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February 2011

Choosing An Outside E-Discovery Vendor

Companies that face pending or reasonably anticipated litigation have an obligation to preserve all relevant communications, documents and information. Businesses will be required to produce this information throughout the discovery process.

Failure to properly preserve it can result in serious consequences. 

One way to proactively protect against difficulties in the discovery process is to ensure your company’s document retention policies are up to date now -- before you ever see litigation on the horizon! Be sure you raise and discuss your document retention policies, relevant electronic systems and  e-discovery questions with your lawyers. And be sure your lawyers have a good handle on these issues. Computer

Many companies find it beneficial, or maybe even necessary, to hire an outside vendor to lend a hand with electronic discovery or electronic document retrieval.

Here are a few considerations to help a businesses and their counsel choose an outside e-discovery vendor to help gather electronic documents and information:

  • Make sure company decision-makers work with information technology and legal counsel (inside and outside) in outlining the company’s needs and in making the decision.
  • Ask the vendor if it will be able to work with the quirks of your case.  Be sure to mention relevant discovery and court deadlines, and you may want to ask how they respond if deadlines change, as they often do. Particularly, if you have a potentially large case or suspect data recovery may be complicated, ask the vendor if it has the resources and capabilities to handle the complexities of your litigation.
  • Review the vendor’s policies carefully.  Be sure you and your lawyer understand, or negotiate, what happens with the information retrieved. For example, where is it stored? Exactly who will have access to the data? Does the vendor subcontract any step of its process? You may also wish to confirm your business retains ownership of the data retrieved.
  • How familiar is the vendor with the legal process? 
  • What steps does the vendor take to protect personal, confidential, proprietary or other private information?  (i.e., will confidential information be stored in encrypted form?)
  • A question that may be particularly helpful for your attorney to ask: what is the vendor’s availability outside of regular business hours? 

Litigation is never fun for businesses. But, in addition to maintaining good document retention policies, finding effective ways to manage the discovery process – particularly the challenges posed by electronic discovery – can help make the litigation process go much smoother for you and your lawyer.

Get well soon!

A frisbee made by Wham-O.Image via Wikipedia

I was driving around downtown Des Moines last week, enjoying one of our rare 50-degree days in an unseasonably warm February. I couldn't help but notice the lack of public activity available downtown.

Now don't get me wrong, Des Moines has really improved and downtown and continues to. But it got me thinking about the importance of wellness opportunities within the young professional community. After all, YP athletic organizations are seeing a lot of momentum.

No matter the size of the city you live in, health and wellness (great blog!) is something necessary to a successful community. Gyms and other fitness programs are one thing. However, that isn't something visible.

Where can I drop what I'm doing to shoot some hoops, play some tennis or get a game of flag football going? What's a kid got to do to get a playground up in here?

I'm a big proponent of physical activity no matter how you choose to get it. Today's YPs make a good effort to stay active, which can be a big factor when choosing a place to live. There have even been whispers that Des Moines is focused on becoming a "wellness capital." That would be a big step in attracting a younger demographic to the state as well.

At work, you hear about it more and more. If your employer doesn't already have some sort of incentive package for staying in good health then I'm sure there is one coming your way. It's true, staying active relieves stress and happy people make better employees.

Here are a few things vital to having a culture of wellness to attract people to your city:

  • A central park: A place to throw a Frisbee or to knock a tennis ball around downtown.
  • An events schedule focused on wellness: Okay, so maybe you can’t run a marathon, but you can do the 5K!
  • Wellness center: Where are the healthiest places to eat around town? What intramurals can I join?
  • Incentive package: Cities need to be incenting businesses to incent their employees to be healthy and cut health care costs.
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Boring Blog

White on WhiteImage by Alan Bell via Flickr

The UCC is only exciting when you are in a dispute. Read this boring blog and avoid the excitement.

Article 9 of the Iowa UCC (Iowa Code Section 554.9101 et seq.) governs the purchase and sale of goods and related secured interests. This blog will deal with protecting a business during an initial transaction. My next blog will deal with placing the public on notice of a security interest.

Bill’s Bakery Supplies is an equipment wholesaler.

Joe Smith is CEO (and sole employee) of Smith’s Confectionary Inc.

Smith purchases equipment from Bill's. If Smith cannot pay, how can Bill’s recoup the unpaid balance?

Often, security agreements arise where an item is sold on account (six months same as cash) or a loan is received for the purchase of an item (bank loan for a car), and the purchaser is allowed to pay off the balance over a period of time. A seller may want to retain certain rights to the goods until paid in full.[1]

Smith pays 10 percent of the total price, signs the purchase agreement, and takes the equipment. Bill’s Bakery Supplies may be entitled to full payment on the account, but has it retained a security interest in the goods?

