At Blumer CPAs, we like to consider the season of life and business.  Summer winds down, kids head back to school, and the energy in the air changes. For many business owners, September feels like a fresh start—an opportunity to reassess and reposition heading into Q4. It’s also a time of change: team members return from vacation, budgets get real, and client rhythms shift. Pair that seasonality with the demands—and opportunities—of the final quarter, and strategic preparation becomes non-negotiable. 

The Power of Seasonal Reflection

Businesses, like seasons, go through predictable shifts. Some find energy rising now; others begin to slow. What happened this summer? What worked—or didn’t? How did your team function under pressure or in transition? A short reflective pause now sets the tone for a stronger finish to the year.

Key September Transitions to Anticipate

September is a natural turning point in the business year. Even if the numbers don’t say “new quarter” yet, the energy shift is real—and strategic leaders take note. Recognizing what’s changing now helps you make smart, timely adjustments before Q4 ramps up.

Team Shifts – After a summer of PTO and looser schedules, teams come back to a new rhythm. Some people return re-energized. Others may be showing signs of burnout or quietly planning their exit. You might be hiring or reshuffling responsibilities to handle what’s ahead. This is the time for intentional check-ins: How’s morale? What capacity do we have? What needs to shift now to avoid burnout later?

Budget Clarity – With eight months behind you, your budget is no longer a forecast—it’s a scorecard. Maybe you’re under budget in areas that matter, or facing overruns where you didn’t expect. Revenue may be on track—or not. Look at the gaps between planned and actual spending. Adjustments now can help you meet targets before year-end, not just explain them after.

Client Behavior – Some clients are racing to meet year-end goals; others hit pause until January. Knowing how your client base behaves in Q4—accelerating or slowing down—can help you plan cash flow, staffing, and delivery schedules more realistically.

Workflow Rhythm – Summer’s slower pace often gives way to an abrupt fall rush. Deadlines tighten, projects relaunch, urgency returns. If your team or systems aren’t ready for that shift, it’s easy to get overwhelmed.

Spotting these patterns early lets you plan with intention, not just react under pressure.

Actionable Tips to Prepare for Q4 Success

Here are some practical, no‑fluff steps you can take in September to build momentum:

1. Review YTD financials—and spot trends, not just totals

Move beyond profit and loss at face value. Look for trending patterns:

• Are sales stronger in certain channels?
• Is labor cost rising faster than revenue?
• Which product or service margins are expanding or shrinking?

Highlight two or three key insights. Those insights will guide smarter decisions in Q4.

2. Have a focused team conversation by role

Instead of a generic town hall, meet with key contributors and ask:

• What capacity constraints surfaced over the summer?
• Where did creativity stall—and why?
• What support will help them deliver in Q4?

Frame it collaboratively: you’re building Q4 strategy together, not issuing directives.

3. Revisit your Q4 budget—and make it action‑oriented

Now’s the time to layer in planned investments: like upcoming marketing campaigns, additional staffing, software upgrades, or contractor support. Then ask:

• What are the top 3–5 financial targets for Q4?
• How will those influence cash flow and runway?
• What assumptions need confirmation or revision?

Set the budget with concrete milestones—not just numbers on a page.

4. Block strategic planning time—and use it

Schedule a 60- or 90-minute strategy meeting in early October—now. Put it on your calendar. Use that time to reflect, review, and reset your purpose and priorities before the rush of December arrives. Yes—you read that right: stop reading, open your calendar, and block it now.

5. Identify your Q4 “must-dos” vs. “nice-to-dos”

As fall fills up, requests will pour in. Delineate upfront:

• Must‑dos: deadlines tied to revenue, client commitments, or compliance
• Nice‑to‑dos: website refreshes, aspirational new offerings, or broader rebrands

This distinction keeps focus on what actually moves your mission—and paces your investment of time and money.

