Why do businesses need to develop and implement good strategy?

16. October 2017 11:48 by Selina Stewart in

 

Seems like an easy question, yet when I ask business leaders this question there is a long pause followed usually by a discussion around how they develop a strategy in their business and not why.

So why is it important to ask the why question? There is no legal requirement to develop or implement the strategy. I was recently talking to a business leader at a networking function who proudly told me he had never done a business plan and his business had been quite successful. My response was to wish him well, but if you are going to use luck and hope, they will run out eventually.

In this blog, we examine the three key reasons why developing and implementing strategy is important.

Key reason #1 - The business remains competitive

A strategy is all about positioning. If we don’t nail a unique position, then we are just one of the pack. To position a business well, we need to be clear about two things. Firstly, who are our competitors, and how well does our positioning beat them and secondly does our positioning provide a clear value proposition to our customers.

If you can answer yes to those two questions, congratulations your business has a competitive advantage in your chosen market. If you can’t answer yes, then the market will decide what happens to your business, and not you. You would then rely on the strategy of “good luck” to survive. Good luck with that one!

Key reason #2 – Your business will be fit to deal with any dark clouds that could destroy the business

You know what we mean by dark clouds. We have all dealt with them. Losing a major customer, a product or service loses its market attractiveness and sales drop, cash flow crises caused by external events. The list goes on. One of my favorite questions, is “How could I destroy your business?”

Developing strategy allows us to identify both looming threats and be “match fit” to deal with them. A company that failed to do this, and now, no longer exists was the Australian airline Ansett. In the 1980s it was one of the best airlines in the world. By 2001 after 9/11 it had collapsed. Those responsible had no real strategy for a cash-strapped business for a number of years, so when external threats such as the 9/11 airline shutdown actually occurred, Ansett was highly vulnerable and collapsed. It wasn’t fit.

Key reason #3 – Your business needs to identify its strategic opportunities to grow and prosper

In 2016, the life of a viable, robust business model is getting shorter by the day. Previously in strategic planning, business could look 3, to 5 to 10 years out with a bit of confidence. Most business leaders I am talking to are only going out three years as the world is changing so rapidly.

We need good strategies to understand where the next growth opportunities are going to come from. Are there new markets we should be chasing, either geographic or demographic? Are there any innovative opportunities either with new products and services or for operational improvement?

Finally, with change occurring more quickly, businesses need to not only identify these opportunities but also ensure they are rapidly implemented.

Key reason #4 – A well-documented strategic direction unites a team

It’s important that a team is united on where a business is headed. A disparate team working on disparate issues leads to a confused business. Adelaide Steamship was an Australian company that had over 50 different interested ranging from freight through to departments stores to food processing. There was a long-held view when the banks stepped in and began liquidating assets in 1991, that the company had too many fingers in too many pies and lost its focus. On the contrary, the global packaging giant Amcor has always had a clear plan, focus, and direction, and for decades has continued to provide a good return to shareholders in a very competitive market.

Key reason #5 – A clear strategy provides a good filter for decision making

Every day, business leaders are faced with many decisions to make. What do we say yes to/ what do we say no to? Without a clear strategy, everything is up for grabs. We run the risk of saying yes to everything and becoming at best an average business.

We can use a clear strategy as a great filter in decision making giving business leaders absolute clarity in what to say yes and no to.

The Disney Corporation was a great example of this. There were some a potentially hostile takeover offer by Columbia studios in 1982.  The Disney board felt that the company would lose the founders purpose “to bring happiness to millions” if it sold out.

The board said no and the rest is history.

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4 Proven Methods for Higher Sales Revenue

23. September 2017 17:40 by Selina Stewart in


Does your company need higher sales revenue?  These 4 tips are effective and easy to implement.Those who work at their respective organizations as the head of sales have one job: drive higher sales revenue. One key issue though is that many of us working in sales make this task far too challenging on ourselves. Then despite our best efforts, we are unable to reach our sales targets. If you struggle with find effective ways to get higher sales revenue numbers for your company, here are some important tips.

