Ways to Protect Your Business From a Recession

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Many business owners are scared that a recession might be around the corner. A recession has the potential to harm businesses and it might even cause some businesses to have to close their doors. Regardless, you should understand that there are ways to protect your business from a recession. Read on to look at what you should be doing to insulate your business from the potential of a recession. 

Cultivate Strong Supplier Relationships

Having strong supplier relationships will benefit your business in many ways. It can help to protect you from a recession, too. Having a backup vendor in place in case one goes down due to a recession will keep your business supplied. It can also be good to simply have a rapport with a supplier so that they will do their best to keep working with you even when times are tough. 

Customer Retention Matters

You want to try to build a loyal base of customers that will keep coming to you no matter what. To do this, you need to provide them with the best service possible. The biggest strength of your business is going to be the loyalty of your customers. If you can build a brand that resonates with the people, then you’ll be in a much better position during a recession. 

Automate Certain Processes

Automating certain processes can help to save your business money. If you automate things such as checkouts and customer service chats, then you’ll be saving a lot of money. Many people love using self-service checkouts and people also enjoy the convenience of customer service chatbots. This could help to keep your spending low during a recession and it might keep your business afloat. 

Stay Focused on What Makes You Money

You might want to avoid trying to spread out into new markets when a recession is on the horizon. Focusing on the products or services that make you money will allow you to keep things going. You can continue to make money by doing what you do best and you can save expanding into other markets for a more stable time. Being overly ambitious can sink a small business fast during a recession. 

Use Marketing Dollars Carefully

Marketing dollars should be used carefully during a recession. You want to focus your marketing on the areas that are going to give you the most value. It’s also good to use low-cost marketing techniques such as social media marketing and handling your SEO properly for your online content. If you make smart use of your marketing dollars, then you might be able to see modest growth during a recession while not spending too much money on costly advertising campaigns. 

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Smart Financial Habits for Small Businesses

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If you want to be successful while running your small business, then it’s good to develop the right financial habits. Smart financial habits can help to keep your business running smoothly and you’ll be able to avoid certain pitfalls. Take a look at some of the financial habits you should be cultivating by reading the information below. It will help you to keep things on track so that you can find the business success that you’re looking for. 

Saving Money

Saving money is going to be crucial to the success of your small business. If you create a savings account for your small business, then you will be able to save for the future. It can also help to insulate you from financial problems that might occur. Having savings to use for various purposes will prove to be beneficial for your small business. 

Preparing for Taxes

Preparing for taxes ahead of time is imperative. If you aren’t thinking about next year’s taxes, then you really should be. A small business owner should never be caught off guard by taxes and you should have a tax savings strategy in place. Working with a tax preparation professional might help you if you struggle with taxes. 

Maintain a Budget

You should also be putting thought into how much money you’re spending each month. If you are not considering your overall expenses, then there is a good chance that you’re overspending on a monthly basis. Maintaining a budget will help you to save more money each month. It’s best to be mindful of your expenses so that you can keep things under control. 

Make Use of Accounting Software

Accounting software can help you to automate the process of keeping tabs on your finances. This could free up a lot of time for you that you’ll be able to use elsewhere. You can even automate your payroll so that you don’t have to worry about things being done properly. Small business owners should always look to use the latest software so that things can continue to go smoothly. 

Invest in Your Business 

Aside from saving money, it’s also going to be important to invest in your business. You have to invest some of your money in your business so that you can stay on top of current trends. Consider things such as upgrading your equipment, marketing your business, and improving your facilities. You can make improvements over time and you don’t have to do everything at once. 

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How to Survive a Difficult Financial Time

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Difficult financial times have the potential to put you in a bad spot. Many businesses don’t have the savings to weather a tough time and others might not have the proper plans in place to see things through. If you want to know how to survive a tough financial time, then there are many things to consider. Take a look at the information below so that you can help your business to survive a difficult financial situation. 

Assess the Situation

The first step in trying to survive financial problems is to be able to assess the situation properly. You need to be able to understand what is going on and you have to figure out just how bad things are. Try to use all of the accounting software and analytical software that you have to get data about how things are going for your business. You can use this information to get a real picture of how bad things are and how bad they might be moving forward. 

