Business Record - Iowa Biz

Learn to pitch

I have seen marginal ideas funded and great ideas shot down for the same reason: The pitch.

While business plans, financial plans, market research, product development and the rest are all absolutely important, they can all be undone in a 10 minute pitch. Learning to pitch is straightforward. You need to practice. Start by practicing in front of a mirror. Speak out loud. Believe me, I have spent many hours pitching out loud to a mirror or wall. This will get you comfortable with your content and voice. Next, you need to practice in front of a friend or co-worked. Someone who understands what you are talking about so they can help you improve the message. 

From here most go straight to the major leagues. They pitch an investor. Though this can work, it is risky. You are only going to get so many investors to pitch to. You do not want to waste these opportunities. Thankfully there is another step available here in Iowa from the Technology Association of Iowa (TAI). It is called Pitch and Grow. On September 18, Pitch and Grow X  happens at the Innovation Expo in Coralville Iowa.

At Pitch and Grow, entrepreneurs will pitch their business to a supportive group of peer CEOs, CIOs, business development experts, industry professionals and business-savvy people. In return, they have a unique opportunity to receive constructive feedback on areas such as fundraising, value proposition, business plan, management team, sales/marketing/support and building strategy. Many past presenters have made critical connections and picked up great feedback on how to make a stronger pitch. Check out Pitch and Grow X and sign up to Pitch today. 

-Mike Colwell

See more of Mike Colwell's personal blog at bizci.com. 

Managing the ESOP benefit

The average ESOP company contributes between 8 and 12 percent of an employee owner's wages into their ESOP account on an annual basis. This contribution is somewhere between three and four times the average 401k company match. This is a huge benefit to the employee owners and a wonderful marketing tool in recruiting new employees.

For many ESOP companies, the selling shareholder sets up the original financing and structure of the ESOP. A key question that gets missed in these original ESOP discussions is - "What level of benefit can the company support long term"?

This is not an easy question, as it is intertwined into the highest level of strategic thinking. Remember that the ESOP benefit is tied to the value of the company stock. The allocation of cash (be it generated or from debt) for equipment, acquisitions, executive compensation, the ESOP benefit level, or other items, requires a deep analysis of the impact on the stock value long term.

ESOP benefit levels are not locked in stone and can be modified, but be sure that the modifications are reviewed by qualified experts. This is just one step of many in the sustainability of an ESOP. Take the step!

-Victor Aspengren

Central Iowa -- don't miss Jason Falls!

All the big names are performing in Des Moines these days. Bob Dylan, "Book of Mormon," Def Leppard, Alan Jackson...

And Jason Falls. Of these... the one that will actually make you smarter, more money and get you out of the office is Jason.

Jason has written a couple of books (No Bull$%#^ Social Media and The Rebel's Guide to Email Marketing) and created one of the most popular websites devoted to digital marketing, Social Media Explorer.

Jason's going to be here in Des Moines next Thursday (August 30th from 1-5pm) and you won't want to miss him. (Register by clicking here)

During two 90 minute sessions led by Jason, attendees will learn how to use social media strategically, identify specific actionable goals, apply business discipline and proven best practices, stop fearing risks and start mitigating them, measure performance, and get results.

Not only will you get to meet Jason, hear his smarts... but you'll also be networking with Central Iowa's best and brightest.

So hurry up and register. Just like his book title says, Jason shoots straight and there will be no bull. You'll learn a lot, laugh a fair amount and leave with a To Do list that will help your business prosper.

 Full disclosure: Jason is a friend of mine. I don't get any money if you attend the event and Jason didn't ask me to write this. I just don't want you to miss out. 

~ Drew

Burned out?

Burned out, tired, your business is no longer fun? We sell a lot of businesses because of this. But-don’t feel alone; at some time most business owners will have that “Burned Out” feeling. Many surrender and sell or close the business. And - some take control. If you are getting that feeling, you might want to consider the following to get you back on track:

1. Take some time away from the business (completely away!). You will return with a new perspective and energy.

2. Consult with some professionals about your business and the opportunities. Did you ever hear about the forest and the trees?

