With holidays approaching, this is the perfect time of year to take a moment and reflect on all of the things we are grateful for. Being grateful may sound a bit trite, but it’s also the number one, hands down, fastest way to bring more positivity and less negativity into your work and life.
Acts of gratitude are selfless and done unconditionally. You can use gratitude as a private exercise of reflection or you can express your gratefulness to show people that they are appreciated.
You don’t have to wait to feel gratitude; you can invoke it proactively.
If you don’t have a gratitude practice, consider starting one. Science has gotten involved in studying gratitude, especially in the field of positive psychology, and the benefits to health and well-being are enormous. It can benefit your business, too, when you show appreciation for business partners, employees, customers, and vendors.
Here are five easy ways to bring more gratitude into your work and life:
- Think of five clients you can send thank you notes to. You can write them by hand or send a greeting card with a thank you message.
- On your customer service email templates, add a line before the closing that says, “We appreciate your business.” It does make a difference.
- Quick, right now, think of five things you are grateful for and list them off the top of your head. After you’re done, you should feel a little bit happier than you did a few minutes ago. Use this tool after you feel a negative emotion to move you back into positivity faster.
- Find part of your day that you don’t love, such as your commute to work. Change it to your gratitude commute, finding things along the way to be grateful for. You might be surprised how great you feel when you arrive at work.
- Let one of your employees know that you’re grateful for the work they do for you. You can do this verbally, with a note, or with a gift.
When you practice gratitude, you can’t help but feel happy for the things you have in your life. Try these five things on a regular basis to bring more gratitude and positivity into your work and life.
A great entrepreneur will always be on the lookout for ways to improve their business. Efficiency is a goal everyone wants to achieve when it comes to business because it can translate into less work and more profits. Here are five ways you and/or your team can become more efficient in your business.
1- Get software-savvy.
Do you use the same software apps day in and day out? If you do, ask yourself how well you really know them? Are you able to just get by or are you a whiz with deep knowledge? If you’re just getting by and spending a lot of time wandering around or undoing things, you may want to take a course in that software.
The deeper our knowledge is in the apps we use every day, the more proficient we can be. This is true of all of your team as well.
2- Reward new suggestions.
Your team will be the first to know where there are bottlenecks and hiccups in your processes. Encourage them to speak up when they find something that could be improved. Listen to their ideas and reward the good ones. Implementing ideas from your business’s “front line” will increase its overall efficiency.
3- Watch your time.
How do you spend the bulk of your day? Working on new strategic projects, fighting fires, or a little of both? An honest evaluation of how you spend your time can yield many ideas about what’s going right and what needs work in your business.
Allocate at least an hour a day to work “on” your business instead of in it. That time is the only way your can move your business to the next level. If you’re the CEO, the focus should be more external than internal, more proactive than reactive, and more strategic rather than operational.
4- Avoid “bright shiny object syndrome.”
Are you easily distracted by an email (that you didn’t realize waylaid you into an hour of unproductivity), a web link, or a conversation? It’s crazy-easy to get sidetracked right in the middle of a task these days. It’s also easy to purchase something that looks great without doing your homework.
One way to avoid unnecessary purchases is to get three bids from potential vendors on all major purchases for your business. Make it a procedure so that you’re not lured into fancy marketing and items you might not ever use once you see the fine print.
5- One person’s trash is another’s treasure.
When you start to look around your office, you might be surprised at all the things you haven’t used in a while. Laptops that have been replaced, office supplies that were accidentally double-ordered, those folders you were going to use two years ago for a marketing campaign, even extra desks and chairs that are now empty: all of these items could be recycled to not only free up space but also get you some cash.
Which idea do you like best? Try it next week to improve your business efficiency.
The products and services your business sells make it unique. The same thing is true of how these items are set up in your accounting software. Whether you’re using QuickBooks Online or something else, getting your products and services set up right can impact the quality of the information you can get out of your accounting system.
Here are the types of items you can set up in most systems.
