Month: April 2020

Categories
Process & Business Expansion

Phygital- Redefining the Customer’s Shopping Experience

Shop till you drop with Phygital

Imagine a shopping experience where you just enter the store, pick up what you want and simply walk out. Yes, you read it right! No lines, no checkouts, no payments just walk in, grab and go! Welcome to the world of Phygital.

4 years ago when e-commerce giant Amazon launched it’s first ’Amazon Go’ store, it redefined the entire Customer’s shopping experience. With their ’Just walk out technology’ Amazon Go became the first store of its kind where no checkout is required. 

The Amazon Go app allowed the customers to enter the store, browse through its products and then leave. What bliss for people on the go!

Defining Phygital

  • The marriage between the usages of intelligent technology to boost customer’s shopping experience is the new norm today
  • It is an ecosystem where both physical and digital co-exists.

Both the worlds complement each other in the sense that the consumer experience is not just limited to their computer or mobile screens but makes it way into the vicinity of fancy stores as well. 

The objective of both the premises is to enrich customer’s shopping experience
which has a direct impact on revenue generation and business growth

Importance of Phygital in business growth

With technology and innovation taking center stage of every business, companies now have become more focused on giving its consumers a world-class shopping experience be it in physical store or in the digital domain. 

In an age where time is money, a consumer needs the holistic experience of both the worlds (digital + physical) before buying a product.

In retail, through Phygital a customer can experience the following things:- 

  • look and feel the product
  • Browse through a plethora of options
  • Take feedback
  • Enjoy easy transactions through mobile point of sale units
  • Guided layout to add value to overall shopping experience
  • Virtual add-ons
  • No need to stand in queues 

After making a mark for themselves in the e-commerce space, brands like Lenskart, Myntra, Nykaa, Firstcry.com understood the need of giving this ’wholesome’ shopping experience to the customer.

It allowed brands to move from online to offline seamlessly. It helped them in increasing their offline reach to the customers and in turn helped in their business growth.

The Way Forward

Taking a cue from the retail giant Amazon, back home in India, Dmart also followed suit. 

In its new store format, customers can place their order online or through the app. They can then collect their purchases from the DMart Ready stores, or have it home-delivered for an additional charge. 

Clearly, the idea behind the new format is to provide shopping convenience to customers and to tap into the e-commerce category as well.

Small business in tier2 and tier3 cities should focus on the smooth transformation of their stores/shops into new age customer engagement hubs. 

Tip:

  • A small businessman can create a basic website or app, through which he can accept orders online from customers and customers, can pick up their order from the nearest physical store without having to wait or stand in the queue.

Great opportunities lie ahead for businesses that have a hold in smaller cities. 

Tip:

  • Small businesses should look for the collaboration with online giants like Flipkart, Snapdeal to open their physical stores and target offline customers for their business growth.

The Phygital trend which is catching so fast is here to stay for 2 simple reasons- 

  • In Phygital, physical comfort meets digital convenience
  • Speed meets personalization

Phygital has enhanced the overall shopping experience of a customer by multiple notches and has been an integral strategy for the business growth of many brands. Offline and online stores which were once perceived as opponents, Phygital has surely blurred the lines between the Bricks and the Clicks.

Categories
Finance

5 Essential Accounting Terms for Small Business Owners

Everything You Need To Know About Small Business Accounting

How often do you end a call with your accountant feeling more confused than you were before?

If you response is ’almost every time’ have no fear!

We’ve compiled a list of 5 most crucial accounting terms for small business, along with the technique to understand them with regards to your business  

1. Cash Flow

Cash Flow = Money Flowing In & Out Of Your Business

Most of the small businesses fail not because of the lack of sales or profit, but because of lack of cash in their business.

Cash is not the same thing as revenue. Sales occur when a business sells a product or renders a service, but the cash comes in the business when the company collects payment from the customer.

Being cash flow positive
 i.e. having excess cash in the business means:

  • Business is better equipped to keep up with the debt
  • Business can cover unforeseen expenses
  • Business can invest in growth opportunities

The activities that affect the cash flow of business are:

  • How quickly customers payback the company
     ’ the faster they pay, the faster cash comes in the business
  • How slowly the company pays back to its vendors
     ’ the slowly these bills are paid, the more cash is retained in the business. But you have the credibility to build too, hence this should be done within a 45-60 day cycle depending on your terms with the vendor
  • The inventory size and how many times it rotates in a year
     ’ the larger the inventory, the more cash needs to be invested in the inventory.

2. Variable & Fixed Expenses

Variable & fixed expenses are very simple but extremely important accounting terms for small businesses.

Variable expenses can increase or decrease depending upon the company’s production output in a month i.e. they rise as production increases and reduces as production decreases.

Fixed expenses remain the same regardless of the production output in a month (e.g. office rent, employee salary, etc.)

