How to Operate Your Small Business for Maximum Efficiency and Profitability

As far as I am concerned, one of the primary reasons the washout rate for small business owners is so high is because too many investors fail to place enough emphasis on getting the maximum return on every dollar and hour that they put into their small business. Instead, they seem to be more concerned about frivolous stuff like the color of their business cards. In any small business endeavor, a lack of focus, coupled with the inability to prioritize tasks, is a recipe for failure. So, too, is the type of complacency that breeds an “if it ain’t broke, don’t fix it” mentality, which usually results in a stagnant business that’s barely able to keep its head above water. That’s why to my way of thinking, the catch-phrase “easier, faster, and cheaper” should be the mantra of every real estate investor in America. I say this because I’ve learned the hard way that for me to consistently achieve the highest possible rate of return on the money and time that I invest in my business, I must continually analyze, refine, and tweak every aspect of my operation, to make it easier, faster, and cheaper to run. Nowadays, I think of my business as a high performance automobile engine, which must be finely turned and calibrated to run at its optimum speed and maximum efficiency. I can tell you from experience that in order to operate a small business at maximum efficiency and profitability, it takes:

1. Personal and financial discipline.

2. Organizational skills.

3. Management know-how.

4. Meticulous planning and attention to detail.

5. Prioritization of tasks according to their profit potential.

6. Maximum use of available technology.

7. Accurate record keeping.

8. Maximum use of all the tax benefits that are available to small business owners.

It Takes Discipline to Operate a Business at Maximum Efficiency and Profitability

It takes a combination of personal and financial discipline to operate a small business at maximum efficiency and profitability. First, you need to have the initiative and self-discipline that’s required to be successfully self-employed. You must work smart, so you don’t waste your valuable time doing grunt-type tasks that can be hired out. In other words, don’t spend your time cleaning up trash around your office when you should be out searching for customers. Second, you need to possess the financial discipline that’s necessary to operate your small business at maximum profitability. The only way that you’re ever going to be able to keep your spending under control is by:

1. Adopting a bottom-line mentality that’s totally focused on maximizing the profitability of your business.

2. Operating your business on a bare-bones budget by buying all equipment, supplies, and services at the lowest available prices in your area.

3. Keeping close track of operating expenses by carefully reviewing all invoices for errors, overcharges, and bogus charges.

Prioritize Tasks according to Their Profit Potential

The number one question that you must continually ask yourself when you’re working in your small business is: Is what I am doing right this minute the most profitable use of my time? A lot of people fail as small business owners simply because they’re never able to prioritize tasks according to their profit potential. They end up never making a profit because they couldn’t distinguish between what’s important and what’s trivial. As a general rule of thumb, I consider any business function that doesn’t contribute directly to my bottom line to be low priority and best left for after business hours. In other words, if the task at hand isn’t part of the process of completing a real estate transaction that will eventually end with me going to the bank; I put it off until later in the day.

Avoid Reinventing the Wheel Every Time You Need to Complete a routine Task

Whatever you do, don’t fall into the trap of reinventing the wheel every time you need to complete a routine task. The term, reinventing the wheel, refers to re-creating something from scratch. An example of reinventing the wheel would be retyping standard documents, such as purchase agreements, over and over again, instead of storing them in a Microsoft Word document file where they can be printed out as needed. The point here is to work smart by making your operating as streamlined as humanly possible.

Operate Your Small Business on a Bare-Bones Budget

One surefire way to fail as a small business owner is to run your operation in a slipshod manner with no financial controls in place to keep your operating costs from going through the roof.

Do a Cost-Benefit Analysis before You Make a Purchase

I suggest that you do what I always do, before I ever part with any of my hard-earned money, and ask yourself this very poignant question: How exactly is this-(fill-in-the-blank)–going to have a direct impact on the profitability of my business? Unless you can justify to yourself why the purchase under consideration will immediately contribute to your bottom line, you should hold onto your money. This type of decision-making process is referred to in business schools as “cost-benefit analysis,” which means that if the cost outweighs the benefit that’ll be gained from purchasing an item, it shouldn’t be bought. Keep this in mind the next time that you get the urge to splurge.

