Time is our most precious personal resource; once we’ve spent it, we’ll never get it back. As busy entrepreneurs, we seem to have less time than anyone else, so it just makes sense to look for ways to use our time wisely. Here is one technique that has worked for many.
The Four D’s
When you think about it, there are only four actions you can take against any one of the many tasks you have on your plate:
- Do it.
- Delegate it.
- Delay it.
- Delete it.
As you approach each task on your to-do list, ask yourself which one of the four D’s is best.
The first option is simply to do the task yourself. Get it done, checked off, and out of the way. This is often the best option if it’s urgent, important, or you are the only one with the experience and training to do it.
It might sound counter-intuitive at first, but doing a task might not be the best option. Let’s look at the other three options before we decide.
If your to-do list is full of simple, routine actions, then delegating is a strong choice. Delegating is also a great choice for tasks that are beyond your skill set and that would take too much learning-curve time away from your core work. If you don’t have time to do everything yourself, then getting help is a smart alternative to doing it yourself.
Getting help doesn’t mean you have to hire a full-time employee. You can get help in a multitude of ways:
- Engage a company to do a task. From walking dogs to managing Google Ad campaigns to handling your bookkeeping and taxes, there are companies like ours that would be delighted to take over your task for you.
- Automation is a form of delegation. Can software do what you are doing?
- Find someone on Fiverr.com or UpWork. You can hire someone for a five-minute task or a 5-day task. Find them on any website that lists freelancers for hire.
- Plenty of people are looking for part-time jobs, just in case you don’t have enough work for a full-time person.
If you can write instructions about how to perform the task, you can delegate it. And if you’re worried about losing control or quality, simply add milestones where you check the person’s work. Initially, it might not be faster, but in the long term, it will pay off.
If a task is not urgent or important, delaying it might be the right option. The problem with this option is that you have to handle the task at least twice: once when reviewing it and deciding whether to do it, and again when you finally decide to do it. If you keep deciding to delay it, you’ve handled it more than twice. Not only can this take up precious time, it can be a drain on your energy as you see the incomplete task on your to-do list for a long time.
However, there are times when delaying a task is best:
- Delay if it’s not urgent and you have other urgent items to attend to.
- Delay if it’s not important.
- Delay to prioritize other, more profitable tasks first.
- Delay when the task is best done in batches. Here’s an example: Rather than answer each email as it comes in, think about blocking out three times a day where you check and clear your email. You can apply this time-batching concept to just about everything to gain efficiency: posting on social media (write and schedule a month’s worth in advance), returning phone calls, attending meetings (book them all on one day and keep other days clear), and running errands (delay until you have three to four errands, then do them all in one run.
Be careful of delaying a task over and over again. Something else may be going on with your mindset:
- The task may be uncomfortable for you (find someone that loves to do what you don’t and delegate), or
- How to get started is ambiguous (get training or find someone experienced to shorten your learning curve).
Some tasks should never have been added to your to-do-list in the first place. When there is no return on investment for a task, perhaps the best choice is to delete it.
Take a look at some of the things you do out of habit. Does it still make sense to do that task, or is it simply done because it was always done that way?
Do, Delegate, Delay, Delete
Try the four-D time management trick for yourself to get an instant boost in efficiency and productivity.
The 2021 holiday sales season will give businesses a chance to continue their online migration from 2020 trends, with opportunities for more refinement and improvements. The key is to bring as much as possible online and integrate all of your customer touch points into an omnichannel of positive experiences.
Let’s take a look at some trends in retail that we can apply to many other industries. These trends will strengthen our businesses and position us well for the future.
Strong E-Commerce Presence
As people increased online shopping and delivery last year, the trend is expected to continue beyond the pandemic. For this reason, all businesses should strengthen their online presence, especially their e-commerce presence.
