First Steps Financial

Cash Flow Forecasting: Predicting Uncertainty

Tue, 28 Apr 2026 01:53:06 GMT

Running a business requires navigating changing conditions. Sales may fluctuate from month to month, customer demands may shift unexpectedly, and external factors can influence financial performance without warning. These realities make financial planning challenging for many entrepreneurs. This is where cash flow forecasting becomes essential.

While no projection can predict the future with perfect accuracy, a well-designed forecasting process helps business owners prepare for different possibilities. Instead of reacting to surprises, leaders can approach uncertainty with a plan.

Strong forecasting does not rely on guessing. It combines historical patterns, thoughtful assumptions, and flexible planning that allows organizations to adapt when actual results differ from expectations.

Why Predicting Cash Flow Can Feel Difficult

Many entrepreneurs struggle with forecasting because business conditions rarely remain stable. Seasonal fluctuations, changing customer behavior, and market shifts can create unpredictable revenue patterns.

Uncertainty often leads owners to question whether projections are even worthwhile. Forecasts that fail to match reality can feel frustrating, especially when unexpected events disrupt plans.

The purpose of forecasting, however, is not perfect prediction. Financial projections help leaders understand potential outcomes and prepare for a range of scenarios. A clear picture of possible results makes it easier to navigate uncertainty with confidence.

When viewed as a planning tool rather than a guarantee, forecasting becomes far more valuable.

Using Scenario Planning to Prepare for Different Outcomes

Scenario planning strengthens forecasting by exploring multiple possibilities instead of relying on a single estimate. This approach allows entrepreneurs to understand how different circumstances might affect their financial position.

A basic scenario planning process typically includes:

An optimistic projection based on stronger-than-expected revenue
A realistic estimate using historical performance patterns
A conservative projection that assumes slower sales or delayed payments

Reviewing these scenarios helps leaders understand how much financial flexibility exists under various conditions. Planning for multiple outcomes also reduces stress when unexpected changes occur.

Organizations that regularly evaluate different financial scenarios are often better prepared to respond to market fluctuations.

Building Financial Buffers for Greater Stability

A contingency buffer provides an important safety net when actual results fall short of projections. Even a well-constructed forecast cannot eliminate every risk, which makes financial reserves an essential part of planning.

Cash reserves allow businesses to maintain operations during slower periods or unexpected disruptions. These funds may cover payroll, vendor obligations, or essential operating expenses when revenue temporarily declines.

Creating a financial buffer usually requires consistent discipline. Setting aside a portion of profits during strong months can gradually build a reserve that strengthens stability.

Having this cushion reduces pressure and gives leaders more time to make thoughtful decisions when challenges arise.

Creating Flexible Spending Frameworks

Forecasting works best when spending plans remain adaptable. A rigid budget can become problematic if revenue changes significantly throughout the year.

Flexible financial frameworks allow owners to adjust spending as actual results unfold. Certain expenses may remain fixed, while others can be scaled based on performance.

Several practices support this flexibility:

Prioritizing essential operating costs before discretionary spending
Delaying non-critical investments until revenue targets are achieved
Reviewing financial performance regularly to guide adjustments

This approach helps organizations remain responsive to real conditions rather than relying solely on early projections.

Build Stronger Financial Clarity for Your Business

Forecasting uncertainty becomes far more manageable when supported by accurate financial records and clear reporting. Reliable financial data allows entrepreneurs to create realistic projections and evaluate how their organizations are performing throughout the year.

First Steps Financial helps business owners strengthen their financial visibility through fractional bookkeeping and financial consultation services that support effective cash flow forecasting. Organized records and thoughtful analysis allow leaders to plan ahead while remaining flexible as conditions evolve.

If you want greater confidence in your financial planning and support building stronger cash flow forecasts, reach out to First Steps Financial today to start the conversation.

Five Summertime Strategies for 2026

Tue, 21 Apr 2026 20:10:39 GMT

We’re a few weeks away from the midpoint of the year. It’s the perfect time for taking a strategy check in your business to see how you’re doing for the first half of 2026 as well as to plan something fun and productive for summertime.

Here are five business strategies to help you regroup, reassess, and rejuvenate your business halfway through 2026.

Celebrate Your Accomplishments

Take time to pat yourself on the back and congratulate the people around you for the goals you’ve reached and the efforts your team has made on your behalf. You might be shocked when you think about how far you’ve come. Maybe you’ve hired another team member and your team is the largest it’s ever been; perhaps you’ve reached record revenue goals; possibly you’ve solved a complex supply chain problem.

We all could use more praise and more celebrations in our lives. Perhaps you can organize a party, or if you are not the partying type, a quiet word individually with your team can go a long way, maybe more than you know.

Take a Vacation

If you’re feeling quite burned out, the best thing you can do is stop and take a breather. There’s nothing better to rekindle your creative juices than to get away from the business for a while. Summertime is when most people take a vacation, so if your business is not having its busy season, this might be a good time to go away, even if for a little while.

If you’re anxious about being away from your business, you’re not alone. In your annual planning process, plan for and block out your vacation way ahead of time. Book the reservations with no refunds several months in advance so that you won’t chicken out at the last minute. There is life beyond your business, and you will be a better business owner when you take regular breaks away.

Schedule a Mid-Year Review

How has your business fared for the first half of 2026 compared to the goals you set at the beginning of the year? Are you on track to reach your goals? Should you design a course correction or are you on track? Maybe you’re even ahead of plan!

You can make this process as informal or formal as you want. Some businesses hold retreats; you may simply need some quiet time on a weekend when all your family is busy doing something else.

Be Selective About the Projects You Start

Is your plate too full? Entrepreneurs that wear many hats would probably say “yes” to that question, so the next question is do you have to do it all at once? Ask yourself what you can afford to stop doing that doesn’t make sense. Is there a project or two that can wait? If so, decide to stop stressing about not getting it done and give yourself permission to put it on the back burner for now.

Play Big

Maybe you’re not playing big enough. You might be busy, but are you busy with the things that will take your business to the next level? Do the thing you’re afraid to say “yes” to; the thing that you know will transform your business and get you closer to your dreams.

If you’re putting off a project that you know will pay back handsomely, then shelve everything you’re working on and start on the one that will reap the most rewards. It could be a new product or service line, a new ad campaign, a new hire, a new joint venture, new financing, or even a new partner, which is very big indeed. You likely know what it is you need to do; your gut has been telling you for a while now. Just get it started, and it will then become easier.

Summertime is a great time to regroup, re-energize, and refresh your business. Try one of these five tips to spice up your summer as well as your business success.

The Silent Profit Killer: How Payment Processing Fees Are Eating Your Bottom Line

Mon, 13 Apr 2026 17:10:06 GMT

Digital payments have become the standard for modern commerce. Whether customers tap a card at a register or complete an online checkout, convenience drives sales. Behind the scenes, however, many business owners overlook one quiet expense that steadily reduces profitability. Payment processing fees are often small on a per-transaction basis, yet they add up quickly across hundreds or thousands of sales.

Many entrepreneurs accept these charges as a routine cost without fully understanding how they work or how much they truly impact financial performance. Taking a closer look at how credit card processing operates can reveal hidden opportunities to protect margins and make more informed decisions.

Understanding What Payment Processing Fees Actually Include

A typical business transaction involves more than just the swipe of a card. Several participants play a role in moving funds from the customer’s bank account to the merchant’s account.

Processing costs generally include three core components:

Interchange fees: Charges set by card networks and paid to the issuing bank for handling the transaction
Assessment fees: Network charges collected by companies such as Visa or Mastercard for using their infrastructure
Gateway or service fees: Costs paid to payment processors that manage authorization, settlement, and reporting.

Each component contributes to the total amount deducted from every purchase. Together, they form the full cost of credit card processing services.

While the percentages vary depending on card type, industry, and transaction method, many companies pay somewhere between 2-3% for each sale.

The Real Cost Per Transaction

A 2% charge might appear minor at first glance. The true impact becomes clearer when owners translate percentages into actual dollars.

Consider a company generating $500,000 in annual card revenue. A 2.9% rate results in roughly $14,500 paid in processing charges. Increase annual revenue to $1 million and the cost rises to about $29,000.

These numbers illustrate how credit card processing fees quietly accumulate. When organizations rely heavily on electronic payments, the yearly burden can rival other major operating expenses.

Understanding this total cost helps leaders treat processing charges as a controllable financial factor rather than an unavoidable background expense.

Why High Volume Businesses Feel the Pressure Most

Industries with frequent transactions often experience the greatest impact from credit card processing. Restaurants, retail stores, subscription services, and e-commerce operations typically process large volumes every day.

Even small adjustments in rates can produce meaningful savings in these environments. A reduction of half a percentage point may translate into thousands of dollars over the course of a year.

The challenge lies in visibility. When costs are spread across hundreds of deposits and statements, they can easily blend into normal accounting activity. Businesses that examine their merchant reports regularly gain a clearer understanding of how these charges influence profitability.

Practical Ways to Reduce Processing Costs

Entrepreneurs cannot eliminate payment processing entirely, yet several practical steps can help reduce unnecessary expenses.

Review merchant statements carefully to identify hidden charges or unnecessary service add-ons
Negotiate rates with processors once transaction volume increases
Encourage debit payments or lower cost methods when appropriate
Evaluate whether the current provider still offers competitive credit card processing services

Small adjustments can create noticeable financial improvement over time. Regular monitoring also helps ensure fees remain aligned with the organization’s current transaction profile.

Strengthen Financial Visibility and Protect Your Margins

Processing costs represent one of many operational expenses that quietly affect profitability. Strong financial oversight allows leaders to recognize patterns, evaluate vendor relationships, and make adjustments when necessary.

First Steps Financial supports entrepreneurs through fractional bookkeeping and financial consultation designed to improve visibility across operating expenses, including credit card processing fees. Clear reporting and organized records help owners understand where money is going and where improvements may exist.

If you want clearer insight into your financial data and assistance in evaluating payment processing expenses, reach out today to start the conversation.

Don't Let Your Revenue Get Tangled: Mastering Your Accounting for Multiple Streams of Income

Fri, 27 Mar 2026 19:11:44 GMT

As businesses mature, the temptation to diversify becomes irresistible. A consultant may provide strategy sessions while selling downloadable guides. A fitness studio might offer in-person classes alongside virtual memberships and branded merchandise. Restaurants sometimes expand into packaged goods such as sauces or meal kits. While multiple streams of income provide valuable resilience against market volatility, they simultaneously create accounting complexity that can obscure profitability and drain resources.

Without a proper financial structure, diversification can become a liability masquerading as a strength. Entrepreneurs find themselves unable to answer fundamental questions: Which channel actually drives profit? Which consumes disproportionate operational overhead? Which deserves continued investment? These aren't academic concerns. They directly determine whether your business thrives or slowly strangles itself with unproductive complexity.

The Hidden Cost of Poor Income Categorization

Many business owners overlook a critical distinction between revenue growth and profit visibility. A coaching business that expands into digital courses might celebrate new revenue, only to discover later that customer acquisition costs for the course channel exceed those for one-on-one services by 300 percent. Without tracking multiple streams of income separately, this inefficiency remains invisible until it's already consumed months of resources.

Payment processors compound this problem. Payment platforms often batch deposits from multiple sources into single transfers. Marketing expenses, software subscriptions, and fulfillment charges blur together in expense accounts. The result: financial statements that show impressive top-line growth while actual profitability deteriorates undetected.

Expense allocation errors are particularly insidious. When a single advertising campaign drives sales across three revenue channels, business owners often make a false choice: assign the entire campaign cost to one channel, or divide it equally across all three. Both approaches distort reality, preventing accurate comparison of which channel actually generated the best return on that investment.

multiple income streams

Designing a Financial Architecture for Clarity

Sophisticated businesses separate income sources at the categorization level, not just in monthly reports. This means distinct income accounts for each revenue channel. Consulting fees, product sales, course revenue, subscription income, and affiliate earnings each occupy their own account.

This granular approach serves multiple purposes beyond simple tracking. It enables accurate gross margin analysis for each channel. A high-revenue offering might carry dramatically different profit margins than a lower-volume stream. Without this distinction, margin improvements in one area mask deterioration in another.

Monthly profit and loss statements should break down revenue, direct costs, and allocated overhead by channel. Direct costs attach to specific streams: fulfillment expenses for physical products, hosting for digital courses, or subcontractors for consulting projects. Allocated overhead requires more thoughtfulness. If you spend $3,000 monthly on business insurance that protects all operations equally, you might allocate proportionally to each channel based on revenue percentage.

This structured approach transforms accounting from a compliance burden into a strategic tool. Entrepreneurs can identify which channels justify expanded investment and which consume attention without generating proportional returns.

The Strategic Evaluation Framework for Multiple Streams of Income

Armed with accurate financial data, you can make informed decisions about which streams of income deserve continued development. Performance evaluation should consider not just revenue, but also:

Growth trajectory
Profit margins
Scalability, and
Alignment with your long-term vision

A channel generating consistent revenue with minimal oversight warrants different treatment than one requiring constant attention for modest returns. Similarly, high-margin offerings deserve different strategic prioritization than high-volume, low-margin streams.

Sometimes the best decision is discontinuation. Eliminating underperforming offerings frees resources, reduces administrative burden, and allows focus on your strongest opportunities.

Build Financial Clarity That Supports Growth

Whether you operate two revenue channels or ten, financial clarity remains non-negotiable. The complexity introduced by multiple streams of income isn't solved by working harder or hoping for better results. It's solved through intentional structure and consistent execution.

First Steps Financial helps entrepreneurs strengthen their financial systems through fractional bookkeeping and financial consultation services designed for growing organizations. Clear reporting and organized accounting structures provide the insight needed to manage expanding revenue streams with confidence.

If you want greater clarity around your income channels and accounting structure, connect with us to start building a system that supports your growth.

Leading vs Lagging Indicators: Financial Metrics Small Business Owners Need to Know

Mon, 09 Mar 2026 14:23:16 GMT

Running a company without reliable measurements is like driving without directions. You might move forward, yet uncertainty grows with every mile. That is why financial awareness matters for long-term stability and confidence. Think of metrics as a navigation system. Some readings tell you where you have been, while others hint at where you are headed. Understanding leading vs lagging indicators helps owners replace guesswork with informed direction and timely action.

What Are Lagging Indicators?

Lagging indicators measure results that already occurred. They confirm outcomes after decisions have played out, making them useful for evaluation and reporting. Common examples include:

Net profit or loss
Historical revenue growth
Accounts receivable aging
Customer acquisition cost calculated after campaigns conclude

These figures are concrete and easy to pull from records, which makes them popular during reviews or planning sessions.

Their strength lies in clarity. They show whether goals were met and whether strategies delivered results. Their weakness is timing. Once the numbers appear, the opportunity to influence them has passed. Adjustments based on these readings affect future periods, not the one already closed.

What Are Leading Indicators?

Leading indicators focus on signals that suggest what may happen next. They do not guarantee outcomes, yet they provide early insight into momentum and risk. Examples include:

Sales pipeline value
Website traffic paired with conversion behavior
Engagement trends
Cash flow projections
Quote-to-close ratios

These measures require consistency and discipline, since they depend on timely updates and thoughtful interpretation. Their advantage is foresight. They give leaders room to respond before challenges escalate. Their limitation is complexity. Tracking them takes effort, and interpretation can feel less certain than reviewing completed results.

Why Small Businesses Need Both

Lagging measurements validate whether a plan was successful or not. They answer questions about effectiveness and efficiency after the fact. Leading signals provide the chance to adapt sooner. They highlight potential shortfalls or opportunities while there is still time to act.

Using both creates balance. One confirms reality, while the other shapes preparation. Together, they support steadier decisions and reduce surprises.

How to Get Started

Begin by identifying two or three lagging results that reflect success in your industry. Choose figures that clearly connect to sustainability and cash health.

Next, select two or three leading signals that influence those outcomes. For example, if collection timing affects cash availability, monitor invoice trends and projected inflows.

Use tools like QuickBooks Online or customized dashboards to keep information visible. Schedule regular reviews weekly or monthly and commit to acting on what you see. Consistency matters more than volume.

Turn Leading vs Lagging Indicators Into Action

Understanding which signals matter is one step, but interpreting them accurately and applying them consistently is another. At First Steps Financial, we help organizations connect financial metrics with daily decisions through fractional bookkeeping and consultation. Our role is to guide you toward clarity, not overwhelm you with data.

If you want support setting up meaningful indicators and using them with confidence, let’s chat.

Protecting Your Investment: What to Consider Before You Sign a Small Business Partnership Agreement

Tue, 24 Feb 2026 20:22:35 GMT

Entering a partnership can feel like a major milestone. Shared vision, combined skills, and pooled resources often promise faster progress. Yet enthusiasm alone does not protect your investment. A well-structured business partnership agreement sets expectations early and reduces confusion later, especially when money, responsibility, and authority intersect.

Before signing anything, it helps to pause and examine how the arrangement will work in practice. Clear planning now can prevent strain and preserve trust down the road.

Defining Roles, Authority, and Accountability

Partnerships struggle most when responsibilities overlap or remain vague. Each participant should understand their scope of authority, operational duties, and decision-making rights .

Consider how daily choices will be handled. Determine who oversees operations, who manages finances, and who represents the organization externally. Clarity supports efficiency and reduces friction.

Written definitions also help when circumstances change. Growth, staff additions, or market shifts can test informal arrangements, while documented expectations provide stability.

Capital Contributions and Ongoing Commitments

Money is often the most sensitive topic in any business partnership agreement. Initial contributions should be clearly documented, including cash, assets, or services provided at the start.

Equally important is understanding future commitments. Decide how additional funding needs will be handled. Will partners contribute proportionally, seek outside financing, or pause expansion plans?

Addressing these questions upfront avoids resentment and protects working relationships. Transparency around financial considerations builds confidence and aligns priorities.

Profit Sharing, Draws, and Cash Flow Planning

Sharing profits seems simple until timing and distribution enter the conversation. Agreements should outline how earnings are allocated, when distributions occur, and what happens during lean periods.

It is also wise to distinguish between compensation for active involvement and returns on ownership. Mixing the two can cloud performance discussions and strain cash availability. Clear policies help ensure stability, especially when one partner depends more heavily on income from the organization than another.

Exit Paths and Conflict Resolution

Even strong partnerships can change over time. Planning for exits does not signal mistrust. It reflects foresight. Outline how ownership transfers occur, how valuations are determined, and what triggers a buyout. Include processes for resolving disputes without disrupting operations.

Having a roadmap for difficult scenarios protects both the investment and the people involved.

Turning Planning Into Financial Clarity

A strong business partnership agreement is more than a legal formality; it's an investment in your business's future and the relationship at its core. The effort you invest in planning now pays dividends through smoother operations, fewer misunderstandings, and stronger trust between partners. However, partnership agreements don't exist in a vacuum. They need to align with your actual financial realities: cash flow patterns, equity structures, and long-term sustainability goals.

At First Steps Financial , we help businesses gain financial clarity through fractional bookkeeping and financial consultation services. We’ll navigate the numbers so you can focus on running your business and building a solid partnership. Let's connect.

Accounting for Small Business Owners: 5 Red Flags That Your Books are Broken (And How to Fix Them)

Mon, 09 Feb 2026 20:35:28 GMT

Strong financial records are not just about compliance or organization. They shape daily decisions, long-term planning, and confidence as a leader. For many companies, problems begin quietly and grow until cash flow feels unpredictable or reports stop making sense. That is why accounting for small business owners deserves regular attention, even when things seem stable.

Below are five warning signs that your records may be unreliable, along with practical steps to correct them before they cause lasting damage.

1. Your Financial Reports Never Match Reality

If statements show healthy margins, but the bank balance feels tight, something is off. This disconnect often points to missing entries, timing issues, or misclassified transactions.

Start by reconciling accounts monthly. Compare statements against source documents such as invoices, receipts, and bank activity. Consistency creates trust in the numbers and reduces surprises when reviewing performance.

2. You Are Always Behind on Updates

When records lag weeks or months behind, visibility disappears. Decisions become guesses rather than informed choices.

Create a recurring schedule for updates. Weekly or biweekly check-ins keep information current and manageable. Smaller intervals also make it easier to catch errors early, before they compound into larger issues.

3. Expense Categories Keep Changing

Frequent shifts in how costs are labeled make trends impossible to track. Without consistency, comparing periods lose meaning.

Establish a clear chart of categories and stick to it. Adjust only when operations evolve in a meaningful way. Stable classifications help reveal spending patterns and support better planning.

4. You Rely on Your Bank Balance Alone

Checking available cash may feel sufficient, but it only tells part of the story. Outstanding invoices, upcoming obligations, and recurring commitments are invisible without proper reporting.

Use cash flow summaries to understand timing. Seeing inflows and outflows together provides clarity and reduces stress during slower periods. Awareness supports proactive choices instead of reactive ones.

5. Corrections Happen Only During Year-End

Waiting until the end of the year to clean up records can feel efficient, yet it often creates confusion and rushed fixes. Important insights are lost along the way.

Build in periodic reviews. Quarterly assessments allow adjustments while details are still fresh. This habit improves accuracy and reduces the burden of large-scale corrections later.

Turning Clarity Into Confidence

Addressing these red flags takes time and discipline, but the payoff is control. Reliable records support smarter pricing, steadier cash management, and calmer leadership.

First Steps Financial partners with organizations that want clarity without adding internal strain. Through fractional bookkeeping and financial consultation, our team helps bring structure, consistency, and insight to financial systems so leaders can focus on running their operations with confidence.

If you are ready to replace uncertainty with clarity, let’s connect .

Business Savings Emergency Fund: How Much Should You Keep in Cash Reserves?

Tue, 27 Jan 2026 20:22:06 GMT

Unexpected disruptions happen to every organization, no matter how established it may feel. Equipment breaks, clients delay payments, or market conditions tighten without warning. That uncertainty is why a dedicated cash buffer matters. A well-structured business savings emergency fund provides stability during uneven periods and helps leadership make decisions calmly rather than reactively.

Still, many owners ask the same question. How much liquidity is enough without letting idle funds hold the company back?

Why an Emergency Fund Is a Financial Anchor

An emergency reserve exists to protect daily operations when income timing shifts or expenses spike. Unlike growth capital, this money is not meant for expansion, hiring, or upgrades. Its purpose is continuity.

Having accessible business savings allows payroll, vendor obligations, and essential overhead to continue even during short-term stress. That breathing room preserves relationships and credibility, which can be difficult to rebuild once damaged.

Just as important, it reduces emotional decision-making. Leaders with a cushion can pause, assess options, and choose the most strategic path forward rather than acting out of urgency.

How to Calculate the Right Reserve Size

There is no universal number that fits every company, but a common benchmark is three to six months of core operating costs for business savings. Start by identifying predictable outflows such as compensation, rent, utilities, software subscriptions, and insurance.

Next, evaluate revenue reliability. Organizations with steady contracts may lean toward the lower end of the range. Those with seasonal income or client concentration often benefit from a larger buffer.

Also consider access to external funding. If credit lines are limited or expensive, holding more liquidity internally can provide flexibility when timing gaps appear.

Where to Keep Your Cash Reserves

An emergency fund should be easy to access and separate from daily transaction accounts. Mixing reserve money with operating cash increases the temptation to use it for nonessential purposes.

Many companies choose high-yield business savings or money market accounts that preserve principal while earning modest returns. The goal is safety and availability, not aggressive growth.

Clear labeling and internal guidelines help reinforce the purpose of the fund so it remains untouched unless a true disruption occurs.

Common Mistakes to Avoid

One frequent misstep is building business savings but never revisiting the amount. As operations scale, expenses rise, and your client mix changes, the business budget should be adjusted accordingly.

Another issue is using the fund as a convenience account. Tapping reserves for planned purchases defeats its protective role and can leave the organization exposed when an actual emergency arises.

Finally, some owners delay building reserves entirely because margins feel tight. Starting small and contributing consistently is far more effective than waiting for a perfect moment.

Building Confidence With the Right Financial Guide

Determining the appropriate reserve level and maintaining it over time requires visibility into cash flow patterns and expense behavior. This is where First Steps Financial can serve as a steady guide. Through fractional bookkeeping and financial consultation, our team helps organizations understand real operating needs, set realistic reserve targets, and monitor progress without adding internal complexity.

If you want clarity around cash reserves and long-term financial resilience, let’s connect.

The Entrepreneur's Guide to Financial Decision Making: Data vs Gut Instinct

Thu, 15 Jan 2026 02:07:51 GMT

Every entrepreneur faces a critical crossroads: should you trust the numbers or follow your instincts? The truth is that successful financial decision making requires both analytical rigor and intuitive judgment. Understanding when to lean on data versus when to trust your gut can mean the difference between breakthrough growth and costly mistakes.

The Case for Data-Driven Decisions

Numbers don't lie, but they do require interpretation. Data-driven financial decision making provides entrepreneurs with objective insights that remove emotional bias from the equation. When you're considering a major investment, expanding your team, or entering a new market, hard data gives you a foundation that gut feelings simply can't match.

Consider these advantages of analytics-based approaches:

Predictive accuracy: Historical financial data reveals patterns that help forecast future performance with reasonable confidence
Risk quantification: Metrics like cash flow projections and break-even analysis transform abstract risks into measurable variables
Stakeholder confidence: Investors and partners respond more favorably to decisions backed by solid numbers and research
Performance tracking: Data creates benchmarks that allow you to measure whether your decisions actually delivered results

The most successful entrepreneurs treat their businesses like laboratories. They A/B test pricing strategies, analyze customer acquisition costs, and constantly refine their approach based on what the metrics tell them.

When Intuition Matters Most

Yet data alone won't build a visionary company. Some of history's most transformative business moves happened because someone trusted their instincts against conventional wisdom. Steve Jobs famously said that customers don't know what they want until you show them, and no amount of market research would have predicted the iPhone's success.

Gut instinct becomes invaluable in scenarios where data is incomplete, misleading, or unavailable. Early-stage ventures often lack sufficient historical information to make purely analytical choices. In these situations, financial decision making must incorporate the entrepreneur's deep understanding of their market, customers, and competitive landscape.

Your intuition draws on pattern recognition that your conscious mind hasn't fully processed. Years of industry experience create an internal compass that can sense opportunities or threats before they appear in the spreadsheets. This is particularly true when evaluating people, assessing cultural fit, or making rapid decisions under uncertainty.

Finding the Balance

The most effective approach to financial decision making combines both methodologies. Start with data as your baseline, then apply intuitive judgment to interpret what those numbers mean in context. Ask yourself whether the quantitative analysis captures all relevant factors, or whether qualitative elements might tip the scales.

Create a framework for different decision types. Routine operational choices should be heavily data-driven, while strategic pivots might require more intuitive weight. Always document your reasoning, whether analytical or instinctive, so you can learn from outcomes over time.

When data and gut feeling conflict, that's your signal to dig deeper. Perhaps your instincts are detecting risks that aren't yet visible in the numbers, or maybe emotional attachment is clouding your judgment. This tension is actually valuable because it forces more thorough examination.

Moving Forward

Strong financial decision making isn't about choosing between spreadsheets and instinct. It's about developing both capabilities and knowing when each should take the lead. The entrepreneurs who thrive are those who can read a balance sheet with precision while also trusting the subtle signals their experience provides.

Ready to sharpen your financial strategy? At First Steps Financial, we help entrepreneurs build robust decision-making frameworks that leverage both data analytics and strategic insight. Whether you're scaling rapidly or navigating uncertainty, we'll work with you to make smarter financial choices that drive sustainable growth. Schedule your consultation today and discover how the right guidance can transform your business trajectory.

Business Recovery Plan: Financial Strategies to Rebuild Your Business After a Difficult Period

Fri, 26 Dec 2025 20:26:50 GMT

Every business faces challenging times, whether from economic downturns, unexpected crises, or internal struggles. The key to emerging stronger lies in implementing sound financial strategies that address immediate concerns while building long-term resilience. Recovery isn't just about surviving; it's about strategically repositioning your business for sustainable growth and profitability.

Assess Your Current Financial Position

Before implementing any recovery plan, you need a clear understanding of where your business stands. Conduct a comprehensive financial audit that examines cash flow, outstanding debts, operational costs, and revenue streams. This baseline assessment reveals which areas require immediate attention and which assets can support your recovery efforts.

Create a detailed balance sheet that includes all liabilities and assets. Identify which expenses are essential and which can be reduced or eliminated. This honest evaluation forms the foundation for all subsequent recovery decisions.

Prioritize Cash Flow Management

Cash flow often determines whether a business survives or fails during recovery periods. Implementing effective financial strategies focused on cash flow means accelerating receivables while managing payables strategically. Consider offering early payment discounts to customers while negotiating extended terms with suppliers.

Review your inventory management practices to free up capital tied in excess stock. Apply just-in-time ordering principles where feasible, and liquidate slow-moving inventory to generate immediate cash. Every dollar of improved cash flow strengthens your operational flexibility.

Restructure Debt and Obligations

When facing financial pressure, proactive debt management becomes crucial. Contact creditors early to discuss restructuring options before accounts become delinquent. Many lenders prefer working with businesses that communicate openly rather than dealing with defaults.

Consider these debt management approaches:

Consolidate multiple high-interest debts into single, lower-rate obligations
Negotiate payment plans that align with your current cash flow capacity
Explore refinancing options for long-term debts to reduce monthly obligations
Prioritize secured debts to protect essential business assets

Revise Your Budget and Reduce Costs

Developing lean operational financial strategies requires examining every expense category. Distinguish between costs that directly generate revenue and those that don't. Focus cuts on non-essential areas while protecting investments that drive customer acquisition and retention.

Renegotiate contracts with vendors, explore alternative suppliers, and consider shared services or outsourcing for non-core functions. Small cost reductions across multiple categories create significant cumulative savings that improve your bottom line.

Diversify Revenue Streams

Recovery plans shouldn't rely solely on cost-cutting. Smart financial strategies also emphasize revenue generation through diversification. Analyze your customer base to identify underserved needs or complementary products and services you could offer.

Explore new market segments, develop strategic partnerships, or create subscription-based offerings that generate predictable recurring revenue. Digital channels often provide cost-effective ways to reach new customers without substantial upfront investment.

Build Financial Reserves

Once stabilization begins, prioritize building an emergency fund. Even modest reserves provide crucial breathing room during future challenges. Allocate a percentage of monthly profits specifically for this purpose, treating it as a non-negotiable expense.

Consider these reserve-building tactics:

Set aside 5-10% of monthly revenue automatically
Deposit unexpected windfalls or tax refunds directly into reserves
Maintain a separate account to avoid temptation of accessing funds
Gradually increase reserve targets as profitability improves

Monitor Progress and Adjust

Successful financial strategies require ongoing monitoring and adjustment. Establish key performance indicators that track recovery progress, including profitability ratios, cash flow metrics, and debt-to-equity ratios. Review these indicators monthly to identify trends early.

Stay flexible and willing to modify your approach based on results. What works initially may need refinement as circumstances evolve. Regular financial reviews ensure your recovery plan remains aligned with current realities and future objectives.

Transform Your Business: Partner With Financial Experts for Sustainable Recovery

Rebuilding your business after difficult times demands expertise, commitment, and proven financial strategies tailored to your unique situation. You don't have to navigate this journey alone.

At First Steps Financial , we specialize in helping businesses develop and implement comprehensive financial strategies that drive results. We'll work alongside you to analyze your situation, identify opportunities, and create an actionable plan to restore financial health and position your business for growth. Ready to build a stronger, more resilient future? Let’s connect.

The Small Business Expense Tracking Guide

Mon, 15 Dec 2025 17:03:26 GMT

Running a small business means juggling a hundred different responsibilities, and keeping track of expenses can easily fall to the bottom of the pile. Yet small business expense tracking isn't just busywork or something to deal with "later." When you master this skill, you're literally taking control of your company's financial destiny. In this guide, we explore how to take complete control of your finances and uncover the insights hiding in your expense data.

Why Your Expense Records Matter More Than You Think

Think of your expense data as a financial mirror. It shows you exactly where your money is going and reveals patterns you might never have noticed otherwise. When you're diligent about small business expense tracking, you're not just creating paperwork. You're building a comprehensive narrative of your business operations that gives you real, actionable insights.

Maybe you'll discover that your software subscriptions have crept up to an unsustainable level, or that certain supply vendors are significantly more expensive than alternatives. These discoveries become opportunities to optimize and grow.

Create a System That Actually Works for You

The best small business expense tracking system is the one you'll actually use consistently. Start by choosing a method that fits your working style. Some business owners prefer digital tools with automatic receipt scanning, while others thrive with traditional spreadsheets. What matters is consistency and accessibility.

Consider implementing these foundational steps:

Designate a specific time each week to log expenses
Keep receipts organized in one central location
Categorize expenses logically from the start
Set up alerts for unusual spending patterns

Categorizing Expenses: Your Secret Weapon

Organization becomes your superpower when you group related expenses into meaningful categories. Rather than having a chaotic pile of receipts, thoughtful categorization reveals which areas of your business consume the most resources. You might have categories for equipment, office supplies, professional services, marketing, and utilities. Some expenses might not fit neatly into a single bucket, but spending time upfront to create clear categories pays dividends later when you need to understand your spending habits quickly.

Real-Time Tracking Beats Catch-Up Work

One of the biggest mistakes business owners make is waiting until the end of the month or quarter to handle small business expense tracking. By then, receipts are lost, details are forgotten, and the task becomes overwhelming. Instead, aim to log expenses as they happen or within a day or two. This real-time approach transforms expense tracking from a dreaded chore into a quick daily habit. You'll have more accurate records and spend less time backfilling information later.

Use Technology to Work Smarter

Modern tools have revolutionized how businesses handle expense management. Apps now exist that automatically categorize expenses, extract data from receipts, and sync information across devices. Ramp, for instance, offers a comprehensive spend management platform for businesses, combining corporate charge cards, expense management, bill payments, and accounting automation.

Evaluate solutions that integrate with your existing software so everything works seamlessly together. A small investment in the right technology can save you enormous amounts of time and reduce human error significantly.

Making Sense of the Numbers

Once your small business expense tracking system is running smoothly, the real magic happens. You'll generate reports that show your spending trends, identify cost-saving opportunities, and support better business decisions. When you can answer questions about your expenses quickly and confidently, you position yourself as someone who truly understands their business.

Your Next Step Forward

The business owners who take control of their finances are the ones who ultimately build the most resilient companies. Small business expense tracking is the foundation of that control. If you're ready to take your financial management to the next level, consider partnering with an accounting firm that specializes in working with small businesses.

At First Steps Financial, we go beyond simple number crunching. We become your strategic advisor, helping you interpret your expense data to make smarter decisions about cash flow management, spending allocation, and growth investments. We’ll help you implement systems that scale with your business, ensure nothing falls through the cracks, and free up your time to focus on what you do best: running and growing your company. That's the difference between struggling with finances and confidently piloting your business toward success. Let’s chat .

Nonprofit Accounting Best Practices: A Complete Guide for Board Members

Mon, 01 Dec 2025 15:00:49 GMT

Managing nonprofit accounting can feel overwhelming at times. As a board member, maintaining strong financial systems is essential for keeping your organization focused on its mission while building trust with supporters. Clear nonprofit accounting practices provide the foundation for sustainable growth and long-term impact.

Running a nonprofit takes more than passion; it requires structure, transparency, and reliable financial systems. With the right approach, your accounting can support organizational goals instead of creating obstacles.

Aligning Finances With Your Mission

Every strong organization connects its mission directly to its finances. Effective nonprofit accounting ensures resources are allocated where they matter most. When financial goals align with mission objectives, organizations become more focused and achieve greater impact.

Sharing regular financial updates with your team and board keeps everyone informed about fund usage and encourages accountability. This transparency builds confidence among donors and community partners over time.

Staying Compliant and Accountable

Sound nonprofit accounting practices help organizations meet financial regulations without requiring expertise in complex compliance matters. Organized records of donations, grants, and expenses demonstrate responsible stewardship of every dollar received.

Regular review of financial reports allows board members to identify small discrepancies before they escalate into larger problems. Clean, well-maintained records enable organizations to focus on their core mission rather than scrambling to address preventable issues.

Strengthening Financial Controls

Strong internal controls protect your organization and increase the reliability of your financial reporting. Here are five essential ways to improve your nonprofit accounting system:

Separate financial duties so no single person handles all money-related tasks. This division of responsibilities reduces risk and promotes accountability across the organization.
Track restricted funds clearly to ensure money designated for specific purposes is spent according to donor intent and grant requirements.
Monitor cash flow regularly to anticipate seasonal fluctuations and prepare for changes in funding streams.
Schedule financial reviews or audits as appropriate for your organization's size and complexity to identify potential issues early.
Keep your board fully informed so all members understand the organization's current financial position and can make sound governance decisions.

These practices make it easier to achieve the efficiency and transparency that donors, grant makers, and regulators expect from nonprofit organizations.

Planning Ahead With Budgeting and Forecasting

Strategic planning is one of the most valuable tools for organizational stability. A well-designed budget helps nonprofits maintain steady operations even during periods of uncertainty. Combining budgeting with forecasting enables organizations to prepare for new grant opportunities or shifts in donor contributions.

Flexible budgets that adapt to changing circumstances while remaining aligned with mission priorities give leadership teams confidence when making financial decisions that advance organizational goals.

Simple Ways to Strengthen Financial Performance

Improving nonprofit accounting doesn't require complex overhauls. These practical steps can create meaningful improvements:

Review financial reports consistently to maintain awareness of organizational progress and identify trends early.
Diversify funding sources to reduce dependence on any single grant or donor relationship.
Use reliable accounting tools that simplify transaction tracking and streamline reporting processes.
Train team and board members so everyone understands their financial responsibilities and can contribute to sound fiscal management.
Seek professional guidance when specialized expertise is needed for complex accounting or compliance matters.

Keeping systems simple and transparent allows nonprofit organizations to grow stronger and expand their impact in the communities they serve.

Building Financial Confidence That Lasts

Strong nonprofit accounting builds trust, confidence, and long-term stability. With appropriate processes in place, board members can focus on mission advancement knowing that finances are well-managed and transparent.

Clear financial systems transform accounting from a burden into a strategic asset that supports every aspect of organizational success. Our team at First Steps Financial makes managing money easier and more meaningful. Connect with us to learn how we can help your nonprofit stay organized, compliant, and ready for growth.

Monthly Financial Analysis Checklist: What Every Business Owner Should Analyze

Mon, 10 Nov 2025 21:37:52 GMT

Most business failures aren't caused by bad products or poor service. They result from preventable financial blindness. When leaders lose sight of their numbers, minor issues compound into critical problems. A disciplined approach to financial analysis transforms raw data into strategic advantage, turning monthly reviews into your organization's competitive edge. This systematic practice reveals patterns invisible to quarterly reviews, catches problems while they're still manageable, and positions your business to capitalize on emerging opportunities.

Financial Analysis: Reviewing Cash Flow for Liquidity

Cash flow statements reveal the actual movement of money through your organization. Unlike profit and loss statements that may show theoretical gains, cash flow tracks real dollars available for operations. This distinction matters because a profitable business can still fail if it cannot meet immediate obligations like payroll or vendor payments.

Compare your operating cash inflows against the timing of revenue collection. Late-paying clients create gaps that strain operations, while unexpected expense spikes can drain reserves faster than anticipated. Identifying these patterns early allows you to secure lines of credit before emergencies arise or adjust payment terms proactively.

Revenue Trends and Profitability Metrics

Break down revenue by product line, service category, or funding source to understand what actually drives your business forward. This granular view exposes which offerings generate sustainable growth and which drain resources without adequate return.

Gross margin analysis measures how efficiently you convert sales into profit before operating expenses. A shrinking margin signals pricing pressure, rising production costs, or inefficient operations. Through consistent financial analysis, address margin erosion by adjusting:

Pricing strategies to reflect true value delivery
Vendor agreements to reduce input costs
Operational processes to eliminate waste

Operating Expense Management

Track monthly spending against both budget projections and historical patterns. This dual perspective reveals whether cost increases represent intentional investments or uncontrolled drift. Categorize expenses by function (staffing, marketing, technology, facilities) to identify which areas deliver measurable returns and which consume resources without proportional benefit.

Rising costs aren't inherently problematic if they support strategic priorities. The key is ensuring every dollar spent advances your objectives. Technology investments should improve efficiency, marketing spend should generate qualified leads, and staffing increases should enable capacity growth.

Working Capital Cycle Analysis

Accounts receivable management determines how quickly customer promises convert to usable cash. Calculate your average collection period and track changes over time. Lengthening collection cycles indicate either deteriorating customer quality or inadequate follow-up processes.

Accounts payable timing affects both cash preservation and vendor relationships. While extending payment terms preserves liquidity, consistently pushing limits damages partnerships and may result in unfavorable pricing or service priority. The optimal approach balances cash needs with relationship value.

Integrating both metrics reveals your working capital cycle efficiency. Faster collection combined with strategic payment timing creates self-sustaining operations that require less external financing.

Key Performance Indicators That Matter

Financial analysis extends beyond traditional accounting metrics to include operational indicators that predict future performance. Select KPIs that directly connect to your strategic objectives rather than tracking generic benchmarks. Essential metrics to monitor include:

Customer acquisition cost
Revenue per employee
Gross profit margin
Accounts receivable turnover
Operating cash flow ratio

Growth-focused organizations emphasize expansion metrics like customer lifetime value and market penetration rates. Established businesses prioritize efficiency indicators such as operating leverage and return on invested capital. Nonprofits track donor retention and program efficiency ratios.

Building Sustainable Review Practices

Establish a consistent monthly schedule for financial analysis rather than sporadic deep dives. Use a standardized checklist covering cash flow, revenue composition, expense trends, working capital metrics, and relevant KPIs. This discipline converts periodic reporting into strategic management.

Regular reviews train your eye to spot anomalies quickly. You'll recognize when trends diverge from expectations and can investigate causes while course correction remains simple. Monthly attention prevents the accumulation of small issues into existential threats.

Creating Accountability Through Numbers

Financial analysis creates transparency around resource allocation decisions and performance outcomes. When leadership commits to regular review, the entire organization develops financial awareness that improves decision-making at every level.

This discipline prepares your business for both challenges and opportunities. Leaders who understand their financial position can move decisively when competitors hesitate. They weather downturns without panic and invest in growth from a position of strength.

Building this capability requires consistent effort, but the foundation it creates enables sustainable success. Need help streamlining your monthly financial analysis process? Our team at First Steps Financial is here to help. Let’s chat.

Business Growth Strategies: How to Finance Growth Without Destroying Cash Flow

Tue, 28 Oct 2025 13:13:40 GMT

Every year, thousands of ambitious companies collapse not from lack of opportunity, but from expanding too fast. The culprit? Depleted cash reserves that couldn't keep pace with growth. The paradox is stark: the very success that drives expansion can starve a company of the liquidity needed to survive. Smart business growth strategies recognize that sustainable expansion requires protecting your cash flow while pursuing new opportunities.

Evaluate Internal Cash Flow to Guide Business Growth Strategies

Before pursuing any expansion, leaders must understand their current financial position. This means analyzing revenue patterns, expense categories, and liquidity levels to determine whether operations can genuinely support new initiatives. Growth that compromises your ability to meet payroll, vendor payments, or operational costs isn't growth at all.