  • Small businesses should try to keep more expenses as variable and only a few expenses as fixed, to make higher profits.
  • Unused resources like employees not being able to produce at their maximum potential because the pace of the business alternates, hence such resources can become a real drag on the bottom line.
  • Businesses should try to keep such expenses as a variable by using seasonal workers, freelancers or other third-party resources, only paying them when they work.

3. Depreciation

Many business owners feel that depreciation is a complicated accounting term, which is a completely wrong perception.

Depreciation is the decrease in the value of an asset over time due to its wear and tear, new technology or market conditions.

  • Common assets that a company can calculate depreciation for includes tangible assets like machinery, vehicles, furniture, buildings etc. and intangible assets like patents, copyrights, computer software, etc.
  • For example: If a company purchases a vehicle costing Rs.500,000 and the expected usage of the vehicle is 10 years, the business might calculate depreciation on the asset at Rs.50,000 each year for a period of 10 years. 

Depreciation is an income tax deduction. By decreasing the value of the asset, your overall taxable income lowers, and hence, your tax liability decreases.

4. Cost of Goods Sold (COGS)

COGS or Cost of goods sold refers to the expenses that are directly related to the creation of the product or service of the business.

In simple language, the accounting term COGS refers to the direct costs of producing the goods sold by a company. 

COGS includes cost of the material & labour directly used to create the goods or services, and excludes indirect expenses such as distribution costs and sales force costs.

How COGS affects Business Income:

Accounting term Cost of goods sold is a business expense, just as cost of doing business. As COGS increases, the company’s profit decreases, resulting in reduction in the tax liability. 

But a business owner should keep in mind that increasing COGS means that the business doesn’t make much money overall, hence COGS should be managed efficiently to increase profits.

5. Gross Profit Vs Net Profit

Profit is the amount of money your business makes. The difference between gross and net profit is that expenses when subtracted form gross profit gives us the net profit earned. 

  • Gross profit is what remains after deducting cost of goods sold from your business’s revenue. Gross profit is your business’s profit before subtracting business expenses.
  • Net profit is what remains after subtracting all operating, interest, and tax expenses, in addition to deducting your COGS from revenue. 

To calculate net profit, you must know gross profit of your business. Small business owners should always try to increase their gross profit by reducing their cost of goods sold.

Accounting terms, Gross & net profit are both key indicators for measuring performance of a business as an industry benchmark or its competitors.

If you understand these 5 key accounting terms for small businesses, it can help you manage your accounting in a more efficient manner helping you build your enterprise.

Taking the time out to understand these accounting terms for small businesses is well worth your while and can set you up for future success.

Categories
Process & Business Expansion

5 Fastest Growing Industries to Start a Business In 2020

What industries should excite you in 2020?

Are you planning to start your new business venture?

You must be wondering if you have your eye on the right industry or not?

Starting your own business is not easy. There are so many things to consider, from market demand to competition, but it will all be worth it. 

To help you drive the wheel towards the road to success, we’ve rounded up 5 fastest growing industries to start your business in 2020:

1. Ed-tech

Data Points for the Industry:

  • From 2014 to 2019, more than $1.8 Bn has been invested into Indian ed-tech startups.
  • The sub-segment of test preparation has the highest capital inflow & the greatest demand in India.
  • India’s tech economy growth has also pushed the demand for skill development solutions.

If educating people is something that you’re passionate about, Ed-Tech or Educational Technology may just be the startup industry for you.

The growing popularity of online learning has provided a major push to 3 of the top subsectors in the edtech market:

  • Test Preparation (from k-12 to entrance exams)
  • Online Certification
  • Skill Development

What’s the upside of Ed-Tech industry in India?

Fundamentally, India is one such market where there is a lot of focus on education. Most parents aspire to see their children aim high in education, and hence, people are willing to pay for these services. 

  • As per a study conducted by KPMG, the estimated market size for the ed-tech industry i.e. online certification and the reskilling industry is estimated to be $463 Mn (2021) growing at a CAGR (compounded annual growth rate) of 38% since the year 2016.
  • The key theme and major advantage for the ed-tech industry is: Personalisation and Inclusion
    .

Ed-tech is considered as one of the fastest growing industry in India.

2. HealthTech

Data Points for the Industry:

  • Indian Health-tech sector recorded a total funding of $586.93 Mn in the year 2019
  • Indian healthcare market to be valued at $372 Bn by 2022.
  • Some of the popular healthtech startups are CureFit, PharmEasy, Practo, etc.

Increase in population, changing lifestyles and environmental instability pose newer challenges, as new diseases appear. To tackle these challenges and focus on mass scale solutions, it is important to encourage technology & automation in the Indian healthcare sector.

What’s the upside of HealthTech industry in India?

