While we are on the subject of tracking and measuring our sales process, I thought it appropriate to mention a free little tool out there called Free CRM (www.freecrm.com).  A CRM, or Customer Relationship Manager, is a software program that helps you store and track information about your leads, customers, opportunities, and sales.  CRMs have advantages such as allowing you to categorize customers so that you can use targeted marketing approaches based on the type of customer and your desired relationship with them.  CRM systems are great for businesses large and small to simply and accurately track sales data and have control over your sales process.  It takes discipline and effort, but the increase you will see in your sales make it well worth it!

 ___________________________

Matthew A. Griffith is an attorney, business performance coach, mentor and entrepreneur.  He coahes, advises and guides business owners, entrepreneurs, inventors, property managers, investors and real estate professionals.  Matt has nearly two decades of experience helping businesses grow.

Matt’s next class. . .

Posted on | July 16, 2009 | 2 Comments

August 28, 9:30 am:      Legal Landmines: Grow Your Business Without Stepping In It

New Home Buyer Tax Credit Law Explained

Posted on | July 16, 2009 | 4 Comments

GUEST POST FROM MICKEY BROOKS-

Matt,

 Thanks for letting me respond to this question for you and your blog readers.

 First, the disclaimer – I am not a tax expert so the client should refer to a qualified accountant or CPA regarding their particular situation.

But, here is the exact text of an answer to the same question from the National Association of Home Builders. I had this at hand because I just got the same question from 2 of my clients yesterday. I discussed this with a couple of local CPA’s and they say the tax law specifically allows for the description of the use of the credit as described below. I am waiting for them to supply me the text of the tax code that addresses this.

Q – What is the definition of a first-time home buyer?
A – The law defines “first-time home buyer” as a buyer who has not owned a principal residence during the three-year period prior to the purchase. For married taxpayers, the law tests the homeownership history of both the home buyer and his/her spouse. So, it is very clear for married buyers.

For example, if you have not owned a home in the past three years but your spouse has owned a principal residence, neither you nor your spouse qualifies for the first-time home buyer tax credit.

However, unmarried joint purchasers may allocate the credit amount to any buyer who qualifies as a first-time buyer, such as may occur if a parent jointly purchases a home with a son or daughter, or an unmarried couple wishes to purchase a home together and one of them has owned a home in the past three years. In the unmarried couple’s case, the partner who has not owned a home in the last three years would file as a single taxpayer and have their partner allocate the credit to them.

Ownership of a vacation home or rental property not used as a principal residence does not disqualify a buyer as a first-time home buyer.

Best regards, and thanks for all you do…

Mickey Brooks
Mortgage Planner
JLB Mortgage Group
11769 Whisper Bay Ct
Carmel, IN  46033
317.218.0283 (Office)
317.218.0291 (Fax)
888.249.4003 (Toll Free)
mbrooks@jlbmortgagegroup.com
www.jlbmortgagegroup.com

Residential Landlord-Tenant Rules

Posted on | July 14, 2009 | 1 Comment

QUESTION FROM ONE OF MATT’S READERS-

“I just came across your website and found it very helpful. I have a question concerning a landlord issue. We recently just moved out of a home we were leasing. We did everything the landlord asked for and followed the lease perfectly. During the time we stayed there the landlord would visit almost everyday unannounced. He would use the driveway and work in the shed behind the house. Many of his friends would just wander the yard also. He also used our water hose almost everyday. We did talk to him about this and he told us we had to get use to it. We decided we would just stick it out and not renew our lease.

Upon moving out the landlord said we had left a small spot on the back of his 32 year old pink countertop. He rented the property out right after we moved and is still using the countertop. He charged us $540 for the small spot saying it had 3 years left his loss. So he was charging us $180 a year. I read up on Indiana law and I thought it said he can only charge fair market value. I also read we were entitled to have reasonable notice when he came on the property. That we were entitled to peaceful living which we definally did not have ( I did take many pics/videos of him coming and going all the time) Do we have any rights? The 45 day deposit letter he sent us just said he was charging us $180 a year his loss. Is it vaild? He has no intention on fixing or replacing the counter plus he is still using it. Do we have any rights? He also asked us to lie for him if the county assesor came by. He is saying his wife lives in the rental under her maiden name so he can claim the homestead exemption. Is the lease vaild if he does not even own the home? The home is under his wifes maiden name only. Any input would be greatly appreciated! Thank you for your time.

Maria”

Matt’s Answer-

Landlords are not always right.  Tenants are not always wrong.  If your facts are correct, you might have a very good case.  Indiana has a security deposit statute that poses a “Zero Sum Game” for landlords.  If a landlord wrongfully holds a security deposit after the lease ends, the landlord loses.  If a landlord fails timely to provide the “45-Day Letter” and any security deposit balance owed to the tenant, the landlord loses.  So, landlords should be careful to follow the “45-Day Letter” Rule very carefully.

