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How You Can Avoid Bankruptcy as a Business

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StrategyDriven Managing Your Finances ArticleOne of the worst nightmares for any business owner is their business becoming bankrupt. While some companies have been able to rise from the dust in such instances, this isn’t the fate for many. In this case, it’s safe to say that if you can, avoid getting to the point of bankruptcy in the first place, you should. However, this means paying close attention to your business’ finances by budgeting and closely watching your expenditures.

In case you’re wondering what steps you need to take to avoid such from happening to you, you’re going to find a few essential ideas you can try below.

Get a Qualified Accountant

One of the first ways to avoid bankruptcy as a business is to invest in a qualified accountant. Seeing as they have experience and the required knowledge when it comes to finances, they’re in the best position to help you avoid major money mistakes and keep your books in order. When you’re looking for an accountant, be sure to look for someone who has experience working in your sector if possible. They should also be certified as you’re entrusting your business’ finances into their hands. In addition to this, other general qualities to look out for are someone who is detail oriented enough to pick up on irregularities and mistakes as well as an accountant that is trustworthy.

Get a Mobile Office

If a physical office isn’t an absolute necessity, why not get a mobile one? Doing so should help you keep expenses to a minimum and free up your finances. Renting out an office space can be incredibly expensive, especially if it’s in the city center or a mainstream area. However, by getting a mobile office, you can reduce that cost as well as move your office just about anywhere you want to! If you’ve never heard of them before, they can be used as alternatives for conventional office spaces, as conference rooms, or as a training facility. If you want to save even more, this company has used construction office trailers you could consider.

Manage Your Debt

One of the most common causes of bankruptcy is debt. Businesses often need to borrow for a variety of reasons, such as to give their business a push or to help expand operations. However, when debt spirals out of control, it can be extremely damaging for a business. Keep track of the institutions that you’re owing and try to pay off your debts as quickly as possible. Also, before taking out any loans, make sure you’re getting a fair deal in terms of interest and repayments. Nevertheless, debt can help to jumpstart your business when its used and managed in the right way. Some of the ways it can include tax deductions in some cases, faster growth, and better credit if you’re consistent with repayments.

Lower Expenditures

When it comes to bankruptcy, one of the biggest culprits is probably unnecessary expenses. There are so many things that you may feel you need as a business that ends up being entirely unnecessary. Have a look through your outgoings for the past three months and make a note of what you’re spending on. Identify any patterns, such as spending too much on work lunches, high travel expenses or anything that can’t be accounted for. There will be things that aren’t essential to business growth like cable TV, for example. Other practical ways to cut business expenses is by reducing office supply expenses, looking for ways to save on insurance, and doing in-house marketing to mitigate costs. The point is to be as frugal as possible so that you can save money and avoid hitting rock bottom.

Separate Accounts

You’d be surprised at the number of businesses that go under because of a failure of owners to separate accounts. When you’re depositing and withdrawing from a business account for both business and personal reasons, it can throw your finances off course and make it difficult to see how your business is growing. The easiest way to avoid this is to make sure your personal account is entirely separate from the business one. Once you pay yourself a salary every month, there should be no reason to dabble into business funds. Also, by getting your business a separate credit card, it should ensure that any small or miscellaneous purchases you make for the company are easily accounted for.

Consolidate Loans

In addition to the mentioned, you should think about consolidating your loans. Managing your debt adequately is imperative if you want your business finances to remain healthy. If at any point, you notice that your repayments are becoming overwhelming and you want to reduce the amount you’re paying, why not try and see whether you can consolidate your loans meaning you take out a new loan to pay off liabilities and consumer debts on more favorable terms. Although paying smaller amounts means it will take you longer to repay, it frees up your finances so that you can use them for operations or to expand your business and increase revenue. In some instances, you could even get lower interest rates.

