Category Archives: Business Planning

How a Successful CEO Gets Ready in the Morning

Ask the most successful chief executive officers (CEOs) the secret to success, and you might just find that it all starts with the morning routine. The way you get ready in the morning sets the stage for the day and can completely alter its outcome, laying the foundation for productivity, creativity or whatever intention you set. Let’s take a look at some of the morning routines of some of the most powerful business leaders to see how the a.m. grind affects their success.

  • They Get Up Early—What’s one thing all successful members of the C-suite tend to have in common? They get up early. In fact, Facebook’s Chief Operating Officer (COO) Sheryl Sandberg reportedly gets to work by 7 a.m. every day. The amazing thing? Despite the fact that she runs one of the world’s biggest tech companies, she still manages to leave work every day by 5:30 p.m. It’s all about work-life balance! Richard Branson (Virgin Group), Elon Musk (SpaceX, Tesla) and Tim Cook (Apple) all rise before 5:30 a.m., and Cook reportedly gets up each day at 4:00 a.m.!
  • They Check Their E-Mails and Read the Paper—Just about all the biggest figureheads tend to wake up with their face in their phone, including Sandberg, Cook and Musk. Others like to get their mind going the old-fashioned way, by reading a book, magazine or newspaper. It may not surprise you to learn that the octogenarian CEO of Berkshire Hathaway, Warren Buffet, reportedly opens up each day by reading a physical newspaper, but it may come as a shock to learn that Google’s 47-year-old CEO, Sundar Pichai, does the same thing to get the brain in motion.
  • They Do a Morning Workout—Even 87-year-old Warren Buffet makes time to work out every morning. In fact, he reportedly gets his sweat on after a breakfast of McDonald’s and Coca-Cola (seriously). On the other end of the spectrum, Jesse Moeinifar, the CEO and founder of the audience development platform Viafoura, says he blocks off three hours each morning, between 5:30 and 8:30 a.m., for physical fitness. He follows up his daily morning workout with a mix of ginger, turmeric, cinnamon, lime and honey, which he says, “has enabled me to ward off any sickness for 13 years straight now.” Packing your gym bag with a men’s toiletry bag full of the basics is a great way to emerge from your morning workout energized and look amazing when you get to the office.
  • They Outline Their Goals for the Day—Whether via a peek at their Google Cal or a mental rundown of what the day will look like, almost all successful business leaders begin each day evaluating what’s on their plate. In fact, the founder and CEO of HighTower, Elliot Weissbluth, says that (after waking up at 4 or 4:30 a.m.) he goes over his goals for the day and reshuffles any priorities with regard to his work and his family. He says he uses the Chrome plugin Momentum, which allows him to set a daily intention and helps to eliminate distractions throughout the day.

Successful CEO

  • They Put Effort into the Way They Look—Don’t look to Facebook CEO and Founder Mark Zuckerberg for advice here (the guy is known for wearing the same outfit every day, which he says gives him “one less decision to make.”) But, contrary to what Zuckerberg would have you believe, what you wear to the office and how put-together you appear does matter when it comes to how people perceive you. By using some top-notch men’s grooming tools and products and selecting well-tailored outfits, you can look like a super-polished CEO without putting in much effort at all.
  • They Eat Breakfast—Yup, even the busiest people in the world somehow find the time to eat breakfast. And, barring Buffet—whom we all know gets his day going with a bacon, egg and cheese biscuit from McDonald’s—they pretty much all start their day with something healthy to eat. Oprah reportedly enjoys egg, toast and avocado with a chai tea, while Shark Tank investor and Dallas Mavericks co-owner Mark Cuban says he lives off Alyssa’s Cookies, which are low in calories but high in protein and fiber.

