10 steps to learn Financial Accounting

We will have a series of blogs to understand the Financial Accounting process followed mostly in small / medium scale manufacturing Private Limited Companies. This will be of help students or anybody who wants to learn accounting and have something to refer back in future. You can refer the video given here to understand why is it important to learn Practical Accounting.

Accounting is a vast subject and can not be learnt in 15 – 20 hours. We will follow a step by step approach. This will help to understand the concepts and logic. After learning theory we will apply it. So the topics covered will be as below –

Step 1 – Understand the types of Companies in India with reference to Company’s Act 2013.

Step 2- Introduction to Tax structure in India.

Step 3 – Introduction to Accounting system, Concepts and Principles.

Step 4- Understand the End to end process of recording the business transactions.

Step 5- Get the knowledge of various types of entries.

Step 6- Do Journal entries and ledger posting for various transactions.

Step 7 – Post the  Adjusting entries.

Step 8- Take the steps in finalization and closing the books of accounts .

Step 9- Prepare the Financial Statements

Step 10- Analyze the  financial statements for control purpose.

The above will help to understand the accounting system. As we know , the Accountant has to follow the Generally Accepted Policies & Procedures for recording the monetary business transactions. The Company accounts are governed by the Company’s Act 2013. The Act lays down the Schedules to prepare financial statements.

This series of blog will help beginners as well as experienced accounts professionals to understand the end to end accounting process. The Double Entry Accounting Rules are uniform across the world.

Before we start to learn accounting process it is important to get familiar with Company’s Act 2013 because it is necessary to understand the meaning of company, types of companies, the ownership of capital, various terms forming part of share capital, Reserves & Surplus, the format of financial statements, depreciation schedule etc.

Similarly almost all the business transactions come within the purview of Direct or Indirect Tax, it becomes necessary to have the knowledge of Taxation also. All this has a direct impact on the accounting entries which the Accountant has to record. If you are just graduated from your college then start learning MS-Office (ie Word , Excel, PowerPoint) and accounting package like Tally ERP-9. This will help you to get a job.

Step 1 : To begin with, let’s get some knowledge of Company’s Act 2013.

Company’s Act defines a “company” in section 2(20) as a company incorporated under this Act or under any previous company law. A company is “an artificial person, having a separate legal entity, with a perpetual succession, a common seal (if any), and a common capital compromised of transferable shares and limited liability.”

The Act lays down the following types of companies –

I) Companies on the basis of liability-

A) Unlimited Liability Company-

      • May or may not have share capital .
      • Liability of the members is unlimited proportionate to their interest.
      • Can be a public or private company.

B) Companies limited by guarantee :

      • Liability of the members in the event of winding up of the company , is limited to the amount undertaken by them .
      • Members are guarantors of company’s debt up to the agreed amount.
      • Clubs , trade associations , research organizations are examples of such companies.

C) Companies limited by shares-

      • Liability is limited to the extent of unpaid amount of the shares if any., held by the shareholders.
      • The unpaid liability can be asked during the continuation of the company or winding up of the company.
      • If the shares are fully paid, shareholders do not owe anything to the company.
      • These can be Public limited company like Reliance Industries, Mahindra & Mahindra.
      • or a Private Limited company.

II) Types of companies on the basis of Incorporation-

A) Statutory Companies-

      • With the intention to provide public services, these are formed by the special Act in Parliament or state laws.
      • National Highway Authority, Reserve Bank of India etc are examples of such companies.

