Finance and Accounting
Bartering is a tried and true (and ancient) business practice. It is still commonly used in many countries in every day business interactions. For whatever reason, it is not as common in the U.S. but this doesn’t mean it should be forgotten altogether!
If your small business is still afloat but you find yourself short on cash, give bartering and honest look. There are many barter exchanges which you can join and here’s how it works:
Step 1: Research the barter exchanges. Like I said there are a lot out there so do some research and pick the one you think will best suit you based on other members and how much you want to pay to join. You can find lists of these exchanges at nate.org , irta.com or itex.com .
Step 2: Join your chosen exchange. There are a wide variety of membership fees out there. Some have a one time fee of $800 for new members while others charge a much lower monthly fee in the $10 to $30 range. In addition to the fees, there can also commissions involved which, if you are a low-margin business, would make bartering a money losing venture. Run the numbers and find out.
Step 3: Barter away! You will receive "barter cash" for your and work you do/goods you offer which will be good only within the exchange you join.
Keep in mind these important factors (compiled by BusinessWeek.com ) when getting involved in a barter exchange:
Joining an exchange does entail costs, including fees and commissions. If you run a very low-margin business, those commissions may make bartering a money-losing proposition. Every business will want to limit its barter business to 5% to 15% of total revenue so that cash flow remains at healthy levels, says Ron Whitney, executive director of the International Reciprocal Trade Assn. (IRTA), a Rochester (N.Y.) nonprofit that promotes barter. And if you are bartering one-on-one, be careful. Misunderstandings can arise if you don’t have a formal contract. Then there is the IRS: Barter deals have to be treated like regular cash sales in federal and state filings. If a business owner uses barter services for personal reasons, the cost of the item is considered compensation on your income.
If anyone has tried this, I’d love to hear how well you think it works?
Tags: Accounting, barter, bartering, Business, cash flow, finanance, money, small business
Posted on May 27th, 2008 in Finance and Accounting | No Comments »
Crude oil prices are up 16% already this year and show no signs of slowing down. So without further ado and straight from the dailybreeze.com here are 10 great tips on how small businesses can deal with the soaring gas prices:
1. Add a separate fuel fee. Call it a fee, call it a surcharge - call it whatever you want. But more and more small businesses are tacking on a special charge to offset the cost of gas. Customers may not be happy, but most understand since they’re dealing with the same situation themselves. They don’t expect small businesses to absorb gas price increases forever.
2. Restructure your pricing or territories. Some businesses are restricting the areas they serve, or charging more to go out of area. Others are raising minimum charges or putting tiered pricing in place to compensate for having to travel greater distances.
3. Use an outside shipper. Small businesses that once delivered small supply orders themselves are finding it cheaper and more efficient to send things via UPS or the postal services. In many cases, items arrive in just a day or two. Shipping services Web sites such as RedRoller.com can help you find the lowest-cost carrier.
4. Leverage the Web . Show customers how buying online and by mail order can save them money by not having to visit your location. Use Web-based collaboration sites to "meet" with clients, freelancers, partners and others rather than meeting in person. A few choices include Zoho , Basecamp and WebEx .
5. Hop into a hybrid. A few years ago, there were only a couple of hybrid models to choose from. Now there are dozens, including SUVs and vehicles suited for small-business needs. Even if you don’t get a hybrid, lighter-weight vehicles and those with smaller engines may be far more fuel efficient than what you have. If you plan to switch, a great place to compare fuel efficiency information is at FuelEconomy.gov .
6. Charge by the mile. If your business or profession allows for it, a per-mile charge might work best. This allows for small adjustments whenever needed. The standard IRS mileage rate for 2008 is 50.5 cents per mile, up from 48.5 cents in 2007.
7. Drive less. Have your suppliers deliver items you need to your business rather than picking them up yourself. Use online map-routing services like MapQuest.com to plan service and delivery routes better, for maximum fuel and time efficiency. Group jobs together to reduce travel.
