business finance Archives | Page 11 of 12

You Don’t have to Be in the Music Industry to Learn from its Current Changes

I came across a good article discussing the 10 Truths about the Modern Music Business. The remarkable fact about this article was that you don’t have to be in the music industry to appreciate the observations in the article. As I read the article, I substituted “business person” for “artist,” and “customer” for “fan.” In most cases, there was a direct relationship among industries.

Now, I am not saying that every point can relate to other industries, exactly, but let me give you an example. I told a client that when I Go-ogled his industry in the southern California area, his company did not materialize. In fact, I had to insert a very refined search term, and his city, just to find his company’s site. Ironically, his competitors appeared all over my results. His response, “Well, that is not the way my business works. Companies don’t Google to find my type of business.” I asked him, “Then why are you losing market share? Why are you struggling to bring in new business, where the same competitors seem to be growing?”

This article has some good points that businesses can take home like, the use of technology to stay in front of the field, and the need to communicate directly to your target prospect, and not rely on Yellow Pages, or some other platform to do it for you. New thinking is taking hold in the world of Strategic Planning. Will you be a leader and embrace them, or be left behind with only excuses?

Music App Swims in an (Apparent) Blue Ocean Strategy Looking for a Long Tail

You remember the music industry, don’t you? You know, the enterprise sunk by pirates on dry land? But, light shines brightest in the darkness. An article came across my computer that shows the ingenuity of these creative enterprises. The article is New iPone apps are changing how music is marketed and made. This is a good example of a strategist using the Blue Ocean Strategy to create a long tail. (See Chris Anderson’s video on the Long Tail and the music industry).

In the IPhone article, the creator of the BandApp has designed an app that helps bands to launch their own virtual record companies. The app “works as a record store, marketing department and cameraphone-wielding stalker combined.” The app seems to take out the middlemen between the band and the fans. This of course is creating a blue ocean strategic plan for both the bands and the app owner because the traditional record company cannot compete on this level. The record company can advertise more, create more tours, but ultimately there will be forced to confront this app (or some derivative of it) head on. There will be no avoiding it. The app is creating a blue ocean where there is no direct competition.

Likewise, the owners of BandApp also are looking for the long tail. “Equally, rather than trying to sign five bands in hope of selling a million records each like a record company, he can, without risk, “sign” 100,000 bands, even if they’re only likely to sell 50 records each.” What that means is instead of focusing on the big-selling bands in the top tier, they are focusing on all the rest of the bands regardless of popularity. On an X-Y axis, with the Y axis representing dollars, and x axis representing band ranking, the graph would look like a big mountain with an infinitely long tail. That tail gets smaller as it stretches to the right. This is the money-making arm of BandApp.

During times of economic gloom, strategist who find their blue ocean will more likely survive now, and maybe prosper when the economy improves. The long tail combines the strategy with the new viral markets.

Play by the Rules with S-Corporations

The use of S-corporations has been rising in recent years. However, the challenge is to operate them correctly so as to not create a fatal mistake invalidating your S-corp election, or other problems. Here are some areas to be careful

Make sure you give yourself an adequate salary. Many S-corp owners take only draws thinking that they can escape all Social Security and Medicare taxes. The IRS is very keen to this one. There has been some attempts to make all S-corp income subject to self-employment tax. This legislation would eliminate the need for reasonable salaries.
Be careful when you pay back your loans to the S-corporation. If you used those loans as part of your basis to take losses, you may have to recognize income on their repayment.
In order for an S-corporation to have a single class of stock, the economic interests must have the same rights to distributions. If partners are to receive disproportionate distributions, then maybe an LLC is your best choice for a tax vehicle.
When an S-corp shareholder leaves, be sure allocate the activity properly and provide all applicable elections.

If you have an S-corporation, consult your tax advisor when making decisions that may affect its status.

How to Hire Bookkeeping Services in Los Angeles

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Bookkeeping: The mere mention of the word can give business owners a headache. But it doesn’t have to be painful. In fact, if you follow these ten tips for hiring business bookkeeping services , you can reduce errors, increase productivity, and improve profitability.

