PBGW – Page 2 – Pritchard, Bieler, Gruver & Willison, P.C.
Business Consultants & Certified Public Accountants

Take a Shot at a SWOT Analysis

Many business owners have used strengths, weaknesses, opportunities and threats (SWOT) analyses to frame their strategic planning. If you’re looking to map out your company’s next big move, now might be a good time to take a shot at it yourself.

Think about your customers

A SWOT analysis starts by spotlighting internal strengths and weaknesses that affect the success and value of a business. Strengths are competitive advantages or core competencies that generate revenue, such as a strong sales force or exceptional quality.

Conversely, weaknesses are factors that limit a company’s performance. Generally, weaknesses are evaluated in comparison with competitors. Examples might include weak customer service or negative brand image.

A company’s strengths and weaknesses are often tied to customer requirements and expectations. A characteristic affects future cash flow — and therefore, success — if customers perceive it as either a strength or a weakness.

Envision the future

The next step in a SWOT analysis is to predict future opportunities and threats. Opportunities are favorable external conditions that could generate return if the company acts on them. Threats are external factors that could prevent the company from achieving its goals.

When differentiating strengths from opportunities (or weaknesses from threats), the question is whether the issue would exist without the company. If the answer is yes, the issue is external to the company and, therefore, an opportunity or a threat. Changes in demographics or government regulations are examples of opportunities or threats a business might encounter.

Pick your path

Generally, there are two directions you can go with the information gathered from a SWOT analysis:

  1. Capitalize on opportunities with strengths, or
  2. Convert weaknesses into strengths — or threats into opportunities.

Need help with the decision? Please contact our firm. We can assist you in conducting a SWOT analysis from start to finish.

Your Accounting Software Should be a Many-Splendored Thing

You’ve probably heard the song, “Love is a many-splendored thing.” Well, your company’s accounting software should be, too. That is, you’ve got to make sure your system does all of the big and little things necessary to efficiently and accurately track your financials.

It’s not only about revenue

Annual revenue doesn’t always dictate what software you should acquire. Some $50 million a year businesses will do just fine using a less expensive accounting software package, while some $5 million businesses will require a much higher end product. The key is to thoroughly review your accounting processes, tax-reporting requirements, transaction volumes, staff’s abilities and management reporting needs.

The future matters as much as the present

Another important factor: your company’s growth rate. If you’re growing 20% or more per year, you must have an accounting package that can grow with you. Otherwise, converting to a new accounting system every couple of years will be a painful and expensive process.

Your users matter the most

You’ll never get maximum value out of accounting software that your employees can’t fully use. Better systems provide on-screen tutorials that walk users through a sample company’s transactions and offer prompts for completing certain tasks. Extensive help should be available on-screen as well as via a 24-7 phone number. Some providers even provide support through instant messaging.

You’re not just tracking, you’re analyzing

The system should allow you to readily generate monthly and annual accounting reports. This means being able to easily record and access bank reconciliations, recurring transactions, and aging of accounts payable and scheduling of payments. A better package will customize reports that include instant unadjusted trial balances, income statements, balance sheets, cash flow statements, statements of retained earnings and more.

A second opinion is always helpful

So do you love your current accounting system? If you can’t say “yes” unequivocally, give us a call. We can review your existing functionalities and make recommendations regarding whether and how you should upgrade.

 

5 Ways to Cut Costs and Improve Cash Flow

When business owners start to feel the choking effect of a slow cash flow, they often blame their customers. “Why aren’t we getting paid on time?!” But it’s important to remember that cash flow is affected by a variety of elements. For example: Operating expenses and overhead can have a significant impact. Here are five often-missed ways to cut costs and improve cash flow:

1. Review your rent or mortgage. Can you negotiate a lower rent with your landlord or refinance your mortgage? Also look into whether you may not need as much office space if you’ve begun to allow many employees to telecommute.

2. Implement energy efficiency improvements. You’d be surprised by how much of a difference little changes can make to lower your utility bills. For example, draw the shades in the summer and adjust the thermostat a few degrees. Or look into whether it’s time to make an upfront investment in better windows or HVAC equipment.

3. Take a close look at travel and entertainment expenses. Can you pare these down by conducting more meetings via teleconferencing or using a Web-based application? Can you cut back on expensive meals and, if applicable, sports and concert tickets for clients? Clearly, you don’t want to diminish relationships with clients and vendors by cutting back too much. But there may be ways to save.

4. Slow down shipping expenses. Employees often send packages overnight when two- or three-day shipping would suffice. Establish or re-establish clear policies. In addition, you might be able to find some lower cost shipping arrangements by comparing providers.

