How to Cut Expenses without Killing Your Business!

Feb 2, 2018 by

The purpose of any business is to develop a profit. There are many factors that will affect your business’s ability to generate a profit. Those include the costs of goods sold on your products, your price point on your product and services, your fixed and variable expenses.

In this economy where the sales funnel is typically wider for most businesses, meaning it will take more calls to make a sale, the knee-jerk reaction is to cut your prices to increases sales revenue to help generate overall more profits. That strategy typically will backfire (unless your up-sell process is strong and you know your numbers like clockwork).

One of the biggest issues is knowing the ratio between cutting your prices a certain percentage (like 10%) and now knowing your corresponding COGS (Cost of Goods Sold) percentage. The key question becomes, how many additional sales will you have to do at full price to make up for the one sale you gave a 10% discount? My good friend Spike Humer, has developed a very good chart that tells you the answer based on the price discount and COGS. For example, if your product or service has a 40%COGS and you cut the price by 10% the company would have to do an additional 15 sales to make up the profit lost on that one sale. This brings in revenue, but unless a strong back end exists this can lead to a fast track to being out of business.

There are a few fundamentals that we recommend you have in place before you start cutting expenses to make the best decisions.

First, you must know your numbers. There are important questions to ask yourself about your numbers. How many leads to you have each day? What is the cost per lead? What is your cost per appointment? Cost per new client? What is lifetime value of each new client?

For example, if you have 10 leads per day and you have to spend a total of $2,000 per month for marketing, and that is divided by 30 sales days (counting weekends ) or 20 sales days if you do not. That comes out to 10 leads per day x 30 sales days= 300 leads. Now take $2,000/300 leads=$6.66 per lead.

If it takes 10 leads to develop 3 appointments, that is $22.00 per appointment. If those three appointments turn into 1 sale that means it is costing you $66.66 per client (which is a low number). For many of you, it may be costing you $25 per lead that you receive. That changes the numbers dramatically.

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Patterns that Create Business Failure and Business Success—An NLP Prospective

Jan 29, 2018 by

Business and life do have patterns of success and failure. NLP (neuro-linguistic programming) is the study of the connection between the neurological processes (“neuro”), language (“linguistic”) and behaviour patterns that have been learned through experience (“programming”) and can be organized to achieve specific goals in life and business. I like to use this simple definition: it is a study of patterns or recipes. If you have a great recipe for your favorite meatloaf there are certain ingredients that if are added in the correct amounts and sequence will create a specific result. This is similar to an NLP pattern.

For example, good spellers do one thing differently (or have one more ingredient) than bad spellers. Good spellers will first see a word visually in their mind, sound it out, and then spell it. Bad spellers will skip the step of visually seeing the word and jump right to sounding out a word, then attempting to spell it out. Good spellers have a different “recipe” than bad spellers. They have one ingredient different.

In business, there are patterns of success and failure. One core pattern for business success is the Disney pattern. This was molded after the famous Walt Disney. Walt and his team of Imagineers were able to accomplish amazing results with their meetings. Walt did not run a meeting like most business meetings. He would separate meetings into different meetings. In the first meeting, called “the dreaming room,” you are allowed to come up with ideas and that is it. There is no evaluation or organization of ideas. That is a separate meeting! Why? If you start
allowing your staff or yourself to evaluate ideas in the meeting many times that will stifle the new ideas. People will start to think, “Maybe my idea is not such a good idea”. That is NOT how Walt Disney conducted meetings.

I would recommend you adopt this pattern for your business meetings. Here are the four meetings Walt would run: First is the “in the dreaming room” – all brainstorming. Second is organizing the ideas. The third is to evaluate the ideas. Fourth would be to implement the ideas.

This was his brilliant pattern for business success. This is especially important if you are a solo business owner. You may be sabotaging your own success by coming up with great ideas and immediately thinking how can this NOT work. That will stifle even your own ideas.

Another pattern that seems to prevent a lot of success is lack of time management skills. Most people think they are very good at managing their time and they are really not. You can calibrate in a minute to how well you are doing and perhaps consider a different pattern for success.

The poor time management pattern looks like this:

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Why Completing Your Estate Planning is a Must!

Jan 24, 2018 by

Growing your business can be one of the most rewarding experiences for you and your family. It can provide a stream of income for years to come. Part of being successful in business is planning for the unexpected, anticipating what can go wrong and have contingency plans. On a personal level, you should be taking the same approach. For example, do you have life insurance (especially if you have loved ones) to support your family if something happens to you? I know in my situation with three girls and my wife I want to make sure they are taken care of if something should happen to me (hopefully a lot later than sooner). Having life insurance was something I had in place right after I was married over 16 years ago.

What I have found over the years is the big areas that create the biggest mess; when a business owner does not get around to completing their estate planning and something unexpected happens to them. This creates a financial mess for the family that is left behind. It is hard enough to handle the sudden loss of a loved one but to add on the financial turmoil can be just devastating for your loved ones. Especially when the IRS gets involved with estate taxes that will be due that may cause unnecessarily to liquid assets at a fire sale point of view to pay the
estate taxes.

Here are my top reasons why your estate planning should be a must to complete in the next 30-60 days and for you to take immediate action after reading this article otherwise it may be 12 months from now and you have not started yet.

1.Take care of your family. Your spouse must be prepared financially and emotionally as best as possible to make sure if something happens to you what the steps are financially..

