All businesses want to be able to make a profit and continue to increase those profits every year.  Although, this is the goal we all know that sometimes our bottom line shows more of a net loss than a net profit.  What, then, is the best way to earn a profit?  As in every discussion, there are several opinions out there some of which are shared by several and some of which are only shared by a few.  I am going to cover the ones more commonly shared among successful business owners.

One of the more popular opinions is to cut your own costs down.  This makes sense, if it cost you less to run your business, then you will make more profits because you are spending less.  On the practical side of this, how does one cut their costs?  Some of the suggestions were very good.  For example, negotiate cost of you inventory items with your vendors.  Shop around for the best deal, and go with the vendor that will give you the most for the least without sacrificing quality.  As far as inventory is concerned, keep a good tracking system on goods so that you are not over ordering nor loosing inventory items due to theft or other means.

Another way to cut cost is to start outsourcing and automating some of your needs.  Virtual assistants are becoming more and more popular as are virtual bookkeepers.  Making use of one or both of these might save you money on office staff, benefits packages, and keeping up with technology.  Also, find ways to automate processes that you might otherwise be doing by hand or paying others to do for you.  These will save you time thereby giving you time to devote to the job you actually love the most – your business.

An area that can really zap the money out of your pocket is marketing.  There were some really good ideas on how to save money on your advertising campaigns.  One of those was to use geo-targeted marketing.  This is the first time I had heard of this so I did a little research.  Basically, geo-marketing gives you the ability to choose an area or areas that you want your advertisement to hit.  If you do an internet marketing campaign, sometimes you pay per click.  What if those clicks are in an area outside your market zone?  Then you are paying for something that isn’t beneficial for you.  Also, keep track of what is working and what isn’t.  This sounds easy and logical, but when you are busy with running your business, sometimes you spend and don’t really think about its actual benefit or lack thereof.

There were a few other ideas that came up more than once on how to increase your profits.  One of these was to increase your prices.  That is ok, but you also have to stay competitive.  It was stated that if you increase your prices, you must also make sure you keep the quality up to standard, and also that you are providing something unique to your niche.  This idea of a unique niche is becoming more and more popular right now.  It is so important at this moment in time that the rumor is if you do not make yourself unique, you will not succeed.  That sounds a little harsh, but that is the reality, so good luck to all you struggling entrepreneurs.

As always, if I can help relieve some of your everyday bookkeeping tasks and maybe take some of the financial stress/headache off your shoulders, please send me a quick e-mail, text, or phone call.  I would love to help you out.

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Bambi Samares                                                                                    (cell) 936-697-5412

Epoch-Bookkeeping                                                     [email protected]

I was on a social media site specific to businesses this week, and came across an article written by one of the businesses owners about start up companies. Considering I am a start-up company, I became very interested in what this person had to say.  One of the issues that shocked this writer was how very few start-up companies have a business plan.

The more I read, the more I realized how important it is to have this plan.  Anyone who knows me understands that I can’t survive on a daily basis without an agenda.  My poor daughter learned that word by about age 3 or 4 and would ask me regularly what our agenda was for the day.  A plan helps me feel safe, secure, and focused.

In relation to my business, though, I have a plan in my head, but it is not on paper.  I looked at several sites this week with examples of business plans and felt that this is an overwhelming task for a start-up company.  Even though the plan in my head is totally in line with the business plan templates, on paper the task looks daunting.

A little discouraged by this monumental task, I searched a little further and found a website with a free template for a “simple business plan” (https://www.va.gov/osdbu/docs/vepBusinessPlanOutline.pdf).  I put simple business plan in quotes, because you will see it and think it is still a little overwhelming, but a very good document.  I would encourage all of you entrepreneurs out there, if you haven’t already written down your business plan to please do so.  Then I would suggest you review it often, make modifications when necessary and analyze whether or not you are following your plan.  Maybe it will keep you focused and help to increase your profitability.

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As always, if you are in need of help with the financial side of your business, give me a call, text, or send a quick e-mail. I will be happy to discuss options with you.

Bambi Samares                                                                www.epoch-bookkeeping.com      Epoch Bookkeeping                                                         936-697-5412 (cell)                                                           [email protected] (e-mail)

Some of you out there might not have any clue what is going on with your finances. You never have to pay the bills, reconcile the bank and credit card statements, or worry about anything but spending that hard-earned money. In the age of plastic and wallet apps, spending is extremely easy even when you don’t have the money in the bank. This is true in ones personal finances as well as in small businesses.

So, how does one keep track of their spending and earning habits? This is where the balance sheet comes in handy. This little report shows you what you own and what you owe. It is like going to the doctor for a wellness exam. Once a year everyone should be going to the doc for a check-up to see how well he or she is taking care of his or her body. Your finances deserve the same wellness check-up only a little more often. Some people like to run this report at the end of each fiscal period. This can be monthly, quarterly, or yearly. It is preferable not to wait a whole year to run a Balance Sheet report, but quarterly is definitely a must if you want to stay on top of things.

The balance sheet is a short story illustrating in number format the three main components of your financial fundamentals. These include your assets, liability, and equity. If you have read my previous blog posts, you should have a good understanding of what these are in a business.

A good basic definition of an asset is anything of value that you own. This can be cash, savings, stocks and bonds, 401(k), vehicles, property, money you are owed (A/R), etc. All of this added together represents you assets. Staying in line with our accounting equation, this is the left side and must equal the right side, which lists your liabilities and equity.

