Category Archives for "Business Tips"

The five-star review trap (Read this before using star ratings for your business)

When a five-star consumer rating system for products and services was adopted by major online businesses including Amazon, Yelp and Trip Advisor, the practice soon became widely used. But other businesses such as Netflix ditched star rating after discovering some downsides. Here are some things to consider before you adopt a star rating system in your own online business:

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Get your small business off the rocks

Every small business eventually hits a rough patch. It’s easy to get discouraged when it happens. But look at the upside: you have infrastructure in place, you have existing customers and most importantly, you have the hard-won experience of knowing what works and what doesn’t. With that in mind, here are some ideas to get things back on track:

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How to protect your friendship and your business

Good friends, great business partners

Survey small business entrepreneurs and you’re sure to discover relationships that soured when long-time friends became business partners. Fortunately, the story doesn’t always end on a tragic note. Here’s why:

  • Friends can talk openly. Because a foundation of trust has been established, friends have already learned to communicate candidly. When tough business decisions need to be made, they can discuss choices without wondering how criticisms will be construed.
  • Friends capitalize on each others’ strengths. One partner may love recordkeeping but tend to avoid dealing with the public. The other, a crackerjack salesman, may struggle with accounting minutia. As friends, they can capitalize on one another’s strengths to advance the company vision while minimizing internal squabbles.
  • Friends are committed. Friends care about each other, and will often go to lengths to work out differences because they’re committed to the friendship. They also typically have an understanding of each others’ top priorities, and are willing to help in reaching goals.

How to protect your friendship and your business

No significant business relationship should be undertaken lightly or blindly. With the help of skilled advisors, initial expectations about the company should be committed to writing. This includes laying out the details of operational roles, capital investments, working hours, exit strategies and other crucial aspects of the business. Even among friends, clearly written policies can prevent future misunderstandings.

Depending on your timeframe and industry, consider performing a beta test: a pilot project you can complete jointly before launching a business together. Along the way, ask these questions:

  • How do you handle disagreements?
  • Does one person always take the lead?
  • Can you easily switch leader and follower roles as circumstances dictate?

Test your relationship in a real-world setting. Observe how well you work together and make adjustments before the firm starts operations.

One more question worth pondering: is your potential business-partner friend in a stable position in life? If he or she is working through the aftermath of a divorce or climbing out of financial debt, consider postponing the launch of your business. If possible, start operations without major distractions.

If you’d like more advice about creating a successful business partnership structure, give us a call.

CPA Helps Business Owner Reach Goals

 A Designer’s Vision: CPA Helps Business Owner Reach Goals

Janet began her interior design business three years ago with a promising idea. The designer planned to work three days a week and help families achieve the home of their dreams by offering them her experience and creativity.

But, as happens often with small business owners, the dream didn’t quite come true. Instead of working three days a week, she found herself balancing a 70 hour work week while looking after her three children.

At the end of the year, Janet met with her CPA to review her accounts and tax position. The good news: she was profitable and had cash in the bank. The bad news: she confided she was becoming more and more unhappy with the business. She even said she thought about selling it.

The CPA talked to her to help align her business and personal goals. Together, they discovered that:

  • Janet’s overriding motivation was to make enough money so that she could spend more time with her children
  • She had taken on all comers and felt obliged to squeeze in more and more clients
  • Her brand in the marketplace was premium, but her pricing did not reflect that
  • By running the numbers together, they found that 23% of Janet’s clients had contributed 82% of her profit the previous year.

Following the session, Janet agreed to work with her CPA redesigning the business to suit her lifestyle goals, by starting with the numbers and going from there.

Not surprisingly, revenue jumped significantly as a result of understanding the numbers. But more importantly, within 12 months, Janet had her life back, meaning she could be with her kids more.

If you’re interested in learning about how to improve your business’s performance, please call Harvey and Caldwell today in Overland Park, KS to schedule an appointment and have a chat.

Source: Panalitix

Tax, Business Resources, Financial Strategies & Tips

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Updated weekly with tips for business owners, taxes and financial strategies to help you make money and keep it. If you have questions please contact us @ (913) 451-4400.


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Save on Business Travel Costs

While nurturing relationships

You may view corporate travel as a necessary evil. But you also know that successful companies thrive on relationships, and nurturing those relationships can require face-to-face contact with clients, vendors, and potential customers. So when you have to cut travel costs, you may struggle with a balancing act. If you cut too much, business relationships may deteriorate. Cut too little and profits may suffer. Here are five ideas that can help bridge the gap.

  • Video conferencing. You may remember early issues with this technology, including hardware and software glitches and slow internet connections. However, today’s advanced systems and networks have reduced the incidence of low-quality graphics and choppy audio and video feeds. You don’t need your own video conferencing studio to take advantage of high-definition systems. Look into pay-by-the-hour rental options instead.
  • Discounts. Investigate price reductions for corporate customers offered by hotels, car rental companies, and airlines. The savings can be significant when your staff regularly travels to the same destinations. Make sure your employees know about and use these vendors.
  • Cost-cutting ideas. If your travel plans are flexible, take advantage of mid-week flights and less-frequented airports. In some cases, train transportation may be a viable alternative. When possible, purchase tickets at least two weeks in advance to get better deals. Research hotels at your destination, and book rooms at those that offer complimentary breakfasts and free internet service.
  • Employee surveys. Employees who spend a lot of time on the road tend to develop definite opinions about everything travel-related. Your sales staff and other travelers can be a valuable resource when you’re reworking travel policy.
  • Travel audits. Don’t cut costs or change policies haphazardly. First make sure you understand how much you’re spending and where the money’s going. Get a firm grasp on the details behind the numbers. Then act.

Need more business cost-saving and budgeting advice? Contact our office for suggestions.

