Helpful Cost Cutting Tips For Small Business Owners

The secret to having a successful small business or home base business is to create a new way to monitor costs. You also need to realize that business spending can sometimes immediately increase and also decrease the income, and your business will not see any progress.

Most of the business owners realize that they generate income from the business, but they do not recognize where the money spent to. This problem will definitely affect the cash flow of their businesses. Successful business owners know that they have to regularly review their expenses within certain period of time. From this action, they are able to arrange the cash flow smartly and create more saving in their business.

You may review below lists for your consideration in creating good cash flow on your business.

- You can purchase the last year model of your operational needs such as computers, fax, furniture, or others for your office because these needs will always be newly produced by the manufactures every year and the costs of buying them will be higher. From here you can do the saving of you operational needs.

- You can start to purchase stocks in larger quantities and buy them in advance. Larger quantities means lower costs. Repurchase your needs before the stocks run out. And with purchasing them in advance, you will have more opportunity to gain the benefit of sales.

- Try to combine product shipment with consolidating them into one period of time. You can cut your mail cost from this consolidation.

- Turn your preference to probably products that is produced by national manufactures. It means that you can start to use national products to save money.

- Most of smart entrepreneur is aware when and where to buy a stock or products for lower prices. One of the options of have these are to gain the benefit from discounted products. Some companies provides discounts to their member on certain services such as travel, insurance, cargo services, telephone, or others. Taking advantage from the offers of some credit card providers is also a good option for your cash flow.

Aktasio Zikri is International Certified of Neuro Linguistic Programming and Time Line Therapy Practitioner. He plant the applications within the businesses and studies them for entrepreneur mindset development. Visit [http://www-smallbusinesscredit.com] for more information about small business accounting [http://www-smallbusinesscredit.com/small-business-accounting].

For Business Owners Only - You Can't Be Fired But Neither Can You Quit

The decision to sell, or not to sell your business is a difficult one. There are many questions that need to be answered before an informed decision can be made. Is selling your best alternative? Will one of the kids want to take over the business? Timing is everything. Is now the right time? You do not have to sell or decide right now. You are quite busy so maybe you will look into it after. . .

Facing the issue of succession or continuation of one’s business is very much akin to addressing the need for life insurance. Neither subject is addressed with much enthusiasm by the average person. The prudent address the inevitable and prepare. Although only one eventuality exists for us as individuals, three exist for our business: Transfer to family, sell to outsider, or close down.

As with the purchase of life insurance, the decision to sell or plan a viable business’ succession can be continually postponed. Unfortunately, when a business must be sold it usually is too late. Few people are willing to buy a business that has to be sold. Of the hundreds of business transfers we have facilitated, less than a handful could be classified as sales for “desperate sellers.”

How have other business owners addressed the continuation of their business? Actually very little is known or documented regarding the succession of private and family businesses. The information available usually pertains to very large companies. Data regarding smaller business transfers and succession is generally not available.

What are business owners’ expectations regarding succession or the continuation of their businesses?

Massachusetts Mutual Insurance Company sponsored a telephone survey of 614 owners of family businesses grossing two million or more in annual revenues. The survey, conducted by the Gallop Organization and designed by Mathew Greenwald & Associates was completed in September 1994. Although the majority of private companies are considerably smaller than the sample (the companies had an average of 50 employees) the opinions of those surveyed should be representative of most business owners.

Questions related to succession expectations revealed: 65% plan to pass the business on to family members or other relatives, 24% do not plan to pass to family members, and 11% are undecided. Only 7% plan to sell or liquidate and 1% plan to pass the business to someone outside the family. Seventy-five percent do not have a written succession plan.

MassMutual reports that their survey is the largest of its kind ever undertaken and, since the report’s release it has been hailed as “the most comprehensive piece of information on family business ever produced.”

What really happens?

Franchisors are perhaps the best source of information on many issues relating to small business operations as they are intimately and contractually involved in the franchisees’ affairs. The franchisor is therefore an excellent source of information on what happens when a franchisee decides to “move on.” Do their franchisees go in and out of business happily?

