Good Technology But Bad Marketing

Sometimes I see businesses that get carried away with technology. Technology can be a very useful tool. But like all tools, it must be used correctly. Before you decide to put in some "great system" for your company, ask yourself one very simple question. "Will this make it easier for my customers to do business with me?"

Some business owners lose sight of the objective. Whenever you put in a new system, whether it is to place orders, pay invoices, etc., it should make it EASIER for the customer to do business with you. Let's take a common form of technology and examine it - the automated phone system.

I call someone on the telephone because I want to communicate with them. I want to give them information, get information, or both. Anyone disagree with that? Of course not. That is why we make a business call. Therefore, your phone system should make it AS EASY AS POSSIBLE to reach everyone in your company. If I know the person's extension, I should be able to enter it at any time. If I don't, I should be able to hear a list of names. That is easy. I may not know her last name. I don't want to have to enter the spelling of her first name. Does she spell it STACEY, STACIE, STACI, or STACY? Does she spell it MICHELE or MICHELLE? Get the point?

Likewise, when I get to the person's extension and they are not available, I want to hear a SHORT greeting. "This is John Doe. I am not available, please leave a message." I may not be Bill Gates, a presidential candidate or the Pope, but my time is valuable to me. I don't want to hear a commercial for your products. I want to understand what you said. If I can't talk to you, I don't care where you are. I just want to leave a message as fast as possible.

This is true of every type of technology. Keep it simple for the customer. If I don't have my account number, can I just enter my name and address? Do you really need my father's middle name to take my order? And if I have already entered my account number, why are you asking for it again when I talk to you?

MAKE IT EASY FOR THE CUSTOMER TO DO BUSINESS WITH YOU !!!!! Technology is a great tool ....but only if it makes it easy for the customer - NOT EASIER FOR YOU !!

Examine all of your systems. Survey your customers. Ask them what you could change to make it easier for them. Most customers are like water. They will take the path of least resistance.

Dangerous Business Vocabulary

George Carlin, the comedian who recently passed away, often talked about the seven words you could not say on TV. I believe that there are some words which should either never be said in business, or if they are said, they need to be accompanied by a very detailed explanation.

If you listen carefully when most people talk, they usually are afraid to make a commitment. They use terms which show that they are not really confident about what they are telling you. Here are some examples.

most: I'll have most of the work done by tomorrow. What is "most"? 90%? What 10% won't be done? How will you decide what won't get done?

usually: I usually get there by 5:00. How many times is usually? Will you get there at 5:00 tomorrow? - because that is when I need you to be there.

think: I don't think that will be a problem. Will it be a problem or not? I need to know now so I can be prepared.

should: That should be fine. Will it be fine or not? If it won't, then I need to do something else.

plan: I plan to have it done Thursday. I don't care about your plan. Will it be done on Thursday or not?

next week: I'll call you next week. When next week? Five days is too long a span of time.

I could go on and on. I am sure you get the idea. If you are going to run a successful business, you can't afford to accept that kind of communication from anyone - employees, customers, or vendors. You can only make good decisions if you have good information. You can only run your business efficiently if you have good information. If a vendor says "I usually deliver by 3:00," you really need to know that he WILL be at your company by 3:00. If a customer says "I usually buy 10 of Part A and he orders 12, what will happen if you have only manufactured 10?

Now some of you may think I am taking this to an extreme. I disagree. I believe that business owners that accept less than the best, less than the most accurate, etc. will never realize their full potential. If you get on an airplane that is supposed to go to Denver, you don't want to hear the pilot say, "Welcome aboard. I usually land this plane in Denver somewhere between 5:00 and 7:00. I should be able to do that today." That wouldn't give you a very warm feeling.

Don't let anyone off the hook. Ask them to commit!!!!

Whether you agree or disagree, please feel free to post your comments. I always enjoy hearing the opinions of other business people.

Sales … It’s as Easy as 1-2-3 (Part 2 of 2)

This posting is Part 2 of 2 of Peter Bruening's article. If you have not read Part 1, it will certainly benefit you to read it first. Peter, owner of The SellingPoints Group, Inc., and the author of The Power Guide to Supportive Selling does a great job in explaining the "basic 1-2-3" of sales. Here is Part Two.

In Part 1 of this article you were introduced to the importance of engaging in the 1-2-3 of sales success (Goals-Activity-Results) to create consistent sales results. Part 2 will describe how you can begin to do this for your business.

