Have Questions? We have Answers

In our line of work, we get a lot of questions on anything and everything related to owning and operating a business (and we’re happy to answer them, too)! While a lot of these questions are usually pretty easy to answer, sometimes we get a few that really make us think. Even then, we enjoy researching and finding the answers to help business owners be successful.

So, what questions do you have about your business? We would love to help you reach your dreams and goals.

In case you think your question might be too far out there, we promise it’s not. Check out some of these questions (and our answers) to get you started on finding the information you need to watch your business succeed.

“I have invoices coming out of my ears! What do I do with all of them?”

When you have a large amount of invoices to deal with, it’s easy to get overwhelmed and lose track of what needs to get done. When invoices aren’t being properly managed, your business can see some serious negative side effects, such as fraud. Following this list of tasks can help you make sure you’re keeping everything in check. Looking to an automated system, such as QuickBooks, is also a great way to keep your invoices at a manageable level.

“Where in the world did all of my cash go?”

This question is more common than you may think. While your business may be profitable, you can still be running out of cash, which might be a concern. Financial struggles can be hard, but our professionals are available to help. Check out this blog – and then, let’s talk!

“Why don’t I have enough time to do everything that needs to get done?”

We get it: owning and operating a business means you have a lot on your plate. From accounting and finance, to human resources to the day-to-day operations, you probably don’t have enough time to do it all yourself. The good news is you don’t have to! Consider your team of employees. What can you delegate to take some of the burden off your shoulders and free up some time? Another option is outsourcing. When you outsource some of your business activities, such as your accounting processes, you free up time to focus on why you got into business in the first place.

“What is this accrual accounting thing I hear so much about? Am I doing it?”

Knowing the specific ins and outs of accounting can be a confusing, daunting task. What it comes to what method of accounting you are using, the water may get even muddier. Maybe you’ve heard of cash based accounting and accrual accounting, but you really have no idea where to begin. We’ve written multiple blogs on how to tell the difference and how to select what fits your business and set up your books. Check them out!

“Taxes terrify me. Where do I even begin?”

Taxes are a complex issue, and questions regarding this topic are common. Whether you want to know more about R&D tax credits, employer vehicles and mileage, how to track your taxes or even all those pesky (yet necessary) forms, we’ve got you covered. Check out our tax archive for answers to all your most pressing questions. If you can’t find the answer, let us know.

Remember, although we numbers nerds really like our financial lingo, we promise to answer your questions in a way you will understand, not just a bunch of accountant talk. After all, we want to see your business succeed!

A Community Resource: Emerging Prairie

Guest Blog By: Annie Wood, Director of Community Programs, Emerging Prairie

Founded in 2013, Emerging Prairie began with the goal to create a community we all want to be part of. We want to do our part to make Fargo a great place to bet on ideas, start companies and improve the human condition through technology-based solutions. In 2016, Emerging Prairie became a non-profit organization and maintains its mission to connect and celebrate the entrepreneurial ecosystem.

At Emerging Prairie, we live out our mission in multiple ways:

– Platforms: we have an online content publication and several events that create opportunities for people to share and spread their ideas. We also utilize platforms like 1 Million Cups (caffeinated by the Kauffman Foundation) and TEDxFargo to help champion these ideas.

– Coworking: we run The Prairie Den, a coworking and event space in downtown Fargo. The Den provides a home for startups, small businesses, entrepreneurs, an office away from the office for other organizations, and a place for people to meet.

– Connecting: we run multiple programs and groups that are designed for authentic connection for entrepreneurs to connect to other entrepreneurs, as well as build connections between members of the community.

– Convening: we play a role in helping bring entrepreneurs together so our community learns together and can share what we collectively need when folks like the Bank of North Dakota are working on new ways to serve the startup community.

