Business Best Practices

Whether or not the number of people working from office buildings returns to pre-COVID levels, one thing appears certain: Remote and hybrid work models are here to stay. Business owners and other managers who rely on individuals who are working remotely full- or part-time are refining and elevating their management skills so that they get the best out of their employees.

While managing remote and hybrid workers bears many similarities to managing fixed-base teams, it also has some unique aspects. Here are several best practices you may want to consider and apply to your own situation, no matter your level of experience in prior management of remote workers.

Make Your Expectations Clear and Simple

Clarify the hours when employees should be available and accessible. Give employees performance goals and metrics that define success in meeting those goals. Lay out clear guidelines when it comes to after-hours work-related emails and text messages. You want employees to maintain a healthy work-life balance, one that prevents burnout, and ultimately, keeps them working at peak capacity for your business.

Communicate Regularly

Employees want to know how they are performing and whether they are on track to meet the goals you set for them. Check in regularly with them and communicate your satisfaction or your concerns about how they are doing. Regular check-ins are important; just be aware that you can overdo it, since too much oversight may be resented by employees who feel they are not trusted. It’s important to keep them in the loop about any changes in company policy when it comes to wages, benefits, job openings, promotion opportunities, and other changes that may impact them.

Depending on the demographic makeup of your remote employees, you may have to refine your communication style. Talk with your employees and solicit their opinions on what works best for them — texts, Zoom calls, or other forms of instant messaging.

Listen Attentively

Closely related to good communication skills is the ability to listen carefully and attentively to what your employees are saying. You want to give them the opportunity to express what they think about their workloads and talk about any stresses or frustrations they may be feeling. When you listen carefully to what your employees are saying, you are communicating trust and respect.

Build a Sense of Community

Some workers thrive in environments where they can interact and engage with fellow workers face-to-face. That engagement is less important to other workers. One of your goals managing a remote workforce should be to build connections to workers who feel isolated and out of the loop. Employees who feel this way typically do not perform at their highest level. By staying in touch and by organizing the occasional virtual — or in-person — get together in which you build connections and a shared sense of purpose with employees, you can create a sense of community that can have a positive impact on employees and their level of engagement.

Embrace Flexibility

A rigid approach to managing your remote employees may be limiting and not as effective as a more flexible approach. For example, once you determine that the work is being completed on time and is of a high quality, you may want to give employees some leeway as to the specific times they are working.

The work world has changed in numerous ways over the past couple of years. Your management approach has to stay ahead of these changes, especially when it comes to remote work, if your business is to continue to grow and thrive.

Small business owners who conduct regular reviews of their business’ operating health are more likely to detect potential issues before they develop into major problems. Some areas should be monitored regularly since they hold the greatest potential for harming a company’s long-term financial health.

Cash Flow

You should be concerned if your cash flow is insufficient to cover expenses because payments for goods or services are slow in coming. Beware also if your cash reserves accumulate rather than being put to work. Excess funds may be parked in short-term investment accounts, but ideally, they should be put to work growing the business.

Gross Profit Margin

If it is shrinking over several quarters, your production costs may be rising at a faster pace than your prices. Or, it may because you are charging less than in the past. Either way, declining gross profit margins are a threat to the financial health of your business.

Receivables

If they are growing faster than sales, it is a sign that your customers are not paying what they owe you in a timely manner. You may need to take steps to improve your collection procedures. Be proactive and consistent about issuing invoices and providing any necessary supporting documentation. In addition, contact customers as soon as you detect any delays in payment and stay on top of accounts that are past due.

Debt

Almost every business carries some debt. It’s generally not a problem as long as it is kept under control. Too much debt is a different matter in that it can eat up your cash, cut into your profits, and reduce the return you’re getting on your investment in the company.

Assets

Turnover rates are an important measure if your business carries inventory. When inventory turns over slowly, cash flow suffers. Your best approach is to determine how many days’ worth of product you’d ideally like to have on hand and adapt your purchasing to meet that goal. Additionally, keep an eye on fixed assets. If you have equipment that’s not being fully utilized, you may be able to repurpose it. If not, it may be time to sell or donate it.

Professional Input Can Be Valuable

Business owners should evaluate a broad range of financial information when making decisions. The input of a financial professional can be helpful in the assessment of a business’s overall financial health

A bookkeeper for your small business is not a luxury; it’s a necessity. You must always be aware of what is happening to your business on a basic financial level. Lacking that knowledge could hinder your business’s growth and success. Read more to learn what a bookkeeper does and how outsourcing your company’s bookkeeping tasks could help your business succeed.

What Bookkeepers Do

Bookkeepers are responsible for a businesses’ accounts. At the most basic level, a bookkeeper keeps the general ledger by recording cash flow. However, bookkeepers can also create valuable reports such as financial statements, prepare bank deposits, oversee payroll, approve a purchase, create invoices, and monitor delinquent accounts.

