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culture

Tips to Building a Healthy Culture That Can Grow Your Business

We are focused on building a long-term business. 

Heck, we are at the 11-year mark so we are learning and applying what we learn.

Without a doubt, at the foundation of that is people.

And the people need vision, clarity, values, and a mission to get behind. 

Prompts to get everyone aligned and moving in the same direction.

People also need to be supported, heard, cared for, and loved. 

Yup, you heard that right, loved.

culture

If you are building a business or organization, culture should be a top priority. You should be constantly thinking about how to shape, cultivate, and prune the culture.

Before we jump in, here are a few reflection questions for you:

  • How would you rate the culture in your organization on a scale of 1-10?
  • How do you define culture? And what does a healthy culture look like?
  • What investments are you making to nurture the culture that you are looking to build?

As for us, we let our customers rate us. We believe that the awesome service we strive to deliver is a reflection of the culture we have created. So we ask our customer.

Check out what clients are saying here.

We believe that culture can be defined as a set of attitudes, behaviors, and practices shared within an organization which gives it a distinctive identity.

And as for investments, we make lots. 

We have developed a care team, called Wrap Around, to care for our employees. We constantly clarify our mission, vision, and values and share ways the employees can participate in building culture. And we set aside time each month to just have fun together. But more on that later.

We believe that one of the single most important investments you can make in your business is in creating a healthy culture. And this is critical in supporting the growth of the business.

In this article, you will learn about: 

  1. Why culture matters
  2. Who’s responsible for creating and building a culture
  3. Key investments to make in culture
  4. Top 3 Takeaways

Let’s dive in.

Why Culture Matters

Legendary management expert Peter Drucker said that “Culture eats strategy for breakfast”.

Ain’t that the truth?

We believe that culture sets the foundation. 

It sets the tone for how your people operate, communicate, treat each other, make decisions, and treat your customers.

Want more?

It also sets the tone for how you hire, how you fire, and how you promote. It helps you identify customers, vendors, and partners that will align well with your organization.

In Built to Last, Jim Collins discovered that enduring companies have a culture that defines who they are and what they value to attract like-minded individuals to them. 

People who fit the culture know what to do because they can feel why it is important. Conversely, those that don’t fit the culture feel out of place.

Culture matters because it scales. 

It permeates every aspect of the business.

We are living proof of this.

Here are some outcomes of a healthy culture that we have experienced:

  • Lower employee turnover and higher engagement
  • Increased profitability
  • Increased job satisfaction
  • Stronger relationships built on trust
  • Less time wasted on non-sense such as gossip, here say and drama
  • Higher probability of achieving Company and Individual goals
  • Alignment and focus on the greater good

Here are some outcomes of an unhealthy culture that we have witnessed:

  • Higher employee turnover and lower engagement
  • Decreased profitability
  • Decreased job satisfaction
  • Weaker relationships 
  • More time is wasted on non-sense such as gossip, here say, and drama
  • Lower probability of achieving Company and Individual goals
  • Lack of alignment and focus on the great good. 

As you can see there are healthy outcomes related to a healthy culture.

And there are unhealthy outcomes relating to an unhealthy culture.

In our experience, this is a very important part of any organization. 

We believe that there is no silver bullet and it takes time to create, shape, and build a culture that will last.

Who is Responsible for Creating and Building Culture?

We believe that everyone has a role in creating and building culture.

From the newest team member to the most experienced team member folks will be either adding to or taking away from culture.

But the buck stops with the CEO or Visionary. 

The CEO needs to take ownership of the culture.

Sure we want to get the leadership team involved. This will help to multiply the efforts and bring the culture alive in the organization. 

A key point is that if the CEO does not create, and then support, the building of the culture someone else will.

Do you want your unhappy employee, who is not a right fit for your company, to go around and create the atmosphere in the company?

Probably not.

So the leadership team needs to do some groundwork in the following areas to set the baseline:

  • Define the mission
  • Define the vision
  • Define the core values

Then the leadership needs to take the following steps to build the culture:

  • Remove employees or customers that are not a core value fit
  • Provide positive feedback to employees living in the culture
  • Provide constructive feedback to employees not living in the culture
  • Bang the drum and constantly get the Mission, Vision, and core values in front of the team

At New Economy, we have a quarterly company rollout. During that meeting, we review and bang the drum on the Mission, Vision, and Core Values.

Also, we use Slack as an internal communication platform. We have a channel called core value callouts. We encourage employees to “call out” an employee and give recognition when a core value is being lived out. This helps with positive reinforcement.

There are so many different directions you can take this in.

The Company needs a Core Value Champion which is typically the CEO.

