Something has been bugging me throughout the long-winded analysis and never-ending media coverage of the U.S. financial markets. It's this concept that several gargantuan banks in this country are 'too big to fail'.
First and foremost, we are supposedly a free market economy, and that means that if you stink in business, rip off customers and take chances that don't pay off you are allowed to fail. Not to mention the fact that, in spite of huge injections of taxpayer money, several financial giants are in fact failing and failing miserably. There's no way they will still be in business in 20 years no matter what we do.
After taking the time to learn about the little 'securities shell game' that led to the stock market debacle, and after listening to the pathetic excuses offered by top bank executives, I am convinced that quite a few bloated multi-national banks deserve to fold. They have been reckless... they have securitized the nation to the brink of disaster... and when their bets haven't pay off they have held out their hands to Washington with the excuse that they are 'too big to fail'. And we bought it!
Bankruptcy and annihilation are exactly what these banks deserve. There are literally thousands of smaller banking institutions in this country who are fiscally sound, who have strong loan portfolios and who are still lending. They have a right to grab the market share of over-sized behemoths who fold. They are far more capable of building a diversified system that spreads risk around, cares for consumers and enforces accountability. No one should get a free pass or an automatic bailout simply because they dominate a huge percentage of the market. All the more reason to let them fade quietly in the night to trouble us no more.
The surf industry is not banking, but there's a lesson to be learned from recent events. In December of 2005 a monopoly folded. Surf legend 'Grubby' Clark faxed out a letter to shapers around the globe saying that his factory was closing effective immediately. Clark Foam at the time manufactured an estimated 90% of the surfboard blanks used in board production worldwide. Surf magazines and blogs from California to Hawaii to Australia predicted ruin for the entire industry.
Can you guess what happened? The free market economy kicked in. There were several lean months in which shapers had a tough time getting enough blanks to keep going, but a new crop of innovative and driven blank manufacturer's cranked up production and filled the gap. Within 6 months supply levels were strong and prices had stabilized due to increased competition. Clark Foam cornered the market because they were there, not because they were the only ones who could... and when a gap opened up capitalism flowed in with new upstarts, better technology, wider selection and fair prices.
Both Washington and Wall St. should take note. Right now the quandary is this: we can't undo the past. We can't go back and fix billions in toxic assets. We can't retroactively limit the size of banks. We can't launch new rules right in the middle of a recession and allow the immediate failure of the banking system. It would spiral the U.S. into a real Depression! So for now, we'll probably have to prop up some financial institutions that have been completely irresponsible.
But I hope that the government will learn from past mistakes. In a free market economy nobody is guaranteed a rescue - nobody gets to dodge the rules. I don't know what all the solutions are. A socialist state doesn't seem alluring; limits on bank sizes, government-ownership of private firms or heavy-handed regulation. But there must be a balance somewhere in which the fundamentals of the banking system change and common sense reigns. CitiGroup, AIG, Bank of America and other institutions should probably be broken up into smaller, more palatable units. Some deregulation should probably be rolled back to bring in more oversight and accountability.
Corporations can never again be allowed to become 'too big to fail'. Massive failure is supposed to be the fate of businesses that make dumb decisions. Smarter survivors will pick up the pieces, take over the customer bases of extinct companies and enrich the economy. We cannot allow the current crisis to reoccur.
Right now we need to deal with the 800 pound gorilla in the room. The stimulus plan doesn't address this crucial issue. Neither does the Treasury Department's proposal for the remainder of the TARP money. But someone has to - and soon.
Friday, February 13, 2009
Saturday, February 7, 2009
Survival Key #1: Become a Problem Solver
Obviously, the global economy is down and the U.S. is in a recession... but how is your economy? Just because a lot of your competitors, business partners and friends are struggling doesn't mean you have to.
Win at the survival game by preparing rather than panicking... by channeling your energy outward rather than inward. The first key to jolting your business out of panic-mode is to switch your focus back to the customer.
Many companies forget at times that they exist solely to solve problems for people. And although a temporary loss of momentum during an economic upswing may not do much damage - it's a company killer during a recession.
Avoid the trap by remembering your crucial role as a problem solver, and taking the time to slow down and look at each and every transaction from the customer's point of view. Before you try to make another sale or call on the next customer, look at the real world, so you can develop real ideas and relevant answers for both consumers and for yourself.
