Category Archives: Entrepreneurship

10 THINGS TO DO AS A STARTUP ENTREPRENEUR

startup(1) Be realistic: It’s great to be a cheerleader for your company when dealing with customers and clients, but you must be realistic when it comes to understanding the limitations of your business, making financial projections, accepting apparent weaknesses, etc. We’ve all heard the expression, “Don’t drink your own Kool-Aid.” This principle applies to new ventures as it can get a startup entrepreneur in real trouble. Be honest and realistic as you move forward. If not, trouble can come before success!

(2) Slow down: It’s a never-ending problem all founders and small business owners have. There is never enough time in the day to get everything accomplished. It’s either too much to do by yourself or a lack of delegation. Whatever the problem, you must find time to step back from the business to relax, enjoy, and think. Yes, think. Without some “down” time, you cannot properly plan, innovate, or make improvements. Work smarter, not harder and longer!

(3) Full energy: You can only be successful in a small business when you devote your full energy to your new venture. This doesn’t mean working yourself to death (see #2 above). It does mean, however, that whatever hours you devote to your new endeavor whether full-time or part-time, it needs to be with your full energy and devotion during those hours. Who wants to do business with you or, possibly, invest in your business when you’re not giving it your “100%” when needed? Work on your new business with partial energy and see only partial results!

(4) Hatch your eggs: Make sure your eggs hatch before moving forward. Every entrepreneur wants to make a big splash right out of the starting blocks. It would be wonderful if it works that way but most of the time, it doesn’t. Throw a small pebble, make a ripple, and see what works. Then you’re ready to throw a boulder and make a big splash. Make sure the eggs hatch before moving on!

(5) Competence counts: Entrepreneurs “think” they know best and, maybe, they do when it comes to the technical aspects of their businesses. When it comes to other areas such as taxes, accounting, insurance, or legal, it pays to obtain professional and competent advice. Don’t try to do something yourself today only to hire a professional tomorrow to undo your mistakes. Pay to get the competent advice right from the start. Pay now or pay later!

(6) Narrow your focus: It would be nice to be all things to all customers, but it usually doesn’t work that way. Narrow your focus and concentrate on what you do best. Determine your strategy, define your target market, and don’t deviate. New opportunities and new markets can be profitable, but they must match the internal resources and strengths of a business. Be a great business in a narrow market rather than a mediocre business in a broad market. Focus first, then expand!

(7) Market research: Of course you know that your product or service is going to be successful, but have you checked with prospective customers for what they want? Market research is a powerful tool that can help lead a new business in the right direction. You can do it yourself. Ask, talk, send surveys, read industry publications, search the Internet, have a “think tank” dinner with respected business colleagues. When so much information is available before you start your business, why not take advantage of it? Market research just might be an eye-opener!

(8) Be prepared: It’s exciting to get a new business off the ground, but you must be prepared. This means having everything in place, so there is no faltering when the “doors open.” Financing, employees, marketing, procedures, etc. must be in place and ready to go. Why stumble at the opening when you can start running? It’s all about being prepared!

(9) Be passionate but prudent: You can’t be a small business owner if you’re not passionate about what you do. Unfortunately, being passionate does not always equate to being successful. Be practical, wise, and sensible when making business decisions. New startups do not have the luxury of poor decision making…and survive. Take the opposite approach. Be prudent and succeed!

(10) Know your numbers: You’re not an accountant. You don’t want to be an accountant, but you still need to know the numbers of your business…inside and out. What is your estimated revenue, cost of goods sold, gross profit percentage, cash burn rate, or current ratio? If the numbers don’t work, then your business might not work. Don’t leave all the numbers to someone else. Perhaps, they can do the preparation, but you still need to understand the numbers!

Source: http://www.aasbc.com, 10/23/14.

SMALL BUSINESS OPTIMISM CONTINUES TO GROW

smallbusinessownerby Isaac M. O’Bannon, CPA Practice Advisor, August 13, 2014

More small business owners say their company’s current financial situation is good, yet their outlook for the next year has not changed significantly, according to a new survey.

The latest Wells Fargo/Gallup Small Business Index score increased slightly to positive 49 (+49) in July, up two points from positive 47 (+47) in April. The score, which measures small business optimism, has increased six of the last seven quarters. Small business optimism is now at its highest point in more than six years, however it remains well below pre-recession levels.

