February 2012
W-2 & 1099 Information

Small Business Blog

Brought to you by Steve Strauss

February 2012

Overcoming Business Challenges

One of the things I really appreciate about working with Greatland is that it is their mission to make our life easier. That is, most small business folk don't have a great handle on W-2s, 1099s, and other such tax related issues. But Greatland does, so they can step in when necessary and make an entrepreneur's life simpler and easier.

And that's important for all sorts of reasons, not the least of which is that small business people have plenty of challenges already, without having to learn or otherwise deal with something like a tax issue with which the may be unfamiliar. Which begs the question: What do you do when business gets rough? How do you handle the inevitable challenges that crop up when you are an entrepreneur?

In this month's blogs, that is what we will be examining.

The first thing to consider when business gets tough is that, while unwelcome, some problems can actually be the proverbial blessing in disguise; your issue may actually hold the very seed of your renewal. Like a Phoenix rising from the ashes, sometimes the best ideas occur during times of trouble.

This being an election year, let me give a political example:

In 1984, Ronald Reagan was running for reelection against a younger Walter Mondale. At the first of their presidential debates, Reagan looked and sounded like an old man. The buzz was that if he didn't do dramatically better the next time, he might lose the election.

Came time for the second debate and everyone was watching the 73-year-old President closely. Soon after the debate began, Reagan took the initiative and broached the subject. The President promised everyone that even though age had obviously become an issue in the campaign, he "would not exploit, for political purposes, my opponent's youth and inexperience."

With that quip, Reagan reversed his fortunes and regained the momentum. The issue evaporated and he walked off with the election. It was political Jujitsu.

If you think about it, businesses can also use a form of "business Jujitsu" to handle problems and challenges as well. The basic idea behind Jujitsu is to use an opponent's weight and strength against him. By turning the tables on it, a problem becomes an opportunity.

The prototypical example of how to do it right in business comes from Johnson & Johnson. In 1986 its star product was Tylenol, which at the time accounted for about 15% of the company's profits. That year, someone laced some Tylenol with cyanide and seven people died. A panic ensued. Instead of making excuses or hiding, Johnson & Johnson became proactive. They pulled all Tylenol from the shelves and invented tamperproof packaging. So rather than being associated with a disaster, the company was praised for its quick and decisive actions. Sales of Tylenol actually grew after its use of business jujitsu.

So that is the lesson. Part strategy, part mental trick, and part ancient plan of attack, business Jujitsu is the first thing to consider when business gets tough. It can help you reverse fortunes and actually take your business to new heights.

(For even more business tips and strategies, check out the new podcast on iTunes that I am doing in conjunction with Greatland called Small Business Success with Steve Strauss, Powered by Greatland.)

Getting the Help You Need

In my blogs this month, we are looking at some of the best ways to meet and beat business challenges. In my last entry, I looked at how business problems can often be reversed by using what I called "business Jujitsu." This week, I would like to drill down a little more into the issue and idea of getting help when you need it.

A problem not a few small business people have is that they don't have enough hands on deck. Lacking help, their business becomes stagnant. So what do you do when you have a great idea – or business – but it's more than you can handle on your own?

Get a partner, that's what. That's what a (literal) genius by the name of Chester Carlson did.

In 1930, Chester Carlson landed a job in the New York City patent offices of a small electronics company, where his job was to assemble patent applications. Patent applications are extremely long documents, and Carlson's job of duplicating the drawings and specifications by hand was boring and tedious. Frustrated by his day job, and already prone to inventing, Carlson decided that there must be a better way.

He began to study photography, the physics of light, paper treatment, and printing. Carlson's research paid off when he stumbled upon photoconductivity – the method in which light affects the electrical conductivity of materials, thereby allowing him to reproduce documents electronically. Hoping to find a corporate sponsor for his invention, or even someone to sell it to, Carlson then spent the next few years meeting with, and getting turned down by, the likes of GE, RCA, and IBM. He had no luck; he was a genius, but not a marketer.

The break Carlson had been hoping for came in 1947 when Joe Wilson, the president of a small photographic company called Haloid, and a marketing wiz, came to see the electrophotography machine he had read about. After seeing a demonstration, Wilson exclaimed, "Of course it's got a million miles to go before it will be marketable. But when it does become marketable, we've got to be in the picture!"

Wilson and his company eventually pumped $100 million and 10 years into the invention before finally turning Carlson's idea into a workable machine. Deciding that "electron photography" and "Haloid" weren't snazzy enough names, the marketing wizard decided to rename the process and the company to – Xerox.

The moral of the story is that, often, the best businesses are those that are started by two people of different backgrounds and with different skills sets. You may be a marketing genius, but know nothing about finances, and you might have a friend who is financially literate but knows nothing about business. Together, you may make a great team.

Business partners can take many forms. You may be able to find a "silent" partner who merely wants to invest in return for a share of the company, or you might find someone who is interested in becoming an active participant.

The important thing to remember when looking for a partner is that you will get the help you need only if the partner gets what he or she wants. Does he want to be involved in day-to-day operations? If so, you better be sure that this is someone you can work with. Does she just want a return on her investment? Then you better have a solid financial plan. Ask them what they want and the give them what they want.

