Top 2 Profitable Purchases of 2017

2017 isn’t over yet but I guarantee that nothing else I buy in the next 3 months could surpass these 2 products. Read on if you want to:

  1. save time for what’s REALLY important
  2. save energy
  3. maximize your productivity and efficiency

BACKGROUND

I have two kids, a 3 year old and 5 year old, which I home-school and I also do some work from home. So with the 2 kids, you can imagine what kind of mess I have to deal with daily on top of my regular chores. I used to use a cordless stick Dyson vacuum for all of the little messes on our hardwood and spent about 15 minutes per day sweeping/vacuuming only in the kitchen/living room area. On the weekends I would spend an additional 45 minutes vacuuming the carpeted areas in the house and the bedrooms.

15min x 7 days = 105min + 45min = 150min/week x 52 weeks in a year = 7,800min /60min = 130 hours per year /24 hrs = 5.42 days a year

DOING IT MYSELF

That means I spend almost FIVE AND A HALF DAYS in a year vacuuming or sweeping. OK fine, some days I’m too tired or lazy and don’t vacuum / sweep at all so lets round it down to five days a year (reduced by 10 hours). That is STILL FIVE DAYS OF MY LIFE of which I can think of much better ways to spend my time!

HIRING HELP

So lets say you would rather have someone come into your home and vacuum for you. The average hourly rate for housekeeping in Edmonton according to care.com is $16.44 x 130 hours per year is $2,137.20 (or rounded down again to 5 days = $1,972.80/year).



 

PURCHASE # 1 – iRobot Roomba 860 or iRobot Roomba 890 <— we have the 860, not the 890 so I can’t comment on how well the 890 works, I just wanted to point out that 890 was wi-fi capabilities and you can control it with iRobot’s HOME App.

This is a vacuuming robot (there are higher end versions which maps out the layout of your home but we purposely chose 860 as it doesn’t have Wi-Fi)  You can schedule the Roomba to vacuum every day of the week at a certain time or just press CLEAN when required. These 2 also have the tangle-free rollers/brushes which the older versions DO NOT, so they are much easier to clean than the older versions. We had an older version with the brushes that have bristles so I had to cut the hair out of the bristles each time I cleaned Roomba and eventually I got tired of cleaning the bristles and decided sweeping is faster.

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  • The extractors are tangle free now – no more bristles, the hair just accumulates in rolls at the end which just fall off when I clean the extractors
  • There is a little Virtual Wall Barrier that you can turn on to stop Roomba from going past certain points or around a certain area
  • If it detects dirt in an area Roomba concentrates in that area. Cleans under beds, furniture and along walls
  • Does not fall off of the stairs (cliff detector)
  • Lets me know when the debris bin is full
  • Comes with High Efficiency Filters captures 99% of dust, mites and allergens as small as 10 microns
  • Once it’s done it goes back to it’s charging station to charge up for the next cleaning session


 

PURCHASE # 2 – iRobot Braava jet 240   This is a mopping robot. You just attach a a cleaning pad (I bought reusable ones here), put WATER in and press clean. Once it’s done you press the button to eject the cleaning pad.

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  • 3 cleaning options: Wet mop, damp sweep, and dry sweep
  • Great for cleaning “small spaces” like kitchens and bathrooms (I clean 1 area at a time, charge up/refill the water and continue cleaning the next room)
  • Systematic pattern cleaning
  • Small and compact to clean around toilets, under beds and cabinetry
  • Does not fall off of the stairs (cliff detector) and doesn’t go up rugs
  • Super quiet

 



The cost of hiring help for 5 days a year just to vacuum (and not mop) is almost $2,000/year. This alone almost covers the cost of purchasing TWO Roombas and TWO Braava jets! My previous Roomba is still working and is now 8 years old so these purchases are definitely worth it (plus the amount of time it saves me each year is worth much more to me than the $2,000 each year).

We would love to head from you about what your profitable purchases are.

