Saturday, December 12, 2009

Happy Holidays to our Clients and clip_image002

Friends from the Counselors of

SCORE Chapter 114

Satisfied Customers are Good for Your Business

This article was written by Carl Woodard, Chairman, SCORE Orange County


Keeping your current customers happy is as important today as ever….perhaps more so. Analyze the cost to gain 10 new customers and you will realize that keeping ten current customers is far cheaper. And, you already know their buying habits, preferences, payment history and how to attract their business. How do you keep them, given today’s business environment? First, keep supplying them with top quality products and personal service. And follow up with them to see how they think you are performing….but be careful how and when you ask for that opinion.

Recently, I entered my local bank and found the usual long line of customers waiting to be served. I became line member number 17. The line moved slowly and I noticed that there were eight teller windows at the long counter, but only three were occupied. After several minutes, a well dressed employee moved down the line and, with clipboard in hand and a smile on his face, asked me “How can we help you today?” I suggested that he count the number of people who were backed up, drop his clipboard, go behind one of the open windows and start serving customers. His response was, “I wish I could” ….and he moved to the next in line….and asked the same insincere question. The result was a few dozen customers being vividly reminded that they were not being helped very well.

Customers know good quality in products and services which they receive. It is expected, appreciated and leads to loyalty. Loyalty can give you the edge even though your price may be higher and your store smaller than competitors. And, when you ask your customer how you can help them, be ready to demonstrate that you mean it by taking some action. Now, that will impress them.

At SCORE Orange County, we like satisfied customers. We first try to determine exactly what help you need for running your business. Do you need a business plan, or tips on how to improve sales? Do you need to understand your cash flow or learn how to use social networking to introduce your business to an expanded customer base? SCORE offers workshops throughout the county, most at no charge. Then we follow with personal, confidential, one on one counseling either in person or via the internet, always at no charge. We are well stocked with experts on finance, marketing, sales, human resources and other specialties. And you can receive these services free. Simply call us at 714-550-7369 and arrange an appointment or visit us at and sign up for a workshop or reserve an exhibit table at our next Women in Business breakfast meeting.

You will find that, when SCORE asks you, “How may we help you?” we really mean it. Try us!

What's Involved in Changing a Business's Legal Entity?

This article was written by Dick Ginnaty, CPA

clip_image001So you decided to change the legal form of your business.  That is, you've been operating as a sole proprietor (or partnership, or an LLC) and you've decided to change to a corporation (or LLC, or partnership). What are some of the considerations involved in converting legal entity types?

First, you need to recognize that in a lot of ways it is like starting a new business. New tax identification numbers must be obtained such as new federal identification number ( new state employer number (see and new sales tax reporting number (see

In addition, accounts receivable and accounts payable from the old entity (in our example a sole proprietorship) would not carryover to the new entity as they are an asset and liability of the prior entity, and do not represent income or obligations of the new entity.

This issue will cause some confusion, and some overlap of bookkeeping.  You will likely find that you have to keep track of the new entities receivables and at the same time wind down the accounts receivables of the old entity. In many cases, the money collected from the old entity will have to be used to fund the new entity until collections of the new entity catch up.  This will often create a need to "loan" the new entity money on a short term basis to fund this startup period.  So in our example, the sole proprietor may need to lend money to the new corporation (with appropriate documents including an interest charge) to be repaid when possible.

Other considerations include deciding which assets of the old entity to transfer to the new entity.  It is not always the best idea to transfer all the assets of the old entity to the new one.  Items such as rights to names, patents, or trademarks may be better "licensed" to the new entity but not transferred (title wise) to the new entity.  In addition, certain assets acquired by the prior entity such as buildings, machinery and other valuable assets may be better protected from creditors or the risks of the business by keeping them outside of the new entity.

Planning is the key here, and you should consult your advisors when contemplating an entity change.

Good luck and here's hoping it "all adds up" for you.

Employee vs. Independent Contractor – Ten Tips for Business Owners

This article was written by Bern Lefson, SCORE Orange County Management Counselor

clip_image001All too often we find employers upset with the high cost of workers’ compensation and associated employee costs who decide to employ Independent Contractors. While the perceived incentive of lower cost is attractive, this decision can put an employer out of business. Both the State and the IRS are seeking revenue and this area is ripe grounds for additional revenue.

The most significant potential liability of worker misclassification is back federal, state and local payroll tax withholding (e.g., FICA and income tax). The IRS has made reviewing employee misclassification a priority when conducting audits. Other potential liabilities include overtime, benefits, and unemployment compensation.

The IRS does aid small and large businesses by posting the rules and tips on its website. Below is one of those tips that may assist you in avoiding fines, penalties and bad publicity.

Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.

2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.

3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.

4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.

6. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.

7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.

8. Workers can avoid higher tax bills and lost benefits if they know their proper status.

9. Both employers and workers can ask the IRS to make a determination on whether a specific individual is an independent contractor or an employee by filing a Form SS-8 – Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding – with the IRS.

10. You can learn more about the critical determination of a worker’s status as an Independent Contractor or Employee at by selecting the Small Business link.  Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication 1779, Independent Contractor or Employee, and Publication 1976, Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the IRS Web site or by calling the IRS at 800-829-3676 (800-TAX-FORM).

Women’s Breakfast, January 15 at the Center Club

How to Stay Positive and Focused in Uncertain Times

clip_image002We had a very successful Women in Business breakfast, with 95 persons sign up. Please join us for the next Women’s breakfast on Jan 15. We promise you a exciting program with Santa Maybin as our featured speaker.

Sarita Maybin is a high energy speaker whose clients include Hewlett Packard, NASA, Nokia, Kaiser Permanente, WD-40, Los Angeles County and the Las Vegas Convention Center among others.

Sarita has spoken at conferences and companies in 48 states, Canada, England, Asia, Mexico and Iceland.

She is a former university dean of students with a Masters degree in Counseling, a Toastmasters Humorous Speech Contest winner and a past president of the National Speakers Association, San Diego chapter.

,Sarita will share:

• 7 strategies for thriving on change

• How to cope with situations that are beyond your control

• 3 P's for staying positive

• How to use "resiliency resources" to bounce back from adversity

• 5 ways to rekindle passion for your career

For reservations, go to

Currency Weak or Strong?

This article was written by Bob Bradley, Score Orange County Management Counselor

clip_image002I admit that I have written similar articles in the past but it is always important to keep things in perspective. Most of the news we receive about the dollar has a political agenda. One party blaming the other for a "weak" dollar or another party taking credit for a "strong" dollar. We write, comment and take sides as if the dollar was the "home team" and we have to root it to victory. When another currency gains in value against the dollar we put it in terms that suggest the "home team" is being challenged and our national pride is at stake. As one economist says, " we should label them 'competitive' and 'non-competitive."

Markets around the world are based on relative strengths of economies. Currencies are no different. When markets are in a panic, which they were a year ago, investors and speculators seek safe havens and that is usually buying US Treasuries. Buyers need dollars which pushes the "market price" of dollars higher because there is great demand for them. The so called "strong" currency that results serves to inhibit exports (our products are more expensive overseas) which is a factor in determining this country's GDP, which measures the growth of the US economy.

Panics always end and investors always seek higher returns when they feel a degree of normalcy has returned. This has happened as investors have marched back into the stock market seeking better returns which has reduced the demand for dollars and thus the "price" to buy dollars. This decrease is what we affectionately refer to as "weak". However, this "weak" currency is actually "competitive" currency as it makes our products more attractive to other countries to buy because they are cheaper. This increases our exports which favorably contributes to GDP growth.

