Thursday, February 17, 2011

Will 2011 Be Just Another New Year, or Will it be a Prosperous New Year?

clip_image002This article was written by Robin Noah, SCORE Orange County Management Counselor

Happy New Year… When I wished a business friend “Happy New Year” he said “I prefer a prosperous New Year in all ways. That resonates a lot better than a plain Happy New Year.” He then went on to say “My new year’s resolutions are for my business to thrive, to flourish, to be successful and to be on the plus side financially. So I better take a look at the ways and means for achieving my goals in the New Year.”

Are you one of the business leaders that say This year – we’re going to be better, we’re going to change and do things differently”. How does this come about? Will your resolution this year be that you are going to overcome the odds and redirect them in your favor? What will be your approach? Will you map out a plan that will take you to your goals? If yes, then consider my recommendation to” Go for the Holy Grail of business – “profitable growth”. Consider:

§ Growth generates energy and enthusiasm: It attracts the best talent

§ Growth & Innovation: Sustains your business now and in the future

§ If your business is not growing, it’s in decline: Either embrace it or begin thinking about an exit strategy and let someone else take the lead.

The time to reflect is at the beginning of the New Year.

Once you are committed to growth you need to do several things.

1. Start with review of your business’ previous year’s performance

2. Then define your top growth priorities

Critical questions are:

§ Were sales and profitability targets achieved? Is there a message in the results?

§ Have your best customers’ needs and desires changed? Customer’s perception is vital when it comes to building loyalty, which in turn grows business.

§ Where sales and margins are flat, how are you going to fix the problems? Evaluate and improve marketing and sales operations.  Rebalance your marketing and sales budgets; refocus on what needs to occur to achieve your growth priorities.

§ Define the most important trends in your industry and/or the markets your company serves? Take a hard look at the changing needs of your customers and the trends in the markets your company serves.

§ How do these trends create immediate opportunities to grow? Use this intelligence to find opportunities, particularly ones that add new value at a lower cost and disrupt your competitors (disruptive innovation).

§ What do you hope to achieve in the current year and beyond? Here is the tough spot. IDENTIFY at least 3 major actions that must be taken to achieve the resolutions you make.

This is only the beginning. Get a buy in from your staff and employees. Keep everyone focused on these actions and maintain an ongoing measuring stick that is shared with all.

1099 Reporting Rules Repeal Amendments

Editor’s Note: The article below comes from the Accounting Today newsletter, republished by permission.

Two similar, but competing amendments were introduced this week by Democratic and Republican lawmakers to be attached to a larger re-authorization bill for the Federal Aviation Administration (see 1099 Repeal Amendments Proposed for Aviation Administration). One came from Sen. Debbie Stabenow, D-Mich., and the other from Sen. Mike Johanns, R-Neb., who had both introduced earlier attempts to repeal the 1099 reporting requirements.

The two amendments mainly differed in a few words regarding the handling of administrative expenses at the Social Security Administration. To avoid adding to the budget deficit, Stabenow’s amendment authorizes the director of the Office of Management and Budget to cut unnecessary unobligated spending, but exempts the Social Security Administration's administrative expenses from being cut. There are also differences in the cost estimates of the two amendments and in how they would be offset.

The repeal of the 1099 reporting requirements enjoyed broad bipartisan support. The requirements, which were included in the Patient Protection and Affordable Care Act, would have required businesses to report to the Internal Revenue Service any purchases of goods and services over $600 a year from another business or individual.

Senate Finance Committee Chairman Max Baucus, D-Mont., who has tried several times to get the 1099 reporting requirements repealed, hailed the approval of the amendment containing language exempting the Social Security Administration’s expenses. The Senate voted 81-17 to reject a point of order that had been raised against the Stabenow amendment.

“We heard small businesses loud and clear, and today both parties came together in a bipartisan manner to respond to their concerns,” Baucus said in a statement.  “Eliminating these paperwork requirements lets small businesses focus on the critical work of growing their businesses and creating jobs. This amendment is paid for by cutting spending in other areas, but we took the extra steps to ensure that not a thin dime of Social Security money is used. The common-sense solution we passed today delivers the paperwork relief small businesses need while protecting and preserving the crucial Social Security and veterans benefits millions of people in Montana and across the country rely on.”

