Category: Tip of the Month

The idea of starting your own business is inherently romantic, if not exhilarating: You get to run the show, flesh out your ideas and live your dream. But where do you begin? Here are seven smart steps to get you started – and help improve your chances of success.

Come Up With a Concept

What’s your idea? Is it profitable and something you’re passionate about? Would others consider you an expert in this area and seek your advice? What kind of funding do you have? Will you partner with someone or go solo? When you can determine all of these things, then you’ll be off and running.

Know Your Competition and Market

Do your research. Learn about the industry you’re entering. Who are the leaders, and what is their USP – Unique Selling Proposition? Then figure out what yours is. Next, get to know your target customers with questionnaires, surveys, and interviews. Find out what they want. You might also conduct a SWOT analysis, which stands for strengths, weaknesses, opportunities, and threats. After you synthesize and analyze all this data, you’ll have a clear picture of how your business will take shape.

Create a Road Map

You don’t go on a trip without a guide. Starting a business is no different. In your roadmap – or business plan – you’ll want to generate a comprehensive picture of your business, which includes everything from an executive summary and market analysis to a mission statement and financial plan. Other items to include are a marketing plan and an exit strategy. When your business plan is complete, you can share it with potential investors and banks. Here’s a free simple business plan template you can use as a blueprint.

Choose Your Structure

Will you be an LLC (Limited Liability Company), LLP (Limited Liability Partnership), Sole Proprietorship or corporation? There are pros and cons to all of these. In addition, you’ll want to name your business, come up with your DBA (Doing Business As). Then, you’ll register your business, apply for an EIN (Employee Identification Number), and get the right licenses and permits.

Organize Your Finances

Open a business bank account – you’ll need your EIN when you do this. If you sell a product, you’ll need either a bookkeeper or good accounting software. Then determine your break-even point. What are your startup costs? What kind of supplies or professional services will you need? Will you operate out of your garage or rent a space? Here’s the equation to follow: Break-Even Point = Fixed Cost/Contribution Margin.

Fund Your Business

Knowing your break-even point, how will you fund your business? Do you have money saved? Do you have credit cards to use? Do you have cash from friends and family? Small business loans, grants and lines of credit, angel investors, venture capitalists, and crowdfunding are other solid avenues you can explore. Finally, consider buying business insurance to make sure that if something goes wrong, you’re covered.

Market Your Company

After you’ve acquired all the right tools, like accounting software, email hosting, and a credit card processor, you can hang a shingle and get the word out that you’re open for business. Bobby’s Bagels is now serving! You’ll need a website that explains everything you offer, as well as an e-commerce component. Then you’ll want to optimize your site for SEO and create content that is relevant for your target audience. The last step is creating a social media strategy.

All of these steps are high-level. When you’re in the process of gathering everything you need, other details will emerge. Starting a business might be hard work, but it will allow you to become your own boss and, best of all, realize your dream. Remember, you’ll never work a day in your life if you love what you do.

Sources

https://www.forbes.com/advisor/business/how-to-start-a-business/

So, we’re a month into 2023, and the sheen might’ve dulled from all your shiny New Year’s resolutions. Though diet and exercise are the top things you might want to change, there’s one you might not need to touch – your budget. Here’s a discussion about who does and doesn’t need to revamp their finances.

Who Needs a New Budget?

Budgets are always a good idea. They help you save money and pay off debt. But only a few folks need to create a new one. According to Annette Harris, founder of Harris Financial Coaching, you need a new budget if you are:

• Unable to keep up with expenses
• Falling behind on debt payments
• Borrowing money from others
• Relying on credit cards
• Using payday lenders

But on the flipside, some positive life events may also call for a fresh look at your budget:

• Buying a house
• Planning home improvements
• Sending a child to college

Now, if you’re debt-free, saving, and investing, then a new budget probably won’t provide much value. Further, Harris says that if you don’t have children that you’re putting through college, don’t have any upcoming big purchases, continue to spend wisely and build your net worth, don’t bother changing what you’re already doing. In other words, of it’s not broke, don’t fix it.

The Stigma Around the ‘B’ Word

That would be “budget.” Jesse Mecham, founder of the app You Need a Budget aka YNAB, has a good explanation about why this is so. He says that this very term (budget) is among the reasons that people don’t follow through with setting one – and sticking with it. He says that generally, people think it means restriction, deprivation, or diet. What you need, he says, is a shift in perspective. If you think about a budget being a plan for intentional spending, no matter what year it is, you always want to be intentional. Makes good sense, right?

Some Budgets Might Even Cause Harm

Dana Miranda, founder of the “budget-free” financial ed website Healthy Rich, believes that budgets can do more harm than good. She says that people inevitably feel like they’re failing and aim for a fresh start at the beginning of the year, but no amount of recommitting to budgeting can make the realities of your life fit into the unrealistic restriction of a budget. Miranda says when people are stressed about money, they budget. When they succeed, it’s great. But when they fail, they feel like a failure and, consequently, are even more stressed, much like dieting.

