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  • Stay Ahead of the Game: Key Tax Deadlines for Businesses in 2024

    As the new year rings in, so too does the inevitable dance with deadlines, especially for businesses navigating the labyrinthine world of taxes. Fear not, tax warriors! This article breaks down the key tax deadlines for businesses in 2024, ensuring you stay compliant and avoid penalties.

    First Quarter:

    • January 16 (moved from 15th due to holiday): Pay the final installment of your 2023 estimated taxes. Farmers and fishermen, this is also your estimated tax payment due date for 2023. Don’t miss it! If you skip it, you’ll need to file your 2023 return and pay all taxes due by March 1, 2024, to avoid the penalty.
    • January 31: Send out W-2 forms to your employees and file certain 1099 forms with the IRS. This includes Forms 1099-NEC for non-employee compensation and Forms 1099-MISC for certain types of payments. Make sure your employees and recipients have their documentation in time!
    • March 15: For partnerships, multi-member LLCs, and S corporations, this is your tax filing deadline for 2023. Remember, if you missed the estimated tax payment on January 16, you can still avoid penalties by filing and paying everything today.

    Second Quarter:

    • April 15 (April 17 in Maine and Massachusetts): This is the big one! C-corporations, this is your tax filing deadline for 2023. Individuals and sole proprietors, you have until this date to file if you paid your 2023 estimated taxes on time.
    • April 15: This is also the estimated tax payment due date for the first quarter of 2024. Get those calculations done and make sure your payment is in on time.
    • June 16: Your second quarter estimated tax payment for 2024 is due. Stay on top of it!

    Third and Fourth Quarters:

    • September 16: Extended deadline for filing partnership and S corporation returns from 2023. Take a breath, but don’t leave it to the last minute!
    • October 15: Extended deadline for filing C-corporation returns from 2023. Don’t procrastinate, get it done!
    • December 16 (C corporations) or January 15, 2025 (individuals): Your final estimated tax payment for 2024 is due. Make sure you’ve accurately estimated your income for the year to avoid a surprise at the end.

    Pro Tip: This is just a snapshot of key deadlines. Depending on your specific business type and filing status, there may be additional deadlines that apply. Stay informed by regularly checking the IRS website or consulting with a tax professional.

    Bonus Tip: Automate and file electronically whenever possible! Not only will you save time, but you’ll also minimize the risk of errors and missed deadlines.

    Remember, staying informed and organized is key to navigating the world of business taxes. Mark these deadlines in your calendar, set reminders, and get your documents in order. With a little planning and preparation, you can conquer tax season like a pro!

  • Choosing a Business Entity for your Startup

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    What are the most common business entities for small businesses?

    There are several types of business entities that small businesses can choose from, each with its own advantages and disadvantages. The most common types of business entities for small businesses are:

    1. Sole proprietorship: A sole proprietorship is a business owned and operated by a single individual. It is the simplest and most common form of business organization.
    2. Partnership: A partnership is a business owned by two or more individuals who share profits and losses. There are several types of partnerships, including general partnerships, limited partnerships, and limited liability partnerships.
    3. Corporation: A corporation is a separate legal entity owned by shareholders. In many cases for small businesses this would be an s-corp. It offers limited liability protection to its owners and is more complex to set up and maintain than other business structures.
    4. Limited liability company (LLC): An LLC is a hybrid business structure that combines the liability protection of a corporation with the tax benefits of a partnership. It is a popular choice for small businesses because it offers flexibility and simplicity.
    5. Nonprofit: A nonprofit organization is a type of business entity that is formed for the purpose of providing a public service or benefiting the community, rather than for the purpose of making a profit.
    [/et_pb_text][/et_pb_column][et_pb_column _builder_version=”4.19.4″ _module_preset=”default” type=”2_5″ theme_builder_area=”post_content”][et_pb_blurb title=”If you would like a more detailed explanation to get the most out of your business Check out these Resources ” image=”https://sugoibusiness.com/wp-content/uploads/2023/01/11-15-22-05-45-33_26-300×300.png” _builder_version=”4.19.4″ _module_preset=”default” theme_builder_area=”post_content” hover_enabled=”0″ sticky_enabled=”0″ url=”https://markjkohler.com/all-products?rfsn=6678487.95719b0″ link_option_url_new_window=”on” title_text=”11-15-22-05-45-33_26″ border_width_all=”5px” border_color_all=”#0E3701″]

    Mark J Kohler is a CPA and Attorney that specializes in business and asset protection.  He hosts the Main Street Business podcast and does much training to help small business owners be successful.  If you are serious about starting and growing your business you need to check out the resources available at markjkohler.com

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    What are the advantages and disadvantages of a sole proprietorship?

