Entrepreneurship starts with an idea. One of the challenges once the business gets off the ground, though, is coming up with more ideas that push the company forward.

An idea often stems from inspiration and lacking that, some business owners say, can result in stagnation or a failed enterprise. 

 Without innovation and forward thinking, no business can succeed. But being a business owner is very demanding, and at some points, you’ll hit a wall where you can’t seem to come up with new ideas.

 To be a successful entrepreneur, you have to stay on the search for the next idea that will grow your business. And the truth is that most entrepreneurs are in need of some inspiration to ignite those ideas.

Here are several solid ways to cultivate inspiration. 

• Fix things that bug you daily. Entrepreneurs encounter frustrations, and the more bothered they are by certain issues, the more those can become an obstacle in the way of the business. Focusing some attention on negatives of the business and solutions can move it forward. Your desire to eliminate a daily problem or a building annoyance can inspire you to fix it. 

• Listen to your employees. Ask yourself, “How could they get better at what they do? How could they be happier and make our business better as a result of their passion and growth?”

• Think outside the box. The day-to-day grind shouldn’t prevent the entrepreneur from daring to dream. Have fun with it; see five to 10 years ahead and where you envision the business being. Further, use that inspiration to fuel sound ideas for expanding the business sooner than you thought, and even adding new ventures. 

• Meet with peers. An entrepreneur can re-energize and be inspired by being around like-minded leaders and speakers, perhaps at an industry trade show, where participants are pumped up. It can get you more excited about your business and remind you of why you started it.

• Read frequently. Leaders learn far more when they not only keep up with industry trends through reading but by reading about topics outside of their industry. This can really inspire you, because when you read outside your niche, you see creativity you’re not used to, and it inspires ideas.

• Unplug and take walks. In the often loud and chaotic world, we live in, especially in the business sphere, entrepreneurs need quiet time to clear their minds and then think freely. We live with distractions. They get in the way if we let them — or if we don’t get away from them on occasion. Walking in nature is a great way to do it. Quiet time opens a door to inspiration and creativity.

• Tailor an existing idea to your business. You don’t want to exactly copy people, but it’s foolish not to observe and learn from other businesses’ ideas. Then find innovative ways to apply them to your business. Inspiration rarely just shows up out of nowhere, uninvited. An entrepreneur needs to make time for it and go look for it, and there are a variety of ways to make that search energizing for you and your business.      

Peter J. Strauss (www.peterjstrauss.com) is an attorney, entrepreneur, and author of several books, including “The Business Owner’s Definitive Guide to Captive Insurance Companies.”

—Success demands a high level of logistical and organizational competence.  — George S. Patton

The complexity and regulatory requirements associated with tax-exempt, not-for-profit organizations has increased substantially during my 40-year career. In particular, the past 10 years have seen exponential increases in complexity for the following independent-auditor requirements:

• GAAS = Generally Accepted Auditing Standards

• GAAP = Generally Accepted Auditing Principles

• Uniform Guidance = Audit Standards for Federal Funds

• Cost Reporting = different rules for a variety of different funding sources

• Unallowable Costs = all government funders have defined more than two dozen types of costs that should never be charged to a government funder in a Certified Cost Report.

Tax-exempt financial reporting and governmental cost reporting regulations now rival the complexity of the legal profession.

As an old man long in the tooth, with four decades of experience, I am still flabbergasted and amazed that independent accounting firms will submit audit-fee proposals for the same scope of audit, tax and cost reporting work that can vary by more than 100 percent from the low bid to the high bid. I also continue to be disappointed that both management and governing board members will base their decision on selection of auditors based on the price quote that is either the lowest or close to the lowest submitted.

As is true with any type of purchased service, there is a wide range of quality and expertise available within the CPA audit profession. It is this wide range of quality and expertise that has a direct impact on the cost of an external audit. Equally important in terms of audit cost is the amount of time necessary for the auditor to complete an external CPA audit in accordance with the hundreds of rules and regulations promulgated by the Auditing Standards Board of the American Institute of Certified Public Accountants. These statements on auditing standards, with more than 115 issued at last count, establish the requirements, guidelines and roadmap for CPA firms to follow in the conduct of any independent CPA audit in the country. Please be aware that one of the most frequent compliance violations with the Nonprofit Revitalization Act is the failure of the Audit Committee to “assess the performance of the independent audit firm on an annual basis.”

