Technology

I Was Scammed

Even the smart professional gets scammed every now and then. I’m supposed to be impervious to anything related to parting with money foolishly. How humbling . . .

Fortunately, I didn’t fall for a huge scam, but I fell for it nonetheless. How did this happen? The scam penetrated my ultimate weakness; not thinking clearly when sleep deprived. Here’s the story:

I woke up in the middle of the night and couldn’t go back to sleep right away. By the way, I heard that if this happens it’s best to just get out of bed for a little while instead of lying there sleepless or using your phone. Eventually, I picked up my phone, and started to watch YouTube videos. In the middle of a video appeared an infomercial about a special fan that cools air quickly with the use of water and some sort of advanced technology. It was probably a warm night because I purchased the fan thinking that it may come in handy, especially if making pizza in a hot oven during the summer. If the fan can cool down a factory that melts steel, then it can certainly cool down my kitchen.

Fast forward a few weeks, and fortunately only $90 later after shipping and handling, arrived this magical air cooling fan. I read the directions, added some water, plugged it in, and laughed at myself for being so stupid. The fan was so weak that you couldn’t even feel it unless you were within a foot or two away from the breeze. Nothing was really cooled except for my pride.

Fortunately, it wasn’t a lot of money, but I did learn two lessons. First, anyone can get scammed under the right circumstances, and two, don’t watch YouTube videos at night, especially when you’re tired.

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10 Small Improvements That Have a Big Profit Impact

Improvements do not have to take an enormous effort to make a huge impact on your profits. Sometimes it’s the small things that add up over time. Here are 10 simple improvements that can have a significant impact on your profits:

  1. Schedule work better: Are you wasting time by scheduling work poorly? For example, do you allow enough time for you or your employees to complete a project within the scheduled time? If not, then there will be too much stopping and starting which kills efficiency. Another scheduling challenge is to make sure that you do not have too little or too many staff members scheduled at the same time.
  2. Set aside time for high value activities: High value activities are not usually urgent, which makes them get pushed to the side. In order to get these items done, you need to schedule this type of activity, even if just an hour or two a week.
  3. Look at your financials: Do you look at your financials or tax return just once a year or possibly not at all? For starters, you should review your financials at least once per month to see how you are doing versus the same time last year. Your financial statements are the measurement of your business’ results, and you need to know how you are doing to make better decisions.
  4. Consistency of pay: When possible, try to keep your pay and distributions consistent, unless paying yourself a bonus or bonus distributions. This makes it easier to manage your cashflow and reduces the temptation to take too much just because you had a good month.
  5. Work less: Working crazy hours will burn you out over time and is not sustainable. Try to consistently reduce your hours over time to give yourself a breather. If you become depressed or develop a health problem, then you will not be able to work at all.
  6. Acknowledge people: Show sincere appreciate, gratitude, and respect for your employees, customers, vendors, and especially your family for bearing with you during good times and bad.
  7. List your activities for a week: Over the next week, jot down everything that you do and how long each task takes. Then, ask yourself, “Should I be doing this, should someone else be doing this, and does this even need to be done?”
  8. Pay extra towards your debts: Even a small amount will add up to quickly pay off your debts. You will save interest and eventually increase your cash flow. You’ll also think twice before incurring more debts.
  9. Contact an old customer: Is there an old customer or client that you liked to work with and have not heard from in a while? Maybe there was a misunderstanding that you can easily resolve or maybe no reason at all and they just need to be asked to come back.
  10. Use a pricing worksheet: Instead of just winging it with your pricing, why not develop a pricing chart? It will take the guess work and emotions out of pricing, which ends up causing you to undercharge.

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Are You Too Financially Cautious?

Is it possible to be too financially cautious?  Cautious does not mean that you are just conservative or frugal with your money, but that you are too afraid to spend your money wisely. You may not even be aware that you are too cautious and here are some examples:

Hesitate to make the right investments: Aside from traditional investments, you may be too cautious to invest in your own education and knowledge, spend the money for new equipment and technology, marketing, or spending money on employees.