A thorough internal cash flow review exposes both strengths and vulnerabilities. Are receivables stretching beyond 60 days? Have fixed expenses climbed faster than revenue? Do seasonal fluctuations create liquidity gaps? Identifying these issues early allows you to address weaknesses before they become crises.

Rolling cash flow forecasts provide the forward visibility essential for confident decision-making. By updating projections monthly or quarterly, you can anticipate how expansion initiatives will impact liquidity and adjust accordingly.

Explore Financing Options That Support Stability

Once you've assessed internal resources, external financing can bridge the gap between current capacity and growth ambitions. The key is selecting options that provide flexibility without creating unsustainable obligations. Common financing approaches include:

Lines of credit: Flexible funding for short-term needs and working capital management.
Term loans: Structured repayment over time to fund larger, long-term growth initiatives.
Revolving facilities: Ongoing access to funds with repayment cycles that match operational needs.
Strategic partnerships: Shared funding arrangements that reduce risk and broaden opportunity.

Each option carries distinct implications. Short-term credit may solve immediate needs, but can strain cash flow if repayment schedules are aggressive. Term loans spread costs over time but require confidence that future revenue will support payments. Evaluate not just the cost but how each structure aligns with your revenue cycle and growth timeline.

Prioritize Investments With Measurable Returns

Not all opportunities deserve equal attention. Effective business growth strategies focus resources on initiatives that deliver clear, quantifiable returns such as increased revenue, operational efficiency gains, or expanded market reach.

Financial modeling helps compare potential outcomes and identify the highest-value investments. Analyze payback periods, contribution margins, and scalability to ensure capital flows toward opportunities that strengthen rather than strain your business. Consider phasing major projects to test results, refine approaches, and scale what works without overcommitting resources upfront.

Implement Scalable Processes to Prevent Bottlenecks

Rapid expansion exposes operational weaknesses. Without scalable system s, growth creates bottlenecks in invoicing, inventory management, fulfillment, or reporting that directly compromise liquidity and customer satisfaction.

Automation plays a critical role in scaling efficiently. Automated invoicing accelerates collections and reduces errors. Digital inventory systems prevent stock outs and overordering. Integrated reporting platforms provide real-time visibility into performance metrics. However, technology alone isn't enough. Training teams, refining communication channels, and establishing clear protocols ensure people and processes evolve together to support sustainable expansion.

Monitor Key Indicators to Stay Ahead of Problems

Business growth strategies succeed only when leaders actively track performance. Operating cash flow, working capital ratio, and debt service coverage reveal whether expansion aligns with financial health. Regular monitoring enables you to spot warning signs early and course-correct before minor issues escalate into major problems.

Real-time dashboards and reporting platforms make this easier. Monthly or quarterly reviews of both financial and operational metrics allow timely adjustments. But don't focus solely on financial indicators. Customer retention rates, operational efficiency, and team capacity provide equally important signals about whether growth is sustainable or simply inflating revenue at the expense of long-term stability.

Growth Should Strengthen, Not Strain, Your Business

Successful expansion isn't about chasing every opportunity but about pursuing the right ones at the right time. By carefully evaluating cash flow, making thoughtful financing choices, investing strategically, building scalable systems, and monitoring performance consistently, you ensure that growth builds organizational strength rather than exposing dangerous vulnerabilities.

First Steps Financial partners with you to design business growth strategies that balance ambition with financial discipline. Together, we analyze your position, identify sustainable opportunities, and implement approaches that expand your organization while protecting liquidity. Connect with our team to build a growth plan rooted in both confidence and financial resilience.

10 Financial KPIs Every Small Business Owner Should Track

Thu, 16 Oct 2025 13:55:04 GMT

Running a small business when you're not tracking the right Financial KPIs is like steering a ship through foggy waters without a compass. While passion and intuition might have launched your business, sustainable growth requires clear visibility into your financial performance. The good news? You don't need an MBA to master the essential metrics that will guide your business decisions and illuminate the path to profitability.

1. Cash Flow

Cash flow is the lifeblood of any small business. This metric shows you exactly how much money is flowing in and out of your business over a specific period. Unlike profit, which can be theoretical, cash flow represents real money you can actually spend. Positive cash flow means you're bringing in more than you're spending, while negative cash flow signals potential trouble ahead. Monitor both your operating cash flow (from daily operations) and free cash flow (what's left after necessary investments) to get a complete picture of your financial health.

2. Gross Profit Margin

Your gross profit margin reveals how efficiently you're producing and delivering your products or services. A healthy gross profit margin indicates that you are pricing your offerings appropriately and managing production costs effectively. Financial KPIs like gross profit margin help you understand whether your core business model is fundamentally sound before considering overhead expenses.

3. Net Profit Margin

While gross profit margin focuses on direct costs, net profit margin gives you the complete financial story. This metric shows what percentage of your revenue remains after all expenses, including overhead, taxes, and interest payments. It's the ultimate measure of your business's profitability and efficiency. A declining net profit margin might indicate rising costs, pricing pressure, or operational inefficiencies that need immediate attention.

4. Customer Acquisition Cost (CAC)

Understanding how much you spend to acquire each new customer is crucial for sustainable growth. Customer Acquisition Cost includes all marketing and sales expenses divided by the number of new customers gained in that period. This Financial KPI helps you evaluate which marketing channels deliver the best return on investment and ensures you're not spending more to acquire customers than they're worth to your business.

5. Customer Lifetime Value (CLV)

Customer Lifetime Value predicts the total revenue you can expect from a customer throughout your entire relationship. Financial KPIs like CAC and CLV help you make informed decisions about how much to invest in customer acquisition and retention. When your CLV significantly exceeds your CAC, you have a healthy, scalable business model. Focus on increasing CLV through improved customer service, upselling, and building long-term relationships.

6. Accounts Receivable Turnover

This metric measures how efficiently you collect money owed to your business. Calculate it by dividing your net credit sales by average accounts receivable. A higher turnover ratio indicates you're collecting payments quickly, which improves cash flow. If this ratio is declining, you might need to tighten credit policies, improve collection processes, or reconsider which customers you extend credit terms to.

7. Inventory Turnover

Financial KPIs for businesses that carry inventory, show how quickly you're selling and replacing stock. A high inventory turnover typically indicates strong sales and efficient inventory management, while a low turnover might signal excess stock, poor demand forecasting, or products that aren't resonating with customers. Strike the right balance to avoid stockouts while minimizing carrying costs

8. Debt-to-Equity Ratio

This ratio compares your total debt to your business equity, providing insight into your financial leverage and risk profile. A high debt-to-equity ratio might indicate heavy reliance on borrowed money, which increases financial risk but can also accelerate growth. Understanding this ratio helps you make informed decisions about financing options and manage your capital structure effectively.

9. Working Capital Ratio

Working capital measures your ability to meet short-term obligations and is calculated by dividing current assets by current liabilities. A ratio above 1.0 indicates you have sufficient liquid assets to cover immediate debts. This Financial KPI is vital for managing seasonal fluctuations and unexpected expenses that could otherwise disrupt your operations.

10. Revenue Growth Rate

Track how your revenue is growing month-over-month, quarter-over-quarter, and year-over-year. This metric helps you identify trends, evaluate the effectiveness of growth strategies, and make realistic projections for the future. Consistent revenue growth indicates a healthy business trajectory, while declining growth rates signal the need for strategic adjustments.

Take Control of Your Financial Future

Mastering these Financial KPIs transforms you from a business owner who's simply hoping for success into one who's strategically driving toward it. However, implementing robust financial tracking systems and interpreting these metrics correctly can feel overwhelming when you're already juggling countless other responsibilities.

That's where expert guidance makes all the difference. At First Steps Financial, we specialize in helping small business owners like you establish comprehensive financial monitoring systems, interpret key metrics, and translate data into actionable strategies. Our team understands the unique challenges you face and can help you build the financial foundation necessary for sustainable growth. Don't let uncertainty cloud your business decisions any longer. Let’s connect and discuss how proper financial tracking can accelerate your path to success.

Pricing Strategies That Actually Increase Profit Margins

Fri, 03 Oct 2025 02:26:58 GMT

Most businesses leave significant revenue on the table simply because they're using outdated pricing strategies. While many companies default to cost-plus pricing or match competitor rates, strategic pricing can unlock more profit without losing customers or compromising value.

Smart pricing isn't just about covering costs; it's about understanding customer psychology, market positioning, and value perception to maximize both profitability and customer satisfaction.

Understanding Cost, Value, and Competitive Pricing Strategies

Let’s start by exploring the fundamental relationship between cost structure, perceived value, and market positioning. Understanding these strategies will help you develop pricing strategies that maximize profitability while remaining competitive. These core concepts enable you to make informed pricing decisions that align with both your financial objectives and customer expectations.

Cost-based pricing ensures each product or service covers expenses while providing a reliable baseline profit margin. Relying exclusively on cost plus markup may miss opportunities to generate additional revenue strategically. Comparing internal costs against industry benchmarks allows pricing that stays competitive without reducing profitability.

Value-based pricing emphasizes the benefits customers perceive rather than only production costs. Customers often pay higher prices when pricing accurately reflects the value and benefits they receive. Ongoing assessment of customer preferences and market shifts is essential to keeping pricing effective and sustainable.

Competitive pricing evaluates your offerings relative to competitors’ market positions and pricing structures. Analyzing competitor prices uncovers opportunities for differentiation while protecting overall profit margins.

Leveraging Tiered Pricing and Bundling

Tiered pricing encourages customers to select higher-value options by presenting multiple pricing levels. Offering basic, standard, and premium tiers motivates clients to upgrade without feeling pressured. The highest tier should provide clear, tangible benefits that justify the increased cost and value.

Bundling complementary products or services increases average purchase value while reinforcing perceived benefits. Grouped offerings often encourage additional spending and enhance overall customer satisfaction. Financial modeling helps determine which bundles maximize profit margins effectively and support strategic objectives.

Key Takeaways:

Offer multiple pricing tiers to guide customers toward higher-value options
Bundle complementary products or services to increase average transaction value
Use financial modeling to identify bundles that improve profit margins

Monitoring the performance of these tiers and bundles provides actionable insights for improvement. By tracking revenue, conversion rates, and customer responses, you can make data-driven decisions to refine strategic pricing approaches.

Applying Psychological Pricing Strategies

Psychological pricing can subtly influence customer decisions while maintaining product value. Pricing strategies that set items just below round numbers, such as $49 instead of $50, increase perceived affordability. This strategy leverages human behavior rather than relying on direct cost adjustments or discounts alone.

Anchoring high-priced options alongside standard offerings nudges customers toward mid-tier selections. Strategic placement encourages larger purchases and guides customers to perceive higher value within their choices. By offering comparative displays, you enhance the buyer’s decision-making confidence and the effectiveness of your pricing approach.

Key Techniques:

Price just below round numbers to increase perceived affordability without reducing profits
Anchor high-priced options alongside standard offerings to encourage mid-tier purchases
Use price framing and comparisons to highlight perceived savings and enhance customer value
Highlight limited availability or urgency to subtly motivate quicker purchase decisions
Employ decoy pricing to make certain options appear more attractive and valuable

Assessing Market Position and Competitor Pricing

Regularly reviewing competitor pricing uncovers gaps and areas where your offerings can increase perceived value. Understanding your market position informs decisions regarding strategic price adjustments, promotional offers, and sustainable margin protection. It also helps you ensure that your products or services remain appealing to customers.

Competitor monitoring is, however, not a once-and-done. To support long-term financial stability and growth strategies, you need to continually monitor market trends and emerging competitors.

Testing and Iterating for Profitability

Testing different price points, packages, or promotional offers helps identify strategies that improve profitability. By executing small-scale pricing experiments, you can gain valuable insights without risking overall revenue or customer satisfaction during implementation.

By conducting financial modeling and scenario analysis, you can forecast the impact of pricing changes before full implementation. Continuous iteration creates a dynamic pricing framework that responds to evolving market conditions and customer behavior. This adaptive approach is vital to maintain consumer trust and satisfaction while optimizing profits.

Are You Leaving Revenue on the Table?

Pricing decisions directly influence revenue, customer perception, and long-term growth potential. At First Steps Financial, we deliver tailored consulting solutions designed specifically for your business needs and goals. Our experts can help you evaluate your business strategies through financial analysis and forecasting. With a results-driven approach, we continually monitor outcomes and make adjustments to create measurable impact. With First Steps Financial, you’re not just getting a consultant; you’re gaining a trusted ally in achieving your goals! Let’s connect.

How to Build a Winning Business Budget: Critical Questions for Success

Tue, 16 Sep 2025 18:10:55 GMT

Creating a business budget is one of the most critical steps for entrepreneurs looking to build a financially sustainable and successful business. The process involves careful consideration of multiple financial factors and asking the right questions to ensure your financial planning aligns with your long-term goals. The questions outlined in this guide won’t only help you construct a smart business budget but will create a roadmap for strategic financial decision-making throughout the year.

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Why Fractional Accounting is Essential for Your Small Business

Tue, 16 Sep 2025 16:48:32 GMT

Small businesses face a persistent financial challenge: they need professional accounting expertise but often cannot justify the expense of hiring a full-time accountant. Between managing cash flow, preparing taxes, and ensuring compliance, the financial complexities can quickly overwhelm business owners who started their ventures to focus on their core products or services, not spreadsheets and regulations. Fractional accounting emerges as the perfect solution, offering professional accounting services on a part-time or project basis.
This approach provides small businesses with expert financial management without the substantial overhead costs associated with full-time staff. By leveraging fractional accounting, small businesses gain access to seasoned professionals who can guide their financial strategy while maintaining the flexibility to scale services according to their specific needs and budget constraints.

What is Fractional Accounting?

Fractional accounting represents a service model where experienced accounting professionals work with multiple clients on a part-time basis rather than being employed full-time by a single company. This arrangement allows businesses to access high-level accounting expertise without the commitment and expense of traditional employment relationships.

The services encompassed by fractional accounting are comprehensive and tailored to each business's requirements. These typically include monthly bookkeeping, financial statement preparation, cash flow analysis, budgeting assistance, and strategic financial consulting. Many fractional accountants also provide specialized services such as controller-level oversight, financial process improvement, and preparation for audits or investor presentations.

Engagement models vary to accommodate different business needs and preferences. Some companies prefer hourly arrangements for specific projects, while others establish monthly retainers for ongoing support. Project-based engagements work well for seasonal businesses or companies facing particular financial milestones.

Cost-Effectiveness: The Primary Advantage

The financial benefits of fractional accounting become immediately apparent when comparing costs against traditional full-time employment. A full-time accountant typically commands an annual salary between $68,000 and $82,000, not including benefits, payroll taxes, workers' compensation, office space, equipment, and software licenses. These additional costs can easily add another $15,000 to $25,000 annually.

Fractional accounting eliminates these employee-related expenses. Businesses pay only for the services they actually need, when they need them. A small business might spend $1,500 to $5,000 monthly for comprehensive fractional accounting services that would cost significantly more with a full-time employee. For businesses requiring only basic bookkeeping, monthly costs will be considerably lower.

Beyond direct cost savings, fractional accounting delivers substantial return on investment through improved financial decision-making. Professional accountants identify deductions, optimize cash flow management, and provide insights that prevent costly mistakes. Many small businesses discover that their fractional accountant's recommendations save them more money than the service costs. This makes it essentially a profit-generating investment rather than just an expense.

Access to Expert-Level Expertise

One of the most compelling advantages of fractional accounting lies in the caliber of professionals available to small businesses. While a company might only afford a junior-level full-time accountant, fractional accounting provides access to senior professionals with decades of experience, advanced certifications, and specialized knowledge across multiple industries. Their experience working with diverse clients means they can quickly identify patterns, spot potential issues, and recommend solutions based on proven strategies from similar businesses.

Fractional accountants maintain current knowledge of ever-changing regulations and industry best practices through continuing education and professional development. This ongoing learning ensures that small businesses benefit from up-to-date expertise without having to invest in training or worry about whether their internal staff stays current with regulatory changes. The strategic guidance these professionals provide helps business owners make informed decisions about expansion, financing, and long-term planning.

Scalability and Flexibility Benefits

The dynamic nature of small businesses demands accounting support that can adapt quickly to changing circumstances. Fractional accounting excels in providing this flexibility. It allows companies to scale services during busy periods and reduce them during slower times without the complications of hiring, training, or dismissing employees.

Economic uncertainties and market fluctuations become more manageable when businesses can adjust their accounting support accordingly. Companies facing temporary downturns can reduce services to essential functions. Conversely, those experiencing unexpected growth can quickly scale up to handle increased transaction volumes and more complex financial reporting requirements. This flexibility extends to accessing specialized expertise for specific projects, such as financial modeling for loan applications or due diligence for potential acquisitions.

When Your Small Business Needs Fractional Accounting

Several clear indicators signal that a business has outgrown basic accounting software and DIY financial management. Transaction volumes that require more than a few hours weekly to manage suggest the need for professional support. Similarly, businesses facing complex financial situations such as multiple revenue streams, inventory management, or multi-state operations benefit significantly from accounting expertise.

Specific business milestones and growth phases may trigger the need for fractional accounting services:
Companies preparing for bank loans require professionally prepared financial statements and cash flow projections.
Businesses seeking investors need sophisticated financial reporting and analysis that demonstrates growth potential and financial stability.
Companies facing audits or regulatory scrutiny require expert preparation and representation.
Expanding businesses need cash flow management, budget planning, and financial controls to support sustainable growth.
Companies considering new markets, products, or services require financial analysis to evaluate opportunities and risks effectively.

Making the Strategic Investment in Your Business's Future

Fractional accounting represents more than just a cost-saving measure; it constitutes a strategic investment in your business's financial health and growth potential. The combination of professional expertise, cost efficiency, and operational flexibility creates a foundation for sustainable business success that few small businesses can achieve through other means.

At First Steps Financial, we offer a range of professional accounting services, including fractional accounting, bookkeeping, financial advisory and consulting services, and strategic guidance. Our experienced team understands the unique challenges small businesses face and provides tailored solutions that evolve with your company. We’re here to alleviate financial stress and enhance your business growth potential. Let’s connect.

Small Business Owner? 7 Signs It's Time to Consider Small Business Accountants for Your Company

Fri, 05 Sep 2025 17:26:18 GMT

Understanding the Strategic Role of Small Business Accountants

Many entrepreneurs struggle with a common dilemma: knowing when to step back from certain responsibilities and bring in professional support. You understand your business better than anyone, but the complexity of business finances requires specialized expertise that goes far beyond basic number-crunching.

Small business accountants serve as far more than data entry specialists. These professionals act as financial strategists, business advisors, and operational efficiency experts rolled into one. They bring analytics to your financial decision-making process while providing insights that help you reshape how you view your business's potential.

The 7 Critical Warning Signs

Navigating the financial landscape of a growing business requires keen awareness and proactive planning. The following warning signs reveal critical moments when small business owners should consider professional accounting support.

Sign 1: Your Financial Records Create More Confusion Than Clarity

When reviewing your books feels like deciphering a foreign language, and you spend more time trying to understand where your money went than planning where it should go next, you need to take decisive steps to bring clarity back. Disorganized financial records don't just create headaches; they prevent you from making informed decisions about inventory, staffing, marketing spend, and growth investments. If reconciling accounts has become a monthly nightmare or you're unsure about your true profitability, a professional bookkeeper can serve as a trusted partner to restore order.

Sign 2: Cash Flow Unpredictability Keeps You Awake at Night

Successful businesses often experience the paradox of being profitable on paper while struggling with actual cash availability. When you find yourself constantly worried about meeting payroll, paying suppliers, or having enough working capital for unexpected opportunities, it's time to consider professional help.

Accounting professionals excel at creating cash flow forecasting models that turn unpredictable financial swings into manageable, anticipated patterns you can plan around.

Sign 3: Business Decisions Happen in an Information Vacuum

Every strategic choice, from hiring decisions to product launches, should be grounded in solid financial data. If you're making important business decisions based on gut feelings rather than concrete financial analysis, you're operating without one of your most powerful tools.

Professional accountants create comprehensive reporting systems that provide real-time insights into which products, services, or customer segments drive profitability and which ones drain resources.

Sign 4: Rapid Growth Has Outpaced Your Systems

Success can create its own hurdles. The simple systems you used initially become inadequate when transaction volumes increase or you manage multiple revenue streams. Small business accountants specialize in scaling financial infrastructure to match business growth. This ensures that expanding operations don't collapse under their own administrative weight.

Sign 5: Compliance Requirements Feel Overwhelming

As businesses evolve, regulatory obligations multiply. New licensing requirements, industry-specific reporting standards, employment regulations, and operational compliance demands can consume your time and mental energy.

Rather than becoming an expert in every regulatory nuance, engaging a professional allows you to ensure compliance while focusing on activities that directly drive revenue and growth.

Sign 6: Financial Planning Extends Beyond Next Month

When your business planning involves longer time horizons, investment considerations, or funding discussions, rudimentary financial tracking becomes insufficient.

Whether you're contemplating expansion, considering acquisition opportunities, or preparing for investment rounds, fractional accounting firms provide the sophisticated financial modeling and analysis that informed decision-making requires.

Sign 7: You're Leaving Money on the Table

Perhaps the most subtle but costly sign involves missed opportunities for financial optimization. This might manifest as poor vendor payment timing, suboptimal pricing strategies, or failure to identify the most profitable aspects of your business. A fractional professional can help you identify these hidden profit centers and cost reduction opportunities.

The Fractional Advantage for Growing Businesses

Fractional accounting services provide access to financial expertise without the overhead costs associated with full-time staff positions. With a fractional accountant on your team, you stay in the driver’s seat armed with senior-level expertise in your corner, ready to help you seize opportunities, cut through complexity, and gain a competitive edge.

Fractional accountants often bring years of experience across multiple industries and business stages, offering insights that come from seeing diverse challenges and solutions. The scalability factor makes fractional arrangements particularly attractive. As your business grows, services can expand proportionally. During slower periods, you're not paying for unused capacity.

The investment in professional accounting support typically pays dividends far beyond its cost through improved decision-making and operational efficiency.

Ready to transform your business's financial strategy? At First Steps Financial, we offer tailored accounting solutions that help you turn potential challenges into meaningful opportunities. You’ve already proven you can build a thriving business; now take the next winning step. Let’s design a financial strategy that keeps you ahead of the game. Let’s connect.

Business Succession Planning Essentials for Small Business Owners

Wed, 09 Jul 2025 14:00:01 GMT

Business Succession Planning Essentials for Small Business Owners

For many small business owners, their company is not just a source of income—it’s the result of years of dedication, late nights, and personal sacrifice. Whether you're considering retirement, passing your business to a family member, or preparing for a future sale, business succession planning is a critical step in protecting what you’ve built.

What Is Business Succession Planning?

Business succession planning is the process of preparing for the future transition of your business, whether through sale, inheritance, or internal leadership change. It involves identifying successors, outlining a strategy, and organizing your finances and operations to ensure a smooth transition.

Succession planning is not just for retirement- it could be about starting a new business or moving onto something else that you are passionate about- either way, It's about creating options and control. Whether you're five years or five months from exiting, a plan puts you in the driver’s seat.

Why Is Succession Planning Important for Small Business Owners?

Many small business owners wait too long to think about succession, and unfortunately, that delay can lead to:

Undervalued sales
Operational chaos
Family or partner disputes
Tax surprises

With a thoughtful plan, you can:

Maximize your business’s value
Transition smoothly to the next owner or leader
Protect employees, customers, and the legacy you've built
Reduce legal and tax complications

Common Questions on Business Succession Planning

How early should I start succession planning?
Ideally, you should start planning 3–5 years before your intended exit. That gives you time to prepare successors, clean up financials, and improve your valuation.
Do I need a successor picked out already?
No, but having options is key. Whether it’s a family member, employee, or third-party buyer, identifying potential successors early helps guide your planning and vetting.
What’s the difference between succession planning and exit planning?
They overlap—succession planning focuses on who will take over, while exit planning includes how and when you’ll transition, including the financial, legal, and operational details.
How much is my business worth?
This is often the biggest unknown. A professional valuation and well-organized financials can reveal your business’s true value—and where you can increase it. Business owners tend to think their businesses are worth more than they actually are- bringing in a professional is worth the time and effort.

Exit Planning for Entrepreneurs: Where to Start

If you're thinking about selling your business, exit planning can feel overwhelming. Here’s where to begin:

Get Your Books in Order
Clean, accurate financials are essential. Buyers (and their advisors) want transparency. Your bookkeeper can help ensure your QuickBooks is investor-ready.
Clarify Your Goals
What’s your ideal exit? A full sale, partial sale, family transition, or merger? Different paths require different planning.
Understand the Tax Implications
Work with your CPA and financial advisor to anticipate taxes from the sale and explore strategies to reduce your liability.
Strengthen Operations
A business that runs without you is more valuable. Document processes, train key staff, and eliminate owner-dependent tasks. Delegate and Elevate
Assemble Your Team
You don’t have to do it alone. Surround yourself with trusted advisors—your bookkeeper, attorney, CPA, and business broker. Most of these professions deal with businesses exiting and it won’t be their first time dealing with this.

Important Questions when thinking about an exit or succession. This will ensure success for you and your business.

1. Assess Your Current Position

Are your financials accurate and current?
Do you know your business’s valuation?
Are your processes documented?

2. Define Your Timeline and Goals

When do you want to exit?
How much do you need from the sale to support your next chapter?

3. Identify Potential Successors

Internal (employee or family) vs. external (sale to third party)

4. Prepare the Business for Transition

Delegate responsibilities
Formalize operations
Reduce reliance on you

5. Plan for Life After the Exit

What will you do next—retire, start something new, or consult?
Sometimes this is the most important place to start. Having a plan in place and something to look forward to after the sale can make a difference on how you view the whole process and outcome

Final Thoughts

Whether you’re actively preparing to sell or simply thinking about your options, business succession planning puts you in control. Don’t wait for a life event or burnout to make a decision. With the right guidance and preparation, you can exit on your terms and leave your business and legacy in good hands.

Need help getting your books in shape for a future transition?

We specialize in making your financials clear, clean, and buyer-ready—so when the time comes, you're set up for success. Reach out today to talk about how we can support your journey.

What You’re Really Paying for When You Hire First Steps Financial

Tue, 01 Jul 2025 19:29:40 GMT

What You’re Really Paying for When You Hire First Steps Financial

We often hear, “Why does this cost more than my last bookkeeper?”

It’s a fair question—especially if your previous bookkeeper logged into QuickBooks once a month, reconciled a few accounts, and sent you a report you barely glanced at. That’s not what we do at First Steps Financial. We’re not a traditional bookkeeping service—we’re your Fractional financial operations team.

This week, we spoke with a founder who hadn’t seen a real financial report in six months and another who was frustrated by constant last-minute scrambles for payroll. Two very different stories, but both highlighted the same issue: they were stuck managing financial tasks instead of running their businesses.

Here’s what you're really investing in when you hire us:

1. A Team That Leads the Process So You Don’t Have To

You shouldn’t have to babysit your bookkeeper.

One business owner told us she spends her Fridays reviewing QuickBooks entries, double-checking payroll entries, and texting her bookkeeper to fix missing receipts. That’s not the job of a CEO.

At First Steps Financial, we drive the financial process. Fractional is all about ownership of the process and being part of your business’ success. Our team takes ownership of every task—categorizing expenses, paying vendors, tracking payroll, and reconciling accounts—without being chased down. You'll have a system in place that runs without your constant input. Want to stay hands-on? Great. Prefer to be hands-off? Even better—we've got it covered either way.

2. We Don’t Just Do Your Books; We Build Your Financial Operating System

One startup came to us using five disconnected systems: spreadsheets for expenses, Venmo for contractor payments, manual payroll entries, and no clear way to track profitability by project. Their internal team was overwhelmed, and decisions were being made with partial data.

Within 60 days, we had:

Consolidated their tech stack and integrated QuickBooks Online with Gusto, Bill.com, and Ramp.
Designed a custom chart of accounts to give visibility into each service line.
Built standard operating procedures for month-end close and contractor payments.
Created a shared finance hub with documentation and workflows anyone on their team could follow.

They went from disorganized chaos to confident decision-making, fast.

3. Visibility Without Getting in the Weeds

One of our clients had their finance team dumping endless reports into their inbox each month—none of which they actually used. Why? Because none of it was distilled into anything meaningful.

At First Steps Financial, we boil it down to what really matters. We build a simple, actionable Financial Scorecard that highlights the 5–7 key numbers you need to run your business:

Cash position
Outstanding receivables
Current liabilities
Net profit margin
Net profit
Sales over time

You don’t need to dive into QuickBooks. You just need the right data, consistently delivered, so you can lead.

4. True Accrual Accounting—for Bankers, Buyers, and Better Decisions

Cash basis accounting might keep the IRS happy, but it won’t help you evaluate your company’s health—or sell it.

We recently started working with a growing creative agency that had scaled quickly but couldn’t understand why their margins were so unpredictable. Once we shifted them to accrual accounting, we uncovered deferred revenue issues and project costs that were being mismatched month to month.

The result? More accurate forecasting, better project pricing, and financials they could confidently show to banks, investors, and potential acquirers.

5. We Grow With You—and Help You Mature Financially

One client came to us during a leadership transition: the founder was stepping back, and the new CEO needed clarity and systems. They inherited a cobbled-together process—manual bill pay, late invoices, and a backlog of uncategorized expenses.

We brought in automation, accountability, and a fully documented financial operations playbook.

Now, they’ve got a team they can rely on and financials that reflect the business they’re building—not the one they used to be.

You're Not Just Hiring a Bookkeeper. You're Hiring a Fractional Financial Partner.

If what you really want is to stop being the backup bookkeeper and start acting like the CEO, First Steps Financial is here to help. Let’s build a system that works for you—not one that depends on you.

Common Government Audits Every Business Should Know

Fri, 20 Jun 2025 18:08:29 GMT

Most Common Types of Government Audits

IRS Audits (Federal Tax Audits)

Correspondence Audit

Conducted by mail.
Usually focused on a specific item (e.g., missing 1099s, questionable deductions).
Least invasive.

Office Audit

Conducted at an IRS office.
Involves a deeper look at specific parts of the return.
Requires the business owner to bring documentation to support the claimed items.

Field Audit

Conducted at the business location or the taxpayer’s accountant's office.
Most comprehensive type.
IRS examines books, records, operations, and business structure.

Common State Tax Audits

Income Tax Audit

Similar to an IRS audit, but conducted by the state’s Department of Revenue or equivalent.
Reviews state income tax returns and potential discrepancies.

Sales and Use Tax Audit

Common for businesses that sell goods or taxable services.
Ensures proper collection and remittance of sales tax.
May also look at use tax for out-of-state purchases.

Payroll Tax Audit

Examines state employment taxes (unemployment insurance, state withholding).

What Can Trigger These Types of Audits?

Large discrepancies between reported income on state and federal returns
Underreporting of income (e.g., cash-heavy business, missing 1099s)
Consistently reporting losses over multiple years (especially if the business looks like a hobby)
Discrepancies in payroll filings or failure to remit taxes
Sudden spikes or drops in income without explanation
Deposits in bank accounts exceed reported income

Tips to Avoid or Prepare for Audits

Keep clear, accurate, and up-to-date financial records
Be honest about your income and expenses
File all required returns on time
Classify workers correctly (W-2 vs. 1099)
Maintain proper documentation for deductions and credits
Stay compliant with state-specific tax and labor requirements

Lead Boldly, Think Deeply: The Power of Balanced Leadership

Thu, 22 May 2025 14:52:50 GMT

“Be a doer and a self-starter — aggressiveness and initiative are two most admired qualities in a leader — but you must also put your feet up and think.”

— Col. Glover Johns

The Misconception of Military Leadership

Popular culture has long painted soldiers as blunt instruments—brash, aggressive, and uninterested in deep thought. Older movies, in particular, reinforce the image of the muscle-bound, shoot-first soldier, whose disdain for strategy is matched only by his eagerness to kick down doors. While this stereotype has softened in recent years, particularly with portrayals of elite military units, many still assume that military leadership success comes solely from forceful action.

This is why Colonel Glover Johns’ insight is so powerful. He highlights a truth often overlooked in discussions of leadership: the best leaders don’t just act boldly; they also take the time to think. Aggression without direction is chaos, and initiative without reflection leads to disaster. On the other hand, planning without aggression leads to inaction. True leadership is about balancing decisiveness with contemplation, knowing when to push forward and when to pause and reassess.

Business Leadership Needs More Than “Move Fast and Break Things”

This lesson extends far beyond the military. Business owners and entrepreneurs constantly hear about the importance of being aggressive. Influencers, books, and colleagues preach that taking massive action is the key to success. They encourage going all in, moving fast, and never letting up. The Silicon Valley startup mantra of "move fast and break things" is a perfect example of this mindset. And while there is undeniable value in decisiveness and action, the advice often omits a crucial part—taking the time to stop and think. Without careful planning and consideration, uninformed aggressiveness can lead to reckless decisions, wasted resources, and unnecessary failures.

Aggressiveness is an essential trait for leaders . It fuels action, pushes boundaries, and creates momentum. In business, aggressive leaders make bold moves, take calculated risks, and drive results. However, there is a fine line between productive aggression and reckless haste. Making moves without a strategy or understanding the bigger picture can quickly lead to disaster. This is why Colonel Johns’ wisdom is so powerful—initiative and action must be paired with contemplation and strategic thinking.

The Best Leaders Balance Action and Thought

We often see the impact of this balance in successful leaders. The best CEOs, military commanders, and entrepreneurs are not just go-getters; they are also thinkers. They take time to analyze, strategize, and consider the long-term implications of their actions. They know when to push forward aggressively and when to step back, put their feet up, and reflect. This ability to toggle between action and thoughtfulness is what separates great leaders from those who burn out or make reckless decisions.

The challenge for anyone in a leadership position is to develop this balance. When faced with a decision, ask yourself:

Am I being strategically assertive, or just aggressive?
Have I taken the time to think through my next steps?
Am I acting with purpose, or am I simply moving for the sake of movement?

By integrating this level of awareness into your leadership approach, you can avoid the pitfalls of uninformed aggression and harness the power of strategic action.

Colonel Johns’ words serve as a reminder that leadership is not just about moving fast and breaking things. It’s about knowing when to charge ahead and when to pause and reflect. If you can master this duality, you will not only be a more effective leader but also a more successful one.

5 Ways to Increase Cash Flow in Your Service-Based Business

Fri, 02 May 2025 16:30:38 GMT

Cash flow is the lifeblood of any business, but for service-based businesses, managing cash flow can be particularly challenging. With fluctuating client payments, project-based revenue, and ongoing expenses, maintaining a steady flow of cash is critical to sustaining and growing your company. In this white paper, we’ll outline five actionable strategies to improve your cash flow and ensure financial stability.

1. Optimize Your Invoicing Process

One of the most common reasons for cash flow issues is delayed payments. To accelerate cash inflows:

Use Automated Invoicing: Implement invoicing software like QuickBooks Online to send invoices promptly and track outstanding payments.
Set Clear Payment Terms: Require upfront deposits or shorter payment terms (e.g., Net 15 instead of Net 30).
Offer Multiple Payment Options: Make it easy for clients to pay via ACH, credit card, or online portals.

2. Improve Pricing and Packaging

Many service businesses underprice their offerings, leading to tight margins and cash flow struggles. Consider:

Bundling Services: Create packaged service offerings to encourage larger commitments from clients.
Value-Based Pricing: Charge based on the value you provide rather than just hourly rates.
Regular Pricing Reviews: Reassess your pricing annually to ensure profitability.

3. Implement a Recurring Revenue Model

Recurring revenue provides predictable cash flow and reduces the pressure of constantly acquiring new clients. To transition to this model:

Offer Subscription-Based Services: Create monthly retainers or ongoing support packages.
Encourage Long-Term Contracts: Provide discounts for clients who commit to extended service agreements.
Automate Payments: Use autopay systems to ensure consistent cash inflow.

4. Manage Expenses Strategically

Reducing unnecessary expenses can free up cash and improve profitability. Some key actions include:

Review Expenses Regularly: Identify non-essential costs and renegotiate vendor contracts.
Use Technology to Streamline Operations: Invest in tools that automate administrative tasks and reduce manual labor.
Outsource Strategically: Leverage outsourced bookkeeping or virtual assistants instead of hiring full-time staff.

5. Forecast and Plan for Cash Flow Gaps

Proactively managing your cash flow ensures you can handle slow periods without financial strain. To stay ahead:

Create a Cash Flow Forecast: Use financial software to predict cash inflows and outflows.
Build a Cash Reserve: Set aside funds for emergencies or seasonal dips in revenue.
Secure a Line of Credit: Establish credit before you need it, so you have access to funds when necessary.

Improving cash flow isn’t just about cutting costs or chasing payments—it’s about implementing smart financial strategies that create stability and growth. By optimizing invoicing, refining pricing, adopting recurring revenue, controlling expenses, and forecasting cash needs, you can take control of your business’s financial health.

If you need help optimizing your financial systems and cash flow strategy, First Steps Financial is here to support you. Schedule a consultation today!

Outsourced Accounting vs. Fractional Accounting: What’s the Difference?

Tue, 15 Apr 2025 13:52:28 GMT

As a service-based business owner, managing finances effectively is key to growth and profitability. When looking for financial support, you may come across terms like "outsourced accounting" and "fractional accounting." While they may sound similar, they serve different purposes and offer unique benefits. Understanding the differences can help you decide which approach best suits your business needs.

What is Outsourced Accounting?

Outsourced accounting refers to hiring an external firm to handle bookkeeping and financial reporting tasks on an ongoing basis. This solution is ideal for businesses that need consistent, reliable financial management but don’t require a full-time, in-house accounting team.

Key Benefits of Outsourced Accounting:

Cost-Effective: More affordable than hiring an internal accounting department.

Scalability: Services can be tailored to your business size and needs.

Access to Expertise: Work with professionals who specialize in bookkeeping, payroll, and tax preparation.

Technology-Driven: Many firms use cloud-based software like QuickBooks Online for efficiency and real-time reporting.

What is Fractional Accounting?

A fractional accounting firm provides higher-level financial strategy and decision-making support, often acting as a part-time CFO or controller. This approach is best for businesses that need more than basic bookkeeping but don’t yet require a full-time financial executive.

Key Benefits of Fractional Accounting:

Strategic Financial Oversight: Helps with budgeting, forecasting, and financial planning.

Higher-Level Expertise: A fractional CFO or controller can provide insights beyond day-to-day transactions.

Customizable Support: Businesses can engage a fractional firm for a few hours a week or month based on their needs.

Growth-Focused: Ideal for scaling companies needing financial strategy without the full-time cost of an in-house CFO.

Which One is Right for Your Business?

The choice between outsourced and fractional accounting depends on your business size, complexity, and financial goals.

Choose Outsourced Accounting if: You need reliable bookkeeping, payroll management, and financial reporting but don’t require deep financial strategy.

Choose Fractional Accounting if: Your business is growing, and you need financial leadership, cash flow management, and strategic planning without the cost of a full-time CFO.

The Best of Both Worlds

Some firms, like First Steps Financial, offer both outsourced accounting and fractional CFO services. This allows businesses to start with outsourced accounting and scale up to fractional services as they grow, ensuring they always have the right financial support.

Both outsourced accounting and fractional accounting firms can play a crucial role in your business’s success. The key is understanding where your business stands today and what level of financial expertise will help you achieve your long-term goals.

If you’re unsure which option is best for you, First Steps Financial can help!

Train, Trust, and Let Go: How Great Leaders Build Confident Teams

Fri, 04 Apr 2025 16:21:03 GMT

Don’t overinspect or oversupervise. Allow your leaders to make mistakes in training, so they can profit from the errors and not make them in combat.

-Col. Glover Johns

We had just hit the jackpot. A Chinese submarine crossed our path in an area where no one expected it to be. This should have been a massive win for U.S. intelligence, our ship, and us as SONAR technicians. But there was one problem: no one made the call. The submarine was only discovered in post-analysis days later. What should have been a career-defining success became a failure for our SONAR team due to hesitation and lack of confidence. One of my teammates saw the submarine—its frequencies matched, it behaved like a submarine, and all the indicators were there. But he didn’t speak up. He was afraid of being wrong.

When this failure came to light, our team had a meeting to figure out what went wrong. The teammate who had seen it was devastated. He felt like he had failed the entire crew. Our immediate supervisor didn’t help—he picked apart every mistake, repeatedly asking, “How could you miss this? I’ve shown you this a million times!” After a few minutes of this, his boss stepped in. He asked how we were being trained. The answer was obvious to all of us. Our supervisor was a doer, not a teacher. He couldn’t stand to see mistakes, so instead of letting us learn, he micromanaged and took over. The result? We lacked the confidence and knowledge to make decisions because we had never been trusted to.

At this point, you might think, “What a terrible leader!” And you’d be right—at least in this instance. But what you might not realize is that even good leaders fall into this trap. And you’re not immune to it either. If you have kids, I guarantee you’ve stepped in and done something for them because they were taking too long. If you run a business, you’ve likely taken over a task because you didn’t trust an employee to do it right. It feels like the right move in the moment, but it’s not. It is the easy way out. The answer is simple: real leadership requires patience. It’s easier to take over than to teach.

So how do we break this cycle? It takes discipline.

Step one: provide the right training. No one becomes an expert overnight, but they need a foundation strong enough to work from. Encourage questions and never make people feel stupid for asking. If they’re afraid to ask, they’ll be afraid to act.

Step two: let go. You have to trust the people you train. Set expectations clearly and then step back. Resist the urge to jump in.

Step three: debrief. Go over the work. Point out successes and failures. Then, instead of just pointing out what went wrong, show them how to do better.

Follow these steps, and I guarantee you’ll build a team that has the knowledge and confidence to make the call.

Written by: Marc Chianese, CPA Candidate

The Importance of Clean Books: How We Help Small Business Owners Stay on Track

alisa@firststepsfinancial.com (Alisa McCabe) — Fri, 21 Mar 2025 16:47:41 GMT

As a small business owner, keeping your financials in order is crucial—especially when it’s time to file taxes. Many small business owners come to us for cleanup services because they realize their books don’t reflect their actual business activity. Without accurate financials, you’re flying blind when it comes to planning, decision-making, and tax compliance.

Here’s how we help small businesses clean up their books and get back on track:

Step 1: Assess the Situation

Our first step is to review your books and identify:

What looks incorrect: We spot errors like negative balances, uncategorized transactions, or inconsistencies.
What needs to be cleaned up: Issues like unreconciled accounts or miscategorized expenses.
How to improve going forward: Suggestions to ensure your books remain accurate and useful.

Common Issues We See in Small Business Books

Here are some of the most frequent problems we uncover:

Uncategorized transactions: These don’t show up in your financial reports, leaving you with an incomplete picture of your business.
Bank and credit card accounts not reconciled: Without reconciliation, you can’t trust the accuracy of your financials.
Large balances in the undeposited funds account: Often caused by customer payments not applied to invoices, leading to double-recorded income.
Negative balances on the balance sheet: This usually indicates recording errors, like misapplied payments or incomplete loan setup.
Inconsistent expense categorization: For example, telephone bills recorded under different accounts, making it harder to compare year-over-year trends.

