Your business structure is the backbone of your company. It dictates your control, liability and taxes, and sets the pace for your entrepreneurial journey. However, the first structure you choose doesn’t have to be permanent.
“As your business matures, you may find that your current structure no longer fits your needs,” said Brittany Nevels, business and branding coach and owner of BE Different Designs. “A company that started out as a sole proprietorship may add a partner, hire a staff, or produce products or services in a capacity that requires more protection. Likewise, a larger corporation may find that they need to downsize and may feel that an LLC may be a better fit.”
If your original plan isn’t working for you, you can choose a different one – so long as you are willing to endure the process. Here’s how to change your business structure.
Check with state regulations
Because different states require different steps and paperwork, you should check with the Secretary of State where your business is registered, said Nevels.
“You will also want to be sure that the change in structure doesn’t need any additional license or insurances,” she added. “That will also vary depending on the business type and location. Some counties will require additional documentation outside of what the state requires.”
Shlomo Zalman Bregman, Esq., business attorney and founder of The Law Offices of Samuel M. Bregman, said you may need to modify your articles of incorporation and company by-laws, file a DBA (“doing business as”) with your state’s government, register for an EIN (employer identification number), and notify your bank of any documented changes. Also, research whether your new structure will have filing fees, new forms and paperwork requirements.
“In many states, a Limited Liability Company (LLC) [is required to] create a concomitant LLC Operating Agreement, which spells out in detail how the LLC shall be governed, and … is filed with the state,” said Bregman. “The creation of the Operating Agreement often necessitates a lot of work and could trigger several thousand additional dollars in legal fees.”
You want to understand the details of each option before moving forward to avoid any potential issues with liability, taxes and more.
Ask yourself these questions
Depending on the product or service your company offers, Nevers advised asking yourself the following questions:
- Will you require insurance?
- Will vendors require additional liability insurance?
- Does your state have sales tax?
- Will you be required to tax your product or service?
- Will you pay quarterly or annual tax?
- What type of product or service will you provide?
- Will you interact directly with your clientele?
- Do you run a higher risk of being sued if something goes wrong?
- How much money do you have to invest in your initial startup?
Consider your options
Bregman notes that it’s important for a business owner to know all their options for legal structure.
“It’s almost impossible for a layperson to figure this out on their own,” he said. “It’s vital to communicate and strategize with a seasoned business attorney, and probably afterward with your accountant as well.”
The most common business structures are:
- Sole proprietorship. One person is responsible for the entire company’s profits and debts.
- Partnership. Two or more people share ownership of the company.
- Limited liability company (LLC). Owners have limited liabilities while enjoying flexibility and tax benefits.
- Corporations. The business is a separate entity from its owners. There are several kinds: C corporations, S corporations, B corporations, close corporations, and nonprofit corporations
- Cooperatives. Owned by the people it serves.
Sole Proprietorship and Limited Liability Corporation (LLC) are two of the most popular options for small businesses, said Nevels, but they’re not the only choices.
“Some operations may find that a full corporation will be more beneficial for them,” she added. “Corporations are taxed differently so many organizations find they get a larger tax break under this structure.”
However, Nevels added, if your business provides a service like event planning or photography and deals with clients, an LLC might be best in protecting you from being sued as an individual.
“There are some exceptions, but in broad terms the LLC prevents the individual from taking your personal assets,” she said. “Instead they sue the business solely … In LLCs and corporations, it is imperative that you keep the business funds away from your personal funds. Failing to do so runs the risk of piercing the corporate veil, and putting yourself and your business at risk.”
For more on choosing the best business structure for your business, visit this article on our sister site, Business News Daily.
While some basics apply to all businesses, accounting is different from industry to industry. Accounting methods for a construction business, for example, differ quite a bit from that of a restaurant or a retail store.
Business owners in the retail industry need to know how to handle their specific accounting needs, and that starts with recognizing the main difference: Retail accounting comes with the added challenge of keeping track of your inventory and knowing exactly how many goods you’re buying or selling and how much is left over.
To help, here’s a breakdown of the basics you need to know about costing and tracking inventory in retail accounting.
Part of managing your inventory is keeping track of the cost of the items you sell, as well as the money you have left in your inventory. This can become especially complicated when items have different prices and initial costs, so there are several methods for calculating the cost of your inventory.
