News You Can Use - Thursday, May 20, 2010

Articles on Tax Issues

IRS Posts Revised Format for Form 941

(Journal of Accountancy) - On May 18, the IRS posted a new version of Form 941, Emplyer's QUARTERLY Federal Tax Return, and its instructions for claiming the special payroll tax exemption that applies to new workers hired in 2010.

IRS Issues Guidance on Eligibility for Small Firm Health Care Credit

The Internal Revenue Service May 17 provided comprehensive guidance (Notice 2010-44), on a small-employer tax credit included in the recently enacted comprehensive care reform legislation, clarifying that the federal credit will never be reduced because an employer is receiving a state health care subsidy. 

http://www.bnasoftware.com/News_Articles/News/IRS_Issues_Guidance_on_Eligibility_for_Small_Firm_Health_Care_Credit.asp

Articles on Marketing Issues

10 Ways to Use Social Media for Lead Generation and Nurturing
For some consumers, social networking sites have taken on personality traits that reflect who they may log in as and communicate with. Facebook might be a boyfriend. LinkedIn a boss. Twitter is filled with acquaintances to say "hi" to in the hall.(Click on link below for complete article.)

http://www.targetmarketingmag.com/article/10-ways-use-social-media-lead-generation-nurturing/1#utm_source=tipline&utm_medium=enewsletter_continue&utm_campaign=2010-05-19

A Personal View on a Common Thing: HOME

I got home today, just before lunch. I had just returned from a very significant and exciting business meeting. I was a little revved up. A business idea I am working on is really taking shape and I was caught up in the moment.

But as I started to go to the kitchen, I realized something I had never noticed. For the first time I can remember, I stopped in the living room and looked around the room and sized up what I saw. The room and the things in the room are very ordinary and a little out-of-date style-wise.

 The house is a nice house but not extraordinary. We have had the furniture for a few years and it is showing a little bit of wear and tear. But it is home. It is familiar and comfortable. It has the feel of my comfortable loafers,  which are a bit worn, but they feel great on my feet. And in this setting and to the people who share this space with me, I am viewed as mostly a known quantity, without huge distinction. I am defined by the people who share this place with me not by my accomplishments or my possessions. I am defined by my relationship with them.

In that moment, I was forced to put several things into perspective. Out in the business world, I cultivate a particular image. My reputation and my accomplishments precede me. As a businessman, there are issues of image and status and position. In the business world, I am also judged by the clothes I wear, the car I drive, where I live and how well I follow through on a project. At home, those things do not count as much. The standards by which I am judged at home are set to a much higher benchmark. What happens in my home ultimately proves to be infinitely more important to me than anything which happens in my professional life. That is as it should be.

In that moment of realization today, I thought about Warren Buffett, one of the most successful and wealthy men in the world today. He lives in the same house he has lived in for fifty years. That speaks volumes to the substance of the man. He knows what is important. He could well afford a home worth millions of dollars. But he chooses to remain where he is.

Today I understood maybe for the first time, why when we are at our home, it is a very different experience. We are more grounded and forced to keep things in perspective. We are not allowed to become too full of ourselves or to strut around with an inflated ego. At home, no one will or should put up with that sort of attitude. It is a place where the only person each of us is allowed to be is ourself. Home is a port in the storm where we do not have to wear a particular mask to fit in or make it. Home is a place where we can find acceptance without judgment and a refuge from the hurly-burly of the world.

There is that part of our lives which thrusts us into the frenetic world of business with all the excitement and the stresses. There is that part of our lives centered on our family, our friends and the people who mean something to us. For some people, their work has become their lives. That isn't what our lives should be about. We must always remember that we work so we can have a life, not the other way around. And if we are going to find the balance we so desperately need in our lives, we should always view our home as the central place in our lives and not an outward reflection of our professional status or our successes in business.

Today, Can Your Company

Still Provide Excellent Perks 

For Your Employees?

ABSOLUTELY!

Your employees can enjoy hotel getaways, cruises, resort getaways 
and amazing vacation 
packages at 
unbelievable 

prices

  

Las Vegas, $59 per person
4 days, 3 nights
  

  

Waikiki Beach, Hawaii,
for $659 per person
8 days, 7 nights

Great prices on cruise packages

on major cruise lines. 

All at little or no expense to your   company

For only a small cost to your employees.

