Everywhere you turn you will hear people talking about negotiation. It has become one of the “in” words and is often associated with big company deals or inter-country politics. In fact, negotiation is a part of everyone’s lives and is undertaken daily. You will notice that every day interactions involve discussing options with someone and agreeing to take a certain path. This may be a promotion path, the way to finish a project or even as simple as what time you will be home for tea. Every time you engage in a consultation exercise with someone you are, in fact, negotiating to achieve the best possible outcome for everyone involved.
Why aren’t your current skills working? Believe it or not, it is always possible to improve your negotiating skills and the following tips will help you to become a better negotiator:
Engaging in a negotiation means engaging in a conversation. For the meeting to end on good terms, the people involved must reach a mutually favorable agreement. Here are three basic steps you should learn to master.
Most business people have a baseless fear of negotiation. This is probably founded on a lack of perceived experience and a fear of being asked a question that you cannot answer. Provided you have prepared for the meeting this is unlikely to happen. If you know your subject then you will be able to work out the best answer to any question.
Every negotiation is actually just about choices. You have your needs in mind and you should also be aware of what you are prepared to concede in order to get your demands met. Sometimes this choice may even be that you must walk away from a deal. There is little point in doing a deal when there is no benefit to you. Knowing your options before a negotiation will make this difficult but possible decision.
No matter how well prepared you are for a meeting you must be able to keep your mind open to new possibilities. It is often the case that the most obvious or logical route is not the best. A creative approach can allow you to see and exploit options that may not normally have been considered. You must remember that the same approach will not work in every negotiation.
There is little doubt that the other party will make an attack on your plan of action. You should remember that this is not a personal attack. Likewise you should never launch a personal attack, always keep your focus on the options and the discussion not the people involved in getting a solution.
After any negotiation, whether successful or not you should take the time to evaluate the proceedings and see where things could have gone differently. You should do this as soon as possible after a meeting to ensure you have the facts straight in your head. This will provide an excellent opportunity to improve your negotiation skills for next time. It takes time for someone to master the art of negotiation; the good news is practice makes perfect. The more you learn the better chances to have to succeed.
What is success and what can we do attain it? In today’s competitive business environment, only the smartest and bravest business gurus will succeed. That’s because they have the determination to stick to their guns and stand by what they believe in. Mastering the art of entrepreneurship is easier said than done; there’s so much competition going on, that it’s sometimes impossible to keep up. Many start-ups fail because their leaders are not passionate enough, and when you can’t find motivation in the work that you do, it’s literally impossible to stay engaged. Reading motivational business books can persuade you to step out of your comfort zone and take a chance. Here are 6 must-read books you should start devouring right now.
“Zero to One” is a set of motivational lectures written by founder of PayPal and billionaire investor Peter Thiel. Blake Masters is the co-author of the book, and former student of Thiel at Stanford. Together, the duo composed an assertive set of standards meant for start-ups, entrepreneurs and thoughtful leaders who want to make a difference and help their companies thrive. “Zero to One” is a brilliant business book with excellent tips and tricks for leaders and entrepreneurs striving to build a better future for themselves and for their future enterprises.
Those who can truthfully believe that there’s a brighter future waiting for them should read “Leaders Eat Last”. The book’s main idea is centered on actions we should all take to achieve success. Sinek advises leaders to replace the “command and control” management model with approaches that are more sustainable and focused on empathy. Entrepreneurs should completely redesign a workspace - the office must look and feel comfortable to keep employees engaged. “Leaders Eat Last” is all about understanding that a company needs a team of people to function properly, so if you’re an enthusiastic business person this is a must-read.
David Bornstein’s “How to Change the World” is a beautiful interpretation of various types of “social” entrepreneurs. The cases presented in the book are meant to emphasize that every leader can succeed provided that he has a desire to change the world. “How to Change the World” is about treating life with as much optimism as possible. Idealism is what business people need to attain greatness, so if you’re the dreamy type of entrepreneur, this book should stimulate you to do more.
