A Final Post

I hope everyone had a wonderful holiday and took time to appreciate what they had and gave thought to things that really are important and matter.

Although the adventure of creating a blog has been fun, because I have not received any comments good OR bad, no thoughts from anyone else, even when I have specifically asked for them I have decided to end my blog and put this energy into building my business.  With the new year beginning it is a very busy time and also a time to plan goals for 2011 - remember, without the map you don't arrive at your destination.

I want to thank all the folks that have been reading my posts and wish all you the very best for the year to come!

What to do during the holiday distraction?

Have you noticed how trying to conduct business now is almost impossible?  I had a meeting today and the person didn't show up.  Not because they were being rude but because they were focused on the North Pole ... Christmas, shopping, making sure everything was perfect for their family.  Ugh...

Keep up the fight!  Although some of you may be distracted by the same theme, don't forget to use this 'in between' time to catch up on your list of follow-up items, letters that need to be written and your game plan for 2011 and how you're going to get the business, grow your business and make sure you are clear and concise in how you sell your product or service.

It's a time for you to build momentum by knowing that you are poised and ready to go for the new year.  Remember, next week won't be any better because people have New Years on their minds and the potential parties they may attend.  It's just two weeks of no serious business that provides all of us self-employed, business builders with free time to re-group, revise and put together new strategies.

Use this time wisely and productively and don't forget to assess how your efforts turned into business.  That's an important part of being a good business owner.  You always evaluate, get feedback and make the necessary changes as you move forward.

Happy Holidays to All !!

Customer Satisfaction...or not

Something we all want is customer satisfaction.  Customers are the reason we are in business.  Whether you are a consultant or a retail business or an artist or writer...you are doing what you do (because you love it..hopefully) and ultimately you are hoping someone else will too so it is important that you place "value" on your customer to be sure your attitude matches.

It has always been interesting to watch clients manage their customers.  Some work very hard to provide high quality products and services and get very few complaints.  They are enthusiastic about their business and value their customers.  In fact they proactively seek out feedback so they can continue to provide top service or products.  However, there is a fraction of businesses that perhaps have gotten tired or are struggling and their anxieties & fears come through when their customers complain.  I have witnessed business owners getting very angry and critical of customers who dared to complain or voice dissatisfaction.  They respond in a combative manner and suggest to the other employees that the customer is the "real problem" - this is never a good sign on many levels.  Note to reader:  if you find yourself feeling this way about your customers...it's a good time to step back and consider talking with someone about these feelings.  It means that there's something else going on that needs to be addressed.

Some customers or clients are absolutely demanding and hardly enjoyable to deal with but there are ways to manage these people and create a win-win result.  In some cases it may be time to fire a customer because no matter how hard you try they are not going to be satisfied.  The key is to know when you've reached this point.

Here is an article that will hopefully be helpful to you with customers issues Handling Customer Complaints.  It's always good to consider the many options available and to check your own attitude regarding these ideas.  Remember, getting a good result has as much to do with your personal feelings and attitudes as it does with the person in front of you complaining.  Remember, it is a good thing that they came to you because they are giving you the opportunity to fix the problem.  Unfortunately for every one that comes to you there are probably some that don't but if you  'listen & learn' from these folks, you are minimizing further issues going forward.

No one cares as much as you do -

If you've been working hard, trying to make contacts, networking like there is no tomorrow and expect that others are going to care as much as you do about building your success, stop now...NO ONE cares as much as you and probably no one is thinking about you or your business like you are.

I've joined a networking group and have met some great people who have very successful businesses.  They're established and doing well, even in these economic times.  One in particular has more business than expected in a time that is usually quiet.  She is a wonderful individual who has built a very successful business.  But she cares the most about it's success.  Another man has the same thing going for himself.  He's a wonderful person who has worked hard to build a successful business.  Like the other, he values his customers and employees and both know it but no one cares as much as he does about the success of his business.

Networking is an art and process that almost takes on a life of it's own.  In some respects it's another 'job' that people do in order to get customers.  It's really about building relationships that may, over time, MAY result in a business connection but it's not necessarily the way you're going to build you business base.  

