Mistake #1: Not Doing Any Marketing As with most service-based startup businesses, bookkeepers can fall into the trap of thinking that having years of experience and an alphabet of credentials will result in new clients magically beating a path to your door. They won’t. To get clients, you need to do at least some initial marketing. What does that mean? Getting the word out about the tangible benefits you can bring to your clients’ businesses, and building relationships thereafter. Marketing is the communication needed to bring your practice to life, and keep it moving toward your ultimate financial goals. It’s a must. Mistake #2: No Website Whether you’re a solo freelance bookkeeper, or building an accounting and tax firm, we all need to be online. Our clients are online, so we need to be there too. That means having a professional grade website. It serves as your virtual brochure and contact hub through which potential clients will judge if you’re the right bookkeeping service for them, or not. If you don’t yet have one, a simple WordPress website that focuses on how you help your clients prosper financially is your best bet. Make it unique to you, and have it professionally created, if at all possible. Your website doesn’t need to cost a lot, but it should look professional and not like every other accounting website. Design it to attract your ideal clients. Mistake #3: Not Being on LinkedIn Even if you’ve got Mistake #2 licked with a top-notch website, you need to have an up-to-date LinkedIn profile with a reasonably recent photo of yourself (not your company logo, please). LinkedIn ranks very highly in the search engines, and will help you get more eyeballs on your website. It also serves as your online expanded business card. Use it early and often for following up with prospective clients and referral partners. Even if you are on a shoestring budget, no excuses for anyone here. LinkedIn is free. Mistake #4: Hiding Behind Your Business Most of us accounting types are introverts. Revealing who we are online can feel scary. Will prospective clients even take you seriously if they know you’re a business of only a few people, or even solo? In a word, yes. People do business with people they know, like, and trust. So reveal a bit of your personality, your story, and use your photo in your marketing materials. Effective marketing is built upon your ability to make human connections and build authentic relationships. Mistake #5: Accepting Any Client Who Comes Your Way This is a big one. Pay close attention here. Not all clients are good clients! If you’ve just lost a large client, or you’re trying to really grow your practice and kick up the cash flow, any potential client that happens to stumble your way can seem like a good client. Warning! Clients should not be accepted purely on the basis that they have a bank account from which they might pay you. To fill your bookkeeping practice with high quality clients, you must have quality standards. Be clear on who your best, most profitable clients are and proactively build your marketing messages and services around attracting them exclusively. Accept only clients who are the best fit for your practice (and you for them). The courage to turn away misfits dramatically changes everything for the better. Mistake #6: Under-serving Your Existing Clients We all do it. We’re always chasing after more new clients, instead of maximizing what we already have. Playing off of the previous point, if you now know who your A level clients are, are you, in fact, delighting them? Or are they just tolerating you? Truth is, most clients only tolerate us. They want (and need) more. Turn your marketing focus to delighting and expanding what you provide your existing clients, and you’ll not only see an immediate increase on your bottom line, but you’ll also fan the flames of client referrals. Mistake #7: Throwing Money at Advertizing This is another typical practice killer. The idea of proactively building relationships and schmoozing to market our services may cause you to break into a cold sweat. So advertizing may seem like an easy way out. It’s not. In the (now distant) past, advertizing made sense. A basic (though expensive) Yellow Pages ad literally got the phone ringing. But those days are long gone. ROI on ads now is generally dismal. Relationships and reputation rule instead. Admittedly they take effort to build, but they’re assets that won’t drain your budget. These days, an effective form of “advertizing” is sharing useful information on your website blog or your LinkedIn profile. Over time, they’ll result in high quality relationships and inquiries. So, how’d you do? Are any of these seven marketing mistakes holding you back from hitting your financial goals? If so, you’re certainly not alone! We all struggle with at least some of them. But we can conquer them. The solution is identifying your sticking points, and taking proactive steps to correct them now. Put a basic plan in place, then work it. That’s the true key to consistent growth. Specifically, setting up a new client pipeline is a powerful way to do just that. Let’s market well and prosper together!
Larry gets home late one night and Linda, his wife, asks, “Where in the hell have you been?”
Larry replies, “I was out getting a tattoo.”
“A tattoo?” she frowned, “What kind of tattoo did you get?”
“I got a hundred dollar bill on my privates,” he boasted proudly.
“What the hell were you thinking?” she asked, shaking her head in disgust.
