Bizzalley's Business Q&A
Bizzalley's Answer-Financial management in any business, start-up or established, stands just beside product and service excellence. This means your finance is to be managed with as much care and patience and expertise as your products and services are rendered. If you’re low on capital, you can manage your finances with QuickBooks or Excel by yourself as a startup but getting a bookkeeper or temporary CFO is a way better, safer and more efficient way to handle your finance.
Bizzalley's Answer-One major way to avoid falling into heavy debt is down payment. Always have a clause for a down payment for every service provided to clients. This is very effective because the down payment includes cost price and a little bit of extra for your work. Sometimes customers change their minds or get involved in something else and the down payment is what protects the business and keeps the entrepreneur from paying other people’s pain.
Q)Are credit payment options a good idea for a startup?
Bizzalley's Answer-As a startup, you are trying to utilize your capital and still make the profit at the end of the month. You definitely do not need people owing you. If you have provided a product or service, payments need to have been provided too. However, giving a strict timeline for payment can help. For instance, if you agree to provide your services or products on credit and give a ten-day payment timeline, the customer feels like they are special enough to be trusted and as such will always come back but at the same time, the timeline will serve as a constant reminder.
Q)How do I prepare the perfect budget for my business?
Bizzalley's Answer-As a startup, creating a budget can be challenging because so much data is still unknown. So much educated guesses will have to be made in areas of:
• Yearly sales
• Annual sales growth
• Product pricing
• Production cost
• Operating expenses
• Salaries to employees and self, benefits, payroll and total staff needed.
• Income tax rate.
• Payment methods for customers
• Amount to be borrowed, collateral and interest rate.
It is always better to have extra than to run out of fund so when you ask yourself these
questions, remember to always stay higher than lower.
Q)How can I further equip my employees with a low budget?
Bizzalley's Answer-Employee training doesn’t have to be expensive and bulky. Work with your budget and good training centres. Instead of sending your employees away for months to a school, send them to off-sites, one-day seminars sponsored by organizations like the American Management Association and local colleges.
Q)What strategies can I employ to keep my taxes as low as the law allows?
Bizzalley's Answer-Sometimes taxes can be a pain especially when your profit isn’t as large as expected but taxes are larger than ever. There are a few tax planning opportunities that are perfect for businesses which will help you save a lot of money that would otherwise be paid as tax. For instance, if you, the owner buys an asset personally and then rent it to the business, the business can deduct the payment from its tax return and you can enhance your benefit through interest and other expenses. Also, things like health and welfare trusts, Estate freezing, retirement compensation arrangement and so many others can be very beneficial to you, your business and your employees.
Bizzalley's Answer-Selling your assets in a business is a quite complex thing but following a simple methodology can help a great lot. Assets are usually one-two sets – those with diminishing market value and those with lifetime market value. Now if you have assets with diminishing market value, it is always best to sell them as soon as possible and get off it a portion of the cost price. However, an asset with a lifetime market value should not be sold. Look at them as lifeboats you keep for when the ship is sinking. So you use them regularly to further help your business and if for any reason, you find yourself knee deep in debt then you can sell these assets to save yourself.
Q)Do I get an investor or invest my own money?
Bizzalley's Answer-The truth is, investors are not always great. Once you get investment, you no longer own all of your company. You no longer have the authority to run things according to your discretion. You are now a part of a team from whom you need permission to do things. Investors write Cheques to get a huge chunk of your company and sometimes, they go as far as eventually squeezing you out and taking it all. So if you have enough capital from your personal money, it is always best to invest your own money. Besides, if you don’t believe in your company enough to invest your money, why should others?
Bizzalley's Answer-Expenses in business is unavoidable but they can be managed. Have a scale of preference and spend on the most important first, all in moderation. For instance, customizing 500 metal business cards for $1,000 dollars when you can get normal cards for $10 is a complete no. So in essence, exercise moderation in all expenses. In addition, weigh all risks before engaging. Get professional advice too so you don’t invest in a scam and loose so much capital.
Bizzalley's Answer-The key to this is the ability of the business to successfully operate and even thrive in your absence. To achieve this, you need a well developed and trained team staff. This team must
be able to replicate your products at the same high quality without any input from you. Gradually separate yourself from the day-to-day activities sometime before retirement and let your team staff do most of the work. Also, transitioning from a “lifestyle-based” business to an “equity-based” one keeps your business from falling when you retire and remember to
transfer power to the best member of your team staff and not just someone who doesn’t have much experience in that field.
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