General Business and Finance Blog

Technology, some people fear it, some resist it, and others
embrace it. As a small business owner, it could be the best
thing that ever happened to your company. With the technology
available today, small businesses are increasingly leveling the
playing field between themselves and big companies. With toll
free virtual PBX (Private Branch Exchange) telephone systems,
small businesses are combining today’s technology with
traditional customer service to take their business to the next
level.

It used to be that only Fortune 500 companies with thousands of
employees and 10- story office buildings could afford and
maintain a traditional PBX telephone system. Now, with toll free
virtual PBX services, anyone with a telephone can reap the
benefits of this powerful communications tool. A virtual PBX has
all the advantages of a traditional PBX and more without the
hassle, hardware, and expense.

A virtual PBX allows small businesses to:

(1) Project a professional, more established company image (2)
Have one unified number for office phone, cell phone, fax, and
pager (3) Make information available to their customers 24/7 (4)
Automate order taking and pre-qualifying processes (5) Have
web-based, real time access to their system

Small and home-based businesses are using all of these features
of their toll free virtual PBX systems to sound and operate like
a Fortune 500 company everyday.

Project a Professional, More Established Company Image Right or
wrong, consumers assume a company with a toll free number is a
more established and secure company. When a toll free number is
attached to a virtual PBX with an automated attendant, that
powerful image is perpetuated. An automated attendant will
answer all incoming calls with the same professional and
courteous message every time, day or night. Professional
greetings can be recorded by the business owner themselves, or
even by a voice talent, and customized for the needs of the
business. It doesn’t matter if the business is operated out of a
home office or the Oval Office. The caller hears a professional
greeting each and every time they call.

Unified Voice and Messaging System With a toll free virtual PBX
system, small businesses only need one telephone number. This
number can be an office phone, cell phone, fax, and pager all in
one. Gone are the days of having to put 3 or 4 different numbers
on business cards. Now the virtual PBX toll free number replaces
them all. When a call comes in to the toll free number, it can
be routed to any local number. It can even be programmed to
route to different numbers at different times of the day or even
different days of the week. A call never has to be missed again.
That kind of flexibility is unheard of with a traditional toll
free number or a hardwired PBX. If the call is not answered, or
is sent to voicemail, the virtual PBX system can even send out a
page to let the user know that there is a message waiting for
them. The toll free number also acts as the fax number. When a
fax is sent, the system recognizes it as a fax and can store it
in the fax mailbox for later retrieval, forward the faxed
document to a local fax machine, or even send the fax to an
email address as an attachment. The unified messaging feature
unchains small business owners from the home or small office and
allows them the flexibility to get out and build their business
while still being available to their customers.

Powerful Automation No matter how efficient a small or
home-based business is, they simply cannot be available to their
customers all the time – unless they have a toll free virtual
PBX system. If a caller has questions they want the answers now.
If they don’t get those answers when they call, chances are
they’ll look some place else. Making sure information is
available, even when a live person isn’t, can be the difference
between someone becoming a customer or moving on to the
competition. A toll free virtual PBX allows the storage of an
unlimited amount of information for callers to retrieve 24 hours
a day, 7 days a week. Menus broken down into what kinds of
information a caller might need, make it easy for them to
navigate the system and get what they are looking for. Faxes can
even be attached so the caller can request an automated fax
back. For a business that needs to pre-qualify their callers, or
would just like to get some information about them, can take
advantage of question and answer voice mailboxes. A set of
pre-recorded questions can be asked of the caller and the voice
responses then saved in the system and emailed as a sound file.
These automated processes not only save time, but they also make
sure callers can get the information they need when no one is
available.

Web Based System Access A toll free virtual PBX is just that,
virtual. What that means for a small business owner is that one,
there is no hardware to maintain or software to buy, and two,
that they can access their system from anywhere they can get
online. Online system access is one of the most popular features
of a virtual PBX system. Web-based system access allows users to
check their voice and fax messages over the internet or have the
messages delivered directly to an email address. Of course,
messages can still be checked from any touch-tone phone,
anywhere.

A small business owner has administrative access to check the
call logs of all incoming calls to their toll free number and
use the call capture feature to not only capture the phone
number of the person calling, but also their name and address.
It also allows a user to run reports based on different criteria
chosen. For example, reports could be run to show when the
busiest time of the week is for customer service or if the call
volume increased after a specific ad campaign was released. The
applications are endless.

With all these powerful features, and most times more, it’s
amazing that toll free virtual PBX systems can be found at a
reasonable price. Most systems offered are between $9.95 and
$29.95 depending on the capabilities and size of the system.
Many will offer a varying number of voice mail boxes, features,
and minute plans. A good toll free virtual PBX service provider
can also customize systems if needed.

Technology is ever changing in today’s fast paced world. Small
business owners will either have to embrace it or risk being
left behind

The concept of franchising is in itself a sound business idea. Many have become rich because of it. However, not all franchise businesses become a success story. There are several factors that may contribute to the problem.
Some franchise units, although parented by large corporations, failed to make the mark due to the failure of the franchisee to strictly adhere to the program and terms of the franchise. Following the system of the company and the provisions of the franchise agreement is crucial to the success of any franchise unit because it is the essence of franchising.
Some companies venture into franchising with little experience and limited resources, hence they are unable to develop an effective franchise system. Although they may be able to sweet-talk prospects into buying a franchise, some, if not all, of these franchises are doomed to fail because of the flawed system of the company.
In some cases, the company did not place much attention and effort to market research specific to the franchise because its main concern is selling as many franchises as possible, without studying what the ideal number of units in a given area should be to ensure success.
The market is affected by many external factors that are beyond the control of business. These include the condition of the national economy, the outbreak of war or local civil unrest, market demand or shift in preferences, disease outbreak that affects raw materials supply, natural calamities, or anything that would cause sudden and significant decrease in the supply of goods or the market demand, or both. Unfortunately, business cannot do much about these conditions. The key to survival is adapting to prevailing conditions and being able to take the blow, until conditions are better. Sad to say, not many businesses can do both so they eventually succumb to the pressure.
Other franchises ceased operations after some time because they failed to obtain a firm commitment from central management to provide adequate, substantial, and continuous support to the franchise.
Some failed to get the commitment of their own employees to support a new business strategy or develop new employee and management skills to help them cope with new market demands.
Failure to handle and manage change is also another factor in the collapse of a franchise. The franchisee may not have sufficient insight about the staff’s resistance to change (new strategy, management style or policies) to be able to detect it right away and handle the situation properly.
Moreover, the franchisee may lack the required knowledge in technology, operational systems and organization that he loses credibility among his employees. In such a situation, employee morale will be low and a high rate of employee turnover can be expected. This dissatisfaction will certainly reflect on their initiative and work quality, and will be mirrored in the overall performance standard of the unit.
Franchises may also lack adequate reporting and control systems particularly those that were abandoned by the parent company after the business has opened. Any business that does not have a strict reporting and control system will most likely be operating on vague estimates, until it finally closes shop.
There are many reasons behind the failure of a franchise but all these can be avoided with a thorough study of the company, its existing franchise network, proper training, and strict compliance with the terms of the franchise agreement.