Too cautious about wasting money: If you are so concerned that you will waste your resources then you will end up spending too much time trying to save a nickel, but it ends up costing you a dollar. For example, you don’t want to spend the money to keep track of your finances in QuickBooks or even Quicken for personal use, but yet you incur hundreds of dollars of insufficient funds charges each month. I have seen clients spend approximately $10,000 for insufficient funds fees.

Not taking a loan when you should: I am not an advocate of borrowing money excessively or foolishly, nor do I think that borrowing should be avoided at all times, which some pundits advocate each position strongly for. However, sometimes you need to have a line of credit to smooth out some bumps or to take advantage of low-risk opportunities that arise. Alternatively, if you pay off all of your debts too quickly then you may not have any cash available.

Time versus money: Using your time productively strongly dictates your financial success. However, if you spend your time on $10 per hour activities that drive you crazy instead of paying someone to perform them, while you can be making $200 per hour, then that is a poor use of your time and financial resources.

Money before relationships: If you are too financially cautious then you will probably never want to get married, and if you do, then you will worry about not having enough money for your children and will probably not have any.

Another way of saying financially cautious is to be penny wise and pound foolish. Don’t try to save your pennies, but make dollars!

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Help Your Employees Succeed in 5 Steps

One of the common topics that I discuss when advising business owners is that of employees. From finding employees, keeping employees, and sometimes letting employees go. Dealing with employees can be difficult because we are people with emotions, problems, families, health issues, and also have lives outside of work. As a business owner and manager, here are 5 steps to make sure that your employees succeed:

#1 First things first: Slow down the hiring process to make sure the position and the potential employee are a good match before even starting. This can include multiple interviews, interviews with your other employees or managers (if you are a solopreneur, then the other interviewer can even be your wife or someone that you trust greatly), asking the right questions to gauge ethics and personality, and tests. A test can include a short demonstration of skills and knowledge.

#2 Initial set-up: It seems so simple, but is your employee ready to start working on their first day? Do they have the proper technology, equipment, uniforms, or even completed payroll information all ready before starting? Don’t waste their time because ultimately you are wasting your time and money and also do not appear to be organized.

#3 Training: Even if you hire experienced employees, they will still need to be trained with how you operate. Take the time to train so that they will perform well and feel good about their job.

#4 Set expectations: Let your employees know what you expect them to work on today, tomorrow, this week, and in the future. Also, set expectations for hours worked, time off, busy times during the year, and the like.

#5 Support: Employees will experience sickness, need to attend to family matters, and go through stressful times. Support them during their time of need to help them throughout any ordeals they may have. If you need support, then good employees will support you too.

There are many more ways, but this is a good start. Remember, success is not accomplished by itself.

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The 3 Pillars

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A business has many moving parts that must all be coordinated to ensure smooth and profitable operations. Usually, there are aspects of a business that are either completely ignored or not given the time, energy and focus that they need. These moving parts can be broken down into 3 major areas: operations, marketing, and financial.

Operations: Most businesses focus all of their time and energy on the operations of their business, and with good reason. Without operations there would be no business. Aspects of operations that are usually overlooked are: developing and managing employees, delegation, scheduling, and technology. It’s easy to get lost in all of the details of delivering your product and service that improvements to your business get pushed aside for the sake of just getting through the day.

Marketing: Marketing is the promotion of your business and is the key to growth opportunities. This can include old-fashioned networking, social media and Internet marketing, and many other forms of getting the word out. There are even indirect ways of marketing your product or service based upon visual interactions and use of technology.

Financial: Financial matters are like a middle child that tends to get ignored. Anecdotally, I have yet to see a business that does not have either cash flow problems or tax issues if they ignore their finances. Practically speaking this is the least interesting aspect of running a business, which is probably why it is ignored. However, operations, marketing and financial are all thoroughly intertwined, and if you ignore the financial aspect of your business then it will negatively impact all of the others.

These three pillars create the foundation of a business, and by strengthening them you will create lasting success.

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Why Does a Fast Growing Company Bleed Cash?

