Monday, November 5, 2012

Buying A Business

In the business broker community there is a review process that helps a buyer determine if a business purchase makes sense or not. This check can be done by a Fortune 500 company where everything is figured down to the penny and takes 1000 hours of research or it can be done by a small main street shop buyer who figures it out in 1 hour. Each item in this review process requires a decision. This decision can be based on extensive research or just on a reasonable guess.
The beauty of this process is; how long you want to spend on doing this activity is totally up to you. As we review this process, I will explain the variables of this system so you can make the necessary decisions where needed. Remember, this is only a tool to help you make decisions about a business purchase; it is not a sure-fire foolproof system. I will just lay it out for you and you make your own decision as to the validity of this formula for analyzing a business purchase that you may want to make.
The Sanity check requires two mathematical formulas, which require dollar amounts or other numbers to be entered in each formula. The math is calculated and then the results are compared against the purchase price. If it doesn't work out the way you wanted, you have the option of then going back and change some of the numbers and do the calculation a second time.
The two formulas are:
1. SP + WC - BF = CR
Sale Price + Working Capital - Borrowed Funds = Cash Requirement
2. SDE - FMW (FO) - DS - ROI = Extra Profit/Loss
Sellers Discretionary Earnings - Fair Market Wage (for the owner) - Debt Service - Return on Investment (Cash Requirement x Interest rate -Stated as a Percentage) = Extra Profit/Loss
Since each item in the formula needs to have a dollar amount determined, we will define the terms and then discuss how the dollar amount is derived at.
Terms Definition:
Sale Price: The price that is being asked for the business or the price the buyer is thinking of offering. Depending on when you do this analysis. If you are trying to determine an asking price you would calculate all the other numbers in these two formulas to determine what should be your offering price. We will do examples to make this clear later in this article.
Working Capital: The short-term assets minus the short-term liabilities is the accounting definition. The simple explanation would be the amount of money necessary to be invested by the buyer to run the daily operations of the business, once purchased. This would include monies tied up in inventory, and accounts receivables. Money invested to pay the landlord's or utility company's deposits. Also included is the money spent on the business purchase to cover the loan origination costs and purchase escrow fees when buying the business. It is the total funds invested into the business to keep it running. The down payment given to the seller is not part of this number, since it is included as a separate item.
Calculation notes:

1. Cost of inventory:  $_________________  (+)

2. Accounts receivable: $_________________  (+)

3. Landlord deposit:  $_________________  (+)

4. Utility Deposits:  $_________________  (+)

5. Escrow fees to purchase: $_________________  (+)

6. Loan origination costs: $_________________  (+)

7. Short term liabilities*       $ _________________  (--) 

Total Working Capital $_________________
* Short-term liabilities are defined as liabilities that are to be paid off within 1 year - accounts payables and the part of any notes payable that are to be paid within 1 year.
Borrowed Funds: The loan made for a business purchase from a bank or private party. The private party can be the seller or some friend or relative who might be willing to make a loan. This is borrowed money that must be paid back to someone at some time in the future.
Cash Requirement: This is the invested cash required to both buy a business, and working capital-to run the business. The amount of cash needed to make the business purchase and run the operations of the business after deducting all borrowed funds, regardless of source.
Sellers Discretionary Earnings / Owners Total Benefits: This is the total of all the non-business related benefits going to a business owner or his family on an annual basis that have been paid for, by the business. Included in this is definition are taxable profit from operations, unreported cash income, owners salary, salaries to non-working family members, any amount over the fair market value of salaries paid to working family members, family auto expenses, family telephone, family office expenses, health and life insurance for any or all family members, pension plan/ profit sharing contributions paid for the benefit of family members. This can also be stated as the reason why most people go to work everyday; they get family support for working.
Calculation notes:

1. Taxable profit from operation   $_________________  (+)

2. Cash      $_________________  (+)

3. Owners Salary     $_________________  (+)

4. Salaries of non-working family members  $_________________  (+)

5. Amount over the fair market value of wages 

of working Family members                $_________________  (+)

