New Years Resolutions for Small Business

As any business owner knows, it pays to do some goal planning and lay out a strategy for next year. The key is to make the overall goal lofty while laying out intermediate short term goals that need to be taken to succeed. For example, if one of your goals is to pay down 100k in business credit card debt by the end of 2011 then you can tie the overall goal into monthly goals and weekly goals. You would need 10k in extra cash flow monthly, or $2500 weekly, to stay on target. This objective can then be tied into you other facets of your business. For example, if your free cash flow is only $1000 a month then you know that sales need to be increased by "X" amount, or overhead reduce by "X" amount, to make this more obtainable.

As you can see this takes a massive amount of planning to work in all the variables and implement the strategy. Keep in mind, success takes time...whether you hit your goal by the end of 2011 or mid 2012 is still considered success...as long as you stay committed to the overall objective.

Small business advice for investing your extra cash in a low interest rate environment

As a business owner, there are limited options to invest your cash safely and get a decent return. It is not like it was a few years ago where putting your money in a savings account or money market account would give you 3% or more annually. If you have unused space for your business, buying in bulk to achieve discounted pricing might give you a decent return. Consider the fact that even saving 5% on bulk adds up. Another option is to stockpile raw materials you commonly use in manufacturing...since commodities are forecasted for further rise in 2011 locking in pricing or hedging your future costs may increase your bottom line and make you more competitive in the future.

As always your best option may be to pay off credit cards and line of credit debt. Although not considered an "investment" lowering these debts make you appear bankable, save you monthly, and allow you a cushion to access if you need cash quickly

How to be productive as a business over the holidays

Many businesses experience a slow down over the next 2 weeks as employees and employers take time off. Since many of your clients are slow as well this can be a great time to pay attention to productive tasks you wouldn't normally have time for during a day to day operation.
- One of the most productive tasks is to personally call your most important clients and wish them a safe holiday and productive new year. Don't use this opportunity as an effort to sell them...simply to say personally wish them a happy holiday. You can also send them a holiday card or quick e-mail.
- Use this downtime to do some strategic planning for next year. Further analyze your business model and make definitive goals for what you want to accomplish in 2011. Whether it be on the revenue side, bottom line income, or landing new accounts.
- Re-organize your office, clean up the clutter and allow yourself a fresh start to 2011.
- Start gathering important tax information together for both personal and business. An early start during this downtime will leave you more time during your busy months to keep focused on what earns your company income.
- Re-evaluate your marketing efforts, what sort of return are you getting on what you spend? If you aren't satisfied with your results take some time to start considering other options.
- Most importantly, re-charge, spend time with your family and allow time for yourself. This allows you to re-engage and be productive after the 1st rather than having a regretfully holiday hangover of "I wish I would have more time off"

Update on tax legislation and how it affects small business owners

The House passed the tax legislation, and over $800 billion package, and all that is left is for Obama to sign off. The most important feature for business owners is the allowance of a 100% write off on equipment acquisitions through the end of 2011. Business owners that are profitable can utilize this to re-invest in their business and reduce their taxable income. Although this will only help capital spending, this could further weaken the value of the dollar or lead to a dramatic rise in interest rates. Also, many business owners have loss carryforwards for the last few years and wouldn't have to pay tax anyway so having an additional equipment payment may not make as much financial sense. On the most basic scale, if the investment isn't going to more than pay for itself within an 18 month timeframe then it may make sense to delay...regardless of how great of a tax break. This also could lead to an opposite affect of business owners streamlining their operation further by automating and reducing their work force.

Bond Bubble and affect on Business owners

The government recently announced a $600 billion bond buying program to attempt to hold down interest rates. Despite this stimulus, bond yields have risen recently which will drive up interest rates on everything from new mortgages to short term lines of credit. Business owners should be proactive to protect themselves from rising interest rates by avoiding variable rates whenever possible. There are a few possible outcomes depending on what the fed does.
- If investors and overseas nations lose confidence in the bond market yields will increase further...making interest rates jump substantially. Either the federal government then prints more money as part of a stimulus plan to buy more bonds...in affect to hold down the rate or consumers/business owners are stuck with unattractive interest rates. Either way it is a dangerous time to hold a significant amount of variable rate interest debt.

Business owners cutting energy costs

For many manufacturers, the cost of electricity is a big component of their overhead manufacturing costs. Many business owners are starting to be proactive about ways to reduce this cost by staying ahead of their competition and improving their margins. Since the SBA has recently reduced restrictions on funding, as a business owner you may be able to implement these measures at significantly more attractive funding than previous commercial programs offered. Here are just a few ways business owners have been making their business more energy efficient:
- Install LED lighting to reduce lighting costs
- Install solar panels to control your useage and stop buying from the grid
- Install geothermal systems, these generate electricity and heat from underground sources
- In cold weather states, look for new insulation applications to reduce heating costs.
Keep in mind some of these applications allow you to take tax credits to further reduce your taxable income.

Mistakes small business owners make with their phone/voice mail system

I have worked with many owner's over the years in helping them expand and as a result have come across a number of common mistakes companies make in setting up their voice mail. Surprisingly, even larger corporations with over 50 employees make some of the same errors. Here are the most common and troublesome problems that may be costing you clients:
- Having a voice mail system that takes more than 5 rings to pick up. Your potential clients aren't patient and will move onto the competition if they think no one is answering the phone.
- Having a voice mail system with an infinite loop. These errors are common, you 0 out to get an operator and no one picks up so the system routes you back to the main menu. Potential clients are stuck in an infinite loop.
- Having an answering service instead of voice mail. These services are frustrating for clients, it takes too long to leave a message and just advertises that your business is too small.
- Not keeping up with your voice mail greeting. Having an outdated greeting shows that the business owner isn't paying attention to detail. Don't say you are out for Easter when it is already August. In addition, don't say you are out until Monday without leaving a specific date range you are out. I have had some clients make the mistake of keeping this greeting over months...are they always out until Monday?

