You Won't Retire in Paradise on Social Security

Tax Protection

A dollar saved by avoiding taxes is even better than a dollar earned, mostly because you would have had to pay on that dollar earned, anyway! Plus, it always brings a smile to my face when I am able to keep a few of my hard earned bucks out of Uncle Sam’s greedy grasp.
The advantages of investing through a tax deferred plan aren’t just spiritual, however, and they go beyond the immediate tax deferment of income.

• Opens up different kinds of investments that might not make sense if they were not tax advantaged. For example, while your assets are inside their tax protected shell all earnings and capital gains on them have no immediate tax effect; which is not the case for investments held outside a retirement plan. Therefore I can invest in assets without having a tax bite every time I buy or sell. If you’re interested in trading or even if you’re only rebalancing your portfolio, which you ought to do anyway, there will be no tax to pay as long as you keep those assets inside the plan. My wife and I have assets both inside and outside our retirement plans and our money outside is for more long-term investments while we like to look for deals and growth with our money inside the plans.
• Allows faster accrual of income. Look, you don’t have to have a MBA in finance to understand that if you have to pay taxes on gains every time you sell an investment or receive a dividend then your money will grow more slowly than if you were able to do the same transaction tax free. This is the unappreciated benefit of a retirement plan contribution as people fixate on the immediate tax savings instead of the long term savings.

Bankruptcy Protection

Owning your own business is risky business. You get sued, the economy tanks and takes your business with it, your supplier steals your designs or your partner goes bankrupt and leaves you with a big bill. One day your on top of the world and the next day you’re on the breadline and its happened to many smart entrepreneurs with much more experience than yourself; Donald Trump, Henry Ford, and George Foreman have taken the walk of shame only to come back bigger and badder than ever. Most retirement plans, done right and not abused, can shelter assets from bankruptcy and provide a nice, soft cushion to fall upon before building your next business.

Diversification

There is stereotype of the entrepreneur as a hyper-testosteroned type A guy that bets everything on his business, including the family farm and his first born. As you learn the ropes, you quickly find out that this is absolute nonsense. Obviously, many successful entrepreneurs are female and virtually 100% of entrepreneurs that have been in the game for any amount of time carefully diversify their money across various business and investment opportunities.
Every entrepreneur that I have had the honor to work with and learn from has had a passion for their business and laser intense focus on making it successful. It is because of the focus and attention to detail that they should be stuffing every dime that they are able to or are allowed to into a retirement plan. Most retirement plans can be set up to be very low maintenance. Just make the maximum contribution allowable into one or more index funds and forget about it. This is what makes it so special to the entrepreneur, no sweat, no hassle, no losing focus on their most important investment, their business. Keep the current economic crisis in your mind and remember that businesses really can be floating in a sea of cash one day and then high and dry the next.

You Are Not Immortal

When your mother gave birth to you she simultaneously condemned you to your death. We will all die and most of us will grow old or become ill before we finally kick the bucket. When you’re a new entrepreneur everything is exciting and the sky is the limit and you don’t really think about that, but it’s there, hovering over everything that you do. The fact is that your enthusiasm for business and entrepreneurship will fade and you will tire and wish to devote time to other pursuits, whether its spending more time with your family or traveling the world or running away with the circus. An industrious and fortunate few of us will cash out Paul Allen style and the chicken feed that we have saved through our retirement plan will almost be an afterthought, a little gas money for the yacht. Savor that thought for a moment. Now, 95% of entrepreneurs I know, and I’m including people with successful, multi-million dollar businesses, use their retirement plans to at least supplement their incomes when they choose to slow the pace down a little (few actually totally retire). Also, should you lose the longevity lottery and slip into the deep sleep prematurely, then those retirement funds could help sustain the loved ones that you leave behind.

If you don’t max out your retirement plan contribution, or at least give until it bleeds, 2010 is the time to really make this a priority. Even if you are in the start-up stage and cash is hard to come by you need to “pay yourself first” and not neglect this important tax and finance tool.

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The Old Bath + Bottle + Story = Sleep!

How My Two Year Old Can Help You Kick More Ass

There is no greater lesson on the importance of communication and what works in motivating people and modifying their behavior than the one you get as the parent of a small child. I mean, you can have long-winded meetings at work and hope to motivate employees through entreaties to their professionalism and the possibility of career advancement but that absolutely will not cut it with Little Susie Q, your adorable but emotionally erratic two year old. If you want to reward her for doing something (or bribe her to do it) then the gratification has to be instant and when you need to punish her (and you will need to punish her) then the punishment has to be swift, fair, and consistent.

