business manager Archives | Page 10 of 10

Think of Your Business Clients as “Fans” and You, a Rock Star

Music Think Tank posted an article, How Well Do You Know Your Fans? that define different segments of a band’s fan base. As you read the article, substitute the word fan for business client. We all have business clients that appreciate our services on different levels. Levels of dependability, confidence, and of course honesty. Business clients can be classified in similar groups as rock fans. The questions to ask as a business owner is why are some clients more dedicated than others? What did I, as a business owner do that impressed clients to be loyal to me as some are. Lastly, once you have answered these questions, adjust your strategy in business client relationships and procurement. Learn by the mistakes when losing business clients, and duplicate the attributes you possess with those who are your greatest fans.

Don’t Drop all 20th Century methods of Business Generation because we are in the 21st Century

This Wall Street Journal article offers examples on how business that tried social networking (SN) and search engine optimization (SEO) prospered when they combined them with old tried and true methods of generating business. SN and SEO are a great way to build a bigger fishing net, but you must throw the net out in a school of fish and personally reel it in. Good old fashioned busines sense can go a long way.

https://online.wsj.com/article/SB10001424052702303436904575570842639137342.html

Need Help Choosing a Retirement Plan? Use this Interactive Tool to Help you Decide

Retirement Plan! I can’t even make ends meet. I can’t use bread and butter money to stash away for the future!

Sometimes, that is statement I hear from individuals and business owners. So many just struggle through the daily grind, and don’t think about their retirement. Some small business owners think they have a good plan, i.e., place the entire risk on their business. When they are old enough they will sell the business to finance their retirement. Both of these positions are alarming, and are missing the biggest advantage to a retirement plan: time. When you invest tax deductible money in a retirement plan, it grows tax free over many years. If done correctly, compounding growth can set you up for a nice nest egg when you need it.

Ok, so I got your attention, sort of. But which retirement plan? Well, the AICPA has launched a nice tool to help you decide. Check it out.

https://www.choosingaretirementsolution.org/

Music App Swims in an (Apparent) Blue Ocean Strategy Looking for a Long Tail

You remember the music industry, don’t you? You know, the enterprise sunk by pirates on dry land? But, light shines brightest in the darkness. An article came across my computer that shows the ingenuity of these creative enterprises. The article is New iPone apps are changing how music is marketed and made. This is a good example of a strategist using the Blue Ocean Strategy to create a long tail. (See Chris Anderson’s video on the Long Tail and the music industry).

In the IPhone article, the creator of the BandApp has designed an app that helps bands to launch their own virtual record companies. The app “works as a record store, marketing department and cameraphone-wielding stalker combined.” The app seems to take out the middlemen between the band and the fans. This of course is creating a blue ocean strategic plan for both the bands and the app owner because the traditional record company cannot compete on this level. The record company can advertise more, create more tours, but ultimately there will be forced to confront this app (or some derivative of it) head on. There will be no avoiding it. The app is creating a blue ocean where there is no direct competition.

Likewise, the owners of BandApp also are looking for the long tail. “Equally, rather than trying to sign five bands in hope of selling a million records each like a record company, he can, without risk, “sign” 100,000 bands, even if they’re only likely to sell 50 records each.” What that means is instead of focusing on the big-selling bands in the top tier, they are focusing on all the rest of the bands regardless of popularity. On an X-Y axis, with the Y axis representing dollars, and x axis representing band ranking, the graph would look like a big mountain with an infinitely long tail. That tail gets smaller as it stretches to the right. This is the money-making arm of BandApp.

During times of economic gloom, strategist who find their blue ocean will more likely survive now, and maybe prosper when the economy improves. The long tail combines the strategy with the new viral markets.

Play by the Rules with S-Corporations

The use of S-corporations has been rising in recent years. However, the challenge is to operate them correctly so as to not create a fatal mistake invalidating your S-corp election, or other problems. Here are some areas to be careful

Make sure you give yourself an adequate salary. Many S-corp owners take only draws thinking that they can escape all Social Security and Medicare taxes. The IRS is very keen to this one. There has been some attempts to make all S-corp income subject to self-employment tax. This legislation would eliminate the need for reasonable salaries.
Be careful when you pay back your loans to the S-corporation. If you used those loans as part of your basis to take losses, you may have to recognize income on their repayment.
In order for an S-corporation to have a single class of stock, the economic interests must have the same rights to distributions. If partners are to receive disproportionate distributions, then maybe an LLC is your best choice for a tax vehicle.
When an S-corp shareholder leaves, be sure allocate the activity properly and provide all applicable elections.