“Why on earth would an accountant get a hundred dollar bill tattooed on his privates?”
“Well, for one thing, YOU like to watch my money grow… So do I — regularly!”
“Two, once in a while you like to play with my money.”
“Three, I like how money feels in your hand.”
“And, lastly, instead of you going out shopping, you can stay right here at home and blow a hundred bucks any time you want.”
Larry is now recuperating in Room 232 at the General Hospital.
“Are you the manager?” she asked, softly stroking his face with both hands.
“Actually, no,” he replied.
“Can you get him for me? I need to speak to him,” she said, running her hands beyond his beard and into his hair.
“I’m afraid I can’t,” breathed the bartender. “Is there anything I can do?”
“Yes. I need for you to give him a message,” she continued, running her forefinger across the bartender’s lip and slyly popping a couple of her fingers into his mouth and allowing him to suck them gently.
“What should I tell him?” the bartender managed to say.
“Tell him,” she whispered, “there’s no toilet paper, hand soap or paper towels in the ladies
Every investor hopes for a strong return on investment from their stock portfolio, but the truth is that dividends paid out from corporate stocks are not created equal. The way in which dividends are treated for tax purposes plays a central role in an investor’s ROI, making it important for would-be and current investors to have a firm understanding of the different types of dividends and the tax implications of each.
There are two types of ordinary dividends: qualified and nonqualified. The most significant difference between the two is that nonqualified dividends are taxed at ordinary income rates, while qualified dividends receive more favorable tax treatment by being taxed at capital gains rates.
What classifies a dividend as ‘qualified’ for tax purposes?
Ordinary dividends are the most common type of distribution from a corporation or a mutual fund – as they are paid out of earnings and profits. Examples of ordinary dividends that do not qualify for preferential tax treatment include:
- Generally, dividends paid out by real estate investment trusts (there are instances where dividends can be considered qualified, provided certain requirements are met – – See IRC §857(c))
- Generally, dividends paid out by master limited partnerships (However, if the MLP is invested in qualifying corporations and it receives qualified dividends from those investments, it would pass out qualified dividends to the partners)
- Dividends paid on employee stock option plans
- Dividends paid by tax-exempt companies
- Dividends paid on savings or money market accounts by mutual savings banks, mutual insurance companies, credit unions and other loan associations
Other dividends paid out by U.S. corporations are qualified. In order to meet Internal Revenue Service standards, however, the requirements listed below must be met:
- The dividends must have been paid by a U.S. corporation or a qualified foreign corporation
- Investors must adhere to a minimum holding period
There are a few details to remember when considering these two rules. First, a foreign corporation is considered “qualified” if it has some association to the U.S., typically in the way of residing in a country that has a tax agreement in place with the IRS and Treasury Department. Because other circumstances may classify a foreign corporation as “qualified,” investors who are tax planning should consult a tax or accounting professional to determine definitively how dividends paid out by a foreign corporation will be classified for tax purposes.
Special holding rule requirements apply in order for a dividend to receive favorable tax treatment. For common stock, a share must be held more than 60 days during the 121-day period beginning 60 days before the ex-dividend date. Under IRS guidelines, the ex-dividend date is the date after the dividend has been paid and processed and any new buyers would be eligible for future dividends. For preferred stock, the holding period is more than 90 days during the 181-day period beginning 90 days before the stock’s ex-dividend date.
Changes to capital gains tax rate for qualified dividends
Knowing how dividends will be taxed is of particular importance in 2013, as new capital gains rates went into effect. High-income earners with qualified dividends may find themselves paying more. As of this year, single filers earning more than $200,000 and joint filers earning more than $250,000 will be subject to the additional 3.8% Medicare surtax on investment income. In addition, single taxpayers earning more than $400,000 and joint filers earning more than $450,000 will be subject to:
- A top marginal rate of 39.6 percent, up from 35 percent in 2012
- A 20 percent tax on long-term capital gains and qualified dividends, up from 15 percent
Investors in the 25 to 35 percent bracket may see qualified dividends taxed at 15-18.8 percent, while those in the 0 to 15 percent bracket will not be subject to capital gains taxes on qualified dividends.
Confused about which credits and deductions you can claim on your 2015 tax return? You’re not alone. Here are six tax breaks that you won’t want to overlook.
