PASBA Fall 2014 Newsletter

FALL 2014

I LEADERSHIP SUCCESS

BY R. SEAN MANNING

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I FALL CONFERENCE AGENDA

p.10-11I MEMBER PROFILE

STEPHANIE KIMAK

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by Renee Fellows

Before You Franchise,READ THIS

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In a story recently published by The Wall Street Journal, “franchisees in the Cold Stone Creamery ice cream chain defaulted on 29% of working-capital loans backed by the government, costing taxpayers tens of millions of dollars.”

And Cold Stone’s failure rates aren’t alone at the top of the high-risk heap. Huntington Learning Centers, Quiznos, and Planet Beach franchises ranked among the top ten worst franchise brands in terms of their default rate on Small Business Administration loans. The Cold Stone and Quiznos franchise failures alone left taxpayers holding a $72 million of the overall $121 million dollar price tax for franchise-loan charge-offs in the past ten years 2004-2013.

That’s not to say that all franchises are bad. There are numerous franchise success stories such as McDonald’s, Pizza Hut, and the 2014 Franchise of the Year by Inc. Magazine, Anytime Fitness. And America needs these success stories. According to the International Franchise

Association, franchising and related businesses “employ nearly 17.5 million people in the U.S. and represent almost 10 percent of the nation’s gross domestic product.” The secret is in finding the right franchise fit for your personal goals, skills and business mix.

Everyone advises researching a franchise before signing the contract, but in reality, it is hard to find accurate information regarding the financial success or failure of franchise businesses.

Franchises aren’t required by law to disclose their franchisees’ first-year average sales and failure rates. A good researcher uses the back door. The Federal Trade Commission (FTC) does require franchise owners to share any recent bankruptcy filings and prior litigation. The Wall Street Journal had to make Freedom of Information Act filings in order to gain access to specific SBA loan data.

Franchise ownership can be a quick, efficient way to enter into business ownership without all of the backend system building and front end design, product and customer education of a unique start-up.

Entrepreneurs can simply focus on starting and growing the business. Before signing with your lender and your franchise, it is wise to do some research on the success of the franchise and more importantly, the failure and default rate on loans granted to the brand.

OTHER FRANCHISES AT RISK FOR LOAN DEFAULT:

Before You Franchise,READ THIS

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All franchises aren’t created equal. For every franchise financial failure there is an equally inspiring success story. Here are some positives for consideringownership in a profitable franchise.

Cash Flow and FundingMany franchises offer a strong business strategy, marketing plan and forecast for growth potential making themselves an attractive form of investment for lenders. Franchises also come with more tested and predictable costs for easier cash flow planning and growth opportunities. Research the financial history of not just the franchise headquarters, but talk with current and past franchise owners to learn their own stories for funding the business. (cont’d on p. 5)

Before You Franchise, A Little SBA Loan HistoryThe SBA 7(a) loan guarantee program is the most popular type of loans for franchisees to seek. It is intended for use by for-profit businesses that are not able to readily secure financing or loans from other lenders or resources. The loans are provided to the business, not the individual owners, so the business must be for-profit, have a demonstrated repayment history and not already have internal resources to provide the requested financing. Loans can be written for as little as seven years for working capital and as long as 25 years for real estate. The maximum loan amount is $2 million. The loan can be used to finance an existing business such as a franchise or it can be used to supplement a business already in operation such as a small business seeking growth funding. Ultimately, the 7(a) loan is meant to benefit the business and encourage growth and future success.

Where did the 7(a) loan process with franchises go wrong?Of the nearly $18 billion in 7(a) loans written in 2013, $2 billion was for franchisees. Eighteen percent of all such 7(a) loans were charged off including 13 percent of the loans to franchisees. High risk franchises were allowed to continue to apply for and receive 7(a) funding even though the franchise’s health was in jeopardy. How this continued, according to the WSJ report, is due to a lack of “monitoring the risks.”

The SBA defines its failure percentage as the “number of loans in liquidation plus charged-off loans, divided by the total number of loans disbursed.” The SBA only considers franchises with 25 or more SBA loan disbursements as part of this equation.

by Renee Fellows

FINANCIAL REVIEW GROUP The FRG is an opportunity to have a “Board of

Directors” review your financial statements and

provide input on areas in your practice that you

may need help with. Each member gets the

“stage” for a defined time frame (typically 1-2

hours) to present their practice details and then

solicit feedback from the other members on any

topics they wish. Besides getting specific advice

on your own practice you also get an intimate,

detailed look into the other participating practices.

All firms’ income statements are put on a single

spreadsheet using a standard chart of accounts

for ease of comparability. This is a powerful tool.