5. Give us a call. We’d be happy to take a comprehensive look at your company’s expenses and assess how they’re affecting your cash flow. Most likely, we can make some strong money-saving recommendations.

 

Is It Time To Get Accountable With Your Employees’ Expenses?

Many companies start out, and get pretty far down the road, using the “per diem” approach when reimbursing employees for lodging, meals and incidental expenses. Doing so involves the use of either IRS tables or a simplified high-low method to reimburse workers up to specified limits.

The per diem approach is relatively simple and doesn’t involve too much record keeping. But it also puts businesses at risk if they exceed the per diem limits, exposing them to IRS penalties and employees to higher tax liability. For this reason, companies often reach a point where they create an “accountable plan” for handling employee expense reimbursements.

Reaping the tax advantages

An accountable plan is a formal arrangement to advance, reimburse or provide allowances for business expenses. The primary advantage is that your business can deduct expenses (subject to a 50% limit for meals and entertainment), and employees can usually exclude 100% of advances or reimbursements from their incomes. Workers whose jobs involve frequent travel may realize significant tax savings.

Qualifying for eligibility

To qualify as “accountable” under IRS rules, your plan must meet the following criteria:

  • It must pay expenses that would otherwise be deductible by the employee.
  • Payments must be for “ordinary and necessary” business expenses such as airfare and lodging charges.
  • Employees must substantiate these expenses — including amounts, times and places — ideally at least monthly.
  • Employees must return any advances or allowances they can’t substantiate within a reasonable time, typically 120 days.

If you fail to meet these conditions, the IRS will treat your plan as nonaccountable, transforming all reimbursements into wages taxable to the employee, subject to income and employment taxes — though potentially deductible by the employee.

Getting some help

Accountable plans take time to establish and require meticulous record keeping. Let us help. We’d be happy to assist you in setting up your accountable plan and regularly reviewing its compliance with IRS rules.

The Tragic Tale of a Troubled Business Succession

It’s a tragic tale that plays out in many businesses across the country. The owner of the company believes he’s finally ready to trigger his succession plan and retire. So he names his daughter as his successor, enjoys his retirement party and departs for his vacation home.

Reluctant retiree

For six months of the year, the now-former business owner lives at that vacation home while his daughter toils away at establishing control of the company. Although her father has given the daughter stock in the company, he still retains the majority vote.

And whether on vacation or at his primary residence, the former owner insists on calling into work almost every day and being kept informed via email of everything going on. When tough decisions are required, top managers still look to him for final confirmation. Every so often, he even pays a visit to the office with much fanfare, undermining the authority he has seemingly given his daughter to oversee the business.

After a year or two of this, the true consequences start to become clear. The former owner’s relationship with his daughter has deteriorated severely — mainly because of business disagreements. And, without a clear strategic direction, the company itself is floundering and falling behind the competition.

Sad lesson

The lesson of this sad story is fairly clear: Once your retirement date arrives, stick to it. Doing so means getting out — all the way out, at least in terms of decision-making.

Remember, you can always stay available as a consultant. Just make sure not to undermine your successor’s authority. Making a clean break is usually the most effective way to ensure a succession plan succeeds.

Strong moves

If you’re nearing retirement, let us help you go over the details of your succession plan. We can help with both the financial aspects and the strategic moves that will keep your company strong.

 

Fortify Your Benefits Plan with Fiduciary Liability Insurance

Among the most contested areas of employee benefits litigation is an employer’s fiduciary duty to its plan participants and beneficiaries. The cost of defending yourself can be steep — regardless of fault. That’s where fiduciary liability insurance fits in.

Who’s a fiduciary?

ERISA defines a plan fiduciary as an individual who:

  • Has discretionary authority or control with respect to plan management or disposition of plan assets,
  • Renders investment advice for a fee, or
  • Has discretionary authority or responsibility for the plan’s administration.

Although it’s possible to diminish exposure by delegating plan decisions to third parties, it’s generally impossible to eliminate liability risk entirely.

What is it not?

So what is fiduciary liability insurance? Let’s first look at what it isn’t.

First, it isn’t an ERISA fidelity bond. These bonds protect the plan from dishonesty on a fiduciary’s part, but don’t protect fiduciaries from claims by others.

It also isn’t employee benefit liability (EBL) insurance. While both policies cover administrative errors and omissions, EBL coverage doesn’t cover clear ERISA violations.

Finally, it isn’t a directors and officers (D&O) policy. Typically, D&O policies don’t cover incidents that happen when a person is acting in a fiduciary capacity.

What’s covered?

Fiduciary insurance can cover both the fiduciary and the company sponsoring the plan. Policy provisions may include:

  • Faulty advice from counsel,
  • Improper plan document amendments and disclosures to plan participants,
  • Incorrect investment advice,
  • Imprudent choice of outside service provider, and
  • Negligent errors and omissions.

