MBE Magazine

David Hinson Explains MBDA Closings Recommendation

2012-02-24T10:24:00.000-08:00

http://www.mbda.gov/blogger/director/mbda-strengthening-support-minority-owned-firms

Plan To Fail: Successful Business Plans Start with Failure

2012-02-08T10:59:00.000-08:00

Posted on January 16, 2012 at Enloop.com | Written by David Worrell

Welcome to the dark side of writing a business plan. We don’t talk much about it, but the dark, dangerous discussion of failure is an important part of any plan. There are a thousand ways that a business can go off track – a thousand ways to fail. And as miserable as it seems, thinking about failure is as important to your business planning as budgeting and marketing.

How to Plan for Failure
Every startup has weaknesses and investors expect you to cover the “big 6 business risks”: Product or Technology; Market Acceptance; Key Employees; Competition; and Financing. These risks are important enough to be covered thoroughly, each in their own sections of your plan. There are plenty of other articles about these typical business risks, so let’s go beyond the basics.
Take your strategy to the next level by including less obvious risks in a separate section of your business plan simply called “Risks”. Thinking through the less obvious risks will strengthen your business – and your chances with investors.
Don’t hold back. This is one place in your plan that you can let your imagination go wild. So put on some gloomy music (Amy Winehouse? Pink Floyd?) and imagine all the ways that your business could come crashing down:

Supplier Dependence? Sure. If making and delivering your product or service relies on a single key vendor, describe how you will find alternatives.
Natural Disaster? Absolutely. If your business would be mortally wounded by an earthquake, hurricane, tsunami or tornado, write it down.
Government Regulation? Uh-huh. Just look at Amazon’s battle with sales tax. What could Congress do to your company?
Technology Changes? Oooh boy. Now you’re talking. What if Microsoft launches a new version of Windows? What if people switch from PC’s to Tablets? Think about how streaming is killing DVDs.

You get the idea. There is certainly a long list of risks – things that could go wrong. Brainstorm as many as you can, then include your top 5 or ten in the business plan document.

Dodge the Bullets
The point is not simply to list these threats, but to understand how you can (a) avoid them; or (b) adapt
to and overcome them. If an earthquake would disrupt your internet-based servers… you better look at
hosting in multiple cities sooner rather than later. If you are sourcing key parts from just one supplier,
describe where you will find a secondary source if the first one fails to deliver.
Every plan A needs a plan B… and maybe a C, D and E too. The more important a piece of your business
plan is, the more you should reinforce it with contingency plans.

Presenting Failure to Investors
Identifying failure points in your business plan is one way that you are reducing risks for your investors.
But this process can backfire if your contingency plans are too different from your original concept – no
investor wants to hear that Plan A is selling organic vegetables, but Plan B is to host websites.
A great Plan B leverages everything you know and have already accomplished. Remember, Plan B is a
pivot, not a retreat.
Startups are inherently risky. No entrepreneur or investor believes they are not. But there’s a
difference between starting a risky business and starting a business after you’ve identified and planned
for the risks.
So give your business the fighting chance it deserves. Consider your risks, your risk avoidance strategies,
and how you will adapt in the worst-case scenarios. Your investors will thank you, and your business will
be stronger for it.
Dedicated to your (Risk-Adjusted) success,
David
David Worrell provides strategy and finance help for small and medium-sized businesses… and he loves the business planning tools available at enloop. Give your business a rock solid strategy by visiting David at RockSolidFinance.com

How Do I Balance New Business Development Versus Day-To-Day Operations? Part 1

2012-02-07T10:54:00.000-08:00

Written by Cynthia McCahon

As the founder of a software company that bootstrapped its way to life, I was always hyper-aware of time as a precious commodity. The startup stories you hear about long hours and sacrifice are true—I’ve been through the war and can confirm that you always wish you had more of two precious commodities: time and money. There never seemed to be enough of either to run the day-to-day operations, much less to develop and execute new business development. Yet the less time you spend on new business development, the less money you generate. Your choices become a matter of priority in your company’s survival.
Determined not to be a statistic on the big heap of startups that wither and die because of missed opportunities, I developed a process for making sure I made time for new business development. Here are the most important parts of my new business development process:

Assign Responsibility
Along the way of launching and running Enloop, I knew it was imperative to make business development an assigned task. Otherwise it too easily falls by the wayside. An effective way to accomplish this is to assign the responsibility of new business development to one person and tie their compensation to the results. In the early days this might be you, which is entirely appropriate. Only you can synthesis the feedback you’ll hear from customers and partners during the course of your new business outreach. As a bonus, you’ll come to understand the intricacies of your business in deeper, more meaningful ways. You’ll find the direction of your company is vastly improved with the insight that new business development conversations afford.

Make Time, Not Excuses
If your business is like most others, the balancing act of just running the company leaves little time for anything else. Remember that the most important task for growing a business is to develop new business. Finding time for this task, which often is relegated to last on your to-do list, can sometimes feel like finding the proverbial needle in a haystack. It sounds obvious, but you must set aside a certain number of hours every week for new business development. Create an on-going schedule of your time and assign new business development to a weekly block of time. Make that block of time a priority on your to-do list rather that an expendable item. Your schedule is one of your most important weapons, so guard it wisely and delegate as many tasks as you can to free up space.

Work Your Network
Developing and working your professional network is critical. Make strengthening your network the top task on your to-do list. The best place to start is with efficient technologies like Linkedin and Twitter. Learn to use these tools and embrace them in ways you never imagined possible. Next, join industry associations and groups that bring you into contact with people who can help you—and that you can help, remembering that networking is a two-way street. Your network can prove to be a lifesaver, as a well-cultivated network brings you exponential opportunities. Work it like you’ve never worked it before. Talk with everyone, including your customers, and listen intently to their feedback. What they’re saying might give you big clues for your next product or market opportunity.

The process of new business development affords business owners a critical opportunity to simply think about their business. By carving out specific, goal-driven time periods for business development you provide yourself with a window into the future of your company and the opportunity to creatively innovate. Give yourself the gift of steady growth through a well-managed new business development that’s smartly integrated into your day-to-day operations.
Posted on February 1, 2012 at Enloop.com. Cynthia previously posted this article on SCORE's Small Business Success Blog

Publisher's Page - January/February 2012

2012-02-07T02:00:00.000-08:00

Barbara Oliver

The American Contract Compliance Association will mark their 26^th Anniversary National Training Institute in Philadelphia later this year. The event is designed to educate a new generation of contract compliance and supplier diversity professionals about their history and to "rekindle the spirit, passion, energy and commitment for economic empowerment."

We sometimes forget that there are more "newbies" to contract compliance and supplier diversity, and less of us veterans who know the history. As one such advocate put it, "Not everyone knows what M/WBE even stands for. These same folk certainly don't understand what it was invented for, [or] the value of it."

This is not to say that these new advocates are not passionate and committed, but many have been thrown into their positions with little understanding of what they are fighting for. It is incumbent on MBE magazine, and those of us that truly understand, to teach the lessons we learned from our struggles. In this case, there is absolute truth in the saying, "Those who cannot remember the past are condemned to repeat it."
The above-mentioned advocate took it upon himself to share some of his wisdom in subsequent postings, which MBE magazine has shared this month on our LinkedIn group page and our blog at http://www.minoritybusiness.blogspot.com/. He references Croson and Adarand, two of the most influential court decisions, affecting contract compliance. MBE magazine reported extensively on these decisions, what they meant, and their likely effects. We will share these on our blog as well as new Google+ site.
If you are a supplier diversity advocate or minority or woman business enterprise in need of a refresher course, I encourage you to visit our social networks and join the conversations going on now. You may be surprised by what you can learn.

