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How to Operate Your Small Business for Maximum Efficiency and Profitability

Posted on December 4, 2019 in Uncategorized

As far as I am concerned, one of the primary reasons the washout rate for small business owners is so high is because too many investors fail to place enough emphasis on getting the maximum return on every dollar and hour that they put into their small business. Instead, they seem to be more concerned about frivolous stuff like the color of their business cards. In any small business endeavor, a lack of focus, coupled with the inability to prioritize tasks, is a recipe for failure. So, too, is the type of complacency that breeds an “if it ain’t broke, don’t fix it” mentality, which usually results in a stagnant business that’s barely able to keep its head above water. That’s why to my way of thinking, the catch-phrase “easier, faster, and cheaper” should be the mantra of every real estate investor in America. I say this because I’ve learned the hard way that for me to consistently achieve the highest possible rate of return on the money and time that I invest in my business, I must continually analyze, refine, and tweak every aspect of my operation, to make it easier, faster, and cheaper to run. Nowadays, I think of my business as a high performance automobile engine, which must be finely turned and calibrated to run at its optimum speed and maximum efficiency. I can tell you from experience that in order to operate a small business at maximum efficiency and profitability, it takes:

1. Personal and financial discipline.

2. Organizational skills.

3. Management know-how.

4. Meticulous planning and attention to detail.

5. Prioritization of tasks according to their profit potential.

6. Maximum use of available technology.

7. Accurate record keeping.

8. Maximum use of all the tax benefits that are available to small business owners.

It Takes Discipline to Operate a Business at Maximum Efficiency and Profitability

It takes a combination of personal and financial discipline to operate a small business at maximum efficiency and profitability. First, you need to have the initiative and self-discipline that’s required to be successfully self-employed. You must work smart, so you don’t waste your valuable time doing grunt-type tasks that can be hired out. In other words, don’t spend your time cleaning up trash around your office when you should be out searching for customers. Second, you need to possess the financial discipline that’s necessary to operate your small business at maximum profitability. The only way that you’re ever going to be able to keep your spending under control is by:

1. Adopting a bottom-line mentality that’s totally focused on maximizing the profitability of your business.

2. Operating your business on a bare-bones budget by buying all equipment, supplies, and services at the lowest available prices in your area.

3. Keeping close track of operating expenses by carefully reviewing all invoices for errors, overcharges, and bogus charges.

Prioritize Tasks according to Their Profit Potential

The number one question that you must continually ask yourself when you’re working in your small business is: Is what I am doing right this minute the most profitable use of my time? A lot of people fail as small business owners simply because they’re never able to prioritize tasks according to their profit potential. They end up never making a profit because they couldn’t distinguish between what’s important and what’s trivial. As a general rule of thumb, I consider any business function that doesn’t contribute directly to my bottom line to be low priority and best left for after business hours. In other words, if the task at hand isn’t part of the process of completing a real estate transaction that will eventually end with me going to the bank; I put it off until later in the day.

Avoid Reinventing the Wheel Every Time You Need to Complete a routine Task

Whatever you do, don’t fall into the trap of reinventing the wheel every time you need to complete a routine task. The term, reinventing the wheel, refers to re-creating something from scratch. An example of reinventing the wheel would be retyping standard documents, such as purchase agreements, over and over again, instead of storing them in a Microsoft Word document file where they can be printed out as needed. The point here is to work smart by making your operating as streamlined as humanly possible.

Operate Your Small Business on a Bare-Bones Budget

One surefire way to fail as a small business owner is to run your operation in a slipshod manner with no financial controls in place to keep your operating costs from going through the roof.

Do a Cost-Benefit Analysis before You Make a Purchase

I suggest that you do what I always do, before I ever part with any of my hard-earned money, and ask yourself this very poignant question: How exactly is this-(fill-in-the-blank)–going to have a direct impact on the profitability of my business? Unless you can justify to yourself why the purchase under consideration will immediately contribute to your bottom line, you should hold onto your money. This type of decision-making process is referred to in business schools as “cost-benefit analysis,” which means that if the cost outweighs the benefit that’ll be gained from purchasing an item, it shouldn’t be bought. Keep this in mind the next time that you get the urge to splurge.

