LLC’s are a popular topic among startup companies. Unfortunately choosing to setup an LLC tells us nothing about your tax situation. LLC’s are very flexible for tax purposes. This video outlines the various taxation schemes available to LLC’s.

My friends at Eat Media are passionate about content strategy so when @eatmedia posted a link to the slideshare presentation below I took a time out to view it. If you are a business owner it’s important that you understand the underpinnings of content strategy just as thoroughly as you understand financial, professional development, marketing and other traditional business strategies. An effective content strategy will increasingly separate the leaders in a given industry from their competitors as the choices for media, publishing and content delivery expand. At its most basic I understand content strategy to result in the effective communication of your message to the right audience. And just so no-one is confused “effective” means the audience takes the ACTION that you INTEND for them to take. If I’m getting it wrong somebody correct me in the comments.

Some businesses set expectations and commit the time and resources to plan around those expectations and others don’t. Often this one trait makes difference between success and failure.

Earlier today I was working on some continuing education materials produced by Ron Rael. He proposed this simple test to determine whether business owners are measuring what matters.

Imagine that you are the Howard Hughes (owner) of your company and can access just one piece of information on a regular (hourly, daily, weekly, monthly) basis. This one data point will only tell you whether your firm is succeeding or not; it will not tell you to what degree. Get ready to write down what you need to know, but before you do… the information you receive cannot be

Answer quickly: What information must you have to know if your firm is being successful?
What does this information tell you? Why did you select it?
Do you measure and include this in your regular daily, weekly, or monthly reporting?

I encourage all of my clients to build a scorecard that captures critical financial and non-financial information about their business. Scorecards should be concise and incisive, but businesses tend to rely too heavily on financial numbers and metrics. The Howard Hughes test cuts to the chase and forces business owners to unearth the success drivers of their business as well as the success indicators. I like it!

Lean business concepts are typically applied to manufacturing scenarios, but they can also help service industries gain a fresh perspective on internal business processes. Lean has been called a lot of things. Just-in-time, six sigma, value chain, all of these are lean cousins. They all share a discipline that subjects every process, manufacturing step and business interaction to the following litmus test:

Conversations about value can quickly turn esoteric so I prefer a more relevant question.

When you start putting your business processes and procedures through that kind of scrutiny you will find that the answer many times (perhaps most of the time) is “NO!” In a truly lean environment you simply eliminate anything the customer will not pay for. If this sounds good to you, just try it. In about ten minutes you will either break out in a cold sweat or decide this “lean” stuff is the stupidest thing you’ve ever encountered. But hold on a second. If you stay with it long enough you might find out there is something worthwhile here.

The challenge in working lean isn’t to manage the business without all those administrative processes and procedures that keep you on track throughout the day. We all need checks and balances, systems of internal control and quality assurance. But too many of us design these systems without any thought toward added value for the customer. Embracing lean concepts means that if you are going to keep that checklist you had better find a way to make it valuable enough that your customer will be willing to pay you to fill it out. This may seem tough when the customer has never seen the checklist, but maybe that is the problem. Maybe your customer needs to see the checklist. Maybe they need to add their own items to the checklist and then get a copy of it, in real time, as soon as it is produced. Maybe they would be willing to pay for that.

The underlying concept of lean is not genius at all. It is simply the act of looking at your business through your customer’s eyes. What do they value about what you do? What do they pay you to do? And what are you doing that they just don’t care about? Encourage them to tell you what they value. Spend more time doing what they are willing to pay for. And find ways to eliminate the stuff they just don’t care about.

Twitter is the latest social media craze. If you’re wondering what it is check out a post I wrote a few months ago. Whenever you hear people talking about using Twitter for business they inevitably say something like “If you’re not paying attention to what your customers are saying about you on Twitter you’re an idiot.” Since it’s unlikely that any of my clients are going to be talking about me or my firm on Twitter I decided to keep track of what people are saying about CPA’s in general (this is pretty easy to do using an application like TweetDeck or Twitter’s own search functionality). Here’s what I learned.

1. If Twitter is still around in five years A LOT MORE CPA’s will be using it. How do I know this? Because there are a lot of CPA candidates tweeting about their progress on the CPA exam. Once they pass, move into the ranks of staff accountants and start seeing clients you can bet we’ll be hearing about their interactions in real time.
2. Client service may not be the profession’s strong suite. Clients don’t like it when we’re not proactive. More than a few people are upset with their CPA because they owe taxes. From experience I think this is less about blaming the CPA for their personal tax situation and more about not liking surprises. Still, if you need any encouragement to offer EVERY client the opportunity for a tax estimate in November reading some of these tweets is good medicine. There’s also a lot of evidence that CPA’s should do something to aleviate the anxiety that accompanies a tax appointment. There’s a lot of comparing going to the CPA with going to the dentist. Not exactly the frame of mind I want my clients in when they show up to meet with me.
3. Community rules. There is a vibrant community of cool, friendly and helpful CPA’s out there more than willing to lend a hand, offer advice or provide that missing nugget of information. For those of us with small, niche practices having a network of like minded colleagues who walk in our shoes every day is invaluable. Twitter is a great way to feel the pulse of a thriving, professional community of CPA’s who care about what they do. The community would still be there without Twitter, but tapping into it would be a little more difficult.

Web and social media guru Gary Vaynerchuk encourages people to reach out and recognize April 3rd as Good People Day 2009. This web holiday started last year and I thought it a nice way to cap off the week. My vote this year goes out to Britta and Ian Alexander at Eat Media. They’re good people, they run an exciting business and my world is better for knowing them. Thanks guys.

Is your business dependent on referrals. Ours is and over the last several years I have come to view relationship selling as not only the life blood of my business, but also as the road to a happier life. Think deep, not wide and you’ll get it.

Comments, please. What do you think?

We don’t specialize in tax disputes or deficiencies but we do receive inquiries. This type of work is very time intensive, and requires a lot of work not only to get clients caught up, but to also make sure they don’t commit the same mistakes again. This article from the Journal of Accountancy does a great job of outlining what this side of the business looks like from a CPA’s perspective. For anyone with big tax problems I think it should be required reading.

http://www.journalofaccountancy.com/Issues/2009/Apr/20081290.htm

This podcast (yes, it’s been forever since we did a good old-fashioned podcast) talks about the four things you ought to be doing in the middle of season to make sure your business is prepared to increase results next year.