Cloud computing security generally refers to a wide range of policies, technologies, and controls deployed to protect cloud data, applications, and infrastructure. Emails containing financial documents in cloud hosting are at the highest theft risk. Overall, businesses should always avoid sharing critical information over the Internet. Please keep reading to learn more about the significant security issues you must consider and ways to prevent them.
The security concerns associated with cloud computing are divided into two main categories:
Security issues faced by the cloud security providers.
Security issues faced by their customers using the cloud security software.
Securing the data is divided among providers and customers. The provider should always ensure the infrastructure is secure and their client’s data is protected. On the other hand, users should also keep a keen eye on their cloud security applications and inhibit safety protocols such as placing solid passwords and authentication methods so that only authorized personnel can access the data.
Whenever an organization decides to put its data online with a cloud security software or application, the physical accessibility is reduced. Therefore, keeping a watchful eye over the employees with access to that information is necessary, as insider attacks are a considerable threat to organizations and businesses. Data centers should also be under surveillance most of the time.
Cloud Security Controls
Cloud security architecture is effective only when you have a proper security and defense system. Without appropriate security measures and authentication procedures, online emails or any data exchanged between the customer, the client, the employee, and the employer are at an exceedingly high risk of being lost to foreign uninvited entities. Although there are many types of controls that management can implement and utilize to reduce the risk of data loss or online attacks, they can be found in one of the following categories:
Deterrent Controls
Deterrent controls make attackers aware that there will be adverse consequences if they proceed with stealing data or performing suspicious activities. They work more like a warning system.
Preventive Controls
Preventive controls play a vital role in strengthening the system. For example, strong authentication of cloud users enables only authorized personnel to access the data.
Detective Controls
Detective controls intend to detect and react appropriately to any incidents that may occur on the online platform where you have stored your data. In an attack, the detective controls trigger the security protocols and inform the attacker and the data owner that something is suspicious. Furthermore, detective controls include system and network security monitoring, intrusion detection systems, and prevention arrangements.
Corrective Controls
Corrective controls usually limit the damage of attacks by coming into effect during or after the incident. An example is when the system backs up in case of an attack.
Now that you know how to protect your online data, let’s examine the security and privacy methods you can adopt to reduce theft.
Security and Privacy
Identity management
Almost every industry has a verification system that allows only authorized people into the business vicinity. Cloud providers primarily integrate the customer’s identity management system into their system or use a biometric verification system. Overall, no matter what procedure you use, ensure you know the people leaving and entering and the people accessing the online date.
Physical security
Cloud service providers ensure the security of a workplace against unauthorized access and theft. They also ensure that essential supplies, such as electricity, are provided to minimize the damage caused by theft or loss of critical financial documents.
Privacy
Providers ensure that critical data is masked and encrypted and that only authorized users can access the necessary information.
Several security threats are strongly associated with cloud data services. Therefore, whatever purpose you have for cloud data services, always ensure that you have suitable security protocols, especially when you share financial emails or any data that may be at risk.
Data security can be highly beneficial and accessible, but it is also necessary to protect it from risks. Overall, ensure that accuracy is maintained, data is kept confidential, and you can access the controls of your online services and cloud data usage.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Overcapitalization is a term that might seem complex at first glance, but it’s an essential concept in the financial world, especially for businesses striving for longevity and success. Understanding overcapitalization, its implications, and how to manage it is crucial for any business owner or financial manager. This article will explore the essence of overcapitalization, strategies to minimize it, and why managing it effectively is vital for the health and success of your business. We’ll sprinkle in some related business statistics and facts along the way to paint a clearer picture.
What is Overcapitalization?
Overcapitalization occurs when a company has more capital than it can profitably invest or deploy. In simpler terms, it means the company has too much debt or equity funding, leading to a situation where the cost of capital (interests on loans or dividends on shares) exceeds the income generated from these investments. This imbalance can significantly affect a company’s profitability and, in the long run, its viability.
For instance, a study by the Small Business Administration (SBA) suggested that improper capital structure is one of the leading causes of business failure among small businesses. This highlights the thin line between having sufficient capital to grow and having so much that it becomes a liability.
The Implications of Overcapitalization
Reduced earnings per share (EPS)
With more shares in circulation than necessary, earnings are spread too thinly, reducing the EPS.
Decreased market value
Companies suffering from overcapitalization often see a decline in their stock prices as investors lose confidence.
Increased vulnerability
Excessive debt can lead to higher interest payments, squeezing cash flow and making the business more vulnerable to economic downturns.