Revisit Your Budget

When trying to avoid debt, it always boils down to one thing which is your budget. See how you can improve this so that you’re genuinely saving all that you can and financially managing your business in the best way possible. There’s always room for improvement and an opportunity to ensure your finances are improving as opposed to declining. You can do a regular audit as well as occasionally shop around to see if there are cheaper alternatives to all of your expenses. Ultimately, always think about every expense carefully and how it could impact your business.

Conclusion

Bankruptcy doesn’t have to be something your business experiences if you learn to be frugal as a business and budget. Your focus should be on raking in steady income and new business as opposed to unnecessary spending. When you’re able to do this, you should find that you’re moving forward and growing financially as a business.

4 Ways Vehicles Drive Businesses That You Don’t Know

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StrategyDriven Managing Your Business Article | Entrepreneurship | Business Vehicles | 4 Ways Vehicles Drive Businesses That You Don't Know

Cars may be a standard part of life, but businesses don’t utilize them as much. Some do, and they are seen as influential, thriving companies that can afford to provide vehicles for their staff. You would love to do the same, yet don’t have the money or resources. At least, that’s what you assume.

Of course, the truth is that company cars raise brand awareness and generate leads without being overly expensive in terms of upfront costs. The majority of them are leased and paid in installments every month. And that’s one thing you didn’t know about vehicles and how they drive businesses.

In this post, you’ll find four more impacts that cars can have on your organization. However, be warned that they aren’t always healthy. Cars come with lots of positives, yet you’ve got to plan carefully for them to help the firm be successful.

Employee Perks

As far as employee perks are concerned, a vehicle is usually at the top of the list of benefits that workers desire. It’s not hard to see why when it eliminates the average costs that are included with owning a car outside of the office. The average sale price for a new engine in the US is around $35,000, and used cars aren’t much cheaper. Then, there is the rising costs of insurance and gas to consider, as well as repairs and maintenance fees.

Looking at from a financial point of view, it’s no wonder employees want a company car. The direct knock-on effect of this is that you’ll be able to attract a high standard of applicants when looking to recruit. Organizations that provide quality bonuses tend to secure fantastic candidates because modern workers require more from a job than a strong salary. Of course, though, it’s worth considering that you will also need to provide parking, maintenance, and even a traffic control company to keep things from getting out of control. These costs are often worth the benefits that come with your company cars.

Hidden Costs

What people don’t understand is the expense of opting for a company vehicle. In some ways, it can result in their wage being smaller at the end of each month. As soon as staff realize this, morale may drop, and that can affect output and productivity, too. There’s also employee turnover to consider.

A high rate of people leaving the business will cost you a fortune in the short, medium, and long-term. You must find a way to make employees who drive happier, and a utility vehicle is an option. They are believed to make drivers more content, limiting the high rates of turnover. Alternatively, you can be transparent about the fees from the outset. That way, you or the business isn’t to blame if the situation goes south.

21st Century Practices

The changes in the automotive industry are massive. Today, pretty much all the major manufacturers are creating hybrid or electric cars, and some are pushing the envelope further by removing drivers. Automated cars may be experiencing a few snags right now, but there’s no doubt the technology will be on the market in the future.

How does this help your business? By partnering with manufacturers such as these, you can piggyback off their innovation. Your brand is seen as creative and new-age as a result of implementing the technology into your business plan. The right vehicles are more than marketing tools with gaudy exteriors – they are signs of intent.

Also, these cars connect consumers with companies. Shoppers are more moralistic than ever, and it impacts buying decisions. Using an EV may be the symbol that proves you respect the planet, encouraging more people to adopt the brand.

Enhanced Customer Service

The importance of customer service will never cease. How customers expect to interact with business may evolve, but they will always judge you on your ability to deliver. Cars are the missing piece of this puzzle, especially vehicles that drive autonomously.

Similar to a drone, AV will be able to deliver products with fewer glitches in the future. However, unlike a drone, customers will be able to track it mid-journey to check up on their package. Plus, removing the human element means that delivery times will be shorter than usual. Then, there is the virtual assistant support that you can implement for holistic consumer experience.

