And the Foolish Man Built His House on Sand

Recently, my 4-year-old Lane wanted to get a treat all by himself.  After all, he is 4 years old now.
The Skittles he wanted was on the top shelf in the pantry.  Yep, Skittles.  Not the apple or banana he passed in the fruit bowl on the way to the pantry.

So obviously, he couldn’t reach it.

• At first, he tried to stand on his bean bag to reach them.  His bean bag is pretty old, so it is really just a bag at this point.  That didn’t work.
• Then he tried blocks.  He came tumbling down like a bad game of Jenga.  
• Next, he tried a chair, but it was still out of reach.
• Lastly, he asked his dear old dad for a little help.  I picked him up, he grabbed the goldfish, and life was good.  

Lane needed a solid foundation to achieve his goal.

The same is true with your business.

You need solid foundations for your solutions.  There are no quick fixes.

• If you are having cash flow issues, you may need to dive deep into the numbers.  Getting a loan may only be standing on a bean bag, especially if you don’t address the source of the cash flow problems, i.e. accounts receivable, having too much payroll, not charging enough.
• If you are having personnel issues, continuing to hire the same type of person, may be like standing on a set of blocks.  It may be time to review the set of qualifications needed for the job you have, such as the attitude and translatable skills versus just having experience in the industry.
• If you want to have a consistent marketing approach for your business, you need to have your own content and a calendar to keep you on track.  Just dragging up a chair to stand on, every time revenue dips will only get you close to your goals.

While you will have to be patient, building your business on a solid foundation will always beat sand.

Or a bean bag…or blocks…or a chair.

5 reasons you will be successful

Yes, I know that you are preparing to swap gifts, travel way too far to see family, and eat enough to put you into a sugar coma, however, a brand new year is right around the corner.

Below are 5 reasons you will be successful in 2017:

1. You will find a qualified CPA who can assist you and your decision making year-round, set a fixed amount that you will pay them, and use their advice.  They will save you more money than they cost.
2. You are going to perform a cash flow projection for 2017 and identify potential shortfalls today, not tomorrow!
3. You are going to raise your prices, because you offer a premium product/service!  You will have a better profit, better customers, and sleep well at night.
4. You are going to delegate some of the roles that you currently perform in your business, so you can grow the business, i.e., bookkeeping, digital marketing, payroll, and anything that someone else can do as well as you, for less money than you!
5. You are going to schedule an appointment with your local TSBDC counselor to get a jump start on your 2017 goals!

Go ahead and visit Aunt Edna, attend Christmas Eve services, and hang on to those gift receipts and we will see you next year!

Would you rather eat an elephant, a snowball, or a frog?

I know you have heard this one.  How do you eat an elephant? Wait for it…one bite at a time. We all know the saying, but we often fail to apply this lesson in our businesses. 

Brian Tracy wrote a book called “Eat that Frog.”  He quotes Mark Twain, saying, “If the first thing that you do when you wake up in the morning is to eat a live frog, you’ll have the satisfaction of knowing that’s probably the worst thing that’s going to happen to you all day long.”

Yuck!

And we’ll discuss snowballs in a moment.

Right now, I'm working with a business owner right now that needs to eat an elephant, a snowball, and a frog.

She has a decent size business with 5 employees.  She has been at the same revenue for as long as I've known her and she wants to get over the hump.

She wants to work on marketing, managing her production crew, her admin staff, bookkeeping, and her own day-to-day activities. 

In other words…everything.

• First eating the elephant.

She’s finally letting me really dig in and help her. We have identified her three major goals for the next year and are simply breaking down each area of her business, one bite at a time.

• Next is the snowball.  Well, she’s not actually eating it, but you’ll get the point.

She is taking on the easiest project of her business first, like Dave Ramsey's snowball method for paying off debt. In this case, it is just job descriptions. She feels like this would be easy to work on.  Once she has that done for November, she will have some confidence and see her progress paying off and we move on to the next project. 

• Lastly, she is eating the frog.

Even though she is taking on the easiest project of her business, she is committing to working on the hardest task first each day.   In the case of job descriptions, she works on them for 30 minutes each morning, before answering any email or phone calls.

It's never a perfect process and there can always be a reason to put it off. 

The key is to break down the process into small bites, starting with the easiest project, and do the hardest task first each day.  

This will make the process manageable, allow you to build some early victories, and make each day count toward your goal.   

The New Overtime Rule

Recently a new overtime rule was passed.  Currently, salaried employees making less than $23,660 are eligible for overtime pay IF they work more than 40 hours in a week.  That amount is being raised to $47,476, effective December 1^st, 2016.

This will be a big adjustment for small business owners and they will have some tough decisions to make regarding salaried employees making less than $47,476.

What can you do?

1. You can simply pay those employees time-and-a-half for all hours worked beyond 40 each week
2. Scale back their hours to just 40 per week and still pay the same salary
3. Give the employee a raise to $47,476 or above so they can continue working more than 40 hours per week without overtime pay

You can also use any combination of the three options.

You will not be the only business owner impacted.  In fact, 4.2 million employees will be affected, which means your business could be impacted as well.