For more information:

Contact Elaine Latham, 
Vacation Benefits Specialist

Tel: 713-501-3277

Email: elatham1@gmail.com

Living on Overdraft

For far too long, businessmen, large and small, have used credit cards  to finance some day to day company operations. When one crunches the numbers, it is very clear that practice isn't very smart. Were businesses to pause for a moment and consider the cost of interest that credit cards generate, they might have put some brakes on their very extensive use. Most companies are much more focused on generating sales and serving clients and customers.

Now, credit of any sort is very tight. Not a few small and medium sized companies are experiencing some very inconvenient cash short falls. Businesses are forced to scale back spending  and that has certainly affected operational and marketing planning.

When a company finds itself in a cash crunch, there is an almost compelling temptation to shift using overdraft in the same way it used to use credit cards.  It is not a stretch to see a company using overdraft as a strategy of last resort to keep the company afloat. However one slices or dices this strategy, it still means that the company is spending money it does not have. By any other name, the bank is loaning the company to cover cash card purchases.

The worst aspect of the concept of overdraft as a service is that it is not regulated by any state or federal agency. In fact, if one were to ask a bank representative if money advanced for an overdraft transaction is a loan, that representative would say no. Banks cannot admit that overdraft money advances are loans, for if they did, they would be regulated. The bank would say it is a convenience extended to its customers.

The truth is that banks introduced overdraft banking in a calculated effort to reap millions of dollars in additional income. Pardon the pun, but they were "banking" on most companies managing their bank accounts poorly and that most cash card purchases were not booked in a timely manner. Frontline, in the episode titled The Card Game, reported that to add insult to injury, banks added software that would rank cash card transactions by how a large a purchase the customers made. At the end of the day, the computers were set to process the largest purchases first. The internal logic of this programming was to push the client's account into overdraft and when that occurred, every small transaction that remained would generate another juicy overdraft fee. So much for banks looking after the best interests of their clients.

As the owner of a business, ask whoever does your bookkeeping to track just how much your company spent on overdraft fees over the last six months. If yours was a company that actually used overdraft as a financing option, you will probably be very dismayed to find out how much it has cost you over the long term. That realization will be the real measure of how poor a strategy it is to allow your company to live on overdraft in this or any business environment.

Howard Fireman
Productivity Consultant/ Accounting
howard.fireman46@gmail.com

Little House on the Prairie, The Musical... A Show for Our Times

Laura Ingalls Wilder

Little House on the Prairie, The Musical has had a two week run at the Hobby Center for the Performing Arts, in Houston. Melissa Gilbert, who played Laura in the original television series, played the role of Caroline Ingalls, Laura's mother in this production. It is the sort of show we don't get to see very often anymore. The sets, the costumes are for the most part plain and unadorned, just like the story of the extraordinary family depicted in the story. Those of you who are familiar with television of the 1960's know the Laura Ingalls Wilder's unforgettable saga of the settlers who traveled west to make a new life for themselves.

"As the Ingall's family settles in DeSmet, South Dakota, the independent teenager Laura and her sisters learn the joys and hardships of growing up under the big blue sky. When Laura leaves home to make the ultimate sacrifice for her family, she learns an invaluable life lesson: Giving is always more rewarding than receiving when it comes to love."

This production is the very sort of show we need for our city and our nation at this very moment in time. I found this show to be very pleasant, pleasing and especially compelling. As the familiar story unfolded, the story and the characters took me back to a simpler time in our country and a very different mindset. I was forced to remember the sturdy and obstinate folks who built our country. The settlers faced bad weather and brush fires that destroyed their crops. They endured brutal winters and somehow managed to survive until Spring. They overcame seemingly overwhelming obstacles. They built homes and lives in places where no town or farm or road existed until they arrived and built them. They were survivors and nation-builders and their story that this show told was nothing short of heroic. Even today, we can identify completely "... with these life affirming stories about the Ingalls' struggles and triumphs through the celebration  of the pioneering spirit and the core values on which this country was founded --- a spirit that still resonates within each of us today."

