Category Archives: Strategies

All Tax Preparers are Not Created Equal

It stands to reason that somewhere in this country is the Worst Tax Preparer. The bad news is you may have already booked your appointment with him. Preparing taxes is a complex activity. It is so complex that many of us simply throw in the towel, pack up our receipts, and head for the nearest tax office. When you arrive at the office, you fully expect your tax preparer to be highly competent and completely vested in getting you the best deal in town.

Back in my tax preparing days, I worked for one of the big name tax preparation franchises both as a preparer and as a tax return editor. I worked with seasoned professionals and total neophytes. I well remember the first time I stepped up to the plate as a new preparer. I was terrified. Terrified the customer would know I was inexperienced. Terrified I’d make a huge blunder and the customer would pick up on it. Terrified the more experienced preparers would laugh at my mistakes.

I quickly realized that as inexperienced as I was, I still knew way more than my clients did. And because the franchise had great systems, others would be checking and re-checking my work so my mistakes and oversights would be caught before I did any damage to the client.

As a tax return editor, I saw and corrected more mistakes than you would feel comfortable knowing about. Which brings me to a very important point, tax preparation is not a cut and dried, read the manual, do the formulas, follow the instructions, and poof! you’re done kind of activity. The tax codes in this country are complex and open to interpretation.

Tax preparers have a wide range of experience from none to grizzled veteran. They also span the continuum from ethical to completely fraudulent. The more complex your return, the more you need a veteran preparer. And if your preparer tells you about this great deduction that you can take and it sounds suspicious to you, listen to your intuition. It’s the difference between paying a little bit now or paying a whole lot later.

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Beating the Small Business Cash Flow Blues

Although cash flow problems plague 66% of small businesses, owners of small businesses have more control over their cash flow than they realize. To help you get a jumpstart on solving your own cash flow woes, follow these tips:

  1. Avoid the dreaded “Fly by the Seat of Your Pants” accounting method: Businesses need to systematically track income, expenses, accounts receivable, and accounts payable. Without this vital information, your business cannot flourish and your cash flow will always keep you up at night. If you only know how your business is doing once a year at tax time, you’re bound to end up deeply mired in the Cash Flow Swamp.
  2. Develop “Strength in Numbers:” Once you have your accounting system in place, you need to learn what the numbers are telling you and how to use those numbers to manage and grow your business.
  3. Keep tight control of credit: Business owners can get themselves in credit trouble two different ways: poor credit granting practices and shortsighted use of credit from banks, credit cards, and vendors.
  4. Be sure your Receivables and Payables “play nice” together: The money owed to you by your customers should arrive in time for you to pay your vendors and your employees. Don’t extend credit unless it’s absolutely necessary. Establish credit policies to help determine who will get credit. When your customers take 60 days to pay and your vendors want to be paid in 30 days, you can quickly end up with a Cash Flow Crunch.

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4 Stress-Saving Strategies for Cash-Strapped Businesses

Small business owners can relieve a lot of their own cash flow problems, thus reducing their stress levels. Here are three stress-saving strategies for cash-strapped businesses:

  1. Make decisions based on Cash Flow not Profit: Many businesses that fail are profitable when the doors close. What those businesses don’t have is CASH. When you pursue that big, juicy contract or think about hiring another employee, always ask yourself, “What will this do to my cash flow?”
  2. Create a budget: A budget is a plan that helps you stay focused on what you need to achieve. For example, you can use your budget to help you achieve sales goals, determine how much you need to spend on advertising, how much you’ll need for materials, and if you can afford to pay overtime. Having a budget for your business is the difference between piloting a plane with instruments or flying blind in a fog.
  3. Don’t forget your debt to society: Some bills are easy to forget. Bills like sales tax, payroll taxes, and estimated taxes. Ignoring them doesn’t make them go away. Planning ahead makes the bite easier to take and keeps you from suffering tax day sticker shock. Scrambling to find money for taxes causes major cash flow problems.
  4. Don’t spend your company’s future on a speed boat: Everybody loves toys. Don’t make the mistake of thinking all the profits of your business are “fun money.” You’ve heard it many times from personal financial planners that you should have enough cash put aside for six months of expenses. This is true for your business, too. Sales ebb and flow. Expenses rise. Customers leave. Vehicles break down. Computers fry. The number one rule of small business is “stuff happens.” Having a reserve of cash keeps your cash flow from tanking every time a new challenge appears.