Key Investments to Make in Culture

A healthy culture takes investments.

It takes investment in time, talent, and treasures.

The more you invest, the bigger your return.

Are you willing to make investments in your organization’s culture? 

Investments in Time

We believe that building a healthy culture happens over a period of time, and it is a lifelong pursuit.

Here are some of the examples of investments that we making in time at New Economy:

  • Monthly Culture Zoom – All employees participate. This is a fun event where we create time and space to get to know each other and have fun. It is not work-related.
  • Quarterly Wrap-Around Zoom – All employees participate. We have a care team called Wrap Around. Each quarter they host an event to “wrap their arms” around the team. Our last topic of discussion is generosity in the workplace. 
  • Monthly One-On-One Zoom – All employees participate. Our first question on these is “How are you doing and how can we help?” We make these about the employees and try to remove obstacles that are preventing them from being successful.

Investments in Talent

We believe that Companies rise and fall based on leadership. As we noted above, the Leadership team has a responsibility to create a culture.

Here are some of the examples of investments that we making in talent at New Economy:

  • We have training budgets for all team members of about $1,000 per year.
  • We invite all team members to attend the Global Leadership Summit.
  • We have created a Leadership Team Oath that leaders put into
  • We have our leaders participate in coaching programs like C12, Key Players, and How to Be a Good Boss

Investments in Treasure

All we are referring to with treasure is money. Beyond developing talent and creating time for developing culture it takes monetary investments.

We have mentioned a few above in the form of the value of time through meetings and training.

Here are a few more.

  • Above we mentioned our Wrap Around team. They invest $50 per month to partner with each employee in investing in a charitable organization picked by the employee. This is $600 per year of cash donated to good causes.
  • Above we mentioned our Wrap Around team. They invest $50 per month to partner with each employee in investing in their emotional, spiritual, and physical well-being. Think gym memberships, meditation apps, and meal delivery services. This is $600 per year of cash donated to good causes.

Building a healthy culture that will last takes time.

Also, it takes investments in the form of money, talent, and more time.

But it is so worth it.

Imagine working at the place you always dreamed of working.

You can make that happen by investing in building and growing your organization’s culture.

3 Key Takeaways

At New Economy, we want to help you gain control of your finances to make smart decisions. Part of that is understanding your finances and how to drive business performance.

Here are 3 key takeaways.

  1. The CEO needs to take ownership of being the Chief Culture Officer. And he has to encourage and hold the Leadership team accountable for building and nurturing the desired culture.
  2. There are no shortcuts. Building a culture takes time and lots of work. Do the work and you will reap the rewards.
  3. Make sure you are making investments in culture. Invest in people. Invest the time in the right meetings. Invest money in the right support to help people succeed. People who buy into your culture will champion it for you.

There you have it 🙂

culture

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

Creating a Small Business Budget

A small business budget is like a treasure map. Yup, you heard that correctly. Just think of Jack Sparrow in the Pirates of the Caribbean.

Many entrepreneurs and business owners can communicate where they want to be at some point down the road. For many, that is obtaining the treasure i.e. achieving goals and financial measurables. 

But they struggle with how they are going to get there.

That’s where creating a small business budget comes into play. Think of your small business budget as the map to provide the steps to obtaining your treasure.

At New Economy, we believe in one-year, three-year, and 5-year budgets, and as we are entering into the fall, now is the time to start thinking about your budget again. As much as we love the three-year plan, this article is focused on the one-year plan.

We want to help you gain control of your finances to make smart decisions to build and grow your Company. 

 

Small Business Budget

In this article, you will learn about: 

  1. How to get started on preparing your one-year small business year budget
  2. Best practices in creating your one-year small business budget
  3. Utilizing your one-year small business budget to obtain your treasure
  4. 3 key takeaways

Let’s dive in.

How to Start Preparing Your One-Year Small Business Budget.

You might be surprised, but some of the most important parts of creating a budget have nothing to do with numbers or spreadsheets. The first part of creating a budget requires stepping back and obtaining a deep understanding of the business.

Understanding the Business

At New Economy, before we prepare a one-year budget, we spend time getting to know the business. This requires meeting with key team members like the Visionary/CEO, Integrator/COO, Operations, and Sales team leaders in an effort to gather as much knowledge as possible about the business. 

We do this because we seek to understand. We want to be able to offer up best practices and strategies to help you get closer to achieving your goals. And without historical context, an understanding of the present moment, and the future vision it is difficult to predict.