Every sales opportunity that you or your company engages in is also a goal. To be more accurate, every sales opportunity is a set of progressive goals. At the very beginning of the sales cycle, the goal is to schedule an initial meeting to discuss the customer’s situation. The next goal is to reach a point of agreement for the customer to consider buying your product or service. Finally, the next goal is to close the sale. Every sales opportunity moves through these three mini sales cycles: Prospecting, the Customer Interview, and Present & Close. That’s it. That’s all sales is. Here’s the real kicker. While I’d love to have you call me so that we could work together – that is, after all, how I make my living – I’m going to hand you the golden key for free. Just for reading this article, I will give you the golden key. It is this: Target dates drive activity which creates results. That’s the 1-2-3 of sales.

In sales, you must always, always, always have a next step that you are trying to achieve in each sales cycle. This next step is the current goal you are trying to close to move that sales opportunity forward. You may be thinking, ‘Big deal. Some golden key. What am I supposed to do now?’ I’m glad you asked! The way to implement this fundamental sales concept is by never ever letting a conversation or meeting end without setting the next step with the customer. At the very least, never let a conversation or meeting end without at least trying a couple of times to set this next step. A good way to think of it is that, at any point in the sales cycle, what you are really selling is the next step! When you get the next step scheduled, you’ve actually closed a mini sale along the way toward your end goal of closing the actual deal. This change in your behavior will have more impact than any single change you can make. And it’s easy to do. It is something that is totally within your control. I can tell you without any doubt that I get more positive feedback from my clients about this one technique than anything else I teach in my workshops and sales coaching engagements.

So, how do you know a next step when you see it? A lot of the time, I’ll be working with a client and they’ll say, “Peter, I always do that. I always set next steps.” “That’s great”, I respond. “Give me an example.” My client will tell me, “Well, I always tell them I’ll get the information they need, and I’ll call them next week.” Is this a next step? No. How about this. “Peter, the customer told me they liked what they saw in my proposal. They wanted to look it over and they said they’d give me a call the week after next.”

Sorry, that’s not a next step either. A legitimate next step must have two elements: a Time and a Date. If it doesn’t have a time or date, then it is not a next step. And if you don’t have a next step, you have a stalled sales opportunity. It is as simple as that.
Sales really is as easy as 1-2-3: 1-Always be closing for your next step with the prospect or customer; 2-That next step will drive activity, both on your end AND on theirs; 3-Activity drives sales results. Consistently implement this discipline in your business, and watch your sales grow. And if you want some tips on this, or on questioning and listening techniques, let me know!

Thanks again to sales trainer and consltant Peter Bruening for taking the time to write for this blog. If you would like to contact Peter for more information, he can be reached at pbruening@SellingPointsGroup.com. More information is available at http://www.sellingpointsgroup.com/. Once again, I encourage your comments on this posting or any posting in this blog. I am sure there are many experienced and knowledgable people reading this blog whose comments can help others.

Sales - It's As Easy as 1 - 2 - 3 (Part 1 of 2)

In past postings, I have talked about the fact that I feel marketing is basic. Peter Bruening, owner of The SellingPoints Group, Inc., and the author of The Power Guide to Supportive Selling likes to present selling in basic terms as well. Mr. Bruening is a well-known and respected sales trainer and consultant. I asked him to present some of his thoughts on sales. I am posting his response in two parts. Part One is presented below.