Many retail establishments benefit from a complete ecommerce solution, including a storefront, shopping cart, online payment process, and automated fulfillment. They can expand their online effectiveness with these features:
- Enable chat features between customers and store clerks to simulate the conversation the customer might experience in the physical store
- For clothing, post detailed sizing charts, imitate the dressing room mirror with try-on automation, and use photos of models in all shapes and sizes
- Create how-to videos to show customers ways to effectively use the product
- Expand photography so customers can see all angles of the product as well as how it can be used
- Display and sort user reviews to help customers decide
- Implement clear navigation and search options so customers can find what they want. Today, many customers research online, then visit the physical location to finalize their transaction.
Expanding your business’s e-commerce presence doesn’t just apply to retail. For example, businesses in the services space have implemented appointment-setting and payment processing. Real estate agents have enhanced virtual home tours. Many businesses with physical goods and documents have beefed up delivery options and implemented curbside pickup.
Each business has a unique sales cycle that a customer goes through when purchasing goods and services. The question for business owners to ask is how they can bring most of that experience online.
The vast majority of transactions are now occurring on mobile devices. If your business’s mobile presence is not optimal, then you’ll want to make that a priority this year to catch up with your competitors.
More and more consumers are using social media channels – Instagram, YouTube, TikTok, Snapchat, LinkedIn, Pinterest, Twitter, Clubhouse, and Facebook — to discover and purchase items that delight them. Wise business owners will invest more budget into attracting customers from this channel.
With the move to online shopping, the holiday season has been extended from just one day or one weekend to entire months. Consumers are shopping earlier and all year long. Retailers and other businesses can benefit by always having some kind of sale or attraction going on. Here are the key holidays for the fourth quarter:
- Columbus Day
- Halloween, the second most profitable holiday (Christmas is first)
- Veterans Day
- Thanksgiving Day
- Black Friday
- Small Business Saturday
- Cyber Monday
- Christmas Eve
- Christmas Day
- Boxing Day
- New Year’s Eve
How does your business fare when it comes to a fully online experience? Use these trends to boost sales growth in 2021 and beyond.
If you grant credit to customers or take recurring credit card payments, the unexpected can happen: a customer fails to pay on time, the credit card expires, or the check bounces. What can a business owner do to spend as little time as possible on these items but get the cash collected? Plenty. Here are our ideas:
Re-examine your credit policy
Is there any way you can have credit customers pay up front? Perhaps you can collect a deposit to minimize your risk. Perhaps you can request final payment right before you deliver the final product. Perhaps you can convert credit terms to a layaway situation, like they use in retail.
The best way to speed up collections is to change your payment terms if at all possible.
If the client is late with a payment, respond quickly. Send them proactive reminders. Give them a call just before the payment is due if you have this luxury.
If the customer pays by credit card, monitor credit card expiration dates, and send reminders to update the card before it expires.
Make it easy and clear on your website support section how a customer can update their credit card number on file at any time. Automating this process will save you a ton of time.
Payment failures and disputes
It’s inevitable that you will experience customers whose credit card payments, ACH withdrawals, and checks fail or bounce. As a business owner, you need to have solid procedures for you or your employees to process these exceptions.
When a credit card payment fails, make sure your shopping cart, merchant account, or gateway processor notifies you of the failure. Contact the customer right away to correct the situation. The same is true of bounced checks or failed ACH deposits. Assess any extra fees and flag the customer account if you want to place any future payment or credit restrictions on them.
You may also have customers that report disputes to their credit card company. Respond timely to these transactions as there is always a tight deadline, and make sure you have all of the documentation you need at the time of sale if this comes up.
Develop solid collections processes
If the payment is late, start your collections routine. Send out friendly reminders at first; then get progressively aggressive as the payment grows later and later.
Follow-up steps are very important. Make sure your customer is getting your notifications, and give them a call before you have to take legal steps with them.
Finally, if necessary, turn the payment over to a collections agency who can impact the customer’s credit report and possibly collect your money.
We hope you do not have too much of this activity in your business. But if you do, being proactive is a great way to reduce it. Check to see if you have all the processes described above in place to handle collections in your business so that your cash continues to flow.
While Net Profit and your cash balance are probably the first two numbers you look at on your monthly Profit and Loss Statement, don’t stop there. There are a lot more gems you can glean if you dig a little deeper and look through the following six lenses at your data.