Data compiled by Quick Printing (a magazine for commercial print shops and copy shops) may provide insight as to what is actually occurring, not only with franchised print shops, but also private and family businesses in general.

More than 5,000 print shops were represented in the survey. Of that number 302 closed their doors and 93 sold. Three businesses closed for every one that sold! Of the 395 franchisees that “moved on” (eight percent of the total) 76.5% went out of business whereas only 23.5% transferred to someone else.

John H. Brown, author of “How to Run Your Business so you can Leave it in Style” illustrates the conflict between business owners’ expectations for the continuation of their businesses, and the reality of what actually happens.

Expectations Vs Reality

Expectations Reality

Transferred to family 50% 15%

Sold to employees 30% 5%

Sold to outsiders 10% 10%

Sold to competitors 10% 10%

100% 40%

From an address to the International Business Brokers Association

The above data substantiates that reality is in direct opposition to the expectations of the MassMutual survey participants. Although the overwhelming majority of business owners wish for their businesses to continue, most businesses will simply close down.

Small business is continually credited with providing most new jobs, more than half of our gross domestic product, and perhaps 65% of all wages. Small business is the backbone of the US economy. A mortality rate of 75% among this most important group is a national tragedy.

Why Don’t Businesses Business Owners Sell?

The largest single reason that most businesses are not sold or transferred seems to be that the owners never made the decision to do so. If you do not make the decision to sell or select a successor, outside forces will eventually combine to determine the ultimate fate of your business. In defense of those who have not been able to come to a decision regarding business succession, we offer the following:

1. Business owners know they are missing important information in connection with selling.

2. To take action without a full understanding of “the rules of the road” would be foolhardy.

Most Businesses can be Sold

Our experience, gained in assisting more than 2,000 business owners with succession decisions and business transfers, indicates that essentially every business can be sold if:

1. Ownership fully understands the unique environment in which businesses are sold, and therefore avoids the costly mistakes of employing traditional sales methods to sell their business.

2. Ownership recognizes the natural cycle of business ownership

(a time to grow and a time to go) and makes a timely decision and preparations to sell.

3. Those involved in the decision understand that the motivations to sell are personal and not purely financial.

4. The company is properly prepared for sale before marketing efforts begin.

5. The “right buyer” and the optimum price are identified before going to market.

A timely decision to sell, coupled with proper preparation and a comprehensive understanding of the unique rules and selling environment, is required for a business to transfer successfully.

Obtain Necessary Information

“I am considering the sale of my business” is the initial phrase we hear most often from business owners. Very few will tell us they have decided to sell. This is understandable as information is required before an informed decision can be made. Those that do proclaim to have decided to sell, generally have waited too long, and have nothing left to sell. Life insurance agents are not enthusiastic when someone calls out of the blue to buy life insurance. Ninety-nine times in one hundred that person has just left his doctor’s office with the bad news. You cannot buy insurance on a burning building. You cannot sell a business for an optimum price when you are compelled to sell. You can, of course, always liquidate or give the enterprise away. Is that what you would choose to do?

Information Needed

The following are the questions most commonly asked when selling is considered:

• What is my business really worth?

• How can I find the right buyer and still maintain confidentiality?

• Are there steps I can take to increase my company’s value?

• How long does it take to sell a business?

• Are there buyers out there with the money I want?

• Will I have to finance part of the sale? If so, how much?

• If I do, how can I be assured that I receive my money?

• What will I do after I sell?

• How much money would I have after the sale?

• What is an ESOP? Is it something I should consider?

• What would I do if I could not get my price?

• Perhaps a big company would buy my business. Would I have to stay on for long? Would they keep my employees?

• What expenses are involved in selling?

• What kind of investigation will a buyer want to perform?

We have developed a “Sell Your Business Tool Kit” that may be found at [http://www.howtosellasmallbusiness.com] to help business owners address these and other questions as they consider the possibility of selling their business.

What is important to remember is that the timely decision “to do something” with your business is the single most important factor impacting your ability to cash in on your investment in your business. You cannot wait until you are compelled to sell. Waiting for an offer you cannot refuse to come out of the blue usually happens only on TV.

