The 10 Rules of Successful Entrepreneurship (Part 3 of 3 part series)

Continued from the previous post…

8.  Learn to sell – this is a must-have skillset, whether you have someone in charge of sales or not…  The good news, even if you’re not born with the gift of gap, you can become better by continually getting in front of prospects and practicing your pitch.  While I do not believe in entrepreneurs pitching vaporware but if you don’t believe in your products and services, it’s impossible to convince others to believe in them (you can read between the lines)…

9.  Redefine failure – when you have your own business, often the highs are so high and the lows are so low.  But even on their gloomiest days, successful entrepreneurs feel a compulsion to make sure that failure isn’t the end of their story.  It’s OK to fall down nine times, just make sure that you get back up the 10^th time.

10.  Don’t be in it just for the money – a tricky statement¸ since most entrepreneurs I know are red-blooded capitalists like me.  But as an old saying goes, money is a great motivator, not an end-all be-all.  Successful entrepreneurs are driven by desire to accomplish meaningful things while embracing it as a way of life.  Jobs once asked Sculley (back then a senior exec at Pepsi) when trying to convince him to join Apple, “do you want to spend the rest of your life selling sugar water or change the world?”  Sculley came on board as the CEO of Apple (only to get fired later but that’s for another post).

While writing this 3-part post, I found myself reflecting on my own current endeavors.  Am I following the rules myself and doing everything I can to ensure their success?  What’s your answer?

Get Control of Your Network Through Inventory Management

Protect network investments with an Inventory Control Management System

If you consider that your company’s computer system and every network device connected to it as an asset, you should consider a network inventory management system (NIMS).  Here are some of the common risks and issues that can be mitigated as potential threats to your network with some diligent inventory practices.

Information Theft – A network IMS not only keeps track of your hardware but also your software. It also shows you who has access to that software. A regular check of your system’s inventory will let you know who has downloaded and used unauthorized software.

Equipment Theft – A network management system will automatically detect every piece of equipment and software connected to your system. Certain IMS’s will also let you know which items are not working properly, which items need to be replaced, and which items have mysteriously disappeared.

Licensing Agreements – An inventory of your software and licensing agreements will let you know if you’ve got the necessary licensing agreements for all your software. You do not want fees and fines for inadequate licensing.

System Upgrades – Outdated equipment and software can cost your company time, money, and resources. Downtime and slow response times are two of the biggest time killers for your business. By setting filters on your network IMS to send alerts when it’s time to upgrade software or replace hardware. You do want your systems running as smooth and efficiently as possible don’t you?To me, it makes sense that if you do a monthly inventory of the products that you sell, shouldn’t you do the same for your computer network which I consider to be your most valuable assets?

Network Routing – Where There’s the Will, There’s a Way

As an IT professional, the right network management tools help you simplify your ongoing IT responsibilities. After all, your company’s network is certainly the last thing you would want to have fail. With the right tools in place, however, you can ensure you’re always on top of keeping network connectivity up and running.

Three key points discussed below illustrate why your IT department should strongly consider leveraging network management tools as part of their daily tasks:

1. Appropriate network routing.  You probably don’t want the computer on your desk communicating with the printer out in the shop. Certainly, you don’t want all of your associates to have access to the company’s financial data. And who would want to drive across town to the satellite office when they get a copy of their most recent invoice?  Network management tools interconnect each piece of networking equipment – computers, hard drives, printers, and even phone systems – allowing them all to communicate with each other efficiently.

2. Network system management security.  A good network system management includes a traffic monitor that allows you to view everything on your network. You’ll see where users are going, the IP addresses they’re coming from, and if they’re trying to access unauthorized information or files. Whether intruders are coming from within your company or from the Internet, you’ll be able to stop information theft before it occurs.

3. Take inventory of your network.  A quick scan of your network will enable you to view inventory of all hardware, software, applications, and equipment connected to your network. Not only will this give you a snapshot of your IT asset inventory, it will also allow you to detect unwanted users on your network who may be stealing bandwidth or, worse yet, confidential company information. Regular scans will help eliminate internal equipment theft and also detect malfunctions before they take down your entire system.

Year-End Reconciliation for SMBs – Forecast and Budget (Part 3 of a 3 Part Series)

In this series we initially discussed government compliance related year-end tasks, and then addressed internal record keeping and accounting close.  In the final installment of this series on year-end tasks, we will discuss forecasting and budgeting.

You may be thinking, “I get compliance and accounting close as part of year-end reconciliation, but how does planning for next year fit into that definition?”  Well technically it does not – it is part of the strategic planning process.  However, when conducted properly it will seamlessly close the loop on the integrally related processes of planning, understanding the variances (e.g. actual vs. planned), closing the internal books and complying with federal and state regulations.  Year-end anxieties will be thing of the past.

