Business Record - Iowa Biz

Do you know how "products completed operations" can affect your business?

Do you know how "products completed operations" can affect your business?

Not surprisingly, most business owners don’t.

Often times, when I review this coverage with a client, if their business is not manufacturing, they don’t think they need it. I have even been asked if it can be removed from the policy since they do not make any products within their business.

So what I would like to do is review some simple scenarios that can show how useful and important this coverage really is.

• A self employed contractor builds a deck for a client – three months later the deck collapses and the client is injured. It is later determined that the contractor neglected to fasten the deck correctly and caused the deck to collapse.

• A customer eats a hamburger at your restaurant and later makes a claim against the business claiming that they received food poisoning from eating at your establishment.

• A heating and cooling business installs a new water heater in a client’s home. Three months later, the water heater leaks and causes property damage to the client’s home.

While some of these situations seem simple - they are common, everyday business operations that can affect many different industries.

It is important to note that to be covered, the injury or damage must occur away from your own premises, unless your business includes selling, handling or distributing your product for consumption on your premises.

Just as important to know is that this coverage only provides protection while the policy is in force.  So, if a business owner cancels the policy, closes their business or retires - and a claim arises three months later for work they performed during their policy period - they’re probably not covered.

So the next time you are reviewing your policy, make sure that your Products Completed Operations coverage is adequate for the risk you bear.

As always, I welcome any feedback that you may have and click on the above links for more information on this coverage.

Preamble Your Project

Happy Independence Day from Iowabiz!

To celebrate our nation's birthday - and with help from my friend, Josh Nankivel, and his fellow authors at PMStudent - I thought it appropriate to look at our constitution as one big project charter:

We the people At their core, projects are about people.  They are of the people, by the people, and for the people. People skills are the chief component of what makes a project work.

In order to form a more perfect union Does your project support the cohesive mission of your organization?  If not, you'll have stakeholders pulling you in every direction.

Establish justice In a project setting, "fair" is a myth. There will always be somebody who perceives your project solution as unfair.  As a leader, you are shooting for an equitable solution.

Ensure domestic tranquility Keeping your stakeholders and end users at the forefront of your focus can prevent embattlement down the road.

Provide for the common defense Projects will always be embattled by office politics.  Why not keep your sense of humor and be prepared for the worst?

Promote the general welfare While you are meeting deadlines and building deliverables, why not develop your people and manage their skills and talents in the process?  It could save your project.

Secure the blessings of liberty While there are many tools and approaches in project management, the best practice is to maintain your flexibility, try new things, and ultimately just do what makes sense for your project and your team and your organization.  Rigidity kills projects.

To ourselves and our posterity What kind of legacy is your project leaving for the organization?  Will people ignore and dismantle the solution once you have moved on, or will they embrace what you have accomplished?

On behalf of my fellow Iowabiz authors, I wish you a safe and happy Independence Day holiday.

Carpe Factum!

The Right Way to Approach Customer Service

Image by Jim Frazier via Flickr

Several months ago I found myself in the midst of a real life version of Planes, Trains and Automobiles and I learned a valuable lesson in customer service. I was on my way home from a business trip and, to make a very long story short, I was stuck with a bunch of other travelers at Chicago's O'Hare International Airport. We'd loaded the plane. We'd sat on the tarmac for hours. We'd returned to the terminal to correct a problem. We'd reloaded the plane. Then we were told we'd have to get off the plane and be shuffled to another flight. It was your basic travel nightmare.

As I stood in the back of the line at the service counter waiting for my reassignment, I watched as my fellow travelers verbally accosted the ticket agent. Granted, they were saying all the the things I was thinking, but the poor guy was getting mercilessly yelled at and berated.

I was the last person in line. As I approached the lambasted ticket agent, I noticed that he defensively refused to make eye contact.

"Tough night for all of us, isn't it?" I asked with the most cheerful tone I could muster.

He finally looked at me as he held out his hand for my boarding pass. I forced out an "I know how you feel" smile as I gave it to him. He rolled his eyes, nodded, and began to work on my reassignment.

"Thanks for taking care of us," I said as his fingers clickety-clacked their way across the keyboard.

The printer whirred and he pulled out the new boarding pass.

"Thank you," he said to me with deliberate earnestness. With that, he handed me a first-class ticket home.

