| 3 Hidden Costs That Are Eating Away At Your Budget

Posted in Finance at 9:00 AM by Loftis Consulting

In this piece, we’re talking about three hidden costs that could be eating away at your business budget, and how to solve them. Take a look at the points below for more info:











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Phone Bill

It’s ironic how many companies neglect their phone bill when they actually make lots of calls every day. In a world where there are so many different communication methods, phone calls are still seen as the most personal and preferred method of contact for a lot of businesses. As a result, your office phone bill can soon ramp up and be very costly indeed. It may not seem like much, particularly when the cost per call is so small, but every month these calls could eat away at your budget. Plus, it’s even worse when you spend a lot of money calling your other offices across the country or even across the world. If you’re an international company with branches in different countries, you could suffer international call costs that are huge.


So, what are the solutions to this problem? For one, you could try and use other means of communication where possible to cut down on calls. Secondly, companies like eSudo LLC offer VoIP services that mean you can make calls to your other offices via the internet. As a result, you no longer pay for those calls. Trim this hidden cost and your budget will be in better shape.

Energy Bill

Yet again, another utility bill that businesses don’t pay much attention to is their energy bill. As a company, you will use up lots of energy in your premises every day. So much so that your bills can be massive. Think about all the electronics you use on a daily basis and the costs soon add up.


But, you can reduce these costs by being smart and undertaking green business practices. Unplug things when they’re not in use, avoid turning on the heating or AC unit, and opt for more energy efficient lighting. All of this will bring your bill right down, and save your business some money.








(Pic source: http://bit.ly/2jmrCQE)


The final hidden cost isn’t a bill, but it is something you will pay for! Mistakes are made in every line of work, and they can end up being very costly. If someone makes a mistake, then it often means the work has to be done again. In some businesses, this means using up twice the amount of resources just for one task, and these resources cost money. Small mistakes can add up and cost your money a lot of money over time without you even realizing it. Whereas, big mistakes can cost you loads of money all at once.

How can you avoid this hidden cost? The idea is simple; stop making mistakes! It can be hard to do this, but you need to be more thorough in checking your work and checking that everything is ready before you undertake a task. Make sure you know exactly what’s needed of you, and you can avoid mistakes. Also, communicate more, as a business, so people are on the same page and fewer mistakes are made.

Don’t allow these hidden costs to eat away at your budget. Fix them, save money, and keep your finances in good order.

| Big Ideas To Boost Your Profits

Posted in Finance at 9:00 AM by Loftis Consulting

Profits get a bad rap in the press for being a symbol of greed. But profits are nothing of the sort. As Elon Musk puts it, they’re simply a way of keeping score, telling you whether you’re doing something that’s worthwhile or not. Increasing profits in the name of the game in business and there are all sorts of ways to do it. Here are some big ideas to boost your profitability.


Utilize Resources to Their Maximum Extent

Small businesses don’t usually have a lot of money to throw around. In fact, most small businesses are cash-starved, meaning that their profitability often requires their long-term bets paying off. In light of this, it’s imperative that small businesses focus on utilizing resources to their maximum extent. But what does that mean in practice?

For starters, it means knowing exactly what ROI you’ll get for a particular investment. Melinda Emerson, a management guru, says that she never employs anybody unless she knows their potential ROI. It’s imperative, she says, that each person hired at a small business is able to add overall value

She also points out that it is important to buy durable equipment, like anti-fatigue matting, to reduce depreciation. Every time companies spend money on new equipment, they’re eating into their profits.


















Have Monthly Sales Goals

Having monthly sales goals is a great way to keep track of whether or not your business is on track. Emerson says that having a monthly sales log is a process you’ll want to start early on in your business. It’s rare, she says, to be a profitable business without having sales targets in mind, as these are what drive people in your organization to succeed and win as much business as possible.


