Effective Business Performance Metrics

Effective Business Performance Metrics

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Every entrepreneur looks at the financial structure of their business. One way to quickly understand the financial health of your organization is to look at the various financial ratios. Financial ratios provide insight into cash, credit and inventory situation. They reveal the stability and health of your business. Businessmen must review these ratios to understand the changing trends in the company.  

There are four basic types of ratios. They are: 

Liquidity ratios 

These ratios measure the amount of liquidity (cash and easily converted assets) that you have to cover your debts. 

Current ratio also called working capital ratio is used to measure your company’s ability to generate cash to meet your short-term financial commitments. Quick ratio measures your ability to access cash quickly to support immediate demands. A ratio of 1.0 or greater is generally acceptable. But this ratio depends on your industry. A low ratio means your company might have difficulties meeting obligations or taking advantage of opportunities. Higher ratio means it’s time for you to invest more of your capital in projects. 

Efficiency ratios 

These ratios are measured over a longer period of time and provide additional insight into different aspects of the business

Inventory turnover looks at how long it takes for inventory to be sold and traded during the year. This ratio will help you in understanding where you can improve in inventory management.  

Inventory to net working capital ratio can determine if you have too much of your working capital tied up in inventory. It is better if this ratio is lower. Evaluating inventory ratios depends on your industry and the type of business. 

Average collection period looks at the average number of days customers take to pay for your products or services. You can improve this ratio by establishing clear cut credit policies and also providing incentives to encourage payment. 

Profitability ratios 

These ratios help in understanding the financial viability of your business. You can also gauge what your position is in the industry.  

Net profit margin measures how much a company earns relative to its sales. Companies with higher profit margin are generally flexible and efficient. 

Operating profit margin or coverage ratio measures earnings before interest and taxes. Through this you can assess your ability to expand your business through additional debt or other investments. 

Return on assets (ROA) ratio tells how well management is utilizing the company’s various resources. Return on equity (ROE) measures how well the business is doing in relation to the investment made by its shareholders. Profitability ratios are also compared with several companies from the same industry to know where you stand. 

Leverage ratios 

These ratios provide an indication of the long-term solvency of a company and extend of your use of long term debt to support your business.  

Debt-to-equity and debt-to-asset ratios are used to see how your assets are financed. It can be financed from creditors or own investment. 

The ratios mentioned above will help you determine your financial position. Closely examine other factors and data to fully understand your business performance.  

What role does your website play in your Business Growth?

What role does your website play in your Business Growth?

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Long gone are the days when your website acted as an online brochure. Nowadays, websites play a vital role in expanding your business. Websites can be very complex or simple but they help in carrying out many sales and marketing strategies. There are innumerable benefits that a website provides to your business.

Given below are some of them:

Marketing

Having a website is the basic requirement for online marketing. Your website should house all your great content and offers. It should provide all the needed information regarding your brand and products.

When using social media marketing or email marketing, the links provided should all lead to your website. This is where you engage and attract new audience. Optimizing your site will also increase your chance of gaining new customers.

Sales

Improving sales will benefit the business greatly. Websites are an efficient way to reach more consumers. It increases your sales opportunities. Having a website will also increase your availability.

Consumers can have access to your products and services around the clock. You will have a global reach. Customers can get the information they require from the website regarding the benefits of the product. This will help them in their decision making.

Credibility

In today’s digital space, a business without a website might seem less credible. Consumers need to see what your brand stands for. By being open to your customers, you can easily build trust. Use your website to establish authority and credibility through the content you create.

Be educational, informative and engaging. Ensure that you stand apart from your competition. Through your customized content you can show consumers what sets you apart from other companies.

Accessibility

Website is the best way to reach and engage with your target customers online. It will be available 24/7. There will be sales happening around the clock. Customers can learn about your brand and products any time they want. They can quickly and easily browse through your products.

Your website acts as a digital sales person. You need not be physically present to ensure that a sale takes place.

First Impression

Your website will be your customer’s first impression. Clients usually research about the company before buying the product.  Make sure that your site is user-friendly and easy to navigate. It should have great content and attractive designs and graphics. Get help from web design agencies to create a professional looking website.

A website can be created for various reasons. It can be used to launch a new product, build awareness of a product or even help support a marketing strategy. Regardless of its various uses, a website ultimately plays a vital role in the success of a business.

