Tag: mann

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What will my business be worth when I need it to be worth a lot? Your Exit Strategy

What will my business be worth when I need it to be worth a lot?   Your Exit Strategy

An exit strategy, as defined in Wikipedia, is “a means of leaving one’s current situation, either after a predetermined objective has been achieved or as a strategy to mitigate failure.”  With planning, a solid approach to managing business finances and operations, lots of hard work and a little luck (and more planning), your exit strategy from the business will look more like something from the first category rather than the latter.

It’s important to note that having an exit strategy doesn’t necessarily mean that the sole purpose of the business is to sell out for a bunch of money – not right away, anyway.  For many small business owners and entrepreneurs, the exit strategy is really about where they want their businesses to be in the future, and what they hope to get from it now and later.   For every small business owner, it is a balancing act between meeting today’s needs and reaching tomorrow’s goals.  The “Exit Strategy” is the essential plan for recouping the capital (money, time, effort) that has been invested in a company, whether that “recouping” happens earlier or later.

Not every business owner is in business to become a Fortune 500 company; some small businesses exist largely to support the lifestyle desired by the owner, and to perhaps leave a legacy behind for the heirs.  As with any investment strategy, a well thought out plan must be developed and followed in order for the entrepreneur to have a chance of reaching the desired outcome with the business.  What is really difficult is getting that plan in place, and then monitoring progress and making adjustments over time.   Business valuation – establishing the worth of the business – isn’t done based on data from a single point in time, it must capture historic performance data over several years of operation.  Business value also takes into consideration whether or not there is a profitable future for the business given its current condition, based not just on historic information but on industry outlook as well as economic and competitive landscapes.

Because business value is a dynamic thing, potentially changing with any given activity or event, it is essential that the business owner monitor performance and how it impacts the value “goal”.  Too often is a business owner caught off guard, believing that things were going very well because the cash flow was good, only to find out that they have drawn too much cash out of the business to allow it to grow in a healthy manner.  If the goal of the business is to support the owner lifestyle, perhaps this is not a problem, as additional growth of the business may not be the primary goal established.  The following quote from an article on Entrepreneur.com described this type of business owner pretty well:

“I asked the owner of a small, fabulously profitable manufacturing company why he didn’t grow the business bigger and sell it for a gazillion dollars. His response: “Excuse me? You’ve had way too much schooling. What part of 30-hour work weeks and a $5 million personal income don’t you understand?”

For most small business owners, this is where the struggle becomes visible – understanding that what you do now in the business impacts what you will get from it in the future.  If the business needs the money to grow, then taking too much out will stifle that ability.  If part of the exit strategy is to build value in the business and position it for acquisition, then a growth strategy is likely a requirement.  On the other hand, if you’re getting what you want and need from the business, and growth isn’t your imperative, then it is good to know that, too, and plan accordingly (the cash cow won’t be alive forever without proper care and feeding!).

The key for every business owner is to establish the goal – the result they wish to achieve from having the business – and to then make a plan and follow it as best they can, adjusting to changing conditions and situations, but never letting the path and the goal get out of sight.

Make Sense?

J

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Not Everybody’s Accounting Online: Outsourced Bookkeeping and Accounting for “Offline” Clients

Not Everybody’s Accounting Online: Outsourced Bookkeeping and Accounting for “Offline” Clients

With all the focus on online technology, solutions that help you work smarter and not harder, and having mobile access to information at any time and from anywhere, you’d think that the entire world had adopted an entirely mobile and high-tech approach to life and business.   The popularity of software-as-a-service models and apps for just about everything are certainly a testament to the movement toward a more connected and mobile lifestyle and business environment.  However, not every business has adopted a comprehensive paperless, mobile-accessed, virtual working world – not by a long shot.  In fact, more folks than you may realize are still using actual paper, writing things by hand (things like checks and invoices), filing piles of paperwork in stand-up filing cabinets, and generally doing things the long, slow, painful way and then recording it on PC-based spreadsheets.  You know – the way we did things before the Internet showed up.

While paperless offices and technology-enabled approaches to collaborative business are gaining popularity and adopting users every day, there is a community of business users out there who are not as laser-focused on the high-tech approach to online accounting and working closer with their outsourced accountant or bookkeeper.  These business people are just getting the job done, and have found ways to handle their information and processes that work for them.  It is this business user that accounting professionals should not forget as they seek to adopt new and innovative cloud approaches to service delivery, and for a couple of reasons.  First, this type of client is likely to be in need of process support and additional service as the business grows, and the accounting professional is in a great position to help with those needs.  Second, this type of client exists in great number.

Consider the following scenario; a discussion I discovered when perusing a small business forum recently.  The interesting thing is that this is a discussion I see pretty frequently with small business owners and entrepreneurs – the discussion about the value of actual accounting or bookkeeping solutions versus a simple spreadsheet approach to record keeping.