Higher Sales Revenue Tip #1: Focus on Your Team
A key aspect of driving higher sales revenue number is your sales team, but it often gets overlooked. Carefully review your team and make sure that you have the right people in the best roles for their skills.  You might have a very competent and hard-working employee, but if he or she is in the wrong role then you might not be as effective. Take time also to review the skill sets that your team has and what skills those in each role need to be successful. If you find any knowledge or training gaps, address them as soon as possible.  Focus on your team and make sure they have what they need to allow each of them to shine.  This will provide motivation for them to work heard on higher sales revenue goals at your organization.

Higher Sales Revenue Tip #2: Have a Solid Strategy
Sales success depends on a solid and clear sales strategy if you are going to effective. What is your business strategy?  What is your marketing strategy?  Do your business, marketing, and sales strategies mesh well together?  Have you taken time to properly evaluate your competitors and the current market to determine strengths, weaknesses, and opportunities?  To drive higher sales revenue, be sure to take the time to take a good hard look at the moving pieces that impact your customers if you are going to increase sales numbers.

Higher Sales Revenue Tip #3: Review Your Structure
The inner workings of your entire organization, including your overall strategy, depends on its supporting structure.  Empowering your employees and your leadership team with a solid structure ensures that all of the missing pieces will eventually fall into place and that your efforts have their best possible chance of being successful.   Does your business have the tools and resources to execute your marketing or sales strategy?  Do you need upgrades in your sales or marketing follow-up software? Does your sales team still need to automate follow-up tasks so they can reach more customers and have the best possible chance of driving higher sales revenue?  It’s important to take some time to evaluate your structure to help your employees with whatever tools or resources they need to help your company reach its goals.

Higher Sales Revenue Tip #4: Focus on Optimal Process Efficiency
When a business wants to get higher sales revenue number, it’s essential that everything moves and operates with optimal efficiency. Putting the proper items, including a checks and balances system to measure your sales goals, will help you to avoid wasting valuable time and money.  Going into a sales quarter with a poor process could potentially be disastrous for your sales team.  So consider this: do your current processes help your sales team or hinder them?  Does your current sales process allow your time to accelerate the buying cycle when needed? Is the needs and buying timeline of the customer taken into consideration?  Work to ensure that your process aligns with your people, your strategy, and your structure and you will empower and inspire your sales team to higher sales revenue numbers.

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10 Frequently Asked Questions About Payroll Processing

14. September 2017 20:28 by Junita Jackson in

Processing payroll is one of the most complex and time-consuming tasks a business must complete. If you’re new to the process, payroll can be confusing. Here are answers to some of the most frequently asked questions about payroll.

What Is an EIN?

The IRS issues employee identification number (EIN) numbers. This 9-digit number is used on federal and state tax filings for businesses, including payroll tax reporting documents. You can apply for an EIN through IRS.gov.

The EIN number can be used for a variety of business entities, including sole proprietorships, S corporations, and C corporations. Assume, for example, that you operate a C corporation, Ganz Manufacturing. Your corporation can operate under more than one fictitious name, and you can use the same EIN number. Ganz Furniture and Ganz Tool and Die, for example, could be fictitious names used by the same corporation.

This policy simplifies the tax filing process. You’ll need to register your fictitious names in the state where your business is headquartered.

What Is an I-9 Form?

Employers use Form I-9 to verify the identity and employment authorization of individuals. Every U.S. employer must have a completed Form I-9 for each worker hired, whether or not the individual is a U.S. citizen. To complete the form, an employee provides documents as evidence of their identities, such as a driver’s license, birth certificate, or passport.

An employer must retain each Form I-9 for a specific period of time, and a state or federal government official may ask to inspect the forms. Government agencies review I-9 forms to verify that each employee is authorized to work in the U.S.

What Is a W-4 Form?

