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Monthly Archives: June 2015

Hammernik’s 10 Skills To Master For Business Success

Last week I gave you a quiz.

Got some great responses … and in case you haven’t had the chance to comment, here it is again (I’d love to know how you feel you are doing in these areas, so we can help you even more effectively — email us by clicking the button at the top of the page):

How many “Yeses” can you answer?

1) I have a financial statement for my business that is no more than 30 days old.

2) I reviewed my financial statement with my bookkeeper or accountant within the last month to pinpoint the potential trouble spots and identify pockets of easy cash.

3) I know exactly which products, departments and services give me the highest ROI (return on investment).

4) I have a year-end tax strategy based on my figures to date.

5) I know how much cash I have and how much I will need next week.

6) I can sleep at night, knowing that my record-keeping will support my deductions if the IRS audits me.

If any of these are concerns for you, especially with the regulatory situation continuing to evolve, let’s discuss ways that we can fix it for you: (414) 545-1890

The reason I’m asking you these questions is that it’s a large part of my job to work with business owners by “picking up the pieces” of their finances, and, unfortunately, it’s often too late to have done any good.

Yes, every day, my staff and I swim in an ocean of numbers. And we’ve become pretty quick about knowing what’s happening in a business by seeing where the “currents” are leading (if you will).

But, as I mentioned, often we’re stuck looking historically instead of real-time, because too many business owners don’t have a system in place for getting those numbers to us quickly. But when they do, we can very quickly know how to help.

But, I’d also like to identify for you some other numbers, which don’t show up on balance sheets, and why they’re perhaps even more important than what you see on a P/L statement …

Hammernik’s 10 Skills To Master For Business Success
“You can use the fanciest computers to gather the numbers, but in the end you have to set a timetable and act.” -Lee Iacocca

I sometime recently had a conversation with a client about the level of detail needed to survive in this economy. It’s easy to get lazy when a business can survive just with the low hanging fruit available in an easy marketplace — but, when the market shrinks because of funding availability, number of prospects, or profitability margins, then many people don’t know how to tweak their marketing and sales systems so they can track the numbers at each step in the sales process.

I have seen (in several industries) that the businesses who have weekly sales meetings, track the numbers and hold their team members accountable are successful … while those that guess and “assume” are usually out of business. It’s just a matter of time.

The key to business successis knowing the numbers — what is the average expected result and how you are measuring up against that result for each step in the process.

But many people don’t want to track the numbers, because they might have to admit that they aren’t doing their job and letting their teammates down, others simply do not have the systems or understand how to track those numbers or understand the benchmarks of the average business, the good business and the great business.

Many self-employed business owners just feel what they are doing is “working” without having tested it or tracking where they are at which indicates a complete lack of understanding of the basics of any business. Unless you have completed a valid split test and received statistically reliable results, you don’t have any idea whether you are improving or going backwards.

With all of the chaos happening seemingly every week, the mind of the American consumer is shifting — and many are downsizing, reducing debt and spending more conservatively right now (with some exceptions in certain demographics). Some business owners and sales people are realizing the days of easy pickings are gone for right now.

In some industries response rates are crashing, refunds are rising, bad debt is soaring, and sales numbers dropping.

Here is the cold, hard truth about business success — If you don’t know how to test scientifically — or if you do know but you think it’s not necessary — your business doesn’t have a chance.

Here Are The Numbers To Know…

To be successful from now on, you will have to develop expertise in direct marketing and sales. And that means mastering the following skills:

1. Statistically valid testing at each stage of the sales process
2. Structuring price, term, refund, and premium tests for profit
3. Determining the true lifetime value of every new customer
4. Calculating “allowable acquisition costs” (what you can spend to get a customer)
5. Measuring responsiveness by media source
6. Figuring the “doubling date” or “half-life” of a new offer or customer
7. Purging unproductive prospects and staff
8. Discovering your “optimal selling strategy”
9. Develop multiple streams of revenue in your business
10. Designing effective “peer reviews” and staff meetings

If you don’t have these skills — or if your key people don’t have them — consider your business to be in trouble. The market is tough now, and it doesn’t look like the “easy streets” of mid 2000’s are coming back anytime soon.

That being said, in a time when many businesses are going broke, others are doubling their sales.

And it starts with knowing your numbers.

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890

Hammernik & Associates

ATTENTION BUSINESS OWNERS: Don’t Mess With The IRS!


Have you heard about the indictment issued to the family which owns local Milwaukee restaurants El Beso and El Fuego? Their violation of federal tax laws has put them in some major trouble. Take a look at the report here:

As you can see, the IRS is not someone you want to mess with. Not reporting cash sales is a huge red flag to the IRS, especially since they started requiring credit card companies to issue 1099’s. If the IRS notices that your total reported sales are close to the amount reported on the 1099-K for credit card sales, then they may choose to investigate via audit. Another mistake they made was paying employees in cash. These wages were not reported to the IRS and therefore there weren’t any employment taxes paid on those wages.

This case is an extreme case of unethical practice. However, there are business owners that may not be aware that they are breaking federal laws. That’s why it is important to have knowledgeable professionals overseeing your financial decisions. This will help you keep up to date on payroll taxes, sales taxes, and stay compliant with IRS law.

