Is Your Business Killing You?

10 tips for creating boundaries

Below are top-10 tips to create boundaries in your life and business that will bring more balance, ease and joy into your life:

1. Honor yourself by setting realistic limits, managing your capacity and saying “no” often.

2. Use your business as a platform to give your gifts, joy, spirit and love away daily.

3. Create a self-care plan, and stick to it. If you are unhealthy, your business will be, also.

4. Simplify. Get rid of anything that isn’t useful, beautiful, loving or joyful.

5. Don’t get consumed by your roles (i.e., business owner, wife, mother). Step out of that role daily for 10 minutes for meditation/prayer/inventory check. You are more than the roles you play.

6. Invest in your future by keeping yourself balanced, healthy and focused. Stop taking yourself so seriously.

7. Be your biggest fan, not your enemy.

8. People won’t honor your boundaries if you don’t honor them first. Then others will follow.

9. Create more play (for employees and for clients) in your business — it will grow.

10. Surround yourself with people who empower and honor you.

Getting your business BOOKKEEPING in order

This is an interview that was recently conducted with Ellen DePasquale, a nationally recognized expert in small business financial automation — with some tips on getting your business BOOKKEEPING in order.

Q: HOW SHOULD YOU CHOOSE ACCOUNTING SOFTWARE?

A: The most common mistake is purchasing the software on someone else’s recommendation without taking the time to EVALUATE the needs of your business. Before running out and buying software, the small business owner needs to understand how that software was judged, and what their business needs to obtain from the software. For example, we all know that Intuit’s Quickbooks is the best selling small business accounting software. It is a great software program and offers good functionality. It is easy to setup and use which is why it is so popular. However, it lacks good INVENTORY functions so it would not be good for a retail company, or even a handmade crafts business that required heavy inventory controls. On the other hand, QuickBooks Pro offers good time and BILLING features, which makes it a program worth a look for service-oriented businesses.

Q: WHEN SHOULD YOU HIRE AN OUTSIDE ACCOUNTANT?

A: My advice is to obtain an accountant absolutely as soon as you can AFFORD one. An accountant is a valuable asset to a small business, offering experience and helping a small business get around some of the growing pains it would have encountered without the accountant’s assistance. Accountants do more than reconcile the checkbook. A good accountant will help a client’s business grow through financial advice and business STRATEGIES.

Q: WHAT ARE THE BENEFITS OF INCORPORATION?

A: A small business should weigh incorporating very carefully. Two important issues to consider are LIABILITY and TAXES. In many situations, corporate taxes are more complicated to deal with than unincorporated taxes. Also, if you have a sole proprietorship, and you do the work yourself, then you are still liable — personally — for any problems with your work, not the corporation. It is best to seek the advice of an accountant on this issue, or at least do some extensive homework on the Internet.

Q: WHAT IS THE BEST SOFTWARE FOR CONSULTANTS?

A: The “best” accounting software is the one that fits the NEEDS of the business. Not all consulting firms are operated the same way, but there are standards in the industry that should be included in the software. Since consulting is a service-oriented business, software that efficiently tracks TIME is important. The software should also produce professionally laid-out INVOICES and group transactions by job or project. Programs to consider include QuickBooks Pro, Peachtree Complete Accounting for Windows Plus Time and Billing and TimeSlips.

Q: WHAT’S THE BEST SOFTWARE FOR A RETAILER?

A: Again, the “best” is the one that fits the needs of the business. Retail businesses, if they have a physical storefront will need a point of sale system that ties into the cash register and a bar coding system. If they have a virtual storefront, then point of sale is not necessary. Retail businesses also need good inventory features that include REORDER levels and BACKORDER tracking. Another requirement is an invoicing program that can handle separate ship to and bill to addresses. The complexity of these features depends on the individual business. Cougar Mountain has a point of sale module that ties into their accounting software, but most point of sale software is stand-alone. Mind Your Own Business, Proven Edge Professional Edition, BusinessWorks and three different Peachtree programs will all handle the INVENTORY and shipping requirements.

Q: HOW DO YOU CHECK A CLIENT’S CREDIT WORTHINESS?

A: A small business extending credit should develop their own credit checking procedure. Their clients should fill out a credit application that includes REFERENCES. Of course, good credit references are never a guarantee that this client will pay all of their bills on time, but they do lower the risks. Find out the credit limit, how well they pay and how often they buy. Other available information is what kind of BALANCE they have in the bank. A bank will give you an answer such as “low five figures” so you can get an idea of how much cash they have on hand. Also, check with the local Better Business Bureau to see if anyone has filed a grievance about your client. Lastly, you may want the initial sale to be CASH and then offer a small credit limit to start the ball rolling.