I am the owner of a brand new small business. It has only been up and running for a short time. My accountant is pressuring me to use the online version of QuickBooks, but I am doubtful as to whether this is the right software for me.

I know that QuickBooks has a lot of different features, but I really only need it to track spending and customer payments, and since it’s still early on, I don’t have a lot of either. I would only need the very basics, and would probably only check it every two weeks at most.  The fees they want for the software would add up pretty quickly for something I’m not really going to use much.  My business is very small (just me) and service-based (tour guide), without much potential for repeat customers. I don’t need the payroll, invoicing, or other advanced features.

I honestly think that the easiest thing for me would be some sort of spreadsheet or really basic software that I could put directly on my computer instead of accessing online.

The truth of the matter is that spreadsheets often provide the common ground between small business owners and their accountants.  For a business owner, spreadsheets offer a simple and intuitive way to organize and record information because the column layout makes it easy to understand where to enter which data.  For the accountant, a spreadsheet can fairly quickly be sorted, filtered and prepared as accounting or tax return data.  While working with clients in a fully online, collaborative model may be the “best case scenario” in terms of delivering high levels of service in the most efficient manner, understanding how best to work with those clients in other scenarios is also necessary.  Getting the spreadsheet from this type of client is generally not terribly difficult – they are often more than willing to email it.  As long as the professional has a good document management solution to capture and manage these files, and introduce them into the firm workflow, then working with this type of offline client doesn’t have to be a huge impact to internal firm efficiency.

For accounting and bookkeeping professionals working with small business owners around the country, this type of client likely fits into the “normal” category more than those with a strong motivation to use cloud computing and having a great desire to use the Internet and connected services for everything they can (eventually the “new”normal?).  I believe the reality is that only a small fraction of smaller companies – solo, soho, and small/medium business – are actively managing the majority of their business process and information online.  In fact, Intuit (makers of QuickBooks) and other entry-level accounting and bookkeeping solution providers continue to heavily target small business users who are still tracking their finances using spreadsheets and other methods.  This simplified and after-the-fact approach to spreadsheet record keeping is being further facilitated by the banks and credit card companies providing customers with a greater ability to classify and categorize transaction information, and then quickly download it into said spreadsheet.

Yes, the dichotomy is clear: many small business owners resist (or are, at least, unimpressed with) cloud accounting approaches, yet these very same individuals are likely utilizing cloud services from banks and other financial institutions to support their spreadsheet and checkbook record keeping, as well as accessing email and other services via the web for various reasons.  It makes some sense, though, when you look at it from the business owner perspective.  Their way sounds easier, is less overwhelming, and meets the need – for now.

J

Learn more about Working Online With Clients: How to leverage the internet and cloud computing to work closer with your clients

Read more about Online Accountants and Their Clients: Working Smarter, or just Closer?

Read more about Data Warriors: Accountants in the Cloud

Read more about using the cloud to extend “connectedness” beyond traditional boundaries

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Knowing More: CFO and Accountant Value in Understanding Business Operations

Knowing More: CFO and Accountant Value in Understanding Business Operations

Accounting professionals are being pressured to deliver more value and intelligence to their business clients every day.  The pressure comes from a variety of areas, not the least of which is the fact that a lot of do-it-yourself tools are now available which lead business owners and managers to believe that they know what’s going on in the business.  Lots of charts, graphs, and dashboard presentations make the numbers more readable, but they don’t say whether or not the numbers are even right.  Even more important, they don’t deliver insight based on experience and understanding.  This is where the accounting professional’s value really comes from – providing insight based on good data and quality data analysis backed by experience and understanding of the business.

You can’t be a good CFO or a strategic business partner to your CEO until you thoroughly understand operations and how they drive performance,
CFO.com (http://s.tt/1rtoZ)

Knowing what makes a business valuable is important, but what many business owners don’t fully understand is how to best increase that value.  Generalized reports which summarize financial information, distilling it into a standard set of metrics, often don’t tell the business owner what they really need to know – how to go about increasing the overall value of their business, whether it is through improved profitability or through growth.

The business owner understands the operations, but not necessarily how operational activities actually impact value and profitability.  Helping owners know more about their enterprises requires that the accounting professional also know more, where gaining a deep understanding of operations and learning what business functions are addressed and how becomes the key to bridging the gap between operational knowledge and business valuation. This is where the accounting professional or CFO can really make a difference, and can help to apply their knowledge in building business value directly towards those areas which fundamentally impact it.

