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The 10 Bookkeeping Basics You Can’t Ignore

November 15th, 2016 TBI Admin No Comments »

Millions of small business owners and startup entrepreneurs are masters at creating great products and services, building awesome teams and winning over customers. Many of them, however, would probably flunk basic bookkeeping.

But if you – the business owner – don’t understand the different types of “accounts” your bookkeeper uses to organize your finances, measuring the success (or failure) of your efforts will be futile. Being deft at digital marketing, for example, isn’t enough if you don’t have a clear financial picture of your business and run headlong into cash flow problems.

What do your accounts receivable look like? Are you constantly paying your own bills late? Not sweating the small stuff like understanding your own books is trouble in the making, says Lita Epstein, who designs online courses about reading financial reports and is the author of Bookkeeping Kit for Dummies (Wiley, 2012).

Here are basics of the 10 most common types of bookkeeping accounts for a small business that you should know:

  • Cash. It doesn’t get more basic than this. All of your business transactions pass through the Cash account, which is so important that often bookkeepers actually use two journals — Cash Receipts and Cash Disbursements — to track the activity.
  • Accounts Receivable. If your company sells products or services and doesn’t collect payment immediately you have “receivables” and you must track Accounts Receivable. This is money due from customers, and keeping it up to date is critical to be sure that you send timely and accurate bills or invoices.
  • Inventory. Products you have in stock to sell are like money sitting on a shelf and must be carefully accounted for and tracked. The numbers you have in your books should be periodically tested by doing physical counts of inventory on hand.
  • Accounts Payable. No one likes to send money out of the business.  But it’s a little less painful if you have a clear view of everything via your Accounts Payable.  Good bookkeeping helps assure timely payments and – importantly – that you don’t pay anyone twice.  Paying bills early can also qualify your business for discounts.
  • Loans Payable. If you’ve borrowed money to buy equipment, vehicles, furniture or other items for your business, this is the account that tracks what’s owed and what’s due.
  • Sales. The Sales account is where you track all incoming revenue from what you sell. Recording sales in a timely and accurate manner is critical to knowing where your business stands.
  • Purchases.  The Purchases Account is where you track any raw materials or finished goods that you buy for your business. It’s a key component of calculating “Cost of Goods Sold” (COGS), which you subtract from Sales to find your company’s gross profit
  • Payroll Expenses.  This is the biggest cost of all for many businesses. No matter how much you beg, few people want to work for nothing.  Keeping this account accurate and up to date is essential for meeting tax and other government reporting requirements. Shirking those responsibilities will put you in serious hot water.
  • Owners’ Equity.  This account has a nice ring to it. Basically, it tracks the amount each owner puts into the business. “Many small businesses are owned by one person or a group of partners; they’re not incorporated, so no stock shares exist to divide up ownership,” says Epstein. “Instead, money put into the business is tracked in Capital accounts, and any money taken out appears in Drawing accounts. In order to be fair to all owners, your books must carefully record all Owners’ Equity accounts.
  • Retained Earnings. The Retained Earnings account tracks any of your company’s profits that are reinvested in the business and are not paid out to the owners. Retained earnings are cumulative, which means they appear as a running total of money that has been retained since the company started. Managing this account doesn’t take a lot of time and is important to investors and lenders who want to track how well the company has done over time.

Read more »

5 Business Model Components Every Entrepreneur Needs

November 14th, 2016 Staff No Comments »

Is your business on a collision course with a train, but yet you’re 100% focused on getting more people to like your Facebook page or follow you on Twitter?

Let me enlighten you: Big mistake.

If your core fundamentals are out of whack, so is your business.

Danny Iny, Founder and CEO of Firepole Marketing, is a guy who sees this everyday. And because of this, he is on a mission. As he stares down the face of one business failure after another, he sees major flaws in the way entrepreneurs are taught. And yes — he is taking action to change it.

Dubbed the ‘Business Ignition Bootcamp’, Iny’s focus is to help business owners break through the madness and escape failure.

And guess what? Iny opened up the first module of his bootcamp so I could take a peek and share it with you.

