« April 2012 | Main | June 2012 »

May 2012

Is the romance gone?

DeadRosesAhh, the wooing. The courtship. The attention. The expressions of heartfelt love. A belated Valentine’s Day post? Nope. Just a reminder of how you behaved as you were chasing that potential client.

You remember -- you thought about them all the time. You sent notes and you went out of your way to express your desire to be with them.

It was full on pitching woo.

Until you caught them. Then the romance was over.  No more flowers, candy, late night calls. Now it’s just business as usual. You call them when you need something. But if you're honest with yourself, sometimes when they call you -- you groan and let them go to voice mail.

If this sounds uncomfortably like you — don’t worry. It will all sort itself out. Because sooner or later -- they're going to be the object of someone else's desire....and because you don't make them feel special anymore, leave you behind.

When you lose that client to the competitor who woos them away, you can always turn on the charm and find a new one. And so on and so on…

Or, here’s a novel idea. Keep the romance alive. If you have great clients -- tell them. Appreciate them. A little woo goes a long way.

 

~ Drew

Equity is king

Employees today are more attentive to the benefits that a company provides them. Pay, health benefits, insurance and others are the standard. The exception in the benefits realm is equity.

According to the NCEO, only 13 million workers in the United States have equity in the companies they work for. This amounts to roughly 8% of the workforce. These workers can make the linkage between working overtime, weekends, and extra time outside of the normal business day and equity. The value they create is not directly tied to cash in the hand, but to the long-term success of the company and themselves.

Sharing equity in a company gives employees a greater appreciation and tolerance for downturns, capital investments, tough decisions, and the future of the company. Employees will give that little "extra" which turns ordinary companies into extraordinary companies.

Equity is the motivator for employees to put their sweat, knowledge, and the vast majority of their life into a company. Equity is the driver that increases company and personal success.

-Victor Aspengren

Partnerships - a guaranteed divorce

partnership agreementpartnership agreement (Photo credit: o5com)

Many of the clients I advise are in partnerships.  It is a common situation.  Two or more people get together to solve a problem and the next thing you know a partnership is born.  If you listen to the first-time partners, they will tell you their priorities are to get the product into the market and grow the business. If you listen to partners who have been through years of business together, you will hear something different. 

What older, wiser partners will tell you is to plan the divorce.  It is coming.  It is guaranteed.  At some point the partnership must end.   Whether for reasons of death, indifference, disagreement, or a multitude of other reasons, it will happen.  The key these wise people will tell you is to plan the divorce in advance.  Setting the value of the company and how one partner might buy out another partner well in advance sets the rules if things go bad. I sincerely hope that things will not go bad for you in your partnership.  But in case they do, have the ground rules set in advance. 

My good friend Rush Nigut at Brick Gentry has presented on this topic many times in the past.  Check out the video of him on this subject "Rush Nigut on Partnering" for an in-depth analysis of why this is so critical and how you can protect yourself. 

 Mike Colwell
www.bizci.org
www.startupmodels.com
www.plainsangels.com

Enhanced by Zemanta

You negotiated a debt workout? The IRS may be glad to hear that.

The best-laid business plans can go awry. When that happens, everyone may be better off renegotiating the debt. If you do that, remember that the tax man has a seat at the table.

20120516iabizThe default rule under the tax law is that debt forgiveness generates taxable income. Fortunately for distressed debtors, there are some important exceptions. The most important:

-A reduction in purchase-money debt for an asset can be treated as a reduction in your purchase price, rather than debt forgiveness income.

-Debts forgiven under the terms of a bankruptcy decree are tax-exempt.

- Debt forgiveness income is taxable to the extent a taxpayer is insolvent.

A taxpayer is "insolvent" to the extent the value of assets are less than the taxpayer's liabilities. If a taxpayer has a negative net worth of $100,000 and has debt of $110,000 forgiven, the $10,000 difference is taxable income.

There are also debt forgiveness exclusions when home mortgage debt is forgiven, for business real property acquisition debt forgiveness, and for farm indebtedness.

If a taxpayer has debt forgiven that is tax-exempt,, it's not usually a free lunch. If the taxpayer has unused loss carryforwards or tax credits, they may be reduced or eliminated by the debt cancellation income. Alternatively, you may find yourself with a lower basis in some of your property, increasing your gain or reducing your loss on an eventual sale.

Sometimes what seems like debt forgiveness isn't taxed that way. For example, if your debt is settled by foreclosure, you have a taxable sale of the secured property to the extent of its value. Only the debt forgiven in excess of the value of the surrendered collateral is debt forgiveness income that may eligible for an exclusion.  

