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Financial Advice to Avoid on the Road to Success
Be wise when seeking financial guidance. There's a massive amount of advice out there, and some of it may lead unwary business owners off track instead of setting them on the road to success. Here's some advice to avoid:

Raising money without a goal: One suggestion deserving of the dustbin is money-raising with no goal in sight. Money is a means to an end; save your money-raising efforts for specific expenditures.

Spend to make: Likewise, disregard the suggestion that you must spend money to make money. This may be true in the short term, but habitually spending big is likely to land you in trouble in the long run. Operating on a tight, well-designed budget forces you to make efficient choices and innovate rather than throw money at your difficulties.

Multiyear projections: Then there's the advice on preparing multiyear financial projections. Because small business operations tend to be unpredictable beyond next year, projecting too far into the future wastes time.

Bigger is better: Perhaps the most important advice to ignore is that by charging lower prices than competitors, you can build a large organization and make more money. But a low-price strategy results in low profit margins, and only very high-volume enterprises can function successfully on low margins.

Small businesses are generally successful at serving niche markets rather than tackling larger markets (and more competition). There's no rule that says you must be big to be highly profitable.

Your best way to avoid bad advice? Trust your accounting pro to steer you in the right direction.

Entrepreneurship, Like Love, May Be Wasted on the Young
Contrary to popular belief, creating a start-up is not just for the young.

As the headline for a May 2017 article in CNBC suggests: "Boomer entrepreneurs are making it big by doing what they love."

Referring to research data from the Kauffman Foundation, CNBC reporter Kate Rogers notes that "boomers were nearly twice as likely to plan to launch businesses than their millennial counterparts."

And their numbers have grown; the Kauffman Foundation's 2016 Index of Startup Activity indicates a 24% increase in new entrepreneurs aged 55 to 64 last year, compared to a 14.8% increase in 1996.

As consultant George Deeb points out in Forbes: "... people over 55 are twice as likely as people under 35 to launch a high-growth start-up."

While we all know that Silicon Valley is the purview of the young, research shows that tech entrepreneurship among seniors is an emerging reality - a reality that can be seriously profitable.

As Roya Wolverson writes in Time magazine: "There's no question that starting a business is easier when you're younger," but, she adds, "... start-ups in some industries, such as biotech and business software, gain an edge from the experience that comes with a founder's age."

Many boomers are returning to the workforce out of pure passion for an idea they believe in. Some go back when they identify a problem for which they believe they have an innovative solution. And others return simply for the paycheck. Whether for necessity or invention, the number of older entrepreneurs is on the rise.

Data You Can Use, Delivered Fast - What a Concept!
Memory-driven computing is new. It's fast. And it's offering tremendous opportunities for problem-solving and innovation.

In the age of big data, the volume of available data has surpassed our ability to process and use it. But information technology company Hewlett Packard Enterprise (HPE) has developed a new approach to computing that turns massive amounts of data into secure, actionable insights instantaneously.

The secret sauce? Upgrading processing from the current slow silicon to hyper-fast memory - an approach called memory-driven computing. This technology gives every processor in a system access to a high-performance interconnect protocol, which is essentially a humongous shared pool of memory.

Based on this new approach, in which memory is central to the system and not simply tethered to a processor, the company has rolled out a prototype known as "The Machine" that is up to 8,000 times faster than processor-based computers.

According to HPE (and supported by enthusiastic reviews in many tech publications), memory-based computing will unleash new opportunities for companies of every size in virtually all fields. Consumers can improve the performance of their Internet-of-Things (IoT) devices, and analysts will be able to predict and quickly respond to situations in health care, transportation, retail, and other industries.

For example, a memory-driven computing system could enable doctors and researchers to come up with personalized diagnoses and treatments, as well as predict and head off major epidemics. First responders could simulate emergency situations and prepare for crises. And smart transportation systems could optimize traffic flow. It's a whole new world. Again.

When Repairs Are Not Expenses ....
Bookkeeping that records every payment for property repairs as an expense is just so much fiction. Cash outflow isn't always found on the business income statement - also known as the profit and loss statement. In fact, it's the balance sheet that reveals whether money was directed to decreasing debt or increasing assets.