FIFO stands for “first in, first out” and, according to The Balance, means that the first items to be put in your inventory are also the first to be sold. In other words, the goods left over in your inventory at the end of the year are the most recent items you’ve put in stock. The FIFO costing method would make sense for a grocery store, for example, because of food expiration dates.
On the other hand, LIFO stands for “last in, first out” and means that the most recent inventory you’ve stocked up on is what sells first. This works well for retail businesses that aren’t selling perishable items, according to Investopedia.
Calculating FIFO and LIFO is very similar; the difference is simply in which inventory items you count first. The Balance article explains them both with the same example: Say the items you sold for the year are produced in three batches. For each batch of items, you calculate the unit cost by dividing the cost to produce the items by the quantity. In The Balance’s example, Batch 1 consists of 2,000 units at a cost to produce of $4 per item, Batch 2 consists of 1,500 units at $4.67 per item, and Batch 3 consists of 1,700 units at $4.53 per item. That makes the total number of units produced 5,200. Assume you sold 4,000 units during the year.
FIFO assumes that you sold Batch 1 first, meaning that, of the 4,000 units, you sold all 2,000 from Batch 1, all 1,500 from Batch 2, and only 500 of Batch 3’s 1,700 units then you just add up the costs accordingly. LIFO works the same way, except it assumes that you sold the last batch first, so you simply add up your costs in the reverse order.
This is when you determine the average cost of all your inventory items based on the items’ individual costs and the quantity of each item in your inventory. According to Chron.com, with this method, you determine the cost of all your different inventory items and the number of units of each, then multiply the number of units by the corresponding cost. Add up the totals for each different item in your inventory to get one sum. Then, add up the total number of units in your inventory. From there, divide the first sum by the total number of units, and you’ll have your weighted average.
The retail method is a simpler method, in which you divide your purchase and beginning inventory costs by the cost-to-retail ratio (which you can find by dividing the cost of an item by the price you’re selling it for). You then multiply the sales total by the percentage and subtract that number from the cost of goods sold, and that gives you your ending inventory total.
Along with calculating cost, you need a way to track and monitor the actual items in your inventory.
The periodic method involves taking occasional physical counts of the items in your inventory along with their costs, according to Investopedia. In this method, you record merchandise purchases in your purchases account, then set up specific time periods (such as every month, every quarter or once a year) to go through and update your inventory account to reflect the cost of goods sold.
To calculate the cost of goods sold every period, add the balance of your inventory to the cost of your inventory purchases, then subtract the cost of your ending inventory.
This is perhaps the easiest method for tracking the number of items in your inventory accurately. According to Investopedia, under this method you simply keep track of your inventory continuously, automatically updating your inventory account and your cost of goods sold as new items come in and go out. This means using a digital system to keep track of everything – and that, so long as you don’t face theft or damage of items in your inventory, your inventory account balance should be accurate at all times.
You can find out more about the process of accounting for your retail business – including income statements, balance sheets and cash flow – in our complete Guide to Retail Accounting.
A seamless POS system can revolutionize any retail business – if it has all the features you need. Essential features such as inventory tracking, accounting software, and built-in timeclocks allow retail owners to spend less time managing the ebb and flow of their operations and more time analyzing how to expand their business. A good POS system can integrate multiple areas of a business into one interface, but what other features are vital to retail businesses? Here are seven you should check for before you choose a system for your retail business.
1. Online management
Online sales management is a key aspect for growing your business. Some POS systems provide the option to manage ecommerce. Lightspeed Retail, for example, offers an option to manage online sales using one simple interface. You can use a specific page to manage inventory and customize your web orders and web page information for better SEO. The flexibility of a POS system that offers online management and sales is essential for any business owner.
“If you’re an online- and inventory-centric retailer, it’s probably one of the most important aspects of your business,” said James Brookes, sales engineer for Lightspeed.
Editor’s note: Looking for a POS system? We can help you choose the one that’s right for you. Use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:
Many users say that having a POS system to manage online sales keeps everything integrated and on track. Ben Adler, owner of Rebicycle in Montreal, said his bike shop is gearing up for an e-commerce release with Lightspeed in the spring.
“We’re going to have a custom bike builder where the customer can actually select all the components themselves on our website through Lightspeed eCom,” Adler said. “The new e-commerce offering is very competitive and very compelling, because it’s based on SEO specifically. There’s a lot of companies out there where you can make nice, pretty-looking ecommerce sites pretty easily, but Lightspeed is specifically based on search engine optimization.”