Each worker completes IRS Form W-4 to indicate the amount of tax withheld from gross pay for federal income taxes. Employees complete similar forms for state income tax withholding.

How Do I Determine Payroll Taxes?

Once a W-4 is completed, the employer uses IRS guidelines to calculate the dollar amount of federal income taxes withheld. Each state has similar guidelines to calculate state tax withholdings.

The payment schedules are published in IRS Publication 15.

What Does Withholding Actually Mean?

Withholding refers to the dollar amount of federal and state income taxes that an employer collects from a worker’s gross pay. The dollar amount is determined based on the IRS W-4 form and the state’s withholding form. The company sends the taxes withheld to the IRS and the state’s department of revenue.

The dollar amounts withheld are reported to the worker on Form W-2 after year-end. It’s the employee’s responsibility to file their personal tax return and calculate their tax liability. The worker subtracts the W-2 taxes withholdings from the tax liability, and any remaining amount of taxes owed should be paid when the tax return is filed. This process applied to both federal and state taxes.

What Are Third-Party Liabilities?

In addition to withholding taxes, employers may also withhold the worker’s share of payments for insurance premiums, retirement plan investments, and other benefits. The worker decides on the amounts withheld for the payments. Once these payments are withheld from gross pay, the employer forwards the payments to each third party (insurance company, an investment firm, etc.).

When Do I Need to File W-2s and 1099s?

W-2 and 1099 forms are issued for different reasons. A W-2 is issued to an employee to report gross wages earned, tax withholdings, and other withholdings from gross pay. If you have wages withheld to pay for insurance premiums or to fund a retirement plan, those amounts are reported on a W-2.

The IRS requires employers to mail W-2 forms to workers no later than January 31st of the year following the end of the tax year. So, 2017 W-2s must be mailed by January 31st of 2018.

If your firm has paid at least $600 to a vendor for a product or service, you must issue a 1099-MISC form to that vendor. Freelance workers are considered vendors and are issued a 1099-MISC form. The IRS also requires employers to mail 1099-MISC forms to vendors no later than January 31st of the year following the end of the tax year. The employer combines all of 1099 issued and reports them to the IRS on Form 1096.

What Is Workers’ Comp Insurance?

Businesses purchase workers’ comp (compensation) insurance policies to pay for medical care and other costs if a worker is injured or killed while working on the job. The insurance policy pays for medical expenses and makes payments to the injured party based on a state’s workers’ compensation laws.

The insurance premiums are based on the total dollar amount of payroll a company pays, and the type of work performed the employees. If workers perform manual labor or work in jobs that expose them to physical injury (such as construction), the insurance premiums will be higher.

Construction, engineering and other firms that have a higher risk for worker injury need to have safety plans in place to reduce the risk of workplace injuries. If you can limit worker injuries, you can keep your insurance premiums at a reasonable level.

Am I Required to Have Labor Law Posters?

There are state and federal labor law poster requirements for businesses. The posters address worker rights related to the federal minimum wage, equal employment rights, and worker safety, among others. Companies can purchase “all-in-one” posters for both federal and state labor law requirements. The posters should be displayed so that employees can see them each day. The posters are typically posted in a break room.

What Does a Payroll Company Do?

A payroll company can perform many of the complex tasks required to process payroll accurately. To get started with a payroll company, a business provides the gross pay and withholding amounts for each employee. The payroll company uses current tax laws to calculate the correct tax withholdings and also withholds any benefit payments.

You can give a payroll company access to your corporate bank account so that the company can send each net pay amount to employees. This outside firm submits the payments withheld to the IRS, state revenue departments, and any other third parties. The company will complete all payroll reports and create W-2s and 1099s at year-end.

Every business should consider using a payroll company. This decision will help you save time and ensure that your payroll processing is accurate.

QuickBooks offers a number of payroll solutions ranging from simply cutting checks to full-service payroll. All payroll products integrate directly with your accounting software to keep your books in order with less work.

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What Business Advisory Tools Do I Choose?