Use Your Savings

Use your savings to pay your bills and keep things moving along. If you have a savings account, then now is the time to put it to use. You should be saving money for situations like this. If your business doesn’t have savings, then there are still ways for you to get the necessary funds, but it won’t be as easy. 

Take Out an Emergency Loan

Taking out an emergency loan might help you to get the money that you need to pay your bills. If you don’t have savings, then it is going to be necessary to get the money from somewhere. Work with a lender to get the amount of money that you need to see things through. It might be best to take out a loan for more money than you need so that you can navigate the murky financial waters for as long as it takes to return to profitability. 

Reduce Spending

Reducing spending can help you to keep your business afloat, too. You should try to avoid spending too much money and you should look for ways to cut costs. You might be able to save money on certain facets of production and it also might be necessary to let some employees go if you don’t have enough cash coming in. Look at your situation realistically and then decide how you can reduce your monthly expenses. 

Control Your Recovery

You should be able to recover from financial problems over time if you make smart decisions. You just need to understand where the market is going and you have to control where your business is going. It might be smart to focus on certain areas where your business is succeeding while putting off plans for growth in other areas. Try to find ways for your business to become financially viable again so that you can work to pay off the loans that you have taken out. 

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Steps to Take Before Selling a Business

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If you’re considering selling your business sometime soon, then you should take a step back to think about things. You want to make sure that you’re doing everything right before you sell your business so that you can get the most out of it. Take a look at the following steps to take before selling a business. You’ll be able to feel prepared for what is to come and you’ll have an easier time putting yourself in an advantageous position. 

Learn How to Price Your Business 

Learning how to price your business is the first thing that you need to do. You need to consider many factors such as the value of your assets, the potential for future business earnings, and the value of certain intangible business assets. The value of your brand that you have built needs to be considered when pricing things out. Take the time to assess the true value of your business so that you can get the most out of it. 

Understand the Selling Process 

Selling a business isn’t something that just happens one day. It’s actually a process that can take a long time and it’s quite involved. Look into the process and understand what it entails. It might take months for a business sale to go through and you’ll likely want to hire legal professionals to help you with everything. 

Hire the Best Advisors

Hiring the best advisors can make selling your business a much easier prospect. You will be able to get the help of experts in law and you’ll also likely want to have tax professionals on hand. This is a complicated process and you need to navigate the waters carefully to ensure that you don’t make any tiny mistakes. If you hire experienced professionals to help out, then things will go smoothly and you won’t have to be nearly as concerned. 

Prepare Your Employees

Your employees need to be told about your plans to sell the business. Inform your senior staff first and then they can help you to get the information to everyone else in the company. Being transparent about this process can keep employee morale high and you can ensure a smooth transition to the new ownership. 

Prepare Yourself

You have put a lot of yourself into your business and selling it might be a bit of an emotional journey. Some people struggle to come to terms with giving up a business that they put so much effort into. You should make sure that this is the right decision for you emotionally while considering the benefits of selling the business. If you want to go through with things after preparing yourself for what it means, then you’ll be ready to sell for sure. 

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The Importance of a Business Savings Account

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If your business doesn’t have a savings account, then that is a mistake. Many people don’t realize how important it is to have a business savings account. Read on to learn about some of the benefits of maintaining a savings account for your business. It will allow you to make an informed decision about what to do for your business. 

Saving for the Future

Saving for the future is smart and you don’t want to spend all of the money that you’re making. It is necessary to invest funds back into the business, but you should also be saving money in a savings account. You can save a certain amount of money each month so that you’ll have money to work with when you need to make changes in the future. The business market can shift suddenly, and it’s better to be prepared. 

Protecting Yourself

Having business savings can help to protect you in the event that something bad happens as well. Many companies wind up going under or struggling through tumultuous times due to not having savings. If you have savings, then that money could be used to keep things going if your business hits a rough patch. You’ll be thankful to have it if you’re ever in need. 

Savings Help to Give You Options

Having savings will help to give you options. You’ll be able to choose how to use that money to help your company moving forward. It might be possible to use the money to expand your business in a controlled fashion. You could use it as a cushion or you could save money up for a specific purpose. 