Analyze your reality, and compare it to their reality. Before you run one more ad, visit one more potential distributor or move any farther in creating a new product, you have to know what the total situation is. In order to understand consumers, relate to them, help them, serve them and, ultimately, sell them, you have to get inside their head. Of course your long-term goal is selling, but in these times, "closing deals” may be the last item on a long list.
Don’t make the fatal mistake of just defining your own situation and obsessing about your own problems. You also have to define your customer’s situation, the market situation and your company’s differentiators so that your messaging speaks to people in a language they understand and connects with their needs on a deep level. People are cash-strapped and sick of being pitched by desperate sales people - don't become one of them!
If you are selling a big-ticket item and sales are sluggish, think about the reason why. Maybe such a huge investment is daunting to potential customers even though they need and want what you are selling? Maybe installation is a barrier? Maybe concerns about reliability or repairs is creating resistance? Can you offer a better guarantee or free installation to overcome those buying obstacles.
If you are having difficulty collecting on invoices and your cash flow is is causing problems, ask yourself why people aren't paying - or talking. Do customers simply not have the cash? Are they stockpiling out of concern over the future? Your mission is simply solving the problem for them. Can you approach customers and offer payment plans to ease their cash crunch and still keep money flowing in? Can you create a positive incentive to pay on time such as a 5% discount for paying within 14 days?
Such simple strategies... and so obvious once the transactions are examined from the customer's perspective.
I challenge you to share your ideas and thoughts with your customers, so they can become aware of how serious you are about helping them and building your business in a positive way. Doing this will not only demonstrate your professionalism, but will also give your customer's peace of mind - and perhaps a little peace of mind will rub off on you as well.
Problem solving and true consumer understanding will not only set you apart from your competitors (who at this very moment are panicking and merely trying to sell, sell, sell!), but they will also keep your customer relationships strong through difficult times. When times become better - and they always do - you will have earned the loyalty you deserve by being a champion for solutions your customers care about and demonstrating your advocacy for their best interests.
Win at the survival game by preparing rather than panicking... by channeling your energy outward rather than inward. The first key to jolting your business out of panic-mode is to switch your focus back to the customer.
Many companies forget at times that they exist solely to solve problems for people. And although a temporary loss of momentum during an economic upswing may not do much damage - it's a company killer during a recession.
Avoid the trap by remembering your crucial role as a problem solver, and taking the time to slow down and look at each and every transaction from the customer's point of view. Before you try to make another sale or call on the next customer, look at the real world, so you can develop real ideas and relevant answers for both consumers and for yourself.
Analyze your reality, and compare it to their reality. Before you run one more ad, visit one more potential distributor or move any farther in creating a new product, you have to know what the total situation is. In order to understand consumers, relate to them, help them, serve them and, ultimately, sell them, you have to get inside their head. Of course your long-term goal is selling, but in these times, "closing deals” may be the last item on a long list.
Don’t make the fatal mistake of just defining your own situation and obsessing about your own problems. You also have to define your customer’s situation, the market situation and your company’s differentiators so that your messaging speaks to people in a language they understand and connects with their needs on a deep level. People are cash-strapped and sick of being pitched by desperate sales people - don't become one of them!
If you are selling a big-ticket item and sales are sluggish, think about the reason why. Maybe such a huge investment is daunting to potential customers even though they need and want what you are selling? Maybe installation is a barrier? Maybe concerns about reliability or repairs is creating resistance? Can you offer a better guarantee or free installation to overcome those buying obstacles.
If you are having difficulty collecting on invoices and your cash flow is is causing problems, ask yourself why people aren't paying - or talking. Do customers simply not have the cash? Are they stockpiling out of concern over the future? Your mission is simply solving the problem for them. Can you approach customers and offer payment plans to ease their cash crunch and still keep money flowing in? Can you create a positive incentive to pay on time such as a 5% discount for paying within 14 days?
Such simple strategies... and so obvious once the transactions are examined from the customer's perspective.
I challenge you to share your ideas and thoughts with your customers, so they can become aware of how serious you are about helping them and building your business in a positive way. Doing this will not only demonstrate your professionalism, but will also give your customer's peace of mind - and perhaps a little peace of mind will rub off on you as well.
Problem solving and true consumer understanding will not only set you apart from your competitors (who at this very moment are panicking and merely trying to sell, sell, sell!), but they will also keep your customer relationships strong through difficult times. When times become better - and they always do - you will have earned the loyalty you deserve by being a champion for solutions your customers care about and demonstrating your advocacy for their best interests.
Monday, January 26, 2009
Guess what? You're in Sales!
