Got a Thorny Business Problem?

Posted on May 16, 2015 By

Thorny Problem

Every business encounters insurmountable problems.  Revenue drops off a cliff, raw materials double in price, entire container shipments disappear.  It’s a bit of a cliche to say, it isn’t the bad things that happen to you; it’s how you react is important.  But there is a kernel of truth to it.  How do you react to dramatic takedowns of your business?

First, if you are going to be emotional about it.  Get that out of the way.  Go have some ice cream, beer or scream at the greek gods about the unfairness of it all.  Are you back now?  Good.

Second, define the problem.  Raw materials doubling in price?  Your competitors will also be facing that same issue.  Revenue drops?  Have to checked the sales reports lately?  Is one of your employees stealing cash?  Economic downturn?  It’s important to know why this bad thing has happened, not just that it has.

Third, Brainstorm for immediate solutions.  Do you need a cash infusion?  Do you need to reduce staff?  Plug the immediate problem as best as you can.

Fourth, Back to problem solving.  Outline the problem/solutions and future problems that might happen.  For each step; write down something that would alleviate that risk.  Containers have gone missing?  Did you have shipping insurance to cover that risk?  Consider talking to your mentors about the issue.  Google the individual problem.  You will be surprised to learn how many people have already have solved your problem.  Give it a try.

Fifth, Do you have some long term solutions yet?  Break down the solution into steps.  The tangled path out the quagmire should be more clear now.

Sixth, Acceptance.  It’s true that sometimes there is no immediate solution.  Say, your retail store burning down with all your inventory before the holidays.  In that case, you need to build a business plan to figure out what it would take to restore your business.  You might discover that the business insurance was insufficient, the local zoning might have changed, or the business climate is inadequate.  Consider if you are planning on making the problem worse, or solving it.  Nothing lasts forever and some never are reborn in a new format.

A great example is Woolworths.  If you don’t remember Woolworths, it was one of the original dime stores.  I loved going to their lunch counter, browsing their store, and just finding weird stuff that had been there for years.  Now, that format is still around, Walmart, Kmart, and Target are the same updated store type; but Woolworths has died.  Or has it?  The corporate structure has changed, the store fronts have changed, but Foot Lockers and other mall stores are the same company.  They successfully transitioned to a new version of themselves.  If a nickle and dime store chain can do that, you can too!


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Create an Effective Business Plan Mission Statement

Posted on May 15, 2015 By

Effective business plans needs mission statements.  It immediately communicates the business plan goal.  It should be written in clear language and only be three sentences long.

Don’t make them guess, ponder or wonder what the goal is.  Compare the following:

  • Deliver 200,000 units this year


  • Inspiring Puzzle Designs that Stimulate the Mind

One is a sales goal and one is a mission statement.  It’s very possible that the operational goal is what the funding will enable.  However, the mission goal let’s the banker or investor know what the overall goal is.  Inspiring Puzzles.

The 200,000 puzzles sold this year is a sales goal.  Perhaps the loan will pay for the additional graphic artist and sales people that will be needed to fulfill the sales goal.  But what type of puzzles are being sold?  Inspiring.

The next time you apply for loan, are you sending in your sales goals?  Or are you providing your mission statement?

Puffed Up Mission Statements

The other mistake that I’ve seen is puffed up and global mission statements. Like:

  • Reverse Global Warming

If your mission statement is comfortably vague like the above, perhaps you should sharpen the mission statement.  Perhaps:

  • Reduce the Impact of Global Warming in Puget Sound

So now, it’s more tightly defined and gives a reader the understanding of what you are trying to accomplish.  You could reduce the focus even more by saying:

  • Global Warming is killing Puget Sound Oysters.  Let’s find a way to fix that.

No Mission Statement

What happens if you don’t have any mission statement whats so ever?  I was asked to vet a business plan a few weeks ago.  It wandered here and there and then back again.  I paged through it looking for the business goal, I read lots of business plans, and I had no idea what it was.  Were they creating a company?  Did they need to hire employees?  Is for a web app?

Don’t assume that the reader is familiar with your company and it’s goals.  It’s easy to be too close to the goal to effectively communicate that your company needs to update it’s app to keep current with mobile search.





