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ENTREPRENEURS |
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Worth the Expense? Measuring the Impact of New Initiatives |
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An entrepreneur makes changes in the business not merely to improve satisfaction or add excitement, but also to increase profitability. Determining if these creative actions are adding to the bottom line begins with identifying which categories on the business income statement are impacted by initiatives.
Typically, a change entails some additional spending in the near term that's aimed at delivering benefits later. For instance, crafting a new sales strategy or marketing campaign will increase certain selling expenses. How can you tell if the expenses were worthwhile? Monitor the changes by comparing marketing costs after implementing the new strategy with the costs in these same categories under your old sales process (be sure to compare with the same time period last year). Later, examine revenue to see if you achieved the expected rise that should follow a successful program.
Other potential changes are new products, added services, a different menu, or a big sale. All of these enhancements are aimed at improving output, supplying an increasing number of customers, and improving sales. These goals are commonly preceded by higher expenses, such as acquiring product samples, adding a new employee, paying for new printing or promotional materials, buying extra advertising, and making changes to your website. To measure their impact, compare the increase in relevant expense to the increase in revenue. This ratio reveals how well your new actions have succeeded.
Some innovations are intended to increase profit without raising revenue. They simply aim to reduce expenses. For example, a new physical layout for your business may inspire easier workflow. If such innovations are worthwhile, your income statement will show an increasing profit margin due to lower costs. Success! |
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HOT BIZ TRENDS |
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Have You Tapped into Texting to Engage Customers? |
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Texting, also called SMS, is a simple yet effective way to engage customers and prospects.
Texting's brevity, instant delivery, and prominent position on a consumer's mobile phone make your message stand out, even if only for a few moments. And unlike with an email that may end up in a spam folder, people are generally motivated to read text messages. Adobe reports the open rate for text messages is up to 98 percent, versus about 20 percent for email.
Text messages not only reach customers, but they drive engagement with them. Many buyers consult their phones when making purchases, and their purchase behavior is often influenced by the product and pricing information, coupons, and other relevant information made available to them in the moment.
SMS allows you to communicate with customers on a personal level. You can send a reminder about an upcoming appointment or thank them after a visit.
Texting is also an effective way to publicize new products and/or services, promotions, event notifications, flash sales, and special offers.
Your text messaging strategy should complement your other marketing efforts. When you sign up for text messaging services, you will be assigned a dedicated 10-digit number (long code), and customers must give you permission or "opt in" by sending a keyword to your long code.
Integrate your efforts by publishing your long code on your website, in emails, on social media, and on promotional materials like vehicle signage and flyers. Use these opportunities to encourage customers to opt in to receive your texts.
Once they've opted in, make customers happy they did so. Offer convenient interactions and relevant content via text that add value to your services. |
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CUSTOMER SERVICE |
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Mastering the Accessibility of Social Media |
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Social media is a great way to connect with current consumers and reach potential new ones. But social media can be a double-edged sword, too, as customer complaints and poor reviews can gain traction and spread quickly online.
How can you successfully incorporate social media into your business operations? Here are some tips.
Respond quickly to both messages and reviews. If it's a negative review or a complaint, do what you can to address the matter ASAP. If it's a question, give a prompt response, even if just to say, "I'll get back to you soon with a specific answer."
Respond to feedback and reviews respectfully. No matter how rude or unfair a customer may be, remain courteous and professional. Don't argue with the person, as this will only generate more negative comments. Try to use the opportunity to understand the issue, fix the problem, and improve your reputation.
Start a Facebook group and build an online community around your
brand. Invite members to share opinions, ask questions, and communicate about your products and services.
Use chatbots. Increasingly, people reach out to businesses using Facebook Messenger, and you can respond using Messenger's chatbots. By setting up Q&A triggers, you can have the bot answer FAQs about location, hours, and service offerings. For more complex queries, a live operator can take over at any time. When you create scripts for your chatbots, make them as friendly and human-like as possible so the bot reflects positively on your business. Leverage this technology to save time and make service more convenient for you and your customers. |
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ACCOUNTING |
| Donations and Deductions: What You Need to Know |
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Taking a tax deduction for items donated to charities is a common practice for millions of individuals. But what about tax deductions for donating business property? This process is a bit more complex.
A personal income tax return is where most business owners deduct the charitable contributions of their companies. Only a regular C corporation deducts donations on the income tax return of the business. Sole proprietors, partners in partnerships, shareholders in S corporations, and everyone with a limited liability company (LLC) treat charitable contributions by the business as if they had been made personally.
