Your Video Guide to an IRS Audit
Posted on 14/10/202014/10/2020Categories Tax Leave a comment on Your Video Guide to an IRS AuditYour Video Guide to an IRS Audit
Accountants, Tax & AHCA Consultants
Since 1983 – 786-250-4450
Your Video Guide to an IRS Audit
10 Tips to Getting Publicity for your Business
You don’t need a degree in public relations to effectively publicize business to the press. And you don’t need a huge marketing budget either. What you do need is a clear understanding of how to reach reporters and what they’re looking for. These 10 tips will get you started.
1. Know what makes you newsworthy. This differs for each media outlet. If you own a restaurant, the town newspaper might be interested in your grand opening. An industry magazine might be interested in your chef’s unusual management style. A “green” publication might write about your commitment to the environment.
2. Join a free press release distribution site. Sign up with sites like PR.com (www.pr.com), PRLog.org (www.prlog.org) or Free Press Release.com (www.free-press-release.com) to distribute your press releases to search engines for free. Most also provide guidelines for writing a good release.
3. Make your website media-friendly. Create a pressroom or media area with links to past publicity, and an “About Us” section highlighting your mission and key employees. Make it easy for the press to contact you—you’d be surprised how many sites don’t.
4. Go where the reporters are. At ProfNet (https://profnet.prnewswire.com) and Help a Reporter Out (www.helpareporter.com), members of the media post queries seeking sources for articles. Use both sites to open your business to a world of publicity opportunities.
5. Know your target. Before pitching a media outlet, be familiar with the website or publication. Know what topics the reporter covers (his or her “beat”) and what angles he or she is likely to be interested in. This helps you tailor your pitch to the person’s needs.
6. Become a resource. When you see information that might help a reporter—such as industry statistics or a local trend—pass it on. If you’re helpful on a regular basis, you’ll be top-of-mind when the reporter needs a source.
7. “Sell” your pitch. Most press releases today are sent by email, and reporters get hundreds of emails a day. Break through the clutter with a subject line clearly conveying the benefit to the reporter and why your news should interest him or her.
8. Offer an exclusive. If you have a ground-breaking product or service, or really want your company mentioned in a particular media outlet, offer an exclusive. Giving an influential reporter the first chance to publicize your news can create more incentive to write about you.
9. Network. It’s easy to find out reporters’ beats and what they’re interested in. Get active on social networking sites such as LinkedIn and Twitter to connect with members of the media and see what they’re working on.
10. Don’t forget bloggers. PR once meant targeting print publications or TV shows, but bloggers have become equally important. Many bloggers post multiple times a day, so they’re hungry for news. Read their blogs, post comments and cultivate them as carefully as you would any other member of the media. You can find the bloggers that cover your industry at the blog directory on Technorati.com or at accountant.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
Should You Buy a Hot Franchise?
In theory, buying the hottest franchise around makes a lot of sense; there’s probably some serious buzz about the franchise, which means that lots of potential customers know about it.
Can you imagine opening up a franchise in a market that already has customers waiting patiently for your arrival? That would be fantastic!
Once in awhile, things happen like that. More often than not, they don’t. Of course, it depends on the type of franchise you’re buying; if you’re buying a home-based consulting type of franchise, it’s not like you’ll be having a huge Grand Opening celebration. You’ll have to market the heck out of your arrival on the local scene.
A food-related or retail franchise is a different story, however. I’ve been to many *new franchise business Grand Openings, and they’re really exciting. The town’s Mayor (or an aide) is usually in attendance, along with other local dignitaries. There’s a formal ribbon-cutting ceremony, along with food and drink. It’s a memorable time, especially for the new franchisee.
Now, let’s talk about a little business reality for a moment. I’ll use the stock market as an example.
Did you ever receive a stock tip from one of your friends, or family members? Do you remember that surge of adrenalin that shot through your system moments after you received the details? Did you go out and buy that “hot” stock? If so, how did it end up doing?
If you’re a rather lucky individual, maybe the stock did really well. Congratulations! But, if you’re like most of us, it didn’t. Do you know why?
The reason it didn’t do well has to do with timing; you invested in the stock way too late. It probably was a “hot” stock at one time. (Like when your friend purchased it, for instance) The problem was that by the time you heard about it, it was already starting to cool off. The same thing can happen with a “hot” franchise business opportunity.