Sounds like this landlord is trying to cheat you,  Fight it.  Don’t let him charge you for a new countertop, when you did not even damage the old one.  Right is right, and this landlord is wrong.  You should consider going to small claims court.  I would need to see your evidence and the lease to be certain about your best options.

You might want to read this post-  Indiana’s Security Deposit Law

Good luck.

Matthew A. Griffith is an attorney, business performance coach, mentor and entrepreneur.  He coaches, advises and guides business owners, entrepreneurs, inventors, property managers, investors and real estate professionals.  Matt has nearly two decades of experience helping businesses grow.

Why Your Business Must Have An Operations Manual

Posted on | July 8, 2009 | No Comments

Businesses fail.  Most businesses fail, because they run out of momentum.  You’ll hear that described in various ways, like: 

• High debt service.
• Shift in markets.
• Poor cash flow.
• Insurmountable rise in costs.
• Inflation.
• Recession.
• Insufficient capital or “under-capitalization.”
• And so on.

Those are just sad excuses for a business to fail.  In the end, every business failure is the result of the owners and managers failing to identify and plan for future opportunities and threats.  I am not a big fan of SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), because it usually does not translate into action.  SWOT sessions  make management feel good that they involved the whole “team,” but concrete action steps are not often listed, assigned to personnel and followed up later.

Done well, SWOT can benefit a business.  It’s just not done well often enough.

Another approach is more akin to Kaizen theory, which is generally defined as incremental but continuous improvement.  That works well, if a business has two key things:

1.  An Operations Manual

2.  Regularly scheduled meetings to review and improve the Operations Manual.

SYSTEMS!    That is the key to operating a business well.  A system enables a business to all these things as a part of what the business itself does:

• Deliver the same quality good or service each time to every customer.
• Identify quickly the cause of any problem resulting in lower quality.
• Identify new customer needs and wants, which is often a signal for a new market opportunity.
• Identify trends suggesting that your current offering of goods or services is becoming obsolete.
• Reduce inefficiencies.
• Reduce risks and losses.
• Grow market share by effectively communicating with customers and future customers.
• Identify new vendors, alternative sources of materials, labor-saving equipment/services, and strategic partnerships.
• And so much more.

I’ve watched dozens upon dozens of businesses fail over the years.  In the final analysis, each one failed because each lacked systems.  None were fully committed to systematic business operations.  The owners and managers thought too much about making widgets and not enough about building a business enterprise.

So, what is your business doing?  Are you building widgets?  Are you simply creating or maintaining jobs for the owners or managers?

Or are you fully committed to building a business?  Are you developing the systems needed to build your business enterprise?

Diversified Portfolios

Posted on | July 6, 2009 | 1 Comment

Guest Post by-

Christopher R. Norwood, CFA(r)

Senior Investment Advisor

Biechele Royce Advisors

The Knowledgeable Investor

Many people believe they have too little money in their investment portfolio to own individual stocks. They feel that mutual funds give them the “safety” of diversification. I often review portfolios for prospects and find that they are invested in five, six, ten different mutual funds. The prospects believe they are adequately diversified; after all, they own multiple mutual funds which hold one hundred plus stocks each on average. They are often surprised when I tell them that they are not very well diversified at all. They are down right disbelieving when I tell them they could get almost the same diversification with a portfolio of 25 carefully chosen stocks. The reality is that 15 to 25 well chosen stocks provide 90% of the benefits of diversification and that a 40 stock portfolio can provide 99% of the benefits of diversification. The hundreds of additional stocks owned by the mutual funds in which our prospects are invested provide almost no additional diversification benefits. Have $100,000 allocated to equities? More than enough to build a 25 stock portfolio that will adequately diversify away your non-systemic (company-specific) risk. However, you aren’t properly diversified just because you own a properly diversified stock portfolio.

A properly diversified stock portfolio provides nowhere near the diversification benefits of investing among different asset classes. Small, large, domestic, and international stocks are sub-asset classes, not truly separate asset classes. After all, stocks tend to move together because companies tend to prosper or suffer together as economies expand or contract. Rather than limiting oneself to a single asset class, investors should build a properly diversified portfolio containing all four major asset classes (the historical data indicates that a four asset class portfolio composed of stocks – domestic and international, bonds, real estate, and commodities provides high levels of return per unit of risk).
The famous Brinson, Hood, and Beebower (BHB) study done in 1986 indicated that approximately 92% of a portfolios’ variation of returns is due to the mix of asset classes chosen. BHB used stocks, bonds, real estate, and cash in their study. Simply put, the percentage of each asset included in your portfolio will go a long way in determining your returns and the volatility of your returns over the long run. Individual security selection and market timing are not major determinants of long run returns and variation of returns relative to the asset classes in which you choose to invest. (Importantly, the value style of investing does outperform so-called growth and momentum styles over the long run and therefore does add to an investor’s returns).

