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The balance sheet is a snapshot of your business financials. It includes assets, and liabilities and net worth. The “bottom line” of a balance sheet must always balance (i.e. assets = liabilities + net worth). The individual elements of a balance sheet change from day to day and reflect the activities of a business. Analyzing how the balance sheet changes over time will reveal important financial information about a business. It can help you can monitor your ability to collect revenues, manage your inventory, and assess your ability to satisfy creditors and stockholders.

Liabilities and net worth on the balance sheet represent sources of funds. Liabilities and net worth are composed of creditors and investors who have provided cash or its equivalent to your business. As a source of funds, they enable your business to continue or expand operations.

Assets represent the use of funds. A business uses cash or other funds provided by the creditor/investor to acquire assets. Assets include things of value that are owned or due to a business.

Liabilities represent obligations to creditors while net worth represents the owner’s investment in the business. Both creditors and owners are “investors” in the business with the only difference being the timeframe in which they expect repayment.

ASSETS

Anything of value that is owned or due to the business is included under the Asset section of a Balance Sheet.

CURRENT ASSETS

Current assets mature in less than one year. They are the sum of:

Cash:

Cash pays bills and obligations. Inventory, receivables, land, building, machinery and equipment do not pay obligations even though they can be sold for cash and then used to pay bills. If cash is inadequate or improperly managed, a business may become insolvent or forced into bankruptcy. Cash includes all checking, money market and short-term savings accounts.

Accounts Receivable (A/R): 

Accounts Receivable are dollars due from customers. More specifically, inventory is sold and shipped, an invoice is sent to the customer and cash is collected at a later time. The receivable exists for the time period between the selling of the inventory and the receipt of cash. Receivables are proportional to sales. As sales rise, the investment you must make in receivables also increases.

Inventory:

Inventory consists of the goods and materials a business purchases to resell at a profit. In the process, sales and receivables are generated. The business purchases raw material inventory that is processed (called work-in-process inventory) to be sold as finished goods inventory. For a business that sells a product, inventory is often the first use of cash. Purchasing inventory to be sold at a profit is the first step in making a profit. Selling inventory does not bring cash back into the business—it creates a receivable. Only after a time lag (equal to the receivable’s collection period) will cash return to the business. It’s important that inventory is well managed so the business does not keep too much cash tied up in inventory, as this will reduce profits.

At the same time, a business must keep sufficient inventory on hand to prevent “stock-outs” (having nothing to sell). Insufficient inventory will erode profits and may result in the loss of customers.

Notes Receivable (N/R):

Notes Receivable is a claim due to the business as a result of the business making a loan, such as a promissory note. Notes receivable is usually a claim due from one of three sources: customers, employees or officers of the business.

Other Current Assets:

Other current assets consist of prepaid expenses, other miscellaneous and current assets.

FIXED ASSETS

Fixed assets represent the use of cash to purchase physical assets whose life exceeds one year, such as:

INTANGIBLES

Intangibles are assets with an undetermined life that may never mature into cash. For most analysis purposes, intangibles are ignored as assets and are deducted from net worth because their value is difficult to determine. Intangibles consist of assets such as:

Intangibles are similar to prepaid expenses – the purchase of a benefit that will be expensed at a later date. Intangibles are recouped, like fixed assets, through incremental annual charges (amortization) against income. Standard accounting procedures require most intangibles to be expensed as purchased and never capitalized (include in the balance sheet). An exception to this is purchased patents that may be amortized over the life of the patent.

OTHER ASSETS

Other assets consist of miscellaneous accounts, such as deposits and long-term notes receivable from third parties. They are turned into cash when the asset is sold or when the note is repaid.

TOTAL ASSETS

Total Assets represent the sum of all the assets owned by or due to a business.

LIABILITIES AND NET WORTH

Liabilities and net worth are sources of cash listed in order of their maturity from the soonest to mature obligations (current liabilities), to obligations that are never due (net worth).

There are two sources of funds: lender-investor and owner-investor. Lender-investor funds consist of trade suppliers, employees, tax authorities and financial institutions. Owner-investor funds consist of stockholders and principals who loan cash to the business. Both lender-investors and owner-investors have invested cash or its equivalent into the business. The only difference between the investors is the maturity date of their obligations and the degree of their nervousness.

CURRENT LIABILITIES

Current liabilities are those obligations that will mature and must be paid within 12 months. These are liabilities that can create a business’s insolvency if cash is inadequate. A satisfied set of current creditors is a healthy and important source of credit for short-term uses of cash (inventory and receivables). A dissatisfied set of current creditors can threaten the survival of the business. The best way to ensure creditors will be satisfied is to keep their obligations current.

Current liabilities consist of the following obligation accounts:

Proper matching of sources and uses of funds requires that short-term (current) liabilities must be used only to purchase short-term assets (inventory and receivables).

Accounts Payable (A/P):

Accounts payable are obligations due to trade suppliers who have provided inventory, goods or services used in operating the business. Suppliers generally offer terms (just like you do for your customers), since the suppliers’ competition offers payment terms. Whenever possible, you should take advantage of payment terms because this will keep your costs down. If the business is paying its suppliers in a timely fashion, days payable will not exceed the terms of payment.

Accrued Expenses:

Accrued expenses are obligations owed, but not billed such as wages and payroll taxes, or obligations accruing. These expenses can also be paid over a period of time such as interest on a loan.

Accruals include wages, payroll taxes, interest payable and employee benefits accruals such as pension funds. As a labor-related category, it should vary in accordance with payroll policy. For example, if wages are paid weekly, the accrual category should seldom exceed one week’s payroll and payroll taxes.

Notes Payable (N/P):

Notes payable are obligations in the form of promissory notes with short-term maturity dates of less than 12 months. Often, they are payable upon demand. Other times they have specific maturity dates (30, 60, 90, 180, 270, 360 days maturities are typical). Notes payable include only the principal amount of the debt. Any interest owed is listed under accruals.

The proceeds of notes payable should be used to finance current assets (inventory and receivables). The use of funds must be short-term so that the asset matures into cash prior to the obligation’s maturation. Proper matching would indicate borrowing for seasonal swings in sales, which cause shifts in inventory and receivables, or to repay accounts payable when attractive discount terms are offered for early payment.

NON-CURRENT LIABILITIES

Non-current liabilities are those obligations that will be payable in the following year. There are three types of non-current liabilities, only two of which are listed on the balance sheet:

Non-current portion of long-term debt is the principal portion of a term loan not payable in the coming year. Subordinated officer loans are treated as an item that lies between debt and equity. Contingent liabilities listed in the footnotes are potential liabilities, which hopefully never become due.

Non-current Portion of Long-Term Debt (LTD):

Non-Current portion of LTD is the portion of a term loan that is not due within the next 12 months. It is listed below the current liability section to demonstrate that the loan does not have to be fully liquidated in the coming year. LTD provides cash to be used for a long-term asset purchase, either permanent working capital or fixed assets.

Notes Payable to Officers, Shareholder or Owners:

Notes payable to officers, shareholders or owners represent cash that the shareholders or owners have put into the business. For tax reasons, owners may increase their equity investment beyond the initial business capitalization by making loans to the business rather than purchasing additional stock. Any return on investment to the owners can therefore be paid as tax-deductible interest expense rather than as non-tax-deductible dividends.

When a business borrows from a financial institution, it is common for the officer loans to be subordinated or put on standby. The subordination agreement prohibits the officer from collecting his or her loan prior to the repayment of the institution’s loan. When on standby, the loan will be considered as equity by the financial institution. Notes receivable officer are considered a bad sign to lenders, while notes payable officer are considered to be reassuring.

