Friday, February 12, 2016

The Ultimate Guide to IRS Tax Audits & How to Avoid an Audit

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Most people cringe when they hear the word audit. Going through the ropes and ultimately resolving an audit is no fun and could be costly, so it’s important to determine a plan of action to avoid being audited in the first place.

What is a Tax Audit?

A tax audit takes place when the Internal Revenue Service or a state agency conducts a closer review of the financial records of a business, an organization, or an individual. The IRS primarily focuses on examining tax returns. This examination is done to ensure that all information is being properly reported on an actual tax form, such as IRS Form 1040.

In addition to traditional audits, there are also joint tax audits. A joint audit is the examination of a business or individual tax return by 2 or more auditors in 2 or more states who examine cross-border tax issues. These auditors work together on a single audit to gain a full understanding of the situation at-hand.

How Does an Audit Work?

While the process of flagging tax returns for potential audits may seem random, the IRS uses the Discriminate Income Function (DIF)—a computer program that compares your deductions with those of others in your income bracket—to search for inconsistencies.

If you get audited, it’s likely you’ll receive a notice in the mail that indicates you’re being audited, along with the specific reason. From there, you can either agree or disagree with the audit. To agree, you must sign off on the paperwork and send it back with any requested documents and payments to account for the inconsistencies on your audited return.

For an in-person audit, the auditor will visit your office or place of business to conduct a thorough review of your records. This process may involve examining your printed documents or computer systems. It varies on how long such an audit can take. In some cases, it could take an auditor several days – or even a few weeks –to sufficiently review the records in your office.

If you do receive a notice from the IRS detailing the issue with your tax return, make the recommended changes and send the requested documentation to fulfill the request. If you disagree with an audit, you can file an appeal with the IRS, which could ultimately lead to landing in a tax court if the issue cannot be resolved between you and the auditor.

What Causes an Audit?

Certain discrepancies raise red flags for auditors, such as miscalculations on tax returns, overestimations on deductions, and other information that appears to be inaccurate, inconsistent, or out of the ordinary.

Let’s take a look at a hypothetical example of a tax audit:

Jack miscalculated his home office deduction by claiming more expenses than he actually incurred while running his small business from home. Instead of writing down $500 for his home office deduction, he wrote down $5,000 on his tax return. The IRS agent reviewing the tax form noticed the unusually large deduction and flagged the return for an audit. The IRS then mailed Jack an audit notice, requesting that he clarify the write-off. He submitted his records, and it became evident to the agent that he miscalculated the deduction. It took 3 months to resolve the issue, and Jack had to file for an extension to avoid late-filing fees. He ultimately was able to claim the correct $500 amount for the home office deduction.

Who Normally Gets Audited?

In 2014, the IRS audited more than 1.2 million taxpayers. IRS statistics show that out of every 37 returns for people with incomes of $200,000 or higher, someone will get audited. For those who earn $1 million or higher, the probability is more like 1 out of 13.

But don’t think that the only people getting audited are the ones with yearly incomes that reach 6 or 7 figures. If you are a waitress, bartender, hairdresser, or are involved in any cash-based industry, you’re already more likely to be audited. The same goes for doctors, lawyers, or accountants who normally keep their own books. Sole proprietors and Schedule C filers also have a higher chance of getting audited than formally established business owners who operate LLCs or corporations.

Why to Avoid an Audit

There are several reasons why you should do your best to avoid being audited. For one, an audit can be a time-consuming process that will take away valuable time from focusing on your priorities and could result in you having to pay more in taxes to the IRS. Additional accuracy-related penalties exist for filers whose returns are incorrectly reported. Nobody wants to owe more money than they think they do. Also, the chances of a future audit increase if you’ve been audited before. Getting in major hot water can occur when taxpayers try to evade the IRS or file fraudulent returns. These actions could result in criminal charges.

IRS auditors are instructed to close audits within 28 months of the date you filed your tax return or the date it was due—whichever is later. This means an audit can be hanging over your head for over 2 years.

An audit could involve sending and receiving several pieces of mail in order to fully resolve the issue and pay any requested fees you owe to the IRS. Imagine having to open your mailbox every day wondering what your latest letter from Uncle Sam will say. Audits can be very tedious because of how much detail is involved in getting on the same page with the IRS. It can be what seems like a never-ending, back-and-forth nightmare.

Who wants to deal with the IRS for any reason at all—let alone for a long period of time in order to resolve one audited return? Of course, nobody does.

Tips to Avoid a Tax Audit

There are a few basic strategies you can use to significantly reduce your chances of getting that dreaded audit notice in your mailbox:

1) Ensure your tax return is 100% complete.

After your tax return has been completely filled out from top to bottom, review it with a fine-tooth comb. Make sure that every line that is applicable to your tax situation has been filled out completely and correctly. If you submit an incomplete tax return, a tax authority may question why you did not disclose certain information on your return.

If a line on your return doesn’t apply to you, still fill it in with a “0” or dash (—) so that nothing is left blank. A blank space can raise a big red flag.

2) Report all taxable income on your return.

Taxpayers who are categorized into higher income tax brackets—particularly earners of over $200,000 per year—typically have a higher chance of getting audited. While the good majority of individuals bring in most of this income legitimately from a small business, a W-2 job, or through interest or investments, all taxable income must be reported on your return. The IRS wants to know about every taxable penny you earn, so be sure you disclose it appropriately.