A quick look at the Bureau of Economic Analysis shows that the GDP grew by approximately $150 billion from the 2nd Qtr. 2009 to the 3rd Qtr. 2009. During prior periods, the excess of imports over exports was around $700 billion which is a subtraction from the GDP number. In the 3rd quarter of 2009 this number was reduced to approximately $350 billion, which means we had to subtract less than half the amount from GDP that we did in the past periods. If our excess of imports over exports had continued at the same rate as prior periods there would not have been any GDP growth. In fact there would have negative GDP growth which is a positive way of saying our economy would have shrunk (again).

So before you root too much for the "home team" please consider that you may get the win, but it may not be the victory that you thought it would be. 

Monday, November 9, 2009

Happy Thanksgiving to Our Clients and Friends from the Members of SCORE Chapter 114 _______________________________________________________________ Another Great Year for SCORE Chapter 114

This article was written by Jack James, SCORE Orange County Management Counselor and Newsletter Editor

clip_image002The figures are in for FY 2009 and we have exceeded our goals with your continued participation.

The total client services were 17,347 contacts for the year, up 30% from 2008.

There was significant improvement in our workshop attendance. There were 9,158 attendees or a 49% increase. Our workshop program keeps getting better with an expanding curriculum of small business courses at National University and various libraries. Take a look at our website, to see the workshops available. Good percentages are free and you have to sign up early, as many have wait lists.

Face to face counseling was up 8% and Cyber counseling was up 19%.

Our 92 dedicated counselors are the reason we are successful with your participation.

We plan to exceed these results in the coming year. We have innovations planned for 2010 which will make counseling and workshops a more rewarding experience.

We hope you will continue to join us. Call 714-550-7369 and make an appointment.

Time for Your Annual Business Checkup

This article was written by Dick Ginnaty, CPA

clip_image001It’s November and it’s time for your business’s annual checkup. Now is the time for you to call your accountant and have a year end tax and business review of your business. It is now (before year end) that your accountant can make the biggest impact on the amount of taxes you will be paying. If you wait until after year end, their bag of tricks (strategies etc.) are substantially reduced.

I encourage my clients to review with me in November for several reasons. I want to check their QuickBooks files for errors, I want to estimate their tax position for the current year (and hopefully reduce the tax burden), and I want to talk about the next year in the financial planning sense.

Checking the QuickBooks files for errors lessens the time it will take me to prepare the tax returns in the spring when my time is at a premium, and should lessen the bill accordingly. More importantly however, by correcting any errors now, the true financial picture will emerge making for better tax planning.

Checking for QuickBooks errors, and tax strategizing is a current year task but don’t forget about talking to your accountant about next year’s plans. The benefits of this annual conversation are many. One, the accountant can incorporate the tax, and financial implications of your plans into future strategies. Second, and maybe more importantly, it requires you to think about next year, and to articulate them The mere commitment to the meeting will require you to clarify your thoughts about the coming year, and reviewing those plans with your financial advisor may uncover some inconsistencies or holes in your thinking.

Finally, having a once a year conversation with your accountant, will bring him up to speed about your industry issues, and keep him in tune with your thoughts, and plans going forward.

Good luck and here’s hoping it “all adds up” for you.

P.S. If there is any area in accounting or tax that you think needs to be addressed in this column please e-mail me at and if it is of general interest, I will address it in future column

Blogging Can Cause Damage to Your Company’s Image

This article was written by Bern Lefson, SCORE Orange County Management Counselor

clip_image001Today's bloggers can and do release anger and possible trade secrets.With this new method of expressing themselves, employees need to know what the boundaries are when commenting about their employer.  This dictates that the employer writes a policy on blogging that will provide the protection needed or enable the employer to take appropriate action.  Before taking any adverse action, however, employers should carefully consider whether the blogger's actions may be legally protected.  Rash employer responses can result in claims of unjust termination, discrimination, retaliation, and/or violations of state or federal laws, thereby compounding the damage caused by the blogger's posting and, in many cases, causing more damage to the employer than caused by the original posting in the first place.  Here is a sample policy an employer may consider.  It was written by Keisha-Ann G. Gray senior counsel in the Labor & Employment Law in New York .

XYZ acknowledges the growing popularity of Weblogs or "blogs," personal Web sites, and other public Internet communications as a means for sharing experiences, ideas, and opinions with the public.  However, because of the legal and other ramifications that may stem from publicly posting material, we have adopted the following policy regarding public Internet communications both during working and non-working time.  Public Internet communications.   This policy applies to all Internet communications that may be accessed by the public, including but not limited to blogs, personal Web sites, and discussion forums.  Blogging not permitted on company time.  

All blogging and other Internet activity during work hours and/or using company equipment or connections is subject to the company Internet and computer use policies.  Unless specifically authorized by a company official, blogging and other public Internet communications are not permitted during an employee's working time.  During non-working time, the following requirements must be met:

Disclaimer required. Any reference to XYZ, XYZ employees or customers publicly posted on the Internet must contain a disclaimer indicating that the thoughts and opinions expressed belong to the author and do not necessarily reflect those of the company. 

Posting of certain protected information prohibited. Employees may not disclose trade secrets, confidential business information (e.g., business plans, strategies, customer information, etc.) or other proprietary information belonging to XYZ or its customers to individuals outside the company, including through blogs and other Internet postings.  In addition, employees must not disclose certain company financial information in violation of securities laws or regulations.  Employees wishing to post blogs or other public Internet communications should be aware that copyright and trademark law mayrestrict the use and copying of material belonging to XYZ and others.

Employees may not violate the intellectual property or privacy rights of others.  Other prohibited activities. XYZ's equal employment opportunity policy and its policies against sexual or other harassment apply fully to the use of the Internet, including blogging. If conduct is in violation of our policies and/or is seen as compromising the interest of the company, the company may request that you cease the volatile commentary or remove the offensive posting, and may take appropriate disciplinary action.

Other guidelines.  Employees are reminded that they are personally responsible for material they post on a blog or Web site.  In addition, employees wishing to maintain blogs or Web sites should be aware that  they could be held responsible for content posted by third parties, such as comments. Employees are encouraged to monitor and/or restrict such third-party content on any Web sites or blogs they maintain.  

Violations of policy.  Failure to follow this policy may result in disciplinary action, including possible termination.   All blogs and other public Internet communications are subject to the other policies contained in this handbook, including but not limited to the Internet and Computer use policies, equal employment opportunity policy and the policies against sexual or other harassment.

Office and Facility Leasing

This article was written by Dennis Wright, SCORE Orange County Management Counselor

In an earlier article I said that renewing an existing facility lease should not be attempted without help from a qualified real estate professional - an experienced commercial real estate broker - and that statement generates questions like this one: “I leased this space on my own and I’m not planning to relocate, so why do I need help from a broker now?” The answer is without help from a broker you won’t know if you’re getting the best lease renewal terms possible / you won’t know if you’re actually leaving $$$ on the table when you renew your lease.

Consider this; when you leased your present facility you probably looked at numerous properties and then, based on what you had seen and learned, negotiated what you felt was fair and affordable rent for the space you wanted. You may have even gotten some landlord concessions, such as a tenant improvement allowance to facilitate your occupancy. Now here we are several years later, the market has changed dramatically, and you are focused more so than ever growing sales and reducing expenses.

So what do you do; do you negotiate for a 3% or 5% reduction in rent, or perhaps insist on a 10% or 15% reduction? If so on what basis? Without up-to-date market knowledge and information from “non-public” sources you are not properly prepared to take that next step. Simply put you don’t know what’s out there, what you ought to be asking for or how and when to go about asking for it. At this point I’m reminded of a few words of wisdom passed along to me some years ago: ”landlords value un-informed tenants”.

