Business Success 3: What is Common in One Market is Not in Another

We frequently share a particular business success to illustrate points you can use to grow yours

I wish to illustrate how your tax dollars can return a great investment if you let it. The government offers several great services to small-business owners. Many of the services cost nothing or ask for a very small fee. Margaret’s story highlights how taking advantage of their services can grow your business.

Agricultural Agents Share Good Ideas

Margaret lived in a rural section of Utah, USA. She and her husband grew wheat on a 1,000 acres. Droughts, the market, and other factors continually dropped the price of wheat. The farm had a hard time providing adequately for the family. They needed a method of earning more income.

Margaret consulted with the agricultural agent with Utah State University. She thought about growing a special kind of wheat and selling it to flower shops on the east coast. She had seen pictures of floral arrangements in magazines using wheat instead of baby’s breath. The agent did some research into what wheat east coast shops used. He compared strains that would grow best in their area. They planted 100 acres of a certain strain.

Idea Generates a Golden Harvest

The agricultural agent suggested that Margaret visit the local Small Business Development Center (SBDC). He told her about the workshops, classes, and materials they offered to help people organize and market their businesses. She attended a few workshops and consulted with one of the counselors at the center. The SBDC counselor and agricultural agent helped her analyze the market and prices shops paid for the wheat.

She honed her business and marketing plans. She marketing to several floral shops. They amazed her with the price they were willing to pay. Her 100 acres of wheat generated more profit than the other 900 on the farm. The family gained the additional income they needed—and $5,000 more. Her expenses from Utah State University and the SBDC totaled $250.

Come back on Tuesday when we explore how to analyze your market position and competition

Business Success 2: Expanded His Franchise

Here is another success story to help you see that you can also accomplish something good
I’m sharing stories of business success with you so that you can see success and believe in your own success. Today’s story about Daniel focuses on people who own franchises. I will not share the name of the franchise he bought, nor his real name. I respect this person very much and stand in awe of what he has done. I don’t know if this story will help you or not. If not, perhaps one of my later success stories will assist you.


Do Your Homework to Prepare for the Future
Daniel graduated in advertising. He went to New York and hit the streets for six months before landing a job at the world’s largest advertising firm. He excelled at the firm, developing award winning ad campaigns for Fortune 100 companies. After several years, he found a job with another ad firm in Atlanta. His next move took him to an ad firm in the San Francisco Bay area.
Daniel knew that advertising was a young person’s game. He recognized the need to transition into a new phase of his career. He served as marketing directors and VPs to major companies. At times, he despaired of finding a good career solution.
But he kept planning and exploring.
Finally Found His Niche
Daniel knew some friends who owned a retail franchise company. He got a job as the national marketing VP. His guidance helped franchise owners improve the brand and grow their franchises. Those that followed his policies enjoyed success.
He bought a franchise in a city hit hard by the recession. He helped his store to implement good marketing practices. As a result, his store became one of the four best stores in the country.
Recently, the parent company asked him to buy a store that struggled. They had faith that he could turn it around. He took over the store at the beginning of the year. It already began to improve.
Come back on Saturday when we share another business success story

Business Success 1: Increased Sales and Revenues

I will periodically share different kinds successes that my business clients achieved

I’m going to share success of that one businesses experienced implementing some of the ideas I have shared with you over the past year. They represent a small portion of the clients I consulted over the years. Their success resulted from implementing not one specific idea, but implementing several. I will not share the name of the companies and nor the true name of the person involved. I will, however, share the names of the tools or organizations, that helped them achieve the success.

Copies and So Much More

Dick owned a second-generation copy center and specialty store. He evaluated his business model and competition. He worried that the future of copy centers did not bode well for his business. He decided to reevaluate and reframe his business.

He started reading voraciously books on business, management, marketing, and other. He listened to audiobooks. He attended business conferences and seminars. He joined Marketing Success Institute’s My Marketing Day and attended every month. He completed most of the assignments, add things to the collaboration web site. He joined a mastermind team.