Mistakes small business owners make on their company website.

Many small businesses have already embraced the internet by launching their own website...in today's economy it is a must for small business owners. A website gives credibility and allows potential customers to find you in this digital age. However, a few common mistakes can end up hurting your business instead of helping it.
1. Not making your web page user friendly. A client usually makes up their mind in the first few seconds of viewing a website whether to continue or hit the back button. If the layout on your website is confusing with multiple links/graphics/banner adds etc then your web visitors may skip you and go on to a more user friendly site
2. Your website takes too much time to load. If your website doesn't pop up in the first few seconds your client will move on. Having video and graphics can be great but save it for other pages on your website and not the main page if your home page doesn't load quickly.
3. Having a "News" section with no recent news. If you don't post anything within the last few months as news then get rid of this section or pay more attention to it. Too many business sites have news releases from 2009 or 2008 and nothing since then. As a potential client, I view this as either the business went under, isn't successful in winning contracts, or is inept on keeping things up to date.
4. Having a "contact us" section that asks for too much information. Keep it simple, a name, email, and phone should suffice. If you are asking for addresses and a bunch of other irrelevant information your prospect won't invest the time to fill it out. They know you are using this information to build your database however don't lose prospects by making it too challenging.

Bush Tax Cuts Extended, update for Small Business Owners

Under Obama's proposed plan, Bush era tax cuts would be extended for 2 more years. This benefits small business owners in the 6 figure bracket. In addition, 100% expensing of equipment has been extended through the end of 2011. From a conservative standpoint, you may be able to invest in your business, accelerate your write off, and on paper not show as much taxable income. These plans might not spur hiring but if anything would make additional investment in income producing equipment more feasible.

Obama tax break update

Interesting, Obama reduces the Social Security tax withholding for the employee but not the employer. Also, the tax on dividends stays the same at 15% which makes investing for an income stream still relevant. I will post a formal update as I get into the changes in detail and how it applies to business owners. 2Y4T3H8RXQMQ

How small business owners are fighting rising benefit costs

With the costs of insurance and benefits forecasted to rise not only are small business owners automating production as much as possible but they are starting to outsource certain business functions. To reduce head count, many owners are finding it more cost effective to outsource HR, Accounting, and even marketing functions. This does not bode well for the unemployment rate however allows business owners to better maintain their costs.

What the tanking dollar means for small business owners.

Commodities keep making new highs and the value of the dollar is forecasted to drop significantly over the next few years due to the massive debt our country is in. Manufacturers based in the United States may benefit in a pick up in the export market since our goods become cheaper in the international marketplace relative to certain currencies. The problem is that as the dollar tanks further raw material costs rise so small business owners need to be proactive about hedging the prices of their largest raw material components. For example, if 50% of your product involves steel then an investment in either steel production companies or a play on futures can help protect your business if steel rises by 20-30%. This can also put your business in front of any competitors that aren't proactive enough to protect themselves from inflation and double digit interest rates.

Unemployment Rises/impact on small business

Unemployment rose to 9.8% and employers added only 39000 jobs...106000 less than expected. Although some analysts are probably surprised I am not. In day to day discussions with business owners, owners are automating as much as they can and do everything possible to prevent hiring. With the cost of insurance and benefits forecasted to increase, it makes more sense for owners to add equipment then hire. A perfect example is a manufacturing plant at capacity, rather than add an overtime shift with additional supervisors and lighting costs it is more cost effective to add duplicate equipment and keep the same staff. The added benefit is a great tax write off under Section 179...plus your equipment won't show up late for work.

How to fight inflation and why fixed debt is good

It seems like the government can't stop printing money to try to get us out of this economic depression. Based on how much debt our country we must prepare ourselves for inflation and double digit interest rates. Since eventually China could start dumping their dollar holdings (they already are investing in commodities) either the dollar will tank or our government will be forced to raise interest rates to try to pay back the deficit and prop up the dollar. Either way taking on fixed debt now at low interest rates is a smart investment...you can pay back your debt with worthless dollars in the future. By saving your cash, you can invest in assets that are forecasted to appreciate...silver, gold, oil, or emerging markets such as Brazil. By investing through an ETF you can also quickly liquidate your assets and raise capital if need be rather than trying to pull your capital out of your equipment assets or real estate. If do decide to hedge a portion of your assets in commodities make sure you are aware of different capital gains tax implications by holding physical gold or the ETF GLD.

Example of Section 179 to clear up any confusion

Section 179 Example

A few people have asked me about an example of how Section 179 works. Here is a simple example, lets say as an owner you were going to show $50,000 in profit at the end of your 2010 Tax year. If your tax bracket is 30% then you would normally pay $15,000 in tax back to the IRS in April, 2011. If you added even 10k in equipment, whether it be computers or a work truck, you would reduce your taxable income to $40,000 and save yourself $3k in tax. Don't buy equipment just to buy equipment, but take a hard look at what may benefit your business and profit from

How small business owners can profit from Section 179

Update on Stimulus Program for Small Business Owners

What is Section 179?

The Section 179 deduction is a tax deduction that enables business owners to deduct up to $2,000,000 in equipment to help offset their taxable income. The allowance lets you take a 100% write off on the first $500,000 in equipment added and a 50% write off for any amount over $500,000 up to the $2,000,000 limit. These limits were increased as part of the 2010 Small Business Jobs Act to help spur investment in the economy and allow business owners flexibility to grow their business. This provision allows owners to accelerate their tax write off and take accelerated depreciation in the first year instead of over a 3-7 year timeframe