Category Archives for "Small Business"

What is Inventory and why is it Important to your Business?

By Randall Orser | Business Income Taxes , Small Business

Your company’s inventory is what you sell to your customers.  It can either be purchased from a wholesaler and sold on-line or in your store, or it can be the raw materials that you use to manufacture products to sell.  It can also be component parts that you put together to make a product to sell. 

Inventory has value so it is an asset to your business and once you sell it you will be making money.  It also has value as collateral if you need a business loan.   The cost of selling your inventory (called cost of goods sold) is important for your business as it includes the cost of the items to make your product as well as the costs for storing inventory in your warehouse, shipping products to your customers and hiring people to work in the warehouse. 


Keeping Track of your Inventory – in both your accounting system and its physical location is important for your business:

  • To know how many items are in your inventory and their value as an asset on your balance sheet.
  • To know the costs associated with buying and selling inventory which are deductible business expenses that can reduce your business taxes.
  • Inventory costs and gross profit from sales are a major part of your business tax return.
  • The value of your inventory can be used as collateral for a loan.

Different Types of Inventory -  inventory can be divided into two categories:

  • Supplies – items sitting on the shelf waiting to be used.  These include office supplies, cleaning supplies, computer supplies and accessories.
  • Product inventory – this can be either items you buy wholesale to sell to customers or items manufactured and ready to sell, as well as components and raw materials.

Inventory and Cost of Goods Sold – Inventory is essential in calculating the cost of goods sold, which in turn is used to determine gross profit for a business that sells products whether it is a sole proprietorship, partnership or a corporation.  The cost of goods sold is calculated by:

  • Beginning inventory (your inventory at the beginning of the year, or the beginning of your business.
  • Add net purchases (calculated after discounts, allowances and returns).
  • This equals the Cost of Goods Available for Sale.
  • Less ending inventory, which is the value of your inventory at year end.

The closing inventory at the end of one year becomes the opening inventory at the beginning of the new year.  Businesses take physical inventory to make sure that what they have on record is correct.  At the same time, they can check for spoilage of obsolete goods and theft or bad record keeping which costs the business money.

From an article by Jean Murray

What is the Difference Between Office Supplies and Office Expenses on Your Business Taxes

By Randall Orser | Small Business

It is important to know the difference between Office Supplies and Office Expenses for your business because these costs are handled differently on your tax return for Canada Revenue.  The CRA allows any reasonable business expense in that the expense must be appropriate to your business and used in an attempt to make money. 

Office Supplies – are traditional office items such as pens, staplers, paper clips and printer ink cartridges that aid in the operation of your business.  Also included in office supplies are:

  • Invoices and receipts used for record keeping purposes
  • Cleaning and janitorial supplies including toilet paper
  • The cabinets and storage lockers where your supplies are kept
  • Kitchen supplies such as plates, utensils and paper towels
  • Beverages such as water and coffee
  • Postage


It is very important that you keep all your receipts pertaining to office supply purchases to prove to the CRA that that you did in fact purchase the supplies.

Office Expenses – are the other expenses of running an office, they are used for the operations of the office and are sometimes called office operating expenses.  They include:

  • Website and cloud services such as iCloud
  • Internet hosting fees and website maintenance, domain names, monthly costs for apps
  • Software including web-based software such as QuickBooks and Adobe
  • Merchant account fees 
  • Desktop computers, laptops, ipads and tablets
  • Office phones, smartphones and most software and hardware.  Cellphone expenses can also be included in office expenses
  • More expensive office expenses may become business equipment and are categorized as assets and are depreciated over time. This would include computers, furniture, fixtures, office machines and other electronic devices.  

For more information on office expenses visit the Canada Revenue website at:  

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html

Ideas for a Halloween Business

By Randall Orser | holiday season , Home Based Business , Small Business

If you are thinking of starting a seasonal business, statistics have shown that Halloween is a good time to do it.  Don’t bother thinking about trying to get into business selling candies or pumpkins, that Halloween business is already taken by bigger companies like Walmart so it would be pretty much impossible to compete. 

