Archive for the ‘General Business’ Category
12/26/2009 | 8:28AM
I created my Twitter account (CFOwise) on December 26th, 2008. After one full year, this is what I have learned:
Twitter is like every other form of connecting with people (yes, I’m excluding all non-person driven Twitter accounts). Whether it be face-to-face, over-the-phone, through social networking, or via some other medium, connecting with people professionally and personally is about BUILDING RELATIONSHIPS. That’s it. No secrets or amazing revelations. But here are some thoughts on how Twitter has helped me to build more and better relationships during the last 12 months.
As my vision for my Twitter usage began to take shape, I found that there were some people with whom I wanted to connect that did not seem to feel the same way towards me. It did not take me long to realize that they had nothing against me, rather, they did not understand the need to create and foster relationships. They thought Twitter was a race to gain the most followers and that somehow that would be fulfilling. Let’s be honest…most of those people have gained thousands, if not tens of thousands, of followers only to find that they were getting a lot of noise, or tweets, but they really didn’t have anyone with whom they could connect and create anything of value. A lot of these folks have even written blog posts about how they have either unfollowed everyone to try and de-clutter their account and start building real relationships or they have started completely new Twitter accounts so they could start fresh with relationships, not numbers, as their focus.
Whether in business or in personal matters, just building relationships is highly ineffective. You end up knowing a lot of names but aren’t able to add much value to any of them. Building relationships of TRUST generates very effective relationships, the kinds of relationships we all want. Twitter is a tool; it is still up to each end-user to build the best kind of relationships. So, here is a brief list of the some of the key elements of building relationships of trust and how we can apply them to our relationships on Twitter.
Consistency- Be a regular, even if it is for a short time each day. Respond to your @replies and Direct Messages (not the sales-oriented and spammy ones).
Add Value – Do not just listen to the conversation. Jump into the fray and communicate. Add value to what others have to say. Say things that are valuable in the first place. Re-tweet the really good stuff you come across. Add value to the conversation.
Be Genuine and Real - There is no faster way to destroy trust than to fake it. Be yourself. If you do that, you will be happy with the relationships you have built. I sure am after my first year.
Stay Away from the Trash – Yes, there are certainly some undesirable Twitter accounts. Just block them and move on. Filter and flourish.
Help Others- Think about what others are trying to get out of Twitter and help them get it. If they want exposure, then help them with re-tweets and #followfridays and whatever else makes sense. This is an old concept, but it applies to Twitter just the same – help others get what they want and they will help you get what you want. Sounds a lot like building relationships, to me. If your only Twitter efforts are self-promoting, then you’re not going to attract many trust-based relationships.
Use the Tools- I love using Tweetdeck. The search tools help me stay on top of my keywords and accelerate my efforts to connect with the right kinds of people. There are many other applications and tools for making your Twitter experience successful. Find what works best for you.
In conclusion, let’s consider the many advertising and marketing initiatives we have seen on Twitter. Some have gone very well, and others have left a bad taste in our mouths. Just like any other broadcasting medium (by the way, all of their revenue models are built around marketing and advertising), the ones who are building relationships of trust are the ones we listen to and the ones from whom we buy. If that is true, then we need to try and be just like them.
12/21/2009 | 8:50AM
With 2009 coming to a close, we look ahead to what we can expect and should plan for in 2010. Here is my list of the top ten trends founders, CEOs, and entrepreneurs of start-up, emerging, and medium-sized businesses should consider as they prepare for the new year.
1. The recession will not end, regardless what anyone says - There are just too many issues that still need resolution before this economy can rebound, like the write-down of ALL of the bad assets on the books of the financial institutions. The fact that they are still not lending much to existing or new customers should be a sign that they know they still have a lot to lose before they can begin to gain again. In addition, the new business models that are emerging in this recession are leaner and meaner than we have seen in a long time, meaning they aren’t going to help unemployment any time soon. The effects of this recession could last quite a while.
[Author's Note:I realize I will take some heat for this prediction, but please know that I am only bearish on a macro-economic level. There are and will continue to be many businesses that grow and thrive through this time, and I applaud them all for it! If more businesses were like them I would be much more optimistic about an economic recovery.]