Alternatives to Budgeting

Here are three other ways to get a handle on your finances in the New Year.

Track Your Goals

We’re not talking about counting every dollar but focusing on goals. Instead of not overspending, eating out less, or avoiding online shopping, find areas in your budget that can help you accomplish your goals – one at a time. For instance, if you want to save for college for your kids, buy an investment property, or create a vacation fund, set up a tracker with a defined timeline and work toward that. It’s easier to narrowly focus on one important goal than on everything all at once.

Create an Annual Budget

This is in contrast to a monthly budget. This helps you accommodate for variables – life stuff – that inevitably come your way and knock you off course. According to Harris, take time to map out monthly costs, travel plans, and home renovations, along with any one-time and variable recurring costs. The bills you pay regularly are easy to anticipate; it’s the ones you don’t that will throw you a curveball.

Look at Your Relationship With Money

Ask yourself things like:

• Do I find joy in the way I make money?
• Are the commitments I made (like a monthly savings amount) still working for me?
• Am I achieving what I want?
• Am I at peace with the way I spend?

Harris says self-awareness found through journaling, meditation, yoga, and prayer are great ways to harness conscious spending. They contribute, she says, to helping you become more intentional with the way you spend.

No one is perfect. Everyone makes mistakes. However, with a few helpful hints like these, you can get better and better every day.

Sources

https://www.forbes.com/advisor/personal-finance/new-budget-new-years-resolution/

2022 Consumer Saving & Spending Behaviors (bankofamerica.com)

For the most part, New Year’s resolutions are hard to keep because many times you either list too many things or ones that aren’t manageable for the long haul – especially those that involve money. Here are a few simple tricks to help you make changes that are bite-sized, easy to implement, and more likely to stick.

Do a five-minute daily money check-in. Life is so busy that sometimes it’s easy to just spend money, then move on to the next task at hand. You might think, “I’ll check my bank balance later,” and then you never do. But if you’re serious about getting a handle on your finances, you might want to try this one thing: give yourself a “money minute.” Select a time of day, maybe after dinner, to log into your bank account. Take stock of what you spent money on. Did you really need that bottled water? That designer coffee? This way, you can nip those small (perhaps unnecessary) expenditures in the bud and make smarter choices in the coming days.

Get a money-saving app. One of the best ones to help you achieve financial goals is Ibotta. Let’s say you want to buy a new pair of running shoes, a good brand that’ll really last. With this app, you’ll save on everyday purchases, and when you’ve earned enough cash back, you can cash it in for a gift card from your selected store and get what you really want.

Consider micro savings goals. This technique is actually about rewarding yourself financially for changing your behavior. For instance, every time you go to yoga or Pilates, stash away $5. Or if you wake up early or finish a difficult task, stash away $10. When you’ve saved enough money to buy whatever it is you’ve decided on beforehand, you’ve not only avoided the trap of putting your goodie on credit (and paying interest), but also most likely started a new, healthy habit.

Set up an automatic savings plan. After you’ve paid taxes, insurance premiums, and perhaps even your retirement account, you might consider tucking away money for yourself that you’ll never miss. Every. Single. Paycheck. That’s right. When you automatically have a set amount deducted every time you get paid, over time, you’ll accumulate a bucket of money to use in whatever way you deem important – it could be saving for a vacation or a new car. It could also be a fund for emergencies. The point is it’s an easy, failsafe way to save and achieve your goals.

Do one frugal thing a day. This is all about a little bit of forethought and then just taking action. And when you adopt this mindset, you’ll be working daily toward your financial goals like paying off debt, saving money to quit a job you hate, or even having enough extra cash to invest in real estate or whatever strikes your fancy. Here are a few things to consider: drink more water than soda. Eat at home. Use public transportation instead of driving when you can. But this just scratches the surface. For more smart ways to start living frugally, check out this super helpful article. You’ll be surprised at all the ways you can cut back and save.

All of these tricks are easy and, in some cases, no-brainers. When you take a few minutes, set your mind on what you want, anything’s possible. Here’s to fulfilling your dreams in the New Year!

Sources

11 Financial Resolutions That Will Stick in 2023

Believe it or not, the year is coming to a close. If you want to finish strong and set attainable goals for 2023, here’s a handy, actionable checklist to help you navigate upcoming expenditures.

Review Your Spending and Create a Budget

This might seem like Finance 101, but it’s a tried and true method that works. Take a look back to see where your money went. When you’ve evaluated your patterns of spending, you can reset priorities for the New Year, assuming you want to make changes. If you do, sit down and create a budget. Your tax professional will probably have a downloadable tax planning guild so ask them first, but here’s an example of a family-friendly free, downloadable template to get you started on your 2023 plan. 