Common Reasons for Sale

The reasons most often given for wanting to move on revolve around “life-style” issues such as:

Retirement

Health considerations

Relief from the “burden of ownership”

Boredom with the business

No time for the rest of my life

Burned out, tired, need a rest

Business demanding what I can’t or don’t want to provide

It’s not enjoyable anymore.

The one constant of life and business is that things will change. There is no such thing in business as status quo—it’s either up or down, grow or go—no status quo. It is best to consider selling when business is on the upswing rather than the down.

Decide, Choose, Act

If you are considering doing something, you have to approach the decision in the appropriate manner. It does not matter what the decision. The decision must be approached in the right sequence. Ready, Aim, Fire. Not Fire, Ready, Aim. In our instance the sequence must be Decide, Choose, Act.

When it comes to deciding what to do about your life and your business the most important thing you can do is to resolve to do something. Reading this article is perhaps an excellent first step. Congratulations.

Organize your questions. Get the answers. Weigh your options. Choose the alternative that suits you and your situation best, then act. The quiz found on the next page is for business owners only. It may help you decide if preparing your business for sale is a timely thing for you to do.

Take the “One Minute Quiz for Business Owners Only” found on the next page

A One Minute Quiz

For Business Owners Only

Circle your answers to the following questions, then turn the page to see how you scored.

1. Is your business less enjoyable now than before? Y N

2. Does your business challenge and excite you less than before? Y N

3. Do you think of selling your business more often now than

you did before? Y N

4. Do you find yourself complaining more lately? Y N

5. Has the business come between you and your loved ones? Y N

6. Has your business begun to level off or decline? Y N

7. Are you concerned you no longer have the stamina your

business requires? Y N

8. Do you ask yourself “What would I do if I sold?” Y N

9. Do you often wonder “What is my business worth?” Y N

10. Would you be hesitant to personally guarantee a sizable

loan in order to grow your business? Y N

The question: Is now the time to sell my business?

To determine your answer, count your yes answers.

0-3 Yes

Congratulations! You are happy and probably quite prosperous in your business. Keep it up.

4-6 Yes

Pay attention to your “early warning signals”! It’s best not to make the mistake of staying too long! Sell while you are still having fun. Best to start the preparation process early. The actual sale of a business can take a long time.

7-10 Yes

Do not let time spoil the fruits of your labor. Most great men and women in history have had more than one career. Time for you to decide that you want a change. Choose what you want to do next, and then act.

(If you are considering the sale of your business you should check out the “Sell Your Business Tool Kit” designed especially for business owners who are considering the sale of their business. Go to http://www.bizbooksoftware.com to check it out.)

Mr. Burbank is President of Lighthouse Financial, LLC and Parker-Nelson Publishing. Since 1979 he and his associates have participated in more than 2,000 business transfers. He is the author of "In & Out of Business . . . Happily" - "Buying a Business Made Easier" - "VALUware 6.0" Business Valuation Software - "DealMaker 4.0" Business Acquisition Software - "DealMaker docs" Transaction Documentation Software all published by Parker-Nelson Publishing. In addition he is a contributing author to "Merger and Acquisition Handbook for Small and Mid-Size Businesses" and "Business Valuation Handbook for Small and Mid-Size Companies" both published by John Wiley and Sons. http://www.bizbooksoftware.com

Attention Small Business Owners: Don't Make That Payroll Processing Mistake!

One of the more common mistakes I've seen small business owners make is choosing to process payroll themselves. Unless you are also in the business of processing payroll for others, you should not be processing your own payroll. Some "experts" will tell you that it is simple and cheap to manage payroll in most accounting software systems, but words like simple and cheap are relative. Often, there are significant unseen factors that can rise up months or years later, and the $100 a month you had been saving will be of small consolation. Let's look at a few of those factors.

