Weath Creation

Small Business Model for Success – Make Your Profits Flow

wealth-creationAs a small business owner, you wear many hats – one being that of Chief Financial Officer (CFO).  Being the CFO of your business does not necessarily mean being your accountant – in fact, I highly recommend hiring someone to do your bookkeeping and financial reporting for you (i.e., the collecting and reporting of results).  As the CFO of your business, you are instead focused on strategy, planning and operating your business to maximize your profits and cash flow, and your financial value.  You have a big picture vision, so you look at your financial plan, forecasts, budgets and results from 30,000 feet, and analyze those results in context of your overall business objectives and strategies, asking “what if…”  You determine what your results are telling you, and make strategic, financial and operational decisions accordingly.

So, how do you do build a business model that will allow you to maximize your cash flow?

This is step 5 of my 8 Steps to Building Your Road Map to Success – create your strategic operating and financial plan (if you missed the previous steps, click HERE to go to see previous posts).  As a small business owner myself, I like to keep it simple – first by building a profit model that allows you to create fluid and sustainable profits and has these key characteristics:

  • is intuitive, flexible and has flow
  • allows for creativity and innovation
  • is scalable and has multiple layers that allows you to easily and fluidly up-sell, cross-sell and down-sell between the layers of services and packages
  • focuses on 2-3 things that you do really well, and
  • allows you to continuously dip into your well of opportunity, to connect with the people entered your world at various levels and give them the “what’s next”.

Always with your core business purpose and ideal client in mind, the key is to set up your business model and services/packages in a way that allows you to maximize every opportunity to its full potential.  Start with your platinum service level that will bring you top dollar and platinum client, then your entry level service that will allow people to connect with you for little investment, and then fill in the middle with a couple of gold and silver level offers that will engage and create momentum with your clients.

Ultimately, you want to maximize your profits, so when you create your business profits model with the different layers of packages/offers, you’ll need to run the numbers.  This is what gets scary for a lot of people, especially creative types in my experience (as a creative myself – I write poetry and design jewellery for the everyday occasion – I can empathize.  But I also have a very analytical mind that allows me to help bridge the gap for other creatives in building their business models for success.).  But without knowing your numbers –  the cost of inputs (including what your time is worth and overheads), capital requirements, desired profit margins, projected unit sales and break-even points – you may find yourself struggling to make ends meet.

When clients come to me for assistance with their pricing and what to charge, I have found that every one of them has undervalued what their time is worth and how much time the spend developing, marketing and delivering their products and services, leading them to charge to low a price.  This results in lower profits and having to work even harder for the revenues they do collect, leaving them cash and time poor.  With my easy pricing model, I then show them how to quickly determine what their time is worth and how to price each of their packages and services to create maximum value.

This is just one of the things that I will be showing participants at my upcoming workshop on February 29th in Milton.  If you want to know how to easily charge what you’re worth and price your packages and services for maximum value, then you MUST come to the workshop!  Click HERE to secure your spot and get all the details.

 

[button link=”https://www.eventbrite.com/e/workshop-improve-your-business-cash-flow-with-your-4ps-of-success-tickets-21330914339″ type=”big” color=”green” newwindow=”yes”] SECURE MY SPOT AT THE WORKSHOP![/button]

[author] [author_image timthumb=’on’]http://54.82.103.175/wp-content/uploads/2015/10/linda-contact-e1447279259479.jpg[/author_image] [author_info]Linda Spencer is a Creator, Visionary, Business Coach and Savvy Canadian Tax Specialist. Linda believes that NO ONE should have to struggle to create the life of their dreams. This drives her to empower business owners with the knowledge and tools they need to gain insight and clarity into their business strategy and to take inspired action to streamline their processes, improve their cash flows and reduce their stress levels, such that they can more easily create the life of their dreams. With 20 years experience helping businesses with their financial, tax and business plans, managing tax risk and advising on Canadian corporate, personal income tax and sales tax matters, Linda combines her expertise and knowledge with her intuition and creative abilities to arrive at sound tax and business solutions. She is also known for successfully leveraging cross-functional teams and creating efficient processes that translate into tangible business results. Discover how you can create more ease and flow in your business at www.VisionSpire.ca (formerly www.LindaSpencerTaxConsulting.com)[/author_info] [/author]

Gap Analysis – it’s a matter of perception

When you take the time to look at things from many angles you not only expand your awareness, you multiply your opportunities. r2g-p5-ai7-Dont-Wait-web

Think of your business as a road trip (and not the scenic kind – you’re on a mission!).  You identify where you want to go, where you are starting from, the fastest route, alternate routes, what you need for your trip, and start navigating your way to where you want to go, in the most efficient way possible.   In this series, I help you get clarity at the different steps of creating and navigating your road map to business success.  This is the third installment of this eight week series. 

