You have a great idea for a small business. You've done all the research, you know there's a need for your product or service and you even have a few great marketing ideas. Unfortunately, you're not exactly a financial genius. You know profit is a good thing and loss not so much. However, when people start asking anything more complicated than are you making any money, you're at a bit of a loss.
 
Even if you employ a top-notch accountant to deal with money matters, it helps to know what position your company is in. To help demystify small business finances, let's look at the basics – P&L and the balance sheet.
 
Profit and Loss Statement
 
At its simplest definition, profit is what is left over after you subtract your costs from your income. From this point, it becomes a matter of going into detail. What are the costs? Are they recurring or once-off? Do you have a single type of income or are there various categories – for example, a property company could get income from rentals, property sales, or investments. Each of these is a different kind of income, or revenue that needs to be shown as its own item on the statement, but counted together, they are all income. Costs could include salaries, consumables, marketing and a host of others.
 
Loss, however, is not the same as costs, or expenses. Loss happens when income minus expenditure results in a negative figure – in other words, when you've made less money than you've spent. This could be because of any number of factors, including unexpected expenses, failure to make enough sales, or a sudden increase in costs. At the same time, loss can be deceptive – for example, just because you haven't sold your inventory doesn't mean it doesn't have value. That's where the balance sheet comes in.
 
Balance Sheet
 
A balance sheet shows your company's overall situation when it comes to assets and liabilities. Assets are anything you own, including income received, property, inventory, investments, equipment, anything that has any kind of value that you owner. Liabilities are anything that causes a drain on your finances. This can include normal operating costs, maintenance fees, even depreciation in the value of fixed assets. The balance sheet takes all these factors into account to show the total balance of equity in your company.
 
Of course, the deeper into company finances you go, the more complex it can seem, but if you can get a handle on these two important statements, you are well on your way to being in control of your own company finances.
 
 

​There is any number of reasons why you could need to know what your business is worth – applying for a business loan, deciding to expand, or to sell out at a profit. You might even be a buyer looking to invest in or purchase a small business, wanting to find out whether it's worth it or not. But how do you accurately assess the value of your business?
 
There's more to it than just looking at your profit margins. We're taking a look at three important things to look at when assessing the value of a small business.
 
Financial Value
 
The first, and probably most logical, place to start is the financial value of the business. This is reasonably straightforward to calculate, although it is advisable to use the services of a good accountant or financial manager to make sure everything is taken into account. The simple calculation is Assets – Liabilities to get the fixed value, plus average profit over the last three years to gauge potential income.
 
Market Value
 
Market value has less to do with its financial value and more to do with whether it has potential to grow beyond its current position. There are several questions you can ask to determine market value:
 
Where does your business sit in relation to other, similar businesses in the market? Who is your target market and what are they doing at the moment? Does your product or service have any unique selling points that could attract investors or buyers? What is the potential for growth in the market generally and this company specifically? If there room for growth or is the market saturated? Look at other, companies of similar size to find out how they have fared in the last year – has there been a significant number of closures in the industry or is it booming?
 
These questions aren't going to give you a financial value, but will help you gauge whether it is worth selling, investing in or buying this kind of company.
 
Reputational Value
 
Even in difficult market conditions, some companies have such a good reputation for customer service, product excellence, market presence, and goodwill that they are a good choice for any investor. Such companies tend to have repeat business based on their positive reputation and relationships with customers.
 
Fortunately, it is a lot easier to find information on a company's reputation than it used to be, say, twenty years ago. With social media, online reviews, publicly available reporting information and even something as simple as email, it is reasonably easy to find out if the company has a good – or bad – reputation.
 
It is always extremely risky to take on a company with a bad reputation, although it is possible to publicize the fact that the company is under new management and that things will change. Counter-intuitively, it can also be extremely risky to take on a company with an impeccable reputation; there is always the possibility that the reputation relies heavily on some seemingly magic combination of factors that could shift under new management.
 
