There’s no doubt that most organizations, from small businesses to large corporations, are struggling. It’s been a darn hard time for most people. And yet giving up just really isn’t an option for many small business owners since the job market doesn’t offer a lot of hope and many retirement plans have suffered serious setbacks.
But even though the economic situation is less than perfect, it does present us small business owners with a perfect opportunity to ask some penetrating questions. It allows us to ask ourselves what is important about our small businesses. It helps us remember why we started our small businesses, and determine whether those reasons are still important to us.
That’s why it’s important for us small business owners to ask themselves three crucial questions. The answers to these questions will either get you back to feeling great about your small business or clarify the fact that you need to move into some other form of livelihood.
An Example: My Four Small Businesses
For instance, I run four small businesses. Three are well-established and require fairly passive management on a daily basis. The fourth is a startup, not quite a year old, and one that I hope to grow within the next two years. The startup takes some fairly active work to keep afloat, not to mention monetary investment, but I don’t resent the investment or the elbow grease. Having done three other startups, which are now established businesses, I know the length of time it takes to launch a startup. I know the patience required.
On the other hand, there are days when I just want to give up the ghost and call it quits. Some days I get very little done or I’m just too tired to even stagger over to my cigar stash for a relaxing puff. It’s off to bed so I can get up and do it all over again tomorrow. These are the days I ask myself, “Why the hell am I doing this?” These are the days when the two years I’ve given myself to build my startup seem like the equivalent of living in purgatory …forever. These are the days when I have to sit down and reflect on why I have small businesses, and why they are important to me.
Three Questions for Small Business Owners
On those DODs (days of despair, not Department of Defense), I ask myself three questions:
1. What do I get from my small businesses and what do I pay?
2. Are the original reasons I started these businesses still important, and if not, are there new reasons to keep going?
3. Is there a way to change my business model to fit this new economy?
It would be too long-winded and boring to list my answers to those questions for all my small businesses, but I will give you the answers for one business, just for grins. So one business I have is an online school that teaches magic (like spellwork and Tarot) and shamanic traditions. Answers to the three questions are as follows:
1. What do I get from my small businesses and what do I pay?
I get to spread this esoteric information to people all over the world, especially in countries where this kind of information isn’t readily available, like Nigeria and New Zealand. I get to play a part in spreading magic into the world. I also get a solid paycheck.
Aside from regular operating expenses, I pay in elbow grease … in the attempt to reach the right audience. The information we offer is for people who really want to learn the art and science of magic and shamanism, not for people who want a free online spell to help them win the lottery. I pay to develop my own patience and tolerance while wading through hundreds of “send me a free spell” emails.
2. Are the original reasons I started these businesses still important, and if not, are there new reasons to keep going?
Yes. Not only do we have a group of advanced students who have been with us for more than a decade and really take part in bringing magic and shamanism into the world, but teaching the classes and creating the materials keeps me in touch with my own spiritual practice.
3. Is there a way to change my business model to fit this new economy?
Definitely. Offering the information in different online forms, from YouTube videos to webinars, is the way I’m going. It makes the information more readily available, and can be transmitted at the speed of light. It takes work to convert the material to online form, but it’s happening little by little.
What About You?
So those are my answers, good, bad, or ugly. What about you? How is your small business treating you, and how are you treating it? Is it time to re-evaluate your reasons for owning a small business? Is it time to change the way you run your small business? Most importantly, do you still remember what is important about your small business?
A while back I wrote a blog post on finding a great accountant for your small business. Recently, I decided to take my own advice. I have used the same accounting service for almost a decade, and have always had a great relationship with them.
However, I found that as my small business focus shifted away from a “bricks and mortar” city environment to an online environment mixed with country living, I needed an accountant with different specialties and skills.
Where to Find a Good Small Business Accountant
I’m of the generation who “Googles” everything first. It hardly ever occurs to me to peel open a phone book if online access is just a few clicks away. Digging around on Google, I found several “accountant search” sites, and entered my request on several. Most sites asked for the following information:
– number and types of businesses I owned (sole proprietor, S-corp, etc.)