Like it or not, Customer Service Representatives have the power to help or hinder our quest for resolution. How you approach them may determine which it's going to be. As my Grandma Golly always said, "You can catch more flies with honey than you can with vinegar."

Why corporations block social media sites: Security and productivity

Image by luc legay via Flickr

Recently, The Des Moines Register reported that the Iowa DOT (Department of Transportation) blocked the use of Twitter, MySpace, Facebook and other social media applications among its employees, citing security concerns.

So, how unsafe are social networks, anyway? In my opinion, social technology is no more or less safe that any online destination and function (Web sites, e-mail, et cetera).

As an individual user, there are many precautions you can take, including using a safe browser: Firefox and Chrome get high marks for their advanced safety features, while Internet Explorer is frequently full of holes and security exploits.

You should also have some form of security software on your desktop machine or laptop that scans for viruses, malware, spyware and phishing apps once every 24 hours.

Thirdly, and probably most importantly, have some common sense. Don't click on anything that looks suspicious sent from someone you don't know, whether it comes to you in the form of an e-mail message, a tweet or a Facebook post.

Now, to the other issue, is the Iowa DOT really concerned about security issues, or is this a smokescreen to ensure that employees remain productive? I truly believe social networks (when used properly) can enhance a business or organization, and blocking them may simply result in missed opportunities.

Security and productivity should be addressed, in my view, with proper educational training, internal policies and employee culture. It's up to each individual company to talk to their employees about what goes and what doesn't go.

In the Iowa DOT's case, I'd recommend keeping these applications open for marketing and communications staff as a start. These are the people who will need to make use of social media tools and channels right now. Other employees, especially those on machines with access to sensitive data such as social security numbers, can remain closed-off and perhaps activated on an as-needed basis.

For a good analysis of what an internal social media usage policy might look like, here's a Mashable article on the topic including examples from Ford and Zappos.com.

Nathan T. Wright

Should your S corporations be in a holding company?

The way the economy is going, a lot of entrepreneurs are going to be looking at taxable losses for 2009.   Those who run multiple businesses in separate S corporations should ponder an S corporation holding company before year-end.

S corporations generally don't pay their own income taxes.  They report their income on a Schedule K-1 issued to their owners, and the owners pick up the K-1 income on their 1040s.  S corporations are popular because they can distribute their earnings without further income tax, in contrast with double taxed C corporations.  They also can enable their owners to reduce their income with K-1 losses.

Unfortunately, shareholders need to have basis in their S corporation stock, or in loans they have made to their S corporations, for their K-1 losses to be deductible.  Entrepreneurs with multiple S corporations might find themselves with plenty of basis in a profitable S corporation, but no basis at all in a money-losing corporation.  That means they might pay tax even though they didn't actually make any money:

Example: Todd owns 100 percent of S corporations Razor Corporation and Market Street Brewing Company.  Razor has $1 million taxable income, while Market Street has a $1 million taxable loss in 2009.  At the beginning of the year, Todd has no basis in either company.  He makes no distributions or cash contributions to either company in 2009.  At year end, he has $1 million in basis in Razor, because undistributed taxable income increases the basis of S corporation stock.  Unfortunately, he still has no basis in Market Street, so his losses only carry forward until he either contributes basis to Market Street or it generates its own taxable income.

 Even though between the two companies Todd has no taxable income, he has to report $1 million of income from Razor without deducting any loss from Market Street.

A far better solution would have been to have the S corporations all under a single roof in an S corporation holding company.  For example, Todd could set up a new S corporation -- we'll call it Todd Holdings -- and contribute his stock in both companies to it.  The old S corporations would elect to be "Qualified Sub-S Subsidiaries," or "Q-Subs," of Todd Holdings.  Todd could then count the basis of the corporations together, enabling him to use the $1 million of year-end basis in Razor to take his Market Street loss.

Setting up holding companies is normally uncomplicated, but it can cause huge tax problems if not done properly.  Don't mess with your corporate structure without consulting a competent tax advisor.  If you get it set up by year-end, a holding company should provide the same benefit as if it were in place the whole year.

Remember Lou’s 10/90 Rule to Manage Stress

Legendary college football coach Lou Holtz gave some great advice I draw to mind when feeling stressed: “Life is 10 percent what happens to you and 90 percent how you respond to it.”