Whether you're the current business owner, a prospective investor or someone looking to buy a business, remember this – the value of a company lies in more than just the money it makes, and a savvy investor will take that to heart.

Best Business Practice – Learning From the Best


Every day, thousands of start-up companies are born. The majority of them will fail, but a few will succeed and it's all because they followed a few simple strategies that are followed by large, successful corporations.  If you're thinking of opening your own small business, or already own one, try these tips to help you grow your business in the right direction.


Management


Whether you're a one-man operation or a small group, effective management is essential for success. For the single-person operation, make sure you manage your time, efforts, resources and relationships with clients well. If you have a few employees, be certain that you are managing them to the best of their ability – ensuring you have people with the right skills for the job, making certain their talents are being used to your best benefit, and keeping an eye on how their time is being used. If you aren't maximising the time they spend at your offices, you need to reconsider how they work.


Service


No matter how big or small, delivering the best possible customer service is absolutely vital. For a large company, one or two disgruntled customers can be managed, placated, or even written off if there's no pleasing the customer. For a small business, the loss of one or two repeat customers can be disastrous. Define your customer service strategy, make sure you and your client understand what will be delivered, how it will be delivered, and when it will be delivered – then stick to that!


Finances


Especially if you're quite busy, it's easy to let the finances slide. Sure, you may be sending out invoices and getting money in, but is that money being properly managed? Are your bills, taxes and salaries being paid on time and accurately? Is there any way you could be investing some of that money to help it grow? If you have plans to expand and need a business loan from your bank, do you have clear cash-flow projections, income and expenditure analysis? Unless you are a financial whizz-kid and are able to not only do your work, manage your company and keep all the finances perfectly in order, you may need an accountant – even a part-time or freelance one.


Skills transfer


One of the greatest risks with a small company is specialisation. The more niche your product or service, the more difficult it is to find the right people to do the work. And even if you find those people, there's no guarantee they will be around forever and if they leave, they take not only their skills, but everything they've learned with them. This can cause a massive skills shortage for your company. Make sure that all knowledge gained within your company is shared, written down, kept alive, so that it can be passed on and not lost along with a prized employee.


Marketing


Effective marketing is absolutely critical for any small business. If nobody knows you exist, they won't be able to use you – it's really that simple. You don't need to spend millions on that marketing, though. Look at current marketing that works – use social media to its best advantage, be present in your marketplace, keep your brand story alive and active. If you find something that works, use it – just don't use it to death, and don't use just that idea.


Keeping a small business running takes plenty of effort, but it can be done. Use these techniques to help make sure your business works, and you could see your company grow beyond your dreams.

The Affordable Care Act, also referred to as Obamacare, is the Obama administration’s tool to address problems within the existing healthcare sector, making affordable healthcare accessible to more Americans through reducing the cost of insurance. But what is the impact of the Affordable Care Act on small businesses? Consideration must be given to lawful requirements and the penalties for not adhering to them, as well as being aware of help available.

Defining a small business

A small business is defined as one that has 50 or less Full Time Equivalent employees. The ACA states that a FTE Employee works 30 hours a week. As this is not a standard for full time hours, businesses need to have a formula in place to calculate their full time employees taking into consideration that part time workers need to be included in the total. Adding one employee could tip the scales resulting in a small business changing status. Businesses could then face penalties if healthcare is not provided to employees. 

Documentation requirements

The requirements of the Affordable Care Act affect all businesses whether small or large in terms of how health benefits are viewed, provided to employees and reported. Understanding the requirements of the ACA on your business is the most important step towards compliance. Without a clear understanding, you may miss your responsibilities incurring unnecessary fines. Accurate and consistent record keeping, and monitoring of hours worked to ensure employees are classified correctly is essential. Organisations must keep documentation of employee eligibility for healthcare, as well as employee’s awareness of their eligibility. This can be done either through electronic signature receipt or manual distribution of documentation with a signed receipt.