– number of employees and contractors I employed
– average revenue numbers
– accounting specialties being sought (home business, agricultural, government contracting, etc.)
I was surprised and pleased to receive both an email and a phone call from a representative at GoodAccountants.com. Shahana Faridi, my representative, asked several questions and said she would get back to me within a week with one or more suitable accountants. In fact, she got back to me within a couple of days, and set up an appointment for me with some local accountants.
I had thought she was setting up a phone appointment, and marked it as such in my calendar. Boy was I surprised when Denise and Janni showed up in person! The interview went well, and I will soon be finalizing my agreements for them to handle my small business accounting needs in the coming year.
Is It Time To Reconsider Your Accountant?
The difference between a suitable accountant for your small business and an unsuitable one can be vast. It can be the difference between paying in a huge chunk in taxes every year versus paying a much smaller sum. It can be the difference between sleeping well at night knowing your accountants will back you up with the IRS should the need ever arise, and sweating at night wondering if the other shoe is going to drop soon.
For me, an accountant suitable for my various small business enterprises means someone who knows about home business, the livestock business, the publishing business, and S-corporations as well as C-corporations. I asked a number of probing questions, all of which Denise and Janni answered to my extreme satisfaction. It was a good time to change accounting services, and I am looking forward to my new relationship with Denise and Janni.
What about you? Have your small business accounting needs changed in the recent past, and is it time to re-evaluate your accounting relationship?
It pays to be a maverick these days because nothing seems to work like it used to. Sure, a lot of people are doing their best ostrich act, sticking their heads in the sand and hoping that when the alarm beeps in the morning the world will have returned to its normal order.
Not gonna happen, folks. “Business as usual” isn’t going to cut the mustard in this new economy, this time of prolonged uncertainty. By the way, did you know that prolonged uncertainty is one of the greatest causes of stress a human being can suffer? They’ve done studies that prove it. So here we are, in a time of prolonged uncertainty, and we are, well, uncertain.
We live in a strange emotional mix that resembles those multi-layered cocktails: hope floats on top, “business as usual” hovers somewhere in the middle layers, and at the bottom is the dismal swamp of despair. We try to drink in only hope, but if you’ve ever tried drinking one of these layered cocktails, you know that as soon as you tip the glass you get a little of each layer. So we swallow the hope with the despair and end up doing “business as usual.”
Maverick Tricks and Old-Fashioned Values for Small Business Owners
As small business owners, we may not know what we need during these times, but it’s not the usual stuff. If you’re doing business by rote, stop! Times have changed, and your small business needs to as well.
I’ve recently been on some teleconferences and webinars offered by small business leaders who are expert in everything from online marketing and social media to accounting and cash-flow generation. While the topics of these seminars are all different, a peculiar theme is emerging in all of them:
… small business owners need to both become mavericks and return to old-fashioned values …
This may seem a contradiction, yet it is what those who are successful are saying.
Maverick Tricks for Small Business Owners
Let’s take the maverick part first. The webinars and teleconferences are all about maverick-ism — how small business owners need to do things differently. For instance, one webinar covered 13 new ways small business owners can ask for and get paid by their clients more quickly. This is important because cash flow means the difference between staying alive and closing the doors on your small business. Are these methods always polite, conventional, or socially acceptable? No, a lot of them are not. But these are new times and small business owners and clients alike are adapting to maverick ways of doing business.
Another webinar introduced the maverick idea of creating your own hedge funds in your small business. Southwest Airlines has been hedging fuel prices forever: they pre-buy large quantities of fuel when it’s less expensive, and then take delivery of that fuel when prices go up. Small business owners can create hedge funds in a slightly different manner. Instead of pre-buying something in bulk, you stash money away in a hedge fund when prices are low, say for inventory items. Then when the prices go up, you use the money in your hedge fund to keep your cash flow going. So there are a lot of ways to use new maverick techniques to keep your small business afloat.
The Value of Old-Fashioned Values
At the same time that these experts are teaching maverick methods for small business owners, they are also talking about a return to old-fashioned values. In a word, they are saying that we have become lazy. Recent studies show that more people believe that they can “get rich quick” with a small business than ever before.
