Financial Cyber-Attacks – A Growing Management Problem (Part 1)

March 8, 2016 by

donk1-300x266Anyone who has been paying even the slightest bit of attention knows that financial cyber- attacks against all types of companies, organizations and governments have increased dramatically.  The attacks have included stealing data to sell, high jacking the information system and holding it for ransom, or taking money.

Any business can be vulnerable and the attacks have hit companies of all sizes.  However, there’s been a significant increase in the attacks on small businesses (SMB).  The Internet now makes it possible for an Eastern European crime syndicate to hit an Akron contractor.

Cyber thieves have become more sophisticated and organized.  They’ve realized that SMBs are low hanging fruit and are targeting them more often.  Small companies don’t have security or IT departments and they seldom have any policies or procedures in place to deter online, or offline, theft.

SMB owners are notorious for not paying attention to the financial health of their companies.  They often leave “all that stuff” up to an accountant or bookkeeper.  They don’t pay attention to, understand or have any checks and balances in place for financial matters.  This leaves them wide open to external (and internal) larceny. 

Cyber criminals are taking advantage of this lack of management oversight – SMBs are becoming their objective of choice.  They’ve discovered that the way into larger companies is through their SMB partners or vendors, who are much easier to hack.  It’s believed the 2013 Target breach, of 70 million customers, was made possible through accessing a HV/AC contractor’s system.

Therefore, SMBs are high yield for cyber-attacks.  It’s simple to gain access and siphon money, with the added bonus of having easy access to larger companies up the chain.  But, it doesn’t matter if your business is the intended victim or collateral damage, either way you lose. 

It has been estimated that half of the small businesses who are cyber attacked close within six months.[1]  They simply can’t afford the loss.  It’s unfortunate, because a conscientious owner – with a little discipline and some common sense procedures – can prevent or minimize the possibility of a successful attack. 

Next month we’ll go over some steps you can take to protect your company with Part 2 of Financial Cyber-Attacks – A Growing Management Problem.

[1] Testimony of Dr. Jane LeClair, Chief Operating Officer, National Cybersecurity Institute at Excelsior College, before the U.S. House of Representatives Committee on Small Business (Apr. 22, 2015), http://docs.house.gov/meetings/SM/SM00/20150422/103276/HHRG-114-SM00-20150422-SD003-U4.pdf

Filed Under: coaching Tagged With: , , , , , , , , , , , , , ,

Do You Have Salespeople or Order Takers?

March 2, 2016 by

business (9)It’s 2016 and just like small business owners all over Northeastern Ohio you’re vowing that this is the year you’re  going to focus on increasing sales.  This is the year the sales department is finally going to “get it in gear”.  Then, just as you did in 2015, 2014, 2013…, you dig  out the old goals and ideas.

For the sake of this article we’re going to assume the sales plan you have is a solid one.  (It may not be, which is a subject for another time.)  So, if it’s a good plan why hasn’t it worked all these years?  The problem with even the best sales plan is that it’s only as good as the people who execute it.

Most small businesses have order takers rather than salespeople.  This isn’t just a matter of semantics.  There’s a real difference in attitude, aptitude and mindset between the two – a difference which will increase or decrease your bottom line.

Order takers

Attitude – He sees his job as giving the customer just what they order.  They tell him what they want, he puts the order in and the transaction is complete.  His attitude is that his role in the sales process is a passive one.  He doesn’t believe that customers would get a greater benefit if he took a more active position.

Aptitude – She’s in the position by default, she didn’t seek it out as a career.  It may have been the only job available at the time or one she simply fell into.  She doesn’t really want to be a salesman, but “it’s a job that pays the bills”.

Mindset – His mindset is static and he fights innovation, believing “things are fine just the way they are”.  He sits in his office waiting for “new” business to come from the company’s existing lead sources (i.e. a RFP, an incoming call or a web request).  He plays solitaire on his computer waiting for the customer or prospect to come to him. 

Salespeople

Attitude – She believes she and the customer (or prospect) are a team, one which identifies problems and finds answers.  Her job is to take an active role in finding and helping people whose lives, jobs and companies would benefit from her product or service.

Aptitude – He likes and wants to sell, seeing it as an opportunity to make a good life for himself and his family.  He has an appreciation of the skills needed to be successful in the profession and works on developing them. 

Mindset – He enjoys his job and likes the challenges of the sales process.  He takes pleasure in “not being stuck in an office” and seeks out chances to interact face to face with future and existing clients.  His mindset is that he’s an expert concerning the product or service and others can benefit from his knowledge.

