Business Record - Iowa Biz

Sometimes you just need to play the game...

This week, I attended my son's chess club orientation.  He's in 1st grade and it was his first experience with the game.

Now... I'm not going to lie...  the thought of teaching a group of 1st, 2nd and 3rd graders how to play chess is a bit scary, but... a couple of brave parents took the job and started working with the kids to explain how it all worked.

One parent started by reviewing the rules. 

He did a great job of explaining how the various pieces moved.  He showed the kids how some moved forward, some moved to the side and some could go anywhere they darn well pleased. 

For a while, the kids stayed with him... grasping at the rules and logistics.  But then, you could tell... they started to get lost in everything there was to understand. 

So another parent came from the back of the room and simply said, "Maybe we should just have everybody try to play the game?" 

You could tell the first parent was relieved by the suggestion and the kids launched into experimenting with the various pieces. 

As you can imagine, they devoured the game. 

Some kids were laughing.  Some stared at the board with the intensity of a Russian Chess Champion. 

Most made mistakes as they played... but they were learning as they went.  It was fun.  It was an adventure.

Then it struck me.  Sometimes we are just like these kids.  Right?

We get a new idea or get struck by something we want to try and we dive into the rules and the regulations.  Right?  It's not a bad thing.  Many times, it's the smart thing to do.

Maybe it's an idea for a new product. 

It would make sense to research the rules around that.  It would also make sense to do some research and check out the markets, competitors and opportunities.  Right?

Or maybe you're thinking about a new job. 

It would be important to check into things before making a leap.  You know.  Read about the industry.  Talk to people who are doing it.  Find out more.  Dig in.

BUT... just like kids getting lost in the rules of chess... sometimes we get stuck there.  Don't we?  Our eyes glaze over and the idea dies on the vine. 

Sound familiar?

Well sometimes you may just need to "try to play the game." 

Maybe you shouldn't spend thousands on equipment for your new product right away, but maybe you could find someone to help you make a prototype to test with people.

Maybe you shouldn't march in and quit your job today, but maybe there's someone you could to spend time with that's doing exactly what you want to be doing.  Maybe you could spend a day shadowing them to experiment and see if you really connect.

What do you think?

Okay, so here's my suggestion after watching the kids learn how to play chess and after coaching hundreds of people over the past few years:  Figure out a way to "play" today. 

Try something.  Have some fun.  Limit the risks.  But get out there and play the game.

Sure... just like my 1st grader... you will make some mistakes.  But isn't that one of the best ways to really learn? 

So... What are you going to try today?

Click "comments" and join in the conversation.

Photo credit: Ed Yourdon

Playing It Safe

Many small business owners that are just starting out feel they can not afford to protect themselves against every risk. 

I wonder what business owners are thinking when they feel they do not need Products and Completed Operations Coverage.  I usually get the response, “Well, that stuff is just too expensive and if something goes wrong I’ll just file for bankruptcy and start over.”

My question is, “What do you do if you have a product that is wonderful and just needs a little twist here and there to put you on the next cover of Time magazine?” 

You just filed bankruptcy and have no way of getting this product back into production with the correction it needs. And now a competitor has made alterations and gets it out into mass production. 

If you had purchased Products Liability Coverage there is a good chance that you could have sustained the loss and continued on in business.

If you are a small business owner that makes a product, do not overlook this particular part of your coverage.  It is very important to look at your overall risk factors and determine where to spend your premium dollars. 

I know in the news recently that a very well-known baby crib manufacturer is having one million cribs recalled.  Turn on your television and you’ll hear about all the toy manufacturers that are going through recalls due to dangerous levels of lead.

If it can happen to the big businesses it can happen to the little ones, too.

Look to the next post for more details on Products Liability Coverage and further discussion concerning Completed Operations Hazard.

Flickr photo by Hess Kennedy

Martha Stewart Need Not Apply

When documenting the status of a project, one of the hardest things to do is determine the color status of the project.  For simplicity's sake, the three obvious color status choices are red, yellow, and green.

Red essentially means that the project is in chaos mode.  No progress can be made until pressing issues are handled.

Yellow denotes a cautionary mode for the project.  It means that some elements are derailed but that the project (with the right attention) can move forward.

Green refers to a project that is in a controlled mode.  All of the critical elements are firing on all cylinders and need little outside intervention.

I've had people try to get very creative on project status.  It is as if three colors are not enough.  Here are statements I've from actual project managers:

• "We're green but with the slightest tinge of yellow.  Let's report the color as lime."
• "The project is essentially red, but I still feel that we can pull it out.  Since you won't let us be orange, can we choose a more reddish color like pumpkin?"
• "There are elements of all three.  Let's call it a stoplight swirl."