How much?
The amount of tax deduction that an individual takes for donating personal property is typically the fair market value of the donated item. Fair market value is simply what an ordinary buyer would pay for the item and what an ordinary seller would agree to accept for selling the item. In other words, the tax deduction is whatever amount of money the charity receiving the donated item can get from selling it.
A general exception, however, is that the individual cannot deduct more than what was originally paid for the item. This amount is known as the basis of the property. For example, donation of business inventory results in a tax deduction for the cost rather than the fair market value of the items. Likewise, the tax deduction for donations of art, literature, or music is limited to the cost of creating it.
Conversely, an asset specifically held for appreciation in value may, in most cases, be treated as if it were sold and the proceeds donated. The deduction in these instances is the fair market value, not the basis. This is true, for example, of investments in qualified shares of stock.
What about accounting?
Thinking about the bookkeeping for a business, it's easy to see the complexity of deducting fair market value for a donated item. Unlike inventory, the basis for most items is $0, because the business already deducted the cost at the time of purchase. Therefore, the charitable deduction is limited to $0. Office supplies and most small equipment fit this description.
Long-lived fixed assets are generally not expensed when purchased. Their cost is depreciated over time. If the original cost has not yet been fully depreciated, these items have a basis above $0. Basis for these items is the part of original cost not yet depreciated.
The basis for fixed assets is found on the company's balance sheet, which is the financial statement showing assets balanced against liabilities and equity. When a charitable donation is recorded, the asset's basis is removed, the expense lowers profit, and equity decreases.
However, the bookkeeping technique is different if the deduction is not limited to the asset basis.
For example, what if the fair market value of the donated item is lower than its basis? In these instances, the business deducts the part of the basis that is not deducted as a charitable donation as a loss on asset disposal.
In rare cases, if the fair market value is more than basis, the business may choose to report a gain on disposal of the asset.
Do you need to record a charitable donation from your business? To ensure proper navigation of these bookkeeping measures, consult with your tax adviser for assistance with business asset donations. |
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Gold Gerstein Group
505 Pleasant Valley Avenue
Moorestown NJ 08057
856-727-0100 Office
856-727-0772 Fax |
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| info@g3cpa.com
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| How to Win Big in Today's Economy |
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| The altered economic landscape presents innovative and nimble businesses
with opportunities to thrive. |
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Find out how by requesting my free report
"How to Win Big in Today's Economy" by
replying to this email. |
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| Worth Reading |
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Transitioning from Solopreneur to a Team Leader
By John Rampton |
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Entrepreneur.com
Businesses may begin with an individual, but teams make them grow. Not all founders make good team leaders, though. This article summarizes what you need to know to move from working alone to leading a team. Understand the company's purpose and build your team around it. You no longer need to fill every role, so be intentional about who you hire and how you develop their skills.
Getting It Right: 10 NY Entrepreneurs Share Their Best Hiring Tips
By Forbes New York Business Council
Forbes.com
It matters who you hire, so it matters how you hire. Here, 10 different business owners give their advice about how to hire properly. Their insights range from what skills and qualities to look for in candidates and the type of questions to ask during an interview to how to help new employees after hiring. This article also broaches the subject of who should be involved in the hiring process.
Learn the Ins and Outs of Video Marketing with These Expert Tips
By Annie Pilon
Small Business Trends
If video marketing intimidates you, or you want to see how your current efforts compare to best practices, check out this post. It links to information about aspects of video marketing, including SEO use, ensuring audience retention, and upgrading content.
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LINKS YOU CAN USE
This Month-Prospecting |
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Prospect simply means "to search for." But what do you do with customers once you find them? Nurturing those leads is essential to turn prospects into sales and cultivate lifelong customers. Use the following links to sharpen your skills.
What prospecting techniques lead to well-nurtured customers? Try these:
9 Effective Sales Prospecting Techniques You Should Be Using
Cold calls are tough. Learn 25 ways to encourage a prospect to have that initial conversation with you:
25 Time-Tested Ways to Schedule a Call With a Business Prospect
Where should you invest your time prospecting? Here's how to qualify potential leads to invest time strategically:
A Dirt-Simple System for Qualifying Sales Prospects
What forms of prospecting have you tried? Are you tapping into the most effective email initiatives? Here's a helpful overview of automated emails:
How to Nurture Your Prospects Toward The Sale
A host of tools are available to help small business owners nurture prospects in today's market. Try this library of resources:
37 of the Best Sales Prospecting Tools for 2019
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