Book Report on “Originals” by Adam Grant

Preface: “original, n. A thing of singular or unique character; a person who is different from other people in an appealing or interesting way; a person of fresh initiative or inventive capacity.” – Adam Grant

Book Report on “Originals” by Adam Grant

Introduction: “Originals: How Non-Conformists Move the World” by Adam Grant is a profound exploration of how individuals can champion new ideas and drive innovation. Grant, a renowned organizational psychologist, delves into the challenges of identifying and nurturing original ideas, the importance of producing a large volume of work, and the role of feedback and collaboration in refining those ideas. He also examines how birth order and parenting practices influence creativity and risk-taking and offers strategies for fostering originality in both individuals and organizations.

Generating and Selecting Original Ideas: Grant emphasizes that while people are capable of generating a substantial number of original ideas, they often struggle to identify which ones will be successful. This difficulty arises from our inherent bias towards our ideas and our misguided perceptions of their quality. Grant argues that conviction in our ideas can be dangerous, as it leaves us vulnerable to false positives and prevents us from generating the variety needed to reach our creative potential. To overcome this, he suggests turning to colleagues who have no particular investment in our ideas and enough distance to offer honest appraisals. These individuals, often other creators, are the most accurate forecasters of an idea’s potential.

The Importance of Quantity: One of the key insights from “Originals” is the importance of producing a large volume of work to increase the chances of hitting on successful ideas. Grant points out that even the most eminent creators, such as Thomas Edison and Mozart, produced a vast quantity of work, much of which was unremarkable. Edison filed nearly 1,100 patents, and Mozart composed 600 pieces of music, but they are remembered for only a handful of their creations. This highlights that producing a huge volume of work is the single most important thing someone can do to be original. By continually generating new ideas, individuals increase their chances of finding those that will be successful.

The Role of Feedback and Collaboration: Grant stresses the importance of seeking feedback from others to assess the merit of our ideas. Since we are not reliable judges of the quality of our own ideas, it is crucial to turn to colleagues who can provide objective evaluations. This feedback helps refine ideas and identify those with the most potential. Additionally, Grant warns against relying solely on intuition, especially when lacking experience in a particular domain. Intuition is only trustworthy when people have built up experience making judgments in a predictable environment. Therefore, analysis and feedback from experienced colleagues are far better sources of insight when considering new ideas.

Raising Original Children: Grant explores the impact of birth order and parenting practices on creativity and risk-taking. He notes that laterborns consistently show greater ease with taking risks, accepting radical ideas, and embracing societal progress compared to firstborns. However, Grant argues that these patterns are more influenced by parenting practices than birth order itself. Parents tend to be more flexible and relaxed with later borns, allowing them more freedom to explore and take risks. To raise original and creative children, Grant suggests giving them the freedom to take risks and encouraging constructive rebellion. This involves steering children towards honorable and proactive behaviors while avoiding destructive paths.

Combating Groupthink: Groupthink, the tendency to seek consensus instead of fostering dissent, is identified by Grant as the enemy of originality. He argues that traditional theories of cohesion breeding conformity are a myth and examines the real causes of groupthink. To prevent groupthink, leaders should hire and solicit input from a diverse set of team members. Dissenting viewpoints, even when wrong, stimulate divergent thinking and lead to innovative solutions. Grant also advises against relying too heavily on assigning a purposeful “devil’s advocate,” as this often lacks sincerity and fails to draw out a diversity of ideas. Instead, leaders should unearth genuine dissenters and create opportunities for open-minded debate.

Fostering Originality in Organizations: Grant discusses the concept of “commitment firms,” organizations that value culture over all and hire people who conform to established characteristics. While these firms may initially outperform others, they eventually suffer from a lack of diversity in thoughts and values, leading to stagnation and failure to adapt in volatile markets. To foster originality, leaders should promote the expression of original ideas and create an environment that values dissent and diverse perspectives. This involves moving away from the maxim that team members should only bring up problems when they have solutions. Instead, leaders should invite complaints and feedback, creating an invaluable safeguard for the organization.

