The 22 Dos and Don’ts for Successful Negotiations

 

Whether you face haggling with customers, salespeople or employees, there are easy strategies for negotiating anything you want. But you must first remember it’s important to reach a fair compromise – with win-win negotiating skills.

You’ll want both parties to feel positive after the negotiation is complete. In other words, emotional needs for both of you have to be met.

So don’t carelessly let something slip out. Whether you struggle to protect your turf, putting an end to people taking advantage of you, or you’re laboring to get what you want in a transaction, there are basic skills you need to know to find solutions that are acceptable to you and the other person.

Understand that your position is strengthened by having the ability to walk away. The winner is the person who’s best prepared for the deal not even happening.

The dos:

1. Determine goals. Decide on your objectives. Know your bottom line.
2. Anticipate the desires of your opponent. Think collegially – envision the person as your partner in the deal.
3. Analyze the assets. What do both of you bring to the table?
4. Evaluate options. That means for both of you.
5. If you have a history with the other party, analyze your track record and precedents with the person. What issues have impacted the two of you?
6. Assess the power you bring into the discussion, and that of the other person.
7. Anticipate the obvious consequences, the corollaries.
8. Pay attention to detail. Try to put the other person’s needs first. In that way, the person feels as though you’re listening. Show empathy to the other person’s concerns and problems.
9. Stay calm, no matter what. You’ll keep the emotional advantage. Focus on issues, not personalities.
10. Keep in mind plan B. Know your options for a fallback position.
11. Document the deal – get it in writing immediately.

The don’ts:

1. Never bargain with someone using the word, “between.” If you offer a range using this word, customers and vendors will only hear the minimum. Sellers and employees will hear the maximum.
2. Don’t signal the person that you’re done negotiating by using the phrase, “I think we’re close.” You’ll be giving away your power – the person will believe you’re exhausted and that you put a higher priority on getting an agreement instead of achieving your actual goals.
3. Don’t get into a bidding war. Brand yourself so that you’re the only party the person should deal with. Don’t negotiate against yourself. If you make an offer, wait for the response. Be careful in using the phrase, “Why don’t you throw out a number?” Usually, the first amount mentioned by a seller is the amount that’s ultimately agreed upon.
4. If you need time to think, don’t establish at the beginning that you’re the final decision-maker. You’ll get more wiggle room if you indicate there’s another person with whom you must speak.
5. Don’t be afraid to ask what you want – be specific about what you want and don’t want.
6. Don’t negotiate with a person who doesn’t have authority to sign off on a deal.
7. Don’t do all the talking. The best results occur when the other person does 90 percent of the talking. That’s accomplished by asking open-ended questions, such as “What are your concerns about what I am suggesting?”
8. Don’t ignore the person’s body language. Know the green lights.
9. Don’t argue, but discuss items in which there are disagreements.
10. Steer clear of form contracts. They are designed for a pre-determined outcome. The agreement must reflect the negotiations.
11. Don’t forget to prepare. Failure to prepare leads to failure in negotiations.

Good luck.

From the Coach’s Corner, remember in all negotiations, your purpose is to sell your ideas or products. You need to know the five value perceptions that motivate customers to buy; seven steps to higher sales; and the three-step process for overcoming sales objections. They’re all included in this related resource link: The Seven Steps to Higher Sales.

“If I had eight hours to chop down a tree, I’d spend six sharpening my axe.”

-Abraham Lincoln

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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?

 

Why the Sales Tax Debate Erupts in Washington State

 

Nov. 22, 2011

The buzz in Seattle and other Washington locales is over another attempt to raise taxes.  Yes, Gov. Chris Gregoire wants to raise $500 million via a temporary half-cent increase in the state portion of the sales tax to offset continued budget deficits to prevent more state government cuts in spending.

Either the Legislature could pass the increase providing it passes with a two-thirds majority in an upcoming special session. If it can’t, the Legislature can pass a referendum bill by the end of this year for voter approval.

Gov. Gregoire’s request also threatens to risk relations with Oregon and neighbors by repealing their sales tax exemption when traveling and shopping in Washington state.

Washington’s sales tax debate request follows four developments:

1. Failure by public officials to practice good stewardship of existing revenue.
2. Lack of jobs – nearly a double-digit unemployment rate.
3. Businesses are struggling.
4. Washington’s two-thirds vote requirement for tax increases – demanded by voters in four referendums.

No. 1 – the sales tax increase request is not a surprise to watchdogs in the wake of years of overspending. For years, analysts have been warning about public policies, including in this space as long as two-and-a-half years ago when this portal was launched (Analysis: Steps for Economic Success in Washington State).

Part of the problem stems from furtive policymakers and the failure to answer the right questions: Why Not Transparency for Good, Open Government in Washington State?

No. 2 – 314,700 people are unemployed in Washington state out of the 3.5 million-person workforce. In October, 4,600 jobs were created in government, education, health services, manufacturing and wholesale trade.

No. 3 – With many of the new jobs in government and education, it underscores the point about the state’s business climate. The tech sector in Seattle is doing well. But ask any business owner or manager if their companies are better off now than they were in 2006 before the recession.

No. 4 – It seems unlikely the Legislature will be able to pass such an increase, but will authorized a vote of the people thanks to I-1053, which was passed last year after the Legislature circumvented the three previous voter-approved referendums (I-1053: Critical to Washington
State Businesses and Workers).

