Many small business owners are overwhelmed by the mere thought of going international. The process is easier and quicker than you might believe. Thanks to the growth of technology your business can go overseas.
The internet has probably had the greatest effect on international business. I am not just talking about ecommerce sites. The internet is an amazing place to find resources of how to go international. There are government and local sites with a wealth of information. I have listed these resources for you at the bottom of the post.
Dependable shipping is a must have for any business especially when it comes to international affairs. The ability to track a package can put the customer and business at ease. Shipping companies also are able to give a shipping destination date for the product. This reduces the amount of inquiries and tedious tracking efforts for a business.
Another way technology has benefited international business is through outsourcing. People have mixed views of outsourcing. Some see it as good while others see it as horrible. If you have dealt with calling a customer service line for a product then you have probably dealt with a person who is overseas. Technology has made it possible to outsource customer service support to places such as India and the Philippines. High speed communication systems have made it possible to send these jobs outside of the U.S.
The internet, shipping, and outsourcing are just some aspects where technology has assisted in international businesses. Taking your business international is a great opportunity to take your company to the next level. Make sure you use these resources to get a better feel for regulations, processes, and additional information that you might not be aware of.
http://export.gov
http://exim.gov
http://buyusa.gov
Sunday, March 8, 2009
"Just in Time" Inventory
In many manufacturing industries there are problems between production scheduling and the ability for purchasers to wait for a product. A solution to this problem is called the just in time scheduling system. This type of inventory management has gained greater popularity over the recent years.
The whole purpose of JIT inventory control is to eliminate inventories altogether. The way to do this is by producing goods to correspond with projected shipping dates. This means that products are shipped directly to the purchaser as they leave the assembly line. This type of inventory control reduces production costs greatly.
Just in time inventory management is great for a stable economy and demand. However, it should not be used if the demand changes, which is often seen in a producer of consumer goods. The industry in which the manufacturing takes place cannot have problems with supply or unreliable shipping. You must remember that your supplier has to be dependable and there is enough lead time for the transportation of goods.
As you can imagine, the JIT inventory control would be extremely difficult to coordinate without the use of technology. Just in time inventory has to be controlled by a complex computer based system. Although these systems tend to be expensive, the money saved using JIT inventory control outweighs the cost of the computer system.
Just in time inventory control is a great alternative for manufactures. Like I said before, you have to make sure your industry is stable along with supply and shipping. JIT inventory control reduces costs, virtually eliminates inventory, and diminishes inventory handling.
The whole purpose of JIT inventory control is to eliminate inventories altogether. The way to do this is by producing goods to correspond with projected shipping dates. This means that products are shipped directly to the purchaser as they leave the assembly line. This type of inventory control reduces production costs greatly.
Just in time inventory management is great for a stable economy and demand. However, it should not be used if the demand changes, which is often seen in a producer of consumer goods. The industry in which the manufacturing takes place cannot have problems with supply or unreliable shipping. You must remember that your supplier has to be dependable and there is enough lead time for the transportation of goods.
As you can imagine, the JIT inventory control would be extremely difficult to coordinate without the use of technology. Just in time inventory has to be controlled by a complex computer based system. Although these systems tend to be expensive, the money saved using JIT inventory control outweighs the cost of the computer system.
Just in time inventory control is a great alternative for manufactures. Like I said before, you have to make sure your industry is stable along with supply and shipping. JIT inventory control reduces costs, virtually eliminates inventory, and diminishes inventory handling.
Friday, March 6, 2009
The Credit Formula
What goes into a credit decision when extending credit to a customer? There are four “Cs” to evaluate the eligibility for credit. They include character, capacity, capital, and conditions. Let’s explore what each C means and how it is measured.
Character is the most important aspect when determining eligibility. This means the integrity, honesty, and sense of responsibility of the customer. It is the hardest to assess, as you can imagine. Many times character is determined on the customer’s past track record. Did they handle credit well in the past? Well, then that must mean they have good character and they will continue to do so. I do not believe this is the best form of judging character, but it does seem to work well enough for those who use it. It definitely does not extend grace to the people that may have struggled in the past, but would shine if given a second chance.
Capacity refers to the financial strength and stability of the customer. This is much easier to assess than character. The overall debt ratio is determined of the individual to see if they will be able to pay back their line of credit. The general rule when it comes to credit is that debt should not exceed 30% to 45% of income. Stability of income is also determined when considering capacity. A good indicator of income stability is the how long the individual has kept their current job and the skill level required of their position.
Capital also refers to the financial strength of the customer, however, it is judged on the ultimate collectability to pay off credit. This is determined by establishing the net worth of the customer. This means that the individual’s assets are measured against their debts and liabilities. The higher their net worth, the stronger they are financially. Sometimes collateral will be involved if the customer is making a large purchase. For example, when a person buys a car, the value of the car is used to secure the credit.
Conditions mean any circumstance that might affect a credit decision. For example, today’s weakened economy plays a major role in the eligibility for credit and the set limit. Another condition may pertain to the health of a business. If a business is doing poorly then they might be more lenient with credit decisions to bring in more customers. There are a myriad of conditions that affect credit eligibility.
Extending credit to a customer might be essential for your business. It is important that good decisions are made about whom to extend the credit to. The success of your business could hang on the credit decisions your company makes. That is why it is so important to thoroughly evaluate your customer using the 4 “Cs.”