However, you there is scope with Halloween costumes and decorations to develop a business and cater to a niche market.  For example:

  • Providing Halloween music for parties
  • Creating “authentic” period costumes for adults
  • Providing Halloween decorating services for homes or businesses
  • Presenting in-house parties for children (a substitute for trick or treating.) or organizing adult Halloween events.

Also growing in popularity is visiting haunted houses.   Setting up your own could be expensive and turn out not to be as good as other ones nearby but providing tours of “haunted houses” and other spooky sites in your area could be a lucrative business.  Contact your local historical society to research the paranormal history of your area and you could uncover ghost stories that might surprise you and present them to your customers in an entertaining and exciting way. 

If you set up a decorating or party planning business for Halloween, it would not be difficult to turn this into a seasonal business for Christmas or even do the same for birthdays.  Once you are established and do a good job you might be surprised at how many clients you get and how much profit you can make.  

The Top Mistakes New Freelancers Make

By Randall Orser | Consulting , Freelancing , Home Based Business , Small Business

Once you have made the decision to leave the rat race and set yourself up as a freelancer, there are some things that you must consider before you begin, if you want to be successful. Although there is nothing wrong with giving it up and going back to your office cubicle and 9-5 routine, if you make these mistakes then you might be going back sooner than you think.

  1. Not Having Enough in Your Savings Account  - Experts say that you should have between three and six months of expenses saved as well as your start-up costs.  This can seem like a lot of money.  There are ways that you can raise money, but two things you should not do is withdraw from your RRSP or put everything on your credit card.  If money is tight you should start freelancing while keeping your full-time job.
  2. Not Defining your Goals – Once you decide to go out on your own you need to set your goals.  The first one is to decide what you want to get out of going freelance.  Is it about having a flexible schedule, and the ability to decide on the clients that you want to work with?  Is it about just making enough money to pay your bills or do you want to make more than you did as an employee? Once you set your goals you need to check them at regular intervals to make sure you are achieving them or to revise them.  
  3. Not Having a Business Plan- You need a business plan to use as a guideline for your future.  Your plan needs to include basic information about your business such as the contact information, what you do and what you are hoping to achieve. In the future. You need to describe the products or services you are offering including pricing. Information as how you will market your business is important as is an estimate of your operating expenses and what you will need for future growth.
  4. Jumping in too Soon – It is a good idea to start your freelancing career while still working full time.  You will be able to try out a different jobs and clients and see who you are happiest working with.  It enables you to make mistakes and still have an income and also to build your savings so that you are ready when the time comes to jump.  It also allows you the time to set up your office to suit yourself and have the equipment that you will need to do the work.
  5. Not Having a Contract – Having a verbal contract can be enough but a written one is usually better.  A contract will not always help you to get paid, but it will define expectations on both sides and make sure that there are no surprises when the job is finished.
  6. Not Having a System to Organize your Paperwork and Money– You don’t always need to hire a bookkeeper or accountant, but as your business grows this might be a good idea.  You can use an app such as Quickbooks to make tracking your income, expenses and taxes much easier.
  7. Taking on the Wrong Clients – Good clients are those who give you regular jobs that you can and want to do, and work with you to get the best results.  They are also easy to communicate with and pay your invoices on time. Inevitably you will end up with a client who does not meet those criteria and you spend more time than you should on them for less money.  You need to be able to decide when you have had enough and that they are no longer worth it, as well as how to recognize the signs to avoid this type of client in the future.
  8. Not Setting Realistic Rates for your Work  – There is no fixed formula for setting rates for your freelancing work.  Prices depend on the industry, geographic area, your skillset and expertise and the work you are doing.  You need to decide if you are going to bill hourly or by the project, which can change with each job.  You also need to decide what is your rock bottom dollar amount and keep this in mind when charging clients.  You may start out at a lower price as you are building your clientele and experience, but you must know how low is too low so that you don’t take jobs that don’t pay enough leaving you financially overextended and stressed.  As you gain more experience you should look at your rates and revise them if necessary. 
  9. Not Having the Required Self Discipline– You might start freelancing assuming that the best thing about it will be the flexibility of your work hours.  In reality, you will need to available for your clients during regular office hours which can be difficult if you prefer to sleep late.  Even though clients cannot demand that you are available specific hours they still need you to be available to answer their questions or they will move on to someone more accommodating.  On the other hand, you need to establish what hours you will be available to your clients, such as 8am to 6pm.  Make it clear that unless you say so, calls from them at 10pm or on weekends and holidays will not be welcome. 

