Archive | Business

Entrepreneur

Economic Expectations Versus Reality

By Tom Irmen

According to the NFIB (National Federation of Independent Business) Index, small business optimism has continued at historically high levels now for more than six consecutive months. NFIB President and CEO, Juanita Duggan, said that this “remarkable surge in optimism that began last year right after the election shows no sign of slowing down.”

But indexes, like sentiment, can be disappointing to small business owners who were hoping for a “quick fix” to the economic doldrums that our economy has been languishing in for the past decade or so. Not to say that there hasn’t been bright spots, because there has been. But just where is the growth that entrepreneurs had grown accustomed to after prior recessions?

Today entrepreneurs need to balance expectations with reality. Much of the positive economic news being reported on today is forward looking. Like the stock market, where values are a reflection of anticipated future results, economic indexes are an attempt to gauge future economic activity.


But there’s a catch, because much of today’s positive financial news requires that Washington or, more specifically, the new administration act to put into place the requisite fiscal policies needed to stimulate future economic growth. And it’s here where expectations meet reality. Policy changes such as personal and business tax cuts, infrastructure spending, and renegotiated trade agreements will take time to enact and even more time for their impact to be felt. DC is like a Kabuki dance, where there is always a great deal of drama but oftentimes little in the way of measurable results.

Small business owners who are accustomed to making quick and decisive decisions are understandably frustrated by Washington bureaucrats who move at the speed of a sloth, if even that fast. And the fact that we have had to live with this decade of slow or no growth makes us even more impatient for action.


Change has occurred, albeit slowly. Change will continue to occur, and our nation’s economic engine will once again reward you for your efforts, perseverance, and, most of all, patience.

Posted in BusinessComments (0)

Is Entrepreneurship Right For You?

By Tom Irmen

To be clear, I use the term entrepreneur to refer to an aspiring small business owner and not an individual employed by a business that might exhibit entrepreneurial characteristics. The two individuals are very different, as a business owner risks everything, whereas a non-owner risks very little by comparison.


I don’t know if business ownership is part of the cultural fabric woven into the American dream or not, but it was for me. I do, however, believe that many would-be business owners often romanticize about becoming an entrepreneur and the perception they have of the freedom they think awaits them upon launching their very first venture.


Self-employment is clearly not for everybody, and far too many persons discover this only after investing a great deal of time and money into a new business. But there are steps you can take to avoid the same mistakes made by so many unsuccessful would-be entrepreneurs.

If you feel that you have what it takes to succeed in the self-employment arena, I would encourage you to seek the advice of several trusted and experienced business mentors who can help you to better appreciate what might lay ahead as you navigate the uncertainties of small business ownership. In addition, questions you may want to ask yourself include:

» Am I comfortable taking risks?
» Can I act independently?
» Can I be persuasive and compelling?
» Do I possess the necessary skills to negotiate?
» Can I think and act creatively?
» Do I have a strong system of mentors in place?

Starting and owning your own business can be an exciting and rewarding experience for the true entrepreneur that understands that they will confront far more challenges than they might otherwise experience as an employee. Becoming a successful entrepreneur requires careful planning, creativity, and, most of all, lots of hard work.


Statistics show that the potential for success as a business owner is very low indeed. But I believe that if these same statistics were adjusted so as to differentiate between the true entrepreneur and those would-be business owners possessing little more than good intentions, you would discover that the potential for success is likely much higher than you might have anticipated for the genuine entrepreneur.

Posted in BusinessComments (0)

Small Business Optimism Surges

By Tom Irmen

Since the election of 2016, there has been an undeniable surge in small business optimism nationwide. And despite the feelings on the part of many that this upswing in optimism is tied directly to the presidential election, I have no interest in wading into the possible political aspects of this much welcomed rise in sentiment. Besides, we already have a 24/7 news media that will debate this renewed optimism for us.

Regardless of who you voted for in the last election, there’s no denying that this new level of optimism among small business owners has spiked dramatically in recent months. The real question for you to consider is how are you planning to take full advantage of this rising tide?

Here are some facts to consider:
» Small business lending has now increased to pre-recession 2008 levels, signaling an expansion in small business growth.
» A recent Bank of America survey found that 51% of small business owners expect the economy to improve during the next 12 months compared to only 31% last fall.
» ADP has reported a nearly three-fold increase in hiring from the fourth quarter of 2016 by small businesses that employ fewer than 50 employees.
» The National Association of Manufactures has reported that 93% of manufacturing industry executives are optimistic about the future of the economy, up from 56% just a few months ago.