Character is the most important aspect when determining eligibility. This means the integrity, honesty, and sense of responsibility of the customer. It is the hardest to assess, as you can imagine. Many times character is determined on the customer’s past track record. Did they handle credit well in the past? Well, then that must mean they have good character and they will continue to do so. I do not believe this is the best form of judging character, but it does seem to work well enough for those who use it. It definitely does not extend grace to the people that may have struggled in the past, but would shine if given a second chance.
Capacity refers to the financial strength and stability of the customer. This is much easier to assess than character. The overall debt ratio is determined of the individual to see if they will be able to pay back their line of credit. The general rule when it comes to credit is that debt should not exceed 30% to 45% of income. Stability of income is also determined when considering capacity. A good indicator of income stability is the how long the individual has kept their current job and the skill level required of their position.
Capital also refers to the financial strength of the customer, however, it is judged on the ultimate collectability to pay off credit. This is determined by establishing the net worth of the customer. This means that the individual’s assets are measured against their debts and liabilities. The higher their net worth, the stronger they are financially. Sometimes collateral will be involved if the customer is making a large purchase. For example, when a person buys a car, the value of the car is used to secure the credit.
Conditions mean any circumstance that might affect a credit decision. For example, today’s weakened economy plays a major role in the eligibility for credit and the set limit. Another condition may pertain to the health of a business. If a business is doing poorly then they might be more lenient with credit decisions to bring in more customers. There are a myriad of conditions that affect credit eligibility.
Extending credit to a customer might be essential for your business. It is important that good decisions are made about whom to extend the credit to. The success of your business could hang on the credit decisions your company makes. That is why it is so important to thoroughly evaluate your customer using the 4 “Cs.”
Tuesday, March 3, 2009
Keep Your Business Safe
Attention small business owner; there may be a thief inside your business. Do you know that small businesses experience fraud at a 100 times higher rate than large companies? This is an alarming rate that must be taken seriously. Several reasons are implied for this higher existence of fraud in smaller businesses. First of all, the highest rate of fraud is committed by the accounting personnel. The small business may have one accounting professional who is given complete trust in dealing with all financial matters. Another reason why there is higher fraud in small firms is because of the lack of internal controls. Small businesses rarely hire an outside source to audit or review their accounts and to hold the accounting professional accountable. The difficult thing about fraud is the fact that fraudulent people look like you and me. They are usually not criminals, but instead our friends, co-workers, and family. Since the person who commits fraud can be a close acquaintance we may tend to overlook or be in denial that they may actually be stealing from our business.
Instead of focusing entirely on why fraud happens in a small firm I want to give some tips to preventing fraud from happening in your small business. Many times fraud occurs due to blurry boundaries, lack of supervision, or lack of respect of the leaders in the company. Fraud can be best prevented by creating an ethical environment; one of integrity and respect. The first step in fraud prevention is the implementation of a fraud policy. If a fraud policy is in place, there will be no room for misinterpretation. An employee should be well aware of the rules, regulations, and punishments pertaining to fraudulent activity. The second step is to have high moral conduct when it comes to dealing with customers and suppliers. This example being set forth will elevate the morality in the other employees. Thirdly, establish a place of social unity and respect amongst the employees. Happy and connected employees will not want to steal from the company they enjoy working for. The forth step is to allow no exceptions to the rules. That way there is no gray area in what is right and what is wrong. The last step in preventing fraud is to always screen your potential employees. This means you check references, get background and credit check, and interview them with proven techniques. Many businesses do not take the hiring process seriously enough. It is the first and foremost step in preventing fraud. If that fraudulent person does not get hired they will not have a chance to steal from you.
I hope that you have gathered some new information about fraud and how it affects a small business. As the entrepreneur, you are the one who is responsible for the health of your business. If you do not take precautionary measures against fraud then I can almost guarantee that it will occur in your business. Please begin a plan against fraud now if you have not already done so.
Instead of focusing entirely on why fraud happens in a small firm I want to give some tips to preventing fraud from happening in your small business. Many times fraud occurs due to blurry boundaries, lack of supervision, or lack of respect of the leaders in the company. Fraud can be best prevented by creating an ethical environment; one of integrity and respect. The first step in fraud prevention is the implementation of a fraud policy. If a fraud policy is in place, there will be no room for misinterpretation. An employee should be well aware of the rules, regulations, and punishments pertaining to fraudulent activity. The second step is to have high moral conduct when it comes to dealing with customers and suppliers. This example being set forth will elevate the morality in the other employees. Thirdly, establish a place of social unity and respect amongst the employees. Happy and connected employees will not want to steal from the company they enjoy working for. The forth step is to allow no exceptions to the rules. That way there is no gray area in what is right and what is wrong. The last step in preventing fraud is to always screen your potential employees. This means you check references, get background and credit check, and interview them with proven techniques. Many businesses do not take the hiring process seriously enough. It is the first and foremost step in preventing fraud. If that fraudulent person does not get hired they will not have a chance to steal from you.
I hope that you have gathered some new information about fraud and how it affects a small business. As the entrepreneur, you are the one who is responsible for the health of your business. If you do not take precautionary measures against fraud then I can almost guarantee that it will occur in your business. Please begin a plan against fraud now if you have not already done so.
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