Here are some of the things we seek to obtain and understand and what you should too if you are preparing your own budget:

  • Review existing business and financial information like historical financial statements, tax returns, and business plans.
  • Review and understand unit economics. For example, the cost of making your product or service.
  • Review pricing strategies.
  • Understand management’s vision, growth, and exit plan for the business.
  • Get a sense of the resources needed to achieve the vision. Think people, equipment, technology, and so forth.
  • Understand the finances and capital in place to support the business.
  • Understand the sales and marketing process and review all collateral.
  • Understand the issues and challenges the business is facing.
  • Get a sense of the overall market conditions and opportunities in the specific industry.
  • Review key documents like customer agreements, employee agreements, and bank documents.

It seems like a lot and it is, but it’s important. We typically have a few sessions to do these knowledge and data transfers.

By reviewing all of this information, we are able to obtain a baseline understanding of the business and the direction that management is looking to go. We use this as the foundation for building a one-year small business budget. So don’t rush through, take your time and seek to understand. Soon, you’ll have what you need to create the map that leads to your treasure.

Best Practices For Creating Your One-Year Small Business Budget

Okay, now we are ready to get started.

Tools and Technology

There are many forecasting tools out there, and we are big fans of leveraging technology. This allows for automation, reduction of errors, and possibly some time savings.

A few forecasting tools to check out are:

  • Jirav
  • Spotlight
  • Fathom

However, at New Economy, we tend to gravitate towards either Excel or Google Sheets. We find they allow us to customize the levers and unit economics and inputs specifically to your business. In other words, we have extreme flexibility when building out the budget.

There is no wrong answer here, but staying consistent with a single tool is the best route.

General Framework

At New Economy, we build our budgets much like your historical financial statements. So our budgets encompass three financial statements:

  • The Balance sheet
  • Profit and loss statement
  • Statement of cash flows

You’ll need this to produce budget versus actual information but more on that later.

When building out financial statements, we take a detailed approach and use the chart of accounts in your financial statements to build the budget. Yup, we do it line item by line item based on each account so we create variance reporting at month end.

Further, we build out the financial statements by month. So each financial statement will have monthly balances. The end product is a Balance Sheet, Profit and Loss statement, and statement of cash flows that mirrors your financial statement accounts and is produced by month.

Input Sheets

Next, we move into the input sheets. These sheets are the drivers, the levers that feed into the financial statements mentioned above. By setting up input sheets, you are able to run “what if” scenarios and change your assumptions which will ripple throughout your financial statements.

Here are some key examples of input sheets:

  • Staffing Sheet – This sheet represents the team you have and the new hires you will make. You can add new hires, increase compensation, add benefits, and even remove staff. The idea is to show what your team is going to look like over the next 12 months and how much it is going to cost the business. Again, this is done monthly and at a detailed level. 
  • Operating expense Sheet – This sheet represents the general expenses and overhead needed to support your business over the next twelve months. Think about expenses like rent, insurance, software costs, and marketing expenses. These are your fixed costs and the idea is to show how much it is going to cost the business. Again, this is done monthly at a detailed level.
  • Revenue and Cogs Sheet – This sheet represents your revenue and the direct costs to produce that revenue. We like to get very detailed on the revenue side. For instance, as you build this sheet out, think about the economic units. Meaning, can you build this sheet out showing # of units x price per unit to get to sales? This allows you to make different assumptions around growth. On the Cogs side, it is variable with revenue. We do build them from the bottom up and get a sense of the costs needed to produce one unit of revenue. But we also look at it from the top down and look at the overall gross profit margin as a gut check. Again, this is done monthly at a detailed level.

Financial Statements

This is where the magic all comes together. 

You should have a good understanding of the financials since the budgeted financials are just a forward looking picture of the actual financials you review at the end of each month.

In our framework section, we discussed the basic layout as follows:

  • Balance sheet by month
  • Profit and loss sheet by month
  • Cash Flow Statement by month

Your traditional financial statements that give you a sense of how your business is performing from a financial perspective on a month to month basis. And we have both the actual historical financial statements for each month as well as the future oriented budgeted financial statements out into the future.

Your Actual and Budgeted Balance sheet will show all of your assets, liabilities and equity.

Your Actual and Budgeted Profit and loss statement will show all of your revenue and expenses.

Your Actual and Budgeted Cash Flow statement will show you where your sources and uses of cash are coming from.

All of the financial statements in our budgets are linked up to the input sheets. So any changes you make in the input sheets ripple through the financial statements automatically.

We feel it is important to take a detailed approach to budgeting and have your budgeted financial statements mirror your historical actual financial statements which we discuss in the next section.

 

Utilizing Your One-Year Small Business Budget to Obtain Your Treasure

Now that you have a one year budget in place, let’s talk about the ways to use it.