Just imagine seeing every one of your income

statement numbers alongside the numbers of

other successful practices. What better way to

take your practice to the next level? Practice

Stats participants agree to adhere to a strict

code of confidentiality.

If you are interested in joining an FRG, please contact Stephanie Kimak at [email protected].

»»I HOPE THAT each and every PASBA member is having a successful year and that your revenues are up significantly over last year! It seems like there is always something going on in the busy atmosphere of a PASBA-style practice. We hit the end of the extension filing period. Then a breather, then the Fall Management Conference, then hopefully another breather before busy season kicks in.

We recently returned from a great National Training Conference in Orlando. It was a record sized attendance for one of these national training meetings; over 130 people were there. Thank you to Vince and Vivian Howard and their staff for hosting a wonderful office visit for all of us! They truly epitomize the concept of teach, share, and learn. We also received valuable feedback from those in attendance that will help make future training conferences even better. Thanks also to all who donated their time to present topics at this conference!

Planning is well underway for the Fall Management Conference in Austin, Texas. The conference will run from November 17 – 20 and it is great to see so many signing up to come and spend this valuable time together. There is a separate planning committee for this conference and I want to thank them for their hard work in putting this together. Many hours go into the preparation for one of these conferences. The agenda is finished and looks great, the location

looks wonderful, and it should be a valuable time, not to mention a fun time for all. Be sure to come early and take a spin in one of Vince Howard’s race cars. And stay late to participate in one of the sales review groups. But show up and soak up all of it that you possibly can. This is also the debut of the Payroll University, which will become a fixture at every Fall Management Conference.

I have been in touch with many PASBA members over the past few months and one theme seems to resonate. The financial review groups are a must-do. If you are not already a member of a financial review group, please contact the PASBA central office and they can put you in touch with the appropriate PASBA members. Being involved in an FRG has led to a six figure increase in the bottom line profits for many PASBA members.

I really look forward to seeing all of you in Austin!!!

MESSAGEPRESIDENT’S

BRIANPAULSON

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Real EstateFranchises will often provide suggested development sites or geographic regions that are favorable for new business opportunities. Leadership at the franchise will often act as mentors providing insight and feedback on potential sites.

Demographic Sweet SpotWith some 10,000 baby boomers hitting retirement age every day in the U.S., franchises that focus on services for that market are thriving. In-home healthcare, medical care, and assisted living franchises all continue to see growth and profitability. Make sure that the franchise you’re considering has not just a current demographic, but opportunities for future growth.

Solid Business ModeThere’s security in using a tested business model. Franchises offer their franchisees with a stable model from which they can develop and grow their own business.

Tested InfrastructureMore flexibility and more free time. Because many of the associated business tasks such as marketing are provided for the franchisee, there’s more time to devote to the business or even to just relax and spend time with family.

If you still have questions about franchising, talk with a PASBA Small Business Advisor in your area.

PASBA member accountants bring the collective resources of a nationwide network of Certified Public Accountants, Public Accountants, Enrolled Agents and other practitioners available to answer your tax and financial questions and streamline your business accounting, bookkeeping, and payroll operations. To find a trusted accountant in your area, visit SmallBizAccountants.com.

Please be advised that, based on current IRS rules and standards, any advice contained herein is not intended to be used, nor can it be used, for the avoidance of any tax penalty that the IRS may assess related to this matter. Any information contained in this article, whether viewed or subsequently printed, cannot be relied upon as qualified tax and accounting advice. Any information contained in this article does not fall under the guidelines of IRS Circular 230.

Before You Franchise, READ THIS... (cont’d from p. 3)

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SUCCESSFUL ENTREPRENEURS are those who are first and foremost great leaders—the kind of leader who openly shares their vision firm-wide and is dedicated to following through with that vision. These leaders are building sustainable businesses, creating careers for staff (not just jobs), and offering clients a rich experience every time.

Lately, a popular point of discussion for firm owners is talking about the transition from working as a “technician” in their business (a producer of product) to leading as an entrepreneur. True entrepreneurs are always working at a strategic level. For example: creating a vision, building the right staff, and offering the right services for clients.

So, how do practitioners become great leaders and, ultimately, successful entrepreneurs? The remainder of this article offers core tips on how these individuals operate.

Start with Your Why, Embrace Change & Educate Successful business owners must start by defining their “Why.” That is, WHY they do what they do—why they’re in the business they are; why they offer specific services or products; and why they’ve set certain business goals? Defining your Why always begins with creating a company vision. Your vision outlines everything you want for your business, offering a roadmap of sorts as you build your enterprise. In simple terms, the vision for my payroll firm is “To help other business owners be more successful by offering much-needed payroll and

Great Leadership Leads to Successful Entrepreneurship

by R. Sean Manning, CPA

Sean is owner of Manning & Company, a full-service CPA firm, and Payroll Vault, a full-service payroll firm.