How to Minimize Overcapitalization
Prudent financial planning
Businesses must carefully plan their capital needs and avoid raising more funds than necessary. This includes thorough market research and realistic revenue projections.
Debt management
Regularly reviewing and optimizing the debt structure can prevent over-leveraging. This might involve refinancing high-interest debt or paying off loans early when possible.
Equity financing
While issuing new shares can dilute ownership, it’s sometimes a preferable alternative to debt financing. However, it’s crucial to assess the market conditions and investor appetite to avoid overissuing shares.
Investment in profitable ventures
Ensuring that every dollar invested brings a return higher than the cost of capital can prevent funds from being tied up in unprofitable ventures.
The Importance of Managing Overcapitalization
The management of overcapitalization is not just about preventing financial inefficiency; it’s about securing the future of your business. A study by Deloitte highlighted that companies with optimized capital structures are 15% more likely to outperform their peers in terms of revenue growth and profitability. This is a testament to balancing capital’s importance in fostering sustainable growth.
Furthermore, managing overcapitalization enhances a company’s agility. In an economic landscape that is constantly changing, having a lean financial structure allows businesses to adapt more quickly to market changes, seize new opportunities, and mitigate risks effectively.
Case Study: XYZ Corp
Consider the case of XYZ Corp (a fictional company), which experienced rapid growth in its early years. Eager to capitalize on this growth, XYZ Corp aggressively pursued debt financing to fund expansion projects. However, as market conditions shifted, the revenue from these investments failed to cover the interest expenses, leading to financial distress.
By restructuring its debt and focusing on high-return investments, XYZ Corp managed to navigate its way out of overcapitalization. This turnaround not only stabilized the company’s finances but also restored investor confidence, leading to a gradual increase in its market value.
Conclusion
Overcapitalization is a complex challenge that can have far-reaching consequences for a business. However, it’s a challenge that can be overcome with careful planning, prudent financial management, and strategic investment. The key is to strike the right balance between having enough capital to pursue growth opportunities and not so much that it becomes a burden. Remember, in the world of business, more is not always better, and efficiency is the name of the game. By managing overcapitalization effectively, businesses can ensure their success and longevity in the competitive market landscape.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
The accounting needs of today’s small business industry can be described in the words of John F. Kennedy.
“History … has no present, only the past rushing into the future. To try to hold fast is to be swept aside.”
Not much has changed in a long time when we talk about the system of using double-entry as a way of bookkeeping to track a company’s possessions. It is the equation that revolutionized the bookkeeping method in all types of businesses, big or small.
Bookkeeping is a standard and precise process in business and accounting that helps business owners ensure their accounts are accurate and timely. It helps them gather all the necessary and relevant information to formulate their accounts.
The alteration in bookkeeping for small businesses today is due to the development and advancement of technology, which has made it much easier for accounting experts to perform their work. Advanced accounting platforms have improved performance, streamlined analysis and entries, and decreased errors, tampering, and omissions with interest charges, penalties, and dishonesty.
With the introduction of various cloud accounting programs, it has become a trend for small businesses to manage their accounting books with automatedsystems. However, many small business owners are anxious about making the switch. They must realize that they must adapt to automated bookkeeping, or they may be left behind.
Shift to the Cloud
Small business owners already have many time-consuming tasks that they must manage. Automated bookkeeping should not be one of them. Cloud accounting programs can save so much time and effort.
Experts have said that today’s business owners must streamline the cloud into their accounting processes. The process needs to be cloud-based, from ERP to managing expense and travel reports. This program allows small business owners to focus more on other parts of their business. With cloud-based accounting software, they will spend fewer resources and time on administrative activities.
Automate Your Accounting and Bookkeeping Software
If a small business owner is using accounting software, they should be aware of all the automation options offered by the software. Do not let it go to waste.
Automate your bookkeeping to track all of your business expenses and earnings. Use the app that connects to your bank account. This way, you will automatically save receipts and pull transactions. Delegating such an arduous task will save you time and allow you to be able to spend your valuable time focusing on growing your company.
Separate Personal Expenses from Business Expenses
Most small business accounting software allows owners to separate their personal and business expenses.
Experts say that small business owners should create separate checking, credit card, and savings accounts for their businesses. This allows you to accurately track business spending without mixing personal spending accounts. By doing this, you will discover that it makes it much easier to determine your deductions and filings on your tax return.
Conclusion
In the fast-paced world of small business, embracing change is essential for survival. As technology advances, so does the landscape of accounting. From traditional double-entry methods to modern automated systems, the evolution of bookkeeping has revolutionized how businesses track their finances. Today, cloud-based accounting programs offer efficiency and accuracy, allowing business owners to focus on growth rather than administrative tasks.
