Wednesday, April 20, 2016

What small business owners struggle with: getting everything done

It is often said that small business owners wear many hats.  This is usually true, especially during the early stages of a business.  While it is a good idea to keep costs down during the start-up phase of a business, what many entrepreneurs fail to realize is that there isn't enough time in the day to do it all themselves.  I taught a class on entrepreneurship at our local technical college which walked the participants through the process of creating a business plan.  One woman planned to open a small coffee shop and hoped to do it all herself!  I had her estimate the time it would take to make the coffee, bake the pastries, clean the facility, do the bookkeeping, make the bank deposits, buy the groceries/supplies.....  She soon realized that one person could not do it all.  She had to build employees into the business plan.

Employees will cut down on the time a business owner has to spend on the task the employees will be handling once they are trained.  Notice the italics! The process of hiring and training employees takes time and a smart business owner won't rush this.  Employees who are a good fit for the job and are well trained in the tasks assigned to them will help a business grow and prosper.  Employees who are hired with little thought as to their fit in the company environment and are not trained properly can create chaos and frustration for both customers and the business owner.

Employees aren't the only solution to not having enough time in the day for the small business owner.  Using outsourced service providers can free up time and allow the entrepreneur to concentrate on income generating tasks and areas which require the owner's expertise.  Just like hiring employees, taking the time to find the right service provider is the key to successful outsourcing.

Using a calendar is a great way to stay on track.  Block in time for all the key tasks which need to be accomplished and try to stick to the "appointments" with yourself.  Make sure you make tax deposits/payments and filings a top priority as missing key deadlines can be very costly.

The variety of tasks a small business owner tackles is one of the things many people enjoy about being an entrepreneur.  The key to being a successful entrepreneur is knowing when it is time to delegate some of those tasks!

Friday, April 8, 2016

What do small business owners struggle with: Marketing

Many small business owners think marketing means advertising, but it really encompasses so much more.  Marketing determines how a business will promote, price, package and distribute its products or services.  Advertising is the media used to promote a product, service or event.

Taking the time to create a marketing plan before a business is launched is vital to the success of a start-up.  Keeping the plan up-to-date is just as important.  Many entrepreneurs try to save money when launching their business and try to create the marketing plan themselves. an expert is suggested but make sure to take the time to find the right marketing expert for your business.  Ask lots of questions and get a firm quote.  Developing a comprehensive brand at the outset is worth the money and can make a real difference in the success of the start-up.  

Once the marketing plan is set, the business owner may be able to execute the plan themselves.  Having the expert review the results with the business owner once a year is a good idea and allows for the refining and updating of the plan based on the results of the previous period.  

There is a great deal of advertising that can be done at a low price.  Facebook and LinkedIn ads can be targeted to a region or demographic and you can set budgets to keep the costs under control.  A marketing expert can help the business owner determine what their target audience is and what the best way is to reach them.  Many companies don't need to advertise on the radio or television or with a billboard, which are all costly.  They may been necessary, but it is important to make sure before the money is spent.  Having an outside party, like a marketing expert, give advise versus the sales rep. for the television or radio station will prevent the business from spending money on ads which don't reach their audience or are more costly than they need.

A small business can have the greatest product or service out there, but if buyers aren't aware of the company, it can't sell to them.  Unless the entrepreneur has a good background in marketing, it is a good idea to let an expert get you started right. 

Friday, April 1, 2016

What do small business owners struggle with: dealing with employees

One of my clients once remarked that employees are a necessary evil!  While most employees are not evil, dealing with employment laws and payroll taxes is a struggle for many small business owners.

