Archive for July, 2008

5 Ways To Raise Capital For Your Business

31 Jul.
Posted by harbern in Finances | 3 Comments

Raising capital to start a new business may seem like a daunting task, but it need not be overwhelming if you follow a few basic business practices. If you have a viable idea that will net a return for your investors and prepare a compelling business plan the chances are good that you can find investors to join you.
If you’re thinking about getting outside or equity capital to help fund your business, there are some things you need to do first, that can make your business more attractive to investors. Follow these simple ideas, and you’ll be well on your way to raising the money you need.
First, always talk to a qualified business attorney (not your family lawyer). There are a lot of laws pertaining to how equity capital can be raised from the public, and the laws change often. You need someone who understands not only these laws, but also how to make sure that any business contracts are written to protect you and your business, especially the fine print.
1. Taking your company public. Although security laws in the U.S. have made it easier for companies to go public, and offer stock as a way to raise needed funds, this is still probably the most risky choice. It is usually not a recommended option for very new or very small companies. Because of the number of legal issues involved, consulting with a knowledgeable attorney beforehand is vital. There is also a lot of stress involved in running a public company, and a considerable loss of autonomy and control. Before making this choice, be absolutely sure that this is the wisest course of action for your business.
2. Getting money from relatives. Yes, it can seem like begging, and it’s a difficult thing to have to swallow your pride. Surprisingly, in a recent survey, almost 30% of entrepreneurs said that they raised all or part of the capital they needed through family members. If this is your choice, make sure that you have your attorney draw up a regular business contract. When approaching family members, talk to them about their investment the same way you would any other outside investor. Tell them about how much money they can make, not about how much you need their help. And make sure that you keep to your end of the agreement.
3. Using your savings or credit cards. This is the most common way for entrepreneurs to raise needed business capital. Before choosing this method however, talk with your financial advisor. You want to look at the long-term consequences of using your savings, life insurance or credit cards, especially in the event that your business venture fails, or does not bring in the projected return on investment (ROI). If you do end up financing your project using credit cards, make sure that you shop around first, and find the card that will offer you the best rate and gives you the most “bang” for your buck.
4. Venture Capital and Angel Investors. Before even looking for venture capital, look at your company from an outsider’s point of view. Ask yourself these questions: Does your company have a solid track record? (Most venture capitalists don’t invest in start up companies). Does your company have the potential of becoming very large in the next five to seven years? (People don’t invest in your company out of the goodness of their hearts. They’re looking for a return on their investment — the larger the better.) Does your company own a good percentage of its market, or does it stand to gain a large percentage in the next 12 to 18 months? (Contrary to popular belief, your company doesn’t have to be involved in high tech to attract venture capital). If you can answer yes to the above questions, your next step is to find a venture capital firm whose ideals and goals are in line with yours. Your next step should be to look at your “circle of influence” and see if you know someone who can give you a personal introduction to someone at the venture capital firm. (People invest in people, not just companies.)
5. Potential or Current Employees. Surprisingly, one of the most common ways (especially for new companies) to raise equity capital, is by inviting your potential or current employees the opportunity to become investors. With this method, not only do you get a really committed workforce, but many equity employees are also willing to accept a below-market wage in the beginning (especially if you do the same). There are other benefits, but this choice is not without its pitfalls as well. Again, before going this route, talk to your business attorney, and put policies into place that plan for potential problems. For example, what do you do if an employee’s work becomes substandard? Or an employee quits and goes into competition with you after learning all of the company secrets? Putting a risk management plan into place and considering all contingencies is your best bet for this option.
No matter which choice you make in looking for equity capital, by planning ahead, doing your homework and following the advice of your attorney, you’ll increase the probability of raising the money you need and making the relationship between you and your investors a profitable one.

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How To Prepare Your Mind Body To Give Great Speeches

31 Jul.
Posted by harbern in Finances | 2 Comments

Sure you have catecholamines - all speakers do. (including Sir Winston Churchill and Presidents Kennedy, Carter, and Reagan.) Those are the chemicals that make you sweat, make your heart beat fast and make your hands shake. Get rid of those chemical and psychological reactions by becoming message-centered and audience-centered, not self-centered.
1 Replace fear and negative noise with positive affirmations. Create new beliefs that nurture you and support you with new ways of thinking. The New Adult You! example: “I am well prepared, and the audience wants me to succeed.”
2. Do a quiet meditation, visualization, or exercise before you speak. Breathe deeply. Deep breathing sends a message to your brain that you have nothing to fear. It calms you down.
3 Who cares if you’re nervous? Researchers have found that most people report noticing little or no anxiety in a speaker. If you are thoroughly prepared, your internal nervousness seldom shows. Prepare 150%.
4.Rehearse, rehearse, rehearse. Talk out loud, and walk around while you practice. Use the same physical energy you plan to use on the day of your presentation.
The Coach sez. . . practice in front of your mirror .Practice in the car. If you can concentrate while driving, you will be able to pull it from your unconscious when are you in front of the group. Make your points sound spontaneous and conversational.
5. Exercise is an antidote to stress. Arrive early and take a brisk walk for at least five minutes. If it is raining or snowing outside, you can still do some body stretches.
6. Abstain from caffeine and alcohol before you speak. You don’t need more jitters. Always wear your favorite outfit and use attractive colors. Women, go simple on the jewelry. Avoid too much black and white.
7. For trembling hands, place your hands on the side of your chair, and, count to 10 as you try to lift the seat. This is an isometric exercise that works and nobody will notice you doing it.
8. Don’t be perfect. Give yourself permission to make mistakes. No one is perfect in real life. Get the butterflies in your stomach to fly in formation. That’s how you convert your stress into speaking power!
9. Reduce your nervousness by taking several deep breaths immediately before you ‘re introduced. And for you chocoholics, eat some chocolate to relax your vocal chords.
11 If you experience dry mouth, chew your tongue to increase saliva flow. Singers do this. Close your lips and bite down on the entire surface. Always have a glass of tepid (not cold) water nearby.
12 Focus on a friendly face in the audience. Pretend you are having a conversation, rather than giving a speech. Just be yourself.
13 The Coach sez. . .Most of all, enjoy yourself and have fun. SMILE. After all, aren’t you glad to be there? The sign of a mature adult is one who does not take himself too seriously.
14 Here is a vocal warm-up exercise used at the Ryal Academy of Dramatic Arts in London. Say:PaPaPaPa, BaBaBaBa, TaTaTaTa, DaDaDaDa, KaKaKaKa, GaGaGaGa Then do it backwards. (from Robert and Rande Gedaliah)
Get more speaking skills at our “Summer Sizzle” webpage: http://www.schrift.com/summer_sizzle.htm
andcopy;2004 by Sandra Schrift. All rights reserved
Publishing Guidelines: You are welcome to publish this article in its entirety, electronically, or in print fre*e of charge, as long as you include my full signature file for ezines, and my Web site address (http://www.schrift.com) in hyperlink for other sites. Please send a courtesy link or email where you publish to sandra@schrift.com. Thank you.

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Use These 130 Plain English Agreements

30 Jul.
Posted by harbern in Finances | 3 Comments

Early understandings make for the longest relationships.
- Alan Dohrmann
Don’t let legalese get in the way of a good deal.
Most contracts are often written with complete disregard for the potential emotional impact of the wording. These are the things we’ve fixed in AgreementBuilder-everything is smooth, understandable, and appealing to the emotions of the people involved with your deal.
Stupid lawsuits you hope never happen to you!
All contracts must be written in plain-English and contain clauses requiring binding arbitration in the unlikely event that things get ugly-no matter what, you both agree to take your lumps at the risk of the whim of an arbitrator… moving on, in favor of a complicated and expensive legal battle (that no one really wins). Using an Agreement software with every legal contract template, provides insurance for your protection.
Some examples of Agreements are:

Account for Collection Assignment
Advertising Co-op
Articles of Incorporation
Assignment - Accounts Receivable
Agreement Extension
Background Research Release - Comprehensive
Background Research Release - Simplified
Bailment
Bill of Sale
Business Assets Transfer
Bylaws (Corporate)
Collection Agent Appointment
Co-Marketing
Commercial Lease
Commercial Sublease
Confidentiality
Confidentiality - 1 page
Consignment Sale
Consulting - Marketing Services
Content Acquisition Agreement
Content Purchase Letter
Contract Assignment
Copyright Assignment
Corporate Bylaws
Credit Purchase
Custom Software Development
Dealer Resale Agreement
Distribution Agreement - Exclusive
Distribution Agreement - Non-Exclusive
Debt Assignment
Employee Invention Assignment
Employee Non-Disclosure
Employee Stock Bonus Plan
Employment (Employee)
Employment (Executive)
Employment Continuation
Employment Termination and Severance
Equipment Lease
Equipment Purchase
Extended Service
Extended Use License
Finder for Sale of Business
Finder’s Fee (for Investors)
Finder’s Fee (for Sale)
General Partnership
Hardware Maintenance
Idea Submission
Indemnity
Independent Contractor
International Distribution
International License
Internet Co-Marketing Agreement
Joint Development
Lease Assignment (by Lessor)
Lease Assignment (by Lessee)
Lease Guaranty
Lease Modification
Legal Representation (Contingency)
Legal Representation (Fee)
Letter of Intent (Purchase Forthcoming Products)
Letter of Intent (Negotiation and Information Exchange)
Letter of Intent (Non-Binding)
Letter of Intent (Sale of Business)
Letter of Intent (Sell Business Assets)
License Product for Sale and/or Manufacture
Limited Partnership
Logo License Agreement
Mailing List Exchange
Mailing List Rental
Manufacturer’s Representative
Marketing - Exclusive Territory
Marketing-Material-Development
Mutual Contract Release
Mutual Contract Termination
National Account Manager

