Strategy: Win a Business Award

One often-overlooked business strategy that brings many benefits to a company is competing for (and winning!) a business award. Competing for a business award and being named a finalist, that is, eligible to win first, second, or third prize, is a big vote of confidence for the chosen organizations. The recognition sets your business apart from competitors, implies credibility and expertise, enhances your company’s brand and stature and is almost certain to increase the number and quality of prospects, clients and referral sources your business receives.

There are more ways to win than you might think. Sponsoring organizations are typically generous with the number of awards and categories they choose to honor. More awards and more categories are an incentive for business owners and leaders to become contestants because there will be more opportunities to win. More contestants means more entry applications received by the sponsor and more tickets sold to the awards banquet (when those activities resume), since every finalist will buy at least one ticket and some will buy a table.

In addition to its role as a revenue enhancer, sponsoring awards is good PR for the organization, which could include the bank where you keep your business account. The awards not only distinguish the group as a prominent member of the business community, but also attract and help to retain members (or customers). In the best of American traditions, business awards are a way for many to make money. That could mean you, too.

Full disclosure—-as a result of the destabilizing impact of the coronavirus shutdown, I declined to accept an invitation to return as a preliminary round judge in The Stevie Awards/ Women in Business category (there are eight in all), an honor I’ve been happy to receive for six of the past eight years. Judges are neither paid, nor do we pay to participate. I do it because I enjoy experience and it looks good in my bio.

Be advised that as with any marketing campaign, there are expenses involved. You’ll be required to join the sponsoring organization. You must pay the award entry fee for every award category that your company pursues—-best new product launch, business of the year, best workplace, social responsibility award and so on. You must buy one or more tickets to the ceremony (even when it’s virtual). The awards process could represent the entirety of your outfit’s annual marketing budget.

The time needed to prepare your award entry and determine which supporting documents will best communicate who you, your team (if applicable) and your company is another cost. Creating an impressive and persuasive entry application can be a laborious and time-consuming undertaking.

Furthermore, an assessment of your company’s readiness to pursue an award may reveal that it would be advantageous to build for 12-24 months before your organization is prepared to compete for an award. But that’s OK. Taking steps to analyze the strengths, weaknesses, opportunities and threats of your organization (are not most of us facing the threat of the COVID economy?) will pay dividends in and of itself. Just be objective about your company’s chance of winning and understand the time and money likely to be involved.

Choose a target award

Potential contestants are advised to do some homework and discover awards that are sponsored by local, regional and national organizations, whether business networking organizations (chambers of commerce), industry-specific associations (such as the Bar Association for attorneys), or your business bank. I recommend that your initial forays into awards campaigns focus on local sponsors, particularly for those of you who are Freelance consultants and small business owners generating less than $500,000 in annual gross revenue.

After compiling a draft list of possibilities, check the award entry criteria. It’s likely that candidates must join the organization in order to compete for an award and that will be your first expense. Annual dues may run from a few hundred dollars to $1000 or more, depending on the sponsor. Confirm also when new members will be eligible to compete for an award. Next, investigate other entry facts—-the entry application deadline, the fees and whether candidates must be nominated to compete for the award.

Read the specs and select the categories in which you can expect to do well—-excellence in your field, customer service, new product or service launch, community outreach, environmentally-friendly, for example. Within the categories offered, where might your company step to the front of the pack?

Finalize your choices and prepare to compete, being sure to give yourself ample time to collect, evaluate, or create the supporting resources you’ll need to enter. The good news is that if you plan to enter more than one category, most of the content developed can be used in multiple entry forms.

Tell a compelling story

On nearly every award entry, there’s a section that asks for more details about your business, your team and you. Be sure to provide all of the information that is requested and as well, tell a story beyond the statistics. Let the judges feel your personality and understand what makes your business stand out. Here, you can share unique information that might not fit elsewhere in the entry application. Customize your message by sharing relevant success stories and achievements that address the award category you are entering.

Construct a strong beginning, middle and end for your story. Reveal how you overcame challenges to reach new heights and back up your claims with hard evidence. Feel welcome to include good visuals like charts and graphs, or the persuasive appeal of client testimonials. Keep your application punchy and concise, using short sentences and statistics to underline key points. Bullet points are an effective way to ensure that judges can absorb your performance metrics quickly.

