Feeling Stressed and Unsure About Your Business Right Now? Utilize the 10-10-10 Method to Make the Right Decisions for Now and for the Future
When your business begins struggling, whether it is a simple downturn in income or the downfall of a recession, you are going to feel so many emotions. After all, your business is like your baby. You worked hard to get your business up and running and you have spent hours honing your skills, so your business could grow and thrive.
Once unchartered times, like our current recession, hit, you are going to want to instantly go with your gut when it comes to making all of your decisions. However, I want to urge you to ignore your gut and focus on the data you are collecting. This will allow you to create actionable plans that will help, and not hurt, the future of your business.
The 10-10-10 method is what I love to use when things are on a tailspin because it allows you to focus on the next ten minutes, ten months, and ten years. This is excellent because what may seem like a fantastic idea right now, could be the worst decision for your business’s future.
In the beginning, you may only want to focus on the first ten minutes, but you will want to determine what the long-term results will be from those actions.
For example, laying off an employee now may make you feel horrible emotionally, but when you think about ten months from now when you can rehire them, you will feel much better. Creating a new offering for your business might seem like a ton of work right now, but in the long term, all of that work will allow you to reap the rewards later on.
One of the best things that the 10-10-10 method can do is stop you from taking out a loan. While a loan may seem to be your best answer for the next ten minutes, in ten months, and even ten years, from now, you won’t be as thrilled when you are struggling to make the payments when they are due.
Of course, during this recession, you do have options when it comes to loans and they are the Paycheck Protection Program (PPP) and an SBA loan. You can also take advantage of the emergency disaster funds that are being distributed.
It is important to note that you must place any money you receive from the three funding options above into a separate account from the rest of your business’s finances. The reason for this is that the above loans can be forgiven, but only if you use the money for what it was designated for. Therefore, you must keep track of everything, even if it appears to be a small purchase like hand sanitizer.
If you think you will qualify for forgiveness of a loan mentioned above, that might be the only way it would pass the 10-10-10 method for being good ten minutes from now, as well as ten months and ten years from now.
Looking past the immediate future can be very difficult, especially if you haven’t been able to start focusing on what is truly important. However, making rash decisions will not help your business, so start using the 10-10-10 method to see how every decision you are considering will affect your business now and in the future.
If you have no clue where to start, or have so many questions, please give me a call! I want to help you figure out what the best options are for your business.
If you are old enough, you know that this isn’t the first recession we have had in the last twenty years or so. Yes, this one may seem a lot worse, because most of our country is shut down, and the impact may be greater than the others if you are not reacting the right way.
There are five stages during a recession and the very first one is where a business owner like yourself will simply freeze. This is understandable because you are in shock since this all came on so suddenly. I mean, it’s not like you had months of advance notice, where you could create a plan for this massive struggle in the business world!
The worst thing you can do right now is, stay in the grief-stricken phase where you are frozen and have no idea where to turn. Doing that will mean the end of your business, which is the last thing you want after all of your hard work.
It is common to go through the second phase of disorientation for a little bit too. I am not telling you that you shouldn’t have a million different scenarios going through your head in the beginning. However, I urge you to not just jump in headfirst and do the first thing that comes to mind or try to work multiple angles without any clue of whether it will work or not.
This reactive phase will usually have you doing the wrong thing, even if you are thinking you are doing it for the right reasons. This is not the time to incur a ton of new expenses, because it will cause you long term agony. The impact of those types of actions can cause your business to fail before you have the chance to rebuild.
Out of the five phases, the third stage is going to be where you want to have your focus sooner than later during this current recession. Not many businesses are there yet, so don’t feel concerned if you are still a little disoriented. However, now is the time to get busy and start evaluating the data you have available.
Now, it normally takes between two and four weeks to get a real trend from all of the data you collect. This is the time when you are going to need to ask some hard questions before creating a plan that has appropriate actions with a positive impact for your business. Most of the time, your action will be only one thing, but it is the most important item when it comes to moving your business forward.
This is also the time when you will see many of your competitors closing up shop. Do not begin to panic again, or start ignoring all of the data you have been collecting. Instead focus on the fourth phase, which is the action that you came up with using all of your data and nothing else.
If you do business outside your office walls, you need remote access to QuickBooks Online. You now can have it with Quickbooks Online’s Mobile Feature.
One of QuickBooks Online’s most compelling benefits is its portability. While its desktop counterparts remain chained to your desktop PC or notebook (with limited remote capabilities), many of the features found in browser-based QuickBooks Online can be easily accessed via iOS and Android smartphone and tablet apps.
These apps don’t look and work exactly like QuickBooks Online, and they don’t do absolutely everything you can do in the browser-based versions, but the most common accounting tasks you’d want to do away from the office are supported.
These mobile apps give you and your staff the freedom to manage numerous accounting tasks away from the office, whether you’re at home, a customer’s location, a conference or convention, or any event where you can sell products or services.
You can, for example:
- Enter expense data
- Build new records for customers and vendors
- Create invoices and estimates
- Receive payments
- Issue sales receipts
You can do all of that on a smartphone. The iPad version offers more, including reports and account registers.
QuickBooks Online mobile apps take advantage of the capabilities of whatever device you’re using, so it’ll be easy to jump in and start using them by clicking on links or buttons, entering data or choosing from lists, and returning to previous screens when necessary. Their user interfaces and navigational tools are very similar.