  • Indian healthcare industry is growing at tremendous pace and is considered as one of the fastest growing industry due to increased penetration of technology, improved connectivity and enhanced healthcare policies.
  • Indian healthcare market is expected to grow threefold to Rs.8.6 trillion by 2022. 

3. FinTech

Data Points for the Industry:

  • India is experiencing a ’FinTech Boom’ by emerging as the world’s second largest fin-tech hub.
  • Indian Fintech sector received a total funding of $3.18 Bn in the year 2019
  • Some of the popular Fintech companies are Paytm, PhonePe, Google Pay, Cred, etc.

For years, FinTech (or Financial Technology) has been a hot startup sector and one of the best industry for business in India. The digital payment space in India is set to witness interesting times as WhatsApp
, the global messaging app, is coming in a phased manner with its payment services.

What’s the upside of FinTech industry in India?

  • As per Deloitte & CII’s Vision 2020 report, India is speedily heading towards becoming a digital economy with over a billion mobile phones, 330 million internet users, and 240 million smartphones.
  • B2B startups in FinTech industry are climbing the ladder
  • Some of the other areas where Fintech businesses are moving in 2020 includes taking insurance to the masses & a new wave of Fintech in education.

There is no doubt that competition in the fintech industry will intensify in the year 2020, however, it will still remain one of the fastest growing industries in India.

4. Gaming

Data Points for the Industry:

  • Smartphones accounts for a majority of online gaming revenues in India
  • India fantasy sports operators witnessed a 7 times growth since 2016, while the user base grew 25 times in India
  • 250 Mn online gamers and game developing companies were recorders in the year 2018, while the numbers were 20 Mn and 25 Mn, respectively in 2010.

Today, gaming industry has grown to become one of the biggest in the entertainment sector in the world and is considered as one of the fastest growing industry.

With smartphone penetration at its peak, the Indian gaming market ranks 5th among the world’s top mobile gaming markets. 

What’s the upside of Gaming industry?

  • Gaming industry was estimated at more than $150 Bn in 2019, and this figure is anticipated to grow to nearly $200 Bn by 2022, with a CAGR of over 9%.
  • The impact of mobile gaming is nowhere more evident than in India, where it always has always been considered a niche form of entertainment.

Games such as PlayerUnknown’s Battlegrounds (PUBG), FarmVille, Candy Crush Saga, and Clash of Clans, with social and multiplayer components, only furthered the trend, making gaming one of the fastest growing industry.

5. Data Security

Data Points for the Industry:

  • The Indian business ecosystem’s poor data security is no secret
  • The BYOD (Bring your own device) work culture is now prevalent across many offices and workplaces in India
  • India business & enterprises don’t have adequate visibility into their cybersecurity health

The more time people spend online, the more they are exposed to data breaches & violations of digital privacy. 

Due to major data privacy thefts & scandals like Cambridge Ananlytica, companies and consumers have now become more aware of these risks.

What’s the upside of Data Security industry?

  • Data privacy breach makes Cyber Security one of the fastest growing industries and creates endless opportunity for entrepreneurs and business owners willing to bet on cybersecurity and data protection as a business.
  • According to a report by PwC, the cyber security market in India is expected to grow from USD 1.97 billion in 2019 to USD 3.05 billion by 2022, at a CAGR of 15.6%

Though Data Security is one of the fastest growing industries, but starting a cyber-security company is no easy feat but the starting point could be by offering consultancy services to local companies.

If you’re thinking about starting a business soon, be where there is enough sunrises. Be a part of those sectors where the next wave of growth will come from.

We have given you a lowdown of the 5 best industries for business in 2020 and should be well considered when establishing a new business 

Categories
Strategy

3 Important Tips To Improve Your Logistics Strategy

Improve your Logistics Strategy & gain Customer Loyalty

’The sustainability of your business isn’t just based upon acquiring new customers, but also on your ability to maintain a loyal customer base who buy from you time-to-time’

Every business owner knows that the cost incurred to acquire a new customer is always way more than to keep an existing one 

To create a loyal customer base it’s essential to build a reliable & best logistics strategy. Here are 3 tips to build a consistent logistics framework

1. Preparation is the Key:

Managing your inventory and choosing right logistics partner are the most important steps to create the best logistic strategy for your business.

It seems obvious but if you don’t have the products that you’re selling to your customers in the warehouse, sooner or later you are going to disappoint them. Hence, whether you procure and manage your supply in-house or outsource it, you need to have this element under complete control.

The best way to manage an accurate inventory?

  • Tracking your goods: For small business owners, it is essential to master the art of supply and demand, which is not any easy thing.
  • Regularly reviewing your stock forecasts and committing enough time to calculate safety stocks.

An effective way to create the best logistics strategy is to always connect with all parts of the supply chain- such as suppliers, partners, and companies.