What You Should Have When You Set Up Shop as a Small Business Owner

I am willing to concede that an owner could possibly run their small business without any of the basic amenities of a modern high-tech office at their disposal. However, it would be a very inefficient operation, and I am willing to bet that most small business owners, in this type of work environment, would end up spending much of their time performing tedious tasks such as retyping the same documents over and over again. I don’t know about you, but I’ve never met anyone who has typed their way to a fortune as a small business owner. As far as I am concerned, every neophyte small business owner, who’s really serious about consistently making money in their small business, should have the following six items when they set up shop:

1. Telephone service and a prepaid telephone calling card to make calls on the road from pay phones.

2. Personal computer with Microsoft Windows operating system.

3. Microsoft Word software.

4. Internet connection.

5. Black-and-while laser or inkjet printer.

6. Financial calculator.

It’s Hard to Succeed in a Digital World Using Horse-and-Buggy Technology

Computer technology is here to stay, and, if you want to make it as a successful small business owner in today’s digital world, you had better embrace the latest technology and learn how to use it to your advantage. So if you happen to be computer illiterate, the very best advice that I can give you is to buy an inexpensive personal computer (PC) and then jump in with both feet and learn how to use it. If someone with a nontechnical background like me can use a computer, anyone can.

What It Takes to Run a Small Business at Maximum Efficiency

According to the Small Business Administration (SBA), 80 percent of all new small businesses fail within five years of opening their doors. More often than not, the cause of failure can be directly attributed to an appalling lack of organization and planning on the part of business owners. I hate to come across as some sort of killjoy, but you just can’t throw a business together without any organization and planning and expect it to be an efficient operation. It takes meticulous planning and attention to detail to set up a small business so that it operates at maximum efficiency. The only way that you’re ever going to have a smooth running business is by doing the little things right, such as:

1. Maintaining a master to-do checklist to run your business.

2. Computerizing all business documents and records.

3. Setting up your business so you avoid re-creating anything from scratch.

4. Organizing your office so that everything you need is available at your fingertips.

Use a Master To-Do Checklist to Run Your Business

To keep your business operating at maximum efficiency, I recommend that you do what I’ve done for the past 20 plus years, and maintain a master to-do checklist. I keep my checklist on my computer in a Microsoft Word file. It serves as a combination checklist and appointment calendar. For example, each entry that I make on my checklist, lists the task or appointment along with the completion or meeting date. This way, nothing slips through the crack and tasks are completed on time and appointments are kept.

Deduct Your Home Office as a Business Expense

In order for a home office to qualify as a business deduction for federal tax purposes, it must be used regularly and exclusively for business purposes. For example, if you’re a part-time real estate investor and a full-time school teacher, who has a home office that you claim as a real estate investment business expense, but you use your office for both your real estate investment business and for grading student papers, your home office deduction would be disallowed if you were ever audited by the Internal Revenue Service (IRS). The IRS would do this because your home office isn’t being used exclusively for business purposes. The best way to make certain that your home office will pass muster with the IRS is to regularly use the space you’re claiming as your home office exclusively as your principal place of business. I comply with the IRS home office use rules by having a home office that’s located in a separate building behind my home-approximately 40 steps one way-and used exclusively for business purposes. My compact home office measures a measly 10 feet long by 10 feet wide and is a scant 100 square feet in size, but it serves its purpose quite well. I like this arrangement, as it allows me to separate my business from my personal life. For more information on how to deduct your home office as a business expense, read IRS Publication 587, Business Use of Your Home, which is available online at the IRS Publications and Forms Web site.

Accurate Record Keeping Is an Integral Part of Running an Efficient Business

Maintaining accurate records is an integral part of running any type of successful business. Yet, it’s probably the most overlooked aspect of the real estate investment business. For many small business owners record keeping is last minute ritual that’s performed annually around 8 P.M. on the fourteenth of April, and forgotten about the other 364 days of the year. Needless to say, this is definitely not the smart way to run a business. Here’s a listing of the five types of records that real estate investors must maintain in order to have a smooth and efficiently running business:

1. Income records: Income records include monthly income and expense statements, bank statements, and accounting records documenting all of the income generated by your real estate investment business.

