Gerry Simpson SmartLine

Business Management

2012-03-05T07:57:00.000-08:00

Crisis Management

What is Crisis Management?

In any business, it is always essential that you are prepared for any problems that may arise when it is least expected. It is in the way that you deal with these issues that the success of your business will be based on.

No organization, however large, is immune from various crises. This may include situations such as your computer systems failing or even worse, infrastructure being completely destroyed.

Crisis management can contribute a great deal to the prevention of major management disasters.

Types of Crises

It is important that you have a good understanding of the different types of crises that could take place, as all crises cannot be handled in the same manner. The most common categories are as follows:

Financial crises - This would be huge problem for any organization, as such a crisis would basically involve the organization heading in the direction of bankruptcy.

Natural disasters - This type of crisis is highly unpredictable and could come by at any time. Earthquakes, tsunamis, hurricanes have occurred recently in different areas and businesses should always be ready to face such a situation.

Technological crises. This is where a system collapses due to failure in the functioning of different equipment and machinery. These crises could occur either because of human error or a fault in the system used, and have multiple consequences including chemical spills and oil leaks.

Political & Social - With the current political climate the world over, organizations may want to take into consideration any threats to security and any forms of terrorist activity.

Dealing with Crises

It is essential to keep in mind, that when a crisis occurs, you would need to have a response team ready to deal with employees, media, and the various other stakeholders.

All these parties would need information on the given situation and what is being done to deal with it. This also requires you to have a clear crisis communication plan with the target audience in mind.

Remember that each group needs to be handled in a different manner; Customers may not require the same information as the employees of the organization, and so on.

Conclusion

The only way to successfully control a crisis from getting out of hand is to always have a good plan and a team ready to deal with various situations that may crop up.

With these strategies in place, you would always be able to reduce the damage caused to the organization.

Business Management

2012-02-27T06:11:00.000-08:00

Key Management Skills

To run a successful business you need a diverse range of business management skills. Here are some of the keys areas of successful management.

1. Time Management:

Having time management skills is simply having the ability to recognize and solve time management problems. It is as the old adage says, to never put off for later what can be done right now. You can develop this personal management skill by keeping a calendar and beginning to schedule everything including scheduling free time.

2. Financial Management:

“It is not how much you make that counts but how much money you keep” – Robert Kiyosaki, investor, businessman, and author of best-seller Rich Dad Poor Dad

The keys to successful financial management revolve around the ability to create wealth for the business, generate cash, and provide an adequate return on investment for owners of the business.

3. Communication Skills:

Business is all about people regardless of your industry and you will encounter a range of people on a daily basis in the operation of your business from customers and suppliers to employees and business associates. With great communication skills comes the power to influence and encourage others and yourself.

4. Leadership:

A true leader inculcates feelings of confidence, admiration in the followers and a sense of commitment towards the business. A leader influences others to follow him. Leaders need to be flexible, adaptable to change and encourage these qualities in the team members too. Being innovative is important for business growth. Innovation is a skill in itself. Leaders need to be open to new ideas, they need to innovate, bring in positive change as and when needed and progress.

5. Foresight:

This is important in business management. You need to be able to sense trouble ahead of time. You need to be prepared for it and plan accordingly. You need to think ahead of time to be ahead in the industry. An excellent example of a manager and business developer with foresight was Steve Jobs. You can't just ask customers what they want and then try to give that to them. By the time you get it built, they'll want something new, he said. He believed in anticipating customer needs in advance to be able to give them products they would start wanting.

Management is about taking the right decisions at the right time and getting them implemented by the right people. Effective business management requires you to have a variety of basic skills. The skills outlined here certainly are not all inclusive. Perhaps, the most important thing you need to have is common sense.

Business Financing

2012-02-20T14:17:00.000-08:00

Business financing issues

Finding a supportive financing institution or bank is the start of one of the key relationships in the life of your business. Understanding how potential financers look at a business can increase your chances of success in landing the financing needed.

Outside views will take an objective look at your business that might not be consistent with your vision.

Sometimes entrepreneurs think they should receive more money than the fundamentals of their business merit. They also often underestimate the riskiness of their project.
At the same time, entrepreneurs shouldn’t forget that banks and other financial institutions are in business too and need to find and keep clients. That can make them an invaluable resource for new business owners.

Whether your plan is to start a business or expand your existing company, here are some key factors to consider when seeking financing.

1. Types of financing

- There are two types of financing: equity financing and debt financing. When looking for money, you must consider your company's debt-to-equity ratio. This ratio is the relation between dollars you've borrowed and dollars you've invested in your business. The more money owners have invested in their business, the easier it is to attract financing.

- If your firm has a high ratio of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt to equity, experts advise that you should increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged to the point of jeopardizing your company's survival.

2. Your financial capacity

Having a solid credit history says a lot about your trustworthiness and ability to run a successful, profitable business. A willingness to put a significant amount of money into your business will show your lender that you are committed to the project and willing to share the risk.

The lender will also want to know how you are going to use the money, when and how you are going to repay your loan and whether there’s any security that can be pledged against it such as equipment, buildings or personal property. It might take two or three meeting to sort everything out.

3. Know your break-even point

- Breakeven analysis is a tool used to determine when a business will be able to cover all its expenses and begin to make a profit. For the startup business, it is extremely important to know your startup costs; you need to understand the level of sales revenue needed to pay the ongoing expenses related to running your business.

- A startup business owner must understand that $5,000 of product sales will not cover $5,000 in monthly overhead expenses. The cost of selling $5,000 in retail goods could easily be $3,000 at the wholesale price, so the $5,000 in sales revenue only provides $2,000 in gross profit. The breakeven point is reached when revenue equals all business costs.

- To calculate your breakeven point, you will need to identify your fixed and variable costs. Fixed costs are expenses that do not vary with sales volume, such as rent and administrative salaries. These expenses must be paid regardless of sales, and are often referred to as overhead costs. Variable costs fluctuate directly with sales volume, such as purchasing inventory, shipping, and manufacturing a product. The formula for determining your breakeven point requires no more than simple arithmetic.

The lender wants to see that you have built your plan based on a sound analysis that takes into account the market, the competition and the economic context. Do your own research and show that you know the trends, the opportunities and the risks when you present your plan. This boosts your credibility and a simple, concise presentation of facts and figures will back up your statements and business plan.

Business Principles

2012-02-13T10:50:00.000-08:00

Business Principles to follow

Business owners don’t often think about basic operating principles but here are a few thought starters to ponder on what fundamentals drive the business.

1. Measure risk

In early stages you can have an appetite for greater risk as there is lots of time to recover if you misstep. As the business and ownership matures perhaps a more prudent approach to risk taking is appropriate.

2. Maintain control

Take a hands-on approach to accounting and record keeping as a means of gaining a better feel for the progress of your company. Gaining control of accounting and record keeping allows you to end any dubious activities promptly.

3. Communicate, Communicate, Communicate

Whether it is with investors, customers, co-workers, or business partners, you have to over communicate.

Listen carefully, communicate regularly, be clear and concise.

4. Be Respectful

Treat others with the utmost of respect. Regardless of differences, positions, titles, ages, or other types of distinctions, always treat others with professional respect and courtesy.

5. Build a network

The activity of building a network of contacts within the industry and the local business community will be invaluable in the long term. Attending networking events and community activities can expand awareness of the business and expose potential future consumers to your products or services.

There are many other principles that could be added to the list; these should provide some input to how you operate your business.

Business Failure

2012-02-06T06:15:00.000-08:00

Why Businesses fail

There are many reasons businesses fail and these have been well documented. Some articles should be required reading for entrepreneurs starting into business would be well served to research the topic before starting their own venture.

This article will serve as a reminder to some of the more common issues and I hope create some additional focus by owners to avoid the same fate.

1. Weak Management

New business owners frequently lack relevant business and management expertise in areas such as finance, selling, production, and managing employees. Unless they recognize what they don't do well, and seek help, business owners may soon face issues of a failing business.

2. No long-term plan

Often there is a focus on short-term profits. It is obvious that there must be profits but this should not be at the expense of building a long term value in the business and understanding the potential of long term customer relations. Building value requires hard work and planning based on good current information and a realistic forecast of the future.

3. Uncontrolled growth

Seem surprising? Too much growth? Over expansion can be fatal if the business does not have the resources to cope with growth including appropriate financing, personnel and capacity to meet demand. Sometimes less is more.

4. Poor accounting

The business cannot be managed if owners do not know what is going on. Without accurate financial information the business is flying blind. Don’t expect the accounting firm who does tax filing to keep track of day to day business; that must be handled within the company by the CEO or top finance person.

5. Inefficient operations

Paying too much for rent, labor, and materials weakens the bottom line. The leanest companies are at an advantage and usually are more flexible and adaptable to market change. Not having the tenacity or awareness to negotiate terms that are reflective of today’s economy may leave a company uncompetitive.

The marketplace is rarely forgiving and owners need to eliminate missteps that certainly are avoidable with a little insight into business management.

Business Growth

2012-01-30T07:13:00.000-08:00

Business Growth In Slow Economies

It can be difficult to grow a business anytime but properly managed small businesses can thrive in even poor economies. Here are steps to consider when facing challenging markets:

1. Manage costs: To stay ahead of the curve businesses have to cut costs with the precision of a surgeon. Cut too little and the company’s survival may not be assured; cut too much and the business may jeopardize the quality service offered to customers. It is important when household spending is reduced to offer special inducements that get people to part with their cash.

2. Broaden the customer base: The business is at risk if too much dependence is placed on a few customers who may have financial difficulties. Spread the risk and reliance by having as large a base of stable customers as possible. At the same time give important customers special attention, nurture relationships that will build loyalty.

3. Refine Marketing: Refine key selling points and use new internet based marketing to attract a new generation of customers. Take full advantage of free social networking; Twitter and Facebook may offer new free ways to advertise. Combine this with other direct marketing approached to reach customers.

4. Manage assets and profits: many businesses focus on sales, expenses, and margins and often ignore assets, particularly cash flow. Profits and hence net worth can be increased through cash flow management. Prudent management of needs with both short and long term sourcing of funds with a plan developed in conjunction with a banker can be a strong tactic to ensure growth.