8. Get rebates on gas purchases. Gas rebate credit cards are increasingly popular with small businesses and can net you cash back of up to 6 percent on what you spend. The higher fuel prices go, the more you get back. Just be sure you pay the bill on time, or interest charges will more than eat your savings. Find gas rebate cards at CreditCardGuide.com or PumpandSave.com , which currently lists the Discover Open Road card as the best deal with 5 percent cash back on all gas and auto maintenance.
9. Find the cheapest gas. While it doesn’t make sense to drive far to save a few pennies, there can sometimes be a surprisingly large price difference just a short distance away. GasBuddy.com and GasPriceWatch.com are two Web sites that specialize in helping find the cheapest gas in your area.
10. Follow fuel-efficient driving tips. You’ve probably heard them - avoid jackrabbit starts; keep tires properly inflated; run air conditioners less, keep vehicles tuned and air filters clean, etc. WikiHow.com has a long list of ideas for "How to Save Money on Gas." Search the title at the site.
For more tips check out Oil prices are going up–ways to cut down on the business energy bill and Little Cost-Cutting Tips that Add Up to Big Savings.
Tags: economy, gas prices, small business, Tips
Posted on April 22nd, 2008 in Finance and Accounting, In the News | 1 Comment »
How would you feel about hiring an accountant who puts the interests of the IRS before those of you or your business? What’s that you say? You wouldn’t like it? That’s what I thought you’d say…but what if I told you you had to?
Unfortunately, that may be the case.
(I mean, I won’t force you to but a much stronger influence might…what was their name again?…..oh right! The Government.)
The Small Business and Work Opportunity Tax Act of 2007 stipulates that those who prepare returns containing an understatement of tax due - which the preparer "knew or reasonably should have known" - will be subject to penalties amounting to "the greater of $1,000 or 50% of the income" the preparer received for that particular federal return.
The act also expands the definition of tax-return preparer to cover those handling any federal return, including those for estate, gift, excise, and employment tax.
According to a recent Fortune Small Business article there are a bevy of downsides to this new legislation including:
- The act has the potential to injure the close personal relationships many small businesses maintain with their accountants.
- Smaller businesses may need to prepare more documentation than previously required. In turn, accountants may be less apt to take clients at their word.
- In some extreme cases, accountants may ask for far less data, hoping they will be less liable the less they know, which would put more of the legal burden on entrepreneurs.
So it sounds a bit like intimidation doesn’t it? And it would appear that the government would end up with a lot of free (and somewhat covert) auditors. How do you plan to handle this new legislation? Are you going to write your congressman? Did you even know this tomfoolery was afoot?
And for those of you who do end up getting audited this tax season (for real) check out How to Survive an Audit of Your Business- And Live To Tell About It
Tags: Accounting, Finance, government, legislation, small business, taxes
Posted on April 10th, 2008 in Finance and Accounting | No Comments »
One of the most difficult parts of owning and running a business is collecting on accounts receivable. While nobody likes to be the bad guy, you need to have an established procedure to collect the money your company is owed.
The first and most important part of your accounts receivable process is to decide just who you want to extend credit to. With credit cards, debit cards, and EFTs, the customer who needs to have credit really must demonstrate a need for you to establish a line of credit for them.
While you want your company easy to do business with you also are in business to make money and if someone has questionable credit the chances are everyone they try to do business with is going to make sure they can collect the money they are owed.
There are many different agencies you can use to establish credit and usually you can do it online within the same day they apply. Again, the best policy is to collect from you customer at the time you ship goods to them, just like when you buy groceries or have your car worked on. Payment is expected at the time of service.
If you do elect to extend credit make sure you have a credit policy that is signed by your customer prior to extending them credit. Spell out all of the terms including when amounts are due, how much of a finance charge you will levy on balances past due, and under what circumstances you will revoke the credit you have given them.
Ensure that in your credit policy you discuss the collection process and how you will proceed should they become seriously overdue. You don’t want to have surprises when you get to the point of having to collect.
When a customer begins to fall behind in payments it is important not to procrastinate. You need to get all over accounts receivable asap and as the owner or manager of a business make sure you are intimately involved in the details of accounts receivable, it is profit sitting there waiting to be collected or written off.