By embracing automation and leveraging accounting software’s capabilities, small business owners can streamline their operations and gain valuable insights into their financial health. Separating personal and business expenses is crucial for maintaining financial clarity and maximizing tax deductions.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Are you embarking on a business venture? Have you considered how much profit you aim to make? This is a crucial aspect to ponder. It’s essential to grasp the concept of net profit margin, a key element in bookkeeping that can significantly empower your financial management to do so effectively.
Net Profit Margin
The net profit margin of a product is the difference between the sale price to the final consumer (without value-added tax) and the costs of production or purchase of the said product. According to this, the formula to calculate the net profit margin is:
Net profit margin = (Retail price without value added tax) – (Production or purchase costs)
Let’s delve deeper into the concept. The net profit margin is different from the ‘percentage of profit.’ It’s a term used to divide the net profit of a sale by the cost of goods, providing a clearer picture of a company’s profit on the sale of goods, not the overall profit. To illustrate, consider Firm A. In one year, it generated a revenue of $2 million with expenses of $ 650,000, resulting in a net profit margin of 67.5%. However, the following year, despite an increase in revenue to $2.25 million, the net profit margin dropped to 11.11% due to a significant expense increase. This real-life example demonstrates how changes in revenue and expenses can impact the net profit margin.
Likewise, increasing or decreasing a company’s spending does not indicate improving or worsening its net profit margin. Assume that Firm B has revenue and expense of $2 million and $1.5 million, respectively, in one year, with a net profit margin of 25%. However, the following year, the firm restructured by lowering its total revenue and expenditure by lifting a product line. If the second-year income and expenses of Firm B are $1.5 million and $1.2 million, respectively, the net profit margin is now 20%. Thus, Firm B has significantly lowered its costs, but its net profit margin has fallen because revenue falls faster than spending.
Net Profit Margin Limitations
While the net profit margin is a useful and popular metric for assessing a company’s profitability, it has limitations. For instance, it’s most effective when comparing companies within the same industry with similar business models. However, companies in the same sector can have vastly different business models and sources of income, making such comparisons less meaningful.
Consider a company that sells luxury products with high-profit margins but low sales volume compared to a company that sells staplers with lower profit margins but higher sales volume. These differences in business models can significantly impact the net profit margin, highlighting its limitations in specific contexts.
Net Profit Margin Variations
Analysts and investors utilize several changes in the net profit margin to determine certain aspects of a firm’s profitability. Such a variation is the net profit margin that is acquired by dividing the net profit by the earned income. This change has some limitations, as management often has too much control over material costs. In such a scenario, the net profit margin is less effective in defining the overall quality of management. Additionally, industries that do not have a manufacturing process have no or low sales costs.
The net profit margin is effective when it comes to companies that are involved in producing certain goods. A specific variation of the net profit margin is the operating profit margin that divides the operating profit into income distributions. Traders and analysts can often use pre-tax profit margins by dividing their pre-tax earnings (revenue without deduction of tax costs) on a revenue basis.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Most motivated professionals and expert entrepreneurs know the importance and advantages of investing in themselves—developing and sharpening valuable skills that boost their strengths over time. While you certainly require guts and patience to initiate and run a new venture, you must also concentrate on nurturing these six essential business skills vital to succeeding as an entrepreneur in critical situations.
Communication
Your company can instantaneously turn from a good to a bad situation when your communication lacks clarity, purpose, and impact. On the contrary, effective communication has enough potential to revolutionize an idea, thus breathing new life into your product or brand. Besides being a creative and design genius, Steve Jobs, the founder of Apple, was also an influential communicator. If you revisit his marketing taglines and keynote speeches, you will immediately realize how communication played a crucial role in building one of the most valuable companies in the world. Many psychologists and business experts also believe that effective communication is one of the most essential skills for becoming a successful entrepreneur.
Branding (Personal as well as Business)
In today’s digitally evolved corporate environment, knowing how to establish yourself as an expert professional in your industry is critical to your entrepreneurial success. Branding now includes being active on social media platforms like Facebook, YouTube, Instagram, and Snapchat. It is shaped by content marketing both on and off your business website. However, poor content can result in negative branding. Consequently, it is necessary to determine how to share your content and marketing resources so that your target audience not only wants what you have to offer but also finds it valuable.
Critical Thinking
Critical thinking is the objective analysis and assessment of a matter to form a logical judgment. It typically begins with questioning assumptions, hypotheses, opinions, and claims rather than simply accepting them as gospel. Just like bookkeeping is fundamental to creating business accounts, critical thinking is essential to smart entrepreneurial decisions, making it, in turn, a key to becoming a successful businessperson.
