Think the Grateful Dead were just a bunch of stoned-out hippie musicians? 
You’d be Dead wrong …

OK — I hear you groaning:  “Coach — the GRATEFUL DEAD???  What the heck do THEY have to do with success?”  As a veteran over over 50 concerts since I got “on the bus” in 1971, I’m a relative lightweight “Dead Head,” yet I learned a lot by following them.  To quote one of their song lyrics, “Once in a while you get shown the light in the strangest of places if you look at it right.”  So let me break it down to you:

•  Passion   We’ve all heard the saying, “Do what you love and the money will follow.”  The Grateful Dead were ALL about the love of sharing their music with a legion of rabid Dead Head fans.  In their early years they could have cared less about money, going deep into debt as they toured incessantly.  Formed in 1965, it took into the mid-1980’s before the band began to see its cash flow swell — are you willing to pursue your passion for 20 years without having much financial success to show for it?

•  Hard work   The group played over 3,000 concerts in 30 years, most twice as long as the typical rock show.  And no two of their performances were ever the same, as compared with your average touring band that plays the same set list every night.  Yet, was this really “work,” or “play?”  They were able to make a living playing at what they loved, bringing their fans back tour after tour to experience the “joy factor” in every concert — isn’t that a worthy ideal for all of us?

•  Persistence   Even though their success might appear effortless today, all high achievers know the trials and tribulations they went through over the years to finally make it.   The Grateful Dead had more than their fair share of adversity, from being continually harassed for their “scene” by the local gendarmes in every city they visited, to being panned by most rock critics as being a “psychedelic-relic greatest hits band,” to having their entire bankroll embezzled by their manager (incredibly, the father of their drummer!) in the early ’70’s, to the death of not one, not two, but THREE keyboardists in 30 years.  Yet they just kept on truckin’.

•  Improvisation   How often do you need to improvise solutions in your line of work?  The granddaddy of all “jam bands,” The Grateful Dead were known for their unrehearsed sonic excursions.  The quest for a unique concert experience kept us patient with their nightly extended jam experiments.  These musical trips into the unknown sometimes fell short of the mark — but when it clicked, it was magic.

•  Technological savvy   We’ve all got to keep pace with changing technology, and the Grateful Dead were often ahead of the curve.  They spent huge wads of cash on equipment to get the best sound possible (including their infamous “wall of sound” — a gargantuan amplifier set up that literally dwarfed the band members), refined the art of the light show and, most recently, pioneered direct-to-consumer digital audio recording sales of their live concerts (much to the dismay of music industry middlemen).

•  Marketing mavens   Quick — when you see a tie-dye T-shirt, who comes to mind?   A full 40 years after the band’s inception, “Brand Dead” is still going strong — Grateful Dead Merchandising is hawking everything from vintage ’60’s concert posters to “dancing bear” baby wear.   They’ve got the kind of marketing staying power that rivals other rock’n roll icons like the Beatles and Elvis — I just don’t recommend you “go Dead” before you make this happen for yourself …

•  Giving back   Nobody played more benefit concerts in their time than the Grateful Dead.  The Rex Foundation, their philanthropic organization formed in 1984, has given millions of dollars over the years to support a number of worthy not-for-profit endeavors.  They seemed to intuitively know that charity breeds prosperity — what I want to know is, are you kind?

•  The bottom line   Hard as it may be to believe, the Grateful Dead were the highest grossing touring act in the entire entertainment business between the ten year period of 1985 – 1995 — outdrawing (and out earning) the likes of Bruce Springsteen, Madonna and Michael Jackson.   (How’s your last ten years been?)

A full decade has passed since their legendary lead guitarist and founding member Jerry Garcia died, yet the remaining original band members still go on tour, both collectively as “The Dead” and with solo projects.  Goes to show you don’t ever know — if you live your life following the high standards the Grateful Dead have embodied since the mid 60’s, you’ll have a “sunshine daydream” of a life!

Success Skills Coach Jim Rohrbach, “The Personal Fitness Trainer for Your Business,” coaches business owners, entrepreneurs and sales professionals on growing their clientele.  He has helped hundreds of individuals to achieve their goals since he developed his first coaching program in 1982.  You can visit Jim on the web at www.SuccessSkills.com.

Here are eleven tips on cutting costs in the meat department of your grocery store.

1. Get to know your meat-cutters by talking to them.  Then find out when they have meat-specials.  This is usually done in the morning when a meat package is nearing its sell by date.  You can save 50%.  Just be sure to put the meat in the freezer that day. Then go in early in the day before it sells.