The question to ask yourself is, “Do I have salespeople or do I have order takers?”  If you have order takers, chance are you’ll be dusting off that unused sales plan about this time next year too.  It doesn’t have to be that way, make 2016 the year you add some salesmen to your work force.

Filed Under: coaching Tagged With: , , , , , , , , , , , , , ,

Use Your Business as a Personal Bank (and Ruin It)

February 4, 2016 by

business (11)Too many small business owners don’t understand the difference between personal and business money.  They don’t “get it” to the point of undermining their success.  Countless people have driven their thriving business into bankruptcy or severely limited its growth.

They have the same basic mindset – my business money is just an extension of my personal money.  While there are a variety of ways this thinking affects their actions there are 2 behaviors which are the most common.

Run everything through the business

They believe the business can and should absorb the costs of personal items (i.e. kid’s college tuition, boats, cars for family not working in the company, vacations).  But, that’s what personal money – salaries, savings accounts and loans – should be used for. 

They use the company account as a bank that provides interest free loans, which never get paid back.  Putting aside the tax consequences if they get caught, the bottom line is that most small companies can’t support the cost (overhead) of personal items. 

Money isn’t unlimited and too often the business starts to suffer.  The money to buy a needed piece of machinery, hire more personnel or a new service truck is tied up in the home basement remodel, a family country club membership and a new motorcycle.

Use the company as an ATM

Another way of using business money as personal money is raiding the coffers.  They may or may not run any personal items through the books, but believe the cash assets are fair game.  They unofficially take money out in addition to officially paying themselves a salary and bonuses. 

Some owners take “just a little” cash.  One took $30 a day out of petty cash for pocket money.  He was shocked when the accountant pointed out he was getting a $7,500 bump in salary ($30 x 5 days a week x 50 weeks a year).  A raise he hadn’t formally given himself, because the company couldn’t afford it.  Others take larger amounts, sometimes hundreds or thousands.

But, regardless of how the cash is siphoned off it takes money to make money and if the business doesn’t have enough operating capital, at best, it becomes impossible to grow it.  At worst, the financial hole is dug too deep; it can’t survive the drain and folds.

No matter how it’s done using the business as a personal bank is short-sighted and self-defeating.  Everyone knows, or should know, the story of killing the goose who laid the golden eggs, and yet many don’t learn from it.  It’s unfortunate, because when used properly business money can be parlayed into bigger profits, which means a higher salary and increased bonuses.

Filed Under: coaching Tagged With: , , , , , , , , , , , ,

Retirement For The Small Business Owner

January 19, 2016 by

64002400

Are you thinking about retiring soon? Are you financially prepared? If you are a small business owner or  self-employed, are you selling your business? There are many questions that as a small business owner or self employed you have to answer before you want to retire. If you are prepared financially, are you prepared to hand the business over to a family member or business partner? If that is something you haven’t thought about, talking to a small business consultant to help you with the succession of your business may be a good idea, especially if you are thinking about staying involved in the business.

For more relevant small business news follow the links below.

Making retirement plans for a small business

Q. I have a small business and I’m finally ready to start a retirement plan. I’m the only employee. What’s the difference between a 401(k) and SEP-IRA?

— Small biz

A. It’s great to hear you’re ready for a retirement plan.

You do have several choices, and the best plan for you depends on how many employees you have, how much money you’re able to save each year and how much the plan will cost to administer.

First, let’s talk about the benefits of 401(k) plans and SEP-IRAs.

Contributions to both of these retirement plans are tax deductible by the business and neither has a minimum amount that you must contribute each year, said Laurie Wolfe, a certified public accountant with Lassus Wherley in New Providence.

“Both of these plans offer flexibility with regards to timing of contributions, which makes sense for a business with profits that tend to fluctuate from year to year,” Wolfe said. “Both plans need to be set up by Dec. 31 of the year you wish to make contributions, but deposits can be made all the way up to the filing deadline of the tax return — including extensions.”

Can chambers of commerce stay relevant for small business?

For years, chambers of commerce have proven valuable for small businesses across the nation. But unless they keep up with social media and other technologies, chambers will struggle to stay relevant.

​For years, chambers of commerce have proven valuable for small businesses across the nation. They act as a collective lobbying voice for businesses, while enabling small business communities to seek and share advice, join events and network with peers.

But the U.S. Chamber of Commerce was founded more than one hundred years ago, long before the Internet and social networks changed the face of small business.