I would recommend this tremendous work of essential legal documents in doing business to anyone! You can use my name and quote anyway or anywhere you feel fit. You have an excellent product that would be of value to anyone self-employed, small-business or medium-sized business. (Larger companies probably have their own lawyers, either on retainer or as part of the legal staff.) This is great stuff. And, you are very customer-service oriented. I would recommend you to anyone who had need for your expertise.
- Michael McGee, McGee and Associates, Santa Clara, CA
Agreement Builder (JIAN Software): Available at http://rothline.com/v-web/ecommerce/os/catalog/product_info.php?products_id=125

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How To Create A Business Note That Is More Attractive To A Note Investor

30 Jul.
Posted by harbern in Finances | 5 Comments

You are selling your small business (business value under $1 million for this article). You would like the buyer of your business to come in with an all-cash offer, or be able to qualify for an SBA guaranteed loan. However, in many cases the owner of the business ends up taking back the financing because the buyer is not able to make an all-cash offer or does not qualify for an SBA guaranteed loan. So you create a “business note” and you now become the “bank”. At first that may seem okay, but after a couple of years of receiving payments you may decide you want to get back into business and you need the cash that is tied up in your business note on which you are receiving payments. So now you want to sell your business note to raise cash for your next business venture. What is it worth? That will depend a lot on how you structured the note. The objective of this article is to help you structure the note so that it is more attractive to a prospective business note buyer.
Assumption: This article discusses the structure of a note that includes only the business assets of a business. If a business also includes real estate that is being sold at the same time as the business, that real estate should be sold in a transaction that is financed separately from the business assets. This allows each to be valued and financed in the most optimum manner. For example, it may be possible to finance the real estate with a lower down payment, for a longer term, with a lower interest rate, and without a personal guarantee.
The objective of a business note buyer or investor when buying future business note payments is to minimize the risk of a default on the note. Therefore, they look for specific things when evaluating the purchase of future payments from your business note. Those include the following.

buyer’s down payment
number of payments made on the note (also known as “seasoning”)
buyer’s credit history
personal guarantee of the buyer
total amount of payments being sold
cash flow of the business and past profitability
length of term of the note
payment amount
offsets
lien position of the note
amortization of the note
experience of the buyer with the type of business purchased
interest rate on the business note
documentation of the business sale

Unlike the purchase of a piece of real estate, the tangible assets of a small business may not be adequate to cover the amount due on the business note if the buyer of the business defaults. Therefore, the business note buyer is looking for ways to lessen the likelihood of a default. If there is a default on the note, the business note buyer will require that the business buyer follow through on their personal guarantee which secures the business note.
A cash down payment of at least 33 percent should be made by the business buyer. This down payment should not come from borrowed funds. The reason for requiring such a large down payment is to make it less attractive for the buyer to “walk away” from the business if they encounter problems. If they have a significant amount of their own money invested in the business, they may think twice about walking away from the business when things get tough.
If the down payment was less than 33 percent, then the business note buyer will require that the difference be made up by additional payments on the business note. The business note buyer wants to see that the new owner of the business has at least a one-third equity investment in the business between the combination of cash down payment and payments made on the business note while operating the business.
Business note buyers want to see that at least two monthly payments have been made on the note by the new owner of the business. For new owners of professional practices such as doctors or dentists, a larger number of paid monthly payments will be required. This serves a couple of purposes. It should show that the new owner is generating cash flow from the business. It also allows the new owner to see if the business is meeting their expectations. As part of the “due diligence” performed by the business note buyer, they will interview the new owner to see if any problems exist that might lead to future problems making payments on the business note. They will want to know if the new owner was “mislead” by the seller of the business.
The buyer of the business should have a credit score of at least 600. A higher score is required by the business note buyer when the value of future business note payments being purchased reaches a certain level. Any “clouds” on the business buyer’s credit history should not be current. These should have been resolved before purchase of the business.
The business note must be personally guaranteed by the buyer. It cannot be guaranteed by the company buying your business. Specifically, it cannot be guaranteed by a person signing on behalf of the company. If there is a default, the business note buyer will be coming after the personal assets of the individual(s) making the personal guarantee. A personal financial statement for the buyer should be obtained to verify that they have the necessary assets should it be necessary to fulfill the personal guarantee.
The maximum amount a business note buyer will buy in a single transaction is between $300,000 and $450,000. You can create a business note for more than this maximum amount, but the business note buyer won’t buy more than their maximum at one time. This means when the period is completed for which payments have been sold any remaining payments will once again come to you. At this point you will have the option of selling future payments again, if you want to.
The cash flow of the business must be adequate to service the note and provide additional cash for the new owner to live on. The cash flow should be at least 1.25 times the amount required to service the note. The business should have been in the same location for at least 3 years (4 years for restaurants and bars), and it should have been profitable over that time.
The term of the note should not be longer than 72 months with 36 to 60 months being preferred. You can create a business note for longer than the recommended period, but a business note buyer will only buy the number of payments with which they are comfortable. The objective is to minimize the risk to the note buyer. The longer the term, the greater the likelihood that something will go wrong. The note buyer is looking to minimize their risk because the note is not fully secured by the assets of the business.
A key item related to the term of the note is the term of the lease of the space in which the business operates. In order to avoid a major disruption to the business due to a problem renewing the lease, the term of the lease should be at least as long as the term of the business note.
The business note must be in first lien position. The business note cannot be a second position lien behind a bank loan. If there is a default, the second position lien holder may have a difficult time recovering their investment.
The business note should be fully amortized over its term. There cannot be a balloon at the end because there is probably no way to refinance the balloon at the end of the note term. If a bank was not willing to finance the original transaction, it is unlikely that they would be willing to finance the balloon at a later date.(Notes: Some business note buyers may accept a balloon if it can be amortized within 24 months using the same monthly payment used to pay the note. Other business note buyers may buy payments up to a few months before the end of the note term, but leave the balloon for the business note holder.)
The business note buyer wants to see that the new owner of the business has prior experience running the type of business being purchased. This is especially important for the purchase of a “high-tech” business or a professional practice. The assumption is that someone with experience in the type of business has a better chance of succeeding than someone without prior experience.
One of the biggest factors contributing to the discount that the seller will have to take when selling the future payments is the difference between interest rate on the original business note, and the yield required on their investment by the business note buyer when they buy the future note payments. Therefore, the interest rate on the business note should be set as high as possible while still allowing a monthly payment that can be covered by the cash flow of the business for the term of the note.
The deal is not done until the paper work is done. There are stories where people documented the sale of a business on a napkin or restaurant place mat. That will not be adequate if you have any thought of selling your business note in the future. There are four main documents that should be produced. It is recommended that a lawyer be used to help properly prepare these documents. The documents are listed below.