 

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How Much Does Bookkeeping Cost?

Customers have told me I am a terrible businessman: they have been happily paying me $xx and now they will pay LESS under the new billing.  I want to reward efficiency.:

  1. My billing over the past 10 years was tiered based on income levels: $380K, $880k, $1.5 million, $6 million.
  2. The new billing is based on expenditures processed: more expenditures means more transactions to process, review and more after-work in terms of CRA compliance.

This move is also in response to CRA’s increased audits of different expense account and industries.

If you are going to do something, do it as best you can. There is no sense in working 30 years, sacrificing your health and time with your children if you can make the same money in 10.

Efficiency is only important when a resource is scarce.  As a young person with a whole lifetime ahead, money was the priority. As we get older, time and attention is the priority. (Attention is important, for example, Spending 1 hour QUALITY time with your kids, interacting with them and reading to them is much better than spending 2 hours with them in front of the television)

Its an inefficient use of time to advance your wealth beyond a certain point.

I want to maximize my limited time left on earth and want to improve my craft each day and at 37 years old there is not much improvement for working more than 5 hours per day. The best way for me to improve is to work with big numbers on limited accounts. Big numbers mean the errors of others would compound to adversely affect my customers.

Businesses that revolve around E-commerce, beauty/aesthetics, food/health are all great businesses that could effectively give you $20,000 or more a month in after-tax income and being in Alberta, there is still some opportunity left in the oil/pipeline sector as well.

Keeping in mind, Pareto’s principle aka the 80/20 rule, 80% of the effects come from 20% of the causes and in our case, 80% of the inefficient use of time comes from 20% of the customers. By refusing service to companies that do not use their time and resources efficiently guarantees we don’t have to lose time with audits. This, in turn, gives us more time to spend with our valued clients.

 



The all-inclusive flat fees including GST are as follows:

$8,800    Industry: Annual expenses over $1 million
$7,100    Enterprise: Annual expenses between $450k and $1m
$5,600    Venture: Annual expenses between $200k and $450k
$4,700    Boutique: Annual expenses between $100k and $200k
$3,900    Micro: Annual expenses less than $100k
$3,200    Startup: No payroll & revenue below $380k

Save 1 free month of bookkeeping for every new client you refer to us.  Your referral will also get 1 free month of bookkeeping and you’ll receive a thank-you for introducing them to a service that at a cost of 1% or less, legitimately reduces costs by 3-30%. 

The Best Low-Cost Canadian Index Fund

 

Why?

  1. 8.2% return in the past 5 years
  2. Lowest MER fee for good return at 0.39%

The Catch?

  1.  Requires a minimum of $50,000. This is how they keep their fees low! If an investor comes in with $100 they take up the same amount of time and resources as the investor who comes with $50,000 so that’s why funds at all other banks and firms that cater to the masses have much higher MERs.  This higher entrance fee keeps too many people from having it. Too many people indexing causes mispricing in the efficient market theory.

How much difference can half a percent in additional MER fees make?

If you are paying half a percent in extra MER fees, this could lead to nearly as much money paid in fees as your total contributions over your working life.  $1 million lost in fees over 40 years on a $1 million of contributions.  If the fund is giving returns that are less than or only meet CIBC’s premium index fund, there is no reason to pay the extra fees.

If you already maxed out your investment in your own business and have $50K liquid cash then call your nearest CIBC branch to set it up:

  1. https://www.cibc.com/en/personal-banking/investments/mutual-funds/growth-funds/canadian-index-fund-premium.
  2. https://www.cibc.com/en/personal-banking/investments/mutual-funds/growth-funds/balanced-index-fund-premium.html

More investment advice is here:

  1. https://thutaccounting.wordpress.com/2015/06/22/housing is a poor investment!
  2. https://thutaccounting.wordpress.com/2015/06/09/the-power-of-compound-interest/

Canadian Western Bank has a business savings account that pays 1.15%

The Best Way to Deal with Minimum Wage Increases

One month from today minimum wage increases from $12.20 to $13.60 and next year it will be $15 per hour.