Today, we are continuously bombarded with tactful content and sound bites. That is why our ability to question to determine what is real and what is not, to understand casual relationships, and to reason logically instead of generalizing from a given data point has become more critical than ever before.
Consequently, question everything, especially superstitions, and common doctrines. Also, listen to people who challenge your popularly held beliefs. Here, you must resist habitual pressure to look at matters in “us vs. them” or black-and-white terms. In addition, you should learn to view the world from different viewpoints, perspectives, and angles.
Sales
Although you may not identify as a salesperson, you are involved in sales to a great extent when running a business. You might have a great sales team handling all of your corporate sales. However, you typically tap into your sales skills when you give a presentation about your business products, negotiate with a vendor, or simply convince anyone of anything.
There are numerous strategies for selling, even without selling. Take a moment to think about corporate conversations you have with your potential clients. Those that make a sale are probably not hard pitches to get your potential customers to purchase from you. They primarily focus on helping them find a solution to their problem. Thus, it would help if you also concentrated on helping them instead of selling. This way, you will have more confidence in the sales process, which will also bring in more sales.
Confidence and Assertiveness
While listening is necessary for effective business communication, you must also determine when to take control of a conversation and assert your viewpoints, opinions, and beliefs. Although you must be attentive to other people’s requests and claims, you must also understand when to say no. You must learn to be consistent and open-minded to earn the trust and respect of those around you.
Perseverance
Most successful entrepreneurs have faced devastating failures and defeats in their lives. Instead of looking at such situations as a demotivating factor, they view them as stepping stones towards their business success. Besides maintaining their perseverance and optimism, they also make smartly calculated changes to their future efforts. Always remember that you fail when you do not try, as persistence is the key to success in just about any aspect of a business.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Doing business in other states is known as a foreign qualification. Please don’t get confused by the wording; it can be misleading. You may think it sounds like an international idea but it’s not. In this case, the phrase“foreign” doesn’t mean outside the United States. It’s simply about operating in the U.S. but outside the state where you incorporated your business.
What is a Foreign Qualification?
Foreign qualifying is simply registering a business in a state other than the one you incorporated. Companies and LLCs are considered domestic only in their state of incorporation.
Foreign Qualification Process and Requirements
When you foreign qualify your company, you are essentially registering for a Certificate of Authority in the state(s) where your company will be conducting business and also paying the required state fees. This informs the state that your company is conducting business within its limitations. If your business expands into new states and requires foreign qualification, you should consider these initial and ongoing fees as a necessary part of doing business.
Do you Need to Foreign Qualify?
If you are currently considering incorporating in a state other than your home state, you should consider whether you need to foreign qualify in your home state. There are many factors to consider when determining the need for foreign qualifications. While different states have different criteria for conducting business, consider the following:
Does your company have a physical presence in the state?
Do you have workers in the state?
How does your company receive orders within the state?
Do you have a company bank account in the state?
If you answered yes to these statements, you will likely need to foreign-qualify your business in the state. If you’re still unsure if you need to get foreign qualifications, you may want to seek the advice of a lawyer.
Consequences of Not Foreign Qualifying
State laws mandate that foreign corporations and LLCs conducting business within their borders must obtain qualification, and the penalties for failing to do so far exceed the associated costs:
You may lose access to the court system in that state
May face fines, penalties, and back taxes
Foreign Qualified or Incorporated in Each State?
A practical alternative to foreign qualification is to incorporate your business or form your LLC in the other state(s) where you plan to do business. By incorporating or forming your LLC in multiple states, your company gains a crucial advantage. It becomes domestic in each state, establishing distinct entities and expanding its reach. Consider the following in making your decision:
Increased corporate formalities: The increase in corporate formalities significantly hinders corporations. Corporate procedures include drafting and maintaining regulations, issuing stock, and recording all stock transfers. In addition, they hold initial and annual meetings for directors and shareholders, carefully documenting minutes for all meetings in the corporate records. Unlike corporations, LLCs are not subject to as many regulatory requirements.
Separate owners and management: Establishing a separate corporation in each state means each will have its own stock, shareholders, directors, and officers. Even if the same individuals are involved in each corporation, it’s vital to adhere to the formalities for each domestic corporation, which significantly increases the annual record-keeping requirements.
One company versus separate companies: When you foreign qualify, only one corporation or LLC exists. Corporations, irrespective of the number of states in which they foreign qualify, need only one set of statutes: stock, shareholders, directors, and officers. The bookkeeping for initial and annual meetings of directors and shareholders only occurs once.