2. Multiple locations
As your retail business expands, it’s essential to have a POS system that can handle inventory tracking and sales from multiple locations. This tool, like an omnichannel experience, can be the difference between seamlessly monitoring sales trends and getting lost in excess data. Jean Iennaco, director of operations for Over the Top Cake Supplies in San Antonio, Texas, said her company has two corporate stores and two franchise locations. With four locations, which include both stores and classrooms for baking classes, Iennaco said her Revel POS system has been great for managing the expansion.
“We initially had another POS system, which wasn’t compatible for multiple-location use, so we switched to Revel, which is compatible,” Iennaco said. “We have four locations. I can be anywhere and help them out if there are issues. For example, I can check on locations by going into reporting and offering advice on ways to increase sales for the month. It’s user-friendly and convenient for having multiple locations.”
3. Third-party software integrations
A POS system that can integrate with other programs, such as QuickBooks or Como, can add value to your business without you having to introduce an entirely new production process to accommodate a new program. For Iennaco, Over the Top Cake Supplies is looking to introduce Como in the coming months so that customer information and rewards can integrate with the Revel system.
“We don’t have all of our customers in Revel right now, but once we get Como live, then every single customer we have will go into the Revel platform,” Iennaco said. “We’ll then be able to track sales, offer promotions based on what customers purchase and be more customer-oriented based on specific customer needs.”
Lightspeed also offers similar options by providing different software that is already integrated. Adler said that his business uses third-party scheduling software called Booxi to create custom bikes. Lightspeed and Booxi are seamlessly integrated, so Adler can record a customer’s information without having to input it multiple times.
“When somebody makes an appointment on Booxi and they actually come in the store, I already have all their customer information, including their phone number, their email address and what service they’re coming in for,” Adler said. “I can automatically create a work order in Lightspeed with that customer information already populated, and so it’s very easy for us to make a quote on the spot.”
4. Inventory management
One of the best features online POS systems offer is the ability to track inventory in real time. By integrating business orders with online and in-store purchases, business owners can now track their supply levels quickly and efficiently. Adam Watson, director of U.K.-based mirror retailer Hollywood Mirrors, said that his POS system, Brightpearl, has been a huge help in keeping track of his products.
“The stock reporting shows the rate that the items are selling at and [predicts] when they are going to go out of stock. It also takes into consideration lead time from the supplier in the algorithm,” Watson said in an email. “It has resulted in us becoming more organized and streamlined with less products, less stock, but revenue and profits are up. We are a lot leaner business because of this, and ordering stock with suppliers takes a few minutes instead of 30 minutes.”
By tracking inventory in real time, businesses can save money and avoid making mistakes when ordering from a supplier.
5. Built-in bookkeeping
Much like inventory management, built-in bookkeeping allows businesses to maintain efficiency while reducing the potential for mistakes. Tracking finances in real time lets business owners constantly see the state of their business. Watson said he wasted time and was even unaware of his business’s finances before switching to a POS system that featured built-in accounting software.
“Everything was entered in manually, and we were months behind with the old system. I didn’t have a clue if we were making a profit,” Watson said. “With Brightpearl, we can see near enough within a week our profitability in real time, as all our purchase orders and sales are all processed and invoiced within the system … It’s a great feeling knowing everything is OK and I can see what is going on with the numbers; it gives you confidence.”
6. Employee management
In addition to managing and monitoring the supply flow and finances of a business, some POS systems offer the ability to manage worker productivity.
Ann Motovidlak is a front-end supervisor for Gerrity’s, a grocery store based in northeastern Pennsylvania. Gerrity’s has nine locations in the area, and Motovidlak said that managers use the RORCv6 POS system to track employee use.
“Cashier productivity is a feature we like to use,” Motovidlak said in an email. “We monitor our cashiers’ sales, scans and items per minute and voids. It also assists us in loss prevention.”
Tracking productivity can be a valuable tool, particularly in maintaining a secure and financially sound working environment. For many small businesses, managing employees and monitoring sales closely creates a more reliable and efficient workplace.
Many POS systems also feature built-in timeclocks, employee sales information and security management geared directly toward employees. With Lightspeed, business owners have the ability to set permissions for different employees based on role, store or individual. By managing a worker’s access to different areas of the business, owners can ensure that their operations run smoothly and safely while avoiding micromanagement.
