Monthly Archives: April 2014

Our 3rd Tax Season

Funny how time flies; has it really been three years?   We’ve posted in the past how our 1st and 2nd tax seasons played out, so in keeping with tradition, this post will tell how this year went.

We’ve got some more analysis to do, but here are some of the successes that we are aware of:

  • Approximately 150 clients served
  • 50 new clients entrusted us with their tax situation
  • Revenue growth in excess of 20%
  • Processed returns in 20 states, which is a 18% increase vs. last year

Our Challenges
This year was not without its challenges.  Some of these were self imposed (i.e. possibly setting the bar a little too high) while others were outside of our control.  With that being said, here is what we faced:

Staffing.  In working to grow and serve more clients, you have to add infrastructure.  While we did a good job on the employee screening front, we encountered a issue mid season that required a personnel change.  The biggest problem with this is that it happened mid season so finding a replacement was a little challenging.  However, we successfully navigated that challenge and in this post, our first employee discusses their time working with us.

Testing marketing programs.  This year we went a little big on the marketing front and threw our hat into the ring on multiple fronts.  Problem with this is 1) it cost money and 2) you won’t know what doesn’t work until you test it.  Needless to say, we did find out what made the phone ring and people come through the door.  The downside is that we spent a lot of money to get that education.

Hey, who is that guy?!?!

Hey, who is that guy?!?!

Aggressive projections.  Last year we had a 3rd party source that brought us a sizeable amount of business.  Problem with that is that we based our projections for this year with that business in mind.  Unfortunately, we lost a nice chunk of that business (i.e. the clients didn’t repeat) which of course impacted our numbers.  But the lesson learned is that past performance is not indicative of future results.  So we’ll lick our wounds on that front and come back with a new plan for next year.

In the end, we continue to plod along and we continue to grow.  More clients come to us each year and tell us how glad they are to have found us.  This gives us hope that if we keep acting like the little engine that could, maybe one day we’ll make it to the top of the mountain!

How To Deal With Being Scared

Sometimes, we all feel like this!

It’s okay to feel like this!

I can’t tell you how many times in a given year that I feel, just how I look in the picture above.  Being an entrepreneur is the ultimate personification of the term uncertainty.  You never know what is going to be thrown at you on a daily basis.  Despite your projections, you never really know if your sales are going to materialize like you envision.  But even more unsettling, you never really know if, or how long, you’re going to survive.

In a post we’ll upload in a few days, you’ll learn of some of the challenges we faced this tax season.  But every year around this time, I personally face a challenge; the transition back to contract work.  Essentially, when tax season ends I become a freelancer and go and work a “gig” with whoever needs an experienced finance resource.  The fears around this time always boil down to 1) if I will be able to find work and 2) how long it will take before my finances begin to get tight.

About a week ago I found myself having a panic episode about the above.  All those fears and little thought gremlins were hard at work and my emotions were running wild alongside them and their journey.  So here are some tips for dealing with being scared, many of which I used that miserable night:

Take a deep breath.  When faced with an uncertain situation, it’s important to stay calm.  If you can’t focus on what is going on, you will never be able to come up with the solution.  So take a deep breath and calm down.  I can’t tell you how many situations I’ve been in where initially it appeared that there we so many moving parts that I would never get my arms around them.  But once I took a deep breath, I could then do this:

Focus on what you CAN control.  When presented with a challenging situation, you may feel that there is nothing you can do.  Fortunately, this is usually not the case.  This is just the human reaction to not knowing what to do FIRST.  Thus, you need to analyze the situation to see what you can do, control or influence.  Once you identify the above, you can stop being scared.

Formulate your plan.  I’m a big list person.  The reason?  Well, when you make a list and cross items off one by one, you know what you do?  Make progress!  Action and progress are what move you forward and get you closer to your goal.  So once you know what you can change or influence, formulate your plan of attack.  This will give you a very clear picture of what needs to be done and where you should wind up when everything is complete.

Begin to execute.  This is simple enough.  Move forward, step by step, and don’t look back.

Keep moving forward to keep your mind from being idle.  We’ve all heard of the saying that an idle mind is the Devil’s playground.  If you let up from your actions then all those fears and thought gremlins will come right back.  So, if your actions aren’t generating the desired results, don’t sit there and mull it over.  Reevaluate your actions, look at your plan, make the necessary modifications and then press on.

Financial Rules For Marriage

Many failed marriages often cite financial troubles as a major factor in the breakup. This isn’t surprising because the way we use our time and money often reflects our values. Without a strong set of shared values, marriages can drift apart. But, dealing with finances together can bring a couple closer. With that said, here are some principles that you can use to help build wealth and strengthen your marriage.