Schedule Your Strategy Time

Seriously—stop reading this, open your calendar, and block at least one full day for strategic planning, preferably each week.  If you can’t find a full day, then find a half day. Anything is better than nothing. Think of it as a strategic deposit—invest a little time now, and the return shows up in focus, clarity, and better decisions down the line.

If you’d like guidance through this process—a structured agenda, team facilitation, or financial forecasting—we’re here. Blumer CPAs helps entrepreneurs turn seasonal shifts into springboards for growth.

You’re Not Alone Through the Seasons

We support business owners through every season: summer lull or Q4 sprint. September offers a unique window of clarity—pause, reflect, and prepare for what’s next. Whether you’re ramping up or winding down, you don’t have to navigate it alone.

Beneficial Ownership Information (BOI) Reporting is on the Horizon

As you may have already heard, there is a new type of information reporting that will be required of businesses: Beneficial Ownership Information (BOI). This requirement was created in 2021, when Congress passed the Corporate Transparency Act.

This new reporting requirement involves submitting information on beneficial owners (those who own or control businesses) to the Financial Crimes Enforcement Network (FinCEN) of the US Department of the Treasury.

New businesses (those that are started in 2024) are required to file a BOI report within 90 days of formation. However, for existing businesses, the required reporting doesn’t kick in until January 1, 2025. 

This means that Blumer & Associates can spend 2024 closely watching this system that was just implemented in the current year, and learn about the ins and outs of reporting BOI before our clients are required to submit their reports next year.

A lot related to BOI is new, but here is what we know:

What is the Purpose of this Report?

The purpose is to make it more difficult for criminals, money launderers or other “bad actors” to hide behind shell companies or convoluted ownership structures.

Who Needs to Report:

Many businesses will be required to report information identifying the individuals who own/control the business, either directly or indirectly. Both foreign companies registered to do business in the US and domestic companies will be required to report Beneficial Ownership information to FInCEN.

While there are many exemptions to this requirement (for example, nonprofit organizations), most businesses -corporations, LLCs, or similar entities- organized under the laws of a state will be required to file.

What Must Be Reported:

Identifying information on all Beneficial Owners: full legal name, date of birth, complete current address, identification numbers and the issuing jurisdiction, along with an image of the identifying document (US passport, state-issued driver’s license or ID).

Beneficial owners include anyone who owns or controls at least 25% of a reporting company, or anyone who exercises substantial control over the company regardless of ownership percentage. 

When Must It Be Reported:

For businesses that already exist as of January 1, 2024: must file its initial BOI report by January 1, 2025.

For new businesses in 2024:  Starting January 1, 2024, any new businesses must file an initial BOI report within 90 days of creation/registration. 

For new businesses in 2025 and later: Starting January 1, 2025, any new businesses must file an initial BOI report within 30 days of creation/registration. 

Note: willful failure to report Beneficial Owner Information to FinCEN carries steep penalties, fines and potential jail time.

Who Do You Report to:

As mentioned at the beginning of this article, the BOI reports are submitted to FinCen (Financial Crimes Enforcement Network), an arm of the US Treasury Department. 

How Do You Submit Your Report:

FinCEN will have an online portal available through which businesses can submit their BOI initial reports, as well as reporting any changes over time in Beneficial Owner names, addresses, ID numbers and other information. 

You can find more information on how to file on the FinCEN website at: https://www.fincen.gov/boi

While businesses can file this form directly with FinCEN, they can also consult with their accountants or attorneys to help file this report.

What Challenges Do We Foresee related to BOI Reporting:

While there is no fee for businesses to file online with FinCEN, many business owners will want to opt out of such administrative work and delegate this reporting to their accountants or attorneys. However, the laws which determine who can legally do this work may vary from state to state, so it may be unclear who should file on a business owner’s behalf in any given situation.

Timely updating of BOI information may also be a challenge, as any change in owner information is required to be reported to FinCEN within 30 days of the change. Since the requirement is so new, updating BOIs may not be top of mind for many business owners, and filing themselves on time (or getting the updated information to their accountant or attorney on time) may be a challenge.