- Automation Opportunities
Look at your labor detail reports as well as professional and outsourcing expenses to see what areas might be ripe for automating. Is your admin spending too much time scheduling meetings? If so, automate everyone’s calendars. Are you finding places where duplicate data-entry is driving up costs? Get Zapier or another integration solution.
On the flip side, cancel tech spending where you are no longer using the app and get those expenses off your books.
- Duplicate or Excessive Expenses
Where are you paying for things twice on your Profit and Loss Statement? Where could you scale down? As an example, if you are renting 5,000 square feet but now only need 2,000 because everyone wants to work from home, see if you can re-negotiate your lease or sublet that extra space.
Do you have redundancy in your insurance policies? Perhaps your liability and your business umbrella both cover workers compensation. See what you can do to reduce the overlap.
You might only need three phone lines but are paying for five. Retainer and recurring expenses should be inspected carefully; are you getting what you’re paying for?
- Outsourcing Opportunities
Are their companies that can do tasks or work cheaper and better than how you are doing them now? If so, outsourcing could be a profitable option to look into further.
- Indications of Fraud, Theft, or Excessive Risk
As owners, we need to protect our business investment, and we should always be on the lookout for signs that our investment may be at risk. If your numbers look odd or unexpected, you should be skeptical and investigate further.
- Tax Savings Situations
Investing in tax planning almost always yields great results, especially this year with new tax relief available to qualifying businesses. Get help from a tax professional to see if you qualify or are close to qualifying for tax deductions, credits, and savings.
- Sales Growth
This list would be remiss without mentioning the obvious opportunities of finding ways to grow sales. Your sales results can give you an idea of where more growth can occur, where promotion opportunities exist, and where completely new revenue sources can be created.
After you’ve examined your cash number and your net profit, try these six new filters to get even more ideas to run your business better.
Many people have complained about the worker shortages this year. If you need additional workers in order to grow your business, here are some ideas for your consideration.
Where to Look for Workers
We may think of workers as only being employees, but there are a lot more options if you’re open-minded. Here’s a list of places to find workers of all kinds:
- Employment agencies
- Online job portals, such as Indeed, SimplyHired, and ZipRecruiter.
- Social media, including LinkedIn Jobs
- Your own website, email list, or employee referrals
- Temp agencies
- Specialized online job portals that cater to your industry and business type
- Virtual assistant organizations
- Day labor online sites and pickup areas
- Job matching sites such as Upwork, Fiverr, and Freelancer.
- Colleges, when you need interns and entry-level workers
- Your local unemployment office
- Small business development centers
- Virtual assistant agencies or businesses
- Chambers of Commerce and other business organizations
- Professional organization directories where a license is needed, such as hair stylists, dentists, or CPAs
- Friends, colleagues, competitors, and neighbors; your own personal or business network
- Craigslist and local classified ads
- High school guidance counselors if you want to hire straight out of high school
- Outsourcing to a company that provides the labor that does what you need
- Volunteer matching sites
Options for Adding Workers/Labor
There are many ways you can increase labor in your business. The obvious is hiring employees. Beyond employees, there are many more options than you might first think:
- Contractors, where you have a contract for a particular job and meet all of the IRS and other compliance requirements
- Temp workers, where you “lease” an employee who stays on the temp agency payroll or hire them outright with a limited term of employment.
- Part-time workers on your payroll
- Companies that you outsource the work to and contract with as vendors to provide a particular service. They may outsource your labor needs or simply have labor as a component of the product or service you have contracted them to supply.
- PEO, or professional employer organizations, act as a client’s employer and hire their employees as well as manage payroll and other HR compliance tasks.
- Interns, which are unpaid positions. Check your state and local rules for laws regarding hiring interns.
- Volunteers. This is common if you have a nonprofit organization.
With all of these options available, it should be a bit easier to find ways to add labor and grow your business.
If you’re a business owner who wants to continually find ways to increase your profitability, then you’ll want to learn about direct and indirect costs. Breaking out your expenses into direct and indirect categories can help you arrive at the most profitable volume of sales for your business.