    Sole proprietorships are the simplest and most common form of business organization. They offer several advantages, including:

    1. Easy to set up and operate: Setting up a sole proprietorship is relatively simple and requires minimal legal formalities.
    2. Complete control: As the sole owner, you have complete control over your business and can make all decisions.
    3. Fewer regulations: Sole proprietorships are subject to fewer regulations than other business structures, such as corporations.
    4. Flexibility: You can change the nature and direction of your business easily.
    5. Tax benefits: Sole proprietorships may be eligible for certain tax deductions and credits.

    However, sole proprietorships also have some disadvantages, including:

    1. Unlimited liability: As a sole proprietor, you are personally liable for all debts and obligations of the business.
    2. Difficulty raising capital: It can be difficult to raise capital for a sole proprietorship, as you cannot sell ownership shares in the business.
    3. Limited growth potential: The growth potential of a sole proprietorship is limited by the personal resources of the owner.
    4. Lack of continuity: The business ends if you die or decide to sell or close it.
    5. Limited professional reputation: A sole proprietorship may have a limited professional reputation compared to larger businesses.
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    What are the advantages and disadvantages of a limited liability company?

    Limited liability companies (LLCs) are a hybrid business structure that combines the liability protection of a corporation with the tax benefits of a partnership. They offer several advantages, including:

    1. Limited liability protection: LLC owners, called “members,” are generally not personally liable for the debts and obligations of the LLC.
    2. Flexibility: LLCs have flexibility in terms of management and tax treatment. They can be managed by the members or by a board of managers, and they can choose to be taxed as a corporation, partnership, or sole proprietorship.
    3. Pass-through taxation: LLCs are taxed as a “pass-through” entity, meaning that the LLC itself is not taxed on its income. Instead, the income is passed through to the members and taxed at the individual level.
    4. Ease of formation: LLCs are relatively easy to set up and operate compared to corporations.

    However, LLCs also have some disadvantages, including:

    1. Higher startup costs: The initial costs of setting up an LLC may be higher than those for a sole proprietorship or partnership, as you may need to pay legal and filing fees. It is highly recommended that this be done through a knowledgeable attorney.  Although you are able to easily file directly with some states where they generate the LLC documents, these documents are generally not sufficient to limit your liability in case of issues.
    2. Complexity: LLCs may be more complex to operate than sole proprietorships or partnerships, as they have more formalities and record-keeping requirements.
    3. Self-employment taxes: Members of an LLC who are actively involved in the business may be subject to self-employment taxes.
    4. Limited life: The life of an LLC is limited to the life of its members unless provisions are made in the operating agreement for the LLC to continue after the departure or death of a member.
    5. Limited ability to raise capital: It can be difficult to raise capital for an LLC, as you cannot sell ownership shares in the company like a corporation.
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    What are the advantages and disadvantages of an S-Corp?

    An S corporation, also known as an S-corp, is a type of corporation that elects to be taxed under Subchapter S of the Internal Revenue Code. S-corps offer several advantages, including:

    1. Limited liability protection: S-corps offer the same limited liability protection as regular corporations, meaning that shareholders are not personally liable for the debts and obligations of the corporation.
    2. Pass-through taxation: Like LLCs, S-corps are taxed as a “pass-through” entity, meaning that the corporation itself is not taxed on its income. Instead, the income is passed through to the shareholders and taxed at the individual level.
    3. Potential tax savings: S-corp owners may be able to save on self-employment taxes by electing to be treated as employees of the company and receiving a salary, in addition to any profits distributed from the corporation.
    4. Professional image: S-corps may have a more professional image than other business structures, such as sole proprietorships or partnerships.

    However, S-corps also have some disadvantages, including:

    1. Complexity: S-corps have more formalities and compliance requirements than other business structures, such as sole proprietorships and partnerships.
    2. Restrictions on ownership: S-corps are limited to 100 shareholders, and all shareholders must be individuals, certain trusts, or estates. They cannot be owned by other corporations or partnerships.
    3. Double taxation: While S-corps are not taxed at the corporate level, the salaries and bonuses paid to shareholders who are also employees may be subject to both income and payroll taxes.
    4. Limited flexibility in allocating profits and losses: The profits and losses of an S-corp must be allocated among shareholders in proportion to their ownership interests.
    5. Potential loss of corporate tax deductions: S-corps may not be able to claim certain corporate tax deductions, such as the deductions for charitable contributions and domestic production activities.
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    Which entity should I choose?

