Four Keys to a Good Business Presentation

There is nothing worse than wasting someone’s time.  It’s one of the few things we cherish most, but don’t have enough of it.  We can’t get anymore of it either!

Knowing how to give a good presentation is an essential skill to have.  Whether you are pitching for money, selling to a prospective client, giving a presentation at work, or even asking for a raise; a good presentation can tip the scales in your favor. With such little time at our disposal, it’s easy lose attention quickly.  This is even truer today with so many things vying for it.  According to Statistic Brain, the average attention has decreased from 12 second in 2000 to 8 seconds in 2013.  That’s an incredibly short amount of time.  So what should you do to keep it on your message?

Know your content

You know what they say…practice makes perfect.  You have to practice your speech over and over to ensure that you know the material and have the timing right. Steve Jobs would spend many hours practicing his speeches before he went public with them and he was always known to be a great speaker. Knowing and having confidence in the content will allow you to keep better eye contact as well as allowing you to better scan your audience.  Scanning your audience allows you to pick up on their visual cues and subtle hints which can allow you to gauge and make necessary adjustments on the fly.

Keep the slide content to a minimum

Keeping the slides short and to the point allows your audience to focus on you and your words.  Studies have shown that multitasking decreases productivity by as much as 40%.  If your audience is reading your slides, do you think they are really comprehending everything you are saying?

Keep your audience in mind

Understanding who you will be speaking to is paramount in ensuring the message gets across.  You will need to tailor your presentation to the demographic(s) you are addressing.  You would not talk to a group of business people the same way you would talk to a non-profit group for example.  You would use different terminology and possibly need to avoid controversial topics.    

Maintain their attention

How do you keep your audiences attention long enough to get your point across? This is the tough one, but you can do it.  Adding entertainment value to your presentation can surely help.  Being comical with some of your content can liven up your audience and refocus their attention.  Team presentations can add value because you can play off one another and alternate speaking turns.  I recommend these be quick alternations in order to briefly shift your audience’s focus back and forth while keeping them engaged.  Don’t just section each person into chunks of regurgitation of information.

Keep these four keys in mind when preparing for your next presentation.  They may just make it a success. Thank you for stopping by and as always, remember to “Stop Doing the Mundane, and Start Getting Weird!”

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Establishing Company Values

Well-established and well-known statements of mission and vision are necessary to establishing company values. It is not enough to just write down what and who you want your company to be in your business plan and then file it away, never to look at it again. Mission and vision statements are so much more useful when their words resonate throughout your business.

The mission statement is used to tell you, your employees, and your customers what your goal is in doing business. Your vision tells them where you’re planning to go. Let’s take a local dry cleaning business for example. Their mission and vision statements might look like this:

Mission: Happy Clean Service.

Vision: Always there when we’re needed.

This example is very simple and easy to understand while communicating that you offer friendly service in a clean environment and plan to remain flexible to better serve your customers.

Many mission and vision statements vary in length, but shorter is better. Take the Smithsonian  Mission Statement for example: “The increase and diffusion of knowledge.” This is short, sweet and to the point. Anyone can learn it in moments and recite it later without very much difficulty. This is key in the dissemination of your core purpose and values.

These statements give your organization guidelines to live by and you will ultimately develop strategies to carry them out. When everyone within your organization knows and understands your mission and vision, they will have better clarity in understanding how to carry out their duties in the name of the organization. This helps everybody to work together toward a common goal while holding each other accountable.

Consistent projection of your mission and vision is required and they should serve as a guide behind all decisions. It is not enough to just put it on the wall and be done. You have to rally your troops behind them so they become shared principles and goals. Help the members of your organization understand why they are important and consistently make iterations as necessary.

Once every part of your business is singing the same tune, then it gets projected out to your public in every interaction. This could be at the point-of-sale, your vendor interactions, or even your employees bringing it home with them and telling their friends. Your business becomes recognized as a “well-oiled machine” (as long as you’re doing everything else correctly too!) and others’ trust in you builds. A culture emerges.

Get started on you mission and vision statement today! Check this Mission Statement Generator out to help you get started with yours. Thank you for stopping by and remember to “Stop Doing the Mundane, and Start Getting Weird”!

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The Interest Tax Shield and Write-offs Explained– Part 3: Write-offs

I don’t know why, but all I hear around tax time is “Let’s buy this or that because we need more write-offs!”  This is a tactful strategy for decreasing your tax liability while acquiring something you need, but those purchases should not be made frivolously.  Spending leftover money at the end of the year should NOT be your main goal.   Much like the interest tax shield, write-offs aren’t all they’re cracked up to be.  Let me explain why.