Step 2: Clean and Reconcile

Once we’ve assessed your books, we tackle the cleanup process step by step:

Categorize all transactions in holding: Ensuring they appear in your financials.
Reconcile every bank, credit card, and loan account: Without reconciliation, there’s no confidence that your numbers are accurate.
Apply customer payments to invoices: This prevents double-counting income and ensures your sales figures are correct.
Review accounts with large balances: For example- A large sales tax liability may indicate payments are being recorded as expenses instead of reducing the liability. A negative loan balance could mean the original loan wasn’t recorded properly.
Check for consistent categorization: We run reports to ensure, for example, that all telephone bills are categorized under the same expense account.

Step 3: Build Confidence in Your Financials

After cleaning up the books, you’ll gain:

Accurate financials: Confidence that your reports reflect reality.
Insights into past trends: So you can make informed decisions about the future.
Ready for filing taxes: Avoid overpaying taxes by ensuring income is recorded only once.

For instance, if customer payments are recorded as new income instead of being applied to existing invoices, you’ll overstate your revenue—and could end up paying taxes on double what you actually earned!

Step 4: Prevent Future Problems

We don’t stop at cleanup. We provide training and tips to help you:

Keep your books accurate moving forward.
Spot and fix issues early before they become major problems.

Why Accurate Books Matter

Accurate financials allow you to plan for the future of your business. Whether it’s forecasting cash flow, preparing for growth, or filing taxes, clean books give you the clarity and confidence to make smart decisions.

Ready to clean up your books and take control of your financials? We’re here to help! Reach out to get started.

Written By: Diane Roberts

The Role of a QuickBooks ProAdvisor: Why Certified Expertise Matters for Your Small Business

Fri, 07 Mar 2025 16:29:00 GMT

Running a small business is no easy feat. From managing day-to-day operations to serving customers and planning for growth, the responsibilities can feel endless. One area where small business owners often struggle is keeping their finances in order—and that's where a QuickBooks ProAdvisor can make all the difference. If you want customized service find an accounting firm that specializes in QuickBooks Online. You will be supporting another business like yours while gaining insight from another business owner.

A QuickBooks ProAdvisor is a certified expert in QuickBooks, trained to help small business owners maximize the software’s features while ensuring accurate and efficient bookkeeping. Here’s why partnering with a ProAdvisor can add immense value to your business.

Expert Guidance You Can Trust

QuickBooks ProAdvisors undergo rigorous training and testing to become certified. They are skilled in everything from basic bookkeeping to advanced accounting practices and can help you set up your QuickBooks account to suit your business needs. There are two levels of certification- Level 1 is basic and Level 2 is advanced.

Whether you’re a startup just beginning to track your finances or an established company looking to optimize your accounting processes, a ProAdvisor ensures your system is tailored to your unique business model. They also stay up to date on software updates and new features, ensuring your business benefits from the latest tools and technologies.

Saving You Time and Reducing Stress

For many entrepreneurs, bookkeeping and financial management can quickly become overwhelming. Reconciling accounts, tracking expenses, and running payroll can eat up valuable time that could be better spent growing your business.

A QuickBooks ProAdvisor takes these tasks off your plate, ensuring they’re done correctly and efficiently. They can also identify and correct errors that may otherwise lead to costly mistakes down the road, like unbalanced accounts or inaccurate tax filings.

Maximizing QuickBooks Features

QuickBooks is a powerful tool, but many business owners only scratch the surface of what it can do. A ProAdvisor can unlock its full potential for your business, including:

Custom Reports: Gain deeper insights into your finances with tailored profit-and-loss or cash-flow statements.

Job Costing: Track expenses for specific projects to ensure profitability.

Automation: Set up workflows that save time, such as recurring invoices or payment reminders.

By leveraging these advanced features, a ProAdvisor helps you make data-driven decisions that drive growth.

Preparing for Tax Season and Audits

One of the biggest stressors for small business owners is tax season. Ensuring your books are accurate and compliant with tax laws can be daunting, especially if you’ve fallen behind on your bookkeeping. A QuickBooks ProAdvisor helps you stay ahead of tax deadlines by keeping your financial records audit-ready year-round. They can work with your tax preparer or CPA to streamline the process, ensuring deductions are maximized and filings are accurate.

Planning for Growth

As your business grows, your accounting needs will evolve. A QuickBooks ProAdvisor can help you transition to more advanced features, such as multi-user setups or industry-specific tools. They can also provide strategic financial advice, helping you forecast cash flow, manage budgets, and plan for long-term success.

Hiring a QuickBooks ProAdvisor is an investment in the health and future of your business. By providing expert guidance, saving you time, and optimizing your financial systems, a ProAdvisor helps you focus on what you do best: running and growing your business. If you’re ready to take control of your finances and unlock the full potential of QuickBooks, consider reaching out to a certified ProAdvisor today.

Preparing for Audits: What Small Business Owners Need to Know

Mon, 24 Feb 2025 19:31:57 GMT

For small business owners, the word "audit" can strike fear and uncertainty. However, with proper preparation and organization, audits can become a manageable process—one that can even uncover valuable insights into your business operations. Here's what to expect during an audit and how to ensure your books are always audit-ready.

What to Expect During an Audit

An audit is a detailed examination of your financial records to ensure accuracy and compliance with tax laws, financial regulations, or internal policies. Here’s an overview of the process:

Notification and Initial Request: You’ll receive a notice specifying the scope of the audit and a list of documents to provide, such as bank statements, receipts, and tax returns.
Document Review: Auditors will examine your financial statements, expense records, payroll, and other relevant data.
Interviews and Clarifications: Auditors may ask questions about specific transactions, policies, or discrepancies to gain a deeper understanding of your business practices.
Findings and Recommendations: At the end of the audit, you’ll receive a report outlining findings, including any compliance issues or errors, along with recommendations for improvement.

Audits can be conducted by external parties, such as the IRS, state agencies or financial institutions to assess processes and controls.

How to Prepare for an Audit

Proactive preparation can save time and reduce stress. Here’s how to ensure you're ready:

Keep Accurate and Organized Records:
Ensure all financial transactions are accurately recorded in your accounting software. Regularly reconcile bank statements, track receipts, and categorize expenses properly. Organized books are essential for quick retrieval of records and a sure sign that you are being proactive in keeping good financial records.
Understand Compliance Requirements:
Familiarize yourself with local, state, and federal regulations affecting your industry. Ensure you’re collecting and remitting the correct taxes, filing payroll reports, and following all applicable guidelines. Seek out professionals who are experts.
Review Financial Statements Regularly:
Conduct monthly or quarterly reviews of your income statement, balance sheet, and cash flow statement to ensure accuracy. Correct discrepancies as soon as they arise to avoid compounding errors. This should be regularly done with your accounting team.
Maintain a Digital Trail:
Use cloud-based accounting software like QuickBooks Online to store and back up records digitally. This makes it easier to retrieve and share information during an audit.
Establish Internal Controls:
Implement checks and balances, such as separating duties for handling cash and recording transactions. This reduces the risk of errors or fraud that could trigger red flags during an audit.
Seek Professional Guidance:
Enlist the help of a professional accountant or bookkeeper to ensure your books are accurate and compliant. If you’re notified of an upcoming audit, consider hiring a CPA with audit experience to guide you through the process.

Preparing for an audit doesn't have to be daunting. By staying organized, adopting best practices, and leveraging technology, you can ensure your business is audit-ready at any time. Regular maintenance of your books not only reduces stress but also positions your business for growth and success. When in doubt, seek the guidance of financial professionals to help you stay on track.

Getting to the Next Level of Your Business

Tue, 18 Feb 2025 19:50:09 GMT

Sometimes it’s hard for business owners to know how to take their businesses to the next level of growth and profitability. If you’ve been stuck at the same level of revenue or profit for a while, it could be because scaling your business is not a skill in your toolkit… yet.

Enter a classic management book on scaling your business: High Output Management by Andrew Grove, ex-chairman and CEO of Intel. While the book was written in 1983, it has made a recent comeback in Silicon Valley, but it’s still not well-known outside of the Bay Area. Many people who have read it say it’s the best management book they’ve ever read—life-changing even.

In the book, Grove applies the principles of engineering and manufacturing production to management. It’s all about process—developing processes and procedures so you can track what’s going on and measure the results or output every step of the way. Only then can you improve the process so it leads to higher output.

Measurement is an important concept in the book. No matter what business you’re in, you can apply the ideas of developing processes, measuring them, and improving upon them in your business.

Grove explains how managers can motivate their team members and improve production. He talks a lot about leverage, which enables scaling both positively and negatively, and how it can affect employees’ output. One example of positive leverage is when managers ‘nudge’ employees to enable their work. A negative example is when managers meddle and get in the way of progress.

In the section on meetings, Grove breaks the topic down by purpose and lends his ideas on how to run each type of meeting better. He touches on other key topics such as decision-making, planning, motivation, performance reviews, and values.

One significant highlight from the book: If you’re motivated to become a better manager and wish to improve the output of your organization, there’s nothing more important than training yourself.

Reading this book is a wonderful way to spend time learning new business skills you can put into action immediately.

Key Questions to Ask When Building a Business Budget

Mon, 10 Feb 2025 12:27:50 GMT

Creating a budget is one of the most critical steps for entrepreneurs looking to build a financially sustainable and successful business. A well-constructed budget not only helps manage day-to-day finances but also provides a roadmap for achieving long-term goals. To craft an effective budget, entrepreneurs must ask themselves the right questions. Here are some essential considerations:

1. What Are My Revenue Streams? ��

Understanding where your money comes from is the foundation of any budget. Identify all revenue streams, whether it’s product sales, service fees, subscriptions, or other income sources. Ask:

Are my revenue streams predictable, or do they vary seasonally?
What are my most profitable products or services?
How can I diversify my income to reduce risk?

Knowing the answers to these questions allows you to forecast revenue realistically and prioritize high-margin opportunities.

2. What Are My Fixed and Variable Costs? ��

Categorize your expenses into fixed (rent, utilities, salaries) and variable (materials, marketing campaigns, travel). For each expense, consider:

Are my fixed costs sustainable as my business scales?
Can I reduce variable costs without sacrificing quality?
Am I accounting for inflation or rising costs in my projections?

Breaking down expenses in this way ensures you have a clear picture of what it costs to operate your business.

3. What Are My Growth Goals? ��

Budgeting without growth goals is like navigating without a map. Ask yourself:

Do I plan to expand into new markets, launch new products, or hire more staff?
What investment is needed to achieve these goals, and when will I see returns?
How can I balance reinvestment with profitability?

Aligning your budget with your growth objectives helps ensure that every dollar spent supports your vision.

4. Do I Have a Contingency Plan? ⚠️

Even the best plans can face unexpected challenges. Ask:

How much should I set aside for emergencies or unforeseen expenses?
Are there risks (economic downturns, supply chain issues) that could impact my budget?
How quickly can I access additional funds if needed?

A contingency fund, typically 5-10% of your budget, can provide a financial safety net during turbulent times.

5. Am I Leveraging Technology? ��

Modern budgeting tools can streamline your financial planning. Consider:

Should I use software like QuickBooks, Xero, or specialized apps for forecasting?
Can automation improve my accuracy and save time?
What metrics or dashboards should I track regularly?

Leveraging technology ensures you have real-time insights into your financial health.

6. How Will I Monitor and Adjust My Budget? ��

A budget isn’t static—it evolves as your business grows. Ask:

How often will I review my financial performance (monthly, quarterly)?
What key performance indicators (KPIs) will I track?
Who on my team will be responsible for monitoring the budget?

Regular reviews allow you to adapt to changing circumstances and seize new opportunities.

7. Should I Seek Professional Help? ��‍��

Finally, recognize when it’s time to bring in experts. Ask:

Do I need an accountant or CFO to guide my financial planning?
Could outsourcing bookkeeping free up my time for strategic tasks?
How can I ensure my budget aligns with tax requirements?

Professional assistance can help you avoid costly mistakes and ensure your budget supports sustainable growth.

Conclusion

Building a business budget requires thoughtful planning and regular evaluation. By asking the right questions about revenue, expenses, growth goals, and risk management, entrepreneurs can create a budget that serves as a powerful tool for decision-making and long-term success. Start with these questions, and you’ll lay a strong financial foundation for your business.

5 Tips to Spice Up Working from Home

Sun, 09 Feb 2025 16:38:18 GMT

We’ve been in a pandemic for what seems like five years now, right? All joking aside, if you’ve been lucky enough to work from home this past year, then it’s possible that you are going stir-crazy. Or maybe you’re simply ready to shake things up a bit.

Working from home has its benefits. Yet, if you are someone who enjoys going to the office every day, chatting with co-workers in person, attending meetings that aren’t all virtual, and having a little spontaneity each week, then we’re here to help.

Here are five tips to boost your WFH (work from home) environment.

1. Take Short Breaks

Taking regular breaks throughout the day is important—more than ever before! Without a doubt, these breaks will help you mentally, but they can also boost your quality of work and productivity. These breaks don’t need to be—and shouldn’t be—long or strenuous.

Walk the dog. Stand up and do some light stretches. Run up and down your stairs. Go outside into your backyard. Dance to a song. Do a quick chore, like emptying or loading the dishwasher. Call a friend. Or choose your own favorite break activity. The goal is to get the blood flowing and the fog cleared from your mind.

2. Switch Up Locations

Get creative and switch up your location. If you have a yard or patio and good weather that allows you to sit outside, perfect! If not, try working from the living room, the dining room, the kitchen, even the bedroom. The idea here is to change your surroundings a few times a week so you don’t feel stuck or get lost in the monotony of a daily routine.

3. Treat Yourself with Lunch

Everyone needs something to look forward to, and what’s better than food? Depending on your budget, treat yourself to a special lunch once a week, every other week, or monthly. Consider trying new restaurants, different foods, places you’ve always wanted to visit but haven’t had the opportunity to do so. Not only will this be fun for you, but you can also support small, local businesses. Win-win!

4. Dress for Success

We can probably all agree on one thing: sweatpants are comfortable! But it can be difficult to trade in the sweats for jeans or dress pants every day. After all, if you’re working from home and there’s no dress code, it can be hard to dress for success. Yet, it can give you a little burst of inspiration to get through the day. Keep your outfits casual as long as you have fun getting dressed. For example, you could have Sandal Mondays or Blue Shirt Fridays. Just have fun!

5. Create a New Playlist

Are you motivated by music? Can you work and listen to music at the same time? If so, create different playlists to listen to throughout your day. Try listening to various genres or new artists—anything that keeps you alert and stimulated, even excited about your workday. Depending on the type of music you enjoy, you can even get up periodically and take dance breaks (refer back to Tip #1)!

Try the tips above to keep your routine fresh and boost your productivity and mood.

When To Reach Out for Professional Help with QuickBooks Online: A Guide For Small Business Owners

Thu, 23 Jan 2025 16:51:00 GMT

QuickBooks Online is a powerful tool for managing your business finances, but there are times when even the savviest entrepreneur can benefit from professional help. Whether you’re struggling with errors, preparing for year-end, or exploring advanced features, knowing when to seek assistance can save you time, money, and stress. Here are key scenarios when reaching out to a professional is essential:

Red Flags in Your QuickBooks Data ��

Your financial reports should provide clarity, not confusion. If you notice incorrect balances, negative accounts, or unbalanced reports, it’s time to call in a pro. These red flags could indicate underlying errors such as duplicate transactions, incorrect categorizations, or reconciliation issues. Left unaddressed, these mistakes can snowball, making it difficult to gauge your business’s financial health and potentially leading to inaccurate tax filings. Professionals can identify and resolve these issues efficiently, restoring your confidence in your data.

Year-End Prep with QuickBooks ��

Tax season can be overwhelming, especially when your books aren’t in perfect shape. Professional oversight during year-end prep ensures your QuickBooks data aligns with IRS requirements. Experts will help with tasks like reconciling accounts, categorizing expenses correctly, and generating accurate financial statements. This not only reduces the risk of audits or penalties but also gives you peace of mind as you close out the year.

When DIY Becomes Overwhelming ��

Managing QuickBooks alongside running your business can become a daunting task. If you find yourself spending more time troubleshooting software issues or reconciling accounts than focusing on growth, it’s time to outsource. A professional can take over bookkeeping tasks, streamline processes, and provide insights that help you make informed decisions. This allows you to focus on what you do best—growing your business.

Cleanup After a Messy Year ��

Errors in your QuickBooks can accumulate over time, leading to a “messy year” that’s tough to untangle. Professionals specialize in cleanup projects, meticulously reviewing transactions, fixing errors, and reconciling accounts to ensure everything is accurate and up-to-date. This not only prepares your books for tax season but also sets a solid foundation for future growth.

Transitioning to Advanced Features ��

QuickBooks Online offers powerful tools like job costing, inventory management, and app add-ons. However, implementing and optimizing these features can be complex. A professional can guide you through the transition, ensuring the setup is tailored to your business needs. They can also train your team on best practices, so you can fully leverage these advanced tools for improved efficiency and profitability.

Pro Help Isn’t a Luxury—It’s a Smart Investment

QuickBook Online is a valuable asset, but knowing when to bring in a professional is key to maximizing its potential. From spotting errors to preparing for tax season and navigating advanced features, a financial expert can transform your QuickBooks experience from stressful to seamless. By investing in professional help, you’re not just fixing problems—you’re setting the stage for sustainable growth and long-term success.

Gearing Up for Holiday Sales: 2021 Trends and Opportunities

Tue, 31 Dec 2024 11:49:35 GMT

Starting a business always sounds fun when you’re casually chatting with friends and family over drinks. You’re brainstorming and writing ideas down on napkins. There’s energy and excitement in the air.

If you wake up the next morning, still jazzed to start this new venture, ask yourself these seven questions before you make the leap and become an entrepreneur.

1. Why are you starting the business?

For money or passion? Successful entrepreneurs are rarely motivated by money, but it’s an incentive that can keep fueling your passion.

If you have pride and believe in your work, your potential clients will sense it!

2. Can you start it as a side hustle?

While working a full-time job, can you slowly start your own business? This path protects you from greater losses, but it also reduces the rate at which you can grow your business.

When you work full-time on your business, you’ll accomplish your goals faster. But moving slower allows you to make adjustments to your goals without major financial impacts.

3. Do you want a partner?

Or should you go it alone? Having a partner is great—until it isn’t. You’ll need to be honest with yourself and do some soul-searching to see if you would make a great partner.

Do you really need a partner (someone to contribute their expertise, money, and skills), or do you just want someone to hold your hand on this scary new adventure?

4. Is what you are offering needed?

Are you solving a pain point? Do your research to see if there are offerings like yours on the market. Are they successful?

If your business idea is truly unique, try sending surveys to potential clients to determine if they’d buy what you are offering and what they’d be willing to pay. Speaking of clients…

5. Who are your potential clients?

What are the demographics? Who would you want as a client? Do they share your ideals? Where would you find these people—online, in person? Why would they want to work with you?

6. How much money are you willing to invest?

Will you bootstrap it? Get investor support? Every business requires an initial investment, whether it’s buying furniture for an office or creating a digital presence. The Small Business Association offers loans for small businesses at every stage.

7. Are you willing to work long hours for little money?

How about losing sleep over issues in your business? Are you ready to be exhausted and exhilarated at the same time? Owning a business isn’t for the faint of heart. It requires grit to pursue entrepreneurship and keep chasing it. And that requires passion and perseverance.

Things will go wrong (sometimes horribly), but they’ll also go really well. In those moments when it seems like all things are moving in the right direction, you’ll have a feeling like no other. When you experience this feeling, you’ll feel energized to continue on to your next goal.

If you’re thinking about starting a new business, First Steps Financial is here to help you. We can set up your QuickBooks Online file properly to help manage your finances and keep you updated on revenues and expenses. Contact us today!

The Impact of Technology on Business Growth: Leveraging Innovation for Success

Fri, 13 Dec 2024 14:01:17 GMT

In today’s fast-paced business environment, technology is no longer a luxury; it’s a necessity. Entrepreneurs who effectively harness the latest technological innovations can streamline processes, improve efficiency, and ultimately drive business growth and spend more time with clients providing excellent service.

1. Automation: Streamlining Repetitive Tasks ⚙️

Automation involves using software and tools to perform repetitive tasks without manual intervention. This can include anything from scheduling social media posts to managing inventory.

Automation frees up time for business owners and employees, allowing them to focus on more strategic activities. This can significantly reduce labor costs and minimize human error.

How it works: A small e-commerce store used automation tools like Zapier to automatically process orders, send shipping notifications, and manage customer inquiries. This helped the business scale efficiently without the need for additional staff. Zapier can make connections between software that doesn’t have innate integrations. They can connect almost any software https://www.zapier.com/

2. Cloud Computing: Flexibility and Scalability ☁️

Cloud computing allows businesses to store and access data over the internet instead of on local servers. This means you can access your business applications and data from anywhere, at any time.

Cloud-based solutions provide flexibility, scalability, and cost savings. Businesses can easily scale up (or down) as needed, without investing in expensive hardware. Some hosting companies require multiyear contracts and don’t allow for flexibility.

How it works : A startup marketing agency switched to cloud-based project management software, enabling remote teams to collaborate seamlessly. This increased productivity and reduced IT costs, allowing the company to scale quickly. Asana is a great example of project management and it has a robust free version: https://www.asana.com

3. Data Analytics: Making Informed Decisions ��

Data analytics involves collecting and analyzing data to gain insights into customer behavior, market trends, and business performance.By leveraging data, businesses can make informed decisions that drive growth. This means identifying which products are most profitable, understanding customer preferences, and optimizing marketing campaigns.

How it works: A small business tracked which of their services was most profitable. They were then able to direct their marketing efforts to make this service more visible to their ideal customers. They were able to increase their sales AND profitability. A good system to track this is using QuickBooks Online: https://quickbooks.partnerlinks.io/ny4sodjbugfz

4. Artificial Intelligence (AI) ��

AI involves creating systems that can learn from data and make decisions or predictions. These technologies can be used for everything from customer service chatbots to demand forecasting.

AI can help businesses improve efficiency, reduce costs, and personalize customer experiences.

How it works: An online retail business implemented AI-powered chatbots to handle customer service inquiries. The bots could answer common questions instantly, leading to faster response times and improved customer satisfaction, while reducing the workload on human staff. https://chatgpt.com/ OR https://www.perplexity.ai/

5. E-commerce Platforms: Expanding Reach Online ��

E-commerce platforms allow businesses to sell products and services online. With the rise of online shopping, having a strong e-commerce presence has become essential for many businesses.

E-commerce platforms expand the reach of small businesses, enabling them to reach customers beyond their local area. They also provide tools for managing inventory, payments, and shipping.

How it works: A small boutique that initially sold products in-store expanded online using Shopify. By marketing through social media and optimizing their website for search engines, they grew their customer base beyond their local town and doubled their revenue within a year. https://www.shopify.com

⚡Understand where your business is facing challenges and explore tech solutions that can address those issues. Whether it’s automating a process or improving customer engagement, the right technology can make a big difference.

��You don’t need to overhaul your entire business overnight. Begin by adopting one or two technologies that address immediate needs, then gradually integrate more tools as your business grows. Start small and test it out before you roll it out for company wide use.

��The tech landscape is constantly evolving. Keep an eye on emerging technologies and trends to ensure your business stays competitive. This is where your continuous learning comes in. You need to keep up on the latest technologies and how they are affecting your industry. You don’t want to get left behind.

The right technology can be a game-changer for small businesses, helping them streamline operations, improve customer experiences, and drive growth. By embracing tools like automation, cloud computing, data analytics, and AI, entrepreneurs can build more efficient, agile, and scalable businesses. Stay curious, be open to change, and keep experimenting with new technologies—your next big breakthrough might be just one tech tool away!

Building a Resilient Business: Lessons from Adversity

Fri, 13 Dec 2024 14:01:17 GMT

Resilience is crucial in business because it empowers entrepreneurs to navigate challenges, adapt to changing circumstances, and recover from setbacks. It fosters a mindset of perseverance and problem-solving, enabling business owners to learn from failures, maintain focus on long-term goals, and drive continuous growth even in the face of adversity.

Some business owners showing resilience during adversity- for inspiration!

Sara Blakely – Spanx

When Sara Blakely, founder of Spanx, came up with the idea for footless pantyhose, she faced numerous rejections from manufacturers. Most of them didn’t believe in her product and refused to take her seriously. Blakely continued to knock on doors, eventually convincing a manufacturer to take a chance. She took charge of every aspect, from production to marketing, and even managed to get her products featured on Oprah.

⇨⇨ Spanx became a multi-billion-dollar company, and Blakely is now recognized as one of the most successful self-made women entrepreneurs. Her perseverance turned a simple idea into a global brand.

Howard Schultz – Starbucks

When Howard Schultz acquired Starbucks, it was a small coffee bean shop. He had a vision of transforming it into a coffeehouse chain, but faced skepticism and resistance from potential investors.

Schultz was determined to bring his vision to life, so he persisted and eventually gathered enough investment to grow the brand. When the company struggled financially during the 2008 recession, he made tough decisions, including closing stores and reinventing their brand experience.

⇨⇨Schultz’s efforts paid off, as Starbucks became a global coffee powerhouse, admired for its brand, culture, and innovation. His resilience in the face of early setbacks and economic downturns helped the company thrive.

Reed Hastings – Netflix

In its early years, Netflix operated as a DVD rental service. The company faced intense competition from Blockbuster, which dominated the market. Hastings approached Blockbuster with a partnership proposal but was turned down. Rather than giving up, Hastings pivoted Netflix to an online streaming model. This forward-thinking move allowed Netflix to pioneer the video streaming industry, which disrupted traditional rental models.

⇨⇨Today, Netflix is one of the leading streaming platforms worldwide, and Reed Hastings’ ability to adapt and innovate helped it grow into a multi-billion-dollar entertainment giant.

Vera Wang – Vera Wang Bridal

After being passed over for the editor-in-chief position at Vogue, Vera Wang decided to switch careers and follow her passion for design. She faced the challenge of entering the highly competitive fashion industry with no formal background in fashion design.

Wang took the rejection as an opportunity to pivot and launched her own bridal wear line. She used her industry knowledge, connections, and vision to fill a gap in the market for modern, high-end wedding gowns.

⇨⇨Vera Wang is now one of the most iconic names in bridal fashion, and her story is a testament to how adversity can lead to new beginnings and success.

Janice Bryant Howroyd – The ActOne Group

Janice Bryant Howroyd founded The ActOne Group, a staffing agency, in 1978 with just $1,500. As a Black woman entrepreneur, she faced biases and had to navigate a challenging business environment with limited resources.

She used her personal experiences, skills, and tenacity to grow the business steadily. By focusing on excellent service, she built a reputation that helped her company expand.

⇨⇨Today, The ActOne Group is a multi-billion-dollar global enterprise, and Howroyd became the first African-American woman to run a billion-dollar business. Her resilience and strategic thinking helped her overcome numerous obstacles along the way.

These stories highlight how setbacks and adversity can serve as catalysts for growth. Each of these entrepreneurs turned challenges into opportunities, building resilient businesses that have left a lasting impact. You are not alone if you feel like you are struggling as an entrepreneur.

Take note of these leaders and how they used this adversity to make changes and grow their business.

Create the Right Year-End Check List

Fri, 06 Dec 2024 18:48:30 GMT

The end of the year is a great time to review your QuickBooks Online account and make sure everything is in order. Here’s a quick checklist to help you get started:

1. Is everything reconciled?

How do I know? Use reports>For My Accountant>Reconciliation Report

Chose each bank account to see when it was last reconciled and if the statements are attached

Review the most recent Reconciliation report. What is outstanding for more than 30 days? Look into those transactions and make adjustments as needed.

2. Track your mileage .

If you need to have your mileage tracked for tax purposes, do it now. There are plenty of apps that can help you with this and there is one right inside of QuickBooks Online:

3. Gather your receipts .

Make sure you have taken your paper or digital receipts and have them stored on your computer or inside of QuickBooks Online. There is a receipt capture feature inside of QuickBooks Online that can streamline this process. You can upload receipts from your computer, Google drive or have them sent by email directly into QBO.

Other apps that do an exceptional job of this are Expensify and Divvy. They are very helpful when you have employees who need to provide expense reports and reimbursements.

4. Verify vendor information

It becomes very difficult in January to hunt down vendors for their W-9s. Start now, if you haven’t already by asking vendors for W-9s to keep on file. Make sure their email and physical addresses are up to date, because 1099 forms are sent electronically or mailed. Having done these tasks will make things go smoothly when it comes time to file 1099s to the IRS.

5. Payroll

Are benefits and salaries being calculated properly? You can ask your payroll provider for reports to review and make sure these items are what you are expecting. Start to think about year end profit sharing or bonuses and what those will look like.

We hope this helps you get started on your end of year review. If you have any questions, be sure to reach out to our team of experts. We’re always happy to help!

What Revenue Milestone Are You At And What Does That Mean?

Fri, 22 Nov 2024 14:01:17 GMT

We have been talking about this quite a bit lately. Business owners who don’t think differently or change what they are doing can get stuck at a revenue level. Each level of revenue often brings new challenges, requiring shifts in strategy, processes, and management style.

These are the typical revenue milestones where entrepreneurs may need to rethink their approach:

1. $100,000 – $300,000: Proving the Concept

Key Focus: At this stage, the primary goal is validating the business model. Entrepreneurs are often handling most tasks themselves or with a very small team.

Challenges: Limited resources, juggling multiple roles, and proving that there is consistent demand for their product or service.

What Needs to Change: Entrepreneurs may need to start delegating tasks, investing in marketing, and establishing a clearer operational structure. This gets you to the nex level-

2. $1 Million: Establishing Systems and Processes

Key Focus: Reaching $1 million in revenue is a major milestone that usually signifies a strong product-market fit. However, what got the business to this point may not be sufficient to grow beyond it.

Challenges: Scaling beyond this level requires consistent processes, better organization, and more efficient operations. Entrepreneurs often struggle with time management and may find themselves overwhelmed.

What Needs to Change: This is where businesses need to implement standard operating procedures (SOPs), hire key team members (especially in areas like sales, marketing, and finance), and invest in software to automate processes. At this level, businesses need robust systems for customer relationship management (CRM), enterprise resource planning (ERP), and more sophisticated financial controls. Entrepreneurs must learn to delegate effectively, relying on their leadership team to execute the strategy. Processes must be scalable to handle further growth without breaking down. Many companies implement systems like the Entrepreneurial Operating System (EOS) to bring structure and accountability.

3. $5 Million: Building a Strong Team

Key Focus: At $5 million, a business is no longer just a startup; it’s a small company with more complex needs. The founder must transition from doing to leading if they haven’t already done so. The entrepreneur’s role shifts to that of a CEO focused on vision and strategy rather than daily operations

Challenges: Leadership becomes a critical issue. The founder can’t do everything, and micromanaging will hinder growth. Issues with company culture and communication across departments can emerge.

What Needs to Change: Entrepreneurs need to focus on building a leadership team. Hiring specialists for various roles (HR, marketing, operations) becomes essential. It’s also important to establish a strong company culture to ensure alignment and engagement across the organization. If EOS is strongly entrenched across the company this step might be already done.

4. $10 Million: Strategic Expansion

Key Focus: At $10 million, the business is likely competing with larger companies, and strategic expansion is key to continued growth. Entrepreneurs need to consider expanding to new markets or diversifying their offerings.

Challenges: Managing a larger team, ensuring consistent product or service quality, and navigating more complex financial structures. Entrepreneurs may also face increased competition and pressure to innovate.

What Needs to Change: This is when strategic planning becomes more important than ever. Entrepreneurs must build a robust mid-level management team, invest in technology and infrastructure, and possibly seek outside investment to fund expansion. Data-driven decision-making becomes crucial for scaling successfully.

5. $20 Million – $50 Million – $100 Million and Beyond: Becoming a Market Leader & Transitioning to a Legendary Enterprise

Key Focus: The business is now possibly competing at national or global level.The focus shifts to dominating market share and long-term sustainability.

Challenges: With more employees, more revenue streams, and possibly multiple locations, operational complexity increases. Entrepreneurs must balance growth with sustainability, profitability, and maintaining a strong company culture.Leadership complexity, increased competition, regulatory issues, and the need to innovate constantly. Entrepreneurs must keep an eye on market trends and emerging technologies to stay ahead.

What Needs to Change: This is where entrepreneurs transition fully to a CEO or board-level role, focusing on big-picture strategy. They need to hire seasoned executives, implement corporate governance, and possibly explore mergers, acquisitions, or public offerings to fuel further growth

Each revenue milestone brings its own set of challenges, and what worked at one level might not work at the next. Entrepreneurs must be willing to adapt, delegate, and continuously refine their strategies to grow their businesses effectively. Understanding these transitions and preparing for them ahead of time can help entrepreneurs navigate the complexities of scaling and achieve long-term success.

Building a Strong Company Culture to Drive Growth

Fri, 08 Nov 2024 14:36:35 GMT

A strong company culture is more than just a set of values on a wall—it’s the heartbeat of a successful business. For entrepreneurs, creating a positive culture can lead to higher employee engagement, better performance, and sustainable growth. Gino Wickman’s “Traction” emphasizes the importance of building a strong organizational foundation to scale effectively.

1. The Power of Core Values in Shaping Culture ��

According to “Traction” defining and living by core values is critical for building a strong company culture. Core values act as the guiding principles for every action, decision, and behavior within the company. They help ensure that everyone in the organization is aligned, leading to a cohesive and positive work environment.

Action: Clearly define your core values and make sure they resonate throughout the organization. Use them in hiring, training, and everyday operations to cultivate a consistent culture. Examples of core values: Wonder, Be a Teamplayer, Be Kind, Innovation, Can do. If you want to create your own core values try this: Ninety.io Create Core Values

2. Getting the Right People in the Right Seats ��

One of the core concepts in “Traction” is the “Right People, Right Seats” philosophy. This means hiring individuals who align with your core values and placing them in roles that fit their strengths. When people are in positions that suit their skills and passions, they are more engaged, motivated, and productive.

How It Impacts Culture: Employees who fit well within the company culture and excel in their roles contribute to a positive, collaborative environment. This leads to higher morale and lower turnover, which ultimately drives business growth.

Action: During recruitment, focus on cultural fit as much as technical skills. Regularly review roles and responsibilities to ensure employees are in positions where they can thrive.

3. Vision and Traction: Aligning Teams with a Common Purpose ��

It’s important to have a clear vision and make sure everyone is on the same page. This concept is known as Vision/Traction. A shared vision ensures that all team members understand the company’s direction, goals, and how their work contributes to achieving them. Everyone is rowing in the same direction.

How it impacts: A culture that promotes transparency and shared goals fosters collaboration and accountability. When employees see how their efforts impact the company’s success, they feel more engaged and motivated to perform at their best.

Action: Use tools like the Vision/Traction Organizer (V/TO) to clarify your company’s core values, long-term vision, and key priorities. Regularly communicate these with your team to keep everyone aligned.(see resources below)

4. Open Communication and Feedback Loops ��

Open communication is a pillar of a positive company culture. Implementing regular meetings, or “Level 10 Meetings,” to keep teams connected, address issues, and ensure accountability create a structured way for employees to share feedback, voice concerns, and collaborate on solutions.

Why It Matters: When employees feel heard and valued, it builds trust and strengthens the company culture. Open dialogue helps to quickly address challenges and keep the business moving forward.

Action: Establish a regular meeting rhythm, such as weekly or bi-weekly check-ins, to maintain clear communication channels across the team. Encourage openness and honest feedback during these sessions. To make these meeting productive and stay on track ALWAYS have an agenda and a ‘squirrel tracker’ someone who identifies when you are getting off topic, calls it out and gets the meeting back on track.

5. Fostering Employee Engagement and Accountability ��

A thriving culture is one where employees are engaged and take ownership of their roles. Setting clear responsibilities and goals for every team member helps create a sense of accountability and ownership in those roles.

Impact on Growth: When employees are accountable, they are more likely to be engaged, productive, and aligned with the company’s goals. A culture of accountability fosters trust and drives performance, both of which are essential for scaling a business.

Action: Use EOS tools like Scorecards and Rocks (quarterly goals) to track performance and maintain accountability. Each member should set their own goals (Rocks) and build out the milestones (small steps) to reach those goals. Each team member should be responsible for their ‘number’- task completed, sales won, sending out reports on time, etc.Celebrate achievements to keep morale high and reinforce the importance of team contributions.

Building a strong company culture isn’t just about making work a pleasant place to be; it’s about creating an environment where employees are engaged, aligned, and empowered to drive business success. By integrating the principles such as defining core values, aligning teams with a shared vision, and fostering open communication—you can establish a culture that supports growth. A positive company culture is the foundation on which thriving businesses are built, and it’s an investment that pays dividends as your business scales.

You can use this site for resources for Action items (free): https://eosone.com/sign-up/ or if you use ClickUp they have it built in Click up Resources .

You’re Not Superhuman: Embracing the Power of Delegation

Fri, 11 Oct 2024 14:36:35 GMT

As a small business owner, you’re no stranger to the grind. You’ve put in 120-hour weeks, missed family gatherings, and sacrificed countless hours of sleep to build your business from the ground up. Your dedication and hard work are nothing short of inspiring. But here’s a crucial truth you might need to hear: even with all your hard-earned success, you’re still only human. And there are only 24 hours in a day.

The relentless drive that got you to where you are today won’t necessarily propel you to the next level. To break through to new heights, you need to embrace something that might feel uncomfortable at first: delegation.

You’ve probably read about delegation in countless business books and articles. Yet, understanding the theory and applying it are two different things. One major challenge that I consistently see entrepreneurs and leaders struggle with is figuring out what to do with all this free time.

This is a fundamental misunderstanding of what delegation is. Delegation is to give you the breathing room to stand up above the fray and look ahead, not to have less work. Use this time to focus on strategic planning and long-term goals that will help you and your business scale and thrive.

Here’s a simple truth: delegation isn’t about doing less work; it’s about working smarter. When you delegate effectively, you’re not just freeing up your schedule—you’re also empowering your team and fostering their growth.

So take a moment to acknowledge the incredible effort that got you here. Then, understand that the same skills will not take you to the next level. Embrace delegation, and use that extra time to innovate, plan, or network. Your business and future self will thank you.

Effective Team Building for Scaling Startups

Fri, 20 Sep 2024 14:36:35 GMT

As an entrepreneur, one of the most critical factors in scaling your startup is building and managing a high-performing team that can support the increased demands of a growing company. The right team can be the difference between rapid growth and stagnation. Here are some strategies to help you assemble and manage a team that will propel your startup to the next level.

1. Hire for Fit

When scaling a startup, it’s essential to hire individuals who align with your company’s culture and values. Skills can be taught, but cultural fit and a growth mindset are harder to instill. Look for candidates who are adaptable, eager to learn, and have the potential to grow with your company. During the interview process, assess how well candidates resonate with your mission and vision. This alignment will foster a cohesive team environment where everyone is working towards the same goal.

2. Diversify Your Team

Diversity is a powerful asset in a growing company. A team with diverse backgrounds, experiences, and perspectives can bring fresh ideas and solutions to the table. When scaling, ensure that your team represents a variety of viewpoints, not just the ones you are comfortable with. This diversity will not only enhance creativity but also improve problem-solving and decision-making, which are crucial for navigating the challenges of scaling.

3. Invest in Continuous Learning

As your startup grows, so should the skills and knowledge of your team. Encourage continuous learning and professional development by providing access to training programs, workshops, and conferences. This investment in your team’s growth will pay off as they bring new insights and skills back to the company. Moreover, fostering a learning environment will help retain top talent who are eager to advance in their careers. When you invest in your team and provide them support, they will become invested in the company’s success.

4. Foster Open Communication

Effective communication is the backbone of a successful team, especially in a fast-growing startup. Create an environment where team members feel comfortable sharing ideas, asking questions, and giving feedback. Regular check-ins, team meetings, and open-door policies can help maintain clear and open lines of communication. Additionally, consider implementing collaborative tools like Slack, Asana, or Trello to streamline communication and keep everyone on the same page.

5. Promote a Positive Work Culture

A positive work culture is essential for maintaining high morale and productivity, especially in a scaling startup where the demands can be intense. Promote work-life balance, recognize and reward achievements, and create opportunities for team bonding. A strong, positive culture will keep your team motivated and engaged, reducing turnover and attracting top talent.

6. Adapt Your Leadership Style and Empower your team

As your startup grows, your leadership style may need to evolve. In the early stages, you may have been involved in every decision, but as your team expands, you’ll need to shift to a more strategic role. Focus on providing vision and direction, and trust your team to execute. Be open to feedback and willing to adapt your approach as the company’s needs change.

Empowering your team means trusting them to make decisions and take ownership of their work. As your company scales, you won’t be able to micromanage every aspect of the business. Instead, delegate responsibilities and give your team the autonomy to solve problems and drive projects forward. This not only boosts morale but also encourages innovation and accountability.

7. Monitor Performance and Provide Feedback

Regular performance reviews and feedback sessions are crucial in a scaling environment. Set clear expectations and regularly assess whether your team is meeting them. Provide constructive feedback and recognize achievements to keep your team on track and motivated. Use key performance indicators (KPIs) to measure success and identify areas for improvement for both employees, your company and yourself.

Building and managing an effective team is a continuous process that requires careful planning and adaptability. By hiring the right people, fostering a positive and inclusive culture, investing in their growth, and maintaining open communication, you can create a high-performing team that will support your startup’s scaling journey. Remember, your team is your greatest asset—invest in them, and they will help you achieve your entrepreneurial dreams.

Important Steps Before Scaling: Budgeting for Success

Fri, 06 Sep 2024 14:36:35 GMT

As small businesses prepare to scale, creating a well-structured budget is essential to ensure resources are allocated efficiently and growth targets are met. Budgets can easily be done with QuickBooks Online Plus and Advanced. You can create as many budgets as you like and it helps with understanding of how things are going when you run the actuals vs budgets.

1. Understand Your Current Financial Situation

Review Financial Statement: Start by reviewing your current financial statements, including the income statement, balance sheet, and cash flow. This provides a clear picture of your business’s current financial health and performance.

Identify Current Costs: Break down your current expenses into fixed costs (rent, salaries, utilities) and variable costs (materials, marketing, costs for services). Understanding your cost structure is vital for creating an accurate budget. As the company grows it is good to know what costs will grow and which will remain stable.

Assess Revenue Streams: Analyze your existing revenue streams to determine which are the most profitable and scalable. This will help you focus on areas that offer the greatest potential for growth and where to invest your time and money.

2. Define Your Scaling Goals

Define your scaling objectives, such as increasing market share, expanding into new markets, launching new products, or improving operational efficiency. Clear goals will guide your budgeting process.

Establish a realistic timeline for your scaling efforts. Determine short-term (6-12 months) and long-term (1-3 years) goals to create phased budgets that align with your growth plans. These will also be your budgets to create 6 months, 1 year and 3 years.

3. Forecast Revenue and Expenses

Estimate future revenue based on historical data, market trends, and your scaling goals. Be realistic and consider factors such as seasonality, economic conditions, and competitive landscape.