Regardless of all of these positive signs, the great recession has dramatically changed the behavior of many of today’s small business owners, and entrepreneurs are displaying a heightened level of caution. Much of today’s optimism can be directly traced to future expectations that are reliant upon a variety of governmental actions that are anything but certain. But despite this level of uncertainty, the cost of inaction on your part can result in missed opportunities and the erosion of market share.

While risk aversion is more a part of a business owner’s DNA today than it was a decade ago, even the most cautious among us should be encouraged enough by recent developments to take advantage of this long awaited rise in optimism. Consider expanding into a new product or service line or stepping up your existing marketing efforts to successfully differentiate your small business from your competitors, helping existing and would-be customers to understand and appreciate just how they will benefit from doing business with your company.

The cost of action is likely far less than the cost of sitting on the fence.

Posted in BusinessComments (0)

Entrepreneur

The High Cost of Inaction

By Tom Irmen

Perhaps because I’m 67 years old, I think more often about those issues confronting other entrepreneurs my age. Whether those issues involve planning for retirement, health, or end-of-life considerations, most small business owners would be best advised not to postpone examining these very important issues for themselves.

The truth is that far too many business owners have failed to put a comprehensive retirement plan into place. Perhaps they’re anticipating that the potential future sale of their business will provide the resources needed for retirement. But relying on the successful sale of your small business in the future to provide for your retirement is not without risks.

Other business owners may be contemplating a continued stream of income during retirement after turning their business over to their children to manage. But if you lack a succession plan, that son-in-law you can’t stand could end up at the helm of that same company you worked a lifetime to build. Also, in the absence of a succession plan, the divorce of one of your children could result in the dissolution of your company, all which could be detrimental in the future to your retirement.

If you believe that life will become simpler as you grow older, think again. Life has many moving parts, and delaying decisions on important issues that can impact your future will only compound the pressure you’re likely to experience later in life when you are forced to act. Also, inaction can create a level of anxiety that most people might prefer to avoid.


So how can you avoid this doom and gloom scenario? Find a trusted financial planner, one who will work closely with your attorney and accountant, who can help you find the answers to both the questions you have, as well as the answers to questions you might not have even considered. Acting today will provide you with a level of confidence and the peace of mind that has likely been evading you, not to mention greatly enhancing your potential for a successfully and prosperous retirement But your key to success rests on your decision to act today – not tomorrow, next week, next month, or next year.

Imagine a future free from financial stress, where your income is assured and your company is continuing to operate efficiently and profitably while being managed by those individuals you’ve personally selected. Consider, too, that your spouse, children, and grandchildren will be provided for as well, because you chose to act and not to entrust your future to a roll of the dice. What are you waiting for?

Posted in BusinessComments (0)

Pricing is More of an Art

Pricing is More of an Art
By Tom Irmen

Few entrepreneurial responsibilities faced by small business owners are more challenging than establishing prices for your company’s products and services. For many entrepreneurs, it’s a shot in the dark. Others may rely on competitive price comparisons within their marketplace, or perhaps your franchise or dealer network provide pricing recommendations. Regardless of how you arrive at your company’s pricing structure, pricing should be regarded as both a short- and long-term strategy designed to be a driver of both sales and high margin profitability.

Here are some important points to keep in mind when establishing your pricing strategy:

  • Being busy does not equate to being profitable.
  • Closing on 100% of your proposals likely means that your prices are far too low.
  • Price gouging will likely only attract additional competitors into your marketplace, which will result in lower overall marketplace prices.
  • Customers typically do not view pricing the same way as entrepreneurs. If the perceived value the customer receives from your products and services far exceeds their actual cost of the product, your price is likely too low.

Pricing is more of an art than a science, and many of us lack the prerequisite skills or experience needed to create a comprehensive pricing strategy. Regardless, the responsibility is yours.
Familiarize yourself not only with your competitors’ pricing but, more importantly, the perceived value they offer customers. Don’t rely entirely on the pricing models provided by a franchise or dealer who may be unfamiliar with your local marketplace. And don’t use pricing as the only tool to secure each and every proposal.

Every interaction with a potential customer provides the perfect opportunity to access your company’s value proposition. Are you viewed merely as a commodity or as a company whose extra services are perceived as extremely valuable, perhaps even indispensable, to a client? It is absolutely imperative that you clearly articulate to every potential customer the real value of the services or products that you offer if you are to succeed. Customers will select the company with the higher actual price, provided that the perceived value they receive is greater.

And one final thing. An estimated 20% to 30% of all customers are low price shoppers. Avoid them. This is the commodity marketplace that will leave you broke.