MBE magazine January/February Issue now available online

2012-02-06T11:39:00.001-08:00

http://mbe.imirus.com/Mpowered/imirus.jsp?volume=mbe12&issue=1&page=0

Addressing an Often-Overlooked Risk

2012-02-02T18:07:00.000-08:00

Submitted by Marland Richardson

You try to protect your business against as many risks as possible as you grow and seek to take on bigger projects. But when it comes to key employees who are critical to your company’s success, there might be more risk than you think.

The death or disability of a key employee can reduce the earning power of any business in the short run. For smaller businesses, it can have a more dramatic effect, and even threaten the company’s stability if it happens at the wrong time; especially when dealing with Federal Contracts. This can also be true for other key

contributors such as co-owners or board members.

Addressing these risks with insurance is simple in theory, but determining the right kind of coverage for each key person requires careful analysis, best undertaken with the assistance of a trusted financial professional with specific training in this area.

Having the foresight to protect your business against the loss of a key employee – perhaps a company's most valuable asset – can mean the difference between business as usual and closing up shop. Some important questions need to be faced in order to ensure the business can continue and thrive if the unexpected should occur:

• What value does the key person bring – creative genius, sales acumen leadership qualities? And, what are those characteristics worth to the business?

• How much revenue could be lost before a replacement can take over the role?

• How much will it cost to recruit and train a replacement?

• Will clients lose confidence in the company?

With the help of a trained professional, you can estimate the financial impact on the business of these and other factors, and put in place effective life and disability insurance policies, as well as appropriate legal agreements and/or trusts as needed, to help ensure those costs are covered.

No one wants to imagine the worst. But making a plan for your business to survive is always a good decision.

Richardson is a Financial Advisor with WestPoint Financial Group, a MassMutual Agency. WestPoint has expertise in helping businesses protect the investment they have made in their business through various growth stages. These polices have exclusions and limitations. For costs and complete details of coverage, please call Richardson at 317-469-9999 ext 353 or e-mail marlandrichardson@finsvcs.com.

The information provided is not written or intended as specific tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalties. MassMutual, its employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

Your New Years’ Career Resolution… Improve Your Public Speaking Skills to Become a Leader or Stay a Leader

2011-12-28T14:26:00.000-08:00

By Matt Eventoff

The end of one year and the beginning of the next is a time for self-evaluation, and asking yourself, “How can I improve?” or “What can I do to further my career?”

One area that almost always can be improved is presentation skills. Effective presentation skills are crucial for leaders in the business world --- whether you are an executive already or are trying to move up in the ranks. Improving communication skills is an excellent way to increase productivity in the New Year.

Many communication tips seem basic, but remembering the basics and using them to your advantage is valuable in improving your skills.

Communicating effectively requires more than just having the right text or the right slide deck. You need to prepare and practice until you feel extremely comfortable.

There are brilliant, capable leaders who literally spend ten times longer preparing a presentation than practicing the delivery of the presentation. Imagine an executive team that spends hundreds of hours putting together earnings reports, and less than one hour preparing for the call to talk about the report. Imagine a corporate team leader who has a vision for the organization, but lacks the ability to communicate that vision effectively. These scenarios occur more often than you realize, in businesses of all sizes --- by seasoned executives as well as aspiring executives.

A strong leader must exude confidence when he or she communicates. Confidence comes from practice and preparation. Practice and preparation make the difference between a confident speaker and a speaker who is just muddling through.

Some of the basic lessons we’ve learned from great speakers of the past still apply in today’s corporate world. In his famous Gettysburg Address, President Abraham Lincoln’s used key tactics that are useful when addressing any group. Let’s look at three main techniques Lincoln used:

Be brief --- The entire address was less than 300 words and took less than three minutes. You don’t have to be long-winded to make your point. It means that when speaking or preparing your presentation, focus on what the audience really wants and needs to know, rather than just what you want to say.

Engage your listeners --- Focus on your message and engage your listeners by making it relevant to them, or at least interesting and easy to understand. Remember: You want to engage your audience, not try to impress them with the depth of your technical terminology or vocabulary. At the same time, you never want to “talk down” to your audience, either. Lincoln’s word choice was clear and effective --- and he quickly engaged his listeners.

Call to Action--- Keep in mind the purpose of your presentation or speech. Are you rallying your staff to action or modifying a behavior? Be clear on what you want them to do. Keep your goal in mind. Lincoln’s goal was to bring together a nation torn by Civil War.

So when you are preparing that big presentation to give in the boardroom --- or, to your staff or your boss --- remember to be brief, be engaging, and motivate your audience.

And don’t forget to prepare and practice, practice, practice! The more comfortable you are with the material before your presentation;the more relaxed and confident you will be when it is time to present.

Keep these basic public speaking tips in mind and you will be headed in the right direction for the New Year!

Matt Eventoff serves as a communication and messaging strategist for C-level executives in organizations ranging in size from startups to Fortune 100 firms, political leaders, nationally- recognized litigators, public figures and leaders from myriad other industries. He has successfully prepared clients to appear before almost every audience and in multiple venues, including: the United States Senate and U.S. House of Representatives, State and Federal courts, corporate settings ranging in size from small board meetings to interviews on the floor of the NYSE and on nearly every network and major cable news program, including 60 Minutes, 20/20, Nightline, Dateline, Frontline, Hardball, and Good Morning America. To learn more about Mr. Eventoff, visit http://www.princetonpublicspeaking.com/.

When Business and Personal Credit Collide

2011-12-14T17:00:00.000-08:00

by John Ulzheimer

When I sat down to write this article I considered several titles; Not All Plastic is Created Equal, Don’t Take it Personally, Swiping Your Way Into Chapter 7, and several others that aren’t worth mentioning. I chose the one with the word “Collide” because that’s how many small business owners feel when they make the mistake of mismanaging their small business credit card accounts.

What many small business owners don’t realize is that when they apply for small business credit cards they are really applying for personal credit cards. The difference is that the business card has your company’s name emblazoned across the front, which is structurally meaningless. This gives the impression that the card’s liability is assigned solely to the business. Nothing could be further from the truth.
When you applied for your small business card, sometimes called a commercial card, you filled out an application. And, within that application is what’s referred to as a “PG” or personal guarantee. What those two words mean is that you, not the business, are on the hook for the payment of any debts incurred on that card, regardless of who incurs them.

As a general practice most small business credit card issuers do not proactively report your account activity to the three national consumer credit reporting agencies, Equifax, Experian and TransUnion, as long as the account is in good standing. There are, of course, always exceptions to this rule and the only way to truly confirm if your small business debts are bleeding over into your personal credit reports is to check them periodically, which you can do for free at www.annualcreditreport.com.

What is almost a certainty is if you default on your business credit cards issued by a lender with whom you’ve signed a personal guarantee, the record of default will be reported to your personal credit reports in the amount of time it takes to boil an egg. When this happens the defaulted debt then comports with all of the rules that govern the reporting of personal debt to a consumer credit-reporting agency. Most notably, the reporting of the defaulted debt will remain on your personal credit reports for seven years from the date of the terminal delinquency, which is normally the date the lender wrote off the debt as “uncollectable.”

