Our monthly newsletter, Link Newsletter, is full of tips, reminders, and timely advice to help you stay well informed when it comes to your business and personal finances. If you have questions about any of the articles, feel free to email Damon Yudichak at Damon@yudichakcpa.com.
Focused Information for the Small Business Owner
Volume 3, Issue 4
Portrait by Charles Gupton
In honor of oil-soaked birds, ‘tweets’ are now ‘gurgles.’
Recipient of First
Golden Tweet Award
(1964 – )
In This Issue
A Fast Mile
This month was a pretty exciting month from a running perspective. On May 14th I timed myself on a mile. I ran as hard as I could and when I reached the mile mark I was elated at the time on my watch of 5:52. I had run a mile in 5 minutes and 52 seconds. This is the fastest I have run a mile in well over a decade so I was quite pleased.
At the beginning of the month I joined the Jeff Galloway Training program which is a team training program to help people train for and complete in half marathons and marathons. Jeff is a former Olympian and developed the run walk run method for training and running marathons.
Jeff’s program has been around for thirty years and the thing that attracted me most to the program is that it is a way to run injury-free. The program dictates that on long runs one runs for a set amount of time say 4 – 8 minutes and then they walk for a minute. The big benefit of the program is that during the walk portion the body uses different muscles and the running muscles get a chance to rest. At the end of a long run, the muscles are not as tired and thus run time improves and injury risk is reduced.
The final running accomplishment came with the conclusion of my fourth half marathon. Given that I had just run a 5:52 mile, I was expecting to really excel at the half marathon. I developed my game plan for the race and set what I planned on for mileage pace. The one thing I didn’t calculate into the race plan was the number of hills on the course. This was by far the hilliest and most challenging half marathon course I have run to date. On the other side it was the most scenic course I have run which made it an enjoyable run.
Damon’s Big Lesson
There is an old adage that cash is king. The longer I’ve been in business the more I realize how true that has been. Even more important as a business owner, cash flow is critical to running a business. Cash is the lifeblood of any business. It’s vital that a business owner develops a way to project how much cash they will need and then make sure that they have the cash to fund their expenses.
One of the strategies that I developed at the beginning of the year was the use of multiple checking accounts to manage cash. Currently I have five checking accounts to manage my business. Five checking accounts??? You may be thinking that is preposterous. Why would anyone need five checking accounts? Let me tell you.
The five checking accounts are as follows: Operating, Working Capital, Payroll, Savings, and my Damon account. Each checking account serves a purpose.
• The operating checking account is where all my deposits go. It is also where all checks for expenses and purchases are written. The only checks that don’t come out of this account are payroll checks.
• The Working Capital account is my cash reserves account. For every deposit I make, I transfer ten percent of the deposit from the operating account to the working capital account. I recommend that a business owner have at least six months of working capital in cash reserves. If one were to look at the total of their monthly expenses, that would be what a month’s worth of working capital should be. Six months of working capital ends up being a large amount of cash which makes it difficult for many people to fund it immediately. That is why ten percent of every deposit goes into my working capital account.
• The payroll account has the cash in it to cover wages and payroll taxes. Once I run my payroll and know how much the payroll checks and payroll taxes will be, I transfer the funds for both into the payroll account. Then payroll checks and payroll taxes are paid out of the payroll account.
• The Savings account is used to set money aside for budgeted expenses. I’ve got expenses that I know I will have to purchase in the coming months. Given this knowledge, I transfer funds into the Savings account so I will have the cash when I need to pay for the purchases.
• The Damon account is for my paycheck. This was my way of making sure that I set aside money to pay for my paycheck.
I’ve been really happy with the system as it helps me have the cash when I need it.
The Marketer’s Mind
Having a plan for most things is important. Having a plan for marketing is important given the many moving pieces that are involved in effective marketing. But it is not simply enough to have a plan cogitating in one’s brain to have an effective marketing plan. I’ve had lots of marketing ideas over the last two years. I didn’t implement many of them because I never wrote them down and never created a system for implementing the marketing. So those ideas stayed on the backburner because there was always something more pressing that took precedence in my daily work.
It is important to write down a marketing plan. Writing down the marketing plan on a document brings structure to the plan and causes one to be more serious about implementing the plan. When developing a marketing plan, start small. There are so many ways to market that it can become very overwhelming.
The first step is to determine who you will market to. There are many audiences that one can market to – one’s customer base, referral partners, past customers, niche customers, demographic customers, geographic customers, etc. Each one of these customers will respond to a marketing message that is specifically designed for that audience. For instance if I was marketing to individuals, I would emphasize different benefits than if I were marketing to businesses because each group has different needs.
Now that there is a target audience, determine what the needs of that audience are. With this knowledge in hand, list how your products/services meet the needs of the audience. Now that you have a list of customer needs, rephrase the list so that the list is now a list of benefits that the customer will receive from buying from you.
This process ends up being a lot of work, but when done properly, you end up positioning your business in a lot better place because you move from having to sell services to having the customer buy from you. Ultimately, it is a lot better to have people buy from you then to have to sell all the reasons why you are the perfect fit for the customer.
What’s With the Moon?
I’ve had a couple people ask, What’s with you and the moon? About two years ago, I became fascinated with the Apollo Program. I began to study the program and interview people who helped make the monumental task of landing on the moon a reality.
The moon is a symbol of possibility for me. It is a source of inspiration. I like to be inspired.
My name is Damon Yudichak and I am a Certified Public Accountant. My father was an Army officer and we moved around a lot. We finally ended up in Fayetteville, NC. I’ve been a resident of Raleigh since 1999 when I moved here to go to North Carolina State University. I am fascinated with the moon and am still amazed that man has walked on the moon. I also am a big standup comedy fan.
The Orange Star Newsletter is prepared by Damon Yudichak. The Orange Star Newsletter carries no official authority, and its contents should not be acted upon without professional advice.
In accordance with IRS Circular 230, this newsletter is not to be considered a “covered opinion” or other written tax advice and should not be relied upon for IRS audit, tax dispute, or any other purpose.