Tips on Understanding the Mindset of IRS Auditors

 

An IRS audit is enough to make you tense with cold sweat in the palms of your hands. More businesspeople have complained to me about the mean-spirited treatment at the hands of IRS agents than any other federal agency. Worse, the agents’ frequent lack of common sense is shocking.

Believe it or not, the IRS Web site has comprehensive information that will help you to stay calm in dealing with the agency. True, the IRS has over-officious, mean-spirited representatives, but the agency also has level-head, reasonable employees — especially at the lower levels.

So, understand that the IRS isn’t a 100 percent, overbearing bureaucracy. It helps to anticipate the aspects of your return that serve as catalysts for an audit. You can stay practically stress-free and prepare for a reasonable dialogue – if you know what IRS agents want.

Some tips on understanding motives of IRS agents in audits:

1. They first judge on appearances. Make sure you look like a business. Organize your records so that they’re ready to be inspected. That means computer software and reconciled bank accounts.
2. Be able to accurate analyze your firm’s revenue and to present it if necessitated by an audit.
3. If you don’t have adequate internal controls, IRS agents will get suspicious. Many will get hard-nosed about your records, and expand their audit. Not only they scrutinize every single minute detail of your return, but IRS agents are known to expand the audit to other years.
4. If you have benefited from bartering or trading products or services, know that the IRS wants to know about it because it’s considered income. Yes, even if you put something out to get something in return. Agents will stop at nothing – they’ll look high and low for evidence of your participation in a bartering club. So specify your bartering at fair market value.
5. Beware of how you assign income. Auditors look for evidence that taxpayers assign income to other businesses – to avoid paying taxes or to show a net operating loss. If you do assign income to another party, be prepared to show that entity’s tax returns.
6. Separate your business from personal records, and keep a record of your revenue and expenses. IRS agents will tally all your bank deposits and compare them to your sales. So keep careful records on whether you make personal deposits to aid your business for positive cash flow or a financial gift from relatives.
7. Keep computer records with copies of cancelled checks in all non-taxable income items that are deposited in your bank account. This should allay any IRS suspicions.

From the Coach’s Corner, here are more financial tips:

• 4 Strategies if You Fear Missing Year-End Forecasts
• Primer for Best Practices in Preparing Financial Statements
• Checklist to Increase Your Startup’s Cash Flow
• Do You Know What Drives Your Profit?
• Accounting / Finance – Why and How to Determine Your Break-Even Point 

“We’ll try to cooperate fully with the IRS, because, as citizens, we feel a strong patriotic duty not to go to jail.”

-Dave Barry

__________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

 

Pension Reform: Washington Labor Leader Is Right – It Is ‘Class Warfare’

 

March 19, 2012

Union leader Greg Devereux is right about a debate in the current special session of the Washington State Legislature. A budget proposal to reform the lavish pension system for Washington state public employees is an indicator of class warfare – between the have-nots and the ruling class.

The have-nots: The countless stressed business owners, the financially burdened self-employed, under-employed workers, job-seekers, retirees struggling to survive, and others.

The ruling class: Washington state, county and city public employees, their union leaders and many politicians. In other words, public sector employees who profit from the system.

Mr. Devereux, who opposes government-employee pension cuts, is executive director of the Washington Federation of State Employees. He made the class warfare accusation, which was reported by The News Tribune (TNT) in an article entitled, “Are pension cuts ‘class warfare’ or ‘reform’? Lawmakers differ.”

Actually, pension reform has long been an issue. The Washington Policy Center once suggested passage of a constitutional amendment to solve the issue (See Common Sense Needed for Washington State Pension Reform).

Pension reforms were also advocated by State Treasurer Jim McIntire in 2010.

Washington state lawmakers are still getting sore toes from kicking the budget can down the road. Following an unproductive legislative session, the state Legislature is again in a special session supposedly to balance the state’s budget.

You’ll recall the recent legislative session didn’t result in a balanced budget. Nor did last fall’s special session of the Legislature.

A major stumbling block: The lucrative pensions paid to 40,000 public employees. Public employees receive on average 74 percent higher pension benefits than workers with retirement plans in the private sector.