1. State Sales and Income Taxes
Thanks to last-minute tax extender legislation passed in December, taxpayers filing their 2015 returns can still deduct either state income tax paid or state sales tax paid, whichever is greater.
Here’s how it works. If you bought a big-ticket item like a car or boat in 2015, it might be more advantageous to deduct the sales tax, but don’t forget to figure any state income taxes withheld from your paycheck just in case. If you’re self-employed, you can include the state income paid from your estimated payments. In addition, if you owed taxes when filing your 2014 tax return in 2015, you can include the amount when you itemize your state taxes this year on your 2015 return.
2. Child and Dependent Care Tax Credit
Most parents realize that there is a tax credit for daycare when their child is young, but they might not realize that once a child starts school, the same credit can be used for before and after school care, as well as day camps during school vacations. This child and dependent care tax credit can also be taken by anyone who pays a home health aide to care for a spouse or other dependent–such as an elderly parent–who is physically or mentally unable to care for him or herself. The credit is worth a maximum of $1,050 or 35 percent of $3,000 of eligible expenses per dependent.
3. Job Search Expenses
Job search expenses are 100 percent deductible, whether you are gainfully employed or not currently working–as long as you are looking for a position in your current profession. Expenses include fees paid to join professional organizations, as well as employment placement agencies that you used during your job search. Travel to interviews is also deductible (as long as it was not paid by your prospective employer) as is paper, envelopes, and costs associated with resumes or portfolios. The catch is that you can only deduct expenses greater than two percent of your adjusted gross income (AGI). Also, you cannot deduct job search expenses if you are looking for a job for the first time.
4. Student Loan Interest Paid by Parents
Typically, a taxpayer is only able to deduct interest on mortgage and student loans if he or she is liable for the debt; however, if a parent pays back their child’s student loans that money is treated by the IRS as if the child paid it. As long as the child is not claimed as a dependent, he or she can deduct up to $2,500 in student loan interest paid by the parent. The deduction can be claimed even if the child does not itemize.
5. Medical Expenses
Most people know that medical expenses are deductible as long as they are more than 10 percent of Adjusted Gross Income (AGI) for tax year 2015. What they often don’t realize is which medical expenses can be deducted, such as medical miles (23 cents per mile) driven to and from appointments and travel (airline fares or hotel rooms) for out of town medical treatment.
Other deductible medical expenses that taxpayers might not be aware of include health insurance premiums, prescription drugs, co-pays, and dental premiums and treatment. Long-term care insurance (deductible dollar amounts vary depending on age) is also deductible, as are prescription glasses and contacts, counseling, therapy, hearing aids and batteries, dentures, oxygen, walkers, and wheelchairs.
If you’re self-employed, you may be able to deduct medical, dental, or long-term care insurance. Even better, you can deduct 100 percent of the premium. In addition, if you pay health insurance premiums for an adult child under age 27, you may be able to deduct those premiums as well.
6. Bad Debt
If you’ve ever loaned money to a friend, but were never repaid, you may qualify for a non-business bad debt tax deduction of up to $3,000 per year. To qualify, however, the debt must be totally worthless in that there is no reasonable expectation of payment.
Non-business bad debt is deducted as a short-term capital loss, subject to the capital loss limitations. You may take the deduction only in the year the debt becomes worthless. You do not have to wait until a debt is due to determine whether it is worthless. Any amount you are not able to deduct can be carried forward to reduce future tax liability.
Are you getting all of the tax credits and deductions that you are entitled to?
Maybe you are…but maybe you’re not. Why take a chance? Call the office today and make sure you get all of the tax breaks you deserve.
A large number of expired tax provisions would be extended—some permanently—as part of the omnibus spending bill, the Consolidated Appropriations Act, 2016, that was introduced in Congress on Wednesday. Congress is expected to vote on the bill on Friday, and, if it passes, the White House has indicated that the president will sign it. Division Q of the bill, called the Protecting Americans From Tax Hikes Act of 2015, contains numerous tax provisions.
Several expired provisions would be extended permanently and in many cases modified. Other provisions would be extended for five years (through 2019). And many provisions would be extended for two years (2015 and 2016).
Among the permanent extensions would be the Sec. 41 research credit (with modifications) and the Sec. 179 deduction (also with modifications). Bonus first-year depreciation would not be made permanent, but it would be extended through 2019.
