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Businesses Fail - Complete Controller

Deficiencies in capital, business experience, resources, planning, and management structure are a few of the leading factors in business failures. An entrepreneur, having ample liquidity, but no idea of how to make and use a business model will have little to no success in running and keeping a business. Check out America's Best Bookkeepers

According to studies conducted by leading management experts, 90% of start-up businesses fail to surpass the three-year mark. This failure is often the result of poor planning and implementation. To combat this, the first step is developing a realistic feasibility plan and a balanced budget or forecast. Without a feasibility plan, one cannot be a successful entrepreneur. The inception of a business plan is essential when initiating any business and helps the business adhere to the roadmap laid out in the business model. Check out America's Best Bookkeepers

 

The purpose of the business must be evident in the planning process. It is also vital that the business owner’s experience is relevant to the use of the company. This experience will help the owner evaluate the business’s economic health during the phases of a downturn or market boom. It is equally important to stick to the budget numbers and forecast in the business plan. The owner should be familiar with the concept of project management and capital budgeting techniques. The plan should include the breakeven point of business operations and proper numbers allocated to expenses and revenue. Most businesses that fail do so because the owner did not factor in all the budgeting expenses. The incurred losses eat up the capital, and the owner has to shut down the business.

 

Careful and proper planning (non-financial) should also be kept in mind to avoid any business hiccups. Management structure plays a vital role in augmenting the purpose of the business. The business owner must ensure that the management structure comes equipped with the experience relevant to the company. A proper management structure in the organization accounts for adequate human resources in finance, inventory management, production, operation, production, and recruitment.  It is entirely up to the business owner whether the decision-making has to be centralized or decentralized. This function of the decision-making process has to be part of the management structure and in conjunction with the business model. If the numbers fall within the anticipated forecast, there is no reason for management to worry even if operations are running into losses. The core competency of management anticipates that initial failures in capturing the desired market share and wallet size will eventually lead to profit. Check out America's Best Bookkeepers

 

SWOT analysis is another feature that can help the business in preparing itself against any unforeseen circumstances. It helps in identifying the strength, weaknesses, opportunities, and threats. Understanding the market share, competitive environment, socio-cultural influence, and distribution accounts for success in any business. A business owner needs to be a visionary and exhibit positive behavior traits, both on the micro and macro level. Control over every aspect of business operation and financial expenditure should be of the utmost priority. If a business owner successfully manages to envisage the potential of business growth swiftly and aggressively, then the business operations can capture a sizeable market share.

 

To establish a business with the purpose of only existence, without a proper feasibility plan is just a sketch on paper. As earlier mentioned, a cash-rich person, without any business model, the purpose of business, and poor management structure, is just another example of business failure.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
sources of Capital - Complete Controller

Capital has a diverse range of sources, and these sources have a diverse range of needs and objectives. Thus, these sources are divided into debt financing, which means to borrow money and pay interest on this, and fund equity, which means investing in one’s business and exchange partial ownership.

 

Debt Financing Sources

 

Check out America's Best Bookkeepers Commercial banking: Once the first phase is completed, small businesses often draw the attention of employees to commercial loans. In deciding whether to offer financing, bankers must first consider credit ratings, guarantees, and payment options. Bankers can also study the nature of their businesses, management teams, competitors, industry trends, and how they plan to use revenues. Well-designed loans can play a long-term role in demonstrating your company’s ability to lend to future lenders and repay loans. Moreover, bookkeeping is also easy in commercial banking.

 

Companies in finance that refuse to accept bank loans have become commercial finance companies. These companies generally charge much higher fees than other creditors, but if you register for other services such as for salary administration, they can offer lower rates. Due to the low number of state and federal regulations, commercial finance companies have a more flexible credit policy and greater risk tolerance than commercial banks. But they offer higher interest rates and adjust credit guarantees for undeveloped companies.

