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March 2012

A company's greatest asset

Follow almost any form of news and you are bound to hear about the latest and greatest technological advances being made. Headline after headline touts the “next great thing” that is going to transform your life.

Major news corporations usually cover products intended for personal use, but industry news publications share developments in business-related technology. In the health care industry, for example, the ‘trending’ technological advances have been the creation and implementation of electronic medical records and many online resources to help make hospitals paperless.

2012mar30_peoplebehindtechnologyAs leaders, we are challenged to keep up with technology introductions and stay current with technological standards as advancements are made. But according to MediaPost contributor Jason Heller, the “role of technology in our endeavors is only as valuable as the insights, strategies, creativity and oversight provided by our people.” With all of the news coverage given and strategic discussions held regarding technology, it can be easy to lose sight of the most valuable asset within organizations: people.

Every employee, no matter his or her rank, responsibilities, or number of years with the company, has the ability to make a direct impact on your business. They can affect productivity, customer service, growth, even your bottom line.

So the questions to consider are: How are you investing in your greatest asset? How is that investment reflected?

There are several ways to nurture talented employees to increase their satisfaction while also investing in your organization’s future.

  • Purpose: Employee commitment is driven by a feeling of purpose within the organization. By making sure each employee understands how his or her role contributes to organizational objectives and goals, you can develop this sense of purpose.

  • Connection:  According to Kristin Kaufman, founder of Alignment, Inc., a consultancy for corporate coordination, “creating an environment where people are truly valued as the company’s greatest asset starts with the individual.” This means that it is your responsibility to make the people who report to you feel both valued and connected to the organization. Get to know your employees, take an interest in their lives and find out what their aspirations are, what motivates them; this will help you to better personalize their goals, incentives and overall experience with the company. The best way to successfully engage your team is to have a good understanding of them on a personal level.

  • Advancement: For many employees, promotions and advancement are among the things they would like to list as professional accomplishments. On the employer side, finding the "right place" for your "right people" to exercise their strengths leads to mutual long-term success. Invest in your employees and the future of your organization by helping employees develop a career path, encourage continued training and education, pair promising individuals with a tenured employee in a mentor program, and so on. All of these things will help people to grow in their current role while also preparing for future ones. Drive employee loyalty by helping them picture a future with your company; this will help you retain top talent, a key to the success of any business.

  • Recognition: A 2010 survey conducted by a top talent management software company found that apart from compensation and benefits, feeling appreciated motivates employees and makes them more likely to stay with an organization. Remember to say thank you and give praise where praise is due. Don’t underestimate the value of showing appreciation to your employees for their efforts.

  • Empowerment: One of the best ways to empower employees is to give them the opportunity to be heard and actually listened to. Involve employees on projects and decisions at every opportunity; seek their opinions when changing company policies or procedures. The more involved an employee feels at your company, the more dedicated they’ll be to contributing to future company growth. A recent article in BusinessWeek advises empowering employees to deliver strategic value to your organization as this will enhance what is truly your greatest asset.

Focus on making improvements in these areas, and you can develop a satisfied workforce that feels valued. You are bound to see great returns from this investment.

- Bill Leaver

Your biggest marketing mistake might be in the office next to you

Hiring isn't easy. And even when you hire well -- sometimes people change.  A good employee can morph into a disaster over time.  (Rarely does it go the other way!)

And yet, we're terrible at recognizing when someone has to go.  The other employees see it before we do. Our customers see it before we do.  But we hang in there...hoping we can fix it. Or we dread the new search so much we delay the inevitable.

I have seen it said that the first time you think that you should fire someone... you should. I don't know if I would go to that extreme but most of us allow a bad apple to sour the whole bunch for way too long.

Our employees are a reflection of not only our company, but our company's values, beliefs and attitude about our customers.  If you're not happy with the message one of your employees is expressing -- maybe it's time to stop waffling and defend your brand -- even if it is from an inside attack.

The only saving grace -- you're not alone. I think most business owners and leaders would say they're too slow to fire.  Check out what that indecisiveness costs us.

 

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Should employees give their passwords to prospective employers?

There's been a startling new trend emerging from the front lines of unemployed job seekers. Many employers - as part of the interview process - have been asking unsuspecting applicants to provide their Facebook username and password so the human resources department can access the applicant's account.