Rest assured, we are monitoring the situation and will update our clients on any and all new reporting requirements as they occur.

If You Only Do 5 Things In The Coming Year, Do These

So here we are again, facing the end of one year, and the beginning of a whole new year. A shiny, brand-spanking new and unused year, full of possibilities and opportunities. This time of year always has me reflecting on the past year, as well as thinking ahead to what I’d like the next year to look like. 

Here are some ideas for what I want to take into 2024; hopefully you can find something useful for your new year, as well.

Decide what your work/business “word of the year” is for 2024. Then try to live it. 

The “word of the year” idea has been making the rounds on the internet for a while now. But last year, I actually did it. I chose a word and I made sure to put it in front of my face all year. I was struggling with procrastination, and I decided I needed a good dose of self-discipline (my word for 2023). I grabbed a great wallpaper for my laptop screen with a quote about self-discipline. Having a daily visual reminder worked; by the end of the year, I’d gotten good at just doing what I needed to do, when I needed to do it..

Pick a word that will make you and your work life better in 2024. Then put a reminder of your word in front of you for the next 365 days. I bet it will make a difference.

Don’t see problems, see only challenges.

I heard this quote from a business owner/vendor at an accounting conference. As I talked to him about some minor problem at the conference, he said to me “We have no problems. Only challenges.” For some reason, that quote struck me immediately. And it has stuck with me since.

It’s such a beautiful mindset shift. “Problem” implies something nobody wants to deal with, something painful and difficult to solve. “Challenge” implies something you can rise to; something that might be difficult, but can be overcome.  

For 2024, look at all your “problems” as challenges instead. And see if you can’t rise to the challenge!

Accept that work/life balance are not always balanced. But try to tip towards the important anyway.

So I don’t know about you, but 2023 was a wild ride. We had a lot going on in the first half of the year: tax season, a major software migration, and a number of new team members to train. To say I had any sort of work/life balance in the early half of 2023 would have been a total lie. It was all work, very little life. And that was okay. We emerged with projects done, tax season conquered and an amazing new team!

But I realize now the balance has to tip back the other way, back towards taking care of the things that make the work worth doing: devoting time to my spiritual life, connecting with family and friends, taking care of my health.

For 2024, check yourself and see if you need to tip back towards the life portion of your work/life balance.

On the other hand, get over the whole “self-care” trend. Real self-care is getting your stuff done!

So, the idea of “self-care” was very trendy in 2023. It was very easy to find suggestions on self-care all over the internet. And while there were some good ideas out there, quite often “self-care” boiled down to “treat yo self.” 

There’s nothing wrong with treating yourself. But I discovered that I felt best when I got the stuff done that I knew I needed to do: having a productive day at work. Decluttering a room. Crossing a major project off my list. Doing the things I already know need to be done.

So take care of yourself by doing the things you’ve been procrastinating on but need to do. You will feel so much better about yourself. Now that’s self-care.

Simplify, simplify, simplify!

I’ve been hearing the siren call of the simple life since I hit the big 5-0. Something about making the turn into that particular decade has me wanting to nurture the essentials and let everything else go.

In my home life, this means paring down all the stuff. Having too many physical items is just exhausting: you have to clean it, store it, maintain it, think about it. Having less *stuff* to deal with is actually freeing, mentally.

The same is true in my work life. Having too many tasks, too many emails, too many apps, etc, is also exhausting. So I’m trying to learn to delegate, instead of hanging onto tasks and trying to be the hero. I’m trying to learn to clear my inboxes faster by deleting the junk (I’m not really going to attend that webinar, download that whitepaper, or make an appointment to talk to that sales rep). 

See if there aren’t ways to simplify your work life in 2024, so you can get the essentials done, and let the rest go.

