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Quantifying your success is a great way to see how your small business is doing in an objective fashion. Two metrics in particular are significant in determining if your company is operating efficiently enough to continue to grow and prosper.

Customer Retention Rate

The first is the customer retention rate, which refers to the number of repeat customers of the company as opposed to one time customers. One way to calculate this is using the following formula:

(Number of total customers – number of new customers)/(original number of customers)

The goal is to keep the retention rate as high as possible, which implies that your business is satisfactory and significant to your customers.

Customer Acquisition Rate

The next metric is the customer acquisition rate, which is how much money a business is spending to acquire new customers. To calculate this, you simply add up marketing and sales costs and divide this by the number of new customers.

It is important to keep your customer acquisition rate as low as possible in order to ensure that you are not losing too much money in order to gain a small number of customers.

Both the customer retention rate and the customer acquisition rate should be used as general benchmarks for your company to measure its efficiency. Different industries have different standards, and so it is important to research the values for typical firm in your industry. These metrics can be used to potentially apply for bank loans or can be shown to investors to advertise the success of your business.

Inflation is often considered a tax because of its detrimental effects on the purchasing power of currency. Small businesses find themselves unfairly targeted by changes in inflation because even small fluctuations can have a large impact on their daily operations.

Inflation Effects

Inflation affects businesses in several ways. First off, it increases the prices of raw materials and the price of labor. Additionally, it decreases demand of products because of increasing prices. Small businesses are particularly affected by a decrease in demand because they are generally price takers, and find it more difficult to push higher prices onto their customers. In some cases, they may even find themselves absorbing the extra costs themselves.

Inflation also plays a role in lending costs. Inflation actually helps those who have already taken out loans, as the worth of each pound that needs to be paid back has gone down. On the flip side, because interest rates will have risen, taking out a new loan will be more expensive.

How to Prepare

Inflation is unpredictable and is out of the control of the everyday business owner. Because of this, it is hard to be completely protected from its effects. Following the financial news and keeping updated on government policies are two ways to stay informed to help predict future inflation. Additionally, maintaining a flexible financial budget and leaving reserves will help to lessen the impact.

Inflation can have detrimental effects on small businesses because they are sensitive to volatility. The best you can do to is to keep up to date on the current state of the economy and remain adaptable in budgeting and planning.

For more tips and tricks on helping you grow your business, follow Budget Mastermind on LinkedIn or @budgetmastermnd on Twitter!

Budget Mastermind provides business finance solutions to help grow businesses. If interested in our services, visit our website at www.budgetmastermind.com.

Your credit score is an important way for lenders to easily judge your credibility as a borrower and plays a large role in their ultimate lending decision. The higher the credit score, the more likely you will be able to open a line of credit at the best rate possible. Here are some tips on managing your score to successfully grow your business:

#1 Be sure to pay all bills in a timely manner and stay within your limits. Although seemingly simple, it is easy to fall behind on payments or overborrow. It may seem beneficial at the moment however these decisions will have lasting effects on future borrowing opportunities.

#2 Keep updated on your credit report and ensure that all the information is correct. Even items such as address can potentially affect your score. It is important that any false statements be amended.

#3 Register to vote at the address listed on your credit report, as lenders use this information to confirm what has been listed. If the information does not match, your application could be determined unsuitable.

#4 Be purposeful in credit applications. Lenders have access to previous applications, and if they see several in a short period of time they will be suspicious or question your capability of receiving a loan.

It is important to remember that credit scores are ever changing and therefore can be potentially damaged or improved by every day decisions. By staying informed and being cognizant of factors that play a role in your score, you can ensure a better borrowing experience.

For more tips and tricks on helping you grow your business, follow Budget Mastermind on LinkedIn or @budgetmastermnd on Twitter!

Budget Mastermind provides business finance solutions to help grow businesses. If interested in our services, visit our website at www.budgetmastermind.com.

Christmas is nearly here and as it’s an expensive as well as a jolly time of year, we thought you’d appreciat a tax break with regard to your company Christmas party.

HMRC allows a tax exemption of £150 per employee for a Christmas party. As a gift from her majesty, an employer can spend up to £150 per employee tax free, which is separate from any additional deductions from corporation tax.

The tax exemption applies whether you are a multi-national or the only employee and even includes guests of the employees, tax and NI-free!

A Christmas party does not necessarily have to constitute a party; it could take the form of a meal or entertainment. Just make sure the total cost per head stays under the £150 per head. If the cost per head exceeds this exemption even by £1, then the full amount would become a benefit in kind for the employee and tax and NI would be charged.

The cost per head is calculated as:

• The party/function
• Transportation or accommodation included
• Divided by the number of people in attendance
• The restaurant or hotel should be booked in the company name and if the £150 limit is at risk of being exceeded, the director should be authorised to pay the bill personally and claim back only up to £150 per head from the company – supported by receipts.

If you have any questions about the above, why not get in touch to see how we can help you save this yuletide! A very merry Christmas to you all. Hope to see you in the new year!