New parents quickly figure out that their children actually crave routine and order, even as they rebel against it, and they put this to use in their war battle loving effort to get the damn thing to fall asleep and sleep through the night! How many of you have used some variation of the nighttime formula: bath + bottle + book + crib = good night’s sleep? And by good night’s sleep I mean yours, not the child’s. Well, what you are doing is establishing routine and order in the otherwise chaotic life of your infant. Like Pavlov’s dog, over time the infant internalizes the sequence of events and the sleep becomes natural to them. Good parents recognize a good thing when they see it and use similar tricks for potty training, teaching manners, and teaching sharing.

Well, it’s not just small children that crave order, the very same technique can work to make us more productive, healthy, and happy. Think of any great habit that you wanted to develop and how hard it was to stick to it. By creating a routine, a ritual even, leading up to the successful practice of that habit you can vastly improve your probability of success.

I’ll give you a for instance. Every night, after I put my two year old to bed, I sit down to write. Well, I don’t sit right down, first I go through my ritual. First I make myself a cup of tea and then I spend five minutes thinking about my goals and why I sit down to write every night, no matter what, instead of watching t.v. or surfing the Internet. Then, at the end of the five minutes I take a brief minute to plan my attack on the night and I get down to work. In the past I have tried to just get right to work but ever since my son taught me the value of ritual I have followed this and IT WORKS! Not just in making me more productive, although I certainly have noticed that, but it makes the task so much more fun and therefore I am much less likely to skip it.

The key to developing a real kick-ass and effective ritual is consistent, dedicated application toward a worthwhile goal. This is where the word ritual comes into play because you have to be religious, almost fanatical, in your practice; at least at first. You’ll know that you’re starting to get the hang of it you start to do it automatically, without even thinking about it as an option. When it gets to the point that you would feel odd and disconcerted if you didn’t go through with it then you’ll know that you are really getting it down right.

Beware of Bad Rituals!

Just as rituals can be used to learn and grow good habits, they can also cut the other way. Think of the incredible number of people out there that get home from work, eat dinner, and then veg in front of the idiot box until they realize that it is bedtime. I know people that can’t walk into a room without turning on the television; notwithstanding the presence of company or having some other task to accomplish. The television is normal, and its absence makes them uncomfortable.

Don’t Believe Me? Then Ask Landon Donovan

Have you ever seen Landon Donovan take a penalty kick? What about Tiger Woods tee off, Peyton Manning take a snap or Lebron James take a free throw? Before Landon takes a penalty he goes through a routine that involves his crossing his fingers and kissing them several times before he starts the approach to the ball. He’s gotten a lot of slack for that, but he’s also made a ton of penalty kicks. Never missed for the United States, as a fact.

Rituals for preparing for and performing in sports are both ubiquitous across all sports and legendary. Some athletes will continue to wear the same clothes when they have a hot streak, some will shave their heads to start one and some won’t shave while they are winning. To prepare for games, some players will listen to aggressive, high-intensity music like some rock or rap while others will choose music that makes them mellow. During games some players will cross themselves, mutter to themselves, bounce the ball a certain number of times or approach the plate a certain way.

While sports are especially notorious for the use of rituals to put the athletes “in the zone” and to promote concentration and performance, highly effective people in other professions such as actors, public speakers, and sales people have also tapped into the power of routine and ritual. I’ve spoken with sales people who use methods to hype themselves up and with surgeons who use yoga and soothing music to calm themselves down. Writers will use tricks to bring focus and artists to encourage creativity.

So What Do the Experts Say?

So what do the professional psychologists, men and women of science who have devoted years of study to the subject, think of the use of ritual to enhance performance? Surely they frown upon it, or at least turn a blind eye. I remember an episode of Frazier when Miles Crane took on a basketball player who was in a slump as a client. The upshot is that Miles encouraged the use of positive thinking and visualization while the player fell back upon good old superstition. Either way, the slump was rectified and both parties were happy. Real sports psychologists, who get paid big bucks to advise clients, often actually encourage the use of routines and consistency in their clients, and there are even clinical studies that lend evidence that it actually is effective in enhancing performance.

What’s Harry Potter Got to Do With This?

Some Harry Potter fans will remember in Harry Potter and the Half-Blood Prince when the potions master, Horace Slughorn, gives Harry a flask of the elixir Felix Felicis, also known as liquid luck. Slughorn claimed to have used it twice, each time resulting in a “perfect day.” Under the influence of Felix the feels confident, self-assured, ready for anything that may come. So suggestive is its power that Harry pretends to give some to his best mate Ron before a Quidditch match; with the result that Ron, who is duped into believing that he has taken the medicine, performs brilliantly because that is what he believes he is destined to do.