First of all a good broker is going to recommend that you begin the lease renewal process well enough in advance that relocating your business (even if you are not interested in doing so at this stage) prior to the end of your present lease term is possible. Doing so, combined with the fact that you have a broker representing you, sends a powerful message to your landlord. Secondly he will gather data on comparable properties, both available and recently leased, including renewals for comparison purposes. You will see how long those spaces have been or were on the market, and specifics on landlord concessions such as free rent, tenant improvement and refurbishment allowances. In addition an experienced broker will know how aggressive certain landlords are in terms of deal making and which landlords may be more motivated than others based on their present financial condition.

With this information you will be properly prepared to take the next step and have the broker begin negotiations in your behalf. Bear in mind though if your landlord comes to you, and he likely will, saying that he could have made a better deal without a broker being involved / without him having to pay a broker commission you have no way of validating that claim. Fact is, the threat of you relocating, be it real or perceived, and the information your broker accumulates to support your negotiations almost always produces the best lease renewal terms possible.

Monday, October 12, 2009

Handling Phone Calls… From a Customers Observation

This article was written by Barry McKinley, SCORE Orange County Management Counselor

Don’t answer in a hurry, you make it sound like you are doing me a favor by answering your phone ----Don’t forget I am doing you a favor by calling!

Don’t interrupt – you may think you know what I want but let me tell you, your wrong more then ½ the time!

Have knowledgeable people answering the phone—Since I may never come into your business, get the “first team” to talk to me. Many times I don’t buy because of the poor phone treatment.

Have your phone person be able to speak clearly and precisely. When you have somebody answering your phones that sounds bad or uses poor English that may be why they don’t ring!

Please roll play with new employees. Make them feel comfortable and learn about your company before turning them loose on me!

Have everything you need when answering the phone, pricing, pen, paper, etc. I can’t tell you how many times I hear “hold while I get a pen and pad!” When you come back, expect a dial tone!

Don’t put me on hold forever---- If you have to put me on hold and you don’t have music playing come back on every 30 seconds to let me know you are still there.

Don’t say I will call you right back – unless you call me right back! Many times “right back” to you may mean when you get a chance, find the information or remember. If it is going to take sometime, tell me that, “I will call you late today or early tomorrow” –then do it.”

Don’t ask me to call back because so and so is out or you are busy. Politely tell me that my phone call is very important and could you have my name and number to return my call, and then ask when that would be convenient for me.

Please don’t use your industry slang when talking to me. “I have no idea what a “SDW ho” is, and more importantly I don’t care!

Please keep you conversation polite. Make me feel that you are truly happy to serve me and appreciate my call . . . Remember I am your paycheck!

Women in Business Breakfast-November 6th

This article was written by Martha Ryan, SCORE Orange County Management Counselor

Magnetize Your Marketing to Attract Your Ideal Clients

clip_image002Now, more than ever, it’s crucial to stand out in the crowd of competition. Join us as Master Marketing Consultant, Intuitive Business Coach and Founder of Conscious Marketing, Lisa Cherney discusses how to own what makes you unique and translate your passion into your marketing. Lisa brings 15 years of Fortune 500 experience to help her clients enjoy businesses of passion and profit. She will cover:

  • The critical difference between a target market and an Ideal Client that will sky rocket your business
  • A step-by-step method for finding the perfect words to communicate your unique approach
  • Powerful marketing strategies that will attract tons of your Ideal Clients and fit any budget
  • How to maximize the impact of all your marketing investments & get results fast
  • A simple system you can use over and over to market any product or service you ever have!
Register online at

The Magic of a Cash Flow Projection

This article was written by Bill Bowers, SCORE Orange County Management Counselor

clip_image001When seeking either equity or debt financing, the entrepreneur will be advised to write a business plan. This can often be a daunting task because the writer doesn’t have all the answers and isn’t sure where to get them. That’s when a cash flow projection can be almost magical in it’s ability to bring out the answers and simplify the chore of constructing a business plan.

Why is that? Well consider what information is needed to make a 1 to 3 year cash flow projection. All the anticipated cash in from sales, loans and equity investment must be considered and entered into logical monthly positions on the cash flow spread sheet. All cash out including rent, insurance, payroll, interest, etc. has to be entered also.

It’s appropriate here to identify the difference between a cash flow projection and a Profit & Loss projection. The key difference is that cash flow shows actual cash coming into the out of the business. A Profit and Loss statement takes into account depreciation and usually counts sales when products are shipped and not when the payment is received from the customer, along with accounts payable. P & L most often accounts for bill payment when the bill is received and not when the bill is actually paid. So for a bill that is received on April 1, P & L will account for the payment on April 1 but Cash Flow will show it 30 days later, with 30 day payment terms, when the cash is actually dispensed

The Cash flow projection forces the entrepreneur to think through all aspects of the business including how much equity or debt capital to bring in to start and run the business. If, after entering all the cash ins and outs over a 3 year period the bottom line shows minus, it becomes clear that either more start up cash is needed or cash ins and outs adjustments needs to be made. A minus cash flow bottom line is a definite no-no.

SCORE’s Small Business Solutions CD has an excellent template for fashioning a quality cash flow projection. This task should be at the head of the list of things to do in designing a quality business plan.

Orange County SCORE 114 launches CEO FORUM

Shared Knowledge-Shared Experience-Better Results

This article was written by Jack McSunas, SCORE Orange County Management Counselor

clip_image002[4]The leaders of growing small and mid-sized companies confront the constant challenge of “doing more” with constrained resources in the face of increasing competition. The CEO FORUM program was formed by SCORE Orange County to address these strategic issues in a peer group setting. The members of the FORUMS are passionate about improving the performance of their businesses through shared experiences and knowledge.  Each CEO FORUM group is comprised of 10 - 12 CEO/Presidents from non-competing businesses who meet monthly as an ongoing team.

The CEO Forum program includes a monthly, half-day problem-solving and skills development meeting that is facilitated by SCORE Counselors with CEO experience. This meeting is an opportunity for the group to share problem solving, experiences and support.  Additionally, once a quarter the monthly session will include a three hour workshop which is led by an expert outside resource speaker based on the group’s collective interests. These meetings are usually held at a central hotel conference room but, on occasion are hosted at a member’s business location which provides valuable insight into their operations.

Between the monthly workshops each member can also choose to meet individually with an experienced SCORE Advisory Board member for no-cost, personal performance coaching sessions at their place of business. These sessions can be focused on a wide range of business and personal development opportunities.

The CEO FORUM program will enable you to become a better leader, make better decisions and achieve better results through:

  • Better insight into your own business as well as the economy at large which will help them to compete and outperform their competitors
  • New perspectives to stimulate fresh ideas about your opportunities and challenges
  • Enhanced skills to facilitate ongoing learning and performance improvements
  • A confidential sounding board comprised of experienced executives for both everyday and strategic decisions

To keep the groups homogeneous the following criterion has been established:

· Revenues are expected to reach at least $1,000,000 during the current year

· The company has been operating for a least two years

· There is an established office ( excludes home-based businesses)

· There are at least 3 non-family employees

· There will not be any competitors in any given FORUM

· Members must sign a confidentiality agreement

· Members informally agree to participate for one year, once they have completed their group orientation and have attended their initial meeting (after acceptance by existing members, if joining an established group)

Each SCORE 114 CEO FORUM Member is requested to be active in meetings and cooperative and respectful of other FORUM members. Members come to each meeting with current business issues that they wish to share with the other members that may have similar problems or perhaps have some experiences that might be of assistance. Additionally, each member seeks to identify areas of their business experience that may need some skill development and share these requirements with the facilitator.

