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  • What is the Owner's Job? Part 1
    By Tom Crouser - Tuesday May 15, 2012
    By Tom Crouser So what’s my job as business owner? Makes my head hurt. Wrapped up in one short question is one seriously long answer. So, this is part one of four and my first answer is that there’s not a job for an owner. There is for the person running the business, however. Ownership is a passive verb. If you own stock in General Motors, you have a right to a return on investment and you have a right to expect your management will focus on increasing your shareholder value. In our kinds of businesses it is no different. You may own a car but that does you little good until you take on another role – the role of driver. Same is true with our businesses and the refusal of many business owners to actually drive their car is a...

  • Question Masks Real Issue
    By Tom Crouser - Friday October 7, 2011
    I learned early in consulting that when owners self-diagnose, often true issues are hidden. In fact, one of the criticisms leveled at consultants is their solutions are so simple that “anyone could have said that.†Sure, solutions are simple. Where a good consultant earns their money is asking good questions so that real problems can be defined; not in just providing solutions. My last post was a great example of this phenomenon when my printer-friend asked, “What percentage of sales should rent be?†I thought, “Why do you suppose the owner asked that?†So, after I responded (5% to 6.5% with a typical of 6%, which is up from 4.5% over the past five years), I asked the obvious: “Why do you...

  • How Much Working Capital Do You Need?
    By Tom Crouser - Wednesday August 24, 2011
    Hi, Tom I have been tracking my current ratio according to your formula for years and years. Now I am selling my business. We have 13 employees, a four-color shop, $2 million in sales, and very good cash flow. The potential buyer is calculating that he is going to need $220,000 in working capital. He calculates this from the fact that my accounts receivable is about $220,000. I am taking the accounts receivable, so he will have zero A/R the first day (bulk or asset sale). But he is asking the bank for an additional loan for $220,000 to cover his working capital. I am telling him that is too much because some of our customers pay cash or within 30 days, so he will have cash coming in to make payroll and he can work with the suppliers to...

  • A Taxing Question
    By Tom Crouser - Saturday January 22, 2011
    Hmm. Is the 1099 provision of the Health Care Act really that onerous? I work with hundreds of small businesses in the US, mainly in the printing industry, and 99% utilize QuickBooks and/or a similar automated system. Those out there who are still on a manual system should be automated for their own best interest. Now in QB, the ability to track purchases from a vendor is a couple clicks away, and printing out 1099s is fairly simple and quick. The hard part would be collecting the FEIN numbers. I anticipate vendors will quickly begin providing this info on invoices should this provision stand. Why? Vendors won't want incoming calls seeking the information any more than we small business owners would want having to track them down. So...

  • NFIB Being Unfair to Members?
    By Tom Crouser - Friday January 21, 2011
    So what’s up with the National Federation of Independent Business? I’ve engaged in a Tweet-a-thon with them @NFIB in which I’ve tried to point out inconsistencies of a member organization soliciting other members in direct competition with many of their own members. As a matter of disclosure, I work with hundreds of printers, copy shops as well as small businesses engaged in packing and shipping throughout the United States, many of whom are NFIB members, as is my firm. Fact is, I encourage and recommend the organization for it is an efficient voice of small business, and their basic model is great. They survey the opinions of small business owners and pass them along at the highest level in Washington as well as...

  • Can You Take a Real Vacation?
    By Tom Crouser - Wednesday January 5, 2011
    I thought it appropriate to ask if you regularly take a vacation. Why? Well, many business owners are more martyrs than managers and confuse service with servitude. If you feel some of this applies to you and would like a solution, then read on. Va•ca•tion: (1) a period of time devoted to rest, travel or recreation (2) a scheduled period during which the activities of courts, schools or other regular businesses are suspended. Hmm... There are reasons a business owner cannot take a vacation, at least a vacation according to the classic definition. We can travel but it's impossible to rest when we have to direct the work of others who are still at the shop. So, we can travel but not to areas where there is no cell phone...

  • Creating a Sustainable Budget
    By Tom Crouser - Monday December 27, 2010
    What coach would plan to lose half their games before the season starts? None that I know. Yet don’t we do the same thing when we create a monthly budget on our average month’s sales? After all, an average is in the middle, with half more and half less. Here is one way to estimate a realistic and sustainable sales level so you can create a realistic and sustainable budget. 1. Start where you are. If you sold $1.2 million last year, there is no negative sales trend, and you know of no reason you should reduce your monthly sales estimate, then list the monthly sales from highest to lowest (most easily done in a spreadsheet: Excel Users: Data -> Sort -> select your monthly sales total cells). 2. Reduce sales if there is a...

  • Section 179 Depreciation Saves No Money!
    By Tom Crouser - Monday December 6, 2010
    If you think the end of the tax year is the time to buy equipment to save money; well, it’s time to think again. Why? Section 179 Accelerated Depreciation saves no money and it can hurt your cash flow. Here’s how. Section 179 Accelerated Depreciation in the U.S. does just that. It does allow you to accelerate or move your depreciation deductions you would take during out years to this year, but it provides NO additional deduction. Over time, you have exactly the same tax effect. Okay, you might be thinking, “What is wrong with taking the depreciation this year instead of waiting?†Follow the cash to find out. If you pay little or no money down to purchase $50k of equipment this year, you probably can deduct the...

  • Beware of Trap in Downsizing
    By Tom Crouser - Wednesday November 17, 2010
    A print shop owner is learning a lot about his business the hard way now that he terminated a high priced and overly demanding prepress worker. Specifically, that means he’s doing prepress himself and seeing more cash as a result. Also there is a side benefit that everyone is more of a “team†and he has a renewed spirit and vision that has been missing for years. All he has to do now is beware of the Downsizing Trap. What’s the trap? It is playing defense to the exclusion of offense. In any game, you still have to put points on the board to win, even when you are behind. In our friend’s case, he was the selling owner and, as with many businesses, sales were down. Then the prepress worker went too far...

  • Most Writers Don’t Seem to Know What an Entrepreneur Is
    By Tom Crouser - Monday July 12, 2010
    I’m tired of reading material written by folks who don’t understand us. I think Forbes is one of the biggest offenders. AOL put Richard Branson, founder of Virgin Airlines, as chairman of their Small Business Board of Directors. Then there’s the likes of Inc. and Entrepreneur that assume all of us want to float an IPO (initial public offering) and get rich. And then there’s the flip side: those who treat us as self-employed and give us stories about five helpful iPhone Apps and the like. Okay, here’s the real scoop. An entrepreneur is one who brings together the forces of land, labor, and capital and makes a profit. Lesson one is that a self-employed person is not an entrepreneur; rather they are...

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