2. Bootstrapping will be king!- Usually you will hear me say that cash is king. In 2010 the entrepreneurs that have learned to boot-strap will be king – because boot strapping is the best chance for cash generation. Many of their competitors have gone out of business or are in some sort of a death spiral. Those who made changes early and are continuing to adapt to the changing economic market are going to win. I hear lots of businesses take the mentality of: “If we can make it through the recession will be poised to do well.” That attitude is just not going to cut it. Survival cannot be the only goal – those that can figure out how to generate positive cash flow in the tough times are the ones that will win when things turn around.
3. Solving lots of customers’ needs will raise capital- If you are starting a business and your whole focus is on raising capital, you will not get any in 2010. If, on the other hand, your focus is on getting and satisfying customers with a great product or service, then you have a much better chance to get the money you need (if you even need it). Ben Peterson, a successful entrepreneur and angel investor, identified one of the major sources of this problem. He said that the focus in business schools and entrepreneurial education is on teaching how to raise money, not how to grow a successful company that is actually worthy of investment capital. Get to work, and the money will follow you if you can take care of lots of customers and your need for capital will really add value to your efforts to serve your target market.
4. Business Lending requirements will increase – It got a lot tougher to borrow money in 2009, and it will continue to become more difficult in terms of requirements and complexity. For example, a business just obtained a small $125,000 line of credit and the legal documents the bank sent to their customer were over 150-pages in length. Even though the mean credit score in the US is on the decline, banks have raised their requirements on business owner credit scores and they are mandating more collateral (as a secondary source of repayment) than before, especially if it is real estate.
5. The cloud will continue to gain a share of all things computer- We are seeing more and more companies abandon traditional software and convert their operations to the cloud. This is a great trend for entrepreneurs who can accomplish just as much as big businesses for a lot less expensive cloud-driven solutions. Here is just one example: 2 years ago almost every business used Outlook or some other computer-based email client for its employees. Today we are seeing some companies, especially those with entrepreneurs under the age of 40, switch to web-based and SaaS applications. Google Apps seems to be the most popular for now, but the point is clear - the practices of purchasing expensive software to load on each computer and servers to host all of the company’s data are becoming antiquated and cumbersome.
6. Social media overload will drive users to the best content sources and filters- Even status updates in LinkedIn are tough to keep up with anymore. The flow of information through social media tools has grown so dramatically that most feel like they are on overload and like it is impossible to keep up. While providers are trying to figure this out, we are all going to be driven to the sources of the best and most reliable content, especially if it allows us to filter it quickly and effectively.
7. Health insurance will continue towards high deductibles and consumer-driven care - I have long been an advocate for high deductible health insurance plans with HSAs or other medical savings accounts. Yet such plans represent such a stretch from traditional health insurance that adoption rates have been very low. It seems like employers and employees alike are warming up to this idea and the popularity of these plans will continue to increase.
8. Being big will become less advantageous to being small – Big will no longer necessarily be better. There are many reasons for this, but here are the main two – small and medium-sized companies are often more flexible and more hungry to satisfy their customers and big-company economies of scale are becoming less relevant. For example, with its use of remote, flexible, and contract workers, Jet Blue is able to do more for its customers than any of its larger rivals – and that is in a very capital-intensive business. Service businesses may find even greater advantages as compared to their larger competitors.
9. Focus on relationships will pay- Relationships have been and will always be the key to building a successful business – mainly because they help us establish trust. I’ve included this on my trend list because it seems like to some the practice of building trust is a lost and fallen art. Obtaining more followers on Twitter and increasing your pool of friends of FaceBook are only relevant if we build relationships in the process. We will see relationships and trust-building come back to the forefront of business as filtering tools allow us to connect with those who matter most and with whom we want to foster and strengthen our relationships.
10. Knowledge workers will take more contract and less full-time work - This recession is helping to accelerate our economy to more of a knowledge-based worker model. These knowledge workers are finding more benefits in contract and part-time work. Some appreciate the flexibility, while others feel their value-added to and sustainability in these roles are more secure and potentially more profitable. Our CFO services business is just one of many examples of this trend.
