Three Best Ways to Catch an Employee Thief

Three Best Ways to Catch an Employee Thief |Wall Street Journal|By SARAH E. NEEDLEMAN

If your small business can’t afford external auditors, security cameras or other resources for spotting employee fraud, consider doing some detective work of your own. The effort could save your firm from a significant financial loss or worse—failure.

After all, a single heist could be fatal for a small business, says Richard Hollinger, a professor of criminology at the University of Florida. Small firms typically don’t have

the financial resources to fall back on that large organizations have, he explains. (See related story, Business Owners Get Burned by Sticky Fingers.)

Employee fraud can take place right under a business owner’s nose. According to the Association of Certified Fraud Examiners, an anti-fraud trade group in Austin, Texas, such activities occur on average for as long as two years before the victim organization catches on.

The phone keeps ringing. Some corrupt workers will instruct friends to repeatedly call a business and ask if the owner is on site until the answer is no, says Mark R. Doyle, chief executive of Jack L. Hayes International Inc., a provider of workplace crime-prevention services in Wesley Chapel, Fla. Once they hear those “magic” words, the friend knows it’s safe to come by and swipe merchandise under the rogue employee’s watch, he explains.

The math doesn’t add up. Two years ago, ReShonda Young noticed a subordinate at her father’s transportation company, Alpha Express LLC, had turned in a weekly time sheet with more hours than he could’ve possibly worked. That prompted Ms. Young, a manager at the Waterloo, Iowa, company, to investigate further and she discovered that the employee had been stretching his hours for months, initially to a less-noticeable extent. “I guess it got to be a little easy,” she says. Now all supervisors must review and sign workers’ time cards before they can be processed, says Ms. Young.

Money problems surface. Financial pressures are a key motivator of occupational fraud, the ACFE reports. For this reason, business owners should take note of any excessive complaining by a worker about money burdens. And if such a person’s lifestyle suddenly improves dramatically, this could signal he or she has their hand in the company’s cookie jar.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

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How to Manage Multiple Business Locations

How to Manage Multiple Business Locations | Inc |By Darren Dahl | Mar 4, 2010

Thomas Friedman was onto something when he wrote his book, The World is Flat. Companies increasingly feel the need to expand their reach into new markets—both domestically and internationally—from a very early age.

One direct result of this expansion is that you may now be forced to manage multiple locations and oversee employees in distant offices—a fact that can cause quite a few challenges and headaches, says Eric Bloom, president of Manager Mechanics, a management-training firm based in Ashland, Massachusetts.

“No matter how widespread your organization becomes, you need to work hard to retain team cohesion and the philosophy that everyone is on the same team regardless of where they work,” he says.

Dig Deeper: Why You Should Expand

Managing Multiple Locations: 6 Challenges

1. Out-of-site-out-of-mind syndrome. When things get busy at your primary location, it can be hard to give your employees based at other locations the time they deserve.

2. Loss of spontaneous communications. Because you do not see your employees in the hallway or at meetings, there is very little natural or unplanned communication.

3. Attenuated logistics. Anything that cannot be sent electronically, must be mailed, which causes time delays and increased effort.

4. Complicated work assignments. It is harder to perform certain types of jobs or collaborate on them when employees are based in remote locations

5. Lack of team cohesiveness. Your team members will not know each other as well. This can easily lead to an “us-versus-them” mentality.

6. Concerns over general supervision. If you have a remote office that clients visit, it’s virtually impossible to see if your employees are arriving on time, working appropriate business hours or wearing proper business attire.

To tackle these and other challenges, then, organizational leaders need to focus on three key areas: systems, technology, and communication.

Managing Multiple Locations: Put Systems in Place

The old adage is that systems run businesses, and people run systems. “You must have systems in place to be able to standardize the quality of your communications, products and results,” says Bert Martinez, founder of Bert Martinez Communications, a business training and communications company with multiple locations. “Systems will allow you to duplicate offices and grow faster with reduce training times and supervision.”