Republicans have introduced a plan that would save $2.3 billion over 25 years. One component would omit a $143 million pension payment to reduce liability, and funds the payment after reducing benefits to future state workers.

“It’s a big net gain for taxpayers, and an excellent example of the sort of policy changes we should be making to improve the state’s long-term financial outlook,” TNT quoted Sen. Joseph Zarelli, R-Ridgefield.

TNT reports the proposal includes these provisos:

• Creates future savings by eliminating an early retirement benefit for state government and school employees hired after July 1.
• Leaves intact the law that requires new state workers, teachers and school employees to pick from second- and third-generation pension plans.
• Earmarks any savings to pay down the $3.2 billion of unfunded liability in the older Public Employees’ Retirement System Plan 1 and Teachers’ Retirement System Plan 1 that closed years ago to new workers.

As expected, Gov. Chris Gregoire doesn’t like the skipped payment component of the proposal.

But here’s the irony: You’ll recall she has signed such budgets in previous years.

The good news is that Gov. Gregoire supports Sen. Zarelli’s ideas that would leverage savings to pay older pension plans. She also warns she’ll veto or won’t sign many of the recently passed bills into law until lawmakers compromise on a balanced budget.

Not to pick on the Washington state lawmakers, go to Google News. You’ll see countless stories about public employee pension plans that are plagued by overgenerous benefits and chronic underfunding.

You’ll also see the Zarelli proposal did not originate in Washington state. New York gets it and will reduce benefits for new public employees. The lawmakers recently passed pension reforms saving $80 billion over the next three decades.

This is the Washington State Legislature’s third shot at balancing the budget. Will the third time be the charm?

Mr. Devereux needs a cup of coffee. A strong cup. Otherwise, in his class warfare, he won’t get his wish. There isn’t enough tax revenue among the have-nots to fund his members’ lavish pensions.

From the Coach’s Corner, here’s a public policy question: Will State Lawmakers Heed New SBA Data, Small Business Concerns? 

“Ancient Rome declined because it had a Senate, now what’s going to happen to us with both a House and a Senate?” 

-Will Rogers

 

_______

Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

 

Web Site ‘Priming’ – 6 Tips That Will Help You Succeed

 

If you want to increase your odds for Internet success, you might consider priming your Web site. Priming is a method to motivate users to make decisions when they visit your site. I gather the term was coined by the inventor of a testing tool that enables Web-site owners to obtain reactions to their sites.

Writing in Website Magazine –  Paul Veugen, the CEO and founder of Usabilla – indicates site priming provides users with “direct and indirect cues online that can unconsciously nudge them into making different decisions down the line.”

“The next time you visit the supermarket and see a product from an ad, these positive memories are triggered and they leave you with a positive attitude towards the product,” Mr. Veugen writes.

“If you need to choose between a hundred different types of yogurt brands, you are most likely going to go for the one that gives you a positive feeling,” he adds.

“Priming does not work by forcing a decision upon your customers, but you can use it as a means to effectively support their decisions,” he explains.

His six suggested primes:

1. Colors Colors have different meanings and can be used to prime emotions. You can color your background or only specific elements like buttons or content areas, for example. Be aware of your target group and their understanding of colors and the emotions they elicit.

2. Text Text can also be used as a prime, of course. Include the exact wording of your menu items in your content and build a nice story around them, for example. Then when customers look around your site, the primed menu item will lead their thoughts back to your story — which makes elements of the story accessible.

3. Metaphors Use metaphors that refer to information to help your customers make a decision. For example, imagine you try to sell vacation trips. You could use the metaphor of a shell to trigger positive emotions like sun, beach, palm trees, ocean, waves, relaxation, etc.

4. Images Use pictures to prime your customers. These pictures can either be in the background or a central element of your webpage. You can prime emotions that come with the purchase of your product or you can prime a desirable action that requires the purchase of your product, for example. Both times, you trigger memories that might only be distantly related to your product, as a way to guide your customers’ decisions.

