Your genuine business niche and profitability

Running a business well within a genuine niche leads to business profitability. Recently, CBS News Money Watch posted a well-written article online about finding a business niche and sticking with it.

My business niche as an accountant/bookkeeper is working primarily with web design companies, advertising agencies, and similar creative companies that have revenue of $ 3,000,000 per year or less. It doesn’t mean I won’t handle the finances of other companies in fields like manufacturing, but it does mean I know the specific challenges facing these type of clients and I can speak their language. Can other bookkeepers or accountants serve my clientele? Yes, they can. It’s not so narrow a niche where I won’t have competition, but it gives me a profitable focus for building my business.

A niche is a way to distinguish your business from the massive competition that exist in urban areas like the greater Los Angeles region or even online.

Here’s another example of a niche. There’s a manufacturing company in the U.S. that builds firefighting equipment to export to developing countries where the roads and villages can only accommodate small firefighting trucks.

The article points out that enduring small businesses serving niches are often “highly-specialized manufacturers feeding larger industries, companies serving narrow markets, or tech companies doing things that are difficult or impossible to duplicate. Great wealth has been built this way, and if your goal is to have a healthy, enduring small business, you’ll probably find your best opportunities in the niches.”

And lastly, my husband is launching a company in Los Angeles that provides high quality display cases for museums. He’ll distribute the cases which are manufactured in Germany.

Consider your business model. Do you have a niche or can you easily create one in order to define your business and what you offer to customers?

For the complete story by Michael Hess on CBS Money Watch click here. http://www.cbsnews.com/8301-505143_162-57325050/the-biggest-small-business-rule-i-wish-id-followed/?tag=nl.e857

 

Setting Customer Expectations

I do the accounting and bookkeeping for creative companies around Pasadena, California like web designers and small advertising agencies.

The profit challenge facing these companies is to stay focused on projects to prevent wasted time just like a company handling products doesn’t want wasted inventory.

Setting client expectations is one of the first steps in running a profitable creative service company.

Here are questions you can ask yourself:

Are new clients positively aware of your reputation? If so, you have credibility when sitting with them to formulate a creative brief.

Did you clearly show them your design style or other style to ensure a fit with their brand?

Did you interview them well on their needs and did you repeat back to them their reason for coming to you?

Do you have a brief outline of the work stages like draft, revisions, completion and have them sign off on each stage? This makes having a change order easier.

While clients can get finicky about the outcome, setting expectations is one way to maintain the best client-vendor relationship possible.

Handle your finances like following a diet

If your business finances need organizing, be sure to handle them like someone going on a diet. Little decisions help us lose or manage our weight and the same principle applies to getting your bookkeeping in order.

Step 1 Create folders

Separate receipts in the current month according to your spending categories. Take an envelope and mark it “travel/meals” for any travel-related expenses. Make an envelope in the same category for the coming month and then place the envelopes in designated folders.

Step 2 Use a bookkeeping ledger – either paper or online

For the busy individual business owner, starting a company or running an established company means receipts can get in disarray. Buy a ledger from an office supply store. Dome makes an easy-to-use ledger or begin implementing a Web-based solution from Zoho.com or Freshbooks.

Start with the present date in entering expenses and income.

Step 3 Set aside 30 minutes each week for finances

Block out the time just like you would for an important meeting. A Friday may be a logical time—or else Saturday morning from 9 to 9:30. Whenever you do it, be committed to spending 30 minutes once a week to tidy up your books.

If you need to hire a bookkeeper, you can use this free test from the American Institute of Professional Bookkeepers. The test is for companies using an accrual system. http://www.aipb.org/testrequest.php

Helping small businesses with bookkeeping and accounting around Pasadena and Glendale

I meet new and established small business owners with a variety of financial needs.

One need may be obtaining business loans for expansion.

A good place to start for businesses around Pasadena and Glendale seeking help with finances is the SBA (Small Business Administration) or SCORE (Service Corps of Retired Executives). Here is a link to the SCORE office in Glendale.

Ask yourself three simple questions:

How much money do you need?

What will you use the money for?

Who will you pay back?

Get to know your banker and your banker should know you.

Click here to find a SBA office in your area http://www.sba.gov/content/find-local-sba-office

5 basic tips for organizing your office

An organized office is a profitable office. Filing and organizing reduces wasted time hunting for essential tools and wasted time equals wasted money.

Organizing an office requires self-discipline, a vision for categorizing information specific items, and the courage to throw away pieces of paper or magazines that aren’t going to be read anymore or haven’t been read in months.

Here are some tips:

#1 The files accessed most frequently should be the ones closest to the desktop and given priority on being kept up to date.

#2 Toss out excess information. Make it easier by reminding yourself that most magazine articles or newsletter articles you might want to keep are found online or in the library. A really good article that sits buried under piles of paper may be well written and contain useful information, but how much good is it doing you?

