Business Management

Business Accounting

Running a business will require you to do accounting. Everyone hates doing that stuff, but it has to be done. One thing many people will do when starting a business, is ignoring the important thing of getting organized. In the beginning there are no customers, no income – just expenses. That’s easy. All you need is a shoe box and you’re done, right!? Then business starts picking up and you are too busy to keep track of everything right away. So, the old shoe box still looks pretty empty and you are sure you will do the accounting next weekend or the weekend after at the latest.

12 weeks later down the road, the shoe box is full. What now? You’re too busy to think about the accounting stuff now and just keep on piling up the receipts for income and expenses.

You need to get organized early enough in your venture. Don’t start ‘doing it later’. Accounting is not something you can push out and catch up on it later. How do you know if you have positive or negative cash flow? What if you need a loan and your banker asks you for an income statement? What if your house burns down and with it all the receipts for income and expenses. Yes, the money might be in your account but the IRS still wants to have a complete tax return from you.

An easy and affordable way of keeping track of everything, is to use an Excel spreadsheet. It might not be the most sophisticated accounting software, but it will give you most of what you need. One page lists all the expenses and the other lists all the income. That would be smallest thing you need to do to keep track of the expenses. If you want it a little more sphisticated, you start using the functionality of Excel and use the calculation options it offers. Split your expenses and income into months and have Excel do the math. You now can even see your cash flow – how much money does come in and how much do you spend. Well, that’s a start, but why not take it to the next level? You are investing in hardware. Hardware cannot be written of in one piece if it is a significant investment for your business. The amount of your investment needs to be split over several years. Use Excel to do this work. Again – the mathematical calculations it can do for you, will allow you to build cash-flow statements, budget listing and much more. As most people have Excel on their computer, it is the most affordable way to keep track of your income and expenses and to have the accounting nightmare avoided. If you do not have Excel – try Open Office – an open source Office package. It has something similiar like Excel to offer.

If you are willing to spend some money (but not too much) you can use Quicken or Money as your account software. It allows you to generate reports and it automates many tasks (like recurring payments). The 2 software packages are easy to learn and upgrade costs will be low. In many cases these software packages come with a new computer from the factory. Can’t beat that. Both software packages also come in a small business version with added features for small businesses. Not the real thing – but a good start. If you are already using Quicken or Money for your personal finances, this might be the best solution to go with.

If you know that your business will grow fast and big, you should consider a professional accounting software. Quickbooks, Simply Account, Mind Your Own Business – MYOB and Peachtree are the most well-known account software packages out there. They are more expensive but offer you a full-blown accounting solution. You can even integrate a merchant account into some of these software applications. Imagine that – automate your recurring billing. Instant money and instant accounting updates. The bad thing is – these software packages require knowledge to make them work. If you do not have an accounting background, this can be a challenge. If you are serious about running a business, you can hire an accountant for the initial setup of Quickbooks (just as an example) and he/she will configure it for you. Or you go and take a training class at a local community college to get up to speed. “Computer Moms” is a small consulting company (Franchise). They are showing up in more and more cities. They offer one-on-one training for Quickbooks, too (at least where I live).

If your business or your income situation gets complicated – consider hiring an accountant. They are not as expensive as you think ($35 – $80 per hour) and you will have your peace of mind. You basically just deliver them all your paperwork and they will take of it for you. The initial start-up might be a little expensive, but once you have this thing going, you will be glad you did it. An account might also be a good choice for your very first tax return. He/she will help you that you do not overpay the IRS and that you do not miss out on money-saving tax issues.

Be smart – get organized. Don’t save money at things where it can cost you much more than what your intial saving would be.

Disaster Recovery Planning

Your web server or reseller account is up and running. You made sure that the important data is being backed up or that you are using redundant systems to keep everything up and running without risking the loss of data. But how are you protecting your actual business that you are running from your home? What happens if your house burns down or is taken apart by a Tornado? Or somebody breaks into your house and steals your computer equipment?

