My Business: Held Together By Band-Aids and Duct Tape

By 0 Permalink 0

Last week, I told you my BIG WHY that propelled me into business and also what keeps me motivated to push forward. Where I left off was after I started the company. You see, when I started Knutson CPA, I didn’t really have a “business plan”. My plan was to secure an office, hire the right marketing person, get the word out, and start serving customers. And in the beginning, that’s just what we did.

People came our way, and we would take them on as long as they had a checkbook (and heck, even sometimes when they didn’t!) We worked for anybody and everybody that could pay us, and that fostered crazy growth.

We grew so fast my head begin to spin. Challenges and obstacles cropped up all over the place. There was no time to seriously look at an org chart, software solution, or a growth plan, so we used Band-Aids and Duct Tape on the issues that arose.

By our third year in business, I can say with confidence my business was held together by Band-Aids and Duct Tape! Did I realize there was a problem? You bet! But I didn’t know how to craft a cohesive operating plan- a plan that would allow me to become profitable and actually pay myself. (Moment of truth? I went for two years before taking a paycheck.)

Speaking of taking a paycheck, we have discovered that many small business owners go months or years without paying themselves. Sure, they pay their employees, but their paycheck is the last to be considered when it’s time to run payroll. This can lead to resentment on the owner’s part:

  • Resentment toward the wonderful employees they hired to grow the business. And,
  • Resentment towards the business itself. The business of their hopes and dreams. Their baby.

Fast forward to the fall of 2014. I discovered the book Profit First by Mike Michalowicz. When I read this book, I learned a new way to look at accounting and a way out of my Band-Aid and Duct Tape mess.

The standard GAAP (Generally Accepted Accounting Principles) equation for finances is:

Income – Expenses = Profit

But Profit First says the way you look at your business should be:

Profit = Income – Expenses

The math is the same, but the perspective is incredibly different. It says that PROFIT is what you shoot for. PROFIT is what you look at first. YOU, business owner, get paid.

Want to know more about this revolutionary way of running a business? Want to hear how it completely pieced together my Band-Aided and Duct-Taped mess?  Stay tuned for next week’s blog post!

My Capsule Wardrobe and Capsule Business Niche

By 2 Permalink 0

Last week’s post detailed what a Capsule Wardrobe is and how I created mine.  At the same time I created my Capsule Wardrobe, I was on a journey of simplifying my business. I was thrilled to realize several parallels between my Capsule Wardrobe and my simplified business focus. You might almost say that I discovered a Capsule Business Niche.

One “aha moment” about the Capsule was when I realized that I needed to carefully consider what I put in my capsule because I would have to live with it and wear it for three months. I realized that if it isn’t something that I loved or didn’t bring me joy I would quickly tire of the item during those three months. Also, I want quality things in my capsule, and I find that I should spend a little more to buy what I really love because I know I am going to wear them many times and won’t be frivolously spending money on any other clothing pieces during the season.

I carefully considered what I selected for my Capsule and realized this is similar to choosing a niche for your business.

It’s been said that:

Finding a niche is one of the best ways to increase the profits in your business. Standard ways to niche are:

  • Who-The customer or client you serve
  • What-The product or service you offer
  • Where-The market where you appear
  • How-How you go about providing your service or product offering

It is important to niche your business because you will be spending about 90% of your time in the who, what, where and how. Also, it helps whittle down the competition as your business niche clearly identifies whether you are the best fit to a potential customer.

In determining your business niche, it is critical that you carefully evaluate whether you are energized by the customers for whom you work. Do they make you excited to come to work everyday or are they a drag on your energy? When you think about the product or service you are offering, is it your best work? Is it what you are truly gifted in-your core competency?  How about the market you serve? Is it one that you love and are passionate about or just the most convenient when you started the business?  What about the “how”? Do you go about your work in a special way that sets you apart from the competition?

Have you niched your business? What kinds of successes or challenges have you seen from doing so? Please leave a comment to let me know!

Tidying Up My Finances

By 0 Permalink 0

In last week’s blog post, I introduced Marie Kondo’s book The Life Changing Magic of Tidying Up and explained how I began my tidying journey.  After I purged my home of junk and clutter, I had an overwhelming desire to declutter everything in my life.  The thought echoing in my mind was:

Everything must be tidy.

How much joy could I experience by having my entire life tidied?

Tidying Up My FinancesCredit Cards

The need to simplify went hand in hand with the Profit First philosophy. As I walked through the Profit First method of accounting and banking in my company, I realized tidying up my finances needed to come next.