This will have a detrimental effect on many businesses. Many businesses will suffer worse margins and less profit, here how to do the OPPOSITE:

 

Don’t increase prices

Your choice is the same as everyone else: less employees or less profit.  The only way to maintain your current margins is working with fewer people. In a restaurant example, if your food costs as a percentage of sales are already low vs. industry benchmarks, increasing your prices with respect to food costs would be bad for you.

Change payroll practices

We have worked with customers in various industries to prepare them for the minimum wage hike since late 2015: normalizing 5-hour shifts and eliminating people who work less than 50% (100% being 40 hours per week). Fewer people means considering appropriate times to do prep work (pre-portioning, mixing etc) to mitigate the busy times with fewer people (even if it is only 1 less person). Also, this means getting the fewer remaining staff – personable kitchen staff, for example, to help with guest service. A more radical/specialized change in restaurants is conveyor ovens.

5-hour shifts

I have been so impressed with the improvements our restaurant customers have made, effective Aug 1 our own office enjoys 5-hour shifts. Shifts under 5 hours, employees are not entitled to any breaks.  Breaks during the typical workday are not used to re-energize or restore attention. The end goal of efficiency is to remunerate employees as much as they did when they had 8 hour days, this will, in essence, give them a higher raise than the increase in minimum wage.

Now, most of our customers are no longer concerned about the minimum wage increase since it does not affect them anymore (they pay more than the minimum wage: they hire 2work them like 4 and pay them like 3. This is the same as paying someone an 8-hour wage for 5 hours of work). If you can give them an increase of paying them 8 hours at their “old rate” for 5 hours of work you could go as far as eliminating tipping.

For example, if an employee is currently earning minimum wage at $12.20/hour + tips, if you reduce their shift to 5 hours and reap the same benefits you could afford to pay them $18.30/hour and eliminate tipping. 

($12.20 x 7.5 hours = $91.50 / 5 hours = $18.30/ hour)

The check to make sure you are on the right track is if you pay someone $18.30 per hour, the employee should also “pay the company” at least $36.60 per hour (giving you $18.30/hour as their contribution to overhead). Profit per employee is an important metric SwissBooks will track for you.

I am confident that in the long run, this is better for Canada, making us a little more like Switzerland etc. where people have a career in every type of work. The work is done with pride, and this will only help your reputation and your business, and the quality of product and service across the board should increase to society’s benefit.

Downloading Bank Transactions to CSV

Please remember to choose the correct dates based on your year end!

Instructions links are below to view step by step instructions on how to download your bank transactions from your corporate bank account for us to complete your year end.

CIBC 

RBC  (must be done every 3 months)

TD:

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Format this page for printing

Downloading to a Spreadsheet* (CSV & CDV)

  1. Scroll down to the bottom of the ‘My Accounts’ (checkmark the account you wish to download under the “Download” column) or Account Activity page.
  2. From the drop-down menu next to the words Download to: select Spreadsheet (CDV).
  3. A pop-up window will display asking you what you would like to do with the file about to be downloaded.  The options in Internet Explorer are Open or Save file to disk.  In Netscape Navigator the options are PICK APP (application to open with) and Save .
  4. Select Save to Disk another window will open and provide you with the opportunity to specify where you would like the file to be saved.  It is important to be able to recall where this file was stored, so you may wish to write this location down.  You MUST also rename the file with an extension of .csv so that most major spreadsheet programs can read it.