You might have home owners insurance but does it cover equipment used for a business? Many policies actually do not cover business and personal property at the same time. Check with your insurance agent to take care of these things if necessary. But even if your equipment is protected – how about the data itself? Sure, you probably backup all important data and files to a CD-Rom. You’re protected, right?! Where do you store the CD-Rom? On your desk? In a cabinet? What would happen if the house burns down? You could get a fire-proof safe but will this be sufficient? As a responsible business owner you should think about an off-site storage solution. Backing up the data onto a CD is a good thing, but storing it in a bank safe is even smarter. Bank safes do not cost a lot to rent and you could use one anyway to have your birth certificate and passport in a safe location. My bank charges me $40 per year for a bank safe and all my important paperwork and off-site storage needs are met. The fee for the safe is even tax deductible in many cases (please contact your accountant to verify).

How often do you do your data backup? Daily? Weekly? Monthly? What happens if your hard drive crashes tomorrow? Can you recover within 4 hours or less? If your business depends on a single computer and a single hard drive – plan ahead. Nothing worse than having a hard drive failure and not being prepared for it. Also have copies of the operating system CD and software available. It is recommended to have copies at your house and the originals in your bank safe.

Is that all you will need for disaster recovery? No, it is not. Imagine your house burns down – how are you going to support your customers? How are you going to monitor your systems? What about billing and invoicing? How do you get Internet Access? What computer are you going to use if your old one is a piece of smoking junk? How are your employees and technicians going to get in touch with you during the time of crisis? These things need to be looked and planned for. Setup a plan that will lay out where you will stay and how you get access to the basic business tools (computer, Internet). Make arrangements for your employees to be able to respond properly when your business operation is basically shutdown. Your documentation should contain all contact information for every business partner and employee. You don’t want the data center to shutdown your servers because you are maxing out your credit card to buy food and clothes for you and your family. Make sure you can contact your service providers and they know how to get a hold of you. Have keys and information for your bank safe available off-site, too. Nothing is worse than having a bank safe that you can’t open because you left both keys in the same location (your burned down house).

Your documentation should list in detail what the steps are that you will need to follow. During crisis you will forget important things. Plan for it ahead. You will be stressed and under pressure. A detailed plan telling you what you will need to do will reduce the pressure and the stress and also will help to not lose your source of income. Also make sure that you frequently re-visit your disaster recovery plan and update it whenever necessary.

The Small Business Administration offers loans for disaster victims:

Quote: The amount of money that the SBA will lend you will be based upon the actual cost of repairing or replacing your home and/or personal property, minus any insurance settlements or other reimbursements or grants. The total loan amount is subject to the limits set out above.

Please visit the SBA’s website for all the necessary infomation if you are a victim of a disaster and need help (loan).

Does a new business needs the same protection as an established business? Yes and no. A bank safe should be a mandatory thing as well as daily or weekly backups (including off-site storage). Everything else can follow – but should be always on your mind.

Let’s hope that you will never have to execute this disaster recovery plan. But having it available in time of crisis is important and will give you the peace of mind to be prepared.

Selecting a Merchant Account

Shopping for a merchant account is a confusing and difficult process. And, unfortunately, many merchants do themselves not a big favor by going shopping without first understanding what they are really shopping for.

It’s simply not enough to research the rates of banks and independent sales organizations/merchant account providers to find out which are lowest. You must also know the different types of accounts available to determine which one is really right for you. So, why not just shop for the lowest rates?

Because the accounts that offer the cheapest rates won’t necessarily be right for your business. Retail/card swiped accounts often have the lowest rates but carry requirements that, if not met by the merchant, will result in additional fees, surcharges, and even penalties. For example, if you’re signed up for this type of account but are not able to swipe a card electronically, some processors charge you as much as 1 percent to 2 percent more. Especially being a web host means doing business on the Internet. You might not even need to look at the rates for physical transactions. It is much more important to find out the rates for virtual transactions.

Back to not being able to swipe a card electronically. In the business world, these are known as nonqualified or disqualified transactions. This means that the transaction won’t meet all the requirements and therefore it doesn’t qualify for the best rates. The real-world effect can be a monthly bill that’s much larger than what you expected, leaving you wondering what happened to that great deal you thought you were getting when signing up with this provider. Always make sure you’re using an account that’s right for your business.

