NOW IT’S TIME TO SHINE AND I KNOW YOU HAVE A PLAN READY FOR THAT
You have incorporated your company and now it is time for you to look forward as a new business owner and take the next step. But what is that next step?
You need to start by reviewing your initial plan and checklist so that you don’t get off tracked and end up making unnecessary expenses. At this point, you need to be cautious! No one wants to miss out on the small details while starting a fresh project. You need to make this work and make it one of your biggest achievements.
TIME TO PUT THAT INVESTMENT TO USE!
You’ll need to let that investment roll in the business in order for you to generate revenue.
The amount of investment that your business requires depends on the nature of business, by that I mean whether your business will be a service provider or a goods provider?
LET’S SAY YOU ARE A SERVICE PROVIDER
A service provider can provide a wide range of services, such as professional services like consultancy, legal and accounting services which do not require heavy investment. The investment is mostly used to get computer devices, employee costs and a strategic office.
Service providers who require heavy investment can be from industries like construction, transportation, cleaning and so on. These service providers are required to invest in expensive equipment to provide the services they are offering.
There could be instances where the business owner does not have the required investment to acquire the required equipment, during those difficult times taking a loan is a good option to sustain your business. In the initial stage, the business can also lease the equipment as it is more beneficial than owning one. By leasing the equipment, the rent would be the only biggest cash flow in terms of the equipment and cost of having an operator to operate that equipment (if required). This will help to reduce the outflow of cash from the business, giving you funds to reinvest in business for other necessary operations.
If you are considering purchasing the equipment, there's a long list of cash outflows which includes maintenance cost, capital and interest payment if a loan was acquired to purchase that equipment, transportation cost if the equipment needs to be moved around, insurance, a dedicated individual for managing the equipment and so on. Once you have a better understanding about your business, you can consider both the options and choose wisely considering what will suit the business better.
LET’S SAY YOU ARE A GOODS PROVIDER
When you are a goods provider, the main investment is your inventory if it is only retail. Some businesses do their own production and retail. Those businesses need to make investments to run their manufacturing units and inventory. This type of business model requires more investment to be in the game.
If you wish to keep the goods provided by you authentic and artisanal, you continue to do the production by your business and not outsource it. But if you wish to save on cost and have huge quantities to be processed then outsourcing can be an option or have a bigger plant to increase the production capacity. By outsourcing your production, you can move your focus to lead your business towards expansion and growth.
A small business doesn't have goodwill before being incorporated, therefore one needs to build goodwill and good relations with their clients and stakeholders.
A key factor to building goodwill is the clients, so maintaining a good relationship with them is always beneficial for the business as they provide revenue and market your business.
LET’S SAY YOU PROVIDE BOTH GOODS AND SERVICES
Your business could be providing a blend of services and goods, for example a restaurant. At a restaurant, when one pays for the food, they pay for the food and the service provided, which is why dining at restaurants are charged higher than fast food chains. While calculating the unit cost at a restaurant, the business includes the cost of cooking and also considers the cost of the premises, staff, cutleries and all other factors that helps the business to create a comfortable ambience for its customers.
It is important to use your valuable investment in the most favourable way for it to be profitable. Good capital management is the key to achieve profitability and good return on your investment.
All businesses start low and slow, consistency will help the business grow successfully. It is important to define your purpose, vision, goals and strategies to achieve those goals. Make sure to follow your plan consistently and make changes as your business grows to accommodate the market needs. Frequent changes in your business plan can cause your business to incur more cost with any resulting benefits of it. The business should be consistent with regards to service and product delivery as it generates trust and demonstrates professionalism. Inconsistencies can affect the goodwill of your business, customer perception and customer retention.
Once you have decided how to invest in your company, you will need to look into sales mechanisms. For the company to bring in customers, you need to find new ways to attract customers and convince them to try your services or products.
We got you covered with this one. Our next post would be the sales strategies that a company can adopt and what other ways you can use to make your business more profitable and efficient. Be posted!
At BHTAX CPA, we are here for you to attend all your about tax and accounting issues. Contact us now and lets discuss about all your business needs. Our range of services is meant to help you start, grow and retain most of the cash in your business. BHTAX CPA is an accounting firm specializing in Small Business Bookkeeping & Tax Planning.
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