Be On the Lookout For Efficiency Gains

Businesses aren’t government departments. They don’t have the luxury of staying in operation, no matter how high their expenses rise, thanks to getting paid by taxpayers. Instead, they have to manage their revenues against their costs and make sure that the latter do not exceed the former. When it comes to profits, businesses have two options: they can either increase revenues or reduce costs. Increasing revenues often includes a lot of risks – like a marketing campaign which could go wrong- but reducing costs is usually a safer option. There are usually dozens of ways that you can save costs around your business. Could you lower your banking fees by switching to a different provider? Could you save money on SaaS products you don’t use often? Could you lower your IT expenses by outsourcing to a third party company? Could you save money by swapping out light bulbs for something that uses less electricity?


Evaluate Your Pricing Strategy













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There’s a reason businesses segment the market: they know that different groups of people will be willing to pay different amounts for the same service. Thus, it’s important that companies seek out these profit opportunities wherever possible. For instance, if you’re a software company, you could offer a slightly pared-down version of your product to students in exchange for a lower price in order to access that particular market.




| Four Things You Shouldn’t Cut From Your Business Budget

Posted in Finance at 9:00 AM by Loftis Consulting

I know, I know! There’s so much pressure on small businesses to cut things out of the budget and make saving these days! It can be super hard to know what to keep and what to get rid of especially when there is so much pressure to get the best out of absolutely every bit of money. But when you have to look at making these dreaded cuts, bear in mind that getting rid of some things is just not worth it. Read on to find out more.



OK, so you have to make some cuts, and you think, how dirty could our office possibly get? Or maybe ‘so and so’ could do a quick clean up and empty the bins before they go home, that will be a good money saving idea. But stop! Actually keeping your office clean is way more important that you realize.















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Firstly it’s where you customers come to see you, so you really want it to look its best and maintain your professional image at all times. That is why it’s essential to keep your contract cleaning service on, despite making cuts.

Secondly, when lots of folks work together in one place, the opportunity for sharing germs it’s so high. So do you really want to be cutting out the only barrier that you have for this? Is so, then you should think carefully about how many people are taking sick days now and the effect that getting rid of your cleaning service could have on that.



Another area in which you should try and avoid cuts is your marketing budget. This is because no matter how confident you are in the product or service that you offer, you aren’t going to sell as many as you could if your customers don’t know that you’re out there.

Did you know that most leads come from marking, rather than the customers finding your products or service first time, or even being referred to you by another happy customer? You have to make this search work in favor of your company and not your rival. So that is why as always worth keeping some budget in reserve for marketing purposes.


Staff Rewards

OK, so you might think that cutting staff rewards is a great way of saving money. Not only are you paying less out, but you are passing some of the losses that your business has incurred on to your employees. Which will surely make them work harder?

Wrong! All it’s like to do it make them even more demotivated. Especially the ones that were trying as hard as possible anyway! Steer clear of this false economy wherever possible, and try to keep your workforces’ spirits up, as this will have a positive effect on your business.



Something else that you should never scrimp on is accounting services. Come on, unless you have been trained as an accountant, it can be almost impossible to make heads or tails of all of those figures!

That means accountants are one type of business professional that you should always use. This is because you do need someone that can effectively interpret the numbers, or else you won’t even know whether you need to make any savings or not! Or when there are more resources to invest in other areas of your business development.

| Question of the Week: Can My Business Pass a Financial Stress Test

Posted in Cash Management, Finance at 9:00 AM by Loftis Consulting

In the banking industry, U.S. banks must pass the Federal Reserve’s annual stress tests to make sure they can use their cash for reinvestment in their own stock, to pay out dividends or even acquire other banks.  If they don’t pass the Federal Reserve’s test they do not get to do any of those things and must work on getting their financial house in order.

A financial stress test is a tool you can use in your own business.  A financial stress test is way to gauge if a business can remain viable if certain negative situations occur that cause it to run into trouble. These tests are usually modeled through ‘what if’ scenarios such as low risk, moderate risk and high risk situations.  For example, if interest rates doubled (a high risk scenario) what would be the impact on your business and would it be able to survive in a high interest rate environment. Would your business have enough capital readily available to weather the storm?

