Feb
Article by: Jeffrey Skolnick, CPA, M.S. Taxation
You’ve embarked on your career as a small business owner / entrepreneur. You are extremely excited by the products or services you sell or provide. Your self-esteem is high, after all you’re the head honcho. Everything is going well and then it happens. Overwhelm sets in. You had no idea how much paperwork business owners need to deal with. Regulations, how to advertise, handling employees, income taxes, payroll taxes, sales taxes, insurance premiums, record keeping and bookkeeping. In addition to the issues just mentioned, every time you go on the internet you see an advertisement for something that looks like you should have in your business. How can you keep all these things straight and still find time to actually sell your products and services? You start to panic and as I mentioned overwhelm sets in.
I have worked with many business owners in precisely this position. They come to me paralyzed by business management decisions that are taking so much time that their sales have fallen. At this point they may even start thinking about selling new and different products. Some are angry, some are in tears. It’s total chaos! In reality they are just individuals dealing with being overwhelmed.
The first thing I tell them is to step back, take a deep breath and relax. The key to relieving the stress and anxiety of this situation is organization. I know it sounds overly simple but let me explain how this removes the paralysis and begins the process of relieving your stress.
DEFINE YOUR GOALS
The first step you must take is to define your goals. I know you’ve heard this one before. There is a reason why you’ve heard this so often, it’s true. Whether you realize it or not you do set goals. Some individuals may have just a rough idea of why they are in business and what they are trying to accomplish. The most organized individuals will write down their goals. Actually, putting pen to paper (or in today’s world, typing in word), changes your mindset. Some business owners will even use vison boards and a variety of other tactics to cement their goals in place. If that’s you, great, but that may not be for everyone. Whether that is you or not, however, you still need to set some goals. I believe your goals will usually be uncovered by answering a series of questions. Some examples would be:
- Is your business going to be your main source of income or a side hustle?
- How much do you need your business to net and how many hours are you willing to put in to make that happen?
- How soon do you need to reach your goals?
- How do you supplement your cash flow while you are initially building your business (in other words, before you’ve reached your goals)?
DESIGN A PLAN TO ATTAIN YOUR GOALS
Once you clarify your goals, the next step is to formulate a plan that will be your roadmap to success.
You would start by listing every function that must be performed. I’ve already discussed many of the administrative tasks that must be completed. Keep in mind there are others. The administrative tasks I’ve mentioned would be pertinent to any business. Granted your business may not be required to perform all of these tasks but these can pertain to almost any business. You as a business owner also have decisions to make relating to your specific business. These might include pricing (including what your competition is charging and what you can afford to charge) or managing cost of goods sold (examples such as whether you can receive early payment or volume discounts) to name a few.
Once each task is listed you make informed decisions on each one. The key to remember here is how to make informed decisions. You should start by looking at each item on the list and deciding which decisions are best made on your own, and which may require some assistance.
If I start with assessing your insurance needs, I recommend getting a good insurance agent. You want someone with expertise to be able to ask the right questions and make sure you’re protected.
You would hire a great accountant (more on this in a bit).
You would determine your sales and marketing strategy. Are you going to handle the marketing yourself or do you hire someone to assist you?
Once again, you would follow a similar analysis pattern for each item on your task list.
The largest amount of stress on small business owners is the unknown. Nothing is scarier than the company books. Here’s where a great accountant comes in. I always tell my clients to just relax, it’s only numbers.
- I would then begin with the basics such as whether the organizational structure makes sense for the business. Put another way, should the company be a sole proprietorship, LLC or S corporation?
- Next, I would establish a set of books. This would entail the selection of an accounting program (such as QuickBooks). Many business owners fear bookkeeping but NONE can afford to. If you are a business owner, then you must understand a basic set of books. Knowledge of financial statements is vital for you to manage your business. You want to be able to compare expenses from one period to another, or in relation to sales volume to identify trouble spots or successes that you would like to replicate. I am not trying to make anyone a CPA here but if you are the owner understanding a set of books will help you with many decisions. A few of these could be when and if you need a loan to expand, how much money you should put away for income taxes and whether you have the money to hire another employee. The bright spot is this is very easy to learn. It does not take long to understand the basics and once learned; you won’t forget them. Another bonus is today these reports can be obtained with a few clicks of a computer mouse.
- I would help my client assign personnel to each task listed. For example, Is the client better off doing payroll in house or hiring a payroll company? Is the owner going to do their own bookkeeping or are they going to hire a bookkeeper? I said as a business owner you must understand a set of books. I never said you had to be the one to prepare them.
Each business will evaluate these questions based on their relevancy to their specific business. It is very important to keep in mind while you are building a roadmap, this map will change. As a business owner you will change strategies based on a variety of factors including finding more efficient methods, the economy, technology and personnel to name a few.
CONCLUSION
There is no doubt in my mind that taking a methodical approach to your business and developing a system to encompass the many tasks required of today’s business owner will be the number one way to relieve the overwhelmed feeling so many new business owners experience. My guess is you’re feeling a little better already.