As of early September there are 29 companies in three FORUMs. FORUM FOUR is being formed.

A new FORUM member sent the following email following the last meeting: “Before time got away, I wanted to thank you, a big thank you, for the invitation to the Forum this past Wednesday .The session, for me, was energizing and inspiring. Actually, I was first humbled and then, proud to be in the company of you and the other facilitator. Your combined experiences, successes and talents set the tone for the meeting. And when each of you spoke, the comments were measured and intelligent. The atmosphere was certainly cordial and open, but it was also apparent immediately that people were going to reach down and put forth their best observations and input.
The diversity, intelligence and entrepreneurial spirit shared by each member around the table was gratifying. I don't use this word loosely - it was truly synergism at its best. For me, the experience was like Jack Nicholson's  character in the movie As Good as it Gets, when he says to Helen Hunt -"You make me want to be a better man".
The experience made me "want to be a better, more astute, more complete business owner and entrepreneur".
Thanks for being there and doing what you do.”

To request an application for the SCORE CEO Forum please contact the Program Chairperson at or telephone 714-550-7369 between 9 – 2:30 weekdays.

Looking for New Business? Don’t Forget your Chamber of Commerce!

This article was written by Jerry Margolin, SCORE Orange County Management Counselor

clip_image002In today’s business climate things are tough. Companies are laying off employees, reducing operating hours, cutting prices, and a whole lot of other things, hoping to hang on until this recession passes, and unfortunately, that may also include dropping their Chamber of Commerce membership “till things are back to normal.” You might want to think twice about those Chamber dues.

I’m a Chamber fan, and even when I worked for companies doing business throughout the country, I never considered dropping out of the Chamber to save money. It makes no sense. The Chamber is our watch dog for the business community. It monitors legislation, advises their members about “job killer bills” cuts through red tape for those who are having trouble with local, and state government, works with the city to encourage new business to move into their city. The list is endless.

In order to do that though, they must be supported by the various businesses that are based within the community itself. If your business makes its profit from the community itself, such as Retail Stores, Restaurants, Automobile Sales, Attorneys, Doctors, Book Stores, Banks, and on and on, then being a Chamber Member, provides you a golden opportunity to not only have a list of all the other members of the Chamber, it gives you an open door to meet these business owners personally by joining with them at these special events.

In order to be successful though, you can’t just get your plaque at a mixer, put it on your wall, and point to it when customers come in. You have to work at it. A Chamber Mixer is a business event, as is a networking Breakfast, and almost any other “social function” that you hear that they are having. When I hear “I don’t have time for these parties, I’m working.” I sometimes lose it, you are working! You have to get involved, “work the room,” introduce yourself, don’t attack anybody with a sales pitch, but let them know you are there, and interested in what they do, if you are interested in them, they will be interested in you. People do business with people they know! In these difficult times, they better know you!

Thursday, September 10, 2009

Tax Games That Are Well Known by the IRS

This article was written by Dick Ginnaty, CPA

clip_image002Many new owners operating in “cash” businesses such as bars, restaurants, video rental, etc think that they can play tax games such as not reporting all the cash taken in.

These are not new games to the IRS. They are familiar with them and they have developed approaches to determine “sales” irrespective of the reported numbers.

In fact, over time the IRS has developed audit manuals for specific types of businesses which are actually public knowledge and can be researched on line. Their techniques for estimating sales are primarily based on analyzing supplier invoices, such as beer and wine suppliers, and then marking up the purchases with the “industry average” markups to equal estimate sales. They then compare their estimate to the reported number to determine if there is sufficient difference to continue to investigate. Many times the fact that the business is reporting little or no income and yet has been in business for five or more years will indicate a potential problem. They then may proceed to determine how the taxpayer is existing (paying mortgages, utilities, etc.) while making little or no money. Valid answers to such questions are loans, gifts, or inheritances.

In some cases, they will actually put the business under surveillance and count the customers. They have been even known to pretend to be a customer, pay in cash, and watch how the cash is handled. Was it put in the cash register? Was the sale rung up?

The point here is it is a dangerous game to play to not report significant amounts of sales. There of course will be penalties, and Congress is ratcheting up the amount of those penalties on an almost yearly basis. A penalty of 20% for underreporting is the usual starting assessment, and then interest, and late payment penalties are added, but criminal indictments can happen.

The old adage that “hogs get slaughtered” comes in to mind when warning people that their innovative technique for not reporting income is usually old hat for the IRS.

Good luck and here’s hoping it “all adds up” for you.

P.S. If there is any area in accounting or tax that you think needs to be addressed in this column please e-mail me at and if it is of general interest, I will address it in future columns.

Restaurant Survival at Mammoth Lakes

This article was written by Jack James, Score Orange County Management Counselor and Newsletter Editor

clip_image002Tony Rojas, a former Orange County realtor, has owned and operated restaurants at Mammoth for 10 years.

This ski season his upscale Alpenrose restaurant was about to become a recession casualty like other Mammoth restaurants. Dining was at low levels, as low as 15 customers per day. He needed a new business model quickly if he was to survive.

From the market research, 90% of patrons wanted good food at lower prices. Amenities were way down the list, price was the determining factor.

He closed the restaurant, changed the format and remodeled the dining area. Six weeks later he reopened with new menu and lower prices. The plush booths gave way to tables and chairs. The wine inventory was sold off. The major conversion was walk up ordering and paying for your food.. Good food is served quickly and diners save about $4 per plate. No tip required.

The Fireside Grille is a family friendly restaurant where you get BBQ ribs, bratwurst, pastrami, house wine and beer. Try it when you visit Mammoth.

Tony projected 75 meals per day when he reopened. The first week 150 meals per day were being served and it’s increasing as the people hear about the restaurant. The only marketing is word of mouth.

The lesson here is if your niche isn’t working, maybe its time to rethink the business model and make drastic changes.

SEO (Search Engine Optimization) Success Story

This article was written by Bob Bradley, Score Orange County Management Counselor

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clip_image002The Tribune Company was in the news for all the wrong reasons in the past few months. Bankruptcy and financial losses to name a couple. Many journalist jobs were threatened, so they looked to the online editions of their newspapers for a glimmer of hope.

Educating journalists did not prove to be an easy task. Their chief SEO person gave a presentation to the suspicious journalists and used an analogy to get his point across. A great article is useless if no one sees it. You can take your news stand and stick in the middle of Missouri by doing no SEO or you can put it in the middle of Times Square by doing good SEO work. He explained that by putting proper words in their headlines, many of which may not be acceptable to journalists, they could make a huge difference in the number of people who read the article. A handful of people, perhaps a quarter of them, bought the snake oil story. Those 25% worked with the SEO and found that their articles hit the first page of Google more often than not. Needless to say the technique was adopted by more journalists but not by all. There are still those that are stubborn, although the percentage has reversed it self (25% still refuse to use SEO).

What did the SEO do to help the journalists? Although he was given full authority to edit whatever he wanted, like changing the title tags, headlines, sub headlines or even the story if he wanted, he never changed any of the headlines, just the tags and description within the HTML. He only made recommendations with respect to the headlines, sub headlines and other text. He worked with the converted journalists on doing keyword research and finding out what works and what does not. In the case of the death of Michael Jackson, their research indicated that the best keyword phrase to be used was, "Michael Jackson Dead". Not "King of Pop is Dead" or "Wacko Jacko is Dead". Keying on "Michael Jackson" would have been obvious but there is significant competition for that word from sources such as MTV and TMZ. One creative and quick to act person bought the domain of www.