How does an entrepreneur deal with employment issues if they don't have a human resources person?  Many of the payroll processors not only help with processing payroll and filing/paying payroll taxes but also provide HR services.  The following is a short list of companies providing payroll and HR services:
  1. ADP  
  2. BenefitMall
  3. Big Fish Payroll Services
  4. Ceridian
  5. Gusto
  6. Namely
  7. Operations Inc
  8. Patriot Software
  9. Paycor
  10. SurePayroll
  11. TriNet
In addition, the following companies provide just human resources services so if you are happy with your current method of dealing with payroll and payroll taxes, then this list will be of interest to you:
  1. Jumpstart: HR
  2. MMChr
  3. Namely
  4. ProHR+
We always recommend new business owners hire someone to get them started on the employer road.  Making sure you understand employment laws and complying with payroll tax laws is important to avoid penalties and interest charges.  Hiring an attorney to review employment and non-compete contracts, if they are necessary to your business, is a must.  Once a business is up and running as an employer, they may be able to manage the processing of payroll and filing of payroll taxes on their own, but paying for expertise at the outset is the best way to avoid headaches.  

Most entrepreneurs are required to handle a multitude of tasks, but knowing when to outsource and when to pay for expertise can make managing your small business easier.

Tuesday, March 22, 2016

What do small business owners struggle with: complying with regulations and laws

One thing most small business owners must deal with is the need to wear many hats when running their business.  It can be tiring and worrisome to try and manage all the different tasks without the necessary skills or training.

One way entrepreneurs can reduce the strain is to take advantage of the resources available to small businesses.  Their local SBDC (Small Business Development Center), the SBA (Small Business Administration) and their local SCORE office are the best sources of free or low cost assistance.  Their experts can point a small business owner in the right direction when dealing with the myriad of laws and regulations a company may need to comply with.  Employment laws alone keep many small business owners from hiring needed employees.  Sitting down with an expert from one of these resources can alleviate many of the concerns and enable the entrepreneur to take the necessary steps to becoming a successful and compliant employer.

Another way a small business owner can insure compliance with regulations is to use the expertise of an outsourced service provider like an accountant, an attorney or a human resources expert.  Using an expert such as this can help the business get set up correctly at the start and trained to continue compliance with employment, sales or other regulations.  Using an outsourced expert will give the business the skill set necessary to insure compliance without the ongoing cost of hiring an employee to handle the tasks.

The SBDC, SBA and SCORE offices often have local experts they can recommend to small business owners so if they exhaust the free resources, they have an outsourced expert they can hire. The following links can assist you in finding the appropriate resources in the State of Wisconsin.  If you are in another state, just search for the resources with your state's name tagged on!




Don't let the fear of regulatory compliance keep you from growing your small business.  Conversely, don't bury your head and avoid the steps needed to insure compliance.  The government takes employment issues very seriously so calling people contractors to avoid employment taxes is not the correct tactic to take.  Find an expert to help you manage the task of following all relevant laws and regulations for your business.

Thursday, March 10, 2016

What do small business owners struggle with: finding the right attorney or accountant

The success of a small business is dependent on many things with finding the right service providers being one key.  Here are a few things to consider when selecting an attorney and accountant for your business.

What type of work does the provider specialize in?  An attorney who works mainly on divorces or other litigation may not be the best choice to help you with contracts and employment issues.  A big CPA firm will provide you with all the advice and services you need, but if the billing rates are so high that you hesitate to ask the question, then that is not the right accountant for your company.  Asking what kinds of business experience the provider has is a good start as well as what specific industries or types of businesses they have experience with.  If you are a small manufacturer, finding an accountant who has experience with manufacturing will be much more helpful than one who only works with retailers and service providers.  You will want someone with an understanding of operations and margins and cash flow to assist you with running your enterprise.  If your business will have patents or copyrights, you will want an attorney with experience in those matters.  Asking for references is another good idea so you can talk directly with other clients of the accountant or attorney.

What rates does the provider charge? As stated earlier, if the rates are at an uncomfortable level for you, then you may be hesitant to make use of the accountant or attorney.

Are you comfortable with the provider?  You need to be able to talk with your attorney or accountant and feel like they are listening to you and understanding your concerns.  You don't want someone who doesn't take the time to hear all your concerns or ideas or who speaks condescendingly to you when responding to questions.  Take the time to talk with a potential accountant or attorney long enough to determine if you will feel comfortable with him/her.  If they are not interested in meeting with you as a potential client, then you know he/she isn't the right person for you.