Conclusion: “Originals” by Adam Grant provides a comprehensive guide to identifying, nurturing, and championing original ideas. By emphasizing the importance of producing a large volume of work, seeking feedback from others, and fostering a culture of dissent and diversity, Grant offers valuable insights for individuals and organizations looking to drive innovation and creativity. The book also highlights the role of parenting practices in raising original children and the dangers of groupthink in stifling originality. Overall, “Originals” is a must-read for anyone seeking to understand and cultivate the habits of successful non-conformists.

The Clean Vehicle Credit and You

Preface: “For by Him were all things created, that are in heaven, and that are in earth, visible and invisible, whether they be thrones, or dominions, or principalities, or powers: all things were created by Him, and for Him” -Colossians 1:16

The Clean Vehicle Credit and You

The Inflation Reduction Act of 2022 may or may not have reduced inflation, but it did introduce a streamlined clean vehicle credit for qualifying clean energy vehicles placed in service from April 18, 2023, through to 2032. Since this new version of the credit is slightly less complicated than it was in prior years, and since it will be in effect for the better part of another decade, it’s worth taking a few minutes to understand it.

The Clean Vehicle Credit includes three different types of credit: one for new clean vehicles, another for previously owned clean vehicles, and yet another for “qualified commercial clean vehicles.” Let’s look first at the credit for new vehicles.

Credit for New Clean Vehicles 

To take the credit for a new clean vehicle, the vehicle must:

      • Have at least four wheels.
      • Be EITHER an electric vehicle (EV) with a battery capacity of at least 7 kilowatt hours capable of being recharged from an external source of electricity OR a fuel cell vehicle (FCV). Note that hybrids that are not plug-in will not qualify.
      • Have been manufactured primarily for use on public streets, roads, and highways.
      • Be placed in service by you in 2023 or later.
      • Be for your own use or for lease to others, not for resale.
      • Be used primarily in the United States.
      • Have undergone final assembly in North America.
      • Meet either mineral or battery component requirements, or both.
      • Have a gross vehicle weight rating (GVWR) of less than 14,000 lbs.
      • Have a manufacturer-suggested retail price (MSRP) of less than $55,000 ($80,000 for vans, SUVs, and pickup trucks).
      • EVs (but not FCVs) must be manufactured by an IRS-designated “qualified manufacturer.” An updated list can be found here.

The value of the credit for a new vehicle is:

      • $3,750 if it meets the critical minerals requirement, and
      • $3,750 if it meets the battery components requirement,

for a total of $7,500 if it meets both. Don’t worry, you don’t need to start studying up on minerals and battery components. Sellers of qualifying vehicles should be licensed dealers who are required to provide you with information you will need to claim the credit, including the credit value of the vehicle. This information will be linked to the car’s vehicle identification number (VIN). You will include the VIN on your tax return, and if it matches, the IRS should allow you the credit.

The credit is non-refundable, meaning the amount of the credit you can take is limited to your tax liability in the year you take it. An unused amount of the credit cannot be carried forward or back.

The credit is also limited by your income. If your modified adjusted gross income (MAGI) is over the limit, you are not eligible for any credit. There is no phase-out. Rather, the credit completely disappears if you earn even one dollar over the limit. For this purpose, MAGI is your adjusted gross income plus any excluded foreign income.

The one saving grace is that you can choose to use your MAGI from either the year you take delivery of the vehicle or the year before. As long as one of them is below the threshold, you can take the credit.

The most recent MAGI limits provided by the IRS for the Clean Vehicle Credit are as follows:

      • $300,000 for married couples filing jointly or a surviving spouse
      • $225,000 for heads of households
      • $150,000 for all other filers

These numbers are likely to be adjusted for inflation.

If you receive any Clean Vehicle Credit through a passthrough entity such as a partnership, S-corporation, or trust, then the income limit applies to your MAGI, not the entity’s.

A new vehicle that was used partly for business and partly for personal use must be prorated so that part of the credit is a business credit and part is personal credit.

Credit for Previously Owned Clean Vehicles

To get the credit for a used vehicle, the vehicle must:

      • Have a model year at least two years earlier than the calendar year you bought the vehicle
      • Have had a sales price of less than $25,000
      • You must not have taken the credit for a previously owned clean vehicle in the last three years
      • The used vehicle must meet all the remaining requirements for new vehicles.

