Do You Want Your Business to Grow

Do You Want Your Business to Grow?

In my previous article, I shared the five stages of small business growth. One of the biggest decisions business owners face is whether to try to expand their businesses. Some business owners don’t want to grow. They want to maintain their clients and eventually pass them on to someone else as they head toward retirement. Others want to grow but haven’t learned what they need to know to progress. Both choices are ok; you just need to determine which direction you want to go in.

If you’re confident that you don’t want to grow, then start working on succession planning. Respect the clients that have given you their business for years by making sure you have the right people in place. Then create a plan to transfer the business and start working the plan.

On the other hand, if you want to expand your business, but feel stuck, it may be due to one of the following.

You Don’t Have a Solid Business Plan in Place

No business can succeed without a solid business plan in place, one that involves continually monitoring all the aspects of your business, ensuring that you’re prepared to deal with problems as they arise. An effective business plan will help you to concentrate on your vision and goals and establish firm plans in order to accomplish them.

Poor Cash Flow

As a startup, money is usually tight and it can take a year or two in some cases to generate a stable income. Even if you’ve been in business for years, you may need to consider whether or not your cash flow is working for you. It’s important to come up with and adhere to a realistic budget, and avoid draining the business income on unnecessary spending. Smart businesses also keep tight financial records and review their revenue and expense reports every month.

Ineffective Sales and Marketing Strategies

If you are ineffective with your sales and marketing efforts, you’ll throw money at the wind. You need to know your target audience, how to best market to them and how to close the deal. If you don’t have these very necessary skills, you’ll need to hire someone who does. This expert can focus all their time and energy on getting to know your competition, attracting potential clients and closing the deals.

If you feel you can’t afford to hire professionals, then start to learn sales and marketing skills yourself. It will take a lot of time and effort, but you’ll see better results.

Substandard Customer Service

Once you’ve attracted the attention of potential clients and converted them into customers, you need to do whatever it takes to retain them. Continue to monitor their wants and needs, make it easy for them to communicate with you, and make an effort to be pleasant and responsive.

Are You Suffering from Burn Out?

Owning a business demands a massive investment of money, time and energy. Let’s face it, it can be emotionally draining. All of the above leads to burnout. It’s important to take time, even if it’s mini-breaks throughout the day, to unwind. Whether it’s a brisk walk outside, reading a good book, dinner with the family or taking a short weekend “stay-cation,” the breaks will help you recharge and refocus.

If you’re unsure about what it takes to grow, start working with a coach or a mentor. He or she can help you identify resources and steps to take to get you to the next level. Schedule a free consultation today.

Five Stages of Small Business Growth

Understanding the Five Stages of Small Business Growth

As you grow your business, it goes through a life cycle, of sorts, encountering different challenges in each stage that requires a unique approach. Marketing, sales, business development, and preserving market share are all different now than they were when you opened the doors. Your priorities and business operations have changed and so have your finances. Understanding the stages of small business growth will help prepare you to deal with the obstacles that most small businesses face as they continue to grow.

There are five stages of small business growth that you’ll encounter as you grow and scale your business.

Existence

In the existence stage, businesses are typically small organizations in which the owners do most of the work and guides the actions of their employees. At this point, the company’s main concerns are getting clients and providing services or products that will earn their new client’s loyalty.

Survival

In the second stage of business growth, the company has managed to establish itself, has managed to generate a good client base and the quality products or services that those customers require. Revenues at this point aren’t capable of funding exponential growth, leaving survival as the major goal. Owners continue to be heavily involved in the day-to-day operations of the business.

Success

At this stage, the business has accomplished goals and stabilized cash flow making it possible for the owners to make the decision to either use their business as a means of support or as a base for further growth.  The owners will be less involved in day-to-day operations as this stage.

Take off 

At this stage, the business has grown considerably, has achieved a sustainable amount of financial resources and attracted key managerial talent. Primary concerns at this stage are not only to accelerate growth but also to learn how to generate enough revenue to handle that growth.

