Recommended
More Related Content
Viewers also liked
Similar to M&G SBDC SBA-LI 2016.07.27-B
Similar to M&G SBDC SBA-LI 2016.07.27-B (20)
M&G SBDC SBA-LI 2016.07.27-B
- 1. Progress through process. SBA Lender Matchmaking SummitJuly 27, 2016
- 2. Who am I ? - A former corporate person who went rogue - Began M&G as a hopeful (and naïve!) business owner - Here to help you avoid the minefield of being a new business owner © Martin & Green LLC 2016 All Rights Reserved 2
- 3. Who are you ? By show of hands, who here is: - Already a business owner? - In the infancy of starting your business? © Martin & Green LLC 2016 All Rights Reserved 3
- 4. Who are you *really* ? Please give a 30-second commercial: - Your name - Your business name - How long you’ve been at it - What you hope to learn today © Martin & Green LLC 2016 All Rights Reserved 4
- 5. What will we cover today? - Key relationships - Why you need accounting (and an accountant!) - Key documents - You’ve got a great idea, now grow it ! © Martin & Green LLC 2016 All Rights Reserved 5
- 6. Key relationships - Lawyer - Banker - Accountant - CPA © Martin & Green LLC 2016 All Rights Reserved - Commercial Insurance - Payroll - Coach (SBDC!) - Marketing partner 6
- 7. Key relationships – part 1 - Lawyer - Are you a partnership or franchise? - We’ll talk about key documents in a bit. - Banker - This guy (or gal) can be the key to big things! © Martin & Green LLC 2016 All Rights Reserved 7
- 8. Key relationships – part 2 - Accountant - CPA / tax planner – it’s more than forms … © Martin & Green LLC 2016 All Rights Reserved 8
- 9. Key relationships – part 3 - Commercial Insurance - Payroll - Business Coach - Marketing partner © Martin & Green LLC 2016 All Rights Reserved 9
- 10. Owning your software – why you need to You MUST own your accounting program! - They’re YOUR numbers - Don’t rely on an outsider! - It’s more affordable than you think © Martin & Green LLC 2016 All Rights Reserved 10
- 11. Bookkeeper / Accountant / CPA - Are these guys really all the same? Nope! - Bookkeeper – day to day - Accountant – systems, strategy and reporting - CPA – specialization and more specialization © Martin & Green LLC 2016 All Rights Reserved 11
- 12. More about QuickBooks Things you need to know: - QuickBooks is accounting for accountants so… - Hire a legitimate accountant © Martin & Green LLC 2016 All Rights Reserved 12
- 13. And who to hire Who to hire, and who not to: - DO hire someone who supports business owners day in and day out - DO NOT hire someone who wants to trade with you © Martin & Green LLC 2016 All Rights Reserved 13
- 14. Key documents in the business If you’re not a sole proprietor, you will need: - Partnership agreement - Buy / sell agreement - Key Man policy © Martin & Green LLC 2016 All Rights Reserved 14
- 15. How to grow it - The Chamber - BNI - A marketing pro © Martin & Green LLC 2016 All Rights Reserved 15
- 16. Q & A 16 Who has questions?
- 17. Progress through process. Thank You. (713) 301-5594 www.MartinGreenLLC.com info@MartinGreenLLC.com
Editor's Notes
- Good morning everyone and welcome to the lender matchmaking summit. My name is Mikelyn Martin and I am the founder and owner of Martin & Green and we are a resource who helps to make your accounting simple. We encourage our clients to let us do what WE do best so you can do what YOU do best. Also, it’s worth nothing that I’m the only person in my company who is NOT an accountant. I’m the owner so I get to make those kinds of decisions. Okay, I’m going to circulate the sign-in sheet to please just give us a record of your visit – I know some of you will have appointments during the session so if it’s your time to scoot, just head out – I’ll understand.
- Like most of you, I was once in “corporate” and while my business partner and I had a plan to go out on our own, I made the layoff list the day before I was leaving the country for New Year’s Eve, three months ahead of our intended start date. Did that accelerated start change anything or put us at a disadvantage? Not really … I probably would have been just as dumb three months from then. So Andrea – my CPA partner – and I got started as soon as I got home from Iceland. We hired a hotshot lawyer to form our company, we hired some hotshot marketing guys to develop our logo, website and “brand” and we opened up shop. And then … absolutely nothing happened. In this session I’m going to tell you what we learned as new business owners and what I’ve learned in working with business owners the last three years. So now you know a little about me, I’d like to learn a little about each of you …
- So if you’re already a business owner, please raise your hand. And everyone else, are you just starting out? Still considering making the leap? …
- This is a bit of a networking event so let’s at least do some introductions. Tell me – and everyone here – your name, the name of your business, how long you’ve been operating and tell me one little nugget you hope to leave with today. (Once everyone has spoken) Thanks everybody ! We have a lot of diversity here. Let’s get into the program.