At this point the negative credit reporting will have a serious impact on your personal credit scores, unless your personal credit is already in the dumps because of other unrelated defaults. This means lower credit scores, and right now isn’t the time to have lower scores because lenders, both personal and business, have tightened their lending standards in reaction to both economic and legislative changes. Credit scoring systems, while amazingly sophisticated, are not designed to exclude small business debts. Point being, if they’re on your personal credit reports they’re fair game to any and all credit scoring systems.
To make matters worse, the collection efforts of the spurned lenders are also going to be reflected on your personal credit reports. Generally lenders will first attempt to collect defaulted debts internally, usually with staff collection personnel. If this proves unsuccessful then their next step would be to enlist the assistance of a 3rd party debt collector. The lender would either sell them debt or consign them responsibility of collecting the debt in exchange for a share of recovered monies. Under either circumstance a record of the collection activity would also be reported to the consumer credit reporting agencies.

If collection agency or debt buyer efforts are still unsuccessful then their next step could be litigation. Collection attorneys have become very aggressive in their efforts to collect defaulted credit card debt and while you can ignore phone calls and collection letters, it’s hard to ignore a process server who is delivering a lawsuit complaint. In fact, if you do choose to ignore the lawsuit you’ll lose by default and the lender will now have what’s referred to as a default judgment against you.

The default judgment, which is also likely to end up on your personal credit reports, gives the Plaintiff the ability to pursue what’s referred to as a garnishment. Under garnishment the Plaintiff can ask the court to order deductions from your wages until the entire debt has been paid. This, of course, assumes that you’re gamefully employed.
See what I mean about using the word “Collide” in the title?
© enloop, Inc.

Negotiation Know-How: 6 Keys to Masterful Deal Making - Part II

2011-12-14T10:30:00.000-08:00

What are the secrets to masterful deal making? Arthur Wylie continues his advice in this second offering. Add these basic steps to becoming an ace dealmaker. Read Part I which was posted on December 7, 2011.

• Key # 4: Be humble. You have to be humble, but firm, to effectively broker a deal. There’s a fine line between the two, particularly when you’re dealing with people who have already attained a measure of success. Always respect the positions of the other people involved in your negotiations no matter how badly, or not, you want the deal. It’s important to be fair and honest about the negotiation and to keep your intentions pure. You need to let people know you have the ability and desire to perform the task with which you’re charged. You also need to showcase with quantifiable examples that you put 100 percent effort behind everything you do. At the same time, you must express genuine respect and appreciation for what the other parties, what they have done and who they are—even if they’re, well, jerks. Even a jerk can grow to appreciate, respect and ultimately benefit you, and once that two-way street is established negotiations can ensure and deals can be made. Humility with backbone. It’s a tricky combination to maintain but one that’s absolutely mission critical.

• Key # 5: Finesse. No matter how large or small, almost every deal takes finesse, which is where skill and natural ability meet. This is where you get to have fun and allow your personality to shine. It means being able to explore different angles and try the somewhat weird and wacky—maybe even a bit of the fearless and crazy. It’s problem solving with a twist. It’s poise and diplomacy. It’s art. In the end, when finesse comes into play, the parties genuinely like each other and all sides look for ways to make sure the deal becomes a reality. For the best wheeler-dealers, finesse comes naturally; they don’t even know they’re doing it. If you’re lucky, it works that way for you as well. If not, develop it, let it flow and have fun trying it. Before you know it, you’ll be finessing your deals, too.

