Category Archives for "Small Business"

Five Tips To Know If You Have What It Takes To Start A Home Based Business

By Randall Orser | Small Business

You may see, hear, and read a lot of people constantly raving about the numerous wonders of a home-based business but starting and managing one isn’t immediately a bed of roses. In some cases, having a home-based business is easier than having a business in traditional settings, but in some cases, it’s absolutely the other way around.

Tip #1 You Still Need the M’s for a Home-Based Business

The only difference is that there’s no need for you to pay for rent and possibly, you’ll have lower business costs because your business is based at home. But other than that, the process of starting up and the necessary factors of production are still the same.

Money - Its rarely possible, if at all, to start a home-based business without spending even a dollar for investment and pre-operating costs.

Material - If your home-based business is selling products and not services then you’ll still have to ensure that you’ve got the best materials to produce the best products in the market.

Manpower - for a home-based business, you can usually make use of family members ñ even your kids ñ to help and provide the necessary labor for the business.

Machinery - Usually, a home-based business selling services online can function with a computer and Internet access, but if you’re selling products, you’ll naturally need other additional equipment.

Tip #2 You Still Need to Register Your Home-Based Business

The fact that you have a business based or you’re working from home doesn’t exempt you from your obligation to pay taxes. You can, however, apply for tax deductions that you may be eligible for due to your home-based business.

To qualify for tax deductions, you need to prove that one part of your home is indeed used primarily and exclusively for operating your business. Secondly, if ever personal meetings with your clients, suppliers, and affiliates are required, you use that section of your home for such purposes.

Tip #3 Products, Services, or Both?

A home-based business may sell products, services, or both. The success of your home-based business depends on how marketable your products or services are. Consider the following factors:

Quality - How does the quality of your products or services fare compared to those manufactured or provided by your competitors?

Cost - How much are you selling them for? Since you’re operating a home-based business, you should take advantage of your situation and use it to lower the price of whatever you’re selling. Lowering your price is something you can afford to do because you have lower costs, and it will at the same time allow you to compete against bigger retailers on the same ground.

Tip #4 Online, Offline, or Both?

The success of your home-based business will also depend on how you should to advertise about your business. If, for instance, you’re selling home baked cookies, you’ll probably achieve greater profit by focusing mostly on selling to your neighbors and acquaintances in the area then advertising online on the sides. Setting up a home-based web designing business on the other hand would certainly benefit more from online advertising.

Tip #5 Are You Good at Waiting?

A home-based business will also take time to prove its profitability and stability. Thus, make sure that you’re willing to wait for your business to grow. There are any number of hurdles that your home-based business might face in the future but you need to be prepared to face all of them if you wish to succeed.

That Great Employee Benefit is Probably Taxable 

By Randall Orser | Business Income Taxes , Small Business

You’ve decided to reward your employees with a benefits plan, maybe a company car, gift cards, and such. Now, before you go and give your employee something, you need to find out if that benefit is considered income to the employee, and, therefore, taxable. Sadly, any kind of benefit you give an employee is considered a taxable benefit, and the employee must be taxed on it, some even are taxable for Canada Pension Plan and Employment Insurance. We’ll talk about what is a benefit and how is it taxable.

Your employee has received a benefit if you pay for or give something that is personal in nature: directly to your employee; or to a person who does not deal at arm’s length with the employee (such as the employee’s spouse, child, or sibling).

A benefit is a good or service you give, or arrange for a third party to give, to your employee such as free use of property that you own. A benefit includes an allowance or a reimbursement of an employee’s personal expense.

An allowance is a limited amount decided in advance that you pay to your employee on top of salary or wages, to help the employee pay for certain anticipated expenses without having him or her support the expenses. An allowance can be calculated based on distance or time or on some other basis such as motor vehicle allowance using the distance driven or a meal allowance using the type and number of meals per day.

A reimbursement is an amount you pay to your employee to repay actual expenses he or she incurred while carrying out the duties of employment. The employee must keep proper records to support the expenses and give them to the employer.

Determine if the benefit is taxable

Your first step is to determine whether the benefit you provide to your employee is taxable and should be included in his or her employment income when the benefit is received or enjoyed. Whether the benefit is taxable depends on its type and the reason an employee or officer receives it. To determine if the benefit is taxable, see Chapters 2 to 4 of Guide T4130, Employers’ Guide Taxable Benefits and Allowances.