If property is foreclosed in settlement of non-recourse debt -- debt for which the creditor has no right to pursue the debtor beyond what is recovered in foreclosure -- the entire amount of the debt is considered to be the sale price of the property sold. This can be an expensive problem if the taxpayer has depreciated the property and has a low basis, triggering a big taxable gain on the foreclosure.

Taxation of debt forgiveness can be fiendishly complex. If you are negotiating a workoout, keep your tax advisor involved; after all, the IRS already is.

Image via Wikipedia

-Joe Kristan

Integration is where it's at

MarketingRoundWe all know people who seem to have split personalities. They behave one way at work, one way on Friday nights and another way on Sunday mornings. I find it's difficult to trust people who don't live one, integrated life.

I think we react the same way to brands and companies. Part of what creates a sense of trust for us as consumers is consistent, integrated behavior.

That's one of the reasons we've always advocated for an integrated marketing approach. Your traditional marketing tactics should look and feel like they're coming from the same place as your Facebook page, which should match the way you answer your phones which should align with how you handle customer complaints and random tweets.  

It all needs to be seamless, work together and give me a sense of the holistic organization.

That's why I'm recommending people check out a book that is just hitting the shelves called Marketing in the Round by Goeff Livingston and Gina Dietrich. (click here to buy*)

This book is a must-read for every senior marketing, communications, and PR decision-maker.

It's not about social media. Or new (or old) media. It's media agnostic. No matter what media you use (and you should use several) it's about weaving them together so they are all stronger.

When you integrate all of your efforts (beyond marketing by the way) you get:

  • Meaningful metrics and data
  • Messaging that connects and moves customers and prospects to action
  • Consistency that builds trust and trial
  • Removal of clutter and unnecessary noise

This book is like a playbook. The authors get down to the details and show you how to make it happen. They cover strategy, tactics, research and metrics, and a wide array of media options. 

Read it with a pen and paper at your side so you can jot notes and ideas as you go. You'll be glad you did!

 

*Affiliate link

 

Insulate yourself from the world

Insulation 1Next time you think about sustainable design, start with the insulation in your house. Insulation is what keeps the interior of buildings and homes from feeling the effects of the outside temperature. In an Iowa winter for example, the temperature inside a home will naturally decrease because of the effects of a lower outside temperature. When the inside temperature decreases, the thermostat senses the decrease and sends a message to the furnace systems to heat air and then push it through metal ducts to make people feel comfortable.

The greater the amount of insulation, the less the inside is effected by the outside temperature. In fact, Superinsulation is defined as at least an R-Value of 40 in the walls and an R-value of 60 in the roof. R-Value is a measurement of the resistance to heat flow of insulation. The higher the number, the better the insulation resists heat flow.

Insulation 2The Iowa Building Code requires residential construction have at least an R 20 for walls and R 38 for roofs. As compared to superinsulated construction, what gets built (since the code usually becomes the standard) has a much lower R value.

Insulation 3To meet the Iowa Code, the walls require a 6” fiberglas batt which has an R value of 19. Other parts of the wall get the overall R above 20. A 12” fiberglas batt has an R value of 38 for the roof or attic. Super insulated homes use foam insulation for walls because of the higher efficiency per inch as compared with batt insulation. Spray foam insulation is nearly 3 times more efficient per inch so in the same space a fiberglas batt provides R19, spray foam provides R44.

Remember, the closer you get to super insulated standards, the less energy it will take to keep your house comfortable.

See other blogs featuring sustainable construction.

We the owners

The Great Recession has caused many of us to evaluate the way we do business. It shook the foundation of our country and changed lives in a significant way.

But did we learn anything during this crisis?

The Foundation for Enterprise Development and Passage Productions has put together a film that talks about a different model for business - employee ownership. The film profiles several successful employee-owned companies, and has commentary from experts within the employee ownership field - ESOPs, cooperatives, and other types of equity sharing with employees.

The film will be released this coming summer. The trailer can be viewed at http://www.wetheowners.com/the-film.html.

The trailer gives a taste of something truly special in the business world. When people talk of hope, future, trust, and responsibility with passion - then something amazing can happen.

Watch the trailer and feel the change that comes over you. This may be the spark that creates a movement for employee ownership and a better business model in the USA.

-Victor Aspengren

 

 

6 kinds of business buyers

SaleSale (Photo credit: Gerard Stolk (vers l'Ascension))

Buyers of businesses can generally be categorized as belonging to one of the following groups, and some buyers belong to more than one:

The Individual Buyer: This typically is an individual with substantial financial resources and with the type of background or experience necessary for operating a company. This buyer will typically seek a company that is profitable and will provide a return on their investment. If they lack in financial resources they will turn to family members or other resources for additional financing and rely on the Seller for some financing. These buyers will typically limit themselves to transactions of less than $1 million. Most of these buyers will come from unhappy or unsuccessful job situations.

