Table Of Content
- Chapter 1. What are the Characteristics of an Entrepreneur?
- Chapter 2. Different Types of Business Structures
- Chapter 3. Business Plan Funding Request for Investors and Creditors
- Chapter 4. Venture Capital Fills a Critical Financing Gap
- Chapter 5. Time Management Means Taking Control
- Chapter 6. The Importance of Forecasting Cash Flows
- Chapter 7. Unknowing the Future
- Chapter 8. Guide to Project Planning of Project Closure
- Chapter 9. Marketing for Entrepreneurs
- Chapter 10. The Difference Between Management and Leadership
- Chapter 11. Working With Bad Employees
- Chapter 12. Employee Performance Improvement
- Chapter 13. Releasing Employee Vitality
- Chapter 14. International Business Travel
- Chapter 15. Sales Tip – Beat The ‘Competitor’ Objection
- Chapter 16. Strategic Leadership
Chapter 1. What are the Characteristics of an Entrepreneur?
The goal of improving America’s productivity has spurred an interest not only in studying what makes an entrepreneur but also in entrepreneurship education.
The research is yet to throw up the set of entrepreneur characteristics that can guarantee entrepreneurial success every time. However, much has been learnt about many common traits of entrepreneurs who have succeeded in business. Some myths have also been destroyed in the process.
Section 1. Who is an Entrepreneur?
The French word entrepreneur means:
“One who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods.”
This does give a surprising insight into what makes for entrepreneurship. It highlights the fact that entrepreneurs are typically not “me too” followers, but people who thinks up something new.
They are then able to organize the necessary finance and bring the required degree of “business acumen” to translate the idea into a successful business. Business acumen can be seen as the ability to see business realities as they are and work accordingly to produce results on the ground.
One needn’t be a Harvard Business Graduate; what is needed is an acquired habit of observing realities and drawing relevant conclusions, as they relate to business.
Section 2. Characteristics of Successful Business Entrepreneurs
- Hard Work: Entrepreneurs have no office hours. Typically, they are small businesspersons who have no or little staff support. This means that they have to work long hours to attend not only to all the operational requirements but also the incidentals. An ability to work hard is thus a common characteristic of successful entrepreneurs.
- Health and Energy: Working hard is easier when the businessperson is not distracted by sickness or a lack of energy. Many entrepreneurs start their business as a part time work from home while keeping their employment, a course that will need more than the average quota of health and energy.
- Self Starters: Entrepreneurs prefer to do things their own way, and dislike being told what to do. They have strong ideas on how to do things and are able to make things work. They learn from mistakes and acquire the skill to achieve results.
- Persistence and Confidence: Running a business is not easy; not only is there a learning period when businesspersons make mistakes but there are also events and factors that are beyond their control and that affect the business. To succeed, the businessperson needs confidence in the ultimate success, and the persistence to continue in the face of setbacks.
- Active Persons: Entrepreneurs are typically active persons with an urge to get things done. They hate inactivity and tend to find things to do to further their business.
- Going to the Essence: When necessary, they can go into details required to complete tasks successfully. At the same time, they maintain an overview of the whole operation including an idea of future developments and action programs. They can also understand cause and effect relationships and see a total picture.
- Focus on Business Requirements: While successful entrepreneurs might have their egos, they do not let the egos stop them from seeking help where needed. They measure their success by business results rather than status symbols (which of course they might acquire once they are certain their business will not be affected).
- Emotional Issues: Entrepreneurs are not typically moved much by emotional issues. They might not have much empathy with people’s feelings, instead preferring to focus on what results they produce. While this can be a strength in getting things done, it can cause people problems. As the organization grows and success begins to depend on motivating employees, it is the entrepreneur who can make necessary adjustments who continues to succeed.
Section 3. What Business Entrepreneurship Does not involve
- Undue Risks: Despite the talk about risk-taking capability of entrepreneurs, the fact is that successful entrepreneurs avoid taking unnecessarily high risks. However, they do exhibit the capacity to assess complex situations and proceed in a way that they can influence the results.
- Concern with Immediate Monetary Rewards: Successful entrepreneurs know that business results often take time to appear and are willing to wait, in the meantime doing things that keep the business on course.
Section 4. Entrepreneurship Education
Many universities are now offering courses in entrepreneurship. The better ones also ensure that the trainees gain exposure to the actual realities of starting and running a business. For example, they might have a compulsory project that requires the student to come up with a business idea and convert it into a running business.
The conceptual knowledge gained through classroom sessions combined with the insights gained through such projects can prove an invaluable combo.
Entrepreneurs who have established successful businesses exhibit several common entrepreneurial characteristics such as a capacity for hard work, an ability to see things as they are, learn from mistakes, persistence to continue in the face of setbacks and an urge to remain always active.
They can see complex relationships and work in dedicated manner adjusting to ground requirements and making the business a success.
Chapter 2. Different Types of Business Structures
Section 1. Which One Is the Best?
In the United States, there are various types of business structures, with different advantages and disadvantages.
The most common business structures in the United States are sole proprietorships, partnerships, and corporations. The best type of business structure depends upon individual circumstances and preferences. Some factors to consider are ease of formation, liability, and how each type of business is managed.
Section 2. Sole Proprietorship
In a sole proprietorship there is one owner, who is the sole decision maker and owns all business assets. A sole proprietorship is the easiest business structure to form. The owner reaps all profits from a sole proprietorship.
However, the owner also has unlimited personal liability, which means that all debts incurred by the business extends beyond the business assets to the owner’s personal assets, such as automobiles, savings accounts, and real estate holdings.
Section 3. Partnerships
There are various types of partnerships: general partnership, limited partnership, and limited liability partnership. A general partnership consists of two or more persons who co-own all of the business assets and share decision-making, profits, and losses. All the general partners have unlimited personal liability for the business obligations.
A limited partnership is also managed by one or more general partners, who all have unlimited personal liability for business obligations. But, unlike general partnerships, in this type of partnership there are limited partners, who do not manage the business and have no liability except the amount contributed to the business.
