No Such Thing as a Wasted Break for Small Business Owners

Our lives, both personally and professionally, can be filled with both positive excitement and stress.  If you’re a small business owner, you’re probably experiencing a lot of both.

You dreamed of and worked hard to own your own business, but perhaps you’re experiencing unexpected levels of pressure as an entrepreneur.

One of the best ways to relieve stress throughout the work day is to give yourself several small physical and/or mental breaks.  It’s easy to dismiss a micro-mini R&R session as wasted time, but it’s actually a savvy strategy for keeping yourself fully charged and functioning at your best.

Here are two simple and effective things you can do during a quick break from which you’ll reap great benefits.  (I promise.  Just be willing to give them a chance.):

MOVE!

-        Take a ten-minute stroll outdoors

-        Do you work from home?  Grab your bike and take a 10 or 20 minute ride.

-        Stand up and stretch.  It may seem obvious, but it works wonders.

BREATHE!

Sit or stand in a relaxed position.  Slowly inhale through your nose, counting to five in your head.  Let the air out from your mouth, counting to eight in your head as your breath leaves your lungs.  Repeat several times.  That’s it!

There’s no end to the many ways you can recharge during a brief pause.  But if you’re pinched for time, remember – moving and breathing can be done anywhere, for any amount of time.

For those of you whose small businesses are in New Jersey, you’ll find a wealth of valuable information in my book Straight Talk About Small Business Success in New Jersey: How to Maximize the Growth, Cash Flow, and Profitability of Your Small Business.

Until next time,

Salim

Nika Stewart of GhostTweeting.com Speaks at “Business Breakthroughs” Breakfast, and Happy Birthday Salim!

Attendees of the May 2013 Business Breakthroughs breakfast listen to guest speaker Nika Stewart of GhostTweeting.com.

Last October, The Omar Group launched an exciting breakfast event to bring Monmouth County business owners together to meet like-minded entrepreneurs interested in proven strategies to grow their business in 2013 and beyond.   Formerly known as “Grow Your Business Over Breakfast”, the event underwent a name change to the “Business Breakthroughs Monthly Breakfast”.  At each breakfast, an expert speaker presents on a topic such as increasing profits, hiring and recruiting a top-notch staff, and attracting quality customers without breaking the bank. Our May breakfast featured co-founder and CEO of www.GhostTweeting.com, Nika Stewart.  Stewart is a social media expert who manages the social media presence for a diverse clientele.  She spoke about using social media to improve your company’s brand image.

Happy Birthday to Salim and our guest speaker Nika Stewart of GhostTweeting.com!

May is the birthday month for both Nika and Salim, so attendees enjoyed a birthday theme breakfast and a delicious piece of cake.  But you could say they “sang for their supper” (or breakfast, as the case may be. Happy Birthday to you…

Please join us for our next monthly breakfast at the Middletown Pancake House on Route 35 in Middletown, NJ.  The date will be posted shortly and you’ll be able to pre-register at http://www.growmonmouthbusiness.com. Cost is $10.00 per person and includes breakfast. We look forward to seeing you!

Attendees of the May 2013 Business Breakthroughs breakfast.

Salim Omar enjoys his birthday with attendees of the Business Breakthroughs monthly breakfast in Middletown, New Jersey.

Don’t Overlook The 5 Types of Records Required In Your Small Business

In any small business record-keeping system, there are five essential types of records that must be kept.  Are you keeping all five of these in your business?  Take a look, and pick up some organizational tips while you’re at it:

1. Sales Records.  What are you selling, how much of it, and when? When organizing your sales records, do so by category.  This will make them easier to analyze later.  As an example, let’s say you sell both wholesale and retail.  You might consider organizing these records by region or some other market segmentation.  If you’re a service provider, you might choose to categorize your revenue records by the type of service you provide.

2. Cash Receipts.  Cash receipts represent cash actually received, in the form of sales as well as collection of accounts receivable from monies formerly owed to you.

3. Cash Disbursements.  This refers to monies actually paid on behalf of your business.  Cash disbursements may indeed be cash, but they can also be paid by check.  When recording cash disbursements, include these essentials: date, number, amount and purpose.

