Small Business Profit Maximizer!

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.

Marketing Tip of the Week - Repetition, Repetition, Repetition… Oh and did I Mention Repetition?

Next time you’re watching T.V. or listening to the radio, pay attention to the commercials and you’ll notice that the commercials repeat certain information at least three times. You may even notice that a company will play their commercial several times during certain programs.  Repetition is a must when it comes to marketing and advertising.

 

Any good advertising campaign or marketing plan must have a strategy to hit their target customer several times in order to create awareness and resonance. You can’t possibly expect your customer to remember your one advertisement amongst the thousands they are bombarded with everyday. You have to keep reminding them that they need your product or service. Sending your target market consistent messages will increase your chances of gaining new business. 

 

It would be great if we all could remember everything we’ve come in contact with, but unfortunately, most of us can’t. So, as business owners, you have to tell prospective customers about your product and services as many times as possible in hopes that they will remember your business when they need it.

Financial Advice for Young Adults

As a young person, it can be a daunting task trying to determine the best practices for a young adult to set themselves up financially for the future. Let’s look at some of the things you can do to get on the right track.

Watch what you spend – Regardless of what you earn, if you spend it all, or you spend more than you earn, you are always going to be poor. It’s easy to find yourself seduced into purchasing whatever you want rather than just what you need. For you to enjoy financial success, you must defer gratification and live within your means. There is no other way. It is wise for you to keep track of your spending for a week or month, so you have a good idea where your money goes. Making small ordinary changes in your expenses is a way to free up your cash and then you can use it to build your financial security.

First pay yourself - Your most important priority is your financial savings. You need to determine your personal expenditure budget – groceries, rent, socializing, travel, etc. There is no need for you to live like a pauper while you pursue your distant future; however, just change your mindset so that you put the priority on your regular savings. Think of it like your financial workout, where you begin small and gradually increase what you are saving.

Debt is the devil – You can use debt responsibly which will allow you to purchase things today that you actually need, such as your home, but which you could not buy outright if you had to. When you borrow money, you should always keep in mind the interest rate and the length of time to pay it back (the term) as this will have a direct impact on your ability to repay the loan. Right now with low interest rates, mortgaging a home looks very enticing, but you have to remember that interest rates will go up and you need to still be able to comfortably pay your mortgage, so don’t over extend. Also don’t use debt (credit) to buy things you don’t need. Credit cards are dangerous when not used properly.

Creating your business dream and vision- the vital first step to your business success and happiness!

For thirty plus years I have worked with thousands of businesses. Only a handful of them these were businesses that made money and the business owners were happy. The vast majority of businesses were just scraping by. But, what is even more surprising is that the most of the financially successful business owners were unhappy with their business. The business consumed their life and money became the main goal and measurement of success.

Now, these “successful” business owners almost always had a strategic plan, mission statements and goals. That was how they got this big. But, they constantly were complaining about their customers’ demands. Oh, and don’t get them started on how impossible it was to get good employees! They will bore you to tears with stories of all the disappointing employees they have had hired and fired over the years.

Simply put – these “successful” business owners are very unhappy with the business they have created!

And, that is the key – every business owner created the business they now have. Both the things that are working and all those that aren’t, were happening because the business owner allowed them to happen. Until they accept that – nothing changes.

So what do the handful of business owners that are financially successful do to create an exciting place that they and their employees look forward to working in have in common? And don’t forget their customers are loyal because of the great service and atmosphere. They understood the importance of a creating a business that serves others – not themselves! The successful business owner understands that the only way to be successful is to create a company that serves someone else’s needs and desires more effectively than anyone else in the market is currently doing.

Very few business books are written on this. The best I have found is Awakening the Entrepreneur Within by Michael E. Gerber (the Author of the E-Myth Revisited).This book goes over these key points and how entrepreneurs can benefit from having powerful dream!

Everyone wants to make a difference in the world. We don’t just want to make money. Yes, we need money to pay the bills, but in an ideal world money would not dominant. At the end the day, what we and our employees really want is to make a difference. Actually, let me restate that – everyone wants a job where they can make a massive difference in the world!