The value of the credit for a used vehicle is the lesser of:

      • $4,000 or
      • 30% of the purchase price of the vehicle.
      • Like the credit for new vehicles, it is non-refundable.

Like the credit for new vehicles, the used vehicle credit will not be allowed if your MAGI exceeds certain limits in either the year you take delivery of the vehicle, or the year before. The current income limits for the used vehicle credit are:

      • $150,000 for married filing jointly or a surviving spouse
      • $112,500 for heads of households
      • $75,000 for all other filers

As with the new vehicle credit, you must buy the vehicle from a licensed dealer who will provide you with a report on the value of the tax credit for the vehicle and you will need to enter the VIN on your tax return in order to get the credit.

The used vehicle credit cannot be taken as a business credit.

Qualified Commercial Clean Vehicle Credit

Businesses cannot take the credit for a used vehicle. However, businesses can take the credit for a “qualified commercial clean vehicle,” the most valuable and least restrictive type of the Clean Vehicle Credit.

Unlike the credit for individuals, it is not subject to an income limitation or to an MSRP cap, it has no mineral or battery component requirement or assembly in North America requirement.

It can also be taken for vehicles that weigh more than 14,000 lbs. In this case, if the vehicle is an EV, it must have a battery capacity of at least 15 kilowatt hours. For a qualifying heavier vehicle, the maximum credit is $40,000 instead of $7,500.

The only catch is that the vehicle must be a depreciable asset used for business or for lease.

The Qualified Commercial Clean Vehicle Credit is also more complex to calculate. It is the least of:

      • 30% of the vehicle’s cost (15% if the vehicle is a plug-in hybrid) or
      • $7,500 ($40,000 for vehicles weighing more than 14,000 lbs) or
      • The “incremental cost” of the vehicle, which is the cost of the clean vehicle over the cost of a comparable gas or diesel-powered vehicle.

While you cannot take the Qualified Commercial Clean Vehicle Credit on a car for your personal use, this credit may mean it is cheaper for you to lease a qualifying vehicle if the leasing company is able to take the credit. This option also allows you to benefit from the credit if your income is too high to allow you to take the Clean Vehicle Credit in your own name.

Transferring the Credit to the Seller

If you are buying a new or used vehicle that you intend to use for personal use and that qualifies for the Clean Vehicle Credit, you may arrange at the time of sale to sign your Clean Energy Credit over to the seller in exchange for a reduction in the sale price. This may allow you to receive the full value of the credit regardless of your tax liability. However, this does not exempt you from the income limitation. You must still apply for the credit on your tax return and include the vehicle’s VIN. If you do not qualify, for example, because your income is too high, the amount you received from the seller will then be added to your tax. In this case, you do not need to repay the seller, the IRS will consider the amount to be repaid as part of your tax liability for the year.

The option to transfer the credit to the seller must be for the entire credit amount and not just part of it. The option to transfer may be chosen for the Clean Vehicle Credit for either a new or used vehicle, but not for more than a total of two vehicles in the same year.

Transfer of the credit is optional. The buyer is not required to elect it and the seller is not required to offer it.

In Closing

The Clean Energy Credit is a potentially valuable credit available from now until 2032. If you are considering buying an EV or FCV, look into the credit before you decide to buy. Not all vehicles you think of as “clean” vehicles necessarily apply. Not all taxpayers may take the credit or your benefit from the credit may be limited.

A good place to begin researching the eligibility of particular models can be found here.

When you buy a qualifying vehicle, make sure you get a time-of-sale report from the seller that includes all the information you will need to claim the credit.

Finally, you must reduce the cost basis of a vehicle you buy by any amount of the credit you are able to claim on it.

10 Characteristics of Successful Entrepreneurs

Preface: “The way to get started is to quit talking and begin doing.” — Walt Disney

Being a successful entrepreneur requires more than a great idea; it takes determination, resilience, and the ability to adapt to an ever-changing landscape. For those looking to understand what sets successful entrepreneurs apart, this insightful article from Harvard Business School outlines the key characteristics that drive entrepreneurial success. [Read more here].

