Virtuoso Team Consulting, Inc.

While I grant this posting is later than I had wished, it is still timely and relevant. I was working on a project last week from Monday through Thursday, averaging 20-hour days. After everything had been accepted by the client, I passed out on the couch for a few hours. Upon waking I decided to unplug everything electronic for the whole weekend and spend time with my wife and friends. We traveled to Orlando (Winter Springs) for the Central Florida Scottish Highland Games.  I didn’t take phone calls, check emails or texts, and I felt great!

At first I had a great deal of trepidation, but in this 24-hour a day, always-on world it is easy to burnout. Intellectually, particularly as a business owner, I know I have to spend more time working than most in order to create a revenue stream that can operate without me in the future. This situation brought the balancing act many of us perform into stark relief, and I was forced to decide where to draw the line. Luckily, I have friends who are caring enough to remind me when to take some down time, but I also have clients who are able to work me to death, and I am grateful for both. The big surprise was that I met a vendor from Bradenton, Robin McAllister of Faire Isles Trading Company, and we hit it off while discussing the finer points of our Utilikilts. After all of the work I had done I still remained excited to talk shop on my vacation, a reminder to myself of how much I love my chosen career path.

I try to do everything in moderation, work and play, but it’s unrealistic to suggest that will happen all of the time. Sometimes the best any of us can do is to find some degree of balance. Hard work is nothing to whine about, but to balance it I followed with a tech disconnect and a couple of days out-of-town. Having been through slow times, and the current economic situation, I can honestly say I will never complain about being too busy, but I will also try harder to secure the freedom to enjoy my life, family and friends and to take the time to smell the roses and watch men and women in kilts toss the caber. : )

Do you live to work, or work to live? How do you decompress?

With a new year come new goals, new challenges, and new opportunities for success. Regrettably I have let my blog get lost in the shuffle of life and work, and that is something I resolve to fix this year. I will make a concerted effort to post, at least a small article, once per week. There are a lot of facets to business, and I should have no problem coming up with topics, but I would like to hear from others. If there is a topic you are interested in, have a question about, or even something would like to write a guest post, please email or call. It will help me collect ideas as to what to write about and also ensure everyone gets timely information about what really matters.

At a New Year’s party last weekend a number of people expressed interest in starting their own businesses this month. It seems since the economy is still in a state of flux people would rather cut their expenses and make a go of business ownership than continue worrying about losing jobs. They want to have a sense of control of their own lives, their future, and they want to do what makes them happy. While I, being in the business of helping businesses, wanted to get each and every one of these people on contracts, it occurred to me that in most cases they did not have the funds to hire my company. After a few conversations, all similar in scope if different in substance, these realities lead me to a new offering. I want to help each of these businesses get started along the right path, but do not have a great amount of time to dedicate to them. As such, I or a colleague will be meeting with the principals of each company for an hour or two this week to ensure they have a plan laid out, know where they want to go, and set them on the path to achieving their goals, and we will be doing it for FREE. They will have to do all of the heavy lifting, and will succeed or fail based on their own effort, but they will have the solid foundations many companies lack at startup.

Why are we doing this?

Quite simply, because we can! Small companies:

• Represent 99.7 percent of all employer firms.

• Employ just over half of all private sector employees.

• Pay 44 percent of total U.S. private payroll.

• Have generated 64 percent of net new jobs over the past 15 years.

• Create more than half of the nonfarm private gross domes­tic product (GDP).

• Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).

As a sector, this is the easiest way to help create jobs, stabilize the economy, and help people do what they are passionate about.

Is there something in it for us?

Absolutely! Once these small businesses start to flourish their goals are going to change, they will outgrow their current business models. They will need to hire or retain a business consulting firm, and we will have the opportunity to solicit that business. Nothing will compel them aside from the fact that we helped when they needed it, and we did it well.

This is not necessarily going to be an ongoing offering, but if you are considering starting your own business, please contact us. We would love to help!

Thank you for taking the time to read this, and I will make every effort to have another post by next Monday.

There are a lot of independent business owners out there who feel as though they have, neither a pot to pee in, nor window to throw it out of. The economic slow down is causing a great many business owners to go out in search of a part-time or even full time job, thus relegating their businesses to an “as able” status.

Truth be told, historically, this is the best time to start a business, and the worst time to have already been running one. Many of my friends are business owners, as makes sense in my profession, and the majority have found other jobs. One, however, recently contacted me and has decided to become lean. He was remembering the old days of his start-up, the fun he had with only a handful of reliable clients. We are currently restructuring his company to take him back to that stage, and it occurred to me that this may be an excellent solution for others too! His revenue is going to drop, but so will his overhead and expenses. I love the idea; it feels like tech going artesian, growth through getting smaller.