In last week’s post, you determined where you are currently in your business.  This is your starting point, point A of your road map to success.  So now you know where you want to go (point B, determined in Step 1 – Start with the end in mind), and where you’re starting from (Point A, determined in Step 2 – Know where you are now), the next step is to figure out what you’re missing and need to put in place (Step 3 – Analyze the gaps between where you want to go and where you are now) in order to effectively build your action plan for how you will achieve the goals you set for your business in Step 1 of the 8 steps to create your road map to success.  (By the way, If you missed my 8 Steps to Building your Road Map to Success post, or the posts for Step 1 (Kick-start Your Year with Clarity and Focus) and Step 2 (Do You Know Where You Are?), you can get them HERE.)

So, what are you missing?  Where do you need to invest more time/effort/resources. What skills and training do you need to develop/upgrade?  Where do you need to shift your time and resources?  What money and success mindsets and habits do you need to adopt to help close those gaps?  What systems and automation do you need to help you run your business more efficiently?  What support do you need, from who?  Who do you need to add to your team?

This is an exercise in self-awareness and being truthful with yourself.  It’s not about figuring out how to do it all yourself, or how to get all your tools into your tool chest before embarking on the adventure or your business, but rather, it’s about identifying what you know to be missing to get you from point A to point B in your business.  Sometimes, the gap is filled by hiring someone (staff or outsource) to do certain tasks for you, allowing you to spend your time more efficiently on the tasks that you are a specialist in and that will generate revenues for you. Sometimes, the gap is filled with the tools that you will acquire along the way in your adventure.

When you take the time to look at things from many angles you not only expand your awareness, you multiply your opportunities.  When I took the time to look at what I was missing, and how I could fill those gaps (from many different angles, asking many questions to help me see the big picture, along with all the details), I realized that a really big skill that was missing for me was effective marketing using social media.  You see, I consider myself a great student.  I learn quickly and typically recall things quite easily.  However, when it comes to marketing with technology, I tend to flounder and have to work extra hard to understand how make it work.  I’m just not technologically savvy, no matter how much training I’ve had with it so far.  Taking a different view, and a shift in mindset from doing everything myself, instead of spending a lot of time and money to try to master this skill in marketing with technology, I will instead focus my time and energy on what I’m an expert at.  For 2016, this has led me to seek the counsel of a marketing specialist, to learn some key strategies and processes, and HIRE someone to execute the best strategy for me.  As a business advisor and coach, I’m continuously learning new skills and content to create value for my clients. My mastery is in creating and delivering great content to clients as it relates to money mastery in business. The marketing must be done, but it doesn’t all have to be done by me…and I get to multiply my opportunities to create 🙂

When you expand your awareness of the gaps in your business, you find more opportunities to close those gaps. So look at where you want to go with your business, and what’s missing from your tool chest to get there, ask key questions and focus on taking inspired action to close the gaps to realizing those business results that you want to achieve! 

If you would like assistance or clarity in building your business road map to success, contact me to set up your complimentary Business Clarity Breakthrough Session, or ask for my Business Management Assessment Questionnaire to help you identify the gaps in your business.

PS – Speaking of content and creating value, I’ve been working on a great new line up of workshops and programs for small business owners to help them master their business cash flows more effectively and efficiently.  Watch for our calendar of events and MARK YOUR CALENDAR – the next one is coming up on February 29th (registration opening soon)!   Get on the VIP Invitation List to receive added bonus offers that will not be offered to the general public (in fact, the only way to get these special offers is to be on the VIP Invitation List)VIP List

12 things you can do before the year is through to increase your cash flow and get ready for 2016

With a few weeks left of the year, there’s still time to take some action to increase your cash flow and get organized for 2016.  Earlier today, I shared these tips with some fabulous entrepreneurs over my first annual holiday networking lunch and now I share them with you.  Here are just a few things you can do to end out your year on a positive note for your business and your bank account.

YEAR-END BUSINESS TIPS (that you can do any time of the year):

1. Look at where you are leaving money on the table.
• Take advantage of early payment discounts on payable invoices, and bulk purchase discounts (if they make sense for you)
• Take advantage of zero to low interest deferred payment options

2. Collect outstanding receivables
• Have tough money conversations with the people who are past due with paying you what they owe you
• Set up an automated payment plan – get your customers to pay your something, anything, to show they are committed to paying you for the services/goods they received from you
• Review your pricing and payment policies and procedures

3. Pre-sell, and get paid for services/goods to be delivered in the new year.
• Think of a Boxing Day/Week promotion that you can offer to pre-sell a 2016 package
• Plan your January and February time slots and get clients booked in those spots now

4. Plan 2016 with the end in mind. Think about your overall goal, where you want to play, how you will win your game, what capabilities/resources need to be in place, and what systems (including policies and processes) need to be adopted to achieve your goals. Set SMART (Specific, Meaningful, Action-oriented, Realistic, Time-bound) goals not only for the year as a whole, but chuck them down into 60-90 day periods as well.