Q: WHAT ARE SOME EFFECTIVE COLLECTION PRACTICES?

A: The best practice is to stay on top of your RECEIVABLES. You need to know when a client is late and contact them immediately. Stay professional and be very nice, but firm to your clients. You have a higher chance of getting paid in full within the first 30 DAYS than if you wait any longer. And the longer you wait the worse your chances of getting paid at all. In most cases, it is an oversight, or a backup of paperwork. Offer to resend the invoice if necessary. Once you tolerate a late payment you are setting a PRECEDENT for future collections struggles. Make sure your clients know you expect them to pay promptly and most of them will.

Turn Personal Expenses Into Business Deductions

There is a general rule in tax law that says all “ordinary and necessary” business expenses are deductible. We’ll spare you the details about the arguments over this phrase, but suffice it to say that it basically means that in order to be deductible, an expense must be a legitimate expense that pertains to your business.

Here are some common business expenses:

• Fees for tax preparation
• Bookkeeping & Accounting Expense
• Advertising
• Car and truck expenses
• Business Travel
• Office Supplies
• Entertainment
• Insurance Payments
• Professional organization membership dues
• Transportation costs
• Postage
• Business gifts of $25 or less
• Interest

What about your personal expenses? Here are some ways others have turned their personal expenses into business expenses:

BEFORE	BECOMES	HOW?
Computer	Business Equipment	Prove the business use.
Internet Services	Utility	Your need for business communication with clients
Cell Phone	Business Equipment/Service	Phone usage to call clients
Automobile	Auto Allowance	Document how much of your monthly mileage is business related and deduct the IRS-approved standard mileage rate
Meals Out	Business Meals	Note the business purpose of meal and who attended
Child/Day Care	Provided Child Care	Business adopts plan to furnish child care.
Child Allowance	Employment for your Child	Written job description, time sheet, reasonable wage
Medical, Vision	Medical Reimbursement	Adopt medical reimbursement plan to pay all medical, vision, dental, orthodontia cost.
Magazines	Subscriptions	Prove use for your business or have available to waiting clients
Art Work	Office Art	Use in your office, and document as business expense
Dry Cleaning	Out-of-town Expenses	This is allowed as part of your out-of-town business expenses
Gym Equipment	Physical Fitness Facility	Establish an on-premise house/office gym
Vacation	Business Trips	Create business purpose for the trip
Tuition	Education	Authorize employee/owner education
Seminars	Education	Authorize employee/owner education
Furniture	Business Furniture	Where appropriate, prove business need – desk, etc.
Home Costs	Home Office or Business Rental	Follow home office guidelines – measure square footage used for business, track all home expenses for reimbursement

Many IRS publications address the topic of allowable business deductions. You can download them from the web or get them free by calling the IRS Tax Distribution Center at 1-800-829-3676. Some important publications include #334, Tax Guide for Small Business; #463, Travel, Entertainment, Gift, and Car Expenses; and #535, Business Expenses.

So once again, consider a side-business. It could save you hundreds of tax dollars every year.

Mind Your Own Business

Editor’s note: This excerpt was taken from

http://www.frugalfun.com/sidebusiness.html

MIND YOUR OWN BUSINESS

Consider this example.

If you work for someone else (as in a JOB), your finances flow somewhat like this:
1. Earn the money
2. Pay Taxes
3. Spend the money

When you have your own business or corporation, you:
1. Earn the money
2. Spend the money
3. Pay Taxes on what’s left

Do you see the difference here? I’m going to recommend a book for you to read if you want to understand this process better. It is called “Rich Dad Poor Dad” by Robert Kiyosaki. It is a great book and I highly recommend it. Now, back to our article.

When starting a business, The IRS requires only that you keep good records, conduct your affairs in a business-like manner and show that you are trying to make a profit. There are also some new tax laws that favor “home offices” even more than in previous years.

Old Tax Law: If your home office is your principal place of business, then you could deduct home office expenses.

New Tax Law: If you have a space at home that you use “regularly and exclusively for administrative or management activities” in your business, you may now qualify for a home office deduction.

Previously, if you worked outside of your home, you weren’t allowed to deduct your home office because it isn’t the “primary” place of business. Now you can. For more information, see the Internal Revenue Service publication #587 on the IRS Web site, http://www.irs.treas.gov

There are a lot of deductions associated with home offices. Some things that might be deductible include a percentage of your mortgage interest, property taxes, rent, utilities, insurance, garbage collection, second phone line, cleaning fees, magazines/newspapers, office supplies and equipment.