Let this be an eye opening lesson to all business owners.

Dale Hammernik’s Simple but Effective Advertising Techniques

Before I address this notion of your advertising agenda, I wanted you to take a little quiz, of sorts.

So many new tax and ACA regulations are going to be coming down the pike in the next year, that it’s really important that you have your business squared away.

So, here’s the quiz: How many “Yeses” can you answer?

1) I have a financial statement for my business that is no more than 30 days old.

2) I reviewed my financial statement with my bookkeeper or accountant within the last month to pinpoint the potential trouble spots and identify pockets of easy cash.

3) I know exactly which products, departments and services give me the highest ROI (return on investment).

4) I have a year-end tax strategy based on my figures to date.

5) I know how much cash I have and how much I will need next week.

6) I can sleep at night, knowing that my record-keeping will support my deductions if the IRS audits me.

If any of these are concerns for you, especially with the regulatory situation continuing to evolve, let’s discuss ways that we can fix it for you: (414) 545-1890

Now … to switch gears, I want to talk about marketing, and a big myth I see.

And, so you know (and as I’ve clarified before), the reason I do write about marketing so much is NOT to set myself up as some sort of guru — I’m not. But it’s one of the primary (if not *the* primary) factors in your revenue column. I can help you with the planning and expense side … but YOU have to manage the revenue side.

So, I put together ideas I see from my best Waukesha County clients — and I distill them into advice for you. This stuff works.

And this week is about another big myth which is sometimes making ad reps rich … and small businesses, not so much.

Dale Hammernik’s Simple but Effective Advertising Techniques
“We all start with all there is. It’s how we use it that makes things possible.” – Henry Ford

Advertising is obviously a crucial ingredient of any effective business plan, yet it actually works against many businesses — especially “small businesses”. You see, most small businesses mimic what they see the “big boys” doing (I mean, big mammoth corporations), and that’s like a thoroughbred horse jockey trying to imitate an elephant trainer.

You’ve got entirely different agendas as a small business owner. Many large corporations are engaged more with “marketing” than they are with direct advertising (which is what I addressed last week).

You see, to run a successful ad for a small business, it must do one of two things — and do these ONLY:

1) Generate Sales
2) Generate Sales Leads.

Even better — do it in a measurable, quantifiable way.

The best part — when you do this right, then you have no problem ‘getting your name out there’ … but you’ll also make money in the process.

Unfortunately, most businesses simply attempt to “get their name out there,” and it’s very likely that they won’t generate sales OR sales leads with such advertising techniques.

People don’t expect nearly enough from their advertising, and they don’t hold it accountable for results. So they waste thousands of dollars, and then they start pounding their sales people for orders on the 26th of every month.

So … what about when you’re trying to generate leads? Well, don’t try to accomplish overmuch at that stage.

You must remember that all you’re really trying to do for lead generation is to get people to “raise their hands” and identify themselves as someone who has a problem – and tell you who they are.

Anything more than that, will actually reduce your response. The purpose of pure lead generation advertising is NOT for you to tell them all about yourself – not in the first step anyway.

The only purpose is for them to tell you who they are.

When you do this correctly, it’s simple and effective. And most importantly, nobody feels like you’re chasing them.

And THAT’S a power position you want.

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890

Hammernik & Associates

Dale Hammernik’s Secret Strategy to Planning Your Next Ad Campaign

Well, we’re now almost halfway through June (and a reminder — second quarter estimated taxes are due on June 15th. This is the quarter that always sneaks up on everyone, as it’s only two months after April 15th — so don’t get behind).

This is a good point to assess your progress in 2015 — I’d be interested to hear from you about how you are progressing in your sales and other business goals that you set at the beginning of the year. My contacts and clients are extremely important to me, and I’m interested in hearing of your progress. So do drop me a note (you can email me by clicking the button at the top of this page), just to check in.

As to the subject of today’s post, it’s something about which I’ve noticed some confusion among my clientele, and of course in the broader small business community.

There are certain activities which can and should be considered “marketing” that don’t necessarily have to bring in a specific ROI. I’m talking about your branding, your signage, your space (if you have one), and other activities intended to create good will.

But you should also make sure you include more direct forms of advertising in your marketing mix, about which I speak today.

And look, again, I’m just passing on to you information I’ve discovered to be true. I don’t pretend to be a “guru”, but nor do I want to be a victim of advertising reps and marketing agencies — and I believe in the power of sharing strategies that work with my clients. In my opinion, we’re moving away from the era of being “closed” with one another in business, towards an era of greater sharing, and openness.

So let me know what you think — along with how you are doing towards your goals.

Dale Hammernik’s Secret Strategy to Planning Your Next Ad Campaign
“You must either modify your dreams or magnify your skills.” – Jim Rohn

Have you heard that old line from an advertising rep: “People need to see your ad 8-11 times before they remember it” ?

Fine, but here’s the TRUTH: If your ad campaign does not work very well the first time, it probably won’t work eleven times.

This myth is leveraged to sell all sorts of advertising space and campaigns that are a waste of money. And because the people who tell you this ALSO tell you that you can’t measure advertising, you have no way of knowing whether they’re right or wrong.