The key is to establish clear responsibilities, boundaries, and authority, says Ann Latham, president of Uncommon Clarity, an organizational-behavior consulting firm in Easthampton, Massachusetts. “Vague responsibilities create the proverbial cracks into which everything drops,” she says. Muddy boundaries create disasters ranging from personnel problems to legal ones while insufficient authority can become a source of delay and demotivation. “An employee with everything needed to exercise good judgment except either the authority or sense of responsibility to do so is worth little,” says Lantham.

The point, then, is to make each employee’s responsibilities clear through an organizational structure combined with a system that measures each and every employee, and holds everyone accountable for delivering on their work responsibilities regardless of where they are based.

Dig Deeper: Building Systems to Manage Your Business

Managing Multiple Locations: Adopt New Technology

With the advent of the Internet, and the prolific surge in the number of collaborative tools that have spawned from it, technology has become an integral part of the backbone for any far-flung organization, says Bloom, particularly because it can help your organization cut down on business travel expenses.

While many organizations rely on custom-built software platforms and intranets as collaborative platforms, some of the most commonly-used tools by small businesses in particular are also either free, cheap or available as a software-as-a-service, which means you can access these tools over the web for a monthly fee. Some of the best and cost-effective options include:

• Google Documents, Gmail and Calendar for internal training and communication.
• Basecamp: An popular project management tool.
• Facebook : The now ubiquitous social networking tool is just as useful for business as it is for personal applications.
• Skype: The surge in VOIP technology and software means that you can communicate with remote employees cheaply and effectively.
• Salesforce.com: One of the most popular tools around, Salesforce.com allows remote sales team to collaborate in real-time on maintaining your company’s sales pipeline.

A new wrinkle in terms of technology is that many firms have begun to equip all of their employees with smart phones such as the iPhone as a way to enable them to access any web-based technology regardless of where they are, including many new applications.

Dig Deeper: The Latest Small Business Technology News

Managing Multiple Locations: Focus on Communication

Systems are a must, technology is important tool however, none of these will work with out real communication, says Martinez. “Communication is the key to collaboration with your offices, coworkers, and clients,” he says. If you neglect this aspect of running your business, you do so at your own risk, particularly in a business with multiple locations. That’s why Martinez also makes having his employees have time face-to-face a priority by having his offices take turns hosting each other once a year to enable communication between people on all levels.

Other tips for fostering communication between your employees based in the office and elsewhere include:

1. Establish full team weekly staff meetings via phone or webinar to get your whole group together.

2. If possible, have web cams so your team members can see each other.

3. Make each physical site responsible for a specific type of work, rather then assign random tasks associated with a central project.

4. When doable, have the CEO or management members personally visit each remote site on a scheduled basis, every month, for instance.

5. Establish weekly phone-based staff meetings individually with each remote group so that each physical location will get time with top management.

6. If possible, get your whole group together once or twice a year for staff meetings, brainstorming and team building.

Dig Deeper: How to Improve Your Communications Skills

Managing Multiple Locations: The Global Workforce

Managing multiple locations across the U.S. is hard enough. But when you add a new sales office or manufacturing plant overseas, says Bloom, you can actually run into a host of new challenges associated with cross-cultural communication that include:

1. Time zones. There is limited or no overlap in the standard workday.

2. Language. Even if everyone has a common language, English for example, differences in accents, language fluency, and the use of slang expressions can make communication extremely difficult, particularly on conference calls and speakerphones.

3. Social norms. Cultural differences from country to country can accidentally cause tension, embarrassment, and miscommunication.

3. Holiday schedules. Scheduled meetings, reporting deadlines, cash flows and standard business processes can be derailed or delayed based on local holiday schedules.

4. Technical connectivity. Not all countries have high-speed connectivity at all locations.

5. Labor laws. Laws regarding hiring, employee termination, hours worked, layoffs, sexual harassment differ from country to country.