5. Maintain flexibility: businesses must stay alert and respond quickly to market changes. Pay attention to market feedback and analyse facts. Adapt new systems and use current technologies to facilitate response.

Finding the optimum balance between sales and expenditure will guarantee growth in austere times and enable business to thrive when the going gets good. After all, the only certainty is change.

Business Compensation

2012-01-22T07:51:00.000-08:00

Creative compensation options

Developing compensation strategy is straightforward but it is sometimes important to be creative when rewarding long-term effective employees. At times established ceilings may prevent providing salary increases to reward high level achievement.

Here are a few options that might be used to continue to motivate these high achievers:

1. 1. Paid time off: extra days off for personal projects, add time to years of service, or just hours away from work to help children in school or to volunteer in community service.

2. 2.Professional development: this is an individual reward that reinforces the company’s interest in the personal growth of an employee.

3. 3. Recognition: Try to publically recognize achievement; treat the employee to lunch or have a department party to recognize the employee.

4. 4. Provide technology: buy the employee a new laptop computer or cell phone. Perhaps add a second phone for a spouse since they often play a significant role in the success of an employee.

5. 5. Bonus: pay a specific bonus or incentive that relates to achievement for a specific project or completion of a set of objectives.

6. 6. Stock: An important method for rewarding high achieving long term employees is to offer stock options that allow for participation in the overall success and profitability of the company.

In addition, the company can provide enhanced benefit programs, increased retirement benefits, extra perks such as use of company vehicles, club memberships, flex hours or the ability at times to work from a home office.

The organization is going to reap the benefits of rewarding highly effective employees and in addition there is a likelihood of the business retaining key employees or attracting key new employees if it has a reputation of strong, competitive and creative compensation planning.

Business Planning

2012-01-09T08:41:00.000-08:00

STRATEGIC PLANNING

Let’s review a few key factors on Strategic Planning that help small business owners determine the value of this process.

WHAT IS IT?

- A planning tool for management to formulate high-level business strategy.

- Strategic Planning provides the foundation for the development of a more detailed Business Plan.

- Strategic Planning is top down: Strategic – Tactical – Operational.

WHY DO STRATEGIC PLANNING?

- To define the precise mission of the firm.

- To measure the competitive environment.

- To prioritize external opportunities and assess potential threats.

- To help manage growth.

- To focus on key objectives.

- To satisfy succession planning needs.

- To focus on internal strengths and overcome weaknesses.

- To formulate strategy to maintain a competitive position.

WHEN TO DO STRATEGIC PLANNING

- When the business needs to establish guidelines for a new or updating of a Business Plan.

- When a review is needed to maximize resource utilization.

- When the business needs to prioritize growth options.

4. What are the goals for Strategic Planning

- Quantify objectives for the business.

- Establish indicators of achievement.

- Develop an implementation plan.

- Assign responsibilities and accountability.

- Identify resource requirement for plan achievement – financial, personnel, equipment, facility, products.

Business Management

2012-01-02T14:45:00.000-08:00

Keys to success

Let’s look at some key factors that contribute to business success. The role management plays is critical and management must focus on and achieve the goals and objectives set for the business. This is accomplished with a number of key management functions.

1. Planning:

The key to your success is having a business plan in place. Whether you're about to launch a start-up or you've been in business for years, your business' direction is guided by your business plan. To begin the planning process, you'll need to do some critical analysis; business planning is about realistically forecasting where your business is going.

2. Organizing:

Organizational design is the way in which you set up your company (employees, information and technologies) to best meet your business objectives. How you structure your business has a major impact on how well it functions. There is no single best organizational design for all small businesses. Each business structure is as unique as the organization it represents.

3. Leadership:

A leader is someone who has a vision, a drive, and a commitment to achieve beyond that vision. The leader must then also have the skillset to enlist the support of others in the organization to achieve the stated goals.

4. Controlling:

Many small businesses lack proper control systems because they are focused on production or service issues.

Having a control system allows you to monitor measure and adjust your organisation’s performance, whether it is sales, production capabilities, or general efficiencies. In other words, the purpose of business control is to identify unfavourable business performance so appropriate actions can be undertaken.

5. Communicating:

Communication is essence of management. The basic functions of management as shown, planning, organizing, leading, controlling cannot be performed well without effective communication. Business communication involves constant flow of information and receipt of feedback. This is essential for the growth and success of the organization.

In the end, management will determine the success or failure of a business. Success surely cannot be attained without decent management skills.

Business Management

2011-12-21T12:59:00.000-08:00

Managing Business Development

Effective management is the key to the establishment and growth of the business. The key to successful management is to examine the marketplace environment and create employment and profit opportunities that provide the potential growth and financial viability of the business. Despite the importance of management, this area is often misunderstood and poorly implemented, primarily because people focus on the output rather than the process of management.

Business managers sometimes become absorbed in improving product quality, sometimes ignoring their role vis-a-vis personnel. The focus is on reducing costs and increasing output, while ignoring the long-term benefits of motivating personnel. This short-sighted view tends to increase profits in the short term, but can create a dysfunctional long-term business environment.

In large businesses, planning is essential for developing a firm's potential. However, many small businesses do not recognize the need for long-range plans. Nevertheless, the need for planning is as important in a small business as it is in a large one.

There is a need to manage both the External Environment and the Internal Environment. This article deals with some of the key Internal Environment issues.

1. Ensure open communications

Effective communications play an integral role in managing and operating any successful business. With open communications changes and their effects on the organization are quickly shared. Your firm then has the time and skills needed to respond to changes and take advantage of evolving opportunities

2. Balance schedules, stress, and personnel

Without organization and good management, the compressed time schedules associated with modern business can cause stress and make extraordinary demands on people. An effective management structure can reduce stress and channel the productive capacity of employees into business growth and profits.

3. Define duties and responsibilities

An organization is characterized by the nature and determination of employees' duties and responsibilities. While many organizations use different methods for determining these, it is essential that they be clearly defined. The core of any organization is its people and their functions. Duties, tasks and responsibilities often evolve in an ad hoc manner. A typical firm starts with a few people, with often one person performing most duties. As the firm grows, others are hired to fill specific roles often on a functional basis. Roles that were handled by consultants and specialists outside the firm now are handled internally. As new needs emerge, new roles are developed.

4. Control conflict

Another key to successful management lies in controlling conflict. Conflict cannot be eliminated from either the business or the interpersonal activities of the enterprise. A measure of the organization's success is the degree to which conflict can be exposed and the energies associated with it, channelled to develop the firm.

5. Establish authority

The central element of organizational management is authority. Through authority your firm develops the structure necessary to achieve its objectives. The authority that once was conferred by either owning a small business or having a position in the bureaucracy of a larger firm has been replaced by technical competence. Once the owner-manager controlled the entire business, but suppliers, customers, unions and the government have severely limited the ability of the business owner-manager to take independent action. A primary component of authority is the exercise of control within the organization. A thorough system of controls ensures the firm's operation and provides a mechanism for imposing authority.

Successful management is founded on the mastery of a myriad of details. While management schools teach the importance of focusing attention on major issues affecting the business, practical managers realize the major issues are the variety of small aspects that form the business. In an increasingly structured society, inattention to even one minor detail can result in significant disruption of the business or even its failure.

Business Planning

2011-12-12T17:16:00.000-08:00

Succession Planning

Succession Planning is actually about putting in place a strategic business plan for your business which allows you outline your business and personal goals and relates directly to your ability as a business owner to extract the maximum amount of value from your business when you exit, to provide for your retirement planning needs.

Planning for the day you leave your business is a valuable investment. Whether you decide to sell up, retire or have to get out of business due to health reasons, it’s important that you spend the time with your family and/or your business partners and plan what you are going to do. A succession or exit plan can help you outline what will happen and who will take over your business when you leave.

A good succession plan enables a smooth transition with less likelihood of disruption to operations. By planning your exit well in advance you can maximise the value of your business and enable it to meet future needs.

Is there a legal document that dictates the terms of the succession? If so, what are the terms? Are there any contracts that need to be modified in the event of the succession, e.g. partnership contract? Are there any new contracts that need to be drawn up?

If you are in a partnership do you have a buy-sell agreement in place? What are the terms? Will the remaining partner(s) buy your partnership share or will it be open to external partners/family members? Does this arrangement apply to all partners in the organisation?

Make sure your succession plan is attainable - set a realistic timetable and measurable milestones along the way and stick to them. As time passes your circumstances may change and having your succession plan up to date will ensure you are always ready in the event you need to leave earlier than anticipated.

Business Management

2011-12-05T06:48:00.000-08:00

Make Better Business Decisions

Making a decision is one of the most powerful acts for inspiring confidence in leaders and managers. Yet many bosses are sometimes squeamish about it. Some decide not to decide, while others simply procrastinate. Either way, it's typically a cop-out -- and doesn't exactly encourage inspiration in the ranks.

It can help to learn how to make better decisions. You'll be viewed as a better leader and get better results overall. Here are five tips for making quicker, more calculated decisions:

1. 1. Stop seeking perfection. Many great leaders would prefer a project or report be delivered only 80% complete a few hours early than 100% complete five minutes late. Moral of the story: Don't wait for everything to be perfect. Instead of seeking the impossible, efficient decision makers tend to leap without all the answers.

2. Create a constructive environment. For successful decision making, make sure you establish an objective, involve stakeholders, hear others opinions, and ask the right questions.

3. Generate Good Alternatives. This step is still critical to making an effective decision. The more good options you consider the more comprehensive your final decision will be. When you generate alternatives, you force yourself to dig deeper, and look at the problem from different angles. If you use the mindset ‘there must be other solutions out there,' you're more likely to make the best decision possible.

4. Don't problem solve, decide. A decision can solve a problem, but not every problem can be solved by making a decision. Instead, decision making often relies more on intuition than analysis. Deciding between vendors, for instance, requires examining historical data, references and prices. But the tipping point often rests with your gut. Which feels like the right choice?

