Category Archives: Business management

Four Reasons 2012 will be Great

Posted on February 22, 2012 | Leave a comment

I couldn’t really think of a good title for this post – I was going to call it “4 Habits” or “4 Methods” I’m using, but these don’t really fit into those categories entirely. So here are 4 reasons I am excited about 2012:

1) The process of figuring out my WHY and using it to guide what I do. I cannot tell you the freedom this one thing has given me. Being a CPA it is in my nature to solve problems. But now I realize it is OK to say no to someone that may not fit my Why and thus not allow me to use my gifts the way I know I can.

It is still hard to use words to describe my Why because it comes from such a different part of our brain than where we communicate, but here is my Why: I want to help people overcome obstacles so they can own their life and achieve their goals.

2) I found a group of people that challenge, encourage and support me. My friends in the Thriveal CPA Network have rejuvenated my career and my life. I am forever grateful. Just knowing there are people out there going through some of the things I do and being able to talk and share with them is amazing. Having passion for what I do spills over into everything else in my life…I’m a better husband, father, friend, etc.

3) Scheduling “whiteboard”/reflective time in each day, or week to think about the direction my life or business is heading. This may be talking to an existing client to get feedback, or just sitting down with a notebook and jotting down what I’ve done that week. So often we are drowning in the urgent matters, we push our long-term “important but not urgent” goals to the back burner, or forget about them entirely.

4) Budgeting in money and time to spend on professional or personal development, even if it is just reading a handful of books. To innovate and create we must continuously learn. For a long time, I treated my Continuing Professional Education (CPE) requirement as just that – a requirement to check off my to-do list each year. Now I see it as an opportunity to meet new people and learn new concepts that will push me to challenge my clients, along with myself.

A terrific example of this was the Firm of the Future Symposium I attended last October. It was definitely NOT a traditional (read: boring) CPE seminar. I learned so much about business, client relationships and pricing that my head hurt for about a week after. The course has already paid for itself and added a ton of value to the service I provide my clients. I now see CPE as an investment in myself, rather than a requirement to be completed at the lowest possible cost.

I’ve also set a goal for myself to read 12-15 books this year and use concepts from each to help my clients.

What stuff has you excited for the rest of 2012? Have you taken any courses or read any books that have changed the way you do business?

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Posted in Business management, Tactics

What is the Value of Data?

Posted on January 4, 2012 | Leave a comment

A blog I follow posted a link to a study on soda consumption. Being a faithful Mountain Dew drinker I took a look. Yikes, it would take me 50 minutes of jogging to burn off a soda! That’s about 50 minutes more than I currently do!

Then I started thinking this sounds a lot like accounting. Accounting is essentially a big hunk of data. Similar to slapping the number of calories on the back of a soda can, the fact that the company spent $1,859.49 on office supplies last year doesn’t mean much unless it is put into meaningful context.

What if that expense doubled from the previous year? Did you expect that?

What if it declined, but you expected it to be under $1,000 for the year because your company went paperless last year?

How many customers or transactions does it take to make $1,849? Is that more or less than you thought?

Does your accounting system tell you any of this? It should.

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Posted in Accounting, Business management

Small Business in 2011

Posted on December 23, 2011 | Leave a comment

I love this infographic from Intuit. Scroll down to the reasons entrepreneurs start their business…nowhere does it say “To spend time doing accounting.”

You unleash your passion, find your WHY and let me deal with the accounting and tax compliance.

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Posted in Accounting, Business management

Year End Review

Posted on December 15, 2011 | Leave a comment

December is a great time for tax planning, but it is also a great time to sit down and think about what went right (and wrong) with your business in 2011. Here are some questions I compiled from a few places around the web to help explore that topic and maybe push you toward a prosperous 2012:

Were sales up or down compared to the past 3-5 years? Why?
Were profits up or down for that same period? Why?
Look back at the goals you set at the beginning of the year – which ones did you accomplish? If you didn’t set any goals, now is a great time to do that for 2012.
Did you stick to budget in 2011? What about 2012?
Is your business worth more now than it was last year? Entrepreneurs work hard – taking a look at your balance sheet will give you a snapshot of how the business changed over time.
How has your industry changed over the past year? Are there new risks or opportunities? Is your company nimble enough to take advantage?

