Small Business Profit Maximizer!

How Should Employers Handle President Trump's Payroll Tax Deferral

Under President Trump's Executive Order, Starting 09/01/20 Social Security taxes will be deferred for the rest of 2020. So how should employers implement this order.

 

 

If Not Now--When?

To succeed in the business world, you have to replace excuses with action. In this video I discuss why NOW is the right time to start growing your business.

 

To succeed in the business world, you have to replace excuses with action.  Many owners barely have enough money to pay bills and survive; they don’t have much left over for anything else.  Many are struggling with not making enough money to take care of their families, and know that they are working harder but making less.

There are a million excuses a business owner could give for not being able to change their current situation.  They are sabotaging their success with excuses.  I am constantly hearing, “The economy isn’t good right now.”  “I can’t compete with the big guys in my field.”  “The banks won’t lend me money.”  “I don’t have any money to spend on marketing.”

Excuses are caused by our fears.  They are created by our minds as a way to avoid and ignore our innermost doubts.  Excuses lead to inaction and zero results.

If you are unhappy with your current situation, you must change it.  First, think about the worst case scenario you envision for your business.  Next, ask yourself if you are able to live with this scenario.  If not, how can you prevent this scenario from happening?  Don’t use “I should have done x, y, or z” or “One day I will do this” as an answer.  Now is the time to create a plan to strengthen your business.

Make a list of all your excuses, doubts, and fears.  Go down the list and figure out how you can eliminate or mitigate each one.  Then create a plan to achieve your business goals and include monthly action to achieve them. Once you put your plan in action every month you will prevent new excuses from forming in your mind.

The most important thing is to understand that now is the time to act and make a plan for the future.  There has never been a better time to start or grow your business.

Right now prices are low and suppliers are willing to strike deals.  Suppliers are hurting too, and are likely to work with you on material costs in order to make a sale.  Take advantage of this opportunity.

Technology has made it easier for the small business owner to compete.  You are now able to take your business online, use social media, webinars, e-books, digital magazines…the options are endless.

With more businesses shutting their doors each day, there is less competition in the market.  This will make your profits increase dramatically as the economy rebounds.

High unemployment has made a wealth of talent available at reasonable rates. Many people are much more willing to work for smart small business owners now.  In the past they wanted the perceived security of working for larger, more established companies.  Events over the last decade have shown many employees that this security was an illusion.

Remember, excuses are obstacles to your success.  If you allow them a place in your business, you are sabotaging your chance for future profits.  Replace your excuses with a monthly plan of action.  Follow the plan, achieve your goals, watch your business flourish, and add to your pocketbook.

Mama's Marketing Totally Word of Mouth

In this video I discuss the importance of referrals and explore how a local Mexican food restaurant has mastered. I also reveal the steps you must take to also master it.

 

You Must Get Them to Refer Their Friends, Family, and Associates

The best way to get referrals is to do such a good job solving problems, in a way that is both enjoyable and convenient, that people just want to brag about you to their friends.  I call this earning the referral.

Then simply ask them for the referral.  But don’t just ask them for names of people you can contact.  No one wants to unleash a hungry salesperson on their unsuspecting friends.  So instead, ask them for names of people who have similar problems.

For example, let’s say you just took photos of a couple getting married.  When you go over the finished pictures with them, ask them if any of their friends are getting married, graduating, having a baby, etc.  This is more likely to get you a referral because they can remember people in those situations easier than the mysterious someone who may want their picture taken.

Start by scripting your referral request.

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The last step of the referral process is rewarding them.  This can be as simple as a thank you card or call.  But it is much more effective to offer an incentive for referring.  A discount for both them and the new customer often helps overcome people’s hesitance.  Just look at the power of affiliate marketing.  You also might want to consider a contest for getting more referrals.

Write down how you will reward your valued customers who do you the favor of referring their colleagues, friends, and family

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Avoiding Costly Entity Selection Mistakes

In this video I discuss the three major mistakes that business owners make when opening a new company. I also discuss how these mistakes can cost you thousands of dollars.

 

 

Profits are What You Should Focus On!

In this video I discuss why focusing on sales is a huge mistake and why the business owner must focus instead on profits.

 

The myth most business owners believe:  The most important thing is to get the sale!

Why this myth causes a problem:  It focuses on the wrong thing!  The only thing that counts in a business is to make a profit.  You didn’t start a business to make a sale and turn around and send all the cash out to vendors and employees.  Most business owners started their business in order to be reasonably prosperous (some may even have wanted to be unreasonably prosperous).