The bill also contains many other tax items, including delaying for two years the imposition of the so-called Cadillac health care tax under Sec. 4980I and the 2.3% medical device excise tax under Sec. 4191, which would not apply to sales during 2016 and 2017.
In a break with congressional tradition, the bill would extend many provisions permanently, giving taxpayers who take advantage of those tax breaks more certainty in the future.
Child tax credit: The threshold amount for determining whether a taxpayer is eligible for the refundable (or additional) Sec. 24 child tax credit is permanently set at $3,000 (not indexed for inflation). That amount has been the threshold since 2009, but it was scheduled to expire at the end of 2017. The bill also would preclude retroactive claims of the child tax credit by preventing taxpayers from amending a return (or filing an original return) for any prior year in which the taxpayer or the qualifying child did not have an individual taxpayer identification number (ITIN) in order to claim the credit. The bill adds a provision barring individuals from claiming the credit for 10 years if they fraudulently claimed the credit and for two years if they are found to have claimed the credit with reckless or intentional disregard of the rules. The IRS is given math error authority, which allows it to disallow improper credits without a formal audit if the taxpayer claims the credit in a period in which he or she is barred from doing so.
American opportunity tax credit: The Sec. 25A American opportunity tax credit is made permanent and modified. The bill prohibits an individual from retroactively claiming the credit by amending a return (or filing an original return) for any prior year in which the individual or a student for whom the credit is claimed did not have an ITIN. The bill adds a provision barring individuals from claiming the credit for 10 years if they fraudulently claim the credit and for two years if they are found to have claimed the credit with reckless or intentional disregard of the rules. The IRS is given math error authority, which allows it to disallow improper credits without a formal audit if the taxpayer claims the credit in a period in which he or she is barred from doing so. Taxpayers claiming the American opportunity credit must report the employer identification number of the educational institution to which the taxpayer makes qualified payments under the credit.
Earned income tax credit: The enhanced provisions of the Sec. 32 earned income credit are made permanent. These provisions include an increased amount for families with three or more children and an increased phaseout range for married taxpayers filing jointly. The phaseout range is indexed for inflation for years after 2015. The bill also prevents retroactive claims of the earned income credit by prohibiting individuals from claiming the credit on an amended return (or original return) for any prior year in which the individual did not have a valid Social Security number.
Other permanent extensions of provisions affecting individuals would include:
- The Sec. 62(a)(2)(D) deduction for certain expenses of elementary and secondary school teachers, which allows teachers to deduct up to $250 they spend to buy books, supplies, computer equipment, and other materials for use in their classrooms. The bill also indexes the $250 amount for inflation, beginning in 2016.
- Sec. 132(f), which provides parity between the exclusion for employer-provided mass transit and parking benefits by making the limit for the monthly tax exclusion for employer-provided transit passes and vanpools the same as the limit for employer-provided parking benefits.
- The Sec. 164(b)(5) deduction for state and local general sales taxes in lieu of a deduction for state and local income taxes.
Various incentives for charitable giving would also be made permanent:
- The Sec. 170(b) charitable deduction for contributions of real property and the special rule for contributions of capital gain real property made for conservation purposes, which permits qualified conservation contributions to be deducted up to 50% of a taxpayer’s contribution base (100% for qualified farmers and ranchers). The bill also modifies this provision to allow Alaska Native Corporations to deduct conservation easement donations up to 100% of their taxable income.
- Sec. 408(d)(8), which allows taxpayers who are at least 70½ years old to make up to $100,000 in qualified charitable distributions from individual retirement plans without including the distributions in income.
- Sec. 170(e)(3)(C), which allows businesses to make contributions of “apparently wholesome food” to charities that will use it for the care of the ill, the needy, or infants and to take an above-basis deduction for these contributions of food inventory. The limitation is increased from 10% to 15% of the taxpayer’s adjusted gross income (15% of taxable income for C corporations) per year. New rules are introduced for valuing food inventory for these purposes.
- Sec. 512(b)(13)(E), which modifies the tax treatment of certain payments to controlling exempt organizations so that they are not treated as unrelated business income.
- Sec. 1367(a)(2), which allows S corporation shareholders to adjust their basis in their stock when the S corporation makes charitable contributions of property using their basis in the property instead of its fair market value.
For businesses, the tax provisions that would be made permanent include:
- Sec. 41 research and development credit, which provides a credit for qualified research expenses. The bill also modifies the credit so that eligible businesses with $50 million or less in gross receipts can claim the credit against their alternative minimum tax (AMT) liability. Also, certain small businesses can claim the credit against their payroll tax liability.