1. Don’t Do It All Yourself!: Most small business owners hate the idea of handing over the bookkeeping reigns to someone else. They feel like they’re losing control. Does this sound like you? The truth is that having small business bookkeeping services in fast-moving Los Angeles actually frees you up to focus on your core business and serve your customers better.
2. Communicate: Communication is key when you hire a small business bookkeeping services in Los Angeles. Make sure you keep the firm up-to-date on all financial transactions—especially such things as new property purchases and employee bonuses that are often overlooked.
3. Save Receipts: This may sound like a no-brainer, but it’s easy to forget to keep receipts or even misplace them in the day-to-day hubbub of a busy office. It’s important to have the backup documentation for your deductions so tax time can be easier and more beneficial.
4. Track Expenses: As a small business owner, you may pay for expenses out-of-pocket. While this is not ideal, the real problem is forgetting to track these expenses and submitting them to the company to be reimbursed. A small business bookkeeping services in Los Angeles specializes in keeping you on track so you can reduce your tax liability.
5. Reconcile Properly: It’s a fundamental aspect of bookkeeping. The books and bank statements must be reconciled each and every month. This can be a time consuming process for a business owner, so again this is another task that can be managed by a small business bookkeeping services in Los Angeles.
6. Backup!: A paper trail is imperative. Documentation or verification should always be available. You don’t have to have all of it on-hand. Just sign-up with an automatic data back-up service to ensure everything on your system is backed-up on a daily basis.
7. Properly Classify Employees: Do you know who is an employee, who is a contractor, a consultant, a freelancer? It can get confusing. Make sure you hire a small business bookkeeping services in Los Angeles to help you classify each and every employee so you can get the biggest benefit at tax time, not to mention avoiding penalties for misclassification.
8. Know Your Petty Cash: How much money is in petty cash at any given time? Setup a system and make sure a petty cash slip is filled out whenever money is removed for any purpose. Something as simple as petty cash can really mess up a company’s bookkeeping.
9. Categorize Expenses: Are you using the right categories for expenses? Again, this can get confusing. Your small business bookkeeping services in Los Angeles can help you follow generally accepted accounting practices.
10. Deduct Appropriate Sales Tax: Many retail businesses make mistakes when deducting sales tax. This can actually be a huge problem if you have many total sales because it results in a higher total sales amount without lowering the taxes due. Of course, this can be easily corrected and regularly monitored by a small business bookkeeping services in Los Angeles so you can avoid any tax burden as a result of sales tax.

These may seem like second nature to some business owners, but keeping focused can keep your books clean.

Do You Know Your Company’s Risks? Are You Managing Them?

Leaders of small to medium-sized businesses usually have two things on their mind: What are my sales? And, do I have enough cash to make payroll? Don’t settle on a reactionary position in dealing with the risks that can have long-lasting effects.

Many businesses suffer, and fail because their leaders do not see the inherent risks that can negate the years of hard work it took to build the business.Here are some tips to managing the risks:

Look at your company from the 20,000 foot level: The first step to managing risks is to identify, on a broad level, your company environment. What is the established company culture that increases your risks? Why is the culture like this? What is the company philosophy? If you need a blueprint, use the COSO ERM (Enterprise Risk Management) framework as a guide.
Take your business apart: Look at your company by business unit or profit center. Use techniques like questionnaires, interviews, or my favorite, scenarios.
Access the Risks: Access the risks visually. I have found that flowcharts show the snags in operations that lead to inefficiency, misappropriation, and possible fraud.
Develop a plan and assign responsibilities: An ERM plan should tie into the company’s strategic plan. All cylinders should be firing sending the machine in the same direction.
Be proactive in your thinking: Don’t react to crises, but implement controls that can prevent, or at least detect a breach of company policies and procedures.
Communicate the plan: All department heads and executives should own the responsibility of implementing the plan and controls.
Use metrics to monitor: We create executive dashboards that monitor certain benchmarks, critical success factors, and accounting ratios that indicate the plan is in operation. This is essential, because an unmonitored plan is a dead plan.
Be flexible and alter the plan: Nothing is in stone. Businesses are not stagnant, so change the aspects of the plan that are not working.

Consumer Fraud–Identity Theft Protection Tips

Small safeguards can save you consumer fraud giant headaches. Many safeguards are common sense, but in today’s information age, sometimes the sence isn’t so common.

