I suppose there’s never been an easy time to be in business.

It’s tempting to look at the current economic situation and cite all the things working against business owners right now. And Google helps with that… My internet search this morning lent me the following statistics:

• Inflation is the top concern for 32% of business owners.
• 41% of small business owners are struggling with job vacancies.
• Supply chain issues are still affecting 85% of business owners in 2023.

You can relate to at least one of these stats, no doubt.

In fact, if you’re experiencing major financial hurdles right now, I’m more than happy to sit down to talk with you about some possible paths forward: |
calendly.com/kristin_kristingravitt/discovery-call 

But has it ever been smooth sailing? When you think back to your first year in business, or your fifth year, or your tenth … there were still struggles then, too. The business ownership circle is truly made up of a family of survivors through hard times.

So there’s got to be a constant, driving force to keep you in the game, no matter what. Early on in your entrepreneurship journey, you probably spent time uncovering your business “why”. That process turned into your overarching mission for your Lake Norman business that probably held you steady through the ups and downs.

Is your “why” still driving you forward in business today? I’d posit that your “why” today is more important than ever. Here’s why I think it’s worthwhile to uncover your business why all over again…

Kristin Gravitt, PLLC’s 4 Straightforward Questions to Uncover Your Business Why
“The purpose of life is not to be happy. It is to be useful, to be honorable, to be compassionate, to have it make some difference that you have lived and lived well.” ― Ralph Waldo Emerson

In every season of business ownership, remembering the reason you’re in business is often the push you need to keep. going. But knowing your “why” isn’t a one-time thing — you’ve likely discovered this by now. It’s an ongoing journey. 

Research shows that businesses that take the time to uncover their business why — and have a strong sense of purpose as a result — tend to do better even when the economy is down. A 2019 study by Harvard Business Review found that companies with a clear purpose grew three times faster than their competitors over a 10-year period.

That’s a good incentive, but I’m talking to you as a human being here as well. At the end of the day, your Charlotte business is not just about making money. There’s so much more to be had than dollars and cents.

So let’s talk about how to uncover your business why and bring your business’s purpose back to the forefront of your daily decision-making. A purpose that stays the same in the face of ever-changing circumstances, giving you stability and inspiration that lines up with what you really believe in.

Here are four straightforward questions to get you going…

1) Why did you start(up)?

Take a moment and remember why you started your business. What got you excited about it? Was it a problem you wanted to solve, something you loved doing, or a change you wanted to make? 

2) What kind of impact do you want to make?

Business has the potential to make a real difference. What kind of impact do you want your business to have on your community, your city … the world? Think purpose beyond profits here.

3) What are you good at?

Think about what you’re really good at and how it fits with what your business is trying to achieve. Using your strengths to work toward your “why” doesn’t just make your business better – it provides a framework and boundaries around your purpose.

4) How can you say it simply?

Now put all of these answers into words. Create a simple statement that tells your team, customers, and everyone else why your business exists.

This exercise might seem overly simplistic, but I actually think there is value in that. The point here of uncovering your business why is to get down to the most foundational roots of why you’re doing what you’re doing. Filtering through your years of business history to find that foundation is work enough … so keeping the process simple should be freeing.

And freedom is really what we’re after here. The freedom that comes from knowing what you’re about, keeps you steady in the rolling tide of economy and culture.

Now that’s worth the effort, for you and your Lake Norman business.

Here’s to the future, and the past that will get you there,

Kristin Gravitt

Did you see the Barbie movie or Oppenheimer this weekend? Or jump in with the 200,000 other Barbenheimers and see both?

In case you didn’t, your social media feed likely filled you in on what you missed (or didn’t, depending on your view of these things).

What a weekend for the movie industry as a whole that hasn’t seen these kind of opening weekend numbers since 2019’s one-of-many in the Avengers series. Seems like a good sign in the midst of inflation, right?

