Monthly Archives: November 2013

Professional Development , , Leave a comment

Leadership Starter Kit

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Christmas Season notwithstanding,  I am busy this December and it feels so good! Catch my act on Wednesday December 4,  when Dalya Massachi of  “Writing Wednesdays” and I talk about the benefits derived when nonprofit leaders write a business plan for their organization.  3:00 PM EST,  2:00 PM CST,  1:00 PM MST,  12:00 PST. FREE! Register at http://www.writingtomakeadifference.com/writing-wednesdays

Readers in the Boston area may want to direct clients who are leaders at nonprofit organizations to get essential how-to information on business plan writing at my popular workshop “Become Your Own Boss: Effective Business Plan Writing”.  We’ll meet on three consecutive Wednesdays,  December 4, 11 & 18  5:30 PM – 7:30 PM at Boston Center for Adult Education 122 Arlington Street Boston 02116. Register at  http://bit.ly/1bP4uw9  or call 617.267.4430 class ID# 10190.

Congratulations,  you have been named project leader of a prestigious assignment.  You are thrilled to the gills,  but also apprehensive.  You have practical experience,  creativity and enthusiasm,  but you are not quite accustomed to such a front-and-center role.

You’ve scheduled a meeting to bring everyone together for the project kick-off,  where roles and responsibilities will be discussed,  timelines established,  milestones identified and important success factors and potential stumbling blocks will be acknowledged.  You know this is where you establish your bona fides and stake out your claim as the leader.  You are in charge and ideally you will project good natured authority and not arrogance or insecurity.  You are 20 years younger than several project team members.  How do you get this right ?

Introduce yourself

Welcome the team and thank them for participating on the project.  Express that you are very happy to work with such a talented and experienced group of professionals.  Without bragging,  state your professional experience as it relates to the project,  to let the group know that you are qualified and that they have every reason to trust your judgment and expertise.

Team introductions

Invite team members to participate in the standard round robin of introductions.

Confirm the project deliverables and due dates

Establish the expectations and begin to assign roles and responsibilities,  milestones and timelines.  Encourage team members to have a say in this process,  as they know more than you about how departments interact,  unspoken protocols and overall how to get things done.  Be secure enough to accept their suggestions,  as it will promote your credibility and earn you respect.

Ask questions

Pose questions that allow team members to contribute to the decision-making process and telegraph that you value their expertise.  Let team members share their knowledge.  Avoid being a know-it-all.

Listen carefully

Make team members feel heard and you will earn their confidence,  respect and loyalty.

Be humble

Team members must believe that you are qualified to lead the project,  but take care to portray yourself as a team player and a leader who wants to make everyone involved look successful.

Be empowering

Champion good ideas that are presented by team members,  and not just your own perspectives,  and you will build the team’s enthusiasm for and commitment to the project.  Respect and value the perspectives and recommendations that deep experience and long tenure bring.  Some ideas may fall by the wayside when explored in detail and others may turn out to be brilliant. Your tenured team members have the ability to make the project successful. Whatever happens,  empowering team members builds respect and loyalty and makes you look like (and be) a good leader. Remember also to be publicly generous with compliments.

Thanks for reading and Happy Thanksgiving,

Kim

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Business Plan , Leave a comment

Business Planning for Nonprofit Organizations

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A successful nonprofit organization requires not only a vision and mission that resonate,  but also a good business model and well thought out operational,  marketing and financial plans.  There must be a sufficient number of constituents in need of programs and services that the organization would provide.  Planning to ensure growth and sustainability into the future must be carried out.

Over the last 5 years or so,  foundations that make major grants to nonprofit organizations have begun to require that aspiring recipients submit a business plan in the application materials.  Apparently,  a proliferation of grant requests has prompted many deep-pocket foundations to demand evidence of viability and responsible leadership and management in nonprofits they agree to fund.