Only Buy What you Need

Expenses typically referred to in the small business community as “write-offs”, are purchases made to offset the tax liability that will be incurred after the end of the fiscal year.  In other words, you have money left over and you may think you need to spend it so that you don’t pay a seemingly large amount of taxes.  This tactic should only be used to buy things that would have been purchased normally or items that you will need to purchase within the next year.  If you buy frivolous things, then you are just wasting money to avoid paying the tax on those leftover dollars.

Nobody Likes Taxes

I don’t know a single soul who loves to pay taxes, but you may want to.  I’ll clarify this in the next section.  Let me clarify why with a brief on taxes.  Taxes are charged on a business’ net income.  This is the total Revenues minus Expenses, Depreciation, and Interest.  Let’s say you have a net income of $100,000 after you’ve paid yourself the wage you deserve.  If you’re taxed as a partnership or sole proprietorship (includes S-Corps and LLCs) then the taxes you pay are based on the personal income tax rates.  Therefore, your total tax liability includes what you’ve paid yourself and what the company still has in net income.

So if you’ve paid yourself $100k and the business has $100k in net income, then you are taxed as if you made $200k.  I think this is mostly a perception issue because you will receive a fairly high tax bill.  You don’t notice it as much when you pay yourself because taxes come out of every paycheck, but money that hasn’t been distributed yet will not have had taxes taken out of it resulting in seeing the full tax liability amount in one big chunk.

Build Your War Chest

The world is full of opportunities and if you’re constantly spending everything you have to avoid taxes, then you will miss out.  If you had a war chest built up before the economic downturn of 2008, how different would things be for you today? Saving money is tough to do since you end up giving 25% to 35% of everything you save to Uncle Sam, but that’s just the cost of doing business.  It’s the cost of living in America.  Check out this post on “How to Set Up Your Small Business War Chest” if you’d like to learn more.

I hope that I have clarified some things for you regarding the interest tax shield and write-offs.  Build you strategy to start that war chest today and remember to “Stop Doing the Mundane, and Start Getting Weird!”

 

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The Interest Tax Shield and Write-offs Explained – Part 2: The Interest Tax Shield

In my previous post we covered the importance of purchasing decisions. Since most large purchases are done on credit, let’s now discuss the interest tax shield created from using that credit.

When you purchase something on credit, you are charged interest until the loan is paid off.  Figure 1 is an example of an amortization table for a 60 month(5 year) $100,000 loan at 4% interest.  As you can see from the table, the amount of every payment is made up of interest and principle. Notice how the interest portion decreases while the principle portion increases over the course of the loan. This is typical.

There are two things you are able to write-off with big purchases like this and that is the interest incurred and the depreciation. I’m not an accountant, but I do have an understanding of depreciation and how it affects tax liability. Figure 2 below shows the annual straight-line depreciation in column 2 of a $100,000 purchase with a salvage value of $10,000 over 5 years. The straight-line depreciation method subtracts the salvage value from the purchase price and then divides that number by the number of years. (i.e. $100,000 – $10,000 = $90,000/5 = $18,000)

Columns 3-5 of Figure 2 shows the total principle paid each year (3), total interest paid each year (4), and the total of all of the payments to the bank each year (5). The reduction in tax liability is derived from adding the amount of depreciation and interest for each year. This is where it gets tricky. If you compare this total to the amount of the yearly cash outflow incurred from financing you will find that you still have a tax liability that you will need to pay on. In other words, you paid out more than your possible tax reduction.

Normal expenses are written off 100%. However, in this scenario, you received a 98% write-off in Year 1 and an 83% write-off in Year 5. Assuming a tax rate of 35% your total tax liability in this scenario over the 5 years is $10,000 x 35% = $3,500. Add this number to the total interest paid and you get around $14,000 paid over price to make that purchase. The notion of a tax shield doesn’t seem like much of a shield now does it?

On the flip side, let’s say you paid cash instead of taking out a loan. Since you can’t write off large asset purchases in the year they were made, you would end up paying 35% in taxes of $82,000 when you subtract out Year 1 depreciation totaling $28,700. The $82,000 is perceived as profit even though it’s not in the bank. This is a significant up front cost, but it gets paid back to you by being able to depreciate that asset over the next 4 years. This means that your tax liability is reduced by $18,000 each year resulting in a future saving of $25,200 at the end of year 5. In this scenario, you only paid an additional $3,500 to make the purchase rather than the $14,000 in the previous scenario.

So the answer to the question of cash vs. credit can be answered fairly simply if this was all you needed to worry about. Other factors that will influence your decision is the need for operating cash flow, immediate necessity, opportunity costs that could come up later, and the overall financial health of your business. Debt is a tool to be leveraged and a cost benefit analysis will tell you if it’s worth the risk.

