Business Banking E-Newsletter - February 2011

Financial Resolutions for 2011

No matter how healthy your business is, chances are good that there are some financial issues you could have managed better in the past year. So when you start anew and set New Year's resolutions, make sure to include some that relate to your financial future.

Here are a five to consider for 2011 based on suggestions from Phil Leibowitz, a partner of San Francisco accounting firm Burr Pilger & Mayer, whose clients includes entrepreneurs.

No. 1: Set personal financial goals.

If you're a 30-year-old who is just starting out in business, your personal goals and a timeline are likely to be different from those of a 60-year-old who may be eyeing retirement. And these plans may have an impact on the decisions you'll be making for your business in the coming year. So it's worth taking time to consider where you want to be personally in three to five years -- and discuss what that means for your companywith your tax professional.

"I would have the 30-year-old think about his risk orientation and talk with him about how much money he wants to invest in his company and leave there for future growth," says Leibowitz. "With the 60-year-old, I would be talking about succession planning and starting to diversify his money out of the business."

No. 2: Make a budget.

Only a fraction of entrepreneurs write a budget, according to Leibowitz. While business owners may think they can keep track of their company in their heads, he doesn't recommend it. "It's like driving at night without the lights on. You know there's a road there, but you don't know exactly where it goes."

The process of creating a budget is critical for planning a company's future, instead of just reacting to it. Leibowitz suggests starting with such questions as:

  • Will you need extra cash at a certain part of the year?
  • Will sales slow down or pick up seasonally in your industry? If so, will you need to cut costs or hire extra help?
  • Will you need to increase your line of credit for some short-term need?

No. 3: Talk about the company's priorities with your team.

It's important to share your goals for the next year with employees, especially if your plans reflect shifting priorities. "Maybe your goal this year is to increase market share, and you're willing to give up some profits to do it," Leibowitz says. "If your employees don't know that, they might be price sensitive when making sales and lose business. So you want to make sure they're on the same page."

You also want to be clear about the role each employee will have in meeting business goals. Mapping out specific responsibilities can be especially helpful when evaluating employee performance for raises or bonuses.

"If you have five employees, this doesn't have to be formal. If you have 40 or 50 or 200 employees, you need a process," Leibowitz says.

No. 4: Lock in fixed costs.

Leibowitz expects that as the economy improves, your vendors, just like you, are likely to want to increase prices and cushion their margins. Therefore, he suggests staying one step ahead and negotiating terms now.

"With rent and other business specific fixed costs, you want to negotiate two-, three- or five-year agreements where you lock in the current price or agree to only inflationary increases," Leibowitz says.
No. 5: Revisit postponed expansion plans.

If you've put off plans because you couldn't secure capital, it might be time to revisit them in the coming year. Leibowitz expects the lending environment to improve in 2011, at least for businesses whose cash flow and balance sheet are in good shape.

"In 2008 and 2009, banks were reticent to do anything unless it was riskless to them," he says. "They would only lend to companies with ultra strong balance sheets." Now he's beginning to see companies that are profitable with merely solid -- not extraordinary --balance sheets qualify for loans.

"The cost of capital only goes up over time, so this is a good time to establish a good banking relationship, before that starts happening again," Leibowitz says

Is Your Status Quo Killing Your Business?

The more things change, the more they stay the same -- especially in business. And that's the problem, according to global business consultant, Rebel Brown.

"As much as we all acknowledge how the world has changed over the last two decades, businesses and corporations tend to continue doing things the same way they've always done them," said Brown, a consultant who has worked with companies as diverse as Silicon Graphics, NeXT and Verity, as well as startups in the U.S. and abroad.

"I can't count the number of times executives have told me, 'Well, that's the way we've always done it.' The truth is that most companies talk about change far more than they actually engage in it. That's because they are afraid of making any change out of fear -- of Big Bang disruption, of the wrong change or of leaving the safety and comfort of the known. We're stuck in the way we've always done it -- and that's a big reason why our economy is stuck in neutral."