The benefit may be paid in cash (such as a meal allowance or reimbursement of personal cellular phone charges), or provided in a manner other than cash, such as a parking space or a gift certificate. The way you pay or provide the benefit to your employee will affect the payroll deductions you should withhold.

Types of benefits and allowances

To find out if benefits and allowances are taxable and how they are declared on T4 or T4A slips, see the Benefits and allowances alphabetical index. There are just too many to go through in this blog post.

Calculate the value of the benefit

Once you determine that the benefit is taxable, you need to calculate the value of the specific benefit. The value of a benefit is generally its fair market value (FMV). This is the price that can be obtained in an open market between two individuals dealing at arm's length. The cost to you for the property, good, or service may be used if it reflects the FMV of the item or service. You must be able to support the value if you are asked.

Goods and services tax/harmonized sales tax (GST/HST) and provincial sales tax (PST)

When you calculate the value of the taxable benefit you provide to an employee, you may have to include:

  • the GST/HST payable by you; and
  • the PST that would have been payable if you were not exempt from paying the tax because of the type of employer you are or the nature of the use of the property or service.

Use the “Benefits chart,” here to find out if you should include GST/HST in the value of the benefit. Some benefits have further information about GST/HST in the topic specific section.

The amount of the GST/HST you include in the value of the taxable benefits is calculated on the gross amount of the benefits, before any other taxes and before you subtract any amounts the employee reimbursed you for those benefits.

You do not have to include the GST/HST for:

  • cash remuneration (such as salary, wages, and allowances); or
  • a taxable benefit that is an exempt supply or a zero‑rated supply as defined in the Excise Tax Act.

Policy for non-cash gifts and awards

You may give an employee an unlimited number of non-cash gifts and awards with a combined total value of $500 or less annually. If the fair market value (FMV) of the gifts and awards you give your employee is greater than $500, the amount over $500 must be included in the employee's income. For example, if you give gifts and awards with a total value of $650, there is a taxable benefit of $150 ($650-$500).

you can, once every five years, give your employee a non-cash long-service or anniversary award valued at $500 or less, tax free. The award must be for a minimum of five years' service, and it should be at least five years since you gave the employee the last long-service or anniversary award. Any amount over the $500 is a taxable benefit.

If it has not been at least five years since the employee's last long-service or anniversary award, then the award is a taxable benefit. For example, if the 15-year award was given at 17 years of service, and then the next award is given at 20 years of service, the 20-year award will be a taxable benefit, for five years will not have passed since the previous award.

The $500 exemption for long-service awards does not affect the $500 exemption for other gifts and awards in the year you give them. For example, you can give an employee a non-cash long-service award worth $500 in the same year you give him or her other non-cash gifts and awards worth $500. In this case, there is no taxable benefit for the employee. If the value of the long-service award is less than $500, you cannot add the shortfall to the annual $500 exemption for non-cash gifts and awards.

Items of small or trivial value do not have to be included when calculating the total value of gifts and awards given in the year for the exemption. Examples of items for small or trivial value include: coffee or tea; T-shirts with employer's logos; mugs; plaques or trophies.

Basically, anything you give an employee becomes a taxable benefit. Ensure you chat with your bookkeeping/accountant before deciding on any employee benefits, as more than likely, they are taxable.

Annual Clean-Up and Backup of Your Files

By Randall Orser | Small Business

The end of the year is a good time to put some time and attention into cleaning up and backing up your files. Cleaning up your files lets you clear up physical, digital and psychological space so everyone can get more done. Backing up is essential in case something goes wrong.

Here's how to do your annual file clean-up and backup.

Delete Clutter from Project Management

If you still have old projects open in your project management software, delete them or archive them now. People on your project management software should only be seeing projects that are actually relevant to their work right now.

Archive Physical Files

If you have a lot of physical files lying around that aren't being used anymore, archive them. Small businesses can open a small storage facility to store their archived files. Larger businesses can open an account with a file archive facility.

What to Back Up

At least once a year, you should back up:

§ An entire copy of your website. You should have the "front" end of your website, including the CSS and HTML code, as well as the "back" end infrastructure (e.g. server code) all backed up somewhere.

§ Your entire database should be backed up as well.

§ Your email list and newsletter list should be backed up, along with any mailing sequences.

§ Your customer list should also be backed up.

§ Your forums or any other communication channels should be fully backed up. You should be able to restore your community if anything happened.