Separation of liability between businesses. Creating a new corporation or LLC in each state allows for liability separation. However, if you are foreign qualified in each state, only one corporation or LLC exists, meaning there is no separation of liabilities.
Conclusion
Foreign qualification is the important process of officially registering a business to operate in a state other than its original state of formation. This typically involves completing and submitting an application along with paying a fee to the Secretary of State or a similar governing body in the new state. Additionally, once a business is foreign qualified, it must comply with the ongoing requirements of that state, such as annual report filings, additional tax obligations, and other regulatory requirements. While this can involve additional paperwork and fees, it is essential for businesses to prioritize foreign qualificationsin order to ensure compliance with the legal obligations of conducting business in multiple states.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
No person or organization is safe from cyber security risks. It is nearly impossible to escape it in today’s world. Therefore, every individual and business owner should proactively build a safe and secure environment for their employees, associates, customers, and other users. A safe corporate environment reduces cyber criminals’ risks to a business. Below are a few innovative ways to minimize information and data security risks to your computer systems.
Train Your Employees In Cyber Security
As bookkeeping is essential for financial recording, it is vital to set some time aside to educate your employees about cyber security, how to be smart online, and how to identify scams such as suspicious emails and websites.
Take Advantage Of Antivirus And Anti Spyware Software For Each Computer
Ensure you always have an updated version of powerful antivirus software on all your computers and devices so that no device is infected with new viruses.
Avoid Skipping The Firewall
Firewalls are critical to keeping cyber criminals out of your devices. If you have over five computers, a network firewall is a good idea to protect your network.
Obtain Necessary Backup Copies Of Vital Data
Without necessary data backups, you will be in a significant bind if you lose your organization’s valuable data and records because of a cyber breach. Aat least one of your data backup sets must be kept off-site in a secure place so that only a few reliable and trusted individuals can access it. Experts suggest locking up your critical business backup data.
Secure Your Wi-Fi Connections
Usually, Wi-Fi networks are easy ways for cybercriminals to obtain easy access to confidential content. Thus, your Wi-Fi networks must be robust and complex enough to reduce your risk of this happening. Consequently, using special and numerical characters cannot harm, either.
Ensure Robust Control Over Access To Your Business Computers, Networks, And Other Devices
You’re bound to have seen the thriller movies where a cyber criminal fakes their identity and then attacks a server, stealing sensitive data by copying it onto a USB in minutes. Sure, that’s Hollywood for you. However, it happens in real life more than we’d like to admit. Thus, always ensure you know who is coming in and out of your company premises. In addition, do not permit individuals to play with your systems containing essential data files.
Create An Individual User Account For Each Employee
Having employees use their official accounts to perform their jobs on your business computers makes sense. It ensures easier tracking of who is performing what activity online and is a security measure that will be beneficial in many ways.
Keep A Password Policy In Your Organization
An easy tactic to safeguard your devices is to secure them with good passwords. A password policy will encourage all employees to change their account passwords quarterly and create them so they are difficult to guess. As mentioned earlier, it is imperative to build passwords using letters, numbers, and special characters simultaneously, making it harder to crack the code. Consequently, passwords have to be easy to remember but hard to guess.
Limit Authority To Install Or Uninstall Software
Even if one of your employee’s user devices is compromised, a hacker will fail to download or deletesoftware if you have limited authority. Only authorized staff members must be able to install software applications on your company’s devices to ensure a safe and secure environment.
Leverage Cyber Liability Insurance
In case of a cyber breach or data hack on your business computers, cyber insurance will protect you from system failures, cyber extortion, and breaches. Suppose your company heavily depends on its business computers, servers, and devices or stores personal clientinformation. In that case, adding a cyber policy to your company insurance plan is a good idea.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Inventory shrinkage occurs in retail stores and businesses when the physical tally of the stock or merchandise contrasts with the tally that records specify should be there. Shrinkage can be due to various factors occurring in combination or singly. These include theft, inefficient record keeping, misplaced stock, order fill, or shipping errors. Even though paper errors indicate a trace of inaccurate loss, robbery can be an actual inventory loss.
Inventory shrinkage refers to a loss of merchandise due to damage and spoilage, theft, administrative mistakes, and faults in articles taken from the industrial site to the end consumer. It is often referred to as a strike to the loss or margin of profit.
Where do you get the information to monitor inventory shrinkage? Bookkeeping provides all of the necessary and relevant information from which all of your accounts are formulated. Bookkeeping is a recognized and well-defined process in business and accounting.