The Recipe for Felix Felicis

Alright, Old Slughorn didn’t really give me the recipe (I was a crap potions student) but between my son, Landon Donovan, and Harry Potter I think the path has been blazed and the answer is evident. Feeling good about yourself (having the “perfect day”) comes about from kicking ass and getting things done, while kicking ass and getting things done comes about as a result of consistent and relentless effort. Indeed, I’ll bet Landon Donovan wasn’t always an automatic goal at the penalty kick and my son certainly didn’t fall asleep the first time we tried the old bath + bottle + book + crib trick. However, through countless repetition, and that old Jedi mind trick of using ritual as a psychological trigger, they have developed the confidence to do so. The ritual triggers the action, and the action becomes automatic.  Now is your chance to tap into the power!

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Don't Get Burned by a Boring Business Idea!

When it comes to starting a new business too many hopeful entrepreneurs display a shocking lack of creativity, thinking only of expensive and time-intensive business, like bars, restaurants, and boutique stores, and therefore absolutely miss the best businesses for new entrepreneurs.  If your just starting out and want to make some money as you learn the ropes as an entrepreneur, firmly say “no thanks” to these boring businesses with their high start-up costs and even higher risk of failure and instead sell something much sexier and potentially exponentially more profitable, your own ingenuity and hustle.  To learn more and for some great ideas on starting up your own home business, see my guest post at Entrepreneur and Small Business Journal.

Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!

Tyler Wells, C.P.A.

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I absolutely love the material put out by the Kauffman Foundation, which exists to help instill entrepreneurialism in America and around the world.  Now they are bringing entrepreneurs together to commit ourselves to the countries future because, in the words of the Kauffman Foundation’s executive, Carl Schramm, “entrepreneurs continue to be the key to our country’s economic recovery because they are the primary source of new job creation. Introducing the Pledge only enhances the Entrepreneurs’ Movement, which is aimed at giving entrepreneurs a platform to share their stories and amplify their voice.”  So check out the pledge below, and then go over to the Kauffman Foundation to sign the pledge.

The Entrepreneur’s Pledge:

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I don’t know about you but every once in a while I need a real kick in the ass; something that shocks me out of complacency and moves me to reach for something more and to leave my comfort zone in order to venture out into the unknown. Well, this week the William Kamkwamba story provided just that shock to the system.

William grew up in rural Malawi, Africa, and had to leave school to help provide for his family of 20. In William’s village there was no electricity but lots of wind, and so, sick of sitting in the dark, William decided to make a windmill. His only book as a guide just had photos and the basics of what a windmill was and was definitely not a guide on how to make them. Not the quitting type, William says “Yeah, I figured it out on my own.”

But don’t just listen to me wax on about it, invest 6 minutes of your time to take a look at William’s story.

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Ty's Offshore Telecommute

No Graphics or Photos

Look, with amazing and breathtaking photos available for free on flicker.com (don’t forget to give credit to the photographer) and inexpensive photos and graphics at iStockphoto.com there is absolutely no reason not to include some images that can bring some life into your book.  I may turn an exquisite phrase, but the perfect photo can frame and enhance my prose to make it truly a masterpiece.  Or at least readable.

No Table of Contents

Nothing screams amateur like the lack of a detailed table of contents with hyperlinked indexes.  The first page I read, or at least review, in any book is the index.  It helps me organize my reading and serves as a reference when I’m done.  God knows I could use a little more organization in my life.

No Section About the Author

It's OK, He Takes After His Mother

No Personality in Writing

I once had an accounting professor who literally wrote the book on corporate income tax.  As you can imagine, the book was your typical, dry college textbook; except he still managed to put some personality in it.  In the examples, instead of saying Mr. Jones, Chief Financial Officer of ABC Corp he would use something like Guido McGoodfella, CFO of Concrete Shoes , Inc.  Also, the guy had kids that played soccer and was a bit of a soccer nut, this was during the 2002 World Cup, and managed to bring in soccer references in his material.  Now when I write I think of that guy and think that if he can put personality into an accounting textbook then really none of us has an excuse not to season our material with our own personalities.

No Updates if Material is Technical or Timely in Nature

The world changes and, unless your eBook is on using the ancient Greek method of fermentation to make wine in your basement, your eBook needs to change too.  Open any book cover at Borders and you’ll see multiple published dates, especially if the book is informative or at least somewhat technical in nature.  The subsequent dates are often revisions in which the book was revised to keep up with changes in the material.  Your eBook, if you continue to sell it, must be kept up to date as well and the reader should be informed of any revisions.

