Posts Tagged ‘bookkeeper’

From Financial Data to Profit & Growth

August 4th, 2016

Too often business owners are so preoccupied with certain parts of the bookkeeping process that they don’t realize just how valuable their full set of financial data can be; should it be made available to them in an actionable way. Some business owners focus on preparing the yearly tax statement. Others may worry about that and their cash flow. And others might just use it to balance their checkbooks. If you choose to have us do your accounting, we can do all that and more. And most importantly, we can help you become more profitable.

First you need a reputable accountant, what we like to call a Profit and Growth Expert, to determine your business goals. These goals may include, but are not limited to, growth expectations, marketing plans, profit margins, and overall labor expenses. We ask important questions like, what do you want? And why do you want it?

Here is a technical way of looking at bookkeeping:

Bookkeeping: The practice involved in the systematic recording of transactions affecting a company, beginning with the data-entry process and ending with the preparation of financial statements. The art, practice, or labor involved in the systematic recording of the transactions affecting a business.

In layman’s terms, bookkeeping is the practice of determining which numbers are important to you and your business. Once that’s decided, we can set up a customized system that will organize the information you want and need. This is the different between the accounting services provided by a bookkeeper as opposed to a Profit and Growth Expert.

Let my firm, Solid Growth Accounting Services, be that Profit and Growth Expert, and advance you from a business that keeps financial records, to one that uses financial data to determine the best path to successful growth and prosperity.

Q: Is it me or is QuickBooks getting harder to use? A: Its you.

February 27th, 2016

Is it me or is QuickBooks getting harder to useAs a long time QuickBooks professional, I have to ask, “​Is anyone really saying that QB is getting harder to use?”

Everything you have learned over the years is pretty much the same. Sometimes the interface gets modified, but that’s an easy adjustment. You might not even need the newer features, and can almost certainly get by without them if nothing related has changed in your business. And unless to use payroll or other features that require an online interface, you might not ever need to buy the new version. I have clients still using QB 2010.

If you change to QB Online you will find the interface to be very different, but then of course, it’s a different program. None of my clients that made the switch had difficulty adjusting to it, maybe because I toured them through the features they need to use themselves. If you subscribe to one of the low end, less expensive versions, you might burn a lot of time looking for features and reporting that don’t exist. Frankly, it is my option that these limited low-end QBO versions are just a ploy to get you vested in the product. Intuit knows that you will upgrade before long, especially if you need common small business features such as being able to produce 1099s for your contractors.

The difference between finding QB easy or hard to use is all about learning the proper use of the program. Just like everything else you do. If you don’t learn how to use it, it will be hard for you to use properly.

The next issue is that even though you don’t need to be an accountant, it helps a lot to understand accounting/bookkeeping basics. If you don’t, then you will have some degree of difficulty using it, and even worse might be creating a mess out of your books. The best boost in business I ever received was back when Intuit ran advertisements (for many years) with the slogan, “With QuickBooks, you are only a click away from being your own accountant”. Thousands of small business owners believed that, bought QB, and proceeded to make a real mess out of their books.

Even to this day, I rarely take over the bookkeeping of a new client without having to start out by fixing a large amount of problems related to the miss-use of the program, and then proceed to edit their Chart of Accounts to make their QB a better reflection of the actual business and the kind of information the owner needs to make the best possible business decisions. That is the case even when they had a bookkeeper doing the work for them. So many bookkeepers have learned QB, but still don’t know basic accounting or how a business functions. There is a lot more benefit in the proper use of any accounting software than just keeping track of things so you can file tax returns. An awful lot.

 

Controlling Overhead Costs

May 22nd, 2015

Overhead CostsThe cost of overhead can put your company in an uncompetitive situation due to the buildup of excessive expenses incurred in the running of your company. Without a breakdown of costs into production and overhead categories, you might not realize how much you’re actually spending on the operations side of running your company. Regular financial reporting and budget variance analyses will help to maintain the appropriate cost structure in a sustained fashion.

Overhead

The costs you incur to run your business and sell your product make up overhead. These are expenses you have even when you aren’t making your product. They include expenses such as rent, marketing, phones, insurance, administrative staff, office equipment, interest, office supplies, etc.

Identify All Overhead

The first step in determining your overhead is to identify it. If you don’t record every expense you have on a budget sheet or other financial report, do so. Start by creating production and overhead reports. Production expenses are costs that apply directly to making your product, such as materials and labor. Next, break down your overhead by function, such as marketing, human resources, information technology, office administration and sales.

Create a Purchasing Process

Assign one person to review and approve purchases so that they can see all expenses that are planned to be made before they are paid. Set policies for spending, such as requiring competitive bids for purchases over a certain dollar amount. Have your purchasing manager shop for better deals on common items you buy. Consider offering a bonus if your purchasing agent meets specific savings targets without sacrificing quality.