Causes of Inventory Shrinkage
Inventory shrinkage is unavoidable. On the other hand, the pace can be measured through appropriate inventory management practices. Shrinkage can happen due to deceitful behaviors such as:
Nevertheless, inventory shrinkage isn’t continually accredited to a hurtful swindle. It could also be that there are below-par defined operational standards and procedures, leading to complex administrative errors. A trickle-down effect occurs in the entire business, including financial and warehouse operations.
How to Avoid Inventory Shrinkage
To decrease inventory shrinkage in your business, you will have to increase your control and security in each sector involving merchandise.
Constrict security by putting up cameras in the customer and employee areas, including break and stock rooms. If need be, change the locks in the stockroom areas. Allow only the higher-level employees to access the excess stock.
Bolt the back doors. If theft in the area is high, hire a security provider to watch your store. Ensure that at least one of your employees is always present on the sales floor. For retail stores, train employees to greet customers verbally so that any prospective shoplifter knows they’ve been recognized and seen in the store.
Elect certain specific employees to accept, open, and distribute new shipments. The items inside the shipment should be matched according to the order sheet instead of the transporter’s packing list. The merchandise should be immediately registered into the store’s inventory system and booked as received right before it is placed away. Ensure that the associates sign off on the packing list once all of the items have been verified to be correct.
Verify that packing lists, purchase orders, shipping receipts, and invoices are accurate before filing. Organize the paperwork in a file cabinet, scan copies, and duplicate the forms on a computer. Make sure that you have a backup copy.
Review each day’s transactions in the presence of your associates for accuracy. Check for repetitive and suspicious transactions. Instances can happen when an employee regularly cancels cash transactions. Provide employees with their password so they can use the cash register. In case of theft, you will know which employee committed the crime.
Calculate the physical inventory you need in your business. Make a habit of doing this at least every year to keep track of the actual numbers you should have in your possession.
Conclusion
Businesses must implement rigorous control measures and security protocols to combat inventory shrinkage. By enhancing surveillance, enforcing strict inventory procedures, and fostering a culture of accountability among employees, businesses can mitigate the risk of losses due to theft and administrative errors. Regular audits and diligent monitoring of inventory transactions are essential for maintaining accurate records and identifying potential discrepancies promptly. Through proactive measures and vigilant oversight, businesses can minimize inventory shrinkage and safeguard profitability.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
In an audit-ready business, accounting information and bookkeeping are up-to-date and transparent. Such a business is ready for an audit at all times. Investors have trust and confidence in an audit-ready company and business.
An audit is an investigation and analysis of bookkeeping and accounts by an auditor compared with the physical verification of the stock/inventory. An audit can be done internally or by external auditors to check a company’s accounting information and bookkeeping.
Internal audits are conducted by a company’s employees or by the head of a particular department.
An external audit is done by an external auditing company or by a team of external auditors. All government and private registered firms are bound to have an external audit done annually. An independent company does an external audit. After the completion of the auditing process, the external auditor prepares an audit report. Investors, government agencies, and the public can use the information in the audit report.
Accounting software helps small—and medium-sized businesses stay audit-ready and keep their bookkeeping and accounting work up to date.
Perks Of Audit Ready Business: Winning Investor Confidence
An audit-ready business has many perks, one of which is building investor confidence in the business.
An audit-ready business means it has up-to-date accounting and bookkeeping information, paving the way for increasing investor confidence and trust.
An audit-ready business means its accounting statements match and its accounting and bookkeeping information is transparent. This increases the business’s credibility, and investors can invest capital safely.
Investors can easily interpret the business’s accounting information if the bookkeeping and accounting data are up-to-date and clear.
Investor confidence increases when they receive regular audit reports.
In dire need of foreign investment, an audit-ready business always attracts more investors and customers.
All businesses that get regular audits done, both internal and external, have an increased business rating. Potential investors will more likely go for a business with a good rating.
Not only investors but banks and other lenders have more confidence in an audit-ready business.
Investor confidence is increased in audit-ready businesses because the risk of fraud and embezzlement is minimized. Small and medium-sized businesses are more prone to fraud. Regular audits minimize fraud as maintaining an audit-ready business minimizes fraud.
Investors want to obtain the true financial picture of an audit-ready business. They can invest their money mindlessly in any business. A true financial picture can only be obtained if the accounting and bookkeeping are current and the balance sheet, financial statements, and cash flow match. The audit-ready business builds investor confidence by clearly depicting the financial picture. The investor will be ready to invest money whenever needed in the business.