I hope these 5 things have sparked some ideas in you of what lessons and habits you’d like to take with you into the new year. May you have a wonderful, productive and enjoyable 2024!

Blumer’s Characteristics are our goals.  They’re what we strive for.  They’re what we want our clients and those we come in contact with to say about our service and our team.  

Our characteristics are few, but they pack a lot of punch in each one.  Check out how our team describes these traits. 

High autonomy, high accountability

High Autonomy and High Accountability are 2 sides of the same coin. We are all adults on the team, and we are treated that way. That’s the High Accountability piece. We are accountable to each other, to do our work in a timely manner and to the best of our ability, especially where it impacts another team member’s work, or it impacts the client directly. We are accountable to get ourselves in gear each day and do what we need to do to get the work done.

The flip side of that is that no one is going to be standing over our shoulders, micromanaging our work. That’s the culture that Jason and Julie have created here at Blumer. They have high expectations of us as a team. But they also place High Trust in us as a team; they believe in us and encourage and support us. And we do the same for each other.

When we as a team are accountable to Jason & Julie, to the clients and to each other and we strive to live up to that accountability, it allows an atmosphere of trust to happen. Clients can put their trust in us that their work will be done to a high level of service and on time. Our team can put their trust in each other to collaborate so we can all do our work successfully. – Mariela Reiss 

High Value, High Service

To me, high value, high service is when clients can FEEL the value of the service we bring to them. High Value is the product that a client feels like they’re getting a lot for their money. High Service is what gives a client that value…It’s communication. It’s timely work. It’s confidence in what we do and doing it well.

High Value, High Service is also displayed within the team. It’s a passion for each other to do well and to see the firm do well. It’s jumping in to help a team member when we are already busy or asking a team member “how can help” if it’s a slower season for me. High Value, High Service is reviewing each others work to make sure we deliver the best possible product to the client. I see the team working together like no other team I’ve ever seen. When other companies have employees competing against each other, this community really steps in to make sure everyone flourishes. – Andrea Hyman

High Dependability, High Trust

As a team, high dependability/high trust is displayed like trapeze artists. Each team member depends on the other & each team member must trust one another. It is a mutual sense of dependability & trust. At Blumer, we display the Blumer Core Characteristic of “high dependability, high trust” when we depend & trust the team member to do their part of the accounting puzzle and serve the client. Conversely, the team member performing the work depends on the rest of the team for support/troubleshooting and trusts the rest of the team to have their back. – Stephanie Kuchle 

Extreme Ownership 

Extreme Ownership means being 100% responsible for your position and how what you do affects your job and maybe even others. Sometimes extreme ownership is owning something good or bad that has affected you or your team. I also think going the extra mile in your job shows extreme ownership to make sure there is not a gap in processes or communication.

My favorite way Blumer/Thriveal employees show Extreme Ownership is when someone is giving you information in Twist, it is so thorough and no questions have to be asked. If there are spreadsheets, they are linked! To have employees take extreme ownership like that in a remote company is awesome!  – Lauren Day

The Blumer team is comprised of a group of adults, working asynchronously, but collaboratively, striving for high value and service for our clients and each other. 

If you missed part 1 and part 2 of this series, make sure to check those out.  Are you looking for a high service type of team to serve you?  Check out What We Do.

The IRS issued an announcement on December 23, 2022 that caused a massive sigh of relief from third-party settlement organizations everywhere (as well as from tax preparers and small businesses): A planned increase in reporting requirements for Form 1099-K was delayed from 2022 to 2023.

For a little background, the IRS defines a third-party settlement organization (TSPO) as an organization that facilitates payments, usually to merchants, through a third party network. These include auction-payment facilitators (think PayPal) or other merchant services providers (think American Express, Visa or other organizations that process credit card payments to businesses).

Prior to the American Rescue Plan of 2021, these TSPOs had the obligation to report payments to merchants on Form 1099-K only if they processed payments to those merchants that exceeded $20,000 or 200 transactions for the year. 

