The post How to judge your business success appeared first on Checkbox Accounting.

This includes the pulse or heart rate, body temperature, respiration rate, and blood pressure. Taken together, these help indicate the state of the patient’s essential body functions.

If any – or all – offer some cause for concern, the doctor can start diagnosing the patient more thoroughly, before suggesting a course of action…

And now we’ve arrived at the part where you’re wondering why we’re discussing basic medical practice.

Well, this idea of ‘vital signs’ is something that can be comfortably extended to your business.

Your company’s financial health should be examined regularly to make sure there are no underlying maladies that will only grow worse if left untreated.

Knowing What to Look For

These financial ‘vital signs’ have many names, some of which may be familiar to you. They include: Key Performance Indicators (KPIs); business metrics; critical success factors; and moneymaking statistics.

No matter the label attached, they are all essentially the same thing: a means of tracking the performance and success of your business.

Just as a soaring temperature or irregular heartbeat will make a physician want to dig deeper in diagnosing their patient, there are a few things you should keep an eye out for when it comes to the health of your business.

For instance, revenue is a clear indicator as to the financial performance of your company. By monitoring your income in comparison to your expenses, you will have an understanding of how much you are making (or not, for that matter), and why.

And when it comes to revenue, consider the various streams. In particular, online sales are simple to measure by implementing sales software, allowing you to spot trends and take action before it’s too late.

Or perhaps you could track the referrals that bring you new business. This will help you determine whether or not your marketing endeavours have been worthwhile, and if your current clients are actively recommending you to their network.

Once you have those customers, think about retention. How many clients are returning to your business over time after first working together or selling them on a discount or offer? Are you maintaining a loyal customer-base, or are you struggling to retain them? The answer will give you an insight into your company’s customer service capabilities.

Take the Pulse of Your Business

These are just some of the Key Performance Indicators – or vital signs – that you ought to look out for as you measure the performance and success of your business.

Understanding how your business is doing at any given moment is crucial to helping you make informed and effective decisions as its leader.

Tracking financial and non-financial metrics can help keep your business healthy. And as with your body, spotting any worrying trends early will make it a great deal easier to remedy than if you leave them untreated.

And it can be tough when you dig deep and track these metrics, only to discover that your business is living on borrowed time. When that happens, you must be ready to evaluate the alternatives; and quite often those alternatives can mean making difficult decisions, such as letting people go, selling the business, or filing for bankruptcy.

Start Tracking Today

Putting a plan in place to track key business metrics is fundamental to the growth and success of your company.

By staying on top of your KPIs, you will be in a much better position as you work with an up-to-date and accurate budget. And by doing so, you will be able to grow and invest in new resources, personnel, or locations, without putting your business under financial strain.

If you’d like to discuss setting up a system to track your key business metrics, please contact us.

The post Is your business ill? appeared first on Checkbox Accounting.

No matter your reason for taking the leap as an entrepreneur, you will encounter a number of concerns as you progress. It’s important that you know how to recognize and handle these concerns so as to avoid derailing your business.

In dealing with many small and medium-sized businesses over the years, we have been able to distill some of these concerns down to four of the most common questions.

At some point in your business journey, you will find yourself asking a variation of the following:

1. How will I achieve what I want in my personal life?
2. How will my business help me achieve my goals?
3. Do I really have control over business performance and numbers?
4. How do I get more from my business?

In this post, we will help you navigate these concerns and emerge from the other side a better business owner.

How will I achieve what I want in my personal life?

Running your own business should be about achieving personal freedom.

Freedom to work on what you want, when you want. Finding joy in the day-to-day is the ultimate goal for many entrepreneurs.

So, to get to the heart of what you truly want out of your business – and how it impacts both your personal and professional life – ask yourself the following:

• Why did I start my business?
• How is my business organized?
• Do I feel I am on track with my goals?
• What keeps me up at night?
• What do I do in my spare time?

Once you have a handle on why you’re in business for yourself, and where your passions lie out with your business, you can start working on balancing the two. Otherwise, the business will consume you.

How will my business help me achieve my goals?

In order to achieve your personal and professional goals via your business, you must be the one in charge.

Now, this might seem a little strange given that you own your business; who else would be in charge?

But the truth is, your business can quickly take on a life of its own if you let it.

You must be the one in control, rather than taking a back seat and letting the business drive you. If you’re achieving success almost by accident, then you and your business are driving blind without a strategy or a roadmap.

Your goals will go unfulfilled if you don’t treat your business as more than just as means of making ends meet.

Do I really have control over business performance and numbers?

We know it can feel like you don’t; that your numbers can spiral out of control amidst the day-to-day of running your business.

But you can and you must take control of those numbers, and by extension, the performance of your business.

You should:

• Know exactly what your numbers are for the month
• Have complete clarity on which products or services are selling well (or not)
• Understand what’s in your financial statements, and what those numbers mean
• Know how much tax you’re going to pay, well ahead of the due date

When you do, you can actually look forward to meeting with your accountant!

How do I get more from my business?

When you have a handle on your goals, you’re building a business geared towards meeting those goals, and you’re accurately tracking your numbers at least monthly, you will get more from your business.

It’s really that simple!

You can then look forward to scaling your business, hiring employees (if you want), outsourcing work, spending time working on your business rather than in it, taking a day off now and again, and even taking a vacation.

Let’s Address Those Concerns

If any of those concerns are keeping you up at night, then here’s how we can help:

1. Personal Goal Setting

We can help you get to the very heart of the reason why you went into business in the first place. We will determine what your goals were, and how they have changed (if they have at all).