After months of work and nurturing, the SEO and the editors began to understand each other better. Editors actually worked directly with the SEO in developing headlines not just for their online version but for their offline newspaper too. The paradigm was changed from delivering the news we believe people should have, to giving them the news we KNOW they want.

The success? Increase in monthly visits to Tribune sites by 20 million!

The principles of SEO and keyword research are the same for everyone. You can target keywords for each of your products and services, put them on specific pages or on targeted pages. SEO never ends, it changes as the world changes.

Reducing Costs in Difficult Times

This article was written by Dennis Wright, Score Orange County Management Counselor

Getting through difficult economic times motivates businesses, both large and small, to seek out ways to reduce costs in an effort to maintain or restore profitability. That often leads to painful choices regarding staff. The resulting actions, however, may create other problems – internal problems – that can lead to further deterioration in top-line results. Then that business finds itself right back where it started, perhaps reaching for another dose of the same medicine.

Looking beyond what appears to be the obvious though, can produce surprising results. What I’m suggesting is that you look beyond those things that may, and often do, effect sales volume; look at costs that are considered “fixed”, such as those associated with your facility, office equipment, machinery, etc. and the leases related to them.

For example, in terms of office space, if you have something to bargain with – such as extending the term of the lease, provided of course that makes sense after considering other factors – you may be able to reduce your present monthly rent by means of an early renewal. This requires market knowledge and research to engineer, and should not be attempted without help from a qualified real estate professional. It’s also a good idea to look closely at how you are using leased space. A right-sizing analysis and a workflow study might lead to reconfiguring your space, which in turn may enable you to create a landlord approved space sharing arrangement with another party who would also share the rent, or give you the ability to sublease a portion of it to another business. Downsizing equipment and entering a new lease with the same vendor may also help trim costs.

There are several reasons these alternatives are often last to be considered, but that’s another matter. The key is to think outside the box and see where that leads. SCORE is here to help you do just that. Consider this: over 100 counselors, most of whom are retired executives or former business owners, all of whom have lived through recessions. In other words a team of people who likely have faced the same situations – the same decisions – you now face who will listen and offer advice that comes from real life experiences.

I’m certainly not saying there is a single “silver bullet” solution just waiting to be discovered, as a matter of fact any solution will likely involve further research and a combination of appropriate well planned and executed actions, but don’t you owe it to yourself and your staff to explore every option before taking the next step? Call us today, at 714 550 7369, for an appointment and let’s see what ideas we can come up with together.

The NEW Economy

This article was written by Hillel Pitlik, Score Orange County Management Counselor

clip_image001The turmoil in the US economy forces every business to re-evaluate and reinvent itself. That may sound off the wall, but its time to rethink why things worked in the past and what today has brought.

Is your product or service still relevant? Is the competition beating you on price, quality or service? These questions cause us to rethink our business idea. Is it due for an update or change in direction? Perhaps it’s time to stop the bleeding and pack it in.

Our economy will recover slowly. So our expectations of our customer base must, of necessity, be revisited. Are there new customers out there whom we could reach? If so, how? Or must we change our mode of operation?

The new media offers the clever entrepreneur a golden opportunity to compete with the brick and mortar sellers. But can your business model compete on a local basis that the media won’t reach? An understanding of your business and the dynamics of the past months might lead to you to establish a new set of goals and new methods to achieve them.

It may be a simple tweak to a durable business idea or a serious change in direction. But understanding the formula that worked before as well as devising a formula that will work today is the key to new success.

One thing is certain, customers are not as willing to part with their hard earned cash. In fact, the economy kicked them badly, so they are saving for the next rainy day, if they can. But there are niches in the armor that can be penetrated. What spending pattern is constant in spite of the economy? You may be able to sneak into those areas and find new success.

I guess what I’ve been saying is, “Look at your business in the mirror and see if the image you see is prepared for today and tomorrow.”

Score Chapter 114 Selected to Judge Aerospace Competition

The Supplier Excellence Alliance(SEA) is a partnership for aerospace suppliers to improve supply chain efforts and create innovation.

SEA has selected Chapter 114 for the second year to judge about 120 applications for their awards. Awards will be given at a Gala in Palm Springs in November.

The Score team is: Angelo Farro(Captain), Jim Fulton, Bob Lichtsinn, Jack James, Jerry Margolin, Pete Dorsa, and Steve Day.

Monday, August 17, 2009

Where Others Have Gone Before

This article was written by Carl Woodard, Chairman, SCORE Orange County, California

clip_image002 I just returned from Chicago. Driving through so many large and small cities, seemingly endless fields of crops, beautiful national parks and beside full, rushing rivers. When time allows, driving is now my favorite mode of travel, since I retired. And, I prefer the small rural routes to interstates. But, for everyone who travels this country, we truly appreciate the work of all who came before us to stretch roads across mountains at 12,000 feet, cut highways through miles of solid granite, build bridges across rivers which flow with raw, erosive force and bore tunnels to shorten our way. We can now easily drive from coast to coast in four or five days, if necessary, because of their dedication and experience.

Dedication and experience…. makes the path easier for those who come in the future. Dedicated pioneers pointed the way for all who followed. Today, with so many ways to plan our routes, we have no reason to get lost or delayed….unless we want to.

If you own, or plan to open, a small business of any kind, in any location, you have the ability to call on dedicated, experienced business counselors from SCORE….counselors to America’s small business. Our deep experience in virtually any business discipline can make your road to success faster and easier to climb. The ladies and gentlemen of SCORE can help you develop your business plan, guide your financial planning, build your marketing plan, arrange the layout of a warehouse or teach you smart purchasing methods.

All of our counseling is at no cost to you! In Orange County, our SCORE Chapter has more than one hundred, experienced counselors, representing over 4000 years of business experience just waiting to make your way easier. And our knowledge is real, not simply from a book, but honed from actual marketplace experience. Why not benefit from our experience, rather than cutting a slow, new path through your business wilderness?

To schedule an appointment with a SCORE counselor, simply call 714-550-7369 and tell us what you need. Or, go to and see our workshop schedule for a topic and location near you. Call us or join us. We can make your journey a lot easier.

Social Media is the New Frontier


This article was written by Bob Bradley, SCORE Management Counselor

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clip_image00210 Years...This seems to be the time period that comes up most often when successful internet marketers are asked "how long have you been doing this?". It is also interesting to note that Google celebrated only its 11th anniversary just last month. That's right, only eleven years!!  In the last 5-7 years the real commercialization of website marketing has taken place. Google now indexes over 1 TRILLION unique URLs and it is estimated that there are over 200 million websites and still growing at about 3 million per month. The latest market share reports indicate that Google is getting close to performing 75% of the searches worldwide. Bottom line is that people accept the web world as part of their lives even though this was not always the case. This is similar to the horse people accepting autos back in the early 1900s 

However, with this growth rules have arrived. Search providers spend large sums of money to present a "pure" search result to the user based on the searcher's query. Substantial revenues can be generated by a company by being in the top 5 search results. Thus, the schemers and scammers attempt to wedge their way to the top five or ten by employing nefarious techniques. To battle this the search engine providers come up with more rules and controls. This results in complexities when attempting to create a successful web presence. One must learn and follow the rules and use prescribed techniques to "get found" that comply with the rules and the terms of service. Websites can be taken down for violations.

