Monthly Archives: January 2016

Small Business Tax Recordkeeping

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Most small business people figure they will worry about taxes in April. However, if you can take a step back and manage your records better, it could make for a whole lot less hassle, as well as a smaller bill from CPA.

Here are some quick and easy ways to improve your recordkeeping, allowing you to breeze through tax season focusing on growing your small business.

Receipts, Receipts, Receipts

Despite the bad reputation, receipts can actually be a lifesaver for the small business owner. Yes, all those receipts are annoying, but they are the documentation that your business had a legal expense. Lucky for you, there are many machines and programs that will help you digitized those receipts with ease. A desktop scanner like NeatDesk can de-clutter your life. Yet, it will retain all the expenses for your business, allowing immediate access to a whole year of records.

Categorize everything with Mint

Mint is a renowned budgeting and general finance software tool.  However, many of its features are underutilized by its users.

One of the best, which is especially helpful for small business owners, is categories.  This feature allows you to categorize every single expense, charge, income, or any other transactions as a specific type. You can even assign multiple categories to one item or make your own categories. For example, you can categorize “gas” as your personal gas and make a new category for “business gas” for a company vehicle.  This can be further slapped with a “tax deductible expense” category.

The idea behind this is come tax time, a quick push of a button and Mint will show you every single expense in any category for your desired timeframe—say for the past year. There has never been a faster way to find all your deductible expenses in a flash.
The only downside is that throughout the year the recordkeeping is time consuming. However, it will save you time and money when figuring up taxes.

Avoid Cash

Not only is cash less secured then a digitized form of payment such as Android Pay or a credit card, it is incredibly hard to track.  More specifically, it is incredibly hard to REMEMBER to track cash expenses. Consider that most days you will be juggling multiple meetings or other items. Will you be able to remember every expense that goes with each meeting? A credit card print out, while not as full-proof as a receipt, can serve as a safety net for when you forget to ask for a receipt.  With cash, there is no safety net.

Store your digital records on the cloud

Nothing could be worse than a computer failure causing the loss of all your records. If you forgot or neglected to back up the files, you will be hard pressed to recover records. Digitizing records is convenient and efficient, but only if you can access them in a timely manner. The cloud now makes this a reality.  Consider storing a copy of your records on a cloud-based platform like Dropbox. Remember to regularly update the cloud records, we suggest at least once a month.

That way if you do lose everything, you won’t have to piece together but a few weeks or a month at most.

Direct Marketing in the Social Media Age  

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Do you remember envelopes, gift baskets, and yellow letters?

Alas, these terms are long forgotten in the age of social media.  Research shows over 78% of companies now have a dedicated social media team.  How many still have a direct marketing team?

In an episode of the hit TV show the Office, Michael Scott tries to win back former clients by bringing them lavish gift baskets.  It failed miserably, and the clients explain to him that they went with another supplier because they have a website that makes it super easy to order.

Is Direct Marketing dead?  Believe it or not, direct marketing is not dead.  Here are some clever strategies you can actually use as a unique approach in the digital age.

What was commonplace is now surprising

When is the last time you got a handwritten letter?  For many it has been over 10 years. Twenty years ago, businesses and their leaders would receive hundreds of letters a day, now they receive few, if any.  It seems like the only people still using snail mail is the IRS.

This can work to your advantage.  Social media channels are becoming more crowded by the day with noise and marketing material.  This tsunami chases users to other platforms in a constant race to escape the marketing. However, the person cannot change their physical address. Not every business can be on our smart phones, so maybe your business can benefit by going old school.    A hand written note to check us out on Facebook can now be more convincing than an invitation on the platform itself!

Email, was, is, and always will be king

 

An email list can be a very effective means of advertising your business to others, even in the age od social media advertising.