When it comes to successful business growth – one of the key differences that separates the successful business owners from the average ones…

Is what the business owner ‘works’ on – when they have employees.

I have noticed that the best business owners work on improving their employees…

Why? Well, so that the employees learn and then do certain tasks that the business owner used to do.

By doing this, the owner can remove themselves from the ‘day-to-day’ running of the business so that they can work on areas that can grow the business – and/or do the things they enjoy doing.

Like playing golf, going on holidays, spending time with their families.

On the other hand, the average business owner continues to work ‘in’ the business despite having employees. For a number of reasons the average business owner says that they don’t have the ‘time’ to improve their employees.

As a result, the employees lack the skills and/or the freedom to do the tasks that would free up the business owner from the day-to-day running of the business.

So guess what happens? The business remains dependent on the Business owner.

So the Business owner has to continue working.

Despite having employees, the business owner is still working a million hours… but the business never seems to grow to the levels that the business owner is hoping for – even though they’re working harder than they ever have.

Does this sound familiar?

Let’s explore how this happens.

The average business owner that wants to grow their business – but find it very hard to grow successfully… tends to do the following.

They have a business – and it’s growing. Early in the business it’s just the owner and maybe a few others. The business is growing, and the owner is working a million hours.

The average business owner knows that they should employ staff, but they put it off and put it off, until they can’t possibly cope with the workload anymore.

So they hire new staff at the last minute.

Usually the new person is employed in such a hurry that the business owner doesn’t have the time to train them. Because the business is so busy.

After all, the business owner has been working a million hours, so they’re probably feeling a bit stressed and overwhelmed.

They’re typically not feeling in control and calm – that’s for sure.

And the business owner usually doesn’t have a system to hire appropriately skilled or passionate people.

Because they don’t have a proven hiring system, the staff that are employed can often lie their way through interviews telling the owner that they do have skills – when they actually don’t.

You know how the story goes…

Anyway, a new person is hired.

But because the business is busy, and the business has no real induction or training system to get the new employees up to speed – the business owner continues to focus on doing the work themselves.

When the owner checks to see how the new employee is performing, they get disappointed because the new person doesn’t have the ‘skills’ or the initiative to do things properly.

So the business owner steps in to ‘do it themselves’ because they think that they can ‘save time’ by doing it themselves.

It’s at this time the business owner starts proving to themselves that ‘no-one can do it as good as me’.

And they are correct. Of course no-one can do it as good as them – because no one has taught the new employees properly.

So the average business owner continues to do the ‘day-to-day’ things, and take over from their staff when the staff aren’t doing the right things…

By continuing to do the work that the employees are suppose to do, the staff very quickly realize that the business owner will always ‘save the day’.

So they back off on their productivity, and their passion.

The staff quickly learn how to ‘hide’ in the business so that they just get by.

They become ‘clock watches’. They turn up to work, to watch the clock and as soon as it turns 5pm – they’re out of there.

And this hurts your customers. Because the customers of the business receive inconsistent levels of service.

The customers quickly begin to realize that if the business owner serves them – they may get extraordinary service.

And if the staff serves them – they’ll get inadequate service.

If the service is poor and inconsistent the customers will start to get annoyed. They’ll literally ask for the owner every time they come into the business. Because they know they’ll get the service they want.

And that’s a sign of a poorly trained team.

As a result the customers end up going somewhere else, the business suffers, the sales and profits dwindle – and the business owner blames it on the ‘staff’.

The business owner may then go into “see I told you I can’t find the right people’.

The average business owner has tried to grow the business, yet misses a few crucial things that makes them miss out on the rewards of a successful business.

The result is unhappy staff, unhappy customers, a business that barely makes any money – and an owner that works around the clock, stressed and overwhelmed for little or no return.

Well it doesn’t have to be that way!

You can quickly and easily turn this around, if you’re in this position, or even better you can completely avoid it by following my guidance.

Every great business owner that I know, that has successful business growth follow a number of specific steps to get them out of the situation I’ve just outlined.

And it’s crucial for the growth of your business too.

It’s wonderfully easy when you learn how to do it for your situation.

Let’s look at what the best business owners achieve by following these specific steps – and what you could possibly achieve by following my guidance.

Firstly – your staff will have the right skill sets and attitude to work in your business. Plus they’ll improve and grow rapidly (faster than you may think). This means that you can comfortably rely on them to get the ‘job-done’.

By focusing on getting the team up to the standard you can be assured that in a few weeks or months they’ll be at the point where you can depend on them.

They’ll be doing a great job and delivering consistent levels of service.

As a result you can now forget about having to ‘look over their shoulder’, or forget about having to ‘save the day’ like other average business owners.

Because your staff are now producing – you have freed yourself up from the day to day running of the business – so you can focus on ways to grow and improve your business.

And you can even spoil yourself with reduced work hours, time off and even holidays.

Imagine that?

