Simply Junior

As life becomes more expensive, it’s getting harder to save for a rainy day. But with a little examination, you can find ways to save even on things you consider essential in fact it is much easier than you think!

1. First you’ve got to see where you are now. Take a couple of weeks and keep track of every expense, and don’t leave anything out. Even a couple of bucks spent at the local Gas n’ Go is subject to scrutiny. And don’t forget your normal “operating expenses” such as electricity, groceries, etc.

2. Now, take your list and cross off every essential item. You now have a list of unnecessary expenses, and it is your goal to cut or eliminate as many as you can. You may be most surprised at what you spend eating out. Consider brown-bagging for lunch during the week, cut family dinners down to once a week, and of course, nix the infamous $4 coffee.

3. OK, that didn’t hurt too much. Now take a look at your essentials list. What can you do to reduce expenses there? You can cut electrical costs at home by unplugging appliances when not in use, switching to compact fluorescent bulbs and lowering or raising your thermostat, especially when no one is home. Consider carpooling to save on gas, and pay attention to sales, coupons and special offers when you’re shopping for food and other necessities.

Stretching your money is a matter of small steps that become habit. The sacrifices now will be worth it as your savings grow!

The Approaches to Establishing Property Value

Sales Comparison Approach

The sales comparison approach is used at property tax hearings for houses, land and owner-occupied buildings. It is sometimes used for income properties as a secondary method of valuation. To perform the sales comparison approach you need information on sales of property similar to your property. You can obtain this information from a variety of sources including the appraisal district, real estate appraisers, brokers and third party vendors. Inspect and photograph the comparable sales making detailed notes regarding differences between the comparable sales and your property. Then make adjustments for differences between the subject property and comparables. Adjust comparable sales to the subject property. For example, if a comparable sale has four bedrooms and your home has three bedrooms, make a downward adjustment to the sales price to the comparable sale to bring it down to the level of your house. Select sales as similar as possible to the subject property to minimize adjustments. Comparable sales data is given strong consideration in property tax hearings for houses, land and owner-occupied commercial buildings.

Income Approach

The income approach is typically used for income properties. The basic theory is that investors purchase income properties for the income stream they produce. This income stream can be converted to an indication of market value for the property. The primary steps in the income approach are to estimate the potential gross income using rent comparables and information regarding actual income at the subject property. An allowance for vacancy is estimated based on the performance of the subject property and average vacancy in the area. Operating expenses are estimated using actual expenses at the subject property and market expenses for similar properties. The net operating income is calculated by deducting vacancy and operating expenses from the potential gross income. Net operating income is converted to an indication of market value by dividing it by the capitalization rate.

Cost Approach

The cost approach is not typically used at property tax protest hearings except for new buildings. Appraisal districts often use the cost approach for properties up to two or three years old. After that, they typically use either the sales comparison approach or income approach depending on the type of property. The appraisal district will apply the cost approach for a new property by adding the market value of the land (typically the purchase price) to the construction costs for the building. In addition, they may add an allowance for soft costs and for entrepreneurial profit. If the sum of land and construction cost exceeds the appraisal district’s assessed value, it is unlikely they will reduce the assessed value in the property tax hearing. However, if the sum of land and construction cost is less than the appraisal district’s initial assessed value, providing this information at the hearing will likely generate a reduction in your assessed value and property taxes.

Uniform and Equal Approach

The Texas Property Tax Code was amended in 2003 to allow property tax for property owners to protest based on “a reasonable number of comparable properties appropriately adjusted.” This new section of the Texas Property Tax Code allows a protest based on a limited number (perhaps 3 to 10) of assessment comparables. Some appraisal districts agree and are considering protests under the section. Others have chosen to interpret this section differently.

To prepare a protest using Uniform and Equal, gather data on assessed values for property similar to your property. Make adjustments for significant differences between the assessment comparables and your property. This can include items such as building size, land size, number of bedrooms, number of bathrooms, size of garage, site influences, age, etc. Make negative (downward adjustments) to an assessment comparable for items that are superior in the assessment comparable. For example, if the assessment comparable has four bedrooms and your house has three bedrooms, make a downward adjustment to the assessed value for the assessment comparable for this item. After applying appropriate adjustments to the assessment comparables, calculate the median level of assessment for the assessment comparables. The median is the middle data point after the adjusted assessment comparables are arrayed in order of increasing or decreasing (on a per square foot value basis). Multiply the median per square foot assessed value times the size of your property (improved area) to calculate the value your home should be assessed for based on Uniform and Equal. Section 41.43 of the Texas Property Tax Code provides you the opportunity to protest using this methodology. However, don’t be surprised if your local appraisal district is not receptive to this method of protest. The appraisal division of O’Connor & Associates is a national provider of investment real estate appraisal services including commercial real estate appraisals, commercial comparable sales database, San Antonio commercial comparable sales [http://www.oconnorcomps.com/whatnew.aspx?pgType=Commercial%20Comparable%20Sales%20-%20San%20Antonio.htm], Austin commercial comaprable sales [http://www.oconnorcomps.com/whatnew.aspx?pgType=Commercial%20Comparable%20Sales%20-%20Austin.htm], condemnation appraisals, due diligence, residential appraisals and investment hypotheses.

