Can You See Your Firms Vision?

The word ‘vision’ is part of our contemporary business language, yet not every accountant can readily articulate just what their vision for their practice is.

It’s not just a marketing plan, although these plans have to be based on an appreciation of a vision for the firm. The irony is that a vision is something that never exists in the physical sense – it simply can’t be seen with the eyes.

A vision is a product of the imagination. It can be reduced to writing but that’s only a summary of something much more vital.

One way of defining vision is: “What the practice will be in three years’ time”. It’s obviously not a part of the here and now but rather something that is going to happen in the future. Here are the elements of the vision for a firm:

• What it will be like at a designated time in the future
• What its structure will be at that point in time
• What its culture will be at that point in time
• What forces will make it be like that
• What the drivers for those forces are (or will be)

How important is it for an accountancy practice to have a vision? Absolutely essential! A firm is unlikely to grow unless it knows what it wants to be and how it’s going to get that way. And without growth, in this fast-moving competitive era a firm will actually be going backwards.

It’s a real shame that so many partners in accounting firms don’t seem capable of looking ahead – to see what might be, rather than only what exists right now. That attitude only ensures that things will happen by accident, and those aren’t necessarily going to be good things.

So what is it that can create a vision and enable accountants to conceptualize a future for their enterprises? There are at least three ‘drivers’ that do this.

An investment of energy

Visions are created only after a significant investment of energy. It takes energy to do the research, the thinking and to spend the many hours of hard work to articulate the vision for a practice.

An accumulation of knowledge

A vision isn’t created in isolation. The creator of a vision has to know about the market, the principles of business and how to run one, human behaviour, leadership, finance and a host of other things that need to be learned.

It’s only the background knowledge that enables a visionary to construct a future out of the past and present.

The power of thought

The human mind is an amazing and powerful thing. It is the engine that creates the vision, the intellectual tool that enables a person to consider a vast body of knowledge and sort out what can and should be from that which is impossible or unwanted.

A vision is a prediction of the future and can only be produced by thought. The mind can create many possibilities but only one can be chosen to be the vision towards which the business is launched.

Just having a vision isn’t enough to make it happen. Once created the vision must be achieved by the use of resources, and one of the most powerful resources integral to achieving a vision is the team in the firm.

To be truly effective a vision must be shared with and accepted by the members of the team. It must be clearly communicated and become part of the culture of the practice. Unless this is accomplished it’s not likely to be realized.

Article courtesy of RAN ONE:

Talking To Strangers

Business networking is the process of establishing a mutually beneficial relationship with other business people and potential clients and/or customers. For many business people that may not sound like their experience of networking, which is often equated with meet-and-greet functions where it’s a race to exchange business cards with as many ‘opportunities’ as possible. Identifying and cultivating leads is indeed one of the functions of networking, but by no means the only one.

People who claim to get something out of networking will give you a different slant on how it works and what it is all about. Networking for them involves meeting people in a wide range of formal and informal forums, people who could be of help to them in some situations and to whom they could be of help in others. In other words, networking should be seen as building reciprocally beneficial relationships. And the opportunities networking provides can be of many types:

• Learning from the experiences of others and sharing new ideas on whatever is of interest
• Receiving regular news bulletins and attending events that keep you up to date in what’s happening in your line of business
• Participating in or contributing to surveys or research in your field or business sector, and
• Meeting prospects, competitors, suppliers and service providers who could provide the opportunity for mutually beneficial deals

Networking is an investment, not a nuisance

By putting in the time to build your network you save time when you need to get things done. Well networked people don’t have to waste time firing off random emails or making cold calls for advice and assistance to people they don’t know, buying leads or industry lists, or hunting through dozens of resumes for the right candidate. They know who to contact or they have a contact who will know. And being in a relationship with that contact they can probably expect a speedy response – requests from acquaintances get dealt with sooner than requests from strangers.

Building a network of good relations with a wide variety of business associates can really be a big productivity improver.

What’s a good network for me?

When you think of a network as a group of people who can offer you a mutually beneficial relationship the options for what to join expand beyond the chamber of commerce and the trade show or professional organization.

To keep your commitment manageable and focused though, when considering a network to join or networking events to attend you will need to think of your primary requirements, e.g. market information, training and development opportunities, expert advice, or leads. Aim to balance your needs with the level of participation and involvement you are able to commit to.

