So you’re about to have a baby. Congratulations! But you also want to start a business at the same time. How do you do everything at once? And how do you manage employees when you’re the same age as they are? Join hosts Gene Marks and Elizabeth Larkin as they discuss these questions and more on this episode of the Small Biz Ahead Podcast.
Do you have a question you’d like Elizabeth and Gene to answer? Submit your question to the Small Biz Ahead Podcast.
Elizabeth: Welcome back to another addition of the Small Biz Ahead podcast. Gene and I are here on a beautiful Friday afternoon in April and typically we try to not talk about anything too timely because we never know when people are going to be listening, but we do have to mention that it’s April 15th today.
Gene: Yes. It is.
Elizabeth: Luckily, this year tax day was extended to the 18th. I always feel like the people that don’t do their taxes until the last minute, you could give them another month, and they’re still just going to do it at the last minute.
Gene: There’s people in this world that are just procrastinators, right?
Elizabeth: Yes. As a small business owner, Gene, what do you think about, what do you start thinking about now for next year as far as taxes?
Gene: I’ll tell you what we do. I’m a CPA, but I don’t do taxes.
Elizabeth: You’ve told us that we should not hire you.
Gene: You don’t want to hire me as a CPA, but there are certain things that you do learn by route as being a CPA. One of the things I do, like a lot of business owners do, I make estimated payments because a lot of business owners they file an es-corp tax return, very common, and then it comes down to their personal income tax. They’re not withholding taxes so you have to make estimated payments throughout the year. I’ll tell you what we do is … You know you’ve got to make your payment on April 15th and then in June and then in September so we send our accountants an updated journal ledger, like an income statement from our accounting system, before we make our estimated payments, and we pay them for an hours worth of work, and they review it just to make sure that the estimated payment is on track or if it could be even less.
If we expect to make less money this year, I don’t want to be making estimated payments that were based on a more profitable year before. I’d rather hold onto it. Paying in too much, whenever people say to me, I got a big refund!
Elizabeth: That’s not a good idea.
Gene: I’m like that’s kind of stupid because the IRS has your money all of that time and you’re earning no interest. One big thing I always tell clients to do is if you’re making estimated payments, work closely with your accountant throughout the year. Keep them clued in on where you are, and adjust those estimated payments. Put the money in your pocket. Don’t give it to the IRS.
Elizabeth: I think for individuals a lot of times people think, if I had that money I’d just spend it so I want to pay in more throughout the year, and then I’m going to get that big $7,000 and then I’m going to take that and spend … If you’re just going to take that and put that in your retirement account, I guess that’s fine, but wouldn’t you want it going into your retirement account like all year long?
Gene: Then take that difference and put it into your 401K. Your IRA. Don’t spend it, put it away for retirement.
Elizabeth: We’re actually going to have a couple shows. We get a ton of questions about taxes so we’re going to have a guy that does small business accounting come in and answer some questions.
Gene: Good. I have questions for him as well.
Elizabeth: Everybody always has a question for the accountant, as you know Gene. We’re going to hear from our sponsor. We’ll be right back with question 1 about a tech business.
QUESTION #1: Launching a Business with a Newborn
We’re back with question 1. This is from, I love this, Lucy from Liverpool, New York.
Elizabeth: Lucy writes
My tech business is finally starting to take off!’ Exclamation point. Good job! ‘On top of that, I just found out that I’m pregnant!’ Also exclamation point. ‘All really great news except that at the end of the day, I’m exhausted. My parents think I should step back from running my business, but my husband thinks I’ll regret walking away from it. I know the exhaustion will pass, but big picture, can I really have it all? Can I run a business and raise a child at the same time?’
Elizabeth: Gene, I’m not even going to try to answer this because I’m just going to set Gene up for this.
Gene: You’re going to set me up for a lawsuit.
Elizabeth: No! You and your wife had 3 kids in a year, right?
Gene: Yeah. Eleven months, yeah.
Elizabeth: This was around the time you were starting your business?
Gene: Yeah. It was right around the time I started my business. That’s right, but it was me starting my business, not my wife. She was off, and she raising our kids while I was doing my thing. Again, I was able to do a lot of work from home and be around or whatever. Geeze, Lucy, come on! It’s a big question. When you talk about growing a business and raising a child at the same time, different people can do different things, and people make a lot of choices. You should never judge anybody else’s decisions. You’ve got to have a happy, fulfilled life. I’ve met a lot of people over the world that they wouldn’t be the same kind of parent that I am, but then again, I’m not the same kind of parent that they are. In the end, kids turn out, for the most part, fine. You’ve got to look out for yourself. Lucy, you have to think about yourself first. Your health and your happiness. Being pregnant and then having an infant, a small baby, and then running a business, is that do-able? Yeah. It really is, if that’s your thing that you want to do.