You don’t need to be a sports fan to benefit from Holtz’s mantra. We all experience difficult situations, and if we’re not careful, stress can cause physical, emotional and psychological strain that affects us at our home and work.

Stress is defined as the body’s response to change. Along the way, you may have already experienced some of the common symptoms: depression, heart disease, sleep loss, headaches and pain in the back, neck and jaw.

According to the American Heart Association, it’s important to identify ways you best handle stress, such as exercising, talking about your troubles or learning to accept the things you cannot change (the old Serenity Prayer).

You also should pay attention to potential stressful conditions at the office. The National Institute for Occupational Safety and Health outlines several stressful situations, including:

• Task Design: Heavy workload, infrequent breaks and long work hours can take their toll on even the most serene individual.
• Management Style: Departments lacking team decision-making opportunities, open communication and family-friendly policies may experience high turnover and employee burnout. 
• Work Roles: Employees struggling with conflicting or uncertain job expectations, extensive travel or an endless number of immediate reports may feel overwhelmed and frustrated. 

Be mindful of your own reaction to stressful situations and focus on identifying the disruptive factors affecting you and your team. Make time to discuss difficult projects or clients while helping others develop positive methods to manage their stress.

This is important. Studies show that stressful working conditions are associated with increased absenteeism, tardiness and employee turnover – all of which can have a negative effect on the bottom line. So remember Holtz’s advice, and focus on your personal and professional health.

Reflection on the Passing of Three Cultural Icons

Michael Jackson via last.fm

Last week, each generation lost three cultural icons: Ed McMahon, Farah Fawcett and Michael Jackson. Their lives had great meaning and contributed much to the popular culture. Pop culture, as silly as it can be sometimes, provides energy in an otherwise boring world, so when pop icons vanish it feels as if part of our own history our own identity has also left.  

As some eulogize these figures, many are thinking back to a life experience that somehow involved one of these stars. Though many might argue over the abundance of attention a celebrity’s death may get compared to the average person, the truth is we were able to chronicle our own lives and identity by watching them. Sometimes it was comparing our actions and sometimes it was contrasting our actions to theirs. Yet even in their passing these icons provide a reflecting lesson for the generations to take.

Ed McMahon knew his role, found success and thought it would never go away; a great legacy that in latter years was trying to regain relevance, not for limelight’s sake but for humility’s purpose. McMahon did things the right way until things changed and McMahon was left.

As the world changing Boomers now face a changing world, it is fascinating to see the struggle to pass down not just the memories of their past, but its significance and purpose to future generations that may not be as willing to absorb all its predecessors lessons.

Farah Fawcett’s death was probably the most heroic, her fight had been long chronicled, and in the end it was bitter sweet. However, before the end of the day it was largely overshadowed by the death of Michael Jackson. As time goes on she will be re-eulogized in a way that is not overshadowed, and the courage of waning days will be celebrated.

While the focus has been on Boomers and Millennials, Gen X characteristically has been overlooked. But as I’ve noticed of Gen X's embrace of an imperfect world is the generation's realization that they have to lead regardless of being in the shadows of two behemoth generations.

Jackson’s legacy was multi-generational. However, Jackson’s persona can only fully be measured from a generation that only remembers him when he was at his peak. There is no question that Millennials are a self-aware group searching to find their place in the world of work. Jackson grew up in the limelight, which allowed him much influence. But away from the stage it created a real sense of vulnerability that in the end was probably his downfall.

USA Today published a report recently referring to Millennials as the “recession generation” and indicating that this generation had particular dreams and expectations that all of a sudden took a turn when the economy tanked. Now a generation that has always been taught it was invincible is starting to realize it s vulnerability.

Thee is much more we can take away from the lives of these individuals, but let's continue to look at the lessons their lives teach us.

Lighten up and get some new customers

We all take our work seriously, as we should.  After all, it's how we pay our mortgage.  But depending on what exactly it is your business does...sometimes it pays to take a more light-hearted approach to selling your wares.

Takes the good folks at PetButler.com.  Darron Kitterman, the Central Iowa franchise owner has a sense of humor and uses it to grow his business.  Pet Butler's work is for the dogs....literally.  They scoop poop.  They do provide some other services...but they're all related to dog waste of some sort.

