Get Your New Year Off to a Flying Start

Happy New Year! The holiday season is officially over and it’s time to get moving again! Here are a few suggestions to get things moving in January.

Reconnect with people

There were almost certainly people with whom you couldn’t connect last year because your schedules didn’t line up. This includes existing or potential customers and clients, existing or potential partners, vendors, suppliers, etc. And yes, people are going to be busy catching up, but now is the time to get on their calendars if you aren’t already. Make a list of all the people that you tried to contact and then reach out to schedule a time to talk or even meet in person. It may be a bit harder to remember the people who tried to contact you when you didn’t have time to speak, but you can always look through the call list on your phone or check your emails. You may be surprised to see who you forgot!

Set Your Goals For The Year

If you don’t have goals for your company, it’s like getting into the car without selecting a destination first. Think of goals as the direction. How quickly you reach the destination depends on the speed and effort you apply to that direction.

Try to stick to goals you expect to achieve this year. It’s good to have multiple short term goals so you can show forward momentum and stay positive. Reaching a certain revenue number or completing a certification course by a certain date are a few examples. It may also help to build better work habits by setting recurring goals like responding to all emails or phone calls within a certain period of time.

Real long term goals may take years to reach, so it’s a good idea to start with your ultimate goal and work backwards to set those smaller goals. Back to the car analogy, these smaller goals become stops on the map to the final destination. And, just like a map, there are multiple ways to get to the same place. If you find one of those goals isn’t going to be possible, think about a different goal on a different path that could get you to the same place.

If you need help setting goals, the SMART system created by George Doran, Arthur Miller and James Cunningham is a time-tested system that’s proven extremely useful. This acronym stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. If you’ve never used it before, it’s worth reading about more to use it more effectively.

Focus your team

It’s easy to get bogged down in your own tasks as a manager and to forget that your team is relying upon you to not only manage the company, but to lead them as individuals and as a team. Being a leader isn’t easy, but it can be made easier when your team knows what they have to do and why what they do is important. This also helps them realize why they are important to the company and to each other as a team. This clarity will help both you and your team to focus their efforts and improve results.

Among the first things to focus the team upon is understanding the company goals. Again, if everyone knows the intended destination, they have a better understanding of what is required to get there. One way that can help is to have the team work together to develop the goals. How this is implemented depends on the size of the company… whereas a small company may involve many of the employees, a larger company may only have key leaders involved.

Another item to help focus will be establishing how to communicate more effectively with each other. Whereas some companies and employees are effective verbally, it’s very difficult to hold people accountable for conversations alone. Conversely, because email can get overwhelming, it’s very difficult to communicate everything over email. When you add in texting and instant messaging or other channels, a lot of communications can get lost in the shuffle. Ultimately it may require combinations of things: if a text or meeting is used to communicate an objective, it may be followed up with an email to document what was communicated and/or a calendar notice to set a due date for a deliverable. Another option is to use project management software (e.g., Nifty, Trello, or Clickup) that helps to improve team communication and keeping on schedule. This can have a learning curve to work effectively, but can work wonders when used correctly.

Create A List Of Answers To Seek

To stay competitive requires understanding your company as well as its place in the market and industry. This means understanding your customers’ changing needs and buying habits, general consumer trends, what new advancements are expected, changes in regulations that may require changing your offerings or how business is done, and hundreds of other details that you can’t possibly have the time or ability to research without giving up on your other responsibilities. So what do you do?

Instead of spending the time answering every question you have, first determine what answers you need to know to remain competitive. From there, figure out what questions you can ask to get those answers. Some questions are easy to figure out: if you need to know how many items to order, you should ask how many you think you will sell. Other answers may require a lot of questions: knowing customer trends that affect your business may require asking if people are buying mostly online or in-person, what is popular, what is outdated, are changes seasonal or annual, and any number of questions.

Once you have these questions listed, consider which of them can be delegated to your team. Some may be quick tasks while others may turn into full projects. 

Commit to learning

Many of the most respected business leaders are successful for being in the right place and doing the right thing at the right time. Part of that may be luck, but more often than not it’s because they knew where to be and what to do before they got there. How they knew is because they got informed. More often than not, this means reading or otherwise consuming that information.

Reading the news is generally a good idea; however, it’s also worth checking if the source is reliable, especially if it’s online. Fortunately, search engines make it easy to do this and compare them with each other when something sounds off. It’s generally a good practice to read multiple sources about the same topics to stay level headed.