Based on the 5 key Business Model Components from the best selling book ‘Getting To Plan B’ by authors Randy Komisar and John Mullins, module one addresses the importance of these 5 components on your road to entrepreneurial bliss:

 

Component #1: Your Revenue Model

In a nutshell, this is your strategy to generate revenue. What you plan to sell, and what will convince people to buy. Value propositions, positioning, effective messaging, product/market fit. For example, when I say “Victoria’s Secret”, what comes to mind? Yes — good or bad they have a clear understanding of their revenue model and communicate it well. Although most business owners get the importance of this in theory — why do so many struggle? Perhaps because they really don’t get it after all. Do you?
Component #2: Your Gross Margin Model Read more »

How leadership systems are key performance indicators in a business

November 6th, 2016 Staff No Comments »

The success of any business firm starts with its leadership system and how it is integrated. Many firms has anticipated high levels of success due to high integrated leadership systems which impart better management techniques and skills to achieve high profitability in the Company. It imparts a sense of direction and strategic plan that ought to be achieved by the company. While the aspect of leadership may be seen naturally among some people, it is a technique that has to be learned and achieved by others.

Leadership system is an integrated structure within an organization, processes, procedures and policies through which the power of control and decision making is based. Defining effective policies within the organization does not only gears the operations of the company but also enhance effective running and planning of company’s activities. In today’s competitive environment, the aspect to renovate leadership systems to conform global trends and changes is a core key performance indicator within the organization.

 

Deriving effective system of leadership control in an organization helps to set effective tasks that conforms to objectives and goals of the business. Good leadership skills transforms the strategies formulated by management team into operational goals and creates a shared purpose within a business unit. Leadership structures draws how chain of command should act and how mode of information communication among the management should revolve along the organization. It helps to make firm decisions regarding course of action to be taken, retrenchment, growth, stability orientation decisions requires such systems to be implemented for better performance. Read more »

Fraud Risk Management Guidance Updated by COSO

October 31st, 2016 Staff No Comments »

Managing the risk of fraud is a challenge for organizations of all sizes.

A typical organization loses 5% of revenues in a given year as a result of fraud, according to the 2016 global fraud survey results contained in the Report to the Nations on Occupational Fraud and Abuse.

But governing boards, senior management, staff at all levels, and internal auditors can deter fraud in their organizations by following guidance contained in a newly updated Fraud Risk Management Guide published by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), of which the AICPA is a member. The Association of Certified Fraud Examiners (ACFE) is a co-sponsor of the report.

The guide builds upon Managing the Business Risk of Fraud: A Practical Guide, which was published in 2008 by the AICPA, the Institute of Internal Auditors, and the ACFE. The updates consider recent developments in risk management practices, including information related to technology and data analytics.

The guide’s executive summary, which is available at the COSO website, explains that fraud deterrence is achieved when an organization implements a fraud risk management process that:

  • Establishes a visible and rigorous fraud governance process.
  • Creates a transparent and sound anti-fraud culture.
  • Includes a thorough fraud risk assessment periodically.
  • Designs, implements, and maintains preventive and detective fraud control processes and procedures.
  • Takes swift action in response to allegations of fraud, including actions against those involved in wrongdoing where appropriate.

Read more »

How You Should Evaluate Your Current Business Model

October 30th, 2016 Staff No Comments »

Business model innovation is job one for organizational leaders. But what is that job?

How about we consider first how learning and change ideally occur.

In the most recent quite a long while, Russian athletic mentors and coaches scholarly something extremely significant. Competitors could significantly enhance their exhibitions by investing a large portion of their energy contemplating flawless execution and a large portion of their time physically rehearsing. Customarily, little time had been spent on imagining immaculate execution. In both the mental and physical practice, Russians additionally discovered that measuring the mental and physical exhibitions was discriminating to advance.

Like competitors, you need to invest significant measures of energy considering, taking a shot at, and measuring every one of the three measurements of a business model. The capacity to do as such obliges a noteworthy shift in center and in how time is spent for many.

Most organizations invest colossal rates of their energy in enhancing execution on second rate or out of date business models, and no time on conveying the current business model, dealing with the following one, or articulating long haul business model standards. Some of that time spent on old business models will need to go.

Start by measuring the amount of time is being spent on each of the three measurements of a business model, and also the amount of time is being spent on enhancing the execution of the business model you have now . . . instead of supplanting or enhancing it the model itself.

