As a CPA firm owner working primarily with women small business owners, I have noticed a trend that was backed up by an article I read last night. According to the article, women small business owners are more optimistic about growth, hiring, and expansion than their male counterparts.
The article goes on to say that “the increased number of women in powerful positions of influence in politics, healthcare, and education” is the predominant factor paving the way for the next generation of women entrepreneurs. I could believe that argument!
Here are some topics that I’ve recently discussed in recent meetings with female entrepreneurs:
- Projections – 73% of women small business owners are planning to expand this year. Not only does the process require some good historical data from which to start, but the assumptions that anchor the projections are also important. Projection assumptions are based on what you hope will happen in the future. As we know, a series of small changes in a business’ revenue and expense can have dramatic effects on profits, and it’s a fun exercise to see how assumptions trickle down to the bottom line.
- Tax Planning – 84% of women small business owners expect year-over-year growth in 2020. Growth has an impact on tax return results for small businesses and their owners. Since nearly all of our small businesses are S-Corps and single-member LLCs, the profit of the company is reported by the owner as taxable income. So, tax planning has to happen on two levels…at the business level as well as the individual level. So, we generally start with the projections that outline the growth plan, then we closely examine the tax impact of the growth.
- Hiring – 25% of women small business owners plan to hire in 2020. Hand-in-hand with projections and tax planning is the examination of how hiring additional employees impacts the business. Small businesses are unique, so hiring a new sales person is very different than adding a new receptionist or marketing director. We like to examine not only the impact on the company’s bottom line in the immediate future, but how the bottom line could grow if that person were hired. What responsibilities are being handed to the new hire that would free up the owner’s time to focus on growth? Is this an admin position that won’t immediately add profit, but will increase customer satisfaction in the long run? Does a new sales person potentially increase profit by 2.5x? Under what conditions would this new hire over-burden the company’s cash flow and cause problems? These are all important questions to answer when considering a new hire.
We love digging deep with our clients and exploring the “what-ifs.” If these same issues are important to your small business, let us know if we can help you explore them further.