Negotiate Against Yourself (Buying a Business)

Ed owned a rental property in Ashburn, Virginia.  He didn't want to own one, but he did as a result of a second marriage.  For five years, he couldn't sell the property for enough to pay off the mortgage.  Finally, prices recovered in Ashburn and Ed felt sure he could unload the property.  In fact, prices had not just recovered.  There was a shortage of houses for sale.  Ed signed up with a real estate agent, prepared to list the house, and set an asking price.  After years of rental, the house wasn't in perfect shape, but he was prepared to make some price allowances.

Ed's agent notified the tenant, Sandeep, that the house was about to be listed for sale.  She also told Sandeep the asking price.  In Ashburn, most houses received multiple full price purchase offers in the first few days after listing.  Some sold without ever making the MLS listing service.

Sandeep wanted granite countertops, new hard wood flooring, and a host of other improvements.  He offered Ed the listing price less $25K for his desired improvements.  Ed's real estate agent wanted to negotiate based on Sandeep's offer.

Ed declined to make a counter offer and instructed his agent to proceed with listing the house.  After the first weekend, Ed received an offer very near his asking price and accepted it.  Ed knew something his real estate agent didn't.  Accepting Sandeep's purchase price formula was really Ed negotiating against himself.  The price he originally set included an allowance for the condition of the home.  He was offering to sell for the price the hot market was setting.  Accepting Sandeep's price logic was negotiating down from the market price.  Business owners do this all the time when they buy businesses.

The price for a business is determined by the identity of the buyer.  Yes, cash flow determines price, but the cash flow to different buyers can be different.  For instance, a competitor can usually afford to pay more for a business, since he / she doesn't need the overhead expenses of the purchased business.  He will lay of the office staff, close the office, and consolidate operations in his office.  A buyer, who needs the entire business operation, will realize less cash flow and thus will be willing to pay less.

Given the above, how do buyers end up negotiating against themselves?  They let the seller control the terms of the negotiation.  A business purchase is successful when the seller and the buyer agree on a price.  The buyer calculates the value of the business to him.  The seller calculates the price he will accept.

The seller controls the terms of the negotiation when the seller accepts the buyer's implicit assumptions.  The seller will try to increase the price by selling the future potential of the business.  For instance the seller will state that the business will be worth much more to the buyer if he takes actions like increasing promotion or entering a new line of business.  When the buyer accepts the validity of these assumptions, he negotiates against himself.

The buyer should be buying what the business is, not what it might become.  Even if the seller's suggestions are valid, the buyer will have to carry out these actions with no certainty of success and a good deal of risk.  If the actions eventually increase the value of the business, that profit should go to the new owner not the old one.

I'm not suggesting that you blindly stick to your offering price.  For a desirable business with many potential buyers, you will have to split some of the future potential value of the business with the owner.  But be aware you are doing this.  It lowers your rate of return on investment.  If you have to give up all of the future profit, why should you be interested?  You will be better off pursuing another opportunity.  Sometimes the best deal you make is the one that doesn't happen.

Have you bought a wedding gift for RGIII yet?  Time is running out.  He is registered at Bed, Bath, and Beyond.  RGIII's acceptance of gifts from fans became a major sports talk topic last week.  On idiot sportswriter suggested that fans could better spend the money on charity than RGIII.  Of course, the sportwriter's employer might better spend the idiot's salary on charity as well.  A wedding gift for RGIII is much better use of money than spending it on a sportswriter.

As always, thanks for reading.  For daily snarky business advice, please like the Facebook page, "How to Screw Up Your Small Business."  Until next time, let's do it to them before they do it to us.

For real tax and accounting advice, please like the Stitely & Karstetter Facebook page or visit www.skcpas.com.

Sal Leaf Plate and Bowl Making Machine for set up Small Business

Sal Leaf Plate and Bowl Making Machine for set up Small Business:-

Sal Leaf Plates and Bowls Making Machine is a very good Small Business idea for earning some handsome money at home.