The Secretary of State’s timeline for the sales tax debate:

• Dec. 30 – Last day for Legislature to pass tax referendum bill for March 13 election

• February 10 – Military and overseas ballots mailed for March election

• February 21 – Mailing of voters’ pamphlets begins for March 13 election

• February 24 – Regular ballots mailed for March 13 election

• March 13 – Election Day

“There will be plenty of time to debate the merits of the Governor’s tax proposal but one thing isn’t open for debate, I-1053 is working exactly the way voters intended by providing them the opportunity to ultimately decide this important question,” writes Jason Mercier of the Washington Policy Center.

He offers this proviso:

“To help ensure this opportunity continues in the future, if lawmakers are going to send voters a proposed tax referendum they should also put a constitutional amendment enforcing the four-time voter approved two-thirds vote requirement for tax increases on the ballot,” he writes.

“This would provide the public and businesses with predictability about whether this tax protection will exist from year to year and clarify whether or not the four-time approval of the voters for this policy was a fluke or actually reflects their consistent and ongoing desire for lawmakers to build a strong public consensus on the need for any proposed tax increase,” he explains.

Agreed – tax increases would be unnecessary if the public officials worked to improve the business climate and performed to voter expectations. Tax increases are never temporary in Washington and the economic environment isn’t improving.

From the Coach’s Corner, Washington state has budget woes and high unemployment because legislators don’t ask the right questions, such as  What Do Small Business Owners Need from Washington State Policymakers?

“Be thankful we’re not getting all the government we’re paying for.”

-Will Rogers

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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?

Tax Tips for Your 2011 Year-End Tax Planning

 

November 9, 2011

If you haven’t completed your year-end tax planning, you might want to consider it now.  Just in time, come 12 pointers from Grant Thornton’s Washington national tax office.

“It’s not too late to change what goes on your tax return when tax season rolls around,” says Justin Ransome, a Grant Thornton partner in a press statement. “Just a little bit of planning in November can often go a long way on April 15.”

The professional services firm acknowledges that tax burdens for everyone are as challenging as ever, as policymakers are trying to maximize tax revenue to balance budgets.

Grant Thornton is quick to remind you to see your tax advisor for your own situation, but offers 12 tips that fit most anyone’s circumstances.

For brevity here, Grant Thornton’s excerpted list includes:

1. Accelerate deductions and defer income. Why pay tax now when you can pay tomorrow? Deferring tax is a cornerstone of tax planning. Generally this means you want to accelerate deductions into the current year and defer income into next year. There are plenty of income items and expenses you may be able to control, and business owners and self-employed taxpayers often have the best opportunities.
2. Bunch itemized deductions. Many expenses can be deducted only if they exceed a certain percentage of your adjusted gross income (AGI).
3. Maximize “above-the-line” deductions. Above-the-line deductions are especially valuable because they reduce your AGI, and AGI is used to test whether you’re eligible for many tax benefits.
4. onsider charitable contributions carefully. Think about giving appreciated property to charity so you can deduct the full value without paying capital gains taxes. But don’t donate depreciated property.
5. Leverage retirement account tax savings. It’s not too late to maximize contributions to a retirement account. Traditional retirement accounts like 401(k)s and IRAs still offer some of the best tax savings in the tax code.
6. Roll over into a Roth account. “Roth” versions of traditional retirement accounts, such as 401(k)s and IRAs, also provide a great savings opportunity. You don’t get a tax break when you put money into a Roth account, but the money grows tax-free and is never taxed again if distributions are made properly.
7. Expense business investments. Business owners have been given a great opportunity to save on taxes while investing in their businesses this year. Legislation enacted in 2010 doubles a bonus depreciation tax benefit for property a business places in service before the end of the year.
8. Consider your salary as corporate employee-shareholder. If you own a corporation and work in the business, you need to think carefully about your salary structure.
9. Make up a tax shortfall with increased withholding. Don’t forget that taxes are due throughout the year. Check your withholding and estimated tax payments now while you have time to fix a problem.
10. Don’t forget to use annual gift tax exclusion. If you may have to pay estate taxes eventually, consider establishing a gifting program for your children and grandchildren to take advantage of the annual gift tax exclusion.
11. Watch out for the “kiddie tax.” The “kiddie tax,” which requires a portion of a child’s unearned income to be taxed at the parents’ marginal rate, has been expanded to apply to full-time students under the age of 24 whose earned income does not represent at least one-half of their support.
12. Perform an overall financial checkup. The end of the year is always a good time to assess your current financial situation and your plans for yourself and your business. You should think about cash flow, health care, retirement, investment and estate planning.

“Keep in mind that these tax tips are general tax advice and may not be applicable to your particular circumstances,” warns Mr. Ransome. “Make sure that you consult with your personal tax adviser before implementing any changes or additions to your tax planning strategy.”

That’s excellent advice, too. For more details, I strongly urge you to read Grant Thornton’s 2011 year-end tax guide. 

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

Budgeting Basics for a Micro Business

In Any Economy, What Drives Your Profit, Really?

Embezzlement – Tips to Protect Your Nonprofit or Company Assets

Accounting / Finance – Why and How to Determine Your Break-Even Point

6 Values for Financial Protection

“We don’t seem to be able to check crime, so why not legalize it and then tax it out of business?”
-Will Rogers

 

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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?

