Wednesday, January 15, 2014

When should you fire a client?

When is it appropriate to fire a customer?  It is a question most small business owners face and it isn't an easy one.  There are a few factors to consider: how much revenue does the customer bring in?  How much of the business' time do they take?  If you have this information, you can calculate the hourly rate the customer merits which you can then compare to other customers.  If the rates very significantly (the customer takes up much more time per dollar of sales than your typical customer) that may justify letting them go.

Another factor to consider is what revenue this client may generate for the business in the future.  If the client is apt to grow and need additional services down the road, it may be worth dealing with a lower ROI in the present.  If their need for your services is likely to remain the same, you may find it best to end the relationship.

One further thing to consider is the customer's influence in the community.  A business doesn't want to be held hostage, but it may pay to be practical and stay on the good side of a community benefactor.  Consider the goodwill this customer may bring as a marketing cost to lessen the sting!

There was an interesting article on calculating the lifetime cost of a customer.  Check out this article:

If you do decide to end a relationship with a client, try to make it as pleasant as possible. Don't make things personal and don't get emotional.  Do end things in person if possible and offer to help with the transition if you are a service provider.

Tuesday, January 7, 2014

What do you need to do to close your books at the end of the year?

January is drawing to a close and you should have enough information to close the books for 2013. We use a checklist for our clients to make sure everything has been entered and all accounts reconciled or verified. A brief checklist looks like this:

1. Verify that all vendor bills are posted by the end of the year
2. Invoice any customers for any work done in 2013
3. Review Accounts Receivable and determine if any need to be sent to a collection agency or written off as uncollectible
4. Review all loan payments to verify the correct allocation between interest and principal.
5. Reconcile
    a. Bank accounts
    b. Credit cards
    c. Accounts Receivable (compare the Balance sheet amount to the aging report)
    d. Accounts Payable (compare the Balance sheet amount to the aging report)
6. Create a list of 1099 vendors and calculate the amount due them.
7. File your 1099s
8. Adjust any prepaid items, such as insurance
9. Record any accruals for the year end for any other expenses which aren't included in Accounts        Payable or the credit card
10. Calculate and record depreciation and amortization expense as needed
11. Review asset and expense accounts to insure that all fixed assets have been recorded on the books
12. Prepare year-end reports: W2, W3, 940, 941, 1096, 1099, WT-6, WT-7, UCT101 and remit to the   appropriate parties
13. Review your financial statements for 2013: Profit & Loss, Balance Sheet, A/R aging, A/P aging,   Budget to Actual
14. Enter the budget for 2014 into your accounting program
15. Review your data backup plan for adequacy and clean up your paper files
16. Schedule your appointment with your tax preparer

Thursday, January 2, 2014

Happy New Year!

It is the beginning of 2014 and we hope 2013 was a good year for all of you.  It was a good year for both of us even though we had a lot of changes to deal with.  We had children finishing school (two high school graduates and one college) and children starting school (two college freshmen and one starting graduate school) and one applying to med schools.  Susan is learning to be an empty-nester and Beth is getting ready to have her youngest driving.

Business was good for E&S Entrepreneur Advisors, LLC and the business did not experience many changes, which was nice!  We have new clients, of course, but no major changes for us to deal with.  We are gearing up for our busiest month, January, when we help everyone close their books, file 1099s, file payroll forms and get ready for tax preparation.  We usually get a lot of calls from potential clients this time of year as business owners realize that they are not ready for tax time and will need help getting ready.  Our hope is to have all of our clients ready for taxes, both from an information and document standpoint and from a mental standpoint.  We like to help our clients avoid surprises like large tax payments due!

This is the traditional time to make resolutions for the new year.  We always set goals for ourselves as individuals and goals for servicing our clients.  What are your goals for the new year?