The Most Efficient Way to Run a Business

NEW OFFICE HOURS & PICK-UP OPTION

Our new office hours are Monday to Friday 8am to 1pm. If it is inconvenient for you to drop by during our office hours you can also arrange a time for someone to pick-up your documents after 1pm. (Edmonton area only)


Background and Framework for Efficiency

  1. Focused 5 hour work day: We had the focused 5 hour work day from 2010-2013 and started it again with one employee in March 2017. We have seen first hand that our focused 5 hour work day reduces absences, stress and increases efficiency. Shifts under 5 hours, employees are not entitled to any breaks.  Lunch and breaks during the typical workday are not used to re-energize or restore attention.  In our office’s case, they are spent eating lunch late at our desks in front of the computer, while other workplaces time is lost strolling in late after getting caught in line at Tim Hortons. Back in 2010-2013, as owners, we worked 10+ hour days and we were much more efficient running two employees on separate 5-hour shifts (8am-1pm and the second person from 1pm-5pm).
  2. Unless you are financially independent, you should be working rather than hiring out the work. No one will ever do a better job than you, and no one will ever care about your big picture as well as you. Only farm out things that can be completed more efficiently through unique skills and economies of scale (Accounting, bookkeeping vs. doing it yourself). Due to minimum efficient scale, the cost/technology would not make sense for an individual to specialize in something that is not directly related to their ability to generate revenue.
  3. The most sustainable payroll solution is that if you pay someone $20 per hour, the employee should also “pay you” at least $40 per hour (giving you $20/hour as their contribution to overhead). You have to account for the payouts you are responsible when you have staff: statutory holidays, 4% vacation and eventually termination pay.  Profit per employee is an important metric that our 3rd iteration of SwissBooks will measure and report to you.
  4. Consider converting any full-time staff you have to focused 5-hour shifts. If you are open longer you could consider running back-to-back 5-hour shifts as we did 2010-2013.
  5. Bring efficiency and focus into your life is efficiently articulated in this appropriately titled book: Efficiency: Get Rich Without Giving Up Your Life.  It will also tell you how to start an online business or make money with affiliate marketing.
5 hour Office Monthly Income Update
  1. $10k+ after-tax per month of passive income from a 5% net return on $2.5 million.
  2. $14k+ average after-tax income from hours worked. (Total average after-tax net income $24k+/month+).
Asset Class Update 2017
  1. 20% insured real estate (max 30%).
  2. 10%  stock (max 20%) maximum 3% of this initially invested in any one company.   Be prepared to hold on to stocks indefinitely: choose strong brands that will be around in 20 years.
  3. 15% CDIC protected cash (minimum $50,000)
  4. 15% CDIC protected guaranteed term deposits
  5. 35% scalable assets


Dear valued SwissBooks clients,

We would like to inform you of a billing change effective September 1st, 2017.

Since launching THUT Accounting in 2006, our constant improvements equip you with the most innovative accounting solution, which is why this billing change will also support the ongoing development of new value for your business.

The all-inclusive flat fees including GST are as follows:

$8,800    Industry: Annual expenses over $1 million
$7,100    Enterprise: Annual expenses between $450k and $1m
$5,600    Venture: Annual expenses between $200k and $450k
$4,700    Boutique: Annual expenses between $100k and $200k
$3,900    Micro: Annual expenses less than $100k
$3,200    Startup: No payroll & revenue below $380k

Save 1 free month of bookkeeping for every new client you refer to us.  Your referral will also get 1 free month of bookkeeping and you’ll receive a thank-you for introducing them to a service that at a cost of 1% or less, legitimately reduces costs by 3-30%. 

If you do not report at least $90,000 of annual net income and have at least 20% pre-tax margins, then SwissBooks is not helpful and it is not fair to recommend a product that is not going to be tailored to your needs. It may be in your best interests to dissolve your corporation and save yourself unnecessary accounting fees by filing as a proprietor.  Alternatively, the easiest ways to turn it around are either through focusing on either recurring revenue or big ticket item sales. 

We want to thank you for your continued business and we are committed to working with you to help save you money, and help you net $20,000+ a month after-tax in your business.