Demand and Market of Sal Leaf Plates and Bowls:-

Sal Leaf Plates and Bowls are generally used during various occasions like wedding ceremony, marriage feasts, religious and social festivals, feats etc. Sal Leaf Plates are used in hotels, restaurants etc places in the market. The demand of Sal Leaf Plates and Bowls is found all throughout the year. With the Sal Leaf Plate Making Machine toy can make plates and bowls and can supply in local market. You can earn some handsome money this machine.

How to make Sal Leaf Plate and Bowls/Sal Leaf Plate Making Process:-

Sal Leaves are available in soma places of Bankura, Mednapore districts. Some Sal Leaf suppliers supply Sal leaves after making it ready for use. You have to buy Sal leaves from these suppliers or they will supply it to you on demand.

At first you have to sink all the Sal leaves into water. Then put these Sal leaves on the indicated place of the machine. Start the machine and Sal leaves will take the form of plates and bowls automatically.

You have to use different dies for making different sizes plates and bowls. To make these plates and bowls more lasting, you may laminate these with polyethene. You may buy polyethenefor lamination from the market of Barobazar in Kolkata. You have to use different dies for making Sal leaf Bowls.

The machine is available in tow conditions-Manually Operated and Motor Operated.

It needs 220 volts to operate the motor operated Sal leaf Plate Making Machine.

Price of the Sal Leaf Plate and Bowl Making Machine:

The price of the manually operated Sal Leaf Plate Making machine is approximately Rs. 12,000.

The price of the motor operated Sal Leaf Plate Making machine is approximately Rs. 35,000.

The price of the 14 inch dies is approximately Rs. 3,000.

The price of the 10 inch dies is approximately Rs. 2,500.

The price of the 8 inch dies is approximately Rs. 2,000.

The price of the 4 inch dies for making bowl is approximately Rs. 1,500.

Where to buy the Sal Leaf Plate and Bowl Making Machine:-

Bharat Machine Tools Industries,

61, Ganesh Chandra Avenue,

Kolkata-700013,

You can find many companies manufacturing a wide range Sal Leaf Plate and Bowl Making Machine.

To read the reviews and buy the Sal Leaf Plate and Bowl Making Machine visit websites

http://www.searchall.co.in/webProfile.php?info=12

http://www.tradeindia.com/manufacturers/leaf-plate-making-machines.html

29^th May, 13 KK

The Importance of Bookkeeping for Your Small Business

Small Business Bookkeeping

-->

Bookkeeping refers to keeping the financial records of a business operation. A bookkeeper, business owner, or family member usually performs this function. An accountant may be needed to interpret and adjust these financial records, prepare financial statements, and file tax returns.

Importance of bookkeeping 

You need financial information to help you run a business, even a small business. Cash is the life-blood of any business operation. Without cash, or the ability to get cash, your business probably will fail. Financial information tells you the sources and uses of cash. This information can serve as an early warning that you will run out of cash unless you make some changes in your business operation. This same information can help you minimize unnecessary uses of cash. It also can help you develop additional sources of cash. The financial information for your business activities should be kept separate from your personal activities. The best way to do this is to have a separate business checking account.

Do-it-yourself bookkeeping 

In this type of small business bookkeeping, the business owner or family member keeps the financial records. This may be done using hand-written records, or it may be done on your computer using an accounting program. The person who performs the bookkeeping may need to read a book on bookkeeping or accounting to know what to do. This type of book can be found at a local library, a local bookstore, or an online bookstore.

Hired bookkeeper 

You may want to hire a bookkeeper or an outside bookkeeping firm to maintain your financial records. This person or firm should have the qualifications and experience needed to perform this service. You should have confidence in this hired bookkeeper. You must be willing to share your financial information and discuss financial matters with this bookkeeper.