Sean has dedicated the past several years to building and perfecting a sustainable, profitable payroll services model. He is a nationally recognized speaker on the topic of payroll services and building a successful business model. Sean can be reached at [email protected].

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workforce solutions to clients, and to stay connected in our business community.” It’s also important to note here that you must write your vision down. You’d be surprised at how much more effective and accountable you will be in fulfilling your vision if you have it recorded.

CHANGE is the next area of importance. Great leaders embrace change, because without it, our businesses would become obsolete. In our firm, we like to embrace the word “vitality” in place of change. Though we know change is a necessity for growth, for some, it can be an intimidating word. Vitality in business means you see and embrace opportunity and find ways to successfully implement new ideas to advance your enterprise.

Companies that have vitality look at all the different components of the business and resulting challenges in order to build a plan that staff can manage and implement. Vitality creates a uniqueness that builds value in products and services that are rewarding to staff and support a sustainable business.

EDUCATION must also be part of your business model. Ongoing sharing of knowledge and expertise helps define opportunities and builds strong relationships among staff. It also consistently reinforces your vision and the direction you want to lead the business—which is forward! Maintaining business vitality requires an ongoing system of education for everyone within your organization chart.

Building a Great Team Starts with You Only when a business owner can honestly evaluate herself/himself, adopt leadership changes, and begin to refocus how they run their business will they advance to being a great leader. Firm owners must step into the role of visionary and lead the firm in the direction it must go. If you don’t do it, no one else will. It’s also important to note that a great leader is often viewed as a “people person”—someone that views everyone around them as an integral part of the machine, including staff, clients, and community, and then works to build these relationships for the good of the business. When you are seen as a great leader (people person), you will attract top staff, clients, and vendors to your business. A key result here is that you will start to feel your company’s culture improve—a business that is viewed as somewhere people want to work and one that others are drawn to and want to do business with. All of this adds up to a stronger, sustainable enterprise.

Don’t Ignore the Importance of Your Brand Today’s clients are researchers who are studying multiple vendors before making a purchasing decision. As a business owner, this is where you need to consider the power of your brand. There is something called the “8-10 Rule,” which basically says that the average buyer requires 8 to 10 confirmations to prove that your business is one from which they would purchase a product or service. Knowing this, you can see how important it is to have a strong brand. Your brand is made up of everything about your business—office, staff, marketing materials, reviews, products and services…the overall “feel” of who you are. Great leaders ensure that they are always working on creating a strong brand to draw in the right clients and attract the right staff. You should also make sure that you are helping potential buyers with their research. Offer a professional website, complete with tools that allow visitors to communicate with you and that make it easy to understand what it is you do and how well you do it. Offer downloadable materials that will provide them with detailed information

on your business. Also, make sure that your staff is aware of how to handle prospects. This is where education comes in—train staff on your vision, how to manage and support prospects and clients, and make sure everyone is telling the same story. Your brand image depends on it.

Invest in Client Service Superior client service should be a main priority in your business, and the first step in making this happen is to have a service plan in place. Great leaders are dedicated to always enhancing the client service experience—it should be a focal point of the business. Your service plan is a formal document used to educate your staff and advance them to a level of expertise in properly serving clients. It cannot be overstated how important it is to set your enterprise apart in this area. Just consider that the July 1, 2014 American Customer Satisfaction Index reported that customer satisfaction is “down sharply.” The report also goes on to say, “The drop in satisfaction in the first three months of 2014 was the largest in the 20-year history of the index.”

BRIAN PAULSON PRESIDENTCSI Accounting Services

[email protected]

MATT PATRICK PAST PRESIDENTPatrick Accounting & Tax Services, PLLC

[email protected] 901.755.5858

TOM BOWMAN PRESIDENT-ELECTBowman & Company, CPA, PC

[email protected]

STEVE GIFT TREASURERGift & Associates

[email protected]

CARL CORNELIUSON SECRETARYCorneliuson & Associates, Inc.

[email protected]

KIM BRYANTBryant & Associates, P.C.

[email protected]

RICK DOPUCHBusiness in Balance

[email protected]

JOHN ESTESSEstess & Associates, LLC, CPAs

[email protected]

VINCE HOWARDHoward and Company, P.A. [email protected]

407.333.8110

BRENT MOTLCharles J. Motl, CPA & Associates

[email protected]

2014-2015 PASBABOARD OF DIRECTORS

PASBAMEMBERSIN THE NEWS

David J. Lucier, CPA, CGMA, a past president of PASBA and board member of RISCPA, has been awarded the 2014 Rhode Island Society of Certified Public Accountants Presidents Award.