UCC-1
chattel security agreement or chattel mortgage
promissory note
purchase agreement

The UCC-1 documents that the seller is holding a “perfected” lien on the business. This document is filed with county government and is part of the public record. If there is a default, this document indicates that the business seller will be first (after tax liens) to receive proceeds from the sale of any business assets.
The “chattel security agreement” is a list of the tangible assets of the business. This will usually be the furniture, fixtures, and equipment that are the tangible assets of the business. The intangible assets are things like a loyal customer base that can be lost if the new ownership does not provide the service received from the previous ownership. The chattel security agreement does not become part of the public record, but is necessary to document what the tangible assets were at the time of the business sale.
If any vehicles are part of the security for the business, the title of the vehicles should indicate that you are the owner of the vehicles so that the new business owner cannot sell these vehicles without your knowledge.
The promissory note documents the details of the sale like value of the note at the time of sale, the term of the note, the monthly payment, the interest rate, and any other special terms such as late payment fees.
The purchase agreement ties the whole transaction together. It may contain information that is not specifically contained on the other documents such as provisions to provide periodic financial statements to the seller which could then be made available to a prospective note buyer for evaluation.
The promissory note or the purchase agreement should not contain any “offset” statements which would allow the business buyer to deduct from payments made on the note due to problems running the business or problems with equipment purchased as part of the business. If the promissory note or purchase agreement does contain “offsets”, then the business note buyer will require at least 6 months of seasoning to see if there have been any events that would activate the “offset” provisions.
The following table summarizes the factors contributing to a business note that will be more attractive to a prospective note investor.
Note Factor
Preferred Value for Note Factor
Buyer’s Down Payment
At least 33% in cash that was not borrowed
Minimum Number of Payments Already Made (Seasoning)
2 monthly payments (more are preferred and more are required for professional practices) by the new owner
Buyer’s Credit History
Buyer must have a credit score of at least 600 with no recent “clouds” on credit history
Personal Guarantee
Personal guarantee required (cannot be a person signing on behalf of corporation or partnership)
Total Amount of Payments Being Sold
Maximum is $300,000 to $450,000 in a single transaction (note can be created for more than this amount, but the maximum that can be sold at one time is $300,000 to $450,000)
Cash Flow of the Business
Cash flow should be at least 1.25 times the amount of the monthly payment on the business note.
Length of Term of the Note
72 months maximum but 36 to 60 months is preferred (Note can be created for a longer term but business note buyer won’t buy the payments beyond a certain point.)
Lien Position of the Note
First lien position only
Amortization of the Note
Note must be fully amortized within the note term
Experience of the Buyer
The buyer should have prior experience in the type of business being purchased.
Interest Rate
As high as possible such that cash flow can support the required payment for the term of the note.
Documentation For Sale

UCC-1
Chattel Security Agreement
Promissory Note
Purchase Agreement

Real Estate
Real estate that is part of the business should be sold in a separate transaction from the business assets
Of course, a business note can be structured other than recommended above, especially if the seller does not anticipate selling future note payments. However, if the seller has any thought that they might want to sell future note payments, then the seller should follow the above recommendations as much as possible.
If you have an existing business note or are in the process of creating one as part of the sale of a business, and you are thinking about selling some or all of your future payments on that note, then we can help you determine what an investor would be willing to pay for those payments. Please contact us today for a free, no obligation quote on the sale of your future business note payments.

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How To Find The Lowest Rate Possible

29 Jul.
Posted by harbern in Finances | 4 Comments

The quest is on! You’re in the market for a new home loan, a refinance, or a consolidation and you absolutely insist on finding the lowest rate possible! So what better place to do your research, then here on the internet, late at night, with your coffee in hand, and your family fast to sleep!
We’d like to help you on your quest, so here are 3 free tips that we think will speed up your journey, and move you to success:

1. Benchmarks
2. Comparisons
3. Apples and Oranges

1. Benchmarks:
You have to start somewhere. Define “low”? Let’s not lick our index fingers, and poke them in the wind to see what direction the storm is heading. If you want the lowest rate possible, you need to know what the market is doing right now, where it’s been historically, and what it might be doing over the short term long-haul (say over the next 3 to 6 months.)

Fortunately for you, there are TONS of resources available on the internet to do easy market research. Our website provides a Rate-Watch, for example, updated throughout the day, complete with graphs, charts, and specs on fixed rates, ARMS, Jumbo’s, and everything in between. But we aren’t the only site out there that provides free resources. Just go to your favorite search engine, and you’ll find a gazillion sites that would love to give you free market information.
What I suggest you do is primarily focus on the 30 year fixed rate, and find a graph demonstrating the TREND over the last 6 to 12 months. A picture is worth a thousand words. Also, check out the current fixed rate, and maybe even poke your eye at the APR for an adjustable rate mortgage, and perhaps check out two or three different resources online. Most of them should be extremely similar. This will encourage your confidence in your own growing knowledge about what’s going on out there.
What’s the news got to say about it? Our site provides a free Financial News watch for mortgages, auto loans, and breaking business stories, updated throughout the day. It’s no secret, of course, that news is abundant on the internet, and we aren’t the only free resource to provide this information. Go wherever you desire, but read an article or two, even if it’s just the first few paragraphs. What’s going on with the rates? What are the Feds doing? Any pundits out there talking about how things look, and what may be happening with interest rates? I swear, if you spend 5 minutes doing this, you’ll be as informed as the best of them, in terms of having a gestalt view on rates. You will know, with a high level of certainty, what “low” means, in the current world of mortgages and loans.

So take 20 minutes, and derive some benchmarks for yourself. Then, and only then, will you be in a position to gauge what the lowest possible rate truly is, and fully prepared to move forward with your important shopping trip.
2. Comparisons:
Every loan is different. Every lender is unique. Every borrower has his/her own, special, unique set of circumstances. In addition, there are thousands and thousands and thousands of lenders. The information is out there, but what you need is to focus on efficiency.

So the best way to sift through the deluge of thousands of lenders, with rates changing daily, and terms that may or may not be posted for all to see, is to use one of the many online services that provide this technology to you (for free.)
I won’t go into naming my favorites, or listing recommendations, or pointing out the ones that are the oldest, or the newest, or the fastest. That’s not the point of this article, and I believe in your ability to make good choices. What I will say, is that I believe in these services.
By providing very simple, brief, and concise information on a short form application, you will almost instantly be provided with 3 to 4 loan offers that match your needs and circumstances, from the thousands of lenders, rates, and offers that are collated and organized in the databases of these various loan search providers. I give that an A for efficiency, allowing you to spend your hard-earned time and resources on other more productive things.
Once provided with these loan offers, the process naturally, is to compare them. Compare them to the market. Compare them to each other. Compare them to different kinds of lending institutions. Compare their terms. Compare their locations. Compare their histories. And of course, compare their rates, and points, and Origination Fees, and everything else in between. Compare, Compare, Compare.

3. Apples and Oranges:
This may be a counterproductive question, given the nature of this article, but are you absolutely sure that RATE is all you’re concerned about? Is getting the LOWEST rate, truly the most important thing to consider, when diving into something as important, as a new mortgage?

Sometimes, it’s nice to do business with your local bank. They’re right around the corner, they know you by name, and maybe you even get a Christmas card and sometimes, even a box of chocolate. They may charge a little more in rate, or their terms might be slightly less competitive, but usually, they’ll be up front about that, and what they’re selling isn’t the bottom-line so much, as the security of knowing who they are, and what kind of personable relationship you can count on over the next 30 years.
Sometimes, it’s nice to take advantage of your local credit union. Maybe you are a government employee, or you work for the electric company, or your business participates in a local, non-profit credit union. Credit Union customers tend to be loyal, and almost religiously in favor of going the route of the credit union for all financial needs. It’s a nice idea, that you own a part of the bank, and that you are borrowing from yourself, in a matter of speaking. So, perhaps the credit union can offer you competitive rates, but more importantly, this is always a good way to go if you’re seeking an alternative beyond private lending institutions.
Sometimes, it’s nice to borrow from the Big Mammas out there. There’s nothing like convenience. And if you’re into doing everything right out of your neighborhood grocery-store, then you should look into this as well. Rate isn’t everything. Convenience matters. Look, if you live a busy California lifestyle, then perhaps it’s more important to incorporate ease of doing business into your decision making process.

The point I’m trying to make, is that rate really isn’t everything, but it most certainly matters. So, I’m not persuading you against getting the lowest possible rate available, but I am encouraging you to do your homework, and check out all options before making a final decision.
We’ve enjoyed providing this information to you, and we wish you the best of luck in your pursuits. Remember to always seek out good advice from those you trust, and never turn your back on your own common sense.
Publisher’s Directions: This article may be freely distributed so long as the copyright, author’s information, disclaimer, and an active link (where possible) are included.
Disclaimer: Statements and opinions expressed in the articles, reviews and other materials herein are those of the authors. While every care has been taken in the compilation of this information and every attempt made to present up-to-date and accurate information, we cannot guarantee that inaccuracies will not occur. The author will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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Managerial Malpractice Claims On The Rise

29 Jul.
Posted by harbern in Finances | 2 Comments

Protect Your Assets and Executives with DandO Insurance
(ARA) - When disgruntled shareholders, employees, customers or competitors allege financial mismanagement, discrimination or other wrongful acts, blame often lands at the feet of corporate directors and officers. Claims of managerial malpractice are on the rise, along with the costs — legal fees, settlements and judgments — associated with them.
Just how expensive can a claim against your company and its officers be? The average shareholder claim rose $1.51 million to $8.67 million in 1999, the highest ever recorded. During the same period, the average employee claim climbed to $306,000, up from $287,000 in 1998.
“That fact is, the threat of lawsuits and litigation costs is a basic risk of corporate directorship,” says international risk management expert Thomas W. Harvey. “Because directors’ and officers’ services are considered fiduciary, requiring decision-makers to exercise their powers in good faith and with prudent judgment, directors and officers risk what essentially are managerial malpractice claims.”
According to Harvey, president and CEO of Assurex International, the world’s largest privately held commercial insurance brokerage group, directors and officers (DandO) claims typically result from disputes over financial or accounting irregularities or company decisions alleged to adversely affect shareholders’ return on investment.
For public companies, shareholder complaints are the most frequent sources of DandO claims. Common shareholder complaints involve financial disclosure, breach of fiduciary duty, fraud, mergers and acquisitions, stock offerings and spin-off-related issues.
Discrimination is the primary employee complaint, followed by wrongful termination, harassment and breach of contract. Clients cite discrimination more often than any other type of complaint. Business interference tops the list of competitors’ claims. For both clients and competitors, contract disputes come in second on the list of typical grievances.
“Directors and officers insurance can help mitigate losses when an organization and its directors or officers are slapped with a legal claim,” said Harvey. “For responsible organizations operating in the age of workplace lawsuits, DandO insurance is a must.”
The Purpose of DandO Insurance
Available for public and private companies, non-profit and for-profit organizations, DandO insurance:

Protects directors and officers with insurance covering matters for which they might not be indemnified under corporate by-laws.
Reimburses the organization after it has indemnified directors and officers in accordance with corporate by-laws.
Motivates the organization to attract quality outside persons to serve as directors or executive managers.
Reassures inside directors and officers.

