Business

What Keeps Business Owners Up at Night?

Aside from worrying about everything, there are really just a few timeless concerns of most business owners. If you don’t have at least one of these concerns then that is probably a concern. Here they are with a few solutions:

Employees: No matter how well you run your business, it will always be a challenge to manage employees. Common problems are: finding good employees, keeping good employees, and making sure that they are productive. There are several ways to address these concerns that are simple, but no way full-proof. The first step is to take your time hiring and to hire the right people from the beginning. Next, treat your employees well and fair. Lastly, spend the time to train your employees properly so they are productive. It sounds so simple, but maybe that is why it is so difficult.

Taxes: Who wants to overpay their taxes? Not only paying taxes, but staying compliant with all of the numerous tax filings can be a huge burden. Having a good accountant can help to alleviate this concern.

Growing: If you are not growing then your expenses will soon eat up a good portion of your profits. Growing sales is a major concern, however, the focus should be to grow your sales profitably. Aside from smart marketing, each new dollar of sales should be profitable to you, otherwise something is wrong.

Cash flow: Either not knowing where your cash is going or not having enough are both problems. Your accountant should help to explain where your cash is going and why there is a shortage. Common solutions are to improve your accounting systems and procedures, increase sales, implement better collection processes, increase your profit margins, and obtain a line of credit.

Too many hours: I don’t think that you are allowed to stop thinking about your business so technically you work 24 hours a day. How can you work less hours? There are dozens of ways, but a few easy to implement solutions are: better scheduling, delegation, and a commitment to work smarter, not harder.

There are a few other closely-related concerns, such as health insurance for employees, feeling burnt out, and the economy. Unfortunately, we cannot control the economy.

If you like what you just read then don’t hesitate to forward/share with your friends

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

Follow Your Emotions and Go Broke

According to dictionary.com, one definition of emotion is “an affective state of consciousness in which joy, sorrow, fear, hate, or the like, is experienced, as distinguished from cognitive and volitional states of consciousness.” Emotions can be complex and if you make business and financial decisions based solely on how you feel at the moment without considering facts then this can be a disaster. Here are a few examples and ways to prevent you from making decisions based upon emotions:

Investment decisions: When the stock market tanks and the economy is in a recession, you may be strongly tempted to sell all of your investments, which is most likely the worst decision ever. If you have a good financial advisor then hopefully they can temper your emotions.

Too excited over expected results: A perfect example is when a sales person tells you how much money you will make by placing an ad in their publication because thousands of people will see your ad. It may be true that thousands of people will see your ad, but if they aren’t your target market then your results will be dismal.

Conflicts with customers and employees: If you have a performance issue with an employee, first determine if this is a recurring problem before you pounce on them. Maybe the issue just needs a gentle correction versus more severe actions. What about a customer complaint? Even if you are right, try not to reactive emotionally so as not to let the situation escalate out of control.

There are several techniques that you can use to prevent poor, emotionally-based decisions:

Wait: Don’t be reactive to another person or situation. If the situation requires you to speak or deal with it immediately, then pause, even if just for a moment, before speaking. For other decisions, take a day or more to make a decision. The time spent making a decision should coincide with its importance.

Look at the facts: What you think is true based upon how you feel and what actually is the truth are two different things. Separate feelings from facts.

Seek advice: Speak to a trusted professional, friend, or colleague about your decision. Sometimes just speaking to a third party before making a decision can put things into perspective.

Don’t let your emotions get in the way of your decision making.

If you like what you just read then don’t hesitate to forward/share with your friends

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

What is a Growing Business Doing Differently than a Struggling One?

There are major differences between the actions of a business owner with a growing business versus that of a struggling business. There seems to be a recurring theme for growing and struggling that closely mimics those who are fit and healthy versus those who struggle with their weight.  The accumulation of certain actions will greatly impact the outcome as follows:

Successful Businesses:

Hire smart and delegate: Business owners who are willing to take on additional employees will find that they are better able to increase sales due to additional capacity. They also do not over do it by hiring too many employees at once compared to needs, which ends up causing cash flow issues.

Invest in infrastructure: This not only includes the physical infrastructure, such as buildings, but also technology and equipment. Have you noticed that franchised restaurants update their locations quite often and do not hesitate to invest in technology and equipment?

Are reluctant to use debt: Debt can easily overwhelm your business even if you are growing rapidly. Although debt can be useful if used for the right reasons, it must be used sparingly and wisely to avoid pitfalls. As a business matures, then the goal should be to rely less on debt to support business operations. Why do you think the interest rates and payment terms are much different with traditional financing versus non-traditional loans, such as merchant loans or hard-money loans?

Seek advice: There are different ways of learning and some are more efficient and effective than others. One way to shortcut your success is to seek the advice of those who know more than you and then implement their suggestions. It sounds easy, but our pride tends to get in the way.

Struggling Businesses:

Are obsessed with cutting expenses: This may come as a surprise, but many struggling business owners are obsessed with cutting expenses. My only guess is that they do not see the link between smart spending to support profitable business operations. They are also penny wise and pound foolish and spend enormous amounts of time trying to save a few bucks, which ends up costing more.