6. Family Auto Expenses    $_________________  (+)

7. Family Telephone Expense   $_________________  (+)

8. Family Office Expense    $_________________  (+)

9. Health and Life insurance of

Any/all family members    $_________________  (+)

10. Pension plan/profit share family members $_________________  (+)

Total Seller Discretionary Earnings:  $_________________Return on Investment:  We need to have this stated as a dollar amount in Formula two. ROI is calculated as follows:
Cash Requirement X "a Percent" - the greater the risk, the higher the percent
First we must determine what the interest rate return we wish on our investment. This is a very subjective percentage and a change in this number can change the whole result of this analysis. If it is of any help, many financial investors in "Corporate America" feels they need to get a 20% return on their invested capital. Companies do not always make money and therefore the possible loses are built into the ROI. Some of the reasons are: companies are bought and go broke, overseas competition causing expectations of growth and income not to be met, and lastly government regulations periodically close whole industries. These are just some of the many risks involved in owning a business.
Putting your money in a bank has little risk, because the Federal Government insures your deposits in the bank. The stock market has a lot of risk that many people do not fully understand, causing them to accept a long term ROI of 10-13% from mutual fund investments. A 95% drop in stock prices like the stocks or what happened when we had the oil embargo in 1992 are indications that the stock market can be a much higher risk than people realize.
I personally feel that owning your own business and buying real estate are much lower risks, providing a much higher return. The proof of this can be found in the number of people who got rich in real estate and the over 25 million small business owners across this country.
Figure out what ROI you want and insert this number as .20 amount to represent 20% or .06 to represent 6% ROI. This is an annual return on invested money.
Once you have a percentage return on your investment we need to multiply it by the Cash requirement in order to come up with a dollar amount return needed. This restated is Dollars invested x percentage (stated as a decimal) = Dollar return on investment.
1) Investment of $50,000.00 @ 6% Return On Investment (ROI) would be calculated as follows: $50,000.00 X .06 = $3,000.000 (Dollars return on investment)
2) Investment of $50,000.00 @ 20% Return On Investment (ROI) would be calculated as follows: $50,000.00 X .20 = $10,000.00 (Dollars return on investment)
Debt Service: The reason we need this number is because this is a financial expense of owning a business. It is not an operating expense of the daily business operations but if you have debt, in your business, you must be able to make the payments, out of the business operations profit. Usually this payment is mostly interest and a smaller portion is the principal reduction of the loan balance.
Most professionals deduct the whole payment when doing this analysis, because the business must generate enough profit to make the whole payment. My personal preference is to just deduct the interest portion and to add the principal portion of the payment to working capital amount needed. This counts as more money being put into the business just like financing inventory and/or accounts receivables.
For simple one-hour analyses it is not worth splitting up the payment. In the case of a very large principal reduction payment it could be unreasonable to not split it up. It is up to you. You can always try it both ways, since this is a process to raise your understanding, not to come up with a fixed answer of, yes! it is a buy or no! it is not a buy.
Fair Market Wages: This is an amount that the new or old owner would be paid, if he were an employee not the owner. If the owner were the company salesman and also the company bookkeeper working a total 60 hours a week, a reasonable salary would have to be determined for each job. As an example only, lets say that an outside salesman, in your industry, could make $40,000 per year. And a bookkeeper usually charges $15 per hour. The salesman might very well work 50 hours at this job to earn this salary. If a bookkeeper would work 10 hours per week doing the bookkeeping that would mean 520 hours per year (10 hours x 52) times $15.00 per hour which comes to $7800 per year for the bookkeeper. The two Fair Market Salaries would come to $47,800 ($40,000 + $7,800).