- Sec. 45P employer wage credit for employees who are active duty members of the uniformed services, which provides a credit for employers for up to 20% of the eligible differential wage payments made while an eligible employee is serving on active duty.
- Sec. 168(e)(3), which allows 15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
- Sec. 179 increased $500,000 expensing limit and $2 million phaseout threshold and an expanded definition of Sec. 179 property to include qualified real property. The bill also indexes the $500,000 and $2 million amounts for inflation beginning in 2016. It also treats air conditioning and heating units placed in service after 2015 as eligible for expensing. Finally, the bill eliminates the $250,000 cap with respect to qualified real property beginning in 2016.
- Secs. 871(k)(1) and (2), which exempt interest-related dividends and short-term capital gain dividends from a regulated investment company (RIC) from tax.
- Sec. 1202, which provides an exclusion of 100% of gain on certain small business stock.
- Sec. 1374(d)(7), which reduced the S corporation recognition period for built-in gains tax to five years.
- The Subpart F exception under Secs. 953(e)(10) and 954(h)(9) for active financing income.
Several incentives for real estate investment would also be made permanent:
- Sec. 42(b)(2) minimum low-income housing tax credit rate for nonfederally subsidized buildings, which allows a 9% minimum low-income housing credit rate for those buildings.
- Sec. 142(d)(2)(B)(ii), under which the military basic pay allowance for housing exclusion is disregarded with respect to a qualified building for purposes of the low-income housing credit.
- Sec. 897(h)(4), which treats RICs as qualified investment entities under the Foreign Investment in Real Property Tax Act, P.L. 96-499.
A handful of provisions would get longer, but not permanent, extensions. Provisions that would be extended through 2019 include:
- Sec. 45D new markets tax credit (carryovers of the unused limitation were extended through 2021), which provides tax credits for investments in businesses or real estate in low-income communities.
- Sec. 51 work opportunity tax credit equal to 40% of the qualified first-year wages of employees who are members of a targeted group. The bill also modifies this credit beginning in 2016 to allow it to be claimed by employers that hire qualified long-term unemployed individuals (individuals who have been unemployed for 27 or more weeks).
- Sec. 168(k), which provides a depreciation deduction equal to 50% of the adjusted basis of qualifying property in the first year it is placed in service (also known as bonus depreciation). The percentage phases down to 40% for property placed in service in 2018 and to 30% for property placed in service in 2019. The bill also modifies the AMT rules to increase the amount of unused AMT credits that can be claimed in lieu of bonus depreciation. Bonus depreciation will now be allowed for “qualified improvement property.” The bill also specifies that certain trees, vines, and fruit-bearing plants will be eligible for bonus depreciation when planted or grafted, rather than when placed in service.
- Sec. 954(c)(6), which provides for lookthrough treatment of payments of dividends, interest, rents, and royalties received or accrued from related controlled foreign corporations under the foreign personal holding company rules.
Other expired provisions would be extended for two years, retroactively for 2015 and through 2016. These include:
Individual tax incentives
Tax incentives for individuals extended through 2016 would include:
- Sec. 108(a)(1)(E), which excludes from gross income discharge of qualified principal residence indebtedness income.
- Sec. 163(h)(3) treatment of mortgage insurance premiums as qualified residence interest, which permits a taxpayer whose income is below certain thresholds to deduct the cost of premiums on mortgage insurance purchased in connection with acquisition indebtedness on the taxpayer’s principal residence.
- Sec. 222, which provides an above-the-line deduction for qualified tuition and related expenses.
Tax incentives for businesses
Business tax incentives extended through 2016 would include:
- Sec. 45A Indian employment tax credit for employers of enrolled members of Indian tribes (or their spouses) who work on and live on or near an Indian reservation.
- Sec. 45G, the railroad track maintenance credit, equal to 50% of the qualified railroad track maintenance expenditures paid or incurred by an eligible taxpayer.
- Sec. 45N mine rescue team training credit, which provides a credit for a portion of training costs for qualified mine rescue team employees.
- Sec. 54E qualified zone academy bonds, which allows qualified schools to issue bonds for renovations (but not new construction), equipment purchases, teacher training, or developing course materials when they partner with private businesses.
