One of the points of the article is that if you start now, devoting 15 minutes a day to going through your 2008 transactions is a simple way to get caught up. Start with the first transaction is January, and list and categorize every transaction for fifteen minutes. Once the time is up, mark where you left off, and close up until the next day. Eventually, you will have gotten through the entire year’s worth.

There are two main problems I see with letting your accountant enter and categorize all your transactions for you. First, its a waste of money. Accountants are expensive- one of THE MOST expensive ways to accomplish a feat as simple as data entry. Second, you need to know what is going on with the finances of your company. For my clients, I publish a report that gives the details of the state of their business finances. If you have been out of touch with your business money all year, chances are that you are making un-educated financial decisions. Use the 15 minutes to get better acquainted with the flow of your money.

If this blog applies to you at all, chances are you are not a QuickBooks person. Telling you to make sure to enter all your transactions into QuickBooks is not going to help. If you could afford a service to do your books, you probably would. If you fit in that category, try LessAccounting It is an extremely simple yet thorough web-based accounting application for small business. I don’t use it for my clients because I like to get more detailed in reporting, but for Do-it-Your-Selfers, it may very well be the way to go for 2009.

Mike Freeman
Accounting and Bookkeeping Services in Southern Maine

Before you make that move, read this article, by Kelly Spors on Independent Street. I have discussed keeping employees before; I have always felt that layoffs hurt more than they help, especially in small business.

Spors gives a few common sense reasons why layoffs are bad for business, then addresses the alternatives:

• Hiring Freeze
• Hour Cuts
• Pay Cuts
• Benefit Cuts
• Get Rid of the Weak

While I agree with the premise of the article, I take issue with the order of alternatives. Getting rid of the weak should have been done before you needed layoffs! Even in good times, business owners should not hang on to toxic or unproductive employees. In any company, wasting valuable payroll money on someone that is actually hurting the company should not be tolerated. Continually communicate with your employees to ensure everyone is on the same page and working on the same team (sorry for the mixed metaphors).

With that exception, the rest of the list is fine- though quite unattractive. Being faced with not enough money to pay all the bills is never a good situation. You feel responsible for your employees and cutting wages and benefits is not something you want to do.

So, here are my two cents (or five, as it were):

1. Stay ahead of your finances by making projections about next month, next quarter, next year. Be realistic about not only what projects/sales you will have, but also how much cash will you have coming in or going out. Try to foresee where you will have cash shortfalls or project shortfalls in coming months so you can adjust now.
2. Get your core team together and lay the financial information out on the table, so everyone can see the stakes.
3. Get ideas from everyone on the team on how to boost revenue to prevent having to cut costs.
4. Set goals and decision point dates, so everyone knows what is coming.
5. If you still have to give a pay or benefit cut, make sure you take one too- of the same amount or bigger. If you have only good employees, laying even one of them off will hurt your chances of coming out of the tough times stronger than your competitors.

While it may sound lofty to assert companies should not layoff employees, the goal is really to get you to think longer term. The reason you’re faced with layoffs in the first place, many times, is due to failure to make changes months (or even years) ago- and wishful thinking. Think long term about your budget, and think long term about your employees.

The last thing you want is a quality employee going to work for a competitor because you got rid of him or her for short-term cash (think Johnny Damon and the Yankees).

If all else fails, hire Terry Tate, the office linebacker, to increase efficiency around the office:

Mike Freeman
Maine Small Business Financial Planning

‘Canned’ image created by ViajeroJT.

To be sure, you have to be a little used to New York to appreciate the shop. Much like everywhere else in the city, space is limited. This is no suburban Tim Hortons with room to sit an relax. Nor is the restaurant perfectly clean-looking. Since I have been to New York many times and tried my share of hole-in-the-wall eateries, I was prepared.

What I was not prepared for, however, is just how delicious the doughnuts would be! These are organic, or at least semi organic doughnuts. Mark uses no processed foods and only the freshest ingredients. The filled doughnuts are square, he says, to ensure filling in every bite. It works! I tried a standard jelly filled doughnut and got filling in every bite. The texture was very light and the vanilla bean glaze was amazing. I washed it down with a glass of fresh squeezed Orangeade.

The total cost of my snack? $5.90. Doughnuts range from $2-3, more than twice the local average.

This doughnut shop reinforces my many other posts on pricing. Why cut prices when you can build a sustainable competitive advantage? Be awesome and charge what you are worth. This is true in products and services.

One other tip I learned while eating my doughnut. A certain parcel delivery person came into the shop, asked for a doughnut, and left without paying. I asked the clerk about it, and he said “I give him doughnuts, he brings us important packages first!”

Mike Freeman
Doughnut Connoisseur

Fowkes was in such a situation. He has secured some contracts with a few bigger organizations, but he is out of money and facing foreclosure on his home. On the show they gave some tough advice to him, and Jeff Chavez repeated it in a blog post. In a nutshell, here is his advice:

• Make sure you are meeting the needs of your family, then pursue your dream.
• Don’t let you emotions cloud your judgment.
• Even though you need to make changes, the dream doesn’t have to die.