Likely no. In Iowa, an agreement to sell goods alone is not enough for a security interest to attach to the goods. Iowa Code Section 554.9203 provides that for a valid security agreement there must be:

(1) value given;

(2) a right in the collateral that the debtor can transfer to the secured party; and

(3) a signed security agreement with a description of the collateral or the collateral in  possession of the secured party.

This means Bill’s no longer has an interest in the goods sold and, essentially, has an unsecured open account.

If your business wishes to keep a secured interest after sale, create an agreement that:

(1)  specifies that a security interest is held by the seller;

(2)  is signed by the purchaser; and

(3)  includes a detailed description of the goods (e.g. serial number, make, and model).

[1] (Author’s Note: The UCC refers to a security agreement in this situation as a Purchase Money Security Interest, where the entity which gave the funds to the person to procure the good/s has a security interest in the goods as collateral.)

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3 Tips to Become a Time Management Superhero

EVA_superhero_270px Time management these days often means we have to get more done in less time, with fewer people and a $0 budget. Unless you are a superhero, this can seem like a daunting task. Try as we might, our efforts never quite cut it.

Villains enter the scene of our well-planned day: Captain Super Urgent, Shiny Object Man and The Guilt Tripper. They show up with an evil laugh and a dastardly scheme to thwart us from being effective. These villains don't want us to focus on an important fact:

Success is not about getting a lot of things done, IT'S ABOUT GETTING THE RIGHT THINGS DONE.

If you've got too many villains lurking in the shadows, pick up the bat phone and call the superhero within you!

3 Tips to Find Your Superhero-ness:

  1. Know WHAT you want. Define it, or you won't reach it. Figure out the musts, the wants and their importance. When Captain Super Urgent shows up, use your "I know what I want" laser beam vision to determine if it's the right thing for YOU to do.
  2. Know WHY you want it. Let the "why" drive the choices you make in your day. If Shiny Object Man tempts you with a distraction, use your "I know WHY I want what I want" super strength to resist him.
  3. Know HOW you will get it done. Everyone is given the same amount of time -- it's finite, not infinite. If you tend to overestimate what you can get done in a day, and The Guilt Tripper cackles at you, take a step back and adapt. Use your superhero power of elasticity and decide what will get done -- and when -- within the time you have.

Speaking of elasticity, my favorite superhero is Elastigirl. She faces setbacks but she adapts, twists, bends, and stretches… all because she knows what she wants and why. You can do it too!

What superhero powers have you gained to battle the time drain villains? Do you have a favorite time management superhero? Post your comment to the community and share!

Here are some links to my favorite Time Management Super Heroes:
Book: "The Effective Executive" by Peter F. Druckers (recommended to me by Iowa Business Owner Mike Wagner of the White Rabbit Group)
Book: "The Truth About Getting More Done" by Mark Fritz
Blog: "Getting Things Done (GTD)" by David Allen
Blog & Author: Julie Morgenstern on "Time Management Mistakes"
Photo: The Secret to Getting Things Done by Problogger, Darren Rowse

- Jocelyn Wallace

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Work sucks. Fix it.

"Work sucks," according to Cali Ressler and Jody Thompson, unless we rebel and do work differently. Unless we do it the way it makes sense. The way it ought to be done in the Information Age.

Instead, we're stuck in this Industrial Age mindset of forty hours, Monday through Friday, eight to five. And it's making us sick, according to Ressler and Thompson -- authors of Why Work Sucks and How to Fix It. It's why this sense of dread descents upon most of us on Sunday evenings, about the time that Sixty Minutes comes on. We know, deep down, that what we're about to do the next morning is stupid and unhealthy.

The solution as they see it? They call it a Results-Only Work Environment, or ROWE. In a ROWE, people can do whatever they want, whenever they want, as long as the work gets done. As long as someone is getting the results they are responsible for, their life is their own.

Ressler and Thompson wrote their book this year to start a movement, a movement to reshape the way things get done at work. They base their belief that this workplace of absolute trust and treating-adults-like-adults will really work on their experience in the early 2000's at Best Buy Corporate headquarters. They implemented ROWE there and found that:

  • employees are happier
  • company productivity is up an average of 35%, and
  • voluntary turnover rates are down as much as 90% in some divisions.

What do you think?

  • Would a ROWE work where you work? Why or why not?
  • How hard would it be for you as a leader to embrace the idea of trust to that extent?
  • Are there some people who would thrive in a ROWE and others who would fail miserably?
  • Do you already set the kind of clear goals and expectations that tell you whether someone is doing their job and getting the results they're supposed to get?

