WHAT IS THE “E” GAP?

Posted on | December 8, 2009 | 3 Comments

  

How will we recover from this recession?  This “GREAT RECESSION?”

How will we recreate the 8.2 Million lost jobs?

 

If you think the Congress or President Obama or the Federal Reserve is going to be part of the solution, then this article is not for you.  You are simply not in the right starting place fully to appreciate this blog.

 

The solution will not be big government or even big business.  Government does not save jobs or even create jobs.  Government can hinder or facilitate the business community in its natural endeavor of generating profits, which requires manpower which translates to jobs.  So, starting from that point, why won’t an economic recovery immediately generate more jobs?

 

I assume that the overwhelming majority of economists are correct that this will be a “jobless recovery.”  Here’s what that looks like visually:

 

   

 

 

The “E” Gap

 

 

The difference between economic growth and job creation is what I call the “E” Gap.  As explained below, the “E” Gap represents a void that will trigger the greatest wave of entrepreneurship we have witnessed since the end of World War II.

 

The precise numbers in the chart above are irrelevant, so please do not focus on the values that I have assigned here or the rates of GDP growth versus the rate of job creation.  Those are not the issues here.

 

If you start with the proposition that GDP or economic growth will out-pace job creation, then you must accept that there will be a “jobless recovery.”  That will be true, at least, in the sense that economic activity will increase faster than net job creation will grow.  I do not believe that those 8.2 million jobs will return in the same form as existed before the Great Recession started.  Here’s why:

1. Employers were extremely confident prior to the recession.  Employment is a measure of confidence in the economy.  If an employer is confident in the future, it will hire more employees in anticipation of future growth.  There are no indications that employers will exhibit the high levels of confidence that predated the recession.
2. Taxes, particularly employment taxes, healthcare costs, etc. will surely increase in future years.  These pressures will increase the costs of labor, which will cause the demand for labor (employment) to drop or at least not grow as quickly.
3. Employers will innovate in ways that will reduce the demand for employees.  Some of the best innovations result from the necessities created during difficult times-  RECESSIONS!  Unfortunately, innovation often means less need on labor.  Machines, computers, new devices, software, processes, etc. are being created right now, all in an effort to reduce costs.  Labor happens to be one of business’ largest costs.  Do the math.  Jobs will be lost forever.
4. Many manufacturing jobs have been lost forever.  Take our two largest job-producing industries: automobiles and homes. 
5. Employees seemingly distrust employers more today than in many decades.  The level of employer-employee and employee-employer disloyalty may have never been higher.
6. The Baby Boomers will be working longer, because they are living healthier lives for longer periods of time, and they have lost their retirement savings.  They can, want and must work longer, which will increase the supply of labor.

The bottom line:   SOME JOBS HAVE BEEN LOST FOREVER.

 

But, people have to eat, you say.  I agree.  In fact, I think that people want more than just food to eat.  I think people like to wear clothes, sleep in nice homes, drive cars, go to the movies, buy mp3 players, etc.  The unemployed will, sooner than later, find a way to earn a living.  And, businesses will still need services, innovation, talent, experience, etc.  While these needs normally translate into job creation, all indications are that jobs will trail economic growth.

 

If you can’t find a job, you create one!  I challenge anyone to disprove that proposition.  Even during the Great Depression, people found ways to survive.  Odd jobs eventually became services which grew into companies, which employed other people, and so on. 

 

Entrepreneurs will create their own jobs, build new enterprises and, in turn, create even more jobs.  AND THAT’S CALLED ENTREPRENEURSHIP.  Employers won’t hire back the 1,000,000’s of unemployed.  The unemployed will start small businesses, form partnerships, or work for a start-up or emerging company.  Job creation will start with the small venture and grow from there.  Don’t expect Uncle Sam or even Uncle Sam Walton (Wal-Mart) to create tomorrow’s jobs.  Look at today’s unemployed, highly skilled, experienced and hungry worker, middle manager or recent MBA graduate.  Those are tomorrow’s entrepreneurs who will restart the job market and create the economic recovery that will generate jobs and better wages.

 

 

More on entrepreneurship and the economy in years to come in a future blog.  Here, I wanted to cover the basic concepts that will create the “E” Gap.

 

 

________________________________________________

Matthew A. Griffith is a business and real estate attorney, entrepreneur, business success coach and investor.  He guides small business owners, management teams, inventors and investors to profitability using both time-tested and innovative business ideas, methods, tools and techniques.  For a consultation, contact him via email-  griffith@indiana-attorneys.com

Do I Need to Register My Company to Do Business?

Posted on | August 1, 2009 | No Comments

 

 

Yes, no, sometimes and maybe.

