Planning for a Fabulous 2015

December 24, 2014 · Posted in Business Development, Business Tips · Comments Off on Planning for a Fabulous 2015 

The holiday month of December brings celebration as well as reflection for all the events that occurred in 2014.  It also gives us great hope for a new fabulous start in 2015.  Here are three ideas to start 2015 with a bang.

  1. Find a focus for the year.

    Instead of getting into the rut of making and breaking resolutions, consider having a focus for the entire year.  Choose your focus from among things like:

    • Developing a department in your business, such as your sales, marketing, operations, HR, admin, or another.  The focus will be on building or expanding the department you’ve chosen to work on.
    • Changing your company culture to a trait or aspect you want to be known for.  Developing the trait will be your focus.
    • Building a relationship with an individual or a group of people related to your business.  The relationships are the focus.

  2. Live by a theme for 2015.

    Your theme could be an emotion or expression such as gratitude or compassion.  It could be a color – purple – just for fun.  You might adopt a favorite quote or religious verse or even song.  Your goal for the year will be to embody your theme and/or bring it into other’s lives as well.

  3. Do the one big thing.

    Are you holding back on a huge dream for yourself?  Then take steps in 2015 to move closer to it.  Make 2015 your year to do the one big thing that’s been weighing heavily on your mind.  Just think how you’d feel if you finally did it; your life would be forever altered.

Happy 2015Write your focus, your theme, or your one big thing on dozens of sticky notes, and plaster them everywhere.  Mark your calendar and to do list with reminders and milestone checks.  Make art out of your sticky notes, and post them on the refrigerator door and your office walls.  That way, the reminder will be physically with you all year.

We wish you a happy and healthy new year to you and yours.

What Is Real-Time Accounting (and Why Should You Care)?

November 13, 2014 · Posted in Accounting, Business Development · Comments Off on What Is Real-Time Accounting (and Why Should You Care)? 

Real-time accounting is when your books are caught up to the present and you know exactly where you stand with your account balances, revenue, and profit.  It’s truly doing your accounting in real time.

The opposite of real-time accounting is getting your books done once a year (or worse, being years behind).  When you wait to do your books once a year, say at tax time, you lose the power of being able to monetize opportunities in real time.   Some examples are realizing your prices are too low and your profit margins need adjustment, seeing what’s selling well and restocking sooner than later, or discovering a worker is not productive based on your pay rates and prices.

Today’s cloud accounting systems and bank feeds allow you the potential for real-time accounting, where the benefits include:

  • Better cash flow management
  • Faster correction of pricing, hiring, stocking, and margin mistakes, saving money and increasing profits faster
  • Faster identification of any tax liabilities as well as the ability to reduce or eliminate penalties from paying late or underestimating taxes due
  • Ability to see whether you are making a profit or a loss
  • Potential to catch fraud or identity theft much faster if you become a victim
  • Lower accounting costs when errors snowball over time
  • More peace of mind
  • Ability to be more proactive in your business management, capitalizing on opportunities that show themselves in the numbers

Consider moving to real-time accounting if you haven’t already.  For example, if your books are done annually, moving to quarterly or monthly services will begin to provide the advantages listed above.

How Understanding Assets vs. Expenses Can Make You Rich

October 30, 2014 · Posted in Bookkeeping Tips, Business Development, Management Tips, Profitability Tips · Comments Off on How Understanding Assets vs. Expenses Can Make You Rich 

Assets and expenses both have a “debit” balance on the financial statements, but that’s where their similarities end. Spending on one can make you rich and spending too much on the other can leave you broke.

An expense is money you may need to spend, but after a year, there is nothing lasting to show for it. An asset is a tangible resource that is still worth something after a year or more and that belongs to you or your business. The best assets grow in value over time, but some lose their value too. Real estate typically goes up in value, while a car loses value, or depreciates heavily, in its first few years.

The best example of an asset versus an expense is spending on a mortgage versus rent. When you pay a mortgage, you own more of the property than you did last month. One day, you can sell your ownership in the property and get cash or another asset in trade. When you pay rent, there’s nothing left at the end of the month. There’s no accumulated value.

