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How To Know If Your Business Is Suffering: Employee Turnover

For entrepreneurs, the ultimate sign of financial anguish is generally running out of cash. However, running out of cash is not a cause of business failure and rather a symptom of business breakdown. Let me explain:

Why a Business Truly Fails

  • Gross or Net Margins Slip: Gross profit margin (GPM) is calculated by deducting cost of employee turnover-1goods sold from total revenue and then dividing that number by total revenue. GPM is used to denote ability of a company to effectively manage its most critical costs. On the other hand, Net profit margin (NPM) refers to the percentage of revenue that is left after all operating expenses, taxes, interest, business bookkeeping, and preferred stock dividends (with the exception of common stock dividends) have been deducted from the total revenue of a company. Usually, the NPM of a company is far more significant than the amount of earned profit.
  • Profitability Challenges and Struggles: In today’s cutthroat business environment, it is important for every business (even the brick-and-mortar ones) to make profits that are sufficient enough to survive. There is no doubt when we say a company that is not profitable is a business at huge risk. An unprofitable company will then resort to raise capital from outside that opens up a completely different world of control and risk.

It All Starts Internally: Watch for Your Employee Turnover

Employee turnover is classified as the percentage of the workforce of a company that quits voluntarily during one year.

High employee turnover rates do not always indicate that there is a problem with management or that the company is not a great place to work. Remember: employees of companies with great visibility and brand value are more “poached.

Good managers and entrepreneurs can control employee turnover rate by managing compensation, working conditions, supervision, training, communications, monotony, and organization practices. Essentially, you’ve got to make your own workforce happy!

The Key to Financial Success During the Great Recession

Out of all questions asked of a financial advisorthis one is the most clever. Why? You really want to determine success when interviewing a particular expert in consultation of services for your financial management? You talk about the “Great Recession,” particularly in the year of 2008. Why the Great Recession? Why does that matter when considering a financial advisor for your accounts?

Businesses Surviving the Great Recession Often See Great Success as a Cut financial advisor dollar billAbove the Rest

Given the state of competition, when you consult multiple professionals for financial advisement, you’ll see everything from price ranges to personality and everything in between pretty clearly. Nothing, though, — and I do mean nothing — beats a particular expert who did work through the Great Recession, especially through 2008. So this is what you do:

You ask about how long the financial advisor’s been taking clients and working.

If the candidate has actually managed many accounts well before 2008, and is still going strong, then you can rest assured — you have a real winner on your hands, hands down. However, if you’re interviewing a candidate for financial advisement, and you ask the question to get an answer that’s just shy of employment before 2008, then you just may be dealing with a newbie getting his or her feet wet in the industry, and if you want someone more experienced on your books, move on.

It’s All About the Timing

That is to say, timing isn’t the be-all and end-all of competitive consulting, determining which financial advisor might be the best fit for your accounts. But it can certainly tell a lot. Call me crazy, but I’d be pretty impressed about a certain advisor who still did fine even through the Great Recession. Think about it.

This is a profession dealing in money! And what other time besides the Great Depression did money absolutely suck as an industry?

Why the Limited Liability Company Might Be the Best Choice for You

I won’t go into much detail on business structure as I could for the moment, because if I did, we’d be here for hours. Business law is laden with so much nuance and intricacy that it would take a fine-tooth comb to get through all the hairs and pull out all the dandruff one by one. It’s a painstaking process, one you could at least minimize the heartache and turmoil by hiring an attorney to consult you on whether or not a partnership, or a corporation — or especially in this case, an LLC — would be the best fit for you and your company.

Wait a Second — What’s an LLC?llc business formation jack bauer

limited liability company? That hopefully didn’t fly way past your head (because at one point, it did for me) like an unlucky bullet over Jack Bauer’s skull. A lot of business owners and entrepreneurs go for a limited liability company for obvious reasons, but this is probably the most important one (and most likely the only reason you need to know): there’s flexibility in this structure of the LLC.

Like a corporation, though, you file certain articles of organization and structure as well as a certificate of formation with a limited liability company. However, the flexibility comes around when you can incorporate more of a balance between ‘owner’ and ’employee’. You’re basically all members of the company, for lack of a better term, and all members have the option to decide how they want to be taxed within the entity — either as a ‘partnership’ or ‘corporation’. There’s where you get the flexibility and additional benefits with a limited liability company.

In a way, you’re looking at a hybrid of a corporation and partnership: that’s what a limited liability company really is. And it just might be a good fit for you.

So Should You File for One?

It’s a possibility, for sure. It all depends on what your goals are. There are trade-offs involved. If you’re a small business, but have a decent size workforce, chances are an LLC might be the way to go. You won’t pay as many taxes — but you get a lot of the corporate benefits from the government you otherwise wouldn’t get from a business partnership or sole proprietorship.

It’s all up to you on the path you want to take. As always, though, consultation’s your best weapon in the effort to formulate a business, hence why you could easily contact an organization like Cloud Based Bookkeeping and get it all squared away. That way, you can do away with that fine-tooth comb!