Growth Follows the Plans and Strategy

Success began to accumulate slowly. Then, it accelerated. He made major changes to the business and the facility. He delegated more operational responsibility so that he could establish vision and strategy. Some of the successes he experienced:

• Increased sales significantly in both the copy and retail end of the business
• Expanded his online and wholesale presence generating a 30% increase in revenues
• Established a synergistic publishing business increasing sales by 20%
• Offered workshops, podcasts, and online seminars that established his reputation and market niche
• Generated more sales by listing publications and other materials on Amazon

His diversified business makes more money than it did four years ago. He no longer worries about the company relying on one product to survive. He enjoys the changes and finds great satisfaction in the growth and diversity. He credits his research, the collaboration, Marketing Success Institute, and his mastermind group with the improvements.

Come back on Thursday when I share another business success

Enhance Your Operation 6: Reduce Time at Workstations

This continues our series on how enhancing your operation increases your profits

We dealt with a little bit with reducing time at workstations in our streamlining and bottleneck posts. Today, we add more points to reduce the amount of time product or paperwork spends at any particular workstation. Time stalled at a workstation costs you money.

Find the answers 4 questions about the product, paperwork, processing step or other (referred to as “it” in the questions below)):

How long does it stay at that workstation?

• Many machines, computers, and other workstations come with programs that allow to time how long it performs a certain task, input a record, or keep a file open.
• If not you may use the stopwatch app on your smart phone.

What happens to it at that workstation?

• Once again a program or app may keep track of exactly what happens at the workstation.
• You can also assign an employee or consultant to write down what they see the person the workstation do.

Why must it spend so much time their?

• Ask the observer to notice roadblocks that may delay getting it off the workstation: slow computers, slow workers, misplaced product that delays processing
• Observe if the worker need to set up, change, or open different templates or programs.
• Look to see how many interruptions, time away, or meetings delay processing.
• Examine the motivations for workers to speed up or slow down

What can we do to reduce time spent at that workstation?

• Reorganize the workstation to streamline task and material flow, and reduce duplication or lost movements
• Repair, tune, or enhance the equipment to function faster
• Train the worker to work faster and more accurately to eliminate mistakes
• Divide the tasks and responsibilities of that workstation to process faster
• Reduce interruptions, approvals, meetings, or other barriers slowing down the workstation
• Ask the workers for opinions to speed up the reduce time at the station
• Consider incentives to move the work faster

Join me on Tuesday when we share some success stories of business clients

Enhance Your Operation 5: Reduce or Eliminate Bottlenecks

This continues our series on how to improve your business operations to grow your business
In our last post, we discussed streamlining your production line or processes . We alluded to how bottlenecks cost you money by slowing production and increasing costs. A bottleneck occurs whenever new product arrives at a workstation faster than the workstation can process it.
While streamlining can eliminate some bottlenecks, others may require special attention and solutions. We will examine the cause and effect of bottlenecks in businesses. Then, share some ideas for resolving them.
Cause and Effect of Bottlenecks in a Business
Bottlenecks occur in manufacturing lines, clerical processes, or any sequential work done by different people. Companies create bottlenecks without meaning to do so. Causes of bottlenecks may include:

• Faster workstations or employees feeding into slower ones
• Multiple workstations consolidate into one process or workstation
• Missing workers in the production or process line for meetings, vacations or illness
• Workstations that do not have the materials needed to process what comes
• Workstations impacted by slow, broken, or inappropriate equipment or systems

You may use several tools to identify existing or potential bottlenecks:

• RACI analysis to identify who is responsible, accountable, consulted, or informed in the process
• Flow charts allow you to chart visually the flow of work and identify bottlenecks
• Ask “Why?” as you look at a bottleneck. Then, analyze that answer with another “Why?” until you’ve asked “Why?” 5 times

Reduce or Eliminate Bottlenecks
Mindtools suggests that you have two basic options to eliminate a bottleneck