Affordable self-driving cars are some way off the market, so it may be a while before they’re used in to drive businesses forward. Still, when the price drops and the tech is more stable, your customers will receive an enhanced service that will catapult you to the top of the market.

From helping customers to advertising the company to potential employees, cars have their pros and cons. Do you think one outweighs the other?

During this Crisis, Don’t Expect Business as Usual from the Family Enterprise

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StrategyDriven Entrepreneurship Article | During this Crisis, Don’t Expect Business as Usual from the Family Enterprise | family businessIn the last half-century, the pace of change and the many innovations that have reorganized our behavior in no way compare with the unanticipated situation we now face from the coronavirus pandemic. We simply have no precedent for how to plan for what may come next, or for managing the pace of the upheaval. And yet every day we must act – even making tough choices – without much information about the best direction to take.

Family businesses and wealth are under threat like never before. With family members unable to go to work, it’s hard to imagine how to go back to some sense of normal once we get the “all clear.” That uncertainty and inability to be in command of business operations makes us anxious. And when we’re anxious, we do impulsive and short-sighted things.

In times of crisis, feelings of anxiety and loss cause people to draw inward and focus only on how circumstances directly affect them. That explains the lines at grocery stores and gun shops. Similarly, the individualist model of most businesses ownership is a lone wolf. Rather than seek help, owners make the tough decisions on their own.

But a crisis can also present the opportunity to lead more openly and plan together how to respond. By sharing the specifics of their dilemma, they are more likely to receive help and to also be available to each other.

The owner of a small family business has no idea of what will happen next. He or she must deal with anxiety in family members, employees, customers and suppliers, and the community. What was built over time is suddenly threatened. Rather than deal with these issues alone, the legacy owner is better off using this opportunity to bring others in and develop a shared response.

For example, within resilient family businesses, owners are not just together to make money, but to share values, responsibilities and a commitment to future success. These family businesses are able to act collaboratively.

Family business owners will want to act on these principles when responding to this crisis:

1. Shared family responsibility.

Family members have grown used to the security of the business. Even with its ups and downs, they’ve learned to depend on you. Rather than give false reassurances, it’s time for transparency and open discussion. This is a time to share the challenges regarding fixed costs, debt, obligations and the cost of doing business. A family discussion of what’s actually happening and the difficult choices that need to be made can actually provide more assurance and confidence than empty promises.

Use this opportunity to talk to younger generations in the family about business operations and the trials ahead. Describe what you are doing, and ask for help and ideas. For example, the family might decide to create an austerity plan and talk about how to cut expenses. The family can also discuss its underlying values and how, especially in this time of social hardship, how to look beyond their own self-interest and use their wealth to help others.

2. Transparency with employees.

Local businesses are trying to stay afloat while doing their best to virtually carry out essential services and responsibilities. Many have had to reduce operations, and some have been forced to let staff go. Family business owners need to be open with their employees, transparently communicating information and concerns. They must ensure that everyone across the company, not just employees, shares in the burden. The response must recognize financial reality, but also sustain social capital by respecting all stakeholders.

Collaboration, defining and maintaining underlying values, and ensuring open communication are qualities that will allow family businesses to bounce back after a crisis.

About the Author

StrategyDriven Expert Contributor | Dennis T. Jaffe, Ph.D.Dennis T. Jaffe, Ph.D., a leading architect of the field of family enterprise consulting, is an acclaimed speaker in programs for business families and financial service firms. Dennis leads the 100-Year Family Enterprise Research Program at Wise Counsel Research. He is also Family Business Scholar at the Smith Family Business Program at Cornell University, a faculty advisor at the Ultra High Net Worth Institute, and a regular contributor to Forbes Leadership channel. He was awarded a special commendation for Outstanding Contributor to Wealth Management Thought Leadership by the Family Wealth Report. His new book is Borrowed from Your Grandchildren: The Evolution of 100-Year Family Enterprises (Wiley, 2020). Learn more at dennisjaffe.com.