What Type of DandO Insurance is Right for You?
Your organization’s structure will determine the type of DandO coverage application form used by the underwriter. Insurance companies that underwrite DandO policies distinguish between for-profit and non-profit organizations, as well as publicly held and private companies when preparing DandO quotes and policies.
The good news for non-profits: DandO coverage is both broad and reasonably priced for non-profit organizations. Minimum premiums begin well under $1,000. Directors and officers of non-profit organizations can obtain coverage aspects and extensions not available to the directors and officers of for-profit organizations. Non-profit organizations’ coverage provisions might include full coverage for the organization, employment practices liability, an affirmative coverage grant for punitive damages (unless prohibited by law), defense expenses payable beyond policy limits and in some cases no per-claim deductible.
When it comes to private versus public company DandO insurance, a major distinction is the scope of coverage available for the organization as an entity. Most publicly held organizations are able to purchase coverage for the organization’s liability only for shareholder claims in connection with Securities and Exchange Commission (SEC) liability. Since this exposure is not faced by private organizations (even those with shareholders), underwriters generally exclude the SEC exposure from private companies’ DandO policies. But, it is still important that a private organization’s DandO coverage not exclude claims brought by shareholders, as many private organizations do indeed have shareholders.
Underwriters of private company DandO insurance offer several coverage forms to cover the organization’s liability to the same extent as the liability coverage provided to directors and officers. However, since for-profit DandO policy limits are provided on an aggregate limit basis, payment of covered claims made against the organization erodes the coverage limit available for directors and officers.
Don’t Forget Employment Practices Liability Coverage
A benefit of covering private organizations as an entity on a DandO policy, in addition to protecting the directors and officers, is the ready availability of Employment Practices Liability (EPL) coverage. EPL insurance protects employers from workers’ claims of discrimination or wrongful termination based on race, sex, age or disability. EPL insurance also protects organizations from third-party liability claims filed by customers and outsiders.
How to Maximize Your DandO Coverage: 15 Buying Tips
DandO insurance coverages are highly negotiable. Your insurance agent should make every effort to customize DandO coverage to meet the unique needs of your organization and its management structure. Market conditions should be taken into account as well.
Assurex International offers 15 tips to maximize your organization’s DandO insurance coverage.

Make sure the policy is non-cancelable, except for non-payment of the premium. Require the insurer to give a minimum of 90 days written notice of non-renewal.
Strive for an affirmative coverage statement regarding punitive damages.
Be clear on the extent of entity coverage afforded, for settlements, judgments and defense expenses. As an alternative, pre-set an allocation percentage (ideally 100 percent) for the entity. Generally, for publicly held entities, the only entity coverage available is for SEC-related claims. While broader entity coverage is available, DandO entity coverage is still evolving.
Is the policy endorsed to extend to EPL claims? This extension is valuable only if the entity is specifically covered for EPL claims.
If your organization is publicly held, have your agent investigate a coverage carve out in the exclusionary language for pollution-related claims, covering shareholder suits against directors and officers.
Generally, exclusionary language for Professional Services or for Errors or Omissions is too broad. Request coverage carve out for failure to supervise, if the exclusion cannot be removed entirely.
Secure a written commitment from the insurer for multiple-year pricing, or language that restricts possible premium increases to significant financial changes, a major acquisition or significant claims activity.
Seek automatic coverage for newly acquired or created organizations, with no additional premium payable with policy renewal or anniversary.
Make sure there is a specific provision for the insurer to advance defense costs to the insured.
Arrange for pre-approval of the insurer’s choice of defense counsel.
Secure coverage for non-officer employees named in a covered suit with officers and/or directors.
Be sure a minimum of 12 months is allowed for the Extended Reporting period (discovery clause).
Have legal counsel review the DandO policy application forms before submitting them.
Extend coverage to include outside directorships.
Have your insurance broker obtain a carve out from the usual insured versus insured exclusion to cover claims brought by bankruptcy trustees, federal or statutory receivers, and debtors-in-possession. This is valuable in situations involving bankruptcy of the insured organization.

DandO insurance will not necessarily protect your organization against intentional wrongdoing such as fraud, theft or blatant disregard for employees’ rights. However, whether your organization is private, public or non-profit, DandO insurance should be a component of your overall insurance and risk management program.
Assurex is the world’s largest grouping of privately held risk management and commercial insurance brokerages. Visit Assurex online at www.assurex.com.

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Twitch Speed Reaching Younger Workers Who Think Differently

