Hiring a new employee is a big accomplishment in any small business, and there are a lot of steps involved, too. Here’s a handy checklist to help you stay organized when you bring that new hire on board.
First things first, the legal and accounting items:
- Signed employment agreement, typically an offer letter. There may also be a supplemental agreement outlining employee policies.
- Payroll documents include:
- IRS form W-4
- Form I-9
- Copy of employee’s government-issued ID
- Most states require a new hire report to be filed; sometimes your payroll system vendor will automatically file this for you.
- Notify your workers comp insurance carrier.
Next, it’s time for employee benefits enrollment:
- Health insurance
- Any other benefits you provide
- Provide the employee with the holiday schedule
- Explain their PTO and vacation if not already explained in the offer letter
Set your new employee up for success with the right equipment:
- Desk, chair, lamp, other furniture
- Coffee mug, refrigerator shelf
- Truck, keys
- Computer, monitor, mouse, keyboard, power strip, floor mat
- Office keys, card entry, gate remote, parking assignment
- Filing cabinet, keys
- Office supplies
- Cooler, other supplies
Your new employee may need access to your computer software systems:
- Employee email address
- Any new user IDs and password for all the systems they will need to access
- Document access
How will your new employee learn the ropes?
- Set up training
- Assign a buddy
Hopefully, this list will give you a start toward making your employee onboarding process a little smoother.
One of the biggest challenges for small businesses is managing cash flow. There never seems to be enough cash to meet all of the obligations, so it makes sense to speed up cash flow when you can. Here are five tips you can use to get your cash faster or slow down the outflow.
1. Stay on top of cash account balances.
If you’re collecting money in more than one account, be sure to move your money on a regular basis when your balances get high. One example is your PayPal account. If money is coming in faster than you’re spending it, transfer the money to your main operating account so the money is not just sitting there.
2. Invoice faster or more frequently.
The best way to smooth cash flow is to make sure outflows are in sync with inflows. If you make payroll weekly but only invoice monthly, your cash flow is likely to dip more often than it rises. When possible, invoice more frequently or stagger your invoice due dates to smooth your cash balances.
Take a look at how long it takes you to invoice for your work after it’s been completed. If it’s longer than a few weeks, consider changing your invoicing process by shortening the time it takes to send out invoices. That way, you’ll get paid sooner.
3. Collect faster.
Got clients who drag their heels when it comes to paying you? Try to get a credit card on file or an ACH authorization so you’re in control of their payment.
Put a process in place the day the invoice becomes late. Perhaps the client has a question or misplaced the bill. Be aggressive about following up when the bill is 45, 60, and 90 days past due. Turn it over to collections quickly; the older the bill is, the less likely it is to get paid.
4. Pay off debt.
As your cash flow gets healthier, make a plan to pay off any business loans or credit cards that you have. The sooner you can do this, the less interest expense you’ll incur and the more profit you’ll have.
Interest expense can really add up. If you have loans at higher interest rates, you might try to get them refinanced at a lower rate, so you won’t have to pay as much interest expense.
5. Reduce spending.
You don’t always have to give up things to reduce spending. Look at your expenses from last year and ask yourself:
- What did you spend that was a really great investment for your business?
- What did you spend that was a colossal mistake?
- What do you take for granted that you can cut?
- Where could you re-negotiate contracts to save a little?
- Where could you tighten up if you need to?
Managing cash flow is always a challenge, and these tips will help give you a little cushion to make it easier.
Do you remember the days when you got a report card from school? Now that you have a business, your business has grades as well. But it’s up to you to calculate them. Here are some grades you can compute for your business to give it a report card of its own.
How successful is your business from a financial standpoint? These financial ratios can help you give yourself a grade.
Return on equity
This ratio measures profitability as it relates to the investment or money you have tied up in your business. The formula is net income / average equity. An ROE of 15 percent or more is an “A” for your business report card.
Return on assets
This ratio measures profitability as it relates to your business assets. The formula is net income / total assets. An ROA of five percent or more is an “A” for your business report card.
This ratio measures efficient use of your business assets. The formula is sales / total assets. This number should be high for low margin businesses and low for high margin businesses.
How profitable is your business? You might know your bottom line number, but there’s more to it.
Gross profit margin
This ratio measures the financial health of a company as it relates to how much money is available to cover overhead. Calculate it as follows: (revenue – cost of goods sold) / revenue. The value will be different depending on what industry you’re in, but some say a range of 25 to 35 percent is normal for small business.
Net profit margin
Net profit margin measures how profitable your business is in relation to the amount of sales you have. As an example, a business that can make $50K in profits on $500,000 in revenue is more healthy than one that can make $50K profits on $3 million in revenue. The formula is net income / total sales, and although it depends on the industry, a net profit margin over 10 percent is considered an “A.”
