Small Business Expert

Tips for Small Business Owners

  • vision

    You’re the Big Cheese. Cast the Vision.

    posted by Mike Kappel
    Featured Article
  • Payroll Taxes Cost U.S. Small Business Owners Valuable Time

    An Abstract of One Hundred Dollar Bills with Narrow Depth of Field.Some U.S. small business owners are spending up to three workweeks per year just handling payroll taxes for their companies, according to a new survey by the National Small Business Association (NSBA).

    Results from the NSBA’s 2014 Small Business Taxation Survey showed that while 60% of small businesses handle payroll on their own, 11% spend more than 10 hours a month on the administration of payroll taxes. Another 43% spent three to 10 hours a month on the tasks, the survey showed.

    Doug Simmons, who handles payroll tax filings and deposits for customers at Patriot Software, Inc., said some small business owners may think they are saving money by handling payroll taxes on their own, but may not realize that there is a cost to their time.

    Turn a Convention “Lemon” into Lemonade!

    conventions

    Leg wrestling saves a convention?

    My second company, Top Echelon Network, has held numerous conventions every year since 1989. We want our customers to have the chance to meet — and to create memories together.

    As was customary, in September/October of 1998 we were conducting three mini-conventions in three different cities, back-to-back, three Saturdays in a row. We had meetings, seminars, and guest speakers for our customers all day Saturday. Each Saturday evening, we would organize dinner, open bar, and some sort of entertainment (e.g., a band playing live music).

    This particular year, I had a young female superstar working for me who was easily handling every marketing task I threw at her. Besides having a business-marketing degree, she also had a degree in music. Since we were both very confident in her abilities, I assigned her the task of selecting the bands we would hire to entertain our customers in each of the three cities we would visit.

    Has Business Gotten Harder?

    Business has always been challenging, but I personally feel that business is getting harder. It’s harder to start a business than it was 27 years ago. It’s harder to make money.

    First obstacle: Regulations

    There are requirements on new businesses that can suffocate innovation as seen in this Time magazine article: “Health Officials Bravely Shut Down Rogue 11-Year-Old Cupcake Magnate.” A little girl was baking cupcakes at home and selling them, and health officials shut her down. What’s next? … the neighborhood lemonade stand?

    Nowadays, there are more taxes and government regulations on small business. There are more types of insurance needed.

    In other words, the requirements are eating up your limited time and money.

    Do Salary Increases Cause an Entitlement Mindset?

    Most companies conduct their employee performance reviews once a year. We prefer to do reviews every six months.

    6-month cycle

    Why every six months? Because it forces us to recognize achievements and snuff out problems. And, we almost always issue raises (or cash bonuses) at the same time.

    Conducting performance reviews every six months is painful for managers, but it’s better for each individual worker. The six-month cycle has helped us stay in touch with our employees’ needs and support employee retention.

    Economic downturns

    We have passed out raises in some economic downturns, but not during others. It depends on how I feel we’re doing as a company. However, I am a firm believer in this statement:

    “If it’s within your power to give, give!”

    So, yes, I have been guilty of giving out raises and cash bonuses when the economic climate meant that most business owners were not.

    Fighting the entitlement mindset via open letter … educating my employees

    Passing out raises every six months can cause a problem — people start to expect that bump in pay.

    Do You Know the 3 Social Media Rules for Business?

    social media

    Being social with my customers in a [small] convention hall in the 90s.

    So you’re trying to use social media to promote your business? That’s okay, but here’s the first thing you need to remember. It’s called social media … social networking. The key word here is “social.”

    Here’s why …

    The convention hall

    Imagine that you’re at a business convention or a networking event that takes place in a big convention hall. You are one of many people in the room, and you start to make the rounds.

    You introduce yourself to people. You give out your business card. You laugh. You tell stories. You ask questions. People ask you questions. You check out the other people in the room. They’re checking you out.

    Suddenly, you look to your right, and there’s some guy who is overly loud, obnoxious, using profanity, and basically being a jerk. You avoid him. (At least I think you would avoid him!)

    Then you meet someone else who has characteristics and interests that are similar to yours. That person interests you, and you want to learn more about what he/she is doing.

    Later, you might overhear someone bashing your religion or your favored political candidate/party … you will likely avoid that person, too.

    You like people who are like you

    Here’s the bottom line.

    Ignore the Competition (Part I): Invent Your Own Secret Sauce!