After a couple of decades of great success in the business domain, Carol Dweck decides to write “Mindset”, a book about what we should do to thrive in business and in real life. She talks about taking responsibility for our actions, and using more than just our abilities and skills to turn ideas into facts, and facts into wealth. This book is meant for those who want to improve the quality of their lives and thusreach their highest goals.
If number-crunching financial talk and puzzling algorithms confuse you, then you’ll love to read “How to Speak Money”. In the book, readers will learn more about how the real world of finance functions – starting from clear definitions to words like “inflation” and “amortization, to finding loops and irregularities in a contract’s terms & conditions. Lanchester explains beautifully the way hedge funds work in his book, as well as the entire financial system, but in much simpler, easy to understand terms.
Carla Harris’s newest book, “Strategize to Win” is meant for everyone in the business domain, whether they’re just starting out or hunting for new opportunities. The author is a Wall Street veteran, and she tries to help leaders get out of bad situations and reposition themselves and their goals in order to achieve success. How can you make the most of your ideas? Are you ready for a career change? Do you have what it takes to take your company to new heights? All these questions will get answered in “Strategize to Win”. Carla’s book is excellent for those who wish to hone their skills, surpass drawbacks and position themselves for great accomplishments.
It’s tough to succeed in business if you’re not willing to make sacrifices. The books we mentioned above are must-reads if you’re a passionate entrepreneur looking for his big break in the business environment.
Ed. Note - You probably already know that we're all about the bootstrap here at SBT. Still, we also know that some kingdoms aren't built from sweat alone, and some ideas require a boost to get off the ground. So here, courtesy of SBT contributor Ivan, is a piece all about attracting investors to get going. Enjoy! -Seth
Many entrepreneurs dream of launching a wildly successful startup. Although the odds might seem slim, there are some entrepreneurs who experience a great amount of success with their business idea.
ABC’s Shark Tank turns many of these entrepreneur’s dream into a reality. Over the course of five seasons, Shark Tank gave entrepreneurs the opportunity to launch the business of their dreams. The Sharks (otherwise known as investors) offered to invest more than $20 million in over 109 companies.
While it appears that many of these startups receive funding, there aren’t very many that succeed. Since 2012, only one in 17 startups from Shark Tank have seen a profit and and only about a third of the deals closed.
Launching a startup involves a lot a risk, but if you know the right business strategies, you’ll be able to launch a very successful business. Let’s take a look at some of the lessons entrepreneurs can learn about launching a startup:
Know the need for your product.
The only way you can launch a successful business is if your product or service provides value for your target customer. Regardless of how great your idea for a product is, it won’t be successful unless you have a defined target audience who will benefit from your product.
Always be prepared.
There are a lot of hoops entrepreneurs must jump through when launching their business and pitching to investors.
Whether you’re pitching an investor or creating a business plan, you must be prepared for anything. Be confident in your numbers and have a good idea of how much revenue you plan to produce. This type of information will be valuable to your success as an entrepreneur.
Remember, every successful startup begins with an idea, a goal, and pitch. By following advice from Shark Tank, you’ll feel more confident when launching your business. To learn more about the Shark Tank formula for success, check out the infographic below:
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This guest post comes from SBT's favorite accountant, Harold Littlejohn. Why is he our favorite? Read on to find out.
-Seth
Nate and Seth at SmallBizTriage.com are extremely busy guys. So busy that when they converted their Washington-based Smallbiztriage.com business to an LLC (Limited Liability Company) in 2013, they must have missed opening a “snail mail” from Uncle Sam (Tip: Never open an email from the IRS…..they don’t contact taxpayers via email) that would have reminded them that the filing of their Form 1065 LLC partnership tax return for the tax year 2013 was due on April 15th of 2014.
Lo and behold, life went on, business went real well for Nate and Seth, and April 15th came and went without their 1065 being filed.
This is where my years of tax experience shine! Thanks to a little-known IRS rule, if you or your business has a clean record with no late filing demerits over the most recent three years, they will forgive a late filing penalty. But you must request it in writing.