I would love to hear any thoughts, concerns, questions, modifications, additions, or deletions you have for this list and how 2010 will impact you and your business. All the best for a prosperous 2010!
12/14/2009 | 8:42AM
As I sat trying to explain the deal points of a transaction for one of my clients to a business attorney, I was amazed at how he began every sentence with: “The problem is…” He spent my entire time with him explaining all the problems with the deal, so I invited him to share some solutions. He offered none. I’ll share how this story ends, but first I want to address the challenges that professionals who only focus on problems create for themselves.
Have you ever had an experience like this with a professional service provider like a CPA, attorney, insurance agent, banker, etc? Were you as frustrated as me? Please know that I have a lot of respect for all of the professionals I know and with whom I associate, but my philosophy on hiring a professional is more than just to define problems.
Sure I want them to use all their expertise, experience, and wisdom to help me identify existing and potential problems, but I am also looking to them to solve those problems. The more people focus only on problems and not on solutions the less value they bring and the less we want to work with them. I was once asked by someone unfamiliar with our CFO services if we were like all the consulting companies that come in and tell you how bad you are at everything but don’t ever really help you get any better. I quickly explained a few of our drastic differences with this negative philosophy, but I was amazed at the bad taste this person had from their prior experiences.
My point is that only focusing on the problem leaves everyone with a bad taste in their mouth. If a professional in any field dares to point out a problem, then they need to be ready and willing to design and implement the solution to that problem. If not, then they will slowly lose their influence and they will have fewer and fewer opportunities to discover any problems at all, let alone solve them.
So, how did my experience at the beginning of this post end? The attorney had done some work for the company before, but he was clearly not experienced in transactions. After a brief discussion with the client, I approached another attorney with a lot of background in our type of deal. After just 30 seconds with him he said he knew exactly how to draft the document and would have it done for us in a few days. Did he think there might be some problems with structuring the deal correctly? I’m sure he did. But is he going to focus on solving all of them so this transaction can close by the end of next week. You bet he is, and he’s going to get more business from us as a result!
11/27/2009 | 8:00AM
Two different companies, each in a different industry, face the same dilemma. Growth and success have created significant pressure on their business, specifically their people and their technology. In order to solve the short-term constraints as well as build the most scalable solution for the long-term, how much investment should be made into new technology and how much should be made in people, or human assets?
Both companies have found a shortage of “off-the-shelf” software to solve their technology needs, so they have built powerful databases and other platforms from which they run their business. It seems that many entrepreneurs under 40 have the attitude that they should hire a full-time programmer and build their systems from scratch, which often ends up much more affordable in the short-term. The spirit of bootstrapping is alive and well, even in young entrepreneurs.
The challenge, however, with this scenario is what happens after a year or two. In both situations, the customized solution has already become antiquated and the company is beholden to the developer who, after some analysis, used non-traditional coding and programming language that is difficult to comprehend and unwind. These developers often become a little lazy and create shortcuts and work-arounds that begin to rear an ugly head in the most inopportune moments. What worked in the short-term may not be the viable long-term solution. At CFO WISE, we have found this to commonly be the case.
Both companies are very conservative in their hiring practices, careful not to over-staff their operations. Yet failing technology systems put so much pressure on their staff that the entrepreneurs begin to hear things like: “I’m going home at night and on the weekend and working several extra hours each day remotely to try and keep up. We need to hire more people or I’m going to burn out.” Often we hire more people to keep our staff happy, but we are actually perpetuating the problem created by insufficient technology.
I tend to operate under the following two premises when it comes to people and technology in a business. First, use technology to automate as much of the business as possible so that the company can focus on hiring bright, smart, talented employees to help the company grow. Second, do not buy or implement technology to solve your problems – your employees need to solve the problems first, then you can purchase and implement technology to automate the solutions they develop. Each of these is worthy of a separate blog of their own, but we’ll let this serve as the basis whereby we approach this dilemma.
Obviously the answer to this dilemma will differ with each situation, but I challenge all entrepreneurs to think hard about the investment they are making into people and technology. If we are confident that your technology can support the next five to ten years of growth in terms of scalability and relevance, then we are in a fantastic position. If we are not confident in this and we are just doing the necessary things to “band-aid” our way through each day, month, and year, then ultimately we will probably have to scrap that system and start all over again, anyway. And we’ll spend a lot of money on people trying to hold it all together in this process. We should seriously consider getting it right the first time if at all possible.