Inventory items are used in retail and wholesale businesses. They are physical items that the system can keep count of for you. You can purchase or make the items, and the associated cost is usually tracked when a shipping receipt or bill is entered. They are sold when a sale is made and an invoice or sales receipt is entered.
Transactions using inventory items impact a lot of accounts on both the balance sheet (cash, accounts payable, accounts receivable, and inventory) as well as the income statement (cost of goods sold, sales, and returns). The inventory item can be tied to default sales and purchase accounts in most systems.
QuickBooks offers a type of item called a non-inventory item. There’s a big difference in that non-inventory items do not have quantities associated with them. They don’t increase or decrease the inventory account. But they are able to be tied to default sales and purchase accounts like inventory items above.
Examples of non-inventory items include items purchased for a specific jobs, such as a contractor purchasing appliances for a custom home, items you sell but do not buy, such as an ebook or other digital product, and items you purchase but do not sell, such as shopping bags.
A service item is a special type of non-inventory item. There are no quantities, which makes sense because services are not physical items. They also are only connected to a sales account and not a purchase account.
With service items, you could set up service packages or hourly rates.
A bundled item is a group of items that were designed to be sold together. For example, if you sell a gift basket of coffee products, you would bundle the items used to create the basket.
An assembly item is a special type of inventory item where the quantity is tracked, but it differs from an inventory item in that it can’t be sold separately because it is a component and not a whole item. Assembly items are available in larger accounting and inventory apps, such as QuickBooks Enterprise, and are used in conjunction with a Bill of Materials or other build feature.
An example is a set of shelves. The assembly components are the individual shelves and the frame pieces that you may want to keep counts of. An inventory item that contains the shelves, the frames, and other parts is “built” from the assembly items. The nuts and bolts could be non-inventory items or assembly items, depending on whether you wan to keep count of them or not.
Sales tax is a very special type of item used on an invoice or sales receipt to calculate sales tax due on the order. In many accounting systems, it’s usually kept in a separate list from the other product and service items. Rates can be entered for each sales tax jurisdiction.
Some systems have an “other” category to capture items such as freight, shipping, handling, and other add-ons to the sale.
Setting up the right type of products and services is critical to matching costs and revenue for accurate insights into gross margin. This section of your accounting system is also the one that’s most different from industry to industry and company to company. Be sure you get professional help from experts who know both the software and your industry for best results.
Fixed assets are special kind of assets in your business. They include land, buildings, equipment, furniture, and vehicles that your company owns. While we frequently look at expenses to cut costs, fixed asset management is another place we can look to find ways to better utilize our resources and, in some cases, improve our profits.
Fixed asset management is a discipline that requires keeping good records of the assets a company owns. In the case of furniture and equipment, many businesses place an asset tag on the item and assign it a number that goes in a spreadsheet where data is kept about the item. There are also software apps more sophisticated than spreadsheets that track all of the fixed assets for a company, including original cost, depreciation method and history, and tax treatment.
You never know how many of an item you might have until you record and count them. How many computers (and computer parts) do you have lying around your office? Extra desks and chairs? Maybe you even have extra office space or extra land.
Part of being a great entrepreneur is fully utilizing all the resources you have at your disposal. Where can you put to better use the extra assets you have? Could you sell the surplus items? Or donate them for a write-off? Do you have extra room to rent out to a tenant, earning rent?
Sometimes we’re so focused on operating the core of our business that we don’t see what else is a money maker right in front of us. In addition to focusing on income and expenses from operations, consider the resources you have in your fixed assets.
At the very least, consider developing a spreadsheet that tracks the major items your business owns. Or reach out to us, and we’ll help you develop a fixed assets schedule and tracking process for your business.
And if you do sell some of your fixed assets, be sure to reach out to us so we can help you record the transactions properly.
Whether you call it bacon, Benjamins, or big bucks, cash – having enough of it – is key to running your business. Here are five tips related to managing and getting the most out of your business cash.
1- All banks are not the same.
Choose your bank wisely, and don’t be afraid to switch if you need to. Banks know they have a “high switching cost,” which means it’s one big time-consuming hassle for customers to change banks.
