Create a Theme for a Prosperous and Meaningful New Year

It’s almost 2014, and at this time of year, it’s natural for us to pause and reflect on where we’ve been and where we want to go.  For business owners, it’s especially important to raise our minds above the daily fires for a moment, take in some fresh air, and elevate our perspective.  Creating an annual theme is an easy and fun vehicle to do just that.  

Deciding on a theme for the year will give you a focus and a new perspective on your work and your routines.   It can be highly rejuvenating to look at things through the lens of your new theme. 

Ideas for themes are limited only by your imagination.  Some possible themes include:

• Organizing, detoxing, or cleansing.   Consider cleaning out your garage (or your office), upgrading your systems, re-designing your filing system, or going on a cleanse or a vacation or a retreat that will leave you feeling clutter- and worry-free. 
• Growth.  You might want to consider a growth-related theme, such as productivity or profitability.  You might also want to develop a new skill such as learning a new language, developing your computer skills, or taking a philosophy class at your local junior college. 
• Abstract themes, such as abundance, creativity, or diversity.  At the risk of sounding a little fluffy, an esoteric theme might be just what you need in 2014.  A theme with abundance will allow you to think big, be abundantly generous with others, and search for large contracts.   A theme with diversity will challenge you to be more open-minded.  You may also want to consider forgiveness, gratitude, humility, or service. 
• Relationships.  Your year might be dedicated to meeting new associates and building business relationships.  Your action item might be to spend more time networking, participating in groups, or going to your industry conference.
• A new service.  Perhaps you’re launching a new service and need to focus on developing this new line of business. 
• Giving back.  On a personal note, you might value volunteering and decide to organize your year around a couple of volunteer opportunities. 
• Exploring.  If you’ve retired or the business is starting to run smoothly without your day-to-day input, it might be time for that trip around the world.

As you choose you goals for 2014, make sure the majority of them support your theme for the year.  Themes can bring an overarching focus to our practices and our lives. 

What’s your theme?  Let us know what your theme is and we’ll share ours!

What to Do When Calling the Help Line Doesn’t Help

Have you ever called a help line and at the end of the call had a bigger problem than before you called?  Unfortunately, it’s not uncommon. 
Navigating the help line process can be a challenge for anyone’s patience.   Here are a couple of tips you can try to make the process a little less painful. 

Repeat Business

If you get someone that does a good job of solving your problem, ask them if you can contact them directly.  You will begin to establish a rapport, and you’ll have an inside ally you can turn to.  They’ll also begin to know your issues, the product you’re calling about, and how you use it. 

Fly First Class

Sometimes, it’s just worth it to pay for a higher level of access.  You can check that out yourself, or you may have expert vendors you can tap to access their higher-level resources.  By paying for a higher level of service, you can get priority service and access to more highly trained personnel.

Learn the Language

How you communicate your request to the help line personnel can make all the difference in the world when it comes to saving time.  To speed up the process, have the following things handy:

·      If an error message is involved, take a screen print or write down the exact wording or error code, if any. 
·      If software is involved, be ready to let your technician know the operating system you’re on, what browser you’re using if the Internet is relevant, and other details that will isolate the problem. 
·      If software is involved, they may ask you what version you have.  You can find that by choosing File, Help from the menu, or they can walk you through it.   

Call Off-Peak

For shorter wait times, try to call when no one else in calling.  For hardware and software support, this may mean avoiding Mondays and rush hours.  For questions to the IRS, it may mean calling earlier in the season. 

Hire an Expert

Some of your vendors may have access to a higher level of support based on their connection with the company.  For example, certain QuickBooks ProAdvisors have access to an elite group of support technicians and get priority services as well.  Accountants have a special line in to the IRS. 

You may be able to save money and especially time by delegating these help line calls to those privileged vendors.  

Try these tips to improve both the speed and accuracy of your help line calls. 

Optimize Your Revenue Mix for More Profits in 2014

Many small business owners focus on generating more revenue every year, and that’s a great objective.  But not all revenue is created equally.  If you sell more than one product or service in your business, then you can benefit from looking at your revenue mix. 

Although it’s fun to watch our revenues grow, it’s the profit number that really matters.  If your expenses grow faster than your profits, then you have a lot of activity going on, but you don’t get to keep as much of what you make, which is what really matters.

An insightful exercise to try is to take a look at your revenue mix.  Then you can ask “what if?” to optimize your profits. 