As you can imagine, with such thresholds ($20,000 or 200 transactions per year), many smaller businesses, who had few customers paying them by credit card, fell below the reporting requirements. In such cases, TSPOs were not required to report to either the merchant or the IRS.

However, the American Rescue Plan of 2021 changed this threshold to a mere $600 (most likely to better line up with the current reporting thresholds for Forms 1099-MISC and 1099-NEC). And this threshold was supposed to go into effect January 1, 2023 for 2022 transactions.

Now TSPOs would be required to give a Form 1099-K to any merchants who received $600 total during the year for goods and services. And TSPOs would also have to file these forms with the IRS. 

Suddenly TSPOs were facing much higher reporting requirements, and small merchants would be receiving forms that they had not previously received and might not know what to do with.

This was almost guaranteed to cause chaos and confusion for the 2023 filing season.

Enter some wisdom at the IRS: The IRS actually heard the misgivings of taxpayers, tax professionals and businesses and decided to delay the change in reporting requirements for Form 1099-K by one year. 

Now, according to Notice 2023-10, there will be extra time to transition into the new reporting requirements. The new $600 threshold will now apply to 2023 transactions (which will be reported in 2024). The old thresholds of $20,000 or 200 transactions will continue to apply for 2022 transactions, thus simplifying the reporting for the quickly-approaching 2023 filing season.

TSPOs, small businesses and tax professionals now have additional time to ensure accurate reporting, and clarity on what to do with the new 1099-Ks, as the IRS continues to issue instruction and guidance during the upcoming year. 

So you won’t be receiving as many Forms 1099-K to deliver to us during tax time as we originally thought. Enjoy this gift from the IRS and have a Happy New Year!

The Inflation Reduction Act was signed into law on August 16, 2022.

In this time of rampant inflation and the drastic moves by the Federal Reserve in hiking interest rates, which is hitting us all painfully in the wallet, something called “The Inflation Reduction Act” sounds fantastic, right? 

A law that will help bring down inflation? Bring it on!

Except…wait a minute, what is in this law, exactly? And how is this law going to reduce inflation?

Good questions. Let me take a few minutes to try and answer them for you as we take a brief tour of The Inflation Reduction Act.

Does the Inflation Reduction Act Actually Reduce Inflation?

First of all, it isn’t strictly inflation-reducing legislation. What the Inflation Reduction Act (or IRA, for short) actually does is both 

a) create additional revenue for the federal government while at the same time, 

b) authorizing the federal government to invest in a few key areas. 

Because the revenue the law will create is greater than the cost of the investments,the extra revenue will help reduce our national deficit. Which should, in theory, reduce inflation.

An estimated $737 billion in new revenues will be generated, while a mere $437 billion will be invested, leaving a net $300 billion or so that can be used to reduce the deficit. 

Okay, that sounds good. We are all for reducing the deficit if it will eventually bring down the price of everything back to normal levels.

So, how exactly are we going to generate an extra $737 billion in revenue?

I’m glad you asked.

How to Raise More Money if You Are the Government

There are 5 key ways in the IRA that the federal government proposes to raise revenue. They are:

1. Instituting a 15% Corporate Minimum Tax on corporations that have over $1 billion in profits over any 3-year period. This should bring in over $220 billion from corporations currently paying less than that thanks to corporate tax loopholes, over the next 10 years.
2. Creating a new 1% stock buyback excise tax on any corporate buybacks of stock sold on an open exchange. This is expected to create over $70 billion in revenue.
3. Reforming the way Medicare negotiates on prescription drug prices, in order to save over $280 billion.
4. Authorizing the IRS to modernize and also hire additional agents in order to aid the agency’s tax enforcement efforts, which is expected to drum up over $120 billion.
5. And a 2-year extension of the Loss Limitation rules for excess business losses should raise over $50 billion

And Now What Will the Government Do With All that Cash?