Crucial Distinctions
What account types do exist? This would be easy to answer if every merchant account provider would use the same terms, fees, and structured pricing in the same way as everyone else. Unfortunately, life is never so easy. Nevertheless, please allow us to say that, in general, credit card merchant accounts are classified as one of the following account types:

Retail/card swiped accounts are designed with the typical brick-and-mortar merchant business in mind, one who can swipe the card through an electronic terminal reader as proof that the card was present.

Retail/keyed entry accounts are designed for situations in which the card is present but the merchant is unable to electronically swipe the card. The magnetic stripe might be damaged as an example. Important: The card numbers are keyed into the physical terminal.

Rates for these accounts are generally a little higher than those for card swiped accounts, but can be lower than Internet rates. Important: Retail/keyed entry merchant accounts require that the merchant can (not must) obtain a manual imprint of the card in addition to the customer’s signature. Examples of merchants that fit this account type include mobile merchants, such as locksmiths and arts and crafts dealers. Why are the rates higher? Due to the higher risk somebody using a stolen credit card number and customer name to charge an account.

Mail order/telephone order/Internet accounts are for those merchants who don’t usually see their customers and therefore cannot obtain a physical swipe read on a terminal or an imprint of the card. Not surprisingly, these transactions carry more risk and are therefore more expensive than normal rates. You will need a virtual terminal to be able to make keyed transactions. Authorize.net would be such a provider for a virtual terminal.

What kind of Credit Card Merchant Account Is Right for you?

Use a retail/card swiped account with a physical terminal if you see your customer and are able to electronically swipe 90 percent or more of your transactions. This is a good option for somebody doing local business from a physical store mainly selling non-recurring services.

Use a retail/keyed entry account if you always see your customer and can obtain a manual imprint of the card but not swipe it, or if you routinely swipe fewer than 90 percent of your sales. This sort of credit card merchant account is also a good option for a business mainly targeting the local market.

Use an Internet account anytime you don’t see your customer face to face AND have a lot of recurring payments to take care of.

When doing the research – ask the merchant account provider to provide you with a sample invoice representing a typical month. Let them explain every single fee.

When is time for you to get a real merchant account? In many cases it makes sense to have your own merchant account when your monthly sales volume that is charged to credit cards reaches $1,000 or more. Close to that point the fixed fees for the merchant account equal the higher transaction fees or 3rd party providers like Paysystems or 2Checkout.

How does credit card processing actually works in the web hosting industry?

Accepting credit card payments through your web site actually requires multiple components. There are usually 3 things involved when a customer makes an online payment.

Your Order Form – The customer decides to use your services and accesses your order form on your website. You must have code/software in place that will collect the client information and billing information. The information must be stored in a way that it can be accepted by the payment gateway.

The Payment Gateway – This is the part that will transmit your customer’s order information to an Internet merchant account provider (e.g. Authorize.net). The payment gateway does the actual credit card processing in the moment the transaction happens.

The (Internet) Merchant Account – A credit card merchant account is an account with a financial institution (merchant account provider) or bank, which enables you to accept credit card payments from your clients. The payment gateway will transmit the billing information received when the actual transaction took place to the merchant account provider.

How much does a credit card merchant account cost?

Understanding the total costs of your merchant provider can be tricky. Typically, an internet merchant account will have several types of costs associated with it:

Application Fees
Most merchant accounts will require an up-front application fee. This fee, supposedly, is to cover the initial cost for processing your application. In case you decide not to open a merchant account or if your credit standing is really bad, they still cover their initial costs. Although good providers waive these fees in case they deny your application and I recommend that you choose a provider that does not require an up front fee (if you find one). Local banks might be a better option in those cases. They want to keep their customers and you could be moving an account to another bank and they lose the thing, makes them often do a little more.

On Going Fixed Fee
Almost every merchant account providers require you to agree to a monthly fixed fee or “statement fee” as it is often named. This is simply another way to cover their fixed costs and to make money. It’ll be almost impossible to find a provider that does not require this type of fee on a monthly basis. However, do not choose a merchant account that requires you to pay more than $10.00 per month. In addition to that, most merchant providers require a monthly minimum fee (usually $20.00 or $25.00). This will bring your fixed fees to around $30.00/$35.00 as a minimum.