If you have an S-corporation, consult your tax advisor when making decisions that may affect its status.

Selling a Small Business?

So you want to sell your small business that you built from scratch! That’s great, but are you going to sleep at night? Here are a few tips you should consider when selling a small business:

Know what your small business is worth. Compare your small business to the industry, and the regional market share you possess. If you are the value of your small business, you will have a hard time selling it for what it is worth.
Make a liquidation plan of your small business. There are “asset sales” and “stock sales” of a small busines corporation. Find out the difference and consult a financial advisor about which would be better.
Value your small business by its individual assets, first. This valuation will help you understand your tax picture. You should know this before you sign the contract to sell, or maybe before you accept an offer.
Don’t warrant anything. Your small business financial statements are probably not audited, so don’t act like they are. If they are audited, let the CPA attest to its validity. Be careful of what assurances you make about your small business.
Have you considered the option of consulting to your small business after you sell it? This could build a comfort level in the buyer and intice them to make the deal.
Consult your financial advisor before making any decisions to sell your small business. It could be the difference between crafting a great deal, or life-long regret.

Strategic Planning–Avoiding Sharks with a Blue Ocean Strategy

When I hear, “Think outside the box,” I cringe. I believe that this command frustrates analytical people; they do not know what to do, or how to do it because there are no rules or assumptions.Instead, I like to tell people to use the right side of their brain – the creative side.A strategic planning approach, The Blue Ocean Strategy, facilitates this type of thinking.

Blue Ocean Strategy (BOS) is a corporate strategy and business book written by Professors W. Chan Kim and Ren© Mauborgne, of INSEAD. The strategy attempts to create an uncontested market space, and thereby make competition irrelevant. Dim & Maubourgne initially called this “Value Innovation,” in 5 articles for the Harvard Business Review published before their 2005 book. BOS is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000).

There is no easy way to quickly describe BOS, except by example. Cirque du Soleil is a good example of a company that meets the BOS criteria (focus, divergence, and compelling tagline).For example, compare this circus to Ringling Bros. using the following factors: star performers, animal shows, 3-ring arenas, aisle concessions, theme, unique venue, and artistic dances. Cirque du Soleil concluded that the public really did not want star performers, animal shows, 3-ring arenas, and aisle concessions.In addition, star performers and animal shows were very expensive.They decided to do away with the three, but added theme, unique venue and artistic dances. This created a unique market because they were discarding what the public did not value, and added new aspects that the public would value.Instead of being in a “bloody” red ocean competing on price or quality, they could be competitive by offering a new experience for the audience.

If you are in the artistic world, maybe I can stretch this example to Paul Simon.In 1986, he could have composed music using the same style such as folk (Simon & Garfunkel), or a pop (Kodachrome).However, he used his artistic ability to expand his use of world music. In 1986 he released Grammy award-winning Graceland, which featured the groundbreaking use of African rhythms and performers. In 1990, he followed with the album The Rhythm of the Saints, which featured Brazilian musical themes. These albums helped to popularize world music as a genre.It essentially created a blue ocean for him without competition in a new genre.

Now this is not to say that every blue ocean does not turn red, because once the idea is manifested, there is a window of uncontested opportunity.So, what a business must do is continually develop blue oceans and keep ahead of the competition.

This alone will not confirm success. To stop at a strategic plan level will only bring frustration, because the process will not be complete. In order to be successful, you must properly impliment, monitor, and alter a strategy.

How do you include social networking in your business strategy?

I remember when I was a little boy, how I used to marvel at the futuristic gadgets that Walter Cronkite would display in the Sunday night program, The 21st Century.The program was designed around scientific advances that could re-shape our lives in the next century.The 21st Century seemed so far away to a little boy in the 1960s.But here we are.