Small business purchases not paid for by check are generally paid for with petty cash.  Most businesses establish a petty cash fund from which small purchases are made as needed.  Funds are kept in a convenient but discrete location, and should be accessible only by a few.  Petty cash expenditures should be tracked in much the same way as cash disbursements.  Periodically, petty cash is replenished by totaling receipts for cash spent, then issuing another check to “Petty Cash” for the total amount of the receipts.

4. Accounts Receivable.  A good record-keeping system should provide you with a detailed report of accounts receivable, including current information on customers and a running balance of their accounts.  To maintain a good accounts receivable system, record credit charges on a regular basis.  It’s essential that you follow up on all late-paying and delinquent customers.

Accounts receivable should be aged at the end of the month.  This means organizing the accounts into those that are current, 30 days old, 60 and 90 days old.  This arrangement helps you take appropriate and timely action.

Some of the key information on your accounts receivable report would include:

-        Name of account

-        Account number

-        Invoice date

-        Invoice number

-        Invoice amount

-        Terms of invoices

-        Amount paid

-        Date paid

-        Balance

5. Accounts Payable.  An accounts payable schedule will provide helpful information about money you owe to others.  Do you have bills that are past due?  If so, you might rely too heavily on trade credit.  How do you manage your cash?

A payables schedule lists the amounts you owe to others.  Accounts payable schedules are generally prepared on a monthly basis.

While many businesses will also find it necessary to keep other important records – such as for payroll, insurance, and business equipment – the above five types of records are the most essential.

For those of you with small businesses in New Jersey, you’ll find a wealth of valuable information in my book Straight Talk About Small Business Success in New Jersey: How to Maximize the Growth, Cash Flow, and Profitability of Your Small Business. 

Regards,

Salim

To Avoid IRS Scrutiny, Be Smart With “Little” Employee Benefits

Many smart and generous employers understand the value of providing employees with “little extras” – sometimes known as “de minimis” fringe benefits.   These are small-value, morale-building gifts like tickets to concerts or sporting events, soft drinks and the like that you probably don’t consider significant enough to account for.  These benefits are not taxable to your employee.

However, in order to avoid scrutiny by the IRS, it’s important to monitor the frequency with which you give such gifts, and to understand what qualifies as “de minimis” benefits, and what doesn’t.

These de minimis benefits should only be given out occasionally – not on a regular basis.  In addition to the aforementioned tickets and soft drinks, they include:

-        Holiday gifts (other than cash) with a low fair-market value

-        Occasional parties or picnics for employees and their guests

-        Coffee, snacks and other refreshments

-        Occasional meal money or local transportation fare for employees working overtime (not based on hours worked), and meals provided to enable employees to work overtime

-        Typing of a personal letter by the business’s secretary or occasional use of company copy machine

-        Group-term life insurance of $2,000 or less payable on the death of an employee’s spouse or dependent

Small fringe benefits are an excellent idea.  They’re a way to show appreciation towards employees for a job well done, and often a method of encouraging extra effort.  Just be sure to keep them “occasional” rather than a routine form of compensation that employees come to expect.  This should keep you out of trouble with the IRS, while still keeping your team happy.

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3 Ways to Get Customers to Spend More

Wouldn’t it be nice if each sale you made in the past month was worth double what you actually took in?  You’d be looking at twice as much revenue, without having to break a sweat working to woo twice as many new customers.

If it’s in your customer’s best interest, then by all means – find a way to persuade them to spend more money with you.  You’ve already got them in the door.

But how?  There are a number of ways to increase the average size of sale per customer.  Here are three:

1. Raise Prices.  Customers are often willing to pay more for something than you think.  Feel unsure about this?  Try it, but tip-toe into it.  Raise prices in small increments – say, 5%, 10% or 20% at a time.  Keep an eye on the results.  Also, keep in mind that most small business owners underprice their products or services.  They try to price similarly to their competitors.  Instead, ask yourself, what are people willing to pay for the kind  of results you’ve given      them?  The market will tell you what  your best price is.  Test your  theories, then track your results.

