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Small Business

Lifestyle, Small Business

20% is Enough Effort

8632234386_56ed10483b_zOver a hundred years ago an Italian economist made a discovery while in his garden. Vilfredo Pareto noticed on a pleasant 1906 afternoon that 20% of the pea pods in his garden produced 80% of his pea production. His interest piqued, Pareto wanted to know if this 80/20 ratio applied to other areas, including business. In every place he looked the ratio held. 80% of results came from 20% of the inputs.

Today we call this the Pareto Principle or the 80/20 Principle. The ratio isn’t perfect, but more of an approximation, somewhere around 4 to 1 or 5 to 1. And it happens everywhere, not just in business or an Italian’s garden! Think about it. You wear 20% of your clothes 80% of the time; use 20% of your home or apartment 80% of the time; eat the same food 80% of the time.

Illinois Tool Works is a large public corporation that has turned the 80/20 Principle into a profitable business plan. ITW buys smaller competitors on a regular basis and then sends in their teams to ramp up profitability by firing clients! Sort of. The 80/20 Principle says 80% of profits come from 20% of clients. Yup. It does. I ran the numbers in my own office. A small list of my clients brings in the bulk of profits. And ITW capitalizes on this fact to improve profitability in companies they purchase.

Think of your personal life. You spend 80% of your waking hours doing the same 20% of activities. If a normal day includes 20 activities, about 80% of the time will be spent on four of those activities.


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Get Paid to Take a Vacation

frog-897418_960_720Mrs. Accountant and I recently went on a business trip. Like most business trips we invested time, but no money. The trip was better than free; we came home with more money than we started with and did nothing crazy like house-sitting or couch surfing. We enjoyed meals at excellent restaurants and slept in 3 and 4 star hotels every night. We drove in this instance because we like seeing the sites as we go. In all it took three weeks to complete the business trip. It was a great time for Mrs. Accountant and me to spend quality time together without interruption.

There are a million ways to travel for free. Many people in early retirement dream of doing so. But what about the rest of us? You might not be retired. And then there is the unique breed of animal called the business owner. I fall into the last group.

Traveling is something I avoid. Life on the road is not something I look forward to. As I get older I find myself on the road more and more for longer periods of time for business. Now you know why Mrs. Accountant works for my company.

The reason for the trip is not important. What is important is how I accomplished the feat of three weeks of travel and got paid to do so. Actually, three entities paid for our trip: the organization I was asked to speak for, the bank, and the government. The government paid the largest portion of the bill and it was all legal.

Speaking engagements are the biggest reason for time away from home now. Training conferences are second. Many conferences extend over a long weekend, four days in this instance. The four days at the conference were covered: meals and lodging. Personal entertainment and travel were my own.


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Increase Blog Traffic Faster Than Naked Kim Kardashian Pictures

blog-1027861_960_720By this time I am mildly qualified to intelligently explain how to increase blog traffic. My online writing goes back to the AOL days in the 90s and grew over the years. The Wealthy Accountant is my most popular blog, but I have two fantasy fiction blogs pulling around 4 million pageviews a year, an astounding number for online fiction. The Wealthy Accountant numbers are lower, but the traffic is higher quality; in other words, Google, advertisers, and readers like it more. This blog now boasts 40,000 page views per month with a strong growing trend line. There are a few tricks I learned over the years to accelerate blog traffic. I am no expert on the subject and there are many with greater skills at increasing blog traffic. My experiences, however, should provide a solid framework to take a blog from zero to a million pageviews in a year.

The first year is always the hardest. Unless you have a name people know growing traffic is done the old fashioned way. It takes work and time. My three steps to building a blog are:

  • First, create content
  • Then, build traffic
  • Then monetize

Jumping the gun on any step can harm traffic. You need content before building traffic; you need traffic before monetizing. Growing quality content is the hardest part for many people. Writing is supposed to be easy. You just sit in a chair and type. And bleed.


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Treat Taxes Like a Game

staunton_chess_setLife in the accounting business can be difficult at times. Clients are as close to friends as you can get without actually being friends. You know all the details of their private lives. I know a divorce is imminent many times before the spouse does. I get details on illnesses in the family. I have to. Part of the tax preparation process is to know your client. When you ask about medical expenses you get the details too. In Wisconsin we have a deduction for certain private school tuition. When I ask about the kids I get the low-down on little Billy. And I don’t mind one bit. I care about my clients so I listen and interact. The line between client and friend is thin indeed.

That is why it bothers me when I can’t communicate a message to a client. Try as I may, some clients could care less about their taxes. They are willing to overpay their taxes to get out of all the reporting. They don’t understand the amount of money left on the table.

A few weeks ago I emailed a client reminding them to verify their retirement contributions and to provide a log for business miles and business overnight stays. To be honest, I didn’t expect a response. They are awesome clients and I love’em to death, but they just don’t engage at the level I would like and it bothers me because it is costing them dearly.


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Expand Your Business and Increase Margins with Outsourcing




outsourcingStarting a business is an act of love and courage. Enjoying a task soon becomes a business. You might start working out of the home or buy a small store front. The previous hobby now commands more of your precious time. A business is about more than making money. Small business owners love the work they do and get paid to do it. Awesome! Then reality sets in.

