3 Keys to Recession-Proof Your Business

Whoa, has it been scary lately.

The Dow Jones is down by hundreds of point a day, then only up by ten or twenty. Oil prices are scaring everyone.

As housing prices fall, so does consumer spending. Is there anything you can do to protect your business against the recession we are facing or (according to Warren Buffet and others) already in?

What are the main issues that we, as business people, need to think about and address? The bottom line is, every small business owner today has to be looking at what ramifications the recession will have on the business.

It comes down to three main areas that you, as a business owner should be examining. If you are like a lot of businesses, you have seen sales fall and you should be using this down time to figure out what you can to be doing to recession-proof your business.

Think CSI. No, not the T.V. show, but the three main ingredients of any business: Customers, Suppliers, Infrastructure.

YOUR CUSTOMERS

Make no mistake about it, they are the lifeblood of your business. If you are not selling, you are not earning. In a recession, it is important to remember that consumers become more value oriented. Now is the time to review all of your customer service related issues.

• Is your site/store/service easy for the consumer to access? Do a dry run as a fussy customer and make sure there is nothing about your business that is going to make a potential customer drive by, surf by or otherwise ignore your great products.
  
• Are you maximizing your marketing efforts? Now is the time to consider some novel ways of attracting new customers. Perhaps you can partner with a complementary business and get more bang for your advertising buck. This popular new concept of cross promotion allows you to share advertising space, expand your customer exposure, share mailing lists and run parallel specials.
  
• Is your customer service team properly trained? Are your salespeople friendly and helpful? Do they offer additional products to buyers? Work with your staff to brainstorm new ways of catering to the customer and increase sales.
  
• Do you have a website? Here is something to keep in mind: even brick and mortar businesses need a presence on the web, so customers can check you out and gain confidence in your business. Locations, directions, product lines and special services you offer will make it easier for customers to find you. If you haven’t done so already, now is the time to use some of your slow time to work on web development.
  

YOUR SUPPLIERS

Distributors are concerned about cash. Customers in our fast paced world have become accustomed to overnight or, at the most, second or third day delivery. Customer tastes change, and a company’s inventory must meet that challenge with new product offerings. Make sure your supply line is tightly managed so that you can offer the best product at the best price, with the best service.

• If you are in a position to do so, take as much advantage as you can of early payment discounts. In a slow market, suppliers are hungry for cash.
  
• Maintain good relationships with suppliers. Pay on time, cooperate or help if they have delivery problems, etc. When things start to get a little tough, you’ll be the customer they will bend over backwards for.
  

YOUR INFRASTRUCTURE

Employees are worried about their jobs. Costs of supplies, transportation and space are escalating. A downturn is just the time when you need to be reevaluating all of your resources and operations. The key is to make sure you are getting the maximum value from every dollar you spend.

• Cross train your employees. If each employee can wear more than one hat, they can help in different areas during crunch times.
  
• Get out the pencil sharpener. Every cost should be scrutinized so that any waste can be eliminated. Can deliveries be more streamlined or consolidated, can you save space costs by warehousing stocks, are there better, cheaper communications systems you need to be investigating?
  
• Rather than cutting employee benefits, are there some ways you can bring in some cost sharing features? Flexible spending accounts, 401 matching plans and other features that shift some of the costs of employee benefits to the employees themselves may mean the difference between keeping a benefit (even though it is in a different form) and eliminating it altogether.
  

When the going gets tough, the tough get going. Being proactive in the face of a possible downturn will help your business at least survive, and, if you find solutions that give your business a unique advantage over your competitors, may even help it grow.

Tax Time: One month and four days to go

Do you remember last tax season? You left it till the last day… (like every year, am I right?)

Then, you had to disappoint your son because you skipped his game and spent the evening at home printing reports and gathering all the papers. Then what happened? That’s right, he tore his ligament and you ended up at the hospital all night and got nothing ready for your tax file. To top it off, he made the winning shot just before his fateful fall and was carried out a hero and you missed it all!

OK, so that’s a little dramatic…

This year, you promised yourself not to wait until the night before the appointment with the tax guy to get all the tax stuff together, am I right? No procrastination, no filing for extensions; this year you are going to follow my Top Steps for Organizing Your Tax Records.

1. Make an appointment with your Tax Preparer You know what? This is one of the biggest problems people have in getting their taxes done on time. They forget to call until April or so and then they have a hard time getting an appointment that coincides with their schedules.
   