Companies of any stage can connect with us. Some of our programs are geared to companies of different sizes, stages and industries. For example, 1 Million Cups Fargo (which is supported by the Kauffman Foundation) is curated to be primarily tech-based founders or entrepreneurs who have a product or software as a service (SaaS) companies. We work to put founders first, so many of our programs are more geared toward supporting founders versus the size and stage of the company.

The Prairie Den is an inclusive space in the heart of downtown Fargo – it’s truly a place for community to be built. We think of it like a student union for our city. Just like a student union on a college campus is a place for students to study, hold meetings and social events, The Prairie Den provides a similar area to the community. It’s a place for connecting, for working, for moving ideas forward, and for groups to gather. We offer workspace for teams, individuals, and as an office-away-from-the-office for employees of many organizations. We also have conference rooms, a classroom and even an event space that we rent to members and non-members.

The Den is also where Co.Starters is hosted by our friends at Folkways. Co.Starters is a nine-week course to help people with ideas turn them into businesses, or people with young businesses strengthen them.

Emerging Prairie subscribes to the Fargo Thesis, which Co-Founder and Executive Director Greg Tehven first wrote about in Fargo Monthly. The Fargo Thesis is to Connect It, Believe It and Love It. This is how we operate in our community –Connecting people; Believing that Fargo is a place of possibility; and showing love by celebrating and caring for community members.

As an organization, Emerging Prairie is excited about continuing to support our startup community. We believe ideas matter. We know it’s a leap of faith to start something new, so we want to celebrate those who take the leap. And we want to be an organization that helps pave the way for founders to bet on their ideas, to build teams around them and to pursue possibilities to create a community that we all want to be part of.

How Accountability Can Help Your Organization Succeed

You have a lot of great ideas, but nothing’s really getting accomplished. Or, you’re trying to move things along on a project, only to find out no one really knows who’s in charge of the project.

Welcome to the need for one of the most important aspects of a successful business. ACCOUNTABILITY.

Why you may ask?

Accountability provides the roadmap to get things done.

When there is accountability in an organization, the employees know what is expected of them and what they can expect from the organization. Not only does accountability help foster a positive work environment, it also helps increase the overall performance of the business. Who doesn’t want that?

So how can you create accountability in your business? Here are a few tips:

  1. Have clearly defined roles and responsibilities. Do your employees know their place on the bus? Do your employees know what their overall responsibilities are? How about their day-to-day expectations? Do your employees know what their critical success factors are?Critical Success Factors – what an employee needs to accomplish to succeed and help the business succeed.
  2. Give your employees a sense ownership. Do your employees feel that they are a part of something bigger; that their performance matters to the business as a whole? Do they feel they have control over the measurements they’re being evaluated on?
  3. Build a trusting team environment. Do your employees feel they are able to give and receive feedback without ramifications? Do your employees feel they are able to seek information from other team members?
  4. Give your employees the resources and knowledge to make decisions. Are your employees empowered to make day-to-day decisions regarding tasks? Do they have the freedom to make those decisions?
  5. Don’t make it about punishment– rather, make it about improvement. When your employees fall short, are you the first to point it out and yell? Do you provide constructive feedback about ways to improve or hit the mark next time? Are there incentives for a job well done? If your employees fear failure, you will lose qualities like innovation.
  6. Make sure you have a performance evaluation in place. Do your employees know what they are doing well? How about areas of improvement? Do they know the value they bring to your business? Feedback (constructive, of course) in the workplace is invaluable. In addition, it’s a good idea to have multiple forms of feedback to ensure a fair evaluation. Sources of feedback can be from customers, key metrics, supervisors, peers, and/or subordinates. The feedback can be in the form of surveys, dashboards, roundtable discussions, etc.

In summary, accountability is one of those characteristics a truly successful business needs. It provides traction to achieve your goals and vision. If no one is accountable for the success of your business (other than you), it will be hard to steer the bus in the direction you envision it going. Need help? We have the resources to help you create accountability in your business.

