Recognizing Your Story

Where does your company stand right now?  What is your most profitable product or service?  How much do you expect to make next month?  What about next year?

There are a number of ways to gain insight from the information available to you.  This is what consultants do.  They know how to use information to construct a story.  While consultants can be extremely valuable, it is important to understand the basics of evaluating the condition of your business.  Two of the key things to focus on are trends and anomalies.

Trends

Financial data, especially, typically holds little value as a snapshot in time.  In most situations, you want to compare to prior periods.  For instance, let’s say your net income (net profit) was $800,000 last year.  What does this say about your company?  It says you had money left over after all expenses.  Now, what if you compared this to the last 5 years and it showed the following

Current Year

PY 1

PY 2

PY 3

PY 4

$800,000

$850,000

$1,100,000

$980,000

$1,020,000

This tells a different story.  While the current year was profitable, clearly it is trending downward.  You may find that sales (quantity) are flat, but the margin per unit is down.  That could be due to cost increases, a change in product mix, or something else entirely.  More investigation would be necessary to really identify the cause.

The comparison could be the last 5 quarters or the past 5 years.  The timeframe might change depending on what you are comparing, but the term must be sufficient to identify a pattern.

Anomalies

Numbers that look out of place and/or are unexpected can mean a number of things.  First, it could be an error.  Generally speaking, that is the first thing to consider.  If you see an anomaly, check the data first.  If the information presented is determined to be accurate, then it should be telling you something.

Look at the reason for the anomaly.  If sales spiked, why?  Did it coincide with some other event?  Sometimes, this can occur without a true marketing effort.  If you can determine what caused it, you need to ask yourself, can I repeat it?  Of course, if the cost to produce a widget

 

Financial and operational reports provide information, but it is the trends and anomalies that tell the story.  They represent the events that have occurred over a time period.  Information itself has no value unless you know how to use it.

What is your story?

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Hiring with the right focus

Some states have passed laws making it illegal to ask a potential employee for access to his or her social media content.  As much as I sympathize with employers and the challenges posed with hiring, I applaud the efforts of these states.

It certainly seems reasonable that an employer have the right to research prospective employees using publicly available information.  Commonly used background checks are also reasonable as they can expose past illegal activities.  Despite what anyone says about the privacy of social media, the content shared with friends/followers/connections only should be considered private unless and until it is exposed publicly by either the individual or friend/follower/connection.

When hiring someone, you must be diligent.  Dave Ramsey is well known for spending considerable time and using a series of interviews before hiring someone.  It can just be too costly to hire the wrong candidate.

Here are some tips for hiring the right person:

  1. Know what you want.  I once interviewed and hired someone who most people thought was too “quircky”.  That didn’t bother me.  I wanted someone who would be working independently most of the time combing through vast amounts of data.  Quite frankly, “quircky” was what I needed!  He turned out to be an excellent choice.
  2.  Communicate what you want.  Make sure your job description is accurate and, when interviewing, make sure the candidate is clear on the expectations.
  3. Pay attention to the little things.
    1. How is the person dressed?  Even if you are hiring for a blue-collar job, if someone is nicely dressed, it shows initiative. 
    2. How does the person act?  Are the pleasant to talk to or do they seem a bit edgy?  If they are even the least bit defensive or confrontational in an interview, they will be 10 times worse on the job.
    3. Are they friendly and polite?  Do they say please and thank you?  Do they smile and laugh?  I’m serious.  Not doing these things shows either arrogance or deference, and you don’t want either one.  Be careful not to confuse the behavior, though, with nervousness.
    4. How do they talk about other people?  It is for them to talk about challenges they had with other people.  It is not ok for them to talk about the flaws in others.  You want the focus to be on what they did to ensure a good working relationship despite the issues.
    5. Do they speak from the heart?  You aren’t looking for tears, but you want to know they felt a connection with something…anything.  Lack of emotion is troubling because it shows they are unable to be passionate (which is a desirable trait) or that you have difficulty being passionate with regard to your work.
    6. Do your homework. 
      1. Contact references.  You don’t gain much by talking to personal references as nobody will provide a personal reference that will not give them a glowing recommendation.  Rely more on discussions with past employers.
      2. Perform background checks.  This is rather obvious.  You are primarily looking for legal issues.  Those could be criminal or civil issues, bankruptcies, etc.
      3. Search online.  You may find public Facebook, Twitter, and LinkedIn accounts.  What do they post online?  Do they have a blog?  If so, what do they say in their postings?
      4. Don’t be afraid to “snoop”.  You are making the investment and taking the risk, so you have every right to gather as much information as possible (within legal boundaries) to enable you to make a better decision.

There are companies that can help you screen employees.  You can also work with a company like ISB Partners to help you develop a strategy for hiring.  They can also help you assign a value to the cost of training and losing an employee.  It can be as high as 50% of their annual wages.

The most important thing to remember is that hiring an employee is easy.  Hiring the right employee, however, takes real effort.  When you consider the costs, the effort seems a small price to pay.

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Surviving the Storm

As I was cutting branches that had fallen from a recent storm, I noticed something different between the branches that had fallen and the branches that remained.  The ones that remained seemed to be lighter and more flexible.  The ones that snapped had put up more of a fight…trying to resist the wind instead of moving with it.

