How Record Keeping Saves Your Business

Good record keeping is a vital activity to ensure the success of your business, for several reasons:

1. Measuring the success of your business
2. Producing correct financial statements
3. Supporting limited liability protection
4. Filing tax returns
5. Handling audits

Measuring Your Progress

You can see if your business is growing and whether a particular strategy is effective by updating your records every month. With this information in hand, you can tweak your business plan all during the year to fix unsuccessful strategies. Delaying until the end of the year to update your records can waste a lot of money.

Correct Financial Statements

Proper bookkeeping during the year permits you to create timely financial statements, which are necessary when you apply for a line of credit or loan. Lenders require accurate information when loaning money to small businesses. Applying for a loan with inaccurate financial statements creates problems and delays. IOU Financial can advise you on what you need in order to secure a loan from us.

Lawsuits

Precise record keeping can preserve your limited liability protection during a lawsuit. If your business is sued, you’ll have to review your internal records to gather the necessary information. Another advantage of up-to-date bookkeeping is that it provides protection if a court tries to “pierce the corporate veil” — a phrase meaning that the courts want to see if there is separation between you and your business entity, and that there is no commingling of monies. If this were true, your liability could outstrip the amount you invested in the company. Each state makes its own rules, so it’s a great idea to talk with your lawyer for additional information regarding piercing the veil.

Tax Returns

Preparing tax returns takes significant time, but erroneous records can morph it into an expensive ordeal for the business owner and the business’ tax professional. If you pull together your tax returns by yourself and use imprecise records, the return may become a work of fiction. If you use a tax professional but don’t have accurate and timely records, the preparer, who relies on the information you supply, may provide wrong information to the government. Under the law, this is your obligation and an audit can lead to additional taxes, penalties and interest payments.

Audits

Proper records are indispensable when trying to favorably resolve an audit. You may face an audit at any time by your state’s department of revenue or from the IRS. Once they reach you, you normally have 30 days to answer, which is rarely enough time for a tax professional to locate the backup for a client’s records if they aren’t being accurately kept. It takes oodles of time to hunt through piles of papers in desk drawers or trying to find information kept in boxes stored within your garage. Those 30 days will go by very rapidly and you risk missing the deadline, causing added problems. Moreover, requesting a last minute extension from the IRS will probably go down in flames.

Case Study

According to Internal Revenue Regulation 142A, taxpayers carry the responsibility for proving that they are entitled to the deductions that they claim, and this includes the substantiating their claims. In Joyce Lindsay v. the Commissioner of Internal Revenue, the defendant was a tax preparer who worked from her home for many years and was selected for an audit. During that audit, she could not provide the documentation for things such as charitable deductions, contract labor, office expenses and depreciation. The tax court ultimately ruled against more than $37K in deductions because she had inaccurate bookkeeping. Don’t let this happen to you!

Top 10 Reasons You MUST Join Your Local Chamber of Commerse

As a business owner, you may feel that your days are too full already and joining the local chamber of commerce (CoC) will be too time-consuming. Think again — the real question is whether you can afford not to join the CoC. The advantages that these worthy organizations confer are well worth the time invested, and your business should benefit by increased networking and timely information about your community and your industry.

Here are the 10 top reasons for joining your local CoC:

1. Credibility
   The general public holds the CoC in high regard, and being affiliated with one helps burnish the reputations of members. You’ll also improve relations with other businesses, especially if they too are CoC members.
2. Visibility
   Hanging a CoC plaque in your front window or on your office wall announces to the world your ambition to make your business the best it can be. You get the added visibility of a listing in the CoC newsletters and social media sites, as well as specialized CoC publications. You can join in and advertise at CoC events and fundraisers, which should generate goodwill in the community. All in all, CoC membership is a big boost to your public relations.
3. Networking
   You can capitalize on a great opportunity by joining one or more CoC committees. Not only will you make important connections with your fellow businesspeople, you may also rub elbows with local politicians and other community leaders. Pick a committee where you can make a difference that will help both your business and the community at large.
4. Democracy
   Speaking of politicians, your membership in the CoC helps you advance your own interests on the tough political and social questions of the day. Don’t just complain about high taxes, red tape and over-regulation, do something about it by helping the CoC confront misguided representatives with the truth. CoC fights to keep free enterprise free and ensure fair treatment for all businesses.
5. B2B
   Nothing promotes business-to-business relationships like membership in the CoC. Your fellow business owners become like an extended family, and you are likely to increase commerce with your fellow members. No other organization does a better job at promoting local connections and networking opportunities.
6. Information
   A local CoC is a one-stop source for all kinds of local, regional and national information important for the success of your business. CoC sends out newsletters with community updates and the latest information that can help you run your business. The CoC community calendar lets you plan your time so that you can attend important events — don’t underestimate the promotional value of these occasions. Naturally, it’s wise to invest a few dollars placing ads in the local CoC publications.
7. Recommendations
   One nice fringe benefit of CoC membership is all the recommendations you are likely to receive from other CoC members on behalf of vendors and consumers seeking new relationships.
8. Special Events
   Throughout the year, you’ll find that the CoC offers many special events and programs that can enlighten you and give you additional networking opportunities. It’s a fun way to generate new leads for your business.
9. Advertising
   Advertising via a CoC vehicle adds extra punch to your marketing and promotional activity. Fellow CoC members take note of and appreciate money spent on advertisements in CoC publications and media, since this helps grow the organization.
10. Discounts
    CoC members enjoy a number of special discounts and exclusive services offered by other members. You might be able save money on, for instance, office supplies or phone equipment.

As you can see, the CoC is a useful ally as you develop and grow your business. Don’t wait another moment — join your CoC today!

Are you taking advantage of all Google has to offer?

The term “google it” has replaced the phrase “search for it” on the internet. Don’t you agree?  Google is typically the place people go to when it’s time to search for something. But what about your business? Will people find it on google?  Are you listed on google business, and if so do you have your business information listed correctly so your customer can find you? Let’s take a look at the details and the 3 reasons why you want to makes sure you are listed on Google Business.

1. One of the most important aspects of business is being listed in such a way that your clients can find you. With Google My Business you are able to list the proper information regarding your business so the search field in google, along with the maps feature and google+ will all work properly in pulling up your company information.
2. You can’t run a business without customers! Google Business has a focus on this critical aspect of business. There is a follow button that your customers can press which helps them stay up-to-date on company news, updates and specials. Google Business also allows your customers to post ratings and reviews (hopefully outstanding ones!) and allows you to respond to the feedback as well.
3. Google My Business provides a one-stop location to help your business glow, and when it comes to business management, ease is critical. There is a dashboard feature that lets you manage all of google information in one place. And with the Google My Business app you can take these features wherever you go. .

It’s clear that Google My Business can only help you in various aspects of your business. But maybe you still have some questions about the features, the cost (there is none!), etc.  Go and take a glance at the Google My Business FAQs to see what you think, and then move ahead to bring a new level of management and interaction with your customers to your business.

Don’t Let Chargebacks Get the Best of You!

Chargebacks can have a substantial financial impact on your business. Whether the chargebacks are due to frivolous claims from unscrupulous consumers, or claims that are seemingly justified, the result is the same – loss of money to your company. But there are steps you can take as a business owner to cut-down on those costly chargebacks; here are three:

1. Make sure your company descriptor is clear. When your customers receive their credit card statements, your company name listed on their statement should be one that they recognize. Ideally it should be your company name. Many times, if a parent company name is used, or alternate name of possibly another company you own, the customer will not recognize the name and as a result may enter a chargeback claim. This is easily avoidable by making sure your customers recognize your company name on their credit card statements.
2. Keep good records of all credit card transactions and contracts/agreements. It’s important to keep information such as amount, date and authorization information regarding all credit card purchases. This way if a chargeback comes in, you can refer back to the actual transaction itself. In addition, if your business deals with contracts, where a customer has agreed to pay a certain amount for a product or service, this will be fuel for you to prove that payment was indeed required.
3. Provide excellent customer service. While it may not jump out at you why exceptional customer service will help you avoid chargebacks, when you provide excellent service to your customers they are more likely to value you and your service. If there seems to be something in question regarding their purchase, they may reach out to you first, trying to rectify the situation rather than initiate a chargeback.