B) Registered Companies-

      • These are companies Registered under the Company Act.
      • These companies come into existence when the company gets a certificate of incorporation

Apart from above main types, there are following types of companies –

a) Public Company- The shares & debentures of the public company are freely  transferable to general public and these are traded on a stock exchange and it is required by the Law to add the words “Limited” at the end of its name. If a private limited is a part of public company then it will also be known as public company.

b) Private Company– The minimum of two shareholders are required to form the company and the maximum number of shareholders is 200. The shares of this type of company have restricted right to transfer the shares.

c) One Person CompanyHere only one person is a member of the company & he can also be Director over there. There is only one shareholder and he has to mention a nominee at the time of registration of the company.

d) Domestic Company A company registered and formed in India is known as an Indian Company.

e) Foreign CompanySection 2(42) of the Company’s Act defines the “foreign company” as any company or body corporate incorporated outside India and which has a place of business in India whether by itself or through an agent, physically or through electronic mode; and conducts any business activity in India in any other manner.

f) Small Scale Company:  “small company” as defined by Section 2(85) of the Company’s Act is a company, other than a public company whose paid-up share capital does not exceed 50 lakh rupees or such higher amount as may be prescribed which shall not be more than 10 crore rupees; and the turnover of which as per profit and loss account for the immediately preceding financial year does not exceed 2 crore rupees or such higher amount as may be prescribed which shall not be more than 100 crore rupees.

There are several exemptions and privileges available to such companies. But the provisions of this section are not applicable to the companies registered under section 8, or a body corporate, company governed by Special Act or it is a holding or subsidiary company.

The Accounts & Finance professionals have to keep themselves aware about the regulatory, statutory reforms and also the social-economic situations, calamities etc because all such things hamper the functioning of business so the accounting entries will have to be done for recording losses, damages. One such example would be the present COVID-19 pandemic. The lockdown & sluggishness in business is huge but it is extraordinary loss for the business. The journal entries for such extraordinary losses need to passed in the books of account. Here is blogpost about the Packaging and printing inks – COVID Impact written by Ms. Preeti Agarwal. DO read this post and understand the situation from digital marketing point of view also.

In the next blog, we will take a look at Taxes. See you there, till then bye.

Jayashree

The Law of Marketing

7 Steps for successful product marketing

*** The blog is based on the sessions in Digital Marketing Internship program conducted by my Mentor – Digital Deepak. I am writing this blog with lot of gratefulness to Deepak Sir for imparting the precious knowledge, his honest and hard efforts, also to his team for coordinating this amazing internship program.

7 Steps To Success

Why nobody is buying my products? I have an excellent product; it is going to solve the customer’s problem but no sales? What is wrong with my product?

I have been spending so much on marketing and publicity but why I am not getting the results?

Why my product advertisements on TV are not generating any results for me? Am I marketing my product the right way?

If these are the questions popping in your mind all the time, then it’s high time to check your marketing strategy.

Let’s see what the problem is. You have already done some market research and come up with a very innovative product to solve people’s problem and therefore you have a perfect niche in place. Your product is of extremely good quality and price you are charging is worth it. You are carrying out some marketing activities also but your revenues are not going up. 

In this article I will share with you the 7 crucial steps to successful marketing:

  1. Power of Personal Branding.
  2. Need to understand the Law of Marketing.
  3. The reasons to learn and master marketing.
  4. Importance of communication skills in marketing.
  5. Traditional Marketing v/s Digital Marketing- problems & suggested way.
  6. The CATT marketing funnel.
  7. Importance of Integrated Marketing.

Let’s discuss the above steps one by one.    

PERSONAL BRANDING:
To become a market leader or for the success in business, you need to have a skill or learn new skill by understanding the concepts, remembering the facts and practicing the procedures.

Once you learn the skill and implement your learning in real world, you will get experience. Based on this you start your blog and let the market know about you and your products, earn the trust of people. This will help you to offer your consultancy services or become mentor to many people who want to become like you. This will give you enough confidence to start your start-up.

In this way the Personal Brand gets evolved. People like to hear from you about your product, your product or company logo is not going to talk to people. So Personal Branding is necessary to start your business. At this stage your Personal Brand is bigger than your company; it works as a brand ambassador for the company you are running, so use your influence to give rise to many brands. Over a period of time your Product Brand will outgrow your Personal Brand image.

The Personal Brand cannot be sold and investors will not be willing to invest in it so gradually when the company grows you need to rub off your Personal Brand and allow the company to grow on its own.

Building the trust about your product I the minds of the people is the crucial ingredient for success in marketing. This process of building the trust is called as Mass Trust.