We find the same sort of phenomena in business.  The businesses that maintain their flexibility are better able to survive the storms.  Those that want to remain firm in their ways and fight the forces of change are subjected a battering that they will not always survive.  Look at what is happening to RIM (the maker of Blackberry devices) today.  Once a leader in smart phones, RIMs market share has dwindled dramatically, as is their company.  It would appear that they could not foresee the demand for touchscreens soon enough.  They also did not make enough of an effort to encourage the development of apps for Blackberry.

Change is at the essence of business.  At some point, your business model will have to change.  Don’t be afraid to make the changes necessary to insure your business succeeds not only today, but tomorrow as well.

Consider hiring a consultant to help you develop a strategic plan.  Better yet, consider a company like ISB Partners, LLC.  For a small monthly fee, they will not only work with you to plan for the future, but help you develop a sustainable business model today.

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What Does Affordable Care (Obamacare) Look Like?

I saw a blog recently that criticized people for speaking negatively about the Affordable Care Act (labeled Obamacare by most conservatives).  I think that is fair.  So, I set out to read the law for myself.  That proved to be challenging.

The bill is about 2000 pages of legalese, cross references, and exceptions.  In the end, I can’t say that I read the entire bill.  What I did do is look for specific items.  Specifically, I wanted to capture the things that are not being talked about.

Lost in the debate over the mandate portion of Obama’s Healthcare tax are the taxes and regulations themselves.  The emphasis has been on the individual mandate and the benefits.  I started looking at ways that businesses will be impacted, before realizing that almost everything has the potential to impact small businesses. 

Keep in mind that I am not an expert.  To me, this is an advantage.  I am just an average American trying to decipher a bill with a very significant impact on the lives of all Americans.

Therefore, here are a few of the items that may affect you and your business:

  • Tax on Medical Device Manufactures
  • Surtax on long-term capital gains.
  • Since insurance companies must offer coverage to adult children up to 26, the premiums charged to your business may increase.  Either the cost to you or the cost to your employees will increase.
  • Since the Flexible Spending Accounts will have limits, the usage of those programs will diminish.  Businesses will either chose to pick up the slack, or let the added cost pass to the employees.
  • There are numerous additional regulations regarding reporting that will be assessed upon insurance companies.  The additional costs to comply will most assuredly find their way into premiums.
  • Health coverage cannot be dropped for an individual without significant cost to the insurance company.  Some small insurance companies may drop out of the market as the risk profile will become too high.
  • Insurance companies will be limited on how much they can charge different individuals (based on tobacco use, age, etc.)
  • Offered plans must be available to every employer.  This means that if you are in an industry with low risk and healthier individuals, your premiums will go up.  Insurance companies cannot offer customized solutions with potentially lower costs for your business.  This also means that company sponsored wellness programs may not result in discounts.
  • Individuals cannot be denied coverage for any reason.  Again, the increased risk profile will push out competition.
  • If the cost of healthcare exceeds $8500/yr for individual or $23k/yr for family coverage, the excess will be assessed a tax of 40% of the excess.  The limits include cost of living adjustments.  Unless you live in a “high cost” state.  This is assessed on the insurer, but the employer is responsible for calculating.  If the employer’s calculation is wrong, the employer pays the penalty.
  • Brand named prescription drug sales will be charged a fee based on sales.
  • Insurance companies charged a tax on premiums collected…above normal income tax.
  • Limit on itemized deductions increases from 7.5% to 10%.  This only changes for 65 and over through 2016.  Then it affects everyone (conveniently after the 2016 election).
  • Tax increase for those making over $200k/yr ($250k/yr for those filing jointly).
  • Tax on elective cosmetic surgery or medical procedure of 5%.
  • Employers must pay the same contribution rate for each employee, regardless of status or income.
  • Any employee with at least 1000 hours of service in preceding year is eligible to participate in insurance offered by employer.

 The only thing I think I can really say for certain is that healthcare costs will increase.

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LinkedIn Connections For Your Business

Some might ask why I would write about LinkedIn as my first social media focused article in light of its popularity compared to other sites. The reason is simple. LinkedIn is still, I believe, the best option for connecting with others in business, and www.benderforbusiness.com is devoted to business.

First, when creating a profile, be sure to include as much information as possible. You want people to feel that they know you before they even connect. Even if you are representing your business, use a personal photo, not a logo.

To make connections in LinkedIn, you can simply invite others to connect with you. However, LinkedIn will track those that say they don’t know you and you may eventually lose your ability to connect without already having an email address. When sending invitations, it is best to include some sort of personal message. Otherwise they receive the standard “I would like to invite…” message, which every knows is system generated.

Now, LinkedIn is set up to encourage more meaningful connections, not just a large quantity. Here are a couple of suggestions for making meaningful connections:

  • Use the search functionality to identify those in your target industry.
  • Join groups that focus on a targeted area. This is a good way to interact with other members and make solid connections.
  • Answer and ask questions under “Answers”. This is a great way to gain a reputation as an expert and to make connections with others you can help or who can help you.

If you would like to connect with me on LinkedIn, click on the link at the top of this page.

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