Startup Q&A #12: Bookkeeping, Networking Organizations, Selling a Business, and Politics

Hey everybody, Matthew Paulson here. Today we are going to talk about bookkeeping, joining business organizations, politics in business, and selling your business. Let's do this. This is officially episode 12 of Startup Q and A, the online video show that helps small business owners, startup founders and entrepreneurs grow, grow their businesses faster and achieve their dreams of financial freedom. So if you're just getting started or if you have 100 employees, this is the show that will give you actionable ideas and advice that you can implement in your own business. Now, before we get started, I wanted to share an email marketing tip in a segment that I refer to as the tip of the week. So this week's tip is to split test your subject lines. This sounds like common sense, but most people don't do it. So pretty much every email marketing software has the capability to send a small percentage viewer list, one subject line, another small percentage, a second subject line, and then figure out of those two subject lines which had the higher open rate and they'll send the remainder of the list the subject line that worked better. So let's say you have one subject line that just says bad news, it gets an open rate of 8%. You send that to 10% of your mailing list. You have another one that says great news that gets open 10% of the time. You send that to 10% of your mailing list and then your email marketing software will wait an hour and then Send the remaining 80% of your subscribers the subject line Great news that worked better. Now, going from 10% to 8% or 8% to 10% might not sound like a huge deal deal, but it's actually a 25% increase in the total number of opens which will result in a 25% increase in click through rates which will increase in a 25% increase in sales, hopefully. So, you know, just spending a couple of minutes to do two different subject lines versus one subject line can, you know, have a dramatic impact on the business value that you get out of your email marketing sense. I'd strongly encourage you for pretty much every message you send from your business split test the subject lines using mailchimp or whatever you use. It is well worth the effort. So go ahead and do that the next time you write an email. So that is the tip of the week. Let's dive into the questions. Every week we take four or five questions submitted through Facebook or through our website. So if you have a question you would like answered on the show, go to the domain startupqa co and that will redirect you to my website. And then under the Startup Q and A menu there is a link to ask a question and you can ask your question there. I also periodically ask people on Facebook if they have questions. So if you see one of those posts, go ahead and comment and that will get your question on the show as well. Alright. The first question this week comes from Lisa Gruen and she asks, what do you recommend to new entrepreneurs use to manage and track their financials for their startup? So you know, how do you manage and track your financials for your business? First, I think it's important to say actually take the time to do your financials at the end of each month. A lot of us were focused on other things. We don't, we get our financials behind and then the end of the year comes up and then you have 12 months of financials to do at once. Typically this doesn't work out very well because then you have to think, okay, what did I spend money on like 11 months ago? And you don't remember. You miscategorize things, you just miss entries, you end up making mistakes. And then you're analyzing financials based on inaccurate and incomplete data. And you are also filing a tax return based on inaccurate and incomplete financials. And that can definitely get you into trouble down the line. So at the end of every month, do your financials for the month. That way you can analyze how the month went and you can have more accurate, you know, more accurate set of books. So how do you actually do them? If you don't have a lot of transactions, you can do it yourself through an online accounting package like QuickBooks Online, Xero Wave Accounting or Zoho Books. If you don't want to do it yourself, you can pay a bookkeeper to do that for you. It's not very expensive. Maybe around $100 a month or so when you're first getting started, just kind of depends on what your needs are and whether or not you need payroll and all that kind of good stuff. Then at the end of the year, or actually for the first few months, I guess, excuse me, if you are doing your books yourself, you should at least have your accountant review them for the first several months that you're doing them. That way if you're doing something horribly wrong, your accountant can yell at you and then tell you to fix it. Right now at MarketBeat, what we do is we use QuickBooks online. I personally prepare the financials at the end of every month, so QuickBooks will automatically import my Wells Fargo bank account, my Chase credit card payments. We get through Stripe and PayPal, and it'll put that into one giant kind of register. Then really, all I have to do is go in and categorize stuff. And usually it does most of it automatically because it knows that if I sent money to web Hosting Buzz for web hosting last month, it'll automatically categorize that as web hosting again this month. So it's really not that much work. Then at the end of the year, my accountant takes that and creates a tax return based on that set of books, and it works out pretty well. I actually don't have any kind of business background. I never took an accounting class in my life. But QuickBooks Online and other packages make it really easy to do. All you do is hook it up to your bank account and your payment accounts, and then you go in