Think that debt is THE answer: Debt may be a part of the solution, but it is not the answer to all of your business problems. Examples of problems that debt will not solve are: a lack of sales, overly burdensome expense structure, too many employees for the size of the business, and bad customer service.

Have an excuse and don’t listen to reason or reality: The economy is by far the most common excuse, along with “nobody buys this anymore” or “no one has time to do that anymore.” They may be right to an extent, but what about when the economy has turned around? If your customers have changed their buying trends, then why don’t you adjust your strategy as well? If you don’t change then you will prove yourself to be correct, but at a major cost to your business.

The probability of becoming a growing business will increase if you take the actions of growing business, while the odds of struggling will increase if you take the actions of a struggling business.

If you like what you just read then don’t hesitate to forward/share with your friends

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

5 Traps to Avoid When Growing Your Business Rapidly

Growing your business, especially growing rapidly, can be a really great accomplishment, but there are dangers when growing too quickly. Here are several traps to avoid to ensure successful growth:

Cash flow: Quite often, a small business will have cash flow issues when growing too rapidly. This is due to a delay of getting paid, while expenses need to be paid for upfront or before getting paid. There are 3 solutions that can help depending upon your situation. The first is to see if you can obtain terms with your suppliers to delay expenditures, second is to obtain a line of credit to support your receivables, and third, which tends to be the hardest, is to build up a cash cushion first.

Finances: As you grow your business, the financial aspect becomes even more crucial to your success. This entails a focus on investing in more robust accounting software, accounting staff and/or accounting services, streamlined processes and procedures, and internal controls, to name a few.

Employees and management structure: Unless you enjoy working 24/7, you need capable managers to manage your employees (you have been hiring more employees, right?). It is easier to have a few people reporting directly to you then several dozen. Also, make sure to acknowledge and reward the loyal employees that helped you to obtain your success.

Personal time and wellness: It is very easy to put in excessive hours to handle the massive growth of your business. There will be times when you need to work extra, but if this becomes the norm then it is easy for your personal relationships to suffer, along with a decline of healthy habits.

Infrastructure and organization: This applies not only to the physical nature of your business, but especially your operations. Have you outgrown the physical space that you occupy? Are you using equipment, technology, or IT that is not keeping up? Are your vendors and advisors able to handle the growth of your business? What about marketing and marketing staff? These are all areas to consider; otherwise, they will act as barriers to your growth.

Growth needs to be profitable, stable, and smart; otherwise, your results can easily go in the opposite direction that you intended. Think long-term, strategically, and surround yourself with the appropriate advisors to help you along your journey.

If you like what you just read then don’t hesitate to forward/share with your friends

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

Old School Marketing that Still Works

Google AdWords, Facebook ads, Instagram, and email marketing, are just some of the modern ways to market your business. We are told by social media experts that traditional, old-school marketing does not work anymore. Let’s take a closer look, especially as some digital marketing methods have become overly saturated.

Some traditional marketing methods work better than others, which is the case for any type of marketing techniques. Methods, such as phone book advertising, may be dead because no one receives phone books anymore, but here are 4 old school methods that are still alive:

Networking: Developing a network of referral sources by going to networking events, lunches, dinners, etc. and developing strong, trusted, relationships, still works. People always like to do business with and refer their customers to someone they know, like, and trust. It may take some time though.

Pounding the pavement: If you are selling a service or product to restaurants, as an example, then make an effort to visit them. Make sure to know when it is a convenient time to stop by plus it is beneficial to have information to provide to the business owner.

Direct mail: I’ve heard it being said that direct mail is dead. It’s not true. If you are going to commit to direct mail, which can be very costly, make sure that your efforts are very focused and get noticed.

Speaking engagements: What better way to come into contact with people who actually want to hear and know more about your expertise? Even a small group of attendees can produce a significant return on your time and investment, especially if you make it easy to get in touch with you and obtain contact information from those willing to share this information.

If you like what you just read then don’t hesitate to forward/share with your friends

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

The Lifeblood of Your Business

There is one critical aspect of your business that you cannot underestimate or take for granted. It’s not marketing or accounting, although these are important and critical also. It’s . . .

Your employees!

Customer service: Depending upon your role in your business, they probably have much more interaction with your customers than you do. Your employees should understand the importance of your customers and enjoy servicing them. Customer-focused employees will ensure a pleasant and successful experience for your customers.

Operations: Properly trained employees will be more productive and have better outcomes than poorly trained employees. Training can be on-site, off-site, or a combination of both, but is extremely important to the overall results of your business. Your customers will also have a much better experience when dealing with capable employees.

Team: Your employees are your team and to some extent like an extended family, especially if you factor in all of the time that you spend together. The business owner is the leader of the team and how well your team is lead will ultimately determine how well they perform. Leadership skills can be learned by experience, training, advisors/mentors, and education resources.

Treat ‘em well: Your employees are people too and need to be treated with respect and compassion. This does not mean that you should not correct them or be firm when necessary. Everyone needs this from time to time, even you. Make sure to compensate them as well as you are able to and provide room for career growth. Remember that people have ups and downs in life and sometimes it will be your employees who will pull you through those rough patches; other times you will be their rock.

