Accountants: Worth Their Cost

Please share your experiences (good or bad) of working with accounts

I know a lot of small-business owners—especially start-ups—that try to do all their taxes and accounting themselves. The cost intimidates them. They don’t consider their business complicated enough to require an accountant. They share lots of reasons. I found the money I spent on a professional once a year saved me 3-4 times what I paid them.

David’s Story

David ran an IT consulting business from his home. He combined project work with consulting for 10-13 mid-sized businesses to provide a comfortable living for his family. He still operated as a sole proprietorship. He used one of the on-line tax systems to prepare his taxes.

One year, one of his clients created a glitch in the payment for a 4 month project. David decided the complication warranted going to a CPA. Not only did the CPA easily resolve what David considered a significant problem. She also asked questions his cousin never asked. The size of the tax savings surprised David. He saved more than 4 times the money he spent on the accountant. The accountant also highlighted liabilities that a sole proprietorship offered that an LLC could prevent.

David followed the advice and went to an attorney to change the legal structure of his business. He also told his cousin that he no longer required his services. David continues to work with his accountant once a year. He remains grateful for the money she saves him.

Why and How to Select an Accountant

Certified Public Accounting (CPA) professionals provide a number of benefits to business owners. I share these courtesy of David Mills Certified Public Accountant:

• Recommending income tax planning strategies
• Preparing tax returns
• Reviewing a company’s accounting system and recommending improvements
• Consulting on business problems and advising ways to improve the use of resources
• Assisting in the design and installation of data processing & IT systems
• Conducting special studies (financing, inventories, cost accounting, credit, & collection) for your business
• Helping you apply for loans and credit by gathering and preparing information required by lenders
• Working with clients, attorneys, and bankers on mergers, acquisitions, and expansions

• Advising individuals on personal finance planning, including retirement & estate planning

Several sources can help you find a CPA. You can find the accountancy board that regulates CPA’s in your state. I like the article the Ohio State Accountancy Board shares with residents. They encourage people to

1. Verify the license status with the accountancy board
2. Verify that the accountant maintains continuing education requirements
3. Interview your prospects. Ask them “What kind of accounting work do you typically perform?”. Compare their answers with your needs.
4. Ask for office hours and how long they are open (many only open during tax season)
5. Explore if they participate in peer review, and the date and results of their last one
6. Use an engagement letter to detail the work to be performed for, who will perform the services, the cost of service, and the duties and responsibilities of the CPA. The Ohio board states “The Board receives many complaints from consumers against CPAs that allege the CPA performed services either of poor quality or incorrectly, and in the majority of these cases there was no engagement letter that clearly described the agreement between the consumer and the CPA. As a result, both the consumer and the CPA can offer only verbal recollections of the engagement's scope to the Board, and the Board is limited in its statutory ability to discipline CPAs for substandard work.”

Avoid Accountants that Can Get You In Trouble

I especially like the this advice: “It is now possible to purchase public accounting services on the Internet. While this appears to be a convenient way to access a broad range of services, it is important to "do your homework" before selecting a practitioner. Keep in mind that because Internet practice involves no face-to-face client contact, it may be easier for unqualified persons to masquerade as licensees. Also, remember a practitioner offering services on the Internet may be physically located anywhere in the world. To provide CPA services to consumers in Ohio, a practitioner should be licensed as a Certified Public Accountant or Public Accountant by the Accountancy Board of Ohio, or must be practicing in Ohio incident to the licensee's home-state practice under Section 4701.15 of the accountancy law. A licensee practicing in Ohio under a home-state license must be a currently licensed CPA in the other state. Check our list of Accountancy Boards in the USA for further information about other accountancy boards.”

You can find additional information at the American Institute of CPA’s. Do not let the perceived expense of a CPA discourage you from taking advantage of their expertise and protection. They will usually save you more money than you pay them. Accountants are worth your money.