 

The answer as to what registration is required for a business depends on two things: (1) the legal entity you create to operate your business and (2) the nature of your business.

 

Small business owners often make the mistake of creating a corporation or LLC without completing basic steps.  Use this short checklist to review whether you formed or registered your business properly.

 

1. Pick the right legal structure for your business. Your options include the limited liability company (LLC), general or limited partnership, limited liability partnership or corporation. Your business lawyer and your accountant should be consulted.  You should consider such factors as the number of owners, the business plan, the capitalization plan, taxes and other factors.

 

2. File a Certificate of Business Name. Most businesses use a shorten name, called a trade name, for marketing purposes.  ACME Medical Products, Incorporated will be marketed as “ACME” or “ACME Medical Products.”  One of the cheapest and most important things you can do keep your limited liability “shield” in place is to file a Certificate of Assumed Business Name in order safely to use trade names.

 

3. Register for your business’ Federal Tax ID. All partnerships, multi-member LLC’s and corporations must have an Employer Identification Number, which can be obtained from the Internal Revenue Service.

 

4. Register with the State Revenue Agency and Obtain Permits/Licenses.  Depending on the nature of your business, you may be required to register with your state, especially if you sell a product and are required to collect sales tax.  In some parts of the country, you might even be required to obtain local permits or licenses.

 

Of course, this is the short list, and your business may be required to obtain other permits or licenses, or you may be required to register with other governmental agencies.  See your legal advisor for help.

 

 

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.

Start a New Business

Posted on | July 25, 2009 | No Comments

 

Starting and running a small business takes desire, passion, skills, knowledge and talent. It also takes research and planning. While many small or start-up businesses can recover from early mistakes, many cannot.  Every small business makes initial mistakes, but no small business can survive fatal missteps.  So, planning is important. 

Explore and evaluate your business and personal goals.  Using those goals, craft a comprehensive and thoughtful business plan that will help you reach these goals.  The process of creating a plan forces you to think about important issues that you might not think about without planning.

A plan is a valuable tool that can serve multiple purposes.  But like hand tools, a business tool left in the “tool box” and never used is worthless.  Again, the process of planning is most important, rather than detailing the plan in a formal written document.  I recommend that plans be written, but the written document is not more important than the planning process itself.

 

Let’s Get Started-

 

 

List your reasons you want to start a new business. Consider this list to start your thinking:

• Self-management or freedom
• Financial independence
• Creative freedom
• Maximize personal skills and knowledge you’ve developed over the years

 

 

Decide what type of business is right for you. Ask yourself:

• What do I enjoy doing?
• What skills have I developed?   What value can I add?
• What am I good at doing?
• How much money do I need to support myself?  My family?
• How much time do I have to run a successful business?

 

What’s my business niche?

• What business do i want to start?
• What services or products can I sell?
• What need, want or desire can I meet?
• Will buyers pay for it?
• Is there competition?   Competition is not always bad, as it demonstrates a market for your product or service.
• What strategic advantage do I have over the competition?
• Can I deliver a product or service with better quality, cheaper, faster?
• Do i have to create a demand for my business?   How hard will that be?

 

 

Finally, consider these tough questions:

• What skills and experience do I lack?
• What legal structure will I use?
• How will I keep business records and data?
• What insurance do I need?
• What equipment or supplies do I need?
• How will I pay myself?
• What are my resources?
• What are my cash or credit needs?
• What facilities do I need?  Is location important?
• What will I name my business?   Is my brand important?

 

As you can see, these lists are long but still probably not comprehension.  Small business owners must go through this process.  It’s not always fun, and the answers might suggest that starting a small business is a bad idea.  Resist the urge to accept any answer that furthers your dream but is not supported by facts.  In other words, as you answer these question, be honest with yourself.  Not every business should be started.

 

If your honest answers suggest that starting a new business is a good idea, use your answers to create a focused, well-researched business plan.  A good plan is a blueprint for business operations, management, and capitalization.  Review your business with your business lawyer, your CPA, friends and business associates.  Schedule a monthly review of your plan, and be prepared to change the plan frequently.  A good business plan is a flexible one that should change as you encounter obstacles and your business grows.

 

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 starting small businesses and 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

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?

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!

All Employees Are Involved in Sales – Part III

Posted on | June 30, 2009 | 1 Comment

 

 

You only offer ONE COMPANY EXPERIENCE for your clients and customers.

 

There is no shipping department.  There is no sales team.  There is no service department.  There is only a store!  From the customer’s perspective, there is ONE and ONLY ONE store.

If a restaurant patron has a problem with the table or the silverware or the food, it is up to every restaurant employee to make sure that patron is satisfied.

 

Are you thinking about how your employees are treating your customers?  Your better be thinking about it!