8 Steps to Building Your Business Credit

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StrategyDriven Managing Your Finances ArticleOne of the biggest issues facing small and medium businesses is financing. And the ability to secure finance is often directly related to the business’s credit score. But it’s often a challenge for small businesses to establish their credit when they have nothing to show for it. However, there are some things any new small business owner can do to boost their credit and get access to more financing options. Here are the exact steps you should follow to boost your business’s credit score.

Know the Basics

If you want to build your business’s credit, you first have to understand how it works. While consumer credit scores are usually rated on a scale of 300 to 850, business credit scores are usually rated from 0 to 100. A variety of other indicators are also used to calculate business credit scores, like Fico’s rating service for small businesses (SBSS), which rates business credit on a different scale.

You should also know that each of the main credit bureaus for businesses, Dun & Bradstreet, Experian and Equifax, all have their own set of criteria when scoring a business’s credit. However, for the most part, they will all look at things like credit obligation data, how much outstanding debt you have with lenders and supplier, your total credit utilization, background info on your company, such as what sector you operate in and how long you’ve been in business, and various other factors.

While having no history can make getting credit more difficult, it’s also the perfect place to start since you have no blemishes on your record yet, which allows you to start building your credit on solid grounds.

In 2019, it becomes very hard to understand the credit score world, if you want to read more about credit score and basics, check out this guide from the experts of Finimpact.

Make Sure That Your Finances are Separated

If your business happens to be incorporated, keeping finances separate will be easy. But if you’re a sole proprietor, you have to make sure that you completely separate your finances and that you keep your personal transactions and business transactions separate at all times. This means opening a bank account and getting a business credit card as well.

When choosing a business credit card, make sure that you pick one with perks that will benefit you in your line of business. For instance, if you spend a lot on wireless phone service, there are business credit cards that will give you bonus cash back on wireless spending. It would also be wise to check reviews of business credit cards Canada so you can compare things like APR and rewards as well.

Keeping your finances separate will ensure that bad personal spending habits and debt do not end up affecting your business credit score and vice versa.

Get a DUNS Number

Dun & Bradstreet is a major credit bureau recognized worldwide and can play a vital role in helping you establish your business’s credit. You can also use your DUNS number to bid on a variety of government contracts.

Once you get your DUNS number, they will open your business’s credit profile using that number. It will help them track your vendor and lender relationships to get a clearer picture of your business’s financial stability and assess your creditworthiness.

Open Multiple Credit Accounts

Getting a business credit card and bank account is only the first step. Now, you should try opening more credit lines to help you establish your credit. These accounts will allow you to show that you are a trustworthy borrower. But you have to have discipline and use them correctly, however. Making one-time payments will help credit bureaus keep a track record of your financial activity and stability and adjust your score accordingly.

Some examples of accounts you could open include gas cards, store accounts, and lines of credit. Not enough small businesses open a line of credit, but it’s an important step for any business trying to establish their credit.

Choose Vocal Vendors

While you want to flex and use that credit, it’s essential that you spend money with vendors that will actually be reporting your activity to credit bureaus. You have to make sure that you spend your money with vendors who have an actual reporting strategy in place. If you aren’t sure, just ask them. If they don’t have one, then you should consider spending your money somewhere else.

Be Responsible

This should be common sense but make sure that you pay your bills on time is essential if you want to establish a strong credit score. And while paying on time is good, paying early is even better. Some indicators will only give you a perfect score if you consistently pay early, so do everything in your power to pay your bills as soon as possible if you can.

Make Sure You Check Your Reports Often

You’d be surprised at how many people got credit rejected because of false information on their credit reports. Maybe it’s an outstanding bill that they paid but didn’t show. Or an account that was closed that still shows as active. These are all things that could affect your credit negatively and that you must address immediately. All you need to do is request a copy of your credit report and look for any inconsistencies. If you see any, credit bureaus will have a clear and easy to set of procedures you can take to correct errors.