Why you should never stop learning

Why you should never stop learning

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Education and learning is something that most people discard once they graduate school or university. But learning is a continuous process. It is an essential part of our existence. Continuous learning is important to for both personal and professional growth. Successful entrepreneurs never stop learning. They update themselves constantly and adapt to the situation. This in turn helps them in building a profitable business. Here are some more reasons on why you should never stop learning.

To stay updated

The only constant thing in life is change. Minor changes in the industry can vastly affect the business. It is important for businessmen to constantly monitor the changes and be up-to-date with the latest trends and needed skills. To keep up with the technological changes you need to learn new things and offer new products to stay relevant.

Being prepared

Sudden changes in the work environment can bring forth unexpected setbacks or failures. By learning new skills you can quickly adapt yourself to the change. Being knowledgeable about the industry will help you predict the changes and be prepared for the worst.

Personal and professional growth

Lifelong learning leads to personal and professional development. You will be able to switch jobs easily or even land promotions faster because of your vast skill set and area of expertise. New skills will prepare you for better opportunities.

Prevents stagnation

Most people stop their formal education once they start a job. Continuing your formal education will help you reach further up your career and even help you switch your position to the administrative or managerial side. The methods and procedures that you follow might become obsolete after a point of time. Identify the areas you are weak in and overcome these hurdles.

Innovative ideas

Learning new things and acquiring more knowledge can help you identify opportunities and come up with new products and solutions. Present problems can be dealt with in a more innovative and unique way that will eventually help the business in the long run. New products can boost sales and increase revenue.

Different perspectives

Continuous learning and new experiences will open up your mind to new possibilities. You will gain a deeper understanding of life and other people. This will help you view problems from different angles and perspectives. You will be able to negotiate better and come up with the ideal solution that will satisfy all sides.

Forward vision

Continuous learning is a process of preparing for the future while making you better in the present. It’s a lifelong process that makes you a better person and also helps in developing leadership qualities. When followed with the at most dedication and interest it can inspire other employees and foster in them the need to pursue education.

Lifelong learning is a basic requirement for long term success. With the sudden social, economic, political and technological changes happening in the world, it’s highly important for aspiring entrepreneurs to be fully prepared to take on the challenging world.

Your Business Growth is Proportional to your Digital Advertising Cost

Your Business Growth is Proportional to your Digital Advertising Cost

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Modern means of communication and information acquisition has drastically changed marketing strategies. Though traditional social media marketing schemes are still working, it’s important to invest in paid digital advertising to expand your business.

How to start building a paid media plan:

Before you start making a concrete plan understand the following:

  • Your target customers
  • Customers’ buying process and decision making
  • Customers’ usage of social media
  • Your budget allocated for digital marketing
  • The message you are projecting

Develop a proper marketing and communication plan once you are sure about your goals.

Different platforms and their advantage  

Facebook

It is one of the best platforms to find and engage your target customers. Once you learn how to build your audiences based on demographics, geography and interests, you can easily attract new customers. Familiarize yourself with building campaigns and create a plan that works for you.

LinkedIn

LinkedIn is the best tool to attract decision makers. Paid marketing on LinkedIn also provides data that helps you see how your ads are working.

Search engine marketing

The biggest advantage of search engine marketing is that you can easily find people who are searching for your products or service. But this form of marketing has become increasingly complex and expensive. It requires some very advanced skills to be able to build, manage and optimize campaigns that get a solid return on your investment.

YouTube

YouTube advertisements are one of the best ways to attract attention to your brand and products. YouTube pre-roll ads should be short and attention grabbing. If they are long they should have a great story line which should engage the audience. YouTube ads are a great way gain new customers.

Digital Ad Networks

Networks such as AdRoll and DoubleClick place ads on websites where your target customers might be browsing. They place ads all over the internet. Companies must understand their goals and analyse how this form of digital marketing will influence their business.

Remarketing, Affiliate Marketing and Influencers

Remarketing is a very powerful tool that helps you gain more sales. Affiliate marketing is a technique where you offer up commissions to third parties for referral traffic to your website. Influencer marketing is more about product placement and using influencers to promote your product. Again, analyse your target audience and understand their social media usage before going for a product placement.