Just about every time I do a presentation on franchise ownership, someone asks me this question;
“Gus, what’s hot now?” The folks who ask that question dislike my answer, immensely.
“The hottest franchise for you is the one that fits what you want in a business. It’s also the one that will fit into your budget (with room to spare), align nicely with your personality traits, job skills, and geographic location,” I exclaim.
(At this point in the conversation, I usually get a strange look, or if it’s my lucky day, someone will roll their eyes at me.)
Here’s the bottom line; what goes up, must come down. Hot gets cold. Try to find opportunities that can do well year-round. Look for franchises that can serve a large audience. Find opportunities that make sense for your personal situation, and for the area in which you live. A franchise that allows you to use your unique personality traits and professional skills can turn into a hot franchise.
As a matter of fact, it is kind of up to you to make the franchise business that you end up choosing, hot.
Now, go find it.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
IRS Has $164.6M in Refunds Waiting to Be Claimed
A total of 111,893 taxpayers are due one or more refund checks that could not be delivered because of mailing address errors.
A taxpayer only needs to update his or her address once for the IRS to send out all checks due. Undelivered refund checks average $1,471 this year, compared to $1,148 last year
The average dollar amount for returned refunds rose by just over 28 percent this year, possibly due to recent changes in tax law which introduced new credits or expanded existing credits, such as the Earned Income Tax Credit.
If a refund check is returned to the IRS as undelivered, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. The tool also enables taxpayers to check the status of their refunds. A taxpayer must submit his or her Social Security number, filing status and amount of refund shown on their 2009 return. The tool will provide the status of their refund and, in some cases, instructions on how to resolve delivery problems.
Taxpayers checking on a refund over the phone will receive instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.
While only a small percentage of checks mailed out by the IRS are returned as undelivered, taxpayers can put an end to lost, stolen or undelivered checks by choosing direct deposit when they file either paper or electronic returns. Taxpayers can receive refunds directly into their bank, split a tax refund into two or three financial accounts or even buy a savings bond.
The IRS also recommends that taxpayers file their tax returns electronically, because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
10 iPad Apps Everyone Should Have
Dazzling design aside, the iPad owes its remarkable success chiefly to the vast and varied library of applications it runs. Competitors like the Galaxy Tab fall short because they don’t have an app library to match it. For the time being, HP’s Slate is relying Windows 7 massive number of apps, but that only matter to business users. For the average consumer, the AppStore is the only game in town.
I had just a couple of requirements for this list. The apps had to have wide appeal among average users. Sketch for the iPad is certainly a killer app, but if your artistic abilities are like mine–the word “limited” comes to mind–it is useless to you. Likewise, the Bloomberg iPad App is the best way to track your investments, but after a year with unemployment at 10%, precious few of us have those anymore. When I say these apps are essential for every man, woman and child, I mean it. And if you think you don’t need to download Angry Birds, you’ve never played it.
Of course, you are probably going to download and install a LOT more than this, so just consider these apps a great first start. Click on the image below to start the slideshow and get all 10 of my picks.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
Obama and Republicans Talk of Tax Negotiation
President Obama and congressional Republicans are laying out their positions more openly on the fate of the expiring Bush tax cuts as they prepare for negotiations later this month.
In an interview with CBS’s “60 Minutes” on Sunday evening, Obama told correspondent Steve Kroft about his wish to limit the extension of the tax cuts for those making above $250,000 a year.
“I understand the Republicans have a different view,” he said. “And so, we are going to have to have a negotiation. And I am open to finding a way in which they can meet their principles and I can meet mine. But in order to do that, I think we do have to answer the question of how we pay for it. If in fact we’re going to extend these tax cuts, then we’ve got to figure out what does that mean for our debt and our deficit. Because there’s no getting around it. It’s going to cost $700 billion to extend those over 10 years.”
Kroft asked Obama if he would be open to a suggestion from House Minority Leader John Boehner, R-Ohio, who is expected to take over as Speaker of the House in January. Boehner wants to extend the current rates for another two years and roll back discretionary government spending to 2008 levels.