Healthcare Plan Options

As a small business there are options available to offer employees healthcare. The Small Business Health Options Program allows small businesses access to more affordable health plans. Also, businesses with less than 25 FTE employees can apply for tax credits to assist with the cost of providing healthcare for employees. Remember a large business must provide, as a minimum, a Minimum Essential Coverage Plan (MEC) and maximum employee contributions vary in some states.

Benefits of providing healthcare

While small businesses are not liable to fines for not providing healthcare, it is important to consider the benefits of doing so. Providing healthcare can lead to greater employee job satisfaction, increasing staff loyalty, and giving the business a competitive edge for hiring skilled and effective employees.  
 
Who can help?
​
Businesses can employ a qualified consultant to ensure preparations are made. Advice is also available from the National Federation of Independent Business, Small Business Majority and the IRS. 

Supply Chain Risk Management is critical for every business, no matter how small.  In fact, small businesses might have more flexibility in dealing with and predicting risks as their operations are usually less complex. A billion-dollar company asking a supplier for a million parts per week might quickly find themselves out of luck should the supplier experience a failure or disruption.  Small businesses can develop alternative strategies and use their nimbleness to their advantage in the event of a supply chain disruption.
Here are a few ways to manage risk in your supply chain.
Use Multiple Suppliers
Often, businesses will solicit bids from several suppliers, inquiring about x number of parts and selecting the one with the lowest price. This can be great for the bottom line. However, a business might be overlooking the risks they are taking when they rely on one supplier for a certain product. 
Often it might be a better idea to have most of x product to come from the preferred company and a smaller percent, 10-20%, come from another supplier.  This may increase the costs overall, but it will allow more flexibility when things go wrong.
One option this arrangement presents is if the main supplier has a difficulty such as a warehouse fire, your company has an existing contract with another supplier. This other contract could be temporarily increased or renegotiated to ensure the product continues to flow smoothly. This is a much better approach than frantically calling new suppliers when your existing supplier has a disruption.  In that case, the new suppliers might hesitate to work with a new customer or might give unfavorable terms because they know you are desperate. 
Have Contingency Plans
Many companies are only worried about the initial plan and once it is running smoothly they see no need to worry about it again. This can have disastrous consequences when something unexpected happens and the business is not prepared.  Most mistakes happen when the information is limited and time is of the essence.
A more logical approach would be to spend some time thinking about hypothetical contingencies.  The idea is that these will provide a blueprint for figuring out how to react and overcome supply chain interruptions.
For example, your company can go over alternative ways to import products should a natural disaster occur. If you normally ship by boat from manufacturing facilities in China, exploring potential airfreight services would be a useful contingency exercise.  Even establishing a contact with multiple companies can make recovering from a supply chain interruption easier.  

​Build a flex fund or contingency into the budget
 
A great budget that can last throughout the entire project and protect a company's balance sheet is more than just estimating how much everything will cost.  No, it involves understanding the risk and realities of the project you are undertaking.  Be sure to have a portion of your budget allocated for contingencies or emergencies with undertaking the project.  This helps you stay on budget rather than having no backup plan and when unexpected expenses crop up, having to scramble to find the resources or shut the project down which wastes valuable time and money. 
 
Ensure you have an amazing project manager/leader
 
The key to an efficient and smooth project is largely due to the manager or leader of the project.  This person’s job is to allocate the resources budgeted to the project properly, as well as motivates and organizes the staff to complete the project on schedule.  It is critical to ensure the project manager fully understands the scope of the project and ideally, has worked on or led a similar one before.  It is very difficult to complete a project or estimate its costs if you have never undertaken something similar. That unknown means a greater risk, which means the project is more likely to go over budget. 
 
Organization and communication are key
 
Spending the first few days or weeks of a project, establishing a routine and system for organization and communication can seem like a waste of time on the surface. However, the more complicated the project, the more likely issues in these areas will arise.  Information and instructions passed along the chain can be misconstrued by different mid-level managers causing confusion in their subordinates.  Work completed which is not tracked and organized could be repeated unnecessarily--wasting time and money in the process. 
 