Basically, anything that could critically cripple your business if it disappeared should be backed up regularly.

At Least Three Backup Sources

You should have at least three backups of all your most important data. Each offers a different level of protection.

§ Online backup - Online backups work well for small files and for files stored on personal computers.

§ On site backups - These can be done as frequently as once a month. Simply take all your digital data and dump them on a hard drive, then store that drive.

§ Off-site backups - On site backups can't protect your data against earthquakes, fires, floods and other disasters that could affect the physical devices your data is stored on. Off-site backups will hold your data for you, so you're protected in case of a disaster.

Just one level of protection isn't enough to protect you against a catastrophe. Higher levels of protection require more work and are generally performed less frequently.

Change Dropbox Passwords

At least once a year, ask all your employees to change their Dropbox, Google Drive and other backup passwords. Passwords now need to be more complex, and best are ones that are 16 or more characters.

If you perform these tasks regularly, you'll be well protected against disasters in all forms.

Why You Need More Than a Brilliant Idea to Succeed as an Entrepreneur

By Randall Orser | Small Business

Entrepreneurs are more than clever business people who see a need for a new product or service and fulfil it. Successful entrepreneurs not only have brilliant ideas, but also can build relationships, understand customers’ wants, and interpret the constant signals from the market. If you want to succeed as an entrepreneur, you will need vision and the skills to see your plans come to fruition; otherwise, you are just are a dreamer.

Entrepreneurs Need Emotional Intelligence

Emotional intelligence is about having an awareness of your own emotional state of being and not allowing emotions to overrule your decision-making facilities. At the same time, a high level of emotional intelligence enables entrepreneurs to read other people very well and to know when and how to build instantaneous rapport with potential customers or business partners. Some entrepreneurs may use emotional intelligence to manipulate other people or may get another person to tell more than the individual originally intended to say.

Entrepreneurs Need to Build Relationships

Entrepreneurs are extremely good at building relationships, and will often build long term business partnerships with several different businesses. Entrepreneurs excel at marketing, but are not necessarily good salespeople.

A sales person will push to close the deal and to get the sale, while a good entrepreneur will focus on the relationship and may stop short of closing the deal to maintain the good relationship. Often entrepreneurs need to work in conjunction with a sales person who can close the deal, after the entrepreneur has set up the foundations by building a strong relationship with the potential customer or affiliate business.

Entrepreneurs Need to Have a Vision

Small business coaches will often tell individuals who are starting a small business to plan everything and to set up a five year plan. However, entrepreneurs work towards a vision and may not plan every single step along the way. Entrepreneurs will often work with a big picture idea and plan the details to fit in with the overall vision, rather than focus on the details of a plan and forget where the plan leads the business.

Entrepreneurs Need Flexibility to Change the Plan

Entrepreneurs will feel free to change the details of the plan to take advantage of new opportunities. The difference between a small business owner and the entrepreneur is often most visible when a new opportunity knocks. The entrepreneur will be willing to change the plan and to take risks if the opportunity that presents fits into the overall vision, whereas the small business owner will be more likely to ignore the opportunity if it was not in the original business plan.

Entrepreneurs Need Good Timing

An understanding of the cyclical and rhythmic nature of business allows entrepreneurs to know instinctively when the time is right to launch a new business venture, or a new product. Entrepreneurs possess good timing and will know when to hold back on a launch of a new venture until the market reaches the right step in the cycle to ensure the new venture is a success.

Entrepreneurs Need Industry Knowledge

Although entrepreneurs rarely react to what competitors are doing, entrepreneurs do study the competitors and the industry. This industry knowledge enables the well-informed entrepreneur to lead the industry rather than react to it, and to have that impeccable timing to know when to launch the new products.

A brilliant idea will only get you so far in the business world. However, blend the clever business idea with a high emotional intelligence, relationship building skills, vision, flexibility, good timing, and strong industry knowledge, and an entrepreneur has the world at his or her feet.

Understanding Your Financial Statements

By Randall Orser | Small Business

So, you’re going to your accountant’s office tomorrow to review your company’s year-end financial statements. They have already sent to you a draft copy of the statements so that you may prepare for tomorrow’s meeting. But without going over the details in person with your accountant, you’re not sure what it all means.