Describe what motivated you to launch the company. Detail the company’s vision, mission, guiding principles and values and what you and your team are passionate about and which accomplishments make you most proud. Tell your story from your heart. Before hitting the send button, or sealing the envelope for a hard-copy mailing if required, add a personal note and thank the sponsoring organization and the judges for their consideration of your entry. Then conjure up some positive thoughts!

Thanks for reading,


Image: The inimitable Academy Award, Golden Globe Award and Grammy Award winning actress-singer-dancer Judy Garland in A Star is Born (1954), for which she won the 1955 Golden Globe Award for Best Actress in a Musical

2021 Financial Tune-up

We’re at the top of the year, after closing out a particularly trying nine months of the previous. It seems that rough sailing will continue but we know what to expect now, more or less, and our experiences will enable us to brainstorm and identify strategies to help ride out the storm.

Whatever you’d like to achieve this year, money is likely to be necessary. In fact managing money may be the singular focus of your plan for the new year. For example, a practical goal for your business enterprise may be to conserve cash as a risk management strategy as the pandemic economy grinds on and on. Alternatively, saving money that will make it possible to take aim at your personal bucket list, which may include buying a home or trading up, or becoming more diligent about retirement savings, are or her motivators for managing and saving money.

Create a budget

The ultimate money-tracking and management tool is the budget. A budget accounts for anticipated revenue, which Freelancers are advised to conservatively estimate, and balances that amount against expenses that will be due, be they predetermined obligations such as rent or mortgage, transportation and groceries or discretionary expenses, such as new clothing purchases.

It’s also necessary to factor into your budget room for mundane expenses such as routine or emergency auto maintenance, technology needs and occasional home repairs and accessories, as well as allowances for fun expenses such as holiday and birthday gifts, occasional dinners out, or a weekend trip.

If one is both prudent and fortunate, revenue will exceed expenses most of the time and you’ll be able to save a few dollars every month. So budgeting should not be viewed as punishment; to the contrary, your budget is your friend. Why wouldn’t you want to know how much money you can expect to earn in a month or quarter and compare that amount to the typical expenses you expect to pay in that time period?

We all need to keep close tabs on cash-flow. The idea is to make money and avoid deficit spending. Budgets can be monthly, quarterly, or annual but a personal budget probably works best on a monthly cycle.

Get started by finding your 1099s and adding them up to identify the previous year’s gross revenue. Because 2020 was a year of diminished revenue for most Freelancers and we don’t know how much of a bounce forward 2021 will bring, income averaging 2019 and 2020 revenue could be a reasonable predictor of 2021. If you have dividend paying investments or interest bearing accounts that actually amount to something, be sure to include that income as well. Who knows, maybe you have a modest trust fund to include as well (it must be nice!).

Next, document 2020 expenses. Consult credit card statements, ATM withdrawals, mobile payment apps and checking account statements. Be honest with yourself about all the little ways that you spent money, from impulse purchases in the grocery store check-out line to chocolate therapy ice cream emergencies.

You will soon need to consider how to format your budget. Some will like an Excel spreadsheet and others will download a budgeting app such as what’s shown here. I find The Balance website to be very helpful.

Watch your caffeine

In life, so often it’s the little things that matter. Small expenses can easily add up to a bigger drain on your income than you realize. In other words, beware the $5.00 caffeine drinks. The most frugal option is to buy a good coffee maker or tea kettle + accessories and make your own brew. However, if stepping out for a break helps you to be a more effective work from home professional, find a local restaurant to visit. You may be able to save money as you have the pleasure of supporting a local business.

Monitor other expenditures as well. Not all of your small but life-enhancing pleasures will have to end, but making note of their impact on your finances may change your mind about a few things. If possible, maintain a couple of indulgences that mean the most and let the rest go.

Pay on time

Late fees for many bills are $25.00 or more and some companies consider them to be a line of business. You don’t want to go there. Late paying clients can force a Freelancer into that trap and I’ve been there. Help yourself by invoicing on time and finding the courage to send a gently worded reminder email to collect unpaid receivables that are approaching 60 days.

Moreover, when discussing a project with a client, ask for 20% – 25% of the total fee before you commence work. Tie subsequent payments to successfully completed project milestones. Avoid leaving more than 30% due at the project’s completion and therefore leaving yourself vulnerable to an unscrupulous operator who decides not to pay the full amount, now that s/he has want they want.