So when SmallBizTriage generated a hefty late filing penalty in their first year of business, I immediately banged out a letter to beg, on their behalf, the King (read IRS) for pardon. But I was worried…..this has worked for my clients in the past, but they had track records of three years of timely filing, but SBT didn’t.
So imagine my delight when I received an email from Nate that Uncle Sam had forgiven them and removed their late filing penalty!
You see, even the giant behemoth known as the IRS has a heart in there somewhere after all!
To be frank, the IRS's lifeblood, or their “business model” if you can call it that, does depend on “customers,” I mean taxpayers, filing returns and paying the tax that is due. Think of it this way….they have a customer filing every year and paying taxes. That customer misses a deadline one year.
With no forgiveness, that taxpayer/customer might be afraid to file late and could slip into the “non-filer” category that is the thorn in the side of the IRS's well-oiled revenue machine.
So by offering forgiveness every few years, they keep the money flowing in and filing goes on for another several years and hopefully the taxpayer will never forget to file on time again.
Many persons and even professionals don’t know of this rule. Wait….if a professional is perfect, his clients never miss a deadline, so he wouldn’t NEED this forgiveness exception. Ha!
In my experience, there's a lot that sharp businesspeople like Nate and Seth don't know about tax rules and regulations, so here's a few pointers to help you out during the journey you have chosen as a small business owner:
You can’t be expected to know your own business PLUS all these tax rules. So contact me for some help this coming tax season. I might save you a lot of money, and isn’t that half the battle of being in business?
And if you have already made the big boo-boo and you are late, contact me with the tax problem, as I am human and I have experience with forgiveness of the occasional late filing penalty!
Editor's Note: No Doctor Who references in this post, I'm afraid, but this guest post from Holly Chavez goes above and beyond when it comes to thoroughly examining the question at hand. Enjoy! -Seth-
If you’ve been weighing whether outsourcing varying components of your business can contribute to its success, you’ll want to take a number of factors into consideration first. That’s a vital first step because when it is implemented correctly, you can watch your company expand and save money. There are also other reasons for the advantages that go well beyond financial means.
I was a lowly college student busting my tail working full-time and going to school part-time when I first heard the buzz about outsourcing back in the early 90’s. It was starting to catch traction in the news and my professors made the information about this business practice a part of their lesson plans, especially in my business courses. Outsourcing was particularly demonized at the time, and the media often portrayed it in a purely negative light. I was sitting in my business class one day when one of my fellow students asked the teacher why we were sending so many jobs overseas. The question was very pointed, and I could tell that my fellow student felt that it was definitely a negative trend by the way they spoke about it.
The professor listened to him politely, and then turned to the rest of the class. He asked us to look in our clothing and find one example of a hat, shoes, shirts, and pants…anything that indicated that our clothes had been made in the USA. We found several examples of Mexico, the Philippines, India and China on the labels within, but there wasn’t a single stitch of clothing that had been made in America (and it was a very big class!). The teacher then told us our term paper would be about outsourcing, and the many benefits it brings to business owners. “Have fun!” he said. “Thanks, I thought sarcastically.”
I figured that the term paper would be a boring topic on a business trend that I didn’t agree with. After all, my mother had lost her job in a textile mill due to outsourcing. So with much reservation and lack of appreciation toward my professor and the student that got his wheels turning, I began my work. However, the paper I produced that semester opened my eyes and subjected me to my first realization that there is a strong media bias that influences much of what we read and see on television, and there are actually many benefits and advantages to business outsourcing.
To illustrate, there were plenty of stories in the news about how we were losing jobs to outsourcing and NAFTA – who can forget Ross Perot’s famous statement during his 1992 presidential campaign proclaiming that NAFTA (North American Free Trade Agreement) would create a “giant sucking sound” of jobs going to Mexico where labor is much cheaper if the deal didn’t work both ways?
What we know from fast forwarding 20 years after NAFTA became a reality, was that Perot was wrong, and mainly in his assertion that it would drag our economy down. It has actually been a boon to the U.S. economy, along with other outsourcing and offshoring ventures. According to economist Gary Hufbauer, NAFTA alone has created two million jobs annually since 1994.