Sometimes the market salaries are not so easy to figure. Lets take an owner who owns a 99-cent discount type store. This shopkeeper works 70 hours per week behind a counter in the store. You can hire a counter person for $7.00 per hour so this becomes (70 hrs x $7.00 per hour x 52 weeks).
Then you start discussing that this $7.00 per hour counter person would not be able to do the buying. You might want to figure a purchasing agent's salary. This can be done or you can just do simple numbers, leaving the salary only based on a counter person's wages.
By now you have the information to come up with numbers to put into the formula. Let us create a scenario. This was a transmission shop. The customers pay COD-upon pick up of the car. The parts inventory is from old transmissions and show on the books as worth nothing. The seller-owner is asking $75,000 for this business that he is able to takes out $50,000 in profit or benefits. In an interview, the owner mentioned that if a buyer will put $40,000 as a down payment he would carry the $35,000 balance at 5% interest for 5 years. By observation, we can see that the current owner sits in the office and does the bookkeeping, orders parts and makes bank deposits. He has a manager who bids jobs and handles production. No one is going out and calling on prospective business, which is one thing the owner should be doing with his time, but he is not doing. Lets go through what the numbers are with this example.
Math Formula #1: Sale Price + Working Capital - Borrowed Funds = Cash Requirement
Sales Price: $75,000
Working Capital: The business requires $10,000 cash infusion upon close of escrow, mostly to pay the landlords deposits and start a new marketing campaign.
Borrowed Funds: $35,000
So, the calculation for formula #1 looks like this:
Sales Price: $75,000
Working Capital (+) $10,000
Borrowed Funds (-) $35,000
=Cash Requirement: $50,000.00
Math Formula #2: Sellers Discretionary Earnings - Fair Market Wages For Owner - Debt Service - Return on Investment (Cash Requirement x Percentage) = Extra Profit/Loss
Seller Discretionary Earnings in this case is, let us say, $50,000.00.
Fair Market Wage: You can calculate what you consider fair or you can put all of the other numbers into the equation and see what is left for salary. If you like the salary you buy the business, if not you do not. If we were to calculate what the owner's salary should be I would not pay much for what he does. Even though he puts in 50 hours a week he really only works 15 hours a week of true production. I am figuring 5 hours for bookkeeping and banking and 10 hours for ordering parts and answering phone calls. At $15.00 per hour he is earning $225.00 a week ($15.00 x 15 hours) and that multiplied times 52 weeks comes to $11,700 per year.
Debt Service: My financial calculator says that if you borrow $40,000 for 5 years (60 months) at 5% and the balance at the end of the 60-month is zero, the monthly payments come to $660.49. Since the formula requires yearly figures we multiply by 12 and get $7,925.92. Most of this payment is principal reduction but we are going to just deduct all of the payment as is generally accepted in the industry.
Return on Investment: We are going to use the 20% figure we discussed above. Formula one determined that $50,000 was needed as an investment which is multiplied by 20% (.20) = $10,000 per year return on investment.
Formula #2 (Sellers Discretionary Earnings - Fair Market Wages (For Owner) - Debt Service - Return on Investment (Cash Requirement x Percentage) = Extra Profit/Loss) would the look like this:
Seller Discretionary Earnings: $50,000.00
- Fair Market Wages: $11,700.00 (-)
- Debt Service: $ 7,925.00 (-)
- Return on investment: $10,000.00 (-)
= Extra Profit/Loss: $20,375.00
This means that after deducting from the income, wages, financing costs and a return on your cash investment the business still generates $20,375 more profit. Now would you buy this business under these circumstances? It would appear, yes! Of course this is based on a few assumptions, which might not be true. Lets look at them again.
The owner is only working 15 hours a week or he is only doing 15 hours of real work even though he is sitting around all day. The other assumption is that a 20% return on your investment is a sufficient return for the risk.
We can also consider that if the new owner puts in an extra 25 hours a week doing productive sales the business should be able to afford to pay him another $20,375 for the first year. It would appear that if the sales work was done then the profit should greatly increase in the second year or maybe even the second month.