3) Avoid claiming large itemized tax deductions.

If you choose to itemize your tax deductions rather than claiming the standard deduction, the IRS may compare your write-offs to what fellow taxpayers in your income tax bracket claim on their returns. If the agent reviewing your return determines that your deductions are a little high, they might give it a second look.

4) Properly claim all eligible tax deductions on expenses.

Home office deduction: To claim the home office deduction when filing your return, you must use a specific area of your residence for business activities. You can write off either an appropriate percentage of your bills, or you can claim the flat-rate deduction of $5 per square foot with a maximum deduction of $1,500 for up to 300 square feet of home office space. It’s critical to fully document all of your home office expenses.

Meals and entertainment deduction: Self-employed professionals are also allowed to write off 50% of business-related meals and entertainment activities as a tax deduction. But you must follow a few rules to ensure the agent reviewing your return doesn’t question the deduction. Stick to the 50% write-off amount, document who was present at the gathering, and don’t forget to write down the type of business that was conducted or discussed. Saving receipts is a must, and failing to do any of these things could trigger an audit.

Travel expenses: Don’t forget travel expenses you can also write off. As long as you travel by plane, train, or automobile for business purposes, you can deduct these costs. Let’s say you fly from New York City to Los Angeles to meet with a client. You can deduct your flight, rental car, hotel, and any other travel expenses you incur for the trip. If you’re an employee, you may write off unreimbursed employee expenses, which could include travel costs.

Deducting charitable contributions: As a business owner, it’s also nice to be philanthropic. And you can save on taxes while helping others, too. Consider making donations to your favorite charity—clothing, toys, household goods, or even a vehicle. As long as you donate to a qualifying charity and save your receipts, you can deduct 100% of your non-cash charitable contributions on your tax return. Documentation is key here to help you avoid an audit.

5) Always claim accurate deductions on business losses you incur.

Business losses are commonly incurred, especially during the startup phase of a brand new company. To properly deduct any business losses you incur, they must qualify as deductible losses. The best way to meet this requirement is to launch or maintain a formally established business entity, such as an LLC, S corporation, or C corporation. Doing so helps you prove to the IRS that these losses are actually tied to your business and are not simply personal losses.

6) Explain yourself to the IRS.

If you think your tax return has a good chance of raising an audit flag, you should include extra forms, worksheets, or receipts with your filing. Use them to explain inconsistencies on any audited returns from the last few years in areas such as your name, your dependents, deduction amounts, and income. This can help you avoid unnecessary correspondence with the IRS when it comes to clarifying your information.

7) Double-check your numbers.

It’s easy to skip over numbers or calculations, especially when you consider how many figures can appear on your tax form. So, you could easily make errors between the number 100 and the number 1,000 if you’re in a hurry to fill out your return. Calculations should always be done on a calculator—or even with an app on your smartphone—to ensure accuracy. Make the same calculations more than once to guarantee certainty in the numbers you record on your return for income and deductions. Pay close attention to zeroes, decimal points, and commas.

8) Incorporate if you work for yourself.

Filing a Schedule C as a self-employed taxpayer automatically increases your audit risk. If you are your own boss, consider incorporating or setting up an LLC for yourself. In general, corporations and LLCs are audited less frequently than sole proprietorships and partnerships. This is because what would ordinarily look abnormal on a personal return would make more sense for a business.

In essence, having a formal entity proves to the IRS that you are indeed operating a business, rather than claiming you are.

9) Avoid filing amendments to your IRS tax returns.

If you file an amended return, your original return could also come under scrutiny, so make an effort to file correctly the first time around. An amended tax return is filed in order to make corrections to an original return. This may involve correcting income amounts or deductions you are claiming. If you file an amended return, your original return could also get a second look. That’s why it’s critical to file correctly from the get-go. You don’t want the IRS to get suspicious when you’re submitting numerous returns for a single tax year.

The Bottom Line on Audits

There is no surefire way to guarantee that you will never receive an IRS audit notice in the mail in your lifetime. The same can be said for audits from non-federal agencies like state and local tax authorities. However, the aforementioned steps can significantly reduce your chances. It is also wise to work with an accounting professional who has dealt with audits in the past and knows how to avoid them in the future.

8 Essential Etiquette Tips for Your Next Business Dinner

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It doesn’t matter how schooled you are in etiquette. When it comes to business etiquette, there’s a lot more to know than the manners your mother taught you. In some instances, business dinners may hold major significance in shaping the future of your career. You want to leave a lasting, professional impression that will give others confidence in you. Remembering a few small formalities can take you a long way! To help you avoid any social faux pas at your next business dinner, here are 8 etiquette tips you should observe at your next function.

1. Master the art of greeting

Before everyone is seated, this is the best time for all introductions and handshakes. If others arrive before the meal is served, you’ll have to go through the process again on an individual basis. Generally, before another person sits at the table, you’ll want to stand and greet them. It’s not very polite to remain seated when shaking someone’s hand.

2. Choose your dish wisely

What you ultimately choose to eat should be influenced by the person hosting the business dinner, and also by what’s least likely to get on your clothes. Greasy or messy foods are always a no. What could be more embarrassing than sitting through a business dinner with stains on your shirt? You’ll also want to take note of what the host orders. Never go for the most expensive thing on the menu, and if your host orders a light dish, you should do the same.