 

Have you trained, either directly or indirectly, your employees to “pass the buck?”  Are there financial incentives in place that encourage the wrong employee behaviors?  In other words, do your employees make more money in their paychecks by “passing the buck” on to other employees?

 

Remember that what we tolerate, we teach.  Even worse, your employee compensation structure may be encouraging employee behaviors that harm your customers’ buying experiences.  If your customer is not 100% satisfied, there is an opportunity for your competitor to take business away from you.  Your competitor does not have to be perfect.  Your competitor just has to be better than you are.

 

So, in summary, your customer needs to have a satisfying experience when dealing with your employees.  If your employees are projecting your internal operational shortcomings onto your customers, then the buying experience is less than 100% satisfactory.  And that is all the opportunity your competitors require to make your customers their customers.

 

Check out Part I and II of this topic.

Recessions Offer Opportunities

Posted on | May 20, 2009 | No Comments

 

During a recession, marketing is often the first budget item to be cut, even though marketing is the most important tool a business has during difficult times.  I would argue that now is a great time to make lemonade out of “economic lemons.”  There are at least two ways to do that.  First, consider this a time to reach out to potential strategic partners to develop co-marketing and co-sales opportunities.  You might also have opportunities to re-package, or distribute products or services differently to reach new customers or old customers in new places or ways.  Creativity can be developed, grown, nurtured and fostered, but only if creativity is first valued.

 

Does your company value creativity and calculated risk-taking?

 

Really?  How?

 

Secondly, consider whether your customers’ needs or motives have changed.  If so, your message should change to reflect new customer needs, wants, desires, anxieties, etc.  Consider a few examples recently shared by Raquel Richardson, owner of Silver Square, in a recent e-newsletter:

 

• A-1 Steak Sauce’ changed its message to-  “A-1 Steak Sauce isn’t just for sirloin anymore.”  The target was hamburger lovers, and the strategy worked.
• Dow’s Ziploc food bags saw increased sales when Dow shifted funds from glass cleaners to help introduce a new line of Ziploc freezer bags that protect the freshness of leftovers.
• Quaker Oats developed new recession-driven messages:
  • “Grain products are inexpensive sources of protein.”
  • “Oats for breakfast cost just pennies a day.”
• Lipton pushed up its soup sales by promoting packaged cups of soup as both convenient and inexpensive.

Several companies have gone so far as to mention the recession in its messages.  Wendy’s message is: “Look, I know you have less to spend these days, but that doesn’t mean you have to eat less.”

 

The list of companies that have enjoyed increased market share by spending more on marketing during recessions is long and storied.  Interestingly, in each case, the competition spent less on marketing and tried to “ride out the storm.”  When your competitors are avoiding risks and pulling back, they are potentially losing both today’s and tomorrow’s customers, and future opportunities.  That’s your chance to gain market share that will likely mushroom when the economy recovers.

What is the message of your visual vocabulary?

Posted on | May 15, 2009 | No Comments

 

Introduction by Matthew A. Griffith, J.D.

I had the pleasure of meeting Annie Sever-Dimitri at a Rainmakers’ Main Event recently.  We had a great conversation about the importance of image in developing brands.  Image doesn’t mean dressing very well, having clean shoes and combing your hair (for those of you with hair).  Annie and I agree that image can be “dressing down” at times.  It means there is a matching of your client’s expectations and how you meet those expectations.  Your image plays a huge part in your brand development.  That is especially true for small businesses and professional services companies.  So, this is a topic that I hope you’ll start to learn and understand.

Please enjoy Annie’s post.

 

Guest Blog by Annie Sever-Dimitri

As an image consultant, my job is to help my clients create the best first impression possible. Actually, I think we should revise the term “first impression” to be “first and last impression” because what others think of you when you first meet generally sticks for the long run. It takes only 3 – 7 seconds for the visual information we send to be picked up by others. I know—you haven’t even opened your mouth at that point. That is because experts state that roughly 90% of our language is received visually; only 10% of any message we send is derived from the movement of our mouths.

I bet you are now pondering your image, meaning your clothing, grooming, and body language. And your wallet. In today’s restrictive economic climate, business owners are only spending what is absolutely necessary. What you wear, the style of your hair, or how you stand when conversing may seem quite trivial when compared to other aspects of your marketing. But it isn’t when you really let it sink in that your appearance is doing the vast majority of your marketing for you.

Another point to consider is the fierce competition these days. How many marketing companies, ghost bloggers, and web designers do you know? What sets them apart from each other? I love this line from the inside cover of a marketing book called “Differentiate or Die” by Jack Trout : “The only way to truly differentiate yourself is by marketing the product’s uniquely valuable qualities.” When I network, I don’t see many people displaying anything unique with their appearance. Lots of khaki pants with beige shirts for the men; too much black; very few people providing a succinct message about their business because they just fade into the crowd.