Chavez also published a neat little report called “The 11 Killer Instincts of Entrepreneurship.” You can access the report at www.northstarthinktank.com (sign up required). You can see if you possess the qualities of a true entrepreneur by looking at the 11 instincts.

The bottom line is that you have to have to be flexible enough to take different routes to success. Some of those routes may be humbling and require you to work odd jobs to supplement your income. Don’t be afraid to make changes- in fact, your ability to recognize failures early will greatly improve your chances of long term success.

Mike Freeman
Born Entrepreneur

I remember talking with other owners of office cleaning businesses. They would moan and gripe- perhaps not unlike business owners in any other industry. They would complain that in tough economic times, the cleaner is the first to go. They would also complain that there was too much competition with such ease of entry to the cleaning market. This used to trouble me, because it didn’t line up with what I was seeing. We had never lost an account because a client no longer wanted to spend money on cleaning. In addition, we were getting some of the highest rates in Portland, and having very few battles with those who would seek to undercut us.

To me, office cleaning seemed like a recession proof business! As companies fired their full time janitor, they would seek out a service to take his or her place! Not only that, but businesses never want to let the cleaning service go (save the micro-sized offices) due to money. What is a few hundred dollars a month? By losing the cleaning service, a manager is taking the one of the quickest paths to losing employee moral. If you want to everyone to feel poor, then don’t have the office cleaned. The flip side is that in good economic times, more and more offices spring up and there is plenty of new business to go around. Janitorial services is a good business no matter what the economic condition.

Don’t get me wrong. Our cleaning company was not without its share of problems. We had all the client relations issues every other business faces, and there were many tough times financially. My point is that while many cleaning companies were quick to blame economic downturn on their financial troubles, there were clear-cut business mistakes to blame. Running a business takes balancing the marketing, management, finances, and human resources with performing the actual work- in this case cleaning. When there is a problem, recession is the easy answer because its all over the news. In reality, I think there were some common denominators with the complaining cleaning companies that we can learn from:

Not enough marketing. At the time, the basic source for customers other than referrals was the phone book. It was amazing to see how hesitant companies were to even pay to have their company put in bold. If you don’t stand out among all the other ads, how will people find you? I suppose there is the ever popular AAAAA Cleaning Service!

Appearance of being unprofessional. Many of these operations were run by people with full time jobs- and it showed. Broken down vans, worn out equipment, no uniforms, and process inconsistency gave the wrong impression. In order to stand in a recession, you can’t look like a recession business.

Trying to be low-cost leader. By supplementing their business with full time jobs, many of the companies were able to charge ridiculously low rates- like 75% less than us. Why would anyone pay me $100 when they can get their place cleaned for $25? One reason, among others, is that by paying me $100, they feel they have a better chance of getting the job done right. I hate competing on price, as I have said in many blog posts. It is never a real competitive advantage for a small business, and it just leads to heartache.

No real competitive advantage. Sometimes people compete on price because they feel they have no real competitive advantage. In a commodity-type service, what real advantage can you offer? Quality, for starters, is a great advantage to shoot for. Providing the best value- exactly what the customer is looking for and for the right price- is even better.

The bottom line is that even though recessions hit businesses hard (some more than others), many times looking internally before blaming external circumstances will give you better chances for success.

Mike Freeman
Not Complaining

In a nutshell, here are his tips:

• Read a wide range of books.
• Write articles and maybe even a book.
• Drive sales with extraordinary service.
• Gain trust by performing consistently.
• Tell the truth.
• Always complete your jobs.
• Be trustworthy.
• Think long-term.
• Don’t be greedy.

You can read the entire article, including part 1 here. The reason I like part two so well is because they are things you can actually do, not just traits you are born with. Another reason I like part two is because all the tips require long term commitment, patience, and perseverance. They don’t sound easy, but deep down you know that if you were able to do all these things, your power to influence would increase dramatically.

Many times, when businesses are running a little lean due to economic conditions or some other uncontrollable event, a business owner’s first instinct is to attempt to get quick cash. This is usually done through some major departure from the business plan, and it may even work for a while. Long term, however, your power and influence in your original market will have decreased. If your influence decreases, so do your sales.

Bottom line: Don’t hurt your business’ future for short term solvency. Continue to be patient and work hard at becoming the power influencer in your industry. If your financial difficulties are that serious, a little cash now won’t really help anyway, and you will still have to find another solution.

For more reading on this topic, pick up a copy of the classic book, How to Win Friends and Influence People by Dale Carnegie at Amazon. Mr. Carnegie, methinks, knew something about influencing people.

Mike Freeman
Did I just influence you?

Bookkeeper Accused Of Stealing Nearly $400,000 From Employer

A bookkeeper for a local company is accused of stealing money by paying her own credit cards with company funds. I’m sorry to say it, but it reminds me of the movie Matchstick Men with Nicholas Cage. The conman’s famous saying is “I didn’t steal it, you gave it to me!” In order for her to steal that kind of money over four years, she had to go virtually unchecked the entire time. All the money was put right in her hands with no accountability!