The Strategic Buyer: This buyer is almost always a company trying to enter a new market, increase its market share, seek a strategic gain or to eliminate a competitor. These buyers can be in the same business or a competitor and will usually seek businesses with sales in excess of $20 million with a proprietary product and/or a unique market share with management willing to stay.

The Synergistic Buyer: Like the strategic buyer, this buyer is usually a company. They seek companies that, by joining the two together, will be worth more (i.e. 2+2=5). The benefit of this type of acquisition helps both companies be more competitive and profitable.

The Industry Buyer: This is often characterized as the “Buyer of Last resort”. The buyer is often a competitor, knows the industry and will not want to pay for the seller’s expertise.  Their interest is in reducing costs by combining the operations. They will typically pay only for the assets (usually not all of them and at a price below the market value). This buyer does not pay for goodwill or want to employ the Seller.

The Financial Buyer: This buyer is driven by the projected return on their investment.  They will have access to financing and will leverage it as much as possible.  Their sole purpose is to make the maximum amount of money with the least amount of their capital.

The Inside Buyer: These are family members or employees and will usually be the most difficult to deal with, require the largest amount of seller financing and often fail to make the payments to the seller. They often rely on the sympathy of the seller.

Steve Sink

Certified Business Intermediary

Merger and Acquisition Master Intermediary

ss@phxaffiliates.com

Enhanced by Zemanta

Let go or be dragged

Stunt show at Texas Hollywood, AlmeriaStunt show at Texas Hollywood, Almeria (Photo credit: Wikipedia)

So the other day I was getting ready for yoga class when one of my classmates told us about something she saw on Facebook. Someone, I do not know who, posted "Let Go or Be Dragged" on their page. As the class talked about this from the standpoint of life in general I thought about how this applies to startup and growth businesses. 

One of the key failure points in a business is when the owner or general manager cannot let go of certain aspects of their business. Recently I was working with a VP of marketing at a small manufacturing company. She was adding a dedicated sales manager to her team. Her manager, the president of the company, who was probably trying to do the right thing, interjected a whole different organization structure on this VP. While it is his prerogative as her manager, he unintentionally cost her a lot of time and trouble. She was having to drag him along to where she needed him to be. He needed to trust her and let go. 

The problem here is knowing what things to let go of and what things to stay in control of. If you want a company to grow, you have to get the right people engaged in the team. Once you do this, you have to let go. Keeping tight control of a talented, motivated employee is a fast way to lose that employee. 

The same thing holds true for founders. While they are the ones that start the company, that is no guarantee they are the right ones to grow the company. In fact, I will argue that in most cases the founder will not be the right one to grow the company. The necessary skills are not the same. Sure, there are exceptions, but they are few. 

In the end, if you are an owner or manager, stay aware of the people on your team. Are they dragging you along? Do you need to let go?

Mike Colwell
www.bizci.org
www.startupmodels.com

Enhanced by Zemanta

Death and income taxes

IMG_1675The untimely death of Business Record managing editor Jim Pollock is a sad reminder of how little control we have of our destiny, no matter how carefully we plan. He struck me as a wise and kind man. I'll miss him and his Business Record work.

Unfortunately, the tax law doesn't think death is much of an excuse for not filing tax returns for the departed.  Here are some tax basics for survivors:

  • Death ends the tax year.  A surviving spouse can include the portion of the year up to the spouse's date of death on a joint return. 
  • Single or separate filers file a final 1040 for the tax year ending on the date of death.  The decedent's final return is due on the normal April 15 due date.
  • Normally the decedant's estate will report after-death income on a Form 1041.  An estate can choose to end its taxable year at any month end up to a year following the death.  If the estate makes distributions, the income is also distributed to the beneficiaries.  Income retained in the estate is taxed there under the trust rate schedules.
  • The way assets are held determines how after-death income is reported.  Jointly-held assets automatically are the property of the surviving spouse after death.  Assets held directly by the decedent go into the estate. If the dededent owned assets in a living trust, the assets and their income are disbursed under the terms of the trust.
  • Large estates may need to file Form 706, the federal estate tax return.  If the decedent was married, even smaller estates may want to file Form 706 to preserve for the surviving spouse whatever portion of the decedent's $5 million lifetime exclusion was left unused. Form 706 is due nine months after the date of death.  If it is not filed, any unused exemption is lost. The executor of a tiny estate would sure feel silly if the widow won the Powerball and suddenly had enough assets to use that extra $5 million exemption.

IRS Publication 559 is an excellent guide for helping executors and family members deal with the tax requirements of decedent returns.

- Joe Kristan

 

This site is intended for informational and conversational purposes, not to provide specific legal, investment, or tax advice.  Articles and opinions posted here are those of the author(s). Links to and from other sites are for informational purposes and are not an endorsement by this site’s sponsor.