Expenses that fall into the direct cost category are ones that relate directly to the items you sell. Here are some examples.
- If you have a flower shop, the cost of the flowers is a direct cost. So is the cost of vases, ribbons, cards, and the labor to put the arrangements together.
- If you are a law firm, the labor and any materials or supplies spent on serving a client is a direct cost.
- If you own a pool building company, the costs of the concrete, tiles, filter, pump, and labor to build the pool are direct costs.
- If you run a toy store, the purchase of the toys is a direct cost.
Direct expenses, unlike indirect expenses, will vary proportionally to the volume of items you sell. The more you sell, the higher your direct expenses. The less you sell, the lower your direct expenses.
In general, direct expenses should be recorded in Cost of Goods Sold. You can get your Gross Profit figure by calculating Sales less Cost of Goods Sold (or COGS). Gross Profit Margin is an important percentage to know in your business. It is computed as follows: (Sales – COGS) / Sales.
Some small service companies might not bother to break out labor into direct and indirect on the Profit and Loss statement each month, but it can be useful to break out periodically or when you are re-evaluating your pricing and profitability.
Direct expenses are important in making pricing decisions, but so are indirect expenses.
Indirect expenses are expenses that you need to incur to run your business, but are not directly related to the items you sell. Here are some examples:
- Utilities such as electricity, gas, water, and garbage pickup
- Administrative labor, such as a receptionist or supervisor
- Education and training
- Professional services, such as legal, HR, IT, or accounting
- Office supplies
- Hardware and software
- Business permits
Fixed and Variable Costs
Direct and indirect costs can each be further broken down into fixed and variable costs. For example, HR expenses, education, and training will go up as you sell more and hire more workers. That makes them variable costs.
Other indirect expenses will remain flat no matter what your sales volume is, such as rent. That means they are fixed costs.
Pricing Your Items
When calculating your sales prices, use direct costs to be sure your profit margin is high enough to cover an allocation of your indirect expenses. In other words, sales price should always cover all direct costs plus a profit component, plus enough to cover indirect costs when considering the volume of your sales.
The lower your sales volume, the higher the price per item should be. A higher sales volume gives you more room to spread out your indirect costs over more sales. That leads to either higher profits, or you can lower your price to be more competitive.
If you have questions about direct and indirect costs or want help validating your pricing decisions, please feel free to reach out any time.
You may already be doing your part to help save the planet. From recycling to driving electric cars, to avoiding the use of plastic bottles and carrying reusable bags to the grocery store, there are myriad ways for all of us to make a difference—both big and small. However, it may be important to stop and ask ourselves: Are we currently doing enough?
If you have considered pursuing an even more sustainable lifestyle, guess what? There’s an app for that! Actually, there are a few different apps to help you accomplish the goal of tracking your carbon footprint. In doing so, you can physically see your carbon environmental impact.
Below, we have detailed some of these apps and their benefits. Take a look! If you have any questions, please don’t hesitate to reach out.
Capture is an app that calculates users’ monthly CO2 targets by asking a series of questions. These questions include things like, “How many flights a year do you take?” and “What kind of diet do you adhere to?” Capture also utilizes GPS tracking to predict emissions from transportation.
Specifically, the app was designed to not only make planet-friendly living possible, but also make the process easy—or, easier—for those interested. With the capture app, users can conveniently “track, reduce, and remove CO2 emissions from everyday life.”
Interestingly, the app can be used single-handedly or with colleagues. If you are a numbers person who likes measuring and tracking, Capture is for you.
UK-based, Almond’s mission is simple: to help as many people reach Net Zero carbon emissions as possible, and in just four easy steps:
- Understand your carbon footprint
- Discover responsible brands
- Earn offset coins when you make a switch
- Offset your carbon footprint
Almond allows you to scan products to not only learn about that particular item’s story but also see what’s in the product (i.e., if it’s environmentally-friendly). Then, you can earn money with crypto rewards to plant and protect trees, which offset your carbon footprint. The more you earn, the faster you can grow your forest to achieve a carbon-balanced lifestyle and reach your personal CO2 Net Zero.