Use Your Credit

Credit utilization is an important factor when credit bureaus assess your credit score. So, it’s important that you actually use your credit and don’t leave your credit lines sitting there without using them. This is why you should start using them as soon as possible, but make sure that you don’t max them out. As a rule of thumb, you should aim for about a 20 to 30 percent utilization rate.

Conclusion

Building your credit as a small business is possible if you take the proper steps and maintain good habits. Make sure that you follow the tips in this article if you want to start building your business credit the right way.

Online Businesses Popular for Senior Citizens to Start

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StrategyDriven Starting Your Business Article | Online Businesses Popular for Senior Citizens to StartRetirement does not need to mean the end of work for senior citizens if they don’t want it to. There are many businesses that even those in need of in-home senior care can start. These businesses can give retirees extra income while still allowing them the flexibility to enjoy their retirement.

These 6 online businesses are good for retirees to start.

Senior Citizens Can Start an Online Genealogy Researching Business

Genealogists research the history of a family, and they can use the Internet to access genealogical records and create a detailed family tree for clients. This work is research-intensive so people are willing to pay others to do it for them. This makes it an ideal home business for retired seniors with time on their hands.

Although much of the research can be done online, genealogists sometimes need to go to libraries, churches or courthouses. They may also need to conduct interviews with people. This part of the job is excellent for seniors who enjoy getting out and socializing with others.

Starting a Virtual Assistant Business Can Help Retirees Earn Money

Virtual assistants are like administrative assistants who work remotely. They can help a business with a variety of tasks such as research, social media management, bookkeeping, data entry, managing email, booking travel, calendar management and more.

Senior citizens who want to start an online virtual assistant business need to assess the existing skills that they can offer and then decide if they want to learn new skills to add them to their offerings or just focus on the ones they already have.

Retirees Can Start a Writing or Blogging Business

There is a great need for quality content online, and senior citizens who want to start their own business can call upon their years of experience and knowledge to write that content. In fact, writing is an excellent home business for seniors who want to work entirely from home because all writing, research and telephone interviews can be done from the comfort of a home office.

Retirees who want to start a writing or blogging business should create a website with samples of their writing, perhaps creating their own blog that touches on the subjects they can write about. This will give them a portfolio to point potential clients to.

A Photo Business is Great for Senior Citizens with Tech Skills

For an older adult who knows their way around Photoshop or other photo enhancing tools, starting an online photo business is ideal. The business can offer services such as photo restoration of old or damaged photos, digitizing slides, negatives or prints, touching up digital images and more.

An investment in some hardware and software may be necessary for a senior citizen to start this business. Once that investment is made, a creative senior can make extra retirement income helping others enhance and preserve their photo memories.

Retired Teachers and Professionals Can Start an Online Tutoring Business

The ability to connect with others through video chat makes online tutoring easy. Former teachers and other professionals can offer their expert knowledge in subjects that students need to be tutored in and do that tutoring online.

This is one online business seniors can start that they might be able to get underway just by word of mouth. An older adult who announces on social media that they would like to tutor others in a subject they qualify to teach may find students very quickly.

Senior Citizens with Web Design Experience Can Start their Own Business Designing Websites

There are many website building sites such as WIX or Squarespace that make it simple to get a website up and running quickly. Tech-savvy seniors who take the time to get to know a couple of these sites can start a business that builds websites for others.

A senior who wants to open a company that helps other retirees may even consider starting a website designing business for other senior citizens that want to start their own online businesses.

About the Author

StrategyDriven Expert Contributor | Kelsey SimpsonKelsey Simpson enjoys writing about things that can help others. She lives in South Jersey and is the proud companion to two German Shepherds and spends her free time volunteering in dog shelters.

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