Now, back to your staff.

Because they’re learning, growing and producing you’ll be happy with them and they’ll be happy with themselves – and of course they’ll be happy working for you.

And it’ll rub off on your customers.

Why?

Because your customers will get great consistent service from your entire business.

So what will this mean to your business?

For a start, your customers won’t always be asking for you, because they know your staff are consistent – so you won’t feel trapped.

Because of this consistency your customers will reward your business with their repeatable profitable custom, positive word of mouth and ongoing referrals to your business.

Now you’ll have a business where the team are growing and happy, your customers are happy and raving about you, and your financials are healthy and very profitable.

That’s right, your business will be profitable which means you’ll be making great money – and remember, your staff will be doing most of the work… so you’ll not only be making great money – you’ll also have ample free time.

Can you see, hear and feel what’s happening to your business?

Multi-millionaire business owners always tell me that the most important part of their growth – is good people. They’ll always hire people that know more and perform better than them on the certains task they are employed for.

People are one of your greatest assets as a business owner. And like any asset you need to invest in it to get returns.

Invest your time and your focus on growing your people to do better than you. That way you’ll have the time to grow your business.

On my one-on-one business coaching program I take my clients through this process step by step so that they can fast track their growth – with the safety and peace of mind knowing that they are following a process that has worked time and time again.

Copyright © 2007 by Casey Gollan. All Rights Reserved

Email and document security is no longer just an option for
companies, it is a necessity. Couple that with the costly user
licensing of most enterprise software solutions and many small
business operators can be locked out of taking advantage of Best
Practice strategies that ensure the privacy of intellectual
property and communication. Setting rights permissions to
documents and encrypting email will be essential to future
security practices for all businesses.

Common knowledge has been that the less sophisticated small
business operates on a pricing sensitivity and is more apt to
take advantage of promotions, whereas the more sophisticated
make security decisions based on perceived business necessities.
Overall, small businesses tend towards waiting to implement
internet security measures until after suffering an email breach
or informational leak. By this time privacy and accompanying
monetary loss may have already done irreparable harm to a
company’s intellectual property and reputation. Large enterprise
solutions make it necessary to adopt complex IT infrastructures
and processes that are usually dependent on an IT staff – a
solution that does not fit well into the budgets of most small
businesses.

According to published reports in PCWorld.com, there are nearly
70 million small businesses worldwide and over 20 million in the
U.S. alone. Small business is a major part of the global economy
- that means it’s time to replace a general passivity towards
the possible threats from email and document theft with a look
towards initiating security measures as a business standard. The
increasing level of security risk due to email and intellectual
property theft make it imperative for small businesses to raise
their level of security knowledge and investment.

Recent studies show that although information security is a high
concern for small business owners, lack of actual knowledge and
awareness of the economic impact of security incidents is
equally high. Imparting an awareness to the small business
community of the real threats in regards to security
vulnerability should be top priority. Through education in this
arena, small businesses can better enable them to not only
determine their own level of risk but also choose the necessary
email and document security solutions.

The responsibility of raising awareness of security provisions
needs to come not only from governing agency reports, but also
from security solution vendors. Providers of business tool
solutions are better equipped than any other entity to position
themselves as leaders in educating businesses on not only the
dangers but the appropriate basic security measures to
complement a small company infrastructure. Especially here,
being informed on which internet security products best suit a
company need is important as the needs of small businesses are
vastly different than that of enterprise businesses.

Look to numerous market survey and analysis reports that
specialize in studies on information security and small
business. A little research will show they repeatedly state the
same warning to small businesses – they need to change their
attitude towards security and begin adopting a security plan.

Taking the time to gather information on creating good internet
security practices will lead to a decrease in the future cost of
lost productivity, and by educating your workforce you create an
even wider prevention of productivity loss

Today, improving the image of the small business, or rather creating the appearance of a larger corporation, can be achieved by many small businesses through the implementation of a Virtual PBX System. The features of such a system are numerous, including the ability of the Small Business to connect to employee teams across the country, or create virtual departments within their business.
Easy and affordable to implement, the Small Business can readily compete today with the larger functionality of the Fortune 500 phone system used by larger corporations.According to a report written by Derek Leebaert, in Journal USA dated January 2006, on “How Small Businesses Contribute to U.S. Economic Expansion”, he outlines several interesting factors including, how “firms of 100 to 1,000 workers are spending money eight times faster on technology than are big corporations”. He also points out how “small businesses act as a shock absorber for fluctuations in employment caused by globalization and downsizing” by highlighting the fact that 53 percent of small businesses are operating out of an individual’s home. These businesses range from Hair Styling to Business Consulting Services, and more.
The Virtual Switchboard is the perfect example of the Small Business Owner jumping on the technology bandwagon to stay ahead of, or just compete effectively with larger companies. Useable features in these online systems can paint a professional image of a small company being larger than it physically is. Some features of the Virtual PBX include:
Multiple Extensions and Greetings;
Dial-by-Name Directory;
Customizable Music-on-Hold;
Answering Rules;
Flexible Call Forwarding;
Total control over Managing Incoming Calls.The Small Business Owner Can also set-up fax and voice mailboxes for employees, and can select a toll free number that is right for them. One of the more obvious benefits to the small business owner is their ability to live and work in one city and acquire a local number from another city.
Again, according to statistics provided from the above article, Fortune 500 companies now employ 9 percent of the workforce in the USA, versus the 20 percent employment ratio they provided in 1980. In the last decade, an average of 9.36 of the American population started their own business. Contrary to what many people think — ‘that new businesses are likely to fail’ — two thirds of all businesses started are still open after two years.
By implementing innovative production techniques from technologies such as the Virtual PBX, and generally stream lining operations, the small business can adapt faster to shifting economic conditions, and can, in most cases, successfully compete with the image of their larger business counterpart.