Successful CEO

  • They Check in with Themselves—The late head of Apple, Steve Jobs, was known for infusing some mindfulness into his morning routine. He reportedly asked himself each day, “If today was the last day of my life, would I be happy with what I’m about to do today?” According to Jobs, if the answer was “no” too often, that was his signal that he needed to make some big changes in his life. Oprah, Arianna Huffington and Tony Robbins also say they start out each day with mindfulness by way of an energizing 20- or 30-minute meditation sesh.
  • They Listen to Audiobooks—The CEO of Twitter and Square, Jack Dorsey, gets his morning exercise by walking the five miles from his home to Twitter’s headquarters in San Francisco. On the way, he reportedly listens to audiobooks and podcasts. Sriram Sridhar, the co-founder and CEO of the website LateShipment.com, does the same, saying he spends the half-hour drive to work listening to audiobooks rather than music, which allows him to listen to more than 30 books a year.

They Maintain a Routine

Regardless of if they meditate, listen to audiobooks or read the newspaper, all successful CEOs have one thing in common: they do the same thing every morning. Settling into a routine is one of the best things you can do to hold yourself accountable and get into good practices for a lifetime. No matter what gets you going in the morning, doing it at the same time every day is a great way to hold yourself accountable and to build positive habits that set you up for success.

Is Your Business In Labor Law Compliance?

labor law compliance

One of the most important milestones of a business is to hire employees. It’s an exciting endeavor, especially for startups. It’s an indication that you have a thriving and growing business. However, it doesn’t mean that hiring staff doesn’t come with a disadvantage. Yes, despite being a step towards success, hiring employees requires you to have the knowledge and be in compliance with labor laws. And that is not always easy.

In every operation that your business undertakes involving your employees, it’s essential to make sure that you’re going to comply with the federal and state rules. Staying apprised of the existing legal landscape will be beneficial as it can be easy to violate them, especially if your business has multiple locations.

Compliance with labor laws, however, isn’t only about avoiding fines, it is also about maintaining a safe work environment for all employees. Labor laws also present guidelines on how to treat your workers fairly. Therefore, if you want to build a long-lasting and sustainable business, you have to keep up with federal labor law, together with state and local regulations.

How To Stay Labor Law Compliant?

There are simple things you can do or implement for your business to be in labor law compliance as possible.

The first thing, of course, is to know what labor laws apply to your business. Some federal laws have specifications in terms of its applicability, and others may have variations as they reach the local level. An excellent example is the Age Discrimination In Employment Act, which only applies to businesses with twenty or more staff.

Another step you can take is to create or come up with a compliance checklist. A compliance checklist should contain all the required notices on hand. Having a list of these notices will help you to determine further actions that you have to take more efficiently. It’s also a way to track how your business manages compliance tasks and if it’s doing enough to complete these tasks by the appropriate deadlines.

Last but not least is to develop an employee handbook as part of your compliance toolkit. It will help in reducing misunderstandings between you and your staff by giving them helpful information about their rights and benefits.

What Are The Labor Laws That You Should Comply With?

Missed opportunities might result from only fulfilling the minimum requirements instead of ultimately meeting your legal obligations. Always staying in full compliance will allow you to take advantage of all the benefits that various laws, rules, and regulation offers.

Below are some of the laws you should comply with as you move forward with your business operations.

Correct FLSA and IRS Employee Classification

To keep their operations running, many startups rely on workers known as independent contractors. Despite being called “independent contractors,” the federal government may still consider them as employees depending on the relationship they have with your business.

At a rate that gets calculated as one-and-a-half times the regular hourly rates of the workers, employees that FLSA or the Fair Labor Standards Act covers should receive overtime pay from employers. Employers give overtime pay to workers who work more than forty hours a week. Employers can benefit from modern financial tools to make sure that compensations get calculated accurately.

The overtime pay has exemptions, though, and it happens once an employee falls under the executive, as well as the administrative or professional FSLA exemptions. The white-collar exemptions involve specific job responsibilities that may cover one of your workers.

Some businesses purposely misclassify employees to avoid paying payroll taxes, overtime compensation, and other employee-related expenses. It’s something that you have to avoid doing if you don’t want the Department of Labor and the Internal Revenue Service to hunt your business. Based on three significant areas, which include the type of relationship, financial factors, and behavioral factors, a 20-factor test gets performed by the IRS to determine the status of a specific worker accurately. The worker status gets classified through his contributions to your business as well as the level of control you have over his daily operations.

