Planning is the key to any successful business. There are many different models and variations of business plans, so it is extremely important to choose the right one specific to the type of business. Having a business and knowing what to do with it are very separate issues and creating a well-executed business plan for the right reasons will enhance the odds that your venture will be one of the ones to succeed.
“Accounting is the measurement, statement, or provision of assurance about financial information primarily used by managers, investors, tax authorities and other decision makers to make resource allocation decisions within companies, organizations, and public agencies. ” (en. wikipedia. org ). Whether you are seeking funding from investors or you are compiling a business plan to serve as a guide for managing your business, it is imperative that you make financial projections. These financial projections will attract investors and serve as a guide to future business decisions. Financial projections can be intimidating.
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Use a template or sample as a guide. Estimates, such as sales, are not simply based on knowing the number of people in your demographic region and making an educated guess as to how many will opt to use your product or services in a given time frame. Sales are projected in line with your marketing strategy. The purpose of accounting is to provide the information that is needed for sound economic decision making. The main purpose of financial accounting is to prepare financial reports that provide information about a firm’s performance to external parties such as investors, creditors, and tax authorities.
Managerial accounting contrasts with financial accounting in that managerial accounting is for internal decision making and does not have to follow any rules issued by standard-setting bodies. Financial accounting, on the other hand, is performed according to Generally Accepted Accounting Principles guidelines. Many small businesses utilize an accounting system that recognizes revenue and expenses on a cash basis, meaning that neither revenue nor expenses are recognized until the cash associated with them actually is received.
Most large businesses, however, use the accrual method. Under the accrual method, revenues and expenses are recorded according to when they are earned and incurred, not necessarily when the cash is received or paid. For example, under the accrual method revenue is recognized when customers are invoiced, regardless of when payment is received. Similarly, an expense is recognized when the bill is received, not when payment is made.
Under accrual accounting, even though employees may be paid in the next accounting period for work performed near the end of the present accounting period, the expense still is recorded in the current period since the current period is when the expense was incurred. 1 All organizations have specific goals and objectives that they strive to meet. Top executives devise strategies and formulate policies to ensure that these objectives are met. A corporation’s goals and policies are established by the Chief Executive Officer in collaboration with other top executives, who are overseen by a board of directors.
The chief executive officer of a corporation retains overall accountability; however, he may delegate several responsibilities, including the authority to oversee executives who direct the activities of various departments and implement the organization’s policies on a day-to-day basis. In addition to being responsible for the operational success of a company, top executives also are increasingly being held accountable for the accuracy of their financial reporting, particularly among publicly traded companies. Chief financial officers direct the organization’s financial goals, objectives, and budgets.
They oversee the investment of funds and manage associated risks, supervise cash management activities, execute capital-raising strategies to support a firm’s expansion, and deal with mergers and acquisitions. In addition to developing a sound business plan, it is very important to find the right people for the job. The Human Resource Department covers a wide variety of activities, and key among them is the topic of staffing. No matter the breadth or the depth of an organization, it will always have the inherent need for human resources. It is safe to say that without manpower, no organization in the world would exist.
Recognizing not only the need for people, but also more importantly, the need for skilled, efficient and loyal employees has been a key turning point in defining the role of the HR professional. The Small Business Administration (SBA) was created in 1953 to aid, counsel, and protect the interests of small businesses, as well as to help families and businesses recover from physical disasters. “The Small Business Development Center (SBDC) Program is the U. S. Small Business Administration’s largest matching grant-funded service delivery network providing quality customer service to the small business community.
The SBDCs, in partnership with the SBA’s Office of Small Business Development Centers and District Offices, develop programs and provide business management and other services that enhance the economic development goals and objectives of SBA and their respective states and their local funding partners. ” (http://www. hawaii-sbdc. org/new-pol/SBA. htm) Ethics is a hot topic these days. Simply stated, ethics refers to standards of behavior that tell us how human beings ought to act in the many situations in which they find themselves-as friends, parents, children, citizens, businesspeople, teachers, professionals, and so on.
Many times, leaders are forced to decide on issues where there are arguments on both sides – a problem that makes ethical decision-making very difficult. In your role as a leader, your ethical decisions and conduct have a wide impact. Making good ethical decisions requires a trained sensitivity to ethical issues and a practiced method for exploring the ethical aspects of a decision and weighing the considerations that should impact our choice of a course of action. Having a method for ethical decision making is absolutely essential.
When practiced regularly, the method becomes so familiar that we work through it automatically without consulting the specific steps. 2 One of the most important investments you can make is to ensure you have one or two local technology consultants who you trust, who know about your business, and who can guide you in your technology growth. Every business, no matter how big or small, needs high-speed access to the internet. Having traditional dial-up access is simply too slow and too limiting for a business.
High-speed internet will enable you to take advantage of online backup, VoIP and other technologies you wouldn’t be able to do at all or as efficiently with a dial-up connection. Of course, you must have computers for each employee. These computers shouldn’t be slow, rinky-dink, bottom-of-the-barrel relics from the early ’90s, but should be relatively new, high-speed tools. Each computer should have plenty of memory, hard-disk space, a fast processor and a quality screen for minimum eyestrain. It’s absolutely imperative that your businesses data is secure and backed up.
Your local network and each of your computers should have a firewall and anti-virus software. In addition, ensure your computers and network are configured by a local security consultant. Once you have selected and developed a unique product or business idea, correctly positioned and targeted it to buyers, and developed your packaging and pricing, the selection of distribution channels and sales representation is the key to successful marketing. It’s fairly easy to change many of your marketing tactics and strategies on a periodic basis; pricing, packaging, and product mix are among these flexible choices.
However, distribution and sales decisions, once made, are much more difficult to change. And distribution affects the selection and utilization of all other marketing tools. Distribution choices for a service business follow the same lines as those for a physical product. For example, financial planning services may be offered from printed material, sold at retail by consultants, delivered electronically by computer, or relayed by phone, fax or mail. Steps for selecting distribution and sales force representation include: ? Identify how competitors’ products are sold.
There really are only two types of financing available: debt financing and equity financing. Debt financing is loan-based financing: this is where you mortgage your home or take out a loan from the bank or get a business loan from a lending institution or write promissory notes to your family to get money. In each case you pay back the money you 3 owe plus interest. The lender earns a profit for the financial risk they took and that profit comes to them in the form of interest payments.
While you’ll not likely use bonds for a small business, a bond is an excellent example of debt financing. Lenders like this type of financing because the money is regular and predictable. Businesses like this type of financing because the payments are budgeted, constant, and anticipated. The risk is that you won’t be able to meet your payment obligations on time. In conclusion, planning is very important if a business is to survive. By taking an objective look at your business you can identify areas of weakness and strength.
You will realize needs that may have been overlooked, spot problems and nip them before they escalate, and establish plans to meet your business goals. The business plan is only useful if you use it. A comprehensive, well constructed business plan can prevent a business from a downward spiral. Finally, your business plan provides the information needed to communicate with others. This is especially true if you are seeking financing. A thorough business plan will have the information to serve as a financial proposal and should be accepted by most lenders.