Category Archives: Administrative

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Attention Shoppers! It’s Time to Invest in the Business

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Our  “new normal”  economy has regrettably resulted in sluggish business for most Freelancers and we are forced to watch our pennies.  The financial squeeze may tempt many to cease spending on all expenditures deemed nonessential,  but it’s wise to be strategic about what gets relegated to that category.

In fact,  judicious expenditures for the right business upgrades will help us to fight back against the recession and demonstrate to clients that our business remains viable.  If your credit line can handle it,  this is an ideal time to invest in your business by purchasing almost any type of equipment or promotional service.   Fourth quarter purchases are sweetened by the knowledge that the tax deductions will flow back to you a little faster.

So let’s go shopping!  There’s plenty of inventory in the stores,  despite diminished wholesale purchases,  and prices have never been better.  Now is an excellent time to replace or upgrade  computers and other IT equipment,  office furniture or even a company vehicle.  Commercial real estate is likewise more plentiful and hence affordable,  so if trading up has been on your wish list,  investigate options now.   Plus,  if a build-out is necessary,  those in the trades are ready and willing to provide quality work at competitive prices. 

Advertising space is likewise more plentiful and hence more affordable.  Discounts are available and payment terms are gentle.  Revisit publications and online sites that were previously out of your reach and ask what can be done for you now.  Do not be afraid to negotiate.  The buyer’s market is in full effect.

Now,  take a look at your website.  Does it look a little dull?  Maybe the text could use some sharpening?  Or perhaps you’d finally like to have a logo?  What might help your website to communicate your brand and core services more effectively,  or provide a compelling  “call to action”  to potential clients?  Web developers,  graphic artists and copywriters continue to be busy,  but not so much that they won’t take on smaller  jobs and do good work at a reasonable price.

The  “new normal”  economy also makes this an excellent time to hire,  if you can make the case that an extra body or two will increase revenue.  There are so many highly qualified professionals searching desperately for cash-generating projects that you will be able to hire someone (maybe part time?) to write your monthly newsletter,  manage social media,  cold call prospects and set appointments for your follow-up,  manage the books and accounts payable and receivable or just about anything else you need taken off your plate.

Finally,  our professional skills are our most valuable asset and also deserve investment.  I’ve seen more generous than expected early-bird registration discounts offered for numerous seminars,  since organizers are anxious to fill rooms.  Take advantage of this trend and sign up for training that perhaps you previously could not afford.  You may also want to have a few sessions with a business coach,  who may now offer money-saving incentives to stimulate business,  and work on other ways you can find competitive advantages for your business venture.

Thanks for reading,

Kim

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How to Hire a Freelancer

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 This week,  we flip the script and examine the thought processes and procedures that ought to be followed when we are hired for a project.  How do ya  like them apples?

1.)  Determine what work needs to be done.  This  should be obvious,  but a surprising percentage of  project managers do not have a clear idea of the scope of the job.  They may furthermore have an unrealistic  view of the time,  resources and information needed for successful project completion.  These are the managers who hire a Freelancer to work 10 hours /week for 4 weeks,  when 20 hours /week  for 8 weeks is what the project requires.  This information is imperative for accurate project budget development.

2.)  Determine the relevant qualifications most likely needed to successfully perform tasks associated with the project.  Resist the temptation to gratuitously demand degrees and certifications  simply because in a tight economy it is possible to do so,  under the mistaken notion that this will ensure that the best candidate will be hired.  Pieces of paper are not necessarily an indicator of ability.  Experience is  a  much more reliable indicator of competence and therefore should be the primary qualification sought.

3.)  Research the price range for consultants within the  specialty.  This information is also necessary for accurate budget development.  Verify that adequate funds will be in hand,  so that Freelancer invoices can be paid on time.

4.)  Interview three or four candidates if  this project has not been outsourced previously.  First,  gauge what level of talent is available.  Second,  learn to recognize candidates who are  able to do the job.  In this economy,  there is  a large pool of  high quality talent available within most specialties.  These  individuals can bring skills and insight to a  project that  a  hiring manager may not have considered and they may be able to effect a better outcome than was originally envisioned.  Some candidates  may have a better understanding of what is needed to successfully complete the project than the manager.

