Monthly Archives: June 2011

Professional Development , Leave a comment

The Ideal Network

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We’ve all encountered people whose primary goal is to create a vast network of  “contacts”.  These folks supersize.  They have an enormous collection of Facebook friends and they exchange business cards with everyone they meet,   inviting one and all into their LinkedIn network.

But what do their  “contacts”  actually mean to them?  Do such collectors of contacts follow networking best practices and act as a resource? Would they actually even recognize many of their  “contacts”  if they ran into them at the grocery store?  Too often,  the answer is no.

I’ve had the experience of being sucked into the clutches of a few super-networkers and found that when I emailed an easy and uncomplicated question,  my inquiry went unanswered.  Needless to say I severed the association but I’m sure my absence is neither missed nor even noticed.  Who can keep track of or maintain contact with 500 connections?

Well I’m happy to report that at last there is data that supports what has long been my gut feeling about networking.  Apparently,  when it comes to our network of relationships,  size matters and smaller is better.

Robert Cross,  Associate Professor at the University of Virginia’s McIntire School of Commerce and Robert Thomas,  Executive Director of the global consulting firm Accenture’s Institute for High Performance,  contend that the most effective networks focus on high-quality relationships,  ideally with people who come from diverse levels of the corporate and/or socioeconomic hierarchy.  Cross and Thomas found that a properly functioning network consists of about 12-18 people.  The ideal network provides guidance,  exposes us to fresh approaches to decision-making and problem-solving,  challenges us and also gives us validation and encouragement.

A diversity of professional and personal interactions pays numerous dividends,  socially and professionally.  We get to meet and rub shoulders with those who’ve lived different lives and therefore have different values,  perspectives and experiences.  We learn how to become more flexible and resilient.  Our decision-making capabilities improve because we incorporate additional information and we become better leaders and better business people.

Take a look at who you know and who you consider to be a member of  your network.  Who looks out for you and who do you look out for?  Cross and Thomas recommend that we cultivate relationships in these categories:

  • People who share or expose you to new information or expertise,  e.g.,  giving the heads-up on happenings in your business environment.  This could be a client or someone from the chamber of commerce or other business group.
  • Peers in other industries,  who can open your eyes to what other organizations consider to be best practices or smart business strategies.
  • Powerful people,  who can open doors,  make introductions,  cut through red tape,  provide useful inside information and mentoring.
  • Those who know and validate validate your work and can provide feedback and challenge you to get better (maybe a client,  peer  or boss).
  • Peers in a business similar to your own,  but who are based in another geography and therefore allow you to discuss business strategy and not worry about competition.
  • People who provide personal support,  good friends and family you can call on when things go wrong and you need to talk.
  • Outlets for spiritual and physical well being:  fitness,  meditation,  religion,  volunteering,  sports and hobbies.

As you review and perhaps revamp your network,  look to include people who bring good energy,  people who bring out the best in you.  Build relationships with people who see opportunities and know how to reach for them.  If you’ve been gestating an important goal you’d like to achieve,  think about who in your network can help you get there?  Is there someone you should reconnect with?

Most of all,   remember that networking is about building and maintaining relationships,  whether or not there is an immediate need to call in a favor.  Reciprocity rules,  so maintain contacts,  reach out and reconnect to good friends and colleagues and be generous when they are in need.

Thanks for reading,

Kim

Business Strategy , , , Leave a comment

Face Your Financials

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Although you may have both an accountant and a bookkeeper on your payroll you, the business owner,  still bear the ultimate responsibility for maintaining the financial health of your enterprise.  Every business owner should be able to understand and make good use of business financial data.  Each financial statement has a story to tell and you the business owner must be able to decode the language and comprehend the information that the numbers relay.

There are three financial documents that are generated monthly  (and also compiled quarterly and annually): the Balance Sheet, the Cash Flow Statement and the Profit & Loss  (or Income)  Statement.

  • The Balance Sheet resembles your checking account monthly statement.  This document details business assets and liabilities,  showing the monetary value of all the business owns and what it owes.
  • The Cash Flow Statement is the business budget and shows what sales revenue will flow into the business and what expenses will flow out.  This document helps you stay on top of how much money is available to cover expenses,  like payroll and rent.  Accounts payable  (the bills)  and accounts receivable  (sales revenues)  are listed on this statement.  If you’ve ever managed a household budget,  then you can master the Cash Flow Statement.
  • The Profit & Loss  (or Income)  Statement is similar to the Cash Flow Statement.  It contains many items that are also found on the IRS tax form Schedule C,  Profit or Loss From a Business.  Sales revenues and expenses are listed on this statement,  including labor,  taxes,  inventory  and the wholesale costs of products sold.  Net Profit (also known as the bottom line)  is  the last line of this statement and this figure represents the ultimate story of business financial health.