#3 Set aside one hour per week to read outside of normal work assignments. Skim through articles and either file them right away or toss them.

#4 Ask for help – this may be difficult to ask a colleague. For the home office, the cost of hiring some one to come in help may be an expense that pays off in the long run.

#5 Archive old files and projects. Put them in a box, label them and take them out of an active file drawer.

While there may be many other tips for a productive office, these five are basic and easy to follow on a regular basis.

To stay on top of clutter, consider having a professional organizer stop in the office on a once-a-month basis to help you run your business more smoothly and profitably.

Learn more at the National Association of Professional Organizers. http://www.napo.net

Why managing cash flow for business is critical

Cash flow management is a test of how well a company operates.

Cash flow is the difference between cash coming into the business and cash going out of the business during a given period.

Here are ten ways to manage cash flow:

1. Decrease the amount of money owed to you– get customers to pay their bills
2. Cut out excess overhead expenditures
3. Keep a close eye on inventory
4. Don’t overpay taxes
5. Review owner’s compensation – secondary income may be valuable to the success of many small business ventures in the early years
6. Consciously structure the payment of bills – pay bills closer to the deadline but do not incur late fees
7. Consider biweekly or monthly paychecks
8. Update company procedures to make process more efficient and cost-effective
9. Plan ahead – using cash saving activities such as renting instead of buying or purchasing used equipment versus new equipment, finding cash paying customers and quick paying customers versus giving credit and late payers.
10. Develop a good record keeping system

Did you find this helpful? Leave a comment and let us know. We love to hear feedback.

Track business expenses to realize profits

Businesses exist to make profits, but businesses that don’t understand expenses face a hidden obstacle to realizing profits.

List all company expenses – monthly and infrequent expenses. Not knowing all expenses can paint a false sense of profitability.

After listing all expenses, determine the amount of income and what customers brought in what percentage of income.

For example, there is a single owner packaging business in Southern California that has 30 clients. About 80% of the business comes from 12 – 15 customers.  His client base stretches from Orange County to the San Fernando Valley.

The owner does well keeping up with his most profitable clients. But because he finds it easiest to spend time with them, he doesn’t get out to generate new business. The other 15 or so customers keep him busy but are they helping him reach profitability? If not, the owner needs to evaluate why the additional customers aren’t bringing in more business. Has he not asked? And is it outside his comfort zone to generate brand new accounts.

Do you know your expenses or have a good idea of what they are?

If not, set aside the time to write them down and review receipts to get a handle on cash flow for your company.

Was this helpful?  Leave a comment.  We appreciate feedback.

For more information about me http://www.yourbackoffice.ca

Update on my Xero Accounting software transition from QuickBooks

I am a certified QuickBooks Pro Advisor and have been using QuickBooks Accounting Software for at least 7 years.    I have recently switched over to Xero Accounting System.  It is a cloud product based out of New Zealand.   I have been using this product for a few months and so far so good.   I am really liking it.

So what make this so great you ask, well, it works for my business because:

1)  I can access my information from my iPhone, (they have a nice app).

2)  Plays well with others, I use Workflowmax and the inegration between the two is nice and simple.   Plays well with Freshbooks as well, and the list gets longer.

3) Bank Feeds and import of bank transactions.   I have a Paypal feed which once I set up I don’t have to do a damn thing to it, information comes in.    You can import a .csv file easily from your bank.

4) Finally a decent cash flow report that I don’t have to manipulate.   The cashflow report in QuickBooks wasn’t my favorite, it took some work.  In Xero I ran the report and there it was.

5) Customer Service is great.   I asked a question, I got an answer the next day.   Usually when I go to QuickBooks tech support, they are trying to upsell me, or I know more about the software that the person reading from the script.

6) QuickBooks was trying to be all things to all businesses it got a little cluttered.   Xero sticks to the basics, clean and simple.

There is still some more work to do, like adding more US Bank Feeds to their roster and a small Paypal issue that they are working on.   Currently you cannot print checks out of the system, but I understand that it will soon.

It isn’t a solution for every business, but if you are a service provider/mobile warrior you should give it some consideration.

Do I need to upgrade my Quickbooks Software?

I get asked that one a lot. If it’s been over 3 years, to me, that’s a yes. Mostly because Quickbooks won’t provide any support for versions that are over 3 years old. If you were to call for support, they won’t help you and will say that you need the latest version.

Additionally, loading older software onto newer machines may not provide past functionality. I recently did this and my ability to generate reports in pdf format didn’t work. Now I have to spend some time troubleshooting that one.

How often should I upgrade? That’s another popular one. My answer to that is every other year. Rarely does one years upgrade change that much in functionality that you would need to upgrade every year. Mostly what happens are bug fixes. If you keep up with the updates, you will get those anyway. So unless you have some critical process that needs to be fixed you can wait a year.