Happy Holidays! Entrepreneurs, Get Ready for the 2020 New Year with these Hacks for Your Small Business.
Small Biz Hack: Tax Prep is Just the Start
Another year-end and new year are upon us! Once the parties are all over and you are back to building your business, I know that you are preparing to distribute your 1099’s and W2’s by the end of the month as well as finishing your yearly close-out of your books. Great job! You are a well-oiled compliance machine! In addition to your annual tax preparation burden, don’t forget to do a couple of other things that will make your life a lot easier this year as a business owner.
Small Biz Hack: Change the Oil in your Vehicle
Wait, is this advice on how take care of my car, or is this about my business? Well, it’s both. I grew up hearing that you should change your oil every 3 months or 3,000 miles. The New York Times says that this old rule of thumb is pretty much history, however, despite the new technology of oil and engines, it is still important to get your oil changed in January. Most of us use our personal vehicles in our businesses. IRS requires us to keep a log of miles driven for business purposes. Talking to many business owners, this proves to be a challenge. I would suggest that you change your oil every January because the quick lube place or mechanic will record your mileage on your estimate and make suggestions when to return to service your car again. This at least gives you a verified 3rd party mileage check once a year so you know at the very least how much you have driven, year to year. This makes it a lot easier to calculate your business vs. personal miles. Plus, you vehicle will appreciate you a lot more by lasting longer.
Small Biz Hack: Make a Yearly Value Assessment to Your Business
In addition to changing your oil on your vehicle, you want to take this opportunity in January to set the value to your business. You really need to sit down with your partners or owners of the company and assess a dollar figure to the value of the business. This is very important because things happen during the course of the year. You may have a partner that gets divorced, becomes ill, incapacitated or worst-case scenario, dies. Unanticipated events like this can leave your business in disarray. It’s difficult enough to get through situation like this, However when you combine it with the fact that you may have to buy their spouse out of your business, this becomes very difficult for all parties to agree on what the business is worth at the present time. Additionally, one of the owners of business may decide to take a job elsewhere, or start a new venture, get divorced, or they just might want their money out of the investment. In any of these scenarios, it causes a major disruption to the business. If you assess this business value in January as part of your normal operations and strategic planning for your company, you will have peace of mind. All the owners will have already assessed the value for the business that will stand for that year. So that all partners involved understand that if they need to pull out of the business for whatever reason, they already have agreed-upon a set value for the business in the current fiscal year. There is no arguing in court that is worth twice as much as it is, there is no call for an audit, or a sudden reviewing of financials that needs to take place. All you need to have is proof that you have all agreed upon a set value of the business for the year. I’ve seen many attorneys and other advisors have their clients write this into the businesses operating agreement, if the business is an LLC, or the company’s shareholder agreement, if the business is a Corporation.
Happy New Year! - may your small business be blessed with health, wealth and a lot less inventory on your shelves
Small Biz Hack: It Only Starts with Tax Prep
Happy New Year! Now that the parties are all over and you are back to the daily grind, I know that you are knee deep in preparing to distribute your 1099’s and W2’s by the end of the month. I won’t even talk about it because I know that you are working on it. You are a well-oiled compliance machine! In addition to your annual tax preparation burden, don’t forget to do a couple of other things that will make your life a lot easier this year as a business owner.
Small Biz Hack: Change the Oil in your Vehicle
Wait, is this advice on how take care of my car, or is this about my business? Well, it’s both. I grew up hearing that you should change your oil every 3 months or 3,000 miles. The New York Times says that this old rule of thumb is pretty much history, however, despite the new technology of oil and engines, it is still important to get your oil changed in January. Most of us use our personal vehicles in our businesses. IRS requires us to keep a log of miles driven for business purposes. Talking to many business owners, this proves to be a challenge. I would suggest that you change your oil every January because the quick lube place or mechanic will record your mileage on your estimate and make suggestions when to return to service your car again. This at least gives you a verified 3rd party mileage check once a year so you know at the very least how much you have driven, year to year. This makes it a lot easier to calculate you business vs. personal miles. Plus, you vehicle will appreciate you a lot more by lasting longer.