Most business owners who have rapid increases in sales for the first time almost always run into cash flow problems.  They have spent so much time focusing on increasing sales that they failed to get the financing and systems in place to support the increased costs in inventory and employees to deliver the product to the customer.  The result is usually serious financial trouble and sometimes even bankruptcy.

The truth successful business owners learn the hard way!  Successful business owners have learned that in business, the only thing that matters is profits!  A profitable business provides the means to support the business owner and their employees while also paying all vendors, bank loans, tax liabilities, and investors.

Profits allow the company to have the strength to survive the tough times and to take advantage of good business opportunities when they appear.

The successful business owner starts every year by creating a profit plan.  A sales and marketing plan that focuses on profitable sales is obviously a large part of that profit plan.

Lesson learned:  Start each year by making a profit plan that maps out exactly how the business will hit the profit goal that the business owner has set.  By focusing on what is really important in running a business, you will greatly increase your odds of truly becoming successful.

Book Done at Printers!

My book is done and will on sale in 2 to 3 Week. In this video I discuss why I wrote it and how it will help you reset your profits in 90 days.

 

Problems for Employers Created by President Trump's Payroll Tax Deferral

Employers NEED to watch this video to learn the problems you face and decisions you will need to make before September 1st.

 

 

Creating Your Profit Plan

 

I am always telling my business owners that they need to have a profit plan.  I have seen many different profit plans including a few that were drawn up on the back of a cocktail napkin.  Of course, if you want to achieve massive profits you will need a more organized method.

I have developed the following system after trying many different options taught by other business gurus.  One advantage of this system is that business owners can easily understand it and implement it.  Call your accountant if you need help the first time. 

Start by creating a spreadsheet that looks like the following:

                Sales                                                                            $4,300,000

                 Cost of goods sold                                                         2,100,000

                            Gross profit                                                       2,200,000

                   Less net profit goal (10% of Gross profit)                       (220,000)

                   Less overhead (non-payroll and related taxes)              (800,000)    

     Calculating salary cap                                                              1,180,000

                Actual payroll costs                                                       1,540,000

                (Excess) payroll costs                                                    $(360,000) 

                                                                                                     ========

A few notes while putting this form together:

• When establishing your profit goal be sure to aim high. I assume your goal was to make money when you started your business.  So aim high. 

         Notice I am subtracting profits as the very first item.  Your business profit plan is designed to make you the profit that your business deserves.  If you           can’t figure out how to reach that profit than maybe the business isn’t a viable business as currently being operated.  (Pickup and read “Profit First”           by Mike Michalowicz for a very good explanation of why you must take out your profits first.)

• Cost of goods sold is all expense items needed to produce your product. Do not include payroll.

• Payroll costs are all wages, salaries and outsourced contractors that you pay. Also add in all related costs such as payroll taxes, pension plan contributions, bonuses, health insurance, etc.

• Overhead costs are all other business expenses other than costs of goods sold and payroll costs.

Once you have completed the form determine if you have excess payroll costs, like my example above, or if your payroll is under the calculated salary cap. 

If you are under the salary cap I recommend that you increase your profit goal dramatically.  In fact I would recommend that increase it to the point that you have created an excess payroll cost situation.  My experience is that businesses that are making a good profit already are perfectly situated to rapidly increase their profits by following my SMART Profit Maximizing System.

If your worksheet shows that you have excess payroll costs don’t panic. My example above is from a real client who I worked with.  Once I worked with them to implement my SMART Profit Maximizing System they had eliminated the payroll cap deficit and had increased their profit to $166,000 rather than a $220,000 loss.

This is the order that I use to increase the profits (all of these areas are covered in other articles):

• First, I work with the client to decrease their overhead costs.
• Second, I work with them to reduce payroll costs.
• The third step is to increase your gross profit. This is mainly done by reducing your product costs and to improving your business cash conversion cycle.
• Finally, we work to increase sales. We do this last because; at this point, we now can increase sales that add to the bottom profits.  Remember, if you increase sales first you may actually work harder and lower your profits.

Remember that massive profits are not an accident.  They are a result of creating and implementing a well thought out profit increasing plan.

So until next time—let’s make this our most profitable year ever.

Study Confirms Main Reasons Businesses Fail

These reasons that cause new business to fail are also the main reasons that I see in businesses that are stagnating and even starting to lose sales and profits.