Book Review: “Competing Against Luck” by Clayton M. Christensen

Preface: “If you do not know how to ask the right question, you discover nothing.” – Clayton Christensen

Book Review: “Competing Against Luck” by Clayton M. Christensen

Summer is a perfect time to catch up on reading, and “Competing Against Luck” from Clayton M. Christensen has been a popular choice around our office.

Clayton M. Christensen was a renowned American academic and business consultant, best known for his groundbreaking work in business innovation. As a professor at Harvard Business School, he gained international fame for developing the theory of “disruptive innovation,” which describes how new entrants can disrupt established markets by offering simpler, more affordable alternatives to existing products or services.

In “Competing Against Luck,” Christensen delves into the intricacies of successful innovation and introduces the powerful “Jobs to Be Done” theory. This concept transforms the way businesses approach customer needs and product development, providing a framework for creating products that truly meet customer demands.

For an in-depth look, visit the page here.

Understanding Child Labor Laws: Key Insights for Employers

Preface: “Train up a child in the way he should go, And when he is old he will not depart from it.” – Proverbs 22:6 (KJV)

Understanding Child Labor Laws: Key Insights for Employers

Navigating child labor laws can be challenging for employers, especially with varying regional regulations. A new article offers essential guidance on hiring young employees, covering legal requirements and best practices to ensure compliance. This resource is invaluable for businesses aiming to foster a safe and lawful working environment for all employees.

Read the full article here.

Faith Driven Entrepreneur: What It Takes to Step Into Your Purpose and Pursue Your God-Given Call to Create

Preface: “In the world of entrepreneurship, challenges are inevitable. But with faith, perseverance, and a reliance on God’s strength, you can overcome any obstacle.” — Craig Groeschel

Faith Driven Entrepreneur: What It Takes to Step Into Your Purpose and Pursue Your God-Given Call to Create is a compelling guide for entrepreneurs who seek to integrate their faith with their business endeavors. Authored by Henry Kaestner, J.D. Greear, and Chip Ingram, this book provides a roadmap for faith-driven individuals to navigate the challenges and opportunities of entrepreneurship while staying true to their spiritual beliefs.

Key Themes and Insights

Faith Driven Entrepreneur is structured around several key themes that are essential for integrating faith with entrepreneurship:

Purpose and Calling: The book emphasizes that every entrepreneur has a unique purpose and calling from God. It encourages readers to seek God’s guidance in their business ventures and to view their work as a form of worship and service to others.

Values and Ethics: The authors stress the importance of operating with integrity, fairness, and compassion. They argue that faith-driven entrepreneurs should be known for their ethical practices and their commitment to treating employees, customers, and stakeholders with respect and dignity.

Community and Support: Entrepreneurship can be a lonely journey, but the book highlights the importance of building a supportive community of like-minded individuals. It encourages entrepreneurs to join faith-driven business networks and to seek out mentors who share their values.

Impact and Legacy: The authors challenge readers to think beyond profit margins and to consider the broader impact of their businesses. They advocate for using business as a platform to address social and environmental issues and to make a positive difference in the world.

Practical Guidance: Throughout the book, the authors provide practical advice on various aspects of entrepreneurship, from developing a business plan to managing finances and scaling operations. They also share stories of successful faith-driven entrepreneurs who have navigated challenges and achieved their goals1.

Here are a few notable stories from the book.

1. The Ethical Dilemma

One of the compelling stories in the book involves an entrepreneur who faced a significant ethical dilemma. This business owner was presented with an opportunity that promised substantial financial gain but required compromising on their core values. Despite the potential for profit, the entrepreneur chose to uphold their principles, even though it meant turning down the deal. This decision ultimately led to greater trust and loyalty from customers and employees, demonstrating that integrity can be a powerful competitive advantage.

2. The Community Builder

Another inspiring story is about an entrepreneur who focused on building a strong community within their company. This individual believed that a supportive and values-driven work environment was crucial for success. By fostering open communication, collaboration, and mutual respect, they created a workplace where employees felt valued and motivated. This approach not only improved employee satisfaction and retention but also enhanced overall business performance.