When I was a sophomore in high school I fell in love with the stock market crash of 1929. The teacher said economists don’t know what really caused the crash. The Smoot-Hawley Tariff was probably the trigger but many other events also played a role. I could not let it go. Every book in the school and public library in my small town was in my paw, devoured for any tidbit of information on why things went so wrong in 1929. I never found a definitive answer, but I did learn a lot about economics.

And the stock market. From that point on I wanted to be a stockbroker. When I was in college I took a business class, accounting, and macro and micro economics. Though I never earned a degree I learned a lot that has helped me in my career. It gave me a start on where and what to study to get good at finance.Continue reading

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Supercharge Your Net Worth

img_20161009_152000Business ownership is the fastest way to significant net worth and financial independence (FI). It is possible to grow your net worth $2 or more for every dollar you increase your revenue. This is before investment gains! By understanding the accounting behind business valuation, anyone can accumulate a seven figure net worth in as few as five years which can be turned liquid and invested in income producing assets allowing for early retirement.

Building a massive net worth is more difficult, if not impossible, with earned income only. Mega-wealthy people like Warren Buffett and Bill Gates know wealth is created from multiplier effects. Buffett grew Berkshire Hathaway by investing in other successful companies and insurance. Bill Gates grew Microsoft into a world leading software company. In each case the majority of the wealth created, around twenty times the profit level, came from multipliers. Only about 5% of their wealth came from actual profits!

Average people can use the same methods as the uber-wealthy to supercharge their net worth. Business owners have the advantage. Wage earners have no multipliers to help them accelerate their net worth growth, whereas a business owner can increase her net worth by $2 or more for every dollar of increased revenue the business has even if she saves and invests none of the profits.


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Workflow in a Tax Office

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Workflow system.

The more traffic grows on The Wealthy Account the more questions I get from accountants wanting to know how to run their office more efficiently. The tips below can be tweaked to work in many business settings and can be applied to personal management of time with family and friends while allowing ample “me” time for reading, thinking, and relaxing.

The workflow process in my office evolved over time as the tax industry changed and my practice transformed from a tax office to an accounting/payroll/bookkeeping office to its current incarnation as a quasi-communications company focusing on tax issues. So you understand my thought process I will walk through how I handled workflow in the past and why I changed procedures when I did. By seeing each stage of my workflow history you can pull the pieces that fit your situation best and modify them for your needs.

In the Beginning. . .

Organization in a tax office is not optional. From day one workflow had to be recorded and tracked. In business and even in our personal lives it is important to write things down. We start each client with a line item on a legal sized piece of paper. Since there are so many steps we take with our clients we break down each task into its components. Accountants track their own work and the computer monitors progress. My front desk is used as a redundant system, preventing mistakes. An empty checkbox on the legal paper requires investigation.

Before workflow even enters the office, client flow must be managed. In your personal life you can’t visit 38 different friends in different locations at the same time. The same applies in business; you see one client at a time. The early years of my business grew fast. People would frequently drop in without an appointment. Then one year in early February there was a line out of my building and half way down the parking lot. Something had to be done.


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Working with the Wealthy Accountant




20160323_165144One of the occupational hazards of having a very public blog is demands from readers. I love hearing from all of you. Your ideas spark me into action, looking for new ways to manage and reduce tax bills. The downside is all the time required handling requests for personal help. Normally a simple answer would suffice, but when people have a tax question it takes time to flesh out an accurate answer. There are just too many emails to answer them all. It bothers me immensely. So I will initiate a new procedure to help maximize the number of people I can serve adequately.

Anyone is welcome to contact me. Understand if I don’t respond, it is due to an overload of requests. Readers contacting me for help either want tax preparation services or consulting; consulting is the largest request. I block four hours per work day for consulting with clients. This includes research time and review of client documents.

Returning phone calls is a huge sinkhole of time; I only get through about 20% of the time. I’ve resorted to sending return emails requesting the reader to contact my office and schedule an appointment along with my consulting fees. I started that process a few weeks ago and got only a small response back.

With that in mind I want to outline how I will handle this extra workflow. Rather than readers sending me long emails and asking for my fee, how about I give you my consulting fee here and let you decide if it is worth it before you contact me.

My consulting fee is simple: $225 per hour with a one hour minimum.

If you are good with that, feel free to contact me. You can also contact me to prepare your tax return or if you want me to consider you for a Reader Case Study, which I will start doing on this blog as we approach the 2017 tax season.

Tax returns will still need a quote and I have added staff and opened several slots for new tax returns. Depending on the size of the tax returns coming in, my guess is we will accept around 100 new clients in 2017. This is a small number compared to the volume of requests, but a large investment of time as most readers contacting me have a multitude of issues.

The consulting fee is low so I anticipate a reasonable number of requests. I am also opening up slowly to American ex-pats on a limited basis. We will help catch up back tax returns, too.

My goal is to provide better service in a timely manner to more people. The massive transformation at Tax Prep & Accounting Services, Inc. has stretched my management skills. I needed the kick in the pants. It was time to up my game.

If you emailed me in the past without a response, feel free to do so again. I look forward to working with you.

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