Today, one might question the necessity of the chambers, especially those that have not stayed relevant by adequately using the Internet or available social technologies.

YouTube Appeals to Small Businesses. Will They Spend Money With Alphabet Inc.?

A Homer Simpson video targets local advertisers. The market is huge, and big digital players such as Alphabet and Facebook are eyeing an increasingly bigger share.

YouTube, part of the Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL) empire, rolled out a video last month starring the Simpsons characters that targets small businesses as advertisers on the popular Web video platform. The move highlights what’s soon to become a major battlefield for the big online players such as Google and Facebook (NASDAQ:FB)and the ad tech they’ve been developing.

The video, which plays off Homer’s famous scheme to start a snowplowing business, shows the character trying to get his “Mr. Plow” business off the ground by tucking promotional leaflets beneath car wipers, only to see them all blown away by gusting winter winds.

Filed Under: coaching

Entrepreneurship – What Kind of Smart Are You?

January 11, 2016 by

business (7)There used to be only one kind of “smart”.  You took a test which measured your intelligence quotient (IQ) and were assigned a number based on the results.  The higher the number, the smarter you were and the more likely you were to be a success.  Fortunately, that way of thinking is now known to be flat out wrong.

We all know someone who is book smart, but no one can work with her because she’s completely clueless on how to interact with people.  Then there’s the charming, personality guy who doesn’t know how to turn a profit.  There are many kinds of intelligence. 

Word smart

Word smart people know how to communicate their ideas, visions and goals, which inspires others to support them. They’re able to create loyalty in employees, sell customers, write business plans, teach using funny and interesting stories, influence important people and raise money from investors.

Words matter.  Lack of communication, across the board in all industries, is the biggest complaint workers have about their bosses. It’s a fundamental part of human nature to want to know what’s going on and, more importantly, how we’re going to be affected by it.

Self smart

One of the abilities of the self smart person is the capacity to understand herself (i.e. motivations, limitations, strong points, fears, hopes, wants vs. needs, drives) through others’ eyes.  It’s impossible for us to see ourselves as others see us, we all have blind spots.  Some peoples’ spots are much larger than others – you know who they are. 

Successful entrepreneurs welcome people who challenge them, who “call them on their s***”.  Self smart people seek out feedback from others, it gives them insight, which they use to learn, grow and move forward. 

Number smart

Successful people comprehend profit, loss and margins.  They use financial information to make decisions and do their planning.  This occurs over the life span of the company, beginning with start-up costs and ending with exit strategies.

The lack of number smarts is the biggest problem most entrepreneurs have.  It’s estimated that 80% of businesses fail in the first 5 years because the owners weren’t aware of or didn’t care how vital it is to know and do the math. 

People smart

This kind of smart is having good social or people skills. It’s being able to read and interact with all types of individuals.  These are people who’re energized by and like to work with others. 

Their knack of effectively interacting with people shouldn’t be confused with an ability to communicate (word smart).  They often talk at, rather than with others.  They’re the personable “glad handers” who can efficiently work a group without really saying anything.

If you want to be a successful entrepreneur it helps to know which kinds of intelligence are your strengths and which are your weaknesses.  You can focus on your positives and learn to overcome or compensate for your negatives.  The more you know about them the better chance you have of achieving your goals. 

Filed Under: coaching Tagged With: , , , , , , , , , , , , , ,

A Way to Limit Common Management Mistakes

December 14, 2015 by

64510516You’ve probably heard this saying, “Insanity is doing the same thing over and over again and expecting different results.”  It’s commonly attributed to Albert Einstein, but that’s a mistake – the exact origins of the quote are unknown. However, as mistakes go it’s a “no harm, no foul” one.

Like this one, some mistakes are little ones, and then there are those big enough to close businesses.  The ones big enough to close businesses usually are the result of the owner’s and manager’s repetitive, unproductive behaviors (i.e. insanity).  The kind of mistakes that they repeat over and over, regardless of facts which show the behavior isn’t working.

Maturation in humans and animals is the process of being able to learn from our mistakes, which results in positive behavior changes.  That’s what we call experience – I tried this, it didn’t work, I learned from it and will try something else that’s hopefully better (and repeat). 

There are several common management mistakes which most people make.  However, there’s a simple time tested way to avoid or minimize the damage from them.  A way which has evolved over centuries and has the power of experience behind it – ask for help. 