2. Get a large upright freezer and stock up on bargains.

3. Any meat counter will custom cut your meats.  For example, a whole fryer can be on sale from .79 to .99 cents a pound.  Cut up fryers are like $2.49 a pound in the display case.  Instead of picking up that cut-up chicken, take the whole chicken and have them cut it for you for free on request.

4. Instead of paying for ultra lean ground beef, or chicken or pork, buy a chuck roast or round roast on sale and then have the meat-cutter grind it for you for free.  Stock up while you are at it.

5. Don’t buy packaged broth, make your own from bones that you don’t throw away, but save all bones in a zip lock bag in the freezer. A small container of broth costs 3.49.  You can make it for free by simmering bones in a crock pot for several hours.  Use about 3 lbs of bones.  It is easy and no fuss no work.  Freeze the stock or broth for your next soup.

6. It goes without saying; don’t buy soup bones when you can make it from bones that you have saved instead of thrown away.  Soup bones are expensive and a major profit item for meat counters.

7. Don’t buy steaks or chops already cut, order them in advance from the butcher and tell him that you want them an inch to an inch and a half.  It is better to have one pork chop cut to an inch than two half inch pork chops.  The meat will be more flavorful and juicy and tender, same goes for steaks.

8. Following the above rule, when Porterhouse steaks are on sale, buy them in quantity and tell the butcher to hand select and cut them.  Also have him bone out the fillet part of the Porterhouse and save that for a different meal.  In this way you have two elegant meals from one cut of meat.

9. Take the time to learn to marinade meat to tenderize cheaper cuts and use your slow cooker to further tenderize them.

10. When round steak or chuck steak is on sale, ask the meat cutter to run it through their cubing machine which they will do for free.  This gives you a cheap tender piece of meat that is ready right away without marinating or slow cooking.

11. Look at buying chicken leg quarters in quantity.  Usually they are sold in 10 lb. bags for about .59 cents a pound.  There is no other cheaper meat protein.  Use them for bar b que, in soups, stews etc.  You can use a couple of leg quarters to make a great chicken noodle soup.  You can also boil down the broth into a thick stock rich stock for a noodle casserole.  Instead of milk add non-fat sour cream for a creamy rich taste without the fat grams or calories.

John Wilder is a Cool Old Guy from Indiana who likes to share advice on several topics. Search for John’s other articles here on CoolOldGuys.org. You can contact John at Southernwriter57@yahoo.com

 Contributed by: Jim Rohrbach

“If it were EASY to start up a successful new business, then everybody’d be doin’ it, and then it would be worth the equivalent of flippin’ burgers at your local McDonalds — a minimum wage job.” — Success Skills Coach Jim Rohrbach, speaking from experience

OK — all you beginning business owners out there — don’t you wish someone would tell you the TRUTH about what it takes to start up and run a successful business?  I mean, the real dirt, not the hackneyed sayings from the motivational speaker cheerleaders:   “Just do it!”  “Feel the fear and do it anyway!”  “The sky’s the limit!”  What happens when you’re a couple of years into it and  the sky is falling?

Not that I want to burst your bubble of enthusiasm, but creating and maintaining your own successful business is HARD, period.  The US Small Business Administration estimates that up to 90% of all small businesses close within the first five years.  But take heart — the fact that business success is difficult is actually good news, because it forces you to test your self to the limit:  Do you have what it takes that separates the men from the boys?   You’ll never know as long as you’re working for someone else.

So let me share some of the more challenging aspects that you’re bound to go through on your business journey:

       •  Frustration  “Why is this taking so long?”

       •  Irritation  “Why don’t those people return my phone calls?”

       •  Aggravation  “How come the printer can’t get my brochures ready in time for my mailing date?”

       •  Confusion  “What the heck is my niche anyhow?”

And it gets worse:

       •  Self-doubt  “What if they were right — maybe I don’t have what it takes?”

       •  Helplessness  “We’re bleeding in red ink!”

       •  Hopelessness  “I can’t seem to close any deals!”

       •  Despair  One of the turning points — I’m convinced there hasn’t been a business owner ever (who wasn’t a trust funder with deep pockets) who didn’t lie awake AT LEAST one entire night, eyes wide open, staring at the ceiling, asking the question, “WHAT THE HECK WAS I THINKING WHEN I STARTED THIS DAMN BUSINESS???”  I got to the point where I realized that my ignorance WAS bliss — if I had known how hard it was or how long it would take, I might have never started at all.