Resource Maturity

Businesses that arrive at this stage are generally preoccupied with consolidating and managing the financial gains that were brought on by the accelerated growth. To continue being successful, they also will need to focus on retaining the benefits associated with their small size. That is their ability to be agile, efficient and think out of the box.

Being Prepared

The five stages of growth must play a part in your business plan and the processes from stage one to stage five. If you plan for what needs to be done next and take immediate action, your business will have the best chances of achieving the next stage of growth.

If you don’t know what stage you’re currently in, take a look at your major risk factors. Are you just starting out or do you have a thriving machine that’s operating on all cylinders?

Once you know where you are, you can begin making plans for your next stage. You’ll also become more aware of your business, identify the problems, possible pitfalls, and opportunities at any given point. If you can do this, you’ll be able to navigate the five stages of business growth and thrive beyond your imagination.

If you’re struggling with any stage, I can help identify areas of improvement and scalability. Schedule a free consultation with me today.

Why You Should Issue 1099-MISC in Your Business

Why You Should Issue 1099-MISC in Your Business

These days businesses rely on additional services from contractors and freelancers for tasks that don’t require employee headcount. This means that it’s essential for them to understand IRS rules and varied prerequisites for issuing 1099-MISC forms in their businesses. Unfortunately, a lot of business owners “wing it” when it comes to following the rules and requirements because keeping up with changes can be so aggravating that many entrepreneurs simply give up. This can be a dangerous and costly move with penalties adding up quickly. Fortunately, filing the 1099-MISC isn’t complicated. Here’s what you need to know.

1099-MISC Defined

Generally speaking, you’ll need to issue a 1099-MISC to anyone you’ve paid a minimum of $600 for services related to your business. This includes materials, rent, awards, prizes and other income payments made during the year. You don’t need to submit a 1099-MISC for payments made for personal functions.

A 1099-MISC form helps independent contractors report their earnings to the IRS. It’s similar to a W-2 that an employee receives from their employer.

The IRS requires companies to report payments to the IRS and recipient through a 1099-MISC. The form displays total payments that you provided to an entity or person during the year that you’ve received services for. It contains personal information, including name, address and either employer identification or Social Security number. Beyond the basic personal information, it classifies every type of payment in individual boxes on the form based on the grounds for your payment. For example, if you paid for contract work the annual earnings should be acknowledged as non-employee compensation.

Business Legal Obligations

There are a wide range of transactions that require you to submit a 1099-MISC to the person or entity who received your payment. A few of the most common transactions include paying:

  • $600 or higher in compensation in exchange for services rendered
  • $600 or more to a law firm or attorney for legal services
  • Payments you make to rent commercial real estate, like a warehouse or office.
  • $10 or more in royalty fees
  • Awards or prizes of $600 or more
  • Direct sales of at least $5,000 of consumer products to a buyer for resale through a non-retail establishment

In addition, if you ever end up paying a lawsuit settlement, you’ll be required to report all of the payments you make apart from the ones that compensate an individual for their physical injuries or medical expenses.

In order to avoid IRS penalties, it’s important to be aware of reporting deadlines for the 1099-MISC. You’ll need to give the recipient of the payment a copy of the 1099-MISC no later than January 31st, right after the end of the tax year that you made the payments in. In addition, you’ll need to file the 1099-MISC with the IRS by February 28th. The IRS may give you more time if you file electronically.

Setting up processes and systems to issue 1099s can help you save time and money every year. If you’d like to discuss how I could help your business improve productivity and efficiency, schedule a free consultation here.

Simple Steps To Recruit Finance Professionals

Simple Steps To Recruit Finance Professionals to Work for You

Hiring the right professionals is crucial for the success of any business. From telecommunications to manufacturing, to retail products and banking, businesses across all market sectors need exceptional financial talent to increase revenues, reduce costs, efficiently navigate through investments and merger and acquisition activity, and intelligently deal with increased government regulation. Even though recruiting exceptional financial talent is difficult, the following simple steps will help.