Forecast your expenses based on your growth plans. Include both existing and anticipated costs such as additional staff, increased production, expanded marketing efforts, and new technology investments.

4. Create a Budget

Develop a flexible budget that can adapt to changes in your business environment. This includes creating multiple scenarios (best-case, worst-case, and most-likely) to prepare for various outcomes. You can utilize QBO Plus or QBO Advanced to do these types of budgets.

Prioritize spending in areas that directly contribute to your scaling goals. Allocate resources to critical areas such as product development, marketing, customer acquisition, and talent acquisition. Make sure that resources are used in accordance with the goals you are setting. Something might be a ‘shiny penny’ but distracts you from the current scaling goals.

Set aside a contingency fund to cover unexpected expenses or opportunities. A good rule of thumb is to allocate 5-10% of your total budget to this reserve.

5. Monitor and Adjust Your Budget

Technology Solutions for Scaling Businesses

Fri, 23 Aug 2024 14:36:35 GMT

In today’s fast-paced business landscape, technology plays a crucial role in facilitating the scalability of small businesses. Leveraging the right tech solutions can streamline operations, enhance productivity, and support sustainable growth. If you can’t find an app to solve an issue, ask your accounting team- they are usually well versed in solution technology.

Scalable Software

Adopting scalable software is foundational for businesses aiming to grow. Scalable software solutions are designed to handle an increase in workload without compromising performance. For instance, cloud-based services such as Amazon Web Services (AWS) or Microsoft Azure allow businesses to scale their storage and computing power according to demand, eliminating the need for significant upfront investments in IT infrastructure. If you build it yourself, you will continually have to go back and fix it yourself- is that the best use of your resources?

Automation Tools

Automation tools can drastically reduce manual tasks, freeing up valuable time and resources. Customer Relationship Management (CRM) systems like Hubspot automate sales processes and customer interactions, ensuring consistency and improving efficiency. Similarly, accounting software such as QuickBooks Online automates financial tasks, from invoicing to payroll, enabling accurate and timely financial management.

Technological Innovations

Innovative technologies such as artificial intelligence (AI) and machine learning (ML) provide sophisticated data analysis and insights, helping businesses make informed decisions. For example, AI-powered chatbots enhance customer service by providing instant responses to customer inquiries, while ML algorithms predict market trends, allowing businesses to adjust strategies proactively.

Cloud Computing

Cloud computing solutions enable businesses to access data and applications from anywhere, fostering collaboration and flexibility. Platforms like Google Workspace and Microsoft 365 offer a suite of productivity tools that support remote work, ensuring teams remain connected and productive regardless of location.

E-commerce Platforms

For businesses looking to expand their market reach, e-commerce platforms such as Shopify or WooCommerce offer robust solutions for online sales. These platforms provide a scalable infrastructure, allowing businesses to manage increased traffic and transactions seamlessly as they grow. They also easily sync with your accounting software using programs like Synder.

Cybersecurity

As businesses scale, the need for robust cybersecurity measures becomes paramount. Implementing advanced security solutions such as multi-factor authentication (MFA), encryption, and intrusion detection systems (IDS) helps protect sensitive data and maintain customer trust.

Investing in the right technology solutions is essential for small businesses aiming to scale effectively. By adopting scalable software, leveraging automation tools, embracing technological innovations, utilizing cloud computing, exploring e-commerce platforms, and ensuring robust cybersecurity, businesses can position themselves for sustainable growth and success in a competitive market.

Scaling Without Losing Your Company Culture

Fri, 09 Aug 2024 17:27:27 GMT

Maintaining a strong company culture is vital for long-term success, but it becomes increasingly challenging during periods of rapid growth. As entrepreneurs scale their businesses, they must navigate the complexities of expansion without sacrificing the core values and identity that define their organization.

Challenges of Maintaining Company Culture During Scaling:

As the organization grows, there’s a risk of diluting the core values that once defined the company’s culture. Rapid expansion can lead to communication breakdowns, making it difficult to reinforce cultural norms and expectations. With teams dispersed across different locations or departments, maintaining a cohesive culture becomes challenging, leading to cultural fragmentation. Employees may feel disconnected from the company’s culture as they become overwhelmed by increased workloads and changes.

How to address these issues and what are best practices:

Lead by Example:

As a founder or leader, embody the company’s values in your actions and decisions, serving as a role model for employees at all levels.

Communicate Transparently, Often, and with a Process:

Foster open and transparent communication channels to keep employees informed about the company’s vision, values, and goals, especially during times of change. This is why a ‘State of the Company’ is valuable. It will keep everyone informed and feel part of the movement. Make sure your channels of communication are well-defined. Where does the team communicate?- through email, chat, or another form of messaging like Slack.

Define Core Values:

Clearly articulate and reinforce the organization’s core values, ensuring they are integrated into hiring processes, performance evaluations, and day-to-day operations.

Invest in Onboarding and Training:

Develop robust onboarding programs that immerse new hires in the company’s culture and values from day one. Provide ongoing training and development opportunities to reinforce cultural alignment.

Empower Employees and their Well Being:

Encourage autonomy and empowerment among employees, allowing them to make decisions aligned with the company’s values and objectives. Prioritize employee well-being and work-life balance to prevent burnout and maintain a positive and supportive work environment.

Celebrate Successes:

Recognize and celebrate achievements that reflect the company’s culture and values, reinforcing positive behaviors and fostering a sense of belonging.

Collect Feedback:

Regularly solicit feedback from employees to gauge their perception of the company’s culture and identify areas for improvement. A weekly or biweekly survey for employees to express ideas and opinions is a great way to capture feedback. Rule of thumb; make it easy to understand and take under one minute to fill out.

Scaling a business presents numerous challenges, but preserving company culture should remain a top priority for entrepreneurs. By proactively addressing the challenges of maintaining culture during growth and implementing practical strategies to uphold core values, entrepreneurs can build a resilient and cohesive organizational culture that drives success at every stage of the company’s journey.

Choosing The Right Growth Strategy for Your Business

Fri, 26 Jul 2024 17:27:27 GMT

Selecting the right growth strategy is crucial for the long-term success of any business. Different strategies, such as market expansion, product diversification, and mergers/acquisitions, offer unique opportunities and challenges. Here we explore these growth strategies, helping entrepreneurs identify the most suitable approach for their company’s stage of development, industry landscape, and objectives.

Market Expansion:

Market expansion involves entering new geographic regions or demographic segments to increase the customer base. This is most ideal for businesses with saturated or limited markets, seeking to capitalize on untapped opportunities.

How to address these issues and what are best practices:

Conduct thorough market research to identify viable expansion opportunities.
Develop localized marketing strategies and adapt products/services to meet the needs of the new market.

Product Diversification:

Product diversification entails offering new products or services to existing or new markets. This is most suitable for businesses looking to reduce dependency on a single product or market segment, or capitalize on emerging trends.

Next Steps:

Assess market demand, customer preferences, and competitive landscape to identify potential product/service extensions.
Invest in research and development to ensure new offerings align with brand identity and customer needs.

Mergers and Acquisitions (M&A):

Mergers involve combining two or more businesses to form a new entity, while acquisitions involve one company purchasing another and is appropriate for businesses seeking rapid growth, market consolidation, or access to new capabilities/resources.

Next Steps:

Identify target companies that complement existing operations or fill strategic gaps.
Conduct thorough due diligence to assess financial health, cultural fit, and potential synergies.
Develop integration plans to streamline operations and maximize value post-transaction.

Strategic Partnerships and Alliances:

Strategic partnerships involve collaborating with other businesses to achieve mutual goals or access new markets/resources. Suitable for businesses seeking to leverage complementary strengths, access new markets, or share risks/costs.

Next Steps:

Identify potential partners with aligned objectives and complementary capabilities.
Negotiate mutually beneficial agreements outlining roles, responsibilities, and expected outcomes.
Foster open communication and collaboration to ensure the success of the partnership.

Each growth strategy offers unique advantages and challenges, and the most suitable approach depends on various factors, including business objectives, tolerance for risk, market dynamics, and industry landscape. By carefully evaluating these strategies and aligning them with their company’s goals and capabilities, entrepreneurs can drive sustainable growth and unlock new opportunities for success.

The Art of Scaling: A Comprehensive Guide for Entrepreneurs

Wed, 10 Jul 2024 17:27:27 GMT

Scaling a business is a pivotal phase for an entrepreneur. It involves expanding and standardizing operations, creating systems, increasing revenue, and solidifying market presence. However, scaling is not merely about growth in size; it’s about sustainable expansion while maintaining quality and efficiency. This step-by-step guide is sure to help.

Step 1: Assess Readiness and Define Objectives

Assess Current State: Evaluate the business’s strengths, weaknesses, opportunities, and threats (SWOT analysis). Determine if the infrastructure, team, and processes are capable of handling growth.

Define Objectives: Clearly outline what success looks like post-scaling. Are you aiming for increased revenue, market expansion, or diversification of products/services? What is your position in the newly scaled model? Will you sell? Semi retire? Stay at the helm?

Step 2: Develop a Scalable Business Model

Streamline processes and standardize operations. Identify inefficiencies and streamline processes to increase productivity and reduce costs, while keeping quality in your services. Develop systems that can be replicated and used by all as the business grows.

Invest in Technology: Implement scalable technologies such as cloud-based systems, automation tools, and scalable software solutions to support growth. Keeping anything in a spreadsheet is not scalable. Every system should be accessible by anyone who needs to use it and it should be able to easily grow with the company. A good question to ask is can I do this with 100 clients? What about 1,000? What about 10,000?

Step 3: Build a Strong Team

Determine the key positions required for scaling, including leadership, operations, sales, and marketing. If all the people are in the right seats, you will move quickly towards your goals. These steps are so important that if it is not done right you will get off track and not be able to scale which means you need to hire individuals with the right skills, experience, and cultural fit. Prioritize candidates who can adapt to a rapidly changing environment. Make sure you know what your ideal candidate is and adhere to only hiring those that are the right fit.

Invest in Training and Coaching: Provide ongoing training and development of skills to ensure the team is equipped to handle increased responsibilities.

Step 4: Funding the Scaling

Create a budget for the financial resources required for scaling, considering factors such as hiring new talent, expanding infrastructure, and marketing efforts. Or if scaling includes purchasing other firms to grow your business, you will need to either hire someone to find those firms or use internal resources to search for a company that is the right fit for your growth goals. Evaluate various funding options, including venture capital, angel investors, bank loans, or crowdfunding. Choose the option that aligns with your growth objectives, your culture and risk tolerance.

Implement financial management practices: Monitor cash flow, track expenses, internal controls and ensure efficient use of resources.

Step 5: Expand Your Market

Conduct market research to identify new opportunities, target demographics, and emerging trends if it is warranted. Create targeted marketing campaigns to reach new customers and increase brand awareness. Set up reporting to track the effectiveness of these campaigns. Consider expanding distribution channels, such as partnerships, online platforms, or brick-and-mortar stores, to reach a broader audience.

Step 6: Monitor and Adapt

As always, this is not set it and forget it. You need to continually monitor all aspects of the company to be agile and flexible in response to the market,customer feedback and industry changes. Define key performance indicators (KPIs) to measure the success of scaling efforts, such as revenue growth, customer acquisition cost, and customer retention rate. Continuously monitor progress against set KPIs and adjust strategies as needed to address any challenges or capitalize on opportunities.

Scaling a business requires careful planning, strategic execution, and continuous adaptation. By leveraging best practices, entrepreneurs can navigate the scaling process successfully and unlock new levels of growth and profitability for their ventures.

How Do You Create And Present A State Of The Company

Fri, 28 Jun 2024 17:27:27 GMT

The “state of the company” refers to a comprehensive overview or report that provides insight into the current status, performance, and direction of a business. It typically covers various aspects of the organization, including financial performance, operational highlights, strategic initiatives, challenges, and opportunities.

A state of the company presentation should include 3 basic areas:

Operational Highlights: Updates on key operational activities, such as product development, sales and marketing initiatives, customer acquisition, and operational efficiency measures. Information related to the workforce, such as staffing levels, employee engagement initiatives, training and development programs, and recognition of employee achievements. Information about community involvement and planned events can also be included here.

Financial Performance: Information on revenue, profitability, cash flow, and key financial metrics. This is an opportunity for you to provide your financials to the team. You don’t have to share everything with them but you should share percentages. How much have you grown in sales since last year? What is the profit margin? What is the highest expense in relation to sales?This section may also include comparisons to previous periods or benchmarks.

Strategic Initiatives and progress: Discussion of the company’s strategic objectives, progress on strategic initiatives, and plans for future growth and development. Present the plan for the quarter or the year and build out milestones of what you want to achieve each quarter. At the state of the company, share your progress. Get your employees involved- let them know what they can do to help achieve company goals. Make them a part of the plan and the success.

You can also include in this section any Exploration of growth opportunities, market trends, new product or service offerings, and other opportunities for expansion or improvement.

The state of the company presentation or report serves as a valuable tool for stakeholders, including employees, investors, customers, suppliers, and other external parties, to gain insight into the company’s performance, priorities, and outlook. It helps foster transparency, alignment, and engagement among stakeholders and supports informed decision-making.

State Of The Company: Promoting Transparency, Engagement, Alignment, Empowerment, and Adaptability

Thu, 06 Jun 2024 17:27:27 GMT

Regularly presenting a state of the company to employees in small businesses offers several benefits:

Transparency and Communication: It fosters a culture of transparency by keeping employees informed about the company’s performance, goals, and challenges. This open communication helps build trust and alignment among team members. It opens the doorway for two way communication

Employee Engagement: When employees understand the company’s direction and how their contributions fit into the bigger picture, they feel more engaged, empowered and motivated- and as an added bonus more likely to have a high retention rate. Regular updates can help employees see the impact of their work and feel more connected to the organization.

Alignment: Keeping employees informed about the company’s performance and goals empowers them to make better decisions in their roles. When employees have a clear understanding of the company’s direction, they can act more autonomously and make choices that support the company’s objectives.

Retention and Morale: Feeling informed and included in the company’s journey can boost employee morale and job satisfaction. Regular updates demonstrate that the company values its employees and their contributions, which can help with retention efforts.

Alignment of Goals: Presenting the state of the company allows employees to understand the company’s strategic priorities and objectives. This clarity helps align individual and team goals with the overall goals of the business, leading to more focused and effective efforts.

Adaptation to Change: Small businesses often face rapid changes in market conditions, competition, and technology. Regular updates help employees stay informed about these changes and adapt quickly to new circumstances, ensuring the company remains agile and responsive.

Overall, presenting a state of the company to employees on a regular basis promotes transparency, engagement, alignment, empowerment, and adaptability, all of which are essential for the success and sustainability of small businesses.

Pricing Strategies: How To Price Your Services

Thu, 16 May 2024 17:27:27 GMT

Have you reviewed your profit and loss statement, only to find a loss that leaves you feeling frustrated? Once you do another look over, you need to find out why. One place that entrepreneurs sometimes forget to look is at pricing. If your service is not priced right, you will not be profitable, no matter how much you increase sales.

Determining the right pricing for services can be challenging, but there are several strategies entrepreneurs can employ to ensure they are charging appropriately and generating sufficient profit. BUT the most important part of this process is that you have a profit after all we did start our business to make money.

Here are some guidelines and considerations:

Start with Cost-Based Pricing

Calculate all costs associated with delivering the service, including direct costs (materials, labor) and indirect costs (overhead, administrative expenses).

Add a desired profit margin to cover business growth, risk, and a return on investment.

This method ensures that the price covers all expenses and provides a profit.

Remember to account for hidden costs when setting your pricing, taking into consideration all facets of your business such as marketing, customer support, and ongoing service enhancements.

Next: Use Profit Margin as a Guide

Aim for a profit margin that allows for business sustainability, growth, and reinvestment.

The desired profit margin can vary by industry, and you can google that information. Software subscriptions can be as high as 50%, supermarkets are typically 1-2%, as are liquor stores.

Next: Look at Value-Based Pricing

Assess the value your service brings to clients. Consider the benefits, outcomes, and competitive advantages your service provides.

Are you experts in the industry?

What difference will your services make to the client and their profit margin?

Are you providing something unique?

A perfect example of this is art – if you based it on all the other pricing factors, you would be setting prices for far less than the value of it. Another example is when you are an expert in the industry or you have a proven track record of success. Your knowledge, derived from years of experience, should not be confined to an hourly rate – which fails to encompass the education and training you’ve undertaken – but rather should be reflected through value-based pricing.

Set prices based on the perceived value to the customer rather than just the cost of production.

This approach can result in higher prices if your service is perceived as highly valuable.

Understanding the perceived value of your service from the customer’s perspective can lead to customer satisfaction and loyalty.

Review Regularly

Regularly review and adjust your pricing strategy to account for changes in costs, market conditions, or the perceived value of your services.

Set a standard from the beginning when you create your pricing strategy.

Let clients know that each year your prices will increase and let them know the range of increase. Will it be 5% or the rate of inflation – some years it was 0%, Are you ok with that? Or you can link it to their success if your services directly affect that. For example, if sales increase 25% our service fees will increase 2.5%.

Remember that the right pricing strategy can vary based on industry, target market, and the unique value proposition of your services. It’s essential to strike a balance between covering costs, staying competitive, and providing value to customers. Regularly reassess your pricing strategy to ensure it aligns with your business goals and market dynamics.

Improving Profitability: The 80/20 Rule

Thu, 02 May 2024 17:27:27 GMT

Today we’re going to be talking about the 80/20 rule and how you use it to improve profitability and what reports you can look at when thinking about the 80/20 rule.

The 80/20 rule, also known as the Pareto Principle, suggests that roughly 80% of the effects come from 20% of the causes. In the early 1900s, Vilfredo Pareto identified this pattern while examining the distribution of wealth in Italy. He noted that just 20% of the population owned 80% of the country’s land. Pareto also observed similar instances of this 80/20 phenomenon in other places like in the production of pea plants in his garden.

In the context of a profit improvement plan, this principle can be applied to identify and focus on the most significant factors that contribute to your profits. Here’s a simple profit improvement plan based on the 80/20 rule:

Identify High-Profit Customers:

Analyze your customer base to identify the top 20% that generate 80% of your profits.

Develop strategies to retain and upsell to these high-value customers.

Report: Profit and loss by clients to identify the 20% and track those month over month.

Product/Service Analysis:

Identify the top-performing 20% of your products or services that contribute the most to your profits.

Optimize pricing, marketing, and sales strategies for these high-performing offerings.

Report: Profit and loss by services and identify what services are most profitable.

Cost Analysis:

Identify the top 20% of cost drivers that contribute to 80% of your expenses.

Explore cost-cutting measures, get new quotes or renegotiate contracts to reduce these high-impact costs.

Report: Profit and Loss by % of Income and Profit and Loss of % of Expenses.

Employee Productivity:

Identify the top-performing 20% of your employees who contribute significantly to your business success.

Invest in training and development for the high-impact employees.

Possible reporting: time tracking by client or by service.

Tasks Productivity:

By applying the 80/20 rule to tasks, you can maximize your productivity and efficiency by concentrating your efforts on the activities that yield the greatest results and contribute most significantly to your success. Reporting on this? Time track how long tasks take and then assess which ones have the most impact on your goals.

Sales and Marketing Strategies

Analyze sales pipelines to identify the most effective ones that bring in the majority of your revenue.

Allocate resources and marketing efforts towards the most profitable sales pipelines.

Evaluate marketing channels and campaigns to identify the most effective ones.

Shift resources towards the channels that bring in the highest return on investment.

Possible reporting: Tag/custom designation on invoices to see what source or marketing campaigns are bringing in revenue.

By concentrating your efforts on the most impactful areas of your business, as identified by the 80/20 rule, you can achieve more significant improvements in your profitability.

Keep in mind that the figures 20% and 80% are not precise statistics; they’re merely rough estimates and observations. Focus your efforts on activities or clients that promise the greatest returns.

By applying the Pareto Principle to your business strategy, you’re more likely to boost profits while reducing time and resources spent on less fruitful endeavors.

As a reminder, this is not set it and forget it! Regularly review and update your profit improvement plan to adapt to changes in the market and your business environment.

Navigating Success: A Guide for Small Business Owners on Setting and Tracking Key Financial Metrics

Tue, 30 Apr 2024 17:27:27 GMT

Understanding and tracking key financial metrics is paramount to making informed decisions and steering your ventures toward success. We will explore the crucial realm of financial metrics, discussing key performance indicators (KPIs) that entrepreneurs should regularly monitor to assess the financial health and performance of their businesses.

The Importance of Financial Metrics: Why?

Strategic Decision-Making:

Financial metrics provide a roadmap for strategic decision-making. By understanding and tracking specific KPIs, small business owners gain insights that empower them to make informed choices regarding resource allocation, growth strategies, and operational efficiency.

Early Identification of Challenges:

Monitoring key financial metrics enables entrepreneurs to identify potential challenges early on. Whether it’s declining profitability, cash flow issues, or rising expenses, early detection allows for proactive adjustments to prevent financial setbacks.

Essential Financial Metrics for Small Businesses: What to measure?

Revenue Growth:

Calculate the percentage increase in revenue over specific periods. Consistent growth is a positive indicator of business health.

Gross Profit Margin:

Evaluate the percentage of revenue retained after deducting the cost of goods sold. A healthy gross profit margin ensures profitability.

Profit and loss by income %

Assess the proportion of revenue allocated to operating expenses. Monitoring this ratio helps control costs and maintain profitability.

Cash Flow Forecast:

Create projections to anticipate cash flow fluctuations. This KPI is crucial for ensuring ongoing operations and planning for future investments.

Accounts Receivable Turnover:

Measure the efficiency of your collection policies. A high turnover indicates effective management of accounts receivable. This is the one key area that can lead to cash flow issues if revenues are not collected in a timely manner.

Inventory Turnover:

Evaluate how quickly inventory is sold. Efficient turnover reduces holding costs and ensures optimal use of resources.

Debt-to-Equity Ratio:

Assess the proportion of debt relative to equity. A balanced ratio indicates a healthy financial structure.

Customer Acquisition Cost (CAC):

Calculate the cost of acquiring a new customer. Monitoring CAC ensures that marketing efforts align with revenue generation.

Lifetime Value of a Customer (LTV):

Determine the total revenue a customer is expected to generate over their entire relationship with your business. LTV helps in customer retention strategies.

Net Promoter Score (NPS):

Measure customer satisfaction and loyalty. A high NPS indicates a strong customer base likely to promote your business. You can easily do this yourself with Google forms or utilize a company or a software that can monitor your clients regularly.

Setting Up Tracking Mechanisms

Utilize Financial Software:

Invest in financial software to automate tracking processes. Many tools provide real-time updates and customizable dashboards for easy monitoring. Keep it simple. If tracking your financial metrics is time-consuming or cumbersome, you won’t continue to do it. We use Tally Street as our dashboard software. It connects directly with QuickBooks Online and provides easy to read information.

Regularly Review Financial Statements:

Conduct regular reviews of income statements, balance sheets, and cash flow statements to track changes and identify trends.

Establish Clear Reporting Periods:

Set specific reporting periods (weekly, monthly, quarterly) for tracking financial metrics. Consistency enhances the accuracy of your assessments.

For small business owners, setting and tracking key financial metrics is a proactive approach to navigating the complexities of entrepreneurship. By regularly monitoring essential KPIs, entrepreneurs gain a comprehensive understanding of their business’s financial health and performance, enabling them to make strategic decisions that drive long-term success. Remember, financial metrics are not just numbers; they are the compass that guides your business toward sustainable growth and prosperity.

Empowering Entrepreneurial Success: A Guide to Financial Literacy for Small Business Owners

Sat, 06 Apr 2024 17:27:27 GMT

Financial literacy is a superpower that empowers small business owners to make informed decisions, navigate challenges, and drive the success of their ventures. the importance of financial literacy for entrepreneurs and provide actionable insights on how to invest time in developing this critical skill set. So, why invest time and energy in financial literacy?

Informed Decision-Making:

Financial literacy equips entrepreneurs with the knowledge to make strategic and informed decisions. Whether it’s assessing investment opportunities, managing cash flow, or setting pricing strategies, a solid understanding of financial concepts is indispensable.

Effective Communication with Professionals:

Entrepreneurs often collaborate with financial professionals, such as accountants or financial advisors. A foundational knowledge of financial terms and concepts enables effective communication, ensuring that entrepreneurs can actively participate in discussions about their business’s financial health.

Building Financial Literacy Muscle- where to go to get training?

Online Courses and webinars Explore reputable online platforms offering courses on accounting, finance, and business management. These same sites usually offer webinars too.

Read books and literature on financial management tailored to small business owners. Any books by Suzy Orman- Dave Ramsey, new comers worth a look- Tori Dunlap- Financial Feminist; Vivian Tu Rich as AF: the winning mindset.

Follow some of these influencers but be sure they are the real deal- some of them really know what they are talking about. I do follow Tori Dunlap at her first 110k and Vivian Tu Rich BFF.

How to know if they are the real deal? If they give you a fabulous idea run it by your accountant….they are usually most intune with what is legal and feasible. Join Facebook and LinkedIn groups; There are many groups that are industry specific or subject specific. Find your peers and hang out online with them. You will be impressed with how much you can learn.

Networking and Mentorship

Connect with your peers and join industry-specific networking groups to exchange insights and learn from the experiences of fellow entrepreneurs.

Seek Mentorship: Establish mentorship relationships with experienced business leaders who can provide guidance on financial matters.

Financial Planning

Develop a comprehensive budget that aligns with your business goals and tracks income and expenses and implement strategies for effective cash flow management, ensuring a steady financial position.

These are the statements you want to learn about and ask mentors

Income Statement: Also called the Profit and Loss Learn to interpret the P&L to understand revenue, expenses, and profitability.

Balance Sheet: Familiarize yourself with balance sheets to gauge the financial health and stability of your business.

Regular Financial Check-Ins

Schedule regular reviews of your financial statements to identify trends, opportunities, and potential challenges.

Utilize Financial Tools

Accounting Software: Invest in user-friendly accounting software to streamline financial processes and gain real-time insights. Implement dashboards that provide a visual representation of key financial metrics for quick analysis.

Continual Learning

tay Informed: Keep up with industry trends, changes in tax laws, and other financial developments that may impact your business.

Follow people online, keep up relationships with your network and mentors.

Encouraging a Financially Literate Team

Once you feel comfortable with financial literacy you can share it with your team. Extend financial literacy training to your team, empowering them to understand the financial implications of their roles.

Create Open Communication

Encourage Questions: Foster an environment where employees feel comfortable asking financial-related questions, promoting a culture of continuous learning.

Financial literacy is not just a skill; it’s a cornerstone of entrepreneurial success. By investing time in developing financial literacy, small business owners can confidently navigate the financial intricacies of their ventures, make informed decisions, and communicate effectively with financial professionals. Remember, the journey to financial literacy is ongoing, and the benefits it brings to your business are immeasurable.

Vivian Tu IG

Book

Tori Dunlap IG

Book

Smart Debt Management for Small Business Owners: Navigating the Financial Landscape

Fri, 15 Mar 2024 18:25:07 GMT

For small business owners, judicious debt management is a powerful tool that can fuel growth and support strategic initiatives. However, navigating the realm of business debt requires a keen understanding of distinguishing between good and bad debt, as well as implementing effective repayment strategies. Let’s delve into the art of smart debt management, offering advice on leveraging debt wisely and ensuring financial sustainability.

Distinguishing Between Good and Bad Debt:

Good debt is incurred for strategic investments that have the potential to generate long-term returns. This could include funding for expansion, purchasing high-value assets, or investing in innovative technologies that enhance productivity and competitiveness.

Look for debt options with low-interest rates. While interest is an inherent part of borrowing, minimizing this cost ensures that the benefits derived from the borrowed capital outweigh the financial burden.

Bad debt often stems from unnecessary expenses or impulse spending. Before taking on debt, critically assess whether the expenditure contributes to the business’s overall growth and sustainability.

Avoid high-interest credit options whenever possible. While quick and easy access to funds may seem tempting, the long-term impact of high-interest rates can significantly impede your business’s financial health.

Leveraging Debt Wisely:

Before taking on any debt, establish clear objectives for its use. Whether it’s expanding operations, upgrading technology, or hiring additional staff, aligning debt with specific goals ensures that borrowed funds are invested strategically.

Consider various financing options to find the most suitable terms for your business. This might include traditional loans, lines of credit, or alternative financing methods. Each option comes with its own set of terms and conditions, so choose wisely based on your business’s need

Develop a realistic and sustainable repayment plan. Understand the impact of monthly repayments on your cash flow and ensure that your business can comfortably manage the debt burden without compromising day-to-day operations.

Managing Debt Payments Effectively:

If you have multiple debts, prioritize repayment of those with the highest interest rates. This approach minimizes the overall interest paid over time and accelerates your path to debt freedom.

If your business faces challenges in meeting debt obligations, don’t hesitate to negotiate with creditors. Many creditors are willing to work with businesses facing financial difficulties, and renegotiating terms can provide temporary relief.

Regularly monitor your debt and financial situation. If market conditions change or your business experiences shifts in revenue, be prepared to adjust your debt management strategy accordingly. Flexibility is key to long-term success.

Smart debt management is an essential skill for small business owners, offering the potential for growth while minimizing financial risks. By distinguishing between good and bad debt, leveraging debt wisely, and implementing effective repayment strategies, entrepreneurs can navigate the complex financial landscape with confidence. Remember, debt is a tool – when used strategically, it can be a catalyst for business success and sustainable growth.

Effective Budgeting for Business Growth: A Strategic Guide for Entrepreneurs

Tue, 20 Feb 2024 18:25:07 GMT

When is the best time to start a budget? Today! The beginning of the year has everyone thinking of goals and resolutions, which pairs perfectly with budgets.

In the fast-paced world of entrepreneurship, effective budgeting is not just about keeping the books balanced; it’s a powerful tool for steering your business toward growth and success. Crafting a comprehensive budget that aligns with your business goals and allows for strategic allocation of resources is the key to sustainable expansion.

The Strategic Importance of Budgeting:

A successful budget begins with a clear understanding of your business objectives. Are you looking to increase revenue, expand your product line, or enter new markets?

Align your financial goals with these strategic objectives to ensure that every dollar spent contributes to the overall growth of your venture.

Driving Informed Decision-Making:

A well-crafted budget empowers entrepreneurs to make informed decisions. By having a detailed breakdown of income and expenses, you can identify areas where resources are optimally utilized and areas that may require adjustments. This strategic insight ensures that your decisions are grounded in financial prudence.

Creating a Comprehensive Budget:

1. Identify Revenue Streams:

List all potential revenue sources for your business. This might include product sales, services, partnerships, or any other income-generating activities. Understanding your revenue streams provides a foundation for projecting future income.

2. Distinguish Between Fixed and Variable Expenses:

Categorize your expenses into fixed and variable. Fixed costs, such as rent and utilities, remain constant, while variable costs, like marketing and employee bonuses, fluctuate based on business activities. This distinction is crucial for strategic resource allocation.

3. Allocate Resources Based on your Business Priorities:

Identify key areas that contribute directly to your growth objectives and allocate resources accordingly. Whether it’s investing in marketing, technology, or talent, a strategic allocation ensures that your budget is a catalyst for growth.

4. Innovation and Research:

Allocate a portion of your budget for innovation and research. Staying ahead of industry trends and technological advancements is essential for long-term growth. Investing in innovation ensures that your business remains competitive in a rapidly evolving market.

Regular Review and Adaptation:

A budget is a dynamic tool that requires regular evaluation. Set aside time for periodic reviews to compare your actual financial performance against your budget. This analysis provides insights into areas of strength and opportunities for improvement.

Be prepared to adapt your budget to changing circumstances. Markets evolve,

consumer preferences shift, and unexpected challenges arise. A flexible budget allows you to navigate these changes with agility, ensuring that your business remains resilient and positioned for growth.

Effective budgeting is not just about managing finances; it’s a strategic process that propels your business toward growth and success. By aligning your financial goals with business objectives, strategically allocating resources, and regularly reviewing and adapting your budget, you’ll create a roadmap for sustainable expansion. In the entrepreneurial journey, a well-crafted budget is your compass, guiding you through the complexities of business and steering your venture toward greater heights.

Investing in a High-Yield Savings Account

Fri, 22 Dec 2023 18:25:07 GMT

The Federal Reserve raised rates to the highest levels in more than two decades, which is good news for your savings accounts. Take advantage of today’s high rates by opening a federally insured high-yield savings account. Make sure you see that they are a Member of the FDIC before you sign up for an account and don’t forget they are insured only up to $250,000 per account.

Investing money in a high-yield savings account can be a great financial decision for a small business for several reasons:

1.Safety,Security and Easy Accessibility

High-yield savings accounts are typically offered by reputable financial institutions and are FDIC (or equivalent) insured. This means that up to a certain limit (usually $250,000 in the U.S.), the funds are protected against loss in case of bank failure.Most high-yield savings accounts offer convenient online banking options, allowing you to manage your account, make transfers, and access statements with ease. This level of accessibility can be crucial for day-to-day business operations.

2. Liquidity and Emergency funds

Unlike longer-term investments, such as certificates of deposit (CDs) or bonds, savings accounts offer high liquidity. This means that you can access your funds quickly and without penalties, making them suitable for emergencies or unexpected expenses. Having a well-funded emergency fund is a crucial aspect of sound financial management for any business. A high-yield savings account can serve as a reliable source of funds to handle unexpected expenses or bridge gaps in cash flow.

3. Higher Interest Rates and Low Risk

High-yield savings accounts offer significantly higher interest rates compared to standard savings accounts or checking accounts. This allows your business to earn more on its idle cash reserves, potentially providing a valuable source of passive income. While the returns from a high-yield savings account may not match the potential gains from riskier investments like stocks, they provide a stable and predictable source of income. This is especially important for small businesses looking to protect their capital.

4. Short-Term Goals and Projects

If your business has upcoming expenses or projects in the near future (e.g., purchasing equipment, renovating a space, or launching a marketing campaign), a high-yield savings account can be a secure place to set aside funds for these purposes.

5. Minimal Maintenance and Fees

High-yield savings accounts often have low or no fees associated with them. This means that the returns you earn are not eroded by maintenance costs, making them a cost-effective option for managing your business’s cash reserves.

Remember, while a high-yield savings account provides a secure and relatively low-risk option for storing funds, it may not be the best choice for long-term growth. It’s important to balance your business’s financial strategy by considering a diversified approach that may include other investment vehicles based on your specific goals and risk tolerance.

Gifts for Clients: Let Them Know you are Thinking of Them

Sat, 02 Dec 2023 18:25:07 GMT

Building strong relationships with clients is a cornerstone of any successful business. One way to show appreciation and nurture these connections is through thoughtful and timely gifts. Whether you’re celebrating a milestone, expressing gratitude, or simply keeping the lines of communication open, these gifts will leave a lasting impression.

1. Welcome Gifts

First impressions matter, and a warm welcome gift can set the tone for a prosperous partnership. Consider items like custom-branded merchandise, high-quality notebooks, or a curated selection of local goodies. Include a handwritten note expressing your excitement about working together.

2. Milestone Celebrations

Acknowledge the achievements of your clients with gifts that commemorate their milestones. Personalized engraved items, such as plaques, crystal awards, or custom artwork, serve as tangible reminders of their accomplishments- make sure to include their logo! . These gifts show that you’re invested in their success.

3. Thank-You Tokens

Gratitude goes a long way in business. Send a heartfelt thank-you gift when your client has made a significant contribution to your shared endeavors. A carefully chosen selection of gourmet chocolates, a beautifully crafted thank-you card, or a potted plant for their workspace can convey your appreciation.

4. Seasonal Surprises

Embrace the festive spirit by sending seasonal gifts during holidays or special occasions. Consider tailored gift boxes filled with seasonal treats, branded company swag, or even a virtual wine tasting experience. These gestures create a sense of camaraderie and strengthen your business relationship.

5.. Wellness and Relaxation

Help your clients unwind and prioritize self-care with wellness-focused gifts. Consider sending a luxurious spa set, a subscription to a meditation app, or a personalized yoga mat. These gifts demonstrate your concern for their well-being beyond business matters.

7. Tech Gadgets and Accessories

Stay on the cutting edge of technology by gifting innovative gadgets or accessories. Think wireless chargers, noise-canceling headphones, or a sleek, branded power bank. Practical and forward-thinking gifts like these show your commitment to modern solutions.

8. Exclusive Events and Experiences

Provide your clients with memorable experiences that go beyond the ordinary. Consider inviting them to an exclusive networking event, a behind-the-scenes tour of your facilities, or a private webinar featuring industry experts. These unique opportunities strengthen connections and foster a sense of belonging.

Conclusion

Sending thoughtful gifts to your clients is a powerful way to nurture and grow your business relationships. By tailoring your gifts to specific occasions and the individual preferences of your clients, you demonstrate your commitment to their success and well-being. Remember, it’s not about the monetary value of the gift, but the sentiment and effort behind it. These gestures will leave a lasting impression and set the stage for continued collaboration and success.

From 4th Grade ‘Help’ Desk to Entrepreneurship: Lessons Learned

Fri, 24 Nov 2023 18:25:07 GMT

In the landscape of childhood memories, those moments shine like stars, guiding us on our life’s journey. For me, it was a fourth-grade endeavor that laid the foundation for a future filled with innovation and problem-solving.

In the 70s, things were freewheeling in the teaching sector. Teachers were experimenting with new ideas, open classrooms (the classrooms were literally open to each other), and new ideas on how children learn. I, as a then 4th grader, saw an opportunity in this sea of change. Inspired by the character Lucy from Peanuts, I hatched a plan with my teacher (Mr. K) to set up a ‘help’ desk where fellow students could seek advice for a fee. It was a charming and innocent display of budding entrepreneurship.

Throughout the school year, the ‘help’ desk buzzed with activity. Classmates flocked to the desk, bringing their queries and seeking solutions to various predicaments. From homework woes to friendship dilemmas, the ‘help’ desk provided a safe space for discussions and advice. This initiative not only helped classmates find answers but also ignited a spark for me- I was an entrepreneur feeling the thrill of owning my first business..

As the school year came to an end, the ‘help’ desk had accomplished more than just answering questions. It had managed to generate earnings – a feat that only a true entrepreneur can appreciate. With the hard-earned funds, my teacher and I decided to treat the entire class to popsicles. It was a sweet ending to a project that had sparked a fire for me..

Years later, I reconnected with my 4th-grade teacher, Mr. K. We reminisced about our ‘help’ desk venture and had some good laughs. It became evident that this seemingly simple project held valuable lessons that would continue to shape my path.

Through my teacher’s support of my crazy idea, I learned the importance of exploration. Permission to think outside the box fostered a sense of creative thinking that would become integral to my entrepreneurial journey. I started a remote accounting firm before it was ‘cool’ to be remote. I was looking to change how accounting processes were done for small businesses, which required innovative thinking.

The ‘help’ desk provided a platform for problem-solving and discussions. This experience taught me the significance of creating a safe space for individuals to seek guidance and find solutions. When we talk with our clients, we never judge, as the entrepreneurial journey is not easy and rife with trials and tribulations.

Solving classmates’ problems brought a sense of fulfillment. Here, I discovered the profound satisfaction of helping others navigate challenges – a sentiment that would inspire me to work with entrepreneurs.

From a humble ‘help’ desk to a lifelong entrepreneurial spirit, my journey serves as a testament to the power of childhood experiences and the power of great teachers.

It reminds us that the seeds of entrepreneurship can be sown at the most unexpected times and places. Whether it’s offering advice to classmates or founding a startup, the lessons learned from that fourth-grade venture continue to resonate in every entrepreneurial endeavor I’ve undertaken.

Thanks Mr. K!

Is Your QuickBooks Online File a Mess? Here’s How to Tell and What You Can Do About It

Fri, 13 Oct 2023 14:15:16 GMT

QuickBooks Online can be a life-saver for small business owners, but only if your files are in good shape. A messy QuickBooks Online file can lead to all sorts of problems, such as incorrect financial reports and missed tax deductions. So how do you know if your QuickBooks Online file is a mess? And more importantly, what can you do about it? In this blog post, we will answer those questions and provide tips on how to clean up your QuickBooks Online file.

If your QuickBooks Online file is a mess, it can lead to all sorts of problems. Here are some signs that your file needs some attention:

You have duplicate transactions.
Your financial reports don’t make sense.
You’re having trouble reconciling your bank account.
You have accounts with negative numbers

If you’re seeing any of these signs, it’s time to take action. Waiting to address issues until next year can leave you with less options for the current year and could lead to trouble later.

So how do you clean up your QuickBooks Online file?

Here are some tips for cleaning up your QuickBooks Online file:

Fix duplicate transactions. Make adjustments but don’t delete- see below
Don’t Delete- if a transaction looks like it shouldn’t be there- void it. Once you start to reconcile you may realize that a transaction was needed. If you void it, it can still be retrieved and put in the correct account.
Reconcile your bank account. Sometimes that is the easiest way to find errors. If it is not on your bank or credit card statement, but it is in QuickBooks Online, you need to investigate further. Is your beginning balance off? Check out this video from QuickBooks for help: How to fix beginning balance issues when reconciling in QuickBooks Online
Update your Chart of Accounts. Make sure your chart of accounts will allow you to create the reporting you need. Need help with this? We have you covered. We can help you create the best reports for your business and keep monthly tabs on income and expenses.

Cleaning up your QuickBooks Online file may seem like a daunting task, but it’s important to keep your QuickBooks Online file in good shape. By taking the time to clean up your QuickBooks Online file now, you can avoid potential problems down the road.

Understanding Goodwill in Accounting

Fri, 22 Sep 2023 14:15:16 GMT

You might know the word “goodwill” as the name of a local charity where you can drop off household items you no longer need. It might also be something that’s talked about at church. But in accounting circles, goodwill is something completely different.

Goodwill is an account on the balance sheet of certain businesses. It falls into the category of assets, and specifically, it’s an intangible asset. An intangible asset is something that is not physical. Examples of other intangible assets are copyrights, patents, and trademarks.

Goodwill arises when one company purchases another. When a company pays more for the company that it is acquiring, the difference is booked as goodwill. Goodwill represents the extra value that the acquisition provides for the purchasing company.

When one company buys another, the assets and liabilities of the acquired company are taken over by the purchasing company. They are recorded on the purchasing company’s books at their fair value. The balancing entry between the fair value of the assets and liabilities purchased and the purchase price is booked to the goodwill account.

What could lead a company to pay more for another company? Things that are not on the balance sheet but are valued could include a solid customer base, great employees, brand reputation, the company name and what it means, technology owned by the company, and a great reputation for customer service.

Normally, an intangible asset like goodwill would be amortized, but it is not. Amortization is when a portion of the asset is expensed each year. A patent, for example, is amortized over its useful life, not to exceed 20 years. Amortization is comparable to depreciation. Some physical assets are depreciated, while some intangible assets are amortized.

Before 2001, goodwill was amortized for up to 40 years, but the accounting rules have changed to something less arbitrary. Goodwill must be checked each year for “impairment.”

