Monday, January 24, 2011

Work With Purpose in 2011

You've vowed it before, but 2011 is going to be the year that you begin to work with purpose as you manage your business. Setting goals is an important part of continuously improving your business. It allows the business owner and their employees to be proactive rather than reactive in their dealings. The specific goals for 2011 should align with the long-term strategy of the business. Below are several keys for setting business goals.

1. Goals should be relevant. That is, they should be something that somehow ties into your strategy.

2. Goals need to be actionable and measurable. It is not specific enough, for example, to state a goal of improving customer service. You need to understand how to improve customer service and state your goal in those terms. For example, an acceptable goal for improving customer service is to reduce project turnaround time by 3 days. You will then need to track and measure past and future project turnaround time.

3. Goals should have a time line assigned to them. If the time line is a longer period of time, the goal should also have benchmarks. For example, if the goal is to increase sales by $40,000 by December of 2010, then you might set a quarterly benchmark of $10,000 to track your progress toward the goal.

4. Goals should be reasonable. Goals that are completely unattainable serve no purpose toward improving your business operations. They only lead to frustration.

Goals are usually focused on generating greater profits so they are often developed in the areas of customer service, sales, improving operational efficiency, and improving employee competency.

Don't work another day just reacting to business. Put your goals in place before the end of the month and move your business forward with purpose in 2011!

Thursday, January 13, 2011

Perceived value in a tough economy

I was at an advisory board meeting for the Better Business Bureau today and we were discussing perceived value.  We were talking about the reasons some businesses chose not to renew their accreditation with the BBB and it came down to perceived value. 
With many small businesses continuing to struggle financially, owners must make hard decisions on where to spend money.  Some areas are not negotiable-insurance and rent must be paid as do employees.  Other areas are not as obvious such as memberships or dues.  Accounting often falls into the same category-lacking perceived value. 
Beth and I have been fortunate to retain all our clients through the last 2 years, but we often run into the value question when we are meeting with perspective clients.  They know they need help, but the idea of the accounting bill can be hard to swallow.  Those businesses who do retain us do come to see the value of our work which is why they remain clients.  We make sure to post their recommendations and testimonials on our website and on Linked In so potential clients can see what people have to say about our work. 
My husband often finds himself in a similar situation.  He is the sales manager for a local business which is fortunate to have over 50 years of quality products and service to their name.  Despite this sterling reputation, they often find businesses interested only in the bottom line-they want the lowest bill or the cheapest alternative and not the best value.  Again, it is a question of perceived value.  There may be other businesses that provide a cheaper product, but the buyer may find that the quality is lower and the maintenance higher and in the long run, the overall cost to the business will be higher.  Some individuals find this concept difficult to comprehend upfront. 
Any ideas on how to combat the question of perceived value?

Wednesday, January 5, 2011

What needs to be done now that the year is over?

Happy New Year! The end of a year brings several things that business owners need to accomplish. Whether you do the work yourself or  your accountant helps you, the following list will help you to be sure that nothing is forgotten. 

1.       By January 15, 2011, anyone who has been paying estimated taxes needs to pay the final installment for 2010. This is sent in on Federal Form 1040-ES and for Wisconsin business owners Form WI 1ES.

2.       By January 31, 2011, 1099 Forms need to be sent to all service providers who are not taxed as corporations and you paid more than $600.00 in 2010. They must also be sent to any lawyers regardless of the amount that you paid them. For 2011, make it your policy to have all service providers fill out a W-9 before you pay their bill. That way you are sure to have their information come tax time next year.

3.       By January 31, 2011, W2’s need to be sent to all employees. Other payroll reports and returns that need to be completed by this date are the 2010 4th Quarter Federal Form 941 or annual Form 944, Federal Form 940, and for Wisconsin the 4th Quarter Form WT-6 and Annual WT-7 as well as the 4th Quarter UCT101 for the Department of Workforce Development. If you have not been paying in monthly or quarterly, payment will be due with these returns.

4.       By January 31, 2011, the sales tax return for either the month of December, the 4th quarter of 2010, or the entire year of 2010 is due depending on your sales tax filing status.

5.       Your Financial Books need to be reviewed for accuracy and completeness. Below are several areas that are critical to look at before you close your year:
a.       Accrue any year-end costs associated to payroll in 2010 which were not paid until 2011.
b.      Ensure all vendor bills are posted by the Dec. 31, 2010 date.
c.       Ensure all clients are invoiced for 2010 business.
d.      Adjust any outstanding receivables that are considered uncollectible against bad debt expense. Verify that all receivable reports are accurate and equal the Accounts Receivable account balance.
e.      Verify that all accounts payable reports are accurate and equal the Accounts Payable account balance.
f.        Reconcile all bank accounts, savings accounts, credit card accounts, and loan accounts.
g.       Conduct a physical inventory count and record adjustments.
h.      Adjust any prepaid items that need to be expensed.
i.         Calculate and record amortization and depreciation.
j.        Review asset and expense balances to ensure that all fixed assets have been accurately recorded. Also verify that the detail for assets is recorded in a fixed asset ledger.
k.       Adjust any prepaid deposits to earned revenue.
l.         Print and review year-end reports.
m.    Back-up your data.