For years, I had accumulated credit cards. Any time a store offered a deal, discount, free shipping, or friends and family pricing for card holders, I signed up immediately. After all, I rationalized, it’s a bargain. I would be a bad steward if I didn’t take the card. I realized, however, that in order to receive free shipping on an order and redeem my $10 discount, I needed to spend $50. That just caused me to spend money on things I didn’t need and that did not bring me joy. Managing the “discount” credit cards actually cost me a large amount of energy and money, brought distraction, and cluttered up my wallet and finances. I no longer wanted to use my energy and brainpower to manage the many credit cards in my wallet. I begin to cancel them and cut them up one by one, and therefore, tidying up my finances. 

Tidying Up My Finances with MikeMy Profit Assessment Meeting with Mike

When I first started implementing the Profit First methodology in my own company, I had a strong desire to become a Certified Profit First Professional, so I applied to do so with Profit First. The first step in my journey to become certified was analyzing a Profit Assessment on my very own business with Mike Michalowicz, the author of Profit First!  We scheduled a conference call and went over the details of my Profit Assessment. During that phone call, two main points of focus came to mind:

  1. Our business was going in too many different directions. We needed to tidy up and rid ourselves of the services that were not profitable. As Mike taught in Profit First, The niches are in the riches. One specific area of low profitability immediately came to mind, it was something we had maneuvered around for years. Mike guided me to the reality that this particular service needed to be let go in some fashion. We needed to create a laser focus.
  2. My company could no longer use a credit card. Even though it was the kind that was paid off from month to month, for me to be a purist and embrace Profit First system fully, spending on a credit card just wouldn’t work. The money needed to be spent in cash via a debit card.

I needed confirmation that the right thing to do was cut up my company credit card. My initial plan was to take a month. As recurring bills hit the credit card, I would change the billing to a debit card. But I’m not much on an ease-into-things-kind-of-girl. When I make a decision, I like to start right away. I realized almost instantly, that we had to get rid of the Amex. I pulled everyone’s credit card and started paying for all our bills with a debit card.

That month was painful! I was paying for everything twice- the credit card bill with the charges in arrears and the current monthly expenses as they occurred. However, the joy I felt the next month when I didn’t get an Amex bill, made the pain worthwhile. I no longer dread the 17th of each month when I would receive a bill that was somewhat of a surprise. (I don’t like surprises. As a company, we focus on no surprise bills for our customers. This new method of tidying up my finances and paying for things up front fell right in line with that philosophy.)  

Now, I know how much money I have available all the time and I’m truly living the Profit First focus. Stay tuned for next week’s blog post – Grasping Opportunities

The Beginning of My Tidying Journey

By 0 Permalink 0

Marie Kondo Tidy UpIn the Fall of 2014, I read Profit First by Mike Michalowicz and had no idea that this one small book would launch me on a year-long reading and re-thinking journey from cluttered confusion to calm profitability.

Profit First turned the traditional method of accounting on its ear (more about that here) and although I struggled with the idea at first, it made a HUGE amount of sense to me!

Next, while ice bound, in February of 2015, I read The Life Changing Magic of Tidying Up by Marie Kondo. (Ask any Texan how many seasons we have, and they will say two – Summer and ice. When ice storms hit, they make driving almost impossible, so we do our best to stay off the roads.) The weather that caused me to stay home for two days gave me a unique opportunity to focus on this small, hardcover book and its process.

The book addressed challenges I had faced my entire life:

  • Clutter
  • Accumulating “stuff”
  • Binge shopping
  • Buying items and then not knowing what to do with them.

I had an inability to make decisions about where to put things, and it stressed me out more than I realized. Marie Kondo’s methods and philosophy of doing one large purge and tidying up in your home and life rang true in my mind. This was the answer to the question I didn’t realize I had been asking:

“How can I simplify my life?”

I decided now was the right time. I followed Marie’s advice and picked up each item in my home, touching the material and asking her one critical question:

Does this spark joy in my life?”

As I started the tidy up process around my house, I noticed I felt less stressed and more calm.

One of my huge “aha moments” while implementing the Marie Kondo tidying method was that once I rid myself of things that did not bring me joy, I couldn’t buy any NEW items that didn’t bring me joy!

I admit to you that I still struggle a bit with how to find that joy in the store as I’m shopping. Much of that challenge probably has to do with the fact that I do a lot of online shopping. I can’t touch the item when I’m browsing online to see if it brings me joy. However, I can order it, touch it when it arrives at my house. If it doesn’t bring me joy I can ship it back, thanks to my ever-patient daughter, Marissa, who takes packages back to the post office.

Be sure to read next week’s blog post on how finances were the next stop on my personal journey of tidying my life.