The Hammons Business Report

Outsourcing Can Be Your Ticket To Success

Outsourcing is when you hire someone from outside of your business to perform certain necessary tasks.

Different marketers have different reasons for outsourcing their business tasks. It all depends on what they want or need to accomplish, how much time they can personally devote to particular tasks, and how they value their time.

One mistake that many small business owners make is thinking they have to do everything themselves, either for reasons of creative control, or because they think outsourcing is not a justifiable expense.

The truth is, if you can outsource part of your business workload, you will be able to devote more of your time to tasks that hold more value and importance for your business.

In some cases, businesspeople outsource some of their work because they do not have the equipment or resources, or they do not have the expertise to do it themselves. Or they may simply need help through a busy period.

Whatever the reason for outsourcing, if planned with purpose, it can contribute to the productivity and ultimate success of a business.

One advantage of outsourcing is the fact that it is much more efficient than hiring, training and supervising new employees. Simply hire a professional, tell them what needs to be done and let them go to it. A side benefit is you won't need more office space to accommodate more people. Not only does outsourcing leverage your time, it can also help to leverage your resources.

Additionally, when you outsource some of your workload, you won't need to worry about additional paperwork involved with hiring an employee, such as tax forms and scheduling. And you won't have employee costs like taxes, vacation time, workers compensation and so on.

Another advantage is that you won't need to purchase or lease new equipment or go through the ever-challenging process of learning new software or new skills.

The key benefit to outsourcing is the time it frees up for you to concentrate on more important business-building tasks.

You can focus on your marketing efforts; work on improving your customer service; devote some time to new product development; speed up your delivery system; develop new markets; land some bigger customers and larger orders; expand your services to take on any overflow your competitors can't handle.

Some small business marketers may look at outsourcing as a burden of expense rather than a benefit. "How can you justify the expense," they ask, "when sales and income are low?"

The thing is, if sales are low, that is exactly why you need to outsource some of your tasks – so you can devote more time and attention to your marketing and advertising in order to generate more sales, faster.

The key is to have a solid marketing plan. Know what you need to do to achieve your sales and income goals; identify the tasks that are critical for you to pay personal attention to, and determine which tasks can be delegated to an outside service.

Outsourcing is just one of many resources at your disposal. When used wisely, outsourcing can definitely contribute to your business and marketing success.

Limited Liability Companies

The limited liability company (LLC) is a distinct business entity that combines the corporate advantage of limited liability protection with "pass-through" taxation, the method of taxation afforded to both general partnerships and S corporations.

Like corporations, LLC's come into existence after making a filing with the appropriate state body, typically the Secretary of State, and paying the necessary state filing fees. The LLC formation documents are typically called articles of organization or a certificate of organization.

In terms of taxation, the LLC’s income is not taxed at the entity level as is that of a C corporation. While the LLC does complete a tax return, the income or loss of the LLC as shown on this return is passed through the LLC and is reported on the owners’ individual tax returns.

The LLC’s owners then pay taxes on the LLC’s profits at the individual tax level. LLCs can elect with the Internal Revenue Service (IRS) to be taxed like a C corporation, but this is not overly common.

Other advantages of LLCs include:

Members are typically not held personally responsible for the debts and liabilities of the company.

Forming an LLC can help establish credibility for a new business with potential customers, employees, vendors, and partners.

There are generally no restrictions on the number of members allowed.

LLC's have flexibility in structuring the management of the company. LLC's do not require as much annual paperwork or have as many formalities as corporations and S corporations.

Some disadvantages of LLCs include:

LLC's are more expensive to form than sole proprietorships and general partnerships.

LLC's face more ongoing requirements, such as state annual report filings, than sole proprietorships and general partnerships.

Ownership is typically harder to transfer than with a corporation.

Because the LLC is a newer business structure, there is not as much case law to rely on for determining precedent.