• Key # 6: Swagger. Swagger is an attitude you implement through finesse; it uses finesse as a tool. If finesse is about problem solving and outside-the-box thinking, then swagger is about having commanding and authoritative disposition and demeanor but without being pretentious or arrogant. It’s about knowing how good you are and hinting at what you are capable of but without being braggadocios. Swagger is a spirited characteristic that you possess and radiate without ever compromising your integrity or sacrificing your general likability. In a deal-making situation, your swagger should exude confidence, success and fearlessness. Hit the right notes with your swagger, and you’ll walk away with what you want. Just one more step in perfecting your life-wealth plan.

~~~

Master the six steps outlined above and you’ll be ready for some high stakes deal making. Remember, though, that Rome wasn’t built in a day, so conquering negotiating skills isn’t going to happen that quickly either. Start small before attempting to hit the Big Leagues. You may have to stumble a few times, but just get back up and go at it again. Along the way, keep both your successes and your failures in perspective, remembering that they are just stepping-stones along your lifetime of deal adventures. Once you’ve mastered the art, aim high—just like those seemingly crazy and fearless billionaires.

Internationally-regarded investing and entertainment mogul Arthur Wylie is the author of “Only the Crazy and Fearless Win BIG!: The Surprising Secrets to Success in Business and in Life” (http://www.crazyandfearless.com/) and serves as CEO of Arthur Wylie Enterprises – a brand with diverse practice areas, including include business consulting, real estate, investing, speaking, entertainment/film production, book publishing and philanthropy.

Vision Casting for the Solopreneur

2011-12-12T10:35:00.000-08:00

By Akia Garnett, MBA

Are you a small business owner with little – to – no staff? If you are and haven’t written your vision statement try doing the following:

-Carve out a few hours and write what you see for yourself and the company.

*Try not to focus on making it pretty, just clear

*Try not to focus on any formula in terms of the number of words and tenses

*Simply write what the company looks like in a perfect world

Once you’ve done that then:

-Select a trusted advisor, someone you know well who doesn’t know a lot about your industry.
-Ask them to spend a few moments with you and read them the vision statement.
-Ask them if you’re able to send it to them and request it back from them with any suggested changes or comments within five days.
-Call and ask three to four of your business advisors to participate in a mini focus group (if you don’t have any business advisors, now is a good time to appoint some).

Consider the following agenda:

-Purpose of meeting
-Your passion and why you went into business – keep it brief, but make your points very well
-Review of main activities, products and services the company focuses on today
-Review of draft vision statement you’ve worked on with your trusted advisor

-Review of your vision statement publishing timeline – give it a few weeks from when you meet Keep the meeting to approximately one hour – preferably around the lunch time hour. Provide them with written copies to take home with them, and request that they send any requests for clarification within two days. Remember that you’re not asking for approval of your vision statement. You’re simply allowing others to request clarification from you so that the vision statement makes sense, reads well, and most of all conveys what you mean it to and what you told them when you described why you went into business.

Once you have received feedback from your focus group attendees, then focus on editing the statement to rid it of any typos and inconsistencies. Run it by an editor or someone who will catch whatever you didn’t and publish it! You’ll need to review your statement every year during your budgeting process, and it should also be ever present in your office, Website, marketing collateral, where space provides, and other touch points for both you and your clients. Once you are done, I would like to hear your vision statement writing story. Send it to help@bestpracticesforsmallbusinesses.com

Akia T. Garnett, CEO Brandbuilder; CoAuthor, Seen and Sustained: Best Practices in Communication that Increase the Visibility of Small and Diverse Businesses

Complete an entire vision and mission mapping process. Order a copy of Seen and Sustained: Best Practices in Communication that Increase the Visibility of Small and Diverse Businesses for $19.95 plus taxes and shipping. Find out how. www.bestpracticesforsmallbusinesses.com.

Seen and Sustained is on Amazon.com and BarnesandNoble.com.

Three Ways to Damage Your Credit With Business Financing

2011-12-09T17:27:00.000-08:00

by John Ulzheimer

Unless you’re extremely fortunate there's a good chance at some point you'll want or need to get commercial financing to fund operations and growth. One thing to keep in mind is that a bad debt will not only slow your company’s growth and profitability, but it can create cash-flow challenges and have a trickle-down effect on your ability to cover your quarterly IRS liabilities. Conversely, a properly obtained business loan used for revenue generating activities can not only help you propel your company where you need it to go but can also be cash-flow friendly, offer tax benefits, and possibly be kept off your personal credit profiles.
Personal Credit Cards For Business Use
While it’s tempting, it’s probably not the best idea to use personal credit cards to fund your business. But if you’re already doing so, you’re not alone. According to the Meredith Whitney Advisory Group, 82% of small business owners use credit cards as part of their funding strategy. If you believe the stats, and there’s really no reason not to, you’re either already doing it or will eventually.
Hopefully you’ll eventually make the move and utilize business credit cards (instead of personal credit cards) and when you do you’ll want to work on the much more difficult task of understanding whether the business credit cards you're utilizing will be reported to your personal credit reports. Why? 30% of your personal FICO credit score is determined by your indebtedness and much of that 30% is made up of what’s referred to as "revolving utilization", which is the relationship between the balances on your credit cards to your credit limits expressed as a percentage.
This means with each swipe of your credit cards your FICO score is heading on a vacation south of where it's at today, which means more expensive (or limited) financing down the road. For example, an aggressively marketing business credit card issuer is Capital One, which is a perfectly reputable lender. But, “they report business card use to personal credit files”, according to Tom Gazaway, President of Hawkeye Management, a small business consultancy firm. “You need to be aware of their credit reporting policies because it will have an impact on your personal credit scores.”
Aggressively Seeking Credit
The second thing that can lead to damaging your personal credit is the shotgun approach to applying for business credit. “I call this the Lending Tree phenomenon”, says Gazaway. Applying for several loans or lines of credit from multiple lenders, while seemingly prudent is rarely a wise decision if there's no method to the madness. Multiple applications mean multiple credit inquiries and inquiries make up 10% of the points in your FICO scores.
Perhaps more importantly excessive inquiries will send a message to the rest of the lending world that you're looking all over for a loan. When you submit that 4th or 5th application - assuming there's no strategy behind that plan - how do you think the underwriter will feel when he knows your file has been to multiple other lenders before him/her. How would you feel to be #5 on someone’s list?
When you think about it like you almost realize that the multiple inquiries will not only impact your credit scores but they will also impact you at the “underwriting policy” level. “The number one reason for people with excellent credit to be denied a business credit card is for having too many recent inquiries”, according to Gazaway. Get your plan together and shop around verbally or online as much as possible before pulling the trigger on an official application.
Treating Business Credit Like a Personal Friend
First off, thinking of any lender or credit vehicle in a personal sense or as a friend is dangerous. It’s dangerous because your lenders will drop you faster than you can flip off a light switch the minute they feel you’ve become too risky with which to do business. The real take away, however, is to avoid treating a business line of credit the same way you would treat a loan or a mortgage.
While this might seem like “lending 101”, it’s not actually that simple. As a nation we've become pretty knowledgeable about the basics of how mortgages and auto loans work. These are almost always fixed-rate installment loans. This means you have the same payment every month for X number of years. And, as most of you homeowners know, your mortgage payment is due on the first of the month but not past due until the 17th of the month.
Zoom back to the 82% of the small business owners who are using personal credit cards as a key funding mechanism in their business. Can you consistently pay your credit card(s) 17 days late without a penalty? No way. In fact, you can’t your credit card(s) 1 day late without penalty? The takeaway – the due date on your business credit cards (or personal cards used for business) is not a friendly suggestion.
© enloop, Inc.

Negotiation Know-How: 6 Keys to Masterful Deal Making - Part I

2011-12-07T15:34:00.000-08:00

By Arthur Wylie

Whether in your business or personal life, making deals—from the biggest ones that take months to finalize and involve teams of lawyers to the nominal ones that are sealed with a handshake after a 10-minute chat—is an art. Deal making is a craft that, when done well, requires a skillful, visionary and inspired application of key principles and methods to create a desirable end result. When you’ve mastered this art, you will successfully negotiate deals in which all parties involved walk away with a win.

And, don’t underestimate the small deals, which can help you gain confidence with the process and also nurture other people’s confidence in you—and reverence for you. Indeed, it’s often the culmination of small deals that lead to the big one. Steve Jobs, Warren Buffett, Mark Zuckerberg and Sam Walton didn’t start out making headlines. They crawled before they could walk and ultimately made sure they were prepared to win the proverbial race when they approached the starting line of a mammoth business deal.