While all three help generate the appetite, none truly conveys to a reader where the project is.  One of the key skills of project managers is decision-making.  And if a project manager cannot decide on one of three colors, one really must wonder if that project manager is ready for the true rigors of project management.

Of course, my favorite is the project manager who was expounding on exactly how red his project was, just as the fire station next door received an alarm and sirens began blaring.  I congratulated him on his use of sound effects.

So, based on the links provided, do you feel comfortable reporting your project as red, yellow, or green?  More importantly, do you know what to DO when you see a project reported with such a status?

Carpe Factum!

Customer Satisfaction? CHECK!

A client of mine is a pilot. One day he brought me the checklist of things he must go through before taking off in his plane. I was shocked at the multiple pages, with multiple columns of items typed in a tiny font. There are so many details it's a wonder that he gets to fly at all. I'm sure that there are days when the preparation and checklist takes more time than the actual flight!

I've always said that the difference between good and great is in the details.

My wife and I are staying in a Springhill Suites this week. Marriott does a nice job overall, but I notice that, as a business traveler, it's the "details" that annoy me. The water in my "kitchenette" faucet doesn't work. The list of channels on the in-room channel guide are completely wrong. They may seem like nit-picky things, but when they don't work they annoy you. When they annoy you it affects your overall impression and satisfaction with the experience. Will it affect my decision in the future. Probably.

Perhaps the channel guide and faucet aren't on housekeepings checklist.

Do you have a checklist of what your customer expects? Do you check and double check that you are delivering the details in a way that will satisfy customers?

Blogging is More Than Lunacy

Blogging isn’t the lunacy many proclaim. There is some lunacy, but there's more to blogging than lunacy.

Many use blogging to journal thoughts, photos or sound bytes. But that's just a few ways to use blog sites. There's more.

Smart business people are beginning to use blogging to increase their findability, position themselves as an expert in their field and to engage in conversations with their customers.

While those that are using blogging for business are finding success, some professions still have their defenses up on the subject. Maybe it's fear.

Hearken back to yesteryear, when the complaint against television was that it would kill radio. It didn’t. But radio did find different – if not better – ways to be used. The outcry against blogging is similar in some professions.

The archive, architecture and frequency of a blogging is changing the professional worlds of web development, marketing, copywriting, and public relations.

Web Development
Here are the distinct differences between a static web site and a blog site:
1.    Timestamped, Archived Content
3.    Ability for the Reader to Engage
4.    Syndicated Content (or RSS Feeds)

Search Engines have a responsibility to deliver fresh, relevant content to their user or face losing them to competitors. Because blogs are updated frequently, provide depth with archived pages, and are have a categorized architecture – search engines are attracted to blogs.

RSS feeds is another reason web development is changing. Because users can receive content without the ads and design – web development is changing.

Marketing and Copywriting
Today’s customer craves a meaningful relationship. While they may switch loyalties and practice diversity – it’s in search of a business that practices meaningful outreach and treats the customer like royalty.

Since blogs allow the reader to receive the content however they choose – and since blogs allow for a form of open dialogue – the company that blogs will be talking with their customers, rather than at them.

Don’t Just Publish – Participate
Blogging isn‘t just about publishing your message, but also about participating in a larger discussion with other bloggers – namely your customers and prospects.

Like any other conversation, blogging has two roles: Listening and Talking. There are tools such as Google’s Blog Search and Technorati that allow you to search the blogosphere by keyword or web address. By subscribing to the RSS feeds of these results, you begin practicing “Search Once and Subscribe.”

Blogging is more than just quilts and cats, pictures and poetry. They are that and more. While some say it's lunacy - there are lunatics driving cars on our roads...but I'll bet you still drive a car.

Photo on Flickr by Sue Richards

Lights, camera...sales?

There are many ways to deliver a marketing message. One that is often overlooked or erroneously dismissed as being too expensive is producing a video. YouTube has changed some perceptions in that arena but not so much in the marketing field. 

In reality, the return on the investment can be significant, even if you get a top notch professional to shoot your video. Some of the advantages are:

~ Delivers the intimacy of extended one-to-one communication.

~ Compared to TV ads, non-interruptive.

~ Allows three-dimensional views of products, show a product in use or a service provider in action.

~ With music, action and color, generates emotional impact.

~ Can bring your employees and their passion for your business to life.