I’m asked all the time, “Peter, if you had to boil it down to one thing, what’s the most important thing you need to do to be good at sales?” I like this question, because it makes an attempt to hone in on something basic. Something fundamental. And that’s what successful selling is all about. It’s not about being fancy. It’s about being fundamentally consistent. And this is true whether you are a full-time quota carrying salesperson – or whether you are a professional, such as an accountant, a financial advisor or architect, for example – or whether you own a small or medium business. No matter what you do in the business world, sales is fundamentally important to the survival and growth of your business. I went to graduate school to get my MBA, but you don’t need to do that know that the most basic business equation is: Total revenues minus expenses = net profits. Successful businesses work on both ends of the equation – they maximize sales while keeping expenses in check.
So, what’s the most important thing you can do to be good at sales? Without a doubt, if you’re talking about the part of selling that happens when you are with the customer, the single most important thing you can work on is your ability to ask good questions, and then close your mouth so you can closely listen to your prospect’s or customer’s answers. This ability is part science and part art. And, not surprisingly, it is what I spend a large portion of my time teaching my clients in my workshops and in my one-on-one sales coaching work. If you don’t know what questions to ask, how to ask them, and when to ask them – and if you don’t couple this with the self-discipline to keep your mouth shut as your prospect or customer answers – you cannot succeed at sales. I’ve seen more people than I can count who have what many would consider to be “natural born sales talent” – and then they fail at sales because of the lack of the capability to ask questions and listen. And I’ve seen at least as many people who would never be described as “natural born sales people” succeed at sales because they excel at questioning and listening. This second group of people will never win a contest for knowing the most jokes, and they aren’t necessary the life of the party. But they know about questioning, and they know how to listen.
How do you learn the science and art of questioning and listening? Read books, practice, hire a sales coach, practice, go to seminars, practice, read more books, practice, practice some more, and then practice. Do you get the picture? And there are two kinds of practice. The first is the kind you do by yourself. If you see me talking to myself as I’m driving down the road, you can be sure that I’m practicing a sales technique. I do this on a daily basis. It’s a great way to use what would otherwise be wasted time to improve myself. The second is the kind that you do in live situations with live customers. If you don’t take new techniques and behaviors out to the field of business, you’ll never learn them.
So, while questioning and listening is certainly the single most important aspect of selling, it is actually not the main theme of this article. Right on the heels of this critically important skill is what I sometimes call the basic 1-2-3 of sales. It is actually the same 1-2-3 that is behind success of any kind. Think about it for a second. Any success that you have in life starts with a goal. This goal drives activity. And this activity creates end results. The 1-2-3 of success is Goals-Activity-Results. This is true about any success. Years ago, when I was living in an apartment, I had a goal of owning my own home. This goal drove certain activities – I went to school, moved my way up in career and income levels, saved money – and eventually the result was brought to fruition. Now, three houses later, I have been through this particular goal cycle several times. Each time, my goal drove my activities, and my activities created my end result.

This concludes Part 1. Part 2 of this article will continue to outline how you can engage the 1-2-3 of Goals-Activity-Results to create consistent sales success in your business.

A special thanks to Peter for sharing this information with all of our readers. Please remember, Part Two will be posted shortly. If you would like to contact Peter at the Selling Points Group, he can be reached at pbruening@SellingPointsGroup.com. More information is available at http://www.sellingpointsgroup.com/

Feedback on Protecting Your Business

First of all, I would like to thank Christine for her comments. If you haven't read them, please go the comments section of Marketing 201. She makes some important points.

Greg Bevington, a partner in the law firm of Bootay and Bevington, sent me a write-up on an area that he feels is very important when it comes to protection. It contains some excellent information which I think every business owner needs to follow. Here is what Greg wrote.

“Piercing the Corporate Veil” – Forming a corporate entity is only the first step in personal asset protection. Sole proprietors’ and/or partnerships’ personal assets and business assets are one in the same in the eyes of the law when it comes to executing a judgment. Obviously, that is a common reason most business owners choose to form a separate entity such as a corporation, limited liability company, limited partnership, or some variation of the previously mentioned forms. This is a smart first step for the business owner, but personal asset protection does not continue automatically. Business owner beware!

It is critical that the business owner who has formally set up his entity continues to act as a formal entity. In its simplest form, a legal “person” can be created in the following ways: an American citizen is born and issued a Federal Social Security number, a person passes away and the “Estate” is issued a tax identification number, or a business entity is created and the IRS issues a Taxpayer Identification Number for that entity. I tell my clients to view the entity as a completely separate “person”, which it in fact is, with an independent set of rules which must be strictly followed. If the rules of the business entity are not followed, a judgment creditor can “pierce the corporate veil” and attack personal assets owned by the business owners. “Piercing the corporate veil” is a legal term used to describe an action to have the corporation set aside for purposes of litigation such that the personal liability attaches, and personal assets can be reached. Aaron Lawson, Piercing the Corporate Veil , Expertlaw.com, August , 2004. Different degrees of ownership may be subject to different degrees of liability, but that is a more complex topic for another day. In general, a formal business entity receives personal asset protection as long as the asset follows its formal corporate procedures, is properly capitalized, and is not a sham company with a purpose only to advance individual interests.

In general, a business entity’s owners will receive personal liability protection when it follows the rules set forth by the entity as stated above. For instance, it is necessary to have a set of by-laws or its equivalent, to have annual shareholder meetings, elect a board of directors or managers, have corporate resolutions passed and records of such kept in minutes for corporate activities such as entering into contracts or buying and selling assets, keep business checking/banking accounts separate from personal accounts (ie, do not commingle funds), or perform any other corporate formality procedure required. These tasks can be easily accomplished by keeping updated minutes.

