How to Calculate Free Cash Flow for your Business Health

Free Cash Flow

Free cash flow is one of the key indicators used to show the health of the business, particularly its profitability. Typically, it demonstrates the amount of money any business for other purposes after all the capital expenditures that may include equipment, buildings and various other necessary expenses that help businesses sustain their operations.

Although calculating cash flow is a complicated process, there are many ways you can do it. According to experts, it is always better to use all methods correctly. If they all generate the same result, it provides you a reliable way to cross-check your operations.

It is worth noting here that cash flow doesn’t relate to all businesses. It is precisely a measuring tool that non-financial firms use rather than professional associations and investment firms.  If you own a non-financial enterprise, you can calculate the cash flow for free with these three equations.

Equations to Calculate Free Cash Flow

1.       Free Cash flow:  Subtract operation taxes and costs from Sales revenues then subtract required investments for operation capital

The equation is one of the easiest ways to calculate free cash flow. Business owners take sales revenues, including taxes and operating costs from their income statement. The fixed assets show an increase when you invest in new operating capita. The balance sheet shows everything from investments and revenue details.

For example, if your business has earned revenues of $500,000, the amount is reduced to $300,000 because of taxes due and operating costs. If your business requires an investment of $150, 000, it will have the free cash flow of $30,000 to $50, 000.

2.      Free Cash flow:  Subtract net investments in operating capital from net operating profits NOPAT (after taxes)

 NOPAT refers to the same figure we used in the previous equation: subtract operating taxes and costs from sales revenues. Net investment of operating capital uses the same figure that is used in the third term of first calculations. For calculating free cash flow through this equation, it is better to use the increased fixed assets on your balance sheet.

That means, your NOPAT will remain at the same amount of $30,000. You just need to exchange the required investment of your business in operating capital for your net investments in operating capital.  If you assume the same figures, your free cash flow will remain the same.

3.      Free Cash flow:  Subtract capital expenditure from the net cash flow of operations

 You can also calculate free cash flow by subtracting the capital expenditure from the net cash flow that comes from operations.  Net cash flow in this equation comes from the cash flow statement, while capital expenditure is taken from the increase in the business’s fixed assets.  For instance, if your operation’s net cash flow is around $200,000, the figure might be reduced by your capital expenditures.

Interestingly, all these free cash flow calculation methods will give you the same answers when you work with these equations. You might feel like approaching the same information and data from three different angles.

How does Free Cash Flow Calculation Affect Your Business?

As mentioned earlier, free cash flow is useful for the health of your business. Firms with healthy free cash flow are financially stable to meet the bills and investments every month. Plus, they also have leftover funds that they usually distribute among dividends and shareholders. Man firms use this extra fund to seize opportunities to help them generate more revenues through acquisitions of innovative products.

That is to say, if your business is booming and has high free cash flow, it is an indication that it is doing well and you should consider expanding it. Conversely, if it fails to generate good free cash flow, you might need to consider restructuring it as there are remaining funds after the basic expenses.

However, it is important to understand that poor free cash flow doesn’t always indicate a failing business. It might be expected even when your business is pursuing growth. Development and acquisition of new products are temporarily subtracted from the main capital. That is the reason why most of the investors tend to work with the businesses that have high free cash flow. These businesses are generally considered healthy with bright prospects. If an investor finds a business that has rising free cash flow with an undervalued share cost, it may be a great investment bet.

How can you Benefit from the Free Cash Flow

Since you understand how positive free cash flow may benefit you by indicating the healthy financial status of your business, it is better to use this understanding to your advantage. It is always better to look beyond the figures. Know that established firms have relatively consistent and healthy free cash flow. New businesses, on the other hand, are in a state where they need to pour money into growth and stabilization.

Although it depends on the business owners how they use the free cash flow, using the funds to expand the operations, pay shareholders and dividends, invest in new products, research or to reduce debt is beneficial for the business.

Always remember that companies that have surging free cash flow due to debt elimination, dividend distributions, cost reductions, efficiency improvements, or revenue growth can reward their investors in the future.

In other scenarios, when free cash flow is shrinking, businesses fail to sustain their growth earnings. Not only this, insufficient free cash flow for growth forces a business to boost debt levels. In a worse scenario, a business without enough free cash flow may not even have the liquidity to sustain.

Final Thoughts

All in all, it is important to find an all-purpose tool that can help you test the fundamentals of your business that seem elusive. Free cash flow calculation is like a performance metric they provide entrepreneurs an opportunity to guard up if their business is not generating enough revenues.

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Common Spending Mistakes in Small Businesses

easy way

There is no denying that running a business is not always easy. There are plenty of challenges that reverse growth or halt progress. Precisely, if these challenges have a direct impact on business finances, it may cause several other risks that your business needs to face. In other words, managing finances is pivotal to stay on top. And if you’re a startup, finance management becomes as important as serving existing customers or finding new leads.

But, if you are like business owners who find managing money or bookkeeping a daunting task, you must know your common spending mistakes to stay ahead in the business domain. This is one way you can mitigate not only financial risks but also monitor the cash flow of your business. In other words, by controlling your spending and cash flows, you improve success chances and your profitability also.

We have enumerated a few common spending mistakes to help you steer clear of the financial management of your business.

Common Spending Mistakes in Small Business

1.     Failure in Keeping Personal and Business Expenses Separate

This might sound trivial to you, but many business owners when entering the business world make this mistake. Remember that you are in the early phases of your business, it is vital to keep the expenses separate. Although sometimes you need to rely on the personal finances to support business expenditures, you need to ensure that you h have a separate budget for your business.  Also, relying on the personal expense to fund business may cause problems in the long-term.