From your dream you create your vision. Some call it a mission statement. Simply put, it’s what you see as your purpose for both you personally and the business. A company without a vision is a company that has no purpose – no soul! The vision must support your dream and quickly communicate your dream.

From this vision you must articulate your purpose. From this purpose you finally articulate the company’s mission.

As you can see it all starts with a dream. And, the more the dream is how you can serve your customers - the more successful the company will be! That is why this is the first step in the Human Resource area, strategic planning or even in creating your marketing plan. How can you succeed if you don’t know what your mission is? And, if the mission is not derived from a dream of how to serve others how will you continue to persist through the struggles that will invariably arise? How can you sell your customers if it is not something that is in their best interests? How can you motivate your employees if they are working only for a paycheck and not to serve your customer?

Looking for jobs as an older worker

The old saying is that you are in fact only as old as you feel, but when it comes to looking for work, how you act, look and think also come into the equation. If you are an older, experienced worker looking for a new job, there are a few things to take into account that can make the process easier.

One thing to bear in mind is that finding a new job will probably take time. You should be financially and emotionally prepared for the long haul and make sure that the channels of communication remain open with your loved ones, while not allowing anyone to deter you with depressing remarks about your age or equally depressing job statistics.

Another good tip is to make sure that you understand the job search process prior to starting. Making use of a professional career consultant can be a good method to make sure that you are able to move forward as quickly as possible and have some support.

Marketing & Selling Tip of the Week – Trying to Figure Out Your Customer

Many business owners say they know their customers but don’t understand why their marketing isn’t working. The key in creating a marketing message is giving your customers what they want; not what you think they want.

Marketing messages sometimes get over shadowed by the owner’s agenda.

For example:

A business owner has ordered a product that has been on shelves for over six months and has had very little sales activities.  He decides he is going to advertise it and have his staff include this product in their sales pitch. The product still isn’t selling. So the owner tries a different ad and places it in a different location in the store, still no changes in sales. The owner is baffled to why the product is not selling.

The owner is not listening to their customer; they do not need that product! You can spend all your time and money on advertising a product; but, if your audience is not interested in the product, it will not sell.

So what should you do as a business owner? First you have to plan out your marketing campaigns and create a message that speaks to your customers not just at them.  Take their interests and needs into consideration.  Ask yourself questions like: What does the customer think we promised? What solution do we offer? Does the customer have this problem?

If you need help getting that right message out there, give us a call at 915-857-8158! We’ll be more than happy to help you out.

Keep Missing That Promotion? Maybe This is Why!

There is nothing more frustrating than being turned down time and time again for a promotion, especially when you are not sure why.  In many cases though, it is not the way that the candidate performs at interview that holds them back, but a rather a flaw in their basic thinking.

What most people tend to do when they have their eye firmly fixed on moving that next step up the corporate ladder is to perform like a superstar in their current job.  The thinking behind this tactic is that if they can show that they have mastered their current role, their potential for the next will be sufficient to carry them through.

Often though, the responsibilities at the next level up are entirely different and require a totally different skill set.  Rather than trying to do more of the same then, or doing better what you already do, the trick is not only to look at what your immediate boss does, but to start doing some of those same things by way of preparation.

As strange as it may sound, many employees actually don’t have much of an idea as to what their line managers do, or the qualifications, skills and experience required to do their work successfully.  If you are eager for that promotion, therefore, start by doing some research to find out these things, and then do more of what your boss does!

Location, Location, Location – Are you in the right place?

Over the years I have worked with many business owners that learned a lot their
first year in business.  A lot of them now tell me that they regret signing a long-term lease agreement just to save some money on rent.  Now they realize that the “deal” they got is costing them more money than it is saving them.

The location of your business is one of the most crucial decisions you’ll have to make.  Whether it is convenient for you or your customers, your location has to meet your needs.