5.)  Clearly describe the project scope to those who are interviewing and review again for the Freelancer who is ultimately hired.  Again,  this seems obvious,  but a disappointing number of project managers fail to disclose certain specifics of the project.  Inevitably,  this results in disappointment and frustration for all concerned.  Failure to accurately describe project specs is most unfair,  because whose   “fault”  is  it when expectations are not met?

6.)  Confirm the availability of the Freelancer most likely to be hired and speak with one or two of his/her clients as  a  reference check.

7.)  Develop a written contract/proposal  that clearly details project specifications and expected outcomes or delieverables,  hours /week,  project start and end dates and pay scale.  In some situations,  the Freelancer hired will provide this document.  Both the project  manager (or responsible organization representative) and the Freelancer should sign the contract/proposal,  with a photocopy given to the Freelancer.

8.)  Require that the Freelancer hired signs a confidentiality/nondisclosure agreement.  This will allow staff to feel comfortable to candidly discuss pertinent business matters in the presence of the Freelancer.  Find a template online or ask an attorney to prepare a standard template that can be generally used for consulting needs.

9.)  Introduce the Freelancer to staff,  starting with those with whom he/she will regularly work or encounter.  It is  a  good idea to inform staff that  a  Freelancer will  be hired for the project.  It is a better idea to verify whether there are staff  in-house who have both the ability and time to take on the project,  if only the  manager was smart enough to ask! 

Thanks for reading,

Kim

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The Living is Easy…

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And so we are drifting through the summer doldrums.  As heat and humidity rise,  our focus and motivation fall.  Summer is the slowest period for Freelancers and most others,  with the exception of  landscapers, building contractors, wedding planners and those in the tourist industry.

For the majority,  summer means billable hours  that evaporate like the morning dew on roses.  But who can afford 10 weeks of idleness?  Savvy business owners know it is wise to make hay while the hot sun shines and use the summer months to position themselves to create business in the fourth quarter and beyond.  A business slowdown need not mean no business activity.  Summer is the perfect time to pick up the thread of what slipped off the radar screen earlier in the year.

You may start this productive cycle by reviewing your business model.  How efficient is your operation?  How much does it cost to make a sale?  Just how profitable is your business,  anyway? What processes could be streamlined?  What technology could make service delivery,  customer contact and/or administrative functions easier,  faster or less expensive?

By the way,  did you meet your sales projections for the first half of the year?  Might it be time to hire help,  so that productivity can increase,  customer service improved or administrative functions executed in a more timely fashion?

What emerging  priorities and concerns  are on the horizon that may excite or agitate your clients and how might that impact your business? You have the next few weeks to catch up on industry magazines,  websites,  white papers and blogs and find out what you need to know to stay competitive and understand  what may change in your marketing message or service options and delivery.

Summer is also a great time for professional development.  Look for certifications to pick up,  or courses and workshops to attend.  If you can budget it,  use this time to boost your skill set and  make yourself  appear more of an expert to clients and prospects.  Along the way,  you’ll meet a few people you should know.

Summer is a time of more flexible schedules and despite vacations,  it’s a good time to collar people and arrange those meetings that no one had time for between January and June.  So go back through your notes and remind yourself of whom you wanted to meet with and send out a few emails.  What intriguing and mutually beneficial proposal will you present?

Finally,  summer is an excellent time to do the prospecting that you’ve been putting off  for six months.  Ask colleagues for introductions and maybe do some selective cold calling.  Make it a point to make inroads on new business development.  I’ll bet that slippery someone whom you’ve been chasing since last year is more available in July and August.

By taking the initiative,  you will see that  summer is the best time to evaluate, investigate and create business opportunities that will give you a cushion of revenue that will get you through next year’s summer doldrums!

Thanks for reading,

Kim

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The Doctor Will See You: Whatz Up With Health Insurance

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At last,  health insurance will soon become more easily accessible to those who live in the US.  Belatedly,  we have joined the ranks of  industrialized nations by taking important steps toward providing access to health insurance for almost everyone.

The health care bill,  which was signed into law on my birthday,  is far from perfect but it is a start.  Unfortunately,  we will continue to pay too much for health plans that may not cover enough—like mammograms,  Pap smears,  prostate exams or periodontal care.  If  you should find a plan that will cover those necessities of health maintenance,  the deductible is likely to be exorbitant.

My guess is that in most instances,  we will be forced to pay more out of pocket than we would like and that we’ll pay more for our monthly premiums than we would like.  Same old story,  pay more to get less.