Monday, October 29, 2012

Federated Prepares to Absorb May Department Stores

The American retailing industry is witnessing the absorption of The May Department Stores Company ["May"] into the Federated Department Store group of companies. Pending federal approval, Federated will sell off as many as 68 May stores after the upcoming holiday season is complete. How this plan will affect shoppers is only beginning to now be realized.
When Federated announced their interest in acquiring May earlier this year, not too many people were surprised. Yes, the size of the acquisition is huge and some wondered aloud how Federated would fit May into the fold, especially with a huge overlap of store brands and locations. Still, Federated was looking at the merger as an opportunity to expand their venerable Macy's name to areas of the country not served by the chain.
With the pending acquistion we know the following:
  • All 330 May's stores will be converted to the Macy's brand.

  • Long time brand names such as Filene's, Hecht's, and Kaufmann's will disappear.

  • Lord and Taylor, with 58 stores, will remain a brand and could be expanded, as well as Marshall Fields which has 60 stores.

  • The 243 David's Bridal stores, 453 After Hours Formalwear stores, and 11 Priscilla of Boston stores compromising May's Bridal Group will probably be left alone.Analysts are concerned that the bigger Macy's brand may run into some difficulty. Long accustomed to serving a higher end clientele, Macy's may find it difficult selling their wares in stores throughout the heartland that is currently dominated by the likes of Target and WalMart. Income levels in many of these served areas are far lower than the major metropolitan areas where Macy's dominates. Some are wondering if the Macy's name will have to "drop down" to accommodate the new markets.
    It has been forecast that federal approval will given by the end of the third quarter, just in time for the big holiday shopping season. Federated's present to itself this Christmas season will be a bigger retail family to support; time will tell if consumers "buy into" the expanded retail giant or go elsewhere in search of other opportunities, especially in the heartland where the Macy's brand is currently unavailable.
    Regardless, 2006 will shape up as a year of change with recognized store brand names such as Filene's disappearing and with the Macy's name expanding. Let's see how the American consumer reacts!