However, the limited partners, despite having no managerial responsibility, can be held responsible for the torts or wrongful acts of the managing partners. This is unlike a limited liability partnership, a newer form of partnership, in which partners are not liable for the torts or wrongful acts of their co-partners.
Section 4. Corporations
Like partnerships, there are several types of corporations, each with their own advantages and disadvantages. A corporation is an entity created by the person or persons who organize it. The corporation is a separate entity from its members, which are called stockholders. The corporation, due to being a separate entity, is subject to taxation.
This is called “double taxation,” which means the shareholders also pay tax on distributions made to them. The liabilities of the shareholders and board members and how the corporation is managed vary with each type of corporation.
The different types of corporations are: limited liability corporation, professional corporation, S corporation, and close corporation. In a limited liability corporation the members of the corporation are provided limited liability from obligations of tort or contract.
Either the members or designated managers operate business activities. Corporations formed by professionals are called professional corporations. Professionals, such as doctors, lawyers, and accountants, may decide to incorporate to gain certain tax and other benefits.
However, these professionals remain liable for personal negligence and negligence of employees. An S corporation does not pay taxes as a separate entity, and all income earned is passed through to the shareholders. All shareholders must agree to apply for S status, which is only available to certain corporations.
A close corporation is owned family members and friends. The shareholders in a close corporation are allowed more flexibility in management. Also, close corporations do not need to adhere to all of the formalities required of other business corporations.
Section 5. Which Business Structure is Best?
The procedures and fees associated with forming each type of business
structure vary. Each type of business structure requires different local and state legal paperwork. Some types of business structures are expensive to form, while others are more affordable. Corporations are more complicated and expensive to form than sole proprietorships and partnerships. With all of the different options for starting a business, it is advisable to obtain the advice of a business attorney.
Chapter 3. Business Plan Funding Request for Investors and Creditors
If funding is needed for the business startup or expansion, a properly written funding request is an important part of any business plan for creditors.
The funding request should be one of the last sections of a business plan. Others sections should reinforce the need for funds to increase profitability. The entire business plan should demonstrate to creditors and investors that securing financing will lead to an increase in profits.
This part looks at the funding request report and the information that it should contain.
Section 1. Elements of the Funding Request for the Business Plan
Whether funding is needed for a business start up or for a current business expansion, there are certain elements that should be included in the request. Creditors that review the plan want to know exactly what the current and future plans are for the business.
Creditors and investors don’t want to guess what the financing will be used for.
Section 2. The following are some of the elements of the funding request.
- The amount of funding, present and future
- Timetable for when financing will be required
- How the funds will be used
- Type of funding
- Terms of the financing
- Future plans and the impact on funding
Section 3. Funding Request Amounts and Timetable
The request outline should have a monetary amount that’s needed to accomplish the goals of the business. It should also show when specific amounts are needed, as well as when the specific amounts are needed. The dollar amounts can be listed as specific dates or specific scenarios. Some examples of specific scenarios are
- Seasonal requirements (Christmas, summer etc…)
- Certain sales levels to cover inventory purchases and/or expenses
- Expansion requirements (market area, store locations etc…)
- Product development requirements (marketing, material, operating expense)
Section 4. Type and Terms of the Business Plan Funding Request
Since there can be various methods for securing funds, the type of financing that the entrepreneur prefers should be spelled out in the outline. The business plan should also be written in a manner that emphasizes the type of funding request.
If the entrepreneur is looking for investor for example, the plan should emphasize projected return on investment. A loan for example might focus on the company’s ability to repay and meet the terms.
The preferred terms of the funding should also be written in the request. If for example the business plan is attempting to attract investors, the request should spell out how the investors will benefit along with the expected return on investment. A better, best type scenario may also be included incase investors or creditors are reluctant to release funds under specific conditions. Be prepared to negotiate.
Section 5. Future Business Plans and the Impact on Funding
Creditors and investors alike will want to know what the future plans are for the business. Explain what the plans are for the company down the road. Where does the entrepreneur expect to be 3, 5 or 10 years down the road? Creditors want to have an idea of the company’s ability to repay their debt in the future. Investors will want to know expected return on investment down the road.
As part of the elements of a business plan, the last section should consist of the company’s financial statements. The funding request should be second to last, just before the financial statements.
It’s important that the financial statements coincide with information contained in the funding request. Any contradictions could result in a loss of confidence in the company’s ability to meet their obligations.
Chapter 4. Venture Capital Fills a Critical Financing Gap
Section 1. Venture Capitalists are Willing to Take Risks that Lenders Will Not
Innovative businesses with quick and high growth potential are the ideal candidates for venture capital funding. A detailed business plan would be essential, however.
Venture capital investors provide private equity capital (cash in return for shares in your company) if they judge that a business has fast growth potential. The funding is typically provided during the early stages of the business. If the growth potential is realized, the investors will be able to sell their shares at much higher prices and obtain high returns.
Section 2. Venture Capital Funding is Costly
Venture capitalists take up risks that more conservative fund-providers, such as ordinary shareholders and banks, are unwilling to accept. Banks typically look for a record of past successful business performance. New entrepreneurs do not have such a business record and will not typically be able to satisfy bankers.
In return for the risk-taking, venture capital companies look for high levels of returns like 40% per annum. If entrepreneurs had been able to obtain needed funds from normal sources, these high returns would have accrued to them.
New entrepreneurs can seek normal types of funding to maximize their returns. For example, small business support agencies might be willing to provide repayment guarantees to banks.
Section 3. Venture Capital Can Mean Loss of Full Control over the Business
Venture capital firms do not just provide equity funds and then stand by. Typically they will have management partners with business management expertise and domain specialists with specific industry expertise. With the help of these specialists, they will exercise some degree of managerial and technical control over the funded business.
This can be a good thing because new entrepreneurs, particularly technical entrepreneurs, might not have the needed business expertise to exploit the full business potential.
Section 4. Who are the Venture Capitalists?