• “Increase the efficiency of the bottleneck step”
• “Decrease input to the bottleneck step”

PlantRun, an international consulting firm on downtime manufacturing information, adds:

• “Optimize the speed of machine or work”
• “Ensure the bottleneck machine is well maintained”
• “Provide a constant buffer of stock upstream of the bottleneck” (Great idea!)
• “Reduce time wasted in set ups and changeovers”
• “Train more operators for the bottleneck” step & use them to unjam bottlenecks
• “Run bottleneck steps longer than others” (Start earlier/end later)
• “Improve operator efficiency and competence”
• “Improved time management”
• “Improved motivation” for workers

Come back Saturday to analyze if outsourcing or drop shipments will enhance your operation

Enhance Your Operation 4: Streamline Your Production Line

This continues our series on how to grow your business by improving your operation
Inefficient layout of production flow costs businesses millions each year. Your business may not lose millions, but you may lose money without recognizing it. The term production flow in this context goes beyond a manufacturing line. It includes all business processes: accounts payables, accounts receivables, sales & marketing, supply chains, and even management.
Possible Bottlenecks in Your Operations
Inefficient processing flows increase the time needed to get things done. Bottlenecks created through poor process flow slow down results. Several factors lead to inefficient flow:

• Paperwork sitting in an in-or-out box for 2-3 days impacts cash flow and more
• Paperwork or manufacturing flows that do not follow straight line flow or that crisscross the manufacturing floor
• Production in various countries with customs and tariff costs or delays
• Small problems in your warehouse can delay shipping your product by 1-4 days

How to Streamline Your Manufacturing and Other Processes
Business Knowledge Source suggests how to simplify and streamline manufacturing operations:

• Identify where your production falls down through slower or faster workers
• Ensure your employees perform at peak performance by training them effectively
• Eliminate or consolidate any complicated or unnecessary steps in the process
• Keep things organized. Give workers 10 minute breaks to clean their work area
• Hire a consultant to help you identify and implement additional improvements

Other processes will reduce processing time and streamline your processing flow:

• Purchase Enterprise Resource Planning (ERP) software to monitor your processes
• Implement processing models: LEAN Processing, Agile, KANBAN Pull production or others
• Move workstations closer together to reduce transport between countries, buildings, etc.
• Eliminate slow workers or increase their speed with the right equipment or training
• Use a RACI analysis to evaluate people overloaded with responsibility, accountability, consulting, or information, then reassign functions based on improving processes
• Evaluate the countries in which you work and connect with brokers or economic development groups who specialize in imports, exports, and offshore manufacturing
• Join user groups, your local manufacturers or other professional associations

I hope these ideas help you begin to evaluate the potential bottlenecks, detours, and challenges affecting the processes in your business. A lot of resources can help you improve and streamline your workflow.
Join me on Thursday when we focus how to improve your operation by reducing bottlenecks

Enhance Your Operation 3: Use the Proper Equipment

This continues our series on improving your business operation
Using the proper equipment in your business enhances the productivity, efficiency, effectiveness, and quality of your product and your operation. Good office equipment improves your office support. The right manufacturing equipment will not only speed up your production line, but also improve its quality. Warehouse equipment moves your inventory safely and accurately. Yet, too many companies use the wrong or obsolete equipment.
The Importance of Using the Proper Equipment
Gallup Management Journal listed Giving Your Employees the Right Equipment as the 2nd element of Great Managing.

“When Gallup researchers analyzed hundreds of work dimensions in search of those most predictive of success, it was no surprise that materials and equipment showed up as fundamental. While many of the other 12 Elements, such as talking with employees about their progress, are primarily psychological in nature, the Second Element is both psychological and excruciatingly practical. Workgroups that don't have the right supplies can't produce. Universally, teams that produce have what they need to get the job done.”

They state in an article titled Why Employees Need the Right Equipment,

“When Gallup researchers went in search of the aspects of work life that are most important to performance, one that emerged earliest was measured by the statement "I have the materials and equipment I need to do my work right."