  • Monday, October 22, 2012

    Virtual Pbx Levels the Playing Field Between Small Business and Fortune 500

    Technology, some people fear it, some resist it, and others embrace it. As a small business owner, it could be the best thing that ever happened to your company. With the technology available today, small businesses are increasingly leveling the playing field between themselves and big companies. With toll free virtual PBX (Private Branch Exchange) telephone systems, small businesses are combining today's technology with traditional customer service to take their business to the next level.
    Only Fortune 500 companies with hundreds of employees and 10- story office buildings can afford and maintain a traditional PBX telephone system. Now, with toll free virtual PBX services, anyone with a telephone can reap the benefits of this powerful communications tool. A virtual PBX has all the advantages of a traditional PBX and more without the hassle, hardware and expense.
    A virtual PBX allows small businesses to:
    • Project a professional, more established company image
    • Have one unified number for office phone, cell phone, and fax
    • Make information available to their customers 24/7
    • Automate order taking and pre-qualifying processes
    • Have web-based, real time access to their system
    Small and home-based businesses are using all of these features of their toll free virtual PBX systems to sound and operate like a Fortune 500 company everyday.
    Project a Professional, More Established Company Image
    Right or wrong, consumers assume a company with a toll free number is a more established and secure company. When a toll free number is attached to a virtual PBX with an automated attendant, that powerful image is perpetuated. An automated attendant will answer all incoming calls with the same professional and courteous message every time, day or night. Professional greetings can be recorded by the business owner themselves, or even by a voice talent, and customized for the needs of the business. It doesn't matter if the business is operated out of a home office or the Oval Office. The caller hears a professional greeting each and every time they call.
    Unified Voice and Messaging System
    With a toll free virtual PBX system, small businesses only need one telephone number. This number can be an office phone, cell phone, fax, and pager all in one. Gone are the days of having to put 3 or 4 different numbers on business cards. Now the virtual PBX toll free number replaces them all. When a call comes into the toll free number, it can be routed to any local number. It can even be programmed to route to different numbers at different times of the day or even different days of the week. A call never has to be missed again. That kind of flexibility is unheard of with a traditional toll free number or a hardwired PBX. If the call is not answered, or is sent to voicemail, the virtual PBX system can even notify the user know that there is a message waiting for them. The toll free number also acts as the fax number. When a fax is sent, the system recognizes it as a fax and can store it in the fax mailbox for later retrieval, forward the faxed document to a local fax machine, or even send the fax to an email address as an attachment. The unified messaging feature unchains small business owners from the home or small office and allows them the flexibility to get out and build their business while still being available to their customers.
    Powerful Automation
    No matter how efficient a small or home-based business is, they simply cannot be available to their customers all the time - unless they have a toll free virtual PBX system. If a caller has questions they want the answers now. If they don't get those answers when they call, chances are they'll look some place else. Making sure information is available, even when a live person isn't, can be the difference between someone becoming a customer or moving on to the competition. A toll free virtual PBX allows the storage of an unlimited amount of information for callers to retrieve 24 hours a day, 7 days a week. Menus broken down into what kinds of information a caller might need, make it easy for them to navigate the system and get what they are looking for. Faxes can even be attached so the caller can request an automated fax back. For a business that needs to pre-qualify their callers, or would just like to get some information about them, can take advantage of question and answer voice mailboxes. A set of pre-recorded questions can be asked of the caller and the voice responses then saved in the system and emailed as a sound file. These automated processes not only save time, but they also make sure callers can get the information they need when no one is available.
    Web Based System Access
    A toll free virtual PBX is just that, virtual. What that means for a small business owner is that one, there is no hardware to maintain or software to buy, and two, that they can access their system from anywhere they can get online. Online system access is one of the most popular features of a virtual PBX system. Web-based system access allows users to check their voice and fax messages over the internet or have the messages delivered directly to an email address. Of course, messages can still be checked from any touch-tone phone, anywhere.
    A small business owner has administrative access to check the call logs of all incoming calls to their toll free number and use the call capture feature to not only capture the phone number of the person calling, but also their name and address. It also allows a user to run reports based on different criteria chosen. For example, reports could be run to show when the busiest time of the week is for customer service or if the call volume increased after a specific ad campaign was released. The applications are endless.
    With all these powerful features, and most times more, it's amazing that toll free virtual PBX systems can be found at a reasonable price. Most systems offered are between $10.00 and $50.00 depending on the capabilities and size of the system. Many will offer a varying number of voice mail boxes, features, and minute plans. A good toll free virtual PBX service provider can also customize systems if needed.

    Monday, October 15, 2012

    Find Your Niche in the Business World

    Who am I and what do I love to do? Well, isn't this the twenty million dollar question! A more appropriate question might be "Who was I and what did I love to do?"
    As you search to find yourself, and what it is you love to do, you may find the task harder than you thought it would be. Try to think about your childhood. Can you remember what thrilled you as a child? Like many people you've probably forgotten what brought try joy and excitment to your essence.
    Children instinctively just "know" what they love. We quickly forget what makes us happy as we grow into adults. External influences eventually diminish the thought of actually "doing what we love to do."
    When I was a child I vaguely remember wanting to be a stewardess, a mother of 8 (don't know why it had to be 8, sounds rather ambitious in today's world), and a musician.
    Well, didn't every little girl who grew up in my world want to be a stewardess? It seemed so. Or, could it have been a clue to what really was the essence of me? Maybe I longed to travel and this was what society offered at the time.
    I did have a musical inclination. I seemed to learn to play clarinet fast, and was quite good for a beginner. Never got past the beginning, victim of circumstances, but that's another long story. I could pick a tune on the piano by ear and dreamed of being able to sit down and flawlessly play the most beautiful of compositions. But, that didn't happen.
    The mom thing? Don't know where that came from. Maybe the caring side of me. Maybe just that period most little girls go through where they emulate their mother and "play house." Who knows?
    But, I did grow up to be the mother of four. I quickly learned that 8 was really ambitious. Some days, I don't know how I survive the four. I'm far from super mom status, but I guess I don't do too bad.
    I've found recently, through self searching and pondering, that the question of "who am I?" becomes increasingly difficult with age and life's interference. Yes, life interference can be very damaging to our happiness. Our experiences tend to mold us into the person we are today. By the way, that isn't necessarily who we were meant to be.
    Have you ever longed to be able to do something you are passionate about and truly loved as a child. Maybe it's some form of art; painting, drawing, crafting, dancing, or singing. Maybe you enjoyed building things or, taking things apart and putting them back together. Or, were you the mathematical genius in the class? Did you love to play school and teach real or imaginary children?
    Childhood is innocence. As children we accept our true essence without question and pursue it daily in our real and imaginary play. It is life and life's external influences that re-route us away from what we love to do. We are too quickly discouraged from the pursuit of happiness.
    It is apparent in many happy, successful, adults that there is often a common denominator. Most extremely successful people really love doing what they do. They live their work. They strive to be better and better at it. They never dread going to work and are always thinking about new ways to improve. They simply love the work. They "live to work" not "work to live."
    America's most famous billionaire, Malcolm Forbes, reflected this same belief, that you should do what you love to do to be successful, in several of his statements:
  • "Success follows doing what you want to do. There is no other way to be successful."