Join us next week when we discuss finding funding and financing for your business

Please share your experiences (good or bad) of working with accounts

Virtual Assistants Save Time & Money

Enrich the discussion. Share your stories about working for, or as, a virtual assistant

Frequently, business owners need to focus on delivering the product or service their 1-person company offers. The billing, correspondence, updating a web site interfere. Many plan on doing those tasks during their “free time”, or having a family member do them on the side. As the business grows, however, neither the family member, nor the free time prove adequate. The business usually cannot support hiring even a part-time assistant to help at this time.

Virtual assistants provide a wonderful and less expensive bridge allowing you to focus on the business, not the paperwork.

Robin’s Story

Robin started an interior design business 9 years ago. In the beginning, she could easily balance meeting with potential clients, designing the spaces, buying the materials, and all the paperwork to keep it running. As the business grew, she found herself spending more and more hours “after work” doing the paperwork. It wasn’t enough to hire someone, but enough to irritate.

Robin met Donna at a community business organization they both attended. Donna, a single mother, with 2 young children ran her own virtual assistant business. She wanted more clients to serve. Her BA qualified her to do accounting work and all other administrative tasks. It took a couple of months to commit, but Robin eventually contracted with Donna.

For three years Donna would stop by Robins place once a week. She would deliver hard copies of the items that Robin wanted: contracts, proposals, etc.. She emailed most items during the week to a special email only Robin saw, because Donna screened and answered 90% of Robins emails. She would file everything for Robin. She highlighted the items Robin needed to act on. She did all the other things that had to be done in the office. After, an hour or two Donna would pick up all the things she needed and took them home to work on them. The only administrative task Donna did not perform for Robin’s company; she did not answer Robin’s phone.

Robin’s business thrived now that she could focus on the service delivery. Donna kept her appraised, but did not interfere. Robin’s business grew. After 3 years she tried to hire Donna full-time, but Donna loved her life as a virtual assistant. So, Robin hired a full-time administrative assistant. Donna accepted a new client that another client referred to her.

Both benefited quite well from the new arrangement.

Benefits of a Virtual Assistant

• Virtual assistants reduce the amount of time you need to spend on clerical, bookkeeping, and administrative tasks
• They allow you to hire someone—as needed—without making a commitment for a specified number of hours
• They work as you need them to work. You only pay for what you ask
• You share the costs of a workstation, computer, or other office equipment and supplies with the other clients

Virtual assistants provide a variety of services. I copied the following from Donna’s web site Busy Bee Virtual Assistance:

“A partial list of what we offer:

• Database maintenance
• Invoicing and collections
• Translation services
• Creating Power Point presentations
• Bookkeeping and bank statement reconciliation
• Transcription (charge is by audio hour)
• Proofreading services. Never send out another mailing with embarrassing misspellings again!
• Website maintenance. We can keep your website up to date and your content fresh.
• Newsletters and e-zine campaigns.
• Grow your business
• Keep in touch with your clients on a regular basis!
• Correspondence handling. We can manage both your snail mail and email correspondence, respond to routine requests, and forward items to you that need your personal attention. You save time and money!
• Creating and sending out bulk mailings.
• Assisting with special projects and seasonal/periodic work overflows.”

How to Find Virtual Assistance

You can find virtual assistants many ways:

• Google the words Virtual Assistants or Virtual Assistance: your response will show mostly virtual assistants working outside the United States for as low as $6.00 an hour. While this provides the lowest costs, you must balance the pros and cons with an off-shore assistant.
• VANetworking.com impressed me. They bill themselves as “Social Networking for Virtual Assistants and their clients”.
• They provide good informational information about what Virtual Assistants can do for your company.
• They also offer an easy to use search engine to find a virtual assistant near you.
• They provide training and tools if you want to start a Virtual Assistant Business
• Entrepreneur magazine published an article in 2004 about the phenomenon. While some of the links at the bottom are dated, they still provide access to virtual assistants throughout the world. (The article is also informative for those interested in become a virtual assistant.