What You Want to Know: Mixing Business & Personal Expenses

You’ve started your own business and you’re ready to go. With all the things you have to do to keep this business going, you set up a business account that you occasionally use for personal expenses. No harm, no foul right?

WRONG.

But, it’s all my money.

Doesn’t matter. If you are mixing business and personal expenses, you could land in a heap of trouble with the IRS if you aren’t accounting for the expenses properly.

What’s a business expense?

The IRS defines business expenses as ordinary and necessary costs of carrying on your trade or business. Seems reasonable, right?

So what happens if I mix business and personal?

We’re not saying you can’t mix business and personal, because you can. However, you need to account for the personal expenses properly – like a distribution. Also, make sure you are keeping the supporting documentation (invoices, receipts, etc.) for your business expenses because the burden of proof is on you. Yes, you need to prove that your business expenses are legitimate; in this case you are guilty until you prove you’re innocent.

Helpful Hint: There are more considerations for distributions. To learn more, check out our previous blog on basis.

Is this seriously that big of a deal?

If you pay personal expenses with your business account and categorize them as business expenses, you are reducing your taxable income by the amount of those personal expenses. Therefore, you are improperly reducing your tax liability, resulting in remitting the incorrect tax payment to Uncle Sam (and then we are talking penalties and interest).

We sincerely hope that if you’ve been doing this it’s not deliberately. Because if it is, that’s also known as a little thing called tax evasion … and then Uncle Sam isn’t the only person who will want to talk to you.

On the flipside, you can also be missing legitimate business expenses by paying with your personal account.

So what’s the moral of the story here?

We recommend keeping it simple and don’t mix business and personal. You should have a personal account for personal expenses and a business account for business expenses. We understand that, in some cases (which are hopefully rare), mixing may be unavoidable. However, make sure you account for the personal expenses in the proper manner on your financials.

Keeping business and personal separate can help you stay out of harm’s way in the case of an IRS audit.

Why HR Matters for Startups

One of the most important pieces of a startup or early stage company is human capital. After all, these are the individuals helping you achieve your dreams and goals. And they make a big impact if they choose to leave. So what resources are you devoting to them?

Often, startups don’t focus on HR practices or resources early on. While the reasons can be many (cost, no one sees the importance, etc.) the impact can be devastating to a company and its employees.

This boils down to a fundamental disagreement about what HR actually is, and what it’s not. Human Resources isn’t just responsible for onboarding and ensuring every form is signed on the dotted line by the individual’s start date. They’re also not babysitters hired specifically to watch your every move.

Human Resources allows employees to feel comfortable at their job, to help set expectations and to ensure a safe workplace for everyone.

Don’t believe us? Here are a few examples:

  • What happens if your employees are unhappy at their jobs? Or if they are having problems with someone else on staff? What outlet do they have to communicate their frustration? “As water cooler gossip migrates online … disputes can spread with alarming speed, distracting the rest of the team when they should be focused on delivery of a product” (source).
  • Who do you hire? Startups often employ friends to help expedite growth. When this happens, personal and professional issues get thrown together. “Leadership teams will tap their networks for the first 50 or even 70 employees. So you’ve got duality of professionalism and also friendships that run deep. It can be really funky” (source).
  • Are you developing an inclusive work environment? A recent study found that women are more often “the most vulnerable employees due to startups’ lack of HR and general anti-harassment procedures” (source).

So how do you fix it? Well, it starts with a tone at the top. Communicate the way your business will function and the types of behavior that will be tolerated, and what won’t be. Have a process in place for how you, as a founder, will handle complaints that come to you.

Then, back it with HR strategies, tactics and resources so your company isn’t blindsided. Decide what’s best for your organization, what your needs are and what gaps you need to fill in. There are several technology solutions out there that can help you streamline the standard practices and procedures and while ensuring you’re in compliance.

But make sure to look beyond just the technology solutions. Never underestimate the power of an actual person.