Goodwill impairment happens when the value of the acquisition declines after it has been purchased. One of the most famous impairments write-downs occurred right after this new accounting rule was implemented. In 2002, $54.2 billion in impairment costs was reported for the AOL Time Warner, Inc. merger.

More recently, in 2020, a few of the largest impairment write-downs included companies, such as Baker Hughes, Berkshire Hathaway, and ATT, due to the latter’s acquisition of DirecTV in earlier years. In 2022, impairment write-downs included Teladoc Health and Comcast. Covid-19 was in part responsible for a large number of impairment write-downs in recent years.

If impairment is required to be booked, the journal entry will look like this:

Debit Impairment Expense (increases expenses and therefore reduces profits)

Credit Goodwill (reduces the asset amount)

If your company has acquired other companies and you have a goodwill account on your balance sheet, you can work with your accountant to determine how to check for impairment and if you are required to correct your books.

The Three Stages in the Leadership Journey

Fri, 15 Sep 2023 14:15:16 GMT

I run a women’s business book club. This summer, one of our members introduced a fascinating idea: reading and discussing articles. The concept was simple—each person would present a summary of their chosen article and explore how its insights could be applied to both personal and business contexts. The article I’m bringing to the table is “ The Leadership Odyssey ” from The Harvard Business Review.

A phrase that has been echoing in my mind ever since I read the article is “what got you here won’t get you there,” and this article truly delves into that concept.

This piece deeply resonated with me because it aligns with where I currently stand on my journey and how I am viewing it. Gone are the days of the heroic leader charging ahead—the traditional image that often seems gender-biased towards men. In today’s landscape, women are carving out their place as effective leaders by acknowledging the importance of empowering those around us. We are stronger when we all rise together.

A Three-Stage Journey

The article outlines a three-stage journey: departure, voyage, and return.

Departure

The first stage, departure, is perhaps the most challenging. It’s that moment when you recognize, often through repeated teaching moments, that change is imperative. This is the stage where the phrase “what got you here won’t get you there” truly comes to life. It’s about realizing that the strategies and habits that brought you success in the past may not be the same ones that will lead you to becoming a great leader or successful business owner. This recognition often comes through feedback from colleagues and employees—a process that takes time and repeated instances to fully comprehend. Sometimes, finding a seasoned mentor with the skills you lack can serve as a model for the change you need.

However, this transformation usually demands external assistance, as it’s a more substantial effort than one might anticipate. An unbiased source, such as a coach, mentor, or advisor, can be invaluable in this journey. It’s about partnering with someone who guides you through this process of change.

Voyage

Once you’ve pinpointed the common thread among your issues and identified the behavior that needs alteration, you move on to the second stage—the Voyage.

In this phase, successful executives create a fresh learning context. They place themselves in situations where their authority is indirect, and they need to empower others without wielding traditional control. A collaborative style takes precedence over dictating and driving objectives. This new approach involves asking questions that steer conversations towards desired outcomes—an exercise in influencing without the traditional authority.

Another effective tactic during the Voyage is to transfer knowledge from other domains to your current situation. The article uses parenting as an example, highlighting the collaborative nature of raising a child—a challenge we’re all familiar with!

Enlisting the support of close colleagues who can point out when you exhibit the behaviors you’re trying to change is another strategy. These small wins, although they may encounter setbacks, are essential in the journey.

Return

The final stage, Return, is easily recognizable. You find comfort in situations that previously frustrated you. Your journey yields a new professional identity—an identity characterized by the transformation from practiced behavior to inherent traits. While the journey never truly concludes, it becomes self-sustaining.

Moreover, this newfound expertise fuels a desire to share your learnings, fostering growth in the workplace and beyond.

Embarking on this journey effectively begins with charting out a learning agenda. This plan illuminates the path towards behavior change and provides insights into the required effort. Ultimately, self-awareness is the cornerstone of successful change. Understanding who you are and acknowledging your insecurities can profoundly aid this transformation.

The “Leadership Odyssey” sheds light on the evolution of leadership. It speaks to a profound truth: to reach new heights, we must let go of what propelled us in the past. As we embrace this journey, it’s not just our roles that transform, but our identities as leaders and mentors.

Unlocking the Benefits of Automatic ACH Payments for Small Business Owners

Fri, 25 Aug 2023 14:15:16 GMT

As a small business owner, ensuring a steady cash flow is vital to the success and growth of your company. Embracing the convenience and efficiency of automatic ACH (Automated Clearing House) payments can significantly increase your predictable cash flow management. In this blog, we will explore how small business owners can increase cash flow by leveraging automatic ACH payments to receive payments from clients.

1. Simplified Payment Process:

One of the primary advantages of automatic ACH payments is the streamlining of the payment process for your client. Everyone wants convenience, especially when paying bills. By setting up this secure and reliable system, you eliminate the need for manual payment collection, reducing administrative tasks and potential errors. Your clients can authorize recurring payments, ensuring regular and timely cash flow into your business. You can make it part of your initial proposal or contract with the client making them aware of this expectation.This efficiency allows you to focus more time and resources on core operations and business growth.

2. Prompt Payment Collection:

Automatic ACH payments empower you to collect payments promptly, providing a predictable and consistent cash flow for your firm. With manual payments, you may face delays or missed payments due to various reasons such as forgetfulness, scheduling conflicts, lost checks in the mail or other distractions. By implementing automatic ACH payments, you eliminate these hurdles and create a more efficient and reliable payment collection process. Timely payments contribute to healthier cash flow and enable you to meet financial obligations promptly.

3. Improved Cash Flow Forecasting:

Automatic ACH payments enable better cash flow forecasting and financial planning for your small business. With the predictability of incoming payments, you can accurately project and manage your cash flow. By having a clear picture of your cash inflows, you can seize opportunities and navigate challenges more effectively.

4. Enhanced Payment Security:

Security is a top concern when it comes to financial transactions. Automatic ACH payments offer a high level of security for both your business and your clients. The robust encryption and authentication protocols safeguard sensitive financial information, reducing the risk of fraud or data breaches. By providing a secure payment method, you build trust with your clients and foster long-term relationships based on reliability and professionalism.

5. Efficient Accounts Receivable Management:

With automatic ACH payments, you can streamline your accounts receivable management process. By eliminating manual invoicing and payment tracking, you save time and resources. The automation of payment collection reduces the likelihood of errors and eliminates the need for follow-up communications to collect outstanding payments. This efficiency allows you to focus on delivering exceptional services to your clients while maintaining a healthy cash flow.

Small business owners can significantly boost cash flow by embracing automatic ACH payments for receiving client payments. With simplified payment processes, prompt payment collection, improved cash flow forecasting, enhanced security, and efficient accounts receivable management, you can optimize your financial operations and focus on growing your business. By leveraging the benefits of automatic ACH payments, you can experience increased efficiency, reduced administrative burdens, and a more stable and predictable cash flow. Embrace this powerful tool and pave the way for financial success and sustainable growth for your small business.

Want to learn more about how to implement this process? Head over to our website and click on the Let’s talk button and set up a meeting on how to set up this internally and roll it out to your clients who will gladly pay you by ACH.

Cool Tech Tools: ChatGPT

Thu, 10 Aug 2023 14:15:16 GMT

The topic of artificial intelligence (AI) has been in the news quite a bit recently, and one of the reasons is the launch of an AI chatbot called ChatGPT. The GPT in ChatGPT stands for generative pre-trained transformer, which is a program that can realistically write like a human and interact in a conversational way. Basically, you can type in a complicated question, and ChatGPT will give you an amazingly lifelike, most-of-the-time accurate answer.

ChatGPT was launched in November 2022 and developed by OpenAI, an AI research lab tasked with developing a friendly AI. OpenAI has both a non-profit and for-profit component in its organizational structure.

As of this writing, ChatGPT is offered at no cost, but you must open an account and verify both your email address and phone number to access it. Once you do, the prompt is simple; just ask it a question. You can get access here: https://chat.openai.com/chat

Here is a sample answer to the question, “What are debits and credits?”

ChatGPT: “Debits and credits are terms used in accounting to describe the money movement into or out of an account. In accounting, every transaction involves at least two accounts, and each account is either debited or credited.”

“A debit is an entry that increases assets or expenses or decreases liabilities or equity in an account. For example, if you buy office supplies for your business, you would debit the office supplies expense account and credit the cash account.”

“A credit is an entry that increases liabilities or equity or decreases assets or expenses in an account. For example, if you sell goods on credit to a customer, you would debit the accounts receivable account and credit the sales revenue account.”

“Debits and credits are used to keep track of the financial transactions of a business or organization. They are important tools for recording and analyzing financial information, and are essential for preparing financial statements and tax returns.”

Yes, ChatGPT is a touch verbose at times.

Here is a tax example:

Question: Qualified Business Income – earnings limitations if NOT a specified service business

ChatGPT: “Under the current tax law in the United States, if you are a qualified business owner who operates a non-specified service business, you may be eligible for a tax deduction of up to 20% on your qualified business income (QBI).”

“However, there are certain limitations on the deduction, including a cap on the amount you can deduct based on your total taxable income. For the tax year 2022, the threshold for the taxable income limit is $329,800 for married filing jointly and $164,925 for other taxpayers.”

“Additionally, there may be further limitations on the deduction if your business has a significant amount of W-2 wages and/or depreciable property.”

“It’s important to consult with a qualified tax professional or accountant to determine how the QBI deduction rules apply to your specific business and tax situation.”

It can also answer these questions/requests, along with literally millions of others:

The best recipe for lemon bars
Write an engagement letter for tax preparation
Comment on the elevation of the El Camino de Santiago de Compostela from Sarria to the end.
Write an ad for marketing services.

There is a disclaimer in place, as ChatGPT will occasionally generate wrong answers. It did generate a misleading answer when it was asked a very complex tax question about the Employee Retention Credit and greater than 50 percent owner wage eligibility.

How can you use ChatGPT in business? It might save you time with writing initial drafts of letters, ads, speeches, webpages, or other correspondence. It can also save time on research and data analysis, but be sure to verify its answers. It can help with coding if you’re into computer programming. You can also use it for fun or for a second opinion.

Try ChatGPT to start seeing how it can benefit you and your business.

Why Moms are Natural Entrepreneurs

Wed, 26 Jul 2023 14:15:16 GMT

We work with a lot of entrepreneurs and we see some exciting trends. Moms and those who run a household with children seem to have an advantage when it comes to small business. At First Steps Financial we love to hire moms who have run a household, run the PTA/PTO or been a volunteer at school or someplace else. Why? They know how to put out fires- and in what order! They also seem to understand our small business owners, anticipate their needs and can empathize with them. They possess an incredible set of skills that are learned from experiences while others that appear innate. These skills are not limited to women, but seem to be someone who is taking the greater share of responsibility with kids and the home. While we love to hire these moms- they also make amazing business owners.

Multitasking Superpowers: Moms possess exceptional multitasking abilities that make them ideal small business owners. Juggling numerous responsibilities in their personal lives, such as managing household tasks, caring for children, and supporting their families, prepares them to handle the diverse demands of running a business. Their innate ability to prioritize, organize, and efficiently manage their time enables them to excel in handling multiple aspects of their small business simultaneously.
Natural Problem Solvers: Motherhood instills in women or caretakers a remarkable problem-solving mindset. From resolving conflicts between children to finding creative solutions for everyday challenges, moms develop a keen sense of resourcefulness and adaptability. These problem-solving skills translate seamlessly into the entrepreneurial world, where small business owners constantly encounter obstacles and need to think on their feet. Moms possess the resilience and determination to overcome challenges, making them adept at navigating the uncertainties and complexities of running a successful small business.
Empathy and Customer Focus: Mothers are known for their nurturing and empathetic nature. They have a deep understanding of the needs, concerns, and desires of their children, and this empathetic mindset extends to their interactions with customers. Small businesses thrive on building strong relationships with clients, and moms excel at providing personalized care and attention to their customers. They have a unique ability to listen, empathize, and meet the specific needs of their clientele, creating a customer-centric environment that fosters loyalty and trust.

Moms possess a range of qualities that make them outstanding small business owners. Their exceptional multitasking abilities, problem-solving mindset, and natural empathy contribute to their success in managing and growing their businesses. By leveraging these inherent strengths, moms create a nurturing and customer-focused environment that sets them apart as exemplary entrepreneurs.

Five Summertime Strategies for 2023

Thu, 29 Jun 2023 14:15:16 GMT

We’re a few weeks away from the midpoint of the year. It’s the perfect time for taking a strategy check in your business to see how you’re doing for the first half of 2023 as well as to plan something fun and productive for summertime.

Here are five business strategies to help you regroup, reassess, and rejuvenate your business halfway through 2023.

Celebrate Your Accomplishments

Take a Vacation

Schedule a Mid-Year Review

How has your business fared for the first half of 2023 compared to the goals you set at the beginning of the year? Are you on track to reach your goals? Should you design a course correction or are you on track? Maybe you’re even ahead of plan!

You can make this process as informal or formal as you want. Some businesses hold retreats; you may simply need some quiet time on a weekend when all your family is busy doing something else.

Be Selective About the Projects You Start

Play Big

Summertime is a great time to regroup, re-energize, and refresh your business. Try one of these five tips to spice up your summer as well as your business success.

Unveiling the Secrets to Finding the Perfect Employees

Thu, 22 Jun 2023 14:15:16 GMT

In today’s competitive job market, finding employees who align with your company’s culture and mission can be a daunting task. It requires a dash of creativity and a strategic approach to attract individuals who possess the right skills and mindset. In this blog, we delve into the art of finding the perfect employees and explore unconventional methods that can help you build a team of exceptional talent.

Think Beyond Traditional Job Boards: While platforms like Indeed, ZipRecruiter, and LinkedIn are popular choices for job postings, they often yield a flood of applicants with limited qualifications. Instead, consider specialized search services like Robert Half or industry-specific forums. For niche industries, thinking outside the box and employing unique recruitment strategies can help you discover hidden gems.
Define Your Ideal Employee: Start by identifying an existing team member who epitomizes your ideal employee. Analyze their qualities and attributes that contribute to their exceptional fit within your organization. Conduct personality tests with your team to gain insights into the traits that align well with your culture and mission. By focusing on these characteristics, you can pinpoint candidates who have the potential to be a perfect match.
Tap into Online Communities: Explore the online spaces where your ideal employees are likely to spend their time. Survey your current team to discover the groups and communities they belong to online. Research these platforms and, if allowed, post your job openings there. By leveraging these niche communities, you can connect with individuals who may not actively be searching for jobs on traditional platforms, expanding your talent pool.
Harness the Power of Referrals: One of the most effective ways to find great employees is through your existing team’s recommendations. Happy employees tend to surround themselves with like-minded individuals who share similar values and ideals. Encourage your team to refer potential candidates and leverage their networks. Word-of-mouth referrals can bring in high-quality applicants who are more likely to align with your company culture and values. You can provide your employees with incentive rewards for bringing in top talent. It can be in the form of a bonus or paid time off.

Finding the right employees is undoubtedly challenging, but with a mix of creativity, strategic thinking, and leveraging your existing team, you can assemble a talented workforce that propels your organization to new heights. Embrace unconventional methods, tap into online communities, and prioritize employee referrals to attract individuals who not only possess the required skills but also resonate with your company’s culture and mission. By investing time and effort in your recruitment process, you’ll set the stage for a vibrant and harmonious team that drives success.

Why You Should Be the Primary Administrator on all the Software You Use

Thu, 08 Jun 2023 14:15:16 GMT

Recently we have been discovering issues where our clients are not the master administrator on their software, bank accounts, social media and websites. Some entrepreneurs might think that it is not a big deal, because they trust the person running the software.

Trust is not a plan.

This does not mean that you can’t trust people but you should have systems in place that allow you to have access to what you need in case your trusted person leaves.

We are onboarding a new client and we are working in their QuickBooks Online file. The owners are not the primary administrator. In fact, the person who is on as the primary administrator hasn’t worked there in years and they can’t get in touch with them. The file is owned by this phantom person- who could come in and wreak havoc if they wanted to. To remove this person and have the owners become the primary administrators is a long and complicated process, which they will have to do.

In another case the client didn’t have primary access to the payroll. Their bookkeeper did. Everything was in her name. She got sick and couldn’t be reached. Payroll could not be run because she was the primary administrator. We were eventually able to help the owner get access but it created undue stress on all involved and a late payroll run.

Another new client was not able to access their own credit card account or healthcare information. They let their assistant set up all the information and he used his personal information. The assistant decided he wanted to retire and the owners realized they had no access to these accounts. Lucky for them, they were able to get the information before the assistant left and after a review of the account realized all the transactions were legitimate. It could have gone very differently.

We have seen where people took advantage of the situation and committed fraud. How to prevent it?

Follow these recommendations

Any software should be in your name. This includes QuickBooks Online and your website. Check under ‘users’ or ‘user management’ to make sure that you have the highest level of access and no one can kick you out or change your access.
Keep track of all your usernames and passwords. You can use Last Pass or other secure portals for this.
If you are implementing a new software, find out what the hierarchy of access is and make sure you have the one that no one can change.
Don’t share your access with anyone. You can put a plan in place where two people each have access to one piece of information and have to put it together to gain access. This would be a contingency in case you get sick or hurt and your business still needs to run for a short time without you.

This happens to all of us. When I first started my company I had someone create my website. It was beautiful! One of my clients works monitoring websites and offered to do updates. I told my original website designer that I decided to work with my client on the website.He didn’t take it too kindly and he took down my website. I then realized that I had no access to the website and was not able to do anything to retrieve the information. I had to start from scratch. It was so much work to recreate the site- and I learned a valuable lesson. Make sure you have the highest accessibility to all your software, websites, bank accounts and anything else you need to run your business. Most systems allow other users with different levels of access and one or two people being super users.

Take the time to check and make sure you are the owner of your software. It will be time well spent and it will also give you peace of mind.

Don’t Shortchange Yourself: Entrepreneur’s Pay

Sat, 27 May 2023 14:15:16 GMT

What should you pay yourself?

Being in business means taking a lot of risks, especially financially, and as an entrepreneur, you deserve to be rewarded for those risks. Your pay is just one of the many benefits of your self-employment. But it’s not like the pay you get as an employee, there is more to just picking a number for salary.

Getting Paid

The two major ways entrepreneurs can take money from their businesses are through owner draws or by receiving a paycheck. If your business is incorporated, you’ll take a paycheck; if your business is a sole proprietorship or a partnership, you’ll take a draw. Again its important to know what entity type your business is

Here’s a list of five items to make sure you have covered in your pay:

Reasonable Compensation.

If you were doing the same work for a company that hired you, what would your pay be? Are you making at least market equivalent or better? A lot of times, as entrepreneurs, we tend to focus only on this piece of our compensation when we set our pricing, and that’s a big mistake.

There are also tax implications of paying yourself too little (to avoid payroll taxes if you take a paycheck) or too much.

Retirement plan

When you work for yourself, no one is going to fund your retirement for you. Although the Social Security program helps, it’s up to you to set additional money aside for a comfortable future when you can’t or don’t want to work anymore. 401k plans are easy to set up with your payroll and require little extra work. We love working with Guideline for retirement plans. They sync with our payroll and record all the information neatly in our QBO file.

Benefits

Employees get vacations, health insurance, and bonuses; and you should too. This should be part of your compensation package as an entrepreneur, and there are many tax advantages as well. Find a good health insurance broker- one that understands the tax implications of setting up health insurance for an owner. They will help guide you to the best plans for your situation.

Taxes.

You need to cover taxes that will be incurred on your pay as well as your business profits. This includes:

Normal withholding for federal income taxes, state and local income taxes, Medicare, and social security. If you receive a paycheck, these will be taken out of your paycheck, but they may not be enough because they don’t consider taxes on your profits. If you take a draw, you may not have withholding, but you will need to factor in self-employment taxes.
Taxes on your profits. For sole proprietors, partnerships, LLCs, and S Corps, your taxes will be figured on the profits of your business when you complete your federal income taxes. They will “pass-through” from your business to your personal return. Don’t let this part surprise you!
State business taxes. If your business does business in multiple states, you must file a tax return for each state. Many of them collect taxes based on flat corporate fees, the revenue you earned in that state, state payrolls, and/or the value of property owned in that state.

Check with your tax advisor so that there are no surprises in your tax bill for your business or your personal returns.

Profit.

As an entrepreneur, you take extra risks when you own your own company, and you should be compensated accordingly. Your capital is tied up in your business and should be earning a good return in addition to your regular salary or draw. Making a profit is the goal for every business- if not you are setting yourself up for failure, because no profits mean you are not getting a return on your investment.

Complete Compensation

Your compensation should include all of the above components. If it doesn’t and you feel like you can’t afford to pay yourself that much, then your pricing might not be right and , you might have a volume problem, or your business model may need some adjusting.

It’s normal to take a smaller paycheck the first few years as the business is growing, but if you’re still doing it after several years or constantly have cash flow issues, then something may be wrong and you need to take a closer look at revenues and expenses.

If you’d like our help in this area of your business, please reach out and let us know.

Analyzing Your Profit and Loss Statement

Fri, 19 May 2023 14:15:16 GMT

This is the first report you should be reviewing every month and comparing it to last month and last year. Once your books are reconciled this report can give you good information to make future decisions. Your profit and loss statement reports the total income of your business minus the expenses. It gives you a baseline of the health of your business.

It measures the business on these 3 performances:

Generating income from sales
Managing expenses
Sustaining a healthy profit margin

Once you have reviewed the information you can use it to make decisions in many areas of the company, such as:

Setting prices (increasing or providing discounts)
Developing sales targets
Forecasting growth
Obtaining loans or finding investors
Ability to get tax planning advice

Applying for a loan? A profit and loss statement will be one of the documents that will be needed. Thinking about finding investors? They will also want a profit and loss statement to see if your company is financially sound.

By analyzing your profit and loss statement, you can identify areas where your business is doing well and areas where it needs improvement. This can help you make informed decisions about how to grow your business and improve its profitability. Do you want to learn more about what reports to review or maybe learn more about what your reports really say about your business?

Click here to set up a meeting to see what we can help you with!

What KPIs Should I Measure?

Fri, 12 May 2023 14:15:16 GMT

I love to review reports, they tell a story….and different numbers tell different things about the company’s health and future. Depending on what industry you are in and what your goals are will depend on what numbers you look at.

The key performance indicators (KPIs) you should be looking at depend on your specific goals and objectives. KPIs are metrics that help you measure progress towards your goals, and they can vary widely depending on the industry, company size, and type of business.

Here are some examples of KPIs that are commonly used across different industries:

Revenue: This KPI measures the total amount of money earned by the business over a given period of time. You can then compare these periods of time to see increases or decreases.
Customer Acquisition Cost (CAC): This KPI measures the cost of acquiring a new customer, including marketing and advertising expenses.
Customer Lifetime Value (CLTV): This KPI measures the total amount of revenue a customer is expected to generate over the course of their relationship with the business.
Churn Rate: This KPI measures the rate at which customers stop using a product or service.
Net Promoter Score (NPS): This KPI measures customer satisfaction and loyalty by asking customers how likely they are to recommend the business to others.
Website Traffic: This KPI measures the number of visitors to the company’s website.
Conversion Rate: This KPI measures the percentage of website visitors who take a desired action, such as making a purchase or filling out a contact form.
Employee Satisfaction: This KPI measures the level of job satisfaction among employees.

These are just a few examples, but there are many other KPIs that could be relevant to your business depending on your specific goals and objectives. KPIs can change over time. You may decide to change what you are measuring because the organization is moving in a different direction. It’s important to identify the KPIs that are most important to your business and track them regularly to ensure you are making progress towards your goals.

The When and How of Firing a Client

Fri, 28 Apr 2023 17:46:46 GMT

We really like our clients. And it might seem strange but that is important to us. We spend a lot of time with our clients and become invested in their success. When we have issues with clients, it really bothers us. We do everything we can to solve the problems but sometimes there is no fixing differences in ideals. Firing a client is never an easy decision, but sometimes it becomes necessary to maintain the values that are the core beliefs of your business.

Here are some steps to follow before you fire a client: (you will feel better knowing that you did everything you could- and your client will too!)

Evaluate the situation: Take the time to assess the situation and determine why you want to fire the client. It could be because of difficult behavior, late payments, or a lack of cooperation.
Have a conversation: Schedule a meeting or call with the client to discuss your concerns. Be direct, clear, and specific about the issues you’ve identified. Try to remain professional and avoid becoming emotional. Can it be fixed? Or is it something that will not change?
Offer alternatives: If appropriate, suggest alternative solutions that could help resolve the issues, such as changing the scope of work or adjusting the terms of your agreement.
Document the conversation: Follow up with a summary of the conversation in an email. Include any agreements made during the meeting or call. This documentation can be important if any disputes arise in the future.
Provide a formal notice: If you decide to move forward with ending the business relationship, provide a formal disengagement letter to the client. Be clear and specific about the reasons for termination, how information will be passed and the date on which the relationship will end.
Be professional: It’s important to remain professional and courteous throughout the process. Avoid burning bridges, as the client may become a potential referral source or return customer in the future.

Remember, firing a client should always be a last resort. If possible, try to resolve any issues and maintain a positive relationship. However, if the relationship becomes too difficult or damaging to your business, it may be necessary to part ways, but make sure you try to leave the relationship on good terms. It will benefit both parties.

6 Key Strategies to Keep Your Business on Track

Thu, 20 Apr 2023 17:46:47 GMT

Everyone knows how important it is for a business to maintain best practices for company finances. While faults in customer service or marketing can hinder your business, accounting mistakes can stunt your growth and leave your company struggling to survive.

Small business owners wear many hats, dealing with duties ranging from marketing, to inventory management and everything in between. With the hustle and bustle of trying to stay on top of everything, errors can occur, especially with respect to accounting. But with prudent planning and smart choices, even accounting errors can be mitigated or avoided altogether.

Here are six things you can do to help avoid common accounting mistakes.

1. Hire the best Accountant and Bookkeeper you can afford- it will save you money

The do-it-yourself approach is a tough one. And even if you think you are up to it, proper accounting takes time and energy that you could be devoting to other areas of your business.

Setting up a QuickBooks Online account is a good option. This will help you to track everything going in and out of your business. It saves time and headaches.

Not every online financial tool is created equal. As such, it’s important to do your research and find the right software for your business. Remember, the cash your business could lose through poor financial practices isn’t worth the savings you make on cheap or “free” software.

Doing it yourself may work in the beginning stages of your company, but as your business grows, you’ll probably need some help.

If you want an accountant that is qualified and attentive, be ready to pay a premium for those qualities. By paying less for an accountant, you may think you’re saving money, but hiring a subpar accountant can lead to missed deadlines and inaccurate reporting.

Like financial software, competent accountants are worth the extra investment. They have the ability to not only take care of the basics, but they can also offer insight into the proper ways to spend your money and grow your business. On top of that, most professional accountants use QuickBooks to handle their clients’ finances, so if you started with QuickBooks on your own, your new accountant will be able to easily take over your books.

2. Get Comfortable Discussing Finances

Finances are hard to talk about but you will need to find an accountant/bookkeeper that you can talk to and just as importantly, understand. They should be able to explain your financial situation in terms that you can understand. Find someone that is patient with your questions and is willing to teach you enough to understand the answers.

Don’t be too proud or afraid to expose your personal lack of knowledge to your accountant/bookkeeper. This is especially important when you’re talking about money, so find someone that you feel is competent and honest enough to give you an accurate picture of your business..

3. Control Your Expenses

Reviewing your expenses monthly or more frequently is a good habit to start. As you review, look for expenses that are not essential or that could be reduced by finding another vendor or asking for a discount. Over time, an incidental expenditure of $20 here or $30 there can really add up. An accountant/bookkeeper can help you keep this spending in check.

4. Keep Personal and Professional Expenses Separate

When starting a business, the first thing you should do is open a business checking account; this is where all business income should be deposited. Keeping your business income separate from your personal income minimizes the likelihood of errors that are bound to happen when using a single account. It can also help you stay compliant with IRS regulations.

5. Choose the Right Accounting Method

Business accounting has two main methods: cash and accrual.

Using the cash accounting method, you record income when it is received and process payment transactions at the time of payment. The cash method deals with the actual flow of cash coming in and out of the business. Most small businesses are run on the cash basis and pay taxes based on this.

The accrual accounting method, on the other hand, differs in that it records expenses and income when the transaction occurs, even if the cash itself has not yet changed hands.

It’s vital to talk with an accountant or tax professional and determine the best accounting method for your business.

6. Employee or Contractors?

The IRS classifies workers into two basic categories: employees and independent contractors. There are a lot of differences that go into making that distinction. Make sure you know the difference

For Employees : You will have to pay payroll taxes on full-time, part-time and temporary employees. This means that you will be responsible for paying a portion of your employees’ contributions to Social Security and Medicare, as well as withholding a portion of their paycheck to pay their federal tax bills.
For Independent Contractors : As an employer, you likely won’t need to deduct anything from an independent contractor’s pay. Beware, however, that if you control the structure of the work of your independent contractor, the IRS may classify him or her as an employee, which could lead you to pay the IRS and State agencies back employer taxes, plus fines and interest.

More information can be found here on the IRS website about the differences between an employee and contractor.

Have You Ever Thrown Good Money After Bad Money?

Fri, 07 Apr 2023 17:49:25 GMT

As business owners, we’d like to think that we make rational, logical decisions when it comes to our business finances. However, scientists have discovered that we have built-in biases in our brains and our thinking processes, and one of these biases is the sunk cost bias.

A sunk cost is simply money, time, or resources that you have already spent and can’t get back. The bias comes into the picture when we consider those costs in future decisions.

One example is when you have already invested a lot of time and money in a losing project. You continue to do so even if the benefits are not worth it. Let’s say you have spent a lot on car repairs. You continue to repair the car, digging a deeper and deeper hole. Buying a new car would be the better decision because the benefits would outweigh the costs, but you are still emotionally (and irrationally) attached to all the money you spent on the clunker.

You can also fall into the sunk cost trap with relationships. Let’s say you have an employee that is a borderline performer. You keep investing in them, thinking you can “fix” them, and they don’t improve. You should have fired them a long time ago!

Scientists Daniel Kahneman and Amos Tversky studied cognitive bias, including the sunk cost bias, in case you want to read more about the topic. Kahneman won the Nobel prize for his work.

How can you avoid falling into the sunk cost bias trap? Here are some ideas:

Be aware that it exists and it affects more of our daily activities than we realize.
Track key performance indicators regularly so that you can see whether you’re on or off track.
Detach emotionally, if possible, from your business project.
Set goals and milestones on your projects and have a “walk away” plan if things spiral out of control.
Stay future-focused.

Now that you’re aware of sunk cost bias, you can be more mindful when making financial decisions.

Do You Need More than a Business Checking Account?

Thu, 30 Mar 2023 17:49:25 GMT

If you have accumulated more money in your business checking account than you really need for daily operating expenses, that is a nice problem to have! It’s time to consider putting that money to work by setting up funding for emergencies and taxes. A business savings account might be your answer.

Every bank is different when it comes to the features and benefits of their business offerings. Here is a list of some of the items to consider asking your banker.

Is your checking account interest-bearing, and if so, how does the interest rate compare to a business savings account interest rate?
Is there an initial minimum deposit to open the savings account?
What are the monthly fees for each type of account?
What minimum balances are required in both checking and savings accounts so that fees are waived? And, is it worth it to keep minimum balances?
Are there withdrawal limits?
What are the other benefits of having a business savings account?
Can I connect more than one savings account to the main checking account?

Often, a bank will tie the checking and savings accounts together, and there will be a combined minimum balance that is lower than if either account was separate. For that reason, having your checking and savings accounts in the same bank might be more effective. Other common benefits include waiving overdraft fees, wire transfer fees, and NSF charges.

There are other types of interest-bearing accounts besides savings accounts, including money market accounts and certificates of deposits (CDs). Money market accounts may have check-writing privileges, but the withdrawals may be limited. While CDs typically pay a higher interest rate than a savings account, they tie up your money for a specified period of time, and there are steep early-withdrawal penalties.

There are many institutions besides your main bank that are focused on savings accounts and will pay much higher interest rates. Typically, online banks and credit unions will pay a higher interest rate than a bank, but the money may not be FDIC-insured, so be sure to read the fine print. Also, remember that usually $250,000 or less is FDIC insured, but anything over that amount is not insured with each bank. There are sweep accounts to look into that can increase this amount.

An additional benefit of keeping money in a separate savings account is that you can save for many things:

A cushion for emergencies.
Lump sum tax payments.
Future capital expenditures.

Once you’ve set up your new savings account or accounts, consider setting up monthly automatic transfers from your checking account to your savings account so that you build up your emergency and tax funds.

Make sure your business cash works as hard as you do!

How to Delegate with Confidence

Wed, 22 Mar 2023 17:47:57 GMT

Entrepreneurship is all about running a successful business. The problem for most entrepreneurs is that you probably need some help doing it. You feel like you are the ‘bottleneck’ and everything is stuck with you in the way of progress.

If you are going to grow or scale your company learning how to delegate effectively and not abdicate should be one of your top priorities. It’s easy to pass off tasks, but when you do it without instruction you are abdicating. You are doing so with a plan based on the hope that the employee will complete the task and do it well. If you’ve done this, you’re certainly not alone.

We have all been there, too many things to do without enough time and someone willing to take it on. If there’s one thing that’s certain, it’s that it never ends well. If that person who did take on the task, and by chance does it well, leaves without documenting the process, you are back at square one — the task is back with you and there is still no process. That’s where delegation comes in.

How do you pass off tasks with instruction and feel like they getting done the way you want them done? It takes some work but you will be glad once the process is underway. Check out this podcast by Ryan Lazanis about carving out time to work on your business each day — a crucial task! Future Firm Accounting Podcast- First 2 Steps to Freeing up time in your firm

Where to start?

Begin documenting your easiest tasks that don’t require your direct touch. These can be all things administrative, data entry, and setting up appointments or zoom calls. You could also pick the tasks you like the least or have the least amount of experience in.
Match the tasks to the right person. This is also where you decide what to delegate to your team and what to outsource outside of your firm. If you are outsourcing any tasks, make sure they are experts in this area and have great referrals
Provide training. Yes, this takes time but it is important for success and the time you’ll save in the long run will be well worth it. You have the process documented and the right person, now show them how to do it. Then watch them do the process and then let them do it on their own, following your instructions. Check to make sure it was done correctly and you should have confidence it will be done properly going forward.

How can you track if it’s being done?

Before you pass off these tasks, you need to focus on the results and let go of the need to control the process.

Find a way to check on the completeness of the task and if it is being done correctly. You can set up a project management system like Asana for completeness. The free version of Asana connects with other systems like Google Calendar so tasks always stay in front of you! We use a practice management system, Financial Cents, to track all our tasks and make sure they are getting done.
So how do you know if the task you pass off to someone else is being done correctly? It depends on what the task is…. For us, we can check on reports to make sure the team is doing their job correctly. To make sure our team has reconciled the bank and credit card statements following our process, we can review the reconciliation report. Are there any transactions that are more than 30 days old? Is there a reconciliation discrepancy? What was the date of reconciliation? This report answers all of these questions and therefore can tell us if the job is done correctly. In a marketing firm, you might delegate the task of posting on social media. Try using a scheduling platform that has built-in analytics that will show you what has been posted, when, and how well it was received by the audience. This allows you to see if your team posted timely, followed the strategic plan for your client, and executed killer posts that had a great engagement!
Communicate constraints and boundaries. These are actions you want to make sure your team member doesn’t make. Make these constraints and boundaries a part of training. You might want to give parameters on what type of response they are allowed to have with clients or a response time that is appropriate.

Above all, your team needs to know your mission, vision, and priorities. If they are on board with the direction you are going in, they will be highly engaged and self-motivated and take actions that are in line with your goals.

Once you have delegated tasks and have put in place ways to track them, you are on your way to preparation for growth and scaling your company!

Your Go-To Conference Checklist

Tue, 14 Mar 2023 17:45:06 GMT

There are more than 270,000 conferences and 10,000 trade shows each year. Conferences are one of the most valuable learning experiences if you go with the right attitude and have a plan when you return.

Here are some things to think about to get organized before you go:

1. Why are you going? There are usually 3 areas where we want to increase our knowledge:

Marketing your services better.
Running your own business better utilizing best practices and technology.
Increasing education in your industry.

2. Once you have decided your learning ‘track’ you can then choose the workshops that align with your plan. If you are going with another person this is where you can collaborate. Maybe there are 2 workshops at the same time and you can’t decide. See if your colleague wants to go to one and you go to the other, then exchange notes and key findings from each session.

3. Have a plan for organizing the information you will be absorbing and collecting while you are there. Try creating a folder in Google drive to upload presentation slides and make notes. From there, we set up a checklist of action items to take when we return home. You’ll likely be meeting a lot of people and collecting their information, so take pictures of business cards or conference tags. That way, you’re able to upload them to a file and set up actions to take when you get back to your office.

While you’re at the conference, don’t forget that some valuable knowledge nuggets happen in between the workshops:

Be open to talking to people. Ask people to have breakfast with you or grab a coffee.
Go to the after-events that the vendors typically sponsor. It is a great way to learn more about those who share in your affinity for your field of work
Drink plenty of water and get some sleep. Early morning meetings and late nights can dull your brain!
If you can, stay an extra day. Use the time to get with your colleagues and share notes. Decide what you want to take action on when you return to the office. Important, pick 3 action items. If you choose too many action items, you will get overwhelmed and get NONE done.

When you return you will be exhausted (if you did it right!), so follow these tips to unwind:

Take your organized files and create a presentation for your team about what you learned – most importantly, those ‘Aha!’ moments. This presentation doesn’t have to be long but it should showcase what your action items are.
Take those action items – things you want to learn more about, new processes to implement, marketing strategies, etc., and see who also wants to learn more. This can be your accountability partner.
Follow up on the people you met at the conference. They can become ‘your people’ – for me these people have become the greatest support group.

It can seem like a lot of work to go to a conference, you have to be away from work for a few days and the work can pile up but the time spent is well worth it. You will be learning the newest technology, best practices and meeting the people who have a growth mindset.

How Will a Client Success Manager Benefit Your Business?

Thu, 09 Mar 2023 17:45:06 GMT

As First Steps Financial has grown over the last 10 years, one thing has remained important — our clients’ experience with us and the service they receive.

Throughout the last decade, our company has changed from working with small solopreneurs to larger firms with employees. No matter the size, we still want everyone we encounter to have an amazing experience with us from the get-go. First impressions are everything. That is why we are using a Client Success Manager.

What is a Client Success Manager?

The role of a Client Success Manager (CSM) is to be accountable for the client experience, understanding the client’s needs, and solving long term problems.

They are responsible for managing interactions between customers and the company and act as an advocate for customer-facing employees.
They are a guide for new and existing clients through the onboarding process — fostering customer retention by ensuring a smooth customer journey as well as training employees on how to provide excellent customer service.
CSMs actively collect and analyze data to improve customer service through surveys and meetings with clients.

How do they help?

Client Success Managers (CSM) reach out to new clients within 3 months of the engagement with a survey and a short meeting. This ensures that all promises extended in a proposal are met and reviews areas where we can improve. The will then communicate with the the team to let them know what steps they need to take to ensure a harmonious relationship.

If someone on your team thinks there may be an opportunity to serve a client better or discovers an issue with a service, the CSM is the perfect person to go to. This will allow the team to stay in their role and the CSM to take over with their excellent resolution skills.

From the client’s perspective, having a Client Success Manager means they have more people looking out for them and the welfare of their company without having to manage them. Not to mention, they have another resource they can go to if there’s an issue or if they have a question.

A great Client Success Manager is the perfect solution to achieve the highest quality of customer care, without putting more on the plates of your team. Hiring a CSM means you’ll have someone to conduct careful monitoring of team training, ample client interactions and problem solving, adding benefits for all parties involved.

Are you ready to take the plunge and add a CSM to your team?

How To Choose a CFO for Your Small Business

Fri, 03 Mar 2023 17:45:06 GMT

All small businesses can benefit from the knowledge and guidance of a CFO. They report directly to the owner, are responsible for financial reporting, and oversee the accounting team, but how do you know who is the right fit for your business?

We have created a simple checklist to help you get started in your selection of a Chief Financial Officer.

Do they have experience in your industry? If they have worked in a similar business or industry, odds are they are familiar with the nuances of the reporting that you will need. You can ask for references and do your own research, Google and LinkedIn are great resources.

Do you like them? While this may seem a bit basic, if you like them you will feel more comfortable asking uncomfortable questions. Those questions may include clarification on something you don’t understand, and when you’re out of your comfort zone, it’s easier to discuss with someone you are comfortable around.

Do they understand and embrace your core values, mission, and vision for the company? They need to be on board for what is to come and be able to provide insight into the direction you are going or be able to change course as needed.

Do they understand what you need and can communicate effectively? It is critical that a CFO can interpret your pain points and relay information to you in a way that is easy to understand. A CFO who has brilliant reports on financials that you don’t understand or who doesn’t communicate what actions should be taken next isn’t going to be what you need to grow or scale your business.

A CFO can help you grow your business, navigate unsteady economic conditions, and work on strategic plans based on your vision. Choosing the right one can make all the difference in achieving your goals.

10 Ways to Slow Down in Business (and Why You’d Want to)

Thu, 16 Feb 2023 17:45:06 GMT

Sometimes we all just need to slow down. It could be our body telling us it needs a break. It could be our mind experiencing the first signs of burnout. Even if you own your own business, you are subject to burnout, especially if you are a people pleaser or say “yes” to everyone!

But how do we do that? It has often been so long since we’ve changed our pace that we don’t know where to begin. Here are some tips on the best ways to slow down in business:

1. Eliminate wasted time.

Take a deep look at your to-do list. Identify one task that you’ve always done that adds nothing to your business. Does it really need to be done? If you’re still doing a task only because you’ve “always done it,” that’s usually a good sign that it can be crossed off of your list.

You should be able to free up a lot of time! For now, use it to slow down. Take a nap, call a friend, visit your employees with no agenda and really listen, take a walk and smell the roses, hug your children, or simply just relax.

2. Get off electronics.

A friend recently suffered from a concussion and her doctor told her to stay off electronics to help her brain heal faster. She limited herself to one hour a day for two months. What would you do if you had to stay off electronics? My friend read all the paperbacks she had that she hadn’t gotten to (for 15 years), cooked more, went shopping for things she had wanted for years, took walks, and began learning a new language.

If you spend any time on social media, eliminating it even partially can be a huge pickup in time. Getting off electronics and using that time to get back into nature is healing for everyone.

3. Get enough sleep.

f you are sleep-deprived, everything takes longer. Slowing down and getting enough sleep each night can make you more productive, reducing your work hours. Plus, you just feel more refreshed. You should be getting between 7-9 hours of sleep each night — experts even say that adults that get less than 7 hours of sleep each night may have more health issues than those who get 7+ hours.

4. Gain a new perspective.

Slowing down your normal routine can help you gain perspective. You might have been fighting fires in the trenches for so long, you’ve forgotten why you’re in business to begin with. Take time to reconnect with your mission, vision, and purpose.

As you refresh yourself with your mission, this is also a great time to make sure your employees understand their grander goals as well. Having everyone on the same page will make for a smooth, seamless environment.