Facebook recently registered its objections to the practice, and warned employers not to ask prospective employees to share their password, noting that employers who did this are opening themselves up to invasion of privacy lawsuits.

This seems to be a violation of many laws and rules governing human resources best practices in interviewing. For example, if an HR professional cannot legally ask you about how many children you have, or your marital status, or any diseases or disabilities you have, how can they force you to log on to your account to find these answers?

Employers have been stymied in their efforts to get information about applicants due to recent improvements in Facebook privacy settings. Most of us have figured out how to clamp down our settings to avoid the general public from being able to view our profiles, comments and photos. HR professionals have to be very crafty to be able to see the content now, or very bold and request to be "friends" with those applicants.

So, what would you do if asked to provide your Facebook password? Or email passwords? I can tell you I would say no. Playing on the desperation of the unemployed is an ugly tactic, and asking an employee to "volunteer" the information when they are seeking employment is akin to coersion. Employers must know that people are desperate to compete in any way they can in this economy, and to me using this tactic to gain information from applicants is simply lazy.

The question applicants should be asking is: "What should my Facebook page look like? What information am I putting out there to the world?" Let's review.

  1.  It's ok to share personal information. Just make sure it is clean and doesn't portray you in a compromising or illegal situation.
  2. Take control of the way you are portrayed online. Clean up your Facebook page and other sites, delete questionable photos or posts that could be misconstrued by people who don't know you.
  3. Show an interest in the companies you're applying with. "Like" their pages on Facebook, seek out their company page on LinkedIn, Google+ and Pinterest.
  4. ALWAYS refrain from saying anything negative about a current or former employer on social nets. It just makes you look like a whiner.
  5. Posting nude pictures or slandering another person is not just dumb, it could get you in legal trouble.
  6. Use your social presence to demonstrate your expertise, confidence, balanced life and stability. If they're looking for red flags, show them only green ones!

Don't give away your passwords, but don't give companies the evidence they need to conclude that you are not the right person to hire.

- Claire Celsi

Who's the most miserable of all?

Cover of "The Three Signs of a Miserable ...Cover via Amazon

We read all the time about how miserable many Americans are at work. We hear about the "Sunday evening slump," when something clicks in the brains of millions of Americans and they recognize the weekend is history, and tomorrow it's back to the grind. Why do so many people hate their jobs?

If you're a leader, you should be especially interested in the answer to this question. Heaven forbid that your employees fall into this funk and go from being a fun and engaged parent on Saturdays to being despondent and grumpy on Sunday nights.

Patrick Lencioni has written numerous books about dysfunctional teams, deadly meetings, and other pitfalls of corporate America. In one of his latest books, he takes on this topic of misery at work. In Three Signs of a Miserable Job, he identifies the three things that make people miserable at work: irrelevancy, anonymity and immeasurement. In other words, people are miserable if they don't see how what they're doing makes a difference -- to anyone. It doesn't seem like their manager knows they exist, and they can't tell how well they're doing unless their manager decides to clue them in with some sort of subjective assessment.

So...step back.

Let's flip the characteristics that reportedly lead to dissatisfaction and look at them from a  positive angle. If I were to ask your employees the following three questions, do you know how they'd answer?

  • How does what you do on your job matter, and to whom? How do you know?
  • How well does your manager know you? How do you know?
  • Are you successful in your job? How do you know?

We talk about employee engagement. Here it is. The essence of engaging the hearts and minds and hands of the people who make leaders successful. They're pretty basic but they take attention and intention.

Through planning and processes and systems, leaders can implement ways for employees to see the connection between what they do everyday and how it matters: to the environment, the community, customers, and even to each other. Embedding metrics for measuring "How I'm doing" takes time but is totally do-able.

Of the three elements of job misery, however, I find that the feeling of being anonymous is the most disheartening. And it can't be faked. Not really. I know of work places where employees can go days without a connection with their manager, not because the manager isn't around, but because the manager is focused on the tasks at hand at the expense of any kind of relationship-building.

What's your take on this prevalent but often ignored topic in the workplace? Does anonymity make people the most miserable?

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BUYER BEWARE

CaptureRecently I was asked on a project to provide a list of all interior materials and the location where the product was made.  Sounds easy, but as I went off to do my job I found it was not.