Did you go from being a business owner, to having your business own you? If so, I would love to hear your story, and share what you did with others. Please leave a comment.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

Bringing in new management is simultaneously the smartest and hardest thing to do correctly in business. New blood, especially if coming from a different industry, can breathe new life into a stagnating company. However, during this process there are usually a few people whose toes get stepped on, so it is important to keep them involved because their experience may be important for the team to succeed as a whole. Most managers would rather be a player on a winning team than the captain on a losing one.

Having said that, there will always be a few people who are very resistant to change, and would rather sew the seeds of discontent. It is important to identify them early, and either counsel them or remove them. These few can be capable of usurping authority, bringing energy levels down, or worse.

A client was losing members to their club, and could not seem to build the numbers up again. After speaking with the executives, the problem was obvious. There was a loud, domineering individual who was resistant to change, and would not concede.

A consumer study was conducted, in order to discover what the underlying cause of the attrition rate was, facts were gathered, and an analysis and write up were concluded and offered to the executive committee. There were some simple issues that needed to be addressed which would not only get back lost members, but add to their rosters expanding their market demographics.

Though this person was not the highest ranked in the room, he refused to yield his opinion to logic, facts, or even the consideration of trying something new. Needless to say that this plan will not be implemented until he is gone, at which point I hope it will not be too late.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

How much will customers be willing to pay for your product or service?

How many customers will buy at that price?

How large is the actual market for your business?

From the beginning, regardless of your education or experience, these questions and others are best estimated by a SHAG, or a scientific half-assed guess. This method is not quite as willy-nilly as it may sound, but is a carefully constructed best guess based on known facts, and supposition.

What facts do we have at hand?

Of what do we feel reasonably sure?

What do we believe to be true, and why?

These represent a psuedo-solid foundation for creating estimates. Whether the company is a start-up or a century old, the importance of these guesses remains the same. The only thing that changes is the historical data sets that show where the company has been, not necessarily where it is going.

There are traps people fall into using SHAGs that I would like to warn against. First, it only gives you a starting point, so be flexible enough to change your course as experience dictates. Thinking that you are right can destroy a business far faster than admitting your wrong. Second, do not over use SHAGs, or put too much faith in them. Anecdotal evidence can only carry you so far, the proof, as they say, is in the pudding. Sometimes it is the questions you don’t think to ask that kills you. This is a process that is best accomplished with the help of a group of people you trust. Generally speaking, the group is smarter than the individual.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

Taxes are a much maligned responsibility of business owners, primarily because the offices responsible for collecting them do not make the process at all user friendly. While no one wants to pay taxes, they do want the services rendered from their collection. Another issue that I believe should get a small mention is, contrary to popular belief, tax collection is legal and there are plenty of people who have been incarcerated who will attest to this. Whether you agree or disagree with the premise, taxes are what you have to pay when you make money, personally or as a corporation. The important thing to remember is that you only have to pay what you owe, and there are many things you can do to reduce your taxable income. As I have stated before, I am neither an accountant nor a tax lawyer, nor will I pretend to be. What I am is a business advisor, and if your earnings allow it, finding a good accountant is an excellent investment. They will frequently save you more than they charge you, yielding a net positive for your business.

In my opinion, the best way to find a reliable accountant or bookkeeper is through word of mouth. Talk to other business owners, see who they use and then meet or interview those people they recommend. Pretend this person is going to be your doctor; you need to feel comfortable with them. They will be vital in keeping your business healthy. Trust your gut, if someone makes claims that you find questionable or they simply give you an unsafe feeling, keep looking.

Why should I pay my hard earned money to an accountant when I can do my own taxes?

Simply put, the fees you pay to an accountant or tax preparer are tax deductible, and they are better qualified to find deductions you do not even know about. Going back to the idea that you have only two things to invest, time and money, while they are working for you, you can be working on making more money or spending time with family and friends. I cannot stress it enough, whenever able and prudent, it is wiser to let a professional handle some of your business workings so you can manage the part that makes you money.

Another avenue for information is the tax collection agencies. They frequently offer classes or lectures that explain how to figure taxes owed, payment methodology, and answer questions regarding situations specific to your company. Typically these services are free, and are designed to help you fulfill your obligation correctly and with as little error as possible.

Remember, these payments support all kinds of services from the police officers and fire-fighters who protect yourself and property to SBA programs that help small businesses with loans, putting money into the economy. It is the cost associated with being able to follow your dreams. Most successful business owners will agree it is a small price to pay.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

They say the only two certainties in life are “death and taxes”. Each of these can, and will, have their own blog post, but I we shall start with Death. While this is a terribly morbid subject, I assure you it is something every business owner should take into consideration for a multitude of reasons. Business entities, continuation planning, and insurance are just a few issues that should be contemplated.

There are a number of different types of business entities, each with their own strengths and weaknesses, and I do not presume to know which entity best suits the reader. That is a subject best left to an accountant, tax advisor, or lawyer, and I am none of these. Having said that, one of my preferred entities is a subchapter S Corporation, primarily because it exists outside of the individuals who run it. It has its own name, tax identification number and legal liabilities. Most importantly, if anything happens to one of the principals, the corporation continues in perpetuity. This is in stark contrast to sole-proprietorships and partnerships which dissolve upon the death or incapacitation of a principal.