Brown, author of Defy Gravity, believes that the key to evolving and prospering is to not only challenge some of our most basic business assumptions, but, in some cases, to reject them outright. Brown has proven through her past client engagements that businesses that let go of the status quo will begin to rise above their competition, defying gravity in a sense. In order to start that process, Brown wants executives to start questioning some of the most common sacred cows of business, including:

It's Our Best and Biggest Seller 

Sometimes clinging to the cash cow can lead to a complacency that prevents new companies from staying in sync with what the market needs. Instead, these companies become slavish to the needs of one client, and ignore the changes in the marketplace. What's worse is that the big seller may represent strong revenue, but all the extra attention this client commands may actually mean that it's big only in revenue, but not in profits. What's worse is that your company may end up completely incapable of surviving if that big seller stops selling, because myopia has prevented them from evolving to meet the changing needs of their customers.

They're Our Biggest Customer

Are they? Sometimes our best customer commands more attention than the rest, which cuts into the actual profitability of that customer. It may also take our attention away from other customers who could account for as much profit, if the time and effort were taken to help those relationships grow. Moreover, focusing on a very select set of big customers makes us myopic to the changes in our industries, often preventing us from capitalizing on other opportunities for growth and expansion.

It's a Huge Opportunity 

The big deal, the dream client, the huge order -- all things that businesses strive for -- may not wind up being that profitable in the long run. We'll discount, deal, sacrifice strategy, dedicate extra resources and throw out the baby, the bathwater and the tub to get those deals. And once we have them, we celebrate and take our victory lap, but what have we really won? We rationalize that we'll make up whatever we spent to get the deal over the lifetime of the contract. We justify the extra effort by thinking if we can get this big domino to fall, other big ones will follow. But the reality is that those plans aren't always sure things. Remember, huge opportunities aren't always inherently opportunities for success. They can be opportunities for failure, as well.

"Let's face it, two years ago, we never expected the emergence of social media as a way to communicate with and market to our customers and prospects," Brown added. "And five years ago, many didn't expect the web would become the major revenue driver it's become. So, if the world around us is changing so dramatically, so quickly, why do we cling to the oldest ideas in business? If we truly want to defy gravity, we must first untie the tethers that bind us to old assumptions. We can use our innate human abilities to learn to think differently about our businesses by listening to our markets and shifting our perspectives -- from gravity to growth."

25 Ways to Simplify Your Business

It's your typical day at the office. Like every other day, it started at 7:00 a.m. When you sat down with that first cup of coffee, you were hoping to get to work on some meaty stuff-strategic planning, ideas for that big project, a thorough review of your staffing needs for next quarter--the kind of long-term thinking that helps your business grow. But you'd barely gotten started when... it started. Urgent phone calls from clients. Personnel crises. Last-minute meetings. Stacks of documents, checks and other paperwork that need your approval or signature. Suddenly, it's 7:00 p.m., and all you've done is put out fires.

Want tomorrow to be different? Then read on for 25 easy ways to simplify your business so you'll have time for what really matters. Put these ideas to work, and before you know it, you'll be finishing up that strategic plan... and maybe even have time left over for a life.


Streamlining your business technology can make life less of a headache for everyone. Entrepreneurs often "don't realize they can make things easier," says Kevin McElligott, founder of iTech Developers, a Nevada City, California, technology consulting firm and hosting provider. Here are a few ideas to get your technology in tip-top shape:

1. Serve it up. A server can act as a digital filing cabinet for your growing piles of documentation. Compared to daisy chaining several PCs, "Servers give you a lot more reliability and improve your business," says Mike Beltrano, supervisor of product management for servers at CDW Corp., a Vernon Hills, Illinois, server company. Another bonus: By keeping important documents on a central server, it's easier to back up all your important documents daily.

2. Phone it in. Are you wasting time running between voice mail on your cell and office phones? VoIP systems offer a great deal of personalization and features for a rock-bottom price. In fact, VoIP can be up to 40 percent cheaper than a traditional small-office phone system, and it offers useful features for any small business. Voice mails, for example, can be handled just like attachments--clicked, dragged, dropped and passed along. "Voice mail is becoming e-mail that can be forwarded where you want it," says Henry Kaestner, CEO of, a Cary, North Carolina, firm that provides VoIP services to companies. These systems are fairly new, but they're getting more popular and more reliable every day.