2. Determine how you are going to file. Right off the bat, that will make a difference in the type of information you will be gathering for your returns. If you are filing a Schedule C with your personal tax returns, and you work out of your home office, you will want to calculate business usage of certain expenses. If you are filing a separate corporate return, there will be different requirements. (See Travis Giggy’s Definitive Guide to Incorporation and LLC for more)
   
3. Get all of your personal data ready. Wife’s and children’s Social Security numbers, and perhaps your parents. If you used the same tax preparer last year, he will have all of these records, but if there have been any changes, such as a new baby in the house, or if you are newly supporting a parent, you have to have access to these SS #’s as well. Don’t forget the Tax ID or Social Security Number for your child care provider, for that all important childcare tax credit.
   
4. Income records. First of all, if you work for someone else, you need the W-2 forms from your employer(s). Income from your partnership, corporation or LLC should be reported by your accountant, or you have to run the reports off of your bookkeeping system, if you do that stuff yourself. Needless to say, you should include all income reported on forms 1099-MISC. Don’t forget alimony received, any winnings or prizes, and state and local tax refunds or unemployment compensation (Form 1099-G).
   
5. Homeowner or renter information. Make sure your preparer has the correct address of your home and business. Some specifics as to types of reports: Form 1098 mortgage interest from your lending institution(s), Form 1099-S for sale of a home or other real estate, real estate taxes paid (from your county clerk if it is not included in your mortgage payment), rent paid, moving expenses if related to your job or business.
   
6. We’re not through yet. Now gather all of the information related to your financial assets. Interest and dividend statements (Forms 1099-INT and 1099-D), proceeds from broker transactions (Form 1099-B), and any retirement plan distribution (Form 1099-R).
   
7. And now, look at the liability side. Interest on auto or equipment loans or leases, as well as the car or equipment value and personal property tax information if it applies in your locality.
   
8. These are just the tip of the iceberg. Now we get into the real nitty gritty- deductible expenses. Make no mistake, this will probably make the most difference in your tax return than almost any one other item. With that in mind, here is a separate “sublist” of what you should make sure you have in hand for that important tax meeting.
   
   
   
   • Receipts for gifts to charity
     
   • Unreimbursed expenses for volunteer work
     
   • Unreimbursed job related expenses
     
   • Investment related expenses
     
   • Job hunting expenses
     
   • Education expenses
     
   • Childcare expenses
     
   • Medical Savings Accounts
     
   • Adoption expenses
     
   • Alimony paid
     
   • Sales tax expenses
     
   • Tax preparation fees
     
   • K1 for any partnership
     
   • All business related expenses
     
   • Federal, state and local estimated tax paid
     
   • IRA, Keogh or other retirement plan contributions
     
   • Medical expenses
     
   • Losses due to casualty or theft
     

This looks like a full time job in and of itself, but it is crucial to your business that you have all of these records at hand. Why do I say this? Minimizing expense and maximizing profit is one of the keys to a successful business, right? So making sure you are able to take advantage of any legitimate deduction only makes good business sense.

Now at this point, you should decide upon a timeline to get it all done. In my experience, I’ve found that it is better to tackle this job a little at a time. Today is March 11; let’s say your appointment is March 31. Break the list down to 20 steps and do one of them each day. Simply stated, you will get a few things together each day so that you will not burn out on one day and do a sloppy job of it towards the end. Breaking a job down into manageable pieces like this will also motivate you to get started in the first place, since it will not be such an overwhelming task.

So what do you think? Share any comments below.

Who you gonna call? Productivity for small business owners.

(As they say in Ghostbusters)

Who you gonna call (when you REALLY don’t feel like working)?

Since you work for yourself… there IS nobody to call!

You know the saying, “When you work for yourself, you have the toughest boss there is.” I mean, this boss won’t even give you a mental health day off - or any comp time for those late nights. And, you have to be on your death bed before you can call in sick.

Believe it or not, we all have days when it is just not that easy to get going, or to be productive when you get there. Let’s face it – even when you’re in business for yourself, with all the incentive in the world, it is sometimes hard to stay motivated and productive every day.

You…just….have…to…get…going.

Here are some tips, tricks, tasks and techniques that will help to push you into action on those kinds of days.

See the bottom of this post for more on how you can provide your own input on how to get going!

Most of these ideas will actually come from your old world of (sorry to have to use this word) working for others. Routines, schedules, appointments, deadlines and interaction with others are pretty powerful incentives for getting things done, and getting them done in a timely manner. If the nature of your career does not automatically impose these restrictions on your working day, you have to find other ways of imposing them on yourself.

