| Don’t Fail To Prepare For These Potential Cash Flow Issues!

Posted in Cash Management at 5:00 PM by Loftis Consulting

New business owners are often taken by surprise by unexpected cash flow issues. Problems of that nature can cause serious concerns for any company. The last thing you need is to discover there isn’t enough money in your accounts to pay your suppliers. When that happens, you have to ask for an extension. Before you know it, you spiral into a financial situation that’s difficult to resolve. With that in mind, we wanted to offer some advice today that you can use. Hopefully, the potential issues mentioned on this page will give you a heads up. If you prepare for these events and keep extra cash in your accounts, you can weather the storm. So, pay attention, and put this information to good use as your business grows.












Credit Card Chargebacks

Chargebacks occur when someone calls their credit card company and asks them to reverse a transaction. That can happen when one of your customers isn’t happy with their purchase. It can also happen when someone just wants to play games and cause trouble. It’s a major issue for you because it means money can leave your accounts without notice. The credit card companies won’t contact you in mind instances. They will just send the cash back to the original account. Chargebacks are a real pain for business owners just starting out. For that reason, it makes sense for you to keep all funds in your bank for at least a couple of weeks after each sale. That way, you won’t miss the money too much if it disappears. Don’t rely on that income until you’re 100% satisfied the customer received their item and you avoided any problems.













Employee Injuries

Like it or not, someone could become injured when working for your company. When that happens, they will often make a claim for compensation. The money is designed to cover their loss of earnings and any medical bills. The process can become costly because you will have to pay for legal representation. You will also lose the worker until they recover, and that means your team is one man down. To limit the number of times that happens, you must place emphasis on adequate health and safety precautions. You should manage to avoid all workplace injuries if you get things right. As you’re just starting out, you might require some assistance. Thankfully, there are professionals you can pay to come to your office or warehouse and perform assessments. They will then offer advice on the best course of action.


Fines from the Government

Depending on the nature of your operation, you might have to pay government fines at some point. That is especially the case if your processes are deemed to harm the environment. There’s a big push towards green technology these days. So, maybe you should consider changing the way you work? Whatever you decide, make sure you research the potential fines you could encounter ahead of time. That way, you can ensure there is always enough money in your accounts to cover them. Of course, the best thing to do involves avoiding the penalties altogether. So, now is the time to perform as much research as possible. Regardless of your business model, there are always ways in which you can protect your interests. Even if you have to spend money upfront, it’s better than getting into trouble with the authorities.













Other Legal Issues

There are a million and one different legal problems that could affect your company. Considering that, you need to build a relationship with an experienced lawyer. If you do that, they will often let you pay for their assistance in monthly installments. That should stop the expense from affecting your cash flow too much. At least you will know how much you have to pay at the end of each month. There might come a time when another business owner claims you’ve infringed on his copyright. Court cases of that nature can take a long time to reach their conclusions. So, you need a reasonable specialist who won’t expect the payment upfront. Of course, you still need to keep a close eye on how many hours that person works on your case.

Now you know about some of the most common cash flow issues, we hope they won’t take you by surprise. There are lots of other things that could affect your operation. However, the instances mentioned on this page are by far the most likely. With that in mind, learn from the advice, and keep as much cash in your accounts this year. Failure to do that could mean you end up back at square one. That would be a shame after all the effort you’ve made thus far.

| Small Business Owners: We Need to Talk About Fraud

Posted in Finance at 4:00 PM by Loftis Consulting

All over the world, fraud accounts for approximately $3.7 trillion of losses to businesses and economies, and the typical business loses around 5 percent of their revenue. While huge corporations can often handle those losses with ease, the reality for small business owners is that it could be the difference between survival and folding. And given that small businesses simply don’t have the security budgets of the bigger companies, that 5 percent figure is likely to be even higher. The big question is, what can small business owners do about it? We’re going to take a closer look at fraud and how it affects small companies – and go through a few solutions.












System Integrity

First of all, if you want to stop external hackers getting into your system, it is almost impossible to stop them if they have enough determination. The good news is that hackers, like burglars, much prefer easy targets. So, if your small business ensures you invest in even the most basic of firewalls and antivirus programs – and keep them updated – the majority of hackers will look elsewhere. Make sure you are making daily backups of all your data, too, and ensure you have robust encryption in place. If you are using the cloud services that are available these days, it’s vital to ask rigorous questions about how they treat security issues.