Finally, you may notice that planning to save money may inspire you, Freelancer Friend, to become more ambitious and disciplined about keeping your sales pipeline filled, enacting client retention strategies and even devising a campaign pitch to move regular clients to retainer agreements. When you make a commitment to yourself to manage money, you’ll want to be able to predict, and ideally increase, your revenue in order to achieve the savings target.

Thanks for reading,


Harnessing the Cloud: You’ve Got an App for That

Freelancers and other business owners are nearly always pressed for time and we need to get things done, quickly, efficiently and accurately. Advances in technology have yielded many apps that can make our lives easier and make us look good as we take advantage of their features. Below is sampling of free to low cost apps that will help your business.


Canva. If you’re in need of professionally-designed marketing materials for your business but don’t have the budget to hire a graphic designer, you can successfully DIY with Canva This useful app features attractive design templates that allow you to create beautiful visual content for the images that are the core of social media marketing. You can also design logos, brochures, infographics, business cards and templates for Instagram, Twitter and Facebook posts. Canva will also allow users to crop images and enhance photos. The website provides good support, including tutorials on how to use Twitter for marketing. The free version of Canva offers most of the features a Freelancer or business owner will need and an upgrade to the Pro version costs $9.95/ user/ month.


Expensify. All those who travel for business must collect and organize a stack of receipts very soon after returning, whether you’re a Freelancer who must save them for quarterly taxes or an employee who must submit receipts to your boss.  Expensify makes an onerous task much more bearable by automatically scanning the printed paper receipts and adding them to pre-designed templates that facilitate a seamless transition into your electronic records. Other features include reimbursement calculation based on the number of miles travelled, hourly billable amount or wage, a choice of four currencies for calculation and synchronizing directly with your bank account. Free  – $4.99/ month for most users.


FreshBooks. If you operate a B2B knowledge economy service business that doesn’t need a high-powered accounting solution, then FreshBooks  will give your organization a user-friendly option that offers a lot of functionality. You can track billable hours here as well and also log receipts and send invoices from your smartphone or tablet. The service integrates with several others, including Basecamp, PayPal, Google Apps and ZenPayroll.  The basic plan starts at $15 a month and allows management of up to 5 clients. More fully featured versions allow unlimited clients for up to $50 a month.


Mailchimp. This easy-to-use email marketing tool is a go-to for Freelancers and small businesses. It offers easy-to-use templates and intuitive drag-and-drop email building that anyone can use to create a professional-looking email that will enhance your company’s reputation. It also allows you to automate your email campaigns and track subscribers, so you can make the most of your communications campaign. Plus, Mailchimp offers easy integration with many popular e-commerce tools. The basic service is free, but many will want to upgrade to either the $9.99/ month plan, which provides custom branding email design or the $14.99/ month option, which gives users custom newsletter and email templates and marketing automation.


ScanBizCards.  Rather than taking a card from someone with whom you’d like to follow-up, it’s much more efficient—and cooler—to scan the business card or even a conference name tag and know you have that important person’s information will be saved automatically in your phonebook. ScanBizCards


Skype for Business. The classic video conferencing app is owned by Microsoft and the functionality of its infrastructure is versatile, powerful and seamless. The service offers free online meetings for up to 10 participants, set-up from any device, PC or MAC, Android, iPad, or iPhone and PowerPoint upload capability, Instant Messaging and a white board feature. Unlimited free video conferencing, instant messaging, conferencing and audio calling are also offered and  Skype for Business runs ad free and without interruptions— excellent for a business interview or discussion.  Explore the premium features through Microsoft Office 365—$6.00 / user/ month – $15.00 / user/ month.


Slack. There are several real-time messaging and file-sharing apps available, but Slack prevails as a result of its simplicity. It has DropBox, Asana, Google+ Hangouts, Twitter and Zendesk compatibility built into the app and the platform is very responsive and user-friendly. Every message is archived, so searching is quick and easy.  Free – $15.00/ month / user for premium services.


Toggl.  This timer tracks how you spend your time, making it an ideal support system for those who must record billable hours in order to accurately and quickly prepare invoices so that they will get paid, Freelancer friend. You can track as many projects or clients as you want and assign your hourly rate to each project, so that you can quickly calculate what you’re earning, export timesheets and sync your numbers with several project management apps. Toggl is priced from $9.00 / month /user for the basic service to $18.00/ month/ user for team time tracking and other premium services.  