Do not readily give out personal information. For example, some restaurants request a credit card number over the phone when making reservations. Do not give it, and go to another restaurant. Your protection is only as good as their security. Even if the restaurant’s employees are trustworthy, credit card information could be left unattended for the others to view.
Be careful of copied documents or identifications. Years ago, I was asked to prove my residence in a city three different ways for my son’s baseball all-star qualification. One identification they were requesting was a copy of a driver’s license. Parents were unaware that a driver’s license number and birthdate are invaluable data for bank accounts and other privacy circumstances. If you must provide a copy of such, black out the sensitive information. The document you may be handing over may pass through many hands.
Restrict access to your personal information. Passwords on computers are essential. Access to your computer can provide information to undesirable eyes
Do not let anyone cash your checks without a phone call from the bank. Visit your bank and arrange to block the cashing of all checks unless they phone your cell phone. This procedure has prevented the fraudulent check cashing four times in five years for me. The last time, a bank called me for check cashing by a client who did not write the check. Individuals produce fraudulent checks and cash them at your bank.
Do not return calls to suspicious area codes. Scammers text messages, or leave phone messages with some urgent message. They entice you to call a number that is to the Caribbean (e.g., “809” area code) and keep you on the line as long as possible. That can bring charges up to $25 per minute. I have also heard of some scams that transfer your call around the world amounting to hundreds of dollars on your bill. Be careful. Here are some other area codes.

Country Code

Bahamas 242
Barbados 246
Antigua 268
Cayman Islands 345
Monsterrat 664
St. Lucia 758
Puerto Rico 787
St. Kitts/Nevis 869
Jamaica 876
Bermuda 441
N. Commonwealth 670
Trinidad &Dominica 767
Tobago 868

How do you include social networking in your business strategy?

I remember when I was a little boy, how I used to marvel at the futuristic gadgets that Walter Cronkite would display in the Sunday night program, The 21st Century.The program was designed around scientific advances that could re-shape our lives in the next century.The 21st Century seemed so far away to a little boy in the 1960s.But here we are.

In the 1996, my interest was piqued with Bill Gate’s books, The Road Ahead. In this book, Bill Gates predicted that we were nearing a society where financial transactions, product research, file transfers, and such could be transacted though the internet on a device the size of a checkbook.

How ironic, within the next decade, Steven Jobs would spearhead the invention of the Iphone.Users now bring up all sorts of applications including social networks like Facebook, Twitter, etc. These social networks are becoming the foundation of the new business communication.

But, how do these social networks impact business? So many businesses just stick their toe in the SN waters. Can business really take advantage them?

The answer is a guarded “yes”.

The advantages of such networks are communication and visibility. Implemented correctly, vehicles like FaceBook, LinkedIn, Twitter, blogging, and others can enhance your company’s visibility, and draw the world to your web site.With increased visibility comes opportunity.
There is a downside to these opportunities, however. Employees can post criticism on blogs that may hurt the firm’s reputation.In addition, the opportunities with any of these networks can be a bottomless pit sapping into employees time with no immediate response.

Like any tool, the internet can be the piece of your strategy that increases your market share, if used correctly. If used incorrectly, it could be a wasteful tool.

So, here are a few basic tips when your business ventures into social media:

Concentrate on building relationships, not just numbers. It’s nice to see the numbers grow, but if many are not viable business contacts, then so what?
Don’t spam people with your services. Give them something to take home with them every time you connect.
Build partnerships among those who have similar business interests, or work in a similar industry.
Don’t just copy what others are doing in your industry. Set yourself apart by using your core competancies to create your own uncompetative ocean (i.e., Blue Ocean).
Be consistent, be creative, but be real in your daily social networking business strategy.
Write about relevant topics that concern your market place.

These six points will give you a start in developing a real social networking strategy for your business. A very important point not listed, though is that you start today.

Strategic planning tips when buying a company

So you found the perfect company to buy! That’s great, but are you going to sleep at night? Here are a few strategic planning tips you should consider when buying a company:

Do your due diligence. Investigate the trends of Accounts Receivables, Cash, Accounts Payables, Officer Loans, Sales, and Cost of Goods Sold over five years. The trends will tell you a lot about the past, present, and possibly the future of a company. If these trends look bad, ask the hard questions, and demand support for their responses.
Create a Strategic Plan. Most new owners do not know what this means. The main point is to visualize where your company is in relation to its industry and where you want it to be. The strategic plan will include your internal strengths and weakness. Be honest and don’t look at the business through rose-colored glasses. An honest strategic plan before you buy the business can alert you of business aspects that you overlooked.
Plan for technology. Technology can help you monitor your strategic plan. Along with your budgeting plan, strategic plans have benchmarks that a company wants to meet. Use technology as a “thermometer” of your business health. A few troubling metrics can signal a bigger problem down the road. Also, how will social networking and search engine optomization help you in achieving your goals?
Cash is king. Always capitalize your company adequately and properly. Sometimes the best capitalized companies are those who squander their resources, while the poorest companies may have the best ideas but no capital to get there. Again, your strategic plan along with your maketing and budget plans should give you an honest idea of what it will cost to finance your company. Many feel that once you arrived at that number, multiply it by three because your sales will usually lag behind your estimates for a lot longer than you think.
Consult experts: There are many forms of strategic planning. If you have a good grasp of you industry, you can solicit the help of a strategist and business plan professional to help you organize the plan. Never venture out in a new direction without professional help. A couple of hours of consulting with a CPA or an attorney can save the business down the line.

