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What is Equity and Why is it Important to Your Business

What is Equity and Why is it Important to Your Business
What is Equity and Why is it Important to Your Business?   So, you’ve finally started your own business. You are officially an entrepreneur. While you might feel a fleeting sense of accomplishment, it may not last forever. For many new business owners, the thrill of starting a business wears off quickly and is replaced, at least in part, by worry. Will your business be profitable? Have you taken every legal step possible to make it a legitimate endeavor? Did you borrow too much money to start your business? How long will it take to be profitable? While there are many notions to understand as a business owner, equity is a key concept and you should have a firm knowledge base of how it works. It is essentially what will drive your business and its profitability.   What is Equity? Equity is essentially the value of any asset, in this case your business, minus any liabilities on that asset. A liability may be a loan or debt that is owed against the business. Here is an example: If you bought your business’s physical building for $400,000 and the mortgage balance is $200,000, your equity is $200,000.   There is also the concept of owner’s equity. This is essentially the total amount of equity you, as the owner, have in your company. Let’s look at this in another example. If your company has $200,000 in total assets but also carries $50,000 in total debt, your total equity in the business is $150,000. A simpler way to think of owner’s equity is that it is the amount of money that would be left over if you sold all of your business assets and then paid off all of your business debts. The lower your debts, the likelier you are to have positive equity in your business and the higher the probability you would make a profit should you decide to sell it.   Negative Equity Negative equity, as its name suggests, is not a good thing for any business owner. It applies to the concept of when your ownership interest in your business is equal to less than your liabilities and debts. So, for example, if you purchased your business’s building for $300,000 and took out a loan for $250,000 to pay for it but the value drops to $200,000, you now have negative equity. That is because the value of the building is now less than the balance owed on it. You want to avoid negative equity as much as possible. You would not be able to sell your business for a profit if you had negative equity.   Types of Equity You can have both tangible and intangible assets in your business. Tangible assets are those that you can physical touch. If you run a business that keeps an inventory of product, that inventory is a tangible asset. An intangible asset cannot be touched but may even be more valuable than a tangible one. An intangible asset might be the reputation of your business. This can obviously bring you more customers. Another intangible asset might be brand identity. Everyone knows, for example, that golden arches represent McDonald’s. The more recognizable your brand, the better. If customers know you, they may use you for your services or goods.   Importance of Equity Equity is of the utmost importance when it comes to your business. As your owner’s equity increases as time goes on, you can potentially sell your business and turn a profit. So, if you want to eventually make a profitable business, you need to be consistently building equity in it. This means the value of your business should...
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How to Avoid Cash Flow Problems as a Small Business

How to Avoid Cash Flow Problems as a Small Business
If you own a small business, then you’re probably no stranger to cash flow issues. In fact, 21% of businesses claim that cash flow problems were significant issues, potentially leading to closing down. One of the best ways business owners can ensure success is by carefully managing cash flow. Because no matter how great your business plan is, your business won’t survive if you run out of money. What Causes Cash Flow Problems? Before you can get a handle of your cash flow issues, you have to understand why they occur. Here are three common reasons why cash flow problems may arise: Unnecessary Spending Many business owners have head the old adage that you have to spend money to make money. Unfortunately, this belief has caused many ambitious business owners to overspend. Not all business expenses equally as important to your operations. Consider the cost-benefit of each expense. Overestimating Future Earnings Optimism is a great trait but it needs to be paired with a healthy dose of objectivity. It’s important to forecast your sales based on previous earnings and data. By not counting on future earnings that may never show up, you can prevent overspending. Inconsistent Sales Some businesses have occasional spikes in sales followed by months where they sell next to nothing. Trends like these cause problems with budgeting and makes it difficult for business owners to make operational decisions, often choosing to survive off of their “good” months. Get started with Flexible Funding today! Flexible Funding provides payroll-funding solutions in addition to back and front office support services as well. Flexible Funding works with staffing companies to implement the right staffing-industry software solutions for each client’s unique needs to create the best solutions and to save you time and money -from off-the-shelf accounting packages like QuickBooks and Sage 50 Accounting to in-house custom-built financial accounting software tools. Whether you are a start-up or an established staffing agency looking for best business practices, Flexible Funding will find the right solution for you– from payroll and invoice processing to W-2 preparation and filing, background checks, custom reporting, and so much more.   Tips for Avoiding Cash Flow Problems Cash flow problems are a reality for nearly all business owners but there are ways to manage them. Here are five ways to mitigate your cash flow issues: 1) Take Out a Short-Term or P2P Business Loan A short-term business loan can provide the capital you need to run your business and pay for any expense, from inventory to office furniture. Short-term business loans have a high rate of approval even for businesses with limited credit history. You’ll receive the money faster than you would if you took out a traditional bank loan, which can be extremely helpful if you have immediate needs. Sometimes the application process can take as little as 24 hours. One of the first places to check for business loans as a business owner would be Small Business Administration. Or, if you prefer to bypass the government, you can try a peer-to-peer business loan. These loans are funded by individual investors through a lending platform. However, these loans usually require more frequent payments, and you will likely end up with a higher interest rate. 2) Use a Working Capital Loan Working capital loans can give you the cash flow to cover crucial operational costs like rent and payroll. This gives you the flexibility to invest in your company’s growth and still cover day-to-day expenses. Unlike other business loans, working capital loans don’t require that you state your reasons for taking out the loan. However, you will have to repay this loan quickly and your loan may have a...
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8 Ideas For Profitable Ecommerce Niches Right Now