A primary contact is likely to be your trade or professional association and after that you can ask for recommendations from your business advisors, e.g. your bank manager, lawyer or accountant, for networking groups/organizations matching your business requirements.

Be an active participant in your networks

Networks are established for collective benefit and are most successful and effective where there is give and take by the members. However, since not everybody has the same amount of time available and yet may be just as keen to learn and share information, different forums may be useful to different people.

If you can’t spare the time to attend functions and events you might focus on finding a network hosted on the Internet. Similarly, if you do not think you are likely to be able to proactively pass information on or help someone else in return for advice then stick to joining a more passive network that supplies newsletters and bulletins and hosts online debates rather than joining an events-based one.

Where you are involved in meetings-based groups you will be expected to actively share your experience by talking to the other members as well as passively learning from hearing about theirs. When you attend debates and discussion groups don’t hesitate to contribute your ideas and experiences or even deliver a talk on some aspect of business you feel particularly confident with.

A network’s strength in any particular area or service depends on how actively its partners exchange information with each other and reciprocate when they receive a request for assistance. If you receive advice from a network partner be prepared to offer your own help in the future. To improve sales remember to regularly pass on recommendations for other member’s businesses to your customers – your network partners should do the same for you. And if you have been pleased with a particular supplier let your fellow network members know so they also have an opportunity to try them out.

Networking is a great way to get to know new business professionals in both your own line of work and in ones related to what you do. The results? A high quality network of diverse business people who can provide answers, insights and leads.

copyright Bullseye Business Solutions. Article originally published in Grow Your Business newsletter June issue 2007

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5 Tips On Lead Management

A lead is really just raw material waiting to be turned into something of value – a customer. Achieving this requires careful management, from the moment the lead is acquired until the sale is made and a new customer joins the database.

Modern lead management should be a combination of people, software and processes that work together to acquire, manage and convert leads into sales. Lead management isn’t just having a team of salespeople that prospects and sells, it’s about having a systematic process for ensuring leads are dealt with in the best way to turn them into customers.

1. Qualify leads: to avoid wasting time on tire kickers or missing out on a hot lead you need a system to qualify the leads that come in. It might be as simple as a checklist of the ideal customer or the ‘feel’ of the person who took the inquiry, but it needs to be made so that response priorities and the amount of time and effort to invest in nurturing the lead can be assigned.

2. Ensure good leads are responded to in a timely manner. Like fruit left too long, leads spoil. Surveys show a surprisingly high number of SMEs either are very slow in responding to a lead or even fail to respond at all. That can be for a variety of reasons (don’t check their email frequently, have no one responsible for dealing with them and so on), all of them resulting in lost opportunity and bad reputation. Have a back-up plan that kicks in when the primary individual responsible for contacting leads is not available.

3. Respond to leads appropriately: if you have qualified a lead as ‘hot’ you can move to the sale quickly. If the lead is just ‘warm’ then more time is required to supply information and build their confidence in your ability to supply just what is wanted. Too much pressure could cool the opportunity.

4. Develop a system to get leads to the right sales channel: a particular lead may stand the best chance of turning into a sale depending on whether it goes to an individual sales person, the territory manager, a reseller, or a distributor. Don’t risk it getting passed around and going stale.

5. Make each person who has contact with a lead responsible for updating the customer database: it should be possible to call up the lead’s record any time and have an up-to-date snapshot of where things are up to. This is critical since it’s the only way you can accurately measure the quality of leads and decide your next move with them. In the longer term this data will allow you to assess the effectiveness of marketing programs and the ROI you achieve.

Copyright Bullseye Business Solutions. Article originally published in Grow Your Business newsletter July issue 2007

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What Drives Us To Perform?

Hint: it’s not threats and rewards!

The evidence of more than four decades of robust, global scientific research on human motivation shows categorically that there is a serious mismatch between what science knows motivates people, and what business does.

Dan Pink, successful business and technology writer reveals in his fascinating book Drive: The Surprising Truth About What Motivates Usthat science has identified three intrinsic human motivators:

Autonomy: The urge to direct our own lives.
Mastery:The desire to get better at something that matters.
Purpose: The yearning to do what we do in the service of something larger than ourselves.

Ideas about successful management practices are not set in stone. Management, points out Dan, is an invention after all, and the scientific evidence shows us that it is based on erroneous information.