Well, whether or not we’re headed for a recession is still in question. I’m sure you have your opinions on the matter. We’ll see how the Fed’s interest rate hikes (including the final one expected this week) have impacted things economically. Keep an eye on the Q2 earnings for big A-list corporations (like Mcdonald’s and Exxon) set to release this week. Their performance will be a helpful indicator of just how effective inflation-slowing efforts have been and if we’ll see the economic ship right itself.

While we keep our attention on that, I also want you to remember to not let it consume you. Sure, inflation and recession may force you to make big changes, but change is often a really good thing for a business. Not only does it force creative thinking and more laterally-minded measures, it also pushes you to evaluate your systems and decide where you can streamline them.

One area that you might not have considered is your system for keeping business and personal expenses separate.

Because it’s easy as a business owner if you don’t have a (good) system in place, to blur the lines here. Believe me, I’ve seen plenty of people come to me whose books are a mess, which complicates operations unnecessarily. That’s why I’m bringing it up.

Now, if you know things are messy and you need help to get them cleaned up, I’m happy to meet with you and do an in-depth dive into it. Just set up a time: calendly.com/kristin_kristingravitt/discovery-call

But let’s start here with a little about WHY it’s so important for you.

Keeping Expenses Separate in Your Lake Norman Business
“In diversity there is beauty and there is strength.” – Maya Angelou

When you started your Lake Norman business, I’m sure you felt that sugar high that comes with it. You have this idea that’s been percolating in your mind for months, maybe even years… and now you finally get to open the doors, make the announcement, close your first sale…

It’s such an exciting (and hectic) time that many small-business owners (especially new ones) easily forget one basic fact about having your own company: Keep the money separate. 

If we’re honest, treating your business’s money as your personal account (or vice-versa) is so easy to do: depositing a client’s fee paid to your business into your personal bank account, dipping into your business account to pay a personal expense, and not keeping the records because you know where the money went, and everything is doing fine. 

The harm comes in the recordkeeping, though… because you might depend on it later to keep your company’s doors open. Here’s how. 

A caution against commingling

If you’re properly in business, having two pots of money confuses your accounting. And accounting is what you’re going to need first and most obviously to determine your company’s strengths and weaknesses, aka profits and losses down the road. 

Separating expenses can also be for your own good if you’ve incorporated them. If — heaven forbid — your company goes bankrupt someday, one avenue that creditors will have to your personal money will be if your business and personal finances were intertwined (piercing what’s called your “corporate veil”). 

If you’re a sole proprietor, do yourself a favor and look into becoming a limited liability company (LLC), which can offer you some protection from the fallout of debt.

You’ll also need a proper audit trail to prove the deductions and losses you take (and believe me, you’ll need those in the first few years) on your business tax return.

While we’re on taxes, if you’ve got even a small online business, this could be the first year you get an IRS Form 1099. For tax year 2023, if you use a third-party payment platform like Venmo or PayPal or sell on sites like Etsy or eBay and make just $600 for professional services, you and the IRS will get a Form 1099-K in January 2024, and you must report the income.

If you use a payment platform for personal payments, you won’t get a 1099-K – but there’s no guarantee that mistakes won’t be made in this initial year of the 1099 blizzards.

You’re probably beginning to see how keeping good records and separating funds will be especially helpful. 

The nitty gritty

Bank accounts: From the minute you turn on the lights, get a proper business account that’s completely distinct from your personal accounts. To open a biz account, you’ll need to get a federal tax ID number (EIN) and a state tax ID number, as well as any documents you filed for when you formed your company such as articles of incorporation or a certificate of formation.

Business accounts typically give you checking, savings, credit card accounts, and a merchant services account that allow credit and debit card transactions from customers. Other perks should include multiple credit cards for you and your employees (more on that in a sec) and merchant services that keep customers’ personal info secure. You’ll probably get a line-of-credit option for your company larger than what you’d get in a personal account. 

A business account in the same bank where you keep personal money may get you a break on some fees, but it depends on the bank. It’s the same for introductory offers and sign-up bonuses (which are taxable). Shop around and study the fine print — and don’t forget non-bank sources, like American Express. 