3. Never assume alcohol is okay

If your host doesn’t order alcohol, or ask if he or she should order wine for the table, avoid ordering an alcoholic beverage. If your host doesn’t see anything wrong with having a drink or two during dinner, have a drink or two, but keep it to a maximum of two to avoid getting sloppy and tipsy.

4. Don’t monopolize the waiter

There are plenty of valid reasons for inquiring about a dish, such as making sure it won’t conflict with any food allergies. Having the waiter explain everything on the menu will give the impression that you’re rude and indecisive. If you have questions, limit them to one or two dishes, or explain your food allergy and ask what the waiter can safely recommend.

5. Eat neatly

This means taking small bites of food and working your way through your plate slowly. Obviously, you should be cautious to avoid taking with your mouth full. Lay your utensils down back where you found them, and never gesture with your hands while you’re holding utensils or glassware.

6. Carefully consider topics of conversation

Sex, politics, and religion are considered the three most controversial conversation topics. You’ve come to have a business dinner, not a debate. If other people engage in those topics, avoid putting your two cents in. Allow them to discuss things, and keep your opinions to yourself.

7. Excuse yourself correctly

You don’t need to tell everyone you have to pee. It’s a natural thing, and it happens to everyone, but your associates would rather not know where you’re going. Simply say, “please excuse me” before removing yourself from the table and pushing your chair back.

8. Don’t squabble over the bill

You may think you’re being the nice, but your host may perceive it as insulting if you offer to cover part of the bill. They invited you there, and they’ve likely already planned to pay for the bill. Business dinners can often be written off, and your host already knows what they’re doing. Simply thanking them and shaking hands upon departure is good enough.

Remember that your guests and hosts will also help set the tone of the evening. Some business events are more casual than others, but it’s always best to walk in assuming that the bar is set high for formalities. You can always reduce the level of your proper presentation, but you can’t take back any mishaps.

Author: Zoe Anderson is a marketing assistant at StudySelect. She’s keen on learning about new branding strategies and digital marketing tools.

 

7 Inspiring Books You Must Read

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She told me to turn off the light.

It was 8pm and it was time to sleep according to the adult’s house rules. These were non-negotiable. My desire and passion for reading that I had discovered after mastering “the cat sat on the mat” sentence at the age of five, made this a cruel and arbitrary time.

And a seven year old’s passionate response…

“…But I want to keep reading.”

Despite protestations and mumblings, the light switch was flicked to the off position. First battle lost. The adults (sometimes referred to as my parents) had all the fun. But they didn’t count on my patience that was driven by an inherited trait of passionate persistence.

As the house went silent I grabbed my bedside lamp and positioned it under the bedcovers so that an orbiting spy satellite would have trouble knowing what I was doing. Parents score zero and child chalks up a win.

This was the start of a reading habit that has sometimes bordered on obsessive.

Glimpses of genius

Books are your access to the best minds in the world. From creativity, to business and marketing and beyond. They distill the essence of what often is a life of learning into a few pages. It is where you will discover ideas, tactics and habits that are the seeds to success.

A great book is one that reveals the ideas with clarity. They expose the genius but don’t hide it in dross and words that don’t matter. Often the best books are the short books.

It’s also what you do with those concepts that will define you.

Self publishing doesn’t need permission

Some of us may want to not just read but write. Today you do not need to beg for permission to publish a book. You can write it in a word document, send it to your designer (that you found on Freelancer) to create a great looking cover and then upload it to Amazon.

You are now an author!

New age writers and authors are taking advantage of that and building a lifestyle and businesses based on their creative output.

But you must keep in mind that becoming a good or even a great writer requires practice and also that means reading and more reading. Steven King said that, “If you want to be a writer, you must do two things above all others: read a lot and write a lot.

Great ideas do not emerge from a vacuum.

It’s a new age and you need to reinvent yourself

In an age of video, multimedia and digital innovation the book and the business landscape has evolved. You can read books on tablets, book readers and even your smart phone. You can gain ideas that were made public just a few seconds after the author hit the publish button on their blog.

In a digital age that changes every day, the role of books, blog posts and self-education are more vital than ever. We cannot rely on just the wisdom of the last century or even a decade that has just passed. We need to continue to hunt down the new ideas and innovations that are driving an ever changing world.

Here are some inspiring books that I have read recently and are also woven into my creativity, business and marketing habits.

1. Elon Musk: Tesla SpaceX, and the Quest for a Fantastic Future

In this book, veteran technology journalist Ashlee Vance provides the first inside look into the extraordinary life and times of Silicon Valley’s most audacious entrepreneur. Written with exclusive access to Musk, his family and friends, the book traces the entrepreneur’s journey from a rough upbringing in South Africa to the pinnacle of the global business world.

Vance spent over 40 hours in conversation with Musk and interviewed close to 300 people to tell the tumultuous stories of Musk’s world-changing companies: PayPal, Tesla Motors, SpaceX and SolarCity, and to characterize a man who has renewed American industry and sparked new levels of innovation while making plenty of enemies along the way.

My key lessons from this book are the three vital ingredients that all successful people have. An appetite for hard work, passion and a higher purpose that is not about money. It’s what you need if you want to change to world or make a dent in the universe.