Darron uses that sense of humor to make sure everyone knows what he does for a living and how he can make your life a little easier.  Darron dons a shirt like this and waves a passing cars.  He mails t-shirts (see photo) and candy bars that look like poop.

They use poop puns like "often imitated, never doo-plicated."

They have fun.  They make us smile.  And we remember them.

And when we're frustrated because your kids can't play in the back yard or mowing is a landmine avoidance game....who do you call?

Exactly....the people who gave you a chuckle and made dog poop amusing.

I'm not saying this tongue-in-cheek approach would work for every organization.  But, it's a great example and a worthy reminder to all of that that we don't always have to take ourselves quite so seriously.

Having some fun doesn't mean you aren't a poo-fessional!

Don't Tell Twitter Your Vacation Plans

The Good With the Bad
Twitter, blogs, message boards, Facebook, LinkedIn and other social media platforms are great ways to connect with large groups of people. Transparency, being open about who you are and what you do, has many advantages. It generates trust. It builds relationships. In addition to the benefits openness provides, it also has dangers. Knowing what these dangers are and how to protect yourself, your home and your family, is not difficult and may just keep you from becoming the latest victim.

Dangers of Over-sharing
Everyone knows posting confidential information to the Web is an identity theft waiting to happen. Thieves will do whatever they can to get your valuable information, but did you know even disclosing your location could lead you to become a victim? Last month Israel Hyman, (Twitter handle @IzzyVideo) posted on Twitter that he and his family were on vacation in Kansas City. He also set up his Twitter account to automatically update his Facebook status with that information. After his family vacation, Mr. Hyman returned home to Arizona only to discover he had been burglarized, with thousands of dollars of video and computer equipment gone.

How Did It Happen?
In addition to Mr. Hyman's 2000+ Twitter followers, anyone could have logged onto Twitter to check his status. Once they know you will be away, thieves do not need much to find your home. A name, a cell phone number, a Web site address (which they can check for contact information) or a picture may be all they need to connect your "I'm on vacation" post with a Google Map to your home. So what can you do?

Think Before You Post
The solution is not to stop interacting online. The solution is simply to think before you post. Refrain from posting outside your closest network of friends things like: "I'm home alone" or "I'm working late." Also, continue to post while on vacation. Posts from your friends, such as "Has anyone heard from Jane? She has not posted for days" are cues that your home may be vacant.

Stay in Touch
If you are online, your network of contacts is actually your best defense against becoming an online victim. More than likely, someone in your network will be the first, not only to alert you to potential threats, but to tell you how to protect yourself from them. If you are a real glutton for punishment, and need all the latest information about cyberlaw and online threats, feel free to follow me on Twitter @BrettTrout

Brett Trout

Presentation Awareness

Earlier this week I was invited to sit in on a lunch and learn presentation that was given by a friend of a friend. The lunch and learn has certainly become a popular and effective way of introducing a business idea, promoting and marketing a company, or simply giving a group of people in the community something of value to make their business better…if it’s done correctly.

Unfortunately, this presentation died before it started (By the way, I speak from experience. I’ve been the pilot of more than one presentation that crashed and burned so I know what I’m talking about).

The meeting was advertised to begin at 12:00 and end at 1:00. It didn’t. Many of the attendees are coming from their corporate jobs so time is crucial. The presenter was sitting at a table speaking one on one with what appeared to be one of his friends and the presentation started just after 12:15. The presenter was a very friendly and funny person, but like me was like a kitten with a shiny object being waved in front of him. The presenter was just simply not aware of what was happening outside of him (i.e. everyone looking at their watches and squirming in their chairs). Way too much time was spent trying to be entertaining and the message just didn’t resonate.

At nearly ten minutes after one o’clock, the presentation ended. The presenter asked for questions (none were asked), and thanked everyone for coming. Once the audience finally received their lunch bills, they hurried out the door and back to work. I'm guessing it was not a very profitable afternoon.

So with that, I present a few (of many) obvious ways to make a lunch and learn more effective;

• Be prepared Having fun and bringing your personality into your presentation can be very effective. But even great improvisation has structure. There is a reason people like Drew McLellan and Adam Carroll make it look so easy.
• Respect people's time Start on time and end on time. Know your audience. In this case, many people were coming from their corporate jobs where lunch hours are actually one hour. If people are stressed about getting back to work on time you've lost them even if they are still in the room.
• Give something of value Again, time is precious. Funny and entertaining is icing on the cake. If your audience doesn't leave with something that can make their job or life better, you've wasted your time and theirs.
• Keep it simple Here is a slide from Garr Reynolds at Presentation Zen on keeping it simple. Think about it.