At some point in every business’ growth cycle the leaders lose sight of their real job – sales. They get hung up on staffing issues, quality improvement, planning or new product development and completely forget that if no one is buying what they’re selling they have a huge problem.
In order to grow your company, you must remember that your business is sales. Your business is not the product you manufacture. Your business is not the service you provide. Your real business is marketing and building the internal capacity to successfully sell and deliver your products and services to a multitude of consumers.
Most business owners don’t initially launch their company because they are a great manager or a born marketer. They start their particular business because they possess technical skill in a certain area of expertise such as making glass vases, roofing houses, fixing computer systems or teaching people how to ski. So, when it comes to marketing, small business owners are often fish out of water.
That’s a colossal drawback in today’s competitive business climate, because you can make the most beautiful vases in the world, or be a whiz at troubleshooting computer glitches, and if no one knows you exist you’ll be bankrupt in no time. Or if you design a product that no one likes except you, you’ll have no market for what you are selling. You simply can’t generate revenue without mastering the process of bringing in and retaining customers!
Truly great marketing is an art form - and the strongest companies are willing to invest in professional help to do it right. But every business owner should know their customer base, understand the basic appeal of their products and services, and think like a marketer.
At its most basic, marketing is a three step process:
1. Understand consumer desire. You can’t sell to people you don’t understand, so get intimate with your ideal customers right away. Think about every transaction from their perspective. Learn what they like and don’t like, where they hang out, who they respect… their age, race, gender and income range. Nothing is too small to pay attention to. This process let’s you create a profile of who your best customers are, and will arm you with the data to find them, speak to them, and tailor your business model around issues that are important in their world.
2. Develop an offering that fits your target customers. If you’re selling diamond rings for $10,000, and your target customers are middle-class suburban teenagers who like ‘bling’, it’s not going to work. They can’t afford what you’re selling. Armed with information about your target audience you can make sure that your products and services meet their needs and fit their budget. Maybe in this instance you could create a flashy line of costume jewelry that would suit your target customers better? Or maybe you could re-engineer your products and promotions to appeal to a better target market - upper class professional women.
3. Connect consumers to the products and services they need through a sale. This step represents the most obvious stage of the marketing process – reach a customer and close a sale. You have to know where to reach your target audience, what to say that will peak their interest, and how to remove barriers to buying. Whether you are advertising on TV, writing an editorial column in the local paper, hosting a networking event or making a speech – you have to keep your focus on penetrating your target market and convincing them to make a purchase from you.
There is another key element to the marketing process that is critical and frequently overlooked… What comes after a successful sale? Businesses tend to focus on obtaining new customers to the exclusion of following through on their brand promises and retaining the customers they already have. You need to have a system in place to follow up with customers, encourage repeat purchases, invite referrals and ensure satisfaction.
As you grow your business, I urge you to examine every level of your company from your customer’s perspective. Successful entrepreneurs know that each sale has to be mutually beneficial and consumer-focused to move them a step closer to their ultimate dream of running a large, thriving organization. By thinking like a marketer and acknowledging your never-ending role as the chief salesperson on your team, you too can set yourself up to succeed down the road.
In order to grow your company, you must remember that your business is sales. Your business is not the product you manufacture. Your business is not the service you provide. Your real business is marketing and building the internal capacity to successfully sell and deliver your products and services to a multitude of consumers.
Most business owners don’t initially launch their company because they are a great manager or a born marketer. They start their particular business because they possess technical skill in a certain area of expertise such as making glass vases, roofing houses, fixing computer systems or teaching people how to ski. So, when it comes to marketing, small business owners are often fish out of water.
That’s a colossal drawback in today’s competitive business climate, because you can make the most beautiful vases in the world, or be a whiz at troubleshooting computer glitches, and if no one knows you exist you’ll be bankrupt in no time. Or if you design a product that no one likes except you, you’ll have no market for what you are selling. You simply can’t generate revenue without mastering the process of bringing in and retaining customers!
Truly great marketing is an art form - and the strongest companies are willing to invest in professional help to do it right. But every business owner should know their customer base, understand the basic appeal of their products and services, and think like a marketer.
At its most basic, marketing is a three step process:
1. Understand consumer desire. You can’t sell to people you don’t understand, so get intimate with your ideal customers right away. Think about every transaction from their perspective. Learn what they like and don’t like, where they hang out, who they respect… their age, race, gender and income range. Nothing is too small to pay attention to. This process let’s you create a profile of who your best customers are, and will arm you with the data to find them, speak to them, and tailor your business model around issues that are important in their world.