 

Leasing Companies: If you need funds to buy assets for your business, leasing can replace traditional debt financing. Instead of buying equipment, leasing what is needed while building the business can be a positive choice. If the agreement is correct, the operating lease will include a clause that gives you the right to cancel the lease with minimum penalties or without penalties. The cancellation terms provide flexibility if the sales volume decreases or if the equipment becomes obsolete. Financial leasing is different from operating leasing, as it generally does not include any maintenance service and allows them to participate in the use of equipment throughout their lives. Check out America's Best Bookkeepers

 

Local and state credit plans: The local and state governments promote economic development. Through support services and even credit guarantees, providing direct assistance to capital or small or expanding partners. Financing conditions are generally governed by regulations that allow the creation of state agencies or local development.

 

Trade receivables and P2P loans (point to point): Many companies do not see obvious sources of financing or loans like customers and suppliers. Suppliers interested in the long-term growth of their customer base may be ready to provide favorable business conditions for loans and even provide direct financing to facilitate customer growth. The same principle applies to customers who rely on companies as suppliers of key resources. You can also explore online P2P platforms, such as a circle of lenders or a credit club.

 

Equity Capital Sources

 

Private investors: Most of the first investor companies are the first shareholders of private investors, be they are individuals or small groups. These investors are called “bands of angels” or “angels.” This is the fastest-growing private equity market sector. Check out America's Best Bookkeepers

 

Institutional Risk Capital Companies: In recent years, traditional venture equity companies can be the source of capital for entrepreneurs. These groups form a formal venture capital organization to promote the prosperity of high-tech industries and Silicon Valley. However, these funds generate a small increase in general capital each year, so they are ready to expand their horizons.

 

Venture capitalists and strategic investors: Often, large companies have established venture capital to manage operating businesses to find investment opportunities (usually in their main branches), not just for profit, but also to achieve strategic goals, such as unique talent that can grow your company or technology purchases.

 

Foreign investors: A large number of foreign exchanges, leasing companies, and banks, seem to be interested in corporate finance with US companies, particularly with Saudi Arabia, Germany, China, and India, and other growing economies. Before making any international financial transaction, carefully study the differences in the methods of planting and management, as well as in contractual and legal management.

 

Intermediaries: Growing companies are starting to seek funding through brokerage agencies, such as brokers, investment banks, financial advisors, or commercial bankers. These individuals and companies are not direct suppliers of shares, but they help growing companies to organize financing through insurance companies, commercial lenders, private foundations, or other institutions. Investment banks often also organize private investors to invest in shares for the public issue of corporate securities.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Capital financing relates to any kind of capital, which happens as the aftermath of a business decision. In other words, capital financing might seem like the current assets and liabilities of a company but is more complicated than that. The term capital financing is utilized to define four different kinds of capital. The four are venture capital, debt capital, working capital, and equity capital. These labels relate to the origin of capital financing. While a business flourishes and expands the business function, external finance might be required to support an increase in the capital. Equipment, properties, and main assets are financed via capital financing options so that companies could keep the most amount of cash in hand for interim business requirements. While funding is accessible for every business, big companies hold more choices because of their size and records of commercial achievements. Some kinds of capital financing entail private investors, equity financing, bank loans, and business bonds. Check out America's Best Bookkeepers

Debt financing is another capital that is acquired via borrowing of funds to be paid back at a future date. General forms of debt financing are credits and loans. The advantage of debt financing is related to the fact that it enables a business to leverage a trivial sum of money into a far larger amount, empowering further swift development that might not be possible otherwise.

 

Call for the Establishment

This calls for the establishment of efficient financial management. Financial management entails development, systematizing, regulating, and monitoring financial capitals to accomplish business objectives. You could achieve efficient financial management only if you have developed a comprehensive business strategy. An approach in this regard relates to holding determined goals and being agreed, established, and assessed the procedures, policies, strategies, and practices to accomplish these goals. Check out America's Best Bookkeepers

The standards of bookkeeping are considered as one of the guiding principles for efficient financial management. The bookkeeping systems of your organization for maintaining financial records and documentation should perceive recognized external principles of bookkeeping. Establishing efficient financial practices and systems to evaluate the financial strength of the company is considered as a significant part of running a business and assures that your tax requirements are met.

