Business Banking E-Newsletter - November 2012

Starting a Home-Based Business? Start Here

If you're thinking of setting up an office in your home, there are a number of considerations you'll want to take into account.

Zoning and Insurance

Perhaps the first issue you'll need to address is making sure your home business meets zoning regulations and that any required licenses or permits are obtained. Many towns and homeowners associations have restrictions on home business activities. If customers will be coming to your home, you may need to comply with other requirements as well. These include parking, disability access, and display of advertising. If you rent, check your lease and consult your landlord. It's also a good idea to tell your immediate neighbors what you plan to do so that they bring their issues to you directly rather than to the landlord or association.

You should also check your home insurance policy to make sure that "commercial" activities are covered. Most home policies do not cover claims arising out of commercial activities in a residence. If your business involves any activities that might increase the likelihood of slips or falls or damage to property, consider expanding your property loss and liability coverage.

A major factor to consider when operating a business from home is technology. The significant advances in Internet technology and home office equipment in the past 20 years have made working from home easy and realistic for a growing number of people. Yet there are several factors you should consider, including:

  • Systems support -- Make sure you have somewhere to go when you have systems problems. Find a local techie you can rely on to resolve systems issues quickly and effectively.
  • Backup -- A common oversight of many home businesses is systems backup. Save your work often, back up your files regularly, and make sure you have an alternative should your computer suddenly crash. Losing your files could mean losing your business.
  • Internet access -- High-speed access to the Web, via cable or DSL, is a necessity for most home businesses. Check with your local phone and cable company to see what's available in your area.
  • Upgrades -- The average computer is virtually obsolete in just three years, and most of the widely used software applications come out with new versions every two years, so keeping on top of technological advances is an ongoing effort.

Tax Considerations
If you operate a business out of your home, the IRS may allow you to deduct expenses associated with your home office. For sole proprietors, this is done on Form 8829 (Expenses for Business Use of Your Home). These may include phone, internet access, and various maintenance expenses, as well as a portion of your rent or mortgage and property taxes,1 association fees, insurance, and other expenses, based on the percentage of space in your home that the office occupies.

To qualify for these deductions, there are certain requirements you must meet. The home office must be used "exclusively" for business; a guest room/office will not qualify -- nor will any other shared space. Although the office doesn't have to be a separate room, it must be a "defined separate space" used exclusively for business. To take a deduction for phone expenses, the IRS generally looks for a separate line devoted solely to the business. The same applies to cell phone and Internet service.

The key to claiming any of these deductions is to prove that they are necessary for and confined to business use. Accordingly, it's a good idea to keep accurate records and back up your space-based deductions with photos of the office in case you are subject to an IRS audit.



1Mortgage interest and property taxes are also deductible under Schedule A and cannot be deducted twice.

© 2012 S&P Capital IQ Financial Communications. All rights reserved.

5 Reasons People Fail (& What to Do Instead)

Why do some people achieve their goals while others fail? It's because successful people manage to overcome five barriers that, in many cases, guarantee failure. Here are those barriers and how to overcome them:

1. Uninspiring Goals

When most people set goals, they envision a "thing," such as a particular amount of money, an object (like a new car), or a specific achievement (like writing a book). Unfortunately, these "things I'm going to get or do" goals don't appeal to the core of what motivates you, because they miss the point that what you're actually seeking in life and work is the POSITIVE EMOTIONS that you believe those things will produce.

Fix: Rather than envisioning a "thing" as your goal, envision--with all the strength in your imagination--how you will feel when you achieve the goal. That way, you'll be inspired to do whatever it takes (within legal and ethical bounds) to achieve that goal.

2. Fear of Failure

If you're afraid of failing, you won't take the necessary risks required to achieve your goal. For example, you won't make that important phone call, because you're afraid that you'll be rebuffed. Or you won't quit your dead-end job and start your own business because you're afraid that you might end up without any money.

Fix: Decide--right now!--that failure, for you, is a strictly temporary condition. If things don't go the way you'd like, it's only a setback that, at most, delays your eventual success. In other words, accept the fact that you'll sometimes fail, but treat that failure as an unavoidable (yet vital) component in your quest.

3. Fear of Success

In many ways, this fear is even more debilitating than the fear of failure. Suppose you achieved something spectacular, like enormous wealth. What if it didn't make you happy? What then? What if you ended up losing all of it? What then? Would your friends start acting weird? Would your family be envious? Such thoughts (and they're common) can cause even a highly motivated person to self-sabotage.

Fix: Decide that you're going to be happy and grateful today and happy and grateful in the future, no matter what happens. Rather than focus on possible problems, envision how wonderful it would be to be able to help your friends and family achieve THEIR goals.