A couple of things that are important when choosing banks (some of which we never knew to ask five years ago) include:
- Is your accountant able to connect your accounting system with free bank feeds, saving you hours and hours of accounting work?
- How automated is your bank? The more automated, the fewer errors, and the more likely the bank is to have competitive services, features and prices.
- What is their policy on holding large deposits?
- Do they offer ACH services?
- Does your payroll withdrawal need to be approved each pay period?
Accountants have experience with banks, so if you are in the market for a new one, feel free to reach out and ask us our opinion on the easiest bank to work with.
2- Keep the number of cash accounts to a functional minimum.
Certainly, you’ll need at least a business checking account, often a business savings account, a business PayPal account, and perhaps a petty cash fund. You may also want a separate account for payroll; a lot of companies do. But if you need more accounts, there should be a functional business reason to support them. That’s already a lot of accounts to reconcile and keep track of each month.
The same is true of credit card accounts. It’s the keep-it-simple approach.
3- Reconcile all of your cash accounts every month.
Keeping all of your cash accounts reconciled each month is a good idea. If a bank error, accounting mistake, or even fraud occurs, you can catch it and get it resolved more quickly than if you delay.
You’ll also have more accurate information about your balances and can move and manage your money better.
As you learn your balances each month, you can also move money around. Unless you spend a lot out of PayPal, plan to move that money to pay off debt or into your checking account on a regular basis.
4- Maintain a cushion in your checking account.
If your checking account hovers close to zero more often than not, you may be wasting precious time watching your bank balance instead of spending time to manage your business. If you make a small error, you may get hit with costly overdraft fees, making your cash situation even worse.
Instead, consider depositing a fixed amount, like a cushion, that you never spend. You won’t get overdraft fees, and you won’t have to watch your balance so closely. You may give up some interest income, but the time freed up and the reduced worry will be worth a few extra pennies.
5- Watch your liquidity.
Cash is to business as water is to people; we can’t live without it. Make sure you have enough to cover future obligations, and when possible, build up several months of reserve for emergencies. Anything that you can liquidate quickly, such as accounts receivable, can count toward this fund too.
Try these five cash flow tips to keep bringing home the bacon in your business.
The income statement of any business is probably the most utilized report of all. It is a snapshot of the financial performance of your business over a period of time, such as a month or year. You might also hear it called the Profit and Loss Statement, or P&L.
The income statement can give you all kinds of insights as to whether you are bringing in enough sales, if your prices are generating enough profit, and how your expenses are running. Let’s take a look at the report, step by step.
The report starts by listing the revenue for the period of time covered. Revenue includes all sources of income, including sales from operations and any other source of revenue. In most small businesses, sales will be the largest part of the revenue, if not all of it. In some countries, the term used for sales is turnover.
If you sell more than one item or have more than one location, it might be a good idea to be able to view the sales detail from these categories. This should not be detailed on your income statement, but you should be able to get a drill down report on your sales detail behind the scenes.
Look for exceptions to what you expect to see. There can be some decisions you can make and actions you can take from the insights you discover.
Cost of Goods Sold
This section of the income statement includes costs you incur directly on items you sell. If you maintain an inventory, it’s the cost you paid for the inventory items that you sold during the period. If your business is a manufacturer, cost of goods sold, or COGS, will include costs of materials and labor to produce the items.
If you’re in construction, COGS will be Materials, Labor, Subcontractor Expense, Equipment Rental, and General Conditions.
If you own a service business, COGS will typically be zero. As a service business, you may incur direct costs when providing services, and these costs can be booked in a variety of expense accounts, including supplies.
Some income statement formats will include a gross profit number which is sales minus cost of goods sold. This number is important for businesses with inventory or job costing.
The expenses section of the income statement is your company overhead. It includes all of the expenses you incurred in your business, including advertising and marketing, rent, telephone, and utilities, office supplies and meeting expenses, travel, meals, and entertainment, payroll and payroll taxes, and several more.
These are non-operational revenues and expenses. Other Income includes interest and investment income, revenue from insurance claims, and sales from assets or other parts of the business. Other Expenses include depreciation, amortization, interest expenses, and taxes.