Once your business is operational and starts serving the customers, separate finances by making a separate business credit card. Make sure you have a separate bank account for your business. Doing so can be extremely helpful in managing tax problems and avoiding bookkeeping confusion subsequently.   It will also empower you to evaluate potential or existing cash flow issues and overall business finances before they turn into a major problem.

2.     Not Creating a Budget

You might find easy budgeting, but you cannot deny its long-term value that outweighs all initial stress and effort.

Creating a budget means analyzing how much have you earned and how much you can invest. An organized budget helps you make informed decisions about all business matters that include everything from supplies purchasing, staffing, and training to inventory. Conversely, when you work without a budget, all these tasks become challenging and may cause you significant cash flow problems. This particularly affects your business if it works with seasonal shifts, and you need this cash flow to maintain business operations during the slow months.

Fortunately, there is a wide variety of apps such as Scoro, Centage, and Adaptive insights that can help entrepreneurs not only create but also maintain a budget. Not to mention how these budgeting apps keep track of your business expenses and send you a handy report at the end of the month or year. This allows you to do preparations for tax seasons and review performance.

3.     Failure to do Financing at the Right Time

All business owners know that working capital is an essential thing to operate the business and increase its growth. If working capital runs low, your business might face a lot of issues that not easy to resolve it right away, and that may vary from unpaid bills, mounting fees to lower credit scores.  Not only that but making payrolls also become a challenge while tackling such issues. The situation may create problems when it comes to retaining your potential employees. The problems like staff shortage, inventory, and supply management lead to decreased revenues and unsatisfactory customer services.

Ultimately, the failure to meet your business financial obligations can impact different areas of business. That is why it is important not only to identify but also address the cash flow issues and to prevent poor working capital in a easy way. It is better if you seek assistance about taking control of financial matters before they become problematic for your business.

4.     Ignoring Poor Credit Scores

Recognizing the right time to consider alternative financing options like a line of credit or loan is important. However, your due diligence will not benefit you if you fail to qualify as a borrower. That means, it is essential to be vigilant about both your personal and business credit scores.

It is also important because your credit scores impact your ability to use financing solutions with suppliers or vendors. The arrangements often help business owners easy fill the gaps in their cash flow.  Moreover, with a good business score, you can reduce the insurance premium and interest rate on your loan.

Sometimes, your credit scores contribute to secure many affordable financing terms; particularly when you opt for loans, credit cards, and line of credit.  The phenomenon is confusing for many people since they are advised to keep their personal and business financing separate as an ideal practice.  

However, it is important to understand that when you sign a lending agreement as a primary applicant,  banks use your credits to determine your eligibility, repayment terms, and interest rates.  Customers are sent an annual credit report, and it is good to use it for your advantage.  Although the business credit report is hard to obtain, you can get them through various platforms.

5.     Overspending on Startup

When starting a startup, you are naturally optimistic that your business will produce good revenues if you invest a large amount in it. This optimism sometimes leads to overspending, which is another common spending mistake. To avoid overspending, research carefully about how much inventory or staff you need to take a good start.

Final Thoughts

When running a business, you may face many financial issues, and to plan for all potential scenarios is not easy. However, when it comes to cash flow, various things can be done to avoid cash flow issues. The most important thing is to be proactive in whatever approach you use to manage your business finance.  Besides this, budgeting and healthy credit scores play an important role in keeping business finance issues at bay.

Thus, the given spending mistakes are very common when a business is in establishing phase. However, you can avoid them by planning and evaluating everything in advance.

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Business Credit Card vs. Business Loan: How to Choose?

If you have long been looking for business funds, the multiple business financing options must have overwhelmed you. Many entrepreneurs don’t want to involve outside investors to raise capital for their lean startups to avoid entailing risks such as misaligned structure and timeline.

If you are one of them, business credit cards and business loans are some of the readily available options for you. Plus, these financing options are widely accessible for the entrepreneurs who want to self-finance their business.

Regardless of what options you choose, understanding their pros and cons is essential. But before we plunge into the details, let’s quickly split the difference between business credit cards and business loan to help you choose the most appropriate option for your business.

What Is the Difference between Business Credit Card and Business Loans

No doubt, it is one of the common questions that come to mind when it is about funding your startup. Typically, a business loan refers to a lump sum amount you are paid out that you need to pay back in the form of monthly installment over a specified period. A business credit card, on the other hand, is a credit line that allows you access to money or funds to a certain limit on a recurring basis. This credit line, like another credit amount, can be paid off through monthly payments or over any period of your choice unless you meet the credit limit of each month.

Business loans are generally installment debts; however, business credit cards are revolving debts. Although neither of these options hurt your personal credit scores in the long term if you pay them on time, it is worth noting that business credit card has more potential to affect your credit card scores.  If not paid on time, revolving debt may decrease debt to credit ratio.

Moreover, business loans undeniably offer large sums of funds and may have a lower interest rate as compared to business credit cards. However, qualifying for them is nerve-wrecking since the lending process is unnecessarily long and can take months.

Alternatively, business credit cards can offer you immediate access to funds or cash you need to invest in yours.  While their interest rate tends to be higher, you have an option to pay off your full bill each month. Besides this, the best business credit cards provide a slew of other reimbursements such as credit rewards, purchase protections, and perks that can particularly benefit business owners.

Business Credit Card or Business Loan- Which Can You Get Easily?

