A case for networking with just one person

When I started my own tax and consulting practice I set out to network with the local business community so that I could grow my business. Not being a natural networker, I had to learn the hard way how to go about using networking opportunities to grow my business. I figured a good place to start was with the local Chamber of Commerce. After my first Chamber function I returned home triumphantly with a large stack of business cards. I had figured out the game of exchanging business cards and I had a handsome pile of cards to my credit.

What I hadn’t figured out was what to do with them. Should I call everyone who gave me a card? Send them all an email? Nervously avoid them the next time I saw them? I didn’t want to be the guy flooding everyone’s inbox with emails, nor did I want to avoid people at the next event. I had to do something different but what?

Not knowing what to do differently, I went to the next Chamber event and hung out with the 3-5 people that I was friends with and could engage in unimportant conversation. I didn’t want to meet new people because I couldn’t see how their business card could put money in my pocket (the ultimate goal of networking) and I didn’t want to talk to the people whose cards I got last time because I already had their cards! Something had to change.

After taking some time to consider my strengths, my needs as a business owner and my networking comfort level, I decided upon a very simple strategy: network with just one person. Don’t get overwhelmed by the sea of people, focus on just one potentially valuable relationship. Here’s what it looks like:

 

1) I’m at a big networking event with dozens or even hundreds of people.

2) Say hello to the people that I’m friends with (it can’t be avoided, but shouldn’t be prolonged).

3) Look for someone I haven’t met.

4) Introduce myself and find out what they do.

5) If I perceive that there could be some value in getting to know more about them and letting them know more about what I do, schedule a meeting with them. Don’t delay. Try to set it up for the next 3-5 business days.

6) Follow up with an email as soon as I’m back at the office.

 

That’s it. I’m done. Now look at what I just did:

1) Set a SMART goal (Simple, Measureable, Achieveable, Relevant, Time-sensitive)

2) Met my goal (we all love that feeling)

3) Showed the new contact that I value their time and am serious about learning about them.

4) Avoided wasting time.

5) Still had a chance to talk with friends.

6) Started a relationship that could be valuable to both of us, instead of adding to that business card stack that we all try to hide.

 

Maybe your personality is different than mine. Maybe you can effectively network (read: add real value to your business) with dozens of people in an evening. But that’s not me. This is the plan that I have used ever since and it works. In addition to this, I’m a member of a local Business Networking International chapter. My time in BNI has given me two very important skills: 1) how to effectively tell someone about my business in a very short time (30-60 seconds) and 2) how to make the most of the longer meeting.

Let me know what you think. Do you have a similar strategy? What works for you?

The Red Sox collapse & your company culture

This was a sad year for Red Sox fans. On September 3rd the Sox lead the Tampa Bay Rays by 9 games in the AL wild card race. By September 28th they had lost 18 of 24 games and were eliminated from the wild card race. What happened? Is the curse back?

No. Not unless stupidity and arrogance can be considered a curse. The Red Sox epic collapse can only be blamed on the Red Sox and their management. As the days go by we learn more and more about players partying during games (if beer, fried chicken & video games can be considered partying), management turning a blind eye and players caring only about themselves. From possible World Series contender to the brunt of late night jokes in three and a half weeks.

What can we as business owners learn from this disaster? Simply this: culture matters. What you tolerate at your workplace speaks volumes of your character and will directly impact the performance of your organization. I work with a small town retail store that gets it. From the day they opened four years ago the owners made sure that everything was done a certain way. Their establishment is always clean, well-stocked and staffed with knowledgeable and polite salespeople. As a result, they’re growing. Their second retail location will open next month and their products are now sold in dozens of outlets throughout New England. The business has the potential to take off and reach a level of success rarely seen by a Maine-based business.

How do they do it? Culture. Everyday they make sure that their corporate values are lived by. If someone slacks off, they are corrected and reminded of the standards they are expected to meet. They understand that their corporate culture could make or break their company.