The larger, $34.5 billion FAA legislation enjoys wide bipartisan support and includes $8 billion for airport construction and infrastructure improvement. It also would establish a whistleblower office at the FAA, upgrade air traffic control technologies, and create a national review board that would travel to FAA offices to perform safety audits.

There was no vote on the Johanns amendment on Wednesday. However, he hailed the passage of the repeal, pointing out that the Stabenow amendment was nearly identical to the language of the Small Business Paperwork Elimination Act that he had introduced, which had attracted 61 co-sponsors, including 16 Democrats.

"I'm thrilled that after multiple attempts to repeal this burdensome mandate, the Senate has finally done the right thing in voting to repeal it," Johanns said in a statement. "The small business owners and organizations who stepped forward in opposition to this 1099 overreach were instrumental in sustaining the momentum that has resulted in wide bipartisan support. I look forward to continuing the effort to repeal the health care law and finding true solutions to our health care challenges. This is a big victory for our job creators."

Stabenow also praised passage of the amendment. "Today we provided a common-sense solution for business owners so they can focus on creating jobs, not filling out paperwork for the IRS," she said. "Since last year, I have worked with my colleagues on both sides of the aisle to address this problem. If left unchecked, 40 million small businesses would see their IRS 1099 paperwork increase 2000 percent."

A Primer for Starting Your Own Business SUCCESSFULLY! On The Path To 5 Critical Questions Developing a Business Plan

imageThis article was written by Hillel Pitlik, SCORE Orange County Management Counselor

So you want to be your own boss! You’re sure you can do it better than Joe Schmoe down the street. You have a great product or process idea that will be worth a bundle. Or perhaps you feel you can make loads of money just based on the power of your personality and your strength of will and determination!

Any of the above is the force that stimulates us to try to go into business. Having an idea or a better way to do things is only the first step. “There are many a slip twixt the cup and the lip.” Many promising entrepreneurs learn, all too soon, the task of transforming an excellent idea into a profitable business is fraught with mountains and hills which must be overcome.

To carry out your plan you must consider the following factors that will impact the development of your business. Note the early steps in the process require realistic estimates of the issues listed below:

1. How many people will want one of your gadgets or your service? Obviously, if this is a large number, then you will have a good supply of potential customers and you would be advised to go to the next step. This is a good time to evaluate what if any competition you’ll be facing in the marketplace.

2. How easily will you be able to sell this idea or product and how much will Joe Public be willing to pay for it? This will no doubt be an educated guess. But the product of the number of potential customers and the selling price yield a guesstimate of the market potential. Now, as you move forward you should consider factors which will reduce these numbers, such as price competition, promotional discounts and other market pressures. Remember, the real world doesn’t always follow our greatest expectations.

3. What will it take in terms of commitment, time, dollars and assembling a team composed of the right kind of people to develop the idea to the point of placing the product or service on the market? Now you begin to realize some of the challenges that you face. The first being, does your personal life allow the commitment of time and money to bring your idea to fruition? Does your life partner agree with this adventure? Do you have the means to assemble the right team, acquire a suitable facility, raise the proper capital and the drive to take your business idea to success?

4. How will you reach your target market, the one you indicated exists in step 1? The cost of reaching the target market is your marketing/sales cost.

5. Do you envision taking this adventure from concept to manufacturing, through distribution and finally to sales? Or do you want or need to turn over one or more of these functions to other people or companies? Here you face the question of what is your role in the business and what is your job description?

If you have done your homework properly, you will be on your way to putting the groundwork in place for the creation of an effective roadmap for your business, more commonly known as “The Business Plan.” The reason for preparing this document is to establish what precise steps you must do to propel this business to success. Success is measured by the return on your investment which results in $’s in your pocket. You’ve been through the preliminary thinking, now comes the task of accomplishing what you set out to do, and exactly how you will do it.

In the process of preparing your Business Plan you must also convince yourself that the idea is truly worth the effort. When you’ve considered all the factors and are convinced you’ve got a winning idea on your hands, it’s time to roll the dice, pass Go, and proceed to collect $200!

