Are you feeling overwhelmed by the pressures of managing your business?
You’re not alone. Business management is not easy, regardless of whether you’re an experienced owner or a new entrepreneur. In fact, in some ways, managing a small business can be just as challenging as running a Fortune 500 company…if not more so!
Data from the U.S. Small Business Administration puts these challenges into stark relief. According to the SBA, two in ten new businesses fail within the first year, and only five in ten businesses survive five or more years.
So what’s the good news?
With the right information and an educated approach, managing your business doesn’t have to feel so hectic and stressful!
In this post, I’ll offer some simple but important tips that will help you:
Read on to discover three tips for improving your business management and positioning your company for growth and success.
As someone once said, “If you fail to prepare, you are preparing to fail.” And yet, in a research report published in 2018, a striking four out of five businesses surveyed had no formal business plan. Furthermore, the same report found that only one in three businesses surveyed regularly spent time refining their growth strategy, even though 98% of participants felt their business had growth potential.
A business plan is a written document created to detail all aspects of a business on a comprehensive level. The goal is to establish and examine the organization’s objectives and the best strategies for achieving them. To put it more simply, it is an outline of the path you intend your business to take and how you intend to follow that path.
However, creating a thorough, meaningful, and actionable business plan can be difficult and time-consuming. Writing the plan requires significant research, and it can take time and attention away from other needs. Consequently, some entrepreneurs prioritize simply getting the business started and choose to maintain flexibility when it comes to the company’s subsequent development.
Every business is different, of course, and this approach may work for some. Broadly speaking, though, a business plan is still one of the most effective ways to establish a strong foundation for your company—one that pays off with many vital benefits.
For example, the process of researching and writing a business plan can sometimes reveal potential problems. Even the simple exercise of outlining your business’s strengths, weaknesses, opportunities, and threats (the ever-popular SWOT analysis) can be enlightening.
Many banks and investors require a written business plan before lending or investing. Furthermore, a carefully thought-out business plan can also help define short- and long-term goals for the business and the methods for measuring the level of success in reaching them.
What’s more, by carefully examining each aspect of a company at its beginning, one can structure that business to create the maximum level of tax advantage for the owners.
Finally, and just as importantly, your business plan provides a means to measure your business against others in the industry and identify areas of improvement. By including milestones you want to reach, you can maintain accountability to your long-term strategy and keep your company on track.
If this sounds like a no-brainer, it may surprise you to learn how many businesses are not diligent about budgeting. In fact, a 2018 survey revealed that 61%, or nearly two-thirds, of businesses, did not create an official, documented budget at all that year.
Although this was most prevalent in businesses with ten or fewer employees, 21% of larger firms still reported operating without a formal budget.
In almost any imaginable case, skipping the budget is ill-advised. The key to managing most businesses is balancing revenue and cost-effectiveness. Without a clear-eyed understanding of how this balance applies to your business, you are likely to create unnecessary challenges and endanger the organization’s financial health.
Moreover, without a budget, you have no perspective on your company’s financial decision-making, no ability to measure your performance over time, and no way to ensure your company can meet its financial obligations.
With a budget, on the other hand, you can reduce your costs, ensure your resources are appropriately allocated, and assess whether or not your company met its goals.
The life cycle of a budget breaks down into four phases:
A good business plan can help prepare your budget. After all, if you’ve already set realistic goals and priorities, it will make it easier to allocate available funds. You should also study industry forecasts and analysis, as well as any financial data or statements your company has generated.
Use this information to help anticipate revenue and expenses, and break your estimates down by month, quarter, and fiscal year.
During the execution of your budget, be attentive to whether or not your estimates are accurate and whether you need to make any changes. If revenues are lower than you anticipated, you discover something new about your customer base, or if something unexpected occurs, you may need to make adjustments.
Think of your budget as a living document, which you can modify as needed.
Evaluate your budget regularly during and after execution, and apply any lessons you learn to your next budget.
Internal control procedures are there to safeguard the assets of a business.
Without them, dishonest employees or owners can misappropriate cash, property, or supplies with little effort. But with a few simple rules and systems in place, you can safeguard your business and improve operational efficiency.
Here are some examples of policies you might consider.