6. Business-related laws, ethics, and practices. Business is conducted very differently from country to country.

7. Personal-privacy laws. In European Union member states, the laws regarding the personal use, storage, and transport of personal information are quite stringent compared with those in the U.S.

Dig Deeper: Building the Best Virtual Workforce

Managing Multiple Locations: Adapting to Different Cultures

Bloom suggests tackling these challenges by considering the following tips:

1. Find one key contact in each country that is very knowledgeable in local customs, business practices, and laws.

2. Learn to pronounce people’s names correctly.

3. Gain a basic understanding of country politics and current events.

4. Know the names of your managers and leaders in those countries and pronounce their names correctly.

5. Find ways to take advantage of the time zone differences.

6. Be respectful of the differences between people and cultures.

The bottom line in managing multiple locations, says Martinez, is to help make everyone in your company feel motivated and part of the team, regardless of where they do their work. “When your people feel good and that they matter, they will perform better,” he says.

Dig Deeper: How to Be a Lead Teams in Emerging Markets

Managing Multiple Locations: Additional Resources

Corporate Agility: A Revolutionary New Model for Competing in a Flat World, by Charles Grantham, James P. Ware and Cory Williamson (AMACOM, 2007.) This book will show you how to get your company to embrace new technology, understand the ever-changing workforce, and rethink the way you structure work environments to deal with the global economy.

Competing in a Flat World: Building Enterprises for a Borderless World, by Victor K. Fung, William K. Fung and Yoram (Jerry) Wind (Wharton School Publishing, 2007.) A book filled with solid tips to create a flexible organization capable of competing anywhere.

The Facility Management Handbook, by David G. Cotts Kathy O. Roper and Richard P. Payant (AMACOM, 2009.)
A great reference guide for understanding and implementing best practices for the modern workplace.

First-Time Owners Find Management Comes With Headaches

Wall Street Journal | Small Business By SARAH E. NEEDLEMAN – FEBRUARY 24, 2010

When Cameron Madill launched Synotac Design LLC in 2003, wiping away tears and giving pep talks wasn’t on his to-do list. But once he began hiring employees for his Web-site development firm two years later, he learned that dealing with people matters comes with the job.

“I was interested in building a company,” says Mr. Madill, a first-time business owner in Portland, Ore. “I never thought through that it meant I would have to hire people, terminate people and do all of the things associated with being a boss.”

It’s common for first-time entrepreneurs to overlook responsibilities tied to managing people when starting out, says Edward P. Marram, a senior lecturer of entrepreneurship at Babson College in Wellesley, Mass. With all the focus on selling a new product or service, “most don’t think about being a boss,” he says.

But at some point, business owners typically need help to grow, Mr. Marram says, and that means hiring staff, delegating responsibilities, and learning to be effective managers. For the inexperienced, those management duties can be challenging, depressing and sometimes plain awkward.

For instance, entrepreneur Lisa Morris last year had to deal with an employee who accidentally copied her on a highly graphic email to a hotel sales manager. “He was saying he’d do certain things to the person’s body for good rates,” recalls Ms. Morris, owner of Road Concierge Inc., a travel- and concierge-services firm in New York. “We’re all about servicing our clients, but not actually servicing them.”

Ms. Morris, who started her business in 2006, says she felt “really uncomfortable” scolding the employee for his behavior because ruling with an iron fist isn’t her style. “I don’t like to be very corporate,” she says, adding that she runs a casual office where employees’ pets are welcome.

Still, while it was clear that the email exchange wasn’t serious, nor was the recipient offended, Ms. Morris says she needed to stress that a repeat performance would be unacceptable. “I hate having to act like a mom,” she says. “But there are times when you can’t be nice. You’re the boss and you have to enforce policy.”

Many first-time business owners struggle with laying down the law because they are in fact former corporate employees who became entrepreneurs in part to escape rigid work environments. The worst situation, however, is having to tell an employee you can no longer keep them on board.

