Important Tips for Taxes, Business and Finances

If you’re going to offer your customers prices that are competitive, you must first buy competitively. Attend wholesale auctions, buy factory direct where possible, and establish a buying co-op with other small but non-competing businesses.

Customer service pays in higher profits. Your entire staff should be aware that it is the customer who provides the money to meet payroll and pay for future salary increases.

Develop a circle of friends in similar businesses around the country. Discuss ideas and business problems with them on a regular basis. You’ll find out what others are doing to manage problems with inventory, receivables, personnel, fixed assets, computers, etc.

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.

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.

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.

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.

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.

Don’t be one of the many businesses that overpay vendors due to sloppy accounts payable procedures.

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’ compensation insurance. Review group insurance programs. Consider higher deductibles as a means to lower premiums.

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.

Actual results should be compared to these projections to highlight areas needing attention before major problems develop.

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.