3. Take it online. If you've taken the leap of setting up an accounting package to handle your bills, take the extra step of automating the process. See if your accounting software can automatically generate invoices as well as e-mail reminders for late payments. "The system will literally tell me when it's time to call," says McElligott, whose automated billing process alerts him after each late notice has been e-mailed to a customer, and it automatically suspends the client's hosting services as of the third notice. Likewise, your accounting software (and your bank) can handle electronic transfers so you never have to worry about a late electric bill.

4. Hit the web. Your website is a potential client's main access point to your business. Don't worry as much about fancy graphics as making sure visitors can get the information they need. An online FAQ list can cut down on the time clients spend calling with basic questions and prevent a frustrated client from going elsewhere. You don't have to be a techno-whiz to set up a good website. Many web hosting companies can provide reliable websites for relatively little money, and many provide tools to help even technophobes set up online purchasing and billing.


Money might not be the root of all evil, but it is the cause of many headaches for business owners. Here are five tips for managing your money better:

5. Bank on it. "One of the assets business owners have is their cash," says Manny Calzon, vice president and finance manager for the central district of Merrill Lynch in Tampa, Florida. But many entrepreneurs don't understand how much they're paying in service charges to their banks every month. Request a bank analysis statement that breaks down the generic service charges found in your monthly statement. "You can make an educated decision as to whether you need [all the services you're] being charged for," Calzon says, "and if not, [ask the banker to] streamline and reduce costs associated with this account." You can then reinvest the savings in ways that take the business to the next level.

6. File taxes electronically. Companies with $10 million or more in total assets that file 250 or more returns a year are now required to file their 2006 taxes electronically. "Small businesses are going to be scrambling," says Bradford Hall, managing director of Hall & Company CPAs in Irvine, California. "They're going to [need] an automated payroll service that files electronically for them." So get a head start now to make life easier later on.

7. Pay now, not later. Can you pay smaller bills in advance? If you have a monthly bill for $15 but opt to pay $90 for six months of service, you'll save $1.95 in stamps and you won't incur late fees. Best of all, you're not wasting time paying bills.

8. Upgrade your accounting systems. "A business that's projecting $10 million-plus [in sales] should be on a sophisticated system," Hall says. Software packages such as BusinessWorks, Enterprise, Great Plains (which was recently acquired by Microsoft) and MAS 90 offer increased sophistication for a growing company and will make life much easier come tax time or, heaven forbid, an audit.

9. Make your (bench) mark. It's common for growing companies to do business without understanding how they stack up against similar companies in their industry. Most likely, your accountant has industry profit and overhead statistics at the ready--data you can keep on file for future strategy sessions without having to do your own legwork. Says Hall, "Businesses aren't taking advantage of it."

10. Obey the urge to merge. You might pay slightly more, but renewing all your insurance policies on the same date with the same agent lets you sit down once a year to review insurance for the entire business instead of having different renewals pop up three or four times a year. You'll save time, and your insurance agent "will do better with the full picture," says Scott Simmonds, owner of Insurance Consultants of Maine, a Saco, Maine, company that helps small-business owners navigate their insurance plans. Check out Simmonds' site or InsuranceBuzzer for tips on 40 types of insurance.


Day-to-day management of employees and processes is probably the single toughest job for any entrepreneur.

Want to simplify? Here's how:

11. Hire strategically. Create an online application form, and have elimination criteria related to scheduling, salary and educational level. "Select out vs. select in," says Suzanne Zuniga, COO of CorVirtus, a Colorado Springs, Colorado, HR consulting firm. Being more selective means you'll hire sooner and get back to work.

12. Stay on schedule. Creating a schedule for employees is a time-consuming nightmare for every employer, especially in retail. But there are software packages-- Asgard System's Time Tracker,

TimeClock Scheduler and TimeCurve Scheduler , to name a few--that let you scan for scheduling errors and track employee hours and earnings in real time. Some, like TimeCurve Scheduler, also integrate with QuickBooks to make payroll easier. Scheduling software packages range in price from around $125 to more than a thousand dollars with site licenses depending on the size of your staff and what you want, but it's an investment that will save you time in the long run. Many of these companies provide free demos on their websites for you to try, too.