Online software 

Another way to maintain your small business bookkeeping records is to use online software. The Outright website is recommended for this purpose.  To begin using their services, you give them links to your various online business accounts. Then they can access the information from these online accounts and feed this information into your accounting system. Outright maintains your accounts using IRS-approved tax categories. This simplifies the preparation of your income tax return.

You can review your Outright financial information from any computer with Internet access. They even provide an iPhone app for this purpose. Besides the information that they automatically download from your online accounts, they allow you to enter other information such as your business mileage. Outright provides many types of useful reports to help you run your business operation. These reports include your profit and loss, your sources of income, your best customers, your biggest vendors, and your sales by state.

Final thoughts 

The financial information provided by your small business bookkeeping or accounting system helps you with both day-to-day business decisions and long-term business planning. You can't run your business without it.


Other articles you may enjoy:

Propel Your Business Towards Success

Small Business 101

Simple Steps to Form a LLC

Colourful Hair Band Making Machine for set up a Small Business

Colourful Hair Band Making Machine:-

Hair Band making machine is a good Small Business Idea.

Demand and Market of Hair Bands:

The demand of Hair Bands is found all throughout the year. You can start a home based small business with this Hair Band Making Machine. You can make it at home and supply orders in local market.

How to make Hair Bands with Hair Band Making Machine:

At first you have to buy colourful nylon thread from market. You can buy it from the market of Barobazar in Kolkata. Then put the nylon thread on the indicated place of the bobbin of the machine. Then start the machine and the band will be made automatically. Now you have to cut the band in indicated size as you want. Then join the band and your Hair Band is ready.

The machine can make upto 10 kg nylon thread band per hour.

It needs ½ hp motor and 220 volts to operate the machine.

Price of the Hair Band Making Machine:

The price of the Hair Band Making Machine including motor is approximately Rs.60,000.

Where to buy Hair Band Making Machine:

Bharat Machine Tools Industries, 61, Ganesh Chandra Avenue,

Kolkata-700013.

You can find many companies manufacturing a wide range of Hair Band Making Machine. Their machine matches high technology electronic control.

To read the reviews and buy the Hair Band Making Machine visit websites

http://www.alibaba.com/showroom/hair-band-making-machine.html

http://www.bharatmachines.com/hair-band-machines-646453.html

22 May, 2013 KK

Pick the Wrong Business

This is from my mailbag.

Dear Frank,
I am looking for some relationship advice.  You are obviously an expert, being married to a smart, beautiful, and successful woman.  I am coming off another bad relationship.  I tumble from one bad romantic relationship to another.  I need guidance on landing a super stud, Brad Pitt look alike, whose best quality is his humility, like you.  I seem to become dependent on men, never able to achieve my own identity and become financially self-sufficient and attractive to successful men.  I believe self-employment is the key to my self fulfillment.

I am considering selling promotional items.  After talking to the regional sales director, I know I can make $.33 on every dollar of sales.  I have expensive tastes.  So I need to make at least $100K per year to maintain my lifestyle.  Please help me.
Lovingly yours,
J. Aniston

Dear Jen - I mean J.,
Thank you for your sincere and well-deserved compliments.  Self-sufficiency is attractive in a woman.  One of the reasons, I was so attracted to Laura was her success and her achievement of an independent and affluent life.  She didn't need me financially.  I was just another bimboy that she could casually use and toss aside.

Let's explore your chosen business opportunity.  You gave me great information on your life goals.  That is a fantastic place to start.  You need to earn $100K in profit a year after expenses.  That, combined with knowing that you will make 33% in gross profit, gives us the making of a business model.

Maybe you are asking how I got the 33% gross profit percentage.  I got that by dividing the $.33 you make on every dollar of sales by $1.  That gives you one third or roughly 33% that you will make on every dollar in sales.  Of course, that is BEFORE any expenses other then the cost of the merchandise.

