Small Business Profit Maximizer!

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 drives 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 first step in improving your business. Create your survey today!

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.

Are You Using Facebook Ads?

If you have a Facebook business page, you really should try adding a Facebook ad to your marketing. Facebook ads are an inexpensive way to reach a very targeted audience.

When you create a Facebook ad, you first set your daily budget and when you want to start your campaign. Don’t worry if you want to spend only $5 a day, you can. Then you will choose “Pay for Impressions (CPC)” or “Pay for Clicks (CPC)”. Pay for impressions means you will expose your ad to your desired audience. You will be paying for exposure and how often your ad is displayed is dependent on your daily budget. Pay for clicks means Facebook will display your ad to your desired audience, but you will not pay for anything until people start clicking on your ad. Once your daily budget is reached, your ad will no longer be shown.

After you have decided on how much you want to spend, you will choose who you want to see your ad. I feel this is the best feature of Facebook ads. Facebook acts like a database of people’s personal information. If you wanted to target a narrow group of people, you have that option. Facebook also makes this easy for you. 

Now all you have left is your message.  You will have limited words and space restraints, so get right to the point. Make your message as alluring and eye-catching as possible. This will be the hardest part of the whole process.

Now get to it! Put your business’s face out there and make the most out of your social media.

Never Take a Sale for Granted!

I’ve been looking at cars recently, and marketing is constantly running through my mind. Car dealerships spend tons of money on advertising, leads, and internet marketing, but it really comes down to the salesperson. If you think about it, this is true in most sales transactions.

As I visited different dealers I met many different salespeople. Each had their own personality and style to getting you to their sales milestones (engage, test drive, and financing). There was one that stood out the most, not because he was a particularly good salesman, but because once we started to talk numbers, he assumed I was going to buy the car. He was so confident he even had the staff prepare the car I was looking at for the purchase. He was very surprised to see that I walked away from the deal because the numbers didn’t work out. It reminded me of the saying “Don’t count your chickens before they hatch.”

In marketing, nothing is ever a sure thing. Never assume that your sale is done until you receive payment and your customer has left with the product. Even then, any good business person knows this is just the beginning of a long-term business relationship.

Why Should I Care About Good Accounting Records?

After all this time it still amazes me that business owners don’t understand the importance of having good records. As often as I have run into it over the last 30+ years, it shouldn’t anymore. They usually hire a bookkeeper and a CPA to do their taxes and then forget about it.

The problem – it’s not enough. I truly believe that a business where the owner understands the importance of good numbers is one of the main things that separate successful businesses from those that fail.

So – let’s try again. The following are the main reasons that every business owner should make having accurate, timely financials a priority:

• Lack of adequate record keeping is a major cause of business failure.I
• If you don’t understand your numbers, you can’t manage them.
• Good accounting records provide the data needed for owner to make informed, data-driven decisions.
• Businesses with good accounting records are less likely to overpay their taxes.
• When your business is audited by the Feds or by the state, good records go a long way toward reducing your exposure to additional taxes and the resulting interest and penalties.
• Good financials allow the owner not to operate in a vacuum. They can spot trends much earlier.
• Good financials help the owner increase sales by spotting customers that reduce their sales and following up quickly to solve the problem and recover the customer.
• Good financials help prevent or detect fraud quickly.
• Companies with good records almost always make higher profits than a similar company that has poor records.

As important as having good records is, there really is no good excuse for not having good records. So, why don’t you?

 

Easy Investment Mistakes

While there are a lot of options to consider for making good investments, there are an equal if not greater number of investments that no one should consider. Often, these investments seem like a "sure thing," but they are anything but over the short or long term.

To avoid common investment errors, always check with your financial planner before buying into anything. In addition, be sure to watch for:

• Lack of specifics – Carefully check any investment prospectus and take the time to understand the numbers. Some investment information is not really much more than hype and potential, so look for specifics and realistic measurements of the type of growth you can expect on your investment.
• Overly risk-adverse – There are different times in life when being highly risk-adverse is important. Generally, the closer you are to retirement, the less risk you should take with investments. However, focusing on very low-risk investments means little return, limiting your ability to generate the returns needed for your long-term financial goals.
• Day trading or penny stocks – Unless you really know the stock market and are prepared to spend time learning market trends and indicators, day trading and penny stocks are poor investments. Relying on "hot tips" off the internet is another big mistake as these are typically not well-researched and are promoted by people with limited knowledge or proven market success.
• Playing the real estate market – This is similar to trading. Unless you really know what you are doing and what the market trends are likely to be for a given location and property type, it is a risk. Television shows about flipping houses don't show you the possible risks involved, particularly if you are gambling with your own retirement money.