What You Should Have When You Set Up Shop as a Small Business Owner

I am willing to concede that an owner could possibly run their small business without any of the basic amenities of a modern high-tech office at their disposal. However, it would be a very inefficient operation, and I am willing to bet that most small business owners, in this type of work environment, would end up spending much of their time performing tedious tasks such as retyping the same documents over and over again. I don’t know about you, but I’ve never met anyone who has typed their way to a fortune as a small business owner. As far as I am concerned, every neophyte small business owner, who’s really serious about consistently making money in their small business, should have the following six items when they set up shop:

1. Telephone service and a prepaid telephone calling card to make calls on the road from pay phones.

2. Personal computer with Microsoft Windows operating system.

3. Microsoft Word software.

4. Internet connection.

5. Black-and-while laser or inkjet printer.

6. Financial calculator.

It’s Hard to Succeed in a Digital World Using Horse-and-Buggy Technology

Computer technology is here to stay, and, if you want to make it as a successful small business owner in today’s digital world, you had better embrace the latest technology and learn how to use it to your advantage. So if you happen to be computer illiterate, the very best advice that I can give you is to buy an inexpensive personal computer (PC) and then jump in with both feet and learn how to use it. If someone with a nontechnical background like me can use a computer, anyone can.

What It Takes to Run a Small Business at Maximum Efficiency

According to the Small Business Administration (SBA), 80 percent of all new small businesses fail within five years of opening their doors. More often than not, the cause of failure can be directly attributed to an appalling lack of organization and planning on the part of business owners. I hate to come across as some sort of killjoy, but you just can’t throw a business together without any organization and planning and expect it to be an efficient operation. It takes meticulous planning and attention to detail to set up a small business so that it operates at maximum efficiency. The only way that you’re ever going to have a smooth running business is by doing the little things right, such as:

1. Maintaining a master to-do checklist to run your business.

2. Computerizing all business documents and records.

3. Setting up your business so you avoid re-creating anything from scratch.

4. Organizing your office so that everything you need is available at your fingertips.

Use a Master To-Do Checklist to Run Your Business

To keep your business operating at maximum efficiency, I recommend that you do what I’ve done for the past 20 plus years, and maintain a master to-do checklist. I keep my checklist on my computer in a Microsoft Word file. It serves as a combination checklist and appointment calendar. For example, each entry that I make on my checklist, lists the task or appointment along with the completion or meeting date. This way, nothing slips through the crack and tasks are completed on time and appointments are kept.

Deduct Your Home Office as a Business Expense

In order for a home office to qualify as a business deduction for federal tax purposes, it must be used regularly and exclusively for business purposes. For example, if you’re a part-time real estate investor and a full-time school teacher, who has a home office that you claim as a real estate investment business expense, but you use your office for both your real estate investment business and for grading student papers, your home office deduction would be disallowed if you were ever audited by the Internal Revenue Service (IRS). The IRS would do this because your home office isn’t being used exclusively for business purposes. The best way to make certain that your home office will pass muster with the IRS is to regularly use the space you’re claiming as your home office exclusively as your principal place of business. I comply with the IRS home office use rules by having a home office that’s located in a separate building behind my home-approximately 40 steps one way-and used exclusively for business purposes. My compact home office measures a measly 10 feet long by 10 feet wide and is a scant 100 square feet in size, but it serves its purpose quite well. I like this arrangement, as it allows me to separate my business from my personal life. For more information on how to deduct your home office as a business expense, read IRS Publication 587, Business Use of Your Home, which is available online at the IRS Publications and Forms Web site.

Accurate Record Keeping Is an Integral Part of Running an Efficient Business

Maintaining accurate records is an integral part of running any type of successful business. Yet, it’s probably the most overlooked aspect of the real estate investment business. For many small business owners record keeping is last minute ritual that’s performed annually around 8 P.M. on the fourteenth of April, and forgotten about the other 364 days of the year. Needless to say, this is definitely not the smart way to run a business. Here’s a listing of the five types of records that real estate investors must maintain in order to have a smooth and efficiently running business:

1. Income records: Income records include monthly income and expense statements, bank statements, and accounting records documenting all of the income generated by your real estate investment business.

2. Expense records: Expense records include paid invoices, bank statements, cancelled checks, and accounting records documenting all of the expenses associated with operating your business.

3. Property records: Property records include mortgages, deeds of trust, promissory notes, grant and warranty deeds, surveys, purchase agreements, property appraisal reports, closing documents, easements, blueprints, certificates of occupancy, construction warranties, building material warranties, equipment warranties, building inspection reports, termite and pest inspection reports, and utility services account information.

4. Insurance records: Insurance records include property and casualty insurance policies, title insurance policies, workers’ compensation insurance policies, flood insurance policies, liability insurance policies, umbrella insurance policies, automobile and truck insurance policies, pest control insurance policies, and equipment insurance policies.

5. Tax records: Tax records consist of property tax assessment notices, property tax payments, federal tax returns, federal withholding-tax payments, state tax payments, and county and city occupational license fee payments.