Here are five things you need to do on an annual basis to see if your business can pass a financial stress test:

  1. Calculate financial stability – How risky is the business’ revenue stream and related expenses
  1. Determine debt-to-income ratio – How much of business earnings will go to pay off debt which provides insight into the business’ debt burden
  1. Determine free cash flow – After paying bills how much cash is truly available to reinvest in the business
  1. Determine liquidity – Measures the level of assets available to payoff existing short-term obligations
  1. Determine risk mitigation factors – What does the business have in its arsenal to lower its business risks


Keep in mind, the fact that your company is making money today does not mean it can remain profitable if there is some shift in your product or service offering as well as the general economic environment.

If you need assistance with developing your own stress test, give Loftis Consulting a call at (312) 772-6105 or visit our website at LoftisConsulting.com to learn more.

| The Right Protection for Your Business Assets

Posted in Finance at 9:00 AM by Loftis Consulting

Investing our money into a business comes with a lot of worries. What happens if we lose that money? What happens when that expensive piece of machinery we bought breaks down and is beyond repair? What if someone burgles our business premises? These questions are all too common when it comes to planning your business, and there are far too many concerns to worry about. Luckily, there are ways to protect your business assets no matter if they are physical, on the internet or part of your property.










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Protection for Tools

Whether you’re self-employed working on a per-contract basis or a large business that deals with many clients at once, you need to protect your tools of the trade. It could be computers, drills, cars or even animals—you need to protect them so that you don’t risk them failing or losing them. You can do this a number of ways and it depends on the type of assets you want to keep an eye on.

For instance, if you have invested heavily in power tools and DIY equipment as a contractor, you need to buy some sturdy Platt cases to keep them safe from weather damage and being lost. In addition to protecting them physically, you also need to ensure that you have a warranty plan in place should some of the items you order be ruined or go out of commission. Make sure that they are insured as well if it’s a large piece of machinery, and keep in touch with repair and maintenance services to keep them well-oiled and running properly.










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Security Measures

If you operate a retail store that sells a lot of fancy equipment or expensive electronics, then you better have security guards and solid display cases to prevent people from coming in and robbing your place. If you aren’t entirely sure how to do this, then hiring a security specialist should come first. Once that’s in place, you can contact security professionals and experts to give you advice on how to properly deal with security measures. For instance, installing scanners at the entrance and exit of your store and attaching sensor tags to your items is one way of deterring thieves.

Another option is to have security cameras installed. There are times when crafty thieves will be able to get around your security measures, and the only way you’ll realize if something has been stolen is during a stock check. With cameras, you can constantly monitor your store or business premises and track down thieves who think they can get away with stealing from your business.


At night, your warehouse or business is also susceptible to burglary. It’s a good idea to install alarm systems in your premises and tell your employees the code to unlock it so that when they open and close the store, they know how to set the alarms before they leave. These systems can be linked with the local authorities so as soon as they notice something wrong with your business premises, they will dispatch someone immediately to check it out.

| Don’t Let The Green Get You Seeing Red

Posted in Finance at 1:00 PM by Loftis Consulting

Few things about running a business are simple. The business finances can sometimes be the most complicated of them all. Failing to properly structure your approach to them won’t just mean you spend a lot of time untying all the knots. It can also get you in trouble if you are late in invoicing, or even worse, late in payroll and 401k payments. Here, we’ll look at how to keep your finances straight and simple.












Get a Bookkeeper

If you’re having trouble staying on top of expenses, costs and the money coming in, you can be in trouble of losing a grasp of how well your business is doing financially. You could even be straying dangerously far from your cash flow projection. If you can’t keep a handle on your finances in the real time, it’s a good time you could use a bookkeeper. You can even use telecommuting bookkeeping so you don’t have to have them in the office itself.


Create a Schedule for Yourself

Don’t leave things to the last moment. That’s an easy way to find yourself lacking the money you need or missing important dates. Create a financial calendar that sets aside time every day. That time can be used for processing invoices and following up late ones. It can also be used for the big tasks like getting your tax accounts in order a piece at a time so you don’t have to rush to do it all. You can make the schedule more manageable by automating some of those financial tasks, too.