Giving Back to the Community

Many companies also choose to use their savings to help give back to the communities. Having the goodwill of the community is always going to be important. You could use these funds to help donate to local charities each year or you could hold certain charity events to help those who are less fortunate. Either way, it’ll be nice to have the money to use for purposes like this and it will reflect well on your business. 

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Ways Small Businesses Can Save Money

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Trying to save money as a small business might not always seem easy. You don’t want to cut corners, but it’s still going to be beneficial to be able to keep your costs low. There are a few ways that small businesses can save money that will make life a bit easier. Read on to get more information. 

Avoid Paying for Office Space

Office space is very costly and it might not be an effective way to use your funds. Many small businesses choose to work out of home offices instead of renting commercial spaces. Unless you’re operating a retail-oriented business, this is going to be a good way to save yourself some cash. You can keep the funds that you would be spending on rent and they can be used for other business expenses. 

Buying Secondhand Equipment

You might be able to get away with buying secondhand equipment as well. A brand new printer or fax machine might cost a lot of money, but buying something comparable that is second hand could save you a lot of cash. There might be many pieces of equipment that your business will need that will also be available on the secondhand market. Consider trying to look for a deal rather than going out to buy expensive new pieces of equipment. 

Make Use of Freelancers

Paying employees will be expensive and you might not have the money to maintain a full staff. It can be more cost-effective to hire freelancers to help out when you’re in need. This can save you a lot of money on your payroll while still allowing you to get the help that you need. There are many great freelancing websites that you can sign up for where you can find professionals who are looking for work. 

Spend Marketing Dollars Wisely

If you are going to be marketing your business, then you can spend your dollars wisely to get the most out of your money. You can make use of inexpensive marketing methods such as social media marketing. It’s also helpful to develop a rapport with customers and to rely on your customers to spread the good word about your business. If you can avoid paying for costly ad campaigns, then you should do so. 

Install a Smart Thermostat

Installing a smart thermostat will help you to save money on your energy bills. Energy bills can add up to quite a bit of spending each year and being able to cut that bill down substantially will be useful. A smart thermostat keeps you from wasting energy at the office. It’s a cost-effective way to save a bit of money each month. 

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Small Business Accounting Mistakes to Avoid

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Running your small business takes a lot of effort. If you’re handling your accounting by yourself, then it’s easy to let little mistakes slip through the cracks. Even so, it’s important to avoid mistakes like these because they can throw things off in severe ways. Take a look at the following small business accounting mistakes to avoid. 

Tracking Business Costs Improperly

If you make mistakes while tracking your business costs, then you are going to put your small business in a bad position. You want to make sure that you are accounting for all of your costs down to the last cent. Keeping accurate records of spending will prove to be imperative. You need to double-check things to make sure that you aren’t inputting things into your spreadsheets improperly. 

Mixing Business and Personal Accounts

As a business owner, you need to make sure that you keep your business and personal accounts separate. If you fail to do so, then things can get messy come tax season. It can complicate things when you are trying to get business loans as well since lenders will need to get a look at your cash flow to determine whether they can lend to you. Make sure that your personal accounts and your business accounts are kept separate. 

Billing Mismanagement

Billing mismanagement can harm your business substantially. Some businesses make mistakes when managing billing and they might wind up sending out invoices late. This can lead to delayed funds and you could wind up being late paying your own bills. A few mistakes with your management of billing could lead to costly repercussions for your small business. 

Not Planning for Taxes Ahead of Time

You need to plan for your taxes ahead of time to avoid being caught off guard. This is why it is highly recommended to simply hire professionals to take care of things. They can inform you of what needs to be done for tax purposes while also managing your books. If you are worried about making mistakes, then calling in professional accountants will alleviate those worries. 

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How to Know If Entrepreneurship Is Right for You

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Not everyone is going to be cut out for entrepreneurship. It can be a difficult path and you might not be sure if your business idea is good enough to move forward with. If you want to determine if entrepreneurship is a good path for you, then there are many things to consider. Keep reading to find the answers so that you can figure out if becoming an entrepreneur is a good idea in your situation. 

Does Your Business Idea Solve a Problem or Need?