No Follow Through or Use of Social Media

Once you’ve drawn the reader in and dazzled them with your wit and personality then don’t just let them walk quietly away into the darkness but rather give your new friend (the reader) the chance to maintain and even enforce the connection that you have established.  Provide links to your blog or Facebook fan page, let them follow you on Twitter, and lead them to other products you have been involved in.  This isn’t just good business, this is a service to your client.  After all, they’ve just been educated and entertained and are starving for more.  So don’t leave them hanging, throw them a bone.

How to do it Write Right

Besides not doing any of the above, you should look to the experts.  Pat at the Smart Passive Income blog has a brilliant eBook available that is a guide to writing and promoting better  eBooks!  Better still, all it costs you is your name and email address.  I have used it for my own eBook and I absolutely love it.  Note, I get absolutely nothing from Pat, not even a thanks, for recommending this to you.  Besides Pat’s book there are a number of books and blogs out there that can help.  In addition, if you are going to market through another website then see if anyone will edit your book.  Having a pair of experienced eyes read and edit your book adds tremendous value.

Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!

Tyler

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Put the World at Your Fingertips

The World At Your Fingertips

I don’t know if it was calling home from a McDonald’s in Guatemala for free on my laptop or visiting a Spanish School that had teachers in Guatemala giving lessons to students in Japan that provided the epiphany, but I realized that I had been oblivious to the most incredible revolution of the 21rst century to date, the end of the geographical tyranny of opportunity. If a potential business partner, vendor, or customer in Manila or Tel Aviv is just as easy to do business with as someone two blocks over, why wouldn’t you at least consider their services? Voice Over IP (VoIP), and specifically the largest provider of VoIP, Skype, are going to impact services in more profoundly than containerization shook up manufacturing.

What Skype Can Do For You

If you haven’t used Skype yet then it’s time to dip the toe in the water. Used as a conventional telephone to make a phone call to another phone, Skype can undercut the prices of your regular carrier and save money on long distance calls. However, when Skype is used to contact other Skype users is where it really shines. Skype to Skype calls are free and, since you can download Skype for free, you can really talk to anyone, anywhere for free. Not only that, but Skype allows you to make video calls, record video messages to forward, and even make conference calls. Now you can even use Skype from your cell phone in the U.S. with most major providers.

Any business that deals with communication and information needs to think about the impact of Skype and of how it opens up the entire world to them. Think about our friends the Spanish teachers for a minute. The use of Skype both opens up new clients to them and can help them retain old clients. So you go to school in Antigua, Guatemala and really feel that you’ve made humongous strides in improving your Spanish and you would like to continue your lessons, but you’ve got to go home tomorrow. No problem, on your last day your instructor asks you to fill out an evaluation and suggests that you continue your lessons on a weekly basis through a Skype video call! What a fabulous way to add value to both student and instructor. Alternatively, there will always be a segment of the population that just can’t get away for a month, or can’t stand the thought of being an hour’s drive away from a sushi bar, or maybe wants to test out the teacher before actually committing to studying in a foreign country, but would still like to learn. Either way, the school has the chance to better serve its customers and to make more money.

Learn Spanish in Antigua, but without the view

Skype and the Virtual Office

As part of the aftermath of Tim Ferriss’s book, The 4-Hour Workweek, the concept of a cubicle-less virtual office, with team members collaborating from all over the world, is sweeping through the business world like a rampaging tsunami. Of course the internet and email have been the sparks that have ignited this revolution, but Skype is like a supertanker of high grade fuel that has just drifted into the blaze, threatening to take it to the stratosphere.

What It Is Used For

If you are a knowledge worker you spend 90% of your working life on your computer and, in those rare situations in which you are away from it, you carry your Blackberry or iPhone with you everywhere, maybe even your laptop. Using your computer, and by extension your cell phone, as your own mini-call center just makes sense. Everyone from your office and your most important customers are already on Skype and familiar with it anyway, it really becomes a matter of convenience. A fantastic article in Small Business Computing summed it up this way: “RNC is probably typical of businesses using Skype in that its partners and employees are all heavily computer-centric. If you ask Lane what it is he likes about Skype, besides the cost savings, he says, ‘It’s just the convenience of having it on my computer. It’s nice especially when you’re in an airport—you can plug the headset in and start taking calls.’”

Skype can also become part of your virtual phone system. Steve at MyWifeQuitHerJob.com has an excellent article on how a virtual phone system can make your small business look and function like one of the big boys. Multiple phone lines for different departments, check, call forwarding to your cell phone, check, voice transcription, check. Why should only the guys with the big and fancy offices get to have all the fun?