To comprehend the qualification, a cutback to handle lower volume because of lost deals is attempting to enhance execution of a current business model. Outsourcing many of your insignificant exercises to change with your volume, then again, can be a piece of a change towards a superior business model. While both endeavors are centered around expense changes, just the last is prone to open the windows to new open doors by permitting more regard for be centered around key exercises.

Additionally, you ought to gauge your verifiable and current execution in respect to contenders and potential contenders along the measurements of a decent and an ideal business model.

Just to remind you, here are those components. In creating ideal business models to help your business achieve its fullest potential, my investigation indicates there are another four components to add to the essentials needed for a decent business model:

1. Your business model opens new windows of chance for you, while shutting those and other critical windows of chance for present and potential contenders.

2. You discover approaches to give more accommodating advantages to more sorts of partners with every round of business model change.

3. You serve partners who might typically not have the capacity to meet your base principles to end up lenders, shareholders, workers, suppliers, accomplices, or clients.

4. Your business model enhancements grow your capacity to make more sorts of business model developments all the more quickly later on.

Great samples of ideal business models can be found by concentrating on organizations like Business Objects, Ecolab, Iron Mountain, and Paychex.

A decent business model gives advantages to every last bit of its partners more viably than existing contenders or new contestants can. Here are six normal approaches to give a more noteworthy cluster and volume of partner advantages:

1. Help your clients include clients for themselves quicker than their rivals.

2. Animate industry development through giving more advantages and less downsides at the present value level.

3. Reprice your offerings to support utilizing a greater amount of them.

4. Lessen the assets expected to give and utilize these offerings.

5. Rehash the assets produced by your business model to give much more advantages and less downsides later on, quicker than your rivals can.

6. Decently impart abundance assets to the partners who have bolstered and given the business models achievement in an anticipated manner, so that no other association can offer these partners as much advantage now or later on.

Leadership: Strategy and Tactics

October 30th, 2016 Staff No Comments »

Strategy is the creation of a unique and valuable market position supported by a system of activities that fit together in a complementary way (Porter, 1980). It is about making choices, trade-offs, and deliberately choosing to be different.

It should not be confused with operational effectiveness or best practices — what is good for everybody and what every business should be doing, such as TQM, benchmarking, or being a learning organization (Porter, 1980). Thus, when developing strategies, the goal is to be different from your competitors. However, this does not mean that you are willing to do anything, but rather determine where the opportunities lie that you can best exploit.

All strategic plans of the departments need to tie in with the organization’s overall strategic plan. That is, in going back to the definition of strategy, the leaders of the organization should create the unique and valuable market position; while your goal is to support the organization with activities that fit together in a complementary way.

 

That does not mean you cannot do things differently or set your own goals. It simply means that you need to keep your leaders’ visions and goals in focus when setting your goals. For example, if the leaders have ethics and diversity at the forefront of their strategic vision, you cannot put elearning and knowledge management at the forefront of your strategic goals. However, that does not mean you cannot use elearning and knowledge management technologies to bring about ethical and diversity goals.

Visioning

Visioning is the start of any strategic plan. Once your leaders have set the organizational strategic plans, you need to determine how best your department can bring about changes that will support those plans. And while their strategic plan needs to be unique, you need to think along the same lines.

Visioning strategy is best performed using a four-prong approach: Read more »

Internal Control – Integrated Framework

October 19th, 2016 TBI Admin No Comments »

Executive Summary

Senior executives have long sought ways to better control the enterprises they run. Internal controls are put in place to keep the company on course toward profitability goals and achievement of its mission, and to minimize surprises along the way. They enable management to deal with rapidly changing economic and competitive environments, shifting customer demands and priorities, and restructuring for future growth. Internal controls promote efficiency, reduce risk of asset loss, and help ensure the reliability of financial statements and compliance with laws and regulations.

Because internal control serves many important purposes, there are increasing calls for better internal control systems and report cards on them. Internal control is looked upon more and more as a solution to a variety of potential problems.

Internal Control

Internal control means different things to different people. This causes confusion among businesspeople, legislators, regulators and others. Resulting miscommunication and different expectations cause problems within an enterprise. Problems are compounded when the term, if not clearly defined, is written into law, regulation or rule.