Chargebacks will happen, but you can mitigate that possibility by taking precautions and by being the type of company that your customers value and appreciate.  And when the chargebacks do come, make sure to check your records, and whenever possible, fight back because after all that is your hard earned money.

Understanding When Your Business Needs Funding

Just about every business, big or small, needs financing. You have to remember that you can have profits without having much money in your bank account. If you run short of cash, it will negatively affect the entire business, including paying for:

• Startup costs
• Inventory purchases
• Payables
• Uncollected receivables
• Other uses for working capital
• Capital expenditures

Funding Facts

Funding is available in the form of debt and equity. If you are a small business, you may not have a way to raise equity, and/or you may not want to be selling partial ownership to someone else.  Selling equity in a rush to the wrong person, can put you in a place where you feel like your hands are tied in decisions that should have been completely yours to make. Thus, you are more likely to use debt as a means of raising funds. You use the funding to pay your bills and to grow your business. While it’s possible that you have enough cash in the bank to finance all your needs, the great majority of businesses rely on at least some outside money to start operations, undergo an expansion program and/or replenish their working capital (current assets minus current liabilities).

Roadblocks to Success

If you are a well-prepared business owner, you’ve assembled a business plan that includes your estimated cash flows. Whenever you project negative cash flows, you will need additional funding through equity or debt. In other words, it’s time to take out a loan when you are depleting your cash.

The most notorious cash flow culprit is accounts receivable (A/R). Simply stated, if you extend credit to customers, you will always run up against a few bad apples who take forever to pay their bills. If you make cash inflow estimates of $10K a month and even have sales figures that meet this target, slow collections can result in a cash shortfall. Eventually, you hope to collect at least 95 percent of your A/R, but the longer it takes, the more you will need funding.

As you are waiting for your credit customers to cough up the cash, you still must pay bills to vendors, lenders, the IRS, employees, etc. These folks are not interested in your collection problems –they want to be paid on time. That’s when timely commercial loans, such as the ones available from IOU Financial, are just the ticket to get you over the rough patches.

Startup Costs

Another common use for external funding is to pay for the costs of starting your business. To earn money, you have to spend money, and during the startup phase, you are spending aplenty but earning nary a nickel. A startup loan will allow you to purchase the equipment, space, merchandise, recruitment, insurance and dozens of the other things you need in order to open the business.

Going back to your business plan, a startup should have a pretty good idea of how much funding it will need before it can begin selling products or services. The plan will show the necessary borrowing, including a realistic assessment of the interest costs and the payback period. It’s a complete red flag if you can’t secure the funding you need to start your business — better rethink the whole thing. Perhaps you can modify your plans to make them more modest. One strategy is to start very small and then use profits to bootstrap your growth. If even a modest plan can’t scare up enough funding, you might have to abandon the whole idea. That’s how capitalism works — allocating resources where they will do the most good (i.e. bring the highest returns on investment).

The bottom line is not to be surprised that you will need financing from time to time. Even healthy established businesses need to take out working capital loans in order to continue to grow.  The solution is to identify reliable lenders, such as IOU Financial, who will have the cash ready for you when you need it. By carefully husbanding your money, you can grow your company and enjoy the fruits of your labor.

What Businesses Benefit the Most From Lower Fuel Costs?

In reality, it’s hard to find many businesses that don’t benefit from lower fuel costs. The biggest losers are oil producers, who receive less revenue for their inventories. This also depresses business activity for oil explorers and producers of alternative energy solutions, since they now have more price competition from cheaper oil and gas. But let’s not shed too many crocodile tears for Exxon and BP. Instead, let’s celebrate the winners.