I had one client that signed a 5-year lease in a small shopping center on the far West Side.  He didn’t think twice about it because he only needed a small office and was on the road most of the time.  Well, after a couple of weeks he realized he should have gotten an office in the center of town.  He spent so much time running back and forth between his office and his clients’ locations that he was paying tons of money for gas, adding tons of miles to his car, and wasting time that could have been spent more productively.

Another client decided to open a store in a shopping center close to a bar-and-grill.  The client thought it would help generate more business, but that idea backfired.  Due to the popularity of the bar-and-grill, there was never any open parking, and store customers complained that it was inconvenient for them to shop there because of the traffic from the restaurant.  Eventually the client had to close the store because of the bad location.

My last story will be my own.  Let me start by saying I hate moving.  It’s a pain and it takes time away from work, so I would rather not move if I can help it.  If you’re a veteran client of mine, you know I have had two moves in the last ten years.  My first move was from 3110 Trawood to 3100 Trawood.  I had outgrown my original office and needed a space that would let me grow even more, but I really didn’t want to move too far from the area for fear of losing clients.

Just as the lease was up on 3110 Trawood, 3100 Trawood became available, so I took it.  The space had an unconventional layout and parking area, and I had to share the building with a masseuse and an escrow company.  I cannot complain about our neighbors; they livened up the building, but the parking situation became an issue.  Soon, I realized there were other problems with this new location.  The layout was not really set up for what I needed to function at 100%, a bank opened across the street which made leaving the office a safety issue, and clients never knew which way to go when they entered the building!  To top it off, I still lost clients due to the move.

When the lease was up on 3100 Trawood, I had to make the decision to either stay or move.  I thought about what I needed from an office and what would benefit my clients.  In the end the best choice was to move.  Now that I had experience under my belt, I had a better idea of what I wanted to get out of a new office.  I needed an open space that would provide multiple areas for my employees to work, a good size conference room, and a fair amount of parking.  I also had to accept that I would run the chance of losing clients no matter what location I chose. 

Which brings us to today.  We have been at 11208 Montwood for 2 tax seasons now, and I must admit that it has been one of my better business decisions.  My staff and I are able to work more efficiently, clients have been able to find us more easily, and we have been able to provide better service.

I know rent is one of the biggest costs you will have, but going for the deal can literally cost you more than your savings.

Lessons Business Owners Keep Learning the Hard Way!

For 35+ years I have worked with small business owners and watched them. This has allowed me to learn many things that worked and a whole bunch of things that don’t. This is my 20^th year running my own CPA firm and I have to confess I have repeated many of the mistakes I watched others make. Heck, since I tend to be creative, I even made a few new ones of my own.

This is the first in a new series sharing some of these lessons with you. I will start with the “myth” that most startup business owners believe and follow that with the “hidden truth” that successful business owners learn the hard way. Finally, I will finish with a business lesson to be learned.

So, let’s start ………………

Budgets – The secret to survival!

The myth most business owners believe: If you know your business, budgets are only needed by the bank when you are applying for a loan.

The truth successful business owners learn the hard way: Running a successful business requires attention to a huge amount of moving parts that seldom fall together correctly. Even the smallest business will run into cash flow problems because of the business cycle. Large growing companies are almost guaranteed to run into cashflow problems at one time or another.

In the past three years, I have met with many small construction companies who learned the “business cycle” the hard way when they won a contract at Ft. Bliss. Once they started the contract, they quickly learned that they had to pay upfront for materials and labor and that it often took 45-90 days to get paid. A quick budget would have helped them see this problem ahead of time.

What they didn’t understand is that budgets are critical to every business owner’s success! Operating without a budget is like starting off on a journey without any idea how to get to where you are going. Sounds like fun but often ends up as a disaster. A budget helps you plan to be a success rather than hoping for success.

When you budget (and I mean real-life budgeting – not Government pretend budgeting!) you actually sit down and figure out:

1. what you are going to do in order to get the sales you need to be a success,
2. what costs are absolutely necessary to deliver your product efficiently,
3. what staffing that is needed to attain this budgeted income,
4. what financing might you need during slow times.