Identifying the Proper Equipment
BDC Entrepreneurs provides some tips for making the right equipment purchase:

• Assess and understand your business reality. Identify exactly what you want the equipment to do
• Get an external point of view from a consultant if your business warrants it
• Be innovative in acquiring equipment or technology
• Look at your business as a whole rather than making isolated purchases
• Shop around for suppliers that provide a wide range of specialized equipment
• Keep training in mind and consider the time, money, and resources required to do it
• Consider the advantages and disadvantages of financing options: purchasing, leasing, or renting
• Think safety first and include safety and protective equipment
• Keep it green when purchasing equipment or technology

Come look at the post on Monday when we examine how to streamline your production line

Enhance Your Operation 2: Purchasing & Order Raw Product (or Supply Management)

This continues our series on improving the operations of your business
Purchasing materials, supplies, and goods impact the profit of your company. Raw goods constitute a major portion of the overhead of manufacturing companies. Decreasing the cost of goods and materials could significantly increase your profit margin. In addition, small office supplies that slip through your fingers can increase your overhead. Identifying bulk discounts saves money. Today, we will discuss tips and suggestions to better control your purchasing and raw product orders.
Sources Where You Can Find Tips about Purchasing
Several web sites offer suggestions about purchasing supplies, raw materials, or goods. Here are a few you may want to try:

• Business.com offers tips about Purchasing Resources for Office Supplies 
  • “Taking full-advantage of the Web sites of major office stores can: save time, save money, and save your sanity.”
    
  • “Cut web time to a minimum with one-click ordering and even personal sites…with pre-set shopping categories”
    
  • “Ask about discount programs if your company has more than 20 employees…talk to your stores small-business re about volume discounts and special small business ordering.”
    
  • Buy store brands: “office stores will happily sell you their own brand of their highest volume (and highest margin) products, sometimes at  substantial savings.”
    
  • “Go to the warehouse-shopping route. Office stores will often cut you a deal for buying in bulk.”
    
  • “Get personalized office products and services”
• Keith Taylor shares a slide show 10 Ways To Improve Your Purchasing Department
  
• Bastian Solutions provides Tips for Purchasing Material Handling Equipment Online
  
• Next Level Purchasing describes Service vs. Manufacturing Industry Purchasing
  
• The Institute for Supply Management shares articles about supply chain issues
  
• Gartner Group shares an article on the role of procurement risk management
  
• Supply Management gives information about large corporate purchasing practices
  
• WiseGeek also gives good advice titled What are Procurement Best Practices

Managing the purchasing, procurement, and risk management of your business contributes directly to your profits. Make the investment to study these sites.Join me Saturday when we explore how to use the best equipment

Enhance Your Operation 1: Overview

This begins our series on maximizing satisfaction and profits by improving your operation
In the past, we’ve explored marketing, financing, establishing your strategy, and legally structuring your business. This series will explore how to improve your business operations. Traditionally, human resource/legal, sales/marketing, accounting/finance, and information technology merely supported operations. Operations typically received raw product, processed it, and delivered it to the client. I will use a modified definition of that understanding in this series.
Defining a Business Operation
Each business, each industry operates differently.

• Manufacturing businesses operate production lines that machine, assemble, smelt, or extrude a product
• Insurance, banks, and finance companies process paperwork and electronic records
• Retail operations receive goods through loading docks, store them, move them to shelves, and out the door by way of a cashier
• Internet businesses prepare pages, shopping carts, program interactive elements and publish them
• Architects and engineers create ideas, draw designs and plans, test them, and finalize the blueprints or plans before building them

Clarifying Your Business Operations
The following questions may help you clarify how your business operates :

• What supplies, intellect, materials or other elements do you need to make, process, or create our product or service? (We will call the answers to this question “raw material” in the rest of the post)
• What do you do with that raw material to make process, create or add value so that your clients want to buy it?
• Who are all the people involved in touching, reviewing, modifying, or processing the product through the operation?
• What workstations, systems, or assembly points does it have to pass through to be finished?
• What have you not identified that should be added to these questions?