Don’t Be Afraid to Get Some Help

Learning about your finances and keeping control of them is important. But that doesn’t mean you have to try to handle it all yourself especially if you’re liable to get in trouble if you’re not able to keep up with it. For instance, if you might have trouble staying compliant in how you handle retirement contributions, a safe harbor plan can ensure you’re not missing anything. Just as you shouldn’t be afraid of getting a tax consultant to help you ensure you’re paying what you should be. When the law and compliance are involved, it’s better to be safe than sorry.


Separate the Personal and the Business

When you start a small business or start working for yourself, it’s easy to just treat all your finances as one big lump sum. When you’re looking to get exemptions of certain business purchases and straightening yourself out for tax season, however, that’s going to bite you in the real. Creating separate accounts makes it a lot easier to separate the personal from the business. Otherwise, you will have to go through those costs one by one in future, trying to remember why you spent that money.

The use of the right tools, the right organization, and even the right help is going to make it a lot easier to stay on top of your finances. Meaning you will have more time to do the jobs that actually make you money.

| Why Your Business Needs to Use Data Analysis to Grow

Posted in Finance at 5:00 PM by Loftis Consulting

Trying to figure out what is going on in your business? Many businesses overlook the data they have in-house gathered from their sales register, payroll and other systems.  With the right analysis, this data can take the business to the next level.  Companies now days have so much information on customer buying habits, employee processes, sales metrics and so on but most companies don’t know how to use this information to grow their business.  This is where your finance team can help.

Finance employees are used to looking at data to put together your business financial statements but that is just reporting the numbers. The next evolution of your finance team should be to interpret the data for decision-making purposes to move the business forward.

Here are some ways the finance team can help you with informed decision-making using data analytics:

  • Determine the revenue and expense drivers of your business and select one or two metrics for each to track. For example, for a manufacture it could be machine downtime or an online store could be conversion rate of online visitors.  Whatever drives the sales and expenses of your business should be tracked with goals set for improvement in three, six and twelve month cycles.
  • Make the process of collecting and analyzing data simple. If it takes too long then the analysis may be stale by time it is presented to management. If getting the data is too cumbersome then new systems may be warranted.
  • Don’t be scared to get outside help to take your finance team to the next level. If the skil lset for analyzing data is available with your existing team bring in outside help to train the team and develop processes and metrics to track.

Loftis Consulting, an outsourced CFO resource can help analyze your data to help your business make better decisions to grow revenue and lower expenses. Give us a call today at (312) 772-6105 or visit us on the web at LoftisConsulting.com.

| Meeting Your Business Needs

Posted in Finance at 1:00 PM by Loftis Consulting

Business can be a tough life – what makes it so much tougher is that it’s your decision to run a business and you’re the person responsible for it. It can be difficult to meet the needs of your business sometimes whether that means money or the day-to-day running of the business.

Firstly, be sure to constantly seek advice from the right people. In business, being told what you want to hear and seeking the people who will go ahead and tell you what you want to hear is a recipe for disaster. You need constructive criticism and to hear what you need to hear, not the words you just want to listen to. It’s not just about listening, though; it’s about learning. There are plenty of places where businesses can go wrong – study the big cases and lead your business appropriately. Stay humble, educate yourself and conduct your business with passion and character.











It’s never a bad idea to set your goals and look at the big picture of your business. Set goals that will detail your financial goals, profit, business goals such as bringing in new customers or building new products. Some goals could include recruiting and training new employees for your business. These are goals that need to be clearly defined so you can achieve it. Success might very well be elusive if you can’t visualize clear goals for your business. If you are struggling to define a set of goals ask yourself how you want your company to look and run in a year. This type of assessment doesn’t have to only happen every year – it’d be a good idea to reassess and evaluate the path towards your business goals on a monthly basis.