Using Skype as a cheap and easy way to keep your team of workers in touch is one thing, but some businesses take it to another level. Shahab Kaviani of HyperOffice, winner of an award in 2009 for innovation in using Skype, says “we use Skype to follow up on international leads. International customers made up less than 5 percent of revenue in 2007. Looking at 2009, I expect that number to be closer to 20 percent, using Skype for inexpensive international calls.”
He continues, “and, in our email marketing, we embed a SkypeMe icon. Our prospects receive an email campaign and within minutes we have people who we never spoke to before clicking to Skype chat or call with the Internet sales department.”

In another Skype innovation winner, RareJob, uses Skype in a way similar to our old friends the Spanish teachers. One of RareJob’s services is teaching English in Japan using teachers based in the Philippines. Besides saving money by not having to rent expensive classroom space like their competitors, RareJob also has the advantage of being able to hire labor in a lower cost environment, the Philippines, and being able to push some of the savings on to their customers. But that is really not the best part; the best is that it is simply more convenient for both parties. The customer doesn’t have to schlep down to some distant learning center and the employee can work from anyplace with an Internet connection; saving both parties time and bus fare and helping the environment to boot.

How Can Skype Revolutionize Your Business?

This is the most fascinating part, brainstorming up all the different business models that suddenly become viable when you take the cost out of voice telecommunications. I have founded this business because I believe that the old way of doing accounting, of partnerships, of networking through local business and service organizations, and of rounds of golf followed by the nineteenth hole, will soon become a thing of the past as a new generation of technologically sophisticated entrepreneurs takes the place of the old guard. Now your online footprint and the integrity of your reputation are becoming more important than your golf game or social contacts. Even more importantly, geographical specializations with give way to knowledge-based specializations.  So, instead of being, for example, the small business accountant for Littletown, USA, you must niche your knowledge specialization further and become, say, the online startup accountant for the world!  The most shocking thing to me is, most accountants are as unaware of this as the Dodo was aware of the impact that new human settlers would have on its population!

Think about it this way, while accountants faithfully trot to classes every year that debate the minutiae of this or that new regulation or tax law, no one ever talks about how the way that we meet, serve, and do business with our customers is undergoing a dramatic revolution! Even now, I can speak with a client anywhere in the world using Skype, as I review their financial records online using Quick Books or just about any major accounting software, and share documents with them using Basecamp. I reach out and promote to them via my blog and through writing articles for business-oriented and participating in online forums. If they want to learn more about me then they can track me via LinkedIn or visit my Facebook page. The point is, the world is changing, don’t forget to change with it.

Do you know of anyone using Skype for their business? Do you have any brainstorms yourself? We would love to hear them!
Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!

Tyler

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E-Myth Revisited is one of those classic icons of the small business/entrepreneurialism genre, up there with the Richest Man in Babylon, the Four-Hour Work Week, and Rich Dad, Poor Dad. I had come across references to the book and it’s author, Michael Gerber, while  taking the Entrepreneurial Learning Initiative many times and I really respected what the man had to say and what he accomplished, but I never got around to reading the book. Finally, while doing research for a blog entry I came across the E-Myth web site and it is class. No more excuses! I picked up a copy of the book and began to read.

EMyth.com

What It is All About

The central point of the E-Myth Revisited is that most small businesses don’t work because most small business owners have really created themselves a job, not a business. A real business should have structure and planning and a system in place that is so flawless that it does not require the owner to work in the business as an employee, but rather on the business as an entrepreneur; doing the heavy work of thinking, planning, and refining the system.

In Gerber’s eyes, most business owners get the entrepreneurial bug and leave the business that they are in, in the profession that they have trained for (people Gerber calls “Technicians”), to start a competing business in the exact same field, because that is what they know how to do. The problem is what the Technicians don’t know how to do, which is actually run a business. But because they are uncomfortable or unfamiliar with that role, they put it off by burying themselves in other tasks. Gerber puts it much more eloquently as “most businesses are driven by Technicians who lose themselves in the minutiae and the work because that is what they know how to do.”

How Do I Make My Business Work?

Alright, now that we know what’s wrong what are we going to do about it? In Gerber’s eyes we all, and especially those of us whom already have a small business, have an Entrepreneur lurking within us. This Entrepreneur needs to be nurtured, developed, and brought into the running of our small businesses. Gerber says, “to the Entrepreneur, however, the customer is always an opportunity. Because the Entrepreneur knows that within the customer is a continuing parade of changing wants begging to be satisfied. All the Entrepreneur has to do is find out what those wants are and what they will be in the future. As a result, the world is a continuing surprise, a treasure hunt for the Entrepreneur.” This is about as beautiful of prose as you will find in a small business book.