4. An Unrealistic Timetable

Most people vastly overestimate what they can do in a week and vastly underestimate what they can do in a year. Because of this, most people try to cram too many action items into the short term rather than spacing out activities over the long term. The inability to get all the short-term steps accomplished creates discouragement and the impression that the final goal is slipping away.

Fix: As you list the activities and steps required to achieve a goal, schedule only the 20% of the activities that will produce 80% of your results. Beyond that, set ambitious long-term timetables, but always leave some "wiggle room" when you plan short term.

5. Worrying About "Dry Spots"

It's easy to get discouraged when you reach a point at which nothing you do seems to advance you toward your goal. For example, suppose you're trying to master a certain skill. You make swift progress at first but then, after a while, it seems as if you're not doing any better, or maybe a little worse. Some people use these "plateaus" or "dry spots" as an excuse to give up and therefore fail.

Fix: Whenever you

reach a plateau or dry spot, it's time to celebrate rather than give up. A plateau is almost always a sign that you're on the brink of a major breakthrough, if you just have the patience to stick with it and trust that you'll eventually achieve your goal.

Source: - Geoffrey James

23 Rules for Face-to-Face Meetings

While a lot of business is conducted today over the Internet and the telephone, customers often want to meet you personally, just to make certain you're the kind of person who can be trusted to deliver what you promise.

Here are the eternal DOs and DON'Ts of these face-to-face meetings, based upon experiences and dozens of anecdotes from "school of hard knocks" salespeople:

1. DO have a specific goal. 

Always have a goal like: "obtain approval to present to senior management" rather than something vague like "build a better relationship."

2. DO have a written agenda.

Create a one-page agenda showing three to five items or questions you'd like to discuss.  An agenda puts customers at ease because it sets a natural time limit on the meeting.

3. DON'T be showy.

A member of the team once went with several executives in a private plane to visit a customer in Ohio. The customer's first question was: "why don't you guys fly coach like we do?".

4. DO check your appearance first.

A member of the team once went to a meeting with an executive and discovered afterward that he had a hole in his sweater that showed a little pink circle of skin. We’ll bet he didn't hear a word that was said.

5. DON'T arrive late.

Arriving late tells customers that you don't give a damn about them. Always arrive at least 15 minutes ahead of time.

6. DON'T be too business-like.

While a little pre-meeting chit-chat is socially necessary, don't let the customer be the one who brings the conversation back to business.

7. DON'T be too friendly.

Rather than pretending to be a long-lost friend, be authentic about who you are and approach the customer with a sense of curiosity.

8. DON'T talk too much.

Initial sales calls are all about relationship building and gathering information, which you can't do if your mouth is moving.

9. DON'T listen too much.

If you don't add at least something of value to the conversation, the customer will think you're an empty suit.

10. DON'T argue with the customer.

If the customer doesn't agree with an important point, arguing will only set that opinion in concrete. Instead, ask the customer why he holds that opinion; then listen.

11. DON'T discuss politics.

If a customer insists upon talking about politics, segue the discussion by asking: "In what ways do you see the current situation affecting your business?"

12. DON'T discuss religion.

If a customer insists upon foisting religious views, suggest that you'd "love to speak about the subject sometime " and move the conversation back to business.

13. DON'T give a sales pitch.

Sure you've got something to sell, but if you pitch too soon, you'll get pitched out the door. Fix: Ask questions to understand needs, before you pitch.

14. DO have product knowledge.

Customers doesn't want to hear "I need to get back to you about that"...over and over. Make certain you're trained on your current products and policies...before the meeting.

15. DO have business acumen.

Customers expect you to understand their business model, customers and how both fit into the customer's industry. Do your research before the meeting.

16. DO remember customer names.

What could be more embarrassing than actually forgetting whom you're talking with? Write down the names of everyone in the room with a small table diagram.

17. DON'T ask personal questions.

A sales guy once looked at a photograph on his customer’s desk and asked: "Is that your mother?" It was a photo of his wife. He was not impressed.

18. DON'T flirt with anybody.

Anything you say or do that's even vaguely unprofessional will be common knowledge throughout the customer organization within two hours. Trust me.

19. DON'T be rude to anybody.

Imagine if you gave a dirty look to a guy who was smoking in the lobby bathroom of a huge office building and then upon entering the meeting, realized the man smoking is your client.

20. DO turn off your phone.

How could ANY call or text be more important than a real live customer? Turn your phone off and stick it in your briefcase.

