Thursday, September 15, 2011

About Me, Free Business Advise, The American Jobs Act and Simple Math

I have worked for businesses both as an employee and under contract to grow business and cut costs, streamlining efficiency, resulting in not only much higher sales but higher profit on all sales. In 2010 I had a 1-year contract with two start-ups in where the owners had sales experience but no business experience. Both companies did over $1,000,000 in sales their first year in this struggling economy. In company #1, the owners handed me the reigns.  I created their business plan, implemented it, negotiated business to business contracts, insurance, and the rest of their business needs, trained the owners and their staff while they focused on sales and learning. These businesses sold quality products that were not essentials. The owners chose to be their company’s only salesman and to work on a part time basis which is why this number is so low. The end of year NET profit was 16% and I left them with a system that would successfully propel them into the following year.

Company #2 merely consulted me when they recognized problems with their own plan; therefore, I am not privy to all of their numbers. Although, they were more than pleased with the results of what I implemented, they did not hire me to implement an entire plan. They were pleased with their profit and survived their first year in business. Unfortunately, they make poor choices as to where to invest in business growth. Unless this owner learns to focus on both short term AND long term he will keep himself in a struggling short term.

Previously, companies I worked with were excited with my results and voluntarily paid me much more than what we had originally agreed on because of results much higher than they expected. One had an efficiency profit improvement of 241% in less than 3 months while sales reached record proportions. In another, I worked with for 6 months, restructuring here and there which resulted in more than quadrupling their orders for the following year while greatly increasing their net profit margin. I have several other examples and have never failed. Point being; I know my stuff and I get things done.

Many may be surprised at how I prioritize and finding this surprising hurts your business.
#1) Customer Service
There is never an excuse to forget that every customer is buying dinner and making house/rent payments for everyone profiting from the company. Continuously treating every customer with heartfelt appreciation for this grows sales.

#2) Employees
Happy, well treated, positively motivated employees that are properly encouraged by a bar raised high and deserved praise which increases a sense of accomplishment for reaching and surpassing this bar are well armed for providing excellent customer service. Employees are where the rubber hits the road and will excel when they know that when they do, to you, they are all that and a bag of chips. Customers sense this and it creates a beautiful, profitable circle.

#3) Largest Investment
Payroll and employee costs are a company’s largest investment. Staying competitive, don't be stingy. These people create your sales and raise your profits. Invest some of their hard earned company profits back into them. In essence, your good employees are your customers and should be treated as such. Use this as a part of the bar rising. Employees that can afford dinner, house/rent payments and nice things are happier and help you achieve #1 and #2. This creates a beautiful, profitable circle.

When unemployment is low, there is no excuse to have under-performing employees. Investment of time into training and motivating is essential.
With unemployment high, there is less than no excuse to have under-performing employees. Investment of time into training and motivating is essential. Being as employees that can afford dinner, house/rent payments and nice things are happier and help you achieve #1 and #2; wages and benefits are not wise areas to cut costs.

Although competition for business always exists, this difficult economy has made it fierce. Those with the most customers win. Reach #1, #2 and #3 if you want to win big.

In analyzing a company; I keep an eye out for the current above methods as I look through books, software, hardware, accounting practices, vendors, and numerous other items. Everything comes into play in a successful business plan.

One of the many common mistakes I see companies make is the inappropriate use of down time. Down time occurs in every business, whether it is portions of the day, portions of the week, portions of the year, etc. Down time is the necessary time that should be used to grow business. Restructure, fix, create and implement marketing strategies, everything that will create less down time! Down time should be the exciting time of focusing on the future, both near and far. When used wisely, there will not be fear of the future. On the contrary, you will be one of the few prepared to excel in the future. I am not saying that there are not times to cut back. I am emphasizing making down time profitable.