A well-prepared set of financial statements, which should include comparative figures for the prior year, provides information about the company’s performance and financial position. Fundamental to understanding your financial statements is an analysis of its components by calculating certain financial ratios and comparing them to industry-wide ratios or those which are relevant to your business. These ratios will reveal important information about your company’s past, which will help you choose the path you want it to follow for the future.

Although a complete set of financial statements includes a statement of income, a balance sheet, a statement of retained earnings and a statement of changes in financial position, this article will be devoted to explaining ratios that are useful in understanding the statement of income and the balance sheet.

The Statement of Income

This is where you’ll find your company’s “bottom line”. With some simple analysis, however, there is a lot more information available.

By comparing sales from year to year, you’ll see if sales have increased more than any price increases that you implemented during the year. If they have, great! If not, it means you’re either losing customers or your customers are buying less from you. If your sales are analyzed by major categories, you may also be able to identify meaningful changes in your sales mix.

You can figure out your inventory turnover ratio by dividing the cost of sales by the average inventory for the year. The higher the ratio, the better off you are. A drop in your turnover ratio, however, may reveal an overstock situation that has yet to be corrected.

The gross profit (or gross margin) represents the excess of sales over cost of sales. A change in your gross profit ratio, which means dividing gross profit by sales, may be a symptom of many different conditions. It may mean that your sales force has maintained margins, or that you had to give in to competitive forces. On the other hand, a change may also mean that your suppliers have increased or cut their prices. If you’re a manufacturer, it may also mean using various production elements efficiently. If your sales and cost of sales figures are analyzed by major categories, you may be able to spot a trend for a type of product, rather than for the company.

For operating expenses, your primary concern should be cost control. You should focus on significant variances in the amount of expenses for any one line item, or on any changes in relationships between line items. For example, if there is a strong relationship between commission expense and sales, check to see if the commission rate on the financial statements is in line with your expectations. Furthermore, fixed expenses such as rent, insurance, and other overhead expenses, should generally be the same amount from year to year. Big variances in fixed expenses may require further investigation.

The Balance Sheet

The balance sheet gives you a financial “snapshot” at the year-end date. As you know, the balance sheet reports the company’s assets (the things that it owns), its liabilities (the things that it owes) and its shareholders equity (net worth). Using some basic balance sheet ratios will help you identify trends about your company’s finances and ability to meet its commitments.

The current ratio, being current assets divided by current liabilities, is one indicator of a company’s liquidity. The higher the ratio, the better; but a drop in the ratio may indicate trouble, such as using a demand line of credit to finance new capital equipment or other long-term assets. Another reason for a deterioration in the current ratio would be recent decreases in operating cash flow to pay your trade suppliers and other current debts as promptly as in the past. The quick assets ratio, which represents the ratio of current assets less inventory over current liabilities, is another good indicator of liquidity.

To analyze accounts receivable, you should use the accounts receivable turnover ratio, being the amount of credit sales divided by the average accounts receivable balance. When this ratio drops, it means that it’s taking longer to collect your receivables, which might be a problem that’s widespread throughout your customer base, or may be concentrated with just a few of your major customers. Although both situations require corrective action, the latter is especially dangerous. You may get hit with a big loss because of an unhappy customer or because of their own financial difficulties.

On the liability side, the most commonly used ratio is the debt-to-equity ratio, which is the sum of the liabilities divided by tangible net worth (shareholders’ equity less the book value of intangible assets). The more debt that you take on, the higher this ratio will become. Taking on too much debt means less flexibility in making business decisions or taking on new projects. This is because your lenders will have become your business partners, and that’s not the reason you went into business in the first place, is it?

To determine return on investment, which shows a shareholder’s yield on his / her investment, simply divide net income (or loss) by tangible net worth. An unusually low ratio may mean that the company’s profitability isn’t what it should be when compared to prior years or to industry standards. Alternatively, if cash balances are high, the current ratio is higher than normal and the debt to equity ratio is lower than normal, a low return on investment ratio may mean that it’s time to make either make a substantial distribution of excess company cash to shareholders or make an investment in another venture that will improve the company’s overall profitability.


Now that you’ve analyzed the statements, you will have come to certain conclusions about how well your business has fared over the past year. But was this year’s performance in line with your real expectations? Had you even set targets and goals for the year?

Planning for success, by preparing financial and operational budgets, is an important part of effectively managing your business. You should also make sure that your financial reporting system is set up in such a way that reporting actual to budgeted results is a snap. If you need help in preparing budgets or in setting up a financial reporting system, seek your accountant’s advice. He / she will be qualified to advise you on what methods and systems are best suited to you and your business.