3. Learn to say “NO”.

4. Stop being the employee.

5. Get in shape.

6. Remember why you got in business.

7. Protect your time. When you dispense this asset, what is your return?

8. Ask for opinions. It can be easier than asking for help.

Good Luck!

 

Steve Sink

CBI

M&AMI

ss@phxaffiliates.com

Back to basics: What does it mean to "be social?"

There are learning curves in social media. As a coach to newcomers to social media, I've observed some of the most common hurdles:

-Lack of basic computer skills
-Lack of time or motivation to make social media  interaction really work
-Lack of social skills and empathy (Ouch, I know.  Sometimes the truth hurts.)

Computer skills can be learned and practiced, work time can be scheduled, and motivation increases with success. Imagine your social media channels as a cozy living room, and you are the host of a cozy gathering with good friends. You'd be working extra hard to make sure everyone was comfortable, right?

For some, social skills and empathy can be a heavy lift. Since these skills are a huge part of interacting online, here are a few exercises to get you feeling "the social media way" of talking to others online. Practice each of these skills weekly, and you will be successful. I promise!!

1. Try to be more like an empath: Some people are born with the ability to observe the feelings and emotions of others, say just the right thing, and make them comfortable. In the example of social media "as a cozy living room", your job is to make sure everyone is welcome and is part of the group.
2. Acknowledge people and situations: When someone expresses happiness, anger or frustration, SAY SOMETHING! If you were in the same room with someone who is experiencing a "moment" of emotion, you wouldn't just walk by them. A simple "that's great" or "good luck!" or "that's too bad" is simple good manners. 
3. Speaking of manners, try to keep harsh or overly-critical remarks to a mimimum. The old adage "if you can't think of something nice to say, don't say anything at all" does not necessarily apply, though. Just try not to be negative all the time, but there is nothing wrong with a little disagreement. Social media is often described as a virtual world, and this is true. And there's no world I know of that doesn't have a little dissention once in a while.
4. Keep it clean. Use your indoor voice and keep the cusswords to yourself.
5. Find humor in the world around you. Post a clean joke, a funny picture, or tell a story about some bizarre thing that happened to you today. People can relate to the human experience, and most people find humor in day-to-day life.
6. Tout the accomplishments of others. Acknowledge milestones such as birthdays, anniversaries, graduations and new jobs.
7. Spend at least half your time talking to people about something other than yourself. Trust me, the favor will be returned 10 times over.
8. Pass on information for your friends. If someone has a bit of news to share with the world, and it's valuable and newsworthy, take the extra time to pass it on.

If you follow these simple rules, you'll be on your way to "social media social" and have lots of friends to share with. Any other tips you'd recommend?

-Claire Celsi

Wisconsin trucker skids into "self-rental" rule

It’s common for taxpayers to rent things to their businesses. Owners of C corporations often find rentals a tax-efficient way to pull cash out of a business and get a rent deduction, instead of paying non-deductible dividends. Sometimes an owner of a multi-owner business will also provide the real estate via rental. It usually works fine, but a Wisconsin trucking operator last week learned in Tax Court of a tax trap that sometimes lurks in self-rental.

The taxpayer ran his Wisconsin trucking business as a C corporation -- a corporation that pays its own taxes. If a C corporation pays dividends, they are taxable to the owner and non-deductible to the corporation -- so corporate income is taxed both when it is earned and when it is distributed.

The trucking company owned no trucks. Instead it leased them from an S corporation owned by the taxpayer, and also from the taxpayer personally. An S corporation pays no taxes; its income is instead taxed directly on the shareholder’s returns, and distributions of taxable income are not taxed again. In short, the rental income showed up on the owner's 1040, and the C corporation took a deduction while getting cash to its owner.