It is not time to panic, however, it is time to make some decisions.  Have you looked at your options?  Do you have the correct systems in place to handle those options?  What will be your best cost benefit?  

I would recommend talking to your payroll company or your accountant to make the best decision for you and your employees.

Customer Service: Case Study

We all have stories of what our best and worst customer service experiences are. For some of you, this experience will make you a loyal customer for life or make sure that you never use that company again.

Below are two experiences that come to mind for me.

Worst

Our television service provider, who shall remain nameless (not a satellite company), is somewhat notorious for poor customer service. They have a good product, but if and when you need to have an issue resolved, it can be a train wreck of an experience.

For example, a few years ago we had to close our checking account. We had several monthly bills automatically withdrawn every month: electric, gas, water, cell phone, cable, etc. We called each of them, filled out paperwork, and were told the process for each.

When we contacted our cable provider, after waiting on hold for over twenty minutes, being disconnected, then connected to the wrong department, then finally transferred to a real person, we were told that this would be no problem. “Just fill out this form and send it in, and then next month the billing will come out of your new account.”

Fast forward two months. The billing is still coming from the old account or rather the closed account. And each time it does, there is a “bounced check” fee and late fees. After several rounds of calls and discussions, I was told, in a condescending, you’re-too-dumb-to-be-on-the-phone-with-me-manner, that I should know that it takes several months to change this process and there is nothing more we can do about YOUR PROBLEM.

The icing on the cake - after I refused to pay the fees, they finally managed to go into my new account and take the “late” fees out without asking, but still would not connect billing to my new account. 

Best

On the other hand, I do have an example of exemplary customer service, and it’s a familiar business -Publix.

Several of us could probably give a glowing story or two about this grocery store, however, I have long been a resentful shopper there. You see, I’m a cheapskate. I have been known to squeak a little when I walk. With that being said, I’m also a converted shopper to this place.

Last year I made a quick shopping trip in to get a few items I needed to make gumbo. I had my items in my basket and was ready to check out, when I realized that I had the wrong sausage (not the one Mr. Cheapie had a coupon for), so I set my basket down up front and ran back to get the right sausage. When I returned, my basket was gone. Was someone else too lazy to shop for their own gumbo items? No, the fast and friendly folks at Publix had noticed the unattended basket and put the items back where they came from.

When I asked an employee where they may be, he asked for my grocery list that was in my hand, and took off. He was fast, too. In just a few minutes, he returned with the items on my grocery list, wiped the sweat from his brow, and apologized for the inconvenience.

Now this is not ground breaking stuff here, but I could just imagine if this happened elsewhere, the reaction would have been much different. 

As a small business owner, you have a choice.  An easy choice.  Do you want to provide customer service that is so good that people have to talk about it or do you want to provide service so bad, that people have to talk about it? 

Tennessee Pour House owner honored by Small Business Adminsitration

Angel Carrier, owner of the Tennessee Pour House, has won the SBA Woman Owned Business of the Year for Tennessee.  She was nominated by the Tennessee Small Business Development Center at Volunteer State Community College.

Located at 880 Greenlea Blvd. in Gallatin, Tennessee Pour House uses fresh, ethically-sourced products for its coffee and other offerings. Angel says her goal is to help improve the local and global community one cup at a time.

Angel came to the TSBDC at Volunteer State Community College in the fall of 2013.  Coming from Colorado, Angel wanted to open a specialty coffee shop in the rural community of Westmoreland. She learned steps to open a business in Tennessee, created a business plan and financial projections to reach her goal.

And in the spring of 2014 Angel opened the Tennessee Pour House. She used the business plan and projections to self-finance and hire employees.

After creating a following and reaching break-even, Angel decided to move the business to Gallatin in 2015, to reach a larger population.

Carrier again used the services of TSBDC and did her own research to find her next location and develop a new marketing strategy.

“The TSBDC has been a great resource in helping us start and grow our business,” Carrier said.

"Working with Angel has been awesome," said Charles Alexander, director of the TSBDC. "She is a bundle of energy and has worked very hard to create a niche here in Gallatin.  She has a loyal following and brings something new to our area.”

Since moving the business to Gallatin, Tennessee Pour House has expanded into a breakfast and lunch menu that provides a multitude of organic and vegan options.

Tennessee Pour House coffee is also sold at 40 Kroger locations throughout Middle Tennessee, including the Kroger Marketplace on Nashville Pike near Cages Bend Road.

5 Customers You Need To Fire Today

I have a client, let’s call him Bob, which had a nightmare of a customer.  Bob’s customer was always late on payment, was high maintenance, and was never wrong.  I suggested Bob fire this bad customer.  The problem?  This customer was 25% of Bob’s revenue. Ouch!

After Bob had finally had enough, he bit the bullet and let his customer know they would be no longer be working together.  Bob was professional, gave them a 60 day notice, and even offered some names of competitors (Bob thought that was funny).

Bob’s business took an initial hit financially, however, over the course of only 6 months, he replaced the income.  And Bob was happier than ever.

There are certain customers you have, that are like Bob’s customer.  Let’s take a look at five of them.