Thanks for reading,


Photograph: Kim Clark September 7, 2018. Fog x FLO, a “fog sculpture” installation by Fujiko Nakaya (Japan) that appeared in five Boston locations from August – October 2018. Every hour from dawn to dusk, a blast of steam would be emitted by a special mechanism and the fog would appear—and disappear in a minute or two, depending on how the wind blew. The fog sculpture pictured here was across the street from the Isabella Stewart Gardner Museum.

Cash-Flow Therapy

So many businesses in the U.S. are undercapitalized; insufficient cash-flow is a factor in the demise of many ventures that might otherwise succeed.  Cash is king, it is often said, and the wise business owner will do what is necessary to maintain adequate cash-flow in his/her organization.

Make friends with the basic three financial documents and learn to use them as analytical tools.  They exist to enable your success and they will signal you when corrective action must be taken.

Monitor the top line of your company’s Income Statement (sales revenue/ billable hours).  Observe the ebb and flow of the accounts receivable (who owes your business money) and payable (to whom you owe money) on your Balance Sheet.  Make note of the beginning and ending cash balances on your Cash-Flow Statement.  Also on the Cash-Flow Statement, notice the cash sales (representing billable hours payments received as checks, for example) and the operating expenses.

Seasonal variations in billable hours/ sales can potentially exacerbate cash-flow problems if that is an issue in your business (the Christmas to New Year’s slowdown, for example) and pop-up emergency expenses can do the same.  Unfortunately, the outcome for Freelance consultants or other business owners can be a cash deficit, an especially unwelcome state of affairs in a month that involves holiday expenses.

But the primary cause of cash-flow woes is usually a result of persistently insufficient billable hours for services rendered or product sales, perhaps secondary to an anemic client list.

Former Wall Street Journal Assistant Editor Serenity Gibbons points out that if you  struggle to generate enough at the top line, you’re probably facing one of the following challenges:

  • The optimum target clients have not been reached by your marketing campaigns, or the message doesn’t address their priorities or aspirations.
  • The product/ service has limited value to the target clients, or your offerings are overwhelmed by dominant competitors.
  • The product/ service is perceived as too expensive for the value delivered.

It’s time to take control and consider what can be done over the short and long-term to correct the problem.  Do some homework and discover the basic challenges, concerns and goals (as defined by their respective industries) that would motivate your prospective clients and guide their decisions.  Determine why they’re doing business with your competitors and not you.  Moreover, make sure that you are pursuing the best target markets for your products/ services.

A second issue is an administrative one that plagues many Freelancers—-we fail to invoice in a timely and regularly scheduled fashion.  Help your clients to take you seriously and treat you like a “real” business by invoicing when promised. Take measures to improve the odds of getting paid on time and in full.  I’ve lived through this challenge and can report that with a small amount of discipline, it can be overcome.

Third, watch your operating (fixed) and sales related (variable) expenses.  How much are you spending to generate sales revenues/ billable hours? Limit what must get dropped into accounts payable and expand what drops into accounts receivable.

There are usually ways to stem the tide of cash-flow problems, that is, if you take action early enough.  You might start with revisiting your pricing strategy.  Ensure that your pricing reflects the value of your product/ service; that your prices are comparable to what competitors in your area charge for similar services/ products; and that you charge close to the maximum of what clients expect to pay for what you offer. Do some in-depth pricing research, using GSA MOBIS, the federal contract system, as a benchmark.

Another useful tactic that serves as a band-aid for cash-flow glitches that are more inconvenient than problematic is your business credit line.  While you’re still able to pay bills on time and have a respectable credit score, investigate obtaining a business credit card through your bank.

Resist the temptation to charge business expenses to your personal credit cards!  Keep business and personal expenses separate and get your arms around the spending in each sector.  Furthermore, a business credit card usually has a much higher credit limit than a personal line and that allows you to more easily make investments in your business and earn cash back and points as you do.

Finally, if inflated business expenses, whether fixed or variable, play a major role in your cash-flow problems, then you will have some decisions to make (re: the selling expenses) and negotiating to do (re: the operating).  If you regularly pay on time expenses for inventory purchases, credit cards, or insurance, for example, get on the phone and ask for lower interest rates or a lower premium.  If variable expenses seem high, reconsider how much you must spend on marketing, advertising, sales and client entertaining.