Sorry…I forgot one other lesson. Dare to dream big.

2. The One Thing

This book by Gary Keller reveals the power of focusing on your “one thing.” His New York Times bestselling books have sold more than 2 million copies.

He also reveals the “One” thing that made Keller Williams Realty, Inc., one of the largest real estate companies in the world. What was that? It was writing a book that positioned him and his company as the authority in real estate in the USA.

In The ONE Thing, you’ll also learn productivity tips such as:

  • Cut through the clutter
  • Achieve better results in less time
  • Build momentum toward your goal
  • Dial down the stress

 3. Steal like an Artist

Creativity and genius is sometimes thought of as being that one insight or flash of inspiration that appears from nowhere. Nothing could be further from the truth.

In this this very insightful book by Austin Kleon explains that you don’t need to be a genius, you just need to be yourself.

That’s the message from Austin, a young writer and artist who knows that creativity is everywhere, creativity is for everyone. A manifesto for the digital age, Steal Like an Artist is a guide whose positive message, graphic look and illustrations, exercises, and examples will put readers directly in touch with their artistic side.

4. Now, Discover Your Strengths

The biggest challenge for all of us is discovering what your mission on this planet is. That is often the journey of a lifetime.

It also means working on your strengths but many of us don’t know what they are.

Or how to find them.

Unfortunately, most of us have little sense of our talents and strengths, much less the ability to build our lives around them. Instead, guided by our parents, by our teachers, by our managers, and by psychology’s fascination with pathology, we become experts in our weaknesses and spend our lives trying to repair these flaws, while our strengths lie dormant and neglected.

Marcus Buckingham, (who was also coauthor of the national bestseller First, Break All the Rules), and Donald O. Clifton, have created a revolutionary program to help readers identify their talents, build them into strengths, and enjoy consistent, near-perfect performance. At the heart of the book is the Internet-based StrengthsFinder Profile, the product of a 25-year, multimillion-dollar effort to identify the most prevalent human strengths.

This book comes with free access to the web based “Strength Finder Test” that you will find very revealing. I know I did.

5. The Lean Startup: How Relentless Change Creates Radically Successful Businesses

The digital age has turned almost every aspect of our world on its head. This extends to our personal lives and how we do business.

Rather than wasting time creating elaborate business plans, The Lean Startup offers entrepreneurs—in companies of all sizes—a way to test their vision continuously, to adapt and adjust before it’s too late. The author Eric Ries provides a scientific approach to creating and managing successful startups in an age when companies need to innovate more than ever.

I found this a great book to challenge my thinking and grow my business.

6. Insanely Simple: The Obsession that Drives Apple’s Success

This book by Ken Seagall caught my attention after reading Steve Jobs biography by Walter Isaacson while travelling by train through Italy. After that 630 page exposure to the mind of a genius, I became a bit of a Steve Jobs fanboy. So finding out more about the person that has redefined our world was tempting.

To Steve Jobs, simplicity was a religion. It was also a weapon. Simplicity isn’t just a design principle at Apple—it’s a value that permeates every level of the organization. The obsession with simplicity is what separates Apple from other technology companies. It’s what helped Apple recover from near death in 1997 to become the most valuable company on Earth in 2011.

What does this book cover?

  • Think Minimal: Distilling choices to a minimum brings clarity to a company and its customers—as Jobs proved when he replaced over twenty product models with a lineup of four.
  • Think Small: Swearing allegiance to the concept of “small groups of smart people” raises both morale and productivity.
  • Think Motion: Keeping project teams in constant motion focuses creative thinking on well-defined goals and minimizes distractions.
  • Think Iconic: Using a simple, powerful image to symbolize the benefit of a product or idea creates a deeper impression in the minds of customers.

Put it on your reading list!

7. Do the Work

This short but powerful and inspiring book by Steven Pressfield was revealing about a problem that many of us have. Having a lot of great ideas but not doing the work. This book led to me adopting the Mantra “Done is better than perfect”.

It also helps answer questions such as:

  • Could you be getting in your way of producing great work?
  • Have you started a project but never finished?
  • Would you like to do work that matters, but don’t know where to start?

So the answer is Do the Work, a manifesto by bestselling author Steven Pressfield, that will show you that it’s not about better ideas, it’s about actually doing the work. Do the Work is a weapon against Resistance—a tool that will help you take action and successfully ship projects out the door.

Over to you

Books are great and reading them is fun. You can gain many great ideas that are inspiring, motivating and lead to many conversations. But if you don’t take the key lessons and start the work then nothing happens.

Over to you.

Mailing Lists, Email Marketing, Errors, Oh My!

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Using old email lists for the first time is like eating really stale doughnuts. The taste is pretty bad, and the side effects could be disastrous.

Email companies like Constant Contact, MailChimp and many others all have strict rules they follow to avoid being caught in spam hell, with their servers blacklisted and worse. Each has automated software watching over your uploads of new lists. And each will block the use of any list they detect may be suspicious.

If you have 4,000 names and add 12,000 more, that’s a red flag. Most services will automatically block you until you fill out a form and even speak to a representative. They will ask where you got the list, and was it single or double opt-in? Did you get the list from any third party? Is the list tested with opt-ins less than one-year old?