Store Original Copies of Records and Documents in a Safe Deposit Box

I recommend that you photocopy or scan all of your important property related records and documents onto a CD-ROM and store all of the original copies in a safe deposit box. This way, you’ll have all of your original records and documents in a safe, secure, off-site location where they can be easily located in case of an emergency.

Use Generally Accepted Accounting Practices to Maintain Financial Records

Over the past couple of years, there have been a slew of court cases involving fraudulent accounting practices in which CEOs and other corporate higher-ups “cooked the books” to prop up the value of their company’s stock. Unless a stay at a “Club Fed” facility appeals to you, it’s best that you stick with generally accepted accounting practices instead of using creative accounting methods, which are based on fuzzy mathematics. In basic accounting jargon, the term generally accepted accounting practices (GAAP) refers to accounting principles and practices that are standard in a certain industry. The best way that I know to keep bookkeeping straight is to use an off-the-shelf computer software accounting program such as QuickBooks financial software. This way, all you have to do is enter your financial data and the software does the accounting functions and balances the books and makes it easy for you to:

1. Identify the source of receipts.

2. Keep track of tax-deductible expenses.

3. Document expenses claimed on tax returns.

4. Prepare tax returns.

Deduct All Business-Related Travel Expenses

Make certain that you deduct the cost of all travel expenses related to running your real estate investment business. The Internal Revenue Service requires that taxpayers maintain automobile mileage logs to document business-related mileage that’s claimed on federal tax returns as a business expense. The standard mileage rate that can be deducted from federal taxes for the cost of operating a vehicle on business-related travel changes each tax year.

Depreciate All of the Equipment Used in Your Small Business

In order for your small business to earn a maximum profit, you must take full advantage of all of the depreciation allowed under the Internal Revenue Code. To do this, make certain that you claim the maximum depreciation allowed on all of the equipment used in your business to include:

1. Office furniture and equipment such as computers, printers, and facsimile machines.

2. Software programs for accounting and word processing.

3. Cellular telephones, telephones, and telephone answering machines.

How to Prepare Your Tax Returns

For years, I’ve advised small business owners to hire a tax professional, such as a certified public accountant, board-certified tax attorney, or an enrolled agent, who is licensed to represent taxpayers before all administrative levels of the Internal Revenue Service to prepare their tax returns. I made this recommendation because of the very real possibility that an unreported glitch in an off-the-shelf tax preparation software program could cause an investor’s tax return to be audited. And then the investor would be on their own, as no one from the tax preparation software company is going to represent them in front of the Internal Revenue Service during an audit. However, I’ve had a change of heart after using the Turbo Tax Business tax preparation software program, which is made by Intuit, Inc., to prepare my federal tax returns. I’ve found Turbo Tax Business to be relatively easy to use and a fast, safe, and economical way for me to prepare my tax returns in the privacy and comfort of my home office. And it’s the same tax preparation program that the enrolled agent, who previously prepared my tax returns, uses. I very seriously doubt that the chance of my taxes being audited has been significantly increased by preparing my own returns. But if you’re not comfortable preparing your own tax returns, I recommend that you hire a licensed tax professional to do it for you. For more information of the Turbo Tax Business tax preparation software program, log onto the Turbo Tax Web site.

Use the U.S. Master Tax Guide as a Guide

I highly recommend that you use the U.S. Master Tax Guide as your tax reference guide. It’s published annually by CCH Tax and Accounting and is available for purchase online at the CCH Tax and Accounting Web site.

Small Business Management

Posted on December 3, 2019 in Uncategorized

Running a small, start-up business has it share of ups and downs. When I launched my company nearly nine years ago, running my own small business has been both rewarding and challenging. It has enabled me to establish greater balance in my life as I have reduced the administrative burden that corporate America places on each of its employees and replaced it with more time spent on developing content for my clients.

Given the choice, running my own small business is the best option for me at this stage of my life. I can work out of my house, see my kid on a regular basis, focus my work effort on content, rather than administration, and yes golf a tad. That being said, I am asked continually by others “what is it like to be in business for yourself?” as they contemplate the leap from corporate to sole proprietorship.

While it is not for everyone, here are some of the points of consideration that one should mull over before making the jump to starting your own small business:

One Stop Shop: One of the benefits of being a small business owner is the autonomy of “calling the shots”. You are the boss and clearly can steer your company as you see fit. Many think they relish this set-up but in reality, when it comes to being the self-motivator that is required to be successful – the “guy” to go to – lots fall short. Before you read any further, ask yourself if you are cut out to be the “go to guy”. If not, you can save yourself a lot of time and frustration. Simply stay in the corporate world.