Effective Financial Management System

While establishing an effective financial management system, bookkeeping is the process of recording financial transactions. These records could support applying for financing, evaluate business practices, compliance with tax obligations, and productive management. This financial transaction includes equity to and from shareholders, payments to retailers and account payables, payroll to employees, and billing and cash receipts from customers. An accurately organized bookkeeping system would assure a sufficient internal control system where all the transactions are recorded and only officially sanctioned transactions are carried out. The posting of financial transactions is usually related to the accountabilities of a bookkeeper. It must be noted that bookkeeping is the handling and recording of financial transactions after the transaction has been made. Check out America's Best Bookkeepers

Along with that, due to tax, you would be officially obligated to maintain records about your commercial expenditures such as general sales tax (GST), employees’ salaries, your income, fuel tax credits, fringe tax benefits, and superannuation. Fundamental skills in efficient financial management initiate in the critical fields of cash management and bookkeeping that must be executed following particular monetary regulations to guarantee reliability in the practices of bookkeeping. Fresh managers in the leading roles would soon go on to learn how to create financial statements with the assistance from bookkeeping records and evaluate these statements to comprehend the financial situation of the company. For the reason that financial evaluation demonstrates the actual condition of the business, efficient financial management is considered as one of the most significant processes in the management.

 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

A crucial first step in securing financing for your business requires a well-designed business strategy. Once you have formed a business strategy, then comes the vital step to make a decision related to the financing plans for your new business. While looking for finance options, an entrepreneur must decide the debt-to-equity ratio of the company. This relates to the association between capital borrowed and capital invested in the business. The more money an owner has invested in the business, the more his business will be lucrative for the financiers.

Public Financing

Check out America's Best Bookkeepers A publicly traded corporation is a limited liability business that offers its securities for sale to the public, over a stock exchange, or with the help of market makers functioning over the counter markets. A new business might face difficulties securing debt financing such as a bank loan, that is why businesses at their first stages prefer to go for public financing. This turned out to be the major reason behind the importance of publicly traded companies. Before their existence, it has been challenging to secure a large volume of capital for private enterprises.

Generally, the security of a publicly-traded company is owned by financiers that is why publicly traded companies are capable of generating capital and funds via the sale of their securities.  In some circumstances, where the securities of the company are offered to fewer financiers, you might not have to get into more paperwork. Still, if a business has opened itself to broader public trading, the amount of paperwork would surely overwhelm its owner. Check out America's Best Bookkeepers

Debt Financing

In case you consider not having an investor and want the full authority of the business to yourself, you might need to pursue debt financing to speed up the start of your business. In such circumstances, business owners would try to bring in their sources of capital in the form of personal loans, home equity loans, and even credit cards. In some cases, there would be a possibility that your close friends or members of the family might wish to loan you the much-needed funding at a low rate of interest and acceptable terms for repayment. Further, options may include applying for a business loan.

Debt financing empowers business owners to take responsibility for their decision related to the business. But, the drawback of borrowing money for a new business would be overwhelming. The owner would have to make significant repayments for the loans promptly to commercial banks and credit cards, or you could destroy your credit rating if you didn’t do so. This would cause difficulty in the approval of further loans or maybe a rejection of the loan application. Bookkeeping services could further help out in planning the financial requirements to drive the business where the bookkeeper would evaluate the actual amount of funds as well as capital.  Check out America's Best Bookkeepers

Final Note

The answer to the question, which could be the most suitable choice between public financing and debt financing, would rely on the circumstances. The factors that might impact your decision include the kind of business you are planning to start, the financial capital you initially have, and your credit standing.  It also includes business strategy, your tax condition, and your possible financiers.

 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers