Category Archives for "Business Tips"

How a Profit Coach Can Change Your Business

There are a lot of different coaches out there. A sports coach, supporting athletic teams to bettering their game and winning championships. A personal coach, to guide you in creating a life you dream about. A business coach, to help you develop a strategy to keep your business growing.

Once your business is running and you’ve started bringing in regular revenue, have you considered the benefits of a profit coach?

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3 Priorities for Your Best Year Yet

No matter what time of year it is, you can make it your best year yet. For many small business owners in the health and wellness space, that means bringing in more clients, developing new programs, and increasing revenue.

Yes, revenue is important, but not at the expense of prioritizing the things that can make that happen. And what can make that happen is you, your network, and the systems you have in place to simplify your business and your life.

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What to Do in a Year-End CEO Planning Session

One of the best things about the end of the year is the fresh start of a new year we’re about to embark upon. There are so many possibilities! As a CEO, it’s your job to navigate what possibilities you’ll take on, what you’ll let go of, and what your plan for the future will be.

Taking some time away from the day-to-day running of your business is important so you can focus on next steps. And your year-end planning session might look a little different than what you do at the end of each quarter.

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How to Get Closer to Retirement

This is a guest blog post from Howard Polansky of Cash Flow Coach.

I consume podcasts more than any other media. I am subscribed to WAYYYY too many and have to listen to them at 1.6x speed to not get too far behind. One podcast I truly respect is Radical Personal Finance by Joshua Sheats.

Joshua is a husband, father of four, in his mid-30s who walked away from the traditional financial world and has taken his family all around the world to be a global citizen. He is highly intelligent, sometimes way too verbose, but has done something so elegantly simple. He has explained financial planning in 10 words.

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Good Uses vs. Bad Uses of Debt: Knowing the Difference

At some point or another, most of us have had a relationship with debt. That first credit card we got in college or the mortgage to buy our current home. Sometimes the debt is used for good; other times the debt wasn’t in our best interest. (Maybe some of those early credit card purchases weren’t the best idea.)

I don’t want to sound polarizing, but there’s a good time and a bad time to use debt. That’s true in your personal finances and in your business.

So how do you know when using debt is a good thing and when you should plan to use cash?

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It’s Time to Audit Your Expenses

This is a guest blog post from Howard Polansky of Cash Flow Coach.

While it’s important to raise your prices as you go because your value and expertise will continue to improve over time, This isn’t the area that creates the greatest impact to your business.

As Mike Michalowicz mentioned in his book, Profit First¸ he had a 7-figure business that was losing money. The average person would think to themselves, how could that be? It’s because the top line has nothing to do with what’s left in the pocketbook. If the million dollars of revenue costs you $1,000,001 to generate, you are not running a profitable business.

An audit of your expenses should be a required task every year, at a minimum. I know Profit First professionals (PFP) will help you with an audit of profitable/neutral/destructive expenses when a new client onboards. Why? Because they are guiding you into an operating expense budget your business needs to fit in.

At the start, it almost feels like those pants you haven’t worn since you put on the COVID-15. It’s tight, you don’t know where to cut, but your PFP is your guide to realize what tools are must-haves to your business vs nice-to-have. However, there’s a deeper reason that most PFPs may not even realize on why this should be done annually.

I credit Tim Francis of Profit Factory for making this concept simple to understand. Tim calls this the BLOAT of the business. Most people understand the concept of the profit margin of the business. If my business generates $100,000 of revenue and my expenses are $90,000, my profit is $10,000, or 10%. To generate an extra $2,500 of profit, I need to sell another $25,000 of goods and services. That may feel intimidating just thinking how much more you have to sell to barely create a bump in profit.

But have you stopped to think: If I can save $X from my expenses, how much less do I have to sell? This goes back to the BLOAT. If I can cut a one-time expense of $100 and my business has a profit of 10%, I won’t have to sell $1,000. If that $100 was a recurring monthly expense, I won’t have to sell $12,000!! It doesn’t sound real, but the math is the math. So let’s take this step by step.

First, figure out your profit margin. It’s simply revenue – expenses = profit. Divide the profit into your revenue to get your profit margin.

Next, we figure out the BLOAT. Divide 100 into the profit margin to get there. If your profit margin is 18%, we calculate 100/18 = 5.56.

Now we come to the justification. Let’s say the one-time expense is $200. We multiply the BLOAT number of 5.56 by $200 to equal $1,112. The question we ask ourselves is this:

To justify this $X (recurring/one-time) expense, I have to sell $Y of goods and services. Is it worth it?

With this example, to justify this $200 expense, I have to sell $1,112 of goods and services. Is it worth it?

If it is a monthly recurring of $69, we multiply the expense by BLOAT and by 12. In other words:

$69/month x 12 months x 5.56 BLOAT = $4,603

To justify this $69 monthly expense, I have to sell $4,603 of goods and services. Is it worth it?

I’m not here to judge what you need to run your business. I’m here to help you truly analyze, by the numbers, how you justify each and every expense and understand how much in sales each expense really costs.

The added benefit of scrutinizing and justifying each expense is that when you can cut an expense permanently, the profit margin of the business increases and the BLOAT decreases. Playing defense is how sports team wins championships and how you create a championship business.

Is Your Personal Account Growing for Retirement?

This is a guest blog post from Howard Polansky of Cash Flow Coach.

I love to analyze numbers. Making projections about how much money this will grow at X% over Z years is just easy for me. But I have to be honest and know I am driving myself crazy over that stuff. If someone asked me what numbers they should track if they could only follow one statistic in their own personal financial life, I would tell them to track their savings rate.

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How to Get Long-Term Results (in business and in money)

We’re in business to have a business, which means making sure it’s profitable year over year. And even better is when your business grows over time–either slow and steady or more quickly.

Like anything in life, you get back what you put into business. If you nurture it with the right actions and tools, it will flourish. If you ignore parts of it, you’ll struggle.

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Start Your Year on the Right Financial Footing

Every new year, do you go through the motions of creating a “new year, new you,” trying to overhaul your business and your life to make this year your “best year yet”?

Look no further than your social media feed and you’ll quickly find that you are far from alone. Everyone is encouraging us to be better than before by changing our diets, our exercise regimens, our reading habits, our relationship statuses, our home organization systems, our money management, you name it.

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How to Reduce Taxes Without Reducing Net Profits

Everyone likes being profitable, yet no one likes paying taxes. So, how can we reduce taxes without reducing net profit?

Retirement Contributions

Making contributions to your qualified retirement plan (SEP/SIMPLE IRA; Solo 401-K; etc) through your business can reduce your federal income tax, but does not reduce your taxable net profit. The cool and unique thing about this deduction is that the IRS allows you to make retirement contributions beyond December 31, up to the filing deadline of your main tax return, in order to maximize your deduction for the previous year.

Health Insurance Premiums

The health insurance premiums paid on behalf of the owner(s) work very similar to retirement plan contributions: They reduce your federal income tax, but not your business’s net profit. Health savings accounts can be used to achieve the same objective. First, make sure you’re eligible for the deduction. For example, if your spouse has health insurance through their employer and they have the option to cover the entire family, you may not be able to claim the deduction through your business. 

S Corporation Conversion

If your small business is profitable (especially beyond $50K/yr) and you file taxes on Schedule C, you may benefit from electing to be taxed as an S-Corporation. This strategy will help you to legally reduce self-employment tax. But be careful when adopting this strategy. Electing to be taxed as an S-Corp comes with increased compliance issues, which means more fees. You’ll have a separate tax return to prepare, and you’ll have to run a payroll for yourself (which will require payroll tax returns). You’ll want to do this with the help of a tax pro. Make sure all of the extra fees associated with becoming and maintaining an S Corp do not eat up what would have been your tax savings.  

Non-Business-Related Deductions and Credits

All business owners will eventually end up filing a Form 1040 (the main tax form), and it includes all of the credits and deductions that aren’t business-related. Make sure you are maximizing all credits and deductions outside of the business. They will not reduce your net profit at all but the tax savings can be great.  

The main thing to remember about the 1040 tax return is that it includes ALL sources of income, and well as all of the available credits and deductions; not just the business stuff. The popular ones are the student interest deduction,  charitable contributions, the Child Tax Credit, Earned Income Credit, etc. Reach out to your tax pro to see which credits and deductions you may qualify for.