The concern comes from LEED credits available for using a product where the raw materials and manufacturer is within 500 miles of the construction site.  The goal is to encourage buying brick from the next state rather than have it shipped across the country.  If everyone purchased materials this way then collectively less gas etc. would be used. 

But what about all the lesser materials like floor tile, ceilings, countertop materials like Corian, sinks, faucets, and all sorts of other products.  Wouldn’t it be more sustainable if these products were at least made in the USA?  A web research into various products came up empty handed.  Time and time again there were pages and pages of product information but none on where the various products within one company were made.  Several instances stick in my mind.

One was an obvious American company like Formica with only corporate address info and nothing on plant locations or where anything was made.  Did they have a plant in China?  Another example was a company with a name like “American Products Inc.”  At least I could assume I found a company making goods in the USA but upon further investigation it was a subsidiary of a company from Germany; an obvious ploy in sustainable product marketing to get consumers to buy foreign products.

The only way I could get to the bottom was to call the factory representative or the company itself.  Even then most did not know where their stuff was made.

Buyers beware for sure!!

- Rob Smith

The power of expectations

When left alone, the human mind will fill in the story of any situation unless it has good information.

Example: A significant other, child, or spouse is supposed to be home by 10:00 p.m. - it is now 1:00 a.m. When they walk through the door, there is already a story in the mind of the person meeting them. Right or wrong, the mind will fill in the story without good information. A simple text or call would have changed the story in a significant way.

The same thing occurs within employee owned companies. As soon as someone is called an "owner", the mind begins to fill in the story for expectations of what an owner can do. Employees who are now employee owners will begin to cross the boundaries of how decisions are made. They think, "I am an owner, therefore I should be able to hire, fire, give raises, and have input on everything in the company".

Managing expectations is critical to creating a culture of respect, understanding, and trust. Being an employee owner may or may not change how decisions are made in the company. The key is defining what does it mean to be an employee owner based on the expectations of the company's leadership. A best practice would include the employee owners in this process.

A simple tool that clears up expectations is a Rights and Responsibilities chart. It lays out the different decision making bodies and clearly identifies where decisions are made and where input may be asked for. Everyone will not be happy, but it helps in clarifying the expectations of what it means to be an employee owner.

- Victor Aspengren

The business sayings of my father

English: Car dealership on Ipswich RoadImage via Wikipedia

I grew up the son of an entrepreneur.

My father was Bill Colwell.  For anyone who was in Waterloo, Iowa in the early 70s you could not miss him.  He ran TV commercials on channel 7 every night for Schukei Chevrolet. This was when I was in junior high.  Every night my dad would get on TV and say, "Hi, I'm Bill Colwell for Schukei Chevrolet and I'm crazy!"  

Yes, I got tough fast.  But more importantly, growing up around an entrepreneur who did not finish high school and did not have a direct path to success, it was a learning experience. 

My Dad had a lot of sayings.  Many of these have been of great value to me in my career.  I would like to share a few of these with you as they have helped me grow my businesses.

  1. Tell the truth, you never have to remember what you said.  Boy is this more true than ever. Back in his day there was no internet and social media data pile storing everything you ever said or did.  I cannot tell you how many times this has saved me with a customer or vendor.

  2. Sell what you can see, don't see what you can sell.  When I first starting selling cars, I would come back into the store and tell my dad that "if we just had xxx car" or "if it just had power seats" I would have sold it.  My dad pointed to the rows of cars and said "see those cars, that is all the money we have.  We have to sell those cars".  That was the long version of "Sell what you can see, don't see what you can sell".  In business you have to sell what you have to sell. 

  3. Smile and dial.  We did a lot of cold calling.  Can you imagine taking out a phone book and dialing random numbers to try to sell someone a car?  Well, I tried to do it.  One thing my dad taught me was "Smile and Dial".  In other words, when you are talking to a customer, smile!  You will sound much more positive.  Also, look up and straight out to the horizon.  Your voice will be more clear. 

  4. Shut up and Write.  When the customer said yes, shut up and write up the deal.  If you keep talking, you may say the wrong thing and talk the customer back out of the deal.  Even today I will have experiences where a salesperson keeps talking and starts to confuse the situation.  They need to "shut up and write!"