We all need clear targets and results-statements to be able to do our best work. And we'd all like to think that if we were just given the freedom to get those results as we see fit, we'd do it. However, the fact that so many people leave corporate America to start their own enterprises and survive only a year or two --in spite of being their own bosses and having total freedom to get the results they're after -- makes me wonder: like everything else in life, does a ROWE require an awful lot of discipline, more than a lot of us have? I know, that sucks!



Possible Tax Consequences of Seller Financing

076/365  I am accountant...Image by Venn Diagram via Flickr

You have sold your business and elected to do some seller financing to maximize the sale price. But, before you start to spend those payments, be sure to check with your accountant. In general, the gain or profit from the sale of property can be reported under the “installment method” of accounting for tax purposes.

This rule was put in place under the theory of tax law that taxpayers should not be required to pay taxes when they have not received enough cash to cover the tax bill. It started out as a good rule, but Congress has put so many restrictions on the use of this rule that, without careful analysis, you can face a bigger tax bill than any amount of cash you’ve received!

Some of the most common exceptions are:

1) Depreciation Recapture: You’ve been claiming accelerated depreciation on your business assets and you are now disposing of the business before the assets are fully depreciated. Now you have to go back and “recapture” any excess depreciation claimed over the straight-line method of depreciation. This “recapture” amount must be taxed in the year of sale and is not allowed in installment sale calculations. Again, for the sale of a partnership interest, you must “look through” to the assets of the partnership, and this rule could apply.

2) Sale of Publicly Traded Property: Congress determined that if you are selling assets that are readily traded in a market (i.e., an established securities market), the asset is liquid enough that you can sell it in order to pay tax on the gain. Therefore, we have this exception to the installment sales rule.

3) Sale of Inventory: The term “installment sale” does not include disposition of personal property that is included as inventory of a taxpayer. This includes the sale of a partnership interest to the extent that the sale is attributable to the partnership’s inventory.

4) Sale of Depreciable Property to Related Persons: Selling your business to a relative? Don’t expect installment sale treatment to apply to the depreciable assets. Note that this only applies to depreciable assets – if your building is included in the sale, you can still get installment sale treatment on the land under the building. “Related persons” includes selling any property to another company in which you, or a related person, owns 50 percent or more of the stock.

In short, if you have lots of inventory or depreciable equipment, you may find that the installment sale rules are not going to help you come tax time. Therefore, be sure to have your CPA review all terms before entering into an agreement to sell.

Good selling.

-Steve Sink

Socialism or Capitalism?

2679792681_6411771818_t The debate rages on.

Is socialism or capitalism the right approach to support the people in this country? Both have advantages and disadvantages. Is there something beyond both of them that could work better?

ESOPs (Employee Stock Ownership Plans) could be the solution. The idea is shared ownership not equal ownership. Ownership is typically distributed based on wages, but there are variations where ownership is distributed on hours worked. In either case, those that have a perceived higher value to the business (hours or wages), and stay with the company longer, receive a greater ownership stake.

Ownership implies that you accept the risks and rewards that come with it. The actions of the owners make a difference in the value of their company, whether it is the individual owner or the owners as an organization. 

The research shows that involvement by the owners creates better financial results. If an $8 an hour employee can build a retirement account of $30,000 in five years, is that success? If a company of eighty employees has a six-figure retirement account, is that success? There is no right answer, but these results are actual examples from ESOP companies. If an individual does not like the results, they have the choice to leave. There is no gun pointed at their head requiring them to stay.

It is time for owners, employees and companies to quit acting like there is a gun pointed at their head and realize that they have a choice to do something different and become something better - to go beyond socialism and capitalism.

Flickr photo by fenderjrp

Do You Let Your Employees Eat Lunch Together?

Lunch break + CalligrapomorphicImage by moriza via Flickr

Sometimes, when company leaders contemplate implementing a new social media program, their biggest fear is not what customers will say, but what an "anonymous" employee might say.

They fear a disgruntled current or former employee might log on to their blog and give the company a black eye, or worse, expose a trade secret. Believe it or not, corporate attorneys put the kibosh on social networking because someone might say something bad.

That's so frustrating, and totally misguided. Here's why.

Leaders entrust their employees with the company's brand reputation every single day. They allow employees to log on to our secure servers, leave the company with briefcases full of sensitive documents, and stand at the copy machine, where they MIGHT be copying documents for their personal portfolio or running copies of their resume. Heck, they might even have lunch together! Out in the open! There's no way to know for sure what employees are doing.

Oh, wait. There is one way. Start a company-wide social media presence. The boss will be able to read everything everyone is saying.

There are two types of social media that companies can deploy. The first, and probably most important, is an internal social network, where employees can say whatever they want. The only caveat is that they have to create a profile and submit their remarks under their real name. One company in the metro area doing a great job with this is Aviva.