and categorize stuff. And there's really not a lot to it beyond choosing categories and then making sure the numbers match up at the end of the month. QuickBooks Online is not a perfect solution. I've had some problems with it, especially with the PayPal integration. It imported my transactions for a month, three times over, so I had to go through and delete like 200 transactions by hand. But now that I've got it set up and working, it actually works pretty well for my business. And I definitely consider that as one of the know your potential solutions. So do your do your books every month. Have an accountant look them over or have a bookkeeper do them for you. Make sure that your accounts reconcile at the end of the month. So make sure your bank account balances, you know, are done or they match up with what. So your QuickBooks or whatever should match up with what your bank account says you have. If those account balances match, you know, that's a pretty good sign that your stuff's correct. And then at the end of the year, have an accountant do your taxes. You know, for what you can pay somebody to do taxes, it's usually not worth it to do them yourself. I don't want to do my own taxes. I could probably figure it out. It's just not a good use of my time and that if I make a mistake, it's my fault. And if my accountant makes a mistake, it's her fault. I'd rather have a mistake be somebody else's fault than my fault. So that's kind of my advice for that question. Next question comes from Marissa Poppins. She asks, should I join a local chamber of Commerce? This is a great question. I personally used to think joining a local chamber was kind of a waste of time. I thought if I joined, the only benefit that I would get is that salespeople would call me up and try to sell me stuff, you know, like financial advisors and real estate agents, stuff like that. I figured I'd just get hounded by these people, and that's really the only thing that I would get out of it. That was my typical millennial kind of train of thinking about this. But as I've gotten a little bit older and wiser, I actually do think, you know, chambers of commerce do have some value for entrepreneurs, regardless of what kind of business that you have. You know, I joined MarketBeat as a member of the local Sioux Falls Area Chamber of Commerce. It costs like $320 or something like that a year. It's really not that expensive, and I think we definitely get some value out of it. There's probably a few different things they do. First is that they do a good job of keeping track of what's going on in your local and state government, in legislation and regulations that impact businesses. And even if you have a very small business, tax rates and business laws will have an impact on your business. So it's very good to stay abreast of changes. And usually our chamber does a good job of saying, hey, this is coming down the line. Be aware of it, or complain to your legislature legislator if you don't want that to happen. So that is kind of a nice, easy way for me to know about stuff that the government is doing, state and locally, that is going to impact my business. I found a lot of value in that. The second benefit that I get out of my Chamber of Commerce is personal networking. Our local chamber has ribbon cuttings, they have mixers, educational events, and just a lot of different stuff that you can go to throughout the month. Going to these things are a great way to meet business people in your community. You don't want to go to all of them because there's a lot of them, and it can just be a time suck. But if you go to a couple of them a month, it's a great way to kind of introduce yourself to your local business community and meet some contacts that might be valuable down the line. The third kind of benefit is marketing and pr. Our local chamber has a magazine. I don't remember the name. I think it's just the chamber magazine. But obviously they're not going to write about you if you're not a chamber member. So if you ever want your local chamber to write about you, you should probably be a Chamber member. And then the second benefit is that you can have a ribbon cutting when you become a member so that you can get throw a party, have a bunch of people show up, have some Chamber people show up, make a nice event of it, and then a bunch of people that weren't aware of you or your business become aware of your business. At MarketBeat, we joined a Chamber maybe last summer sometime, and we finally had our ribbon cutting in February, had 50, 60 people there, gave away some books. It was a nice kind of way to promote my personal brand and my business brand to my local community. That was definitely a nice thing we were able to do as a result of our Chamber membership. And then finally you get some good advertising discounts, at least with our local Chamber. So if you're a local business, you want to advertise on radio or TV or the newspaper or a local magazine, there are some great discounts on advertising buys that you get when you join the Chamber. So definitely take advantage of those if you have a business that can benefit from local advertising. MarketBeat doesn't happen to be one of those because we are very specifically targeting investors and we just can't make it work targeting a broad base of people. We really have to target investors through investing lists. But if I had a local business, I would definitely be all over those advertising discounts. So I think it's worth joining the Chamber just a couple hundred bucks. You get some really nice kind of political information. You get some nice personal networking benefits, some nice marketing PR benefits, some good advertising discounts. I think it's definitely worth $300 that I pay every year. Next question is from an anonymous reader or listener and they ask, at what point should I think about selling my