Thanks for reading,


Photograph: Baccarat at the Sands Hotel in Las Vegas, NV, with Frank Sinatra (in black tie) as the card dealer (1959)











































































































































Thanks for reading,


Photograph: Baccarat at the Sands Hotel in Las Vegas, NV with Frank Sinatra (in bow tie) dealing the cards (1959)

Understanding Break-Even Financial Analysis

Most business owners are familiar with the big three financial control documents: the Income (Profit & Loss) Statement; Cash-Flow Statement (or projection, when used for budget planning); and Balance Sheet. Those three statements are compiled monthly, quarterly and annually. They give useful insight into the fiscal health of the company. The smart business owner consults these statements each month, teases out the story that is revealed and makes decisions accordingly.

A fourth financial document, the Break-Even Analysis, provides forecasting information. The Break-Even is used when a new product or service will be introduced, or when a capital improvement or other upgrade is scheduled to be made.  The Break-Even indicates the amount of sales revenue the product or service must generate to cover the roll-out costs associated with its introduction or acquisition and therefore, positioned to become a decision that pays off.  A Break-Even is also generated when a new business venture is launched. The Break-Even allows the business leader to predict how long losses must be sustained and how to anticipate cash-flow comditions and management in response.

Break-Even is achieved when revenues = expenses; the business is neither making nor losing money. Business expenses are of two types, Fixed and Variable. Fixed Costs are the standard monthly operating costs and they are not impacted by sales revenue generated.  Office space rent, insurance, utilities and payroll are Fixed Costs.

Variable Costs are largely tied to sales: product acquisition or manufacturing costs, inventory purchases, the cost of materials used to manufacture the products sold and all aspects of marketing and selling costs.  As sales increase, Variable Costs increase proportionately, because more product must be purchased or manufactured to be available for sale.  Total Expenses = Fixed + Variable Costs, as recorded on the Income Statement.

When calculating expenses, it is standard to determine the relationship of Variable Costs to sales revenues.  The Variable Cost amount is divided by the number of product units sold,  yielding the Variable Cost per Unit.  In other words,  Variable Costs = units sold  X  variable cost per unit.  For the purpose of calculating Break-Even,  Total Expenses = Fixed Costs + Variable Costs (expressed as units sold  X  variable cost per unit). As always, sales revenues = unit price  X  number of units sold.

The Break-Even Point is reached when

Price  X  Units Sold = (Units  Sold  X  Variable Cost/Unit) + Fixed Costs

The difference between selling price per unit and the variable cost per unit sold reveals the amount that can be applied to Fixed Costs each time a unit is sold.  Think of it this way: if monthly Fixed Costs are $2000 and the average price of your product units sold is $2, with an average Variable Cost of $1 each,  when you sell a unit, you earn $1 to apply to Fixed Costs. With monthly Fixed Costs of $2000, Break-Even is reached when the business sells 2000 units per month.

Knowing how many units must be sold each month to achieve Break-Even is essential for effective financial management of the venture.  One can also calculate Break-Even in terms of dollars that must be generated each month.  In this example, Break-Even Revenue is achieved at $4000 in monthly sales, since the sales price is $2/unit and 2000 units must be sold each month to cover expenses.

A basic knowledge of the process of business financial calculations and the ability to interpret the data generated are must-have skills for all business owners and Freelance consultants. While it is true that one’s bookkeeper or accountant will perform the Break-Even on Quickbooks by plugging in numbers derived from the Income Statement,  it is always in your best interest to understand how the calculations are made and how to make sense of what the financial documents reveal.

When it is proposed that a new product or service might be sold, which might be the development of a new workshop to propose and teach or some other intangible service, a Break-Even Analysis will indicate how many units must be sold, billable hours generated, or classes must be taught before the production costs will be re-couped and the new offering will be positioned to generate ROI.

Thanks for reading,



2015 Year-End Tax Planning Thoughts

It’s mid-November and time for Freelancers to think about how much money we will hand over to the tax man this year. Tax planning is usually at top of mind as the year ends, but be advised that obsessing over taxes is not always useful. New York City CPA and small business tax specialist Michael Hanley recommends that you take a breath and consider the impact that aggressive tax strategies would have on your financial circumstances.

Hanley cautions small business owners and Freelancers against inflated spending on business expenses just to give themselves a lower tax bill, because tax deductions are not a dollar-for-dollar benefit. Every dollar written off as a deduction yields on average only 30 cents in tax savings (depending on your tax bracket and legal structure of the business). If you have a big-ticket item to buy and you anticipate that this year’s income and next year’s will be about the same, then buy when you can get the best price on the item, be it in this year or next. Your savings could be worth more than the tax deduction.