CEO Chris Littlefield has an internal blog, and the company has an extensive Intranet where employees from all over the globe can comment on corporate issues, or start their own groups to talk about whatever they want.

Even though the employees comment under their own name, it's surprising and fascinating to see them leave real opinions, for everyone to read. For employers, it's certainly an inexpensive way to gauge employee feedback, easily and quickly.

The second type of presence is public. This would include things like having a public-facing blog, Facebook page and Twitter feed. According to ComScore, 22 percent of Fortune 500 companies have a public-facing blog, and many more are planning to start one in the next year. I found this awesome guide to corporate blogging. It's free and yours for the taking!

There is a risk of getting negative comments on a public blog, but since you will have a real person monitoring your comments, that should not be a problem. By using comment moderation, you can assure that only on-topic comments get posted. Abusive or promotional stuff gets eliminated before its even posted and no one else besides the moderater get to see it. Constructive criticism is fair game, however. Any smart company should want to know what people are saying. Listening to your customers is the price of entry into the social space.

In reality, your employees will be motivated to help you spead the word about all the good things going on in your company. After all, it's public. Just like going to lunch and talking about the boss. Only the employees who want to keep their jobs are going to blab company secrets loud enough to be heard by the next booth.

But even if they did, you'd never know it. Would you?

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When Things Go Really Wrong

Head crash in a new model hard disk.Image via Wikipedia

No matter how hard you try, things can go wrong.  Many of the businesses I work with provide software as a service on the Web.  Think Google Mail.  When it works, great.  When it doesn't, hang on! 

Recently, a friend had such a problem.  Their system went down.  People who depended on them could not use the service.  It was pretty bad.  Worse yet, the outage was caused by internal actions.  In other words, the outage was unintentionally self inflicted. 

In a recent post, Jason Fried of 37Signals wrote a piece called "How to Turn Disaster into Gold".  In it he told about a situation where one of their key products went down.  What they did about it is the cool part.  They took full responsibility for the issue, communicated regularly and in due time got things back up and running.  What they did not do was go into hiding, blame someone else or just stop communicating. 

These days you just can't lie to people.  If something is wrong, admit it, take responsibility for it and then make it right. Most of your customers will understand, even if they are irritated.

My friends were able to get their system back up and running.  They posted regularly to their blog and let people know what was going on.  They said what they did know and what they did not know. 

Here is the key - now their customers know what kind of company they are.  They learned by watching how the company handled a hard problem.  Everyone is pretty great when things are fine.  When things get difficult is when you learn who people really are. 

- Mike Colwell

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Voice of the Customer is Often Mute in Tech Investments

Technology - "Future Vision"Image by $ydney via Flickr

This week, I spoke to a room full of information technology folks at an event sponsored by Avtex Inc. and Microsoft Corp. Microsoft is launching its new CRM software and I was asked to bring a different perspective to the IT department. So, I talked about customer expectations as it relates to a company's technology needs.

Let me summarize my message to this great group of technology pros. Whether you are a small retail business or work in a major global corporation, there's an important lesson to learn for the sake of your customers.

The profusion of technology in the past 20 years in unprecedented. Technology is changing so rapidly that it's quickly becoming stressful, if not impossible, to keep up. The result for all businesses is a dizzying plethora of technology tools. Everyone is selling their tech widgets as the answers to all your business needs. But, there is one voice that is silent in the business tech conversation: the customer.

You can spend a lot of time, money and resources implementing the latest, greatest technology gadget to save you time while increasing productivity. But does this technology help you meet what your customer's expect? Will it allow you to better satisfy the specific needs of your customer? Do you even know what those expectations are?

What's really sad is investing a lot of time and money on a technology solution only to find out that your customer neither notices nor cares. Don't assume that you know what's important to your customers. Ask them. Then you can make strategic IT and technology investments that you know will impact both your operation and your customers.

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FTC Endorsement Guidelines Address Online Communications

We recently began a discussion about the proliferation of Web 2.0 and how that posesBlog pic  various legal risks to business owners.  For example, in 2009, the Federal Trade Commission (FTC) issued its first update in almost 30 years to its "Guides Concerning the Use of Endorsements and Testimonials in Advertising."  The updated guidance mandates disclosure of any “material connections” between a person endorsing a company, product or service, and the company/product/service being endorsed. 

One oft-cited example:  bloggers have to disclose any payments or in-kind donations, or “freebies," they receive in return for reviewing a product or service.  Employers may also incur liability if their employees engage in online communications promoting a product or service of the employer and the employees don’t disclose the fact they work for the business being promoted.  Significantly, the FTC suggests that an employer may help mitigate liability by instituting, and consistently enforcing, appropriate employee policies on social media and other online communications.