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about Data Warriors: accounting in the cloud
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Working Online With Clients: How to leverage the internet and cloud computing to work closer with your clients

Working Online With Clients: How to leverage the internet and cloud computing to work closer with your clients

When it comes to using technology and the Internet to work closer with bookkeeping and consulting clients, it is important to recognize that there is never only one way to accomplish something, and different clients will have equally different ideas on and tolerances for how you work with them.  In order to serve each and every client to the best of your ability, you have to carry around a “toolbox” of solutions and services which will assist you in delivering the most effective and efficient service in each situation and under each set of conditions.  While you must do what you can to streamline and standardize your processes to be as efficient as possible while delivering a high level of service, but you can only work within the parameters allowed by each client and circumstance.

Paperless_468x80

I think we can all agree that, whenever possible, it is wise to avoid situations where you have to get in the car and drive somewhere just to pick up information or paperwork.  These are the activities which are most costly in terms of time and resources.  Using file sharing solutions, such as DropBox or ShareFile, is a great way to get documents from clients.  That is, if the documents are in electronic form already.  If not, then either scanning the files and saving to the Dropbox or web folder, or faxing them to a service such as eFax, is the process.

Sometimes Internet connectivity is the issue.  Using a fax-to-email solution like eFax takes that out of the picture, in terms of getting documents and other paperwork from the client.  But let’s face it… there is no good way to electronically exchange or share QuickBooks or other computer data files safely and quickly unless the client has broadband Internet access.  You can always go back to dialup modems and connect using the old version of PCAnywhere, the way we did it years back, or you can recognize that sometimes you just have to get in the car and bring a USB drive with you.

Internet-based remote control solutions, such as LogMeIn, provide you with the ability to connect your computer directly to the client computer in order to perform tasks on their system and with their data.  This is a better approach than going to the client office and doing the work there, but it doesn’t address a situation where both you and the client need to be working at the same time.  If you are controlling their computer, you take over the workstation while you are connected, which prevents the client from doing independent work while you are doing your job. The better option is to use a solution that allows you to both work at the same time, even when connecting to the same computer.  MyQuickCloud does this. MyQuickCloud is a remote access solution that can be applied as both a remote access and remote working solution. It is better than remote control because it can allow many users at the same time to connect to the computer and run applications.

In some cases, working online with the client may mean working in the same applications and data files by accessing a centralized online solution, such as QuickBooks Online Edition or hosted QuickBooks (QB Online and hosted QuickBooks are not the same thing).  When both people (the client and the accountant/bookkeeper) have access to the same programs and data files in real-time, it allows them to work together more closely yet at times and from locations which work for the individuals.  This arrangement works quite well when the accounting professional and the client can both serve their requirements with the same software solution.  If the client uses QuickBooks to perform their daily tasks, the bookkeeper and accountant are able to simply log in and use the same solution to perform their work.

A model which more people are beginning to recognize as valuable is the model where each user or functional area in the business has the solution which works best for them, and the various solutions in the business each integrate and share data as necessary.  For an accountant or bookkeeper working with a small business, this may mean that the software or solution used by the client to handle their daily tasks is different from the solution used by the accounting professional to do their job.  Just as a tax preparer will use accounting data to prepare a tax return using a tax preparation solution, accountants may use transactional or financial data from other systems to perform accounting functions in an accounting software solution.  As long as the data is easily accessed, via built-in integration or sync tools, it makes a lot of sense to give each user a solution designed to meet their process needs because they will use the solution more effectively.  Giving a user way too much functionality can be confusing, and expose them to areas of business activity or information they should not have access to (or which is meaningless to their job) can waste time and introduce risk.

Examples of this approach might be where a small business owner uses FreshBooks accounting to manage their daily invoicing, but the information is then exported to and integrated into QuickBooks financial software, where the accountant or bookkeeper handles the rest of the business accounting functions. Another example may be when services such as Bill.com, TSheets, Expensify, Concur, and other “point” solutions are in use. These web-based solutions provide specific functionality, such as bill payments and approvals, employee timesheet management and reporting, expense management, and more.   They make it easier for the client to handle certain functions and address related information management and reporting needs, and facilitate the data integration with core accounting and finance.  In many cases, this approach delivers not only more relevant functionality and process support for the business users, and still allows the accounting professional to do their work with the tools which work for them.

Providing a high level of service to your client while embedding as much efficiency in your processes as possible can be a challenge for any outsourced accounting or bookkeeping professional.  Your profitability and the goodwill you develop with your client depend on finding the best way to engage and deliver on the promise of great service.   Your toolkit  – the connected services and solutions you leverage to this task – can positively impact the “degree of success” you experience with each client or project.

Make Sense?

J

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You Spent What?! Keeping Tabs on Travel Expenses

You Spent What?! Keeping Tabs on Travel Expenses

In the world of business, it sometimes becomes necessary to travel. Whether it’s sending an employee to your client’s business in the next town or across the globe to make a deal, travel incurs expenses. How do you track those? Usually by painstakingly collecting receipts and keeping a copy of any travel itinerary. That’s an awful lot of paper.