Click here to be taken to the next post in this series about write-offs!

 

 

The Interest Tax Shield and Write-offs Explained – Part 1: Purchasing Decisions

In order to discuss the interest tax shield and write-offs we should first take a look at purchasing
decisions.  Purchasing decisions are very important to the well being of the business.  Ill-thought out decisions waste resource and have negative impacts on the business.

Smaller purchases are less impactful, but many small purchases can add up quickly.  Large purchases that don’t quite work the way you need them to or not at all have an affect that includes more than just the money spent.  It can include losses experienced from learning curves, loss in productivity, business process reengineering costs, and opportunity costs.  For a local small business, this can result in tens of thousands of dollars in wasted resources.  For big corporate, it can result in millions, which is why they have teams dedicated to purchasing and will typically hire consultants to ensure proper implementation of more complex purchases.

Large purchases made by small business are generally garnered through the use of credit.  (We will discuss using credit for purchasing deeper in the next post)  Sometimes we can be over optimistic about the “if we buy it/build it they will come” mentality and we fail to perform the necessary steps to ensure the purchase is a good one.   Good purchasers perform intensive research into products and their comparables generating a list of advantages and disadvantages among the top contenders.  Then they look for product reviews and call on references to get real-world information. Once a decision is made on which product is the best fit, they perform a cost-benefit analysis.  This analysis is then compared to all of the other necessary purchases the business needs to see which one is most important and which one can get the business the biggest bang for their buck.

Let’s see this in action and use a bakery for an example.  The bakery is at capacity with production and they can either buy a new oven to increase capacity or they can marginally increase their prices, which should decrease demand.  Which of these sounds better to you?

If you buy the oven, you risk a large capital expenditure, which will decrease monthly cash flow, but you have the potential to offset it and gain more profits by selling more product.  However, there is no guarantee that you can sell enough to run the new oven at capacity and therefore maximize profits.

If you marginally increase the price, you will make more money on every item you sell, but you can lose customers that you may never be able to get back.  The question here will be if you can capture enough revenues to offset the loss in demand.  This is a very tough decision and cost-benefit analyses are never cut and dry, but you must put a value to everything. Be conservative, but as accurate as possible.  A consequences table can aid in this sort of decision-making process.

Now that we’ve covered purchasing decisions, let’s take a look at the interest tax shield and its affect on the health of your business. Check back tomorrow for Part 2.

 

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Business Lessons in the Most Unexpected Places

Have you heard of the show Kitchen Nightmares with Chef Gordon Ramsay? Every time I watch this show, I get some really good business advice that I can usually adapt to other businesses.

Every show introduces a new failing restaurant with new problems and Chef Ramsay is there to fix it. It starts with a brief introduction of the restaurant, but the show really starts when Ramsay first comes into the establishment and orders some menu items so that he can assess the food. He picks through the food addressing its presentation and then tastes it, even tasting some of the most questionable items and shares his thoughts with the camera.

Once he finishes trying the food, he then takes a tour of the restaurant pointing out any problems he sees. After this, he sticks around for dinner service only watching to see how the restaurant normally works and taking note of the feedback received from the patrons. At the end of the night he debriefs the owners and staff discussing all of the problems he saw. He then departs to formulate a strategy with how to turn the restaurant around within a week.

This is where it gets really interesting and many more lessons can be had with the way he handles owner/employee situations, restaurant/food presentation, customer service, and business offerings. He mostly spends the week getting the restaurant cleaned, establishing good practices for food handling, training the chefs on new menu items, and training the rest of the staff on the new menu and service efficiencies. The restaurant usually gets a face-lift too and ends with a re-opening where area patrons can come and give feedback on the revamp. However, during this weeklong process of restaurant improvement, more personality conflict issues typically come out with the owners and/or the staff.

It is expected to have change resistant issues come out when you are essentially going through business process reengineering practices, but these issues compound on top of core issues that Ramsay is able to bring to the top and address. It gets really exciting to see how he handles these issues. He typically has to use tough love to get through to some of the most stubborn people and almost gets them to a point of total meltdown or to where they start stonewalling. Then he starts to reel them back in with empathy. This gets them to the point of acceptance because they know that deep down; Ramsay is just trying to help them succeed.

This process excites me because he really helps these businesses to be able to prosper, and the results are instantly measurable. He walks away knowing that he gave another restaurant the tools to thrive and the owners and staff are extremely grateful for everything he has done. It’s hard to really express this gratitude in words, but imagine you were poor and somebody just gave you a million dollars out of the kindness of their heart.