Finally, a budget helps you stay on track. Successful business owner’s review every month what actually happened against their budget and then make the necessary adjustments needed to reach their goals. You would be amazed how many business owners only discover that they made a profit when I do the tax return after the year end. By then it is way too late to adjust for changing business circumstances.

Lesson learned: Budgeting is a waste of time only if you don’t plan on making money!

Tax Tip - The Deadline is Near

 

As the tax deadline nears...our final set of reminders for your 2016 return.

Returns are due by Tuesday, April 18 this year. Even though Because April 15 falls on a Saturday, on Easter weekend, Washington, D.C. will observe its Emancipation Day holiday that day.

You have two options to get a six-month extension if you need more time:

• File Form 4868 with IRS by the due date of your tax return, adding a check for any additional tax you expect to owe. But be careful not to lowball your estimate: If it is unreasonably low, IRS can void the extension. You can also e-file the 4868.
• Or, for a fee, charge an extension-related tax payment on your credit card through an IRS-approved processor. In both cases, the new due date is Oct. 17.

If you can’t pay with your extension or when filing your return, file anyway.

Doing so avoids the 5%-a-month penalty for failing to file. This penalty is capped at 25% of the unpaid balance. The failure-to-pay penalty is far less...½% a month.

You can arrange for installment payments by filing Form 9465. The fee is $105 ($52 if you agree to wire payments). Low incomers will be charged $43. Of course, you still will have to pay interest plus the penalty for late payment.

Your IRA contribution for 2016 is due April 18, even if a filing extension has been requested. Payins by mail are OK if they are postmarked before April 19.

Plan For Life Through Your Accountant

Have you ever stopped to wonder how some people just seem to be able to weather any storm that may come their way? This may include changes in jobs, divorce, kids going off to college or almost any unexpected things that happen in life.

In addition you may find that these same people always seem to have money to take vacations and get those new cars every few years. This doesn’t necessarily mean they are wealthier than you are; it may just mean they are maximizing their money’s ability to work for them.

Your accountant can help you plan for all these events in life by:

• Helping you prioritize – often people have difficulty in deciding what they are saving for. Your accountant will sit down with you and develop short and long term savings and investments based on what you see as important in your life.
• Assisting with “what if’s” – with years of experience in working with people with similar lifestyles, incomes, goals and financial dreams your accountant may be able to provide you with options for savings, retirement planning or just getting that special something.
• Assessing risk – many people end up investing in things that look good on the surface, or even in the prospectus, but that really are very high risk types of investments. An accountant can help you understand the risks associated with an investment potential so that you can make an informed decision.
• Lowering your taxes – everyone wants to pay the lowest possible taxes so working with an accountant year round is important. Remember that this is not just true for businesses; it is also true for individuals as well. Meeting with our accountant if you are considering a major change that will impact your finances is a great way to plan to maximize the deductions that may be possible.

An accountant will not make decisions for you, those will always be your choice. What he or she will do is make sure you understand the pros and cons of the choices that you make and how they can help or possibly hurt your financial future.

What Makes A Good Investment?

Have you ever had a friend suggest a sure-fire investment? If you think back, you may recall thinking they were a bit delusional and that the investment was risky at best or a complete non-starter at worst.

The reality is many people have a hard time determining what a good investment is and how to evaluate investment risk and return. This is where financial advisors can come in as resources to help you determine if the reward is worth the risk.

Generally, with any type of investment, there are several factors to consider. These include:

• Long term stability – When the asset, property, company or fund has a history of long-term stability and value, it may be a very good investment. However, past performance is not an accurate predictor of future value in many industries. You have to not only look at the value and stability in the past, but how relevant the asset will be in the future.
• Can you afford it? – Even the best investment is not a good risk if you cannot afford the buy-in. For example, if you have to take out a loan or liquidate your other assets, you have just tied yourself financially to that one investment. Putting all your eggs in one basket is never recommended, especially in today’s economy.
• What is the risk? – The risk is not tied into whether or not you can afford to lose all the money today, but can you afford to not have that money in some other investment? In other words, if all your retirement is tied up in one investment, it isn’t available for emergencies, for other investments, or even for paying off expenses.
• What do you know about the investment? – Many people get emotionally involved in decision making around investments. This may happen because you trust the person making the investment recommendation or perhaps you simply got caught up on the marketing and advertising. Stepping back and completing independent research on the company, stock, fund or other investment is always a wise decision.