The gravy train has clearly derailed in the global economic collapse, so what better time for you to seek out new management solutions to building a profitable business?

What the evidence shows is that:
• When the work is largely mechanical and compliance in nature, then the carrot-and-stick style of management has some effect in improving performance.
• Using a reward /punishment approach in most cases destroys creativity and problem solving ability – performance is actually worse. To put in another way, hundreds of scientific studies over 40 years consistently show that where there is any cognitive reasoning required to do the task well then the presence of rewards or threats has a negative impact.
• The secret to high performance is to tap into the intrinsic human need to direct our own lives, to learn and create new things, and to do better by ourselves and our world.

Let’s look at one well known case which contrasts the two different approaches.

Microsoft decided the market was ready for the online encyclopedia. They employed the right people with the right skills and offered them incentives to develop Encarta, This is the traditional management model. Some years later along came Wikipedia – put together for free, by people who volunteer their input for the love of it because they feel it has value. Game, set, match.

Think about your own business and what you can do to change your approach. Pay people adequately and fairly, that’s a must. Then focus on the nature of the task. If it is merely mechanical, rewards and punishment might still have a place. Otherwise come up with strategies that encourage people think freely and autonomously and contribute in meaningful ways.

One SME digital agency we know gets its team members to take turns hosting regular meetings where they have to present a talk on some new concept, product, activity or idea not necessarily related to their work. Although they normally must account for every 15 minutes, time out to prepare the presentation is built in to their work schedules. They get to freely explore anything at all that interest them and the company reckons that the cross-fertilization of ideas has resulted some of their best campaigns.

Forget about figuring out how to offer juicier carrots and poke with sharper sticks. Work with what really motivates people and watch productivity go up, engagement go up and employee churn fall.

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Where Did The Accounting Profession Begin?

A lot of people that history calls ‘accountants’ were really auditors, stewards and bookkeepers in ancient societies. Even though we have identified examples of double-entry accounting going back nearly a thousand years, as a profession, accountants have only existed since the nineteenth century.

Earlier number crunchers toiling away with their quill pens by lamplight in drafty monasteries and castles usually plied their skills to keep track of a wealthy employer’s inventories and funds. They mostly lacked formal training and many combined their roles with other duties such as serving as scribes or household secretaries.

When we look for the world’s first true ‘modern’ accountant we find that Scotland is where the first example of a chartered accountant can be found. Unlike his predecessors, this accountant had defined skills and worked independently for several clients. Scotland is also the home of the oldest society of chartered accountants.

Italy is often seen as the place where modern accounting began, and it’s true that during the seventeenth and eighteenth centuries Italy was extremely important in developing accounting methods. But as yet there was no official acknowledgement of the qualifications of those who performed in accounting roles.

The first official recognition for accountants came not from Italy but from England. In 1854 the Society of Accountants in Edinburgh was granted a royal charter by Queen Victoria, thereby making accounting a recognized profession for the first time anywhere in the world.

The Society of Accountants in Glasgow was also granted a royal charter five months afterwards. Here are some excerpts from the petition that the Society of Accountants in Glasgow submitted to Queen Victoria when seeking their charter:

“That the profession of an Accountant has long existed in Scotland as a distinct profession of great respectability;
– “that originally the number of those practicing it was few but that, for many years back, the number has been rapidly increasing, and the profession in Glasgow now embraces a numerous as well as highly respectable body of persons that the business of an Accountant requires, for the proper prosecution of it, considerable and varied attainments;
– “that it is not confined to the department of the Actuary, which forms indeed only a branch of it, but that, while it comprehends all matters connected with arithmetical calculation, or involving investigation into figures, it also ranges over a much wider field, in which a considerable acquaintance with the general principles of law, and a knowledge in particular of the Law of Scotland, is quite indispensable;
– “that Accountants are frequently employed by Courts of Law to aid those Courts in their investigation of matters of Accounting, which involve, to a greater or less extent, points of law of more or less difficulty; that they act under such remits very much as the Masters in Chancery are understood to act in England, and that it is obvious that to the due performance of a profession such as this a liberal education is essential.”

What these accountants had defined was a distinct and highly qualified profession incorporating a specific body of knowledge and a firm relationship with the law of the land. This is a lot more than just keeping track of a wealthy merchant’s stores.