What is your corporate culture like? What do you tolerate? Where do you draw the line? Are you poised for growth or will you be the next 2011 Red Sox?

Uncomfortably agreeing with Big Brother…

I have long been a proponent of smaller and simpler government. While I don’t self-identify as a Libertarian, I do lean that way. So it is with some sheepishness and reluctance that I have to say I agree with one area in which Big Brother is increasing it’s oversight and control: regulating tax preparers.

Anyone can prepare taxes and anyone can be paid to prepare taxes. Prior to this year there have no restrictions or requirements placed on unenrolled tax preparers (those that aren’t CPAs or Enrolled Agents). Starting this year, however, unenrolled preparers will be required to pass competency tests and to register for a PTIN (Preparer Tax Identification Number) with the IRS. They will also be required to pay a $64.25 for the privilege of acquiring this new identification number.

You may ask, “Isn’t this the same as states and municipalities requiring people to register to be a barber or requiring the cute kids to have a permit for their lemonade stand?” Yes and no. It’s similar in that the government is grabbing more control and money. It’s different in that the tax code is far more complex than lemonade stands and barber shops. Because of this complexity it makes sense that there be some standard for return preparers. After all, not just anyone can practice law (or remove lead paint).

The bottom line: the government has created an extremely complex tax code and is now telling us that because they have made it so complex, we now have to register and pay for the right to competently interpret it. It makes me uneasy, but it needs to be done.

Barber shops, however, that is entirely different and….never mind…..I’ll save that for another post.

What the Chilean miners can teach us about money

As I write this post the Chilean miners are being extracted from the depths of the Earth. CNN tells me that 17 have been rescued and 16 remain underground. This wonderful story can teach us three important lessons about money:

1) What you think is really important might not be important at all. So you really think it’s crucial to get a new car? Buy a new toy? Purchase a larger house? What if that money was spent on something else? Something more lasting? A date with your significant other? Time alone with one of your children? A donation to your favorite charity? These are the things that we can’t undo, the things that will last.

2) As important as money is, time is more valuable. First of all, I understand the premise that time IS money. I get it. What I’m talking about is finding balance for your life. Even as I write this post, time is ticking away. Time that I will never get back. I love my work and I enjoy spending time helping my clients. But at some point I need to say, Enough” and return to the more important things in my life: faith, family, friends. True, I need some amount of money to enjoy these things but I’d rather get to the end of my life with all three of these and some money left over than to get to the end with a large mountain of cash and none of them.

3) Work matters. Having said all of that, our jobs matter. They matter to others and they should matter to us. The miners were working when this disaster started, they had to work to help clear rubble and most of them will be working again within a few weeks. Because our work matters, lets do work that we enjoy and can be proud of.

I am thankful that the miners are being rescued and I am confident that they will take lessons from this ordeal that will permanently shape the way they live their lives. And I hope that you and I don’t need to get trapped underground for two months in order to learn those same lessons.

So you want to sell your business…

In the past few months I’ve had clients come to me that have expressed an interest in selling a business and want to know what steps to take. Here are some basic principles to consider. Bear in mind that I am not offering legal advice and I am not a business broker.

1) What’s it worth? For most owners of small businesses the answer is, “less than you think.” Someone who has worked for 25 years as a plumber, taken home $75,000/year for the last three years and has steady work lined up for a few months might want to get $250,000-$400,000 for their business. After all, they’ve been building this for 25 years! The reality will be much lower than that. What is actually being sold? Equipment? The company name? A book of business? Each of these can be valued (some with more difficulty than others). In the case of the plumber, there might not be a lot of equipment, the business is probably the name of the plumber and there are probably no regular recurring customers. What exactly does the purchaser get? I don’t say this to discourage the sale, only to bring the expectations down. You need to have an accountant and an attorney advise you in this regard. What are the liabilities and assets of the business? What are the tax implications of selling the business?