2. Choose Reliable Logistics Partners and Tools

The second step to creating the best logistics strategy is to choose consistent logistics partners & tools. Many startups or smaller businesses prefer to keep logistics as an in-house function because involving a third party agency or a vendor means additional cost for the business.

According to our Bada Business Professor, Mr. Harpreet Singh Malhotra – Managing Director, Tiger Logistics (India) Private Ltd, budding entrepreneurs or business owners should focus on their strengths which is the product and should outsource the logistics service at the initial stage of business.

Outsourcing the logistics service helps in the following ways:

  • Focus can be directed towards the core business and product
  • Taking advantage of the expertise of the logistics partner
  • Bringing economies of scale in the business
  • Cost-effective and timely solutions

How to choose the right logistics partner?

To choose the right logistics partner for your business, you should consider the following points:

  • Product Knowledge:
    Your logistics partner must have the essential knowledge about your product. 

For example: If you’re in the food grain business, then your logistics partner should be the one who has sufficient knowledge about this domain and can make sure that grains are delivered in time without any loss to the product.

  • Reliability of the partner company:
    Your logistics partner needs to be someone, you can completely rely upon. This can be evaluated on the basis of the following:

The capability of the company to handle your products

– Credibility in the market

– Ability to give the benefits of its vendors to you

– Timely delivery of the product

– Reasonable costing of delivery

– Experience in a similar product line or product mix

3. Offer a wide range of options to your customers

Last but not the least, to create the best logistics strategy you need to offer a wide variety of options to your customers.

Flexibility is an absolute must nowadays. Today the customers are me-centric and expect the business to provide the options that fit in with their lifestyle and needs. And when it comes to logistics & order fulfillment, this is very relevant and crucial.

Many customers discontinue and leave their shopping cart when choosing the delivery option. Why?

Because customer haven’t found the delivery option they wanted. Keep in mind, as a business you have to consider and offer both delivery/pickup options and the speed at which these functions take place

  • Many customers want a door to door shipping option while others feel that a pickup delivery option is better and works for them well.
  • To maintain an edge over speed, you can offer regular, express and even same day or next day delivery services.

This helps you to become the preferred brand for your customers and builds a good reputation in the market.

We hope these tips help you create the best logistics strategy that will not only be good for your business but for your customers as well, leading to a long-lasting relationship with them. An efficient logistics strategy creates loyal customers for your business and loyal customers can help your business grow. 

Categories
Marketing

8 Ways CRM For Small Business Can Help Reduce Costs

CRM: An Essential Tool to Reduce Costs

  • What do businesses want today?
  • Increased Efficiency
  • Seamless management
  • Growth & Profitability

This is where CRM for business software comes in

The CRM system can help you build an organisation that can focus on increasing sales, improving employee productivity and making your long-term customers more loyal to you. Here are 8 ways that can help you reduce costs for your business

1. Cost Reduction
 

Very often, CRM systems are customized solutions created based on the specific requirements of a particular business. But there are also ready-made CRM for business software in the market that contain built-in features that are also beneficial for a business.

  • Creating a customised individual CRM system allows you to work with your personal pain points, thereby reducing those costs which are either not very essential or are present due to inefficiencies in the operations process.
  • For example: Let’s say the load has significantly increased on your customer support staff and they don’t have the bandwidth to manage the influx of new customer queries. In such a case, the implementation of the CRM for business system will help in managing the load and eliminating the need to hire additional staff, thereby reducing the costs.

2. Keeping Production Costs in Control

One of the benefits of CRM system is that it has powerful built-in analytics and accounting tools. These features enable you to manage the goods that are in the manufacturing phase or already in stock.

  • You can take into account each unit of goods with the help of CRM.
  • You can also run an analysis on which goods are sold better than the others.

This allows your business to optimize your production and reinvest the profits to produce those goods that see increased customer demand 

3. Reducing Cost of Customer Acquisition

’Retaining an existing customer is cheaper than attracting a new one’

This is a long-known law of marketing & economics. We know the business needs to grow and one parameter for growth is acquiring new customers & clients.

CRM for business system can indirectly help you generate new leads without digging a huge hole in your pocket.

Recommendations, word of mouth can lead to exponential growth in the business, and a CRM software can help in turning around these referrals into satisfied customer queries. This might lead to a conversion for your business. 

4. Streamlining & Reorganising Sales
 

Business is based on long-term relationships with your customers. This means that the sales team that represents your company needs to meet your customer personally from time to time and provide answers to all their queries till the customer is fully satisfied.

With the CRM system:

  • It is possible to plan these meetings with competence and localize these meetings at a minimum distance from each other.
  • For business, this means saving tons of time and lower transportation costs.

5. Reduction in Customer Support Service Maintenance Cost

Generally, a CRM system has a self-service portal for a customer that allows them to resolve their issues on their own, thus, reducing the load of your support desk.