business? I think the right time to sell a business and is when you're no longer excited about running that business. When you don't have a vision for two or three or five years down the line, what could this business do five years from now? If you've just kind of lost faith in your business, you're no longer excited, you just don't want to do it anymore. It's a drag to do it. You just aren't excited about it anymore. I really think that's probably when you should start thinking about throwing in a towel for finding a buyer and going and doing something else. If you've got another business that you're excited about more than your current business, you want to work on that, this kind of a background thing, you should really sell it now while it's still working. And making good money before you start neglecting it and then the income starts to go down. You're better off selling it when you're not excited about it and it's doing well than waiting a couple years and then you've lost interest for two years. The revenue goes down because you're not focusing on it. And then you'd have to sell it for a much lower valuation. So you're better off to sell it sooner rather than later if you're no longer focusing on the business. I've only sold one business in my life. It was a press release writing and distribution business called Lightning Releases. I started it in early 2013. I pretty quickly grew it to about 200 grand a year in revenue. It was a nice little business, but it just didn't have the capability of scaling like MarketBeat did. So I spent about half my time on MarketBeat, half my time on Lightning releases. But MarketBeat was making several times more revenue than Lightning Releases. I just wasn't excited about it. I wasn't excited about working with that base of customers because they had some pretty high demands for the amount of money they were paying. And I just rather would work on MarketBeat. So I decided to sell Lightning Releases. Normally the way that you would do this would be to go contact a broker. There are several good online business brokers. I like FE International. I also like Quiet Light. So normally you'd go to one of those guys, then you list your business with them and they come up with a price and then they take a commission and they do a really good job of selling online businesses. I happen to get lucky. I found a buyer at a conference, came up with a price that was agreeable to both of us, sold for a 2x ish multiple of revenue or profit. Profit 2x of profit. Because of the type of business it was. Happy with the sale, happy with the price I got. And then I was able to stop focusing on that and focus on MarketBeat. And that was a very good decision for us in retrospect. So, yeah, once you're not excited about it anymore, then it's time to start thinking about selling it. And you know, there are several good online brokers. If you have an Internet business, if you have an offline business, well, I guess I can't help you there. Next question is an interesting question comes from Shane Oyne. I think that's Shane's last name. Sorry if I pronounced that wrong, Shane, but he says how should I navigate personal, political or religious viewpoints, especially when they could be inflammatory to my customer base. And of course, it is obvious that they hold the wrong position. So how do you navigate politics and religion and all that stuff in the workplace? So that is a great question. I don't think we talk about this enough, but my general view of political advocacy is that it really doesn't have a spot in the workplace. Ultimately, a business is an organization of people designed to create jobs, create a product or service that people find valuable, and to create profit for the shareholders of that business. Being actively involved in politics inside your business does not further those goals. So I just prefer to keep politics out of business. Discussing political views with your customers or having your partners do it or your employees do it just doesn't further those goals. You know, if somebody agrees with your political views, it'll end up being kind of a neutral thing for your business. Or if they disagree with you vehemently, you know, that will probably drive them away from your business. So you might be the biggest Donald Trump fan in the world or his biggest opponent. It just doesn't benefit you to make that opinion known to your customers or your audience, because it will only drive people away from you. It won't drive people toward you. So with this reason, Markabee is a strictly apolitical organization. We don't talk about politics. I don't ask my employees what their political opinions are. It's not, you know, we're kind of understood, we don't talk politics rule because there's just no benefit from it at all. So keep politics out of your business then. Religious views is kind of a. How do your religious views impact your business and your employees? Religious views, how do you manage that? That is a little bit more of a complicated question, because typically somebody's views on faith and religion really impact the core of who they are, and you can't really separate that from how you do business. So I happen to be a Christian, and my faith is really important to me, and my faith impacts how I treat other people in the world. It impacts how I treat my employees and my customers and our policies. I think it's very important that people are treated fairly and that you are seen as a good person trying to do right in the world to the people that you work with. The Bible says that workers deserve their wage. I think wages. I think you should treat your employees well and pay them fairly. That impacts how we do compensation. I think that because I make it known that I'm a Christian, it's very important that I treat people fairly. We have generous refund policies. We try to give people the