As long as you’ve got the resources to have help around you, I think that there’s a good case for you to be that person. If that’s what you really want to be.
Elizabeth: I don’t think that you should consider yourself different from a lot of women that work at a big company, and take maternity leave, and then go back to work. You could take a maternity. You could give yourself that however long …
Gene: If you’re able to.
Elizabeth: If you’re able to do that. There’s women that work in big companies that I’m sure feel guilty coming back to work, and they don’t really want to leave their kids, but they do it, and people are not judging them for it. I don’t think it’s any different …
Gene: I disagree with you. I think people do judge them for it unfairly. I really do.
Elizabeth: Even today?
Gene: Even today. Sometimes when people make choices, they say, I’m not going to work, I’m just going to be a full-time mom. That’s good and good for you, but then that doesn’t mean that you turn around and judge somebody who chooses not to be a full-time mom, you know to have a job and maybe to have daycare for a child today.
Elizabeth: You’re right. I think whatever moms do they get judged. What I’m saying is I don’t think … There’s a lot of women that have babies, have maternity leave, and come back to work at a company. That’s no different from continuing your company. This is your business so I guess you could have the flexibility to stay home and just never work again, but it’s separate from …
I feel like we should start over with this question.
Gene: No! I think this is good. The other thing I want to make sure is clear is that the decision is for you, the mom, Lucy. Your kid is going to be fine no matter what, and I know that the women that I know that have a hard time going back to work is because they miss their kid, and they miss being with their child and that’s a really hard, hard thing to do, but meanwhile the kid is okay. What kid remembers anything about their life before the age of 6 even? They don’t know whether you’re around or not so it’s really not about the kid, it’s about you, and what’s going to make you a better, more balanced person so you can be a better mother to your child, and better at work. I know a lot of women that choose to come to work because it keeps them balanced. Like they want to be with other grown-ups during the day and do their thing. Believe me, their kids turn out fine.
I think you have to think about yourself first, and if you’re happy, your kid is going to be happy.
Elizabeth: I will say in my experience, my mom has a very successful career, and my brother and I are so proud of her all the time. As adult kids we talk about our mom is the director of academics at a college, and we talk about her with a lot of pride. It’s great to be home with your kid, but it’s also great for your kid to be able to say, you’re setting a good example for them.
Gene: Getting back to her question, can I run a business and raise a child at the same time? The answer is yes, if you choose to do that. It’s just a personal choice, but nobody can tell you what to do. It’s what you want to do that will make you happy. I will tell you, your child will be fine.
Elizabeth: All right. We’ll be right back with question 2.
QUESTION #2: Being a Young Boss
Elizabeth: Okay. We’re back with question 2. This is from Carter in North Carolina. Hello Carter, and he writes,
I own and run a 13 person web development and design company. I’m 29 years old.’ Wow! ‘And most of my employees are about the same age as me. It’s tough because most of my employees feel like my peers because of our age, but I also need to let them know that I’m the boss.’ What’s your advice on handling a situation like this?
Elizabeth: I think the fact that it’s your company conveys that you are the boss. The issue that I would have with that is that you do need to keep up a boss mentality, and it’s hard to do that when you’re around people who you consider your peers so you kind of have to be on watch, like on guard all of the time. I think the best way to go about that would be setting up some grounds rules, and I’m going to let Gene expand on that.
Gene: First of all, in my company, I don’t socialize with any of my people in my company.
Elizabeth: You don’t like any of them?
Gene: No. They’re horrible people. They’re very selfish. They just have their hands out all the time. No, no, no. They’re great. We talk to each other. We see each other all of the time during the day at clients all around, I get that, but I have like another life. Carter, it kind of depends on the wall that you build between you and your employees. You’re the business owner. You’ve got other people working there that are about your age, which is fine, but the question is, are you friends with them or are you their employer?
Elizabeth: I think again you just need to set some ground rules. You need to decide, I would find that hard to not get personal and socialize with people. When you’re 29 you kind of want to find people your own age to hang out with, but I think you need to decide you are the business owner. I think Gene’s rule of not socializing, but Gene, isn’t that hard for you? You probably like all of the people.