Join me next week when we explore the importance and value of an accounting firm

Enrich the discussion. Share your stories about working for, or as, a virtual assistant

Business Accounting Software

Please share your experiences with Quickbooks in the comments section

Most people begin a business because they have a technical skill: drafting, graphic design, software development, or other. Typically they lack experience in the “support” functions of business: accounting, marketing, human resources, or information technology. As a result, many fail to process accounts receivables or payables, taxes, payroll, costs, profits or losses. They might monitor cash flow (watch the cash flow in and flow out again, taking what they need to support their family—barely), but cannot tell anyone where it flows.

Mabel’s Story

Mabel, a young single mother of two, ran a craft’s business out of her home. She handcrafted wood lawn ornaments, toll painted nick-knacks, and signs. She bought what she needed from her regular checking account, She deposited her sales into the same account. She paid both personal and business bills from that general account.

She created a set of file folders for her receipts, but rarely filed them. She intended to do so; but the children, meals, making the crafts, and other things distracted her. So, so she put a lot of the receipts into a bowl on the chest of drawers in her bedroom for later filing. Many of the receipts fell out of the bowl and down the back of the chest of drawers. She threw away most of the receipts. She also recorded most, but not all, of her sales in a little NCR receipt book she bought at an office supply store.

She filed her taxes as a sole proprietor with a schedule C with her 1099. She took all the receipts from the bowl, fished them out from behind the drawers, and added them together with the calculator on her computer (no paper). She also added all the receipts in her NCR book. Knowing that she had lost some receipts and did not record many, Mable estimated their value and subtracted some money for costs and added some money for sales. She estimated a lot more costs than sales. The tax process frustrated her immensely.

Then she got audited by the IRS. They did not accept her estimates and rejected most of her expenses, but accepted the sales recorded in receipt book. As a result, they estimated that she owed them at least $1,500 in additional taxes. The interest and penalty brought the number to more than $2,000.

Mabel could have avoided these charges and frustration by purchasing Quickbooks for less than $125 plus another $40 to learn how to use it.

Simple Accounting Tools Reduce Your Stress

Today’s small-business owner benefits from technology’s creation of Quickbooks and other simple accounting software packages. Quickbooks costs from $170-325 depending on the version you purchase. Many Small Business Development Centers (SBDC's) offer courses on how to use it from $0-50. Most people learn it easily. If you struggle, you can find a child, grandchild, or neighborhood teenager to run it for you. Home-based and small-businesses will require 2-10 hours a week to maintain all accounting functions using Quickbooks.

These small-business accounting programs typically perform the following functions and more to help you manage your business more effectively and efficiently:

• Create and maintain a chart of accounts for revenues and expenses
• Create and send invoices to your clients, and monitor them for payment or collection
• Monitor bills you need to pay for prompt payment and to avoid interest or penalties
• Calculate costs for products or services including fixed or variable profit margins
• Prepare general ledger, and asset, account, and profit/loss statements
• Interface with IRS & state forms to simplify sales, income, use, payroll, & other taxes
• Remind of fees you need to pay to government, licensing, or other entities

You do not have to understand all the tax or generally accepted accounting principles (GAAP) to maintain accounting documents. Most of the work involves simple data entry into preset forms and printing statements and reports.

Once again the SBDC or mid-size accounting firms frequently offer training at very reasonable rates. Google Quickbooks training and the name of your community to see what they offer in your area.

Business owners feel better when their financial affairs process smoothly, when they understand their financial status, and submit appropriate tax forms accurately and punctually. Quickbooks or other accounting software reduces your stress. While business owners should still consult a good CPA, maintaining good accounting practices improves your profits by controlling expenses and allocating revenues more effectively.

Join us next we outline the advantages of delegating to a virtual assistant/bookkeeper.

Please share your comments or questions about accounting software

No Money Without Sales

Your comments and experiences will enhance our conversation. Please share your sales stories (successes or failures).

