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Strategies for Growing Wealth for your Small Business

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By James Pruitt, Senior Staff Writer

Often, business owners find themselves in the midst of a crazy business idea that promises to become their bread and butter. Has your dream come true? The last thing you need at this point is to throw practicality out the window. The first success may be only the start of a crazy growth spurt. Depending on the business itself and your own ambitions, the following considerations may grow your idea into a cash cow.

1) Know your Priorities. . . Budget, budget, budget!

Office supplies and equipment and maintenance can really dribble the resources of a Veteran Business Owner. Business owners should never be pennywise and pound foolish.  Profits don’t come from penny-pinching, 

You know your business better than anyone else. Over the long term, Veteran Business Owners should balance their plans with their resources.

For a successful business, the best profit margins should more than compensate for the overhead. Seek good deals. The tastiest ice cream should more than compensate for the glitter on the cone.

2)  Understand that Money should Make Money

Stagnant money does no one favors. Various resources can provide business owners with the seeds to grow their investments into a harvest that may yield fruit.

Occasionally, a bright idea may pop up in the news that sprouts and sheds its spores. Business owners should consider these situations case-by-case. However, in general, secure investments do the best service for Veteran Business Owners.

The best investment is yourself, and your knowledge and understanding of your own idea. Outside of their own considerations for their own business ideas, business owners need to maintain some sort of corporate veil between their own ambitions and those of their company.

Corporate bank accounts can yield dividends, but business owners should give thought to any opening capital until that money is ready to blossom into the Veteran Business Owner’s dream.

3) Diversify

When a business owner has capital, careful education should guide the management of that wealth. For example, many people confuse stocks and bonds. Bonds are essentially documents issued by corporations and governments that issue certificates that increase in value at a fixed rate. Stocks entail ownership of a share of the company. Bonds generally bank on the security of the issuing body, whether governmental or private. Stocks require care and confidence, and generally function best in a portfolio long-term, after careful contemplation. The health of the company matters. Also, consider the health and future of the industry.  

Also, consider your own resources. Do you own real property? Real estate can be rented, assets can be sold. As for yourself, as long as you have a place to live, consider all options. 

4) Stay in Control

Keep in mind your own “money story.” Business owners should know that they know their own story better than anyone else. Profit often matters more than cash flow. Assuming humble beginnings, strong incoming revenue indicates a healthy company. On the other hand, a large investment requires even greater incoming cash to make the company successful. 

Legally, remember that you are always the master of your own estate. No one can take that control away from you. Veterans should seek counsel in any situation that challenges their feelings about how to manage their money.

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

 

Productivity Strategies for Small Businesses

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By James Pruitt, Senior Staff Writer

To stay effective, businesses need to investigate methods to streamline operations. Various techniques save time and energy when getting your company or organization above ground. These include organizational methods to streamline project management, information retrieval, employee communication, and decision-making processes.

1) Project Management:

Business cycles rarely flow with perfect routines and without bumps in the road. At times, seasonal cycles control the ebb and flow of resources of even the most stable businesses.  As a result, skillful project management must tackle the unpredictable trials that break the rhythms of even the most stable institutions.

In some cases, the same project rolls around each year. In these cases, project management systems can facilitate review and record-keeping. Applications like Asana can help create plans for these periodic bumps in the road, facilitating the delegation and simplification of tasks.

In other cases, a specific circumstance may arise, and a company has a new dragon to slay. In order to tackle such unforeseeable bumps in the road, organizations should retain the flexibility to mobilize. Cross-training can help employees take on diverse tasks within the company as needed. Also, keeping business operations flexible may allow wiggle-room for novel situations as they arise.

2) Good Information Management and Storage, aka a Good Filing System:

Even before the age of computers, any secretary could describe the benefits of a good filing system. Effective companies need to stay organized. Lost documents and jumbled service can destroy a company’s reputation. 