  • "When what we are is what we want to be, that's happiness."

  • "The biggest mistake people make in life is not trying to make a living at doing what they most enjoy."
  • These quotes from Malcolm Forbes pretty much sum up the importance of doing what you love to do. Everyone should pursue what they love to do. Then work at doing what they love. You may say "It's too late."
    It's never too late to rediscover your childhood passions. It's certainly never too late to start getting some satisfaction and enjoyment out of life. If only for your own pleasure, you should pursue what you love to do.
    Whatever it is you feel you would love to do, go for it. Take an art, singing, dancing, literature, accounting, computer, home decorating ,or mechanic class. Invest in yourself and your happiness. You may find that through pursuing what you love, you will find your best work. Share your knowledge, passion, or talent with others. You will see yourself become confident and successful at what you love to do.
    I found that my favorite thing to do is to simply be a housewife and mother. Maybe it's not "just being a mom." Rather, it's doing the things required to be a housewife and mom. It's not a glamorous career. But, it does require quite a few skills. Moms are usually very talented in more than a few areas; art, organization, accounting, negotiating, and decorating are just a few that come to mind.
    My favorite task is saving money. A family of six makes saving money pretty much a requirement of my job but, I've found that I Love IT! I get great satisfaction in getting the most for my money, getting things for free, and managing a household on a very limited income. So, in order to expand on my happiness, I decided to share my knowledge with others. I actually have fun sharing my ideas and money saving tips. And, I enjoy researching and finding more money saving tips for myself and others.
    Sometimes, it seems like I can't pull myself away from my work. That's because I love it so much. I love it, I am passionate about it, and I believe in it! Enthusiasm is contagious. If I can get others excited about saving money, then I am happy.