5. Avoid multitasking.

Almost everyone thinks they are good at multi-tasking, but it turns out science says only a minority percentage of people can really multi-task effectively. Become self-aware of your own habits related to multitasking. Do things take longer when you multitask? Do you make mistakes you have to go back and correct when you multitask? If so, you may be in the majority of people who simply shouldn’t do it.

6. Stop worrying about billable hours (for service businesses) – at least for a while.

If you are really fixated on billable hours, you may need to just let them go for a while until you can get your perspective back. There is more to life and business than billable hours.

7. Re-connect with your business’ community.

If there has been no time to connect with your co-owners, customers, and employees, slowing down can provide that time. The most important thing is to simply show up and listen. You will learn a lot!

8. Make time for strategy.

If your business is headed in the wrong direction, you don’t want to waste another second in turning things around! Take a step back to re-visit your strategy, making sure you are working on the right projects, that you have the right company culture, and that your business goals are in alignment with your big-picture purpose.

9. Do nothing.

It’s really okay to do nothing when you’re the business owner. You need time to come up with ideas, think about the hard issues, and even daydream. Sometimes even taking this time to yourself can help your creativity and ability to see things from a different perspective. You have to stop working in the business so you can work on the business.

10. Get better at managing distractions.

If you get interrupted every five minutes, you’re bound to be drained of energy at the end of your work day. Get smart about managing interruptions so you can be more productive. This will free up more time for you to take breaks and slow your pace during your workday.

Try at least a few of these ideas to slow down before your mind or your body insists on it.

Fall Back in LOVE with your Business

Fri, 10 Feb 2023 17:45:06 GMT

Remember when you first started your business? It was exciting, exhilarating and fun. You couldn’t wait to go to work everyday and you felt so energized by it all.

As you are in business for a while and things start to get routine, you may begin to feel it all getting boring or burnt out from the frustration of dealing with the same issues over and over again. No one is immune to the problems of running a business – client dilemmas, employee complications, service headaches – even in a well-run company these things happen. After continuously solving issues, you tend to lose your stamina for doing it or maybe even lose heart.

Any long-term relationship (which is what you have with your business) has its ups and downs. You need to be able to rekindle the romance, think back on days when you were filled with wonder and joy with the relationship, the anticipation of a big sale, the excitement of growing the company, proudly seeing your clients and employees succeed, and the fullness of having a healthy profit.

Go back to your mission, vision and core values. They are there for inspiration when you are not feeling good about your business. Review them and ask yourself are they still relevant? Do they stir up the feelings you want your team to identify with your company? Are they speaking to the culture of your firm? Do they resonate with your way of thinking, how you solve issues and how you treat your clients and employees? Do they capture the passion you once felt for what you do?

If you don’t have a mission or core values mapped out, no sweat, the exercise of creating them will bring back those feelings of why you started the business and how far you have come. It will also provide you with a reminder of how passionate you are about what you are doing.

Your mission statement communicates the purpose of the organization. What is your why? Need some inspiration on your mission either to develop one or check that yours is on point? Check out Simon Sinek’s classic TED talk How great leaders inspire action .

Examples of mission statements:

“To accelerate the world’s transition to sustainable energy.” …
“Spread ideas.” …
“To connect the world’s professionals to make them more productive and successful.” …
“To build the web’s most convenient, secure, cost-effective payment solution.”

The vision statement provides insight into what the company hopes to achieve or become in the future.

BBC: “To be the most creative organization in the world”
Disney: “To make people happy.”
Google: “To provide access to the world’s information in one click”
IKEA: “To create a better everyday life for the many people”

The core values reflect the owner’s core principles and ethics.

James Clear offers a list of core values to help you get started. Take a look and see what resonates with you if you can’t think of any on your own.

Those you hire should exemplify these values and if you hire right, they should feel like they have found ‘their people’ when joining the team. As for clients, if they are the right ones, they, too, will match your core values.

Take some time to reflect and fall back in love with your company and the passion you had when you started. You, your team and your clients will be glad you did.

Want to talk more about mission, vision and values – or any topic about running your business? Let’s chat .

Is “Motivation” Really Just Garbage?

Fri, 27 Jan 2023 18:48:30 GMT

I’ve been listening to Mel Robbins’ recently launched podcast, and she said one particular thing that stuck with me. “Motivation is garbage!” she exclaimed.

Is she right?

Mel is a world-renowned motivational speaker, so I was surprised to hear her blast the very thing her audience is seeking – motivation. We all need motivation to get things done, don’t we?

She talked about how society feeds us the idea that we will do something once we are motivated. However, the downfall is that motivation is not coming to the rescue! Since our brains are wired to avoid uncomfortable things, trying new or ‘outside-the-box’ endeavors requires much more effort than the routine actions we’ve grown accustomed to. When we want to do something different – start a business, write a book, or try something new – we must reach down and dig out the energy to get it done.

Try a Countdown Instead

So how do we get in touch with this energy or motivation? Mel started doing things with the support of a countdown: 5…4…3…2…1. At one, she launches herself into what she needs to do, whether she wants to or not. She has used this for everything: getting out of bed when she doesn’t want to, not eating when she isn’t hungry, and even making one more sales call to close the day.

She attributes her success with this countdown method to science. When you interrupt your brain pattern, you have 5 seconds to stop yourself from talking yourself out of action. This is called breaking the habit loop, or metacognition, if you want to get precise. Successful people throughout history have used it, and you can use it too.

Simply put, you outsmart your brain by directing yourself in ways that allow you to do things you usually wouldn’t. It’s human nature to perceive speed bumps as barriers and let small challenges stop you from doing what needs to be done. Starting rituals helps you form new habits. Thus, the countdown “54321,” where you take action immediately upon saying 1, will set you up to do any activity, big or small.

What’s At Risk While You’re Waiting for Motivation?

In just 5 seconds, you can rob yourself of the joy you’ll feel if you take action or the success you’ll feel after taking a risk and having it pay off. The biggest risk? Not ever becoming who you want to be because you were afraid to take one simple step. That’s why you must start moving before your brain talks you out of it.

How To Interrupt The Pattern

Add a mantra thought that will be your anchor. Your mantra is not positive thinking on its own, but should be coupled with the interruption of the negative thoughts by counting. Catch yourself straying from the vision or anchor thought- bring in 5..4..3..2..1- and focus back on the vision you see for yourself. It can be: I will close this sale, I will not eat unhealthy food, I will do this….

Tell yourself you will do this, AND tell yourself you are excited to do it! Being nervous is the same as being excited – you just need to say it out loud!

Getting motivated can be daunting- using this method should help you get that ‘launch’ you need to get started and silence those negative thoughts!

Listen to her podcast in full here:

https://www.melrobbins.com/podcasts/episode-3

Goal Setting — How to Set Yourself Up For Success

Fri, 13 Jan 2023 18:48:30 GMT

At the start of a new year, most people start to think about setting goals — losing weight, going to the gym, saving money, or buying something that they really want. I know I do. Having the break from my everyday routine between Christmas and New Year’s Eve allows me to have some space to think…and my thoughts go to ‘What do I want to accomplish in the new year?’

Do you need a plan that can be tweaked as the year progresses? These are some of my tips to help me get a plan in place to reach those goals.

The first step is to decide what your priority is this year. Is it to spend more time with family or increase profits or sales in a business or make sure you save more money this year?

Make sure the goal really resonates with you, not your boss or your family. This is all about you . Don’t set more than 3 goals. You won’t do it. I think of myself as an overachiever, so I can do at least 5 if not 7 goals right? Wrong! When I did this, I ended up feeling overwhelmed and disappointed in myself —which sucked all motivation out of me!

Put your goals in writing. Yes, write them down and use the SMART format. Trust me, this will make your goals better defined and help you really get to that pot of gold (hahaha) at the end!

Your goals should be:

Specific – Identify exactly what you want to achieve. Do not be vague.

I want to read more books – Not Good.

I want to read 3 books this year – Better

I want to read 3 books this year on leadership and team building – YES!

Measurable – How will you know you are on track? What number can you use?

Save money for a vacation – Not Good

Save $2000 – Better

Save $500/month and book the vacation in 4 months – YES!

Actionable – Pick action words to help you move towards your goal.

Be more organized – Not Good

Clear my desk at the end of every day – Better

Clear my desk by filing papers, create a to-do list for the next day, and shut down my computer at the end of the day – YES!

Realistic – Can your goal be achieved? You’ll want to challenge yourself a bit but not so much that you can’t really do it.

Make millions of sales this year- not good

Have a million dollars in sales in my first year – better

Create a sales process that can scale to 1 million dollars in sales- YES!

Time Bound – Give yourself a deadline,

Retire early – Not Good

Retire at 55 – Better

Retire at 55 with 4.3 million dollars – YES!

It’s a process to work through goal setting. Give yourself the gift of time to do it. Take your time daydreaming about it and then start to put them into the SMART formula.

Then write down these SMART goals and make sure it’s somewhere you can see them regularly. Put a whiteboard up or write it on a piece of paper and hang it on the wall.

Make sure you add the actions you will take to achieve these goals. And stick to them! This is the hardest part. Life gets in the way and it’s easy to make up excuses not to do it.

Need help? Read Atomic Habits by James Clear. His tips on creating habits are legendary. Once you get started creating goals and pairing them with actionable habits — you’ll be unstoppable.

Five Ways to Welcome in a New Year: 2023

Fri, 06 Jan 2023 18:48:30 GMT

A new year is a perfect time for a fresh start for you and your business. Here are five ways to welcome 2023 and make it your best year ever.

1. Decide on a theme for 2023.

Setting a theme for the year can help you remember what you want to focus on. Some examples of themes might be:

Growth and improvements to your business. You can be specific, such as making your theme the year of mastering technology, the year of profitability where you focus on cutting costs or increasing sales, or the year of diversity where you focus on creating a diverse team.
Downsizing, cleansing or simplifying. Perhaps your business has grown so quickly that you need to sit back, de-clutter, re-design, or simply clean your office.
Expansion. Is it time to launch a new service?
Giving back. If everything is humming along, it could be time to start giving back to your profession or community.

From here, you can create a plan of tasks and timelines that are aligned with the theme you’ve chosen.

2. Recharge your energy

3. Learn from 2022.

If 2022 was a bumpy time for your business, it might be a good idea to perform a detailed review. This will help you learn what went wrong and explore why. Then, you can brainstorm ideas on how to avoid the pitfalls of 2022 as you move into 2023. Make it as informal as you want, or structured as an after-action review.

4. Select a word for 2023

If setting a theme is too complicated, how about selecting one simple word for 2023? Here are some ideas:

Abundance (think big, go after large contracts and big projects)
Creativity
Powerful relationships (OK, that’s two words!)
Gratitude
Service
Humility
Forgiveness (especially good if you are in customer service or have difficult clients)
Fun
Helpful
Prosperity

I’m sure you can think of one that will be perfect for you. In the past, we have used words like Intentional and Process. Kellie Parks from the Workflow Watering Hole Facebook group, asks this question every year of her members. They used words like Rise, Prosper, and Realignment. Once you do, write the word on several sticky notes and paste it everywhere you work, maybe even at home. Your postings will serve as a reminder of what your intention is throughout 2023.

5. Make a profit plan (start with the end in mind)

Making a profit plan for the new year will help you hone in on the profit amounts that you want to achieve.

Understanding how much volume you need to reach and what you can spend will avoid surprises at year-end. At mid-year, it’s a good idea to see if you are on track for the rest of the year.

Whether you do one or all of the ideas above, we hope you have an awesome 2023 and that it’s your best year ever.

The Benefits of Narrowing Your Focus in Business

Thu, 15 Dec 2022 18:48:30 GMT

When it comes to business, most people think that the more markets they conquer, the better. But this isn’t always the case. In fact, specializing in one area of business can have a number of benefits for your company.

You will become an expert in your field.
Your customers will know what you’re good at and come to you for those services.
You can focus all of your energy on becoming the best at one thing.
Marketing becomes easier as your target market becomes more “defined”.

Some notable companies that have specialized and reaped the rewards are Apple with its technology products, Amazon with its online retail store, and Starbucks with its specialty coffee drinks.

In his book, Rice, Noodle, Fish , Anthony Bourdain discusses the Japanese approach to business and how they focus on one thing and get really good at it. He mentions how sushi chefs spend their entire lives mastering the art of sushi making, and how this dedication to a single craft has led to some of the best sushi in the world.

Bourdain goes on to say that Western businesses could learn a lot from the Japanese approach. He says that instead of trying to be all things to all people, we should focus on becoming experts in our field and delivering the best possible product or service. This strategy can deliver increased profit and a more successful business.

There are a few disadvantages to specializing in one area of business. You may become complacent and reluctant to try new things or you may miss out on opportunities in other or new markets.

Worried that there are already too many other businesses in the space you want to specialize in? There seems to be room for improvement in every industry. Walk into Sephora and you will find hundreds of lines of makeup – all selling the same products with different branding. What about vodka? Tito’s famously only sells one type of vodka – and nothing else. It doesn’t specialize in flavors or mixers, just vodka and as a result, the brand is well known for its quality product.

However, there are some ways to overcome these disadvantages.

1. Focus on becoming the best in your field. This means developing expertise in your area and offering top-quality products and services.

2. Market yourself as the go-to company for a certain type of product or service.

3. Stay up to date with current trends and changes in your industry. By doing so, you’ll be able to adapt your offerings as needed and continue to attract new customers.

If you are thinking about narrowing your focus in your business, talk to a trusted advisor or others who have gone down the uncertain road of specializing in one industry or product.

You can talk to us too. Go to www.firststepsfinancial.com and click on the Let’s talk button to set up a time to continue the conversation.

The 3 Best Business Books I Read in 2022

Fri, 09 Dec 2022 18:48:30 GMT

This is the time of year I reflect back on 2022 and think about what worked well and what didn’t. I love belonging to my Smart Boss Business Book group. It is composed of amazing women who share their experiences and how they are applying what they learned from the books we are reading.

Atomic Habits by James Clear.

His theory on making small changes that have big results was really applicable to every part of my life. He presents the Four Laws of Behavior Change as a simple set of rules that we can use to build better habits. They are:

Make it obvious
Make it attractive
Make it easy
Make it satisfying

He also suggested stacking habits to make them more ‘sticky’. I had been wanting to start some type of exercise program to improve my skiing and tennis game. I also wanted to watch more YouTube videos on ways firms like mine were using QuickBooks Online (QBO) in different industries.

Boom! Thanks to habit stacking, I was watching videos while I walked on a treadmill for 30 minutes every morning. Even the walking and watching started small, I picked short videos, first five minutes and then made them longer every day to increase the amount of time I was walking. I was consistently walking 30 minutes a day in no time and ready to do any sport. I also learned a lot about QBO in different industries.

I love that he really goes away from the norm of setting goals and focuses on the system and who you wish to become. We are always setting goals for ourselves and I haven’t stopped doing that but I do it with a system that will help achieve who I want to be. Look out world!

The Power of What You Don’t Know by Adam Grant

Adam Grant has an interesting way of looking at situations and providing alternative views for you to consider, using humility and skill, like a scientist. He points out that we typically have three mindsets.

“As we think and talk, we often slip into the mindsets of three different professions: preachers, prosecutors, and politicians. In each of these modes, we take on a particular identity and use a distinct set of tools. We go into preacher mode when our sacred beliefs are in jeopardy: we deliver sermons to protect and promote our ideals. We enter prosecutor mode when we recognize flaws in other people’s reasoning: we marshal arguments to prove them wrong and win our case. We shift into politician mode when we’re seeking to win over an audience: we campaign and lobby for the approval of our constituents.”

Instead, he puts forth that we should be thinking like scientists, being actively open-minded, searching for reasons why we might be wrong – not looking for things to reinforce what we already know- then revising our views based on what we learn.

Grant also provides ways to help others see new possibilities using ‘motivational interviewing’. He suggests that you do this by asking open-ended questions, using reflective listening and affirming the person’s desire and ability to change.

I once again found this book applicable in all areas of my life. I was able to practice thinking like a scientist when my team would bring situations to me and I wanted to go down one of the 3 mindsets. This book also made me think more about communications with family members and how I could improve those conversations too.

You Are a Badass at Making Money by Jen Sincero

I was a little hesitant to read this book. I thought it would not be as useful as other books that I had read. As a group we were used to books that gave us clear paths to action. This was more of how to change your attitude and get a healthy relationship with money and use it to create a successful life. I loved her definition of Rich: “Able to afford all the things and experiences required to fully experience your most authentic life” That started me thinking differently about my life and what my current mindset was.

I felt like I had a good relationship with money and I think I still do but this definitely made me realize I had put up walls for no reason. I put boundaries on my thinking about how much money I could make and what it took to do it. I told myself stories (excuses) about why I couldn’t make unlimited money.I have 6 kids and my focus is on them (true..but…) and I wanted more than just money, I want a life of interactions with my kids, travel,and fun. I realized I can have all three so why limit my dreams to only what I have decided is possible?

My three main takeaways:

Money isn’t evil and if you have an adversarial relationship with it, you will keep from realizing your full potential.
Putting positive energy out into the universe, especially about finances, will do wonders to improve your situation.
To make your money goals become reality, get specific about the amount of money you want to have and how you will use it.

She really pushes you to think beyond what you have in front of you and to ask the universe for help. When she starts to talk about the ‘universe’ I wanted to shut down my thoughts, as it sounds very intangible and admittedly a little too out there for me. But having read The Power of What You Don’t Know, I tried to use my scientist mode to lean into this and wrap my head around it.

It is a different way of thinking and then again it isn’t. She likened it to the voice in your head, a spiritual guide or knowing that there is something bigger than you at work here. Ok, I can get on board with that and delve deeper into changing my attitude to fit with this new outlook on making money. This is an easy read – she is funny and very authentically herself. I really enjoyed reading about someone else’s journey and taking tips from her experiences and applying them to my life.

While we read several books in 2022, these three really made an impact on the way I work, lead my team and my life. I highly recommend them and if you want to continue the conversation or join our women’s Smart Boss Business Book club, email me ( Alisa@firststepsfinancial.com ) and I will get you on our list!

The Accounts Payable Process

Fri, 02 Dec 2022 18:48:30 GMT

All businesses, no matter their size, have bills to pay. The larger the business, the more formal the accounts payable process tends to be. That doesn’t mean small business owners can’t benefit from a formal accounts payable process. Too many “fake” bills are being sent, and all businesses should have safeguards in place. Let’s take a look at the workflow of accounts payable to see where we can put some controls in place to protect your hard-earned money.

Purchase Order

A good first step is to initiate a purchase ordering process. All spending over a certain amount, such as $500, should require pre-approval from a manager or officer of your company. This can take the form of a purchase order.

A purchase order (PO) is simply a pledge on the part of your company to purchase an item or group of items from a particular vendor. It should include the vendor’s information, the item(s) and quantities, the price that the vendor has agreed to, and who initiated and approved the proposed purchase. It will look similar to an invoice, but it’s not an invoice and should be appropriately marked.

If the price is not standard or the items are custom, there may be an estimate from the vendor that documents the price on the purchase order. The estimate document is written by the vendor, while the purchase order is originated by your company.

While the purchase order is important, it does not create any entry on your accounting records, as no transaction has taken place yet.

Invoice

The invoice is the documentation of the purchase with a request for payment and is created by the vendor you are obtaining goods or services from. It should be recorded on your accounting books once it is received from the vendor.

The invoice should be matched with the purchase order, checking to see if each item, quantity and price match the same on the purchase order. Any discrepancies should be explained.

The timing of the invoice can vary. It may be received before or after you actually receive the goods or services that it covers.

The invoice should not be paid yet (unless prepayment is required). We’ll cover that in a minute.

Packing Slip

If the goods you have ordered are physical and are to be shipped to you, then there will usually be a packing slip or shipping document included in the shipment. The shipping document will have quantities, but may not have prices. The document should be matched with the actual items received and any shortages or overages should be noted.

A process to stock the items into your inventory should then occur. A transaction should be entered into your system to increase inventory for the goods you receive.

The (corrected) packing slip should be matched with the invoice to make sure everything on the invoice was received. If there is a discrepancy, it should be noted.

Items may come in a later shipment if they have been back-ordered. You’ll need to set up a process for that, noting it on the appropriate documents.

Approvals

As you can see, a couple of processes need to be put into place. There should be a process for each document listed above. There should also be a process for matching the documents, and there should be a process for when there are discrepancies. Last, there should be approval processes all along the way.

Your workflow may vary from the one listed above, depending on the order the documents are received and when payment is required. You may even have a different workflow for different vendors.

Once the purchase order, shipping document, and invoice have been matched and corrected, it’s time to get them approved for payment by the appropriate level of management that you desire. This is something you’ll want to set up in advance: which of your employees can spend and approve what amounts.

Payment

Once your invoice is approved, it is time to look at the payment terms, noting when payment is due. It can then be set up to be paid. This can be done inside a system, using a company credit card, sending a bank transfer or wire, or writing, signing, and mailing a manual check.

Payment affects your books as well, so an entry should be made when payment is issued.

Workflow

A great accounts payable workflow will protect your company from unauthorized payments, missing items, and even hasty purchasing decisions. There are also many accounts payable systems to support the automation of many of the steps, but don’t forget you still need to set up the processes so they work for your company and the vendors you use.

As always, if you need our recommendations, we’d be happy to help.

Is Your QuickBooks Online File a Mess? Here’s How to Tell and What You Can Do About It

Fri, 11 Nov 2022 18:48:30 GMT

If your QuickBooks Online file is a mess, it can lead to all sorts of problems. Here are some signs that your file needs some attention:

You have duplicate transactions.
Your financial reports don’t make sense.
You’re having trouble reconciling your bank account.
You have accounts with negative numbers

If you’re seeing any of these signs, it’s time to take action. Waiting to address issues until next year can leave you with less options for the current year and could lead to trouble later.

So how do you clean up your QuickBooks Online file?

Here are some tips for cleaning up your QuickBooks Online file:

Fix duplicate transactions. Make adjustments but don’t delete- see below
Don’t Delete- if a transaction looks like it shouldn’t be there- void it. Once you start to reconcile you may realize that a transaction was needed. If you void it, it can still be retrieved and put in the correct account.
Reconcile your bank account. Sometimes that is the easiest way to find errors. If it is not on your bank or credit card statement, but it is in QuickBooks Online, you need to investigate further. Is your beginning balance off? Check out this video from QuickBooks for help How to fix beginning balance issues when reconciling in QuickBooks Online
Update your Chart of Accounts. Make sure your chart of accounts will allow you to create the reporting you need. Need help with this? We have you covered. We can help you create the best reports for your business and keep monthly tabs on income and expenses.

Create the Right Year-End Check List

Sat, 05 Nov 2022 14:01:17 GMT

The end of the year is a great time to review your QuickBooks Online account and make sure everything is in order. Here’s a quick checklist to help you get started:

1. Is everything reconciled?

How do I know? Use reports>For My Accountant>Reconciliation Report

Chose each bank account to see when it was last reconciled and if the statements are attached

Review the most recent Reconciliation report. What is outstanding for more than 30 days? Look into those transactions and make adjustments as needed.

2. Track your mileage .

If you need to have your mileage tracked for tax purposes, do it now. There are plenty of apps that can help you with this and there is one right inside of QuickBooks Online:

3. Gather your receipts .

Other apps that do an exceptional job of this are Expensify and Divvy. They are very helpful when you have employees who need to provide expense reports and reimbursements.

4. Verify vendor information

5. Payroll

We hope this helps you get started on your end of year review. If you have any questions, be sure to reach out to our team of experts. We’re always happy to help!

Pricing Methods for Your Products and Services

Thu, 27 Oct 2022 18:48:30 GMT

How do you arrive at a price for the products and services you sell? While it depends on what industry your business is in, there are only a handful of foundational pricing methods that are useful to know. Here are several of them.

Time and Materials Pricing

Many service-based businesses price based on the time spent performing the service. An attorney usually has an hourly rate. A massage-therapist will charge based on a 50- or 80-minute service. Plumbers charge a minimum fee for the first hour and another rate for subsequent hours. A moving company charges by the hour (they may also charge by truck or have a fuel charge these days).

In some cases, time-based pricing may be loosely tied to the salary level of the person performing the service, but there must be a substantial markup to cover payroll taxes, health insurance, overhead, training, and any materials or tools that are included.

Next: Use Profit Margin as a Guide

Aim for a profit margin that allows for business sustainability, growth, and reinvestment.

The desired profit margin can vary by industry, and you can google that information. Software subscriptions can be as high as 50%, supermarkets are typically 1-2%, as are liquor stores.

Cost-Plus Pricing

Cost-plus pricing is used in the retail industry where goods purchased from a manufacturer or wholesaler and made available for sale. This method is based on the cost of the item. A common example is keystone pricing, where an item is marked up to twice the purchase price plus one dollar.

Other industries that use cost-plus include groceries and auto dealers.

Market Pricing

Market pricing is pricing that is dependent on fluctuating market conditions. Commodities are the best example. Crops, oil and gas, and metals are a few items that are priced by market.

Target Pricing

Target pricing is where you start with a price that you feel customers will be willing to pay, then design a service or product around it. It’s most commonly used in the software industry. As an example, let’s say you come up with an idea for a software application that you feel people will pay $49 per month for. You then build a software development and support team around a budget that supports that price.

Value Pricing

Value pricing is based on what the client values and will pay for. For projects, it can be based on the client’s expected return on investment. Value pricing is used in internet marketing and for some services and products.

There is a fine line between premium pricing and value pricing. Some luxury brands may be premium-priced with some value pricing thrown in.

Pricing in Real Life

In business, determining a product’s or service’s price is part math and part art. It can be a combination of two or more of the methods listed above, or a method not listed above. Many factors and considerations should go into your pricing decisions.

One thing we can help with is to determine if your pricing is adequate for the profit margins you want. We can also help with what-ifs. For example, if you raised your price by ten dollars but demand went down five percent, what would your numbers look like?

Pricing is a skill to pick up, just like selling, running a business, and customer service are skills you need. If we can help you with your pricing process, please reach out any time.

Your Guide to Successful Tax Planning for Your Small Business

Thu, 20 Oct 2022 18:48:30 GMT

As a small business owner, you know it’s important to keep your finances in order. But did you know tax planning is one of the most important aspects of financial management? Unfortunately, many small business owners don’t do any tax planning at all. This can lead to big problems down the road.

In this blog post, we will discuss why tax planning is so important for small businesses, and we will also give you some tips on how to prepare for a successful tax planning session.

Why Tax Planning?

There are several reasons tax planning is so important for small businesses. First of all, it can help you save money. By planning your taxes ahead of time, you can ensure you are taking advantage of all of the deductions and credits you are entitled to. This can lead to a significant reduction in your tax bill.

We strongly recommend having a tax planning meeting with your CPA in October or November to take advantage of the actions your CPA suggests. If you are part of our virtual CFO services, your vCFo will attend the tax planning meeting and help implement those actions.

Tax planning can also help you avoid problems with the IRS. If you don’t take the time to plan your taxes, you may end up making mistakes that could trigger an audit. By taking the time to do some tax planning, you can avoid these potential problems.

Tips for Tax Planning Success

Now that you know why tax planning is so important, what do you need to do to have a successful tax planning session? The first step is to gather all the information you will need. This includes your income statements, receipts, and any other documents that will be relevant to your taxes. If you are working with First Steps Financial, your dedicated accounting support will be able to provide all the reporting you and your CPA will need.

There are a few different ways to approach tax planning. You can do it yourself, or you can hire a professional tax planner. If you decide to do it yourself, there are a few resources that can help you. The IRS website has a lot of great information on tax planning, and there are also many software programs.

If you decide to hire a professional tax planner, make sure you choose someone who is reputable and who has experience working with small businesses. If you need references for a CPA, we can provide a list of CPAs we recommend.

No matter how you do it, tax planning is an important part of financial management for any small business. By taking the time to plan ahead, you can save yourself money and avoid potential problems with the IRS.

Don’t wait until tax season to start planning! Now is the time to get started.

How to Budget Your Business Finances

Fri, 14 Oct 2022 18:48:30 GMT

If you’re like most business owners, then you know effective budgeting is essential to the success of your company. But creating and sticking to a budget can be difficult, especially when cash flow is tight.

In this blog post, we will discuss some tips and strategies for effective business budgeting. We’ll also provide a few helpful resources to get you started!

Track Your Income and Expenses

One of the most important aspects of budgeting is tracking your income and expenses. This will give you a clear picture of where your money is going, and will help you make informed decisions about where to allocate your resources.

There are many ways to track your finances, but one simple method is using a spreadsheet. You can find templates for business budget spreadsheets online, or you can create your own.

Be Realistic

Another important tip is to make sure you are being realistic about your income and expenses. It’s easy to overestimate how much money you will bring in.

Review your budget regularly and make adjustments as needed. As a rule of thumb, you usually spend more than you expect. If you are starting from scratch, estimate your expenses and then add another 10 to 20 percent to create a buffer for unexpected costs.

Automate Your Finances

Finally, one of the best ways to stick to your budget is to automate your finances as much as possible. This can include setting up automatic bill payments, transferring money into savings accounts, and using budgeting software.

By automating your finances, you can free up time and energy to focus on other aspects of your business.

Helpful Resources

For more information about budgeting for your business, we’ve included some helpful resources below.

We’re also here to help! We can help you create your budgets in QuickBooks Online and review them with you to gain insight into your financials and help you stay on track to reach your goals.

Small business budgeting can be difficult, but it’s an essential part of running a successful company. Set yourself up for success by budgeting your business finances effectively!

How Time Batching Boosts Your Productivity

Fri, 07 Oct 2022 18:48:30 GMT

For small business owners, it seems like there’s never enough time to get everything done. One tool that will help you get the most out of your time is time batching, also called time blocking.

If you haven’t heard of this concept before, it can revolutionize the way you approach work.

What is Time Batching?

Time batching is the process of grouping similar tasks together on your calendar to gain economies of scale. Almost every task can be batched: answering emails, running errands, customer calls or appointments, responding to employee questions, and even meetings.

Here are a couple of examples. Instead of running separate errands on Tuesday, Thursday and Friday, why not run all errands on Wednesday in one trip? Instead of answering emails throughout the day, plan to answer them for 30 minutes at 8AM, 1PM, and 4:30 PM. Instead of having appointments scattered throughout the week, schedule them back-to-back on Monday.

The beauty of time batching is that your brain will be less exhausted at the end of the day. Interruptions are minimized and you’ll have fewer ‘switching costs.’ Switching cost is the time it takes your brain to switch from one task to the next. Changing gears too frequently strains the brain. Time batching helps your brain to get into and stay in “flow,” allowing you to get more work accomplished in less time.

Business and Personal Use

You don’t have to restrict time batching to your work life. You are likely already practicing time batching at home and don’t know it. When you prepare the week’s meals on Sunday or wash several loads of laundry in a row, you are practicing a form of time batching.

While some things can’t be batched—like walking the dog—the vast majority of tasks can. You just need to be open to the possibilities.

The Payoff

The largest payoff with time batching comes when you can reduce your most common interruptions. For example, could you encourage your team to write down questions throughout the day and present them at the end of the day?

Emails and texts are constant interruptions for many. The first thing you can do is turn off your email and text notifications so you’re not interrupted every time a message comes in. Then decide how often during the day you want to check for new items. Aim for three or fewer times if your job allows it.

Phone calls can be another interruption. When possible, encourage callers to schedule a time to call you or let them know email is more efficient.

Getting It All Done

Time batching is something you can practice for years and still get better at. Try implementing one piece of time batching at a time so you don’t overwhelm yourself with change. Look intentionally for more items to batch every few months, no matter how long you’ve been practicing.

Time batching will not only give you more time in your personal life, but you’ll also be less drained and more energized at the end of the day. Try it and see what you think!

Understanding Equity on the Corporate Balance Sheet

Thu, 29 Sep 2022 18:48:30 GMT

Your favorite number on the balance sheet just might be cash. It’s easy to understand and something every business has.

But there’s a more meaningful number, at least in the long-term sense, and that’s equity. Let’s dive deeper into that part of the balance sheet.

The Equity Section

As a reminder, the balance sheet has three major sections: assets, liabilities, and equity. When it comes to equity, the accounts displayed are dependent on your business entity. Your business could be a sole proprietorship, a partnership, a corporation, or something else. In this article, we’ll focus on equity in a corporation.

Every corporation should have at least three equity accounts.

1. Stock

his account should reflect the amount of stock issued by the corporation. The amount and price of each share is usually spelled out in the Articles of Incorporation, the initial legal document of the corporation.

For example, if the amount of shares the corporation can issue is 100,000, and they have a par value of $.01, then your stock account balance should be $1,000, which was paid in cash by the corporation’s owner(s).

This account might also be named capital stock, common stock, or something similar. This account’s balance typically doesn’t change much over time for a small business. It’s only when new stock is purchased (issued), sold, retired or repurchased (by the corporation) that the account will see changes.

2. Additional Paid in Capital (APIC)

Additional Paid in Capital occurs when investors and business owners pay in more than the par value price of stock. The balance represents the difference between what owners/investors paid into the company and the par value of the company stock.

3. Retained Earnings

Retained Earnings is where the action occurs, and it’s an important number to understand. It’s the accumulated earnings of the company less any dividends paid to shareholders.

For a small business, retained earnings will change once a year at the end of the fiscal year when net profit (or loss) from the current year is rolled into the retained earnings account. At this time, all of the income and expense accounts are zeroed out to start over for the new year, and the balance (which is profit or loss) is added (or subtracted, in the case of loss) to retained earnings. Your accounting system automatically does this for you, and you can check it out by running a balance sheet as of the last day of your fiscal year, then running a balance sheet on the following day—the first day of the next fiscal year and comparing what changed.

You can reconcile retained earnings by adding up all of your profits and losses for each year you are in business. Then subtract any dividends paid throughout the years, and you should come out with your retained earnings balance. You can have a negative retained earnings balance.

The retained earnings number is a measure of the long-term value of the business. It also plays a large role in determining your basis, or investment, in the company, which is used for tax purposes.

An S Corporation will have an additional fourth account in its equity section.

4. Distributions

Distributions represent the money the S Corporation owner has taken out of the business. This money is over and above the salary paid to the owner. It must be tracked for tax purposes, which is why it has a separate account on the balance sheet. In simple terms, distributions are generally not taxable as long as the owner has enough basis to cover them. In this way, distributions are different from dividends that are issued in C Corporations, since they are taxable.

Finally, if you run a balance sheet report in your accounting system on any date during the year, you may see an additional account:

5. Current Year Earnings

This is the sum of all of your income and expense accounts. It should be the same number as net profit or loss on your income statement from the beginning of the year to your balance sheet date. On a formal balance sheet for external purposes, this number is rolled into the retained earnings account.

The equity section can be the most difficult section to understand on the balance sheet. Hopefully, the explanation above will provide a bit more clarity and shine a light on the significance of the retained earnings balance.

Are You Getting Organized Financials from Your Accounting Department?

Fri, 23 Sep 2022 18:48:30 GMT

When you hire an accounting professional, it can sometimes be hard to know if your books are being done correctly and whether you are getting accurate information.

Here are some things you can do to stay on top of your finances without becoming a micromanager.

Review Your Chart of Accounts at Least Once a Year

Look for duplicates and question them. Ask about the chart of accounts setup. Does it enhance your reporting? The chart of accounts should be set up as a source to pull reporting from. Don’t worry if it doesn’t show the details you want—think of it as buckets of information that can be poured into other buckets for closer examination.

For example, a great report is profit and loss by the top 10 customers. You don’t need your customers listed in the chart of accounts to get this information.

Reconcile All Bank and Credit Card Accounts Through the Current Date

This is a good way to know if all transactions came through properly and which ones are missing. You should also receive a report of what transactions haven’t cleared yet. If those transactions are within a few days of the closing date on the statement, it will probably clear by the next month end. Anything outside of that timeline should be investigated.

Ask for Payroll Reporting

You will want to see payroll reports that capture all items: salary, benefits, taxes paid by employer and reimbursements. All payroll paid to employees should be recorded as gross wages, not net (gross minus employee taxes)—unexpectedly, ask for a detailed payroll report with each person’s wages listed, as well as reimbursements and year-to-date wages paid.

In our experience, fraud occurs more often in payroll than in other areas. Asking for this information will help you stay on top of payouts.

Ask for a List of Vendors Paid to Date and if W9s Have Been Collected

This will be helpful at year-end when it is time to create 1099s to send to these vendors. W9s should be given to anyone you are paying, regardless of the reporting threshold ($600)—it is much easier to get a W9 from someone before you pay them than after.

Make Time to Review Your Reporting Monthly

Your accounting department should be sending financials for your review on a regular basis. Make sure you review them for accuracy and to make decisions. Reports like profit and loss by month will show trends, but it will also show if something is miscategorized. For example, you can compare months to see if rent expenses are consistent or if a month is missing.

If you have any questions about what you see in the reporting, always ask for clarification or for a meeting to go over it.

Once you have the confidence you are getting quality financials, you will feel more comfortable making decisions based on those financials.

Have questions about your financials? Wondering if you are getting all you can from your books? Give us a call and we can review your books and answer your questions!

4 Tips for Organizing Your Business Financials (and One Tool That Will Really Help)

Fri, 16 Sep 2022 15:09:40 GMT

Organizing your small business financials doesn’t have to be a daunting task. By following a few simple steps, you can create a system that works for you and your business.

Step 1: Take Time to Plan

Decide what information you need to track and how you’re going to track it. There’s no right or wrong way to do this—it all depends on what’s best for your business. Create a budget and track your expenses using a spreadsheet or app. This will help you stay on top of your spending and make sure you’re not overspending on unnecessary things.

Step 2: Separate Your Bank Accounts

Setting up separate bank accounts for your business and personal expenses. Keeping business and personal accounts separate will help you to see what income and expenses are truly for the business and provide valuable information to make decisions.

Step 3: Reconcile Your Accounts

Start reconciling your accounts on a regular basis. This will help you keep track of expenses and income and ensure your books are up to date.

Step 4: Create a Bill-Paying System

Put together a bill-paying system that works for you. This may involve setting up automatic payments or simply creating a list of bills to be paid each month. There are several software programs that can help with this—Bill.com, Veem and Melio are just a few.

By taking the time to organize your small business finances, you can save yourself time and money in the long run.

One Tool in a Sea of Many to Help You Get Organized

QuickBooks Online is a great tool for small business owners who want to get their finances in order. QBO can help you track expenses, reconcile your accounts, and create a bill-paying system that works for you.

QuickBooks Online can also help you plan for your future by creating financial projections, developing budgets and tracking your progress over time. It is a powerful tool that enables you to take control of your finances and run your business more effectively.

Not sure you want to try it alone? Reach out to us we can evaluate your business needs and recommend the right QuickBooks Online subscription. We can also provide training to get you started organizing your business.

Cool Tech Tools: ClickUp™

Thu, 08 Sep 2022 15:09:40 GMT

ClickUp™ is a versatile new web application that serves multiple functions for small businesses. It’s primarily a CRM—customer relationship management—tool with project management and workflow features built in, and is adaptable across several industries.

ClickUp’s goal is to save users time and reduce redundancy by tying everything together in one app. Its integrations, called ClickApps, are truly its strength. The 1,000+ integrations set ClickUp apart from other offerings, and for this reason, ClickUp excels at automating processes that use multiple apps, including hard-to-automate processes like customer onboarding.

Some of the tasks people use ClickUp for include reminders, goals, whiteboards, templates, calendars, document flow, task management, dashboards, marketing processes, and team collaboration and communication.

One of the features frequently mentioned is the ability to create custom views exactly how you want them. Views provide a summary of your work and come in many variations. You can create task views, list views, boards, calendars, Gantt views, workload views, and box views.

If ClickUp has a weakness, it would be complexity. You need to be somewhat tech-savvy to get everything set up. The learning curve can be intimidating, but once you get through it, there is so much power in having everything customized and in one platform.

ClickUp does have a following of power users, and there’s a certification available. Becoming ClickUp Verified means you’ve earned expertise in the product. If the learning curve is too much for you or your team members, you can hire a ClickUp consultant to do the setup for you.

As of this writing, ClickUp hosts 4,000,000 users, including the ones on the free version for personal use. Monthly pricing for business users ranges from $5 to $19 per user, depending on the features you need. Enterprise options are also available.

ClickUp was founded in 2017, is headquartered in San Diego, CA, and has raised three rounds of funding as of this writing. You can find out more at clickup.com!

Have you heard of or used ClickUp? Let us know!

When Your Remote Employee Lives and Works in Another State

Fri, 02 Sep 2022 15:09:40 GMT

Remote working has exploded in the last few years, especially in professional services. Now that companies are seeing the benefits of remote work, they are also seeing the benefits of an expanded pool of potential employees. Some firms are hiring employees that live several states away from where the office is located, which comes with many ramifications for the business.

Let’s say your business is based in Texas. You already file quarterly payroll reports and pay federal payroll taxes for your Texas-based employees. You also already file all the required state payroll reports and have Texas workers compensation.

In May, you hired an employee that lives in Cleveland, OH. In June, you hired an employee that lives in San Francisco, CA. You’ll need to get set up to pay employees in each of these states:

You may need to get set up as a Foreign Corporation in these states (the exact paperwork depends on your type of entity, as well as the state’s requirements and where your business originates). This means filing legal paperwork and complying with annual tax filings and statements of information. You may also need to hire a firm that can be your registered agent and legal contact in that state.
You must get workers compensation in those two states.
You must sign up with the unemployment agency in those states. For California, it’s the EDD (Employee Development Department), and for Ohio, it’s the Ohio Department of Job and Family Services.
You’ll need to work with your payroll provider to give them your account numbers so they can accurately create the paychecks with the appropriate state withholdings.

But that’s not all. You’ll also need to make sure you file the correct quarterly payroll reports in addition to your federal ones. Continuing our example: In California, this consists of Forms DE-9 and DE-9C, Quarterly Contribution Return and Report of Wages.

In Ohio, there are multiple forms: one for SUTA, IT 3, IT 941, and IT 501, all with exacting filing requirements.

Some states that are small and closer in proximity may have exceptions you can follow to save time.

Nexus

Having an employee in another state might create a nexus for your organization, which means you may have additional tax and legal requirements beyond payroll taxes.

If you have sales in these states, you may also need to collect and remit sales tax on those sales and file sales tax returns. The first step is to register with the sales tax agency in the state.
As the business owner, you may even need to file a state income tax return and pay state income taxes as an individual, even if you’ve never set foot in that state!

Hiring a remote worker is easy, but the paperwork that comes with it is often complex. Make sure you stay in compliance with all the tax and legal requirements of hiring an out-of-state worker. There can be some lead time in getting all this set up, so be sure to plan for this prior to your new employee’s start date.

Seek out a professional who is well-versed in state and local taxes (SALT). They will be able to navigate this path for you and provide clear instructions on how to proceed.

If you need help finding one, we can put you in touch with professionals that can help!

Preparing for the Possibility of a Downturn

Thu, 25 Aug 2022 15:09:40 GMT

Will there be a recession? The future is filled with uncertainty. One of the best ways to provide comfort and control is to start planning now, knowing you may need to adjust as the situation unfolds.