In the event a sole proprietorship or partnership has been chosen, a thoroughly detailed, legal document should be in place to dictate what happens in the event of someone’s death. The goal should be to keep “business as usual” for the remaining principals, not to mention addressing the rights and responsibilities of the survivors of the deceased. If the decedent is the business, as in the case of a lawyer, physician, or CPA et al, then what plan is in place to service their clients? Can these assets (client lists) continue to be served or sold to another individual or business?

Insurance is a tricky subject that I am licensed to talk about, but will only speak of in generalities for this blog. Insurance, in its simplest terms, is an investment you hope to never have to collect, but is of the utmost importance if it is ever needed. In particular, there are insurance policies to help offset the expenses of keeping the business running, searching for principal or executive replacements, and buying back stock from the decedent’s estate.

These situations should ideally be addressed before starting a company, but if that is not possible, they should be addressed immediately! Do not wait for this or that to happen before you plan for these eventualities or you may lose your ability to do anything about it at all.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

From the beginning, I knew it would be important to have a website for VTC, and since I had taken the last 8 months off from work so I could concentrate on school, I also knew I didn’t have the money to pay someone to build it for me. Two months later, it is finally ready to be hosted. This brings me to a simple premise; there are only two things we can invest, time and money. I had no extra money, so I had to spend time teaching myself all kinds of things about website development. While I can now speak somewhat intelligently on the subject, I hope to never again do much more than post blogs and podcasts.

The hours I spent working on the site took time away from my family and friends, an opportunity cost, but not one that can be easily measured monetarily. Would I have been better off saving my money in order to have a professional do it? At what cost? If the site had been up earlier, could I have increased my workload and by association my revenue? Questions such as these plague business owners. What I have decided for myself is, sooner is better than later, if the price is reasonable. I now determine “reasonable” by how much of my free-time will remain free, versus doing it myself.

For example, if it takes a professional website developer a week to create the page for VTC, and it costs $750, then I can say it will free seven weeks of my personal time. That is just over $100 per week, which in my mind is a great value. Everyone’s “reasonable” is going to be somewhat different, but it is important to look at the value of your time. Additionally, it is important to ask service providers about payment plans, and to establish the ROI (return on investment) such an expense will provide both you, as the owner, and the company.

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

A client said something today that made me think of a customer I used to work with. He would come in to the bank and swear that all he needed was $25,000 in capital to make his business succeed. He had no collateral, terrible credit, and could typically be found with more excuses than account receivables, but wanted the bank to lend him these funds. Thankfully an investor came along and gave him the money, and it only took one month before the customer came back in complaining that, “if I just had another $25,000 I could make this business succeed.” The capital was spent, and there was nothing to show for it except an annoyed investor. It has been my experience there are only two reasons business owners apply for large capital loans, to buy assets or time.

Successful business people borrow money all of the time, but it is to purchase assets or expand. If they wanted to buy new technology that would allow them to save money, move more inventory, or ultimately drive a higher ROI (return on investment) than the interest rate being charged, more power to them.

A bad decision is using capital simply trying to survive an economic downturn. Then they are throwing good money after bad, buying time. What happens if it was not enough money, the economy stays bad longer than expected, or competition comes along? Now the business owner is in deep debt, the bank has a large (probably under secured) loan and options are limited. As in the case I mentioned above, the problem with the business had more to do with low profit margins due to a lack of cost structure understanding. A simple, low cost change to their operating budget would have paid huge dividends.

The lesson in this instance is that money does not fix things; in fact, money tends to amplify the business system, for better or worse. The next time you hear someone say they just need more money, you can ask them if they need it to buy Assets or Time?

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.

The sheer volume of things that must be done to legally start a corporation in the state of Florida is astounding:

1.Register with the Department of State of Florida, Division of Corporations

2.If necessary, make sure you have an occupational license

3.Get an EIN (Employer Identification Number) from the IRS

4.Elect and file the paperwork to be a subchapter S corporation from the IRS

5.Pay to be licensed with the county and city, as required.

6.Don’t forget your license to collect sales tax, or pay unemployment tax

7.How about a worker’s compensation waiver?

That is just the legal and tax stuff someone has to go through, let’s not forget about actual business planning, for example:

1.Writing a business plan

2.Creating a marketing plan

3.Registering your domain name (in case you should want to have a web presence, which is highly recommended in this day and age)

4.Establishing your budget, pricing, cost structures and profitability

…to name but a few.

There are also miscellaneous things like bookkeeping software, hiring employees, and exit strategies that should be established.

It really makes me wonder why anyone would want to start their own business, but then I remember what one of my clients at the bank said to me, “Jer, if you do what you love, you’ll never work a day in your life.”

©2008-2009 Virtuoso Team Consulting, Inc.   All Rights Reserved.