Regular audits keep the business audit-ready at any given time. The investors do not have to check daily bookkeeping. A check and balance can be maintained through audits. Investors are getting the audit reports and indirectly have control over the business’s day-to-day bookkeeping and accounting functions.
Conclusion
Investors have more trust in audit-ready businesses. Audit-ready companies always have up-to-date accounting information, and their accounting statements match their daily bookkeeping functions. Investors can make wise, timely, and future decisions about the business with regular audits, as the audit-ready business depicts its true financial status. Investor trust and confidence are built in an audit-ready business. Potential investors are also more attracted to audit-ready businesses.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Maximize Your Self Storage Gross Potential with Smart Calculations
Self-storage gross potential represents the maximum monthly or annual revenue your facility can generate at 100% occupancy using market rental rates across all unit types. This fundamental metric serves as the foundation for investment decisions, pricing strategies, and performance benchmarking in the $448 billion U.S. self-storage market, which generates approximately $37.9 billion in effective gross income annually.
Over my 20 years as CEO of Complete Controller, I’ve worked with hundreds of self-storage operators who transformed their facilities from underperformers to profit powerhouses by mastering gross potential calculations and revenue optimization. The secret lies in understanding that facilities achieving 30-40% profit margins (with some exceeding 50%) don’t just calculate their gross potential—they systematically optimize every revenue stream while maintaining 85-95% occupancy rates. This guide reveals the exact strategies that helped one California facility increase revenue per square foot by 32% in just 18 months.
What is aelf atorage gross potential and how do you calculate it?
• Self storage gross potential (GPR) equals total revenue at 100% occupancy using current market rates for each unit type
• Basic calculation multiplies each unit’s market rent by the number of units, then sums across all types
• Advanced calculations factor in unit locations, amenities, and climate control premiums
• Industry best practice targets 85-95% GPR achievement for optimal profitability
• Smart operators leverage GPR data to optimize pricing, unit mix, and identify growth opportunities
Understanding the Foundation of Gross Potential Revenue
Gross Potential Revenue forms the cornerstone of self-storage financial analysis, representing the theoretical maximum income under ideal conditions. The self-storage industry’s remarkable 92% business success rate stems partly from operators who master GPR calculations and use them as strategic planning tools rather than simple mathematical exercises.
The basic GPR formula multiplies market rent by total units, but sophisticated operators recognize multiple layers of complexity. Ground-floor units typically command 10-15% premiums over upper floors, while climate-controlled spaces generate 25-50% higher rates than standard units. These micro-location factors significantly impact overall gross potential calculations and subsequent revenue optimization strategies.
Revenue optimization through strategic analysis
Modern revenue optimization incorporates demand forecasting techniques that predict occupancy trends based on historical data and market conditions. Facilities implementing dynamic pricing systems automatically adjust rates when occupancy exceeds 85% or falls below 70%, maintaining the delicate balance between maximum revenue capture and customer retention.
During the 2008 financial crisis, national occupancy rates hit 82.8% in Q1 2009, yet the industry rebounded strongly, demonstrating remarkable resilience. This historical perspective proves that understanding and optimizing gross potential provides stability even during economic downturns.
Valuation impact of accurate GPR calculations
Professional valuers examine facilities’ historical achievement rates against gross potential as key operational efficiency indicators. Properties consistently achieving 90%+ of GPR while maintaining healthy margins command premium valuations, while those struggling below 80% signal pricing or operational challenges requiring immediate attention.
Calculating Your Facility’s True Revenue Potential
Accurate gross potential calculations demand systematic approaches accounting for every revenue-generating component. Start by conducting thorough market research, establishing appropriate rental rates for each unit type and size category through competitor analysis and local demand assessment.
Create detailed unit-by-unit calculations considering square footage, facility location, accessibility features, and climate control options. Units near elevators justify 5-10% premiums, while end units with easier access often support higher rates than interior locations.
Market analysis integration strategies
Comprehensive market analysis ensures rental rates reflect current conditions rather than historical pricing. Examine competitor occupancy rates, pricing strategies, and concession offerings to identify premium positioning opportunities. Areas with high concentrations of renters, students, or military personnel support different unit mix strategies compared to suburban family markets.
The most successful facilities develop multiple scenario models accounting for best-case, worst-case, and most-likely performance outcomes. These projections factor in existing customer rate increases (ECRIs), enabling higher gross potential achievement even when initial rates include promotional discounts.
Technology-driven income projections
Advanced facilities leverage automated revenue management systems processing market data and occupancy patterns far more efficiently than manual approaches. These systems enable real-time optimization decisions, maximizing revenue capture while maintaining operational efficiency.