The FTC’s “Facts for Businesses” begins with a helpful explanation of the basis for the new guidelines:

Suppose you meet someone who tells you about a great new product. It performs exactly as advertised and offers fantastic new features. Would that endorsement factor into your decision to buy the product? Probably.

Now suppose you learn that the person works for the company that sells the product – or has been paid by the company to tout the product. Would you want to know that when you’re evaluating the endorser’s glowing recommendation? You bet. That common-sense premise is at the heart of the revised Endorsement Guides issued by the Federal Trade Commission (FTC), the nation’s consumer protection agency.

The Revised Endorsement and Testimonial Guides themselves offer employers a couple illustrations to help them understand the updated rules.  The FTC’s press release also offers some information.  The FTC also gives additional explanation of the guidelines for bloggers in its multimedia library about the endorsement guidelines.


*Update:  Thanks to Brett Trout for alerting me to my typo -- I inadvertently said the regs were effective last year, but they went into effect in 2009

Come out with your hands up

The IRS has just launched a new "amnesty" program for taxpayers with offshore bank accounts. The tax law has strict rules for reporting offshore financial accounts with balances rising over $10,000 and severe financial penalties for non-compliance. Of course, the penalties can be much worse than financial when tax fraud is involved. 

Unfortunately, many otherwise innocent taxpayers have offshore accounts that have not Treas_logo been reported on Form TD F 90-22.1, the "FBAR" form. A business may have an account overseas to make it easier to pay vendors or accept export payments, or an individual posted overseas may have inadvertently triggered an FBAR filing requirement just by having a personal bank account.  The IRS has been taking a "shoot the jaywalkers" approach to minor technical violations, making it an expensive nightmare for such taxpayers to come into compliance. This program offers such taxpayers an opportunity to get in compliance at a small cost, or in some cases, no cost.

Taxpayers who have been avoiding tax, whether inadvertently or purposefully, can also come in from the cold by paying their back taxes and a penalty of up to 25 percent of the highest offshore account balance. That might seem like a high price to pay, but it may be a good deal, as Janet Novack explains at Forbes.com:

Under the initiative, a taxpayer who put $1 million in a foreign account in 2003 and earned $50,000 of interest income on it each year, none of it reported to the IRS, would owe $518,000 in back taxes and penalties. If that taxpayer doesn’t participate and is found out, he could be assessed a stunning $4.5 million in back taxes and FBAR and tax fraud penalties. And, of course, he could be criminally prosecuted and go to jail.

Foreign bank account secrecy is rapidly becoming a memory. With the IRS securing thousands of names of Swiss account holders, and with other names becoming public via Wikileaks, there is no assurance that a secret offshore account can stay that way. If you have such an account, the time to contact your lawyer about the program is now.  The program requires filing amended returns to report all offshore income by its Aug. 31, 2011, deadline. Aug. 29 will be too late to start.

Blizzards + Social Media = Pizza

Gusto Gusto Pizza is the newest gastronomical marvel to spring upon the Des Moines restaurant scene. It's hip, it's cool and the menu is refreshingly different.

A few weeks ago, after the bad weather caused some Des Moines schools and businesses to completely shut down and send their employees home to safety, Gusto took the completely opposite tack. Gusto stayed open and turned up its social networks full blast. After all, people still get hungry for pizza during bad weather. Some people even seek out pizza during blizzards.

What makes Gusto so special? Why were they supremely positioned to open a new pizza place during the dead of winter, a time when most restaurants are experiencing very low customer traffic? What's in the secret sauce?

There's no doubt the "new place" syndrome is in play. People simply flock to a new place to try the food and be able to say "I've been there. Here's my opinion..." It's human nature. Even I did it. But they have a couple of unique ways of using social media that are worth observing and sharing.

  1. They know their specific audience. Gusto's audience is people who eat pizza. Specifically, it's young people who are very active in social media. Gusto caters to this audience, while still casting a wide net for whoever might be listening.
  2. They build excitement. The week before the business was opened, informational posts about the grand opening created a pent-up demand for the new products. The high-quality photos of their pizzas on their website helped, too!
  3. They share interesting information. How often do you get to see a brand new pizza oven being delivered? It was momentus to them, and they cared enough to share it with their friends. That's pretty cool.
  4. They create a social media "home base." Instead of random tweets and Facebook pages, they choose to have a website with a blog built in. Over time, this will build authority with search engines and send more people their way. But more importantly, it's a place to store their content. Think of it as a leather-bound scrapbook that will never get yellow around the edges. Gusto tweets
  5. They are "on" social media when their customers are "on." Instead of pre-programming tweets to come out automatically during the day, there is a live person tweeting and answering tweets during the dinner hour. This means Gusto will be able to answer questions, give directions and close sales that they might have otherwise missed.