Now the last question is a daunting one for any of us. Which one of us has run any of our lists through the opt-in process each year with a special email to everyone on the list essentially telling them that they must opt-in to continue receiving material from us? I’ll bet the answer is “none of us.” Yet that is what some of the mailing houses insist upon if they suspect a list is not generated by you directly through opt-in sign-ups.

How about a list you have that is over a year old that hasn’t been used lately? You can pay about a penny per name with a usual minimum of $100 to clean the list, which is quite effective. The list cleaning service will separate your list into five groups: verified (good name and not a trap), unknown (may be good but careful), undeliverable (bounced), unreachable (invalid domain), and illegitimate (known trap, monitoring domain, or black hole.) The first group is the only safe one to trust. Many of the common portals like AOL, Yahoo and MSN do not return a response to an email ping, leading all of those addresses to be classed as “unknown.” And that’s a large part of anyone’s list.

Your mailing list company must protect themselves, and in doing so, protect you. A large number of bounces or many unsubscribes in a single mailing are red flags that will be caught by the mailing company system. Depending upon the size of the list in relation to the total size of all of your lists with that mailing company, your account may be placed on hold while you complete a form with detailed answers about where you got the names, if you got them yourself, and if you have verified them with an opt-in during the last year.

So how do you grow a list if you purchase names from a service? The first answer is in the form of a question. Does the service guarantee that the names have been run through their verification filter in the last month or two? If not, the bounce rate will be as much as one percent higher for each month the list has not been trimmed. That amounts to big numbers in a short time.

The second answer is to divide the list into small bites that are less than a third the size of your present lists in sum, and feed those in slowly into the system.

Another protection with an incremental benefit is to register your domain with emailreg.org, which will verify that your domain for mass emails is legitimate and not spam, then provide a whitelist of legitimate email servers with their domains—to reduce the chance of false positives while spam filtering. Many ISP spam filters check the legitimacy of domains as one test before tossing your email into their spam filter. The cost is a minimal annual fee, and may be worth it, especially if you use your “regular” email address for mass mailings and do not want to have normal email traffic challenged as spam.

The days of spam mailings to spam lists are gone, and we have all benefited by the enforcement of laws in many countries, especially in the United States. Follow the rules and suggestions above, and your doughnuts will not be stale. And you’ll not suffer a stomach ache or worse.

Benefits of Video Marketing for Small Businesses

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Video marketing is often seen as an expensive, luxurious form of marketing, reserved only for big brands with equally big marketing budgets.

When it comes to getting (and keeping) consumer attention, there’s little doubt video does the job. Video marketing is bigger than ever, with online video accounting for a staggering 50% of mobile web traffic. We just can’t get enough of those cat videos it seems.

Beyond better bounce rates and having the rapt attention of your visitor, there are other compelling reasons to go video. For one, on a mobile device, a video takes up the whole screen. So it’s almost a guarantee you have the full attention of your visitor. With large amounts of text your customers can quickly lose focus. A video helps to get the same message across in a lot less time. A video can be a great tool for making a memorable impression.

Using videos is a proven way of increasing trust in your brand. In many cases a video is a far greater way to showcase the benefits of your product than plain text alone. A video makes for a welcome change for many prospects. According to Forbes, 59% of executives would rather watch video than read text.

Overall a video helps you build a relationship with your audience. When it comes to creating content online, it’s often better to think about how you can maintain relationships, not just try to sell to people.

Video Marketing doesn’t have to be expensive, or complicated

There is often an assumption that video marketing is too expensive or time consuming. In reality a smartphone or budget camcorder can look just as good. You can get hold of some cheap lighting and hire a video editor on Fiverr to add a professional touch to your video, all for a small cost.

In fact you can use video marketing without creating a video at all. Think about all of the videos available on YouTube, if a video gives value to your audience; ask the content creator if you can use it on your website. Very often they’ll be happy for you to share their video for them.

Why use video marketing?

Thinking about using video marketing? Here are some reasons why you should start:

  • Video marketing improves email campaigns. Using the word “video” in an email subject line can increase open rates by 19%.
  • Video marketing increases the time people spend on your site. Visitors spend 2 minutes longer browsing websites with video than those without.
  • Video marketing increases your search ranking. If you want to increase your search ranking, a video is a great way to achieve it. Research by Forrester found that having a video on a web page makes it 53x more likely to appear on the first page of Google. How much value can you put on that?
  • Video marketing helps make purchase decisions. In a survey by swimwear boutique, over 90% of shoppers surveyed found video useful in making purchase decisions.

These are just some of the benefits of using video in your online marketing.

Video marketing tips for small businesses

Creating a video is one thing, making sure it has an affect is another. Before you start with your first video, take a look at some of these video marketing tips for small businesses:

  • Keep your videos short. People will be far more likely to click a video that’s 2 minutes than one that’s 15 minutes. Equally they’ll be more likely to view it to the end.
  • Link back to your website. There’s no point using videos if you don’t get your visitors to take action from it. Website links or landing page links with an email capture or other call to action will get you prospects while they’re hot.
  • Make your video valuable. People want to gain some sort of value from your video. Whether that is learning something new or being entertained, value must be derived. Don’t make your videos solely promotional in nature. Your audience will lose interest and you’ll lose prospects.
  • Show your personality. Be true to your business, what makes your business different?