5. Look back at 2015 and see what worked, and what didn’t, so you don’t make the same mistakes and can make improvements going into 2016. This means you have to get your year-to-date finances and accounting in order now (not April next year) since your numbers paint the picture of what has happened. Your numbers let you see the peaks and valleys of your business so you can better plan for them in 2016 – to make the valleys smaller and create more consistent (and increasing) revenues and cash flows throughout the year.

6. When looking at 2016 planning, book in your time off/vacation/self-care time first (make you the most important asset and take care of you first – afterall, if you’re out due to illness, who will run your business for you?). You’ll also want to book in your CEO/CFO strategy and reflection dates and stick to them (A reflection date is when you take the time to reflect on your business results for the last period and decide what actions to take to keep moving forward). I recommend reviewing your numbers weekly, but with deeper dive at least quarterly, giving you many more chances in the year to address issues and take necessary detours as things come up, and to be pro-active rather than reactive in your business.

YEAR-END TAX TIPS:  Most people don’t think about taxes until filing their return after the year is over. However, with various tax changes in store for us in 2016, there are a few things that you’ll want to consider BEFORE the year is done to optimize your taxes for the coming year.  Before the end of the year, to reduce your taxes for this year, you should consider:

7. Purchasing business equipment before year end – If equipment purchase is on your list to do, consider purchasing equipment before year-end instead of waiting until next year.  This allows you to accelerate your CCA (tax depreciation) claim and reduce your net income this year.

8. Paying reasonable salary to your children and spouse who are working for you
If you have kids or a partner who does work for your, pay them what they’re worth (a reasonable salary) – especially if they are in a low tax bracket. This keeps the money in the family and reduces your tax bill by legitimately splitting income.

9. Making car repairs if your car is used for business
If you use your car for business and it’s in need of repairs, and you’re looking to reduce your tax bill, consider getting those repairs done before the end of the year so you can deduct them on your 2015 tax return.

10. Making charitable donations
Charitable giving is very tax effective (giving you up to $45 tax credit on every dollar given) and you help those in need at the same time. But you must actually make the donation before the year is over. Also, one caveat I give clients, is to always check out the charity and how their dollars are spent before giving to the cause. It might sound like they’re doing good things, but when they spend 80% of the donations on administration, maybe not so much

11. Consider selling losing stocks to offset realized gains
If you have made capital gains on stocks that sold in the year, and you have some investments with accrued losses, consider selling them to offset the gains. Just be careful of the 30 day stop loss rule (where you cannot buy back the same stock you sold at a loss in the first 30 days of the sale, or the loss is denied)

12. Now that I’ve given you all these great tips, here’s the kicker…you may actually want to defer some of these tips until the new year, depending on what tax bracket you’ll be in. You’ll want to consider how the new Liberal government tax initiatives that are expected to take effect Jan 1, 2016 will impact you and plan accordingly, namely with respect to:

  • New higher taxes for personal income over $200k (Ontario combined rate will be 53.53%, now 49.53%) – if your income will be over $200k you might also consider whether you should incorporate and defer some taxes
  • A reduced tax rate for personal income between $44.7k and 89.4k (Ontario combined rate will be 20.5%, now 22%)
  • The reduced small business corporate tax rate to 11% from 9% which the new government is proposing to change/defer the 2% reduction to a later time
  • Proposed changes to what companies will be eligible for the small business deduction
  • The elimination of the Family Tax Cut
  • The elimination of UCCB and CCTB, replaced with Canada Child Benefit, which is purely income driven (payments starting in July 2016 based on 2015 income)

It’s really about knowing your numbers and what to do with them to maximize your cash flows.  So, what can you do right now, with 3 weeks left of 2015?   Estimate your 2015 income and tax liability NOW, and estimate your 2016 income and tax liability based on your 2016 plan.  Then, take action to optimize your income and tax liability between the 2 years, so you’ll know exactly what you’re paying/receiving for 2015 well in advance of filing your return – leaving you with peace of mind for tax time, and the freedom to focus all of your energy come January on running your business and creating results for 2016 in 2016.

If you would like assistance with your 2015 year-end tax strategy and with planning your 2016 vision, contact me ASAP to book your complimentary Clarity Session (a conversation whereby I help you get clarity on what to focus on in your business and the one inspired action you need to take to get going).  Limited spots available in December.  www.visionspire.ca

Helpful links:

Canadian Charities Listing – http://www.cra-arc.gc.ca/chrts-gvng/lstngs/menu-eng.html

Canadian Income Tax Estimator – http://www.taxtips.ca/calculators/canadian-tax/canadian-tax-calculator.htm

Liberal tax changes (as per their election campaign, confirmed in the Dec. 4th Throne Speech) – https://www.liberal.ca/files/2015/05/Fairness-for-the-Middle-Class.pdf