Is Your Company Becoming Too Lean & Losing Out Because of it?

By Randall Orser | Small Business

It seems every business is touting the importance of being lean and mean. Lean manufacturing, lean supply chains and reduced overhead seems to be the recipe for today’s businesses, or at the very least, today’s version of how to succeed in business. It certainly makes sense given the severity of this most recent recession. However, was this move born out of necessity? Was it done to reduce excess, to become more competitive, or was it done simply because some companies wanted to emulate the strategies of other enterprises? Ultimately, was it done because it had to be, or were some companies pursuing this action simply because they read it was the right thing to do? Surprisingly, in a few situations, it was the latter.

There are many benefits to being lean. First, there’s the benefit afforded to companies who reduce their fixed expenditures. This reduces the company’s overhead and allows companies to offer more competitive prices. Second, pursuing vendor consolidation allows companies to streamline their supply chain and reduce inventory costs. However, there are also several drawbacks to pursuing lean principles. Some of these include reduced market presence, a reduction in the company’s service capabilities and the inevitable pursuit of a supply chain strategy that doesn’t meet the needs of the company’s customers or its market. The question you must ask yourself is whether your decision to become lean has limited your company’s ability to capitalize on opportunities. Was this decision made in your company’s best interests, or where you simply pursuing a course of action to keep up with competitors?

Understanding the consequences of lean principles

Lean principles are enticing. They are the ultimate solution to complex business problems. They represent the ideal scenario of reduced expenditures, reduced inventory costs and higher profit. However, are lean principles solid in theory and lacking in practicality? Do they offer the perfect solution to an imperfect business world? Ultimately, do they promise more than can be delivered? While lean principles do work for some companies, for others they are solid in theory, but lacking in their ability to deliver the goods. Becoming lean can lead to companies missing out on opportunities. So how does this happen?

Reduced market presence

One of the first areas companies cut in a recession is their marketing expenditures. Unfortunately, a few companies forget that marketing and sales are one and the same. Cutting back on marketing expenditures often seems like an easy decision. However, why would a company cut back on the one essential function that drives business? Why reduce the effectiveness of marketing and its ability to deliver sales opportunities? Surprisingly, some companies cut marketing expenditures simply because they lack the ability to track its effectiveness.

Several companies fail to see how marketing lowers their costs of finding new customers, how it increases gross profit, how it increases market share and stabilizes the company’s future and ultimately, how it addresses customer needs by answering their most pressing questions. When thinking of marketing, think of how much your customers need you in times such as this. Think of how they need your company’s support, knowledge, help and input during difficult times. Those companies who remain a strong player within their market are the ones who will benefit most.

Reduced service levels

One of the biggest impacts of becoming too lean is the eventual decline in the company’s service capabilities. Companies must clearly define those services that are deemed essential to sustaining business and retaining customers. After all, when times are tough, companies must do everything they can to retain market share. Therefore, it’s essential to clearly define the company’s essential services and to be mindful of the impact of cost reductions on the company’s ability to service its clients. What should companies look for?

A company’s service capabilities are defined by its internal and external clients. Internally, the company must have clearly defined procedures, work processes and seamless operations to improve how work is done and how fast it is completed. Who benefits the most from improved operations? The customer does. Therefore, understand that a company’s service levels include far more than just its customer service department. It includes how products are packaged, delivered, how customers are dealt with by accounting, technical support, as well as how sales & customer service can provide solutions. Becoming too lean will produce savings, but those benefits are easily eroded when customers are lost!

Reduced supply chain effectiveness

Companies need inventory to capture market share, but they loath the financing costs of supporting that inventory. Financing inventory is an extremely expensive part of running a successful business. Companies are right to identify inventory and their supply chain to reduce costs, but the mistake they make is by pursuing an inventory management and supply chain strategy that is not conducive to their business model, their market and their customers’ needs.

Instead of reducing costs by identifying their cost drivers, they instead change their inventory management philosophy by pursuing lean strategies they can’t possibly make work. This often happens when businesses decide to pursue lean supply chain practices like JIT, or Dell’s “Push-Pull”, when they lack the purchasing power, economies of scale and operational abilities to make either of these approaches work. Reduce your company’s inventory costs. However, start by identifying those costs and putting a plan in motion to reduce expenditures. Inventory may be costly, but you need it to capture opportunistic sales and maintain your market share.

