Using Break-Even Analysis in Budgeting

Break-even analysis can be a good tool to estimate costs because the model is relatively simple to use. The information gained from such an analysis can be very useful for making budgeting decisions.

The purpose of break-even analysis is to determine the number of units that must be sold to cover the expenses related to that project. The break-even point is reached when the quantity of units sold exactly covers the costs associated with the project. There are two types of costs to consider: fixed and variable. Fixed costs are those which are independent of the quantity of units sold (or produced). Variable costs, on the other hand, are directly influenced by the number of units sold/produced. The break-even point is calculated by dividing the total fixed costs by the amount of profit each unit generates. The profit earned per unit sold is obtained by subtracting the variable costs involved in producing or selling each unit from the amount of revenue that unit creates. For example, suppose that a hotel has a fixed annual cost of $2,000,000, and the hotel charges a rate of $50 per night for one room.  The variable costs for one room are $30 per night, so $20 of prof it is generated per night per occupied room. $2,000,000 is divided by $20, which means the break-even point is 100,000. That is, if 100,000 nights have been sold, all the operating expenses have been covered.


Of course, simply reaching the break-even point does not do much good. In the before mentioned example the hotel would need to sell more than 100,000 nights to be profitable. If your business needs budgeting assistance, contact us today. Imagine Solutions Group can help your firm operate profitably.

What is your web design and web presence saying?

Many new business owners can find themselves too strapped for time or manpower to devote the proper amount of attention to their company’s online presence. However, neglecting elements such as web design and social media is something that a small business cannot afford to do if they want to succeed in the long run. A person who is searching online for your services has thousands of options, and it is the job of your company website to make the right first impression. So, what should your web presence be saying to potential clients?

1. I’m Current – Web design that looks clunky or homemade can appear out-of-date as well as unprofessional, leading customers to question whether the information on the page is current or not. You want your website to be easy to navigate, well-maintained, and pleasing to the eye so there is no question that your business is active and up-to-the-minute.
2. I’m Available – A well-kept website is an excellent main hub of information, but establishing a web presence also means expanding through social media to make your company available to the public through as many outlets as possible. Reaching out through sites like Twitter and Facebook exposes your business to a wider audience, and keeping those pages updated gives your current clientele a convenient way to communicate and keep tabs on activity.
3. I’m Cohesive – Your web presence is the first look a person will have at your business, and subsequently, should give a strong sense of your branding no matter what page of yours they are looking at. Strive for a unified experience across your website and social media, and make sure the two are linked. More than using a consistent color scheme on every page, you want the personality of the company to come through.

Contact us for more on how we can develop and maintain your web presence, and for more services essential to building or expanding a business.              

Free Website Design Giveaway!

In honor of our Nation's Birthday, Imagine will be giving away 3 free basic website designs. You can nominate a small business that deserves a great website by emailing info@HelpMeImagine.com. We will take nominations till July 3 and our winners will be announced on July 4, 2013! 

www.HelpMeImagine.com

Tips for Setting Up Your Small Business Back Office

Successful business owners must focus on income-producing activities, not worrying over small but necessary tasks like recording receipts and mailing invoices. Even though these tasks make systems flow better, you have a limited schedule when it comes to managing a small business. One of the keys to establishing a seamless operation begins with setting up the back office. Focusing on these three areas for setting up or improving the management of your business will pay big dividends down the line.

Focus on the finances. Failing to manage your finances could result in loss of business or worse. You need a good understanding of basic accounting principles if you want to accurately track and forecast finances. Reliable accounting software can make that happen. Your small business deserves the best start possible.

Get your files ready. As the business takes on a steady stream of customers you'll need back office systems that keeps you on top of customers' records. Without good tracking, you might miss a crucial follow up selling opportunity. Day to day clutter could cause you to lose important documents like contact or vendor information. A comprehensive system will include the binder, electronic and traditional filing systems or some combination of at least two.

Streamline time management. Simple tasks should not take up an inordinate amount of time. It should only take one person to handle a transaction and record it properly. Businesses should track the time spent on key tasks and also issue and prioritize a to-do list. Using reliable filing systems help cut down on waste.