An email list has always been a great way to directly market to your customers for one very simple reason.  Unless you are doing something shady, then your list subscribers gave you permission to market to them. You might be surprised at how powerful that is. Instead of shouting at the same level as famous celebrities and cat videos, you are now nestled in their email between the Amazon receipt and dentist appointment reminders. This is your opportunity to develop a new customer or retain a loyal customer, simply through the use of an email.

Creative Financing for a Small Business

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A wise man once said that small businesses are the lifeblood of America.  Yet, small businesses are one of the hardest enterprises to finance. Here are some creative ways you can go about financing your small business.

Partnership

While relinquishing ownership of a half or more of a small business may seem crazy, it can be a great way to infuse capital into your idea.  The amount does not have to be a huge sum in the millions- it can be much smaller.  There is a large community of individuals that will lend out money such as a loan or in exchange for equity as either an active or silent partner.  The key to securing this type of financing is professionalism and networking.

Finding individuals with large pockets can be difficult if you are fresh out of college or haven’t done much networking.  Once you have secured a meeting with an individual who may be a potential financer, be professional, treating their time as valuable. Arrive early enough that you can be calm in the meeting. Also, bring as much materials with you as possible- business plan, investment pitch or ideas, and product samples if needed. Being prepared will indicate your seriousness and indicate that you are a serious prospect for their investment.

401k loan

For many individuals in American, their retirement account, either a 401K or IRA is one of their largest assets.  Many people have taken advantage of employer provided 401Ks or started their own IRAs and have built up a significant saving in these accounts. These accounts may be used as a lending source or a direct investment from an IRA into a small business. The advantage is that you have a personal ready source to fund your small business.

The disadvantage of using a retirement account is that you are placing your retirement at risk. A 401k loan has an added disadvantage you must repay the loan in a set period of time with a specific amount of interest or you may be subject to a penalty. Additionally, you may miss the potential investment results that your retirement money could have been in, instead of your business.

However, if your small business is successful the gains you get in terms of financial security or a pay out when you sell could turn out to handily beat any gain of 5 or 6 percent you might have got in stocks or bonds.

Get a roommate or rent out your basement

A great way to unlock capital in an apartment or house is to “hack it” so that someone is paying part or all of your mortgage and you therefore have more cash flow freed up to invest in your business.

A roommate, while they may cramp your lifestyle, they will likely cut your utilities payments too.  If you own a house, there is likely a way to rent out an extra room or turn the basement into a studio apartment to generate extra cash flow.

This does not have to be a permanent situation as all it takes is a few months to a year of extra cash flow and your business can get off the ground and start to support itself or be viable enough for more traditional financing.

Crowdfunding

The elephant in the room of creative financing is crowdfunding.  Rather than discuss the sites you may have heard of, such as Kickstarter, you need to realize that crowdfunding is becoming more than just a couple of websites.  Crowdfunding is becoming a movement, a generational concept, rather than just an option.

The best advantage of crowd funding is it is less risky than traditional debt.  Sure, if you don’t fulfill a million dollar Kickstarter then the backers may sue you, possibly even the government. However, in most situations the risk of loss is shared between you and the crowdsource funders.  Thus, there are possible risks to you in crowdsourcing, but it may be a good way to get your business off the ground.

How to Attract Excellent Employees in a Tight Labor Market

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The employment rate has sunk to 5.0%, considered by many economists to be the full employment level. What does this all mean for the business owner? Employment is booming, which means a tight labor market, especially when searching for an excellent employee.

What is a small business owner to do? Here are some tips about how to survive and attract great employees in a tight labor market

Be more forthcoming in the job description

A tight labor market means employees can be more selective about jobs.  Consider expanding a job description and increasing transparency about its role and responsibilities.  This transparency will help attract quality employees, rather than average candidates.

It can also be advantageous to disclose the salary and benefits in the job description.  Job seekers often guess whether or not a job is a promotion or increase in compensation simply by the job title.  There is little evidence to show this is an accurate method of comparison.  For example, “Financial Adviser” could be a $40,000 job or a $150,000 job depending on several factors.  An accurate and forthcoming job description ensures employee don’t discount your posting because of their inaccurate ideas.

