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BEST PRACTICES |
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Fact or Fiction? Small-Business Myths Debunked |
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Not all advice is good advice. To succeed, entrepreneurs must discern what counsel is sound and what is pure fiction. Following are three of the most common myths that can lead small-business owners astray.
Tax myth: Topping the list of management mythology is the notion of increased spending to reduce taxes. It's true that the timing of expenditures sometimes yields beneficial tax consequences. But this does not mean that unnecessary costs are a good idea simply because they're tax deductible. Especially disastrous is borrowing to pay for things that don't add to business productivity. Burning $1,000 to obtain a $300 tax deduction simply results in a $700 net cost.
Image myth: Some people encourage frivolous spending on things the customers never see. For instance, retail stores need visible locations with plenty of parking, but a fancy office suite will not impress clients who interact with a business remotely. In addition, despite the importance of reliable transportation to jobsites or a decent car for client meetings, frequent upgrading to the latest model is wasteful. Remember, image cannot replace performance.
Payroll myth: Perhaps the most important myth to dispel is that you should always reinvest in your business before paying yourself. Instead, focus on operating a profitable business. If you have invested the right amount to launch the enterprise, it should provide some amount of compensation for your work. Always plan to pay yourself something first and expand with what's left. If you aren't getting paid for running a profitable operation, you're only reinvesting in an unprofitable endeavor. |
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HOT BIZ TRENDS |
| Customer Reviews Are Crucial: Here's How to Get Good Ones |
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These days, customer reviews can make or break a small business. This means you need to actively encourage your satisfied customers to share their experiences with your company online.
Here are some tips to get you started:
Social Media
Make sure you have a presence on all major social media sites that are relevant to your business. Start with Google, Facebook, and Yelp. Then consider Bing, Angie's List, LinkedIn, Yahoo, TripAdvisor, CitySearch, and others.
Feedback
Ask your customers to give feedback. As long as you deliver as promised on your product or service, they won't mind if you ask for a review. Don't wait too long, though. Customers are more likely to provide feedback right away.
Follow-Up
Whenever possible, follow up your initial request with a reminder email containing links to suggested review sites. And anytime customers compliment you in person or via phone or email, ask them to post their feedback online.
Convenience
Make it easy for your customers. Put direct links to your review profiles in multiple places, such as in emails, in newsletters, and on your website.
Incentives
It's okay to incent, but not buy, reviews. You might offer your customers a bonus or reward of some kind, but be sure all reviews are authentic.
Review
Make sure your employees understand the importance of soliciting reviews from their customers, and be sure to monitor the reviews. You need to know what is being said about your business and where you may need to improve your level of service. |
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EMPLOYEE RELATIONS |
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Are You Building a Championship Team? |
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Because great teams are goal-oriented and imbued with a sense of purpose, team-building needs to be a holistic process.
The first step is to choose team members who can and will contribute in meaningful ways to the team's overall success. Once the team is in place, as team leader, you need to delineate the roles and responsibilities so that individuals know that their jobs matter and that they bring something unique and essential to the table.
Next, set clear, realistic short-term and long-term goals, and establish milestones and deadlines. Motivate progress toward the goals with positive reinforcement, but also know when to pivot or course-correct if necessary.
Provide continuous feedback and maintain open channels of communication. Communication fosters engagement and commitment to the team's success and also enables team members to surface ideas, suggestions, and issues that may lead to a more productive workflow.
Celebrate successes and accomplishments, but also acknowledge problems, setbacks, or concerns. This type of candor conveys the importance of working together and reaffirms each individual's responsibility to contribute to the team's success.
Ultimately, it takes vision and strong leadership to create and sustain a high-performance team. As a leader, you will have to make difficult decisions, establish standards of performance, and implement corrective action from time to time. Be aware of your leadership style and techniques. Get to know the people you work with so that you can have constructive discussions and lead your team to achieve the best outcomes. |
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ACCOUNTING |
| Financing a Purchase? Follow These Accounting Basics |
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Accounting for financed asset purchases is likely the most complicated bookkeeping procedure to untangle.
Where should you start? To avoid missing vital details in your books, you must record the entire cost of an asset, including the part you pay in the future as loan payments. This allows you to deduct asset costs appropriately and sidestep future errors when recording loan payments.
Use the following procedures to keep your books in order.