Expenditures for so-called capital goods appear on the balance sheet as fixed assets. These items - such as equipment and buildings - are different from ordinary operating expenses on the income statement.

But "capital goods" can also include repairs to existing fixed assets. The cost for these expenditures is depreciated over time rather than immediately appearing as an expense on the profit and loss statement.

Small-business operators are frequently faced with deciding whether a cost is a repair expense or a depreciable capital expenditure. And this can prove a sizable burden.


Improvements to existing fixed assets constitute a new capital expenditure when the cost is sufficiently high for capitalizing and the improvements extend the useful life or functionality of the fixed asset. These are distinguished from repair expenses, which constitute minor alterations. Capital improvements are generally structural - such as a new roof for a building. More cosmetic costs - like painting - are expensed as repairs.

Distinguishing between a repair and a capital improvement is complex. Tax authorities have released some general guidelines to help. A capital improvement is an expenditure for the "betterment," "adaptation," or "restoration" (B.A.R.) of the property. Determining whether any of these conditions applies requires comparing the condition of the property when it was purchased - or when the last work on it was performed - to its condition after the new expenditures.

Detailing B.A.R.

"Betterment" ameliorates a deficient condition in property and adds to a property's capacity, size, or quality. "Adaptation" changes a property to a new use that's different from the original, and "restoration" returns property to its efficient operating condition. "Restoration" also applies to any major component of a property that contributes to the property's substantive function, which can make identifying a capital improvement tricky. It means, for example, that replacing the motor necessary for a machine to run properly is a capital expenditure, even though the entire machine is not being replaced. Work performed on smaller assets - such as machinery - is commonly a capital expenditure. A component critical to the usefulness of equipment is very likely a capital improvement when replaced - unless the cost is minimal.

Large properties - like buildings - are more likely to incur repair expenses. Tax rules require dividing a building into multiple property units; the entire building is not a singular property, but rather each system in the building is considered separately. So replacing the air conditioning compressor might be a depreciable capital improvement, since the ventilation system is viewed as a distinct property unit.

Uncovering whether expenditures are repairs or capital improvements isn't easy. The best way is to consult a tax expert when these costs are incurred so that purchases are correctly recorded.
Michele Ball
Perfect Additions
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Worth Reading
Why Many Founders Should Think Global from the Start
By Jeff Harbach
It's never too soon for a company to start thinking about global domination - in fact, you should start thinking globally when you launch your business. Why? Geography is no longer an insurmountable barrier. Any company that sets its sights on becoming global now has a good chance of reaching its goals. Find out how to develop your global outlook now.

The Four Ds of a Business Exit Strategy
By Brent Dees

Anyone who has created a successful business knows how much planning is involved (not to mention hard work and luck). But did you know that most don't plan for exiting their business? Dees quotes Stephen Covey's The Seven Habits of Highly Effective People: "Begin with the end in mind." Consider the four Ds: Death, Disability, Divorce, and Departing. Then relax and enjoy, knowing you have an exit plan.

Why Being an Underdog Gives You a Competitive Advantage
By Eric Schurenberg

In an ideal world, you'd likely choose to be Goliath instead of David, but if you take a step back, you'll see that being an underdog in business gives you a serious competitive advantage. You may not be able to compete with companies that have more capital and bigger budgets, but you have the edge in at least two areas: your workforce and close-knit team culture, and a deep insight into your customers' wants and needs.

Negotiating Skills
Successful business owners are successful negotiators. Your negotiating skills impact your business from top to bottom and inside out; if you're a strong negotiator, you're well on your way to success. But if you lack negotiation skills, or just want to brush up, the following links can help beef up your bartering:

Entrepreneurs must master three key negotiation skills for success:
Three Overlooked Negotiation Skills Entrepreneurs Need To Master

Do you feel you may be a weak negotiator? Strengthen your skills here:
The Most Important Counterintuitive Step to Winning More Negotiations

Telecommuters make up a large share of today's workforce. Here, 40-plus companies explain how they've made these arrangements work:
7 Negotiation Techniques Every Small Business Owner Should Know

Conducting effective negotiations with customers and distributors is an essential skill. Be successful at it:
Grow Your Small Business By Improving Your Negotiating Skills

Read this practical guide to negotiating, and refer to it often:
The Art of Negotiating
This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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