Gene: I do. We talk to them all the time and whatever, but we’ve managed to draw that line. I’m not saying it’s easy. Carter, you’re around these people all day and they’re about your age and you want to socialize, but I am warning you, if you get friendly with your people, and you see them after work, you see them during work, they know all about your life, the closer you get the harder it’s going to be to separate yourself from objective business decisions that you’re going to have to make. I’m not saying you should go around being a jerk all of the time, but there is a basis for separating yourself from your people, and that’s going to have to be something that you’re going to have to decide.
Elizabeth: You need to keep in mind that at some point, like the obvious, you might have to fire one of these people or you might decide to sell your company and you have to tell people that they’re all out of a job. As hard as that may be, you need to kind of keep that in the back of your head.
Gene: Correct. Or firing people. Or hiring other people or asking people to do things or work on clients or projects that you know they may not like to do, but they’re the right person for the job. This gets back to, we were talking in an earlier podcast, about treating your business objectively, like it’s an asset. I don’t mean to sound harsh, but you’re people are assets, but they are tools for you to generate a profit. I know that does sound a little harsh, and I’m not saying you should treat them like robots or be a robot yourself, but I really do think you need to create a little bit of a wall, and have a separate life and social life outside of your business. I think you’ll find making business decisions a lot more easier that way.
Elizabeth: People like structure, even adults, and I think setting down some ground rules and following them, and letting people know you’re still the boss, you’re in charge, and some things you don’t want to cross a line. People will respect that because you don’t want to get into a situation where someone starts just showing up a half an hour late everyday, and then it becomes an hour and a half, and it’s because you were out with them the night before, hanging out. That’s just a slippery slope so you need to shut that down in the beginning.
We’re going to hear an ad from our sponsor, and we’ll be right back with our words of brilliance.
I love the next question. It’s about Porta John’s.
Gene: Oh no! Who comes up with these questions?
Elizabeth: Mike did.
Gene: Oh. Okay. Fair enough.
WORD OF BRILLIANCE: Baltic Dry Index
Elizabeth: We’re back with our words of brilliance from Gene. Gene you’re going to go first, and then I’m going to follow up.
Gene: Oh. I will. I have 3 words connected to brilliance. I’ll ask you Elizabeth. My 3 words are Baltic dry index. Elizabeth, do you know what Baltic dry index is?
Elizabeth: I have no idea.
Gene: The Baltic dry index just so you know it’s an actual economic statistic.
Elizabeth: It’s a real index?
Gene: It’s a real index, and what it does is this index actually tracks shipping prices, freight prices across the Baltic Sea. I, myself, could not find the Baltic Sea on a map if you asked me. For all I know there are people canoeing across the Baltic Sea, but it is the world’s most traverse shipping lanes, or one of the world’s most traverse shipping lanes. The Baltic dry index because it measures freights and it’s accounted for on a daily basis, it tells you a lot about the world global economy. When the index is going up, supply and demand, that’s because people are shipping more so the cost of freight is going up. When it’s going down it’s quite the opposite. As we sit here now in 2016, it’s really down, it’s really low. What does that tell you? It tells you that the global economy is low which there’s a lot of reasons why the American economy has kind of been stumbling along the last year or so as well.
A smart economist once told me about that. I remember him telling me about this during the height of the recession, when people were like jumping out of windows because we were losing so much. You’re like oh my god, is there ever going to be an end? He said, ‘Yeah Gene, the end has already come because we’re actually coming back because the Baltic Dry Index is starting to go back up again.’ This was in early 2010.
Elizabeth: What’s it at now?
Gene: I don’t know what the actual measure of it is, but it’s at a low, significantly low, and the reason why is because when you look at the Baltic dry index, when you start seeing it trend back up again, that gives you the indication that world-wide economy is going up, and that will affect the American economy, and very much so your business. The reason why I bring up the Baltic Dry Index is to do this. Smart business owners that I meet they usually look at a metric or 2, a macro economic metric because they’re job is to make sure that they are directing their company in the right direction. They have a lot of people that are relying on them for the decisions that they have to make. When you think about the economy overall, and some investment decisions, hiring decisions, where you want your business to be, you should be looking at some macro-economic metrics to make sure that the economy is going in the right direction. Smart business owners are always doing that.