Your financial planner can help you avoid jumping into risky investments, and help you to determine a long-term, balanced strategy for growing your personal wealth.

20 Power Marketing Tips

Use these powerful yet simple tips from the national best-seller, "Secrets of Power Marketing: Promote Brand You" - the first guide to personal marketing for non-marketers.

Create and grant an annual award.

Send hand written congratulations and thank you notes.

Send greeting cards for some occasion other than Christmas.

Send postcards when you travel and even when you are at home.

Give a good book to special clients. Always sign it with a positive message.

Build relationships with the media before you need them.

Associate with winners - attend awards functions.

Build and maintain a database of clients, prospects, and key influencers.

Earn certifications and win awards from your associations - and tell everyone.

Ask happy customers to write testimonial letters for you.

Recruit your suppliers as marketing agents. They work for free.

Join and be active in your chamber of commerce.

Write tips sheets for your customers.

Write and send articles to magazines and newspapers.

Send a news release to the media every three months.

Do something crazy and newsworthy at least once a year.

Send photocopies of your news coverage to your clients.

Build and maintain an informative and interesting web site.

Sponsor a cause, event, charity or community group.

Volunteer for your association, charity or community group.

Brainstorming Techniques

Have you been in a "brainstorming" session where each person just defended their own ideas? Worse is when people don't suggest ideas at all, for fear they'll be attacked. That's no way to brainstorm. Brainstorming is using the power of many minds, and ideas should flow freely and trigger other ideas. How do you make that happen?

The Key To Good Brainstorming

You have to have a good leader to have good brainstorming. The leader isn't there to impose his will, though, but to stop the imposition of anyone’s will. His role is to stop criticisms, arguments, and even strong opinions, at least in the first part of the session.

A brainstorming session needs to be spontaneous, open and uncritical. "Bad" or "silly" ideas can lead to helpful ones, so suggestions have to be left un-judged at first. To brainstorm effectively, you can't stifle the creative process. The leaders job, then, is to make everyone feel free to suggest any ideas.

An Example Of Good Brainstorming

The scenario: your business needs to cut delivery costs. The group throws out ideas and thoughts. "Let's not deliver," someone suggests, and when another starts to criticize, you remind him of the rules. "Negotiate lower rates," somebody says, "Or just find a company with lower rates," another adds. Ideas like reducing package weight and charging customers more are suggested, and lead to other ideas.

You keep it civil, take notes, and eventually call a halt to this free-for-all part of the session. Now it's time to evaluate and develop the ideas for whatever usefulness they may have.

To keep the creativity flowing in this stage, have participants defend or develop ideas that are not their own. This brings new insight to the idea, and prevents the problem of ego-identification that causes people to get "stuck in a rut" with their own ideas.

For example, ask the man who was critical of the idea of not delivering to work with that idea. "We have to deliver," he might start with. Then he thinks for a second and says, "I suppose we could deliver to central distribution points instead of to the individual customer. The customer could drive a short distance to pick up their order. That might save us on shipping."

Someone else suggests that the customers may like the arrangement. They would be able to return the product immediately if they were dissatisfied, with no need to pack and ship it. You assign a couple people to look into it, and move on to the other ideas.

Good leadership keeps the whole process working. In the last example, you've even used a "bad" idea to come to a possible solution. That's good brainstorming.

Marketing & Selling – Why Reinvent the Wheel?

If you have worked with me before, you may have heard me say “Why reinvent the wheel?” And I really believe in that saying.

As a small business owner, I know we have limited resources.  Using information, techniques, ideas and methods that other businesses have had success with is just smart business. They have just saved you a ton of money and time by finding a selling method that works and all you have to do is incorporate it into your marketing plan.