There is a ton of great forecasting or predictive analysis software out there.  However, I’ve found that simple, assumptions-driven Excel models fit the needs most of the time for small to medium-sized enterprises.  At a very high level, there are four steps to any planning cycle –

• Prepare business plan and strategies – this is where the senior management team provides overall guidance and sets the direction for the following year.  The job of any good finance and accounting professional is to translate that into actionable steps and achievable numbers.
• Gather historical revenue and expenses data – look for trends.  There should not be a huge year-over-year variance on both revenue and expense sides.  If there is, make sure you understand why.  Look for drivers that could be useful in developing an assumptions-driven Excel model.
• Set business or revenue targets and corresponding expense parameters. Clearly identify the assumptions so that the entire model could be easily tweaked.  In models I’ve developed in the past, I made all assumptions bold blue so that they can be easily identified.
• Compile a master forecasting and budgeting template. A committee-led development of your forecast and budget is not only painful, it often simply does not work.  Go into the session with product that’s 90% finished, and focus on tweaking the assumptions to arrive at an agreeable resolution during the meeting.

A good forecast and budgeting model is a living document.  Throughout the year, you should be able to test and validate the assumptions; identify variances against the plan; and manage the risks.

Year End Reconciliation for SMBs – A Three Part Series

Part 1 – Federal and State Compliance

Part 2 – Accounting and Close

Part 3 – Forecast and Budget

Year-End Reconciliation for SMBs – Accounting and Close (Part 2 of a 3 Part Series)

In the first part of this series on Year End Issues we discussed government compliance related year-end tasks.  Now let’s discuss the same compliance matters as they relate to internal record keeping.  Unlike government compliance tasks where there’s no margin for error (or creativity for that matter), there’s lots of room for initiative and creativity in year-end internal reconciliation process to make it truly your own.  But first, below are the textbook step-by-steps for year-end accounting close:

• Post entries to the general ledger and total the general ledger accounts.  This will help you arrive at a preliminary ending balance for each account.
• Prepare a preliminary trial balance.  Add all of the general ledger account ending balances together.
• Prepare adjusting journal entries and financial statements.
• Prepare closing entries. Get your general ledger ready for the next accounting period by clearing out the revenue and expense accounts and transferring the net income or loss to owner’s equity.

If your company uses accounting software such as QuickBooks or Peachtree, data transfer between the ledgers, the income statement and balance sheet will be seamless.  So in practice, what do the above steps entail for small businesses?

• At a minimum, a business that is a going concern will have to close out its books once a year since that is required to file your taxes.
• Depending on the size of the business and amount of transactions, you may be able to manage with quarterly reconciliations.
• Ideally, you’d want to close your books once a month, and this entails:
  • Collect all necessary documents – bank and credit card statements, payroll reports, cash receipts, invoices and bills, etc…
  • Add all sales receipts, either paid via checks or direct deposit.
  • Deduct all expenses paid via checks, credit cards, direct debit and cash.
  • Determine and record Net Income.

For smaller companies, often the CEO or the office managers wear the bookkeeper’s hat.  Whatever the case may be, make sure you have a good tax accountant to review everything at the end of the year to make the financials make sense for filing.

 

Year End Reconciliation for SMBs – A Three Part Series

Part 1 – Federal and State Compliance

Part 2 – Accounting and Close

Part 3 – Forecast and Budget

Year-End Reconciliation for SMBs – Federal and State Compliance (Part 1 of a 3 Part Series)

Small businesses dread this time of the year.  Heck, I dread it…   I’ve seen enterprises of all shapes and sizes put off this crucial task as long as they can, hoping it would somehow go away.  However, year-end reconciliations, for both IRS compliance and internal records and P&L purposes, don’t need to hurt as long as you stay organized. 

Key compliance tasks for year-end reconciliation of federal and state tax matters include:

• Employee Wages and Taxes – each quarter, you should have sent the federal government a Form 941-SS, which summarized your employees’ wages and withholdings.  At the end of the year, you will need to send the Social Security Administration a W-2 form showing how much each employee was paid, and how much was withheld, in addition to W-3, which is a summary of all the W-2 forms.  Lastly, if your state has an income tax, you must send in an annual reconciliation along with copies of the W-2s. 
• Contractor 1099 Payments – similar to W-2 employees, each contractor gets a 1099 at year-end, and you will need to send a 1096, which is summary of all 1099s, to the federal government.

Regardless of how independent or self-reliant you may be, bear in mind that the market provides you with a sound way to avoid creating a year-end rush and a long-term operating issue.  For a minimal fee your payroll services provider will file all compliance paperwork and mail W-2s and 1099s for you.  You will simply need to verify transactions and documentation with your agent.  Stay organized through the year and leave the hard work to payroll provider at year-end.

 

Year End Reconciliation for SMBs – A Three Part Series

Part 1 – Federal and State Compliance

Part 2 – Accounting and Close

Part 3 – Forecast and Budget