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How Often Should a Business Plan be Updated?

Posted on May 14, 2015 By

Business plans are just for applying for loans or to entice investors.  Business plans help focus and distill the business’s focus and investments.  A wise business leader will:

  • Update the Business Plan each year.
  • Determine which business lines are the most profitable.
  • Determine which business products are the most active.
  • Examine whether advertising is bringing in customers and revenue.  Reevaluate the marketing and advertising budget.
  • Determine if the cost of good sold or cost of services has changed.  If it has changed, why and are those trends expected to continue?
  • SWOT analysis to determine marketplace competitors.
  • Determine if the current rates of return are profitable. Not all businesses are as profitable as they could be.


Kickstarter Budgets

Posted on May 12, 2015 By

I recently had a successful Kickstarter project.  While it didn’t create new sales records, it did fund and I’m busy fulfilling the orders during May 2015.  I’d like to share some key ingredients to having a successful Kickstarter project.

Here is the project, if you want to take a look:

A budget is completely necessary.  It’s easy to get carried away while doing research and development creating new products. Kickstarter projects are definitely a category of product creation, marketing and product fulfillment.  I don’t consider myself an expert on each, but your team does need to think of it in three phases.

Product development:

  • Create an outline of what you want the new product to do.  White board time.
  • Find other products that already do that.  There is very little that is new under the sun.  Do some market research and find out how successful/unsuccessful they were.
  • Go back to your outline and improve on your product.
  • Many companies suggest that their employees never look at the patent office filings because they would be subject to lawsuits.
  • Make your product more awesome.
  • Create and research manufacturing methods.  Prototype it.  Test it.
  • Make it more awesome.


  • Research other kickstarter marketing campaigns.  Note what worked and what didn’t.
  • Consider buying an email list of previous kickstarter campaign supporters.  This is not something I did, but I think it would be helpful.
  • Have your product reviewed at least six weeks before the campaign.  In the game category, I discovered on other blogs that some reviewers only review for money and other consideration.  I also found that some game sites do not support listings unless it falls into their supported categories.  My guess is that like most large review sites; it takes a year of work to be regarded as a community member.  Figure out where your project needs to get reviewed/posted.
  • Many kickstarter campaigns get supporters ready to go before the campaign.  The large dollar pledge bump then kicks it up in the kickstarter algo.
  • I wouldn’t bet the farm on being a kickstarter approved project.  Many of the kickstarter projects fail.  It does take a while to find them on there, since they are buried in the algo.  Try looking in the projects in their final days.  It’s the easiest way to see how many projects fail.
  • Create a story, video and compelling rewards.  There are tons of humble brag blogs about these topics.


  • Create a costing sheet prior to creating rewards.  Add Shipping as necessary.
  • Make sure the rewards cover the product cost, shipping and any stretch rewards.  Remember that kickstarter and the credit card company takes about 10% in total.
  • Make a time budget as well.  Many kickstarter campaigns have been time starved.  There are projects that never deliver or are three years behind in delivering the products.  Be real.  At least 45 days to deliver from China.  Just say’n.
  • Number crunch again.  Make sure there is a decent profit margin.  Remember that you have to pay taxes on it, as well.



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Grant Writing Requires a Solid Budget

Posted on May 11, 2015 By

Grant Writing implies that your nonprofit or organization is asking a third party for funds to complete a project.  A solid budget of expected costs and time is usually part of that grant request. If you don’t have a budget even outlined in the grant request; reconsider that before hitting send on your email.



Are Accountants Overhead?

Posted on May 8, 2015 By

If you read any accounting or cost accounting book, the accounting department the accounting department is overhead.  In other words, this is an expense to support the organization; but doesn’t directly contribute to the company’s revenue generation.

What is the result of this?  If there is a chance to shrink the accounting department, through technology or redundancy, management will usually not hesitate to reduce the accounting personnel.  With technology always increasing; it’s always something on the horizon.