 

While most think that the recent economic trends will adversely affect their future, accountants are able to see this downturn in a positive light. Accounting is a very stable career path. Despite being a stable career path, accounting is also quite recession-proof. Though almost all jobs are on the decline, accounting remains one of the top positions searched for by companies these days. There is never going to be an economic downturn for accountants because accountants will be needed for everyday commerce. As long as there is business, there will be a demand for skilled accountants so that companies can allocate costs and reduce them as well as increase production where they are making money. Whether the economy is on the rise or becoming sluggish, accountants will always be safe. A strong economy means that there will be more businesses, meaning more businesses that are looking to hire accountants. Even a sluggish or stagnant economy will has a high demand for accountants because the businesses will want to cut costs as much as they can in order to stay competitive.

The demand for accountants is at an all time high recently because of the Sarbanes-Oxley Act. The Sarbanes-Oxley Act has made businesses pay closer attention to those they hire in the accounting, auditing, and financial fields. Because of this legislation, businesses are looking to hire the most adept professionals in their field to keep up with the new regulations presented by the Sarbanes-Oxley Act. The strict regulations create opportunities for accountants and auditors to audit financial records more thoroughly.

The transition to International Financial Reporting Standards is also playing a role in the all time high hiring of accountants. The shift to IFRS is a very costly process and many businesses and accounting firms are doing all they can to ensure a smooth transition. To do this, firms are looking for accountants with knowledge in both U.S. GAAP and IFRS. The shift from U.S. GAAP to IFRS will take place for some companies in as early as 2009. These companies have been preparing for this for years. They are hiring more accountants to make it a smooth transition.

The recent economic downturn has actually made the demand for accountants rise. Because businesses are looking to save money by cutting costs wherever they can, they are hiring accountants to find out where they are making their money and what sections of their business are less profitable. Unlike most other jobs, accountants are always in demand. Whether business is good or bad, accountants will always be needed. Since the Sarbanes-Oxley Act, businesses are looking to accountants to keep the integrity of their business because of the more complicated business deals that go on daily.

Accountants are also being hired more steadily today because of scandals surrounding the accounting community. The scandals create more accounting jobs because businesses and auditing agencies want more detail in their analyses because of the strict regulations and more auditors means more detail. Accounting is one of the rare professions that have an increase in people hired after there is a scandal involved in that line of work. The demand for forensic accountants has been steadily climbing in the last ten years. Because of the lack of ethics in business today, with crimes such as embezzlement, bribery, and securities fraud becoming commonplace, the demand for forensic accountants to detect illegal financial activity by individuals, companies, and organized crime rings.

Hiring is going so well for accountants that some firms even go to colleges and universities in order to find future employees. Many firms nowadays are looking to hire graduating accounting majors right out of college. One reason accounting firms are doing this is because the firms can train the new graduate in their own way of doing things. Also, because the demand for accountants is so high, firms can seek employees at a much lower cost.

 

Accounting is a great career path because there are there are many different types of specialties in the field and the fact that the demand for accountants has been increasingly yearly with no end in sight of this trend.

 

Small business grants are not just given away by government agencies or private institutions for helping you start your business. There needs to be a particular interest in your project in order for them to provide the funding that you need. And it’s not enough to have a good idea in order to obtain finance for it; you need to have a well made business project to convince them of your eligibility.

No Credit Or Income Requirements?

Though there is no need to reimburse the money on government grants, claims that state that there is no credit or income requirement in order to get approved for a government grant are far from being truth. Truth is that the requirements for approval are not present in the same sense as on private or federal loans but there is still a qualification process.

You may wonder then, what is needed in order to qualify for a government grant. The idea is that you’ll need to show that your business project is viable, and thus, you’ll need to show that you can be trusted which implies having a fair credit score and the ability to generate a proper income to show proof of the business viability.

Presenting a Viable Business Project

What you need to understand is that prior to requesting a government grant, you’ll need to prepare a presentation of your business project. This obviously implies having a project and not just a mere idea. There must be certain degree of research done with market analysis to prove the viability of the business and the income generation capacity.

Though the money doesn’t need to be returned, the government agency is interested in investing the money in a project that will endure in time and that will keep generating job positions and revenues thus boosting the economy and the welfare of the nation. The particular requirements of each government grant need to be consulted with the government agency that provides them.

Getting Approved For a Government Grant

The key to getting approved for a government grant is to present an appealing business project that shows great feasibility and relates to those fields that the government is interested in promoting. If you don’t meat the requirements for a government grant approval, there is not much you can do about it. Yet, if you do qualify, it is important to be well informed prior to applying in order to take the proper steps and avoid getting declined due to bureaucratic reasons.

If you can’t qualify for a government grant, don’t despair and use the opportunity to consult about government business loans that are sometimes offered with subsidized interest rates and very affordable payments.

Business Grants

One of the best places to research the availability of business grants and loans is the Small Business Administration, an agency of the federal government with a mandate to help business, especially small business succeed. Despite what many people tell you, the idea that the government is just sitting around with a pile of money waiting to give out to you or any other small business is just plain wrong. The idea of obtaining a small business grant, for many small business owners, is great.

Your chances of obtaining grants for your business dramatically increase if you have a non-profit organization. This isn’t to say that assistance isn’t available at all, just that grants are probably a long process when and if you happen to find one where your small business fits. While the Small Business Administration does not have any monies to provide directly for business grants and loans they can direct businesses to a number of government agencies and departments that do provide this type of assistance.

Even though the category of Business and Commerce may be what appears to have the largest selection of resources for business grants for women, consider the other categories as well, according to where your business falls. There are many types of grants offered by the Governments and other financial institutions that include individual grants for personal necessities, business grants for starting new business, education grants for funding education and many more. There are two main types of financing available for small businesses; small business grants and small business loans.

You’re not along if you need small business grants and loans to get your business started. If you want to avail of free government business grants then you need to locate a program that provides grants to start up businesses. Government’s Catalog of Federal Domestic Assistance (CFDA) provides a listing of Government grants and other types of assistance that you can receive.

The downside of grants is that business grants for women are not widely available. So, are there any grants available to you as a small business owner? New business owners and existing business owners are eligible to apply for business grants.