Having good credit card scores are necessary to qualify for both business credit cards and business loans.   In addition to that, to initiate the funding process, you will be asked to apply, along with the documentation showing your revenues. However, documentation for business loans tends to be more extensive and hectic. Not only this, you may find requirements for business loans stricter in terms of business profitability and length of time.

Overall, qualifying for business loans is more difficult than getting funds through business credit cards. The requirements become even more challenging to meet if your credit scores are low or you are a startup.

Luckily, Small Business Administration offers loans for startups. Although traditional lenders invest in these government-backed loans, guarantees up to 50% percent of the loan to make the process easier.

Comparison between Business Credit Cards and Small Business Loans

There is no easy answer to the question of whether one should opt for a business credit card or business loans. As mentioned earlier, to choose the best funding option, you need to compare the best features of each alternative.

Features Business Credit
Cards
Business Loans  
Loan amount Up to $50,000 Up to $5million
Loan type Revolving credit line Installment loan
Repayment Monthly payments to the minimum credit limit to pay off a debt to avoid high interest Set payments to be paid monthly over a specified time that can go up to 25 years
Average APR 13 to 20 percent 8 to 10 percent
Eligibility  Steady income and personal credit history  Good  business revenue model and credit
Approval Time Seven days  Weeks or a minimum of six months
Benefits  Sign up bonuses, reward programs,  purchase protection, trip insurance Government-backed loans

Business Credit Card or Business Loan: What is the best Option for You?

You have compared the features of both options; it is the right time to decide which works best for you.        

Business loans are Ideal for your business if you;

  • Need large sums of funds
  • Want investment for profit-generating projects that include purchasing equipment hiring staff or renting new locations
  • Want to expand an established business that generates revenues up to 100,000

Business Credit Cards are ideal for your business if you

  • are looking for options to separate finances  or sole proprietor
  • Want to use the payment option that comes with big rewards
  • Need to access cash immediately
  • Do not want to borrow money and need a payment option that allows you to pay in a month
  • Want to invest in a project that has 0 percent introductory APR and plans to make payments before its promotional period deadline

Factors to consider while Choosing Business Credit Cards and Business Loans

Your job is not done after you decide which option you want to choose and why.  There are certain factors you need to consider to make a safe choice.

  • Interest Rate–   it is important to choose the option that has a low-interest rate. The interest rate in loans and credit cards are compounding, and you will end up wasting a lot of money if you are not diligent.
  • Other fees–   choosing a business credit card means you will have to pay annual fees, foreign transaction charges, and late payment charges
  • Eligibility– applying for consecutive loans or credit cards may ding your personal credit scores by resulting in the new inquiry.  

Final Thoughts

Overall, both financing options come with their perks and downsides. Given that, it is up to you when it comes to making the decision that meets the requirement of your small business.

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Get Matched with a Credit Card!

These Are the Reasons You Are Struggling With Sales

Converting sales is a difficult task for any business but for some, it’s much harder. Whether you’re a B2C or B2B company, your sales team works tirelessly to reach their quota and help the business achieve its goals. However, no matter how hard they work, it seems like your sales team can’t lure in enough willing buyers. You know what they say, work smarter, not harder.

It doesn’t matter how much effort you are putting into the sales operation; it won’t make a difference if you’re going in the wrong direction. There are reasons why your company is struggling with making sales, and you need to understand them before coming o a solution.

You Haven’t Adapted To Change

The economic climate changes whenever a new wave of innovation and technology hits. Hence, if your business isn’t making as many sales as before, it might be because you are using obsolete systems. Ever since the proliferation of social media, analytics, and big data has come onto the scene, things have changed.

To get ahead of competitors, it’s crucial that your company adapt to these changes. Take big data and analytics, for instance. Many companies still haven’t embraced the importance of data and trends that you can derive from it. Once you do, you’ll begin to understand many things; why a sales drive failed, why you’re losing customers, and what makes a marketing campaign powerful.

You’re Putting a Cap on Commissions

For your sales team, motivation is knowing that, on a good day, they can take home a huge commission without worrying about capping. Capping commissions can stop your sales team from closing more sales and striving to go higher than a specific quota. Numerous studies prove that putting a cap on commissions can hurt overall revenue and productivity.

The results of such studies conclude that companies should remove caps from commissions. Once respective companies did so, they saw their revenue rise by almost ten percent. So don’t worry about having to pay your sales representatives large commissions, because they probably helped your company make a huge profit.

You’re Not Following Up On Every Lead

Sales representatives seem to lose their enthusiasm to follow up with every lead they come across. Instead, they only work towards ones they feel like they can convert. This guesswork makes things very confusing, especially since your sales team is relying on their gut feeling rather than an objective factor.

Take out records of how much your sales team has followed up with old leads. The reason for poor sales could be that they are ignoring certain leads, which results in your company closing fewer sales. It’s crucial that you remember how every consumer is a potential customer in one way or another, so it’s best never to ignore a lead.

Inadequate Marketing

All parts of a business have to work together to drive sales and boost customer retention. The marketing department of a company plays an integral role in giving sales representatives the leads they need. It often happens that a marketing team is unable to deliver qualified leads to sales representatives.

This step hurts your company’s numbers, and you need to improve by improving marketing efforts. This process can involve launching a well-planned Google AdWords campaign and other solutions that have the potential to boost sales.

You’re Unaware of Competition

Even though you’re looking at your competitor’s numbers, there’s a chance that you aren’t learning what they’re doing right. A large part of your understanding should come from what our competitors are doing. You need to invest in research and data about rival companies who have better sales numbers than you.

This research can provide you with valuable insight that determines what you’re doing wrong. Although you don’t have to imitate your competitors, there’s always something you can learn from them, and that’s not a bad thing.