Check out the show when you get a chance and you’ll see what I mean.  Thank you for reading my post and remember to “Stop Doing the Mundane, and Start Getting Wierd!”

 

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Growth Through Feedback – The Employees

Your employees can be your greatest asset.  Their performance can have a major impact on the bottom line whether it’s from doing their jobs or talking about your company within their circles.  This is why Zappos CEO, Tony Hsieh, says they pay employees $2000 to quit in an interview with Big Think.  Zappos does this because according to Tony:

“…we want to make sure that we get employees that are, really believe in the long-term vision of the company, want to be a part of that, and really believe that this is the company that is right for them from the culture perspective. And you know, we do occasionally have people who take that offer, and I actually think it’s a win-win for both sides.”

If your employees are not engaged in the company’s mission and vision then they are just there to collect a paycheck.  So how do you get them engaged again?  You may not have the $2000 to pay an employee to leave, but you can figure out how to get them motivated again.  This concept of 360 degree feedback isn’t new, but I think many don’t understand it or are afraid of it.

I recently read an old Harvard Business Review article titled “The Young and the Clueless” by Kerry A. Bunker, Kathy E. Kram, and Sharon Ting from 2002 that really made this concept click for me. They discussed a deeper form of 360 degree feedback that widened the net to include a wider range of people that the subject interacts with and giving them an “…opportunity to read verbatim responses to open-ended questions. Such detailed and extensive feedback can help a person see (themself) more as others do…”  This not only helps the individual to really take a long hard look at their self, but can also aid in increasing their emotional intelligence.  They begin to understand how their actions/reactions have affected the people around them and can then begin to understand others on a more emotional level.

Getting truthful feedback can be a hard pill to swallow, but ultimately leads to personal growth in the end.   This type of growth is not only good for the individual, but for the company as a whole.  Communication channels become repaired and strengthened allowing coworkers to work better together and managers to become better leaders.  This translates into increased productivity, customer service, profits, and overall employee morale.

Develop your feedback plan today and start growing your company’s culture.  Your company will be better off for it. Thank you for reading this and remember to “Stop Doing the Mundane, and Start Getting Weird!”

 

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Growth Through Feedback – The Company

Who tells you that you’re doing it wrong?  You may have those few customers that aren’t afraid to let you have it, but what about those that give you a try and then never return without ever knowing why not?

Feedback is a powerful tool and many companies have embraced that fact.  It is now a major part of their business.  Think about how many companies have offered you a little gift, or even a chance to win a big prize just for filling out a very simple survey.  There are even some that call you shortly after they’ve provided a service to you.  The employee you’ve dealt with will typically ask if you’ve been satisfied with the service they provided.  If you say yes, they follow up with telling you that you will receive a phone survey usually within a couple days and that they would appreciate high marks on it. Should you say no, they will attempt to fix your issue until you say yes.

Employee wages and bonuses are often tied to these customer service metrics.  These companies want to know that their boots on the ground are offering you the best service possible.  They want to ensure that you are happy and haven’t been given any reason to shop the competition.  As you may or may not know, it is much more expensive to acquire a new customer than it is to focus on keeping your existing ones.

Surveys are also given to evaluate the service or product in an effort to improve it.  For instance: On products they want to know how you use it, how easy it is to use, are you using all the features, and what features you’d like to see added.  They offer you thoughts and suggestions only for the cost of doing the survey and you decide how you can improve your process or product.  This is social research & design at work.

Surveys can be given through the use of robust expensive systems that offer complex analytical tools, but an e-mail survey or a Survey Monkey can be done for minimal cost.  This is also a good way to introduce new products.  Getting the product into your target customer’s hands and capturing their thoughts on the product can help you to develop an MVP. (Minimum Viable Product)  This is extremely useful in preventing you from wasting resources on unnecessary extra features and making the improvements that add value. In reality, the definition of your product or service has increasingly become market driven.

As you can see, feedback can be a powerful tool.  Keep in mind, however,  that a customer is more likely to be less forthright to your face than an anonymous questionnaire.  Start getting feedback from your customers and see where it gets you!  And as always, “Stop Doing the Mundane, and Start Getting Weird!”

 

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Three accounting tips I’ve picked up along the way.

From a closet full of receipts to a streamlined accounting program, every business has to account for all of its transactions in some way.  Here’s a few tips that I’ve picked up along the way.

If you don’t have an accounting program, get one.  That wasn’t my first tip, but it needed to be addressed.  There a many different small business accounting programs out there, but I will be referencing QuickBooks, since it is the most widely used small business accounting system out there and the one I am most familiar with.  Here’s a review of the best small business accounting systems by PC Magazine

Tip #1 – Organize Your Books

While I had taken business accounting courses during my academic career, looking at Profit & Loss’s, Balance Sheets, and Cash Flow statements for my own business was a new concept.  It definitely took some trial and error to get it to an understandable format, but once I did, it was much easier to interpret.