 

Business Management Lessons from Yahoo’s Demise

 

Updated Feb. 7, 2012

From a management perspective at the board level, Yahoo is starting to make the right moves. Chairman Roy Bostock, the chair for four years, and three long-serving board members have resigned. This follows the resignation of co-founder Jerry Yang after the search giant hired a new CEO, former PayPal executive Scott Thompson.

Why are the moves positive?

You might recall Yahoo missed a chance to sell to Microsoft for $47.5 million in May 2008. Do the math. This would have meant $33 per share. At this writing, Yahoo’s stock is trading at $15.82.

Other negative headlines: The public catfight between deposed Yahoo CEO Carol Bartz and the board. After her termination, she refused to resign from the board.

Certainly, published reports show Ms. Bartz failed to demonstrate quality leadership in terms of the company’s performance and her personal style of communication. Thirty-two months of valuable time was lost during her tenure. That’s a big sales-opportunity cost.

Despite whatever skills Ms. Bartz seemed to possess to get the top job after previously working at Sun Microsystems and Autodesk, they weren’t apparent in her nearly three years at Yahoo.

True, she successfully addressed financial and organizational issues.

But she didn’t seem to show an adequate grasp of the big picture – to understand the company, its marketplace challenges and solutions. The company’s heritage advertising platform has been backsliding. Too, I have to wonder if the vaunted Yahoo Finance platform has suffered in reputation. It’s been a favorite for those who want to check stock prices.

During her reign, Yahoo’s stock price was at stagnant levels. It’s worth noting that Yahoo’s share price immediately jumped 6 percent when she was terminated. That’s indication she didn’t have friends on Wall Street, either. It might have been advantageous for her to read the book, “How Win Friends and Influence People.”

But, of course, Yahoo was sliding before she took the reins.

Yahoo was once the No. 1 search engine, but since the 1990s it failed to stem the rising tide from competitors Google and Facebook. The board ostensibly didn’t understand the link between financial performance and succession planning.

Yahoo has seemed to be standing still. It hasn’t evolved, or re-engineered its focus like all companies must do. It needs to look fresh and innovative with compelling products and services. In other words, it needs a vision.

In a nutshell, to regain its 1990’s stature, Yahoo must accomplish three salient goals:

1. Hire a chief executive officer who acts like one – productive interpersonal skills, who understands the big picture for Yahoo to successfully compete. Hopefully, Mr. Thompson will meet the challenge.
2. Short-term, the search giant should become relevant in the minds of Internet users, especially among younger demographics. With its significant stake with a Chinese partner, Alibaba Group, fence-mending is indicated.
3. Long-term, Yahoo needs to develop a strategic action plan for a successful business model.

My hope is that Yahoo is again successful. If not, a merger might be in the works.

From the Coach’s Corner, it would seem Yahoo is left holding the bag without adequate leadership. Consider these resource links:

Management Strategies for a Successful Turnaround

Is Carol Bartz Using the Right Leadership Approach

Hottest Tactics to Beat Your Competitors

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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?

 

How’s Your Strategic Planning?

Strategic planning suggestions that work for nonprofits and businesses

 

Are you ready to compete? Is your company like many that need to rethink their strategic plans? Here are some tips in strategic-planning basics.

Cash flow for companies is a common problem. Some businesses have grown too fast. Others have fallen short in due diligence. Many failed to plan for a roller coaster ride. No matter the reason, as a result, many are cutting muscle in human resources and marketing.

History shows the organizations that keep pressing forward do better in the short term and dramatically increase market share as the economy improves.

In a weak economy, successful companies know employees are a key asset and they stay on the attack in marketing. In this way, they’ll maintain market share and develop opportunities for growth at the expense of their competitors.

And, instead of waiting for a transforming event to rescue them, successful companies don’t miss opportunities to grow. They recognize opportunities and seize them by launching and periodically fine-tuning their strategic plans.

Do you know when should you create a new strategic plan?

Here are the five reasons to create a new one:

1. When your company is new.
2. If you’re looking for breakthrough results.
3. If your firm is failing in cash flow or customer satisfaction.
4. If you have a limited budget in choosing options.
5. If you need to set short and long-term goals.

Here are some tips in strategic-planning basics:

Schedule blue sky sessions to make a plan. Ask lots of questions, such as: What are your financial goals? What are your biggest challenges? What is the desired footwork? What will be the required investments? Develop a vision of what you want to achieve and then draw your road map of how you can make that vision a reality.

Make choices based on your return on investment. Some opportunities are positive, but some aren’t. Record and analyze how you spend your time and money. Determine your ROI on each before moving ahead. Not every idea is a good opportunity.

Acknowledge that perfection is not attainable. Procrastination results if you’re looking for perfection. Don’t be afraid to act.

Brace yourself to stretch your comfort zone. Remember the definition of insanity: “If you keep doing the same thing time after time, but you’re expecting new results, then…”

Be assertive – make a commitment. Once you make a decision, don’t engage in self-doubt.

Here’s an example provided by one of the world’s great entertainers:

As a youngster growing up in Palm Springs, one of my neighbors was Bob Hope, who passed away in 2003. So I was especially motivated to interview his grandson, Zachary, regarding the comedian’s business philosophy.

He confirmed his multi-millionaire comedian grandfather wasn’t joking when he used to say to his family and associates: “Get it done.” He said it was the comedian’s most-used phrase.