Companies must be able to reduce expenditures and continually pursue initiatives that lower costs. However, they must also be mindful of the consequences of becoming too lean. There are benefits to improving operations, reducing inventory costs and streamlining supply chains. However, these benefits must be tempered with the consequences of losing market share and customers. Be sure that the changes your company makes are ones that are needed to improve your bottom line. Do what’s right for your business and not what you think you should do because other companies are pursuing the newest and latest trends.

What Every Small Business Owner Should Know Before—and After—Hiring a Bookkeeper

By Randall Orser | Small Business

Many small businesses need to hire a skilled bookkeeper to track income and expenses, not only for tax preparation purposes, but for financial management as well. But how do you find a qualified bookkeeper, what should you look for and what should you look out for? We’re taking more about someone you hire as an employee and not necessarily as a freelancer.

A common misconception made by accounting novices is that anyone that can add and subtract can be a bookkeeper. Another is that anyone with a little computer savvy can purchase and use popular accounting software to meet his bookkeeping needs. Useful bookkeeping requires some basic knowledge of accounting, including concepts such as assets, liabilities, equity, income and expense accounts, and can understand financial statements. Furthermore, if you have employees your bookkeeper should be familiar with payroll taxes and federal and state laws pertaining to employees, even if you have an outside service preparing the payroll. Frequently, you can find individuals offering their services as “bookkeepers” when they do not have a grasp of these basic accounting principles. Unfortunately, if the employer also does not understand accounting, it can be months or more before he finds out that this bookkeeper really doesn’t know what he is doing.

The best place to start when looking for an acceptable candidate would be your accountant’s office. Many accounting office’s offer bookkeeping services, but their staff bookkeeping services are often billed at a premium. If your accountant offers this service, but you feel that the rate is too high for your small business, ask the accountant if he can refer you to a qualified independent bookkeeper. Rates for these individuals usually run a little lower.

You should interview several bookkeepers until you find one that you feel comfortable with, as this is someone you will be working with closely on sensitive information relating to the business. You should also request permission to run a background check on your prospective hire, as incidents of fraud and embezzlement do occur. The individuals who have committed these types of crimes are not always prosecuted, and after being discovered and terminated, will often take employment elsewhere with unsuspecting business owners. An experienced and reputable bookkeeper will not be offended by this request, and should be able to offer business references as well.

There are bookkeeping tests that you can administer to your prospective hire to determine if the individual has sufficient skill to perform the tasks necessary. Many are offered free on the Internet, some provided by professional bookkeeping organizations.

Once you have hired a bookkeeper, there are some ways to protect your business from fraudulent activities and in turn allow the bookkeeper to feel free from suspicion.

The following is a partial list of good practices:

1. Have all bank information such as statements, passwords, cancelled checks, etc. mailed to your home or a different business address. Open all such mailings, before any employees, to review for any suspicious activity and ASK QUESTIONS if something doesn’t look right.

2. Never give out passwords on bank, credit card, or loan accounts to the bookkeeper even though it may seem more convenient to do so.

3. Make sure that all bank and credit card accounts are reconciled properly and promptly and that you review the reconciliation reports. If you don’t know how to read a bank reconciliation report, ask your banker or your accountant to teach you what to look for.

4. Make sure that you have adequate “separation of duties” policies in place. Some examples of this would be:

a. The employee recording a bill or creating a bill payment should not also be signing the checks.

b. The employee reconciling the cash should not be the same person taking the deposit to the bank.

5. You can find out more about the “Separation of Duties” by researching online or by speaking with your accountant.

6. Be sure that you and/or your accountant review the financial statements on a regular basis for anything that looks out of the ordinary.

Finally, when you find a good bookkeeper, be sure to value and compensate him accordingly. This is an important position within the business and should not be left to unskilled, poorly trained, and underpaid people.

5 Ways an Accountant/bookkeeper Can Help a Small Business

By Randall Orser | Small Business

The decision to hire an accountant/bookkeeper is an important one for a business owner to make. Not only can hiring an accountant/bookkeeper free up some time for the owner, but also accountants/bookkeepers have specialized skills and knowledge that can be a significant asset for a small business. Here are five of the ways that the specific skills of an accountant/bookkeeper can help a small business to succeed.