The above has been written in a general format and is not specific to any particular state or territory in the United States and can vary on the type of business entity created and operating. For more information about business planning and personal asset protection in the Commonwealth of Pennsylvania, please contact Greg Bevington, Esq. of Bootay & Bevington, LLP at 412-650-5940 or email gregbevington@gmail.com.

Once again, thanks to Greg Bevington for providing some valuable information. I welcome all comments on any business subject. If you enjoy reading this blog and feel that someone else could benefit from the information, please pass on the name our our site.

The Two Biggest Marketing Mistakes

We all make mistakes. No one is perfect. Mistakes are usually accidental. Most mistakes are even excusable. BUT ........... I believe that two mistakes are NEVER excusable. Do I have you a little curious?

You have most likely heard the saying, "Don't burn your bridges behind you." For marketing, you can translate that to say, "You never know where your next order is coming from."

So what are the mistakes? Here is the first ..... most business people do not realize that ......

Every person you meet in the elevator, talk to on the phone, buy from, pass in the hallway, sit next to on the plane, etc. etc. is either . . . .

a customer,

a potential customer, or

a referral source.

They ARE buying from you now, CAN buy from you in the future, or can REFER someone to buy from you.

If I sell left-handed golf clubs and you don't play golf, you may not buy from me now but you may start to play in the future and need left-handed golf clubs. You would be a potential customer. If you are not left-handed, you will not buy the clubs even if you start to play in the future. BUT .... you may know a left-handed golfer. If you like my company and my product, you will likely recommend to your left-handed friend that he buy left-handed golf clubs from me. Thus, you are a referral source.

Everyone is either a customer, a potential customer or a referral source. Think about that when you have contact with other people.

A financial advisor has an office in the same building where I am located. She recently put a sign on her door that said, "NO SOLICITING." I asked her why she put the sign on the door. She said she didn't want people who sell office supplies, copiers, phone equipment, etc. coming into her office and trying to sell to her. I asked her if those people ever used a financial advisor. She said that they probably do. You can guess what my next question was. "Why don't you want potential customers coming into your office?" Then I said, "And if they don't need your services, maybe they know someone who does." I suggested to her that when someone makes a cold call to her office, all she needs to say is, "I will let you tell me about your product or service if you will then listen to me discuss what I sell." She took the sign down.

The second of the two biggest mistakes is not telling EVERYONE what you sell. To be a potential customer or referral source, a person must know what kind of business you have. A plumber comes into your house to make a repair. Does he leave with your business card and brochure? No, he may not need your product but he is certainly a referral source. What about your mechanic, hair dresser, dentist? What about the receptionist at your chiropractor's office?
They all can be referral sources , but they MUST KNOW WHAT YOU SELL.

If you are not treating EVERYONE properly (because you never know where your next order is coming from) and if you are not telling EVERYONE what business you are in (so they can be a customer, a potential customer or a referral source), then you are making the two biggest marketing mistakes.

I have received a great email from an attorney who wanted to comment on my postings about protecting your business. I will present his comments in my next posting. Please feel free to comment on this and previous postings. Your comments are always welcome.

Marketing 201

I do not consider myself to be a marketing expert. But I do think that anyone who lasts more than five years in business has learned a great deal about it. After all, if you can't market, you can't survive.

What I know, I learned through reading numerous books on marketing, talking to others I believed to be experts, and trial-and-error. I learned a great deal from all three methods. All three methods helped me to determine what marketing is. To me, marketing is anything and everything that your customer sees, hears, tastes, touches, or smells that comes from or is about your business.

Marketing is not just an ad in the newspaper or a fancy brochure. It is not just a special sale or promotion. It is not just a unique logo or catchy slogan. It is not just taking customers to lunch. Once again, Marketing is anything that your customer sees, hears, tastes, touches, or smells that comes from or is about your business. Marketing is ........

• the cleanliness of your parking lot.

• the appearance of your employees.
• showing up on time for meetings with customers.
• retuning phone calls promptly.
• treating vendors respectfully.
• etc. .... etc. ......etc.

Think about this. What would be the larger determining factor in a buying decision .....

• seeing a large billboard advertisement, or receiving a hand-written thank you note for referring business to them?