In summary, here are the basic components of a strategic plan:

• Mission. This is where you reason why your firm exists and where you list the contribution of your principal players along with your core values and priorities.
• Strengths and weaknesses. Evaluate your resources, including your employees’ skills and facilities.
• Opportunities and threats. List factors, such as changes in technology, employees’ abilities, available resources to help you achieve your mission.
• Forecast your capabilities. Anticipate any upcoming budget, resources and personnel changes before you forecast opportunities.
• Goals and objectives. Remember that goals need to be specific, measurable and developed by consensus of all principals. Then, outline your tactics to achieve your goals.
• Implementation. As you carry out your tasks, continue to evaluate the results and fine-tune your plan as necessary.

From the Coach’s Corner, for more on planning, see this site’s Planning pages. Meantime, don’t give up and as Mr. Hope used to say, “Get it done!”

“You’ve got to be very careful if you don’t know where you’re going, because you might not get there.”

-Yogi Bera

 

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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?

 

Startup Toolkit – How to Make a Hit on the Internet

 

First impressions are critical for entrepreneurs. People will buy depending on what they feel about you emotionally. Just like your bricks and mortar location, your Internet presence will be strong if you always remember why people will buy from you.

It’s important to tap into the psyche of your prospective customers – there are five value perceptions that motivate customers to buy.

That’s right, customers aren’t even aware of it, but they make a buying decision based on five psychological reasons about value: What they think about your spokespeople, image of your company, product or service utility, convenience, and price.

Yes, there are a lot of people who will only buy at the cheapest price, but ignore them.  

Now that you’ve laid a foundation for sales to make a hit on the Internet, here’s the remainder of your startup toolkit:

Create a credible name. Thanks to the recession, businesspeople and consumers have changed their outlook. The dot-com era of quirky names will not work as well these days. Also, your name has to be relevant and easy-to-remember. That goes for your branding slogan or tagline, and your logo. Product or service utility is important in a slogan and logo – answer the question that all visitors subconsciously ask, “What’s in it for me?” There’s a link between a simple logo and branding success.

Professional image. Your site needs to be low-key, but assertive in telling your story. Include a page that explains what you’re all about. That’s different from being too sales-oriented or ostentatious. Demonstrate you expect to earn your visitors’ business.

Make certain your site’s layout capitalizes on the natural movement of the eye, which is to upper left, over to the right and then down the side. So a strong element needs to be on the left, too, such as a great graphic of video. The bottom line for profits: Size doesn’t matter but image and professionalism count.

Professionalism also means an informative blog, which will help guarantee that you will have a higher search-engine placement. Encourage interaction. Ideally, your blog is on your Web site. If you must maintain a separate blog, make sure it’s synchronized with your Web site. At any rate, here are search engine optimization strategies for a No.1 rated blog.

Showcase your team. Customers want to feel comfortable dealing with you and your staff. Buyers are impressed if you show pride in your workers. Show their images and bios on your site to point out their expertise.

Establish a strong reputation. Demonstrate your expertise as an authoritative resource. Become known as a leader in your industry. Make informed statements in newspaper articles and other online forums. It’s true more and more people are relying on social media promotions. But publicity in a credible news medium – newspaper, TV or radio – will generate the most respect. Flaunt it. Here’s how to get news media coverage.

Testimonials. Become adept at generating testimonials. Go for it.

Videos. Relevant videos now play a key role. Here are video tips.

Social Media. Your social media – Facebook, Twitter or even LinkedIn – should be coordinated with your site. Again, encourage inter-activity. There are two reasons to insert sharing buttons. It will enable visitors to share your Web site link with others, and you will be able to share your pages, too.

Proofread all copy. Obviously, errors do not promote professionalism. That means  you need to budget time to double-check all spelling and links to pages.

Fresh looks. Update your content as often as possible. Search engines and visitors will take note. But take care not to extremely change your look so you can continue to capitalize on your previous marketing initiatives.

Optimize. Be sure to use search-engine optimization techniques and coordinate your site with your social media. Take advantage of 14 strategies to rock on Google.

Contact. Make it easy, very easy for visitors to get contact information – your location, telephone number and e-mail. But include your information in graphics so unwanted bots and spammers can’t pick up the information simply by crawling your site. You’ll avoid countless unwanted e-mail spam, phishers, and telephone calls.

Prevent online threats. Remember British Petroleum’s online nightmare – the fake BP Twitter account? It generates 10 times the number of visitors than BP’s Twitter account. Use best practices to optimize your brand and manage your Web reputation. 

From the Coach’s Corner, here’s more on online marketing:

How Small Businesses Can Capitalize on Cyber Strategies for Profit

5 Strategies to Sell More from Your Web Site

In SEO, Your Site’s Download Speed Matters to Google

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

-Aaron Wall

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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?

 

Management and HR for Higher Performance

 Part three: How to grow your small business

 

In analyzing the growth rates of small businesses – every great entrepreneur has one salient quality – the ability to be an effective manager.

An effective manager efficiently allocates resources for achieving goals. Quality management usually results from an independent SWOT analysis – assessing internal strengths and weaknesses along with evaluating external opportunities and threats.

Self-employed people need to carefully inventory their own strengths and weaknesses as business personalities. They should also assess how to maintain their good health because they’ll suffer if they don’t. Larger companies should focus on several factors in a strength-weakness analysis of their human resources, such as recruitment, training and development, compensation, culture, leadership, reliability, and salespeople.