Now we are seeing explosive growth in the social media. Many scoff at social media sites as a passing fad, or something only for teenagers. No marketer worth their salt can ignore that there are over 250 million users of Facebook and between Facebook and MySpace they get 130 million hits each month. For perspective, when Google was Facebook's age they had 50 million users. Users of Facebook stay on the sites just under 30 minutes (in a world where 2 minutes is good) and the fastest growing segment of registered users in Facebook is the over 35 age group. Twitter has been in existence for just over 2 years, they have 42 employees and have amassed over 35 million users. They have little or no revenue model as of yet and are backed by numerous investors expecting a good payday. 

What does this mean to a marketer? Social media, as a business, is positioned just where websites were 10 years ago. There are no real rules right now and opportunities may be everywhere. Rest assured that real entrepreneurs are taking this trend seriously and they will find ways to monetize their efforts. Money will be made and money will be lost. Meanwhile those that scoff will be the ones trying "me to" marketing efforts a few years from now and find themselves stymied by how hard it is to make any real money in social media. History does repeat. Get a horse!

Sunday, August 16, 2009

Should I upgrade my Windows XP to Windows Vista?

This article was written by Dan(Baer) Feinberg, Fein-Line Associates, Inc.

For those still running the venerable but aging Windows XP, here are questions and answers.

• (Q) I am still running XP, should I upgrade to Windows Vista? (A) No, while Vista is now a good operating system, Windows 7 is even better and as it is so close to release I would now wait.

• (Q) When will Windows 7 be available? (A) It will be available with new computers sometime in September or October but any new computer you buy now should include a free upgrade to Windows 7 when it be­comes available. Separate upgrades will be available in October.

• (Q) Is Windows 7 as good as what I hear? (A) Yes, it is. Windows 7 seems to be perhaps the best OS since Windows 98SE and perhaps the best Windows ever. It is speedy, intuitive and it is not bloated which means it will not slow down even an older slightly underpowered computer. There are many additional rea­sons to upgrade, more than can be covered here.

• (Q) Where do I get the upgrade? (A) If you buy a new computer this Summer you will get a coupon for up­grade when it becomes available. Just follow the instructions. If you are planning on upgrading a present Windows XP or Vista machine you will be able to buy an upgrade to W­7 when it becomes available. Right now however there is a great advance order sales going on. See the links below to get the approximately 50% discount and advance order the upgrade.

• (Q) Can I still continue to run Windows XP? (A) Of course but remember XP is an OLD OS and it therefore does not have many of the valuable features found in Vista and Windows 7. It is also less secure and Mi­crosoft will eventually stop supporting it.



“General Ledger” is an Old Accounting Report That Still Has Uses

This article was written by Dick Ginnaty, CPA

clip_image002In the world of accounting “General Ledger” is not a military hero, or the father of Keith, but a useful accounting report that every business person should be aware of.

A general ledger contains every accounting entry to each account in the chart of accounts. So every debit and credit which is a result of an accounting transaction during the period in question is recorded in the general ledger. For example, by reviewing the general ledger entries for an account that seems to be in error, (let’s say “rent expense” seems too high), you can discover the root of the problem and if you are operating in QuickBooks you can correct the erroneous entry right then.

This report is most useful when reviewing the tax liability accounts, the fixed asset accounts, the loan liability and interest expense accounts. Each of these accounts tends to have errors in them or have dates of payments that are critical to complete the tax returns correctly. Don’t be surprised if your accountant is asking for this report to be printed out for their review.

To see the general ledger in QuickBooks, go to “Reports” tab, and select “Accountant & Taxes”, then select “General Ledger”. You can then view all the activity in all the accounts, or by using the filter capability of QuickBooks you can just view the accounts that are of interest.

P.S. If there is any area in accounting or tax that you think needs to be addressed in this column please e-mail me at and if it is of general interest, I will address it in future column.

Good luck and here’s hoping it “all adds up” for you.

Next Women’s Breakfast, Friday Sept 11th



Eight Principals of 21st Century Networking!

Join us for another exiting breakfast with Lisa Bentson, Author, VP San Diego SCORE Women’s Program, President of Leads Club Inc. Lisa believes that the bottom line of successful networking is building business friendships. Today’s networking is all relational networking. As an attendee, this interactive seminar will provide you information on the eight principals of 21st century networking.

  • The golden rule of networking
  • Define your strategic objectives
  • 7 seconds for success
  • Be someone’s hero
  • Your networking tool kit
  • Once is not enough
  • Expand your universe
  • Networking etiquette

The Center Club , 650 Town Center Dr., Costa Mesa, CA 92626 
Note: The Center Club FREE VALET is located just past the ticket office for the OC Performing Arts

Sign up on line at Score114.0rg under Women in Business

Sunday, June 21, 2009

(Don’t) Wait Until Next Year!

Woodard This article was written by Carl Woodard, Chairman, SCORE Orange County

The promise of better results next year rings throughout Orlando and Detroit today, as celebrations in Los Angeles and Pittsburgh mark championships, after long seasons of basketball and hockey. Fortunately, for all of those teams there will be a next year….a next chance….another quest for the trophies.

Your business success may not be measured by how many trophies adorn your trophy case or by how many people greet your plane when you return from that last successful sales call of your year. More likely, you celebrate by privately appreciating achievement of your goals of increased sales, higher profit or planned business expansion.

Unfortunately, success these days may be measured by your ability to simply remain in business and plan for better years ahead. And that is where we come in….

SCORE, Orange County has over 100 seasoned, successful business people who have faced stiff competition and enjoyed the trophies of business success. Call us at 714-550-7369 and ask for an appointment with one of our counselors. We can guide you in developing your business plan, starting your new business or understanding cash flow. We can help you focus on how to survive an economic downturn. If you prefer, we offer counseling via the internet.

Visit our website and browse through the library of business material. Or check out the extensive list of workshops presented throughout Orange County for your convenience. Notice our Women In Business breakfasts where networking opportunities abound and common problems can be discussed.

Managing a successful business does not allow a “Wait until next year” attitude. Do it now. And remember, our counseling is free of charge. We are waiting for your call.

Sales tax surprises of the ugly kind.

Ginnaty This article was written by Dick Ginnaty, CPA

If you sell tangible goods in California to non governmental entities who are the end users (i.e. they do not resell the goods) then you are subject to collecting and remitting sales tax to the state, and you will be audited by the State Board of Equalization about every 3 years or so. Unfortunately there can be surprises (as in the negative costly kind) during this process.

Two issues that are often the culprit of the surprise, is in installation of the product and delivery of the product. Both processes can give rise to sales tax liabilities.

Part of the installation fees (if charged) can become taxable if there is modification to the product during the installation. For example, if you are a custom drape or window covering business, and in the installation process you trim, or adjust the window cover in any fashion, a portion of the installation charges will be taxable. So if you are a business where installation is part of the process, and you charge for the service, be aware you may be incurring a sales tax liability associated with a portion of your installation charge.

Likewise, if you deliver your product and charge for delivery, you may be subject to sales tax on the delivery. In general, only businesses that deliver themselves via their own vehicles have to be concerned. Delivery via public transportation services (Fedex etc) are not taxable if the fee charged equals the cost. If the fee exceeds the actual cost then the excess is taxable.

The best advice in this area is to call the State Board of Equalization and ask if there are issues with your type of business. In many cases there are special pamphlets for businesses that have issues which are published, and available to identify the problem areas.

Good luck and here’s hoping it “all adds up” for you.