Remember to be unique and original to stand out. The message that your brand stands for must resonate with your audience. Developing the message your customers want to hear is a good investment. With proper planning and understanding you can develop a digital marketing strategy needed to stand out.

Mistakes to avoid when taking a Business Loan

Mistakes to avoid when taking a Business Loan

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Taking a loan is one of the quickest ways to propel your business forward. But make sure that you look into a few things before applying for a loan.  

Given below are eight common mistakes that entrepreneurs must avoid when taking a loan: 

1. Not looking into the credit score 

One of the important factors that determine the approval of your loan is your credit score. Knowing your credit rating will show your where you stand. Get your credit score from several credit bureaus. 

2. Not having a business plan 

A concrete business plan is important to show the lender your future business goals. Specifically how you plan on achieving these goals. A plan helps convince the lender to invest in your business. A well written business plan will have information about past performance, competitive advantages and proposed project. When starting a new business, a detailed plan will determine the approval of the loan.  

3. Not providing adequate collateral 

Providing collateral is important should there be a default in payment. Collateral acts as the lender’s insurance policy. Use your property and assets as collateral and it will increase your chances of getting a loan. 

4. Not explaining what the loan is for 

When applying for a loan make sure that you explain what exactly the money will be used for. Lender will need to know how the money will be put to use and how it fulfils your wants and needs. 

5. Not prepared with financial documents 

You should always apply for a loan with the proper financial documentation. Apart from your credit score lenders look into your cash flow statement, six months of bank statements, tax returns, the most recent balance sheet and profit & loss statements. Therefore, always maintain a record of your financial statements and documents. Make sure it is up-to-date.  

6. Only focusing on the interest rate 

Interest rates keep fluctuating. Make sure you lock in on a rate you are comfortable with instead of waiting for the rate to change. Focus on other aspects of the loan like the term, lender’s flexibility on repayment and the amount needed for collateral.  

7. Not reading the contract 

Do not hastily sign any contract. Before you put your sign over the dotted lines make sure you fully understand the terms and conditions of the transaction. Once you sign there is not going back. Therefore, clarify any queries and do not assume anything. 

8. Depending on one lender 

Being fully dependent on one financial institution can make your business vulnerable. Instead focus on meeting other lenders and consider other financing options before you make a decision.  

How to carve a successful freelancing career?

How to carve a successful freelancing career?

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Freelancing career is becoming more and more popular in the present era. The ability to work from home and being independent is drawing in more people into this new field. 

Given below are a few ways to carve a successful freelancing career: 

1. Find your area of expertise 

A single skill may not be taken seriously by companies hence do not limit yourself to one category, but do not try everything. List out a sensible skill set, explore new areas and find out what would be best suitable for your freelancing career to be built upon. 

2. Create a portfolio  

Ensure that your skill set is displayed in the best possible manner. Make your presence felt by using social networking platforms like Facebook, Instagram, and Twitter. Use other digital tools also like blogs, social media, e-commerce sites, etc. Make an impactful portfolio that will get noticed easily. Keep updating these platforms as your career grows. 

3. Use contracts 

Making use of contracts will ensure that both your client and you are on the same page. Have a general agreement with the clients about some basic yet essential terms like: 

  • The produced work is original and is not plagiarized. 
  • The client’s information will stay confidential. 
  • Your payment terms. 

4. Nail your clients 

Now that the foundation for your freelance career is set, you only need to find clients. Potential clients can be found using Google or any of the many social platforms. The farther you reach, the more likely you are to get work faster. Make sure that the work you offer can get clients. 

5. Focus on your business 

Focus on the identity of your brand and the type of projects you take. Pick one or two services to specialize in, and only accept work that falls into those categories. Turn down the rest. Once you have decided on your services be sure to translate that into your personal brand. 

6. Give emphasis on the present 

Do not get lost thinking about the future. Know where you want to be one day and do what is necessary to get there. Make a daily to-do list with small tasks that will help your freelancing career. Focus on your daily tasks and assignments. Take one step at a time to your long term goals. 

7. Be serious and confident 

Freelancing is almost like sole entrepreneurship. If you do not take your business seriously it will collapse. Take each client seriously. Be strong to face criticism and failure. Persist till you gain blind faith from your clients, and have a good reputation in the industry. 