Step 1: Create a Success Profile

Along with developing job descriptions, it is important to create a “success profile” of what you consider to be the ideal finance professional. You probably have a basic idea of the responsibilities and job skills you want the potential employee to handle, but you’ll have a much better chance of recruiting the right candidates (and avoiding the wrong ones) if you have a success profile laid out in advance. Make sure you specify the attributes you’re looking for including knowledge, skills, attitudes and behaviors.

Step 2: Understand What Motivates Possible Candidates

Once you have a good idea of who you’re looking for, it’s time to consider what the ideal candidate will want in return. A positive, motivating work environment is as important to most employees as compensation. Does your workplace offer perks, benefits and work-life balance that will attract and motivate top-notch finance professionals?

Step 3: Seek Employee Referrals

Your employees can be a very reliable and valuable recruiting source. A lot of companies have an employee referral program in place that rewards employees who recommend someone that the company ends up hiring with a reward like cash bonuses or extra vacation days.

People like to work with people they know, like and trust. Not only will you get a good referral, but you increase the likelihood of keeping both employees longer.

Step 4: Tap into Social Media

If you’re not utilizing social media to its fullest, it’s time to put up a company LinkedIn profile, especially if you’re trying to recruit a finance professional. When it comes to job searches, the active job seekers spend a lot of their time networking on sites like these.

Step 5: Network

By joining business associations, going to networking events and consistently contributing to public discussions regarding your industry, you’ll be able to get the word out about your company and your recruiting needs. It’s also a good idea to take part in career fairs and maintain a presence on college campuses. These types of venues give businesses the opportunity to offer job placement, mentorships and scholarships to college students.

Step 6: Hire a Recruiting Firm

A lack of time, inexperience or inadequate professional network can all result in recruitment challenges. If you’re facing any of these challenges, it’s time to contact a recruitment agency. Reputable professional recruiters have access to a substantial pool of applicants and they also handle the key administrative details, including placing ads, reviewing resumes as well as carrying out preliminary interviews. On top of that, you only pay the recruiter’s fee once they find someone you end up hiring.

I can help you find the right financial professional for your team. Contact me today to learn more about my process.

Why Is Professional Judgment Important In Accounting?

Why Is Professional Judgment Important In Accounting?

With the progressively complex nature of today’s global business practices, it’s important to have reliable financial information for your business. Accountants are professionals and due to the nature of their industry, are expected to apply professional judgment. Having the ability to make a professional judgment is essential for accountants, but it can be challenging,

Professional judgment is a required skill for principles-based accounting strategies, including auditors, preparers and regulators of financial statements. That said, making professional judgment calls can be difficult, and there isn’t necessarily one right answer in most cases. There is a learning curve, but it’s possible to recognize and take the logical steps necessary to better navigate through judgment calls, including asking common sense “what and why” questions.

What is Professional Judgment in Accounting?

Professional judgment is the process of drawing a conclusion or arriving at a decision when there are several possible alternatives to choose from. It is a process that is unbiased, logical, consistent and objective.

Accountants make use of pertinent information and balance intuition, knowledge and experience to make the best call. Unfortunately, many accountants don’t have a thorough process in place and fall into common judgment traps. Many of these judgments end up being shortcuts that can help simplify complex accounting tasks but may lead to less than optimal judgments and can cost your business in the long run.

It’s important that you have a good relationship with your accountant so that you can express your concerns and support for professional judgment with your business tax records. Make sure that every item in question is assessed according to the law. If professional judgment is needed, you should work with your accountant to understand the impact that the decision will have on your business.

Following a Sound Professional Judgment Process

Peace of mind comes when you hire the right people for the right job. Accounting is not easy. Your accountant is responsible for providing regulators, directors, managers, investors and others with reliable, up-to-date, comparable financial and accounting reporting information. It’s important that he or she stays on top of the law, receives the training required to make good business calls and follows a consistent process.

By persistently following a good judgment process, understanding risks and vulnerabilities, and having the right competent accountant on your team, you’ll be able to monitor your company’s risks (including fraud) and strategies. Be consistent in your judgment process. If you chose path A for one item, use the same process for the next one in question. Following an expert judgment process equates to improved risk management and business outcomes.