Sandy Sabean, co-owner of Womenkind, pictured center, meets with employees Lara Ngai, left, and Betsy Handwerker, right.

“You feel terrible,” says Sandy Sabean, co-owner of Womenkind LLC, a New York marketing-communications firm with five employees. Last year, she says, she laid off two workers for the first time after the company lost a bid. “When you have to let someone out on the street under those circumstances it’s hard,” she says. “It’s sad.”

Gary Hewing, co-owner of Bert Martinez Communications LLC, a sales- and business-training firm in Houston and Scottsdale, Ariz, says it’s just as rough to fire someone for poor performance. “You know they’ll have a tough time finding a job and that you’re giving this person the last check they may have for months,” he says. “It’s extremely difficult. I do not appreciate that aspect of the job.”

Some inexperienced entrepreneurs are caught off guard by just how significant a role a boss plays within a small company.

Mr. Madill, whose Web-design firm has eight employees, learned that lesson about three years ago when a worker who was hired to do miscellaneous tasks refused to take on a new assignment and subsequently offered her resignation.

A self-described pushover, Mr. Madill agree to let her stay on the company payroll for the next six weeks while she searched for a new employer. “She helped build the company,” he says. “You feel some loyalty to your first few hires.”

But the decision drew resentment from the rest of the company’s staff, says Mr. Madill, particularly because the uncompromising employee did little work from that point on. “It led to an unbelievably toxic atmosphere,” he says. And when the problem worker was finally gone, things changed dramatically. “Productivity suddenly increased,” he says. “You would’ve thought we hired a person the day she left.”

Mr. Madill says he since changed his outlook on business leadership thanks to the advice of counselors at Accelerator, a nationwide support organization for early-stage entrepreneurs. Other support groups small businesses can turn to for advice include Young Entrepreneur, Energizing Young Entrepreneurs and SCORE.

Now Mr. Madill believes that as a business owner, “you only have an obligation to make (your employees) successful to the extent that they give more back to the company,” he says. “And if someone doesn’t understand that, it’s not your responsibility to educate them.”

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Internal Hires, Referrals Were Most Hired in 2009

Wall Street Journal | By SARAH E. NEEDLEMAN

Last year, employers filled more than half of job openings with existing employees, a new study to be released Friday shows.

Internal transfers and promotions accounted for an average of 51% of all full-time positions filled in 2009, down from 39% in 2008 and 34% in 2007, reports CareerXroads, a staffing-strategy consulting firm in Kendall Park, N.J. Survey respondents included 41 companies that employ a combined 1.8 million U.S. workers. Last year these firms collectively filled 176,420 positions.

For the 49% of jobs that were filled with external recruits, referrals accounted for the most hires — 27% — and about the same number as in 2008. On average, these yielded one hire for every 15 referrals received. Meanwhile, company Web sites and job boards accounted for 22% and 13% of external hires, respectively.

What the findings indicate, says Mark Mehler, co-founder of CareerXroads, is that networking is the most effective strategy for landing employment. “Job seekers should use job board and corporate sites to find information about openings, but they should use their network to apply,” says Mark Mehler, co-founder of CareerXroads.

Among the job boards that respondents credited for netting outside talent, CareerBuilder.com came out on top, accounting for 42%, however one respondent claimed a significant portion of these. Monster.com netted 12% of external hires, while aggregate job sites, which advertise openings from multiple job boards, hooked 10%. Classifieds provider Craigslist.org accounted for 2.8% of external hires.

Survey respondents also said outside talent was found via job boards that specialize in advertising open positions in specific categories. For example, Dice.com, a job board for the technology sector, netted 0.8% of external hires, as did TheLadders.com, which lists only positions paying salaries of $100,000 or more. All other niche job sites that employers identified were collectively credited with bringing in 27% of external recruits.