·         Whining customers – I’ll bet you that there is one particular customer that you absolutely hate taking a call or email from, because you know that they are going to find something to whine about.  They don’t think they should have to pay a certain price, they want something for nothing, or they just plain ole whine about life.  This customer is not only a drain on your bottom line, but they can be a drain on your mental well-being.

·         No profit customers –Take a look at your customer list and examine it carefully, Odds are you will find customers that do not make you a profit.  In fact, a few may cost you money, just to do business with them.  Unless they lead to larger customers or referrals, they need to be sent away.

·         Frustrating customers - Customers that make poor use of their time create emergencies for you.  If they are always running late or canceling meetings, not prepared to take product or service, or don’t respond in a timely manner, you may need to reconsider this customer.

·         Late paying customers – This customer always has an excuse, but in reality, they are either disorganized or not respectful of your business.  Either way, they may not be a good long-term customer.

·         Know-it-all customers – If you are a graphic designer and your customer insists on using Comic Sans, because “it looks so cool”, you may need to move them to a competitor. 

Firing the customer is never easy and may not always be right for you.  The thing to remember is that you are running your business to make a profit and to provide a product or service that helps others, and that product or service may not be right for everyone. 

The 3 Obstacles between You and Success – Faith, Family, and Friends

Every month I teach a "Starting a Small Business" workshop here at Volunteer State Community College.  I usually get a dozen or so wide eyed optimists wanting to pursue their dream of entrepreneurship.  They tell me they want to start a business so they can immediately call their own shots, spend more time with family, come and go as they please, and do what they want, when they want.

Their priorities are faith, family, and friends and no amount of success will change that!

Then I chuckle a little.  Not out loud.  That would be rude.

We then spend the next couple of hours discussing what it takes to start a business successfully.

I also see the same for businesses that have plateaued or never really taken off. They want to do the same things that the startups are aspiring to, without doing the hard part first.

Of course their priorities should be faith, family, and friends.  Most successful people have those priorities.  But they can’t be your excuse to not building your business, i.e. my business won't take off, because I won't sacrifice my faith, family, and friends.   The truth is, YOU can have both!  

It’s more about what you are willing to do, to truly make those priority matter.

You may have to do some things you don’t want to do, in order to get the things you want.

Doing the following in your business will help you in making your faith, family, and friends your real priority.

• Don’t wait on the economy to take off.  I think we are there.
• Create your goals.  Then create steps to reach those goals.  Then create the team and time to reach those goals.
• Turn off the TV
• Back off golf or “insert-hobby-you-have-justified-here”.
• Exercise
• Read books
• Turn off email, text, and Facebook alerts
• Step outside of your comfort zone, knowing that making an omelet involves breaking a few eggs, i.e. put yourself out there to make sales.

And once your business has a strong foundation, you will then be able to call your own shots, spend more time with family, come and go as you please, and do what you want, when you want, without sacrificing, faith, family, and friends.

6 Foolproof Steps to Reach Your Goals

I remember meeting with one of my very first clients here at the TSBDC.   They owned a local restaurant (no longer in existence.)

Me: So, what is your goal for this year?
Restaurant Owner: Well…to be one of the best restaurants around, I guess. 

Me: Okay, but how much money do you want to make?
Restaurant Owner: You know, a lot. 

Me: Alright, how will you know if you hit the goal?
Restaurant Owner: Well, I reckon if I have money in my account and happy customers, I hit it. 

Me: Hmmm…do you want to write down some specific goals, steps, and measures for that?
Restaurant Owner:  Nah, I have a gut feeling for these things.  Hey, but thanks anyways. 

I swear, they almost patted me on the head like I was a child trying to tie my shoes. 

So why do we need goals?  Goals give you focus, energy, persistence, and make you successful. 

They also need to be written down and visible.  Unfortunately, only 2% of people have written goals and those with written goals are twice as successful, than those without written goals. 

These 6 steps make reaching your goals possible. 

1.  What - What is the goal?  Is it specific?  Is it realistic?  Can it be measured? If not, pick a new goal.

2.  Who – Who on your team is responsible for meeting this goal?  Who will you surround yourself with to meet this goal?  Who are you going to share your goal with that will hold you accountable?

3.  When – When is the deadline?  Sometime this year is not a “when.”  Give it a date.

4.  Where – Where will it be measured?  Is it the profit-n-loss statement, balance sheet, number of customers, number of leads, number of employees, etc.

5.  How – How are you going to reach the goal?  Are there specific steps that you can lay out that will lead you to your goal?   There better be.  Otherwise, that would be like taking a trip to an unknown destination with no GPS.

And most importantly…

6.  Why – Why does this goal matter?  Will it change your business?  Will it change your life?  Will it make you happy?  If you don’t know the answer, start again with Step 1.

And if you need help in setting your business goals for 2016, contact the TSBDC.

Forecasting and Budgeting - Why Bother?

This week, I am turning over the podium to a buddy of mine, Greg Tilley of Weather Gage, LLC.  His contact information is greg.tilley@weather-gage.com.  Greg, it's yours.....