Credit cards: Getting a business credit card separate from your personal plastic is just as important as having a distinct bank account. It’ll be instrumental in creating the paper trail needed to justify deductible expenses that you take on your business tax return. 

Application and approval is a similar process to that of personal cards. Go into it knowing your credit score and history. Be prepared with your written business plan, profit and loss statements, and other financial records from any previous business you had. 

What function is the card going to have in your company? Narrow this to just a few details — for instance, cash flow, international use, multiple employees using the card, and rewards points that match your company’s buying patterns — and match the card’s plusses to those.

Untangling a mess

It’s never too late to begin untangling business and personal finances. 

Go back through your records (with luck, your company is still young enough so you won’t have to look at too many years). Pick out the transactions you know are business or personal. Pay special attention to meals and travel, vehicle expenses, and home-office costs — the IRS likes to attack these ones. 

We’d also be happy to chat about possibly filing amended returns, and about how we can help keep your biz and personal money separate (and safe). 

So whether your Lake Norman small business venture is just taking flight, or there have been a few messes along the way that you’d like to clean up, always feel free to reach out:

calendly.com/kristin_kristingravitt/discovery-call

In your corner,

Kristin Gravitt

Raise your hand if you or your workers, in any way, still work remotely post-pandemic.

It’s a common enough reality — maybe more so now even than 2020. Working in sweatpants from the comfort of your Lake Norman home is infinitely better than dress shoes and uncomfortable desk chairs — and cheaper than paying high business space rent prices.

But with so many companies going remote and giving up their brick-and-mortar space, it’s caused a bit of an office space crisis in major cities like NYC (up to 20% of spaces being unused nationwide). That’s looking like an 800 billion loss for urban office real estate value —  that’s a KPI to pay attention to… and figure out alternatives for (like converting said offices into rental properties).

Getting creative with turning losses into profits is an important skill for you as a business owner these days.

And I know you understand that. The past three years have forced you to figure out ways to adapt to new realities.

But you couldn’t do it without these really important things that are really the central figures of your business. Yes, I’m talking about KPIs.

But utilizing these performance indicators the right way is more than just printing a report. It’s knowing which ones to set up, how often to track them, and how to organize them into something coherent you can actually use.

And I want you to be able to USE them to keep you sharp and well-positioned for every economic moment — opportune or difficult. Your success matters to you… and to me.

So, let’s start that conversation here: calendly.com/kristin_kristingravitt/discovery-call

Tracking Your Lake Norman Company’s KPIs Effectively
“Performance stands out like a ton of diamonds.” – Harold S. Geneen

Measuring performance in your company is an indispensable tool for small business owners. The standard metric for that measurement: the KPI — or “key performance indicator.” 

KPIs are performance quantifiers — recorded and tracked numbers — that have a specific and clear value, such as a dollar figure for increased sales over a certain period. They’re how you see at a glance if your company is on course. You create KPIs by setting that goal — such as a doubling of profits in the next three years — and working backward to decide what has to happen and when.

In many ways, KPIs formalize an instinctive method you have for measuring incremental success. The concept falls down, though, if you don’t track your progress.

So, how should you do that? And how often?

Setting it up

This depends on your company’s goals, but some common KPIs look at revenue (average profits, total revenue, profit margin); employment stats such as turnover, employee performance, and vacancies; customer service (average call time, customer satisfaction); customer retention and acquisition (and the revenue associated with each); and marketing (sales generation, overall effectiveness).

Your specific industry might dictate use of other KPIs, such as website traffic for an e-commerce company, table turns for a restaurant, or rejections for a production line. Among other points:

• Indicators differ in your KPIs. Leading indicators measure the actions you’re taking to reach goals; lagging indicators are the results you’re getting. High indicators measure your company’s overall performance; low indicators measure results from a specific product, department, or other component of your company.
•  KPIs must be quantifiable. A salesperson’s revenue during a period is quantifiable. That salesperson’s relationship with a client isn’t.
• Some metrics may require looking at more than one KPI. “Customer service,” for example, can comprise many factors, from delivery time to reps’ responses to product quality. 

