Cohen Consulting Group
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Do You Go to Power Hour?
I’m sure you’ve heard of Happy Hour, but have you heard about Power Hour? Power Hour is something you should be doing at least once a week during your working day. It’s the time that you carve out of your busy schedule to do the highest-payback tasks for your business. These include items like strategic planning, product or service development, deal-making, and leveraged revenue-building activities.
Chances are some of these power hour tasks may not even be on your to do list. Sometimes it takes some brainstorming and being away from working “in” your business to develop the innovative ideas you need to move your business forward.
To make Power Hour the most effective, schedule it on your calendar on at least a weekly basis (a few times a week would be better). The entire hour should be uninterrupted and free of phone calls, email, and current clients.
Power Hour should NOT include:
- Doing billable work for current clients. This will bring in income, but it will not move your business forward like higher-payback ideas.
- Checking email.
- Answering unscheduled phone calls.
- Putting out fires.
- Routine marketing work, such as going to a networking meeting or creating a web site.
- Administrative work or work that falls into your overhead bucket.
- Supervising employees.
We all keep very busy in our businesses, and if we don’t take the time to occasionally stop and take stock, we often become distracted working on things that are urgent but not important.
The things you do in a Power Hour should be a little bit (if not a lot) scary to you. In fact, that’s why we put them off. But they’re the exact things that will allow our business to really take off when we make the time and face our trepidations.
Some of the things you can consider that would go into a Power Hour:
- Identifying power partners that you can make major deals with to bring in substantial contracts or clients.
- Developing new revenue stream ideas.
- Developing human performance skills such as speaking, writing, or negotiating.
- Working with a coach or doing homework a coach gives you.
- Doing a survey to see how you can look for new ideas for new service lines to serve your customers better.
- Going after leveraged reputation-building opportunities, such as speaking to 1,000 ideal prospects or appearing in the news media.
What can you do that is going to bring in a significant amount of business across a multiple number of clients? If you think of some things, make a note right now.
Power Hour also brings perspective. It allows you to slow down and examine all of the tasks on your list to see what may not make sense to do. As your Power Hour ideas take root and produce revenue, you may very well be able to delete some items on your to-do list that are less profitable. That will free you up so that you’re working less and making more. In effect, you’ve just given yourself a raise by implementing Power Hour.
Try Power Hour for a month and see what happens in your business. If you’re already doing some form of Power Hour, formalize it, expand it, and leverage it so that you’re benefiting even more.
An Appetite for Double-Dipping (and I Don’t Mean Ice Cream)
We never think it will happen to us. Becoming a victim of fraud is a horrible experience. It can wreak financial damage, sometimes significant enough to put us out of business. It’s a time-consuming business disruption which often involves accountants, lawyers, credit bureaus, bank executives, and IRS and state tax agents (our favorite people, right?). Worst of all, it’s a betrayal by one or more fellow human beings, sometimes relatives; an intimate violation that can leave us emotionally scarred for years.
The purpose of today’s article is to get you thinking about this business threat, relay some common ways your accounting system can be used to hurt you, and to urge you to make a plan to protect yourself against fraud so you don’t become a victim.
Story time
Here’s a list of just a few common ways that someone with access to your accounting system can make off with your dough.
Paying bills you don’t owe.
If you and your bookkeeper both owe Pacific Gas and Electric, make sure the check is going to cover your account balance and not theirs. It’s a common fraud act to pay personal bills from the company account. According to a Florida CPA, “one bookkeeper promised to repay a company owner $50,000, with a second mortgage on the bookkeeper’s house, when caught using QuickBooks this way.”
Also watch out for repeat requests for reimbursements of the same receipts as well as overstated expenses due to improper use of entering bills versus writing checks in QuickBooks.
PayPal, ATM withdrawals, and petty cash violations.
Make sure you have the same controls on your bank accounts as you do your cash equivalent accounts. It’s easy for employees to abuse PayPal accounts, ATM withdrawals, and other cash equivalents if controls are not in place.\
Lackadaisical oversight.
When the cat’s away….
A Connecticut consultant’s clients were living overseas while a cousin was supposed to be handling their bills. The clients were unable to access their accounts online, so they began asking for bank statements. When they didn’t get them, they suspected something was up. They finally had to request the bank statements from the bank and found that their cousin was paying both the clients’ bills and their own bills from their account. It took four to five years to straighten out, plus a huge bookkeeping bill, and they never recovered all of the lost money.
You would hope people don’t take advantage of you when you are in a weak spot, but it didn’t happen in the next story. A Florida CPA tells of a bookkeeper and manager who stole $250,000+ while an owner was out trying to recover from a liver transplant. They kept money that should have gone to pay payroll taxes. By the time you get the IRS letter telling you of the problem, the bookkeeper and manager can be long gone.
Don’t let the mice play.
Sales irregularities.
A Florida CPA alerted me to this story. When a customer attempted to return an item to the Complete Wireless store in Edinboro, PA, the receipt could not be found. Robert Kerner, a former employee, allegedly pocketed over $19,000 worth of cash sales by deleting not only his sales receipts but the sales receipts of other workers. Journalist Tim Hahn of the Erie Times-News wrote, “Kerner admitted to taking the money in order to pay his college tuition.”
Angry employees.
An attorney who was a client of a Connecticut Timeslips consultant terminated their bookkeeper but let her work a few extra weeks. All of the billing was done in Timeslips. The angry employee deleted billings worth thousands of dollars right before she left. The Timeslips consultant was hired to attempt reconstruction of the damage.