Business owners are busy running their business.  Creating a plan for the coming year is not high on the list of priorities.  A forecast is just guesswork anyway, so why bother?  Projecting an increase in sales doesn’t make it happen!

It’s true that a forecast doesn’t guarantee success, but how do you know if you have succeeded in business if you have never defined success for your business?  When a runner starts on a marathon she may not be certain that she will finish, but she certainly knows where the finish line is and how to get there.  Otherwise, her chances of success are pretty slim.

It’s the same in business.  Your chance of succeeding is greatly reduced if you haven’t planned for success.  That includes setting goals for the year and then figuring out what resources will be needed to achieve those goals.  The forecast translates those goals and resource requirements into a measurable action plan.  The forecast becomes a blueprint that guides day to day decision making.  It influences your response to every new opportunity or setback during the year.  At the end of the year you can evaluate what worked and what didn’t, and make an even better plan the next year.

Once you’ve decided to make a plan, how do you start?  How much time will it take?  If you have never done it for your business (or at least not since start up), then it could take some time.  The good news is that it will be easier each following year.  Also, you can reduce the impact on you and your business if you enlist a professional to help.  Either way, here are the basic steps:

1.       Set realistic goals.  Most businesses set goals based on revenue or income, but goals can also relate to other factors like staff sizing, inventory turnover, operational efficiencies, debt reduction, quality improvement or some combination.  The only requirement is that they are measurable and reasonably achievable (you don’t want to set yourself up for failure).

2.       Determine what, if any, resources and actions are required to achieve the goals.  This could include new hires, equipment, marketing, etc.  Identify the costs and timing associated with each, and whether there are contingencies to consider.

3.       Develop a financial forecast model that incorporates the goals and resource requirements.  At a minimum, the model should include a P&L and cash flow statement so you know if your cash and credit lines are sufficient to fund the plan. (This is where you may want to enlist a professional with experience in forecasting.  They will be able to do it faster and more accurately than you could.)  The model does not need to be as detailed as your accounting system, but it should be detailed enough for you to measure your progress on key revenue and cost items throughout the year.  It should also include a list of assumptions. 

4.       Use the process as an opportunity to question your expenses.  Sometimes, we spend at levels based on prior years, without serious consideration whether a particular expense, or level of spending, is still appropriate for our business going forward.  Where possible, check your ratios against industry norms.  Is your sales and marketing cost in line with your competitors?  What about the revenue per square foot for a store, or revenue per server for restaurant.  Statistics are available for most industries.  Not all businesses will conform to the norm, but it gives you a basis for understanding any variance.

5.       Evaluate your progress against the model at least quarterly.  You might make adjustments in the model as you go, but always keep a copy of your original forecast so that you can evaluate deviations at the end of the year and make adjustments the following year as appropriate.

A plan and forecast can be done any time of year, but the first quarter of your fiscal year is optimum.  Let’s do it!

Fact Based Decison Making

I guarantee this post will offend people, who don’t use facts to support their positions.  And, I don’t give a damn about such people.

The most important factor in making business decisions is facts.  The more facts you have about a business problem, and the better able you are to use those facts, the more likely you are to solve your problem.  The fact that most small businesses fail is ample evidence that few small business owners evaluate facts well.  My business has been around for more than twenty-five years.  So I claim street cred.

There are two important steps necessary in using facts to solve problems.  First, you gather facts.  Second, you identify the facts relevant to your decision.

Here’s the New Year’s resolution I wish for most Americans.  Derive your opinions from facts.  If you have no facts, have no opinion.  Note that facts come first, and opinions come later.  The order counts.  Don’t form an opinion and then search for facts supporting the opinion.

A perfect example of getting the order wrong is the recent Rolling Stone article on an alleged gang rape at a University of Virginia (UVA) fraternity.  The writer started with the opinion that fraternity men commit gang rapes and then proceeded to look for facts supporting her already decided conclusion.  She sought out a story from a UVA coed without checking ANY of the story.  Her conclusion about the gang rape preceded any attempt to find facts.  In fact, she never made any attempt to find facts.  She just accepted a story, using as a lazy excuse, that she was being sensitive to the victim’s situation.  Every jackass has an excuse for laziness.

Within a few days, the story fell apart.  None of the dates from the story were accurate, and the alleged rapist had no connection to the alleged victim.  One need hardly mention that the alleged victim was stone cold, passing out drunk during the incident, not exactly a credible witness even if something did happen.  The story was a fraud in every significant way.  The Rolling Stone “regrets” not checking the facts.  They should get back to their main business writing puff pieces about rock stars.  Journalism isn’t a core competency for them.  They also set back the case against sexual abuse a decade or so.

The order matters.  First you obtain facts.  Then you develop your conclusion.

Second, after gathering facts, determine which ones are relevant to your decision.  The riots in Ferguson are  perfect example of using the wrong facts.  This is a fact.  African American men get shot and killed by the police at a higher proportion than white men.  This is an undeniable, but absolutely irrelevant fact to the Ferguson situation.  Here’s why.