Your business idea could be a good one, but it needs to solve a problem or a need. If there isn’t a demand for your type of business in your area, then you run the risk of failing even if you’re great at what you do. Make sure that your business idea makes sense and that it is filling some type of need in your area. You should also consider the competition and whether you think you can do things better than your potential competitors. 

Is Your Business Idea Profitable?

Of course, your business idea needs to be profitable for it to truly be able to take off. If you aren’t sure whether your business idea will make money, then it’s not going to be good to move forward. You need to do market research to see how your business will work in today’s market. Be sure of your decision before you start investing money in a new business. 

Why Do You Want to Start a Business?

Why you want to start a business is just as important as whether your business idea has potential. If you are starting a business purely because you want to get rich, then it might not be a good idea. Entrepreneurship can be risky and it also takes a long time to find great success in most situations. Make sure that you’re starting your business for the right reasons and that you have the necessary passion to keep on going when things get tough. 

Are You Prepared to Work Hard?

It’s also imperative to understand that being an entrepreneur takes a lot of effort. You have to work long hours and it can make it difficult to find enough time for your personal life. The first few years of launching a business will be especially busy. If you aren’t willing to put in the hard work and the long hours, then entrepreneurship is likely not for you. 

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Accounting Tips for SaaS Startups

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Software as a Service (SaaS) is a business model focused on the delivery of software. And like any business, it has needs in accounting to make that business model run efficiently. Knowing where to start with accounting for your SaaS startup can be a difficult thing to wrap your head around.

It doesn’t help that so few states actually have concrete positions on whether or not to tax SaaS or exempt it. Knowing the financials of your SaaS company is essential regardless. There are steps that you can take before calling in the professionals, but this aspect is essential no less.

Scale Your Tax Planning

Tax compliance is one of the most important aspects of any business. Non-compliance is usually a case of shoddy bookkeeping and it can be easily avoided. When growing your business especially, compliance can be an issue. Maybe you are compliant where your business originated, but are not when you expand across state lines.

Having a tax professional in your corner can help guide you towards proper tax planning. This can help you avoid any catastrophes that could seriously set your business back and get you into trouble with Uncle Sam.

Be Aware of Extras

Maybe your company sells complementary services to supplement a core product. In that case, be aware of what fees are being charged outside of that core product. Make certain to allocate revenue based on the estimated selling price of each of those services or a fee on a stand-alone basis. 

While there are many SaaS companies that have recognized the benefits involved with doing this, there are many more that have not. Understand everything that you are charging for when factoring in your revenue for accounting.

Be Aware of Changes

Because SaaS is still uncertain from a tax standpoint, it is imperative to be aware of any changes that may be made to tax codes. Pleading ignorance won’t do you any good; staying on top of regulations and codes will.

Small businesses cannot afford to be negligent with tax codes and developing regulations can help you stay on top of those changes.

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The Most Important Accounting Reports for Small Businesses

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Keeping detailed records is imperative for any business, let alone small businesses that can live and die on the smallest of factors. What you might not know is that there are many more benefits that small business accounting can bring to the table.

Having the right accounting reports at your disposal can be a huge deal when it comes to improving, growing, and expanding your business. Here are a few of the reports that can help your company stabilize and grow.

Profit and Loss

This is hands down the most important report that any business has. This is the report that shows a business how much money they are making (which is a completely gloss-over explanation). This includes details of where your money is coming from and where you are spending it.

Knowing where your money is coming from and where it is going is an absolute must for any business. This allows for refinements to be made and allows you to cut down on unnecessary spending. Know what is working well for your business and what isn’t so you can make the necessary adjustments. 

Balance Sheet

The balance sheet is right there with your P&L report as one of the most important reports that you need to have. Your balance sheet, to over-simplify, tells you what your company owes and has coming in. This includes basic assets like accounts receivables, bank accounts, and possibly an investment account.

Your balance sheet can also contain assets like computers, equipment, property, and any other physical and intangible property. This is your one-stop-shop for seeing what your business owns, what it owes, and where your liabilities are.

Revenue by Customer

While you should definitely be aware of who owes you money, you should also be aware of who is giving you the most money. Revenue reports are essential to see what you’re bringing in, but they can be even more helpful by letting you know what customer demographics to target.

This is, in essence, focusing on strengths in order to keep your business growing while you work on improving sales in other areas.

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