2) What does a buyer need to know? Two years ago I looked at buying a small manufacturing business. It was in an industry that I knew, the owner was willing to finance it and the company was successful (according to the owner). When I asked to see financial statements and tax returns, the owner brushed off the idea. When I insisted that it would be necessary if I was going to seriously consider a purchase of this size, they were produced. As I looked over the documents, the owner could sense my concern/irritation and said, “Well, we don’t really want to make any money because then you have to pay taxes.” The reality was vastly different than how things had been presented and I walked away.

I tell that story because the first thing you will need to do will be to pull together 3 years of tax returns and financial statements. This is especially important for business owners who report their income on a Schedule C. If there are relevant statements that go back further than 3 years, gather those together as well. You will also want to spell out any existing contracts with customers and vendors that are currently in place, any future work that you are certain to get and a client list. You want to show without any doubt that the business is viable (if, in fact, it is.)

3) Get ready to answer questions. Why are you selling? What’s wrong with the industry? Why now? Why such a high price tag? Will you finance it? Etc. An informed buyer will have many questions for you. That’s okay. If they are serious about buying the business they should be asking lots of questions.

4) Who do we sell it to? I tell my clients to start with the easiest potential sales: employees, family involved with the business, local competitors. These three groups are most likely to have an interest in the business. If those don’t seem like a good fit or if they aren’t interested, I recommend listing the business for sale in a trade publication. This will give you a broader audience of individuals/businesses that would be interested in your company. From there, talk to a business broker about listing the business for sale. I should note that a solid argument can be made for talking to a business broker at the outset and using their services. A good business broker should be able to help you value the business appropriately and should bring more for the business than the cost of their commission.

5) Why are you selling? One of the questions that a prospective buyer will have is one that you need to have thoroughly considered yourself. Why are you selling this business? Are you moving? Retiring? Changing careers? Getting rid of a messy situation? If the business is profitable, why not stay involved? If the business isn’t profitable, who would want to buy it? Is it possible to remove yourself from ownership and stay on in an advisory or part time role? Is this what you really want to do? These questions must be answered and they must be answered well. You need to be in a comfortable position when you sell your business. If you are under duress or are uncertain, you probably won’t get enough for the business.

After reading all of this, I hope I haven’t discouraged you from selling your business. What I tell my clients is this, “Make your money now from the business and if you sell it someday, consider that an unexpected bonus. Don’t make plans based on what you might get for the business!”

I hope this helps you.

Stop it! You’re not a pro at everything!

I’m a big fan of the internet. So much information a few mouse clicks away makes me feel powerful. It makes me feel that I can do anything. Never before in history has it been easier to find out how to read the engine codes for your car, bake the perfect gluten-free birthday cake or find out how many fireplaces there are in the White House (28). But there’s a big problem with the internet:

It makes me feel like a professional at virtually anything. And I’m not. No matter how many, “how to cross stitch” videos I watch, I’ll never be as good as my mom. Ever.

I use this example to illustrate my larger point: I’m also not a doctor, attorney, engineer, electrician, diesel mechanic, exterminator, baker, bowling pin machine mechanic…you get my point. I’m good at a small set of skills around which my business is based.

Today, I called my stock broker and told him to sell some stock (thinking that I knew what I was talking about). He graciously replied, “Bob, if we do it that way you won’t get as good a price for the stock as if we do….” I thought to myself, “That’s right, Brian is the broker, not me. This is what I pay him for.”

What areas of your business are you doing this in? Are you pretending to be a bookkeeper, but actually have a huge pile of bills, receipts, and invoices cluttering your desk? Are you delaying that meeting with your attorney because you’re pretty sure you’ll never have any legal problems? Are you filing your tax return with a prayer each year, hoping that you filled it out correctly and didn’t miss anything important?

A successful person recognizes their weaknesses and does something about them. For me, I am weak on marketing my own business. I have loads of ideas for others, but seem to struggle with promoting myself. That’s why I’m working with Jim Bouchard who is helping me in this area. You’re reading this because Jim said, “Bob, you’re good with people and have a unique perspective, you need to start blogging.” Yes sir, coach.