In the 1996, my interest was piqued with Bill Gate’s books, The Road Ahead. In this book, Bill Gates predicted that we were nearing a society where financial transactions, product research, file transfers, and such could be transacted though the internet on a device the size of a checkbook.

How ironic, within the next decade, Steven Jobs would spearhead the invention of the Iphone.Users now bring up all sorts of applications including social networks like Facebook, Twitter, etc. These social networks are becoming the foundation of the new business communication.

But, how do these social networks impact business? So many businesses just stick their toe in the SN waters. Can business really take advantage them?

The answer is a guarded “yes”.

The advantages of such networks are communication and visibility. Implemented correctly, vehicles like FaceBook, LinkedIn, Twitter, blogging, and others can enhance your company’s visibility, and draw the world to your web site.With increased visibility comes opportunity.
There is a downside to these opportunities, however. Employees can post criticism on blogs that may hurt the firm’s reputation.In addition, the opportunities with any of these networks can be a bottomless pit sapping into employees time with no immediate response.

Like any tool, the internet can be the piece of your strategy that increases your market share, if used correctly. If used incorrectly, it could be a wasteful tool.

So, here are a few basic tips when your business ventures into social media:

Concentrate on building relationships, not just numbers. It’s nice to see the numbers grow, but if many are not viable business contacts, then so what?
Don’t spam people with your services. Give them something to take home with them every time you connect.
Build partnerships among those who have similar business interests, or work in a similar industry.
Don’t just copy what others are doing in your industry. Set yourself apart by using your core competancies to create your own uncompetative ocean (i.e., Blue Ocean).
Be consistent, be creative, but be real in your daily social networking business strategy.
Write about relevant topics that concern your market place.

These six points will give you a start in developing a real social networking strategy for your business. A very important point not listed, though is that you start today.

So what have we learned about the financial demise of Nicolas Cage, and his entertainment accountant?

You hear the story all too often, High profile entertainer goes broke. Or Entertainer blames entertainment accountant for bad tax advice. The first question the public asks is how? Doesn’t this entertainer earn $20 million a movie? That is more than ten people make in a lifetime. What did his entertainment accountant do with it? Steal it? Invest it in speculative investments?
I have worked as an entertainment accountant, aka business manager for entertainers for over twenty-five years. The public doesn’t see the view of the entertainer that we do. In fact, the persons usually in the inner circle are the entertainment accountant, attorney, agent, and publicist. Remember, the artist’s image is everything, and if that image conflicts with reality, something is bound to surface at times. Look at Charlie Sheen, or Tiger Woods. Their personal inequities surfaced because it is extremely hard to cover. The same is for the finances. A good entertainment accountant knows when a client is spending beyond their means. I have seen entertainers’ buys real estate all over the world, planes, boats, and rare art. As an entertainment accountant, my position is sound the alarm when a client nears a crucial financial point. That alarm gets louder as their situation gets more desperate.
So, did Nicolas Cage’s entertainment accountant sound the alarm? Did the entertainment accountant contribute to such a travesty? The court records may have told us the answers to these questions.
So what should you learn from this? Well, many of you may not be celebrities, so you wouldn’t hire an entertainment accountant. But, you can act as your own accountant by looking at your financial situation objectively. That is what entertainment accountants do. We don’t look at the things that a client wants, but at the relationship between what the client earns and spends. We also look at the future, and how they will survive when they aren’t hot anymore.
So how to you start?

Act like your own entertainment accountant. Look at your credit cards first. Are you paying them off each month? If not, cut them up live off cash at least for two months. You will see what you really need to survive in your budget.
Are you paying your taxes concurrently? One of the biggest worries of entertainment accountants, is to come to the end of the quarter, or year and not have any funds to pay taxes because the client has spent it. If you are self-employed, think about paying your taxes weekly. You can do this by opening a separate bank account.
Are you using your house as a piggy bank? As an entertainment accountant, the first thing I look at when a client needs to borrow money from their house is why, and what return should we expect. Don’t borrow to spend lavishly. Have a plan on paying it back.

So, if you cannot afford an entertainment accountant, or if you are even not an entertainer, be smart.