What are the secrets to masterful deal making? Below are some basic steps to becoming an ace dealmaker—skills that will help bolster your position whether you’re negotiating for a railroad or a rental car, and whether you’re acting on behalf of a worldwide organization, a sole proprietorship or just your own personal finances:

• Key # 1: Know your value. While you can’t know every possible result that the other party would want, be sure to understand what your offer or position can do for them. This means researching all the potential benefits and ways that your idea, product and/or service could help the other party, whether it is solve a problem, increase earning potential or simply make their life or business more convenient and enjoyable. If your argument is lacking some key benefit, then it is up to you to figure out how to adapt it so that it can serve the needs of your target audience while also achieving your own objectives. This takes time, effort, forethought and sometimes research, but it is well worth it when it’s clear to the other party that you not only understand their needs, but you also seek to structure an agreement that’s in their direct best interest as well.

• Key # 2: Personal relations. Relationship management is the key to showing the other party who you are as an individual, what you can do, where your values lie and how the deal at hand will benefit everyone involved. You learn about them; they learn about you – it’s a two way street. Both parties must feel that there’s synergy – a chemistry of sorts; only then can a mutually beneficial relationship be forged. From there, you present your win-win case, handshakes are offered and agreements are signed. Frequently, deals can close quickly and easily because people have come to know and trust you, either directly or by referral, making them comfortable to do business with you. If you create a strong enough brand and a stellar enough reputation, others will want to be part of the success you’ve amassed. Your opposition will clamor to close the deal with you.

• Key # 3: Get buy-in on your vision. Getting others on board with your plan can be challenging, especially when there are many people involved and/or there is much at stake relative to risk and potential upside. A critical step in artful deal making is to convey and articulate your vision of the outcome in such a way that the opposing party will desire that very same outcome. The “WIIFM’ – “what’s in it for me” – factor must be made crystal clear to the other party as you present your position. Of course, to do this effectively, you must first understand, or predict based on sound preparation, what the vision of the other party is likely to be at the onset of negotiations. This way, you can appropriately integrate synergistic ideas so that the visions ultimately meld. In addition, vision buy-in will be facilitated if you underscore to the other person that they will still be involved at a conceptual level as the project ensues.

Stay tuned next week for Part II of this article...

Internationally-regarded investing and entertainment mogul Arthur Wylie is the author of “Only the Crazy and Fearless Win BIG!: The Surprising Secrets to Success in Business and in Life” (www.CrazyandFearless.com) and serves as CEO of Arthur Wylie Enterprises – a brand with diverse practice areas, including include business consulting, real estate, investing, speaking, entertainment/film production, book publishing and philanthropy.

Seal It With a Stamp – Gift Giving Vs. Good Service

2011-12-05T21:31:00.000-08:00

By Akia T. Garnett, MBA
Customer Retention Program Basics
My pal, Frank McKinney, co-franchisee of a soon to be opened Tide Dry Cleaners which will be located in northern Virginia, former franchisee of a restaurant called Camille’s Sidewalk Cafe, and representative for an online greeting card generation and mailing company Send Out Cards (which allows for customization and mass mailing at reduced prices) asked me if I thought that sending out greeting cards to clients is a good relationship building tactic. I provided Frank with my thoughts and he suggested that I feature this topic as a blog. Below are my thoughts on using cards (and gifts) as a basic customer retention tactic:
Sending greeting cards and gifts are a great way to say “Thank You”, “Happy Holidays”, “Happy Birthday”, to show appreciation, and of course, to re-engage a client with whom you’ve lost touch. The messaging of today’s greeting cards have advanced, whereas they are both diverse and specific, which provide even more opportunities to personally address your clients throughout the year.
In addition to the sleek customization services that today’s card automation companies offer, companies specializing in premiums and corporate gifts have even more automation capabilities to personalize and package merchandise in small and large quantities. Both types of companies have made it easier to mass produce and expedite the packaging and shipping process while maintaining the integrity of a corporate brand.
Here’s one example. Sarah Meisenhelter, Long and Foster realtor located in Northern Virginia has created and maintained an annual calendar mailing campaign as a “thank you” gift for her clients. Below is what she had to say:
“We’ve sent 8″x11″ calendars that go on the fridge for years (at least 10+). The primary reason we send them is to offer a small gift to our clients, many of whom have become friends over the years. We add new clients to the program and always send one to previous clients. At this point, we have a large number of people who look forward to receiving these every year and will contact us in mid-December if they haven’t received theirs yet. We also include a personal family photo with a holiday greeting. Many people look forward to seeing how the grandkids have grown and how many we have currently, which creates a very personal feel. We truly don’t do this as a way to get more business. It’s just a “thank you” and a good wish for the new year.”
Here’s the Tricky Part: It is important to separate cards and gifts from the ‘work’ you actually do for your client(s).
Cards and gifts serve as relationship building tools. They cannot be used in place of good service, neither can they be used to build a substantive and authentic relationship with your clients. No matter how great the gesture or gift, in today’s competitive marketplace, good service is still king. Therefore, customers will voice their right to receive what they’ve paid for. Likewise, for relationships gone sour, cards and gifts might help temporarily, but they won’t guarantee that clients will not leave if the greater issues are not addressed in ways that meet their expectations for curing problems.
Showering Clients … with Good Service
Even though retention management is a great concept, remember that if your aim is to maintain market share, or encourage repeat business, investing time and effort into understanding how to deliver great service will better ensure success in that area. It is important to remember that problems will always arise, deadlines will not always be met, service deliverers will sometimes get it wrong, and occasionally, clients simply won’t be happy. What do you do in those instances? Focus on your ability to deliver good service and less on gift giving. Once you’ve smoothed out your operations, any relationship building program you resume or intensify will positively correlate with the client’s experience of your brand. When service delivery and relationship building are done well, top of mind awareness (TOMA) with your clients is maintained – thereby increasing the likelihood of repeat business.
Caution: Be sure you understand and have permission to speak.
It is important to have some concept of who your clients (or prospects) are before you mail greeting cards or send gifts. Keep in mind that procurement policies may prohibit some clients from receiving gifts of any kind. Additionally, everyone doesn’t celebrate birthdays, and neither does everyone observe holidays. Taking a chance by mailing them without permission is what many companies do. However the best way to know if and when clients want to be mailed is to ask them. In marketing terms, allow them to opt – in to your mailings for cards, and find out about their procurement policies for gifts. When your clients give you permission to include them in your retention programs and when it is appropriate to do so, your relationship building tactics will go even further.
Akia T. Garnett is CEO of Brandbuilder
Email: A.T@MasterYourBrand.com
Direct: 571.931.0137
URL: www.MasterYourBrand.com
URL: www.BestPracticesforSmallBusinesses.com

Managing Virtual Teams

2011-11-12T23:04:00.000-08:00

By Keith L. Scott, PMP, MBA
Today’s workforce is global. Obsolete are the days when team members sit in the same cubicle row in front of their manager’s office. Today’s project teams are working from home, across the city, on the other coast, or even in another continent in a different time zone. In the past, it was believed that to be an effective and efficient organization, team members should be located together. However, what is more important is that team members understand the project goals and objectives regardless if they interact and communicate in the traditional face-to-face manner.
As a project manager, it is your responsibility to ensure that deliverables and milestones are achieved on time and with the upmost quality. There are many moving parts to a virtual team which makes managing them that more difficult. Here are a few tips and techniques to follow:
1. Set project objectives and expectations for your team. Clearly communicate the project objectives, schedules, and individual roles and responsibilities. It is important that everyone knows what they are doing, how their work contributes to the project, what other team members need from them, and why.
Though everyone can work independently, it is important to constantly communicate the team’s objectives. Failure to do so can be catastrophic for the success of a project.
2. Set the tone early. At the beginning of the project it is crucial to let the team members know what is expected of them. Status reports, participation in conference calls, set hours of availability, and deliverable schedules are essential parts of managing virtual teams.
3. Understand and respect different cultures. This is very important if you are managing team members of different religions and/or in different countries. Honor your team member’s right for personal and religious practices.