Your Revenue Mix

Let’s say you offer three different services: Services X, Y, and Z. Your revenue pie looks like this:

X:  $1.4 million or 70% of the total
Y:  $0.3 million or 15% of the total
Z:  $0.3 million or 15% of the total
Total:  $2.0 million

In this example, Service X is clearly the service making you the most revenue in your business.  But is it making you the most profits? 

The profit you receive from each of these service lines is as follows:

X:  $160K
Y: $20K loss
Z:  $60K
Total:  $200K

While Service X is generating the most profit volume for your business, it’s actually Service Z that’s the most profitable.  Earning $160K on $1.4 million yields 11.4% return on Service X, but earning $60K on $300K yields nearly double the return at 20%.  Service Z generates the most return.   And if possible, Service Y may need to be discontinued or turned around. 

Optimizing Profits

Your strategy for a more optimum revenue mix might be to sell as much of Service Z as possible, while eliminating or fixing the problem around Service Y. 

It’s fun to experiment with different revenue mixes.  And of course, there are many more variables besides profit, such as: 

·      Which service do you prefer to work on?
·      Are you able to sell more of the most profitable service or are there marketing limitations?
·      Is one service a loss leader for the others?
·      Are you able to adjust price on the lower margin services to increase your profits? 

There are many more questions to ask and strategies to consider to make you more money, which is why we love our job! 

A New Year, A New Mix

We hope you’ll spend some time analyzing your revenue mix and having fun asking yourself “what if?”   If we can help you expedite the process or add our perspective, please reach out anytime.

Five Fall Projects to Refresh Your Financial Results

As we move into the fall season and the final quarter of the year, it’s a perfect time to commit to a project in your business that will help you reach the year’s end in better shape.  Here are five ideas:

1.      Back-to-School Time

If payroll expenses are one of the higher costs in your business, then it makes sense to boost your team’s productivity and maybe also your own.   Fall is back-to-school time anyway, so it’s a natural time of the year to take on a course, read a business book, or hire an organizer to help you get more from your workspace. 

If you spend a lot of time doing email, consider taking a course on Microsoft Outlook® or even Windows; learning a few new keystrokes could save you tons of time.  If you need more time, look for a book or course on time management.  Look for classes at your local community college or adult education center. 

2.      A Garage Sale for Your Business

Do you have inventory in your business?  If so, take a look at which items are slower-moving and clear them out in a big sale.  We can help you figure out what’s moving slowly, and you might even save on taxes too. 

3.      Celebrate Your Results

Take a checkpoint to see how your revenue and income are running compared to last year at this time.  Is it time for a celebration, or is it time to hunker down and bring in some more sales before winter?  With one more quarter to go, you have time to make any strategy corrections you need to at this time.  Let us know if we can pull a report that shows your year-on-year financial comparison. 

4.      Get Ready for Year’s End

Avoid the time pressure of year’s end by getting ready early.  Review your balance sheet to make sure your account balances are correct for all transactions entered to date.  You will be ahead of the game by getting the bulk of the year reviewed and out of the way early. 

Also make sure you have the required documentation you need from vendors and customers.  One example is contract labor that you will need to issue a 1099 for; make sure you have a W-9 on file for them.  If we can help you get ready for year-end, let us know. 

5.      Margin Mastery

If your business has multiple products and services, there may be some that are far more profitable than others.  Breaking these numbers out to calculate your profit margins or contribution margins by product or service line can help you see the areas that are adding the most income to your bottom line.  Correspondingly, you can determine if you have any items that are losing money; knowing will help you take the right action in your business. 

Refresh your financials this fall with your favorite idea of these five, or come up with your own fall project to rejuvenate your business.   

Five Fun Things to Add to Your Invoices

When it comes to marketing, the company invoice might be the last thing you’d think about.  But think again:  it’s a great place to make every attempt to get paid faster and have your customer coming back for more services and products.  Here are five fun easy-to-implement ideas to add to your invoices: 

1.      A Thank-You

A simple “Thank you for your business” or a “We appreciate your business” is a nice added touch on the bottom of every invoice. 

QuickBooks invoices include a comment line where you can choose your comment or write one for yourself.  You can also customize the form so that it appears on every invoice. 

2.      Your Current Special Offer

A customer that just purchased from you now trusts you; it’s the perfect time to let them know what else you have available that they could benefit from.  Your offer could be a small amount off their invoice for referrals they send you, your monthly special, a sale item, or an item related to what they purchased. 

Just add a quick text line to your invoice letting them know the special and where to call for more information.  If you haven’t ever tried this, you will be surprised and delighted at the results.