5. Video Use videos to prime a whole process of actions. Showing the sign-up process with the different steps involved will make it easier for your customers to sign up, for example. Different memories related to a sign-up process will be accessible that help to make the right choice. Besides, when your customers see the sign up button, the process of signing up will be more accessible to them than it would be without the prime.

6. Audio Include audio on your website to prime any action you want your customers to engage in. Make sure that you don’t tell your customers what to do, but rather give them the idea that they figured it out themselves.

“The emotional perception and elements that refer to emotions are important primes when it comes to the perception of your site,” Mr. Veugen explains. “And for the rest, be creative! Anything that activates information in the minds of your customers can be used as prime.”

He writes priming and subliminal messages aren’t synonymous. “The two are related, but subliminal messaging includes ‘hidden’ primes and is considered by many to be an unethical marketing practice,” he asserts. “Besides, not much research can be found to prove that subliminal messaging really works.

“…Priming includes visual or at least sensible primes that can be identified, such as pictures or odors. These primes should be context-sensitive and part of your website design.”

To see more about Mr. Veugen and his offerings: www.usabilla.com.

From the Coach’s Corner, suggested reading:

• Tips, Plus Why it’s Never Too Early to Plan for Q4 E-commerce
• How Small Businesses Can Capitalize on Cyber Strategies for Profit
• SEO: Strategic Primer for a No.1 Rated Blog
• 11 Sales Strategies to Outsell Your Big Competitors

“In business you get what you want by giving other people what they want.”

-Alice MacDougall

 

__________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

 

The Key to Internet Dominance: Think Integration

 

Whether you’re a new or established business, it wasn’t that long ago that a strong Internet presence meant having a great Web site with a top ranking. Partially, that’s still true but the competitive marketplace continues to rapidly change daily, which means the No. 1 objective should be a vibrant, integrated presence. 

In other words, what matters most is your total Web image – your Web site is an important secondary consideration. 

Naturally, it’s important to develop online relationships with social media and other strong Web sites. They will enhance your Web image until it achieves a dominant position in your niche. So, an integrated approach works best. 

That means think big picture to achieve a proper balance. Facebook has, of course, become a player. But it’s important to note there are Winners and Losers in Facebook’s Invasion of Google’s Turf, including a threat of cannibalizing your Web site’s presence on the search engines.  Here’s a second analysis: Aside from Privacy, Security Issues — Facebook is a Threat 2 Ways. Harness the power of Facebook, but don’t let it make your Web site irrelevant. Use due diligence to capitalize on Facebook.  

Besides, there’s another ramification if you allow Facebook to cannibalize your Internet reputation. Why? Facebook appears to be Approaching the End of Its Product Life Cycle. Fixing the problems caused by a faltering Facebook would be costly in time and money. Building a successful Web site consumes a lot of resources. Don’t let Facebook exacerbate your situation. 

A Web site doesn’t have to be an expensive venture. With WordPress and other options, you can forget about HTML, which is challenging and time-consuming to learn. You can use a free WordPress template, www.blogger.com, or buy a complex WordPress template and customize it. 

Another challenge: Cyber security. Be sure you take every security precaution. (This portal has more than a dozen columns quoting a nationally respected security expert, Dr. Stan Stahl.) 

If you’re a blogger, the possible downside for not using HTML is that it will be a challenge for you to convince Google that you’re a news site. Stature as a news site, of course, means more prominence. But you can still be successful without HTML – if you lay the right foundation for success. 

21 steps for integrated approach

Not to over-simplify, for an overall great Internet presence, here are the basics:

1. Research options for your ideal branding.
2. Decide on your slogan – three to five words that will pique the interest of your target audience.
3. Develop a logo that tells your story.
4. Create a favicon, which is a short description for “favorites icon.” A favicon is small, often 16×16 pixels, used as a logo for your Web site on the search engines. If it’s the same as your company’s logo, you’re really rocking. For example, just look at the URL in this search line on this Web page and you’ll see mine. Or look up any major company or site. All the big dogs – successful companies – have a favicon. It will help portray you as a unique firm.
5. Install a good site map for the convenience of search engines and SEO (search engine optimization).
6. Don’t under-estimate the power of the news media. Include a “Press Room” on your site for the convenience of journalists to read about your firm’s developments.
7. Know and implement the right key words for you. If you’re a small firm, include your name and a brief Web description that isn’t too long to be inserted on the search engines when they mention your site.
8. Develop your site – if possible, include a blog, and blog frequently.
9. Consider inserting relevant videos — an increasing draw for traffic.
10. Register your site with the search engines.
11. Read the search engines’ Web developer tools. However, in the main, if you focus on quality and relevance you’ll do well on the search engines. Many people think you have to have use separate strategies for each search engine, but that’s not the case. Relevance and value are what matter most.
12. Immediately establish a Google profile, and create profiles on the four salient social networks: LinkedIn, Google+, Twitter and Facebook.
13. Miscellaneous tips – on LinkedIn join all relevant groups focusing on your target audience and your industry. Promote your work on the groups. For Facebook, decide if you want a personal or company fan presence. Grow your Twitter followers every week.
14. If possible, include StumbleUpon (see Using StumbleUpon To Drive Traffic to Your Website.) There are more than 340 social media sites from which to choose, but you’ll only have time to utilize a handful of them.
15. For your profile, make sure you use a good picture with strong resolution. Use the same picture in all your promotions. Consistency is a requirement to earn universal trust. Include all your profile basics.
16. Develop and implement an editorial schedule for your blogs. Life happens. Keep it flexible in case the schedule has to be temporarily altered.
17. For every salient event or blog, write an online press release and have it distributed on an authoritative press release service. Many will do it for free.
18. Post your blogs on your social media, especially your LinkedIn groups.
19. Install a sharing button, such as Add This, to every page. You can also insert separate buttons for your social media. Despite what the conventional wisdom indicates, you can also do the Facebook “like this routine,” but it isn’t crucial.
20. Check the Google page rank of all sites linking to you, and you’ll need a lot of them. Google assigns page ranks from one to 10. However, remember your new Web site will have a zero page-rank, and you don’t want other zero-ranked sites linking to you. That goes for your online press-release company. Shoot for links with a page rank of 6 or higher because if you do things right you’ll quickly earn a page rank of one or two. Allow for some wiggle room for your site’s future ranking. (Check sites here.)
21. Continue to innovate in all that you do.

The best way to innovate is to keep an open mind. The best way to keep an open mind to spot and capitalize on new opportunities is to practice the “Principle of Contrary Action.”

It’s a tip from a cherished mentor more than three decades ago. Keep track of everything you do and strive to do it differently each time. That includes taking different routes to work or even going to the grocery store. (It was a simple but effective strategy from Dr. Len Brode, who has had many accomplishments as a scientist and as a great human being.

He also was a proponent of “how to keep your personal power,” long before I heard of Tony Robbins. He is married to Jade Brode, the author of Marry the Man of Your Dreams and No Is The Word.)

A Web site is important. But an integrated approach is the key to Internet dominance. Good luck in your venture.

From the Coach’s Corner, here are more research links:

• Checklist to Build Your Brand on a Budget
• Google Insights – 23 Key Questions about Your Web Site
• Study Provides Vital Lessons for Web Sites Seeking Profits
• Checklist: 19 Quick Marketing Tips for New Entrepreneurs
• Marketing Checklist to Measure Your Brand’s Personality

“A strong foundation increases the value of everything you do.”

-Aaron Wall

__________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

 

Tech Planning: What If There’s Another Downturn?

 

Pick any region. Most respected economists and other experts believe economic growth will be tepid, at best. Despite the hype over a so-called recovering economy, there are continuing concerns about the world’s economy.

It’s important to ask a key question: Are you ready for a possible double-dip recession?

Certainly, many global economic trends are eye-opening. Here in the U.S., job-growth and the consumers’ inability to buy are major concerns.

Moreover, public policy at all levels – federal, state and county, and city government – is hurting the nation.

At the federal level, stimulus spending that totals more than $1 trillion has been inefficient. Relatively few jobs are being created and there are constant calls for more spending. Policies are detrimental. The healthcare reforms are anything but productive. The legislation created 19 new taxes, it lacks cost-controls, and insurance premiums are mounting.