Once this inner Entrepreneur is given his rightful place in the business, he immediately gets to work reorganizing the business so that it becomes a system and not a job. The system is modeled after the most successful business model for developing entrepreneurial success of all time, the turn-key business franchise and specifically that of McDonald’s. Gerber really drums in the necessity of consistency for success and lays down the following rules.

1. The model will provide consistent value to your customers, employees, suppliers, and lenders, beyond what they expect.
2. the model will be operated by people with the lowest possible level of skill.
3. The model will stand out as a place of impeccable order.
4. All work in the model will be documented in Operations Manuals.
5. The model will provide a uniformly predictable service to the customer.
6. The model will utilize a uniform color, dress, and facilities code.

According to Gerber people crave consistency, which is why the fast food restaurants do so well, they create a uniform experience wheresoever in the world you may be. It is not enough for service to be excellent, it must be excellent in the exact same way every time.

The Importance of Accounting and Other Key Points

In one of my favorite sections Gerber gives up a little love for the nerdiness that is my profession, accounting. Gerber stresses the need for the quantification of your efforts. In this he is not just talking about products sold or dollars made, he is talking about the quantification of the consistency of your business model. Gerber says, “because without the numbers you can’t possibly know where you are, let alone where you’re going. With the numbers, your business will take on a totally new meaning. It will come alive with possibility.” An appeal right to my heart.

“Find a perceived need and fill it,” is another great line from the book. The emphasis here is on perceived. If someone needs something (like great accounting and help in the quantification of their success) but doesn’t perceive that they need it then it is really of little use to the entrepreneur.

Some other great lines include:
“In fact, there isn’t a function or position withing the company that is free of asking marketing questions, if by marketing we mean, “What must our business be in the minds of our customers in order for them to choose us over everyone else?”

“The customer that you’ve got is one hell of a lot less expensive to sell to the the customer you don’t have yet.”

What This Book Can Do for You

Man, if you have a new business or are planning on starting a new business pick this up and read it now. I’ve laid out the bullet points here but Gerber really drives it home with some top-shelf, beautifully written prose. The book is actually an incredible relief for most of us, as you don’t have to have an MBA to run a small business and you don’t have to re-invent the wheel. You don’t even need tons of money or a revolutionary product. Just follow the trail blazed by Ray Kroc and make a quality system that allows your business to thrive an removes you as far a possible from being an employee of the business and allows you to focus on direction, organization, and innovation.

If you read as many business books as I do then some of this might seem to be very familiar. That’s because the book was written in 1995 and so many later writers have borrowed from it’s teachings. I read some passages and was reminded of Robert Kiyosaki or Tim Ferriss only, of course, it is they who were influenced by Gerber.

Bottom line, if you’re in the trenches starting up a new business and putting in the hard hours and incredible effort that it takes to get there then Gerber provides you with a road map and shows you the light at the end of the tunnel.

Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!

Tyler

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You’ve worked incredibly hard to build up your business and, when the time comes to move on, you want to get the absolute best price for it. However, the market for a small business is extremely illiquid, that is, it is very difficult to unite potential buyers with the business. You must be proactive and reach out to the potential buyers and have the information they will want in order to make their decision. Be prepared to work as hard to sell your business as you did to build it and go into the process with the same sense of adventure and enterprise.

Big Dollars For My Biz

Take the Initiative

The fact that you have a valuable business for sale, something millions dream about but never get around to doing, means that you are the type of person that takes charge and gets things done. So don’t stop now, merely hanging a “For Sale” sign on your door, or even hiring a broker, and then sitting back and waiting for things to happen isn’t going to cut it when it comes to selling your precious asset, you will have to go out there and make this happen. Start by thinking of who you’re potential buyer will be. A-list blogger and online entrepreneur Yaro Starak sold his first web business to some of his best customers, who loved his business so much that they didn’t want to risk it falling into less friendly hands. Think about your competitors, about business owners in the same industry who may wish to expand into your industry, and businesses in parallel industries that could find useful synergies with your own. For example, if you have a camping supply store then a synergy might be someone selling adventure travel and vacations; the two have a significant overlap in customers and could try to cross-sell their customers. Don’t forget to market to trade and professional organizations, if they’re appropriate to your business. I know that the AICPA (Bean Counters of America Association) has a special area on the web site for CPA practices for sale. In case you’re wondering, I’m going to build my own up to the eight figure neighborhood before I put it up for sale.