So far, so good. Unfortunately the "passive loss" rules add another wrinkle. The passive loss rules were enacted largely to shut down the leasing tax shelters of the 1980s. They say that rental losses are normally "passive," deductible only to the extent of "passive" income. The taxwriters of the day feared that business owners would get around these rules by renting items to their own business to artificially create passive income that would allow them to continue to deduct passive losses. Their response was the "self-leasing" rule.

The self-leasing rule says that if you have income from leasing an "item" to a non-passive business that you own, that income is non-passive -- but self-rental losses are still passive. That means self-leasing income doesn't help you deduct passive losses.

The Wisconsin taxpayer had taxable income on the trucks he leased through his S corporation, but losses on the trucks leased personally. The IRS examined his return and told him he couldn't deduct the self-rental loss against the self-rental income. The Tax Court last week upheld the IRS. They also told the taxpayer that he was lucky the IRS didn't make things even worse:

…we conclude that each individual tractor and each trailer was a separate “item of property” within the meaning of section 1.469-2(f)(6), Income Tax Regs. However, because respondent has not contested petitioners’ netting of gains and losses within TRI [the S corporation], only TRI’s net income is recharacterized as nonpassive income.

In other words, the court said the IRS could require the taxpayer to break out the income tractor-by-tractor and disallow the losses on each lease generating a tax loss.

The case gives us two important lessons:

1. Rental income from items rented to your non-passive business doesn't help you deduct other "passive" losses.

2. If you rent multiple items to your business, you should make sure each item generates taxable income.  This could affect how you structure your leases and what depreciation decisions -- like bonus depreciation -- you take.

These rules are complex, so be sure to get your tax advisor involved early.

-Joe Kristan

Who is the average QR code user? You might be surprised!

In the second quarter of 2012, there were more than 16 million mobile barcodes scanned according to a new report from Scanbuy.

Among mobile barcode scanners, exactly half were aged 35 or older in Q2, representing a 22% increase from 41% share of scanners in Q1 and a 28% increase from 39% in Q4 2011. While an almost equal number (26%) of barcode scanners were aged 25-34 in Q2, this represents a big drop from 35% in Q1.

All the older age groups (35-44, 45-54 and 55+) showed an increase.

When it comes to gender, the people scanning the codes are still predominantly male. In Q2 it was 69% and in Q1 it was 68%. According to survey results released in February 2012 by BrandSpark International, in association with Better Homes and Gardens, although men and women report equal awareness of QR codes (77%), men who are aware of them are 75% more likely than women to have used one (28% vs. 16%) to access product information.

QR codes continue to grow in popularity and they might be perfect for your next effort.  Consider using one if you want to:

Enhance the user's experience: Many tech savvy museums, tourist locations, art galleries and other tours use QR codes to add audio commentary and video enhancements to their displays.

Digital notebook: Your customers are used to using their phone to record data they want to remember.  Why not let them trigger an email or reminder with a quick scan.

Let them grab some extra perks: Whether it's a free music download or some other digital asset, a QR code is an easy way to deliver some extras to your best or most frequent customers.

Provide real time data: Wait times at bus stops or other constantly changing data can be easily communicated through a quick QR scan.

But which are the most effective? According to the data from ScanLife’s “Mobile Barcode Trend Report Q2 2012,″ the top 5 marketer campaigns that generated the most scans were: contest; loyalty program; social media; app download; and video. 

No matter why you use a QR code, be sure the destination is optimized for mobile devices.  There's nothing worse than scanning a code only to be taken to a desktop site that doesn't present itself well on your smart phone.

 

~ Drew 

About the Data: The data in the Scanbuy report was pulled from the ScanLife Reporting Platform. It represents traffic from both 2D (QR) Codes and UPC barcodes. The 2D Codes scanned may have been generated on the ScanLife Platform or from 3rd party generators. The 2D barcode scanning traffic may come from either the ScanLife app or 3rd party apps.

 

Iowa is more than a breath of fresh air

I am sure as you travel across Iowa you have noticed the horizon dotted with wind turbines. More than 25 wind farms can be found mostly in the north and west portions of the state. One of the most noticable is near Adair along Interstate 80.