Never consider an investment that is recommended by a friend, family member, or a business colleague on face value. Do your research, talk to your financial planner, and evaluate the risk and possible rewards with other options available.

Simple Money Saving Mistakes that Derail Your Efforts

If you are like most people, you have a lot of very good and very well-intended ideas about maximizing your savings and building up an emergency fund. However, you may also find that at the end of the month there never seems to be any extra money to add to the account.

The reasons this happens will vary from individual to individual and situation to situation. With that being said, there are a few common mistakes that people make to undermine their efforts at building their savings.

• Not prioritizing savings – The best way to ensure you make your monthly deposit to your savings account is to take it off the top rather than at the end of the month. If you have automatic deposit, set up an automatic recurring draft from your checking account to a savings account on the day of the direct deposit.
• No budget – The biggest factor for saving is having a budget. This means allocating, based on a realistic amount, how much you need to have every month for your needs (bills, loans, payments, etc.) and also for your wants (entertainment, dinners out, etc.). Once you know these amounts, you can set a realistic savings goal.
• Rationalizing – Many people are very good at rationalizing why a "want" suddenly turns into a "need" even if they have a budget. It is important to be able to tell yourself “no” or to wait until you can budget for the item.
• Buying on sale on credit – If you are buying items on sale to save money and then putting the purchase on a credit card that you will take months to pay off, you are not really saving. There is nothing wrong with buying necessary items on sale, but you should only make the purchase if you can also pay the card off and not carry that high interest forward for months.
• Not using programs – If your employer offers a retirement savings program in the form of matching funds, it is worth using this option rather than doing it on your own. While it will lock up the funds, it may also double your savings, something you will not achieve with any type of saving accounts anywhere else.

Take the time to consider your options. A simple and easy to follow budget and savings plan is still the most effective option to build your savings account.

MYTH VS TRUTH: It's the Business Owner's 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 consumes all the time that should be spent developing long-term strategies and designing new products or services.

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 past 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 for their problems.

Make It Fun!

Customers like to feel like they’re a part of something special and exciting. So when you’re planning promotions, try to make them special and exciting! Use your creativity!

We have seen business owners give away prizes, give free food and drinks, or invite guest speakers or bands--anything that draws people to your location!

Just remember to sell once the crowd is there! I have heard business owners complain that people just come for the free stuff. But the owner only did half the job! Aside from your hosting duties, you and your staff have to take advantage of the crowd and make your sales pitch! Change the store layout, go over sales techniques with your staff, and be prepared.

So make this month’s marketing fun and exciting!

Successful Business Owners Don’t Follow the Herd!

In fact, the most successful business owners see what other business owners are doing, and do the opposite!

Why? Well, consider that 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.

So why then do most new business owners study what other business owners are doing, and then just copy them? This almost guarantees that they will become one of the 95% who either fail or are just getting by.

If you truly want to succeed, you should instead see what the “herd” is ignoring.

• Is there a niche where your product or service can be sold that the herd is currently ignoring?
• Is there a new way to use your product or service that the herd doesn’t see?
• Is there a new product or service that you could be offering that the herd is not? (Think Apple iPads.)
• Is there an add-on product that you can offer that the herd isn’t offering?
• Is there a more efficient way to produce or deliver your product?
• Is there a different price (either higher or lower) that your product or service can be offered at?
• Is there a way to increase customer satisfaction when using your product or service?

Sounds like a lot of trouble and work. But so is failure!

Working with Interim Managers

Particularly during times of great upheaval in a company, leaders may choose to hire the services of an interim manager, something that can feel quite threatening for existing staff and managers who may feel as though their own skills and experience have been overlooked.  And how other managers react to an interim can do much to influence leadership’s perception of them and can potentially damage their careers. 

Interim managers are typically senior-level business leaders who have a wide range of skills and knowledge acquired from working with a variety of companies.  Their services typically prove invaluable in cases where a senior executive leaves suddenly, companies are reorganizing or drastic cutbacks need to be made to ensure the business’ survival, as well as when new systems or processes need to be brought in.  Often these situations require difficult decisions and an objective view that can only come from an outsider. 

Interims are normally given the requisite degree of authority to allow them to carry out their assignments, but they still rely heavily on the support of existing employees to achieve their objectives.  Employers pay well for their services and expect tangible results, so any worker who fails to offer his or her full support to an interim manager risks being frowned upon. 