“I think that when we start getting specific like that, there’s a basis for a conversation,” said Obama. “I think that what that means is that, we can look at what the budget projections are. We can think about what the economy needs right now, given that it’s still weak. And hopefully, we can agree on a set of facts that leads to a compromise. But my number one priority coming into this is making sure that middle-class families don’t see their tax rates go up January 1.”
Obama pointed out that under his proposal, those making over $250,000 a year would not see their taxes return to the rates under the Clinton administration. Only the amount above $250,000 would be taxed at those rates, so for a couple making $300,000 a year, the majority of their income would still be taxed at the current rates.
Obama also noted that he wants to extend tax breaks for businesses as well as individuals, particularly for research and development.
“It’s not, by the way, just tax cuts for individuals that we’re concerned about,” he said. “There are also a bunch of provisions for businesses in terms of how business investment is treated. If they’re investing in research and development here in the United States and what kind of tax breaks do they get on that, we need to provide businesses certainty on that. We’ve got to do that before the end of the year, and my hope and expectation is that we can solve this problem.”
Unlike Boehner, House Republican Whip Eric Cantor, R-Va., who is expected to become House Majority Leader in January, opposes “decoupling” tax cut extensions for upper-income taxpayers for just two years, while the tax rates remain permanently at the current rates for the middle class.
“I am not for decoupling the rates,” he told “Fox News Sunday.” “Because all that says to people looking to go back in and put capital to work and invest to create jobs is you’re going to get taxed on any return that you can expect.”
However, Senate Minority Leader Mitch McConnell, R-Ken., indicated a willingness to at least negotiate with Obama, even though he believes the tax cuts should remain permanent for both middle-class and upper-income tax payers. “We’re happy to talk to the president about that and all the other issues that he has on his mind,” he said on CBS’s “Face the Nation” on Sunday. “But our view is, don’t raise taxes on small business. We would rather not do it at any time. In fact, I’ve introduced the only bill that would make the current tax rates permanent.”
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
10 Tips for Turning around Flagging Sales and Boosting your Small Business Revenues
If your sales are struggling and revenues are falling, it’s essential to conduct a full review of your small business to understand where things have gone wrong and where the opportunity lies for turning things around.
This is, of course, easier said than done when you are living and breathing this stuff each day, but here are some tips that can help you stand back from your day-to-day business and build a plan for a successful turn-around.
1. As the Owner and Manager, It all Starts With You
Be honest, are you running your business as it should be run – holistically, with an eye on strategy and a finger on oversight, but without being buried in the day-to-day minutiae?
This is a toughie, especially if you are new to business or have experienced sudden growth. Running a business is not like having a job, unless you provide a very niche service to a small group of clientele, it’s rare that you can do everything yourself.
If this is you – try to step back and understand where you need help, whether it’s with accounting, marketing, building a better business Web site, or empowering your team, do it, it’s worth the investment. If you can’t afford help in these areas, consider outsourcing certain functions.
2. Embrace, rather than Retreat from Market Forces
Understanding and keeping a finger on the pulse of your industry is fundamental. Ask yourself – has the industry changed, do you still have a full grasp of the market and goals in place to go after that market? What is the competition doing? If they are doing well, take a hard look at what it is that you think your business is doing wrong, in the light of what your competition across town is doing right. Next find a way to re-connect with your target market using those lessons learned – whether it’s diversifying your products or correcting your price points. Embrace, rather than retreat from market forces.
3. Give Your Customers What they Want
One of the hardest parts of running your own business, is giving customers what they want, not what you think they want.
It sounds obvious, but to go back to the basics. Frequently the reason so many restaurants fail is that the restaurateur lacks a clear vision for his market, is not really in tune with his customer needs, and ends up trying too hard to keep everyone happy by offering hundreds of dishes but invariably fails because the restaurant can’t prepare a single dish well.
4. Manage your Inventory
Retail stores and restaurants have to manage inventory. If it doesn’t shift it quickly becomes money ill-spent and dated. Your accountant can offer guidance on finding new and better ways to handle your inventory, including re-stocking, and its impact on cash flow and profitability, reporting inventory for tax purposes, warehousing, and how and when to take inventory.