Starting out as a freelancer can be difficult but you should not get discouraged if you make a mistake.  You will soon discover whether working freelance is a fit for you. 

Five Skills You Need to Learn Before Starting Your Own Business

By Randall Orser | Cloud-computing , Small Business

Starting a new business is always difficult, especially if it is your first business. In order to give your business the best chance of success, there are several skills that you need to learn. Fortunately, all of the skills needed to run a business can be learned. Here are 5 skills you need to learn before staring your own business.

Time Management Skills 

Time management skills are essential for any business owner, as you will need to ensure that all business tasks can be completed within a set amount of time. One of the best ways to improve your time management skills is to keep a daily log of your business activities.  You can then analyze your log at the end of the week to see where you could be managing your time more effectively. Look at the amount of time you spend on common tasks to see where you could shave off a few minutes.

Self-Motivational Skills 

In order to succeed in business, you need to be able to motivate yourself, as you will have to make your own rules and decisions. Nobody else will tell you when to start and finish working, when to take or break or when to seek help from other people. You will need to use self-motivational skills on a daily basis. In addition, if you intend to employ other people, you will need to be able to motivate yourself in order to motivate your employees. Create a mental vision of where you want your business to be in one, two or five years, as this will help to keep you motivated and focused on your goals.

Organizational Skills

Organizational skills are essential for keeping your business running smoothly. Organizing ideas, tasks and paperwork effectively gives you a strong foundation for your business. Using detailed task lists is one of the best ways to organize your working day, as it gives you clear goals to achieve each day.  It is also important to keep detailed records of all business activities, outgoings and income for future reference and legal purposes.

Research Skills 

Research is one of the most important aspects of setting up a successful business. You need to research the industry in which your business will work, as well as the products and services you wish to sell. You also need to research the competition and your potential customer base. In addition, you will need to conduct research on an ongoing basis to see how your business is performing in relation to your competition. Learning how and where to gain information for your research is one of the first skills you should learn.

 Analytical Skills 

Once you have conducted your research, you need to be able to analyze the results and develop ways to use the findings to your advantage. Analyzing data and public opinion helps you to make decisions that can improve your business and increase public approval. Develop the habit of evaluating your business activities to see where improvements can be made. Listening to your customers is also important for improving your analytical skills, as it gives you a different perspective on the situation. 

Setting up a new business can be a challenging time, especially if it is your first business. You can increase your chances of success by learning the skills needed to run a successful business. Practicing these skills before setting up your own business gives you chance to develop effective ways of working.

Does Your Small Business Need a Consultant?

By Randall Orser | Consulting , Small Business , Technology

Most small business owners are very hands-on and want to be involved in all aspects of their business.  They find it difficult to delegate tasks to employees or outside consultants.   

However, as their company grows, they may find that too much time of their time is being spent on activities that others could do just as well or better, so they should consider hiring a consultant.  They  need to decide what their time is worth vs the cost of contracting out some tasks.

Bookkeeping and Accounting

For those who find bookkeeping tedious or if the business has a large amount of transactions it makes sense to let a professional handle it.  A bookkeeper can usually keep your record keeping up to date in a few hours a month.  They can pay your bills, do payroll, submit invoices, pay government taxes and get your accounts ready for the tax season.  