So … you pull out your checkbook, spend a bunch of hard-earned revenue, and you have no idea what you got back. That’s not a great feeling, right?

Here’s how you combat it: First, figure out how much response you need to make it pay off. Play with the elements of your ad, running it in an inexpensive place, until it gets the response you need — THEN run it 8-11 times.

Second, figure out how to measure the response. (I consistently urge business owners toward this.) When you measure the effectiveness of advertising — and systematically improve it — you’ll discover that some ads produce 20 times as much results as others. When you discover formulas that truly work, you won’t just run them 11 times, you might run them for years. And you’ll make profits all along the way.

And when you actually test marketing messages for performance and experiment with them, you’ll find that tiny changes in wording can have large effects on response.

It’s absolutely scary to think about what can happen if you’re not testing things. And it’s absolutely incredible what happens when you are.

AdWords and Facebook ads enable you to bid on any words or phrases you want (or towards a specifically targeted demographic, in the case of Facebook), and to have your ads ONLY show up when people search. And you only pay when people click and visit your website.

It’s probably the fastest way to generate sales and sales leads. But it’s also an awesome way to test advertising messages in an inexpensive manner.

And the even-better news is: 95% of companies don’t test their advertising. Your competitors almost certainly don’t. If you do, you have a clear advantage over them.

Don’t be a victim. Test your ad campaign.

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890
Hammernik & Associates

Dale Hammernik Advises on Whether to Lease or Buy

I’d like to explain why I spend time in these weekly notes dealing with marketing, sales and management issues — especially since my specialty (and my team’s) is cashflow, forecasting and accounting.

You see, working with small business owners over the years, I’ve discovered that you, as an owner, can often feel like you’re on your own little island. Sure, you might have your trusted staff to hash through strategy — but who’s there for you who’s willing to take a cold, objective look at the true health of your enterprise?

That’s where we come in … and further, I often discover that my clients’ financial issues don’t stem from a “financial” problem, but a *sales* problem. I.E. Fix the sales problem, and the financial problems melt away.

So yes — I’m not your normal tax preparer, that’s for sure. Based on the feedback I receive, I know you’re grateful. But I’m putting back on my “tax hat” this week to answer a question I’m constantly getting from my business owner clients.

Read on, and feel free to email us (by clicking the button at the top of this page) any questions or comments.


Dale Hammernik Advises on Whether to Lease or Buy

“The only limits are, as always, those of vision.” – James Broughton

The choice of whether to lease or buy a business car depends on many factors, and I aim to lay them all out for you.

You see, calculating the true, after-tax cost is not a simple task. Obviously, you must compare similar deals (for example, a 48-month lease and a 48-month loan for the same model car). In addition to tax considerations, you must look at factors like upfront payments, penalties in a lease contract for extra mileage or wear-and-tear, and the amount you pocket from eventually selling a car you own.

For tax purposes, you can sometimes come out ahead by leasing, especially if you drive an expensive vehicle.

The first tax consideration when buying a business car involves the “luxury” automobile depreciation rules that apply to any passenger vehicle which costs more than about $15,800 or about $17,300 for light trucks and vans.

And, of course, with the price of cars these days, most new vehicles fall into this luxury category whether you’re looking at a $19,000 Ford or a $65,000 Jaguar. So most cars fall under the special restrictions imposed on the depreciation of a luxury vehicle.

However, in an effort to help stimulate the economy, there was a new tax break in 2008. For a new passenger auto or light truck that is used more than 50 percent for business and is subject to the unfavorable luxury auto depreciation limitations, a “bonus” depreciation tax deduction greatly increased the maximum first-year write-off. (Used vehicles do not qualify for bonus depreciation.)However, as of this writing, this “bonus depreciation” does NOT apply for cars placed in service during 2015, as it was not extended at the end of December 2014 by Congress.

How can leasing sometimes be a tax saver?
When you lease a car, you can write off the portion of your monthly lease payments attributable to business driving. So if you pay $400 a month for a leased car and drive it for business 90 percent of the time, you can deduct $360 per month.

Because lease payments are partially based on the car’s expected residual value at the end of the lease period, you get to indirectly write off the car’s depreciation as part of the lease payment deductions. You’ll have to recognize an “inclusion amount” of taxable income when you lease a business car worth over about $15,800 or $17,300 for light trucks or vans. The exact calculation comes from IRS tables. The inclusion amounts are minimal compared to the limitation on depreciation deductions for a vehicle you own. So in most years, leasing may be more advantageous because it essentially allows you to bypass the annual luxury auto depreciation limits.

Still “Greek” to you? Well, let’s have a chat–we’ll take a look at your situation, and figure out your best plan.

Give us a call today: (414) 545-1890

Feel very free to share this article with a Waukesha County business associate or client you know who could benefit from our assistance — or simply send them our way? While these particular articles usually relate to business strategy, as you know, we specialize in tax preparation and planning for Waukesha County families and business owners. And we always make room for referrals from trusted sources like you.

Warmly (and until next week),

Dale Hammernik
(414) 545-1890
Hammernik & Associates