~ Can be combined with CD, DVD, or streaming video technology to translate to an easy direct mail piece or web page content.

~ Is a powerful storytelling medium.

Wondering where you can use your video?  Your lobby.  Your website.  Your e-mail campaign.  Your annual meeting.  Staff recruitment.   New business pitches.  And that's just the beginning. 

What is Fair Use?

Ignore the Urban Legends
I am not making money on it; it's fair use.
They should be happy with the press, I'm making them money, it's fair use.
It didn't have a copyright notice on it; it's fair use.
If you are hearing these kinds of statements flying around your office, keep me in mind. You will likely need a copyright attorney in the very near future.    

Don't Believe Everything You Hear
Better yet, you can take a little preventative action now and avoid ever having to go to court in the first place. So, what do you need to know about copyright. The first thing is to never believe anything about copyright law unless you hear it from a copyright lawyer; and even then you might want to check out a second or third opinion until you find a copyright attorney you can trust.

What is Fair Use?
In some situations it is permissible to use limited portions of a copyright work, including quotes, for purposes such as commentary, news reporting, scholarly reports. This is particularly true for current news stories & historical analysis (to promote accuracy). The quoted material, however, must not be unreasonably large and must not destroy the market for the original work (quoting the salacious portions of Monica Lewinsky’s memoirs).

Be aware that courts rarely uphold a claim of “fair use” in a for-profit, commercial context unless the use is directly tied to parody, news or critical commentary. In determining whether your copying constitutes “fair use” the courts will look at:

1) The purpose and character of your work-Are you making money from the copies?
2) Nature of copyrighted work-Is it a form book meant to be copied?
3) Amount of work taken-Are you taking 90% of the work or 2%?
4) Economic impact of taking-Are you taking the 2% that makes people want to buy the original (Lewinsky passages)?

In determining whether a use is a fair use, courts weigh all of these factors, along with additional factors indicating why or why not your use might be allowable under copyright law. If you are copying 1% of the non-critical portions of a form book for your own personal use, you are okay. If you are selling 98% complete copies of the The Davinci Code, you are in trouble. For anything in between, it is best to either consult your copyright attorney for advice or stick with copying works already in the public domain.

Now, For the Really Important Question
Am I going to get sued? Curiously, the answer to this question often has little to do with the legal analysis. No law or lawyer can tell you whether you are going to get sued. Whether you are going to get sued depends much more on the motivations, as well as the relative strengths of the parties. Is the entity from whom you are taking the copyright work an 800lb gorilla run by the guy with an itchy trigger finger you fired three years ago? If so, a detailed analysis of the esoteric legalities of fair use under United States Copyright Law is kind of a moot point. You are going to get sued. And since you likely do not have the $30K+ to fight the case, you are likely going to lose or settle for far less than what might otherwise be considered “fair.”

Think Like a Business
While I am all for fighting the good fight and not paying the bad guy money to use against the next innocent victim, a Pyrrhic victory, or more likely complete immolation at trial, does not help anyone. You may think you are becoming a martyr for the cause, but getting wiped out in court may actually do more harm to future victims than paying money. Large corporations often use a track record of putting infringers out of business to extract settlements. The smartest move for you is to review your copyright material beforehand to check for any potential copyright problems. If you own a business, be sure to include "fair use" policies in your employee handbook. With copyright issues, an ounce of prevention can be worth about seven figures of cure.

For more on fair use, as well solutions to the most common internet law problems, be sure to check out CyberLaw: A Legal Arsenal For Online Business.

Fair Use Cyberlaw

Enron's Binge - Your Hangover

When the Enron scandal broke, it was hard for a small businessman not to laugh at the $6,000 shower curtains, the offshore accounts, and the extravagant excesses of the period.

Then Congress got involved, and now the laugh is on all of us.

Congress added "Section 409A" to the tax law in response to the use of high-tech deferred compensation arrangements by corporate looters.  These new tax rules on "non-qualified" deferred comp plans were carefully tailored by Congress to apply to... almost everyone.

It has taken the IRS three years and hundreds of pages of regulations to try to make sense of Sec. 409A, so we can only scratch the surface here.

THE TAX PENALTY

If you make a mistake designing or operating a plan covered by Section 409A, two bad things happen:

- The employee covered by the deferred compensation plan pays tax on all amounts that have been deferred for his benefit since he was employed - even if the employee didn't receive the amounts, or even if he never receives them.

- The employee also pays a 20% penalty tax on the deferred amounts included in income

ITS REACH

You don't need to have a Ken Lay-sized retirement plan to be covered by Section 409A.  It's almost easier to list plans that aren't covered by Section 409A. 