So if you are that person who is trying to do everything for their business, I have two words for you: stop it! Find quality, qualified people in your area that can come alongside you and free you up to do what you do best. You’re not a pro at everything, but you are a pro at something. So focus on that.

Jim Bouchard can be contacted at:
www.jimbouchard.org

Want to succeed in business? Catch a bat!

Yes, I mean that kind of bat….the nocturnal terror that flits about mocking us as we stumble in the dark. If you are an entrepreneur and you want to succeed in business, you have to be able to catch a bat. Or at least possess several of the skills necessary to do so.

In the course of the past week, I have caught two bats in my house. This simultaneously delighted my children and terrified my wife. The process of catching them is much like being an entrepreneur seeking to grow your business. Here’s what it looks like:

1) Nerves of steel. Let’s face it bat catching, like being an entrepreneur, isn’t for everyone. To do it successfully you have to be okay with an uncertain outcome and a constantly changing path to that outcome.

2) Control what you can. To catch a bat in your house successfully, start by making it a little bit easier for yourself: turn on all of the lights. In business, the successful entrepreneur does what they can to change the playing field to their benefit. Look at solving a newly emerging problem. Solve an existing problem in a better way. Constantly improve your skill set so that you gain or maintain a competitive edge.

3) Patience. Bats are faster than you. Deal with it. You aren’t going to catch one on the first try. Very few (if any) entrepreneurs experience their desired level of success in their expected timeframe. That’s okay. Keep adjusting and attempting and eventually, like catching a bat, you’ll get it.

4) Don’t be afraid to move. Don’t confuse patience with stalling or laziness. When the time arrives, you have to move quickly. And remember what Coach John Wooden once said, “When opportunity arrives, it’s too late to prepare.”

5) Success doesn’t always look like you thought it would. Have you ever held a bat? It’s a delicate, ugly creature that shrieks at you when it’s mad/scared. That sound is the sound of victory. Not what I expected. Businesses have to change. And when they do, so does the picture of success.

6) At some point, you have to let go. You can’t hold the bat all night. In business, you have to be willing to move on, to change, to grow. The market is constantly changing. Needs and wants are shifting. You have to be willing to let go of what worked yesterday to discover what will work tomorrow.

I hope that you won’t need to catch a bat in your house. But I also hope that the application of bat-catching to business helps you to gain a new perspective on what you need to do succeed in business. No bats were injured during the research for this post.

Addendum for the curious:

1) Use a bath towel to swat at the bat. It’s large enough to challenge their radar system and won’t injure them when you hit them.
2) Wait for them to either land or settle into a predictable flight pattern.
3) Use the towel to pick up the bat. Many of them carry rabies and they might bite you.
4) DO NOT tease your terrified spouse with the captured bat.

Why the rich should NOT get a tax hike next year.

Some of you are already mad at me based solely on the title.  I’m okay with that.  Hear me out.

First, let’s get the following out of the way:

1) This is a very contentious issue

2) The definition of “rich” is arbitrary and relative.  For the purposes of this post, I’ll use those with incomes (combined or otherwise) of over $250,000.

3) I am not rich (at least by my arbitrary definition of financial wealth)

Now that we understand each other, let me lay out my reasoning.

1) The rich buy stuff.

2) The rich employee people.

3) You might be rich someday.

4) Some of the rich aren’t rich.

5) Let’s stop punishing success.

I could end the post here but let me further explain.

1) Wealthy people buy lots of things.  When their tax burden goes up and even when a tax increase is suggested, they buy less stuff.  That hurts the economy.  Many wealthy families have more disposable income than the average per capita personal income of $39,138.  That means they are able to spend more than $39,000 on things they really don’t need but that perhaps you or your company sells.  Take Chelsea Clinton’s wedding for example.  What small town wouldn’t want a wealthy family to come spend $3,000,000 in one weekend?