2. Develop an offering that fits your target customers. If you’re selling diamond rings for $10,000, and your target customers are middle-class suburban teenagers who like ‘bling’, it’s not going to work. They can’t afford what you’re selling. Armed with information about your target audience you can make sure that your products and services meet their needs and fit their budget. Maybe in this instance you could create a flashy line of costume jewelry that would suit your target customers better? Or maybe you could re-engineer your products and promotions to appeal to a better target market - upper class professional women.
3. Connect consumers to the products and services they need through a sale. This step represents the most obvious stage of the marketing process – reach a customer and close a sale. You have to know where to reach your target audience, what to say that will peak their interest, and how to remove barriers to buying. Whether you are advertising on TV, writing an editorial column in the local paper, hosting a networking event or making a speech – you have to keep your focus on penetrating your target market and convincing them to make a purchase from you.
There is another key element to the marketing process that is critical and frequently overlooked… What comes after a successful sale? Businesses tend to focus on obtaining new customers to the exclusion of following through on their brand promises and retaining the customers they already have. You need to have a system in place to follow up with customers, encourage repeat purchases, invite referrals and ensure satisfaction.
As you grow your business, I urge you to examine every level of your company from your customer’s perspective. Successful entrepreneurs know that each sale has to be mutually beneficial and consumer-focused to move them a step closer to their ultimate dream of running a large, thriving organization. By thinking like a marketer and acknowledging your never-ending role as the chief salesperson on your team, you too can set yourself up to succeed down the road.
Monday, January 5, 2009
Think BIG!
One of the things that most small business owners struggle with is thinking big enough. We all have to consciously work to expand our horizons and mentally move beyond what we know. But growing a business is not an accidental endeavor, so planning ahead and preparing your company to increase is size is a huge step in seeing your dreams become a reality.
Last month we addressed clarity of vision, which provides the foundation upon which your company is built. That vision will be the driving force behind step number two – thinking bigger than you are. You should have an idealized image in your mind of what you are working toward… what your company can look like five or ten or twenty years into the future. Although you naturally have to deal with lots of little day-to-day issues surrounding the organization you currently have, you should never lose sight of what you ultimately want to become.
Are you willing to make some changes today to transform into something magical tomorrow? Can you sacrifice what you are for what you can be?
If so, then begin to practice the following five principles that will help you think bigger:
1. Stop seeking external validation. While historical data, statistics and industry standards can be helpful, they shouldn’t be the bar by which you measure your present or your future. Ultimately the most successful companies break through barriers and forge pathways into uncharted territories, so if you need to see logical external validation for every move you make, you simply won’t be on the cutting edge of achieving rapid growth.
2. Always act on your intuition. Michael Burke said that, “Good instincts usually tell you what to do long before your head has figured it out.” I completely agree. How many times do we all look back and say, “Ach, I had a gut feeling about that and I didn’t act on it!” Don’t let yourself fall into the trap of safety in your business. If you play it too safe and can’t make a decision without a perfect case for WHY, then your company won’t be adaptable and competitive in today’s ever-shifting marketplace.
3. Plan ahead for MORE. I can’t stress this point enough when it comes to driving growth. In every decision, every task, every purchase you must think beyond the current size of your business and ask yourself, “Will this be big enough later on?” Companies waste billions of dollars annually scaling up systems that they just put in place to accommodate growth. Your goal should be to plan ahead and design systems that are capable of expanding, serving more customers, integrating more staff and lasting through the next phase of your organization’s life cycle.
4. Make big, bold promises. Promises are different from targets or goals or ideals. If you are an individual of integrity, promises are things that you are willing to commit to in stone. I see many business owners shirk from making lofty promises. They are willing to try, to work towards objectives and to dream - but they are not willing to simply commit to making something happen come ‘hell or high water’. Some of the greatest triumphs in the history of business have come because leaders made a rash promise that seemed unattainable and then found a way to miraculously follow through. As Epictetus sagely advised, “First say what you will be; and then do what you have to do.”
5. Take action now. Vision and planning and promises are great, but your business won’t grow if you don’t take action in the present moment. I urge you to translate your big dreams into small action steps that you can begin working on immediately. A walk of a thousand miles begins with a single step… so take the baby step today that will launch your epic journey of growth and success.