To review your expenses, check line by line to see if anything looks out of sorts, and take the appropriate action.
Net Profit or Loss
The final number on your income statement represents whether you made or lost money in the period the report covers. The formula is simple: revenue less COGS less expenses plus other income less other expenses equals net profit or loss.
Net profit/loss can go by many names, depending on the size of your business and your accountant’s vernacular. You may also see EBITDA: Earnings before interest, taxes, depreciation, and amortization. Earnings is another word for net profit.
It’s a good idea to compare your income statement numbers to other periods in your business. Common comparisons include last period, last several periods, and same period last year.
It’s also a great idea to have a Revenue Plan that sets goals for your income statement numbers. Then you can compare budget to actual numbers and take action on the variances.
If your business falls into a standard type of business, you may also be able to see how it is doing compared to others in your industry. This is called benchmarking, and the income statement is a very common format that’s used in benchmarking.
Do spend some time each period reviewing your business’s income statement. It can help you make a faster course correction in your business so you can be even more successful than you already are.
Please let us know if we can help with any of this!
It’s always fun to surprise and delight your customers. This puts a smile on your client’s face, boosts loyalty, and is fun for your employees too. Here are five ways to surprise and delight your customers with inexpensive perks.
1. Handwritten thank you note.
Email and social media have all but killed the handwritten thank you note. So when you send yours to your top customers, it will really stand out.
2. Promotional items.
Promotional items are frequently handed out at trade shows, but they can be used in other settings too. These are items where your logo is typically imprinted and you purchase them in quantity. Items that are useful and popular include coffee mugs, t-shirts, fidget spinners, screen cleaners, webcam covers, key chains, notepads, calendars, and more.
Choose an item that is similar to or a reminder of your business or product. An IT consultant might choose a screen cleaner, while an accountant might choose a piggy bank.
3. Coupon bag.
If your business is located in a shopping mall or office building with other businesses around, go door to door and ask for coupons that you can put in a coupon bag to give to clients. Clients will be delighted to get a coupon for the dry cleaners, florist, and hair salon in your center no matter what type of business you’re in.
4. Random prize.
If your business has a stream of clients coming in a physical store or a virtual one, you can award prizes randomly to customers. If customers are grouped together as in a classroom or lecture hall, it’s easy – you can hold a drawing for a prize. Or you can select a random number and the customer assigned that number wins a prize.
Choose a prize from one of your services or products, or give something away that’s universal and “hot,” such as an Amazon Echo Dot.
5. Free samples.
The cosmetics industry has been giving away free samples and gifts with certain purchases for decades. Grocery stores often have free samples of food at a little booth staffed by a host at the end of an aisle. You might be able to apply this idea to your business with a little bit of creativity.
Think of how you can “sample” your service or product and package it up in a free gift or sample. If you offer a service, you may have to get extra creative. A consultant can offer a book that’s related to the service offered, a spa can have healthy treats while clients wait, and a divorce attorney can offer stress balls or fidget spinners.
With customer service declining in many businesses, try these five things to wow your customers and set your business apart.
One of the most important success factors of small businesses is the ability to generate revenue, and to do that, most businesses need to market their services and products to bring in new customers and sales. The challenge for small business is how to make their marketing dollars work the hardest, and this requires careful tracking and measurement. Here’s one way to get started tracking your marketing spending so that you can find out what’s paying back the most.
List your sources of revenue
First, determine where your sales are coming from by making a list of all the ways you are currently attracting customers. Here are a few:
- Website via search
- Social media
- Google ads
- Referrals from existing customers
- Ad in a local magazine
- Article or Newsletters
- Board membership on local nonprofit
- Chamber of Commerce membership and participation
Track your expenses by source or method
Once you have your list, it’s time to look to your accounting system. Create an account for marketing expenses in your chart of accounts to track expenses for these marketing methods. Sort them by the payee to review totals for each category. If you need our help, please feel free to reach out.
