Investing My Money Has Got To Be Easier Than This

When investing my money, I am always amazed at how complicated the procedures are. The unnecessary barriers that exist in investing capital can be seen as quite serious impediments. One of the biggest barriers is the broker commissions or the deposit size when considering real estate.

I am certain everybody with half an interest would be delighted to begin investing capital for long term rewards. Everyone loves the idea that they are going somewhere as time passes and investment brings that settling feeling. Knowing that your capital is working for you can be a real delight.

However the barriers to investment makes only the people with a large capital account able to invest. There are easier ways. First thing is we need to recognize that people earn a living from investment vehicles. That means there are costs. So for people with a very small seed capital account, investing in mediums where others make a living (like brokers, financial advisors and real estate agents) is quite the wrong direction.

These industries provide a certain legitimacy to the investment vehicles of the stock market or real estate, however, that legitimacy is seen wrongfully as security and a absence of risk. Nothing could be further from the truth. The truth is they are paid essentially to break us the bad news that investing can be risky. Not the other way around.

If we ignore the legitimacy of these institutional investment vehicles and look at the word investment without being baffled by the specialist language, we see investment is nothing more than spending money to get a return while making sure the risk is very low of losing the money. That is all an investment is.

If you want to invest, but only have a few hundred dollars, you will not make much of a return putting that money to work in a bank. At 6% per year you might make a few dollars. Not very exciting. However, link back to what investing means. It means buying something to re sell it later for a profit. The speed of your return is crucial. If you can buy something and sell it in a week, for a 10% or 20% return, well that is a huge accomplishment. If you have $200 and you buy something and re sell it for $230, that is a 15% return. This type of hands on investment is safer than the stock market precisely because you are in control of the money and making the decisions for yourself. You become your own investor source.

Can Your Accountant Make Your Business More Successful?

When the highly esteemed American economist, Theodore Levitt, redefined the “corporate purpose” to creating and keeping customers, he invited a deeper meaning for business creation, transcending the old belief which said business existed only to make money. Ultimately in order to create and keep customers, business owners must always think “growth,” even before the first dime is registered.

Growth means creating unique products or services while looking to improve existing products or services. It means partnering with other businesses or associations that can introduce those products or services to larger market segments. And it also means forging key business relationships that will help grow your small business into a medium-size business, and potentially grow your medium-size business into a large business. One of those key business relationships is the one you create with an accountant, the one person who could mean the difference between growth, stagnation or failure.

One of the biggest mistakes small business owners make is not having a big enough vision for their economic potential. ‘Why do I need an accountant now? I’m getting along just fine without one,’ many of them think. It is at the start-up phase of a business where an accountant can offer the most valuable advice and service. Most business owners aren’t savvy when it comes to bookkeeping. An accountant has the specialized knowledge to set-up the chart of accounts for recording transactions, which will later be organized into financial statements that will tell the story of your strategic success or failure.

A good accountant can guide you through monthly financial statements, helping you understand what the numbers mean, and how to use them to make strategic decisions. And what about having to decide how your business will be set-up? After consulting with another key business association, your lawyer, an accountant can explain the advantages and disadvantages of forming a sole proprietorship, C Corporation or S Corporation relative to your situation.

Do you know what you can deduct and what you cannot? An accountant is there if you have questions about what business expenses are deductible. You want to maximize all deductions that you are entitled, while avoiding penalties for deducting expenses that you are not entitled. While deductions are extremely important for businesses, it is also a complicated process as the rules and regulations continuously change, often varying by state.

Benjamin Franklin said,In this world nothing can be said to be certain, except death and taxes.” Tax issues have certainly been the death of many start-up businesses. Technical situations such as filing W2s and 1099 forms have caused businesses thousands of dollars in penalties. A good accountant will know what taxes to pay and when to send out the forms. In the case of 1099s, he will advise you if those individuals are truly independent contractors, or should be registered as employees. Making a mistake here could result in hefty penalties, potentially crippling a young business.

What’s critical is that business owners truly understand the importance of developing a relationship with an accountant, instead of just thinking, ‘Okay, I’ll get one because I guess I have to.’ This is where business owners miss it. They should be thinking about this relationship as they would any strategic planning issue. Accountants have the ability to directly affect your business success, or its failure. Good accountants will have knowledge of the industry you’re in and recommend a course of action you may not have thought of, since they may have experience dealing with similar situations. The relationship with your accountant is so important that when your business stumbles, your accountant will be there to help position it back on track.

A good accountant saves you money by providing expert and timely advice, which often translates into business growth. Remember, it’s not enough to just make money. It’s about continuously creating that new customer and holding on to her.

Oftentimes whenever a business owner is trying to break through that next level of revenue stream, an accountant knows exactly what to do and can steer a business away from any potholes. They can share their wealth of knowledge as in the case of knowing what lending institutions are more likely to lend to a particular business model.

What if you are looking for investments in your business? Do you just pick up the yellow pages, walk to the local bank or do you look for someone who knows how to maneuver within this space, and can offer critical, time- and money-saving advice?

