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Archives for June 2021

Does the Competition Hold the Key to Your Success?

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Sometimes even the obvious is worth re-stating: The better you understand your competitors, the better chance you have of beating them — especially in business.

In order to know what your competitors are doing, you have to study them. A competitive analysis is a system of researching and collecting data on a rival business to help your business grow and gain an edge in the marketplace. If you’re not routinely performing a competitive analysis, you’re missing out on a goldmine of information that you can use to your business’s advantage.

Know who you’re up against
Understanding the competition starts with identifying them. Who are your biggest rivals?

Direct competitors sell products or services that are very similar or identical to yours. Indirect competitors offer different, but related products and services that target the same groups of customers to satisfy the same needs. For example, two coffee shops downtown are in direct competition with one another. But they’re also indirectly competing with the diner on the same street.

Think about why a customer may choose a direct or indirect competitor over your business. Maybe they value price points, and the competing business offers a better deal. Or perhaps the other business has more convenient hours or locations. See which geographic or service areas your competitors are focusing on and identify the gaps that your business can fill. Maybe their ecommerce shopping site is top notch, but their brick-and-mortar service experience leaves a lot to be desired. This could be an avenue where you can grow your customer base among those who prefer to shop in person.

Whether it’s in-house or outsourced, utilize available resources to gather pertinent data about the competition, so you can stay a step ahead.

The power of competitive analysis
How does the competition use social media? What does their branding look like? How do they engage with their customers?

The more information you collect, the more advantages your business will gain:

  • Know where you stand. How are your price points, your conversion rates and your online sales? How do they compare to others? Identify what makes your business unique, so it can stand out in the crowd. Consider investing in benchmarking data to see how you stack up across various metrics.
  • Enhance your marketing. If more customers are choosing a competitor’s brand, pinpoint what they’re doing differently to win business, and how you can do a better job. Consider all the possible ways your customers’ needs can be satisfied.
  • Think big picture. Don’t be afraid to develop ideas based on your rivals’ successes and failures. Learn from their mistakes to avoid making the same in your business.
  • Discover where your business can shine. Are there potential areas that the competition doesn’t serve? New markets for your brand? Look for opportunities to branch out and win new customers.

Solidify your position as the industry leader
Without a clear picture of the marketplace, businesses can fail to adapt. If you have a vision of where you want to take your business, NJ CPA firm Magone & Company can help. Contact us today at (973) 301-2300 to learn more.

Bigger Tax Savings in 2021: 4 Tips for the Self-Employed

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Being self-employed has its benefits, for sure. You can enjoy the freedom and flexibility of working from where you want, when you want. Plus, you can build your own client list and reap the profits from your hard work.

But there’s also a downside — and it has to do with self-employment taxes. If you had a rude awakening filing your 2020 return, here are some strategies that can help keep more hard-earned cash in your pocket next year.

  • Open a SEP-IRA. This is one of the simplest ways to shelter your self-employment income and save for the future. The SEP-IRA works just like a traditional IRA; the main difference is that this program is designed specifically for the self-employed.
  • Invest in a solo 401(k). The solo 401(k) is basically the self-employment equivalent of a traditional 401(k), but you control the money and how it’s invested. Best of all, the contribution limits for solo 401(k) plans are even higher than those for traditional 401(k) plans, and maxing it out could help reduce your taxable income.
  • Contribute to a health savings account (HSA). Many self-employed workers save on health insurance by purchasing a high-deductible plan. With such a plan, you may be able to reduce your taxes by pairing it with a health savings account, or HSA. An HSA lets you set aside some money, tax-free, to spend on care or care-related costs.
  • Push payments into the following year. If your clients are willing to go along with it, deferring payments until the next calendar year is one more way to reduce your taxable income. You will need to settle up with the IRS eventually, but this strategy can work well if you anticipate next year’s income to be significantly lower.

Achieve the best of both worlds
Working for yourself can be great, but it can also be quite taxing. That’s where tax planning comes into play. Ask your tax advisor or reach out to us for assistance.

The above information is provided for general education purposes and should not be considered financial or tax advice. Please consult your accountant or financial advisor for advice specific to your situation.