Experiencing business growth is always exciting for an entrepreneur, but periods of growth aren’t always continuous given that every business has ups and downs. Implement growth strategies with the tips below to help your business become more sustainably profitable over time.
Define the Purpose of Your Business
A clear purpose propels growth, profit, and sustainable success, but business owners must regularly review their objectives to be sure that they’re still serving the company in an authentic way. Does your purpose still prompt strong engagement within the company as well as with clients? Does it still lend itself to focus, drive, and innovation? A genuine and straightforward vision helps both entrepreneurs and team members to create valuable and original products and services.
Maximize Operational Efficiency
Delegate, delegate, delegate. Transferring tasks and projects to qualified employees saves you time by removing the burden of smaller duties from your proverbial plate, which allows you to focus on larger aspects of running a business. Relinquishing some of this control also allows you to move into a business leadership and visionary position at a macro level rather than spinning your wheels at the micro level just to keep the business afloat.
Build Your Brand
Your business can grow by leaps and bounds when you develop a reputable and reliable brand. A well-considered brand will help you stand out among competitors and stay fresh in the minds of both new and potential customers. However much of your budget you can allot to marketing, make sure you pin point your target audience, connect with your audience in an authentic way, and keep your messaging concise, simple, and inspiring.
Cultivate Customer Loyalty
A vital factor of business growth and sustainability is your company’s ability to keep repeat customers. Not only does establishing client loyalty help to bolster sales, it also spurs word-of-mouth testimonies that will bring in more business. Be sure to implement expectations within your hiring, training, and review processes that will strengthen your company’s relationship with customers. Keeping in touch with clients and asking their opinions will also help to ensure repeat business.
Be Attentive to Budgeting
Maintaining a budget keeps unnecessary expenses at bay and necessary expenses within financial means. Additionally, acute awareness of your company’s funds means that you know how much can be spent on marketing, technology, new product, new hires, etc. in any quarter or season. Let your budget slip and you risk delving into debt, which will only slow the long-term growth of your business.
Businesses can grow under the guidance of flexible and adaptive leaders who are willing to embrace new methods and processes, new technology, new industry standards, etc. All businesses unavoidably experience seasons of growing pains, but how you as an entrepreneur approach those seasons makes all the difference. You can continue to do the things the way you’ve always done them and risk a stagnant business, or you can embrace change and move your business forward.
Failure is a very real possibility for small businesses. It’s a reality that will test your resolve as a business owner as well as the durability of your business strategy. When giving up feels like the only option, here are some tips to turn a sinking ship around.
Connect with other business owners, influential people in your industry, and even professional business consultants. The chances are highly likely that you’re not the first business owner to be going through this phase. Be willing to ask questions and be open to new ideas.
Execute A Strategy
Do you have a clear vision of your overall strategy and the bigger picture for your business? If not, consider working with a professional marketing agency or consultant to help develop an effective plan to nurture client relationships and keep customers engaged in the long game, which will translate to consistent sales.
Invest in Employee Trust and Motivation
You wouldn’t have made it this far without significant contribution from your team, but be sure all employees are on the same page. Do they understand your business model and long-term goals? Are their contributions and talents valued? A dedicated and active team will build company morale and translate to better sales, better products, and better output.
Know Your Client Base
Business survival is dependent upon fulfilling customer needs and expectations, so it’s important to always be in tune to the pulse of industry current events, news, products, advertising trends, and overall awareness. Likewise, it’s crucial to keep your ears open to customer engagement, feedback, and satisfaction. Partake in market surveys, meet the customers you’re serving, have one-on-one meetings with clients, and invest in low-cost advertising methods.
Realize the Potential of Your Assets
If you find your business in dire circumstances, relief may come in the form of your company’s assets, which are meant to supply capital for your business. Trading assets might just prove to be the lifeline you need to keep from going under. For example, you can lease out buildings, office space, or machinery for a generous stipend. If at all possible, negotiate a rental or leasing arrangement rather than sell completely. However, if you’re convinced that selling is the right move for you, strive to maintain some proprietary rights in the property.
Go Back to the Drawing Board
Try to determine where things went awry in your business. If you collect data and monitor negative feedback, the trends will give you a clue. Start asking difficult questions about salaries, the amount of staff you’re employing, and compensation packages. What additional cost-cutting actions can you take?
On March 27 the CARES Act was signed into law in response to the COVID-19 pandemic. Below is an overview of the types of assistance available to small businesses in an effort to lessen some of the economic impact.
Paycheck Protection Program (PPP) Loan
This is a $350 billion loan program that will provide loans to small businesses for 2.5 times the average monthly payroll based on payroll reports from the previous year, with a cap of $10 million.
The interest rate for the Payment Protection Plan is 1%, and loan payments for any non-forgivable parts will be deferred for six months. The loan can become forgivable if funds are used for approved expenses: payroll costs, including continuation of health care benefits during periods of paid sick, medical, or family leave; insurance premiums; employee salaries and commissions; payments of interest on any mortgage obligation, rent, and utilities; and interest on any other debt obligation incurred before February 15, 2020. No more than 25% of the loan forgiveness can be related to non-payroll costs, and the amount of the loan available for forgiveness will be reduced if full-time employee count, salaries, or wages decrease.