If your home is the principal place of business, you are allowed to deduct the mileage for all your business trips. You can count the mileage from your home to the place of business (i.e. post office, bank, client site) and the return trip. The IRS requires that you keep good records of your driving. Keeping a little pocket calendar in your car or handbag is an easy way to track mileage on a daily basis. At 32.5-cents a mile, every 307 miles of driving will earn you a $100 deduction. This can add up very quickly over the course of a year. I know it does for me.

If you have children under 18, hire them to work in your business. You must issue them a W-2 and all the money you pay them is a business deduction for you. Your child must pay taxes on the money they earn but there is no tax on the first $4,300 of income earned from working. There’s also no Social Security tax to pay when you hire your child under 18. Please remember that your child must do real work and you must keep good records. I know people who send their children to private schools on tax-free income. They pay their child to work in their business and the child uses that income to pay tuition.

Are you starting to see some of the possibilities here?

Any purchases you make in association with your business are deductible. If your business is enjoyable and related to your interests, you might have made some of these purchases anyway and now they are deductible.

If you are going to have a business for tax reasons, your intent should be to make a profit. The IRS knows that there are significant costs in starting a business and that it might not be profitable for a few years. A general rule is to show a profit within two to four years. [Editor's note: My understanding is that the IRS requires you to show a profit at least three years in five. Otherwise, they actually hit you retroactively for back taxes, and that can HURT. With a little effort, i.e., putting back or deferring some legitimate deductions, you ought to be able to show a profit from the first year. I *strongly* recommend working with a skilled tax professional specializing in small business. When I started doing this, I found out that I could take a per-diem food allowance on business trips that was a far larger deductible item than my actual cost. That alone saved me $1200 in reported income and paid for the cost of the tax preparer.]

The longer you go without making a profit, the more likely the IRS might consider your business a hobby and disallow the deductions you are claiming unless you can show a business plan with a definite plan to be profitable and show changes when needed to increase your chances for profitability.

So once again, consider a side-business. It could save you hundreds of tax dollars every year.

How to Create a Working Budget

Editor’s note: This excerpt was taken from wikihow.com

A budget is a great way to take control of your finances and save for some goal or maybe just get out of debt.

1. Calculate how much money you earn in a month after taxes. For this budget plan, use your net pay or take home pay. Include tips, supplementary income, side-jobs, investments etc. This is your income.
2. Figure out your expenses. The best way to do this is to save receipts for a month or even a couple weeks. Knowing how much per month you spend on groceries or gas makes the next part much easier. If you want to start writing your budget today, and don’t have receipts, that’s OK, it’s just a bit more difficult.
3. Set your goal. Why are you going on a budget? Maybe you want to start saving for college, or maybe you want to get out of debt. Whatever your reason, define your goal clearly so you can determine if you are meeting it or not.
4. Break your budget up into some basic categories. Some categories you could use are: Housing, Food, Auto, Entertainment, Savings, Clothing, Medical, and Miscellaneous. You might want to organize your expenses into needs – such as your loan and electricity – and wants – such as clothing and entertainment.
5. List all your spending under each of these categories. Let’s take Auto as an example: $300/month car payment, $100/month insurance, $250/month on gas, $50/month on maintenance, 10$/month on fees such as registration. So, your total Auto budget for the month would be $710/month. If you don’t know the exact amounts you spend, try to make good estimates. The more accurate you are, the better chance your budget has of working.
6. Once you have broken down all your spending into your basic categories, add it all up. This should show your total monthly spending. Compare it to how much you make each month after taxes.
7. Obtain some kind of record-keeping method to keep track of your budget. Some people like to use computer programs like Quicken or Microsoft Money. If you prefer you could just use a good old-fashioned ledger book. You can find one at a general shopping center for about $5.
8. Set up your ledger. Skip the first 5 or so pages for later, we’ll come back to it. Divide the rest of the ledger into as many sections as you have main categories. Put each main category on the first page of each section. This will give you room for lots of entries in each category. Some categories, like food, are going to need lots of pages.
9. Decide what period of time you want your budget set up for. I found monthly to be the most useful for me, since most bills are monthly. However, I decided to make the deposits to my budget categories twice a month. In other words, if my Auto budget for the month is $710, I showed “deposits” of $355 in the Auto section on the 1st and 15th of each month.
10. Show a deposit in each category at the start of each period, then show all the expenditures from that category throughout the period. So, for Auto, you would start off with $710 for the month, then show several expenditures for gas, one expenditure for car payment, maybe one expenditure for insurance(depending on whether you pay insurance monthly or not).
11. Use that first section of the ledger book to record income and then show the budget being subtracted from it each period. For instance, I get paid every other Friday, so there are corresponding entries in the income section showing income deposits every other Friday. My budget is ~$2800/month, and gets subtracted on the 1st and 15th. So on each 1st and 15th, the income sections shows a budget subtraction of $1400.