    Your choice in most cases is not permanent, so in general it is best to start with the simplest of the entities which is the sole proprietorship.  If you are in a position where lawsuits are more likely such as in rentals, construction, or other professional fields you should start at least as an LLC.  As income starts to increase the tax advantage of an s-corp becomes very desirable.   Your final choice depends on a variety of factors that are too complex to address in an article.  It is recommended that you consult with an attorney that specializes in business entities to determine the best entity for your situation. 

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  • Accounting for Startups

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    Why is accounting important for a small business?

    Having an effective and current accounting system in place is probably the biggest factor in whether a business is successful or if it fails.  Knowing the numbers is absolutely critical in making so many business decisions from pricing products and services to determining effective marketing strategies.  Keeping good books is also essential to meet your tax and legal obligations. This may be terrifying for some of us but it does n0t need to be.  In many cases for individuals everything you need could easily be done in a paper ledger or a spreadsheet with a shoebox for receipts.  For many online businesses, the sales and cost of goods are tracked by the software you are using,  however, to take advantage of other tax-deductible expenses you will want to track those as well.  In most situations, businesses will use accounting software. 

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    How do I use a paper-based ledger for accounting?

    To do accounting on a paper-based ledger, you will need to follow these steps:

    • Set up your ledger by dividing it into columns. You will need columns for the date, a description of the transaction, the amount of the transaction, and the running balance.
    • Record all of your financial transactions in the ledger. For each transaction, enter the date, description, and amount in the appropriate columns.
    • Calculate the running balance. To do this, add the amount of the transaction to the previous balance to get the new balance.
    • Repeat this process for every financial transaction.
    • Periodically reconcile your ledger with your bank statement to make sure that all transactions have been recorded and that the balances match.

    It is important to keep your ledger organized and up-to-date, as it is the basis for creating financial statements and making informed business decisions. If you need help setting up or maintaining a paper-based ledger, you may want to consider consulting an accountant or financial advisor.

    .

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    How do I Choose Accounting Software?

    There are many factors to consider when choosing accounting software. Here are some things you may want to think about:

    1. Cost: How much can you afford to spend on accounting software?
    2. Features: What features do you need in your accounting software? Do you need something basic or do you need more advanced features like inventory management and project tracking?
    3. Ease of use: How easy is the software to use? Is it user-friendly, or will you need to spend a lot of time learning how to use it?
    4. Compatibility: Is the software compatible with your business’s other systems, such as your point-of-sale system or your CRM?
    5. Integration: Does the software integrate with other tools you use, such as your bank, your invoicing software, or your payroll service?
    6. Scalability: Will the software be able to grow with your business?
    7. Customer support: What kind of customer support is offered by the software company?

    It can be helpful to do some research and compare different accounting software options to find the one that best fits your business’s needs and budget.

    In most cases, one of the options from Quickbooks is the best solution.  There are other great programs available, but having something that integrates so well with banks, other software, and accounts software are extremely helpful.  It has many great features that allow you to track receipts, mileage, track time, and much more.

    [/et_pb_text][/et_pb_column][et_pb_column _builder_version=”4.19.4″ _module_preset=”default” type=”2_5″ theme_builder_area=”post_content”][et_pb_code _builder_version=”4.19.4″ _module_preset=”default” theme_builder_area=”post_content” hover_enabled=”0″ sticky_enabled=”0″ text_orientation=”center”][/et_pb_code][et_pb_code _builder_version=”4.19.4″ _module_preset=”default” theme_builder_area=”post_content” text_orientation=”center” hover_enabled=”0″ sticky_enabled=”0″][/et_pb_code][et_pb_button button_text=”Buy it on Amazon” _builder_version=”4.19.4″ _module_preset=”default” theme_builder_area=”post_content” hover_enabled=”0″ sticky_enabled=”0″ button_url=”https://amzn.to/3Z39j4W” button_alignment=”center”][/et_pb_button][/et_pb_column][/et_pb_row][et_pb_row _builder_version=”4.19.4″ _module_preset=”default” theme_builder_area=”post_content”][et_pb_column _builder_version=”4.19.4″ _module_preset=”default” type=”4_4″ theme_builder_area=”post_content”][et_pb_text _builder_version=”4.19.4″ _module_preset=”default” theme_builder_area=”post_content” hover_enabled=”0″ sticky_enabled=”0″]

    What information needs to be tracked in accounting?