Money can be a problem with a business, and it’s essential that you aim to break even, if not make a profit. Keep a full record of your outgoings, of course, and make sure every financial transaction is recorded and secured, so your business doesn’t come under any kind of scrutiny.

Giving your customers as many options to pay you as possible is a great idea. Offering to take credit card payments, bitcoin, PayPal and others are a great start. Offering subscriptions for monthly recurring services will ensure you get your money as well. In some cases, if you’re dealing with customers on a large scale you could look to sell your invoices or accounts to a factor which will give you cash for accounts indebted to your company with a site like Factoring Directory. There is plenty of information out there so there are a lot of ways to make ends meet.

There are plenty of businesses you can create, there are plenty of roles you can fulfill and there are a lot of ways you can push your business forward. No matter what, you’ve got to identify the needs of your business and work to meet those needs.

| Limited Liability Company (LLC) Legal Structure Defined

Posted in Finance at 5:00 PM by Loftis Consulting

The limited liability company (LLC) is a hybrid type of legal structure that provides the limited liability features of a corporation but the tax efficiencies and operational flexibility of a partnership.

The owners of a LLC are referred to as “members”.  Depending on the state, the members can consist of single individual (one owner), two or more individuals, corporations or other LLCs.  Unlike shareholders in a corporation, in most states LLCs are not taxed as a separate business entity.  Instead, all profits and losses are passed through the business to each member of the LLC. Members report profits and losses on their personal tax returns just like the owners of a partnership would.


A LLC has the following key components:

  • To form an LLC, you must file the appropriate documents with your state
  • Single owner LLCs operate like sole proprietorships but have the protections of the LLC from unlimited personal liabilities.
  • Outside investment not allowed for single-owner LLCs
  • For multi-owner LLCs, continuity and transferability are determined by the organizing and operating documents and may impact the LLCs ability to choose corporate or partnership tax status
  • Liability rules are similar to corporate shareholders in which members are not personally liable for the debts and liabilities of the LLC.
  • If LLC is treated as a partnership for tax purposes, active members pay quarterly estimated self-employment taxes.
  • Inactive members are not subject to self-employment taxes

To learn more about other business legal structures check out our post “Question of the Week: How to Pick the Best Legal Organizational Structure for Your Business“.

To learn more about how Loftis Consulting can help your business profitably visit our website.

| Corporation Legal Structure Defined

Posted in Finance at 1:00 PM by Loftis Consulting

The corporation legal structure can either be a C Corporation or a S Corporation.

A C Corporation is considered a separate legal entity from its owners and has the following key components:

  • The business is required to file corporate documents with the state annual along with a paid fee.
  • Separate corporate bank accounts and records from owners. Keep in mind if personal assets are co-mingled with corporate assets, the owner may lose personal liability protection from corporate lawsuits.
  • Assets and income generated by the corporation are owned by the corporation
  • Corporation required to pay federal, state and in some cases local taxes
  • Must register with IRS, state and local revenue agencies.
  • Tax ID number required.
  • Pay income tax on corporate profits and then pay taxes again on any dividends paid out to shareholders on their personal tax returns
  • Shareholders who are also employees must pay income tax on their wages
  • To form, the corporation must file articles of incorporation with the state
  • Can issue different classes of stock and bonds

A S Corporation has a Subchapter S designation from the IRS and has the following key components:

  • Charter a business as a corporation in the state where it is headquartered
  • Profits and losses can pass through to the owner’s personal tax return and thus the business is not taxed itself, only the shareholders are taxes.
  • Losses are limited to the shareholder’s basis
  • Shareholders can be paid wages, receive distributions of profits or a combination of wages and distributions.
  • Can issue one class of stock to up to 100 shareholders

Under either corporate structure, the organization exists in perpetuity if one or more owners die and ownership can be transferred by sale of stock.  In addition, shareholders are generally liable only to the extent of their investment in the business but management generally incurs some personal liability.

To learn more about other business legal structures check out our post “Question of the Week: How to Pick the Best Legal Organizational Structure for Your Business“.

To learn more about how Loftis Consulting can help your business profitably visit our website.

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