Hanley also addresses the apparently common tactic of zeroing out one’s business bank account by December 31. Paying for business expenses, adding to your retirement account, or purchasing business equipment or supplies will likely make the zero balance bank account tactic work. Paying yourself a bonus, taking a shareholder distribution if your business is a corporate entity, paying down your credit line at the bank, or paying off business credit cards will not give you legitimate tax deductions.

Professional development education is tax-deductible, so if you’re holding money and there is a potentially useful workshop or symposium offered late in the year, do register and attend. You might also consider throwing a Christmas party for clients, prospective clients, referral sources and selected business colleagues (meaning, no one who might steal a client!). Your Christmas party could turn out to be a networking bonanza that creates billable hours for you in the coming year (and beyond).

Clients and referral sources could come away with more business as well and that will make their relationship with you more valuable to them. If you can grab a big table or a private room in a restaurant that needn’t be fancy, but has a good reputation, then plan your party with Evite, even if a Monday night is all you can reserve.  Allow 7-14 days for the RSVP—last minute invitations can be just fine. Spontaneity has its charms, especially at this time of year.

To make sure that the social swirl and networking will be effective, invite 30 and expect 12 to show. Set out five or six finger foods and arrange for a signature cocktail. If someone asks for beer or wine, let them have it. Your party can run 6:00 PM – 8:00 PM. Most people will have two drinks, the restaurant will tell you how much food to set out. You will probably spend $60/pp, meaning that a table of 12 will cost less than $750.

You might also consider inviting your Linked-In connections to a party. It would be a wonderful way to introduce your colleagues to one another and billable hours could be created as a result. You may want to make this a pizza, salad, beer and wine affair, but so what? It’s a great idea, regardless. If you have 100 connections, plan on 25 showing up.

If it’s too late to host a party this year, the cards and stamps used for the December greetings that you’ll send to clients and referral sources are tax-deductible. If you act now,  there will be time to order specially printed cards for your business (you will still add a personal message).

Thanks for reading,


17 Start-up Screw-ups

Serial entrepreneur John Osher has developed numerous consumer products,  including an electric toothbrush that became America’s best-selling toothbrush in just 15 months.  He also started several businesses,  most notably Cap Toys,  where he built sales to $125 million a year and then sold to Hasbro, Inc. in 1997.

Osher’s most important contribution to American business may not be the companies he’s started and profited handsomely from,  but rather the business advice that he’s willing to share. His list  “17 Mistakes Start-ups Make”  became a Harvard Business School case study.  See what you can learn from his entrepreneurial experiences and use it to create your version of the perfect Freelance consulting business.


“The most important mistake of all.  I say nine out of ten businesses fail because the original concept is not viable.  You want to be in business so much that you don’t slow down and take the time to do the up-front research,  so the business is doomed before the doors open.  You can be very talented,  but your business will fail because the concept is flawed.”  Go to the library and do your research.  Read blogs,  journals and newsletters that pertain to the industry you plan to enter,  so that you’ll know what’s going on.  Develop a credible business model.


“Most new entrepreneurs get very excited about their concept and don’t look for the truth about how many people will want to buy what they they’re selling.”  Take the time to research and understand targeted customers and get to know why they will want to buy from you or hire you.  Calculate your potential to penetrate the target market and grow a client list you can live on.


“Based on inadequate research noted in Mistakes #1 & #2,  fledgling entrepreneurs operate from the premise of over-stated market size and their ability to enter it.  They then start spending more money than they should on start-up costs,  creating costs that require those inflated sales projections to be met,  so they run out of money”.


“You have already miscalculated the size of the market.  Now you over-project your portion of it”.  Always another way to run out of money, no?


“Cost projections are often far too low.  Part of the problem is that you’ve projected market share and sales volume that are too high.  There are always unknown reasons that come up to make expenses higher than planned”.


“Now you’ve got lower sales,  higher start-up costs and then you layer on too-high operating costs.”  I have seen colleagues maintain fancy offices when they have the ability to run the business from the kitchen table at home.  If you can take clients out to a restaurant for meetings,  then why pay for office space?  You can get a telephone answering service to personally take messages,  so it looks like you have a secretary.  I’ve done it for a dozen years.  Besides,  no one answers the telephone these days,  especially not in major corporations. When you need another pair of hands to take on a big project,  hire in another Freelancer and spread the wealth.