Let’s take an example of the financial industry

  • The client wants to take a small loan from your company. Instead of calling you or visiting your company’s office, he fills out an online application on your site, which is automatically redirected to your CRM system and a specific manager is assigned to this task

Thus, the business immediately gets the opportunity to initiate working with the leads bypassing transit points in-between, like calling the support service.

6. Reduces cost of Mistakes

How many times have you been in a situation where your manager mixed up a customer’s contact details, forgot to call back, mixed up goods in package or simply sent them to the wrong customers?

All these situations affects your brand images and hurts the trust built but the customer  

With a CRM for small business system, the chance of a human error or forgetfulness tends to be zero. 

Every manager remains up-to-date on what he needs to do right now according to the company’s strategy.

7. Improves Tracking Methodology

Tracking & Evaluation can help in a big way to track the growth of your company. With CRM for business, every team can track and make changes in their functions

Sales Team can track the lead conversions, Service team can track customer satisfaction index, and marketing team can track what strategies generated how much business. Hence it gives a clear direction to managers on future steps

8. Reduction in Paper Waste

Businesses should also focus is on being green these days; hence unnecessary usage of paper can be eliminated with the help of CRM since everything is just a click away

CRM for small business software keeps everything ’ customer’s contact details, sales records & numbers, documents ’ all in one, easy to access application.

There are many ways in which CRM software can be proven beneficial for your business, but how it can impact the bottom line of your business is one of the most important. 

These 8 ways can help you reduce your costs substantially leading to increased efficiencies, giving a boost to profitability & growth. 

Categories
Motivational

How to Stay Creative in Ambiguous Times

Life-changing Ways to Stay Creative in Ambiguous Times

Finding it difficult to stay creative during these ambiguous times?

Times of ambiguity or crisis are a part of life.

We’ve all been there at one time or another: stuck in uncertainty. It’s a scary place to be, and can leave you feeling stuck, out of control and helpless.

Times full of ambiguity are the ideal days for you to exercise your creativity.

Here are 4 hacks to sail through uncertainty and stay creative in ambiguous times:

1. Utilize the time to read more:
 

Some of the most successful and busiest people on our planet are also avid readers.

If you find yourself with entirely new blocks of time open to you, commit to reading more.

That is because:

  • Reading sparks your creativity, and helps grow your understanding of complex problems.
  • It grows you intellectually, while at the same time, it is also a very relaxing activity.

Fiction requires us to experience reality from a perspective, very different from our own reality and hence, helps us to exercise empathy and stay creative.

However, you can also read nonfiction thought leadership books and articles that you have stockpiled in your ’must-read’ list.

2. Reflect on YOU:

Many world champion athletes, business people, and spiritual gurus share self-reflection as an essential key to their success. The same is also true for ’everyday people’ who seems so fulfilled and happy with their lives.

So why is self-reflection so important to lead a successful and fulfilling life and to stay creative in ambiguous times?

  • Improve self-awareness
    : Having a strong sense of self improves your self-esteem and boosts your confidence.
  • Provide perspective
    : It allows you to see things from a different perspective i.e. you can zoom out and see the whole forest.
  • Allow you to respond, not react
    : When you take out time to reflect on a situation, you respond more thoughtfully and change your behavior for the next time.
  • Facilitate a deeper level of learning
    : Self-reflection is a critical part of the education process. Studies have shown, when people are given time to reflect, they are better able to retain and recall the information.

3. Spark wonder through play:

Play allows an individual to deliver creativity in a certain way. 

It allows a person to discover why and how things are done in a certain way or finding new and different solutions to it.

As kids, we all are born with curiosity to learn, explore and experiment new things. However, as we grow older, learning by creating as a way of play is decreasing.

Playing requires a person to focus, accept the unknown, offers the challenge and develops the ability of a person to use creative thinking.

Example of implementing the elements of play in real life:

Unlock the 007 in you. You have 70 seconds
: This was a real-world experience, a campaign to win the ticket for James Bond movie and is an example of how to put a play in the creative promotion of an upcoming movie.

This example shows, how inserting play can lead to changes in the behavior of people and helps to stay creative in ambiguous times.

4. Look forward with gratitude and generosity.

This time is your chance to take inventory of what you have done and arrive at fresh insights.

Ask yourself a question
: ’What can you do now, so that when you look back on your past, you would be saying ’thank you’ with deep gratitude for this time?’

Many people recommends practicing generosity by asking who you can help, for example, offering free webinars. 

When you humble yourself to be helpful and grateful to others during adverse times, you refuels your creativity.

Ambiguous times always brings out unintended & surprising outcomes and make it difficult to stay creative. On an individual level, a person gets to be more self-reflective, slow down, and identifying what really matters. 

At an organizational level, we get to discard the way we’ve always done things and take a temperature check on our organizational culture. 

There is always a silver lining in every ambiguous and uncertain situation, if you look at the positive side to increase your creativity.  