Going through any of these feelings?   Great … welcome to “Business Base Camp!”  Because now that you’re over the initial euphoria of getting started (usually a couple of years into it), the impartial reality of the marketplace has a way of bringing you back down to earth, or even buried six feet under if you’re not strong enough.  So if you’re at this juncture, the trick is to take control in the following three areas:  Your attitude, your activity and your skills.

1.  Attitude  In order to maintain your sanity despite some (or all!) of these difficult emotions, I recommend a Daily Success Ritual, seven days a week, to keep your attitude strong.  This includes reciting your Mission Statement, affirmations and expressing Gratitude to your conception of God.  I also recommend the daily habit of putting yourself in a relaxed, meditative state to picture the positive outcomes you want, despite any lack of them day to day.

2.  Activity  It’s important for you to schedule your time based upon your goals — so set an appointment with yourself every weekend to make sure your upcoming week is filled with productive activities to keep you on track.  Then, follow this schedule!  Otherwise, you’ll be stuck constantly doing reactive tasks (administrative work like emails, bookkeeping, paper shuffling, etc.) rather than the necessary proactive business-building tasks of prospecting, networking, requesting referrals, servicing clients and the like.

3.  Skills   Daily improvement is the key to any success, especially in business.  Perhaps the most important weakness of beginning entrepreneurs is their lack of of marketing and professional selling skills.  You can have all the technical expertise in the world, but if you can’t get in front of well-qualified prospects and then be able to influence them to do business with you, you’ll wind up as one of the 90% of business casualties. 

Do I sound discouraging?  Take heart — I PERSONALLY went through ALL OF THE ABOVE in my first five years of business.  No — I didn’t love it at the time … I had a particularly stressful period of about 12 months in there.  As a matter of fact, I tried to “quit” by briefly looking for a job.  When I discovered that no one was gonna hire me, I gulped, then recommitted myself.  The underlying blessing of this painful realization?  It forced me to improve.

Luckily, I hung on long enough to crack the code of coaching success.  I guess my point is, don’t be afraid to persist when you think that maybe you’re never gonna get there — that’s one of the tricks the great game of business plays on you before you succeed.  And once you do, get used to the fact you can never stop pedaling — there’s only one way to coast, and that’s downhill.   I never stop pedaling … I thrive on the challenge. 

Has it been worth it?  ABSOLUTELY — there’s no feeling in the world like making it on your own terms after being brought to your knees, humbled by the marketplace, only to rise up and triumph.  I like to say that over the years since 1992, I’m now an “overnight success.”  And you can be too — Good Luck!

Success Skills Coach Jim Rohrbach, “The Personal Fitness Trainer for Your Business,” coaches business owners, entrepreneurs and sales professionals on growing their clientele. He has helped hundreds of individuals to achieve their goals since he developed his first coaching program in 1982. You can visit Jim on the web at www.SuccessSkills.com.

Business performance measurement and management promote the use of carefully selected key performance indicators to evaluate the performance of a company, its management and employees. Management theory has long recognized that the primary purpose of a company’s management is to maximize shareholder value. For large companies with stock that freely trades in public securities markets, this is a simple process of monitoring stock price. For small, private companies the situation is quite different.        

Large, public companies have many stockholders that elect a board of directors, who in turn hire the key executives. This separation of ownership from management does not exist in small, private businesses. Often these three groups (owners, directors and management) are comprised of the exact same individuals. Small businesses become extensions of their owners in many ways including their objectives. Owners are typically more concerned about objectives like: minimizing taxes, maximizing personal income, maintaining personal lifestyles, minimizing the assets held within the business, and protecting personal assets. Pursuit of these objectives tends to minimize the value of small businesses. Owners often are not very interested in the value of their businesses until something happens that makes it important like a divorce or wanting to retire.

Do small business owners really not care about business value? Or is it because they are not accustomed to having it available? Business valuations cost thousands of dollars, so small businesses can’t afford to get one on a regular basis. If it is not practical to measure something, it becomes unimportant. If the value of small businesses were readily available, like public companies, then the owners would become interested in it. Quite possibly they might shift their business objectives to maximize value.          

Those who have tried to monitor business value without paying for regular business valuations often used industry “rule of thumb” formulas. While formulas are easy to use they have some serious drawbacks. They are based on data of unknown quality and quantity. The formulas are expressed in ranges that produce widely varying values. They do not take into consideration the unique facts and circumstances of each specific business.

