1 – BUDGET. - Do you know how much it costs monthly to run your business? Do you know how much your business’s annual deferred expenses total? Are there areas of spending within the company, that if monitored would reduce costs and increase profits?
Putting in place a comprehensive budget forces you to prepare a formal statement of financial resources that are available for carrying out the business’s operations. A budget also creates synergy between all the activities within your company. An accurate budget will have sub-budgets that will be focused on achieving company goals. For example: a marketing budget that is focused on growth or a technology budget that is focused on efficiency. Monthly analysis where the budget is compared to actual will enforce key individuals to exercise control and monitor spending.
2 - TAX PLANNING. –There are many tax saving advantages available to businesses and if you do not plan ahead, you may end up paying more tax than necessary. For example: bonus depreciation is available for new automobile purchases; however, this benefit will sunset at the end of 2011. What if you were in the market for a new company automobile but were delaying the purchase until 2012? Tax planning would allow you to analyze the tax savings available if you were to purchase the company car in 2011. This type of planning could reduce your tax bill by thousands of dollars!
3- PERSONAL PLANNING. – This really speaks to individuals who have “closely held companies”. Can you afford your personal lifestyle? Or should I ask, can your company afford your personal lifestyle? Does your company have a retirement plan in place? If so, is it tailored towards your personal retirement goals?
Retirement planning is one of the best legal tax shelters available for a closely held company. Usually for each dollar socked away there is a 40% tax savings; for every dollar contributed to a qualified plan the company may save forty cents in taxes. What a great way to secure your retirement and increase cash-flow.
4 – BUSINESS PLAN. Take the time to write a business plan. A well thought out plan will be a reference point that details the company’s growth strategy and will at minimum include: sales forecasts; the marketing plan; and a product/service mix. A business plan will set measurable milestones and deadlines keeping you focused on the big picture as you achieve the steps necessary to bring that picture to life.
So, how does a business plan create cash-flow? It will force you to think more analytically about your business. By understanding how all the different elements of the business need to “synch” you may realize you have processes in place that don’t allow for growth or need to be retooled to increase market share and profits. Also, since the plan will require you to prepare a sales forecast; a set of financials; break even analysis; and past performance analysis (if you are not a start-up), you will have an intimate understanding of the resources required. Resources will less likely be squandered since they are earmarked for greater success!
5 – PROCESSES. The biggest “time suck” and “profit suck” can be from lack of OR broken processes. Take the time NOW to write down the three processes in your business that if tooled or retooled would have one or all of the following results:
- Incrreased profits by lowering direct or operation costs
- Increased customer satisfaction
- Increased business integration
- Increased competitive edge
Which profit-increasing tool will you be implementing?
Beth Bockenhauer is the owner of Beth Bockenhauer, CPA, a boutique accounting and CPA practice based in southern California. She started her career with five years of military service. She then worked for ten years as a small business owner, and holds a Bachelor of Science degree in accounting. Beth has worked in public accounting for the past seven years. For more information, visit www.bethbcpa.com
Thanks to author giving good idea for Optimize Processes For Maximum Productivity
ReplyDelete