Use your advisors wisely.
Keep your accountant, banker, insurance agent, and lawyer informed about your business. These professionals consult regularly with many other businesses and can help you avoid pitfalls in making business decisions.
Keep your accountant, banker, insurance agent, and lawyer informed about your business. These professionals consult regularly with many other businesses and can help you avoid pitfalls in making business decisions.
Actual results should be compared to these projections to highlight areas needing attention before major problems develop.
Use your financial statement to give you important management information. Compare inventory turnover (cost of sales divided by average inventory) year by year. If turnover drops, consider it a warning sign and investigate further.
Payroll costs are a major item in most businesses. Perhaps a more efficient plant layout or work schedule would result in reduced labor needs. Consider the use of temporary employees and subcontractors if your business is subject to seasonal variations. Review employee classifications for workers’
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Don’t be one of the many businesses that overpay vendors due to sloppy accounts payable procedures.
Almost every business has past-due receivables. Phone the people who owe you the most money, and try to resolve the problem on the spot. If you can’t collect the total immediately, try to negotiate a payment schedule, or schedule a follow-up call.
To speed up cash flow, reduce the time between shipping your product and sending and invoice. Consider semimonthly instead of monthly billing, and send second notices more quickly.
Motivate your employees to be concerned about net profit. They should be as concerned with controlling costs as with generating sales. To encourage participation, consider implementing a bonus program based on a percentage of costs saved.
Companies that ask employees for suggestions get good results. Your employees are directly involved with both you customers and your product and are in a good position to suggest improvements.
Be innovative and unconventional when necessary. The fact that something isn’t currently being done in your industry or in your area shouldn’t keep you from trying something different if it will give you a better product or better service for your customers.