Invest it, of course! The Inflation Reduction Act includes investment in:

1. Energy Security and Climate Change. Expected investment: $369 billion. These include clean energy tax credits, with the goal of reducing carbon emissions. We will look at these tax credits in more detail in the next section.
2. Extending the Affordable Care Act another 3 years, which will cost an additional $64 billion. The goal here is to continue enabling more affordable health care.
3. And investing in Western Drought Resiliency, to the tune of $4 billion.

What’s in it for you?

There are some nice tax credits included in the IRA that will benefit business and consumers alike. For example;

1. The Research & Development (R&D) Credit for small businesses will be increased from a maximum of $250,000 in credit they can claim against payroll tax (for years prior to 2023) to a maximum of $500,000.
2. The Renewable Electricity Production Credit has been extended for 3 years for renewable electricity production facilities
3. The New Clean Vehicle Credit is extended for individuals who purchase a clean vehicle before December 1, 2023. These include qualified plug-in electric drive motor vehicles and qualified fuel cell motor vehicles.There are limits to how much a taxpayer can spend on these vehicles however.
4. Energy Efficient Home Improvements Credit was expanded from a $500 lifetime credit to an annual credit up to $1,200.
5. The Residential Clean Energy Property Credit was created as a 30% credit on qualified expenditures for solar panels, solar water heating, small wind energy and geothermal heat pumps, among others. 

Some of these credits are extensions or adjustments to existing tax credits. Others will be new for 2023 and beyond. 

If you are a client and have any questions about how these credits may affect your taxes in 2023, please feel free to ask your Customer Ally. Or you can contact us at blumercpas.com.

Protect Your Business (and Your Contractors) with Forms W-9 and W-8 BEN

We are fast approaching the end of the year. Which, among other things, means we are fast approaching the time when accountants everywhere start gearing up to prepare client Forms 1099 for the 2022 tax year.

So if your accountant starts asking you if you have W-9’s and W-8BEN’s for all of your independent contractors, know that they are thinking ahead to the year-end tasks that keep you, as a business owner, in compliance.

Compliance isn’t the most thrilling concept. And remembering to collect all of those Forms W-9 and W-8BEN throughout the year, from each new independent contractor, just seems to be a bit of a hassle, for both you and them.

So do you really need to do it?

As a CPA, I could remind you that the IRS does look at compliance issues. And that they have just recently been authorized to hire potentially thousands of new agents and auditors, thanks to the recently-passed Inflation Reduction Act of 2022.

But perhaps more importantly than that, these forms (W-9 and W-8 BEN) protect both you and your independent contractor.

How, you ask? Let’s take a closer look.

Form W-9 and W-8BEN: What are they?

These forms are used for more than one purpose. But for business owners, they are used primarily to obtain the correct taxpayer identification number, business name, business entity type and address for any business or individual you make payments to for services.   

Form W-9 is used to collect such information from US citizens, US resident aliens, or businesses organized and operating under the laws of the US.

Form W-8 BEN is used to collect similar information for foreign contractors.

What does obtaining these forms from your contractors protect you from? IRS penalties.

Business owners are required to file certain information returns annually. These include filing Forms 1099-NEC (short for Non-Employee Compensation) for any person or business you paid at least $600 to during the year for business services.

To file these, you need the sort of information you would find on a W-9 or W-8 BEN.

Penalties for not filing Forms 1099-NEC or for filing incorrectly include:

•         $50 to $280 per form for not filing by the filing deadline.
•         Minimum $570 per form, or 10% of the income reported on the form, for failing to provide a correct form to your independent contractor (or other vendor)

Those penalties will increase in 2023. And this doesn’t even include interest that the IRS charges on top of penalties.

 

If you have several vendors or contractors you pay more than $600/year and you fail to file these forms or provide them to your vendor/contractor, those penalties can really add up!

