Impact of Cloud Based Systems on Business Valuations

Surprisingly, many small to mid-sized business owners, when prodded, have no basis or accepted methodology for valuing their business. Many of us "think" we know what our business is valued at, but it is often difficult to determine objectively what the business is worth, separating out the passion and "sweat equity" we pour into our companies. For many small to mid-sized business owners, the value of their company may be their own largest personal asset. For businesses that may not be completely privately owned, the value of the company still significantly impacts the partners' overall compensation.

Critical to valuing a business is having an understanding of the company's financial situation. Accurate business valuations require a certain level of financial expertise and analytical experience, and keeping this level of expertise on staff full time can often prove costly for small businesses. However, with the advent of cloud computing, the ability of business owners to accurately value their business has exponentially increased providing them with significant benefits.

1. Real time access to financials- For business owners who have invested in cloud computing services, the financial data they can access is no longer a monthly (or quarterly) static figure. The impact of sales and purchases immediately factors into projections, so that owners can confidently assess their financial situation and have a handle on the health of their business. If they require outside assistance to analyze the figures, providing organized, real time data to the experts assisting with the business valuation is more efficient and therefore more cost effective.

2. Reporting and financial modeling- Many cloud computing programs and system providers offer the option of reporting various performance metrics, indicators that the business owners otherwise may not be able to access. Some providers include standard reports that track financial progress and allow for users to run various scenarios on income projections, evaluating how that then impacts the value of the company. Larger corporations historically have had the means to invest in heavy IT infrastructure and expertise to produce this type of reporting. However, cloud based systems that do not require heavily investing in IT architecture, infrastructure, and support have changed the way small to mid-sized companies do business in that they, too, now have access to this type of financial reporting. Smaller companies now can make decisions based on the same type of financial intelligence previously reserved for larger, more lucrative companies.

3. Transparency of shared data- For businesses prepping for potential sale, investment, or securing loans, cloud based systems allow business owners to share real time information with buyers, investors and lenders, adding credibility to financial data. Investors and lenders can be granted access to financials that provide direct insight into the health of a business, reducing concerns that the data provided to them is not "clean" data.

Although many factors impact the value of a business, such as strength of management team, the most critical factor is a company's financials. Maintaining updated, accurate financial records and having "real time" access to those figures helps business owners assess the true value of their company. We are currently offering a free analysis of your accounting business processes and accounting system. If you would like to learn more on cloud based systems can improve your bottom line and impact the value of your business, please call me directly at 781.503.9004 or email me at sales@aixsol.com

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

Four Tips for Effective Succession Planning

Succession planning is especially essential for owners of small privately owned or family owned businesses. The aim of the succession plan is to ensure that the values and vision held by the business continue. To ensure the business legacy carries on, careful consideration must be given to the succession process. However, owners or partners often neglect to give this process the serious attention it deserves.

This happens for several reasons, including owners finding it difficult to relinquish control of a successful business that was built through passion, dedication, and hard work. Other reasons can include family dynamics that may be fraught with tension, when otherwise invisible surface at times of succession discussions. Even if family relationships are amicable or the question is not applicable to business operations, succession decisions can impact key people within the business itself that can make the entire process cumbersome. This may include tenured or key employees feeling either entitled or neglected in the decisions.

Below are four tips to help ensure development of a successful succession plan.

Plan well in advance; involve professional help if necessary
One of the most common visions for succession is that of a founding member of the business growing old and transferring leadership to an identified, younger employee or family member. Unforeseen developments such as accidents or deaths can easily disrupt such plans, as can situations such as founding members receiving compelling employment offers. Succession planning in such cases becomes reactive, hasty and ill-planned and could erode the company's revenue stream, including customers and market share.

Instead, businesses could benefit immensely from identifying and securing professional assistance. Succession planning can then be conducted in a thorough manner, without disrupting the future of the business or its legacy.