Contingent Liabilities:

Contingent Liabilities are potential liabilities that are not listed on the balance sheet. They are listed in the footnotes because they may never become due and payable. Contingent liabilities include lawsuits, warranties and cross Guarantees.

If the business has been sued, but the litigation has not been initiated, there is no way of knowing whether or not the suit will result in a liability to the business. It will be listed in the footnotes because, while not a real liability, it does represent a potential liability which may impair the ability of the business to meet future obligations. Alternatively, if the business guarantees a loan made by a third party to an affiliate, the liability is contingent because it will never become due as long as the affiliate remains healthy and meets its obligations.

Total Liabilities:

Total liabilities represent the sum of all monetary obligations of a business and claims creditors have on its assets.

EQUITY

Equity is represented by total assets minus total liabilities. Equity or Net Worth is the most patient and last to mature source of funds. It represents the owners’ share in the financing of all the assets.

Your business’ online presence isn’t just your website or social media profiles; founders need to think about how they appear in Google, too. Petia Abdul-Razzaq, marketing entrepreneur and Google-supported trainer, joined our small business webinar series to share insight on how small business owners can use some of Google’s free tools to boost their companies.

GROW ORGANICALLY.

When you enter a word or phrase into Google, the search engine populates the center of the page with organic search results using over 200 signals. You want your business to appear on the first page of results when someone searches for your product or service. 

While you can’t pay Google to put you on the first page of organic search results, you can edit your site’s content in ways to let Google know it is important, through a process called search engine optimization (SEO). A simple way for founders to make their websites more attractive to Google is by using search keywords in site content. For example, if your business is a law firm in a particular city, you might add a heading to your About Us page that says “top-ranked law firm in Anywhere, USA” in order to appear to people searching for lawyers in your area. You may also consider using related keywords, like your specialties, to get visitors who are seeking those as well. Use the free tool Google Trends to find the relative popularity of a search term, and try to target words or phrases that many people search for but for which fewer websites compete. If you’re an independent organic grocer, for instance, you wouldn’t include “whole foods” in your SEO review because a small business simply can’t compete with a giant chain. 

SEO keywords are great, but balance is important, too. “Use the keywords in a way that it’s not obvious that your copy is just loaded with keywords,” explained Abdur-Razzaq.  

You should be testing your campaigns for at least three to six months to really understand what’s happening.

BUILD AND USE YOUR PROFILE.

Google Business lets small business owners claim a free profile that shows users key information at a glance on the right side of the search page on a desktop computer. “Think of the business profile as sort of the digital front window for your business, because it allows you to showcase valuable current information that will help customers plan their visit,” said Abdur-Razzaq. That information includes hours of service, your website, menus and more. Use your profile to share pictures and videos of your space or products. Google pulls these profiles into Maps as another way to serve up search results. Be sure to keep this profile updated.

Think of the business profile as sort of the digital front window for your business.

While many Google tools are useful for all kinds of companies, Google Business profiles are only for those with brick and mortar locations or that do business in a particular area.  For example, if you don’t have a storefront but you consistently sell your goods at a particular market, you can claim a Google Business profile. However, if your business is online only and you never have face-to-face contact with customers, you can’t use these profiles. Those businesses can still leverage other Google tools.

Your business profile is also a great way to showcase reviews, which can in turn build credibility, both for customers and in search. “Reviews are definitely one of the key things that can help your profile to surface higher in organic results.” 

GET SMART ABOUT ADS. 

Google makes it incredibly easy for business owners to advertise. There are no contracts or fees for starting a Smart campaign. However, they are pay-per-click, meaning you pay nothing until a user clicks on your ads. Based on your goals, your ads can either appear in search or be part of Google’s display network, which places ads on partner websites, helping you connect with users at different parts of the buying cycle. 

Abdur-Razzaq offered tips for making the most of your Smart campaign:

Set your budget at the beginning of the campaign, the length of time you want it to run and launch. However, don’t expect results overnight. “A lot of small business owners give up after the first week or a month; that’s not the way it works,” said Abdur-Razzaq. “You should be testing your campaigns for at least three to six months to really understand what’s happening, how the audience is responding and what kinds of campaigns are giving the results you’re looking for.” 

USE WHAT YOU ALREADY HAVE. 

Many site hosting or email marketing platforms have existing integrations that leverage Google services. Those can be a big help when it comes to directing people to your online shop. For example, Shopify features a Google Merchant integration, a service that lists your website’s products in the search engine’s Shopping feature. “I usually recommend that you maximize the possibilities of all of the other free tools that exist, right, because if you’re using them correctly, you begin to enjoy the benefits,” she explained.

An essential part of growing a business is understanding who your customers are and what they want. Matt Wallaert, head of behavioral science at frog, joined our small business webinar series to help our entrepreneurs think differently about how they get to know their customers and their industry through market research. Leveraging his behavioral science background, Wallaert focuses on getting companies to focus on customer behavior instead of customer sentiment or worse, viewing customers as just demographics.

Identify what you want to change. 

Wallaert explained that a behavioral science approach to market research is about conducting experiments based on data and insights. Before starting any kind of experiment, you have to have a hypothesis, or an educated guess at what the results will be. That hypothesis is indicated with a behavioral statement:

When [Target Audience] who [Limitations] want to [Motivation], they will [Behavior] (as measured by [Data]). 

“One of the reasons that we write behavioral statements, and one of the reasons we write these limitations down is they help us externalize,” explained Wallaert. “They help us be articulate about what must be true that we might not have thought of.”

Using Uber as an example, a behavioral statement might be:

When smartphone users who use electronic payment methods and live in major metro areas want to go from point A to point B, they will book and complete an Uber Ride (as measured by users completing rides of $15 or more.)

This level of detail is important, since it wouldn’t help Uber much if users booked lots of rides but canceled them (perhaps because the cars took too long to come). Nor would it help the bottom line if users took mostly short, low-cost rides. “So, really, within your business, you’re writing nested behavioral statements,” Wallaert went on. These nested statements can turn into concrete goals for different teams in your organization. For example, Uber’s CEO will have a statement driving toward increasing ridership. To ladder into that goal, the CMO will focus on getting new customers to download the app, whereas the team handling driver relations would focus on recruiting more drivers, making it even easier to serve more riders. 

Apply pressures.

With the behavioral statement set, it’s time to examine the things that affect whether your behavioral outcome actually happens. Factors that would encourage customers to use your product or service more often or get a potential customer to use your service are called promoting pressures. Sticking with the ridesharing space as an example, offering the best cars on the market would be a promoting pressure because it makes that company more attractive to the target audience. Conversely, factors that make your offering less attractive (such as high price or inconvenience) are called inhibiting pressures. Rather than offering customers rides in top-line sedans, as many of their less successful competitors did, Uber instead lowered the inhibiting pressures that kept users away. Uber is often faster, more convenient and less expensive than other car services. “They don’t make me want to take an Uber; they just [got] rid of all the reasons that I don’t take Ubers everywhere all the time,” Wallaert summarized. 

Remember, marketing is an important tool for letting customers know how you’re addressing the promoting or inhibiting pressures that affect how they engage with your company. 

Thinking strictly in terms of demographics means missing important behavior insights and potential customers.

Ditch the demographics when you set up your research.