4. Choose the right technology to foster communication. The anchor of every virtual team is the technology used to support communication. As gas prices soar, flying the team in for a meeting each week is not realistic. So in lieu of that online chat, conference calls and webinars are ideal. There are a number of technologies available such as AOL Instant Messenger, Microsoft LiveMeeting, GoToMeeting®, and many other tools that support video and web conferencing. In addition, there are collaboration tools that allow team members to share and collaborate on documents such as Microsoft SharePoint.
5. Be specific about time commitments. Never leave something to chance. Make sure that all team members know when deliverables are due. You never want to remind them the day before and have them scramble to get something done before close of business (COB) the next day. In these instances, almost always the quality of the deliverable suffers.
6. Get the team together on occasion. Although it is expensive to bring remote teams together, it is a necessary element to managing a virtual team. In order to build and continue team chemistry,
gathering the team together strengthens personal relationships and working partnerships in both
the short and long term. Never underestimate the importance of team camaraderie and rapport.
7. 360-degree communication. The bottom line is quite simple – get out of the way. Trust your team
to make proper decisions by working with each other and not be the bottleneck by insisting that all
communication be channeled through you – the project manager.
____________________
Keith L. Scott is a co-founder and Chief Executive Officer of the Novel Management Group (www.noveladvisors.com). Novel is a certified Minority Business Enterprise management and technology consulting firm headquartered in Atlanta, GA and an office location in McLean, VA.
© 2011 Novel Management Group LLC.

2011-11-06T22:23:00.000-08:00

A green economy can be described as one that results in financial profitability, in benefit to our individual well-being and in reduced risk to the environment. Today, organizations such as Accenture, Coca-Cola, Ford, Marriott and Wal-Mart serve as leaders in the green economy by making environmental responsibility or "sustainability" an integral part of their business strategies. These companies strive to achieve interaction among financial, social and environmental risks and opportunities across their value chains; and are collaborating with value chain participants to develop environmentally responsible innovations.

Dr. Leonard Greenhalgh, Professor of Management at the Tuck School of Business at Dartmouth College was one of the speakers at the 2011 Minority Enterprise Development Week Conference (MED Week 2011). In his presentation entitled Strategy for Growth in the Green Economy, Greenhalgh shared his insights on how getting involved in the green economy would be a profitable strategy for minority businesses. According to Dr. Greenhalgh, being able to identify how sustainability opportunities and risks travel through the extended value chain will help owners of minority businesses to investigate those issues or areas where the financial impact aligns with environmental priority.

Sustainable business models are based upon the need or desire to reduce, or find substitutes for resources such as energy and water. This effort creates a powerful driver for developing innovative products and operating models. The Coca-Cola Company, for example, is intensely focused on water stewardship. Water is the main ingredient in their products and is also an important part of their manufacturing processes. As a result, the company focuses its efforts on water stewardship in three areas: improving water efficiency; recycling water used in their operations (wastewater treatment); and on community access to water including watershed restoration and protection.

Water, together with the other natural resources are essential to the operations of businesses; and innovative companies like Coca-Cola have developed solutions for achieving more sustainable management of these critical supplies. These companies have acted expeditiously on sustainability issues and have accelerated beyond their peers.

Some companies may not consider water to be a sustainability issue or a financial risk. However, the World Bank estimates that of the approximately seven billion people in the world, as many as two billion people lack adequate facilities that would protect them from water-borne diseases; while one billion lack access to clean water altogether. The United Nations also projected that the world population will surpass nine billion by 2050. This growth in the population and the anticipated increase in pollution could easily create a situation where access to clean water may be significantly limited.

Minority owned businesses can succeed in the green economy by following and collaborating with leaders - Accenture, Coca-Cola, Ford, Marriott and Wal-Mart. Companies that develop sustainability strategies to identify and maximize opportunities in the green economy will undoubtedly enhance revenue and strengthen brand value.

Click on the image below and watch Dr. Greenhalgh share his insights on this issue.

As always, your comments are welcome and will be posted on the Good Foodie blog!

Regards,

Nadine Bartholomew

The Good Foodie

www.thegoodfoodie.org

For Effective Leadership, Understand Your Style

2011-11-06T22:01:00.000-08:00

By Glenn Gutek

At the risk of placing substance over style, all leaders must understand this simple truth: style does matter. It is not about matching your belt to your shoes, or accessorizing appropriately for the occasion, but rather understanding the way you go about leading.

Allen rose through the ranks of the military with great ease and retired young with a high rank. Properly prepared for his transition into civilian life, Allen was able to land a great opportunity with an upstart tech firm in the mid-west. Everyone was confident his previous leadership performance would translate to the battlefield of competitive software development. Within months it became obvious that the members of Allen’s team were not responsive to the command and control leadership style that Allen was comfortable exercising.

Allen’s story is not uncommon. Effective leadership in one field or with one team does not always translate to effective leadership with another team or another field. The complexity of the marketplace has prompted the importance of knowing your leadership style and discerning the style that a team will easily respond to. The distinctions of leadership styles could be endless; however, the following six styles are the most prominent in the workforce today.

Charismatic: This is leadership by infusion of energy often embodied in the personality of the leader. This leadership style may encompass a wide swath of personalities, but the common ingredient is that the energy ushered in by the leader is closely connected to the leader herself or himself. Once Elvis leaves the building, so does some of that infectious energy!

Over the years, this style has been both praised and panned, but any study of leadership must recognize that there is value to those who bring energy to an organization by their sheer presence. The downside of this leadership is the reality that some teams don’t need to speed things up, but rather slow things down. The charismatic leader is an excellent vision-caster and can elicit a loyal and passionate following. Where this style will often fall short is in the attention to details.

Technician: This is leadership by displaying both knowledge and skill. This style is highly valued in cultures where competence is high in economic value. It is leading by simply being the best producer of what your organization produces. This leadership style can influence their arena with an impeccable reputation, and sets the bar for the standard of work quality.

There are limits this style has in being replicated throughout an organization. Some leaders who strongly employ this style can in time be a little like the “Wizard of Oz,” hiding behind the curtain, pulling strings, leaving everyone to wonder “how does he/she do it?” Nobody can argue with the value quality plays in any arena. Keep in mind there is a distinction between leading the best, and being the best.

Strategic: This is leadership by connecting the dots. This style is embodied in people who tend to be global and conceptual thinkers. They not only are able to see the end destination, but they know the path to get there must be identified and paved. Tragically, this style can be marred by the blues, because not only do strategic leaders see what could be, they see what is not.

Team Builder: Here, leadership is by roles and unity. This style recognizes that you can’t just assemble any group of people and claim you have a team. This leadership style is employed by people who look at people individually and find individual roles for them to fill. At the same time, they align these individuals into a cohesive whole.

Managerial: This is leadership by systems. This style focuses on doing things right. Processes and systems are designed and understood so that current operations function consistently. Though some would argue that managers are not leaders, you have to acknowledge that effective managers have a profound influence on those that surround them. In fact, they have the capacity to lead a culture that prizes management, even at the expense of effectiveness.

Directive: Here we have leadership by control. This style was once enamored with the industrial revolution. In recent years, it has been stated that command and control are no longer cherished. However, any organization in crisis would love to have a directive leader step forward and bring order out of chaos. There is still a need for directive leaders.

How to employ your understanding of leadership styles

The most important thing to be understood when examining the concept of leadership styles is to recognize that there are circumstances where certain styles flourish and others where they flounder. In days of old, the common philosophy was to master all of these styles. “A man for all seasons” was the fantasy of owners, entrepreneurs, and executives.

Today, the world is way too diverse and complex; and truthfully, nobody was ever excellent at all styles. Most writers on the subject these days encourage you to know your style and function in an environment where your style will flourish. As a leader, not only should you know your natural style, but you should also know the “shadow side” of that style: How does your winning formula undermine your effectiveness? Typically, a leader’s ineffectiveness will not be exposed, even if one of their weaknesses is revealed. Ineffectiveness will shine when your strength runs a muck. There is an old saying that if the only tool you have is a hammer, than the whole world looks like a nail. Some of the biggest mistakes in leadership are when you are using a hammer when sand paper is required.

