ABC Solutions

Getting to the Next Level of Your Business

Sometimes it’s hard for business owners to know how to take their businesses to the next level of growth and profitability. If you’ve been stuck at the same revenue or profit level for a while, it could be because knowing how to scale your business is not a skill in your skillset — yet.

Enter a classic management book on scaling: High Output Management by Andrew Grove, ex-chairman and CEO of Intel. While it was written in 1983, it has made a recent comeback in Silicon Valley but is still not well-known outside of the Bay area. Many people who have read it say it’s the best management book they have ever read, life-changing even. It is certainly a timeless and invaluable read for business owners and managers.

In the book, Grove applies the principles of engineering and manufacturing production to management. It’s all about process: developing processes and procedures so that you can track what’s going on and measure the results, or output, every step of the way.  Only then can you improve the process so that it leads to high output.

Measurement is an important concept in the book. No matter what business you’re in, you can apply the ideas of developing processes, measuring them, and improving upon them in your business.

Grove gets into how managers can motivate their team members and affect production outputs. He talks a lot about leverage, which enables scaling both positively and negatively, and how it can affect employees’ output. One example of positive leverage is when managers can add a “nudge” activity to enable their employees’ work. A negative example is when managers meddle and get in the way of the employee making progress.

In the section on meetings, Grove breaks them down by purpose and lends his ideas on how to run each type better. He touches on other key topics such as decision-making, planning, motivation, performance reviews, and values.

One significant highlight from the book is that if you’re motivated to become a better manager, and wish to improve the output of your organization, then there is nothing more important than training yourself.

Reading this book is a wonderful way to spend time learning new business skills you can use and benefit from immediately.

5 Tips to Spice Up Working from Home

We’ve been in a pandemic for what seems like five years now, right? All joking aside, if you’ve been lucky enough to work from home this past year, then it’s possible that you are in the process of going stir-crazy. Or maybe you’re simply ready to shake things up a bit.

Working from home has its benefits. Yet, if you are someone who enjoys going to the office every day, chatting with co-workers in person, attending meetings that aren’t all virtual, and having a little spontaneity each week, then we’re here to help. Here are five tips to boost your WFH (working from home) environment.

  1. Take Short Breaks

Taking regular breaks throughout the day is so important, and more so now than ever before! Without a doubt, these breaks will help you mentally (that is, keep you from going stir-crazy), but they can also help your work productivity and quality. These breaks don’t need to be—and shouldn’t be—long or strenuous.

Walk the dog. Stand up and do some light stretches. Run up and down your stairs. Go outside into your backyard. Dance to a song. Do a quick chore, like emptying or loading the dishwasher. Call a friend. Or choose your own favorite break activity.  The goal is to get the blood flowing and the fog cleared from your mind.

  1. Switch Up Locations

Get creative and switch up your location. If you have a yard or patio of some sort – and good weather — that allows you to sit outside and work, perfect! If not, try working from the living room, the dining room, the kitchen, even the bedroom. The idea here is to change your surroundings a couple of times a week so that you don’t feel stuck or get lost in the monotony of a daily routine.

  1. Treat Yourself with Lunch

Everyone needs something to look forward to, and what is better to look forward to than food? Depending on your budget, treat yourself to a special lunch once a week, every other week, or monthly. Consider trying new restaurants, different foods, places that you’ve always wanted to eat at but haven’t had the opportunity to do so. Not only will this be fun for you, but you will also be supporting small, local businesses. Win-win!

  1. Dress for Success

We can probably all agree on one thing: sweatpants are comfortable! As such, it can be difficult to trade in the sweats for jeans or dress pants every day. After all, if you’re working from home and there’s no dress code to enforce, it can be hard to dress for success. Yet, doing so can give you a little burst of inspiration to get through the day. You can keep your outfits casual just as long as you have fun getting dressed. For example, you could have Sandal Mondays or Blue Shirt Fridays. Again, just have fun with it!