Employee Training – and Checking

It’s not just external fraudsters that can get into your business – your employees could be party to a lot of confidential, valuable information. Sadly, there are plenty of examples of employees who steal data and use it for their own purposes, so make sure that you are only giving data access to staff on a need to know basis. There are also plenty of ways an employee can make a mistake, so tight training on security is essential – even for basic administrators who might leave access open by leaving their computers logged in overnight, for example.


Mobile and Devices

If your company has an app that your customers use, make sure there are sound checks in place if valuable information is used. Nothing to do with making payments, for example, should have a lot of protection – you can try using an identity verification service if needs be. Mobile payment systems need to be watertight, too, and only allow payments from registered and recognized devices and accounts. Cybercriminals could be into your system in a flash without robust protection, and there are threats to contend with everywhere.


Inventory Management

It’s not just cyber security you need to worry about. Your stock is worth a lot of money, and theft and fraudulent ordering are a real threat for small business owners. Make sure that you are making regular spot checks and inventory counts, and take advantage of high-quality, highly secure management systems to control your flow of stock.

Whatever industry you are in, fraud is a serious issue for small business owners. It is essential that you put the right protections in place anywhere that valuable information or money changes hands. Failure to do so could result in an embarrassing PR disaster or even severe legal consequences.

| When Business Budgets Strike Back

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













The trouble with starting a business is that it can cost quite a lot of money. In fact, the average for the costs of a start up in the first year is close to thirty thousand dollars. That’s crazy when you think about it because there’s a good chance you have nowhere near that much in your savings. And you will be using your personal funds to pay for the company, at least at the beginning.

Although, as it turns out that first payment is just the first problem you’re going to encounter with costs. You will also need to think about whether you’re getting a quality service from the companies that you’ll be paying to keep your business running. On top of this, there’s the issue of taxation. A lot of new business owners completely forget that they’ll have to pay tax as soon as they start making money and list doesn’t end there.

Let’s look at some of the great issues you’ll face with business finances and figure out how to handle them effectively.


Getting the ROI











Credit Source

Getting a solid return on investment is crucial if you want your business to be a success. You need to make sure that you make money from whatever you buy in the long run. A good example of this would be hiring your first employees.

When you hire your first team members, you need to work to get the best on the job market. One of the worst mistakes you can make is hiring workers just to make sure you have a team. It doesn’t matter if you have a full staff, if they’re the wrong people for the job, your business will fail.

To ensure you get the best team, you need to work with other people in the industry. In this case, your number one source should be a recruitment agency such as https://www.rec.uk.com. A recruitment agency acts as a gatekeeper, and behind that gate, you’ll find the best talent for your company. But to reach it, you have to be willing to invest a little of your funds into a recruitment service.

This isn’t the only situation where an ROI is going to be important. If you’re running your business from an office, you’ll need to purchase quite a lot of tech. Make sure you are thinking about the long-term benefits of this technology rather than a short term small cost. For instance, you can buy older, second-hand tech at a lower price and immediately cut the costs out of your start up. In the long run, however, this tech could cost you more money because it’s less efficient. You might also find that it breaks down more easily and isn’t as reliable. This is a solid example of why the cheapest isn’t always the best option.


Finding the Funds











Image Source

As already mentioned, your first year on the market will be paid for out of your own pocket. As such, you need to be careful with spending. You’re going to run out of personal funds pretty fast regardless, and at that point, you’ll need to think about loans.

With sites like https://personalmoneystore.com, it’s easy to get small amounts of money fast, and this is your best option. Do not rush to borrow hundreds of thousands that you won’t be able to pay back. Keep the amounts that you borrow small and sweet, that way their easily manageable. Don’t forget, it’s not the overall cost of the loan that you need to worry about. The interest rate is a killer. The bigger the loan, the more interest there will be. Borrow money, pay it off as you go and your business will always stay in the green.











Credit Source

Of course, you might find that eventually, you need larger levels of capital. The best way to get it is to ensure it’s provided by revenue. But you won’t get this level of revenue with the typical customer base. Instead, you need to think about appealing to key players who could take your business to the next level. We can look at an example of this by thinking about a car repair company.