No Training Programs

The only way for a company to go forward is if it invests significant time and resources into improving its employees. It’s unrealistic to expect your sales representatives to learn new things on a job that’s so demanding. When they’re following up on leads throughout the day, your employees won’t be interested in learning about new findings from sales research papers.

That’s why you need to build their skill set by bringing in the right expert. Sales mentors are one way that large corporations are boosting their numbers. Hiring an expert on sales is a valuable initiative that you can take, to improve your firm’s numbers. A sales mentorship also increases morale and helps your representatives develop stronger relationships with their colleagues.

Your Sales Team Lacks a Process

In every company’s sales department, leaders have to develop a process, which representatives should use to make a sale. When there’s no sales process in place, your representatives could be mindlessly trying to chase after leads without examining any weaknesses. At this point, it’s possible that your team is implementing a random process, so even an informal one will yield better results.

Instead of letting representatives do whatever they want, however, they want to do it, sales leaders should begin by establishing an informal process as to how they should get things done. Once you follow leads in a way that’s systematic and consistent, you can move from an informal process to a formal and dynamic one.

Conclusion

Therefore, now that I’ve listed out what your company’s sales team could be doing wrong, it’s time to recap what you should be doing to solve the problem. For starters, you need to adapt to changing climates of the industry by implementing new technology and software.

Next, you need to rethink the cap on commissions and improve your marketing strategy. After that, you should learn about your competitor’s solutions and try to understand the theories behind them. Assign focused and dedicated sales leaders to your department so they can implement a sales process. In addition, most importantly, there should be sales training and mentorship programs in place to enhances your sales representatives’ productivity.

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What does it take to run an Online Business?

Owning an online business allows you to work from anywhere you want.  All you need is to set flexible work hours and establish your online presence. Not only this, online businesses have significantly low startup costs and that is what makes it ideal, especially for new entrepreneurs. This is one of the main reasons why traditional brick-and-mortar businesses are gradually declining. They are now more focused on being globalized and ubiquitous.

To put it simply, running an online business has a plethora of benefits if you are an experienced entrepreneur. However, if you are a startup and facing troubles in creating an online presence, you need to understand that starting an online business is easy, but running it requires your attention. Whether your digital set up is in its initial phase or has achieved some milestones, knowing key details of the mainstream market and understanding it is of paramount importance.

Another major aspect that is essential to consider when it comes to running an online business successfully is familiarity with technology. If an online entrepreneur lacks knowledge of digital marketing or other tech-based strategies, reaching the target audience becomes a daunting task.

If you can relate to this, then the provided details might be useful for your online business. All you need is to consider the following steps while running your online business.

How to Run an Online Business?

Establish Your Business Market

There is no doubt that without understanding the target market you want to focus on, you cannot increase your sales. However, if you know where you will find your target audience online, developing marketing strategies become a breeze.

According to expert marketers, when an entrepreneur understands their core audience, it will help them find the right ways to offer the products that interest the audience. The point is, researching the market position and analyzing the needs and interest of customers is substantially important before launching your product.

 Register Your Domain Name

Your online business requires a domain name. Without registering it you cannot run your business as it is your online address, spot or place where people will find you on the internet. The good news is that there is a myriad of online companies that sell a domain name.  Google Domains, in this regard, is one of the common choices you can opt for.

Your domain name plays a critical role when it is comes to branding an online company. Here is when you need to come up with a domain name that truly reflects your company and its goals. While choosing a name, make sure you use the name checker tool to help you see what is available.

Host Your Business Domain

Hosting a business domain is an integral part of running a business online. Through a web host, your online business gets space on various servers. Sometimes both registering a domain and finding a host for it can be achieved with the help of one company. Following are the key features you need to consider when you choose a web host.

  • Uptime percentage
  • Available marketing tools
  • Storage capacity
  • Email features that are based on domain
  • How it offers customer response forms
  • Hosting capability for blogging
  • Accessibility for customer support

Focus on Your Business Website Design

The first impression is the last impression’ -whether you believe it or not it is undeniably true when it is about your website design. Your customer doesn’t have a place to visit or judge your market credibility; however, it’s your e-commerce platform/website that enables customers to understand your marketing skills.

That is to say, the more attractive and informative your website design is, the more customers your online business will attract. This is where both your marketing expertise and technology create a storefront for you.  If your brand is failing to grab the attention of potential customers, it is the right time to consider alternative options.

Hiring a professional web designer with sound web skills can make a huge difference to your websites’ layout.  We recommend you choose a quality e-commerce platform to not only help you customize the website, but also run an online business.

Add an Online Payment Option

The concept of online shopping encapsulates customer’s easiness whether it is about purchasing online or paying online. That is what adding online payment feature to online business makes extremely important. It gives customers satisfaction that they can process transactions without having to go through a long and arduous payment process.

Besides that, giving your customers multiple gateways for shopping can also have a significant impact on your business success. Allow upgrades and provide different packages for purchase options to make shopping fun and convenient from your online store.

Increase Website Traffic

Providing quality products and excellent user experience to your customers is your foremost responsibility if you are an online entrepreneur. It is the only way you can retain your customers while driving more traffic to your website.

