Smart Money Choice$

One of the best things about the shift in our economy, is it’s forcing us to do what we should be doing anyway – managing business more effectively.

The pinch just about everyone is feeling right now can actually serve us. That’s because it provides powerful motivation to trim the fat and maximize all our resources and opportunities. It’s do or die time.

So let’s choose the positive approach to this so-called “new economy,” and take a look at three areas of your business that may need a tune-up to get your bottom line moving in the right direction again.

1. Accurate Recordkeeping

Yes, I know. Recordkeeping is not sexy. But it is vital to maximizing your business’ potential for sustainable profits. Let’s face it. Without profits, you won’t have a business for long.

So, whether your business goals are lofty or humble, priority #1 must be to make money. Period.

To make money, you must be able to see where you are right now, profitable or not. You need the whole picture. Then, with accurate and up-to-date bookkeeping records you will have the ability to realistically and deliberately move forward to navigate this bumpy, unpaved economic road we’re on and reach your final destination successfully.

Accurate financial records help you answer questions like…

• Are you pulling in a profit each month?
• How do your numbers look compared to last year at this time?
• What’s changed?
• Which expenses are directly tied to sales?
• What’s selling most right now…and what’s not?
• What’s your asset to debt ratio? In which direction is that headed?
• Are new customers still coming in? How much are they buying?
• How much are your existing customers still buying?

Answers to these types of questions reveal important trends you can’t spot any other way. Weaknesses will emerge, as well as opportunities on the road ahead that can make or break you financially.  You’ll be able to see them and use them to your advantage, instead of being caught by surprise.

But the only way to see through your business binoculars is by putting a good recordkeeping system in place.

So how do you do it? You probably already know.

Get QuickBooks software and learn how to use it effectively. It’s a powerful program that will give you the insight you need.

2. Create Cash-Sustaining Systems

As with our physical bodies, fear and pain can serve as powerful motivators to get us into action. But they can also become recurring energy-draining aches that only subside momentarily if you react with temporary, short-term “pain killers” to get past the immediate discomfort.

You wouldn’t just take aspirin to treat a toothache and think it will fix the problem. So don’t do the same with your business.

Financial pain must be identified and eliminated at its source to grow a strong and healthy operation. Otherwise, the problem, and the pain, are only going to get worse and more serious. Cash-sustaining systems must be put in place to prevent and cure those pain-causing areas in your business.

The cure? A shift from short-sighted, rollercoaster cash management habits, to long-term business growth systems that provide cash flow stability and health.

How to do it? Use what you’ve learned from your financial reports in Key #1. Maximize what’s working in your business to pull in more sales, and remove what’s dragging you down. This includes implementing both cash-generating strategies and cash-savings tactics.

Once you’ve laid out an action plan, put it to work immediately by scheduling it on your calendar and stick to it for at least six months. Keep track of your results. Documenting what you’re doing and measuring your progress is one of the best ways to build custom-made systems that turn your business into a consistently productive and profitable machine.

3. Reduce your tax burden

There’s no getting around it. Taxes are a significant obligation we all must bear. But it has been conservatively estimated that small business owners and self-employed taxpayers are unnecessarily overpaying by more than 160 BILLION dollars each year. Wow!

Can you really afford to be paying more in taxes than you need to right now? Consider this eye-opening bit of information I stumbled upon the other day…

In a recent report conducted for the Small Business Administration, it was found that tax debt for small businesses is a significant factor in bankruptcy.

“…more than half of individual small business owners [in bankruptcy] reported owing some tax debts. Individual small business owners in bankruptcy proceedings who are encumbered with high tax debts are generally in a precarious financial condition and are worse off financially.”

Why are so many small business owners in such a precarious financial condition?

At least one big reason is they only pay attention to their taxes as a “once-a-year” annoyance, usually sometime around April 15th. I see this all the time. Sound familiar?

If you’re only paying attention to your taxes during tax season, then guess what? You’re probably paying too much tax.

So what can you do about it? You need to do tax planning BEFORE the end of the year (that means NOW), while you can still take advantage of whatever tax breaks may be available to you. Yes, this may mean you need to spend some time doing a bit of research, or at least making an appointment with your tax professional. But this is some of the smartest time and money you can invest for your business longevity.

A significant possible tax-reduction strategies to consider seriously is your choice of business entity, also known as your legal structure. That is, whether your business is a sole proprietorship, partnership, corporation or LLC. Your business structure can have a HUGE impact on the way your income is taxed.

So pick up the phone an make an appointment with your tax professional, or set aside a few hours this week to research the tax breaks that are available to you. One obvious place to start is at the IRS website.

Okay, so I’ve thrown a lot of information at you in this article. And quite honestly, you probably can’t put it all to work for your business immediately. So pick just one of the three keys above and run with it.

The vital message is – make the “new economy” pinch work for you by getting into action now to streamline your business. You’ll emerge a stronger entrepreneur well on your way to manifesting your vision for your business and your life as a result.

Take-Action Resources

Recordkeeping

QuickBooks software – It’s #1 for small business for good reason

QuickBooks Basics: New User Essentials – an economical video crash course for learning how to use QuickBooks software effectively by yours truly

Quicken Home & Business – If you don’t want to learn QuickBooks and you’re already familiar with Quicken, this may be your best bet in the short term for your business recordkeeping

Cash-Building Systems

Cash Flow Kick-Start – My no-nonsense special report that gives you a quick, effective way to get your cashflow moving without breaking the bank

Instant Cash Flow – highly recommended book for building a solid cash flow system in your business, one step at a time.

Tax Reduction

Straight Talk About Business Entities – multi-media training that investigates the different entity types, their tax advantages and disadvantages so you can make an informed choice based on your own unique business situation and priorities

My Corporation – online resources for those who know what they want and want to do it themselves

The Tax Reduction Toolkit – information for small business owners on how to save the most possible in taxes, legally.

Be Sociable, Share!

• 

You can follow any responses to this entry through the RSS 2.0 feed.
Both comments and pings are currently closed.