Going forward, the survey found that 48% of respondents expect to increase hiring in 2010 compared with last year, while just 11% predicted they’d reduce hiring. The remainder said they expect to make no changes to their head counts.

Meanwhile, the Labor Department reported Thursday that there were 2.5 million job openings on the last business day of December 2009. The seasonally adjusted job openings rate increased just slightly to 1.9% from 1.8% the month prior.

Write to Sarah E. Needleman at sarah.needleman@wsj.com

Business Owners Try to Motivate Employees

Wall Street Journal | Small Business By SARAH E. NEEDLEMAN – JANUARY 14, 2010

As Recession Lingers, Managers Hold Meetings and Change Hiring Practices to Alleviate Workers’ Stress

Some business owners say their employees—after months of dealing with layoff worries, wage cuts or scaled-back hours—are stressed out and in need of extra attention.

In November, Nancy Jackson was able to hire a new full-time salesperson for the company she co-owns, Architectural Systems Inc. in New York, but found herself facing an angry 19-person staff. “I couldn’t believe their reaction,” she says. Just a few months earlier, some had seen their workweeks reduced or salaries scaled back; two colleagues had been laid off.

Nancy Jackson, center, and Ron Jackson, left, co-founders of Architectural Systems Inc., met with employees to discuss hiring changes at the New York firm.

To mitigate the situation, Ms. Jackson quickly called a meeting to explain that beefing up the firm’s sales force was a necessary first step for making a companywide recovery. Meanwhile, she has since gone about hiring differently, she says, bringing on a new marketing associate as a temporary part-time employee, rather than a full-time staff member, so as not to rile her team. “There’s been a lot of emotional hand-holding here that we’ve never had to do before,” she says.

As the recession lingers, business owners are finding it necessary to take extra steps to make employees feel valued. They say their efforts—many of which cost little or nothing—are critical for maintaining employee productivity, confidence and satisfaction.

“Your employees are being bombarded with doom and gloom,” says Bert Martinez, a small-business adviser in Houston. “If there’s anything you can do to make your employees feel secure and that they’re important, they’re going to work better.”

What’s more, making strides now could help reduce turnover when the job market recovers. A recent Conference Board survey of 5,000 U.S. households showed that just 45% of respondents are satisfied with their jobs, down from 61% in 1987, the first year the survey was conducted.

To show appreciation for her five employees, Elise Lelon, owner of The You Business LLC, a leadership-consulting firm in New York, says she upgraded their job titles. “It doesn’t cost me anything and it makes them feel good,” she says. “You’ve got to think outside the money box when it comes to motivating your employees in this economic environment.”

Ms. Lelon says workers tend to value senior titles like “director” and “manager” because these can make their résumés more robust. “I have two housewives who were high-powered women before they settled down and had families,” she says. “We crafted titles and roles that offer them more continuity. As a result, they feel as if they haven’t missed a beat with their careers.”

Elise Lelon, right, upgraded job titles to motivate employees at her consulting firm, The You Business LLC.

Ms. Lelon pulled other levers as well. For example, she granted her staff the option to work remotely and at hours of their choosing, including nights and weekends. “Autonomy is worth a lot to people,” she says. “This creates an entrepreneurial environment for them.”

And because she didn’t give out pay raises last year, Ms. Lelon says she created a generous bonus-incentive program tied to the amount of revenue her employees generate for the firm. “It gets their juices flowing and it helps the business grow,” she says. “Today, it’s all about switching fixed costs to variable costs whenever possible.”

Christopher Mills, co-owner of Prime Debt Services, a debt-management firm in Dallas, took another approach. Last spring, he began meeting privately with his 14 employees once a week to let them vent, share ideas or just shoot the breeze. “I found the more I listened, the better they pepped up,” he says. “It takes time from me, but it’s worth it.”

Mr. Mills says he has gained valuable information from the get-togethers. For example, an employee once explained that he and some colleagues were upset because the prior week’s sales leads hadn’t been distributed evenly as usual. “It looked like all of a sudden we were playing favorites,” he says.