Personal Accounting: What to do when you are financially in over your head?

So you just added up your credit card statements, and you got that sinking feeling. What will I do now?

Our society is run on consumerism. We have seen in the last year, that without it, the US is sunk. But what if you spend more than you make? What can you do in personal accounting habits? Here are a few tips:

Change credit cards. If you still have good credit and receive zero interest credit card teasers in the mail, it could be a good thing. Try rolling over your debt onto a zero interest card, temporarily. This personal accounting move can give you a little time in paying off the debt before accruing more interest. However, there is a danger. If you do not change your spending patterns, you will be worse off than before. Use the new card in your personal accounting strategy to eliminate your debt, not incur more. So, this means that you may have to cut up all the other cards until you arrive at a zero debt level.
Pay cash and stop using credit. Pay cash for as many things as you can without running your bank balance into your overdraft account. This personal accounting strategy can really teach you how much you spend each month, and on what items. There are few things more sobering than seeing your cash disappears out of your wallet.
Try to cook most of your meals. Yes, yes I know. You can’t cook. But, the internet is full of quick recipes that can make you a real chef Boyardee in no time. If you must go out, go to restaurant.com and get discount coupons, or buy an Entertainment Book. This way you could cut your dining cost in half, and still enjoy yourself. In this economy, even 5 star restaurants like Lawry’s the Prime Rib are offering deals. Look for them.
Don’t borrow money from friends and family. They don’t need your problems, and it may be the last time they talk to you for a while. This of course may not apply in catastrophic circumstances where families pitch in to help each other.
Make a personal accounting cash flow statement. Schedule out your expenses each month, and consider where you can cut. Be honest with yourself. You want to be debt-free before the holidays, in which at that time you can spend responsibly on gifts.

Cash has been and always will be king.

Life is Wild in Los Angeles for the CPA

Life is wild in Los Angeles. This fact still holds true for even the Los Angeles CPA. California seems to lead the country in reaching new horizons, and breaking new ground. And who is by the business person’s side? The Los Angeles CPA. Looking at the nation, the CPA, or Certified Public Accountant has the reputation for being a financial watchdog. The result of the collapse of Enron was not to bring in more government agents, but to monitor the CPA more closely.The challenges to the CPA in Los Angeles, reaches far beyond the mundane of Wall Street. To start, Los Angeles has more diverse nationalities and cultures than any other city in the world. Along with these cultures come the business nuances that the Los Angeles CPA has to navigate. Many small to medium-sized businesses started in Los Angeles, originally as family-owned businesses. Along with these businesses come business practices that may not be the most beneficial. The Los Angeles CPA has to confront that sensitive issue. How does the CPA change business practices that have been used for generations? And in addition, who is this CPA that wants to insert him, or herself into an ethnic culture. These personal relationships require tact and professionalism.

But what about the geography? Unlike most major cities, Los Angeles has always been spread out. The downtown may house many Los Angeles CPAs, but it is not necessarily the hub. There are a number o f business hubs in the greater Los Angeles area that serve as headquarters for Los Angeles CPAs. This presents a challenge in offering personal and prompt service to the clients. The successful Los Angeles CPA is the one who can leverage technology to meet these demands, and still meet with clients periodically.

The biggest challenge to the Los Angeles CPA is the diverse economy. The types of business in Los Angeles are staggering. So many CPAs are forced to specialize in a certain industry just to keep current on the rapid developments. Most Los Angeles CPA firms, however, specialize in a number of industries, but not all of them.

One such industry a Los Angeles CPA may specialize in is the entertainment industry. The entertainment business manager is a specific field that works with entertainment personalities and companies. The media always gravitates to the private lives of entertainers. But who is at the center of their lives? The Los Angeles CPA acting as their business manager. This trusted advisor stands next to the celebrity in good times and bad times. One would think that their Los Angeles CPA is a family member because he/she is so involved with the personal lives of the entertainer.

Other professions that the Los Angeles CPA may specialize in are retail sales, construction, restaurants, or aerospace. In any event, the life of a Los Angeles CPA could be a wild one trying to keep up with such a diverse roster of clients. This type of compliance could require specialized knowledge and training, and flexibility.