• hearing an ad on the radio, or having the sales person show up at your son's baseball game to cheer him on?

• receiving a fancy brochure in the mail, or receiving a personal phone call from the owner of the company?

• receiving coffee mugs, T-shirts and a tote bag with a logo on them, or receiving a referral for your business?

Now read the above list again and ask yourself this question. Which is more expensive? Chances are the alternatives that you selected as most effective were also the least expensive.

Marketing does not have to be expensive to be effective. I like to repeat for effectiveness so here I go again. Marketing does not have to be expensive to be effective. I am not saying don't spend money on brochures or advertising or give-aways. I am saying THINK about what works best in each situation and what is best for YOUR company. My neighbor had no children. He had a really nice BMW Z4 which I would have loved to have. I have five children. Guess what we had for many years when my children were young - a mini-van, of course. What was right for them was not right for us. Just because another company spends a fortune on advertising does not mean that you have to do so as well.

Jeff Tobe of Coloring Outside the Lines, professional speaker and author of many books on creative marketing, said to me, "You need to out-think the competition not out-spend the competition." With that in mind, I usually avoided expensive marketing programs. I have looked for ways of promoting my businesses without spending a lot of money. When I did spend a lot of money, it was very targeted. I spent it on customers and potential customers where I could get the best return.

Here is an example. I held a speaker series. I invited current customers and potential customers. I selected four speakers to present topics that I thought would be both of interest and helpful to my customers. Each presentation was held separately. All four were held at a local country club in the evening at 6:30 to give my guests ample time to arrive at the club after work. From 6:30 to 7:00 I hosted appetizers and cocktails so the guests could network. The speaker made his presentation for no more than one-half hour. We allowed time afterwards for questions. For those that wanted to leave immediately afterwards, they were gone by 8:00. Others could stay later and network.

That was a targeted marketing program that was informative to my guests and gave them a chance to network with other business people. It was marketing for me that also benefited my customers. Win-Win. For me, it was an image builder. It said that I cared about my customers. I wanted to help them. It increased the credibility of my company. For my customers and potential customers, they learned about a particular business topic and they had a chance to meet and network with other business people. That did more for my business than any ad, promotion or give-away could have done.

That is just one example of many things I have done over the years aimed at out-thinking not out-spending the competition. Once again, I am not an expert. There are many of you reading this blog that have many great marketing thoughts and ideas. I would certainly like to hear what other business people have done that is unique. Please feel free to post in the comments section or email me at ron@sentrabusinesssolutions.com. If you find this blog useful, please pass on the name of the site to other business people that you feel would benefit from reading it.

Marketing 101

I decided to call this posting "Marketing 101" because I want to talk about basic marketing. Maybe the term "basic marketing" is redundant. Is marketing really something that is basic? Do most business people try to make marketing too complicated? Sometimes, I think they do.

I think there really are four concepts that have to be incorporated into a marketing plan - and they are easy to understand.

CONCEPT ONE: Marketing is an on-going process. There is no magic wand !!!! There is no one promotion, or one advertisement, or one slogan, or one whatever that will cause customers to come running to your business to buy your product or service which over the long term will make you successful. Yes, you can have a promotion (buy one get one, 50% off, free gas fill up with purchase, etc.) that may give a short term boost to your sales. But what happens when that ends? I was naive when I first got into business and started looking for the magic wand. I wanted to find that one slogan, or ad, or promotion that was going to make my sales soar. I never found it. I did find the answer though. I discovered that marketing is an on-going process.

It is a process - not an item. It has no ending as long as you are in business. A promotion, a slogan, a sale, an advertisement are all part of that process. Marketing is the sum of all the parts. It is a process that must be coordinated so all of the parts work in unison.

CONCEPT TWO: You need to decide what you want to be. You can't be all things to all people. You need to have a niche and you have to have your business positioned in the marketplace. Some business owners resist having a niche because they think they are losing opportunities. However, by having a niche, you are perceived as an expert. If you read a lot of marketing books you will find many on the subject. One of the best in my opinion is "Positioning" by Al Ries and Jack Trout. I strongly suggest you read it before you develop your next marketing plan.

Just think of yourself as a customer. Do you want to go to a "jack-of-all-trades" or do you want to go to an expert? Can you imagine a surgeon having a sign that says "Heart operations, back operations, brain surgery, gall bladder removals, dental surgery - all performed here." How confident would you feel? Yes, that example is an extreme. But it helps get the point across that you should want your business to be known as an expert.