Discount Rate
In most cases the discount rate will be between 2% and 4% – depending on the card provider (Visa, AMEX, MasterCard/Diners Club/Discover). The discount rate is the sales commission the provider earns on each sale (but partially has to pass it on to their upstream provider – usually the credit card company). For example, if the discount rate offered is 3%, and you receive a sale over your web site for $10, you will owe $0.30 to your credit card merchant provider.

Fixed Transaction Fee
Every credit card transaction will be associated with a fixed transaction fee. Usually the amount of the fixed transaction fee is between $0.20 and $0.30. Unlike the discount rate, the fixed transaction fee is the same for every transaction. Whether you get a $0.50 sale or a $100 sale – no matter if you have 10 transactions a month or 10,000 transactions, the fixed transaction fee will always be the same.

Termination Fees
Often hidden in the fine print of a contract, a termination fee can apply if you cancel your merchant account within a specified period of time (usually within one year). But beware; some credit card merchant account providers require a two-year commitment! Make sure you get this information upfront so that you can decide if you really want to sign a 2 year agreement.

Miscellaneous Fees
There can be additional fees. Make sure you clearly ask for all fees involved and get this in writing from the provider. An example for a miscellaneous fee would be the charge back fee. If a client disputes a charge on a credit card you might get charged back. Not that you will lose the sale – you will also have to pay a penalty (charge back fee). Be aware – many chargeback’s on your account will lead to termination of your account by the provider.

Mission Statement

Every organization or business has a mission, a purpose, a reason for being. The mission statement should be a clear and succinct representation of the company’s purpose for existence. It should incorporate socially meaningful and measurable criteria addressing concepts such as the moral/ethical position of the company, the public image, the target market, products/services, the geographic domain and expectations of growth and profitability. At the very least, your organization’s mission statement should answer three key questions:

– What principles or beliefs guide our work?
– What are the opportunities or needs that we exist to address?
– What are we doing to address these needs and opportunities?

A Mission Statement should be a one-sentence/two-sentence, clear, concise statement that says who the company is, what it does, for whom and where.

The intent of the Mission Statement should be the first consideration for any employee/business representative who is evaluating any strategic decision. The statement can range from a very simple to a very complex set of ideas.

A Mission Statement can be changed over time. It does not have to be static. It is actually good to revisit the Mission Statement over time and to adjust it to the different times in society, culture and business.

Here are some Mission Statements of other companies and organizations:

Mary Kay Cosmetics
“To give unlimited opportunity to women.”

Food & Drug Administration
“The FDA is responsible for protecting the public health by assuring the safety, efficacy, and security of human and veterinary drugs, biological products, medical devices, our nation’s food supply, cosmetics, and products that emit radiation. The FDA is also responsible for advancing the public health by helping to speed innovations that make medicines and foods more effective, safer, and more affordable; and helping the public get the accurate, science-based information they need to use medicines and foods to improve their health.”

North Carolina – Secretary of State
“To serve and protect citizens, the business community and governmental agencies by facilitating business activities, by providing accurate and timely information and by preserving documents and records.”

Sun Microsystems
“Solve complex network computing problems for governments, enterprises, and service providers”

Walt Disney
“To make people happy.”

So, from these different kind of Mission Statements you can see that most of the items mentioned above have been implemented in one way or the other. Make sure your business has a Mission Statement that you can identify yourself with. Make sure your employees know your Mission Statement and understand the purpose of it.

Becoming Wise – Wild & Free – Writing A Successful Business Plan

So you’ve decided to write your own business plan because you know the value that the experience will give you. With the books and software that are out there today you can probably sit down and complete the plan in a day or so, right? Plug in the numbers, add the notes, write the whole narrative (story), print it and get it out to the banks or investors.

If you can complete a plan in a day or so you are either an expert, that has already done all of the research, or you are heading for big trouble, because you have not done enough research. If you are like most people you have a job, a family and commitments that take up a lot of time. It would be impossible to write a business plan that quickly, even if you know your stuff. You have probably heard the old adage, ‘Rome wasn’t built in a day’ well, neither was a good business plan. To create a top quality business plan you need to research each and every aspect as diligently as possible. Take your time and think of everything, don’t leave anything to chance.

