Simply Junior

In order to leverage its talent, ideas and energy to create a high performing company, a small business must be focussed and clear on precisely how it intends to conduct its affairs. Small business plans create this clarity and focus. They take the critical issues identified within a company’s strategic thinking and align them with the necessary tasks, then allocate the resources required to achieve the targeted goals.

The following 4 “musts” are the keys to effective small business plans.

1. Must keep them simple

Effective small business plans embody the following characteristics. They:

- Spell out the goals that need to be achieved

- Establish milestones along the way

- Document the required tasks

- Allocate those tasks

- Transform those tasks into step-by-step processes

- Identify the resources required

- Assign accountabilities and responsibilities

- Create the appropriate deadlines

- Become a measure of progress

- Allow for incorporating emerging opportunities.

2. Must keep the business on track

Small business plans make sure that all employees are pulling in the same direction, in keeping with the human, technological, physical, time and financial resources that the small business has at its disposal.

They do not have to be overly complicated, but they do have to be clear, understandable and tailored to the needs of the business. In essence, they have to be easy to use by everyone in the organization, and they have to cascade down to the individual level.

3. Must be applicable to everyone

When a company implements its small business plans in this manner, the plans become the living blueprint for all of its daily activities. The plans are not meant to sit in a nicely bound folder on a shelf somewhere. They ensure that the small business gets its priorities right and that it is tackling the most critical issues, within a structured approach. All the people in the organization are involved and are attending to the right issues and handling them in the right way in their particular part of the business.

4. Must tell the business how it is traveling

Small business plans facilitate the measurement of results. Business plans that are implemented in this way become the daily measure of all the things that the company is paying attention to.

When cascaded correctly throughout the organization, small business plans create the framework for the body of work that has to be done for the organization to be successful. They enable people to self-manage and self-govern around the company’s priorities and expectations of them, and they give them the tools necessary to do so.

In summary small business plans must:

1. Be clear and simple

2. Keep the business on track

3. Apply to everyone in the company

4. Tell the business how it is traveling.

“I only have a small business, I don’t need a budget.”

“I don’t have enough money to budget.”

For many small business owners, the word “budget” is something for the bigger company – maybe they’ll have one when their business “grows up.”

What is a Budget?

The simple explanation is a budget is a plan for how you will manage all financial resources and all expenses for your business. The basic equation that you want to demonstrate in a budget is as follows:

(estimated )Sales minus (estimated) Expenses = Profit (or loss)

How to create a Budget

If this is your first time to work on a budget for your small business, you might work from the perspective of having to list cost of goods or services plus all of your operating expenses to start the process.

How much does it take to operate your phone line? What is the cost of other utilities? How about the cost of a company vehicle, or what is the cost of transportation if you’re using your personal vehicle to also serve as a company vehicle. Do you need any supplies or inventory to operate your business? How about any employee payroll, payroll taxes or independent product or service providers? Remember to include everything you spend money on to operate your business even if you allocate some of the expenses to “petty cash” expenses, such as parking or bridge tolls while traveling to see clients.

I recommend that you create annual budget, as opposed to a monthly budget, so you can identify any expenses that you may have that come up only once or twice a year such as insurance and include them in your list of expenses. This allows you to amortize or spread the cost of this out over several months so that you can plan ahead for the expense.

As you work on your list of expenses keep in mind that these are the expenses that are necessary to operate your business. These should not be your “wish list” unless you want to budget in some expansion or growth. You may want to create a budget with just the necessities and another version of your budget with expansion expenses listed so that you can see the cost of both separately.

With a dollar figure to work with of your total expenses you are able to set the standard for or evaluate your sales figures. If you are new to your business you may need to use the dollar amount of your expenses to help you determine what your sales need to be in order to cover all costs and show a profit. If you have been in business for a while you can evaluate whether or not you are producing a profit by looking at historical sales figures.

As you conduct business during your budget year you should compare your actual income and spending with what you estimated. This will allow you to manage your spending so that you don’t over spend and cut into or eliminate your profits. You will also be able to see if sales have met expectations in order to cover expenses and still remain profitable.

Who should Budget?

Every small business owner should budget, no matter the size of business. I have heard some small business owners say their business is too small to budget, but that is not true. If you don’t have a written plan for what your financial obligations are and how your revenue will cover those obligations and leave some money unspent, then your business will never grow. In fact, you may out-spend your revenue and put yourself out of business.

Why Budget?

Budgeting for your small business gives you control over your finances. By looking ahead to what you know or can reasonably estimate what your expenses will be, you can then make financial decisions that will keep you from over-spending, or give you the freedom to invest in the growth of your business.

When Budget?

Every small business owner should have a budget to start their business and then review it annually. I recommend that small business owners review their budget several months before the end of their fiscal year. When I say review the budget I’m talking about comparing projected budget with actual. In the comparison you can see if your estimates were realistic. You and your CPA can also plan for last minute tax strategies, or plan to implement strategies in the up coming year’s budget.