Small business administration grants are provided for small businesses that are already in operation. Small businesses always play a significant role in the economic growth of a country and that is the reason governments are always ready to offer financial resources to facilitate small business. This type of service offered by the government is only obtainable to businesses that barely needs a financial support but can not apply for a loan because of inadequate security.

There are indeed many grant and loan programs for small businesses, including many that are administered by state or local government, rather than the federal government. Having pointed to the drawbacks, there are many genuine government grants for both small businesses and individuals available, and these can be substantial. That’s you’ll actually be able to access whatever grants, services and resources are available, because the nonprofit organizations are the ones who work with indidivuals and provide “service delivery.

First, let’s take a look at what type of grants are available. The allure of these so-called small business grants is understandable. If you are interested in looking for a company that can provide you with small business administration grants, you can try searching through the World Wide Web for information.

If you are considering starting your own home business in the near future you should consider researching small business grants and loans now. Federal Grants provides detailed information on Federal Grants, Federal Pell Grants, Federal Government Grants, Federal Grants For Small Business and more. Small Business Loans provides detailed information on How To Get A Small Business Loans, Minority Small Business Loans, Small Business Bad Credit Loans, Small Business Government Loans and more.

To conclude, small business loans are usually awarded to all kinds of businesses to help them to begin and to succeed in their trading. The government is more than willing to help out businesses especially with the economic condition that still remains volatile and unpredictable and with the need for more economic development.

To make sure that financial statements are easy to understand, there is a set of rules and practices that is established, which is known as the generally accepted accounting principles (GAAP). This has been developed to provide a basic guideline for the rules of accounting because I think it’s fair to say that it can get confusing at times. There are a lot of variations to the meaning so here is the best answer.  It’s the generally accepted accounting rules and procedures that are necessary to define accounting practice. Basically it’s a set of theories that accountants come to accept, and there are always controversies with some methods between accountants like any other field of study. Accounting is a discipline that is always growing and changing so it’s a good idea to keep up to date with all of the trends that are going on. Since the management prepares the financial statements of a company it is possible that a financial statement can be altered to give a company a particular boost. So, that’s why the companies that sell their ownership to the public needs to get their financial statements audited by a public certified accountant. A certified public accountant (CPA) are licensed through the sate for the same exact reason lawyers and doctors are, so they and protect the public by providing the highest quality of professional service possible.  The reason why CPAs are used is because they have no connection with the company and are independent. They have zero financing ties with the company. Some firms that employ a lot of certified public accountants include Deloitte & Touch, KPMG, and PricewaterhouseCoopers. An accountant with no strings attached or is independent commonly performs an audit, which is evaluating a companies financial statements, product, accounting systems, and records.  The main purpose of an audit is to make sure that the financial statements have been properly prepared according to the excepted accounting rules. Keep in mind; since accounting is not a precise science it has room for interpretation according to the GAPP.  However, that doesn’t mean that the accountants report should contain substantial errors in the financial report, but more like that for the most report it is reliable for creditors to take a look at.  An accountant can make a decision only when the financial statements conform to the guidelines of GAAP.  In the past creditors, banks, and investors tend to favor an auditor when they are deciding to invest in a company or give loans, because of their independence.  The individualistic audit is an extremely crucial factor in the growth of financial markets internationally. Also, many organizations can directly or indirectly influence a GAAP. The Financial Accounting Standards Board (FASB) is the most critical body for the development and issuing of rules on accounting practice. The website I previously listed is extremely critical and you can attend seminars online for no cost, and also stay up to date with the rules.  This independent body issues the Statements of Financial Accounting Standards. Next, the American Institute of Certified Public Accountants (AICPA) is the official professional association for certified accountants. It’s the largest CPA organization that exists in America and heavily influence accounting practices through its senior committees.  The Securities and Exchange Commission is the agency of the federal government that legally has the power to set and execute accounting practices for companies that sell security to the public, and it has a large impact on accounting practice.  Next, the governmental accounting standard (GASB) is critical for accounting because its main job is to issue the standards for accounting to the local and state governments in the United States.  However, a lot of these organizations are focused on the rules in regulations in the United States. There are a lot of businesses and accountants internationally so that’s why the International Accounting Standard Board (IASB) was formed.  It was approved by more then 25 international agencies.  The U.S laws that analyze the revenues for the cost of operating a business can also affect accounting practice. It’s no question that the major provider for income for the government comes from income tax. The income tax rules are heavily applies by the Internal Revenue Service (IRS). Sometimes these rules actually cause a conflict with the accepted rules of accounting. A lot of businesses use accounting practices because it’s a requirement by tax law.  Also, companies can use the rules of tax law to their advantage financially.  Accounting also has laws of conduct for profession, and one extremely important one is ethics.It touches bases on questions that help determine if something is either right or wrong, and is based on moral decisions. Most people are faced with several ethical issues each day and, and some ethical activities could be on the range of illegal. If a business decides to use false or misleading advertising, or to bribe customers into giving them testimonials for a specific product, then they could be acting in an unethical manner.  The ethics of a company could also be a result of the employees so that’s why it’s always a good idea to run a background check of who you are hiring, whether it’s online or offline.  Professional ethics is the guidelines that apply to the conduct of individuals of a certain profession.  Similar to the ethical actions of a company, the ethical actions of an individual is a decision.  As being a member of an organization, accountants have to take the responsibility not only to their customers and employers, but also to the general public to act in the greatest ethical way possible. Accountants are very good at following professional ethics because they are the second professional group as having the largest ethical standards, with clergy being the highest, no surprises about that one.  It is important for individuals who decide to become an accountant to have the highest levels of professionalism as possible. To enforce that its prestigious members are following the rules, the AICPA along with each state have adopted some codes of professional conduct that certified public accountants have to follow.  Some simple rules are being responsible to the people that depend on the trust of accountants, such as creditors and investors. When working with people the accountant must act with integrity which means that they are honest, and the individuals gain from the visit with the accountant. The accountant must display objectivity which means that they are intellectually honest, and they must remain independent which means that they must avoid any relationship with the business or individual because it will damage the accountant’s principles.