The first professional society of accounting in the United States was the American Association of Public Accountants (AAPA). It received its charter from the state of New York in 1887.

The first Certified Public Accountant (CPA) law in the U.S. was passed in New York in 1896 and required accountants to pass an examination to become certified. The examination had a little to do with accounting and was mostly focused on “The 3 Rs” – reading, writing and arithmetic.

Interestingly at that time there were no specific educational requirements to become a CPA since most accountants received their training through an apprenticeship and not by formal education.

By 1912 thirty-three American states had CPA laws and by 1921 all 48 states had passed them.

This article was originally published in the February 2004 edition of ONEderings ezine.

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Transitioning Between Generations

The family business is often the basis of a family’s wealth. It generates the funds that feed and clothe two or three generations concurrently, and can also be something that is a source of pride and to which all family members have a deep emotional attachment.

When the owner thinks about retiring or is unable to continue managing the business for some other reason it is only natural that another family member would be their first choice of successor. Although it is certainly possible to transfer ownership from one family member to another it’s not as simple as it may seem at first and requires planning to ensure it happens smoothly.

Unfortunately the majority of business ownership transfers aren’t well-planned; more than half of all businesses transferred to the second generation fail in the first three years after the new owner takes over, and fewer than one out of five of those that do survive will make it into the third generation. What these failures can mean to a family might be all the difference between wealth and poverty.

One of the most important considerations is the impact of a transfer of ownership on the non-family members in the business. The outgoing owner has for some time been the leader of the business and there are usually personal relationships in place that need to be taken into account. An abrupt change of ownership can irreparably damage these important linkages.

There are numerous other issues related to a transfer of ownership – from legal and taxation issues to the fundamental need to transfer knowledge about running the business, and they will all be easier to deal with if the transfer happens gradually in an orderly way over a period of time rather than simply ‘happening’.

Set the date ahead of time

The beginning of the process requires a date to be set for the transfer of ownership. This is a ‘working’ date and need not be absolute, although it will be the date around which transfer plans are made.

It could be the owner’s 65th birthday, or the date an anniversary is reached, such as the owner’s fortieth year at the head of the enterprise. The date should allow a period of years rather than months for the transfer to take place.

Choosing a successor

The same principles should be applied as if the successor were being chosen from a group of applicants for the post, even if all members of the group are related. Unfortunately the dynamics of a family often mean that the wrong person is chosen to succeed an outgoing owner at the helm of the family business, and that can also mean the end of the business.

Be honest when analysing the strengths and weaknesses of family members as potential successors. Separate issues of family loyalties and emotional attachments from the selection process and base the choice on a candidate’s business acumen and management abilities.

Some of the questions that might need resolution are:

– How committed is this person to the business itself?
– Do they have the management skills required?
– Is their business experience sufficient to run the enterprise?
– Will they do more than just administer the business; can they develop it?
– Are they really the best person for the job or should someone outside the family be employed by the family to run the business?

Preparing the successor to take over

When the successor has been chosen they must be objectively analyzed to identify areas of weakness or lack of knowledge so these deficiencies can be rectified in time for them to assume control of the enterprise. This might take years to accomplish, which is another reason to set the owner’s departure date well ahead of time.

If a specific educational pathway is required this might require three or four years of study, in which case details like who pays for the education and who will pay for the costs of things like accommodation and meals needs to be determined. Coaching may be required as an adjunct to formal study, and these costs may be met by the business.

It could also be a wise idea for the designated successor to work in the business for a period of time after all their educational and upskilling needs have been met, to give them ‘hands-on’ experience and to familiarize them with the day-to-day responsibilities of the role.

Owner’s realization of value from the business

The outgoing owner of the business will probably want to fund their retirement from the transfer of the business, just as they would if they were to sell it to someone outside the family. The manner in which this can be done without affecting the cash position of the business should be worked out well before the owner’s departure.

Set up a family ‘board’

If there are several members of the family involved with the business it can be helpful to set up a family board that meets regularly and shares information about the transition while it is being planned. This can smooth over any disappointments or feelings of being disadvantaged that can always arise within families choosing a person to head the family business.

It’s recommended that records be taken at all meetings and circulated shortly after each meeting so that no disputes can arise at a later date about what was said or decided.

Taxation and estate planning

The departure of the owner and handover of the business to the next generation will have taxation implications for all those involved. Because the business usually forms part of the owner’s estate there will also be estate planning considerations.

