Watchful Eye: You can't escape the IRS. If you make a small bookkeeping error, the IRS will know. One of the most common mistakes is misclassifying an employee as an independent contractor. If you're found guilty of this, you face severe penalties. But there is good news. The IRS offers a second chance for people who make mistakes.
Steps to Take:
-Fill out form 4670, "Request for Relief from Payment on Income Tax."
-Fill out Form 4669 "Statement of Payments Received"
-Provide Documents supporting your case
Friendly Note:
An employer will not owe employment taxes for misclassified workers if they meet all three requirements described in Sect. 530:
The employer must have reasonable basis for not treating the workers as employees
The employer must have treated the workers and any similar workers as independent contractors for all applicable periods
The employer must have filed Form 1099 MISC (Miscellaneous Income), for each worker, if required
Watch your Back: The Section 530 relief provision doesn't apply in some cases. If you're a worker who provides technical services for the client as a drafter, computer programmer, or engineer, or any other skilled worker in a similar field, the provision will not apply for you. So be careful!
And Remember: Don't be embarrassed about seeking help. No one ever said the IRS was easy. In fact, most people don't fully understand the IRS. To be honest with you, even the Commissioner doesn't know everything about the IRS. Make sure you get reliable, realistic help so that you have less to worry about.
Tuesday, November 24, 2009
Wednesday, November 18, 2009
How to Determine Small Business Client Acquisition Costs and More Importantly Why Should You Know
What does it cost you to acquire and maintain a client?
During my 25 years in business, I am continually surprised that small business owners, entrepreneurs, sales personnel and even executives in larger organizations cannot quickly identify what it is costing the organization to secure new clients and to maintain existing ones. Ongoing efforts through a variety of vehicles including marketing, referrals and cold calling are never truly measured to accurately determine client acquisition cost(CAC). Without knowing CAC, you are ignoring return on your investment (ROI) for not only your fixed marketing costs, but more importantly your customer relationship management focus may be on the wrong customers.
So how do you determine client acquisition cost?
Simply speaking for every client, you delineate all costs associated to initially acquiring that client outside of fixed asset costs such as utilities, rent, equipment, support salaries, etc. This becomes the initial customer acquisition cost and serves as a base.
Then you total up all the sales for the most recent year or quarter, if you prefer, along with the gross profit (total sales less costs of direct products and services). Also in a separate column, total up any new client acquisition costs. New client acquisition costs include sales personnel salaries and all those expenses associated with customer relationship management or CRM. Then add initial client acquisition costs to any new client acquisitions costs and subtract the gross profit from this total. The resulting sum whether positive or negative is your current return on investment in dollars.
Now you have established your baseline for return on investment. Next keep track of all referrals from each client including the gross profit sales as well as gross sales. What you will see that in many cases a client may have a substantial negative return on investment especially if you are trying to get your foot in the door or make a name for your company. However as sales and referrals grow that negative return on investment should turnaround and become a positive one.
The real purpose of this article and activity is for you as the small business owner to begin to measure and then manage your ever growing customer base. Without knowing your CAC, you could be investing thousands of dollars in clients who have low return on investment and potentially ignoring those clients whose value was unknown. And in some cases, you may need to fire a client because the additional CAC is draining your bottom line. Again taking from a very old adage, if you can't measure it, you can't manage it.
During my 25 years in business, I am continually surprised that small business owners, entrepreneurs, sales personnel and even executives in larger organizations cannot quickly identify what it is costing the organization to secure new clients and to maintain existing ones. Ongoing efforts through a variety of vehicles including marketing, referrals and cold calling are never truly measured to accurately determine client acquisition cost(CAC). Without knowing CAC, you are ignoring return on your investment (ROI) for not only your fixed marketing costs, but more importantly your customer relationship management focus may be on the wrong customers.
So how do you determine client acquisition cost?
Simply speaking for every client, you delineate all costs associated to initially acquiring that client outside of fixed asset costs such as utilities, rent, equipment, support salaries, etc. This becomes the initial customer acquisition cost and serves as a base.
Then you total up all the sales for the most recent year or quarter, if you prefer, along with the gross profit (total sales less costs of direct products and services). Also in a separate column, total up any new client acquisition costs. New client acquisition costs include sales personnel salaries and all those expenses associated with customer relationship management or CRM. Then add initial client acquisition costs to any new client acquisitions costs and subtract the gross profit from this total. The resulting sum whether positive or negative is your current return on investment in dollars.
Now you have established your baseline for return on investment. Next keep track of all referrals from each client including the gross profit sales as well as gross sales. What you will see that in many cases a client may have a substantial negative return on investment especially if you are trying to get your foot in the door or make a name for your company. However as sales and referrals grow that negative return on investment should turnaround and become a positive one.