That sounds like a lot of work and a long drawn out process. How will you remember or even think of everything? How can you keep track of what you have to research? If you have to set your plan aside for a while, how will you remember where you left off? You may get tired, bored and even careless in your efforts because like most people you probably have Attention Deficit Disorder when it comes to doing this type of work.

The answer is to do your plan in steps. A good guide book or business plan software will ask you to complete work as you go, one step at a time. You read a section, do some research on the items(s) in the section and enter the information that you discovered. This way you are focused on each item as you go and never become overwhelmed. You will also be able to remember where you were when you have to set the plan aside for a few days, without having to re-read a novel. The process may still seem long but if you concentrate on doing your plan in steps it will be done before you know it.

This series of articles has been written in steps because most people don’t have the time to sit down and read a novel. You can even do your financial projections in steps, which is where I recommend that you start. Doing the projections will help you analyse the feasibility of your project before you spend a ton of time writing a complete plan that may or may not work for you.

About The Author
Written by Rod Francis – President of Advantage Venture
Systems Inc. creators of the Venture Planning System(tm)
Pro business plan software @ www.VPSpro.com
Suite 207, #1-1081 Central Ave. N.,
Swift Current, SK Canada S9H 4Z1
Check for more articles on writing a business plan at:
http://www.vpspro.com/business_plan_articles.html

How Salespeople Can Create Instant Believability And Credibility With Their Customers 

It pays to be specific. I believe that statement is true. If it is true, why do so many salespeople pepper their sales presentations with phrases of generalities? There are two primary reasons. One is habit and the other is instinct.

So many people in and out of sales speak in generalities.

It’s really hard to pin them down for the details. If speaking in generalities comes so naturally to so many people – it has to be instinctive.

In sales it’s tempting to impress new and prospective customers. One of the ways salespeople do this is with their product and service presentations. These presentations often include references to the following:

• How many products are in your product line?
• How many years your company has been in business?
• How many customers you have worked with.
• How much of your business is repeat business?
• How much of a discount you’re planning to offer to get the business?
• How much your product improves productivity?
• How much your product reduces the cost of doing something?

When the time is right to begin talking about yourproducts you’d be a fool not talk about these things. But for some inexplicable reason salespeople usually follow a similar path. Let’s review this list and see how salespeople tend to use all of the above during a sales presentation.

• We have over 20,000 products in our product line.
• Our Company has been in business more than 30 years.
• Our customer database includes more than 30,000 customers.
• Last year more than 50% of our business came from existing customers.
• Because of the quantity you’re buying I’m delighted to offer you a 20% discount.
• Our product will improve your department’s productivity at least 20%.
• Our product will reduce the operating costs for this project by more than 10%.

Do you notice what all these statements have in common? All of the numbers cited end in a zero. Zeros seldom add credibility. In fact, they detract from it. Salespeople tend to feel more secure when they’re not pinned down by the specifics. Generalities make you feel good, but they don’t make you sound good.

It takes a great deal of self-discipline and determination to speak with any degree of specificity. Here’s an example that has repeated itself many times. Whenever I conduct an on-site sales training program (usually one-half day) I always provide the decision-maker, because he’s usually the one who introduces me, with a prepared introduction.

It’s exactly what I want him to say and it also takes the pressure off him to improvise something at the last minute.

The last three lines of my introduction are:

• He has worked with 427 different organizations.
• Last year 68% of his business was repeat business.
• Jim Meisenheimer, Inc. has achieved 15 consecutive years of increased sales and profitability.

All the introducer has to do is read the introduction. Here’s how the last three lines are often delivered. He has worked with over 400 different organizations. Last year more than 60% of his business was repeat business.

Jim Meisenheimer, Inc. has increased sales every year he’s been in business. Ironically, even with a written script the generalities come bubbling to the surface.

Let’s try it one more time and see if you can sense the difference.

• We have 21,973 products in our product line as of July 1st.
• Our Company has been in business 33.5 years.
• Our customer database includes 32,877 customers.
• Last year 57.5% of our business came from existing customers.
• Because of the quantity you’re buying I’m delighted to offer you a savings of $785.34.
• Our product improved ABC Customer’s productivity by 23.6%.
• Our product reduced the operating costs for XYZ by 12.7%.