My dad learned by failing many times.  These sayings of his are hard won knowledge.  My dad passed away in 2001 of lung cancer.  I miss him.  I will never forget him or his sayings.

Mike Colwell

www.bizci.org
www.startupmodels.com

 

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Day trading? Heads you lose, tails IRS wins, unless...

20120316iabizMany strong men have thrown away day jobs to spend their afternoons with Maria Bartiromo -- and with their computers and Ameritrade accounts.

They have become day traders.

While it looks easy on television, it isn't, and big capital losses often ensue. That's a bad thing when you do your tax returns, because you can only deduct capital losses to the extent of capital gains, plus $3,000.  There are day traders out there with loss carry-forwards that they will be still using at that rate when their grandchildren move into assisted living.

There is another way, if you are a truly serious trader: the "Section 475(f) election."  If you make this election, you can deduct unlimited capital losses, at least until you run out of money.  But it's not for sissies, and it's easy to miss.

If you make the Section 475(f) election:

- You have to mark all of your positions to market - gains and losses - at year end.  That means you have to compute your taxes on any open positions at year end as if you had sold them at the year-en closing price. 

- Your gains don't qualify for the reduced rate on capital gains.

- You have to be able to demonstrate to the IRS that your trading activity rises to the level of a "trade or business."  Unless you have trading on a daily or almost daily basis and look to it for your livelihood, you probably don't make the cut.

Most importantly, you have to make a Section 475(f) election by April 15 of the year for which you want it to be effective. That means if you have big 2011 daytrading losses, it's too late.

To make the election for 2012, you need to follow the steps set out in Revenue Procedure 99-17.  That procedure requires you to attach a statement making the election either to a timely-filed 2011 tax return by April 17, 2012 or to a timely-filed extension. 

The Section 475(f) election is a serious step, which you should only take in consultation with your tax adviser.  But if you a very serious trader, it might pay off big at tax time.

- Joe Kristan

Make a promise worth keeping

Bigstock_street_post_with_promises_ave__17171990Most taglines used by businesses today are a cop out.  They feel good but promise nothing unique.

Creating and using a strong tagline takes real courage.  A tagline that will last for decades is one that makes a bold statement or promise.

So what do you need to consider as you evaluate your own tagline? 

A strong tagline makes someone take pause.  It might be the person it’s directed at like – Just Do It. 

Or it might be the employee who has to keep the promise – when it absolutely positively has to be there overnight.  

A memorable tagline should be a bit daunting.  That’s why it’s impressive.  If BMW has told us their cars were a nice ride, would you have remembered?  But who doesn’t want to drive the ultimate driving machine?  Talk about setting high expectations!

An enduring tagline is tied specifically to the product/service:  Another element of a strong, test of time tagline is that we connect it to the company who owns it.  We don’t remember it just because it’s clever.  We remember who said it.  Take this little quiz. Who told us “you deserve a break today” or promised us “we try harder.”

This is where the generic taglines about “our people” and quality lose their steam.  Who doesn’t believe they provide good quality and that their people are dedicated to their jobs?

A memorable tagline tells a story:  In a single sentence, we got the picture when Timex told us “it takes a licking and keeps on ticking.”  We can only imagine what might happen if forgot the warning “don’t leave home without it.”  

We learn through stories.  We teach lessons through stories.  And we buy and sell around stories.  It’s much easier for us to remember a story than straight facts.  Which is why a story telling tagline sticks.

A powerful tagline points out how the product/service is unique:  Who doesn’t know the unique advantage of an M&M?  They “melt in your mouth, not in your hand,” right?  The Marine’s tagline reminds us that they’re very choosy about who they let into their club.  “The few. The proud. The Marines” lets us know that there’s exclusivity to their brand.  

Everyone wants a strong tagline but most businesses are afraid to make a bold promise.  What happens if it doesn’t get there overnight?  Or if the watch breaks?

It’s narrowly focused concerns like that which lead to ineffective, anyone could say that sorts of taglines like “it’s our people.” 

Good marketers understand that a tagline is not an absolute.  It’s inevitable that you’re going to make a mistake or somehow disappoint a customer. 