Effective leadership in today’s diverse culture will require a team approach, and teams require diverse leadership styles. By not only employing the best leadership style for you, but also knowing when to adapt to other styles, you can effectively lead your team to success.

ABOUT THE AUTHOR

Glenn Gutek is a speaker and CEO of Awake Consulting & Coaching, a firm that helps small businesses and organizations improve their leadership and business development through training, development and coaching. He is also the author of “Wide-Awake Leadership,” which teaches leaders how to overcome mediocrity though effective leadership. For more information on speaking and consulting, please visit www.AwakeConsulting.com or contact Glenn at glenn@awakeconsulting.com or 407-901-4357.

The Keys to Building a Great Team: What to Consider Before You Hire

2011-10-10T12:25:00.000-07:00

By Rhonda Savage

Sarah is the manager of a busy department store. In her time as manager, she’s worked hard to develop strategies to properly train employees on the store policies and standards, but lately she’s found that she is unhappy with her team members. Despite proper training and a complete understanding of their job descriptions, her employees aren’t working well together and she is finding it difficult to manage them properly, resulting in low morale and ultimately affecting performance.

Where did Sarah go wrong? How can she ensure that she not only hires good employees, but also employees who work well together? The important thing to keep in mind about building a team is that you don’t hire a team as a whole, you hire the individual.

The next time you are looking to hire new staff members, consider these techniques to ensure you not only build a team, but also that you build a great team:

Assess your strengths and weaknesses. Build and increase teamwork by hiring others whose strengths shore up your weaknesses. For example, if your strength is that you are direct, decisive and goal-oriented, but your weakness is that you don’t always pay attention to detail, surround yourself with detail-oriented people.
Recognize the needs of your team. What team members need to feel good about their work place is typically four things. These four areas of concern are critical to staff retention. In a survey of more than a thousand businesses, these four areas are ranked by level of importance with number one being the most important to your team member.

Praise and Appreciation: This should be timely, specific, and sincere praise, not artificial flattery or insincerity. Praise publicly; correct privately. The U.S. Gallop poll cited 71 percent of American workers were clock punchers. The most common reason noted as to why the employee felt that way: Lack of praise or appreciation for a job done well! Do be careful, however, of the perception of favoritism. Favoritism, whether real or imagined, will drive the morale of the business down. When morale goes down, production drops! Look for the good in everyone rather than singling out one person.
Belonging to a close-knit team: Facilitate great communication and involvement of the team through regular meetings. Make certain all employees hear about important information through various methods: Email, meetings, posted information and through the chain of command.
Responsibility and feeling like their voice matters: Ask for their help! Give them increasing levels of responsibility and training. Involve them in the decision-making process.
Money and Benefits: Money and benefits are important, but workers today also want fast-paced, energetic, interesting work and to feel that their efforts matter! If you’re slow, use your down time wisely for training, working on the facility or marketing. It’s interesting: if the work place is slow, the workers and boss work slower! If we have more time, we take more time. Unfortunately, when you’re slow, gossip goes up and morale goes down. Be clear about duties during “down times.” There should never be a reason to stand around and gossip.

Ask for honest feedback from your current employees to help you identify the roles new staff members should fill. Consider asking the following questions:

If this were your company, what would you do to increase our productivity and decrease our overhead?
What skills, ability, or training can I give you to better enable you to do your job?
If this were your business, what kind of person (skills and strengths) do you think we might hire that would help us grow the business?
If you could improve one thing about the communication within our team, what would it be?
What do I do, or what does your supervisor do, that wastes your time or the time of the customer?
What do you like the best about your job?
What do you like the least about your job?

Hiring well is one of the most difficult jobs of a leader and hiring decisions have a huge impact on employee morale, performance and the overall work environment. Identifying and understanding the needs of your employees will help you build a productive and motivated team.

ABOUT THE AUTHOR

Dr. Rhonda Savage is an internationally acclaimed speaker and CEO for a well-known practice management and consulting business. She is a noted motivational speaker on leadership, women's issues and communication. Savage is also co-author of “Bushido Business: The Fine Art of the Modern Professional” with Tom Hopkins, Brian Tracy & Stephen M. R. Covey. For more information on her speaking, visit www.MilesGlobal.net or e-mail Rhonda@MilesandAssociates.net.

Top 10 reasons to hire a commercial real estate broker

2011-10-05T17:24:00.000-07:00

Do you really need a broker the next time you renew your lease?
Perhaps you consider yourself a good negotiator. Maybe you’re completely happy where you are and have a good relationship with your landlord. So what can a broker do for you? In a word — plenty. The golden rule of real estate negotiation is: “Leverage = Time + Options.”
Unless you have unlimited time and are fully aware of every single opportunity in your market, you’re likely going to leave considerable cost savings on the table if you negotiate on your own. Here are 10 reasons why working with a broker makes good business sense:

You have nothing to lose and everything to gain.
For their services, brokers receive a fee which is paid by the landlord, not the tenant. It costs you nothing to use a broker. Landlords will sometimes offer to pass the amount of the fee along to the tenant if they represent themselves. In reality, even if you do receive the brokerage fee “on paper,” you’ll pay for it in other ways. According to industry research, a good broker will save an average of five times the cost of their fee.
Brokers are good at what they do
Brokers are immersed in the market all day, every day. It is their full-time job and core talent. They have the research and negotiating skills to succeed, and deep, real-time market knowledge.
Brokers have access to better information
Even if someone in your organization has handled transactions, they will not have access to the up-to-the-minute market intelligence of a working broker. Brokers are connected to information that provides you the best options at any given time. Even if you’re not considering moving, this “ammunition” increases your leverage in negotiating with your landlord.
Brokers save you time
Why should you spend time researching the market and negotiating with your landlord when a broker will do it all for you? Engaging a broker allows you to spend your time on what you do best.
Your process shifts from reactive to proactive
Tenants typically don’t think much about their leases until renewal time. Brokers think about leases, market trends and opportunities every day. Establishing a relationship with a broker can elevate your process to a proactive mode that anticipates opportunities in advance.
Not using a broker tips your hand to the landlord
Landlords typically believe that satisfied tenants will renew and accept their increase. Not using a broker suggests to your landlord that you don’t plan to move and that you won’t drive a hard bargain. Using a broker will “keep them guessing” and compel them to make their best offer to encourage you to stay.
Using a broker reflects the good business practice of outsourcing for non-core services
Organizations regularly outsource for specialized skills outside of their core capabilities such as accounting or legal counsel. Real estate is typically the second- or third-largest expense on operational balance sheets. With so much at stake, it pays to outsource to a specialist.
A major brokerage firm gives you one-stop service for all locations
A strong brokerage firm operating in multiple markets can serve you from a single point of contact, eliminating the hassle of finding a good broker in every location where you need one. The best brokerage firms will provide multi-city tenants with an account manager who coordinates with local experts in each market.
Brokerage firms accumulate and share the benefits of experience
Regardless of the scope of your portfolio, major brokerage firms transfer collective insights and lessons learned into standard operating procedures for every new assignment. Even the smallest, most seemingly routine lease negotiations can benefit from this.
A brokerage firm is more capable for specialized needs
Perhaps you wish to investigate special opportunities such as build-to-suit facilities or “green” upgrades. A full-service brokerage firm has staff that focuses on these and other areas like lease administration and project-management to help you build out a leased space to suit your needs.

Torrey Littlejohn is a Vice President in the Dallas office of Jones Lang LaSalle, a global commercial real estate brokerage firm. She specializes in assisting users of office and industrial space.

SBA Signs Memorandum of Understanding with International Trade Administration and Republic of Turkey

2011-09-29T13:22:00.000-07:00

Release Date: September 29, 2011
Contact: Tiffani Clements (202) 401-0035 Release Number: 11-56 Internet Address: http://www.sba.gov/news

WASHINGTON – Marie Johns, Deputy Administrator of the U.S. Small Business Administration, today signed a tri-partite Memorandum of Understanding with the Department of Commerce’s International Trade Administration (ITA) and the Republic of Turkey’s Small and Medium Enterprises Development Organization (KOSGEB) to encourage collaboration to assist small and medium-sized businesses with international trade opportunities.

The MOU, signed during a luncheon held today at the 29th National Minority Enterprise Development (MED) Week conference will enhance and improve cooperation between the participants.