A car repair company will be working with a local customer base. They’ll be repairing cars of individual private customers, but this isn’t where big money is. To get big money, car repair companies need to get a business client. That way, they can work of car fleets and that point you have a massive source of constant revenue. There are possibilities like this in every business model. For instance, a wholesaler could end up supplying a lot of stock to a superstore. This is all about finding the business leads and using them to your advantage. You can read more about this on http://convert.leadforensics.com.


Dealing with Taxes And Unexpected Bills










Image Source

Finally don’t underestimate the danger of taxes in your business model. This might seem like a small consideration, but it isn’t. Taxation can be a big threat to your business if you don’t keep your records accurate. Let’s say you estimate a few of the bills in your first year running your business. This could lead to an audit and a thorough investigation of your company finances. That’s the last thing that you want.

It puts pressure on your business and might ultimately end up with a large bill you weren’t prepared for. To avoid this, you  might want to hire an accountant and you can find one on https://www.sparehire.com. This can seem like an expensive, unnecessary hire, but if it keeps you out of trouble with the IRS, it will be worth it. If you are looking for more extensive services, Loftis Consulting can provide CFO services for cash analysis and long-term business financial planning.

As for other unexpected bills, you always need to adjust your budget to accommodate a few extra thousand. You can use this to fix tech if it breaks down, hire services that you didn’t think you would need and cope with possible loss. Don’t forget when you open your company you will immediately be at risk of hacks and theft. Insurance should provide a safety net but having some extra funds to cope with the short-term repercussions is always a smart move.











Image Source

| Ways You Could Better Prepare For Profits

Posted in Finance at 12:00 PM by Loftis Consulting


Picture Source

Every business wants to make a profit, but not every business understands that to do so requires preparation, organisation and meticulous reinvention when something doesn’t go exactly to plan. You can’t simply roll out a product or a marketing campaign and expect the customers or profits to pour on in; you need to be constantly looking over the company’s cashflow to see ways in which processes could be improved to become more profitable or places in which unnecessary costs are bringing the business down. If you’re wondering how to achieve this, then here are some ways in which you could better prepare for profits within your business.

Do Accounting Properly

Accounting is such a common word in business that many companies simply throw together an accounting department with little thought and don’t realize that not only are they wasting money by over-hiring, but they’re wasting money in that they might be overlooking sectors of the business in which they could be saving or even making more money. Your business might be able to save far more money by outsourcing its accountancy services to one small team, rather than hiring far too many new employees.

You’ll ensure that you’ve got a dedicated sector external to the company which will be striving to reduce energy bills which unnecessarily waste money or even to negotiate fairer deals with the company’s suppliers. There are always ways to make profit, but the answer isn’t always to invent a new product. Sometimes you need people who can help your business look inward and decide how to save money through whatever you’re already doing.

Assess Your Products or Brand

Beyond cost-effective methods, your business should also be looking inwards in terms of a self-assessment of its value. You need to be looking at the brand and its services to determine how valuable the enterprise you’ve created is and what more could be done to push it upwards in the market. You could look into royalty rates for trademarks as a way of assessing how valuable your business’ products or assets already are. You need to be gauging your current success to see if you’re meeting your profitability targets. This is the first step towards a more successful brand, but also a more successful range of goods or services.


Every business owner raves about them and for good reason. You want there to be a substantial increase in the price of your products or services and whatever expenses went into creating those products or services. This is the difference between profiting slowly and quickly. If you’re looking to increase your margins without upsetting customers through unfair prices, there could be ways to cut costs within the manufacturing process. However, it’s more important to maintain quality, as customers are usually willing to pay slightly more if the prices are still in-line with competitors. Of course, as a rule of thumb, the best time to raise the price of your goods is at the point of an increase in demand.

| Give Something Back: Creating a Business-Charity Partnership

Posted in Non-Profit at 10:00 AM by Loftis Consulting

If you have set up a successful business and made some good money, you might be thinking that it’s time to give something back. A good way to do this is to set up a partnership between your business and a charity. It is also a very good way of getting publicity for your company, and improving public relations. Choosing the right charity is vital, as you need to choose something that you think is a worthy cause, and will also play well with your customers. If you are considering setting up a business-charity partnership, here are some key things to consider when choosing an organization to work alongside.