Once a business owner looks in the mirror to assess management strengths and weaknesses, then he or she is ready to analyze opportunities and threats for a strategic plan.

Even if a strategic plan is well-written, beware: Management practices that work well in the early growth of a small firm often cause problems later, according to a series of articles in the Harvard Business Review (HBR) by Dr. Larry E. Greiner. He believes such managers fail to take into account “present events or market dynamics.”

“Creative activities are essential for a company to get off the ground. But as the company grows, those very activities become the problem,” Dr. Greiner wrote in a 1998 HBR article, “Evolution and revolution as organizations grow.” His thesis is still accurate.

Red Flags

Business expert Neil Delisanti agrees that managers often fail to solve red flags:

“There are forces inside the organization that they control; forces outside the organization over which they have little, if any, control; and probably most important, red flags in themselves, about which they may or may not be aware. A good manager must be constantly aware of the impact of all these forces. One of the common failings in managers is that they blame all sorts of things for their failures, rather than admitting they didn’t have a good handle on what’s happening.”

Mr. Delisanti has gifted insights because he speaks from both an academic and solid mentoring perspective. He was a faculty member at both the University of Puget Sound and The Evergreen State College. As the guru for the Small Business Development Center in Tacoma, he counseled more than 2,000 companies.

Mr. Deslisanti believes too many small business owners micro-manage:

“Many folks start a business and believe it is their inspiration that made it a success. Although this is sometimes true, what we find on closer inspection is that it was their perspiration and natural management ability that was more responsible. They have invested a lot, money, time, and sanity, in their enterprise and find it hard turning it over, often even small parts, to someone else to possibly blow it. Any business can grow to where the owner just cannot physically, mentally or emotionally, do it all.”

Does he believe managers limit their business growth by poor human-resource management techniques?

“Often, yes. This is particularly true of a company that starts with an owner and spouse sitting at the dining room table. Not only are there innumerable government restrictions on what is legal, we have to look at what the workforce expects from employers today. The management of people isn’t as simple as the old my way or the highway anymore. Diversity in all areas requires that SBOs have to look at differences in age, gender, race, ethnicity, education, background and experience – just to mention a few facets that have to be considered.”

So, one key step is to partner with your employees.

When to start HR function

“I strongly recommend that as a business gets above the 15-20 employee range, the owner set up some sort of human resource function, and get some assistance in designing job descriptions, recruitment policies, pre-tests, application forms and very importantly – interview policies and procedures,” he suggested. Here’s a checklist of strategies to succeed as a new manager.

To underscore his concerns about HR precautions, I agree. I’ve been called upon to help two businesses:

1. A cable TV company was fined $15,000 by U.S. District Court for sexual discrimination of an applicant. The company’s law firm asked me to provide a three-hour seminar on Equal Employment Opportunity laws as part of the sentencing to close the case.

2. An interstate trucking firm was fined $100,000 and required to design a new wage and compensation plan (Note: the company’s pay system worked fine when it was smaller).

In both cases, the bosses were nice people unaware of the dangers in a litigious society.

Because small businesspeople often seem to feel they’re under siege, Mr. Delisanti suggests:

“Have a vision or goal and incorporate it into a strategic plan, which is different than a business plan. This can come in many forms, but it should be organized and written. Identify your vision and then develop a list of goals that will let you succeed, quantify them, put some time frames on completing them. Most important – assign some responsibility to someone to get it done. This will have you on a course of your choosing and let you become proactive instead of reactive.”

Premature growth

He says some companies grow too fast:

“This happens when growth gets out of control when you can’t fill the orders, due to a lack of materials, equipment, people or cash. This can also happen when the company gets too big for the owner to handle.”

Mr. Delisanti believes others grow too slow to cover added costs and expenses:

“Usually, this is a result of overly optimistic forecasts that bring about expenditures that far exceed revenues. Many reasons cause this, such as an SBO’s enthusiasm; level of success with business on a smaller scale; and non-credible or insufficient marketing research,” he said.

Mr. Delisanti warns about unforeseen situations in the external environment:

“Even the best forecasting can’t predict a tsunamis, earthquake and the level of destruction that natural disasters can wreak upon an industry. Consider skiing in the Pacific Northwest some seasons – there can be a bad time to open a new ski shop.”

He says challenges result from miscalculating factors in what he calls an “uncontrollable” industry environment:

“When a business conducts an opportunity-threat analysis, it should look closely at a number of factors and make its decision, based on what it thinks will happen and how the chain of events will impact its goal attainment. If the business thinks incorrectly, it might lose the competitive advantage over somebody thinking correctly. Remember: Everybody can’t win. If you look at all the data and think that interest rates will go up 9 percent and take the actions that will best help you achieve your goals under those conditions, but if they only go up 2 percent, other companies will probably have an advantage over you.”

One other thought, here’s how and when you should develop an exit strategy.

So, there you have an overview – how to grow your small business – in a three-part series.

For the other two parts in how to grow your small business, see:

Marketing Essentials on a Shoestring Budget

10 Scholarly Solutions for Selling More Products

From the Coach’s Corner, here’s a must read: ‘The Book…on Business from A to Z’.

“I believe managing is like holding a dove in your hand. If you hold it too tightly you kill it, but if you hold it too loosely, you lose it.”

-Tommy Lasorda

 

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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?

 

 

Human Resources: 12 Errors to Avoid in Evaluations

 

If your company continues to cope with the sour economy, you might need to re-think approach to human resources.