Liabilities, on the other hand, are what you owe someone else. These include things like loan payments, credit card debt, Mortgages, money owed to vendors, basically your accounts payables.

Equity is what you have left after you subtract out your expenses from your revenue. Very simply, this is any money you have coming in through sales or services rendered that is left after you subtract out the cost of operations.

I read this week that 90% of small businesses fail within the first 5 years of operations. That is a high percentage, and for someone like me trying to make it on my own, a little discouraging. Sadly, the state of most American’s personal finances is not much better. I found that 80% of us are in debt of some kind. The total outstanding U.S. consumer debt is $3.9 trillion. Wow!! No wonder we can’t get ahead.

My question to you is have you ever run a balance sheet just to see your financial health? My guess is that if more small businesses ran a balance sheet and used it to make better business decisions, maybe we would see more than 10% of entrepreneurs succeed.

As always, if you are in need of assistance keeping up with your finances and the health of your company, please contact me. I have a passion for the small business owner and want to see you succeed and build wealth.

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Bambi Samares – Epoch Bookkeeping, LLC                  Website: https://epoch-bookkeeping.com

Cell: 936-697-5412                                                               e-mail: [email protected]

The accounting equation:  Assets = Liabilities + Capital/Equity

Where does it come from?

There are several records of people using double-entry bookkeeping dating as far back as the 11^th and 12^th centuries

in Korea during the Goryeo dynasty. As time passed, there were several others that used this system as well, but the one most commonly associated with double-entry accounting is Luca Pacioli under direction of Leonardo da Vinci. He was the first to codify the system, which has enabled all the rest of us to study and use this system as a way of explaining our business’s financial health.

What is the accounting equation?

To give you a simple description, it is simply Assets = Liabilities + Owner’s Equity

What exactly does that mean? Basically, everything recorded on the Assets side of the equation has to equal everything on the liabilities and Equity side of the equation. As a former math teacher, this makes perfect sense to me. If you do not like math or struggled with it in school, then this might be a little more nonsensical. My goal then is to break this down so that the common person can understand what is happening.

Probably everyone knows that all math equations must balance. This is the fundamental principle of Algebra. The tricky part is understanding how to keep it balanced. The first thing we have to do is throw out our normal understanding of debits and credits. In the world of finance, debits doesn’t necessarily mean we are subtracting and credits doesn’t necessarily mean we are adding.

Let’s break it down into the different accounts. Asset accounts have what is called a debit balance. That means that they increase in the debit column (left side) and decrease in the credit column(right side). Everything you own like cash, accounts receivable, supplies, prepaid insurance, equipment, etc. are considered assets and increases in these accounts are recorded as debits.

Liabilities (i.e. accounts payable and notes payable) and Equity/Capital (what belongs to the business owner) are credit balances meaning that any increase in these accounts are recorded on the credit column and decreases are recorded on the debit column. Confused yet?? It gets even better.

Lets talk now about what makes up the equity/capital account. This number comes from a separate equation which is Revenue – Expenses = Equity. How does this affect the debit and credit entries? Since these accounts are on the right side of the equation and all the action happens on the same side, then one must be a debit balance and the other must be a credit balance. If we continue with this logic, the right side of the equation has a normal credit balance which means to increase it we would need to record here. Revenue represents money coming in so it would have the credit balance. Our expenses represents money going out so that would be the opposite balance and would be a debit entry.

Example 1

You have a miscellaneous expense of some kind that you paid cash for and need to record it.

Accts Affected	Classification	Normal Balance	Changes in Balance	How Transaction is entered
Misc. Expense	Expense acct	Debit balance	Increases	Debit
Cash	Asset Account	Debit balance	Decreases	Credit

Explanation: Since our expense accounts fall on the right side of the equation and cash falls on the left side of the equation you would think that we would need to perform the same operation to keep things balanced. The problem with this is that the expense account is a part of another account under equity. The expense account increases which decreases equity so our cash must also decrease.

Example 2

Let’s say you buy supplies using cash. How would this be recorded?

Accts Affected	Classification	Normal Balance	Changes in Balance	How Transaction is entered
Supplies	Asset	Debit balance	Increases	Debit
Cash	Asset	Debit balance	Decreases	Credit

Explanation: This one is easier to understand. All the action is on the same side of the equation, which means the transactions need to cancel each other out to stay balanced. When we increase our supplies, our cash decreases.

Example 3

This time we buy equipment on account meaning we put it on a credit card. How would this be recorded?

Accts Affected	Classification	Normal Balance	Changes in Balance	How Transaction is entered
Equipment	Asset	Debit balance	Increase	Debit
Accts Payable	Liability	Credit Balance	Increase	Credit

Explanation: Both sides of the equation increased, so we must increase each of their normal balance columns. In this way we increase the Assets (debit balance) on the left and increase the Liability (credit balance) on the right.

I know this was all math and some of you may already understand all of this, but I think it is very fun and interesting. Although, as many of my former students have pointed out to me not everyone thinks math is fun, nor does everyone think math is easy and understandable. That is why I am here. If you need help, please feel free to contact me and schedule a consultation. My contact information is below.

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Bambi Samares – Epoch Bookkeeping

Website: https://epoch-bookkeeping.com

e-mail: [email protected]

Cell: 936-697-5412