Report cards were important in school, but they’re even more important in business. If you’d like us to set up one for your business, let us know.
The start of a new year also means that it’s the perfect time to revisit old business strategies from last year so that you can maximize your revenue for 2019. If your financial numbers were fantastic last year, that’s great! Keep the strategies that worked for you and cut the ones that didn’t.
If your financial numbers weren’t amazing last year, or maybe you’re just interested to see how you can increase your revenue, we have you covered. Here are 10 ways you can boost your revenue this year:
1. Revisit your current prices and make adjustments as necessary.
Many people will tell you that increasing your prices will increase your profits, but that’s not necessarily true. Increasing your prices by a small amount might increase your profits without turning away existing customers, but make sure you research your competitors’ prices and adjust based on what makes sense in your market.
2. Bundle your services or products together.
Make your products or services more attractive by bundling them together and pricing them at a better deal than purchasing the services or products separately. Customers that only want one particular product or service should still be able to purchase the product or service à la carte, but offering different packages of increasing value makes it much easier to upsell to clients and increase your business revenue.
3. Offer free gift with purchase.
Tacking on a complimentary or free service to your products or services could be the small push needed to close sales. Even better, you could add a complimentary or free service to your highest-quality bundle. As an example, the cosmetics industry has been doing this for decades.
4. Start a new product or service line.
If you’re limited to just a few products or services, it’s time to expand. If you mow lawns, offer a leaf collection or snow removal service. If you sell shoes, add socks. If you manage a restaurant, consider offering alcohol. Expanding the scope of what you’re selling will provide you with additional revenue.
5. Expand your geographic reach.
If you’re still only offering services and products locally, consider expanding your reach, especially because the internet is so readily available nowadays. Think about which services you can offer virtually; some may require you to invest in cloud-based delivery systems. If you only sell products at a physical location, ecommerce is a huge industry and you could definitely increase revenue by having a storefront online.
6. Learn to say “no” to bad clients.
This may seem counterintuitive, but learning to turn away bad clients is really important. When clients are ungrateful, unreasonable and just take up too many of your resources, you have to realize that they are unprofitable. By turning them away, you can devote more of your attention to building relationships with your best customers and creating new, profitable opportunities.
7. Make your online presence known.
Everyone uses search engines and social media to find the right business to serve their needs, so make sure you can be found online. Create a website for your business and make sure your have business pages on social media platforms like Facebook, LinkedIn and Twitter. You’ll have to develop some marketing strategies and optimize your site to rank high, but, when done right, these channels can drastically impact the amount of revenue you get.
8. Manage your online reputation.
When you have many good reviews, your credibility goes up and your business is more appealing to potential clients and customers. If your clients leave you an amazing testimonial, it’s a good idea to ask them to post it online as well—especially on Yelp, your Facebook Business Page, and Google Reviews. On the other hand, negative reviews will look bad to potential clients and can negatively impact your revenue, so make sure you respond appropriately to the review and show potential clients that you care about getting things right.
9. Encourage customers and clients to sign up for a continuity program.
Do you have loyal customers? Reward them by offering a membership or continuity program with VIP benefits. Retail, restaurants, and service businesses can set up privileges like faster service, discounted prices, and frequent purchase rewards that many consumers will pay a small monthly fee for.
10. Encourage customer referrals by building and nurturing customer relationships.
Connect with clients and build strong relationships through effective communication, providing exceptional service, getting feedback, addressing concerns, and showing appreciation. Doing so can increase repeat customers, customer referrals and your business revenue.
If you’re looking to boost your business revenue this year, definitely give these strategies a try.
Many people in their retirement years have regrets about not saving more during their earning years, but you don’t have to be one of them. All you need to do is be realistic and proactive about saving. It’s all about paying your future self.
Circumstances can arise that can erode savings you hoped would be there for retirement. Some of those events include not being able to work due to poor health or a bad job market, unanticipated hospital bills, a divorce, overestimating Social Security benefits, bad investments, procrastination, and simply not realizing how much you need to live on.
The good news is you can prevent future regrets by making a strong savings plan now. As a small business owner, you may not have a retirement plan, so it’s essential that you create one for yourself. You earn an income today. Put some of that income toward paying your future self, and pay that “bill” first each month or each paycheck.
To be proactive and build as much savings as possible, take these steps:
- Increase your financial skills by learning how to fund your retirement, including all that traveling you’d like to do.
- Take care to manage your investment risk and be realistic about investment returns. In good markets, purchase rather than rent or lease so you are building an asset.