    A business needs to track a variety of financial information in order to make informed business decisions and prepare financial statements. Here are some things that a business might need to track in accounting:

    1. Revenues: This includes all of the money that a business receives from the sale of goods or services.
    2. Expenses: This includes all of the money that a business spends to operate, including things like rent, utilities, salaries, and supplies.
    3. Assets: These include things that a business owns that have monetary value, such as cash, inventory, equipment, and property.
    4. Liabilities: This includes debts and other obligations that a business owes to others, such as loans and accounts payable.
    5. Equity: This represents the ownership interest in a business and includes things like the value of the owner’s investment and retained earnings.
    6. Taxes: A business needs to track its tax obligations and payments to ensure that it is in compliance with tax laws.

    By tracking this financial information, a business can make informed decisions about how to allocate resources, set prices, and plan for the future. For a simple business with little complexity, accounting is a simple process.  As complexity increases the software you use will make the complex operations pretty simple.  Keeping good books is a must for any successful business, fortunately, with today’s resources, it’s easy and affordable.  

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  • What are the Risks of Starting a Business?

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    What are the risks of starting a business?

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    Starting a business can be a risky venture. Some of the biggest risks to starting a business include:

      1. Financial risk: Starting a business requires a significant investment of time and money. There is always the risk that the business will not be successful and the investment will be lost.
      2. Market risk: There is always the risk that the market for the product or service offered by the business will not be strong enough to support the business.
      3. Competitive risk: The business may face strong competition from other businesses offering similar products or services.
      4. Operational risk: There is always the risk that the business will not be able to operate efficiently or effectively due to various internal or external factors.
      5. Legal risk: There is the risk that the business will be sued or face legal action for various reasons.
      6. Reputational risk: The business’s reputation may be damaged by negative publicity or negative reviews.

    It is important for entrepreneurs to carefully assess and manage these risks in order to increase the chances of success for their business.

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    How do you mitigate these risks?

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    There are several ways to mitigate the risks of starting a business:

    1. Conduct market research: Researching the market and gathering information about potential customers, competitors, and industry trends can help reduce the risk of market and competitive risks.
    2. Develop a business plan: A well-crafted business plan can help identify potential risks and develop strategies to mitigate them.
    3. Build a strong team: Surrounding yourself with a team of skilled and experienced individuals can help mitigate operational risks.
    4. Obtain appropriate insurance: Insurance can help protect against financial and legal risks.
    5. Manage finances carefully: Careful financial management can help reduce financial risks and increase the chances of success for the business.
    6. Foster good relationships with customers and stakeholders: Building strong relationships with customers and stakeholders can help reduce reputational risks and increase the chances of success for the business.

    It is important for entrepreneurs to carefully assess and manage these risks in order to increase the chances of success for their business.

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  • 7 Habits of Highly Effective People (Required Reading Book 2)

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    My second recommendation of must-read books for anyone considering entrepreneurship or just about any other area of life is the timeless 7 Habits of Highly Effective People. The Seven Habits of Highly Effective People is a self-help book written by Stephen Covey that aims to help people improve their personal and professional effectiveness. The book’s central theme is that people should focus on “principle-centered” living, which means living according to a set of universal and timeless principles.

    Get it on Amazon

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    The seven habits outlined in the book are:

    1. Be proactive: Take initiative and responsibility for your life, rather than being reactive to circumstances.
    2. Begin with the end in mind: Set clear goals and a plan for achieving them.
    3. Put first things first: Prioritize important tasks and manage your time effectively.
    4. Think win-win: Seek mutually beneficial solutions to conflicts and problems.
    5. Seek first to understand, then to be understood: Listen actively to others and seek to understand their perspective before communicating your own.
    6. Synergize: Work effectively with others to achieve greater results.
    7. Sharpen the saw: Take care of yourself physically, mentally, emotionally, and spiritually to maintain effectiveness over the long term.