Expand your search area

Standard career advice for new graduates or any job seeker is to network, network, and network.  Well did you know that you, the employer, could network as well?  This can be a great way to hire someone.  It could even take less time as you do not have to sort through hundreds of resumes.

Reach out to other companies in your area or industry and see if they had anyone apply that was a great candidate, but were not hired.  Ask current employees if they know of anyone with the required skills for the position.  Always remember the labor market is a two way street and an active employer can increase the speed with which they fill a position by tapping other resources.

Consider increasing benefits or perks of the job

Supply and Demand is one of the basic tenets of a capitalistic economy. Most people understand that this tenet applies to goods and services; it can also apply to labor.  If there is more labor then jobs, more supply then demand, then wages fall and employers can be selective.  If the inverse is true, more demand than supply, employers might be forced to increase wages and offer higher benefits.  This can help employers attract more resumes to their job postings and more qualified candidates.  However, this is a difficult decision for small business owners, who can little afford to offer 5% more in 401k matches without hurting the bottom line.

Small Business owners who are strapped for cash but want to attract candidates by increasing their benefits package can consider adding or improving non-monetary benefits.  Relaxing the dress code, allowing partial or full telecommuting, and increased opportunity for internal training as well as advancement are just some of the benefits you could offer.  It is well documented that employees work for so many reasons other than just a paycheck so that could work in your favor.

Consider a more open-ended job description

The smaller your business, the more hats every employee has to fill.  Do you need someone to do a bit of everything around the office?  How do you fit that into a 4 or 5 word job title?

If you need a well-rounded generalist who can handle a variety of roles, consider a flexible job description that does not emphasize a restrictive job title or qualifications.

Be honest about what you need and try to show the potential employee that you have an open and honest culture.  Some people need structure to thrive and will not be enthused by your open-ended job; but it might attract the outgoing and ambitious person you crave.

Get Local

Many employers understand that using the Craigslist page for their city or even a specific job board such as MilwaukeeJobs.com can help them more accurately target candidates in their area.  However, did you know there are even more ways than that to amazing local employees?

Many tech companies have had success using social media to recruit but it can work for any business.  Consider posting your job description to a Reddit page for your city or area. Consider posting on a Facebook group that is applicable to your industry and area

There are many other creative ways to find local employees.  You could advertise on the radio, use a billboard next to a freeway, even using your LinkedIn account to attract a qualified employee.

HR Apps for Small Businesses

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Apps continue to automate business and routine functions such as marketing, sales, data management, communication, and yes, even HR. It is an exciting time to be an entrepreneur or small business owner and there are multiple apps that can make your “back office” operations more successful.

These HR apps can help you get organized, save time and money, and smooth the hiring/ onboarding of new personnel as your business grows.  These are just a few of the apps designed to help with critical HR functions for your business.

Paysavvy

Paysavvy is a fully integrated payroll company that self-proclaims to be the new ADP.  While they may talk a big game, Paysavvy is really a great new payroll and time management helper for small and medium sized companies.

The advantage to Paysavvy is it is designed from the ground up to be more relevant and integrate with the latest in enterprise software. The app assists in employee behavior like retirement savings and charitable contribution on demand or automatically.

The downside to Paysavvy is that, so far, the company is only available for Canadian companies or companies that have employees in Canada and need to operate payroll for those employees.  If you are not a Canadian company, then for now you will just have to keep an eye on this upstart to see how quickly they expand to a country near you!

BambooHR

BambooHR is one of the leading and most well know HR apps for small businesses.  Some of things this app offers are the ability to seamlessly transfer employee information over from your current software, generating detailed reports across a variety of topics, as well as many more items

BambooHR can also help remind you of important deadlines for taxes, payroll, licensing, accounts receivable, and other HR functions.  It even helps you organize and filter through potential new hire candidates, smoothing out the hiring process so you can avoid wasting time and still find the right person to help grow your business.