This year’s MED Week conference is focused on helping minority small businesses expand their operations and establish a presence in the global marketplace while helping them weather the current economic climate in the U.S. The theme for this year’s MED Week event is “Emerging Industries & Markets: A Blueprint for Success,” and it is co-hosted by the SBA and the U.S. Department of Commerce’s Minority Business Development Agency.

“We recognize the significant role that small and medium-sized businesses play in driving national economic prosperity,” said SBA Administrator Karen Mills. “We are entering into this important partnership between the U.S. and Turkey to encourage the exchange of information, including best practices, networking and international trade opportunities for small businesses.”

The roles of each of the participants in the partnership agreement include:

• The International Trade Agency intends to: coordinate digital video conferences with the SBA and KOSGEB to provide information, share best practices and promote international trade among small businesses;

• The SBA intends to: organize briefings for KOSGEB and representatives of Turkey about SBA’s loan guarantee and technical assistance programs, participate in an exchange of experts for training and knowledge-sharing purposes, explore meeting opportunities for U.S. and Turkish businesses and provide KOSGEB with information on SBA’s approaches to promoting opportunities for small business;

• KOSGEB intends to: share knowledge and experience about policies, measures and applications, exchange data and publications about small and medium-sized businesses, host an exchange of experts for knowledge-sharing purposes, organize networking events, mutual business trips to enhance the cooperation between both countries’ small and medium-sized businesses, and encourage and support establishment of ‘Business Matching Centers’ to improve the trade volume of both countries.

All of the participants plan to share relevant information and best practices on innovation, entrepreneurship and export promotion, and international trade relating to small and medium-sized businesses.

For more information about the Memorandum of Understanding, visit www.sba.gov/oit, and for information on MED Week 2011, visit: www.medweek.gov .

###

The Psychology of Taxes on Entrepreneurs by Greg Crabtree

2011-09-19T10:40:00.000-07:00

As an accountant, I have a unique vantage point to observe how entrepreneurs change their decisions based on tax policy. My focus as a business advisor is making businesses more profitable first, then dealing with the tax implications of profit.
As much as I would like to focus on profit, I regularly have to reprogram the entrepreneurs thinking on taxes. With new clients, I often have to overcome the advice given by their former CPA, who would inevitably advise them to buy more equipment at the end of each year to avoid paying taxes. Folks, this is just plain dumb unless your goal is to never build wealth from your business.
I would classify entrepreneurs into three groups when it comes to taxes:
No Taxes, No Way Nate This guy will do anything possible, including cheating, to pay no taxes. From our experience with clients we turn down or terminate, this problem is likely bigger than even the IRS estimates.
Accidentally Profitable Alex This guy is so focused and passionate about his business, that he forgets to plan for success, and the resulting taxes often come as a surprise. Many times this is from a cash out event rather than ongoing profit.
Eddie the Enduring Entrepreneur This is my favorite type of entrepreneur to work with because he is building a lasting business that will be a tremendous wealth-generating engine for himself and his family. This entrepreneur is often held back by bad advisors who encourage him to waste wealth to avoid taxes, but his instinct and common sense frequently help him overcome the faulty counsel.
The only type of tax that you can make No Taxes Nate pay would be a sales tax (or VAT value added tax). But given Nates predisposition to not pay any taxes, he will find a way to skim or avoid the tax all together. Unfortunately for us honest entrepreneurs, we will endure audits because of Nate, since that is the only way the tax collector can find him.
Accidentally Profitable Alex does not make decisions based on taxes until his first major tax event occurs. Once that event happens, he may change his name to Nate if he perceives the tax impact is too great. Alex is likely to be a oneer, which is the term used for someone who can be profitable once, but cannot repeat the success.
Eddie is the guy we should focus tax policy around because he is the guy that employs the bulk of the workers in the U.S. economy. Employment studies have shown that 70% of all employees are employed by privately held businesses and 100% of all new job growth comes from private business. Publicly held businesses kill as many jobs as they create and that is just the nature of the beast. Every time a publicly held business has purchased one of my clients, the public business has decreased employment of the company purchased, not increased. They are inherently geared toward buying the business done by the private company, bolting it on to their infrastructure, and off-loading the private companys management.
Since I started in public accounting in 1978, I have seen multiple tax ideas played out and the varying business decisions resulting from each policy. I can honestly say that no policy proposed has ever caused the result the policy maker wanted, with the possible exception of the 1986 Tax Reform Act. This is the tax act that eliminated tax shelters and lowered tax rates to 2 simple brackets, 15% and 28%. This was the first time I saw my clients get focused on making profits and just pay the taxes. Unfortunately, the 2 brackets eventually turned back into 6 brackets that topped out at 39.6%. In addition to Federal taxes, states have continued to raise rates as well, and the average income tax rate runs around 6%.
What is the Optimum Rate?
I can honestly tell you that somewhere between 25% and 30% (federal and state tax combined) is the point where entrepreneurs will push forward to make more money rather than just put it on pause and take care of their own. It also helps to have fewer brackets and get to the top bracket relatively quickly. Simplicity has a tremendous power to move people to action and release them from the paralysis that lack of understanding brings.
Policy makers need to understand that entrepreneurs can always trim growth and just take care of themselves and their core employees when uncertainty abounds. When they are presented with a flat economy like the one we face now, they need long-term certainty to encourage them to take some risks. When they think their hard work will be eaten up in taxes, it takes all the incentive away.
Disconnect between Cash Flow and Taxes:
In my interaction with entrepreneurs from around the world through the Entrepreneurs Organization, it struck me that U.S. entrepreneurs are significantly under-capitalized compared to their counterparts in Europe and Asia. Easy credit played a big part in this, but tax policy also plays a huge role. The typical U.S. entrepreneur rubs two dollars bills together and tries to make a profit. They start without capital, with just and idea and a dream, and find a way to make it work.
The disconnect that policy makers do not understand is that during the capital building phase of the business (typically the first 5 years in business) all of the after-tax profits are plowed back into the business. Politicians make comments about taxing the rich people, but the ones I deal with that have a business that shows $300,000 in profit are having to pay an average of $120,000 in taxes (40% federal and state) which only leaves $180,000 to put back into the business to repay debt (remember, you encouraged them to start a business and borrow to start it).
Until you have sat in the conference room going over the final year end numbers with a business owner, you have no concept of the disappointment they feel to learn that what appeared to be a success of $300,000 in profit is really only $180,000 (which they used to repay debt so their cash balance did not change). And if they are diligent and have no bumps in the market, they will be out of debt in 5 years. Those are big ifs. We found that we have to monitor this quarterly with clients because they spend their profits and leave no cash for taxes. When they have no cash for taxes, this starts the death spiral of their business because the IRS is now a creditor of last resort.
The Case for Simplification:
Taxes may never be simple, but folks, we can do better than this. Also, I would be a happy practitioner if I never had to help someone file another tax return. We do not need tax preparation to be a jobs program, all of those folks can easily be used to do other useful and more productive things.
Here are my ideas from the real world:
Go back to 2 simple brackets, 15% and 25% - You need to keep the top bracket at 25% since we need room for inevitable increases in Social Security and Medicare tax rates or limits. All income would be treated the same (i.e. no capital gains).
Simplify taxation of C corporations by allowing a tax deduction for dividends paid. This will encourage public companies to pay out excess capital back into the marketplace, plus you can withhold taxes on the payment and increase tax cash flows to the Treasury. This would also help small privately held C corporations eliminate double taxation and put them on a level playing field with S corporations and LLCs.
Withhold taxes on flow of funds since the tax brackets are lower, it is more reasonable to withhold taxes on payments made to owners. Any money taken out by an owner of an S corporation, C Corporation or LLC would have taxes withheld on the payment (no shareholder loans!). This would encourage owners to not fall into bad habits of taking money out of the business without considering tax implications until it is too late.
Eliminate itemized deductions it is time for us to realize we only pollute the thinking of the taxpayer when we make something deductible. You can adjust personal exemptions and a standard deduction to some reasonable level to protect the lower income levels, but after that, make it simple and non-tax motivated.
Greg Crabtree has worked in the financial industry for more than thirty years and founded Crabtree, Rowe & Berger, PC, a CPA firm dedicated to helping entrepreneurs build the economic engine of their business. In addition to serving as the firms CEO, Crabtree leads the business consulting teamhelping clients align their financial goals with their profit model and their core business values. He is the author of Simple Numbers, Straight Talk, Big Profits! For more information, please visit: http://www.seeingbeyondnumbers.com/.
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