Small Business Profit Maximizer!

CALLING ALL BUSINESS OWNERS!!

My book is FINALLY out! If you’re ready to reinvigorate your cash flow and increase your profit margins, you MUST read The 90 Day Profit Reset. It’s available now in print and Kindle versions from Amazon.

Get yours here >> https://amzn.to/32gCYfv

 

The Importance of Customer Lifetime Value For Your Small Business

As a business owner, you may have seen the term “customer lifetime value,” but not known what it meant. If your search for an answer brought you here, you’re in the right place! As it happens, customer lifetime value is perhaps the most important number that every business must know. Knowing this number not only changes your perspective on customers, but has a positive impact on how you interact with first-time customers.

What is Customer Lifetime Value?

Essentially, customer lifetime value is what a customer is worth to your business—not just in the money they spend, but across your relationship with them as a whole. For example, how reliable are they as customers? Even if they’re not big spenders, do you see them often? Do they tell their friends and relatives about your business and bring in new customers? Do they know people who can bring you more important business opportunities? The value of a customer can go far beyond what they spend in a day, and with that in mind, it’s critical to nurture relationships of value.

How Does This Look in a Practical Sense?

Business models can vary widely, so when it comes to calculating customer lifetime value, the formulas can get complicated very quickly. With that in mind, however, let’s use a basic example. Let’s say you’re the owner of a hardware store. One of your regular customers is a contractor who visits once a month and spends a minimum of $200 each visit. In those moments, he’s worth $200 to you, but over the course of a year, he’s worth $2,400! And if he’s been a long-time customer of yours, let’s say, for fifteen years, that means his customer lifetime value is $36,000!

My book, 90-Day Profit Reset: Gain Your Independence from Reduced Cash Flow, Evaporating Customers, and Shrinking Margins, contains a worksheet for helping you calculate customer lifetime value. If you want to get into the mathematical side of things, you can find the book here. It includes different options depending on your type of business, whether it be service, retail, or something else entirely. You can buy it in Kindle form or get a physical copy to take notes.

How do I Make the Most of Customer Lifetime Value?

It’s commonly known that keeping existing customers is considerably cheaper than acquiring new ones. Essentially, the money lies in building a relationship with existing customers in any way you can. For loyal customers, you should be dedicating more time to them, seeing what else you can offer them to get more out of your relationship with them.

It’s here that practices like upselling and cross-selling become critical. Normally, it’s hard to upsell and cross-sell new customers, but with existing customers with whom you’ve built trust, it’s considerably easier to get that extra revenue from going the extra mile.

Building a Relationship

One of the best bits of advice I can give you about upselling is to not sell. Even if you’re taking it easy, most customers will be turned off if they feel like you’re trying to squeeze more money out of them. Reaching that next step takes time, patience, and trust. You can build trust by offering certain perks to loyal customers. This can include discounts, free consultations, and most importantly of all, problem solving.

Get to know your customers a little bit—don’t just treat them like walking piles of money. Like everyone else, customers have problems that they want to solve, and if they’re coming to your business, they want to solve that problem. As an example, I’ll tell you a story that demonstrates not only how to do this effectively, but also how to stand out among your competition.

A client came to me looking to straighten out his finances. He told me that he was paying his CPA a certain amount for very specific services, but not much else, and as a result, he wasn’t seeing a great return on investment. I gave him a more realistic estimate of what he had to do, outlining a plan in detail to help this client save money. Almost immediately afterwards, he hired me to be his CPA.

The important factor here is that I wasn’t trying to sell this client on his services—rather, he was solving his problem. The sad thing is that the other CPA didn’t have to lose that client. The other CPA simply treated that client as a customer and nothing else. Had they put in the effort to solve that client’s problem instead of just taking orders, they would have developed a solid relationship, and that client’s customer lifetime value would have increased dramatically. Since I know this, I took the opportunity the moment I saw it. As a result, I not only helped someone out with a problem, but in doing so, I earned a new client, increased my income, and gave my reputation a boost. Most importantly, I did it by not trying to sell a product. I gave them a solution instead, and this is a strategy that has worked for him countless times.

In essence, customer lifetime value is massively important to your business, and hopefully this explanation gives you some perspective on how to make the most of it. Nurturing strong, loyal relationships could be exponentially more profitable than spending time and effort bringing in as many new customers as possible. It’s one thing to be good at selling, but it’s another thing entirely to keep your clients, and if you can do both, you’re virtually guaranteed to be successful.

Some of my best clients have been with me for over 30 years, and he knows it’s relationships like these that launch businesses to new heights. By solving problems for them instead of blindly selling, my best clients consider me almost “free” because I save them more money than it costs to hire me, and these relationships are mutually beneficial in a huge way.