One does not need a degree in accounting or an MBA in finance to identify which numbers on financial statements are most critical to your business and understand the story that each one tells.  Keeping track of five or six key values,  including values called ratios,  will do wonders for your comfort level with financial analysis and in the process,  guide your business decisions in many ways.

  • Gross Profit  in the P & L tells how much money remains after selling and product production costs,  or the wholesale cost of products sold,  have been tallied.  Freelancers calculate this figure as time: how many hours were spent on your contract project,  networking to create new business,  developing a new workshop? Make a reasonable estimate of the wholesale cost of your labor.  This figure gives insight into how much money/time  it takes to make a sale.  Can you work smarter and faster,  or buy materials for products manufactured more cheaply? That’s how to increase gross profit.
  • Net Profit,  or the bottom line of the P & L,  tells the ultimate story.  Every line item that precedes it impacts it.  If you want that number to be larger (and don’t we all?),  look at all expenses to see what can be trimmed and also consider ways to generate new business through strategic partnerships,  referral relationships,  networking for client development,  PR,  etc.
  • Gross sales revenues  in the P & L may be tracked in two ways,  looking back over what occurred in previous months or years  (historical comparison)  and going forward  (projections, or forecasting)  to what you reasonably expect and want to sell in a given period,  guided by sales history and current demand for your product/service.  Are you achieving,  exceeding or failing your personal sales goals?

Finally,  see your Balance Sheet and calculate these ratios,  to expand your grasp of the financial data:

  • Quick Ratio = Accounts Receivable + Cash – Inventory divided by Accounts Payable    This figure indicates how much money is available to pay bills.  A 2:1 ratio represents a business in good shape.  However,  a big receivables number can mask clients who take longer than 30 days to pay,  thus signaling the owner to step up collection efforts.
  • Current Ratio = Assets divided by Liabilities   This figure measures resources available to pay debts over the next 12 months.  A value > 1.0 shows a business in good shape,  > 2.0 is a business in excellent shape.
  • Working Capital = Current Assets – Current Liabilities   This figure also demonstrates the ability to pay off short-term debts.  Obviously,  a positive number is what you want.
  • Debt to Equity Ratio = Total Assets divided by Total Liabilities   This figure indicates how much debt the business carries relative to its assets.  A value <0.5 is excellent and values > 0.5 mean the business is carrying rather heavy debt and is considered highly leveraged.

Thanks for reading,

Kim

Technology / Office , , , , 2 Comments

In the Cloud

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Cloud computing hooks you up to numerous computer based business functions,  including email,  website hosting and data storage,  directly through the internet.  Access to those computer functions,  which you select based on your needs,  is available from any computer that has an internet connection.  When your computer functions are in the cloud,  your business is truly mobile.  You can tap into your data and work from anywhere in the world.

Needless to say,  cloud computing offers big advantages to businesses and individuals.  A big plus is the tremendous flexibility available.  It’s possible to access numerous computer applications and software functions and operate your business entirely in the cloud.  Users of cloud computing essentially rent space on a virtual server and order a la carte the applications and functions that are desired,  be it Linux or Windows.

From the cloud,  you can request functions specific to your business,  without buying an entire software package that may cause you to pay for and install what is not useful to you.  One can order online accounting and payroll management functions,  for example,  rather than buying Intuit’s QuickBooks software.

Cloud based website hosting can be customized to provide the appropriate bandwidth to support video,  audio,  e-commerce, survey, etc.  Furthermore,  cloud computing is significantly less expensive to operate as compared to buying separate software components like the latest Windows,  traditional website hosting,  plus whatever else your business must run to operate efficiently.

There will be less money tied up in technology and more money available for marketing,  customer outreach and otherwise carrying out the business mission.  Prices start at about $4.95 US per month.  Amazon,  Google,  IBM,  Microsoft and Yahoo are among the companies that offer cloud computing services.

Many familiar online functions already live in the cloud: gmail and Hotmail; VoIP telephone services like Google and Skype;  social media sites,  including Facebook,  LinkedIn and Twitter;  media services like Flickr and YouTube;  and Microsoft WebApps,  which offers internet-based access to Excel,  Outlook, Power Point, Word,  etc.

So should you migrate your online operations to the cloud?  Maybe,  maybe not.  Cloud computing may be pervasive,  but it’s not yet perfect.  Reliability,  security and privacy are real concerns.  The major cloud service providers claim they deliver 99.95% availability with 5 hours/year downtime on average.

Nevertheless, during the week of April 21-24 of this year,  the data center that houses Amazon’s Elastic Compute Cloud servers (EC2) went down and internet access for thousands of businesses was lost as a result.  Although this exciting new technology is being promoted as safe,  comprehensive,  user-friendly and inexpensive,  the underlying infrastructure may not be there yet.