    Overall, the Seven Habits of Highly Effective People encourages readers to adopt a proactive, goal-oriented, and principle-centered approach to personal and professional development. It has become a popular and influential book, with millions of copies sold worldwide.

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  • What you need to know when starting a business

    There are many factors to consider when starting a business such as acquiring customers, making sure you have the inventory and supplies on hand, hiring and managing employees, acquiring real estate or equipment, and much more. A few of the areas that tend to get neglected are determining the appropriate business structure and setting it up correctly to meet legal requirements and making sure you have a good accounting system in place from the start. As a result of shortfalls in these areas, many businesses that are based on fantastic ideas fail.

    Remote Accounting Finance Jobs. Online Accounting Solution. Candid portrait of female accountant

  • You need a Side Hustle

    Some people are able to enjoy their life with only one job, but most of us need at least two jobs to make ends meet. A side hustle is an additional source of income that can help supplement the bills. Even if you are comfortable with your primary income, having your own business provides huge tax benefits. The beauty of a side hustle is that it gives you autonomy over your time and what you’re worth. I just want to share a few of the key benefits of having a business on the side.

    One key thing to note is that when we are talking about a side hustle we are not talking about a second job.  Working as a teacher during the day and then as a cashier at a store in the evening and on weekends will not provide the benefits we are looking for. The key to success in this endeavor is to own a business that you can build and get the associated tax benefits from.  This doesn’t necessarily mean you need to start a business from the ground up because there are many opportunities such as delivery driving or gig work that will meet these standards.

    One of the greatest things about owning your own business is that you’re in control.  Well, that’s not entirely true depending on the nature of your business.  If you doing delivery driving or gig work you do have a lot of control over when you work and how much you work, however, many businesses have a little more control over your schedule than you would expect.  For example, I have a few rental homes, and in general, I can schedule maintenance around my schedule and things run pretty smooth.  This is not always the case, We had a tenant that moved out to avoid eviction and left the place in shambles.   My family and I spent almost all of Christmas Break that year cleaning out, repairing, and remodeling to get it to rent-ready without losing too many months’ rent.  The point is that when you provide a service that customers count on, you will be accountable to the customers and when the service is needed.  Disasters aside you still maintain a large amount of autonomy and control over your schedule and work environment.

    Another key benefit is that your efforts build your personal equity.  We often talk about the benefits of building equity in a home, but building equity in yourself is equally important.  When we run a business we are building relationships, reputations, and experience that we can leverage for even greater success. Even if the initial business does not succeed, the relationships, reputation, and experience are there to help give us a head start in the next venture. In addition to the intangibles, many businesses generate income and assets that heal to build our wealth over time.

    Finally one of the great benefits of owning a business relates to the tax benefits.  Did you know that you are able to write off a portion of your home for a home office, many vehicle expenditures, travel, and vacations, as well as the obvious business expenses?  You are also able to self-direct some of your retirement funds

    This is a photograph of The Tax and Legal Playbook by Mark J Kohler

    and invest in your startup. The tax benefits are huge, but you need to be careful to make sure you are doing everything right. and that is beyond the scope of this post.  The best resource I’ve found is Mark J. Kholers book “The Tax and Legal Playbook” If you are starting a business or already have a business this book is a must-read to make sure you are getting the most benefit from your business.

    In conclusion, owning your own business is a great way to make more money and control your own destiny. You can also enjoy tax benefits that you wouldn’t have with a normal job. Now’s the time to start thinking about how you can get in on the action!

    Affiliate Notice

  • Write your business plan

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    Your business plan is the foundation of your business. Learn how to write a business plan quickly and efficiently with a business plan template.
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    You might prefer a traditional business plan format if you’re very detail-oriented, want a comprehensive plan, or plan to request financing from traditional sources.

    When you write your business plan, you don’t have to stick to the exact business plan outline. Instead, use the sections that make the most sense for your business and your needs. Traditional business plans use some combination of these nine sections.

    Executive summary

    Briefly tell your reader what your company is and why it will be successful. Include your mission statement, your product or service, and basic information about your company’s leadership team, employees, and location. You should also include financial information and high-level growth plans if you plan to ask for financing.

    Company description

    Use your company description to provide detailed information about your company. Go into detail about the problems your business solves. Be specific, and list out the consumers, organization, or businesses your company plans to serve.

    Explain the competitive advantages that will make your business a success. Are there experts on your team? Have you found the perfect location for your store? Your company description is the place to boast about your strengths.