The goal of nonprofit organization leaders is to ensure that all programs and services offered by the organization reflect its mission and are expertly delivered.  The organization must attract a desirable number of constituents,  be fully staffed and operate at optimum capacity.  Good relationships with donors must exist and sources of reliable funding must be in place.  The leadership team should have reason to be optimistic about the organization’s ongoing viability and relevance within target constituent groups.  A business plan (and strategic plan) will see to it that nonprofits put those building blocks in place.

Business plans differ from strategic plans in that the focus is on finance.  A start-up nonprofit organization in search of initial funding,  or an existing nonprofit that has plans to expand or upgrade programs,  services,  capital equipment or office facilities will find that developing a business plan will better demonstrate the organization’s viability to potential major donors and strengthen the case for financial support.

When preparing to write the business plan,  the leadership team will take a big-picture 360-degree view of all aspects of the organization,   including the social and economic environment in which it operates,   target constituents groups,  the business model as it relates to the mission,  the financial health of the organization,  specifics of the proposed expansion or upgrades,  the funding request and details of how funds received will be utilized.  The business planning process will also encourage leaders to:

  • Connect the dots between the mission and programs and services delivered
  • Acknowledge operational efficiencies and strengths
  • Establish performance metrics for programs and services offered
  • Clarify the profile of the constituents and identify emerging needs for services and programs
  • Update and refine marketing and communication strategies and channels
  • Identify short and long-term funding needs and identify where funds will be designated

In small organizations,  the Board of Directors,  along with the Executive Director,  will write the business plan.  In larger organizations,  the Development Director,  Operations Director,  Finance Director and other senior staff share the responsibility.

The business plan for your nonprofit will compel the leadership team to acknowledge and address critical questions that face the organization and demonstrate to potential major donors that plans are underway to overcome challenges,  exploit opportunities,  improve constituent services and more fully express the organization’s vision and mission.

For more information on business plan writing tailored to nonprofit organizations,  please tune in to Writing Wednesdays on Wednesday December 4 at 3:00 PM EST  (2:00 PM Central, 1:00 PM Mountain, 12:00 PM Pacific)  http://www.writingtomakeadifference.com/archives/4007

Thanks for reading,

Kim

Marketing , , , Leave a comment

The Price Is Right

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Pricing is an art and a science and pricing intangible services is especially challenging.  Setting the right price for a product or service is a critical step in building a profitable business.  Quite simply,  you must charge enough money to not only cover your production or procurement costs,  but also reflect the value of the product or service provided and the value of your brand,  i.e.,  what clients will pay for the confidence derived from doing business with you.

But pricing a service is tricky and unless you are for some reason privy to what others may charge for similar services,  you are in the dark.  You probably do not know what competitors are charging,  so benchmarking is impossible.  The price that clients will pay you hinges on what they feel the job is worth and what they feel that you are worth.  Your mission is to avoid being perceived as a commodity,  vulnerable to the cynical bargaining down of your price points.  There are guidelines to follow when creating a pricing strategy.

Step One is understanding how clients perceive the value of your services and of your brand (reputation).  A “cost-plus” pricing strategy,  which is tied to what it costs to produce or purchase at wholesale the product or service to be sold is inadvisable,  according to pricing experts.  If customers are willing to pay $100.00 for a product or service that costs $10.00 to provide,  then charge what the market allows.

Step Two is understanding how the client wants to purchase your service.  Much will depend upon the type of services you provide and whether this is a one-off project,  or an ongoing retainer arrangement.  Whenever possible,  avoid charging an hourly rate and instead  “bundle” products and services into a project fee.  Do not give clients who are so inclined the ammunition to nickel and dime you by scrutinizing duties that you invoice and arguing over how long it should have taken to perform them.

Step Three is establishing different levels of service available: basic,  upgraded and premium.  Jean-Manuel Izaret,  a partner at the management consulting firm Boston Consulting Group,  insists that it is always best to give clients a choice,  whenever possible.

