Monday, February 25, 2008

Assessing the financial health of your business- Part 1

Recently we asked that you answer a series of questions regarding the finances of your business. Today we will talk about the answers to those questions.

1) Do I have a separate checking account for my business? If you haven't already, open a separate checking account for your business. This helps track expenses more accurately. You will also find that you are not mixing business expenses with the family bills such as the grocery store. Also, if you are ever audited by the IRS, having a separate checking account is a good indication to them that you are running a business (vs. a hobby).

2) Do I have a separate business credit/debit card? If you don't, then you should for the same reasons as indicated in #1. Also, for the purposes of tracking expenses, do your best to always use your checking account or credit/debit card when paying business bills. Receipts for bills paid by cash can easily get lost in the shuffle.

3) Am I carrying a balance on my credit card? If you are, then you are overspending AND probably paying high interest rates too boot. If you have difficulty with credit cards, consider using only a debit card.

4) Do I have too many business supplies on hand? Basic is better. It can be easy to get carried away ordering all kinds of brochures from the company; however you'll probably find that less is better. Stick to the basics: order forms, invitation postcards, recruiting contracts and catalogs. E-vites can be a great alternative to postcards and many company websites offer forms and fliers that are downloadable from their websites so take advantage of that! Remember too that statistically there is a 1% return on direct marketing (ie; leaving brochures on your neighbor's doorknobs or in their mailboxes; so save a tree and pick up the phone!

5) Do I own lots of extra “stuff” with my company's logo on it (tee shirts, stationery, magnets, hats, etc ;) We get so excited “shopping” for these kinds of things (especially at convention) that we can overspend. Keep in mind that in most cases, bumper stickers and tee shirts book very few parties.

Tomorrow, we will see how you answered the rest of the questions on our survey…so tune in then!

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