Let’s look at what makes up a proportion.  A proportion consists of a numerator and a denominator.  A proportion is the quotient of a division operation using the numerator and dividing by the denominator.  Yes, this is math.  If you don’t understand these terms, you shouldn’t have opinions about proportions as you are unable to evaluate them intelligently.  In fact, you shouldn’t vote, and you definitely shouldn’t reproduce.  Such reproduction is the root cause of poverty, but that’s a subject for another post.

The numerators in our proportions are the number of people shot and killed by police, in one case African American men, in the second case white men.  The denominators are some measure of population.  In the first case, the denominator is the total number of African American men.  In the second, case, it is the number of white men.  So in both cases, we are taking the number of men killed and dividing by some measure of population yielding two proportions, the first of which is higher then the second.  Thus, something must be wrong.  If all men are created equal, the proportions should be the same.  This is the logic of the protesters, even if the vast majority are unable to express their logic in these mathematical terms.

However, why are these proportions the correct ones to use?  Can we find a better set of proportions to evaluate if police treat African American men unfairly compared to white men in the situations where police officers are attacked?  I submit there is a much better set of proportions to measure, which entirely change the analysis.

We are dealing with a situation where an African American man attacked a white police officer and got shot and killed.  This is undisputed from witnesses and a hospital report on the police officer.  We find, in the situation, the best numerator and denominator to use.  The numerator should be men, who have attacked police officers and been killed.  In one case, we use African American men, who have attacked police officers and died.  In the second case, we use white men, who have attacked police officers and died.

The denominator will be the population of men, who have attacked police officers.  In one case, the denominator will be African American men, who have attacked police officers.  In the second case, it will be white men, who have attacked police officers.  These proportions best show if police officers treat African American men differently from white men in the specified situation.  Are the proportions the same?  I have no idea, and you don’t either.  I also don’t plan on attacking a police officer to gather statistical evidence.  I suggest you forgo such an analysis as well.

The statistics aren’t easily available, if available at all.  No facts, no conclusion as noted earlier.  We can’t evaluate if African American men, who attack police officers are killed disproportionately compared to white men, who attack police officers.  Note the difference in conclusions when you seek the appropriate facts.  No, you don’t always get an answer, but you avoid an incorrect answer such as the one reached by the Ferguson protesters.

How does this apply to making business decisions, as this is allegedly a business blog?  Good decision making comes with understanding the process and practice.  The learning process for making fact based decisions can be painful, if you practice only on your business.  Pain means losing money.  None of us can likely affect the Rolling Stone idiocy or the Ferguson and related protests, but we can practice our fact based decision making risk free on national events.  That’s free.  We can also ridicule those, who can’t make fact based decisions.  Why do that?  Because it’s fun.

Let’s debunk one more myth.  All opinions are equally valid as in, “That’s just my opinion, man.  We’re all entitled to our opinions.”  Yes, we are all entitled to opinions, but many opinions are simply incorrect and of no value.

For example, if in your opinion, two plus two equals five, you are simply incorrect.  The fact that two plus two equals four contradicts your opinion and renders your opinion worthless.  An opinion unsupported by facts is simply incorrect.

Do I sound angry in this post?  Of  course I do.  Much of what ails this country comes from poor decision making in the absence of relevant facts.  Find a national problem and apply fact based decision making.  You’ll be angry as well.  Next time, I promise to take my distemper shot before writing.

Thanks for reading!  As always, please visit the main S&K web site at www.skcpas.com for real tax and accounting advice.  Also please like the “How to Screw Up Your Small Business” Facebook page.  I post shorter pieces there.

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

JHB – BUSINESS SOFTWARE THOUGHTS

Once again I turn the microphone over to Jeff Becker.  Take it away Jeff......

If you are reading this, then Frank may have run out of topics to apply his snarky humor too. That really sucks, because I enjoy his writing over mine. So here we go. Prepare to be bored!

Software, why do we still need so many different programs that ultimately hold our information hostage from other programs? There are many reasons, but there are three main reasons in my opinion. They are as follows:

1.       Any good piece of software started out small and had a great idea, only to be bought by a larger company and subsequently screwed up. You are left feeling like a hostage.

2.       No one was addressing a particular need until a big company showed up…..thought it was a growth area….over sold it….and then screwed it up. You are left feeling like a hostage.

3.       Who the hell can talk to a programmer, let alone want too!! I finally kicked the habit of communicating by grunts and clicks! There is no way I am stepping backwards and talking in 1’s and 0’s!

There are many other reasons, but it all boils down to what I believe is the mind set of all big software companies. They know…..once you have stuffed all that information in…..gone through the learning curve of how to effectively use it……they now have you hostage! The entire process of talking to the sales team and listening to how they were going to streamline my business….always left me frustrated. After I committed to the package…..went through the learning curve of using it….it ultimately didn’t work as advertised. Then I had to deal with product support or a consultant! Can you say extra cost? Now this happened over a period of 20 years, so I am definitely carrying some baggage.

I eventually came to understand that I was asking for something that the infrastructure of servers and available networking protocols, just really couldn’t handle it. Meanwhile I was sold that it could. If I had needed free health care at that time...I would have shot the reps and gone to prison. I didn’t think they would understand me there, so I set that idea aside until I got a bit older.