Finding the right policy

When shopping for fiduciary liability coverage, consider the carrier’s experience, financial strength and reputation for paying claims. But, before you get started, please give us a call. We can help you compare costs and fit the purchase into your budget.

Competitive Intelligence is a Strategic Imperative

All too often, the competitive efforts of many companies are internally focused. Many businesses seek to develop better products and services without knowing enough about their competition.

To truly hone your competitive edge, you need to constantly ask one simple question: “What are they up to now?” And the best way to get answers is through the practice of competitive intelligence.

Legal and ethical data gathering

In the information age, companies have a strategic imperative to analyze every bit of data they can on what the competition is doing at all times. Of course, “at all times” doesn’t mean “at any cost.” Competitive intelligence is the process of legally and ethically gathering data on competitors. And your purpose isn’t to undercut what they’re doing but to anticipate trends, compare best practices and target opportunities.

What you need to track

Specifically, you need to stay apprised of your competitors’ product and service lines, financial standing, and market position. You should also track whether the competition is expanding or contracting. Mergers, acquisitions or strategic alliances could mean you need to play defense, while closures or bankruptcy may mean it’s time to go on the offensive.

Crafting a policy

Before you dive into competitive intelligence, it’s important to establish a formal policy governing your efforts. Please contact our firm for assistance. We can help you craft a policy, in consultation with your attorney, that enables you to gather the right information while minimizing the inherent risks involved.

 

4 Keys to Telecommuting Success

If your company is getting aboard the telecommuting trend, consider the following four keys to success:

1. Set a trial period. Begin with a two- to six-month period during which the employee and his or her manager can get a feel for just how (and whether) this arrangement will work. If either side is unhappy at the end of the trial period, make adjustments or scrap the idea entirely.

2. Manage for results. Generally, telecommuters should be managed based on results — not on close scrutiny of everyday work methods. That said, instruct managers to schedule regular telephone calls and request status reports (as necessary) to stay in the loop.

3. Don’t forget about them. Just because they work remotely doesn’t mean they’re no longer part of the team. Include telecommuters in companywide e-mail announcements and invite them to meetings or events held at the office — even if you think they won’t be able to attend.

4. Provide quality technology. Telecommuters should have a reliable computer, Internet connection, telephone (with voice mail), and all the necessary software and network connections. This may seem obvious, but many people launch into telecommuting without considering the nuts and bolts of doing so.

Telecommuting arrangements can also save your company money, such as on office space. Contact us for help crunching the numbers.

 

Craft Your Mission Statement for Maximum Impact

The right mission statement can be a strong motivational force for employees — and a powerful marketing and branding tool. But, whether you’re writing one for the first time or creating a new statement as part of a rebranding effort, you’ve got to craft it carefully for maximum impact. Here are a few guidelines to follow:

Don’t limit yourself. Granted, you can’t be all things to all people. But the world in which businesses operate and compete is constantly changing. Your mission statement should be broad enough to let your company adapt when necessary.

Aspire to inspire. Make your statement visionary, expressing your business’s purpose, aspirations, philosophy and values. It needs to resonate with the people working for and with you. But, at the same time, it must be realistic, practical and workable so as to inspire confidence.

Keep it concise and understandable. A mission statement shouldn’t confuse people seeing it or hearing it. Avoid buzzwords and technical jargon. The true test? Whether your employees can remember and repeat it.

One might say that a mission statement is where a company’s strategic planning begins. For help crafting a statement that will inspire your staff and impress your customers, please contact us.

 

5 Questions to Ask Before Buying New Technology

It’s often hard to tell whether your company really needs the latest tech tool or you’re just trying to keep up with the Joneses. Before you invest in anything, ask five questions:

1. Where are we lagging? Survey your managers and employees about what they need to do their jobs better. Also question industry colleagues about their favorite upgrades.

2. What must the solution do for us? Once you have a general idea of your needs, get specific. List the “must-have” features of a necessary upgrade.

3. What’s the total cost of ownership? Consider all associated expenses, not just the purchase price. Installation, maintenance (including updates and patches), support and repair expenses will all inflate the cost of ownership.

4. Can we actually use this technology? Typically, new technology means employee training. Can someone on staff lead this process or will you need to budget for an outside consultant?

5. Will this purchase boost our bottom line? Ultimately, weigh the technology’s total costs against the potential savings or new revenues it could generate. Don’t forget to look into tax incentives for technology investments.

There’s nothing worse than a technology “solution” that doesn’t solve anything. Let us help you assess your needs, set a reasonable budget and execute the purchase. We’re a phone call or email away.