These are actionable steps you can take right now to prepare yourself and your company for an economic downturn.

Assess Your Cash Flow

How much are your expenses each month? What happens if your biggest client doesn’t pay for three months or goes out of business? Do you know how much cash you burn through each month?

Check out your P&L for one month and look at COGS+ total expenses. This will equal your cash out for the month. Next, review a few months and get the average amount you are spending. This provides a quick snapshot of cash out for the month.

Dave Ramsey suggests having three to six months of expenses in the bank for personal use. We suggest nine to 12 months for a business.

Examine Your Industry

What will sell better during a time when people and businesses are thinking about saving money? Think of do-it-yourselfers (DIYers)—what are the tasks they’ll be unwilling to do themselves and opt to pay for? Can you expand in that area?

If you are an electrical contractor, people may be less inclined to put in new electrical work, but they might be willing to spend money on repairs. You could offer a ‘check up’ to see what needs to be updated, like a new electrical panel or replacing outdated lights with LED lights to save money on energy bills.

Is there a service you provide that typically generates more interest during a recession? A colleague of mine prepares taxes. Her tax business increased dramatically in 2008/2009 because taxes are one of the things people don’t want to DIY—the risk is too high. Increase marketing for that service to reach potential clients now.

Is there something you can create now that will provide revenue during a recession? People are more likely to seek information and become DIYers. Can you provide fee-based courses that will educate this audience in your area of expertise? Do you have marketing that will drive people to buy it? Do you have room in the budget to pay for the marketing?

Coming up with a plan for creating another stream of revenue is a good idea, even if a deep recession never happens.

Review Revenue and Expenses

Can you increase your fees without pricing yourself out of the market? Can you increase your services with current clients?

Monitor your topline indicators for revenue including leads, sales pipeline, etc. This will give you a better picture of when slowdowns could be coming to affect revenue. Create plans with your leadership team of what to do if a revenue stream slows, and revisit them to make changes as needed.

Finally, scrutinize your expenses. Is there any way to reduce or eliminate costs?

Communicate the Plan with Your Team

Let your team know what measures you will take and how they can help, or if these measures will impact them. If you have to lay off employees, do it quickly and with dignity. Frequent discussions with employees to keep them updated will help you avoid rumors and speculations on the health of the company. It will also give your team a sense of security and trust.

The way you treat people—your employees, customers and vendors—during this tumultuous time is what they’ll remember. Make sure your decisions are aligned with your mission and vision and values. You will get through this! We all will. We are stronger together.

Amid the uncertainty, are you looking for peace of mind that your business finances are in order? Reach out and let’s talk more about how we can help you prepare for the future.

Is Your Best Skill Aligned with Your Business Model?

Fri, 12 Aug 2022 15:09:40 GMT

When starting a business, most entrepreneurs excel at the specific technical skill set they need to deliver their services and products to clients. For example, if you own a bike shop, you are likely skilled in all things bike related. If you own a law firm, your strengths probably include understanding and interpreting the law. This skill is your core skill.

As your business grows, you need skills beyond your core skill to thrive. These skills will depend on your ideal business model.

Here are some examples of business models and the key skills you need to be successful.

People-Based Business Model = Leadership

If your business is one of the 25 percent of small businesses that have employees and you have a team that serves customers, you likely have a people-based business model. The revenue you earn is dependent on how your people perform and serve clients.

Examples of these types of businesses could include a mid-sized law firm, a nail salon, a marketing agency, or a mid-sized plumbing company. Each has a team of people that generates revenue.

These people need to be hired, trained, and motivated, and that’s where the skill comes in. If you have a people-based business model, you must excel at leadership, which includes managing people as well as hiring and firing. You should be great at developing a productive, happy team to reach your highest pinnacle of success.

Your core skill is still needed, but without leadership skills, you won’t grow to reach your full potential.

Acquisition-Based Business Model = Negotiation

Some companies grow through the acquisition of other companies. In this case, your top skill should be negotiation; you will need to make excellent deals to keep your business growing.

Project-Based Business Model = Project Management

If your job revolves around delivering large projects—for example, construction, IT or real estate—your business model might be project-based. While knowing how to be a general contractor may be your core skill, your skills must also include project management.

How well you manage the project timeline, delivery of materials, and project team all factor into completing the project quickly and effectively so you can get paid and move on to the next project.

Volume-Based Business Model = Merchandising

If moving large quantities of products or services is your business model, your revenue depends on volume and how much you can sell. Some examples of these types of businesses include grocery stores, software companies, some retail stores, and wholesalers.

How you display and market your products will affect how many customers you can get in the door and how fast you can sell your products. Your top skill should become merchandising and marketing your business.

The Secret to Future Success

These four business models demonstrate that once you achieve success, your core skill may no longer be the catalyst to future success. Developing skills beyond your core skill will help you grow your business and achieve the objectives you set out to achieve when you became an entrepreneur!

What Financial Documents Should I Keep and for How Long?

Fri, 29 Jul 2022 15:09:40 GMT

I am moving for the first time in 15 years. Moving made me take stock of what I have in my house and what I really don’t need to take with me. While going through old filing cabinets, I realized how many paper files I had from when I first started First Steps Financial over 10 years ago—back before we went paperless.

I mentioned this to one of my clients and she said she had no idea what she should be keeping or throwing out. We started discussing the importance of maintaining copies of your financial documents and working with a partner that has your back in case of an audit. Because this person is a client, I let her know we save her bank statements, tax returns and any receipts supplied to us, either inside of QuickBooks Online or in our secure online filing system, Sharefile.

Since I had quite a bit of paper to get rid of before my move, I called around to find a mobile shredding company that was insured, provided a certificate of destruction and could handle sensitive documents. Then I had to go through all the paperwork and see which documents I still wanted and which ones were required.

After doing some research, I found the following on the IRS website and other sources for best practices for keeping financial documents.

Documents to Keep for 3 Years

Keep income tax records and all related documents (receipts, bank statements, etc.) for three years from the date you file your return or two years from the date you pay your taxes, whichever is later (IRS- How long should I keep records?).

Income tax returns (see notes from the IRS below)
Receipts
Bank statements
Any income/expense documents related to returns

Documents to Keep for 7 Years

Loan Documents

It is a great feeling to pay off a loan. Keep the documentation so if there is an error at the bank, you have proof of payment and closure of the loan.

Keep Until No Longer Active

Active contracts
Insurance documents
Property records
Stock certificates

Keep all these items while they are active. After contracts are completed or insurance policies expire, then you can destroy these documents.

Keep These Items FOREVER

Marriage licenses
Birth certificates
Wills
Adoption papers
Social security cards
Death certificates
Records of paid mortgages

Keep It All Online

Retain copies of all these documents online. You can scan them into your computer or pay for a secure cloud-based filing system, such as Sharefile.

Keeping your documents organized, either online or paper, will allow you to access them as needed and to purge them when they are no longer necessary.

I am looking forward to moving a lot less paper this time and keeping all my records that I do decide to keep organized!

Some Notes About Tax Returns from the IRS

Keep records for 6 years if you do not report income you should report, and if it is more than 25% of the gross income shown on your return.
Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
Keep records indefinitely if you do not file a return.
Keep records indefinitely if you file a fraudulent return.
Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Should You Get Cybercrime Insurance?

Thu, 16 Jun 2022 15:09:40 GMT

The short answer to this question is YES! Incidents of cybercrime have been problematic for a long time, but have increased exponentially since the start of the pandemic.

If your firm’s reputation depends in part on your ability to keep confidential client records secure, cybercrime insurance is a must. It’s not a matter of if but when your private business info will be breached.

Finding the Right Insurance

The best place to start is your current insurance agent or an insurance broker you trust. Cybercrime policies are separate policies that cover specific acts, and you will need to read the policy carefully to see exactly what it protects you from. You should also distinguish between personal and business policies; you may want both.

In a business policy, some of the items you want to consider being protected against include:

Data breaches
Ransomware attacks
Spoofing and identity theft
Wire fraud
Civil fines
Lawsuits
Costs of notification, reputation repair, forensics and data restoration, credit monitoring, and other potential damages

A good policy will cover some or all of these costs:

Business interruption costs
Data breach costs
Extortion costs
Crisis management and public relations costs
Data recovery costs
Computer replacement costs
The cost of reputational harm

Just like any other insurance, you will need to complete an application to obtain a quote. Some of the standard questions include:

Type of products and services sold in the business
Type of electronic data stored on business computer systems
Whether you have written network security and privacy policies in place
Whether you have backups
Whether you are in compliance with PCI DSS (Payment Card Industry Data Security Standard), HIPAA (Health Insurance Portability & Accountability Act), and GLBA (Gramm-Leach-Bliley Act)
Whether you’ve had a breach in recent years
Whether you use a firewall
Whether you use anti-virus protection
Whether you have an employee/third party off-boarding process that terminates access to computers and data

As you can see, the application process itself is an excellent way to ‘cross your Ts and dot your Is’ when it comes to putting safeguards in place for your business. And your premiums will be less expensive when you have these items in place. It goes without saying that your premium will be less expensive if you get insurance before you are attacked so you have a clean application.

A key part of owning a business is managing enterprise risk effectively. Having a cybercrime policy will go a long way toward protecting your hard-earned investment and giving you peace of mind so you can sleep better at night.

If you also want peace of mind that your business finances are in order, reach out to us today ! We can help you simplify your processes, organize your financials, and gain valuable insight into your business.

ESG and Your Business

Thu, 09 Jun 2022 15:09:40 GMT

Pick up just about any public company’s most recent annual report, and you’ll find a section on ESG. ESG stands for Environment, Social, and Governance. It’s a growing trend that not only considers, but also measures a company’s sustainability performance on ESG issues. A new generation of investors is driving this movement as they become more discerning when selecting companies to invest in.

While ESG is still predominately a large company issue, small companies can benefit from being aware of this trend. But first, here’s a brief summary of the ESG components:

Environment

Measuring a business’s impact on the environment means considering topics such as climate change and sustainability.

How many natural resources does the company use, and are they replenishing them as they use them? If the business contributes to pollution, how are they cleaning it up?

Social

A business’s social impact is the broadest of the three areas. It includes a multitude of topics:

Diversity and inclusion in the workforce and with suppliers
Consumer protection related to its products
Human rights, including workforce issues such as working conditions and minimum wage, especially overseas
Animal welfare in product research and development

Governance

Governance measures the company’s leadership when it comes to topics such as ethics, transparency, compensation issues for both executives and employees, and employee relations.

Accounting for ESG

The accounting industry is developing and adopting standards for measuring a corporation’s sustainability performance. As of this writing, the IFRS (International Financial Reporting Standards) Foundation has proposed the creation of the Sustainability Standards Board, which will help to set standards for ESG in 140 countries.

The move will better align the current financial performance of the company with the new sustainability measures. However, this development is years off, as there are many organizations that have developed standards for numerous components of ESG that need to be consolidated and adopted.

In the meantime, we do know a company’s positive sustainability performance drives positive financial performance. There are many ways small businesses can participate in ESG’s benefits.

ESG and Small Business

ESG can have a positive impact on your company’s value, company culture, who you hire, the vendors you select, and the customers that select you.

As an example, if you plan to do business with a large company, mirroring their ESG values can help you both align, giving you an edge in the selection process. Similarly, when you communicate your ESG values and contributions, you are more likely to attract employees with the same individual values, making for a better fit.

While there are many things a small business can do, here are just a few ideas:

Disclose your starting hourly rate if it’s well above your state’s minimum wage to attract better quality hiring candidates.
When purchasing vehicles, consider electric or hybrid.
Match employee nonprofit contributions, and give them time off to volunteer.
Practice transparency when it comes to executive salaries or financial results.
Write and post a diversity and inclusion statement.
Conserve electricity by closing off unused spaces, turning off lights when not in use, and switching from gas to electric appliances when possible.
Optimize service routes to reduce fuel consumption.
Donate excess food to shelters (in the case of restaurants).
Protect customers’ private information with privacy processes and policies.
Make product components recyclable, purchase supplies that are recyclable, and train employees to recycle.

Add your own ideas to the list above! And don’t forget to ask yourself how your business measures up when it comes to ESG, and make a plan to implement the changes you want to see in your business.

3 Fraud Prevention Strategies for Your Business

Fri, 03 Jun 2022 17:23:37 GMT

Internal theft in business is all too common. Search the internet and you will find many articles about embezzlement by trusted employees.

The good news: There are steps you can take to safeguard yourself and your company without relying on ‘trust’ as a method of prevention.

Reduce the risk of fraud in your business by following these three steps.

1. Establish Internal Controls

One of the easiest ways to protect yourself against fraud is to have processes in place so no one person has access to your accounts. Creating a process in which there are at least two signatures or approvals on every check or expenditure can help.

There are electronic systems that can assist you in tracking this approval process and provide tiers of approval. For example, if there is a bill over $5,000, you can require the head of the department to approve it, in addition to the two other approvers.

You should also perform unannounced audits on the system. When you do this, you can catch issues early or deter them entirely—it’s harder to embezzle money when the system is reviewed unexpectedly.

One of the biggest issues we encounter involves sharing usernames and passwords. Please do not give anyone full access to your accounts. This includes bank accounts, credit cards, and your accounting system. There are permission levels for all these accounts to keep you and your company safe.

2. Establish Separation of Duties

This principle is the basis of a solid internal control system. It involves dividing the responsibility of a process between two or more people.

For example, the person who collects checks from clients should not be the same person who deposits those checks. The person who reconciles the bank statement should not be the same person who approves payments. And the person who runs payroll should not be on payroll (they should not be paying themselves).

3. Utilize Outsourcing

One of the most effective ways to reduce your risk of fraud is to outsource your bookkeeping and accounting to an experienced company. This provider will be able to create internal controls and have a road map for separation of duties, which will eliminate the risks involved. They will have processes in place to review your transactions, ask questions, and ensure oversight on others in the accounting system.

Implementing fraud prevention strategies now will not only help you control the situation, but it will also save you time and money in the future.

I’m Ready to Hire a Bookkeeper. How Do I Know If They’re a Good Fit?

Thu, 19 May 2022 17:23:37 GMT

Start by asking yourself some basic questions. Why do you want a bookkeeper? This will point you in the right direction.

Some common whys:

I am not well versed in accounting.
I do not like this part of my business, but I know it is necessary.
I know I can move this company forward if I bring in someone to take over this role.

Next, ask yourself what you want your new bookkeeper to do. Here are some things a bookkeeper can (and should) do:

Reconcile bank and credit card statements
Categorize transactions frequently
Provide accurate reporting
Invoice clients
Pay bills with a secure bill paying app
Provide support for the business owner on things related to accounting and processes

Things a bookkeeper should not do:

Have unlimited access to your bank and credit card accounts
Have single signing privileges for checks
Provide HR support
Be the receptionist

Other questions that are equally important:

If you hire a single bookkeeper, what happens when they go on vacation or are sick? Who will take over that responsibility? If you are thinking you will take it back over and your stomach is churning, maybe you should outsource to a team of bookkeepers so you’ll always have someone working on your bookkeeping.
Who will review their work? You? Your CFO? Your CPA? There should be a process in place for reviewing the financials for accuracy and completeness, at least quarterly.
How will the work happen? Have your training set up before you hire. Know what you need your bookkeepers to learn to fulfill your whys and whats from above.
Where will your bookkeeping take place? Remotely or in-person? Both in-person and online will require security measures (think password storage, access to bank accounts or checks, online access to sensitive data and accounting software). Remote workers may require special access from an outside link to keep your network secure. An in-person resource will require a physical space to work in.

A Final Note

Define the roles and responsibilities before you hire. Drill down on why you want a bookkeeper and what you see them doing. Hire an experienced bookkeeper who meets your needs and is a good fit for your personality. Let them focus on what they do best so you can focus on your business.

First Steps Financial is also here to help! We can handle your bookkeeping and controller and CFO work for your small business. We listen to your whys, understand the whats, and give you a team of experts to take care of your accounting needs.

Just give us a call and let’s talk about your needs in more detail!

5 Reasons to Hire a Bookkeeper NOW

Fri, 13 May 2022 17:23:37 GMT

Is keeping track of your financials the bane of your business? While you might love the work you do, invoicing, paying bills, and reviewing the financials probably aren’t your favorite tasks.

Sometimes your business financials can feel like something to avoid, like COVID or the black plague. However, bookkeeping can mean life or death for your small business. That’s why a good bookkeeper is essential! Plus, they can take on the tasks you don’t have time to do (or want to do), giving you more time in your schedule to focus on what drives you.

Here are five reasons you need to hire a bookkeeper today!

1. They keep your finances organized.

A skilled bookkeeper can organize your financials and be able to provide those financials at a moment’s notice—to investors, bankers, your CPA, and most importantly, YOU! If you are ever audited by the IRS, having organized financials will make the process easier and faster.

2. You’ll have a handle on cash flow.

Keeping track of the money going in and out of your business will help you know how much money you will have on hand to pay bills or run payroll. You’ll also know when invoices are due and have insight into cash shortfalls.

3. They can help you better understand your business.

This is key information for reviewing trends month over month and better understanding your business cycle. The analysis can help you see the performance of your company and anticipate future needs, such as cash flow, sales growth and when to hire.

4, You’ll have a better plan for the future.

When you have your financials organized, predictable cash flow, and reports analyzed, you can then start to plan for the future. You’ll be able to answer questions like, What will year end look like? What is my three-year plan? What is my exit strategy? And how do I get there knowing how my company is running today?

5. It’s the law.

Business owners are federally required to keep financial records of their business. To avoid issues, it is important to obey the law.

Ready to take charge and make sure your books are in order? Give us a call! We can review your file and let you know where you can make improvements.

How to Write a Refund Policy

Thu, 05 May 2022 17:23:37 GMT

A refund policy defines the processes and rules for when customers want to return the products or services they purchased from you and get their money back. It’s often required by your credit card or shopping cart company as part of maintaining PCI (Payment Card Industry) compliance. Plus, it’s just a good, fair business practice to post a refund policy.

As a business owner, you can set your own refund rules. The important thing is that they are communicated clearly to customers in advance of their purchase.

A good refund policy answers the questions customers have when the item they purchased from you does not work out. It reduces conflict and ambiguity, and improves customer service. It also helps your employees manage customer expectations by giving them a documented policy to reference.

Here are some of the components you’ll want to address in your refund policy:

Items to be Returned

Which items can and can’t be returned? Once opened, some items, like food, simply can’t be returned safely. You might still honor a refund even if the item can’t be returned or re-sold depending on the scenario.

Condition of Items

You may want to stipulate that returned items must be in a specific condition to be re-sold. That means the customer may need to return packaging, as well as the item itself, in order to qualify for a refund. If the item appears to be used or worn and if a return would detract from the item’s value, you may also want to state that returns will not be honored.

Time Limit

How long from the date of purchase do customers have to return the item and ask for a refund? Common time limits range from 7 to 30 days.

Shipping

If shipping costs are involved, who will pay?

Processing Time

How long will it take to process the refund once the item is returned?

Money

How will the money be returned? Will it be credited to the card on file? What if the customer paid with cash or a check? Will you only provide store credit?

Requirements

Will customers need to fill out a form, request refund approval, or use a specific shipping return label? What instructions do you need to provide for proper return requests and processing?

Fees

Will there be a restocking fee, cancellation fee, return processing fee, or any other fee that reduces the amount of the refund?

The first step is deciding how you’ll answer the questions above. You might be tempted to adopt a ‘no returns, no refunds’ policy, and this may be the right policy in many cases. However, your refund policy is a chance to build trust with customers, and a rigid policy could cost you sales. Often a ‘no questions asked’ refund policy can increase sales in the long term. Only a small percentage of people will take advantage of it.

Once you’ve determined the specifics of your refund policy, you can start writing it. Post it on your website and near your cash register or the checkout areas of your store.

Next, make sure you have a smooth process in place for handling returns on a timely basis. Most stores have a separate checkout area or customer service desk to process returns so they don’t slow down the regular checkout lines. Employees should be trained on how to talk with customers, how to accept the returned items back into inventory for resale or return back to the vendor, and how to use the cash register or shopping cart system to process returns.

You can even turn returns into a positive experience for everyone. If an item is the wrong size, you may be able to convert the return into an exchange for a different size so the sale is not lost. A great sales person can also provide upsell opportunities for new or similar items to the returned item. Proactively, your store can sell warranties at the time of purchase for select items.

The more customers you have, the greater the chances you’ll have a customer who asks for a refund. Be prepared with a fair, well-documented refund policy.

Looking for additional tips on managing your business finances? Don’t hesitate to reach out!

How to Keep Your Customers Coming Back

Fri, 29 Apr 2022 17:23:37 GMT

Measuring and encouraging customer retention is important for businesses in many industries. There are a few great metrics that can help determine how you are doing in this area.

We’ll explain those metrics and provide some tactical tips in this article.

Measuring Customer Retention

The most common metric for evaluating customer retention is the customer retention ratio. The best report to run to gather this data is a revenue by customer summary report. Each customer should be listed in a row of your spreadsheet, and each year’s revenue for that customer should be listed in the columns.

From this report, you can gather the following numbers. Let’s use 2020-2021 as our measurement period:

A = How many customers you had with sales in 2020

B = How many customers you had with sales in both 2020 and 2021

The formula is B / A, which will give you the retention ratio. The formula A – B will give you a count of how many repeat customers you lost.

C = How many customers you had with sales in 2021, but not 2020

Answer C will tell you how many new customers you gained in 2021. This won’t inform customer retention metrics, but it does help to know how many lost customers you replaced.

Now dollarize your figures.

D = 2020 total sales of customers you had with sales in both 2020 and 2021

E = 2021 total sales of customers you had with sales in both 2020 and 2021

The formula E / D measures the percentage increase or decrease in sales of your repeat customers so you can see whether they are buying more or less from you. Many factors go into being able to influence this number, including upsell and cross-sell opportunities over time, sales communications, your business model, and products offered to repeat customers.

Customer Lifetime Value

One final metric is customer lifetime value, which is easy to pull. Run your sales by customer summary report for all years you have in your accounting system, then sort by highest revenue. Your most valuable customer over the years included will be listed at the top of the report.

Want to compare how you’re doing with other businesses? Industry-standard value ranges for each of these metrics vary greatly and are beyond the scope of this article. However, your best competitor is yourself, and learning how you can improve your own results year after year can be time well spent.

Encouraging Customer Retention

No matter your industry, the best thing you can do to improve customer retention is to maintain an email list of customers so you can communicate with them on an ongoing basis. Letting them know when you have sales, new products and services, and even new staff members can go a long way toward building long-term relationships.

Other ways to promote customer retention include:

Your business model – a VIP membership or subscription model with perks and special access and bonuses can help you maintain customers
Rewards programs
Special events
Special gifts
Thank you notes
Special discounts or exclusive offers
Active social media presence (especially in groups where questions are encouraged and answered)

Whenever you can make your customers feel special, you will increase retention. Think about what you can do to keep customers coming back, and make a plan to execute your ideas.

If you’d like to find out more about calculating these metrics, please reach out to our team !

Why Are You in Business? Creating Your Mission, Vision, and Values Statements

Thu, 21 Apr 2022 17:23:37 GMT

Most large businesses have developed mission, vision, and values statements to guide them and inform stakeholders about their company’s strategic direction. Going through this exercise is a wonderful idea for even the smallest businesses.

A company’s mission statement includes its core purpose and desired impact for employees, customers, owners, and other stakeholders. A vision statement defines what the company wants to be. A values statement describes what the company stands for.

It’s a perfect activity for business owners to answer and remember why they built the business in the first place. It also serves to correct and re-align the business’s trajectory.

Mission Statement

Start by asking what impact you want your business to have on the outside world. Here are some mission statement examples that are frequently quoted:

Harley-Davidson : More than building machines, we stand for the timeless pursuit of adventure. Freedom for the soul.
Disney : The mission of The Walt Disney Company is to entertain, inform and inspire people around the globe through the power of unparalleled storytelling, reflecting the iconic brands, creative minds and innovative technologies that make ours the world’s premier entertainment company.
Nike : Nike exists to bring inspiration and innovation to every athlete in the world. Our purpose is to move the world forward through the power of sport—breaking barriers and building community to change the game for all. If you have a body, you are an athlete.

Notice how each one is short and simple to understand. They focus more on the big-picture benefits the company brings to customers and less on how they will do it.

To write your own mission statement, ask yourself what your business’s purpose is and how you will impact your customers’ lives with your products and services.

Vision Statement

A vision statement is big, bold, and futuristic. What do you want your company to be?

Here are a few examples:

Harley-Davidson : Building our legend and leading our industry through innovation, evolution, and emotion.
Deloitte : We aspire to be the Standard of Excellence, the first choice of the most sought-after clients and talent.
Amazon : Amazon strives to be Earth’s most customer-centric company, Earth’s best employer, and Earth’s safest place to work.

What do you want your company to become? That’s your vision statement.

Values Statements

Values statements are typically a set of adjectives or statements that answer what the company stands for. They can be in the form of leadership principles, core values, or a similar format.

These days, they often include values on environmental, social, climate, global, human rights, diversity and inclusion, sustainability, and many other current issues. They can take the form of additional strategic statements on each one of these issues.

Sample values statements can be found in the company’s annual report, as well as in the about or company section of their website.

Here are some examples:

Harley-Davidson Principles:

Communication – Communicate with purpose, structure, facts and inspiration
Agility – Accelerate, innovate and thrive in a rapidly changing environment
Impact – Focus on impact, not process, and be outcome driven
Simplicity – Pursue the simplest path to achieve each outcome
Speed – Don’t let perfection get in the way of process and pace
Culture – Be fair, honest, positive and creative. Strive to win and have fun.
Courage -Take risks and go against the norm
Judgment -Think strategically and make informed decisions
Focus – Focus on a short list of meaningful opportunities that build desirability
Lean – Maximize impact with limited resources

Coca-Cola Behaviors We Focus on:

Curious
Empowered
Inclusive
Agile

Merck Values:

Patients first
Respect for people
Ethics and integrity
Innovation and scientific excellence

Your mission, vision, and values statements will help you communicate the qualities of your business. When hiring, it can help you determine if a candidate’s individual values align with the core corporate values, and with customer acquisition when prospects see what your company is about. It can also help you remember your roots and why you work so hard every day.

We’d love to hear from you when you write up your mission, vision, and values statements!

Why Meetings are Draining Money from Your Business

Thu, 14 Apr 2022 17:23:37 GMT

It’s another meeting that could have been an email….

Sound familiar? Many people are complaining about back-to-back-to-back Zoom meetings. Once they find out the meeting agenda could have been addressed via email, they’re understandably frustrated! Or worse, someone invites you to an in-person meeting you didn’t really need to be in.

When employees are part of a meeting they aren’t invested in, you’re lowering morale, wasting payroll dollars, and creating animosity in your company. You can turn it around by having meetings that get employees involved and encourage them to take ownership of creating success in the business.

Following these steps can help you host a successful and productive meeting:

Create an agenda and send it out ahead of time. Seems simple enough, but it’s a game changer. When you can tell everyone what the meeting is about ahead of time, it allows them time to process what will be discussed. This gives the attendees time to think about what they want to contribute.
Break the meeting into three sections. The first section should always be an icebreaker. If your team is small enough, this can be a great time to catch up on what everyone is up to. Keep it light and casual—no business should be discussed.

The second section of the meeting should be about issues you need to discuss and why they are important. The third section should include actions that will be taken to solve the problem and who’s taking the lead.

Designate time stamps and a facilitator. Each section of the agenda should have time stamps. For example a 30-minute meeting can be broken up like this:

Section 1: Chitchat (5 mins; or use the actual time, 9:00-9:05)
Section 2: Issues (15 mins)
Section 3: Action items and assignments (10 mins)

The facilitator should move the meeting along and be a strong but gentle voice during the meeting. When a timestamp is reached, the facilitator should move on to the next section and add items to the action items section as needed.

Want to learn more about where your money leaks are coming from and get help solving them? Check out our downloadable guide, The 10 Biggest Money Leaks in Your Accounting System , or reach out today. We can help you simplify, organize and gain insight into your finances.

What’s Your Financial Literacy?

Thu, 07 Apr 2022 17:23:37 GMT

April is Financial Literacy Month! Most people aren’t as excited as I am to talk about money. In fact, discussing finances is something many people avoid.

Patrice Washington, a well-renowned speaker and author who focuses on helping women recognize their worth and grow their wealth, has partnered with Robinhood to produce a video series on how women earn, spend, save and invest. My favorite question she asks is “What is your relationship with money?” The reply is very telling on whether someone spends or saves their money.

Ready for some feel-good finance? Check out My Money Moves on YouTube.

One of the easiest ways to teach your kids (or anyone) about basic finances is to use the PIGS method. My kids were weaned on this method and would roll their eyes if they read this post, but it works. It’s an easy formula to follow that will help you budget every dollar. It even works for businesses, too! You can play with the percentages to see what fits your lifestyle or goals.

P – Pay Yourself First

This portion pays your rent and living expenses. It can be anywhere between 40% to 70%. The choice is yours—either don’t buy Starbucks every day, or put that into your ‘pay-yourself-first’ budget. Since you and your family are top priority, this category is first.

I – Invest

Invest every time you get paid. There are many studies that show consistent investing will benefit you by growing your wealth without your sweat equity. Warren Buffett once said it well: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Plant your tree and keep feeding it. This percentage should be 10-20%.

G – Give

This is an area people leave out most often, and it’s the only one in which the percentage is set at 10%. Give 10% to charities, religious organizations, civic organizations, or causes that help others. When you give for the good of others, the payback is immeasurable.

S – Save. SAVE. SAVE. SAVE.

I can’t stress this enough. Money guru Dave Ramsey is famous for telling people to save 20% of their paychecks. He also suggests allocating three to six months of expenses to a fully funded emergency fund. This can feel like a lofty goal, but you’ll be thankful you saved when something unexpected happens—like when your two-year-old refrigerator dies or your car needs to be repaired immediately.

Try saving between 10%-20% of all money that comes in.

Ready to talk more about finance? Money is the second most discussed topic between parents and teens (after COVID). Last year, half of all states proposed bills requiring personal finance courses in high school. Early money management skills lead to better credit scores, lower debts and higher savings—and this benefits everyone. Empower yourself and those around you by investing in financial literacy.

Want to learn more about how we help small businesses simplify, organize and gain insight into their financials? Reach out to me at alisa@firststepsfinancial.com and let’s have a fun conversation about finances!

Protecting Your Business from Supply Chain Shortages

Thu, 24 Feb 2022 09:56:59 GMT

Over the past few years, the supply chain has experienced major kinks due to a number of factors: abnormal buyer behavior, source material scarcity, government shutdowns, and worker shortages, to name a few.

What can a business owner do to protect their business from shortages and revenue loss? Let’s take a look at a few ideas.

Source New Suppliers

Being dependent on only one supplier for a key item is risky. Increase your options by finding new suppliers to use as backups or alternates whenever you can. While it’s admirable to buy local, it’s not always possible. Expanding your network will provide you with more flexibility, even if you have to pay a bit extra at times.

Understand Your Timeline

How accurate are your lead time predictions? Are you providing enough time from ordering and delivery before you need the part in house? Timelines have changed a lot in the last year. Spend some time reviewing and recalculating lead time if needed.

Fine-Tune Forecasting

Get good at forecasting so you can anticipate and prevent inventory shortages before they occur. We can help you set up the correct spreadsheets and generate the right reports so you’ll have better information for decision-making in this area of your business.

Develop Relationships

The more dependent your business is on a particular supplier, the more you want to develop that relationship. Adding a personal touch might not help you get your orders faster, but when troubleshooting is needed, you’ll want the extra help a personal relationship can provide.

Increase Communication and Collaboration

Increase communication with your suppliers so they can manage their own timelines and supply chains better. Provide them with accurate forecasts and let them know how they can better meet your needs in the present and in the future.

Audit Inventory Records Frequently

If your inventory balances are only adjusted once a year, inaccurate inventory numbers are likely to cause problems. Find ways to take inventory more often, or at least increase the accuracy of inventory balances. The savings will be worth it; you’ll have fewer surprise out-of-stock or back-order situations that can cost not only sales, but also customer loyalty.

Proactively Manage Shipping

There may be times when paying rush charges on shipping is justified simply to get the parts in house. Actively managing shipping and in-transit items will help you keep a handle on this. When possible, line up alternate shipping methods in case one method becomes unreliable. This is especially advised with overseas shipments where more can go wrong.

Create a Supply Chain Task Force

If supply chain issues are critical in your business and have been costing you profits, it might be time to create a dedicated team to manage and prevent crises. Consider organizing a group of employees that can be responsible for strengthening your supply chain. Try these ideas to smooth out supply chain woes in your business and let us know what results you see. In the meantime, if you need help managing your business finances, reach out and we’d love to help!

5 Ideas to Attract Staff During the Great Resignation

Sun, 30 Jan 2022 09:56:59 GMT

If you’re having trouble attracting and retaining staff, you’re not alone. A convergence of issues has created one of the greatest talent shortages in our lifetimes. Boomers are retiring in large numbers, deaths from the pandemic and opioid crisis are rising, and people are no longer wanting to work for low wages. Child care is also becoming harder to find, immigration policies are getting stricter, and many are rethinking their career paths. It’s no wonder small businesses are having trouble finding workers.

The good news is small business owners still have many things they can control when finding the ideal candidates. Here are some ideas to help you do just that.

1. Be open to various options.

If you require a 40-hour workweek and on-site workers dressed in business professional, you may need to rethink your approach. Many talented people are choosing to work part time, and it might be easier to find two part-time workers instead of one full-time employee.

How much of the job can they do virtually? This opens your hiring pool nationally and perhaps even internationally. You should also consider temporary versus permanent employees, and outsource certain functions when you can.

The key is to be open to finding creative ways to get the job done.

2. Make fun a vital part of your workplace.

Even if there are numerous deadlines and serious work to be done, your workplace can still be fun. A good start is bringing snacks to the office; camaraderie always blossoms around food.

Add in extra out-of-work activities like movie or game nights, take weekly team lunches, start an amateur sports team, or encourage co-worker get-togethers after work. Decorate the office for each holiday, and celebrate birthdays, anniversaries, and employee successes. Create fun projects like a volunteer day for a local charity, or support a team entry in a local fun run.

In short, create a culture in which employees can not only have fun, but be themselves.

3. Add perks (and not just the usual suspects).

Employees are demanding more of their employers, and the best businesses are listening and delivering. Beyond increasing pay and ramping up benefits—401k, health insurance, vacation, and PTO—consider these perks:

Flex Hours: Give employees more flexibility in when they work.
Work-from-Home Days: More people are working from home at least part of the time.
Pet Insurance: A New England CPA firm now offers this pet-lover perk to its workers.
Extra PTO: Various companies are now offering unlimited PTO, no questions asked.
Child Care: Any way you can make the work day easier on parents is a plus.

Other perks to think about are holiday gifts, bonuses, free dry cleaning, free car washes, and employee discounts.

4. Embrace technology.

Employees want the best tools you can give them to do their jobs better. Make sure your employees are equipped with the latest hardware and software so there’s less stress around the inevitable tech glitches that occur. There’s nothing worse than having a deadline and coming across a software glitch that wastes precious time.

5. Apply marketing techniques to hiring.

Instead of posting a boring job ad, create a campaign to find employees. Make sure your social media is up to date and mirrors your organization’s culture. Be sure to look in places you may not have traditionally looked for candidates. Create a job interview process that’s interesting and enthusiastic. You’re competing for talent, so doing these things will help you win.

We may all be dealing with staff shortages, but there are still millions of people looking to make a career move or get back into the workforce. Do more for your employees and candidates than your competitor down the street, and they will want to keep working for you.

We’d love to talk more about the changes we’ve implemented in our own employee culture to attract and retain top talent! Reach out and let’s have a conversation. If managing your business financials is also high on your list of stressors, we’re here to help!

Understanding Sales Conversion Metrics

Thu, 20 Jan 2022 09:56:59 GMT

How effective is the sales function of your business? One way to answer that question is to calculate conversion metrics for every step of your sales cycle. These numbers are not tied to any numbers on your balance sheet or income statement, but they can help you produce a better return on your sales and marketing expenses.

Your Sales Cycle

The sales process is different for every business. If the dollar amount of the customer purchase is small, the sales cycle needs to be short or it won’t be efficient. For larger purchases, the sales cycle might be longer.

The first step in determining conversion metrics is to outline the steps a typical prospect takes before they become a customer.

Here are a few examples:

Retail Example

Prospect walks into the store.
Sales clerk interacts.
Prospect selects item(s).
If they’ve chosen clothing, they may visit a dressing room and try it on.
Prospect stands in the checkout line.
Customer completes purchase.

Ecommerce Example

Prospect visits the website and uses search or navigation.
Prospect views lists of products.
Prospect views the product page.
Prospect places product in cart.
Customer completes checkout.

Service Example

Prospect sends an email requesting more info or an appointment.
Customer service/sales clerk responds to the email.
Prospect makes an appointment.
Salesperson and prospect meet.
Salesperson performs follow-up activities.
Prospect agrees to a price/purchase.
Client signs contract and pays the initial deposit.

For each step in the processes above, the prospect won’t always proceed to the next step. Conversion is measured at each step with the percentage of prospects that move forward.

Not all steps are worth measuring. Sales and marketing personnel must agree on when a prospect becomes a viable lead. Measurements should occur from lead to customer.

Let’s expand on the service example:

Prospect sends an email requesting more info or an appointment.
Customer service/sales clerk responds to the email.
Prospect makes an appointment.

The first meaningful conversion can be calculated between steps one and three. Let’s say during the month of December, the company received 100 emails from prospects requesting more info, and of those, 50 made appointments. The conversion rate is calculated as follows:

# Appointments made (step 3) / # prospect emails received (step 1) = 50/100 = 50%

To improve the 50 percent conversion rate, ask yourself what can be done between steps one and three to improve the prospect-facing activities.

Here’s another example:

Salesperson and prospect meet.
Salesperson performs follow-up activities.
Prospect agrees to a price/purchase.
Client signs the contract and pays the initial deposit.

The second meaningful conversion rate in the service sales process can be calculated between steps four and seven. (You could also measure 3-4, 4-6 and 6-7.) Let’s say 40 appointments were kept and 30 became clients.

# New clients signed (step 7) / # salesperson and prospect meet (step 4) = 30/40 = 75%

To improve the 75 percent conversion, ask yourself what you can do in steps four through seven to improve the prospect’s experience.

Actionable Sales Intelligence

As you measure these results over time, are your conversions improving or declining? Is one salesperson closing more business than any of the others? How can you improve each step so conversions are increased? You will have more questions than answers when you first start calculating these numbers. You will also likely have many ‘aha’ moments of insight you can use to improve the prospect’s journey.

If conversion is extremely low in the first few steps, it could be that marketing is not sending you qualified leads. In that case, marketing needs to improve before conversion can improve. If conversion is low in the final few steps, follow-up activities may need to be strengthened.

In any case, measuring conversion throughout your sales cycle will pinpoint the weakest areas so you can improve. When you can increase your conversions, your marketing and sales costs will decrease, and you will become more effective.

And if we can help you with any of these measurements, please reach out any time!

Tips for Controlling Labor Costs in Your Business

Thu, 06 Jan 2022 09:56:59 GMT

For service businesses, labor costs are the largest expenses incurred in business operations. For many other types of businesses, the cost of labor is a large component of overall costs.

Controlling labor costs so they remain in line with what’s best for the organization is an important management function—and that’s why we’re here to help !

Here are several ways to control or reduce labor costs in your business.

1. Encourage Employee Retention

If well-trained employees leave, you likely will have to replace them with inexperienced employees that need training. This results in a temporary loss of productivity. Some turnover can be good, but if turnover is too high, it can result in increased labor costs.

2. Automate Tasks

Save labor by automating any repetitive tasks employees are still performing manually. While some automation might require extensive capital outlays, many systems can be implemented that are inexpensive and provide an immediate return on investment.

3. Streamline Processes

Are you operating your business most efficiently ? Or are employees still performing outdated tasks that have lost their meaning over time?

One place to look is the interface between departments. Is your sales team duplicating marketing’s efforts? Is customer service answering the same question without communicating to operations how it should be permanently fixed? Enhancing communications among employees throughout the company can cut down on labor costs.

4. Train Employees

Make sure your employees have the training to do their jobs effectively. If they are using systems and other tools, make sure they have completed courses or certifications.

5. Provide the Right Tools for the Job

Do employees have the tools they need to do the job well? If you’re giving them an abacus instead of the latest version of Microsoft Excel®, you can’t expect them to perform their best. This is an extreme example, but the importance of having the right tools can’t be overstated.

6. Cross-Train Employees

If an employee is out sick, will a customer request sit around until that employee is back? Check to see if your employees can easily pick up a colleague’s work and fill in if their team member is out.

7. Optimize Employee Schedules

In many industries, including restaurant and retail, employee scheduling can make the difference between profit and loss. Software can help you determine how many employees you need and at what times. Ensuring employees know when to come in and what to focus on when they clock in will go a long way toward increasing productivity.

In some cases, a shorter work week is a possibility that can drive lower labor costs.

8. Outsource

Outsourcing may be cheaper than using employees on certain tasks, especially if you have tasks that require specialized knowledge or skills, or you might not need a full-time person. Outsourcing can also help you determine how long a task will take so you can plan better if you do decide to bring the activity in house.

9. Review Compensation

Compare your company’s current salaries to the going market rate for salaries in your industry. Are your salaries in line? Adjust accordingly for future hires.

You can also consider different pay structures, such as commission-based, to better match performance to labor costs. Bonuses paid out in lieu of annual raises allow you to better manage accumulated pay raises in the case of long-term employees.

10. Review Benefits

Employees love perks, but these perks can be costly. If necessary, this is an area in which expenses can be cut to reduce costs. This can include reviewing time-off policies, employer’s percentage share of 401(k) plan contributions, and additional health care coverage such as dental and vision.

Hiring part-time employees that are ineligible for benefits can also reduce labor costs.

11. Cut Overtime Pay

If overtime pay is so high that you need to increase your headcount, then it’s too high. On the other hand, some overtime pay is fine if it avoids hiring a headcount you don’t fully need.

12. Incentivize Workers

Try increasing productivity and results with incentives built into your compensation plan.

13. Provide Remote Work Options

Studies show remote workers are more productive. Plus, overhead expenses such as rent, furniture, and utilities will plummet, saving expenses overall.

14. Hire Smart from the Start

The saying is “Hire slow, fire fast.” Finding the right workers for your business is an art form. Interview, test, check background and references, and hire employees on a trial basis to be sure you have the best workers.

15. Maintain a Safe Working Environment

Follow all of the regulatory requirements, but use common sense as well to ensure you have a safe workplace for employees.