Consider that approximately 80% of actively managed stock mutual funds don’t beat their benchmarks. Most large cap funds don’t beat the S&P 500 index (large cap). Most small cap funds don’t beat the Russell 2000. Furthermore, the funds that do beat their benchmarks vary from year to year and there is no evidence whatsoever that a savvy financial advisor can pick a priori (in advance) which funds will outperform (Connecting the dots – your financial advisor or planner is blowing smoke when he confidently informs you that he’ll only put you into the best mutual funds, since he can’t possibly know which ones those will be. Unfortunately, too many financial advisors put their clients in mostly, or only, stock mutual funds and they tend to use the ones with the highest commissions!)
Okay, to review: a 25 stock portfolio will get you 90% of the benefits of diversification and a 40 stock portfolio will get you 99% of the benefits (assuming diversification is your goal). But is that a properly diversified portfolio? Stock portfolio – yes, investment portfolio – NO!
Multiple-Asset-Class investing offers demonstrably superior results to investors, providing high rates of return with less volatility than one, two, and three asset class portfolios. For instance, an equally weighted four asset class portfolio (composed of domestic stocks, international stocks, bonds, and commodities) returned 11.24% per annum from 1972 through 2008 with a standard deviation of only 14.11%, resulting in a Sharpe ratio of 0.46 (high). What that means for us individual investors is that we want to create portfolios containing stocks (domestic and international), bonds, real estate and commodities for the long-term. Importantly, we can adjust volatility by adjusting the mix. Also importantly, we can add additional return by using value investing (paying less for a business than its worth) rather than growth investing (paying a premium for a business) or momentum investing (buying a stock simply because it is going up).

Christopher R. Norwood, CFA(r)
Senior Investment Advisor
Biechele Royce Advisors
Ph: 317-913-7000
Fax: 317-913-7020
Cell: 317-590-9095
cnorwood@biechele-royce.com

Avoid Shareholder Disputes- ALWAYS!

Posted on | July 5, 2009 | No Comments

Every small business needs to address the possibility of future shareholder or owner disputes. These concepts apply to every business structure, including partnerships, limited liability companies ans corporations.

Shareholder disputes are time-consuming, expensive and counter-productive. Shareholders disputes are easy to avoid, if you agree on basic principles before shareholders come together as business partners. The basic principles include-

1. Who does what jobs.
2. Who gets paid what and when. (I include a provision to cover taxes.)
3. What happens if someone stops working or completing their job duties.
4. What happens if there is a buy-sell “triggering event” such as death, divorce, dissolution of the entity, disability, etc.
5. How elections are held to select company leaders.

The key to solving shareholder disputes is to AVOID them in the first place through buy-sell agreements, operating agreement and similar documents. Do NOT form your business partnership without addressing these issues IN WRITING AT THE START.

One final thought. . . pick your partners well. I have myself had to endure difficult and unreasonable business partners. So, trust me when I urge you to be cautious in selecting your partners. Assume each partner will be unreasonable at some point.

And get it in writing at the start!

Are You Violating Lead Paint Rules?

Posted on | July 1, 2009 | 2 Comments

Here is a reminder for all home sellers, residential realtors, brokers, investors and property managers to learn, understand and follow the federal lead paint disclosure rules.

EPA FILES COMPLAINT FOR NOT DISTRIBUTING LEAD PAMPHLETS-

The U.S. Environmental Protection Agency recently filed a complaint against property manager National Enterprises, Inc. and owner MA No. 2, LLC in Springfield, Massachusetts.  the complaint asserts that these targets violated the federal Lead Disclosure Rule when they failed to disclose information about lead paint to tenants who rented between June 2004 and January 2005. The EPA is seeking a penalty of up to $11,000 per violation for the 30 violations of the Disclosure Rule.

Please remember to provide the EPA Renovate Right pamphlet during renovation projects in pre-1978 homes which can be downloaded in several places on the Internet, such as www.buildindiana.org (choose codes and laws, and select EPA lead rule info option.)

Also, make sure your purchase agreements, leases, land contracts and similar documents comply with this law.

Matthew A. Griffith is an attorney, business performance coach, mentor and entrepreneur.  He coaches, advises and guides business owners, entrepreneurs, inventors, property managers, investors and real estate professionals.  Matt has nearly two decades of experience helping businesses grow.