In closing, I want to acknowledge how very difficult it can be to hold an imaginary image of your company as a thriving conglomerate in your head, but that is what it takes to design processes and make long view decisions that will take you to the top. By always thinking beyond your present reality you can continually take the small steps required to thrive in the future.
Last month we addressed clarity of vision, which provides the foundation upon which your company is built. That vision will be the driving force behind step number two – thinking bigger than you are. You should have an idealized image in your mind of what you are working toward… what your company can look like five or ten or twenty years into the future. Although you naturally have to deal with lots of little day-to-day issues surrounding the organization you currently have, you should never lose sight of what you ultimately want to become.
Are you willing to make some changes today to transform into something magical tomorrow? Can you sacrifice what you are for what you can be?
If so, then begin to practice the following five principles that will help you think bigger:
1. Stop seeking external validation. While historical data, statistics and industry standards can be helpful, they shouldn’t be the bar by which you measure your present or your future. Ultimately the most successful companies break through barriers and forge pathways into uncharted territories, so if you need to see logical external validation for every move you make, you simply won’t be on the cutting edge of achieving rapid growth.
2. Always act on your intuition. Michael Burke said that, “Good instincts usually tell you what to do long before your head has figured it out.” I completely agree. How many times do we all look back and say, “Ach, I had a gut feeling about that and I didn’t act on it!” Don’t let yourself fall into the trap of safety in your business. If you play it too safe and can’t make a decision without a perfect case for WHY, then your company won’t be adaptable and competitive in today’s ever-shifting marketplace.
3. Plan ahead for MORE. I can’t stress this point enough when it comes to driving growth. In every decision, every task, every purchase you must think beyond the current size of your business and ask yourself, “Will this be big enough later on?” Companies waste billions of dollars annually scaling up systems that they just put in place to accommodate growth. Your goal should be to plan ahead and design systems that are capable of expanding, serving more customers, integrating more staff and lasting through the next phase of your organization’s life cycle.
4. Make big, bold promises. Promises are different from targets or goals or ideals. If you are an individual of integrity, promises are things that you are willing to commit to in stone. I see many business owners shirk from making lofty promises. They are willing to try, to work towards objectives and to dream - but they are not willing to simply commit to making something happen come ‘hell or high water’. Some of the greatest triumphs in the history of business have come because leaders made a rash promise that seemed unattainable and then found a way to miraculously follow through. As Epictetus sagely advised, “First say what you will be; and then do what you have to do.”
5. Take action now. Vision and planning and promises are great, but your business won’t grow if you don’t take action in the present moment. I urge you to translate your big dreams into small action steps that you can begin working on immediately. A walk of a thousand miles begins with a single step… so take the baby step today that will launch your epic journey of growth and success.
In closing, I want to acknowledge how very difficult it can be to hold an imaginary image of your company as a thriving conglomerate in your head, but that is what it takes to design processes and make long view decisions that will take you to the top. By always thinking beyond your present reality you can continually take the small steps required to thrive in the future.
Sunday, December 28, 2008
Reduce your Taxes at Year's End
Last Ditch Tax Tips for the Year's End
Most of my clients call at some point in December and ask, "What can we do to reduce our tax liability?" I'm always happy to hear that question, because it means they've made enough during the year to be worried! So what can you do in the last days of December to reduce your tax bill?
Revisit your 2008 accounting BEFORE the year ends. Most companies don't really examine their books until well into the following year as the tax crunch begins to loom large. It's important as part of your year-end business strategy to have a good understanding of your company's financial situation before the year is over. That way you not only ensure that your books are accurate, you also have the information you need to 'guesstimate' your tax liability and make last minute decisions about spending, giving and deposits.
Examine your inventory. Inventory write-offs can be significant. The drop in market value of any inventory you have on hand can potentially provide your company with deductions. Depending on your accounting methods, you may also want to track any goods that have been damaged or have become obsolete.
Put money into a retirement plan. This is the time of year to make payments into your retirement plan or set up a final contribution before the end of the year to reduce your income. You'll have to check the contribution limits for your type of plan and decide what your budget will allow. 401(k)s, KEOGH plans, Roth IRAs or SEPs are all great places to shelter some funds for future years. As always, you need to discuss the best strategy with your financial planner or accountant.
Defer income into 2009. Any payments your business can receive during the first week of January as opposed to December will cut your tax bill. Every cent deferred until January 2009 will not owe taxes until April 2010. Your specific deferral strategy should be driven by your projected annual profits and legal structure (LLC, partnership, corporation, etc). Depending on your income tax rates in the foreseeable new year, deferral of income can make good sense for many sole proprietors, partnerships, LLC's, and S corporations.