And The Winners Are…

1. Transportation Companies: Operating costs for airlines and shipping/delivery companies are much lower when oil and jet-fuel prices fall. Perhaps this will trickle down to a reduction in ticket prices and shipping charges, but somehow these prices never seem to decline. At best, we are not likely to see new fuel surcharges anytime soon.
2. Automakers: For better or worse, Americans like big, gas-guzzling SUVs and trucks. Lower fuel costs stimulate sales of the mega vehicles, which are far and away the biggest profit-makers for the automakers, especially for the Detroit Big Three. That might also mean more tax revenues and better times for people living in Michigan and other states that produce trucks.
3. Manufacturers: Petroleum provides a wide variety of organic compounds used to manufacture chemicals, plastics, textiles and a huge assortment of other materials. Lower prices for raw materials means fatter profit margins for manufacturers, and may increase price competition. Wouldn’t that be lovely?
4. Utilities: Lower fuel costs are great news for fossil-fuel utilities, such as electric generation companies. But there are a couple of caveats. State overseers may require utilities to roll back prices. If that happens, consumers may use more electricity, increasing demand for generation companies and possibly increasing the possibility of brown- and black-outs this summer.
5. Farmers: Many farming costs are tied to fuel and petroleum costs. Items like fertilizer and insecticides that use organic chemicals may fall. It will cost less to fill the gas tank of tractors and combines. The cost of getting produce to market will decrease. Special exception for corn growers — the lower cost of oil means more price competition for ethanol, so corn producers may find themselves selling corn for food instead of fuel, which may be a less lucrative trend for them. It will cost less to feed corn to livestock, which might mean lower meat prices.
6. Travel Industry: If lower fuel costs translate into lower ticket prices, people might be more willing to fly to vacation destinations in America and around the world. Travel agencies and travel websites, as well the hospitality, restaurant and entertainment industries, will benefit from this trend. This also bodes well for car rental companies, Greyhound and Amtrak.
7. Liquor Makers: A huge percentage of the price of your favorite bottle of bourbon stems from taxes. But the cost of production involves many processes that directly or indirectly require fuel, including acquiring grain, creating mash, distilling alcohol, bottling and distribution. Once again, liquor prices seem to be on a one-way up-escalator, but we can always dream.

It’s obvious that the American consumer is the biggest winner when fuel prices decline. Lower prices on gasoline and on products that have costs tied to petroleum mean more money in the wallet of John Q. Public. This drives demand, boosts the economy and increases the demand for investments in new plant and facilities. If your business finds that demand is outstripping your production capacity, consider a loan from IOU Financial to finance expansion. Interest rates are still low, so now is a great time to anticipate greater demand and grow your business.

Marketing on a Small Budget

You might have the best product or service in the world, but unless people learn about it, your small business is not going to get very far. Marketing is essential for every business, but it doesn’t have to be too expensive. Here are some tips for getting your message out while keeping your cash at home:

1. Do Your Own Market Research
   Make a list of what your customers want, the questions they ask, the problems they want solved, their gender and age, etc. This will help you target your marketing efforts by addressing their concerns directly.
2. Clarify Your Message
   Don’t spend a lot on fancy brochures without first ensuring that your message is clear and concise. If a young person can’t understand your message, then it might need simplification. Clarity above all else!
3. Public Relations on the Cheap
   Do things to get your business’ name out there, like volunteering your offerings at charity events, running a blog and inviting guest bloggers, commenting in other persons’ blogs, and attending networking or civic events.
4. Hire a Small Marketing Agency
   Identify a promising small marketing agency and, at least at the beginning, follow their advice. They will understand you are on a tight budget — they probably are too — but nonetheless will have innovative ideas for you. If they don’t, try another one, but give the first one a little time to prove itself.
5. Look for Free Marketing Advice
   Articles such as this one provide useful information for free. The library is another great resource, and many marketing agencies are willing to perform a free initial consultation.
6. Promote Word-of-Mouth Advertising
   Nothing is more effective than WoM. Excite your customers by offering loyalty programs, contests and raffles, excellent service and solutions that work. Don’t be shy — ask your satisfied customers to help get the word out. Many people just want to be asked.
7. Create Your Own Marketing Materials
   Desktop programs are so powerful today — all you need is a little time and practice to harness that power to produce your own collateral material. Brochures, flyers, logos, company designs, websites and business cards are all fairly easy to produce. Take your own photos and incorporate them into your materials. Later on, when business is booming, you can hire professional photographers and designers for a more polished look.
8. Treat Your Vendors Well
   A happy vendor can help your business, but a disgruntled one can be poison. Make sure you pay your vendors on time! Even better, pay them in full in advance. Make them your friends, then ask them to endorse you and offer to reciprocate.
9. Create Joint Marketing Efforts
   Suppose you own a bakery next door to an independent coffee shop, to which you supply yummy goodies. In turn, you steer your customers next door for a nice hot cup of Joe. Go a step further and take out joint ads that tout both of your places. It’s synergistic and will save you money. Adapt this example to your own circumstances.
10. Exploit Your Website
    You can use various tools, often at no charge, to tell you how well your website is working. How many visitors do you get, and how many of them become customers? Attract new traffic by publishing useful, authoritative articles that will help rank your site high in search engine results. Use search engine optimization techniques throughout your website — you can read up on these or hire a person to help. Don’t forget to use all the social media tools, including Facebook, Twitter and Linked-In, to broaden your marketing efforts.