Sincerely,
Christian Thut
Präsident, THUT of Switzerland

—————————————-

Kính gửi khách hàng SwissBooks,

Chúng tôi muốn thông báo cho bạn về thay đổi thanh toán có hiệu lực từ ngày 1 tháng 9 năm 2017.

Kể từ khi mở công ty THUT vào năm 2006, những cải tiến liên tục của chúng tôi mang lại cho bạn giải pháp kế toán sáng tạo nhất, đó là lý do tại sao thay đổi thanh toán này cũng sẽ hỗ trợ sự phát triển liên tục của value mới cho doanh nghiệp của bạn.

Các khoản phí cố định bao gồm GST:

$ 8,800 Industry-Thu nhập lên đến 6 triệu đồng dollar
$ 7,100  Enterprise -Thu nhập lên đến 6 triệu đồng dollar
$ 5,600 Venture -Thu nhập lên đến 1.5 triệu đồng dollar
$ 4,700  Boutique -Thu nhập lên đến $ 880 nghìn
$ 3,900 Micro -Thu nhập lên đến   $ 380 nghìn
$3,200  Startup: No payroll & revenue below $380k

Free 1 tháng lệ phí kế toán cho mỗi khách hàng mới mà bạn giới thiệu cho chúng tôi. Người giới thiệu của bạn cũng sẽ nhận được free 1 tháng lệ phí kế toán và bạn sẽ nhận được lời cảm ơn vì đã giới thiệu họ với dịch vụ với chi phí 1% hoặc ít hơn, mà giảm chi phí hợp lý xuống 3-30%.

Nếu bạn không báo cáo ít nhất 190.000 đô la doanh thu hàng năm và có ít nhất 20% lợi nhuận trước thuế, vậy thì SwissBooks không hữu ích và không công bằng khi đề nghị một dịch vụ
không được phù hợp với nhu cầu của bạn. Có thể là vì lợi ích tốt nhất của bạn để giải thể công ty của bạn và tiết kiệm cho bạn các khoản phí kế toán không cần thiết bằng cách nộp đơn proprietor. Ngoài ra, cách đơn giản nhất để xoay quanh nó là thông qua tập trung vào doanh thu định kỳ hoặc doanh thu bán hàng lớn.

Chúng tôi muốn cảm ơn bạn về công việc kinh doanh tiếp theo của bạn và chúng tôi cam kết làm việc với bạn để giúp bạn tiết kiệm tiền và giúp bạn 20.000+ đô la một tháng sau khi đóng thuế trong doanh nghiệp của bạn.

Trân trọng,
Christian Thut
Präsident, THUT of Switzerland

Best Ways of Thinking Differently

There was an excellent comment in our highly popular post on Choosing Your Market & Pricing. Thank-you “dicky dee” for creating this idea and everything in quotes are his words.