The real purpose of this article and activity is for you as the small business owner to begin to measure and then manage your ever growing customer base. Without knowing your CAC, you could be investing thousands of dollars in clients who have low return on investment and potentially ignoring those clients whose value was unknown. And in some cases, you may need to fire a client because the additional CAC is draining your bottom line. Again taking from a very old adage, if you can't measure it, you can't manage it.
Wednesday, November 11, 2009
Business Plans For Small Business - 3 Compelling Reasons Why You Must Have One
Business plans for small business people is an interesting phenomenon. Most business owners know they should have one but various research indicates only about 56% of small business enterprises has a current one. This article discusses 3 compelling reasons why you should have one if business success is your prime motivation, which is must be for all of us with our own business.
Read on to uncover the myths of business planning and the easy solutions to create one.
MYTH NUMBER 1: Business Plans for Small Business People Seem Difficult to Construct
After personally completing over 146 business plans for many companies big and small, I have seen the difference it can make in a switched on organization. The most effective plans are those that only take about a day to fully construct. Any more than this the plan is likely to be too long, too complex and harder to implement.
So would you take one day a year or even each quarter to construct a relevant specific plan that will provide motivation to you and your team, strategic direction on what you need to implement, and to give you a much higher percentage chance of attaining business success?
Now there are some great resources and tools on the market that makes creating a new plan such an easy way to go. These are neither expensive nor time consuming so really there is no excuse for not doing one.
MYTH NUMBER 2: Business Plans Implementation is often neglected
Business plans for small business are easy to implement if you look at the following structure. The best way to implement your new plan is to complete a yearly one of only 5-12 pages depending on the complexity of your small business.
Then create a quarterly 90 day plan which is only 2 pages long every quarter. This makes planning a breeze.
The longer yearly plan sets the goals and gives more detail but the shorter plan is just as powerful as it is the action plan needed for implementation.
The best results in implementing strategy is when you look at your 90 day plan of action each week and put time aside of about 3 hours a week to plan and take action.
This means you have a yearly focus broken down to quarters but implementation is done weekly. A sure fire rapid way to achieve maximum business success.
MYTH NUMBER 3: To Start Planning Seems Difficult
Planning is essential for success. Even the statistics shows over 70% of businesses that succeed over a 5 year period have a written plan. Conversely the 80% plus statistic of business failure shows a very low percentage of people in this category have a written plan.
Bottom line: You are absolutely more likely to succeed if you have a current written plan or you are more likely to fail if you have not.
To start planning just look for a business planning template online and get started. These days a better option is to purchase for a very small fee planning software that even has what others in your industry have completed before you. This makes it extremely easy to plan successfully as you use the example for a guideline and change it to suit your individual circumstances.
Business plans for small business are easy to implement if you use the right tools, cheap to construct and a vital skill for you to reach the heights of success you deserve. If the fruits of your labour are currently now what you desire, then I commend you for completing a powerful business plan of action so you can rightly reap the rewards of all of your hard work.
Read on to uncover the myths of business planning and the easy solutions to create one.
MYTH NUMBER 1: Business Plans for Small Business People Seem Difficult to Construct
After personally completing over 146 business plans for many companies big and small, I have seen the difference it can make in a switched on organization. The most effective plans are those that only take about a day to fully construct. Any more than this the plan is likely to be too long, too complex and harder to implement.
So would you take one day a year or even each quarter to construct a relevant specific plan that will provide motivation to you and your team, strategic direction on what you need to implement, and to give you a much higher percentage chance of attaining business success?
Now there are some great resources and tools on the market that makes creating a new plan such an easy way to go. These are neither expensive nor time consuming so really there is no excuse for not doing one.
MYTH NUMBER 2: Business Plans Implementation is often neglected
Business plans for small business are easy to implement if you look at the following structure. The best way to implement your new plan is to complete a yearly one of only 5-12 pages depending on the complexity of your small business.
Then create a quarterly 90 day plan which is only 2 pages long every quarter. This makes planning a breeze.
The longer yearly plan sets the goals and gives more detail but the shorter plan is just as powerful as it is the action plan needed for implementation.
The best results in implementing strategy is when you look at your 90 day plan of action each week and put time aside of about 3 hours a week to plan and take action.
This means you have a yearly focus broken down to quarters but implementation is done weekly. A sure fire rapid way to achieve maximum business success.
MYTH NUMBER 3: To Start Planning Seems Difficult
Planning is essential for success. Even the statistics shows over 70% of businesses that succeed over a 5 year period have a written plan. Conversely the 80% plus statistic of business failure shows a very low percentage of people in this category have a written plan.
Bottom line: You are absolutely more likely to succeed if you have a current written plan or you are more likely to fail if you have not.