It’s dramatic in movies when the bad guy actors escort fired employees directly out of the building (most recently, Margin Call), but it’s a good thing to do in real life as well.
Collusion.
When the bookkeeper is a close friend of a bank teller, it can spell trouble. When they go in together to draft fraudulent checks and pull money out of a business owner’s account, it can spell fraud. This happened to an attorney in Connecticut; to his credit, he noticed some irregular transactions on the bank statement and blew the whistle. You may wonder like I do how people think they can get away with this, especially when it’s an attorney.
Fraud hardly ever ends well, so the best thing to do is to put measures in place to prevent it as much as possible. It’s never a sure thing to prevent fraud 100%, but it makes sense to do as much as is cost-effective to avoid catastrophic losses that can bring an entire business down.
As always, if we can help you in any way with this, please don’t hesitate to contact our office.
(Thanks to Caren Schwartz of Time and Cents Consultants, LLC for the Connecticut-based stories.)
I’m Dreaming of My Ideal Clients for 2012
If you could wave a magic wand and work with any client you wanted in 2012, who would they be and what would your business look like? It’s a fun exercise to think about right as we start a new year.
Let’s begin with your current client base. You may want to create a report of customers that you had in 2011 and list them by revenue collected. Who are your top revenue-producing clients? Are they easy to work with? Do you love the work you are doing with them? If so, you may want to find out a little bit about the type of client you enjoy working with so that you can find more of them in 2012.
Are they male or female? In a particular industry? Have a particular personality trait? Enjoy the same hobbies you do? Have kids? Are they from your alma mater? Do they live in a certain neighborhood that you enjoy?
Look to see if your top clients have characteristics in common. You are beginning to make a picture of who you best work with.
The questions are endless, and you may need to ask quite a few of them before you stumble on what your top clients might have in common. Perhaps they are all dog lovers, pilots, or football fans. Perhaps they have all been in business for less than five years. Perhaps they are all transplanted from the south. Once you see the connection, you will have some freedom and a clear direction to find more people just like them.
Also take a look at what services you like to deliver best. Once you’ve been in business for a while, you may have some work that’s not your favorite, but you keep doing it for one reason or another. In 2012, think about how you can proactively attract clients that need the type of work you love to do. Work that challenges you, is interesting, and is profitable will keep you from burning out. Plus, it will help your entire business and your other clients to seek clients that energize you because you will be happier.
Start by creating another report that shows you revenue by service or product line. What would the ideal 2012 mix be if you could wave your magic wand again?
The intersection of your ideal client and your ideal service/product revenue mix is the sweet spot you want to aim for in 2012.
It’s a simple exercise, yet a very powerful one. As the holidays wind to a close, take a deep breath, wave your magic wand, and think about what would really fulfill you as a business entrepreneur. Then take the first step to creating a business full of the ideal client and ideal work of your dreams.
Russian Roulette, er, I Mean Bookkeeping
A colleague of mine recently brought this to my attention. The early snowstorm in the Northeast a few weeks ago reminded her of the city of Yekaterinburg, a large city two hours east of Moscow by air that often sees snow in October all the way through May. The western border of Siberia is a few hundred miles to the east. In Yekaterinburg, there are many small businesses whose owners need to keep their accounting books just like you do. However there are a couple of twists as you might imagine.
The old Russian accounting system was built for one purpose: to calculate taxes. And the tax system is complicated, expensive, and volatile. In the 1990s, about 600 new laws were published every year (just in case we think U.S is the only country that has a crazy tax system). The Russian government has broad powers to garnish business accounts, and many transactions are handled in cash to avoid this capability. As a matter of fact, it was quite common for small businesses to maintain three sets of books:
- One “official” set of books for the government.
- One for payroll which was mostly done in cash.
- One for management to see what was really going on.
It’s interesting to see whether QuickBooks could handle such data requirements. At any rate, it would need to be QuickBooks in Cyrillic to support the Russian alphabet. Microsoft Excel is definitely available in Cyrillic; I’m not sure Intuit has any plans for a Cyrillic version any time soon, which brings up another challenge: there are not too many plug and play accounting systems available in Russian.
Another challenge in the new, turbulent post-perestroika economy — inflation. Lending rates ranged between 130% and 200%. That’s pretty brutal to profit margins. What’s worse, a loan has to be paid back in three months. A company needing cash for several months is forced to find a new bank every three months to pay off the old loan and lend it the money for the next three months.
Until 1992, Yekaterinburg was a closed city: No foreigners were allowed to visit for reasons of national security. Concepts that we take for granted in America, such as profit and efficiency, are relatively unknown in Russia. There is no Russian word for “efficiency.” Imagine describing efficiency to an employee who has never heard of the concept or the word.
The chief accountant, who is often a company officer, is usually educated as an economist, which is the closest profession that Russia has to accounting until recently. There is a great hunger for management accounting and reporting because there wasn’t anything like it.
Sometimes it’s a breath of fresh air to experience a new perspective. In the U.S. we don’t have to keep three sets of books; one is quite enough for most of us. It’s illegal to make payroll in cash in most states. We have about half a million CPAs and far more bookkeepers to help us with anything we don’t understand. Most of them are quite efficient, and that’s a lot to be grateful for.
If we can help you with anything that feels foreign to you in your accounting system, please call on us anytime.
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About Mandy Cohen