Certainty and financial security are very high needs, especially guys for your wives. Don’t leave your spouse left holding the financial bag and having to work with other family members and in- laws to figure how what should happen next. Especially, if you run the business, provide the revenue to support your family and your wife runs the household, kids’ schedule and school (which is a much harder job by the way, in my opinion). This is even more of a must if you are in a second marriage and there are your kids and your spouse’s kids.

You may inadvertently have your net worth not go to your kids when you thought it would. Even worse, what happens to your kids if something happens to both of you? What directives do you have in place to take care of your kids? Do you have guardians in place? Here are six mistakes that happen in this key area of naming a guardian 1) they name only one person with no back-up; 2) they name a couple without directing what should happen if something happens to one of the partners of the couple; 3) they consider financial resources of their guardians instead of leaving enough behind through insurance or savings; 4) they don’t name anyone to take care of their financial resources for their children; 5) they name only guardians for the long-term and don’t consider what would happen in the immediate moments or hours after an accident until their long-term guardians could arrive; and 6) they fail to exclude anyone they know they would never want to serve as a guardian. If you die without a Will or having named guardians, the decision as to who will take care of your money and your children is left up to a State Court Judge operating in a broken court system who don’t know you or what’s important to you.

Another challenge is having your estate go to the probate courts because you have no estate plan in place. Here is how this works. In any jurisdiction in the U.S. that recognize a married couple’s property as tenancy by the entireties, if a person dies intestate (owning property without a will), the portion of his/her estate so titled passes to
a surviving spouse without a probate. This part seems to be ok at this point. If the estate is not automatically devised to the surviving spouse in this manner or through a joint tenancy and is not held within a trust, it is necessary to “probate the estate”, whether or not the decedent had a valid will. A court having jurisdiction of the decedent’s estate (a probate court) supervises probate, to administer the disposition of the decedent’s property according to the law of the jurisdiction and the decedent’s intent as manifested in his testamentary instrument.

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Where Did My New Years’ Resolution Go? 9 Strategies To Rescue Those Resolutions!

Jan 20, 2018 by

Resolve comes easily on December 31st.

By March of the new year, the resolutions made are in disarray, compromised, abandoned. And the resolute determination to make this year, finally, the year you stick to ‘em, forgotten altogether.

This is not about guilt over this abandonment. Instead, it is about the real reasons resolutions and the determination to achieve them are lost, year after year after year, and how to change – yet this year – and get on track to systematically set and achieve new goals.

Big Idea #1: you can’t achieve new goals or make desired changes without allocating time to do so. Check out page 63 of my NO B.S. TIME MANAGEMENT FOR ENTREPRENEURS BOOK* for ‘time-blocking’ strategy instructions. A big reason that resolutions never become reality is no room made for them in the daily schedule! If your days are already full, and you resolve to get in a 1/2 hour a day on the treadmill or on your laptop, writing that book, that 1/2 hour has to come from somewhere. Something’s gotta give! You have to find something or things currently consuming time you can cut 5 or 10 or 15 minutes from.

Big Idea #2: priorities should govern schedule, the schedule shouldn’t govern priorities. On pages 69-74 and 103-111 of the same book, I talk about the mistake made by the vast majority of business owners and entrepreneurs – they operate like workers instead of bosses and leaders. They report to a workplace, then they let people and events ad interruptions come at them all day, take control of their day. You have to est control away from others’ priorities and govern by your priorities. President Bush cited Social Security reform and tax reform as top priorities of his second term, presumably accompanied by a resolution of the mess in Iraq. Then along came the tsunami. Still, he organized his tax reform panel. It’s hard to judge from outside looking in, but my belief about W. is that he’s determined to govern by his priorities. Are you?

Big Idea #3: resolutions aren’t resolutions without resolve. Only you can decide what really matters to you. You shouldn’t bother with ‘lip service’ faux resolutions, made to appease or satisfy others. Honesty with self is a pre-requisite for success.

Big Idea #4: resolutions require resources. Almost anything you decide to do, any change you decide to make,
any goal you set out to achieve requires new or different resources. That might be a piece of home exercise equipment or different food in the cupboard, a private work environment outside the office, information, people. You aren’t really serious about a resolution unless you invest in and gather the required resources.

Sometimes investment motivates follow-through, too.

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Doing Business in Multiple States -When Does Your Company have to Register? Part II

Jan 17, 2018 by

Division of Tax Base
Now, that you understand nexus and the difference between soliciting business and promoting it, it is critical to understand the background of how the states divide up the tax base. The Commerce Clause requires that a state may tax only that part of a corporation’s income that is fairly attributable to its income-producing activities in the state. There are three general approaches in handling this division of tax base. There are:

  • Separate accounting
  • Specific allocation
  • Formulary apportionment

Separate accounting is based on the premise that it is both possible and practical to isolate the taxable income of portions of a business that a corporation carries on within a state. Based on practical and theoretical flaws, separate accounting is rarely used.

Specific allocation assigns certain types of income to particular states using nonformulary rules. It is generally applied to income not related to the operational or unitary business of the taxpayer.

Formulary apportionment divides a taxpayer’s business income among the states in which it does business. A formula is used to generate an apportionment percentage that is based on the relative amount of a taxpayer’s in-state activities.

So Which Approach do the States Use?
There is an act called the Uniform Division of Income for Tax Purposes Act (UDITPA). UDITPA is a state tax model for allocating and apportioning income among states. Nearly half of the states with a corporate income tax have adopted UDITPA.

UDITPA has created three tests for determining the allocation and apportionment of income among states. They are:

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