Business Education

Easy Ways to Build Up Retained Business Earnings

The U.S. Bureau of Labor Statistics estimates about one-third of new businesses fail in their first two years of operation. Approximately half go out of business within the first five years. Banking statistics reveal around 82 percent fail due to cash flow issues. Those are grim and stark figures. But, these unfortunate circumstances can be avoided by building up a business emergency fund in the form of retained earnings.

Top Reasons to Save Retained Earnings

There are several benefits to saving retained earnings in any business, no matter how small. (But more particularly, for medium to large sized organizations.) Obviously the most important is for emergency situations. It could be a natural disaster, a pandemic, a sizable dip in the economy. Regardless, emergencies do happen and your business will benefit from having savings in-place.

Retained earnings reflect the amount of net income a business has left over after dividends have been paid to shareholders. Anything that affects net income, such as operating expenses, depreciation, and cost of goods sold, will affect the statement of retained earnings. —The Blueprint, a Motley Fool Service

Another advantage of having retained earnings ready-to-go is for opportunity buys. Your business might have the good fortune of being able to purchase inventory and/or equipment in bulk at a substantial discount. Or, there might well be a circumstance where cash becomes temporarily tight. Retained earnings are an ideal source of capital that can later be replenished.

Clever Ways to Save Retained Business Earnings

It’s not always easy (or simple) to put aside money within a business that isn’t specifically for something like inventory, equipment, materials, et cetera. But, there are ways to save retained earnings for your business — it just takes a substantial amount of discipline and patience. Here are some effective ways to save retained business earnings:

Make it simple. Rather than trying to save money in a business checking account and “pad” the balance, open a dedicated account, such as a money market (since it earns interest) and that will provide more incentive to set money aside. This way, you’ll largely avoid the temptation to spend what you’ve ostensibly saved.
Automate savings. Once you have a money market account to save retained earnings, set up automatic deposits to go into that account on a regularly scheduled basis. After a time, it won’t be such a big deal and you’ll grow accustomed to it.
Take advantage of discounts. If you’re planning on a big purchase and have a budget set for the expense, take some time to find the same item at a discount. Or, broaden your search to find something similar but less expensive. Then, take the difference you save and put it in retained earnings.
Sell off old or unused items. You’ve probably bought one or more things in the past that you rarely use or have grown out-of-date. So, go through your assets and find prime candidates to sell off and then put the money into retained earnings.
Take advantage of higher revenue. Whenever business is good, it’s a good idea to put some money aside for a rainy day. While many business owners do this, it’s only sporadic. But, making this a priority and a habit will help to beef up retained earnings.

What other suggestions do you have for building up retained business earnings? Please take a brief moment to leave a comment and share your thoughts and experiences so others can benefit from your strategies. Interested in learning more about business? Then just visit Waters Business Consulting Group.

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Stop and Read This Right Now and Then, Quit Procrastinating