3. The Social Impact Innovator

The book also highlights the journey of an entrepreneur who used their business as a platform to address social issues. This entrepreneur was passionate about education and decided to integrate this passion into their business model. They developed products and services that not only generated profit but also contributed to improving educational outcomes in underserved communities. This dual focus on profit and purpose helped the business attract like-minded partners and investors, amplifying its impact.

4. The Resilient Leader

A story of resilience is shared about an entrepreneur who faced numerous setbacks and challenges. Despite these obstacles, they remained steadfast in their faith and commitment to their vision. Through perseverance and reliance on their faith, they were able to overcome the difficulties and achieve success. This story underscores the importance of resilience and faith in the entrepreneurial journey.

5. The Mentor and Mentee

The book also includes a story about the powerful relationship between a mentor and a mentee. The mentor, a seasoned entrepreneur, provided guidance, support, and wisdom to a young, aspiring entrepreneur. This relationship not only helped the mentee navigate the complexities of starting a business but also reinforced the mentor’s own faith and purpose. This story illustrates the importance of community and support in the entrepreneurial journey.

These stories, among others, provide practical insights and inspiration for faith-driven entrepreneurs. They demonstrate that it is possible to achieve business success while staying true to one’s values and making a positive impact on society.

Conclusion

Faith Driven Entrepreneur is an inspiring and practical guide for anyone looking to merge their faith with their entrepreneurial pursuits. The authors provide a comprehensive framework for building a business that not only achieves financial success but also honors God and serves the community. By following the principles outlined in this book, faith-driven entrepreneurs can navigate the complexities of the business world while staying true to their spiritual convictions. This book is a valuable resource for anyone who believes that business can be a force for good and who seeks to make a meaningful impact through their work. Whether you are a seasoned entrepreneur or just starting out, Faith Driven Entrepreneur offers insights and encouragement to help you pursue your God-given call to create.

Biblical Business Management: Timeless Wisdom for Thriving Amidst Inflationary Pressures

Preface: “Whatever you do, work at it with all your heart, as working for the Lord, not for human masters”  (Colossians 3:23)

Biblical Business Management: Timeless Wisdom for Thriving Amidst Inflationary Pressures

In the roaring 20’s volatile economic topography, businesses face the challenge of navigating inflationary pressures while maintaining ethical and sustainable practices. Today, entrepreneurs and leaders can draw inspiration from biblical principles that provide timeless Kingdom wisdom for business excellence. 

Let’s explore these principles, along with relevant examples from the Bible:

1. Integrity

“The integrity of the upright guides them, but the unfaithful are destroyed by their duplicity.” (Proverbs 11:3)

Application in Business Life:

Transparent Business Practices: Operate with utmost transparency. Avoid hidden fees, misleading advertising, or deceptive practices.

Honesty in Communication: Encourage open and honest communication within your team.

Ethical Decision-Making: Seek ethical guidance when faced with difficult decisions.

Lead by Example: Set the highest standards of integrity as a leader.

Biblical Example: Joseph in Egypt (Genesis 39) Joseph resisted the advances of Potiphar’s wife, choosing integrity over personal gain. His unwavering commitment to honesty led to his eventual rise to power.

2. Honesty

“Honest scales and balances belong to the Lord; all the weights in the bag are of his making.” (Proverbs 16:11)

Application in Business Life:

Truthful Marketing and Advertising: Provide accurate information about your products or services.

Transparent Pricing: Clearly communicate pricing to customers.

Fair Employee Compensation: Be honest and fair in your treatment of employees.

Ethical Financial Practices: Maintain honest financial records and reporting.

Biblical Example: Zacchaeus (Luke 19:1-10) Zacchaeus, a tax collector, repented and pledged to repay those he had cheated. His commitment to honesty transformed his life and impacted his community.

3. Stewardship

“Moreover, it is required of stewards that they be found faithful.” (1 Corinthians 4:2)

Application in Business Life:

Resource Management: Use resources wisely, avoiding waste and extravagance.

Long-Term Vision: Consider the long-term impact of business decisions.

Environmental Responsibility: Care for God’s creation through sustainable practices.

Biblical Example: The Parable of the Talents (Matthew 25:14-30) The faithful stewards multiplied their talents, while the unfaithful one buried his. Effective stewardship leads to growth and blessings.