Despite the wise words of business leaders like Robert Kiyosaki, the majority of people who start small businesses today expect to “make it big” within a year or two. Kiyosaki warns small business owners to set aside at least 5 years before expecting a pay back. Back in the day, it was expected that a small business was a lifetime endeavor, not a get rich quick scheme. “Get rich quick” is a bad idea … it’s how we ended up in this financial mess to begin with.
So if you are starting a small business or you already have one, prepare to dig in. Don’t spend all of your resources at once, preserve cash and cash flow, and give your business at least five years to start paying you back for your efforts. Those are the old-fashioned values that made the U.S. of A. one of the strongest economic forces in the world. To those values we will need to return if we want to maintain that status.
The Maverick in Me and My Small Businesses
As for me, despite all the flak I’ll probably catch for saying this, I’m profoundly happy about this economic correction. It has forced me to make changes I have wished to make for years, but have never had the motivation or necessity to make. I am grateful for the outer economic forces that provide the motivation for the changes I am making to my small business and my personal financial situation. So be it!
What about you? See any sunshine yet?
With the economic uncertainty swirling around us all the time, many people are turning to home-based businesses as a way to create an alternate stream of income in their lives, even if they are currently employed.
If you are a new home-based business owner, then you are probably up to your eyeballs in getting your new business off the ground. In the midst of all of this activity, though, one important step that will really help your business grow is to define some initial goals for your new business.
The Importance of First Goals for Home-Based Businesses
While it may seem obvious that every home-based business should have goals, you’d be surprised at how many new small business owners jump from the starting line to the “millionaire” goal. They skip all the steps in between when setting goals for their business, including very short terms goals that make a huge difference.
Having achievable goals in the near future for your new home-based business is psychologically important. Starting a new business consumes a lot of time and energy (especially if you still have a day job), and as a new business owner you need have goals to show you that you are making progress. Achieving goals gives you the encouragement to keep going in difficult times.
Examples of First Goals for Home-Based Business Owners
First goals are like baby steps. They aren’t very far away from the starting line, and they are something that you can definitely achieve. They are also causes for celebration. Here are a few examples to get you thinking. Your short term goals might include:
– completion of your business incorporation and getting a tax ID number
– completion of your company’s website
– the hiring of your first employee or contract worker
– the first inquiry about your products or services
– the first sale
– the first referral from someone in your network
– the first $1,000 in revenue
Are you starting the get the picture? The first goals for your business are ones that you can definitely see and achieve from where you stand today. They are small goals that will give you a huge sense of accomplishment. It’s important to acknowledge these steps along the way toward the “millionaire” goal. If you don’t, you’ll wear yourself out before you’ve gotten very far from the starting line.
Creating a small business that generates a steady alternative stream of income is no sprint. It’s more like a marathon. So pace yourself, celebrate the small but important accomplishments along the way, and enjoy the journey.
What are you waiting for? Turn on your computer and start making a list of first goals for your small business. If you have already got a small business going, what first goals have been useful for you? Which goals do you wish you would have celebrated but didn’t? Drop me a line … I’m a veritable sponge when it comes to stuff like this!
Time is one of the most precious commodities for a small business owner. Between business development, client work, employee or contract worker management, marketing, and fire-fighting, there’s hardly enough time for coffee and bathroom breaks.
In fact, recent studies show that time management issues are among the main obstacles to small business owners being successful and keeping the doors to their businesses open. So what’s a small business owner to do? Here are some time management tips I recently gathered from a workshop sponsored by my local chamber of commerce.
Tip #1 – Decide What is Important
Most small business owners go to the office and fall into a black hole of disorganized chaos from which they emerge, sometime late in the day, having done a lot but made questionable progress towards definite goals. The time management expert at the seminar suggested that we small business owners plan our work weeks before they start … like on Friday afternoon or during the weekend.
We should decide what major goals we wanted to accomplish during the week, and what amount of time we were willing to commit to each goal. Then we need to schedule that time into our calendars, carving chunks of time when we did not allow disturbances like phone calls or checking email.