  1. Most people think “follow your passion” is sound advice. Successful people often attribute their success to doing what they are passionate about- it’s just an easy thing to say so they don’t need to waste time answering questions. This makes it about YOU and YOUR passion. No one cares about you and its never about you- it is about others. The sooner you figure this out the better. Providing something that OTHERS NEED will make you a success faster and it is easy to become passionate afterward. No accounting grad is ever passionate about accounting. If they get their face plastered on a fleet of vehicles and have a lead accounting role at a huge company its easier to tell people he followed his passion, rather than he followed the money. I forgot who said this but money is a neutral indicator of value, by aiming to make it, you are aiming to become more valuable.
  2. Most people follow trends. Our feed is entirely #Blockchain and #Bitcoin, should our next million be in Blockchain? Of course not, dicky dee explains: “it makes it a lot harder to achieve your goals if thousands of other businesses are doing the same thing as you, it would work however if you have a solid way of differentiating yourself from the pack that would be highly advantageous.” Ease of entry is how he describes this “winner takes all” reality we live in where few players enjoy the bulk of the work. Do something no one else thinks of doing. How can you think like this? UNDER-CONSUME so you don’t need to work. Then instead of working, you can think. Most people don’t think anymore- they are constantly doing something, when they aren’t working/driving/yapping, they glance at their phone. Learn to do nothing but think, if you are bored that just means you are boring.
  3. Most people don’t talk about scale and instead focus on operating margins and net worth. Scale trumps margins. If you have scale, margins can decrease and as long as its positive you have a real business. Scaling is not linear and with the right skill set and framework you can go from half a million dollars in debt to “rich” in a couple years.  Read our customer’s great example in the comments section. Scale is relative and can serve anyone to some extent: why have one noodle house when you can have seven? *wink*  “Scaling with using minimal cash flow” is just plain efficiency. Most people are saving $1,000 a year on switching accountants, scarcity mindset tries to protect their net worth. Your net-worth is irrelevant when you are old, asset rich and cash poor. Cash Rules Everything Around Me: seek to maximize your company cash flow, you can spend as much as you want since your net-worth becomes meaningless after you realize having stuff is overrated.
  4. Most people trade their limited time for money. You can never get back time, so with each year of life you live, the marginal “worseness” increases. The piper will be paid, make use of your time now, so you are not wasting exponentially more time in the future. Only trade time for money when you have no money and lots of time on the money-time continuum. With each surplus dollar, you should trade money for time: someone is buying your time every time you look at their advertisement. You can buy time by outsourcing your bookkeeping/accounting. “If your business depends on you to be there instead of hiring out and creating systems and processes then you will never have true wealth no matter how much money you make because you don’t own your TIME and your income is capped off by how many hours you put in.” Leveraging technology has its limitation so how much do you pay someone to replace you? The most sustainable solution is that if you pay someone $20 per hour, they should also “pay you” $20 per hour. If you pay them $20 per hour and they “pay you” $40 per hour you should pay them more or you’ll lose them. And unnecessarily re-doing the hiring process at no gain is an enormous waste of time.


SwissBooks Pro Tip:

“Man muss immer umkehren” is a German saying that the solution to a problem can be clarified by re-expressing it in inverse form. Work backward and reverse engineer your target. A worthwhile target is to clear $1+ million in a year, if not through recurring revenue then at least through selling your business. The latter part is easier so you only need to generate between $200,000 to $333,333 in annual discretionary cash flow to sell your business for a $1 million. But by the time you are hitting those figures, you won’t want to sell anyway since you would have figured out how to scale.

An oversimplified example in online sales would be: you would need 100,000 sales at $10 of profit per sale. Assuming a 2% conversion this would require 5 million visitors, which will cost $500,000. So you need to come up with $550,000 (50K extra to live assuming 1-year cycle).

If you don’t have it – the process continues. You’ll need 55,000 customers in the preceding cycle at $10 profit per sale which assuming the same 2% conversion would require 2.75 million visitors, which will cost $275K. You need to come up with $325,000 (50K to live).

Getting this requires 32,500 sales at $10/sale with 1.625 million visitors which costs $162,500. You’ll need $212,500 (50K to live).

21,250 sales from 1.0625 million visitors costing $106,250. Requires $156,250.

781,250 visits costs $78,125. So if you had $50,000 of startup cash you could make this model work for you in 5 years and the only way to speed it up is by improving your margins or conversion rate, just don’t forget what is important (in this example its volume). Traps: If the cost of producing and delivering your offering is 50% of your revenue – its probably not worth pursuing.


Pour Conclure

SwissBooks by THUT is our 3rd SaaS iteration is aimed to help you strategize the framework to increase 5 metrics and reduce 5 metrics through our 5-step accounting process run by a 5 person team.

Our year-end report will outline the framework to increase: 1 Revenue, 2 Growth, 3 Efficiency, 4 ROI, and 5 Value, while reducing: 1 Costs, 2 Time, 3 Turnover, 4 Risk and 5 Paperwork.  

SwissBooks uses real-time aggregate data to tell you where you stand and how to improve if you are sub-par.

http://www.christianthut.com/