April 18, 2019 No Comments

It’s nearing the end of another deadline. And, you’re too far behind to finish comfortably. The rush is on and time isn’t on your side. If only you’d started earlier. You can’t afford to spend time reflecting. But, you can’t help but feel a strong sense of regret. How did this happen again? You’ve fallen victim to your own procrastination and you vow not to put yourself in this position ever again. Top Reasons We Procrastinate Everyone knows procrastination leads to trouble. So, why do we do it in the first place? What causes people, even the best of us, to procrastinate? Sometimes, it’s because we feel events are out of control and it leads to paralysis. Or, it could be due to a lack of energy. On a neurological level, procrastination is not the slightest bit logical — it’s the result of the emotional part of your brain, your limbic system, strong-arming the reasonable, rational part of your brain, your prefrontal cortex. The logical part of your brain surrenders the moment you choose Facebook over work, or decide to binge another episode of House of Cards when you get home. But there’s a way you can give the logical side of your brain the upper hand. —Harvard Business Review Of course, perhaps the single biggest cause of procrastination are distractions. Having attention taken away from the task at-hand can really undermine productivity. Other times, it’s just feelings of sadness or depression. Most Effective Ways to Deal with Procrastination If it’s so common, just how does one beat procrastination? Fortunately, there are a few ways to deal with procrastination. First, recognize when you’re procrastinating to start. Then, do the following: Commit to just one task. If you feel the urge to procrastinate, instead of doing nothing, do something, but something meaningful. Commit to just one task, even a small one that will give you a real sense of satisfaction and accomplishment. Give yourself a reward. Another way to overcome procrastination is to promise yourself a reward. If you tackle the task you’re tempted to put off, you’ll give yourself an enjoyable reward. You’ll be amazed at how you’re able to buckle down and focus. Act on things as they happen. Okay, so you might feel a bit intimidated by a particular type of task. That’s okay, deal with it by taking things in order, as they come. This way, you’ll build momentum. And, if it’s the first item on your plate, take comfort in the fact once it’s done, it’s out-of-the-way (at least, for the day). Minimize distractions around you. Alright, this is obvious advice. But, it definitely warrants inclusion. Get rid of any (or as many) distractions as possible to help beat procrastination. What other suggestions do you have to deal with procrastination? Please share your thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Most Common Scams that Target Entrepreneurs

June 2, 2023 No Comments

Starting a new business is an exciting and challenging venture. However, amidst the hustle and bustle, entrepreneurs need to remain vigilant and protect themselves from potential scams that can derail their success. Scammers often prey on the vulnerabilities and limited experience of new business owners. Most Common Scams that Target Entrepreneurs Okay, let’s get ahead of this right now. Entrepreneurs are proud people and willing to take risks. So, they can be a little more susceptible to scams. Even the most skeptical can be fooled. And that means knowing the most common schemes can be very informative. Now, let’s delve into the types of scams that entrepreneurs are most likely to encounter and provide essential steps they can take to avoid falling victim. Fake Invoice Scams One of the most prevalent scams is the fake invoice scheme. Scammers send fraudulent invoices for services or products that were never ordered or received. The invoices may appear legitimate, using logos and details similar to genuine suppliers or service providers. New business owners, caught up in the chaos of managing operations, may inadvertently pay these invoices without realizing the deception. How to Avoid Fake Invoices Implement strict payment protocols: Establish a clear process for verifying and approving invoices. Maintain a record of authorized suppliers and cross-reference all invoices against this list. Double-check all invoices: Scrutinize each invoice for any discrepancies, such as changes in payment details or unexpected price increases. Contact the supplier directly to confirm the legitimacy of the invoice before making any payments. Train employees: Educate your staff about invoice scams and the importance of verifying invoices. Encourage them to report any suspicious invoices or requests for payment. Business Opportunity Scams Entrepreneurs, driven by the desire for success, can become susceptible to business opportunity scams promising quick riches or high returns on investments. These scams often present themselves as legitimate-sounding franchise opportunities (or pyramid schemes or multi-level marketing programs). However, they typically rely on recruiting more individuals rather than selling legitimate products or services. How to Stay Away from Business Opportunities that Sound Too Good to be True Research extensively: Thoroughly investigate any business opportunity before committing. Seek independent reviews and testimonials from individuals who have engaged with the organization and look for the good and bad. Anything that strikes you as a red flag should give you ample pause. Take a step back and look objectively: This is much easier said than done, but it’s worth mentioning. Get some perspective and ask people you trust. Let them evaluate the offer and give you their honest feedback. Phishing and Email Spoofing Phishing and email spoofing scams remain a constant threat to entrepreneurs. Scammers send deceptive emails, often posing as trusted organizations, financial institutions, or even government agencies. These emails attempt to trick recipients into revealing sensitive information, such as passwords, credit card details, or social security numbers. Entrepreneurs may unknowingly compromise their own and their business’s security by falling for these scams. Best Ways to Protect Yourself from Phishing and Spoofing Be cautious with email links: Avoid clicking on suspicious links or downloading attachments from unknown sources. Hover your mouse over links to reveal the actual destination before clicking. Verify email senders: Scrutinize the email address of the sender carefully. Phishing emails often use slight variations or misspellings of legitimate email addresses. When in doubt, contact the organization directly through a trusted source to confirm the authenticity of the email. Utilize security measures: Install reputable antivirus software, spam filters, and firewalls to protect against phishing attempts. Regularly update software and keep your systems patched to minimize vulnerabilities. Business Directory Scams This is an old one, but it’s still in use today. And it targets new entrepreneurs in various forms – usually digital but sometimes, still hardcopy. Scammers may contact business owners, claiming to offer inclusion in a prestigious online directory or publication for a fee. They employ persuasive tactics, promising increased exposure and enhanced credibility. However, these directories often have limited visibility and fail to deliver any real benefits. Effective Protection Tips Conduct thorough research: Before investing in any directory or publication, research its reputation and reach. Look for genuine testimonials and reviews from other business owners. Question unsolicited offers: Be skeptical of unsolicited calls or emails from unfamiliar directories. Ask for detailed information about their services and cross-check their claims with trusted sources. Verify legitimacy: Contact established industry associations or local business bureaus to verify the legitimacy of the directory or publication. What other types of scams would you add to this list? Please take a moment to share your thoughts and experiences so others can avoid making costly mistakes and being victimized by nefarious individuals or criminals. Interested in learning more about business? Then just visit Waters Business Consulting Group to learn more about us and the services we offer.