Tip #2 – Check the Calendar
A calendar is only useful if you check it and follow it. The time management expert stressed that while some small business owners are good at making plans for the week, they are terrible at following those plans. She suggested we check our calendars first thing in the morning, mid-morning, at lunch, mid-afternoon, and at the end of the time. While this may seem a little anal retentive or remind us too much of Adrian Monk, it seems that most small business owners easily get derailed without this level of persistent checking. So make your calendar, and then check, double-check, and triple-check to make sure you are following it.
Tip #3 – Avoid Fire-Fighting
I love this part. The time management expert gave us a mantra: “A lack of planning on someone else’s part does not constitute an emergency on your part.” I like this. Small business owners who do their own planning usually end up fighting fires because someone else forgot to plan. Whether it is a client, an employee, a friend, or a business partner who forgot to plan, learn to ignore it. Follow your own calendar because fire-fighting equals lost time, which means poor productivity on your part. Unless the emergency means a loss of thousands of dollars of revenue, learn to walk away!
There were a lot of other time management tips offered at this seminar, but these three seemed to be the most relevant and interesting, hence they are included here.
Do you have some time management tips to share with small business owners? If so, please share!
Doing a dreaded task once a week is a big time key to success in business and in life. Now don’t get me wrong … most of the time I’m a huge believer in positive thinking and an enthusiastic outlook on life. But, like most people, there are certain tasks associated with my business that I dread. I’d rather muck horse manure for 8 hours straight than do some of these tasks. I’d rather join Mike Rowe for a stint on “Dirty Jobs” than tackle these dreaded tasks. And that’s silly, considering that most of these tasks take an hour or two to complete. Can you say procrastination?
Why Doing a Dreaded Task Weekly Improves Work Productivity
There are many reasons that simply facing and doing a dreaded task is a huge key to success. There is, of course, the common sense reason that the dreaded task usually must be done. It is a requirement. It’s not a “want to” kind of thing.
For instance, in business, this might be something as monotonous and regular as calculating and paying the quarterly sales tax for your business. Is it hard to do? No. Is it boring? Hell yes. Is it easy to get distracted? Totally! And yet, if it doesn’t get done the penalties are, well, unpleasant to say the least. You have to pay a fine, for one thing, and then there’s the extra paperwork that has to be submitted in triplicate with the fine. And that doesn’t even cover the humiliation of being called on the carpet by the state government. Yuck. So on a common sense level, doing the dreaded task is a good thing. Procrastination is a bad thing.
On a psychological level, doing a dreaded task gives you the equivalent psychological satisfaction as finally cleaning out your sock drawer and throwing away all the lonesome socks that have lost their mates. Vacuuming the lint receptacle in your clothes dryer runs a close second in terms of psychological satisfaction. And when you are a psychologically satisfied small business owner, your work productivity is sky high. Your employees will breathe a sigh a relief, thereby saving you from some kind of random employee-generated harassment lawsuit that might otherwise come out of the blue.
Then there’s the third reason to do a dreaded task rather than fall back on procrastination: it will save you time later. Here’s a perfect example of this. For a long time now I’ve needed to upgrade my contact management software. I needed something that included some more up-to-date features, like mail merge, integration with document and financial software, and the ability to handle multiple client contact lists. I had avoided researching, buying, and installing such software because it required a lot of focused attention from me. You know, some days as a business owner I get up on the wrong side of the bed, and I’d rather be flipping hamburgers for a living than running a business.
But after a lot of “I’d rather be flipping burgers” procrastination days, I finally got around to researching and installing said software. True, when all was said and done, and the software was installed with the data fully migrated, I ended up investing about 12 hours into the project. But boy was it ever worth it. With a couple of clicks of my mouse, I can select a financial document, share it with select contacts, monitor their reply, and have an auto-response waiting in the wings. It takes all of 3 minutes to do all of that. So for 12 hours of dreaded activity, I have a future of efficient work … which is good ’cause I get up wanting to be the hamburger girl pretty often these days.