For years, state and local governments have been fiscally dysfunctional, too. They are still increasing taxes and slashing services.

Businesses are disappointed. Many lack an incentive to invest in human resources, marketing and technology.

The aggregate impact: A further deterioration of Americans’ financial and political freedoms.

So, it was not a surprise that technology-research firm Gartner recommends in a study that chief information officers should get ready for another downturn. That requires planning.

Authors of the study, “Plan for a Second Recession, Now,” wrote: “We urge these CIOs to leverage their recent experiences by preparing their enterprises should another economic downturn occur within the next 12 to 18 months.”

Gartner believes it’s important that CIOs communicate closely with senior company executives on priorities. Which IT projects for the next 18 months could be postponed or even disregarded?

My sense is that very function or project should be comprehensively studied and any spending should be approved. The budget needs to be detailed and every item needs to be justified. That’s called zero-based budgeting.

Just to cover all the bases, your department’s finances need to be constantly reviewed.

If your company is in dire financial straits and is attempting a financial turnaround, it’s also important to understand the perspectives of both the senior executive and the chief financial officer.  There must be a daily review in the form of a flash report. A flash report can be designed to monitor indicators on a daily basis and to evaluate your actual performance against the turnaround plan.  For more reading, see: Step-by-Step Solutions for a Company Turnaround.

If a poor relationships exist between IT and the finance department, which is often the case, it’s important to understand the CFO mindset. You might want to read: Tech Trends: CFO’s the Boss, IT Departments Are Disappearing.

Good luck. Start planning and strap in the proverbial seatbelt if the roller-coaster ride proves to be harrowing.

From the Coach’s Corner, if you’re thinking about getting into business for yourself, I’d recommend reading: Eight Strategies to Consider Before Starting A Tech Business.

“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It’s not about money. It’s about the people you have, how you’re led, and how much you get it.”

-Steve Jobs

__________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

 

How to Attract an Angel Investor

 

Now that a University of New Hampshire study indicates early stage financing by angel investors is more advantageous than venture capital money, what now? How do you get the angel funds?

Noted angel investor John B. Dimmer offers seven tips.

The 2009 study – “Initial Public Offerings and Pre-IPO Shareholders: Angels Versus Venture Capitalists” – shows evidence of under-pricing by venture-supported IPO groups in initial public offerings vis-à-vis angel investors. The study was conducted by Professors William C. Johnson and Jeffrey E. Sohl. 

So what does it take to land an angel investment? Noted angel investor John B. Dimmer offers seven tips.

Acknowledging the difficulties of entrepreneurship, the successful angel investor in Tacoma, WA, who likes technology, says he looks for tenacity: “I want people with the moral integrity and intestinal fortitude to make the difficult journey through the Valley of the Shadow of Death and come out the other side,” says Mr. Dimmer. “It’s fun to greet them on the other side, hand them a margarita, and toast the success of their achievements.”

In the third installment of my profile of Mr. Dimmer’s insights, he graciously explains his comprehensive approach in how he selects investments:

Q: What mistakes do new companies make in applying for funding?

A: As I indicated, people are the single most important element in making an investment. As such, I generally don’t see business plans unless I know the people who are involved, or I know someone who knows the people involved. I think that to a large extent, most venture investors share this philosophy.

The business plan always comes first. I want to see a compelling market opportunity, and I want to know how the company intends to capture a meaningful share of that market. Mistakes I often see in this segment of the presentation almost always center around unrealistic sales assumptions. Overly aggressive projections relative to the percentage of market share the company will capture is one common mistake. Another mistake is a fundamental lack of understanding of the sales cycle, and the organizational structure required to produce the target revenues.

Q: Preference on projections?

A: Three years worth of financial projections is adequate, but five years is preferred. I would like to see the first year broken down into some detail, but future years can be prepared on a condensed basis. Having been involved with a myriad of start-up companies, I know that the financial projections will not be accurate; however, the forecasts provide valuable insight into the thought process of the people involved.

