1. Retirement Plan Contributions Deadline
The deadline for retirement plan contributions is April 17, 2012. By being thoughtful and timely, small businesses can maximum contributions by incorporating expenses into their annual operating budget. This is the perfect time to ask your CPA about how your business can take control of retirement planning because limits are dependent on the type of retirement plan, as well as other variables.  We can help you find a qualified and knowledgeable CPA in your area. Call us at 1-877-735-7693 or email sales@growthforce.com.

2. Changes to 1099 Rules
Last year’s changes to the 1099 rules mean businesses face increased penalties if they don’t meet the filing requirements and deadlines – up to $250 per form that isn’t filed! There are also questions on the income tax form that businesses must now answer in relation to the forms. Strict enforcement of penalties by the IRS is likely, so please call your CPA with questions about filing requirements. For more information on the new requirements, visit:

http://www.irs.gov/pub/irs-pdf/i1099msc.pdf
http://www.irs.gov/pub/irs-pdf/i1099gi.pdf

3. IRS released revised Form 941
Due to the recently extended payroll tax cut for 2012, the IRS has released a revised 941 Form. Originally, the 4.2% Social Security tax rate was set to expire and return to 6.2% at the end of February. However, Congress acted to extend the 4.2% rate and so the revised Form 941 now reflects this payroll tax cut extension. If GrowthForce is currently handling your payroll, of course we will make sure this happens for your employees. If not, we can get you on the right track quickly so you can go about your business. You can also ask your CPA about the best way to make the transition to ensure nothing or no one falls through the cracks.

For more information, visit  http://www.irs.gov/formspubs/article/0,,id=234283,00.html

3.5 And One More Tip for Good Measure

A common bookkeeping error is improper coding of deposits that are not income, which means you pay unnecessary income tax on nontaxable items. Recently, while getting to know a new GrowthForce client, the business owner shared a story about an instance where their office bookkeeper deposited a sizable insurance payment for a wrecked vehicle into the business checking account. Because the bookkeeper had not properly coded the deposit, the owner ended up paying taxes on the reimbursement.

At GrowthForce, we ensure this oversight does not happen by instituting protocols to ensure proper coding and by attaching electronic documentation for each item in QuickBooks, so you and your CPA know what it was and where it came from. Spend time now to create an office-wide system for defining your coding processes, because an ounce of prevention is worth a pound of cure.

More than just wishful thinking, strategic planning is an ongoing process involving systematic identification of opportunities and threats. It begins with the end in mind – what are we trying to achieve and what does success look like? Once you answer the why’s and what’s of your business by defining organizational aims and strategies, you can focus on the how’s, who’s and when’s  -  or your measurements for evaluating results and developing future plans.

Getting Started

While the components of a strategic plan are universal, the practice is far from prescribed. It doesn’t matter where you start, but it must be approached with equal parts planning and persistence.  In our outsourced bookkeeping and Controller business, we  began with our company mission –why does GrowthForce exist? Our mission is to reinvent the world of small business accounting so profoundly that our clients never go back to the old way.  Your motivation may be to solve a problem, find answers to drive forecasting, make R&D decisions, need a new strategy, have products/market opportunities to decide…it doesn’t matter.  What really matters is you just do it. Get started.

After reviewing and redefining our mission, we got the key leaders in a room to do a SWOT analysis of our core strengths, weaknesses, opportunities and threats. A SWOT of your business can help you reshape the way you view and do business. Get the key stakeholders in the business – sales, production, accounting, and HR, and delve into the good, bad and ugly of your business. Honesty needs to be the best policy. This way you emerge with a real perspective of where your business stands and what issues matter most to the success and longevity of your company.

How, Who and When?

Once you have a high level view of who you want to be (mission = why), and who are you are (SWOT = what), then you work backwards from “the end” to define how, who, and when.  Take your same SWOT analysis group and ask them to identify how you are going to get there. We call theses “Strategic Initiatives.”  At GrowthForce, we asked ourselves:

• What do we need to focus our non-billable time on to reinvent the world of small business accounting?
• How are we going maximize our Strengths and leverage Opportunities?
• What can we do to minimize our Weaknesses or mitigate Threats?

Too many priorities mean nothing is a priority, so each stakeholder needs to buy into one initiative at a time. What is the most important strategic initiative for Sales, HR, Service, Operations, Finance….right now?  Pick one for each. Then define the major milestones to measure success.  Agree on due dates and the owner for each milestone, and you have the makings of a plan.

Benefits and Limitations

The benefit of being the business owner is you get to decide how detailed your process will be and, therefore, how much time you are willing to have your team invest in the process. The bigger the company, the bigger the investment needs to be.  No matter how easy or detailed, a lot of energy and expense is invested in creating a strategic plan for your business.  But when it’s done right, you will be able to see the forest and the trees. Ideally, the finished product will link four types of plans:  long-term plans, medium-range program goals, short-range budgets and daily operating plans.

While strategic planning can put your business in the fast lane for future success, you must resist the temptation to revert to cruise control, as a plan cannot replace wise decision-making based on current circumstances. Instead, your plan should be a flexible systems approach to help guide your business through situational changes, including crises, to reach your desired goals.