“An automated platform cannot replace the human experience of talking with someone, especially dealing with sensitive issues … when dealing with cultural difference and employee needs, the best solutions are likely not software or dashboard based” (source).

 

 

 

Takeaways from #SWNDWomen

Last weekend we were honored to be part of North Dakota Women’s Startup Weekend. There was so much inspiration and innovation. From hydroponic technology to help end the obesity crisis to jingles for your loved ones and more, it was a truly engaging weekend. For the full scoop on the projects and winners, check out Emerging Prairie’s recap.

Here a few of our takeaways from Sunday’s final presentations:

The need for good people. We’re not going to lie. We can’t imagine how stressful and exhilarating it must be to put together a startup in 54 hours. It probably helps when you have good people on your side to help you make your dream a reality.

The same can be true for any startup (not just those built in a condensed timeframe). “The number one difference in the success of a startup is people,” said speaker Mari Baker (learn more about her here). “A good hire makes all the difference in the world.”

Build a culture, not just a business. Yes you have to have a product or solution. Yes, you should probably have a business plan so you know where you’re attempting to go. Yes you should have an understanding of your finances.

But you also need to have culture in place to help drive your company. “Culture trumps strategy every time,” said Baker. It’s important to put it in place early on so that as your startup grows, you don’t lose sight of who you are at the heart of your company.

Don’t forget about YOU. You’ve put a lot of time, effort, blood, sweat and tears into this dream of yours. You’ve worked hard. But along the way to seeing your dream become a reality, don’t lose sight of YOU. According to Baker, one of the keys to success is being able to take care of yourself first. She likens it to the security talk on an airplane: put your oxygen mask on before helping others.

Further, know where your strengths are … and where they’re not. Come on, no one is perfect. Identify areas where you have weaknesses and hire people who have strengths in those areas. A well rounded team who has the ability to learn, adapt and adjust along the bumpy startup way is key to success.

And a few more …

  • Fail fast.
  • Life ebbs and flows. Try to achieve balance over time.
  • Always ask: Who are the smartest people? Work with them.

 

Cheers to everyone involved in _SWNDWomen

 

 

 

When is value created?

How do you know when the business you created has value? Here’s the short answer: value is created when a buyer is willing to pay for it.

Think about it. Everything has value right? You buy something from the grocery store and you pay for the value of the item. You hire someone to help you manage your books and you pay them for the value they provide. Your business is no different.

Let’s break down some of the ways value can be created within your organization.

  • Development of Intellectual Property. This is a fancy term referring to innovation that has commercial value and can be protected (patent, copyright, etc.). Think trade secrets, know how, designs and so on. It could also be customer relationships, assembled workforce, trade names, etc. It has another name as well: intangible assets. Intellectual property is an asset to your organization. But it only has real value when it can contribute to the generation of earnings for your company (read, it makes you money).
  • Generate Earnings. But what if you are a start up? Well, lucky for you, even pre-revenue companies (meaning you’re not making money quite yet) can have value. Remember, value is created when a buyer is willing to pay. If a buyer believes in the promise of intellectual property or intangible assets and their future earning power, value is created. But how? Project what you’ll earn, based on present value. Then, discount it to reflect the risk in achieving those earnings.
  • Decrease risk. Here’s the thing. Startups have a lot of risk, especially when you’re dealing with something new. When you reduce those risks, you create or increase value. You can do this through developing patents (read, protecting your innovation), finding customers, obtaining permits, getting regulatory approval, and so on.

As your business matures, you will reach milestones that will decrease risk and increase value, such as diversifying your customer base and your products. You’ll grow the size of your organization and you’ll take on more people, helping deepen the level of management and oversight in your company. You’ll have the opportunity prove to the marketplace your idea and company can generate consistent revenue and earnings. Value will rise and risk will fall.

Now we’ve given you a short answer and, you’ve probably realized, we’ve also given you a much longer one. But the moral remains the same. Value is only created when you persuade buyers that future earnings are imminent.

value