Give a little bit away. Charities are hurting right now, and companies that are doing well can benefit from making last minute donations. Think about donations you may have planned for 2009 and push them back into 2008. Make sure you get a receipt for all tax deductible gifts.
Boost your Expenses. This sounds nutty, but if your cash flow allows you to spend at the end of the year you can save a bundle on your taxes. Purchase items your business will require in the immediate future to maximize deductions for this year. If you can see a need for goods and services in the first quarter of the new year, pay for them now and let those expenses count for 2008. Consider stocking up on paper, printer cartridges and other office items. Order promotional materials like flyers and business cards. Pay your January bills before the new year in areas such as phone services, subscriptions, insurance, rent and utilities. Get repairs made and book 2009 travel early. Buy any new office equipment or furniture you need. (You do have to weigh whether or not it is best to take a write off now or spread out the depreciation over years, but buying fixed assets can be a great tax reduction strategy.)
Every situation is unique, and each business owner has to decide whether or not it makes sense to reduce tax liability in the current year. Sometimes if you are projecting increasing sales it's a better call to just pay your tax bill and not make future tax burdens heavier, but if you are concerned about your tax liability for 2008 these are some great tips that can help you save money!
Most of my clients call at some point in December and ask, "What can we do to reduce our tax liability?" I'm always happy to hear that question, because it means they've made enough during the year to be worried! So what can you do in the last days of December to reduce your tax bill?
Revisit your 2008 accounting BEFORE the year ends. Most companies don't really examine their books until well into the following year as the tax crunch begins to loom large. It's important as part of your year-end business strategy to have a good understanding of your company's financial situation before the year is over. That way you not only ensure that your books are accurate, you also have the information you need to 'guesstimate' your tax liability and make last minute decisions about spending, giving and deposits.
Examine your inventory. Inventory write-offs can be significant. The drop in market value of any inventory you have on hand can potentially provide your company with deductions. Depending on your accounting methods, you may also want to track any goods that have been damaged or have become obsolete.
Put money into a retirement plan. This is the time of year to make payments into your retirement plan or set up a final contribution before the end of the year to reduce your income. You'll have to check the contribution limits for your type of plan and decide what your budget will allow. 401(k)s, KEOGH plans, Roth IRAs or SEPs are all great places to shelter some funds for future years. As always, you need to discuss the best strategy with your financial planner or accountant.
Defer income into 2009. Any payments your business can receive during the first week of January as opposed to December will cut your tax bill. Every cent deferred until January 2009 will not owe taxes until April 2010. Your specific deferral strategy should be driven by your projected annual profits and legal structure (LLC, partnership, corporation, etc). Depending on your income tax rates in the foreseeable new year, deferral of income can make good sense for many sole proprietors, partnerships, LLC's, and S corporations.
Give a little bit away. Charities are hurting right now, and companies that are doing well can benefit from making last minute donations. Think about donations you may have planned for 2009 and push them back into 2008. Make sure you get a receipt for all tax deductible gifts.
Boost your Expenses. This sounds nutty, but if your cash flow allows you to spend at the end of the year you can save a bundle on your taxes. Purchase items your business will require in the immediate future to maximize deductions for this year. If you can see a need for goods and services in the first quarter of the new year, pay for them now and let those expenses count for 2008. Consider stocking up on paper, printer cartridges and other office items. Order promotional materials like flyers and business cards. Pay your January bills before the new year in areas such as phone services, subscriptions, insurance, rent and utilities. Get repairs made and book 2009 travel early. Buy any new office equipment or furniture you need. (You do have to weigh whether or not it is best to take a write off now or spread out the depreciation over years, but buying fixed assets can be a great tax reduction strategy.)
Every situation is unique, and each business owner has to decide whether or not it makes sense to reduce tax liability in the current year. Sometimes if you are projecting increasing sales it's a better call to just pay your tax bill and not make future tax burdens heavier, but if you are concerned about your tax liability for 2008 these are some great tips that can help you save money!
Sunday, December 21, 2008
Take the Long View
Recent downturns in the economy are generating a lot of negative talk and fear in the business world. While I don't want to pretend that some challenges don't exist, I'm also encouraging clients to be positive, avoid panic and continue to take the steps that have made them successful in the past. So, look beyond today and take the long view.