If you need help creating a consistent, repeatable and efficient judgment process for your business, call me today. I can help you implement the right systems and people to take your business to the next level.

Strategies for Operating a Cash-Strapped Business

Strategies for Operating a Cash-Strapped Business

Cash flow is the lifeblood of any business and a fundamental factor when it comes to growth and longevity. Today, cash-strapped businesses are easily forced to the brink of failure with the difficult process of trying to get credit or a bank loans. It’s important that entrepreneurs understand from the get go that they can’t operate for long if their cash outflow is greater than cash inflow. All companies, especially startups, need to conscientiously monitor their cash flow to prevent disruption to the business.

Strategies for Operating a Cash-Strapped Business

A substantial percentage of cash flow challenges arise because business owners haven’t invested enough time estimating the potential revenue streams achievable and balance it against their obligation to pay out expenses. As a business owner, you should know the importance of calculating precise cash flow forecasts. If you don’t appropriately estimate your cash flow for the day, week, month and quarter, you’re going to be putting your company at risk.

From the first day you start your business, you need to track and manage your cash flow, including paying your employees, vendors and others against the time frame in which you collect payment from your clients. Make sure that you time cash inflow to arrive before payments to others are due. You should also set up cash reserves to smooth out the bumpy road.

Quality Product or Service is First!

You should always focus on the quality of your products and services before you decide to cut costs. Your business won’t survive if what you’re offering is fatally flawed. You may decide to outsource some of the work to keep employment expenses low.

Customer Service is Second!

Providing superior customer service will give any business a competitive edge. Sure, most consumers want to save as much money as possible on transactions, but they also expect a positive customer service experience.

Before you cut prices to match or beat the competition, focus on improving your customer service skills. When customers email, message or call, make sure that they receive real help instead of empty promises or excuses. If you have a designated customer service employee or department, ensure that they can quickly and efficiently respond to dissatisfied customers. If you cut employment costs by outsourcing this function make sure that you’ve picked a good agency and that you’re following employment law.

By having a well thought out customer service strategy in place, you’ll give your clients a reason to continue doing business with you, regardless of whether your prices are somewhat more expensive than your competitors. Mistakes are going to happen, but if you have effective customer service strategies along with a great product or services in place, most consumers will be more likely to overlook the occasional mistake.

When it comes to business success, cash is always king and cash flow should always be priority #1. Let’s work together to come up with a strategy for your business. Call me today to discuss.

Why Are Net Income and Cash Flow from Operating Activities Different?

Why Are Net Income and Cash Flow from Operating Activities Different?

It’s important for businesses to understand cash flow. Cash is what keeps a business operating smoothly. You obviously need profit, but equally as critical is your cash flow. You must have a firm understanding all the financial facets of your business, from net income to cash flow from operating activities. Here are the basics.

What is Net Income?

Net income is the mathematical outcome of gains and revenues, minus the cost of products and solutions sold as well as losses and expenses. Net income appears on your income statement as a net gain. If the net amount is negative, it is referred to as a net loss.

What is Cash Flow from Operating Activities?

Cash from operating activities is net cash inflow documented in the first section of cash flow statements. Cash from operating activities is focused on the outflows and inflows from primary activities such as providing services, buying and selling merchandise, etc.

Cash from operating activities doesn’t include the amount of money spent on capital expenditures such as new facilities or equipment, cash garnered from the sale of long-term assets or cash utilized for other long-term investments. `

Here’s How They’re Different

Net income and cash flow from operating activities are different for many reasons.