Once you’ve downloaded and installed the free app, you’ll simply sign in using your QuickBooks Online user name and password. Your accounting files are then automatically synchronized with the mobile app, after which you can open the navigational menu, which appears in the left vertical pane.
The apps are arranged slightly differently on each device, but they’re roughly comparable. The iPad version offers the most options out of them all, which isn’t that surprising knowing how functional iPads are in many ways.. They all have a link to an Activity screen, which is an audit trail of sorts. It displays transactions entered in QuickBooks Online on all devices.
Say you’re working from home and you need to create a customer invoice. You’d click on that menu item, then on the “+” sign, and fill out the form similar to how you would back in the office. You’ll have access to your existing customer list and your database of products and services, or you can add your own.
- Select your customer from the list that opens
- Change the dates, terms, sales tax status, discount, and deposit if necessary
- Choose products and/or services from the list and modify the quantity if necessary
- Add a note or customer message if desired
- Save the invoice
All data that you enter, modify, or delete is periodically synchronized and you can also refresh it manually.
QuickBooks Online’s sales forms – invoices, estimates, and sales receipts — all work similarly. You can record payments in the mobile apps, as well as expenses you incur outside of the office.
Of course, if you’ll be selling away from the office using one of QuickBooks Online’s mobile apps, you’ll want to be able to accept credit and debit cards. We can help you get set up with a merchant account that will allow you to do that. Remote payments are sent to QuickBooks Online, so your bookkeeping tasks will be greatly simplified.
If you use any kind of mobile device, there’s really no reason not to use a QuickBooks Online mobile app – unless you absolutely never work away from the office, never meet with customers at their sites, and never sell anything remotely. If you do any of those things ever, you’ll find that the convenience and flexibility of mobile apps can help you save time, manage your workflow better, and increase sales.
Think of the Quickbooks Online’s mobile feature as an added bonus like the app for your personal bank account. The app for your personal banking allows you to see how much money you have and where it goes every month. Well, the Quickbooks Online’s mobile feature will let you see where your business is at wherever you are, so you can make those quick informed decisions that will keep you on track with the growth you desire.
Download this app today and see how it can help you transform your business in ways you couldn’t see before. After all, you will no longer have an excuse as to why you didn’t have time, or access, to keep track of all of your accounting needs. Now you can simply open this app, type in the proper information and all of your Quickbooks platforms will be updated automatically.
The two major ways entrepreneurs can take money from their business is through draws or by receiving a paycheck. The type of entity in which their business is set up will determine which method can be used. In either case, entrepreneurs need to be careful not to shortchange themselves.
Reasonable Compensation for a Salary Per the IRS
For small businesses formed as an S Corporation and with plenty of profits, reasonable compensation is a term you may want to be familiar with.
Many small businesses have organized as an S Corporation form of entity. In many cases, the S Corp election allows a business owner to save money on self-employment taxes, especially if they are operating as a sole proprietor. S Corp profits, or distributions, are not subject to payroll taxes.
If you are a business owner taking a salary and contributing substantially to the operations of the business, you may think that you should just take the distributions and forget the salary. After all, think about how much you would save in payroll taxes. But this has already been tried and shot down by the IRS in the courts. And this is where the term reasonable compensation comes in.
The IRS requires that business owners who perform a substantial contribution to the business be paid a salary according to a number of factors. This is called reasonable compensation. You can’t pay yourself below the market and take a large amount in distributions.
The IRS has issued a fact sheet that describes the guidelines that can be used to determine reasonable compensation. They include employee training, experience, duties, time spent, history of distributions, bonuses, and many other factors.
There are also reasonable compensation ramifications for C Corporations as well.
The 5 Things You Must Consider When You Set Your Own Salary
If you’re running a service business, it’s easy to initially think you can do well with a similar hourly rate that you earned as an employee. However, think of the amount of time and energy you are putting into your business every day of the week.
Here’s a quick list of five elements that should be included in the salary of every entrepreneur:
If you were doing the same work for a company that hired you, what would your payment be? Are you making at least the market equivalent or better? A lot of times, as entrepreneurs, we tend to focus only on this piece of our salary when we set our pricing, and that’s a big mistake. It’s only 75 percent of what our total pay needs to be.
As an entrepreneur, you take extra risks when you own your own company, and you should be compensated accordingly. Your capital is tied up in your business and should be earning a good return in addition to your reasonable salary.
Employees get vacations, health insurance, and bonuses; and you should too. This should be part of your salary package as an entrepreneur.
Although our individual taxes are not deductible as business expenses, we need to compensate for them so that we’ll have enough cash for our living expenses. It’s a huge chunk too. We work about three and a half months every year, just to pay for our taxes.
When you work for yourself, no one is going to fund your retirement for you. Although the Social Security program helps a lot of seniors, it’s up to you to set additional money aside for a comfortable future. The only way you can do this is to make sure you have given yourself a good salary.
Your salary should include all of these components. If it doesn’t and you feel like you can’t afford to pay yourself that much, then your pricing might not be reflecting all of these items correctly, you might have a volume problem, or your business model may need some adjusting.
It’s normal to take a smaller paycheck the first few years as we’re building our businesses, but if you’re still doing it after several years or constantly having cash flow issues, then something may be wrong.
I would be more than happy to chat with you about your salary, to see what changes need to be made to ensure you are getting the salary you deserve.
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Shannon Simmons, a 10+ year business owner, and 5+ year Profit First Coach is the owner of Netbooks Accounting Services, LLC. She is one of the original Profit First Professionals when the concept was created by Mike Michalowicz.
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