starting a business Archives » Checkbox Accounting

How to judge your business success

Fred Crooks — Thu, 22 Feb 2018 19:32:47 +0000

Once you’ve checked your business vitals (see our previous post, Why You Need to Regularly Check Your Business Vitals ) the next step in assessing the health and performance of your organization is to begin comparing your key business metrics with your competitors.

Now, every industry has its own challenges, and its own means of measuring success, but there are a few universal standards that can be relied upon when making such comparisons.

In particular, you should look at gross profit and break-even analysis.

Gross profit is rather simple – it’s your sales minus the cost of goods sold (the direct cost of the production of goods sold or service provided).

The break-even analysis, however, is a little more complex. It is designed to help you analyze the various aspects of your business to ensure it breaks even and starts to become profitable.

This means taking into account fixed costs, variable costs, projected product/service sales, and pricing to determine the break-even point.

At its heart, the break-even analysis is a rather handy tool. It allows you to calculate the point at which the fixed and variable costs of producing your product or service will be recovered by the business. Or, in other words, at what level of sales volume (number of units, billable hours, etc.) will your product or service stop costing you money to produce, and start generating a profit.

Furthermore, the break-even analysis can help inform important managerial decisions, such as setting prices and developing new strategies.

Apples to Apples

As you work on your break-even analysis, you should appreciate that the break-even point for your business can be very different to those operating in other industries.

For instance, an organization working in the manufacturing industry will encounter different fixed and variable costs to those of an organization working in a service-based industry. That’s why it’s so fundamentally important to only compare your break-even point with your industry.

Comparing apples to oranges won’t get you very far.

Try this break-even calculator to get started with analyzing your own business.

Discovering Industry Standards

Once you’ve calculated your break-even analysis, you can start using it to benchmark your organization’s performance against competing organizations in your industry.

If you’re new to your industry, then it makes sense that you look to the leading companies to get a sense of the industry standards. That is to say, the key statistics that point to being a success in your industry.

For example, a restaurant has to sell a certain number of tables a night to make money. Over time, that number becomes the industry standard in that particular neighborhood. So if you were to open a restaurant across the street, you should be aiming to emulate those booking numbers.

You may be curious as to how you should work out the industry standard for your organization. Well, there’s no need for subterfuge; you can simply join a trade organization or association and freely access this information. The owner of our fictitious restaurant might consider joining the National Restaurant Association, therefore availing themselves of all the latest news, research, and restaurant industry forecasts.

Once you have implemented your measurement programs, and developed achievable targets based on these industry standards, you will be well on your way to establishing your business as an industry leader.

And with that position usually comes healthy profits and tax planning opportunities, but we’ll keep that for another post.

How Do You Measure Up?

If you’re not quite sure how to get started in determining the break-even point of your business, you’ve come to the right place.

We can provide you with a simple spreadsheet to help you, or we can guide you through the entire process, step by step. Either way, Checkbox is here to help.

Simply contact us today to get started.

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

Don’t Be Afraid to Work Together

Fred Crooks — Tue, 15 Aug 2017 19:13:31 +0000

Owning and operating a small business can be a lonely endeavor.

Long days, longer nights, and no-one to talk to when the going gets tough – it can feel isolating and demoralizing.

But there is a solution: speak and share with other business owners.

Many small business owners actively fear working with other businesses, worried that they may take advantage of them rather than offering guidance and advice.

However, the rewards can be terrific. By tapping into your local network of fellow entrepreneurs, you have the opportunity to become more knowledgeable, understanding, and efficient.

Why Should I Reach Out?

There’s no two ways about it; being a small business owner is stressful.

All the responsibility, all the decisions, the planning, strategy, and execution; it all falls squarely at your feet. And it can be quite overwhelming.

That’s why having a mentor – or joining a local group of small business owners – can help alleviate some of that stress. They give you a sounding board with whom you can discuss your problems and share your successes.

And this isn’t a new concept by any stretch of the imagination.

Take a beat and think about the franchises you see just about every single day. Starbucks, Wendy’s, Dunkin’ Donuts; they all share financial data and marketing information with the other stores within their franchise in order to better understand the overall market.

Won’t This Threaten My Business?