The goal of this step is to be able to get all costs associated with each of these marketing methods so that you have a total cost over time by method. Don’t forget labor: if an employee spends three hours a week updating your social media accounts, this should be included in your costs.
Determine the source of your sales
To the extent you can, match the sales that come in with the marketing source or method. In other words, if a customer knows you from the Chamber and spends $500 with you, match the $500 revenue with the Chamber marketing source. Do this for every sale you can. If you don’t know or can’t attribute the sale to any one method, then code it to an Unknown tracking code or account.
This step can be difficult, depending on your business type, especially if your customers are anonymous, as in retail or restaurant sales. However, every business can do better by asking “how did you find out about us?” to each new client that comes in and recording that answer.
For online sales, you can use tracking apps such as Google Analytics to help you measure digital marketing methods.
Do the best you can on this step, and implement procedures to capture this information as accurately as possible for future sales.
Analyze and adjust
This is the fun part. Once you’ve done all the hard work, you should be able to match sales to costs and determine the volume of sales that are coming in for each marketing method. Let’s say you found out that you are getting no sales from your nonprofit board membership, the newsletters articles, and social media. You now have some decisions to make.
If you are doing these things solely for the purpose of marketing, you could cut them out and focus on the remaining methods. It could also mean that you need to redo your social media strategy; it’s not working now, but another strategy might. Or just one article or newsletter is not enough, but three articles could start paying off.
At any rate, you have far more information than you did before you started, and now you can make smarter decisions about your marketing. If we can help you code and crunch all of these numbers, please reach out any time.
Learn How Revenues Are Transactional with Rhonda Rosand, CPA and QuickBooks® Pro Advisor of New Business Directions, LLC. If you want to create more revenues within your business you just need to create more transactions! New Business Directions, LLC specializes in QuickBooks® set up, clean up, consulting and training services, coaching small…
Attracting and retaining talent in your small business can be a giant step toward growing into a mid-sized business. Beyond attracting new employees with salary and benefits, here are several perks, policies, and benefits to consider when recruiting women, and employees in general, to your workforce.
1. Flex work hours.
Everyone likes regaining control over their workday, and offering flex hours can be one of the lowest cost policies to implement. Flex hours support work-life balance and are especially important for employees who have school-age children who can plan work around their children’s day.
2. Wellness initiatives.
Large companies are able to offer a wellness program, but small companies can take small steps to reach the same result. Find a local gym to partner with for a membership discount. Bring in the occasional yoga teacher. Or hire a nutritionist to speak once a quarter to your employees. All of these small initiatives demonstrate to your employees that you honor a culture of wellness.
3. Maternity and adoptive leave.
Do you have a policy about time off for new parents? And more importantly, you’ll need a process to re-integrate the employees into the business when they return.
4. Child care support.
Even if you can’t afford to provide onsite child care, you might be able to partner with a local child care facility to provide reduced or subsidized rates.
5. Gender hiring goals and metrics.
Do you have an equal number of men and women in your workplace? If not, do you have goals in place to adjust the ratios when possible? If you have a disproportionate number of one gender making all of the hiring decisions, you may want to consider the effects of implicit bias on your hiring processes.
One way to speed the growth of employees is to provide mentoring. All employees will benefit from strong role models.
7. Opportunities for promotion.
Both men and women will perform better when there is a clear path to promotion as well as leaders in current positions who demonstrate leadership.
8. Dress for your day.
One of employees’ favorite perks is to be able to dress casually when no customer meetings are scheduled.
9. Paid time off.
Paid time off, which used to be called sick pay, is a favorite. But now, with most employers, you don’t necessarily have to be sick or explain your reason for wanting to take a personal day from work.
10. Gender-neutral company events.
Many companies create events for employees and sometimes customers to enjoy and mingle. This can include the company Christmas party, lunches, and happy hours. It can also include sports events such as golfing and attending baseball games. For every traditionally male event, be sure to plan a traditionally female event to keep the options gender equal. Spa day, anyone?
These benefits are a great start to attracting top talent, boosting employee morale, and maintaining a happier workforce in your business.