Remember that your customers are worth more than how much they spend in one day. Spend time with them, work to solve their problems, and build trusting relationships with them to get the most out of your business. With this in mind, go out there, and make the most of customer lifetime value—you have the tools you need to succeed. As I always say: “Let’s make this our most profitable year ever!”

What Does Paid Sick Leave and Coronavirus Mean for Your Small Business?

Almost exactly a year ago, Congress passed the CARES Act to provide relief for Americans during the Coronavirus pandemic. This $2.2 Trillion stimulus package provided billions to state and local governments, a Paycheck Protection Program, direct payments to individuals, and an increase in unemployment benefits. In addition to the CARES Act, Congress also passed the FFCRA (Families First Coronavirus Response Act), which contained special provisions for paid sick leave in regards to the coronavirus. 

As a business owner, you are likely wondering what this means for you, your business, and your employees. In this guide, we’ll be breaking down what paid sick leave for the coronavirus means for you, how it works, and how this will affect you when tax season comes along.

What Qualifies an Employee for Paid Sick Leave? 

Obviously, this law doesn’t cover basic sick leave, and is geared specifically towards the coronavirus. In short, paid sick leave for coronavirus is applicable to employees who are unable to work due to federal, state, or local lockdowns. There are a number of rules that apply here, so we’ll go over a number of them right now.

• If an employee tests positive for coronavirus, they qualify for paid sick leave, even if they’re asymptomatic.
• If an employee is asymptomatic but is being advised by a health care professional to quarantine, then they qualify.
• If an employee is experiencing COVID-19 symptoms and is awaiting a diagnosis (a positive test, for example), then they qualify.
• If an employee has to care for someone under lockdown orders, like a child (especially if they’re young and the schools are closed) or an elderly person, then they qualify. The person being cared for must also be subject to quarantine or shelter-in-place orders.
• If an employee is experiencing substantially similar conditions to COVID-19 as specified by the Secretary of Health, then they qualify. However, please note that at the time of publication, no such conditions have been identified.

It’s strongly advisable to take all the necessary precautions you need, but the unfortunate reality is that sometimes, this won’t be enough. Be careful, take care of yourself and your employees, but be prepared for the worst.

How Much do I Have to Pay for Paid Sick Leave?

This number will vary, but there are specific guidelines in place in regards to how much you need to pay your employees when they take paid sick leave due to COVID-19.

Full-time employees (40 hours a week) will be covered for a two-week period of up to 80 hours. For example, if one of your employees makes $10 an hour, they will receive $800 of paid sick leave—two weeks’ worth of their time.

Part-time employees will also receive two weeks’ worth of pay. However, since their hours often vary and are not set, they will receive an amount based on the average number of hours they work over two given weeks. Much like the aforementioned full-time employee, let’s say one of your part-time employees makes $10 an hour. If the average number of hours they work over two weeks evens out to 29, then they will receive $290.

Different businesses have different needs and widely varying salaries. With this in mind, there are many employees who might make far more then $10 an hour. With this in mind, please note that the limit under the FFCRA (we’ll discuss that “limit” later) is $511 per day, up to $5,110 overall. 

Are There Exceptions? What if I Can’t Afford Paid Sick Leave?

As it happens, there are exceptions for paid sick leave for businesses under very specific circumstances. The most notable examples are:

• If you have work for your employees to do. This may cause some to scratch their heads, but the explanation is simpler than it may seem. Basically, if you shut down your business (or were forced to shut down by legal restrictions), you don’t have to pay sick leave, since there is no work for your employees to perform. However, if you’re still operating your business (hopefully with the necessary precautions in place), you need your employees to perform their tasks, they will therefore qualify if they need to take sick leave. This also applies if you’re open and your employees can work from home. In reality, this qualifier doesn’t make a difference for most businesses, but the information is still good to know going forward.
• If your business has fewer than 50 employees. The law applies to businesses with fewer than 500 employees, but for particularly small businesses with less than 50 employees, they are not required by law to pay for sick leave. This is likely a relief to read if you’re a small business owner.
• If you cannot pay sick leave without jeopardizing your business as a going concern. In particular, this exception applies when “such leave would cause employers’ expenses and financial obligations to exceed available business revenue and cause small employers to cease operations at a minimal capacity at the absence of the employer” being able to prove that the “employee requesting such leave will pose a substantial risk to the financial health of the business,” or if the employer can’t find a replacement employee to do the work. Essentially, if you literally can’t pay sick leave without your business going under, you’re off the hook. However, you MUST have documentation to prove this should the Department of Labor ask you for proof. 