Posted in BusinessComments (0)

Entrepreneur

Just Plain Vanilla

By Tom Irmen

How do your customers or, more importantly, your potential new customers view your small business? Nothing slows up the line at Baskin Robbins faster than the addition of a new flavor. Customers’ eyes feast on the numerous choices available before selecting that much anticipated flavor that will arouse their taste buds. Meanwhile, over in the corner of the freezer display is poor old vanilla.

If your customers and prospective new customers view your small business as poor old vanilla, you had better be prepared for a plain vanilla response. Perhaps it’s because we, as entrepreneurs, invest so much of our day immersed in our daily activities that we take for granted just how unique our companies are. But at the end of the day, if you’re the only one that knows how unique you truly are, you’re just plain old vanilla to consumers.

I recently visited with one of the owners of a home improvement company. The quality of the work they perform is consistent with the quality offered by their competitors. But they’re unique from their competition many ways:

» They fabricate the product they install.
» Their installation time is much faster.
» They don’t charge for many of the extra services they provide.
» They don’t employ commissioned sales people.

I was sold. Unfortunately, very few people beyond those in attendance at our meeting are aware of how truly unique this small business really is. Plain old vanilla, right? I asked myself, “Just how much has their failure to communicate their unique differentiating characteristics cost them?” I’d say hundreds of thousands of dollars annually.

If your small business is experiencing lackluster performance, you’d be well-advised to ask yourself whether anybody beyond your associates knows just how unique you are. The cost of communicating your uniqueness is far less than the sales opportunities you’re missing.

Are you that delectable rocky road fudge ice cream or that plain old vanilla relegated to the back of the freezer case?

Posted in BusinessComments (0)

Entrepreneur

Avoiding Established Competitive Marketplaces

By Tom Irmen


Many would-be entrepreneurs contemplating the launch of their first small business venture understandably try to target what they believe to be a brand new niche market rather than attempt to penetrate an existing marketplace dominated by established competitors. But don’t be too quick to write off those established markets.

Quick printing franchises dominated the personal and small business printing industry in the ’80s and ’90s. You couldn’t close your eyes and throw a rock without hitting one of these franchise locations.

The new owners of an existing franchise carefully analyzed the competitive landscape that existed in their suburban Chicago location. Here’s what they found:

» Printers assessed additional charges for color printing
» No delivery service was offered, requiring customers to pick up their printing orders
» Printers relied entirely on walk-in business, ignoring the opportunity to identify potential new clients

Based on this information, these resourceful owners began offering a color print schedule that eliminated the customary upcharges, which resulted in an immediate savings for their customers and an increase in sales for their printing franchise.

The owners also invested in a delivery and pickup vehicle that brought them into direct contact with their customers’ decision makers, which helped not only to foster valuable new relationships, but also provided them with the opportunity to introduce these same clients to all of the printer’s services that they might benefit from. Sales skyrocketed.


Finally, the owners made a strategic decision to target mid-sized companies that were being underserved by both small print franchises and larger printing competitors. After just months, these innovative small printing franchise owners began receiving individual print orders that exceeded their earlier combined monthly sales.

The net result? These innovative entrepreneurs became the third fastest growing franchise out of more than two thousand locations nationally in just three years.

There is a distinct advantage to targeting an existing marketplace, even one with multiple, established competitors. That is, customers understand and accept the need for the products or services being offered. Why not offer many of the same products or services already being offered, but where you can differentiate yourself by providing a new twist(s) that will be perceived as offering even greater value to your targeted customers? You may actually discover that it is easier to penetrate an existing competitive marketplace than to create an entirely new one.

Posted in BusinessComments (0)

Entrepreneur

Breaking Out in 2017

By Tom Irmen

Small business success does not result from merely being in business. Not a spectator sport, success in small business requires that you be on the playing field, actively engaged in providing a quality product or service and differentiating your business from those that you compete with.


Small business ownership isn’t for the timid as the last decade has proven. And we must all remain vigilant to not allow ourselves to become so pessimistic about the future that we miss what might become a huge growth opportunity.


Although I have spoken about this very subject many times in the past, I feel that it deserves to be repeated once again. Anecdotal evidence is suggesting that a growing number of small business owners are experiencing recent new sales increases beyond their earlier expectations. I’m not offering any political commentary, so whether this renewed economic optimism is the result of the recent election or not, this economic surge might represent the much anticipated catalyst for a long overdue small business recovery. But to benefit from this renewed economic optimism, it’s imperative that you act.