    Market analysis

    You’ll need a good understanding of your industry outlook and target market. Competitive research will show you what other businesses are doing and what their strengths are. In your market research, look for trends and themes. What do successful competitors do? Why does it work? Can you do it better? Now’s the time to answer these questions.

    Organization and management

    Tell your reader how your company will be structured and who will run it.

    Describe the legal structure of your business. State whether you have or intend to incorporate your business as a C or an S corporation, form a general or limited partnership, or if you’re a sole proprietor or limited liability company (LLC).

    Use an organizational chart to lay out who’s in charge of what in your company. Show how each person’s unique experience will contribute to the success of your venture. Consider including resumes and CVs of key members of your team.

    Service or product line

    Describe what you sell or what service you offer. Explain how it benefits your customers and what the product lifecycle looks like. Share your plans for intellectual property, like copyright or patent filings. If you’re doing research and development for your service or product, explain it in detail.

    Marketing and sales

    There’s no single way to approach a marketing strategy. Your strategy should evolve and change to fit your unique needs.

    Your goal in this section is to describe how you’ll attract and retain customers. You’ll also describe how a sale will actually happen. You’ll refer to this section later when you make financial projections, so make sure to thoroughly describe your complete marketing and sales strategies.

    Funding request

    If you’re asking for funding, this is where you’ll outline your funding requirements. Your goal is to clearly explain how much funding you’ll need over the next five years and what you’ll use it for.

    Specify whether you want debt or equity, the terms you’d like applied, and the length of time your request will cover. Give a detailed description of how you’ll use your funds. Specify if you need funds to buy equipment or materials, pay salaries, or cover specific bills until revenue increases. Always include a description of your future strategic financial plans, like paying off debt or selling your business.

    Financial projections

    Supplement your funding request with financial projections. Your goal is to convince the reader that your business is stable and will be a financial success.

    If your business is already established, include income statements, balance sheets, and cash flow statements for the last three to five years. If you have other collateral you could put against a loan, make sure to list it now.

    Provide a prospective financial outlook for the next five years. Include forecasted income statements, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, be even more specific and use quarterly — or even monthly — projections. Make sure to clearly explain your projections, and match them to your funding requests.

    This is a great place to use graphs and charts to tell the financial story of your business.  

    Appendix

    Use your appendix to provide supporting documents or other materials were specially requested. Common items to include are credit histories, resumes, product pictures, letters of reference, licenses, permits, patents, legal documents, and other contracts.

    Example traditional business plans

    Before you write your business plan, read the following example business plans written by fictional business owners. Rebecca owns a consulting firm, and Andrew owns a toy company.

    Lean startup format

    You might prefer a lean startup format if you want to explain or start your business quickly, your business is relatively simple, or you plan to regularly change and refine your business plan.

    Lean startup formats are charts that use only a handful of elements to describe your company’s value proposition, infrastructure, customers, and finances. They’re useful for visualizing tradeoffs and fundamental facts about your company.

    There are different ways to develop a lean startup template. You can search the web to find free templates to build your business plan. We discuss nine components of a model business plan here:

    Key partnerships

    Note the other businesses or services you’ll work with to run your business. Think about suppliers, manufacturers, subcontractors, and similar strategic partners.

    Key activities

    List the ways your business will gain a competitive advantage. Highlight things like selling direct to consumers, or using technology to tap into the sharing economy.

    Key resources

    List any resource you’ll leverage to create value for your customer. Your most important assets could include staff, capital, or intellectual property. Don’t forget to leverage business resources that might be available to women, veterans, Native Americans, and HUBZone businesses.

    Value proposition

    Make a clear and compelling statement about the unique value your company brings to the market.

    Customer relationships

    Describe how customers will interact with your business. Is it automated or personal? In person or online? Think through the customer experience from start to finish.

    Customer segments

    Be specific when you name your target market. Your business won’t be for everybody, so it’s important to have a clear sense of whom your business will serve.

    Channels

    List the most important ways you’ll talk to your customers. Most businesses use a mix of channels and optimize them over time.

    Cost structure

    Will your company focus on reducing cost or maximizing value? Define your strategy, then list the most significant costs you’ll face pursuing it.

    Revenue streams

    Explain how your company will actually make money. Some examples are direct sales, memberships fees, and selling advertising space. If your company has multiple revenue streams, list them all.

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  • What is Business?