    Monday, October 1, 2012

    Business Stress and its Causes

    What is Business Stress?
    Business stress is felt during times of conflict, pressure, loss, illness or anxiety. It describes the frantic pace of business life. Everyone reacts differently to stress. Some people can cope and take it in their stride; others find the pressure too much and buckle under. Much of the stress, anxiety, and the sense of overload that people carry is because they feel their lives are out of control. Stress seems to come from the perception that our life feels overloaded.
    In medical terms, stress is your body's physical reactions to change, which is not always bad. It is said that a little bit of stress is good for our well-being and exercises our faculties. However today's stress caused by business activity can have a detrimental, psychological or emotional effect on our health.
    What Causes Stress?
    Business stress is a common result of fear - fear of uncertainty and insecurity. When working within a large company your fear may come from dealing with your boss, or from handling requests from management. It may arise from the uncertainty about your job and what performance expectations are required of you. It manifests itself in the feelings of insecurities that your job may not even exist tomorrow.
    Many people experience business stress in large organisations. Often they will look at going into business on their own account, to reduce this workplace stress. Before you can free yourself from workplace-induced stress, you need to identify the source of the stress and explore ways of dealing with it. You cannot attribute stress to the fact that you have a difficult boss or that management do not understand the needs of workers.
    Workplace induced stress arises from 2 sources:
    1. Psychological. It is often said that some people are just born worriers and it would be fair to say that there are many people with experience and skills who simply do not fit into the category of true entrepreneurs. That is, they should not be self-employed because their makeup may not handle the stress of looking after their own destiny in business. Some people simply sail through the challenges and pressures that come with being self employed, while others already have chronic fears, insecurities and other anxieties and should seek professional assistance in some areas of their business, or make a decision to get out all together.
    2. External. This comes from the very nature of a competitive global environment. There is no room for mediocre performance and in some industries it is definitely the strong that survive. Stress that comes from within a business organisation may arise from conflicts between employees or from reaction to challenges to the authority of a superior, or it could arise from the lack of cash to pay the bills, or the loss of a contract that a business was depending on.

    Do we need Stress in our Lives?The experts tell us that we all need a certain amount of stress in our lives and that the benefit is psychological, mental and physical. This may surprise most of us but they say it is quite true. When you think about it, without stress life would be quite dull and unexciting. Stress adds a bit of flavour, as well as a challenge, and gives one the opportunity to excel, or push beyond the normal limit.
    The problem arises when there is too much stress. This can seriously affect the well being of the person involved. The trick is to ensure that whatever stress exists in a business environment, it should be moulded to be beneficial rather than detrimental.
    We cannot avoid stress; it is with us from the time we get up in the morning, to the time we sleep at night. As humans, we are involved in activities during the day, which will affect our emotions or wear down our mental or physical abilities.
    Stress is unique and personal to each person. What one person finds stressful another finds relaxing. Some people have a very high stress level and perform well under pressure cooker conditions, while others cannot endure even a small amount of pressure.
    Excess stress causes physical illnesses such as high blood pressure, ulcers and other types of ailments. One of the best ways to help stress in our lives is to ensure that the body gets sufficient physical exercise, rest, and discipline in the amount and type of foods eaten.