Traditional "qualified" retirement plans are not covered by Section 409A.  That means it doesn't affect:

- Section 401(k) Plans;

- Profit-sharing plans;

- Defined benefit retirement plans

- ESOPs

Plans that are affected include almost any other arrangement that defers employee pay more than 2 1/2 months after the year in which it is earned.  This can include "phantom stock" plans, stock option plans, and supplemental or "top hat" plans for executives and owners. 

But the rules don't only cover executives and owners.  The IRS recently had to address how Section 409A affects schoolteachers who have their salary for the school year spread over 12 months to ensure a summer paycheck.

THE DEADLINES

Last week the IRS announced that employers have until the end of 2008 to draft documents for plans covered by Section 409A.  But there is a more pressing deadline.   Employers generally have only until the end of 2007 to decide whether to bring old plans into compliance with the new rules, or to instead terminate them and distribute the funds to employees without the 20% penalty tax.

TALK TO YOUR TAX ADVISOR

The Section 409A rules are complicated, and the penalties for violating them are severe.  If you think you even might have a plan affected by Section 409A, discuss them with your tax advisor.

Links:

Section 409A Final regulations

IRS DELAYS DOCUMENT DATE FOR 409A DEFERRED COMP RULES

Prior Section 409A guidance

Think Around the Constraint of Time

Let's face it, time is one of our most cherished assets and also one of the smallest assets we possess.  The challenge lies in finding a way to capitalize on what little time we have as business owners. 

A quick tip to make the most out of a networking moment.  In this instance, the networking activity is a presentation from a company in the Bio-Technology Industry:

Assume you know nothing about how a polymer reacts to a DNA strand filled with bio-nucleic acid.  Now, assume you are listening to a 3 hour presentation on the entire subject. In the back of your mind you're thinking 'none of this pertains to me.'

Truth is, that presentation does pertain to you.  The trick is to look beyond the boundaries of the information and find a way to create value from your time.  Here are some questions to ask yourself during that presentation:

1. Who do I know that isn't here that could benefit from knowing this company?
2. Who do I know that would make a good strategic introduction to this company?
3. Who is in the audience that I haven't yet introduced myself too?
4. Who would the presenter know that may be able to benefit my business?
5. What is the presenter doing good/bad that I can learn from for my own presentations?

The fact of the matter is, there are opportunities surrounding each and every one of us. It's up to us (and us alone) to look on the edges of mainstream activity to take advantage.

Where Should You Incorporate Your Iowa Small Business?

Where should you incorporate your Iowa small business?  This question is asked a lot by would-be small business owners.  The question used to be surprising but after seeing and hearing numerous advertisements for Delaware and Nevada corporations on the Internet and on satellite radio it is definitely a legitimate question.

Delaware has reputation and history on its side.  Delaware's Division of Corporations boasts that more than a half a million business entities make their legal home in Delaware including more than 50% of all U.S. publicly-traded companies and 60% of the Fortune 500.  Businesses, especially large ones, choose Delaware because of the state's business laws and respected Court of Chancery.  Most observers say it is because of Delaware's predictability. 

Nevada has recently exploded in popularity for many businesses.  This is due to Nevada's pro-business climate, low-tax mentality and the lack of an information sharing agreement with the IRS.

Delaware or Nevada may offer viable options for some companies but in general most Iowa small businesses are probably wise to incorporate in Iowa.  First, Iowa has very low fees when it comes to incorporating your business.  It is a $50.00 fee to file Articles of Incorporation for a domestic corporation in the state of Iowa.  Further, it only a $30.00 fee every two years for a biennial report if you file online.  These fees are extremely low compared to other states.

Second, you won't avoid Iowa taxes by incorporating your Iowa small business in Nevada or Delaware if you are doing business here in Iowa.  The tax and corporation laws of Iowa will require you to register your company and pay fees as a foreign corporation in Iowa and you will be required to pay Iowa state income taxes for any income earned.  (You also do not avoid federal income taxes by incorporating in Nevada despite the lack of an information sharing agreement with the IRS).

And the perceived court advantages in Delaware?  That might be fine for a large business that is actually going to litigate a case in Delaware but it is probably not cost effective for most Iowa small businesses to litigate their cases in Delaware.  Besides unless you have well-written forum selection clause in contracts your Iowa small business will likely end up in Iowa courts anyway.

If you have questions regarding where you should incoporate your Iowa small business be sure to contact a business attorney licensed in Iowa. 

Photo on flickr by rsgranne.