But that’s part of the brand promise too.  How do you handle it when you fall short?  Smart companies have a well-defined plan in place for how to handle a situation when they haven’t lived up to their brand promise.  When done well – this “apology” can actually reinforce and amplify your brand promise. 

I’m not advocating messing up on purpose, but when handled well, it can actually serve to strengthen the relationship you have with that customer.

What tagline being used today really makes you stop and take notice?

 

~ Drew McLellan

 

 

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Right person, right place

Exercise is a key component of a healthy lifestyle. However, not all forms of exercise are for everyone. Personal preference, physical limitations or a combination of both may dictate your workout plan. From cycling, to group fitness classes, to Wii Fit bowling, there are numerous activities you can participate in to boost your mood, control your weight, relieve stress and more.

Regardless of what you choose to do for improved wellness, it is important to recognize your workout style and preference, and use this awareness to make sure you are working out at the right intensity and duration and doing the right exercises for you. Make sure that everything you do is focused on what’s right for you.

As a business leader, focusing on what’s “right” can be a major factor in your organization’s growth and success. Shirley Poertner had a great post last week about Jim Collins' latest book, “Great by Choice.” Being a huge proponent of Collins’ work myself, for this post, I decided to return to his first international best-seller, “Good to Great,” in which Collins introduces the idea of “right person, right place” in his “first who, then what” concept.2012mar14_jimcollins

At the core of Collins’ “first who, then what” philosophy is the idea of attracting and retaining talented individuals. He tells readers to think of themselves as the bus driver and their company as the bus. Collins explains that “those who build great organizations make sure they have the right people on the bus, the wrong people off the bus, and the right people in the right seats.”

The first part of Collins’ claim may seem intuitive as it is standard best practice to hire top candidates and terminate poorly performing employees. It is the last part that I find the most intriguing; the notion that, in addition to getting the best people on your organization’s bus, you must also make sure that they are in the right “seats.”

It is more than simply hiring talented people; you need to make sure their role and duties within the organization are playing to their strengths rather than their weaknesses. Evaluate whether a person is adequately fit for their job; would they fit better in a different department or with different responsibilities? In order to accomplish this, you have to really get to know your employees and get to know them within their roles; you can then use your knowledge of the company and strategic intelligence to move people around until they find a good fit.

Create opportunities for your employees to shine. Hold leadership development seminars or annual conferences where you invite employees to share ideas and give feedback. These events will give you invaluable employee insights and help you identify individuals who could potentially take on larger roles within your organization.

Several years ago, we went through a visioning process for Iowa Health System. After several strategic planning sessions, it was obvious that an important element of our continuing success would be a strong focus on moving the right people to the right positions. Since then, making sure the right person was in the right position for his or her talents and experience has influenced every decision I make. This has led to more engaged, more fulfilled employees and overall, a better-running “bus.”

I will leave you with a quote that I think sufficiently sums up why Collins’ method works and why I apply this philosophy in my organization.

“For, in the end, it is impossible to have a great life unless it is a meaningful life. And it is very difficult to have a meaningful life without meaningful work.” -- Jim Collins

Should your company implement a bring your own device policy?

There is a lot of talk within IT circles about "bring your own device" (BYOD) policies. That is, the concept that employees can bring their own smartphone, tablet, or even laptop, and perform their work duties on it. There are a lot of benefits for both the user and the business. 

For the user, he/she can become better accustomed to the same environment for home and work, making configuration changes that may greatly improve their efficiency. 
They can utilize the shiny new device that they waited in line to purchase, all without submitting a requisition, or justifying the purchase to anyone other than themselves.
For the business, it is one less piece of hardware to budget, requisition, purchase, depreciate, replace, and dispose of.
However, the business still must manage the computer. Or more specifically, a business must still manage how the BYOD device accesses the company's data, including email and calendar information. In fact, many businesses don't have a choice, due to PCI and/or HIPPA regulations.
There are a few key components of managing a BYOD device that make it possible at all to utilize them in business.
  1. The most sensitive data must be on a Virtual Desktop, such as Microsoft Terminal Services, VMWare View, and Citrix XenDesktop. These allow you to have a cloud base workspace for your sensitive data, so that it never actually resides on the employee's device. Controls can then be placed so that the data is restricted to the user based on time and location.
  2. A security policy needs to be defined for BYO devices, including conforming them to antivirus and password requirements, of course taking into account the type of device itself. For instance, it is unnecessary to put antivirus software on an iOS-based device such as the iPad.
  3. A policy needs to be considered that allows remote wiping of an employee's computer. This way, the company can be certain that their data is safe, even if the computer is lost or stolen. This policy should also determine what happens in the event of termination, so that it is clear to the employee what risks they have.
  4. A backup policy needs to be in place for any company data that is located on the device. It should be made clear that the user is responsible for maintaining good backups of their personal data.
More and more companies are using BYOD policies to lower the overhead of their business. Is it time to consider it for yours?