28 Jul.
Posted by harbern in Finances | 3 Comments

Every parent, educator, and manager knows that “Nintendo children”–those born after 1970 and raised on video and computer games, Walkmans, the Internet, etc.–are different. Unfortunately, the Gen-X discussion has focused mainly on the youths’ supposedly short attention spans and attention-deficit disorders, ignoring or underemphasizing what is perhaps the most crucial factor–that this under-30 generation thinks, and sees the world, in ways entirely different from their parents.
An example: This generation grew up on video games (”twitch speed”), MTV (more than 100 images a minute), and the ultra-fast speed of action films. Their developing minds learned to adapt to speed and thrive on it. Yet when they join our companies, we typically begin by putting them in corporate classrooms, bringing in poor speakers to lecture at them, and making them sit through an endless series of corporate videos.
Speedwise, we effectively give them depressants. And then we wonder why they’re bored.
I don’t mean to suggest that Sega and Sony have created new intellectual faculties in under-30s but, rather, that technology has emphasized and reinforced certain cognitive aspects and de-emphasized others. Most of these changes in cognitive style are positive. But however one feels, it’s important that managers (as well as educators and parents) recognize that these changes exist so that we can deal with the younger generation effectively.
Below are 10 of the main cognitive style changes, which raise a number of important and difficult challenges. We have already begun to see the development of new business structures, ideas, and products that take into account under-30 employees’ cognitive changes and preferences. It is likely that the full impact of these changes will not be felt until the younger generation fully comes to power, just as the movies were impacted by the coming-of-age of George Lucas and Steven Spielberg. That time is not far off.
Twitch Speed vs. Conventional Speed
The under-30 generation has had far more experience at processing information quickly than its predecessors, and is therefore better at it. Humans have always been capable of operating at faster-than-”normal” speeds (as airplane pilots, race-car drivers, and speed-reading guru Evelyn Wood can attest). The difference is that this ability has now moved into a generation at large, and at an early age. One problem this generation faces is that, after MTV and video games, they essentially hit a brick wall–short of piloting a jet, little in real life moves that fast. This generation’s “need for speed” manifests itself in the workplace in a number of ways, including a demand for a faster pace of development, less “time-in-grade,” and shorter lead times to success.
An important challenge for today’s managers is how to reassess and speed up their assumptions around time, while still keeping sight of other key objectives, such as quality and customer relationships. They also need to create experiences that maintain the pace and exploit the facility of “twitch speed” while adding content that is important and useful. Several possible approaches include speeding things up via technology (such as by providing workers with the kinds of real-time data that financial traders use), installing faster infrastructures with fiber-optic cable and T-1 telephone lines, and creating new, MTV-style corporate videos. Re-engineering systems and activities so that things simply move faster is another.
Parallel Processing vs. Linear Processing
Much of the under-30 generation grew up doing homework while watching TV and doing almost everything while wearing a Walkman. Many of them feel much more comfortable than their predecessors doing more than one thing at once. While some argue that this limits attention to any one thing, this is not necessarily the case. The mind can actually process many tracks at once and often has quite a bit of “idle time” from its primary task that can be used to handle other things. Today you see young computer artists creating wonderful graphics while listening to music and chatting with co-workers, and young bankers having multiple conversations on the phone while reading their computer screens and e-mail.
This growth of parallel-processing ability appears to be acknowledged by Bloomberg TV News, in which the anchor person takes up only one-quarter of the TV screen, the remainder being filled with sports statistics, weather information, stock quotes, and headlines, all presented simultaneously. It is quite possible, and even fun, for a viewer to take in all of this information and receive much more “news” in the same amount of time.
Rather than admonishing their young workers to concentrate on only one thing at a time, managers should be thinking of additional ways to enhance parallel processing and take advantage of this increased human capability. This might take, for example, the form of multiple types of information hitting employees’ computer screens at once–the objective of so-called “push” technology and Microsoft’s new vision for the corporate desktop. With all the information needed to do the job–numbers, video feeds, links, simultaneous meetings, and the ability to move seamlessly between them–it’s the Nintendo worker’s nirvana.
This generation’s enhanced parallel-processing ability may also help them slide easily into the new “boundaryless organizations,” in which each worker is expected to wear multiple hats and be part of many constituencies. I remember when the requirement that consultants at firms such as BCG and McKinsey serve simultaneously on multiple-project teams was considered unusual and highly suspect. With the arrival of the new generation, such parallelism is being demanded.
Random Access vs. Linear Thinking
The under-30 generation is the first to experience hypertext and “clicking around,” in children’s computer applications, in CD-ROMs, and on the Web. This new information structure has increased their awareness and ability to make connections, has freed them from the constraint of a single path of thought, and is generally an extremely positive development. At the same time, it can be argued–with some justification–that unbridled hyperlinking may make it more difficult for these workers to follow a linear train of thought and to do some types of deep or logical thinking. “Why should I read something from beginning to end, or follow someone else’s logic, when I can just ‘explore the links’ and create my own?” While following one’s own path often leads to interesting results, understanding someone else’s logic is also very important. A difficult challenge is how to create experiences that allow people to link anywhere and experience things in any order yet still communicate s!
equential ideas and logical thinking.
One approach is to set up new information-delivery systems, such as corporate intranets, that let workers break out of the traditional boxes in which corporate information has been stored, and then to create tools to link this information to systems that provide logical and decision-making structure. The U.S. intelligence and military communities recently created Intelink, an intranet-based system in which information becomes universally available as quickly as it gets created, allowing users at all levels the freedom to create and explore random paths that lead to new ideas. The linking and browsing structures of the Internet and intranets have many positive benefits, and managers of Nintendo-generation employees should encourage, rather than discourage, their creation and use. Managers should also be exploring nonlinear electronic alternatives to today’s reports, manuals, lectures, and lengthy narrational videos.
Graphics First vs. Text First
In previous generations, graphics were generally illustrations, accompanying the text and providing some kind of elucidation. For today’s young people, the relationship is almost completely reversed: The role of text is to elucidate something that was first experienced as an image. Since childhood, the younger generation has been continuously exposed to television, videos, and computer games that put high-quality, highly expressive graphics in front of them with little or no accompanying text.
The result of this experience has been to considerably sharpen their visual sensitivity. They find it much more natural than their predecessors to begin with visuals, and to mix text and graphics in a richly meaningful way. An excellent example of this is Wired, whose intensive use of graphics makes it highly appealing to younger readers but difficult for many older folks to read–”Why can’t they just give us the plain text?” is the complaint I hear from colleagues. This shift toward graphic primacy in the younger generation raises some extremely thorny issues, particularly with regard to textual literacy and depth of information.
The managerial challenge is to design ways to use this shift to enhance comprehension, while still maintaining the same or even greater richness of information in the new context. In the training area, creative groups such as Corporate Gameware, my unit of Bankers Trust, are presenting important but not especially “sexy” or exciting material in ways that conform with the preferences of younger employees by using the highly graphic style of video games. Another promising development is data visualization, in which large arrays of information are presented as colorful, ever-changing graphic images that visually accent different characteristics of the data. These tools are beginning to make serious headway in data-intensive business fields such as finance and marketing. However, they should be considered by managers in all industries as an approach that fits the new generational style.
Connected vs. Stand-alone
While the previous generation was linked by the telephone, that system is synchronous (i.e., both people have to be there). The under-30 generation has been raised with, and become accustomed to, the asynchronous worldwide communication of e-mail, broadcast messages, bulletin boards, usegroups, chat, and Internet searches. As a result of this “connected” experience, young people tend to think differently about how to get information and solve problems. For example, if I need a question answered I’ll typically call the three or four people I think might know. It might take me time to get to them, and take them a while to get back to me. When my 22-year-old programmer wants to know something, he immediately posts his question to a bulletin board, where three or four thousand people might see it, and he’ll probably have a much richer answer more quickly.
The challenge for managers is to invent ways of taking advantage of this connected mode in their interactions with the younger generation, as the younger people do among themselves. The more we help connect these employees to each other and to customers, the quicker they will invent positive ways to take advantage of it. The “connectedness” of the generation has also made young workers much less constrained by their physical location and more willing to work in the so-called “virtual teams” that are becoming more useful in a variety of businesses and industries.
Workers who have grown up online tend to be much more comfortable with seeking out and working with the best, most knowledgeable people, wherever they may be. Such virtual teams often recruit each other via messages on the Internet, operate smoothly from widely scattered parts of the world, and many never physically meet their clients or each other. As they finish their day, software developers around the globe often electronically forward their work to a colleague in another country who is just waking up. Managers must become more adept at managing these connected capabilities and directing the acquisition, enhancement, and appropriate deployment of intellectual capital around the world.
Active vs. Passive
One of the most striking cross-generational differences can be observed when people are given new software to learn. Older folks almost invariably want to read the manual first, afraid they won’t understand how the software works or that they’ll break something. Nintendo-generation workers rarely even think of reading a manual. “RTFM” (”read the [expletive] manual”) is a term of derision. They’ll just play with the software, hitting every key if necessary, until they figure it out. If they can’t, they assume the problem is with the software, not with them. This attitude is almost certainly a direct result of growing up with Sega, Nintendo, and other video games where each level and monster had to be figured out by trial and error, and each trial click might lead to a hidden surprise or “Easter egg.”
We now see much less tolerance in the workplace for passive situations such as lectures, corporate classrooms, and even traditional meetings. As the younger generation progresses up the managerial ranks, it is likely that such old-fashioned managerial standbys will be replaced by more active experiences such as chat, posting, surfing for information, and interactive learning. The process of “designing for doing,” i.e., designing systems and experiences that employees can actively use, rather than things they need to listen to or be afraid of doing wrong, may become the new generational equivalent of the industrial “designing for manufacture.” Nike’s “Just do it” slogan hits this generational change squarely on the head. It also explains why Bob Dole’s saying to Gen-Xers, “Just don’t do it” placed him so squarely in the past.
Play vs. Work
While often derided in the press as intellectual slackers, in reality the under-30s are very much an intellectual problem-solving generation. Many types of logic, challenging puzzles, spatial relationships, and other complex thinking tasks are built into the computer and video games they enjoy. Their spending on such electronic games has surpassed spending on movies; PCs are now used more for running entertainment software than for any other application, including word processing. While some have argued that play and games are simply preparation for work, I think that, for today’s younger generation, play is work, and work is increasingly seen in terms of games and game play. The fact that the real-life games are very serious does not make the player’s approach any different than the way she approaches software. Achievement, winning, and beating competitors are all very much part of the ethic and process.
As the post-1970 generation enters the workforce, its preference for the computer as the medium of play is already beginning to have a profound impact on how work gets done. Game interfaces are appearing in the workplace. Financial companies are inventing gamelike trading interfaces in which winning the game means making an actual profit. New associates at Bankers Trust learn about the bank’s policies by playing a nonviolent, customer-focused video game.
One of older managers’ most difficult challenges is to be willing to let the younger generation’s play attitude enter the “real” world of business as quickly and smoothly as possible. Instead of resisting play by removing or banning all games in the workplace, for example, they could be supporting and funding the development of new game interfaces that help the younger generation work and learn in their own cognitive style. The preference for play is also influencing business in the form of pressure for a less formal workplace. Older managers should reconsider their resistance to such changes carefully.
A potential opportunity for managers to relate to the play attitude of the new generation might be to supplement traditional sports-oriented competitions such as softball with inter- and intra-company tournaments in video and other games. Doing so would engage the minds, as well as the bodies, of employees in healthy competition and perhaps foster additional company spirit. Finally, the younger generation’s play preference has implications for employee recruiting, as companies that go on campus with business simulations and other challenging games for potential recruits tend to be very well-received.
Payoff vs. Patience
One of the biggest lessons the under-30 generation learned from growing up with video games is that if you put in the hours and master the game, you will be rewarded: with the next level, with a win, with a place on the high scorers’ list. What you do determines what you get, and what you get is worth the effort you put in. Computers excel at giving feedback, and the payoff for any action is typically extremely clear. A key outcome of this is a huge intolerance on the part of the younger generation for things that don’t pay off at the level expected. Why, they ask, should I finish school when elementary school kids can design professional Web sites, 20-year-olds can start billion-dollar companies, and Bill Gates, who left school for something with more payoff, is the world’s richest man?
Young people make these payoff-vs.-patience decisions every minute, and sometimes in ways that are counterintuitive. For example, it was at first strange to me that the same people who prefer “twitch” games often have great patience with slow Internet connection speeds and the sometimes long waiting times in a game like Myst. I suspect it is because they have decided, or realized, that the payoff is worth the wait. The challenge for older managers is to understand just how important these payoff-vs.-patience tradeoffs are to younger people, and to find ways to offer them meaningful rewards now, rather than advice about how things will pay off “in the long run.”
One clear business manifestation of this requirement for payoff is the increasing demand for a clearer link between what employees do and the rewards they get, leading to the growing trend toward pay-for-performance. Another result is the increasing use of equity as a component of compensation, along with the replication of equity-like compensation structures to reward workers with a “piece of the action” for their own initiatives and efforts. The growing realization that this generation wants its payoff now has also led to an increased willingness on the part of many businesses to provide seed capital and to “spin-off” internal start-ups, allowing workers to potentially cash in more quickly and allowing the firm to benefit long-term through an equity position.
Fantasy vs. Reality
To me, one of the most striking aspects of the under-30 generation is the degree to which fantasy elements, both from the past (medieval, Dungeons and Dragons imagery), and the future (Star Wars, Star Trek, and other science-fiction imagery) pervade their lives. While young people have always indulged in fantasy play, the computer has by its nature made this easier and more realistic, in many ways bringing it to life. Sociologists might say that some or all of this is due to a desire to escape the realities of today’s life: fewer good jobs, more alienation, and a degrading environment. Whatever its cause, the fantasy phenomenon has certainly been encouraged by technology. Network technology allows people not only to create their new fantasy identities but to express them to others and join in fantasy communities. The huge interest in chat rooms and in individual home pages is, at least in part, another manifestation of this.
Rather than admonish younger workers to “grow up and get real” and abandon their rich fantasy worlds, managers should look for new ways to combine fantasy and reality to everyone’s benefit. One place it may be possible to do this is in the design of work spaces: Spaces designed by the younger generation are very different from those of their predecessors and from those designed for them by the older generation. Companies already run by Nintendo-generation individuals generally have much more informal furniture and settings, and often have special rooms for games, etc. Microsoft’s “campus” is full of indoor and outdoor play opportunities.
The younger generation’s fantasy preferences can also seen in the growth of new “off-the-wall” job titles, such as Yahoo’s “Chief Yahoo” or Gateway 2000’s “chief imagination officer.” Young workers may be willing to go a lot further with their imaginations–Gateway decorates its shipping boxes as cows. We are also seeing an increasing debureaucratization of systems and procedures in many organizations. Perhaps it is not too far off when some companies will sport their own “Klingon,” “Borg,” or “Wookiee” divisions doing serious business while decked out appropriately.
Technology as Friend vs. Technology as Foe
Finally, growing up with computers has engendered an overall attitude toward technology in the minds of the younger generation that is very different from that of their predecessors. To the older generation, technology is generally something to be feared, tolerated, or at best harnessed to one’s purposes. No matter how easy we make it, this generation doesn’t want to program its VCRs or even, for the most part, surf the Net (though there are, of course exceptions, such as the Internet’s becoming a useful way for the retired generation to stay connected and productively use their leisure time).
Yet even if the older generation comes to technology willingly, or is forced by a changing culture to learn and embrace technology, it will never be as entirely comfortable and trusting of it as are their children. To the younger generation, the computer is a friend. It’s where under-30s have always turned for relaxation and fun. For many in the generation, owning or having access to a computer feels almost like a birthright. Being connected is a necessity. The huge generational reversal in technical skill, where parents must turn to their children for help in using their expensive equipment, is now legendary. “What technology will I have?” is often the key factor in a young worker’s decision about what job to accept.
How can an older generation of managers relate to and help employees who see computers and related technology in this way? One way is to empower them to create new business elements–computer applications, structures, models, relationships, Web pages–that make sense for their generation. Another possible approach is to continually seek ways to communicate, transfer needed information, and build desired skills via the media the younger generation willingly engage in, such as computers and games.
Rather than forcing the younger generation to use the methods of the past, managers should be offering them the resources to create their own approaches that will work in their new cognitive environment.