Time

If you are a small business owner, your time is very valuable. Furthermore, you can't hire top talent for every fractional position within your company (e.g., a superb marketing director who only works Tuesdays and Thursdays, then an outstanding PR director who works on Mondays and alternating Fridays, as well as an HR director to handle hiring and training new employees as the need arises). Therefore, your focus should be on only the things relating how you make the products you sell and how you sell them. Support roles that play no part in your company's overall strategy or competitiveness in the marketplace should be outsourced whenever possible. Processing payroll efficiently has no bearing on your firm's success, yet can consume a substantial amount of your (or one of your employee's) time.[1]

Accuracy

If you process your own payroll, you are responsible for ensuring its accuracy. This includes making all federal, state, and local tax deposits on time, every time, generating paychecks and earnings statements for employees, preparing and filing W-2s, 1099's, 940's, 941's and a host of other forms with the various taxing authorities, as well as producing documentation for various audits (yes, there are multiple groups than can and will audit you, including your insurance provider for workers compensation premiums and the local workforce development office for payroll tax compliance). If you choose to process payroll yourself, you are taking on all of these other obligations alone, as well. Missing a filing deadline by even a single day will result in a 10% penalty; a single penalty will in all likelihood obliterate any savings gained from processing your own payroll that year. In contrast, most national payroll processing companies will guarantee the accuracy of their payroll tax filings, up to and including paying any penalties you incur due to their miscalculations.

Costs

Except in rare cases, outsourcing your payroll will save you money. Even if you already have a bookkeeper, I question whether this person's time could be more effectively deployed answering phones, printing customized management reports for your review, or even simply transitioning to a part-time position. Where the real cost saving lies, however, is in protecting you from yourself. Most payroll processors can withdraw funds electronically from your business checking or payroll account to cover both the net payroll amounts to be paid to employees (often via direct deposit, instead of paper checks), and the accrued payroll taxes associated with that payroll.

For example, if I have an employee (let's call him Joe) whom I pay $1,000 per week, the payroll processing company will withdraw approximately $800 for the employee's net paycheck, and approximately $300 for payroll taxes. This $300 amount includes the amount withheld from the employee's paycheck to be paid to the state and federal government, as well as about $100 in employer-paid taxes. If you haven't learned already, you as an employer must pay the government for the privilege of employing people. This amount includes the employer portion of Social Security and Medicare taxes due on an employee's wages, plus any other local, state, or federal taxes that may be applicable at the time (the ever-changing complexities of the tax codes are yet another reason to outsource payroll).

The timing for the withdrawals of these amounts is important. By withdrawing the money immediately, you can sleep peacefully knowing that, no matter what happens, you have allocated funds to pay those taxes. If you process your own payroll, however, the cash flow will look quite different. You will write a check to Joe for about $800, and then a few weeks or even months later, write checks to the state taxing authority and the IRS for the $300. Going back to my example, if cash is really tight and I don't do an accurate daily cash flow forecast, it's possible my paper check to Joe could bounce. I would rather have to explain to my payroll processing company why the funds were unavailable, or rely on my back's overdraft protection to cover the shortfall, than explain to my employee why his check bounced. If I had ten employees, my bank would probably charge me $30 per overdraft or returned item, or $300 in total fees, instead of just two electronic overdrafts to a payroll processing company for a total of $60. In addition, if my bank did not honor the paychecks I had written, I would be morally obligated to pay any and all overdrafts incurred by Joe and my other employees due to their bounced paychecks. This careless mistake could easily cost me $1200 or more (if each employee had three overdrafts, that's 10 x 3 x $30 = $900, plus my own insufficient funds fees of $300).

The more insidious cost, however, occurs much later. What are the odds that I will have set aside $300 for the IRS three months from now? You may roll your eyes and laugh at this, but this situation occurs far more often than you might think. When a small business owner must choose between making a COD payment for materials to fill a customer order right now, or setting that money aside for a payroll tax payment in three months, the 'right' thing to do becomes less obvious. Further complicating this matter is a small business owner's eternal optimism that things will improve, the economy will turn around, and sales will pick up, enabling her to make that tax payment later when it is actually due. Unfortunately, this only digs the hole deeper. What once was a $300 deficiency, has now turned in to a $3000 deficiency, and continues to get worse with each passing pay period. In reality, it will be months before the IRS or state taxing authority attempts to contact the business owner concerning delinquent payroll taxes. A struggling business can dig a tax hole tens of thousands of dollars deep with little or no short-term consequence. As if that wasn't enough, this tax hole never goes away; neither insolvency nor bankruptcy will eliminate this debt, and should the business ultimately close, the owner will be personally liable for this amount.[2]

Options

There are myriad options for outsourcing your company's payroll processing, but broadly speaking, they generally fall into three basic categories: your accounting software provider, your local accountant, and a national processing company.