The insurance  companies have already begun to petition state regulators for rate increases.  Several states are bound to let them have their way because they own our political representatives—which is how we got stuck with a raw deal on health insurance in the first place (but you know that).

FYI,  here is what the health insurance roll-out will look like for Freelancers and small business owners:

2010

Freelancers with pre-existing medical conditions will be  eligible to buy health insurance at reduced rates.  By October,  insurance companies will no longer be allowed to place lifetime benefit limits on insurance coverage for those with pre-existing conditions.

Businesses with fewer than 26 employees and average annual wages of $50,000 or less will receive a 35%  tax credit  IF  the business pays more than half of its employees’  health benefits.

2011

Businesses with fewer than 100 employees will be eligible to set up employee wellness programs and offer either bonuses or a maximum 30%  health insurance rate discount to employees who join the wellness program.

Employers will be required to disclose the value of employee health care benefits on form W-2.  Beginning in 2018,  holders of health insurance plans deemed  “expensive”  will pay federal taxes on their value.

2013

Tax exempt contributions to health care accounts for medical expenses will be limited to $2500/ year.  Medicare taxes will rise to 2.35%  on earnings over $200,000 for unmarrieds and earnings over $250,000/ year for married couples  (from the current 1.4%).  Employer tax deductions for the cost of retiree Medicare drug benefits will be eliminated.

2014

All citizens and legal residents of the US will be required to purchase/possess health insurance.  Freelancers and small businesses with maximum 100 employees will be able to obtain health insurance through health care exchanges that states will be required to establish.

Small Business Health Options Programs,  called SHOP Exchanges,  will allow Freelancers and small businesses with maximum 100 employees to band together and purchase health insurance as a group to (presumably) save money.  States,  however,  will be allowed to throw a curve ball and temporarily redefine a small business as one having maximum 50 employees  (through 2016 only).

Insurers will be unable to deny health insurance to anyone with a  pre-existing medical condition.  Businesses with 50+  employees that fail to offer health benefits to employees may face penalties of up to $2000/ uninsured employee.

In the meantime,  venture capitalists are looking to fund start-ups that can streamline and improve upon health care delivery systems,  especially for chronic disease management, physician/medical practice profitability tools and patient (customer) relations management.  A woman in my CEO forum operates an employee wellness program business.  She has just hired two part time staff members and is developing a sales pitch for investors.

A votre sante (to your health),
Kim

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Follow the Money: How to Hire a Bookkeeper

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Some business owners hire a bookkeeper because they loathe even the thought of diving into financial waters.  Their strengths are  “front of the house”  sales and marketing and not “back of the house”  accounting and finance.

While it is  smart to outsource what you know you won’t do and thus make sure that what must be done will be  done,  ignorance of business financial management  is unwise.  You may hate it,  but little by little you must learn to understand those docs and interpret what they reveal about how to effectively manage your business.

Another practical  way to keep tabs on business finances  (and make sure that your bookkeeper is honest)  is to do a monthly bank reconciliation.  Does the record of deposits and withdrawals make sense to you? Are the signatures on checks and withdrawal slips correct and authorized? Some businesses hire a separate bookkeeper to perform this function,  so that an unbiased  pair of eyes can scrutinize the financials and will be unafraid to question anything that looks questionable.

That said,  an expert bookkeeper will save you money and aggravation,  keep you out of tax and legal trouble and contribute to the profitability of your business.  It is imperative that this person is chosen carefully.  A dose of good luck is also very helpful! Here is what you can do to find the best bookkeeper for your business:

  • Learn the types of businesses that he/she has worked with.  It is useful to hire a bookkeeper who has worked with clients in your industry (but not direct competitors) or with clients of a similar profile (e.g. Freelancers).  An understanding of expectations and common practices,  typical problems and good solutions will then be brought to the table.
  • Ask  about your candidate’s  education,  certifications and professional society memberships.  Education and associations reflect the level of professionalism and priority that the candidate places on his/her career.  This quality will  likely be demonstrated in work done for clients.  See also the candidate’s web site and/or LinkedIn page.
  • Inquire about the candidate’s  employment history prior to going into business independently.  Previous employment in corporate finance is a big plus.  Especially if  this person will take charge of your books,  you’ll want someone who knows how to analyze the financials and make smart recommendations.  You want more than a data entry clerk.
  • Tell the prospective bookkeeper what you need managed.  Do you need payroll and payroll tax services,  handling of accounts payable and receivable,  financial statements and tax prep for the accountant (data into QuickBooks),  or complete management of your books?
  • Confirm the fee schedule.  Depending on your location and the services requested, expect to pay $50-$100/hour.  The more services you need,  the more per hour you will pay.
  • Find out your candidate’s availability.  Many bookkeepers have a full or part time job, or a second business.  Make sure your candidate can be there when needed.
  • Ask for references and follow up.