Chick-fil-A: A Modern-Day Example

Chick-fil-A, a fast-food chain, exemplifies these principles in its business model:

Customer Service: Chick-fil-A consistently ranks at the top in customer satisfaction. Employees walk through drive-thru lines to take orders via tablets, minimizing wait times.

Niche Focus: Unlike other restaurants with extensive menus, Chick-fil-A remains laser-focused on selling chicken sandwiches. This deliberate choice has propelled its success.

Franchise System: Chick-fil-A owns and operates its restaurants while offering franchise opportunities to qualified partners. This allows them to maintain quality and consistency across locations.

Closed on Sundays: Despite being closed on Sundays, Chick-fil-A outperforms competitors, averaging over $4 million in sales per store—the highest of any fast-food chain in the U.S..

Chick-fil-A’s commitment to integrity, honesty, and stewardship has made it a formidable competitor, even challenging McDonald’s dominance. As business leaders, let’s apply these biblical principles to thrive in any economic climate, honoring God in our endeavors.

Conclusion

As business leaders, let us anchor our practices in these biblical principles. By doing so, we not only thrive amidst inflationary pressures but also contribute to the testament of a just and stable economy. Remembering that our ultimate purpose is to honor God in all we do, both in business and beyond, helps to keep a Kingdom-first focus.

Tax Credit for Adoption Costs

Preface: “Your greatest contribution to the kingdom of God may not be something you do but someone you raise.” — Andy Stanley

Tax Credit for Adoption Costs

If you incur costs related to the adoption of a child, you can claim up to $15,590 as a tax credit in 2023.

In addition to the Adoption Credit, up to $15,590 of adoption costs provided by your employer can be completely excluded from your taxable income. Just make sure you don’t try to claim credit for costs you are also excluding.

The credit is non-refundable, which means you cannot claim more credit in a single year than you have tax liability. For this reason, A portion of the unused credit can be carried forward for use in up to five future tax years.

After a successfully completed adoption, an adopted child is treated the same as any other child for purposes of all dependent-related tax benefits such as the Child Tax Credit, Earned Income Credit, and Head of Household filing status.

What Costs Are Eligible?

For purposes of the Adoption Credit and Adoption Exclusion, the child you are adopting must be under 18 years old or physically or mentally incapable of self-care. The child cannot be your spouse’s child.

The metric the IRS uses to decide if a cost is qualified is if it is “reasonable and necessary” for legal adoption of a child. This typically includes court costs, attorney fees, and travel costs, including meals and lodging. Costs of surrogate parenting are not eligible.

Limits on the Credit

The limit of $15,590 applies to all costs incurred toward a successful adoption, even if it takes place over multiple years.

If an adoption attempt is unsuccessful and a new adoption attempt is begun, the costs of the unsuccessful adoption are considered part of the new adoption attempt.

This dollar limit applies separately to the credit amount and the exclusion amount.

Your ability to claim the credit or to exclude employer-provided costs will begin to phase out if your Modified Adjusted Gross Income (MAGI) is over $239,230 in 2023. It completely phases out if your MAGI is over $279,230.

To figure this phase out, MAGI means Adjusted Gross Income (AGI) modified to add back most Schedule 1 deductions and any excluded foreign income.

Foreign vs. Domestic Adoption

If the child you are adopting is not yet a U.S. citizen or resident at the time the adoption begins, the adoption is considered a foreign adoption. This means that you must wait until the adoption is final before taking the credit or excluding any employer-provided adoption costs. In the year the adoption becomes final, you may take credit and exclude all amounts eligible up to and including that year. Additional costs incurred in future years may be credited or excluded in the year they are paid.

For a domestic adoption, all credits and exclusions incurred before the adoption is final may be taken in the year following when they are incurred, even if the adoption is not yet final. In the year the adoption is final and in subsequent years, the credits and exclusions are taken in the year incurred, the same as for a foreign adoption.

Special Needs, Special Adoption Credit Rules

If you are adopting a child in a domestic adoption who is determined by a state to have special needs, you may claim the maximum amount of the credit in the year the adoption becomes final, regardless of costs you actually incurred. In this case, you will not claim the credit in years before the adoption becomes final. The credit is still non-refundable and is still subject to the same income phaseout.

