Older marketing methods like direct mail and cold calling just don’t work as effectively as they did a few decades ago. There are two reasons for that:
- The trust level between people has dropped more than 20 percentage points in the last few years; people are more skeptical and untrusting of each other than ever before.
- The amount of marketing messages we receive on a daily basis has increased exponentially, to the point where most everything is simply treated as white noise.
What is there to do if you still need more clients? Sharpen your marketing skills and try out these newer ideas from the 21st century:
Website Landing Pages
A landing page is a web page that is not listed in your website menu. It’s a hidden page that advertises something very specific, such as a free report, a service, a niche, or a sale item. The landing page includes a description of an offer and a call to action, such as a Buy Now button, or a signup form where you enter your name, email, and possibly phone numbers.
You can drive traffic to your landing page through social media, online ads, or email notices. Once someone has taken action, a sale team often follows up with a phone call or an email to encourage further action.
Free Trials or Samples
Although there is nothing new about free trials, they are certainly popular and they still work very well. You might think they are only for magazines and software companies, but it doesn’t have to be that way.
You can offer free food samples or free servings if you own a restaurant, catering or other food service company. If you own a training or consulting company, you can offer a free course or a free consulting hour. Physicians often offer free pharmaceuticals, and dentists offer free toothbrushes. Think about how free trials or samples can be used in your business to attract new clients.
The online equivalent of a class or lecture is a webinar. If your company sells a product or service that requires a lot of client education, you can deliver this information via a webinar. The benefits to offering a webinar are that people do not have to get dressed up to go anywhere, you can have people from all over the world attend, and people will be able to get to know you and how you think so they can make a decision about whether they want to do business with you.
To offer webinars, you’ll need webinar software such as Citrix GoToWebinar or WebEx. You could also use Google Hangouts for free, but the number of people attending is limited. Invite people you know via email announcements or social media. You can make a sales offer during the webinar as well.
Email is a great way to make sales offers to people, especially if you have a list of people who have given you permission to send emails to them. If you send out a monthly newsletter, include a Product of the Month or a Deal of the Month. It’s much less expensive than direct mail, and often there is a much better response rate.
If placing ads in newspapers and magazines is not working in your industry any more, then try placing online ads. There are lots of choices. You can go with Google AdWords and Facebook Ads. Twitter and LinkedIn have ads as well.
You can also try banner ads. There is a special type of banner ad called retargeting. Have you ever been on a company’s website, then left it and started seeing advertisements for that company on the websites you visited later? That’s called retargeting and it’s very popular.
Before you create your marketing plans for next quarter, give these ideas some consideration. You may get more bang for your marketing dollar.
Google Drive, which used to be called Google Docs, is a great way to collaborate with team members and stakeholders that are in a different location than you are. Here’s a quick introduction (or refresher) on how to use this powerful collaboration tool.
Google Drive is a browser-based application that allows you to create documents, spreadsheets, presentations, and other documents that reside in the cloud. They can easily be shared with others, and both of you can see and edit the document at the same time.
Using Google Drive
To get started, you’ll need to have (or set up) a Google account. If you have a gmail account, you can use it. Log in to your gmail or Google account, and at the top right corner of your screen, you will see a square made up of nine small squares. You can click on it and select Google Drive. Alternately, you can go to drive.google.com.
Time to Create
Once you’re on the Google Drive main page, you’ll see a large red CREATE button on the top left. Click it to create your first Google document. Select among the choices of spreadsheet, document, presentation, and more. Give the document a title, and start editing. The commands are very similar to Microsoft Office®, so there’s no learning curve.
Time to Share
When you are viewing a document, you’ll see a blue SHARE button on the top right side of your screen. Click it to enter the email address of a person you’d like to have see and/or edit the document.
You can tell who else is viewing the document at the same time you are because you’ll see a colored box and perhaps their picture on the top right side. You can also tell where their cursor is in the document; it will show up in another color.
As you create documents, you will see your list growing under My Drive. If someone else created the document and shared it with you, you’ll see it under Shared With Me.
So Many Uses
Here are a couple of ideas on how you can use Google Drive.
- As a bulletin board for your employees or customers
- For status reports on projects
- As a to-do list when multiple team members are involved – they can check off the items as they go
- As a collaborative note-taker when you’re brainstorming with another person
- With a client when you need to explain part of a document – you can copy and paste from Word or Excel to Google Drive (but check to make sure everything came over)Google Drive is great for productivity and makes communications easier. Try it and let us know how you use it.
The balance sheet is one of the main financial reports for any business. Among other things, it shows what a company owns, what they owe, and how much they and others have invested in the business. One of the characteristics of a balance sheet is how it separates what you own and what you owe into two categories based on timeframe.