The prices for this app are not listed on their site but you can contact them for a custom pricing solution and introduction to how BambooHR can help your business and HR team!

Zenefits

Another app in the disruptive and fast moving space of HR technology for small businesses is Zenefits.  Zenefits offers a HR software and companion app that covers virtually every HR function imaginable.  It will help you on-board new employees, collect and manage important tax documents like I-9 and W-2s, track employee time and PTO, and even help with the open enrollment of benefits for every eligible employee.

Most of the services of the Zenefits app are free to the user.   Zenefits is paid by the plan providers and insurance companies that your company chooses to use.  Even if you don’t use Zenefits for your health benefits and only use some of the HR features, it remains free, with add-on options offered for fees.  Since Zenefits focus is on benefits like health and dental plans, this would be a great choice if that is an area your company struggles with implementing.

There are many great HR apps and software out there to help the small business owner, with new apps entering the marketplace daily. You can find out more from these three companies or simply run an online search and several helpful HR apps will be at your fingertips.

How Does a Federal Reserve Rate Hike Affect your Small Business?

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Market participants have expected a rate hike this year and it seems all but certain that the rate hike is to come in the final Federal Reserve meeting on December 15-16, 2015.  Most of the news surrounding the rate hike has been about whether or not the Fed should act. Regardless of when the Fed acts, the question for many small business owners is how it will impact their business.

We will first cover at a high level what is theoretically supposed to happen in a rising interest rate environment and then talk more in detail about how it may or may not affect your small business.

A rising interest rate means that treasury bonds, essentially loans to the Federal Government of US, will pay a higher interest rate amount.  Since treasury bonds are considered among the safest assets in the world, this means that riskier, such as stocks should pay a higher return. The expected reaction is that stock and bond prices will fall as the Fed raises rates.

This makes sense if you think about the options for where to invest your money.  If a checking account has a return rate of 10%, then potentially more risky investment like real estate or stocks would have to pay higher returns.

So how does this affect small businesses and their owners?

A Federal Reserve rate hike has a different kind of impact on small businesses then it does on large businesses and the markets overall.  There may also be some benefits or positives to a rate hike.

Higher rates means that rates on everything from mortgages, to personal loans are expected to have a higher rate attached to it.  This means that companies of all sizes will likely have a higher cost of capital associated with borrowing.  It is important to note that rates won’t double or triple overnight though.  The Fed is only expected to raise rates 0.25% and there is no indication when or if another hike will happen after that, although one is expected.  The Fed knows that too fast or steep of a rate hiking could send the economy spiraling back into a recession, as businesses and individuals slow down borrowing and spending money. Thus, while a rate hike can be a negative; such a low rise in rates will be negligible.

Can higher rates actually help me?

The Federal Reserve has said it will only raise rates if it believes the economy is healthy and can absorb it.  This means that the smartest economists in our country believe the economy is doing well enough to absorb a rate hike.

This optimism should translate to a productive and profitable environment for the small business owner.  Despite a higher cost of borrowing and expanding your business, an improved and growing economy should mean more sales for your business. Additionally, banks may become more willing to lend to lower credit rated businesses, expanding expansion capital for small businesses.

The long and the short of it

While a rate hike may mean that loans have a higher interest rate, the underlying economy is performing well meaning increased earnings and opportunities.

Hiring Your First Employee: When Should You Do It and What You Should Know?

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Hiring your first employee can be a terrifying proposition for a small business owner.  The questions fill your head and the horror stories from other employers may haunt your dreams.

Will they be a good fit with the culture you want to establish?  Can you trust them?  Will you hire the wrong person?

It can be a challenge to relinquish some control over your business to a total stranger. However, the advantages of an employee can definitely outweigh the fear and anxiety.

Employees can take over the menial or repetitive tasks that you hate, freeing you up to focus on what you enjoy most about running your business. This may provide you with more time to focus on the big picture and expanding your business.

Here are some of the things to consider before hiring your first employee to ensure the process goes smoothly.