For now, let's ignore those other expenses, even though they may be significant.  We can come back to them later.  We can easily calculate how much in sales you will need to achieve to get $100K in gross profit.  To do that, we take the $100K sales and divide it by our 33% gross profit percentage.  That tells us that we need $300K in sales to get $100K in gross profit.  Let's stop here for some perspective.

Doesn't $300K in annual sales seems like a lot of coffee mugs to sell?  It does to me.  I have never seen anyone in this business achieve that.  I'm certain someone somewhere has.  Someone wins Powerball, just never you.  That's $25K in monthly sales and $822 per day.  Jen, if that hasn't scared you off yet, let's analyze this a little further.

Let's bring the other expenses back into this.  If we expect to spend $25K per year to achieve $300K in annual sales, we now need to sell not just $300K but $325K.  Our $100K profit goal recedes ever further into the world of pipe dreams.

Yes, the regional sales director told you thousands of women, just like you, have become wealthy selling these products.  Sales directors lie.  They make money recruiting lot's of sales reps, who each sell a little.  That adds up to real money to the company, but not a lot to the little people in the field, like you.  Here's a hint. That's the business model behind multi-level marketing, masses of asses each selling a little product.  In a lot of cases, a sales rep's sales largely consist of items they use personally.

Here's why so many people fall for the dubious pitches of sales directors.  They don't do the basic math we have done together to really know just what they need to sell to meet their goals.  Here's Frank's rule of business models.  If you can't figure out how your business makes money on the back of an envelope, it probably won't.  Take fifteen minutes to do some fifth grade math on your business idea.  Determine how much you need to sell to succeed.  If you can't sell that amount, get a regular job.  Self-employment in this business isn't the path for you.

Jen,  here is my personal advice for you.  With your looks, you might consider acting in movies.  Maybe, you should even start out in a wildly popular sitcom.  I think you have potential.  Best of luck in finding that special romantic relationship.
Sincerely yours,
Frank

As always, thanks for reading.  For daily snarky business advice, please like the Facebook page, "How to Screw Up Your Small Business."  Until next time, let's do it to them before they do it to us.

For real tax and accounting advice, please like the Stitely & Karstetter Facebook page or visit www.skcpas.com.

Why You Need Small Business Insurance

Small Business Insurance

-->

It is important for small business owners to do everything they possibly can to protect themselves and their business. Obtaining small business insurance gives business owners peace of mind and safeguards their business against many liabilities. Even online businesses can benefit from having some kinds of business insurance. This article will provide a brief overview of the most common and useful types of small business insurance.

Commercial business insurance is not required by law, but having it can protect you against lawsuits, natural disasters or a death of any of the business owners. A lot of small business owners think that choosing to structure their business as a limited liability corporation is the same as having liability insurance. The truth is, no matter how your business is structured, only commercial liability insurance can protect you from business losses. When you are first starting your business, whether it is based in a physical location or completely online, do your research to find out if the local laws in your area require insurance for certain functions conducted through your business. This includes insuring company vehicles or individual employees who do certain tasks.

Some kinds of commercial business insurance are:

• Product Liability: This coverage protects your business against lawsuits and injury claims caused by defective products that your business may produce.
• General Liability: This coverage protects your business against lawsuits caused by general accidents, negligence and injuries.
• Professional Liability: This coverage protects businesses that provide a service from lawsuits caused by malpractice, negligence and other incidents that may occur while providing the service to a customer.
• Home-Based Business: This coverage protects home-based physical or online businesses from various liability and property damage.
• Commercial Property: This coverage protects your company’s physical property from various damage caused by bad weather, fires, vandalism, burglary and more. With this type of insurance, the term property can be used to define the actual building that your business is based out of, computers your business owns, documents, and even lost revenue.

There are a lot of options for business insurance, so you will have to speak with your insurance company to make sure you choose the best coverage for your business.