Generally speaking, spending on an asset builds or at least better preserves your wealth. Spending on an expense drains your worth because you don’t own anything at the end.

The path to building your wealth is to spend on assets when you have a choice and minimize expenses when you can.

In the book “The Millionaire Next Door,” one of the top examples to build wealth is to avoid replacing your car as long as you dare. It used to be a habit for some families to replace their car every two years. With today’s reliable models, you can go between five to ten years without having to replace your car. Although a car lasts more than a year and is considered an asset, it still loses value every year.

Investing in assets and reducing expenses will build your business’s net worth and increase profits. Look for ways you can apply this to your business and watch your money grow. As always, reach out if you’d like to know more.

Is There an App for That?

September 4, 2014 · Posted in Business Development, Time Management Tips · Comments Off on Is There an App for That? 

The technology side of the accounting industry is rapidly changing and expanding.  Literally hundreds, if not thousands of new companies and new software applications have sprung up to help small businesses automate their processes and save time and money.

The best way to profit from all of this innovation is to first identify where you can best use the technology in your business.  Here are three places to look:

1.     Paper Chase

What business tasks are you still using pen and paper for?   Look what’s on your desk or in your filing cabinet in the form of paper, and that will be your next opportunity for automation.  For example, are you still hand-writing checks?   There’s an app (or two) for that.

Sticky notes and to do lists have been replaced with Evernote.  Business cards you collect can go in a CRM (customer relationship manager).  All of your accounting invoices and bills can be digitized and stored online.

Make a list of all the manual and paper processes you do every day and look for an app that can make the task faster for you.

2.     Fill the Gap

Take stock of what systems you already have in place.  The opportunity to fill the gap is where you might have systems that should talk to each other but don’t.  If you need to enter data into two different places, there may be a chance to automate and/or integrate the systems or data.  For example, your point of sale or billing system should integrate well with your accounting system.  A few other examples include accounting and payroll, CRM and accounting, inventory and accounting, project management and time tracking, and time tracking and payroll.

The more your systems integrate and work as a suite, the better.

3.     Mismatched

It could be you have your systems automated, but the systems are not the best choice for your business requirements.  If your systems don’t meet many of your business requirements, it may be time to look for an upgrade or a replacement.

If you are performing a lot of data manipulation in Excel or Access, this might also signal that your systems are falling short of your current needs.  Look where that’s happening, and you will have identified an opportunity for improvement.

Look in these three areas in your business, and I bet you’ll not only find an app for that, you’ll also find some freed up time and money once you automate.

Shortcut Your Management Time with Exception Reporting

August 21, 2014 · Posted in Business Development, Time Management Tips · Comments Off on Shortcut Your Management Time with Exception Reporting 

Do you spend a lot of time reviewing stacks of reports each month so you can get the information you need to make decisions?  Do you find out after the fact that something went wrong in your business and that if you had known about it sooner, you would have made different decisions?

If so, you might benefit from a special type of reporting called exception reporting.  Exception reporting highlights red flag areas that you need to take action on.  It contrasts with regular reporting, which lists lots of data that you may or may not need to take action on.

Here’s an example:  How often do you check your bank balance?  You probably check daily or even more, right?  Do you really need to?

Ask yourself when do you really need to know about your bank balance?  You need to know when it falls below a certain amount, or when you don’t have enough to cover imminent bills, right?  Why not stop checking your balance all the time and replace it with an alert that will send you an email under the conditions and criteria you set?  This will save you time.

Some exception reports are already built into some accounting systems.  A couple of good examples are the A/R aging report which shows past due invoices that have not been collected and the inventory re-order report that lists inventory items that reached their re-order points and need to be re-ordered.