Applications like Airtable can help organize various documents and spreadsheets. Online applications can supplement well-thought-out systems within the office to ensure information is stored effectively and retrievably.

3) Employee Feedback and Communication:

The workers on the front lines are often the first to know when the first hits arise of a dire new issue. Worker feedback is essential. Proprietary software should include space for comments by operators, and management should take these comments seriously. Open-door policies should allow the rank-and-file to raise issues when appropriate. 

Companies should stay vertically integrated to ensure that the leadership and the rank-and-file stay on the same page. This way, problems are less likely to snowball before they reach the attention of management. Applications like Dropbox can ensure communication between various members of the team.

4) Decision Making: Streamlined Approval for New Initiatives:

How can we define “bureaucracy?” Sometimes, layers of middle management calcify into a concrete wall between innovation and leadership. Hence, skillful oversight protects businesses from careless decisions. Approval processes must be strict, quick, and effective.

A calcified bureaucracy in a large organization can stymie the best-laid plans. Careful scrutiny of processes ensures that only the best products and services go to market. Smaller organizations often struggle to maintain quality in the face of limited resources. Given restrictions in size and resources, the problem for Veteran Business Owners often is not bureaucracy, but lack of oversight.

Several workflow applications, such as Shift, can channel tasks to employees’ inboxes. Such applications can allow workers to arrive in the morning ready to tackle their workload independently.

Overall, productivity strategies should vary with the type of organization. However, the above four considerations can guide management across industries in both the for-profit and non-profit sectors. In other words, both newfangled technological approaches and old-fashion office management techniques can help prune time-wasting redundancies from a Veteran Business Owner’s workday.

 

VAMBOA, the Veterans and Military Business Owners Association hope that this article has not only been valuable but provided some unique perspective.  We work hard to bring you important, positive, helpful, and timely information and are the “go-to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:  

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Do not forget that VAMBOA members receive significant discounts on technology needs.   Check them out here: https://vamboa.org/dell-technologies/ 

 

depreciation

 

By James Pruitt, Senior Staff Writer

What is Depreciation, and How Can I Benefit from it?

Any new item in a business’s repertoire likely depreciates over time. Owners may write off this decline in value during tax season. Also, services and other intangibles may qualify as tax deductions.

For example, vehicles, equipment, and buildings inevitably require maintenance, as well as accounting for any loss of value. These assets may endure wear and tear during the early stages of your business. Guess what? Both the maintenance costs and the loss of value may qualify business owners for a tax write-off.

Oil changes, paint jobs, and worn-out parts can reduce your tax liability. Similarly, loss in inherent value can relieve proprietors come tax season.

Methods for Calculating Depreciation

The straight-line method is the most common way to calculate depreciating resources. This method simply divides the initial cost of an asset by its years of useful life. This asset may be a vehicle, a piece of equipment, or a piece of real property.

Other methods of calculation may fit different circumstances. Variables such as “useful life” and “value” may not always calculate simply, based on the nature of the asset.

Many calculation methods other than straight-line depreciation can reduce a veteran entrepreneur’s tax burden.

  • Sum-of-Year’s-Digits (SYD) Depreciation

The Sum-of-Year’s method accounts for the salvage value of an asset. This method is complex, and business owners should apply this method to their taxes only very cautiously.

  • Units of Production Method

This method accounts for the wear-and-tear of a piece of equipment. Essentially, this accounting practice considers the productivity of a piece of equipment. The depreciation of the equipment depends on the quantity of resulting product.

  • Declining Balance Depreciation

Consider the cliché that a car loses much of its value after leaving the dealer’s lot. This method allows users to subtract most of an asset’s value during the first few years of use. After this period, often the depreciation of an asset flattens. However, the largest tax breaks for depreciation may come early on.

  • Double Declining Balance Depreciation

This method is a hybrid. Generally, this method combines straight-line depreciation with declining balance depreciation. Usually, business owners use this method for equipment with a short useful life.

