More sales is not always the solution

Small business owners are passionate about the product they’re selling or service they’re providing.  They’re typically the best salesperson in the organization.  When times are good, it’s full speed ahead!  But when sales start to drop off for no apparent reason, many owners are lost on what to do.  When faced with adversity, we all tend to look for the type of solution we feel most comfortable with , given our personality and skill set.  Engineers will look for technical solutions, whereas salespeople will look for a sales solution – even when the problem has nothing to do with sales.  I’ve worked with owners who thought that the solution to every problem was to grow sales – even when the margins on those sales were so low that they were losing money on the bottom line.   I don’t know about you, but the BOTTOM LINE (Net Profit) is more important to me than the TOP LINE (Revenue).

Taking the “easy road” will not solve the root problems.  Dealing with the details is not usually the fun part of running a business.  Sales is much more fun!  But in order for a business to be successful and maintain its success over a long period of time, an owner needs to hire and surround himself/herself with people who are more detail oriented and enjoy doing the mundane administrative tasks.  In my experience, entrepreneurs coming from the sales side of the business typically view bookkeepers, accountants and other clerical staff as non-productive employees.  But what these people do for your business is almost as important as getting sales in the first place.  They make it possible for you to keep the customers you already have.  They help you maintain the positive relationships you have with vendors and lenders.  But more importantly, they allow you to focus your time and energy on doing what you do best.  Happy Selling!

Bank Reconciliations

The first thing I ask potential clients in our interview is…”Are you reconciling your bank account every month?” The answer to this one question usually lets me know how much work is going to be involved and how difficult it’s going to be. If cash is not being reconciled, then it’s a pretty good bet that the rest of the bookkeeping is in bad shape. Cash is king and it should be treated and managed as such.

Bank reconciliations should be done every month and reviewed by someone who didn’t prepare them – usually the owner or a responsible manager. Just by reviewing the monthly bank statements, I can learn a lot about the workings of your business because the majority of your transactions flow through your bank account. The function of the bank reconciliation is to cross check or reconcile the bank statement balance with the “Cash in Bank” balance in your general ledger. The two balances rarely ever match because of the delay in checks and deposits clearing the bank, automatic bank fees and bookkeeping errors. Errors are more likely to come from your side, but the bank is not mistake proof, so watch your statements closely.

One final comment……The last thing you want to believe is that one of your employees is stealing from you. One of the best methods for identifying theft and fraud is the monthly bank reconciliation. Make a point to open the bank statement every month and review the canceled checks for any irregularities. Look for unidentified or unauthorized cash withdrawals or automatic deductions. Don’t be afraid to ask questions!

Bank reconciliations are the foundation of basic bookkeeping. If you’re not currently doing them on a monthly basis, please have your bookkeeper start immediately. If your employees need training, or you wish to outsource this critical function, please contact Steiner Business Solutions.

941 Tip

Do not pay your payroll liabilities from the “Write Checks” window. If you use this window, Quickbooks will warn you to use the “Pay Liabilities” window, but will let you write the check. However when you print the 941, it will not reflect any payments that you made using the “Write Checks” window. Use the “Pay Liabilities” window to create checks for all tax liabilities. Using this window will ensure that the payments are reflected accurately on the 941 report and that your liability accounts are properly reduced.

Sleep disorder? Stress? No….it’s Passion!

It was rather ironic this morning when I saw that the TODAY show was doing a segment on sleep disorders. The doctor was explaining how sleep deprivation can influence a person’s physical and mental health. I say it’s ironic because over the last few months I’ve had a hard time sleeping through the entire night. I’ve been waking up at 3am, 4am, 5am and can’t manage to fall back asleep. It reminds me of the time I use to work in the car business as a Controller and Chief Financial Officer. For any of you who’ve worked in that industry, you know what I’m talking about! I use to lay awake at night because of the stress. The pressures I faced during the day would cause my mind to race uncontrollably. It affected me both physically and mentally.

But this time it’s different. It’s not stress that’s keeping me up at night – it’s PASSION! No….not that type of passion.

• Passion for my work.
• Passion for the opportunity to shape my future.
• Passion to help others achieve their dreams of success.

Working for myself is a self-fulfilling dream. Yes – there’s still stress involved, but it’s now motivating me instead of hurting me.