Manage your time for work-life balance.
I put this first because it is so important. Being small business owners will consume ALL of our time if we allow it. We must set aside time for our spouses, our children, and our hobbies and interests. While at work, we must be working on what is critical to the success of the business. We must be efficient. We must also find time to recharge and reflect, so we can return to the business each day with energy and enthusiasm. “Life’s too short” is not just a cliché. Ask anyone over fifty years old.
Plan for success.
A failure to plan is a plan to fail. Did you create a strategic plan and budget for 2014? Have you consistently monitored your goals and the action steps to get you there? Mid-year is a great time to evaluate your progress and tweak your plans accordingly. Analyze results from the first two quarters versus your budget and previous year trends. What went well, and what should you be working to improve?
Be strategic.
Strategy is all about allocation of resources. We cannot do all things for all people every day. We must focus on doing a few good things consistently well. We all know we should be thinking about the business as a whole, its long-term success, our customers, and our competitors, yet we still end up being firefighters of every-day problems. We must find ways to think about what is critical to the success of our businesses and spend our time on those critical activities, not simply on what someone else thinks is urgent.
Understand the metrics for your business.
How do you make money in your business? Which of your products or services are most profitable? Which of your customers are most profitable? Should you fire some of your customers? Do you understand the difference between net income and cash flow? Do you understand that you can be profitable but still run out of cash? Is the quality of your product or service as you expect? How would you know? How much time do you spend understanding and improving your key business processes? Spend some time answering each of these questions and understanding how those answers impact your business.
Expand your financing in the good times.
We all have learned that the worst time to call on your banker for a loan is when you are two weeks away from running out of cash. Unfortunately, many or some bankers only want to lend money to those that don’t need it. If you had a profitable 2013, leverage that success by talking to your bankers or other financing resources to increase lines of credit, refinance existing loans, etc. Take advantage of your success and use it to build an even better future for your company.
Talk to your team.
If you have employees, make sure you are talking with them about their roles in the success of the business and how key processes or quality can be improved. Engage them and make them feel like part of the business. It is a lonely world for business owners some times, and reaching out to employees, service providers, or even spouses can provide a sounding board and important feedback.
Understand how recent tax law changes impact your business.
It seems like every year brings more legislative changes in our income tax laws. Last year and the coming year are no exceptions. The most significant change in federal tax law is the Affordable Care Act with employer mandates, individual mandates, and new taxes. In North Carolina, 2014 brought a lower individual tax rate, changes in standard deductions, and an end to the $50,000 business income tax deduction.
Pay attention to the tax filing dates.
If it is your first year in business, you will soon realize there are numerous monthly, quarterly, and annual tax filings for income, payroll, property, and other business taxes. If not paid on time, penalties and interest are assessed, creating an additional burden on business cash flow.
Pay estimated taxes.
Estimated tax payments are worthy of separate mention. Remember, our tax payment system is a “pay as you go” system. The government expects tax payments throughout the year in the form of withholdings or estimated payments. Significant penalties and interest await those who do not make these payments timely. If you come from a world of weekly paychecks and related tax withholdings, it can be a shock to write checks for thousands of dollars each year. Estimated taxes are due starting April 15, June 15, September 15, and January 15 each year. It is, unfortunately, not unusual for first-time business owners to be surprised at the amount of taxes owed after the first year in operation. They’re even more surprised in their second year when the profits begin.
Dennis Toler, Moyer, Smith & Roller P.A.
Dennis Toler has a long background in serving as corporate accountant to several successful entrepreneurial ventures. As a recent thriver and survivor of aplastic anemia, a rare and intense bone-marrow disease, when Dennis shares his wisdom about work-life balance, it’s from a real-world viewpoint. Moyer Smith Roller, P.A. is one of the Charlotte area’s top twenty-five largest certified public accountant firms. Visit the firm online at msr-cpa.com.
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