Think about it. You get a receipt every time you make any kind of transaction. Let’s say you stop for gas on the way. You get a receipt. Take your client out for lunch? Receipt. Fly across the country? Another receipt, and an itinerary. It almost becomes necessary to get a folio just for receipts, you get so many. As a matter of fact, many do. Folios, folders, organizers. I’ve seen them all. Not one of them makes compiling the expense report easier. It still requires sorting and entering the data by hand. Such a waste of time. Time better spent on what you really need done. Making money and growing your business. Getting a report on what was spent, where it was spent, and how much to bill or reimburse should be as easy as clicking a couple of buttons. It’s not, but it should be.

Look at it from the other side of things. Let’s say I’m an employee and you’re sending me to Nashville to attend a conference. I’m also supposed to have a “meet n’ greet” with some clients, just to ensure that they’re happy and content. I’m stressed because I have to remember to keep every piece of paper I get on this trip. Plane tickets, rental car, hotel, food for myself, food for the clients. Everything. Not only do I have to keep track of it all but I don’t get compensated until after I get back, and only if I manage to keep all of those receipts.

Making the process easier is the next logical step when it comes to tracking expenses. Finding a way to cut down on the time it takes to compile the report, cut down on the number of receipts kept, or even getting rid of the need to keep the receipts at all. Everything under the sun is online these days. Online and paperless. It’s just easier than keeping a pound of receipt paper in your carry-on. With all of the technology that is readily available on today’s market, shouldn’t it be easier than that? One click should be all it takes. Okay, maybe two. My point is that it shouldn’t be pulling teeth just to keep everything in line and under control.

Which is why Concur is such a good thing. Concur.com has taken the headache out of the entire process. Snap a photo of your receipt with your smartphone and send it using Concur. It filters all of the data and attaches it directly to an expense report. It even integrates with Tripit, which allows you to maintain an up-to-date itinerary and travel management capabilities. Concur even tailors travel options based on company policy and individual preferences. Paperless and painless. Just what the doctor ordered.

Make Sense?

See Concur’s innovative and incredibly useful travel and expense management solutions at Cloud Summit 2012.

Get Cloud Summit information here.

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Cash flow troubles can get you in more than just debt: CFOs can be liable for Payroll Tax liability, potentially criminal

Cash flow troubles can get you in more than just debt:

CFOs can be liable for Payroll Tax liability, potentially criminal

With the economy being sluggish and, in some regions, stalled and even worse, a lot of businesses both large and small are feeling the crunch.  Cash isn’t coming easily for anyone, and the cost of running the business and employing workers just keeps going up even if revenues don’t.  Managing cash flow is important when there is cash to manage, but keeping it all going when there isn’t much coming in takes real skill and planning.   Knowing where to cut or limit expenses is essential, but knowing what NOT to forgo when paying the bills can be just as critical if not more so.  You don’t pay the light bill, maybe the lights to out.  You don’t pay payroll taxes, maybe you go to jail.

A recent article on CFO.com discusses the findings where, in cases where payroll taxes were unpaid by the business, specific individuals were held directly and personally responsible for the liability.  And the liability is not contained solely within the walls of the C-level; it may extend to any and all individuals considered to be responsible.   Those who control the purse strings, making the daily decisions on what to and what not to pay, are the folks being identified as responsible for the failure to pay whether they were able to come up with the funds or not.

Responsible individuals, according to the penalty, may include corporate officers, directors, shareholders, bookkeepers and even third parties, such as CPAs, or corporate counsel. In exceptional cases, responsible individuals can have criminal tax liability for failure to pay payroll taxes.
CFO.com (http://s.tt/1p9wf)

To be fair, insufficient funds may seem like a logical reason for not paying payroll taxes. But the Ninth Circuit Court of Appeals in another case, United States v. Easterday, 564 F.3d 1004 (9th Cir. 2009), determined that Easterday could be convicted of a crime even though he may have been able to prove that his company didn’t have enough funds to pay the payroll taxes.
CFO.com (http://s.tt/1p9wf)

Accounting professionals working with businesses and acting as the Trusted Advisor can help their clients avoid facing this type of decision and risk by helping them to monitor and actively manage their businesses more closely – at an operational as well as financial level. Rather than relying upon a current bank account balance or after-the-fact financial reporting to provide the information for making decisions each day, business owners need continuous, real time, actionable data to help them keep the business going forward, and to help keep them out of trouble.

With better information, trend analysis and a little forecasting, accounting services and consultative advice from a trusted accounting professional does not simply help the business stay in business, it could help prevent the business owner, CFO or controller from having to wear an unfashionable orange jumpsuit and shackles.

Make Sense?

J

  • Read more about how accountants need business intelligence, too
  • Read more about how there’s no fear and loathing in accounting
  • Read more about the pressure on accountants to deliver more value and intelligence to their clients
  • Read more about Data Warriors: accounting in the cloud