Here is my brief synopsis of the threats and opportunities that exist in the marketplace today...
1. Business isn't a straight upward curve! We Americans are an optimistic bunch and tend to expect to win more often than we lose; however, it is folly to think that any company, stock, industry or individual person will ALWAYS WIN. Things naturally fluctuate, and there will be times of plenty and times of belt tightening. It's best to just accept the inevitability of lean times, have contingency plans in place, and not allow yourself to be shocked or shattered that every year is not infallibly better than the last.
2. Economic downturns cull out the competition. Now you don't want to BE one of the companies that flops, but seeing low level players with poor quality, inefficient systems and bad marketing strategies fail shouldn't make strong, stable businesses get scared. Let some of your competitors file for bankruptcy! What do you care? Just make sure you are ready and waiting to snatch up their customers and boost your own market share. Recessions are the business world's version of 'survival of the fittest' and they can raise the performance of entire sectors through a healthy separation of wheat from chaff.
3. Don't stop doing the things that work. Panic can cause companies to seize up... to stop focusing on what is going right, to drop future plans, to abandon new product development, to stop hiring, to cease marketing. While you don't want to waste money in a recession, you don't want to stop investing in the future either. So balance risk with wisdom and keep doing the things that have made your business thrive over the years.
4. Focus on controllables - not uncontrollables. We tend to spend a lot of time pondering things we cannot change. You and your team cannot personally alter the outlook for your industry, or change a stock price, or halt foreclosures, but there are a myriad of small things that are completely within your grasp. Keep your eye on the controllables and invest your time, energy and money on activities that matter in your little world and will make a difference in the bottom line at the end of the day.
Here is my brief synopsis of the threats and opportunities that exist in the marketplace today...
1. Business isn't a straight upward curve! We Americans are an optimistic bunch and tend to expect to win more often than we lose; however, it is folly to think that any company, stock, industry or individual person will ALWAYS WIN. Things naturally fluctuate, and there will be times of plenty and times of belt tightening. It's best to just accept the inevitability of lean times, have contingency plans in place, and not allow yourself to be shocked or shattered that every year is not infallibly better than the last.
2. Economic downturns cull out the competition. Now you don't want to BE one of the companies that flops, but seeing low level players with poor quality, inefficient systems and bad marketing strategies fail shouldn't make strong, stable businesses get scared. Let some of your competitors file for bankruptcy! What do you care? Just make sure you are ready and waiting to snatch up their customers and boost your own market share. Recessions are the business world's version of 'survival of the fittest' and they can raise the performance of entire sectors through a healthy separation of wheat from chaff.
3. Don't stop doing the things that work. Panic can cause companies to seize up... to stop focusing on what is going right, to drop future plans, to abandon new product development, to stop hiring, to cease marketing. While you don't want to waste money in a recession, you don't want to stop investing in the future either. So balance risk with wisdom and keep doing the things that have made your business thrive over the years.
4. Focus on controllables - not uncontrollables. We tend to spend a lot of time pondering things we cannot change. You and your team cannot personally alter the outlook for your industry, or change a stock price, or halt foreclosures, but there are a myriad of small things that are completely within your grasp. Keep your eye on the controllables and invest your time, energy and money on activities that matter in your little world and will make a difference in the bottom line at the end of the day.
Friday, December 12, 2008
Clarity of Vision
Einstein once said “the definition of insanity is doing the same thing over and over again and expecting different results”. Think about that statement for a moment and ask yourself, ‘Does this quote apply to the way I run my company?’
Most businesses that continually beat their head against a wall suffer from a profound lack of vision. Everyone engages in frenzied efforts to succeed (always working longer and trying harder), but because people don’t see the big picture or understand the true value they bring to customers, their quarterly profit and loss statements don’t reflect the intensity of their effort.
Here’s the reality… trying harder isn’t usually the solution to achieving more. In fact, it might be a big part of the problem. Let’s examine together the path to clarity of vision.
First and foremost, what is this Holy Grail we call vision? It’s pretty simple really, and boils down to a few primary considerations: Why are you in business? What is so great about what you do or make? What impact do you want your business to leave on the world?
Now you might be able to pop out some pat answers to those questions without really thinking about them, but vision is a critical component of your professional success and deserves more attention. In order to create truly visionary responses to those basic questions, you have to get outside of your comfort zone and slow down. Before you even begin to draft a vision statement, I suggest that you back off of your to-do list, quit trying harder, and pull some wise people around you to help bring an outside perspective into the conversation. Think beyond goals and money and tasks.