Now, go for it!!!!

Smart Hiring. . . The Key to Your Businesses Growth & Success

clip_image002This article was written by Barry McKinley, SCORE Orange County Management Counselor

Writing ads, interviewing, and hiring can be an important skill for a business owner. It is estimated in a recent study by the University of California at Berkley that a customer service representative earning $18,000 a year could cost as much as $58,000 to replace. It would certainly make sense if your customer service representative asked for a 10% raise that you gave it to them rather than looking for a new cheaper representative that could cost you $50,000+ in the long run.

Many years ago I had been guilty of not hiring the best person. I would run an ad, interview 10 people and pick the best. Unfortunately all 10 were not top candidates so I ended up hiring the “Best of the Worst”. I have learned when that happened to throw out all the resumes and start over. I recently helped a client company hire a key sales person. We ran an ad in and Craig’s List. Of the 260 plus resumes we received we only had four duplications. From that number we reduced the possible candidates down to 60. We then set-up interviews for two full days (15 minutes each). At the end of day two we had six top candidates that we felt all could do the job. We then scheduled the final 6 for a one hour interview and some role playing. At the end we were very excited with our choice and knew without a doubt we had the top salesperson. This was a lot of work, but in the long run they will generate huge sales for the company and eliminate costly rehires.

The key to good hiring is asking well thought-out questions. In the above interviews we, had printed questions for both the 15 minute interviews and the 1 hour interviews. By doing this we completely controlled the interview and were able to insure that we evaluated each person equally. Some of the questions we asked in the 15 minute interviews were:

· Why do you think you would do well on this job?

· Tell me about a goal you set and didn’t obtain?

· Where do you see yourself in 5 years?

· We do random drug testing, is that a problem?

· What would your previous employer tell us were your strengths?

· What would they say were weakness?

· Describe the best person you have ever worked for?

· Can we check your references?

· Can you start on the needed date?

This is certainly not the entire list but these questions are designed to see how the applicants “think on their feet” and also uncover secrets or short comings. We were as interested in how they reasoned out the questions as how they answered them. There is an old saying “Give a person enough rope and they will hang themselves” that was certainly the case with some of the applicants.

After each applicant we did a written review so we would know who ranked the best, (tough to remember when you are interviewing 60 people). After each of these questions we gave them a rating of 1-5. Then at the end we picked the top candidates with the highest point ratings.

· Appearance

· Did they check our web site prior to the interview?

· Did they have basic computer skills?

· Did they ask good probing questions?

· Did they appear relaxed and comfortable?

· Did they have a good personality and sense of humor?

· Did they use good grammar?

· Did they try to close us on the job opportunity?

Remember the more time that you put into hiring key employees the more successful and profitable your business will be.

Are “Green Jobs” really “Evergreen?

Editor’s Note – The following article appeared in the column of Debra J. Saunders, of the San Francisco Chronicle, February 6, 2011. Reprinted by permission.

After receiving at least $43 million in aid from the state of Massachusetts, Evergreen Solar announced last month that it would be closing its manufacturing plant in Devens, Mass., laying off its 800 workers and moving its manufacturing operations to China.

Warning: These are the "green jobs" that President Obama has touted as part of his "winning the future" agenda.

The problem isn't that Obama wants to direct federal dollars toward research for alternative energy. It is in the national interest to have affordable options when oil sources are depleted.

The problem is that Obama thinks green jobs are the answer to the anemic economy recovery. And he clings to that belief in the face of contrary evidence.

Last May, the president came to solar-panel manufacturer Solyndra in Fremont to celebrate a new plant - creating 3,000 construction jobs and 1,000 permanent workers. President Obama exclaimed, "The true engine of economic growth will always be companies like Solyndra."

Within months, Solyndra, which has yet to turn a profit, announced that it was canceling the expansion. At best, you can describe Obamaland's choice of venue as: bad advance work.

Michael El-Hillow, Evergreen Solar's chief executive, explained in a statement the reason for his company's move: "While the United States and other Western industrial economies are beneficiaries of rapidly declining installation costs of solar energy, we expect the United States will continue to be at a disadvantage from a manufacturing standpoint."

