Tax season is upon us, and small business owners everywhere are taking notice. Running a business focused on providing web design services comes with a lot of unique financial problems and considerations. For example, it’s necessary to remember to file tax deductions on work-related software expenses and licensing fees. Digital assets you own might also need to be accounted for when tax season rolls around. Furthermore, just over half of the states in the U.S. impose a tax on digital products, which may impact your business when it comes to filing.
This is important information to keep in mind, as business owners need to be transparent with the IRS and share as much relevant financial information as possible in order to avoid getting audited.
But how involved are your employees, stakeholders or customers are when it comes to your finances?
One of the core values a business needs to embrace to ensure long-term success is transparency. For businesses and contractors offering web design services — a highly competitive field — trust is essential. In order to build trust among employees, customers, and stakeholders, an entrepreneur needs to be honest about the current state and trajectory of their business. While business owners may be reticent to share information about their budget and future financial plans, being open about such matters is an integral part of truly being transparent.
How does budget transparency affect your team? How can it positively affect your bottom line? And, most importantly, what policies can you adopt today to begin being open and honest about your business’ financial situation and future plans? Let’s dive into the subject:
Getting Your Team on Board
Disinterested employees lead to lost profits. Apathy has a dramatic measurable impact on workplace productivity, and a lack of transparency is one of the biggest culprits for a negative work environment. According to the financial experts at QuickBooks, “(T)he employer has been viewed paternalistically, protecting its employees from bad news or tough decisions. However, sharing internal information helps bind the organisation to its people and fosters an all-for-one mentality, which encourages productivity.”
In short, withholding information from your team only serves to create distrust; open and honest communication is necessary to create an environment that is conducive to collaboration. You need to involve your team as meaningful participants in your financial journey in order to to keep them emotionally invested in your progress as an organization.
To truly engage and motivate your team, you need to involve them in your business on an intimate level. Hold team meetings in which you give your workers the complete financial picture; paint the financial narrative that your business is in. Discuss the following:
- How is the company doing?: Employees want to know how the company is faring. When employees know that the company is seeing profits, they know that they have greater job security. If the business is having financial difficulties, employees want to know what changes, budget cuts, or layoffs they might anticipate. Failing to communicate this information is extremely damaging to employee trust.
- How do employee contributions affect the bottom line?: It can be easy for an individual employee to feel like a cog in the machine. Describe precisely how an employee’s individual contributions at work translate to greater overall profits. Not only does this grant workers a greater sense of pride and achievement, it also implicitly states that employees are being held accountable for their output — which can be a strong motivator.
- How is the company planning on investing in its employees?: The relationship between employer and employee should be mutually beneficial. A financial narrative can only motivate employees if it demonstrates that improved profits will lead to improved work conditions. Better amenities, benefits, software, and financial incentives are a business’ way of demonstrating that it cares about its workers. When they know they are cared for, they become emotionally invested.
Of course, there are some exceptions to financial transparency. Don’t openly discuss performance reviews, employee salaries, or any other confidential material; such topics should be discussed on an individual basis.
Improving Customer Confidence
Transparency also inspires confidence in your customers and prospects. When customers seek out a web design company, they are typically interested in knowing your company’s financial history and trajectory — especially if they plan on investing in a long-term agreement for website maintenance or future design revisions. Openly communicating this information gives potential clients confidence in your business, which could lead to increased sales.
From project proposals to invoicing, honesty should be a guiding principle for all communication with clients. Be honest about what your company can reasonably accomplish given your (and your clients’) budget, as well as what customers can expect to pay for your services. If clients have questions about the costs of your services, explain the costs that you incur as a web design business: the price of design software, the time spent conceptualizing and refining layouts, and the effort involved in regular website maintenance. This is the only way to maintain a healthy ongoing relationship with customers.
As your profits improve, your business should demonstrate its commitment to improving the user experience by investing in the technology to meet client needs. Keep design principles in mind including readability, accessibility, ease of navigation, and search engine optimization. New tools are released every year that take advantage of advancements in technology, such as artificial intelligence, to enhance and streamline the design process. These can be powerful tools to your employees, resulting in happier customers — and higher customer acquisition and retention rates.
Making Cuts With a Long-Term Vision
As we approach tax filing season, keep in mind that budget transparency is an absolute must; ethics are of utmost importance in taxation. Honesty in this arena ensures businesses receive the full tax refund they are entitled (if eligible) and prevents the potential financial burden of a future audit. True financial stability necessitates open communication with employees and stockholders — not employing “tax filing hacks” or other shady means of cutting costs.
Play it smart: If you need to make some budget cuts to stay solvent, plan cuts with a long-term vision. When you facilitate communication about the subject, everyone involved becomes more receptive to budget cuts. Ordinarily, budget cuts result in confusion, frustration, anger, and fear. Without greater context, employees can become uncertain about the future of the company and lose any emotional investment — they effectively “check out” and simply bide their time while seeking work elsewhere.
However, when employees and investors understand the greater scope of a business’ financial situation, they can understand the purpose and extent of such cuts. They grow more accepting of them and are more willing to accomodate a business’ needs at this stage in their journey. Establishing an air of honesty in the workplace can help businesses stay afloat in times of financial duress.
This is key if budget cuts could limit employee access to certain web design applications or tools. No one likes feeling they are being asked to do something that they don’t have the tools to accomplish. Before revoking access to such applications due to budgetary concerns, establish new procedures to accomodate for the lack of them. Exploring free and affordable alternatives can ease this transition considerably. Discuss with your team how their workflow will change going forward and hold regular meetings to give members an opportunity to express any concerns or questions they have about the changes.
If you are looking to boost productivity in the workplace, begin with creating trust. Being transparent about your budget gives you the opportunity to engage employees and clients and get them on your side. If you effectively communicate about financial issues, these people will accompany you through the peaks and valleys of your financial journey.
Devin Morrissey prides himself on being a jack of all trades; his career trajectory is more a zig zag than an obvious trend, just the way he likes it. He pops up across the Pacific Northwest, though never in one place for long. You can follow him more reliably on @DevMorrissey.