Categories
Strategy

How To Use Discounting Strategy To Make More Sales

Offer Discounts without Losing on your Profits 

Discounts are always a lucrative way to increase sales and tempt the customer. Many of the discount strategies work wonders if they are backed by a strong service and distribution channel. But if a company constantly lowers the price point, there are chances it might eat into the profits.

When small businesses are looking to move up their sales figures, discounting is one of their first approaches. Here are a few tips that can make your discount strategy in retail work without cutting into your profits or damaging your brand image.

1. Define your Goal

  • Keep yourself and the team focused on the discount strategy decided. Blindly introducing discounts will not solve the purpose. Keep weighing the pros and cons and cut your cost to an extent that you will remain profitable.
  • If the purpose is to make new customers, then you can adopt a heavy discount strategy across your retail channels that increases the footfall
  • If you are looking to re-engage with customers who have bought products from you before, then maybe look at some customized offer, or offers on a product that is bought more

2. Get a Competitive Advantage

  • If you are looking to sway customers from your competitors, then go for a discount strategy that will be lesser than your competitor’s pricing, but will keep you profitable
  • In this case, when the customer compares your product with the competitor, even a difference of as low as 300 rupees makes a difference
  • If the customer notices that your pricing is always lower, maybe after a few trials they will start coming straight to your retail outlet and buy rather than even comparing

3. Make Customers feel Positive

  • Sometimes even a small discount or a gift coupon makes customers happy about shopping from you. They leave with a positive feeling about your brand.
  • This will help you in the long run as the customer will associate you as a brand that cares for them

4. Timing should be Right

  • Sending out discounts at just the right time i.e. when customers need them, this will greatly increase your conversion rates. A discount strategy like this works wonders in retail
  • For e.g. if you have lost of customers that come and buy in the first 10 days of the month, then aim your discount strategy around that time

5. Keep a Check on your Margins

  • Compare the sales you need to do at your current margins to achieve your target revenue with how much sales is needed at the discounted margin. The marketing activity can be increased proportionately then
  • A lot of companies also set an ’acceptable range of margin’, unless your objective is aggressive customer acquisition keep you discount strategy in retail within the acceptable range of margin

6. Promote Sale of New Products as well Impulse Buying

  • Since you have put items on heavy discounts, people who visit the store will indulge in impulse buying as well. This discount strategy in retail will help in selling other products as well
  • Give your customers product recommendations and suggest upgrades that can help push your sales indirectly
  • Arrange your products in a way that, the new products are placed in the front of the store while the discounted one behind them. The customer will be left with no choice but to go through the new launches and make note of them. There are chances that he might pick up an item here or there for trial

7. Give Discounts with Conditions

Don’t offer blanket discounts, make sure you have some pre-requisite conditions that the customer must meet before being eligible for the discount. 

Try different method of discounts such as:

  • Buying a certain number of quantity
  • Spending a certain number of amount
  • Special discounts for Loyalty Program customers
  • Buy 2 and get 1 free
  • Bundled Discounts (Cub 2 or 3 items in similar categories together, For e.g. A face wash and a cream)

These conditions don’t let discounts eat into your profits and maintain healthy sales

8. Offer Heavy Discounts to get rid of Old Products

  • This strategy works for products or businesses that are usually seasonal. For e.g. if you run a clothing boutique, you can get rid of your summer collection by offering heavy discounts and you need to display clothes for the next season
  • It can also be used for electronic items like mobile phones especially when a new product of the same series is being launched. To get rid of a lot of the existing model inventory, heavy discounting can be used.
  • This discount strategy helps in at least getting rid of the stock even at the base price instead of dumping them away

Discount Strategy in retail can be a great tool to get in new customers, also engage with your old customers and dispose of old inventory, what really needs to be worked out is the strategy.  Calculate how much discount can you afford to give otherwise there is no option left but to give it away from your profits.

Categories
Finance

5 Good Bookkeeping Habits for Small Business Owners

5 Proven Bookkeeping Tips to Increase Cash Flow in your Business

Do you feel that bookkeeping is not an important business activity?  You’re probably wrong if you think so. 

What about money in the bank that could help you achieve your desired business goals? Now we’re talking.

You don’t have to make bookkeeping more complicated than it needs to be. Adopting some basic, good bookkeeping habits can help you avoid costly errors and stay top of your books each month with little-to-no hassle.

We have put together 5 bookkeeping tips for small business owners. 

Follow these good bookkeeping habits to get a bigger and better handle on your cash flows:

1. Plan for Major Expenses
 

Is it likely that you will need a major computer upgrade or any equipment or machinery that needs to be replaced?

  • You should be very honest and put such expenses that could be coming up in the next one to five years, on the calendar year in advance.
  • Many small businesses are seasonal in nature, hence, it is essential for business owners to acknowledge the seasonal ups and downs, and how it will affect their ability to spend during those times.