You might look upon this arrangement as a threat to your business. Sharing confidential information with a perceived competitor will understandably make you uncomfortable, and it will impact your business.

But, if done right, that impact will be positive, not negative.

By working with your peers, you will improve your understanding of the local marketplace, boost your efficiency and delivery, and oversee a better standard of customer service. This will only serve to drive more business and increase profits.

Where to Start?

If you run an independent small business (i.e. not a franchise) then it can be tough to know where to start when reaching out to fellow entrepreneurs.

Becoming active on social media (Twitter and LinkedIn in particular) is certainly a good idea. This gives you access to a whole host of like-minded individuals, many of whom won’t be swimming in the same waters, and are therefore less likely to appear threatening to your business activities.

But the fact is, nothing beats face-to-face networking.

Search online for local organizations, groups of similar business owners, or an association to join in order to meet and develop valuable business relationships with your peers.

Here are a few in our neck of the woods worth checking out:

Roseville, CA

Sacramento, CA

U-Link Network also has a number of local groups meetings listed on their website.

If you can’t find one nearby or relevant to your industry, consider setting up your own. It can be as informal as meeting for a coffee every few months, but just as valuable as an established organization.

And be sure to complement these meetings by fostering professional relationships with business advisers and mentors.

Put Yourself Out There

As your business grows and develops, and you begin to better understand your own key financial data and moneymaking statistics, you will find that you actively want to compare yourself to your peers.

It’s only natural to seek to benchmark yourself against others. In fact, it can become a crucial part of the overall success of your business.

By simply being active in your local business community, you will open up the doors to new and prosperous relationships, promising leads, and a wealth of advice and experience.

And by improving your knowledge of the local market, it will push you to be a better business leader.

Put yourself out there and make it happen.

If you’d like a helping hand in getting started, contact us today to speak with one of our friendly advisers.

The post Don’t Be Afraid to Work Together appeared first on Checkbox Accounting.

The Four Biggest Questions You’ll Ask Yourself as a Business Owner

Fred Crooks — Tue, 20 Jun 2017 19:31:11 +0000

There are many reasons for starting a business. Perhaps you’ve spotted a gap in the market. Maybe you’ve grown weary of working for someone else. Or it might just be the fulfilment of a lifelong dream to be your own boss.

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:

How will I achieve what I want in my personal life?
How will my business help me achieve my goals?
Do I really have control over business performance and numbers?
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.

Small Business Owners: Tools to Sharpen your Competitive Edge

William Simi — Sat, 21 Jun 2014 15:54:00 +0000

Today’s small business owner is confronted with new business problems and opportunities on a regular basis, but rarely do they have the time to investigate all the possible solutions and opportunities. We at CPA Corporation want to become a valuable resource for businesses to help them solve these problems and take advantage of the opportunities that exist.

In an effort to do this, we will be posting frequent Blog posts several times each month featuring our (Small Business Advisor Toolkit) SBA. These Blog entries will include among other things: Best Practice Checklists, Self Assessment Questionnaires and modifiable Templates.

These tools in our SBA portfolio will incorporate the latest ideas in areas as diverse as customer and supplier relationships, financial matters, employee and industrial relations, production processes and waste management. Using best practice checklists, businesses can borrow from the best current knowledge and modify it to suit their particular circumstances. Best practice questionnaires can provide a diagnosis of a businesses’ current situation and suggest a range of suggestions for improving their business practices.

In addition, business owners can use the modifiable policy documents we post to quickly create policies that will cover all the essential aspects of the process without incurring the cost or taking up the time required by developing them from scratch.

How important is it to have a clearly written Vision and Mission Statement for your Business?

Our first post discusses one of the most important elements of a business which is the businesses’ vision and mission statements. We have all heard of these documents, but rarely do we see small business owners take the time to memorialize their vision into a clearly stated document.

A businesses’ mission statement should represents a picture of where the business wants to be in the future. The statement should do two things:

– It should explain to customers and other stakeholders what the business does.- It should be motivational and provide a shared sense of purpose. This helps to create a focus for the efforts of all the employees and managers.

If you need assistance in developing your business’ mission statement or have any questions regarding this post, please feel free to contact us.

The post Small Business Owners: Tools to Sharpen your Competitive Edge appeared first on Checkbox Accounting.