Bottom line: If you copy the genius who invented photocopies, you are on track to duplicate his success.

(For even more business tips and strategies, check out the new podcast on iTunes that I am doing in conjunction with Greatland called Small Business Success with Steve Strauss, Powered by Greatland.)

Getting Institutional Help

Last week, we looked at how bringing in a partner can solve a lot of vexing problems for an entrepreneur – partners can be a source of financial assistance, and extra pair of hands, a sounding board, and more.

This week I want to suggest that there might also be another source of help around the corner that you may have overlooked: Your local Chamber of Commerce. Chambers of Commerce can be one of the best friends your business can have.

Think about it: What is one of the main problems you encounter as a self-employed businessperson? I bet one of them is a lack of support. Well, the whole purpose behind a Chamber of Commerce is to help you succeed. Indeed, over 85 percent of U.S. Chamber members are small business owners. So your local Chamber is a place committed to your success.

At your Chamber, you will find a host of programs and resources intended to make your business better and more profitable. Let's consider the various ways a Chamber of Commerce can help a small business:

  1. Programming: Much, nay, most, of the programming done by Chambers is intended to help their members grow their businesses. Chambers bring in speakers, offer educational seminars, create informational newsletters, host luncheons, spotlight successful members, facilitate small business counseling, supply relevant demographic materials, sponsor business expos, and offer a variety of other programs intended to help grow members' businesses.
  2. Networking: At a Chamber you still get to network the old-fashioned way – in person. And as a result of that, you will be able to create a network (and not a virtual network) of like-minded people – small business owners who, like you, are juggling payroll, taxes, a challenging economy, etc. There will be people to bounce ideas off of, and ideas from others that can be applied to your business as well.

    Additionally, Chambers of Commerce offer you the chance to do business with your fellow Chamber members.
  3. Lobbying: Legislation of all sorts on the state and national level has profound impacts on small businesses. However, most entrepreneurs have neither the time, resources, understanding, nor desire to lobby on a particular bill. That's another place where a Chamber of Commerce can help.
  4. Getting involved: Chambers always have a variety of committees that allow you to participate in your community on issues of importance to you. By joining one, you can make a difference and have your voice heard.
  5. Discounts: Chambers offer their members discounts and deals on everything from health insurance to computers to education, and on.

So yes, joining a chamber of commerce can be an excellent way to get some institutional support for your business.

(For even more business tips and strategies, check out the new podcast on iTunes that I am doing in conjunction with Greatland called Small Business Success with Steve Strauss, Powered by Greatland.)

Business Incubators

This month, we have been looking at various ways to overcome business challenges – from getting the help you need to having the right frame of mind. One thing we haven't looked at yet is what to do if you are new to business and find the whole thing a bit overwhelming, expensive, confusing, etc.

Not surprising, really.

We all know that starting a business is difficult. There is a lot to know and do, it is exhausting and expensive, and there are many moving parts. On top of that, as you also know only too well, money is usually tight. How do you balance the financial needs of renting space, hiring staff, building a brand, and launching a business?

That's where business incubators come in.

Run as non-profit organizations, business incubators are intended to, well, incubate new businesses. Funded by colleges, governments, civic groups, and other organizations interested in job creation and economic development, business incubators are collaborative programs designed to help new startups grow and thrive.

They do so by providing workspace, support services, networking opportunities and training. Here's an example: The Innovation Depot in Birmingham, Ala., is a 140,000-square-foot facility housed in a former Sears department store. It is funded by the University of Alabama at Birmingham, the Birmingham business community, leading foundations and the City of Birmingham and Jefferson County. This particular incubator focuses on the development of startups in industries as varied as biotechnology, IT and service.

While all business incubators have the same purpose, to help launch and grow successful businesses, not all incubators are the same. Some specialize in forming businesses applicable to a specific region of industry. In the Silicon Valley, for example, you will find business incubators that foster high tech startups. In Kansas, the incubator may focus on farming businesses. It all depends upon the region and the purpose of the particular incubator. And then again, it might just be an all-purpose incubator.

There are obviously many benefits to housing your business in a business incubator. Aside from the reduced rent (business incubators typically charge between 25-50% less than regular rents), other plusses that come from housing your startup in an incubator include:

  • Great contacts
  • Client referrals
  • Teamwork
  • Legitimacy
  • Mentors

So, how do you get in? What you do need is a great idea, a viable path and a good business plan. Because different incubators focus on different sorts of business, it is impossible to state specifically what different incubators look for and what the selection process may consist of. It may be as easy as an application and an interview, or as complicated as a stringent multi-round screening process. That said, it is safe to say that any business incubator wants a business or entrepreneur that not only has a good chance of succeeding, but one in which the incubation process can be the business' tipping point. Incubators also obviously want business that will bring jobs to the area.

For more information on incubators, contact the National Business Incubation Association at www.nbia.org.

(For even more business tips and strategies, check out the new podcast on iTunes that I am doing in conjunction with Greatland called Small Business Success with Steve Strauss, Powered by Greatland.)