Professional Reports

An accountant/bookkeeper will be able to prepare professional looking reports for the business. While this may not seem like a big deal, in many cases it is. When a small business owner contacts a bank or other financial institution to apply for credit, having a professional looking financial report can make the difference between getting approved or denied for the loan. Having standardized financial reports will also reduce the chances of governmental compliance issues, as the accountant/bookkeeper will be familiar with how the agencies want the forms to quickly access the needed information.

Tax Planning

Taxes are not just something that a small business owner should think about on a quarterly basis. As a business begins to grow and expand, certain steps can be taken to lessen the impact of federal and provincial taxes on the business. By lowering the amount of taxes that a small business should pay, the owner can use the savings to grow the business even more quickly. A properly trained accountant/bookkeeper that is familiar with the business can help the owner to find ways to save money on taxes now and in the future.


Though a business owner may be an expert in his or her industry, chances are he or she is not an expert on taxes and financial reporting. However, an accountant/bookkeeper is an expert on these issues. Just as business owner must keep up with changes in his or her industry, an accountant/bookkeeper spends time staying informed of changes that impact the field of accounting. By turning over the oversight of taxes and financial reports to an accountant/bookkeeper, a business owner will have more time to effectively manage the business into the future.

Simplifying Recordkeeping

Accountant/bookkeepers are just as concerned as business owners about accurate records. Accurate records make filing tax statements and other financial reporting documents easier while greatly reducing the chances of making a mistake. An accountant/bookkeeper can recommend record keeping procedures and even software that will reduce the amount of time it takes a business to maintain records and reduce the amount of time that it will take the accountant/bookkeeper to process these records.

Outside Perspective

An accountant/bookkeeper offers a business owner access to a perspective from outside of the business. This can be important in many ways. An accountant/bookkeeper may spot business trends that the owner is missing or uncover potential problems or overlooked opportunities. The accountant/bookkeepers outside perspective may be one of the biggest assets that the accountant/bookkeeper can provide a small business owner. This is due to an accountant/bookkeeper’s background of working with other companies and knowing what has and has not worked in the past. While this is generally not an official duty of an accountant/bookkeeper, some informal advice or suggestions from an accountant/bookkeeper can lead to large profits for a business owner.

Do You Think with Your Right-Brain or Your Left?

By Randall Orser | Small Business

Getting business liftoff with a brilliant website, fancy storefront, or plentiful first-time sales is terrific, but for long-term success there are many more pieces to add to the business-building puzzle.  Building a business is just that—building an entity one building block at a time.

What stage of the building process are you in:  development, revision, maintenance, or expansion?  How do you measure your progress?  How will you know when you’re slipping off-course or need a change of direction?  How do you course-correct?

Charting the Course from Various Angles

How you measure your results may vary depending on the type of thinker you are.  Are you a right- or left-brained dominant thinker?  Looking at how these two types of thinkers respond to situations can offer insight into business dynamics and perhaps help you understand why you do what you do.  Have a look at these two approaches to see if you can identify yourself or your business partner(s) in the descriptions:

  1. Right-brained thinkers are artistic or creative.  They are full of ideas.  They see possibilities.  To some right-brained thinkers, facts and figures are confining obstacles.  They love trying new things.  They love seeing things in full colour.  They’ll go to great lengths to make their creative ideas work.
  2. Left-brained thinkers, on the other hand, are practical.  They see business in dollars and cents.  Surveys, historical proof, traffic counts, facts, data, and the like, are important to them for decisions making.

So, What’s Better?

A good left-brained thinker will look for underlying causes of plummeting numbers, look for logical actions to take, and course-correct.  He may be good at saving the business money and protecting profits.  He may be instrumental in securing ongoing financing.  A left-brained thinker is good at keeping the business in the black.

This practical thinker may be tempted towards knee-jerk reactions though.  He might become tempted to take drastic measures to bring the numbers up.  The left-brained thinker is cautioned, though, not to throw the baby out with the bathwater.  Perhaps tweaking a product or service can help recharge sales.  Firing the best employees in a quick-ditch effort to save money on payroll might end up costing more money in severance payoffs, legal bills and then rehiring and training costs further down the road.

Practical thinkers can benefit from having the viewpoint of right-brained thinkers who are possibility and bigger-picture oriented.  The right-brained thinker may be skilled at seeing untapped markets or have just the right trick up his sleeve that might boost sales.  While the left-brained thinker makes decisions based on logic, he’ll be wiser to consult with his right-brained counterparts in order to make the most prudent decisions that align with the values and long-term goals of the business.