I would not call this production extraordinary musical theater, but I believe this was a very compelling show that held my attention until the curtain fell. I could talk about the production pluses and minuses of the show... the lighting, the sets, wonderfully talented cast and the musicality of the show. But that would beg the real reason that I found the show compelling. I found real hope in this retelling of the inspiring story of the Ingalls family.  Like the rest of you, I have had to struggle to keep an optimistic outlook after the events in the economy over the last 18 months. Even the most optimistic person knows that our lives will be challenging for some time to come. And yet, seeing this show only reinforced my belief that we can survive even this. For Laura Ingalls as for us, when we are confronted with seeming catastrophes, somehow life goes on in spite of everything.

When a show like Little House on the Prairie tells it's story, it casts a spell over us. For a moment, the Ingalls' story becomes our story. They experienced the worst and the best that life could throw at them. That happens to us too. They somehow struggled through and survived the worst. Maybe we can too.

For those of us who are small businessmen, the message of hope that this show delivers is what we need to be hearing here and now. It is a message of keeping the faith and holding onto our dreams and our aspirations. It is the message that no matter how bad things may get, giving up is not an option. It is the message that no matter what life throws at us, we each possess the focus, the creativity and the grit to succeed in our lives. We just have to dig deep enough into ourselves to find it and then to continue to believe in ourselves, no matter what happens to us.

Howard Fireman
Productivity Consultant/Accounting
howard.fireman46@gmail.com

Sticking to the Plan

When is the last time you looked at the business plan for your company? That is, if you actually bothered to write a business plan at all. The reality is that too many of the owners of small to medium sized businesses (SMB) never bothered to do so. Starting a business without a business plan is like planning a trip around the world and to never consult a map of any kind along the way.

So you might say, "So what is the big deal anyway if I didn't? I have done fine without one" Well, suppose that is true, then it is very probable you could have probably done significantly better in business if you had taken the time to write a Business Plan. You would have at least known where you wanted to be headed and along the way, you would have known if you were still going in the right direction.

The big deal is that if you want to succeed at trying to do anything, you have to have an idea of what you want to accomplish, what you are going to have to do, what you will need to succeed and a tentative timetable of what you can expect to have accomplished in 3 months, 6 months, 9 months from now.... well you get the picture. Long story short, you have to have a plan of attack and know what your tentative strategies are, if you hope to be successful. In business, we call that plan of attack a Business Plan.

A lot of work and a lot or forethought go into the writing of the Business Plan. But you will reap so many benefits from having put in the effort.

• You will have defined how you want to be perceived by the people who purchase your services or goods. [Branding]
• You will have clearly defined objectives as to what you want to accomplish vis-a-vis your vendors, your customers, your employees and your peers in the business community.
• You will have identified your competitors, and established why customers should buy goods and services from you rather than from them. 
• You will have carefully thought about the product you are going to offer, determined that your product is actually what your customers want and have figured out why what you are offering is definably more desirable than whatever else is being offered in the market place. 
• You will have worked out a business strategy to follow, which you will use as a benchmark against which to measure how closely you are sticking to the plan, and to determine if the strategy is actually working... or not. 
• You will have a predictive Profit and Loss Statement over three years into the future, against which you will compare your actual Profit and Loss figures over those three years. You will know if you underperforming, on target or performing beyond your estimated expectation. 
• As you write your Business Plan, you will be forced to actually go out into the business world to find out what is actually going on out there and to clearly see what you will have to deal with: in terms of the industry realities, competitors, customers wants and expectations, the economic environment and, looking inwardly, your own strengths and weaknesses.
• You will avoid being blindsided by events that could easily have been foreseen at the onset of the business.

Starting in business is no simple proposition. It seems like common sense that you should have to consider a lot of factors before you commit to going into business for yourself. The hard reality is that the odds of a small business being successful aren't all that great, at best. But without a Business Plan, the odds are increasingly stacked against a SMD.

If you have a Business Plan, take it out of the drawer, dust it off and use it to measure how well you have done so far. If you never took the time to write one, now is never too late. Having it will make your business operations a lot more understandable.

And if you have no idea about where to start, when it comes to writing a Business Plan, contact the great folks at SCORE, here in Houston. SCORE is an organization manned by retired businessmen, who were successful in their respective industries. They are volunteers and share their knowledge and experience, at no charge. The folks at SCORE will assist you  in creating a Business Plan for your company. You can find SCORE on the internet at: www.scorehouston.org.