Nevertheless, the negativity of all the jobs lost to NAFTA and other outsourcing and offshoring deals were presented in the news at that time for the most part.
Unfortunately, none of the benefits they brought in return were mentioned much in the news, especially the long-term predictions for massive job creation. In all fairness to the media outlets, this concept, much like globalization, were in its infancy in the 90’s. The research for the paper I wrote that semester revealed to me that outsourcing had many benefits: it was often better for the environment, allowed more company profitability, and even long-term job growth in many instances. I saw many of these facets in one of my first paying jobs I had while I worked my way through college, also.
One of the first industries that went overseas were lower skilled industries, and many of them being the textile manufacturing business. My first internship in college was at a carpet mill in the Southeast, and it was a lesson in why many of these industries are sent overseas. The process is very simple, and it uses a lot of resources; additionally, they often pollute the water and air as byproducts of the process of making the carpet. The whole town smelled like a wet dog most of the time, and most of that industry probably would have been shipped overseas, like the rest of textile business, if the finished product wasn’t so big and bulky. Therefore, rendering it an expensive and nightmarish logistic option of bringing it back to the states, once manufactured outside of the country.
The carpet industry started seeing the cracks of remaining financially viable in the late 1990’s and early 2000’s. They were hit particularly hard by the housing market crash, and they began to close and consolidate many of their operations soon afterwards. Many of them were shuttled or downsized by the mid-2000’s. Those that stayed open often suffered increasing instances of injuries, and even some fatalities, as safety oversight was scaled back and workers were often rushed to fulfill quotas. Before I left, they were also suffering from and receiving high-level criticism about the amount of water they used during their operations.
A few weeks ago I was involved in the support of public relations and media giant, DKC. They recently had a red carpet event where they were promoting brand recognition for Aéropostale. It was an exciting event, but what was most interesting about the venue, though, was how even a glitzy event such as that can remind you of how valuable that outsourcing is and how it is all around us.
To explain, one of the many services that DKC provides includes facilitating all aspects to build popular brands for the fashion industry. They often hire actresses and models to put a youthful face on hot fashion brands such as Aéropostale. As actresses Vanessa Hudgens and Shay Mitchell came out on the red carpet to give good face to the flashing lights and lend their celebrity clout to boost the image of Aéropostale, I was reminded of my professor asking us to look within our clothing items for a ‘Made in America’ label. And sure enough, Aéropostale is a prime example of company that manufactures clothing outside of the U.S. Their clothing is actually made in a factory in Sri Lanka.
Your first thought may be that of the student that set the mood for the business class term paper we discussed earlier -- something along the lines of, “Wow, the loss of jobs by doing it in another country.” However, not only is clothing outsourcing beneficial, the benefits in these cases are two-fold. There are direct benefits that have an immediate impact--such as reduced capital investment, better quality of the manufactured product and lower costs. Then there are indirect benefits on processes that are kept in house. Indirect benefits are more hidden and have a slow and subtle effect on a company’s profit margin. They can include better resource development, stimulating analysis and converting sluggish functional areas into more dynamic ones.
That question poses a moral argument to some folks that I often encounter while I have worked over the years. At times I was tasked as an industrial engineers to help businesses improve their performance and profitability. Sometimes re-engineering could fix a process that was barely hobbling along. For instance, the solution is often very simple in manufacturing facilities, such as ensuring operations to be in sequential order, thereby eliminating backward loops in the process. Other fixes involved eliminating wait times or moving workstations in sequential operations closer to each other.
However, there were often cases where it was necessary to implement outsourcing to allow the company to improve their bottom line. One instance was as simple as a little more organization, and the scenario involved a small warehousing and distribution company I worked for. After observing the storage process in the warehouse, it was clear that the disorganization and lack of visuals was hindering the worker’s capability to pick and ship merchandise. The issue was seen in all ten of their warehouses.