Small Biz Hack: Assess a Value to Your Business
In addition to changing your oil on your vehicle, you want to take this opportunity in January to set the value to your business. You really need to sit down with your partners or owners of the company and assess a dollar figure to the value of the business. This is very important because things happen during the course of the year. You may have a partner that becomes ill, incapacitated or worst case scenario, dies. This will leave your business in disarray. It’s difficult enough to get through situation like this, However when you combine it with the fact that you may have to buy their spouse out of your business, this becomes very difficult for all parties to agree on what the business is worth at the present time. Additionally, one of the owners of business may decide to take a job elsewhere, or start a new venture, or they just might want their money out of the investment. In any of these scenarios, it causes a major disruption to the business. If you assess this business value in January as part of your normal operations and strategic planning for your company, you will have peace of mind. All the owners will have already assessed the value for the business that will stand for that year. So that all partners involved understand that if they need to pull out of the business for whatever reason, they already have agreed-upon a set value for the business in the current fiscal year. There is no arguing in court that is worth twice as much as it is, there is no reviewing of financials and needs to take place. All you need to have is proof that you have all agreed upon set value of the business for the year. I’ve seen many attorneys and other advisors have their clients write this into their operating agreement, if the business is an LLC, or the shareholder agreement if the business is a Corporation.
PHOTO CREDIT: Jerry Keisewetter, Creative Commons License
Small Biz Stress : Frustration
A client called me over the weekend and he asked me, “Mike, what am doing wrong in my business?” He complained that his employees are not engaged; that they don’t care about his business. He talked about his training process with employees and that they still are not getting it after months of training. This client had been doing everything right. He had planned for the business, written a business plan, done the marketing research, and was generally prepared when he opened his business a year ago. My client continued, “Mike, I am so frustrated, I have been open for a year now and I’m not making any money yet” he exclaimed. “I though that I would be into a money-making rhythm by now, but the business just isn’t at that point. I see other business owners who are doing very well. They are buying cars, and going on vacations and I ask myself, why not me?” he said. Although he was nearly breaking even in his 6 employee restaurant, he was very frustrated and feeling isolated. “I can’t talk to my family, because they don’t understand. I can’t talk to my spouse because it ends up in a fight because she just wants me to stop all of this and just get a “normal” job. I can’t talk to my employees because they don’t care.” he said. “I just feel alone everyday. It’s very depressing. I didn’t sign up for this.”
The Stress of Owning a Small Business: Isolation and Loneliness.
It has often been said that It’s lonely at the top. There is a major paradigm shift that happens when you become the boss. There is great responsibility that is assumed when you go from signing the back of the check, to signing the front. You have become a capitalist and are working toward financial prosperity every day. Your friends won’t understand. They think that you are working way too hard. Your quest is different from the other 99% of the population. You feel alone. Guess what? You are not alone. These feelings of stress, and isolation are real and I want you to know that every business owner has these feelings. It’s normal. Many come to visit with me and they unload their stress and emotions on me. As a business advisor and entrepreneur myself, I’m one of the few people who understand what they are going through. I have considered opening a hotline: Call 1-800-GRIPE2MIKE. If I charged by the minute I could have a great business model :)
Small Business Owners Stress: Appearances are Deceiving
I often hear that everyone around the small business owner is doing great and prospering, however, that is not always true. I have to remind them that things are not always what they seem. I know many business owners who drive very expensive cars in order to present a public persona. Some of these owners are leasing these high-priced rides with monthly payments in excess of $1700. Just because they drive it, does’t mean they own it. Don’t assume that a fancy car means prosperity. I was at an event during the recent recession when one such client approached me. When I asked how her business was doing, she lowered her voice and said: “Mike, I only have $18 in my bank account and no business in process. I am freaking out on the inside - I don’t know how i’m going to pay my mortgage, or car payment this month or even pay for food.” She had a booth at the event which was paid for months in advance, yet she was there putting on a brave face to the crowd. I have often wondered how many people attend these events who are in the same situation as her; concealing eminent failure with a positive smile. It reminds me of a line from a church hymn: “Somewhere is the heart is hidden, sorrow that the eye can’t see.” The bottom line is that everyone has a different deal, even if it’s not visible to the public.
Overcoming Stress Through Collaboration
It is important that you find someone to talk to. Whether this person is a mentor, or business advisor or just a friend, it is important to have someone that you can be vulnerable to. Isn’t that the thing that makes this difficult, you may not feel comfortable being openly venerable to your employees or your family or friends. So, you need a shoulder to cry on - sometimes literally. Keep reminding yourself that the grass is NOT always greener on the other side of the fence. Meet up with other small business owners, or join a networking group. The important thing is that you don’t isolate yourself, but rather put yourself in a collaboration mentality. Remember that you see things differently than other people, after all, that different perception is the reason that you got into business in the first place. Right? And if you hit your breaking point, don’t forget to call: Call 1-800-GRIPE2MIKE.