If you go down this path, you’ll find establishing a shared vision with measurable outcomes will help clarify the roles and responsibilities of employees and institute a framework for decision-making throughout your company.  Just aligning everyone on the same page when they walk in the door will give you a return on your investment in your staff.

How do you develop a powerful financial reporting system? — by employing Stephen Covey’s 2nd Habit of Highly Effective People: BEGIN WITH THE END IN MIND. 

You can do this by answering these questions:

• What reports do you want to see?
• How often do you want to see them?
• Who needs to see them?
• What decisions are they going to make from those reports.

The biggest mistake small business ceo’s make is creating way too many reports just because they can. Less is more. If you want a well-run organization, focus on just the information you need to make decisions. It cost money to produce each report. Not just to compile, produce and distribute the reports – but the cost to capture the information and reconcile it once its captured. There’s a cost to every additional field you require to be entered in the database. There’s another cost to reconcile each field that humans have entered. But the biggest cost is the lack of focus. If you have too many reports, they become meaningless and critical decisions get lost.

The next post in the reporting series will focus on how to decide which reports you should create.

What I like about having a formal human capital strategy is the ability to see how human resources fits together. When we first met with our Insperity recruiters they asked, what is your culture?  What kind of behaviors are successful at GrowthForce? I hadn’t ever considered defining the “culture” or the “behaviors” that were successful for us. Before Insperity, if you could communicate well, were presentable, had QuickBooks experience and would work for the salary I was paying, and could fog a mirror, you were hired.

Now we’re smarter. The first step to a human capital strategy is defining the strategic plan. For most small businesses there is a company strategic plan – In the Owners Head. I knew where I wanted to take GrowthForce, but like most CEOs who are blowing and going that vision was not communicated clearly. If your staff tell you they need ESP to read your mind, read “Start with WHY?” by Simon Sinek and take the time to answer these questions to start your strategic plan.

1. Why do you exist?
2. Why do clients hire you?
3. Why would people want to work for you?

Take the “Why do you exist?” answer and lay out the vision for your company and define the initiatives to get there.

Then you can define the mission, vision and values.

Doing a strategic plan does two important things to a human capital strategy:

1. Helps force the CEO or management team agree and articulate the vision and plan to get there so the entire business can get aligned behind it. The key word here is alignment. Without this clarity of who you want  to be and how you get there, you can’t pull the horses in the same direction – which is what a human capital strategy is all about.

2. It also provides a rallying point for everyone in the company which gives a reason for being. We all look for a higher purpose in life. Why am I here?  If its just to come in and process accounts payable for my clients, its hard to get motivated to give that extra discretionary effort. But if its to be part of a team that is “reinventing the world of small business accounting in ways so profound the business owner will never go back”, that’s a completely different purpose, a different reason to wake up each day to do your job.

We hired Kris Kwalik, of Rodin Consulting to help us with our strategic plan. Insperity helped us take that strategic plan and use that to define: Mission, Vision, Core Values. In addition to the vision of reinventing the world of small business accounting, here’s what we came up with:

Mission

GrowthForce’s mission is to help high-performing small businesses grow by providing financial intelligence as a trusted service partner.

We exist to help small business grow by enabling owners to focus on their core competencies. They do this by leveraging our investment in technology & training which combines best practices in business automation with sound financial concepts.

Our mission will be accomplished by building a great place to work supported by well-trained, talented employees who build their careers while working close to their homes.

Core Values

GrowthForce operates and makes decisions based on six core values:

1. Integrity without compromise (we have open, honest communication and full transparency, especially with tough issues)
2. Delight clients (we proactively solve problems)
3. Take care of our employees (we laugh often and enjoy the journey)
4. Innovate & improve (ours is an environment that constantly learns from mistakes)
5. Own the outcome (each person is accountable for their goals or escalates any issues)
6. We work to live, not live to work

Now we have a starting point for HR.  Who are we?  What’s important?

A second fact about all service businesses is labor is the biggest expense in the business.  In fact, after pricing, hiring is usually the most important decision the small business owner will make.

The ability to utilize staff time and labor dollars effectively is the key to success in a true service business.  A human capital strategy is also known as a talent management strategy.  How are you managing the talent you have in your organization to get you the greatest return on your investment in their salary – your biggest cost?

At GrowthForce we use Insperity (the PEO formerly known as Administaff) as our outsourced HR department.  I’ve learned a lot as a client of Insperity and, because I have come to believe their services are a difference maker in our outsourced bookkeeping and controller services, I’ll share them here.

The official Insperity marketing speak on why I needed a human capital was what sold me originally, so I’ll start there:

• Maximize the return and minimizing risk and cost on the people side of the business
• Designing talent management systems to attract and retain the right people
• Implementing performance based compensation systems to get discretionary effort
• Applying performance management technologies to align people and define training needed so each person can achieve the highest and best purpose.

To turn this brochure-wear into tangible results I worked with our service team to break this down into actionable strategic initiatives.  In GrowthForce we did that over the past four years by breaking this down into eight parts that are organized in what I call “circle of life”.

Over the next few posts I’ll review each aspect…

#4 Social Circle is the Winners Circle

Social networking over the next decade

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