5. Review your Pricing Policy
Review your cost base (constantly). Do you need to adjust pricing – how will this impact your customer relationships? In reality, a low pricing strategy may increase customer interest but result in lost revenue, while a high pricing strategy may alienate customers.
6. What’s Your Image?
Perceptions are created based on several things – your product, price, your service, ease of doing business with you, your location, merchandising, and of course your marketing (signage, ads, Web site, etc.).
If you have doubts about your image, or want to shake things up a little.
7. Revisit Your Business Plan and Plan Ahead
What were your original goals and how did you plan on getting there? Have market forces changed? Is there a new competitor in town? How is your budget? If it’s going to take a new approach to get where you need to be, make sure you revisit your plan, benchmark your goals, and outline the elements that will help you get there (staffing, new markets, etc.).
8. Manage Cash Flow and Keep Good Records
Do you know where your money is going? Are you budgeting wisely so that you know the interval of your monthly income and outgoings? Cash flow is the lifeblood of your business. If you need to get a grip on your cash flow to help you ride the highs and lows of business call us 786-250-4450
9. Help Your Staff Help You Succeed
There are many ways of building successful teams that deliver exceptional customer service and ultimately help add to the value of your brand and improve sales – from employee incentive programs and empowerment activities, mentoring team members, hiring motivated employees, and more.
10. Get Help
Getting outside help, your accountants can help you objectively assess the state of your business and build an approach for turning it around.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
Despite confusion created by recent and probable year-end tax legislation changes, the 2010 federal income tax environment is still quite favorable.
“We may not be able to say that after 2010; therefore, tax planning actions taken between now and year-end may be more important than ever,” said Gustavo A Viera CPA, managing partner for the Tax & Accounting firm, in a statement. “Be careful, though—Congress could change the ball game before the end of the year.”
Following are seven planning ideas for your clients to consider while there is still time to act before the end of the year.
1. Accelerate Itemized Deductions into this Year. If your Adjusted Gross Income will be more than $170,000 ($85,000 if you are married and file separately) next year, you may want to accelerate into 2010 your state and local tax payments that are due early next year. You may also want to prepay in 2010 some charitable donations that you would normally make in 2011. Why? Because for 2010, the phase-out rule that previously reduced write-offs for the most popular itemized deduction items (including home mortgage interest, state and local taxes, and charitable donations) is gone, but is scheduled to come back in 2011, unless Congress takes action to prevent it, which looks increasingly unlikely.
If the phase-out rule comes back as expected, it will wipe out $3 of affected itemized deductions for every $100 of AGI above the applicable threshold. For 2011, the AGI threshold will probably be around $170,000, or about $85,000 for married individuals who file separate returns. Individuals with very high AGI may have up to 80% of their affected deductions wiped out.
2. Think Twice Before Deferring Income into 2011. This strategy makes sense if you are confident you will be in the same or lower tax bracket next year, but the tax picture for 2011 is blurry. With just weeks left in 2010, the fate of many tax provisions for 2011 and beyond is still unknown. The top two rates have widely been expected to increase in 2011 from the current 33 percent and 35 percent to 36 percent and 39.6 percent, respectively—at least for taxpayers earning $250,000 or more ($200,000 or more if single). Therefore, if you fall into this group, you might want to consider reversing the traditional strategy and accelerating income into 2010 to take advantage of this year’s presumably lower rates. However, legislators could still vote to delay any tax increase to after 2011.
3. Time Your Investment Gains and Losses and Consider Being Bold. As you evaluate investments held in your taxable brokerage firm accounts, consider the impact of selling appreciated securities this year instead of next year. The maximum federal income tax rate on long-term capital gains from 2010 sales is 15 percent. However, that low rate only applies to gains from securities that have been held for at least a year and a day. In 2011, the maximum rate on long-term capital gains is scheduled to increase to 20 percent. That will happen automatically unless Congress takes action, which currently seems unlikely.
To the extent you have capital losses from earlier this year or a capital loss carryover from pre-2010 years (most likely from the 2008 stock market meltdown), selling appreciated securities this year will be tax-free because the losses will shelter your gains. Using capital losses to shelter short-term capital gains is especially helpful because short-term gains will be taxed at your regular rate (which could be as high as 35 percent) if they are left unsheltered.