PHOTO CREDIT: Evil Erin via Flickr, Creative Commons License, Some Rights Reserved
The minute you hire an employee, your life changes. You are suddenly responsible for a lot of things. Payroll taxes, unemployment insurance, Workers compensation. Are we having fun yet? Once you own a small
business with employees, Fridays will never be the same. As an employee, I used to look forward every other Friday to getting a paycheck. As a small business owner, every other Friday brings a sense of panic. You are constantly asking yourself: “Can I make payroll on Friday?” Welcome to Management. Managing people is a challenging task. Employees have been known to lie, cheat, steal money, etc. You probably can’t afford the best employees within your startup budget. You have to hire who can afford to take your low paying job. Additionally, No one will care about your small business venture like you do. You cannot expect employees to do so. Remember, this is your dream, not theirs. The worst thing about employees is that you have now magically turned yourself into a boss. You will probably be a lousy boss at first. Take a management class and try not to drive away your employees. Employees suck…Bad bosses suck worse.
Bindrup’s Advice: Be prepared before you hire! Think about Compliance, Management & Mindset.
The AMC series, Breaking Bad, staring Bryan Cranston and Aaron Paul as the unlikely-partnered methamphetamine-cooking protagonists, Walter White and Jesse Pinkman, has just come to a climactic close after 6 seasons. While you are watching old episodes on Netflix or downloading the final episode from iTunes as you are contemplating a fitting end to Heisenberg, here are 7 small business management tips from Breaking Bad.
1. Innovate: Provide a Superior Product to the Market
Thanks to Walt’s background as a chemist, the meth that Walt and Jesse cooked was 99% pure. Until that point, the best stuff on the street was 70% pure. Their product was the best any Albuquerque Meth-Head could get. That increased the market demand for their product because it was better than the rest. Innovation brings superior products to market. Is your product superior to your competition? Are you even close? If not, make a better mousetrap.
2. Branding Differentiates You From Your Competitors.
When they made their first batches of product, they used a type of Methylamine that turned the final product blue. This coloring made it different, and easily recognizable. Users questioned the product’s new coloring at first, until they experienced the high from 99% pure meth. The demand for the “Blue Ice” caused competing products to tint their products blue to resemble the real thing. The blue meth quickly demanded a premium in the marketplace. Your brand identity can set you apart from you competitors in a visual way that makes your brand instantly familiar. Spent time developing your brand and your customers will reward you.
3. Focus On Your Strengths
Walt and Jesse learned very quickly that their strengths lie in the production of the meth, not in the distribution of the product. Distribution was unpredictable and dangerous; more dangerous than cooking in their mobile meth lab. They found Gustavo Fring (Gus) at this point. Gus was able to provide a safe, modern lab for them to work in as well as a legitimate business cover to conceal illegal activities. This enabled Walt and Jesse to focus on perfecting the art of their meth cooking craft. There are 3 areas you need to focus on in your small business: Marketing, Operations, and Finance. Decide which of these areas are strengths and which you will outsource.
4. Use Professional Advisors
Better Call Saul! Saul Goodman is everyone’s favorite bus-bench, criminal-attorney. Saul becomes a needful and trusted advisor for Walt and Jesse as their criminal empire begins to grow. Saul provides business and legal advice that is invaluable to Walt and Jesse, as they are unfamiliar with the complexities of running this type of criminal organization. Not only does Saul keep the police off of their back, he also helps them launder their money. He is a criminal who happens to also be an attorney. Saul also knows a guy that can take care of any situation that they may encounter. Saul arranged for the original meeting with Gus as well as working with Mike. He also arranged for the relocation specialist that helps establish new identities for people wishing to disappear. Every time they come to a difficult hurdle, they call Saul. This might be the reason that we will see a Saul Goodman spinoff in the future. You need many professional advisors for your small business. Pick good CPA’s, Attorneys, financial, business and tax advisors for your company. Let referrals from other small business owners guide you to the best advisors for your business.
5. Choose Your Partners Wisely
Walter White and Jesse Pinkman appeared unlikely partners from the beginning. I wouldn’t advise partnering with a meth addict or a terminal cancer patient that has 6 months to live anyway. Their partnership survives because Walt needs Jesse to distribute the product and do the “street” minded work of their venture. Once Gus handles the distribution end of the business, Pinkman becomes unnecessary and someone that Walt needs to manipulate to control. Partnering with Gus was a good move for Walt and Jesse. It provided stability in a crazy business for the partners. The partnership between Walt, Jesse, and Mike seemed to be a good, logical move, however Walt and Mike were at odds with each other from the beginning with Jesse forced to play the referee. The partnership with the Arizona syndicate group was doomed from the beginning. They only wanted to partner up in order to get the blue meth off of the street so their inferior product could sell better. The partnership with the supremacists was a bad decision that led to bad consequences. Choose you partners carefully or your business life can get extra-complicated.