21. DON'T let the meeting meander.

If you let the conversation wander, you're showing the customer that you don't have the focus necessary to get the job done.

22. DON'T overstay your welcome.

Your prospect has hundreds of other things that he or she could be doing, rather than spending time with you. So set a time limit for the call or meeting.

23. DON'T fail to follow-up.

Keep notes of the commitments you made and schedule the follow-ups in your calendar immediately after the meeting.

Source: - Geoffrey James

Train Employees to be Exceptional: 5 Rules

Companies spend billions of dollars a year on training. Unfortunately, a lot of that training is simply wasted effort, according to sales guru Duane Sparks. A while back, he gave a set of principles or rules for training employees. The conversation was mostly about sales training, but it applies to any kind of training. Here are those rules:

1. Teach Skills Not Traits

Rather than trying to change the personality of the individual, focus on training skills that can be taught and learned.

For example, suppose you're responsible for a field engineer whose duties entail going on customer calls. If she is naturally introverted (a trait) don't try to convince her to be more extroverted (a trait) in order to help you sell. Instead, train her how to listen actively (a skill) and how to use terminology customers will understand (a skill).

2. Teach the Appropriate Skill

Only teach employees skills that you're certain will produce tangible results, within the context of that employee's job.

For example, if a sales team consists of hunters (who find new business) and farmers (who develop existing accounts), it's wasteful to train everybody on the team on cold-calling techniques. Limit such training to the hunters and provide training in other skills (like account management) to the farmers.

3. Reinforce and Support the Skill

Whenever you train a skill, provide multiple opportunities to check on how well that employee is executing that skill and provide coaching as necessary.

Learning a new skill entails making it into a habit. Unfortunately, doing so usually involves overcoming existing habits, which is inherently difficult. Coaching allows you gradually reinforce the skill and overcome the habits it replaces.

4. Implement Skill-based Metrics

There are no truer words in business than "What gets measured gets done."  If you really want employees to integrate a skill into their day-to-day performance, you must, must, must measure the results of the application of that skill.

For example, if you're providing training on some aspect of your sales process, you should measure the conversion rate at that stage of the sales process, rather than just measuring the total revenue that's booked at the end of the quarter.

5. Consistently Measure Progress

If you do all of the above, you should be able to watch the metrics improve as the new skill becomes second nature. If you don't get the expected improvement, there's something wrong. Either you've been training the wrong skill or not providing enough reinforcement and coaching.

Source: - Geoffrey James

3 Surefire Ways to Grow Your Business

Every business struggles with the tradeoff of investing in and maximizing the core business while trying to take advantage of growth in new, adjacent markets. It's generally easier (and more profitable) to focus on your core business. That's the place where you have all the advantages--key customer relationships, brand recognition, strategic assets like equipment or offices, and more assurance that growth investment will pay off. However, every business that creates super-sized growth does so by extending its advantages into new, adjacent markets--new geographies, new product segments, new customer segments, or new sales channels.

How is this dilemma typically solved? Businesses try to balance a healthy mix of investment in the core and exploration and experimentation in new markets. Unfortunately, it's hard to build an organization that does both well. Which is why business is typically segmented (and individuals' roles) into one of three trajectories: maintaining business as usual, maximizing the potential of the core business, and investing in new adjacent markets.

Business as Usual

In any company, it's important not to take your eye off the core business. Each business should be expected to maintain a healthy growth rate--usually at or above the market growth rate--which extends the growth the business has comfortably achieved in the past. This is called "business as usual" growth rate, because it represents growth the business could achieve without significant investment. Note that it's not a "manage for cash" position; the business still funds investment that is necessary to maintain growth. Put a team on this that is responsible for delivering "business as usual."

Maximizing the Potential of the Core Business

What would it take to get more out of the current core business without moving into new markets? This might result in achieving a certain level of market share in core markets with targeted profitability. There is likely some significant investment required to get there, above and beyond "business as usual" investment. Assign a team to execute this investment and make them accountable for achieving the growth above the business-as-usual growth--likely over multiple years.

Investment in New, Adjacent Markets

Every company has opportunities to create growth outside of its core by leveraging its key strengths and strategic assets. This might translate into entering a new geography or adding a new product line. Make a team accountable for this growth, distinct from the rest of the business. Let them focus on experimentation-style growth over a period of time, where investments are trialed and tested. It's important that you separate this investment from the rest of the business; otherwise, it's too easy for these funds to be poached for investment in the first two areas.

Breaking your forecast, mindset, and organization into these three distinct pieces will ensure that you balance investment across each of your growth horizons, giving you the best chance of maximizing growth of the overall business.

Source: - Karl and Bill