The Baltic dry index is a great one. I got a bunch of others that we could discuss at another time. Don’t just rely on GDP, or the unemployment rate, those have been watered down by the mass media. There were a bunch of other really, really cool metrics that I know smart business people, that I personally know are following, that tell them months in advance where the economy is going. That’s something we can talk about at a later date.
Elizabeth: Yeah. I would love to hear more about that. Just in case anyone is curious, the Baltic Sea is between Sweden, Finland, Estonia, Latvia …
Gene: Poland, Denmark. Right exactly. All the shipping that goes to that region. All of Eastern Europe.
Elizabeth: My words of brilliance this week are 7 tips from successful small business owners. This is another article by our fantastic writer, Kelly Spores, and she actually interviewed one, Gene Marks for this.
Elizabeth: Yeah. What we wanted to do is, on SmallBizaHead we wanted to hear from real small business owners, saying what do you do everyday that helps make you successful? Gene talked about delegating which is something that we talk about on this podcast all of the time. That was one, and the other thing you talked about was keeping your overhead low. You took your workforce virtual which you’re right. When you tell your story you think that totally made sense. Of course that made a huge deal because you were out at clients all day long so why would you pay rent for an office.
Gene: It sounds really kind of simple to do, but sometimes it’s easier said than done. My story was we had offices. About 8 years ago I shut them down, and everybody just now works from home. We have a cloud-based server, and cloud-based applications, and all of that. We’re using technology to do that, but nobody was coming to visit me in our offices. We had this office. I’m paying rent and utilities. I’ve got the coffee machine there, the phone system, the whole whatever, and nobody is coming to the office. We got rid of it now.
On the downside, we’re like the world’s most dysfunctional company because we see each other as a group like once or twice a year. Sometimes the people like don’t even … It’s like Game of Thrones. They have entire sections of the cast that’s never met each other. In my 10 person company, we have some people that have never met each other until like our holiday party.
Elizabeth: But you’re all on Slack right?
Gene: Yeah. Everybody’s on Slack, and everybody’s doing their thing, and they’re all with different clients. We talk a lot. It’s just face to face where we lack that, but on the good side our overhead is really low because of that. That got us though the last recession, and it will get us through the next one. The more nimble you can be with your pricing, all comes down to what your overhead is. That was a lesson that I learned and really helped me. I keep saying it to a lot of other business owners that you have to do everything in your power to make sure that on a monthly basis your commitments are as low as possible.
Gene: Debt is another good question. We talked on an earlier podcast about getting financing. It is a great time to get financing. Interest rates are so low. I get that. That’s fine, but you’re still paying interest, and you’re still committing to a monthly debt payment. If things turn south or the economy goes bad or whatever, the bank’s still expecting their monthly debt payment to be coming.
Elizabeth: Yeah. They’re not going to forget about that.
Gene: Even though it’s at a great rate of interest, that doesn’t necessarily mean that it’s helping you because if you’re struggling to make that payment. The reason why I say that is if you’re looking to do something and you can do it without going into debt. Either through cash, through getting another investor to help you out. Somebody that’s a little bit more friendlier than a corporate, than a bank. That goes a long way to controlling your overhead as well, and you’ll be happy for it when thing turn down. They will turn down. Things will turn down.
Elizabeth: I was going to ask you. You’ve said a couple things on that podcast that made me think that you think we’re going into another recession.
Gene: Not right away. I guarantee you we will have another recession. Sometime between now and when you and I die. We will have multiple ones. Every business owner knows that. I think in 2016, I do a lot of writing on economics, talking about. It is a very slow economy. There’s a lot of pressures on the economy. Putting anything specific, any catastrophic events, the rest of 2016 should just be a slow economic year, but not necessarily a recessionary year. If and when we do hit a recession, a lot of economists can look ahead and say maybe in 2017 that’s happening. Nobody’s predicting the kind of depths of the recession that we had back in 2009. We’re not expecting an implosion of mortgage securities or our banking system like we had before. I guarantee you when we go into a recession, a recession i think is defined as a number of quarters with negative GDP growth, 2 or 3 in a row, even if ti’s just a small amount. I can guarantee the media will blow that up into a huge deal. A lot of it is psychological.
Elizabeth: All right. Thanks for joining us this week for another episode of the SmallBizaHead podcast. Don’t forget that you can send us questions via Twitter at @SmallBizaHead, and we would love to answer your questions. Again, that’s @SmallBizaHead on Twitter, and we’ll talk to you next week.