Thinking strictly in terms of demographics means missing important behavioral insights and potential customers. Wallaert instead encouraged our community to bucket customers into “always use”, “sometimes use”, “never use” and “started then stopped use” to gain information entrepreneurs can use. “We don’t know if the problem between the always and the nevers is about promoting pressures, difference in the desire for people towards the thing, or inhibiting pressures, the things that keep them from acting on that desire, until we go out and do market research,” he said.  Broadening your research pool also means avoiding an echo chamber, where you hear only from people who are already loyal fans.

As far as research methodology, sometimes simply watching people is the best starting point for your investigation. This could mean seeing how they interact or move through your store, for example. You may also consider looking into your website’s metrics for information about what customers are responding to and how often they return to your site. Credit card receipts can also tell you about customer behavior (for example, whether people shop with you only during a promotion).

Another great tool is qualitative interviews. Ask customers questions about their behavior, rather than how they feel about your brand as well as about your industry more generally. “As a matter of fact, if your product or service comes up, you want to move away from it if you can,” Wallaert advised. “What you want to understand is what’s going on underneath that.” He recommended entrepreneurs talk to people in bars about their experiences for insight into how they deal with promoting or inhibiting pressures. Wallaert also suggested creating surveys using tools like Pollfish.

Test in a small way. 

All your research doesn’t help you if you don’t then apply it. “I don’t change behavior directly; I change pressures to change behavior,” Wallaert said, putting himself in the position of a business owner. “In order to do that, I have to bring my insights about the pressures along.” 

Use what you’ve found out from customers in the key groups to develop low-stakes pilots to test your findings. For example, a restaurant owner may have found through surveys that their “sometimes” diners don’t come in more often because they’re more likely to eat vegetarian meals. The restaurant can then try a few vegetarian options (printed on plain computer paper) and see if those new offerings change customer behavior, which they’ve decided to measure by an increase in dine-in orders per month. If that test succeeds, the restaurateur can then add vegetarian dishes for lunch and dinner service (now printed on a professionally-designed menu).

Though a single company can’t be everything to all customers, you should run multiple pilots to really drill down into what works.“You want this smooth continuum of higher and higher fidelity more and more investment over time as you gather more evidence,” If the pilots don’t work, that may mean your original insight is flawed. Ultimately, small business owners should always be doing research and making observations so that they never stop innovating. 

THE TORY BURCH FOUNDATION PRIVACY AND USAGE POLICY

Updated September 2021

INTRODUCTION

TORY BURCH FOUNDATION, INC. (the “Tory Burch Foundation”) values the privacy of users of our websites, applications, and other online services (collectively, the “Website”). This Privacy and Usage Policy applies to information that we collect about you through the Website and does not cover any information collected offline by Tory Burch Foundation, including information collected at our events. To better protect your privacy, this policy describes the personal information we collect about you, why we collect it, how we use it, and when we share it with third parties. Our policy also describes the choices you can make about how we collect and use certain information. If our information practices change, we will post an updated policy on our Website. You can tell if the policy has changed by checking the revision date that appears on this policy. We shall not apply changes in our policy retroactively to information collected from you under a prior policy if, in the reasonable exercise of our discretion, we determine that the changes substantively affect your rights, unless we have given you notice of the changes of the policy and an opportunity to opt out. We will provide this notice to you by email if we have a current email address for you and otherwise by posting notice of the change prominently on the home page of our Website.

INFORMATION WE COLLECT AND HOW WE USE IT

Personal information you provide us

We sometimes ask you to provide certain kinds of personal information while you are on our Website, including information that we collect from user forums, donation forms, online surveys, merchandise transactions, applications, contact inquiry forms, or service access registration forms. This information could include certain personal information (collectively, “Personal Information”) as follows:

Use of your personal information

We use the Personal Information we collect from our users for various general purposes, including to:


We also may use your Personal Information for any other purposes disclosed to you at the time we collect the information, or otherwise with your consent.

Information we collect by automated means

The Tory Burch Foundation may also receive and store certain type of non-personal information (collectively, “Non-Personal Information”). This information is for system administration and other internal business purposes and provides us statistical data about how you browse our Website. We use this information to deliver to you a better and more customized service.

The Non-Personal Information we collect includes:

We collect Non-Personal Information by using cookies and similar technology. Cookies will allow us to provide the most relevant content as you visit our Website. You may refuse to accept cookies by activating the setting on your browser which allows you to refuse the setting of cookies. However, if you select this setting you may be unable to access certain parts of the Website or avail of some of our services. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue cookies when you log on to our Website. Additionally, we do not place tracking cookies on a browser that issues a “do-not-track” signal.

We also may use “pixel tags” (sometimes called “Internet tags”, “web beacons” or “clear GIFS”), which are tiny graphic images, on our Website. Pixel tags help us analyze our customers’ online behavior and measure the effectiveness of our Website and our advertising. We work with service providers that help us track, collect, and analyze this information.

Pixel tags on our Website may be used to collect information about your visit, including the pages you view, the features you use, the links you click, and other actions you take in connection with the site. This information may include your device’s IP address, your browser type, your operating system, date and time information, and other technical information about your device. We may also track certain information about the identity of the website you visited immediately before coming to our site. We do not otherwise track any information about your use of other websites.

Other automated tracking

Pixel tags and cookies in our emails may be used to track your interactions with those messages, such as when you receive, open, or click a link in an email message from us.

We also may work with business partners that use tracking technologies to deliver communications on our behalf across the Internet. These companies may collect information about your visits to our Website and your interaction with our advertising and other communications.

We may combine the information we collect through cookies and pixel tags with other information we have collected from you. This information may be used to improve our Website, to personalize your online experience, to help us deliver information to you, to determine the effectiveness of our communications, and for other internal business purposes.

Others with whom we may share your information

We are not in the business of selling your information. We do not share, sell, lease or rent information about you to unaffiliated third parties. There are, however, certain circumstances in which we may share your information with certain unaffiliated third parties, as set forth below:

Linking to other sites

While visiting our Website, you may link to sites operated by our partners, contributors or other third parties to whom we provide links on our Website. This does not mean that we endorse these sites. We do not make any representations or warranties about any website you may access through the Website. They are independent from us, and we have no control over, or responsibility for, their information or activities.

In addition, our privacy practices may differ from those of these other sites. If you provide personal information at one of those sites, you are subject to the privacy policy of the operator of that site, not the Tory Burch Foundation Privacy and Usage Policy. Please make sure you understand the other site’s privacy policy before providing personal information.

Email communications

We publish an e-newsletter that is sent periodically to individuals on a subscribe listserv. You may subscribe or unsubscribe to our listserv at any time. Occasionally, we may send announcements about Tory Burch Foundation events, campaigns and products to the mail listserv.

Choice/Opt-out

If you have subscribed to receive our e-newsletter and later change your mind, you may contact us at info@toryburchfoundation.org to be removed from our distribution lists. To be removed from our email lists, please click the unsubscribe button found at the bottom of any of the emails that we send you. Please allow us at least ten (10) business days from when the request is received to complete the removal, as some of our emails may already have been in process before you submitted your request.

Security

The Tory Burch Foundation uses commercially reasonable measures to keep your Personal Information private and safe. We take appropriate physical, electronic and administrative steps to maintain the security and accuracy of the Personal Information that we collect, including limiting the number of people who have physical access to our database servers, as well as employing electronic security systems and password protections that guard against unauthorized access. Please note that email is not encrypted and is not considered to be a secure means of transmitting Personal Information.