If a good paying customer falls behind just give them a call and see how things are going. It’s possible they made a mistake and misplaced an invoice or have had a change in bookkeeper or some other legitimate reason. It is also possible they had a bad month and are struggling and the chances are if they have been a good customer they will be very honest with you.
While you don’t want to carry a customer if you jump on the receivable early you can have the opportunity to be a hero and gain a customer for life. If you work with a customer who is having a rough patch, when good times return the chances are they will repay your loyalty and remain loyal to you.
Be careful however to not place your business at risk based on trying to work with a customer, you are in business to make money, you aren’t a bank. While the analogy may be old, try buying groceries and telling the checker you’ll pay tomorrow after you sell a couple of your products. The chances are pretty small they will carry you even for a day so be very careful who you choose to "carry" in your business.
Tags: Accounting, advice, collecting payment, Finance, non-paying customers, Sales, Tips
Posted on April 8th, 2008 in Finance and Accounting, Generating More Sales | No Comments »
It ranks right up there with getting your wisdom teeth pulled or surviving the first anniversary of your 29th birthday (for those who haven’t had their coffee yet, that would be your 30th birthday-the horror!). And yet, much like getting your wisdom teeth out (probably inevitable) and turning 30 (definitely inevitable), if you run a business, odds are you’ll eventually have to deal with the unpleasantness known as a lawsuit.
Your best defense is a good offense and you can create a good offense by taking some preventative steps to reduce the risk of being threatened with a lawsuit according to a presentation covered by the Beaufort Gazette recently:
• Rule No. 1: Incorporate. Going alone often provides poor asset protection and poor tax benefits. Have an attorney or accountant review corporate records once a year.
• Rule No. 2: Know the law. Ignorance is no defense, and in fact it’s a good way to get sued. Small-business owners should particularly focus on employment and tax laws. Good record-keeping and proactive tax planning are key.
• Rule No. 3: Maintain adequate insurance. Conducts an "insurance physical" every few years. Business owners should be aware that it’s possible to be over-insured. Employment-practices liability insurance can help businesses respond to claims of employment discrimination.
• Rule No. 4: Manage fairly and wisely. Business owners should beware of falsified résumés, have detailed job descriptions, tackle poor performance early and consistently enforce policies.
• Rule No. 5: Prohibit harassment. A 2007 Texas case indicates "some male supervisors are still truly clueless." Case in point:
A male director of nursing was accused of quizzing female employees about their sex lives two to three times a week in front of other employees, including asking them if they took men home the previous night. When the women asked him to stop, he threatened to fire them.
At trial, he admitted he was questioning the women this way because he thought that if they had a lot of sexual activity the night before, it would affect their work performance because they would be tired — that’s what he said. I can’t believe this case even went to trial. The jury awarded each woman $7,500.
• Rule No. 6: Catch and correct wage and hour violations. Failure to pay overtime is "the new food for plaintiffs’ attorneys." Since 2003, federal court filings involving wage actions have surpassed employment discrimination cases, and settlements have reached into the tens of millions of dollars.
• Rule No. 7: Be careful with independent contractors. Conduct regular reviews of independent contractor classifications and careful consideration of how much control business owners have over contractors.
• Rule No. 8: Watch out for workers’ compensation claims. Adequate training and maintaining a drug-free workplace can prevent accidents. If they do occur, immediately reporting claims and having a return to work commitment helps. Signs of possible fraud include claims by a disgruntled or new employee, an employee on leave who is difficult to contact, or accidents to which there are no witnesses.
• Rule No. 9: Hire an attorney. Interview several before making a selection, and hold regular meetings to compare case progress with budget constraints and requiring authorization for expenses exceeding $200.
• Rule No. 10: Document, document, document. Keep tax-related records for at least eight years, employee records for the term of employment, plus five years, and shred papers before disposal.
SmallBusinessNewz.com also has prepared this short video clip with a few more tips the keep you "out of the the dog house."
Tags: Accounting, Finance, law, lawsuit, legal, small business, taxes
Posted on March 24th, 2008 in Finance and Accounting | No Comments »
Your business has to advertise in order to stay competitive, and every dollar spent must have a favorable return-on-investment (ROI). How do you ensure your marketing dollars are being spent wisely? Here a few tips to help you stay on track.