13. Rent a CFO. At some point, a bookkeeper won't be able to keep up with your burgeoning bottom line. "One of the biggest mistakes business owners make is they don't realize they need the sophistication of a CFO," Hall says. Today, there are employment agencies that specialize in hiring out CFOs. You can "rent" a CFO who will come in one day each week or month, depending on what you need. A temporary CFO's services can be expensive--$1,000 or more per day--but is worth the cost if he or she helps focus your business and make it more profitable.

14. Tighten your supply chain. "Strong partnerships with suppliers and service providers [are] critical in the supply-chain excellence area," says John DuBiel, managing partner of Raleigh, North Carolina-based Supply Chain Edge , a firm that helps companies identify, develop and execute their supply-chain strategies. Keep relationships strong by leveraging your buying power with as few service providers as possible. Says DuBiel, "Simplify and leverage all the volume you can."

15. Outsource your HR function. Entrepreneurs spend up to one-third of their time doing payroll and benefits administration. They're also risking penalties if tax payment deadlines aren't met or filings are incorrect. "When you pay a company that you outsource to, you're paying for the benefit of their mistakes on their dime, not yours," Zuniga says. So outsource HR, and make your time count.

16. Have fewer staff meetings. Do you really need a staff meeting every week when an e-mail update might do? Fewer staff meetings mean less talk and more action. Workers will thank you for your brevity: In one survey, 60 percent of executives complained about the time they waste in meetings, and 74 percent doubted the meetings they attended were effective.


Catching consumers' attention is only getting harder. Here's some advice for revving up your marketing efforts:

17. Do some data mining. What do customers think about your company? "You don't build your brand by yourself anymore; your customers are equally involved," says Michael LeBeau, CEO of Byte Interactive, a South Norwalk, Connecticut, digital marketing company. Simple customer comment cards or web-based survey forms can save market research costs.

18. Leverage partnerships. Strategic partnerships with local businesses will help you rise above the noise. Picking the right partner, however, can be very time-consuming. Simplify the process by looking to your own customers, vendors and suppliers first. You already know each other's strengths in terms of services, products and marketing, which will let you move more quickly to develop effective cross-promotions and sponsorships.

19. Go directly to the consumer. Are you spending all your time knocking on big retailers' doors and saving for TV ads when half of U.S. consumers have lightning-fast broadband connections? "I'm seeing more entrepreneurs starting to market their products directly to the consumer," says Peter Koeppel, founder and president of Koeppel Direct, a Dallas direct-response TV media buying agency that works with clients including Cigna, Columbia House and DirecTV. It's never been cheaper or easier to make your own commercials and post them on your website. "There's technology now [so] that when someone goes to your website, the commercial automatically comes up," Koeppel says. "That's a way for a small business that maybe can't get on TV to advertise."

20. Get the message. It's easy to lose brand focus in a world of in-person, over-the-phone, online, catalog and direct-mail sales. To simplify, divide your business into five main channels (website, catalog, direct mail, employees and customer service) and have one main marketing message every week (a sale, a new product, a new partnership and so on) that you communicate and track for consistency across all channels. You'll see fewer customer-service hassles and less turnover from frustrated employees who can't read your mind.

21. Consolidate your advertising legwork. Most business owners invite random interruptions from advertising representatives throughout the week. Instead, set aside a block of time--Monday afternoon, for example--when advertising people know they can reach you. Everyone will save time, and you won't have to hide anymore.

Personal Time

"It's very easy to let work consume you," says Bo Short, president of the American Leadership Foundation, a Charlottesville, Virginia, nonprofit organization that offers leadership conferences and seminars. "But if you do, will it eat you alive?"

Here are five ways to create a more balanced life:

22. Decide what to outsource. You don't need to have your hand in every single pie anymore; let someone else carry part of the load. Outsourcing a few tasks gives you time to focus on something else--even if it's a round of golf now and then. Plus, "You're the customer, and they'll treat you better," Short says. Learn to delegate to employees, too.