Your job ad matters more than you think

All good landlords know that how they advertise their property determines the type of tenants they attract.  The more professional it is will tend to attract higher quality tenants who recognize that professionalism. The same thing goes for job ads.

Take the time to fully consider the responsibilities, qualifications, requirements, and other aspects of the position.  Time and careful attention upfront will be rewarded when your ad attracts a variety of highly qualified, professional candidates.

Research the tax and legal implications before starting to hire

Nothing is worse than hiring an employee and then realizing you have to scramble to work throw all the paperwork related to that employee.  Before starting on a job description research your insurance, how to withhold/ report income to the IRS, get an Employer Identification Number, and learn about all the required notices and benefits that you now have to provide.

It is less scary and complex then it sounds.  All it takes is a bit of time and research as the information is readily available.  Start by contacting your local SBA office or read up on the IRS website about laws for employees and business owners.

Don’t put all your faith on their resume

Some statistics say that up to 40% of resumes contain false, misleading, or bogus information.  When hiring your first employee, their intangibles are likely much more important than their technical skills or formal education. Remember you can mentor or teach them the ins and outs of your business.

It is much more important to focus on their personality, communications, critical thinking skills, energy, and other intangible but important qualities when hiring your first employee.  Technical skills and knowledge can be learned; however, drive, ambition, and teamwork are much harder to teach.

Use resumes and past experiences to help narrow down your search but take time in the interview, asking deep of questions to provide insight into the candidate.

Consider an independent contractor or freelancer

If your budget is not large or you just don’t know if you have enough work to justify the expense of an employee, consider starting out with a freelancer. The employment market is changing rapidly today and many full time employees have started out as freelancers for an employer. With a freelancer, you will be able to examine the person’s work ethic and abilities, without the initial costs of hiring the person as a full time employee. The freelancer may choose to either work with you as an employee or remain a freelancer. In fact, a large number of employees today are choosing to work several part time or freelance positions, as it gives them more time to focus on other personal activities. There are some great places to search for a freelancer such as the online sites Upwork or Outsource.com.  These sites feature thousands of qualified professionals in areas like writing, video editing, data entry, and others.

Best Sources for General Business Improvement Ideas

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Where can the average small business owner, without the money to pay for high priced consultants get some solid, practical advice about how to improve their business?

The following sources offer some of the best advice to small businesses.

The U.S. Small Business Administration

Founded in 1953, the SBA has helped millions of hard working American entrepreneurs get financing, secure contract templates, find counseling and coaching, and provided other forms of assistance.  The SBA is one of the best places to go if you need help with some of the less glamorous aspects of running a business such as finances, payroll, hiring, or other back-office responsibilities.

Start at their website, sba.gov and find a local or regional office near you.  There you can find the personalized advice that you need on a host of topics pertinent to your business or industry.

The SBA also plays an important educational roll and they have over 50 courses available on their website for free. Additionally, they frequently host seminars and other information conferences and sessions around the country. The agency is a great resource for any small business entrepreneur.

Forbes

While on the surface Forbes might appear to be just another business media outlet, actually Forbes has great content and information for the budding entrepreneur or small business owner.  They have the latest global and local news, as well as videos and speeches from successful business owners.  These resources can motivate any business owner to learn more about tech, marketing trends, or other information to become more successful in the office.

Their entrepreneur section is a great resource for informative articles on everything business, including advice from other entrepreneurs. The best part is that most of this content is provided free as the website is supported by ads and subscriptions, great for the entrepreneur on a budget.

Inc

Similar to Forbes, Inc is a great resource to find content and information about the overall business landscape.  Inc has great resources such as podcasts, articles across a variety of areas like start-ups, innovation, technology, leadership, as well as other tools.

Inc can help you get great ideas to expand or market your business based on what others are doing. They have information on new technologies, as well as trends in the marketplace. All these resources can help you stay ahead of the competition.