You may have wondered by now why I included the American Jobs Act in the title. This is why I encourage you to push its passage and one of the ways it can be used;

there are an abounding amount of business situations. I am going to pull a couple numbers out of a hat to begin an explanation then use the real numbers that they create.  You can replace with your own real numbers to decide what your benefit will be.

A company with 25 (Hat) employees averaging annual wages of $40,000 (Hat) pays total $1,000,000 (Real from here on in) in wages a year. (Although $40,000 is low, 25 employees make for a very small business) The current annual payroll tax paid by this company is currently $62,000. The AJA would cut this tax in half, providing $31,000 free money in which you can use for growth. For this company, $31,000 easily equates to a starting wage. Hire 1 person. Because of AJA, you will be refunded for the payroll taxes paid on this person. Yes, you will pay $961 to payroll tax before it is refunded back to you at year’s end.
This person is a newbie, therefore will replace or share the responsibilities of a lower paid employee, who will share the responsibilities of a another... repeat this until you have freed time of a strategizing, marketing, focused on growth employee or better yet, team of employees. No, this will not cost time or money. The government is supplying the money for the new payroll cost of the newbie; therefore, the time is covered by the free 40 hours a week you received. Your employee focused on growth has now been provided with free down time in order to prepare for future economic growth which puts your company ahead of the game, meaning you will be ready and armed for higher profits. Ohh, those words give me GOOSEBUMPS!! I'm going to say it again. Ahead of the game, higher profits.
If enough businesses choose to take this opportunity the economy will be stimulated which will provide them with future sales and help our countries debt and deficit.

The new employees that are hired will pay payroll tax, making up for some of the cost of the AJA. People currently receiving unemployment only receive 60% of their previous wage. By attaining jobs that pay as much as their previous positions paid they will increase their buying power back to 100%. This will increase demand for business. They will pay sales tax with this newly acquired buying power. They will pay income tax. The current costs of unemployment to (some) companies and the government will be greatly reduced.

Businesses that cannot adapt to change fail. Successful businesses embrace change and roll with it. More successful businesses are excited for change, predict what changes are ahead and are prepared for it. The most successful businesses create the change and leave competitors behind.

There are many more benefits to the American Jobs Act.

1) We can choose to sit in a stagnant economy while we whine and complain that nothing is good enough and continue to wait to see if there is a more perfect solution. We can watch a decline then focus on deciding who is to blame as we choose to fail.

2) We can grab the tools available to us; make things work and forge ahead the way Americans do.

I know my stuff and I get things done.
I want Congress to do the same.

I am encouraged by The American Jobs Act. I want to see the CBO analysis on the Government impact before going from 97% to 100% support. I would have fully analyzed the numbers myself but thought it would be efficient to see the CBO analysis. What’s taking so long?

Here is an excerpt from a Huffington Post article. The writer made some excellent points. I agree with this much but not some other opinions stated by the writer:
According to the US Small Business Administration, citing the most recent Office of Advocacy and Census data, there are:
• 27.5 million small businesses in the US (of these, about 6 million have employees and 21.4 million are "Solopreneurs" or businesses with no employees); 
• 18,311 business with over 500 employees
The historical unemployment rate is about 4-5%, but just to illustrate how important small businesses are to turning around this economy, consider the following extremely "simple math". With 14 million people unemployed currently, this means that:
• If one out of every two small businesses (50%) hired just ONE person, we would have zero unemployment;
• If each of the 6 million small businesses that has employees hired just two people, we would only have 2 million people unemployed in the US (1.3% unemployment);
• In contrast, business with more than 500 employees would need to hire an average of 655people each to get to hire the same 12 million employees (i.e., to achieve 2 million people unemployed)
What's a more reasonable strategy? Helping the small businesses of this nation to grow modestly by hiring one to two people or trying to get big business to take on massive acceleration in their hiring?
In reality, there needs to be a combination of both, but you cannot ignore the power of what strengthening small business can do for the United States and how completely critical they are to our economy.

Please comment. I enjoy discussing business, business strategies and politics.

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