Howard Fireman
Productivity Consultant/Accounting
howard.fireman46@gmail.com

Maximizing the Percentage of Billable Hours Weekly for Consultants

For consultants, time management ranks as one of the top ten priorities in running their businesses. They focus on how many billable hours they can accrue each week. How can consultants carry out marketing activities, handle general administrative tasks, do the necessary accounting for their practices and still manage to maximize the number of billable hours each week? Benjamin K Jackson, Ph.D, a Senior Engineer at Aptech Engineering Services, in Sunnyvale, California has developed a very effective analysis matrix to get a clear sense of how well he is currently utilizing his time and what he needs to do to effectively increase the percentage of time each week he devotes to billable time.

Dr. Jackson's job description involves both his duties as an engineer and his role in bringing in new clients each year for the company. He also must deal with his share of paperwork that goes with the job. So, like all of us who are consultants, he is juggling these competing demands on his time. Approaching this challenge from a very creative angle, he has developed his own strategy for maximizing billable hours, while at the same time handling the other action items on his agenda in a timely manner.

THE RULES OF THE GAME:

This strategy lays out a few rules one has to follow to achieve one's time management objectives:

• Work no more than 10 hours a day. After 10 hours on the job, we are no longer capable of effectively being productive that day.
• Utilize a time-management Excel Matrix to track how we actually use our time, breaking our consulting activities into four categories: (1) activities which produce billable hours, (2) marketing and promotional activities, (3) accounting activities, to track revenue generated and expenses associated with consulting activities and (4) other necessary administrative activities, which are treated as overhead expenses.
• Assign client numbers to each client. Also assign a project number for each of the projects you do for this client. Combine this information into a single code that includes both the client number and the job number:    xxxyy, where xxx = the client number and yy = the job number. Example 03201, where 032 = the client number for the XYZ Company and 01 = project 1 for that client. [A code like this one will enable us to create another analysis matrix to analyze which of our clients are productive for us to keep and which are going to be only marginal sources of revenue.]
• First, track our activities on a daily basis, establishing cumulative daily stats for the weekly tracking, with breakouts for each of the four major areas of activity. The analysis should establish what percentage of the time that day represented billable hours, overhead activities, marketing activities and accounting activities. 
• Next, to track our activities on a weekly basis, creating a separate report for each week. The analysis should establish what percentage of the time that week represented billable hours, overhead activities, marketing activities and accounting activities. 
• Be brutally honest in how we utilize time each week, so that the resulting analytical reports at the end of three months, will have validity and present a true picture of our time usage over that period. 
• Track time usage weekly, but delay making any substantial changes in the way we organize our schedule until at least one month, giving us enough time to gather enough data to recognize any trends in our time scheduling. 
• Make no overriding assumptions about how well we manage time until we have used this strategy for at least three months. After 3 months, we can run a valid analysis of our strengths and weaknesses in managing time. Then we are able to refine scheduling of action items and substantially raise the overall percentage of time we devote to billable hours. 
• Then, based on these analyses, set benchmark goals for realizing a certain consistent percentage level of billable hours weekly, for a fixed period into the future. 

The primary objective is to maximize the cash flow into the company, boosting the revenue the consulting practice produces each year. Additionally, a consultant can study the annual statistical data produced to determine if there will be predictable fluctuations in cash inflow during the year. Different specialties in consultancy will experience different patterns of fluctuation. Also, these analyses can also assess the percentage changes in any of these four activity areas, brought about by internal or external factors, such as reporting requirements by the government or changes in the economy or the business environment. 

I have built a programmed matrix template to track daily activity, based on Dr. Jackson's model. I have also built a second programmed matrix template to track activity on a weekly basis. The two templates are used in conjunction with one another. If you would like to have these templates uploaded to you, please contact me at: the email address listed at the end of this post . When requesting the templates, also request the instruction sheet for utilizing these two spreadsheets. 

A consultant needs to know what percentage of the time he or she is working is producing billable hours. The data the spreadsheets provide enable us to recognize the pattern of time usage over a prolonged period of time. With the derived data, a consultant can identify the problem(s) that are costing him/her valuable time. Then mid course corrections can be made and time which had been lost to action tasks that produce no revenue, can be redirected to generate increased income, instead. 

Many thanks to Dr. Benjamin Jackson for sharing his idea with us. 

Please contact me if you have any questions about this strategy for more effective the time-management function of our companies.

Howard Fireman, Productivity Consultant, E-mail:  howard.fireman46@gmail.com