8 Ideas For Profitable Ecommerce Niches Right Now
8 Ideas For Profitable Ecommerce Niches Right Now Image credit: Pexels Choosing an ecommerce niche can be very difficult, but if you can find the right one, it can prove extremely profitable. There are hundreds of potential niches out there and millions of products that you could sell, so you need to commit time and attention to finding one or two to focus on. Prioritization is essential for entrepreneurs. Niche products are easier to market than general products because you can target a very particular group of people with less competition to contend with. You see fewer leads overall, but the vastly-improved conversion rates more than make up for that. Source: ecomdash   Not sure where to start? Here are 8 strong ideas for profitable ecommerce niches that you can use for inspiration. Athleisure wear The word ‘athleisure’ first entered common parlance a few years ago, and it looks set to stick around. Athleisure wear, as the name suggests, encompasses items of clothing that are suitable for both athletic and leisure activities: if you’ve ever been out to brunch in your gym gear, you’ve rocked the athleisure look. Within this category you can sell everything from yoga pants and sports bras to running shoes, all in a wide variety of colors and prints. Athleisure wear interest levels. Source: Google Trends    Millennials are the usual targets for athleisure wear, with a fairly even customer split of 60% women and 40% men. Because the products are centered on fashion, visual channels such as Facebook, Pinterest and especially Instagram are excellent platforms to grow your brand. Buy it for life (BIFL) People are growing tired of buying cheap, low-quality products, and are getting interested in conscious buying — something targeted through buy it for life products. The emphasis here is on high-quality, durable items that aren’t cheap but will last for a long time. As we become aware of the negative impacts of consumerism in our throwaway culture, we are finding ourselves more willing to spend money on things that won’t break within a few months. Source: The Good Human   While the buy it for life niche automatically means fewer return customers and fewer products sold overall, selling premium products offers a better margin. In addition, buy it for life offers the valuable opportunity to build your brand with a great story, which will help you connect with customers and keep them loyal. Night masks Night masks are a good niche to target because they offer a solution to a persistent problem: needing to block out excess light so you can get a better night’s sleep. Night masks can be broken down into three main customer segments: sensitive sleepers, travellers, and beauty fans. This means you can sell related products alongside them, such as relaxing lavender oil, travel pillows, or skin care products, depending on which group you are targeting. Night masks Source: Google Trends    Good sleep is very important for a variety of reasons, and always will be, so this is a niche that isn’t just a passing fad. Shapewear It has been reported that the shapewear market is expected to leap to $5.6 million in sales by 2022, so now is a great time to start establishing your brand within this niche. Shapewear is worn underneath your clothes and creates a sleeker and slimmer silhouette. For many years it has been associated purely with lingerie, but there are now many different cuts and styles that can be worn under everything from cocktail dresses to pairs of jeans and t-shirts. Source: SmartThingz   Shapewear offers you plenty of versatility as a retailer, and can be sold alongside everything from...
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10 Ways You Can Make Money From Your Blog