FMLA or the Family and Medical Leave Act

One of the most commonly misunderstood labor laws is the FMLA or the Family and Medical Leave Act. For twelve months, given there are valid family and medical reasons, workers have to receive up to twelve weeks of unpaid yet job-protected leave from private-sector employers. It holds as long as the employer has fifty or more employees.

Employers don’t have the power to interfere, prevent, or deny employee rights because these are provided for them by the law. It’s essential to understand the nuances since the FMLA has very specific requirements concerning coverage and eligibility.

However, the FMLA has standards that employees have to meet before they become eligible for leave. That said, part of the responsibilities of employers is to carefully examine the reasons for asking leave to reduce abuse of the FMLA act.

Minimum Wage Fairness Act

Businesses also have to comply with minimum wage increases that the law demands. There are now more labor laws that favor part-time and hourly workers, so you have to make sure that you keep yourself updated with the current minimum wages in every state where your business operates.

Final Thoughts

The laws mentioned above are only some of the many labor laws that are existing in the country. Ask yourself if your business is in labor law compliance and prepare for new changes and developments to the existing rules to avoid consequences.

Business Planning: Do You Know Your Break-Even?

Break-EvenWhen you are planning for your business, you need to know when you will earn a profit. Calculating when is usually done through a break-even analysis, and it is always a necessary part of any business plan. The report will help identify when you will reach profitability and if your business will make money through the break-even point. Many beginners in companies get to be overwhelmed by the idea of creating a break-even analysis, but it is critical to know how a business can be successful.

A break-even analysis is essential because it will show if your anticipated revenue will be higher than your costs. Do you have a great business idea in mind? You need to know your break-even point first. Read on below to learn more about learning more about break-even analysis.

How to Begin With Your Break-even Analysis

  1. Estimate expenses and revenue streams

To generate an accurate estimate of your expenses and revenue, you can do some research on the current market that is related to your business. These estimates are essential in calculating your break-even point:

  • Overhead expenses or Fixed Costs – these include your monthly expenses like rent, utilities, and insurance.
  • Variable costs – these are expenses that are dependent on the number of items produced for the business. Examples are raw materials and labor
  • Revenue – this is the amount you expect to make from all of your sales. These numbers could be estimated monthly or annually.
  • Contribution Margin – this is calculated by subtracting a good’s variable cost from its selling price. If you are going to sell a product for $100 and the cost for materials and labor costs $50, your contribution margin is $50. The remaining $50 is used to cover overhead expenses, and whatever is left from that is your net profit.
  1. Calculate Break-even Point

After having the estimates identified above, you can calculate your break-even point. There are several ways to calculate your break-even point. One way is to calculate it based on units. You divide the overhead expenses by the revenue per unit produced minus the variable cost per unit of manufactured goods.

Break-Even Point (Units) = Overhead Expenses ÷ (Revenue – Variable Cost) per unit

In calculating the break-even point in terms of dollar sales, you will divide the fixed cost by the contribution margin.

Break-Even Point (dollars) = Overhead expenses ÷ Contribution Margin

How Break-Even Analysis Can Help You Launch Your Business

Based on numerous definitions, profit is defined as the amount of revenue a business gained that exceeds all the expenses involved in the business activities. Your business’ need to get enough profit depends uponyour business goals. Having a break-even analysis can help you with that. The second part of the break-even analysis will help you identify how soon you can earn profit and what you need to do to improve the time it takes.

Here are other benefits of generating a break-even analysis before creating a business plan:

  • It helps you plan to avoid losses.

When you have the numbers from your break-even analysis, you can determine the sales quantity for you to generate enough revenue to keep the activities going. Knowing how much you need to produce or how long you need to provide services will avoid potential losses in the future.

  • It helps you determine your profit levels.

Just like what was mentioned above, using break-even analysis can help owners to determine how much they can earn at different sales volumes. Any sales volume or number that goes beyond the break-even point is already a profit. When you already determine the sales volume you need to reach a certain profit level, you can plan your business needs accordingly, like materials, labor, and other costs.

  • It helps you set the right price for your goods and services.

Your price offering is one of the significant factors that you must consider when you start a business. Setting the right price for your goods and services will dictate if you will succeed or not. Selling price affects business profitability in several ways.