A series of questions about what to do in human resources may be swirling around in your thought process. Bear in mind that wisdom and courage will be your best friends.

For example, there are four typical questions about HR in this uncertain economy.

So in this column, we’ll address the four typical questions plus include the 12 typical errors to avoid in employee evaluations:

When do I commence hiring?

The answer will not come for a while. The official word on when a recession starts or ends comes from the National Bureau of Economic Research. We will not hear from the organization for a long time. They are charged with declarations, not forecasts. The board did not timely and officially announce the last recession – after many of us in business had already been feeling the harmful effects of the downturn for more than a year.

We can conclude, however, consumer confidence will be a factor. Consumer demand will account for at least 50 percent of the anticipated economic expansion. But consumers – weary from being laid off and from all the unemployment reports – are likely to be very cautious. All indicators show it will be a jobless recovery.

If I have to lay off workers, can I include undesirable employees?

Well, to avoid any legal hassles, it is generally feasible with some provisos; so, consider these questions:

Do you have documentation explaining the business reasons for a layoff? Can you defend your process for selecting employees to layoff? Do you have written performance reviews or records of disciplinary actions?

Make sure your reasons are solid, especially if you want to refill a position, in order to avoid a potential claim of wrongful termination. Make certain that you properly deal with performance issues. You will also have to take precautionary steps to avoid morale issues with your retained workers.

Here’s a human resources case study from an economic downturn:

It was a complicated situation. I once had a public sector client who was forced to lay off 10 percent of the agency’s workforce. My client, who was nearing the end of the term office, was in turmoil facing an uphill battle for re-election. My client also was trying to cope with several poor performing employees including one worker with a history of being disciplined and who was particularly unproductive with a difficult personality. The employee became the opposing candidate.

My recommendations: Implement an empathetic-based reelection campaign, management training for supervisors, teamwork training for the staff, and include the troubled worker among the employees to be laid off. Before my client could implement the last recommendation, the troubled worker walked into my client’s office asking to be laid off. And what were the re-election results? A six percent winning margin.

What do I do if the economy suddenly improves?

Be prepared. Historically, many employees who do not have reasons to be loyal to an organization will want to work elsewhere. That’s mainly the workers who bide their time until the economy improves. So it is critical to evaluate what will motivate employees to stay and become high performers. Then, implement the appropriate measures to show your workers you care about their welfare. In addition, I am a big believer in employee development and training programs. If you fail to retain great workers, it will cost you in the long run.

How do I properly evaluate employees?

Short of providing you with my firm’s recommended employee-performance appraisal form, make sure you are careful to avoid errors in evaluations.

Here are the 12 salient errors to avoid:

•  Insufficient information about employees and insufficient evaluation time. It is best to get to know employees well enough to accurately evaluate their strengths and weaknesses. Also, it is recommended that you to take the proper amount of time in the evaluation process for each employee.
•  Inconsistent standards of excellence. Ineffective managers permit personal feelings to bias the evaluation process. Lack of uniform criteria from manager to manager can be detrimental to the organization and is why some employees are promoted when they should not – that is an indicator of The Peter Principle. Additionally, without safeguards, it is possible to become too friendly with some employees in making evaluations while being too critical with others.
• Failure to evaluate the entire performance period. Some employees, who are aware that a performance evaluation is due, will suddenly improve their work. In such annual reviews, many managers unfortunately look at the most recent behavior instead of the entire performance period. Throughout the year, when an employee does something noteworthy, immediately write it down; when the employee fails in a responsibility make note of it, too. Use good discretion in deciding whether to enter the information in the employee’s personnel file.
• Fear of bosses’ disapproval. Some managers are afraid to reveal derogatory information about employees to their bosses. They don’t want to admit that subordinates are ineffective. They often write or say what they think bosses want to hear about staff members, not what is accurate.
• The rainbow effect. When employees are popular, they are viewed as competent in their work. On the other hand, when employees are unpopular, they’re evaluated as inadequate.
• People-pleasing of employees. Apprehensive about possible confrontations, managers are often afraid to include unfavorable comments about employees – even when justified.
• Empire-building/maintaining job security. Such managers overlook employees’ weaknesses to gain favor with inefficient employees in order to develop allies among department staffers. To save their jobs, other managers will unfairly criticize workers as scapegoats and sacrificial lambs.
• Justification for employee wages. This is the practice of using unwarranted evaluations to justify decisions about employee salaries, such as giving complimentary reviews in advance of promotions and pay increases.
• Weak analytical ability/indecision. Some raters lack analytical ability. Others, because of favoritism, simply are unable to make objective judgments about some employees.
• Middle-curve analysis. There is a tendency by some managers to stick to the middle or average and they do not accurately evaluate employees – they erroneously stick to the middle – average performance grades in every category.
• Denial syndrome. Some managers make excuses and remain in denial about worker performance.
• Irrelevant factors. Bias of non job-related factors, such as physical appearance or social standing, sometimes erroneously influences evaluations of employees. Beware that some employees are good at selling themselves. Well-intentioned bosses also often give shy people too much benefit of doubt for fear of hurting their feelings.

From the Coach’s Corner, in essence, remember that every employee is entitled to hear the following:

1. What’s expected of me?
2. How am I doing?
3. What’s in it for me?

“You can’t expect your employees to exceed the expectations of your customers if you don’t exceed the employees’ expectations of management.”