    A business is any activity that provides goods or services to consumers for the purpose of making a profit. When Steve Jobs and Steve Wozniak created Apple Computer in Jobs’s family garage, they started a business. The product was the Apple I, and the company’s founders hoped to sell their computers to customers for more than it cost to make and market them. If they were successful (which they were), they’d make a profit.

    Before we go on, let’s make a couple of important distinctions concerning the terms in our definitions. First, whereas Apple produces and sells goods (Mac, iPhone, iPod, iPad), many businesses provide services. Your bank is a service company, as is your Internet provider. Hotels, airlines, law firms, movie theaters, and hospitals are also service companies. Many companies provide both goods and services. For example, your local car dealership sells goods (cars) and also provides services (automobile repairs).

    Second, some organizations are not set up to make profits. Many are established to provide social or educational services. Such not-for-profit (or nonprofit) organizations include the United Way of America, Habitat for Humanity, the Boys and Girls Clubs, the Sierra Club, the American Red Cross, and many colleges and universities. Most of these organizations, however, function in much the same way as a business. They establish goals and work to meet them in an effective, efficient manner. Thus, most of the business principles introduced in this text also apply to nonprofits.

    Business Participants and Activities

    Let’s begin our discussion of business by identifying the main participants of business and the functions that most businesses perform. Then we’ll finish this section by discussing the external factors that influence a business’s activities.

    Participants

    Every business must have one or more owners whose primary role is to invest money in the business. When a business is being started, it’s generally the owners who polish the business idea and bring together the resources (money and people) needed to turn the idea into a business. The owners also hire employees to work for the company and help it reach its goals. Owners and employees depend on the third group of participants—customers. Ultimately, the goal of any business is to satisfy the needs of its customers in order to generate a profit for the owners.

    Functional Areas of Business

    The activities needed to operate a business can be divided into a number of functional areas: management, operations, marketing, accounting, and finance. Let’s briefly explore each of these areas.

    Management

    Managers are responsible for the work performance of other people. Management involves planning for, organizing, staffing, directing, and controlling a company’s resources so that it can achieve its goals. Managers plan by setting goals and developing strategies for achieving them. They organize activities and resources to ensure that company goals are met. They staff the organization with qualified employees and direct them to accomplish organizational goals. Finally, managers design controls for assessing the success of plans and decisions and take corrective action when needed.

    Operations

    All companies must convert resources (labor, materials, money, information, and so forth) into goods or services. Some companies, such as Apple, convert resources into tangible products—Macs, iPhones, iPods, iPads. Others, such as hospitals, convert resources into intangible products—health care. The person who designs and oversees the transformation of resources into goods or services is called an operations manager. This individual is also responsible for ensuring that products are of high quality.

    Marketing

    Marketing consists of everything that a company does to identify customers’ needs and design products to meet those needs. Marketers develop the benefits and features of products, including price and quality. They also decide on the best method of delivering products and the best means of promoting them to attract and keep customers. They manage relationships with customers and make them aware of the organization’s desire and ability to satisfy their needs.

    Accounting

    Managers need accurate, relevant, timely financial information, and accountants provide it. Accountants measure, summarize, and communicate financial and managerial information and advise other managers on financial matters. There are two fields of accounting. Financial accountants prepare financial statements to help users, both inside and outside the organization, assess the financial strength of the company. Managerial accountants prepare information, such as reports on the cost of materials used in the production process, for internal use only.

    Finance

    Finance involves planning for, obtaining, and managing a company’s funds. Finance managers address such questions as the following: How much money does the company need? How and where will it get the necessary money? How and when will it pay the money back? What should it do with its funds? What investments should be made in plants and equipment? How much should be spent on research and development? How should excess funds be invested? Good financial management is particularly important when a company is first formed because new business owners usually need to borrow money to get started.

  • Getting Things Done (Required Reading Book 1)

    One of the things I would like to do in this blog, is share a few of the critical books that everyone in business, or considering getting into business reads to make the most of their opportunities.  There is a strong reason that David Allen’s “Getting Things Done” is first on the list.  The title indicates that it is mostly about accomplishing critical tasks which is important, but it is really about writing things down and determining the next action to make a project move forward.

    The process of determining the next actions is so important to move things forward.  It also gives great advice on how to clear the clutter in our minds.  While I personally am not a perfect GTD practitioner, I still feel like the value of the information in the book is still some of the most important skills we can learn to be successful.