 

A study by CBInsights listed the top 20 reasons startups fail.  (Full study at https://www.cbinsights.com/blog/startup-failure-post-mortem)  This isn’t the first study about startup failure, but it is different from others in that it provided a much higher level of detail.

Though it focused on startups, I believe its lessons apply to every business that is not growing to the level the owner expects.  Here are the study’s top five reasons businesses fail:

1. No market need was listed by 42%. Almost half the failures were caused because their product didn’t solve a customer problem.  This is why we spend so much time in our Sales & Marketing Boot Camp pushing our clients to really discover their customers’ true need

2. Running out of cash was listed by 29%. A third of the businesses simply ran out of cash.  This is why the business owner must become an expert in raising cash, keeping cash, and budgeting.  This is also why the business owner must have good accounting records.

3. Not having the right team was listed by 23%. Too often a small business owner can’t grow a viable business independently and fails to bring in qualified help.  Sooner or later this kills the business.

4. Being outcompeted was listed by 19%. You are often told to ignore the competition and just put out good work.  But if they have a solution to the customer’s problem that is much easier to use, or they simply out-market you, they will become the leader in your niche and you will lose.

5. Pricing/cost issues were listed by 18%. Many businesses have trouble determining what to charge and what pricing model to use.  They often build a product or service and say, “This is what I need to charge to make money.”  This approach ignores the customer.  What is the customer willing and able to pay to solve their problem?  Only after you discover this information can you determine if you have a profitable solution (product or service) to offer.

This brings me back to where I mentioned that businesses seem to be either doing very well or simply surviving.  If you aren’t doing as well as you think you should be, these five things may be a large part of the problem.  Read the full study with the comments and I guarantee you will find ideas and solutions that you can apply to your business.

The Importance of Controlling Labor Costs

Watch this video to learn the only two reasons for hiring employees, how to calculate your company salary cap and how to control labor costs. Also review three examples of success controlling labor costs.

 

Labor costs are usually the biggest cost item for a service business, and the second biggest cost for a business that sells products.  But rarely does the owner make a serious attempt at controlling it.  They may work at controlling overtime and insurance costs, but they seldom do a staffing review to ensure they are not overstaffed.

The business owner should be doing a review at least once a year.

• Scrutinize every job in your company to determine how it fits into the entire operation in accordance with your company’s long-term objectives. Probe all aspects of each job—its basic function, the level of work being performed, its relationship to other jobs, and so on.

• Decide if any job should be eliminated and those responsibilities shifted to someone else in the department. Can this job be outsourced?  Has anyone been performing work that lies well outside of his or her assigned responsibilities?  Do all positions require full-time workers or can one or more be filled with part-timers?

• See if you need to hire additional employees so that critical jobs are being staffed properly.

 

Don’t get lazy and don’t dodge the tough decisions.  The key to running a profitable business is keeping your costs under control.

8 Things You Must do to Jump Start Your Business Profits

Here are the eight things highly successful business owners do differently from their not as successful competitors.

 

A trend I noticed a few years back seems to be gathering steam.  My business clients seem to be doing either exceedingly well or just barely surviving.  Those in the middle appear to only be there while they are either growing rapidly or continuing a long-term slide to elimination.

 Granted, my client base is a small sample.  But my online research and talks with other CPAs seem to back up a trend that is basically being ignored.

 I believe that it is no accident that this separation of businesses into the extremes is occurring.  In the past you could just operate your business and make a decent living.  Now what I am seeing is that every niche is being dominated by one or two companies who have acquired 85-95% of the customers.  All the other business owners are left fighting over the scraps.

 So what do extremely successful business owners do differently?

What I have noticed is that extremely successful business owners do the following eight things that are critical to their massive success:

1. Successful business owners set SMART goals.
2. Successful business owners eliminate all excuses that stop them from reaching their goals.
3. Successful business owners are committed to constant improvement.
4. Successful business owners are committed to lifetime learning.
5. Successful business owners constantly work to identify and eliminate their profit killing mistakes.
6. Successful business owners maximize their profits from their current business.  They don’t leave any profits on the table whatsoever from their current assets.
7. Successful business owners understand the profit formula and how to apply it to their business.
8. And finally, successful business owners set a weekly appointment with themselves to systematically improve their business.

So what does this mean for you?

What are you doing this year to ensure that you are one of the successful business owners?