23. Create boundaries. Set aside 10 minutes after lunch to make and return personal calls. Set a time for leaving the office every day, no matter how busy you are. And spend at least two hours doing something fun before you burn some late-night oil. Your family will thank you.

24. Shorten your to-do list. "A to-do list is nothing but a wish list," says Barry Izsak, president of Arranging It All, an Austin, Texas, firm that helps companies get organized. A long to-do list leaves less time to focus on revenue-generating ideas. Instead, focus on the top three urgent tasks for the day. The rest can wait.

25. Love your inner Luddite. Entrepreneurs who become slaves to gadgets "are running reactive businesses and being reactive with their time," Izsak says. Try working unplugged--this means no internet connection and absolutely no phone calls--for one hour every morning. It will give you a sense of accomplishment that lasts all day.


Outlook 2011: A Mix of Clouds and Sun

Dear Valued Investor;

Neither bulls nor bears in 2011, LPL Financial Research expects the economy and the markets will be range-bound in 2011. Bound by economic and fiscal forces that will restrain and not reverse growth, we believe the markets will provide modest single-digit rates of return.

In 2011, business leaders, policymakers, and investors will play important roles in shaping the investing environment. We anticipate that:

  • The job market will stage a comeback. Slowing productivity gains have driven the need to bring on new workers, we believe business leaders will step-up hiring, ultimately resulting in the unemployment rate drifting lower. However, slow sales growth from tepid consumer spending will keep the pace of hiring modest. That said, we expect nearly twice the pace of job creation experienced in 2010. Economic growth as measured by Gross Domestic Product (GDP) in 2011 will be near the long-term average at 2.5–3%; however, this is below the average of 3.5 – 4%, which is typical at this stage of a business cycle.
  • Policymakers will deliver economic stimulus. As 2011 gets underway, the Federal Reserve (Fed) will be in the midst of providing substantial economic stimulus — after already providing a record-breaking $1.75 trillion in stimulus in 2008 and 2009. Later in the year, drags on growth will begin to emerge as the impact of the Fed’s stimulative monetary policy begins to fade and there is a gridlock-induced shrinking of the federal budget deficit.
  • Investors will play it safe. Inflows to riskier markets will be anemic, contributing to modest performance for both stocks and more aggressively postured bonds. We expect single-digit gains for stocks as earnings growth slows and valuations remain under pressure, and single-digit gains for bonds as yields remain range-bound.
  • Currencies will influence returns. The currency impact on investing will be pronounced in 2011, as the currency war that began in 2010 presents both opportunity and risk. We expect a downward, volatile path for the US dollar.

Overall, 2011 will continue the economic and market volatility of 2010. The global economy remains out of balance, teetering back and forth between the soft spots that invoke a need for increasingly extended policy support and the growth spurts that provoke a desire to begin to pull back some of the record-breaking stimulus. The last time government spending comprised as much of GDP as it does today (during 1945–1960); the economy went through a period of heightened volatility driven by the swings in policy action.

In 2011, the policy-driven themes of reflation, which is the intentional pursuit of modestly higher prices, and a broader U.S. foreign policy provide investment ideas that can thrive in a year where the performance of the major indexes is likely to be lackluster. Expected volatility, which will remain elevated, may present risks to be sidestepped and opportunities to be taken advantage of. Investors with a more opportunistic profile may benefit from a tactical approach to investing in order to find attractive opportunities when offered and successfully take profits when appropriate. Longer-term strategic investors should consider remaining broadly diversified. As always, I encourage you to contact me, Shari Hopkins, if you have any questions.

If you would like to read more detail about the 2011 Outlook by LPL Research, please click here.

Best regards,
Shari Hopkins
Financial Consultant, CFP
Coulee Investment Center
(608) 784-3904

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not ensure against market risk.

This research material has been prepared by LPL Financial.

The LPL Financial family of affiliated companies includes LPL Financial and UVEST Financial Services Group, Inc., each of which is a member of FINRA/SIPC.

To the extent you are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and make no representation with respect to such entity.

Not FDIC or NCUA/NCUSIF Insured | No Bank or Credit Union Guarantee | May Lose Value | Not Guaranteed by any Government Agency | Not a Bank/Credit Union Deposit Member FINRA/SIPC