P.S. If there is any area in accounting or tax that you think needs to be addressed in this column please e-mail me at and if it is of general interest, I will address it in future column.

Next Women in Business Breakfast, Friday July 10th

wib-logo Join us for another exiting breakfast with Ursula Mentjes, founder of Sales Coach Now ( and author of Selling with Intention. Ursula believes when you shift your belief system about what selling REALLY means, you will begin to see sales as an effortless process.

The location is the Center Club in Costa Mesa. Details and online reservation information at under Women in Business link.

When are the Banks going to start Lending?

Seelinger Someone asked me recently, “when are the banks going to start lending and what is the SBA doing to get them to lend?” This is a two part question and, as I mentioned in our April newsletter, banks have the cash to lend but have tightened their underwriting standards. But this tightening of underwriting standards should not be misinterpreted – it does not mean there is no appetite to lend. Indeed, one lender I spoke with recently told me that his goals for 2009 include increasing his loan portfolio by 9%. This strikes me as an impressive goal, particularly in today’s economy when so many businesses are in the doldrums and have been weakened. To put this in perspective, wouldn’t you be happy to increase your sales 9% this year? And what is the SBA doing to encourage lending? As previously reported, the SBA has temporarily increased the amount of their loan guarantees and waived their guaranty fees. Now the real question is “are these measures working? Is the credit pipeline beginning to thaw”? On May 5th, The Wall Street Journal reported that the volume of new SBA-backed loans has risen more than 20% since mid-March with the weekly average number of 7(a) working capital loans approved having risen 28% from January to mid-March; the 504 loan program for real estate and other fixed assets has seen its average weekly volume increase by a third in the same period.

Also, effective June 15th, the SBA has a new loan program called ARC loans. These loans are designed for businesses that have been profitable but are now experiencing difficulties due to the economic downturn but which can demonstrate reasonable projections that their distress will reverse as the economy recovers. The ARC program, for loans up to $35,000, is interest free to the borrower, are 100% guaranteed to the lender and can be used for payment of principal and interest on existing bank debt. Repayment begins six months after the last disbursement and can be made over an extended period. Detailed information can be found on the SBA’s website (

So, the answer to that two part question is that the banks have both the cash and desire to lend, albeit with more conservative underwriting standards. The SBA’s current posture is contributing to getting credit flowing to small business again and the numbers coming in indicate that this is working. Now may be the time to review your business to be sure it is focused and on track, brush up your business plan (and seek Score counseling for assistance) and get ready to approach your bank for financing to expand your business in the anticipated recovery.

Work Sharing Unemployment Insurance Program

 Lefson This article was written by Bern Lefson, SCORE Orange County Management Counselor

In these difficult economic times, the California Employment Development Department (EDD) has a program that may help alleviate some of the financial burden and aid in retaining key employees. The Work Sharing Unemployment Insurance program allows for the payment of benefits to individuals whose wages and hours have been reduced. The basic purpose is to avoid layoffs and, for temporary situations lasting for a reasonable period of time, to share the available work and make up lost wages through eligibility for unemployment insurance payments.

This Program is practical and helpful by providing employers to quickly gear up when business conditions improve. Employers are spared the expense of recruiting, hiring, and training new employees. Employees are spared the hardship of total unemployment. For employers who must reduce their workforce, this Program may be used as a transition to the workforce reduction. Affected employees can continue to be employed while seeking other employment prior to the effective date of the layoff.

Work Sharing is flexible. Employees may be rotated so different employees have reduced work hours and wages each week. The Program allows the employer to determine which week(s) will have hours and wage reduction. The employer also may designate which employees are to participate.

A Work Sharing plan is approved for a six month period. If, at the end of six months, there is a need to continue the plan, a new application must be filed. Such a new plan may be approved to be effective immediately following the original plan expiration.

Eligibility and approval of the employer’s plan requires the following:

  • The Work Sharing plan must be submitted to EDD for approval using Form DE 8686.
  • Benefits cannot be paid prior to the approval of the plan by EDD.
  • The employer’s Work Sharing plan must include at least two employees and 10% of the workforce or work unit.
  • There must be at least 10% reduction in hours worked and wages earned for each participating employee.

It is recommended that anyone interested in the Program contact EDD for more information and for the required Form(s). call the Employment Development Department at:Employers - (916) 464-3343

Walking the Tightrope of Difficult Times

score_tjpg_noah This article was written by Robin Noah, SCORE Orange County Management Counselor

No question these are very difficult time for most businesses. . A major challenge is how continue operating within existing financial parameters. There are no rubber bands to stretch the budget; restructuring, reducing and cut backs are some of the issues business persons are facing. What has to be cut and where do you cut? One of the primary areas always looked at for making changes is the overhead costs.  For most business the first stop is payroll. Cut or reduce payroll and you have personnel issues.

When dealing with personnel issues one needs to be concerned with labor laws. What may seem like a good decision may really be a costly action. For example if cutting back wages is an option you choose to exercise be sure that the basic minimum wages level is maintained for both exempt and non-exempt employees:

Non-Exempts = Mon $8.00 per hour

Exempts = $2,773.33 per month, or $33,280 per year. 

When reducing exempt employees' salary, remember that falling below statutory minimum salaries is a violation of state and federal codes.  This includes any cutbacks or reductions that are reduced by percentages that bring exempt employees below the minimum salary which will negate their exempt classification.

Reducing hours and pay for all employees: This works for nonexempt employees who are paid by the hour and do not have to be paid if they are not working. If you reduce exempt employees' hours to reduce their salary, then you are changing their classification bordering on a non-exempt classification.  Exempt employees are paid to get a job done; not based on the number of hours worked – no time sheets are used.

Another option that is considered is using independent contractors which would reduce the cost of benefits and overtime pay since independent contractors are self employed and receive no “benefits “from the business they contract with.  Independent Contractors (IC) are responsible for their unemployment insurance, workers' compensation and state and federal income tax.

The time bomb here is that simply calling someone an IC does not make it a legal classification. The most important factor is that the business has no control over the IC; the IC has the right to control the manner and means of accomplishing the desired result.   The  web site provides information for making the correct IC classification determination.

Be aware that if you hire someone as an IC but they are actually performing the job duties of an employee you have a misclassification problem. This can cost you significant penalties, such as back pay for unpaid overtime, missed meal and rest breaks, repaying your workers' compensation carrier, back taxes, etc. Carefully review the duties you are hiring someone to perform - if you think the individual is an employee, he/she probably is.

Another area rife with problems can be the hiring of temporary workers and treating them as IC’s’ .Whether an individual is an IC depends on the duties he / she was hired to perform and how he/she performs them. The less control a hiring entity has over the result or work product, the more likely the individual is an independent contractor.

In a recent newsletter the California Chamber of Commerce cautioned businesses to be careful in mandatory shut downs :   “ Employers may find that certain times of the year are slower than others or that because of the current economic crisis, a temporary unpaid shutdown would be cost effective. Employers may want to require employees to use accrued vacation or PTO during the shutdown. The Labor Commissioner has opined in the past that reasonable notice of this requirement must be provided (reasonable notice being about 90 days). Even if you have a written policy in your handbook, CalChamber recommends providing additional notice when you intend to invoke this policy because if the notice you provide is deemed unreasonable, you can be liable for unlawfully withholding wages from employees.”

Additionally, the Chamber comments: - Employers whose employees have a lot of accrued vacation or PTO on the books may wish to wipe out the accrued time to decrease their potential liability for monetary payouts. Remember, California law considers vacation time and PTO as wages; once the money is earned, it belongs to the employee and cannot be taken away. Employers may consider adjusting the cap on vacation, requiring employees to take paid time off, or paying out employees for accrued vacation or PTO, but never institute a use it or lose it policy

Tough times mean tough decisions.  Protect yourselves by carefully considering all possibilities, making responsible decisions that will reduce the potential for law suits concerning employee matters.