- Sec. 168(e)(3)(A), which allows certain racehorses to be depreciated as three-year property instead of seven-year property.
- Secs. 168(i)(15) and (e)(3)(C)(ii) allowing a seven-year recovery period for motorsports entertainment complexes.
- Sec. 168(j), which allows owners accelerated depreciation for qualifying property used predominantly in the active conduct of a trade or business within an Indian reservation.
- Sec. 179E election to expense mine safety equipment, which permits taxpayers to elect to treat 50% of the cost of any qualified advanced mine safety equipment as a deduction in the year the property is placed in service.
- The Sec. 181 special expensing rules for certain film and television productions, which allows taxpayers to treat costs of any qualified film or television production as a deductible expense. The provision is modified to also apply to live theatrical productions.
- Sec. 199(d)(8), which permits a deduction for income attributable to domestic production activities in Puerto Rico.
- Sec. 1391 empowerment zone tax incentives. The bill makes a modification to allow employees to meet the enterprise zone facility bond requirement if they reside in the empowerment zone, an enterprise community, or a qualified low-income community.
- The Sec. 7652(f) temporary increase in the limit on cover over of rum excise taxes from $10.50 to $13.25 per proof gallon to Puerto Rico and the Virgin Islands.
- The American Samoa economic development credit.
Energy tax incentives
Energy tax provisions extended through 2016 would include:
- Sec. 25C, which provides a 10% credit for qualified nonbusiness energy property. The bill also updates the Energy Star requirements.
- Sec. 30B, which provides a credit for qualified fuel cell motor vehicles.
- Sec. 30C, which provides a 30% credit for the cost of alternative (non-hydrogen) fuel vehicle refueling property.
- The Sec. 30D 10% credit for plug-in electric motorcycles and two-wheeled vehicles.
- Sec. 40(b)(6), which provides a credit for each gallon of qualified second-generation biofuel produced.
- The Sec. 40A credit for biodiesel and renewable diesel, which includes the biodiesel mixture credit, the biodiesel credit, and the small agri-biodiesel producer credit.
- The Sec. 45(e)(10)(A)(i) production credit for Indian coal facilities.
- The Sec. 45 credits for facilities producing energy from certain renewable resources.
- Sec. 45L, which provides a credit for each qualified new energy-efficient home constructed by an eligible contractor and acquired by a person from the eligible contractor for use as a residence during the tax year.
- Sec. 168(l), which provides a depreciation allowance equal to 50% of the adjusted basis of qualified second-generation biofuel plant property.
- Sec. 179D deduction for energy-efficient commercial buildings.
- Sec. 451(i) special rule for sales or dispositions to implement Federal Energy Regulatory Commission or state electric restructuring policy for qualified electric utilities.
- Secs. 6426(c) and 6427(e) excise tax credits for alternative fuels.
–Alistair M. Nevius (firstname.lastname@example.org) is the JofA’s editor-in-chief, tax.
Nearly half of all adults have worked in the restaurant industry at some point, and 46 percent of restaurant employees say they would like to own a restaurant someday.
Clearly many people dream of owning a restaurant.
No one dreams of owning a failed restaurant, though.
That’s why I asked Tyson Cole, one of the Food &Wine magazine’s 2005 Best New Chefs, 2011 James Beard Foundation Best Chef Southwest, and co-owner of the Japanese restaurants Uchi and Uchiko in Austin, Texas, for tips for would-be restaurateurs.
Just keep in mind Cole’s background is varied, extensive–and unusual.
He quit one job after he was told he couldn’t make sushi because he was white; he was rehired two days later but told he had to work in the back where guests couldn’t see him. He was also fired for giving a guest a free dessert; he was rehired when the manager found out the guest wasDenzel Washington.
Here’s what he says, in his own words, about how to start a successful restaurant:
1. Never start without the big three. No restaurant succeeds without a great chef, a great location, and a great concept. They all work together. Your location should fit your concept. Your chef, or “talent,” must fit your concept, otherwise you’ll constantly deal with the most common word in the restaurant business: Drama.
Some entrepreneurs say, “Well, location doesn’t matter because I’m going to create a destination restaurant.” In my experience, people say that when they have a bad location. It’s hard to become a destination if you don’t start with a great location.
Accessibility is everything. The more accessible you can make your restaurant, both in terms of location and in a broader sense, the greater your chances of success. Look at the most successful restaurants: They’re the most accessible in terms of location, brand, and price point. Fast casual restaurants are booming because they’re incredibly accessible on all levels.