Simply put, video is an affordable marketing tool that makes an impact. Video can help your business to stand out from the crowd and keep people interested in your brand.

Trademarks for Proprietary Products: What You Need to Know

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Franchisors that are serious about developing additional revenue streams in their franchise will ultimately explore proprietary products. By creating new products either under the brand or as a stand-alone entity, franchisors can sell and distribute their own products to franchisees.

An example would be a pizza franchise that sells their pizza sauce to franchisees and the public. This specific sauce adds to the ability to maintain consistency in all locations and additional revenue streams for the franchisor. Selling the sauce as a stand-alone product online, in retailers, and at franchise locations continues to increase revenues.

In order to protect your intellectual property and branding, trademarking your proprietary products should be part of your strategy.

Importance of the Trademark 

The last thing you would want to do is to invest in promoting a brand name only to have your competitor steal the trademark right underneath you. You would lose all the time and energy invested into that product.

Trademarks are about protection and branding control. They give you exclusive rights to use the name in your industry.

If utilized correctly, proprietary products create brand recognition and help to differentiate you against competitors. You can market your unique product as a reason to visit your business. Sometimes products become better known than the franchise. Either way, this is a win-win.

As both the product brand and franchise grow, you will slowly add more trademarks to your name. Over time customers evolve the way a brand or products are referred to. By securing these evolutionary trademarks, you protect against any holes in your intellectual property.

To avoid becoming trademark poor, make sure that the trademarks you purchase are good for the business. A trademark should enhance your value in the market through developing additional unique selling propositions.

White Labeling

I often advise young franchises to white label products to build in placeholders for future proprietary products. This allows you to develop the distribution systems and require franchisees to utilize the product of your choosing. The ultimate goal is to replace the white label down the road with your own product.

A trademark in this phase does not make sense. Wait until you have your unique product to develop the brand around and stamp a trademark name on.

Your Partner for All Your Legal Franchise Needs

Proprietary products are just one of the many ways to keep your franchise on the cutting edge. With the innovations in technology and new emerging markets, franchises have incredible opportunities to capitalize on new trends.

Whether it is applying for trademarks or developing your Franchise Discloser Document, I am here to help you with all your legal needs. As a part owner in a franchise, I can help you balance staying innovative in the space with building a strong legal foundation.

On a Budget? Try These eCommerce Platforms!

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The ability to make files available online for customers to purchase and download is an increasingly valuable tool for small business owners. Check out four popular e-commerce platforms for selling digital products online to learn more about available options and select the best option for your business.

WooCommerce

Businesses are often drawn to WooCommerce for two distinct reasons: The platform is free and works seamlessly with WordPress. While “free” is typically a good thing and WordPress remains the most popular content management system for websites, base WooCommerce options are limited, unavoidable plugins cost money, and the entire infrastructure is maintained by a haphazard collection of developers who might fail to provide a timely update for security-related issues.

Website owners are also responsible for installing an SSL certificate and making the transaction PCI compliant. In other words, the burden falls on businesses to ensure their e-commerce setup and unrelated 3rd-party plugins work in harmony to provide a safe and secure environment for customers.

Pros: Free; Built for WordPress.

Cons: Plugins cost money; Requires more setup and maintenance; Haphazard development efforts prone to security loopholes.

GumRoad

GumRoad began as a limited digital-only platform and has since expanded to offer a great selection of e-commerce features for both physical and digital goods. Business owners simply create an account, upload product info, and direct customers to a unique GumRoad url or alternatively embed products on their own site by simply installing an SSL certificate and pasting generated HTML code to product pages. The checkout process is probably the sleekest available and options exist for coupon codes, subscriptions, emailed thank you notes, and more.

GumRoad offers in-house credit card processing to remove the need for a 3rd-party gateway like Stripe, although PayPal is also available. Transaction costs are slightly higher than competitors at 5% plus a flat $.25 per purchase, but the lack of a monthly fee makes the math work for smaller volume sales. It’s hard to find a flaw in GumRoad’s service unless the amount of customizations and add-on features don’t fit a particular situation such as generating unique coupon codes for individual customers.

Pros: Easy integration for existing websites; No monthly fee; Dummy-proof checkout process.

Cons: Per transaction fees are higher than industry averages.

SendOwl

SendOwl makes life much easier on businesses with fewer options and a platform focused primarily on digital products. Products are uploaded to a SendOwl account—along with title, pricing, and select advanced options—and the generated HTML code is copied and pasted onto an existing website. Customers complete the transaction in an overlay window for a seamless experience and similar options to GumRoad exist to sell subscriptions, generate coupon codes, and so forth.

SendOwl is extremely user-friendly and provides amazing customer support. While they never charge a transaction free—unlike GumRoad—the fee is simply passed along to a 3rd-party payment gateway such as Paypal or Stripe. Consider the minimum $9 monthly SendOwl fee plus Stripe’s costs of 2.9% plus 30 cents for every transaction when crunching the numbers; GumRoad is a better deal up to a certain threshold, but becomes less economical than SendOwl as volumes increase.

My biggest gripe with SendOwl revolves around the perception of a secure transaction or lack thereof. While GumRoad insists on its clients installing an SSL certificate before embedding the service onto a website and includes a security message with lock icon, SendOwl really doesn’t make it obvious to customers the transaction is indeed secure.

Pros: Zero transaction fees; Great customer service; Easy setup.