Small businesses often operate with a small staff. This can lead to the same individual conducting multiple duties. In turn, this can allow that individual to conceal theft very easily. Separating those duties by having different people perform them can assist in detecting the misappropriation of assets.
Some examples of duties that you should have different people perform include:
Suppose your business is not able to hire sufficient staff to properly separate duties such as these. In that case, the increased involvement of owners and management in daily operations can also be effective.
Often, schemes to steal from a business require the thief to be there in person, manually perpetrating the scheme. A mandatory vacation policy, however, would force the perpetrator to spend time away from work. This may allow you to uncover the system during daily operations.
To be effective, mandatory vacations should be a minimum of two weeks. During this time, the vacationing employee should have no access to the business or its records.
If an employee or owner believes they are unlikely to get away with embezzlement, they are much less likely to choose to embezzle. Creating an environment of detection is the process of alerting all employees and owners that systems are in place to detect embezzlement and theft and that you will prosecute such acts if perpetrated.
You can accomplish this through training, one-on-one conversations, and establishing a hotline that employees and owners can use to report suspected theft.
Backgrounds checks can do more than just screen prospective employees for criminal history. Many background checks also include credit histories. This can help uncover any financial conditions which might motivate an employee to steal from a business.
Guiding an organization to success takes dedication and hard work, and nobody is born with excellent business management skills already ingrained. There are plenty of pitfalls along the way and many potential mistakes.
But with the right information and guidance, you can approach business management with confidence…and lower levels of stress!
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Above & Beyond
New York City
2 West 45th Street, Suite 1208
New York, New York 10036
565 Taxter Road, Suite 105,
Elmsford, New York 10523
Jeff Coyle, CPA, Partner of Rosenberg Chesnov, has been with the firm since 2015. He joined the firm after 20 years of business and accounting experience where he learned the value of accurate reporting, using financial information as a basis for good business decisions and the importance of accounting for management.
He is a diligent financial professional, able to manage the details and turn them into relevant business leading information. He has a strong financial background in construction, technology, consulting services and risk management. He also knows what it takes to create organizations having built teams, grown companies and designed processes for financial analysis and reporting.
His business experience includes:
Creating and preparing financial reporting, budgeting and forecasting.
Planning and preparation of GAAP and other basis financial statements.
Providing insight on financial results and providing advice based on those results.
Jeff also has a long history of helping individuals manage their taxes and plan their finances including:
Income tax planning and strategy.
Filing quarterly and annual taxes.
General financial and planning advice.
Prior to joining the firm in 2015, Jeff was in the private sector where he held senior financial and management positions including Controller and Chief Financial Officer. He has experience across industries, including construction, technology and professional services which gives him a deep understanding of business.
Jeff graduated from Montclair State University, he is a CPA and member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountants and New Jersey State Society of Public Accountants.
Jody H. Chesnov, CPA, Managing Partner of Rosenberg Chesnov, has been with the firm since 2004. After a career of public accounting and general management, Jody knows the value of good financials. Clarity, decision making, and strategy all start with the facts – Jody has been revealing the facts and turning them into good business results for more than three decades.
He takes a pragmatic approach to accounting, finance and business. His work has supported many companies on their path to growth, including helping them find investors, manage scaling and overcome hurdles. His experience and passion for business reach beyond accounting and he helps businesses focus on what the numbers mean organizationally, operationally and financially.
He has a particular expertise in early-stage growth companies. His strengths lie in cutting through the noise to come up with useful, out of the box, solutions that support clients in building their businesses and realizing their larger visions.
Prior to joining the firm in 2004, Jody was in the private sector where he held senior financial and management positions including General Manager, Chief Financial Officer and Controller. He has experience across industries, which gives him a deep understanding of business.
Jody graduated with a BBA in Accounting from Baruch College, he is a CPA and member of the American Institute of Certified Public Accountants and New York State Society of Certified Public Accountants.
In addition to delivering above and beyond accounting results, Jody is a member of the NYSCPA’s Emerging Tech Entrepreneurial Committee (ETEC), Private Equity and Venture Capital Committee and Family Office Committee.
He is an angel investor through the Westchester Angels, and has served as an advisor for many startup companies and as a mentor through the Founders Institute.
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