Customer relationship management systems track tenant behavior patterns, enabling targeted marketing campaigns and retention strategies. These tools identify upselling opportunities, extend rental periods, and promote additional services, increasing revenue per tenant substantially.
Advanced Strategies for Revenue Maximization
Successful revenue management extends beyond basic calculations to encompass sophisticated pricing optimization and inventory management. Facilities achieving the highest gross potential realization rates implement rule-based pricing adjustments responding to occupancy levels and demand patterns.
Financial performance optimization requires integrating revenue management with operational efficiency improvements. The most profitable facilities achieve high GPR realization while maintaining operating expense ratios below 35% of gross revenue, enabling profit margins exceeding 50% in well-managed properties.
Unit mix optimization for maximum returns
Strategic unit mix optimization significantly impacts gross potential revenue. Research indicates facilities averaging 120 square feet per unit operate more efficiently than those averaging 90 square feet, due to corridor-to-unit depth ratios and operational considerations.
Smaller units typically generate higher revenue per square foot than larger units, but larger units often have higher profit margins due to reduced management complexity. Climate-controlled units command substantial premiums but require higher construction and operational costs affecting overall profitability calculations.
Performance metrics that drive success
Revenue per available square foot (RevPAM), customer acquisition costs, and lifetime value metrics provide deeper insights than basic occupancy rates. Implement dashboard systems providing real-time visibility into these metrics across different unit types and customer segments.
One management transition case study demonstrated an 89% rise in net operating income and a 35% revenue boost within four months through strategic rate increases and operational improvements. Monthly revenue grew from $30,189 to $43,885 while occupancy increased from 80% to 89%.
Market-Driven Pricing Implementation
Dynamic pricing strategies balance competitive positioning with profit maximization, using gross potential calculations as flexible guideposts. Understanding demand elasticity within specific markets enables targeted pricing to maximize revenue across different customer segments.
Rental rate optimization involves continuous monitoring and monthly adjustments based on occupancy trends and seasonal patterns. Offering competitive move-in rates with structured increases often generates higher total revenue than maintaining consistently high rates, causing excessive turnover.
Ancillary revenue stream development
Profit margin enhancement extends beyond storage rates to ancillary revenue stream,s including moving supplies, insurance products, and packing services. These offerings typically carry higher margins than storage rentals while strengthening customer relationships and reducing price sensitivity.
Placerville Self Storage’s systematic revenue optimization program increased revenue per occupied square foot from $0.75 to $0.99 over 18 months—a 32% increase. The facility added $59,519 in annual revenue through tenant protection programs while improving occupancy from 84% to 93%.
Final Thoughts
Maximizing self-storage gross potential requires a comprehensive understanding of market dynamics, customer behavior, and strategic revenue management beyond basic calculations. Throughout my career helping storage operators optimize their financial performance, I’ve witnessed facilities transform from average performers to industry leaders by mastering these interconnected elements.
The key lies in viewing gross potential as a dynamic benchmark guiding continuous optimization rather than a fixed target. Implementing sophisticated pricing strategies, optimizing unit mix decisions, and leveraging technology positions operators for long-term success in our competitive market. Visit Complete Controller to discover how our specialized bookkeeping and financial analysis services can help transform your facility’s revenue performance.
Frequently Asked Questions About Self Storage Gross Potential
What percentage of gross potential should a well-managed self-storage facility achieve?
Industry best practices suggest targeting 85-95% of gross potential revenue, with rates above 95% potentially indicating underpricing and rates below 80% suggesting operational or pricing challenges requiring immediate attention.
How do seasonal fluctuations affect gross potential calculations for self-storage facilities?
Seasonal variations should be incorporated into annual projections, with many facilities experiencing 10-20% demand fluctuations between peak summer moving seasons and slower winter months affecting both occupancy and achievable rental rates.
What’s the difference between gross potential revenue and net operating income?
Gross potential revenue represents maximum theoretical income at 100% occupancy and market rates, while net operating income subtracts vacancy losses, concessions, and all operating expenses from actual collected revenue.
How often should self-storage operators recalculate their gross potential revenue?
Most successful operators recalculate gross potential quarterly or whenever significant market changes occur, such as new competitor openings, major economic shifts, or substantial changes in local demand patterns.
Can technology significantly improve gross potential achievement for smaller facilities?
Yes, automated revenue management systems help facilities of all sizes implement dynamic pricing, demand forecasting, and real-time market analysis that manual processes cannot match, often improving GPR achievement by 10-15%.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Jennifer BrazerFounder/CEO
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