Start as newlyweds. There’s no better time to establish the rules of a relationship than at the beginning. Furthermore, every seven years you delay starting a savings plan cuts in half your ultimate net worth in retirement. Chances are you know someone who’s getting
married this year (of even this month) so send them a copy of this blog post.  It may be more valuable than the check you write.

Budget as a team. Shared activities help you build and integrate your values and keep your finances in sync with the rest of your life. Couples that share philanthropic causes or other activities often do better financially because their common vision allow them to work together instead of pulling in different directions.

The more opportunities to forge shared values, the better the marriage team. Even the simple process of creating and
adjusting a family budget, provides a forum for discussion of what is really important to the family.

Realize that a budget gives you freedom. Partners without a budget can, and often do, fight about every dollar spent. Every purchase is an opportunity for values and priorities to clash. Yet couples who have worked together on a budget are already in agreement on the big picture. Once the difficult decisions are made about what will help further the family’s values, the specific purchases in each category are much less relevant.

Additionally, couples with a budget do not get concerned about spending until a category goes over the budgeted amount. Having decided how much money the family can afford to spend on clothes for him or her, the scrutiny over if he prefers lots of inexpensive clothes and she prefers a few nice pieces tends to diminish.  Thus, a budget allows discretion and freedom to prevail within cooperation and teamwork.

Pay yourself first. The best way to achieve your financial goals is by moderating your spending and staying on track with your savings needs. Only after you have saved several times your annual salary does the rate of appreciation become more important than the rate of savings.

To pay yourself first, set up an automatic monthly transfer from your checking account to an investment account where your contribution is automatically invested in a diversified portfolio. Even a small amount makes a big difference. Just five hundred dollars a month (just $6,000 a year) at 11.5% each year will compound to a million dollars by the middle of the 26th year. Money makes money. And the money that money makes, makes even more money.

Limit spending unless you both agree. A single mistake can undo months of frugality and sacrifice. Therefore, big purchases require both members of the team to agree. Honoring each other in this way helps avoid resentment and disgust.

When a couple is just starting out, this dollar limit may be very small, perhaps only fifty dollars. As the couple matures, they will grow to anticipate each other’s wisdom and values; plus, they will likely be able to increase their discretionary spending limits.

Differentiate your needs from wants. In the US, nearly all of our purchases are wants, not needs. Humans really need little more than food, shelter and clothing to survive. It is easy to fall into the
misconception that we deserve nice things because we work hard. But “true” wealth is what you save, not what you spend. The textbook definition of capital is deferred consumption, and wealthy people learn to value financial security over immediate gratification.

Our company has worked with families with very modest incomes who, through saving and investing, have grown to be millionaires. On the other hand, we have worked with couples who spent every dollar of dual six-figure incomes. The difference in achieving financial success is separating needs from wants.

Everyone should own a piece of the budget. Both members of a marriage should have a slice of the budget which is completely at their discretion. So long as their spending stays within this thin slice of the budget pie, they can be completely frivolous. Perhaps it is only 0.5% of your total budget, but it will provide a place to put purchases that otherwise might cause marital strife.

If one partner collects Strawberry Shortcake dolls and the other signed collectible baseball cards, they can both enjoy their frivolous
expenditures without jeopardizing budget items that are more
important to the family.

Couples that learn to live proportionately maintain their balance whether they are rich or poor. No matter the circumstances, they include some fun, some gifting, and some investing as a reflection of their shared family values.

6 Quick Negotiation Tips

Whether you work for an employer or own your own business, the ability to effectively negotiate can make the difference between success and mediocrity.  It doesn’t matter what industry you’re in, or how far you are in your career.  This is because the skill of “getting to yes” is one not widely taught.

With that said, whether it’s a multi-million dollar contract, a job offer, or a luncheon, keep this advice in mind the next time you approach the negotiating table:

Know what you want. Don’t go to the table without a clear, realistic idea of what you want to achieve. It will help you negotiate with confidence.

Ask for what you want. Don’t be afraid to make the first offer. You’ll set the tone for the discussion, and studies suggest that the negotiator who goes first usually comes closer to getting what he or she wants.

Understand what your partner wants. A successful negotiation should satisfy both sides.  Instead of trying to crush your competition, find out what he or she hopes to get, and try to work together toward a solution that works for you both.

Don’t concede unilaterally. Usually one side or the other has to give something up. If you do that, be sure to get a comparable concession from the other person. Giving away something for nothing will be taken as a weakness to be exploited.

Don’t rush. Time can be your friend if you’re willing to wait for the right deal. If the other side senses a deadline, he or she may be motivated to hold out until the last minute, or try to force you into accepting unreasonable terms. Be patient and let the time pressure work against your partner.

Be ready to walk away. This can take a certain amount of courage, but it’s necessary to avoid being backed into an agreement you don’t want. If possible, keep an ally in reserve—someone with the power to approve or reject the deal. This can give you an out if you need to turn down a deal, or motivate the other side to make the best offer