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Mass Trust is a continuous process.

You need to learn a skill, work to implement it into reality, write about these learning & experiences on your blog to earn the trust of people, venture out to consult and mentor the people before you start-up your own company.

Depending on the ever-growing needs & perceptions of the consumers again learn the required new skill and repeat the same process as above. This is a never ending circle.

THE LAW OF MARKETING:

  • Marketing is all about sending the right message to the right person at the right time.

e.g.  During this Corona pandemic many companies providing chavyanprash , immunity boosters, hand wash, sanitizers, soaps etc. are doing rounds of TV advertisement stating the ability of the product to boost the immunity in order to protected oneself from corona spread  or their products have the ability to kill corona virus and bacteria .

Like “Veggie clean” getting positioned as a 100% organic vegetable cleanser to make the vegetables and fruit safe for consumption. Since the vegetables and fruits pass through many hands before they reach to end consumer and there is possibility that corona gets spread though hand touch in the process, the product is being marketed mentioning this fact.

Patanjali is marketing its immunity booster medicine through TV advertisement.

It is easy for these companies to reach to mass customers now because everyone wants to get protected from corona and so the companies are easily selling the products without many efforts to convince the consumers.

  • Remember marketing is science; it helps people to discover your product and build a good perception about your product. E.g. People take pride in using Apple devices and they are ready to be in waiting list for the new product launches by Apple.
  • Advertising is one of the components of marketing.  Advertising is not same as marketing.
  • Copywriting or content marketing is one of the components of marketing. Your advertisement should carry the best content communicating the uniqueness.
  • Sales are one of the components of marketing.
  • Marketing is something that encapsulates everything, you just have to learn marketing and master marketing then only everything will fall in place.
  • Try to spread word of mouth publicity because people trust other people’s recommendation more than marketing.

REASONS TO LEARN MARKETING:

  • To achieve success in business, one needs to invest time in learning marketing because it is rooted in human psychology and understanding the market therefore has a long shelf life.  Marketing has been in existence since the dawn of civilization and will be there as long as human life exists on earth.
  • Although investment in marketing is the last activity you do in an organization, it is the only investment that gives instant results and ROI. If you learn how to market and sell your product then only you survive in the market and have bright future.
  • The recession eliminates the competition and only one or two players manage to survive. Therefore it is very important to have right marketing strategy and strong fundamentals.
  • As an entrepreneur you should not outsource your marketing activity. Marketing starts with the conceptualisation of the product, marketing is required to make the sells transactions happen but marketing is going to be there even after selling the product, you need to seek the feedback from your product users so that you can keep on improving it. This is the only way to keep your product consumers happy & make them your loyal customers for the rest of life. Therefore it is not advisable to outsource the marketing function, the product owner or entrepreneur should decide the marketing strategy then he may outsource the people to carry out the job. This concept is known as Direct Response Marketing.

IMPORTANCE OF COMMUNICATION SKILL IN MARKETING:

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Communication Skills
  • Good marketing is all about good communication and it need not be in sophisticated English. As long as you are able to convey your message effectively, you need not be worried about language or grammar. In fact to be more effective, you may need to carry out marketing and advertisement campaign in vernacular language of the particular state or country.

TRADITIONAL MARKETING V/S DIGITAL MARKETING – SUGGESTED WAY:

  • Choosing the right marketing channel is of utmost importance for wide reach of market
  • Traditional Marketing :

If your product is of generic nature i.e. which can be used by mass people, by anybody irrespective of age, gender, income etc. then

  1. TV commercial is the best option because it has huge reach. India has TVs in 197 million homes; with an average of 4 to 5 members per household TV has a reach of 800 million to 1 billion people. (source – Wikipedia)
  2. For generic product, the next preferred choice is Radio. It has a reach of 65% Indian population  (source – Financial Express)
  3. Newspaper has a reach of 465 million people in India (Source : Business Standard)

But the problem with the traditional marketing is that you cannot come to know if your ad is working or not, just saying that there is increase in brand awareness in not specific and cannot be measured .