We all need that extra edge over the competition. Image consulting provides that. Just like you have honed your message on the web and on paper using the expertise of marketing professionals, you must provide that same attention to your most valuable advertising asset of all: you.

Annie Sever-Dimitri

www.funcoach.biz

317-440-8783

Your Business Is Visible 24-7

Posted on | May 11, 2009 | 2 Comments

 

Your business, even if you are a sole proprietor, is visible to your customers, clients and competitors, 24-7. 

At any time of the day or night, your customers can see your website, read your blog, follow your Twitter, or talk about you to other customers.  Potentially, there is someone talking about your product, service, merchandise return policy, lousy guarantee, great receptionist, rude sales person, etc., any where in the world at any time.  In that sense, you only have limited control over your brand, and that means you cannot afford to make branding mistakes.  Nor can you allow unhappy customers to perpetuate dialogue that is harmful to your brand.  What control you do have over your brand needs to be carefully and wisely exercised.  You can’t afford dumb mistakes that can be accentuated through “negative viral marketing.”

 

The point I’m making really struck me after an experience I had this past weekend.  I was driving north on I-65 to visit family south of Chicago for Mother’s Day weekend.  A white  Chevy Tahoe passed my car going about 90 mph, swerving in and out of traffic and nearly hitting more than one other car.  The windows of the Tahoe were covered with vinyl marketing messages (i.e., a car “wrap”), advertising an upscale painting company located in Illinois.  As I watched the driver of the Tahoe endanger other people’s lives and property, I immediately thought to myself:

“I would NEVER hire that company to paint my house.  If I can’t trust the owners to drive a car responsibly, why would I trust them in my own home?”

 

Welcome to the world of marketing in the 21st Century.  It’s reality, so learn how to maximize the speed by which good news travels and minimize the bad news that can damage your brand.  Actually, I like to say that good news travels fast, but bad news travels even faster.

 

To finish my story about the Tahoe. . . as I was driving, I called the phone number on the advertisement on the Tahoe.  I left a “colorful” message on a voicemail, and I explained that the driver’s behavior was not only endangering lives but also damaging the image of the painting company.   A few minutes later, I got this text message in response:

 

I’m sorry if my husband, who is driving my Tahoe, offended u w/ his driving.  I called him and asked him to be careful on the highway.  Have a nice weekend-

 

Although I might not hire this lady’s husband, I might hire her.  She did a good job of damage control, and she might have saved someone’s life.  Had she actually called me personally to apologize, I would have given her an “A” in damage control.  She gets a solid “B.”  After her call to her husband, he slowed down and greatly improved his driving.  No one was hurt.  No accidents occurred.  It was a good day.

 

Clearly, it would have been better for this lady’s husband never to have behaved like that in the first place, especially as he drove a rolling company billboard up I-65.  But she did the responsible and business-wise thing in apologizing, taking responsibility and fixing the problem.  I am sure that she would have preferred a more positive marketing message from her car wrap, but she did minimize the damage to her company’s reputation with a phone call and a text message.  My hope for her is that she learns from the experience and puts in place safeguards to prevent similar bad incidents that might harm her company’s brand.

 

 

What are you doing to control your brand image, especially when you are asleep or when you’re not there to control your employees?

Meet Matt

Wouldn’t it be great, if your business coach was also an attorney? Owned other service and manufacturing companies? Was an entrepreneur himself? And truly understood business, marketing, finance, accounting, taxes and the law? Meet Matt.

Expert Author

Categories

• Asset Protection (33)
• Business Attorney (19)
• Buy Sell Agreements (4)
• Cash Flow (8)
• Contracts (10)
• Insurance (9)
• Law (42)
• Marketing (14)
• Real Estate (35)
• Small Business (48)
• Uncategorized (28)

Recent Posts

• “ARE LAND CONTRACTS NOW SAFE UNDER THE SAFE ACT?”
• SAFE Act Catches Lawyers By Surprise
• MATT TO SPEAK AT IMPORTANT REAL ESTATE CLASS
• Matt Speaks on Indiana’s new SAFE Act During TeleClass
• “MOST LAND CONTRACTS ARE NOW DEAD IN INDIANA”

Search for more information

Search for:

Matt’s eBook

Matt's next eBook will be
available soon. To get an
advanced copy,
register here

Subscribe to Matt’s Blog

  Subscribe in a reader

Connect with Matt

• LinkedIn
• Twitter
• Friend Feed
• IndyBizLaw
• Smaller Indiana
• Indiana Virtual Law
• Xpedishon Coaching
• FaceBook

Receive Email Updates

Matt Recommends