    Monday, September 24, 2012

    Handle Business Disputes

    Suggestions for Handling Disputes
    Any conflicts involving customers, employees or suppliers, or a partner, is very disruptive. Disputes and conflicts cannot be allowed to escalate because of the damage they can cause. There are ways of dealing with disputes, to arrive at an agreement or resolution where all parties concerned are satisfied.
    Here are a few suggestions for handling a dispute:
    1. Focus on your long-term interest. Try to find an outcome where your business retains its best interests as its main objective. Don't get obsessed with winning a particular dispute or conflict if that is not necessarily the best position for the business in the long run.
    2. Find something simple and quick, and resolve that first. The best resolution is usually that which can be quickly agreed to. The longer a dispute drags out, the more costly it will become and the heavier the disruption to your business, as well as your own personal life. Even if there is some cost involved, it is far better to settle the matter fast.
    3. It's not personal - it's business. If you are in business, you will have to get used to the fact that you will be a target of complaints from someone, whether it be a customer or supplier. No one is perfect and no business is perfect, so expect that things may not always work out as planned. However, you have to ensure that you don't take these attacks personally, but try to focus on the issues involved, rather than the personalities involved. Remember it's not personal - it's business.
    4. Avoid court. If you can avoid it, do not go to the courts with your quarrel. Using lawyers and the court's time is an expensive exercise and can tie up the business and yourself for some period of time. It also creates a lot of stress, which could be avoided by settling for something a little easier or acceptable to both parties. The trick is to avoid going to the law unless there is no other solution. If at all possible, have open discussions with the other party, as they will also understand the time and cost wasted by going to the court. It is far better for both parties to work out a solution outside of legal action. This should be the priority or aim of a meeting set to resolve a conflict.
    5. Find if there is an alternative to resolve the dispute. You may like to investigate whether mediation or arbitration is a fair alternative of finding a resolution. Mediation simply provides for a neutral third party to sit in on discussions while the two parties try to come to a resolution. Mediation is not binding on any party; it is a means of opening up communication to find a resolution. Arbitration however is where two parties sit before a person, known as the arbitrator, who will make an award or decision after hearing both sides of the story. The decision of the arbitration is binding.
    6. Conflicts need to be Resolved Delicately. Conflicts are inevitable. The sooner you as a business owner realise this, the better. The trick is to try and arrive at a positive outcome, so both parties are happy. You need to remember that each party has different priorities and agendas and they are looking at the conflict from two different perspectives. There are certain characteristics, however, that come across and these include:
      • People hate to have others disagree with them.
      • People definitely like others to agree with their views.
      • People love to be agreed with.
      • People don't like others who disagree with them.
      • People who are good at resolving conflicts look for a point of agreement and use their skills to get the other party to see their point of view.
      Resolving the conflicts can be a delicate exercise. The only way to win in a conflict is to arrive at the position where both parties leave the meeting feeling that at least they have won something. That is, try to find a win/win solution. If you don't, and you win your argument, you may take home more cash or win on the issue, but you will lose a customer, client or friend forever. Try and see if it is possible to go down the middle, where each party leaves with a 50/50 win and there is satisfaction, because 50% is better than nothing. There is also the realisation that the other party got away with only 50% (rather than 100%) of what they wanted as well. Always try for win/win and try never to allow the conflict to escalate too quickly or too far, certainly not to the point where it is difficult to recover the position.

    Monday, September 10, 2012

    Nevada Incorporation Services to Avoid Costly Mistakes

    Incorporating in Nevada has many outstanding benefits for savvy entrepreneurs who incorporate their businesses in the silver state. However, you must take care in setting up the corporation correctly if you are to take advantage of the tax advantages and liability protection benefits Nevada has to offer. If you are new to Nevada corporations, you will want to use a qualified nevada incorporation service to set things up right from the start. People who try incorporating in Nevada themselves can easily set themselves up to be in hot water with the IRS if they are selected for an audit. The IRS pays special attention to Nevada corporations when selecting candidates for an audit, so it is imperative that a Nevada corporation be set up with care.
    Common Nevada Incorporation Mistakes
    Business owners new to incorporation in Nevada most frequently make the following mistakes when forming a Nevada corporation themselves:
    • Failing to have employees in the corporation
    • Not having adequate proof of Nevada-based operations
    • Allowing independent contractors corporate benefits intended only for employees
    • Not issuing stock

    Nevada Incorporation Services ChecklistIf you decide to go with an incorporation service, make sure you go with a firm that has experience with Nevada incorporation. Compare what they offer to the list below. A quality incorporation firm should offer the following services as part of its package:
    • Creation of the Articles of Incorporation
    • Filing of the Articles with the Nevada Secretary of State
    • Filing of Initial Officers, Directors, Agents or Members
    • Arrangement for official place of business
    • Arrangement for local telephone service
    • Arrange for contracted employees of the corporation to answer telephone calls during business hours
    • Assistance in opening a Nevada bank account
    • Resident Agent services
    • Mail forwarding
    • Obtaining a business license (usually this will be in the state capitol, Carson City)
    • Federal Tax Identification Number (EIN)
    • Creation of a Corporate Charter
    • Offers stand-in nominee officers so that the names of the officers are not listed in public records. This strategy offers an additional layer of privacy from prying eyes. You can vote these officers out of office at any time, and they will not have any signature authority with the corporation.

    ConclusionIncorporating in Nevada can be one of the most critical steps you can take in your new business venture. Combined with careful investigation and use of professional Nevada incorporation services, you can have peace of mind knowing your Nevada corporation is providing you with the best in domestic asset and revenue protection.