For instance the first large decrease came when payroll companies, like ADP, were able to effectively replace entire payroll departments.  Previously, clerks had hand calculated payroll taxes, paychecks and benefits.  Today, for a few hundred dollars a month, payroll checks are automatically calculated, deposited into employee’s bank accounts, and this is effortless.  It doesn’t even makes sense for most companies to hire payroll employees to manually calculate payroll.  ADP and other payroll companies have become the industry standard for so long; I’m sure most of the readers have no memory of the previous system.

I mention that because this is not a blog on how to prevent technology from making it’s way into the accounting department; but how to work with it.  For instance, many banks can provide downloads of actual bank transaction a few minutes after it happens.  How does this fit into the current traditional accounting department?

Let’s look at some of the technical issues:

  • Bank downloads can be directly put into the transaction ledgers.  Many online accounting software packages promote this as a feature.  Banks provide this as a CSV file, so it’s not hard to imagine that this feature can be programmed for your mid level accounting software.
  • Checks and Wires can be entered directly into the online bank account.  Checks and payments are then directly mailed from the bank to the vendors.  This sounds like it eliminates a day of work for the accounts payable department, doesn’t it?  What about control?  You can enable a second person to approve the payments.

So, lets take a look at that.  You can download bank transactions and you can input the checks to be sent by the bank.  Sounds like a closed loop, doesn’t it?  Small businesses have already transitioned to this business model.  Large or Mid-sized businesses are behind the curve.

  • Scanned Documents vs. paper files.  Scanned documents are easy to make now.  High powered scanners can now rip through 50 documents a minute.
  • Purchase a scanner that doesn’t require 8 by 11 inch paper.  Scan Snap, cell phone scanners, and just a taking a good picture can all be used.
  • Set up multiple scanning stations, if needed.  If you see a bottleneck, you can also give ‘appointments’ to departments so they know when to schedule a scanning session.
  • Ripping out staples in Accounts Payable documents takes time.  Use clips instead to fasten all the approvals together.  Stapling, unstapling, and then restapling is a huge time waster.  Just stop stapling.
  • Say goodbye to the post it notes.  An up to date Adobe PDF reader has a tool for affixing notes and signatures to it.
  • Consider scanning an invoice when it arrives.  Sending it the AP department, getting the approvals, and writing the checks all without handling one piece of paper.
  • Talk to your vendors about sending electronic invoices.  They probably already have that capability, you just need to ask.
  • Find a way to recycle the filing cabinets.  Your company may not need rows and rows of them.  Gone are the monthly storage fees.

Workflow issues:

  • Set up a workflow tracking system.  It would be easy to misplace an electronic invoice if you relied on email.  Drop box or a solid network are more reliable.
  • Create unique approval stamps so that no one can copy and paste approvals on to AP invoices.
  • has set up their entire company around this process.  Consider hiring them to handle it for you.
  • The department will rely more on check lists than it did in the past.  As you lose paper, people need reassurance that tasks have been completed.  Make a checklist to ease the transition.

Are there any other areas that might benefit from technology?  Accounts Receivable?  Are you sending out einvoices to your customers, for instance?  Sending out estatements would save a lot of paper for most large companies.

  • Create a process for streamlining the statement printing.  Some old accounting systems do not allow for estatements to be printed, fyi.
  • Create a quality control diva who double checks that all the customer payments have been applied.  Heck, you will need more checklists more than ever now.
  • Create Attention lines that describe the purchase, due date, and your company name.  Many people search for invoices in their email.  Make it easy for them to find yours.
  • Create file names that make it easy to find in a database.
  • I suggest at least two email or dropbox locations to send the statements to your customers.  It’s easy to ignore emailed notifications.  Will they bother to tell you if one their AP people has left the company?  Maybe or Maybe not!

What about Financial Statement Disbursement?  I’ve spent many an hour photocopying and sending financial statements to company owners.  What do they do with the paper copies?  Are they really incapable of understanding how to use a PDF?  Really?  Maybe they might be more flexible than you think they are. 🙂

  • Consider creating a word doc with excel embedded in it to create more professional looking financials.
  • Education on using the Notes and Signatures now available on most Adobe Readers.
  • Consider attaching some the raw data, so they can look at it.  For instance, the sales from the top ten customers.  Kick up the data you provide by a notch.