2. Expense records: Expense records include paid invoices, bank statements, cancelled checks, and accounting records documenting all of the expenses associated with operating your business.

3. Property records: Property records include mortgages, deeds of trust, promissory notes, grant and warranty deeds, surveys, purchase agreements, property appraisal reports, closing documents, easements, blueprints, certificates of occupancy, construction warranties, building material warranties, equipment warranties, building inspection reports, termite and pest inspection reports, and utility services account information.

4. Insurance records: Insurance records include property and casualty insurance policies, title insurance policies, workers’ compensation insurance policies, flood insurance policies, liability insurance policies, umbrella insurance policies, automobile and truck insurance policies, pest control insurance policies, and equipment insurance policies.

5. Tax records: Tax records consist of property tax assessment notices, property tax payments, federal tax returns, federal withholding-tax payments, state tax payments, and county and city occupational license fee payments.

Store Original Copies of Records and Documents in a Safe Deposit Box

I recommend that you photocopy or scan all of your important property related records and documents onto a CD-ROM and store all of the original copies in a safe deposit box. This way, you’ll have all of your original records and documents in a safe, secure, off-site location where they can be easily located in case of an emergency.

Use Generally Accepted Accounting Practices to Maintain Financial Records

Over the past couple of years, there have been a slew of court cases involving fraudulent accounting practices in which CEOs and other corporate higher-ups “cooked the books” to prop up the value of their company’s stock. Unless a stay at a “Club Fed” facility appeals to you, it’s best that you stick with generally accepted accounting practices instead of using creative accounting methods, which are based on fuzzy mathematics. In basic accounting jargon, the term generally accepted accounting practices (GAAP) refers to accounting principles and practices that are standard in a certain industry. The best way that I know to keep bookkeeping straight is to use an off-the-shelf computer software accounting program such as QuickBooks financial software. This way, all you have to do is enter your financial data and the software does the accounting functions and balances the books and makes it easy for you to:

1. Identify the source of receipts.

2. Keep track of tax-deductible expenses.

3. Document expenses claimed on tax returns.

4. Prepare tax returns.

Deduct All Business-Related Travel Expenses

Make certain that you deduct the cost of all travel expenses related to running your real estate investment business. The Internal Revenue Service requires that taxpayers maintain automobile mileage logs to document business-related mileage that’s claimed on federal tax returns as a business expense. The standard mileage rate that can be deducted from federal taxes for the cost of operating a vehicle on business-related travel changes each tax year.

Depreciate All of the Equipment Used in Your Small Business

In order for your small business to earn a maximum profit, you must take full advantage of all of the depreciation allowed under the Internal Revenue Code. To do this, make certain that you claim the maximum depreciation allowed on all of the equipment used in your business to include:

1. Office furniture and equipment such as computers, printers, and facsimile machines.

2. Software programs for accounting and word processing.

3. Cellular telephones, telephones, and telephone answering machines.

How to Prepare Your Tax Returns

For years, I’ve advised small business owners to hire a tax professional, such as a certified public accountant, board-certified tax attorney, or an enrolled agent, who is licensed to represent taxpayers before all administrative levels of the Internal Revenue Service to prepare their tax returns. I made this recommendation because of the very real possibility that an unreported glitch in an off-the-shelf tax preparation software program could cause an investor’s tax return to be audited. And then the investor would be on their own, as no one from the tax preparation software company is going to represent them in front of the Internal Revenue Service during an audit. However, I’ve had a change of heart after using the Turbo Tax Business tax preparation software program, which is made by Intuit, Inc., to prepare my federal tax returns. I’ve found Turbo Tax Business to be relatively easy to use and a fast, safe, and economical way for me to prepare my tax returns in the privacy and comfort of my home office. And it’s the same tax preparation program that the enrolled agent, who previously prepared my tax returns, uses. I very seriously doubt that the chance of my taxes being audited has been significantly increased by preparing my own returns. But if you’re not comfortable preparing your own tax returns, I recommend that you hire a licensed tax professional to do it for you. For more information of the Turbo Tax Business tax preparation software program, log onto the Turbo Tax Web site.