Ways to Enhance Your Business Operations
Each of the following steps might improve your operation. We will analyze each option over the next three weeks:

• Purchase and order raw product
• Streamline processing design or layout
• Use the proper equipment
• Identify and eliminate bottlenecks
• Reduce time spent on each section
• Outsource and drop ship
• Control inventory
• Ship or deliver product or services

Come back Thursday when we discuss purchasing and ordering raw product phase of operations

Business Growth: Miscellaneous Legal Issues in Your Business

This concludes our series on establishing the right legal entity for your business

We explored the different kind of legal structures you can establish for your business. We also discussed issues to consider in identifying the right kind of legal experts for your business. I want to end our series by reviewing the kind of legal situations your business may encounter. I am not an attorney and urge you to consult one. My list will not apply to all businesses and will not contain all the situations you may encounter.

Legal Considerations You May Create

Doing business in today’s regulated and global society creates several situations that may require legal assistance. For example, you many need the following help:

• Establishing the legal structure for your business
• Contracts with clients, suppliers, employees, and others
• Gaining patent, copyright, trademark, or other intellectual property protection
• Gaining legal permission to import from, export to, or operate in other countries
• Shipping and logistic issues that cross state or national boundaries
• Acquiring, merging, or creating joint ventures with other companies
• Selling or dissolving the business

Legal Situations Others May Create

While you identify the legal requirements listed above. Other people may create legal problems for you. The following list identifies just some of the problems our litigious society creates:

• Patent, copyright, and other product or infringement suits
• Product safety complaints and suits
• Personal injury on your premises (client) or workers’ compensation
• Discrimination or harassment during hiring, on-the-job, or upon termination
• Tax, licensing, compliance, and other government related regulations

Operating a business today requires you to deal with a multitude of legal issues. You may use an attorney for each issue, or retain one to handle your issues on a continuing basis. Several business owners tell me, and I concur, that you should consider involving three key professionals in your business and meet with them regularly: an accountant, an attorney, and a financial planner. You may consider putting them on an official board of directors, or an unofficial advisory board.

Tuesday we begin a new series examining tips for enhancing the operations of your business

Business Growth: Selecting the Right Legal Expert for Your Business

This concludes our series on choosing the right legal entity for your business. I am not an attorney. I urge you to consult a legal expert.

We have been examining ways to legally structure your business. In each post I encouraged you to consult with a legal expert to establish your entity. Several options exist to help you find the right attorney for your business. Business attorneys handle different specialties within the law. The specialties that typically affect your business may include:

• Contract lawyers prepare contracts & review contracts submitted to you by clients
• Business lawyers help you find the best way to organize your business
• Real estate lawyers help you negotiate the best leases, purchases, and contracts
• Tax attorneys work with accountants on legal issues related to taxes & licenses
• Intellectual property lawyers help with media, design or other creative businesses

Where to Find an Attorney

You can find an attorney through various sources. These include:

• Talking to other business owners about their experience with attorneys
• Call the bar association in your state
• Consult with the nearest Small Business Development Center
• Ask a Service Corps of Retired Executives (SCORE) volunteer

Lawyers.com shares 12 questions to ask an attorney:

The Lawyer's Experience

• How long have you been practicing in this field or area of law?
• Have you ever handled matters like mine before?

Managing the Case

• What are the possible outcomes of my case?
• What are my alternatives in resolving the matter?
• Approximately how long will it take to resolve?
• Do you recommend mediation or arbitration?
• How will you let me know about what's happening in my case?
• What kind of approach will you take - aggressive and unyielding, or will you work to reach a reasonable settlement?

Legal Fees & Costs

• What are your rates and how often will you bill me?
• What is a ballpark figure for the total bill, including fees and expenses?

Who Will Do the Work?

• Who else in your law office will work on my case?
• Can junior attorneys or paralegals in the office handle some of legal work at a lower rate than what you charge?