Moreover,  can some pimple-faced brat hack his/her way into your data and wreak havoc on your business?  Let’s pray that never happens,  but to provide the maximum available protection to the integrity and security of your cloud computing,  be sure to use secure sockets layer (SSL) encryption to keep your user name and password safe.

Issues of capability and capacity have also been raised.  Can the present technology support the fast expanding weight of VoIP,  website hosting,  video streams and data storage demands?  What happens as developing nations in Africa,  Asia and Latin America ramp up their internet access and 3 billion more global citizens elect to join the cloud?

All that remains to be seen,  but my guess is that the necessary upgrades will be made to accommodate new cloud users,  because money is the mother of invention.  Data security is probably the larger issue.

On Friday June 10,  the International Monetary Fund learned it was the victim of a major cyber attack.  The data breach occurred over several months and has the potential to expose highly confidential information about the fiscal condition of many nations.  In an article that appeared in the June 12, 2011 New York Times,  the incident was called  “political dynamite”.  There was no mention as to whether the IMF computer system operated in the cloud.

Thanks for reading,

Kim

Survival Strategies , Leave a comment

Launch Your Part-time Business

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Here’s a sampling of part-time business suggestions that will jump start your brainstorming and get ideas flowing for a business you can run while also keeping your nine to five.  Oh,  and do be sure to keep your business activities separate from your job,  meaning,  don’t tell your boss and co-workers what you’re up to.

Baker

First,  decide if you’re a bread baker or a pastry chef: will it be baguettes and croissants,  or cupcakes and pies?  You can sell your wares at neighborhood street fairs and farmer’s markets.  Do some market research and take a tour of local venues,  to see what sells in which marketplace,  at what prices and to which customers.  Check the licensing requirements of your state and city health departments and also find a commercial kitchen to give yourself the capacity for high-volume baking.

Bookkeeper

Those with experience in corporate finance departments,  payroll departments or accounts payable/receivable are the best candidates to set themselves up in a tidy little part-time bookkeeping business.  Brush up on your QuickBooks skills and promote yourself to Freelancers,  churches and small businesses.  Join your neighborhood business association to meet potential clients.

Caterer

Are you a fabulous cook who knows how to serve and present food elegantly and efficiently?  Does the prospect of preparing Christmas dinner for 12 or a buffet Easter brunch for 50 fill you with excitement and make your organizational skills shine?  If that is the case,  then catering on the side may be an ideal money-making and creative outlet for you.  Hone your chops by taking over the preparations for a few large family events.  Graduate to getting hired for dinner or cocktail parties held by friends of friends.  Consider renting commercial kitchen space to make cooking for large events easier.

Floral designer

If you’ve always known how to compose a pretty bouquet,  upgrade and refine your natural abilities by taking a flower arranging course at an adult learning center or community college.  Next,  identify good flower market and floral supply wholesalers,  so you can provide a wide selection of fresh and exotic blooms arranged in the loveliest vases and still earn a good profit margin.  Promote your services to those celebrating anniversaries,  births,  christenings,  graduations or other special occasions.  Form a strategic partnership with a (part-time) caterer who needs to decorate a party.

Gardener

Do you have a green thumb?  Do you know people who have no time for yard work?  There is money in mowing lawns,  trimming hedges,  tending window boxes, weeding and coaxing roses to bloom.   My mother’s uncle started a part-time gardening business which he ran for at least 20 years.  My father worked with him on many spring and summer evenings throughout my childhood.  The more artistically inclined can create a niche in landscape design for residential clients and neighborhood merchants.  Remember to include Christmas decorating in your list of services.

Hair stylist

So maybe you were a hairdressing school dropout? Pick up those scissors again and revive your skills,  so you can offer wash,  cut,  blow-out and maybe even color and straightening services at your kitchen sink or the client’s.  Friends and friends of friends who need makeovers,  or maybe just maintenance,  will appreciate both your talent and at-home discount prices.

Photographer

If you’re a clever shutterbug,  invest in a good digital camera,  become a Photoshop expert and  pull together a portfolio of your work to show to prospective clients.  You may even want to specialize in a niche,  like weddings  or family reunions.  Form a strategic partnership with a web designer who creates sites for Freelancers  and make money taking the all-important website photo.

Tutor/coach

Are you a good teacher?  What is your area of expertise—golf, tennis, algebra or languages? Open an account at Craig’s List,  to advertise your services.  Those who teach an academic subject should also contact local parent’s groups, neighborhood blogs and local schools.  My brother’s wife has taught piano for several years and she’s quite busy.  She is a full-time wife and mother of four.

Thanks for reading,

Kim