The solution: request a W-9 or W-8 BEN from each vendor and contractor when you start working with them and keep those forms updated.

Bonus: The IRS does NOT require you to file 1099’s for certain business entities in certain circumstances. The W-9 has handy checkboxes that tell you exactly what type of legal entity your vendor or contractor is. If they checked the right boxes, you don’t even have to worry about filing.

What does obtaining these forms from your contractors protect them from? Backup withholding.

If your vendor/contractor puts up a fuss about providing you with a Form W-9 or W-8 BEN, you can let them know about backup withholding.

What is that, you ask?

In certain situations where you pay another person for services to your business, you as the payor may be required to withhold a certain percentage of their payments, which you will report and submit to the IRS.

These situations include:

•         Any US person or business for whom you have an missing or incorrect Taxpayer Identification Number (whether a Social Security Number or an Employer Identification Number)
•         Any resident or nonresident alien for whom you have a missing or incorrect ITIN (Individual Taxpayer Identification Number)
•         Any foreign person or business who does not claim tax treaty benefits on a Form W-8 BEN.

For the first two categories above, the backup withholding rate is 24% of your gross payment to them. For foreign persons, the backup withholding rate is 30% of the gross payment.

If you remind your contractors that filling out a simple form can prevent you from being required to hold back 24-30% of their vendor payments, they will most likely be motivated to fill those out quickly!

If you are a client and your Customer Ally checks with you about these forms, know that we are looking to protect your business and your contractors. If you are not a client yet, check out our website to learn more.

How to Deal (as a Business Owner) with Inflation, Recession, and Other Tough Times, Part 2

A recent article in the New York Times just last month had this headline: “Is Recession Staring Us Down? Already Upon Us? Here’s Why It’s Hard to Say.”

Say what?

There is no denying we are in for some interesting economic times ahead. I’m sure this is weighing heavy on the minds of most business owners right now. But, as I mentioned in last month’s blog post, there are certain fundamentals that will always be true when a business faces a crisis. We covered three points in that earlier blog post:

#1 – Cash is everything. 

#2—Do something about debt. 

#3 – Determine what expenses can go and what expenses must stay. 

But there are some other things you can do in an economic downturn to put your business in the best possible position to weather the ups and downs. Here are four more principles to consider as you strategize about the future.

 #4 – Hang onto your team, if possible; you will need them on the other side. You’ve assembled a team you love. It has taken time and effort. The last thing you want to do is lose valued team members, or leave them hurting for pay in a time when costs are going up and the economy is going down. You may have to make the really hard decision to let some team go or to consolidate several roles into one. But make this a decision of last resort. Your people are the backbone of your service business. Look at every other possible cut before you touch payroll. Once the economy starts looking up again, good people will be snapped up right and left; you might not be able to find good replacements for your team when the hiring starts again. Do your best to preserve what you have.

On the other hand, if you have some extra cash flow you can part with right now, consider the fact that you might be able to pick up some highly qualified team members that other businesses are laying off right now. Balance your need for cost-cutting today with your need for potential growth in the future. 

 #5 – Get creative about new streams of revenue. Now is the time to look at your business model and consider how you may need to shift that model to match up to what the market is doing. Are you tightening your belt? Your customers are probably doing the same. But some services remain indispensable for businesses; consider whether you need to add some service offerings to your lineup so that you are also indispensable. Or perhaps your model runs on offering high value for a higher price point; in a down economy, you may need to consider offering scaled-back services at a lower price point to reach a market that you weren’t targeting before. Study the market and start brainstorming all the new and innovative ways you can give the people what they want.

#6 – But don’t forget to serve your existing customers/clients to the best of your ability. In spite of point #5, you do not want to make the mistake of slacking in your service to your existing customers. Now is not the time to do anything that jeopardizes your relationship with your current customers. Next to your valued team, your book of current clients is your greatest business asset. And they are usually the first market you can offer any new services to.