3.      A Prominent Due Date

Most invoices include terms, but you can make it even easier on your client by computing their specific due date.  If at all possible, include the due date on your invoice so the customer can see clearly when they need to pay you. 

Make the due date stand out, too.  Bold it, print it in a different color, increase the font, or do all of the above.  You want it to be really clear when that payment is due in your office. 

4.       A Payment Link

Can you take payments online?  If so, include the web link that customers can use to pay you online.  This might be to a shopping cart, PayPal®, or another online payment system.  If it’s convenient for your client to pay, you’ll get paid faster. 

5.      A Friendly Warning for Overdue Invoices: “Does your mother know you haven’t paid this invoice?”

If all the above fails and the customer does not pay you by the invoice’s due date, you’ll want to have a process for re-sending the invoice and/or statement until the customer pays or until you’re ready to turn it over to a collections agency.  Here are some sample sentences you can choose from:

“We hope you've just overlooked this bill and can send your payment right away.”

“We’re re-sending this invoice in case it got lost.  Please send payment right away.”

“Could you check on the status of this payment for us? Our records show it’s past due.”

“Please contact us if you have questions or issues with this invoice. Payment is now past due; please remit immediately.”

“Hey, we need to pay the rent!  Please send your payment as soon as possible.”

When the invoice gets older, sometimes it helps to add a little humor: 

“Does your mother know you haven’t paid this invoice?”

Marketing to Get Paid

With these five low-cost ideas, you’re sort of “marketing” to get the payment sooner. They are easy to implement, cost very little, and will improve your cash flow. Try them and let us know how they are working. 

Do You Know Your Small Business Vitals?

On a doctor’s visit, the first thing the nurse does is take your vitals:  your temperature, blood pressure, pulse rate, and respiration rate.  These basic measurements are the first place doctors look to see if something is wrong with our health. 

Knowing your vital signs, and especially when they are out of whack, is good for your health.  In the same way, knowing your business’s vital signs, and especially when they are out of whack, is good for the financial health of your business. 

Vital Measures

If you’ve been in business a while, you might already know the “vitals” you like to track.  Here are some common ones for a small or new business:

·            - Checking account balance(s)

·            - Amounts owed (bills, payroll, and loans)

·            - Revenue for the month and year-to-date

·            - Sales by customer so you can see the top five to ten largest customers

    

      As time goes on and your business grows, you may want to add some of the following:

·            - Revenue for the month and year-to-date compared to last year

·            - Net income for the month and year-to-date compared to last year

·            - Days Sales Outstanding which is a measure of how long it take to collect on an invoice from a client

·            - Revenue by service or product line in a pie chart

These are just a handful of the many options there are when it comes to measuring the results of your business, and it would be difficult for us to list all of them here.  The point is to decide proactively what you’d like to track on a monthly basis.  Then you can set up the process it takes to get those numbers delivered to you in the format you prefer. 

Once you decide on the numbers you need to run your business, you’ll be able to take your “vitals” whenever you want.  But you can take this to the next level with one more idea:  exception reporting. 

Being Exceptional     

It’s great to glance at your numbers periodically, but there can be a lot of data to wade through.  How about getting a report that tells you only when the numbers go out of range?  This is called exception reporting, and requires that you set ranges for each measure you want to follow.  If the measure stays within range, you do not have to be alerted.  However, if it falls out of range, then you can get a report to tell you what’s going on so you can take the right business action. 

Exception reporting is not all that common in small business, but can save a busy owner a lot of time. 

A Clean Bill of Health

By determining the vitals you want to watch for your business and putting a process in place to monitor that information, you will be helping your business stay healthy.  If we can help, please reach out and let us know.  The doctor is IN. 

Five Ways to Rev Up Your Referrals

In the vast majority of industries, referrals are the most cost-effective way to gain new clients and grow your business.  When you attract new clients through referrals, your marketing costs are lower, your selling process is easier and more effective, and the referral usually makes for an excellent client.  It’s just good business sense to look at how we can proactively increase our referrals.   Here are five ideas.

1.      Your Email Signature

We know it can be embarrassing or uncomfortable to ask your clients and friends directly for referrals.  A great compromise is to add a line to your email signature that takes care of it for you.  Here are a couple of wording options:

Your referral is our greatest compliment!

Referrals are the lifeblood of our business. We thank you for yours.

We appreciate your referrals.

Adding one of these lines to your email signature file is a subtle notice to everyone you email that you are open to taking referrals.  It’s indirect enough to where no one feels put on the spot, and it takes all of five minutes to implement. 