There is a better solution. Much more information is now available about the sales of small, private businesses. There are a number of sources that have collected data on thousands of transactions over many years. These databases provide actual market data. Professionals and commonsense suggest that quality market data is the best source for appraising any property. The databases have some shortcomings, too. The information is limited to basic data like annual sales, asking price, cash flow, selling price, etc. And some types of businesses don’t have many transactions. The databases work best when there are many similar transactions, so common businesses like restaurants are good candidates. Averaged figures from many transactions offset any extreme or unusual cases. The ratio of selling price to annual sales, or selling price to cash flow is typically used to calculate a specific business’s value.  

These databases are available by subscriptions that are not cheap. So it is not practical for a small business owner to access them directly. And the professionals who do subscribe aren’t prone to sharing them. There are a few companies that for a small fee will search the databases for transactions involving similar businesses, calculate the average ratios, and use them to calculate the value of a small business. These low cost business valuations based on actual market data are great tools for making business value readily available for most small businesses. Using this tool, small businesses can finally start using business value as the ultimate performance indicator, just like public companies.    

David Coffman is a CPA who is accredited and certified in business valuation. He has valued hundreds of small businesses since 1997. David has worked as a CPA and advisor almost exclusively with small businesses for over 30 years. He has started dozens of businesses since his early teens, and is a lifelong student of business.

Lawrence Ferlinghetti’s Pictures of the Gone World…The Celestine Prophecy…Joy of Cooking…South Beach Diet…Worms Eat My Garbage…Winning Through Intimidation—What do these books have in common?

Answer: they all started as self-published. Self-publishing first is a long and honorable tradition. Ben Franklin, Anaïs Nin, Leo Tolstoy, Henry David Thoreau, and Walt Whitman are among the authors who first published themselves and then went to bigger houses (posthumously, in some cases).

Most authors dream about landing a big New York publisher, or at least a well-respected independent house—but with 560,626 books published in 2008 just in the United States, and only a few thousand of them coming from established royalty-paying commercial publishers, the odds are steep.

But it can be done, even if you’re not a household name. Two of my own books have made the transition (one of them to two different publishers). In 2003, I self-published a book on business ethics as a success driver, Principled Profit: Marketing That Puts People First <http://www.principledprofit.com>. First, I sold regional rights to foreign mainstream publishers in India and Mexico, and then later, I sold the U.S. rights: Principled Profit forms the basis for my eighth book, Guerrilla Marketing Goes Green: Winning Strategies to Improve Your Profits and Your Planet(co-authored with Jay Conrad Levinson), which John Wiley & Sons will publish in 2010. The newer book is a lot more comprehensive, but about 2/3 of it was in the original version.

Going back much farther, my first self-published book (and second book overall) was a skinny little paperback on low-cost marketing. That became the kernel of a much larger book, Marketing Without Megabucks: How to Sell Anything on a Shoestring, which Simon & Schuster published in 1993. I bought the book back in 1995, and then in 1998 sold the rights again, to Chelsea Green. Since a lot had changed in marketing, I once again created a whole new book but used most of the original. Grassroots Marketing: Getting Noticed in a Noisy World was published in 2000.

 So as an author, how can you up the chances that a big publisher will take you on? Here are three different strategies; if you can combine all three, publishers may even come after you:

Develop an Outstanding Marketing Platform

As much or more than the quality of your book, publishers want to know about the quality of your “marketing platform”: the number of people you can reach and perhaps convince to buy your book. If you regularly hit the speaking circuit, host your own radio or television show, participate actively in social media networks and online communities of interest, have a popular blog and/or e-zine, get interviewed in the media frequently, and have developed relationships with influential people who can promote you to their large networks, your attractiveness to a publisher is infinitely higher than the solitary scribe in a garret.

My recent successful proposal to Wiley highlighted my connectedness and my own platform. It discussed the many top-tier magazines and newspapers that have quoted me over the years, the 55 books that cite me, the thousands of people I connect with directly through my own newsletters, my blog, and my participation in discussion groups and social media—and probably most important, the 5,130,000 readers I estimated I could reach through the contacts I’ve built up with various e-zine and newsletter publishers, bloggers, and other influencers. A full seven pages of the proposal were devoted to showing off my platform.

So if you think you want to sell to a big publisher in a few years, start developing these spheres of influence NOW.

Create a Product That’s Recognized as Superior

Produce the best book on your subject, both in content and design. Win awards. Get endorsements, reviews, and course adoptions. Land a few bulk sales to catalogs, corporations or nonprofits. It’s all about third-party credibility.

Sell a Lot of Copies

If you’ve sold 10,000 or more copies of a self-published books, publishers will think you’re really HOT. If you haven’t sold 1000 yet, the self-published work will actually hurt your chances. So don’t go to other publishers until you can show convincingly that you’ve taken all the risk out of product development, and that you have a winner.