All commercial property types benefit from our appraisal services including nursing homes, discount stores, truck terminals, tennis clubs, supermarkets, country clubs, medical offices, mini-warehouses, restaurants, vacant lands, skating rinks, community shopping, centers, power centers, car wash facilities and service stations.

One recent poll asked entrepreneurs what they personally believe affects the success or failure of a startup company. The 549 founders came from all kinds of industries: computing, electronics, health care, aerospace and defense.

The top most critical success factors included learning from their mistakes and their successes, previous work experience, a good strong management team and good luck. 98 percent said prior work experience was a very important factor.

Some of the most common questions asked on the government’s Small Business Administration (SBA) website are: How do I get a small business loan… or grant? How do I get started in a business? How do I find an investor for my business? What are the interest rates, and terms or fees that the SBA requires on its Guarantee Loan program?

As small business entrepreneurs head into 2010, following are some real tried and true financial aids that can help any business grow.

Do not waste money anymore. By using good financial strategies, you can stick to the plan to help lower operating expenses. Review your expenses to make sure you are not paying double for anything. Just like public companies, review the year in quarters (Q1: January through March) and then set aside time each quarter to review your financials. You will most certainly find areas to cut back.

For example: Do you rent or lease a car or truck? Did you know that a company vehicle is best purchased because they can be depreciated on your company tax returns. Plus you’ll get a higher return on your investment after the vehicle has been paid off, than leasing. However, think about leasing your computers, which is usually a tax deduction, so that you can always trade them in for newer technology when the time comes.

Now more popular than ever before, another financial business strategy is to begin factoring your outstanding invoices. An invoice that won’t be paid for 60 to 90 days isn’t doing your company any good today. However if you find a factoring company to factor one or more of your outstanding invoices, you can use the money wisely to invest in your business and grow faster. Many factors today do what is called “single invoice factoring” where they will spot one invoice at a time.

Accounts receivable factoring is particularly helpful if you need cash in a hurry because once a factor receives your application and reviews your invoices, you can receive payment within as little as 24 to 48 hours after they have pre-qualified the vendor that owes you the money. Remember your credit isn’t checked, but the vendor that owes you the money will be pre-qualified by the factor.

Factoring companies, just like a bank or any commercial financial institution, charges a fee for its services. A factoring company will first examine your invoices and check the creditworthiness of your customers. You should be prepared to show the factor these following: 1) A current financial statement; 2) An accounts receivable aging report; 3) A certificate of incorporation or partnership; agreement; 4) Proof of insurance; and 5) Invoices and other business documents.

A factor will take charge of collecting your receivables, so they will want to make sure your customers pay their invoices on time. Once you have selected which invoices the factor will purchase, they will typically pay you an advance; for example, the factor might pay you 80 percent of the total amount of your invoices and then reimburse you the other 20 percent once your customers pays the invoices.

A factor will take anywhere from 3 percent to 7 percent or more of the total that they collect. Factors’ fees vary depending on the size of your invoices, your customers’ creditworthiness and the number of days (30/60/90) until the invoice is due.

“I only have a small business, I don’t need a budget.”

“I don’t have enough money to budget.”

For many small business owners, the word “budget” is something for the bigger company – maybe they’ll have one when their business “grows up.”

What is a Budget?

The simple explanation is a budget is a plan for how you will manage all financial resources and all expenses for your business. The basic equation that you want to demonstrate in a budget is as follows:

(estimated )Sales minus (estimated) Expenses = Profit (or loss)

How to create a Budget

If this is your first time to work on a budget for your small business, you might work from the perspective of having to list cost of goods or services plus all of your operating expenses to start the process.