  1. Create a New Playlist

Does music motivate you? Are you able to work and listen to music at the same time?  If so, create different music playlists to listen to throughout your day. Try listening to various genres or new artists, anything that keeps you alert and stimulated, even excited about your workday. Depending on the type of music you enjoy listening to, you can even get up periodically and take dance breaks (Tip #1)!

Keep your day fresh, and boost your productivity and mood by using your imagination and trying the tips above.

Does Your Business Qualify for the Employee Retention Credit?

The Employee Retention Credit is one of the many IRS tax breaks for businesses that was included in the 2020 CARES Act as well as the recent Consolidated Appropriations Act, 2021.  The goal of the credit is to provide financial relief to businesses that suffered from the effects of coronavirus but retained their employees.

The credit is available to eligible employers that paid qualified wages from March 13, 2020 through June 30, 2021. To be eligible, requirements include having the business shut down due to national, state, or local orders or having experienced a significant reduction in gross receipts – 50+ percent in 2020 and 20+ percent in 2021 – in a quarter.

Wages and health costs can be counted for the credit, and there is a cap of $10,000 per employee per year. For 2020, the credit is 50 percent of qualifying wages, and for 2021, the credit is 70 percent of qualifying wages. Any wages used in a Paycheck Protection Program loan forgiveness process are not eligible; in other words: no double-dipping.

This tax credit is a little different as it interplays with payroll taxes and not income or business taxes. The credit can be taken on the IRS Form 941. Some employers can request an advance by completing Form 7200, although the February 1, 2021 has passed for most businesses. Tax professionals are awaiting further guidance on details of the expanded program.

For qualifying employers, the amount of the credit can be substantial. Since this credit affects your payroll taxes, payroll tax forms, and payroll tax filings, you will want to make sure it doesn’t fall through the cracks, especially if your payroll function and your income tax preparation are handled by two different companies.

If you feel your business might be eligible, contact your tax professional to see how to get started.

PPP January 2021 Update

Qualifying small businesses can now apply for Paycheck Protection Program (PPP) loans through certain lenders. The Small Business Administration (SBA) reopened its PPP portal on January 11, 2021 after Congress passed and the President signed legislation in December 2020, authorizing the continuation of the program and an additional $284 billion in funds.

The program allows for two types of applications:

  • First Draw Loans to qualifying entities that did not receive a PPP loan in 2020, and
  • Second Draw Loans for previous PPP loan recipients and with a narrower set of qualifications.

First Draw PPP Loans for First-Time Borrowers

Borrowers that qualify for first-draw PPP loans can apply for up to 2.5 times their average monthly payroll costs (with caps), for a maximum loan amount of $10 million. Generally speaking, the applicants must have been in operation on February 15, 2020 and be among the following types of businesses:

  • Businesses with 500 or fewer employees that are eligible for other SBA 7(a) loans
  • Sole proprietors, some self-employed individuals, and independent contractors
  • Nonprofits, including churches
  • Sec. 501(c)(6) businesses
  • Food or lodging operations with NAICS codes that start with 72 and with fewer than 500 employees per location
  • Certain news operations with qualifying NAICS codes in the 51 range

A number of entities are specifically prohibited from receiving loans.

The SBA application for First Draw Loans is here:
https://www.sba.gov/document/sba-form-2483-ppp-first-draw-borrower-application-form

The applicant must attest to the necessity of the loan, among several other declarations.

Second Draw PPP Loans for Borrowers That Received a PPP Loan in 2020

Borrowers that qualify for a second-draw PPP loan can apply for up to 2.5* times their average monthly payroll costs (with caps), for a maximum loan amount of $2 million. Generally speaking, the applicants must qualify as follows:

  • Employ no more than 300 employees
  • Have spent all of their first PPP loan on eligible expenses
  • Do not have to apply for forgiveness for the first loan ahead of receiving the second loan
  • Can show a 25 percent drop in gross receipts in any one 2020 calendar quarter from 2019. If it’s easier to show a 25 percent drop for the entire 2020 year compared to 2019, applicants can submit their tax returns as proof.

