Five Smart Secrets for Building Your New Business

Dennis L. Thompson, CPA

Secret One: What is My USP?

• USP = Unique Selling Proposition

• Why do People Buy?

– Increase Satisfaction

– Decrease Dissatisfaction

– Why Should They Buy From You?

Secret One: What is My USP?

• By Defining My USP

– I Can Then Define My Ideal Customer

• What are Their Concerns?

• How can I create value for Them?

• How can I deliver my Marketing Message to Them?

• Should I focus on one or more Niches?

• You MUST Embrace Marketing if You Want to be Self-Employed.

Secret Two: Always Be Aware of Your TME.

• TME = Time, Money & Energy

• Three Scarce Resources That We Have to Develop Our Business.

• What is the Most Effective Combination of TME For Marketing.– Do Not Spend Significant TME on Non

Decision Makers.– Think Twice Before You Try to Save

Money at the Expense of Time & Energy

Secret Three: Profit Is An Opinion, But Cash (Or Lack Thereof) Is Cold Hard Reality.• Most Small Business Fail Because of Cash

Flow Problems.

• Monitor Your “Cash to Cash” Cycle

• Be Aware of the “Grow Until You Blow” School of Management.

• Become Familiar with “Break-Even Analysis”

Secret Three: Profit Is An Opinion, But Cash (Or Lack Thereof) Is Cold Hard Reality.

• Know Your Fixed Costs.

• Manage Your Receivables, Inventory & Payables.

• Book Recommendation: “ Never Run Out of Cash” By Philip Campbell

Secret Four: Become an Intelligent Consumer of Accounting Information

• Accountant: Definition

• Besides Being Boring and Hard to Understand, Accounting is Crucial for the Success of Your Business.

• No One is Going to Care More About Your Business Than You – Learn Basic Accounting.

Secret Four: Become an Intelligent Consumer of Accounting Information • Unpleasant Little Secret – QuickBooks and

Microsoft Office Accounting Will Not Teach You Accounting.

• However, Accounting Software Will Help You Make Creative & Complicated Mistakes Much More Efficiently Than You Could Ever Do By Yourself.

Secret Four: Become an Intelligent Consumer of Accounting Information

• You Don’t Need to Become an Accountant, But You Need to be Able to Recognize When Your Financial Statements Don’t Make Sense.

• Recommendation – Take an Accounting Course for Small Business Owners.

Secret Five: Minimize Your Taxes

• Understand That Payroll Taxes and Sales Taxes Are Trust Funds

– Significant Penalties if You Spend Trust Funds.

– Best to Segregate Trust Funds in Separate Bank Accounts – Do Not Commingle with Operating Account.

Secret Five: Minimize Your Taxes

• Understand The Different Types of Business Entities & How They Impact Your Taxes.

• Recommendation: Become an LLC and Elect to be Treated as an S Corporation for Taxation Purposes.

• Understand the Differences Between State & Federal Taxes.

Secret Five: Minimize Your Taxes

• IRS & The Tax Gap

– IRS is Telling Congress that there is a Tax Gap of Around $300 Billion.

– Will be Conducting More Schedule C Audits – Looking for People Who Are Underreporting Income and/or Overstating Expenses.

– Re-engineered Audits

Secret Five: Minimize Your Taxes

• Steps You Can Take to Protect Yourself in the Event of an IRS Audit.

– Have a Separate Business Bank Account and DO NOT Commingle Personal Funds.

– Keep Good Documentation for Expenses.

– Be Able to Account for All Your Bank Deposits- IRS Assumes All Deposits Are Income Unless You Can Prove Otherwise.

Summary

• Being Self Employed Is Not For Everyone.

• You Must Be Good At What You Do AND Effective at Marketing – Not Either Or.

• The Five “Secrets” That I Have Discussed Today Will Help You Increase Your Chances of Success.