Let’s face it, when you work for “the man”:

• You have to get to the office at a certain time
  
• You have quarterly sales targets to meet
  
• You have to file reports or make presentations at given, fixed intervals
  
• Etc.
  

If you don’t - there will be repercussions!

Since you are now the man (whatever your gender may be), you have to play that role as well as many other roles in your company.

Your Work Hours

First and foremost, report to work on time. Fix your working hours and do not let anything but the direst emergency interfere with them. Especially if you have employees of your own, this simple, old fashioned tradition will work wonders. You know from the good old days how employees can be tempted to slack off when the boss is not around. In addition, setting an example for your staff that you are happy and excited to get in and get started will spark excitement in them as well. Don’t expect your employees to feel pumped up about the work they are doing when the person who is benefiting the most from it does not show any excitement. Get into work a few minutes before your “start” time, make or pour your coffee and sit down at your desk by 9:00, or whatever time you have chosen, rarin’ to go.

For the sake of balance, family harmony and your health, you should also have a fairly fixed quitting time. Yes, you may have to work later on occasion, just as in the bad old days, but wasn’t that one of the things you decided to escape? Of course, take advantage of adjustments in your work routine that now allow you extra hours, but don’t become a slave to your freed up time. If you have given up a two hour commute for a fifteen minute ride to the office, then great, you have an extra hour and a half in your workday now. An hour and a half, however, not four. Start closing down, planning your next day and clearing your desk fifteen or twenty minutes before your self imposed quitting time and then get up and leave.

Scheduling Tasks

The district sales manager (you) no longer requires a monthly sales report. The comptroller (you) no longer requires a monthly P& L. The accounting clerk (you) doesn’t even pester you for your travel vouchers to close out that last business trip. Just because no one asks you for these reports and statements doesn’t mean that they don’t have to be done. They do, and if they are not done in a timely manner, you will end up pulling together the information in a haphazard manner when it is needed for a bank loan, a tax return or to balance the checking account. To avoid this, it is necessary to include some of the old deadlines and routines of the work world in your own business. The nice thing about being your own boss is that you can pick the parts you want to keep, like order and routine, and discard the bad parts, like an unreasonable boss, a long commute and the limits of a paycheck.

In this area, once again, it helps to pretend that you have a boss watching over your shoulder. Make a list of the chores, reports and duties you know should be done routinely. Use a simple system like a calendar or a computerized version of a tickler system, but take the time to schedule a fixed date for all of these tasks and STICK TO IT. Review your sales and profits on at least a monthly basis, whether you do it manually or with an accounting program. Balance the company checking account by the 20th of the month, if it is normally received by the 15th. Fix a date to inventory stock, or even office supplies. How often has a small project turned into a big one when you had to run out to get the necessary supplies? Attending to these tasks in an orderly manner, and on a scheduled basis will save you time and even money.

Motivation

When are you legitimately sick, and when are you just not in the mood today and, since no one is really expecting you in anyway, you can just goof off? If you are not 100% motivated today, it is easier to find an excuse not to work when you do not have someone to answer to.

Once again, we have to look to the alternate work world that our jealous friends and neighbors live in. If you were at your old job, would you really call in sick today? You have a report due (it’s on your calendar, and you are sticking to it, remember?), you are behind in your sales goal for the month and you need to review a project that one of your staff has been working on. Looking at your calendar for the day, you realize how important each of these things is to your long term goal, and you report in as usual, even if you are tired, have a little headache or it’s too sunny to be indoors.

Looking at the other side of the coin, you also have to be able to judge the times when you really need to take off. If all of the above items were scheduled for today, and you truly didn’t feel well, would you call out sick at your old job? This is the litmus test. Your career would have been greatly affected if these major tasks were neglected, but if you were really under the weather, you would have realized that it simply had to be-you would not have performed at your best in any case. Your business is affected just as much under your current circumstances; the decision process has to be the same. Treat the process the same as well. If you have staff who report to you, call the office and let them know you are sick. Adjust your scheduled tasks to allow for this day, and then concentrate on getting well.

Many of the traditions and processes of the working world developed from a need to get things done efficiently. As much as we may hate to admit it now that we have broken away from that rate race, these systems will work to our advantage in our own businesses as well.

What is your NUMBER ONE motivation or productivity secret?

Now it’s your turn.

You can help out a lot of people – and give us all a much-needed boost with your input.

Just enter a comment by clicking on the link below.