There are a number of good sources for current business information (e.g., The Economist, Business Week, Forbes, Entrepreneur, Inc.). These are great sources for a variety of information; however, if you’re in a specialized industry, there are likely industry publications or websites that provide more curated news or other content for that industry. And while many of these provide some articles for free, you may want to invest in a subscription to one or two if you find yourself returning to it more often.

If you need to really focus on a subject, books are probably the best option to learn a great deal in the least amount of time. A few books that have information that can help people learn more about how to be more effective at work and in life are:

Can you think of some books that you’ve found useful for your business or for life in general? Who do you think would benefit most from them?

- John Thrush

It’s The End Of The Year… Do You Know Where Your Business Is? 4 Things To Focus On As The Year Comes To A Close

Look forward to 2024 by reviewing 2023 and planning for the future

It’s the holiday season! This means family, friends, presents, and time off; however, business owners and managers have other considerations. They need to make sure everything is completed for the year that’s about to end while also getting prepared for the new year. Here are 4 things that business managers and owners should focus on in the last weeks of the year.

Review This Year's Goals and Achievements

Spend some time reviewing the goals you had for the previous year, reflecting on your company’s performance, and comparing your budget to the actual numbers. What goals did you achieve and where did you fall short? How did you perform better and where could you have done better? Where did you slide away from your budget and where could your spending have been better allocated? What limitations are there keeping you from having more impact? Are there ways to be creative about these limitations and turn them into advantages?

It is important to remember when comparing goals and budgets to the actual performance to not get discouraged about things not going according to plan. Many variables can’t be controlled which will disrupt even the best made plans; however, the process of planning is intended to help managers think through these variables and figure out ways to respond to various situations. If the year brought about unexpected challenges, you now know something else to consider in the coming year.

Review the Financials and Determine Profitability

Tax time is coming sooner than you think, so having an idea of how the business did financially is of tremendous importance. To get an accurate read on this requires diligence in keeping tracking of revenue and spending. This is easier if all spending is done through business bank accounts and cards, but can quickly become complicated if you’re reimbursing employee expenses or using personal credit cards. Something else that can complicate things greatly are using online payment tools like Paypal or Venmo if funds stay in the application rather than being moved directly to bank accounts.

If the company didn’t do well financially, this is where it becomes more important to look at expenses and see where it may make sense to trim for the coming year. Evaluating any regular or automatic expenses is a perfect place to start. Memberships intended for business development not getting the desired results could be allowed to expire. Software subscriptions should be reviewed to see if you’re paying for more features than you need or even using them at all. Another tip for software is to find out if you’re paying for subscriptions to software that duplicates features.

Labor is almost always a substantial expense and wanting to make cuts is a typical response, but it’s important to first look at labor to see how well it’s being used and how much revenue is being generated. Sometimes people are being paid too much, but one of the biggest mistakes a company can make is cutting employees without understanding how the organization will function if those skills or knowledge are no longer available - this is often seen when companies cut back on employees in sales or tech support.

If financial performance was better than expected, it may make sense to do some end of year spending. This could mean upgrading your computers or buying other items to increase productivity or capabilities, but it could also mean giving your employees a holiday bonus to reward them for helping the company get to where it is.

Determine and Document Company Goals

Running a company without goals is like going on a vacation without choosing a destination. Setting even basic goals provides direction while also helping determine the speed and effort needed to achieve the goals. If you’re unable to achieve the goals you set, you can look at how you fell short in the past to get insights on how you need to adapt. Are different skills needed? Do you have the right people in the right positions? Do you need new or different people? Are you targeting the right customers or clients? Do you need to find new ways to reach those people?

While there are many ways to set goals, it is usually good to start with your ultimate goal and work backwards with step goals. Many companies choose to do this with 5, 3, and 1 year goals. Sometimes it makes more sense to start with 1 year, 6 months, and 3 months if your company is new or you’re pivoting.

Another helpful way to set goals is making sure they adhere to the SMART system created by George Doran, Arthur Miller and James Cunningham. This acronym stands for Specific, Measurable, Achievable, Relevant, and Time-Bound. If you’ve never used it before, it’s worth reading about more to use it more effectively.

If your company appears to have hit a ceiling and can’t seem to meet or exceed certain goals, it’s sometimes helpful to work with a consultant. They can help you find out if the goals being set are the right ones and see if what you’re looking at is a problem or just a symptom of something else that’s preventing progress.

Create your Company Budget

While setting goals, it will be natural to think about how to afford the steps needed to make them happen. Even so, it helps think about your goals before figuring out how to afford all of the steps to make those things happen. It’s important to remain optimistic as well as ambitious when thinking about the future. Focusing on limitations can limit both optimism and ambition, so challenge yourself to look past the money a bit at that stage.