Where Does This Money Come From? Do I Get it Back?

If you’re worried about having to pay too much sick leave for coronavirus, don’t be—when tax season comes by, you’ll be getting the money back! As an employer, when you fill out your 941 form, you’ll be getting a dollar-for-dollar credit on your payroll taxes. The aforementioned $5,110, for example, is all coming back to you, so don’t fret if you have to pay that much. Keep in mind that this is retroactive—the law was passed in March 2020, so if you paid sick leave for coronavirus before then, you can still apply for that tax credit.

Regardless, these tax laws can be complicated, so if you’re struggling to make sense of it, don’t hesitate to hire a professional CPA to help you along the way. In summary, if one of your employees has to take sick leave due to coronavirus, you have to pay for it (with a few exceptions). However, you will be getting that money back in the form of payroll tax credits up to $5,110. Be mindful, be safe, and like I always say: “Let’s make this our most profitable year ever!”

SBA changes PPP rules to Finally Help Sole Proprietors, independent contractors and the self employed. But Hurry--Time Running Out!

In Today’s video you’ll learn about the new PPP rules issued by the SBA can greatly help sole proprietors, independent contractors and self-employed.

Before the SBA changes many small business owners who didn’t have payroll had to calculate on net income now can use gross sales.

If you already filed under old rules- Tough luck. But if you haven’t can make a big difference.

Example – before one of my clients didn't qualify because their net income was zero after depreciation write-offs. Now we can use gross income of $150K and qualify for $31,250 in PPP loans.

Must use the new forms (2483-C for the first draw and 2483-SD-C for the second draw)

Warning- SBA has announced that they will look closely at loans of $150K or more to make sure you had a real need for the funds.

Forgiveness rules are the normal rules for sole proprietors that I covered in earlier videos.

All of this is very confusing so get help if you think this is something that will help you

 

 

Referrals the Right Way- Part 1

I’ve said it before, and I’ll say it again…

The most valuable asset a business has is its existing customers.

But what is a business’ second most valuable asset? Customers by referral! If you want your business to grow and your sales to increase, use your current perfect customers to bring in even more new perfect customers.

In other words, when we use our loyal customers to gain more loyal customers, we create a system that guarantees sales, and our business grows exponentially because of it. Sometimes, however, this is easier said than done.

In my decades of experience, I have become an expert in the art of referrals, and there is a right way and a wrong way to do this. Don’t waste your precious time and money on strategies that won’t help your business grow.

Let’s have a conversation and make sure we prioritize the right customers so this year can be our most profitable one yet!

 

 

Referrals the Right Way - Part 2

Had a glitch that shut down my live video. Here is the completion of how to get referrals the correct way

 

 

How the 8020 Rule Can Massively Increase Profits

Do you want to improve your profit and re-engage customers?

Obviously, the answer is yes, but how do we do this while juggling a cacophony of other tasks and obligations as busy entrepreneurs? The best way to grow profits is with the 80/20 rule. This rule states that 80% of your output comes from only 20% of your input. In other words, if we want to grow, we only need to focus on the top 20% of our customers and 80% of our profits will grow.

Especially during the times in our lives in which we have other obligations that take us away from focusing on our business, the 80/20 rule can help.

By focusing on your growing your top customers, you can double or triple your revenue without having to search for new prospects or develop new services.

Don’t get overwhelmed by trying to grow your profits. Just make sure your focus is in the right spot!

 

 

How Eliminating the "What If" dramatically increases sales

In this video I discuss how a strong guarantee will dramatically increase sales from both your current customers and prospects.

 

 

8 Tax Breaks in the New Stimulus Bill for 1040 filers

It’s been over six weeks since the second stimulus bill has passed, and most people have yet to understand the entire scope of these changes.

As we kick off the 2021 tax season, it’s important to understand the new tax breaks in the second round of stimulus.

Your taxes will look a little different this year, but if you do it right, this means more money in your pocket.

The stimulus bill is designed to offer assistance during these trying times. Let’s have a conversation about these tax breaks so we can take full advantage and get more money in our pockets.

 

 

Huge Changes to the Employee Credit Can Mean BIG Money from the IRS!

The new law passed in Late December of 2020 created the possibility to get both the PPP loan and the Employee Retention Credit at the same time. It also extended and expanded the credit into 2021.

This can equal a large credit which will reduce your payroll taxes equal to the dollar amount of the credit amount you qualify for. In this video I discuss the rules and how this can mean reducing your payroll taxes substantially. For one of my clients I estimate it can be up to $50,000.