5. Communicate Your Decision, and Move to Action! Once you've made your decision, it's important to explain it to those affected by it, and involved in implementing it. Talk about why you chose the alternative you did. The more information you provide about risks and projected benefits, the more likely people are to support the decision.

An organized and systematic decision-making process usually leads to better decisions. Without a well-defined process, you risk making decisions that are based on insufficient information and analysis. Many variables affect the final impact of your decision.

Business Management

2011-11-28T06:36:00.000-08:00

Managing Conflict

Conflict in the workplace can have a negative effect on the day-to-day working of your business, or result in a large scale strike or other employment dispute. It can also affect the general health and wellbeing of your employees. Here are a few ideas illustrating how you can manage relationships in your business and minimize conflict between individuals, teams, and larger groups of employees.

1. Signs of conflict

Conflict can arise at work for a number of reasons. For instance, two employees may have a personality clash, an employee may have a grievance against their manager, or a manager feels an employee is underperforming

Conflict can have a negative impact on your employees and this may be demonstrated by:

· a lack of motivation - fewer people volunteer to take on new tasks or providing input at team meetings

· unpleasant behaviour - people start to make derogatory remarks towards each other and there are fewer social events organized

· falling productivity - people are not cooperating with each other

· increased sick leave and absence of staff

By spotting signs of conflict early, you have a better chance of: identifying causes, resolving the conflict.

2. Causes of conflict

Every employee has needs and certain expectations at work, and conflict could arise when people feel that these are not being met or are being ignored.

Conflict could be the result of:

· poor management communication

· unfair treatment

· unclear job roles

· inadequate training

· poor work environment

· lack of equal opportunities

· bullying and harassment

3. Preventing conflict

To minimize and prevent conflict in the workplace, you should try to learn as much as you can about why conflicts occur and develop processes to address them. Common action points that employers should consider are:

· developing a strategy for managing conflict with managers, employees and your representatives

· having sound policies and procedures in place

· explaining plans for change and making employees feel involved

· listening to and consulting with employees on decision-making

· rewarding fairly with pay or bonus schemes

· ensuring work safety

· ensuring that managers are properly trained

4. Managing conflict

When a conflict arises you should try to take a calm approach and not react in a challenging way. You should also not ignore the problem and hope that it will go away.

The best way to handle conflict is to face it and have a planned approach. If you have policies or procedures in place, you can use these to determine how you approach the issue or to give your employee an idea of how you will approach addressing the problem. It may help to have an employee representative and/or a senior manager available who can help when employees find it difficult to confront their managers or when you are not able to speak to each employee individually.

Networking

2011-11-21T05:42:00.000-08:00

Networking tips

1. Set goals when attending networking meetings. Are you attending to learn? Make contacts? Or strictly making business connections.

2. Volunteer. This provides you with greater visibility and you give back to groups that help you. Act as a resource for others to enhance your role.

3. Clearly articulate your needs. Some people cannot answer a simple question like “How can I help you”?

4. Ask open-ended questions. In networking group conversations ask questions like who, what, where, how rather than questions that can be answered yes or no. This suggests you are interested in what people have to say.

5. Follow-up. If you receive referrals follow-up quickly. The way you respond is a reflection on the person providing the referral.

6. Call new contacts. If you meet someone of interest make a follow-up call to indicate your pleasure in meeting the person and try to set a date to exchange further ideas.

Networking can be a core tactic for both independent professionals and small business owners. Customers are more easily attained this way than through more costly and time consuming cold calling.

Business valuation

2011-11-14T06:30:00.000-08:00

Business valuation tips

Here are a few tips courtesy of my friend Bill Sivell of VR Windsor

1. What about that big customer?

Many companies have a single customer or a few large customers that dominate their overall sales. After all, nobody wants to turn down business! But when it comes time to sell the company, this becomes a huge problem. Most buyers won’t look at a business whose revenues could drop dramatically after closing from the possible loss of those customers. Some how, some way, business owners have to find a way to diversify their customer base before they ever decide to sell their business.

2. Timing is everything!

Many business owners seem unable to let go of their company and wait too long. Some lose their entrepreneurial drive and the business starts sliding. Or the market starts to change and the company loses value. To get the maximum price, owners need to do some serious planning to prepare selling the business at its peak.

3. Special Relationships with Customers

Special relationships that business owners have developed with customers can be a real issue when selling the business. A new owner may have a problem continuing that relationship and this could jeopardize the sale of the business. It is recommended that business owners begin delegating any special relationships with customers to other company employees as soon as possible.

Please visit Bill's web site at www.VRWindsor.com for additional tips on placing a value on your business.

Business Leadership

2011-11-07T06:24:00.000-08:00

Effective Business Leadership

Effective business leadership demands a captain of the ship, not just someone who's standing by the helm. Leadership is active, not passive.

Cool-headed, farseeing, visionary, courageous - whichever adjectives you choose, leadership is a winning combination of personal traits and the ability to think and act as a leader, a person who directs the activities of others for the good of all.

But you can't be a leader just by saying you are. Business leadership, like leadership of any kind, needs to be worked at. Transform yourself into the kind of leader your small business needs with these keys to business leadership.

1. Vision - Vision is essential to good leadership. Vision provides direction and without direction, there’s not much point to all that planning; your small business will still flail about. Create a Vision Statement for your business. Because it embodies your dreams and your passions, a vision statement will also serve as a leadership vision. Plan where you want your business to be in five years and how you are going to take it there.

2. Planning - The core of business leadership is being proactive rather than reactive. Sure, leaders are good in crises - but that doesn't mean they sit around letting crises develop. Leadership involves identifying potential problems and solving them before they reach crisis proportions. Good leaders analyze and plan and adapt their plans to new circumstances and opportunities.

3. Communication - Plans, strategies and results should never be left on paper, collecting dust. “If you are making money, your employees should know about it and be rewarded. This will motivate them and your company will continue to grow. The success of the company isn’t yours alone, it belongs to your team. On the other hand, if the company is facing problems, your employees will be a valuable source of ideas on how to improve things.

4. Staffing - Businesses are as successful as the people working in it. Great leaders who created successful companies have one thing in common: they surround themselves with talented, courageous, loyal people. Once you have recruited them, invest in their development through training, coaching and fair compensation.

Learning to be a leader isn't easy because it takes a conscious commitment and consistent effort to develop one's business leadership skills. But on the positive side, anyone who is willing to make the effort can become a good leader.

Start-up issues

2011-10-31T06:27:00.000-07:00

Small Business Start-up Problems

There are many issues facing small business in the initial launch and successful management of these problems can be critical to the continuing profitability and growth of the business.

1. Most start-up small businesses cannot afford debt. Money is often scarce and initial costs high. This is common even if there is no debt; debt can add the burden of interest and principle payments. Revenues are usually slower to develop as owners often overestimate their ability to attract customers form existing business.

Borrow little or nothing. Borrowing increases the level of risk and potential loss if the business fails.

2. Your knowledge base to be successful must be broad. Don’t be misled by friends and associates who have never owned a business. Without a large staff of professional advisors running a business requires knowledge on a lot of topics. Knowledge of advertising and marketing, knowledge of finance and taxes, knowledge of production and operating costs, knowledge of employment laws and government regulations, knowledge of product supply and customer demands.

All businesses face these issues and the ones that survive are operated by owners with the knowledge to understand problems and anticipate potential solutions. The inexperienced often flounder and fail.

3. Advertising by financial and some government agencies directed towards small business tend to create an impression that getting loans or loan guarantees is readily available for those seeking the support. The reality is that neither is true.

Government grants, loans, or loan guarantees are difficult to get approved. Many businesses will not apply, many cannot meet the criteria for approval, and among those who apply few will receive support.

4. Many wishing to start a business do not understand the numbers.

Although many businesses do have a good business plan, all the written prose merely expresses in words the essence of the plan which is the numbers. One does not have to be an accountant to run a business but you must know the numbers. Cash flow, ratios, costs, pricing are essentials that any owner must know and understand completely to operate successfully.

5. Every successful business person must sell.

Owners cannot take the position that they want to own the business but don’t like to sell. Nothing happens in business if a sale does not occur. When a customer is ready to pay for the product or service offered a sale has to take place and that transaction will not take place without some selling effort from the company. Without some effort on the part of the ownership it is unlikely the business will be successful for long.

Procrastinating

2011-10-24T05:58:00.000-07:00

Are you guilty of Procrastinating?

Think the time you spend answering e-mail, composing IMs, and trolling Twitter doesn’t have an impact? Think again. Procrastinating in making business decisions generates enormous costs from time wasted and decisions delayed.

There are several approaches that may be considered to eliminate this waste.

1. Don’t delay. Any time you put something off the problem usually gets bigger leading to more stress and possibly more procrastination.

2. Reduce the issue to small tasks and work in short bursts to complete each portion. This focused activity for short periods allows you to get the feel for accomplishment. It gets you started.

3. Learn to prioritize. You may never get caught up with everything you need to do. To be an effective leader you have to prioritize and decide what’s important and manage your time effectively.

4. Turn off distractions. If necessary turn off email, stop answering the phone; give 100% attention to the task at hand.

5. Create a daily plan. At the end of each day spend 3-5 minutes setting up the next day’s schedule. It may save an hour the next day while you try to determine where to start your work activity.

6. Be accountable. Make yourself accountable to someone for what you want to accomplish. This could be an associate, friend, or business mentor.

A task can more easily be tackled if you visualize it completed. Remember the “Law of Expanded Time”. Work will fill the time available to complete it. By making less time available to complete a task, you will spend less time completing it.

JUST DO IT.

Business expansion

2011-10-10T13:27:00.000-07:00

Business expansion

The do’s and don'ts of business expansion

At one time or another, every business goes through a growth spurt and, whether it’s a multi-national corporation or an entrepreneurial enterprise, expansion is a tough process to navigate.

The real danger for any expanding business is that it does so too quickly or in an uncontrolled way. When this happens, cash flow and customer satisfaction are usually the first casualties and, in extreme circumstances, these can result in the demise of a once flourishing business. The trick is therefore to manage the growth process so you reap the benefits in the medium- and long-term.