You may not need to use the services of an attorney or accountant frequently, but you will definitely get better results if you do your homework ahead of time and pick the right one.  Check with your local SCORE chapter or Small Business Administration office for suggestions.  Talk to other business owners to see who they use and if they are satisfied with the service they receive.

Wednesday, March 2, 2016

What do small business owners struggle with: service providers

Most entrepreneurs or small business wear many hats, especially in the early days.  They can't do it all and finding good services providers to back them up is crucial to the success of the business.  While most hate to spend money on lawyers and accountants, the services provided by these individuals are very important.

Spending the money to have a lawyer review your lease, your customer contracts and employee contracts can save you money, time and frustration later.  Many new business owners are not familiar with all the terms in a lease and may not be aware that they will be responsible for taxes, maintenance costs and insurance as well as the regular rent and this can make a huge difference in their monthly expenses.

Having an accountant set up your accounting system and helping monitor your cash flow is also key to the success of a new business.  I can't tell you how many times a start up is aghast when they finally get their accounting set up and realize how much money they have spent on networking or packaging or office supplies.  Just keeping an eye on the checking account balance isn't the same as knowing exactly what you are spending the money on.  Getting the accounting set up before you start the business means you will be able to compare how you are actually spending the money to your budget or business plan.  A good accountant can spot potential cash flow issues before they arise and help the business owner make adjustments to avoid the problem.

Hopefully this has helped persuade any potential entrepreneurs to find a good attorney and accountant before they open shop and encourage existing small business owners to find good service partners as well.  Next week we will discuss how to find the right attorney and accountant.

Wednesday, February 24, 2016

What do small business owners struggle with : How to deal with cash flow Part 2

We are working our way through a list of things small business owners struggle with the most.  Last week we talked about how cash flow can be a struggle and this week we are going to talk about specific things you can do to improve the cash flow for your business.

The key elements to cash flow are inflows and outflows: Inflows can occur as follows: sales=cash or sales=accounts receivable, collecting accounts receivable=cash.  Borrowing money from the bank either in a loan or a draw on a line of credit=cash. Putting your own money into the business, either as a loan or as equity=cash. Selling assets you don't need (equipment)=cash. 

Outflows occur when you are spending money: make a loan payment or pay down your line of credit=money out the door. Buying inventory=money out the door.  Buying equipment=money out the door.  Paying employees and other bills=money out the door.  Taking a draw for yourself=money out the door.

How can you impact your cash flow?  Increasing sales will bring more money in the door.  Collecting your accounts receivable faster will bring money in the door faster.  Having a line of credit to pay for inventory will slow the pace of money going out the door.  Getting terms from your suppliers or the equipment vendor will also slow the pace of money going out the door.  

A great way to control cash flow is to try and match the terms you get from your suppliers with the terms you offer your customers.  If your suppliers give you 30 days to pay for your inventory, then you can offer 30 days to your customers.  If your suppliers give you 15 days, you don't want to give your customers 30 days unless you have a line of credit to cover the gap.When you are considering buying new equipment, think about the impact on your cash flow.  Even if you get a loan to pay for it or the vendor gives you terms, you will still have money going out the door at some point so you want to make sure the new equipment will somehow generate some money coming in the door: will you make more sales because of the purchase?  Will your costs (labor?) go down because of the purchase? Will the quality of your product improve so you can raise prices which will bring more money in the door?

Many entrepreneurs focus simply on profits and that can be a real issue if the business has inventory or accounts receivable or a long manufacturing process.  Mapping out the pace with which money comes in and money goes out is the secret to success for a small business. 

Thursday, February 18, 2016

What do small business owners struggle with : How to deal with cash flow

We are talking about the top things small business owners struggle with and this week the subject is cash flow.  We will start by talking about what cash flow is and then next week we will talk about how to manage cash flow.

Small business start ups are often not expected to be profitable in the first year of operations, however having adequate cash flow is of paramount importance. A well written business plan is the first key to insuring adequate cash flow for a start up.  After the start up phase has passed, the small business owner still needs to keep a close eye on cash flow.