We use what we consider to be industry-standard security technology in transferring information to process your donations and/or orders. All credit card transactions should take place in a protected area of our site, which is designed to reduce the risk of any loss, misuse or alteration of the information collected. When you have finished submitting your donation and/or orders and begin the checkout process, you should move into the protected area of our site. Once you’ve entered, the page address (URL) should change from http to https. Also, a key or a closed lock should appear in the lower right hand corner of your screen to notify you of this change. You should remain in this secure zone for the entire checkout process. Please check that you are still in this protected area when you type in your credit card details.

Unfortunately, despite our best efforts, the transmission of data over the Internet cannot be guaranteed to be 100% secure. While we use commercially reasonable means to ensure the security of information you transmit to us, we cannot guarantee that such information will not be intercepted by third parties. We may, however, prosecute any unauthorized or fraudulent transactions to the fullest extent permitted by law.

“Spoofing” and“phishing”

“Spoofing” or “Phishing” are common Internet scams. These may occur when you receive an email from what appears to be a legitimate source requesting personal information from you. Please be aware that the Tory Burch Foundation will NEVER send you an email requesting you to provide email credit card or bank information via email. If you ever receive an email that appears to be from us requesting such information from you, DO NOT respond to it, and DO NOT click on any links appearing in the email. Instead, please forward the email to us at info@toryburchfoundation.org, as we will endeavor to investigate all instances of possible Internet fraud.

Children’s privacy

Our Website is not meant for children. We do not intentionally collect any Personal Information from children under the age of thirteen, and will dispose of any such information if we become aware that it has been provided to us. Our online contests or sweepstakes are generally restricted to entrants who are at least 18 years old or the age of majority in the jurisdiction where they are located, whichever is greater.

California privacy rights

Under California Civil Code sections 1798.83-1798.84, California residents are entitled to ask us for a notice describing what categories of personal customer information we share with third parties or corporate affiliates for those third parties or corporate affiliates’ direct marketing purposes. That notice will identify the categories of information shared and will include a list of the third parties and affiliates with which it was shared, along with their names and addresses. If you are a California resident and would like a copy of this notice, please submit a written request to the following address: Tory Burch Foundation, 11 West 19th Street, 7th Floor, New York, NY 10011. Please allow 30 days for a response.

YOUR CONSENT

You acknowledge that this Privacy and Usage Policy is part of the Terms of Use and you agree: (1) that using our Website signifies your assent to Tory Burch Foundation’s Privacy and Usage Policy and related terms of use provided above; (2) that such policy is subject to all applicable laws; and (3) your use is undertaken at your own risk. The Tory Burch Foundation reserves the right to change its Privacy and Usage Policy at any time, without advance notice. As described above, if we decide to change our Privacy and Usage Policy, we will post those changes on this page so that you are aware of what information we collect, how we use it and under what circumstances we disclose it.

In the event of a corporate reorganization or asset transfer, your Personal Information may also be transferred. By giving us your Personal Information you consent to those transfers occurring.

HOW TO CONTACT US

If you have any questions about your privacy or security on our Website, please contact us at info@toryburchfoundation.org.

TERMS OF USE

Please read the following terms and conditions (the “Terms of Use”) carefully before using the Website. By accessing this Website, you agree to be bound by these Terms of Use. If you do not agree with these Terms of Use, you may not use the Website. We recommend that you keep a printed copy of these Terms of Use for future reference.

Intellectual property ownership and use

Please be aware that as you visit and navigate this Website your use of our site is subject to applicable laws governing ownership and use of intellectual property, including our trademarks and copyrights. The Website may provide you with the opportunity to submit, post, or display content, such as comments, feedback, suggestions, ideas, opinions, messages, photos, images, text, materials, information, data, notes, graphics, designs, or any other communications or content (collectively, “Content”). You represent and warrant that you have the right to submit any Content that you upload to Website or otherwise provide to us and that such Content shall not infringe or violate the publicity, proprietary, and/or other intellectual property rights of any third party, or contain, reference, or depict any unlawful, offensive, or violent material or content.

For International Website Users: toryburchfoundation.org is hosted in the United States and is intended for and directed to users in the United States. By using this Website you are subjecting yourself to the laws and jurisdiction of the United States.

User generated content & third party content

By submitting Content on the Website, you represent that: (i) you own or have unencumbered, transferable rights and permissions, including, without limitation, the right of publicity, to the Content that you submit; (ii) you have permission from all persons appearing in your Content to grant the rights granted herein; (iii) the use of the Content as described herein will not violate any law or the rights of any third party; (iv) you are above the age of 16; (v) if your Content shows a child that is under the age of majority in their state or locality of residence, you represent that you have written permission from the child’s parent or guardian to provide the photo or video image for commercial use.

Submitting Content to the Website means that you automatically grant Tory Burch Foundation, and its third-party service providers and vendors, a perpetual, worldwide, unlimited, irrevocable, transferable, assignable, royalty-free, fully-paid right and license to use that Content and your image, likeness, username, real name, caption, location or other identifying information in connection with your Content, for any lawful purpose whatsoever, including but not limited to any commercial advertising, in any manner or media now or later developed, including, without limitation, the right to display, reproduce, modify, translate, create derivative works, distribute, assign, commercialize, and sub-license that Content to third parties for their lawful uses and purposes. Subject to applicable laws, you waive any moral rights that you or your licensors may have in any Content. Tory Burch Foundation is under no obligation to post or publish any Content that you may provide.

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Debt has a bad reputation. But in business, healthy debt can be a path to growth and innovation. Dorothy Kolb, fractional CFO and founder of DK East Associates, joined our webinar series to demystify small business debt and explain which debt products to avoid, if possible. She shared insights on what kind of debt can help your business, what kind of debt to avoid, and how to determine if it’s the right time for your company to take the leap. 

IS NOW THE TIME TO TAKE ON DEBT?

While loans and credit cards can be helpful when your business is struggling, times of strife are not when you should be shopping for debt products, Kolb explained. You should only take on debt if you’re confident you can pay it back and that you can pay it back on time. Essentially, you want to find a sweet spot: a time when the money would be helpful, but not a lifeline. Build business credit when things are going well by paying down debts in a timely manner; payment history communicates to creditors and potential investors that you’re trustworthy. Kolb recommended making the potential loan repayment a line item when doing projections of how much cash you anticipate earning and spending to estimate how that debt will fit into your operation. Online loan interest rate calculators can also be useful to assess what you’ll be able to afford based on your unique business factors and situation.

If you decide that now is the right time for your company, you next need to consider how quickly you need the funding. Is there a retail space you want to snatch up? Do you have your eyes on a machine that would streamline your production process? Some loans can take months before you receive funds. That doesn’t mean you should run to lenders who promise quick payments with lots of hidden strings (more on that later), but consider your options carefully. 

The ultimate goal is to build an impressive business credit score. Much like your personal credit score, on-time payments, how long you’ve been accruing credit, and how much credit you have available to you are all factors that can raise or lower your score. Apply for an Employer Identification Number (EIN) with a credit bureau such as Dun & Bradstreet, FICO Small Business, or Experian Intelliscore, and use that EIN to apply for a business credit card. Kolb recommended checking your business credit score at least once per year, if not quarterly. 

DEBT PRODUCTS TO CONSIDER

Small Business Loans

When applying for a small business loan, you should use a bank and representative that you already have a relationship with, if possible. You’ll get a more personalized experience and they may be more inclined to want to help your business grow. 