Venture capitalists can be institutional investors seeking high returns on the funds they deploy, or high net worth individuals (called business angels) looking for worthwhile investment opportunities.
There are industry associations for venture capital investors and new entrepreneurs might be able to find an investor through them. In the USA, National Venture Capital Association is such a body. US government also licenses Small Business Investment Companies (SBICs) to provide venture capital support to small businesses.
Section 5. Can all Entrepreneurs Expect Venture Capital Funding?
Venture capitalists are highly selective and accept only one proposal out of hundreds that they receive. Entrepreneurs planning to approach this source need to develop their business ideas into detailed and practical business plans in advance.
Venture investors expect to harvest their investments at high profits within a period of three to seven years. Businesses with the potential to become profitable and grow into a much larger business (able to go for an IPO, for example) during this short period stand a better chance.
Venture capital is a source of funding for new entrepreneurs with a superb business idea. These entrepreneurs might find it impossible to raise money from conventional (or informal) sources. They can get both funding and managerial help from venture capital firms.
Chapter 5. Time Management Means Taking Control
Time management is one of those things that everyone can use in life, especially in business. Taking control and using time more effectively is the key.
Time management skills are the hallmark of those people who are effective in this world and in the workplace. Whatever the endeavor, the people that know how to utilize the proper time management tools tend to be higher achievers. Successful sports stars, politicians, business moguls, students, and parents all know how to manage time well.
The individual who can master even the most basic time management skills and training will find an almost magical amount of additional time available in each and every day.
Effective management of one’s time, even free time management, will bring a feeling of accomplishment and help to relieve the stress so often associated with today’s business world.
Section 1. First Rule of Time Management–Focus on Results
Everyone knows the guy or gal who is out there working like tornado tearing up the back forty on a farm in Kansas. These folks are always in a rush, always moving at a very fast pace and always seem to be in a tremendous hurry to be somewhere. With these folks, it seems there is always something that is late.
These folks that are always in this working frenzy never seem to get ahead in work or life. Very little actual work is accomplished by these folks because they have made one of the the first errors in time management. These people are not focusing on the end result and have not prioritized the important things, the things that really need to be done.
Section 2. The Pareto Principle and Time Management
Originally, the Pareto principle was based on an observation of wealth distribution in Italy, that 20 percent of the population controlled 80 percent of the wealth. It’s basically a theory that supports the fact that not everything is fair in this life. This principle is not a hard and fast law, but a general guideline. The ratio is not always an exact 80:20.
In the area of time management, 80 percent of the time and effort put forth each day produce just 20 percent of results.
Let that sink in for a minute. If that is true, then 80 percent of the results are accomplished with only 20 percent of effort. Now, scale that out to society in general. That’s right, just a small number of people are working and getting 80 percent of the results.
If one could use that remaining time and effort even more effectively, think of how much could actually be accomplished in work and life.
Effective management of time means focusing 80 percent of the effort on the top 20 percent of important, prioritized tasks. Using this time management formula will produce the greatest benefit possible using the least amount of time.
Chapter 6. The Importance of Forecasting Cash Flows
Section 1. Failing to Manage Cash Flow Can Lead to Business Failure
A business that is profitable can still fail if it does not plan and manage cash flow. Small business are particularly vulnerable, especially when credit is short.
If a business does not forecast cash flows it runs the risk of having no money in the bank. Without money it cannot pay anyone. Not the staff or the landlord, nor the utility companies or the tax authorities. In the same way that a car cannot run without fuel, a business cannot run without cash.
Small business owners are specialists in their field, such as electricians, plumbers, writers or retailers. Many do not find it easy to work with money and spend too little time on cash flow planning. It is often left to chance whether there will be enough in the bank at the end of the month.
That might not be too much of a problem for a sole trader working from home. But it becomes a major risk for a small business renting premises or employing staff. These are the businesses that need to have good cash flow forecasting processes in place if they are to survive in a downturn.
Section 2. The Importance of Cash Flow Forecasting
Even a profitable business can suffer cash flow problems. Major customers might take a long time to pay their bills. Or the business might spend a lot of money on new equipment or stock, tying up capital that will be released through sales over a long period of time.
Forecasting three or six months ahead will show whether there is going to be enough cash in the business to keep it going, or whether new sources of cash need to be found.
Section 3. How To Forecast Cash Flow
A cash flow forecast should show the business owner how much money they are going to have at the end of each week or each month. It takes into account all the cash coming in and the cash going out.
The forecast begins with the opening balance – the cash available today, either in the bank or in hand. Added to that is all the cash coming in during the next week/month. Then the payments out are to be deducted. This leaves a figure which is the predicted balance at the end of the week/month. The same process is repeated over and over to build a forecast for several weeks or months.
It is important not to overestimate the amount of money coming it. Better to be cautious, particularly if the business is operating near the edge of its financial reserves. When forecasting payments it is important to remember some costs are paid monthly, or quarterly, or even annually.
Section 4. The Result of Cash Flow Forecasting
Forecasting is simply looking ahead at what the near future might hold. This enables business owners to make good decisions about future finance arrangements. They might need to plan to extend their overdraft or take out a loan. Or they might be able to consider a reduction in borrowing, or have the funds to finance further investment.
Cash flow forecasting is always a good investment of time, and can make the difference between a business succeeding or failing.
Chapter 7. Unknowing the Future
Section 1. Using Sensitivity Analysis to Assess Forecast Robustness
The value of sensitivity analysis is that it changes the conversation from an assumption of a specific future state to an exploration of a multitude of possibilities.
As Peter Drucker famously said: “Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window…”; and yet any investment analysis is based on predictions of the future.
It doesn’t matter if the analysis is about the stock market, the company budget or Aunt Beth’s 401K. Any decision will, to a great extent, depend on a forecast of future events which is almost certainly wrong.
Sensitivity analysis deals with this problem by studying the effect of changes on the variables that affect a forecast.
There are several sophisticated statistical methods to perform multiple variable sensitivity analysis that are beyond the scope of this part, but there are also many instances in everyday business where models are simple enough to use an intuitive approach.
