Archive for September, 2006

Now that dot-mobi domain names are available to attract wireless device usage, should you duplicate your company’s domain names with this new suffix?

The answer is part crystal ball technology think (not our bailiwick), part marketing think (not our bailiwick), and part financial think (our bailiwick). Just about every business decision passes through your financial statements, so here’s what this seemingly minor expense triggers from our CFO perspective:

• Risk management – you can insure yourself out of business, spending big bucks to mitigate against any number of problems. In this case the risk is that your prized domain name gets snapped up in dot-mobi format. Insurers are masters at heightening our sense of fear then providing a simple solution that “only costs $2.99 per day, which is nothing compared to what you stand to lose.” So is it worth another $100 or $200 to lock up your dot-mobi? Understand, I’m not knocking the risk management profession – it’s a critical part of running a sustainable business. See recent post about insurance on this topic.
• Expense creep – this is where you wake up one day and wonder how your little company became bloated with overhead. Every little bit hurts.
• Budget – your best defense against expense creep. This expenditure would go under Business Development or Sales & Marketing or Technology depending on how you characterize website expenses. Is it in the budget?

CNET news story on the topic: Dot mobi domain for mobile devices hits the Web

You work hard to build your business, but as sales and net worth go up, so does your risk of losing it all. Insurance should be one part of your asset protection strategy, and like finance, I.T. and H.R., insurance is so complex now that most companies need outside professional guidance.

Our guest author this post is Charles T. Wilson of RiskSmart Solutions®, a risk management and insurance consulting firm that does not sell insurance.

Small Business Logic Inc. and RiskSmart Solutions are unrelated financially and legally.
Reprinted from the Financial Think, December 6, 2005 issue.

Get the Best Broker, Coverage, Price & Service

Insurance programs, like cars and people, need a regular check-up or review to ensure their vitality and fitness. A judicious review can bring significant benefits because business risks can change a lot in today’s litigious world, and new ones can crop up without warning.

But most people dislike the thought of insurance. They put risk and insurance permanently on the back burner - until there’s a problem. Then it can be too late: studies show that 80% of small businesses that suffer a big loss without a contingency plan go bankrupt.

An Insurance Program Review gets you the right broker and service, the right coverage and price, and it’s not difficult. A little discipline can save you time and hassle if there’s a claim, and money because, in the long run, your awareness and prevention planning will mean you have less risk.

Start by determining if you have the right broker. Is there evidence of:

• Knowledge and experience with your industry?
• Understanding and interest in your business?
• A back up team in case he or she isn’t immediately available?
• Access to major insurance companies? and
• Transparency with regard to commissions, fees and any special bonus arrangements
• with insurance companies?

Next create a list of your service needs and expectations. This might include:

• A binder of all policies and coverage summaries;
• A detailed conversation about coverages and exclusions;
• A loss control inspection to detect possible flaws in your plans;
• Regular visits to check on changes in your business, discuss your losses and update
• you on the overall insurance marketplace.

Negotiate your needs and get agreement up front. Don’t be vague: insurance is a vital business decision and a major expense.

The third step is a thorough review of your current business risks, contingency plans and protections. Ask, what could go wrong and how much would it cost? What protections do you have in place (including your insurance policies) and what gaps do you need to fill? Look at all areas of your firm: assets and liabilities; leases and contracts; employees, suppliers and customers; operations and bottlenecks; advertising and web content, to name a few.

Finally, make sure you have a great story to tell the insurance company about your business - your Risk Profile. It includes your commitment to quality, customer service, training, safety and loss prevention to get an insurer’s attention and possibly bring your premium costs down. Then get recommendations for appropriate insurers (financially strong, reputable for claims service and locally licensed), and ask your broker for several quotations to compare prices - they can vary widely. Don’t automatically choose the lowest price: weigh service reputation and financial strength in your decision.

By following this insurance program review process you can be sure to get the best broker and service, the best coverage and price, and the lowest risk. And you may even save money in the process!

This article first appeared in The Journal of Practical Business Ideas, volume V, no. 3

©2004 RiskSmart Solutions®. All Rights Reserved.

Many small businesses operate without budgets and many small business owners get away with it because deep down, entrepreneurs and their bookkeepers/accounting managers usually have a good sense of their numbers. Why waste time developing a budget when there is so much other ‘real’ work to be done?

Now is the time to get a budget in place so that next year’s financial picture is in focus before this year’s end. This is the second in a five-part series where we present a little program to make the process a lot less painful. If you follow it, you will make more money.

Last month I got you started on next year’s budget by making your wish list. The next step is like making spaghetti: throw some numbers at your wish list and see what sticks. We’re talking big picture, rounded numbers here and very intentionally, I don’t want you to think too hard about what you “can” afford.

Specifically, put your wish list into spreadsheet format in Excel, and then assign to each your ‘guesstimate’. Hold your breath, add them up and then (when you have recovered) start cutting.

You have to develop a gut sense for how profitable your company is, and how much extra money you have to spend on, redeploy, invest in or borrow for your wish list. Use this type of background awareness to cull your wish list until it’s to scale and represents your company’s strategic goals for the next year or more.

What sets companies that budget apart is an understanding that budgets are not just about following the money. They are about leading the organization. Since there’s only so much money to go around they want to have a say in where it is going.

A word of final advice: get help with your budget. Engage your team in working the wish list, and instead of talking about strategic planning, you’ll be doing it.

An important financial management rule of thumb: close last month’s books by the 15th of this month.

For the 8/31 books, then, the deadline is this Friday, 9/15.

Each month we send this reminder and the Monthly Close Essentials to assist in your company’s monthly close process.

We love to worry for our clients.

Right now, for example, we’re worried – five months ahead of time – that our clients won’t have up-to-date 1099 information in their QuickBooks files. We know that when January 31st rolls around many businesses will scramble to pull together that information, diverting precious time from more strategic business concerns. Instead, we prefer to see clients calmly file their 1099s, close out their income tax returns, and focus on meeting their 2007 budgets.

If you haven’t kept up with 1099 data thus far in 2006…don’t worry. You still have time to catch up, and we explain how below. The bigger issue is to know that effective financial management depends on planning ahead, in lots of little ways. It’s often the difference between failure and success, between running the business and having it run you.

How to get 1099-ready in QuickBooks…

1. Pull a vendor phone list and customize it to show 1099-related information:
   • Vendor name
   • Business name if different
   • Address
   • Tax ID #
   • 1099 eligible field
2. Sort by 1099 eligible field — For the “yes” vendors, make sure you’ve got all the necessary information filled in. For the “no” vendors, scan to see if someone is marked as ineligible for 1099 but really should be. A weakness in QB is that in the vendor record this field defaults to “no”, so you never know if a “no” is really a “no” or the bookkeeper just forget to mark it “yes” after checking the W-9 status of the vendor.
3. Research and obtain W-9 information — Remember that vendors are required by law to return a W-9 form (PDF) if requested.
4. Put in place a 1099 procedure — New vendors shouldn’t get paid until they’ve been screened for 1099 eligibility and, where needed, sent you a W-9.