If your business is very new, it’s possible that you’ll be asked to provide a personal guarantee when applying for a loan. This means you’ll have to put forth collateral, such as your home, as a way to promise that if for any reason your business can’t fulfill repayment, lenders will still get their money. In this case, you are putting your personal credit score at risk, so it’s even more important to manage your business’ debt well. Even with collateral, a bank may reject a business that has been in operation for less than two or three years.

SBA Loans 

Low interest rates and payback timelines of up to 30 years make Small Business Administration (SBA) loans a good option for most borrowers, but Kolb warns that they aren’t ideal if you need funding quickly. The approval process involves lots of paperwork, and several months could pass before you see any money. It’s also worth noting that collateral is required for loans greater than $250,000. The SBA’s 7(a) loan program also helps business owners with “acquiring, refinancing, or improving real estate and buildings”. 

Microloans

Microloans from community development financial institutions, or CDFIs, are great if you’re borrowing under $50,000. They’re also very small business-focused, with alternative financing options and the potential for low interest, if not interest free, repayment. Start your search with the U.S. Department of the Treasury’s database of CDFIs. 


CDFIs can also be helpful if your business is considered too high risk for other loan options. But Kolb advised that if you’re getting feedback that your business is high risk, try to understand why. Is it just that you work in a risky industry, or is there something unstable within your operation? Try to correct or lower that risk, if you can. 

Founders can also turn to nonprofit microlenders. Kolb specifically highlighted Kiva, a global nonprofit that provides crowdfunded, interest-free loans. 

Lines of Credit

Apply for lines of credit, like credit cards, when your business is doing well and the net profit is high to increase the likelihood of being given a high credit limit. You want to acquire a line of credit before you need it, and use the money like an emergency fund. Take what you need when you need it, but pay it back right away. You should also consider the perks offered when considering a business credit card. Many cards offer cash back, points toward discounted travel, no annual fees, etc. Choose the card that most aligns with your needs. 

Commercial Real Estate Loans

As the name indicates, these loans are for purchasing, refinancing or renovating the physical location of your business. Banks, online lenders like iBusiness Funding and credit unions provide these loans. 

Equipment or Inventory Financing

If you need a major piece of machinery for your business, you may be able to get financing through the seller. The financing is usually available as a short-term loan or revolving line of credit.

GETTING YOUR PAPERWORK IN ORDER.

To apply for debt financing, you will need:

PREDATORY LENDERS: DEBT PRODUCTS TO AVOID.

There are many ways in which debt can help your small business, but it’s important to be cautious of predatory lenders and scams that want to take advantage of your vulnerability. Women and people of color are the most common victims of these schemes. Classic markers for predatory lending include high interest rates, excessive fees, and unrealistic terms and conditions. 

Invoice factoring and invoice financing appear helpful if you need money, but your clients are taking longer than expected to fulfill their invoices. Invoice factoring, or selling an invoice to a third party lender, can be bad because that company keeps a share of the repayment. This means you’ll never be made whole for the original amount you were owed. This can also be an unfavorable option because your clients are aware that they now have to complete their invoice with this third party instead of you. With invoice financing, a third party lender will give you money for outstanding invoices, but they take their repayment (plus interest) directly from your revenue instead of the client. 

Payback for revenue based loans is calculated based on your estimation of how much revenue you think you’ll acquire within a set period of time. Shopify Capital loans are an example. These lenders take their money directly from your gross revenue and on their own terms/schedule, regardless of your expenses or other financial obligations. These can be tricky because if you haven’t budgeted properly, you could be left without enough capital to run your day-to-day operations. 

Short-term or weekly loans offer you money quickly with low interest rates at the start, but that rate can skyrocket as it compounds over time. 

In general, it’s good practice to have a lawyer or CPA read over the fine print in loan agreements to ensure you’re not signing up for variable interest rates or hidden origination fees. Don’t be influenced to agree to anything before you’ve done your due diligence. 

YOU’VE HIT A ROUGH PATCH AND PAYMENTS ARE DUE. 

Sometimes we make mistakes or circumstances outside of our control leave us in precarious financial situations. No need to panic. There are strategies you can utilize to pay down your debt and protect your credit score. 

If you have a loan through a bank, try to renegotiate the terms. This is where working with a bank or representative that you have a rapport with can be useful. Have a conversation with them about the state of your finances and what you can reasonably afford to repay. In terms of credit cards, at least pay the minimum. And don’t be embarrassed. The banks want you to be successful, and they’ll work with you. 

You should also take a look at where you can course correct in-house. Evaluate repayment terms with your own customers and circle back with them to collect on debts they may owe you. 

Considering what expenses you can reduce, such as unnecessary subscriptions or unused software can also free up funds. 

Kolb recommended paying off lower debt balances first and then using that payment amount against the next lowest balance, as opposed to chipping away at larger balances. You’ll gain a sense of accomplishment and organization because then you know which cards have been cleared. But it’s important not to start reusing a card that you’ve paid off. Don’t close out the account, but stay focused on repayment first. 

Debt forgiveness plans can also be a good tool when you’re struggling to pull your business out of a hole. They can temporarily affect your business’ credit score, but you can rebuild over time. Bankruptcy is also an option, but take a close look at how intermingled your personal credit and business credit may be. If you’ve been vigilant about keeping your personal and business separate, then feel free to move forward, but any overlap could drag down your personal credit score as well. “If you can work through some kind of a renegotiation, consolidation or debt forgiveness and get yourself out [of debt] without filing bankruptcy, that’s great,” said Kolb. 

Although a substantial amount of research has examined the link between money and happiness, far less has examined the link between time and happiness. In spite of the belief that money is the resource most central to American’s pursuit of happiness, increased happiness requires attention to time.

Drawing from their research and that of others, professors Jennifer Aaker, Melanie Rudd, and Cassie Mogilner extracted five time-spending principles:

1. Spend time with the right people.

The greatest happiness levels are associated with spending time with people we like. Socially connecting activities—such as spending time with good friends and family—are responsible for the happiest parts of the day. However, work is also an essential element in the time-happiness relationship. Although spending time with bosses and coworkers tends to be associated with some of the lowest degrees of happiness, two predictors of people’s general happiness are whether they have a “best friend” at work and whether they like their boss. And studies show that as the quality of workplace friendships increase, so does workplace happiness and productivity (Rath & Harter, 2010). Greater attention, therefore, needs to be paid to how such workplace relationships form and grow. Consider the question: is there a way to reframe relationships and workplace goals such that colleagues become friends and time spent at work becomes more rewarding?

2. Spend time on the right activities.

Certain activities are energizing, and others make us feel drained and defeated. To increase happiness, people often argue that you should avoid spending time on the latter activities in favor of the former whenever possible. Yet, that strategy is often impossible – indeed, bills have to be paid, the bathroom cleaned, and it’s sometimes a challenge to get through the day. What may be more useful is to reflect on how you are spending your time. For example, sequencing your schedule so that the draining activities are first in the day or partnered with energizing activities may in fact be more useful. Further, research shows that helping others makes people happy. Unfortunately, people tend to “under-help”—probably because the idea of helping others as a way to achieve happiness is not salient, whereas the pressing, logistical concerns of one’s daily schedule are hard to not think about. Considering how you could spend your time helping others is associated with more lasting happiness.