If your business has employees, there are certain kinds of insurance that you are required to have by law. These kinds of insurance typically include:

• Disability Insurance: Employers in the states of New York, California, New Jersey, Hawaii, Rhode Island and Puerto Rico are required to have disability insurance. Employers in other states can choose to offer this insurance as an employee benefit.
• Unemployment Insurance Tax: All employers in the United States must pay unemployment insurance taxes. The amount varies by state. The first step in obtaining this insurance is registering with the workforce agency in your state.
• Workers Compensation Insurance: Employers are also required to have workers compensation insurance. There are many ways to obtain this type of insurance. You can choose to go with a commercial insurance company, become self-insured or participate in your state’s workers compensation program.

Regardless of whether you run a physical business with employees or a home-based business online, small business insurance is something you need to look into. It not only protects your business, but your future revenue and assets as well.



Other articles you may enjoy:

Propel Your Business Towards Success

Small Business 101

Simple Steps to Form a LLC

Create an Advisory Board

I hope you don't live in the Washington DC area and listen to sports talk radio.  All day, every day, the air waves buzz with RGIII rehab news.  Is he ahead of schedule?  Is he behind schedule?  Will he be ready for the first game of the season?  Is he dissing Coach Shanahan for leaving him in a playoff game to get injured?  RGIII's words are more closely parsed for hidden meaning than the pope's.  Of course, RGIII's words make more sense.

If you could create an advisory board for your business, whom would you select?  Wouldn't it be nice to get advice from your CPA and attorney for just the cost of maybe a meal instead of hundreds of dollars hour?  Let's add a banker and maybe our marketing person.  I'm sure they'd love to work in the evening for free as well.  Here is my experience with advisory boards for small businesses.  They don't work, and you may already see why.

What do your advisory board members get for their time?  Oh, you say, they get your continued patronage.  Well, bully for you.  If your business reputation draws free work from attorneys, you don't need an advisory board.  You should be on several.  Here's my experience serving on one client advisory board.  I have been on several over the years.

Joe owned a small manufacturing company that had been in business for fifteen years.  Over that time, he had some success, but he spent a lot of time drifting sideways.  He reached a few million dollars in revenue, but didn't earn any more profit at that level than at lower sales levels.  Joe needed to make some major decisions on direction, and he needed help.  So he recruited an advisory board.

Four people served on the original board, which met quarterly at Joe's office in a run down section of town.  Of course, I was the CPA on the board.  Another person was an employee at a commercial real estate developer.  The third was Joe's brother, who also did something in real estate development.  I don't remember the fourth person, as I don't think he ever showed up at a meeting.

You should be asking right now, "What??????? Two real estate guys and a CPA?  Doesn't Joe run a manufacturing business?"  There was some reason to have at least one real estate person involved.  Joe owned the building and rented out the majority of it to other businesses.  His first issue for the board was refinancing the real estate to raise some capital.  He wasn't totally crazy, but yes, the composition of the board was his first mistake.  He really needed some other areas of expertise, but we were the only fools available.

Here's lesson number one about advisory boards as if this isn't already obvious.  Most small business advisory boards are comprised largely of two types of members, fools (like me) and sycophants.  The fools bring you no value (guilty as charged), and the sycophants echo what you already intend to do.
Let's assume you are luckier than Joe with the composition of your board.  Here's lesson number two about advisory boards.  Members, who get nothing in exchange for their time, will drift away in about a year.  Your lawyer may attend a couple of meetings, but soon, you'll find that he just can't seem to make the meetings work in his schedule.  At first, he'll conference in.  Then, he'll stop participating at all.

Can you really blame him?  Put yourself in his place.  He gets to deal with twelve hours worth of schmucks every day.  Then he gets to spend an evening with you giving free advice.  Sounds attractive to me.  I would mistrust the competence of any lawyer willing to do this.

How can you make an advisory board work?  Put very simply, pay them.  You can't afford that, because you're just a struggling small business?  Then waste your time putting together a group of advisors, who would rather spend time with their spouse and kids.  They will eventually find creative ways to avoid you.  Sorry, your continued patronage just won't cut it for in-demand professionals.  Show me the money.