There are many ideas to generate exception reports:

  • Missed and upcoming deadline tracking such as project due dates, tax forms due, and payroll due
  • Employees on vacation
  • Bills overdue
  • Expiration date tracking like end of lease and insurance policy renewal dates
  • Large variances in budget to actual reports

To take advantage of exception reporting, here are a few steps:

  1. Identify the reports you currently receive that you review but take no action no matter what.  Do you really need them?  If not, throw them out.  If so, ask yourself what trigger would have you taking action and change the regular report into an exception report that reports on that trigger.
  2. Think about what data you access all day that is not in a report or easy to use format.  Can you create an exception report or alert out of it and save yourself time?
  3. What information would you like to start receiving that you don’t have now?  It should be something that you would take action on if you knew about it.  Can you create an exception report for these new information needs?

Try exception reporting, or take it to the next level of implementation in your business, and watch your time free up and your management decisions sharpen.

Six Common Payroll Mistakes to Avoid

August 7, 2014 · Posted in Business Development, Management Tips · Comments Off on Six Common Payroll Mistakes to Avoid 

Getting payroll done has gotten so much easier than it used to be for small business owners.  But there are still some minefields when it comes to state and federal compliance.  We’ll take a look at six of them in today’s article.

1.     Business or Personal?

A great admin might want to help you in any way they can, including personal errands.  But time spent having your admin fetch your dry cleaning and drug store prescriptions is not deductible as a business expense, even if it makes you more productive at work.

Be sure you separate your business payroll from personal payroll to avoid tangling with the IRS on this issue.

2.     New Hire Report

It’s not every day that a small business needs to hire additional help, and the New Hire Report is easy to overlook.  It’s due to your state within a certain number of days of your new employee’s hire date.  Some payroll companies will file it for you, and some won’t, so it’s best to check so that you don’t make the common mistake of forgetting to file this report.

3.     Worker’s Compensation

When you have employees, you need worker’s compensation.  When you bring on your first employee, you’ll need to overcome this learning curve of figuring out what you need.

Even if you’re a veteran employer, you may have coverage holes in your worker’s compensation coverage.   Do you have employees who work at home?  Are you sure they are covered?    In some states, employees have to be specifically named in the policy before they are covered to work at home.

Be sure you ask the right questions so there’s not a risky gap in this essential protection for employers.

4.     Posters

There are both state and federal notices that must be posted for employees to be able to read.  California is especially zealous and liberal about issuing fines (up to $17,000 per location) for employers that do not have their posters, well, posted on workplace walls.

5.     Employee versus Contractor

The proper classification of a worker as a W-2 employee or a 1099 contractor has long been an area of scrutiny for the IRS.  The IRS has rules as well as court cases that have established the guidelines that exist in this area.

If you classify a worker incorrectly as a contractor when they should be an employee, then you can be held liable for paying employment taxes on that contractor.

6.     Bonuses

Bonuses can often be a spur of the moment thing or something that’s done at the very end of the year when we’re occupied with the busy holiday bustle.  It can be easy to forget that the bonuses need to be run through payroll like all other wages so that the proper deductions and taxes can be calculated.

Use these six items as a checklist to avoid these common mistakes as well as reduce your business risk in the payroll compliance area.

Summertime Strategies for Your Business

July 24, 2014 · Posted in Business Development, Time Management Tips · Comments Off on Summertime Strategies for Your Business 

Summer is a great time of year for most businesses to pause for just a little while to take stock, congratulate yourself on what you’ve accomplished so far this year, and make big plans for your future.  Here are five summertime strategies to help you regroup, reassess, and rejuvenate your business.

1.     Mid-Year Review

If your business runs by the calendar year, 2014 is already more than half over.  This is a perfect time to stop and reflect where you’ve been, what you’ve accomplished, and where you want to go next.  You can make this process as informal or formal as you want.  Some firms hold complex retreats; you may simply need some quiet time on a weekend where all your family is busy doing something else.

If you’ve never done any planning and feel like you need a guide, consider the book, The One-Page Business Plan written by Jim Horan.

2.     Take a Vacation

There’s nothing better to rekindle your creative juices than to get away from the business for a while.  Summertime is when most people take vacation, so if your business is not having its busy season, this might be a good time to go away for a while.