I say watch out software companies! Business owners are getting tired of being guinea pigs or hostages. I wish I had all the money back that I spent on computers and software, thinking that their solutions would simplify my life. They all did in some little way, but the fact that none of them talked to each other just made me feel like a hostage and created a new manual process. Just the act of having to import and export something is a process that takes time and attention.

One good thing came out of all those dollars wasted. It made me really think through and determine what my process needed to be, if such a piece of software existed. Let me tell you a bit about my learning curves and how I incrementally became paperless.

MANAGING CONTACTS

The first area I wanted to streamline were all the contacts I had. I owned a specialty construction company and I worked all over the world. I would subscribe to a bid service…..mine data and manually enter the contacts into a piece of software called Sharkware. It was one of those contact managers like Goldmine. Sharkware was later screwed up by a big corporation. Anyways, it was great. I could talk to a lot of contractors, keep current with all those conversations, make links to people that knew each other, and then I could pick up where we left off at any time. People were amazed with my memory, little did they know! This was in the 80’s.

Outlook eventually became the dominate contact manager, but by no means did they create the market. The problem with the solutions available on the market, to include Outlook is -- they don’t integrate easily into other programs. Outlook now provides some integration, however it still doesn’t play nice with other programs with ALL of its features. So, you are held hostage with some of your information if you leverage it for all its capabilities. Don’t even get me started on what it takes to share this information with other users. Outlook is now reducing the many great features it once had. It’s starting to look like a downward spiral into being broken up into more features that now have to be bought.

They do have some hooks for programmers to push and pull data, but ultimately you cannot leverage ALL of the information it has with other programs. You become a hostage and your systems are separate. We are still at a point where sharing the full power of Outlook or any other contact manager will still require this information to be manually placed into your other systems. Have you ever changed your address with a big company, only to still get your mail sent to the old address? This is why. They can’t just use one system either!! So I simply ask, “Why can’t we change contact information in one place and have it register in other systems?” It makes me start calculating the cost of ammo to accomplish my revenge on all the decision makers at Microsoft.

INVENTORY/PURCHASING/ESTIMATING

Every company has some form of inventory. If you buy something from a manufacturer…or a supplier….then go install it or sell it…you have inventory. All three of the above areas absolutely need to be pulling from the same database. This will tie together the purchasing component when it’s time to re-order.

The problem is that accounting packages don’t do it well and standalone inventory solutions hold some important part of your information hostage. Not to mention the inventory sitting on jobsites, riding in trucks, and the list goes on.

Estimating programs absolutely don’t like to work with other programs. Most employees that are out there creating estimates, are using spreadsheets full of information the way they want to use it. I think a bit differently on this subject. I think we should all go to our Vendors and ask for a spreadsheet of everything they sell. Then simply import this information into your software and have it all in one place for the company to draw from. Use each vendors naming and numbering conventions. This simple act makes talking to your vendor easier and purchasing a snap. The minute you call it something else, you have just made your process less efficient. Now all the estimator needs to do is break up the vendor’s items into the many different units they will need for bidding purposes. They will also need a more flexible calculator and the ability to bundle items up to address the many ways they have to bid cost and units. Easily programmed.  

The biggest mistake I have observed is that a common naming convention isn’t used. Therefore your supplier may sell you something called a “Widget”, everyone else in the company calls it a “Thing-a-ma-bob”, and you sell it to the customer as a “pet rock”. Inventory is the #1 contributor to most organizations digital nightmares. The office grind of disputing invoices, returning unused parts, and trying to get this tightened up into a “real time” report is virtually impossible with the solutions today, especially if you re-name what the vendor is selling you. This problem is as much approach as it is the program.

MOBILE COMPUTING

There has always been hope for putting a mobile device into the hands of your employees and having them record their day in “real time”. You can do it now, however anything available today simply doesn’t do everything you need it to….and/or….want to track. They all force you to use the data flow the way they think you need and getting the information to flow requires that you to sometimes enter the information in a format that just doesn’t allow recording the data the way you want. It usually requires you to create a new name for items in order for you to shove your information into how the program was designed.

Mobile platforms have a long way to go. If you consider what is available on a PC today…..after having been around for decades….it’s logical to expect the same from all of these mobile solutions. Why can’t we have some flexibility in creating fields that we need? It’s because all of these mobile solutions are simply an extension of the PC software that is already frustrating you! How many mobile apps did you buy when they first starting coming out? How many do you buy or even use today? I refuse to buy a single app now. They still don’t have what I need.

I once used a custom programmer and created a piece of software, back when Palm Pilots were the rage. It worked great! However we all know the story of Palm. I was not only a hostage, but I became an orphaned hostage. I wish I had that money back. Screwed again by a big corporation’s opinion of what I needed for a phone. I went back to locked down spread sheets in hopes for a better day. However, I did achieve real time reporting!!

I am really excited about the integration of mobile software into the operating systems and cloud computing finally being an option. It really makes the cost of custom programming enter back into the affordable range.