Shel Horowitz is a COG who turns unpublished writers into published authors, and also provides authors with affordable, effective, and ethical marketing strategic planning and copywriting. His most recent book is Grassroots Marketing for Authors and Publishers, http://www.grassrootsmarketingforauthors.com. Reach him at 413-586-2388, or use the contact form at http://shelhorowitz.com/#contact

From where does the value of a business come? Like any investment, business value is a function of the returns a business generates and the risks associated with owning it.

Returns

The returns from a business are generally measured by its ability to generate earnings (earning capacity). The value of a company that does not have earning capacity comes primarily from its tangible assets.  

Earning capacity is not just net profits or cash flow. Financial statements and tax returns do not reflect economic reality. They must be adjusted to compensate for accounting principles, tax regulations, and related party dealings that do not accurately portray what really happened.

Earning capacity is not created in one year. A company must build a history of generating earnings consistently. Trends should be analyzed, and unusual or non-recurring events should be eliminated. These events can sometimes be the accumulated effect of incremental changes, so don’t be too quick to factor them out.         

Value is not created by an earning capacity that is just average. A company can only create value by exceeding the earning capacity expected by industry or intrinsic benchmarks. The earning capacity of a business can be used to value the entire entity or just its intangible (goodwill) value depending on the valuation method used.

Many small businesses don’t earn enough to create value. Their earnings often do not provide the owners with adequate compensation. Some of these companies have existed for decades, have an established customer base, and have excellent reputations. Their owners have worked hard to build the business to its current state, but they lack one important thing – earning capacity. Without it these small businesses have little or no goodwill value. Intangible assets like loyal, repeat customers and a great reputation have no value if the owners can’t convert them into earnings. 

Risks

The many risks associated with owning a business can be separated into two types – internal and external. Factors such as management ability and depth, sales and marketing programs, customer base, financial condition, location, condition of facilities, and operating conditions must be considered to determine the internal risks. The competitive environment, economic conditions, industry trends, legal and political environment, and government regulation must be considered to estimate the level of external risk.

One of the biggest risks associated with a small business is its over-reliance on the owner. If the owner dies, becomes disabled, or sells the business, the risk that the business will be adversely affected is great. This risk is often so high that the business has no value other than its tangible assets. To reduce this risk owners must gradually make themselves less important to the business by delegating, and setting up systems and procedures.

Conclusion

Sooner or later the value of your business will become important to you. When that time comes the business that you put so much time, energy and money into may not be worth much, if you don’t start paying attention to what really drives business value – earning capacity and risk.

David Coffman is a CPA who is accredited and certified in business valuation. He has valued hundreds of small businesses since 1997. David has worked as a CPA and advisor almost exclusively with small businesses for over 30 years. He has started dozens of businesses since his early teens, and is a lifelong student of business.

1. PROTECT YOUR PERSONAL ASSETS:

In short, this means you absolutely positively need to create a properly formed limited liability entity (LLC, C-Corp, S-Corp, etc.) if you plan on conducting any kind of business activity anywhere. The old “sole proprietorship” that you can file in your county offers no legal distinction between YOU and the company. This means any action filed against you in the course of your business activities will be directed at you and more importantly your personal assets. A limited liability entity will serve as a shield to protect your personal assets from a law suit. Forming a proper business entity should not be a daunting and expensive process, but be sure to discuss it with a competent legal advisor so you understand all the responsibilities, formalities and obligations involved.

2. PAPER YOUR DEALS PROPERLY:

Too many new businesses anxious to get the revenue ball rolling ignore the importance of having the appropriate contracts and agreements prepared to protect their interests. This can be a big mistake. I always make sure my clients have, at the very least, their primary contract(s) (service agreement, EULA, License, Privacy Policy, etc.) developed BEFORE they begin transacting business. Bootstrappers also need to be keenly aware that copying and pasting another’s contract to your website or using some “boilerplate” contract you grabbed online can be extremely counterproductive. Every transaction, business, website, individual or company has unique issues that should be addressed before committing to any deal. Remember, this is all about an “ounce of prevention . . .”