The majority of small businesses start because the owner knows something about the product or service.  He’s worked in a specific field for someone else and then gone out on his own.  He’s good at what he does and knows his product, but what he’s not good at is the “other stuff” (i.e.  marketing, accounting, legalities and regulations, human resources, taxes). 

Nor should he be.  While those areas are important in running a successful business, no one has the level of expertise or experience to understand them all.  He shouldn’t expect to be good at or knowledgeable about everything it takes to run a profitable company.

Yet, overwhelmingly small business owners expect just that of themselves.  They won’t ask for help, because they see it as a personal failing.  They believe they can and should figure it out for themselves.  However, they get sidetracked by trying to do the things they aren’t good at and lose focus on their strengths.

One of the best ways to limit mistakes in business (and life) is being willing to learn from others.  Learning from other’s mishaps saves us from having to go through the costs and hardships of making them ourselves.  There are more than enough chances in life to mess up, why not take the opportunity to let someone else do it for you when possible.

Filed Under: coaching Tagged With: , , , , , , , , , , , , , , , , , , , ,

So You Want to Buy an Online Business?

December 4, 2015 by

business (2)There’s a cycle in the development of any new technology and how it enters the business community.  Part of the growth process for any new idea is to be a good enough model to establish a business around it, and have that business become valuable enough to resale.

In the small business community we’re beginning to see the maturing of the online business market.  Up until very recently when people talked about owning an online business they were talking about starting one.  But, that’s beginning to change – small online businesses are trickling into the business-for-sale market. 

Owning and running an online business, like any business, has its positives and negatives.  The way to increase the positives and decrease the negatives begins with the buying process, nothing takes the place of solid due diligence.  Here are 2 vital areas to consider.

Technical

An online business is in a volatile and rapidly changing industry.  How much technical knowledge do you have and how much is needed for the business?  Do the ideas of regularly tracking site traffic metrics, developing SEO tactics, rooting out plagiarized content and maintaining your legal/ethical responsibly for security excite or bore you?

If you can’t or don’t want to manage the day to day technical issues you should have answers to these questions – who will, how much will they cost and how hard are they to find?  The problem of attracting and retaining qualified people is an on-going issue that’s not going to be resolved any time soon, if ever.

Financial

Be sure to assess the company’s actual value, risk and outlook.  Traffic totals are routinely unknown, manipulated and lied about.  Traffic is money, so don’t accept guesses or vague numbers.  The financial information should line up with the site’s metrics, all of which should be hard numbers gathered over a realistic time period.

If you aren’t an expert hire someone who is, someone who knows the industry’s past and current benchmarks.  As well as, someone who understands and has the data for the future outlook specific to your product or service.  Over inflated forecasts for the financial potential of online businesses are legendary.

Don’t be swayed by the hype.  The process of buying an online business is the same as buying one in a more established area (i.e., retail or food store, machine shop, insurance agency).  Taking your time and doing the due diligence is still the key. 

Filed Under: coaching Tagged With: , , , , , , , , , , , , , , , ,

4 Ways to Increase the Bottom Line

November 16, 2015 by

donk1-300x266The majority of small businesses fail because they aren’t able to generate enough operating capital, they simply run out of money.  But, there are ways to prevent this.  The lack or loss of money is overwhelmingly caused by internal problems.  Contrary to most owners’ beliefs, external forces are responsible for just a fraction of small business failures.

Companies run out of money because the owners won’t or don’t know how to address their structural and operational problems.  Commonly, the actual causes of the typical business’s collapse can be traced to 4 problem areas.  Therefore, if addressed in a timely manner, profit and profit margins can be increased when the problems are identified and fixed.

Key to an efficient operation is putting the right person in the right job.  It’s vital to accurately assess employees’ skills, everyone has strengths and weaknesses.  This is especially true in small businesses where family and friends are often in jobs they aren’t suited for.  Putting people in positions they’re not trained to do or just aren’t capable of doing affects the bottom line. 

Lack of accountability – for owners (who usually don’t hold themselves accountable for their actions), managers and workers – is an enormous problem in workplaces.  This area all by itself can financially affect a business to the point of closing.  Employees, owners and managers must be accountable for their responsibilities and behaviors. 

Another area that directly affects profitability is lack of or poor internal and external communication.  Billions of dollars have been lost simply because somebody didn’t pass on important information, talk over a problem, speak up with a concern or listen enough.  Prioritizing effective communication, at all levels, is a smart fix.

The final area, improve production efficiency, is a no-brainer.  Some of the benefits include: it’s cheaper to produce the product, requires less rework, increased customer satisfaction, is easier to sell, generates referrals and decreased waste. All of which contributes to increased earnings.