  • Variance reporting  – Variance reporting is something that happens at month end. Once you close the books for a month and have your actual financial statements we review a variance report. This can be system generated from an accounting system like QBO. The value here is understanding which line items are on track or off track against the budget. Then you can assign a team member to look into why and help understand if any necessary changes are needed to get things back on track.
  • What if scenarios  – We often get asked questions like “can we afford to hire?” Or “if we do hire, what is the impact on profitability”? While most entrepreneurs have a pretty good gut answer we prefer to utilize the data. We would run the hire and salary through the staffing tab to see the impact on the profit and loss statement. Then we can answer the question accurately as to the financial impact of that decision. So you can use the budget to get a sense of the financial impact of any decision you are about to make in your business.
  • Reforecasting  – As the months march on we should be learning about the business. We are aiming for the results laid out in the original budget. However, much of the learning we are obtaining may result in some re forecasting. For instance, maybe we want to increase marketing spend above the budget amount because it is resulting in revenues above the budget amount. So you can use the budget to create a reforecast which is simply changing underlying assumptions in the input tabs based on the direction of the business. But be careful, you want to continue to hold yourself accountable to the original budget.

There you have it. We hope the  road map above gets you closer to your treasure.

Here are three key takeaways:

  1. First and foremost, every Company needs a budget. A budget will help you understand the resources needed to chase after your vision. Further,  budget will help you to determine on a month to month basis whether or not you are on track.
  2. Leverage your data to make smart decisions. If you have questions or decisions to make, use your budget to understand the financial implication of those decisions. You now have a tool to help corroborate your “gut” response to decisions.
  3. Turn your budget into a forecast. Every month, you will be gaining new insights into your business. You have the opportunity to apply that learning along with the financial impact by reforecasting your numbers. We suggest doing this on a monthly or quarterly basis. But keep your original budget intact as those are the goal posts for the year.

 

Small Business Budget

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.

15 Small Business Tax Savings Strategies

Okay, so you have worked really hard to generate a profit in your business, great job! However,  welcome to America and meet your new friend the Internal Revenue Service (IRS). 

If your business is incorporated and has generated net income you can expect to pay taxes on your hard-earned profit.

Are you ready for that?

Here is the good news. 

At New Economy, we’ve created a process and tools to help you keep more of that hard-earned profit in your pocket which we will talk about. As we are entering into the fall, now is the time to pay attention to this.

We want to help you gain control of your finances to make smart decisions to build and grow your Company. 

In this article, you will learn about: 

  1. Our repeatable process to mitigate and plan for your small business taxes
  2. Top small business tax savings strategies
  3. Top Takeaways

Let’s dive in.

Small Business Tax Savings Strategies

What is the Repeatable Process to Mitigate Small Business Taxes?

First off, we believe that every business should have some core accounting and financial processes and systems. These processes and systems should be geared toward providing you with timely and accurate financial information to make smart decisions. 

Before we talk about mitigating taxes, let’s have a quick refresher on the tools that need to be in place to provide the visibility needed. Or you can refer to our blog post on the Top 4 Financial Tools for Success.

Financial and Accounting First

1.Month-end close  The goal of the month-end closing process is to ensure that your numbers are accurate. This is important as you’ll need to leverage your month-end financials to build and grow your business. This process is usually owned by a more experienced team member, like a controller. The deliverable is a set of accurate business financial statements. 

But how does this relate to taxes? We need to understand how the business is performing from a profitability perspective. So as of September 30th do you have net profits? This is an important question to answer.

2.Financial modelThe goal of this process is to provide you with a flexible picture, based on your assumptions, of the future financial condition of the business. Further, it will provide you with a road map of where the business is headed. This process is usually owned by a more experienced team member, like a CFO. The deliverable is a set of projected business financial statements to give you a sense of how your business is expected to perform.

So back to our example above, if the monthly close is showing a profit of $200,000 as of September 30th, what is projected to happen over the 4th quarter? Maybe the profits will increase or maybe they will decrease. 

So the idea is to get a glimpse of how the business has performed to date and then predict financial results through the end of the year. Back to our example:

  • $200,000 of profits as of September 30th
  •   $50,000 of profits expected in the 4th quarter
  • $250,000 of profits that are taxable income

With this information, we can eliminate surprises and work on tax planning. Every business owner should know where they stand from a financial standpoint at all times.

Now, onto Taxes

Okay, so now to taxes. 

At New Economy we think about taxes year-round, yup you heard that right. 

We have a dedicated team member assigned to every client who engages in ongoing tax planning. This gives our business owners peace of mind. 