*Companies with NAICS code 72, which generally speaking are food and lodging operations, can borrow up to 3.5 times their average monthly payroll costs (with caps).

The SBA application for Second Draw Loans is here:
https://www.sba.gov/document/sba-form-2483-sd-ppp-second-draw-borrower-application-form

The applicant must attest to the necessity of the loan, among multiple other certifications and declarations.

Loan Forgiveness

PPP loan recipients can apply to have PPP loans forgiven if the funds are used within a specified covered period from 8 to 24 weeks on the following eligible costs: payroll (60 percent of funds), rent, covered worker protection and facility modification expenditures, covered property damage costs, certain supplier costs, accounting (!) expenses, and a handful of other qualifying expenses.

Timing

The SBA portal opened Monday, January 11, 2021 for first-draw loans by lenders (about 10 percent) that cater to underserved communities. These include Community Development Financial Institutions (CDFIs), Minority Depository Institutions (MDIs), Certified Development Companies (CDCs) and Microloan Intermediaries.

On Wednesday, January 13, 2021, the SBA application portal began accepting applications for Second Draw loans. A few days later, additional lenders will be added to the portals.

SBA says it “plans to dedicate specific times to process and assist the smallest PPP lenders with loan applications from eligible small businesses.”

What to Do Next

Here are some suggested steps to get ready for this next round of PPP funds.

  1. Determine which lender you want to use to apply for PPP funds.
  2. Visit your lender website to see if they have a PPP notification signup so you can get notified of updates.
  3. Collect the documents you need for the application.
    a. Payroll summary reports
    b. Profit and loss statements
    c. Tax returns
  4. Begin calculating the amounts you’ll need for the application:
    a. Gross receipts by quarter for 2020 and 2019
    b. Average monthly payroll costs, including cap limits for wages over $100,000, for the year you want to use (2020, 2019, or the year from the application date)
  5. Contact us if you need help with documentation or calculation or other advice.
  6. Contact us for advice about tax ramifications.
  7. Contact your attorney to evaluate the loan agreement.

Further PPP Resources

Updated PPP Lender forms, guidance, and resources are available at www.sba.gov/ppp.

CARES Act Treasury page: https://home.treasury.gov/policy-issues/cares/assistance-for-small-businesses

Jan 6, 2021 SBA PPP Interim Final Rule – 82 pages
https://home.treasury.gov/system/files/136/PPP-IFR-Paycheck-Protection-Program-as-Amended-by-Economic-Aid-Act.pdf

Jan 6, 2021 SBA PPP Second Draw Interim Final Rule – 42 pages
https://home.treasury.gov/system/files/136/PPP-IFR-Second-Draw-Loans.pdf

Wrapping Up 2020

Year-end is the perfect time to reflect on accomplishments achieved since January. It’s also an important time to put things into perspective as we turn the page and start a new year.

What We Learned

With so much change in 2020, the opportunities to learn have been abundant. Take a moment and contemplate the following:

  • What new skills did you learn this year that you have put to work in your business?
  • What topics did you become wiser about?
  • What situations have you learned to master?

Goals Met

If you set goals for 2020, which ones did you achieve?  Because it was a volatile year, you may have achieved a lot of things that were not planned.  Or you may have simply maintained status quo, which is an amazing accomplishment in its own right in 2020. Give yourself credit for all of that as well.

As we transition to 2021, set new goals to be achieved in your business and record the list so you can look back periodically to monitor your progress.

Gaining Perspective

The circumstances of the pandemic present a constant challenge to keep things in perspective.  Our emotions are exacerbated when we feel threatened, whether it’s about our health or our freedom. This creates the polarization we’ve seen in the news and current events.

Gain perspective by asking yourself these questions:

  • What kind of business person do I want to be in 2021?
  • How do I see my business in five years?
  • What can my business contribute to its customers, employees, and other stakeholders?

Reflect, plan, and gain perspective as we usher in 2021. And have a Happy New Year!