This award recognizes the achievements or development of a new or revitalized program which contributed to the success of RISCPA and its membership. David Lucier has demonstrated a strong commitment to helping the society navigate to the next level. His understanding of the profession is complemented by his distinguished profile within the small business community.

PASBA Welcomes New Associate Members!

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Monday, Nov. 178:00 am – 5:00 pm » MezzanineConference Registration

9:00 am – 12:30 pmBlueprint for Success University » Crystal Blueprint Mastery » Jim HoggBlueprint Payroll University » Chisholm Trail

12:30 pm – 1:45 pm » MezzanineWelcome Luncheon & Member Meeting

1:45 pm – 2:30 pm Running Your Practice Using Dashboard/ Practice Management Metrics, Tony Fiore » Driskill How Many Hats Are You (Really) Wearing? Tim Nolan » Maximilian

2:45 pm – 3:30 pmHow to Get Out of Production, Brian Paulson& Brian McGinn » MaximilianPractice Efficiency Using ACT, Tom Bowman » Driskill

3:00 pm – 5:00 pm » MezzanineExhibitor Setup

3:30 pm – 3:45 pm » MezzanineSession Break

3:45 pm – 5:20 pm » See next page for details.RAPID ROUNDTABLES | 5 Tables • 5 Topics • 15 Minutes

» Technology Tips: E-Signatures Donna Bordeaux

» Monthly to Weekly Billing Nancy Brown

» Connecting Staff to Client to Make Raving Fans Rick Dopuch

» Dealing with Client Reporting Issues David Compton

» Use of Video for Client Relations: Screencasting Brian McGinn

Tuesday, Nov. 188:00 am – 9:00 am » MezzanineBreakfast Sponsored by GKM

9:00 am – 10:30 am » DriskillThe Five Myths You Tell Yourself About Getting Referrals & the Real Truth, Dan Allison

10:30 am – 10:45 am » MezzanineSession Break/Exhibitor Showcase Sponsored by Dillner’s Accounting Tools

10:45 am – 12:15 pm » DriskillThe Five Myths You Tell Yourself About Getting Referrals & the Real Truth, Dan Allison

12:15 pm – 1:45 pm » MezzanineLuncheon

1:00 pm – 1:30 pm » DriskillSponsor Demonstration: Fundation

1:45 pm – 2:30 pmPlanning Now for Your Eventual Exit, Sean Manning » MaximilianConverting Traditional Practice to PASBA, Steve Sharfi, Tyler Thompson, Tom Bowman » Driskill

2:30 pm – 2:45 pm » MezzanineSession Break/Exhibitor Showcase

2:45 pm – 3:30 pmUsing Xero in Your Practice, Donna Bordeaux » MaximilianTraining a Bookkeeper Barb Gay » Driskill

3:30 pm – 3:45 pm » MezzanineSession Break/Exhibitor Showcase

3:45 pm – 4:30 pmAccounting CS Conversion, Ryan McCowan » Maximilian Training & Compensating a Manager, Matt Patrick » Driskill

5:00 pm – 6:30 pm » MezzanineReception & Exhibit Showcase Sponsored by Fundation

AGENDAFALL MAnagement

CONFERENCEAUSTIN, TEXAS

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Wednesday, Nov. 198:00 am – 9:00 am » MezzanineBreakfast Sponsored by Intercept EFT

7:30 am – 9:00 am » Governor’s BoardroomPast PASBA Presidents’ Breakfast

9:00 am – 10:20 amBREAKOUTS:

Large Practice Breakout » DriskillMedium Practice Breakout » Citadel IISmall Practice Breakout » Maximilian

Blueprint for Success University » Citadel IBlueprint Mastery » Jim HoggBlueprint Payroll University » Citadel Club

10:20 am – 10:40 am » MezzanineSession Break/Exhibitor Showcase Sponsored by Forms & Fulfillment

10:40 am – 12:00 pmBREAKOUTS: See above.

12:00 pm – 1:30 pm » MezzanineLuncheon

12:45 pm – 1:15 pm » Citadel ISponsor Demonstration: Thomson Reuters

1:30 pm – 2:50 pmBREAKOUTS: See above.

2:50 pm – 3:10 pm » MezzanineSession Break/Exhibitor Showcase

3:10 pm – 4:30 pmBREAKOUTS: See previous page.