-Howard Schultz

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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?

PRESS RELEASE: No.1 Topic at Biz Coach Site is ‘quite a Surprise’

Press Release Celebrating The Biz Coach’s First Month Anniversary: Economic, political liberties are surprising No. 1 topic of visitors

 

Sept. 9, 2009

Yes, users are reading the performance-enhancing strategies at this new business-coaching Web site. Informative articles range from planning to technology. However, data shows the overwhelming visitor preference is public policy – and how it affects economic and political liberties.

Based in the greater Seattle area, Biz Coach Terry Corbell knows what to write for readers at The Biz Coach: www.bizcoachinfo.com, “Proven Solutions for Maximum Profits.” After analyzing the first month’s results of the site formally launched on July 29, he is happy with the reader response.

“But it is quite a surprise to learn the extent of the popularity of the first column dealing with economic policy, and economic and political liberties,” Mr. Corbell said. “I’m also surprised to learn where those readers live.”

The most-popular column suggests that governments at all levels in Washington state can help create jobs and set a leadership example for the rest of the nation – if they take new actions for economic development. The No. 1 column has a clear lead over the others – 20 times more readers than the second-place column.

“Sixty-five percent of the public-policy-minded readers are from the U.S. Five percent of them live in Washington, but 19 percent live in Michigan and 16 percent in California (70 percent of California readers live in the Silicon Valley),” Mr. Corbell added.

The most-popular column is entitled, “Analysis: Steps for Economic Success in Washington State.” It was the kickoff column to launch the site and the column continued to gain in popularity even though the site is updated every other day with a new column.

The Web site’s other 10 most-popular columns:

1. Case Study: Mistakes Companies Make When Losing Profits

2. Airbus-Boeing Rivalry: Lessons in Strategic Planning

3. 5 Safety Measures to Thwart Mounting Social-Network Attacks

4. Need a Job? Recession and Offshoring Don’t Have to Be Obstacles

5. Planning an Event? Consider 25 Emergency Preparedness Tips

6. What No One Tells You about Raising Investment Capital

7. New Strategies for International Trade

8. How Can Micro Businesses Position Themselves to Win?

9. Cause-Related Marketing Can Increase Sales by Double Digits

10. Web Security Checklist, Warning about Mobile Banking

As a business-performance consultant and profit professional, Mr. Corbell’s Web site provides proven solutions for maximum profits on eight topics:

• Planning

• Operations

• Marketing/Sales

• Finance

• HR

• Tech

• Public Policy

• Wall Street

The site also provides late-breaking video reports on each hour’s featured business story. Other news-video categories include:

• Economy

• Regulatory Compliance

• Personal Finance

• Sci-Tech

• Health

• Press Releases

The average Biz Coach visitor returns twice, reads more than six pages, and reads for more than six minutes each visit.

The top 10 countries in visitors:

• U.S. (80 percent)

• Canada

• Austria

• China

• Philippines

• Great Britain

• Sweden

• France

• Australia

As one of the Northwest’s longest-running columnists, Mr. Corbell has written 450+ business-coaching columns since 2001 for several media Web sites. He currently writes an Internet business-coaching column, The Biz Coach, for the Money News page at Seattle’s KIRO (www.kirotv.com), the “2009 National Edward R. Murrow Award Winner for Overall Excellence.”

Many of Mr. Corbell’s business-coaching columns are updated and archived on The Biz Coach Web site, which was developed by Solid Technology, www.solidtechnology.com, “Trusted Experts, Solid Results.” in Portland, OR.

He is a member of Society of American Business Editors and Writers (SABEW). 

The New York Times featured Mr. Corbell twice in 2008. For some his business tips, simply Google each of these headlines:

• Been There… Done That… Here’s How

• Advice on Taking an Entrepreneurial Leap

As a profit professional, he developed The CMS Approach. To relieve a company’s financial stress, The CMS Approach includes a financial turnaround program on a pay-for-performance basis. Mr. Corbell provides complete solutions for a small retainer and one percent of the net-profit increase.

For external challenges, he provides a full marketing program from public relations to advertising and guarantees a 10 to 55 percent higher return on clients’ investments. He has deep media relationships and includes strategies such as social networking to newsworthy senior-executive videos, and TV commercials.

His firm, CMS Associates LLC, www.cmsassociatesllc.com, has been long-known for providing “Solutions to Increase Revenue.” CMS is an excellent company with an outstanding record of success since 1992. The firm has insights, systems and strategies to save companies time and money while increasing revenue.

Mr. Corbell is also focusing on economic development. He and KIRO are partnering to promote the economic climate of Western Washington communities.

He’s writing a book tentatively entitled, “How to Watch Your Back in the Jungle – Avoiding Business Predators.”

Space for banner advertising on The Biz Coach Web site is still available at reasonable Charter membership prices. In addition to the Web site, advertising for The Biz Coach concept will soon be available on Seattle radio, “The Biz Coach Roundtable.”  

Charter sponsors for The Biz Coach Web site and radio program will receive special incentives and priority red-carpet benefits. For details, visit “Our Services” page: http://www.bizcoachinfo.com/our-services.

Angel Investor: Tips for Increasing Cash Flow, Profits

 

For a growing business, cash flow is crucial for profitability. That’s also true for the biggest companies and sectors traded on Wall Street – airlines, cars, financial services, oil or technology.