 

DIGITAL PAPER/IMAGE MANAGERS

A lot has happened here with PDF being the format winner. Making it feel like paper is where the image management software war is still going on. Many years later, they all still have problems. The big problem is….that it is still a piece of paper and still needs data to be entered by a person. I gave up all hope in OCR technology. It just doesn’t work.

I think a paperless office is the best hope for even the dis-organized of the world. However, there has to be a naming convention for it to succeed. At least link it to a transaction, so it even the disorganized can find it.

The other issue is marking up the document like you would a piece of paper. There are some good products for this, but it is critical to pick one that does it well. I have used two in particular. Paperport is the one I have used the longest, but it is getting screwed up by a large organization. I am almost exclusively using Bluebeam right now. But…..I just received news….they were bought by a large organization in Germany. Who knows what my fate will be. The important factor in picking your document manager is to make sure they don’t convert your PDF’s into some proprietary file format. Otherwise you will always need their program to mark it up and read the files. “Neat scanners” is one of those products you should definitely avoid.

I also required all of my vendors to send all paperwork, via email. This established a custody chain, and a secondary backup system just in case. Tell them that they won’t get paid until they do. It is your company requirement. I only received 2 or 3 vendors that griped about it. I allowed them to fax it to me because my faxes were automatically converted to PDF’s and emailed to me.

There is a solution available for PDF’s, however moving to a paperless office will require some changes in how you do things. It may also require you to change some personnel that are going to resist the change. This is the number one place you can reduce the workload your employees currently have or possibly reduce the number of employees. Remember….most employees won’t figure out how to make their job easier…they just chalk it up to what they hate about their job and slog through it each day. PDF’s paired with automated “real time data capture” is the key to a well-functioning paperless office. When done right, it will feel like paper. PDF’s should only be used as documentation…..software should be capturing the digital information ONE TIME…and then making it flow to the many places it needs to go, without entering it multiple times.

I would also like to add, that your office staff should have a second monitor. Since a PDF is still going to be a piece of paper, they will need to be able to view the PDF on one monitor, while reviewing, marking up, or entering the data on the other monitor. This is what makes a PDF feel like paper. Switching back and forth between a screens on a single monitor is what makes the process seem burdensome. I can go on forever about how I work with PDF’s, but this is the basics you have to have.

ACCOUNTING PACKAGES

This challenge was the subject of many nights of Jack Daniels fueled rants! However, it was one of my proudest moments when I finally discovered the solution and broke the code of accounting packages. When I was in a very large growth spurt, I invested in a $40,000 accounting package that was going to do it all. I learned once again, that throwing big money at something didn’t work either. The more expensive software options, still don’t get it right. They can be more confusing than the more basic solutions. They involve more screens and will most likely handle the data differently than you would. If you want to tweak the system, you have to pay a consultant to do it.

Anyways, it was my attempt to combine estimating, purchasing, asset management, and inventory. Then…..after I loaded the information…hired the local supporting consultant….I was still unhappy with it. I just wasn’t happy with how I had to enter the data and how limited it was on the flexibility to crunch the data many different ways. Yep, I had more spreadsheets to export to.

 I bought the program knowing that I had to make some changes so my business would fit into the program the way ithandled information and subsequently spit out its reports. BIG MISTAKE!! Never settle for a system that requires you to change the way you want to track your business…..or requires you to rely on a consultant to make customized changes. I eventually threw it out and went back to Peachtree!

So here is the hustle in my opinion. The software companies wrote their software and then made recommendations as to “what size” company needed “what solution”. This was all based on who could afford what price point of course. All a CPA had to do was parrot what the software companies advised about their product. This eliminated risk for the CPA. It then set the stage for the large companies to simply buy up any competing company that carved out too much market share from them. This is why we don’t have many options. CPA’s don’t want to buy a bunch of software in order to perform their tasks for clients. As long as any the big boys buy up the small guys who have a great idea, then they get the CPA as a free salesman. I can’t tell you how many business owners tell me that they use Quickbooks, because that is what their CPA said they needed. Ultimately I feel as though I fell prey to the big software company plan.

Now here is something you need to understand about software. In order for software to work its magic, they use a backend database. A simpler explanation would be to say that they create tables. It is the same as using an Excel spreadsheet. Think of your larger spreadsheets and think of each tab as a programmers table. As you create a new tab within the workbook, you have just created a table of information. When the different tabs need to be combined into a single sheet with totals information, then this is when programming along with backend database beats the flexibility of an Excel spread sheet.  They can do the same thing in less tabs and have greater flexibility in accessing the information.

So here is the secret…..wait for it….wait for it…..

Open up your accounting package and count the number of digits your chart of accounts will allow you to enter. I think Peachtree is 17 and QuickBooks is 25. That is a REALLY BIG number. Try typing that number into excel…excel will even choke on it. 2,500,000,000,000,000,000,000,000 ….. That’s a big number!