Plan your expansion

It may seem obvious that any entrepreneur going through an expansion phase should do so with a game-plan, but many businesses expand in reaction to circumstances and don’t draw up a solid plan. Without this roadmap, it’s easy to get lost along the way, making changes to your business that are either too costly or not well thought out.

Don’t over-expand

While planned expansion can take a business to a whole new level, over-expansion is one of the biggest dangers of a growth phase. It’s easy to get carried away in the heat of the moment and to expand beyond the needs and the financial capacity of the business.

As a rule of thumb, plan capacity based on a five-year projection of demand and allow an additional 10% of capacity over and above that for periods of heavy demand or for partial down-time in any part of your business. More than this could be very risky and leave a business with overheads it can’t cope with.

Get professional financial advice

Whatever the nature of your expansion, there are financial implications for the business and it’s always best to seek professional advice. If you need to build or purchase your own premises, for instance, it’s important to speak to a financial institution that has experience in this area.

For plant and equipment, you may need to consider a flexible financing option, either a loan or a combination of a loan and an equity investment. Again, an institution with experience in the field and in your own industry is essential.

Develop a Project Management Schedule for the expansion

Again, this may sound self-evident, but many businesses expand without treating the expansion like a project – one of the most significant it will ever undertake.

When drawing up a project management schedule:

Identify key deliverables
Attach dates to these deliverables
Identify key responsibilities
Set up a regular review schedule
Identify procedures for managing non-delivery on any part of the project
Build in appropriate timing and financial contingencies

Managing the process is as important as planning it and it’s important to commit to this in a formal way, building in the appropriate checks and balances.

Keep your customers informed

Expansion of any kind can cause disruptions in your day-to-day operations and it’s important that your customers know what to expect. Before commencing an expansion, tell them what you’re planning and what the expected completion date is. If possible, tell them what disruptions to expect and how you’re intending to deal with them.

Announce the completion of your expansion

Once the expansion phase is complete, it’s important to let both existing and potential customers know about it. Tell them about the increased capacity of the business and the additional products and services you can offer. Develop a special marketing drive to announce the occasion and send out media releases, especially to the local and regional press.

Celebrate this moment in your business – it’s one of the best marketing opportunities you could ask for.

Business Start-up

2011-10-03T16:56:00.000-07:00

Mistakes that threaten start-ups

1. Under financing: lack of sufficient funding is probably the most common reason new businesses fail. Many entrepreneurs fail to assess the burn rate of the capital they have. Often the most costly step is hiring too many people. Try paying people with equity rather than salary, you will end up with a much more committed team and preserve cash. Don’t overspend on equipment and technology you really don’t need to get going.

Also, many start-ups fail to realize that few customers pay promptly; this can severely impact cash flow.

2. Starting without a plan: enthusiasm over a good idea is over-rated. An idea is only an idea and without a well-developed business plan chances of success are minimal. It is also very difficult if not impossible to raise financing without a plan.

3. Underestimating marketing: Start-ups often fail because of the lack of marketing support. Don’t confuse sales with marketing. Sales close today but marketing builds your tomorrows. Marketing creates the awareness and product demand which will lead to the need for a sales force.

4. Lack of unique position: many start-ups are imitations of an existing idea and represent only a marginal niche. Smaller niche products may seem to be less risky but the limited opportunity may have a short shelf life. Make sure the idea is worth pursuing over a long period and then make sure you have the resources to sustain the pressures of the initial years of development.

5. Inflexibility: with start-ups you have to be prepared to change on the go. Rarely does the plan get executed without a hitch. Marketplace dynamics, competitive behaviour and economic conditions can dramatically impact the plan. Ability to react and change plans may be a key to survival.

6. Lack of preparation: a key failure factor is often the slowness of introduction or delays that may be caused form lack of preparation. Lack of a completed package, delays from suppliers, incomplete marketing support, can delay a launch and perhaps cause the opportunity to lose momentum or perhaps even miss a window of opportunity that is forever lost.

Make sure all key elements to launch are in place to ensure the potential is fulfilled or the entire investment for the new start-up may be lost.

Selling a Business

2011-09-26T07:00:00.000-07:00

Biggest Mistakes that a Seller Makes.

1. Wrong price
This is without a doubt the main reason businesses don't sell. If your price is too high, buyers don't take you seriously and won't bother to investigate further. If it is too low you will leave something on the table. Most sellers don't know the value of their business. Ask a broker, get a valuation. Ask an intermediary that is experienced in selling your type of business. Having a firm idea of what you would like to achieve is ideal but keep it within reason.

2. Inadequate financial records & information
Private businesses are set up to minimize tax, not show maximum profits. However, profit is one of the principal yardsticks of valuation. Low Profits = Low Valuation. If there is a good reason for low profitability and you can demonstrate solid results, make sure you document this. Nothing kills a deal quicker than failure to produce accurate, up-to-date, financial information or not answering queries quickly and efficiently.

3. Lack of a firm decision to sell

Why do you want to sell? This will be one of the first questions a buyer asks you. Give some serious thought to why you want to sell. Common reasons include retirement, health, capitalization or a career change. If the buyer isn’t comfortable with your reason they will simply walk away. If you have not made a firm decision to sell, whatever your motivation - don't. Wait until you’re sure it’s what you want to do and have a firm idea of what you want to achieve.

4. No preparation
Unbelievably, many businesses come to the market without a single idea of what is involved in the sales process and what they want to get out of the sale. It is vital that you understand these aspects and have a firm plan for what you would like to achieve. If you are poorly prepared, it will show, frustrate buyers and waste everybody’s time. The end result is NO SALE. Do not underestimate the amount of time and effort it will take to get a positive result.

5. The right buyer
Usually the best deals arise when a buyer has a real motivation to buy - such as: when they will be gaining skilled staff, a proprietary product, a new geographic location / sales territory or lucrative contracts. These strategic buyers are driven by more than just profitability, which usually means they can offer better value for the business.

6. Demanding an all cash deal
Some buyers are naturally suspicious of sellers who demand total cash settlement. What is being hidden? How much faith does the Vendor have in his business? Buyers may pay a substantial premium for an element of seller finance. Keep an open mind and you might get a better deal.

7. Trying to sell yourself
Selling a business is a complex and time-consuming process. It is very easy to underestimate the process and think you can do it all. You wouldn’t be the first or last to take your eye off the ball while trying to sell, letting your business suffer – weakening your sales proposition.
A buyer will automatically assume a position of advantage if they see you have chosen not to take professional help, especially if they equip themselves with an army of experts. Beware. Using a broker means that you will benefit from an experienced professional who understands what it takes to make a deal happen – controlling the process from start to completion. Not convinced? One of the best reasons to use a broker is to act as a buffer between you and the purchaser. There will be times when you’ll want to adopt a tough negotiating position - a broker makes this possible without antagonising the buyer. Remember, you might have to work with a new owner during a handover.

8. Timing
The best time to sell your business is when you don't have to. Sell when your sales and profits are at, or near, their best. It can be hard to justify a great price and do a deal when your sales volume and profitability are in decline. Plan your sale in advance make sure all the right elements are in place, especially tax advice. Being well prepared can really make the world of difference in terms of the money going into your pocket.
There is also a definite timescale to closing a deal. Buyers can quickly lose interest and move on if they feel they are not making progress or not getting accurate information efficiently. Using a good broker should address this problem.

9. Lack of a business plan

Buyers buy based on their perception of the future revenue stream of the business. The buyer, as part of the evaluation process will prepare a business plan. The seller is much better positioned to project market potential and costs than the buyer. A business plan with well-reasoned and documented operational information will go a long way in convincing a buyer of the long-term future of the company.

Business Agility

2011-09-20T14:41:00.000-07:00

Does your business have the agility to react quickly?

Business Agility allows a company to react quickly to external forces or the marketplace. This can result in minimizing damage from competitive threats or to enjoy the benefits of responding to new opportunities.

The marketplace changes much faster now and a company that is successful and stays on top characteristically reacts quickly. Identifying new trends and creating a product or service to satisfy consumers can produce very large benefits both in short term profits and long term market share advantages. Expansion with new product can lead to a new segment or direction for the business.

Companies that are proactive rather than reactive generally are the industry leaders.

Agile companies remain reactive rather than fixating on long, efficient production runs and standard brands. Rather than bloating with long inventories efficiently made, a nimble company may be better able to deal with changing markets, client needs and competition.

It is important to understand the strengths the business has that can be leveraged as a competitive advantage. The strengths can be products, processes, key personnel or a network than can be used to enhance the business. Understand how to turn the advantage into profit.

Simplifying operations where possible increases flexibility and increases agility or response time to market changes. Organizations that monitor and manage costs without sacrificing quality are in an improved position to change direction when necessary.

Part of simplifying operations is reducing unneeded administrative overhead and information reporting. It is useful to continuously review processes for improvement and to eliminate out-dated procedures. This requires a continued monitoring of internal and external environments to ensure policy are updated. Information needed for strategic reasons should not be eliminated but enhanced to ensure vitality is improved.

Market intelligence becomes a key factor and should be an area of focus to drive the organization and keep it on its toes.

These steps can keep the business highly energized and exciting as it maintains a position of responsiveness to the market, customers, and competition.

Business Planning mistakes

2011-09-12T06:28:00.000-07:00

Business Plans are a useful tool in managing and growing the business. The complexity of the plan varies with the size and nature of the business but here are a few ideas to avoid in planning.

1. Don’t delay.

Too many business owners only create a plan when banks or investors insist on it. Find the time even if you are too busy getting things done. The busier you are the more you need a plan. Don’t spend all the time just putting out fires; the entire business may be lost if you focus on one burning issue.

2. Cash Flow insensitivity.

Most business owners seem to focus on profits instead of cash. The reality is that businesses spend cash to operate, not profits. Understanding cash flow is critical. If you only get one report to manage the business make sure it is a cash flow chart.