In my recent experience I've not gotten any referrals but I've met many wonderful and qualified professionals.  This is always a good thing but on a few things that I've asked for help on, the responses didn't come.  How many times do you follow up and remind people before it becomes a futile attempt?   This is what I mean about 'No one cares as much as you do.'

People are well intentioned but busy.  Everyone is trying to focus their energy on keeping the business they have and building from that so they are not thinking outside their box - they are focused in their box so they can sustain themselves through these rough times.  However I do get disappointed and you will too but you can't let these experiences shade or taint your own optimism about what it is you want to accomplish.  In fact, I'm believing that it may be a sign that the 'fit' just isn't right for getting the business that I want.

Those of us in service businesses are competing against equally qualified people who (also like us) are trying to make ends meet.  It is your job to distinguish yourself from the others and set out to sell that which is unique about you to your potential clients.  For me, although I do bookkeeping, it actually is a small part of the overall services I provide for my clients and that part is what I need to get better at when I'm talking about what I do.  

Remember that no one cares as much as you do about your success ... so, start each day with that idea and work towards developing the personal strength to make your business happen!

Just where have I been?

I would like to say that I've been away on a European vacation but that is definitely not so.  I've had some personal matters to attend to that took all of my focus.  Funny how things that involve our deep emotions are so labor intensive.  I just couldn't focus on anything and realized, anything I wrote would have the wrong under tone attached to it.  I so appreciate all of you readers who hopefully find value in what I write, so thank you for your patience and know that I have returned.

I'm busy reading the NYTimes and INC Magazine to see what gems of info I can pass on to you.  It's Sunday - have a good one and I will be writing more shortly.

Advice from the Experts - Tax & Entity Formation

This week I have information for all of you who are wondering about the type of entity you should operate under.  Sole-proprietorship, S-Corp, C-Corp or ???  There are always reasons to be considered before you make a decision and one of my colleagues, David Herndon who is a tax and business advisor has written the following article about this subject.

Many times clients ask, when opening a business, “what about an LLC or an S Corp?”  The question is really a bigger one—should I operate as a Sole Proprietor, or operate through an LLC company, or in the form of a for-profit corporation?  I wish it were this easy, but to answer this seemingly simple question means asking lots of questions and gathering an intimate knowledge of the client’s situation.

Assuming a viable profit model for their business, I first ask questions trying to determine whether there is a need for some form of liability protection for their business.  Each states’ laws are different, but generally they all offer for-profit corporations and limited liability companies under their laws.  For the purposes of this discussion, I will assume we are dealing with a sole owner—that is, we are not talking about a business that will have two or more owners.

If there is a need for liability protection above and beyond that provided by a commercial or professional liability policy, I will then rule out the sole proprietorship form for the business.  I will next try to assess what the client’s ability is to keep pristine legal records and to follow a more rigid legal structure [which is both more stringent in a for-profit corporation than in a limited liability company] and whether their business model will have employees, other than the owner.

If the business will have employees other than the owner, then the business will have to process payroll and file payroll tax reports, etc., without regard to how we pay the owner.  If however, the business will not have employees, but only compensate the owner for his/her services, then the LLC form versus the for-profit form of entity may be the easiest for the owner to deal with—particularly if a less rigid legal structure seems easier for the owner to operate under.   If however the business appears to be one that will have profits in excess of that which the owner “needs” to live on, I will tend towards a for-profit corporation.  An LLC is reported on a Schedule C of the owner’s form 1040, personal income tax return, and the full profit is subject to ordinary personal income tax as well as self-employment taxes [social security and medicare].  Any profit left for savings or reinvestment is left over after maximum taxes have been applied.

But with a for-profit corporation, the owner is presented with a couple of choices perhaps limiting the income tax and social security/medicare tax bite.  This could represent a considerable annual cash savings for the owner.  With a for-profit corporation, although a more rigid legal structure, one can decide to leave the corporation taxable [referred to as a C Corp] or avoid the corporate level tax by a tax election under the income tax law [referred to as an S Corp].

