Small Business Profit Explosion

Marketing Tip of the Week – You Are Your #1 Salesperson!

I’m constantly telling business owners they need to be out on the field selling. The reason being, that they are the number one sales person!

You are the person that knows your business the best. You’re the one with the experience and know your business’s strengths and limitations.  On top of that, customers know when they are dealing with someone who knows what they are talking about.  Once you have gained the customer’s trust, you’re almost always guaranteed to close the sale.

You went into business because you have a skill, product and/or service that you know the in’s and out’s. You also know that you provide a better value to your customers than your competitors. You have also taken the initiative in starting your business and have made sales! Now that you have grown your business, you have backed away from making sales, losing the best resource both for customer satisfaction and employee’s role model.  I have seen this time and time again.

There is no reason for you to be stuck behind a desk! Get out there and make contact with your current and prospective customers and make that sale! Your bottom line will reflect you!

 

Client Questions - Can I Deduct an Invoice that My Customer Refuses to Pay?

Question: Can I deduct an invoice that my customer refuses to pay?

Answer: Like many tax questions, the answer is maybe.

It all depends on when your company records income. A company can choose between recording the sale at the date of the invoice (on the accrual basis) or when the invoice is paid (on the cash basis).

If the company is on the accrual basis then the bad invoice can be deducted.

But, if the company uses the cash method of recognizing income, then you cannot deduct the bad debt since you never recorded the income. You will, of course, be able to deduct any material or labor that you used on the job.

Like any good CPA, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

 

Lessons Learned – Is it the business owners job to keep the trains running?

The myth most business owners believe: I must be the one to make sure the trains keep running.

Why this myth causes a problem: In order to get more customers, it is my responsibility to make sure that my product/service is delivered correctly and on time.

The truth successful business owners learn the hard way! As a business grows, sooner or later the time needed to run a business eliminates all time to develop long-term strategies and new products or services designed.

And, if you’re not looking for new ways to develop solutions to your customers’ problems and pains you are allowing an opening for your competitors to solve these problems for them.

Also, as Seth Godin said in one of his recent blog articles, “Yes, without trains running, it’s hard to get anywhere. But no, that’s not what the shareholders are hoping you’ll be doing every day.” (I highly recommend that you read his blog daily www.sethgodin.typepad.com ).

Lesson learned: As a business owner, you must not get so stuck in the details of running the business that you no longer have the time do the vital work of delivering solutions to your customers to their problems. 

 

Tax Tip of the Week: Retirement pay for owner doesn’t reduce SE tax

The tax court ruled that retirement payments made by self-employed business owners for themselves cannot be claimed as a deduction on Schedule C in order to reduce self employment tax (the business owners’ Social Security and Medicare).

It is deducted from adjusted gross income on form 1040 in order to regular reduce income taxes.

Contributions for the business owner’s employees and the costs of running the plan may be deducted on the Schedule C and will reduce both income & self-employment taxes. 

                               

Like any good CPA, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

 

Tax Tip of the Week: New tax return 1099 filing question poses danger to taxpayers and preparers

Two new questions on tax returns for businesses are giving tax preparers fits and exposing taxpayers to potentially large penalties.

The IRS wants to know if self-employed, farmers, landlords, partnerships, regular corporations and S firms made payments that must be reported on 1099s.

If so, they must also check a box stating whether they filed or will file all 1099s.

Preparers of their returns fear they’ll have to act as IRS agents to be sure their clients followed the information reporting rules. And they worry that the IRS will hit them with a preparer penalty if it turns out that clients messed up the 1099 filing rules.

Filing tip: The Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 repealed the 1099 rules for landlords. Since 1099 requirement never went into effect, the question on Schedule E of whether landlords made any payments that required the filing of form 1099’s should be answered “no”.

                                                               

Like any good CPA, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

 

Marketing Tip of the Week – How Are We Doing?

Conducting surveys to evaluate your company’s image is always good idea. Finding out what customers think of your products, services, staff, and facility(s) is a part of running a successful business.