Tips

• The very first month you set up a budget, it’s probably not going to work for you, because if you’ve never kept track of this stuff before, you’re not going to magically know how much to put in each category. DON’T BE DISCOURAGED. The second month might be a little better, but most people don’t have a good, working budget until the third or fourth month. You didn’t ride a bike without training wheels the first time you tried, and you weren’t Michael Schumacher the first time you got in a car, either. Practice makes perfect!
• There are occasionally pay-periods where may make some extra money, and when that happens there is a surplus! It’s up to you on how to use that surplus. You could put it directly toward your goal, or you could let it sit in your bank account as an emergency fund.
• As time goes by, you will find that your original budget has some flaws. Some areas you underestimated, some areas you overestimated. Some things come up that you didn’t account for at all. That’s OK! Just make revisions as you get a clearer picture of your spending. Remember to keep your overall spending less than your earning so you can meet your goal.
• The first time I tried this, my spending was more than my earning, and that was without putting anything into savings! If that happens to you, do what I did: start making cuts in your spending plan. For instance, my first budget had $150/month for clothing. After making changes, I reduced my spending to $80/month for clothing. You might have to make many changes like that to be able to accomplish whatever goals you have set for your budget.
• If you keep your emergency fund in your checking (or savings!) account, it could be very difficult to avoid the temptation to spend it when you see that shiny new must-have item you’ve been wanting. Find a money-market account with a decent rate of return (4-5%) and check-writing privileges and you’ll be ahead of the game.
• A common problem people have when making budgets is that they’ll come up with an excellent plan, but then the car breaks down and the plan goes out the window. This is why you have the above-mentioned emergency fund. If you use the emergency fund money for an emergency, don’t forget to budget for putting that money back next month!
• Another common problem is people see the shiny new must-have item at (insert store here) and they buy it, even though it’s not on their budget. Maybe it was on sale and they couldn’t pass it up! This is why it’s good to have a budget category called “Blow” (or whatever you want.) No, it’s not for cocaine, it’s the category for impulse purchases! I highly recommend including this category.
• Don’t try and begin a budget for the first month after an event in your life where money was significantly spent or saved, such as a vacation or a move, or coming into an inheritance or winning the lottery. Wait until your finances have been “in order” or at a steady pace, usually from three to six months afterwards, before starting fresh.

78 Ways for Your Small Business to Save Money in this Economy

Editor’s note: This excerpt was taken from InsideCRM.com

With the economy struggling, every business is trying to cut costs to make ends meet. Small businesses, which have fewer resources, especially feel the burn.

Not to fear. We’ve come up with a mega-list of ways to trim the fat off your enterprise so you don’t become a casualty of the latest economic downturn.

TECHNOLOGY

1.     Go green! Energy-efficient technology will save you money over the life span of your computers, phone systems and other tech tools. There are often tax benefits to green technology, too. Not to mention it’ll help out the environment.

2.     Switch to open-source software. An open-source solution isn’t the scary, “You’re on your own!” proposition that larger software providers lead you to believe. Open-source software costs a fraction of the price as commercial products while still offering all, if not more, of the features.

3.     Consider a smaller ISP. If you don’t have a big-business budget, smaller ISPs offer good value for their cost. Check outThe List to compare prices.

4.     Check out VoIP. VOIP is basically a phone service that uses the Internet. Many small businesses are opting for this cheaper alternative that can save them up to 60% over their traditional telecom costs.

5.     Get a cheaper business phone service. Try a hosted PBX system, like Virtual PBX. Unlike a standard PBX, there is no hardware or software to buy or maintain, so costs start low and stay low.

6.     Switch from a merchant account to an online payment service like Paypal. Say goodbye to statement fees and monthly fees. These services, however, do have a higher “per transaction” cost, so do some number crunching to see if making a switch will really save you money.

7.     Reduce the number of phone lines. You could accomplish this simply by configuring office PCs to send and receive faxes. The Windows XP operating system and Small Business Server both make it easy to set up fax services.

8.     Look for cheap or free web hosting. Check out this list of free Web space or read the reviews of hosts atWeb Hosting Unleashed to see which providers have saved businesses money.

9.     Buy recycled printer cartridges. Printer ink is one of the most expensive liquids on the planet. Much of it is margin, so find low-cost sources.

10.   Reassess your phone plan. Even if you don’t switch to VoIP, you can get service for cents per minute depending on your call volume.

11.   Eliminate unnecessary lighting. Install motion detectors to control lighting in frequently unoccupied areas, such as restrooms and copy rooms.

12.   Turn off equipment when it’s not being used. This can reduce energy consumption by 25 percent; turning off the computers at the end of the day can save an additional 50 percent.