3. Enjoy experiences without spending time actually doing them.

Research in the field of neuroscience has shown that the part of the brain responsible for feeling pleasure—the mesolimbic dopamine system—can be activated when merely thinking about something pleasurable, such as driving a favorite type of sports car or drinking a favorite brand of beer. In fact, research shows that people sometimes enjoy anticipating an activity more than actually doing it (Loewenstein, 1987). For example, reading guidebooks in advance of a big vacation and anticipating the food you’ll eat and the activities you’ll do while there could actually give you more pleasure than the vacation itself. In short, research suggests that we can be just as well—if not sometimes better off— if we imagine experiences without having them.  So to increase happiness, spend plenty of time happily daydreaming.

4. Expand your time.

Unlike money, time is inherently scarce. No one gets more than 24 hours per day. In fact, there is a bidirectional relationship between time’s scarcity and its value. Not only does having little time make it feel more valuable — but when time is more valuable, it is perceived as more scarce. Feeling like you are in a “time famine” — the sense that you have way too much to do and way too little time to do it — has been shown to disrupt sleep, to sap self-discipline and undermines healthy behaviors. However, research shows that something as simple as feeling awe can make you feel more “time affluent”, or rich in time (Rudd, Vohs and Aaker 2012). Further, those who feel they have more available time are less impatient, more willing to volunteer their time to help others; and behave in less materialistic ways. In fact, overall, awe-inspired volunteers were more satisfied with their lives. Take a moment to discover what brings you awe in the day to day.

5. Be aware that happiness changes over time.

As we age, we experience different levels of happiness and how we experience happiness changes. For example, research shows that younger people are more likely to experience happiness as excitement, whereas older individuals are more likely to experience happiness as feeling peaceful (Mogilner, Kamvar and Aaker 2010). Therefore, be aware that basing future decisions on your current perceptions of happiness may not lead to happiness in the long run. Finally, although the meaning of happiness may change, it does so in predictable patterns. So, when designing your career (and perhaps even your life), incorporate flexibility into your expectations, daily plans, and life plan, and ask yourself to what degree you will be able to accommodate the shifts in what happiness means to you.

Dost thou love life? Then do not squander time, for that’s the stuff life is made of.

Benjamin Franklin

In closing, guiding many of our choices is often the question, “What would make me happy?” Yet research has shown that people’s intuitions about what will bring them a feeling of happiness in the moment are often misaligned with what brings lasting happiness, mainly well-being.

Read the original study here.

Opening your business to global trade has the potential to dramatically shift your business. Small businesses can start importing even at the early stages, and it doesn’t have to be overwhelming. 

Caitlin Murphy is the founder and CEO of Global Gateway Logistics, a freight forwarding company that has over 9,500 forwarding partners in 194 countries. The 2019 Tory Burch Fellow joined our webinar series to share her expertise on how business owners can expand their reach internationally through strategic and informed importing and exporting practices.  

HOW DO IMPORTING AND EXPORTING WORK?

There are four major steps to each of these operations that business owners should know:

Importing

Whether you make a product in a factory overseas or you’re importing a finished product for sale in your area, the steps are mostly the same. After you’ve completed your purchase, you’ll 

1) make sure you’ve received all paperwork and product details from the seller;

2) determine shipping costs, responsibilities, and transit time;

3) confirm the cargo has been picked up and sent on its way by the freight forwarder 

4) handle any customs costs after delivery.

Exporting

When exporting, you’ll 

1) prepare and package your product for transit,

2) work with a freight forwarder to determine the best shipping rate, method and transit timeline

3) schedule a time for the freight forwarder to pick up your product so they can transfer it to the main export port; 

4) communicate with your buyer as the package clears customs and heads to their door. 

While this general overview can help business owners understand the process, knowing how to select and work with a freight forwarder, or forwarding agent, may be the most important part in importing or exporting goods. 

WHAT IS A FREIGHT FORWARDER? 

The freight forwarder acts as the middle man between the business owner and the many moving parts of importing and exporting. While they do not actually move goods, freight forwarders work with the companies that do, like the ones that own the ships or trucks. Freight forwarders help business owners decide how best to transport items according to their needs, help them find the best prices and timelines and navigate complex systems like international banking regulations. Freight forwarders often store and warehouse goods before they reach their final destination on their way to their final destination.

Murphy detailed a few must-haves when choosing a freight forwarding service. Make sure they include all costs upfront and don’t hide fees. She recommended finding a partner that offers 24/7 service or one that will assign you a dedicated contact available no matter what time or time zone a potential shipping crisis occurs. Murphy explained that freight forwarders offer  freight insurance based on the valuation of the cargo. She also said it’s OK to have more than one freight forwarder to service the variety of goods you’re transporting.

Freight Forwarder vs. Carrier

Selecting the right carrier is just as important as selecting the right freight forwarder. While freight forwarders manage the logistics of your shipments, they’re not actually the ones transporting your goods. Carriers, such as FedEx, DHL and UPS, will take a shipment from points A to B via air, sea, rail, or road, depending on what best fits your budget and delivery commitments. Murphy noted that these carriers also offer full freight forwarding services for businesses. You can fill out the necessary documents on their website, and they’ll take it from there, even handling customs. 

Imagine you’ve purchased a set of wine glasses for your store, from a glassblower in France. That business owner could partner with a freight forwarding service to sort the documents and logistics needed to ship your glasses to your warehouse in the U.S. The forwarder may choose an air freight carrier, arrange for your shipment to be moved by truck to the airport in France, and coordinate the delivery from your local airport to the warehouse, where you can now ship them to your customers who place an order with you.

INCOTERMS SET THE TONE

Incoterms are 11 terms set by the International Chamber of Commerce for use in contracts, purchase orders, and quotations for business-to-business sales and purchases of tangible goods. Overall, Incoterms reduce the likelihood of misunderstandings between buyer and seller. Murphy used the global online marketplace Alibaba as an example. You might notice a three-letter code in their purchase order that dictates Alibaba’s responsibilities to help inform your buying experience. “It’s going to dictate, along that process of trade, … what the buyer is responsible for in terms of the insurance or the risk, and what they are responsible for with transportation, both the service and the cost,” Murphy said. 

Customs brokers are experts on commodities and can be a great resource when determining which Incoterm is best for your shipment. A customs broker can be a private individual, partnership, corporation, or association that assists with meeting federal requirements by submitting necessary payments and information to the U.S. Customs and Border Protection (CBP) on behalf of its client. They are licensed and regulated by CBP. Some logistics companies can act as both a freight forwarder and a customs broker.

In a contract, you can find the Incoterms listed under terms of delivery, shipping method, terms of sale, or even in a field specifically dedicated to Incoterms. Whether you’re the buyer or the seller, always double check that it’s included. 

Murphy highlighted some of the most common Incoterms you may encounter: 

PREPARING TO IMPORT

When importing goods, you’ll want to know as much about the seller as possible. Do your research to assess what risks you might be incurring: purchasing risks, risks importing from one country to another, risks of partnering with a particular brand or service, etc. Dun & Bradstreet credit checks and vendor ratings are your best friends. If you need additional financing for the purchase, are there investors or managers you need to consult? Murphy pointed attendees to the International Trade Association’s resources on due diligence as a guide. 

PREPARING TO EXPORT

A good place to start when creating a plan for exporting is to learn about the demand for your product overseas and who your potential competitors are. You’ll also want an idea of what registration, licensing, and fees are required. Our Beginners’ Guide to Exports can help you get started with getting your product overseas. 

Once you’ve done your research and have a plan in place, the next steps on your import or export checklist are very similar. 

GET YOUR DOCUMENTS IN ORDER

To import or export, you’ll need a commercial invoice, a packing list, a certificate of origin, bills of lading, and any applicable certificates depending on the commodity. An example certificate might be FDA approval for medical devices or face masks. Some beauty products may require similar clearance.