These principles can be applied to any business trying to boost sales. Just remember, you can't phone this one in! There has to be a real person behind the wheel if you plan to win the race. Are you devoting enough face time to interacting with your customers in real time?

How to sell a good idea

104795553We’ve all seen it happen.  You’ve got a great idea.  Not creative for creative sake, but a strategy that will really spike sales in your company, attract the perfect employee or get a client’s business to a different level.

But the idea isn’t what people are expecting.  In fact, it might make them downright uncomfortable.  Or maybe it’s counter intuitive to your entire industry. 

Having the idea isn’t enough.  You have to sell it.  Often times, the better the idea, the harder to sell. 

Keep these things in mind when you’re teeing up an idea you really want to save from the trash bin.

They didn’t go on the journey with you.  You can’t just show them the finish line. You have to go back to the starting point and walk the path with them.  Show them all the different options you explored and why this one kept showing up as the winner.

No idea is perfect.  Don’t sugarcoat or over protect your idea.  You should know the dangers or weaknesses.  Why not present them before anyone else does?  Bring up the downsides and your solutions for mitigating them.

Know the difference between a single battle and the war.  If your idea doesn’t get the support you wanted in the first presentation, that doesn’t mean it’s over.  Sometimes people need to let an idea simmer for awhile before they can support it.  Or, if may require another conversation to help them see the logic behind what you’re proposing.

Eric Karjaluoto at Ideas on Ideas wrote about how his agency presents ideas to a client or prospect and how they give them a fighting chance.

What other tips can you add to the mix?


~ Drew


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A Healthy Twist for Your To-Do List

It’s 2 a.m. You are jolted awake by the stark revelation that tomorrow is, in fact, Tuesday and your half-finished report is due in eight hours.

Ever experienced this?

Lists are an effective way to eliminate the stressful uncertainty of tomorrow. A daily to-do list can be the difference between getting a few things done and leaving your desk a clean slate.   To Do List Twist 2-11-11

A simple way to infuse the day with a healthy slant is to add a health-related task to your daily list. For example, your list may say, "Deliver report at 10 a.m." Your next item could be "Take the stairs instead of the elevator." Just add one healthy item to your daily list; by the end of the year you’ll have done 365 healthy things for yourself. 

Lists are a great way for individuals to simplify their lives and make tremendous improvements to their health. When it comes to everyday health tips, things like taking vitamins, drinking water, eating an apple a day and sleeping more come to mind, but adding a little something extra or unusual will help keep you engaged.  Odd, easy little exercises like "balance on one foot while brushing teeth" or "take the long route between meetings" can enliven your list and invigorate your body and mood.

The typical soccer parent has to make meals, pick up the kids, run errands, et cetera. But by adding "walk around the park during the kids’ practice," that person is also taking strides toward a healthier life.  Business leaders are busy with building and leading their teams, planning for the future, growing their organizations. Adding to that list something as simple as "go to bed by midnight" could do wonders to a leader's next-day productivity and energy levels.

Whatever it is you do, make your health a bullet point on your list.

So tonight before you go to bed, make your list. After you’ve covered work responsibilities and chores, make sure to add a healthy task. Not only will you sleep better without the unorganized chaos swirling in your dreams, but you could be "365 times healthier" by the end of the year.

Financing the Deal

 A buyer’s source of financing depends in part on the price of the business being purchased. The vast majority of smaller businesses (less than $2million) are purchased with a significant portion of the purchase financed by the owner. The buyer, however, still must make a down payment and be sure that adequate working capital sources are available.

If the funds needed for the down payment are not readily available, the buyer must look for financing from an outside source. To grant such financing, an institutional lender is almost certain to require personal collateral for the loan as well as a wealth of financial and operating data of the business to be acquired. The most attractive types of personal collateral from the lender’s point of view are real estate, marketable securities and cash value of life insurance. In addition to personal collateral, it must also be demonstrated to the lender that the buyer is of good character, has a clear source of repayment, and has a good business plan.

It is rare for a privately-held business to be acquired without leveraging the business’s assets in some manner, pledging them as collateral for a loan made either by the owner of the business or an outside lender. The owner has a strong incentive to provide financing if he feels it is necessary to get the price he wants for the business and has confidence in the buyer. An outside lender must be convinced that the loan’s risk of failure is minimal and represents a profitable transaction.  To obtain outside financing it is important to be well prepared and have information that a lender needs to make decision. Here is a typical check list of the information you should be prepared to submit to the lender.