For running an online business successfully, you need to make extra efforts to stand out from your competitors, which is not possible until you leverage the right strategies to attract the right customers.  Always focus on the target group to generate more sales and create more traffic online. Here are few tips o drive traffic:

  • Register with popular search engines, like Bing and Google
  • Use persuasive online advertising on social media platforms, such as Twitter, Facebook, and Instagram
  • Focus on quality content marketing

Gradually incorporate advanced digital marketing strategies to increase quality traffic on your website. Remember that, driving massive traffic involves a number of technicalities and requires you to consult with digital marketing experts.  In addition to that, never compromise on the quality of e-commerce software as it will help you keep a tab on financial information, customer data and other analytics for your future business decisions.

Final Thoughts

All in all, an online business is undeniably a decent way to earn money, but requires proper strategies and planning to run it efficiently. It takes your hard work, time and most importantly market understanding to run an online business.

 

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How Micro-influencers can Enhance Your Digital Marketing Strategy

You do not need a million followers to become influential when it comes to promoting your business or brand. The concept of micro-influencers seems to have grown in popularity in the past few years. Micro-influencer marketing is gradually turning the idea that a marketer has to be well- known in order to have influence or make a lasting impression.

But what does the term micro-influencer refers to and how does it help entrepreneurs in their bending moments or in improving their marketing strategy?

What are Micro-influencers?

It might sound bizarre, but micro-influencers are considered ‘everyday people’. The strategy is incorporated to promote specific brands or products on social media. This product can be anything from cosmetics, cleanser to assortments and clothing.

That is to say, if your brand  has been trying its best to leverage influencer marketing with the help of established influencers who have significant number of followers (100,000  fans) on various social media platforms, such as Twitter, Instagram, and Facebook, but still struggling to achieve the desired results,  micro-influencer marketing is worth trying.

However, there is no fixed definition of the term micro-influence, but it is explained as someone who’s small, but has a significantly higher following. For example, they have more than 20,000 followers on Twitter, and a few thousand on Instagram and Facebook. That means a micro-influencer makes up a large portion of digital marketers or influencers. It is possible that a micro-influencer has a modest audience, but his influence is certainly great.

The Transition from Social Media Marketing to Micro-Influencer Marketing

In the past two years, the popularity of micro-influencer marketing has grown exponentially. A survey highlighted that approximately 1.5 million people search for ‘influencer marketing’. This was used to be the case for only social media marketing in the past. That doesn’t only indicate how swiftly influencer marketing is replacing other marketing strategies, but also the rise of micro-influencer marketing in the mainstream.

Another apparent reason for this transition is that customers rely on the recommendations and advice of people they trust. Nielsen 2015 Global Trust found in its study that publicity that comes from other people is one of the credible forms of advertising. 80% of the respondents in the study contended that they rely on the recommendations and opinions of their friends and family.

Not only this, two third of the respondents of the study admitted that they trust the information they found in online opinions. Part of the drive toward adopting such strategies is really turning people’s heads and they are accessing micro influencers, depending on their target audiences. Entrepreneurs have started leveraging micro-influencers to improve digital marketing strategies. It has become a reliable way to reach potential customers.

The rise of Micro-Influencers to Rescue Digital Marketing

You must have an idea of how quickly micro-influencer marketing is moving and replacing traditional marketing strategies. While the components of social media marketing and search engine marketing are still performing well, conventional online displays have suffered an inevitable decline in their effectiveness. The two major reasons for that are:

  • People don’t pay much attention to banner ads due to banner blindness. Even if it’s in front of them, they cannot effectively see them.
  • The rise of Adblocker software usage is another reason that has adversely affected display ads. According to a survey, 30% of devices have Adblockers installed on them that removes ads from the screens.

In addition to that, the survey found another digital marketing problem. According to it, most of the social networks lack the quality of controlling ads positions on the platforms. For instance, a high-profile brand, like Coca- Cola, would not be happy to find its YouTube ad positioned next an undesirable video.

With that in mind, it is important for marketers and businesses to know why and how micro-influencers can leverage their digital marketing strategy. If you are a startup and don’t know that, we have you covered here.

How Micro-Influencers Leverage Digital Marketing Strategy?

Micro-influencers – Your Groundswell Approach

There is no denying that micro-influencers use the perfect groundswell approach to influence market when it’s about reaching a large audience. They provide you multiple avenues while channeling digital marketing strategies for exposure and brand awareness.

Besides this, micro-influencers make businesses able to saturate the current market with their product and brand.

Moreover, micro-influencers are aware of the functional significance of repetition, regardless of what kind of marketing you are engaging in.  That is why their campaigns ensure that your brand is exposed to the target audience through different channels and outlets.

Professionals at Content Creation

If your digital marketing strategy emphasizes content creation then micro- influencers are undeniably the Holy Grail! What we mean here is that even if they don’t have the huge following, they can help you produce great content to help you promote your brand.

Whether it is multi-media content, written content or imagery that you are seeking, micro-influencers get this job done keeping everything within your budget. Most importantly, you don’t have to worry about the quality of content.

 Drive Loyal and Highly Engaged customers to Your Brand

There is no doubt that micro-influencers have a loyal and highly-engaged audience. It is growing and mostly made up of people they’ve met who like the content, and who have been following them for a long time; it also includes their family and friends network. On the flip side, most of the macro-influencers have comparatively lower engagement rate.

Target Audience Related to Your Niche

One of the benefits of working with micro-influencers is that they use the right digital strategy to target the audience in your niche. It typically helps businesses align with the audience whose interests and passions match with the product that is manufactured.

It is because influencer marketing is based on the relevance of an influencer to the product, service or brand.  If there is no match, your campaign will not accomplish its goals.

Final Thoughts

All in all, digital consumers have become tech-savvy and smart and micro- influencers focus on the value and power of engagement that is of paramount importance for businesses to grow. The given reasons, in this regard, emphasize the significance of having micro-influencers to enhance your digital marketing strategies.