There’s no set number of KPIs you should be tracking. It’s better to use fewer KPIs and make sure the ones you use are accurate. For each goal you set, set only around six KPIs (that of course correlate to that goal). 

How often you should be tracking KPIs

Basically, you’re balancing frequency and time when tracking KPIs — giving concepts a chance to mature but not so long that they spray too far off course. 

Some goals (such as annual revenue or employee tenure) can be tracked quarterly or semi-annually and still have time to make adjustments. Other KPIs are more immediate in their lagging/leading indicators. The actions/initiatives that those measure can have a quicker impact on your bottom line. 

Customer retention or conversion rates, for instance, require more constant and steadier attention and lend themselves to faster, easier adjustments. For these KPIs, monthly tracking is better. 

Here’s another factor: How much time and money do you need in order to adjust once you spot a problem? Let’s say your KPI shows you need to hire two new salespeople to meet an annual revenue goal. That’s a lengthy adjustment involving advertising, time, interviewing, onboarding, and training. The sooner you spot that KPI, the better — meaning tracking frequently is best. It’s the same for product development to boost sales and revenue for the end of the year. 

But suppose your KPI shows your customer service people aren’t answering calls within the specified number of rings or customer service emails are sitting unanswered for too many hours or days? That could be a quick adjustment of bringing the problem to the attention of the department manager or talking to the reps directly. The quicker the needed adjustment is to make, the less frequently you have to track the KPIs. 

You have a lot on your plate, I know — so set your calendar app to ping you weekly or monthly when it’s time to look at your KPIs. Do push to track consistently. The whole exercise loses effectiveness if you don’t.  

Organizing the info

You want to go visual with the reports, rather than using too much text. The quicker the information can be digested, the quicker you can make decisions using it. (This becomes even more important when considering multiple KPIs. Consider using different colors for different departments.)

As charts and graphs come in just enough formats to be completely befuddling, it’s best to look at a few examples as you figure out how to report your KPIs. A lot of small businesses also get started with Google Analytics, (which experts do say that like, many freebies, can take you only so far in your presentations). 

When you start out tracking and using KPIs in your Lake Norman business, it can feel as much of an art as it is a science. Give yourself time to get the hang of it, and your future self with thank you for making it so much easier to plan strategically for your business.

And reach out to us whenever you need help with tracking KPIs or any other aspect of business growth and development. The door’s always open: calendly.com/kristin_kristingravitt/discovery-call

In your corner,

Kristin Gravitt

There’s this comparative analogy about what makes something American that people like to use: “as American as apple pie.” But, I kind of think we should update that comparison to “as American as starting a small business.”

Not as catchy, I know (or as yummy). But, it’s just the truth. Small business ownership is the epitome of independence.

Don’t want to work for someone else? Don’t want to depend on someone else to pay your bills? Don’t want to follow someone else’s rules and regulations?

Then start something where you call the shots and own the profit. And that’s what you did. You had a dream, and you made it happen. And your Lake Norman small business, along with hundreds of thousands of others, are the spirit and backbone of this economy.

So, when you’re watching all those fireworks “bursting in air,” know that, in a way, it’s celebrating people like you who have built something valuable.

Your business has value in our way of life beyond the dollar signs it produces.

There might come a time though, when you want to know just how valuable it is and how many zeroes are actually attached at the end. Say you want to sell your little empire or exit it and hand the reins over to somebody else.

That’s when you want to consider getting a business valuation. But when you do, you’ll want to make sure the assessor is taking into consideration all the various aspects that affect business value for you. Even when the assessor is qualified, there are still elements of your business and the market you serve that might get overlooked in the process.

Let me explain what I mean here…

How Lake Norman Owners Can Measure Business Value Correctly
“When things go wrong, don’t go with them.” – Elvis 

In our previous two articles, we covered what goes into a business valuation and why and when you might need one — from M&As to divorce. By now, it’s apparent that a valuation can be an important tool for running your company…

So it’s especially important to realize what could go wrong with one.