Okay, let’s wrap it up. Think about these five questions.

1. Do you want to get someone’s attention?
2. Do you want to create the impression that you’ve done your homework?
3. Do you want to build credibility throughout your sales presentation?
4. Do you want to differentiate yourself from your competition?
5. Do you want to increase your sales?

You can do all of these things and more if you trade-in your generalities for more specifics. Specifics are more credible and believable than generalities.

Simply stated, you’ll become more believable and credible as soon as you become more specific.

Free – eCourse The Art Of Closing The Sale.
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Free White Paper – How To Make Sure Your Next
National Sales Meeting Is Better Than Your Last One
Use this link to get your copy Link
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About The Author
Jim Meisenheimer is the creator of No-Brainer Sales Training. His sales techniques and selling skills focus on practical ideas that get immediate results. You can discover all his secrets by contacting him at (800) 266-1268, e-mail: jim@meisenheimer.com or by visiting his website: http://www.meisenheimer.com

Psychology of Converting a Prospect to Money 

If you want a truly successful business, you need to take a close look at how Psychology can set you apart from the rest of your competition.

Secrets of negotiating

Remember this: no matter how great your product or service, unless you can negotiate innovatively you’ll never achieve the success that can be yours.

When you follow-up with a prospects, ask them: “Do you have any situations that we can work out together using our mutual expertise?”

Psychologically, by substituting the word “situations” for problems, you are more likely to get a positive response. Also, by using the term “combined or mutual expertise” you are telling them you respect their valuable knowledge.

Remember this advice – Seek first to understand, then to be understood.

How to make people respond more quickly

Remember: “People respond more to what they are going to lose than to what they are going to gain.”

It’s very powerful when you explain to prospects they will probably lose market share to their main competitors if they don’t adopt your ideas. Ask yourself: What will my customers stand to lose if they do not buy my service or product?

Psychology can also play a powerful part in overcoming objections to requests for a follow-up call. There are two strategies that will result in incredible opportunities coming your way. Try them today.

Tell your prospects you really want to understand their needs precisely and you feel you can’t achieve this unless you talk to them in on the phone. People want to feel understood more than anything else and the businesses that understand this take all.

You can also add that it will only take, say, 12 minutes, (let them time you!) to show them how they can benefit from what you’re offering. You can also offer to give them a free gift (low cost with a perceived high value eg reports, e-books etc) if they think you’ve wasted their time.

Packaging Your Website

You can increase your sales by using appealing photographs of typical users (yourself) on your website.

Why is this? Well, it humanizes your product or service
and prospects perceive you to be more professional and trustworthy.

This can be very powerful for a home-based business to add to the level of trust for your potential prospects.

Beware of this common mistake

This is a common mistake made by many in home-based business marketing. Marketing your home-based business, you must sell benefits, not features. If you sell your product or service using features, you must stop this mistake immediately.

While marketing your home-based business, you can sell its features: “Free website and dozens of marketing tools to promote your site”. How many advertisements do you see like this?

However if you sell benefits, you sell prospects a lifestyle and that’s psychologically powerful.

For example, you can sell benefits by offering “Financial freedom” (your product) with a special offer of test-driving the product for 30 days (innovative pricing to encourage a larger sale). You can then detail how your product leads to financial freedom, for example, free website with your personal attention to helping your prospect begin marketing their new business.

This can be done in many different ways no matter what your home-based business is. The secret is to turn your service or product into a package (a way of life) and combine it with innovative pricing.

Psychology in marketing

Using psychology in your marketing will add immense power to your efforts, you’ll reap the rewards quickly.

Psychology is not a trick it is recognizing and celebrating our strengths and weaknesses as humans.

My next article

My next article will be titles, “We eat our young”. It will be a discussion on the psychological aspects of helping, or in some cases not helping persons new to owning their own business.

Article by: Joe Saddoris, Owner of
http://extra-income-internet-network-marketing.com
Editor of the EIINM newsletter
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Copyright 2004

Joe Saddoris
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Extra Income Internet Network Marketing
http://extra-income-internet-network-marketing.com/