 

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Why is ‘Quality Content’ Important for Your Business Growth?

Business strategies have changed in the recent past and so have marketing strategies. Marketers are now more vigilant when it comes to applying innovative ideas in order to persuade potential customers. Similarly, analytical marketers are more inclined toward tracking metrics.

Many companies in the industry are excelling in product manufacturing; however, when it is comes to subjective elements related to content marketing, they lack the expertise. Creating high-quality content has become crucial in order to keep business flourishing and to avoid the risks that can damage brand image.

If you are an entrepreneur, you probably have experience of dealing with directives given by SEO experts, sometimes from Google itself.  But have you ever wondered what this SEO thing really has to do with the success and failure of content market strategy have you used them for your business growth? How does it affect the reputation of your business if the quality of the content is not good enough? Most importantly, what is the way to know if you have really produced great content?

If these questions seem relatable, we can help you find out the answers. We can help you walk through all the important aspects that Google considers when its assess content quality. Plus, you will find some crucial information about how quality content influences your business growth that eventually helps you improve your digital marketing strategies. The information will also help you generate relevant and quality content to grab the attention of your potential customers.

These are the key reasons that explain why creating high quality content is important for business growth?

Importance of Quality Content for Business Growth

There is no denying that powerful digital marketing can make or break your business.  According to expert marketers, a successful business greatly relies on its digital marketing strategies. From search engines to social media, it is high quality content that promotes your business effectively while maintaining your online presence.

Quality content creation is undeniably one of the most important parts of your digital marketing strategy. It does not only connect you with your target audience, but also builds trust between you and your customers.

To put it simply, high-quality content fuels your various marketing techniques. It acts as a base that promotes and endorses your business online. That is why giving attention to the content that it deserves is of paramount importance.

Let us take a look at some key reasons that make producing high quality content important for not only digital marketing purposes, but also business growth.

1.)  High-quality Content Educates Audience

Educating your audience is the very first step to reaching potential customers, especially when they are deciding whether a service or product is worth buying or not. In other words, before making a decision, having the full understanding of the options available is extremely important. That means as a seller it is your responsibility to provide the content that educates your customers properly.

Typically, educational content refers to well -maintained product pages, blog posts, and company homepage, etc.  Moreover, it may include reviews, tutorials, and any other content that can educate customers about your product or service.  It may also incorporate resources customers require to make informed purchasing decisions.

This content is only considered high quality if it is focused on educating the target audience about your business services and offerings.

In order to create valuable content to educate your customers, you need to take the concerns and questions of your customers into account. Your content needs to address the issues a customer faces.  Plus, it should reflect on how your product or service can resolve or relieve those specific issues and how it can make your customers’ life easier.

2.)  Fuel for SEO

Search engines have become the go to solution for anyone looking for an answer to his or her concern or question.  That makes optimizing the content that you create even more important if you want it to stay relevant for the customers.

It is the only way you can attract multiple new leads to your business portal.  However, it is only high-quality content that can help you fuel your SEO (Search Engine Optimization) strategies.

SEO is all about back links, website visitor and most importantly keyword placement. Your content allows you to build webpages that can fuel all these components. If there is no content, there will be no place for keywords, and for your visitors to get the information.

On the contrary, if you are producing excellent content that your customer is looking for and can relate to, reaching the top of search engines will not be difficult. The more customer flow you have, the more opportunities you will get for your business to grow.

3.)  Content is Important for Social Media Strategies

Social media platforms have completely revolutionized marketing strategies in the past few years.    They have become the easiest way to connect with potential customers. You can use it as a powerful tool to establish genuine relationships with your target audience to make a strong customer base.

Social media is not less than a direct way to approach your customers, maintain conversations, get customer feedback and drive new leads to your site.

However, all of this is fueled by high-quality content that basically enables you to retain your target audience. You can direct customers through your powerful Facebook post or Tweet to your website and encourage them to learn more about your services and products. This helps in establishing a better connection with the target audience. In addition to that, this is one of the ways you can make more visitors to go to your website and collect more information about your products. In other words, it can bring you more profit.

Final Thoughts

In a nutshell, there is no way an entrepreneur can deny the significance of digital marketing strategies as well as high quality content when it comes to business growth.  Keep in mind that quality content is crucial for developing connections with your target audience and driving them to your website.

 

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9 Things to Consider Before Forming a Business Partnership

Budiness partnership

Getting into a business partnership has its benefits. It allows all contributors to share the stakes in the business. Depending on the risk appetites of partners, a business can have a general or limited liability partnership. Limited partners are only there to provide funding to the business. They have no say in business operations, neither do they share the responsibility of any debt or other business obligations. General Partners operate the business and share its liabilities as well. Since limited liability partnerships require a lot of paperwork, people usually tend to form general partnerships in businesses.

Things to Consider Before Setting Up A Business Partnership

Business partnerships are a great way to share your profit and loss with someone you can trust. However, a poorly executed partnerships can turn out to be a disaster for the business. Here are some useful ways to protect your interests while forming a new business partnership:

1. Being Sure Of Why You Need a Partner

Before entering into a business partnership with someone, you need to ask yourself why you need a partner. If you are looking for just an investor, then a limited liability partnership should suffice. However, if you are trying to create a tax shield for your business, the general partnership would be a better choice.

Business partners should complement each other in terms of experience and skills. If you are a technology enthusiast, teaming up with a professional with extensive marketing experience can be quite beneficial.