Cons: Security of checkout process unclear to customers; Monthly fee.

Shopify

Shopify is one of the most recognizable and respected e-commerce platforms for storefronts of any size selling physical or digital products. At $14 per month for a very basic plan and costs realistically rising with integrated plugins and account options, Shopify might not be a true budget option, but is competitive and user-friendly for businesses needing a robust platform to easily maintain tens or even hundreds of products. The platform is able to manage high volumes of products and makes sense for stand-alone storefronts.

Businesses considering Shopify will find their documentation and support to be much more accessible than other larger e-commerce platforms. The development workflow, however, is similarly cumbersome to building any other website from the ground up and miles apart from dropping code into an existing website a la GumRoad or SendOwl. Note that a handful of businesses can get away with making the Shopify their only website to streamline content efforts by creating highly custom homepages and using Shopify’s support for blogs, contact forms, etc.

Pros: Out of the box functionality; Hosting and basic themes included; Industry leader.

Cons: Monthly fee is expensive for small volume sales; Unable to integrate with existing website; Starter plans lacks significant customization.

Final Verdict

The differences between GumRoad and SendOwl are negligible outside of cost considerations and both represent great budget options for digital product sales. My preference leans towards GumRoad for the simple fact customers see the security element in play a little easier, but each business owner’s preference might come down to the slightly different interface of the two platforms and projected sales. Finally, consider Shopify or other out-of-the-box options only when a bigger storefront is needed and budgets can accommodate the inevitable costs.

Matt MillowayAuthor: Matt Milloway is a portable wanderlust and the founder of Experient Media, a company focused on improving the online presence of individuals and companies through web design, e-commerce solutions, SEO, marketing, and more. 

12 Top Trends in Franchising’s Restaurant Industry

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Restaurant franchises had their second biggest month of the year and are responsible for adding two-thirds of the 48,600 jobs created in December 2015.

Continuing with the food industry’s positive momentum, here is a specific look at franchising trends in the food and restaurant industry for 2016.

According to the SVP of Operations at Applebee’s USA, Sanjiv Razdan, there are three key trends which are going to be crucial for casual dining in the next year:

  1. Innovation and differentiation from brands so restaurants stand out from the crowd or sea of options available to consumers. You’ll see building changes both inside and out and new training programs.
  2. New menu items with a focus on keeping food fresh, high in quality and innovative.
  3. Technology will continue to advance to match consumer expectations of their restaurant experience through table top devices, geotracking technology and online ordering.

Consumer interests, behaviors and demands are contributing to the following nine food, dining and service trends in the industry you can expect to see in 2016:

  1. Technology will also play a big role in revolutionizing the food industry by increasing the speed of food delivery to homes, offices and hotel guests.
  2. Smartphones help consumers locate restaurants, order, pay and earn loyalty points more quickly and efficiently.
  3. Franchises will institute specific hubs on their sites to handle deliveries only and outfit to-go vehicles with warming ovens.
  4. Some restaurants may build out separate assembly lines to handle the speedy service.
  5. Grocers are also picking up the pace when it comes to food delivery and promise food items and prepared meals within an hour for an extra charge.
  6. Another sector to join in the on-demand delivery is convenience stores.
  7. With the popularity of TV cooking shows, you may see menu items such as meal kits or dinners-in-a-box where families have all the ingredients and instructions to prepare a new meal delivered to their door.
  8. Franchises will remove menu items or ingredients which include artificial colors, flavors, sweeteners and preservatives as a direct result to consumer’s interests in eating “clean” and staying healthy.
  9. With Americans focusing on shedding pounds and building more muscle, there is a trend toward eating fewer carbs and more high protein meals similar to the Paleo diet. Therefore, alternatives such as quinoa, beans, barley and chia will become mainstay ingredients in addition to more vegetable options.

5 Essential Factors in Planning a Successful CRM Implementation

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Whether you’re implementing your first customer relationship management (CRM) solution or merely transitioning away from outdated software, careful thought should be put into the implementation of any new CRM. Your CRM solution will be the backbone of your organization’s customer experience. It’s important to craft a solution that meets your company’s goals and objectives, while addressing any potential issues and inefficiencies within the organization.

How Will You Engage With Customers?

What features do you need in a CRM solution? Small-business owners may not need, for instance, the vast analytical services that a large enterprise requires—and investing in such a feature could potentially be a waste. Determining which features are most important is often the first step in developing your CRM. Is your CRM going to be used primarily for customer service? Or is it going to be designed to support your sales staff? Or will it be a balanced mix between the two? Equally important is your long-term strategy; are you trying to grow customer acquisitions, or are you focusing on customer retention? It’s important to make sure that your software infrastructure ties into these business goals.

What Are Your Current Roadblocks?

Your new CRM solution should aid you in addressing any current issues when managing and dealing with customer relationships. Is it difficult for your employees to collaborate regarding customer contact? Is your sales team not getting the information it needs to properly score leads? Are employees in other offices finding it difficult to connect? All of these issues can be addressed via your new CRM solution, as long as they are planned for in advance. The goal of a CRM is to streamline and improve upon customer relationships—from the bottom up—and this requires a thorough investigation of your company’s current inefficiencies.

How Much Of Your Budget Can You Allocate?