Outsourcing Bookkeeping is a Practical Choice

While bookkeeping was once a tedious and grueling task due to manually recording every transaction by hand, technology has advanced the process to make bookkeeping much more straightforward and streamlined. It is now possible to outsource your business’s bookkeeping to an online bookkeeper. This approach is a cost-effective alternative to hiring an in-house bookkeeper.

Why Outsourcing Bookkeeping is Important for a Small Business

Bookkeeping is a critical part of any business for legal and financial management reasons. Accurate records allow you to assess the financial health of your business at a glance. It also assists your accountant when it is time to analyze financial data and recommendations for spending and strategize for future growth. Additionally, it’s vital to have accurate bookkeeping practices in place if you ever need to respond to the IRS regarding inquiries or audits.

The following are some of the benefits of outsourcing bookkeeping for your small business:

1. All financial transactions are accurately recorded.

Every small business owner must know where cash comes from and where it goes. Bookkeeping makes this crystal clear. For example, you can quickly determine how much your business spent on office supplies or how lucrative a given client or customer is for your business. And don’t overlook the importance of accurate records when it comes to resolving discrepancies like those that can occur between employees, vendors, or customers.

2. Spending analysis helps streamline budgeting for your business.

Expense analysis allows you to adjust your businesses’ budget quickly and easily. You can examine financial statements to determine the products, services, and industries that help you generate maximum revenue. You can also identify expenses that were once justifiable but no longer serve your business plan. Perhaps your marketing in the local newspaper generated income at one point, but online advertising is more profitable for your company in today’s market.

3. Filing taxes is easier.

Tax time is stressful for any business. However, bookkeeping eliminates the need to sift through piles of receipts, invoices, and documents to gather information. Proper bookkeeping ensures that information is organized all year long.

4. Your records are accurate in the event of an IRS audit.

While the chances of an audit for a small business are low, there’s always the chance of an audit no matter how compliant your business is with current tax laws. Thorough bookkeeping is your first line of defense when and if the IRS decides to audit your company. Organized bookkeeping records allow you to answer the IRS’s questions about any financial aspect of your business.

5. Cash flow is managed correctly and accurately.

The top concern of any small business is cash flow. By outsourcing your businesses’ bookkeeping, you mitigate the challenge of monitoring cash flow because you keep track of cash moving in and out of your business. At a glance, your bookkeeper can tell you how much profit your business generates and if it’s sufficient for paying your business expenses. This benefit can save you headaches in the long run because it allows you to be proactive, not reactive, by garnering a line of credit or seeking other assistance if needed.

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Realizing the importance of bookkeeping in running your business can provide peace of mind that allows you to do what is most important – manage the day-to-day operation of your business. Contact us now for reliable bookkeeping services.

Comparing a business’s key financial ratios with industry standards and with its own past results can highlight trends and identify strengths and weaknesses in the business.

Financial statement information is most useful if owners and managers can use it to improve their company’s profitability, cash flow, and value. Getting the most mileage from financial statement data requires some analysis.

Ratio analysis looks at the relationships between key numbers on a company’s financial statements. After the ratios are calculated, they can be compared to industry standards — and the company’s past results, projections, and goals — to highlight trends and identify strengths and weaknesses.

The hypothetical situations that follow illustrate how ratio analysis can give company decision-makers valuable feedback.

Rising Sales, Rising Profits?

The recent increases in Company A’s sales figures have been impressive. But the owners aren’t certain that the additional revenues are being translated into profits. Net profit margin measures the proportion of each sales dollar that represents a profit after taking into account all expenses. If Company A’s margins aren’t holding up during growth periods, a hard look at overhead expenses may be in order.

Getting Paid

Company B extends credit to the majority of its customers. The firm keeps a close watch on outstanding accounts so that slow payers can be contacted. From a broader perspective, knowing the company’s average collection period would be useful. In general, the faster Company B can collect money from its customers, the better its cash flow will be. But Company B’s management should also be aware that if credit and collection policies are too restrictive, potential customers may decide to take their business elsewhere.

Inventory Management

Company C has several product lines. Inventory turnover measures the speed at which inventories are sold. A slow turnover ratio relative to industry standards may indicate that stock levels are excessive. The excess money tied up in inventories could be used for other purposes. Or it could be that inventories simply aren’t moving, and that could lead to cash problems. In contrast, a high turnover ratio is usually a good sign — unless quantities aren’t sufficient to fulfill customer orders in a timely way.

These are just examples of ratios that may be meaningful. Once key ratios are identified, they can be tracked on a regular basis.

Science fiction movies and books may portray artificial intelligence as a human-like giant brain with thousands of wires coming from it that control whole cities and their populations. The reality today is that artificial intelligence is unobtrusive, everywhere, and we are interacting with it multiple times daily without always recognizing that we are.