Here’s a look at some of the biggest potential trouble spots to determining business value. 

Devil in the details

A business valuation is a waste of your time and money if it uses wrong or incomplete models. Let’s go through these here so you can check them along the way — and never hesitate to question your valuation specialist. You’re the one paying for this, after all. 

Generally, whether the valuation primarily examines your income/earnings, market standing, or overall assets, it should address your company’s non-operating assets and liabilities, taking into account past litigation, tax problems, interest-bearing debt (especially as rates rise), and owners’ worth as related to the business. 

Among other possible business value assessment problems are: 

• Earnings: Small-business valuation specialists often use Seller’s Discretionary Earnings (SDE) or Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) — sometimes using these for the wrong-sized businesses. SDE works better if your company has less than a million dollars in earnings, and EBITDA is best if your company has more than 1.5 million dollars. Businesses with earnings between these two figures can use either. 
• Profits and cash flow: A valuation might accord profits more importance than cash flow. Profits are immediate and important of course, but cash flow is a clearer determinant of future earning potential — probably a much more important figure to a prospective buyer. 
• Non-operating assets: High-value assets (such as real estate or equipment) unused in the day-to-day operations of your company can get overlooked. 
• Goodwill: For business goodwill, a company must generate earnings above a fair return on its tangible assets. Valuations frequently overestimate this factor. 
• Risk: These can include customer concentration, patent expiration, changing market demographics, or product obsolescence — a host of problems not specific to any one industry. An experienced valuator’s judgment might help you most in this area but a less-experienced professional might miss them. 
• Projections: There’s a ton to look at in any business, and valuation is beyond simple addition; it requires judgment. But predictions must depend on evidence. Ask to see what your valuation professional is using — and have yourself and your senior people do your own projections to see if there’s much difference. If there is, discuss it. 
• Estimates: Cash flow, location, human capital, competition, debt, and assets are just a few of the details that should go into your valuation. But often valuators (and a company’s management, too) will leap to some multiple of earnings or some other single factor based on assumption — or on recent headline deals in the company’s industry. 
• Frequency: In today’s rocky economy, a valuation within every five years is recommended, barring unusual circumstances. If you look to sell or attract investors, do one every few years. For exit planning or acquiring another company, even more frequently is recommended.

Who to look for and what to ask

Just as it isn’t cheap, proper valuation is no ad-hoc skill. Look for the right qualifications. 

For valuations for some of its loans, for instance, the U.S. Small Business Administration lists such credentials as Accredited Senior Appraiser, accredited through the American Society of Appraisers; Certified Business Appraiser, accredited through the Institute of Business Appraisers; Accredited in Business Valuation, accredited through the American Institute of Certified Public Accountants; and Certified Valuation Analyst, accredited through the National Association of Certified Valuation Analysts. 

The questions to ask your valuation profession depend on why you want your business value. If you are: 

• Buying or selling a business or seeking funding: How many valuations have you performed in the past year? How many businesses have you sold — and how close to the valuation price? 
• In a legal proceeding: Have you performed valuations used in court before? Are you willing to testify? Are you familiar with IRS Ruling 59-60 (for the valuation of assets) and the Uniform Standards of Professional Appraisal Practice for valuation? 
• Exit planning or tax planning: Do you provide context in your valuations so business owners can take steps to improve their business value?

If you want to do a little preliminary work before shelling out for a valuation pro, M&T Bank also has an online tool to use for a rudimentary valuation of your company.

As you can see, a valuation of your Lake Norman company is a big job — and a really critical one. These are just a few examples of what to watch for.

Need a valuation for your company? I can give recommendations specific to your situation and help ensure it’s done in the way most beneficial for your business. Just reach out. I’m right here:

calendly.com/kristin_kristingravitt/discovery-call

All the best,

Kristin Gravitt