2. Understanding Your Partner’s Current Financial Situation

Before asking someone to commit to your business, you need to understand their financial situation. When starting up a business, there may be some amount of initial capital required. If business partners have enough financial resources, they will not require funding from other resources. This will lower a firm’s debt and increase the owner’s equity.

3. Background Check

Even if you trust someone to be your business partner, there is no harm in performing a background check. Calling a couple of professional and personal references can give you a fair idea about their work ethics. Background checks help you avoid any future surprises when you start working with your business partner. If your business partner is used to sitting late and you are not, you can divide responsibilities accordingly.

It is a good idea to check if your partner has any prior experience in running a new business venture. This will tell you how they performed in their previous endeavors.

4. Have an Attorney Vet the Partnership Documents

Make sure you take legal opinion before signing any partnership agreements. It is one of the most useful ways to protect your rights and interests in a business partnership. It is important to have a good understanding of each clause, as a poorly written agreement can make you run into liability issues.

You should make sure to add or delete any relevant clause before entering into a partnership. This is because it is cumbersome to make amendments once the agreement has been signed.

5. The Partnership Should Be Solely Based On Business Terms

Business partnerships should not be based on personal relationships or preferences. There should be strong accountability measures put in place from the very first day to track performance. Responsibilities should be clearly defined and performing metrics should indicate every individual’s contribution towards the business.

Having a weak accountability and performance measurement system is one of the reasons why many partnerships fail. Rather than putting in their efforts, owners start blaming each other for the wrong decisions and resulting in company losses.

6. The Commitment Level of Your Business Partner

All partnerships start on friendly terms and with great enthusiasm. However, some people lose excitement along the way due to everyday slog. Therefore, you need to understand the commitment level of your partner before entering into a business partnership with them.

Your business partner(s) should be able to show the same level of commitment at every stage of the business. If they do not remain committed to the business, it will reflect in their work and can be detrimental to the business as well. The best way to maintain the commitment level of each business partner is to set desired expectations from every person from the very first day.

While entering into a partnership agreement, you need to have an idea about your partner’s added responsibilities. Responsibilities such as taking care of an elderly parent should be given due thought to set realistic expectations. This gives room for compassion and flexibility in your work ethics.

7. What Will Happen If a Partner Exits the Business

Just like any other contract, a business venture requires a prenup. This would outline what happens in case a partner wishes to exit the business. Some of the questions to answer in such a scenario include:

  • How will the exiting party receive compensation?
  • How will the division of resources take place among the remaining business partners?
  • Also, how will you divide the responsibilities?

8. Who Will Be In Charge Of Daily Operations

Even when there is a 50-50 partnership, someone needs to be in charge of daily operations. Positions including CEO and Director need to be allocated to appropriate individuals including the business partners from the beginning.

This helps in creating an organizational structure and further defining the roles and responsibilities of each stakeholder. When each individual knows what is expected of him or her, they are more likely to perform better in their role.

9. You Share the Same Values and Vision

Entering into a business partnership with someone who shares the same values and vision makes the running of daily operations considerably easy. You can make important business decisions quickly and define long-term strategies. However, sometimes, even the most like-minded individuals can disagree on important decisions. In such cases, it is essential to keep in mind the long-term goals of the business.

Bottom Line

Business partnerships are a great way to share liabilities and increase funding when setting up a new business. To make a business partnership successful, it is important to find a partner that will help you make fruitful decisions for the business. Thus, pay attention to the above-mentioned integral aspects, as a weak partner(s) can prove detrimental for your new venture.

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Overcoming a Bad Business Location – Is It Possible?

Location

In today’s day and age, experienced business owners advise future entrepreneurs to work on their online presence. They should develop an impressive website and practice social media marketing, among other activities. It almost seems as if you can build a great brand based on an influential online existence. However, even though this is true to a certain extent, don’t undermine the importance of a good business location.

This makes it crucial for new business owners to look into the location they will set up. But it’s still possible that issues like financial constraints can lead to them running a business in a bad location. Many startups seem to fail due to this reason. While there isn’t an immediate solution for the predicament, you can take particular measures to alleviate the circumstances. Here are some of the ways that you can overcome a bad business location:

Implement Impactful Branding and Signage

It’ll be hard for people passing by to avoid your store if you manage to lure them in with attractive signs and branding techniques. Captivating signage always manages to pull potential customers out of their way to stop and have a look. A billboard that appears to stand out from the rest works the best. You shouldn’t opt for one that blends in and looks similar to that of competitors. For improved results, take it a step further and provide customers with customized shopping bags that will make others do a double-take.

Brand Your Business

Oftentimes, you can turn the main disadvantage of your business location into something beneficial. Being the only brand selling something of your niche in the area is better than opening shop in a district where your competitors operate.

There are likely people actively looking for your products in the area because they’re far from the district that has most retail outlets. By branding your location online, in local publications and with flyers, you can attract loyal customers to your shop.

Developing a loyal customer base is more effective than having more people walk into your shop. There’s no point if the people walk out with nothing because ‘there’s another shop here’. These customers can boost their reputation among their friends and family. This is far more valuable in today’s world where word of mouth decides what brands people choose.

Make Friends

Since other businesses will surround you, you can use the opportunity to make friends and form collaborations with these brands. Promotions like these can raise hype for both you and your partners, so it’s beneficial for you to approach them with such an idea in mind.

A good example is that you give customers a discount if they show that they purchased from a collaborating store. While it’s best to form agreements with businesses that complement yours, such a tactic would still work when dealing with unrelated fields.