2) The rich employee people.  When I hear someone complaining about the wealthy I ask them, “How many poor people have you ever worked for?”  The answer is always the same: zero.  Wealthy individuals are often wealthy because of the businesses that they run or have started.  When their taxes go up, they are less likely to expand their business by creating jobs, expanding infrastructure and (ironically) becoming more profitable.

3) You might be rich someday.  Do you really want to work for six months of the year for the government and only get to keep half of the income that you worked so hard to earn?

4) Some of the rich aren’t rich.  I’ll probably do a whole post on this some day.  The small business owners who are reading this are already saying, “Thank you!”.  Let’s suppose you own a small business.  You employee 20 people.  Your sales for the year were $2,000,000, with a $200,000 profit.  Your salary is $50,000.  You are rich.  “Why?,” you ask? Because most small business are sole proprietorships, partnerships, LLCs or S-Corporations.  The profits from all of these business entities get recorded on the owners 1040 as income meaning your $50,000 just got $200,000 added to it.  Ouch.

5) Our income tax code is set up to punish success.  If my son sells lemonade one weekend, he keeps the profit, no questions asked.  If he sells lemonade every weekend of the summer and earns $5000, he pays no taxes.  If he hires his three siblings and they set up four stands and work them for the whole summer and he earns $10,000 after paying his siblings, he begins to pay taxes.  If the company grows someday and becomes a business with 30 employees and he pays himself $60,000: more taxes.  Then he takes it regional.  150 employees, a $300,000 salary, and a lot of taxes.  Why grow it to 1000 employees?  Why take it national?  Is it really worth it?

Now at this point some of you are saying, “What about the deficit? We have to raise taxes to reduce the deficit.”  Wrong.  Before my wife and I got married we committed to do something radical, something that many families, most states and Washington D.C. can’t do.  We decided to live on less than we make.  No matter what.  It hasn’t always been easy, but it works.  My solution to the deficit: spend less than what comes in.  Washington D.C. can not create jobs or stimulate the economy by taking from the economy.

Let’s not make a struggling economy much worse by raising taxes on the only people with the ability to truly stimulate the economy and create jobs.   Leave the rich alone.

Maybe the market is still working!

News today from Detroit: the market has rewarded Ford for not being part of the bailout/stimulus fiasco!

Free market economists like to believe the following:

1) The market always self-corrects.

2) Good companies will be rewarded.

3) Bad companies will be punished.

4) Hands off, Uncle Sam!

Recent history, however has shown that this is not always the case.  Ford was not part of the bailout and has now made 5 straight quarterly profits.  If GM reports a profit, it will be the second quarter in a row and that’s with billions of taxpayer dollars being tossed their way!  Why the difference?  Here are 5 reasons why Ford is being successful now:

1) Attention to customer desires.

2) Careful debt management.

3) Good leadership from CEO Alan Mulally.

4) Rejection of taxpayer dollars.

5) The market worked.

And kudos to my hairdresser friend who bought Ford shortly after the government bought GM.  She made a tidy return on her investment.

Be like Bach!!

I know what you’re thinking, “What does Bach have to do with business?”  The answer: EVERYTHING!  Bach composed around 2000 pieces of music during his lifetime.  That’s the equivalent of one piece of music every week for 40 years.  In addition to doing some composing, Bach was an acclaimed organist and also played the harpsichord, viola and violin.  How was one person able to accomplish so much in his 65 years of life?  Excellence.  Bach pursued excellence in all that he did.

Now we can’t all have the talent of J.S. Bach, but we can all pursue excellence the way he did.  Here’s how:

1) Become well rounded within your specialty.  Bach performed and composed music.  The one informed the other and increased his skill.  You don’t need to be all things to all people, but you should have the bases covered within your discipline.

2) Practice excellence regularly.  Not every one of Bach’s compositions is well known today, but they were all done to the best of his ability at the rate of one per week.

3) Manage your time well.  One composition per week in addition to practicing and performing.  That takes careful time management.

Bach is a hero to many in the musical world, I think he should become a hero to the business world as well.  Be like Bach!

SDG