The most common mistake companies make in this area is a failure to understand and exhibit the financial metrics of their particular business. For example, software companies should normally generate 90 percent gross margins. If you are coming to me with a software investment, and your forecasts show a 55 percent gross margin, unless you have a very good answer as to why you deviate from the norm and how you are going to make money, I will assume that your business will fail because you don’t understand the financial metrics. Likewise, if you present me with an opportunity in the professional services space, which normally generates 50 percent gross margins, and you tell me that you are going to generate an 85 percent gross margin, I will assume you don’t know your financial metrics and pass on the opportunity.

Q: Structuring the deal?

A: Angel investing is risky business, with many of the portfolio companies ultimately failing. Accordingly, angel investors need to see an opportunity for substantial returns in order to offset the losses on bad deals and generate a reasonable return on the entire portfolio. What kind of a return is required? Well, a lot of that depends upon the timeline between the initial investment and exit, but traditional metrics suggest angels are targeting five to ten times their money back from a successful deal. It should be a given that any company approaching me for funding will have established the asking price for my initial investment.

Q: Exit strategy in proposals?

A: This should include the type of exit transaction, which may be a merger, an IPO, or something else, the timing associated with the exit, and the valuation metrics at exit. The mistakes I see here fall into one of two categories, those being an initial valuation that is set too high, or an unrealistic assumption about the exit timing and valuations. As the exit strategy is simply a forecast of a future event, my solution to either of these problems would be to try and negotiate a lower initial valuation.

As an example, I recently looked at a company that had their financing pulled out from under them. They had a big business opportunity ready to go, and needed capital to execute. While I liked their business plan, I felt their valuation was exceptionally high. I compared their valuation metrics with those of similar publicly-traded companies, and found that I could own these public companies for about 20 percent of the price they were asking. I ultimately went back to them with a proposal, but slashed their valuations. They weren’t too happy and so went looking for money elsewhere, presumably under different deal terms.

Q: Legal controls?

A: I believe that items such as voting rights or preference provisions should be allocated and enjoyed equally between all the parties involved with a company. Periodically I see instances where the founders have preferential rights to voting or liquidation. I’d like to think that we are all on the same team, which means if one person wins, we all win. Preferences then make it possible for one party to win, and another to lose, cause the creation of multiple agendas and ultimately lead to failure.

Q: What are the components of a successful presentation?

A: It’s pretty simple: brevity, clarity, honesty. A quality opportunity should be somewhat self-evident. I might need a little help starting down the path, but if I don’t pick up on it pretty quickly, I’m never going to buy into the deal. So, don’t be too long, don’t get overly complicated, and don’t try to pull a fast one on me.

The other thing I am going to look for in a presentation is the ability of the entrepreneur to think on their feet. If you really know your stuff, this shouldn’t be too hard. I periodically like to ask questions where I already know the answer just to see if the entrepreneur knows what they are talking about. Likewise, I sometimes like to ask questions that are outside the box just to see how the entrepreneur handles obtuse ideas. If you know your stuff, you can digest the inquiry and quickly formulate a meaningful response. If you stumble, you don’t know your stuff, and if you don’t know your stuff, I don’t want to give you any of my money.

Q: What trends would you care to predict?

A: I do not consider myself a visionary, but I’ve certainly worked with visionaries. My strengths come in the form of listening and then determining if there is a realistic opportunity for the vision to be commercially implemented within a reasonable time period. The only prediction I will make is that as our world advances, each advancement creates more opportunities…More opportunities for services, products, and technologies to be developed and delivered to consumers. The world of the entrepreneur is expanding at an ever-increasing rate, and I don’t see this changing any time soon.

From the Coach’s Corner, the other articles featuring Mr. Dimmer:

• Investor: Tips for Increasing Cash Flow, Profits
• How Investor Has Fun in Business and Technology

“If a business does well, the stock eventually follows.”

-Warren Buffett

 

__________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.

 

9 Image-Building Steps that Will Attract the Best Workers

Why it’s hard to get great workers and 9 ways to attract the best workers.

 

Some things never change.