- I was originally asked to come speak about accounting, and I believe accounting IS important in the business – vital, even. But I work with business owners every day and accounting is just one piece of the puzzle, although it’s a really important piece. A few years ago I was a “baby business owner” and didn’t know anything. We’ve learned SO much since those early days. We made a few mis-steps right at the start - thankfully none that were deal breakers – but it’s become my mission to help business owners with education and help them navigate the minefield that can be business ownership. Today we’ll talk about why your business needs accounting – and a qualified accountant. We’ll talk about some key documents in the business and why they’re important. I’ll share with you some key relationships that can help make your life as a business owner SO much easier. And we’ll talk about a few growth opportunities that might be a great fit for some of you. And if there are any questions along the way, don’t hesitate to raise your hand and let me know.
- So whether you’re just starting out or you’re already well into operations, there are some key people you should have in your business, and it’s never too late to add any of these folks. A lawyer. A banker. An accountant. A CPA. A commercial insurance agent. A payroll partner. A coach – a service like the SBDC, for instance. And a marketing partner.
- By a show of hands, who already has a lawyer AND a banker who specifically support your businesses? One thing you’ll hear me preach throughout this discussion is a real preference for specialization. Being a generalist is okay, but when it gets down to the nitty gritty, you’re going to want someone with particular experience supporting small business owners. Especially if you’re a franchise, you need a franchise attorney. Practically everything in your franchise agreement is negotiable and most folks don’t know that. There are opportunities within that agreement to turn some things in your favor and a franchise attorney can help you capitalize on those and most importantly, they’re going to look out for you in ways you can’t even imagine. And if you’re a partner in the business, we’ll talk about key documents later in the program. And your banker … I’m sure there are services that the big banks offer for startups but for the most part, if you’re not a $20MM a year depositor, generally they don’t really have services for you. Will they take your money? Yes. Will they be there when you need someone to step in your behalf for a credit decision? Probably not. I know this is a lender / borrower summit so I’ll withhold my opinions for now about who’s a great bank for small business but know that there are institutions out there filling the niche between the true community banks and the “big guys.” I’m happy to make introductions once the summit is over if you’re interested.
- Okay, who’s already working with a CPA? (WAIT) How about an Accountant? Both? (laugh) So in talking about your lawyer I said you‘ll hear me preach about specialization and the rubber really meets the road here. Some folks like everything under one roof. Personally, I feel your accounting and tax should be separate, for a couple of reasons. One is that my company does accounting but we do tax ! (little laugh). But the truth is, tax is far too specialized for us to take it on and be able to provide the same depth of service and guidance as a firm that does nothing but tax. Second, I like keeping the accounting and tax separate as a check and balance … there are a few things that are dealt with one way from an accounting perspective but addressed differently for taxes – things like depreciation. I have no hesitation about having your tax planner review the work we’ve done for you all year and that should give you confidence, too. Finally, a qualified tax professional is more than just someone who punches in some numbers and makes your tax return come out … what you want is someone who doesn’t just prepare your taxes. You want someone who prepares YOU. They will help you understand what the right tax election is for the business – and by the way, this dictates how you get paid so it’s kind of important - and they’ll explain that your election may change next year as your business changes. They will also help you navigate the delicate balancing act of income and expenses. You don’t want to be like our client who got a K-1 for a million and a half dollars last year and didn’t have enough “income” to finance a piece of property … his tax guy threw in everything and the kitchen sink as expenses to reduce his taxable income … the problem is, he reduced it to the point that it looked like our client didn’t have any money! The right tax partner will help you with strategies that leave you showing some income but help you properly limit your liability so you don’t overpay.