Review Contracts

If you outsource functions or sign leases, rebid your contracts annually, even if you end up using the same vendors and suppliers each year. Rebidding contracts prevents longtime contractors from inflating their fees, or encourages them to offer more services to keep your business. Frequently this will result in lower costs. A multi-year contract will usually favor the vendor. So, if you haven’t shopped your insurance in the past two years, do so, and discuss with your current provider how to reduce your premiums. Ask your utilities providers to visit your workplace to perform an audit and recommend how you can cut your monthly water, gas and electric bills. This annual process is a lot of work, but it sure pays off.

Improve your bookkeeping and accounting practices

From the start of the business, ensure that your accounting reports keep you aware of spending and revenue. This will help you analyze where you have over spent and where you can cut down on unnecessary expenditures. Well organized and up-to-date books have benefits beyond tax issues.

Technology will help improve productivity

There are many cloud-based tools now that will help your business save money, such as online invoicing, project management and others. Most vendors will offer a free trial period. The resulting efficiencies will reduce overhead costs.

Keep the head count constant

Efficiency is gained when revenue per employee grows. Technology, lean techniques, process engineering, etc. all are ways to free up time so employees can become more productive without having to add new headcount to grow. What if you could replace your lowest 10% of performers with new people that matched your top 10%? This would result in a huge productivity boost at virtually no incremental cost. There are a lot of techniques to improve productivity, but the point is that constantly growing headcount certainly will result in overhead growth that won’t necessarily result in profitable revenue growth.

Contemplate hiring freelancers or contract employees

There are certain functions in almost any business that can be outsourced to reduce the cost of space and other overhead. If you are hiring a full time employee, there are payroll expenses, health insurance and other costs that may be associated; this will slowly eat into profit.

Keep an eye on energy consumption

Switch off lights and other equipment when not in use. This might reduce energy consumption by 20%. If possible, use laptop computers instead of a standard desktops. Laptops consume approximately 80% less energy.

Reduce your phone bills

Use Skype, Google Chat or other chat services to get in touch with your employees or freelancers. You can also use web conferencing tools, such as GoToMeeting, to meet with clients online or make a presentation. It will significantly reduce your travel cost.

Ask vendors to own “their” inventory

Have vendors keep title to their inventory until sold. Normally inventory acquired from a vendor is held in your warehouse for use in manufacturing or resale to your customers. But why think of it as your inventory? It hasn’t been used yet so why can’t it still be their inventory? Best planning results in “just-in-time” delivery so there is no inventory. But this isn’t always possible, for instance, in industries like retail where a certain amount of inventory is necessary for your customers to by when they walk into your store. But again, why are you paying them and then sitting on their inventory? They need to own the inventory until time of sale.

A dollar gained in revenue is a very good thing assuming it leverages the current cost structure. But remember, only a small portion reaches earnings. A dollar saved from cost, however, goes directly to the bottom line. So while focusing on the top-line, don’t forget to engage in a systematic approach to controlling costs as a way to ensure long-term value creation.

Growing Your Small Business: Consider This…

January 16th, 2015

Coffee Shop OwnerAs a small business owner, you may have plans to grow your company. Before you put your foot on the accelerator, take the time to decide whether (and how much) you should grow your company.

What do you really want?

You believe you have the entrepreneurial drive to build your business into a larger one? Do you want to scale a business? Have more employees to help carry the weight? Have the potential to make more money? Create something that is worth a great deal of money, or that changes the world?

Do you need to grow to appear competitive in your market? To have the budget to get the word out, make more sales, and become an industry leader?

Can you be successful as a “boutique” operation? Sometimes less is more.

Do you want a business that comfortably supports you and also leaves time for you to be with family, pursue other interests or take vacations? You may want to grow but to control the growth so that you can enjoy what some people call a lifestyle business. While this term has been used condescendingly in entrepreneurial circles, there is also an increasing recognition that a solid lifestyle business can indeed be a great business to run.

Potential

What potential does your business have to grow? Some businesses are like finely tuned sports cars. They aren’t working at full capability unless they are on the track, racing forward. They are built to move fast and make things happen. Other businesses are engineered for steady travel instead. How about your company? And are you happy with that Chevy or Lamborghini your company is today? Or do you want to reengineer your business for a different driving experience?

Responsibilities

In a very small business, you do nearly everything yourself. As your business grows, you will delegate some tasks. As you grow even more, or scale the business, your responsibilities are likely to change from doing or a blend of doing-and-managing to higher level managing.

Before putting your dreams of growth into practical steps, consider whether you like doing or managing or some blend of the two, and also whether the satisfaction you get from business is from the rush of entrepreneurial growth or from the day-to-day running of the company you have today.

Money

Depending on how you grow and what type of business you have, you have the potential to make more money as the company gets bigger. Generally, this is one major motivation for growing a company.

It should be recognized that there are times when the larger business is not more lucrative for its owner. As you take on more employees, more infrastructure and more risk, you also have more potential areas for poor performance and resulting reduced financial returns. Which brings us to risk.