Getting your customers’ feedback is essential in improving your business. Who better than your customers to tell you if you need to change something? You can also discover what your customers’ value. You may find out it is different than what you think is important.

Most of the time managers and owners only hear of the bad instances that occur in the business. Conducting a survey allows you to gain information about the positive aspects as well.

You can make the survey as detailed or as simple as you like. Include questions that you want to know about. I always suggest including a few open ended questions like: What did you purchase on your last visit? Would you like us to offer any other products or services? These types of questions will help you make more money and learn more about what drive your customers to make a purchase.

Offer a free gift or coupons to your customers for taking the time to fill out your survey. You can conduct these surveys at your business, through email or even mail them to their house. The cost of conducting the survey will surely be worth it once you get your customers feedback.

Take the step in improving your business. Create your survey today!

 

Marketing Tip of the Week – What is Good Marketing?

The other day someone asked me, “What is good marketing?”  I thought that is a really good question and it can be answered in many different ways.

Many people may say good marketing is anything that gets people in the doors. That’s true to some extent but there is more to just getting people to your door, it’s also getting them to buy. Getting them to buy is the hardest part of marketing.

In my opinion, that’s just one of the elements of good marketing.

I think good marketing starts with a plan. The plan should at least consist of:

• a list of all of your products and services
• a list of possible add-on and cross selling products
• a description of each with a summary of what type of customer will need them
• what makes your business different
• how will you get your uniqueness across
• a thought-out and realistic budget
• a target market  
• a description of how you plan on getting their attention
• a filled out promotions calendar  
• a training calendar
• a plan of attack

Once your plan is done, good marketing has to start. A plan is nothing if it’s not implemented!

And the last part to good marketing is, keeping it going. Don’t get side tracked. Marketing isn’t something that happens overnight, it will take time.

I hope this gives you a good starting point in creating your own good marketing. 

 

The #1 reason small businesses prosper

(Growing Your Business Series: Part 3) 

As I wrote in my last blog, one of the big advantages a CPA has working with small business owners is that we get to learn what makes them profitable and what makes them fail. 

In my last blog (The Top 25 causes of small business failure. http://bit.ly/xkoyMF ) I gave you the reasons small business fail. But, while avoiding these reasons for failure is important, it is just as important to understand how to succeed.

Moya K. Mason released a paper this month on What Causes Small Businesses to Prosper? (http://www.moyak.com/papers/small-business-success.html). In it, she writes, “What does matter, it turns out, is having a strong grasp of the business basics. Without exception, companies that outperformed their industry peers excelled at what we call the four primary management practices – strategy, execution, culture and structure.” My observation of small business owners who prosper agrees with her findings. To this I would add the following reasons that small business owners prosper: 

• They have or acquire a strong, working knowledge of business basics.
• They have a strategic profit plan.
• They build their strategic profit plan around a clear value propositions for the customer.
• They are committed to marketing and selling their product.
• They concentrate their sales efforts to a niche rather than trying to sell to every possible customer.
• They develop a way to make their product something their customer “must-have” rather than something that would be a “nice-to-have”.
• They continuously turn out innovative products and services rather than reacting for events.
• They deliver products and services that consistently meet and exceed customers’ expectations.
• They hold themselves and their people to a high level of performance.
• They empower their employees and managers to make independent decisions and to find ways to improve operations.
• They make it easy for their employees and customers to work with their organizations.
• They hold on to talented employees and actively work to develop more.
• They get a mentor on board.
• They practice the “Golden Rule” in all of their business and personal dealings.
• They develop a good accounting system that provides them with strong management reports.

We will be launching a series of free and low cost webinars to help the business owner acquire the business knowledge they need to prosper. Keep a look out for future emails from me introducing these webinars.  

Thank you for your continued support and let’s make this year our most profitable year ever!

 

Tax Tip of the Week: Short of cash for your IRA deposits – Get a loan from the IRS

Are you short of cash for an IRA contribution this year? The IRS may give you a “loan”.