Photo Credit

What Are Your Values?

A good first step is to outline what your priorities and values as a business are. This will help you to find charities that have similar values to your own, and form a natural partnership. You need to be careful that any partnership does not contradict your own personal business goals, even if it is with a charity. Once you have outlined your main values, try thinking about which charities are in line with that.

Your Customers

The opinions of your customers are very important when trying to choose a charity to work with. Do some research into which charities they tend to donate to, and which causes are important to them. If you find any major trends, you can use these to your advantage. For example, if a lot of them are interested in donor brick paving, you could partner with a similar charity. This will benefit you because it will cement your image as a good company in your customer’s minds, and improve brand loyalty. Similarly, you need to make sure that you don’t partner with charities that your customers are not interested in, or don’t consider worthy. If they feel that your company is completely at odds with their priorities, they might think twice about giving you their business in future.

Your Employees

Finding a cause that your employees are passionate about as well is key to starting a business-charity partnership. If they are not invested in the cause, then participation will be low and you won’t get very good results. If you choose something that everybody cares about and is willing to get involved in, you will end up making a lot more money for your chosen charity.

Picking A Charity

Once you have considered all of these factors, you will probably have a shortlist of potential charities to work with. It is often best to choose a local charity, or at least one that has offices nearby, to make collaboration easier. But you need to balance this with the potential marketing benefits of the charity. Choosing a larger charity will get you much more publicity than a small local one that is unknown outside of your city.

It is also important to make sure that you have thoroughly researched the charity to ensure that it is properly registered, and that it is a legitimate charity.

By building a partnership with a good charity, you can give something back, whilst also improving your own business.

| The Profit Protection Guidebook

Posted in Finance at 9:00 AM by Loftis Consulting

A business is only as good as the amount of profit it makes. To do this you need to ensure that it is of course first making a profit, yet also ensure that the profit you do make is protected and allowed to be accrued. This is the same in all businesses bar certain charities, and even they need to make money to ensure that they run properly. The type of business you operate will dictate how you defend your profit, but these are some tips that can apply to the majority of them. You may have even considered some of them, but if not give them some thought to mitigate the issue of lost profit.


Limit Mistakes

Mistakes can be made with ease on paper. Perhaps you have ordered too much of any one given item which now means you’ll be selling at a loss. Maybe you have done the math wrong and you thought you were making a decent profit but have been operating at a loss for the past two months. You can limit these by hiring from a Credit recruitment agency, someone with the expertise required can help you limit mistakes and ensure everything is working as it should. You could also consider some kind of software that you can use to ensure you don’t make mistakes that could lead to potentially disastrous consequences.

















 Use Great Systems and Control

Protect your profit by physically keeping it safe. Use a safe to put the takings in and bank it every day depending on how much you have taken. This is important because if anything happens you are essentially going to be okay because you’re limiting the money that is available to be stolen. You would rather lose a day’s takings than a week. The literal profit is the most important aspect. You need to make sure it isn’t accessible to all of your employees either. You may not think they are thieves in anyway, and they may not be, but it would be better if you didn’t have to find out. Only let those that you trust come near your stacked profits or know the codes for the safe that you use to store it in. Prevention is the best form of protection.


Be Careful With Stock

Many businesses use stock. Those which offer services don’t need to worry too much about it though there still are issues to consider. You need to ensure good processes are being followed. Broken stock eats into profit, as does accepting stock that hasn’t been delivered. You need to stop this as much as possible. There are all kinds of new inventory management software that you can use to help ensure your profits stay healthy. This also applies to things like printer ink and general office equipment. If it is going missing, then you need to look into it. Everything that can eat into your profit needs to be stopped and mitigated as far as you possibly can. Only then can you be comfortable that no mistakes will occur.

| 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:











(Image via: http://bit.ly/2nE1fFn)

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













Wikimedia Commons

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.















Picture here


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.

« Previous PageNext Page »

© Copyright 2003-2011. Loftis Consulting and Financial Management. All rights reserved. | Privacy Policy site by imediawerks