Good employees will help your business to grow and prosper and they will grow along with it. Bad employees will provide a stumbling block and decrease your chance of success. Don’t neglect your team!

If you like what you just read then don’t hesitate to forward/share with your friends and click “Like” on LinkedIn

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

The Secret Formula for Financial Happiness

Is there really a secret formula for financial happiness? If so, it would look like this:

Income = $100

Spending = $90

Result = Financial happiness

Alternatively:

Income = $100

Spending = $110

Result = Not too happy financially (at least not for long)

Simple, but true.

If you like what you just read then don’t hesitate to forward/share with your friends and click “Like” on LinkedIn

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

4 Low Risk Ways of Starting Your Real Estate Empire

Real estate investing can be lucrative over the long haul, but most people never even get started except for owning their own home. How can you get starting without taking upon too much risk?

Don’t sell your home: It is very common for individuals to purchase their first home with little money down and then sell and move after a handful of years. Usually, there is some equity in the home, which is used as a down payment on a larger home. Aside from a large percentage of your equity being eaten up by selling costs, you now have another 30 year mortgage, most of the time. However, another option is to save up the funds for a down payment on a larger home and then rent out your original home. You still need to prepare the calculations to see if this makes economic sense, and if so, then now you are officially a landlord.

Buy the building: This option is for business owners only. Over time, if your business is growing profitably, then owning a building instead of renting could be a good option for you. There are several advantages to purchasing a building and renting to your business. First, if you occupy a majority of the building then you may be eligible for SBA funding, which generally requires a much lower down payment then traditional financing. Additionally, you know the tenant really well.

Partner up: I’m not a huge fan of partners for various reasons, however, you may have a family member or friend that you can partner with to combine resources that you would not have if purchasing a rental property alone.

Look farther away: The real estate market in North Jersey is very expensive compared to other parts of the State and the country in general. If you look a little farther away, then you may be able to find a real estate property for much less, and quite possibly a higher ratio of rental income received versus the price paid. This will make it easier to come up with a down payment.

If you like what you just read then don’t hesitate to forward/share with your friends and click “Like” on LinkedIn

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

Is Cash Flow Going in the Wrong Direction?

Cash flow. It’s what keeps every business alive just like the blood flowing through your veins. The irony is that although it is extremely important, it is not managed properly by many businesses, even the successful ones. Here are reasons for common cash flow issues and how to fix them:

Problem: delays with receiving payments: Common reasons for not get paid timely include: slow invoicing/billing procedures, customers on long payment terms, not accepting electronic payments, and customers with cash flow issues.

Solutions: Do not delay with invoicing or processing payments from customers, especially as soon as a service has been rendered. When possible, shorten payment terms to get paid quicker and/or ask for payment up front. In some cases it is not possible for customers to pay quicker, and if so, then it may make sense to obtain a line of credit.

Problem: spending cash before a sale: This greatly applies to retailers that have to pay for inventory and then wait until it is sold to receive cash. It can also apply to paying for equipment, wages for employees, and various other expenses.

Solutions: For inventory-driven businesses, monitor your inventory to make sure it coincides with your sales cycle and that inventory is actually selling. Some retailers, specifically online retailers, may be able to have items shipped directly from the manufacturer or distributor once a sale is made, which lowers the amount of cash needed for inventory. Also, stretching out payment terms to vendors is helpful.

For service-based businesses, wages can be one of the largest expenses. Make sure that employees are working on a project that is planned as opposed to wasting valuable time on longer-term projects that cannot be taken to completion, thus not being able to be paid.

If you like what you just read then don’t hesitate to forward/share with your friends and click “Like” on LinkedIn

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!

What’s Your Chance of an IRS Audit?

The IRS publishes statistics regarding the percentage of returns that have been examined by type of return. Not surprisingly, some taxpayers have a greater chance of being audited than others according to the latest statistics. Let’s take a look at some stats:

The majority of audits, 74.8%, were conducted via correspondence, and the remaining 25.2% were conducted in the field.

Overall audit rate: The overall audit rate is .5%, but the audit rate of individual returns is .6%.

Corporate audit rates:

.9% for all corporate returns, excluding s-corporations

8.1% for large corporations with assets of $10M or more

.2% for s-corp returns

Individual audit rates:

2.4% for returns with business income and gross receipts of $100,000 to $200,000

3.2% for returns with positive income of $1M or more

.2% for returns with income lower than $200,000, no Earned Income Tax Credit, no business income or rental income.

If you read the footnotes of the statistics, it appears that 37% of individual returns that were selected for examination were due to a taxpayer claiming the Earned Income Tax Credit (EITC). Also, the statistics do not include several million CP2000 notices that are sent to taxpayers each year when there is a mismatch between what is reported on their tax return and what is reported to the IRS. If those notices were included, then the audit rate would be much higher.

If you like what you just read then don’t hesitate to forward/share with your friends and click “Like” on LinkedIn

Make sure to subscribe to our weekly emails to receive practical business, financial and tax strategies! Sign Up Now!