January 20th, 2011
I’ve made a lot of mistakes in my life, and that might be the most important thing I bring to the table as a bookkeeper and business coach. My clients get to make new mistakes, rather than repeat mine.
A simple example comes out of the question, “How much does QuickBooks cost for a small business?” Believe it or not, that ranges from $99 to $5,000!
What should you pay for your business’ accounting software? Rarely is the $99 or the $5,000 version appropriate. I just got a new client who was about to spend $3,000 on QuickBooks. After our review, we determined that a $300 version was the best fit.
As with all business decisions, one must judge Value rather than Price. They are NOT the same. Pay too little and you don’t get what you need. Pay too much and you simply waste that very limited resource called money! You will live with your software for a long time. Spend the time up front to determine the best Value.
Posted in BUSINESS ADVICE FROM BOOKKEEPERS-PLUS, Business Tips Of The Day | 1 Comment »
January 10th, 2011
What do you need to know to start a business?
1. Well, there’s all the legal and accounting stuff to set it up in an appropriate form.
2. There’s having a basis to believe that there’s a market for the product or service.
3. How about your ability to run the business – AND WANT TO.
I met with a potential client who had done all that work, but overlooked one significant detail: He could not get enough product to make the business worthwhile! He maxed out at $300,000 in sales, based on the available supply, but needed to sell twice that to make a reasonable return. Could he sell $600,000 of product. Sure could – EXCEPT HE COULDN’T GET THAT MUCH!
Oops.
So, who do you know who may know the answers – BUT NOT ALL THE QUESTIONS?
Have them call me, Andy Cohen at Bookkeepers-PLUS
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January 3rd, 2011
There are 3 kinds of people:
Those with no plan. They usually fail.
Those with a Plan. They usually succeed.
Those with a PLAN B, for when Plan A doesn’t work out.
They’re the WINNERS!
Who do you know who wants to win? Have them call Bookkeepers-PLUS. We’ll start 2011with a Plan – AND a PLAN B!
Posted in Business DOs & DONTs, Business Tips Of The Day | No Comments »
December 25th, 2010
Then there was the client who had bought his business from his father. He paid $100,000, which was just about $100,000 more than what it was worth.
Worse, he borrowed most of the money in ways that gave him an effective average interest rate of over 26%!
Over a period of four meetings in the first month, we devised a 10-step process to modify his borrowing, renegotiate with certain vendors, correct some of his bookkeeping procedures, and alter his marketing approach. He was thrilled … except that after the month was done, he hadn’t done any of it.
I Fired Him as a client!
He asked me to stay and promised to keep paying me. Told me he really liked my ideas and wanted to continue working with me. My problem, I explained, was that unless he executed the plan – A Plan With Which He Was In Total Agreement – he would fail. And I could not afford to be identified as the coach of his failed business.
Six months later, he was out of business.
Posted in BUSINESS ADVICE FROM BOOKKEEPERS-PLUS, Business DOs & DONTs, Business Tips Of The Day | No Comments »
December 9th, 2010
| 5 Tips for Effective Business Planning |
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- Clearly define your business idea and be able to succinctly articulate it. Know your mission and put it in writing.
- Examine your motives. Make sure that you have a passion for owning a business, and for this particular business.
- Be willing to commit to the hours, discipline, ongoing learning and the frustrations of owning your own business.
- Conduct a competitive analysis in your market, including products, prices, promotions, advertising, distribution, quality, service, and be aware of the outside influences that affect your business.
- Seek help from other small businesses, vendors, professionals, government agencies, employees, trade associations and trade shows. Be alert, ask questions, and visit your local Chamber of Commerce, Economic Development and SCORE office.
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Posted in BUSINESS ADVICE FROM BOOKKEEPERS-PLUS, Business DOs & DONTs, Business Tips Of The Day | 1 Comment »
November 28th, 2010
It is often amazing what BFOs can pour from your business’ books. Just one example:
A small manufacturer of industrial soaps contracted me to convert their books from Peachtree to QuickBooks, and review and refine their Chart of Accounts, and Vendor and Customer lists. The program that translates from the old software to the new is far from perfect, so the books need to be compared and reviewed after the process. In this case, there was a particular number that stuck out like a sore thumb … the supplies inventory was nearly $700,000 – in a business that had only a touch over a million dollars in annual sales. I reviewed the Peachtree history, and it seemed consistent, so I talked with the owner. In fact, the figure was correct because he had taken advantage of a sale – TWO YEARS EARLIER! A review revealed:
The good news was that he had saved 20% on the supplies.
The bad news was that:
(a) his appropriate inventory was under $10,000, so he had tied up, on average, over a million dollars in cash for two years to save that 20%;
(b) he needed to pay a full-time forklift operator to move these materials around so he could access the supplies he actually used on a regular basis; and
(c) he determined that far more than 20% of the supplies would exceed its shelf life long before it was used, and he would have to dispose of it – and, to add insult to injury, PAY for the disposal.