So, now that I’ve given a few ideas on how to enable technology in your accounting department, I’m sure you have a few more.  Rather than burying your head in the sand, try embracing technology.  It’s how you go from being a drag on earnings to being the accounting hero who has modernized the company.

If you disagree with me, I suggest you try calculating a hundred employee paychecks by hand, filing out the manual tax reports, making the tax payments.  Get back to me after you do that. 🙂


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How to Price Accounting Services

Posted on May 6, 2015 By

One of questions that I get from new bookkeepers and newly established CPA firms; is how do you price the services?

First, you need to job cost how much it takes you to produce paperwork.  That includes overhead, like rent, computers, telephone/internet and office supplies.  But wait, aren’t those monthly expenses?  Yes, take the monthly total and divide it by the hours billed each month.  That is your hourly overhead charge to all the jobs.

Second, find all the costs that are directly assignable to that client or job.  Online Software expense, filing fees, and report covers.

Third, Determine how many hours it takes to complete the job.  That might be more difficult for a new practice.  Ask an established bookkeeper or accountant for some time estimates.

Once you have determined how many hours it will take; add 10% for review before the customer sees the paperwork.  Then take your overhead rates and actual costs to the cost estimate.  If you systematically job cost every assignment; it will keep you from unprofitable jobs.  If the potential client is bidding the work between multiple sources; don’t be intimidated into lowering your price.  If it’s unprofitable or unreasonably low; there is no point in winning the bid.

I also like to add a day to sleep on the reports.  My suggestion is to review the original request and think, ‘does this information answer this question.’

It’s helpful to use a time tracking system to help you remember how long it took you to complete the work.  You may not remember the six hours to stew over a complicated problem, but that doesn’t mean that you shouldn’t bill the client for thorny problem research.

Fourth:  Make sure the client approves the estimate in writing.  If they need to provide a retainer, make sure you get one in advance.  If they hem and haw at a $200.00 retainer for a $2,000.00 job;  you can save yourself from working on their project and find something more lucrative.

Clients not paying their bills is a time honored tradition in some businesses.  Remember that you are loaning them money if you are not working for a retainer.  They don’t let you eat the burgers at McDonalds and then pay.  Why should you work and then get paid months later?

An advantage to looking the business books; is that we can see if they pay their bills on time or their average cash balance.  Do you think they have the funds to pay on time?  Or do they have a history of short paying their vendors?

It’s important to review the average hours worked on typical projects.  Technology is quickly changing and we need to be able to react to sweeping changes that online accounting is doing in the small business sector.


Cutting away Dead Vines

Posted on May 5, 2015 By

Ivy Tree

This past weekend I spent a few hours cutting down blackberry vines and ivy.  Before I started the yard work, everything looked green and springlike.  The trees poking out of the overgrown ivy looked green and full of live.

After I did a few test cuts into the ivy and blackberry vines; it soon became apparent that underneath the ivy was a completely different story.  The trees were dead under the ivy, huge roots had grown, and I even found a garden hose buried under the ivy.

It was completely not what I was expecting to find when I set out to chop out some blackberry vines that had grown out of control.

The brownness, sea of green and the hidden garden tools reminded me of a few business issues that I had been brought up to solve.

Black Berry Vines Growing out of Control.  Sometimes there is only the symptom of a problem that might need to be taken control of.  It’s something that is obvious, but maybe put off for another day to solve.  In business, this might a computer system or net work that keeps dying at regular intervals.  Regular crashes don’t tell you what exactly is wrong, but you are pretty sure it’s not a good sign.  Solution?  You should get in touch with a good IT person before it dies, not after.  Check your backup process to make sure it’s in good shape.  Fix the problem before it takes over your system.

Dead Brown Trees:  Under the Ivy and other vines, the trees had stopped focusing on the buried branches.  Has your business focused entirely on the green parts of the it?  Is it ignoring the accounts payable process?  A strange and convoluted ordering process?  An inventory warehouse that makes no sense?  Is there something buried which would benefit from a fresh light?