Sound overwhelming? Consider outsourcing these three key areas to a company you can count on. Contact us for more information about how we can help you set up or streamline your current back office management. We will help you achieve your business goals by creating a customized plan.

Three Employee Management Tips

In the tough economic climate that businesses operate in today, it is vitally important to have good employe management.
employee management. Businesses much achieve optimum work from the employees on staff so they do not have to hire extra personnel. It is a common fact that it is very expensive to hire new staff to replace those who opt to leave. Therefore, maintaining current staff and managing them effectively is a key to the success of any business. Keep reading for three tips on

1.Provide Positive Feedback As Often As Possible

Positive feedback is enough more crucial than negative feedback. It takes five positive comments to undo the damage that one negative comment leaves. This does not mean that a manager should not provide criticism and negative feedback when necessary. However, when maintaining employee morale, it is important that the employees hear about the good work they are doing as well. A good rule of thumb is to start each session with one positive comment, lead into the negative feedback, and close the session with another positive comment.

2. Allow Employees Flexibility in Scheduling

When possible, allow employees to be flexible with their work schedules. This does not mean that you need to compromise production and efficiency. If an employee must miss a day of work or a few hours, check to see if you can allow the employee to make up the time later in the same week. This is a win-win situation for both the employee and the employer. It allows the employee to have a full paycheck while handling the items that required time off work, and it allows the employer to make up the production that would have been lost when the employee was not at work.

3. Encourage Use of Time Off

At first glance, this tip may seem to contradict the tip given above. After all, the last tip stated to allow employees to make up lost time to maintain production. The key here is balance. Although it may seem that allowing an employee time off will hinder production, it can actually help greatly in the long run. If an employee is not well rested or is bordering on burn-out, the production of that employee will be hindered. It is much better to allow the employee to take vacation or paid time off, rest, and come back to work refreshed. The production will increase once the employee is back and the morale will be improved because the employees will know they can use their paid time off without a lot of hassle.

For more information on how we can help you with employee management, contact us.

Four Reasons for Developing an Employee Handbook

Many businesses find that developing an employee handbook is very beneficial.  Does your company currently have an employee handbook?  If not, what are some reasons to consider making one?

1. Answer Employee Questions
• From time to time, employees will have questions regarding company policies for items such as performance reviews, time off, or other concerns.  An employee handbook will go far in answering the majority of these basic questions.  This will help the employee because he or she will not need to go to management for every question.  It will also help management free up time because the manager will not need to spend time on these everyday questions that may arise.
2. Reduce Training Time
• When initially training a new employee, there are many items to cover.  Not only is there the job processes and duties but also basic company policies and procedures.  Possessing an employee handbook which can be handed to the employee to read, review, and sign off on is a great tool to reduce training time.  Handing out the employee handbook, allowing the employee time to read it and sign off on reading it, and allowing the employee to ask any questions allows the manager to eliminate the time to go over every single policy and procedure.
3. Avoid Legal Issues and “I didn’t know”
• When an employee receives negative feedback for violating a company policy, the most common response is that he or she didn’t know it was a policy violation.  Providing the employee handbook and mandating that employees read the book and sign off on reading it is a great way to avoid this.  A manager can simply refer to the page in the handbook where the policy is written.  Possessing the sign off that the employee has read the handbook can eliminate or avoid legal issues because the employee legally signed that he or she received and read the policies contained therein.
4. Locate Any Gaps in Company Policy 
• The actual process of developing an employee handbook can be a great tool.  The handbook will cover company policy so it allows business owners and managers to see all the policies at a glance and locate any gaps.  For example, does your company currently have a dress code?  If not, do you see the need to institute one?  Consider policies about items such as attendance and tardiness and employment of and working directly with relatives.  Do you have criteria which must be met to receive holiday pay such as working the day before and after the holiday?  These are all policies which many businesses find beneficial.

For more information on how we can help you develop and maintain an employee handbook, contact us.