If you’re having trouble answering any of these questions, it may be time to re-evaluate your accounting system. Is it providing the information you need to make key decisions or do you simply see it as a necessary evil you maintain for compliance purposes?

Have you talked to your insurance agent lately and evaluated whether or not you are adequately covered?

Have you talked to your banker lately to see if they have any input?

Have you checked your credit report – it is free. Simply go to www.annualcreditreport.com.

Maybe most important – have you talked to your customers about the value you provide them? Sometimes simply talking to a few key people can open up new opportunities.

I’d love to hear in the comments or via email how you take stock in what has happened in the past year. If you have questions or would like to discuss it more in depth, please email me at kevinmccoy.cpa (at) gmail (dot) com and we’ll set up a time to chat.

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Posted in Business management, Strategy

What is cash flow?

Posted on November 17, 2011 | 1 Comment

While reading this excellent article about a guy teaching his son some early business lessons using a soda machine, I got to thinking. No, I wasn’t thinking I should buy my son Adam a soda machine (he’s only 4).

I thought about small business owners and how crucial cash flow is to them. Wikipedia defines cash flow as “the movement of money into or out of a business, project or financial product”. From experience, I also know that many make the mistake of equating profit with cash flow. While related, the two are different. I’ve heard several times “I’m making money on these jobs/sales, but we never seem to have any money.”

For example, Wal-Mart is known for their killer distribution system. They can get products from vendor to warehouse to store shelves so fast, I would guess they might actually sell a lot of the product before they even have to pay their vendors. That is basically the dream scenario when it comes to cash flow - collect the sales revenue before you even have to pay for the cost of that revenue.

But not every company has that power. Take a contractor for example. Due to the nature of the business, they are usually paid some money up front and the balance at the end of the project (perhaps some in the middle if there are multiple steps in the job). Assuming the contractor prices the job to make a profit, his cash flow is still less than ideal, since he will probably incur all the costs of the job – materials, labor, permits, etc. before being paid in full.

So how does he handle this? There are 3 types of cash flow in a business and each of those can certainly help:

Cash flows from operations – this is cash generated (or used) from normal business activities – selling, collecting accounts receivable, paying accounts payable, etc. In the case of our contractor, he could use cash from previous jobs to foot the costs of the current jobs and so on. In my opinion, this is the best way to run a business.
Cash flows from investing – this includes cash generated (used) from things like selling (buying) equipment. Usually selling equipment to meet operational costs is not a good idea, since you will probably need that equipment later on.
Cash flows from financing – this covers cash generated by issuing stock or taking on debt or used by paying dividends, repurchasing stock or paying down debt. Many companies have a line of credit with a lender that can help bridge the gap temporarily. However if it is overused it can lead to trouble.

There are several ways within each of these three types that business owners can manage their cash flow. Next time you sit down and look at your books, don’t stop at your profit & loss (income statement), take a look at your cash flow statement too. It is a good tool to help understand the total picture. Or why even a profitable company may be struggling with cash.

How is your company managing cash? What strategies have you used to improve your cash flow? I’d love your input, either in a comment below or via email.

Thanks for reading.

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Posted in Accounting, Business management, Fun

Fun with Business Plans

Posted on October 17, 2011 | Leave a comment

Today we’re going to have a little fun with a topic I enjoy, but some people find utterly boring – business plans. Arguments abound whether you actually need a business plan, or not. A friend of mine passed along this hilarious blog post on the business side of Ghostbusters.

Of course, some of the numbers are made up, and some items are missing – insurance and legal fees are two big ones I can think of right away – but even in this simple analysis it is pretty clear our 3 jump-suit wearing friends better get some paying customers very quickly or their new enterprise wouldn’t last more than a couple months.