Be determined and constantly work on improving your skill set. Be dedicated and passionate about your work. Once you have earned the trust and gained a good reputation in the industry, you have carved a successful freelancing career.  

Tips to Effectively Manage a Virtual Team

Tips to Effectively Manage a Virtual Team

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The rise of technology has helped businesses to create teams that cross physical boundaries. Virtual teams offer great flexibility and potential. But working in a globalized work space has its own unique set of challenges.

Given below are a few tips on how to effectively manage and guide a virtual team:

Encourage communication

Proper and adequate communication is necessary for the success of a team. Ensure that there is a free flow of information. Schedule regular meetings and discussions to clear doubts and define goals. Define a proper mode of communication that removes ambiguity and language and time barriers. Informal conversations and socialization can build trust among the team members.

Recruit the right people

Hire people who have the required communication skills and share similar interests. People who had previously worked on similar projects and undergone the same training activities are ideal candidates. Conduct proper interviews that help in identifying the candidate’s communication skills. The aim is to bring in diversity into the team while still ensuring that members can build trust.

Establish a goal

It is important to establish a common goal that is understood by all team members. These goals can be decided based on the broader business goals. Setting goals also helps in measuring the progress of the team. The entire team should have a meeting and work through a strategic planning process. Having a proper goal will make the team members’ more accountable.

Well defined tasks and roles

It is important that the team members understand their role within the team and the tasks that they are required to complete. Give the members a detailed description of the final goal. The best way to manage the productivity of the team is to set clear expectations for role and to conduct regular check-ins to measure the progress.

Choose the right tools

Choose the right software and tools that greatly benefit the team. Virtual teams depend of the latest technological devices for easier communication and management. When picking new software have a small trail period. Provide training to all the members on how to use the tool. Using multiple communication tools will ultimately benefit the team. The right project management tools help in tracking deadlines and provide an overview of the project.

Create a professional work space

Having a team that is spread globally makes it difficult in having a proper professional work environment. Nonetheless, try having a fixed time period daily where most of the team members are online to discuss problems. Being online at the same time encourages team collaboration.  All team members should be aware of the cultural differences within the team. Being aware of the cultural differences within the team will prevent future misunderstanding.

Virtual teams are the future of the modern world. The team leader must modify his methods to suit the needs of the team.

Strategies for Growth in a Sluggish Market

Strategies for Growth in a Sluggish Market

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It is extremely difficult to keep up in a changing economy. Business trends and markets are changing slowly. People are becoming more frugal and are changing their lifestyle and spending habits. How do you survive in such a market?

Given below are some strategies on how to thrive and grow even in a sluggish market:

Stand apart

When there is a diminishing customer base it is highly important to find ways through which you can distinguish yourself from your competitors. Make sure that you offer unique products and service. Consider your competition’s products and ensure that you are better than them. To stand apart from your competition make sure that your product is better, marketing is better and your customer service is the best that you can offer.

Marketing

Usually when things get tight most businessmen immediately reduce their marketing expenditure. This is a wrong move. The best way to survive in a bad economy is to invest more in marketing. The idea is to attract more customers. Spend more money on advertising and evaluate how you can improve your current marketing plan. This way you can attract more customers.

Introduce new products

Most businesses derive 80% of their profits from the sales of a main product. During hard times this dependency on a single product can make your business vulnerable. It is necessary to branch out and create stability. Here are some ways you can expand your business:

  • Entering a new market through a new product.
  • Offering a new product related to the old one and persuading customers to buy it.
  • Making a plan to build continuity revenue.
  • Taking on clients who are from a different market base.

Customer loyalty

During hard times it is easy to fall into quick fix schemes. Remember that these remedies are only temporary solutions. To stay strong in a market it’s important to have a strong customer base. Focus on building customer loyalty and trust. Offer the best possible customer services. Provide innovative and affordable solutions and products. Always keep your clients’ best interests in mind. This will greatly benefit the business in the long run.

Leverage

There are three primary forms of leverage available to entrepreneurs: automation, systems, and people. The key to success is to apply leverage on the well-established business processes. Consider how well you can utilize the available resources and how you will benefit from it. Leverage correctly applied can work miracles for almost any business. So determine how you can use leverage to get more results out of business processes that are already working well.

