Archive for Starting a Business
Analyze Your Product And Services Profitability
Posted by: | CommentsGiven the number of times we’ve had clients ask for help evaluating their product or service mix this past year, I figured it was time for a bit more of a technical discussion. So get that fresh cup of coffee and use this entry to begin to ponder how your products or services help — or hurt — your business.
Knowing the profitability of each individual product/service you provide can help you make decisions to improve your bottom line. You may want to discontinue products and services that aren’t particularly profitable while promoting the ones that improve your overall results.
One basic method of looking at profitability is called cost-volume-profit analysis (CVP). At its core CVP relies on the separation of fixed and variable costs to determine the break even point of a product (or service) and how much it contributes to profit after reaching this point. Read More→
Worry no more, the government comes to our rescue… the HIRE Act
Posted by: | CommentsPresident Obama is widely expected tomorrow, Thursday March 18, to sign into law the $17 billion Hiring Incentives to Restore Employment, or HIRE Act that passed the Senate on Wednesday on a bipartisan vote of 68-29.
What, you have doubts? The Senate has approved legislation that provides businesses with a payroll tax exemption for hiring new employees. Certainly this legislation is a positive step but let’s face it, employers are not going to run out and start hiring the unemployed for the sake of hiring, at least not unless there is a 100% refundable tax credit. After all, would you spend $100 to save a little over $6? Of course not. But, for those businesses that may be on the brink of hiring the tax benefits in the HIRE Act could make a real difference. Read More→
Use financial ratios to review your Company’s results
Posted by: | CommentsFinancial ratios can be helpful tools in understanding your company’s financial health. They are a benchmark by which you can compare your business to industry standards and analyze changes over time.
In fact, benchmarking and comparing to your competition is so important to business success that I provide all my business clients with an annual report on the benchmarks and results for their particular industry or profession. Without this it can be like traveling back roads without a map. Read More→
IRS Announces Extensive Employment Tax Audits; Is your contractor really an employee?
Posted by: | CommentsAs you can imagine, with the economy still reeling and tax collections dropping the importance of the governments’ oversight of our system of taxes becomes ever more critical. From both the federal and state levels we continue to read about new and improved compliance measures being put in place. Take one of the recent announcements at the end of 2009 from the IRS as an example.
The IRS has announced it will conduct intensive employment tax audits under its National Research Program (NRP) starting in 2010. This is a multi-year program with random audits scheduled to begin in February 2010. The IRS has said it will audit U.S. companies under this program. The NRP is a study and data collection project that helps the IRS update its noncompliance estimates and update its computer-based audit programs. “Normal” audits do not yield as valuable compliance data as random audits because the IRS, in normal audits, is intentionally targeting the taxpayers they believe have noncompliance problems. NRP audits on the other hand, are random to allow the IRS to statistically measure the total amount of noncompliance in a specific area. The IRS then uses this data to update its computers and estimates of the tax gap—the difference between total taxes owed and the amount actually paid by taxpayers.
The NRP audits are also much more intense and less targeted than a typical audit. The NRP audits allow the IRS to identify where the compliance problems lie in a specific population and to better target tax returns for audit in the future.
The goal of the employment tax audit program is to gather information in five categories: Read More→
The state of California is getting even more aggressive at collecting all the taxes the law allows — no matter how small. Use tax is the latest way for the state to look for cash. The Legislature has enacted strict new registration and filing requirements for businesses with gross income of $100,000 or more.
Use tax is like sales tax but you pay it directly to the state, rather than to the retailer. The rule of thumb is: You owe use tax if what you bought would have been subject to sales tax if you purchased it at a local store and you did not pay California sales tax. You generally owe California use tax when you use, store, or consume — in California — tangible personal property purchased from an out-of-state vendor. If the vendor does not collect the California tax on the purchase, the purchaser must pay the tax directly to the state. If you don’t report and pay your use tax in a timely manner, such as with your income tax return, the state will assess penalties and interest. Read More→
Our experience with “cloud computing”… Wonderful!
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I suppose I should first ask if you even know what the term “cloud computing” means. According to Wikipedia, cloud computing is Internet-based development and use of computer technology. Essentially, this means that rather than installing some type of hardware or software in your own business computers you just use the Internet to access the tools you need via the Internet.