We love this meeting cadence as it allows our Tax Expert to stay up to date on the happenings of the business.

In case you were wondering, here is a glimpse into our tax process:

Quarterly

  • Tax Expert reviews the Monthly close and Financial projections
  • Tax Expert identifies risks and opportunities driven by the IRS
  • Tax Expert has a quarterly Client Tax Zoom to get a business update and share risks and opportunities
  • Tax Expert offers up key takeaways and action items

The goal of the above is to eliminate tax surprises and to stay on top of taxes year-round by leveraging our meeting rhythm process.

How often do you talk to your tax person? 

We believe it should be on an ongoing basis.

Annually

  • Around the September time frame, the Tax Expert schedules a Zoom with the client to determine the financial performance of the business
  • Assuming profitability, the Tax Expert will run a Tax Projection. The tax projection is a “what if” scenario-based tool with the goal of making decisions to minimize taxes
  • Based on the advice of the Tax Expert, the client is able to make decisions before year-end to take advantage of tax strategies to minimize taxes

As you can see, we are in lock-step with our clients. Before the end of the year, we devise a plan that can be executed to mitigate taxes.

Our Tax Expert is not checking in just annually at the time of the tax return filing, but they are keeping up to date on happenings to best advise our clients. 

The goal is to keep more money in your business so you can invest in your business.

Okay, so what about some strategies?

 

Small Business Tax Savings Strategies

Below, we’ll rifle off a list of 15 small business tax savings strategies, but remember, your specific situation and circumstances matter. 

Hold tight, here we go.

  • Review your entity type to ensure it makes sense. Utilizing the right business entity (for your specific business) may significantly improve the tax efficiency of your business.
  • Review your accounting method to make sure it makes sense. Consider whether you should be a cash or accrual basis taxpayer. This can make a big difference in terms of when income or deductions are reported.
  • Establish a retirement plan for your employees. This is a great way to attract and keep talented employees. Further, it is a way to capture some extra tax deductions.
  • Establish a health insurance plan for your employees. This is a great way to attract and keep talented employees. Further, it is a way to capture some extra tax deductions.
  • Establish a general fringe benefit plan for your employees. This is a great way to attract and keep talented employees. Further, it is a way to capture some extra tax deductions.
  • Bonus out at year-end. This one speaks for itself. Who doesn’t love a year-end bonus? And you get the tax deduction.
  • Prepay expenses at year-end. If you have the cash, spend some of it. It’s possible you can buy some extra deductions.
  • Max out retirement contributions at year-end. Your contributions are pre-tax. Take advantage of it and max it out.
  • Establish a match on employee retirement contributions. Keep your employees happy and grab this extra tax deduction.
  • Prepay bonuses at year-end. More employee happiness and grab this extra tax deduction.
  • Buy assets and accelerate depreciation. Grab that laptop, vehicle, or piece of equipment before year-end and let’s accelerate the depreciation and grab an extra tax deduction.
  • Write off bad debts. Have a customer or two that will not pay? Write the balance off and grab an extra tax deduction.
  • Ensure you’re grabbing all the credits out there like R&D. There are lots of tax credits out there. Don’t miss them, they offset your taxable income.
  • Defer taxable income. Play the game. Defer income to next year and pay taxes on it next year.
  • Consult a tax advisor. A tax advisor is different from a tax preparer. A tax advisor will get to know you, your goals, your business, and help you make smart decisions to achieve your goals. Everyone wants to minimize taxes, right?

The above list is not all-inclusive. Further, the facts and circumstances from business to business differ and are always subject to changes.

The best thing we feel you should do is stay on top of this and talk to your tax advisor on a regular basis.

Here are three key takeaways:

  1. Make sure that you have access to financial information on a monthly basis. By reviewing and analyzing your financial information you can begin to get a sense of tax implications well in advance of the tax filing deadline. Remember, the goal is not surprises and minimizing taxes
  2. Review your tax situation on a quarterly basis. Ask yourself:
    1. Should you be making estimated tax payments?
    2. Are you taking advantage of changes to tax laws?
    3. Are you making decisions that will reduce your tax liability on an ongoing basis?
  3. Engage with a tax consultant. This is someone who will help you out with takeaways 1 and 2. You have worked so hard to generate a profit. Now let’s find a way to keep the hard-earned cash in your pocket and not Uncle Sam’s.

Small Business Tax Savings Strategies

New Economy Team Members are Experts in Accounting for Entrepreneurs

If identifying ways to decrease your taxes is not in your skill set or you want to gain control of your finances to make smart decisions to build and grow your business, New Economy is an excellent partner

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.