By making sure that you have forecasted for major expenses and ups and downs of your business, you’re less likely to miss on business opportunities or finding yourself short of cash.

2. Track Your Expenses

It is important to track each and every expense, to keep your business’ cash flow going in a positive direction.

  • Before you start paying, tracking, and accounting your expenses, you need to separate your personal and business expenses.
  • Open a separate bank account for your business, so that you don’t have to waste hours examining your expenses at the end of the month. You will know the exact amount that your business has spent and the areas where the amount is spent.

At the time of tax filing, it’ll be much easier for you to write-off relevant business expenses.

3. Record Deposits Correctly

Adopt a good bookkeeping habit to record deposits correctly, whether it’s a pocket notebook and pen, an excel spreadsheet or a proper financial software. 

  • Small business owners typically make a variety of deposits into their business account throughout the year, including, sales revenue, loans or cash infusion in the form of capital from personal savings.
  • You’re keeping yourself open to paying taxes on the money that isn’t your income if you’re not accounting from where each of the deposits have come. 

4. Set Aside Money for Taxes

You know, as a small business owner, you have to pay taxes to the government at certain deadlines that are already known to you.

The income tax department imposes penalties and interest if the tax amount gets delayed or remains unpaid. 

Hence, a good bookkeeping habit is to systematically put money aside for taxes, to make sure that the money is there when you need it.

5. Keep a close eye on your invoices

Many small business owners & entrepreneurs have to sell products on credit basis to their customers. 

You should have a specific person to track billings of your business and a proper process in place, if a bill goes unpaid.

In case of late payments, you can do the following:

  • Issuing a second invoice
  • Making a phone call to remind the customer
  • Levying penalties such as extra fees after a certain deadline
  • Having policies for if a customer pays 30, 60 or 90 days late.

You should always remember that ’Every late payment is an interest-free loan and hurts the cash flow of your business’

With your books in order, you’re now ready to achieve your long-term goals, manage cash flows during seasonal ups & down, and improve the profitability of your business.

By analyzing your books, you’ll know exactly how much cash you need and how much you can afford.

Hence, good bookkeeping habits lead to better financing and cash flows of business’it’s that simple.

Categories
Finance

How Does Your Business Structure Affect Your Taxes?

बिजनेस
बिजनेस

What is the Best Business Structure to pay the Least Taxes?

Different Business Structures have different tax liabilities, so it is very important to choose your structure sensibly. An entrepreneur should know the tax implications of the business structure being finalized. Here is your guide to know how a legal structure can affect your taxes:

1. Sole Proprietorship

As the name suggests, this business entity is owned by a single individual and not recognized as a separate legal entity. It has an informal structure and therefore, the tax model is the same as an individual.

Tax Rate

A Sole proprietorship firm is taxed as same as an individual. Therefore, the rebate is the same as the individual i.e. if the income is not more than INR 5, 00, 000/-, there is 100% tax rebate.

Surcharge

The surcharge is as follows:

Income less than INR 50 lakhs: No surcharge

Income between INR 50 lakhs and INR 1 Core: 10%

Income more than INR 1 Crore: 15%

Cess

Health and education cess are calculated at 4% of the income tax and surcharge

2. LLP or Partnership firm

Both kinds of partnerships; LLP or a simple partnership firm are taxed as separate entities. This tax implication for this business structure is:

Tax Rate

The income is taxed at 30% 

Surcharge

If the income is less than INR 1 Crore: No surcharge

If the income is more than INR 1 Crore: 12% surcharge

Cess

Cess is calculatd at 4% of income tax and surcharge

3. Private Limited Company

It is one of the most popular business structures in India. A company is a separate legal entity from its director and members from the start. The tax model is divided into two types: Foreign and Domestic

Tax Rate

For the domestic companies, the tax rates
are as follows

If the annual turnover is not more than INR 250 Crore: 25%.

If the annual turnover is over INR 250 Crore: 30%

For foreign companies
, the tax rates are as follows

If the government is the client: 50%.

If there are other sources of income: INR 40%

Surcharge

Domestic companies:

Income not more than INR 1 Crore: No surcharge

Income more than INR 1 Crore, but less than INR 10 Crore: 7%

Income more than INR 1 Crore: 12%

Foreign companies

Income not more than INR 1 Crore: No surcharge

Income more than INR 1 Crore, but less than INR 10 Crore: 2%

Income more than INR 1 Crore: 5%

Cess

Health and education cess are calculated at 4% of the income tax and surcharge

4. Co-operative Society

The objective of the co-operative society is mutual help and welfare. It is a service-oriented business structure.

