Tips for Running a Cost Analysis

Corporate Business Solutions  has experience implementing cost control systems and accounting into small and medium – size businesses. These areas are crucial to the development of any size business, so don’t wait too long to get the help you need. 

If you’re a new business owner, it’s critical to run a cost analysis for your business as you start it up.  Below are general tips that may help you with the process:

1. List out all of your business costs - Break your costs up two ways (or more if that helps you) – at the very least into fixed and variable costs. These are the one-off costs that you need starting up, like a lease on a location, compared with the variable costs associated with the ongoing operation of your business, such as the cost of the materials or supplies that you are going to sell.
2. Add the amount - Add a dollar value to every single one of these costs. Be realistic – do not make assumptions about being able to get discounts or costs dropping as volume rises – those only get counted when you know you have received them.  Now take a very hard and realistic look at these costs. Set up a spreadsheet for the first year of business with all the fixed costs across the top and variable costs in a separate section below where they can be linked to volume. Plan these costs out over the year. Again be realistic – make no assumptions of success.
3. Eliminate as much as possible- Look at all your costs and think about if you really need to spend the money. Don’t be foolish about it – don’t remove costs you really will have to spend - but also do take out things that you know you can get by without. Think about the fact that every penny saved here is a penny added to your potential profit. And also think about the risk of cutting out things that will affect your ability to actually deliver to your customers.
4. Real world costs – Put real numbers against your costs and get costs as close to reality as you can. By now you have looked at your costs enough to understand how important each of them is going to be toward your business so you can make smarter decisions about the levels and amount of spending you are prepared to make. If you can’t get the costs down to where you can make money then you are in trouble. If after this exercise you are in trouble, don’t despair yet. Give it a day or two and go back and see what else you can save and do without. After that, if you can’t make the numbers work, it may be time to get some professional help!  A third-party objective point of view can often provide a business owner just what he or she needs to figure out the solutions which are necessary to make the business profitable and successful.
5. Develop a managerial cost system that budgets percentages rather than dollars.  In other words, take all the categories for expenses you have identified above and create an Excel spreadsheet which includes the percentage of total expenses for each category, with profit being your first budgeted line of expense.  Then set up a program where those percentages can be tracked over a period of time such as every month, every quarter and every year so that the variances can be identified quickly and action can be taken when percentages get out of line.  In other words, you want to budget percentages for your costs, rather than simply dollars.  You control your expenses by controlling the budgeted percentages for each category of expense with your budgeted profit being the minimum profit you will accept.  This will force you to be a disciplined business manager by making changes in your expenses rather than accepting a lower profit for yourself.

To learn more about us and / or to schedule your complimentary appointment with the business experts at Corporate Business Solutions, call us at 877-357-9366.

Small Business Lending Trends

Corporate Business Solutions has helped many business leaders find their unique path to success. From cost control to accounting, to restructuring and implementing new procedures, these business consultants realize that no two businesses are identical in goals and needs. 

In today’s market, many owners of small and medium – size businesses are turning to small business loans for assistance in developing their brand.  If you are considering a business loan, here are some trends to understand:

1. Non-traditional online lending: The online lending sector of the financial technology (fintech) industry exploded last year and shows no signs of slowing down this year. These lenders attract entrepreneurs by offering faster, more streamlined application processes than traditional banks. However, these online lenders aren’t regulated the same way as banks, and you need to read the fine print carefully to fully understand what the financial implications are for your business before making a decision. Generally, these lenders focus on merchant cash advances (with a payment arrangement that takes weekly or even daily payments from your incoming cash) or working capital loans with repayment front loaded into the first few months of the loan term. Their terms may be unclearly stated, and unsophisticated borrowers can find themselves on the hook for as much as 30 to 80 percent in rates and fees.  Exercise an abundance of caution with any non-traditional lending source, know the terms and determine the true cost of borrowing.
2. Banks will edge back into small business lending- Last year, 79 percent of SBA loans were greater than $350,000, and most big banks would only consider applications from businesses with a minimum two-year financial track record. In 2017, thanks in part to the market threat presented by the booming fintech industry, traditional banks will ease back into lower-dollar lending and will explore alternative funding options. Since the SBA only guarantees loans through traditional banks, anything those banks do to open up to smaller businesses is good news for everyone.
3. Watch SBA Rates - But do your math, and keep a close eye on the Fed. SBA loans are variable and reset quarterly: with a volatile worldwide stock market and potentially rising interest rates on the horizon, these loans will become more expensive in the future than in the past 5–7 years.

To learn more about us and / or to schedule your complimentary appointment with the business experts at Corporate Business Solutions, call us at 877-357-9366.

Starting an HVAC Business

The business professionals at Corporate Business Solutions are renowned for their expertise in the conts construction industries, including heating, ventilation and air conditioning businesses (HVAC.)

The HVAC industry tends to mirror the fast and forwardly growth of technology. Therefore, when improvements are made to the design and function of heating and cooling units, the demand for expert HVAC contractors accelerates.  If you’re looking to start an HVAC company, there are some general tips that may help you: 

1. Specialize - Assess your skill level to determine what you do best and then offer that service first. Realize your limitations and get training in those weak areas, if you feel you would like to offer those services. The HVAC is flexible because you can become an expert in a variety of services based on what you want to specialize in. This includes troubleshooting heat pumps, gas furnaces, or air conditioning; and consulting on ENERGY STAR appliances for homes or commercial buildings, or specializing in other areas of expertise.
2. Get Certified - Join a trusted HVAC industry-based organization that specializes in offering education and certification. Your years of experience and combined training can be even more enhanced with a North American Technician Excellence certification. In addition, your knowledge of ENERGY STAR qualified products and current trends in the HVAC business industry can make you a valuable resource to your customers. Certification may also help you instill your competency to potential customers.
3. Create Growth-Oriented Business Plan - Plan how you will expand your client base over the years to stay profitable, although initially, you may start your HVAC business with limited risk. Start out part time with a set amount of hours you would like to work in your business. Realize how many clients you can service within a week based on the hours you would like to devote to the business and your financial goals. Since HVAC contracting involves physical labor, make sure that you do not overbook and always delivery quality service to your customers. Also, be sure to account for time each week for administrative work. 

To learn more about us and / or to schedule your complimentary appointment with the business experts at Corporate Business Solutions, call us at 877-357-9366.