Importance of Financial Records and Other Information

When you sell a pound of alpaca wool or a barrel of North Sea Brent Crude the exchange is pretty easy; the buyer knows what she is getting and what the current price for it is. Your business, however, is not something that you can drop on your foot, but rather a process or a system that (hopefully) generates cash and profits for its owner. To show prospective buyers what the value of the business is you will need a narrative, which is a one page summary of what your business does to make money, and some supporting numbers, usually in the form of financial statements and tax returns. If you have traditional financial statements then that’s great but you also want to put together a summary of several years statements (if indeed you’ve been in business that long) in a tabular format so that any prospective buyer can easily see what the trend for your business is. Also, in many industries, such as with a website or online store, you will have important non-financial numbers to compile and include in your summary. For example, if your web site is an important element of your business then a number of metrics, such as unique visitors, become important to the businesses potential value to a buyer. Remember that many potential buyers will already be in your business and will by looking for synergies with their own businesses that may increase the value of what you have to offer, so don’t make them have to hunt for this information, tailor your approach to your potential buyer. SCORE has an excellent check list on what you’ll have to prepare before you sell.

Brokers, Accountants, and Lawyers

Your accountant absolutely must be informed of your intent to sell, the earlier in the process the better, and be kept up-to-date at all times. The timing and structuring of the sale can have enormous tax consequences. Remember, due to taxes a $50,000 sale isn’t really worth 50 grand to you; sometimes it’s worth much, much less. Your lawyer needs to be brought in once you have an interested buyer and before you begin to discuss terms. Your lawyer’s job is to structure the sale so as to protect you as much as possible from fraud, default, and negligence from your buyer and to limit your liability during any interim period.  The use of a broker will vary depending on the industry and the expected price of the sale.  Whether you use a broker or not, don’t expect to be able to just hand the job off to them and then forget about it.  From my experience and from what I have been told the majority of businesses get sold through good luck, good timing, or the owner’s hard work.

Online Marketplaces

In the new global age you can buy or sell almost anything online, including your small business and a number of sites have come up to help you connect to a buyer. The online option isn’t just for online businesses, according to the general manager of one of the largest online marketplaces, bizbuysell.com, restaurants were actually the single largest category of business that they sell. Other larger players are imergeadvisors.com and bizquest.com. The market is still relatively young and fragmented, so you might peruse all three to get an idea of their individual strengths and specializations. Also, it is great fun and enormously beneficial to see what the owners of similar businesses are asking and what information they are providing.

Ebay also has a section for selling businesses and websites and, as of today, it had 17 thousand businesses listed, although 12 thousand of those were web sites. My suspicion is that Ebay’s format would be inadequate to sell a more complex business, in which communication between the owners, the sellers, and their supporting professionals is essential, but it does make for some interesting comparisons. Plus it is really fun to look at some of the remarkable stuff that people are trying to sell.

Be Prepared to Negotiate

The old saw in business negotiations is “I’ll let you name your price if you let me name my terms.” What this means is that the structure of the sale is as important as the price of the sale. If you are only interested in cash up front then be very clear and firm on this to potential buyers. When one of my first and best clients, my Dad, passed away he had a number of valuable assets that my mother was not able to or interested in running. I was living in a foreign country at the time but managed to come back for a month and half to help settle things and helped my mother sell off some of these assets, mostly real estate related at a time when real estate was still very hot. It was fascinating and eye opening to listen to the pitches of some of the potential buyers and creativity of some of the terms that they offered. One of the most popular propositions was that one of the assets be put into a partnership owned by my mother and the buyer and then the “buyer” (Mom’s new partner) would contribute their labor and expertise to convert the asset into a more lucrative form (i.e. subdivide or build a building for lease, what Dad had already planned to do with it) and then would share the profits with Mom. The chances are that you are going to get offers that are a combination of cash and credit and in some cases may require your continued involvement. Don’t hesitate to bump up the price if the terms aren’t to your convenience and do not hesitate to walk (run) away from any deal that might put you into business with someone of questionable moral character.

Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!

Tyler

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Online forums are amazing sources of knowledge about almost anything you can think of.  I myself used forums recently to find real estate in Costa Rica, to set up some new software, and to research some gnarly tax issues.  But I never really thought of forums as a way to promote myself as a professional and businessman until hearing some of the big names in internet business talk about how they tapped into the power of online forums to lay the foundations for some breathtaking business success.

Where the Influencers Are

Why the Forum?