Lingering Liability
Loan payments do not belong on your Income Statement, which includes revenue and expenses. Repayment of loan principal applies to a liability on the Balance Sheet. Only the interest portion of a loan payment is recorded on the Income Statement as an expense.
For this structure to function correctly, the loan liability must appear on the Balance Sheet when the money is initially borrowed. Without this element, you have no Balance Sheet liability to reduce as the loan principal is repaid.
Judicious accounting of your loan payments ensures that the liability account on your business Balance Sheet precisely matches the lender's record of what you owe. Periodically reconciling the loan balance on your books to a report from the lender is as essential as reconciling your checking account balance to a monthly statement from the bank.
Capitalized Curiosities
Most costs of doing business are recorded as expenses on the Income Statement. However, a capitalized cost is a special exception.
Capitalized costs are assets such as equipment, furniture, machinery, buildings, and improvements to rented business space. Some of these items, however, may cost so little that they are accounted for as expenses. Rely on your tax accountant to determine the cost threshold that requires you to capitalize a purchase.
Capitalized costs are recorded in an account on the Balance Sheet. The amount spent is deducted over time as depreciation. When this happens, your financial statements simultaneously document depreciation expense on the Income Statement and a reduction of capital costs on the Balance Sheet.
Financing Formalities
Cash that leaves the business bank account for a purchase is recorded as either an expense on the Income Statement or a capitalized asset on the Balance Sheet. Accounting software automatically deploys this double-entry process.
Since capitalized costs are typically larger than ordinary expenses, their purchase often involves borrowed money. Funding from a lender must be identified along with the amount spent by the business. Paying a capitalized cost with borrowed money does not change the amount paid for the asset. You depreciate the total cost, regardless of how much company cash is spent at the time of purchase.
Journal entries are used with computer bookkeeping programs to record the full cost for a capitalized asset along with the borrowed part of that purchase, which creates a new liability. Consequently, business owners must provide bookkeepers with all the information about the cost for an asset purchase and any loans incurred to buy it. This will allow for accurate accounting of your financed purchase. |
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Gold Gerstein Group
505 Pleasant Valley Avenue
Moorestown NJ 08057
856-727-0100 Office
856-727-0772 Fax |
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| info@g3cpa.com
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| How to Win Big in Today's Economy |
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| The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive. |
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Find out how by requesting my free report
"How to Win Big in Today's Economy" by
replying to this email. |
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| Worth Reading |
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12 Most Unusual Offers Made to Recruit a New Employee
By Young Entrepreneur Council |
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Small Biz Trends
Notice when a potential hire with strong credentials mentions a niche interest during the interview. Incorporating that interest into an offer letter may ensure you get the employee you want. That's one tip employers can learn from this list. Another is to leverage remote, digital working arrangements to provide more time off or an option of working while traveling.
Just Do It: How to Work When You Really Don't Feel Like It
By Aytekin Tank
Entrepreneur.com
Don't wait for motivation before starting work. Start working, and then you will find motivation. That's the main theme of this article about how to prevent procrastination. Remove emotions from your work. At the same time, create structures that will encourage you. For example, pair a pleasant ritual with a dreaded task or create a visual reminder of your accomplishments to encourage you to keep working.
10 Ways to Make Working from Home More Productive (and Free Up More Time for Yourself)
By Jeff Haden
Inc.com
Working from home can work, but you need to put in the effort to set up an environment that encourages productivity. This article gives practical advice about how to arrange your workspace and your work schedule. Communicate these things with the people you live with; this can decrease distractions and interpersonal conflict.
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LINKS YOU CAN USE
This Month-Small Biz HR |
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Few small-business owners find it feasible to staff an entire HR department. Yet they must find a way to accomplish the tasks of HR professionals.
How? The following links shed some light on the options available to today's
entrepreneurs:
A good place to start is an overview of what HR is, what HR tasks your business should provide, and the various ways you can do this:
HR for Small Business: The Ultimate Guide
Small-business software may be a good solution for your HR needs. Learn what the software should include and discover a few leading platforms here:
Best HR Software for Small Business
If payroll is particularly challenging for your business, you may want to consider one of these payroll options:
The 5 Best Payroll Options for Small Businesses
Do you need to offer employee self-services? Check out these small-biz-friendly employee portals:
12 Employee Portal Options for Small Businesses
Perhaps HR administration tasks are simply eating up too much of your time. Here are some tips on outsourcing these jobs:
Best HR Outsourcing for Small Businesses in 2019
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