How to save the world

The world is in rough shape right now. We’re still licking our economic wounds when suddenly – BAM – there’s more oil blasting into the Gulf of Mexico than we can possibly manage… and it just keeps flowing and flowing. The world’s attention is focused on those two catastrophes because they are simply gigantic and not easily stopped.

As business owners, we can feel powerless when faced with what seems to be insurmountable issues that even large governments and trillions of dollars cannot correct. But nothing can be further from the truth! If there is anyone who can effect change, it’s the small business owner and his or her customers.

Small business owners represent millions of people and billions of dollars of influence and their customers represent even more. We can all step out and create change. So, if the two biggest issues right now are financial and ecological, where can we start?

Financial
Let’s start with some ethical, customer-service-focused, good old fashioned sales hustle. Let’s get out there and make sales, ethically selling our high value products and services to the people who need them. And, as consumers, let’s buy from others even if the price is slightly higher than we want to pay. Getting money into the economy is going to be the best thing for it and getting a bunch of money into the economy is going to skyrocket our personal, professional, and national economies toward better conditions.

On that note, here is a great article about good and bad profit – there is a difference! – and the few simple things you can do to make sure you are earning good profit.

Ecological
Individually, we’re not going to be able to cap the oil spill or reverse the trends happening there. But collectively, we can make progress elsewhere in the ecosystem to influence an overall change for the better. That starts with going green in our business. When we go green and ask our vendors to go green and buy green products and services, we’re making a significant contribution (in dollars and commitment) toward a better environment.

And here is a great article about green marketing; about turning your business from a regular business into a green business that can promote itself as an eco-friendly alternative.

Jessica Routier, IAC-EZ

I think it’s a zero sum game

Most of the users here at IAC-EZ are freelancers, coaches, small business owners, and entrepreneurs. This is a hard-working group who believes that working for themselves provides a superior opportunity to working for others.

But this group also has a challenge that the 9-to-5 employee doesn’t have: The battle for the balance between time and money. That is: The person who is content to show up to work in the morning, spend the day at their desk, and leave work at 5 has the rest of the time to spend on themselves and their family. But the freelancer, coach, small business owner, and entrepreneur do not have that luxury. They may have to work 8 to 6, 8 to 8, or even be on call 24/7.

Most of the entrepreneurs (plus freelancers, coaches, etc.) that I know embrace the lifestyle, even if they know it’s not perfect. But ultimately, I think each one of us (I’m including myself in this group) would trade a little more money for a little more time.

It’s a zero sum game, or it’s about as near to one as you can get: I can make more money by spending more time or if I need some time to do something else, I will make less money.

It’s something I’ve spent some time thinking about, especially this month when a freelancing friend of mine got sick at the beginning of the month, worked hard to catch up on his work through the middle of the month, and then was delayed again at the end because of a death in the family. Neither “delaying” event was in his control but the lack of time equated to a lack of revenue. That’s the challenge of the self-employed.

The answer is not an easy one, nor does it happen overnight. Part of the solution, I believe, is to build up a few passive income streams (or work generated through employees) so even if you never fully replace your own personal, active income, that revenue can at least offer a cushion. Some savings, too, is important. And the minimization of debt. None of those will come as surprise to anyone, I think; I’m sure that most entrepreneurs would agree that those are useful ways to help.

There’s an interesting blog post over at TheSimpleDollar that gives an interesting perspective: The author talks about minimizing your reliance on money as much as possible while maximizing the amount of time you have. To summarize his post, he says that it’s all about time and it shouldn’t be all about money.

I think he has some interesting things to say but I’m not sure that I entirely agree. I do believe that money won’t buy happiness and time really is valuable when you can spend it with loved ones, but money is required not just to live but to build a business. If I wanted to maximize my time and minimize my reliance on money, I’d just get a regular job somewhere. Certainly the stress of annoying coworkers pales in comparison to the stresses that can come with building a business. But I, like many other freelancers, want to build something. So for a few years at least, that requires a lot of time to earn as much as possible to fund growth.