Imagine if Sears decided to advertise that they sold "high fashion, upper end clothing for the sophisticated buyer." How many men do you think would be willing to pay $2,000 - $5,000 for a suit at the same place where they bought their chain saw and their refrigerator? Position your business and find a niche.

CONCEPT THREE: Never make price your major competitive advantage. If you do, you will only have customers until your competitor reduces his prices so they are less than yours. People who buy from you because of price alone will leave you as soon as someone else's prices are less than yours. That is as basic marketing 101 as you can get. Nothing else needs to be said.

CONCEPT FOUR: You don't market to your current customers the same way that you market to potential customers. When I talk to business owners about marketing, all I hear them talk about is getting new customers. For some reason, they choose to take the current customers for granted.

I don't believe that one size fits all in a marketing plan. I do not market the same way to current customers as I do to potential customers. If you are shaking your head in disbelief, let me ask you this question: If you were a piano teacher, would you teach a new student who has never played a note on the piano the same way you would teach someone who had been taking lessons and practicing for five years? Of course not ..... and that goes for teaching anything else as well. You should think of marketing the same way. Why would you market to a customer who has been buying your product or service for five years the same way you would to someone who has never heard of your company?

If you are still having trouble with this concept, try thinking about it this way. Suppose you were going to take your best customer to dinner and there were five restaurants in your area from which to choose. Three of them you have used many times before and two of them you have never used. Would you be more likely to take him or her to one of the three restaurants that you have used many times before .... or would you go to one of the two restaurants where you have never eaten before? That is a no-brainer. You are not going to gamble with the business of your best customer. No coupon, BOGO, or other promotion is going to influence you. Which one of the three you choose will depend on how they market to you as a current customer. When you call for reservations, which one automatically gives you the time and table you request? When you enter, which restaurant has a hostess that always calls you by name (Welcome, Mr. Smith or Good evening Ms. Jones)? Which owner or manager comes to your table during the meal and acknowledges you in front of your guest as an important customer of the restaurant? Whichever one markets to you best as a current customer will get your business.

Now suppose it is just you and your spouse going to dinner one evening. Would you be willing to try someplace new? What would it take for you to try a new restaurant? It will certainly take something different than the marketing example above because you have never been there before. By now I hope you get the point that marketing to new customers is different from marketing to current customers.

At this time I suggest you read or re-read the three postings on customer retention and on business advisors (those would be your customers). It is important to understand customer retention and how to get marketing information from your customers. For some reason, business owners separate themselves from their customers. It is as if they are performing and must stay in character. Your customers are a great resource. They will tell you why they buy from you. They will tell you why they buy the products that they buy. Customers will be honest with everything EXCEPT one thing. If you sell an upper end product or service, customers almost never admit that they can't afford it. I know quite a few people who gave up their country club membership (coincidentally) when their business was declining. What reasons do they give? "The food is bad ... I don't play enough golf .... my back has been bothering me ... my spouse says I spend too much time away from the family ..... etc." None of them said they quit because they could no longer afford it. Thus, when you are talking to a customer and they say "I don't buy Product A because it doesn't come in green," make sure you ask, "If I make it in green, will you buy it?" If they still won't commit, you will know what the real reason is.

Those are my four concepts of marketing 101. I would really like to hear from marketing experts out there as to whether they agree or disagree or if they would like to add more to my four concepts. You can post your comments directly on the blog or you can email me at ron@sentrabusinesssolutions.com.

Feedback on Forecasting and Insurance

I received some very good feedback on two recent postings. The first comment was on the posting entitled "Two Tips on Financial Forecasting." In case you did not read the feedback in the comments section, here they are.

Your comments work for 'big business' too and I found this article interesting and valuable reading. I find the budget setting process to be one of the most difficult phases of the year, particularly for non-financial managers. The time and effort spent at the start of the process certainly pays dividends down the line. The only other thing I can add to your script is - once you've committed a cost to an area of expense don't artificially move it to another area if that line goes over budget. People are afraid of overspending, but unless you show true varianceshow can you accurately budget the next time around? Learn from mistakes and remind yourself of valid reasons for overspending so you can judge whether they are a one-off or the start of apattern/new trend.

I certainly agree that the forecasting principles apply to big business as well. I also agree that expenses need to be allocated properly. It is vital that expenses be shown regardless if you are over budget - or should I say especially if you are over budget. I would like to thank the reader for making those important points.