Ultimately, how to pay for the steps to achieve your company’s goals will have to be addressed. Many larger organizations often use past budgets with marginal increases to set the subsequent budgets. Smaller organizations are far less likely to do this, especially if they have goals to grow, but also because they have less of a budget and need to be more careful in how they use their available funds. Using the goals should help greatly in how to prioritize funds to achieve the desired outcomes.

If you have a previous budget, you’ll generally know what categories exist already. If you’re working on your first budget, some things you’ll want to address are:

  • Payroll and Contractors

  • Marketing and Advertising

  • Depletion and/or Unpaid Invoices

  • Insurance

  • Interest

  • Professional Services (e.g., legal, accounting)

  • Office Supplies and Expenses

  • Rent or Lease

  • Repairs and Maintenance

  • Taxes and/or Licenses

  • Travel

  • Meals and Entertainment

  • Utilities

Managers are often surprised where money actually goes during a company’s first year of operations. While some spending is unavoidable, using a budget and checking against it periodically can be an eye opening experience. It can also be an invaluable exercise if only to prepare you for the second year’s budget.

Working on these 4 things near the end of the year can help build some structure around reviewing the past and planning for the future. If you find it overwhelming, you’re not alone. This is especially true in times of stress. This is why it’s a good idea to work with a third party that can help you look at things from a different perspective and help you make decisions with less emotion attached to them. If you find yourself in this situation, Brightleaf Consulting Group is happy to help with finding solutions to your challenges and to help get your company back on track or to shift it onto a new one.

When is it time to bring in an expert?

Even the best managers need to rely on experts… knowing when to do so can make or break a company.

Have you ever taken your car to a mechanic because it started acting funny or was making a noise that didn’t sound quite right? If so, did you get an estimate that you thought seemed really expensive for the repair? Are you the type of person that just accepts that this is part of owning a car and pays to get the work done? Or are you the type that insists that it’s not that hard and chooses to do the work yourself? If the latter, was it as easy as you thought? Or did you realize those videos on Youtube make it look a lot easier than it really is after spending more on tools to do the work and being in pain for the next week recovering from scraping your knuckles after the multiple wrench accidents?

While many people believe that they’re capable of doing everything themselves, the reality is that it makes sense to let others do things for us. Sometimes it’s because we don’t have enough time to do everything, but other times it’s because other people have more knowledge and experience to get better results. When you’re running a business, you may not have time to learn something new. Moreover, the cost of doing certain things wrong often ends up costing more in time and money than it does in paying a subject matter expert (SME) to do it right the first time.

There are many different SMEs that can assist in business and many ways to acquire those skills. Sometimes it makes sense to hire a third party company to provide those skills or services while other times it makes sense to hire them directly. A lot of this depends on the size and budget of the company. Smaller companies will often outsource IT, marketing, or accounting tasks to an individual or agency. At a certain point it may make sense to bring at least part of that skill set in-house with an individual or even a department; however, many larger companies continue to outsource certain services because it makes better sense to do so.

Hiring an SME provides numerous benefits. Here are some key advantages:

  • Specialized Knowledge - SMEs possess in-depth, specialized knowledge in a particular field or industry. This expertise can offer valuable insights that may not be readily available within the organization.

  • Informed Decision-Making - Because they have a deeper understanding of the subject matter, SMEs can help businesses make more informed and strategic decisions, especially in cases where gaps or inaccurate information may not be identified by a non-expert.

  • Risk Mitigation - SMEs can identify potential risks associated with specific decisions and provide guidance on how to mitigate or manage those risks effectively. This proactive approach can enhance overall decision-making processes.

  • Cost Savings - Avoiding mistakes in the first place is almost always much cheaper than doing it wrong the first time and then having to pay more to correct a mistake, especially if that mistake may lead to years of continued inaccuracies. 

  • Efficiency and Productivity - SMEs often streamline their processes and cut through unnecessary complexities because they’ve done things before. This helps make quicker, more efficient, and smarter decisions that promote better productivity.

  • Quality Assurance - SMEs help make better decisions by applying their expertise to assess the feasibility and viability of different options. This quality assurance is particularly important for critical business choices.

  • Problem-Solving - More experience makes SMEs better problem solvers and enables them to identify and implement effective solutions that may not be apparent to those without specialized knowledge. They can also help avoid problems in the first place by having seen mistakes that others have made.

  • Training and Development - SMEs can assist in the training and development of staff by sharing their knowledge and expertise. This helps build internal capabilities and ensures that the organization remains competitive in its industry.