How much does it take to operate your phone line? What is the cost of other utilities? How about the cost of a company vehicle, or what is the cost of transportation if you’re using your personal vehicle to also serve as a company vehicle. Do you need any supplies or inventory to operate your business? How about any employee payroll, payroll taxes or independent product or service providers? Remember to include everything you spend money on to operate your business even if you allocate some of the expenses to “petty cash” expenses, such as parking or bridge tolls while traveling to see clients.

I recommend that you create annual budget, as opposed to a monthly budget, so you can identify any expenses that you may have that come up only once or twice a year such as insurance and include them in your list of expenses. This allows you to amortize or spread the cost of this out over several months so that you can plan ahead for the expense.

As you work on your list of expenses keep in mind that these are the expenses that are necessary to operate your business. These should not be your “wish list” unless you want to budget in some expansion or growth. You may want to create a budget with just the necessities and another version of your budget with expansion expenses listed so that you can see the cost of both separately.

With a dollar figure to work with of your total expenses you are able to set the standard for or evaluate your sales figures. If you are new to your business you may need to use the dollar amount of your expenses to help you determine what your sales need to be in order to cover all costs and show a profit. If you have been in business for a while you can evaluate whether or not you are producing a profit by looking at historical sales figures.

As you conduct business during your budget year you should compare your actual income and spending with what you estimated. This will allow you to manage your spending so that you don’t over spend and cut into or eliminate your profits. You will also be able to see if sales have met expectations in order to cover expenses and still remain profitable.

Who should Budget?

Every small business owner should budget, no matter the size of business. I have heard some small business owners say their business is too small to budget, but that is not true. If you don’t have a written plan for what your financial obligations are and how your revenue will cover those obligations and leave some money unspent, then your business will never grow. In fact, you may out-spend your revenue and put yourself out of business.

Why Budget?

Budgeting for your small business gives you control over your finances. By looking ahead to what you know or can reasonably estimate what your expenses will be, you can then make financial decisions that will keep you from over-spending, or give you the freedom to invest in the growth of your business.

When Budget?

Every small business owner should have a budget to start their business and then review it annually. I recommend that small business owners review their budget several months before the end of their fiscal year. When I say review the budget I’m talking about comparing projected budget with actual. In the comparison you can see if your estimates were realistic. You and your CPA can also plan for last minute tax strategies, or plan to implement strategies in the up coming year’s budget.

The Goal in Budgeting

Remember, the goal of having a budget is to stay in control of your finances in advance. Setting the standard for your spending and revenue and having a tool to compare with actual will give you the control that you need to stay profitable. At the very least it will give you an indication of whether or not your business is actually profitable and not just busy.

Copyright 2005 Melody Campbell

Dedicated server hosting and the word “budget” used to be polar opposites from one another. Many larger businesses had to move to the dedicated type, and when they did so, there was a bittersweet mixture of joy that one’s business had grown to that level and despair that operating expenses would get out of control. Dedicated platforms were not always cost effective, but they could be essential if one wanted to keep viruses and other impurities from polluting their site and the lives of their users. But all that is in the process of changing for the better thanks to these key areas: more options, changes in business practices, and more efficient infrastructure.

More Options

It used to be that if you needed a business online to run with any success you had to go with a dedicated server. That meant paying for additional infrastructure and in many cases hiring an employee to handle everything for you. It could be very cost prohibitive to small and mid sized businesses. Then along came virtual private servers, and the efficiency of hosting platforms got much better as did the cost. Cloud computing then came along and really turned some heads. With all these options out there, it was only a matter of time before the dedicated option had to work smarter and more cost effectively. But more on that in a moment.

Changes in business practices

With the economic crises of recent years touching virtually everyone, some sites went under while others were forced to make cuts and think about using the web more intelligently. Many banked on the freedoms of Facebook and Twitter and saw a surge in growth and a slicing of expenses. As a result, businesses found new ways to succeed or they finally fell in on themselves. The landscape of the marketplace changed once again, and with it, so too did the efficiency of the dedicated server.

More efficient infrastructure

By offering managed dedicated servers, and the use of multiple dedicated servers across many geographic locations, budget hosting became affordable even for those in need of the more expensive option. As a result businesses started coming back to dedicated, but they did it in a wiser and more cost efficient manner. With the redundancy and speed of multiple servers working at once, it became possible to have the perks of dedicated servers without actually having to rely on one infrastructure foundation.

If your business is growing, you can now rest easy knowing that the move to dedicated server hosting is within your budgeted means. And you really should consider the move as soon as possible for how it protects you and improves the user experience for all of your audience every time they log on.