Tax Rate

Up to Rs 10,000: 10%

Between 10,000- Rs 20,000: 20%

And, above Rs. 30000: 30%

Surcharge

Income Less than Rs. 1 crore- No Surcharge

Income more Rs. 1 crore- 12% Surcharge

Cess

Health and education cess is computed as 4% on income tax and surcharge

The following are tax structures for different business structures in our country usually opted by SMEs. Apart from other considerations such as Market conditions, Research, Customer profile, Tax implication too plays a dominant role in deciding what business structure you want to opt for.

Categories
Finance

How to Calculate Depreciation in Your Business

इनकम टैक्स
इनकम टैक्स

The Step-by-Step Guide on How to Calculate Depreciation

When you’re running a small business, each and every penny saved is a penny earned.

Many business owners feels that depreciation is too complicated or that they’ll have to pay a lot to the accountant to calculate depreciation. Well that’s a mistake which could cost you far more than any savings from your accounting procedures.

What is Depreciation?

When you use an asset over a period of time, it often loses its value.

Depreciation is the decrease in the value of an asset over time due to its wear and tear, new technology or market conditions. 

What can a small business depreciate?

Common assets that a company can depreciate include tangible assets like machinery, vehicles, furniture, buildings, etc. and intangible assets like patents, copyrights, and computer software.

For example: If a company purchases a vehicle costing Rs.100,000 and the expected usage of the vehicle is 5 years, the business might calculate depreciation on the asset at Rs.20,000 each year for a period of 5 years. 

Depreciation is an income tax deduction. By decreasing the value of the asset, your overall taxable income lowers, and hence, your tax liability decreases.

How to calculate depreciation in Small Business?

There is no single method to calculate depreciation. In fact, there are several methods of calculating depreciation.

3 most common methods to calculate depreciation are as follows:

  • Straight Line method
  • Unit of production method
  • Accelerated depreciation method

Estimate Initial cost, Useful life and Residual value

Step 1

Calculate the initial cost of the asset purchased. The initial cost includes the cost of acquiring the asset plus additional expenses for making it operational, such as installation cost, shipping or taxes.

Initial cost = Cost of asset + additional expenses (installation, shipping or taxes)

Step 2

Estimate the useful life of the asset i.e. the period of time over which the asset is expected to be used, after which it needs to be replaced. 

Step 3

Estimate the residual or salvage value of the asset i.e. the amount that you expect to be received from the disposal of the asset after its useful life.

1. Straight-line method
 

This is the simplest method of all. In the straight-line method, you choose to depreciate your asset at an equal amount for each year over its useful lifespan.

Depreciation expense = (Asset cost ’ Residual value) / Useful life of the asset

For Example: 

Suppose Aggarwal Sweets purchases a machinery for Rs.200,000 having a useful life of 10 years and the residual value of the machinery is Rs.20,000.

Annual Depreciation expense = (Rs.200,000 ’ Rs.20,000) / 10

Annual Depreciation expense = Rs.18000

Thus, Aggarwal Sweets can take Rs.8000 as depreciation expense every year over the next 10 years.

2. Unit of production method

This method is very useful in assembly for production lines. This is a 2-step process.

Under this method of depreciation calculation, equal expense rates are assigned to each unit produced. 

Hence, depreciation calculation is based on the output capability of the asset rather than the number of years.

2 steps are:

Step 1: Calculate per unit depreciation:

Per unit depreciation = (Cost of asset ’ Residual Value) / useful life in terms of units of production

Step 2: Calculate the depreciation of actual units produced: 

Total Depreciation = Per Unit Depreciation x Units Produced

For example:

Gupta Ji Ltd. purchases a printing press to print flyers for Rs.40,000 with a useful life of 1,80,000 units and a residual value of Rs.4000. It prints 4000 flyers.

Step 1: Per unit Depreciation = (Rs.40,000 – Rs.4000) / 180,000 = Rs.0.2

Step 2: Total Depreciation = Rs.0.2 x 4000 flyers = Rs.800

Hence, the total depreciation expense, which is accounted, is Rs.800.

3. Written down value method:

Under this method, depreciation is calculated at a fixed percentage each year on the decreasing book value, known as Written Down Value of the asset (book value less depreciation).

For example:

Sharma & Sons purchased a machine for Rs.500,000 having a useful life of 10 years and its estimated residual value is Rs.40,000. 

Rate of depreciation = 10%

Amount of depreciation = (Book Value ’ Rate of Depreciation) / 100

1st year: Depreciation = Rs.500,000 x 10/100  = Rs.50,000

2nd Year: Depreciation = Rs.450,000 x 10/100 = Rs.45,000

3rd Year: Depreciation = Rs.4,05,000 x 10/100 = Rs.40,500

4Th Year: Depreciation =   Rs.3,64,500 x 10/100 = Rs.36,450

Depreciation is an important part of bookkeeping and accounting which helps companies maintain their income statement and balance sheet properly with the right profits recorded.