  • Innovation and Creativity - SMEs can bring innovative and creative ideas to the table, drawing from their deep understanding of the subject matter. This can be particularly beneficial when exploring new business opportunities or addressing unique challenges.

  • Industry Connections - SMEs often have extensive networks within their industry. Leveraging these connections can open doors to valuable partnerships, collaborations, and market insights that can inform decision-making while also accelerating the pace of business.

  • Adaptability to Change - SMEs can help businesses adapt to changes in their industry by staying abreast of the latest trends, technologies, and regulatory developments. This adaptability is crucial for staying competitive in dynamic markets.

  • Time Recovery - Utilizing SMEs to assist with certain business functions or assist in making substantial business improvements allow the management of the company to focus on their responsibilities and achieve more.

The expertise provided by subject matter experts enhances decision-making processes, reduces risks, and contributes to the overall success and competitiveness of a business. Integrating SME input into key decisions is a strategic approach that can yield significant benefits over time. And yes, while there may be sticker shock at paying an expert, the cost of hiring an amateur or doing it yourself often ultimately costs far more.

If your company is unsure of what the next steps it should take to grow, isn’t sure if you should pivot or stay the course, or even needs help figuring out what questions need to be answered, give Brightleaf a call. We exist to help companies better understand where they are and help them figure out where they should go and how to get there!

- John Thrush

Are You Really Making Money With Airbnb?

Accounting turns your real estate rental from a side hustle into a business

It is expected that roughly 40% of the people in the United States will travel over the next month for the holidays. That’s over 130 million people! And not everyone is going to be staying with family. Many will end up in hotels, but a large number will also choose to stay in short term rentals such as Airbnb or Vrbo. This is great news for the owners of such properties… more rentals means more money coming in. How could that be a bad thing?

One thing could be what comes due next Spring… taxes. And since short term rentals are definitely a business, taxes will definitely need to be filed for that business. To make sure the right amount of taxes are being paid, this means good bookkeeping and accounting. But complying with tax regulations is only one reason for making sure your books are in order… and certainly not the best one.

The main reason to make sure your accounting is solid for any rental property goes back to it being a business and, in every business, accounting should be the primary tool in Business Management. Accurate accounting data is necessary to make intelligent strategic decisions for your property, such as adjusting rental rates, deciding on property improvements, or assessing the overall financial performance.

Other ways accounting is useful for your business are:

Financial Planning: Accounting helps you create budgets, forecast income and expenses, and plan for the financial future of your real estate operations. This planning is essential for making informed decisions and setting realistic financial goals.

Expense Management: Tracking and categorizing expenses related to your real estate properties allow you to identify areas where costs can be controlled or reduced. This is also immensely helpful in making sure you include all of the tax deductible expenses to reduce your tax liability as well as contributing to improved profitability.

Cash Flow Management: Monitoring your income and expenses through accounting helps you manage cash flow effectively. This is crucial for covering operational costs, servicing debt, and ensuring the financial health of your real estate business.

Tax Compliance: Proper accounting ensures that you are accurately reporting income and claiming eligible deductions, minimizing the risk of tax issues. It also helps you take advantage of available tax incentives and credits specific to real estate operations.

Property Performance Analysis: Accounting provides insights into the financial performance of individual properties. By analyzing financial statements, you can identify which properties are most profitable and which may require adjustments or improvements, comparing the financial performance of your real estate operations over time.

Decision-Making: Sound financial data allows for informed decision-making. Whether it's deciding on property acquisitions, determining rental rates, or allocating resources for property improvements, accounting information provides a solid foundation for these choices.

Loan Management: If you have loans or mortgages on your properties, accounting helps you keep track of loan balances, interest payments, and other financial obligations. This is crucial for managing debt and meeting financial obligations to lenders.

Legal Compliance: Real estate operations are subject to various regulations. Accounting helps you stay compliant with tax laws, reporting requirements, and other legal obligations, reducing the risk of penalties or legal issues.

Investor Communication: If you have investors or stakeholders, clear and accurate financial reporting through accounting builds trust and transparency. It provides stakeholders with the information they need to assess the performance and sustainability of your real estate business.

In summary, accounting is a fundamental tool for managing the financial aspects of your real estate operations. It provides the information needed to make informed decisions, ensures compliance with financial regulations, and contributes to the overall success and sustainability of your real estate business. If you’re interested in hearing more about how to do this or getting help in setting up your accounting, reach out to us here at Brightleaf and we’ll be happy to help!