New customers are the lifeblood of every business, but your current customers are even more important. The old adage that it takes more money to get a new customer than to retain one still holds true. Be sure a portion of your ad dollars are being spent on your current customers. Something as simple as a monthly newsletter can help to generate goodwill for your company and ensure repeat business.
Be sure you are using the web effectively. A beautiful website that is not marketed properly is just a beautiful website and nothing more. It serves no purpose and does not bring in revenue. Make sure your web marketing program is geared toward reaching your target market. If you use pay-per-click advertising, make sure you have researched your keywords thoroughly. Do not get involved in a keyword war where you are trying to outbid other sites. It is a waste of money and time. Find lower priced keywords and optimize your site for those.
Know your customers. You should spend a portion of your marketing dollars conducting research. You need to get to know to whom you are selling and their preferences in order to meet their needs. A simple survey at checkout or a paper survey can provide valuable insight into their needs. Polls on your website are also an easy way to gather this information.
Your current customers are your best salespeople and should be treated as such. Spend a portion of your marketing dollars on creating referrals. Starting a referral program that encourages and rewards participation is the key to success. Offer incentives for referrals and watch your business increase.
Be wary of gimmicks. The balloon-animal clown was not such a good idea after all. Sure, you received a few glances and maybe even a few sales, but once the clown is gone, all that is left is you and your reputation. Consistency is the key to success in marketing. Instead of a clown, try a coupon.
Go co-op. Cooperative advertising is a great way to save money or reach more people for the same money. Try partnering with a complimentary business to send out postcards or mailers. For instance, if you own a landscaping company, partner with a local nursery.
Community involvement is an easy and often inexpensive way to market your business. Find ways to volunteer your time, money, products, or services and you will find something more rewarding than profit. It will pay great dividends for you and your company.
Know your market. By narrowing your focus to your target market, you are ensuring effectiveness and cost efficiency. Define your market and refine your marketing techniques to reach them. That is the key to effective, cost efficient marketing.
By following these tips, you will realize a greater return-on-investment in your time and money spent on marketing. Be creative and never be afraid to step out from your comfort zone. Clowns however are the exception.
Tags: Accounting, advice, Finance, Jay Watkins, Marketing, small business, Tips
Posted on March 21st, 2008 in Finance and Accounting, Marketing Your Business | No Comments »
For years now, consumers have enjoyed the benefits of being able to use their Visas, Mastercards, American Expresses, etc. practically anywhere there are things to buy. Consumers sign up for credit cards to pay off other credit cards and with the ease and accessibility of online shopping, the credit industry is booming.
What consumers don’t know (or didn’t) is that the cozy relationship between merchants and credit card companies, isn’t really all that cozy. Up until now, credit card companies have imposed what is called an "interchange" fee on merchants every time a consumer uses a credit or debit card to make a purchase. These fees are calculated independently by the credit card companies and are effectively hidden from the consumer who also ends up paying the fees in the form of product mark ups. The average cost per household is $350 a year. The total amount of interchange fees Visa and Mastercard collected in 2007? $42 billion.
Well, now congress is involved and things are looking up for merchants and consumers alike. Last week, House Judiciary Committee Chairman John Conyers, D-Mich. introduced the Credit Card Fair Fee Act. This proposed legislation according to the National Retail Federation website (who is, in fact, leading the campaign for the approval of this legislation):
"The Conyers bill would require credit card systems possessing “substantial market power” to negotiate with merchants to reach a voluntary agreement on credit card terms and conditions. If an agreement cannot be reached, both sides would be required to submit to binding arbitration by a three-judge panel appointed by the Department of Justice and Federal Trade Commission.
The arbitration proceedings would take place with a limited 60-day discovery period and other statutory deadlines, and the judges would be required to apply a market standard reflecting a perfectly competitive system where neither side had market power. Terms and conditions set by the panel would be in effect for three years, at which time the process would repeat itself. Both sides would receive limited immunity from antitrust laws in order to participate in the process.
The legislation requires that terms and conditions set under the process be available to any merchant regardless of size, industry or location. Individual merchants or groups of merchants would remain free to negotiate voluntary arrangements with credit card companies and their banks."