Best of luck and thanks for reading,

Kim

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When to Hire a Bookkeeper

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Occasionally,  I am asked to refer a bookkeeper.  The one time I was able to make such a referral,  the whole thing blew up in my face.  I introduced a former  student in the business plan course that I sometimes teach to a restaurant owner friend.  Unfortunately,  Ms. bookkeeper  flaked out and never came through.  The restaurant owner and I are still pals, thank goodness.  The bookkeeper’s contact info has been deleted from my files.

A couple of months ago,  a member of one of the CEO forums that I lead hired a bookkeeper whom I’ve known for 20 years (the referral was not mine).  Because my colleague is a smart cookie,  she decided to review the financial statements that were generated by her new bookkeeper.  Right away,  there was a problem.  A significant data entry error was made— yet somehow the bookkeeper managed to make the numbers balance.  Fortunately,  my colleague  was able to recognize the problem and call  it to the bookkeeper’s attention.

The interesting thing is,  her now former bookkeeper is highly regarded by many.  She has a sub-specialty in forensic  bookkeeping and regularly testifies in court proceedings.  So I guess that’s where she learned all the tricks! My colleague was mortified.  Thank God that was not my referral.

I deduce from these incidents that a  reliable bookkeeper may be difficult to find.  A sharp and trustworthy bookkeeper is a hugely valuable  asset for your business.  They can spot and resolve  money drains  and alert you to money saving practices  that you never knew existed.  A good bookkeeper is worth their weight in gold.

Like many Freelancers,  I keep my own books.  I  invoice,  make  deposits,  pay bills,  record transactions in Excel,  receive the 1099s and pay the taxes.  June 15 is fast approaching, quarterly tax time folks!  I manage to stay on top of things.

Nevertheless,  at some point it may become too expensive to perform certain administrative tasks.  Working and looking for work are the primary focus of the self-employed.  Our time and energy are best applied to making sales calls,  networking,  prospecting,  staying visible and generating income through our projects.  When administrative tasks encroach upon the time available to make money,  it then becomes  cost  effective to outsource those functions.

It is the responsibility of every business owner to develop a basic understanding of the  financial statements.  Our ability to make sound business decisions depends upon it.  A good bookkeeper (and accountant) will further analyze the data and provide more sophisticated advice for you.

Because they possess intimate knowledge of your financial history and flow of business capital,  bookkeepers know where you are most vulnerable and know  where the bodies are buried.  A dishonest or sloppy bookkeeper can really hurt you.  The best way to protect yourself  is to know what’s  going on,  so that like my colleague,  you can read  financial  statements and periodically review your bookkeeper’s  work.  You’ll  have a fairly good idea of what the numbers  should  look  like and know what questions to ask  if  things don’t quite add up.

To get started on the path to understanding financial docs,  I recommend  that  you  first examine the Pro Forma Cash Flow statement.  It’s like  a  household budget and is easy to read.  Pro Forma Cash Flow gives  reasonable  estimates of expected business income and expenses  for  a given month.  Go next to the Cash Flow Statement,  which might be generated either monthly or quarterly.  This document shows what was actually spent on business expenses and how much money was actually paid to you.

From those statements,  move on  to the Profit and Loss.  It’s  not much different from the Cash Flow Statement.  Notice that several categories on the P & L are also found on the  Schedule C tax form,  Profit or Loss  From a Business.  Lastly,  take a look at the Balance Sheet and notice it’s resemblance to a bank statement.  The Balance Sheet records your net worth at a given time,  the tally of business assets and liabilities,  and is usually generated quarterly.

Next week,  learn what you can do to make sure that the bookkeeper you hire is both a top drawer professional and appropriate for your business needs.

Have a good week,

Kim