Increased sales are not always the answer. Margins need to be in line, and expenses need to be under control.

One client had started a framing business prior to coming to Universal Accounting Center for assistance. He claimed that his sales were going through the roof… no pun intended…, as he was successful in taking business from his competition on nearly every bid. (Perhaps this should have been the first clue that something was wrong.) With further analysis, we were able to show that he was selling the finished product for less than his cost. He had to bring all three major functions into sync before his business became profitable again.

Imagine if Accounting didn’t step in with the proper information, his business could have plunged him into bankruptcy, even with high sales!  Accounting plays a crucial role in the success of any business.  Have you had similar experiences with clients or as a business owner?  Please share!

This concept is critical to the success of any business operator or internal manager. What do you have to sell? How does that product or service meet your customers’ needs? How do you get customers to your door so you can show them your product or service? If you do not have a method to sell, then there is no need to have a business.

Every asset should be engaged in making sales. Everyone in the company must have a marketing mindset! Every employee should be involved in the sales process in some way. If he or she is not involved on the front line with customers themselves, then he or she should be supporting someone who is.

Sales training is essential! Call a sales meeting often to see what is working, and what is not. Discuss changes in your sales techniques to enhance the skills of everyone. Include the office and production staff in these meetings, to hear their input, and remind them that sales make the business flourish.

A great resource for sales tips for yourself or for your clients to use in their businesses is Scott R. Sheaffer’s Sales Tips Blog.  Check it out by clicking here.

Everything you do in business is related to Marketing. Accounting should play an integral part of the marketing effort. How can an accounting system help in Marketing? Your accounting system should collect critical information for evaluation by the business operator. Your accounting system should provide the answers to the following questions which will support sales growth:

• What are customers buying? Where are they coming from? How much did each customer pay for the products and services you provide? How did they pay—cash or credit?
• What product lines are selling the most? What products have the greatest gross profit margin? How are these products selling, compared to other products? Which products are being returned? If financed, is there a correlation between the products sold on credit and bad debts?
• What is the cost of sales? Which assets are being used to create sales? (Remember, all assets in the business should be used in some way to promote sales.)
• What information from each sale needs to be collected to help in making future sales, and in responding to the customers’ specific needs?

This list of questions has helped me develop excellent accounting systems for clients.  Do you have anything to add to it?  What are your thoughts?

In my experience, giving a perk is easy, but taking it away never is.  Right now, you’re enjoying being out in front, with nobody causing you to have to stretch and manage efficiently.  Someday, that may change.  And, if it does the fancy busses, 8 months paid maternity breaks, and free gourmet food, just to name a few, may have to be reconsidered.

Although, you will likely remain among the best paying employers, and offering a creative environment, you’ll find out fast, that employees don’t like their perks taken away.  It’s called entitlement, and you’ve spoiled ‘em.  Best of luck, you’re going to need it if your business environment changes.

Universal Accounting is a great environment to work in, even without all the extra perks.  We understand that whatever perk we give, it better be one that we’re willing to stand by in good and bad times.  Because in tough times, we need the employee’s loyalty and support even more than in good times – when times are tough is a bad time to start taking things away.

In consulting with business owners, my initial analysis is always the same. I look critically at the three major functions of business—Marketing, Production, and Accounting:

• Marketing is the function of business that brings customers to your door and culminates in some sort of sale.
• Production is the function of business that deals with customers from the time of the first sale through the entire life of the relationship.
• Accounting is the function of business that gathers data and information from all the different aspects of the business.

My first observation is that most businesses do very well in one of the functions, partially well in another, and not well at all in the third. Accounting is most often the one function that falls to the bottom of the list. This means that without proper guidance, many unprofitable decisions could be made.  An accountant becomes more than an accountant when he/she can help his/her clients to bring these three functions together to increase profitability.

Stay tuned to my blog, as I will be addressing this issue in more detail in future posts.  You might also want to purchase a copy of my book In The Black, available here.

Bob asserts that a home is a liability because there’s an associated mortgage with it.  Specifically. what I understood he said was that a home is not an asset because the mortgage is a liability.  His sleight of hand is that he’s speaking of two different things:  a home and a mortgage – they are not the same.

In accounting, a home is shown as a personal asset at its market value.  The mortgage is shown as a liability at its principle value.  The difference between the two is equity.  The more equity, the greater wealth a person has.  If the person has paid off the mortgage, then the market value is the equity.  But, more importantly, when a person has paid off his mortgage, the cost for shelter is virtually eliminated.

I was further amused with Bob’s definition of wealth which is in essence the number of months a person can live without having to work.  Assuming a person has to have some form of shelter, if she’s renting, she has to pay a monthly amount to provide that shelter.  If she owns a home without a mortgage, then her wealth increases because the amount of wealth she has will last longer given the fact that she doesn’t have to make monthly payments.  The sooner she will reach that threshold by paying down her mortgage more quickly the greater the wealth she will have when that time comes.

For example, if a man monthly expenses of $4,000, including rent or mortgage payments, and has savings and investments of $100,000, then he has wealth that will last him 25 months.  On the other hand, if he has paid off his home, and his monthly expenses are only $2,000 then the same amount of savings and investments accounts for wealth for 50 months.  Using Bob’s explanation of wealth, that demonstrates a home is an asset.