6:00 pm » Pete’s Dueling Piano BarAssociation Dinner Event Meet in the lobby at 5:45pm to walk together to Pete’s. WEAR YOUR BEST WESTERN GEAR FOR A PRIZE!

Thursday, Nov. 207:30 am – 9:00 am » Governor’s BoardroomPASBA Board Breakfast Meeting

8:00 am – 9:00 am » MezzanineBreakfast

9:00 am – 10:15 am » DriskillPractice Transformation, Kim Bryant, Brian Paulson & Tom Bowman

10:15 am – 10:30 am » MezzanineSession Break/Exhibitor Showcase

10:30 am – 12:00 pm » MezzanineExhibitor Teardown

10:30 am – 11:45 am » DriskillBusiness Plan for Accountants, Bob West

11:45 am – 12:00 pm » DriskillMeeting Wrap-Up/ Spring Conference Suggestions,Tom Bowman & Kim Bryant

12:00 pm – 1:00 pm » MezzanineBoxed Lunch » Sit Down or To Go

AGENDA

Pete’s Dueling Piano Bar421 East 6th StreetAustin, TX 78701

6:00 pm

Registration Gift Sponsored By Lanyards Sponsored By

SpringMarketingConference

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SAVE THE DATE » May 11-14, 2015The Broadmoor // Colorado Springs, Colorado Room Rate: $239 + $16 daily resort fee

www.thebroadmoor.com

Central Region Meeting December 19, 2014

South Region WebinarsDecember 5, 2014January 16, 2015

Florida MeetingFebruary 15, 2015

UpcomingRegionalMeetings

WELCOMENEW PASBAMEMBERS

ELIZABETH DAVIESProActive Tax & Accounting, Inc. // Jonesville, FL

MIKE HINZENorth Shore Tax & Accounting // Evanston, IL

JULI MARTINJ.R. Martin and Associates // Redding, CA

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Who has had the most influence on your practice?There have been so many people that have had a major influence on my practice, in fact way too many people to list. However, if it weren’t for Tony Fiore telling me about PASBA, then I would have missed out on being a member of this fantastic organization.

What is the best tip you have gained from a PASBA conference? A tip that has had a large impact on your company?The first tip I received at a PASBA Conference is offering the Optional Audit Retainer Fee. Through its implementation, I saw a large lift in sales that year.

What is your most memorable PASBA conference experience?My most memorable PASBA conference was in Scottsdale, Arizona. At that conference, I spent a lot of time chit chatting with people after hours and gained some real gems. It was also the conference in which I found out what a Financial Review Group is. The FRG has continually helped me make progress in my firm year after year.

What is something you have done in your practice that you would NOT do again or would not recommend other PASBA members do and why?I would not recommend letting your firm fall into an identity crisis, and what I mean by that is, do not take on work or clients just for the sake of it. Figure out what services you want to offer and who your

target clients are, then stick with it. Every time I deviated from my firm’s vision/target market, I always ended up regretting it.

What brought you to the accounting profession?For me, it was that I come from a family of accountants. My father, sister and cousin are all accountants, so I thought I might as well keep with the family tradition.

What marketing/technology/practice tool could you not live without and why is it so important to you?I could not live without multiple monitors. It truly is the gateway to increase efficiency and helped make the firm a truly paperless environment. In fact, I love multiple monitors so much that my personal computer at home has three monitors!

What is a unique idea that you use in your office and think might be beneficial for others to try?We have moved to flexible scheduling, which has made a large impact on the happiness of our staff.

If there is one, what aspect of the PASBA system are you trying to implement in your office right now?We are currently trying to implement and utilize the Client Accounting Manual.

STEPHANIE KIMAKUNIFY CPA Fort Collins, Colorado

M E M B E R P R O F I L E

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PASBA WANTS TO RECOGNIZE YOU!Have you or another PASBA member recently changed practice size? Acquired a new practice? Received a new certification? Been featured in a publication? Received an award?

--- OR ---

Do you have an article you would like to publish in the PASBA Insider? Do you have a topic you would like to know more about?

If you have any ideas or articles that you think the rest of the membership should see, please let us know!

CONTACT PASBA CENTRAL OFFICE [email protected] // 866.296.0001

CENTRAL OFFICE 6405 METCALF AVE., SUITE 503 SHAWNEE MISSION, KS 66202

[email protected]

JORDAN BENNETT

EXECUTIVE DIRECTOR [email protected]

913.387.5607

SHELBY MCMILLIN

PASBA MEMBER/VENDOR DIRECTOR [email protected]

913.387.5606

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SAVE THIS EDITION OF THE PASBA INSIDER!

Click to download a digital PDF. Loaded with the same convenient interactive links

you see here. OR, print a copy to read at your leisure.