3. Planning fear.

Preparation of business plan is not that hard. This is not a doctoral thesis or a book that has to be written. Help can be secured from books, small business development centres, local university business schools and planning software from the internet.

4. Undefined goals.

Plans should omit vague undefined goals that are just hype. The purpose of the plan is to define specific goals that are achievable and measurable. Follow guidelines for specific milestones and hold people accountable for results.

5. Lack of priority.

A business plan should provide focus. The plan can include objectives for operations, finance, sales, or personnel but a priority list of 15-20 items will lack focus and importance.

6. Overly optimistic projections.

Revenue projections that accelerate too quickly create a false impression and unrealistic expectations. Generally more conservative projections are easier to defend with bankers or other potential sources of financing and also may prevent the owners from overspending with the anticipation of generating income that may not occur.

A good business plan presents an overview of the business -- now, in the short term, and in the long term. However, it doesn't just describe what the business looks like at each of those stages; it also describes how you'll get from one stage to the next. In other words, the plan provides a "roadmap" for the business, a roadmap that should be as specific as possible.

Business Value

2011-08-22T08:53:00.000-07:00

Tips for Maximizing Business Value

Burying excessive personal expenses in the business financials can lower business value!

The most popular method of valuing a business uses a multiple of earnings over a period of years. Business owners should be aware of that while attempting to reduce the bottom line with personal expenses to minimize taxes. Though there are a number of deductions that may be added back to determine true cash flow, not all add-backs are considered legitimate by buyers or lenders. Being too aggressive in minimizing taxes today may cost a business owner big dollars at closing.

Some businesses may need a whole new direction!

Unfortunately, there are businesses whose market has changed so drastically that their products or services now have limited demand. And it might not be the slow economy! Those business owners may have to consider a whole new business model and get into the research and creative thinking mode. A good starting point is searching ideas on the internet or getting professional help to reposition the business.

“You can’t always get what you want”

The title to the 1969 song by the Rolling Stones seems to echo what the market is telling many business owners these days. There is no question that prices for many businesses are down and for various reasons. But if there are offers on the table a business owner must take a hard look and be realistic as to what has to change, the business or the economy for the price to “sing along” with expectations.

Leases can make or break the sale of a business

The lease terms of the business space can be a major consideration for a buyer. For example, a retail business with a long term lease on a good location can be attractive. But a long term lease on a business needing more space to grow could be a detriment. Or there can be concerns for an expiring lease when the landlord might demand a large increase. When it comes to negotiating a new lease, business owners must carefully think through the timing of their plans for exiting their business.

Business decisions

2011-08-08T19:39:00.000-07:00

Let’s make decisive business decisions

Decision-making is a crucial part of good business. The question then is ‘how is a good decision made? One part of the answer is good information, and experience in interpreting information.

Managers can be trained to make better decisions. They also need a supportive environment where they won’t be unfairly criticised for making wrong decisions. A climate of criticism and fear stifles risk-taking and creativity; managers will respond by ‘playing it safe’ to minimise the risk of criticism which diminishes the business’ effectiveness in responding to market changes. It may also mean managers spend too much time trying to pass the blame around rather than getting on with running the business.

Decision-making increasingly happens at all levels of a business. The Board of Directors may make the grand strategic decisions about investment and direction of future growth, and managers may make the more tactical decisions about how their own department may contribute most effectively to the overall business objectives. But quite ordinary employees are increasingly expected to make decisions about the conduct of their own tasks, responses to customers and improvements to business practice. As a result careful recruitment and selection, good training, and enlightened management are important supports to good decision making.

How do you make the best possible decisions, knowing they will have an impact on your company's future?

There are strategies you can use to avoid common pitfalls and hone your decision-making skills. Making better, faster decisions will help you take advantage of business opportunities and avoid pitfalls.

1. Review the problem/decision in a broad context to include as many perspectives as possible. But don’t procrastinate just to get another opinion.

2. Make decisions as much as possible on facts rather than emotion. It is good to challenge your gut instincts; use objective data to reinforce decisions.

3. Don’t hesitate to challenge the status quo. Staying in your comfort zone in order to be comfortable may lead you on the same path. Change does not necessarily take more effort.

4. Be open to others opinion but trust your own ability and ability of employees to make a well-reasoned decision.

5. Recognize that some constraints may influence the decision; financial constraints, practicality, and lack of resources to implement the decision may influence the path taken.

Decisions are not taken in isolation and the effects of any decision will depend on reactions of others. Competitive behaviour should be anticipated and can influence choices. In the end, the review process needs to be completed with minimum delays and decisions finalized. Respect for action taken with a firm unwavering approach or allowing responsible employees to decide will earn respect from the organization.

Success factors

2011-08-01T19:11:00.000-07:00

Success factors in business

Here are some of the key factors leading to success in business.

1. Plan for success. A good plan increases your chance of success by defining objectives, framing costs, forecasting revenue and defining risks.

2. Management strength: a strong management group is critical. Entrepreneurs should have the confidence to surround themselves with strong people; this will pay dividends in productivity and growth of the business. Those owners who seek individuals who will follow and not lead will be constrained by their own failings.

3. Develop a network. Networks of peers can be a powerful resource for support and direction. It is great if you develop both a network within the organization and a network of peers outside of the business.

4. Consumer focus. An unwavering commitment to the consumer is invaluable. Understanding the consumer’s wants and needs provides the best way to gain customer loyalty. Repeat business is the lifeline to continued success. This also strengthens your reputation in the marketplace.

5. Continuous improvement. In order to stay at or near the lead in your market position there need to be continuous product improvement. Innovation and keeping pace with technological improvements provides that cutting edge performance. This also enhances productivity and profitability of the business.

6. Know your strengths. An honest approach to management of the business can help generate growth. Don’t waste time chasing dreams or ill-conceived ideas that do not match your core values or strengths in the business.

7. Manage time use. Entrepreneurs need to act with a sense of urgency to develop ideas. Learn to manage your time and include leisure activity. If plans are not working adapt to changes that will work even if it requires acquiring skills that may be missing in the organization. Working smart produces quality results which outperform quantity.

Business Financing

2011-07-25T06:09:00.000-07:00

How to find financing for small business

A common issue among small businesses is locating capital for expansion or operating funds.

A major tool that can help business is strong cash flow management. Knowing cash demands, cash income flow, and reserve funding is critical. Understanding funding needs sets up the strategy to be used for financing needs whether short term or long.

Options for capital sourcing include:

- Commercial banks. The local branch for the business can be a real ally. Treat the bank as a partner not an adversary. If the bank manager has a good understanding of the business he/she will be more supportive in times of need. As long as the business has a history of profitability, banks may be more likely to be supportive of expansion of lines of credit. If business treats the bank as an adversary, it is likely to tighten credit in difficult times and increase cost of borrowing until security is improved.

- Government funding. These programs can offer opportunities to access low interest or even forgivable loans business can use to expand. This is particularly popular if expansion programs improve the environment, or create employment. Federal programs often focus on the environment, export expansion, tourism and other national interests. Provincial interest largely focuses on job creation and in encouraging foreign investment in local communities that will expand growth.

Review opportunities for the best fit.

- Business Development Bank. This organization can be a source of funding for a variety of needs including expansion of operating funds, inventory expansion, financing of acquisitions including equipment, or buildings, or even acquisition of new businesses. Cost of borrowing may be a little higher than commercial banks but BDC may be more supportive of needs.

- Private capital. This can be a source in some instances as individuals or some groups seek to invest in opportunities that could generate higher rates of return. Typically these investors will demand much higher rates of return, depending on the risk level and they often expect a multiple return on their investment. Care needs to be taken if private funding is a last resort to ensure the owner does not lose control of the business.

Choose financing options with great care but pay special attention to day to day management of the business in order to minimize the need for outside financing.

Guest blog

2011-07-19T05:27:00.000-07:00

This article was published by friend and former associate Jeffrey F. Paulson.

Paulsen’s Perspectives

"I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel"- Maya Angelou

How does your Lawyer make you Feel?

Typically when a client hires a lawyer, it is because of the education, legal background and life experiences of the lawyer as well as the belief that the lawyer can provide the legal advice, counsel and solutions needed to resolve the client’s legal concerns. The foremost thing on a client’s mind should be selecting the correct lawyer. Selecting the correct lawyer is dependent upon the type of relationship that the client hopes to achieve. Here is a short summary of the types of relationships a client can build with a lawyer:

Highest Level-Trust Based

The highest level of legal advice and counseling a client can receive from a lawyer is based upon trust. This type of relationship takes time to develop and involves focusing on the lawyer-client relationship as individuals. In this type of relationship, the lawyer should be someone that can tell the client what he or she thinks and not what the client wants to hear. The client comes to rely on the lawyer on both a professional and personal level.

Relationship Based

This type of relationship focuses on the client organization and involves a lawyer providing insights and ideas based upon his or her knowledge of the business organization and its objectives. This type of relationship typically leads to multiple interactions between lawyer and client based upon various legal issues and needs. These relationships are longer term and can over time lead to a Trust Based relationship.

Needs Based

This type of relationship is based upon problem solving and providing solutions to a client’s existing problems. Often, this type of relationship is not ongoing and the client needs a lawyer specialized in a particular legal specialty to resolve the immediate legal issue. If there are multiple interactions between the lawyer and the client, this type of relationship can lead to a Relationship Based relationship.

Service Based

This is the most basic relationship that can exist between a lawyer and a client. The lawyer in this instance is retained to answers questions and provide information and legal guidance that is timely and of high quality. This type of relationship may be a one-time engagement or it can potentially develop into a Relationship Based relationship or in rarer situations, a Trust Based relationship.

How the Selection of the Correct Lawyer can make Clients Feel

Unfortunately too often I hear of relationships between lawyers and clients that do not feel good at all. Clients may not like how the lawyer made them feel and frankly the lawyer may not like how the client made them feel. Focusing on the type of relationship the client wishes to establish with a lawyer and having an understanding between the lawyer and client on the type of relationship desired should help avoid these negative feelings.

As a lawyer, I strive to ensure that all my clients never forget how I make them feel and that these feelings are always positive.