The present situation – how business owners rate current conditions for their businesses – is the main contributor to increased optimism in the latest survey. The present situation score is now at a positive 18 (+18), up four points since the April survey and 14 points from the same period a year ago. Specific factors that contribute to the improvement include:

  • Small business owners are feeling better about their current business financial situation, with 62 percent rating it as very or somewhat good, up from 57 percent in the second quarter 2014.
  • More business owners report their company’s revenues have increased, with 43 percent indicating revenues are up in the past 12 months compared with 36 percent in April.
  • Cash flow over the past 12 months also is at a six-year high. In the survey, 55 percent of business owners report their cash flow has been very or somewhat good over the past year, up from 50 percent in the second quarter of 2014.
  • Ease of obtaining credit in the past 12 months is up significantly – 32 percent of small business owners say that it has been very or somewhat easy to obtain credit in the past 12 months.

At the same time, the future outlook for business owners in the July survey was relatively unchanged, down two points to positive 31 (+31) from positive 33 (+33) in the second quarter. In three surveys conducted in 2014, the percent of business owners who think their businesses’ cash flow, financial situation and revenue would improve over the next 12 months has not moved significantly. The percent of business owners who expect to increase capital spending in the year ahead is the same as those who plan to decrease (25 percent).

“The latest Index scores show small businesses have made gradual progress since the economic downturn –with modest improvement in the economy, healthier small businesses are growing revenue and have stronger cash flow today,” said Lisa Stevens, head of Small Business for Wells Fargo. “However, we know many businesses still face challenges in the marketplace and it’s reflected in the survey results. Many continue to wait for more improvement in their businesses and the economy before they express confidence in the year ahead.”

Business owners report that the biggest challenge they face is attracting customers and finding business (13 percent), followed closely by government regulations (11 percent), financial stability of their business (11 percent) and the economy (11 percent).

When it comes to generating new business, small business owners said the toughest part is marketing and advertising (14 percent), and competition (13 percent). Ten percent of business owners said the costs of running a business make it difficult to attract customers and grow. Another 10 percent said making product improvements or having the latest products is the biggest challenge to growing sales.

FIVE BASIC TAX TIPS FOR NEW BUSINESSES

business-owner-stockxpertcom_id17260461_jpg_9d244c0f32209ba041e058fccd912e101If you start a business, one key to success is to know about your Federal tax obligations. You may need to know not only about income taxes but also about payroll taxes. Here are five basic tax tips that can help get your business off to a good start.

1. Business Structure.  As you start out, you’ll need to choose the structure of your business. Some common types include sole proprietorship, partnership and corporation. You may also choose to be an S corporation or Limited Liability Company (LLC). You’ll report your business activity using the IRS forms which are right for your business type.

2. Business Taxes.  There are four general types of business taxes. They are income tax, self-employment tax, employment tax and excise tax. The type of taxes your business pays usually depends on which type of business you choose to set up. You may need to pay your taxes by making estimated tax payments.

3. Employer Identification Number.  You may need to get an EIN for federal tax purposes. Search “do you need an EIN” on IRS.gov to find out if you need this number. If you do need one, you can apply for it online.

4. Accounting Method.  An accounting method is a set of rules that determine when to report income and expenses. Your business must use a consistent method. The two that are most common are the cash method and the accrual method. Under the cash method, you normally report income in the year that you receive it and deduct expenses in the year that you pay them. Under the accrual method, you generally report income in the year that you earn it and deduct expenses in the year that you incur them. This is true even if you receive the income or pay the expenses in a future year.

5. Employee Health Care.  The Small Business Health Care Tax Credit helps small businesses and tax-exempt organizations pay for health care coverage they offer their employees. A small employer is eligible for the credit if it has fewer than 25 employees who work full-time, or a combination of full-time and part-time. Beginning in 2014, the maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers, such as charities.

For 2015 and after, employers employing at least a certain number of employees (generally 50 full-time employees or a combination of full-time and part-time employees that is equivalent to 50 full-time employees) will be subject to the Employer Shared Responsibility provision.

If you would like to start a new business or have questions about starting up a new business, please call our office today. We specialize in helping people just like you who want to enjoy the freedom and flexibility of owning their own businesses.

Source: IRS Summertime Tax Tip 2014-09

TEN PERSONALITY TRAITS THAT EVERY SUCCESSFUL ENTREPRENEUR HAS

Whether I’m out on the speaking circuit, working with startups, back in Ann Arbor teaching MBAs, or just socializing in a coffee shop, I’d say there’s one question I’m hit with more than any other.

It comes in different forms, but the essence of the question is the same: “What does it take to be a successful entrepreneur?”