Determine the qualities of the successor; address ownership
Succession planning should also include business ownership in its domain. This translates to identifying issues that surpass just business management concerns. For this reason, determining a successor becomes a key factor in the plan. Founding members may look for someone most similar to themselves; but this need not always ensure a successful succession plan. Instead, owners should look at the contemporary business environment and look for qualities in the successor that will carry the business forward in current times.

Design a selection plan/process
Unless the business is passed from family generation to generation, a rigorous selection process is required to ensure selection of the right candidate for the position. Consider designing a test that can assess strengths and weaknesses of the potential leader, and administer it to key employees of the business. The exam should not test just leadership qualities; it must also capably assess the candidates' adaptability and creativity and whether they can maintain and develop the legacy of the accompanying business.

Also, succession plans do not require in-house successors. If needed, keep your selection circle open. Hire professionals who can assist in identifying and hiring the right candidate from outside the business.

Make a decision and inform employees about it
Succession planning may begin with much enthusiasm but may lose momentum if the business owner chooses to defer completing it until a later time. If needed, revise and review selection criteria as well as the final decision; however, establish a realistic selection date, as well. After conducting the search, commit to making a decision to avoid negatively impacting morale across the business. Without the perceived consistency of a leader, employees may feel rudderless, impacting overall productivity and the company's bottom line.

By considering the above tips, you have taken the first steps in creating a successful succession plan.

Analytix Solutions
The Company that CPAs Recommend
Analytix Solutions is a professional full-service business support solutions provider. The company offers comprehensive and scalable bookkeeping and accounting services while leveraging its expertise, experience, and state-of-the-art infrastructure. It offers multiple services in diverse packages for companies that are seeking a trustworthy and professional partner to give their business a head start.

Increase Efficiency with Contract Management Systems

As part of our commitment to provide complimentary services which assist our clients in improving efficiency, Analytix Solutions recently developed and launched our new Contract Management System. Contract management systems can be an invaluable addition to any business. This is particularly true for businesses that lack dedicated resources and manpower for management of contracts, such as small and mid-size businesses and enterprises.

Contract management often involves understanding the terms and conditions of various contracts, undertaking negotiations, documenting the process, and tracking amendments and changes.

Contract management requires tracking correspondence such as purchase orders or sale invoices. Depending on the type of the contract, it may also include documentation of details such as technical instructions, legal specifics, and other miscellaneous terms and conditions. Implementing accurate contract management processes reduces the risk of errors caused by misunderstandings of the technical, legal, financial, and other similar details associated with the parties involved.

Proper contract management entails tracking vast amounts of data and details, resulting in an intensive and time-consuming process. By contrast, a contract management system facilitates organization of these details which is immensely beneficial for businesses where manpower resources, budgets and infrastructure are constrained. Implementation of a contract management system ensures accurate information is recorded for key contract elements such as the unique contract ID, the entity entering into the contract, type of contract, etc. Elements including date of the contract, renewal date, and even date of price increase, if applicable, may be included in a comprehensive system, thus helping businesses maintain an accurate report for each contract.

Benefits of Analytix's new Contract Management System include:

• Automatic reminders- Our new system emails reminders and alerts to multiple parties involved in the contract execution. The system also offers easy-to-navigate dashboard, making critical information more readily accessible.
• Detailed tracking- To facilitate managing multiple contracts, our system collects detailed information on each contract, such as the type of company or entity involved. Furthermore, the contracts can be tracked by various categories such as company location, department responsible for contract, etc.
• Central depository for all contracts- Storing contracts in a centralized location makes them easier to access. Moreover, our system offers significant storage space so that clients can store an unlimited number of contracts, while simultaneously being able to easily search them for key data.

For more information on our new Contract Management System, please email us at sales@aixsol.com.

Analytix Solutions
The Company that CPAs Recommend
Analytix Solutions is a professional full-service business support solutions provider. The company offers comprehensive and scalable bookkeeping and accounting services while leveraging its expertise, experience, and state-of-the-art infrastructure. It offers multiple services in diverse packages for companies that are seeking a trustworthy and professional partner to give their business a head start.