Paulsen Law Firm PLLC - "Formed with clients in mind………"Copyright 2011. All rights reserved. Paulsen Law Firm PLLC, Bloomfield Hills, Michigan 48302. 248-456-0646. www.paulsenlawfirm.com

Strategic Planning

2011-07-04T17:27:00.000-07:00

Better Strategic Planning

Here are a few key tips to improve your Strategic planning:

1. Develop a core team. This should include at least 6 leaders/managers from various areas of the company.

2. Set aside sufficient time for broad strategic thinking. This is not a process to be done ad hoc between other business functions. Find a location where interruptions are minimized.

3. Ensure the planning group is committed to the organization goals. If the planning group does not buy-in and become part of the process the Strategic plan will be still-born.

4. Allow free and open discussion in the planning sessions regardless of rank. No one person has a monopoly on all of the good ideas. The CEO should not lead the discussions; hire an outsider if possible to facilitate who can more easily moderate and ensure full participation from all members.

5. The plan must be implemented when complete. A great plan that sits on a shelf is useless.

6. Create an action plan for implementation with measurable goals, accountability, and deadlines. Everyone must understand their role in implementation before leaving the session.

7. Don’t write the plan on a stone tablet. Good strategic plans are flexible enough to respond to market changes but remember it is broad in scope and doesn’t change daily.

8. Make strategic planning a continuous process not just a single event. Performance reviews should be done no less than quarterly with a focus on results and accountability. There should be clear and meaningful consequences for missed deadlines or failure to achieve goals.

Thoughts on Mentoring for small business

2011-06-28T16:24:00.000-07:00

Small business owners can benefit from relationships they build with peers in the business community. Discussing business struggles with others who may be experiencing similar hardships can be constructive in resolving issues. Mentors offer wisdom and knowledge acquired from their experience with growing their business.

Mentoring can be used in a variety of situations and different mentors may be used.

There is no need to rely on a single mentor. It is rare that one mentor will have expertise on all operational issues so it is useful to search out several sources. Find a group of people you can work with that you would trust to have the best interest of your business in mind.

The relationship with a mentor does not have to be a formal or long term contractual relationship. It can be a few hours of mentoring sessions, or periodic reviews over time depending on the current needs.

If you can find someone who knows your business and industry well the mentoring is likely to be more relevant and satisfying.

Mentoring can be used across the organization ranging from coaching younger executives to time spent with the most senior group. If the business environment is changing rapidly a mentor may be valuable guiding the organization through the process of managing change.

Remember, mentoring is not likely free advice; the relationship with a mentor should satisfy the needs of both the organization and the person providing the service. There may be fees involved but a business may also provide the mentor with a unique opportunity to see a new perspective on an issue and fees may be waved in lieu of the experience gained by the mentor.

You can determine when a mentor will be of benefit through self-assessment and determining the challenges the business faces. If you can resolve the issues with resources internally you do not need a mentor but if the answer to the question is you lack the talent in house it may be time to seek the support of one or more persons with the right kind of advice.

Small business staffing options

2011-06-20T05:34:00.000-07:00

Here are issues I see in small business as they deal with staffing:

1. Should the business hire permanent staff or contract help?

Staffs usually provide more continuity and stability but add to cost due to employment taxes and perhaps benefit programs.

Staffs provide the advantage of employee loyalty and an edge in a more positive morale and productivity.

Contract people can be terminated at any time negating the costs of severance programs.

Contracting can add flexibility by allowing the adding or deleting of staff as demand requires.

Compatibility is sometimes harder to than competence so staff can be more productive within a group or department.

Hire a contract person as a temp. If the person works out you can make the job permanent.

2. Should business promote from within or add new employees.

Promoting from within does enhance employee morale and loyalty to the company. Employees who see the company as interested in career development and loyal to staff tend to make a greater effort in supporting company goals and success.

Introducing new employees from the outside does provide a fresh approach to some positions and can re-energize the company. Also, securing new outside talent may reduce the cost of training and development of current staff.

3. Full time vs part time staffing

Businesses should be careful not to add staff too soon. Temp or part time staff can be used as the business grows and changes to permanent positions can be made as the business matures.

If the business has seasonal peaks and valleys, use of part time staff provides the flexibility to adjust to demand.

In some situations, job sharing can provide the opportunity to maintain a larger pool of employees who are familiar with the work but prefer to work part-time.

Let growth, profitability, and demand dictate when to expand permanent staff.

Small business mentoring

2011-06-13T05:51:00.000-07:00

Thoughts on Mentoring for small business

Mentoring can be used in a variety of situations and different mentors may be used.

If you can find someone who knows your business and industry well the mentoring is likely to be more relevant and satisfying.

Business Valuation Tips

2011-06-07T06:54:00.000-07:00

Business owners should be planning for their own future!

Business owners are so busy running their companies every day, they never seem to have time to plan for exiting the business. But they can’t avoid planning for this critical time in their lives. Presenting a business for sale is very different than managing it with the business owner’s personal management style and priorities. It can take years to properly prepare a business for sale to get the highest price. Business owners should start creating an exit strategy at the earliest possible opportunity!

Realistic Expectation of Business Value

Unfortunately, most business owners have a very inflated view of the value of their company. And why not? They have put so much money, time and heart into it. But they need to realize the price is based on what someone else is willing to pay for it. Periodically having an evaluation prepared by a professional is a good way to help determine what the business owner needs to do to reach his or her goals.

Tips courtesy of Bill Sivell – VR Windsor Inc.

Does your business have high standards for business ethics?

2011-05-30T18:26:00.000-07:00

Have you ever wondered how many of the successful business get caught in the public spotlight and are criticised for the lack of integrity in the organization.

Clearly culture counts and it starts at the top with senior management or the board of directors. Organizations need to understand that compliance with influences or rules created outside doesn’t drive ethics it should be the opposite, ethics driving compliance in the organization and the leadership in the organization is responsible for setting the tone.

There are different levels of ethical issues; there is workplace fraud and corruption, sometimes conducted at the highest levels of the organization, and ethical issues relating to how employee and customer relations are handled.

Checks and balances require care in how the organization structure is designed, how human resource decisions are made, and how overall business is conducted. It needs to be recognized that this is a very time consuming process and organization integrity is paramount; when difficult decisions are faced the instinct must be to default to core values.

Too often larger organizations pressure smaller business for concessions they can ill afford but if they don’t concede an entire contract may be lost. This happens even if the original pricing were agreed between the parties when the contract was signed. Where is the pride in living up to one’s word? What values are at the core of that behaviour?

Ethics are derived from values and they make integrity a way of life in the organization. Honesty, respect, and responsibility can be pillars on which to build. It is essential that these values are shared throughout the organization through constant dialogue and through practice in decision making.

Corporate governance is used to promote business ethics and social responsibility. It also creates the framework for guidelines used by all individuals who are part of the organization. Fairness is one of the very basic business ethics concepts as it covers how the organization treats people in its commercial dealings.

The vast majority of businesses are ethical and at least have informal standards expressed through the behaviour of the CEO and senior managers. Anyone working in an organization that seems to behave in an overtly unethical way and chooses to stay or ignore the behaviour is part of the problem.

Business Value Tip

2011-05-23T16:18:00.000-07:00

Business Owners Who Do It All!

Some businesses can’t survive without the owners trying to do everything themselves and there are no key employees in place to help manage the operations. Buyers for businesses like these may be concerned if they themselves can’t replace the skills and experience of the owner. As a result, these businesses may have very little value to anyone else. Business owners who don’t delegate need to make a strong effort to have experienced key people in place before they ever try to sell their companies.

Tip compliments of Bill Sivell, VR Windsor

Business Values

2011-05-16T19:48:00.000-07:00

Operating a business with 5 C’s

There are many values involved across the spectrum of business management but here are a few thoughts to consider in your operation.

Core competency – businesses in the never ending search for growth often stray outside of their core competencies. I suggest you concentrate on what your strengths allow you to do. Too often I have seen the eagerness to expand lead to an acquisition of a business that the entrepreneur knows little about. This can lead to huge wastes of resources, both time and money, trying to integrate a business that does not fit.

Culture – operating in today’s world of integration and worldwide business requires sensitivity to not only establishing a well understood and communicated business culture but an awareness of how our workforce composition understands, interprets, and reacts to management decisions. It may be important to appoint an individual to interact with employees and communicate company policy. This can help minimize offending an employee unnecessarily. Employees too need to look at the broad picture and not expect individual rights to override the common practice of the business.

Competition – understanding the strengths and weaknesses of your competition is a major key to success. Know when to act, react, and take advantage of the market place is paramount to improving results. Stay flexible and be ready to move when opportunity is there.

Capacity – managing the limit of the organizations resources helps maintain a balance between meeting demands of the marketplace and ensuring there are no bottlenecks to any surge in need for additional product or service. Lack of planning can affect financial performance and impede meeting customer needs. Accurate forecast not only of demand but availability of production capacity and resources are the mainstays of strong performance.

Cash – must conclude with “king of the C’s….. cash. Good cash management is a Core and foundation of any business. Cash flow management is paramount and every CEO should be aware no less than monthly of this key reporting tool. Good cash management can provide the flexibility to move in the marketplace to capitalize on opportunity. Poor cash management can put unnecessary strain on resources and stress on management.

There are other topics to be covered but these are some of the C’s worth Caring about.

Successful Business Planning

2011-05-09T15:53:00.000-07:00

Creating a road map for a business may be a key to growth and success but how many entrepreneurs do it right. Here are suggestions for developing a solid plan.

1. Shorten the planning horizon. With the speed of change today the 5 year plan has become obsolete. Shorten the timeline to 3 years. You can have great vision and well developed strategy but unless you can connect the dots between where you are today and where you want be you will fail.

2. Manage what you can measure. Knowledge is power. Monitor the right information and your plan will have a greater chance of succeeding.

3. Increase planning frequency. When the 2-3 year plan is complete, management meetings should be held at least quarterly to review where you are and what to do next. Quarterly meetings with the right decision makers will enable the organization to assess progress and realign targets to meet new business conditions.