6. Negotiate From A Position of Strength
Walt goes into a negotiation with Mike and Jesse where Mike has arranged for the three of them to sell their remaining supply of methylamine to the Arizona Syndicate for $5 million. This negotiation takes place in the desert away from town. It is a dangerous situation, however, Walt realizes that he has a position of strength in the negotiation and instead of selling the chemical to the competition; he offers to partner with them, allowing him to supply them with his sought-after product at a higher price per pound. In a stroke of negotiating genius, Walt ends up leaving the negotiation with a $5 million to buy out Jesse and Mike and a new distributor who agrees to purchase all of his premium product he can produce each week at an inflated cost. Negotiation favors the position of strength. Avoid negotiation when you do not have the position of power.
7. Have an Exit Strategy
Know when to say when. What type of benchmarks do you have in place to indicate when you should sell or close your business? How much money do you need to have in the bank before you sell your business? How bad does business have to get in order to convince you to close it and find a day job? Walt has a difficult time deciding when. Jesse tries to get out of the business at different times because he fears for his life. This is not a strategy, but a reactionary measure. If you don’t have an exit strategy, then you will not be prepared to take it when one presents itself. This leads to the ultimate downfall of Walter White. Stephen Covey wrote “Begin with the End in Mind” in his popular book, The 7 Habits of Highly Successful People. This is sage advice to follow.
Small Business Dreams - Inventors Build Products that Innovate
I have had many inventors as clients that come to me for marketing assistance. They all have the same problem: the product isn’t selling. They all came up with a brilliant idea, patented it, found a manufacturer,and sunk their savings into production run of their invention. Now they are broke, sitting on a garage full of their great idea gathering dust. What is really funny is that most of the inventions seem like they would
sell. They seem like wow! This is a great product! But, no one purchases the product.
Small Business Innovations That You Build won't Always Sell
Sometimes the best inventions don’t sell in the marketplace. Sometimes the best product doesn’t sell. Consumers are fickle. They are taken by fads. They are predictable in one moment and erratic in the next. Even when the product is extensively tested in the marketplace there can be unpredictable results.
New Coke Field of Dreams - Business Innovation That Didn't Work
Just ask Coca-Cola. Remember “New Coke” formula that was introduced in April 1985. It tested well in focus groups. It was abandoned 3 moths later due to 400,000 complaint letters and phone calls that Coca-Cola received from disappointed customers. Coca-Cola has big enough pockets to recover from such a disaster; Start-ups don’t.
Bindrup’s Advice: Build a prototype, protect it, and get it in front of your market. Let sales drive the production.
PHOTO CREDIT: Alex Ford, Creative Commons License, Some Rights Reserved.
Speaking at a Conference instils terror into some people. Here are 10 tips to help you give a better speech.
PHOTO CREDIT: Karin Dalziel, CREATIVE COMMONS LICENSE - SOME RIGHTS RESERVED
My student loan payment was due, however the online site where I normally pay my bill was down on two different occasions when I went to access it. I called the loan servicer and explained the situation. The customer service agent for the financial institution told me that the site was down for maintenance, but that it would be working in a couple of hours. The agent encouraged me to pay them over the phone because it would apply immediately to my account, instead of taking 48 hours to post. This sounded good to me, so I submitted my payment to her over the phone. The next time I checked my statement - there was no sign of a payment ever having been made. So I sent off this message from inside of my logged-in area:
The bank responded saying that they were unable to show telephone transactions as well as online transactions on my account. This made no sense to me, since it should be easy to list all customer transactions. If they can tell me about it over the phone, why can they not show it to me. The only proof that it was paid is my bank statement. I sent the bank the following:
They had a chance to correct the situation, however they sent me a form letter instead. This letter said how much they value my business, right? Nope. They used the words "We truly apologize" and "thank you for your feedback" since they will be "looking into improving their systems". Not improving. Looking into improving. They continued by saying they "valued me as a customer" and are "always here to service your present and future needs". What a load of B.S.! They should have already helped me with my past need that is now a present annoyance. The final blow is that they want me to call their customer service department "at my convenience" to get my full payment history on the loan. keep in mind that the customer service department is the reason why we are here in the first place. They can't simply send me the information I need. (They could have sent it in the message 2x now) They have to send me a message to have me call a number (again). The customer service agent could have warned me against paying via the phone. "Mr. Bindrup, just so you are aware, our IT systems at our International Institution are so bad that we can't actually display to you any transactions conducted over the phone. Would you still like to continue with this phone transaction?"
As small business owners, we can not afford to take care of our customers in such a way. Large corporations should take note of this since we have begun to realize as a consumer purchasing block that our voice does matter. Big business has the resources to shine in the customer service arena, however, unfortunately, they seldom do.
Manage your Small Business better