Evergreen is - this month anyway - the third-largest solar panel manufacturer in the United States. The Massachusetts plant opened in 2008 with much fanfare and generous taxpayer assistance. But just one year later, the New York Times reported, company suits were talking to Chinese officials, who could offer cheaper labor - average monthly wages below $300 as opposed to $5,400 in the Bay State - sweetheart loans and other incentives.

Harvard economist Edward L. Glaeser saw Evergreen leave Massachusetts and opined in the New York Times that while he believed investing in green technology, "it always was a mistake to think that clean energy was going to be a jobs bonanza."

And: "We shouldn't pretend that cheaper solar energy will end up employing millions of our less-skilled citizens."

This leaves American solons with two choices: Keep feeding the meter - or cut your losses.

The high cost of subsidizing wind and solar power should seal the deal. According to the California Energy Commission, the cost of photovoltaic solar electricity is about 26 cents per kilowatt hour, as opposed to 13 cents for electricity powered by natural gas.

With the unemployment rate at 9.4 percent, Washington should be looking to create jobs that aren't going to run to China. Or, as Jack Gerard, president of the American Petroleum Institute, told the New York Times, "If the president really were serious about job creation, he would be working with us to develop American oil and gas by American workers for American consumers."

American Enterprise Institute senior fellow Steven F. Hayward likes to ask people which state has the lowest unemployment rate. The answer is North Dakota, with an unemployment rate of 3.8 percent. "The reason is they've had a huge oil and gas boom," Hayward explained. They've tripled their oil output.

As the price of oil spills over the $100-per-barrel mark, Washington ought to reconsider the "green jobs" approach. As Hayward noted, "Brown energy creates jobs and prosperity."

Orange County SCORE – Hard Work with a Great Payoff

Editor’s Note – Long-time readers of this newsletter will realize that it is not our normal practice to publish “human interest” stories. We prefer to pass along information that can directly benefit our valued clients in the pursuit of their business goals. However, if you have recently retired or sold your business and are now wandering your house driving your spouse nuts, and the idea of really making a difference in the community appeals to you, take a minute to read the follow article written by person who came to a SCORE monthly meeting as a guest, and decided to join our chapter.

This article was written by Janice Salmon, SCORE Orange County Provisional Member

I’ve worked every day of my life from the time when I was sixteen years old until last spring, a total of forty two years. To me that is forever. When your life drives you down this path you become a wealth of knowledge from countless business experiences. If you are like me, you put in years of sixty hour workweeks and build a number of successful companies. Then all of a sudden you have nothing to do! Sound familiar?

Due to the many relationships I’ve built over the years, it took about nine months to really find myself in the position of wandering around wondering what I should do now. I spent time helping friends, catching up on overdue personal tasks and even consulted a few hours here and there, but these things only last so long. Finally I felt that I had to get back into business but those long workweeks did not look as attractive as they did years ago. This is where I was on Thursday morning January 20th at 8:30 a.m. as I parked my car in the National University lot in Costa Mesa. I had been invited to the monthly Chapter meeting of Score 114 of Orange County. A retired business associate of mine joined the Palm Springs Chapter a few years ago and he suggested that I might find it interesting. I had no idea that in less than sixty minutes I was going to feel much different about my future.

The meeting started promptly at 9:00 preceded by pleasant introductions over coffee and breakfast cakes. The printed agenda consisted of 15-20 committee chair briefings. Sound boring? You would think so but each participant spoke with enthusiasm and expertise. It was obvious that each speaker had completed the Toastmaster’s “How to give a Humorous Speech” manual, everyone was an entertainer.

Of the variety of committees I was impressed by the CEO Forum and the Advisory board. Both of these committees were dedicated to assisting existing businesses, either by a forum such as a board or directors or hands-on visits used to locate and solve problems. My friend in Palm Springs was right -- this was just what I was looking for, a place to use my talents to help other people with their business stumbling blocks. This week I begin my orientation at the Santa Ana office with two other new recruits. One of the members said that I was going to experience the “best part of the journey during the next 3 months”. Another pleasant surprise, there are NO DUES.