Pick Your Dreaded Task of the Week
Every single Sunday, yes that lovely Sabbath before the hectic work week begins, I take a few minutes to contemplate my dreaded activity of the week. I’ve gotten so used to this that I actually look upon this choice as a kind of torturous meditation. It’s like the medicine your mom used to give you — it tastes so bad but the results are soooo good. So I pick my task, and I put that task on my calendar, with a big “D” next to it, for the word Dread. Then, when the appointed day comes around, I do the dreaded task. I grunt, groan, moan, and complain, but it has netted some spectacular results in the work productivity department. I’ve done this for long enough now that people close to me know what when D-day hits, they should leave the office until I’m done.
Now doesn’t that sound like fun? Have you got a big D that you do every week? What kinds of things make your Dread List? Drop me a line — I always take comfort in that sort of communication because, as you well know, misery loves company!
The Charles Emerson Winchester III character on the sitcom M*A*S*H used to say, “I do one thing at a time, I do it very well, and I move on.” Now Charles was a total pompous ass on the show, but his approach is very applicable in this day and age of business.
In modern times, when people can’t even have a normal face-to-face conversation without being interrupted by phone calls, text messages, pagers, and other such nonsense, the principle of doing one things at a time is a very useful maxim when it comes to work productivity, especially for small business owners.
Why Doing One Thing at a Time Works to Increase Work Productivity
Multi-tasking is so 1990s, don’t you think? Aside from the fact that it’s old hat, here are some things that you may not know about multi-tasking. Multi-tasking:
– has been shown to decrease productivity. People waste more than 30% of their time when switching focus between tasks.
– is one of the prime causes of adrenal exhaustion, which causes fatigue, food cravings, decreased metabolism, insomnia, and a generally poor quality of life
– does not make for quality time, for you or anyone you interact with
Aside from the science that demonstrates how multi-tasking wreaks havoc on our productivity and our health, consider whether that kind of working situation is really helpful to you or your small business. Are you really that much better off when you try to juggle 7 tasks at the same time? I’m not. I just talk faster, not better.
Increase Work Productivity: How to Do One Thing at a Time
Of course, achieving the Winchester approach to business isn’t at all easy, especially during business hours. The phone rings constantly, we are barraged by emails, and then there are our office-mates. So what’s a busy workaholic to do? Here are three ideas to consider:
1. Set aside “chunks” of time where you can do one thing at a time. I often start work at 3 am because no one is likely to call me at that hour. I do a lot of my writing, thinking, and planning at that hour, and my work productivity is often triple.
2. Set business hours for answering voice mail and email. This was popularized by Tim Ferriss in his 4-Hour Work Week concept. It really does work … trust me, I’ve tried it. Tim answers voice mail and email twice a day.
3. Get some help. If you want to run a small business and not be run by your small business, get some good help. It’s worth paying for. I have two gals who are super efficient and handle all my order processing, customer service, and front-end communication. That frees me up for business development, heavy client work, and strategizing.
Come to think of it, maybe Winchester had more going for him than just the “one thing at a time” maxim. Maybe his pompous attitude is worth copying, too. After all, if you want to increase your work productivity and fend off people who want too much of your time, being a pompous ass can be an effective strategy.
What do you think?
19 minutes is all it takes me per week to have a worry-free tax season for my small businesses. I timed it, literally. You see, I’ve been studying up on how to maximize my small business tax deductions, and I’ve discovered what it takes to keep the IRS happy:
1. Know the rules as they apply to your business and follow them
2. Keep orderly small business tax documents
3. Have a great accountant
Now that might sound like a lot of work, especially the part about knowing the rules and documenting everything, but it doesn’t take long, really.
Discovering Small Business Tax Deduction Rules
So everyone knows that the IRS has rules, lots of them, and that if you don’t follow them you will get in dutch. What most people don’t know, though, is how to interpret those rules so they apply to you and your small business. And being that the tax code is some 18,000 pages long, it’s going to be pretty hard to figure out which small business tax deductions apply to your organization, and how, just by reading the tax code.
That won’t do at all, which is why you need an interpreter. I like Ron Mueller’s tax tips and books because they are easy for me to understand (check them out at www.homebusinesstaxsavings.com). The website is for home businesses but they apply to a lot of small businesses as well, especially if you keep a home office as well as a regular office. The best way to figure out how IRS laws apply to your business to get help from “Cliff Notes” tax interpreters like Ron. I’ve also gotten great information from other tax books for some of my businesses that are very specific, like my horse business.