3. MAKE SURE YOUR TRADEMARK DUE DILIGENCE IS DONE BEFORE YOU START SPENDING BIG MONEY ON YOUR BRAND!

None of us would consider buying a business without conducting the proper due diligence on it. Yet so many entrepreneurs give short shrift to their trademark due diligence, which is also a form of insurance. Here is the scenario we see all the time: new business starts without giving any consideration to their brand or product names (trademarks). In the beginning, this poses no issue. But then things start moving along and more meaningful money is spent on marketing, advertising and branding efforts. Now, this new business is well on the radar of their competitors and just as things look great – BAMM – you are hit with a Cease & Desist letter from a firm poised to launch an infringement action. Now you realize that you spent all that money on a brand name you have no right to use. If you intend to use your business name as a trademark that identifies your goods or services, you should have that name searched, cleared and filed before you start making a significant investment. Just filing the name with your state of registration does not protect your trademark. Having this done correctly from a knowledgeable professional does not have to break the bank, but it should be in your budget and not overlooked.

4. LEGAL RESEARCH ON YOUR SPECIFIC BUSINESS OPERATIONS:

It should go without saying that if there is any question about the legality of the nature of your business, it should be researched before making any investment. I can’t tell how new entrepreneurs come to us with what they think is just a great idea only to realize that it violates the laws of all 50 states and several treaties. Many types of businesses, such as investment advising, financing, sweepstakes/contests, even some retail and e-commerce businesses all require the proper licenses or registrations. In many instances, the entrepreneur can unwittingly be committing a crime. So this is serious. Make sure your business operations clear all necessary federal and state regulations and laws before committing and putting yourself in a compromising situation.

This is by no means an exhaustive list of issues a new business needs to consider. I merely suggested what I think are some of the most important aspects often overlooked by a bootstrapping entrepreneur. I know how expensive reliable legal services can be, which is exactly why I created our service, but wherever possible you should consult a professional to help you avoid the many pitfalls a new business can face.

Frank Natoli, Esq., is the Founder & CEO of the law firm of Natoli-Lapin, LLC, home of Lantern Legal Services. Lantern Legal their suite of cost-effective, flat-rate legal solutions designed for entrepreneurs, small businesses, independent inventors & artists. Feel free to contact them for a FREE legal consult – your inquiries are always welcome!
Support@LanternLegal.com or visit us at www.LanternLegal.com.

*This posting should be considered general advice and is NOT intended to be a substitute for the advice of competent legal counsel.

How is business? It is the superficial question many people ask business owners in lieu of the standard “how are you”. Few really care about or even listen to your response because they know it is just meaningless chi-chat. But do you really know how your business is performing? Meaning more than just sales growth or profitability trends. Have you ever done an in-depth analysis of your business? Here’s how you can.

SWOT Analysis

A common and long-standing tool is to list your strengths, weaknesses, opportunities, and threats (SWOT). It is a simple concept that makes lots of sense. Knowing your SWOT is important and useful information. Strengths and weaknesses measure internal performance and competence. Opportunities and threats assess the level of risk from external conditions. There are many articles about SWOT, but because this type of analysis is so broad and each business is so unique, it is difficult to describe how to apply it to any specific situation. One simple SWOT method is to divide a sheet of paper into four sections. Draw a vertical line down the center and a horizontal line across the middle of the page. Use the top left section to list your strengths, bottom left for weaknesses, top right for opportunities, and bottom right for threats. Then prioritize the items within each section by importance.      

Whether you should focus on fixing the negative things or developing the positive ones is a ‘glass half empty or half full’ kind of debate that depends on your attitude and perspective. Either way a SWOT analysis really doesn’t provide much guidance. Many attempts at a SWOT analysis fall flat when the enormity of the task is realized. Where do you start? What factors should be considered? Where should you focus? SWOT analysis is a great tool, but users need some guidance and structure to make it work.

Five Forces Analysis

In his books “Competitive Strategy” and “Competitive Advantage”, Michael Porter introduced the five forces of competition. They are the: 1) bargaining power of customers, 2) bargaining power of suppliers, 3) threat of new entrants, 4) threat of rivalry from existing competitors, and 5) threat of substitution. The five forces provide a framework that makes external risks easier to grasp and evaluate.     

Combining SWOT and Five Forces

Both SWOT and Five Forces are analytical tools that are widely used by consultants, researchers and other professionals. The Five Forces method is basically a refinement of the external part of a SWOT analysis. So it makes sense to combine these tools to create a hybrid method.

Factors to Consider

For any analysis to be worthwhile, it must consider all aspects of the business. There are many factors that are common to virtually every type of business. To insure that no significant factor is overlooked, the analysis must be structured. Internally, five business sectors should be analyzed: 1) management, 2) workforce, 3) sales and marketing, 4) operations, and 5) financial. Externally, each of the five forces needs to be evaluated. Since every business is unique, the specific factors within each sector must be tailored specifically for the business being analyzed. 