If your company brings in an interim, therefore, always demonstrate the same respect that you would to any senior manager and put aside any feelings of insecurity that might stop you from giving your wholehearted support.

Taking the Stress out of Performance Reviews

Most managers dread that time of year when performance reviews come around, and especially when they have a number of them to carry out.  These annual reviews not only have the potential to raise future levels of performance, but also to improve the relationship between manager and worker.  They are well worth the investment in terms of time and effort.  Here are just a few tips to help new managers get through their next round of performance reviews. 

1. Even though annual reviews take place only once a year, it should evaluate the staff member’s performance throughout the whole of the 12-month period. Be sure to document any significant achievements, strengths or weaknesses, when they occur or are identified; otherwise, you risk focusing solely on recent history and are likely to miss the opportunity to address areas for improvement.
2. Fully understanding the criteria by which you are evaluating staff performance is key to avoiding confusion and stress, and there are only two things that you should be taking into account – the objectives as set out in the individual’s role description, and the goals that were set for the year.
3. When it comes to arranging performance review meetings, don’t feel tempted to get them all out of the way at once by scheduling appointments back-to-back. Arranging only one each day will ensure that your stress levels stay low and that you give each review your proper attention.

You Are Your #1 Salesperson!

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

You are the person that knows your business the best. You’re the one with the experience, and you 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 ins and outs of. 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 for both customer satisfaction and the employees' 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!

110% 24/7...or Don’t Even Bother!

My daughter recently purchased salon services through one of those web deals where local companies offer discounted pricing for their products/services. She saw a deal from a salon that she remembered had a good reputation and was normally pretty expensive, So she bought it.

Once she purchased the deal, she called to make an appointment. That is where things seemed to unravel. The salon’s promotion worked! Apparently, a lot of people had purchased the deal and now it was hard to schedule an appointment. After around the 4^th call, the salon offered an appointment on Sunday, which she took.

When she got there with her cousin, who also purchased a deal, one stylist was at the salon. The stylist takes the two girls and starts the consultations.  As the stylist starts their services, other customers start coming in. The stylist has some customers wait and turns others away. Not good!

As the stylist is working on my daughter, my daughter feels as if the stylist is cutting corners, and she didn’t even get everything that was advertised on the deal. When my daughter got home she was not happy with the service or the final product, and will NEVER go back to that salon.

This is a perfect example of bad marketing. The salon owner had the right idea in offering their services at a good price, but wasn’t delivering what they had promised and provided only subpar services. This promotion may have made them money in the short term, but potentially may have signed their death sentence. Now the salon owner has created a scenario where they have aggravated potential new loyal customers and ruined any chances of repeat customers or referrals. Not to mention they have tainted their once good reputation.

Business and marketing is about the loyal customer. If you’re not offering your customers 110% of your resources all the time, don’t even bother! Without repeat business and a good reputation, your business is dead before it even started.

Your Logo

I have seen many good and bad logos in my day. Here are some tips on how to make sure you don’t pick a bad logo.

• Don’t use an actual picture as a logo – Pictures are hard to reproduce and resize, so when you’re printing your letterhead, banners, and other business documents, your logo won’t print well.
• Don’t use clip art - Clip art is a little bit better than a picture, but unoriginal! Anyone can use that image. Your logo should be unique and allow your audience to bring your business to mind when they see it.
• Don’t rely heavily on different colors - There may be times where you have to print your logo in black and white. I have seen many logos become unrecognizable because they do not print well in black and white.
• Don’t hand draw your logo - Hand drawn logos look unprofessional. Customers may think you’re too cheap to pay for a professional logo, which translates into, This company is unprofessional and may cut corners with my services. Or, This company is too cheap to get a real logo, so their products must be cheap.

When creating your logo, remember:

• It should be something that is simple, unique, and easy to remember so customers can instantly associate your logo with your company.
• Don’t be afraid of spending a little money. There are tons of graphic designers out there that are reasonable with their fees. Remember, this is your business’s identity and will be with you for a long time.
• Go with what you like! Your logo doesn’t have to be a picture of a toilet if you’re a plumber. Go with something you like and looks professional.

I hope this helps you pick the right logo for your company!

Staff and Mushrooms Have Nothing in Common.