Much like cash and team members, you want to preserve your client list as much as possible during an economic downturn. Make sure your customers feel valued, heard and served.

#7—Make plans, work your plans, but stay flexible enough to revisit and reevaluate those plans. Any times of economic uncertainty are the right times to make careful, detailed and strategic plans in all of the areas listed above. Knowing how you will handle the loss of a major client, a tight credit market or price increases from your suppliers will bring you peace of mind.

But know that the best laid plans of business owners rarely match up with reality. There are too many variables for any plan to accurately reflect the future in every detail. So be flexible enough to know your plans will probably change. And be ready to reevaluate those plans on an ongoing basis, so you can keep your strategies up to date with what is actually going on out there in the economy.

I know the points in this 2-part blog series are fundamentals, but they are fundamental for a reason. Countless businesses have weathered tough times by taking care of the fundamentals. You can too.

And remember, your track record for surviving tough days so far is 100%. So keep a positive outlook and carry on.

How to Deal (as a Business Owner) with Inflation, Recession, and Other Tough Times, Part 1

Recession. Inflation. Stagflation. Economic downturn. Global slowdown. 

We’ve all read the headlines. We’ve all scratched our collective heads at the ever-changing predictions on an economic downturn.

 It’s something every business owner has on their minds right now: Are we going into a recession? Are we already *in* a recession? How do we deal with inflation? And what do we do if things get worse? The questions (and the worries) can be endless. So what are the answers? Are there any answers?

 I can’t tell you what the specific answers are for you. They are probably as unique as your business is. The effects of inflation and/or recession on your business depend on so many factors: your client and revenue mix, your specific expenses, the amount and type of debt your business is carrying, your cash reserves, the financial health of your business before inflation and recession hit. All these things, as well as the decisions you make going forward, will determine the effects of an economic downturn on your particular business.

 However, there are certain fundamentals that will always be true when a business faces a crisis. If you, as a business owner, balance these fundamentals well, you will be in the best possible position you can be in when things get tough.

 #1 – Cash is everything. The lifeblood of your business is cash. In any economic downturn, credit starts tightening up pretty quickly and interest rates rise. The businesses that survive and thrive in these times are the ones that preserve cash flow at all costs. If you started out with (and are maintaining) a healthy cash reserve, then you will have a much easier time than the business that does NOT have a cash reserve when a downturn hits.

If your business has a healthy cash flow, keep it up. If it doesn’t, do everything you can to get it flowing; tighten up your collection policies, negotiate shorter payment schedules with clients, or longer payment schedules with vendors, if you can. Put some cash in savings and keep it there. And then try to maintain a cushion of cash that will cover 3 to 6 months’ worth of operating expenses.

 #2—Do something about debt. So I just told you to hang onto your cash. But even as credit tightens up in recessionary economies, interest rates will go up. The Federal Reserve may change its mind, but we started off 2022 with rumors of several interest rate hikes planned throughout the year. If you have debt that is subject to a variable interest rate, you might feel the pain in your pocket pretty quickly. If you can convert that debt from a variable interest rate to a fixed rate, do it sooner rather than later. If you can’t do that, then try to pay off your variable interest rate debt as quickly as possible while trying to conserve and improve cash flow in step #1.

 #3 – Determine what expenses can go and what expenses must stay. Now is the time to take a close look at your expenses and determine where it is that you can tighten the belt. In a service business, the

largest expense will usually be payroll, and you may not have a lot of wiggle room in that category, especially if you want to keep the great team you’ve assembled so far (see #4). But it may be time for a hiring freeze. 

And you can still look at your other expense categories and ask the hard questions. Is this subscription or that purchase really necessary right now? Can we switch to a lower-cost provider without harming the quality of our services? These are the kinds of judgments you will have to make as you look at your expenses.

These are just a few of the things you need to consider when faced with tough times. In part 2 of this series, we will look at some more fundamental principles business owners need to consider in times of economic distress.