Develop A Business Plan: So, why is business planning so crucial? In a word, it provides “clarity”. Investing time to develop a plan provides precise clarification of the company vision. In addition, it provides a mechanism to gauge the results of the business and provides the foundation for future growth plans. In the long haul, it enhances the company valuation through fiscal responsibility, which provides the story of opportunity to any future investor or employee. Business planning is one-part strategy and one-part tactics – but where the sausage actually gets made is in the execution. Execution comes in the hard work necessary to carry out a plan and the accountability for your activities by tracking them.

Understand Tax Burdens: Regardless of the political rhetoric surrounding the tax code and its impact on small business, the fact of the matter is that these entities are levied with a myriad of taxes. I am shocked by how many budding entrepreneurs fail to understand the taxes that small businesses pay. My company has essentially one of the easiest business operating models that a small business can have. I invoice a few clients per month; receive a few checks a month; pay a few bills a month; and have very little inventory and/or depreciation of capital assets. Despite that, my tax return was 84 pages last year. Filing as an S-Corp, my outlay on taxes is between 25% and 39% of federal taxes; North Carolina state income taxes ranging from 6.0% to 7.5%, social security and medicare (twice as a matter of fact for employer and employee) of 15.3%, so nearly 50% of all income goes to taxes and fees.

Replicate Yourself: Given the fact that you are a one stop shop, a small business owner needs to replicate themselves wherever possible. Tools such as social media and the acceptance of telecommuting through online collaboration have enabled small business owners to be in many places at one time. In order to be successful, small business owners need to tap these tools to maximize their exposure to potential clients as well as reaching customers outside of their immediate trade area. Prior to these tools being readily available, my business was limited to the state of Illinois (where my company was originally based). Since I have utilized these tools to replicate myself, I have had clients in thirteen different states.

Navigate Third-Party Challenges: A small business owner wears many hats and relies on third-party entities for key alliances. When Go Daddy had their website and email server outage in September, roughly 5.3 million small business websites and emails were knocked out. Small business owners rely on these support companies and at times, are held captive when issues arise. While my company does not conduct a lot of commerce via my website, many small operators lost online revenue due to the outage.

Be Wary Of Scams: Lastly, where there is a small business owner, there is a criminal waiting to prey on the unsuspecting operator. In fact, this past week, I received a letter from a group claiming to represent the State of Illinois. Having been in business nearly nine years, I am keenly aware of all of the annual expenditures that my company pays. As an Illinois corporation (operating in North Carolina), I received a letter stating that I needed to send in a $125 fee for my “Annual Minutes Records Form”. I didn’t recall ever doing this, and when I contacted my CPA, he shared the following press release with me:

In short, starting and running a small business may be the best decision you may ever make. Having the facts in advance of that decision are critical to ensure that you are positioned for success. Once you fully vet your decision-making for starting your small business, the rewards can be amazing…

Social Media for Small Businesses

Posted on December 2, 2019 in Uncategorized

Social media has become an integral part of our day-to-day lives. Businesses of all size and shapes have started making the most of available mediums. Today we will try to anatomize tips on social media for small businesses. There are a plethora of small businesses eyeing social medium to promote their business/services. However, majorly these small businesses are failing or not being able to make optimum use of social media for their business growth. There are many theories and strategies on how to effectively use social media for established brands, but the topic social media for small businesses is seldom addressed. According to Digital state of eMarketing India 2017 Octane Research:

60% small businesses promote their business on social media. 50% focus on SEO and 35% use multichannel marketing funnel.
70% small businesses consider content strategy as their primary marketing activity.
52% business owners are using social media as to efficiently address customer engagement.
More than 20% of business owners said that they are making 50% plus profit using social media.

The primary reasons for the low turnout are uncertainty on an application of social media, calculating return on investment and persuade employees/stakeholders to clinch social media. Hence it is important to address the elephant in the room and analyze how beneficial is Social media for small businesses.

Social media for small businesses is a great way for emerging businesses to generate lead and build a reputation. If regularly updated, social media can deliver more results as compared to traditional mediums. Social media for small businesses gives brands an edge of control over the content that they want to post. Also, since social media is a two-way dialogue process, it helps businesses to instantly identify what is benefitting them. Social media for small businesses also helps generate Word of Mouth, which is one of the best tools for emerging businesses.