Retaining Walls:  There was a retaining wall under the ivy that I didn’t know about.  It was in good shape and sturdy, but the vines were growing their roots so much through it, it could very well be a future problem.  Is there a problem that is currently under control, but some maintenance is needed to trim the problem back?  Perhaps the retail location could use a facelift?  Or maybe the product pricing is out of date? Is there a basic foundation business unit that has been successfully operating for a while now, but could use some retooling?

Beauty Bark:  The ivy had also grown over an alcove in the retaining wall with at least 5 bags of unused beauty bark.  I haven’t finished digging them out yet, there maybe more.  Has your business been wasting resources?  Are there enough office supplies to last 10 years?  Stockpiling too much inventory?  Or maybe as simple renting too much office space?

Take a minute to think about the hidden issues in your business.  It might pay off in the long run.


Five Steps to Take if you are Stuck

Posted on April 29, 2015 By

I think we all get stuck sometimes on a project or task.  It’s just not our day.  The computer malfunctions, the delivery is late, or the math just doesn’t work in your favor.  Project management doesn’t hinge on how wonderfully perfect you are at any particular moment; it’s how you resolve the problems that counts.

Here are a few suggestions on how to everything go a little bit smoother.

  1. Build time into your calendar to review the project before its released to the public or even your team.  Take some time off from the project; whether a day or a mid-day meal.  Then revisit to make sure it is logical, properly documented and ready to go.  90% of mistakes can be prevented by this one simple step.
  2. Don’t be afraid to have someone else look at your project.  Even well known writers use editors to review their work before publication.  It’s easy to make basic mistakes.  Our minds supply the missing information in our own work.  The mistakes would be simple to spot in others work.
  3. Did you invent the wheel?  If not, try searching on google or other search engines for potential solutions.  Sometimes this ‘solutions’ will be bull pucky or not even likely to work.  However, they can get the creative process working again.
  4. Go outside, turn off your phone, and walk for about a mile.  Physical activity is likely to trigger your unconscious mind to find a solution.
  5. Outline the steps that you need to complete your project.  Go back and check that each one has been completed.  Primary source data corruption is a likely problem.  For instance if you add a column to a pivot table, it will likely not work after that.  Vlook up formulas require unique identifiers to correctly computer the information.
  6. People are causing the problems?  I know it’s frustrating when team members don’t finish their part; but stewing about is likely to not change anything.  For instance, instead of a group email condemning them; try walking over to their desk and having a conversation about it.  It might be they have been sick, they’ve been told to work on a different project, some other random reason for not getting you the information.  Then work together to find a solution.  Maybe that intern is willing to lend a hand.
  7. What would you put here?



Posted on April 28, 2015 By

Today I renewed my CPA licence. Which has got me a bit philosophical today.  It’s one thing to get all the requirements completed, the test passed and to around of applause from your friends and family.  It’s quite another to keep up with the continuing educational requirements, keep up with the latest topics and scams, and educating others about their own requirements.

When you get professional credentials, you are convinced that it will change your life.  Suddenly, everyone will want to hire you, the world is at your feet, and your life will become a Rogers & Hammerstein musical about debits and credits.

Um, no.  Actually, I can’t even say that everyone is thrilled at you becoming a CPA.  Your manager might be concerned that you are going to quit and find a better job.  You passed the test because you are good at what you do.  Not perfect yet, but good.  All that sort of stuff takes times to sort out.  The expectations vs. the reality of being a CPA.

At no point do you really get away from debits and credits and basic paperwork.  If you aren’t completing the paperwork, you are making sure other people are doing it correctly.  And what is correctly?  It provides sufficient proof that a transaction took place.  In addition, you need to make sure it’s booked in accordance with GAAP.

There is a reason that CPA’s are always portrayed as boring people in media.  Try chasing down creatives for their paperwork and they are going to start thinking you are godzilla made from paperclips and file folders screaming your battle cry ” GAAAAAAPPPPP ” as you chase them down the hall with your red stapler.

It takes time to balance the CPA GAAP requirements, people skills, and become a manager.  Don’t be afraid to ask your mentors questions during this growth process.  We all go through awkward period of moving from entry level to management.  In a few years it will start to gel and then in addition to having a CPA certificate, you will really grow into the role of Certified Public Accountant.