So what does that mean? It means that both processes need to know what you want to track and how…in order for them to work. It also means that programmers have over built their software and we are not leveraging the smaller programs to their full potential. I chalk this up to both sides miscommunicating. How information needs to be organized is a big deal. Programmers keep adding features, however it starts making the software very complicated as they do it. This is a problem for the mobile computing software integration. In most cases, a re-write is necessary for many solutions out there. Remember, you are a hostage and getting them to spend the money to do it will be a difficult. They will instead choose to slowly roll out new versions each year, that give you access to a few more areas you have been screaming for.

Back to that big number in your chart of accounts. If you count the number of customers, number of vendors, number of jobs, number of cost codes for each job, now add the number of items you might buy from each supplier…..add to it all the other GL#’s you put cost to……now come up with a safe number of new GL#’s you will need each year. You will quickly see, that after 4 years you still haven’t maxed out the chart of accounts. Remember that all business owners assign a number to everything we track. So if we have ONE table that can accommodate that many numbers….why not just use the one table and forget about the other modules and its features…..meaning you just eliminated a bunch of tables to inter-relate. Programming becomes easier when trying to integrate a mobile solution. Better yet….why not just write your own and get big business out of the hostage taking business!

The solution is putting all that you track into the 18 or 25 digit number. The software will spit out any report you want as long as you do this. You can actually use a smaller accounting package for a much larger company if you do this. The industry would like you to believe differently. Just roll up the items you want to hide for financial or other reporting purposes.

So another way to say it is you don’t need all of the modules these base accounting systems are selling you. Leverage the chart of accounts differently than an accountant would typically have you organized. Try it out once and you will see what I mean. You have to understand, the accountant is setting up your chart of accounts, so they get the information that theyneed! Why not design your own chart of accounts, so it is something you can make sense of.

Owners need to address this part of their business. They are paying too much for these larger systems and many are not getting as much out of the smaller ones. Accounting packages are a backend system. They only organize information for reporting. I say organize it yourself, but make sure your accountant has the accounts he will need.

THE SOLUTION TO BRINGING IT ALL TOGETHER

Real progress has been made in programming. It used to be, that a programmer had to write very large strings of code to accomplish a simple mouse click. Now those programming languages are large pre-written modules that are simply cut & pasted or dropped and dragged to where they belong. Since the operating system now incorporates all the basics, a simple programming tie is all that is needed. So what I am saying is this…..custom programming makes sense today!! I did just simplify the programmer’s job, however it has become a lot simpler than it was. If you leverage the potential of your chart of accounts, create a road map of how you want to track your business, then you just made the programmer’s job easier and less expensive.

The mobile infrastructure is now here as well. Operating systems now have all the features that were considered “custom” simply built into them. Things like GPS, Camera, touch screen, and Cloud computing are all part of the operating system. Moving data and networking is no longer an issue as well. This sets the stage for capturing “real time data” when the work happens or when sales are made. If paired with a backend accounting system that is simplified like I explained above…then the act of stuffing the data in automatically, really reduces the programming costs. You tie this in with PDF’s being able to be tied to a transaction and the storing and sharing of contact information…you have just simplified a large part of your business.

Now here is the catch. Programmers don’t understand your business needs any more than a CPA or lawyer. They don’t want to do your job, nor do they feel like it is their place to advise you on how to do it. They have a job, they do it well, and you probably won’t pay them to run your business.

Custom programming your perfect system is the way to go. You can do it in small steps…or you can take a few years and make the change all at once. You can even make the programs you have now, talk to each other. Then start designing your dream program.

You can even have the systems run in parallel until you are ready to make the switch. The bottom line…explore custom programming to solve the processes that make tasks require multiple people. You may eventually start to believe that your “get it done” employees…can really handle a digital world. The programmer’s job is to make it work before you ask them to use it.

IN CLOSING

If you read my previous post and are now reading this post, you can see the direction I am heading. Helping small business owners fix clunky processes is my future. I have partnered with a programmer that has been doing this for a few decades and we are like minded and know we can fix this issue. He has been listening to these complaints for years and has the bulk of these solutions already written. We just need to tailor them to a business owner’s needs. I am now confident that our business model can compete with the solutions that are out there with me interpreting the client’s needs. I think business owners are ready to really fix the problem.

This was not meant to be a sales pitch. I simply felt as though this was the biggest challenge as a business owner I ever had. I didn’t want an office full of paper pushers that didn’t earn revenue. Having wrestled everything from DOS to windows 8.0, figuring it out consumed too much time and a lot of money. The answer was always there, but I just didn’t know enough about the programmer’s side to see how to communicate my vision without it costing a bunch of money. This exposure to programming has given me the last piece of knowledge I needed to streamline the software problem we all face. I also love to talk business and Frank’s blog is a great place to pass on my experiences to those of you that have the same passion for efficiency.

I never did get to write my dream piece of software, but I did manage to organize my existing software to reduce the redundancy and automate the many processes that I had. It consumed a large part of my time, but I at least got close. I know exactly how my next company will be organized as it grows.

So I think it’s worth the time and money to write your own software. Eliminate or at least, better utilize the office staff you have. Quit paying for software that holds you hostage. At least take the first step and start making the software you already have start to talk to each other.

 

Good Luck in Business,

Jeff Becker

Jeff@jhbecker.com