7. Omnichannel experience
In the modern retail landscape, many business owners want both an in-store and online presence to maximize sales and profits. This demands a POS system that can support sales on multiple platforms. Watson said that Brightpearl’s ability to function on multiple platforms has allowed his business to thrive. Hollywood Mirrors operates through 11 sales channels, including its own website and other sites such as Amazon.
“The way we worked before – managing all the sales channels and all the product listings – it was so labor-intensive,” Watson said. “It was really difficult; we had to have someone keep an eye on products going out of stock all day long, as well as … product listings on eBay, Amazon and our own websites. They had to do this from memory, and the stock quantities were in their head. When I think back to this time, it was a crazy way to run a business.”
Retail POS systems come with many features, and finding the right one requires prioritizing the features that would work best for your business. Regardless of which system you choose, it seems that an omnichannel platform that can easily integrate with third-party software is a must. In addition to those features, inventory management between stores and integration for some form of accounting could go a long way in increasing productivity.
If you run a construction firm, it’s important to know where your transportation vehicles and materials are – and if they’ll make it to their destinations on time. GPS fleet tracking systems use GPS hardware installed in a vehicle to track locations, generate vehicle diagnostics and monitor driving behaviors. Real-time data is sent from the vehicle to your software via satellite, so you always have the most current data.
To help you choose the right one for your construction firm, here are 10 things to look for in a GPS fleet tracking system.
1. Cost and contracts
GPS fleet tracking costs vary. There is no one-size-fits-all approach, and costs largely depend on the size of your fleet and the features you need. The majority of vendors charge on a month-to-month basis. You’ll find prices from around $20 per month to $100 per month or more. Some providers also offer free hardware, while others charge on a per-user basis. Other payment options include annual subscriptions and pay-as-you-go plans. Note that some services require annual or multi-year contracts, but many don’t require any long-term commitments.
Editor’s note: Looking for a GPS fleet tracking system? We can help you choose the one that’s right for you. Use the questionnaire below to have our sister site, BuyerZone, provide you with information from a variety of vendors for free:
You can’t stare at your GPS fleet tracking software 24/7. The best GPS fleet tracking services do all the monitoring for you, sending you notifications by text or email when something needs your attention. You can set which alerts you want to receive, such as when a vehicle departs or arrives, if a driver is off route or crosses geofences, and if the hardware detects unsafe driving behaviors.
3. Customizable dashboard
GPS fleet tracking systems monitor a wide variety of data, which can clutter your dashboard. Choose a system that only has the most important information on your dashboard so you get to see key metrics right when you log in, such as current locations, action items and emergencies. Some providers also allow you to select which types of data to present and how detailed you want them to be. This way, you can cater the software to your specific needs.
4. Easy to use
Because GPS fleet tracking systems monitor all types of vehicles and driving data in real time, the software can get complex. If you don’t have time to get through the learning curve or train your staff, find a provider with a simple dashboard that doesn’t require any tech skills to navigate. Most vendors offer free demos, so you can have a sales rep walk you through it in person or try the software online before you buy.
5. Vehicle diagnostics
GPS fleet tracking software should monitor more than just vehicle locations. For you to get the most out of your investment, it should also track vehicle diagnostics. This includes fuel management, engine diagnostics, repairs, maintenance schedules, start and stop times, and other items to maximize efficiency.
6. Driving behavior tracking
Similarly, GPS fleet tracking systems should monitor driver behaviors to keep them and other drivers safe on the road. It should track route histories, such as when a driver goes off route, is off schedule, has excessive idling times or makes too many stops. It should also record hard turns, sudden stops and other incidents. Some systems allow you to integrate driver IDs with vehicles to streamline work hours and expenses.
7. Signal and uptime
Since GPS data is sent via satellite, choose a provider that has a reliable signal and uptime. You may be able to find this information on vendors’ websites, but you may also want to ask for detailed reports of any downtimes and technical outages.
8. Mobile access
If you’re frequently away from your desk, a GPS fleet tracking mobile app is a great option. This gives you access to all of your GPS data right on your iOS or Android device. Many also let you complete certain tasks, such as contact drivers and send directions. However, not all providers offer a mobile app. If this is the case, and mobile access is important to you, check that your provider at least has a mobile-friendly, web-based version of the software.
9. Third-party integration and automation
Make your life easier by finding a GPS fleet tracking system that integrates with business solutions you already use. For instance, some software can automatically sync with your accounting, payroll, and time and attendance software to log driving hours, mileage and expenses. This can help you and your drivers save tons of time from having to manually recall and input data.