2. Up-Sell and Cross-Sell.  Keep an ear to the ground when it comes to your customers’ needs.  At the  same time, be sure you’re offering product lines that meet different kinds of needs.  If you believe a customer can genuinely benefit from the next level of product, don’t be afraid to sell her more than she wants.  Even McDonald’s understands this when they ask, “Would you like to supersize that for just 39 cents more?”  This is  up-selling.

Cross-selling, however, is offering customers the chance to add related items to their basic purchase.  The idea is that these items, together, will increase the customer’s overall level of satisfaction.  Are you offering related products and services that give you the opportunity to cross-sell?  If not, look for suitable complements to your current line of products.

3. Create Packages.  Almost  everyone responds favorably to a “package” deal.  With that in mind, think about your customers’ spending habits.  Are there certain items they often buy together?  If so, use this knowledge to your      advantage.  Package items together  and price them accordingly.  In my      accounting and tax business, I do this by offering service packages for small business owners.  I found that clients who wanted financial statements and tax returns also wanted financial and tax stewardship, estimated tax reminders, etc.  By combining these services, I allow my clients, who enjoy the benefits of these additional services, to spend more money by choosing a higher-priced service package.

How can you bundle your products or services into packages?  What complementary products or services can you offer to up-sell or cross-sell to your customers?  How much will you try increasing your prices?  Come up with an initial strategy you feel comfortable with, and experiment with increasing the average size of sale per customer.  It’s one of the easiest ways to increase profits without hunting down all-new customers.

For those of you with small businesses in New Jersey, you’ll find a wealth of valuable information in my book Straight Talk About Small Business Success in New Jersey: How to Maximize the Growth, Cash Flow, and Profitability of Your Small Business.

Regards,

Salim

How Lenders Review Your Loan Request

Thinking of applying for a loan for your small business?  Or maybe you already applied and you’re waiting and wondering what the lender is thinking.  What do they look at?  What actually matters?

When reviewing a loan request, a lender is primarily concerned about repayment.  To help determine this ability, many loan officers will order a copy of your business credit report from a credit reporting agency.  Therefore, you should work with these agencies to help present an accurate picture of your business.  Using the credit report plus the information you’ve provided, the lending officer will consider the following issues:

-        Have you invested savings or personal equity in your business totaling at least 50% of the loan you’re requesting?  (A lender or investor will not finance 100% of your business.)

-        Do you have a sound record of credit worthiness as indicated by your credit report, work history, and letters of recommendation?  This is very important.

-        Do you have sufficient experience and training to operate a successful business?

-        Have you prepared a loan proposal and business plan which demonstrate your understanding of and commitment to the success of the business?

-        Does the business have sufficient cash flow to make the monthly payments?

Conventional loans usually take 60-90 days to fully close.  This may be longer, depending upon the information needs of the lender, so be mentally prepared.

And…good luck!

Stay in the loop.  Follow The Omar Group on Twitter!

Regards,

Salim

How Do I Know My CPA is Reviewing My Business’s Numbers?

I received a question from a reader, asking “Is there a formal report I can expect from my CPA at the year-end verifying that he’s reviewed the numbers in my business?”

Your CPA should be issuing you an Accountants’ Report at year-end.  Typically it’s one of the three following documents:

-        A Compilation Report.  With this, you can expect a presentation in the form of financial statement information.  Typically, no opinion is offered, nor is there any assurance that financial statements are free of material misstatement.

-        A Review Report.  This is an expression of limited assurance on financial statements as a result of performing inquiry and analytic procedures.

-        An Audit Report.  This is a statement that an audit was conducted in accordance with generally accepted auditing standards (GAAS) which requires that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, as well as a statement that the auditor believes the audit provides a reasonable basis for his or her opinion.

Small business owners who know their numbers have a tremendous advantage over those who don’t.  Your financials tell a story, and understanding the story behind your numbers can be one of the most important elements for your long-term success.

Such reports, complimented with a meaningful explanation of the numbers in “plain English” should be an essential component of your relationship with your CPA.  If you don’t already have this process in place, talk with your accountant and assess his or her capacity or willingness to provide this information.  If that fails or if you are still dissatisfied, consider finding a CPA who values the importance of such service and, more importantly, can provide it.

Regards,

Salim