What is cash flow?  Cash flow is the difference between the pace with which money comes into the business and the speed with which it leaves.  This differs from profitability due to several factors.  A business can be operating at a loss but still have enough cash coming in to survive due to proper financing.  This is true during the start up phase but can also be true during times of expansion or economic hardship or seasonal issues. Many retailers operate at a loss or at break even until the holiday season. They need to purchase inventory before the holiday season, but they won't see the money from the sale of that inventory until later.  Obtaining extended terms from a supplier or using a line of credit from a bank is an example of managing cash flow. Conversely, a business can be profitable and still run into cash flow issues. A business going through a period of rapid expansion may see this occur.  They are purchasing inventory or new equipment or added staff to handle the sales growth but the cash flowing out for the purchases may outpace the increase in revenue.

There is a popular saying in the business world "cash is king" and cash flow is a prime example.  Next week we will dive into ways to manage cash flow.

Tuesday, February 9, 2016

What do small business owners struggle with most?

Being a small business owner is a difficult endeavor and the issues vary from business to business.  Here are a few common issues which we will address over the next few weeks:

  1. Understanding, managing and improving cash flow
  2. Finding good outsourced service providers such as accountants and attorneys
  3. Keeping up with laws and compliance issues
  4. Dealing with employees if you don't have human resources person
  5. Developing and maintaining an ongoing marketing strategy
  6. Prioritizing tasks and delegating
Are there any issues I am missing?

Wednesday, February 3, 2016

Avoiding tax hassles in January.

We are still alive here at E&S Entrepreneur Advisors LLC!  It was a hectic couple of months so no time for blogging.  We got all the payroll taxes filed including all the W2s.  The State of Wisconsin changed its requirements so we had to submit the W2s to the SSA by the end of January instead of the end of February as the State required employers to submit the W2s to them by the end of January and it has to be the SSA file.  That added a lot of work for us in January.

We also ran into some snags with 1099 filings as the State of Wisconsin has obviously tightened its screening of 1099 submissions.  What we ran into was the EIN or Wisconsin ID numbers and business names on the 1099s not matching the State of Wisconsin's records.  A few of these were typos on our part which we corrected at no cost to the client, but several were due to the names in the state records not being accurate.  We have several clients who set up their own My Tax Accounts for the state and did it in their personal names instead of their business name.  When we filed the W2s or the 1099s, the state kicked them out because the names didn't match.  We will be working with our clients to fix this, but a lesson for all you new entrepreneurs out there: get expert help setting up your tax accounts.

We also ran into some issues with the W9s our clients have for their service providers.  For years, sole proprietors and single member LLCs obtained EIN for their businesses so they wouldn't have to use their social security numbers on the W9s and other official documents. This was a great way to prevent identity theft.  Unfortunately, the IRS wants to match the dollars on the 1099s to the dollars reported on income tax forms and the numbers used on the income tax forms for sole proprietors and single member LLCs are social security numbers.  So, all you sole proprietors and single member LLCs and all of you who collect W9s from them: they must have the person's social security number on them and that is the number used on the 1099, not the EIN.

For all you newbies: a W9 is a document which lists your name, your business name, address and tax ID number.  It is used for a business to business relationship much like a W4 is used in an employee-employer relationship.  A business is required to send a 1099 form to the state, the IRS and the individual to whom the business has paid $600 or more for services in a year. Service includes rent which many are not aware of.  This must be sent to any provider who is not a corporation so that is why the W9 is important and it is important that it is filled out correctly and completely.  You don't need to send a 1099 if the service provider is an S Corp or C Corp but you do need the W9 on hand to show that is why you didn't send one.  Another tip: this only pertains to providers you paid via check, cash, ACH transfer, bill pay (money came directly out of your bank account).  If you paid with a credit card, you don't have to send the 1099 so if you don't want to bother with 1099s, pay with a credit card!  The best time to get the W9 is when you owe the provider money-tell them you can't pay them until they provide the W9.  That will give them the motivation to provide it to you.  Make sure you look it over and verify that it is a social security number if necessary instead of a EIN.  Social security numbers are 999-99-9999 while EIN are 99-9999999.

Any questions: just ask an expert like us.