Current and Long-Term
You may have seen the Assets section of your balance sheet divided into two sections: Current Assets and a list of long-term assets that might include Property, Plant, and Equipment, Intangibles, Long-Term Investments, and Other Assets.
Current Assets include all of the items the business owns that are liquid and can easily be converted to cash within a year’s time. The most common types of current assets include the balances in the checking and savings accounts, receivables due from clients that haven’t paid their invoices, and inventory for sale.
The remaining assets are long-term, or assets that cannot easily be converted to cash within a year. Property, Plant, and Equipment, also termed Fixed Assets, includes buildings, automobiles, and machinery that the business owns. You might also see an account called Accumulated Depreciation; it reflects the fact that fixed assets lose their value over time and adjusts the balance accordingly.
Intangible assets are assets that have value but no physical presence. The most common intangible assets are trademarks, patents, and Goodwill. Goodwill arises out of a company purchase. Investments that are not easily liquidated will also be listed under Long-Term Assets.
Similarly, liabilities are broken out into the two categories, current and long-term.
Current liabilities is made up of credit card balances, unpaid invoices due to vendors (also called accounts payable), and any unpaid wages and payroll taxes. If you have borrowed money from a bank or mortgage broker, the loan will show up in two places. The amount due within one year will show up in current liabilities and the amount due after one year will show up in long-term liabilities.
The most common types of long-term liabilities are notes payable that are due after one year, lease obligations, mortgages, bonds payable, and pension obligations.
Why All the Fuss Over Current vs. Long Term?
Bankers and investors want to know how liquid a company is. Comparing current assets to current liabilities is a good indicator of that. Some small businesses have loan covenants requiring that they maintain a certain current ratio or their loan will be called. The current ratio of your business is equal to current assets divided by current liabilities. Bankers like this amount to meet or exceed 1.2 : 1, although this can vary by industry.
Next time you receive a balance sheet from your accountant, check out your current and long-term sections so that you’ll gain a better understanding of this report.
If you have workers in your business, you likely made a decision when you hired them as to whether they should be an employee or a contractor. If all you hire is employees, then you have nothing to worry about. But if you hire contractors, there may be some financial risk you may taking that you may not know about.
Any person that runs a business as a sole proprietor that you pay money to for services rendered is considered a contractor. One difference between an employee and a contractor is that an employee receives a W-2 and a contractor that you have paid more than $600 per year by check receives a 1099. There are many other paperwork differences, and that’s the major one.
One of the biggest mistakes when a business owner hires a worker is thinking that they can decide to classify the worker as a contractor if they simply want to. Unfortunately, it’s the IRS that decides on the classification, not the worker or the business owner.
What’s the Risk?
There is no risk from an IRS standpoint to classify a worker as an employee instead of a contractor. There is significant financial risk if you incorrectly classify a worker as a contractor when they should be classified as an employee. You may be liable for back employment taxes if the IRS re-classifies a worker from contractor to employee, and this can go back many years.
To calculate your risk, take roughly 20 percent of the payments you made to contractors. This amount plus late fees and penalties can add up to what you could owe the IRS if you are mis-classifying workers and the IRS finds out.
IRS’s Employee vs. Contractor Rules
The IRS focuses on three factors to determine whether a worker should be a contractor or an employee: behavioral control, financial control, and type of relationship.
If you control both what and how a task is to be done, you should probably classify your worker as an employee. If you can control only the results you want, you may be able to classify the worker as a contractor.
There are many other rules about this classification, so be sure to check with your tax accountant for more information. Also, for those of you that love tax research, here’s a link that gives the full details of the IRS rules:
Having a successful business is all about taking calculated risks; however, you may not have known the risk you’ve been taking with contractors that you’ve employed. For the IRS, misclassifying workers is a “red flag” area, meaning they are paying extra attention to it. If you feel like you might be taking a risk that you don’t want to, please reach out and let us know how we can help you with this.
Are you manually entering data into your accounting system? If so, there may be a way to enter that data that’s faster, cheaper, and better. Data entry automation has come a long way. Here are five common ways to automate data entry so that it no longer has to be manually entered.
- Bank feeds or online banking
If you’re still entering your bank transactions, the good news is you have an opportunity to save a significant amount of time and money on your accounting. Almost all banks and many credit unions provide interfaces with your accounting system so that checking account, savings account, and credit card transactions can be automatically entered directly into your accounting system. There are two ways to do this:
- The older way is through online banking which can be started by working with both your accounting system and the bank. The fee is usually $25 per month, with additional fees for bill pay.