While there is a lot of truth in the saying “knowledge is power,” many people choose to interpret this adage to mean that if they share their knowledge, their power is lost.  In the case of some managers, they believe that if they keep information to themselves, then they will be better able to control their staff.  Mushroom management, which describes a management style where managers keep staff in the dark and feed them manure, typically has devastating effects on workers and frequently reflects badly on the managers in question. 

Not dealing honestly and openly with employees engenders mistrust, which in turn impacts the workforce’s morale, willingness to cooperate and, ultimately, its performance.  Rumors and incredible distortions of the truth run riot, information is misinterpreted and chaos ensues as a general lack of understanding takes over. 

Research has shown time and time again that one of the things that workers value most is being able to appreciate where and how their roles fit into the bigger picture. Yet, all too often, managers feel inclined to keep vital information to themselves about the organization’s strategy.  Not only is this hugely frustrating and de-motivating for staff, but managers suffer as their employees work according to the wrong perceptions, using entirely the wrong set of priorities toward entirely the wrong set of objectives.  Treat workers like mushrooms and all you will really end up with is vegetables.

So Now You’re The Boss.

So the winds of fortune blew your way, and now you’re a manager. Suddenly those big questions start mouthing off in your head: “Can I really do this? Can I be the boss?” Here are a few tips to help you get through the new intellectual and emotional challenges you might face: 

• Know what is expected of you. Sit down with your supervisor and ask him or her to spell out all of your responsibilities specifically. 

• Set goals. This will help you and your department get where you want to go. 

• Open the floodgates and pay attention to what people tell you—even if you don’t like what you hear. 

• Get support. If possible, find an experienced manager you respect and ask that person to be your mentor. 

• Be a role model. Lead by example. 

• Hold back on the gung-ho attitude. Don’t try to accomplish too much too soon. You’ll alienate the people who work for you. 

• Use your past as a map when leading others. Think of all the managers you’ve had—good and bad. Try to incorporate what you learned from the experiences and give the people who work for you what you always wanted for yourself. 

• Admit it when you screw up. People will respect you more when you don’t bluff your way through mistakes. 

• Take breaks and try to relax. You’ll be dealing with everything from important deadlines to petty office politics. Doing so calmly will win your workers’ confidence.

The #1 Reason Small Businesses Prosper

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 a past blog I gave you a number of 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 years ago, 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 “nice to have”.
• They continuously turn out innovative products and services rather than reacting to 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. 

 

MYTH VS TRUTH: SALES TAX IS NOT A THREAT TO MY BUSINESS

The myth most business owners believe: Most business owners never worry about sales tax after they first open their business. At that time, they set up their procedures and then believed that as long as they paid their sales taxes monthly, there was nothing left to worry about.

Why this myth causes a problem: In a word - audit! My clients have been audited at a higher rate than any time in the last 20 years. And based on my discussion with other CPAs, this is happening citywide.

The truth successful business owners learn the hard way! Sales tax audits are a bigger threat to your business's survival than almost anything else. The sales tax audit from my last three client audits resulted in an average bill of over $100,000. (Of course, after appeal, we expect to pay much less.)

Lesson learned: As a business owner, it is your responsibility to do a threat assessment annually. You should learn the sales tax laws that apply to your business and do an annual self audit to determine your potential exposure.

 

Focus Your Time on the Work That Increases Profits, Sales and Cash Flow

 

This is number two on my top ten ways to increase your business profits, sales, and cash flow. But I find it is almost always the hardest thing for any business owner to accomplish. Even when a business owner is highly motivated to increase sales and profits, they never seem to get around to it. Why?

Well, the reason I hear most is that they are so busy running their business and putting out fires that they never seem to get around to it. I also run into this. I start off the day with great plans for getting things done, and by the end of the day, nothing has happened due to client and employee interruptions.

But that is the easy answer. The truth is we all like doing things we do well. And many of us are very good at making the product and satisfying the customer. So that’s where we spend all our time.

That is why I almost always tell a business owner that they are 100% responsible for keeping their business from growing! Please don’t think I am telling you not to produce a quality product. What I’m saying is that this may not be the best use of your time. If you had the money you could hire someone to do the technical work that is required to produce the end product for the customer.

But as Dan Kennedy has said countless times, every business is in the business of getting and keeping as many profitable customers as possible! That is where the majority of business owner’s time should be concentrated on. That means I am not really in the CPA business – I am in the business of getting more profitable, paying customers for my CPA business. The same applies to any business. Once you start looking at your business that way, you will quickly change how you allocate your time.

What I am leading to is the following: The business owner’s time is the most valuable resource in the business! You can buy everything else except more hours in the day.