16. Understand the Accounting Side of Labor Costs

If you pay an employee $15 per hour, understand that your labor cost will be far more than $15. These are the things not included in that $15:

Employer’s share of payroll taxes (Social Security and Medicare)
Vacation and time off
Paid holidays
Workers compensation insurance
Unemployment insurance (federal and state)
Health care
401(k) matches
Company picnics and events
The cost of all other employee perks

The cost of onboarding and retaining an employee includes even more than labor costs and should allocate these expenses:

Computer equipment and software applications
Rent, utilities, furniture, parking spaces, building repair
Employer-paid meals, snacks, and coffee
Training
Events and travel
Meeting time and expenses (this deserves to be listed separately)

Employees make your business possible, but to maintain a business profit, labor costs must be kept in line. Try these ideas to help your team be more productive and keep your labor costs under control.

Looking for help tracking and reducing your labor costs? Reach out and let’s have a conversation!

What’s in Store for 2022?

Mon, 20 Dec 2021 11:49:35 GMT

The last few years have been unlike any other in our lifetimes. As we close out 2021 and enter 2022, it’s the perfect time to reflect on what we’ve learned, what’s happening now, and what we want to accomplish in the next 12 months. Here are some things to consider.

Celebrate Your Successes

Give yourself time and permission to review what you have completed in 2021. You’ve likely learned and accomplished more than you think. Compare your status on January 1, 2021 with today, and celebrate the changes you’ve made and projects you’ve finished.

Monetize These Trends

Several trends will continue from 2021 into 2022 and beyond. How can you monetize them in your business?

Remote Work

The move to remote work is likely to continue, especially in certain industries, such as financial services and technology, where the work is delivered digitally. Hiring virtual workers gives employers access to a larger talent pool as well.

Online Business

Expanding your online presence, including ecommerce, is paramount. Most businesses spent more time improving the online interface between company and customers as more customers clamored for increased online purchasing, delivery, and curbside pickup. Some brick-and-mortar businesses adapted their business model to develop new digital services, enhancing their current product line.

Climate Change

Climate changes affected many businesses this year in various ways. Some were victims of disasters and extreme weather. Others became more visibly supportive of climate initiatives, working these initiatives into their mission and offerings.

Artificial Intelligence

Accelerated automation using artificial intelligence is continuing to move through the technology adoption curve. Can your business benefit from AI-driven tech solutions?

Diversity

Diversity initiatives will continue to be important in 2022 and beyond.

A Younger Workforce

Workforce demographics are finally changing. More young people are working in 2021 compared to pre-pandemic numbers, while workers over 50 are retiring at a faster-than-normal rate. Millennials are starting businesses in large numbers, and one statistic shows that 80 percent of those businesses are profitable.

Staffing Challenges

Staffing struggles are real in many industries. Business owners who can no longer find employees have had to resort to outsourcing, contract work, part-time work, virtual work, and many other limited capacity options to keep their businesses afloat.

Social Responsibility

Millennials and Gen Z-ers are prioritizing social responsibility, making business owners reflect more on how they can do their part in their businesses.

A Search for Purpose

Life-goal realignment is something that has swept the world as people experience a wake-up call because of the pandemic. The search for purpose and meaning is one of many side effects of this trend. Ask yourself how this trend is affecting your customers and employees.

Set 2022 Goals

You might hate creating New Year’s resolutions. But it’s the right time of year to decide how you can incorporate the trends above with the personal and business successes you’d like to achieve by the end of 2022.

Make your list, then schedule milestones on your calendar so you can track your progress.

And above all, have a happy New Year in 2022!

Could you use a partner in 2022 to help you organize your business financials and gain insight into your business? We’re here to help! Reach out and let’s talk.

The Power of Thank You Notes

Mon, 20 Dec 2021 11:49:35 GMT

Now that the holiday season is in full swing, it’s the perfect time to think about how we can use thank-you notes in our businesses and lives to express our gratitude to others.

When to Say Thank You

There are many opportunities in business to say thank you:

When a client or associate sends you a referral that results in business
When an employee goes out of their way to fix a problem or make a customer happy
When a customer makes a large purchase
When a vendor over-delivers
When someone sends a gift
After a speaking engagement or an event when someone has hosted you
When someone provides advice that has been helpful, whether face-to-face or in a recommended book or article
When someone does a favor or something nice you’d like to reward

Keeping thank-you notes top of mind will help you think of more opportunities to use them.

What to Say in Your Thank-You Note

You don’t have to be a professional writer to make a thank you note sound good—just write from the heart. Let the recipient know what you are thanking them for. Express a detail about the item or activity involved. And then thank them again.

If you are unsure about what to say, write a draft you can edit first. Then transfer the version you are happy with to your stationery. It’s far better to hand-write your thank-you note than to use a computer-generated one.

Personalized stationery for thank-you notes is a nice touch. This personalization adds a formal and professional feel to your thank-you note, enriching the experience for the recipient.

Sending gift baskets can be a good idea, but sending a hand-written thank-you note alone can be the most powerful action you can take, especially if it’s not expected.

While many businesses send holiday cards each year, thank-you notes can be far more powerful. If your budget is limited, you might want to replace your holiday mailing with thank-you notes instead.

One thing you should be sure to avoid: Making your thank-you note an ad for your company. If you want to send promotional items such as t-shirts, mugs, or other items, do NOT do it with your thank-you card. Sending thank-you notes is not a marketing event; it’s a time for gratitude. Offering promotional items can be a welcome gesture—just don’t do it at the same time.

Helping others feel gratitude is the fastest way to experience your own happiness. Sending thank-you notes is not only good for business, but it’s also good for our health and wellness.

The ‘Four-D’ Time Management Trick to Boost Your Efficiency

Thu, 09 Dec 2021 11:49:35 GMT

Time is our most precious personal resource. Once we spend it, we’ll never get it back.

As busy entrepreneurs, we seem to have less time than anyone else, so it just makes sense to look for opportunities to use our time more wisely.

One technique has worked for many. It’s called the ‘Four-Ds’ of Time Management.

What are the Four Ds?

There are four actions you can take to address the many tasks you have on your plate:

Do it.
Delegate it.
Delay it.
Delete it.

As you approach each task on your to-do list, ask yourself which one of the four Ds applies.

Do It

The first option is simply to do the task yourself. Get it done and check it off your list so it’s out of the way. This is often the best option if it’s urgent, important, or if you are the only one with the experience and training to do it.

It might sound counterintuitive at first, but doing a task might not be the best option. Let’s look at the other three options.

Delegate It

If your to-do list is full of simple, routine actions, then delegating is a strong choice. Delegating is also a wise choice for tasks beyond your skill set that would take time away from your core work. If you don’t have time to do everything yourself, getting help is a smart alternative.

But getting help doesn’t mean you have to hire a full-time employee. You can get help in a multitude of ways:

Engage a company to do the task. From walking dogs to managing Google Ad campaigns to handling your bookkeeping and taxes, there are companies like ours that would be delighted to help!
Automation is a form of delegation. Can software do what you are doing?
Find someone on Fiverr.com or UpWork. You can hire someone for a five-minute task or a five-day task. Find them on any website that lists freelancers for hire.
Hire someone. Plenty of people are looking for part-time jobs (just in case you don’t have enough work for a full-time person).

If you can write instructions on how to perform the task, you can delegate it. And if you’re worried about losing control or quality, simply add milestones to check the person’s work. Initially, it might not be faster, but in the long term, it will pay off.

Delay It

If a task is not urgent or important, delaying it might be the right option. The problem with this option is that you have to handle the task at least twice: once when reviewing it and deciding whether to do it, and again when you finally decide to do it.

If you keep deciding to delay the task, you’ve handled it more than twice. Not only can this take up precious time, but it can also be a drain on your energy when you see the incomplete task on your to-do list.

However, there are times when delaying a task is best:

When it’s not urgent and you have other urgent items to attend to.
When it’s not important at the moment.
When you can prioritize other more profitable tasks first.
When the task is best done in batches.

Here’s an example of that last point: Rather than answer each email as it comes in, think about blocking out time in your day specifically to check and clear your email. You can apply this time-batching concept to just about everything to gain efficiency—posting on social media (write and schedule a month of content in advance), returning phone calls, attending meetings (book them all on one day and keep other days clear), and running errands (delay until you have three to four errands and do them all in one run).

Be careful of delaying a task repeatedly. Something else may be going on with your mindset:

The task may be uncomfortable for you (find someone who loves to do what you don’t and delegate).
The process of getting started is ambiguous (get the right training or find someone experienced to shorten your learning curve).

Delete It

Some tasks should never get added to your to-do list in the first place. When there is no return on investment for a task, perhaps the best choice is to delete it.

Take a look at some of the things you do out of habit. Does it still make sense to do those tasks, or are you doing them simply because that’s the way it’s always been?

Do, Delegate, Delay, Delete

Give the ‘Four-Ds’ of Time Management a try and you’ll get an instant boost in efficiency and productivity. Let us know how it goes!

Looking for someone to delegate your business finances to? Reach out and let’s talk!

3 Ways to Increase Cash Flow in Your Business

Thu, 11 Nov 2021 11:49:35 GMT

The 2021 holiday sales season will give businesses a chance to continue their online migration, as well as opportunities for more refinement and improvements. The key is to bring as many products online as possible and integrate all customer touch points into an omnichannel of positive experiences.

Let’s take a look at some trends in retail we can apply to many other industries. These trends can strengthen your business and position you for success in the future.

Strong E-Commerce Presence

Consumers did more online shopping last year, and the trend is expected to continue beyond the pandemic. For this reason, all businesses should strengthen their online presence, especially their e-commerce presence.

Many retail establishments benefit from a complete ecommerce solution, including a storefront, shopping cart, online payment process, and automated fulfillment.

They can expand their online shopping experience by considering these features:

Enable chat features between customers and staff to answer customer questions.
For clothing, post detailed sizing charts, imitate the dressing room mirror with try-on automation, and use photos of models in all shapes and sizes.
Create how-to videos to show customers ways to effectively use your product.
Expand photography so customers can see all angles of the product and how it’s used.
Display and sort user reviews to help customers decide.
Implement clear navigation and search options so customers can find what they want. Many customers research online, and then visit your physical store to finalize their transaction.

Expanding your e-commerce presence isn’t only a to-do for retail businesses. Businesses in the services space have also implemented appointment-setting and payment processing. Real estate agents have enhanced virtual home tours. Many businesses with physical goods and documents have also beefed up delivery options and implemented curbside pickup.

Each business has a unique sales cycle customers go through when purchasing products and services. The question for business owners: How can you bring most of that experience online?

Mobile Optimization

The vast majority of transactions now occur on mobile devices. If your business’s mobile presence is not optimized, you’ll want to make it a priority this year to catch up with your competitors.

Social Presence

More consumers are using social media—Instagram, YouTube, TikTok, Snapchat, LinkedIn, Pinterest, Twitter, Clubhouse, and Facebook—to discover and purchase items they love. Wise business owners will invest more budget into attracting customers from these platforms.

Holiday Seasons

With the move to online shopping, the holiday season has been extended from just one day or one weekend to entire months. Consumers are shopping earlier and all year long. Retailers and other businesses can benefit by always having some kind of sale or promotion going on.

Here are the key holidays for the fourth quarter:

Columbus Day
Halloween, the second most profitable holiday (Christmas is first)
Veterans Day
Thanksgiving Day
Black Friday
Small Business Saturday
Hanukkah
Cyber Monday
Christmas Eve
Christmas Day
Boxing Day
Kwanzaa
New Year’s Eve

How does your business fare when it comes to a fully online shopping experience? Use these trends to boost sales growth in 2021 and beyond.

Need help getting your business financials in order for 2022? Reach out to us today!

5 Reports Successful Business Owners Review Each Month

Tue, 26 Oct 2021 11:49:35 GMT

To run a profitable business, you have to know what’s going on in your finances.

There are five key reports that will help you run your business more efficiently and make smarter decisions. From these reports, you should be able to answer some key questions about your financial state.

1. Profit and Loss by Month

When reviewing this report, look for patterns.

What is off?
What is increasing or decreasing, and why?

2. Profit and Loss by Percentage of Income

This report tells you where you spend your money.

How much of the sales you’re making are going to payroll?
How much is going to insurance?

3. Percentage of Profit by Client

What client makes up the largest portion of your profit?
Are you paying them enough attention? Can you spend more time with them and increase their overall value?

Remember, eighty percent of your income comes from your top 20 clients.

4. Balance Sheet This Year vs. Last Year

Is your bank balance higher or lower compared to last year?
Are your liabilities higher or lower?
Do you need to consolidate loans so you’re paying less interest and increase your cash to pay other bills?
Are your accounts receivable larger or smaller?

5. Budget vs. Actuals

Are you on target?
Do you need to adjust your sales goals?
Is payroll in line with your budget?
Do you need to hire and more importantly, can you hire?

What monthly reports are critical for your business? If you have questions about any of these reports or need help setting them up, reach out and we can help!

What To Do If a Customer Doesn’t Pay You

Thu, 30 Sep 2021 11:49:35 GMT

If you grant credit to customers or take recurring credit card payments, the unexpected can happen—a customer fails to pay on time, their credit card expires, or the check bounces.

How can a business owner spend as little time as possible on these items, but get the cash collected? Here are a few ideas:

Re-examine Your Credit Policy

Is there a way you can have credit customers pay up front? Perhaps you can collect a deposit to minimize your risk. Maybe you can request final payment right before you deliver the final product or convert credit terms to layaway, like in retail.

The best way to speed up collections is to change your payment terms if possible.

Be Proactive

If the client is late with a payment, respond quickly. Send them proactive reminders. Give them a call just before the payment is due if you have this luxury.

If the customer pays by credit card, monitor credit card expiration dates, and send reminders to customers to update their cards before they expire.

On your website, make it clear how a customer can easily update their credit card information on file. Automating this process will save you a ton of time.

Payment Failures and Disputes

It’s inevitable that you will encounter customers whose credit card payments, ACH withdrawals, and checks fail or bounce. As a business owner, you need to have solid procedures for processing these payments.

When a credit card payment fails, make sure your shopping cart, merchant account, or gateway processor notifies you of the failure. Contact the customer right away to correct the situation.

The same is true of bounced checks or failed ACH deposits. Assess any extra fees and flag the customer account if you want to place future payment or credit restrictions on the accounts.

You may also have customers report disputes to their credit card company. Respond to these transactions quickly, as there is always a tight deadline, and make sure you have all documentation needed at the time of sale if this comes up.

Develop Solid Collections Processes

If the payment is late, start your collections routine. Send out friendly reminders initially; as the payment becomes more delinquent, your communications can become more urgent.

Follow-up steps are important. Make sure your customer is receiving your notifications, and give them the benefit of the doubt before taking legal action.

Finally, if necessary, turn the payment over to a collections agency. The collections agency can then make continued attempts to collect the debt and implement penalties if the account remains unpaid.

Hopefully, you don’t frequently encounter these scenarios in your business. But if you do, being proactive is a great way to avoid them.

Make sure you have all the processes described above in place to handle collections in your business so cash continues to flow.

Direct vs. Indirect Costs (and Why They Matter)

Fri, 06 Aug 2021 12:20:51 GMT

If you’re a business owner continually searching for ways to increase your profitability, you’ll want to learn about direct and indirect costs. Breaking out your expenses into direct and indirect categories can help you arrive at the most profitable volume of sales for your business.

Direct Expenses

Expenses that fall into the direct cost category are ones that relate directly to the items you sell. Here are some examples:

If you have a flower shop, the cost of the flowers is a direct cost. So are vases, ribbons, cards, and the labor to put arrangements together.
If you are a law firm, the labor and any materials or supplies spent on serving a client is a direct cost.
If you own a pool building company, concrete, tiles, filters, pumps, and the labor to build the pools are direct costs.
If you run a toy store, toys are a direct cost.

Direct expenses, unlike indirect expenses, will vary proportionally to the volume of items you sell. The more you sell, the higher your direct expenses. The less you sell, the lower your direct expenses.

In general, direct expenses should be recorded in Cost of Goods Sold. You can determine your Gross Profit by calculating Sales less Cost of Goods Sold (or COGS). Gross Profit Margin is an important percentage to know in your business. It’s computed as follows: (Sales – COGS) / Sales.

Some small service companies might not bother to break out labor into direct and indirect on the Profit and Loss statement each month, but it can be useful to break out periodically or when you are re-evaluating your pricing and profitability.

Direct expenses are important when making pricing decisions, but so are indirect expenses.

Indirect Expenses

Indirect expenses are costs you must incur to run your business, but are not directly related to the items you sell. Here are some examples:

Telephone
Rent
Insurance
Utilities such as electricity, gas, water, and garbage pickup
Administrative labor, such as a receptionist or supervisor
Education and training
Professional services, such as legal, HR, IT, or accounting
Office supplies
Hardware and software
Business permits

Fixed and Variable Costs

Direct and indirect costs can be further broken down into fixed and variable costs. For example, HR expenses, education, and training will increase as your sales increase and you hire more workers. That makes them variable costs.

Other indirect expenses such as rent will remain flat no matter your sales volume. This means they are fixed costs.

Pricing Your Items

When calculating your sales prices, use direct costs to be sure your profit margin is high enough to cover an allocation of your indirect expenses. In other words, sales price should always cover all direct costs plus a profit component, plus enough to cover indirect costs when considering your sales volume.

The lower your sales volume, the higher the price per item should be. A higher sales volume gives you more room to spread out your indirect costs over more sales. This can lead to higher profits, or you can lower your price to be more competitive.

If you have questions about direct and indirect costs or want help validating your pricing decisions, please feel free to reach out any time. Learn more more about our services at firststepsfinancial.com .

When Love Isn’t Enough: Ending a Client Relationship

Thu, 15 Jul 2021 12:20:51 GMT

Working closely with clients, especially in a highly sensitive area, such as legal or financial matters, you get to know clients on a personal level. If you’re lucky, you really like your clients.

But what happens when you love your clients, but they aren’t a good fit for your culture? You may have qualified them when they first inquired about your company, but something changed or you overlooked a warning sign because you liked them.

What do you do when love is not enough?

A member of my team recently presented this question to me. We’re working with a long-time client we ‘love,’ but the dynamic has changed, and we’re perplexed on how to move forward.

Ultimately, we decided we need to separate from this client. It was a learning experience, to say the least. These are a few of our takeaways.

Put emotions aside and focus on what’s really working . Enabling the situation will not make it better. Write down what your ideal client looks like. Does this client still have those characteristics?

Honesty is the best policy . Be frank about what you’re seeing with the client—you might be surprised to learn they feel the same way!

Evaluate your clients often . Go through your current client list and have your team rank each client in order of their fit for your organization. You may need to break up with a few.

People grow and change, as do business relationships . It’s okay to move on from a client that was once a great client, but is no longer a good fit for your company.

We’ve made it a priority to continuously evaluate our relationships with clients, looking through the lens of what’s best for everyone involved. Because sometimes love just isn’t enough.

Have you ever had to break up with a client? We’d love to hear more about your experience.

How to Better Track Your Carbon Footprint

Thu, 08 Jul 2021 12:20:51 GMT

You may already be doing your part to save the planet. From recycling and driving electric cars to avoiding the use of plastic bottles and carrying reusable bags to the grocery store, there are ways everyone can make a difference. But it may be important to ask ourselves, “Are we doing enough?”

If you have considered pursuing a more sustainable lifestyle, there’s an app for that! These apps help you track your carbon footprint. By tracking, you can see your environmental impact.

Below we have detailed some of these apps and their benefits.

Capture

Capture is an app that calculates users’ monthly CO2 targets by asking a series of questions. Sample questions include, “How many flights a year do you take?” and “What kind of diet do you follow?” Capture also utilizes GPS tracking to predict emissions from transportation.

The app was designed to not only make planet-friendly living possible, but also to make the process easier. With Capture, users can track, reduce, and remove CO2 emissions from everyday life.

Interestingly, the app can be used alone or with colleagues. If you are a numbers person who likes measuring and tracking, Capture is for you.

Almond

UK-based, Almond’s mission is simple: To help as many people reach net-zero carbon emissions as possible, and in four easy steps:

Understand your carbon footprint.
Discover responsible brands.
Earn offset coins when you make a switch.
Offset your carbon footprint.

Almond allows you to scan products to learn about that item’s story and see what’s in the product (i.e., if it uses environmentally friendly materials or ingredients). Then you can earn money with crypto rewards to plant and protect trees, which offset your carbon footprint. The more you earn, the faster you can grow your forest to achieve a balanced lifestyle and reach your personal CO2 Net Zero.

Pawprint

Pawprint empowers users to fight climate change from the palm of their hands. This online tool helps you measure, understand, and reduce your carbon footprint.

Known as the “Eco companion,” this app delivers:

Science-based data you can trust
Carbon-reducing tips and challenges that suit your lifestyle
Better insight into how your carbon footprint measures up to those around you. (This app is also UK-based.)

One factor that sets Pawprint apart from other carbon footprint-tracking apps is that all data is validated by an expert in the industry, Mike Berners-Lee’s Small World Consulting.

And of course, there are plenty of other smartphone apps and tools available to better track and reduce your carbon footprint, including The Extra Mile, My Planet, and Carbon Footprint. The trick is finding the app or tool that works best for your lifestyle.

Cool Tech Tools: Airtable

Thu, 01 Jul 2021 12:20:51 GMT

When it comes to running a successful business, how important is it to be organized? Very.

How would you rank your organization skills? Honestly, the answer doesn’t matter. Technology can always help us get organized, and this is where Airtable comes in.

Airtable goes beyond spreadsheet solutions when it comes to tracking teams, projects, tasks, dates, and other information for your business. Cloud-based, Airtable allows you to organize information in a database of tables called ‘bases.’ While databases can be complicated, Airtable makes them easy because they look just like spreadsheets.

Airtable allows users to create a flexible database that fits their particular needs. Some of the use cases include project tracking, product development, event management, team collaboration, lists, planning, pipeline management, calendars, and so much more. Templates are also available to jump-start your project.

Because Airtable is like a spreadsheet, it has been compared to Microsoft Excel. However, it’s important to remember that Airtable is like a spreadsheet and a database. Excel only functions as a traditional spreadsheet, while Airtable gives users more options, especially when it comes to customization.

In Airtable, fields can even be added for attachments, long-text notes, checkboxes, links, and barcodes. It provides options for filtering, sorting, and grouping data.

Airtable also integrates with other applications in case you need to move information from one place to another or add functionality.

One other great thing about Airtable is that it has both free and paid plans. You can find out more here: airtable.com

Do you already use Airtable? Is there another similar tool that helps you stay organized? Let us know!

Clubhouse: The New Kid in Town

Thu, 17 Jun 2021 12:20:51 GMT

Are you familiar with Clubhouse? This social media platform is still pretty new, but it’s picking up steam. One of the easiest ways to describe Clubhouse: When you were a kid, did you ever hold a glass to a wall to hear the conversation in the next room? Clubhouse is kind of like that, only scaled and organized.

Clubhouse is an audio-only platform where you can start a room based on a topic and others can join the room and conversation. You can bring people up to the ‘stage’ who have raised their hand. The platform supports multiple languages, and at any one time, you can see rooms in Russian, Spanish, Mandarin, German, Japanese, English, and many others.

Think of Clubhouse like this: It’s like an interactive live podcast. The platform hosts both personal and business conversations, so there’s a lot of noise to wade through, but that’s true of every social app. Many people love the lack of video that’s so pervasive on other platforms.

The main newsfeed in Clubhouse shows active rooms you might like. To join a room, just click anywhere on the room description. Once in a room, you can hear the speakers talking, or you might hear music if it’s a concert. You’re muted until you are invited on stage.

In a room, everyone can see users’ avatars. Clicking on avatars is encouraged and brings up a bio and direct links to users’ Twitter and Instagram accounts. You have space on Clubhouse to build an extensive bio, and this is primarily how other people in the room can get to know you, in addition to hearing what you have to say if you participate in the conversation.

Clubhouse is an entirely new and fresh way to market your business and let people know about your products and services.

Re-Imagining Your Chart of Accounts

Thu, 10 Jun 2021 12:20:51 GMT

The chart of accounts is the backbone of your accounting records. It is a list of all of the accounts—bank, loan, asset, revenue, and expense—in your general ledger, which holds all of your accounting transactions.

Think of your chart of accounts as a collection of buckets that hold dollars of items related to your business. Each bucket should be meaningful and have a purpose. For example, if you have three checking accounts, you need three buckets on your chart of accounts to hold the transactions for each bank account. It would not make sense to have more or less than one bucket for each checking account.

While it’s standard to have certain buckets or accounts for assets, liabilities, and equity, the number of buckets you create for revenue and expenses can vary greatly from company to company. It’s a good idea to create and design your accounts for what your business needs for taxes, accounting, and decision-making purposes.

Let’s say you’re a hairstylist. Do you want your revenue to be in one big bucket? That’s all Uncle Sam requires. But for decision-making purposes, you may want to separate men’s and women’s services, or cuts versus color and other treatments, or both. In that case, you would have four revenue accounts: men’s cuts, men’s color, women’s cuts, and women’s color. This type of detail would help you see where your revenue is highest so you can better manage your supplies and target your marketing.

Having certain expense accounts matched to the tax requirements can reduce extra work at tax time. For example, separating travel costs—hotel and airfare—from meals and entertainment is a common practice, as is keeping meals and entertainment separate.

The goal is to make your chart of accounts work for you. If you accepted the default chart of accounts when you first set up your accounting system, it may be time to redesign and restructure the list so it better serves your needs.

Here are some additional considerations:

What revenue or expenses do you want to monitor more carefully? Should they be broken out in more detail? You can also use sub accounts to group transactions.
Is cleanup work required due to misspellings or other duplication?
Have you interviewed all the financial information users in your company to see how they need the data organized?
What spreadsheets could be eliminated if the chart of accounts was better organized?
Does your chart of accounts support your budgeting process? If two people are responsible for controlling spending from one account, would it be useful to break it out?
Do you have too many accounts? Or too few? (Most people have too many due to poor data entry hygiene.)
Are you properly using other categorizing features in the accounting system, such as classes, divisions, and custom fields?
What reports could produce better information for taking profit-focused actions in your business if the chart of accounts stored the transactions differently?
How could key performance indicators be better linked to the chart of accounts?

These questions can help you begin thinking about how your chart of accounts can better serve you. After all, it’s your business, your accounting system, and your chart of accounts.

If you need help through this redesign process and organizing your financials, reach out to First Steps Financial to learn how our team can assist you. Click here for a free consultation .

Should Your Team Return to the Office or Keep Working from Home?

Tue, 01 Jun 2021 12:20:51 GMT

Pandemic lesson #589 (too many to count!): We learned we can work virtually. Some employees are thriving in this environment while others can’t wait to get back to the office. If you are trying to decide if you should keep your workforce at home, bring them back, or try a hybrid approach, here are some points to consider to help you maintain culture and productivity:

1. Can your team find the balance between working and home life? Do they feel like they are working all the time?

When you’re working from home, it’s easy to just sit on the couch and work after business hours. If you do this regularly, it can feel like you work all the time and start to resent your work. Even though this feels irrational since we often make the choice to work these additional hours, it’s an issue that should still be addressed.

You can minimize after-hours work by setting clear expectations. What are the working hours you expect your team to be available? We ask our team to be available for four core hours during the day for meeting internally and with clients.

What tasks should be completed and what are the due dates? If your team has a clear idea of what they are supposed to do and when work is due, they can manage their time accordingly.

2. Do they feel connected to team members in the office or others who are also remote?

Managers will need to develop new management skills to keep those who are remotely connected to the team in-house and other remote workers. It’s easy to forget those who are able to or who want to work remotely if you regularly see others in the office. It will require discipline and additional communication on the manager’s part to keep the team on a level playing field.

There are apps that can help keep everyone informed about events, meetings, and other news from the office. Check out the app Turnout, an employee engagement platform dedicated to keeping everyone engaged in the new remote environment.

3. Do people on your team need to see coworkers in person to feel connected? Do they need a space outside their home to work productively?

Social interaction can be minimal when working remotely, and it can feel even more isolating as more people are getting out. Some members of your team will need to be in the office. These people are usually easy to recognize—they’re the ones who have been asking since March 2020 when the office will reopen. Or they might be embarrassed to speak up about their desire to be back in the office, especially if most of the team wants to remain remote.

If you decide to have the team continue working remotely but you have employees who need to get out of their homes to work effectively, you can try shared workspaces like Tigerlabs. The space is considerably less expensive than renting an entire office, and it can be used at the employee’s convenience. Leadership teams will need to recognize what environment their teams need to be most productive.

There’s no one-size-fits-all environment that will make your teams happy and productive. The pandemic has taught us we can accommodate our employees’ needs while still providing superior customer service and products to our customers.

How We All Figured Out How to Work from Home

Thu, 27 May 2021 12:20:51 GMT

You would think a company that has always been remote would have no ‘hiccups’ during the pandemic shutdown. That’s what we thought, too.

We were wrong. Big time. We didn’t take into consideration how our employees’ home environments would change drastically and what additional support we would all need. We were no longer set up to work while our loved ones were at their jobs or school. We were now trying to wear the ‘family hat’ while wearing the ‘professional hat,’ and we found out they both don’t fit on your head at the same time.

We had three people leave at the beginning of the pandemic due to family reasons. They had to take care of kids struggling emotionally in this new unstable world, adjusting to school being taught at home and their spouses being in the same workspace. Not to mention the mental stress COVID had on everyone.

To help the team feel more connected, we met three times a week or more to establish ‘lifelines.’ This way we could see each other on Zoom and keep an eye on each other. We created a safe space for everyone on the team to talk about what was going on and how we could support each other. These connections helped us flourish and we formed a stronger team.

We changed how we worked together and how we worked remotely. We recently talked about how many of us had ‘aha’ moments where we discovered the best ways to work from home during the pandemic and beyond.

Here are a few insights that came out of those conversations:

“I wake up at 5:00 am every morning and get my laundry and house tasks done before I sit down to work. It makes my whole day go better.”

“I schedule personal ‘to-dos’ on specific days. This helps with work efficiency and knowing when to schedule work meetings.”

“The calendar is my work schedule—I block off time for creativity, getting work done and preparing for dinner or picking kids up from school or activities.”

“I created a designated work space at home to limit interruptions and to put me in the right mind frame to focus on work. I also told my family, ‘I am working—only come in here if there is blood.”

“Setting boundaries and establishing routines were very helpful for me. My family is much happier too because I was working all the time. Now I have set days for different clients and I stop working after 3 every day to be with my family. After dinner, I will put in some time and make sure that I set my emails to go out the next working day.”

“Team meetings have been a place to connect, share and discuss. I feel like I am part of a group of people who I can talk to both professionally and personally.”

“Creating a schedule for each parent’s work day to tell the kids who to go to if there is an issue or if they need help with school work.”

“Schedule recess! We all need time to regroup, recharge and exercise!”

What did you learn from your work-from-home experience?

5 Steps to Make Your Office More Efficient

Thu, 13 May 2021 02:07:01 GMT

Are you looking for ways to take the complications out of everyday life in the office? One of the best ways to do this is to refine your processes.

What? No processes ? We’ve got you covered. Here are five easy steps to help you get started and avoid becoming overwhelmed by too much information or technology.

Start with what will make the most impact on your business: cashflow.

1. Accounts Receivable : Provide clients with ACH or credit card forms (Sample form found here) that can be used to pay any recurring charges. You can also create other invoices for non-recurring charges and send them to clients and ask for payment confirmation.

Client experience can make or break a relationship, and it starts with a client’s first impression of how you provide services.

2. Onboarding Clients : Create a checklist for basic tasks that are performed each time. Include who’s responsible for them and when each item should be completed. You can use a task management system or something as simple as a Google Sheet.

Paying your vendors on time is a good way to keep those relationships healthy. Whenever you interact with others during the course of business, you are supporting your reputation as a business.

3. Accounts Payable : Start by picking one or two days a month to pay bills. Staying current on payables can increase your credit score and earn you lower interest rates on your loans.

Invoicing your clients on a regular basis not only improves your cash flow, but it shows clients you are organized and have your sh*t together.

4. Invoicing Clients : Set aside a day to pull together everything you need to invoice your clients. Once you can see all you need to create an invoice, you can make a process to follow.

Want to keep these processes going? Creating a task management system will allow you to stay organized and make better use of your time.

5. Task Management System : Find a system that works for you and fits your budget—whether it’s paper and pen with items you check off or an easy-to-use system like Asana. Once you start tracking your daily tasks, you are on your way to empowering someone else to do them so you can move on to other areas of your work.

The best way to make a process become a best practice is to create one at a time. Resist the temptation to do many at once—we are entrepreneurs, after all, and think we can do it all.

We can do it all! Just one step at a time.

Financing Options for Small Businesses

Thu, 06 May 2021 02:07:46 GMT

All small businesses need cash to operate, and there are many ways to generate the required cash. Businesses commonly get started when the owner makes an investment from their savings or other personal cash.

But what if the investment is not enough? In this article, we’ll take a look at some of the more common ways to finance a business.

Community banks

Most community banks are big proponents of small businesses, so this is a great place to start. Establish a relationship first by opening business checking and savings accounts. Then apply for a line of credit, which is a pre-approved loan you can tap when you need it.

If you plan to purchase a building or equipment, you should be able to get a loan by using the asset as collateral. Business expansion loans are also a possibility—you may be able to borrow against your accounts receivable or other contracts with guaranteed income.

Beyond community banks, there are many online lending agencies, banks, credit unions, and community development financial institutions (CDFIs) where you can apply for a loan.

To apply, you will likely need a good personal credit rating and either a strong business plan or audited financial statements to show the financial condition of your business.

Partners and investors

Investors such as angel investors or venture capitalists can provide cash in exchange for either a debt or equity position in your business. Obtaining financing this way is a big decision since you are no longer the sole owner of the company if you give away some of your equity.

Another option is bringing a partner into your business. Typically, the partner will provide cash, as well as management or other complementary skills, and play an active role in running the business with you.

Government support

There are many government programs to help with small business financing this year due to the pandemic. The Small Business Administration consistently has loans and programs available to small businesses. This year, they are also managing the forgivable Paycheck Protection Program (PPP) loans, economic disaster funding, shuttered venue operator loans, and restaurant relief grants, to name a few. You might also want to see what’s available in your county, city, and community governments.

Finally, organizations like the Small Business Development Council (SBDC) can provide space, funds, and training to small businesses in their area.

Nonprofits and educational institutions

Your business may also benefit from nonprofits and educational institutions that provide grants, scholarships, and other funding opportunities to businesses and business owners in certain categories. For example, your local chamber of commerce may have programs and funding options available for local businesses.

Factoring

Factoring is an option for businesses with accounts receivable balances. A cash advance can be made with the accounts receivable balances as collateral. This type of loan is common in the retail fashion industry where items are ordered months in advance of being sold, which causes a cash flow gap.

Crowdfunding

Crowdfunding has been made popular by platforms like Kickstarter. A business can apply on these platforms for funding, and individuals can make contributions. Sometimes the business will promise goods or services in exchange for funding.

Credit card advances

It’s common for owners to put startup expenses on their personal credit cards and use cash advances. This is one of the most expensive ways to fund a business and should be used as a last resort.

The fine print

All financing options come with fine print. Terms and interest rates vary significantly. Sometimes you come to a cliff, where you have to pay everything back all at once. Be sure to carefully read any agreements you sign and run them by a lawyer if you don’t understand them. Your personal financial situation could suffer greatly if you aren’t careful.

For example, businesses that got a PPP loan and later received a buyout offer may not be able to sell because the loan agreement prohibits them from doing so. If they didn’t read the fine print and sold their company, they are now personally liable for paying back PPP loan proceeds.

If you have questions or want to discuss financing options, please feel free to contact us any time .

How Great Companies Help Employees Find Joy

Thu, 29 Apr 2021 02:05:23 GMT

I spoke to a longtime friend the other day. She was telling me how unhappy and unmotivated she is at the job where she’s worked for many years. She said once she starts her day and gets into her routine, she’s fine. But our conversation left me thinking about this question: What is the joy of working?

I often think of her and wonder what kind of job she’d love to do. But then I realized it’s not the job—it’s the culture and ultimately, the company leaders she’s unhappy with. Company culture is one of the strongest forces for happy employees to stay with a company. Leaders are the ones creating the culture and delivering the message.

In Shawn Achor’s book, Happiness Advantage, he talks about the power people have to influence those around them. One of my favorite quotes from the book:

“How many well-meaning managers shoot themselves in the foot when they remind those under them at work of their weaknesses? Conversely, when a manager openly expresses his faith in employees’ skills, he doesn’t just improve mood and motivation; he actually improves their likelihood of succeeding.”

A great example is MOD Pizza. Previous owners Ally and Scott Svenson possessed ‘The Four G’s,’ which were inspired by Shawn Achor’s book. They knew the world didn’t need more pizza, but instead, people needed a place to be themselves, do work that means something and earn money doing it. Ally mentions that almost daily, she would get an email about how her team went above and beyond to help others.

Their ideas can be translated into any company culture.

Gratitude

Showing respect and being thankful for opportunities. Business owners are here to serve others, and this fulfills the company’s mission of having a people-first culture. Hire people who will be grateful to have the opportunity to work in the environment you create.

The Svensons set out to hire employees with intellectual disabilities or those formerly incarcerated. This strategy succeeds because these team members are already grateful someone is giving them a chance to succeed.

Generosity

Being big hearted and kind. Giving team members a chance to grow and being generous to them with time, encouragement, education and empowerment. When showing generosity to the team, leaders are creating an environment in which the team can pay it forward to clients. Clients are treated better because the team feels they are being treated kindly.

Growth

Keep pushing yourself as an employee and leader to learn more and grow personally. This results in growth for the company—employees will want to help customers and to welcome new team members.

Grit

This one is my favorite because so many leaders leave this part out. Shit is going to go wrong. It always does. Even though you will be challenged, you can’t give up. Choose another way to do something and have the courage to pick yourself up and try again.

The 4 G’s apply to leaders and teams. If we embrace them, we will start to ingrain them into our cultures. Even if you are in a situation where your manager isn’t practicing the 4 G’s, you can start and know that they are contagious. People will notice how you make them feel and pass it on. They might even start to love their jobs.

Managing Customer Service with Technology

Thu, 01 Apr 2021 16:38:16 GMT

Does your business get frequent inquiries? If so, it can be challenging to manage them all. Responsive customer service is key to your company’s success, so finding tools that can streamline the process is a smart business decision.

The most common solution to automating customer service inquiries is implementing a ticket management system or help desk software. A few important things to consider:

How fast you can respond to a customer
How well you solve the customer’s problem
How to track a customer’s issue if it has to be open for a while before it’s solved
How to do all of this in a cost-effective and efficient, yet friendly, manner

Inquiries often come from a variety of places:

Phone calls and voicemails
Emails
Text messages
Website chat
Snail mail
Social media accounts and all platforms your business is on
Posts, replies, and comments
Direct messaging
Any other contact methods you have set up in your social accounts

That’s a lot of communication channels to manage! When these channels can be fed into the same system, you can unify your client communications and take a massive step toward organizing all of the moving parts. A good ticketing system will accomplish this, and the feature you want is multi-channel accessibility.

Keeping your customer service costs low is another factor, and one way to accomplish this is to help users self-serve and solve their own issues when they can. This requires a robust knowledge base. A knowledge base contains a set of how-to articles and videos with the most frequently asked customer service questions.

Here are a few basic topics to consider including in your knowledge base:

What forms of payment do you accept?
What is your shipping policy?
How can customers get help if they need it?
What is your return/refund policy?
What is your privacy policy?
What is your guarantee?
How do you secure customer data?
How can customers update their credit card/address/phone/email?
Where do customers go to track their order status?
What licenses does your business have?
What are your hours?
Do you have hours for seniors?
How and where do customers log into their accounts?
What are your COVID-19 policies for employees? For customers?
Are you hiring and where should applicants go to apply?

A good ticket system will also have the ability to customize the ticket, the service rep assigned, the customer records, and the other important parts of the system. For example, you may want to set up your own status items for each ticket. Open, assigned, active, hold, and complete are typical statuses, but you may need additional statuses depending on your business.

The workflow must also be considered in a ticket system—how does a typical ticket flow through your business, and can the system replicate that flow?

Other important features of a ticket system include:

Support for multiple languages
Customer response to tickets, as well as the ability for customers to view the status of their tickets
Uptime of system (service-level agreements)
Tracking including the number of open tickets, tickets on hold, etc.
Reporting metrics such as wait time, ticket servicing time, and number of tickets handled by each agent
Ticket tagging and categorizing
Feedback loop for suggested product improvements
Ease of use for customers and agents
Notifications

A few of the most popular ticket management systems include:

Zendesk
Freshdesk or Freshservice by Freshworks
Zoho Desk
HubSpot Service Hub
Salesforce Service Cloud
LiveAgent

There are hundreds of technology options for every size of business. If you want to take your customer service to the next level or just want to get more organized, consider looking into these ticket systems.

Process Improvement Tools Save Money and Boost Credit Score Case Study

Thu, 25 Mar 2021 16:37:42 GMT

Background

It’s easy to know when a business has a good accounts payable and receivable process. The business’ bills are organized, they’re all in one place, and they get paid on time. Invoices are sent out in a timely manner and followed up on. Good processes are apparent in other ways, too. The business owner knows how much they have in accounts payable, has budgeted for it and is prepared to send out 1099s in January.

Having the right processes in place can save a business money and boost their credit score. Yet, many companies do not have good processes. These companies do not have the knowledge, time or expertise to make the needed improvements.

Challenge

First Steps Financial recently helped a client with significant process challenges.

The business had employed an office manager to pay bills, run payroll, invoice clients, and handle accounts receivable. Regrettably, this office manager quit without notice. The business owner then discovered that the office manager had no business processes in place for performing these tasks. Bills were tossed onto a pile on the manager’s desk and misplaced instead of being filed. The manager had forgotten to tell the business owner about some bills, which had not been paid on time. There was no system for reminders about when the bills were due. The office manager had stopped answering the phones to avoid calls from creditors.

First Steps Financial also discovered that the company had about $400,000 outstanding in accounts receivable. About 50 percent of the unpaid invoices were a year old.

Solution

First Steps Financial overhauled accounts payable and set up an online system. This included a secure approval system for paying bills on Bill.com. First Steps Financial contacted the vendors to request that they email their bills into Bill.com. This process improvement tool reduced the amount of mail coming into the office and eliminated the need to open and file the bills. The online system sent email reminders when bills were due and required the business owner to approve payment for each bill. Bill.com provided a secure way for the business to pay bills without providing access to their bank accounts.

First Steps Financial also tackled accounts receivable. They followed up with each client with an overdue invoice by resending an invoice with new contact information. They also continued to follow up with letters and phone calls.

Result

The automated invoicing system:

Eliminated at least three hours per week previously spent on invoicing. The company partners used this extra free time to focus on business development.
Provided the partners with an exact amount of money they were guaranteed to bring in each month. With this information, they knew for certain they would be able to hire additional staff.
Guaranteed that 100% of cash receivables would be paid on time. This eliminated the time it took to remind customers their payments were overdue.

The company has never had another cash flow issue. The automated invoicing system completely turned the company around.

Would automated invoicing be right for your business?

Creating a process for accounts receivable is the fastest way to eliminate a cash flow problem. To find out how First Steps Financial can help your business, call (609) 759-5881 or email alisa@firststepsfinancial.com.

First Steps Financial

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7. Should I Seek Professional Help? ��‍��

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