And tell us:

What is your number one motivation or productivity secret? What do you do when you just don’t feel like putting in those extra hours? Do you put on some great music? Do you tell yourself positive affirmations? What? Tell us!

To your business success,

Travis

"How do I get started in such a venture?"

Last night, I received an email from Bob in Illinois. Bob asks a question that I get often - "how do I get started?". So, with his permission, I am posting the original email and my response here. I hope it is helpful.

On Feb 6, 2008 8:20 PM, <p......b@c...t.net> wrote:

Travis,

I read your blog entry regarding StubHub.

I was interested to see you mentioned vacation spots as an example of a possible application. I've thought about that aspect for a while. My idea focuses on Timeshare. It seems there are numerous sites that ask for fees up-front without delivering. As a timeshare owner myself, I'd love a place that is well publicized where I could post my timeshare, like I've done with my Chicago Bears tix on StubHub.

Trouble is, I haven't the first idea how to get started. Where can I learn about the basics of starting such a venture?

Thanks,

Bob M....

Plainfield, Illinois

Hi Bob,

Thanks for the note!

I think to get a venture like this off the ground you need three primary skills.

The first is the easiest to acquire, and that is basic Internet technology implementation. You'll need to know about programmers and designers and online marketing options.

The second is market research. You need to know if people with timeshares (or looking for them) are willing to engage you and build a relationship. You need to know if there is a pain point that you can address and solve. For this, I must recommend Glenn Livingston's survey model. It is extremely thorough - it will give you the data on your market you need to succeed. I have used it several times now - and if you can handle the intensity, you are WAAAAY ahead of the game.

http://www.howtodoubleyourbusiness.com

The third is the less tangible, which is basic business sense. I just finished reading a book called "Jump Start Your Business Brain" by Doug Hall that goes into great detail about crafting a business idea that can succeed. I highly recommend it!

http://www.amazon.com/Jump-Start-Your-Business-Brain/dp/1558706070

In addition to these skills, you need a whole lot of determination and fortitude. When I first got into e-business I was looking for the silver bullet. And I sometimes still find myself trying to take the easy way out. But the thing is - that never works. It takes years to build a successful business online, just like it does offline. If you're not committed and "in love" then you're not likely to succeed!

Hope this is helpful.

Travis

The Difference Between a Job and a Business

What makes the difference between a job and a business?

Well, in my eyes a job is something that you have to go to every day. You collect a pay check every couple of weeks. It's reliable, but usually boring and very time consuming.

A business, on the other hand, is something that should be worked ON and not IN. A business is only a business if it can operate without you. In other words - somebody else should be able to take the phone calls. Somebody else should be able to keep the books. Somebody else should be able to do the selling. Doesn't necessarily mean they have to, and especially not right away because the processes need to be created. But the idea of a business is that it is a system - not a job.

If you own a job then you can't really reap the rewards of being self-employed... I mean, how could you ever take a week-long vacation if the phones need to be answered? How could you focus on expanding and improving your business if your marketing is not automated? The answer: you can't!

I recently read a blog posting by Terry Dean, a seasoned business coach who sold his company and retired at the age of 30. He recommended reading a book called the e-myth which is all about putting processes in place in your business so you can work on it and not in it. I've read these same principles over and over (especially in Rich Dad Poor Dad), so I'm going to pick this book up and read it soon:

The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About It
http://www.amazon.com/E-Myth-Revisited-Small-Businesses-About/dp/0887307280

As a side note, but I think, related...

I also recently read a blog post by Mark Cuban, the owner of the Dallas Mavericks (sold Broadcast.com for billions) that made an impression. He said that you should identify your weaknesses and outsource them. In other words - you're good at some things and you suck at other things. It's hard to actually step back from yourself and identify the things that you're not good at, so you can have someone else do them for you.

Mark says that his business would not have been successful if he didn't face up to the fact that he was terrible at organization, and bring on a partner that was strong in that area. This is worth a read:

http://www.blogmaverick.com/2008/01/06/success-and-motivation-dont-lie-to-yourself

To your business success!

LegalSpring Members Only Resources

In this exclusive section of the website, you will find many resources to form and run your corporate entity. Whether you are forming an Incorporation or LLC, you have come to the right place!

http://corporation-llc.legalspring.com/members/

If you have any questions, or you can't find a particular resource, please contact me at the email address below. I usually respond within 1 business day!

Here's to your business success!

Travis Giggy

Ps. I recommend you start with the video library. You will learn, in a matter of minutes, every step required to form an Incorporation or LLC all by yourself!

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