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The Top 10 Priorities That Guard Your Five Star Reputation

27 Jul.
Posted by harbern in Finances | 7 Comments

Making money doesn’t make your reputation… your reputation makes you money. Gala Gorman
Whether your business is product or service-oriented, the loyalty and dedication of your customers is greatly dependent on your reputation. Your most effective sales force is your existing customer base. Word-of-mouth or the personal recommendation, serves to create an expectation that you must only live up to - rather than one that you must create from scratch. The assets of your business have traditionally included property, plant, equipment, and your customer base. Progressive organizations understand that the concept of business assets should be expanded to include their good reputation. By being responsive to change, having the ability to conduct a constructive dialogue with stakeholders, and taking advantage of networked resources, the organization further extends their tangible and in-tangible non-traditional assets.
Companies are increasingly adopting socially responsible business practices based on sustainable development to ensure efficiency, stimulate innovation, and create top-line growth. This new approach to business requires leadership to re-think priorities with a focus on a longer-term agenda. The socially responsible leader understands that decisions made by management must focus not only on profit-making but also on reputation- building. Fortunately the latter feeds the former.
These are the Top 10 priorities that will ensure a sustainable future for your business or organization. After thoughtful consideration, priorities must be established (re-established) and communicated to stakeholders. With every area of the organization working in alignment with the vision, mission and values, goals and objectives are more easily reached. To begin the discovery process, use this list to honestly evaluate your organization’s priorities.

Define and demonstrate your values.

What products or services do you provide and how do they serve to demonstrate your values? You must first define your values and create your mission with a clear understanding of the values you wish to demonstrate. If your products and services can’t be reconciled with your values, trust is eroded.
How will your products or services impact stakeholders? Your stakeholders include stockholders, but the group also extends to staff, associates, vendors and the community that is directly or indirectly impacted by what you produce. Stakeholders become a far-extending community of concerned parties.
What filter is in place for decision-making? Your filter is created from having a clear understanding of your values and mission. Decisions are run through this filter before being communicated or implemented.

Create a recognizable image.

What is your desired image? Once you have defined your values and mission, you have an easier job of creating your image. You know how you want to be perceived and recognized and, consequently, you can take action that will create the desired result.
Are your logo and promotional materials consistent and memorable? Your logo is a powerful trigger that creates recognition for your organization. Careful thought and consideration should be given to your logo and how it communicates the message desired.
Does your marketing support and extend the desired image? Your marketing plan and program should serve to create and extend your brand recognition. All activities, whether they are marketing related or otherwise, should serve to create and support your brand environment.

Know your market and customer.

Who is your perfectly-aligned customer? You should be able to readily communicate the profile of your perfect customer. By creating this profile, you set the universal law of attraction into motion so that you can focus your energy on customers whose values and beliefs are in alignment with the organization’s.
What does your perfectly-aligned customer expect from your services? If you are focused on serving a customer that is perfectly-aligned with your values, by understanding how they expect to benefit from your services you create a powerful business model. You walk a mile in the customer’s shoes.
How might you extend your services to exceed expectations? Once you understand customer expectations, you can begin to discover ways to exceed them. It is important to maintain focus and know what you can realistically do without diluting your energy.

Strive for perfection.

Is perfection expected? Perfection isn’t conditional. It must be the primary goal regardless of circumstances. Every level of the organization should understand what it means to perfect its product or service.
How are mistakes or errors turned into learning opportunities? Mistakes and errors can be transformed into tremendous opportunities if they are given appropriate consideration. The root cause can be mined for its eye-opening insight into breakdowns in an organization’s systems and infrastructure.
Who decides if it’s perfect enough? There must be one clear standard that is demonstrated at every level of an organization. This standard applies regardless of time pressures or circumstances.

Treat your stakeholders like family.

Do you understand who your stakeholders are? Stakeholders is a fairly new term that extends far beyond an organization’s stockholders or owners. Even the organization’s customers are stakeholders - they have a vested interest in the organization’s continued existence and success.
Is community encouraged? For example, staff spends more of their waking hours with fellow workers than they do with their own family. By encouraging community through fostering relationships between stakeholders, the organization creates loyalty, dedication, and commitment.
Are wealth creation and benefits shared fairly? Careful consideration should be given to the distribution of wealth amongst those that are most instrumental in creating it - intrinsically and consequentially. All members of an organization’s family can expect to benefit from the success created by sharing and progressing the agenda.

Contribute to your local community.

Is your local community defined and understood? For some, local may be limited to a 10-mile radius. For others, local will encompass the globe. In order to contribute effectively to your local community, you must understand its make-up.
Is community participation encouraged and rewarded? The organization should create a win/win relationship with its community. The community provides it with its means for creating success and it gives back to the community appropriately by allocating and sharing its resources.
Do you understand how your local community extends globally? While many organizations may limit their focus to a community that is in their neighborhood, all organizations impact the global community in some way, shape, or form. It is instrumental in progressing the social responsibility agenda to initiate the dialog and take global considerations into account.