An accountant will keep you updated on tax laws, make recommendations such as when to incorporate and give you financial advice to grow your business.  You may only need them for a few hours a year, but it may be well worth the cost.

Information Technology (IT) Services

Technology changes at a rapid pace and most businesses need the help of an IT consultant to keep up and to solve issues with hardware and software.  They will back up your data, set up cloud computing services, install hardware and software, provide training and advise on upgrades to technology to streamline the business and improve productivity.

Human Resources Services

Most business cannot afford a HR individual or department to deal with personnel issues, so they  hire a consultant to deal with employee relations.  HR consultants are knowledgeable about recruitment of new staff, dealing with discipline and terminations, planning training and orientations and managing employee safety and welfare.  

Marketing Services 

Attracting and retaining customers is an essential requirement for business growth. A marketing consultant can implement an overall marketing strategy and design and implement marketing campaigns. They are experienced in social media, email blitzes, website and blog promotions, press releases, flyers, and arranging educational seminars for clients.  In addition, they can set up charity event sponsorships that give your company publicity and cross-promotions with other businesses.

Legal Services

Although many legal tasks such as setting up a business name, incorporation and setting up contracts with vendors can be done by a business owner. More complex legal issues such as partnership agreements, share allocations, lawsuits, real estate or franchise agreements, and trademarks require the services of a lawyer. 

How to Hire a Consultant:

  1. Assess your needs – whether you will need weekly or monthly service or on-call emergency assistance (especially for your IT consultant).  
  2. Make a list of potential candidates – word of mouth is a common way to find a good consultant.  You can also get recommendations from the local Chamber of Commerce and by networking with other people in your business.
  3. Meet with the candidate to discuss your requirements and their qualifications to see if you are a fit.  Ask questions about familiarity with your business, when they are available especially when needed, how you can contact them and of course their rates and how they bill.
  4. Once you have decided who to hire draw up a contract for their services.

 

Why Older Workers can be a Valuable Asset to Your Business

By Randall Orser | Employees , Small Business

According to the Canadian Government, in 2014 over 6 million or 15.6% of Canadians were 65 or over.  By 2030 this number will rise to 9.5 million making up 23% of Canada’s population.  The stereotype of the doddering older person is no longer true, and in fact they can be every bit as creative, innovative and entrepreneurial as their younger counterparts.   

Many older people want to stay within the work force either in full, part time or flexible jobs, or by creating self-employment opportunities for themselves. According to the US Bureau of Labor Statistics, between 1995 and 2016 the share of men in the work force aged 65 to 69 in rose from 28% to 38%, and for women the increase was from 18% to 30%.  Self-employed and entrepreneurial older workers were the highest percentage of any age group, and five times greater than the 24–35 age group.   

Here are some reasons why hiring older workers can help you to maintain a reliable workforce and provide a significant cost savings.

  1. Employers often complain that they are unable to find qualified employees. Older workers bring their previous education and experience, are more dedicated and produce higher quality work usually with little training.  
  2.  They are more likely to show up every day ready and willing to work.  
  3.  They take pride in a job well done, often staying after hours to complete a task.  Younger workers tend to want to put their hours in then leave.
  4.  They value honesty, personal integrity and truthfulness.
  5.  They are detail-oriented, focused and attentive and can often able find mistakes such as pricing errors, spelling errors and accounting mistakes which can save the company money.
  6. They are good listeners and often only have to be told once what to do. This makes them easier to train.
  7. Older workers can set an example and can be excellent mentors for other employees.
  8. They have greater organizational skills meaning less man hours are lost due to workplace disorganization.
  9. They are efficient and confident, willing to share their experience and recommendations with fellow workers and management. This means that jobs can be done more efficiently saving the company money.
  10. They have good communications skills learned from their previous experience in the workplace.

Next time you are hiring, consider an older person for the skills, values and potential savings in time and money that they can bring to your company.  Rethinking the costs of high turnover of younger staff vs the benefits of more mature workers can make a positive difference to your bottom line.

