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The Small Business Advisor Newsletter for September, 1996

HOW TO GET A BUSINESS TRAVEL TAX DEDUCTION FOR PERSONAL TIME
(by Bernard Fruchtman, Publisher/Editor of the monthly newsletter that helps you save money by reducing your taxes, TaxTalk-Plain & Simple)

When you travel away from home primarily for business your round trip transportation, plus 100% of lodging and 50% of the cost of meals consumed on business days are deductible.

On the other hand, expenses incurred for lodging and meals on non-business (personal) days are usually not deductible.

There are however, a number of situations where what appears to be a personal day may actually be considered a business day for purposes of determining the deductibility of expenses.

You don't have to devote an entire day to business for it to be considered a business day.

Generally, you only have to spend half or more of the standard 8 hour work day on business activities for it to qualify as a business day.

Therefore, if you spend 4 hours on business and the rest of the day playing golf and sight seeing the day should qualify as a business day with your meals and lodging expenses for that day tax deductible.

If the primary purpose of your trip is business related your transportation cost each way is tax deductible. This will allow you to combine a few days vacation with a business trip and still get a tax deduction for 100% of the transportation cost.

You must make sure that the number of days spent on non-business activities does not greatly exceed the number of days spent on business activities.

For example, if you go to a two day business meeting but end up spending 10 days in that location the IRS will likely conclude that the primary purpose of the trip was not business.

If this determination is made the transportation costs would be prorated between business and personal expenses and only 1/5th (2 business days divided by 10 total days) of your transportation costs would be deductible.

Airlines and hotels very often give substantial discounts on rates when a trip includes a Saturday night layover. Thus, it may be cheaper to stay over to Sunday than to fly home after a Friday business meeting ends.

The IRS has ruled that all of your expenses (including lodging and meals) are deductible if staying over a Saturday night results in a net cost saving. This is true even if you do nothing but relax and take in the sights during your weekend stay.

Where possible you should plan to end a business meeting on a Friday and then you can enjoy a weekend vacation while Uncle Sam helps with the expenses.

Another way you can get tax deductions for expenses for personal days is to schedule out of town meetings for Thursday, Friday and Monday.

Because there's a valid business reason to stick around, Saturday and Sunday should be treated as deductible business days even if you do not work over the weekend. NOTICE. Remember that the Small Business Advisor is not in the business of giving professional tax advice. Always consult your own tax professional. 10 MARKETING MISTAKES TO AVOID (reprinted with permission from the "Small Business Builder." http://www.finl.com)

Is your marketing making you money, or making you crazy? "My business is failing, but I can't afford to market it because I don't have the money." The "I cannots" in marketing serve only to justify mistakes.

Most marketing efforts fail NOT because of what we don't have, but because of what we do with the opportunities we DO have. Here's my annual review of the most common failed opportunities and marketing mistakes.

1. NOT HAVING A PLAN. The most common marketing mistake is not having a plan. A simple one- or two-page description of your customers and what you'll do to get them to buy from you is sufficient. If you don't have some idea of who buys from you, then how can you know how to reach them?

A MINI-MARKETING PLAN CHECK LIST

The answers to these questions are all you need to form your mini-marketing plan.

• What is your primary product/service?
• How many clients do you serve a week?
• How have you built your business to date?
• Who is your competition?
• What kind of marketing have you done to date?
• Who buys your product/service (i.e., housewives, businesses, ethnic groups, professionals)?
• How long will an average customer stay with you?
• How much will an average customer spend over the time he or she patronizes you?

3. NOT UNDERSTANDING THE LIFETIME VALUE OF A CUSTOMER. Many business owners don't understand the lifetime value of a customer. If a customer spends $5,000 with you over a year, and stays with you for an average of 10 years, with half of every $5,000 spent being profit, that means that every customer has a potential lifetime value of $25,000! How much would it be worth to get that person through the door? At least 10 percent of their lifetime value, or $2,500? I'd think so.

4. NOT HAVING A DATABASE OF CUSTOMER NAMES. Get your names in a database so you can contact your customers regularly.

5. NOT HAVING A BACK END. If you don't have something you can offer after the sale, you are losing money? When are customers the happiest? Shortly after they buy something. You should go back to your customers within 15 to 20 days and make them another offer.

6. NOT TRACKING YOUR SALES. In order to have a low-cost, high-impact marketing strategy, you MUST track every sale. There are several things you must know about each transaction:

• Where/how did your customer hear about you?
• Who referred the customer?
• How much money did the customer spend?

7. FAILING TO UPSELL. You should try and upsell every customer at the checkout counter if you're a retail business, or try to add additional services or offer longer-term contracts for your services if you're a service provider. You can literally add hundreds or even thousands of dollars to your business each year by suggesting an additional product or service for your customers to buy.

8. FAILING TO ASK FOR REFERRALS. As simple as it may seem, this is one of the most overlooked, and hardest strategies for small-business owners to employ. It's amazing since this is one strategy that can almost guarantee your success. Ask everyone who buys your product or service if they would give you the name of a friend or family member who could also use your product or service.

9. FAILING TO GET LETTERS OF RECOMMENDATION OR TESTIMONIALS. You or I don't want to be the first one to buy from someone. So why would your customer? Take the time to get testimonials, and use them in advertising and at the point of sale.

10. FAILING TO TAKE THE TIME TO STUDY MARKETING, and to take the time to study your own marketing. Learn all you can about marketing. There are many great books available on the subject. One of the best is Guerrilla Marketing Handbook, by Jay Conrad Levinson. Any books by Ries & Trout, Jay Abraham, or Jeff Slutsky are also worth reading.

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