11. September 2017 16:17 by Junita Jackson in

With a growing number of business advisory software tools on and entering the accounting market, it is often difficult to know what to choose.

At Smithink we recommend following our EnablerTM Seven Step to Success process using the best software at the critical steps. It is not as easy as having one tool for each step. There are several great applications that can be used. In this article, we will look at some of the tools that are available for each step.

The first step in the EnablerTM process is preparing your firm to succeed with business advisory services. This is critical to the ongoing delivery of services and should include the appointment of a champion and analysis of the right clients to start with. Many firms are using Excel sheets and Word documents to plan out their service packages and strategies for implementation. Key to this step is the development of a Client Relationship Management (CRM) solution such as MYP's Arm and Arm Pro.

From there you need to unlock your client's business advisory needs with an interactive client needs analysis. This, in my opinion, is the most important step, as it will indicate where the client's strengths and weaknesses are, and allows a proposal to develop to address specific needs. Great cloud tools here include Cash Flow Story's simple four-chapter approach to business performance and My Yardstick What's Important to you (WITY) tool and E-Scope automated pricing system can assist here to understand client needs and develop innovative proposals.

The third step is to create a "disturbance" in your client's mind using business value assessments. Paramount to this step is establishing how much the client thinks their business is worth against the commercial value and linking this to the concept of a Business Value Gap (BVG). Some of the best applications here are Cash Flow Story's Business Value Indicator and Bastar's materials, tools and programs that will calculate a capitalization rate for the client's business off financial data and a risk and value assessment. Another new tool in this space to increase the sellability of your client's business is Sellability Score.

From there we introduce financial diagnostic software to fill the gaps by analyzing and managing the client's key macro drivers and results that will improve their financial performance. We will look at where the business is today, its strengths (green flags) and weaknesses (red flags) and where it can be in the future. There are many solutions here including Cash Flow Story's Power of One, PANALITX, Fathom and Profit Guardian.

It is then time to look at the strategies required to implement micro services using smart tools and resources such as ESS BIZTOOLS and ESS BIZGrants. Attaché Software also has great tools here that can assist to implement key strategies with your clients.

Then track the performance of the client's business by preparing budgets and cash flows (or action plans) with Castaway, Calxa or Plan Guru. This step can link back to the development of business and action plans. MAUS Software's Master Plan is an innovative solution to address this need. Another great tool here is MYP's Estate Planning application to unlock your client's estate planning needs and develop key strategies for the future.

Finally, generate new business by growing your business advisory specialization through profitable scenario planning and offering your "how would you like to see the financial impact of every business decision before you make it" service. This look into the future requires software that can simply show the client their pre and post position. Any of the financial diagnostic tools will adequately handle this task.

With this myriad of choices, a firm needs to be confident that they select the right application for their clients and staff.

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3 Tips On Managing Your Corporate Debt

9. September 2017 17:58 by Jason Kelley in

Whether that be a term loan, line of credit, or some other bank credit facility, a business usually has some sort of debt on the books. For big business especially, it’s important to know how to best manage your debt so it doesn’t hinder your growth or sink your business altogether. Here are three suggestions to better manage your debt as you grow your business.

 

1. Negotiate better terms

If protecting your cash flow is a key goal of yours, then making your minimum payment as low as possible gives your company flexibility to protect its cash flow. See if you can have your interest and principle accrue, or if you can have interest only payments due. You can always turn an interest only payment into an amortizing one by paying down additional principal.

2.Negotiate better amortization schedules

The longer it takes to pay off your loan, the lower your payments are going to be. If the loan amortizes over ten years, your payments are going to be lower than if it pays off over five. You may have to pay extra principle, but the key is to minimize your required payments to guard your cash flow.

3. Negotiate better interest rates

This may take a little tact and salesmanship, but the best tool to help you negotiate interest rates with your lenders is to get them competing for your business. This shift takes you out of the position of “applicant” and transforms your lenders into people trying to earn your business.

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