The second feedback came in an email directly to me from Jim Crawford, owner of Crawford Insurance in Pittsburgh, Pennsylvania. Jim agreed with me on the importance of building a relationship in order to enable your insurance agent to provide the best possible service and advice. As an example, Jim pointed out how an agent can save you money by knowing the working of your business. Here is an excerpt from the email.

Workers Compensation insurance can add up to a large portion of your business insurance expense. Some companies can take a bite out of that expense by forming a workplace safety committee that meets state requirements and by applying for committee certification. This may entitle you to a five percent workers’ compensation premium reduction. More importantly, safety committees are a proven tool in helping keep employees safe, injury free and stay on the job earning their full wages. When I know that a company has the opportunity to save on its premium and keep their workers safe, I frequently work with themto set up their safety committee. A good relationship makes accomplishing this
task easier and more effective.

Pennsylvania business owners can learn more about forming a workplace safety committee and obtaining certification by visiting the Pennsylvania Department of Labor and Industry web site http://www.dli.state.pa.us/. Follow the links to Licenses, Permits & Certifications. From there, you can download the application for initial certification. Most likely other states have similar sites to help business owners in their state.

Jim said that any reader who would like more information on this or any other insurance subject can contact him at 412-795-8888 or email crawfordinsure@choiceonemail.com .Once again, thanks to both the anonymous reader and Jim Crawford for adding valuable information to this blog. Reader comments are always encouraged. I know that there are many knowledgeable and experienced business people reading this blog who can help others. Please feel free to contribute. You can add your comments directly to the comment section or you can send an email to me at ron@sentrabusinesssolutions.com.

Protecting Your Business - Trusted Advisors - Part II

Who would you rather have teach you how to play golf - Tiger Woods or Warren Buffet? Who would you rather have teach you about investing - Warren Buffet or Martha Stewart? I think you get the idea. When you have to ask a question about protecting your business, you need to ask the right person. That is why I am always amazed when someone tells me about legal advice they received from their brother - who is a commercial pilot. Or they tell me about the tax advice they received from their uncle - who is a chiropractor.

RULE ONE: We discussed the first rule of protecting your business - establish financial controls - in the first posting on the subject.

RULE TWO: The second rule - build RELATIONSHIPS with "the big four" was discussed in the last article. We are now ready to discuss each of the big four. Let's start with your attorney.

RULE THREE: Never sign or publish unless your attorney reads it first. I learned many years ago that it is much cheaper to pay your attorney to review a contract BEFORE you sign it than to try to get out of the contract after you have signed it. ......and there are a lot less headaches. The same is true for anything you publish such as policy manuals, advertisements, etc. When I wrote my first employee handbook, I sent it to my attorney before I distributed it to the employees. It came back to me with more red marks on it than my 9th grade term paper. When you have built a relationship with your attorney, he or she knows what your objectives are, what you want to accomplish with marketing, hiring etc. With that knowledge, he or she can be much more effective when reviewing contacts, publications, or any legal documents.

RULE FOUR: Don't buy, sell or file taxes without talking to your CPA. Of course I am not taking about buying copier paper. I am talking about major purchases, sales, expansions, etc. Tax planning is important. Most people think of their CPA only in terms of filing the tax return -and filing is certainly important. I stopped filing my own taxes as soon as I owned a business. However, tax planning is just as important. If you want to protect your business against large tax liabilities, let your CPA work with you on tax planning. You don't start tax planning on February 1, 2009 because you have to file on March 15, 2009. You start tax planning on day one of your fiscal year. You constantly keep your CPA informed on your intentions to buy, sell, divide, combine, etc. Once again, if your CPA is totally familiar with your business and your objectives, he or she will be able to do a better job of helping you plan so you can protect your business from large tax liabilities.

RULE FIVE: Don't hide from your banker. Make sure your banker always knows your financial position. Depending on the type of business you have, you may want to give your banker your financial statements, monthly, quarterly, or semi-annually. Many business owners are afraid to ask their banker for help. A good business banker who specializes in your size and type of business can be a great help to you. They want a win-win situation. Just because you are short of cash doesn't mean you are running your business poorly and need to hide from your banker. Many well-run, growing businesses run short of cash. Growth has a way of causing cash shortages. Anyone who has had to buy inventory or equipment to expand their business knows exactly what I mean.

Once again, that is why it is important to keep your banker informed when you don't need money. Thus, when you do have a need for cash, your banker will know your business and be able to provide what you need quickly. He or she will also be able to recommend the best form of financing for your situation.