For example, if you own an Internet technology business, your accountant could advise you of which venture capital firms invest in Internet technology business models; you’re not wasting time searching out venture groups that are more amenable to lending to brick-and-mortar businesses. Most of the time, this kind of information only can be obtained through having the right accounting relationship. The right accountant may even have direct contacts in the very organizations that will help grow your business.

There are a number of ways to find the right accountant for your business. You can ask a fellow business owner who you respect, get advice from an existing business relationship, such as your lawyer, or go through the yellow pages. Business owners should understand the risks if they choose to take this route.

Using the accountant from a respected business owner may not be the right accountant for your particular business needs. A lawyer’s expertise is ”law.” While lawyers may certainly know accountants, they may not know which one is right for you. And using the yellow pages may be tantamount to playing the lottery if you’re looking for a perfect match. Searching this way takes time, and if the accountant isn’t the right one, it will also cost you money. 

At the end of the day, whether business owners decide to use a referral service or slog through the yellow pages, finding the right accountant may be the answer to creating that new customer and keeping her, and ultimately generating true growth and success.

The Business Planning Ladder (Business Planning For the Strategically Challenged)

A traditional business plan (where you examine markets, figures and the likelihood of profit) is something that all business owners should do. It makes you consider the nitty-gritty of your business. Having said that I filed my plan away the day I wrote it. There are many people who have no plan at all. How disastrous is that?

I find the traditional business plan fairly limiting. It’s like putting a really tight hat on and squeezing all the thinking juice out of my brain. I look at it and go blank and it’s not something I use to drive my business. It’s more like an atlas when what you need is a street directory. What I want in a business plan is a map that leads me to my goal in a way that I can use easily, quickly and regularly. I want one that I can adapt on the run and that shows me new opportunities.

There are lots of ways to do a business plan. I have seen a collage of pictures. It didn’t mean anything to me but was enough for the business operator to follow as she went along. Each picture represented something that she needed to achieve on the way to her goals. Let me show you a great tool that you can adapt to suit yourself. I call it a ‘business plan ladder.’ It’s the ladder to your success. One warning – this will not suit traditionalists or people who love specifics. This is perfect for the visual, seat-of-the-pants business person so decide which of these you are before you read on. A successful business will go through stages of growth, expansion and recruitment. The ladder is designed to reflect those stages. By identifying the major stages the rungs of the ladder offer a blue print for you and your business.

The Ladder.

At the bottom is the start. What is your idea? Why do you want to do this? Where are you now? Get it clear in your head before you do anything else.

Stage 1 Products/Services

This is all about getting started. Exactly what will I do or sell? Who is my supplier? How much do I want to make? It is important to set yourself a profit or turnover target so that you can see how you are going. You are deciding who your customers will be and where to find them. Should you have a website or open a shop? Let me have a go and see how it works. This is a time of shaping your business. It is about getting a firm foot hold on the rung before taking any risks climbing to the next. It may be the hardest step that you take.

Stage 2 Increase the business

By now you will be actively running the business. You will have reached your first sales target so you know that what you are doing is working. Now is the time to start increasing your targets or expanding your market. How will you do this? What options do you have? Where can you look for new customers? Are there better ways to do what you have been doing? You have proven that the idea works, now it is time to really boost the business.

Stage 3. Recruit.

By now you will have enough work coming in to keep you busy so it is time to look for someone to help you. How many people do you need? What jobs will they be doing? What changes do you need to make to accommodate them? Can you afford them? This is time of consolidation rather than expansion.

Stage 4. Move to larger premises.

At some stage now that the business is thriving and you have staff, you are likely to need new offices or a warehouse. You have decent sales and good staff. Will you need more staff at the new shop? Will you need new equipment? What impact will it have on staff? You will probably find that you move through stages 3 and 4 a couple of times depending on the type of business you have and how big you want your business to be.

Stage 5 Moving on.

The business is running itself, with the help of great staff. Do you hire a manager and find something new to do? Do you sell the business and retire? What is your exit plan? You have reached your original goal. This ladder is fairly conceptual and you can adapt it to suit any business. By thinking through the growth stages that you are likely to go through you can plan ahead. Each rung of the ladder becomes a framework for your decision making processes. You will also be able to find which rung you are on by looking at what you are currently doing. I find that this helps me in choosing where to focus my energies – I can see what I should be doing to get to the next level.

When I plan my weeks work I can see where I am and where I need to go so it helps me to sort out my priorities. Once you have identified the stage you are at you can start adding detail to the next level. It is so easy to get bogged down in your day to day work that it becomes really hard to think ahead. The beauty of this plan is that you are always focused ahead, not looking back. The Ladder is also useful where your business grows faster than you expected. If you find yourself on stage 3 very quickly you will need to adapt fast. Having the stages identified will help you fill in any gaps that would normally have been resolved along the way. It is a great planning tool because it keeps you on track at all times. I think the hardest business planning question to answer is “How will I know when I’m there?” The answer, ‘how big is your ladder?’