You may be tempted to underprice your product if you want to compete in the market. Many people may think that lowering sales prices can increase sales volume. However, cheap goods or services can be perceived by the masses as something of poor quality. Setting the price low is also a tricky strategy if you want to be present in the market scene for the long term since people might not trust you in case you suddenly increase prices due to rising variable costs.

If you have your break-even analysis, you can set different price levels and evaluate break-even numbers for each level. The numbers will help you study the effect of each price level taking into consideration other factors like competition, affordability, and inventory management.

  • It helps you with scheduling your inventory requirements.

Generating your break-even analysis can help you with maintaining healthy product inventory levels. It is critical for any non-service business to stock enough inventory and has products available over a given period. You can set your inventory volume based on the number to provide by the analysis when you use the constant quantity of units needed to be sold at a given period to have stead profit. It will help you prepare your initial inventory and plan on the restocking based on your cash flow. For service industry businesses, you need to know what level of employment is needed in the same way as product based businesses.

  • It helps you create your business timeline.

One of the primary reasons why having a break-even analysis is essential before creating a business plan; it is because it will dictate your business timeline. Any business owner would want a stable income flow that is also sustainable. A good standard for measuring optimum sustainability for any business is when it earns profit within the first four years of operation.

Profitability is affected by several factors like the nature of business and the current market status or competition. According to reports, advertising, marketing, banking, and insurance businesses tend to profit the fastest. Meanwhile, companies in the food and medical industry tend to earn longer due to high competition in the market. Considering all the factors that affect profitability, industry-wide data, and your break-even analysis, you can plan your business timeline accordingly.

  • It will help you increase your profit faster.

Provided that you already have a realistic timeline, you will know when you can earn your profit. However, if you want to be aggressive in your business and take calculated risks, using the break-even analysis can help you increase your profit faster. To reach a certain profit level, business owners need to stay focused on fixed and variable costs. It would be best if you optimized revenue while reducing your costs.

If profits are getting smaller, considering that there are no issues in the current market and sales volume, you should look into the expenses. Break-Even analysis always has the expense side of the equation. Through the study, you will have an idea to continually review your spending habits and ensure that everything brings value to the business. If you reduce the costs, even without increasing the sales volume and price offer, you will see an increase in profit.

  • It can help you determine the tools to help you in your business.

Make sure that you have the right tools and equipment to keep business activities running smoothly. Since the break-even analysis will show you how much you need to spend and how much you need to produce, you can plan finances accordingly.

Most businesses need to borrow funds as a source of capital. Loans are already considered in your fixed costs. You might need to borrow money to produce a certain number of products, and the amount you will loan is included in your break-even analysis.

In reality, the need for capital will often decline over time. This is because it is expected that you will have growing revenue. However, if you are planning for your business to stay for longer periods, you can expect to borrow again to sustain the operations and have a steady cash flow.

Conclusion

Numbers generated from your analysis will give you an idea of how much you need to produce to reach that break-even point or achieve your target profit or margin. Aside from that, break-even analysis is also used for daily operations and planning.

The break-even point can dictate if the prices of the goods and services are already enough to gain decent revenue or profit. Aside from that, it can also help you with deciding which variable costs are sustainable. Apart from that, it can also help determine the need for new products and services to increase profitability.

The bottom line is, calculating the break-even point is useful not only during the beginning of a business plan but also for its continuity. It is an essential tool for business planning and ensuring that any business opportunity can provide profit. That is why it is never wise to skip this critical step when creating a business plan. Always consider generating an analysis before engaging in any business activity.

On the other hand, we see a lot of companies that are not as concerned about break-even as they are about market share. Some of those companies are loosing significant amounts of money as they build their brand in the hopes of huge profits in the distant future. The WeWork fiasco of 2019 is a perfect example within the office space industry how things can go very badly with that strategy. WeWork lost $1.61 billion in 2018, up from $884 million in 2017 and $429.7 million in 2016. And yet, their founder walked away with a $1.7 billion dollar payout. In 2018 the Wall Street Journal identified that 80% of IPOs in 2018 have been for money-losing companies.

So what’s the best strategy? Let us know what you think?