More next week.  Thanks for reading,


Year End Tax Planning 2013

Lo and behold it is the first week of November and time for you to begin your year-end tax planning.  If you have an accountant or bookkeeper,  pick up the phone and make an appointment.   If you perform these functions yourself,  then take action now,  before Thanksgiving and Christmas ambush you.  Your mission is to minimize the tax bill payable in April 2014.

Let’s start with your place of business.  Do you work from home?  Then consider taking the home office deduction.

Next,  take a look at revenue generated in 2013.  If this was a lucrative year,  you are advised to push income into 2014,  especially if you expect next year to be less flush.   Study the matter before you invoice late 4th quarter projects.  Call clients to confirm that it will be OK to invoice in January.  Many are not on a January – December fiscal year,  so deferring payment until January may not be a problem.

If you expect no substantive change in revenue generated from 2013 to 2014,  consider investing in your business and creating additional tax write-offs this year,  rather than next.  Remember also  to make a contribution to your Solo 401K,  IRA or Roth retirement account.  Freelancers who have already celebrated their 50th birthday are eligible to make a maximum $22,000 tax-deferred catch-up contribution to their Solo 401K each year,  on money generated from self-employment only.

Further,  those who’ve had a good year and hold a Solo 401K may deposit up to 25% of their income into the account.  The tax-deductible and tax-deferred income limit is $49,000 for those under 50 years and $54,500 for those aged 50 years and older.  See my post  for more information.

The Affordable Healthcare Act must now be factored into your year-end tax strategy.  Freelance soloprenuers who qualify for a health insurance subsidy (approximate income maximums of $45,000 for a single person household and $94,000 for a family of four)  need not worry about the subsidy being treated as taxable income.  However,  if your insurer refunds to you a portion of premiums paid,  that refund will be taxable and a 1099 will be sent.

Healthcare Act subsidies function to limit out-of-pocket  monthly insurance premium costs for those who generate revenues below a certain threshold.  The subsidy may be requested as follows:

1. Premium assistance credits, to reduce the monthly cost of health insurance

2. Up-front lump-sum payment

3. Tax credit on Form 1040, to reduce any taxes owed and perhaps create a refund

A statement that documents any subsidy will be issued and there will be an annual reconciliation.  If you underestimated your 2014 income,  you will be required to pay back a portion of your subsidy.  If 2014 income was overestimated,  then a refund will be somehow issued.  Visit the website of either your state or federal health insurance exchange to obtain information about how to estimate your 2014 income.

YOU will be responsible for monitoring your annual income and ensuring that you receive the correct subsidy.  Ben Tallman of Tallman Tax Service in Atlanta recommends that Freelancers monitor revenues and expenses at least quarterly and contact their health exchange and get themselves re-certified in the event of a large increase in income generated,  to reduce the chance of facing a subsidy claw-back at tax time.

Thanks for reading,


2012 Year End Tax Planning

OK folks,  it’s time to think about what  to do before December 31,  so that you can reduce your tax burden.  If you retain an accountant or a business and tax attorney,  make an appointment to discuss year-end tax planning.  You will have a few of the following issues in mind:

Full deduction vs. Depreciation

Depending on how much money you’re on track to make this year and your ability to reasonably project earnings for next year,  you will either make purchases before December 31,  or wait until after January 1.   Further,  you will either take the full up-front deduction on business equipment,  or depreciate business-related purchases and spread the deductions out over several years,  to soften the tax bite on future earnings.

If you did well financially this year,  you’ll probably take the full deduction on business equipment such as your new computer,  printer,  scanner and/or smart phone this year,  to add more expenses to charge off against gross earnings.   But if subsequent years appear more financially rosy,  then use the depreciation method and spread those deductions forward.

Remember all selling expenses

With the passage of time,  it is easy to allow a few expenses associated with generating revenue to get lost in the shuffle.  Did you attend a professional development conference this year,  or take a course?  Did you buy business books?  Pay to attend networking meetings?  Pay dues to join the chamber of commerce or Rotary club? 