These are 4 main ways a company can increase its bottom line.  If a small business owner is willing to learn some new skills, and consistently apply them, the monetary and non-monetary rewards (i.e. time off, happier employees, secure future, increased quality of life) are well worth it. 

Filed Under: coaching Tagged With: , , , , , , , , , , , , , , , , , , , ,

Entrepreneurial Stubbornness – the Good, the Bad, the Ugly

November 4, 2015 by

59948705Persistence, not listening to the nay-sayers, determination, following your dream: All things which contribute to starting and building a thriving business. All things which are fueled by good old-fashioned stubbornness.  I have yet to meet a successful small business owner who doesn’t have a very large streak of it.  Unfortunately, that’s not always a positive.

The Good

Stubbornness is a positive quality when it’s driving you to create, build and sustain a business.  The desire to “do things my way”  is a powerful motivator.  It’s what keeps you on track to work the long hours and make the hard decisions.  It has built multi-national Fortune 100 companies, as well as the local machine shop.

The Bad

As the saying goes, “There are 2 sides to every coin.”  There’s a bad side to entrepreneurial stubbornness.  It’s human nature to become attached to our own viewpoint – not only do we get stuck in ruts, we furnish them for additional comfort.  This makes it difficult to see other’s (accountants, consultants, employees, managers) points of view and listen to their ideas. 

Ideas which are good for you and your company.  When a company is growing there’s a juncture when the owner should shift from “a one-man show” style of management to a team approach.  Many don’t make that change, they stubbornly hang on to old ideas and ways of doing things, which often leads to the ugly.

The Ugly

There comes a time when an owners’ refusal to modify his inflexibility crosses the line from poor management skills to self destructive behavior-“the old way is good enough, no  one is going to tell me what to do”.  Resulting in — due to the owner’s unwillingness to recognize and adapt to changing ideas, technologies, employee’s needs and market requirements — a bankrupt company. 

Good entrepreneurial stubbornness often turns bad and ugly over time.  Owners fail to understand that we all need to evolve if we are to thrive in an ever changing world, and we have to be willing to listen to others to do so.  As Benjamin Franklin said, “We are all born ignorant, but one must work hard to remain stupid.”

Filed Under: coaching Tagged With: , , , , , , , , , , , , , , , , , , ,

It’s Time to Get Serious About Strategic Planning

October 6, 2015 by

business (11)It’s that time of year again. The time of year when companies are — or should be — developing their strategic plans for 2016. Compared to larger companies small business owners are in an enviable position. They have more control over the development and execution of their plans. They can have a greater impact on the profitability and success of their business, with significantly less hassles and politics.
But, the downside is they have fewer resources (people, experience and knowledge) to draw from while formulating their plans. Often, in a small business, owners don’t know where to start or what’s needed to put one together and they need to figure it out for themselves. Here are 3 things they can do to fill in these gaps.
Combine data with intuition
Successful planners strike a balance between relying on just their gut or just the numbers. Usually, an owner falls into 1 of 2 camps — the “I don’t even look at the numbers, I go with my gut” guy and the “I’m a by-the-numbers, they don’t lie” guy. Neither is productive for the long term health of the company, good strategic thinkers use both to counterbalance each other.
Develop a trusted group
The most effective planners solicit information from others (i.e., peers, experts, employees, managers, vendors, customers) who’re successful. Because no one can know everything they seek out knowledge they don’t have. They cobble together their own panel of specialists. However, this isn’t group decision making — it’s about owners gathering data and opinions, and then reaching their own conclusions.
Be willing to learn
Questioning and listening aren’t the same thing. We all know people who ask questions, then don’t pay attention to the answer. The best strategic thinkers are open to what others have to say. They don’t substitute someone else’s judgment for their own, but they’re willing to learn from others.

In addition, not only do they seek knowledge, they look for insight from others. Businesses fail everyday because the person(s) in charge made mistakes based on uniformed, misguided assumptions, ideas and biases. Effective planners learn from mistakes and don’t do them again; ineffective planners make the same ones over and over expecting different results.
Successful, well thought out strategic planning relies on good critical thinking skills, which leads to good decisions. As one of our greatest generals Dwight D. Eisenhower said, “In preparing for battle I have always found that plans are useless, but planning is indispensable”.

Filed Under: coaching Tagged With: , , , , , , , , , , , , , , , , , ,
« Previous Page
Next Page »