To start planning just look for a business planning template online and get started. These days a better option is to purchase for a very small fee planning software that even has what others in your industry have completed before you. This makes it extremely easy to plan successfully as you use the example for a guideline and change it to suit your individual circumstances.
Business plans for small business are easy to implement if you use the right tools, cheap to construct and a vital skill for you to reach the heights of success you deserve. If the fruits of your labour are currently now what you desire, then I commend you for completing a powerful business plan of action so you can rightly reap the rewards of all of your hard work.
Wednesday, November 4, 2009
Small Business Marketing Tip - Focus on a Niche or Target Market
I think selling and marketing today often feels a bit like talking to a brick wall and that in interesting metaphor to help grasp the importance of niche marketing especially when it comes to small business marketing. Imagine for a moment that you are attacking that brick wall with a hammer, randomly hitting it everywhere. What would be the effect? Practically no effect at all. You might knock off a few chips but come back a day or so later, there will be no evidence you were even there.
And that’s the effect of any broad marketing and advertising campaign. You may make the odd sale, but overall nothing will happen and a day or so later people will not even remember your name. But back to that wall again, imagine you took a different strategy. Instead of hitting all over the wall, you concentrated on just one brick, or you searched the wall to find a brick that was already weak. Now you are going to have a much better result.
And that’s really the secret to small business marketing. Without the resources to reach millions of people, you have to concentrate your efforts on a small tightly defined market or research the market carefully and identify a small group with a similar urgent problem you can solve. Lets face it few small businesses are going to become global household names and even if they did, most simply don’t have the capacity or the desire to support a huge market. Amazon.com may have been built in a garage but it was backed by a $300,000 investment and plans to build an international distribution business.
I have friends in the speaking business who deal only with dentists, yet their business turns over millions of dollars a year. In their market they have a huge presence and high reputation. They know everyone and everyone knows them.
The strategy is simple - Define a clear niche for yourself and set out to OWN it.
1. A niche you have a passion for, that you love being part of
2. A market of people you want to do business with
3. Only do business with people you like
4. Find businesses or people who have common problem’s you can solve
5. Look for people who are likely to know each other
6. Seek networks of people who regularly meet each other
A niche doesn’t have to be local to you. It can be global as long as it meets most of the criteria above. Once you have selected your niche its much easier to identity the magazines people read, the trade shows they visit, the conferences and networking meetings they attend, the places they meet, directories they are listed in, the online forums they are members of etc., and become a part of that community yourself.
By working in a niche market you will quickly become an expert in solving their unique problems. You will understand their jargon. You will be talked about and recommended by people when they get together. You can establish relationships with editors and webmasters in the market and built a guru status.
More importantly you will be much more able to customise your products and services to the specific needs of your niche market and demonstrate not only that you understand them, but that you care. All business marketing is ultimately about relationship building but that is so much easier for a niched small business because you can be much closer to the issues and you are able to adapt to changes more easily.
And that’s the effect of any broad marketing and advertising campaign. You may make the odd sale, but overall nothing will happen and a day or so later people will not even remember your name. But back to that wall again, imagine you took a different strategy. Instead of hitting all over the wall, you concentrated on just one brick, or you searched the wall to find a brick that was already weak. Now you are going to have a much better result.
And that’s really the secret to small business marketing. Without the resources to reach millions of people, you have to concentrate your efforts on a small tightly defined market or research the market carefully and identify a small group with a similar urgent problem you can solve. Lets face it few small businesses are going to become global household names and even if they did, most simply don’t have the capacity or the desire to support a huge market. Amazon.com may have been built in a garage but it was backed by a $300,000 investment and plans to build an international distribution business.
I have friends in the speaking business who deal only with dentists, yet their business turns over millions of dollars a year. In their market they have a huge presence and high reputation. They know everyone and everyone knows them.
The strategy is simple - Define a clear niche for yourself and set out to OWN it.
1. A niche you have a passion for, that you love being part of
2. A market of people you want to do business with
3. Only do business with people you like
4. Find businesses or people who have common problem’s you can solve
5. Look for people who are likely to know each other
6. Seek networks of people who regularly meet each other
A niche doesn’t have to be local to you. It can be global as long as it meets most of the criteria above. Once you have selected your niche its much easier to identity the magazines people read, the trade shows they visit, the conferences and networking meetings they attend, the places they meet, directories they are listed in, the online forums they are members of etc., and become a part of that community yourself.
By working in a niche market you will quickly become an expert in solving their unique problems. You will understand their jargon. You will be talked about and recommended by people when they get together. You can establish relationships with editors and webmasters in the market and built a guru status.
More importantly you will be much more able to customise your products and services to the specific needs of your niche market and demonstrate not only that you understand them, but that you care. All business marketing is ultimately about relationship building but that is so much easier for a niched small business because you can be much closer to the issues and you are able to adapt to changes more easily.
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