Every company is concerned about cash flow; but in 2008, 128 of the Fortune 500 companies in the nation had red ink. They include General Motors, Citigroup, Motorola, AIG, Merrill Lynch, ConocoPhillips, and Time Warner.

Cash flow enables you to make productive decisions to navigate and grow in the competitive marketplace.

No one knows that better than angel investor John B. Dimmer, the managing member in FIRS Management LLC, a private investment firm based in Tacoma, WA.  He is also a director at three companies and has extensive management experience.

Here is a sample of his cash-flow solutions:

Q: How do you recommend predicting a cash-flow crunch in time to do something about it?

A: You need monthly income and expense forecasts that are established at the beginning of the business year. These must be realistic numbers that all of the management staff has agreed are reasonable. The second things you need are timely and accurate financial statements.

It is very much like planning a road trip in the car. You are trying to get from point A to point B, so you plot a route. You know that there are landmarks along the way. Every now and then you need to stop and check for these landmarks. If they show up where you expect them, you know you are on the right track. If not, you need to evaluate how far off course you are, and take corrective action.

Q: What strategic process do you recommend to evaluate the causes of cash deficits? What are the most promising solutions?

A: Getting back to our roadmap analogy, if you don’t see a landmark that should be there, or you find a new landmark that wasn’t on the original plan, you need a process for getting back on track. You need to take the time to evaluate where you are, where you should be, and what went wrong.

When you are off plan, there are some fundamental questions that need to be asked: Was the original plan flawed? Has there been a fundamental shift in the business such that the original plan is no longer applicable? Did we make an execution error? When, where, and what was it? Can it be corrected? What are the critical variables with respect to getting back on plan?

Usually this involves one primary variable, which is money. Whatever solution you take, you need to make sure you have enough money to fund it through implementation.

Q: How do you recommend finding creative ways to keep the business alive until sales pick up?

A: One of the mistakes I often see are entrepreneurs who staff their organizations under the assumption of optimum activity. The truth is that there are cycles to business. While not all business can use contract help, I like to try and have my companies staffed to a smoothed-average that is just above the troughs and just below the peaks. In this fashion, you can quickly and effectively reduce your labor costs in times of a slowdown without causing a morale-crisis with your permanent employees. I would also use slower times to beef up on training in preparation for when the good times return.

Finally, encourage your staff to make things happen. When we hit a slowdown in the car business, we ask our sales staff to get on the phone and start calling people. This usually starts with former customers and takes the form of a friendly call simply to inquire how everything is going with their car. Often times, you discover that they love their car, and they have a friend who is interested in buying a new car. Sometimes you find that they love their car and they want to buy another. And sometimes you find that there is a problem. Problems, however, create opportunities. If you invite them to come in, and then solve their problem, they will remember that you were proactive. They will tell their friends about their experience, and their friend will come and see you for their car needs.

Q: What about negotiating with investors or other financial supporters until cash flows increase?

A: Investors hate bad surprises, especially when the surprise is accompanied by an emergency need for funds. Assuming you created the roadmap, and are tracking your progress, you should be able to see the bump in the road well before you actually hit the bump. Most investors are business people who have been down the road before and know that everything is not smooth sailing. They will appreciate the fact that you have a plan, that you are tracking your results against the plan, and that you have foreseen a problem before it hits.

Generally cash flow problems mean you need to borrow more money or raise more equity. If such is the case, have your presentation for raising new money ready to go so that you can transition from the communication stage to the pitch. Be humble, because the last thing I really want to hear as an investor is how smart you are and how great everything is going when, in fact, you are off plan and running out of money.

Part of the negotiation is an acknowledgement of the problem, a rational analysis and a well-crafted solution. You, as the owner, may need to take a bit of a hit in order to implement a solution. This might come in the form of a down round of fundraising where you are force to make up the dilution to the other shareholders out of your own holdings. Know what you are and are not willing to do. If you are forced to give up something to keep the company alive, figure out how to get it back, perhaps via options, if your revised plan was the proper call and the company comes roaring back.

Q: How do you know when it’s time to close or sell the business?

A: I always want to stay in the game, even when it is two outs in the bottom of the ninth inning, you are down by five runs, and the count is full, there is still a chance you can pull off a win. Nonetheless, I try to keep entrepreneurs from getting in so deep that if their company fails, they are wiped out.  I’ve been involved with two companies where I had to tell the entrepreneur that they shouldn’t put any more money into the operation.

In one of those instances, we were able to locate a buyer for the company. The purchaser was a publicly traded entity that, since the purchase, has taken a bit of a down-turn, so the jury is still out as to whether the entrepreneur will come out whole. Nonetheless, it was a better option than closing the doors. With the other company, we have what we feel is great technology; we just can’t seem to get a revenue stream developed. We are in the process of procuring a patent, and think that it will have good commercial value once the patent is issued. Accordingly, we have put the operational aspect of the company in suspense, and are pursuing acquisition opportunities.  The biggest risk on this strategy is a failure to cut a deal followed by an impotent patent.

I never advocate simply closing the doors. If you are doing proper planning, you should see the problem coming down the road. There should always be something saleable about your company, even if it is less than a full recovery.

From the Coach’s Corner, for more on Mr. Dimmer:

How to Attract an Angel Investor

How Investor Has Fun in Business and Technology

“I buy expensive suits. They just look cheap on me.”

-Warren Buffett 
 

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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?

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