Unfortunately, the following descriptions of audit types still exist today, in spite of active peer review tri-annual requirements for each CPA firm. Please be cognizant of the following assumptions:

• Price variations for audit services are at their greatest range in my 40-year career. Firms, depending upon their size, quality, profit objectives, audit risk, and overhead, will price audit services between $75 and $175 per hour.

• Not all tax-exempt boards view the external audit process in the same way. Some see it as a necessary evil (very dangerous), some perceive value and others are looking to fulfill the New York State audit requirement for the lowest cost possible.

The following description of audit types is as accurate today as it was 10 years ago, when I first authored a column on this topic. Each nonprofit board must select a qualified, competent CPA firm with the required expertise and knowledge. From the descriptions that follow, it should be obvious where your organization belongs in the spectrum of audits, depending upon your size, complexity, and government reporting requirements. 

The fly-by audit

• There is generally little to no partner involvement.

• The auditors assigned give you the impression that you are training them as opposed to them auditing you.

•  A significant portion of the audit work is not conducted at your office but rather at their office.

• The firm places extensive reliance on one individual in your organization, generally the finance officer, for virtually all audit explanations and representations without corroboration.

• The auditors do not meet with the board or its designated committee to review audit findings and results (NPRA violation).

• The fly-by audit fee is most often the lowest price quote.

The drive-by audit

• Unexperienced personnel perform the majority of the work.

• The auditor assesses the risk of fraud at a low level even though internal-control policies and procedures may be lacking in certain areas, such as the lack of segregation of incompatible duties.

• Significant pressure on the audit staff to “get in and get out” as quickly as possible with the emphasis on the profitability of the auditor versus the audit risk of the client.

• Generally, the auditor does not issue a management letter with recommendations for internal control and operating improvements. 

• The focus of the auditor is on getting the job done, not understanding your business processes and procedures.

• Limited procedures are applied to assess the risk of fraud, such as errors, omissions, and misappropriations of funds.

• The drive-by price quote may be 25 percent or more below what the organization has historically paid for audit services. 

The stop-by-and-stay-awhile audit

• Planning process, interim internal-control testing prior to year-end and final audit fieldwork are clearly defined.

• Auditor risk 

assessment, audit scope, and materiality thresholds are communicated to management and board in advance of the audit being performed (NPRA requirement).

• At least two meetings with the finance/audit committee are held, including one before the audit begins and the final audit report presentation (NPRA requirement).

• Comprehensive analysis and a report of auditor findings are presented directly to the finance/audit committee, including management letter, financial-trend analysis, benchmarking data, and a plain-English presentation of the messages derived from the audit process and financial statements.

• Executive session (without management personnel) between auditors and finance/audit committee at least once each year (NPRA requirement).

•  A formal report entitled required communications under GAAS addressed directly to the Board or its designated committee.

• The initial audit proposal should provide a summary of the level of audit effort in hours by financial-statement classification and internal-control procedural area. 

• The fee associated with the stop-by-and-stay- awhile audit may be in line with what the organization has paid in the past but is largely influenced by the quality of financial reporting, competency of internal staff, and the timeliness of account reconciliations.

• Auditors should be primarily responsible for auditing, not as bookkeepers closing the books for the organization. More than six audit adjustments each year should be viewed as an indication that changes should be considered in your internal finance staff organization, resources or personnel.

The stop-by-and-stay-awhile audit is most often the desirable approach if your objective is to view the audit process as adding value to your organization processes.

The never-can-say-goodbye audit

This audit has certain attributes that may be desirable but, at the core, it is most frequently characterized by:

• Extremely late delivery of audit reports to the board and management, usually more than 150 days after year-end. Ideally, fewer than 120 days for finalization, wrap-up and presentation of reports is desirable.

• Numerous audit adjustments are frequently necessary and the auditors are more bookkeepers than auditors.

• The resolution of audit issues can seemingly take forever.

• Management letters frequently include repeat recommendations from the prior year since no action has been taken on them.

• Frequently, a lack of internal staff preparation for the audit in account reconciliation and analysis leads to an intermittent field-audit process. A general lack of clear communication between the auditor and finance staff is common.

• The fee is typically higher than the market-value price.

Almost every CPA firm says they can perform an effective tax-exempt audit. This should be verified through references with existing nonprofit clients, which should number more than 25 separate organizations.       

Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at the Bonadio Group. Contact him via email at garchibald@bonadio.com