This report deals with the needs and expectations of management and others. It defines and describes internal control to:

1. Establish a common definition serving the needs of different parties.
2. Provide a standard against which business and other entities–large or small, in the

public or private sector, for profit or not–can assess their control systems and determine how to improve them.

Internal control is broadly defined as a process, effected by an entity’s board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories:

  1. Effectiveness and efficiency of operations.
  2. Reliability of financial reporting.
  3. Compliance with applicable laws and regulations.

The first category addresses an entity’s basic business objectives, including performance and profitability goals and safeguarding of resources. The second relates to the preparation of reliable published financial statements, including interim and condensed financial statements and selected financial data derived from such statements, such as earnings releases, reported publicly. The third deals with complying with those laws and regulations to which the entity is subject. These distinct but overlapping categories address different needs and allow a directed focus to meet the separate needs.

Internal control systems operate at different levels of effectiveness. Internal control can be judged effective in each of the three categories, respectively, if the board of directors and management have reasonable assurance that:

Read more »

My 10 Favorite Classic Management and Leadership Books

October 1st, 2016 TBI Admin No Comments »

My 10 Favorite Classic Management and Leadership Books

Prior to the 1980s, there were few books on management and leadership. There were classic works from Peter Drucker, Douglas McGregor, Alfred Sloan, Frederick Taylor, Dale Carnegie, and a handful of others, but I’ll bet they only filled a small section of the local library or bookstore. Sure, you can finds books written throughout history that teach valuable lessons on management and leadership that are still relevant today, including The Art of War, written in the sixth century B.C., and the Bible. The first MBA programs were only started in the early 1900s as companies looked for scientific approaches to management to bring order to an increasingly industrialized economy. So unlike philosophy or medicine, it’s still a relativity immature discipline of study.

In 1982, Tom Peters and Robert H. Waterman, Jr. wrote the bestselling book In Search of Excellence. For some reason – perhaps the way the authors simplified their lessons and created an engaging format – the book triggered an explosion of new books on management and leadership. Today, if you were to search Amazon for “leadership” books, you’ll get more than 145,000 results and more than 800,000 books on “management.”

 

There is no shortage of “best management and/or leadership books of all time” out there. Many of these are based on sales, which is perhaps the most objective and accurate methodology to choose a top ten list.

This list is purely based on the hundreds of management and leadership books that I’ve read – only a small subset of the more than a million books available.

As I wrote this, I referenced my own bookshelf and selected books that I’ve kept over the years, and still refer to now and then. Some are classics, some best sellers, and there may be a few you haven’t heard. As you progress throughout your own career as a manager/leader, I encourage you to development your own top ten list, and share your recommendations with others.

Here are my top ten favorites, in no particular order:

  1. In Search of Excellence, by Tom Peters and Robert H. Waterman, Jr. This is one of the first management books I ever read, back when I was getting started as a corporate trainer teaching management courses. The book certainty has its share of critics.  Many of the “excellent” companies didn’t perform well after the book was written, and the authors even admitted to fudging some of the data. The core themes that Tom Peters wrote about – the importance of leadership, customer focus, and innovation are still as important as ever. I like reading Tom Peter’s blog and follow him on Twitter.
  2. What Got You Here Won’t Get You There, by Marshall Goldsmith. Again, as much as a tribute to the author as it is to a specific book, as he has written many great ones. As a writer, executive coach, and leader myself, Marshall has always been a role model. I like his behavioral approach to leadership development and use this book as my go-to resource for helping leaders figure out what to stop doing.
  3. The Lessons of Experience, by Morgan W. McCall and Michael M. Lombardo. This groundbreaking 1988 classic remains the best-practice framework used for leadership development. It’s all about how successful executives develop and the lessons learned from those experiences.
  4. The Leadership Challenge, by James M. Kouzes and Barry Z. Posner. If I had to recommend one single book to teach “What is leadership?” this 2002 classic would be the one. Take the 360-degree assessment to receive feedback on the leadership practices described in the book.
  5. The First 90 Days, by Michael Watkins – my welcome gift for newly promoted or hired leaders. This book is a great roadmap for how to get up to speed quickly and effectively.
  6. Managing Transitions, Making the Most of Change, by William Bridges. This is my favorite book on the topic of leading change; packed with practical insights and tools on how to lead yourself and others through turbulent times.
  7. The Five Dysfunctions of a Team, by Patrick Lencioni. This is my favorite guide to how to build a team. It’s all about overcoming the absence of trust, fear of conflict, lack of commitment, avoidance of accountability, and inattention to results. As with many of these, there is an accompanying assessment to see how your own team stacks up.
  8. Crucial Conversations, by Kerry Patterson and Joseph Grenny. This book includes a readable and effective set of tools for effectively addressing conflict head-on.
  9. The Leadership Pipeline, by Ram Charan, Stephen Drotter, and James Noel. I admit that my list is heavily biased towards how to develop leaders, as that’s what I’ve spent my career learning how to do. I like this one because it does a nice job defining the various stages of leadership (from frontline to executive), and how to develop leaders at each stage.
  10. The Effective Executive, by Peter Drucker. Drucker is considered by many to be the most influential management thinker ever. I had to include this classic because I have an original autographed copy on my bookshelf.