I believe that a good marketing plan includes a sales section. I do not accept that marketing replaces sales. Too many business owners mistakenly count sales and marketing as a cost center. Business success requires that marketing (including sales) remain THE profit center. Your company generates no revenue without sales.

Brent’s Story

Brent owned his own photography business. His photography skills equaled or surpassed every professional photographer in the greater metropolitan community. Revenues and profits from his business failed to meet potential or expectations. He wanted more photo shoots each week.

Brent joined a marketing mastermind group. He subscribed to a marketing newsletter from a nationally recognized photographer whose expertise at marketing created a following. Brent hired a firm to improve his web site. He subscribed to a cross-promotion coupon program with a local car dealership. Every month Brent created a new mailing flier to send to current and potential clients. He increased revenues minimally.

In addition, Brent did not capture information about clients that could be used to generate future sales. He did not send emails or make phone calls in time to photograph clients before birthdays, anniversaries, graduations, births or other events conducive to family portraits.

Active versus Passive Sales Approaches

Brent represents thousands of business owners who confuse marketing with sales efforts. They believe the current philosophy that passive sales approaches succeed:

• Sales will naturally follow if they get their message in front of people through the Internet, mailings, advertising, publicity, and whatever method they contemplate
• Millions of clients will flow, with credit cards in hand, to a great web site
• Search engine optimization (seo) automatically translates into sales and revenues
• Automatic telephone messages will simulate people to press the button to buy

I do not contend that passive sales fail in every case. I propose that they succeed in a very low percentage of cases. They generate large sales because they contact 1,000s to 1,000,000s. A low percentage of millions of contacts can overshadow a high percentage of scores of contacts.

Too many business owners think that minimal marketing efforts on their part will entice clients to act. The term “passive sales” refers to situations in which the business waits for the client to act. The term “active sales” refers to situations in which the business acts to help the client agree. Active sales requires that a person become involved with the client.

You must improve either the product/service of your company or your sales strategy if you want to increase revenues. Examine your sales and marketing time. What percent of the time do you spend preparing marketing materials? What percent do you spend talking to past or potential clients? What percent of your time involves overcoming resistance and closing the sale.

Establish Your Point of Profit

I like Enoch Chapman’s term “point of profit”. Your point of profit indicates the action that creates the sale. You must create your point of profit in theory as part of your marketing plan. Your point of profit may be the checkout of a shopping cart on a web site or bricks and mortar in a store. You may designate a form or contract signed by a representative of your company and the client as your point of profit. Your point of profit may be a screen completed by a call center employee.

The purpose of all marketing must lead the client to taking action at your point of profit. Your call to action needs to clearly ask them to act how you want them to act. Many business owners lose sales because of vague calls to action. This applies to Internet sales, phone center sales, retail sales, and sales representatives. Confusing directions may lead your client to someone else. Chip and Dan Heath, the authors of Switch: How to Change Things When Change is Hard encourage companies to remove every barrier to make the path easy to see.

Sales Experts Will Help

The world abounds with experts that teach sales techniques. You may wish to consider the following programs: little Red Book of Selling, The Sales Bible: The Ultimate Sales Resource,  and Customer Satisfaction is Worthless, Customer Loyalty is Priceless by Jeffery Gitomer, The Ultimate Sales Machine by Chet Holmes. The the web site All Things Guerrilla by Jay Conrad Levinson, Spin Selling by Neil Rackham, Advanced Selling Techniques by Brian Tracy.

I suggest that you continue your exploration of increasing your sales by studying these programs. Reexamine what percentage of your marketing time prepares materials and makes sales. Remember that you make no money without sales.

Join us next week when we begin our discussion of the financial section with Quickbooks

 Your comments and experiences will enhance our conversation. Please share your sales stories (successes or failures).

The 7 Pillars of Successful Marketing

Your thoughts and experiences will improve our conversation. Please share your comments.