4. Write the plan yourself. This is an element of business entrepreneurs love to delegate to a consultant. A plan is better understood if it is created within the organization. The elements contained within the plan vary depending on the size and complexity of the organization. Only when there truly is a lack of the skillset for developing plans should the process be delegated to an outsider like a consultant.

5. Share the process. Entrepreneurs who keep their plans close to their chest, not revealing them to anyone, do so at their own peril. Making other managers part of the process provides the opportunity to hold them accountable and they all share ownership of the plan.

6. Be realistic. Plans that are overly optimistic or too safe are both wrong. Optimistic plans project revenues and a resulting spending scenario that may not be achieved. Deficits will result. Plans that are too conservative may result in limitations on spending because revenues are not expected. This may result in lost opportunities. Every effort to achieve realism should be undertaken and frequent reviews help keep the business on track.

7. Share the plan. Once completed the plan should be shared with the management group so everyone understands expectations and the yardstick for success. The organization should, where possible, tie performance bonuses to result attained in the plan.

When employees feel a sense of ownership about the future you may be amazed what they will be willing to do for the organization to help ensure success.

Business Start-up

2011-05-02T17:56:00.000-07:00

Starting a business – better think it through

A lot has been written on this topic but it is worth a few reminders as I often see the same mistakes repeated too often. Let’s look at some of the keys to a successful launch for a new business.
As a preliminary step, assess whether you as an individual are suited for entrepreneurship. Regardless of the merits of the business concept you must be prepared to deal with the risks and rewards of being your own boss and also responsible for those you may employ. If you assess that you are willing and capable of operating a business continue and carefully evaluate some of these factors.
1.     Start with a plan. Review the market potential of the idea. What is the competitive set? Should I start a new business or is there a business for sale that suits my needs?
2.     Will the business be profitable? I am often surprised by the lack of understanding of basic fundamentals ignored by some entrepreneurs. You must clearly understand the costs that will be incurred in setting up the business and provide a significant contingency fund to cover the unexpected. There are always surprises and setbacks that raise the costs of starting.
3.     If you are giving up a full time job make sure you are properly funded. It has been stated so frequently but under capitalization continues to be the most common yet often ignored reason for business failure. You may wish to start the new business part time to reduce your risks and allow the business to grow more slowly. The down side to part time activity is that you have less time develop the business or provide adequate customer service.
4.     Make sure you have a strong management team. Surround yourself with strong, qualified people. If you are using outside financing banks or other lenders will want to know “who is looking after the money”.
5.     Stay on top of the finances. You will sleep better if you have a handle on your bottom line. It’s nice to see sales flowing in but managing cash flow is critical and the key number is on the bottom line not volume at the top.
6.     Expect your competition to react aggressively if you are a new entry into the marketplace. Often the best defense from a competitor is an aggressive price competition. How will you react and your staying power may determine whether you survive.
7.     Take advantage of professional advice. Your accountant, lawyer, banker and others like the Business Development Bank can be very valuable and readily available assets. Don’t be too proud to ask for help. No one person has a monopoly on all the good ideas in business.

This just scratches the surface of issues to be faced but perhaps provides some food for thought. It’s a place to start this often challenging but potentially very rewarding road.

Succession Planning

2011-04-27T08:44:00.000-07:00

Are you ready to pass the baton?

How much time have you spent recently preparing your organization for the future with a succession plan?

Too often I have spoken with owners of business who have given no thought to how their business continues past their time or even who should be in line for succeeding others in key positions.

There is a fine line between structuring an organization so strong back up is available for all key positions and being top heavy with management staff. While it is important to develop and maintain an organization chart that identifies potential replacements for key positions it is a plan that must be kept confidential among only a few very senior managers. Clearly if the succession plan was broadly know the group of subordinates would constantly be chafing at the bit to move up the ladder.

The succession plan should be updated regularly. Performance of employees change, new stars arise and training of key individuals to broaden their experience becomes important elements of the plan to maintain.

In small family organization succession plan may be even more important. The owner may have family members who he would wish to carry on the business but are they qualified? Are there competing siblings who vie for the role of president and how does the current owner resolve that issue?

A well-developed plan not only provides for a smooth transition when needed but also can be a critical tool in situations that result from an untimely injury, illness, or death of the owner. You do not want a vacuum created from the absence, for any length of time, of leadership in the business. A prolonged absence of an identified leader can destabilize the business and lead to losses and in extreme situation lead to the collapse of the business.

The owner or president of the business has the fiduciary responsibility to be proactive and protect the business and ensure survival is optimized. That means an active role in preparing for his/her exit and change in other key management positions.

You never know when there will be a need to pass the baton.

Management Incentives

2011-04-18T07:02:00.000-07:00

Keeping key management personnel.

There is a key role for incentives in managing and retaining key executives for the company. Here are some reasons for and examples of how to structure effective incentive programs for management.

1. You want to retain key management personnel for a number of reasons. High turnover destabilizes the company and can have severe effects on moral of employees and the bottom line.

2. You want to retain high performing managers to enhance your own company’s growth potential and to keep key people from wanting to look at other opportunities.

3. Good managers don’t expect a bonus without achievement but don’t set the bar so high as to be unachievable. That becomes a disincentive to achieve.

4. Set goals that help improve your bottom line; just achieving new sales records is not a priority if the costs exceed the benefit. Sales executives should be just as concerned about profitable sales as the CFO.

5. Pay executives for overachieving by sharing profits. As profits goals are exceeded rewards can continue to be major incentives if shared fairly. Reward contribution.

6. You don’t have to give everything away in this process. Be competitive but unique and allow key employees to participate in goal setting. When they are part of setting the goals they are more likely to increase efforts to reach the bar.

7. Conduct periodic reviews to ensure all incentive participants know where they stand. Let’s not have surprise results announced at year end….good or bad.

8. Be completely transparent. If goals are profit based show actual revenue/profit results so that there is a clear understanding of achievements.

9. Roll plans forward and allow incremental bonuses for achievements in consecutive years. That’s a great way to keep a key person from leaving; that extra bonus for additional achievement may be too juicy to walk away from.

10. Stock options are often used as a tool for key employee retention. The chance to be a part of ownership can be major motivator. However recent issues in corporate governance have tended to dilute and weaken some incentives. Try to strive for balance without risking responsibilities to shareholders.

Incentives are important tool to maintain a motivated and dedicated management team and a well-designed plan can bear fruit over the long term

Maximize Business Value

2011-04-11T14:15:00.000-07:00

Tips for Maximizing Business Value

Burying excessive personal expenses in the business financials can lower business value!

The most popular method of valuing a business uses a multiple of earnings over a period of years. Business owners should be aware of that while attempting to reduce the bottom line with personal expenses to minimize taxes. Though there are a number of deductions that may be added back to determine true ash flow, not all add-backs are considered legitimate by buyers or lenders. Being too aggressive in minimizing taxes today may cost a business owner big dollars at closing.

Some businesses may need a whole new direction!

Unfortunately, there are businesses whose market has changed so drastically that their products or services how have limited demand. And it might not be the slow economy! Those business owners may have to consider a whole new business model and get into the research and creative thinking mode. A good starting point is searching ideas on the internet.

“You can’t always get what you want”

Leases can make or break the sale of a business

These tips are courtesy of Bill Sivell, VR Windsor. Please contact him for additional information on how to amximize the value of your business. www.vrwindsor.com

Crisis Management

2011-04-04T18:18:00.000-07:00

Struggling to deal with a crisis management plan?

Is your organization struggling to deal with a crisis or plans to ensure the business exposure to a crisis is minimized? It is not uncommon to see this paralysis because managers often prefer not to deal with the situation.

Let’s look at some steps that can be taken to help build a safety net.

1. Maintain sensitivity for even minor or seemingly insignificant events. Some could have the potential to develop into major issues that could be a blow to the business.

2. Plan ahead with a look to long term strategies as a guide. Work out best and worst case scenarios to help prepare for unseen events.

3. If a crisis arises act quickly; procrastinating rarely improves the situation.

4. Create a crisis management team with a mandate to trouble shoot, identify potential problems and empower them to recommend and enact changes to protect the business.

5. Provide strong and effective training to key employees and take steps to eliminate small issues so they don’t erupt into major problems.

6. Explore optional solutions and look for new ground to operate from if standard solutions prove inadequate. Think outside the box for solutions.

7. Don’t panic in a crisis situation. As the leader employees want strength. Keeping a cool head may facilitate focussing on the issues and getting a solution right.

The key to avoiding or minimizing the impact of crises that may arise is to be proactive ahead of adversity. I hope these tips provide insight into ways to fight through any situation that may arise with minimal damage to your business.

Business Value

2011-03-14T19:38:00.000-07:00

Do you know what the business is worth?

Corporate valuation is not a perfect science. Indeed, value is perception. Nevertheless, valuation exercises are done with the objective of maximizing the growth of shareholder wealth.

One of the benefits of corporate valuation exercises is to determine how best to raise capital. The best financial solution is one that minimizes the cost of capital or increases the value of equity. By conducting valuation exercises, you would be better able to provide clients with advice on capital and business structures and, of course, provide the ensuing financial structure for expansion purposes, mergers, acquisitions, divestitures and restructuring. For private companies, valuation exercises are also important for estate and tax planning.

While a valuation exercise may help in determining what the best financial strategy to adopt is, it will only give an indication of what the value of the company is given the economic, financial and market conditions at that point in time. For a publicly traded company, the value of equity is also dependent on several factors, including but not limited to, the liquidity of the stock, the control structure and who the target buyer is. For a private company, other factors will include family employment, additional benefits, the control over the bonus and dividend policy and the mix of asset ownership.

There are several valuation methods. Asset valuation is a good starting point beginning with book value and then moving on to replacement value, market value and liquidation value. Assessing the market value of the company as a whole requires access to market data bases whereby a complete comparison of similar companies is done through ratio analysis and industry rules of thumb. The most straight forward, effective and efficient method is the Discounted Cash Flow (DCF) method whereby the present value of future cash flows is calculated.