These areas are usually highly complex and need the attention of specialists with local experience and a good knowledge of all applicable legislation. Advice should be obtained during the process of planning the succession.

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Something To Celebrate

As times change so does the way in which we note special occasions. We now have team members instead of ‘personnel’, and celebrations instead of what used to be unimaginatively called ‘office functions’.

Some of the benefits of celebrations are:

• They bring individuals together and create a community of people within the company.
• They remove barriers between management and team members, allowing everyone to socialize without hierarchical considerations.
• They can establish a connection between the history of the firm and the people who are now part of the team.
• They enable the firm’s values and vision to be communicated to members of the team in an informal way.
• They can be a safety valve where team members can let off steam and relax interpersonal conflicts.
• They create a forum that links pleasure with work.

When you have something to celebrate always consider sharing it with others in the organization. Celebrations can be good team-builders as well as make a big contribution to building a winning culture in your firm.

The reasons for celebrating are many. They include birthdays (even the company’s), reaching revenue targets, welcoming new members and saying farewell to retiring ones.

When a team member gets married or has a baby it’s an occasion for celebration. Milestones like ten years of service or promotions are also good subjects.

This doesn’t mean that the number of celebrations should be overdone. A special occasion must be seen by those participating as being truly special or its meaning will be lost.

Give some thought to just which events are worthy of celebration and note them on a calendar. You should allow a reasonable amount of time between dates, accepting that a few surprises are always going to happen.

Consider appointing a Director of Celebrations from the more outgoing team members. Someone who enjoys planning and is a good organizer is required for this role.

This is also better in that celebrations will be seen by the team as coming from within rather than something ‘the boss dreamed up’.

All celebrations won’t be the same because some events are more important than others. Some might be worthy of coffee and donuts while others deserve a dinner for everyone on the team. Try to involve partners in at least one occasion each year.

Some events should be paid for by the firm as a reward while others can be covered by everyone attending. The guidelines here can be flexible but if the firm has scored a new client or reached a revenue target it’s wise to have the business pick up the cost.

Whenever possible publicize celebrations well in advance so the team can make whatever arrangements are necessary to participate without hassles. An internal newsletter is very useful for this purpose. Another avenue of communications is a bulletin board placed where everyone can easily see it.

Remember that if a celebration takes place during business hours someone will always have to be ‘on call’ to answer the telephone so it might be necessary to rotate this role between everyone on the team so one person doesn’t get stuck with it all the time.

Celebrations don’t have to be hugely expensive occasions. It helps to designate a corner of the office where there’s a bit of space as a place for the occasional presentation of a birthday card or other low-key celebratory event. Nobody objects to ten or fifteen minutes away from their desks at such moments.

Even if a small business can’t afford to take everyone out to lunch you can present the person being honored with a nice card (signed by all the team members) and a gift certificate for a night out.

Celebrations are a way of saying ‘thank you’, a way of recognizing achievement, and just a way of getting the team together when something special has happened. You’ll enjoy them as much as your team will.

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What Is Success?

“Some people dream of success… while others wake up and work hard at it.” – Author Unknown

We often talk about ‘success’ but usually don’t stop to think about what it really means. Success is different things to different people and we need to define it very carefully if we’re going to achieve it in the business world.

In business we need to enlist the help of others if we expect to succeed. We have to first work out what it is that we want and then harness the energies of our team to help us achieve it.

One of management’s greatest responsibilities is getting the team directed toward success – our success in fact. Every member of the team has to work with us to help us attain our goals; this means they share our goals with us and accept them as their own.

Let’s say you’re the owner of a manufacturing business and you feel that you will achieve success if your business grows to a certain size based on its revenues. You are realistic enough to know that nothing like this is going to happen overnight.

Success is usually an incremental thing and it is on the increments that you need to focus before you can personally succeed. Therefore you set out to achieve success by getting the energies of your team focused on a series of goals that will, if reached, contribute to your business growing to the targeted size.

You can’t expect a marksman to hit the target if he doesn’t know what the target is!
An essential element of goal-sharing is that everyone knows exactly what the goals of the business are. Management has to first define these goals and then communicate them to the rest of the team.