Step Four is targeting clients who value your brand and your services and are willing to pay a premium to do business with you.  The size of your available market will shrink, but each client will be worth more money to you.  It will also be easier to make the sale,  because this group of prospective clients values you and what you can do.  Access this group through networking and self-promotional activities: those who have heard your webinar,  read your blog or newsletter,   have received a recommendation from a trusted referral source,  have read a favorable article about you in the press—here is where your PR and relationship building activities can pay off.  This group of clients will have faith in your expertise and will agree to pay premium (but fair) prices at contract signing time.

Step Five is knowing your competitors.  It may be impossible to learn what they charge,   but you can learn the value of their brand.  Are you swimming with powerful fish,  or those about your size and strength?  That could impact your pricing strategy,  but only if clients are familiar with what the big fish charges.  It is unwise to price your services low in the presence of a competitor with a strong and well-regarded reputation.

Step Six is to benchmark against competitors in different parts of the country by checking the MOBIS contract prices offered to the federal government.  This is a useful way to get a credible ballpark number for setting prices.  Further,  you will see what types of services are being offered and how they are bundled.  http://www.gsa.gov/portal/content/245439

Thanks for reading,

Kim

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Year End Tax Planning 2013

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Lo and behold it is the first week of November and time for you to begin your year-end tax planning.  If you have an accountant or bookkeeper,  pick up the phone and make an appointment.   If you perform these functions yourself,  then take action now,  before Thanksgiving and Christmas ambush you.  Your mission is to minimize the tax bill payable in April 2014.

Let’s start with your place of business.  Do you work from home?  Then consider taking the home office deduction.

Next,  take a look at revenue generated in 2013.  If this was a lucrative year,  you are advised to push income into 2014,  especially if you expect next year to be less flush.   Study the matter before you invoice late 4th quarter projects.  Call clients to confirm that it will be OK to invoice in January.  Many are not on a January – December fiscal year,  so deferring payment until January may not be a problem.

If you expect no substantive change in revenue generated from 2013 to 2014,  consider investing in your business and creating additional tax write-offs this year,  rather than next.  Remember also  to make a contribution to your Solo 401K,  IRA or Roth retirement account.  Freelancers who have already celebrated their 50th birthday are eligible to make a maximum $22,000 tax-deferred catch-up contribution to their Solo 401K each year,  on money generated from self-employment only.

Further,  those who’ve had a good year and hold a Solo 401K may deposit up to 25% of their income into the account.  The tax-deductible and tax-deferred income limit is $49,000 for those under 50 years and $54,500 for those aged 50 years and older.  See my post https://freelancetheconsultantsdiary.wordpress.com/2010/11/09/the-self-employed-401k-plan/  for more information.

The Affordable Healthcare Act must now be factored into your year-end tax strategy.  Freelance soloprenuers who qualify for a health insurance subsidy (approximate income maximums of $45,000 for a single person household and $94,000 for a family of four)  need not worry about the subsidy being treated as taxable income.  However,  if your insurer refunds to you a portion of premiums paid,  that refund will be taxable and a 1099 will be sent.

Healthcare Act subsidies function to limit out-of-pocket  monthly insurance premium costs for those who generate revenues below a certain threshold.  The subsidy may be requested as follows:

1. Premium assistance credits, to reduce the monthly cost of health insurance

2. Up-front lump-sum payment

3. Tax credit on Form 1040, to reduce any taxes owed and perhaps create a refund

A statement that documents any subsidy will be issued and there will be an annual reconciliation.  If you underestimated your 2014 income,  you will be required to pay back a portion of your subsidy.  If 2014 income was overestimated,  then a refund will be somehow issued.  Visit the website of either your state or federal health insurance exchange to obtain information about how to estimate your 2014 income.

YOU will be responsible for monitoring your annual income and ensuring that you receive the correct subsidy.  Ben Tallman of Tallman Tax Service in Atlanta recommends that Freelancers monitor revenues and expenses at least quarterly and contact their health exchange and get themselves re-certified in the event of a large increase in income generated,  to reduce the chance of facing a subsidy claw-back at tax time.

Thanks for reading,

Kim