Leverage Online Presence

By becoming ‘that one brand with the –-online, you have the potential to lure in customers who live far from your business location. A charismatic and humorous social media persona will get you far as well because millennials appreciate brands that make the effort of seeming human. You can even leverage social media hashtags that have a certain amount of momentum. However, don’t generalize it, or make it too narrow.

That way, you’ll either be associated with out-of-topic posts or you won’t get any posts at all. If you have the capital for it, hire a micro-influencer to give your business location a shout out by offering samples or inviting them to your store. Additionally, you can put your skills to good use by uploading videos to YouTube. By making them informative and entertaining, you’ll drive consumers to your location.

Make Your Location Accessible

In today’s era when the youth prefers to make memories without spending too much money, you’ll be benefited by accommodating their demand. Therefore, make your business space an open one. Not literally, but ensure that it’s accessible, even by people who don’t intend to buy anything from you.

Most outlets and retail stores are condescending to potential customers who are just looking around because they don’t plan on buying anything. It’s your job to be welcoming to them by offering space for activities. Moreover, make your business location a hotspot for social activities.

You can build upon this idea by holding events yourself, and keep space reserved for events. This way, people that are close by will know that there’s a trendy-looking place in the area that’s all prepared to hold a small event.

Make Use of Windows

Windows offer an intimate look into what’s going on in a particular location. Hence, they’re commonly associated with curiosity. People have a general instinct to look into shop windows, even if they’re not paying attention.

Enhance awareness of your brand among potential customers by placing your best products at the shop window. Or better yet, make it a more personal experience by allowing others to have a look inside at the activities you hold. These are very significant factors because of how they can encourage people to walk into your store.

Talk to Local Media

There are countless ways that you can boost your visibility in the area. Hence, you can make a seemingly bad location work out for you. By talking to local media outlets, such as radio stations and magazines, you can get some flattering press, which adds value to your brand.

People who hear about you through such channels are likely to want to have a look at your products. If you’re up for it, you can write pieces for local publications or give interviews. This step allows the community to know you better. By developing a closer bond with the people around you, the chances of them putting your first before any other brand become higher. These are just a few ways that you can overcome a bad business location. While you needn’t try all of them, it helps to test more methods.

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How to Do Valuation of Your Small Business

When you are looking forward to starting your own small business, you will have to familiarize yourself with a lot of new ideas. One of the important concepts that every business owner must be aware of is business valuation. So, what is business valuation, what is its importance and how do you do the valuation of a business? Read on to know.

Business Valuation

As the name clearly suggests, business valuation is the act of finding the value of your business in the market. It is just like finding the value of a house when you are about to sell it. You can use multiple methods to find the value of your business. However, it is always in your best interest that you hire a professional valuator to do it for you. They know multiple methods of valuation and will make sure that the final valuation is error-free.

The Importance of Business Valuation

The first thing you should know is that it is imperative to do the valuation of your business not for one but many reasons. The first reason that comes to mind is the selling of a business. When you want to sell your business to someone, you have to set a price for it. Sometimes, the owner of a business would want to plan succession i.e. the transferring of shares to an heir. The buy sell-agreement that they use for transferring the shares to their heirs requires them to know the value of the business.

If you have ever pitched your business to an investor, you must be aware of the fact that they always ask for business valuation. They are trying to assess a few different things based on the valuation you give them. First, they want to know how much their investment is worth. Secondly, they want to know whether or not you are fair with your investment demand if you are offering them equity for their contribution.

The Three Business Valuation Methods

Even though there are other business valuation methods as well, you will be reading about the three most common ones.

1. Valuation Based on Market Value

You also call this method the relative valuation method. It is a fairly straightforward way of knowing how much your business is worth. The valuators have to look at other businesses in the market that are similar to yours. They look at their selling prices and determine the value of your business based on those prices. Now, as simple and plain as this method sounds, it does not always work. For example, you don’t find the records of sole proprietorships that easily. So, when it comes to the valuation of a sole proprietorship business, finding records of similar businesses can pose quite a challenge.

2. Valuation Based on Business Future Earning Potential

This is an ingenious way to know the value of a business and one that helps you a great deal when it comes to obtaining investments from interested investors. This is quite a realistic approach but pitching it to investors can be a daring task. First, you have to make sure that you have done proper calculations based on your current and past records to come up with the future earning potential of the business. Secondly, you have to stand confidently with your decision because investors would often question you and your integrity a lot when they deem that you have valued your business much higher than you should have.

Capitalization of past earning is quite a frequently used approach to do this type of valuation wherein you look into the past financial reports of your business, smooth out any extraordinary earnings or expenses, and find the product of the normalized cash flow with a number referred to as capitalizing factor. It is not the only method used for determining the value of the business under this category. Another frequently used method is based on discounted future earnings.

3. Valuation Based on Assets

It is clear from the name that in this type of valuation you find the worth of the business based on the assets it owns. Once again, there are multiple ways to approach this valuation too. A common way to do this type of valuation takes liquidation of the business into account i.e. calculate how much money you would have if you sold every asset that your business owns and then subtract every liability from that sum. The other way is based on the ongoing status of the business wherein you look at the total value of your assets on the balance sheet and subtract your existing liabilities from them.

Once again, it is the sole proprietorship that poses challenges when it comes to doing the valuation of a business using this approach. Why the valuation of sole proprietorships is difficult using this method is because the owner in this case does not use the assets for business purposes only but personal as well.

You now know from the information given above that it is imperative for you to complete the valuation of your business. Whether it is for legal purposes or to sell your company at the right price, knowing the right value of your business is crucial. In the end, you should prepare your business financial documents regularly to help you find its value with convenience.

 

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