Buttons to corn cobs

Bioresin buttonsThis is a second blog in a series featuring Iowa companies who are making an impact in sustainable construction.

The McKee Company of Muscatine was founded in 1895 and at one time was the largest manufacturer of pearl buttons in the world. Their buttons were found on men’s dress shirts made for JCPenney, Van Heusen, Arrow, and Land’s End. When most clothing lines left the states and went to China the need for buttons was drastically reduced. 

The company still makes buttons but has used button making technology and transitioned to sustainable building products. Years ago, the company looked for more sustainable ways of making buttons and turned to a biomass resin instead of petroleum based. Buttons are made by pouring the resin into a spinning drum making a thin sheet which is peeled off the inside of the drum. The sheet hardens and is made into buttons. Corn cobs are used to polish the buttons after they are punched and tooled into the desired shape.

Corn cob counterCorn cob panelJay McKee, fourth generation owner, says one day they experimented by adding corn cob material to the resin and voila, the Green Line of sustainable products was born. The 22 percent bio content panel can be used for many uses such as shower enclosures, bathroom walls, countertops, and decorative cabinet panels.  Other options include wood chips, lemon grass, and fibers. The material has also been Shower wallsuccessfully used at restroom renovations at the University of Iowa Quadrangle dormitories.

The button making process allows many custom panels to be manufactured because small quantities can be easily made rather than setting up for thousands of square feet of material.

Check out my last blog on ReWall at IowaBiz sustainable design and construction

What I learned from Great by Choice

BookIn his latest book, Great by Choice, Jim Collins examines why some companies thrive in tumultuous times and extreme environments and why others don't. It's a fantastic read; I highly recommend it.

Collins, his co-author Morten T. Hansen and a team of 20 researchers discovered after 9 years of research that the best leaders were not bigger risk takers, more visionary, or more creative than those who failed to achieve greatness in equally challenging circumstances.

What was it then?

"They were more disciplined, more empirical, and more paranoid," Collins says. But it's not those 3 qualities independent of each other that's the key. It's the combined effect of all three that makes the difference. It's the "and" principle at work. The best leaders in the worst times are disciplined AND creative AND what Collins calls "productively paranoid" -- in other words, taking precautions before the storm hits, remaining ever vigilant, and "bounding" the risk.

  • Who do you think of here locally, in a leadership position, who demonstrates all three of those traits in combination?
  • Think of the leaders we've seen come and go over the past five years as we've ridden out this historic recession. Were those who didn't make it lacking in at least one of those combined characteristics?
  • How do these three qualities apply to leaders within your own organization or industry?

I remember the first time I saw the cover of Collins' book at Barnes & Noble last year and was struck by the word "choice" in the title. Choice? Surely Collins' research doesn't show that some leaders choose to be great, and some not.

As Collins explains in his epilogue, "Greatness is not primarily a matter of circumstances; greatness is first and foremost a matter of conscious choice and discipline." It's about taking action in a disciplined way regardless of what's going on in the markets or the environment. A quote by Ron Serino in Great by Choice sums it up well: "Freely chosen, discipline is absolute freedom."

(By the way, Jim Collins is speaking in Des Moines in June at the ABI Taking Care of Business Conference!)

The curse of emotions

Zachary Quinto as Spock in the 2009 Star Trek filmImage via Wikipedia

Emotion is the key element to what makes us human and it drives our behavior. Emotions in business...they can be a precarious thing.

Many businesses have failed because emotions replaced logic during key periods of transition in a company. Be it fear, pride, avoidance, etc... emotions became the barrier to the conversation that could have saved the company. During good times emotions can feed the success of a business, but when the conversation gets intense they tend to be a barrier.