But with either of these approaches, the owner needs to include him/herself on payroll from the corporation.  If the owner is going to be running payroll for other employees, then the small cost of processing payroll for him/herself is nominal—and the owner is already dealing with the fact of payroll reports, payroll taxes, workers compensation insurance, etc. for the employees.

If the owner has the ability to put aside a cash savings each year, to accumulate an amount of money without regard to needing it for reinvestment in the business currently, then a C Corporation might be best.  If the owner is otherwise at a high personal tax bracket, then the bottom federal rate of 15% might offer a 20% +/- savings on up to $50,000 of corporate profit each year.  The tax law currently allows you to accumulate up to $250,000 in a C Corporation without any “need” to justify retaining this amount of corporate profit.  So the basic financial model would be to form a for-profit corporation, do not elect S Corp tax status, put the owner on payroll, and “manage” the corporate profit at year-end by possible bonuses to the owner—you would target closing the books with $50,000 of taxable corporate profit for the company.  In addition to the tax rate spread difference in cash savings, the owner saves self employment taxes on the amount of profit left behind in the company versus what otherwise would have to be paid in either the Sole Proprietor or LLC mode. 

If however, the business model is a profitable one, but the owner may need all the money to live on or grow the business on, then an S Corporation tax election may be the preferred choice.  Under an S Corp model, the owner still must be on payroll as the IRS requires that the company pay the owner a reasonable, comparable salary for their labors and work efforts.  But the balance of the profits, representing a return on the investment to the owner as profit for money invested or business risk taken, can pass through to the owner’s personal income tax return free of any self employment [social security and medicare taxes] thus saving those two taxes being imposed on the S Corp income.

Ask questions and be sure you give complete information so that your advisor can give you their best advice concerning your true situation.  Building an effective business/tax model for a client is no different than building an effective estate plan for a client.  The adviser must ask lots of open questions, gather data and information, then apply his/her years of knowledge of the tax law and experiences with other similar client situations to best advise the new client of his/her opinion of the legal and tax route the client should take.

David Herndon

Herndon Co., Tax Accountants

4411 Holland Loop Rd

Cave Junction, OR 97523

541-592-6688 [office]

dave@augustmoonfarm.com

So after reading this you should be giving consideration to whether or not you are operating on an entity that is most appropriate for you.  This is why having an advisor that is not only familiar with business but taxes is a valuable asset to your support team.  In my experience not all CPA's or tax preparers 'advise' small businesses and not all business consultants have an in-depth knowledge of the tax laws and how they impact a business structure.  Take the time to find the right people to help you and in the end they will earn their weight in fees by protecting you from any unnecessary financial consequences.

More Banking Info

My colleague at US Bank is a high energy, committed to top customer service banker and because of that he has sent me more information on how he and his bank can help small business customers sustain and grow their business through business loans.

Business Loans:

 

In small business, a lot of times business owners would use their own capital or liquid assets. It is always good in the beginning or some what in their near future after growth of the business to get some sort of credit product. In doing so, it builds your businesses credit, and makes it credit worthy for any future big loans, like a loan for buying a building, equipment, or expanding the business. A business loan is also advantageous, because it can free up your liquid assets, or for those who have are waiting to receive payment from customers or vendors, it can provide that cash flow.

 

Things US Bank provides in business credit products are: basic as a Business credit card( a great way to start business credit), Equipment financing(Flexible terms, great rates, possible tax savings), Cash flow lines of credit, Quick loans (Term loans), Commercial Real Estate loans.

 

Depending on industry risk of businesses, US Bank also provide SBA loans for those in business less than 2 yrs. We also provide SBA Patriot Express loans up to $25,000 for those applicants or spouse that is a veteran or current member of military, reserves or national guard.

 

Thank you!

Andy Yang
Branch Manager

Menlo Park Office
1105 El Camino Real
Menlo Park CA 94025
650-617-8330

 

Creating a strong banking relationship is something that happens over time.  Because you are doing so many things when you are running your own business, even if you are self-employed, knowing that your money is in good hands and that you are getting the best rates for business checking accounts and savings accounts or business loans is something that creates peace of mind.

 

So when time is available give Andy a call and see what he can do to help you!