Pawprint allows individuals to fight climate change in the palm of their hands. This online tool helps to measure, understand, and reduce your carbon footprint.
Known as the “Eco companion,” this app delivers the following:
- Science-based data you can trust
- Carbon-reducing tips and challenges that suit your particular lifestyle
- Better insight into how your carbon footprint measures up to the rest of the UK (this app is also UK-based)
One factor that sets Pawprint apart from other carbon footprint tracking apps, is that all of its data is validated by Mike Berners-Lee’s Small World Consulting, an expert in the industry.
Of course, there are plenty of other smartphone apps and tools available to help you better track and reduce your carbon footprint, including The Extra Mile, My Planet, and Carbon Footprint. The trick is to find the app or tool that works best for you and your lifestyle.
While we all have to keep our monthly books up to date for tax and other compliance reporting purposes, we should never stop there. Your books hold a wealth of information that you can use to run your business better. Here are five reports you should never be without.
Budget-to-Actual Profit and Loss Statement
Hopefully, you’ve already seen how powerful the Profit and Loss Statement is. Let’s take it a deeper level and add budget comparison to it. With this addition, you can plan your way toward the sales and profit figures you want. You’ll know every month whether you’re on track, ahead of the game (give yourself five stars!), or need to hustle to make it up next month.
Most accounting systems allow you to enter monthly budget numbers for your sales and expense accounts. You can enter them at the beginning of each year and adjust them throughout the year. It’s kind of like having Google Maps on a cross-country journey. You will be able to see where there is construction and traffic, so you can take another route. You can also see where there are cool places to stop, so you can take advantage of the fun. Your numbers tell a story.
Actual-to-Prior-Year Profit and Loss Statement
This is an easy report to generate, assuming you have at least two years’ worth of information in your accounting system. This report allows you to compare your business’s results for this year with how you did last year. Are you ahead? Behind? Have new products and services? New employees? New expenses?
With this comparison, you can take action based on how you would like your business to perform this year versus last year. While this report is readily available, few businesses study it to glean the insights available, so be sure to spend some time analyzing the data in this report.
Sales by Item, Customer, or Division (or All Three)
Inside every business’s sales information is a treasure trove of possibility. Where are you seeing growth, and how can you capitalize on it? Where do you see a slowdown, and can you run a promotion to juice things up?
Choose the breakout – customer, item, division, or another – that is meaningful to your business type. If possible, arrange for a searchable database so you can drill down into the detail even more. What trends do you see? What opportunities do you see?
To find out more about your profitability and to get into the details of how your expenses are matching up with your sales, you need to review your operational accounting reports. The exact report will depend on the type of your business. If you are in services, you’ll need payroll reports and time sheets. If you are in retail, you’ll need inventory reports. If you are in construction, you’ll need job cost reports. And if you are in manufacturing, you’ll need cost of goods sold and other reports to evaluate assembly and production efficiency.
The last report that is essential for good business management is all about cash. There is more than one option here, and these reports can include Accounts Receivable Aging, Accounts Payable Aging, cash flow forecasting, and various cash flow reports.
If you grant customers credit, you’ll want to actively make sure that money is collected on time from clients. If customer balances get too old, action must be taken. Even if you don’t grant credit, transactions such as returns, expired credit cards, and bounced checks need special attention.
The same is true for amounts you owe to vendors, with the Accounts Payable Aging report.
If you run tight with your cash balance, you may want to have a cash flow forecasting report on hand. This report gives you good warning as to when your bank balance may dip below your needs. You can then delay vendor payments or find an infusion of cash to cover the shortfall.
With these five categories of reports, you will have dozens of opportunities to be proactive about running your business and improving your results. And if we can help you find or generate them, please reach out anytime.
A great way to start 2021 is to take a fresh look at your business finances. Many things changed in 2020, and if you are in the habit of spending on the same items year after year, it’s the perfect time to decide what is essential and what can go.
There are only a few ways to increase profits when you think about it in black and white terms. You can either raise revenues or cut costs. Let’s take a look at where we can potentially cut costs.