  • Reason #1: Cash flows from operating activities include specific items that are addressed distinctly on the income statement. Non-cash expenses, including depreciation, share-based compensation and amortization need to be included in order to calculate net profit. These types of expenses are incorporated back into net income on the associated cash flow statement. They reduce net income but do not affect net cash flows.
  • Reason #2: Net income is a line item found in the operating activities area of the cash flow statement. Cash flow from operating activities includes the sum of net income, changes in working capital and changes for non-cash expenses. Increases of existing assets, including accounts receivables, inventories, and deferred revenue are viewed as uses of cash. Reductions in these types of assets are considered sources of cash. In the same manner, decreases in current financial obligations, including accrued expenses, accounts payable and tax liabilities are considered are considered uses of cash.
  • Reason #3: Another reason they are different has to do with timing. Differences exist between the recognition of revenue and expense and the various underlying cash flows.

Once you understand the difference between net income and cash flow from operating activities, you’ll be on your way to fully comprehending the health of your business. But, what happens when your business is cash strapped? I’ll share strategies in my next post so stay tuned.

What You Don’t Know Will Hurt You

Most entrepreneurs don’t start a business because they have a passion for running a business or are an expert on operations. They do it because they’re passionate about their idea and feel that what they have to offer is sure to attract their target audience. Unfortunately, the entrepreneur’s journey is never an easy one.

It’s true that what you don’t know will hurt you. The world is constantly changing, and savvy business owners understand that they need to make time to work on their business instead of in it. To be successful, they must constantly learn and stay current in their field, on employment, in marketing and so much more.

Here are a few tips to keep yourself in the know:

Hire Good Staff With Excellent Communication Skills

Besides having the skills to expertly perform the tasks of the position they are given, having excellent communication skills are a necessity and will also be a reflection of the company. Also, being able to clearly communicate helps keep employees, management and clients in tune with the business.

Hire a Good Business Coach

Business coaches often stay on top of the trends. They’ll be able to help you pinpoint what you’re missing, identify possible roadblocks, help you come up with strategies to address them and help you remain accountable when it comes to following through.

Be Flexible and Responsive

Research your industry and be ready for changes. If you’re not the kind of business owner who can be responsive and flexible to the needs of your business, entrepreneurship might not be for you.

Never Stop Learning

Today there are plenty of ways to maintain the learning process, and you should continually expand your knowledge base. Consider the following easy ways to keep up to date:

Attend Conferences

Conferences and networking events are the perfect opportunity to learn from people in your industry (including your competitors), listen to the speakers and meet people, including potential clients. Even if the presentation is about something you’re familiar with, it will reaffirm what you already know or provide inspiration.

Take an Online Course

There are online courses covering every topic these days, so the possibilities of furthering your education without leaving home are endless. Online courses are also a great way to achieve added business designations that can help improve your credibility.

Read

Read anything that applies to you and your business, whether it’s about improving your sales skills, wealth, communications, cold calling skills or making the most out or email or social media marketing. Even if the topic seems a bit dry, the usefulness may become relevant down the road.

Listen to Podcasts

Today’s podcast technology provides the convenient ability to listen to and take in different content topics during your down time. You can listen to podcasts in the car, on a plane or at the gym. Where ever you desire.

Always spend time learning and continuing to improve your business because what you don’t know will hurt you. But what you do know will set you apart from the competition.

Have you ever had a situation where what you didn’t know, hurt you? What did you learn from that event? I’d love to read your advice in the comments below.

Why You Need an Organization Chart in Your Business

As a sole proprietor, implementing an organizational chart may not be on your list of top priorities. If everyone is aware of their roles, and you have only a handful of employees who wear multiple hats, it may seem pointless to create one.

The fact is that an organizational chart covers much more than tracking employees. It ensures that your company’s efforts are being aligned with your brand strategies and vision. Following an organizational chart is a good business habit to ensure that you optimize your time as well as your employees.

Here are some of the benefits that you might see if you prepare and follow an organizational chart.

Organization Charts Make Planning Easier

Since you can visualize the structure of your business, you can use an organizational chart to help you make plans for the future. You’ll be able to allocate resources better, easily discover competencies of employees and help them visualize a career path at your company.

Organization charts help to provide a blueprint for resource allocation within your business. It can also help you identify areas where you might need a stronger skill set or someone with more experience currently and in the future. Having a hiring strategy in place is much more effective than waiting until you need to hire someone.