Iowa led the nation with nearly 26% of the electricity generated in the state by wind power. The state currently has about 2,900 turbines with a total capacity of 4400 mega watts when the wind is blowing everywhere in the state.  Experts say the wind power capacity of the state is 570,000 megawatts or approximately 130 times the current capacity. Obviously with adequate funds all of Iowa’s demand could be delivered by wind energy.

The turning of the blades rotate a shaft, which creates electrical current through an electrical generator. The electricity is transformed into a higher voltage and put directly into the grid through high power lines. That is why wind farms have to be close to high power lines.

MidAmerican Energy owns and operates almost half of the 4,400 MW capacity in the state and is able to generate an amazing one-third of its electrical generation by wind power.  In fact, of all the utility-based companies, they have the greatest wind energy capacity in the country. Tina Potthoff, spokesperson for MidAmerican says “Wind energy is a cost-effective means to increase generation capacity when compared to nuclear, coal, or oil power plants. The Wind Production Tax Credit helps also.”

Look for more info to come on how you can install a system for your home.

Without vision, the people perish

Many companies wish they could predict the future, but they have no idea how to go about it. The future can become reality if there is vision.

Painting a picture of the future through a statement of vision is critical to organizational success. The vision is driven and championed by the top leader of the organization.  It is the leader's responsibility to make the vision statement a living language within the organization.

Human nature has shown throughout history the power of vision and what can be accomplished - Alexander the Great, Crazy Horse, Abraham Lincoln, JFK, Winston Churchill, etc...  These leaders fueled a vision that captured the minds and spirits of their people.  It is no different in organizations.   

Individuals are no different than organizations when it comes to vision.  Successful people have a vision for their future.  The challenge for organizations is to create a vision that allows personal visions to be accomplished at the same time.

The old proverb "Without vision, the people will perish" has been supported throughout history.  Create an organization where people thrive and do not perish - create a vision!

-Victor Aspengren

Transition teams

English: For Sale by Owner Sign svg (Photo credit: Wikipedia)

When you sold your home, you did not hesitate to use a real estate agent. Exiting your business can be much, much more involved (and financially more significant) than selling your home, and it can require sophisticated, experienced advisors to guide you through the process. Sophisticated business owners will assemble an experienced team to assist them. The team will have responsibilities to:

• Identify and provide guidance to those areas that need to be corrected to meet the owner’s objectives (usually financial).
• Help the owner determine if the objectives are attainable.
• Help to keep the owner focused and on-track.
• Develop a transition strategy for the owner, employees, customers and the business.

While a transition team can be most helpful, the owner has the ultimate responsibility for making it happen. Many an effort has failed because the owner will not change their habits.   

Good Luck.

Steve Sink

CBI, M&AMI

ss@phxaffilaites.com

 

Does Pinterest belong in business?

Pinterest is the latest social network to take the world by storm, and it's a homegrown success. Founder Ben Silbermann is a Roosevelt High graduate, and has proven once and for all that you don't need to live on the coasts to start a successful Internet-based business. In fact, hometown legend Better Homes and Gardens (a Meredith Corp. brand) is one of the early Pinterest success stories.

For those of you who don't already know what Pinterest is, here is a description of the site and how to use it.

After creating a profile on the site, you get started by creating "pinboards" (resembling digital bulletin boards) in categories in which you are interested. Then, you "pin" images to the board. This kind of reminds me of the collages we were all asked to make in junior high by cutting images out of magazines. My friends and I used to make collages of outfits, hairdos, lipstick colors, or even guys we liked. I was a Parker Stevenson kind of gal, while most of my friends were Shawn Cassidy types...

So what's the big deal about creating a pinboard? What's in it for your business? Answer: Web traffic.

Pinterest is now the No. 3 website on the Internet, right behind Facebook and Twitter. In fact, in some categories (especially retail), Pinterest drives more website traffic than any other site, including Facebook. 