These expenses tend to be monthly or yearly, and we tend to just let them automatically renew time after time. But do we really need them? Take a look in your Dues and Subscriptions account to evaluate what you really need to stay informed, and cancel the rest.
If you are a member of an organization or two, what benefits are you getting from your investment? Does it raise revenue for you? Do you use everything the membership offers? If not, it might need to go on the chopping block.
Memberships are especially tricky if the organization provides a local meeting component as a benefit and your state or county has been shut down. There’s a tradeoff right now between supporting the organization so that it’s still there when we can freely meet again and being responsible about your own business costs.
With many employees working from home, the question has come up in many businesses about how much space they really need. As leases expire, consider how much space you really need. Some employees may love to work from home permanently, which frees up space.
Retail stores that have moved their business online may be able to cut back on customer-facing space but might need more inventory storage space. A restaurant that has successfully transitioned to pickup and delivery orders might be able to get by with a smaller seating area.
Are you paying for any technology applications that you are simply not using? This is a good place to look for cuts.
Some applications charge by number of contacts. Keeping your lists clean inside these apps will avoid increases and cut costs in some cases.
Do you really still need things like staplers and scissors on everyone’s desk? If your business is going paperless, you can save a lot on office supplies.
Do you need to spend money on printing, or can the printed item be delivered electronically?
While information can be delivered electronically, physical goods still need to be shipped. Make sure you have the best deal with your shipping vendors based on your volume. You may also need to consider building your shipping costs into the price of the product or add a shipping fee to the bill if you don’t already.
A great way to increase profits is to become more intentional about your marketing costs. Are you able to measure what’s working and what isn’t? Or are you doing the same thing year after year?
Marketing has changed so much, even in the last few years. It might be time to implement digital marketing methods, which can be more cost-effective than older, outdated methods.
Make sure employees manage their time effectively by providing the right training and supervision. This should help to reduce labor expenses.
Has your business changed? Do you need all those extra features you are paying for? Could you do without those extra lines? Would another phone plan save you money on long distance or international calls? Many telecommunication companies will often bargain with you or offer you a new deal just for checking in with them.
This gives you ten places to look to cut costs and correspondingly increase profits for 2021. If you need help reviewing your income statement, please reach out.
One of the best tools to forecast cash requirements is the 13-week cash flow forecast. It can help a business owner predict what their cash balance will be 13 weeks in the future. It helps to answer whether there will be enough cash to cover payroll and bills for a particular week. If you’re having significant ups and downs in your cash balance, it’s the perfect tool to help gain clarity around your cash needs.
Thirteen weeks may sound like an odd length to select, but it’s the length of a calendar quarter. This is the length of a financial projection that is typically used when a business is in financial distress; however, it’s also useful when a company is going through some ups and downs or simply wants to get a better handle on its cash requirements.
The forecast computations start with entering cash receipts and cash disbursements into a spreadsheet. Start with actual spending and receipts for the first week, then use estimates for the remaining weeks. Include planned expenditures such as overhead, payroll, and loan payments. Add in inventory purchases. Project your receipts based on history or recent changes in your business.
Once you’ve completed your forecast, you can make changes and do what-if scenario planning. For example, if the forecast shows that you will run out of cash in week seven, you have some time to decide what you need to do to remedy the shortfall. Options might be:
- Accelerate the collection of 30 percent of your receivables.
- Dip into your line of credit to cover a portion the shortfall.
- Furlough 10 percent of your workers.
Plug your selected scenario into the forecast to see how much that relieves your shortfall.
The benefits of creating a 13-week cash flow forecast are many. You can see what actions need to be taken and when to take them well ahead of time. You can also see how much of an action you need to take. For example, instead of furloughing 50 percent of your staff, you may only need to furlough 25 percent. Or instead of borrowing $50,000, you might only need $20,000.
The cash flow forecast can also save time when developing your annual budget. Budgets are especially useful when business conditions are volatile or when business owners need all the clarity they can get.
Try your hand creating a 13-week cash flow forecast for your business, or reach out to us for help any time.