From an article by Stephen Bastien in Entrepreneur

 

Online shopping is Booming in Canada – Be Part of This Growing Market

By Randall Orser | holiday season , Small Business

Although companies such as Amazon and eBay, command the online market, there is still room or small internet entrepreneurs with niche products or services to set up a profitable on-line business. 

Statistics show that the number of Canadians who shop online has grown from 19.5 million in 2013 to the projected number of 22.5 million in 2018.  37% of these buyers shop online monthly or more and 75% of these spend up to $200 per month. 10% report spending up to $500 per month.

The most popular items purchased on line are:  Books, music, movies and video games, electronics, smartphones, computers, clothing and accessories, appliances and tools and food. Five per cent of online shoppers purchased groceries but as more grocery stores offer home delivery, and with the coming of “DoorDash” and “Skip the Dishes” take-out delivery services, this food delivery niche market will experience major growth. 

Between 16% and 40% of people surveyed said that they preferred to shop online.  The percentage was larger with the younger age groups and less with the older age groups.


Why do people buy online – the three biggest reasons are reason are: 

  • Access to a worldwide market - Most anything you need can be purchased online including many things that are not available in Canada and a greater choice of goods.
  • Price - prices are still very competitive online but can often be less than brick and mortar stores.  In addition, many websites offer special sales for online customers only.
  • Convenience – with so many people working from home, it is much more convenient to purchase on line and have it delivered to your home, rather than braving the traffic to go to the mall.  You can also shop in your pajamas, and no one would know!  

Two of the biggest concerns for on-line shoppers were the security of their personal data, and not being able to return unwanted goods.   

Most people surveyed were comfortable setting up an online account with a retailer, but they were not comfortable when they were asked about their shopping habits.  Most Canadians trusted websites hosted in Canada with their personal information, but 76% had concerns about their information being stored in the United States.  

Many Canadian retailers allow online shoppers to return items to their brick and mortar stores giving buyers more confidence when shopping online.

VL Omni recently published their annual report on eCommerce in Canada which shows considerable growth and potential. 

  • In 2017 Canadian businesses sold $136 billion in goods and services online, up 42% year over year.
  • 62% of Canadians who shop internationally online would prefer to shop domestically.
  • 95% of small business owners bought items for their small business online
  • 23.5% facilitate “click and collect” and 68.9% allow in-store returns of online purchases.
  • Canadian businesses also sell their products through online marketplaces such as Amazon, Walmart and eBay.

Whatever your niche product or service there is still room for you in the online marketplace.  Now is a good time to consider what could offer online and to build a profitable business.  An online business provides a great opportunity if you are retired, a stay at home Mom or if you just need some extra income.  

 

How to Know When it is Time to Fire a Client

By Randall Orser | Small Business

After working hard to acquire and nurture a client, it can be difficult to make the decision to fire that client.  However sometimes they are not worth the time and effort that you put into maintaining the business relationship. Also, keeping them can be both bad for your bottom line and also for your mental health.  

Here are some situations where you should fire a client:

  1. When the Client Become Abusive - This can take the form of threats, making disparaging remarks either to you or to others behind your back, or by being excessively rude or demanding to you or your employees.  No client is worth that amount of stress and hassle.
  2.  When the Client is Dishonest - When the level of trust between you and your client becomes eroded.  Occasional misunderstandings are normal but when clearly written or spoken understandings are continually “misinterpreted” by them it is time to let them go.
  3. When the Client Makes Unreasonable Demands - You will set the bar for expected client behavior, what is reasonable and what is unreasonable, in particular your business hours.  If they are continually trying to reach you outside of your work hours, then it could be time to say goodbye.  This also applies to clients who are unable to make decisions regarding the work you are doing for them but they still expecting it to be completed on time.
  4. When the Client is Consistently Slow to Pay Their Bills - Customers who do not pay on time are both annoying and may cause damage to your company cash flow.  Following up on unpaid invoices takes up time and costs money.  You cannot afford them so don’t keep them! 
  5. When the Client Continually Disputes or Nitpicks at Your Invoices - Clients who accept your price upfront, then when the time comes to settle your invoice argues with you in an attempt to get a reduction, are not worth keeping.  Once is enough so don’t waste and effort dealing with them again.
  6. When the Client Keeps Changing his Mind  - This can be annoying but as long as they know that changes you have to make will be added to their bill then you can deal with it.  If they expect you to make changes at no extra cost to them, then it is up to you to decide where to draw the line.
  7. When the Client Doesn’t Follow Your Advice and then Expects you to Pick up the Pieces This is a common experience in client relationships and the most professional way to handle it is to try and solve the client’s problem then not repeat the experienced by parting ways with them.
  8. When the Client Plays you off Against the Competition - It is good business practice for customers to get a number of quotes for work that they want done. It is not good business practice for them to use competitor prices or timelines to renege on or get a lower price on work that has already been agreed upon whether or not it has been done.  
  9. When Continuing to Work with the Client Could get you into Legal Difficulties - If there is the possibility of legal liability, then getting rid of this client is a no-brainer.

If you are suffering through bad client relationships, then it’s time to realise that you are wasting time on this client that could be better spent seeking out new and possibly more profitable customers.  Get rid of them!

From an article by Susan Ward

Loyalty Marketing Ideas to Retain Existing and Attract New Customers

By Randall Orser | Small Business

Are you looking for ways to retain existing customers and find new ones? Loyalty marketing is one way to encourage repeat business and it can be cheaper than trying to bring in new customers.  Here are some ideas to try in your small business.

1. Gifts

Offer limited-time giveaways or a free gift with the purchase of a new product.  This will get the attention of past customers and encourage them to revisit your business and make another purchase.

2.  No Obligation Trials

This is a good method to use if you are selling software, a subscription service, an expensive product, or a product that is usually difficult to sell. Giving the customer a limited time to try the product can encourage them to sign up for the full purchase.

3.  VIP Club

Creating an exclusive members-only club and making the client feel special will encourage them to come back to your business.  It doesn’t have to cost the client anything and it can be inexpensive for your business to implement.  Offer VIP perks like new product previews, limited time offers, expedited checkout and free samples. 

4.  Free Offers

Customers love to get something for free.  You can encourage them to purchase by offering a Buy-one-get-one free (BOGO) or a Buy-one-get-one at a reduced price.  This is a very popular way to bring in customers both past and new.

5.  Punch Cards and Points

This is a successful method to encourage repeat business that used more often in the food industry.  The more purchases the customer makes, the more they are able to get a free beverage or food.  

6.  Offering an Incentive for Doing a Customer Survey

Customer surveys help you to find out what your customers think about your business and how you can improve your service or products. You can create a survey on-line or by email (probably the most effective way), send it out in the mail or print it on a purchase receipt including a website or email address for customers to respond.  Incentives could be an entry in a draw for a prize or a money off coupon.

7.  Free Upgrades

Offering free upgrades to your service especially if you sell software or another type of app is a great way to keep customers engaged and loyal to your business.

8.  Birthday and Anniversary Perks

If you create a customer data base you can send out greeting cards or offer a price reduction or free gift when they celebrate their birthday.  This is a great way to create an email marketing list and you can offer an incentive for signing up.

9.  Creating partnerships with other businesses in your area

Shared cross store or business promotions or sales events with other businesses in your area. This can be really effective if you are in a mall or a shopping area where clients can visit a set number of stores to earn points towards a reward.

10.  Gamification

Create a game such as a scavenger hunt or bingo where customers can enter using their purchase receipts. A popular example of this type of promotion is the McDonalds monopoly game.

Loyalty incentives are a great way to bring back past customers, bring in new ones and retain current ones.  Continually using one of these ideas or creating your own will help you to generate revenue from increased sales.

 

 

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