In addition, we need to strongly consider which operations performed by employees could be automated, and we need to start down the road of automating those functions. Our competitors are going to do it, and we will need to eventually, as well. For almost 2 years I put myself through college in a call center for one of the largest investment companies in the world. At the time, automated telephone systems were becoming popular and many of my co-workers thought they would lose their jobs to automation. Not only was this not true, but we also found that instead of wasting our time answering questions and resolving concerns that the automated systems could handle we could focus on the more value-added elements of the company’s service mission. The point – our knowledge worker society will progress only as fast as we automate the simple stuff and add more value to our customers with our human assets.
11/13/2009 | 7:30AM
A respected professional @chrisknudsen said something to me a few months ago that I have reflected on several times since that occasion. We were discussing a company that has amazing, break-through technology with a wide-open market space. Their leadership just does not seem to be in a hurry to seize the opportunity. They’re growing at about a 7% rate through the first 10 months of 2009, which is not bad in slow economic times, but they could be doing so much more.
Before I jump too far into this thought, let’s make sure we are on the same page about what a “lifestyle” business is. Wikipedia has a great explanation of a lifestyle business. In essence, it is a company that is not designed to grow much beyond the means or capabilities of the founder(s). A small auto-mechanic shop or a 5-chair beauty parlor would possibly fit this definition along with millions of other businesses around the world. These businesses do not take a lot risk, where software and technology businesses have to continue to risk everything with each change in the technological marketplace. For example, the iphone has existed for less than 2 years, yet if your software does not have an iphone app, you are considered archaic.
Now, let’s get back to the software business. The owners are running it like a lifestyle business. They are not in a hurry to grow, and they are taking only a portion of their relatively minute profits and investing them back into improving their technology and infrastructure. They have little sense of urgency in sales and they are happy to bring on a few new accounts each month. Let me repeat – they have amazing technology that could completely redefine their entire market. However, if they do not act quickly, they will lose their opportunity.
Technology is changing at light speed. Every software company has a window of time to make their leap and make a run at their market. If they wait too long or become too complacent, they will miss their opportunity. In terms of a lifestyle business, if they only rely on their own means and they do not pull the resources together to take advantage of the opportunity, they will not only miss the opportunity but they will likely be out of business in 5 years or less.
Technology is changing too fast and they will not be able to keep up. The competitors will eventually find their way through the window of opportunity even though their technology is inferior and they under-serve the needs of their customers relative to the company’s technology. These competitors will be rewarded with enough cash and resources to adapt and stay ahead of the changing technology.
So, I ask this question: “Is there such a thing as a lifestyle software business?” I haven’t found one, but I’d love your feedback on the subject.
10/6/2009 | 8:40AM
When I was young and received a new baseball hat, I would work the bill of that hat until it formed a symmetrical arch - in the general shape of a rainbow (see photo above). This was accepted as the best and most stylish thing to do at the time. Today no young people engage in this ritual. They take their new hat, flat bill and all, and put it right on their head – and they never work the bill into an arc (see photo above). It is straight-as-an-arrow and, in my opinion, not very attractive.
This is a small example of a world that is constantly changing. Business is no exception to this rule. In fact, unlike popular fashions and trends that may come and then go as quickly as they came, business change is about finding more value, efficiency, cash flow, and profit.
Some of the traditional business models, or old ways of doing business, are under serious overhauls in our new economy with the help of technological advances, social media growth, and a general philosophy that leaner is not only meaner but powerfully more effective.
Here is an example: the professional services industry, as a whole, has been shifting towards a flat fee business model in opposition to its entrenched hourly-rate model. Those leading this charge are seeing phenomenal success. Those unwilling to change will continue to see their revenues, and more importantly, their profits fall.
I recently met a manufacturing firm that has had the same ownership and leadership since 1976. This is impressive, with the exception that the leadership has failed to adapt their business to more effective business models through the years. Their inefficiency, lack of technology, and resistance to change in general has them teetering on bankruptcy. In other words, they are still focused on putting the arch in their baseball hat when the rest of the market, especially their competitors, has a new and better way.