I like Bryan Walden Pope’s The 7 Pillars of Successful Marketing best of all the marketing programs I’ve read. I qualify that remark by saying that the 7 Pillars

• Work well with mid-size companies, but best with small- or home-based businesses
• Structure the marketing efforts of novices &owners lacking marketing backgrounds
• Simplify the complex concepts of marketing into easy to follow steps
• Provide million dollar marketing on a shoestring
• Apply well to all kinds of businesses: storefronts, internet based, home & more

You should understand, before we begin, that each pillar provides a foundation for the following pillar and sets the stage for the next. So, you want to follow them in order. Also, Bryan never refers to our clients as customers. He appreciates the principles of care, nurture, and protection implied in the term “client”.

So, let’s explore an overview of The 7 Pillars of Successful Marketing

Pillar 1: Market Research

Bryan recommends you establish a marketing team of people, vendors, suppliers, and others whose vested interest motivates them to help you succeed. You will conduct your SWOT analysis as part of this pillar. In addition, you will conduct primary and secondary market research to identify both primary clients and competitors as well as secondary clients and competitors.

Pillar 2: The Right Message

The right message includes your Unique Market Position Statement (UMPS) which drives you to really clarify and define your business, your client, your product, your motivation, what makes you distinct, and what draws your client to you. This pillar analyzes your logo, trademark and image to ensure consistent messaging. Frequent assessment of your message allows you to provide even better experiences to your clients.

Pillar 3: Strategy

Strategy includes establishing the specific and measureable goals for marketing each profit center, including the timeframes and milestones to accomplish goals. Strategy outlines your marketing budget (which you will add to the financial section of your business plan). It builds the high/level product/service, pricing, and placement/distribution strategy for your business.

Pillar 4: Campaigns

You outline each of the campaigns you will use throughout the year to emphasize and highlight your sales. Campaigns cater your marketing plan to seasonal, holiday, or special reasons unique to your product. You allocate timelines, dates, budget, and resources for each campaign. Campaigns have very specific start and end dates. You measure the success of each campaign.

Pillar 5: Vehicles & Tools

Each campaign will use specific methods for making the purchase desirable and vehicles to deliver the message to the client. Marketing methods include publicity/public relations, promotions, and advertising. Marketing vehicles consist of how your will get the message to your client. Vehicles include mailings, radio, Internet, telephone, television, magazines, newspapers, and personal visits.

Pillar 6: Sales

Sales defines how you will convert the client’s interest into a purchase. Each method and vehicle for each campaign within the strategy must lead to a sales point. This pillar includes strategies, systems, and expenses unique to the pillar. Whether a person purchase on the Internet, walking a product to a checkout stand, or signing a sales contract with a sales representative; your marketing plan must define who finalizes the sale, and how they do it.

Pillar 7: Client Retention

Client retention describes how you will capture data about your clients for further marketing. This pillar forces you to determine what information you will capture and how you will use it. In addition, client retention describes how you will use the information, and how you will reveal client satisfaction and suggestions for improvement. Client retention returns you to the first pillar of market research.

Remember, that this is only an overview. There is much more to The 7 Pillars of Successful Marketing than has been packed into this overview. I strongly recommend that you contact Bryan directly and purchase his Introduction to the 7 Pillars of Successful Marketing package. He offers an introductory set of CDs plus more than 53 additional CD’s covering various of the 7 pillars in more detail.

The 7 pillars provide a framework that you can use to structure all the marketing information you gather. I highly recommend Bryan’s approach. I hope you find it as useful as I have. The 7 Pillars of Successful Marketing helped me increase participation in our events 500% over 6 years. I know it can help you to increase your profits and revenues.

Register now for my weekly tip for more money, better living.

Join me next week when we discuss Finding Fun in Sales Calls.

Until then, I’m Larry Stevenson wishing you more money, better living.

Your thoughts and experiences will improve our conversation. Please share them below.