Make decisions considering intrinsic and consequential costs/benefits.

How are costs determined in decision-making? In the evaluation of any project or initiative, there are clearly identifiable associated costs. There are also consequential costs that can easily be overlooked if the decision-making process isn’t designed to incorporate a full-spectrum of cost considerations.
Are decisions made with a long-term focused perspective? Short-term motivations are generally limited to a strictly profit-oriented agenda. In order to effectively incorporate progressive and socially responsible initiatives, longer-term results must be considered and prioritized.
Does the organization tell the truth? There are lies and..there are lies. The truth should provide the recipient with the information needed to make an informed decision. If a decision is made based on inaccurate or incomplete information, it is based on lack of the truth.

Manage the organization with integrity.

Are financial records maintained to ensure accurate and meaningful reporting? Accurate financial reporting is critical to effective decision-making. Financial policies should be employed to create records that provide the most genuine and meaningful results of operations.
Does management emphasize being socially progressive? Most organizations delay the implementation of a socially responsible agenda until the pain associated with the delay is intolerable. By taking a pro-active approach, social responsibility becomes the competitive edge.
Do the company’s products and services promote quality of life? If the organization’s success is dependent on the degradation of society’s health and welfare, integrity will be beyond the organization’s reach. Products and services should be designed to contribute to human welfare.

Encourage innovation and continuous improvement.

How does the company capitalize on technological advancement? Technology is a powerful tool that can bring an organization’s stakeholders into closer proximity. In order to foster community, technology can be a great ally.
Are employees encouraged to increase competencies? Continuous improvement requires a commitment to education and personal/professional development. The organization’s compensation program should reward those that increase their skills that can be developed and applied to meet customer’s needs.
Are resources allocated to research and development? It is tempting to focus on today. In the competitive environment we operate in, a today-oriented focus is critically shortsighted. Innovation and improvement must be supported with a commitment of resources.

10. Tread lightly on the planet.

Is the workplace environmentally friendly? As was pointed out above, we spend more time in the workplace than we do in our home-place. The environment should be thoughtfully created to promote creativity, health, and productivity - with an emphasis on the environmental implications.
Have products and packaging been developed considering life cycle? The organization should have a clear understanding of where their products or services will end up 10 (or 100) years from now. When life cycle is taken into consideration, a product’s cost incorporates an entirely new perspective.
Does the organization understand its environmental impact? There is a trickle-down effect associated with just about anything we say or do. This trickle-down effect could also be referred to as a trickle-out effect. The environment is effected in seen and un-seen ways.

Your reputation is one of the most valuable assets of your business. By incorporating a new set of values and priorities into what has proven to be a successful formula on many levels, I believe that business will be the platform for a new agenda - the Social Responsibility Agenda. That agenda will solidify your reputation as an organization that is worthy of its stakeholders’ dedication and loyalty.
Regardless of the size of your business, you make a contribution to the global marketplace that impacts humanity with a rippling effect. As an organization’s leader, you choose whether that ripple will be felt positively or negatively. Even a small movement or change in a socially responsible direction can have a dramatic effect. Every day produces a new opportunity to mold the way your organization is perceived and to enhance your reputation!
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The Top 10 Priorities That Guard Your Five-Star Reputation have been developed from the Social Responsibility Assessment TM (SRA TM) which is at the center of Wholistic Business’ executive development and consulting programs designed for small to medium-sized businesses. Your FREE Report - 40 Questions for Socially Responsible Leaders - is available at http://www.WholisticBusiness.com. At Wholistic Business, we believe that business literally makes the world go around. It will be business owners and managers that will ultimately change the world for the better.
Wholistic Business (http://www.WholisticBusiness.com), a division of MetaComm International, LLC, is committed to assisting small to medium-sized organizations in developing socially responsible business practices with a keen eye on productivity and profitability. Gala Gorman, MetaComm’s CEO, holds a Master’s Degree in Human Development, is a certified public accountant, certified financial planner, published author, executive development coach and business consultant with over 25 years of experience.
The Social Responsibility Assessment TM (SRA TM) is a great way to establish a baseline for your organization ensuring that future decisions and practices move you in your intended direction. The SRATM includes a closing report, prepared after a thorough review of the organization’s policies and practices, which discusses practices currently in place within your organization and suggestions for improvements or recommendations for new implementations.
Call today for your FREE initial consultation to discuss how your organization will benefit from a Social Responsibility Assessment TM conducted by Wholistic Business and from implementing socially responsible initiatives.
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For more information, contact Gala Gorman between 9:00 a.m. and 5:00 p.m. Pacific Time at:
METACOMM MEDIA
A division of MetaComm International, LLC
(888) 886-4111 or (702) 286-4111
Post Office Box 1016
Boulder, CO 80306
E-mail: gala@metacommintl.com
Web site: http://www.WholisticBusiness.com

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A Short Guide To Effective Public Speaking

27 Jul.
Posted by harbern in Finances | 7 Comments

Delivering an effective presentation to 20 or to 200 people is difficult. Because listeners have better access to information since the internet became commonplace, audiences expect more content from speakers today. In addition, because of the entertainment slant of most media today, audiences want a presentation delivered with animation, humor, and pizzazz.
If you would rather spend your time preparing your content than reading a book on public speaking, this is an article especially for you! From my experiences in delivering over l500 speeches during the past 20 years, here is a quick guide to giving an effective and interesting presentation your very first time.
Begin with something to get the attention of the audience. This might be a startling statement, statistic, or your own story. Listeners pay close attention when a person begins with, “Two weeks ago as I was driving to work a car pulled out in front of me….” You could begin with a current event: “You might have read in the paper this morning about the flood that….” A question is another way to make people listen. “How many of you feel our society spends too much on medical care?” might be a way to begin a presentation about curbing costs. Whatever technique you use, when you grab the attention of the audience you are on your way to a successful speech.
Second, be energetic in delivery. Speak with variety in your voice. Slow down for a dramatic point and speed up to show excitement. Pause occasionally for effect. Don’t just stand behind the lectern, but move a step away to make a point. When you are encouraging your audience, take a step toward them. Gesture to show how big or wide or tall or small an object is that you are describing. Demonstrate how something works or looks or moves as you tell about it. Show facial expression as you speak. Smile when talking about something pleasant and let your face show other emotions as you tell about an event or activity. Whatever your movements, they should have purpose.
Structure your speech. Don’t have more than two or three main points, and preview in the beginning what those points will be. With each point, have two or three pieces of support, such as examples, definitions, testimony, or statistics. Visual aids are important when you want your audience to understand a process or concept or understand a financial goal. Line graphs are best for trends. Bar graphs are best for comparisons and pie graphs are best for showing distribution of percentages.
Tie your points together with transitions. These could be signposts such as “First,” “Second,” or “Finally.” Use an internal summary by simply including the point you just made and telling what you plan to talk about next. “Now that we have talked about structure, let’s move on to the use of stories,” would be an example. When you have an introduction, two or three main points with support for each, appropriate transitions, and a conclusion, you will have your speech organized in a way that the audience can follow you easily.
Tell your own story somewhere in the presentation–especially in a technical presentation. Include a personal experience that connects to your speech content, and the audience will connect with you. You want to help the audience link emotionally with what you are talking about, and the personal experience does that. With almost any topic you might choose, you have at least one “war story” to relate to the topic. When you tell the story, simply start at the beginning and move chronologically through the narrative, including answers to the “W” questions: “Who,” What, “When,” “Why,” and “Where.”
To add interest and understanding to your speech, include a visual aid. A visual aid could be an object, a flip chart, a PowerPoint presentation, overhead projector slides, or a dry erase board. Whatever visual you are using, make sure everyone can see it. The best way to insure this is to put the visual where you will be speaking, and then find the seat farthest from it and determine if you can read the visual from that seat. Introduce the visual properly rather than simply throwing it at your audience; explain what the visual will do before you unveil it. Don’t allow the visual to become a silent demonstration. Keep talking as you show the visual. You are still the main event and your visual is an aid. Look at your audience, not your visual. When the visual is not in use, hide it from the audience. Humans are a curious lot, tending to keep looking at the object and losing track of the speaker-you!
If you are delivering a persuasive speech, in addition to your own stories include testimony of experts whom the audience respects and whose views reinforce your points. Add a key statistic when possible to show the seriousness of what you are discussing. For example, if I were discussing the need for improved listening to better serve your customers, I might add that although we spend half of our communication time in listening, our listening efficiency is only about 25%. By using stories, testimony, and statistics in your persuasive talk, you add depth to your evidence.
Look at the audience as you speak. If it is a small audience, you can look at each person in a short period of time. If it is a large audience, look at the audience in small “clumps” and move from one clump to another. One way to insure good eye contact is to look at your audience before you start to speak. Go to the lectern and pause, smile, look at the audience, and then speak. This will help you maintain good eye contact throughout your presentation as well as commanding immediate attention.
One of the ways to have consistently good eye contact is not to read your speech. Use note cards that have key words on them. The word or phrase should trigger the thought in your mind and then you can speak it. If you are including a quotation or complex statistics, reading from your note card actually lends credibility. If you write out your speech you will tend to read it and lose eye contact with the audience, as well as not being as enthusiastic in delivery as when you speak from note cards.
Include a “wow” factor in your speech. Something in your speech should make your audience think, “Wow!” It could be a story, a dramatic point, an unusual statistic, or an effective visual that helps the audience understand immediately. With a “wow” factor, you then have something to look forward to in the speech that you know will have an impact on your audience. You’ll become a more enthusiastic speaker because the “wow” factor will get you as well as your audience pumped for the speech.
Consider using a touch of humor in your speech. Don’t panic at this suggestion; you are not becoming a comedian but rather lightening up a serious speech so that people will be more accepting and interested in your ideas. Humor will help you to be perceived as an amiable person, and it is hard for people to disagree or be bored if they are smiling at you. Until you have lots of experience, keep your humor short. Perhaps inject a one-liner or a quotation. Yogi Berra said a lot of funny things. “You can observe a lot just by watching” for example. Tell a short embarrassing moment in your life that you might have thought not funny at the time. Now that you can laugh at the experience, you understand the old adage, “Humor is simply tragedy separated by time and space.” Don’t poke fun at your audience; you should be the object of any shortcoming, showing that you can laugh at yourself. Avoid long stories or jokes. Even seasoned speakers know that funny stories soon become unfunny if they go on too long. Probably the least risky use of humor is a cartoon. The cartoon is separate from you and if people don’t laugh, you don’t feel responsible. (Be sure to secure permission to use it.)
Finally, leave the audience with something to think about. People remember best what you say last. You might summarize your main points, or you might complete the statement, “What I want you to do as a result of this presentation is….” But beyond that, make your last words a thought to ponder. For example, I might end a speech on becoming a better speaker with “As Cicero said centuries ago, ‘The skill to do comes with the doing.’”
A more modern guide to effective public speaking was penned by some unknown sage: “Know your stuff. Know whom you are stuffing. Know when they are stuffed.”
One never becomes a “perfect” speaker; developing public speaking skills is a life-long experience. But the points discussed here will get you started in becoming the speaker you want to be and the speaker your audience wants to hear.