I’m not going to change the way I wear a baseball hat – I guess that makes me old and I am willing to deal with the very minor repercussions of my decision. Some changes in business are fads and will not have any impact on the most effective model for an industry. But some of these changes are monumental and must be adopted if a business hopes to survive. The executive team, which inlcudes the CEO, CMO, COO, and CFO jobs, is to continue to drive the business model towards acceptance of those changes that will bring great value and true competitive advantages. This should be at the premise of any strategy a company develops for its future.
09/23/2009 | 7:00AM
We (meaning my family) had a need. We just added a sixth child to our family and our faithful minivan, with a total of seven seats, was no longer sufficient to safely hold our entire crew. Without too many 8-seaters on the market, we started looking for a new vehicle to purchase. We found a very nice lightly-used suburban for $30,000, and it filled our need and then some.
However, something stopped us from actually making the purchase. Sure, all the bells and whistles of the new vehicle were nice, I just could not get comfortable with spending $30,000 for another seat. The suburban was certainly worth $30,000, but when cast in the light of our actual need, it was quite excessive.
We received a referral to a qualified company that does seat covers and installations. For $195 we had an additional seat retro-fitted and installed between the two captain chairs in the middle row. We did not need a new suburban because our minivan had everything else we needed, except for an eighth seat.
So, what is my point? Too many companies focus too much on selling their product or service rather than meeting the needs of their customers. Most customers do not know exactly what they need – they suffer from information overload. They want an expert to get to know them and their situation, and then recommend exactly what will best fill their needs and bring them the most value.
I failed to mention our good friend who helped us through the experience. He wholesales cars and, as an expert, helped us find the best value to fill our need. He earned NOTHING on this transaction, but he has earned our business for life because he took time to learn about us and then, without trying to force one of his cars or other services upon us, helped us find the best deal for us.
The marketing and sales process often fails to identify the core needs of the customer. Whether we are selling too much or too little, our best long-term proposition is to know the needs of our customers and fill them. Up-selling is OK as long as we do not overlook the needs of our customers. Our firm that offers part-time CFO services invests heavily up-front into a prospective client so that we can clearly understand their needs and create the most value for them, which almost always affords an opportunity to build a long-term relationship. Those relationships make all the difference in terms of both profitability and knowing we are doing the right thing.
08/6/2009 | 1:03AM
Most employees are responsible. Employees will do their job well,(at least, they think they are doing a good job.) Employees generally feel responsible. These feelings of responsibility are feelings of obligation, and are pretty much instilled in all of us since childhood. So why aren’t these employees measuring up? Well, we need to look first to accountability and then past the individual to the team and processes.
Remember you and your employees are in business not busyness. Busy work is not the work of business. Doing the wrong things well helps no one. So responsibly doing busy work is worthless.
So what is the answer? We all need to be held to account to do the work that needs to be done. And that is what accountability is all about. Accountability occurs when managers specify what they want subordinates to produce (quantity, quality, time and resources), judge how well the subordinate worked and thereby manage the employees. A manager may be reluctant to have the hard conversation, but part of the manager’s job is to ensure that employees are being productive. Human beings are of course social animals. So management must never tolerate or allow bad behavior to be rewarded; think of it as a moral issue for management. No retailer would ever think of using an open cash draw instead of a cash register. An open cash draw rewards bad behavior.
Beyond the individual, most work is done in teams. Again, almost all employees strive to be a part of a winning team. The main inhibitors of teams are unclear work processes, bad incentives, unclear decision making, bad communications and/or lack of knowledge of how the rest of the firm works. Almost all of the problems and issues happen at the margin or transitions–the handoffs, decision points, approval points etc. If you really want to improve employee performance, look at what happens between the teams. Now as the financial crisis on Wall Street shows, the bad incentives can really mess up ever the most profitable business. Well done financials can, of course point the way. This is one of the focal point of the CFO services we deliver to our clients.