2. Always overestimate your capital needs. Plan on having six to nine months of working capital from the start. You’ll be surprised by how quickly the expenditures add up and how much time it takes for a new place to grab hold and get legs/regular customers.
Many new restaurants see a major downswing in business after the opening’s initial excitement. That’s when capital is critical. When I started Uchi I brought clientele with me, but even so there was a gap after the first few months. We had to wait to see if the restaurant would really catch on.
A lot of restaurant owners start out with cash in reserve and start blowing it because they think the honeymoon phase will last forever. That’s why most restaurants go out of business. Never let initial success go to your head. Success is only determined years later.
3. Learn to love teaching. I often bring in people from different places, including interns from culinary schools. Paul Qui, a chef currently competing on Top Chef: Texas, is a great example. Paul came in eight years ago and asked to work for free. He’s worked through every station and now is the Executive Chef at Uchiko.
I don’t work in the kitchen much anymore but I do get to help teach people like Paul. That’s incredibly rewarding.
Doing something new is inspiring. Helping to shape the menu is inspiring. Everyone loves new dishes–the front of the house, the wait staff… once people love to come to work, you’re money.
4. Never be cheap where guests are concerned. The most important money you will spend is money that adds value to the guest.
I definitely made mistakes early on, especially when I tried to go cheap on certain things like equipment, valets, and even desserts. That was short sighted, because everything that touches a guest is important.
Determine a percentage of your revenue to put into improvements that affect the guest and constantly enhance their experience. At Uchi we don’t spend money on advertising or marketing but we run a very high level of comps. We give away gift cards and send a lot of complimentary dishes to tables.
Guests love when a dish comes out and the server says, “The chef wanted you to try this,” because that creates a real connection and makes the experience personal.
Make sure you spend as much money as possible on the guest experience. Spend money on the people already in your restaurant, because that’s the best way to generate genuinely positive word of mouth.
5. Focus on organization and systems of operation. Failing to put systems in place is one of the biggest mistakes an independent restaurant owner makes. I have an amazing partner, Daryl Kunik, and that was more of his realm.
Many restaurant owners don’t want to come off as corporate; to them, the “C” in the word “corporate” is like the Scarlet Letter. To embrace systems would be like selling out and becoming a chain.
I feel the opposite. There’s a reason chain restaurants thrive: Every one of them started as an individual restaurant. Each had a great chef, a great concept, and a great location, and they developed systems that enabled them to build guest demand, hold on to key people, and make money. Otherwise it would have been impossible to open two locations, much less 200.
Organization doesn’t kill the flow of creativity. Putting outstanding systems in place gives you the freedom to be creative.
6. Be ready to evolve, especially if you’re a chef. Many businesses are started by a craftsperson with an idea for a product. Rarely does that idea become anything unless that person partners with someone with a complementary ability, like, “You carve wooden bananas and I can sell them for you.” That’s when an idea becomes a business. I have great ideas, but without someone like Daryl, Uchi would have never succeeded.
Now as a restaurateur my focus is almost solely on people and communication. It was hard for me to say, okay, while I’ll always be a chef, I’m not going to be in my kitchen all the time. I’m going to teach and delegate instead. Once I embraced that I was able to do so much more. That was my tipping point.
Always look for people who are smarter than you. As a business owner the smartest thing you can do is partner with people who know things you don’t—and then give them a reason to care.
It is articulated in many different ways, but the same question is asked in almost every job interview: How will you help make our organization more successful? And though it too is expressed differently, the answer is almost always the same: I’ll work really hard to do my job really well. It’s an appropriate response, but also an incomplete one that sells job seekers short.
Johnson O’Connor is widely recognized as the founding father of the study and measurement of aptitude. The Google dictionary defines aptitude as “a natural ability to do something.” I think a better term is “talent” and a better definition is “the capacity for excellence.”
As O’Connor discovered, talent is an attribute of the human species. Like our opposable thumb, it is one of the characteristics that defines being human. We are all endowed with the capacity for excellence, yet sadly, many of us never recognize or nurture that gift.
There are at least two reasons for this cultural myopia.
- First, our educational system all but ignores individual talent, so people have to discover it on their own. Some of us are lucky and instinctively recognize it, but for many others, their talent remains a mystery that requires testing, counseling or extraordinary introspection to uncover.