Better Employee Job Descriptions

Putting together an organizational chart provides the opportunity to create better job descriptions and assign ownership and accountability. It can eliminate indecisiveness regarding who is accountable and for what. Additionally, it shows who they report to for assignments, time off and career plans.

Strategically Design and Run Your Business

Using an organizational chart makes it possible for you to strategically design a business model that works for you. It’s possible for you to have the freedom you need to operate in your native genius while helping employees see and adopt your vision.

Time to Focus on Customer Service

Companies using a well-defined organizational chart will be able to spend more time concentrating on customer service as opposed to trying to correct ineffective operational issues. Superior customer service helps companies better communicate with their customers and potential customers, answering inquiries right away. When you’re not putting out fires, you have the time to focus on increasing profits and longevity.

Useful Tools of the Trade

There are a number of organizational chart products available on the market at varying price points. If you’re just starting out, a simple Word document or PowerPoint organization chart will work just fine.

Once you’ve completed your organization chart, put it in in a location where other internal employees can see it. Google Drive or Dropbox are affordable options and may even be free depending on the solutions you choose.

An organization chart that nobody sees doesn’t exist. Make sure you share it! I can help you create systems to improve communication in your company. Give me a call today so we can get you all set up for the new year.

Understanding Environmental Regulations

The U.S. Environmental Protection Agency (EPA) and other environmental agencies levy a number of environmental regulations that apply to all businesses, regardless of size. You need to be aware of the law if your business practices involve the release pollutants into the air, water, land or sewers, or if it involves transmitting, storing or the disposal of hazardous waste.

The Business and Environment Connection

It’s critical that you fully understand how your business impacts the environment and that you’re complying with environmental laws. Failure to comply can lead to court appearances, penalties and lawsuits. Even employees can end up being prosecuted for offenses that are committed by the company.

Claiming ignorance of the law won’t protect you, your company or your employees. You should fully understand federal and state environmental laws.

Managing Hazardous Waste

The Resource Conservation and Recovery Act permits are sanctioned by states, counties and EPA Regional Offices to ensure the safe storage, treatment and disposal of hazardous materials. Here’s the link to Arizona’s website.

Some of the most common hazardous wastes include medical waste, like blood and syringes and other waste such as paint, solvents and oil. In addition, the EPA provides a comprehensive list of hazardous waste along with the proper way to dispose of it.

The regulations that apply to your business will depend on the amount of waste you produce each month. Typically the laws require that businesses take care of any hazardous waste that they generate and that they store the applicable waste in safeguarded drum containers.

You can’t accumulate over more than 2,200 pounds of hazardous waste on your property at any time. Additionally, you must hire a licensed waste hauler to transfer the hazardous waste to a facility that’s permitted to receive and dispose of the waste.

Air Pollution Management

The Clean Air Act was designed to reduce air pollution. Any business that emits impurities into the air, including dust, smoke, odors, gases, volatile organic compounds as well as solid particles is subject to the law.

Generally, you’ll need permits that require you to disclose the type and quantity of pollutants you’re releasing as well as the steps being taken to minimize the pollutants. You’ll also need to be able to provide information on how you measure, track and document the pollutants your business emits.

In some cases, a permit may not be required. Especially, if the quantity and form of pollutant emissions fall under a minimum threshold.

Wetlands Protection

Wetland habitats include bogs, marshes and swamps and are commonly located in flood plains and alongside waterways. If your business is located near or in a wetland area, you may be required to obtain permits from local, state and federal government agencies, especially if the business discharges any form of pollutant near a wetland area. The U.S. Fish and Wildlife service provides an interactive map that details the location of wetlands across the United States.

While environmental regulations and concerns might not have a direct impact on your business, they may effect on your clients and vendors. It’s important for you to consider how these regulations may affect not only your bottom line, but your supply chain as well.

Make sure you have contingency plans in place so that your business doesn’t come to a halt. Even the smallest of businesses need to comply with environmental regulations. What you don’t know will hurt you. There are no exceptions.