Artificial intelligence is being used by large corporations in a range of areas, including sales, marketing, customer service, employee training/coaching, and logistics. Small businesses can also employ artificial intelligence to improve customer service, reduce costs, and help drive revenues.

What It Is

Artificial intelligence (AI) is a branch of computer science that focuses on building smart machines capable of performing tasks that typically require human intelligence. Essentially, it endeavors to simulate human intelligence in machines. Examples of AI applications many people are familiar with include smart assistants (such as Siri and Alexa) and virtual agents that interact with customers and guide them to possible solutions. Looking ahead, self-driving trucks and cars are in various stages of development, and some vehicles already have self-driving features.

Customer Service

AI can be deployed through the use of chatbots to handle a variety of tasks, such as directing callers to the function they want (e.g., automatic payments). On a more complex level, AI can be used online to help customers with product search and discovery and respond to requests with relevant recommendations. Businesses can use data gathered from AI chatbot customer interactions to identify where in the process problems may arise and what these problems are so that they can be eliminated in the future.

Logistics

Moving goods from one point to another requires up-to-the-minute data so that what is being shipped is shipped in the most efficient and cost-effective way possible. Certain AI programs can predict points where congestion may happen and help redirect trucks and vans so that they avoid bottlenecks and slowdowns. AI essentially streamlines the supply chain. It can do something similar when it comes to warehouse management — identifying choke points that slow the movement of goods from point A to point B.

Marketing

AI marketing sets out to leverage customer data and machine learning to anticipate a customer’s next move and to nudge that customer toward either buying something or increasing his or her average order value. Businesses are using AI to attract, nurture, and convert prospects.

By tracking a customer’s online searches, AI programs can identify what products an individual might be interested in and may be considering buying. AI can target that individual with ads highlighting products or services previously identified as being of interest to the customer. This approach essentially uses machine learning to offer personalized product recommendations.

Sales Training

AI can be used to coach salespeople to improve their sales skills and help them increase their percentage of successful sales calls. AI programs exist that can analyze a number of variables that are used by the most successful salespeople and use that data to identify strategies that can be replicated and utilized by other salespeople within the organization.

As with any technology, there are costs involved in incorporating AI into a company’s operations. A financial professional can assist you in analyzing the costs and potential financial benefits of any new technological enhancements your small business may be considering.

Perhaps the number one action you can take to support the financial health of your small business is to stay on top of accounting. Make sure you’re aware of most small businesses’ accounting challenges and learn how to overcome them. We’ll tell you how here!

Banking

You’ve been banking for years, and you know how to manage the task. However, when you own a business, banking isn’t like managing personal checking and savings accounts. Unfortunately, many small business owners use their personal funds to pay for business expenses, especially when first starting out. Even small costs add up over time. This “cross contamination” of spending between personal and business accounts can lead to costly mistakes, not to mention headaches for your accounting team. Keep personal expenses, and business expenses separate all the time. Have dedicated bank accounts and credit cards only used for one or the other. If you need to track down an expenditure, you only need to look in one place.

Budget

When bank accounts are separated, budgeting becomes exponentially easier. You can even use an accounting software program to help you keep up with money coming and going to and from your business. However, recognize that simply entering information into a software program is not the end of the work when balancing a budget. Thinking that is true ends up being the downfall of many small businesses. Budgeting for a business means forecasting to ensure that unexpected expenses can be covered, managing inventory, taxes, and more. A shift in any direction can throw off any budget. That’s why many small businesses opt to outsource their accounting. The known upfront expense of doing so can far offset costly budgeting errors down the road.

Unexpected expenses

As mentioned above, you must consider the unexpected as part of your budget. Additional (new) taxes, payment delays from customers, rising costs of materials and supplies, new employee training, etc., are all possibilities. A qualified accountant is aware of these unexpected expenses and others that your business could face and knows how to prepare you for them. Awareness of what could financially happen in business is crucial to long-term profitability.

Payroll

While unexpected expenses are likely the most daunting for a small business, payroll is almost always the most significant. Payroll entails more than what you pay employees. New employee classification, if incorrect, could cost you a bundle in penalties. Other payroll-related accounting challenges are pay accuracy, proper tax filing, compliance, and paid time off tracking.

Unless you’re an HR professional, and chances are you’re not if you’re the business owner, consider recruiting a qualified accountant to help you manage payroll. It will save you headaches in the short term and money in the long term.

Taxes

A conversation about accounting and small business isn’t complete without discussing taxes. The tax struggle can be daunting, from filing to making sure you pay enough but that you don’t overpay. A significant challenge regarding taxes is merely keeping up with the ever-changing tax laws. A qualified accountant or CPA will be up-to-date on new regulations and guidelines so that you don’t have to be.

Overcoming accounting challenges like these is easy with a qualified accounting team on your side. Consider outsourcing your accounting needs so that your focus remains where it should – on running your business your way.

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Contact our accounting professionals now for help managing your small business finances.