New Business Direction LLC
This year’s theme was “epic” designed as the epic conference to empower small business advisors to develop and sustain the epic practice that distinguishes itself and embraces the key differences that separate ProAdvisors around the good, the great and the “epic.”
Sessions
The four-day conference kicked off each morning with Power Breakfast Sessions followed by main stage presentations with keynote speakers such as Daymond John of Shark Tank, Joe Buissink of Canon Explorer of Light, and author Mike Michalowicz of Profit First. In between general session, attendees dispersed around the conference center into rooms where cutting edge training sessions were being held. Training sessions were broken down into 5-tracks for Practice and Professional Development, Practice Growth, In-Depth QuickBooks Training, ProAdvisor Certification Training and QB Integrated Apps.
If you were fortunate enough to attend, Rhonda Rosand, CPA
taught a 100-minute informative training session titled Successful Implementations from Initial Contact through Ongoing Support on Sunday, May 22nd. As the evenings came around, networking sessions were held consisting of ICB Bookkeeper’s Symposium, the Woodard Network Social hosted within Atlantis’ stunning marine life exhibit, The Dig and of course, the infamous TSheets dance Party on TSheets Tuesday.
Sondra’s Take on Vendors
In between training, I was able to visit the exhibit ballroom which held over 90 vendors, some of which were very familiar. I came across software I use everyday to make my work flow run smoothly and now I am able to put a face to the product. For example, SmartVault allows me to access files anywhere, anytime and from any device. I also have the capability to securely share files with clients and our team.While at Scaling New Heights, I learned the importance of technology and how it relates to strengthening our firm and supporting our clients.
Running a small business is often about taking and managing risks. Market risks are normal but business and tax risks are another thing altogether. Most business and tax-related risks can be managed as long you know about them. Here are seven small business risks you will want to make sure are covered.
1. Best Choice of Entity
Are you operating as a corporation, limited liability company, partnership, or sole proprietor? More importantly, is the entity you are operating under providing you with the greatest tax benefits and separation from personal liability? If not, you might want to explore the alternatives to make sure you’re taking the amount of risk that’s right for you.
2. Employees or Contractors
Are your team members properly categorized when it comes to the IRS’s rules about employees versus contractors? Unfortunately, it’s not about what you and your team member decide you want. If you decide to hire contractors and the IRS determines they are employees, you could owe back payroll taxes that can cripple a small business. So you’ll want to do the right thing up front and make sure you and the IRS are in agreement, or be willing to take a future risk.
3. Insurance
If you’d like to protect yourself from possible losses through a disaster, theft, or other incident, insurance can help. There are a lot of kinds to choose from, and you’ll likely need more than one. At the minimum, make sure you’re covered by:
- Business property insurance, renters insurance, or a homeowners rider to protect your physical assets.
- Professional liability or malpractice insurance, if applicable, to protect you from professional mistakes including ones made by employees.
- Workers compensation insurance, to cover employee accidents on the job.
- Auto insurance or a non-owned policy if employees drive their car for work errands.
You may also want personal umbrella insurance, life insurance, and health insurance. Check with an insurance agent to get a comprehensive list of options.
4. Sales Tax Liability
Are you sure you’re collecting sales tax where you should be? As the states get greedier, they invent new rules for liability. For example, if one of your contractors lives in another state, you may owe sales tax on sales to customers who live there even if you don’t live there or have an office there.
Nexus is a term that describes whether you have a presence in a state for tax purposes. Having an office, an employee or contractor, or a warehouse can extend nexus so that you’d need to collect and file sales tax for those states. If you’re in doubt, check with a professional, and let us know how we can help.
5. Underpricing
Most small businesses make the mistake of underpricing their services, especially when they start out. If you started out that way, it’s awfully hard to catch up your pricing to a reasonable level. Knowing the right price to charge can make the difference between whether the company last six months or six years. You can mitigate this risk by getting cost accounting help from your accountants who can help you calculate your margins and determine if you’re covering your overhead and making a profit.
6. Legal Services
Legal services can be expensive for a small business, so sometimes owners cut corners and take risks. Attorneys are needed most when it comes to setting up your entity, reviewing contractual agreements such as leases and loan agreements, settling conflicts, advising on trademark protection, and creating documents such as terms of service, employment agreements, and privacy policies. Just one mistake on any of these documents can cost a lot, so be sure it’s worth the risk.
7. Accounting Services
Doing your own accounting and taxes can be risky if they’re done wrong or incomplete. You could end up paying more than you should if you leave out deductions you’re entitled to. Worse, if you do your books wrong, you could end up overpaying taxes without realizing it. A common bookkeeping error results in doubling sales, and while it might look good, you certainly don’t want to pay more than what’s been truly received.