Former Employee becomes a Rival Without a Non-Compete Agreement — What Should I Do

September 30, 2020 No Comments

Here’s an unusual but not unheard of situation. A team member leaves your company only to go off and form a rival business. Making matters worse, there’s no non-compete agreement in place. Perhaps you never considered one, or thought it unnecessary. Whatever the case, your former employee is now a direct competitor — so, what should you do? Legal Action might Not be the Best Action The reflexive answer might be to sue. However, this will be very costly and challenging. Without an explicit non-compete agreement, you’ll have to prove with documented evidence that he or she used proprietary methods, and/or work product, and/or more, in order to start his or her business and poach customers. In other words, it will be a very expensive and uphill proposition that doesn’t have more than a 50/50 chance of succeeding. When the employer faces a worker that engages in certain activities, he or she may need to sue the person for the actions that lead to the individual becoming a competitor. Many of these circumstances involve the employee acting in direct violation of company policy or the state or federal laws by stealing information from the company or poaching clients. —HG.org That means you’ll have to find another way to deal with the situation. Since you’re probably not going to persuade him or her to give up their newfound success, or come back to work for you, what alternatives are there? Well, it really depends on your relationship as it stands now. How to Deal with an Ex-Employee Who is Now a Competitor When a former employee becomes a competitor, it can stir up a number of emotions. You might feel proud, if this was the plan all along. But, if it came out of the blue, chances are excellent that you will feel angry and even cheated. Fortunately, there are ways to deal with an ex-employee who becomes a business rival: Talk about establishing some mutual boundaries. Although there was no arrangement in-place prior to his or her departure, that doesn’t mean that you can’t come to some agreement now. Speak with him or her about establishing some ground rules. Perhaps, you both can offer different variations of what is essentially the same within the industry. For instance, you take on one type of client, why he or she takes on another. Or, you agree not to cross certain geographic boundaries. Form a strategic alliance. Here’s another idea — work together, yet separately. If the above suggestion isn’t feasible, then there’s no reason you can’t work together, behind-the-scenes. For example, you might be able to serve clients in one capacity, while he or she serves them in another. Yet another alternative is to work in tandem, where you pick up where he or she isn’t available, and vice-versa. Shift your focus. This just might give you the opportunity you’ve been waiting for, for some time. You can look at it as a blessing in disguise to transition from one business model to another. Perhaps you’ve wanted to take the company in a different direction, but have been unable to fill the void. Now, there’s someone to do just that, freeing you to pursue new things. What other suggestions do you have to deal with such a situation? Please take a moment to share your thoughts and experiences so others can benefit from your prospective! Interested in learning more about business? Then just visit Waters Business Consulting Group.