Immediately after, Mr. Mills met with his sales team to explain that what happened was a mistake, thus avoiding “a huge mutiny,” he says. “When they get it off their chests and realize I do care, it becomes my problem to solve. I can address it and they can go about their day being productive.”

Mr. Mills has also been showing his staff appreciation by preparing them a breakfast of waffles, bacon and coffee every Wednesday. “It’s one less thing on their to-do list.”

Write to Sarah E. Needleman at sarah.needleman@wsj.com

How to ‘Couch Surf’ and Sleep Around for Free

Fox News|By Paul Eisenberg -Thursday, October 01, 2009

“I would never in a million years pay what you pay in New York City rent,” my houseguest said.

This statement was uttered a few years ago by a friend of a friend of a friend who had just regained consciousness on my living room couch. My response, according to witnesses, was “Well, then I guess you’re lucky you get to stay here for free.”

My guest’s comment was probably made in a more good-naturedly fashion than I recall, and neither of us had had our coffee yet. But let’s face it, while there are no official rules of conduct for houseguests, one of the basic ones ought to be refraining from remarks that make your host feel like an idiot for living where he does.

If you’ve ever hosted an overnight traveler or been one, you’ve likely walked this sometimes tricky terrain. With no money changing hands, what further obligation do you have as the host? What should you say and do as the guest?

Whether you’re planning to crash with friends or family, or are heading to an exotic destination where they don’t have the courtesy to live, there are a growing number of ways to sleep for free on vacation that are easy and fun. And the rules aren’t all that complicated.

Catch the couch surfing wave.

In case you’re late to the party that is the worldwide phenomenon of couch surfing, it’s generically defined as the act of crashing on someone’s couch, or letting someone do the same, with no money changing hands. Recently, this practice has been somewhat formalized at couchsurfing.org, a website enabling surfers and hosts to find each other and share experiences.

On a whim this summer, travel guidebook writer Erica Rounsefell headed to Great Britain. Couch surfing figured into her visit to York, England, where she stayed with a “dentist originally from Poland. He and some friends of his took me on a road trip through Yorkshire, visiting the seaside at Whitby, an historic abbey, North York Moors National Park, and culminating in a musical performance in the village of Harrogate.” Not incidentally, she saved “at least $1,500 on what I would have had to spend on hotels, but more importantly I met local residents that I never would have gotten to know otherwise.”

Hosts don’t particularly expect anything in return, Rounsefell says, though couch surfers find that the best way to reciprocate is to act as hosts themselves. However, some surfer guests make exceptions for particularly good “service.” One of Rounsefell’s hosts “was very interested in Pakistan and we had a good discussion about it, so I got the book ‘Three Cups of Tea’ for him. Some travelers cook a meal from their home country to share with their hosts, but there’s no expectation on the side of the host.”

Indeed, a surfer visting health coach Melissa Wood’s house cooked her dinner by way of payback. But when Wood offered to buy breakfast for some hosts she crashed with “they said they always buy for the guest, because to them it seems like the thing to do.”

For six of the years he lived in Amsterdam and Dubai, corporate executive Michael Flink hosted more than two dozen travelers, some of them couples. “For me it was a way to meet different people, from all walks of life and all cultures. It may sound strange to open your house to strangers, but only once did I have a bad experience, and that was mild – someone who just wanted to stay longer and wouldn’t take no for an answer until I walked them out.”

Flink concurred with other surfers and hosts that the best payback from the experiences was enduring friendships, though he adds “in terms of little thank yous, a couple from Estonia brought me a bottle of their homeland’s well known booze…and a guy from Poland shared his ‘how to pick up women’ secrets, which eventually led me to meet my wife.”

Stay at (a) home.

By traditional definition, a homestay typically entails renting a room in a family home. But with several homestay services, such as Servas, no money is paid to the host, though the traveler is required to pay Servas a membership fee that varies from country to country. Unlike couch surfing, whose community of hosts and guests is self-policing, Servas reps need to interview and approve potential hosts and guests, all of which must be 18 or older.