In 2006, I wrote a Biz Coach column about an exhaustive study that showed 69,000 employers in Washington state were frustrated over their inability to find the right workers – 51 percent of companies complained workers were unfit. As I recall, employers were concerned about a lack of workers’ skills, poor education and weak soft skills.

Since then, most U.S. companies have enjoyed a boom time, only to suffer in a downturn and so-called recovery.

But one human resources problem remains – a shortage of skilled labor. That’s right, published reports indicate businesses have problems recruiting good employees.

But employees complain about a lack of jobs. Labor unions would have us believe companies are not paying enough in salary and benefits to attract workers. Not true.

There are countless unfilled jobs in the U.S. because of the economic climate and the structural gap between job requirements and worker abilities. Taxes are too high exacerbating a tepid economic climate and jobs are outsourced abroad. Meanwhile, too many American workers are not flexible enough in developing the right skills, getting the right training, and studying the right courses.

Why do many laid-off workers fail to have the right skillsets?

The high-school graduation rate is too low. Only a quarter of high-school students graduate from college. Technology needs math and science-educated workers. There will always be a need for good accountants. And there will always be a shortage of great salespeople and managers. But too many parents are not paying attention. Their children should be strongly encouraged to study and develop strong work ethics. The same is true for adults.

Most government agencies are bemoaning their revenue problems. But it is not a revenue problem. It is a spending and payroll problem that’s hurting the private sector. Not to mention the government infringement of the private employers’ economic and political freedoms. And the cost of labor is the single biggest expense of any enterprise – public or private.

Not to bore you with countless statistics, but the public sector is unrealistic. It used to be a problem for the public sector to compete with private enterprise in hiring productive people. But no more. Many government salaries and pension plans are much higher than the private sector. And the pension plans are grossly under-funded – in the aggregate – by billions of dollars.

So, how can a business compete?

True, the short-term solution is to offshore your needed services and products. You’ll temporarily solve your HR needs. It’s also an economical approach. And sad to say, employers say work ethics abroad are often stronger than in the U.S.

Meantime, it will be necessary to analyze your company’s strengths and weaknesses, anticipate your needs for talent, focus on training of your staff, recruit effectively, and develop and implement a strategic plan.

Here are the nine quick fixes to attract the best workers:

1. Strengthen your brand. Differentiate from your competitors by enhancing your company image, innovate your product and service utility, become convenient as possible for your customers, and operate more efficiently. You will also learn that such steps will help attract the best employees.
2. Performance management. Invest in training, mentoring and education – tools and resources to help your employees succeed.
3. Succession planning. Retain and attract leaders for your firm, and develop a strategy to help your most talented employees ascend to senior levels.
4. Talent development. Help your managers to evaluate your company’s HR strengths and weaknesses. Eliminate any gaps in your workforce and establish a harmonious environment for company growth.
5. Promote diversity. It’s good business to consider and implement policies to recruit workers who are from other cultures. Add disabled applicants, and part-timers – such as stay-at-home parents and retirement-age workers.
6. Recruitment. Target employees with the three A’s of hiring – attitude, appearance, and ability. (Note the priority of attributes. Both you and your customers will be pleased.)
7. Compensation and benefits. No boss wants to over-pay employees, but if you do your best to provide for employees, they’ll deliver stronger performances and take better care of your company’s assets. Costco is a great example.
8. Productivity. Reduce your skills gap by investing in technology.
9. Adapt. Anticipate and respond to dynamic marketplace changes.

If properly implemented, you’ll see strong results. As they say in Hollywood, break a leg!

From the Coach’s Corner, remember you can increase profits with a strong focus on your employees.

My research shows about 52 percent of a customer’s buying motivation depends on what perceive about you and your employees.

What are the so-called soft skills of your spokespersons, customer service, finance and salespeople? Your customers want value, good service and to be treated well.

So fine-tune management of your staff.

“At the end of the day you bet on people, not on strategies.”
-Larry Bossidy 

__________

Author Terry Corbell has written innumerable online business-enhancement articles, and is a business-performance consultant and profit professional. Click here to see his management services. For a complimentary chat about your business situation or to schedule him as a speaker, consultant or author, please contact Terry.