Social Media for small businesses | 10 Tips to effectively use Social Media

Define your Target Audience
The first and foremost important part that small businesses should focus on is to define their target audience. This helps small businesses to device their social media strategy accordingly. The target audience should be defined basis age group, sex, location, users’ online behaviors, their likes, interests, and preferences. For niche products, business owners can even target users based on their birthdays, anniversaries and important milestone. Audience targeting plays a very crucial role in the outcome of the results. For e.g.: a local shop selling footwear should not target users with interest in entertainment. The shop definitely won’t get the desired results.

Set achievable goals
Overnight success is a myth. Small businesses must understand this basic fact. Generally, when a new business starts selling on social media, there is palpable excitement is achieving more than set targeted sales. Businesses need to set goals which are upwards and forward. To achieve enormous goals, small businesses start updating social feed with multiple updates in shorter duration. This leads to user’s disinterest in the product/service. The set goals should be in sync with brand’s core capabilities and expertise. For e.g.: if a business is into selling shoes, they shouldn’t set a goal to repair maximum shoes in their area.

Choose the right medium
By now everyone knows, social media is for free. Even paid campaigns can be conducted at a relatively low cost as compared to traditional mediums. It is in this scenario, that we often see small businesses jumping the bandwagon and creating profiles on all the available platforms. Creating social profile doesn’t hamper brand image, but aggressively promoting a brand on wrong platforms can lead to brand losing its potential customers. Hence it is advisable for SME’s to first identify the right platform through which they can maximize their business. For e.g.: If a shoe selling brand tries to aggressively sell on LinkedIn, they won’t get a plausible response as compared to promotions on Facebook/Instagram.

Promote your core product/services
Since each and every business is riding in the social media wave, it is important for a them to promote their core product/services. Nowadays, we see a lot of businesses promoting their services as well as promoting peripheral products/services, which revolves around their core product/services. Majority of the times, this SME’s doesn’t have capabilities to fulfill a requirement, which can lead to a bad word of mouth for their business on social media platforms. Let us go back to our example; if a shoe seller is trying to aggressively promote socks instead of shoes, it is not going to benefit the business in the long run.

Create quality content
Now that we have covered the topics of identifying the target audience, setting achievable goals, choosing the right medium and promoting the right product/services let us now take a look at the type of content a business should promote on their social pages. A business should always focus on creating good quality content rather than not-good quantity content. Even if the business updates their page once in a day as long as it is relevant to their business, advocates about its core products send across a clear message it is considered as a good quality content. Antagonistically, if a business posts multiple updates which aren’t even relevant to the business’s products and services leads to users considering the business as fake/spam. Also, new businesses should try and refrain from promoting other businesses on their social platforms initially.

Create a content calendar
Making a small business successful on social platforms is no small task. It takes a lot of efforts for the businesses to keep up their conversion ratio. One such effort is to create a content calendar. Small businesses must anticipate important events and create a content calendar accordingly. Ideally, a content calendar must be planned a month in advance but an even weekly content calendar is highly recommended. This helps businesses to avoid any last minute hassles, strategize much more effectively and it also helps in creating curiosity amongst its loyal fans/customers.

Test and re-test
Social media is highly unpredictable. The content a business posts today, might not work for tomorrow. Hence, small businesses must always test their content before publishing it on their pages. Testing content also applies to the platform a small business chooses to promote. Small business owners must always don the consumer’s hat before posting about any product feature, updates, schemes or offers. A consumer’s perspective is the key when testing the content that has to be uploaded.

Look for inspiration
Small businesses must always look for inspiration from a competitor who is successful in the same category. Copy pasting competitors idea or content is not the answer. Small businesses must look for the kind of content its competitors are putting up and derive their own strategies subsequently. Inspiring content/stories always make a business to strive to create their own content that is appreciated by one and all. It helps in increasing brand consideration, brand visibility thereby increasing conversions for the business.

Calculate ROI
Even a small promotional budget is not justifiable if there is no mechanism to calculate its return on investment. It is more important in case of small businesses. It is very important for a small business to keep a tab on the budgets allocated to any promotions and the subsequent ROI related to it. If a certain promotion is not doing well or the business is not getting desired results, the brand custodian can always look for other platforms to generate quality conversions.

Analyze and Re-strategize
There can be umpteen instances where a particular campaign/promotion might not work for a business. That doesn’t mean that the promotion is wrong or the product/service is not good. Doing an analysis of the campaign is as important as setting the objective. This helps the business to formulate their upcoming strategies in more effective ways. At the end of every campaign, brands must note down the learning’s from that campaign and identify if the content/idea was appreciated by their fans or not. This helps businesses to skip the non-performing updates from future communications.

Final Thoughts
Social media for small businesses is definitely beneficial and fruitful. If followed correctly, small businesses can benefit tremendously from the power of social media promotions.

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