For a child with special needs, you may also exclude the maximum amount of income regardless of whether your employer actually provided any adopted-related costs, but only if that employer has in place a written qualified adoption assistance program.

The Importance of Good Information

Preface: For if any be a hearer of the word, and not a doer, he is like unto a man beholding his natural face in a glass: for he beholdeth himself, and goeth his way, and straightway forgetteth what manner of man he was.” – James 1:23-24  (KJV)

The Importance of Good Information

Imagine you are rowing your boat upstream in a creek while drinking from a fire hose as water overflows the sides and leaks in through a hole in the floor. Water surrounds and pushes you.  Running a business can be like that. Information can nearly inundate an entrepreneur. There are reports on your desk of work that was completed, and someone is standing at your desk talking to you. Meanwhile, the phone rings incessantly in the background.

If you need to go somewhere in a boat and water is inundating you, the solution is not to stay out of the water. The solution is to use the water wisely to get you where you should go. Likewise, business owners may be flooded with information.  The answer is not to eliminate information.  Instead, gather the correct information and apply it wisely.

What Information to Get?

First, what information should a business owner seek out? Although the exact information that is helpful may vary from business to business, here are examples that might be useful.

What do customers want? This question could apply to former customers (why did they leave?), current customers (why are they buying from me?), and future customers (why would someone else want to buy from me?).

What can we provide? What product or service can your business offer? At first, this question might sound silly.  Business owners already know what they do, right? Is there perhaps a new offering or a tweak to an existing offering that be helpful? For example, suppose a business specializes in roofing.  Would there be benefit in adding siding to the lineup of work? Maybe or maybe not but asking what you can provide with excellence is a good question.

What have we done? You can gather information on how many products you have sold. For example, perhaps a business sold 1,000 green widgets and 1,500 blue widgets.  You can gather information on what you have done financially.  How much were your sales, your profits, your debts repaid or incurred?

How did we do it?  Businesses can document their processes for work.  If you develop a great way to efficiently work with excellence, consider documenting that information to help you repeat that work. Use that process to train new employees to learn and repeat that good work.  Documented processes don’t need to be volumes upon volumes of data.  To start, document the most important part of the most important processes.

Getting Information

Ask
If you want to know something, ask questions.  Whom should we ask?  First, consider asking yourself.  Perhaps if you sit down and think about it, the answer might come to you.  Also, consider asking your customers.  Without customers, businesses die.  Customers are a wealth of information.  Also, ask other business owners.  Consider joining a business group of like-minded business owners who can encourage each other and provide valuable information.

Seek
Sometimes, simply asking a question might not get you an answer.  The person you ask might not know.  You might have to seek diligently for it.

There may be books and articles that contain knowledge that’s applicable to you.  Have you checked to see if there are periodicals or books that would help you in your business?

In some cases, seek out specialists.  If you have a legal question, consider reaching out to an attorney.  If you have a tax question, talk with your accountant.  If you have a product question, consider calling the manufacturer of that product to see if they have input.

Sometimes you might need to experiment and develop something yourself.  If you want a product to accomplish something new, you may need to use trial and error to accomplish that.

In some cases, you might need to travel somewhere to see other businesses and talk with them to learn more about how they do things. You might go visit the manufacturer of a product you buy and talk face-to-face and get a hands-on demonstration.

Record
One fabulous source of information is your records if you track information in an accessible way.  If all your receipts, bills, and bank deposit slips are thrown in a shoebox and never organized, it might be hard to know the health of your business.  On the other hand, if detailed accounting records are kept, that information might be very helpful.

What information should you record?  This can vary from business to business.  Think about your business, and what information you want to know.  Do you want to know how many widgets you manufactured, how many customers you have, what months have the highest sales, which states you ship products into, or what do you want to know?  Consider asking others with a similar business what information they record.

Review
The information that is around us might not be helpful if we don’t review it.  Do you have a regular rhythm of reviewing your information and making changes accordingly?  How does your information from last month compare to the previous month?  Is it the same, better, or worse?  Do you have industry information to compare it to?

Acting on the Information

A person could dehydrate in the middle of a creek if they didn’t drink the water that surrounded them.  What will you do with the information that surrounds you?  Are their products that you should stop selling, or tweak?  Are there new products that you should start selling? Is there a new state in which to register for sales tax?