I have worked with business owners who have argued, "That is what my competitor is doing." My response is: So? Why are you going to lose money because your competitor tried something out before you did? All you have to do is put your own spin on it in order to have the same idea increase your sales also.

Marketing is one of those things that is always changing and can produce different results at different times; but, if you find something that has proven to work, feel free to jump on that bandwagon and hope it works for your business.

Making the Most of Computer Down Time

For some managers, Internet access is a crucial part of getting things done. So, what happens when your server crashes? What’s your backup plan?

If it’s around midday, there’s always your lunch break. But if it’s early morning or mid-afternoon, you might want to have a few options that are more productive—for you and your staff.

Here are some ideas:

• Catch up on paperwork. There are probably schedules to review—including vacations and other requests for time off—as well as reimbursement documents, invoices, etc.

• Tidy up your desk. Take that 15 or 20 minutes and clear away the clutter. If the system comes up sooner than that, don’t stop. The reorganization and the feeling of accomplishment will help you be much more productive, and you’ll regain whatever time you “lost” by neatening up. Also, your staff might follow your lead, and you can have a morale-boosting cleanup session during otherwise fallow minutes.

• Talk with your associates. You can have an impromptu department meeting, or just engage employees one on one or in a small group. Make the conversation meaningful, though: Focus on an objective or a nettlesome problem to spark a casual brainstorming session.

• Check in with your boss. If the system’s down, the honchos are not immune. Bring him or her up to speed on what’s been going on, and find out what projects and initiatives are in the pipeline so you can start thinking about them now and hit the ground running when they come to fruition.

Never Totally Trust Your Bookkeeper!

Over the years I have spoken to literally hundreds of business owners who have had problems with their bookkeepers. The lucky ones only had incompetent or lazy bookkeepers who only provided financial statements that were so wrong that they were useless as a management decision tool.

The unlucky business owners hired bookkeepers who stole thousands of dollars from them. Most of this theft resulted from the business owner totally trusting them. Why? Well the main reason is that the business owner just hates anything to do with bookkeeping! They would rather be out making a sale and working on producing the product or service so that they can get paid. Who can blame them? But, this trust can go way too far! I have seen business owners let their bookkeepers run the business finances in total. This often includes receiving the money, paying out cash, making deposits, signing checks, using the company & personal credit cards and then relying on them to prepare all the bookkeeping. I know they trust them but do they have to tempt them?

Though some employers are unlucky enough to hire a professional embezzler, most theft starts small as a onetime thing when the bookkeeper has a problem. But, they don’t get caught and they realize how easy it is so it grows. The bookkeepers rationalize it by saying they are running this company and are not being paid what they are worth. So, they deserve the money since they “earned” it!

The employer often thinks their CPA will find it. Wrong! We are hired to do tax returns or financial statements not to perform an audit. Often theft occurs before the cash is ever booked. Most often the theft is payments to cover the bookkeeper’s personal expenses that the CPA has no way of knowing they are not business expenses. There are at least a dozen ways a smart bookkeeper can cover their tracks.

So, what should the business owner be doing?

1. The business owner should sign all checks. Before they do, every check that is given to them to sign should have attached all relevant backup data so the owner knows what is being paid and who ordered it.
2. The business owner should make the daily deposit and compare it to the daily cash receipts report. (If you don’t have one you better call your CPA for help in designing one!)
3. The business owner must control all access to company & personal credit and debit cards. Be sure not to share passwords!
4. The Owner must get the bank statements and open them personally. Better yet, they should review the bank credit card activity on line daily or at least weekly.
5.  The owner should reconcile their bank monthly. If not them, they should hire someone else like their CPA to reconcile their bank accounts. Just be sure it is not the bookkeeper.

Remember, the job of a good professional embezzler is to become the trusted bookkeeper! Never ever totally trust your bookkeeper.

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

P.S. If you don't believe me, google embezzlement and bookkeeper.