The DCF method uncovers the intrinsic value of companies, particularly in the case of highly cyclical situations, avoids the issues of interest rate environment because the rates used in the model are long term rates, and provides a risk adjusted appraisal as it uses expected rates of return. In short, it is a sound quantitative method on which to base discussions around financial strategic planning.

The bottom line… know your bottom line and what your business is worth. Fiscal planning will be a lot stronger.

When is the right time to go?

2011-03-08T05:44:00.000-08:00

One of the more interesting and challenging questions I run into when providing consulting support is “when should I be thinking about exiting this business? There are many factors to be considered but here are a few thoughts.

What kind of shape is the business in today? Is the business operated from strong principles of strategy with a clear vision? Can that vision be expressed and understood by those who manage the business or potential buyers? If you the owner cannot clearly state the purpose or reasons that you exist don’t expect new owners to invent it for you.

How will you get the maximum return if you plan to sell? In cases where management/ownership is dominated by a single individual it is important to maintain a high degree of confidentiality so that employees do not become insecure and unsure of the stability of the company or their jobs. This instability can easily be communicated to a potential new buyer and create a poor impression.

Factors that may support your decision to leave can grow out of many conditions. The most common is an age derivative. A long career leading to a desire for more personal time; reap the rewards of your career. Age may not be the prime driver but longevity at the job could be creating burn out. Time to move on.

Another good time chosen is driven by a need for change. You may feel you have achieved all that can be achieved and you wish to quit while on top of the game. This may also provide a high rate of return if the business is at a high level of performance. Selling now may produce the equity needed to finance a new opportunity.

Look for opportunities to exit from positions of strength. A well trained and competent management group may provide the opportunity to offer your staff a management buyout. Managers may be able to pool resources to fund the buyout, you as owner may offer to finance all or part of the buyout or there may be an option to use company assets to finance the loans needed for the buyout. This is often referred to as a LMBO – Leveraged Management Buy Out. It also provides good opportunities for maintaining stability in the organization.

Finally, the marketplace may facilitate determining the right time to exit. Poor economic conditions or competitive activity can have a huge impact on if or when you should exit. Positive conditions too might bring a competitor to the door with a buyout offer.

So the options are many but not always easy to sort through. Timing is critical, business life changes, choose wisely.

– Are you stuck in a pressure cooker?

2011-03-01T04:52:00.000-08:00

In need of tips to reduce the stress you are under?

You may want to consider some of the following options in order to lessen the impact or negative effects may have on your business operations:

- Know your body signals; excessive heart rates, headaches, anxiety may be signals and suggest a need to find time to wind down.

- Don’t procrastinate and postpone decision making. Difficult decisions are not made easier because you postpone them. At times conditions may worsen if issues are not resolved.

- Without really ducking a decision, stress can be relieved if you just take a short break or switch tasks for change of perspective.

- Stay fit. A program of regular exercise can help your body and mind deal with difficult situations that may arise from time to time. Try to maintain a healthy diet to support your overall health.

- Achieve balance between work and other family and personal activities. Enjoy time away from the job to let you recharge your batteries. Plan periodic vacations or days off. The organization is unlikely to collapse because the boss is away for a short time.

- Delegate responsibility. No one has a monopoly on all of the good ideas and ways to resolve problems. Let staff participate as part of team that enjoys successes and faces difficulties on the job as well.

- Use networks within and outside of the business to share ideas and issues with. Trust people to help with business issues. Working in isolation is rarely a good idea.

- It’s nice to want and demand high standards but an obsession with perfection can destroy a business and the people that surround you.

- Make sure key support people including those managing the finances keep you up to date. Since cash flow is a key marker make sure expenses are kept under control and systems to improve productivity are reviewed often. A well run business with good information flow is a key to stress reduction. Eliminate surprises.

These suggestions won’t eliminate all of the stress in your business but I find they help keep stress at a manageable level.

Interview on the legal perspective of business issues.

2011-02-18T05:50:00.000-08:00

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: the impact of the economic downturn is well known and employment in both countries has been dramatically affected. Major industries have been forced to retrench in order to survive and in some cases without government handouts would close. Do you see similar impact on professional practices? How has the economy impacted the legal profession?

Jeff: Gerry, thank you for this question. Without a doubt, the latest economic downturn has had an enormous short term economic and likely long term structural impact on the legal profession. Many law firms are based upon an out-dated business model that consists of high overhead costs, high hourly billing rates, minimum billable hour requirements, and incentives and a culture based upon revenue generation as opposed to client-centric services. Because of the high cost overhead structure of offices, high paid associates and staff, sports and country club perks, when the economy and tight credit conditions prohibited many companies from growth oriented activities and into a survival mode, the business generation and revenue stream of many law firms were severely impacted. In order to save the law firms, lawyers and staff were laid off in record numbers. Today, there are many unemployed or underemployed lawyers and unfortunately many of these lawyers never considered being an entrepreneur and were never given training on how to be an entrepreneur. Just like the large automotive companies, the large law firms consisted of highly educated and well qualified individuals that no longer had the entrepreneurial spirit that built both industries. Personally, I believe the legal industry has changed forever. Coupling business leaders concerns for cost control, with an understanding that there are well qualified and very experienced lawyers that can provide the same services as their traditional business model law firms, but at a fraction of the cost because of lower overhead structures; the lack of minimum billable hour requirements and the real willingness to look for Win-Win creative compensation relationships with clients; and a belief that a lawyer can put the interests of their clients first and still make a nice living; leads me to the conclusion that the old out-dated traditional legal business model is on its way out. While there will continue to be a need for the large behemoth law firms with multiple offices (i.e. very high cost overhead structures) for certain legal matters, the bulk of the legal needs and legal opportunities will exist for lawyers that believe that it is time for the legal industry to get aligned with business reality.

Thanks, Jeff for your participation. I’m sure the readers will enjoy your insights and I look forward to a future visit with you. Gerry, my pleasure and it is great to have reconnected with you after all these years. While my insights are personal, I have had the opportunity to think about and be involved in the legal industry for over 25 years as an in house corporate lawyer, a large law firm partner, and now a small law firm entrepreneur. It is an exciting time for businesses in both Canada and the U.S., and for the legal industry. I believe the best opportunities are yet to come.

Interview on the legal perspective of business issues.

2011-02-17T05:16:00.000-08:00

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: I often see business leaders shun taking advice from lawyers even when the advice is clearly in their best interest. How do you approach overcoming an issue like this? It must be difficult to be viewed as the “sales prevention” department within your own company or by the client.

Jeff: Yes, you have identified a problem that many lawyers face. Just like the human resources function, the legal function is seen as a “cost center” that does not generate revenue (although I will argue that often the future revenue generated or expenses avoided are because of good lawyering) and therefore the lawyers are not held in as high regard as those business line leaders responsible for P&L statements. My own view is that a great business leader understands that success comes from a well balanced team of professionals who are given the opportunities to do what they do best; whether it is accounting, finance, marketing, sales and yes, legal. My approach has been to demonstrate that I am a business executive with a law degree and although my first responsibilities are to handle the legal functions for a company, my advice and counsel may be considered as a member of the senior management business team as important for the overall business strategy and business plan. If I am permitted to express my views, from both a legal and business perspective, in conjunction with other senior team members, then I will have given the business leaders with the advice that they can use to make the ultimate decision that is in the best overall interests of the company.

Interview on the legal perspective of business issues.

2011-02-16T04:16:00.000-08:00

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: Another common problem I see is how companies deal with customer complaints. Consumers in both countries seem to be too litigious and think companies have such deep pockets they can sue over every product defect and get a large settlement. The old “I’ve got a bug in my soup” story. If the company settles all the time they are vulnerable to copycat suits. If they defend aggressively they get a PR black eye. How do you advise companies in these scenarios?

Jeff: My answer will not to be one answer that fits all. Having served as a company General Counsel responsible for protecting the company from litigation and working to avoid litigation when possible, I can share a few of my suggestions. My initial premise is that we business lawyers should be in the business of helping companies avoid litigation if at all possible. Litigation is expensive, time consuming, gives up control of the resolution process, and takes the company’s focus off of its real business; making products, providing services and helping others achieve commercial success. Although I am now an outside lawyer, I still think it is almost always in my clients best interests to attempt to resolve customer complaints and disputes through creative business solutions, or if needed, by monetary settlements. The counter to that suggestion is as you have noted that it may encourage copycat complaints and lawsuits. There are times when a company needs to defend its legal position aggressively. Clearly if you have a dispute that can jeopardize the existence of your company, its business, a product line, or if the ability to construct a business resolution is not possible, then you must devote whatever resources are needed to ensure success in the litigation. When it comes to copycat litigation, I suggest that a clear understanding of the risk be discussed and that a plan for resolution be implemented. I attempted this at a former employer with retail establishments where we received over 2,000 customer complaints per year and typically had 40 to 50 cases in litigation at any one time. Although the implementation of our plan was not exactly as I had envisioned, this type of decision-tree process can help when a company considers whether to defend each and every lawsuit, settle each and every lawsuit, or preferably implement a plan that includes both a litigation and settlement strategy.

Interview on the legal perspective of business issues.

2011-02-16T04:13:00.000-08:00

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Interview on the legal perspective of business issues.

2011-02-15T03:58:00.000-08:00

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: One of the most common areas that I see poorly handled is employee management. Management of poor performers is often highlighted with a termination and I have not seen any business that seems to handle a termination well. Do you agree? Why is it difficult?

Jeff: Many business leaders are educated and trained in their particular disciplines such as finance, accounting, marketing, sales, supply chain management and other typical disciplines of business leaders. These individuals have been able to achieve success because of their knowledge, hard work and understanding of how to make a business successful using these disciplines. Many business leaders are not trained, nor are they generally interested, in the “softer” functional areas such as human resources management. Often, business leaders are happy to have these concerns handled by the human resources staff; believing that the staff will implement the human resources policies directed from top management. From my experience, I have seen minimal resources allocated to the non-revenue producing functions, such as human resources. This often results in managers not understanding how to write a job description, conduct a performance review or handle employee discipline or terminations effectively.