Join me on Saturday when we explore miscellaneous legal issues related to your business

Business Growth: Establish a Trust

This continues our series on establishing the right legal entity for your business. I am not an attorney. Please consult with a legal expert to establish the legal structure of your business.

Establishing a legal structure protects you, protects your family, and protects your business. The right legal entity saves you money from taxes and other fees. The money you save with the right legal structure can pay for the professional fees required to legally establish your business.

Purposes of a Trust

The IRS states “In general, a trust is a relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of another.

A trust is formed under state law. You may wish to consult the law of the state in which the organization is organized. Note that for a trust to qualify under section 501(c)(3) of the Code, its organizing document must contain certain language.”

Advantages of a Trust

The Quinn Group discusses advantages of a trust:

1. Unit trusts have several similarities to companies in that the trust is separate from the unit holders; the unit holders subscribe equity on units and the principals may be employed by the trust.

2. A unit trust need not pay tax. Rather, the unit holders incur the tax on taxable profits derived by the unit trust.

3. The benefit of tax free capital gains and tax incentives may be passed through to the unit holders provided that appropriate structuring is undertaken.

4. Unit trusts offer different forms of income to different unit holders. This is achieved under modern forms of unit trust deeds by providing for different classes of units.

5. The 50% CGT discount is available to all trusts in relation to disposal of assets.

Disadvantages of a Trust

4 Financial Advice lists several disadvantages of a trust:

• “The cost of establishing the trust
• The cost of managing a trust...
• Loss of control…
• Additional management demands “

Return on Friday when we conclude our series with a summary of how to choose a good lawyer

Business Growth: Establishing a Nonprofit Corporation (501(c)3)

This continues our series on establishing the right legal entity for your business. I am not an attorney. Seek advice from a legal expert.

Legal Zoom states “Forming a nonprofit organization is a powerful way to support a worthwhile cause. As a nonprofit entity, you are eligible to receive private and public grants and apply for tax-exempt status from the IRS. When you have applied for tax exempt status you can solicit tax-deductible donations, which is critical to fundraising.”

Qualifications to File a 501c3

The IRS define exempt purposes as

“The exempt purposes set forth in section 501(c)(3) are charitable, religious, educational, scientific, literary, testing for public safety, fostering national or international amateur sports competition, and preventing cruelty to children or animals. The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.”

Restrictions to a 501c3

The IRS states

“To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.

The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization's net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.”

Join me on Tuesday when we discuss the legal entities called trusts

Business Growth: Establishing an S-Corporation

This continues our series on establishing a legal entity for your business. I am not an attorney. Consult legal counsel for advice.

The IRS defines an S-Corporation,

“S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.”

Qualifications of an S-Corporation

The IRS states “To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation

• Have only allowable shareholders

  • including individuals, certain trust, and estates and

  • may not include partnerships, corporations or non-resident alien shareholders

• Have no more than 100 shareholders

• Have one class of stock

• Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.

In order to become an S corporation, the corporation must submit Form 2553 Election by a Small Business Corporation (PDF) signed by all the shareholders.”

Benefits of an S-Corporation

BizFilings.com shares the following:

• Limited liability protection. Owners are not typically responsible for business debts and liabilities.
• Easy transfer of ownership. Ownership is easily transferable through the sale of stock.
• Unlimited life. When a corporation’s owner incurs a disabling illness or dies, the corporation does not cease to exist. 
• Raise capital more easily. Additional capital can be raised by selling shares of stock.
• Credibility. Corporations may be perceived as a more professional/legitimate entity than a sole proprietorship or general partnership.
• Lower audit risk. Generally S corps are audited less frequently than sole proprietorships.
• Tax deductible expenses. Business expenses may be tax-deductible.
• Self-employment tax savings. An S-Corp can offer self-employment tax savings, since owners who work for the business are classified as employees. 

Consult with a legal expert to learn more about an S-Corporation

Join me on Saturday when we discuss if you want to establish a non-profit 501(c)3