- The brand new, more modern and completely free way is through bank feeds, which are available when you move to a cloud accounting system such as QuickBooks Online or Xero. Bank feeds are not available in desktop accounting systems.
- A smart scanner
If a lot of paper flows across your desk, you can scan it in using a smart scanner that can parse the document and enter it straight into your accounting system. You will usually have a chance to edit and accept the data, which is far better than entering it from scratch.
- Import and export functions
If you need to get data from one place to another, such as from a point of sale system to an accounting system, then using the export and import features of the software may be the most efficient method. There are also software apps that help you scrub the data and get it ready for the receiving system.
If you ever convert from an old accounting system to a new accounting system, this method will come in handy to get you historical data moved.
- Interfaces and programmers
If you have a high volume of transactions that need to move from one place to another on an ongoing basis, it may make the most sense to employ programmers who can build an interface. Alternately, some systems can talk to each other already; they just need to be plugged into each other correctly.
- Smartphones, tablets, and field service hardware and software
If your sale occurs out in the field, don’t wait to get the data into your system when you get back to the office. You may be able to complete the sale right out in the field, so that when you get back to the office, you can call it a day instead of keying in the day’s work.
Mobile accounting apps are where to look for this form of data entry automation.
No more manual data entry
In 2015, consider taking on the goal of no more manual data entry. If we can help, let us know.
The holiday month of December brings celebration as well as reflection for all the events that occurred in 2014. It also gives us great hope for a new fabulous start in 2015. Here are three ideas to start 2015 with a bang.
1- Find a focus for the year.
Instead of getting into the rut of making and breaking resolutions, consider having a focus for the entire year. Choose your focus from among things like:
- Developing a department in your business, such as your sales, marketing, operations, HR, admin, or another. The focus will be on building or expanding the department you’ve chosen to work on.
- Changing your company culture to a trait or aspect you want to be known for. Developing the trait will be your focus.
- Building a relationship with an individual or a group of people related to your business. The relationships are the focus.
2. Live by a theme for 2015.
Your theme could be an emotion or expression such as gratitude or compassion. It could be a color – purple – just for fun. You might adopt a favorite quote or religious verse or even song. Your goal for the year will be to embody your theme and/or bring it into other’s lives as well.
3. Do the one big thing.
Are you holding back on a huge dream for yourself? Then take steps in 2015 to move closer to it. Make 2015 your year to do the one big thing that’s been weighing heavily on your mind. Just think how you’d feel if you finally did it; your life would be forever altered.
Write your focus, your theme, or your one big thing on dozens of sticky notes, and plaster them everywhere. Mark your calendar and to do list with reminders and milestone checks. Make art out of your sticky notes, and post them on the refrigerator door and your office walls. That way, the reminder will be physically with you all year.
We wish you a happy and healthy new year to you and yours.
Year-end is a great time to think about rewarding your staff for a job well done in 2014. Here are a couple of quick tips to help you make the most of bonuses while protecting your business and cash flow.
- Timing. Would you be better off timing bonuses in this year to reduce 2014-year taxes or to wait until next year so they impact the 2015 tax year? It’s something to consider before you dish them out. Do what’s best for your business.
- The pretty holiday envelope. It might be tempting to hand out envelopes of cash but it’s oh-so illegal. Making payroll in cash is illegal in most states, and bonuses are part of payroll. Stick to the payroll system to generate your bonuses even if it’s boring, and you’ll stay out of trouble.
- Pesky deductions. Bonuses are subject to payroll deductions just like any other payroll check, so please don’t forget that. If you write a check for $1,000 to an employee, you will be liable for taxes on the gross-up, and this ranges between 20% to 30%. So that $1,000 bonus just turned into $1,200 or $1,300, which is quite generous but might not be what you really meant!
- Sticking around. Bonuses are a great motivator and can help keep employees from leaving, thereby reducing your turnover costs. If possible, announce a bonus structure ahead of time so employees will have something to work toward and “earn.”
- Invisible costs of bonuses. Bonuses will drive up your workers compensation, state and federal unemployment costs, and any other costs that are related to gross wages, so do take all of that into consideration when issuing bonuses.
- Beyond money. Money is a great motivator, but you may want to provide non-cash bonuses to your employees for extra special memories. If you do, your tax accountant can help you get the transaction recorded properly.
Bonuses are fun for everyone, and we hope these tips will help you make the most out of them in your business.
Real-time accounting is when your books are caught up to the present and you know exactly where you stand with your account balances, revenue, and profit. It’s truly doing your accounting in real time.