The Goal in Budgeting

Remember, the goal of having a budget is to stay in control of your finances in advance. Setting the standard for your spending and revenue and having a tool to compare with actual will give you the control that you need to stay profitable. At the very least it will give you an indication of whether or not your business is actually profitable and not just busy.

Copyright 2005 Melody Campbell

Starting with excessive rates to buying a separate policy for your teen driver, dealing with auto coverage is often confusing, complicated and it also involves a lot of money to be spent. Still, you can’t go around it, as it a legal requirement in most states and a helpful tool to give you a peace of mind when dealing with traffic accidents. Sure, it may seem like a dirty job and you don’t want to waste your time on it. But what if there’s an easier way to get your auto insured without all the hassle you fear of dealing with? If you are interested, read the frequently asked questions below as answered by insurance experts, who know how to get the right policy no matter what’s your situation.

Q: Am I obliged to carry insurance coverage when driving my car?

A: Nearly all states have it as a legal requirement for drivers to carry liability auto coverage as a guarantee that the damages you deliver in a car accidents are paid for. Each state has a minimum amount of liability coverage that a driver must carry with his policy. And even the states that don’t have vehicle insurance as a legal requirement oblige the driver to show proof that he has enough financial resources to pay for the caused damage. Any other types of insurance coverage, outside liability coverage are purely optional and can be purchased with respect to your personal insurance needs.

Q: Is insurance required before buying a new vehicle?

A: If that’s your first vehicle, you will be required to have insurance coverage before even taking it from the dealer. Moreover, if you’re using an auto loan to finance the purchase, you may be required to buy additional types of coverage besides liability. If you already have a car and are changing it to a new one or buying an additional vehicle, you have 14-30 days to report the changes to your insurance company.

Q: How can I get cheap car insurance?

A: Compare insurance quotes in order to see what other providers are offering, and if it turns out that you’re overpaying – switch the provider. If your current rates are quite competitive, compared to other companies, see if you’re taking advantage of all the discounts you can opt for.

When looking for a new car, always make sure that the make and model you are interested in provides cheap auto insurance options. Some cars are a lot cheaper to insure than the others, ask your insurance agent to learn what cars are the most cost-effective from the insurance perspective.

Another way to get cheap auto insurance, although a bit risky one, is to increase your deductibles. By raising the amount of out-of-pocket expenses you can afford before the policy kicks in you get lower premiums. And if you’re driving an older vehicle that has a low market value, you may want to drop collision and comprehensive coverage as it takes depreciation of the car value into account.

You can also adjust the amounts of coverage your policy carries, although experts do not recommend decreasing them to the level of state minimums as it is usually not enough to pay for a serious accident.

For any business the main goal of its activity is to get profit. Profit is one of financials performances of a company and an evidence of its success, which is achieved if the income exceeds the expenses. In the opposite case, the company receives loss. Profit growth determines the potential growth of the company, increases its business activity. Depending on profit they determine the income share between the founders and owners, the size of dividends and other income. Profit is also used to calculate the return on equity and debt funds, fixed assets, the total advanced capital, and each stock. But profit is not only a primary objective of any commercial organization, but also the most important economic category.

As an economic category, a company’s profit reflects the net income generated in the material production sphere. For the enterprise level, the net income takes the form of profit. 

Profit as an economic category performs certain functions. Profit characterizes the economic benefit derived from the activities of enterprise. Profits presence in a company means that its income exceeds all expenses related to its activities. 

Profit has catalytic function, while acting as a financial result and the key element of enterprise’s financial resources. A part of net profit, after paying taxes and other obligatory payments, remains at the company disposal, and it should be sufficient to finance the expansion of industrial activity, for technological and social development of the company, and tangible incentives for workers.

To assess the effectiveness and feasibility of the enterprise, it is not enough to determine only absolute indicators. A more objective picture can be obtained using profitability indicators. Profitability indicators are relative characteristics of financial results and performance of the enterprise. 

The term “profitability” has its origin from the rent, which literally means income. Thus, the term “profitability” in broad sense refers to yield, revenue performance and efficiency.

Profitability indicators are used for comparative assessment of individual businesses performance and industries that produce different amounts and types of products. These indicators characterize the profits in relation to expended productive resources. The most commonly used indicators such as production profitability and product profitability. 

Products profitability (profit rate) is the ratio between the total profit and the cost of production and sales.

Production profitability shows the ratio between the total profit and the average value of fixed and normalized working capital.

In conclusion there is a big difference between profit and profitability, and of course this difference makes all the sense in a business. But even so, these two concepts are very closely related because the increase of profitability brings to profit mass increase, to the reduction of products costs and improve the use of production assets.