You have been reading about how to improve your small business by working on it instead of in it so you are setting goals for next year. Great-make sure they are specific enough to guide you properly. You decide to improve your business by increasing sales by $100,000. That is specific enough, so the next question is how are you going to do this?
You can increase sales by increasing the price of the products or services you sell or you can do it by increasing the number you sell or a combination of both. If you are going to do it by selling more, you need to know how many you need to sell to achieve the $100,000 increase you are seeking. How do you achieve that?
To know how many you need to sell, you need to know how what your average sale is: how much does your average customer purchase from you? Once you determine how many sales you need to achieve the revenue growth you desire, you need to know how many proposals you need to provide to achieve the sales you need. If proposals aren't relevant to your business, you need to know how many people need to come into the store before one buys from you. We call this your close rate as no business sells to every person they meet or who come into the store.
So to improve the profitability of your small business, set a specific goal and determine how you will achieve this goal. If you follow the process described above, you can tell your friends and family you are tracking metrics and using goal setting to improve your bottom line. Sounds impressive, doesn't it? All you had to do is track some numbers and make some calculations-not that complicated!
Wednesday, September 10, 2014
Wednesday, September 3, 2014
As summer comes to a close and we head into September it is time to begin the year end tax preparations. September 15 is the deadline for the 3rd quarter estimated taxes. This is a good time to take a look at how your business is doing so far and how you expect it to do through the end of the year. I like to compare this year’s results versus last year’s results as well as versus our forecast for this year.
Once you have done the analysis for your own business purposes, it is a good idea to meet with your tax accountant, especially if your results are significantly different from the prior year and from forecast. You may need to adjust your third and fourth quarter estimated tax payments. You will want to make sure that you are taking advantage of any tax breaks available to you. You will also want to make sure that you are aware of any changes in tax laws that relate to you.
Often we see owners of S-Corps, particularly in the first year of the S-Corp, have not had enough withholding from payroll and will need to run a special “bonus” payroll with the bulk of the bonus going to taxes. Most of my clients would prefer to adjust their payroll for the last 4 months of the year instead of being surprised with this December 31 “bonus”. From the tax accountant perspective they prevent having additional fees and penalties, but from a business cash flow perspective this can be a cash flow problem that you were not expecting.
Don’t sit back and wait for the tax accountant to make suggestions to you. Take a proactive role and ask for their advice and suggestions.