13.   Lighten up. Dark walls require more power to produce the same amount of light.If possible, repaint your walls or lighten up your office space with wall hangings to reduce the amount of energy you use.

14.   Time yourself. Install timers on outdoor lighting systems so they only operate from dusk to dawn.

15.   If appropriate, use laptop computers. These portable computing machines consume 90 percent less energy than standard desktop computers.

16.   Stop paying for software. Visit sites like Download.com to try hundreds of software products for free through trial downloads, freeware and limited versions. Also check manufacturers’ Web sites for free trial downloads.

17.   Do it online. Do all of your sales calls need to be in person? Internet-based technologies like Web conferencing and tools like Microsoft Office Live Meeting let you make online presentations to customers.

18.   Share printers. If you purchase and maintain multiple printers at your office, you could save money by setting up a network that allows employees to share devices. Microsoft Windows Small Business Server 2003 is an easy-to-use and easy-to-operate server solution that allows you to share printers and create a more secure and productive computing environment.

OVERHEAD

19.   Reduce your variable expenses. Variable expenses change depending on your consumption of a good or service. They can add up, so see where you can regulate or scrap spending all together.

20.   Do house cleaning on your weekly unneeded expenses. If you’re spending $50 a week on pizza for the office, you might want to consider brown bagging it.

21.   Get a freelancer. Don’t let Larry in accounting eat up your electricity as he checks his fantasy football league stats. Hire freelancers, consultants or contractors to work for you from home.

22.   Keep a close watch on energy consumption. Set your thermostats to a lower temperature, turn off all appliances when they’re not in-use and encourage staff to shut down their computers when they’re out of the office.

23.   Sublet office space. You’ll always need to pay rent, regardless of the economy. But try to avoid any additional bills and contracts that will come with having your own office. Subletting is a great way to accomplish this.

24.   Keep it in the family. Got kids? Hire them! You’ll get cheap help, your kid will learn responsibility and you may get some tax breaks, too.

25.   Hire college students or interns for credit. An internship program is a win-win situation for your business. You get bright, young and ambitious employees to do your dirty work for little or no pay.

OFFICE ITEMS AND OFFICE SPACE

26.   Take advantage of member rewards. Maximize your rewards points by double-dipping on programs for many of your office and electronics purchases. You can get points from your credit card provider as well as stores like Best Buy.

27.   Plan shipping or mailings. You can schedule your shipping, mailings or deliveries to take advantage of bulk transactions.

28.   Don’t pay retail. Get purchase orders at trade shows, buy wholesale or even check out the local offerings on Craigslist to save big bucks on office essentials.

29.   Eliminate unnecessary paper waste. Implement paper-reducing strategies such as double-sided printing and reusing paper. You’ll save some trees, too!

30.   Barter. Thought the days of trade were over? Think again. You can now exchange countless number of goods and services online on sites like Barter.net.

31.   Free form it. Don’t waste time and resources finding writers to produce forms for your business. Search online for free forms you can download and print. Entrepreneur.com specifically has ones for small businesses.

32.   Buy used equipment. One person’s trash is another guy’s treasure, right? Sites like Capasset.com sell used computer equipment and copiers.

33.   Check out going-out-of-business sales. You’re business isn’t going to tank because you’re reading this article. But other companies are bound to fail during this recession. Update your business’s digs by capitalizing on the misfortune of others.

34.   Get creative and recycle. Refurbish old treasures with ideas from sites like Suite 101.com.

35.   Opt for industrial space over commercial office space. True, you won’t be in the trendiest neighborhood in town, but you’ll save a wad of cash each month.

36.   Clean up your mailing list. The U.S. Postal Service will clean up your mailing list for free, correcting addresses, noting incomplete addresses and adding ZIP+4 numbers so you’ll be eligible for bar-code discounts.

37.   Use online coupons. Scour the Internet for coupons and promotion codes hardware, software and electronic equipment.
ADVERTISING

38.   Word-of-mouth marketing works. Use your associates to get referrals.

39.   Create an e-newsletter. It’s much cheaper to market to previously acquired customers than creating new direct-marketing collateral.

40.   Use YouTube. YouTube is a great free way for you to get the word out on your business.

41.   Place an ad on local television stations. If you’re not into YouTube, or want to reach additional audiences, local shows are amazingly easy venue to access. Advertising rates for local TV stations are much more negotiable than what you’d expect.

42.   Communicate on online forums and message boards. You’ll interact with potential clients and customers — for free.

43.   Start a blog. You can advertise, review your offerings and give free tips as often as you’d like without worrying about running up your budget.

44.   Use email. Similar to the newsletter, email marketing campaigns will let you interact with specific customers about new products that might interest them.

45.   Get to know your neighbor businesses. They might be up for splitting local advertising and promotion costs, such as sidewalk sales and mailing lists.