- Put as much aside as you can, and try living just below your means.
- If you do have periods where you are out of work, try living frugally until your income is back to normal.
- Optimize your business profits and apply some of them to your savings plan.
- Minimize taxes where possible so you can keep more of what you make.
- Make everything work twice as hard for you:
- Get credit cards with loyalty programs.
- Sign up for frequent customer programs to earn points.
- Make sure your bank is giving you the best deal on interest.
- Sell unused belongings on eBay and put the money in savings.
- Cancel used subscriptions and memberships for both your personal and business needs and move the saved money to savings.
- Periodically reach out to vendors to get a better deal on the expenses you incur. This could be for phone plans, utilities, and any other routine expense. Put the difference saved in savings.
- Select cars and trucks with good gas mileage and also high resale value. Consider that using Lyft or Uber may be cheaper than maintaining a car, depending on how much you drive. Put the difference in savings.
There are hundreds more ways to save more, and these will get you started in the right direction for 2019.
Reputation management is a relatively new area within marketing. In a way, it’s similar to digital public relations; it’s the management of a company’s reputation online. There’s also a customer service component to reputation management.
Unlike public relations workers before the internet came along, today’s reputation managers must deal with what customers and other stakeholders publish publicly on social media, blogs, directories, and many other locations online.
A large part of the reputation management function is to monitor and reply to reviews. Company reviews are available on hundreds of sites. The most common places to look for reviews are Yelp, Google Business, Bing, Amazon, and shopping carts.
If a company receives a positive review, thanking the customer in a response is a nice gesture and recognizes their time spent writing the review. It also reassures others that the company is paying attention to customer feedback.
If the review is negative, swift action should be taken to respond, to apologize publicly, and to take the conversation to a private communications channel such as email or direct messaging. Customer service should get involved to resolve the issue quickly and satisfactorily. In some cases, posting a follow-up response to ask the client if the issue has been resolved is appropriate.
Companies should monitor more than just customer reviews. Sites like Glassdoor allow employees to post job satisfaction reviews for prospective workers. Companies in industries with chronic talent shortages will want to allocate resources to monitor these sites effectively.
Reputation management is not all about reviews; it’s also about mentions. Whenever your company name, CEO, or brand names are mentioned, a reputation manager should know about it.
There are now several apps that perform reputation management monitoring so that you’re alerted quickly to reviews or mentions. A very quick free option is to use Google Alerts to scour the web for company name mentions. Many of these apps also help a business garner more reviews and optimize them to improve their reputation.
Whether your business needs to worry about reputation management depends on many factors, but hopefully this overview will give you an idea of what’s possible in this space.
2019 is right around the corner, which makes today the perfect time to think about your business goals and where you want to be one year from now. As year-end wraps up, you’ll soon know your financial numbers for 2018. You’ll then be able to evaluate how you did and map out a new plan for 2019.
If you’re like many small business owners, you may have started your business without a business plan. Most businesses don’t need a long 20-page document that will just gather dust on a shelf. But you might want to consider putting together a short, 1- to 2-page concise document that includes the basic components of a typical business plan: mission, vision, strategies, and objectives.
A mission statement describes what the company is in business to do. And while you could simply state a mission similar to “Our mission is to sell our products and services,” you may want to think bigger than that in terms of how you want to be known or to impact more than your customers.
A vision statement describes your company’s future position. It’s what you aspire to be. It could again be, “Our vision is to sell more products and services than any other business.” Or it could be more inspiring and uplifting.
Your business strategies support how you’ll get from where you are to what is stated in your mission and vision statements. While there may be many ways to accomplish your mission and vision, strategies are the approaches you’ll take to get there.
Goals are measurable destinations with a timeline that are created from your strategies. Objectives finally get down to the nitty gritty and state the tactics and action plans you need to execute to put all of this work into play.
Each of these items can be written out on a few lines, taking up all together no more than a few pages. The benefits of having a concise business plan are many: if you think of an idea you want to do, you can check the plan to make sure your idea falls under your vision, mission, and strategies that you’ve laid out for the year. If it doesn’t, then you’ll know that your idea would take you off track from your plan, and you know how easy that can happen these days with all of the distractions and options available to us.
You may want to add additional sections to your plan depending on your strategies. If you plan to launch a new product or execute new marketing strategies, you might want to add a Market Summary section. If you seek new funding, you might want to have a section on funding options. With business planning, it makes sense to do what’s relevant, and nothing more or less.
We wish you the very best in 2019, and if we can help you with the financial portion of your business planning, please reach out.
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 staff 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 staff as well.
2- Reward new suggestions.
Your staff 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.