Fix the process, particularly the incentives and many employee problems take care of themselves. FedEx is a good example. Here is what Charles Munger, Warren Buffett’s partner said…”the Federal Express system requires that all packages be shifted rapidly among airplanes in one central airport each night. And the system has no integrity for the customers if the night work shift can’t accomplish its assignment fast…” Federal Express could not get the night shift to get the packages out on time. “They tried moral persuasion. They tried everything in the world without luck. And, finally, somebody got the happy thought that it was foolish to pay the night shift by the hour when what the employer wanted was not maximized billable hours of employee service but fault-free, rapid performance of a particular task. Maybe, this person thought, if they paid the employees per shift and let all night shift employees go home when all the planes were loaded, the system would work better. And, lo and behold, that solution worked.” (from an article “The Psychology of Human Misjudgment”).
07/30/2009 | 8:00AM
In response to our recent recognition for the second year in a row as one of UVEF’s Top 25 Under 5, we received this correspondence from our US Congressman:
Pretty cool. I had no idea he was interested. I also had no idea that our initial concept of offering part-time CFO services would grow so quickly into a legitimate CFO firm. Our company has turned into a great CFO career opportunity for those interested. But one this for certain…we certainly did not receive a letter last year!
07/21/2009 | 2:30PM
I just finished reading one of the best articles of the year. Perhaps I enjoyed it so much because it validated at least some of my core beliefs and the way I try to operate. The article was published in the BYU Magazine from a speech given by Arthur C. Brooks titled: “Why Giving Matters.”
Focus on giving, and the getting will take care of itself. I have always tried to live by this, and it was the theme for the speech I gave at my graduation from MBA school. I especially appreciate Mr. Brooks’ recognition of how his research has validated many of the principles taught within the Servant Leadership movement.
“The study concludes that when people see strangers giving charitably, they recognize a leadership quality in those strangers. If people witness you as a giver, they will see a leader. When people see you giving and cooperating and serving others, they will see in you a leader, or a future leader, and they cannot help but help you.”
The most powerful part of the information Mr. Brooks presents is that he tried to dis-prove and invalidate all of his findings. His data and research have passed much scrutiny and the facts just do not lie…those who give of their time and resources are better off, from both a financial and overall happiness perspective!
This concept may not seem logical to the tradition business financial consultant, but I believe that following the principles above is the small business financial help most need.
07/20/2009 | 12:29PM
CFOwise is proud to annouce that Larry P. Halverson and David Sullivan are the newest members of CFOwise
PLEASANT GROVE, Utah, July 20, 2009 - CFOwise is pleased to announce that Larry Halverson has joined the firm as its’ newest CFO Partner and David Sullivan has joined the firm as an Executive CFO. Both of these CFOs will extend the offering of CFO serivces by the firm in the role of part-time CFO offering financial help for small business as well as emerging and medium-sized enterprises.
CFOwise founder Ken Kaufman commented on the new additions by stating: “It is always exciting when we have a new Partner or Executive CFO join our firm. It reconfirms the commitment we have to all of our CFO Partners. Our committment is to help these professionals succeed in this CFO career opportunity - which allows them to build upon and further profit from the foundation of education and skills they have obtained to this point.”
Larry Halverson stated, “This is a new chapter in my career and I am very optimistic and excited for all of the services and support that CFOwise offers.” In addition to Larry, David also commented on his recent allegiance with the CFO firm: “Everything I was looking for in a company at this stage in my career I was able to fulfill with CFOwise. I am excited to get out in the market and help emarging, start-up and medium-sized companies accomplish the goals that they have.”
About CFOwise
With over two centuries of senior-level executive experience, CFO wise is the premier provider of permanent part-time CFO services to start-up, emerging, and medium-sized companies in the United States. For more information, please visit: www.cfowise.com or contact Kim Waldron at 801-380-5615.