If you’re anxious about being away from your business, you’re not alone.  In your annual planning process, plan for and block out your vacation time way ahead of time.  Book the reservations with no refunds several months in advance so that you won’t chicken out at the last minute.  There is life beyond your business, and you will be a better business owner when you take regular breaks away.

3.     Celebrate

Take time to pat yourself on the back and congratulate the people around you for the goals you’ve reached and the efforts your team has made on your behalf.  We all could use more praise and more celebrations in our lives.  Perhaps you can organize a party, or if you are not the partying type, a quiet word individually with your team can go a long way, maybe more than you know.

4.     Prune Your Projects    

Is your plate too full?  Most of us would say “yes” to that question, so the next step is to ask yourself what you can afford to stop doing that doesn’t make sense.  Is there a project or two that can wait?  If so, decide to stop stressing about not getting it done and give yourself permission to put it on the back burner for now.

5.     Focus

Ask yourself what one thing you could do today that will make all the difference in your profits, revenues, goals, or simply peace of mind.  And get that thing done.

Try these five summertime tips to rejuvenate your business.

Does Your Small Business Need a CRM?

July 10, 2014 · Posted in Business Development, Customer Service Tips · Comments Off on Does Your Small Business Need a CRM? 

Have you ever stayed at a hotel and then returned, finding that they have stocked your room with everything you asked for the last time you were here?  Your special allergenic pillow was already waiting for you, you were asked if you would like a dinner reservation made just like you always do the first night, and there were even extra hangars because you always need extra hangars.  None of this would be possible for the hotel if it didn’t have a CRM, customer relationship management, system in place.

Would your clients be impressed if you remembered all of the details about your last conversation, their last purchase, or their preferences?  If so, your business might benefit from a CRM system.

Businesses that have more than 30 or so clients may benefit from a system that allows you and your employees to enter detailed information about each client interaction that they have.  It can work for both current and future clients, i.e., prospects.  A CRM is basically a great big customer database at its core.  It contains master file information on a customer or client, such as name, company, address, contact info, and custom fields.  It is also transaction-driven in that you can log activity such as calls, meetings, proposal dates, and more.

A good CRM system is also integrated with your other internal systems, such as your accounting or POS system or both.  In some CRM systems, you can see invoice and payment history, so that when a client calls in, you can also peek to see whether they owe you money or what goods they ordered that they may be calling about.

There are literally hundreds of CRM systems to choose from.  The gold standard for large companies is SalesForce.com; however, some small businesses use it as well.  SugarCRM is the largest open source CRM, meaning its programming code is available to the public.  ZohoCRM is one of the largest small business CRMs and offers a suite of products for small businesses.  And Act! is also very popular and plays well with social media.

Before choosing a CRM, decide what you want it to do and how you will be using it.  One of the most important aspects of profiting from a CRM is to make sure it gets used, and that takes some habit-changing from you and your staff.  Once you have your requirements, you can evaluate the software options available, and choose the one that works best for you.

When your clients start talking about how great your service is and how much attention you pay to the details they care about, you’ll know your CRM is paying off for you.

Five Essential Components of an Entrepreneur’s Compensation

May 29, 2014 · Posted in Business Development, Business Tips · Comments Off on Five Essential Components of an Entrepreneur’s Compensation 

The two major ways entrepreneurs can take money from their business is through draws or by receiving a paycheck.  The type of entity in which their business is set up will determine which method can be used. In either case, entrepreneurs need to be careful not to shortchange themselves.

Especially if you’re running a service business, it’s easy to initially think you can do well with a similar hourly rate that you earned as an employee.  Here’s a quick list of five elements that should be included in the compensation of every entrepreneur:

  1. Competitive pay 

    If you were doing the same work for a company that hired you, what would your pay be?  Are you making at least market equivalent or better?  A lot of times, as entrepreneurs, we tend to focus only on this piece of our compensation when we set our pricing, and that’s a big mistake. It’s only 75 percent of what our total pay needs to be.

  2. Profit.

    As an entrepreneur, you take extra risk when you own your own company, and you should be compensated accordingly.  Your capital is tied up in your business and should be earning a good return in addition to your reasonable compensation.