Poor financing is the number two reason small businesses fail, falling right behind poor management. Sufficient funding is paramount to the success of small businesses, and small business grants can be the answer to the problem. If business owners have the necessary knowledge about how to find and properly request grants, they have a better shot at creating a successful business that will be open longer and prosper.
There are over 300 different grants and loans available for small businesses that are just starting out. The grants range from $25,000 up to $1,000,000 depending on the size and projected success rate of the business. There are also grants available to help small businesses grow or expand. Grants are not the same as loans because they do not have to be repaid. A grant is considered free money, as well as an investment to promote the success of small businesses and the U.S. economy. Money for grants comes from income taxes. Obtaining a small business grant does not require credit checks or deposits, even if the owners have experienced bankruptcy in the past.
There are a number of helpful websites that send small businesses government grant packages for free, excluding the cost of shipping. These packages include information on how to find grants, how to prepare a grant request, and how to apply for grants pertaining to a specific business. Some of the providers are Government Funding Solutions, Grant Master, and Grant Wizard.
It is important to be familiar with the Small Business Administration’s (SBA) rules for receiving grants before beginning the process of obtaining one. Although the SBA does not provide grants to small businesses, they do provide helpful suggestions and resources on how to find grants.
In order to qualify for a small business grant, individuals must first become familiar with the 13 CFR 143 document that lists all of the requirements to be eligible for a grant. This document includes information on the pre-award and post-award periods and defines all aspects of applying for a grant and states who is eligible. The CFR is the primary source of rules and regulations for small business grants and must be read before starting the grant writing process.
After reviewing the requirements, prospective business owners must write a grant request. There are professionals who will write a grant proposal or the individuals may complete it themselves. The Catalog of Federal Domestic Assistance is a helpful site that links individuals to resources about federal grants for small businesses. Afterschool.gov gives helpful tips on how to write a small business grant and, although it is geared toward grants for after school programs, includes helpful information for grant writing in general.
Additionally, there are many well-established government and private organizations that provide grants to small businesses. The Department of Justice’s Ten Grant document gives access to grant opportunities for those conducting research in support of law enforcement. The Department of Labor’s Employment and Training Administration has several grant opportunities for small business owners. They offer about $125 million to businesses that are based in a community setting with special attention to training programs. The Department of Transportation is another organization that offers small business grants. They offer grants to any business willing to help resolve the growing problems with the federal-aid highway program. The Department of Education has a program called e-GRANTS that locates electronic grants online. They have a detailed list of grants available and the necessary applications to fill out. There are a variety of grants available for different groups, all of which have detailed descriptions and contact information. Other organizations that provide small business grants include the EPA, the National Cancer Institute, NOAA, the National Endowment for the Humanities, and the U.S. Department of Health and Human Services.

There are many different ways to work out the value of a business. For the small to mid-size business, there are 3 main approaches that are used more than others. These are the Income value, Market value and the Asset value.

In brief, these would be described as follows:

Valuation based on income: One is looking at the potential earning power of the business into the future. Past earnings, expected future growth, owner’s compensation adjustments, and specific risk factors, such as customer concentration, weak management and lack of diversification are all taken into account when income based valuations are used.

Market Valuation: This method of valuing a business is similar to the way one values a house when selling it. What is being looked at here is what the market will pay for the business in question. Basically, one collects information on the sale of comparable businesses within the industry that the business is in. “Rule of Thumb” information is just a summary of many businesses sold with a million variations not being taken into consideration.

With both income valuations and market valuations, we will determine two different price multipliers. One is price divided by gross sales and the other is price divided by earnings. The applicable price multiple is selected primarily on the profitability of the business. For example, a business with high profits would have a higher price multiple applied to it. A business with low profits would be assigned a lower price multiple. When using this approach, one gets a more accurate result when one uses a minimum of at least a dozen comparables of similar type businesses.

Asset valuation: This valuation procedure assumes that a business is worth the fair market value of its tangible (physical) assets plus its intangible assets. Then from these total assets, liabilities or debts are deducted. To value a business that has intangibles, several methods are used. The method that is most employed in this area is the 5-step excess earning calculation. We will not go into the details of how this is done; we are only explaining that there is a method and giving a quick explanation. Do not try to use this method without taking classes or seminars training you in the details of this procedure. IBBA has classes on this subject.

This calculation deals with tangible assets, intangible assets, liabilities and adjustments thereof, to arrive at an estimated value for the business. It figures out what the reasonable return, on the assets, of the business, should be. If the profit is greater, than that number, it is an indication that the business has some intangible assets, which are generating the excess profit.

If the company in question is making little or no money then there will be no intangible assets. When this is the case, the asset valuation method is usually used. This is the case because when a business has capital tied up in equipment and other tangible assets the other valuation methods will come up with a price way below the actual asset value, without considering any good will. Goodwill is not considered because there is no goodwill, when the income method shows low profit. It is understandable that even if a business is making no profit or even loosing money that the seller still wants to get at least what the equipment is worth. That is why this method is used.

The Basic Steps of Valuing A Business

Valuing a business has several basic steps. These steps, when done in this exact sequence, result in a valuation of a business that can be sold. The steps are as follows:

1. In order to do any business evaluation we need to establish two numbers. Gross income-regardless of what the financials report and Total Owners Benefits. To do a quick appraisal, for the purpose of getting a listing, we only need the last full year and the current year to date. Then one does an “add-back” sheet based on the Profit and Loss statement (or tax return) to get a preliminary Owners Benefits. It is important to keep in mind that we do not want to spend hours interviewing sellers and filling out forms, at this stage.

2. In order to market a listing, after the seller has signed up, you need to have the Adjusted Net Income of the business for each of the prior two years plus the “year to date” of the current year. This is done exactly as covered below in “How to Work Out Cash Flow /Net Income”. Note: In some cases, financials for body shops will not be available. In the case of body shops, you can still do the valuations. Simply collect the Gross Annual Income and the Total Owners Income and Benefits regardless of how earned and proceed with the valuation as below.