Businesses and charitable nonprofits with fewer than 500 employees, self-employed individuals, sole proprietors, and independent contractors are eligible. There may be some exception to larger restaurant and hospitality businesses who have less than 500 employees per location.
Emergency Economic Injury Grants
Small businesses, private nonprofits, sole proprietors, and independent contractors who were in operation as of January 31, 2020 are also eligible for $10,000 of SBA economic injury disaster loans (EIDLs) without a repayment requirement. These loans can be used to pay for expenses such as payroll, paid sick leave to employees, production costs, as well as business debts, rent, and mortgage payments. However, using these funds to refinance pre-existing debt or to pay dividends in not permitted. The deadline to apply for an EIDL is December 16, 2020 for most states.
Debt Relief for SBA Borrowers
Included in the stimulus package is $17 billion for immediate relief to small businesses through standard SBA 7(a), 504, or microloans, which covers loan payments for existing SBA borrowers for six months. This includes principal, interest, and fees. This relief is also offered to new borrowers who take out an SBA loan within six months after March 27, 2020.
Employee Retention Credit
For employers whose businesses were fully or partially suspended as a result of COVID-19, the CARES Act specifies a refundable payroll tax credit for 50% of wages paid by employers during the pandemic. This also applies to business owners whose gross receipts declined by more than 50% when measured against the same quarter in 2019. Qualified employers with 100 employees or less are entitled to the credit, whether business is open or subject to a shut-down order. However, employers with greater than 100 employees qualify for the credit based on wages paid to employees while business is halted due to COVID 19-related circumstances.
As an American worker, relinquishing part of your income to taxes is standard practice, but once you move out of the workforce, much of your retirement income is subject to taxes as well. Below are some possible taxes you could face in retirement.
Social Security Taxes
If you have income in addition to Social Security, you will likely lose a portion of your benefits to federal taxes. To determine if your Social Security benefit will be taxable, you need to determine your provisional income. This is your income outside of Social Security—including pension payments, traditional 401(k) and IRA withdrawals, and income from a part-time job—plus half of your yearly benefits. If your provisional income totals more than $25,000 for individuals and $32,000 for couples, 50% of your Social Security benefit will be taxable. If your provisional income exceeds $34,000 for individuals and $44,000 for couples, up to 85% of your Social Security benefit will be subject to tax.
Retirement Plan Penalties
A common tax deduction tactic among workers is to deposit money in an IRA shortly before filing taxes in order to defer paying income tax on the new contributions, but this is not an option after age 70 ½. Additionally, if you miss a required distribution from your retirement accounts after age 70 ½, you will incur a 50% penalty, which is added to the income tax due on retirement account distributions. However, Roth IRAs don’t have distribution requirements in retirement, and workers older than 70 ½ might be able to delay 401(k) distributions.
Taxes on Pension Income
With the possible exception of military or disability pension, you should expect to pay taxes on pension income. However, if you contributed after-tax dollars to your pension, you won’t be required to pay tax on that part of the contribution.
Taxes on Investment Sales
If you intend to sell some investments in retirement, expect to report that sale on your tax return as a short-term or long-term capital gain or loss. Long-term gains are generally taxed at a lower rate than other types of income, but you must hold the investment for at least a year and a day in order to qualify for long-term gains. Interest income and dividends will also continue to be taxed as they were before retirement.
With the learning curve of the first tax filing season in the TCJA era behind us, year-end tax planning is a perfect time to incorporate those lessons learned. Here is a general overview of some steps business owners can take in their year-end tax planning.
If your business has acquired a fixed asset or property (one that you don’t intend to sell for at least one year and will be used to earn long-term income), and it’s placed in service before the end of the year, you can typically write off the cost in 2019. Thanks to changes made by the TCJA, this now applies to both new and used assets. The TCJA boosted the deduction limit to $1.02 million with a phase-out threshold of $2.55 million for 2019. It also increased bonus depreciation to 100% for property placed in service after September 27, 2017 and before January 1, 2023.
The IRS recently clarified that food and beverage costs are deductible by 50% in certain circumstances and when those costs are stated separately from entertainment on invoices or receipts.
One of the most significant changes made by the TCJA affects owners of pass-through entities (partnerships, S corporations, and LLCs) as it authorized a deduction of up to 20% of the owner’s qualified business income (QBI) for the tax years 2018 through 2025. The QBI deduction is reduced for some taxpayers based on the amount of their income, so some individuals may need to consider reducing their taxable income so it falls under the $157,500 threshold ($315,000 for married filing jointly), whether by making contributions to retirement plans or health savings accounts, or even through charitable contributions. Something to keep in mind is that specified service business owners, which includes most personal-service providers, are not eligible for the deduction if their taxable income is above a certain threshold.
It isn’t a bad idea to complete minor repairs by the end of the year because the deductions can offset taxable business income. However, costs of improvements to business property must be written off over time. If you’re unsure whether a specific renovation or upgrade falls under a repair or an improvement, the IRS recently issued regulations that clarify the distinctions.
Estimated Tax Payments
If your corporation is anticipating a small net operating loss for 2019 but a substantial net income in 2020, you might think about accelerating just enough of the corporation’s 2020 income to create a small amount of net income for 2019. You could also choose to defer some 2019 deductions. This way, rather than having to pay estimated taxes based on 100% of your 2020 taxable income, you will be able to base your estimated tax installments on the comparatively small amount of income shown on your 2019 return.