Section 2. A Simple Model
Consider a basic budgeting exercise. Given the volume of sales of a widget, profit before taxes can be calculated if the sales price per piece along with the fixed and variable costs associated to producing the widget are known.
If it is further assumed that price and fixed cost are reasonably stable within the forecasting horizon- let’s say a year- the main variables affecting profit would be sales volume and variable cost.
For example, if sales are forecasted to be 1000 widgets at $1 dollar a piece, with fixed cost of $500 and variable cost of 25 cents per widget, profit will be $250. What does that mean?
Assuming sales and cost predictions are correct, profit is known. But there is only one thing certain about the future. The prediction is wrong.
Section 3. Gaining Insight from Sensitivity Analysis
Instead of pretending to see the future, it is useful to understand the consequences of any deviations from the forecast. Using a spreadsheet, it is easy to produce a two-by-two table showing profit as a combination of sales volume and unit variable cost.
If sales are 1000 units and variable cost is 25 cents per unit, as predicted, forecasted profit will be $250, but if sales drop down to 900 and variable cost raises to .45, a loss of $5 is expected. In this particular case, the budget is robust, since in the sense that reasonable variations in sales and variable cost will still result in a profit. That alone is a great insight.
By inspecting such a table, it will be immediately clear which combinations of sales and variable cost result in profit and which represent a loss. If sales remain at 1000 units or more, profit will remain positive while variable cost increases up to 50 cents. If variable cost remains at 25 cents, a decrease in sales up to 700 units will still produce a profit.
The value of sensitivity analysis is that it changes the conversation from an assumption of a specific future state to an exploration of a multitude of possibilities. Predicting the future is still impossible, but grasping the implications of alternative scenarios enhances the understanding of the risks that are about to be undertaken.
Chapter 8. Guide to Project Planning of Project Closure
Section 1. Planning End of Project for Smooth Transition to Operational Support
Project planning extends to the end of the project to ensure an uneventful transition of the software solution to those responsible for its ongoing operational support.
The end of the project is not with the project delivery of the software solution to the business users but with the transition of its ongoing responsibility to the support team, and project closure is accepted by the business.
In some cases, that may be to the remaining elements of the project team and if so, management must ensure that project deliverables are produced to the same quality standard as if it were to a different team.
Section 2. Project Planning for Project Closure
Project planning for project closure is concerned about ensuring the:
- Completion of project deliverables and transfer responsibility – software and documentation
- Cleanup of the IT environment – test, development, training
- Knowledge transfer to support team – design and function, maintenance tasks and making changes
- Tools and techniques for support team maintenance jobs
- Transition of ownership of training materials especially business user and user administration
- Transfer ownership of current state of benefits realisation – if not complete
- Formal closure of project – release all resources, close project budget, final report
Section 3. Project Planning of Software Warranty Period
Project planning will often schedule a warranty period of somewhere between 30 and 90 days.
This time period is immediately following the project delivery of the software to the business users and is intended to ensure that any unexpected problems can be dealt with quickly and efficiently by the experts who created the solution. This time period is also an opportunity to finish the project closure tasks.
Section 4. Project Closure Tasks
Ideally a successful project will have completed all of the project deliverables, including documentation, to an appropriate quality standard.
However, it is worth noting that the support team may believe that the documentation is not good enough for their purposes.
This is primarily because:
- Focus for project team is to create a descriptive record as required by the project manager and the project quality plan
- Expertise gained during course of project leads to undocumented assumptions when writing content
- Project schedule may have been aggressive resulting in shortcuts taken with documentation or being out of alignment with final solution
- Project team members focused on finishing tasks and moving to next project
Support team focus will be:
- Complete set of documentation deliverables that are written clearly and comprehensively and with few or no assumptions about knowledge of solution
- Gaining practical knowledge of the solution, often by involvement during testing
- Knowledge transfer sessions with the project experts to seek direct explanation of the solution and any clarification of document deliverables
Business focus will be:
- Testing has completed satisfactorily
- Project has formally completed all of its deliverables and has met its scope and objectives
- Delivered solution is stable and works as expected
- Training material is up to date and accurate and can be easily updated as needed
- Business documentation is completed in support of solution
Section 5. End of Project
Projects must complete the project closure tasks to end the project well. If not, there is the risk and perception that the project team will have runaway and left someone else to clean up the mess. A successful project will ensure that project planning includes all of these project closure tasks.
Chapter 9. Marketing for Entrepreneurs
Section 1. Three Helpful Tips for a Stellar Elevator Pitch
These three business marketing tips can help those creating entrepreneur marketing plans develop solid elevator pitches to attract more high-quality clients.
Targeted business marketing is incredibly important for entrepreneurs trying to get the attention of the right potential clients that will really benefit from their products or services. A focused, practiced elevator pitch or elevator speech is essential to a comprehensive marketing portfolio.
An elevator pitch is essentially a quick snapshot of someone’s business that can be delivered in a maximum of 30 seconds. The concept of elevator pitches comes from the following scenario:
An entrepreneur gets in an elevator on the 20th floor of a building after a networking event or cocktail party and sees a very put-together man or woman that fits the profile of a potential client. After glancing at the entrepreneur’s name tag, the person asks, “Hello, [Entrepreneur’s Name], how’s it going?”
The entrepreneur replies, “It’s going just fine, how’s it going with you?” After the potential client responds, the typical next usual question – because all networking events inspire curiosity – is, “Where are you from?”
This is the obvious opportunity of marketing for entrepreneurs, and the point at which the elevator pitch is delivered and business cards are exchanged, before the elevator hits the first floor.
The following three tips can help a business owner in any industry come up with a great elevator speech.
Section 2. Prospective Clients Equate Product or Service Quality with the Quality of the Elevator Speech
Any potential client wants to feel confident in a product or service before investing any significant money. The first step in marketing for entrepreneurs, before a relationship has been formed, is to come up with a really solid company statement – the elevator pitch – that will set the stage for confidence in the product or service being offered.