- Okay, we’ll wrap up the key relationships … Commercial insurance is often overlooked but it can be critically important in the business and the right partner will assure that you are properly covered, and help you understand what that means. I call my commercial insurance partner “the Goldilocks of insurance” – she’s been at it half of forever and she’s not afraid to review your policy and tell you that you are properly covered. But usually what she finds is that the business isn’t properly covered – they’re either way over or way under insured. She reviewed a friend of ours’ policy – these are AC guys – and she found their policy had them classified as “thermostat installers” – the “so what” of that is, if they’d had a claim that wasn’t related to thermostat installation, it probably would have been denied because they weren’t properly rated. Not to mention that they were over paying by about twenty grand a year. So they’re paying this exorbitant rate AND they’re not even properly covered! The right agent won’t let this happen to you. Payroll – I’ll keep this brief. There area lot of things you can afford to wing it on as a new business owner. Payroll is not one of those things. The state takes payroll tax VERY seriously so this is absolutely one you should outsource. Our payroll partner is ADP. They’re excellent, they’re economical and they assume all the liability for proper and timely filing and payment of your payroll taxes. You can’t put a price on that so whatever it costs, it’s worth it. A business coach. Before I found the Small Business Development Center Advisory Council, of which I’m a member, I found my business coach and that relationship has been transformational in our business. The services of the SBDC are offered to business owners, both new and established, at no charge. If you need an advisor in your business, absolutely look into the SBDC. They can offer you excellent counsel and it’s in your budget. (smile) Finally, a marketing partner. Look, you need to be out in the world and the right marketing partner can advise you where you should be, why and how often. Do you need a website? (by the way, YES YOU DO if you want to be taken seriously). Do you need a logo and a brand? Do you need to be on Twitter? Instagram? Facebook? Linked In? Do you need a custom app for your business? How’s your SEO? Do you need printables? Your marketing partner is an excellent outsourced resource for all of these things.
- Should you own your accounting software, or is it okay to just let your bookkeeper keep it and do your books on Their QuickBooks? Who thinks it’s okay that your bookkeeper owns your QuickBooks? Who thinks YOU should own it? First and foremost, you MUST own your accounting software. Do not – let me make this abundantly clear – DO NOT let your accounting resource own it. I’ve met a shocking number of business owners who, when asked, say, “Oh, my bookkeeper keeps it.” In acquiring a client from another provider, the client told me his bookkeeper used QuickBooks so maybe I could get the data from him (because we wanted him to have a full calendar year of activity in his program). I called the provider and he says, “Oh, *I* use QuickBooks but the client doesn’t use QuickBooks …” Um, if you’re doing the client’s books, how is HE not using QuickBooks?? Also, do you realize what you’re risking in allowing your accounting resource to own your accounting software and let you use it? If that person gets hit by a bus, what happens to your financial history? How do you get it back? CAN you get it? Or did you just lose the whole financial history of your business? This is why YOU need to own it and just permit access to anyone who needs it. So let’s talk for a minute about QuickBooks. Overall it’s a very good program and one of the best things about it is that the universe of people who can help you with it is BIG. And it’s surprisingly economical. QuickBooks online is a cloud-hosted version of QuickBooks that’s accessible to you via any device that has access to the internet. I could buy it for you, extend you my Pro Advisor discount and you can get the program for fifteen dollars a month for your first year. Any business can afford that. You can afford fifteen bucks a month, right?
- Finally, let’s demystify the bookkeeper / accountant / CPA conundrum. No, they’re not all the same and yes, you might even have all three. Who is the bookkeeper? This person may be part of your staff – or it could be an outsourced position – to help you keep up with things day to day or week to week. No special education or training is required to be a bookkeeper, although there are some certifications or licenses available like the CPB (the Certified Public Bookkeeper) or the Certified Bookkeeper designation from the American Institute of Professional Bookkeepers. I try never to talk badly about bookkeepers because we get a lot of work from people who’ve had a bad one … be careful in hiring this resource, in my experience if doesn’t often pan out. Now, the accountant has a higher level of responsibility and generally is degreed in Accounting. It’s definitely about education and experience but also it’s about the systems, strategic thinking and strategies in the accounting department. The Accountant will typically prepare adjusting entries on things like bank loans, depreciation, etc., and will prepare the company’s financial documents – the P&L and Balance Sheet and anything else desired by the ownership or management - once the month has been formally closed. Let’s talk for a minute about the importance of monthly close. Monthly close is the reconciliation process, meaning that all external accounts – banks, credit cards, payroll – are reconciled with QuickBooks. Why does this matter? You have a bank, and money comes in and money goes out. QuickBooks is essentially a bank, too. The reconciliation helps assure that everything that happened at the bank also happened in QuickBooks. And vice versa – you want to be assured that everything that happened in QuickBooks also happened at the bank. For instance, if you had ten thousand dollars of deposits in QuickBooks, would it trouble you if only eight thousand dollars was recorded at the bank? It should … you’d want to know where that two thousand dollars went … is somebody driving around with a check in their truck that they forgot to get to the bank? Or is someone indicating things are paid in QB but pocketing the money? The recon will bring to light those types of issues. This is also why it’s a great idea to outsource your monthly close. A client of ours had an employee doing their close each month (this is before we met them) and this person stole from them for months – like, over thirty grand - and went to great lengths to cover it up. You can’t get this kind of stuff past an outsider – we catch it all because we use the documents from the institution. I don’t rely on your office manager to get statements to me, I get them directly from the bank and the credit cards. Finally, the CPA has particular specialization. When I tell clients my partner is a CPA they say, “Oh great, she can do my taxes, too!” CPAs are like doctors – your doctor learns about the whole body and then he picks a specialization – the brain, the heart, the foot. If you’re having chest pains, can you consult with your neighbor the podiatrist? Sure … but for a really comprehensive evaluation, you should see your cardiologist. Your foot guy knows about the whole body but the heart guy really knows how to diagnose – and treat – your heart. It’s the same with CPAs – they broadly learn the whole accounting code and then they pick a specialization. In our case, my CPA partner Andrea’s specialization is business financials. She knows what bankers look for when they’re reviewing a business’ financial documents and you want someone like *that* closing your books each month.