The Harmonized Tariff Schedule is a 10-digit number that’s listed on every commodity. It helps customs brokers assign duty rates and track patterns of goods being shipped. The U.S. International Trade Commission has online tools and resources you can reference. 

All freight forwarders will provide businesses with a shipping quotation, a document that outlines all the costs associated with the shipment, details about pickup and delivery and the mode of transportation. For imports, you’ll send freight forwarders a packing list and specifically denote delivery due dates so that they choose a mode of transportation that best fits your needs. For exports, a Shipper’s Letter of Instruction, organized via Excel spreadsheet or Word document, will be the one-stop-shop for every detail related to your shipment. 

When exporting your products, you should also provide tracking information to the recipients, any necessary documents and always follow up to ensure the products were delivered in good condition. There are deadlines for declaring damage that could take place in transit, and you should be informed about what your options are. 

Murphy provided an expert overview of international import and export processes, but so much of what you encounter as a founder will be subjective to what you’re shipping or ordering and which countries you’re partnering with. She stressed that no business owner’s question is too small or silly to bring to their freight forwarder. Additionally, Murphy encouraged founders selecting a freight forwarder to inquire about what other services they offer. They might have training programs or other resources that could help equip you and your company for your next big step. 

According to the National Small Business Association, 59% of small business owners say that federal taxes are one of the most significant burdens on their business. And a study by SCORE, the Service Corps of Retired Executives, found that 60% of small businesses miss out on significant tax deductions and credits. 

Tax season isn’t just a few months out of a CEO’s year; You should be focused on how to manage your business taxes along every step of your journey as an entrepreneur, explains CPA Ramona Cedeño, founder and CEO of small business accounting firm FiBrick. She returned to our webinar series to share 10 tax strategies to reduce small business taxes by taking advantage of all the credits and deductions that are available. 


It’s important to note that these tax planning strategies are meant to be guidance, not advice. You should consult a tax advisor and conduct your own research before making decisions.

1. OPTIMIZE ENTITY SETUP.

The business structure you choose will dictate your company’s tax needs and guidelines. “It’s important that you consider the long term vision for the business and for you in conjunction with what is the best structure from a tax perspective,” Cedeño said. What are your goals, and which structure will best serve those goals? For example, although a C-corporation is considered a “double taxation entity” — meaning after you pay the 21% flat rate, you may also end up paying again in your personal filing if you’ve taken a distribution from the company — that entity might be preferable if you plan to scale your business with fundraising from investors in exchange for equity.

Another consideration is that each structure has distinct tax reporting requirements. In an S-corporation, you would have to be on payroll as the owner and pay taxes on that income. On the other hand, you do not have to be on payroll for your LLC; you would file taxes for your LLC with your personal tax return, with profits or losses listed on a Schedule C form. 

2. MASTER FINANCIAL ORGANIZATION

“Everything that happens in your business, from a financial and even operational perspective, at the end of the day, impacts your profits or your loss, and it impacts your taxes,” Cedeño said. It’s critical to maintain complete and accurate financials records to get a clear view into how your business is doing. 

Consider getting accounting software, such as QuickBooks and Xero, which makes it easy to generate a balance sheet. Income statements keep up with revenue and expenses, but balance sheets will be able to tell you how much cash you have available, how much of that is loans, and track what financial contributions you’ve personally made to the business. If you’re hesitant to purchase bookkeeping software, Cedeño advised that while she doesn’t prefer tracking expenses in Microsoft Excel, she believes it can be an effective tool for businesses with a low volume of transactions. 

No matter how you choose to keep track of your finances, consistency is key. She recommended reconciling all bank accounts on a monthly basis. 

3. SEPARATE PERSONAL AND BUSINESS FINANCES

Do yourself a favor and set up separate bank accounts for your personal and business finances from day one. You don’t want any confusion or gray areas. If audited, having personal expenses mixed in with your business expenses could result in rejected deductions and penalty payments for any past deductions you weren’t entitled to. If you do need to pad your business account with personal funds, always do so with an official bank transfer and record it as a contribution or a loan in your balance sheet. 

4. UNDERSTAND DEDUCTIONS AND CREDITS

The Internal Revenue Service defines business expenses that can be deducted from your tax filing as those that are ordinary and necessary for the course of business. Common deductions include rent for office space, marketing expenses, insurance, payroll, and subscriptions. Cedeño also spoke to the fact that while a Research and Development tax credit, or R&D, is popular with businesses in the tech space, it is not exclusive to that industry. Your business might qualify for an R&D credit for research and development expenses while creating a new process, manufacturing your product, or enhancing a business entity that already exists. You’ll have to hire an external tax agency to assess whether you qualify for the credit and assign an appropriate dollar amount.

Lesser-known Deductions and Credits

Cedeño also walked through a series of less common, but equally important business deductions:

Startup Costs: When you haven’t launched your business yet, but you’re spending a lot of money getting all of your ducks in a row, startup costs can be deducted. Consult an accountant or other tax advisor to ensure your expenses meet requirements and follow IRS guidelines. 

Pension Plan Startup Costs: If you set up a pension plan for employees, pension plan startup costs are eligible for deduction over the first few years of that plan.  

Bad debt: A bad debt deduction is available, but it’s important to understand whether your debts qualify. If your business is on a cash basis — you only report cash received when it’s deposited in your bank account and you record expenses when you pay them — you don’t qualify for bad debt because the revenue related to a defaulted payment by a customer or client wasn’t included in your income. But, if your business is on an accrual basis, the revenue would have been recorded in prior months and you’re eligible for this deduction. Learn more about how the IRS defines bad debt deductions.

Charitable Contributions: In most cases, charitable contributions will be addressed in your personal tax return, but if you’re making them through your business, make sure they are included in your profit and loss statement. Flag this your tax advisor as they prepare your return, and they’ll determine how they should be reported.

Electric Vehicle Tax Credit. If your business requires that you purchase a car, you might be eligible for an electric vehicle tax credit. There are income limitations, so make sure you do your research before making a purchase. 

Documentation and compliance is crucial for all deductions and credits that you claim. You don’t have to keep a record of every little transaction, but you should know and defer to whatever the IRS threshold is for your business structure. It’s also a good idea to keep notes of the business needs for expenses to reference later. 

5. STAY UPDATED ON CHANGES TO TAX LAWS

It’s good practice to regularly consult tax professionals and conduct your own research to stay up-to-date on temporary and long term changes to tax laws. Cedeño used the example of businesses being allowed to deduct 100% of meal expenses during the COVID-19 pandemic to support local restaurants, but that credit expired after 2 years. If you aren’t keeping up with changes in legislation, you could miss deductions or set yourself up for penalty fees. 

6. MAXIMIZE RETIREMENT CONTRIBUTIONS

Any contribution you can make toward your retirement is great (the more you can contribute, the better), but as a business owner, it’s important to think about which retirement savings plan will best serve your tax strategy, your goals, and the goals of your employees. 

With a Simplified Employee Pension, or SEP, the employer makes 100% of the retirement contribution. Some exclusions or parameters on the amount could be implemented based on factors such as employee tenure, but business leaders should make those decisions with a financial advisor. 

A 401(k) plan requires a retirement contribution from the employee through payroll withholdings, but the employer matches that contribution. If you are your only employee, you may be able to contribute to your 401(k) in both capacities. 