Entrepreneur

Entrepreneur may appear to be very similar to Inc and Forbes, but through its narrowed focus on the entrepreneur the site takes information to a whole new level.

One of their most useful offerings buried beneath the front page is their coaching service.  This gives entrepreneurs they opportunity to have a professional or successful business owner coach them on an individual basis. This may be a valuable service to any business owner who may just need a “sounding board” to examine ideas in their own personal business.

The business form section is also a great resource.  Within this section are a host of helpful forms such as independent contract agreements, templates for your business plan, non-disclosure agreements, and the even purchase orders.

Some of the other sections include event calendars, book listings, and even an “Ask an Entrepreneur” section.

Technology that can help your small business grow in 2016

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Technology can either make your life easier or make it more difficult. With that in mind, here are some of the latest technology trends that can help a small business.

The cloud continues to roar

Cloud computing and cloud services continue their explosive growth with more businesses moving functions such as data storage, database management, customer service, and sales software to the cloud. According to Neueon.com, 37 percent of small businesses already run some of their business on the cloud. As the options expand and competition pushes prices downward the environment is becoming more appealing to small businesses wishing to benefit from this new technology.

How should you transition some of your small business’ tasks to the cloud? The key is to start slow and do your due diligence. Taking everything you already do well and uprooting, it is a recipe for disaster. Start by taking parts of your business, such as accounting and moving those to the cloud. This approach will allow you to continue operating your business without too much disruption. Yet you can begin using the cloud with all of the potential benefits such as convenience, advanced technology, security, and most importantly—cost savings.

Mobile advertising takes center stage

Spending on mobile advertising exceeded 28 billion in 2015 and could be above 30 billion in 2016. In addition, mobile advertising is projected to be 72 percent of all advertising spent and will soon overtake desktop ads in terms of total dollars. The trend is clearly towards mobile.

How should a small business position themselves to compete in this expanding market? The key to any advertising, especially mobile, is to correctly target customers.

Virtually all social media platforms and big advertisers, such as Google and Yahoo, are compiling legions of data about everything. The small business owner can do the same and pinpoint whom they wish to target.

A good website is also a key component and the site needs to be mobile optimized. The reason is that a mobile viewer from your ad may leave a site if the website looks dysfunctional on a mobile device. Consider using simple but quality still image ads as this may be a way to retain a mobile viewer, without the added costs of building video ads for a mobile viewer.

The “business” tablet is officially here

Microsoft has been trying to get business users from all sectors to adopt their Surface or Surface Pro as the replacement to the traditional work laptop. Apple has now entered the market with their latest iPad. The gadget makers want people to drop their old laptops and move their work lives over to a shiny new tablet. Is it worth it?

The answer really depends on what type of business you run, your existing technology, and your future technology needs. If you already have android or windows software technology, then switching over to iPads from a laptop may mean some challenges to ensure your data is where you need it after merging two different ecosystems.

However, if you can stay in the same ecosystem, a tablet for business can be a great way to de-clutter your work life and improve efficiency. With the increased popularity of pens, attachable keyboards, and apps for virtually anything you need, the tablet has almost done a full 360 and remodeled itself as the new laptop. It is getting harder and harder to tell them apart.

Security, security, security

There has been a string of high profile hacks and data thefts from big companies in recent years. The worries are not just for big companies. Intuit has indicated that the average small business owner spends more than four hours a day online; thus, security for your digital assets is critical.

Today’s successful business owner must treat cyber security as they would life insurance or rental insurance policy—an essential non-negotiable expenses. A breach or theft of your customer’s sensitive data can all but destroy your reputation and credibility that you worked hard to build.

In addition, many small businesses rely on their website for everything from marketing activities to sales, so any down time due to malicious attacks can be expensive. Your website is your new storefront, like a good lock, it needs to be protected.

Technology will change how you do business, hopefully improving operations. Embrace the change, by exploring how technologies might help you become more efficient. The potential is unlimited and there has never been a better time to be a business owner than now.