Social sharing is really the engine that drives Pinterest and makes it viral and fun. Pinterest has a button that you can install on your website, email messages or blog to allow quick and easy "pinning" of images. Users can also "re-pin" images onto their own Pinterest pinboards and users will be able to link back to the original "pinner."

Another intriquing thing about Pinterest is that Pinterest users, when they convert to buyers, spend more money than Facebook users. Social media has always been a reliable way to build brand equity and gain better relationships with customers, but Pinterest is proving that it can indeed convert users to buyers. Some experts think it's the visual nature of pinning that attracts people and converts them to buyers.

Speaking of visual, there's another intriguing aspect to Pinterest that I find fascinating. Marketers often categorize social media users by their proclivity to "create" content in social media land. The vast majority of people on social networks "lurk," that is, observe the content that others write or post. Pinterest allows these "lurkers" to join the party simply by pinning their favorite photos. It's an inclusive way to allow people to wade into the pool without putting themselves out there with a bold opinion or point of view.

However popular, Pinterest is taking a bit of heat from its business model. It's already making money, which is a bit unusual for such a social media youngster. Turns out, Pinterest surreptitiously attaches a code to pins and follows them back to the retail sites where purchases are made, ensuring that Pinterest gets a cut of the purchase. Many web critics are asking for more transparency from the new social media darling.

Here are some ideas from some big brands that are using Pinterest successfully to attract new business and social sharing from their customers. 

How are you planning to use Pinterest to attract more business? Would love to hear your comments, and "Happy Pinning!"

-Claire Celsi

Big charitable contribution, no deduction?

It may be better to give than to receive, but it's sure easier to give when it cuts your tax bill. That's why gifts of appreciated long-term capital gain property are in every tax planner's toolkit. You can get a deduction for the full value of the property without ever paying tax on the property's appreciation. Even cash contributions can fail as tax deductions without the right paperwork. 

Any good tax tool can be abused, so Congress has enacted a long list of formal requirements that property contributions have to meet. If you fail to get the paperwork right, your deduction goes to zero, no matter how valuable your contribution is. While the rules can be complex, here are some that come up often:

• Any gift more than $250 -- cash or property -- requires a written receipt from the charity stating the amount, if any, of value received by the donor (other than intangible or religious value). That means if you get 50-yard line seats for your donation to good-old Alma Mater U., they have to tell you how much of your donation was for the seats; you can't deduct that part. No receipt, no deduction -- even if you have a cancelled check.

• Any gift of property more than $500 must be reported on IRS Form 8283 with your tax return. This can subject your return to greater scrutiny. If you aren't sure your dropoff at Salvation Army was really worth more than $500, that's something to think about.

• Any gift more than $5,000 -- except for cash or publicly-traded securities -- must also have a "qualified appraisal" or the deduction goes to zero. The tax casebooks are full of horrendous stories of taxpayers who have lost enormous deductions because no appraisal wasn't received, because the appraiser wasn't a "qualified appraiser," or because the appraisal itself didn't meet IRS requirements.

This rule can wreck your dedection even in instances where you have strong evidence of the value without an appraisal. For example, if you donate a parcel of land to charity and the charity sells it right away, you still need an appraisal. You can't just rely on the actual sales price, as reasonable as it may seem. No appraisal, no deduction. You even need an appraisal for a deduction of more than $5,000 even if you paid more for the donated property than the deduction you are taking.

• Special rules apply to donations of tangible personal property, like art. If the property is sold in the year of contribution, the deduction can't exceed your cost. If the property is sold within three years, you may have to recaputure part of your donation.

While these are some of the commonly-encountered rules, there are some more obscure ones. For example, there are special rules limiting the deduction for "qualified taxidermy property," because hunters were "paying" for their safaris by donating their stuffed trophies to museums. 

The bottom line? If you want to deduct a property donation, get your tax advisor involved early. The money you save on professional fees can turn out to be a bad bargain indeed.

-Joe Kristan