When you’re working to define the goals of your business for your team, try to incorporate as many of these features as possible:

1. The goals should be measurable
2. The goals should be clear and unambiguous
3. Progress toward goals should be easy to observe
4. Progress should be communicated frequently to your team

A really bad idea for a goal is something like ‘Increase revenues by 10%’. This says nothing about how such an increase is to be achieved. A goal should be a ‘how to’ rather than a ‘what’. It’s far better to say ‘increase the number of weekly sales calls to 25’. This is a measurable goal. It’s clear and easy to observe progress towards a goal that is quantified. But that’s not all a goal has to be. It also has to be realistic.

When setting a goal it’s up to you to ensure that it can actually be reached and won’t place unnecessary stress on your team. There’s nothing worse than to set a goal that’s unattainable; this only demoralizes everyone and is totally counterproductive in its effect.

Assuming the target of 25 sales calls you’ve set is a realistic and achievable goal, how can progress towards it be communicated to the team? This kind of goal is straightforward and can be monitored on a daily basis. A chart on the wall showing the number of sales calls each day with a running total would quickly tell the team how the effort is progressing.

There’s another element of success that’s important to everyone in business. Success should be shared with those who have created it. The sales calls each day could be expressed in a way that shows the number of calls by each team member as well as a daily total, with the person making the greatest number of calls given a highlight at the end of each day.

This can be part of a bigger overall contest that rewards the person making the greatest number of sales calls in a week, or a month, or a quarter. The important thing here is to have a mechanism that tracks progress towards a goal and permits tangible recognition to be given to those who deserve it.

Define “success” for yourself and your business and then think of the increments you and your team need to accomplish to achieve this success. Work hard at it and reward your team every time they make a contribution to this success. You’ll then not only know what success is, you’ll also know how it feels.

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Become A Better Communicator

What is communication? The dictionary definition is usually something like: “The exchange of thoughts, messages, or information, as by speech, signals, writing, or behavior”, but it could also be characterized as “Something most of us could be a lot better at doing”.

Effective communication is essential to business success. Whether it’s writing a letter to introduce yourself to a prospect or briefing your sales team, you need to communicate clearly to get your points across and motivate others.

For most of us there is some room for improvement in our communication skills. Here are some pointers that can help in the different areas we might be called upon to use in business.

Speaking without fear

It’s interesting how most of us dread speaking in front of an audience and yet manage to speak with one or two people very easily. The secret to overcoming this reluctance is to be prepared – work out in advance what you want to say and rehearse it until it sounds natural to you.

Always keep your audience in mind. They not only listen to what you say but how you say it, and your tone of voice and body language can be telling quite a different story to your words. There’s a lot more to oral communication than just words. Practice speaking clearly and let your emotions enter into what you’re saying. Emphasize important points with gestures and vocal inflections. This keeps your speech from becoming a dull monologue in which the highlights are buried.

Think about what you’re going to say before you say it. If you have an important meeting coming up then be sure you’re up to speed on the topic being discussed. This will give you confidence as well as making what you say more interesting.

Avoid jargon and using complicated words or sentence structures to impress others. Just speak naturally and don’t rush what you say. Always maintain eye contact with your audience – regardless of whether it’s one person or an auditorium full of people. You can learn a lot about how you speak by talking to yourself in front of a mirror. It’s the fastest way to find out whether you’re the kind of person you’d like to have a conversation with.

Get it right when writing

Writing is a lot like speaking. The purpose is the same – to communicate a message to other people. Although it’s not done face-to-face many of the same principles apply. You still need to organize your thoughts and put them down in such a way that readers can understand what you’re telling them.

Every piece of written communication deserves the same degree of consideration whether it’s an email, a brief note or a whole volume. Write to your audience in terms they’ll understand, and don’t use terminology that might confuse them.

Everyone seems to be time poor these days so get to the point as quickly as possible. You can outline the points you want to get across at the beginning of the communication, and then follow up with supporting facts and details.
One all too frequent aspect of modern communications is the number of errors in spelling they contain. Since most of what you write is done on a word processor, learn how to use the spell check function and use it on everything you write. But even then, be aware that it won’t pick up everything, so you should still review your text carefully one more time after the spell check.

Just as with your oral presentations, avoid using jargon and complicated words or sentence structures. Write naturally and without pretension. Business communications are especially dependent on clarity of the message rather than the style it is couched in.

Copyright Bullseye Business Solutions. Adapted from an article originally published in Grow Your Business newsletter May issue 2004.