Plan For the Future

Do you have a plan for the future of your business?

Is your company a statistic? If you operate a family-owned business, the answer may be yes. According to the U.S. Small Business Administration, over 50% of all small business owners are aged 50 or older. If you’re included in that group, you might be wrestling with the question of selecting and training a successor. Think you’re too young to retire? Getting an early start helps you avoid “crisis mode” decisions that may damage your company’s future prospects. Early planning also provides opportunities for helping your successor learn the business and get prepared to assume full responsibility.

Here are two initial steps to consider.

  • Choosing a successor. Do you expect a family member — perhaps one of your kids — to take over the company when you’re ready to retire? Be sure to align your company’s best interests with your child’s dreams, skills, knowledge, and passion for success. The decision can be an emotional one, so it makes sense to involve an objective third party such as a financial advisor, attorney, board member, or trusted friend. Be open to considering a long-term employee or an outsider with more extensive experience in your industry.
  • Establish a training plan. Identify the critical functions of the company and provide the opportunity for your chosen successor to gain experience in operations, sales, and accounting. Establish a timetable for training, allow for mistakes, and resist the temptation to override routine decisions. Let your successor develop a management style that fits both the company’s mission and your successor’s temperament.

Succession planning takes time and effort. For assistance, put us on your team.

Is S corporation status right for your business?

When you incorporate your business, one decision is whether or not to make an election to become an S corporation. By choosing to make the election, you switch from a regular corporation, known as a C corporation, which is taxed as a separate entity, to an S corporation, where profits and losses are taxed on the individual tax returns of shareholders. Put another way, an S corporation retains the limited liability feature of a corporation, but transfers the tax treatment on income and losses to the individual level.

When does the election make sense? In cases when your individual tax rate is lower than the corporate rate, passing income to your personal federal income tax return means less overall tax. Another example: The difference in the way losses are handled. In a C corporation, losses can offset future profits. Unfortunately, in a start-up business, generating a profit may take years. Shareholders in an S corporation can use losses to offset other income, as long as they have basis in the business.

So what is the downside? From a tax standpoint, C corporations may be able to provide more tax-free fringe benefits to shareholder-employees than S corporations can. In addition, S corporations must meet certain rules to avoid terminating the election. For example, the S corporation can have only a limited number of shareholders, all shareholders must be U.S. residents, and shareholders must generally be individuals.

Do you have questions about whether S corporation status is right for your business? Contact us. We can help guide you through the tax benefits and drawbacks.

Social Media Marketing Has Benefits and Risks

Only a few years ago, Facebook, Twitter, Instagram, LinkedIn, and YouTube were mere dreams of forward-looking visionaries. Now, computer users worldwide spend hours every day communicating via these social media platforms. And the conversation is not all about weekend fun and dinner menus.

One study found that two-thirds of adult internet users were influenced by blogs and other social media outlets when making purchasing decisions. Whether your company’s target demographic includes retirees planning their next vacation or kids hanging out at the local coffee shop, the lure of online community and its potential as a marketing venue should not be overlooked. Here are pros and cons to consider.

On the plus side, social media marketing is relatively inexpensive. Compared to more traditional forms of advertising, such as billboards, television, radio, and magazines, placing your products in the public eye via social media can be done rather cheaply. You set up an account, upload a video, and voila! Your campaign is on its way. Social media sites let you reach a huge audience, both domestic and international. According to one survey, 89% of internet users between the ages of 18 and 29 participate in social media activities. That’s a big market. Professionals use social media sites, too, to network with colleagues.

On the other hand, maintaining a social media presence can be time consuming. Keeping content fresh, updating product information, and responding to customer feedback require significant resources, and the benefits are hard to measure. As a result, months may pass before marketing efforts produce a demonstrable return on investment. In addition, when you post a video or share a new product line, negative comments may follow. Some customers aren’t reluctant to criticize products and services that annoy them, whether or not the criticisms are justified. Erroneous and deceptive information can be shared at the click of a button, and negative feedback, if left unchecked, has the potential to damage your brand and reputation for years.

Connecting with others is the time-tested way to create a successful business, and social media is one more channel available to you. Just be aware of the benefits and risks before you begin leveraging the potential of this latest form of marketing.

Consider working with a professional Digital Marketing firm.

How to hire — and fire — family members

Working with family can be a pleasure. It can also be a pain, especially if you have to terminate the employment arrangement. Here are tips to help you ease the strain on family relationships.

  • Hire for the right reasons. Adhere to the skill sets needed to keep your business operating effectively. Hiring your son because he’s struggling to find a job or employing your niece so she’ll be nearby are not good business reasons for bringing staff on board.
  • Set clear expectations. Communicate the job’s performance requirements to your family member right from the start, clearly enumerating company policies for promotion, compensation, and termination. Make it plain that unethical conduct will not be tolerated and that every employee will be held to the same standard of behavior. Other employees will perceive any favoritism shown to family members. If a poor performer is allowed to “skate,” morale, performance, and your credibility will suffer.
  • Document performance. Throughout your family member’s tenure with your company maintain a detailed personnel file that tracks behavior resulting in disciplinary actions. In the unfortunate case of a necessary firing, a well-documented file will provide a narrative record that lays out your reasons and clearly communicates the evidence leading to your decision.
  • Keep the termination process fair and open. You may want to involve a direct supervisor or a human resources professional to ensure that your company is appropriately represented and to prevent the conversation from lapsing into emotional arguments. Focus the termination meeting on job performance and provide an opportunity for feedback. Use the meeting to suggest resources and contacts to help with the transition to a new career. Give your family member the option of resigning with dignity.

The bottom line: Effective communication can help you keep family and business relationships intact. Contact us if you need more suggestions.