There is an advisory board concept that I like, peer to peer advisory groups.  You pay to play here, and it isn't all about you.  Not only do you get an advisory board, you are on the advisory boards of the other members.  This isn't coaching, where you are "taught" by someone, who has never run a business.  You help other business owners, and they help you.  Everybody benefits.

I like this concept so much, I've invested some of my hard earned nickels in a business that organizes these boards, Inner Circle.  I need some business advice too.  So I'm participating myself.

Thanks for reading!  Please catch up with me daily on Facebook by liking the "How to Screw Up Your Small Business" page.  3,400+ people can't be wrong.  Well, actually they can, but these people aren't.  This week, we are building a business model for a handyman business.

Until next time, let's do it to them, before they do it to us.

The Small Business Administration Offers Resources to Grow Your Business

Small Business Administration

-->

Starting a small business is tough and it's even harder if you don't have access to resources to help you along your journey.  If you are thinking about or ready to start a business, there is a resource you definitely need to be aware of: the Small Business Administration (SBA).
  

The Small Business Administration is a U.S. government agency that assists small businesses and entrepreneurs. The agency’s activity can be summarized in three words that include contracts, capital and counseling. SBA loans are made through credit unions, banks and other lending companies that partner with the SBA. These loans are enhanced to provide up to a 90 percent guarantee. There are several services that the Small Business Administration provides for businesses today.

Programs

This agency provides various programs that help individuals start their own businesses. This includes topics on creating a business plan, choosing a business structure and obtaining licenses and permits. Additional information includes how to choose and register a business name and a guide to business regulations and laws.

Another useful guide that this agency provides is a basic course on how to manage a business. It includes useful information about how to grow a business, running a business, business regulations and laws. Additional topics include how to lead a company and how to get out of a business. It also includes a guide on local resources, health care and business guides for industry.

Loans

The agency also provides a guide to the loan programs it offers to help small businesses grow. Loan programs include debt financing, venture capital programs, surety bonds, microloan programs, the CDC/504 loan programs and disaster loans. Each of these loan programs also has a guide to eligibility requirements, use of their proceeds, fees, repayment terms, interest rates and the application process.

The agency also provides people with a guide to prepare their loan application. It includes topics that help people determine their financing needs and credit factors. The agency provides a business loan checklist. This checklist describes the documentation requirements and questions that lending companies will ask before approving a loan. The SBA also has a tool that helps people find small business loans from their local and state governments. These programs include venture capital, low interest loans and economic and scientific grants.

Grants

The Small Business Association also provides useful information about government grants. This includes application forms for construction and non-construction grants. The website has an article about research grants designed for small businesses from the Small Business Technology Transfer Group and Small Business Innovation Research. The agency also has a complete list of various government agencies that offer STTR and SBIR programs through the federal government. Additionally, the agency has a search tool that helps people find grants from local, state and federal governments.

Contracting

This agency also provides a thorough guide to contracting. It includes steps that businesses should complete to increase their capacity to contract in the industry. It also explains the agency’s role in government contracting, small business size standards and much more. Additionally, the agency includes contracting support for small businesses. This informs people about government-provided tools to help entrepreneurs build their business potential to compete in the federal sector.

The Small Business Administration website helps business owners gain in-depth knowledge of the business world. At the same time, this agency provides numerous options to help people grow their businesses.  If you're ready to do business, the SBA is a place you should visit.



Other articles you may enjoy:

Propel Your Business Towards Success

Small Business 101

Simple Steps to Form a LLC

Keeping the Right Customers

I would like to thank the old people, with diminished faculties, driving behemoth RV's dragging passenger cars behind, for making my trek up I95 from Richmond such a harrowing journey.  I would especially like to thank them for pulling into the middle lane at 55 mph to pass another RV doing 54 mph.  They have given me the solution to two major national problems I can solve with one prescription.  People, who own RV's, should be ineligible for Social Security and Medicare.  With one law, we can get amateur, recreational RV drivers off the road and fix the solvency of two major federal entitlement programs.  My name is Frank Stitely, and I approved this message.