It might seem scary and hopeless surviving in a sluggish market. By applying these strategies any business can grow and proposer even in the most unsure market conditions. 

Career Tips for Women

Career Tips for Women

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Times are changing and women are slowly becoming part of the labour force. Despite the innumerable challenges, women are proving themselves be more successful in a workforce. Large numbers of women are holding high managerial and executive positions. Recent years have shown an increase in the number of woman owned businesses. With all these positive changes happening in the work environment, women are trying to advance their careers and position. Given below are few tips that can guide you in the right direction.

Take on new challenges

Fear tends to hold you back. Always embrace the new opportunities that come into your life. Do not let fear hold you back. By overcoming your fear and embracing new challenges you can develop your skills and become a better person. Trying out new things and facing your fears will lead to personal development.

Learn from mistakes

Failure and disappointments are inevitable. Take the time to learn from your mistakes. It’s a matter of being resilient and persistent in your effort to reach your goal. Every mistake offers a learning opportunity from which you can learn to avoid such catastrophes in the future.

Pick the right team

Working with the right team will help you achieve your goal faster. Being in a team where all members share your goal and ideology will invariably provide you with the support and directive you need to fulfill your aim.

Develop your skills

Personal growth and development is key to becoming successful. Develop your skills and learn new things that will help you deal with the day-to-day situation whilst preparing you for the future. Practice is important and always pau attention to the things that interests you.

Plan your career

Career planning is extremely important for women as there are more chances for sudden setbacks and changes when compared to men. A proper plan with well-defined goals will help in measuring your progress and also allow you to make alterations according to the circumstances. Ensure that you create a plan what allows you to grow both personally and in your career.

Communicate effectively

Proper communication is highly important in any work space. Effective and direct communication removes disparity and reduces any chance of misunderstanding. Communicating with confidence will make be appear more competent. Learn to speak up in the right scenarios. Having the ability to express your thoughts and wants clearly will take you a long way.

Have the right contacts

Build a good network both outside and inside of your organization. Meet the right people and impress them about your work. Build strong relationship with senior members in the organization. Find a good mentor who can guide your professional life.

Working conditions and situations are constantly changing and evolving. With more gender inclusive opportunities being introduced in work places, women are building the careers at a faster pace. With hard work, dedication and passion any one can truly achieve their goal.

How to Tackle the Cash Flow Bottleneck?

How to Tackle the Cash Flow Bottleneck?

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Cash flow problems can eventually lead to the death of a business. Especially in a bad economy it can quickly descend into a bad condition.

Here are some ways to quickly to solve cash flow problems:

Identify and eliminate unnecessary expenses

Look through your recurring monthly expenses and identify those services which you no longer use. Monthly business tool subscription and software subscriptions can add up and increase the expenditure. Identify those subscriptions and services which are not being used anymore. Another way to reduce expenses is to replace expensive services with cheaper alternatives. With proper research you will be able to identify affordable services.

Collect on invoices faster

Collecting your payment is the fastest way to get quick cash. Offer incentives to customers who pay the full amount upfront or within a short period of time. The earlier you get paid, the better your cash flow will be. Another way to improve the situation is to pay your bills slower. By delaying the payment you will have more cash on hand. You can also pay using a credit card which will give you some more leeway before the final payment.

Outsource tasks that do not provide monetary gain

Focusing on activities that do not directly contribute to the revenue of your business will indirectly affect your cash flow problem. It is important to use your full energy and time on those tasks which will ultimately increase the company profit. Outsource the menial tasks to a reliable freelancer. Use a Virtual Assistant or the services of specialised companies to do the mundane and tedious tasks. Concentrate on doing things that maximize the monetary value of your skill set.

Always save

Once the cash starts to flow in its important to remember that changing economic conditions and business environment might drastically affect your business. Creating a reserve and saving some cash will help you in the needed hour. A good month of business does not ensure a smooth sail forever. Past performance is no guarantee of future earnings. Buying unnecessary products or investing in frivolous needs might radically affect your business in the future.

Keep track of the numbers

In both good and bad times it’s vital to keep track of the cash flow numbers. Learn to calculate Current Ratio and Days Receivables Outstanding. These ratios and metrics will help you predict when things are going to go downhill. It will act as a forewarning and even help you to prepare for such a situation.

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