That doesn’t seem too controversial to me – just simple common sense.

Every business is going to receive a complaint from time to time.  Even Disneyland®, The Happiest Place on Earth, receives complaints.  So, receiving criticism does not make a company bad or a scam.  Instead, it’s how the business responds to the grievance that makes the difference.

It’s Universal’s policy to respond quickly, usually within 24 hours, to any customer grievance and attempt to work out a resolution that will be fair to both parties.  At last count, Universal had received 24 complaints in the past three years.  Although any complaint is too many in the eyes of the customer, given that we have over 10,000 customers worldwide there’s bound to be a few mistakes made here and there.   To my knowledge every one of the customers filing those complaints was responded to quickly.

Unfortunately in working with people, occasionally it’s impossible to reach a compromise that satisfies both parties.  For instance, imagine that you were a tax preparer and you created a tax return showing substantial taxes due even though you knew your client was expecting a refund.  In spite of your careful review, there was no legal way for you to arrive at a refund for your client.  Certainly you never guaranteed a refund, yet the client refuses to pay you because it showed an unexpected result and the client can no longer afford to pay you your fees.  When you try to collect the fee, the client files a complaint that your work was unsatisfactory in an effort to try to block your collections effort.

This example is not far-fetched.  In fact, most of the complaints filed against Universal over our 30-year history have been from people who were financing their purchases, then failed to make their payments as contracted, and were seeking to be released from the balance of their contracts.

So that raises the question, what do you look at when determining whether a business is respectful or disrespectful of its customers. Here are three basic things to consider:

• How long has the business been open?
• Does the business have a legitimate license?
• What is the business’s past record with the Better Business Bureau?

To help you in making this determination, the Better Business Bureau has created a 17-element grading system that considers the number of complaints, the consistency of the company resolving those complaints, the business size, and number of customers among other things.  You’ll see that they have assigned Universal an “A” letter grade.  Please feel free to look us up by clicking here: Universal_BBB_rating.

Allen Bostrom
Universal Accounting Center

]]> http://www.allenbostrom.com/one-complaint-does-not-a-scam-make--85.html/feed 0 http://www.allenbostrom.com/alf-bostrom-ideas--80.html http://www.allenbostrom.com/alf-bostrom-ideas--80.html#comments Fri, 24 Apr 2009 23:02:48 +0000 Allen Bostrom http://www.allenbostrom.com/?p=80 The other day, I was rummaging through some of my father’s old business materials, and ran across an article that he wrote that is just as powerful and needed today, as it was two decades ago when he wrote it. In fact, with competition the way it is today, I have to say that it is even more important that every associate in a business look for opportunities to make their job and their company better. Here’s the article that my father, Alf Bostrom, titled “Ideas” – enjoy!

IDEAS

One of the most valuable assets that a valued employee has is productive ideas for the benefit of the business plus the ability to put them to work. Very often coming up with new ideas and using them creates jobs, bonuses, and profits where none of these might otherwise have existed.

I am reminded of the story of the young man who applied for a job at an automotive parts company and was told that there were no jobs available. The next day his closest friend had a job at that same company. When he asked the owner of the company why he gave his friend a job and turned him down, he was told, “Actually no job was available, but your friend suggested that the company start a delivery service and hire him with his small pickup to make deliveries.” It sounded like a good idea, and that young man was hired.

Actually both young men were qualified to fill the position and they both had small pickup trucks, but one had an idea and he landed the job.

In any business, probably the primary difference between mediocrity and outstanding performance is coming up with ideas, putting them into effect, and then following up to see that they are successful. This often has been the difference between success and failure in personnel. The primary areas within a business where ideas are continuously needed are advertising, customer relations, productivity, expense reduction, product display, sales performance, employee morale and goodwill. Actually, departmental problems are reviewed almost daily and yet very few new ideas, although discussed, are put into effect. Probably all that is needed is to realize that ideas need to be utilized. Over the many years that I have been involved in revitalizing unprofitable companies, I have often found that all that was required was putting into effect activities that were being discussed but no action was ever taken.

Now, everyone has ideas and probably many of these ideas have good points that could effectively be used if they were talked over, improved upon, and assigned for completion to the very people who promoted them. This is the reason businesses have meetings, planning sessions, and daily operating controls. One question that everyone should probably ask themselves is: “Do I pass on or utilize ideas that I have?”

A whole new life with new ideas can be put into effect at any time. Review the past, consider the present, and take advantage of the future by resolving to make each day a new day with new ideas and new performance.

Allen Bostrom
Universal Accounting Center

My Management staff is always looking for ways to show them we appreciate their efforts.  One of those suggestions was to create popcorn Tuesday.  Frankly, at one point I wondered if it was really appreciated or just an annoyance for the person making the popcorn.   So, I suggested we discontinue it.  It took only a couple of hours to find out that Popcorn Tuesday had been a hit among the employees.  So, I’m happy to say, it’s here to stay!

Allen Bostrom
Universal Accounting Center

During the past two weeks, the staff at Universal Accounting Center has been introduced, and trained on how to use and benefit from the power of FaceBook, Twitter, and LinkedIn.  All three programs are available online for free, and will network you with people in your neighborhood, or across the globe, based on your needs and interests.

If you’re not there yet, I trust you will be someday.  Hope to see you there, soon.