Saturday, May 16, 2009

Can You Use 4000 Years of Experience?

score_tjpg_woodard This article was written by Carl Woodard, Chairman, SCORE Orange County

We can give you that opportunity!

Hi, I’m Carl Woodard, the new chairman of the Orange County Chapter of SCORE. Our Chapter has over 100 experienced members who have owned, managed or launched successful businesses and have faced opportunities and challenges similar to yours. We easily represent more than 4000 years of real-world business experience and we stand ready to help you. Simply dial 714-550-7369 and tell us what you need, or you can connect with us at

If you have read this newsletter frequently, you know most of the programs which we offer, but I want to list just a few which are popular and growing.

Workshops- Within the year, we conducted 169 workshops on popular business subjects at 16 locations throughout Orange County. Attendance topped 6000. In the current six month schedule alone we will offer 32 workshops on Marketing, 21 on Finance and 11 which teach you how to construct a Business Plan. There are many other topics, as well. Check our website to find a location and topic that you can use.

Face to Face Counseling- Last year we spoke personally with more than 4500 business people about their specific business needs. We can do that for you, also. Appointments can be arranged with a counselor who has experience which you can use. And we are convenient. We can meet you at our primary location in Santa Ana or elsewhere, if it’s more convenient.

Cyber-Counseling-  More than 2600 received counseling from specially trained counselors last year after contacting us via email. If that is more convenient for you, just let us know.

Women in Business breakfasts- Six times each year we have breakfast for 80-100 women in business at the Center Club in Costa Mesa. Programs of interest are presented along with the delicious meal and network opportunities are abundant. While you do not need to be a woman to attend, everyone needs to register in advance at our website. Our next one is Friday, July 10.

Guest Speakers- If your organization needs a speaker to present a business topic of interest, just let us know by calling our number and asking for our Speakers’ Bureau. We respond to many requests throughout the year, and I’m sure we can fill yours.
We hope to see you or hear from you in the near future. As you know, our counseling sessions are totally free of charge. And the workshops are most often free, or carry a nominal fee if not sponsored.

You have 4000 years of experience at your fingertip, waiting to respond as soon as we hear from you. Visit our website or give us a call.

Orange County SCORE Scores Big by Partnering with HP and American Express OPEN

score_tjpg_morland This article was written by Bill Morland, SCORE Orange County Management Counselor

SCORE Orange County Chapter 114 is honored to have been selected by both HP and American Express OPEN to host major events in Orange County to help the local small business community in tough economic times.

The HP event took place on Thursday, April 30th at the Huntington Beach Public Library. It was attended by 103 businesses with 134 attendees were able to attend a great workshop put on by HP followed by a networking lunch. The workshop topics were Business Security, Technology, and Marketing. The guest speaker at the lunch was the former head of the U.S. Small Business Administration, Hector Barreto. HP underwrote the entire cost of the event so there was no charge to the attendees.

hpamex1 The American Express OPEN counseling event took place on May 12th at the Anaheim Hilton. This all day event and was attended by 220 local small businesses with over 300 total attendees. Each business had a 30 minute business coaching session with one of 50 SCORE counselors. In addition, each attendee was able to attend four different workshops on finance, marketing, government contracting, and success stories. Marty Keller, the small business advocate in the Governor’s office, gave a welcoming talk in the morning. Dr. Esmael Adibi, the head of the Economics Department at Chapman University, delivered the luncheon keynote address on the economy. The entire cost of this no charge event was underwritten by American Express OPEN.

hpamex2 At both events Orange County SCORE provided a computer station where small business owners who wanted additional no-charge business counseling could schedule a follow-up appointment with a SCORE counselor. You can easily book your own no-charge face to face business counseling appointment by calling 714-550-7369 any working weekday between 9 AM and 2:30 PM.

hpamex3 Our thanks go out to HP and American Express OPEN for allowing Orange County SCORE to participate and give our local small businesses increased awareness of the services that SCORE offers on a daily basis.

A Bank and Stock Analysis Term that Small Business Persons Should Know About

score_tjpg_Ginnaty This article was written by Dick Ginnaty, CPA

Asset Quality is a term used by bank analysts and others in evaluating the Balance Sheet of a potential lendee. It is an analysis of the quality of the important classes of assets that the bank will rely on as collateral for making a loan, and judging the credit quality of the business. It is a concept that every business person should be aware of also.

Usually the quality that banks are interested in are those associated with accounts receivables, inventory and fixed assets, but they can look at other assets listed on the Balance Sheet if they are meaningful.

Quality in this context means are they “good” assets, meaning are the receivables collectible and being collected on a timely basis,  is the inventory good in the sense is it selling and how long is it taking to sell it, and in the context of fixed assets, what are these assets worth in liquidation (remember we are talking from the banker’s perspective).

Banks will discount (lower the value for purposes of lending) those assets that are of low quality. So, if your receivable aging (the report which shows who owes you, and how long the invoice has been outstanding) shows substantial balances over due, the banks will not give you full credit for them. Same with inventory, if an inventory turn report (a report which shows the inventory in hand in dollars and in units, and calculates
how soon in months the inventory will be sold based on unit sale history) shows that significant inventory items are selling slowly relative to industry norms, then the inventory is going to be discounted for purposes of lending.

Knowledge of this type of analysis is needed when going for a bank loan, and is important as you look at your own business, or analyzing businesses you are

(If there is any area in accounting or tax that you think needs to be addressed in this newsletter please e-mail Dick at and if it is of general interest, he will address it in future articles)

Work Sharing Unemployment Insurance Program

score_tjpg_lefson This article was written by Bern Lefson, SCORE Orange County Management Counselor

In these difficult economic times, the California Employment Development Department (EDD) has a program that may help alleviate some of the financial burden and aid in retaining key employees.  The Work Sharing Unemployment Insurance program allows for the payment of benefits to individuals whose wages and hours have been reduced.  The basic purpose is to avoid layoffs and, for temporary situations lasting for a reasonable period of time, to share the available work and make up lost wages through eligibility for unemployment insurance payments.

This Program is practical and helpful by providing employers to quickly gear up when business conditions improve. Employers are spared the expense of recruiting, hiring, and training new employees. Employees are spared the hardship of total unemployment.  For employers who must reduce their workforce, this Program may be used as a transition to the workforce reduction.  Affected employees can continue to be employed while seeking other employment prior to the effective date of the layoff.

Work Sharing is flexible.  Employees may be rotated so different employees have reduced work hours and wages each week.  The Program allows the employer to determine which week(s) will have hours and wage reduction.  The employer also may designate which employees are to participate.

A Work Sharing plan is approved for a six month period.  If, at the end of six months, there is a need to continue the plan, a new application must be filed.  Such a new plan may be approved to be effective immediately following the original plan expiration.

Eligibility and approval of the employer’s plan requires the following:

  • The Work Sharing plan must be submitted to EDD for approval using Form DE 8686.
  • Benefits cannot be paid prior to the approval of the plan by EDD.
  • The employer’s Work Sharing plan must include at least two employees and 10% of the workforce or work unit.
  • There must be at least 10% reduction in hours worked and wages earned for each participating employee.

It is recommended that anyone interested in the Program contact EDD for more information and for the required Form(s).  Call the Employment Development Department at: (916) 464-3343