The irony of growing a company quickly is that it tends to bleed cash, and a lot of it. Why is this so and what can you do to prevent a cash crunch to keep the momentum going?

A fast Growing company is likely to spend more money to feed the growth of the business then a mature, slow-growing business in such areas as marketing, employees, technology, equipment, improvements, rent, and so on. The key to not going broke is to manage the process to keep the cash inflows consistent and much greater than the cash outflows. For example:

Accounts receivable: Sales growth without receiving money coming in will be awfully painful. Make sure you have billing and collection procedures in place to keep the cash coming in timely.

Marketing: There are different thoughts on how much should be spent on marketing as a percentage of sales. However, instead of thinking about percentages, think about effectiveness of your marketing so that your cash is not wasted.

Improvements & equipment: Building out a new location can be very costly, but there are several ways to minimize the risk of setting up an additional location. First, make sure that your first location is profitable and producing excess cash flow, second, build up a cash cushion, and third, obtain favorable financing or use a combination of cash and financing.

Employees: As sales increase there is a temptation to quickly hire more employees, which is necessary. However, if you hire too quickly, then the productivity of each employee will be too low for you to make a profit. A good strategy is to create metrics, that if met, will let you know that it is time to hire another employee or employees.

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You Get What You Pay For

I like a good deal when I see one, but be careful about going for the “cheap” price. Generally, you get what you pay for and many times it ends up costing you more and you either don’t realize this or realize it once it’s too late. Even commodity type services and products are not really commodities and here are a few examples:

Service providers: The pricing of service providers varies drastically, and includes virtually all services from home maintenance/contractors to professional service providers. Maybe you can find a good deal because the provider is newer in business and is under charging on purpose or is doing so out of poor business practices. However, a “cheap” service provider, especially one that you use repeatedly, will find it hard to provide quality service to you over time. This can be due to a high demand because of low prices, not being able to afford good, competent employees, and not having additional funds to invest in their business.

Products: If you are able to get the same product or software when it is on sale, then that is plain smart. However, when comparing two products, make sure that you understand why one is cheaper than the other. Reasons for a lower price can be because the product uses poor materials, is manufactured poorly, or does not contain a lot of features. The opposite can be true for a more expensive product, which is why you need to make sure that you purchase wisely.

Cost/benefit analysis: When making a purchase for your business, especially a large or important purchase, then weigh the cost/benefit. For example, a consultant may cost you $5,000, but you may expect that his advice will return $50,000 of profit. Alternatively, a software provider may cost you $10,000, but will save you $20,000 of expenses, including salaries. The examples are endless, and it is important to think of each expense as an investment in your business.

Don’t be fixated on price, but make sure that you understand what you are getting for the price you pay. A funny expression is, “If you pay peanuts, then you get monkeys!”

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What is a Growing Business Doing Differently than a Struggling One?

There are major differences between the actions of a business owner with a growing business versus that of a struggling business. There seems to be a recurring theme for growing and struggling that closely mimics those who are fit and healthy versus those who struggle with their weight.  The accumulation of certain actions will greatly impact the outcome as follows:

Successful Businesses:

Hire smart and delegate: Business owners who are willing to take on additional employees will find that they are better able to increase sales due to additional capacity. They also do not over do it by hiring too many employees at once compared to needs, which ends up causing cash flow issues.

Invest in infrastructure: This not only includes the physical infrastructure, such as buildings, but also technology and equipment. Have you noticed that franchised restaurants update their locations quite often and do not hesitate to invest in technology and equipment?

Are reluctant to use debt: Debt can easily overwhelm your business even if you are growing rapidly. Although debt can be useful if used for the right reasons, it must be used sparingly and wisely to avoid pitfalls. As a business matures, then the goal should be to rely less on debt to support business operations. Why do you think the interest rates and payment terms are much different with traditional financing versus non-traditional loans, such as merchant loans or hard-money loans?

Seek advice: There are different ways of learning and some are more efficient and effective than others. One way to shortcut your success is to seek the advice of those who know more than you and then implement their suggestions. It sounds easy, but our pride tends to get in the way.