Over the years, my answer has evolved. But I’ve found myself settling on ten traits that are shared in common by virtually every truly successful entrepreneur I’ve met, observed or studied. The true rock stars are all:

1. Passionate

You need to be driven by a clear sense of purpose and passion. Typically, that passion comes from one of two sources: the topic of the business, or the game of business-building itself.

Why do you need passion? Simply because you’re likely to be working too hard, for too long, for too little pay with no guarantee that it’ll work out… so you need to be motivated by something intrinsic and not money-related.

2. Resilient

If you’re going to build a startup, you’ll need a spirit of determination coupled with a high pain tolerance. You’ll need to be willing and able to learn from your mistakes – to get knocked down repeatedly, get up, dust yourself off, and move forward with renewed motivation.

People will constantly tell you your baby’s ugly, that your business won’t work. Now, you should listen carefully and be open to constructive criticism. But after a while, having the door slammed in your face repeatedly can be withering, and the best entrepreneurs learn to feed off the negativity and actually gain strength from it.

3. Self-Possessed

You need a strong sense of self. You can’t be threatened by being surrounded by talented, driven people. To truly succeed, you’ll need the self-confidence to surround yourself with people “who don’t look like you”… that is, people with skills, background and domain knowledge that complement your own. And check your ego at the door: you shouldn’t be too proud to make coffee for the team, empty the waste baskets, or do the bank runs.

4. Decisive

You’ll need to develop a comfort-level with uncertainly and ambiguity. Entrepreneurs gather as much information as they can in a short period of time, and then MOVE, MOVE, MOVE!! The attitude is that it’s not going to be perfect… We only have 9% or so of the data from which to base our decision… but if we wait to have all the information, we’ll never get moving… and be mired in indecision. (Big organizations are really good at this – the mired thing – saying, We don’t have enough information, so let’s continue to study… form a committee or a task force)

5. Fearless

On the sliding scale from “risk-averse” to “risk-seeking,” it shouldn’t surprise anyone that entrepreneurs tend to be closer to the latter. But you don’t need to be a nut-case, the sort who bungee-jumps without a helmet. Smart entrepreneurs develop an intuitive ability to sniff out and mitigate startup business risk. But you know you’re going to fall down, and feel comfortable with that fact and that you’re going to learn from your failures and adjust as you go.

6. Financially Prepared

You’ll need the right personal financial profile to make the leap. This doesn’t mean that only the rich can be entrepreneurs. But unless and until you’ve got the personal financial ‘runway’ (ability to go without a steady paycheck and subsidized benefits) of at least 18 to 24 months (ideally longer), you might hold off on quitting your day job.

Consider launching the startup as a side-business if that’s possible, while continuing to work the 8-to-5 shift to cover the bills. Or approach your boss about going part-time. Then, once your business generating cash flow, you can dial back on your hours, or submit your resignation and go full-time with your startup.

7. Flexible

I challenge you to find an entrepreneur running a startup four or more years old where that business doesn’t differ dramatically from the vision sketched out in their original business plan. The point is that the folks who stay on their feet are the ones who stay flexible and adjust to new information and changing circumstances.

8. Zoom Lens-Equipped

Can you ‘pan out’ to see a compelling big vision for your business, then ‘zoom in’ and focus on near-term startup goals? Successful entrepreneurs can facilely move back and forth between these two views. They’re able to articulate the big picture, while simultaneously managing and executing to the ‘zoom-in’ picture.

9. Able to Sell

Whether you’re a born extrovert or introvert, as a founder/CEO, you’ll find yourself always selling. You’ll be selling your vision to prospective partners and funding sources. You’ll be selling prospective recruits on why they should quit their day jobs and join this startup they’ve never heard of. You’ll be selling your products and services (yes, you’ll probably be personally closing at least the first few sales). You’ll be selling your employees on why they should remain calm and stay with the ship when the seas inevitably get rough.

10. Balanced

You may not start out with a fool-proof gyroscope, but to survive as an entrepreneur, you’ll need that strong sense of perspective. How to maintain simple, clear focus. How to be at peace with, and learn from, a failure. Understanding that not all battles are worth winning, and when to walk away. Knowing that most in your startup aren’t as entrepreneurial as you – that this may be a very cool job for them, but it’s still a job. Knowing when to go home and give your loved ones a hug. When to go for a run.

Read more: http://www.businessinsider.com/traits-of-successful-entrepreneurs-2013-2#ixzz31YB56K6V

If you are curious about whether you have these personality traits for entrepreneurship, please visit us at http://www.LStortzCPA.com