As you can see, there are plenty of low-cost ways to market your business. You may not see results right away, but persevere and you’ll probably be delighted with the ultimate outcome.

To Yelp or Not to Yelp? That is the Question!

You may be on Yelp already. You may have heard about Yelp but aren’t on there yet. Or maybe you’ve never heard of Yelp! So let’s go over a little background just in case you need to know.

In 2004, Yelp was founded in an effort to help people find local businesses.  In the  4^thquarter of 2014, Yelp had an average of approximately 135 million monthly visitors. Now that’s progress! There have been over 71 million local reviews published on Yelp. So it’s clear to see that people are on Yelp, promoting their services, writing reviews, and looking for the best businesses out there.

Yelp is a way to get the word out on your business. As mentioned there are millions of monthly visitors. When you strategize properly by doing a thorough, informative company description, coupled with pictures (if pictures add value to your service) you will be, more or less, getting free advertising, as it is free to set up a Yelp account.  It should be noted there are paid advertisements you can take part in, but that is entirely up to you.

As mentioned, Yelp is a site for company promotion and company reviews. This can be good but can also be viewed as negative. Sure, when those sparkling reviews come in, fantastic!  You can use those for promotional purposes. But like any business, there may be the occasional (hopefully just occasional) bad review.  This is what the social media world is all about – people having an opportunity to state their opinion. If you receive a negative review, you respond calmly, incorporate changes if need be and move on. If you decide to join Yelp you want to consider this.

All in all, Yelp can be a great source of promotion to showcase your company, along with potentially excellent reviews by satisfied customers. And that can certainly help you build your business.  One tip – if you have a great review on Yelp you can link back to the review on your other social media platforms such as Twitter, Facebook and LinkedIn.

So the choice of yours – which way will you go – to Yelp or not to Yelp? That is the question!

Avoid Roadblocks to Your Success

Just about every business, big or small, needs financing. You have to remember that you can have profits without having much money in your bank account. If you run short of cash, it will negatively affect the entire business, including paying for:

• Startup costs
• Inventory purchases
• Payables
• Uncollected receivables
• Other uses for working capital
• Capital expenditures

Funding Facts

Funding is available in the form of debt and equity. If you are a small business, you may not have a way to raise equity, and/or you may not want to be selling partial ownership to someone else. Thus, you are more likely to use debt as a means of raising funds. You use the funding to pay your bills and to grow your business. While it’s possible that you have enough cash in the bank to finance all your needs, the great majority of businesses rely on at least some outside money to start operations, undergo an expansion program and/or replenish their working capital (current assets minus current liabilities).

Roadblocks to Success

If you are a well-prepared business owner, you’ve assembled a business plan that includes your estimated cash flows. Whenever you project negative cash flows, you will need additional funding through equity or debt. In other words, it’s time to take out a loan when you are depleting your cash.

The most notorious cash flow culprit is accounts receivable (A/R). Simply stated, if you extend credit to customers, you will always run up against a few bad apples who take forever to pay their bills. If you make cash inflow estimates of $10K a month and even have sales figures that meet this target, slow collections can result in a cash shortfall. Eventually, you hope to collect at least 95 percent of your A/R, but the longer it takes, the more you will need funding.

As you are waiting for your credit customers to cough up the cash, you still must pay bills to vendors, lenders, the IRS, employees, etc. These folks are not interested in your collection problems –they want to be paid on time. That’s when timely commercial loans, such as the ones available from IOU Financial, are just the ticket to get you over the rough patches.

Startup Costs

Another common use for external funding is to pay for the costs of starting your business. To earn money, you have to spend money, and during the startup phase, you are spending aplenty but earning nary a nickel. A startup loan will allow you to purchase the equipment, space, merchandise, recruitment, insurance and dozens of the other things you need in order to open the business.