A good CRM platform doesn’t have to be expensive, but your budget will dictate which solutions will be right for your office. On-premise CRM solutions tend to have both a higher cost of adoption and a higher cost of ownership, as they require that physical equipment and assets be purchased, maintained and upgraded by the business. Comparatively, Software as a Service (SaaS) is usually a far more affordable solution, but it does work off external Internet connections rather than internal intranet connections. For sufficiently large enterprises, this may make latency an issue—though the tradeoff is global and continuous accessibility.

Do You Require Third-Party Integration?

CRM solutions often integrate into dedicated sales management software, enterprise resource planning solutions and business process management programs. Creating a fully integrated system is the best way to use technology to your advantage. Though if you do need third-party integration, you also need to explore the options that allow it. Often it is easier to purchase modules from the same software company—and it’s usually desirable to commit to either an entirely on-premise or entirely cloud-based solution.

How Accessible Does It Need To Be?

If you run a local office or headquarters, the CRM implementation may only need to be available on your local network. However, if you have multiple locations or employees that are commonly in the field, a SaaS, cloud-based solution will likely be better suited to your operations. In terms of accessibility, mobile support also becomes incredibly important. If your employees frequently head off site to service clients, they may need to be able to use their smartphones or tablets to connect to the system.

Your customer relationship management solution will affect all levels of your organization’s work, from sales and marketing to customer service. It is better to spend time on the construction and architecture of a comprehensive CRM solution than to potentially create an infrastructure that will be unsuitable for your current and future needs. As long as you are able to appropriately isolate and meet your organization’s needs, the CRM solution can be used to effectively boost productivity and service throughout all spectrums of your business.

Jeff NixonAuthor: Jeff Nixon is the President and Chief Operating Officer of Highland Solutions. Highland Solutions is a technology services company that offers collaborative, enterprise solutions. Jeff is a high-impact business leader that has a solid history of innovative leadership, continuous improvement, product development, managing leading-edge technology and delivering excellent products and services.

11 Key Elements of a Good Business Plan

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Somebody asked me what the key elements of a good business plan were, and I’m glad they did—it’s one of my favorite topics.

It gives me a chance to review and revise another of the lists that I’ve done off and on for years (such as the one on common business plan mistakes).

1. Measure a business plan by the decisions it causes.

I’ve written about this one in several places. Like everything else in business, business plans have business objectives.

Whether the purpose of the plan is better management, accountability, setting stepping stones to the future, convincing somebody to invest, or something else, does it accomplish that? Does it achieve its objective?

Realistically, it doesn’t matter whether your business plan is well-written, complete, well-formatted, creative, or intelligent. It only matters that it does the job it’s supposed to do. It’s a bad plan if it doesn’t.

2. Concrete specifics.

Dates, deadlines, major milestones, task responsibilities, sales forecasts, spending budgets, cash flow projections.

Ask yourself how executable it is. Ask yourself how you’ll know, on a regular basis, how much progress you’ve made, and whether or not you’re on track.

3. Cash flow.

Cash flow is the single most important concept in business. A business plan without cash flow is a marketing plan, strategic plan, summary, or something else—and those can be useful, but get your vocabulary right.

There’s a useful role for a business model, lean canvas, pitch deck and so on in some contexts, like raising investment. But those aren’t business plans.

4. Realistic.

While it is a fact that all business plans are wrong, assumptions, drivers, deadlines, milestones, and such should be realistic, not crazy.

The plan is to be executed. Impossible goals and crazy forecasts make the whole thing a waste of time.

5. Short, sweet, easy-to-read summaries of strategy and tactics.

Not all business plans need a lot of text.

Text and explanations are for outsiders, such as investors and bankers; however, a lot of companies ought to be using business planning to just run the business better. If you don’t need the extra information, leave it out.

Define strategy and tactics in short bullet point lists. And tactics, by the way, are related to the marketing plan, product plan, financial plan, and so on. Strategy without tactics is just fluff.

6. Alignment of strategy and tactics.

It’s surprising how often they don’t match.

Strategy is focus, key target markets, key product/service features, important differentiators, and so forth. Tactics are like pricing, social media, channels, financials—and the two should match.

A gourmet restaurant (strategy) should not have a drive-through option (tactics.)

7. Covers the event-specific, objective-specific bases.

A lot of components of a business plan depend on the usage.

Internal plans have no need for descriptions of company teams. Market analysis hits one level for an internal plan, but often has to be proof of market, or validation, for a plan associated with investment. Investment plans need to know something about exits; internal plans don’t.

8. Easy in, easy out.

Don’t make anybody work to find what information is where in the plan. Keep it simple.

Use bullets as much as possible, and be careful with naked bullets for people who don’t really know the background. Don’t show off.

9. As lean as possible.

Just big enough to do the job. It has to be reviewed and revised regularly to be useful. Nothing should be included that isn’t going to be used.

10. Geared for change.

A good business plan is the opposite of written in stone. It’s going to change in a few weeks.

List assumptions, because reviewing assumptions is the best way to figure out when to change the plan, and when to stick with the plan.

11. The right level of aggregation and summary.

It’s not accounting. It’s planning.

Projections look like accounting statements, but they aren’t. They are summarized. They aren’t built on elaborate financial models. They are just detailed enough to generate good information.

(This started as my answer to a Quora question: What are the key elements of a good business plan?)