We devised a plan-of-attack in which he modified some of his formulations in order to use more of these “bargain” chemicals, and he had his office manager contact clients to offer them special pricing on the soaps that used these materials. During the next year, his direct costs were reduced by 18%, and his inventory diminished by almost $500,000. This left him with over $600,000 in unanticipated positive cash flow. That, in turn, allowed him to make early prepayment on a commercial loan on which he was paying 8% interest. It is probably obvious that there were many other spin-off benefits as well.
There’s more to bookkeeping than simply keeping books. It’s Reading the Stories that Your Books Tell that helps you strengthen and Grow Your Business.
Posted in BFOs, BUSINESS ADVICE FROM BOOKKEEPERS-PLUS | 1 Comment »
November 20th, 2010
Forty-seven years ago on this date, President John Kennedy was assassinated In Dallas. While that is quite a bit of time, it is still only a bit more than half the average lifespan. Yet so much has changed.
For example, there is a great debate right now about whether to renew the Bush-era tax cut for those with the top 2% of income. Do you know what the original rate was in 2003, and what the tax break changes it to?
Do you know what that rate was in 1963?
I use this as an example of how much things change over time. Whether you talk about taxes, sports records, dance steps, or just about anything else, the one thing that stays the same is change.
Most business people don’t have time to keep up with all the changes that affect their livelihood. That’s why they should CONTACT Bookkeepers-Plus (www.bookkeepers-plus.com) . Whether it’s cost-effective marketing, cost analysis, or the cost of filing sales tax incorrectly, they can count on us to keep them up to date and out of trouble.
Oh, by the way, the Top Marginal Rate in 2003 was 38.6%. The tax cut brought it to its current 35%. If the cut is not renewed, the rate will return to 38.6% for income over $311,950.
In 1963, Top Marginal Rate was 91%!
Posted in Business Tips Of The Day | 3 Comments »
November 8th, 2010
Yogi Berra is famous for many things, not the least of which is his Yogi-isms. One of his pithy comments that has been very useful to me is: You can observe a lot just by watching.
As intrinsically apparent as this may be, most of us in business manage to look right by some obvious opportunities in our professions. In the course of our race through the pressures of the day, after all, who as time to focus on details?
For me as a Business Coach, this reality has been a substantial Profit Center. Whether it is noticing inappropriate bank service charges, identifying a production method that dramatically reduces cost, or questioning an inordinately high figure for supplies inventory, I can have the luxury of watching. While the business owner is busy running the business, I can peruse the books and observe a lot. Just give it some thought.
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October 30th, 2010
Time to call your bookkeeper! Starting with your 2011 records (to be reported in 2012), there’s gonna be a whole lot more paperwork on your To-Do list.
Most of you probably get 1099s each year, but now you may be sending them for the first time. 1099s will have to be sent to all vendors who were paid $600 or more during 2011. What’s new is that this now includes corporations that were previously exempt and materials purchases that were also previously exempt.
Everyone who conducts a business has to comply. This includes Corporations, Partnerships and LLC’s, and anyone who prepares a Schedule C (business) or Schedule E (Rental). For example, this will include home day care providers, real estate agents and brokers, multi-level marketers, and even anyone running a part time business.
The Penalties?
As little as $50 per 1099 not filed, and as much as paying the taxes the other guy should have paid.
Start now getting W-9′s from everybody, including corporations, and make sure they give you their Tax Identification Number.
So, schedule more time for Form-Filling, or make better use of your time and CALL YOUR BOOKKEEPER!
Posted in BUSINESS ADVICE FROM BOOKKEEPERS-PLUS, Business Tips Of The Day | 2 Comments »
October 24th, 2010
Desperate to find a new vendor for a critical business process, a not-for-profit client and I shopped the market. Our selection had one problem…its pricing was almost double what we had been paying, so the client asked that they “sharpen their pencil.” They offered a reduction – but that still added over $35,000 to our costs. The CEO and President were ready to bite that huge bullet, but first asked my opinion.
I was clear…the vendor wanted us as much as we wanted them, and they had room to move. We should ask them to drop their price by 50%!
My client thought I was out of my mind, but I convinced them that the vendor would do one of three things: (1) Refuse to move from their offer; (2) Meet our request, or, and by far the most likely; (3) Offer a compromise.
The one thing I was confident they would NOT do was refuse to do business with us, simply because we asked.
So, we asked.
The result? The vendor offered to move more than half the way to our request.
Bottom line? The client’s cost will be LOWERED by about $5,000 rather than increased by $35,000 for the coming year.
Lesson to be learned? Unless the product or service is in much lower supply than the marketplace is demanding, it is never a bad idea to ask. Just be careful that you DON’T convince your supplier to agree to a deal that they will regret…You do not want them to regret that they are doing business with you!
Posted in BUSINESS ADVICE FROM BOOKKEEPERS-PLUS, Business Tips Of The Day, Not-For-Profit, Uncategorized | No Comments »