Regarding the ownership of an LLC, the owners are called members. Members are analogous to shareholders in a corporation or partners in a partnership, depending on how the LLC is structured.

Members will more closely resemble shareholders if the LLC utilizes a manager or managers because the members will not directly participate in the management of the LLC. If the LLC does not utilize managers, then the members will more closely resemble partners because they will have a direct say in the decision-making of the company.

An LLC must specify at the time of formation whether it will be managed by members or managers.

A member’s ownership of an LLC is represented by "membership interest," just like a partner’s interest in a partnership or a shareholder’s shares of stock in a corporation.

When evaluating whether the LLC is the right business structure for your particular business, it is advisable to first determine the goals of your business, and then to assess the advantages and potential disadvantages of the different business structures in relation to those goals. You may also wish to seek the advice of an attorney or accountant.

C-Corporations

The standard corporation, also called a C corporation, is a very common business structure. Corporations are separate legal entities that are owned by shareholders. Conversely, sole proprietorships and partnerships are not separate legal entities, and your personal assets are exposed should your business be sued.

They are considered to be the same as the owner(s). In order to form a corporation, the appropriate formation documents, usually called the articles of incorporation or a certificate of incorporation, must be filed with the state and the state filing fees be paid.

The primary advantage of incorporating a business is the limited liability the corporate entity affords its shareholders. Typically, shareholders are not personally liable for the debts and obligations of the corporation; thus, creditors will not come knocking at the door of a shareholder to pay debts owed by the corporation.

In a partnership or sole proprietorship the owner’s personal assets may be used to pay debts of the business.

Other advantages of incorporating a business include:

Incorporating may establish credibility for a new business with potential customers, employees, vendors, and partners.

The ownership of a corporation is easily transferable through the sale of stock.

Corporations have unlimited life extending beyond the illness or death of owners.

Certain expenses, such as insurance, travel, and qualified retirement plans are typically tax-deductible.

Additional capital can be easily raised through the sale of stock (shares) in a corporation.

The main disadvantage to forming a C corporation is often considered to be the potential for double taxation. C corporations are considered separately taxable entities by the Internal Revenue Service (IRS), and taxes must be paid on the profits of the corporation.

If a corporation then distributes its profits to shareholders in the form of dividends, the dividend income is also taxed as regular income to the shareholders. In this case, the corporation’s profits are taxed twice, first as income to the corporation and second as dividend income to the shareholder, creating the “double-tax.”

However, not all income a shareholder receives from a C corporation is subject to the double tax. For example, if the shareholder is also an employee of the corporation, that shareholder will most likely receive a salary payment from the corporation.

As long as the salary paid to the shareholder is considered by the IRS to be reasonable (or similar to the market salary rates for that position), it is treated as a business expense and is deductible to the corporation. This helps reduce the amount of taxable income the corporation has.

In order to eliminate the possibility of double taxation, C corporations can elect to be taxed as an S corporation with the IRS. With S corporations, the profits and losses of the corporation are reported on the individual tax returns of the shareholders, and any necessary tax is paid at the individual level. This taxation method is called "pass-through" taxation, since the profit or loss of the corporation is passed through to the shareholders.

Other aspects of C corporations that can be considered disadvantages include:

Corporations are more expensive to form than sole proprietorships and partnerships.

There are more corporate formalities, such as annual paperwork, and more state and federal rules and regulations, than with sole proprietorships and general partnerships.

When evaluating whether the corporate structure is right for your particular business, it is advisable to first determine the goals of your business, and then to assess the advantages and potential disadvantages of the different business structures in relation to those goals. You may also wish to seek the advice of an attorney or accountant.

How To Use Postcard Marketing To Increase Your Real Estate Investing Business

Finding new leads can be difficult, and costly. One of the best and cost-effective techniques to get quality leads is through post card marketing.

Using direct mail postcard marketing, you will stand out of the crowd, because this technique is not used by many real estate marketers. This can not only result in leads, but referral business, for a long time to come.