I found that by properly assigning expenses into cost of goods sold or expense made all the difference.  The accounting system organizes your P&L to start with revenues, subtract out cost of goods sold, and then subtract out all other expenses.  Once I did this, I could much more easily understand what I was spending in overhead.  This then allowed me come up with a more precise overhead figure that I could use when building proposals.

The other thing I did was separating sales categories.  This helped me to understand what was selling.  You could take it further and organize your COGS by service or product to help determine where you are making the most money.

Tip #2 – Utilize the tools that you accounting program provides

Your accounting program was built with sets of tools to help you manage your business in real time.  If you aren’t taking advantage of these tools, then your ability to manage your business will be weakened significantly.  This is where you start to run by feel instead of by concrete data.  One such basic function is entering bills.  Do you enter bills as they come in, or do you let them sit in a stack until they come due and then pay them and only record them in the check registry?  If you enter them as they come in then, not only can you get bill reminders that will help you avoid late fees, but you can get a much better control over cash flow.

Tip #3 – Cash vs. Accrual

Gaining an understanding of cash vs. accrual and how they change the numbers of your P&L is key.  I run a cash basis business for tax purposes, but I manage it with accrual and cash combined.  Accrual tells me what I am going to have, where cash tells me what I have right now.  If I did not enter bills as they come in, then I would not be able to see any future cash flow issues.  Typically, we are slow to enter expenses, but quick to deposit checks.  If you ran cash basis and looked at your receivables you would see what you would have if you collected everything within the next 30 days, but more than likely you are just taking a guess at the amount of the expenses you have to offset that by.  Additionally, we typically underestimate this number, which can cause issues and a false sense of security.

I hope this helps you gain some more insight into your accounting practices.  Look at what you can do today to help you better manage your business.  “Stop Doing the Mundane, and Start Getting Weird!”

 

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Outsourcing: Let the Professionals Do Their Job

So you have a can do attitude with your fists clinching the purse strings. Is that really the fastest route from point A to point B?

Almost every small business owner’s concern is the budget. They typically think, “Why should I pay somebody to do that, when I can do it myself?” I would agree with this, especially in the beginning stages, but you will eventually get to a point where the opportunity cost of taking that project or task on yourself is too high. We have a finite amount of time and your time is best spent on your core competency.

At times, there are projects that are like a shiny new toy that you just can’t resist. You think it will be fun and easy at first, until you dive in and really find out how much of a time sucker it really was. There is always a learning curve associated with taking on new projects and this can translate into time wasted. What happens when you hit a wall with the project? Do you take on help to finish it? Or do you let it go and tell yourself you’ll come back to it later?

The reality is that many of the functions we perform in our business can be outsourced. If you put your business on a bar graph that ranked how well you perform each function of your business, what would it look like? You would obviously have very high numbers in you core competency and you probably have some other good business skills that rank up there too. However, there will be some areas where you will probably not rank so high. What if you could help raise the competency in those areas without taking on new personnel?

Let’s take human resources for instance. Hiring a human resources professional can come with a hefty price tag. The median income for an HR Generalist is $49,409 per year according to salary.com.  A small business usually cannot afford this, but there are options.

You can outsource your entire HR function to a Professional Employer Organization that will do everything from payroll and benefits administration to hiring and even firing an employee for anywhere around 3% to 5% of annual payroll. So if you had $300,000 in annual payroll, your HR can be completely taken care of for $9,000 to $15,000. That’s a huge savings from the alternative of almost 50k for an HR manager.

Another favorite thing to outsource is my inbound calls. I have a service that answers the phones when there is nobody in the office or if they’re on another line. When they receive the call they route it to the person’s cell phone that the caller is requesting. If there is no answer, they take down the pertinent information. They weed out the sales calls and if it’s a new client they will take down all the pertinent information you require. So if you’re a service business, they take down the job address, billing address, and additional contact info like an e-mail address that you can send a proposal to. I can have all of this done for my business for much less that it would cost to hire a full-time secretary. Just make sure you choose a service that can handle your customers with the same level of customer service that you would give yourself.

There are many other functions that you can outsource and you just need to research who can do it better in the areas you’re lacking. Outsourcing can really take a load off and give you more time to focus on what you’re good at. Take a look at your business today and find out where you can use improvement to make your business that much better. Thank you for reading this and as always, “Stop Doing the Mundane, and Start Getting Weird!”