A system, whether digitized or based on company hierarchy, can help keep your project on budget by increasing efficiency in all areas of the project.  Assumptions are a project's worst enemy and can cause aspects of the project to have to be redone or changed after completion, which can ruin timelines and budgets in the process. 
 
Establish a relationship with freelancers, outsourced help, and suppliers beforehand
 
Nothing can derail a project more than a key supplier not fulfilling an order or delivery as they previously expected. Even if they have a legitimate reason such as port delays or equipment repairs, projects often have a linear component that means they cannot move forward without certain aspects complete or in place.  If at all possible, you should work with suppliers, freelancers, and other outside the company, on small projects or one-off assignments before relying on them for a key component of a major project. This precaution will ensure that the vendor is reliable, indicating that you are a serious company and should be respected.  Mutual respect ensures the supplier follows through on their promise, on time, and assures the supplier they will be compensated for their efforts as you already have established your working relationship on previous projects.  

​Understand your industry
 
If you plan to open an ecommerce store or a monthly wine service it can help your business and planning in many ways to start researching and studying the competition.  While you may not find a verbatim business plan that they made, either because they got lucky and didn’t make one or didn’t publish it to the public, your studying will help you capture all aspects of your industry without leaving a stone unturned.  The challenges, supplier issues, definition of target customer, headwinds, tailwinds--all these things become more apparent, clear, and will make writing your business plan much easier.
 
Once you know the challenges you are likely to face, your business plan can establish how you plan to tackle those and what resources you need to allocate to that task.  Of course, there will be a myriad of unexpected challenges along the way that you did not plan for, but your business plan could even address how you will respond to those in a general way. 
 
Maybe your plan states you will use a line of credit or debt to handle situations like that or there is a lever on capital expenditures you can pull to reduce cash burn and shore up the balance sheet if an unforeseen event happens. 
 
Look at templates or sample business plans
 
While every business plan will be different, utilizing a template or an existing plan as a reference can help you focus your plan to what really matters.  Often small business owners or budding entrepreneurs can romanticize or neglect certain areas of the business, such as less glamorous things like taxes or legal fees, to the detriment of their business.  While a business plan is a high-level view of your business as well as how it will operate, it is not uncommon for these plans to be tens of pages, often close to a hundred for very complex enterprises.
 
Don’t neglect the mission statement
 
Many businesses neglect their mission statement or hire it out to a freelance writer to produce in fancy, lofty language.  A mission statement is not an archaic concept that no longer applies to fast moving, bootstrapped technology startups, but is the foundation of your business identity and culture.
 
If you want to start a business in a saturated industry but plan to stand out because of x, then your mission statement should be focused around x.  There is a reason you think this venture is a good idea, and that is what the mission statement reflects.
 
That way, when looking back on your enterprise in the future or faced with a tough decision about the direction you should take; referring back to your mission statement can remind you of your original goals, intents, and help to refocus the company. 
 
That is not to say a mission statement can’t be revised--it can and should, but a powerful, well thought out statement can do wonders for a company.  Johnson and Johnson has one of the best etched in stone at their headquarters, and as a result have become one of the most successful companies in the world.  

​Keep the marketing team cohesive
 
Often companies that are performing digital marketing such as Social Media, Targeted Ads, and other fancy techniques will have separate teams performing each function.  These teams do a great job but work in relative isolation, especially at larger companies.  A better way to obtain the marketing results you desire is to ensure these teams work together and that their efforts play off one another.  Data from social media and the types of people that interact or follow the company can be used to target ads to a better demographic or influence other areas of the overall marketing engine. 

Integrate marketing in your product or service at every level
 
Marketing is not just something you should do to drive people to your website or product page.  Rather, it should be an important and integral part of everything you do.  With digital media marketing, the product or service can help market itself, sometimes achieving things for free that no paid marketing could ever accomplish.  A link at the end of your app, a flyer for your website or app included with every product shipped, or other traditional and digital combinations can pay off as well.  Leveraging both traditional and digital techniques to penetrate the marketplace and ensure your message is reaching your target customer is crucial to growing your brand and taking market share. 
 