  • Straight-Line Depreciation

The straight-line method is by far the most common method for calculating depreciation. Most small business owners use this method. This method of depreciation even reduces to a simple formula: (asset cost – salvage value) / useful life in years = annual depreciation.

Which Method to Use?

The straight-line method provides the best calculation method for the majority of small businessowners. However, the relevant variables themselves may not always seem readily apparent. How do we calculate, for example, “asset cost,” “salvage value,” or “useful life in years?”

Consider a small business that manufactures t-shirts. Imagine an embroidering machine. Perhaps the “units of production method” may provide a more useful method come tax season to gain that useful write-off. Lacking sophisticated expertise in gauging the declining value of this piece of equipment, a small business owner could legitimately resort to calculating the deterioration of the machine by the number of t-shirts produced.

Bottom Line

The straight-line method provides by far the most common method of calculating depreciation. However, straight-line depreciation is not always practical.  Variables such as “asset cost,” “salvage value,” and useful life in years” may themselves present difficulties. These values may depend on the type of equipment and the nature of the business. The owner’s discretion inevitably provides the best fit for the optimal tax and accounting methods.

VAMBOA, the Veterans and Military Business Owners Association hopes that this article on Depreciation has been valuable.   We work hard to bring you important, positive, helpful, and timely information and are the “go to” online venue for Veteran and Military Business Owners.  VAMBOA is a non-profit trade association.   We do not charge members any dues or fees and members can also use our seal on their collateral and website.   If you are not yet a member, you can register here:

https://vamboa.org/member-registration/

We also invite you to check us out on social media too.

Facebook:  https://www.facebook.com/vamboa

Twitter:  https://twitter.com/VAMBOA

Don’t forget that VAMBOA members receive significant discounts on technology needs.   Check them out here:

https://vamboa.org/dell-technologies/

Cash Flow and Profits: A Comparison

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By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

 

Cash-flow and profit margin both relate to the health of a company. However, each term relates differently to the company’s bottom-line. Cash-flow is important to a company’s expansion and potential. Profit margin is a different concept that may relate more directly to the company’s bottom line.

Cash-flow governs the everyday workings of the company. Cash flow may come from any of a variety of sources, including the owner’s personal funds, investors, or loans, as well as revenue. Cash flow pays the bills, the employees, and the creditors in the short-term. Profits matter in the long-term, especially in the wake of large investments from investors or creditors.

For a smaller company with an independent cash flow, operations may continue for quite some time (or even indefinitely) before turning a profit, based on the enthusiasm and motivations of its operators. This is especially true with a home business. For a larger enterprises, profits must ultimately keep up with the cash flow. This is especially true when the original investors become creditors demanding payment.

So how do we more specifically define profits versus cash flow? “Profit” is basically the same as “net income.” Within a given period, your “profit” is your business revenue minus your expenses (including cost of providing products and services and overhead).

But how to manage cash flow? Assume a loan of $15,000, with a payment plan of $500 per month. That initial loan provides a healthy cash flow early in the history of the company, but the subsequent $500 per month will eat just that much into the profit margin.

Financial experts sometimes consider cash flow a better indicator of a company’s performance than profit margin. Cash flow affords better opportunities for growth. Cash flow may indicate better credit on the part of the company, and greater enthusiasm on the part of investors. By extension, the incoming monies may signal a brighter future for the company.

On the other hand, profit holds a different importance to the company’s bottom line and plans for expansion. A small side-business can emphasize profitability from the get-go, absent lofty ambitions. Smaller enterprises need not incur debt. Entrepreneurs with bigger plans must consider cash flow while they can maintain their company in the growth stage before reaching the critical mass necessary to generate independent profits.

A small business should consider maintaining a “cash flow statement” that details their periodic cash flow. These statements are called “free cash flow,” or “FCF” statements. In order to calculate your “FCF,” you should:

(1) calculate your operating cash flow

(2) subtract your capital expenditures

(3) on the chance that your company pays dividends, subtract your dividends, which are shares of profits paid to part-owners of the company.