1.      Purpose of the loan

2.      Amount required

3.      Term desired

4.      Source of repayment

5.      Collateral available

6.      History and nature of the business

7.      Age, experience and education of management

8.      Key advisors

9.      Product

10.  Market area and method of distribution

11.  Major customers

12.  Suppliers

13.  Competition

14.  Facilities

15.  Employees and unions

16.  Three years of business financial statements

17.  Three years of business tax returns

18.  Current personal financial statement

19.  Pro forma business income statement, balance sheet and cash budget (for at least three years and the first year by month)

Good Luck,


Steve Sink

Certified Business Intermediary

Merger and Acquisition Master Intermediary


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Following Rules is Easier when you Write the Rulebook

Philadelphia - Old City: Carpenters' Hall - Ca...Image by wallyg via Flickr

My last blog was about dealing with “red tape” and following agency rules and regulations. Sometimes the most efficient way to deal with rules is to help write the rulebook.

 There are many ways to write the rules.

1)      Write to your legislator.

2)      Participate on a board or commission.

3)      Join a trade association that lobbies on your behalf.

4)      Lobby for yourself.

5)      Hire a lobbyist.

U.S. citizens have a first amendment right to petition their government. Corporations also have first amendment rights.  Many businesses exercise that right through lobbying.

Lobbyists are paid advocates who educate and persuade legislators. Most people assume lobbyists simply push for or against proposed legislation, but lobbyists may help draft proposed legislation or suggest amendments. Often, the lobbyist’s job is simply to make a bill “fit.” For example, if a proposed bill would heavily regulate balloon sales, the clown lobby may seek an exception for non-helium balloon animals.

Lobbyists may also put together research that would otherwise go unnoticed by legislators who have to address legislation on myriad issues.

A skilled lobbyist will:

  • Have rapport with lawmakers and know who will serve a key role in specific legislation.
  • Be proactive by heading off contrary or obstructionist legislation.
  • Keep clients informed of upcoming legislation and the associated rules.  
  • Maintain contact with legislators or members of the executive branch with influence over government agencies.
  • Develop relationships with other lobbyists for collaborative efforts and negotiation.

If you help write the book, it is less likely they will "throw the book at you."

- Christine Branstad

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Zebras and Wildebeests

Zebra and wildebeest migration Masai Mara, Sep...Image via Wikipedia

Ah, to be on a dream team! It's what we all dream about, huh? A bunch of people each skilled in his or her own specialty areas, pulling together, accomplishing way more than the added total of each working separately. Companies talk teams all the time, but very few provide the environment for teams to survive, much less thrive. They reward individual performance and undermine the very concept of unity and shared vision.

Unity of purpose is the very backbone of a high performing team. We sometimes think of unity as "sameness." It's actually just the opposite; it's about diversity. And that's where the strength...the backbone...comes in. Ralph W. Sockman, in "The Treasure Chest," said, "There are  parts of a ship, which, taken by themselves, would sink. The engine would sink. The propeller would sink. But when the parts of a ship are built together, they float."

What about you and your team?

  • Do you value and leverage the strengths of your individual team members? Or do you resent that not everyone is as creative? Or as detail oriented?
  • Do members of your team set aside their own interests for the good of the whole? Or are you a group of individual contributors, each vying for the recognition and visibility that belongs to the team?
  • Do you all find joy in each other's successes? Or do you forget sometimes that nobody can achieve the team goal unless everyone achieves the team goal?

While dream teams have all of the talent they need to accomplish a task, not any one member has all of the talent. High performing teams learn how to take advantage of each person's stengths and avoid unreasonable exposure to each person's weaknesses. Members of a dream team talk openly about their strengths and weaknesses. A weakness is not considered bad. The team just adjusts to it and moves on.

In Kenya, both zebras and wildebeests migrate from Masai Mara to Serengeti. Now here's the interesting part. The two massive herds travel together because the zebras have good eyesight, but a poor sense of smell. The wildebeests have bad eyesight, but a good sense of smell. By traveling together, both herds are less vulnerable to predators. Like high performing teams, they're more likely to survive AND thrive.

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Is your work a choice?

4842380202_2318f6b9d2_tFor most employees, work is not a choice. It is a forced action. This is one of the biggest obstacles to creating a productive and engaging work culture.

The requirements of money, family and benefits push people to a forced action versus a conscious choice of fulfillment at work. What were the real reasons you chose your current occupation? Chances are high that life fulfillment was not a priority at the start.

Once the routine of pay, benefits and work schedules have set in, the question of "why do I do this" sets in. This internal conflict keeps employees from being engaged and productive.  It is not easy for a company culture to overcome this internal conflict and that is why many companies give up on culture.

Those companies that create a culture that allow employees the slightest chance of finding a sense of fulfillment perform well. Those that allow fulfillment to flourish blow the doors off performance. What culture will your company choose?