- A little bit more on QuickBooks … So, I said that overall QuickBooks is a good program. And that’s true. It’s very reliable and it’s a real accounting program. That being said, the commercials make it look you can hire a monkey and the monkey can do your accounting. The truth is, I wouldn’t risk it. At its most basic, QuickBooks is an accounting program for accountants. *Regular* people – you know, schlubs like you and me – certainly can use it but it’s a lot easier for the likes of us if a legitimate accountant sets up the program before we start using it. Here’s why. There are some ins and outs with QuickBooks and having a qualified accountant set up the program for you helps assure that accounts are set up properly, your items list has income and expense pointing to the proper GL accounts, taxable items are set up as taxable, etc. Your accountant will get the program ready for handoff so that once you start using it, everything runs smoothly. We do a program called the QuickStart where we do the whole setup – we buy QB, link the external accounts, set up the items list and recon the most recent month of transactions – that program is about seven hundred dollars. I have clients who tell me they think it’s too much money and they’re going to take it on themselves. I try to caution them otherwise but you can’t win them all. Overwhelmingly, these guys come back in six or nine months with a complete mess and they pay me three to four times what my original price was to clean up the mess they’ve spent the last six months making because they don’t know what they’re doing. Hire a pro and get off to a good start – I promise you, it’s cheaper in the long run. I constantly tell clients that the shortcut is NEVER shorter. Remember that.
- And who should you hire for this? Hire a real accountant. Don’t be dazzled by the “Certified QuickBooks Pro Advisor” certification – anybody can get that. *I* even have it! All that certification means is they can pass a test about QuickBooks. It doesn’t mean they know a lick about accounting, and that’s the skill you really need. Anybody who’s a legit accountant can navigate QB with relative ease. So contract with an accountant and make sure it’s someone who supports business owners day and in and day out. Don’t go cheap and get somebody who can help you out “on the side.” And don’t trade your service with somebody who does QuickBooks – that’s a recipe for disaster. I’ll share with you the story of my plumber client who was lamenting to a client about her difficulties with QuickBooks. The client said she was an accountant and she could help the plumber, who eagerly accepted the offer and they agreed to trade services. First problem – the accountant told the plumber that she *HAD* to get off of QBO (the online program) and get on QB for Mac. Second problem – the accountant works in the accounting department of a big company, she does not support business owners every day. So the plumber makes the move to QB for Mac, because she HAS to according to her new friend, and the moment she has a problem with her new program, the accountant tells her that she’s “busy that week” and will “try to help her over the weekend.” Now, this plumber cannot use the program that runs her business and her new accounting friend can’t help her til the weekend. Is that the kind of relationship you’re looking for? Probably not. Third problem – the plumber did nine thousand dollars worth of work for this lady. I asked the plumber if she would have paid this lady – or anybody – nine thousand dollars to do what the accountant did for her. I’m sure you can imagine the answer. To sum up, this accountant lady made a terrible recommendation to the plumber – about QB for Mac – because she doesn’t support business owners every day and she has no idea what kind of difficulties the plumber will have trying to find an accountant who supports QB for Mac. Also, because the plumber didn’t “pay” her, she had no loyalty – the plumber wasn’t a client to her. This is the primary reason I tell clients NEVER to trade – if someone wants you to do work for them, and you want them to do work for you, y’all just invoice each other. Make everyone pay for the services, that way everybody truly appreciates the value of what they’re getting. Even if it’s the exact same amount. You invoice them, let them invoice you. The end.