Business owners should carefully monitor both cash flow and profits, for the sake of the progress of their company, as well as tax considerations. Cash flow could originate from an excited or generous relative, or a small business loan, or any of a variety of sources. Profitability depends on total revenue minus expenses, including negotiated payments to investors or lenders.

Profitability may indicate long-term success, but cash flow generally indicates engagement with the economy and a vibrant outlook for success. Healthy cash flow demonstrates that the company functions in the here and now. In many cases profitability may come afterward.

 

We hope that you have enjoyed this article and the prior one on profitability.   We work hard to bring our audience timely and important information.

We do not charge members any dues or fees.  If you are not yet a member of VAMBOA, please join here:   https://vamboa.org/member-registration/

Members may use our seal on their web sites and collateral and will receive special discounts and other important information.

Is Remote Work Here to Stay?

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By Debbie Gregory.

LinkedIN Debbie Gregory VAMBOA VAMBOA Facebook VAMBOA Twitter

 

The COVID-19 pandemic, with all the necessary social-distancing and isolation measures, has pushed businesses in almost every industry.   The pandemic has pushed businesses to allow some, or their entire, workforce to work remotely.

The various collaborative technology platforms such as Zoom, Slack, and Microsoft Teams have all seen a dramatic increase in users and a huge demand for their services. This increase in demand for these services is not likely to go away once the pandemic ends or abates. Among younger business owners and workers, remote working is being viewed in an increasingly positive light.

Earlier this year, 500 small business owners across the United States were surveyed about remote work and below are the findings of those surveyed:

A.) Small Business Owners are More Open to Hiring Remote Workers:

Currently about 55% of small business owners in the United States would consider hiring remote workers after the pandemic ends or abates. This is a significant increase from the previous year (2019) as only thirty-six percent would have considered it at that time

B.) Age Determines How Remote Work is Viewed:

Small business owners, aged 18-34, stated they have used remote workers in the past twelve months; Sixty percent would consider hiring remote workers in the future; Eighty percent or approximately one half of the small business owners aged 18-34 surveyed stated that they feel remote workers are more productive than on site office workers; while only thirty-five percent of small business owners aged 35-44 and a mere fifteen percent of small business owners aged over 65 stating remote workers are more productive than office workers.   Additionally, small business owners aged 18-34 also feel the quality of remote workers to be higher than office workers, forty-three percent as compared to sixteen percent of small business owners who are 65 or older.

C.) All Generations are Concerned About Remote Work Challenges:

All age groups surveyed agreed that working remotely comes with a great deal of benefits for both the employees and the employers. However, there were also a significant number of concerns about the challenges presented by moving the workforce from the office environment to the home.

Concerns such as:

  • Employees are being distracted
  • Employees spending too much time on personal matters during work hours
  • The ability to effectively manage employees remotely
  • Information safety and security
  • Technology requirements, service, and upgrades

D.) Most Small Business Owners (in all age groups) Were Already Working Remotely Themselves:

Even though the older generations of business owners are hesitant to allow their employees to work remotely, many were already doing it themselves. In fact, approximately sixty-five percent of small business owners work remotely. It is not surprising that younger business owners are more likely to be working from home, eighty-six percent; the older generations are not far behind with fifty-four percent working remotely.

As employers and employees alike experience the benefits of working remotely, more companies will inevitably decide to make this leap. In the future, once the pandemic has finally passed or abated, there will be a dramatic rise in fully remote companies without any physical workplace.  This will also dramatically change the commercial real-estate market especially in very high rent areas on both coasts.

Since so many VAMBOA members are working remotely, we want to extend to our members and friends, significant discounts up to 50% from our Dell, our technology partner.   Here is a link to check them out:

https://vamboa.org/dell-technologies/

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