Read more »

Total Business Insider- Understand Your Business Model

September 30th, 2015 Staff No Comments »

Have you been trying to come up with a business model? Some of the content you find online about business model generation may be difficult to implement because it was either meant for a different industry or the material contains such heavy MBA parlance that it doesn’t make practical sense.

Think of a business model as essentially a system in which your value proposition, meaning customer segments, products or services, channels and cost structure produce profit. It’s not any one of these things, but all of it combined, working together.

So what determines the best model for your business? It’s the wrong approach to assume that there exists a set of business models that a business owner may choose from. It’s true a few probable models may exist but it’s not the best method of approach; and since there is no singularity in that tactic, one should only then come up with a model based on existing strengths, skills, and customers, that way you lay out the basic puzzle pieces and form a working model based on your needs.

Consider the following:

 

· Products and services

· People

· Channels

· Activities

· Costs

Knowing Your Business Model

Before you proceed, seek to understand the existing business model, and then try to draw a connection between these variables. Find out what appears necessary and what’s missing. Finally, figure out if your business is operating with a viable model. Read more »

What Is a Business Model?

August 2nd, 2015 Staff No Comments »

In The New, New Thing, Michael Lewis refers to the phrase business model as “a term of art.”  And like art itself, it’s one of those things many people feel they can recognize when they see it (especially a particularly clever or terrible one) but can’t quite define.

That’s less surprising than it seems because how people define the term really depends on how they’re using it.

Lewis, for example, offers up the simplest of definitions — “All it really meant was how you planned to make money” — to make a simple point about the dot.com bubble, obvious now, but fairly prescient when he was writing at its height, in the fall of 1999.  The term, he says dismissively, was “central to the Internet boom; it glorified all manner of half-baked plans … The “business model” for Microsoft, for instance, was to sell software for 120 bucks a pop that cost fifty cents to manufacture … The business model of most Internet companies was to attract huge crowds of people to a Web site, and then sell others the chance to advertise products to the crowds. It was still not clear that the model made sense.” Well, maybe not then.

 

A look through HBR’s archives shows the many ways business thinkers use the concept and how that can skew the definitions. Lewis himself echoes many people’s impression of how Peter Drucker defined the term — “assumptions about what a company gets paid for” — which is part of Drucker’s “theory of the business.”

That’s a concept Drucker introduced in a 1994 HBR article that in fact never mentions the term business model. Drucker’s theory of the business was a set of assumptions about what a business will and won’t do, closer to Michael Porter’sdefinition of strategy. In addition to what a company is paid for, “these assumptions are about markets. They are about identifying customers and competitors, their values and behavior. They are about technology and its dynamics, about a company’s strengths and weaknesses.”

Drucker is more interested in the assumptions than the money here because he’s introduced the theory of the business concept to explain how smart companies fail to keep up with changing market conditions by failing to make those assumptions explicit.

Citing as a sterling example one of the most strategically nimble companies of all time — IBM — he explains that sooner or later, some assumption you have about what’s critical to your company will turn out to be no longer true. In IBM’s case, having made the shift from tabulating machine company to hardware leaser to a vendor of mainframe, minicomputer, and even PC hardware, Big Blue finally runs adrift on its assumption that it’s essentially in the hardware business, Drucker says (though subsequent history shows that IBM manages eventually to free itself even of that assumption and make money through services for quite some time).

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