10. Customer support
Not all GPS fleet tracking system providers offer live customer support. Make sure someone is always there when you need them by choosing one that offers phone support. Other resources to look for include live chat, email or help desk support, tutorials, documentation, and how-to videos. Note that many vendors charge extra for priority support.
You’re a tech entrepreneur who has developed an awesome new product that can disrupt the way an old-school industry operates by making it easier to get the work done. The only catch? More often than not, leaders and professionals in industries like these go long periods experiencing little change in how their businesses run, so they typically subscribe to the old-school mentality of “If it ain’t broke, don’ fix it.”
How do you persuade an entire industry that doesn’t typically buy into new technology to trust you and your creation? To get those industry members on board, you need to show them exactly what kind of value they would derive from investing in your product.
Successfully pitching a new-school gadget to an old-school audience can be as difficult as taking a cellphone from a millennial. I’ve discovered a crucial element of overcoming skepticism and objections: It’s not necessarily the technology that turns off these prospective buyers – it’s the way it is pitched.
Tailoring the message to convince the skeptics
It’s all too easy to get pulled into the weeds talking about the details of how your technology works. You’re excited about your product, and you want to share all the amazing details and features, which is totally understandable. However, you first need to make sure that potential customers understand not only what they would be getting but also why they should care about what you’re offering.
When pitching to executives and owners – especially those in industries such as mining, oil and gas, civil engineering, and their adjacent spaces of construction and manufacturing – you must be able to address these questions:
- If what I’m doing now is working, why do I need your product?
- What are the risks of changing the way my employees and I work?
- What is your product actually saving me?
I had to learn how to answer these questions when I launched Strayos, a product that combines drone technology, machine learning, and artificial intelligence to empower professionals in the mining and blasting industries. Needless to say, it was challenging at first to help those in charge see how we could help them harness better data, increase agility and improve decision-making. I’ve found that it’s a much smoother process if I can assuage their concerns upfront.
Here are three steps you should take each time you pitch your high-tech product to an old-school audience.
1. Tie your product to individual goals.
Once you know how to answer “What’s in it for me?” in a way that satisfies your customers, you can tailor your message to speak to those pain points.
In the beginning, we focused on how great the software is, how it works, and what the computer and machine learning components are. What we needed to do was focus on the things our customers truly cared about, like how the decision-making process and their day-to-day operations will improve.
We weren’t speaking to our customers in a language they understood. As we grew, we learned to speak directly about the value each stakeholder would find in our product: For example, whereas a blasting engineer’s motivation is to create a more streamlined process, a quarry manager would use our technology to gather more accurate data.
All stakeholders have different skill sets and work on different action items each day, so they’ll each view the product differently. Therefore, highlight how your product can solve the specific problems each stakeholder is facing.
2. Get your hands dirty.
You have to work hard to maintain open and transparent relationships with old-school audiences. The only way to know what value your product actually brings to your customers is to ask them.
To that end, we visit our clients’ sites and physically work side by side with them to see how they’re using our technology and to show them how they can utilize other features to get the most out of it. This reassures them that we understand who they are and what they do.
Demonstrating that you understand customers’ businesses and will continually try to help improve them not only strengthens your customer relationships, but it also helps you land new business. The knowledge you’ve gained will help convince potential customers that they can trust you.
3. Make it personal.
Meeting new customers is not all about business. We spend most of our time in our office or boardroom, but I also try get to know customers and prospects in more casual environments where we can just talk. Informal conversations help me get better ideas of why the customers started their businesses, how they got into the industry, why they’re successful, what makes them tick, and who they are as a company and as leaders.
This piece of the relationship is key because it shows that, unlike the stereotypical salesperson, I truly care about their business. When 65 percent of B2B customers head into such discussions expecting someone in my position to be a poor to average salesperson, I can mitigate their inherent skepticism and gain their trust simply by actively listening to their pain points.
Look at every interaction, every conversation and every moment you spend with a current or prospective customer from their point of view: Would you want to work with people who can’t clearly explain how their technology fits your actual needs or who ignore the very real risks you might be taking by investing in their product?
Of course, you wouldn’t. To avoid putting your own customers and prospects in that position, always put them and their concerns front and center. What goes around comes around. Make sure your message is positive, helpful and personalized according to prospects’ specific goals and pain points.