What if you have some poor performing securities (currently worth less than you paid for them) that you would like to dump? Biting the bullet and selling them this year would trigger capital losses that you can use to shelter capital gains, including high-taxed short-term gains, from other sales this year. If you think your investments that are currently underwater are poised for a comeback, you can buy them back after taking a loss as long as you do not reacquire them within 30 days before or after the sale.
If selling many poor performing securities would cause your capital losses for this year to exceed your capital gains, no problem. You will have a net capital loss for 2010. You can then use that net capital loss to shelter up to $3,000 of this year’s high-taxed ordinary income from salaries, bonuses, self-employment, etc. ($1,500 if you are married and file separately). Any excess net capital loss gets carried forward to next year.
Selling enough poor performing securities to create a big net capital loss that exceeds what you can use this year might turn out to be a good idea. You can carry forward the excess net capital loss to 2011 and beyond and use it to shelter both short-term gains and long-term gains recognized in those years, plus up to $3,000 of ordinary income each year—all of which may well be taxed at higher rates after 2010. This can also give you extra investing flexibility in future years because you will not necessarily have to hold appreciated securities for more than a year to get better tax results.
4. Maximize Contributions to 401(k) Plans. If you have a 401(k) plan at work, you can tell your company how much you want to set aside on a tax-free basis for next year. Contribute as much as you reasonably can, especially if your employer makes matching contributions. You turn down “free money” when you fail to participate to the maximum match.
5. Take Advantage of Flexible Spending Accounts. If your company has heath or child care FSAs, before year-end you must specify how much of your 2011 salary to convert into tax-free plan contributions. You can then take tax-free withdrawals next year to reimburse yourself for out-of-pocket medical and dental expenses and qualifying child care costs (depending on the type of plan). Watch out, though, FSAs are “use-it-or-lose-it” accounts—you do not want to set aside more than what you will likely have in qualifying expenses for the year. And, starting in 2011, over-the-counter drugs (e.g., aspirin and antacids) will no longer qualify for reimbursement by health FSAs, so you may need to consider that when determining your 2011 contribution amount.
If you currently have an FSA, make sure you drain it by incurring eligible expenses before the deadline for this year. Otherwise, you will lose the remaining balance. For health FSAs, it is not difficult to drum up some items such as: new glasses or contacts, dental work you may have been putting off, or prescriptions that can be filled early. Also, for 2010, over-the-counter drugs still apply.
6. Adjust Your Federal Income Tax Withholding. If it looks like you are going to owe income taxes for 2010, consider bumping up the federal income taxes withheld from your paychecks now through the end of the year. When you file your return, you will still have to pay any taxes due less the amount paid in. However, as long as your total tax payments (estimated payments plus withholdings) equal at least 90 percent of your 2010 liability or if smaller, 100 percent of your 2009 liability (110 percent if your 2009 adjusted gross income exceeded $150,000; $75,000 for married individuals who filed separate returns), penalties will be minimized, if not eliminated.
7. Make Energy Efficiency Improvements to Your Home. A great way to cut energy costs and save up to $1,500 in federal income taxes this year is to make energy efficiency improvements to your principal residence. Basically, if you install energy efficient insulation, windows, doors, roofs, heat pumps, furnaces, central A/C units, hot water heaters or boilers, or advanced main air circulating fans to your home during 2010, you may be entitled to a tax credit of 30 percent of the purchase price. However, the maximum total credit you can claim for 2009 and 2010 combined is limited to $1,500. Without Congressional action, the credit will not be available after 2010.
Taxpayers should consult with a personal tax advisor before applying these or other tax strategies.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
5 Things to Talk to Your Accountant About
It’s probably a good idea for most small business owners to focus on the core of their business, such as selling fishing lures or designing websites, and use experts to help them in financial matters. According to the IRS, more than 90% of small businesses use accountants to prepare their returns, something you may be acutely aware of during tax season. But tax return preparation isn’t the only reason to use an accountant.
Here are five areas to discuss with your accountant:
Cash flow, which is the cycle of money in and out of your business, is the lifeblood of any company. If you fail to monitor cash flow carefully, you may run short and, in the worst case, be forced out of business. You can learn what cash flow is and how to manage it from your CPA. Unfortunately, many small business owners don’t understand the importance of cash flow or how to monitor it.