The opposite of real-time accounting is getting your books done once a year (or worse, being years behind). When you wait to do your books once a year, say at tax time, you lose the power of being able to monetize opportunities in real time. Some examples are realizing your prices are too low and your profit margins need adjustment, seeing what’s selling well and restocking sooner than later, or discovering a worker is not productive based on your pay rates and prices.
Today’s cloud accounting systems and bank feeds allow you the potential for real-time accounting, where the benefits include:
- Better cash flow management
- Faster correction of pricing, hiring, stocking, and margin mistakes, saving money and increasing profits faster
- Faster identification of any tax liabilities as well as the ability to reduce or eliminate penalties from paying late or underestimating taxes due
- Ability to see whether you are making a profit or a loss
- Potential to catch fraud or identity theft much faster if you become a victim
- Lower accounting costs when errors snowball over time
- More peace of mind
- Ability to be more proactive in your business management, capitalizing on opportunities that show themselves in the numbers
Consider moving to real-time accounting if you haven’t already. For example, if your books are done annually, moving to quarterly or monthly services will begin to provide the advantages listed above.
Time is the most precious resource on the planet, but sometimes we don’t treat it that way. In our businesses, it’s important to get everything done, but we can also get overwhelmed with all the little things that need to be done to take care of customers. One of the big differences between highly successful entrepreneurs and less successful ones is how they manage their time: the more successful simply value it more and treat it as the scarce commodity it is.
A great exercise to bring this home is to track what you do in one day. You can write a diary as you go through the day or simply recall what you did at the end of the day. List the tasks you did; then write the hourly market rate of each task you did next to the task.
Did you spend time on low-level tasks such as email cleanup, filing, order-taking, order filling, or handling routine customer questions? Or did you spend time calling up power partners, dreaming up new products or services, or restyling your marketing message so that it’s more impactful and reaches more customers?
What was the average hourly rate of the tasks you did today? Multiply that by 2,000 hours and compare it your gross revenues. If your gross revenues were higher than the value of the tasks you did today, then your revenue might be stagnant. If your annualized day was worth more than your gross revenues, then congratulations; you’re moving up and giving yourself a raise. Your business is likely growing.
If you’d like a raise, then the first thing to do is to start delegating the lower level tasks that are eating up all your time. They might be a comfortable way for you to pass the time, but they could also be keeping you stuck, overwhelmed, and moving toward burnout.
We all have the same amount of time each day. If we can free up our time to focus on more powerful action items that move our business forward instead of the chores that clog our progress, then our success will accelerate.
The Balance Sheet is an important report in your business’s financial statements. Most small business owners are unsure of what all of the numbers mean on this report, so let’s see if we can shed some light on what they mean.
A Summary of Balances
One big characteristic of a balance sheet is that it represents one date in time, for example, 12/31/2014. The numbers represent balances, and since the balances change daily, a balance sheet only represents one point in time versus a range.
There are only three parts to a balance sheet, and the easiest part to understand is the assets, or what you own. Most balance sheets start off with cash balances, and these typically represent what you have in the bank less any uncashed checks that could reduce your account once they come in.
If customers owe you money that you have invoiced but not collected, you might see an Accounts Receivable balance on your balance sheet.
If you sell products, the cost of all of them that you haven’t sold yet and that you may have stored in a warehouse is in the Inventory account.
If you own equipment, furniture, cars or trucks or something similar that lasts for years, you will have a balance in Fixed Assets for what you paid for these items. If it’s been a while since you’ve owned them, you may have a Depreciation account, and when you net the two, your Fixed Asset values are reduced.
All of the above are assets and they are listed in the first section of a balance sheet.
What You Owe
If you owe money for taxes, to vendors, or to employees, then it will show in the Liabilities section which is the second of three major sections of a balance sheet. Day to day unpaid bills are in an account called Accounts Payable.
If you have bank loans, they usually each have a separate account like a bank account does. Each bank loan account represents the principal due on a loan (the interest you pay goes to another place).
The final section of the balance sheet is Owner’s Equity. It is the section that will vary the most depending on the type of entity your business is set up as. For example, if your business is a corporation, then there will be a common stock account which will represent the original amount of money you put into the business; it will match the Articles of Incorporation that you drew up when you incorporated. This amount will rarely ever change for the life of the business.
There is also usually an account called Paid-in Capital which is how much additional money you’ve put in or taken out of the company beyond the common stock balance.
A corporation will also have a Retained Earnings account. This reflects accumulated profit (or loss) through the years of operation.
If your business is set up as a partnership, the equity section will include an account for each partner that represents their balance in the firm, which is the net amount of money they have put into the business over the years plus or minus the business income or loss through the years.
Keeping It Simple
These are the very basics of the numbers represented on your balance sheet. If you have questions about any of the numbers, please feel free to reach out and ask.