5 Ways To Mess Up Your Small Business

There are more small businesses in America than ever.  It seems like everybody has a small business either as their main occupation or on the side.  Even a Pastor is considered self-employed.  As a bookkeeper, I have seen how these five things can mess up your business and possibly your life. I will lay out the way to mess things up and then what to do to avoid that unpleasantness.

1. Don't bother keeping track of your income/expenses.  Here is the best way to mess things up. According to the Small Business Administration, the number-one reason for small business failure is poor record keeping.  You need to track everything if you want to succeed in your business.  Get QuickBooks and/or hire a bookkeeper and start tracking your income and expenses, then use the reports to see where you are making and losing money.
2. Get into debt.  Leveraging debt is good right?  No, it increases risk exponentially.  Almost all of the most successful companies do not get into debt, including the credit card companies.  Why? It can turn a small mistake or misjudgement into bankruptcy.  Don't be afraid to grow slow and minimize your risk.  If you are in debt, get out quick! Read Proverbs 22:7.
3.  Co-mingle your finances.  Mixing your personal and business transactions is a great way to mess up your accounting and possibly get you in trouble with the IRS. Instead, open a separate checking account for your business and don't pay personal expenses from it.  This will make your life a lot easier.  When you want to pay yourself, it's called an owner's draw.  Take out the money and then spend it how you want.  It will keep you from the nightmare of figuring out what was a business and personal expense.  In addition, if you pay a bookkeeper, you are paying them more because they are inputting all those personal expenses. (This also makes tithing easier because you can tithe off of the draw you took that month).
4. Hide stuff from the IRS.   Not only is it dumb financially, it's illegal!  The IRS is not known for their mercy and it may even land you in jail.  Just keep everything above board, pay the taxes you owe on time and I promise it will work out better for you in the end. Besides, if you ever go to sell your business, you will be undervaluing it if you are not reporting all your income, losing up to $4 for every $0.25 you didn't pay in taxes.  Pay $4 later to save $0.25 today, now that's a great plan.  And don't forget to set aside money for your estimated taxes. (25% of your profit should do it)
5.  Don't set goals or targets.  How do you know where you are headed if you don't have a destination?  It is important to figure out what your goals are for the month, quarter, and year.  Then take a few minutes to figure out where that will land you.  If you want to run your business full time, figure out how many clients/jobs you need to accomplish that.  If you have been keeping records, you should be able to project from that.  Whatever your goal is, know where you want to be and what it will take to get there. For more information about how to set SMART goals, check out my post called Setting Goals That Matter.

 This is not an all encompassing list but it does give you a starting place and chances are, you are doing one of these.  For a more comprehensive book to help you maximize your business, I recommend Dave Ramsey's Entreleadership.  If you are a small business owner who is looking for a sensible bookkeeping solution (shameless plug) I offer a service called Bookkeeping Kept Simple starting at just $50/month.

Let me know in the comments section some other ways to mess up your business.

Setting Goals That Matter

We all have dreams that we want to come to fruition, but year after year I noticed my dreams would be as far off as the day I dreamed them up.  That all changed in 2011 when I heard Dave Ramsey talk about setting goals for your life.  That year, I accomplished more forward momentum on my dreams than in the previous five years.  I am now on my third year of setting yearly goals in seven areas in my life and I am loving it.  Not only am I achieving more, but the purpose of my life is becoming clearer all the time.

We all start with a dream, that dream must turn into a vision, a vision must turn into goals, goals into action, and action then turns your goals, vision and dreams into reality.  Here are some basics to setting goals that matter in your life.

The Wheel of Life:
    Zig Ziglar identified seven areas that you should be growing in.  In order to keep the wheel turning smoothly, you should be working on all these areas. (If seven is overwhelming, pick one that jumps out to you)

Each one of these areas (Financial, Spiritual, Physical, Intellectual, Family, Social, Career) is important and should not be neglected.  I know that for me, a couple of these come much easier than others, but after finding my goal in each area, my life has a better balance.

Keep Your Goals SMART:

Specific: You need to define what it is you want to accomplish.  "Lose weight" is not specific, but "lose 15 pounds" is.
 Measurable: Will you be able to know if you reached your goal?  Make sure you have a way to measure your success.
Attainable: "Write a book" is specific and measurable, but can you do it in a year?  Perhaps "Outline the first 10 chapters of a book" is more attainable.  My very first goal was to get out of debt, but it was not attainable in one year so I had a three year plan. (It actually took two)
Relevant:  Is this a goal that matters?  Is it leading where God is leading or do you have impure motives?  Figure out if it is what you really need to be putting your energy into.
Time-Bound: You have to have a time frame on it.  The clock will keep you on track and motivate you to keep moving forward.  Be sure to set checkpoints to see how you are progressing.

Here are two more important tips about goal setting:

1. These goals should be your own.  You won't succeed unless you are passionate about it.
2. Write them down!  I wrote my goals on the closet door next to my bed.  They were the last thing I saw when I climbed into bed at night and the first thing I saw when I woke.  If you do not see them regularly, you will let them slip down the priority list.

 How to determine what your goals should be:
    Step 1: Pray - Seek God for direction
    Step 2: Seek Council/Read - A close friend can give you suggestions and feedback about the goal you are setting.  You can also read a book about the area you are stuck on and I promise a goal will jump out at you.
    Step 3: Test it against the SMART method - Make sure it passes all the requirements or you may set yourself up for failure.

I hope that gives you a starting point for setting goals that matter in your life.  If you would like to get more detail on how to set goals you can check out my Setting Goals That Matter seminar by clicking the links below.  You will get real life examples that can clarify the process as well as a list of resources in the "Wheel of Life" areas.
    Setting Goals That Matter - Audio
    Setting Goals That Matter- Handout

If you are struggling to stay motivated, check out my recent post called "Finding Your Motivation"