    Part One in a Series of Four

    competitionBusiness competition is exactly like competition in sports — there’s always someone better, faster, or more talented coming along behind you. And sometimes, that high achiever who runs past the current leader is you.

    In your startup business, you should look and see who your competition is, but that’s about it.

    Don’t …

    Don’t worry if they have a bigger advertising budget than you. Don’t worry if their product or service is better, stronger, or even less expensive than yours. Don’t worry if they have thousands of employees, and you have a few dozen. And never copy what they’re doing … never!

    Do …

    Ignore your competition, start your business, and get in the game.

    Ignore the Competition (Part II): Do Not Underestimate Them!

    Part Two in a Series of Four

    Each of my companies has strong competitors. Some competitors are bigger with lots of money. And some are smaller and working off of borrowed money (e.g., venture capital). Regardless of their size and financial strength, they all have one thing in common …

    They would love to put my company(s) out of business.

    The Big Ones

    Big competitors are dangerous because of their many resources and forceful momentum.

    The Big Ones have large customer bases that usually provide them with steady, substantial cash flow. When a company has a large and steady flow of cash, they become strong — which means they can overcome a multitude of sins they may commit.

    Even so, I’ve really never been too concerned about big competitors, because I have worked in a big company, and I know that eventually they will trip over their own bureaucracy.

    The Small Ones

    Small competitors are even more dangerous than the big competitors. Here are a few reasons:

    Ignore the Competition (Part III): At Your Own Risk

    Part Three in a Series of Four

    competitorsThe way I see it, competitors are everywhere. Some hold greater potential risk for my companies than others; but overall, I can’t spend a lot of time worrying about competitors. They’re going to do what they’re going to do, and I’m going to go down my own path anyway.

    Instead, I tend to keep my attention, energy, and focus on my companies’ tasks at hand. This doesn’t mean that I’m totally oblivious to my competitors. I maintain a general idea of where they are now, where they’re going, and how fast they’re getting there. Other than that, I ignore my competition.

    However, this “ignore the competition” philosophy got me in trouble one time, and it nearly cost me my business! Briefly, here’s what happened.

    Ignore the Competition (Part IV): Venture-Capital Egos

    Part Four in a Series of Four

    Occasionally, you may have a competitor who is building their business using money they’ve received through venture capital (VC) avenues. How will you know when you have a competitor like this? That’s simple, they’ll send out press releases bragging that they just received their first, or second, or third round of funding for millions of dollars.

    I have survived two close encounters with competitors like these during my 27 years in business.

    1. The Blowhard

    In the mid-90s, a VC-funded competitor tried to partner with me. He encouraged me to come to his operation in Redmond, Washington. He showed me how amazing [he thought] his software was. He tried to impress me with the joint-venture relationship he had with the unbelievably large partner (who was his next-door neighbor). He explained that he had received multiple rounds of funding, so he was flush with cash. And then he wanted to pay me to merge my base of customers into his existing software world.

    When I realized that his offer would eventually cannibalize my customers’ businesses, I turned him down. Upon doing so, he threatened that he and his giant joint venture partner would “deliberately put me out of business.”

    I ignored his repeated threats.

    Why You Shouldn’t Be Afraid of Competition

    competitionAs I was just beginning my second startup company in 1988, I called and introduced myself to the two major competitors in that market. One had been in existence for 20 years, and the other one had been around for a whopping 40 years! And there I was, calling to introduce my company to them. My company was a few months old, with a handful of customers, and I introduced myself as a “friendly competitor.”

    Friendly Competition

    The 20-year-old competitor was pleasant in the initial phone call, and we instantly developed a mutually-beneficial relationship that has lasted to this day! The 40-year-veteran competitor scoffed at me during the initial phone call and refused to help me. Then, as the veteran competitor saw us operate with integrity and grow larger than them, we were able to build a friendly relationship with them also. A relationship that still exists today.

    Throughout the years, these two competitors had different seasons when their businesses were spiraling downward, and I easily could have raided their customer lists. But I refused to do that. Remember, I introduced myself as being a friendly competitor … and I took the high road. I like competing, but I don’t like playing dirty. And in my opinion, raiding their customer lists would have been a dirty thing to do while they were experiencing an infrequent struggle.

    Dirty Competitors

    Every now and again (over my 27 years in business), a new competitor comes on the scene and gets ahold of my customer list.