The IRS says that a Savings Incentive Match Plan for Employees (SIMPLE) IRA may be best for small businesses because it doesn’t require the usual start-up and operating costs of a conventional retirement plan.

Each option has its respective contribution requirements, but a business can seek a deduction for contributions it makes to employees’ retirement plans and reduce its net income. 

7. IMPLEMENT TAX-EFFICIENT COMPENSATION STRATEGIES

Incentives such as stock options for employees or investors, depending on your entity structure, would be considered deferred compensation and could be an eligible tax deduction for your business. 

As mentioned earlier, as the owner of an S-Ccrp, you would be required to pay yourself a “reasonable” salary based on the IRS guidelines. You can optimize the tax efficiency by adjusting that salary based on your business’ financial makeup as it changes and future investment goals. 

8. UNDERSTAND IMPACT OF BUSINESS ON PERSONAL TAXES

Knowing how the net income of your business flows through your personal return will give you insight into your personal taxable income and which tax bracket you fall into. But you have more control here than you might think. By accelerating reinvestments into your business, you can lower both your business and personal net incomes. For example, let’s say your company’s expected net income for the year is $100,000, but you want to lower that to $75,000. You reinvest $25,000 in business expenses that otherwise could have waited until the following year. However, Cedeño warned that this is another situation where consulting a tax professional is crucial. In lowering one year’s net income, you could increase the next. Careful budgeting and analysis is key. 

Also, if you’re registered as an S-corp, estimating your personal tax liability will require you to take into account for your own salary along with income from the business. 

9. PLAN FOR ESTIMATED TAX PAYMENTS

If you don’t pay your estimated taxes throughout the year, you will incur penalties for underpayment. It’s important to budget for what you estimate your quarterly tax payments will be.

You also need to be aware of how taxes are expected to be paid based on the requirements of your business entity. In some cases, a business’ taxes are paid directly to the IRS. In other cases, the business’ taxes are routed through the owner’s personal tax return. And there may be state taxes that need to be paid directly, regardless of the business’ federal classification. 

10. DEFER INCOME AND ACCELERATE EXPENSE

Businesses that operate on a cash basis have the option to delay collecting income from their customers during the last month of the year, which lowers that year’s net income and raises the income of the following year. Always consult a financial professional to make sure any changes that you make to your business’ income, within the tax laws, are aligned with personal and professional financial goals. 

While it’s helpful for entrepreneurs to be familiar with these strategies and abreast of changing tax laws, having experts integrated into your team is a worthy investment. Cedeño recommended seeking out a tax advisor or tax planner as well as an accounting firm. If cost is a concern, consider hiring a freelancer who can maintain your bookkeeping under the guidance of your tax advisor. A fractional, or part-time, CFO can also be beneficial as your business grows. 

There have been numerous studies conducted by leading research institutions exploring the perception of ‘ambitious women’. These studies show that culturally, ambition is often lauded in men and criticized in women. In fact, women are so astutely aware of this bias that they go to great lengths to hide their ambitions and drive, particularly when interacting with men.

Read the studies about ambition:

  1. Howard versus Heidi; Columbia University’s study on the negative connotations that surround successful women.
  2. The price of seeking power – a look into the backlash female politicians face.
  3. Women lack ambition. Myth or fallacy?
  4. Single women act less ambitious around men.

Many entrepreneurs start their companies because they have a great idea that addresses a problem. But without a plan, the spark will go out. Data, namely the information that comes from sales and customer interactions, should be a major part of your planning. The tools you use in your business, like your email service provider or ecommerce platform, automatically give you so much information in the form of graphs, it can be hard to truly understand what matters to your company. Innovation and product expert Dasanj Aberdeen led a webinar designed to help take the intimidation out of data, so founders can hone in on what matters before creating new strategies. 

Data-driven decisions vs. data-informed decisions

A data-driven founder looks at data points and uses those numbers or facts as the primary basis for making a decision about their business. But this approach can sometimes mean ignoring other critical parts of a business or industry. Aberdeen explained it is better to be data informed. “This approach means that in addition to what the numbers and hard data [are] telling you, you’re taking other things into consideration,” she said. “So, things such as your user research, your own personal experience, what you know is going to work for your business and what has worked for your business before. And even your personal insights as well.” For example, your decision making process should take into account customer survey responses as well as your observations about how they interact with products. A data-informed approach also takes into account multiple stakeholders and your future plans. 

Set your sights, or KPIs.

What does success mean for your business or product? Having a few answers to that question can help you determine your key performance indicators (KPIs), which will tell you whether you’re on track. Aberdeen recommends matching a KPI to a specific question to keep the data rooted in your business’ goals. For example, a founder may want to know, do customers like my app? The average time spent on an app gives you a better idea of customer sentiment than just the number of downloads. 

A company’s KPIs will vary by industry, product or business model, but all business owners should watch their annual revenue, which products or services get the most sales and which ones bring in the most revenue.

Your success metrics will change as your business changes.

When choosing your KPIs, it’s important to remember that the data you pay the most attention to when you launch your business may not be the same ones that you focus on as your business grows. 

Launch stage metrics

When you’re just starting out, you want to make sure your product, whether fully designed or just a prototype, solves a customer problem. 

Common questions to ask and data that answers: 

Startup stage metrics

At this stage, you’ve proven your product concept with customer feedback, engagement and perhaps some early sales, but you still need to prove your business’ viability. In other words, you will need to determine if you can continue growing and generating value. To do that, you’ll assess or reassess your business model and customer acquisition tactics. You may start to create marketing campaigns to reach new customers during this stage; your goal is to reach as many new people who then become customers for as little money as possible. 

Common questions to ask and data that answers:

Growth stage metrics

Your primary concerns at this stage are becoming or remaining profitable and expanding the market in order to grow or scale. Remember, growth is a linear increase in revenue compared to resources used, while scale is an exponential increase compared to resources used. Not every company can, or wants, to scale. Expanding the market at this point may mean approaching customers in different geographic areas or who fall into different demographic categories. For example, you may have started out selling toys for elementary school-aged children and now you’re ready to market to middle grade children. 

Some founders, especially in the tech sector, may begin pitching investors at this stage. Use data that explains the scope of the problem you’re solving to show how much potential there is for your business and the cost of getting more customers.

Common questions to ask and data that answers:

Maturity stage metrics

“As you mature, the focus here becomes more around staying profitable,” explained Aberdeen. “So, really make sure that you are stable in your business. You’re not concerned about payroll, you’re not concerned about some of the day-to-day expenses that you’ll have in terms of just the cost and operating your business.” She noted that the common key performance indicators in the growth and maturity stages can often overlap, and may inform one another. 

An important part of profitability is customer retention, since it’s always more expensive to convert a new customer than it is to retain an existing one.

Common questions to ask and metrics that answer:

Manage the information. 

The good news is that tools you’re already using, like your point of sale system or your accounting software, are already collecting and analyzing a lot of this information for you. They may even be able to create projections to help you envision your company’s future. Aberdeen also likes dashboard programs like Geckoboard to show your KPIs in a single place. If you’re just starting out and want to keep things relatively low-tech, you could even use Excel for tracking and analyzing your data.

If you’re considering enlisting outside help with some of this analysis, make sure you’re still engaged with the information and know how you’re defining success. “It’s important as a founder to be close to the data,” Aberdeen stressed. You want to understand the real value of the information a consultant pulls for you and how it relates to your place in the market. She recommends “spending upfront time with whoever you may be bringing on to help support you, understanding the build, and maybe directing the build so that you truly get what you want.”