2.  Acknowledge Your Referral Sources

When you find out someone has sent you a referral, be sure to acknowledge that person with a thank you note or a gift.  (Be sure to check any licenses you hold so you know what restrictions you are under concerning gifts to clients; some industries disallow it.)

You might want to reward your top referral sources with more than a thank you note.  If you are not sure who your top referral sources are, we can help you create a report in your accounting system so you can track that information on a regular basis. 

3.  Set Up a Referral Program

Creating a formal referral program generates several benefits:

·         It formalizes the process of asking for referrals.  This lets clients know you’re serious and interested in referrals. 

·         It gets the word out to everyone without anyone feeling pressured. 

·         It is cost-effective and still far lower cost than using other marketing channels. 

·         It is not too time-consuming and produces results.

To set up your referral program, decide how you want to reward your referral sources.  It could be as fun as awarding prizes such as Kindles and tablets to clients who send the most referrals to you.  The cost of the prize is a small price to pay for the lifetime revenue of several new high-quality clients.  Send a letter or email out announcing the program, and then set up a process for tracking. 

If you’re in an industry where prizes and programs are simply not done, then a simple letter requesting referrals will work too.  Be sure to include a description of the specific type of client you are looking for; you are far more likely to get referrals when clients know who to look for. 

4.  Develop Referral Sources

One way to truly quantum-leap your business is to find new sources of referrals.  Your clients are a great source, but they each know so many people.  If your clients have been with you for a while, your referrals could stagnate because your clients have referred just about everybody they are going to. 

Keep your referrals growing by tapping into power partners.  These are small business owners that have the same type of client you do, but are not competitive at all.  The best way to reach out to them is to send them a referral!

5.  Set Up Referral Processes

There’s a lot your back office can automatically do when it comes to referral processes. 

·         You can remember to ask how a new lead heard about you when they first call.  Then you can record and track that, so that you will know where your top referral sources are.  You can systematize the thank you notes and gifts so they go out timely and automatically. You can regularly schedule times with power partner to keep them up to date on your business changes and opportunities. You can systematize a referral program or related communications to keep everyone informed. Once you set up these processes and delegate the tasks, you will grow your referrals and subsequently your revenues. 

Oh, and by the way, we appreciate your referrals!

What Does Popeye Have to Do with Accounting?

You might have heard the terms “cash basis accounting” or “accrual accounting.”  Your net income number can change depending on which method your books are set up for.  Here’s a simple explanation of the difference, with a little help from one of the most famous cartoon characters in history.

Popeye and Wimpy

You might recognize Popeye the Sailor Man from the television cartoons or other media.  His sidekick, Wimpy, was the one who was always hungry and always out of cash.  One of his favorite sayings was, “I’ll gladly pay you Tuesday for a hamburger today.” 

It’s All in the Timing

Let’s make today Thursday.  If Wimpy wants to pay us Tuesday for a hamburger today, here’s how it would be done for a restaurant on cash basis: Cash basis recording Wimpy’s hamburger purchase Both the sale and the receipt of cash would be recorded on Tuesday.  Companies on cash basis only record the transaction when the cash is received. But, if the restaurant’s books were on the accrual basis, it would be a different story: Accrual basis recording Wimpy’s hamburger purchase Wimpy’s hamburger sale would be recorded on Thursday, the day he ate the hamburger.  The receipt would then be recorded on Tuesday, assuming Wimpy made good on his promise to pay. You might be asking why a few days is such a big deal.  Outside of cartoon life, a couple of extra twists can happen.  It can be far more than a few days from the time you do the work to the time you get paid for it.  And often, these dates span different months and even years, affecting the amount you have to pay in taxes to various agencies.  Manipulating these dates (legally, of course) is one of many tax planning strategies that we can help you with.      

Choosing for Your Business

In many cases, the government has chosen which method you must use when it comes to sales tax, payroll taxes, and income tax.  That’s part of the reason we make the required adjustments to your books at year end. To help you run your business in a forward-thinking way, the accrual method is best.  You can record invoices for work you’ve done even though you haven’t received payment yet.  You can enter bills you need to pay before you pay them to forecast cash requirements.  Using accrual accounting, you can budget for cash flow needs as well as see more accurately what your revenue and income is looking like. For clients who remain behind in their bookkeeping and just want to catch everything up once a year, the cash basis is adequate.  However they lose out on all the good information they could have had throughout the year to run their business better. For other businesses, a hybrid approach between cash and accrual accounting can be the most cost effective. 

A Little Help from Popeye the Sailor

What would Popeye say about all this accounting talk? 

"That's all I can stands, cuz I can't stands n'more!"