First off, insurance expert Scott Simmonds has great tips to avoid employee theft.

Second, being in the business of financial management and bookkeeping, I can throw in my two cents to help others avoid this tragedy.

Do an external audit of your company every year with an accounting firm. An external audit would pick up on anything suspicious, so fraud could never last more than a year. As an added benefit, you will also be fully prepared for the IRS should they come knocking.

Insist your bookkeeper provide financial reports and read with a careful eye. If you don’t understand reports, call me. Every business owner should know how to interpret financial statements.

Don’t let your bookkeeper sign checks. Instead, use the bookkeeper to enter the data and produce invoices. Have someone else pay the bills online and sign the checks the bookkeeper prints.

Lastly, consider using a service to do your books (note the conflict of interest here). With a service, you are dealing with a company that carries the responsibility for its own employees and will work directly with you on your finances.

Following these tips insulates you from giving all your company’s money to your bookkeeper. Bottom Line: Never let any one person have total financial control and autonomy. People holding money need to be accountable to someone, or the temptation may just be too great.

Mike Freeman
Bookkeeping and Accounting Services in Maine

“Woopra is the world’s most comprehensive, information rich, easy to use, real-time Web tracking and analysis application. And it’s free!”

At this point, most small businesses that care about the statistics for their websites are using Google Analytics.  Google Analytics is a great tool; I have been using it since our sites were launched.  Woopra is better.

On the Desktop

One of the great things about Woopra is that it’s actually an application the resides on your computer.  It is not a web-based application like Google Analytics.  This allows them to be more visual, robust, and faster.  Obviously the data is still stored on the Internet, but the interface is simply awesome!

Every User

Woopra tracks and displays the interaction of each site user.  You can, at any point, look at all the people who’ve been on your site.  You can see, at a glance, how many pages each of the users visited.  Then, you can click each user and see exactly what they did while they were on your site.  You can see what operating system and browser they’re using, their location, and how much time they spent on each page.

It’s Live

It’s great to see what people have been doing on your site, but it’s even better to see what they ARE doing.  You can view, at any moment, how many people are currently on your site.  Then, you can basically watch the user interact with your site.  As soon as they click from one page to the next, you’ll see it.  As soon as they leave, you’ll see it.  One step, that still may be a bit creepy, is that you can spark a conversation with a live user.  Using the live view, you just simply initiate a chat session and the visitor will get a popup with an opportunity to respond.  I can see great uses for this, but I’m not sure how users will react to knowing people are watching.

Alerts

You can even set up alerts so that you are notified when people visit your site.  You can be very general or specific about what you want alert for.  Maybe you want to know when anyone visits your site, or maybe you want to know when someone from Portland, Maine that uses Firefox on a Mac visits your site.  You have the software running on your desktop and when the user criteria is met, you will get a sound and/or visual notification.  Then you can watch that user interact with your site.

Analytics

Besides being able to watch and track individual users, there are great analytics features too.  You can use these tools to anlalyze, over custom periods of time, anything from where users are coming from to what pages on your site are most popular.

As far as I’m concerned, the only thing missing from Woopra is the site overlay.  Of course CrazyEgg has Google beat on that front.  It would be nice to be able to visualize in Woopra what links are getting clicked and what pages visitors are viewing.

I know this new website analytics tool will help me make changes to our sites that will improve the user experience.  I’ll better know how users are responding to various aspects, and hopefully be able to make better decisions.  You should sign up your site today.  You’ll likely have to wait a while to get in, but it will be well worth it.

Dan
I’ll be watching you

About a month ago, my 4-year-old son, Ethan, had surgery to correct a Chiari malformation. Since the surgery, life has been a blur as we struggle to get Ethan back to his old self. Several *minor* complications have caused Ethan to be put on steroids and other medications. My once off the charts small boy has gained 11lbs and grown 2 inches. Much of his time these days is spent eating, sleeping, and talking about eating.

Needless to say, my schedule has shifted around quite a bit with Ethan’s care. It has put a severe crimp in the way I run my day. I have been doing too much flying by the seat of my pants, causing chaos and confusion. Had I been using trusted systems to handle all incoming and outgoing information, my life would be a lot easier right now.

I share this with you to save you the trouble down the road. I once wrote about my Dad having a heart attack and being completely unprepared for someone else to run the business. As it turns out, I have followed more closely in my father’s footsteps than I would care to admit. A significant change in my availability has made it clear that I rely on myself, not trusted systems.

So, this week, I will be re-reading Getting Things Done by David Allen. My intention is to get back on track using trusted systems to accomplish tasks and handle information. I view his system like algebra; if you don’t use it, it goes cold.

My son had surgery only two weeks after we found out he had the condition. There was no time to prepare. Had I been using Mr. Allen’s system all along, I could have handled the disruption in my schedule much easier.

Mike Freeman
GTD