It’s very important when stepping into the role of the visionary to suspend disbelief and allow yourself to brainstorm outside the bounds of common sense. Vision isn’t mission! Let me repeat… Your vision isn’t an expanded version of your mission statement. Your mission statement should rightly be grounded in the present and directly related to the values and standards that will help you take action in the upcoming months and years, but your vision must be so much more.
Your vision is your enduring purpose; the fundamental reason for an organization’s existence beyond just making money. It is a perpetual guiding star on the horizon and does not change over time. For example, NASA’s vision is “advancing man’s capability to explore the heavens.” In essence, our vision is a mental picture of the future we wish to create through endless pursuit of an ideal. It is love, and passion, and the impetus to pursue that which we truly want most out of life through work.
On the other hand, a mission is a specific destination that is concrete and achievable. A good mission engages people – it reaches out and grabs them and makes them want to do something in the present moment. It should be tangible, energizing, highly focused and support the vision. To stick with our NASA example, a mission statement might establish a goal of “putting a man on the moon by the end of the 1960s”.
So, once you have stepped back from the insanity, and examined the beliefs and dreams behind your corporate vision, how does the simple vision statement you write help your business grow? Clarity = Power. If you don’t have a vision and a sense of destiny about your company, you won’t grow. Timing, recognizing unique opportunities, and the power to execute – these lie within you, not in the situation.
Your vision represents your desires, your passions, your dreams that burn hot in your mind… and thus your vision gives you all the intuitive information you need to find direction and make breakthroughs in performance. Your vision is your own internal ‘magnetic north’ that will enable you to make quantum leaps in your results.
Don’t wait! Define and live your vision today and you’ll begin to see power of purpose in action.
Most businesses that continually beat their head against a wall suffer from a profound lack of vision. Everyone engages in frenzied efforts to succeed (always working longer and trying harder), but because people don’t see the big picture or understand the true value they bring to customers, their quarterly profit and loss statements don’t reflect the intensity of their effort.
Here’s the reality… trying harder isn’t usually the solution to achieving more. In fact, it might be a big part of the problem. Let’s examine together the path to clarity of vision.
First and foremost, what is this Holy Grail we call vision? It’s pretty simple really, and boils down to a few primary considerations: Why are you in business? What is so great about what you do or make? What impact do you want your business to leave on the world?
Now you might be able to pop out some pat answers to those questions without really thinking about them, but vision is a critical component of your professional success and deserves more attention. In order to create truly visionary responses to those basic questions, you have to get outside of your comfort zone and slow down. Before you even begin to draft a vision statement, I suggest that you back off of your to-do list, quit trying harder, and pull some wise people around you to help bring an outside perspective into the conversation. Think beyond goals and money and tasks.
It’s very important when stepping into the role of the visionary to suspend disbelief and allow yourself to brainstorm outside the bounds of common sense. Vision isn’t mission! Let me repeat… Your vision isn’t an expanded version of your mission statement. Your mission statement should rightly be grounded in the present and directly related to the values and standards that will help you take action in the upcoming months and years, but your vision must be so much more.
Your vision is your enduring purpose; the fundamental reason for an organization’s existence beyond just making money. It is a perpetual guiding star on the horizon and does not change over time. For example, NASA’s vision is “advancing man’s capability to explore the heavens.” In essence, our vision is a mental picture of the future we wish to create through endless pursuit of an ideal. It is love, and passion, and the impetus to pursue that which we truly want most out of life through work.
On the other hand, a mission is a specific destination that is concrete and achievable. A good mission engages people – it reaches out and grabs them and makes them want to do something in the present moment. It should be tangible, energizing, highly focused and support the vision. To stick with our NASA example, a mission statement might establish a goal of “putting a man on the moon by the end of the 1960s”.
So, once you have stepped back from the insanity, and examined the beliefs and dreams behind your corporate vision, how does the simple vision statement you write help your business grow? Clarity = Power. If you don’t have a vision and a sense of destiny about your company, you won’t grow. Timing, recognizing unique opportunities, and the power to execute – these lie within you, not in the situation.
Your vision represents your desires, your passions, your dreams that burn hot in your mind… and thus your vision gives you all the intuitive information you need to find direction and make breakthroughs in performance. Your vision is your own internal ‘magnetic north’ that will enable you to make quantum leaps in your results.
Don’t wait! Define and live your vision today and you’ll begin to see power of purpose in action.
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