- Second, talent is often confused with educational attainment or occupational success. We become expert in a field or activity, and assume that our knowledge or skill is the same as our inherent capacity for excellence. Talent must be combined with expertise to be fully expressed and experienced, but it is very different from what we learn or accomplish.
So, then, what does talent look like? It might be the natural ability to organize a group of disparate individuals into a high performing team, or the ability to disaggregate complex challenges into more easily understood and accomplished tasks or the ability to communicate complex ideas so they can be understood by everyone.
Not every talent can be expressed in every occupation, but in every occupation, the expression of talent separates the peak performers from everyone else. And that’s why, it should never be ignored or go unmentioned in an interview.
Showcase What Makes You Different
The Human Genome Project discovered that, while physical appearance makes every single one of us seem unique, we are at our most basic physiological level just 3 percent different. In other words, very small distinctions ultimately have a huge impact on the way we are perceived by others. That’s especially true in the job market.
Typically, recruiters interview five or more candidates for an opening, and as they typically do, when they ask each of those candidates to describe how they will contribute to the employer’s mission, they invariably get five or more variations on the exact same theme. Despite the earnest efforts of each individual, the recruiter’s perception is that they are virtually indistinguishable from one another, at least in terms of how they will perform their role.
It’s that reality which makes talent your most important differentiator in an interview. When you’re next asked how you will contribute to an employer’s mission, begin by describing how you will apply your skills and knowledge on-the-job. Then, go on to detail how your inherent capacity for excellence will enable you to leverage that expertise to do more for the employer in more work situations.
For example, you might explain that your ability to organize and lead teams will enable you to take on assignments with special projects or ad hoc study groups. Similarly, your ability to communicate complex ideas so they can be generally understood could be valuable to an organization when it introduces new workplace technology or processes.
This showcasing of your talent during an interview will set you apart in the recruiter’s eyes first by the expanded view they’ll get of your potential contribution and second by the extraordinary self-awareness you’ve demonstrated in recognizing and engaging your talent.
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Trust is often touted as the cornerstone to a successful relationship–business or personal. The results from the American Psychological Association (APA)’s 2014 Work and Well-Being survey, aren’t encouraging. Nearly a quarter of employees don’t trust their employers, a tough pill to swallow when you consider a good chunk of your day is spent at work.
Gretchen Gavett of the Harvard Business Review spoke with Dr. David Ballard, the APA’s Assistant Executive Director for Organizational Excellence, to find out why employees don’t trust their employers, and what leaders can do to fix it.
The problem is not a new one. In 2009, two-thirds of survey respondents reported that their companies took action to mitigate financial problems such as layoffs, reducing benefits and pay, enforcing unpaid time off, and increasing workloads. When asked about the situation the following year, more than half of the respondents said the cuts hadn’t been restored.
As the economy’s gotten better, employee paychecks haven’t improved, and media reports of skyrocketing CEO salaries only make the situation worse, Ballard tells the HBR. “When your CEO is making as much in a day as you make in a year, and you helped your company bear the brunt of the recession, it’s easy to see how you might not be happy,” Ballard says. Here are three key areas where employee trust is lacking:
“Bottom-up communication is as important as top-down,” Ballard notes. Everyone should be aware of the company’s mission, and employees should feel empowered to give feedback to managers, he says. If employees don’t feel like they’re part of the team, or receiving some level of control or autonomy over their job, they may feel disengaged.
Ballard says businesses can bring employees into the mix by encouraging group problem solving, offer profit-sharing plans, and provide 360 performance evaluations. If an employer asks employees to weigh in on what the company’s doing right, identify areas of improvement, etc., it needs to come back to them and disclose the results, Ballard says, as well as identify what action will be taken based on employee suggestions.
According to the survey, roughly half of the respondents reported feeling valued by their employer. And while participants cite compensation as one of their main stresses, recognition doesn’t have to be monetary, Ballard says. Offering a peer-recognition program that highlights exceptional performance is one way to show employees you value their hard work, he says.
Only 52% of respondents believe their employer is open and upfront with them, and a third believe their employer is not always honest and truthful. The recession affected all business, and even healthy ones had to make difficult decisions, Ballard says. The difference, however, came down not to what these companies did, but how they did it. “The best organizations found ways to do tough things in ways that were healthy, fair, and as transparent as possible,” he says.