After the warehouses were organized and made visual, they found they only needed to have six warehouses vs. ten. The employees in the four warehouses that were closed were laid off, and it was one of the first instances in my career that I was in discussion with business owners to keep things ‘hush hush’ so as not to let it get out to the employees that the layoff was coming as we worked to put the plan in action. Did I feel bad? Not really. Does this make me or others involved with consolidation and outsourcing labor and other resources to another facility heartless? No. It’s a hard decision for anyone, but you really have to look at it from a systems perspective.
There have been times that I have been asked by business owners (and even some other industrial engineers) if the outsourcing bothers me. My answer is resoundingly, NO. You can’t localize outsourcing that way – you have to look at the big picture. Of course the employees lost their jobs in the four warehouses we discussed earlier, but if it had continued the way it was, those facilities would have closed anyway and damaged the profitability of the rest of the company.
Interestingly enough, it’s been seven years since the warehouse closures, and the company has been thriving in a sluggish economy. The company incorporated the best practices outlined to make their warehouse storage systems more organized and visual going forward, and the customers stay satisfied because they no longer are told that goods are missing or their shipment will be delayed.
The center also experienced growth from their original ten warehouse to twelve, with plans to open two more next year. Outsourcing such as this offers huge benefits, especially small businesses that find it a little harder to compete than a huge corporation would. Here are a few of the advantages that outsourcing brings to your business that can help you with your decision.
Periods of rapid growth can stretch a company greatly beyond their limits, especially in the human resource and financial departments of a business. If a small businesses owner or entrepreneur needed any convincing that these activities should be outsourced, they should understand that 40 percent of these are non-revenue-generating activities. From payroll and human resource management to benefits and compensation, entrepreneurs can spend up to 40 percent of their precious day engaged in these necessary but time-sucking tasks.
This type of event can allow these important departments to become overwhelmed and swamped with all sorts of jobs. Instead of focusing on what they were hired to do, they are now in charge of a sea of endless tasks that can be difficult to accomplish in a timely manner.
However, outsourcing that additional work can allow your team members to focus on the core duties. This can include payroll, tax returns, profit and loss, employee review updates and staying within the parameters of the human resource laws.
Office functions that require additional training may be needed in a company. Whether you have to keep up with new rules and regulations pertaining to payroll laws or your medical billing would like to accept new insurance programs, the costs can add up and take a toll on your business.
On the other hand, outsourcing the duties to a facility that specializes in this activity can be cost-efficient to your company. It can also save your business time and money when all they have to do is focus on this specific task and make sure that it’s done extremely well.
While outsourcing can prove beneficial, you also have to take into account the human aspect of it. Business owners and corporate leaders may have to tackle tough decisions related to outsourcing. While it could help to keep your company from going under, consolidating the jobs and duties under one roof can eliminate jobs.
For instance, look at the military bases that have made ghost towns out of the cities and towns where military personnel and their families once supported a booming industry and local economy. Many Base Realignment and Closures slowed down areas that were thriving, but the consolidation made the military stronger as needless spending was cut out. Businesses operate much the same way and with the same methodology in order to stay viable.
Nevertheless, anyone with a heart and soul would find it difficult to put any number of people out of a job, even if it allowed the business to run more efficiently. Separating heart from the real world is difficult to do, but it can help when you hire the right outsourcing company and keep in mind the many benefits that outsourcing brings to the table.
If a company has significant growth at different times of the year, hiring a permanent employee may be a waste of time and money. While they can prove beneficial during the busy times, you may find them a hindrance when your business experiences a drought.
For example, an accounting company that is understaffed during the busy tax season may find it an advantage to outsource temporary employees during the hectic times of the year. Once the demand has lessened, you can release them from their duties.
Going through high rates of employee turnover can be very disruptive to a business. Whether they are on company medical leave or your staff leaves for new jobs, training can be an added burden. This kind of incident can be especially crippling if your employee turnover is high. However, outsourcing allows your work to be completed in a consistent manner without disruptions.
Operations that have lengthy processing times and rely heavily on experienced and skilled individuals when performing them can be particularly taxing on a business budget and schedule.
Also, when a company works with chemicals and toxins, it can cost a company a mint complying with regulations and adhering to strict guidelines.