And just in case you’ve gotten to the bottom of this post and disagree or have more questions, let me clarify: This post isn’t my final word on the subject. I do think time with family is invaluable. I’d love to get to the point where I don’t work but have an income. But I’m not there yet and I don’t think you are either and until we are, we need to think about and talk about the balance between work and time. This blog post is just to continue the conversation.

Jessica Routier, IAC-EZ

How cash flow influences your business choices

I have a friend who is a freelance writer. He jumped into freelancing with both feet by quitting his job before he had any real clients. And in starting his work as a freelancer he realized he had two distinct choices:

1. He could do web writing, which tended not to pay so well (for people who were as new as he was)
2. He could write for magazines, which tended to pay considerably better.

The choice seemed easy, right? But consider this: Writing for the web meant getting paid the same week via Paypal while writing for magazines meant waiting up to 6 months before a check was mailed (because magazines pay after publishing and usually take a couple of months to publish an article).

That changed his thinking: A small amount of cash today versus a large amount of cash in the future. Given his circumstances – jumping right in with no safety net of alternate income – he started with web writing to pay the bills. Slowly he incorporated more and more magazine writing into his work but in the early days, he told me, it was nearly 100% web writing.

Although things might be different for whatever you do, the reality of cash flow opportunities is probably similar. You may have to accept smaller projects on an ongoing basis in order to keep the cash flow coming in, even if it’s not the gigantic windfall that you could have in months or years to come.

I’m a big believer in cash flow. Cash flow is huge and often under-appreciated by small business owners. In my opinion, cash flow with a little bit of profit margin is far superior to larger, slower, and irregular payments that have larger profit margins.

In thinking about increasing your cash flow, think of it like a hose. Let’s say you want to water your garden but when you turn on the hose, only a trickle comes out. You want to not only increase the amount of water coming out of the hose but also the pressure with which it comes out.

With your cash flow, it’s the same thing: You want to increase the amount of cash coming into your business but also the amount of times it comes into your business (the “pressure”). You can do this by increasing the number of clients you have, increasing your prices, getting paid in installments, creating passive income opportunities like ebooks, creating membership sites that accept regular payments, keeping on top of your receivables, and accepting advanced payment for discounted service.

Your business will be healthier when you turn up the faucet and increase the amount of cash and pressure which with it shoots out of your sales pipeline and into your business.

(And as an added tip, do what my freelancing friend did: While you may have to accept those smaller, faster-paying jobs early on, slowly try to increase the number of higher-paying, slower projects so that you’ll eventually replace your cash flow entirely with those higher payments).

Jessica Routier, IAC-EZ

Tax breaks, tax deductions, and glorious tax minimization!

There are lots of tax breaks out there, but you need to know how to find them. In this blog, we’ve collected together a few top tax breaks (and some unusual ones) that we think you might like. They might not all be usable for the tax forms that you’ve been writing but keep these in mind and use them this year.

In this blog by CPA James Maertin, he lists a number of really useful tax breaks for a number of situations. Not all of these will apply to you, but some might!  Read: “List of Tax Deductions.” Oh, and be sure to scroll down to check out his list of expenses that cannot be deducted.

Here’s a list from AllBusiness.com listing “Top 10 Tax Tips for Small and Growing Businesses.”

Forbes produced this list of “Last Minute Small Business Tax Tips”. It’s from several months ago but it’s still relevant, and you might want to apply some of these to your business practices this year to get the tax benefit at the end of 2010. Read it here.

And here’s an article from CNN Money called “Small Business Tax Tips: How to Keep More Cash.”

I thought you might also like this contrarian point of view that looks at five tax deductions many people enjoy but highlights why they aren’t as good as some might think. Read the blog at SmartMoney.com.

And for all of you small business owners out there (that’s basically all of the readers on this blog), here is a list of some of the IRS’ changes to the small business tax code for this year.

- Jessica Routier, IAC-EZ