Email marketing is still king
 
Digital marketing can be overwhelming with all the choices a company can have on how to go about it.  From blogs and communities to product reviews and landing pages, the methods are endless and constantly evolving.  But, one method stands out above all others and has since the beginning-- email marketing.  The best email marketing is one that is voluntary, that is, the customer has gone through a few steps and clicks to give you permission to market to them.
 
Why is this a more effective marketing system, because they are more likely to be engaged with your product or message.  A list of a thousand potential customers that only got on your list because they thought they were getting a free book are a lot less likely to buy something from you then those who voluntarily gave you their email or filled out a survey after purchasing from you.  This type of quality email list can also reduce the time you spend cleaning out and filtering the list and increase open rates and sales funnel success. 
 
Email marketing is a long-term strategy whereas advertisements lose all effectiveness once they are no longer shown unless you pay to keep showing them.  A customer who doesn’t open or view your first few emails may eventually convert, for whatever reason, down the line.  They might have not seen your email, had it accidentally go to spam, or not trusted or been interested in your brand at the time.  Unless they unsubscribe altogether, you will always have the ability to enter their email box with your best shot and try to convince them.  Long-term marketing and repeat customers of the highest quality can be found through email marketing.  Remember what they say, ‘the money is in the list’.  

​Young entrepreneurs are the backbone of the economy.  From creating jobs to advancing technology and improving our lives, these trailblazers embody the American spirit and are important to our success as a society and a nation.  Here are some of the reasons why the world needs more young entrepreneurs. 
 
Inspiration
 
The world needs leaders, role models, and success stories to inspire and motivate individuals to exceed their given situation and accomplish things they never thought possible.  What is more inspiring than a young entrepreneur that created a successful business or an amazing new technology product and became wildly successful and wealthy in his or her twenties? 
 
Young entrepreneurs bring a fresh perspective, an intimate knowledge of technology and the positives and negatives it can have since they grew up with tablets and the internet at a very young age, and help create jobs in places and sectors of the market that are growing and in demand. 
 
It is rare to see a young entrepreneur open up a car factory or a textile plant.  Rather, they are focused on technology-oriented endeavors that will sculpt our future and increase the standard of living across the less developed world.
 
Bootstrapping
 
Bootstrapping is a startup concept or method of operations that involves growing and starting a business or enterprise without much capital, resources, or investors.  Typical bootstrap businesses are not making a profit yet, turning all their profits and revenue around into growing, advertising, and expanding their ventures. 
 
As the economic cycle shifts and rising interest rates tighten access to capital from both debt and equity sources, bootstrapped businesses are likely to make a resurgence.  Young entrepreneurs lead the way in this field, as older entrepreneurs tend to favor the traditional ways of starting an enterprise that they learned in business school.  Older entrepreneurs are also more risk averse because of their mistakes, experiences, and looming retirements.
 
Young entrepreneurs are fearless, sometimes careless, but this allows them to challenge the status quo and help advance society in new and unforeseen ways.
 
Innocence and ignorance as advantages
 
Sometimes not being properly educated or having experience can be an advantage.  Traditional advice affirms that it is usually a disadvantage, but in today's marketplace this is not always the case.  Sometimes it takes a visionary to accept that the way the world drinks coffee is not the best, that the taxi cab monopoly is not good for the environment or the consumer, or that there is a better way to store our files then local hard drives prone to failure and tampering. 
 
An entrepreneur with typical business experience and a typical education struggles to come up with a creative and innovative idea, but the young entrepreneur can live outside these restrictions. 
 
Young entrepreneurs also prefer to work with colleagues and employees that are similar in age and temperament to themselves.  The more these individuals are allowed to foster and become successful, the more opportunities will exist for our young people who have mixed education backgrounds. 
 
These entrepreneurs can also take other misguided or confused kids under their wing in a mentor type program.  This in-house growing of future entrepreneurs bodes well for the economy and society as there is a belief that small businesses are the ones that create true job growth in the economy as opposed to mega corporations either from home or abroad.  