The right-brained thinker may be willing to hang in there long enough and through difficulties to see his ideas fly.  On the downside, he may have so many varying ideas that he fails to focus or launch the right idea in the right niche at the right time.  The right-brained thinker may benefit from having the input of a left-brain thinker to help him measure the practicality of his dreams against the cost of doing business and profitability.

Consider All Viewpoints

Typically, individuals with a strong left-brained bent may have trouble understanding the enthusiasm of their right-brained counterparts.  They can sometimes become impatient with creativity and find it hard to invest in mere concepts.  Equally, right-brained creative types can become impatient with numbers-driven left-brained counterparts.  It takes awareness to see the dynamic of this type of dual thinking in play.  It’s important that each personality type respect and value the contributions of the other.

A good mix of right- and left-brained thinking is ideal.  As a business owner, you may be well equipped with a little of both.  If not, building a balanced team or counting on outside business coaches or advisors to fill the gap may be beneficial.

Develop Consistency

Making changes too often either because of a lack focus, or as a knee-jerk response to falling profits, may actually circumvent your ability to build a solid reputation.  Customers might never fully understand what your business is about if you continually hopscotch around.  There won’t be consumer buy-in if they perceive you as unstable, flighty, lacking confidence, or if you send conflicting messages.

Take a personal business inventory now.  Choose your focus.  Narrow down your moneymaker and your niche.  Craft a vision that will keep you on course and help guide you when difficult decisions need to be made.  Be aware of economic trends, examine your operating cycles, and be willing to ride a few rough waves.  Use a balance of right-brained creativity with left-brained facts and evaluate your progress from a variety of viewpoints.  Most of all, remember that a successful business is never truly finished being built.  It takes ongoing fine-tuning to get it where it needs to be.

Grow Your Business with these Five Pricing Strategies 

By Randall Orser | Small Business

As a small business, even the small advantages can help in a big way. A larger business doesn’t have to make every dollar count, though doing so is still prudent, as it will probably have little impact on their bottom line. Your businesses performance will be based on how you price your products, so take advantage of as many of these strategies as you can.

Use Visuals to Make Your Sales Prices Standout

While pricing is generally literal, the human mind does have some impact on how we see that pricing. As many pundits like to point out, people buy on value they are getting from your product/service more than what they are paying. Making your prices standout visually, helps differentiate the new price from the old one. Using a different font or changing the colour of the sale price can garner more sales because the customer’s mind instantly realizes that something is special about it.

Using the 99¢ Practice

The human mind works in mysterious ways, and sees $49.99 and $50.00 differently, even though it’s only a penny different. The former price looks like it’s a dollar cheaper since it starts with 4, while the latter figure starts with 5. Combine that with a price that ends with 9, and you end up producing more sales. Using pricing that ends with 9 makes people believe that you’re cheaper, and that lower first number endorses that.

Put Cheaper Items Next to an Expensive Items

Pricing isn’t always about being cheaper than the other offering. Many times, people associate a higher price as a gauge of quality, and this can be to your benefit. You can use this to your advantage by offering two or three versions of similar quality of your product or service, and each progressively more expensive. Customers generally opt for the more expensive one when two are offered, and take the middle one when three are offered.

BOGO Pricing

Everyone loves a good deal, however small business is wary of giving away the farm, so to speak, with too cheap pricing. When you start giving deals, and get carried away, you have less money for which to grow. BOGO pricing, or Buy One Get One, can be worth doing as people are far more likely to buy.
Let’s face people are a little greedy, and when they feel they’re getting a great deal, they emphasize the possible value. It becomes not about whether it’s actually a good purchase, but about getting more than they think they should for that price. Also, offering discounts on future purchase can work too.

Prestige Pricing

You can play on prestige rather than greed. Pricing according to prestige numbers, such as 50 or 100, can create sales simply because it feels right. Flat numbers are more easily managed mentally, and suggest security. Your customer isn’t juggling numbers to see if it’s a deal; they get exactly what they want at the price they anticipate.
Your business may live and die by your pricing strategy. You set up your pricing based on your product’s or service’s value; however, your customer doesn’t care what you think your price should be. They only care about WII-FM (what’s in it for me). Once you understand that, the sooner you can chose your pricing strategy.