Sam Spade, the hard edged protagonist of The Maltese Falcon, is in some ways the quintessential small business owner. He is a private detective (or dick if you prefer) with an office, a partner, a secretary and a network that would make a social media climber swoon. As a small business owner he takes on the risks of running a business and enjoys the rewards. He sets his own prices which vary significantly depending on the client and the job. (Recovering the Maltese Falcon is worth thousands, while searching for someone’s sister is worth considerably less). And despite his womanizing and wayward ways, he also embodies qualities that would behoove business owners to emulate.
I met with a small business owner recently who had just purchased a retail business and was looking for a new accountant. It seems that the current accountant was reviewing her books on a quarterly basis, preparing financial statements and doing the year-end tax returns – all typical accountant stuff. The problem was that the accountant, while charging this small business a fairly significant amount of money, was not really adding any value to their business. The bookkeeping, which was done by the previous business owner, was still being entered manually in ledgers (!). The quarterly accounting review consisted of checking the ledgers for mathematical accuracy and ensuring no major deductions had been missed without any discussion regarding the performance of the business. Worst of all, the accountant was not responding to the client’s requests for a meeting.
There are many great accountants out there, however it is important to ensure that you are hiring someone who will compliment your business and add value. Below are some of the qualities that should be considered either with respect to your accountant:
One of the benefits of having a home based business (for freelancers, self employed contractors and small business owners) is that you can deduct the expenses relating to the space that you use to work. This can result in a significant reduction in your tax bill for costs that you would incur regardless, giving you one more reason to love being your own boss.
Criteria for Deductibility:
For home office expenses to be deductible, they have to meet the following criteria:
- It has to be your principal place of business i.e. you cannot deduct home office expenses if you have another office that relates to your business, elsewhere, even if you work 22 hours a day or you check your blackberry in bed.
- The space designated as your home office is used to earn business income and/or you meet clients or customers on a regular basis. You can deduct expenses relating to the workspace in your garage which is used for home improvement projects.
One of the most challenging aspects of starting a new business is knowing what to charge for your services. In economics terms, the ideal price is where demand meets supply. The problem, of course, is that at the beginning we tend to have a lot more supply than demand. This can lead to imprudent pricing decisions. Below are 3 considerations to take into account when determining the price for your services:Read More
Perhaps the most daunting aspect of starting a new small service based business is building a client base. On the other hand, there is nothing quite so exciting as getting those first few clients.
When trying to generate new business, it is important to cast a wide net as you never know where potential clients may be lurking. There are many ways to build a client base, even with limited resources. I have outlined some below:
For the majority of income earners, employment status is pretty evident. If you are going to the same place every day, have an assigned cubicle with a computer and corporate stapler, and your boss tells you what you need to do, chances are that you are an employee. Conversely if you have several clients, use your own laptop, and are worried about where your next sale is going to come from, you are most likely, self employed.
After thinking long and hard you have decided that is time to launch your own business. You have a great product or service, you’ve come up with a compelling business name, all the paperwork has been filed and you have picked out the perfect location (or setup a snazzy new home office). Everything seems to be set for your new independent life as a business owner. And then you realize that nobody except your spouse and cat knows about your new venture. So, how do you bring your fabulous new product to your target market's attention? One way is to use the “build it and they will come” approach. This is usually not particularly effective (even Google, who historically launches products with little fanfare, could benefit from a little more marketing). The other, more effective approach is to get out there and promote your business. Of course in the initial stages, marketing budgets tend to be miniscule. On the other hand, many new business owners have time on their hands, while they wait to be deluged by orders. Below is a list of 25 cost effective ways to promote your small business:
The decision to incorporate is one that most small businesses face at some point in their lifetime. Incorporation, literally, represents the creation of a new person. Whereas a sole proprietorship is an extension of one's self, a corporation takes on a life of it's own; it can give birth to subsidiary, marry via a merger and die with a dissolution. It has to file it's own tax return, can be sued and has a set of rules that govern it's existence. Below are some of the points to consider when deciding whether to incorporate:Read More
As the end of the year draws nigh, it is time for business owners everywhere to start contemplating some end of year tax planning tips to not only ensure that they can maximize their tax deductions and reduce taxes payable, but to streamline the tax filing process in the New Year. Even if you are incorporated and your year end date is not December 31st, it is a good time to take advantage of calendar year deadlines for personal tax planning purposes.Read More
“I want to create a rival to Twitter. So I want it exactly the same except where it says What’s Happening? I want it to say How are you feeling?”(From the very funny "Clients from Hell")
This pretty much sums up the type of client we don't want - ridiculous expectations, unimaginative and just plain clueless. Conversely, there are some clients that are a pleasure to deal with. Ones that ask great questions, and make us feel happy to have chosen the entrepreneurial route. The more important of these are listed below:
Many of us have clients who are annoying, cheap, stupid , high maintenance or some combination thereof. As a new business owner, we are often stuck with these clients because we need them. However, we look forward to the day when we will have the thriving business that we so deserve, and fantasize about the spectacular way in which are going to fire them (you can shove your business into your rear orifice etc.) This is actually a productive fantasy as can help to channel and concentrate anger. Of course, in the majority of cases, a firing should be conducted with slightly less vigour.
The temptation to start a small business or venture into self employment can be strong particularly for those who are unhappy with their existing employment situation. The freedom and flexibility that being your own boss seems to offer can be seductive, as is the potential for growth which you, as the business owner, can have full control over. You may have an idea or a particular skill that you believe is desirable to a specific target market and you are confident that once this target market is aware of your existence they will all be banging down your door. Consequently, you start your business by offering an amazing product or services, only to realize that building up a customer base is more challenging than you thought. Additionally, there are a number of other obstacles for which you do not have the expertise (done by another department when you were an employee) whether it is marketing, website development, legal research and accounting. Finally, you realize that you actually need a fairly sizable source of cash to maintain the business, deal with growth opportunities, whilst ensuring that you are able to support yourself.
The chart below, published by Statistics Canada available Key Business Statistics – July 2012 (this seems to be the latest data that is available), demonstrates the percentage of small and medium sized enterprises (SMEs) that actually survive over a five year period.