Rating the Factors 

After the specific factors are established, the business must be rated by each factor. Each item should be rated in two ways: 1) the importance of the factor to the business, and 2) the business’s competence (internal) or risk level (external). Rate the importance using an alphabetical scale from A to E, with A indicating very important and E not important. Rate the competence or risk level using a numerical scale from 1 to 5, with 1 being very proficient or not vulnerable and 5 being deficient or very vulnerable. 

Categorizing the Results 

Using the dual rating system the results can be categorized by priority. Important, but deficient or very vulnerable (A5) factors may be life threatening. Important, and proficient or not vulnerable (A1) factors are core strengths. The results between the extremes are classified into: critical flaws, moderate weaknesses, potential weaknesses, neutral, potential strengths, and secondary strengths. 

Plan of Action 

Each category helps determine what needs to be done and when. Life threatening factors must be addressed immediately. Critical flaws come next. Moderate weaknesses aren’t killers but correcting them can greatly improve performance. Potential and secondary strengths should be evaluated to determine if it they are worth developing. Core strengths are what the business does best. Too many core strengths indicate that either business resources are being spread to thin, or the analysis wasn’t objective. Relying too heavily on a core strength can turn into a big weakness if the business environment changes in ways that make the strength much less important or even irrelevant.

Conclusion

Analyzing the performance of a business is a tough task to tackle, especially for owners whose expertise and time lies in running the day-to-day operations. The hybrid method, described above, provides a framework that breaks the task into manageable pieces, and automatically prioritizes the results.

Analyzing your business will show you how and where to improve its performance. Then when someone asks you ”how is business”, you will have something worthwhile to say, even if they aren’t listening.

David Coffman is a CPA who is accredited and certified in business valuation. He has valued hundreds of small businesses since 1997. David has worked as a CPA and advisor almost exclusively with small businesses for over 30 years. He has started dozens of businesses since his early teens, and is a lifelong student of business.

For many, the American dream of owning a business is in queue right behind owning a home. I was a teenager when I owned my first business. Since then I have bought or started many businesses and helped others do the same. Here are some common mistakes I have witnessed or committed myself.

Paying too much

This results from the combination of all other mistakes. Many new business owners set themselves up for failure by paying too much, which results in higher loan payments, lower operating funds, and reduced borrowing capacity.

Letting your emotions rule

If you have always dreamed of owning a business, it is very easy to get caught up in the strong emotions invoked by seeing those dreams coming true. To counteract your emotions, take your time, do your homework, and enlist the help of objective advisors.

Paying for potential

You should only pay for the business as it stands at the date of purchase, not what it could be in the future. You will have to spend time, effort, and money to develop its potential. The seller chose not to invest these things, so he does not deserve to be paid for them.

Not evaluating yourself

Do you have what it takes to run this business? Try to match your strengths to the important duties you will be required to perform. Running a small business requires the owner to do many things. No one can be good at them all, so make provisions for those areas in which you are the weakest. Some tasks like payroll and bookkeeping can easily be contracted to outside vendors. Possibly your spouse, other family member, or a partner could do things that you cannot or do not want to do.

Not building a team of experts

At a bare minimum, you should enlist the aid of an attorney and a CPA. The attorney can prepare and review documents, help structure the deal, and make you aware of legal and liability issues. The CPA can provide a financial analysis of the business, and advise you about tax and accounting matters. You should consider adding a business valuation professional. His valuation report can be used to determine the reasonableness of the asking price, negotiate a lower price, and provide valuable information about the business, the industry, the competition, and the economic conditions.

Relying on bad information

You should verify all important information about the business. Your CPA can check financial information like receivables, payables, and inventory. Your attorney can review loan documents, leases, and contracts. Your business valuation professional can analyze the competition, the industry, and the economic conditions. Use independent appraisers to value real estate and equipment. Get a credit report on the business through your CPA or banker. You can do some of the investigating yourself to save money, but do not cut too many corners – it may cost you in the long run.

Changing too much, too fast

Once you own the business, you will be tempted to start making wholesale changes from day one. You risk alienating long-time employees and customers. Unless the business is in bad financial condition and needs immediate action, its better to take some time to get to know the business, your employees, and your customers before making changes. This is a perfect time to solicit suggestions from employees and customers.

Buying a business because you like to do what the business does

One reason restaurants have a high failure rate is people buy or start them because they like to cook. Very few restaurant owners spend time cooking. Their time is spent managing staff, ordering supplies, doing paperwork, and handling daily crises. A small business owner must wear many hats – including that of manager.