You may deduct these expenses.  Proper labeling and immediate filing of receipts and posting of expenses into QuickBooks,  Excel or even an old-school ledger ensures that you will take all legal deductions in the quarter where they should be documented.  Make it easy for yourself to take advantage of every allowable deduction.  If you have not been on top of this stuff,  start looking for receipts now,  before you get tied up with Chanukkah and Christmas,  and record the transactions,  so you’ll be all set for the January 15 quarterly tax filing.

Retirement plan contribution

Especially if you had a good year,  make the maximum retirement fund contribution.  If you are 50+ years old,  or will celebrate your fiftieth birthday on or before December 31,   you are eligible to make the catch-up contribution of $5, 500.00 maximum.  If revenues generated were not stellar,  try to make the largest retirement fund contribution you can manage  (if you can manage). 

It’s not always possible to set money aside for retirement,  unfortunately.  Making money is often difficult,  slow paying clients ruin cash flow and living  expenses are rising.  It’s been reported that 40%  of the self-employed have no retirement funds available.   Many drew down to stay afloat while re-engineering  professionally,  following a lay-off.  Others used retirement money to launch their business enterprise.   As a result,  the retirement fund deduction is much underutilized,  according to the IRS.

Home office expenses

If your fancy smart phone or land line with bells and whistles are dedicated to business,  then you may fully deduct their purchase and monthly billing charges.  Ditto for your office supplies,  internet connection and other office expenses.  You may also deduct a portion of your heating and electricity expenses  (based on the square footage of your office space as a percentage of your living space).

Create boundaries

The fail-safe way to keep track of business expenses is to open up a separate business checking account and maintain a business-only credit card and thus separate your business and personal spending.  Automatically,  there will be a record of all business expenses.  Most business credit cards will provide a year-end summary of charges,  to help you along  (AmEx does this regardless).

Before the year ends,  get your arms around your business expenses,   allowable deductions and the impact on your tax burden.  As millionaires know,  it’s not just what you make,  but also what you keep.

Thanks for reading,


Mind Your Budget

As you brainstorm survival strategies for yourself and your business, creating a budget may be a good item for the to-do list.  A good budget can help you manage costs, understand where your profit centers are (and are not) and most of all,  let you know if you’re really making money and if so, how much.

For Freelancers, the temptation is to simply add up the 1099s at the end of a quarter or year and assume that tells the story. Yet there are always costs of doing business and it is very important that we know where, how and for what purpose we are spending our money.

Do you really need to rent office space?  Is it necessary for clients to visit your office, or might it be perfectly acceptable for you to go to them?  What is the ROI on the networking events that you attend?  Be strategic and selective about the rooms you pay to enter and go to events where you get the most bang for the bucks.

After you’ve been a few times and met a few people, try cutting back to bi-monthly or even quarterly appearances.  If you want to keep in touch with colleagues in between, invite them for a coffee.

Tally your gross revenues and cast a cold eye on expenses. These are the foundation of any budget for any business, or household for that matter.  Managing expenses has a huge impact on the bottom line.  It is possible to lose money overall even if sales are strong, because you either spent too much (money or time) to make the sale or overspent on other operating and production costs.

So if you make and sell jewelry, for example, watch how you buy the raw materials.   Do you have the best available sources?  Should you buy more and stockpile inventory in order to get a better price? Pay attention to market fluctuations and buy big when prices drop.   Managing the cost of goods sold adds to your profit margin.

On the expenses side, be sure to divide fixed expenses (rent, salaries, utilities, long term payment obligations, etc.) from variable expenses (sales commissions, advertising, travel, etc.).  Make note of seasonal fluctuations.  Does business slow down in July and August—or pick up? Identify where you can trim expenses or negotiate a better deal.

Once you’ve figured out the money coming in and money going out over the past 2 or 3 years and assessed where you are,  you can then decide what financial targets you’d like to reach.   Maybe you want a certain overall profit margin on goods sold, or perhaps you’d like to have average net quarterly earnings of a certain amount?

While you’re analyzing gross revenue,  you may even discover that spending a little money will make it possible for you to make much more.  For instance, hiring an assistant at $18/hour to answer the phone,  send invoices,  deposit checks,  post transactions into a ledger or help make jewelry in preparation for Christmas or Valentine’s Day can give you more time to network,  prospect,  make sales calls or double your output of jewelry available for sale.

Especially for Freelancers and other sole proprietors,  how you spend your time can be factored into the budgeting process.  Digging into your company finances may just turn up some buried treasure.

Happy Thanksgiving!