Using direct mail postcard marketing is also a great way to make sure that your potential sellers and buyers keep coming back to you. There are a few things that help you to provide the attention your potential clients deserve.

However, to have the best success with direct mail postcards, you have to go above and beyond. Building a relationship with clients goes a long way in the business world.

By opening up, you are showing your clients that you care about them and their needs and that they can trust you. It is difficult, if not impossible, to build a relationship from one direct mail postcard. That is why it is crucial to have a regular follow-up with your new leads and regular clients.

Going the extra mile, using direct mail postcard marketing, differentiates you from the "also-ran" marketers. It makes it very obvious that you are providing quality service to your clients. It also shows them that they are of utmost importance to you

Throughout the process of following up with your leads and clients, it is vital that you make your postcard design consistent with your business image, to establish and increase the recognition of the postcard, thus increasing your response rate.

Color postcards, including photos, will also increase your response rate. However, we have found that the bright yellow postcard with black type face is just as effective and less expensive.

Direct mail postcard marketing is a great way to keep new leads and clients informed of upcoming deals, while providing quality customer service at the same time. Return buyers and sellers are to be valued, so it is vital that you let them know they are valued. You can do all this and more with direct mail postcards.

Look for my follow up to this post on how to automate your direct marketing and lead capture systems.

How Real Estate Businesses Waste Money...

Most real estate investors subscribe to the thought that you "must spend money to make money". This can be true, but you also must know exactly where that money is going and the results it brings. A real estate investor never has any money to waste.

Some ways that your investing business might waste money includes the following:

1. Manage your credit cards & lines of credit - If you have several cards, develop a computer program that will show you the exact balances, due dates, and the interest rate you are paying. Always be aware of other solicitations that save you money and possibly change your balances over to a new company.

If you have any employee cards, see if you can set a limit on them. If not with the credit card company, make sure that the employees know their limits. Manage your credit cards wisely and never, ever miss a due date.

2. Develop an annual plan so you know where you will spend money - This helps you in several ways. An must be aware of what portion of the profits are going to advertising, towards incentives, towards accounting and other internal expenses, etc.

3. Do not over-purchase any products or services for a business - If you buy rehabbing materials in bulk, the money is tied up and a place must be provided to keep the extras. That might be an unnecessary expense, as well as hurt cash flow.

4. Developing a marketing & advertising budget - Knowing just what resources to use is key to keeping money under control in an investing business. You must market and advertise, but you also must get value for your money or you will soon be out of business.

Keep a record of how much is spent, can you get payment terms, when is the most efficient time to advertise your particular business to get the most value for the dollar.

Every dollar must be accounted for in advertising because the lifeline of your business depends on new leads and customers. Advertising is the way to get the word out to the community or the Internet.

5. A real estate investor will sometimes be under self-induced stress to manage all aspects of the business - Sometimes, leaving the control and decisions to others that are qualified is the best way to manage the business. Releasing control may be hard to do sometimes, but in a lot of businesses, money can be wasted because the owner cannot possibly be as efficient as the person who has studied or is knowledgeable about a particular field.

For instance, if an investor does not know accounting, many mistakes in reporting income and taxes can be made. A qualified accountant can possibly save more than the cost of their services in reduced taxes.

Take a hard look around your real estate investing business and do not let anything be set in stone if saving money is the goal. Challenge everything that will cost money and see what can be done to change the situation.

Any money that is saved is money that can be put back into the business either in profits or in growth.

A real estate investor wants their business to be successful and will work hard to sustain growth. An investor wants a way to continue making and growing money from a product or service that is interesting to them.

After growing a successful investing business and being smart with cash flow, many business owners will sell their businesses only to start another business.

The reason is that real estate investors are independent types and challenges are rewarding when met and faced.

Saving money through every day operations will help the business owner to meet their financial and emotional goals.

Give us a call for a free initial business consultation.