Going back to your business plan, a startup should have a pretty good idea of how much funding it will need before it can begin selling products or services. The plan will show the necessary borrowing, including a realistic assessment of the interest costs and the payback period. It’s a complete red flag if you can’t secure the funding you need to start your business — better rethink the whole thing. Perhaps you can modify your plans to make them more modest. One strategy is to start very small and then use profits to bootstrap your growth. If even a modest plan can’t scare up enough funding, you might have to abandon the whole idea. That’s how capitalism works — allocating resources where they will do the most good (i.e. bring the highest returns on investment).

The bottom line is not to be surprised that you will need financing from time to time. Even healthy established businesses need to take out working capital loans in order to continue to grow.  The solution is to identify reliable lenders, such as IOU Financial, who will have the cash ready for you when you need it. By carefully husbanding your money, you can grow your company and enjoy the fruits of your labor.

Improve Your Quarterly Meeting

Small businesses tend to be informal, but they should not overlook the need for periodic meetings to ensure that all departments and employees are aligned with the owner’s vision. Quarterly meetings are typically set up for several different functions, but no one wants their employees feeling like this through the monotony of the same presentation.

Make sure you share your passion with your team, keep them focused, and discuss how they are having an impact in these ways:

• Sales and Marketing
  This is a review of sales efforts over the last three months and effectiveness of marketing and promotional activities. The owner usually reviews how the sales staff has performed relative to established quotas. Sometimes, the quarter’s most successful salesperson is recognized. Problems are analyzed and quotas for the next quarter are established. Sales policies and techniques can be reviewed. Often, an owner will release ineffective salespeople just before the quarterly meeting as a sobering reminder to the rest of the staff that the survival of the business depends upon sales revenue. Marketing efforts should be measured in terms of return on investment, and advertising campaigns should be reviewed and revised as necessary. If the owner is not satisfied with advertising efforts, she may call for presentations from new agencies.
• Personnel and Recruiting
  Staff is reviewed and if any changes are needed, they may be finalized at these meetings. The need for additional workers is assessed, and this is the opportunity to revise the management structure of the business. Promotions and demotions can be discussed here, as well as modifications to compensation and benefits. Problems with particular employees will be addressed. Sometimes this may require extraordinary support from the business — for example, the company might sponsor a key employee with a drinking problem to a rehab facility. The owner will also evaluate the trade-offs between employing workers or hiring contractors. The Affordable Care Act (ACA) now affects businesses with as few as 50 employees, so this topic will receive prominent attention at these meetings.
• Operations
  This is an opportunity to brainstorm ways to increase efficiency and cut costs. Owners must balance the work that’s done “in-house” versus subcontracted out. Owners of small manufacturing companies must also assess the benefits and costs of replacing some of the workforce with new machines. Interestingly, the trend of outsourcing manufacturing operations to China and other offshore locations has begun to reverse, and many companies are now “onshoring.” Owners are finding that profits from offshoring can be elusive, in part due to logistics and quality control problems. The quarterly operations meeting can address these and other issues that affect a company’s bottom line.
• Accounting and Finance
  A company’s capital structure is constantly evolving. A quarterly finance meeting can review funding needs and sources, especially if new projects or capital expenditures are anticipated. Private companies can acquire funding from many sources, such as private investors, venture capitalists and crowdfunding. Attractive loans are available from private lenders such as IOU Financial that can help finance the growth and operation of a company. In addition, thee tax and accounting regulations change every year, and the quarterly finance meeting is a good time to review the latest developments, such as the new rules regarding depreciation and capital expenditures. As we mentioned earlier, the ACA rules now affect smaller companies and has important tax implications and accounting requirements — points that should be reviewed at the quarterly finance meeting. Finally, the company should review the quarterly financial reports — balance sheet, income statement, budgets, etc. — to measure progress and handle unanticipated conditions.
• Staff appreciation
  It’s a great idea to thank the staff with a quarterly event — an evening at a bowling alley or a weekend retreat. Staff morale is very important, and happy employees can help an owner achieve her long-term plans. A sullen or unhappy staff can ruin a business and sabotage its operations, so staff appreciation meetings are good business.