Five Tips for Selling at Live Auctions

Ah, the old-fashioned country auction! The idea of a country auction conjures up certain images for people. The image of a fast-talking auctioneer offering up an antique table or chair is a popular example.

People who are buying household goods or collectibles are looking to get their items at the lowest price possible. However, the people who are selling their items at auction are hoping for the highest price!

Unless a person is in the business of buying and selling antiques or other items, not a lot of thought goes into how goods are prepared for sale via the auction process. However, if you are one of the growing number of people using auction venues to sell your collectibles or other inventory, there are a few things to learn first about how to sell at auction before you bring a truckload of stuff over to the next event.

Tip 1: Make sure the things you want to sell are a good “fit” for the auction house you’ll be using.

Never bring a load to an auction house without actually having been to one of the previous auctions. It’s important to get a feel for the type of goods that the house sells. For example, at one very rural country auction it was common for the owners to sell live chickens, pots and pans, car parts, and farm equipment.

After close investigation, this would not be the right venue for selling your daughter’s “Hello Kitty” collection. On the other hand, the spare John Deere parts that you bought at last week’s yard sale might be just the right thing for the buying crowd at this auction.

Tip 2: Be sure you clearly understand the terms and policies of the auction house.

Visit with the auctioneer ahead of time. Call to find out what the best days and times are to visit. One of the worst possible times to drop in for an informational visit with an auctioneer is the day of the auction. Call ahead and ask. While you’re at it, find out what are the best days and times to drop your stuff off.

Once you have a little time with the auctioneer, you’ll be able to find out what type of commission he or she takes from consigners (which is you), and what type of paperwork might be needed. Some auction houses send out Form 1099 tax forms at the end of the year. An auctioneer may need to see your identification and have you fill out a W-9. Be prepared.

Find out what happens to your items if they don’t sell. For example, some auctioneers may have a minimum starting bid. If, for some reason, one of your items does not sell, it may be grouped with another one of your pieces. Know the auctioneer’s strategy beforehand so that you aren’t surprised on pay day.

Tip 3: Make sure the auctioneer knows what you’re selling.

It might be perfectly obvious to you that the signed print you are consigning is a rare and valuable piece of art. However, the auctioneer may not know this particular artist. Make a note of anything particularly special about your items, and leave the note with the piece. Be sure to tell the auctioneer about it as well. He or she might determine that this is something to highlight on the company website or in the newspaper listing.

Tip 4: Present your items neatly.

No one likes to have to dig through a box full of grimy and greasy car parts to see what treasures might be in there. Separate the parts and lay them out on a flat, or use more than one box to de-clutter the lot.

There is no need to buy fancy display boxes. It’s easy enough to go to the local convenience store or supermarket and ask if you can have the emptied boxes or flats that they are discarding.

While it’s good to present clean items, take care not to ruin the value of anything by over cleaning. For example, if you find some old cast iron cookware, clean the obvious dirt and grime, but don’t scrub it to its original finish. For many people, this ruins the value of the item. So, clean and tidy and organized is the key here.

Tip 5: Don’t complain to the auctioneer if your stuff doesn’t sell for as much as you’d like.

The phrase to remember here is, “You win some; you lose some.” That’s just the way it is. There are some days where an auction house is loaded with people who all seem to want what you’re selling. There will be other days where the crowd is sparse, and the bidding is simply not competitive.

Remember that it’s in the auctioneer’s best interest to sell your things for the highest possible hammer price. But sometimes, it’s just not going to be a stellar sale. The auctioneer is only human, and is also disappointed if a sale doesn’t go as well as planned.

If you notice that every time you bring a bunch of goods to sell that you’re not realizing as much as you think you honestly should, try another auction venue and compare apples to apples. That is, bring the same types of items to the new auctioneer and compare the results.

Unless the auctioneer is particularly disagreeable or inconsiderate to you or buyers, there is no reason to confront him or her about a sale. If you find you just don’t care for an auctioneer’s style or methods, find another one. Believe me, there are plenty of them out there!