Prospects judge the quality of an idea, product or service and thus the quality of the company on the quality of the pitch. Therefore, any company’s pitch absolutely must reflect exactly what the company does, where it does it and the type of clients that benefit.
Weak ideas and weak businesses will often be weeded out in the 30 seconds it takes to deliver an elevator pitch.
Section 3. Great Elevator Pitches Answer Very Specific Questions
Fine-tuned elevator pitches are as part of diversified business marketing plans are short, sweet and focused. They need to answer the following questions:
- What is the product, service or project?
- What are the benefits of the product, service or project to the investor or buyer?
- Who is the entrepreneur, and why is he/she likable, skilled and trustworthy?
Section 4. Benefits are the Key to a Great Elevator Pitch
Successful business marketing is all about highlighting key benefits the company provides to its clients, so they need to be front and center in any elevator pitches.
A successful elevator speech will show how the business owner provides services and products, but more importantly, the types of problems that these products or services solve for customers and clients.
A great way for a business owner to start drafting a stellar pitch is to make a list of a few benefits his/her services or products offer to customers and clients and then think about how those benefits tie into the mission of the company. The focus of any elevator pitch should be on the customer and not centered around the concept of, “Me, Me, Me.”
Section 5. Two Examples of Outstanding Elevator Pitches
The following two are examples of quick elevator speeches that stress benefits and answer the important questions most customers, clients and investors will have about a company.
- For a computer repair shop catering to the needs of the home user – “I’m [Name] with [Company Name], and we make it our business to help those with PC’s learn how to get the most out of their computers and keep them healthy on the Internet.”
- For a management consultant– “Our service team specializes in on-site business strategies and business development services. We provide consulting for companies in the financial industry and help them with long-term planning so they can stay productive and continue to grow.”
Elevator pitches are excellent ways to regularly practice important business marketing and an essential part of an entrepreneur marketing plan. They need to be memorable and quick and used in any appropriate situation to get the word out about the business.
Chapter 10. The Difference Between Management and Leadership
Section 1. Skills for Effective Business Leadership Development
Discover the skills needed to be a successful manager with leadership quality characteristics. What is the difference between a manager and a leader?
Managers and leaders are not synonymous. An effective leader doesn’t have to be a manager. Likewise a manager doesn’t necessarily have to be a leader. Yet the most effective managers generally have some leadership traits.
So what’s the difference between a manager and a leader? What does it take to become an effective leader? Read on to get some of the answers as to what makes an effective leader and a better manager.
Section 2. Business Management Style of the Past
In years past work life was much simpler. An employee would punch the time clock, do what was expected, punch out and go home, there were no vision or mission statements. The manager’s job was easier because if an employee didn’t do their assigned job they’d dismiss the employee and find someone else. Often managers used coercion to get the job done.
Section 3. The Need for Leadership in Management for the Present and Future
In today’s world things have changed dramatically. In order to compete in many markets today, organizations need managers to get full commitment from their employees. More recently the debacle of corporations through unethical business practices such as Enron created even more need for strong leaders with integrity. Leaders today need to lead with integrity, competence and ambition. In today’s world managing through coercion will certainly lead to disaster.
Section 4. Born Leaders or Leadership Development
Leadership is not something that a person’s born with. In fact one important leadership trait is competency. To be an effective leader when it comes to managing people, the manager must be competent at their job. Gaining the respect of subordinates requires that the manager be competent at their job. Many aspects of competency require knowledge through experience.
Section 5. The Difference Between a Manager and a Leader
- Managers, that are not leaders, do things by the book and think inside the box. Leaders improvise given the situation at hand and will weight their thoughts by thinking outside of the box.
- Managers will make decisions based on pure facts. Leaders will consider the big picture and take into consideration the effects it has on their employees.
- Leaders are empathetic towards the people they lead.
- A leader has a precise vision and that vision is conveyed to their employees.
- The leader will pull or attract their employees to that vision, not push them into getting the job done through coercion.
- A leader will get their employees to buy into their vision with enthusiasm and rigor.
- A manager does what’s best for the bottom line, regardless of the consequences. A leader does what’s right.
Naturally an organization needs managers, but the most effective type of manager is the person that manages through leadership. A good leader will create an atmosphere of teamwork because they are drawn into a leader’s enthusiasm, not because it’s a requirement.
Chapter 11. Working With Bad Employees
Section 1. Disruptive Workers Can Raise Stress Levels in the Office.
Not every employee is squeaky clean. In fact, they can be worse than the boss.
It’s true that many bosses these days aren’t winning many popularity contests. But guess what? Employees aren’t exactly the most joyful or hardworking people either, and they are everywhere.
In banks, coffee shops, restaurants and just about every other type of establishment in which people are interacting with other people, there’s bound to be one rotten apple. This part narrows the list down to some common types of bad and disruptive behavior exhibited by employees.
Section 2. The Latecomer
For whatever reason, this individual doesn’t show up to work on time and they can’t be held accountable because of external conditions beyond their control. On Monday my toilet overflowed and I had to call a plumber, on Tuesday the bus drivers were on strike, on Wednesday I got a flat tire and I didn’t have a spare so I had to call a tow truck, and on and on and on…..
Section 3. The Slacker
Goofing off in the office takes many forms, and this guy/girl knows them all. Coasting through the day by taking time to write non-work related e-mails, playing online games, disappearing for two-hour lunches and answering personal phone calls is very irritating to employees who are busy with company business.
Section 4. The Complainer
These people don’t have a nice thing to say about anybody or anything. Life stinks for them, they want you to know just how much it stinks and are a tremendous drain on everyone else.
Whatever you do, do not tell them something like, “It’s not that bad,” or “Cheer up!” because they will interpret this as a sign that you are not taking their pain seriously, and will complain even more to convince you things are really as bad as they say.
Section 5. The Thief
Kleptomania is not confined to large department stores. Whatever can be inserted into pockets and handbags is ripe for the picking. Believe it or not, some employees crave pens, pencils, even sticky notes. The root of this behavior is hard to pin down, but it might be because the employee hates the boss or a more sinister mental complication could be at work.