  • Digital Marketing:
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Methods of Online Marketing

Digital Marketing means marketing through digital media like SEO, facebook or google ads,youtube, linkedin or any other social media platform.  

Digital Marketing is the best medium to reach to the affluent English speaking population in India with spending power and there are 100 million such users in India.

Although digital marketing can be done and is being done in vernacular language, the market reach may become narrow.

So, the problem with Digital Marketing is that it doesn’t have a tremendous market reach like TV.

  • Suggested method:
Key to Success in Digital Marketing

To overcome the problems with Digital Marketing and Traditional Marketing, the suggested method is Direct Response Marketing.

  1. “Direct Response is a type of marketing designed to elicit an instant response by encouraging prospects to take a specific action”- – MarketingEvolution..com
  2. You can give an ad in the newspaper with your contact phone number to call.
  3. A late night TV infomercial with a phone number to call or place an order. E.g. naaptol commercials on TV.
  4. An ad leading to a landing page with a lead form.
  5. A sales page for a product can be designed to take it to a link to purchase that product. This is similar to the concept like Products displayed on Amazon.in or any other e-commerce websites.

CATT MARKETING FUNNEL

So far we have learnt about what is marketing & the need to learn it, the importance of communication skill, Direct Marketing v/s digital marketing and suggested method of Direct Response Marketing. Now the next step in marketing is to design Marketing Funnel. Marketing Funnel means the customers journey with your product from awareness to the point he buys your product.

It is said that your business success and wealth creation is a function of your niche & CATT marketing funnel.

(n) Niche – half of success is guaranteed when you select the correct niche.

(C) Content – create the attractive page content on your blog, posts, videos, lead magnets, live webinars etc.

(A) Attention – drive the attention to your content using SEO, paid ads on Social Media and Referral programs, the people will find your product and visit to your website.

(T) Trust – Build the trust with audience with small affordable things through tripwires, Marketing automation and sending personalized mails, you can even retarget the same consumer.

 (T) Transaction – when you follow all the steps the buyer will get interested in buying your product so sale will happen naturally you don’t need to push it but at the same time to convert these leads as your customers, you need sales call, sales webinar, sales page, video sales letter.

INTEGRATED DIGITAL MARKETING:

Once you decide your marketing funnel you need to implement it. This is called as Integrated Digital Marketing. There are various methods to do digital marketing like SEO, Social Media, paid advertising. If you adopt any one method in isolation of other methods, you will not get results.  You need to combine all the methods effectively for better results.

You can send your content to SEO and Social Media telling them about your product and then you can run paid advertising campaign for your content, this will give you email contact details and then you can send your contents to them to develop trust and to convert the leads into sales.  Similarly the paid ad will divert the results of SEO and Social Media back to your content and you can start communicating them and convert those leads into sales.

You can refer to the 15 best social media marketing strategies & tips given by Ms. Shreya. You will get a good information about how o use SEO for business purpose.

Paid ad acts as boost to entire momentum of Email Marketing, Content, SEO and Social Media, people start trusting you and this is when your CATT funnel gets completed successfully.

The CATT Marketing Funnel and Integrated Digital Marketing can be shown in  pictorial form as:

The nCATT Marketing Funnel :

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nCATT funnel of Digital Marketing

The Integrated Digital Marketing Chart :

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Integrated Digital Marketing

To summarize the entire topic we discussed till now, we can say that – No one can ignore the power of Personal Brand in marketing; just having a good product is not enough you need to let the market know it through effective communication in Traditional or Digital Marketing incorporating the Direct Response Marketing. To do the marketing on a digital platform you need to decide the CATT Marketing Funnel and execute it through Integrated Digital Marketing. If these steps are followed while carrying out the marketing campaigns, you will get success in marketing and create wealth for your company.

You can refer to following website & books for more insights on this topic.

a. Website : https://www.statista.com

b. Books :

c.  For guidance on E-mail marketing or to arrange webinars, you can refer the Marketing with Amit    – the website of Amit Chauhan . He has given detailed information about the subject.

Thanks,

Jayashree Surve