  3. Benefits

    Employees get vacations, health insurance, and bonuses; and you should too.  This should be part of your compensation package as an entrepreneur.

  4. Taxes.

    Although our individual taxes are not deductible as business expenses, we need to compensate for them so that we’ll have enough cash for our living expenses.  It’s a huge chunk too.  We work about three and a half months every year, just to pay for our taxes.

  5. Retirement plan

    When you work for yourself, no one is going to fund your retirement for you.  Although the Social Security program helps a lot of seniors, it’s up to you to set additional money aside for a comfortable future.

Complete Compensation

Your compensation should include all of these components.  If it doesn’t and you feel like you can’t afford to pay yourself that much, then your pricing might not be reflecting all of these items correctly, you might have a volume problem, or your business model may need some adjusting.

It’s normal to take a smaller paycheck the first few years as we’re building our businesses, but if you’re still doing it after several years or constantly having cash flow issues, then something may be wrong.

If you’d like our help in this area of your business, please reach out and let us know.

Make sure your future is bright and financially secure by including all five components in your entrepreneur compensation.

Do You Know Your Weakest Business Link?

April 17, 2014 · Posted in Business Development, Business Tips, Management Tips · Comments Off on Do You Know Your Weakest Business Link? 

You’ve already built a solid business that you have great pride in.  Yet, if you’re like most entrepreneurs, you’re on a constant search for how to make your business better.   One way to focus your search is to look for the weakest link in your business.

From a return-on-investment standpoint, working on and fixing your weakest link is the highest payback thing you can do.  It lifts your entire company up and makes it stronger.   The key is to look as objectively as possible at what might be holding your business back from being even greater than it already is.

Here are four major areas where you can look for your weakest link:

  1. Client-facing interactions

    A great area to start looking is where you have interactions with clients.  These include things like phone greetings, email, websites, your storefront, your presence at networking meetings, client service interactions, your proposals, invoices, and thank you notes.

    What jumps out at you as the weakest link when you look through the above list?  Perhaps it’s as simple as recording a more friendly voice mail greeting or as complex as getting your website redone.  Don’t get overwhelmed if a lot of these items need attention; instead focus on the one weakest link.  That’s the place that needs your attention.

  2. Your team 

    The toughest area to have a weakest link is when it involves people.  If you have an underperforming employee or contractor that is undermining sales or service, you’ve got a tough decision ahead of you.  If it’s your weakest link, don’t bury your head in the sand like we all want to do.  You need to act so that the person does not drag down your entire business.

  3. Internal systems

    If you feel stymied at the lack of information in your business, you might be in need of better internal systems.  As your business grows, this is the area that changes the most over time.

    Businesses that are newer or smaller need a great accounting system as well as a good point of sale or billing system.  As the business grows, it might need better inventory systems, a good CRM or customer relationship management system, a project management system, or more specialized systems depending on the industry it’s in.

    As the business matures, the functionality of the accounting system should expand to meet the growing data demands.   Integrating the accounting system together with the company’s other systems can become important to control costs and improve margins.

    If you feel like your weakest link may be in your systems, we’re happy to help.  Please reach out and let’s have a conversation about your needs.

  4. Skill set

    No one was born an entrepreneur; it has to be learned.  What keeps it more exciting is that new skills are required at each level you master on the entrepreneurial ladder.  Some of the skills that you need at the entry level include client service, delivery of your service or product, and sales and marketing.  As your business grows, you’ll need to master financial skills, negotiation skills, hiring, and supervisory skills.  Leadership and strategy skills will serve you well when your business is mature.

    Which skill set do you consider your weakest link?  If it’s finance, you’re not alone.   Let us know how we can help.

  5. Focusing on the Payback

    The good news is when you’ve improved your weakest link, you end up improving your entire company and lifting it up to a new level.  Once you’ve fixed your weakest link, congratulate yourself.  Give yourself a reward, and wait a little while.

    Your old weakest link is no longer the weakest area in your business, but something else is.  Since you’re on a constant search for improvement in your business, you can repeat this formula over and over again to keep lifting your company up using this low risk, high payback approach.

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