3. Getting various preliminary value based on the “Rule of Thumb” section of the Business Reference Guide and Common Sense. This guide is written and edited by Tom West and published by the Business Brokerage Press. These numbers need to be taken with a light view since everything is given in ranges. “Rule of Thumb” ideas are a starting point, not a hard and fast rule.

An example of how the values are determined, for an Optical Practice, form the “Rule of Thumb guide, is as follows:

a. Determine what sort of business you are doing the valuation for. In this case an Optical Practice.

b. Look up Optical Practice in the index at the back of the guide and turn to the page indicated.

c. In this case you will see that the “Rule of Thumb” guide for an optical practice (in the 2003 guide) is “68% of annual sales”. This is the only valuation method covered in the guide.

d. Based on the above, if the annual sales were $350,000.00, then the valuation of this business would be $350,000 X 68% = $238,000

4. When using the Business Reference Guide for thumbnail valuations you are getting a range of opinions. Do each one separately and see what the result is. These work best when a company is making $250,000 net income (including add backs) or more annually. The smaller the business is the more you go to the lower numbers in the range for practical valuation purposes.

5. Very small businesses, making less than $100,000 net profit, have to be looked at differently. A capable individual can get a 40-hour per week job earning $50,000. That is only $25.00 per hour worked. This is assuming he doesn’t get paid vacation, holidays and medical insurance. As an owner he will work more than 40 hours and this rate will drop accordingly. If a business is making a small profit, then the first $50,000 needs to be looked at as a salary. In truth, “Rule of Thumb” valuations are totally worthless for businesses making less than $50,000 per year in total owner’s benefits.

The question that comes up here is: Why would anyone buy a job at 3 or more times what he could earn by just simply working for someone else? An individual might possibly buy a job for 1 years’ income, because it has the potential of increasing, and he or she gets to work without a boss. If a business is making $100,000 profit, someone would possibly pay 2 times net profit, for the 2nd $50,000 and $50,000 for the first $50,000. This would give a value of $150,000 for a business profit of $100,000.

We are still talking about buying a job at this level, just a better job. Maybe someone would pay $200,000 to earn $100,000 if the potential really looked good. That would be $50,000 for the first $50,000 and 3 times the next $50,000.

6. A business making $250,000 or more looks more attractive even after you deduct $75,000 for a working owner or manager. A buyer might be willing to pay as much as 4 or 5 times for the remaining $175,000 in profit, because his salary is already covered.

7. If a buyer needs to tie up a fortune in inventory then the desire to pay more for the business reduces. Sometimes a buyer pays for the inventory and wants the business for free, especially if it is making less than $50,000 for a working owner.

Judgment: There is some judgment involved in valuing a business. The guidelines above will help you take the financial figures and apply some workable judgment to them.

8. If the valuations done as explained above are within 10% of each other, or if you only have one valid valuation figure to use, after completing the 6 steps above, the valuation is easy.

9. If you have more than one valuation figure and they are NOT WITHIN 10% OF EACH OTHER, do the following, while taking into account the various judgment factors involved in valuing a business:

a. Use the adjusted net income valuation figure

b. If you cannot get a real adjusted net income figure, then use the annual gross sales figure valuation.

10. If you were using several valuation methods, you would tell the seller what the various methods are; what value was arrived at with each; and your final conclusion along with why you reached that conclusion. The “why” part would be based on the various judgment factor and valuations figure that you arrived at from the above ways.

11. You would then ask seller what price he or she would like to list the business for. Our final conclusion would be the number used as the listing price, unless the seller disagreed and wanted to use another figure. We take the sellers listing price but make it clear what the value of the business is and “why that value” in the client notes.

12. Remember, we advise the seller what the valuations are, but take his or her listing price, only if the seller insists on it.

The Comparable Method

It can sometime happen that, even with the different methods outlined above, a business can be difficult to value. When this occurs, we still have the Comparable Method that we can use.

Kismet Business Brokers is a member of http://www.bizbuysell.com and as such we have access to the “For-Sale Comparable Calculator” on the website. This calculator uses the BizBuySell database of 1000’s of sold businesses to perform its analysis. The Calculator can be used to develop a suggested asking price by simply entering the businesses gross income and/or cash flow.

How to Work Out Cash Flow /Net Income

There is a very specific way that cash flow / net income is calculated. The following is how it is done. When net income or cash flow is asked for we use the “owners benefit” figure. This is the net profit on the P & L (profit and loss statement) plus the owners benefits added back. The owner’s benefits are added back because everything one single owner gets, regardless of its form is not considered a business expense and is added back as profit. Note: Any cash that the owner receives and doesn’t report is considered an owners benefit and must also be added; it is labeled other income.

This is calculated by marking the letter “A” beside each of the following items if they show on the P & L. These items are marked and added to the calculation sheet attached. The items are:

Depreciation and Amortization, IRS Taxes, Franchise Taxes, Interest Expense, Donations, Non-Recurring Legal Expenses or Non-essential expenses. Other Expenses, Owners Medical, Life Insurance for Owners, Pension Plan contributions for owner’s family, Non-Essential Salaries, Health insurance (owner’s family portion), Owners vehicle expenses (lease payments, operating expenses, repairs, gas, depreciation and insurance), Magazine subscriptions, Owner’s Travel, Entertainment, Home office expenses and Home telephone expenses. Any other owners benefit that the seller has hidden in some expense account. Real examples include: a) Personal clothing listed as uniforms. b) Family eating out listed under entertainment. c) Children’s education listed under staff training.

Additional clarification on lease payments is as follows: As discussed in the prior paragraph, lease payments made on personal automobiles are not a business expense and are added back. The buyer many times needs to assume a lease payment on leased machinery. If the lease has a $1.00 buy out or any buy out at the end for less than fair market value of the machinery it is called a financing lease. We treat them like a loan payment and add back 100% of the payments and the seller must pay these loans off or the escrow needs to deduct the balance due from buyer’s cash requirement. We also put these assets on the balance sheet. If the buy-out at the end of the lease, at fair market, on the date of the buy-out, then this is a real lease which is really just a rental agreement. The payments are left as a business expense and are not added back. To find out which kind of lease the seller has will require asking the seller or his accountant.