Accounting Software

Some accounting software systems (e.g., Inuit's QuickBooks) offer an outsourced payroll solution that integrates easily with their software. If your business is a time and materials shop where tracking payroll by project or job in your accounting system is critical, this can be a great solution. While often slightly more expensive than a national processing company, this option integrates payroll data with job costing data, enabling detailed job profitability reporting. Be sure, however, that the payroll option selected provides all of the benefits mentioned earlier. An outsourced payroll plan that still requires you to make your own tax payments is far less beneficial than a complete payroll solution.

National Processing Company

A national payroll processing company such as Paychex or ADP usually will have the lowest associated fees and most complete reporting options. Furthermore, both of these companies' names lend credibility to your business processes in the event of a payroll audit, much like a tax return prepared by a reputable accounting firm versus one of your own creation (or even worse, one that purports to make use of quixotic overseas tax shelters and offshore banking loopholes).[3] Based on my own personal business experiences as well as the experiences of dozens of clients, this is the option I most frequently recommend to small business owners. Again, however, be sure to select an option that provides escrowing of tax payments, direct deposit options for employees, automatic filing of payroll tax forms, and generation of W-2's, 940's, and 941's. The less you have to do, the better.

Local Accountant

The third option, using your local accountant, somehow proves to be the most expensive, yet least effective, solution time and time again. The most egregious example I've seen to date was a client with approximately ten employees, yet somehow a local accounting firm was charging this client over $75,000 per year to make tax deposits, file payroll tax forms, print quarterly reports, and prepare corporate tax returns. Paychex quoted the client $2600 per year to take over all payroll processing functions, leaving the local accounting firm with just preparing tax returns.[4] While this example represents the extreme, I have yet to find a local accountant who can process payroll for a lower fee than Paychex or ADP. Furthermore, the payroll reports produced by local accounting firms are often less detailed than those of the national processing companies. I understand the theoretical value that could be provided by a local expert to help answer all of your payroll questions, but in reality, this never happens. You shouldn't have any questions about your payroll; processing payroll should be as seamless and routine as maintaining insurance coverage for your business or paying the electric bill each month. I welcome feedback from accountants who disagree with me on this, but I have yet to hear of an accounting firm that provides payroll services in a manner as cost-effective and efficient as a national provider such as Paychex or ADP.

Conclusion

Ultimately, your choice of payroll solution will depend on your specific needs, but I would always advise either an integrated outsourced solution with your accounting software or a complete outsourced solution with a national processing company. The savings in both money and time are significant with either of these options. More importantly, however, consider the potential long-term consequences of not having an outsourced payroll solution. While you may plan on your company succeeding for many years, do not put yourself in a position where an economic downturn, a new competitor, or even a personal family tragedy will force you to choose between tomorrow's payroll and next month's tax payment. Outsourcing your payroll processing ensures that, if nothing else, all tax liabilities are current and paid, leaving you with one less thing to worry about.

END NOTES:

[1] Even not-so-small companies outsource payroll. A national consulting firm with over 1000 employees outsourced its payroll to ADP, despite having numerous attorneys and CPAs on staff.

[2] Much like student loans, most tax debts are not dischargeable through bankruptcy, and business tax debts attach to their owners/officers - even if the business closes, the individual is still liable. The best an individual can hope to do is create a low-interest repayment schedule under Chapter 11 or Chapter 13 of the U.S. Bankruptcy Code.