It’s understandable that entrepreneurs are noticeably cautious after experiencing nearly a decade of anemic economic growth; however, you will have no other choice but to play in the game if you are to win the game. It is more important than ever in this current environment to keep your fingers on the pulse of both your customers and competitors, as well as on the local and national economies. The valuable insights that you will discern can guide you in making the well-thought out decisions necessary to take full advantage of any signs of economic recovery.


Success requires action. Do you have a deliberate and comprehensive plan for your small business for 2017? Flying by the seat of your pants or rolling the dice will not likely produce the results you have been hoping for. One year from now, a small number of success-oriented entrepreneurs will be reflecting back on 2017 and viewing it as their breakout year. This success will not be the result of luck, but rather action.

How you will view your small business success for 2017 just one year from today? Will you get down onto the playing field where success awaits you, or will you choose the comfort of the grandstands?

Posted in BusinessComments (0)

Catapult Your Sales Skyward

Catapult Your Sales Skyward
By Tom Irmen

I believe the primary reason for missing the potential to achieve explosive growth in your small business might be your decision to place your customer service levels on the back burner. Entrepreneurs often rely on their websites, social media and online, print, on-air, and mail marketing campaigns to increase sales volume. Yet despite their best efforts to generate additional sales revenue, many of these same companies offer their customers a woefully low customer service experience that only serves to erode even their best sales efforts.

In a 1970s episode of M*A*S*H, a popular TV satire on the Korean War, Major Frank Burns, a not-so-skilled surgeon, focused primarily on his military career, once stated: “This war wouldn’t be so bad if it were not for all of the wounded.”

I’ve witnessed firsthand how many entrepreneurs who, in response to overwhelming customer sales and their inability to maintain acceptable customer service levels, begin viewing their customers as adversaries. A sort of, “My business wouldn’t be so bad if it weren’t for all of the customers” philosophy.

All too often I’ve witnessed small business owners who have succeeded in increasing their sales only to leave a negative wake behind them as their newly found customers are forced to accept their below standard service levels. They’ve promised their customers 100%, delivered 70%, and become angry when the customer brings the difference to their attention.

No business can have enough good press. Every satisfied customer is a reporter on steroids, telling those they influence about the positive experience they’ve had with your company. Conversely, they’re more than certain to pass along their negative experiences as well.

It’s just good common sense to successfully differentiate your small business from the competition by allocating more of your resources into your company’s customer service experience. Your competitor may have the “glitziest” website in town, but your commitment to a superior level of customer care will propel you past their façade if they fail to deliver the quality customer service their customers demand.

Posted in BusinessComments (0)

Year-End Tax Planning

Year-End Tax Planning

You can make contributions to 401(k) or 403(b) retirement plans until December 31, 2016, and SEP or Roth IRAs until April 15, 2017. Maximum contributions vary. With a 401(k) plan, you defer up to $17,500 versus Traditional and Roth IRA maximum contributions of $5,500 ($6,500 if you’re age 50 or older).

You have until December 31, 2016, to take an RMD (Required Minimum Distribution) from your retirement plan if you’re over the age of 70½ or you face a hefty 50% penalty. The most common mistake made is the failure to take an RMD for both an IRA and 401(k). You must take a RMD from each plan. Multiple IRA accounts are treated as a single account, so only one RMD is required.

Consider making a charitable contribution of highly appreciated stocks. If you’re over 70½, donate your required RMDs to your favorite charity up to a maximum of $100,000. This could lower your taxable income and may even help shelter your social security income from taxes.

If you realized losses on some stocks during the tax year, you can only deduct $3,000 of that loss. One strategy to consider, Tax Harvesting, is to sell some of the stocks you’ve made money on during the year to offset your stock losses. You could then wait 31 days and buy these same stocks back again. It’s important to wait 31 days, otherwise the transaction is considered a “wash sale” and you would forfeit the tax benefits.

If you have a Traditional IRA, you might want to convert all or part of your IRA to a Roth IRA, providing you don’t increase your taxable income for the year. Converting to a Roth IRA may save you and your loved ones future taxes.

Before you make any changes to any retirement plan, always consult a qualified tax professional. For assistance with all of your financial planning needs, I encourage you to discover just how Financial Partners of TN, LLC can assist you. Chosen by UT Federal Credit Union, Peoples Bank of the South, and UBANK to provide their members with independent financial planning services, Financial Partners can be your financial partner to a brighter financial future.

Financial Partners of TN, LLC
2100 White Avenue
Knoxville, TN 37916
865.558.8182
www.financialpartnerstn.com

Posted in BusinessComments (0)