10 Ways You Can Make Money From Your Blog
10 ways you can make money from your blog There are many tools you can use to create information products and sell your products. Let us have a look at what type of information products you can make. 1. Ebooks Creating ebooks is one of the easiest ways to create information products. Ebooks can be simply written in a word doc, exported to a PDF and then you are done. You can collate your top posts and compile them in an ebook and sell them on your blog. You can sell the ebook anywhere from $7 to $25. Courtesy: Become A Blogger 2. Membership sites Membership sites is another way to build information products and create recurring revenue every month. It can be difficult to create membership site but when you create a tribe and establish your brand, then you can create membership sites and create features useful for your readers. Until you have created your own following and established your brand, you can hold off creating a membership site and build your brand. 3. Video courses Video courses are something which everyone can make. You can either create video-based courses or slideshows to create content for students. There are different platforms to create your courses like Thinkific or teachable which allows you to create courses. It is easy to set up courses and create different pricing plans for your courses. Courtesy: Elearninginfographics.com 4. Email coaching Email coaching is another way where you can make money by offering your services by guiding the reader in solving their pain point by coaching them over the series of emails. You can easily coach anyone over email and keep a track of communication over the email. 5. Email courses  Another way to create an info product is to create email courses where you send a series of emails as a paid info product. The biggest downside of an email course can be the student treats an email course as any other email and this can drive down engagements of your course. 6. Blog audits You can do audits or reports and analyse the results of other people’s blogs or content. When you provide such a service, you should detail everything that you will provide to the client. Be specific with what you would provide in return and provide a guarantee on what you provide in doing a blog audit for a blogger. Courtesy: Socialmediatoday 7. Apps or software Creating apps is another way you can create income from your blog. Suppose, you have a food blog or a fitness blog, you can have an app which showcases food recipes or exercises. You can also create a software which can solve a pain point for the custoemr and solve a problem. Another way to make money is by creating a website theme which can sell on your platform and can also be used to build an email list. 8. 1-on-1 coaching Your audience may want to get on a 1-on-1 coaching with you to get more information from you to help them to get better at their business or blog. When you do a one on one coaching, be very specific on what you can offer to your client. if you are doing a session of one-hour coaching where you charge $50 per hour worth of coaching, then make sure you are not providing 3 hours of free content to the reader. You should use a scheduling software setup to keep a track of the time offered by you to your clients. Be specific with what you will offer in your coaching. 9. Ads Ads is a monetization option which is used by...
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How do I acquire the millionaire mindset?

How do I acquire the millionaire mindset?
How do I acquire the millionaire mindset? This post is a curated version of couple of best answers from Quora to the ineviatble question “How do I acquire the millionaire mindset?” Everybody wants easy and quick money now a days but never understand that it is next to impossible and money earned such is not going to make you happy. Even if your fore fathers had left a legacy to enjoy, you always have the responsibility of manipulating and multiplying it. So, what is the ‘X’ factor that makes only few people and their companies serve as index of stock markets? Start with this book. Read it as many times as you need to until you have internalized its lessons. Some of its important lessons include the following: Start thy purse to fattening Control thy expenditures Make thy gold multiply Guard thy treasures from loss Make of thy dwelling a profitable investment Insure a future income Increase thy ability to earn The Richest Man in Babylon (The Success Secrets of the Ancients – the Most Inspiring Book on Wealth Ever Written) by George S. Clason At this point, I have probably mentioned this book in a hundred different answers on Quora. I keep going back to this book because there are few other volumes that contain so much wisdom about wealth in so few pages. There is a reason why the book is still in print now, almost 100 years after it was first published. Its lessons are simple, timeless, and effective – as long as you actually put them into practice. Courtesy: Dan Kanivas, admirer of the millionaire next door? Here are some of the mindsets that set millionaires apart from the rest of us: Time does not equal money Most people trade their time for money. Millionaires realize that building assets that work for them is the best way to make money. Often, millionaires own more than one business. They almost build them as a hobby. Opportunity is everywhere Millionaires see opportunity every where. Every pain and problem is an opportunity to build a product or a service. When someone complains, it’s a potential money maker. Action is the best teacher Many get stuck in “student mode.” They read books, articles, and pay for online courses, but they never actually do anything. Millionaires are the opposite. They’ll learn the basics and then dive in. Most of their lessons are learned through experience. Mentors are a life hack Speaking of learning… millionaires often find mentors. They see the value in learning from others that have experience. This is a different quality of teaching than what is provided through a book or a webinar. This kind of learning is personalized, tailored specifically to them by an industry expert. Profit > Revenue Millionaires could often care less about revenue. They care far more about profit. Think about it: 10% profit on $100,000 is only $10,000. 50% profit on $20,000 is also $10,000. Which business would you rather own? (Yes, revenue does matter. A business with a 50% profit margin that only makes $10,000 a month is not a money maker) Money is a tool, not a goal Millionaires do not daydream about diving into a pool of money. It can buy fancy airplanes and cars, but for the most part, it is a tool. It is a tool to build things, repair things, and get things done. Determination Millionaires work tirelessly towards a goal until it is completed. They understand the “art of the finish.” Acquiring these mindsets is not entirely straightforward. There is no manual for how to do it. The best hack I’ve found is immersion. By immersion into the...
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