​In a saturated marketplace, the only way to get the word out and establish your brand's story is through PR efforts.  Very few products or companies are truly original but may have slightly different or innovative approaches.  Here are some ways to use public relations to tell your story and establish the subtle differences that make your company stand out and gain market share as a result.
 
 
Establish what your brand is and what you want it to be first
 
No PR strategy can begin without a plan.  Think through who you want to reach, why, where they are, how you are going to get to them, and how brand building helps your business. 
 
Just because more people know about your brand's existence doesn't automatically turn them into customers—they might just know your brand exists but not be more interested in it than they were when it didn't exist to them.  Any message is not better than the wrong one. 
 
Align charitable giving with your customers’ values
 
Choosing a charity or a group of charities and organizations to donate to should not be done haphazardly.  While some companies might donate to things they believe in, that their employees support because of their own experience, or any number of other reasons, brand building through PR could be a better option.
 
Consider who your customers are—are they likely to donate their time or money to this organization?  Why or why not?  If your goal is to reach customers that value animals and the health of the planet, say, because you sell organic dog treats, then donating to the American Cancer Society is great and all, but the PR it may or may not generate is not optimized. 
 
While doing good should not be reduced to a cold calculated maneuver, it is not much effort to simply shift contributions to different organizations to help build your credibility and brand in the marketplace that you desire to occupy.  The previously mentioned company could instead donate to animal shelters, green organizations, or anything else more closely aligned to their customers’ goals and values.
 
The best PR is genuine, non-solicited, and from a third party
 
Any company can buy an interview, an advertisement, or paid money to force their way into the spotlight.  But these days consumers are savvy and getting smarter by the minute.  Millennials know when they are being advertised and marketed to, and they despise it.  A third party who you did not pay or solicit sharing or talking about your brand, however, is pure gold and the end goal of every great PR or brand building effort.
 
The reason this has such a big impact is that the end consumer sees the extra layer of filtering and credibility.  This is not the company telling me their product is awesome, this is somebody else putting their reputation on the line to tell me it is awesome or not, and that I can get behind.  But how do you achieve this?
 
Make something great.  Something worth talking about.  A cucumber infused soda is much more interesting than the next marketing widget or program.  But if that marketing program has a better story or is more well known, it might have a stronger brand presence.  Story is important as well, and we focus on that next.
 
What do they mean by story?
 
Storytelling is an essential human need, condition, and want.  It comes in many forms whether it is pictures, video, oral dialogue, a fake story that we build up in our minds and convince ourselves is true, books, media, or almost anything.  This is what PR can do for your brand.  It is not enough to simply tell a magazine that your product exists anymore.  No one will care. 
 
What you need is the story behind and in front of it.  Why did you make it?  What motivated you?  How does it change the users’ story in their own life?  Does it let you spend more time with your family, creating great memories and scrapbook moments?  Does it take grocery shopping into virtual reality, letting you embrace your wildest childhood dreams and fantasies?  Then tell customers that.  That is what customers want to hear.
 
Don't neglect your internal brand
 
Many people focus purely on their external brand and the perception of it.  Whether it be their products, their packaging, what kind of furry animal is in the commercials, or the reputation of their services, that kind of brand building is no doubt important.
 
But what can be just as important is your internal brand.  This is sometimes referred to as your company culture, but it is more than that.  Google and other tech companies have become infamous for their unique working conditions that go against the mold of rigid schedules, pointless meetings, structure, and cubicles. 
 
Instead, Google aligns their internal brand with their external one to create a cohesive message.  When you hear a news story about Google, whether it is their basketball games at lunch or the latest amazing invention, the story is the same:  this a company at the forefront of innovation and is not afraid to be different.  They are going places.
 
Aligning your internal brand can help employees at all levels to embody and believe in their external brand building and approach.  This can reduce employee turnover and increase productivity with a healthier workplace to boot.