46.   Get your clients to advertise for you. Ask them to write a testimonial on your Web site or tell their colleagues about your products or services.

47.   Be a guest speaker. Speak at a community meeting or teach a business course to reach new potential customers.

48.   Join trade associations. You’ll get industry-specific information, advice, sales opportunities and other member benefits.

49.   Prune your mailing list. Direct Marketing Association offers this checklist of cost-cutting ideas. Eliminate nonresponders and marginal prospects; print “Address Correction Requested” on your mail; investigate comingling your mail with that of other small businesses to take advantage of discounts available to large mailers; and stockpile mail to build up larger volumes.

50.   Be an early bird. Send mail early in the day, and you can usually expect to get one- to two-day delivery for the price of a first-class stamp.

51.   Shop around for an overnight courier. Overnight delivery rates for the major couriers are competitive; however, if you’re willing to wait a few hours — or even an extra day — you could save.

52.   Piggyback your advertising. Include advertising material in mailings such as invoices and sneak announcements or coupons into newsletters and other promotional fliers.

INSURANCE AND FINANCES

53.   Re-evaluate your insurance coverage and policy costs. Ask your provider about an umbrella policy, which can be cheaper.

54.   Consider a four-day work week. Who’s going to object to a three-day weekend?

55.   Bank on an early deposit. Make bank deposits early in the day so you get credit (and start earning interest) that day.

56.   Consider outsourcing your HR, benefits and payroll to an external provider. Handing over administrative responsibilities to another company will save you time and money.

57.   Order your checks from a printing company. Printing companies often charge less than banks.

58.   Consider raising your deductibles. Assess your risk against cash flow benefits by reviewing your insurance deductibles.

59.   Ask about cash management or sweep accounts. Visit Bankrate.com’s Small Business account search for a comparison of corporate checking accounts.

60.   Take a stand on property taxes. If your business is new in the neighborhood, you may be at a higher tax rate than those who have been there longer. “Go to city hall to determine what your neighbors are paying, and use this to negotiate a better rate,” advised Pete Collins of PricewaterhouseCoopers LLP. “Expanding businesses can often negotiate with community authorities, who want them to stay in town rather than move and take jobs elsewhere.”

61.   Check up on your medical insurance. Before choosing a medical insurance carrier, ask for information on past claims and the loss ratio of paid claims to premiums.

62.   Consider a PEO (Professional Employer Organization). PEOs take over the administrative and legal responsibilities of managing your employees, effectively becoming “employers of record.” This translates into lower HR costs, better benefits packages and reduced legal liability for your company.

63.   Try to bargin. The professionals with whom you work regularly are often amenable to bargaining, thanks to the rapport you’ve developed with them. Ask your insurance agent, accountant or attorney how you can cut back on their costs. You’d be surprised at their suggestions on ways to cut your premiums, reduce billable hours or avoid huge retainers. You might also barter your services as a substitute for payment.

64.   Time your payments. Ask suppliers if they give discounts for early payment. If not, it’s to your advantage to pay your bills — including utilities, taxes and suppliers — as late as possible without incurring a fee.

65.   Seek at least three bids on everything. Even mundane purchases merit shopping around. If you quote a competitor’s lower price, a supplier or vendor will often match that price to win your business.

66.   Commission your sales force. Overhead, salaries, incentives, training costs, fringe benefits and expenses add up when you’re hiring your own sales representatives. Contracting independent manufacturers’ sales reps, paid on commission only, is less expensive and often equally effective.

67.   Form a buying alliance. Join with another business or a trade association for bulk purchasing discounts.

68.   Don’t overlook crucial tax deductions. In addition to being able to deduct a portion of your rent or mortgage interest and utilities as business expenses, you can also deduct a percentage of various home-maintenance expenses, along with a portion of the cost of services such as house cleaning and lawn care. Check out the IRS (Internal Revenue Service)’s Web site, or check with a knowledgeable tax adviser for more information.

69.   Save by association. When looking for insurance, check with your trade association. Many associations offer competitive group insurance.

70.   Temp it out. Rather than paying for employees who sit idle when business is slow, consider hiring temporary employees to handle surges in activity.

71.   Get the best business credit-card deal. Whether it’s cash back or travel rewards, the right business credit card can yield big dividends.
TRAVEL

72.   Shop for discounted fares online. Scour popular travel Internet sites for specials on major air carriers. Don’t forget about regional and budget airlines, however

73.   Get your rental car through a discount broker. Companies like Rent-A-Wreck of America offer reduced rates as compared to mainstream rental-car businesses.

74.   Sharing is saving. Employees should share hotel rooms and rental cars as much as possible when traveling together.

75.   Go dutch. On the executive end of the spectrum, many private jet legs are empty or can be split with otherbusiness travelers.