Small Business Tax Documents – Maintaining Order
If “location, location, location” is the key to success in real estate, then “document, document, document” is the key to success in reducing your tax burden and defending your position, should the IRS ever inquire. While documentation sounds like a lot of work, it’s really not if you get into a routine. As I said earlier, it takes me on average about 19 minutes per week maintain my small business tax documents.
For anything you want to claim as a business expense or tax deduction, you basically have to document the who, what, when, where, and why. If you keep a strong business calendar or activities diary, most of the documentation can go in there. The rest can go into Quickbooks or some other similar bookkeeping software. If you do your documentation during the day or at the end of each work day, it literally won’t take you more than 19 minutes. I have three small businesses, and it only takes me that long.
In my last few blog posts I’ve highlighted different ways that small business can increase their cash flow, with strategies that vary from bartering with other companies to turning away slow/no pay clients. Here’s a list of those blog posts in case you want to know more about ways to bring more cash into your small business.
In this blog post, I explore some more adventurous alternative ways that small business owners are discovering for avoiding the cash flow crunch.
Adventurous Ways to Avoid the Cash Flow Crunch
The methods I discussed in my previous blog posts are fairly common sense and standard; ask any good accountant and you’ll get some, if not all, of these suggestions. The two methods I cover in this blog post are less standard, and you may or may not have heard of them. Even if you have heard of them, you may not have considered them as viable options for you. But with the economy being the roller coaster that it is right now, you may want to keep your options open. So what are these two adventurous options?
– Creating Multiple Streams of Income
Here’s an overview of these two options so you can start wrapping your mind around them.
The word “factoring” doesn’t give you much detail about this option, but it can give your business a boost if you are suffering from constipation in the cash department. With factoring, you sell your accounts receivable to a factoring company, which is usually a bank or a commercial finance company. When you sell your company’s receivables, you get cold hard cash. It is then up to the factoring company to collect cash from the clients who owe money.
The good news is that factoring is becoming more popular and more possible for small business. Previously, if you small business owned less than $10,000 in accounts receivables, a factoring company would not consider working with you. These days, factoring companies are willing to be more flexible. According to the president of one factoring company, only three percent of all small business that are eligible for factoring are even aware that this is an option to generate cash for the business.
Now for the bad news. As with any finance option, you pay a price for getting cold hard cash. The average fee is 5% per month of the total receivables amount, and the factoring company may not accept receivables with payment terms of longer than 90 days. In addition, you run the risk of angering clients if the factoring company resorts to harsh measures to collect their cash. Factoring gives you a definite cash option that you may want to consider, depending on how strapped your small business is for greenbacks.
Creating Multiple Streams of Income
Popularized by Robert Allen and other authors, the creation of multiple streams of income is the new frontier for entrepreneurs and small business owners. Whether this means becoming a shareholder in other companies, creating a new line of electronic products that can be digitally delivered, or doing pure investing, these days small business owners are gathering income streams from diverse markets for financial stability.
The bad news is, of course, that in a cash-poor economy you might not have cash on hand to invest in real estate or other companies (the whole goal being to bring cash in, not spend it).
The good news is that you have other assets that you might be able to convert into alternate streams of income, aside from what your small business currently brings in. For instance, as an entrepreneur you have knowledge, experience, skills, and talent. These intellectual assets are all inside your brain and, for you, free for the taking. The question then becomes, how can you turn those assets into products you can sell for an additional stream of income? Additionally, can you turn one of your company’s physical products into a digital one? Here are some of low-cash sweat-equity ways small business owners are cashing in on multiple streams of income. They are using their own knowledge plus the intellectual and physical assets in their small businesses to sell:
– educational DVDs, CDs, and ebooks
– memberships to websites and webinars
– online consulting (fixed price for a fixed job)
– networking events to match businesses with each other
– affiliate programs
Does this spark any ideas in your brilliant mind as to how you might turn your own or your small business’ assets into a new stream of income?