Not being interested in the business’s product or service

I made the mistake of thinking that because I am a CPA and smart that I could own and operate any business. I bought a business that sold high-performance auto parts to young men who drove jacked-up, four-wheel drive pickup trucks and went to the drag races every weekend. I did not do either and never understood why anyone would. I could not relate to my customers and went out of business in about a year.

Conclusion

Buying a business is a complicated, emotional process. By avoiding these costly mistakes, you can prevent turning your dream into a nightmare.

David Coffman is a CPA who is accredited and certified in business valuation. He has valued hundreds of small businesses since 1997. David has worked as a CPA and advisor almost exclusively with small businesses for over 30 years. He has started dozens of businesses since his early teens, and is a lifelong student of business.

The number one concern I have observed with our clients’ online terms and agreements is NOT with the substantive drafting of the provisions, but with the way these contracts (and yes, they are binding contracts) are implemented on the website. That said, I thought for my first entry, I would offer a quick guide on how to properly implement online terms and agreements for maximum enforceability.

1)      Users need a meaningful opportunity to review your terms and proper notice that some form of action will bind them:

Make sure you give notice to users that there is a binding agreement in place that governs their use of the site. This is covered, of course, if you use a “click-through” agreement because they have to actually agree to terms in order to access the site. Also, Users need to be able to actually review your terms. For example, don’t have the terms on a timer that will then disappear and avoid using “pop-up” boxes for contract terms – the FTC doesn’t like this. And while the use of “browse-wrap” terms may be enforceable (where assent (agreement) is given by simply visiting the site and taking some action on the site, like turning a page), they are not as strong as the “click-through” alternative.

2) Users must actually take that action:

The action can be anything, really, like turning a web page, or entering data, or clicking on an icon. But whatever it is, they need to perform that action in order to be bound.

3) Make this notice of terms “immediately available” when visitors come:

This is important; display NOTICE of your binding agreement on your home page and above the fold (on top) if applicable. Assent to your terms (for all intensive purposes) must occur prior to the User’s action. Otherwise, you run the risk that the terms become unenforceable.

4) Make clear that it is a “binding agreement” and not just a suggestion or request to read terms – It must appear in your notice:

For example, “By using this Website in anyway (or by clicking through to another page, or submitting a query, etc.), the User is bound to our Terms of Use.”

You are permitted to use a hyper-link to your terms in your notice, but note that you should set it off from other text by size, color and type of font. Also, you cannot have more than two (2) layers of links, the wording has to be clear and, again, place the notice above the fold.

5) You need to make sure that the User can:

1. Read the terms (at their own pace)
2. Be able to navigate back and forth, and
3. Be able to revisit the terms (not just a one-time viewing never to be seen
again kinda deal!)

6) Users do not have to actually read the terms to be bound nor do they need to be able to negotiate them:

Remember, most people will never read them and they do NOT have to (even though it is in their interest to do so).

7) The presentation must be “conspicuous” (size, font, etc.):

This is intended to protect your interest by making sure Users cannot say that they did not see important terms. Do not try to hide things with font size!

Proof issues – avoid “click-stream data” because it can create privacy issues and make sure you keep old versions of your websites:

Be prepared to prove that your User was informed and that notice was given and the explicit action was taken, thus assent to your terms is established. The best way is to keep a record of those Users who “click through” as an action of assent, as opposed to monitoring all click-streams.

9) Notice must precede specified action of assent:

You always want to place your notice of terms up front (I can’t say that enough!).

10) Lastly, Terms of Use that are “subject to change without notice” are
not always enforceable:

The better way is to e-mail blast an advanced notice of any changes to your terms or Privacy Policy and allow members to “opt-out” if they do not agree to those changes. They rarely will, and you can make it proactive, meaning they have to take action or they consent by their omission. That is, require action on their part to opt out within a reasonable time frame.

These measures were offered up as a “best practice” quick-guide for enforceability. There is, of course, a lot more that concerns the enforceability of any contract. But taking even a few small steps can transform your online docs from toothless into a mouth full of fangs!*

Frank Natoli, Esq., is the Founder & CEO of the law firm of Natoli-Lapin, LLC, home of Lantern Legal Services. Lantern Legal their suite of cost-effective, flat-rate legal solutions designed for entrepreneurs, small businesses, independent inventors & artists. Feel free to contact them for a FREE legal consult – your inquiries are always welcome!
Support@LanternLegal.com or visit us at www.LanternLegal.com.

*This posting should be considered general advice and is NOT intended to be a substitute for the advice of competent legal counsel.