76.   Don’t eat where you sleep. Hotel restaurants are usually more expensive than other nearby options.
THINK OUTSIDE THE BOX

77.   Get an “executive suite.” You don’t have to run your office full-time from an executive suite to benefit from its services. Many home-based entrepreneurs find executive suites meet a range of needs, including access to a private mailbox and a receptionist to answer or forward calls to your home office.

78.   Don’t scrimp on disaster-recovery planning. It’s cheaper to bend than break.

This is just a start, but these tips will definitely help your business make ends meet during the economic crunch. What steps are you taking to cut costs and save money in your small business? Leave your tips in the comments box below.

Good accounting isn’t a luxury in business. It’s a necessity !!!

This article is taken from The New York Times blog http://boss.blogs.nytimes.com/2009/07/08/the-dark-side-of-entrepreneurship/

For the last 25 years, entrepreneurship has been widely heralded as the path to fame, fortune, and following your own vision while avoiding working for “The Man.” It’s nice when it works. More times than not, it doesn’t.

Some 70 percent of businesses fail within seven years, according to the Small Business Administration. In the worst cases, the result is not only business failure but also complete financial failure. What I have learned is that the damage doesn’t stop there. I share this with you as an attempt to bring some reality to the conversation about entrepreneurship. It is not just about passion and innovation and bringing your dog to work. It is also about risk, tenacity and fear. It is also about the repercussions of bad luck, bad decisions and bad economies. I know of four business owners in Chicago who have taken their own lives since the economy turned.

The following story is not that bad, thankfully, but it does offer a counterpoint to the hype. It started many years ago with a friend of mine, John Baumeister, getting an electrical engineering degree and developing his passion and expertise for audio and video systems. He created a company called Baumeister Electronic Architects, and 20 years later, it was a leader in installing high-end audio and video systems in Chicagoland. His staff grew to 40, and it looked like nothing could stop him — until a combination of the housing and the economic crisis resulted in the delay or cancellation of many of his orders. I have known him for several years, and he called me for advice.

He knew he was in trouble when he realized he had no money to pay for the equipment he needed to finish jobs. The funny thing was, his financial statements suggested that his cash position wasn’t that bad. But when I looked at his financial statements, I discovered the problem. Hundreds of thousands of dollars for jobs that hadn’t been completed had been booked as receivables. That’s not proper accounting. I was surprised to learn that Mr. Baumeister had been using an outside accounting firm. But the accounting had been obscuring just how precarious his financial position had become.

Good accounting isn’t a luxury in business. It’s a necessity. Once the numbers were in the right columns, Mr. Baumeister was basically insolvent — and in shock. He owed the bank, his suppliers and his customers money that he did not have. After several days of talking to family, friends and lawyers, he decided to close the business.

Pressing on seemed too difficult. And perhaps it would have been — this is never an easy decision. A company was hired to dispose of all assets in an attempt to make the bank “whole.” Unsecured creditors would get what was left. But if he thought his troubles were over, he was mistaken. Closing your business isn’t like quitting a job. It’s too big a part of your life. It can be very hard to separate the two.

For my friend, the “fun” was just beginning. It started with telling the employees, many of whom had been with him for years. The business had failed, there was no severance pay because there was no money, and they were all out of work in an economy that was spinning out of control. Some cried, most were sympathetic, a few turned bitter.

Next, he gathered his three children, his wife and his in-laws for a family meeting that was even more painful. The two younger children, 9 and 11, were concerned that the creditors would take their beds and they would have nowhere to sleep. They offered to move in with their grandparents if that would make it easier.

Then came the finger-pointing. Mr. Baumeister’s wife and mother-in-law were angry. They blamed much of the situation on a second in command, who had been with him from the beginning and who also happened to be the godfather of their daughter. His father-in-law recognized that the family had no money and suggested they apply for food stamps and welfare. Mr. Baumeister says it really hit him when his 85-year-old mother had to pick him up at the auction site where he’d gone to turn in his car.

Then the calls started at home. A collector for the gas company wanted to know why they weren’t paying their bill. When his wife explained that they had used their house as collateral for the bank loan, the woman responded, “I’m sure you won’t be doing that again!” It kills me how many people think business owners recklessly put their homes up against loans because they want to; they do it because they have to. No one’s ever happy about it.

In all of the darkness, there were some acts of kindness. A neighbor came over to see how Mr. Baumeister was doing and to offer support. When Mr. Baumeister asked how the neighbor was doing, he replied that he’d been diagnosed with terminal cancer. That brought some perspective.