About Larry P. Halverson, CPA (Partner of CFOwise)
For three decades, Larry has devoted himself to helping business owners from startup to over $200 million in annual revenue. As a business owner and entrepreneur, Larry has a unique understanding of exactly what it takes to start, develop and manage a company successfully. That has been the focus of his professional career since graduating cum laude from the University of St. Thomas (St. Paul, Minnesota) with a Bachelor of Arts degree in accounting. Soon after graduation, Larry passed the uniform CPA examination and has held continuous licenses in Minnesota, Wisconsin and Nevada. After working a number of years in public accounting and as an internal audit supervisor with a fortune 500 international manufacturing company, he started his own public accounting firm in La Crosse, Wisconsin…Read More
About David Sullivan, Executive CFO
David Sullivan has spent the last decade moving small and medium-sized companies from the startup phase to the feasibility and growth phases. As part of this process he has helped raise over $30 million debt and equity financing. He has extensive experience in compiling security offerings and filings, and preparing and facilitating offering packages including regulatory reporting requirements… Read More
04/21/2009 | 5:20PM
Over $200 billion dollars will be spent purchasing goods and services online in 2008, according to the brief above from the April 8th, 2008 USA TODAY. The Internet is becoming the major medium for marketing, advertising, and purchasing. This is a powerful revelation for emerging and medium-sized business owners – it levels the playing field with the big guys and allows for tremendous niche and overall market segmentation strategies. Some feel money spent on their website and e-commerce functionalities are costly and even cumbersome. For those that feel this way, I have some news – the numbers don’t lie.
This is great financial help for small business owners. Not only do you need to get online, but, with the overwhelming amount of available content, you need a strategy to make your web presence stand-out. So, how do we calculate ROI on web strategies? It is important to note that you cannot trade sales dollars for costs. In other words, you cannot say that you spent $10,000 on your web presence and that if it generates over $10,000 in revenue, then you have made money on the dollars spent.
You must consider your gross margin, because you will have certain costs that will vary with an increase in sales, or, in other words, you will incur costs to provide your products or services. If your gross margin, or the percentage of sales remaining after you subtract your variable costs from your revenue, averages about 30%, then your break-even on $10,000 of investment into the web would be $33,333 ($10,000 divided by .30).
03/16/2009 | 2:02PM
I recently heard an entrepreneur state that the probability of raising capital in this difficult market could be defined as the strength of your relationships multiplied by the traction your business is getting in the marketplace. I have thought a lot about that and I believe not only is that true about raising capital, but it is true about being successful in business.
People do business with who they know, trust, and like. If you think that building relationships isn’t important, you are in for a long haul. The recent phenomenon of social networking is making developing new relationships and maintaining old relationships easier than ever before. I have not only developed new relationships through mediums like LinkedIn, Twitter, and Facebook, but I have rekindled innumerable past relationships.
One never knows where their next client might come from and building relationships helps to establish report with existing acquaitances, and opens the door to develop new relationships for future business expansion.
Don’t let these new social media networks pass you by thinking that it is a waste of time using the excuse “I don’t have time to reconnect with old friends” because you never know which relationship will help your business develop the next client.
03/13/2009 | 3:28AM
There is a rising trend, especially among Gen Y and Gen X entrepreneurs, toward building their business models around social causes. Should these enterprises be structured as for profit, not-for-profit, or is there some other way?
Marci Alboher wrote in the New York Times: “It used to be that people who wanted to solve a social problem — like lack of access to clean water or inadequate housing for the poor — created a charity. Today, many start a company instead.” You can read her entire article here: NY TIMES ARTICLE.
The bottom-line is this – some organizations are better fit as for profits, and others are not. But there is a blurring line in our ever-changing society between the two ends of the spectrum – maximize shareholder value vs. benefit the public.
For more information on whether your organization is better fit as for profit other than non-Profit, contact our Part-Time CFO‘s
03/6/2009 | 2:03PM
Many people have asked me the rules about activities being a hobby or a business. The IRS says that hobbies are activities that are not pursued for profit. Here are some things to consider:
Does the time and effort put into the activity indicate an intention to make a profit?
Do you depend on income from the activity?
If there are losses, are they due to circumstances beyond your control or did they occur in he start-up phase of the business?
Have you changed methods of operation to improve profitability?
Do you have the knowledge needed to carry on the activity as a successful business?
Have you made a profit in similar activities in the past?
Does the activity make a profit in some years?
Do you expect to make a profit in the future from the appreciation of assets used in the activity?
My experience is that if you can treat what you do as a small business owner, you will receive much better tax breaks, however, the key is what are your intentions with your efforts.