Are you ready to move beyond crisis-mode money management in your business? My step-by-step course From Chaos to Control guides you through every area of your business with fresh eyes so you can diagnose and solve the problems you may not even know you have. Learn more and buy it today here.

Six of One, Half Dozen of the Other

Motivational author and speaker Jim Rohn says that for a business to succeed it takes about a half dozen things. Of all the millions of things you do, it’s really that half dozen that count.

Of course, the trick is figuring out which half dozen things to do to help your business succeed. A while back, I sat down and did some thinking about the half dozen things I need to do consistently to take my business to the next level.

One of my half dozen is establishing and nurturing relationships. Relationships are crucial for every small business. Not only do those relationships lead to new business opportunities (and believe me, it’s a wonderful thing to have so many opportunities that you can chose who you work with and what kind of work you do), but relationships are a fantastic way to limit the isolation of small business ownership.

Isolation takes two forms. One is the isolation we all feel from time to time being self employed. That’s the “it’s lonely at the top” feeling we all get. Reaching out to others relieves some of that loneliness and gives us other points of view on how we’re running our businesses.

The other isolation is cutting ourselves off from our customers. When you have a strong relationship with your customers, you know what their problems and challenges are. You can use that information to fine tune your products and services or create new ones to help them solve their problems.

What are your “half dozen things?” What do you need to focus on to move your business forward? Once you figure out the half dozen, focus on them relentlessly and watch your business grow.

Ready to take the bull by the horns and figure out just why you never seem to have money? My step-by-step course From Chaos to Control guides you through every area of your business with fresh eyes so you can diagnose and solve the problems you may not even know you have. Learn more and buy it now here.

5 Pricing Strategies: Which one is right for you?

Think the best way to get more customers is to have the lowest prices in town? Think again.

Many small business owners struggle with pricing. There are tons of different approaches to pricing and that in itself creates plenty of confusion so let’s talk about five pricing strategies.

1. Cost + Markup

If you make a product, you can price it by taking what it costs you to make it—materials, labor, and overhead — and add on a markup percent for profit. If you deliver a service, you can price the service by taking what it costs to deliver the service—labor, overhead — and add on a markup percent for profit. If the costs increase, you can raise your prices or reduce what you get for profit. That’s a very common approach to pricing. The profit markup can be very small or it can be very large based on other factors.

2. Competitive Pricing

Survey your competitors to find out what they’re charging then charge a similar amount.

3. The “What do I need to make?” Pricing Model

If you need $40,000 to pay your own bills, can your business generate enough sales to net you that amount? How can you structure your pricing to make that happen? This is a more realistic approach to pricing. If you start out with a baseline—a goal—and work backwards, you often get a better feel for what you have to charge to stay in business.

The downside of this approach is that it limits your income—which means that instead of achieving prosperity from owning a business, you’re only creating a job for yourself.

4. The “What do I want to make?” Pricing Model

Now we’re getting somewhere. Self employment should do more than create a job for you. It should build value. This pricing model takes a long term view of your business. Where do you want to be in 5 years, 10 years, 30 years? What are the opportunity costs involved? Knowing where you want to get to gives you the opportunity to work backwards to see how you can get there.

5. Personal Pricing Strategies

One of my colleagues has a pricing model that she finds works very well for her. She talks to her potential clients about a project. Then, she sits down and thinks about the project and what it will entail in terms of time and energy. She decides on a price, takes a deep breath, and adds a thousand dollars to it. Only then does she call the client with the price. She knows that if she doesn’t do this she will under price her services. (And yes, she’s very busy and successful.)

Another colleague changed her pricing strategy after giving birth to her first child. She looked at her baby and said, “What is it worth to me to miss time with my baby?” She prices accordingly.

Another business takes the approach that they’re the best at what they do so they charge premium prices. They back that up with great results and continual focus on what makes them better than the rest.

In short, there are any number of pricing strategies you can use in your business and any number of ways to justify those prices in the market place.

Are you ready to move beyond crisis-mode money management in your business? My step-by-step course From Chaos to Control guides you through every area of your business with fresh eyes so you can diagnose and solve the problems you may not even know you have. Learn more about it and buy it now here.