In our case here at Scholl, Chyo & Company, CPAs we recently finished migrating our email, calendar, scheduling, tasks, etc. from our Microsoft Exchange Servers to Google’s Apps Premier Edition. I can now say that we’re thrilled with the results. We’ve been able to eliminate the cost of maintaining several expensive servers and saving David, our internal IT guru a ton of time and aggravation. At $50 per employee per year its cost is less than the annual Microsoft Exchange updates alone.
But, not only is there the true monetary savings, we now have a much more robust and stable communication platform. And boy was it tested quickly. Read More→
Time IS Money So Get The Best Return On Your Investment
Posted by: | CommentsHave you ever reached the end of the day and wondered where all your time went? Playing catch-up to retrieve wasted time is what keeps many business owners welded to their business premises way outside of ‘normal’ business hours.
For many business owners a number of their customers, suppliers and employees are likely to be friends as well as business acquaintances. This overlap of private and business relationship can lead to requests for assistance or for special deals that can make serious inroads on their time. A lot of small business operators go slowly broke doing work for friends at discounted rates or for free. ‘Discounted rates’ translates as ‘at less than your market value’ and that means more hours you have to put in to make up for the lost profit. Read More→
12 Days for a Start-Up Business
Posted by: | CommentsThe silly season is around the corner and while recovery from the global financial crisis is, well, not exactly in full swing… I thought it was time to address the vital question of what it takes to start a new business. Much like the larger-than-life gift-wielding icon from the North Pole, many people question whether or not starting a new business on the back end of recession is a good idea … or the figment of over-active entrepreneurial spirit?
Well in some ways it’s a better time and easier than it ever has been. The competition has been winnowed out, and many businesses are quieter and less obtrusive in their marketing. New technology options including the Internet, e-marketing and outsourced suppliers offering SaaS (software as a service or “cloud computing”) make it possible for you to do a lot without emptying your bank.
My‘12 Days For A Start-Up’ lists core criteria for a business start-up, and if you can satisfy them, there may well be a surprise for you this December. Read More→
Avoid Budget Blowouts
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A budget is an important management tool. Being a projection of your income against your expenses you can check it at any time to see how well or how poorly your business is doing. The value of a budget is in direct proportion to the accuracy of the figures you use to create it. Here are some precautions to take to keep your budget figures accurate. Read More→
Choose your customer wisely, you don’t want everyone
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Nearly every business is dependent on a constant flow of new accounts. It’s easy to ignore this because most businesses earn most of their revenue from old, established customers.
The problem is that a certain percentage of old customers will drift away or change their focus every year. They’ll change their buying habits, often for reasons that you can’t influence or life just happens.
So you need to continually market to recruit new customers, establish them, and start promoting them up your customer ladder, so that one day they’ll be part of your staple business clientele.
It’s easy to forget to do this – you’re so busy making money that you have no time to market. But then one day you wake up and find that several of your major customers have defected and you’re left with a gaping hole in your revenue and you have no easy means to fill it.
So you need to be systematic. Think like a commercial fisherman. You go out every day, invest and organize. Commercial fishermen never tell tall tales about the ones that got away. They don’t have to. Their livelihood depends on keeping every bit of their catch and therefore the focus is always on retention.
Step one in this systematic approach is to identify the sort of customer you’re looking for. You can use a range of criteria, including:
- geography (how close they are to you)
- their capacity to make repeat purchases
- their capacity to grow and extend their purchasing
- their preference for quality over price
- the likelihood that they will value your business
- their payment habits (prompt payers being obviously preferred)
- their industry sector
This way you make up a profile of the sort of customer that is likely to be of value to you in the long-term. Then you go out and prospect for them. This doesn’t have to cost you a lot of money. You can do a lot of research merely by surfing internet directories and Yellow Pages, selecting likely candidates and doing some online or other research on them. You can also get information from the directories of trade associations, clubs, chambers of commerce and trade magazines.
Once you’ve got a list of likely candidates, go into more depth. You might want to check out their credit records. Use your industry contacts to see what the ‘buzz’ is about them. Once you’ve done that, you start to make your pitch, whether that involves cold calling, sending out brochures or networking. The main thing is that, at the beginning of your sales process, you’re focused on your final goal, which is to develop a long-term relationship with a valuable customer.
Of course, you’ve still only cast your hooks into the water at this stage. There are other stages to the process. If you want more information, send me an email or give me a call to discuss how to segment your customer base and design a new customer acquisition marketing program.
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