Many strict laws and regulations are designed to protect the environment. Businesses that strive to meet these requirements incur great costs and time in the process. However, finding experts in the field through outsourcing can help with the adverse impact to the safety of the environment. It can also ensure that the proper measures are being followed in regards to working with chemicals and their proper disposal. Letting someone else manage this part of the process cuts out excessive lead times, saves money and is often a more eco-friendly choice.
I saw this in a company I worked at that refurbishes turbine blades for Siemens and GE. Their overhaul and repair process had very long lead-times and was very complex. One of the processing times for the assemblies was even made longer and more expensive because of the chemicals used to clean the blades. Safety regulations in New York where the blades were cleaned and refurbished were very expensive, and the whole approval process was very lengthy. The solution was to outsource the operations to a company in Mexico that had an acid bath that was suited for cleaning the blades. Even considering shipping time, the process lead-time was lessened by two weeks when the blades were sent to Mexico for processing.
Whether you outsource your payroll or accounting duties, you’ll know that the right outsourcing company can ensure that the work outsourced will get done when you need it most. It can often be a task to outsource many business services, especially since many companies have provided these services for decades.
Once that it is done, though, many outsourcing operations are very successful and competent at what they do. This, in turn, leaves you the ability to be able to focus your resources on your core competencies and reap the many benefits of outsourcing.
Many business owners are hesitant to throw their hat into the outsourcing arena. It's definitely a big step, and even though there are benefits as outlined here, it’s still difficult to know how to select the right outsourcing company. It’s such a massive step, so what do I do. The first thing that comes to mind about this that I tell my clients when I consult is kind of silly, but fitting: How do you eat an elephant?
Well, you eat an elephant one bite at a time. The same with choosing the right outsourcing company. You do it in small increments and you do it carefully. After all, it’s your business, and you don’t want to negatively impact it by choosing a poor outsourcing solution.
Outsourcing isn’t always sending work to the ‘wild blue yonder,’ either. Some outsourcing is sent to companies within the U.S. The most recent one I was involved in provided outsourcing the warehouse operations for a medical manufacturing company. The work involved outsourcing the storage of their completed displays and spare parts at a 4PL company warehouse and distribution center. Here’s what we did to implement a successful outsourcing venture for them.
Whenever you outsource to another company you are choosing something akin to a business partner, and you will want to protect your viability and good reputation by choosing a company that is reputable and shares your core values. You’ll want them to have the same (or very similar) business practices and devotion to success.
In the case of the 4PL that was ultimately chosen to be the supplier for the medical company, there was a process initiated for selection. It’s recommended that you pursue a similar path in rewarding your business to an outsource supplier.
The reputation and performance of the service of several 4PL businesses were considered for outsourcing – those two factors speak volumes for a business. For a non-biased source, we looked at publications that featured the top 4PL businesses in the United States.
A top ten list was compiled from the publication based on the criteria that they provided for the service we were looking for. The criteria included storage, inventory management, shipping, and 3PL management.
Request for information (RFI) and requests for quote (RFQ) were then submitted to the companies. Once received and reviewed for a harmonious match with the medical company, a top three were selected.
Another more competitive RFQ was then asked from the final three.
Once the final three RFQs were submitted, the final choice was announced to the suppliers. Then legal contracts and finance began to work on the final contract.
Risk analysis and cost/benefit of all the different suppliers throughout the decision-making process should also be key metrics to judge a supplier by, also, to make an informed decision.
The attributes that the supplier had that was awarded the warehousing business included the following:
1) lowest price for quality of services rendered,
2) great expertise,
3) great management of personnel, skilled employees and flex labor practices,
4) a high-quality and safe environment for both employees and their products and
5) constantly striving for continuous improvement and passing on proven cost savings throughout the contract to their customers.
Business owners who outsource discover that this smart business decision allows them to maximize their revenue and help build customer loyalty. Whether you would like to use it to cut costs, provide faster and better services, or boost profitability, you’ll find the benefits of outsourcing are undeniable. You should now be able outsource your business operations with a better conscience and the confidence that it can make your business operations run better, Now you can brush that pesky angel and demon off your shoulders!