benefit of the doubt. We just try to be a company that people would want to work for. And that is largely a result of my personal religious beliefs. So, you know, while my religious beliefs do impact how I do business, you know, I'm not in my business trying to evangelize my employees or my customers, you know, directly. You know, I don't hand out, you know, tracts or whatever through my email list. I just. I don't think that would be effective to try to evangelize people over, you know, email or through our traditional marketing channels. And so really, my kind of thought on that is the quote that is often attributed to St. Francis, which is, you know, evangelize and if necessary, use words, although St. Francis probably didn't actually say that. But I would rather have people judge my religious beliefs based on my behavior and my actions rather than any outward sign that I say, you know, outward communication piece that I do in my business. Outside of business, it's a different thing. So there's that. But inside my business, you know, there's just. It's not a good, good medium to, you know, share my religious beliefs. So I typically don't do that. You know, I think that, you know, my religious beliefs should impact my behavior, but I probably shouldn't be sharing my religious beliefs, you know, frequently in my business. I'm not saying I'd never do that, but as a matter of course, you know, I'm a Christian, but MarketBeat isn't explicitly a Christian organization, so it's kind of a very fine line there. I guess I don't really have a great answer to this question. So I can't change who I am as a Christian and how that causes me, you know, to view the world and how I should treat people. That's obviously going to impact my business. But I don't explicitly try to convince other people that I work with, do business with, to become Christians, because I just don't think that would work. So there's that. I hope this answers your question. Shane, gives you some. Some good feedback and ideas on this. You know, so political views, keep them out of the office. Religious views, you know, will impact who you are, but keep them, you know, for the most part, out of the office. You know, I don't judge my employees or my business partners or anything based on religious beliefs or political beliefs or personal beliefs. And then if somebody has some unusual personal beliefs that would be considered bigoted or anything like that, either they need to keep them to themselves or they probably can't. Work with me. If somebody's an out and out racist, that is going to be a problem. And that's probably not the type of person that I'd want to work with to begin with. So if there's something really obvious that's flagrantly a problem in our society, that would probably just cause me not to do business with them to begin with. So not a terribly clear answer, but I hope this provides some insight and understanding. So those are today's questions. If you would like to subscribe to Startup Q and A and get next Monday show delivered, you automatically go to the domain startupqa Co and there are links to subscribe via email, Facebook, RSS, iTunes, YouTube, and Stitcher. You can also personally follow me on facebook@facebook.com MatthewPaulsonpage or on Twitter. My user ID is athudp and if you've enjoyed the show, please take a few minutes to leave a review on itunes. That will help us reach more people with the message of financial freedom through entrepreneurship and it will help us achieve our goal of helping business owners, startup founders and entrepreneurs grow their businesses faster and achieve financial freedom. So go on itunes and leave a review. It would help me out a lot. Before I guess cut off the show today, I wanted to take a couple of minutes to talk about a fundraiser that I am doing through the South Dakota March of Dimes. My wife and I, we have two premature children. Micah, he's four years old and Adeline is nine months old. Micah was born 10 weeks early, Adeline was born six weeks early, and they both have complications from that that are going to impact them for several years. Micah's four, his speech is probably that of a two and a half year old. He's not entirely potty trained yet and he's just developmentally delayed because he was born 10 weeks early and he was 3 pounds and 1 ounce when he was born. So we just have My wife and I have a special place in our heart for premature children because we have two of them and for that reason I serve on the board of the South Dakota State Chapter of the March of Dimes and we are working on a fundraiser for that through their March for Babies event. My wife and I kind of have a personal goal of being the top family team in the state. So that money that we're raising will go to fund medical research to prevent prematurity in children in the future and it will also go to provide care services to families that have NICU babies in the hospital. We were really able to benefit from the services of the March of Dimes and we had a NICU baby and now we want to make those services available to other families. So we're raising money for the March of Dimes. If you'd like to contribute to our campaign in any way, just go to the URL marchforbabies.org MatthewPaulsen and there is a link there where you can make a contribution. Anything helps. 10 bucks, 25 bucks, 50 bucks, whatever you want to do would be great. We think it's a great organization. They spend their money well. The mission is really important and I'd love to have you join us in that this cost to raise money for the March of Dimes. So go to marchforbabies.org MatthewPulseon As I'm recording this, we've already raised $9,500. I think we can do a lot more. So if you haven't made a contribution yet, I'd strongly encourage and ask you to do so. So thanks for listening to this little spiel. That's it for today. We'll see you next time. Sa.