The legislation is coming about in response to a hearing in July 2007 where the NRF argued that the credit card interchange fees violate antitrust laws. If it goes through, consumers and businesses alike could see an impact on how much money they save. Stay tuned…
Tags: Accounting, congress, credit card, Finance, legislation, news
Posted on March 11th, 2008 in Finance and Accounting, In the News | No Comments »
There are a number of very good accounting software applications that you can buy and install on your computer. These are tried an true programs that are specifically designed to make your life easier when it comes to keeping the books.
But what if I told you that it could be even easier ? That’s right. You can save time (and maybe a little money) by using online applications to do your finances.
FreelancerSwitch reviews 7 of these bad boys so check em out!
Tags: Accounting, accounting software, ebusiness, ecommerce, FreelancerSwitch, tools
Posted on February 29th, 2008 in E-Commerce and E-Business, Finance and Accounting | No Comments »
Attention all small businesses (50 employees or less, that is)!!!
Microsoft announced at the beginning of February, they will offer further discounts to small businesses on their software. The original plan, called the Open Value Subscription program offered special services and features to small business owners but the new plan will help cut costs even further with up front discounts and flexible payment systems. The plan will cost about a third of the license-only expense currently available to small businesses.
Along with the new licensing aspect, they are also offering a partner program called "Big Easy " that will give money back to small businesses who buy products from specific partners that they can, in turn, use to buy other products later on.
Sign up for the program begins in March so put it on your calender!
Tags: Accounting, Finance, microsoft office, Small Business Resources, Start ups
Posted on February 28th, 2008 in Finance and Accounting, Starting a Business | No Comments »
Starting a business doesn’t have to cost a fortune. Many people have a head full of know-how and great ideas, but avoid taking on a new venture thinking there is no way they can get the capital needed to get things going.
The truth is that you don’t have to be a Rockerfeller to start a business. In this article, we’ll take a look at a few businesses that you can start with little to no money - and how to find the customers to keep the cash coming in.
Start With What You Know
Intellect is a great asset - and a valuable one, if you know how to sell it. What do you know? Are you an expert in any particular area? Is there something you know how to do better than anyone else?
A great indicator of this is if there is something everyone is always asking you to do for them, or show them how it’s done. This is a saleable skill.
Selling Information
If you don’t necessarily want to be the one doing all the work all the time, you may instead want to look into ways to sell information that everyone wants. If it’s a craft that you are good at, you may want to talk to your local craft store about teaching classes. They will do all the work of getting people together, and you can go in, teach, and get paid handsomely for it.
Another way to sell information is to create a how-to book that you sell at craft stores or online that will teach people your skill, step by step.
For more, read our recent article on selling information products .
Selling a Service
If you enjoy a hobby you have, why shouldn’t you sell the items you make? If you are the one everyone comes to when they want a special present wrapped, why not charge for the service. You could become a professional gift wrapper, or just sell beautiful hand-made bows that people can attach to their own presents.
You may be surprised at just how busy you will get at Christmas time when people are purchasing all those last-minute gifts and don’t have time or inclination to wrap them.
Consulting
If you have a background in a particular field and know it better than most other people, you can start a consulting business.
Whether you used to be a VP of a large business and are offering business consulting, are a CPA and know taxes and accounting inside-out, or have worked in emergency management and are doing crisis consulting, there is someone who wants - and will pay for - your services.
Getting Customers
No matter which route you go with these businesses, there is one thing you need to be successful in each of them - customers.
This may be the only area you will have to spend a modest amount of money to start your business. You will need business cards that you can hand out. You may also want to put a small ad in the newspaper, letting people know about the service you are offering. However, to keep your costs down, you shouldn’t spend too much on either of these options.
Next, you need to network. Go to where the people who need your services will be and let them know you exist.
Remember, with these businesses, what you are really selling is you. By getting out and letting people know who you are and what you offer, you are being your own best marketing tool.
Tags: Accounting, advice, Finance, raising captial, start up cash, Start ups, Starting a Business, Tips
Posted on February 27th, 2008 in Finance and Accounting, Starting a Business | No Comments »
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