If your business has taken on a life of its own, we’ll find out why, and how far you are from achieving the goals you had when you started.

By taking you through a personal goal questionnaire and a one-on-one meeting with one of our advisers, we can develop a report that will show you what you want to achieve, what’s missing, and how you can go about accomplishing your goals.

We’ll then help you devise a specific plan of action – one with dates, milestones, and clear responsibilities.

2. Business Planning & Strategy

We want to help you take control of your business. No more autopilot, no more backseat driving.

Together we will develop a business plan and strategy that will have you questioning everything, and testing what you think you know.

We won’t focus solely on ‘best practices’; rather, we will help you find your industry’s ‘next practices’.

What’s more, we want to instil a belief in you, your team, and your mission that will see you carry out this plan to fruition.

3. Monitor KPIs

It’s no use merely glancing at your income statement in order to monitor your business. That’s a bit like watching a hockey game by only looking at the final scoreboard. To get the bigger picture, you must look at the activity within the game.

We will help you map and monitor your progress by focusing on a few Key Performance Indicators.

These will be tailored to your business, meaning no generic indicators or reports. Only valuable and actionable information.

4. Profitability & Cash Flow Improvement

Finally, we will help you get to grips with your profitability and cash flow by getting you up and running on cloud accounting software.

Everything will be real-time and instantly trackable by both you and us, meaning we can spot any potential cash flow issues, so that you can take action ahead of time.

How Can Checkbox Help You Become Great?

In his book, Good to Great, Jim Collins wrote:

“Greatness is not a function of circumstance. Greatness, as it turns out, is largely a matter of conscious choice and discipline.”

We can guide you to greatness. We only ask for your conscious choice to work together, and your discipline to meet, review, and check in.

You can grow a great business. Let us help. Contact us today to get started.

The post The Four Biggest Questions You’ll Ask Yourself as a Business Owner appeared first on Checkbox Accounting.

SBA loans are partially guaranteed by The U.S. Small Business Administration. They offer a variety of loan programs for very specific purposes, from Small Business loans and Microloans to Real Estate & Equipment loans and Disaster loans.

Depending on where you are with your business, and if you fulfill their criteria, you can borrow money from the SBA for a number of different reasons. These include:

• Purchase of real estate
• Building renovation
• Equipment purchase
• Inventory purchase
• Business acquisition
• Expansion of an existing business
• Business startup
• Refinancing of an existing debt; or
• Supply working capital

SBA loans typically have lower interest rates and fees than the more conventional loans from big banks and other financial institutions. Longer repayment terms can also be negotiated, with the interest rate fixed for a predetermined period of time.

However, you will still need a solid business plan to get a loan from the SBA, so be prepared before you apply.  Can we help? Contact us at Checkbox.

Next month we take a look at the benefits of buying vs leasing business assets. Stay tuned!

The post The Benefits of SBA Loans appeared first on Checkbox Accounting.

Most people are familiar with the concept of Net Profit as a means of measuring business success and, in fact, this is what people typically are referring to when they talk about the “bottom line.” But net profit only tells part of the story.  To get a more complete picture of business performance and to begin to do an effective job of performance management, an owner needs to pay attention to two other basic key financial indicators.

Operating Cash Flows – This is, very simply, the amount of cash going in and cash going out of a business.  A positive cash flow is always a welcome event since it means that a business can meet its current obligations and pay its employees, but more than that it speaks to the quality of earnings.  Unlike net profit, cash flow is not impacted by accounting methods and policies.  It is a real event measure that can tell us not only whether a business has net income in the form of cash but how well the business is managing important assets like its accounts receivable and inventories.

Return on Assets or Equity – This is the third important “bottom line” in our trinity. It’s calculated by dividing the net profit of a business for any period into its total average assets or equity for the same period.  It shows how much profit a business is earning in relation to its total assets or equity.  As such it makes a great measure to compare a business to others in the industry or to other kinds of investments.  It answers the questions – Am I earning enough on the total assets of the business compared to my competitors? Given the risks, investment and commitment of time and effort is this business earning me an adequate return?

None of these measures, in and of themselves are perfect.  As Kremer and Rizzuto point out:

The truth is you need all three bottom lines. You need all three measures. Without them you just can’t see the big picture. Your company can look good in terms of dollar profits but poor when you consider ROA, your company can be earning a profit but be unable to meet payroll because there’s not enough cash…. With all three however, you can tell if you’re really making money. Just like the experts… you can “read the tea leaves” and identify your business’s strengths and weaknesses. More important you can use the knowledge you gain to manage the business more effectively.  From a financial perspective, improvement on the three bottom lines is the goal of a business.

At CPA Corporation “the 3 bottom lines” stands for the much broader concept of performance management.  In a larger sense, effective performance management encompasses more than just these three financial indicators.  It may involve many metrics which allow business owners and managers to measure and manage performance in many different areas of business operations, not just finances, but customer relations, human resources, internal operations, community involvement, etc.   We also feel that there are important goals and activities which involve more than just the business such as the personal and professional goals of the business owner, plans for business transition and issues of work/life balance that must also be considered, measured and monitored.

We have found, however, that the “3 Bottom Lines” concept is a good way to start a conversation about performance management and a great starting point in helping owners understand the financial statements that their accountant or bookkeeper provides.  There is no reason, as Kremer and Rizzuto point out in their book, that financials statements “have to be as obscure or as hard to understand as they sometimes are.”

The post The 3 Bottom Lines – Mastering Business Fundamentals appeared first on Checkbox Accounting.