- Okay, moving on to key documents. Your lawyer can help you with these but if you’re not a sole proprietor you will need a partnership agreement, a buy / sell agreement and potentially a Key Man policy. The partnership agreement will spell out: - Contributions – in other words, who gave what, including cash, property or services, and what the ownership split is. / Allocation of profits, losses, and draws – how will each of the partners be paid? Will it be according to the ownership percentage? Will you get regular draws? Understand that you and your partner may have different financial needs and ideas about how funds should be distributed. Decide these things NOW, before there’s any money to split up. Trust me, it’s easier. / Partners' authority – this dictates what agreements can be entered into by any partner without the authority of all the partners. Buying equipment, committing to leased space…if you don’t want the business to incur debt without the consent of all owners, it must be stated up front. / Partnership decision making – there’s no magic formula for decision making but you’ll make life a lot easier if you decide ahead of time how decisions will be made. Be sure to identify what constitutes a “major” and a “minor” decision … / Management duties – which of you will keep the books? Who will deal with customers? Who will supervise employees? Think through the management needs of your partnership and be sure you've got everything covered. / Admitting new partners - eventually, you may want to expand the business and bring in new partners. Agreeing on a procedure for admitting new partners will make your lives a lot easier when this issue comes up. / Withdrawal or death of a partner - at least as important as the rules for admitting new partners to the business are the rules for handling the departure of an owner. You should set up a reasonable buyout scheme in your partnership agreement. / Resolving disputes – if you and your partners become deadlocked on an issue, do you want to go straight to court? Probably not. It’s wise for the agreement to provide for alternative dispute resolution, such as mediation or arbitration. Another key document is the buy / sell agreement, mentioned above A buy-sell agreement is “a formalized business continuation plan that is designed to provide for the orderly disposition or continuation of an individual’s ownership in a business.” Basically, you and your partner agree – in advance – how one of you will buy the other out of the business. Decide this now. Trust me when I tell you that everyone’s idea of their value in the business changes when money’s on the table. Decide now, when you’re fighting over pennies. It’s easier. Finally the Key Man policy This is a life insurance policy on key employees in the business on whom the continued, successful operation of the business depends, and the business is the policy’s beneficiary. Here's how it works: the company purchases a life insurance policy on the employee, pays the premium and is the beneficiary. If that person unexpectedly dies, the company receives the insurance payoff. The reason this coverage is important is because the death of a key person in a small company can cause immediate harm to the company. The purpose of key person insurance is to help the company survive the blow of losing the person who makes the business work. The company can use the insurance proceeds for expenses until it can find a replacement person, or, if necessary, pay off debts, distribute money to investors, pay severance to employees and even close the business down in an orderly manner. In a tragic situation, key person insurance gives the company some options other than immediate bankruptcy. We have clients who are brothers and the two of them – and the wife of one – are the owners. In the event of the death of one the brothers,, the policy could be used by either of the remaining partners to buy out the other.
- Okay, so you’ve started a business and you’ve done everything right and now you need to grow it. You have some options. The Chamber – there are any number of Chambers you can join and there may be some good relationships you can develop but generally, you will get out of the Chamber what you put into it. It’s not a magic bullet – you’ll have to participate to get the benefit of your membership. Who here has already heard of BNI ? (wait …) For those of you unfamiliar with it, BNI is Business Network International and it is the world’s largest networking cult. We joke about it being a cult but in truth, it really is the largest professional networking organization in the world. The purpose of BNI is to provide members quality word of mouth referrals. BNI is unique in that it’s an invitation-only organization and it’s special in that they only allow one member of each profession per chapter. The reason is, if you have three plumbers in your chapter and you have a plumbing referral, which of the three plumbers would you give it to? That’s why there’s one plumber per chapter. Also, that exclusivity allows you to lock out your competition. The other thing I appreciate about BNI is accountability. We track referrals and “closed business” so each week the members and guests get a report card of how the chapter is doing. Last week my chapter crossed the one million dollar mark for closed business since October first. That’s big. BNI is a great network of people dedicated to growing their business through their referral partners. There are I think 42 chapters in the greater Houston area and something like nineteen that are north of 1960. If you’d like to visit my chapter, we meet every Thursday from 3:30 to 5pm at Pallotta’s Italian Grill, so you are welcome to be my guest tomorrow. Finally, your marketing partner – your marketing resource can really get you out into the world through all manner of utilities – ads, apps – you name it. The world of advertising has changed incredibly, even in the time since our launch. It’s pretty amazing what you can accomplish on even a modest budget these days.
- Okay, that’s all I’ve got for you – I’m going to open up the floor for questions.