In my last post, I wrote about the danger of spending time satisfying difficult customers at the expense of good customers.  This time, let's talk about keeping the right customers for your business.  To do this, I'll use the example of Pawan, the amazing IHOP waiter.  Here's how my day starts out two or three times a week.

At 6 AM sharp, the alarm jolts me out of my a passionate lovemaking session with Jennifer Aniston.  I only hope it's as good for her.  In my dreams, it is.  I won't bore you with my morning routine.  I did that in a post a couple years ago.  Sometimes when I go downstairs, I am disappointed to find other human beings in the kitchen.  Anthropologists call these people family.  I call them obstacles to my getting to work and billing somebody.  When I find these primates, I flee the house and drive to IHOP for breakfast instead of dining on a fine banana with a glass of orange juice, hold the vodka, most mornings.

I battle the usual group of idiot drivers heading down 28 South from Sterling to Chantilly and pull into my normal parking space along the side of the Chantilly IHOP.  As I enter the front door, I see a booth with two diet cokes waiting for me.  More importantly, I see Pawan, the amazing IHOP waiter smiling at me, menu in hand.

I have known Pawan for four years.  He works at two IHOP's in Northern Virginia, Chantilly and Gainesville.  I have also seen him working out at Lifetime Fitness in Centreville.  One of us is a stalker.  I'm not sure whom.

Pawan always smiles.  He never seems to be having anything other than an amazing day.  As you know from previous posts, I play a spy when I visit restaurants.  I listen for employees bitching about customers and bosses.  At the Chantilly IHOP, I sometimes hear this sniping, but never from Pawan.  I feel like Pawan is a trusted friend, who gets me in a good frame of mind to do battle with my work day.

Then one day, while finishing my Rooty Tooty Fresh and Fruity pancakes, I learned that Pawan was cheating on me.  He greeted another IHOP regular with the same cheerful attitude with which he greets me.  I sadly understood that I wasn't special to him at all.  He was just using me.  I felt so cheap.  No, not really.  I'll feel cheap when Jen Aniston dumps me.

Pawan treats me the way Pavlov treated his dogs.  Pawan gives me friendly excellent service, and I salivate.  Actually, I do better than that, I tip him well.  I see lots of people leave buck fifty tips on ten dollar checks.  Yes, that's fifteen percent (I had my staff check my math).  But the effort required of an IHOP waiter is no less than for a waiter on a fifty dollar check.  The tip shouldn't be solely defined by the size of the check.  It should be defined by the waiter's effort to make my morning bearable.  I won't tell you what I tip Pawan each time.  That's proprietary information.  Get your own Pawan.  But, you can assume it's better than a buck fifty.

Pawan, like any good psychologist, knows that positive reinforcement is the key to encouraging repetitive behavior.  He makes me feel special, and I, therefore, repeat my tipping behavior.  I wish Pawan were an accountant.  I would hire him first thing tomorrow morning.  He gets customer service.  Reward the good behavior of your best customers, and they will repeat that good customer behavior that we crave as business owners.

Between this post and my last, you have the two keys to customer service.  Rid your business of crazy customers and reward your good customers.  It's the stick and the carrot.  Beat your bad customers over the head with a stick, and feed your good customers your absolute best efforts.  Of course this is exactly the opposite of what most business owners do.  They prostrate themselves in front of customers, who will be forever lousy, and take their best customers for granted.  Pawan knows better.  So should you.

Thanks for reading!  As always you can find me on the How To Screw Up Your Small Business page on Facebook.  I promise to be snarky two to three times a day.  For real tax and accounting advice, please visit the main S&K web site at www.skcpas.com.

Until next time, let's do it to them before they do it to us.