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June 2019

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Carry yourself like a champion now so when you get there, it’s not a surprise.

David Fizdale.

BEST PRACTICES

Fact or Fiction?

Small-Business Myths Debunked

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.

EMPLOYEE RELATIONS

Are You Building a Championship Team?

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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HOT BIZ TRENDS

Customer Reviews Are Crucial;

Here’s How to Get Good Ones

GOSSIP!

[pic]Thank you for making SHRED DAY a success! We had a lot of positive feedback and hope to do another one this fall!!!

[pic]We like to congratulate all the graduates whether its pre-school or college it’s a job well done!!!

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Surveys, surveys, surveys, it seems like every time you turn around someone would like you to take a survey. This was the first time we have ever done anything like that. It has really helped us! We are grateful to all of you who took the time out of your busy schedules and did our survey!

Feedback is the breakfast of champions.

Ken Blanchard

Welcome New Clients and Thank you for Referring

We love giving recognition to our new friends and our wonderful existing clients who are kind enough to refer their friends and relatives to us! We are all helping each other, which is the whole point. In the last month we were fortunate to welcome 53 new tax clients and 8 new business clients. They became members of our firm’s accounting and financial planning family. We’d like to welcome them and thank all the people who have referred business to us.

As you may know, marketing for new clients costs a great deal of money, time and energy. We, like any business, need to get new clients to stay in business. Over the years, we have found that marketing takes away from the time we would rather be spending with you. We have learned that by encouraging you to refer your friends and relatives to us works for all of us. We help you, and you help us. Thank you.

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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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HOW WELL DO YOU KNOW YOUR CUSTOMERS???

You can learn a great deal about your customers simply by talking with them. Don’t be afraid to call, email, or approach customers or prospective customers and engage with them about what they're buying or planning to buy in the future and what’s important to them about the purchasing experience.

Probe deeply to understand why and when they buy certain things, what they expect from you and your company, and what unmet needs they have that your business might fulfill. Their purchasing motivations may be related to pricing, convenience, selection, timing, or levels of service or it may be something you haven’t even considered.

Find out what brings top customers back again and again, what brings occasional customers in, and what prompts new customers to give your business a try. Be sure to ask people what they know and think about your competitors and why they might choose to purchase either from you or from another company. Inquire about what competitors may be doing to attract or reward customers and stay ahead of trends.

If yours is a B2B business, get to know whoever is responsible for the decision to buy your products or services, and be familiar with the company’s procurement processes and protocols.

If you know what drives your customers and the challenges facing them, you can address their needs and offer them solutions. Conducting your own market research can be as simple as just chatting with them.

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.

ACCOUNTING

Financing a Purchase? Follow These Accounting Basics

Quick Quiz

Each month I’ll give you a new question.

Just email me at Lisa@ or call 610-265-4122 for the answer.

This month’s question:

How can you salvage a cake that is stuck to the bottom of the pan?

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The prospect of writing a business plan can be overwhelming for a would-be entrepreneur. It is a time-consuming and laborious exercise, and it requires that you intimately know and understand your business, your product or service, your competition, and the market.

Is it really worth the effort?

Yes. Beyond helping you obtain a bank loan or financing from investors, a business plan serves as a road map to guide you through the start-up, growth, and expansion phases of your business. A comprehensive business plan sets forth a vision for your company and outlines how you intend to realize that vision.

The US Small Business Administration recommends that business plans include an executive summary, a company description, a mission statement, a description of products and/or services, a market analysis, an outline of the business’s proposed organizational and management structure, a detailed financial analysis, and a succinct description of the short- and long-term goals of the business.

Another key component of a good business plan is a strategic marketing plan. Your marketing plan should include detailed sales objectives and marketing strategies as well as plans for bought and earned PR, an optimized website, targeted online advertising, social media marketing, pricing, promotions, and proposed conversion techniques.

The marketing plan should also include data about your target market, budgetary and cash flow projections, operational plans and contingencies, growth milestones, ways of measuring progress, and other details, such as licensing agreements.

A business plan is a living document that can help guide future business decisions and keep your business relevant over time. You may need to modify your plan as the business grows and/or as the market evolves. Whether you’re sharing it with investors, potential joint venture partners, or board members, it needs to show that you’re committed, passionate, and dedicated to the success of your business.

BUSINESS DEVELOPMENT

How to Create a Successful Business Plan

Clairmont, Paciello & Co., PC

250 Tanglewood Lane,

King Of Prussia PA 19406

This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.

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