If you’re not familiar with Yaro Starak’s blog, Entrepreneur’s Journey, then it is definitely worth checking out.  For me, the best part of about the blog are the interviews with successful online entrepreneurs, usually in the form of podcasts.  They have titles like “How So-and-So made $X Doing Y” and are both inspirational and are really meaty in terms of delivering information relevant to most of us and our businesses right now.

How Pat Flynn Lost His Job Then Made $203,219.04 In His First Year Online is the story of, well, I guess the title says it all.  Pat’s  first business was a study guide for a professional certification and the story of how he almost stumbled into it and then was smart and aggressive enough to turn it into a source of income is powerful enough, but what really gripped me was how he earned the credibility and promoted his product in the early days through participating in online forums.  Pat says “I have a brand that people know about because I because I go to forums and I go to different blogs and I help people out and people know me as that guy that gave that great information…  One tactic is to go into forums and just help people… you don’t even need to mention your product just by having your signature at the bottom with the link “for more information go here.”  Pat has since branched out into many different businesses, which you can read all about in maybe the best online business blog on the web, SmartPassiveIncome.com.

James Schramko started out as an affiliate marker for a social networking software product.  After getting his infrastructure set up: web sites, blogs with links back to the sales page to drive traffic, a demo project and a bonus product, James “rolled up the sleeves, sweated it out and went into the forums and started posting lots of valuable posts with signature links back to myself… and I started building up brand equity.”  In other words, James utilized the forums to meet with influential people who were already very interested in the product.  By genuinely helping people out James developed a reputation for being an expert and, even more importantly, a helpful and good person.  People followed his signature link back to the blog and the blog back to his product.  He has since branched out into many online businesses and, per Yaro, is making seven figures per year and absolutely crushing it.  In addition, James blogs at InternetMarketingSpeed.

How Does It Work?

The effectiveness of forums lies in their ability to target the active, decision-making people within a community (Malcolm Gladwell’s “three agents of change”) and to promote through the establishment of an honest, mutually beneficial relationship.  The entrepreneur provides useful, honest information and in return gets access to and the chance to earn credibility with influential decision-makers.  In addition, the entrepreneur gets free publicity and some search engine optimization, as forums are freely searched by Google and other search engines.  Your forum comments remain in the public domain, as well as your online signature and, usually, a link to your own site.  Post Release has an excellent white paper , an excerpt of which is below, on who users of forums are and why the average forum user is a much more important viewer than your average eyeball on the internet.

Forum Users Are Influencers

Most forums will offer the benefits above, but in addition some offer you the chance to submit articles or write reviews or other informative materials.  Many will also offer a “coffee shop” or an area where members can go to discuss off-topic items, tell jokes and socialize.  This brings us to an additional benefit of forums, networking and becoming part of a community.  Many entrepreneurs have met future partners, investors, collaborators and friends through the power of online forums, so don’t forget to take advantage of this aspect of the forum as well.

How to Harness the Power of Online Forums

Any decent online forum will have strict rules against spamming and will move quickly to stamp out any overt advertising, especially if it adds nothing to the conversation of the forum.  This is absolutely to your advantage, because if you are trying to make a one-off, heavy-handed, used car salesman type sale then you are in the wrong place.  The average forum user is pretty sophisticated online and very wary of spams.  Instead, think of this as your opportunity to network, make alliances, and build up credibility in your personal brand.  As Pat says in his interview, “I got to be known as that guy who helps people” on the forum that he targeted.

Many forums will rate community members, usually by their activity and the quality of the information that they give, and will post this information prominently.  This is the forum’s method of rewarding its top participants and, should you become one of them, your way of getting some additional notoriety and credibility.  Again, the absolute key is providing quality, sincere feedback.  Avoid overt advertising at any cost.  It normally is acceptable, however, to answer a question or provide feedback and then provide a link back to your own site for more information.  Another online legend and genius, Robin Good, provides an exceptional guide to using online forums and the strategy, technique, and etiquette that you will need to follow to capture the magic of the forum for yourself.

But Will I Have to Do Any Work?

Yes!  The biggest knock on participation in forums is that they will consume your time and effort.  You will want to find a forum that you can participate in daily, almost the more the merrier, to establish your expertise and your reliability.  Really, forums are almost entry-level online marketing because of their huge time commitment.  However, you’ve got to start somewhere and don’t overlook the usefulness of the forum for your own information.  It’s a great way to keep track of what resources people are using, what concerns or problems they run into and what information they are looking for.

Please leave your questions or offer your solutions below. As the WebCPA and the author of WebBizFinance.com, my job is to help you grow your business and solve your business finance and accounting problems!

Tyler

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