Struggling Businesses:

Are obsessed with cutting expenses: This may come as a surprise, but many struggling business owners are obsessed with cutting expenses. My only guess is that they do not see the link between smart spending to support profitable business operations. They are also penny wise and pound foolish and spend enormous amounts of time trying to save a few bucks, which ends up costing more.

Think that debt is THE answer: Debt may be a part of the solution, but it is not the answer to all of your business problems. Examples of problems that debt will not solve are: a lack of sales, overly burdensome expense structure, too many employees for the size of the business, and bad customer service.

Have an excuse and don’t listen to reason or reality: The economy is by far the most common excuse, along with “nobody buys this anymore” or “no one has time to do that anymore.” They may be right to an extent, but what about when the economy has turned around? If your customers have changed their buying trends, then why don’t you adjust your strategy as well? If you don’t change then you will prove yourself to be correct, but at a major cost to your business.

The probability of becoming a growing business will increase if you take the actions of growing business, while the odds of struggling will increase if you take the actions of a struggling business.

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5 Traps to Avoid When Growing Your Business Rapidly

Growing your business, especially growing rapidly, can be a really great accomplishment, but there are dangers when growing too quickly. Here are several traps to avoid to ensure successful growth:

Cash flow: Quite often, a small business will have cash flow issues when growing too rapidly. This is due to a delay of getting paid, while expenses need to be paid for upfront or before getting paid. There are 3 solutions that can help depending upon your situation. The first is to see if you can obtain terms with your suppliers to delay expenditures, second is to obtain a line of credit to support your receivables, and third, which tends to be the hardest, is to build up a cash cushion first.

Finances: As you grow your business, the financial aspect becomes even more crucial to your success. This entails a focus on investing in more robust accounting software, accounting staff and/or accounting services, streamlined processes and procedures, and internal controls, to name a few.

Employees and management structure: Unless you enjoy working 24/7, you need capable managers to manage your employees (you have been hiring more employees, right?). It is easier to have a few people reporting directly to you then several dozen. Also, make sure to acknowledge and reward the loyal employees that helped you to obtain your success.

Personal time and wellness: It is very easy to put in excessive hours to handle the massive growth of your business. There will be times when you need to work extra, but if this becomes the norm then it is easy for your personal relationships to suffer, along with a decline of healthy habits.

Infrastructure and organization: This applies not only to the physical nature of your business, but especially your operations. Have you outgrown the physical space that you occupy? Are you using equipment, technology, or IT that is not keeping up? Are your vendors and advisors able to handle the growth of your business? What about marketing and marketing staff? These are all areas to consider; otherwise, they will act as barriers to your growth.

Growth needs to be profitable, stable, and smart; otherwise, your results can easily go in the opposite direction that you intended. Think long-term, strategically, and surround yourself with the appropriate advisors to help you along your journey.

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5 Ways Your Calendar Will Help You to Work Less Hours

Are you using your calendar as a tool to be as productive as possible? Most people do not use their calendar in a way to maximize its effectiveness, but if used properly, it can help you to reduce the amount of hours you work. Here are 5 ways your calendar can help you to work less:

Scheduled tasks get done: When a task is scheduled there is a high probability that it will get worked on. Have you ever had the feeling that you did not get anything accomplished on a particular day? The main cause is most likely due to not having tasks scheduled.

Allocation of time: How much time should you allocate for a specific task or meeting? By allocating specific time slots and durations, this will help to alleviate the open-endedness of meetings and tasks. Parkinson’s Law states “Work expands to fill the time available for its completion.”

Batching of activities: Similar activities may benefit by scheduling them close together or within the same day(s). For example, new clients or patients may need a much longer time slot for an appointment, which can all be scheduled on a specific day.

Schedule key tasks early on: Important, but usually not urgent tasks, should be scheduled first thing in the morning or early in the week. There is a constant pull for your time and if you do not focus on important items first, then you may never get to them.

Long-term planning: A calendar can include tasks that are several weeks or months in the future. This can include both tasks and meetings. If you can plan your vacation months in advance, which is very important, then you can and should plan business tasks well in advance also.

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