Have you sat through an awesome presentation lately? What made it great?

Avoid litigators – Don’t Destroy That Document

My posts deal with avoiding litigation. My last post addressed the benefit of putting business dealings in writing. Once you put something in writing, the next logical determination is how long to save that document.

Business owners regularly tell me they keep records for seven years because it is "the law." The magic seven-year rule may be a tax guideline, but it is a business and legal myth.

Prior to going Enron on your corporate records, take a look at the IRS’s Starting a Business and Keeping Records. The Record-keeping section addresses records for taxes. To address concern about potential lawsuits, work with your attorney to design a record retention plan. Be sure the plan covers paper records and electronic data. Once you have a record retention (and destruction) plan, integrate that plan into your business processes.

What if you don’t follow the plan?

Under Iowa law [Iowa Civil Jury Instructions contain a model instruction] if a jury concludes you intentionally destroyed or failed to produce evidence, it can assume that evidence would have been unfavorable to you. The jury may see the missing evidence as the :"smoking gun." A saved receipt may nail your case down; a prematurely destroyed receipt may become a nail in the coffin. Well kept records may be more productive than winning lawsuits; they may convince opposing parties not to sue you in the first place.

How do you devise and regularly apply a sound plan to avoid problems?

In Iowa, most oral contracts have a five-year statute of limitations [section 614.1] to enforce a contract (or to be sued for a breach). Depending on your business, you may wish to retain supporting documents for five years after the contract ends.

In Iowa, most written contracts have a 10-year statute of limitations [section 614.1]. Does your record retention plan keep the contract for 10 years after performance of the contract ends? How long do you keep record of payments made or received? Should you keep emails about the contract?

Under Iowa law, as a designer, manufacturer, distributor or seller of a product, can you be sued 10 or 20 years after production and multiple re-sales if the product causes damage? What are the time limits or Statutes of Repose [614.1(2A)] for such claims? What if your product is a Web-based application? How long must you keep the records of product testing? Of use? Was your product sold with warnings or safety devices, or for a Web-based application, was a warning included with installation or initialization? Do you have records that show your product was altered?

Although the questions are complex, setting consistent policy will make later involvement in litigation less likely or, at least, less painful.

Record retention is important. Failure can subject you to legal presumptions that could end your business. Find out the factors that affect your particular business. Implement a record retention and destruction policy. Put it in writing. Stick to it.

Or wait until you have a problem. Then come see me.

"She Made Me Mad"

Image via Wikipedia

"She made me mad!" Ever said that? Of course you have. We all have. As if she -- whoever SHE is -- crawled inside our heads, flipped a bunch of levers, and cranked up the dial labeled, "anger."

Others don't make us mad. Or happy. Or anxious. WE pull our own levers and turn our own dials.

In fact, one of the biggest stumbling blocks we all face -- whether as leaders at work or in our personal lives -- is our propensity to believe we know exactly what's going on around us. What we see is what everyone else must be seeing, right? So, our truth is also their truth -- and our emotions must match their emotions, right? No so.

Put 50 people in a room. Stage an incident. You'll get 50 different stories about exactly what happened there. More importantly, you'll get a plethora of different emotions, based on what the various stories are about. Scary stories might create the emotion "fear." Funny stories might create "joy." Et cetera.

Remember Shakespeare's admonition, "Nothing in this world is good or bad, but thinking makes it so."

THINKING=STORYTELLING

With apologies to Shakespeare, "Nothing in this world is good or bad, but 'storytelling' makes it so." If you want to change your feelings, (bad feelings like anger, frustration and sadness or good feelings like delight, happiness or curiosity) examine the story you're telling yourself.

Stories are assumptions. Remember the old adage you learned somewhere along the way: "If you assume, you make an "ass of  u and me." Storytelling...making assumptions...is especially troublesome when you're in a leadership role. I like Will Roger's thoughts on the subject: "It isn't what we don't know that gets us into trouble; it's what we know that isn't so." If I didn't know better, that concept could make me mad.