Flickr photo by H.R. Hatfield

The Cost of a Difficult Customer

Angry PenguinImage via Wikipedia

There are many costs to difficult customers. First, the direct cost. A difficult customer will cost more than the average customer. They will demand extra work or services, take more time from you or your staff. They are more likely to return items and or dispute charges.

But what about the indirect costs and the lost opportunity costs? Difficult customers sap energy from you and your company. They can disturb other customers and reflect poorly on your brand. 

There is no way to eliminate difficult customers completely. You can, however, control their effect. Here are a few things to consider

  1. Deal with them quickly and directly. Do not avoid the issue or put off the conversation.
  2. State clearly what you would like of them.  Try to convert them to a customer worth keeping. 
  3. Make the conversation private. Either invite them into an office or offer to meet with them in private at a later time.
  4. Identify and fire repeat difficult customers. If they keep coming back for more but remain difficult, determine the real cost of the customer and terminate the relationship if it costs more than it is worth to you and your business. Remember to put a value on the indirect costs and lost opportunity.

Difficult customers are just not worth the effort. One more point to consider: You can refer always them to your competition.

- Mike Colwell

An easy way to start listening to customers

Jumping Brain by Emilio GarciaImage by "lapolab" via Flickr

Improving your customer service can be as easy as listening to what others are saying about you and your business. For many small business people, the whole concept of social media feels overwhelming. You are curious about what customers might be saying about you online, but the idea of trying to track it seems like a technological mystery.

A simple first step for many business owners is Google Alerts. It's free, it's easy and, true to its' name, it will quickly alert you when someone says something about you on the Internet.

Follow these easy steps:

  1. Open your Web browers and go to www.google.com/alerts
  2. In the "search terms" field, put the name of your business in quotation marks (e.g. "William's Widgets"). The quotation marks tell Google that you're only interested in the complete name of your business. If I didn't use the quotation marks in the example I just gave, I would end up getting alerted any time the name "William's" is used online, which could be a lot.
  3. You can choose what type of Web information you want Google to monitor for you. You might start with leaving it as "everything" and then refine it if you find that you're getting alerted to things that you don't care about.
  4. Choose how often you want to be alerted and if you want "all" or only what Google deems to be the "best results" for your search terms. Again, it might be best to choose "all" to begin with and then back it off if you find that you get a lot of junk references in your alerts.
  5. Put your e-mail address in the appropriate field and click "Create Alert."

By following these simple steps, you'll be alerted via email any time your business is mentioned on line in a news article, on a blog, or in an on-line discussion.

Why is that important?

Let's say a customer complains on their blog about the poor service they received from your business. You get the alert, read about their experience and then immediately contact them to respond to their complaint. The positive word of mouth (w.o.m.) you can generate with that blogger's family, friends and readers can pay huge dividends. Instead of being an uncaring and deaf business owner, you are suddenly a plugged in, responsive business owner. You're the kind of business person with whom people want to do business.

Setting up a Google Alert is free takes only about two minutes of your time. For business owners who care about what customers might be thinking and saying, it's a no brainer.

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How to protect yourself from payroll tax disaster

A busy entrepreneur needs to know when to delegate.  As your business grows, you have to trust vendors and employees to do more.  But as a man once said, "trust, but verify."  The "verify" part is especially important in dealing with your payroll taxes.

EFTPS A Des Moines businessman has learned this lesson the hard way.  Somehow -- perhaps as a result of an employee dropping the ball, but it's not certain -- his distribution company got behind on its payroll taxes.  The federal courts found that he paid other vendors before he got the payroll tax debt straightened out.  When a "responsible person" does so "willfully," he becomes personally liable for the payroll taxes, even if the business is incorporated.  The court ruled that the businessman was on the hook:

"The term willfully does not connote a bad or evil motive, but rather means a voluntary, conscious, and intentional act, such as the payment of other creditors in preference to the United States." Willfulness is generally a question of fact, but if a responsible person knew of payments to other creditors after he was aware of the failure to pay over withholding taxes to the government, his actions are willful as a matter of law."

So can you wash your hands of the problem by outsourcing the payroll function?  No.  If you provide cash to the payroll service and they fail to remit it -- maybe because they steal it -- the IRS will come looking for the money.  They don't count stolen tax deposits as payment of withheld payroll taxes. 

As we said, the entrepreneur can't do everything.  You have to trust, but you can verify your payroll taxes.  If your business is enrolled in the Electronic Federal Tax Payment System (EFTPS), you can go online to make sure your payroll taxes are being deposited.  Whether you outsource your payroll or do it in-house, it only takes a minute to check your payments. 

Getting behind on payroll taxes can be enough to sink a business.  That's why you entrepeneurs should bookmark the EFTPS website, know your password, learn how to access your account, and at least once in a while, verify.

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