Section 6. The Comedian
Hearing jokes and amusing anecdotes is enjoyable most of the time, but the office clown doesn’t know where to draw the line. Not everybody will be receptive to any or all kinds of humor, and besides, isn’t there work to be done?
Section 7. The Hypochondriac
This is just annoying, plain and simple. This person will refuse to handle anything you give to them. He or she will not touch doorknobs, a computer keyboard or any other office equipment and will moan and groan about the smallest injury or ailment. Not surprisingly, they aren’t at work too often.
Not only do these people infuriate co-workers and the boss, but they are harder to fire because if a bad employee even senses that he/she is about to get the axe, they will launch all kinds of legal procedures on their behalf to protect themselves. But that’s not the worst of it.
A bad employee is tough to spot, and can be deceptively charming and/or hardworking during an interview.
Remember, they are everywhere. You’ve been warned.
Chapter 12. Employee Performance Improvement
Section 1. A Manager’s Responsibility
You’ve given a written reprimand and an improvement plan has been signed by both you and the employee.
Now, you sit back and wait for improvement, right?
Actually, a manager may work harder to help an employee succeed during the improvement timeframe.
In Bringing Out the Best in Others, Thomas Connellan coaches managers that in order to change an employee’s behavior, a manager might have to change his or her behavior.
When we place someone on a disciplinary probation or development plan, managers often make the mistake of focusing solely on documenting positive or negative employee behavior rather than continuing to coach the employee. Although documentation is necessary when the behavior is not changed and a further step in the discipline process is needed, in most cases managers should hope that their employee can successfully improve.
Section 2. Identify the Behavior For Change
In the employee discipline meeting, the behavior for improvement should be well identified for the employee, according to guidance from your human resource staff.
Quite often, the problems with an employee’s performance are identified as a need for improvement of a competency (i.e., organization, communication, attitude, team work) or a task-related skill (i.e, data entry, written communication, public speaking, relationship management).
Section 3. Provide Specific Examples
Once the behavior has been clearly identified for improvement, it’s important to provide specific examples of poor past performance and positive future expectations. It’s difficult for an employee to know what positive attitude looks like, for example.
First, show a specific example of poor performance. “Last week when you told the team that the project was not worth working on because it would just be rejected by upper management, your attitude was not supportive of the hard work of the staff or the goals of the department.” Then, describe your positive future expectations. “In your interactions with team members, I expect that you will support decisions made by me, by the team and by executive management by focusing on creating and implementing a work plan.”
Section 4. Focus Your Feedback
Frustration, anger, disappointment or sometimes the tension of the disciplinary meeting can change the personal relationship between the manager and employee. Many times a barrier is constructed where the two feel that conversations are not allowed outside of the scheduled performance discussion meetings.
But, if successful improvement of the behavior is your goal, it is crucial that you continue the relationship with the employee in addition to documenting, as needed. You may even increase feedback during the improvement period.
For example, provide positive feedback to reinforce any improvement in behavior. “I appreciate that you listened and were engaged as the project was presented to the team and that you immediately led the team in brainstorming ideas to get the project started.”
It’s important to reflect the employee’s positive changes in your documentation, but, more important, do not neglect to communicate positive reinforcement to the employee. This assures the employee that you are interested in his or her success and are providing specific direction on how to successfully change behavior.
In the event that discipline problems are more serious, documentation and direction from your human resources staff is critical in any employee intervention. However, for most employees, the process of pointing out problem areas, providing specific examples of negative and positive behavior, and supporting efforts with appropriate feedback will help improve performance.
As their manager, with a little dedication and effort, you more than anyone have the power to help employees succeed.
Chapter 13. Releasing Employee Vitality
Section 1. Micromanagement can Defeat a Philosophy and a System
Even today there still is a frailty and uncertainty of the understanding of what it takes to be involved in managing others in an organization.
Business schools steep their students in a sound curricula but a philosophy alone is not enough. To be effective today, managers must inject systems theory and systems thinking into the cultures of their organizations. It is through these systems and processes that values get institutionalized and until that happens, organizations are only just getting started.
Section 2. What has Changed?
Today, the number of years a company has been in business, its size, location, financial assets, and even technology all mean much less than they once did. Look at the Pontiac brand as an example. Doing the same things faster is no longer a substitute for doing the right things. The development of new knowledge and deploying that knowledge with speed is the new charter for management.
There is a new paradigm that goes with this charter and that is resisting the temptation or even habit to micromanage and over-control. This is simply because managers are often able to do relatively little to motivate people but they have that capability to do 1000 little things that can demotivate them. Demotivated people typically do not deploy new knowledge.
Section 3. Can this Process of Building an Organization be Sped Up?
Just as a biological organism has a drive to reproduce itself and a fear of death, organizations are also driven to replicate themselves and grow. They do this at their own pace and with their own internal models of “what good looks like.” What is important for a manager is these forces can only be facilitated, not accelerated.
Holding a sun lamp over a seedling will encourage more rapid growth but only to the point that the plant can assimilate that solar energy. There is a point of exposure beyond which not only is further exposure not beneficial. It actually starts to inflict more harm on the plant than if it were not there at all. The continual added stress can actually cause the plant to wither and die rather than grow and this same principle can be applied to an organization.
Many companies that need to generate more capacity do so but often through the limited view of a small group in management with their own preferences and prescriptions. This is not new. Going back to the days of Frederick W. Taylor, companies have continually tried to “engineer” human contribution. Companies predetermine the required levels of performance that a firm requires and then production roles are designed around those requirements.
Then, after all these predictions and prescriptions have been made, people are asked to conform to them about their own levels of contribution. They are frozen into their functions with little to no regard for the potential lost opportunity of perhaps a better way to do things.
Section 4. The Role of Self-Determination
In the emerging world of greater self-determination, this type of engineered typecasting can often be described as a form of foolishness. Instead of encouraging the expanding capacities of people, they are often confined to the predetermined boxes of these predictions.