In order to know how much of the financial reports is “owner’s benefits”, it is required that you go through the financials, with the client, and ask him or her to tell you which expenses should be considered personal benefits. You do not need to take the clients opinion as truth; it just needs to make sense. If it doesn’t, do not use it as a benefit.

If the company is a corporation or LLC, mark as with a “B”, the Owners Salary-husband and wife on the P & L statement and put these numbers on the add-back form. . If the business is a partnership or a sole proprietorship we only add-back the “owners/partners draws” amounts if they show up as an expense on the P & L. These salaries and “owner draws” are of interest only if located on the profit and loss sheet. Do not take salary or draw figures off of the balance sheet. The basic decision in adding back salary is this – Add back only one owner’s salary. Other partners or family members salary that will have to be replaced when the business is sold cannot added back. An explanation of what is added back should be included in the business summary.

Finally, where there is other income, this figure is gotten from the owner and added in the “Other Income” section on the attached calculation sheet. Ask the business owner if there is other income or cash that should be noted, get the figure, verify it as much as possible by having the owner supply information that proves the figure is real and how it is calculated. Write it down on the calculation sheet.

Note: Kids salaries are not added back unless they do not work in the business, or they do work in the business and their salary is much more than a non-family employee would be paid. In this case add back, as a separate item – mark it “C”, and put just the excess portion of their salary on the attached calculation sheet. All figures above are annual figures. The attached calculation sheet is used to calculate the various “add backs”. When completed, it is paper clipped on top of the Profit and Loss for the year being worked out.

Also, there are adjustments that reduce the net income of a business. These go under “Other Expenses.”

If the owner of the business also owns the real estate, the P & L will sometimes not properly reflect a fair market rent. Fair market rent is what the landlord/business owner wants from the buyer in rent. Adjust the rent, up or down, on the worksheet, for the difference between the market rent and what shows on the P & L. Property taxes are not an add back because the tenant is usually responsible for the property taxes regardless of who owns the real estate.

Three different adjusted net income work sheets are done, for each business. These are each of the prior two years plus the “year to date” of the current year. “Year to date” is an accounting phrase that means from the first day of the seller’s tax year to the last date available. If that is the 6-month period from January to June then that is the “year to date.” In conclusion, if you have Profit and Loss Statements for 2003, 2004 and 6 months of 2005, you would do an ad-back calculation sheets for the 2 full years of 2003 and 2004 and a 6 months ad-back calculation sheet for the first half of 2005

Finally, add back sheets are signed by the seller to confirm that the add backs are accurate.

What to does the broker or licensed agent do if the seller will not sign the financials as adjusted by us after all corrections are made?

After the finances have been corrected to the seller’s satisfaction he or she may still not wish to sign them. In this case, the following steps are taken:

1) Ask the seller what adjustments would need to be made for him to be able to sign the corrected finances. Advise him that it is essential that we have the financials signed, as they are his report to the buyer as to the financial state of the business. Make the final adjustments and get the signature(s) of the seller(s).

2) If the seller removed the “other income” from the financials, collect the following information so that we can sell the business that is not showing all the income:

a. How much will the seller carry back and at what terms and for how long?

b. Get a statement showing how well he and his family is surviving from the business and what it costs them to live. What they pay for housing, utilities, children’s education, and other expenses will show what it takes to support the family.

Below are the blank “add-Back” sheet and owner confirmation sheet that are used in calculating cash flow and getting seller confirmation of the figures

OWNER’S CASH FLOW ANALYSIS (ADD BACK SHEET)

NAME OF BUSINESS ______________________________________________

For Fiscal Year Ending ______________ 20 _____

Interim Period: Thru __________________________ # of Months ______

Information Source: Tax Returns () Financial Statements ()

NET INCOME FROM OPERATIONS: $______________

(A) ITEMS

Depreciation and Amortization (Except Business Autos)

IRS Federal Income Taxes or Penalties:

State Franchise Taxes or Penalties

Interest Expense

Interest portion of auto lease payments where it is a financing lease.

Donations

Life Insurance for Owners

Pension Plans contribution for owner’s family

Health insurance for owner’s family

Unusual Legal Expenses or Bank overdraft fees

Personal auto lease payments

Auto repair for owner or family auto

Gas for owner or family auto

Insurance for owner or family auto

DMV License for owner or family auto

Travel, clothing

Entertainment

Home telephone expenses

Home office expenses

Other (Name)

(A) TOTAL: $_________________

(B) ITEMS [take only numbers from P & L – not balance sheet]

Owners Salary (If Corporation or LLC)

Owners Draw or Partner #1 “Draw”

Owner #2 or Partner #2 “Draw”

(B) TOTAL: $_________________

(C) ITEMS

Owner’s wife or kids salaries (If not working in the business)

Owner’s wife or kids salaries [excess portion] (If working in the business and getting much more that non-member staff

(C) TOTAL: $_________________

OTHER INCOME: $_________________

OTHER EXPENSES:(A) (Plus or Minus) $_________________

OTHER EXPENSES:(B) (MINUS) $_________________

ESTIMATED CASH FLOW: $_____________________

Seller confirmation of add backs:

OWNER’S CASH FLOW ANALYSIS

“This information is being provided to buyer, by Kismet Business Brokers, as information received from the business owner for such purposes.

The business owner declares that the information herein is based on figures supplied by the owner and that owner intends that Kismet Business Brokers and prospective buyers rely on such information. Owner further declares the owner has documentation supporting such figures and agrees to provide supporting documentation upon request.

Kismet Business Brokers has not independently verified the information provided herein. Further, buyer(s) are advised to obtain appropriate counsel from legal, accounting and other professionals concerning the purchase of this business.”

Business: _____________________________________________

Business Owner’s Signature: __________________________________________________________

Date: __________________________