Risk

Big leases, big loans, shared equity, a larger staff, and other potential demands of a growing business carry with them higher risk alongside higher prospective reward.

A fast-growing business typically brings some loss of control as well as challenges maintaining quality, assuring profitability, and managing your (potentially also large) competition.

Be aware not only of your best-case scenario but also your worst. Are you ready to deal with risk?

Saleability of company

What will you do with your company when you are ready to retire or move on? Will your children run it? Will key employees buy it or take it over? Will you sell it? Will it end when you stop working?

Size is one consideration in this matter. Many small business advisors recommend that you fund your retirement while you are working, in the event that “you are the company” and that the business “dies with you.”

A business that is not overly dependent on you, and that can continue to make money after you move on, is typically a more saleable enterprise.

Unless you have a novel technology in hand, cash is king when it comes to selling a business, so if making a lot of money from the eventual sale of your company is a key consideration in your planning, you may indeed want to grow the business aggressively.

Small businesses that can run without you can be salable, too, since people frequently prefer to buy an existing business rather than starting their own. However, the proceeds are likely to be lower.

As a business owner, you have a unique opportunity to make conscious decisions about growth, based on the market for your services or products, and on balancing pros and cons of large versus small, considering your own management style, and reviewing how you want to blend business and life goals.

Whatever you decide, you have the privilege and the pride that comes with running a business. So many people would like to do what you are doing every day.

 

 

 

Tips for Starting a Service Business

November 17th, 2014

Service Business 2Many entrepreneurs are people with specific marketable skills and know-how. Taking the step to self-employment by starting your own services business can take the value of those skills to an entirely new level. But starting and building a business requires an all together different set of skills and know-how. So, if you are thinking about being your own boss, here’s some advice to get off on the right foot.

Write down your business plan

Writing a business plan may seem like a pointless and onerous exercise, but don’t skip it. Putting your plan in writing will force you to think clearly about your new business, your opportunities and your challenges. It will help you set realistic goals and keep yourself accountable. A well-written business plan is also critical for securing financing for your service vehicles or other major expenses. One great resource to help you develop your business plan is the U.S. Small Business Administration. Your local chamber of commerce is another excellent place to ask for help.

Seek advice

Starting any business involves risk. You can minimize yours by taking advantage of the experiences of others. A good mentor, or two, can help you avoid the pitfalls, as well as show you best practices that will get your new service business on the right foot. Mentors can also introduce you to other influential people and help you establish your own business network.

Your business mentor can be a coach or consultant you hire, or a more seasoned businessperson who takes you under their wing. One excellent place to look for no-cost or low-cost expert business mentoring is SCORE, a nonprofit organization dedicated to helping small businesses.

If you are looking for advice specific to your type of service business, it pays to go online. Many professionals in your field will happily help you out on industry chat boards or LinkedIn groups. All you need to do is ask.

Track everything

Business is a numbers game, in more ways than one. Most new entrepreneurs know enough to track income and expenses at the very least. But the most successful ones don’t stop there. Tracking and analyzing everything in your business will allow you to make better decisions, avoid wasteful practices and realize greater profits.

One example of tracking used to advantage is your vehicle fleet. Instead of simply tracking expenses, take it a step further and track fuel economy per vehicle or per driver, time on the road and location of every vehicle. Knowing these parameters will allow you to manage your fleet for maximum efficiency and productivity.

Develop systems for your business

Imagine if your entire business ran at 100 percent efficiency. It would be so much easier to make a profit, wouldn’t it? No business is 100 percent efficient, but developing systems will get you as close as possible. Once you’ve figured out what works, write it down, and make sure every employee knows it’s standard procedure. If the procedure you’ve developed involves multiple steps, create a checklist for employees to follow. Even little things like making a habit of placing tools back in their proper spot when a task is finished can save countless hours of wasted time in your business.

Your business will probably have unique aspects that require you to develop some of your own systems. But look out for ready-made tools and systems that can help systematize your business. Accounting software is a good example. So is a GPS tracking system that can help you track and analyze your business fleet.

Don’t undervalue existing customers

As you acquire customers, take good care of them and keep in touch. Develop relationships and earn loyalty. It’s much easier to sell to existing customers than to someone who has never done business with you. Anything you can do in your service business to encourage customer loyalty will keep your repeat business flowing, and it will also bring in the best free advertising possible — word of mouth.

Expect to make mistakes

If you can’t acknowledge, learn from and apologize for your mistakes, then you’re doomed. Part of becoming successful is learning to handle and recover from mistakes. You will make them. If you think you won’t, you’d best keep your day job.

Starting your service business will require a lot of dedication and hard work. But by following business best practices you can avoid many of the pitfalls experienced by new entrepreneurs. Take these tips to heart, and you will improve your chances of developing a rewarding and profitable new enterprise.