There is little emphasis on the creativity of the people nor are there anticipated levels of contribution that are higher as a result of their becoming fully engaged in their work. That’s where the solution lies. The fear that people will not accomplish as much when left on their own is a considerable limiting force to reaching that solution.
Chapter 14. International Business Travel
Section 1. Do Business Travelers Have to Pay Foreign Income Taxes?
Most savvy international business travelers are well aware of visa and immigration requirements. Foreign income tax reporting requirements are still a mystery to many.
Few business travelers to the U.S. are aware that under U.S. domestic tax law, if a business traveler to the U.S. spends 90 days or more cumulatively in the U.S. in a calendar year for any reason (i.e. work or leisure) or his / her income allocated to his / her work days in the U.S. is at least $3,000 (even though the person is on payroll outside the U.S.), (s)he may need to file a federal income tax return.
The employer may also need to withhold federal income taxes even though the company is a non-U.S. company outside the U.S. Each state in the U.S. also has its own rules which may differ from the federal laws.
Similarly, most countries in the world have similar tax laws on business travelers with different criteria triggering income reporting, tax withholding and tax payment requirements.
Section 2. Income Tax Treaties
Fortunately, many jurisdictions have income tax treaties with one another to provide exemptions to business travelers and their employers from withholding taxes, filing income tax returns and paying taxes for infrequent and occasional visits if certain specific conditions are met.
However, the conditions vary from treaty to treaty. The exemption conditions in the treaty between the U.S. and Canada are different from those in the treaty between the U.S. and the Philippines. Therefore, an international business traveler needs to know the specific tax exemption requirements for each destination country.
The common factors considered for application of an income tax treaty exemption are:
- home destination countries of the business traveler
- number of days in the destination country in a given period (e.g. calendar year, fiscal tax year or 12-month period)
- who bears the cost of the traveler’s income
- who benefits from and controls the work performed by the traveler in the destination country
Section 3. Example 1 – U.S. to the People’s Republic of China
John is a U.S. tax resident and works for a U.S. based company. He traveled to China numerous times for work (in Shanghai) and sightseeing at the Great Wall (in Beijing) in 2016. He spent a total of 150 days in China in 2016.
None of his compensation is charged to or paid for by an entity resident or with a permanent establishment outside of the U.S. Pursuant to the current income tax treaty between the U.S. and China, he is exempt from Chinese income taxes.
Section 4. Example 2 – U.S. to Hong Kong
Same as Example 1 except that John did not travel to Shanghai and Beijing. He went to Hong Kong and spent 150 days in the city for work and sightseeing in between April 1, 20015 and March 31, 2016.
Hong Kong’s tax jurisdiction is administered separately from that of China and Hong Kong does not have an income tax treaty with the U.S. Under Hong Kong domestic tax law, a foreigner who spends more than 60 days in a Hong Kong fiscal tax year (from April 1 to March 31) may be subject to Hong Kong income and tax reporting.
Therefore, depending the income level and personal allowances available, John may need to file a Hong Kong tax return and pay Hong Kong taxes for Hong Kong’s fiscal tax year ended March 31 2016. His employer in the U.S. may also be responsible for filing a Hong Kong employer tax return declaring his wages apportioned to his work days in Hong Kong to the Hong Kong tax authority.
Section 5. Example 3 – U.S. to Canada
Same as Example 1 except the John did not travel to China. He went to Canada and spent a total of 150 days in Vancouver for business meetings and in Whistler for skiing during the course of 2016. The portion of his wages earned over the year of 2016 related to his business meeting days in Vancouver amounts to C$50,000.
Compared to the U.S.-China Income Tax Treaty, there is an additional income threshold in the current U.S.-Canada Income Tax Treaty of $10,000 in local currency.
Since John’s income related to his work days in Canada in 2016 exceeds C$10,000, he will likely need to file a Canadian income tax return and pay Canadian income taxes.
His U.S. employer technically also has a Canadian tax withholding responsibility as well on his income earned in Canada to the Canadian tax authority.
Section 6. Example 4 – U.S. to Germany
Same as Example 1 except that John did not travel to China. He went to Germany and spent a total of 150 days there for work and leisure in 2016. His work in Germany was under the direct supervision of the German subsidiary of his employer and will benefit the business of the German operation.
Although all income tax treaty requirements may be met for tax exemption purposes for a business traveler to Germany, an “economic employer” concept under German domestic tax law may render John subject to German income taxes on his wages earned while in Germany.
Section 7. Trends of Income Taxation on Business Travelers
None of the above regulations are new. Many of the regulations have not, however, been enforced for many reasons such as political reasons and enforcement challenges. However, many government authorities around the world are seeking ways to increase revenues and taxes are easy targets.
Immigration authorities in some parts of the world have already begun sharing information with the corresponding tax authorities.
For example, issuance of a work permit will trigger a request from the tax authority to the local entity of the employer who sponsors the work permit application to withhold local taxes from the individual.
Section 8. Pre-Business Travel Planning to Minimize Income Tax Exposure
In addition to acquiring the proper visas and making travel accommodations, it is important to understand the income reporting and tax payment requirements of the destination locations.
Human resources and tax departments of many corporations offer and liaise tax guidance and assistance to their globally mobile employees, especially those in sales, marketing, customer support and training.
Chapter 15. Sales Tip – Beat The ‘Competitor’ Objection
Section 1. How to Sell to a Company that is Happy Buying from Another Supplier
Top sales trainers say don’t to try to displace a competitor supplying a company. A better marketing tactic is to open a door with a niche or add-on product or service.
One of the most difficult objections to overcome in business-to-business selling over the phone is that the prospect already has the service or product from another supplier. It’s similar to when the prospect performs a service in-house.
It’s a tough objection to turn to an advantage because as the sales person you are trying to persuade the prospect to ditch a decision that has already been made. You are trying to change a mind that has been made up.