How did you do with these seven risks? If you need to reduce your risks in any of the areas, feel free to reach out for our help.
Most small businesses need help with cash during certain stages of their growth. If you find that you have more plans than cash to do them with, then it might be time for a loan. Here are five steps you can take to make the loan process go smoother.
1. Make a plan.
Questions like how much you need and how much you will benefit from the cash infusion are ones you should consider. If you don’t already have some version of a budget and business plan, experts recommend you spend a bit of time drafting those items. There’s nothing worse than getting a loan and finding out you needed twice the cash to do what you wanted to accomplish.
2. Know your credit-related numbers.
Do you know your credit score? Is there anything in your credit history that needs cleaning up before it slows down the loan approval process?
Take a look also at your standard financial ratios. These are ratios like your current ratio (current assets / current liabilities) and debt-to-equity ratio. If these are in line with what your lender is expecting, then you are in good shape to proceed.
3. Research your options.
Luckily, there are many more options for financing your business today than there have been in the past. Traditional options, such as banks, still exist, but it can be difficult to get a bank loan for a small business.
Here are some online loan sources where investors are matched with borrowers via an online transaction:
- Kabbage
- OnDeck
- LendingClub
- FundBox
- BlueVine
Or you can go to Fundera and compare which loan is the most economical.
There is also crowdfunding, which is very different from a loan. Crowdfunding is a way to raise cash from many people who invest a small amount. Top sites include GoFundMe and KickStarter, where you can find out more about how it works.
Other ways to get cash include tapping into your personal assets: using credits cards, refinancing a house, and borrowing money from family and friends.
4. Create your loan package.
Most lenders will want to know your story, and a loan package can provide the information they need to decide whether they want to loan you money or not. A good loan package includes the following:
- A narrative that includes why you need the loan, how much you want, and how you will pay it back. A good narrative will also list sources of collateral and a willingness to make a personal guarantee.
- Current financial statements and supporting credit documentation, such as bank statements and credit history.
- A business plan and budget, or portions of it, that cover your business overview, vision, products and services, and market.
- A resume or biography of the business owners and a description of the organization structure and management.
While it takes time to put together a great loan package, it’s also a great learning experience to go through the exercise of pulling all of the information together.
5. Execute!
You’re now ready to get your loan. Or not. Going through these five steps helps you discover more about your business and helps you make an informed decision about whether a loan is still what you want and need.
Throughout the process, you may have learned new information that tells you you’re not quite ready for a loan, or that in fact, you are. At any rate, preparing for a loan is a great learning process, and the good news is there are lots of avenues for small businesses to get the cash they need to grow.
New Business Directions, LLC is pleased to announce the recognition of Rhonda Rosand, CPA as an Insightful Accountant Top 100 ProAdvisor for 2016. This will be Rosand’s third consecutive year receiving the award out of tens of thousands of ProAdvisors in the country.
Leading Top 100 ProAdvisors leverage the ProAdvisor Program to better serve their clients, grow their own business, deliver great client service, and increase their knowledge and understanding of the Intuit ecosystem.
This years award ceremony will take place at the Scaling New Heights 2016 conference at Atlantis Paradise Island Resort in the Bahamas.
Congratulations Rhonda!
Two very important skills for entrepreneurs to master are marketing and finances. Combine them by understanding the numbers behind marketing, and you have an even more powerful understanding of exactly what makes your business tick.
Key Numbers – Cost Per Client Acquisition
Do you know how much it costs your business to bring in one client? The technical term is “Cost per customer acquisition,” and it’s computed by adding the total marketing and sales costs excluding retention costs and dividing them by the total number of clients acquired during a period of time.
Cost per customer acquisition is important to know because then you can compute how long it takes before your business begins to make a profit on any one customer. In software application services with a monthly fee, the breakeven for a client can be around ten months.
It’s essential to understand this dynamic for pricing and volume planning purposes. If your services or products are priced too low so that your acquisition costs are not recouped in a reasonable period of time, it can play havoc with your cash flow as well as your profits. If you don’t have enough volume to cover overhead and acquisition costs, then your company will be in trouble in the long term.
Customer Lifetime Value
There is a simple and an academic formula for customer lifetime value. You can estimate it by multiplying the average sale of a customer by the average number of visits per year by the number of years they remain a customer. That’s the easy version.
The more difficult version of this formula takes into account retention rates and gross profit margins. The formula is: Average customer sales for life times the gross profit margin divided by the annual churn rate.
Once you know and track these numbers in your business, you’ll be better able to make smart decisions about your marketing investments and your pricing. And if we can help you, please reach out as always.
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