RULE SIX: Always ask, "How am I vulnerable?" We all know that we need property & casualty insurance and we know that we need liability and worker's compensation insurance. What we don't know - because we are not insurance experts - is under what circumstances are we covered? Your employee is going to lunch. You ask her to stop at the post office on her way back and buy a roll of stamps. Pulling out of the post office parking lot, she hits another car and injures the driver. It is your employee's fault. Is your business liable? You're playing golf with a customer and discussing business. You hit a shot that hits a golfer in the next fairway. Can your business be sued? You encourage your employees to volunteer for a non-profit organization that is having a fund-raising race. Because of your encouragement, an employee participates in the race and is hit by a car. Is your business liable?

These are everyday examples of real life situations. You have liability insurance but do you need special coverage for special situations such as these? You need to review these and other things that you do and then discuss them with your insurance agent. Does your agent really know your business and how you operate? Don't simply renew the insurance policy you had last year. Don't wait until renewal time to discuss your business with your agent. Develop a relationship and keep your agent informed so he or she can give you the advice that will protect your business.

Please feel free to post your comments - whether you agree or disagree. One of the objectives of this blog is to get everyone thinking and analyzing. Thanks for visiting this site.

Protecting Your Business - Trusted Advisors - Part I

There are many ways in which you have to protect your business. Some things you can do yourself as we discussed in the last posting. Others require the help of outside experts. Often, business owners tend to want to do everything themselves. Sometimes it is because of their ego and other times it is to save money. Either way, they are making a mistake.

When you have a cavity in your tooth, you don't drill your own tooth and try to fill the cavity yourself. You go to an expert - a dentist. You need to do the same with your business.

Next to yourself, your attorney, your CPA, your banker and your business insurance agent are the most important people in helping to protect your business. Most business owners only think of the insurance agent in terms of protection. All four of these professionals protect your business. When I purchased my first business, the first four speed dial buttons on my phone were - you guessed it - my attorney, my accountant, my banker and my insurance agent.

Often, business owners wait until they have a legal problem, or until it is tax time, or they have an insurance claim, or until they are desperate for cash before they contact one of "the big four." I believe that it is important to develop a relationship with all four before you start or purchase your business. If you are in business already and don't have a good relationship with them, the time to start is NOW.

Before I go on, let me emphasize that it is extremely important to make sure that the member of "the big four" that you select is accustomed to working with your size and type of business. I don't necessarily mean that if you are a machine shop that they only work with machine shops. I do mean that they have to be familiar with machine shops. Unfortunately, I have seen business owners select an attorney for their business because the attorney handled their divorce or personal injury case. Just as your business specializes in a product or service, so do attorneys, CPAs, banks and insurance agents. An insurance agent who does a great job with your homeowner's insurance may not be the best choice for your business insurance. A CPA who specializes in auditing large, non-profit service organizations may not be the best for your business if you are a small fabricating business.

Don't be afraid to ask them about the type of clients that they have. Ask for references. Ask other business owners who you know and respect if they have anyone that they can recommend to you. In my opinion, these are four of the most important people in your business life. If they are good at what they do, they can save you both money and headaches. I have been sued for amounts in the millions, have had large insurance claims, have been audited by the IRS and the state, and have had immediate needs for short term working capital, and I can assure you that "the big four" helped me immensely to protect my business in all of these situations.

When I use the term "build a relationship" with them, I am saying that you need to tell them about every aspect of your business. A physician can only help you if he knows what is hurting you. "The big four" can only help you if they know all about your business. Make sure they are familiar with your physical facilities. Give them a tour. Demonstrate your equipment for them. Show them your products. Introduce them to your employees. Have them meet some of your customers.

Please don't think that I am saying that if you have a machine shop that your attorney needs to be able to operate a vertical boring mill. However, they do need to .........

• read your business plan.
• know your short term and long term objectives.
• have copies of financial statements.
• have copies of your employee and policy manuals.
• know BEFORE you make major decisions.
• etc. etc. etc.

Don't be protective of your business information. Tell them EVERYTHING about your business - the good points and the bad. When the doctor says, "How do you feel?" you don't say "wonderful" if you have been having chest pains. He won't be able to protect you from a heart attack.

In the next posting, I will get into the details of dealing with each of "the big four." Please remember that your comments are always welcome. If you enjoy reading this blog, please pass on the name of the site to anyone else who you feel would be interested in reading it.