Planning strategy: Use your federal income tax refund to fund your IRA contribution. Simply file your 2011 return early; claiming a deduction for the amount you intend to contribute (assuming you are allowed to make a deductible contribution). When you receive the refund, use it to help fund the IRA contribution you deducted on your return

Is it legal? Absolutely, the IRS approved this taxpayer-friendly technique years ago. (IRS Revenue Ruling 84-18) All you have to do is make the IRA deposit by the April 17 deadline.

The IRA contribution limit for the 2011 tax year is $5,000 ($6,000 if age 50 or older).                                                          

Like any good CPA, I need to add a disclaimer: unfortunately, it is impossible to offer comprehensive tax info over the internet, no matter how well researched or written. And remember, I love my readers but having me bookmarked on your computer doesn’t make you a client: before relying on any information given on this site, contact a tax professional to discuss your particular situation.

 

The top 25 causes of small business failure

(Growing Your Business Series: Part 2)

One of the big advantages a CPA has working with small business owners is that we get to learn what makes them profitable and what makes them fail – without losing any of our own funds. On top of that, we too are business owners who face many of the same kind of opportunities and challenges that all small business owner’s face.

So what have I learned? Well for starters, launching a small business is risky and the chances of building a successful business are small. According to the Small Business Administration (SBA), over 50% of small businesses fail in the first year and 95% are out of business in the first five years. Of the ones that survive past five years, less than 1% reaches a level that allows the business to survive the retirement or death of the founder.

The following are the top 25 reasons I have seen for small business failure:

1. Choosing a business in an industry that just isn’t very profitable.
2. Not having actual hands on experience in the industry before opening the new business.
3. Unwillingness by the owner to take responsibility for everything that is not working in their business.
4. Poor management skills by the owner.
5. Lack of necessary effort by the owner. They often don’t understand that they are not in a 9-5 job anymore.
6. Unwillingness of the owner to be a continuous, lifetime learner.
7. Failure to have a business and marketing plan.
8. Inadequate cash reserves.
9. Failure to truly understand their customers wants and needs. This also includes not understanding what triggers a customer to buy.
10. Lack of marketing & sales skills.
11. Failing to price your product or service correctly.
12. Failure to anticipate or react to changes in the marketplace, competition or technology.
13. An overdependence on a single (or a few) customers.
14. Uncontrolled growth.
15. The owner believing they can do everything themselves.
16. Poor customer service.
17. Unqualified or untrained employees.
18. Failure to seek outside professional help.
19. Employee fraud.
20. Poor location.
21. Poor inventory management.
22. Poor credit arrangements.
23. Absence of performance monitoring.
24. Over borrowing.
25. Failing to innovate and introduce new products or services.

A review of the list shows that the key reason for business failure is the inexperience and lack of business knowledge by the owner. We will be launching a series of free and low cost webinars to help the business owner acquire the business knowledge they need to succeed. Keep an eye out for future emails from me introducing these webinars.  

Thank you for your continued support and let’s make this year our most profitable year ever!

 

Marketing & Sales Tip of the Week – Marketing 5 P’s

Marketers try to simplify marketing down to the 4P’s.

In case you didn’t know the 4P’s they are Price, Place, Product and Promotion.  Every business owner has or should have all of these things when in business:

• A product to sell, at a certain price
• A place where they sell their product 
• And some type of promotion to get the customer’s attention.

Sounds easy, right?

I have always felt that marketers have left out a P – Psychology! Understanding your customer’s thought process when purchasing can really help you put a successful marketing plan together. The trick is to have all these P’s work together and communicate this with your customer.

I have seen business owner focus on just some of the P’s and expect to make tons of money. Marketing doesn’t work like that. Marketing is something that has to be researched, tested and modified in order to see results. Marketing also has to be consistent. You can’t expect to run ONE ad and expect customers to flood your store and phones; it takes time.

Once a business owner knows which products to offer, what to price their products, where to sell, what their customers want to hear and how to reach them; they will have very success marketing plans

Anyone can start a business; but, it takes a special type of person to understand how to run a successful business, and marketing plays a big role in success.