“I rarely stay in hotels. Mostly, I visit people in their homes, make new friends, have more fun, and enjoy a much higher quality trip,” says Shel Horowitz, author of “The Penny-Pinching Hedonist: How to Live Like Royalty With a Peasant’s Pocketbook” who has done homestays with Servas for more than 25 years.

His typical stay, whether in the United States or abroad, is two nights and he confirms that “no money changes hands, though there is an annual membership fee and we usually bring a small gift.”

Tour leader and Trip Chicks co-owner Ann Lombardi, who has overnighted in more than 70 countries, says her US Servas membership letter of introduction has been a lifesaver. “I’ve used it for last minute homestays when my flight or train is delayed or cancelled, or there’s a problem with a hotel booking.” As with the other lodging scenarios, good advice for and from travelers is often a happy fringe benefit.

“I can call a member if I am in the area and ask if he or she can recommend a good value restaurant,” Lombardi says. It’s like Twitter, but the old-fashioned way.”

Barter a bed.

In the spirit of the expression that “the most expensive suit in your closet is the one you never wear,” many travelers in our sour economy are looking to trade their unwanted and unused stuff for big-ticket travel items, including housing.

The site swapthing.com permits you to barter your unused stuff for just about anything, including timeshares and apartment rentals. Similarly, milehighswap.comlets you trade your unwanted things for airline miles as well as mileage for stuff that might include housing.

Motivational coach Bert Martinez says he has also successfully placed ads on Craigslist.com and Kijiji.com to barter for travel. “As a speaker and trainer company we have had a lot of success trading and bartering for items including airline tickets, hotels, time-shares and condos,” Martinez says. “I estimated we routinely saved thousands of dollars by not using a traditional hotel experience.”

10.5 Biggest Mistakes to Avoid When Starting A Business

The following list is derived from my experience. Based on my actions and results I retired from corporate America at the age of 28. Filed bankruptcy at 30. I’ve been involved in several successful businesses and many unsuccessful ones too.

#1 – Never let your expenses exceed your sales. Yeah, I know that’s easy to say, because you say “Jeez, that makes perfect sense, if my expenses never exceed my sales then quite honestly I’m always going to have positive revenue. I’m always going to be in the profit. Wow. That’s fundamentally smart. But c’mon Bert, it doesn’t work that way in the world. Why? When we start out we don’t have any sales yet, and so our expenses have to exceed our sales on day one.” And you’re correct. That’s true, so I want you to have a concept, a goal or even a burning desire. That you will make those days the fewest number of days absolutely possible that your expenses are exceeding your sales.

#2 – Failing to collect the money or the receivables. Question – Should you really be extending credit to people? I don’t care what business your in retail, wholesale, hospitality, legal, or whatever. Selling is what you about not carrying receivables. Don’t extend credit, get paid now! Look fewer customers that have paid you 100% are way better than having more customers when some of them didn’t pay you at all. More cash, less stress – you don’t have to be real smart to do the math.

# 3 – Failing to take care of your employees. People have say that the customer is number 1 – right? Maybe not. Well who is taking care of your customers? Your employees handle quality and service and delivery? Well if you haven’t taken care of your employees, they’re probably not going to take care of your customers very well. It’s just that simple. It’s goes without saying that if you do take care of your employees, they will take care of your customers.

#4- Failing to take care of your customers. Real simple the easiest customer to get are existing customers. There is usually more profit in repeat customers than in new customers. A happy customer is a good customer a good customer refers more customers. Take care of your customers and they will take care of you.

#5 – Underestimating your competition. We can, no matter what business we’re in, we think of our competitor as dim-witted, we think of our competitor as incompetent. Remember this -our battle isn’t against them. It’s for the customer, not against our competitor. We don’t win by doing damage to the competitor. We’re not in a battle with him really. We’re in a battle for someone else. So quit thinking about the competitor and start thinking about your competitor’s customers.