Another casual friend and former customer — not a wealthy man — asked if Mr. Baumeister needed money. He said he could not accept it. The next day a FedEx package arrived with $3,000. Another friend asked Mr. Baumeister’s wife if she would help out at “market day” at their kids’ school, collecting food for those in need. His wife helped out, only to learn that the event was for her own family.

Six months after their ordeal began, I went to dinner with Mr. Baumeister and his wife. He had taken a job with a former competitor, Automated Lifestyles, and he was back to doing what he does best — designing state-of-the-art, home electronics systems. He was trying to make amends withcustomers that had been left in the lurch. His financial problems were far from over, but at least he was doing what he loved and had a steady paycheck with the potential to make a good income as the economy rebounded.

I asked his wife how she felt. She said she was still mad at her husband and his second in command. She had worked at the company in the beginning and felt that if she had stayed on this wouldn’t have happened. I told her that I thought it was great that she had such a clear view of the situation from her armchair in the living room.

I asked her why she wasn’t mad at the accounting firm, which, as far as I could see, didn’t do its job. Mr. Baumeister nudged her: “Tell him why!” She explained that the accountant had been her friend’s brother.

I am confident that in the long run, my friend and his family will be all right. He has accepted responsibility and had the courage to forge on. He is no longer a business owner, but I suspect he is doing what he should be doing.

And he doesn’t have to worry about looking back and regretting that he never started his own business. Was it worth it? It comes down to deciding what horrifies you more: the possibility of waking up one day and realizing you never took a shot at your dream or the possibility of losing your house.

That’s what entrepreneurship is really about

Understanding Your Situation

Hello Friends,

You are to be commended for deciding to chart a positive course of action for your financial health. Understanding your current financial situation is the first step to maintaining financial
security.

Few tips to get you started.

Start with a Plan – Create a definite plan for carrying out your desire and begin at once, whether you ready or not, to put this plan into action.

1. Establish Goals

Where do you want to be?

When you think about your future and what you want to achieve, it’s helpful to establish goals. A goal is a very specific result you intend to work towards. When you are realistic about your goals, it’s easier to achieve them.

A realistic goal is SMART:
• Specific
Smart goals are specific enough to suggest action.
• Measurable
You need to know when you have achieved your goal, or how close you are.
• Attainable
The steps toward reaching your goal need to be reasonable and possible.
• Relevant
The goal needs to make common sense. You don’t want to struggle or work toward a goal that doesn’t fit your plan.
• Time-Related
Set a definite target date for completion.

2. Create a Budget

Determine your current situation. Where are you today?

The main purposes of a budget are to help you:
• Live within your income
• Spend your money wisely
• Reach your financial goals
• Prepare for financial emergencies
• Develop wise money management habits
• Decrease stress
It is important to know exactly where your money is going:

Step 1
Add Up Your Income
Step 2
Estimate Your Expenses
Step 3
Figure Out the Difference
Step 4
Maintain it Monthly – Track, Trim and Target

3. Save

Save your way to a more secure future.

The Power of $50 a Month
Paying down your credit card bills can give you real “savings”. Paying the minimum due each month can be deceiving. Here’s a look at what $50 can do:

If you have a credit card with a $3,000 balance at an annual interest rate of 18% and pay only the 2% minimum monthly payment of $60 per month, it would take you 8 years to pay off your bill. However, if you pay an additional $50 per month on that debt, for a total payment of $110 a month, you would pay off the debt in 3 years and save over $1,800 in interest payments. Imagine what you could do with that
“extra” money!

4. Conserve

Spend sensibly; pay wisely

Pay With Cash
Paying with cash whenever possible helps you spend less than if you had charged the purchase. You’ll avoid credit card interest charges and check-cashing fees.

Paying Off Debt
Get rid of debt by attacking the balance with the highest interest rate first. Pay double, or triple, the minimum payment required. Continue paying your bills even in times of financial distress; any late payment may affect your credit score. If you get into trouble, contact your lender.

Make Every Dollar Count
Above all, you must distinguish between your “wants” and your “needs.” By thinking about where you spend money, you can save and buy the things that are important to you.

5. Take Action

Implement Your Plan
Once you have a financial plan in place, it’s time to take action and put your plan to work.

Assess Your Plan
Give your plan some time to work, then see how you’re doing. Were you able to meet your savings goals? If so, stick with it. If not, look for opportunities to cut back spending and increase savings.

Adjust If Necessary
Evaluate your plan every three months and make adjustments as needed. If you’re not saving enough to meet your monthly goals, you may need to spend less.

Establish an Emergency Fund
An emergency fund can help cushion you against unexpected financial blows such as losing your job. You should plan to save enough to cover your living expenses for three to six months.

A Goal without a Plan is Just a Dream
Need help in setting your financial goals or creating your budget? Click Here