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Build Your Business On A Shoestring Hire A College Intern

26 Jul.
Posted by harbern in Finances | 3 Comments

Starting up a new venture or business can be one of the most exciting times of your life. It can also be one of the most stressful. In the early months, or even early years of your business, cash flow is often not what you would like it to be. If you’re a solo entrepreneur, you’re wearing many hats - in fact, you’re probably wearing all of them.
Not only are you selling your product or service, you’re marketing it, doing the accounting, paying the bills, answering the phones, designing and updating your website and preparing and sending out mail. And, certainly for your own business, you can easily think of ten or fifteen additional tasks to be done in addition to these. In the early days of your start-up, many if not most of these tasks seem doable. But, once you’ve started making sales or the public interest in your business begins to grow, wearing all the hats becomes impossible, frustrating, and highly stressful.
One quick and easy solution is to hire an intern - a college intern. During my corporate career in finance, I made use of many college interns over the years. Not only were they diligent, responsible, and some of the best employees, they were eager to learn and to contribute ideas. My interns were reliable and many of them hired on as regular employees after graduating from college.
With more and more college students choosing to start their own businesses rather than working for others, having a first-hand opportunity to work in a business start-up, like yours, might be just what they’re looking for. So how can you find an intern that will be just right for you and your business?
Simples Steps to Hiring an Intern
1. What do I need to do? What can the intern do? One of the first things to do is to take a clean sheet of paper and begin writing down all the tasks that you perform in your business - and I mean everything. Next, decide what tasks you absolutely need to do yourself and which ones might be assigned to an intern. Typical tasks that you do might include:

inputting business card data into your database
contacting local chambers of commerce and ordering mailing lists
marketing mailings - printing letters, stuffing envelopes, putting stamps on letters
writing and updating your marketing plan
keeping your marketing calendar current
calling on prospects - phone and in person
writing marketing collateral
updating website information
confirming appointments with clients
writing and updating your business plan
appearing at tradeshows (perfect for an intern to work as your assistant)
buying office supplies
going to the post office to mail packages, letters, etc.
miscellaneous errands
meetings with clients
reviewing local newspapers, business periodicals and trade journals for possible business prospects or other opportunities
article clipping
attending chamber functions and other networking events
filing
answering phones
bookkeeping

Certainly there are a lot of things to do in your business! And, obviously, not all of these can be done by anyone other than you. Once you’ve drafted a comprehensive list of tasks, using different colored high-lighters, or something as simple as a check-mark, determine which of these tasks can be assigned to someone else. This will become the basis for writing up a job description for your intern.
2. Drafting a job description. Write up a simple job description that includes a list of tasks you need completed on a weekly basis. Also, estimate how much time these tasks will take and, if possible, what days of the week might be best for someone to work for you.
3. What type of intern? My suggestion is to hire a college intern who has background in the areas that you most need help with. For example, if your start-up is heavily focused on using computer technology to either produce your product or service, or if it is a significant part of the interface with your clients, hire an intern who is studying computer science. On the other hand, if you have a business focusing on delivering corporate sales training programs, hire a marketing major. If you have general office work that needs to be done, consider a business administration student.
4. To pay or not to pay? That is the question. Nowadays, interns are readily available for pay or no pay. The hiring market for new college graduates is rather strained so they know that any and all work experience they gain prior to graduation will serve them well in the future.
5. Offer benefits other than money. Money is not the “be all, end all” of a relationship with your intern. Many interns are looking to learn new skills which can best be learned in a real-life scenario. They also know the importance of networking and the possibilities that might accrue by meeting the right person at the right time. In addition, if they really enjoy the experience (and you do, too), they’ll want you to write them a letter of recommendation or serve as a reference in the future.
There are other ways you can “compensate” your intern. Consider developing a coaching program for them which entails teaching them your business in an organized manner. Teach them the steps of creating a business from scratch. By having them assist with all aspects of the business, you may be opening up the door for them to start their own.
Consider offering them commissioned-based compensation based upon product or service sales they close on their own. Or, you might design an internship where they can earn college credit. Contact the appropriate faculty member in charge of credit-based internship programs to see if you might be able to create a development program which will fulfill some of their elective credit hour requirements.
6. Minimum requirements. Before you’re ready to contact your local college or university to place the advertisement for an intern, make sure you have the following information ready:

Company Name
Company Address
Your Name
Telephone Number (you may not wish to give out your telephone number so that applicants are forced to submit resumes through fax or via email)
Fax Number
Email Address
Job Description (including complete list of expected tasks, expected number of hours to be worked, days to be worked (if necessary), hourly rate of pay (if applicable), negotiable rate (if you wish to evaluate their qualifications before setting a rate)
Type of college major desired (business administration, accountancy, finance, computer science, etc.)
How best to contact you (phone or email) and what to send (resume, letters of recommendation, transcripts, etc.)

7. Contact career services. Once you’ve gathered all the necessary information, contact the career services center of several local colleges and universities. They will either give you online access to a system where you can input your job description information, or you can simply provide them with the information and they will do it for you. Once your posting is approved, it will be made available for students to access.
8. Gather resumes and start interviewing. Allow your advertisement to be posted for at least two weeks. Start sorting through resumes right away to see who might be the best fit. Begin setting up interviews immediately to find the best candidate for the position.
9. Interviewing. Ask both closed and open-ended questions. Closed-ended questions require a yes or no answer, whereas open-ended questions request explanation and elaboration. Find out about their prior work experience; ask for examples of how they’ve handled particular situations, all while carefully evaluating their communication skills. You might even ask for a copy of one their class papers to assess their writing skills. Make sure that you are comfortable with them in every aspect. After all, you will be entrusting them with your top priority - your business.
10. Status reports. You might consider asking your intern to fill out a weekly status report which tracks the assignments completed, including how much time each task required. It will give the intern a sense of accomplishment with respect to their contributions, while providing you with useful information about what has been completed.
11. Enjoy the benefits. There’s so much to gain from building relationships with others. While the intern is learning from you, you’ll be surprised at how much you will learn from him or her. Encourage them to take ownership and pride in what they are doing, praise and acknowledge them frequently for jobs well done, and welcome their comments, criticisms, and contributions.
Using college interns to help you with your business is not only a cost-effective way to get things done, but it’s a wonderful way to contribute to the knowledge and experience of someone who might very well follow in your footsteps. In any case, it can be a win-win situation for everyone.

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