[3] According to the IRS, under-reporting by small businesses and others who report business income on the individual income tax return accounts for more than a quarter of the $385 billion annual tax gap in the U.S. While overall audit rates average 1 in 100 returns, 1 in 8 returns with incomes over $1 million were audited in 2010.

[4] On average, a company of this size spends a little over $7,000 annually in non-payroll accounting fees, including tax preparation services. Upon discovering this, my client promptly changed accounting firms.

Marshall Waters II, a management consultant and former small business owner himself, has traveled extensively throughout the United States and Canada, advising over 70 small and mid-sized businesses on topics such as sales and management training, strategic planning, marketing strategy, and turnaround management. You can reach him via his website at: http://www.altonconsultinggroup.com

All About Auto Owners Insurance

Apparently insignificant caveats and clauses ensconced deep in the fine print of auto insurance policies frequently spell the difference between good policies and bad ones. You can ask your insurance agent the following questions before signing an auto owners insurance contract, and make sure the identical answers are found in the policy itself.

Is this a "family policy" or a "named-insured-only" policy?

Family policies protect each of the drivers in the home and anyone they lend their vehicles to, whilst "named-insured-only" policies cover only drivers explicitly named on the policy. Family policies cost probably 10% to 15% additional (or higher, based on many factors, such as the driving records of any of the other drivers), but they will be the proper choice if anyone other than the policyholder ever drives the automobile. A lot of auto owners don't even understand that they have named-insured-only policies, and they lend their vehicles to friends and family unaware that they might not be covered in the event of an accident.

Do I have the right to decide on my own repair facilities and decide on original equipment manufacturer (OEM) parts with this policy?

A number of insurance agencies, including Geico, Nationwide and Progressive, have reworded some auto insurance contracts to limit automobile owners' repair selections following accidents. Using aftermarket parts -- parts not made by the vehicle's manufacturer -- in the vehicle could void its warranty. As an example: Your radiator must be changed following an automobile accident. A year later, your engine seizes up. The dealership likely will won't honor your warranty because of the aftermarket radiator.

Does this insurance policy have an appraisal clause?

This clause permits the policyholder to seek an appraisal in the event the insurance provider offers you a lesser amount for a totaled vehicle than the policyholder thinks it's valued at. Also ask: Does this appraisal clause allow for the appointment of a third participant by a "court of jurisdiction"? Using this method, when the policyholder's and insurance company's appraisers cannot agree on who to pick as an umpire, either appraiser could ask for the appointment of an umpire by a court of jurisdiction to interrupt the deadlock. If the reply to either of the questions is no -- be warned. You may be powerless if your insurance company contends that your car is worth less than its Kelley Blue Book or NADA (National Automobile Dealers Association) Guide value.

Does the "Limits of Liability" section of the contract contain the phrase "as defined by us"?

This specific part of your car insurance policy sets limits on just how much the insurer will pay. It could say that the insurer can pay "no more than the prevailing per hour labor rate of repair shops within the region," or "no more than a competitive estimate of repair costs."

Unfortunately, some insurers have begun attaching the phrase "as defined by us" onto the conclusion of the limitation clauses in some contracts, effectively giving the insurance company the right to insist on below-market repair rates. Their policyholders have to either take their vehicle to the insurer's "approved" repair shop, which is prepared to do repairs for that lowball rate, or take the automobile to a superior repair shop and pay out the difference up front.

Where to find The Very Best Insurer

Some insurance companies make a responsible attempt to look out for their customers' interests, while some mostly consider their very own bottom lines. Wise ways to tell which are which...

Examine the level of customer problems. Call your state's department of insurance, as well as ask which insurers have the smallest rates of customer complaints.

Examine client satisfaction ratings. Business research firm JD Power and Associates produces its own annual survey of car insurance customer satisfaction. Its most recent ratings can be obtained at http://www.jdpower.com/autos/ratings/autos-insurance.

Obtain suggestions from body shop managers or owners. Ask which insurers take care of their customers well and which try to scrimp on repairs.

Free online quotes at http://www.your-car-insurance.biz
Receive a auto owners insurance quote that will save you money by visiting http://www.your-car-insurance.biz, a reliable auto insurance website that provides information and resources