After you gather information, wisely consider your next steps. After you decide what you need to do, then go and do it.

Growth Through Numbers: Effective Financial Planning for Small Enterprises

Preface: A budget tells us what we can’t afford, but it doesn’t keep us from buying it.” – William Feather

Growth Through Numbers: Effective Financial Planning for Small Enterprises

Navigating the financial aspects of running a small business can be daunting, yet creating realistic financial projections is crucial for long-term success. Accurate forecasts help you make informed decisions and prepare you to meet future challenges effectively. This guide provides essential tips to help you develop reliable financial projections, ensuring your business remains on a path to success.

Establish Realistic Financial Goals
The foundation of solid financial planning is setting realistic and achievable goals based on your current financial situation. Begin by conducting a thorough review of your financial statements to understand your revenue streams, expenses, liabilities, and assets. This detailed knowledge allows you to set goals that are ambitious yet achievable, aligning with your business’s operational capabilities and market realities. By establishing clear, measurable objectives, you create a roadmap for growth and stability that is both aspirational and grounded in financial prudence.

Research Industry Trends
Keeping a pulse on industry trends is crucial for predicting future financial scenarios. Research to identify emerging opportunities and potential risks within your industry. This insight helps you adapt to changing market conditions and anticipate shifts that could impact your business. Whether it’s new technology, consumer behavior trends, or regulatory changes, staying informed enables you to adjust your business model and financial projections to stay competitive and resilient.

Develop a Comprehensive Budget
A comprehensive budget is essential for tracking and managing your financial resources effectively. This financial tool should detail your expenses and predict future costs, helping you to allocate funds efficiently. A well-maintained budget ensures that your spending aligns with your financial goals and highlights areas where cost reductions can be made. Regular budget reviews allow you to stay on top of financial commitments and adjust your spending patterns as necessary to maintain financial health.

Digitize Financial Documentation
Digitizing critical financial documents is essential for streamlining your small business’s operations. Storing files digitally not only saves space but also ensures easy access and enhanced organization. Saving documents as PDFs offers the added benefit of maintaining formatting consistency across various devices. Using a PDF maker allows you to effortlessly create or convert any document into a PDF, adapting to your needs. Embrace this change with a PDF maker to improve your document management process.

Estimate Incoming Revenue
Accurate revenue estimation is pivotal for effective financial planning. Base your revenue projections on a detailed analysis of past performance and forecasted sales figures. This method provides a realistic view of potential income, helping you to plan for future growth and investment. Regularly updating your projections to reflect actual sales results and market conditions ensures that your financial plans remain relevant and responsive.

Enhance Your Business Skills
Building business skills through online courses is a strategic way for small business owners to enhance their financial projection capabilities. Virtual programs make this easy since you can learn at your own pace, fitting education seamlessly into your busy schedule. With business courses, you can level up your accounting, marketing, and operations acumen, ensuring a well-rounded skill set. If you’re aiming to strengthen your financial projections, this deserves a look.

Analyze Business Metrics
Regular analysis of key business metrics like cash flow, profit margins, and overhead costs is essential. These metrics provide insights into your business’s financial health, guiding strategic decision-making. Understanding these financial indicators helps you identify trends, optimize operations, and improve profitability. For instance, a positive cash flow indicates that your business is generating enough revenue to cover expenses and invest in growth opportunities.

Benchmark Against Competitors
Benchmarking your performance against competitors is invaluable. This comparison not only provides perspective on your market position but also highlights areas for improvement. Analyzing how similar businesses manage their finances, respond to industry trends, and attract customers can provide strategic insights that inform your financial projections and business strategies.

Creating realistic financial projections is vital as it not only forecasts the future but also helps in actively molding it to ensure your business’s success. By setting achievable goals, improving your financial knowledge, and keeping abreast of market conditions, you position your business for sustained prosperity. The objective is to do more than just survive; it’s to flourish in today’s competitive market. This approach enables you to steer your business confidently toward long-term achievements.

To elevate your business with expert CPA services and guidance tailored to entrepreneurs, visit Sauder & Stoltzfus today!