Do you have a business plan? Did you come up with it before starting out or to obtain financing or some other external motivation?

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Posted in Business management, Fun, Strategy

Does Your Accounting System Fit Your Business?

Posted on October 7, 2011 | Leave a comment

After writing my own tribute to Mr. Jobs yesterday, I started reading some others. I’ve talked about Simon Sinek before, and I subscribe to his blog, so naturally his tribute was one of the first that popped up. The second paragraph really struck me:

He (Jobs) was singularly devoted, not to technology, but how people interacted with technology. It wasn’t for us to fit into a world of computers, it was for the computers to fit into a world of people. And that’s what made Jobs different. That’s what made Jobs special.

When I read that, I immediately thought of accounting. I wonder how many small businesses try to fit their company around the accounting system they are using, rather than figuring out their needs and finding a system that meets those needs. How many of you go out and buy QuickBooks, Peachtree, etc., set it up and start using it without a thought about if it will really deliver what you need?

One of my goals as a CPA devoted to helping small businesses is to make accounting and tax as simple as possible, and that includes internal accounting processes & systems. If you are not getting what you want out of your accounting system, whatever it is, I’d love to hear from you….in the comments or by email.

Thanks for reading.

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Posted in Accounting, Business management, Tactics

Random small business links

Posted on September 29, 2011 | Leave a comment

I found a couple excellent blogs/articles today that were too good not to share.

First, Seth Godin, always a compelling storyteller, writes about the recession….which he argues is really two recessions. This is the best take I’ve read and really lights the way to where we are going. I especially love the arguments on racing to the bottom to save some kinds of jobs instead of adapting and innovating and creating new jobs.

Second, Norm Brodsky writes a piece in Inc. magazine about keeping your eye on your company’s balance sheet. Most business owners are so obsessed with the other main statement – the income statement – they completely forget (or don’t even know) about the balance sheet. I especially like the last few lines:

Numbers run companies. It’s your responsibility as an owner to know and to understand not only the income statement but also the balance sheet of your business. You ignore them at your peril.

I am especially in tuned to this as a CPA. Many times I’ve heard a business owner say “I’m making money, but my business is still struggling”. A lot of times we can find answers by looking at the balance sheet.

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Posted in Accounting, Business management, General

Inspired by my Community

Posted on September 28, 2011 | Leave a comment

I was tired yesterday morning. Our kids were up late and I just didn’t sleep well the night before. Tuesday mornings I am up earlier than normal so I can drive a few extra miles to my BNI group. I was really tempted to hit snooze and sleep in, but I got up, showered and headed out the door.

Man, I am glad I did. I’ve talked about my group before, but yesterday morning our meeting was absolutely incredible. The energy in the room is always great, but yesterday it was at a new level. We were cracking jokes, enjoying each others’ company and – oh yeah – celebrating our progress for the year – nearly $2 million dollars in closed business in less than a year’s time. You guys are amazing!

Just being in that room with 20 other people, who run cool small businesses and dispel the notion that our economy is in the tank, is so inspiring. Then during the “I Have” portion of the meeting (when we go around and share what we’ve done the past week) I received a very nice testimonial from a customer I started working with within the past year. It was amazing to hear that she appreciated my work and I had a positive impact on her business.

I have learned so much from my fellow members since I joined the group. But the biggest thing I’ll take away is this – having a group of people that inspire, support and empower you (not to mention are fun to be around) makes getting up early an easy choice.

I strongly encourage every small business owner or self-employed individual to find a community of people that will similarly inspire and support them both professionally and personally. You will not regret it!

Let me know in the comments if you’ve had a similar experience.

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Posted in Business management, Gratitude, Relationships

Budgeting & Cash Flow

Posted on August 17, 2011 | Leave a comment

This video is meant for personal finance, but I believe it applies to business as well. You can have a terrific business, but if cash isn’t rolling in, you’re doomed.