#6 Inadequate capital – Now I’ve started business with no money because I had to but then you quickly come to realize that you do need money to operate. You do need capital to grow the company and get to the next level. And here are 2 rules you should remember about capital. And, just in case your not clear, capital is the money we need to fund the organization, to buy the inventory, to hire employees, to do all those things that we’re going to need to do. Well here’s are 2 rules you need to appreciate. Is that your expenses are going to be hirer than you anticipated and your revenue is going to be slower than you anticipated. Those two statements are true in 99.99% of every single business that has ever started. Well that’s what happens. It happens almost all the time. Because we are optimistic, if we weren’t optimist we wouldn’t have started a business. We over-projected what our revenues are. What I’m telling you as a practical, experienced businessman lower that number. Now if you beat, if you excel… wonderful! Find a place to spend it. But if you have shrunk it down, conservative in your projection then you might be safe.

#7 Underestimate the length of time to break even. The break even is a magic moment in the making of a business and if you don’t understand let me try to explain the concept to you. Break even is that magic point when you quit putting money into a company and the company is finally sufficient enough that it starts to pay for itself or is finally starts to pay you for having been there first.

# 8 Focusing on profits instead of on cash flow. Business people, when they first start out, they focus on profits instead of on cash flow. And I know this is going to sound like sacrilege to some people saying well,” aren’t we supposed to be all about profits? absolutely, and yes! And we want to get there as fast as we possibly can! But before we get there we have to make sure something else happens first, and that is that we always have positive cash flow. We always have enough money to pay the rent. We always have enough money to pay out employees. We always have enough money to buy more supplies, to do more marketing, that’s really crucial. That’s called cash flow. Profits will follow the cash flow I guarantee it. Now there’s a different in being profitable and having positive cash flow, you can be unprofitable where you’re actually losing a little bit of money but still have positive cash flow. I’m telling you when your first starting a business, if you have to pick between the two, now if you could have both of them, great go get both of them and that would be wonderful, but I also will tell you from experience getting both of them when your first starting out is really going to be complicated. You’re going to have to make a decision between the two. Pick cash flow when you’re first starting your business.

#9 Over estimating size of your market. Entrepreneurs are optimists and we tend to have this attitude that everyone is going to want to buy what we have – that just doesn’t sell. Get over it. Just come to understand that it’s not going to happen. So what you need to be able to do is think about Bottom Up Marketing. It isn’t how many potential, how many people are out there, it’s about what you can you really do. Bottom Up Marketing looks at your capacity. So if you’ve got 1 employee, 3 employees, 7 employees, that’s all you can handle. It doesn’t matter how many people might want your widget. You can’t handle it! So think coolly about the real size of your market and don’t ever estimate it because you can’t handle it right now. You only need enough market to handle the capacity you presently have, and if you can do that efficiently you will be profitable, and if your profitable you’ll be successful and if your successful you can grow the company again, and again, and again. Do a little research on “Bottom Up Marketing” and you have a better understanding of the concept

#10 No Advertising/Marketing plan. So how are you going to drive your sales through advertising or through sales people. You need to develop your marketing plan, you need to have enough capital to drive sales. I’ve seen to many times were entrepreneurs will invest all this money in equipment or to get the doors open only to discover they have no way to adequately drive sales.

#10.5 – Exit strategy. At one point, P.T. Barnum noticed that people were lingering too long at his exhibits. He posted signs indicating ” “This Way to the Egress”. Not knowing that “Egress” was another word for “Exit”, people followed the signs to what they assumed was a fascinating exhibit…and ended up outside. So what am I talking about? We should start a business that we can create and build something that we can sell, transfer, dispose of, or hand off to someone else. That should be a goal maybe the first goal as you begin to vision your successful business.

Remember . . . You Were Created to Succeed!