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10 Mistakes That Can Cost You Your Business

Even the smartest small business owner can do dumb things now and then. Unfortunately, some mistakes can kill a company.

Just ask Jeff Seifried, small business coordinator for the City of Aurora, Colo., and Peter Tourtellot, chairman of the Turnaround Management Association.

They, along with other experts who prefer to keep their observations anonymous, have seen the best – and worst – of small-business operations.

Here are 10 examples of common, but potentially deadly, errors committed by otherwise brilliant small-business owners. Don’t make the same mistakes.

Underestimating the importance of cash flow management
Two woodworkers had a thriving business building interiors for retail stores. They did beautiful work and their customers were pleased, but it often took them 60 or even 90 days to pay the bill. Until the money rolled in, the partners couldn’t start on the next job because they couldn’t buy materials. They lost jobs because customers were in a hurry. You can be making plenty of money, but if cash isn’t arriving in time to meet payroll and buy inventory when it’s needed, you can be quickly out of business.

Getting sloppy with recordkeeping
The owner of a lawn service was haphazard about recordkeeping. If he had kept better track of lawns mowed, he would have known that his oldest mowers had so many miles on them, they were unlikely to last the season without an overhaul. Instead, it came as a very unpleasant surprise when three of them burned up in one week. Good records are a key decision-making tool. If you’re not keeping good track of your business, you are denying yourself the tools to make good business decisions.

Ignoring inventory
The owner of a business-supply store bought a flat of construction paper just before school started. Three years later, employees were still stepping around the boxes to get into the storage room. If you end up with stale inventory, discount it and get it out of there. Otherwise, you’re just tying up money and taking up storage space.

Neglecting collections
A dentist had dozens of outstanding bills for routine and special dental work approaching 180 days old because his assistant hated to make collection calls. Nobody likes to dun people, but unless you have a systematic collection plan and make sure it’s carried out, some people just won’t pay.

Disregarding employee concerns
The owner of a small jewelry manufacturing operation refused to pay overtime. He thought workers should be able to get the job done in the time allotted. Employees came and often left unhappy over what they saw as unfair treatment. Finally, one of them complained to the state division of wage and hour, which launched an ugly and (for the jeweler) expensive investigation. If you have a hard time hiring and retaining good employees, your business is doomed. And if you find yourself the target of an employment-related lawsuit, your expenses can be astronomical. Get expert advice on human-resource issues. While it may look expensive, it can save you a bundle in the end.

Failing to delegate
A baker thought she was the only one who could make the perfect cookie. Back trouble that put her in bed two weeks before Christmas nearly shut down the business. Recognize that you can’t do everything. Turn some of the job over to the best assistant you can hire and trust him to do the job, even if he makes a mistake now and then. If you insist on doing it all yourself, you can’t grow.

Offering something the customer doesn’t want
A water ice vendor spent all his time and money developing 100 delicious flavors. The trouble was nobody bought anything but cherry, lemon and vanilla. Ultimately, his inventory melted away and so did his profits. Market research is vital. Talk to potential customers, talk to current customers and respond to what they tell you.

Letting costs get out of control
The owner of an auto body shop was having such a great year, that he bought a lift that wasn’t in his budget. He also hired the son of a an employee who needed a job, even though there wasn’t quite enough work to keep another person busy. In the final analysis, revenue went up significantly, but costs skyrocketed. If you’re not careful, you’ll spend up all the profits.

Spreading marketing dollars too thin
The owner of a Tex-Mex restaurant in a part of the country that’s not exactly a hotbed of enthusiasm for Southwestern cuisine had an obvious need to advertise. And she did. She bought one cable TV ad, one radio spot and a small coupon in the local weekly. Although she spent plenty – several thousand dollars altogether – her efforts didn’t add up to a marketing campaign. Failure to spend wisely on an integrated and continuing marketing plan is an expensive mistake. In this case, her location is now a pizza parlor.

Underfunding an emergency account
When unannounced road resurfacing closed a popular dress shop’s doors for a month, it put the owner out of business because she had no emergency money and she couldn’t go a whole month with virtually no sales. As every gambler knows, no matter how good a player you are, you’re occasionally going to be dealt a bad hand.

Likewise, every business needs a financial resource to turn to when disaster strikes. Bad things do happen frequently to good people and their businesses, so, like a good Boy Scout, you have to be prepared.

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