The primary thing to remember as you learn how to sell at auction is that the business is unpredictable at best. You will have good days, some not-so-good days, some great days. The more you sell, the more experience you will gain, and the more enjoyable the business will be.

How to Find Great Live Auctions for Resale Items

Hi, my name is Walt. I’m an auctioneer with 25 years of experience in the auction business and licensed in the state of MA. I own Quick Auction Service, a company that specializes in building and running custom auctions, I’m also the webmaster of my own site and have been on eBay for 8 years. Besides eBay, the types of auctions I run most frequently are antiques and on-site estate auctions, although I’ve run everything from business overstock auctions to charity & special event auctions.

I enjoy sharing my knowledge and stories of the auction business. My goal for article is to help folks get the absolute most out of their auction experience.

Whether your fresh out of the package or a seasoned dealer I think I can offer something in this article to help you with your auciton adventures.

There may be as many reasons to attend auctions as there are types of auctions to attend. Maybe you want to attend an auction to buy items for re-sale on eBay, or some other market. Maybe you want to furnish your home with wonderful antiques, or you want to furnish your home as inexpensively without sacrificing quality.Some folks are just looking for a fun night out. With a little perseverance all these things are possible.

There are antiques and estate auctions, auto auctions, overstock auctions, absolute and no reserve auctions, real estate auctions, specialty auctions where only one genre of items are sold, tailgate auctions, live auctions, online auctions, sealed bid auctions, silent auctions, charity and fund raising auctions and many more.

Can you really buy for pennies on the dollar at an auction? You bet! Many times I’ve seen folks buy and re-sell at the same auction on the same night for a good profit, although be advised, this should only be done after the auction is over.

There are a lot of ways to find an auction, but here are some tips on how to find and attend the best ones.

Visit the genre of shops in the area that apply to the type of auction you want to attend. IE: If your looking for a good antique auction to attend, stop in the local antiques shops and ask for what there are for good auctions in the area. Sounds obvious right? But listen to what they don’t say as well as what they do say. Oftentimes when a dealer speaks poorly about an auction he or she attends, it may be likely that they are trying to keep a good thing secret. Think for a moment, why would a dealer keep attending a lousy auction?

Newspaper ads: I personally like to find ads in the classified ad section rather than flashy display ads. Flashy ads are usually indicative of an auction that will be high priced, may have reserves, (a set price on an item), and usually an enormous crowd. While any auction can be profitable to attend, it is usually best to steer clear of the glitzy ones, at least for the beginner.

Here’s the minimum you want to find out before you go. If there is a phone number in the ad, call and ask for the terms of the sale. What forms of payment do they accept? Is it an absolute auction? An absolute auction is one that has no minimum or reserve bids on items. These are the best auctions to attend! Is there a buyers premium? A buyers premium is like a tax that everyone who makes purchases at that auction must pay above the winning bid price. Most auctions these days do charge a buyers premium, 10% is not unreasonable but I feel much more than that is greedy, and the auctioneer that charges over 10% is counting on most bidders not doing the extra math as the bids quicken in pace.

A fair auction will have ample time to inspect the merchandise, usually at least 2 or 3 hours. Find out when inspection starts and make sure to attend! Never attend an auction if you can’t make the inspection, not unless your prepared to gamble. Most auctioneers sell at a rate of about 100 items per hour, which is why they sell “as is”. They simply don’t have the time to give a detailed description of all the items. Since almost all items at auction are sold AS IS, there are sure to be some damaged, refinished, fake and incomplete items at any given auction. Beware of any auctions that offer very little or no inspection time.

Good auctions will usually have 150 to 400 lots. A lot may be one item or a group of items. The exception to this are specialty auctions, auto auctions, real estate auctions etc.

When you attend your first sale, take note of the 1/2 dozen or so dealers that buy the most often. See if you can find out about other area auctions they attend.

When you do find an excellent auction, attend it as often as possible. By frequenting good sales, you help increase the bottom line of that business. It’s difficult for many auctioneers to keep the quality of merchandise consistent, so good attendance certainly helps. And when an auctioneer gets to know you as a buyer, he/she will go out of the way to accommodate you, to keep you coming back.