One ray of hope is that the company supplying the product or service you want to replace has fallen down on the job. The only way to find out is to be persistent in making calls. Sometimes, you strike lucky.
Section 2. Sales Objections
When the prospect is happy with the products or service from your competitor, these are some of the objections in the prospect’s mind:
- The prospect has put considerable analysis into choosing a supplier and does not want a sales person to imply that the decision was unwise or less than the best or will not stand the test of time.
- The prospect will have invested time, energy and money into making the choice and be unwilling to invest more.
- The choice might have required brainstorming and discussion that was uncomfortable or disruptive; the company would be reluctant to do it again.
- A new choice implies a risk; the choice already made is the comfortable status quo.
Section 3. Business Strategy
The business strategy to overcome this, suggests sales trainer Paul S. Goldner, author of author of Red-Hot Cold Call Selling, is not to try to unseat the competitor or convince the prospect to change. His strategy is to offer a product or service that adds to but does not compete with what the competitor is providing. The objective is to get into the organization and open the door to further sales.
Take, for example, an organization whose computing is performed by an IT services firm. An add-on service could be to assist with training and support for employees with their notebook computers or wireless email devices such as BlackBerry, Palm or Apple iPhone, which the IT supplier might not want to provide.
In another example, many organizations have facilities managers but outsource day-to-day management of office facilities to FM service firms. In many, the FM manager assumes responsibility for document management, which is a specialized task. A firm could offer records management services that the FM service firm would not provide.
Section 4. Executive and Mid-Manager Sales Techniques
How you approach the prospect depends in part on the level of person you contact. Another sales trainer, Mark Hunter, says executives are interested in value while middle managers focus on cost.
When selling at the executive level, you need to stress how your add-on service or product can improve productivity or sales, hence overall value. You might find it easier than at the middle-manager level because the executive is less likely to be “wedded” to a supplier and more willing to consider a change.
The middle-level manager, on the other hand, might have a long-standing, and comfortable, relationship with a supplier. He or she will want to know how the add-on service will help day-to-day work. As for cost, it helps to be able to pitch the service at a price within the manager’s budget level; otherwise the manager will have to sell senior management on the investment.
Section 5. Sales Strategy for Future Business
Never try to sell on price unless the service or product being offered is a commodity. You will just be inviting another objection about the value of what you’re offering.
Never knock the competition. That’s the quickest way to suggest the prospect has made a bad decision.
Choose a niche service that doesn’t compete with the competition and sell it on value or on making a mid-level manager’s work easier. That way, you’ll get in the front door for potentially further sales.
Chapter 16. Strategic Leadership
Section 1. What Does It Take to Move from Unskilled to Skilled Strategist?
Many organizations do well today; it’s what they need to do tomorrow that they need to pay more attention to.
Many leaders focus most of their time on producing results and reacting to challenges. Unfortunately, they do not spend as much time strategizing. And although all of these activities are just as valuable, most organizations do not have enough strategists.
Not surprisingly, leading organizations worldwide have a strong strategy in place and are usually run by visionary strategic leaders.
If your goal is to ensure your organization becomes one of these leading organizations, then it is critical for your leaders to develop their strategic skills. Being strategic is part of every manager’s job, especially as they progress through the ranks and assume more senior responsibilities.
If you are not sure whether you (or other managers you work with) are a skilled or unskilled strategist, take a look at the lists below to see which answers apply to you.
If your answers tend to fall mostly in the “unskilled” list, then you need to work on improving your skills. If you are not sure about your answers, it sometimes helps to ask a co-worker or your manager to go through these lists with you and tell you how they see you.
Section 2. Unskilled Strategist
- Doesn’t think strategically
- More comfortable dealing with the “here and now”
- Spends most of their time reacting to what is happening now/today
- Doesn’t see the implications or big picture
- Can’t create a vision for the future, a picture of where they need to be tomorrow
- May not know enough about the business and/or industry
- Relies mostly on what other people think and cannot construct their own strategic view
- Is very tactical/operational
Section 3. Skilled Strategist
- Has a clear vision of the future and where they are versus where they need to be
- Can anticipate future needs, challenges, and trends
- Has broad business knowledge and understanding
- Is future oriented and sets time aside to think about the future
- Can create sound strategic plans
Section 4. Suggestions for Developing Your Strategic Skills
Become curious about tomorrow’s challenges.
Many managers are so wrapped up in reacting to today’s problems that they do not care enough about the long-term future. They think, “I will deal with it when it happens”.
Unfortunately, waiting until it actually happens will sometimes be too late for the organization, and can also lead to cascading issues that will contribute further to the initial problem. Being a good visionary and strategist requires curiosity and creativity. It requires the desire to play “what ifs” games. Nobody knows the answers, but good strategists know what questions to ask.
Make time to be strategic.
Strategy is always last on the list. Solving today’s problems is always first on the list. If you really want to become more strategic, you need to make time for it. You also need to make it a priority. Delegation is usually critical in this case. When managers complain about not having time to be strategic, ask them to review what they do on a daily basis, select 10 things they can delegate to others, and ask them to use the saved time to strategize.
Choose complex versus simple.
Tactical managers like simple solutions, quick answers, and clear conclusions because it allows them to move quickly to other “here and now” issues. Strategists enjoy dealing with more complex issues, the unknown and unclear, and feel comfortable speculating and projecting various anything-but-simple scenarios.
Improve Your Business Acumen.
Some managers are very good at what they do, technically speaking. They know their function inside out. However, they may not know as much about other functions, the business overall or the industry they are in. Knowing all these things and having a more “generalist” type of approach versus a “specialist” one will help them get closer to having strong strategic skills.
While “strategic” was originally a term borrowed from the military where it meant having an impact outside your own military unit, region or battle, nowadays almost every business function uses the term strategic to describe its plans, programs and initiatives.
And while both tactical and strategic initiatives are important, tactical ones will typically have an impact on the respective department or business group, while strategic initiatives will have an impact on the entire organization. It therefore pays to invest in strategic initiatives and ensure leaders develop their strategic thinking cap.