Rethink Your Savings

If you already have a healthy amount in savings, congrats. Make sure it’s an account that’s interest-bearing and you have the best rate. However, if you had to dip into your emergency savings, then chart a course to replenish it. If you don’t have an emergency fund, it makes good sense to start one. A smart rule to consider is having six months of income saved up, should your heater go out, you experience a sudden job loss, or suffer unforeseen medical expenses that your insurance doesn’t cover. A no-nonsense way to begin is to automate a certain amount each month that will be deducted from your paycheck. You’ll begin to accumulate money in no time. Best of all, you’ll never miss it.

Evaluate Your Debt

Have you made progress in paying it down? Or have you gone the other way?  If you’ve eliminated your debt, once again, congrats. If you’ve increased your debt, don’t despair because there are some easy ways to cut expenses. Slow down on eating out. Review your subscriptions and see which ones you really need. Here’s a list of more areas to consider. Another way to get rid of the shackles of debt is to apply for a consolidation loan. You might also use the debt snowball method—starting with the smallest debt and working your way up to the largest. Or the inverse, the debt avalanche, where you pay off high-interest rate balances first.

Contribute to Your 401(k) by Dec. 31

You still have time to do this, but make sure it happens before the clock strikes midnight on Dec. 31. If you’re fortunate enough to receive a year-end bonus, you might want to put as much of it as you can toward your 401(k) plan. For the New Year, increase the amount you’re contributing. Just one or more percentage points higher can make a big difference. Finally, if your company offers a match that you have yet to take advantage of (read: max out), do so before it’s too late.

Consider a Roth Conversion

If you’ve experienced a loss of income this year, you may be in a lower tax bracket. This means you can take advantage of your situation by converting some of your pre-tax assets like a Traditional IRA into a Roth IRA. If you’ve earned too much to convert to a Roth IRA, a back-door Roth IRA contribution might be the way to go. Here’s how you do it: Deposit money into a non-deductible Traditional IRA, then convert that IRA into a Roth IRA. But before you do anything at all, consult your tax advisor, as there are potential costs and tax liabilities that might come up.

Check your FSA Balance

An FSA (Flexible Spending Account) is a great benefit if your employer offers it. However, check your balance to see how much you have left because the rule is: Use it or lose it. That said, many companies offer a grace period until mid-March to spend what you have left, though not all do. Make sure to inquire about the rules of your account before the New Year.

Get a Free Credit Report

When was the last time you checked your credit? If you haven’t done so, now’s a good time because looking back can help you plan ahead. Here’s a great place to get a free report. If you notice any errors or discover any identity theft, you can immediately take steps to correct them and start with a clean slate for 2023.

While taking care of financial matters at the end of the year can be a love/hate kind of thing to do, if you spend a little time now, the coming days might be substantially merrier and bright.

Sources

https://www.bankrate.com/personal-finance/end-of-year-financial-checklist/

The First 10 Things to Cut from your Budget

https://www.bankrate.com/retirement/what-is-a-backdoor-roth-ira/

There’s no better time than the holidays to show your employees and your clients how much you appreciate them. Here are five simple steps to help you craft the perfect email in no time.

Decide on the Audience and Purpose

Before you begin, determine who will be your recipients. For instance, if you’re writing to your team, it will be a bit different than writing to your clients. However, no matter who you are addressing, you’ll probably want to start by expressing your gratitude. After that, you can further refine your message. If it’s to your employees, acknowledging their hard work and dedication is a great place to start. After that, you might tout the many wins you’ve all experienced over the year. If you’re writing to your clients, you might want to share how great your partnership has been recently and that you’re hoping for an even better year ahead.

Keep it Brief

When expressing a seasonal message, less is more. Take time to think through exactly what you want to say. A good way to begin is to write what you want to say imperfectly. Get the thoughts out – it’s okay if it’s too long. Then come back and refine and cut. But be sure to give yourself enough time to do so. Few things are as challenging as trying to write a great message in a hurry.

Personalize Your Message

Craft your message as if you were talking to an individual, as opposed to a group. You don’t want it to be stuffy or overly corporate. Think about what you’d like to hear. Put yourself in the recipient’s place. Even if you feel your audience is more on the formal side, the holidays are the right time to be transparent and real. No one wants to receive a message that feels forced or fake.

Proofread Your Text

This is critical. Read every single word; and do it out loud. This works. Why? When you don’t do this, your brains fills in missing words. When you speak the words you wrote, you’ll instantly discover your mistakes. Imagine sending a holiday message that says, “Season’s Gratings!” Of course, you’d never do this, but this is hyperbole to make a point.

Choose a Clear Subject Line

Straightforward, concise and professional is what you want to aim for. A few simple examples are:

• Sending You Warm Holiday Wishes
• Season’s Greeting From [Company Name]
• Wishing You a Wonderful Holiday Season

However, you can always be more creative and weave in something that happened over the year that will resonate with the audience, something that is specific either to your company’s culture or the culture of your client.

At the end of the year, as crazy as things can get with schedules, parties and shopping, it’s always nice to open your inbox and receive a message that warms the heart. These days, with everything that’s going on around us, it can make a world of difference.

Sources

https://www.indeed.com/career-advice/career-development/happy-holidays-email