There are some online options, such as MyBizHomepage.com (it’s free), that help you track your cash flow easily. However, it’s a good idea to work closely with your accountant to find sound ways to improve cash flow and address problems that you detect. Your accountant can:
According to the Annual Report to the Nation by the Association of Certified Fraud Examiners, the median loss by fraud in small businesses (fewer than 100 employees) is $200,000. The most-named reason for these losses is fraudulent billing schemes. The best way to detect this and other problems early or avoid them entirely is to have adequate internal controls in place, and the best way to do this is to work with an accountant.
As a privately-held business, you don’t need to have annual audited financial statements prepared by an accountant. You do need to have a professional review your numbers regularly as well as suggest ways to safeguard your financial information and your money as theft protection measures. Safeguards can include simple steps such as better password protection or controls over access to the company’s financial data; you may also want to use more sophisticated monitoring.
Taxes are a complex and costly concern for most businesses. Some self-employed owners like to handle tax return preparation themselves using tax software, such as TurboTax and TaxCut. However, most business owners prefer to let experts do this for them; when there are multiple owners, complex transactions, and multiple states involved, things can be very confusing. Using an accountant for this purpose can ensure that you:
If your business involves inventory, you’ll want to stay on top of your merchandise and find new or better ways to handle your inventory. You can, of course, do things yourself using various software and other tools. But an accountant can offer guidance on:
Reporting inventory. There are choices on how to value inventory for tax purposes that can affect your after-tax earnings (or losses).
Bottom line:
Using an accountant can help you grow your business and avoid problems. If you have an accountant, review these areas with him or her. If you don’t have an accountant, consider engaging one. You can find an accountant by a referral from someone in business you know and trust, or through your state accounting society. As well, to be well informed so you can ask your accountant better questions, find extensive tax information here.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA
Here are some things that an investor wants to see in a business plan submitted for consideration for investment. And this is more-or less in order of importance, but that order is not as rigorous as a numbered list might imply.
1. Experienced team
I want people who have done startups before. They tend to know what they’re doing and where they’re going much better once they’ve been through that process. I don’t mind that much if they weren’t the leader before, and not even that the previous startups failed. I’d like them to know the territory because it reduces risk.
I like a team more than the single entrepreneur. Building a business takes different skills, so ideally a team has people with diverse experience around different functions of the business: Sales, marketing, administration, and so forth.
2. Believable exits
There’s some irony here, because we built our business without caring a bit about exits, but when I think like an investor, I want to know that the money I invest is going to generate money coming out of the company, going back into my bank account, later.
So it’s not just a matter of having a good business. It’s a good business that will grow well and become a business that gets acquired by a larger business in 3-5 years. A lot of good businesses will never be interesting to an acquirer. Is it scalable? Is it defensible? These things make huge differences. It’s surprising to me how many people think they can get investors interested in a people-based service business, for which the assets walk out the door every night. Products are much better for exit than services.
3. Real growth prospects
The key to investment success is making the business worth a lot more later than what it’s worth today. That takes growth. And growth is a matter of scalability and defensibility, which I included above under exits, plus the size of market, the nature of the need, and so forth.
4. Real planning
Like many investors, I can rule out some companies just from reading a summary memo or watching a pitch presentation. But if I’m still interested after hearing the pitch and reading the summary, then I want to see a plan. Pitches without plans are obvious, because they don’t have the potential to drill down into the granularity when questions come up. And of course I like a plan that is easy to decipher and well written, but what I really look for is the pieces coming together. I want to see the conceptual links between product, marketing, sales, and financial plans. Are they aligned with each other? Do they indicate understanding the keys to success? Does this look like a plan that will be managed, that can be reviewed and revised, and will remain flexible? Or is this a plan that was done once and then forgotten. I want to see planning and management, not just a plan.
A final thought
None of this is completely predictable. Good investments will sometimes appear that don’t have all of the characteristics I’ve listed here. Still, all things being equal, this is a good filter to start with.
Gustavo A Viera CPA
CPA firms, Accountants in Miami | Accounting Services in Miami | Accountants Miami | Certified Public Accountant in Miami | CPA in Miami | CPA Miami | Miami Accountants | Miami Accounting Firms | Miami CPA Firm | Miami CPA