It is the cool, calm, leader that helps organizations during difficult times. They shed their ego, fears, anger, and other negative emtions and replace it with logic and patience. The tone that the leaders takes will be reflected in the decision making group.

There are times when it pays to be like Mr. Spock!

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The paradox of a new idea

Deutsch: Logo von YahooImage via Wikipedia

Recently I drove by a closed restaurant.  It had been a steakhouse most recently. I thought about how tough it would be to compete against the other steak houses in the area and wondered if that was why it did not survive.  As I drove on, I thought about all the types of food available today at restaurants from German to Italian, to Mexican to Chinese to Thai, to bagel shops, well, you get the picture.

I realized the one thing harder than competing against the steakhouse or any other type of restaurant probably would be if a new restaurant came along with a whole new type of food or way of doing business.  At least if you are a steakhouse, the customers will know what to expect. This is the paradox of a new idea.  While many customers will say that they are seeking something new, they tend to gravitate to the familiar. 

If you are starting a business that is truly a new idea, how do you get customers to try you out? Groupon leveraged the analogy of a coupon, something everyone already understood. When Yahoo became be one of the first mainstream search engines, they spent a lot of money on memorable ads that demonstrated what a search engine was, then added a unforgetable holler of "Yahoo!"

How does the small business or startup entrepreneur best compete with a new idea?  After all, they do not have the millions of dollars Yahoo.  That is one of the most challenging questions for the truly new idea based business.  Here are a few paths to consider:

  • Like Groupon, create an analogy to a recognizable product idea
  • Offer it as a complimentary product to an existing well-known product.  Want to sell an "after desert palate cleanser"?  Sell it with desert.
  • Offer a known product at a very low price then bundle the new idea product on top.  Are you going to steam clean office desks to get rid germs?  Better sell it with the rest of the cleaning process.

Offering a brand new, unrecognizable product to a market that does not know what it is, will most likely lead to failure.  Make sure your new idea can be recognized and understood in context to it's use. 

Mike Colwell

www.startupmodels.com
www.bizci.org

 

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Where is that blasted 1099?

I want my tax return done!  I need that 1099!  I need that K-1!  I'm supposed to have that all in January! Right?

20120301iabizWell, no.

This can be a frustrating time for taxpayers expecting tax refunds.  It's worse than usual this year, as many of the information returns -- W-2s, K-1s, 1099s -- are coming in later than usual.  What's the hangup, and when am I supposed to have them?

W-2s should be issued by the end of January. 
If you don't have them yet, it's time to be concerned. 

Most 1099 forms should be issued by the end of January. 
If you worked in 2011 as an independent contractor, you should have your 1099-MISC by now.  You should probably have 1099-INTs for interest from your bank in hand.  Less happily, if you settled a debt for less than face, you should have a 1099-C. 

This year it's different for 1099s from stockbrokers. 
A tax law change requires them to report cost information on stock sales starting this year.  That has required massive upgrades to the information systems at the brokerage houses, so their deadline was moved back to February 17.  Many brokers have received permission to issue 1099 forms as late as March 15

The delay for stockbrokers also delays returns that need 1099-Bs from the brokers.  Many trusts can't issue their K-1s until they have the 1099 information, for example.  Investment partnerships also need their 1099s before they can issue K-1s to their owners.  Even many S corporations with investment accounts are on hold until they get the 1099s.

K-1s -- information returns from partnerships, S corporations and trusts -- don't have a January 31 deadline.
These forms only are due when the underlying returns that generate them are due.  S corporation returns are due March 15, and trust and partnership returns are generally due April 17 -- and they all can be extended automatically to September 15. 

If your business has to issue K-1s, don't take the March and April deadlines lightly.
Even though they can be extended.  Irate owners and beneficiaries want their forms, of course.  And if you do have to extend, make sure you really extend.  You need to file Form 7004 to get the automatic extension.  If you don't extend and you file late, the IRS assesses a penalty of $195 per month or part-month for each K-1.  That means missing the March 15 extension deadline by one day for a 10-shareholder S corporation means a $1,950 penalty. 

Extensions can be filed electronically.  If you must file them on paper, be sure to use certified mail, return receipt requested, or an authorized private delivery service that delivers to the IRS service center street addresses.

- Joe Kristan

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