Small Business Articles

No More "Marketing As Usual"

I believe that this is the most opportune moment for the owners and managers of both small and medium-sized business to make a commitment NOW to develop a Strategic Business and Marketing Plan and not wait for this economy or their market (s) to turn around.

]]> by Bernard C. Steiner - I spent the past 30 years as a business - to - business Management Consultant in Business and Marketing Planning and as a senior executive of global Executive Management training organizations.

Many owners and managers of small and midsized business tend to shy away from the business planning process, as opposed to their counterparts in the larger business.

Many Small business owners are "too busy" running the business, but ignore, at their own peril and survival, that "failing to plan is planning to fail."

In my experience many of these business people consider this process to be arcane, too time consuming and really the realm of the bigger more formal organization.

There is a very compelling reason for these owners to begin their business and marketing planning process. Their B2B buyer has changed forever. And these owners must listen seriously and carefully as to the way the b2b buyer is buying in terms of how they research, compare vendors, shortlist and make their decisions, of course clearly these changes have occurred because of the recession.

Therefore, in order for the small b2b business to successfully compete now and in the future they must develop a business and marketing plan; built upon a comprehensive turnaround strategy to fundamentally redefine its business model mission and competitive strategies to turn their business around and grow to the next level. They can create innovative marketing strategies for business growth, develop niche markets, increase their revenue stream, improve their ROI (return on investment), provide greater customer value and increase their market share.

I also believe by undertaking a business and marketing planning process these owners will be making far better current decisions, since by its very nature and definition, planning is "dealing with the futurity of current decisions".

Planning is:

a basic organic function of management. It is a mental process of thinking through what is desired and how it will be achieved. Plans are commitments to specific courses of action growing out of planning. Planning is a process which can identify the most promising opportunities. It will outline how to successfully capture these opportunities or maintain the desired position. The Plan defines the goals, principles, procedures and methods that will determine the desired position.

A Plan is:

* A continuous process - not a one-shot activity.
* A communications tool which integrates all elements of your business activities with it.
* A specification of who will do what, where, when and how to accomplish your business goals in the most efficient manner.

I use an eight step planning process which is sequential and continuous.

In closing, I am convinced that by the very act and nature of thinking and examining the way in which their business competes and operates through the strategic business and marketing planning process will, in most situations, lead to a significantly more profitable outcome and a more competitive business.

About the Author:

Bernard C. Steiner is an independent Business to Business (B2B) Planning Consultant specializing in developing and writing Strategic Business and Marketing Plans for clients. He has over 30 years as a "hands-on" Operating Manager and as a B2B Business and Marketing Planning Consultant. Bernard holds a Degree in Electrical Engineering (BEE) and a Masters in Marketing (MBA).

STEINER BUSINESS PLANNING CONSULTING
917-686-8251
www.bcsplanningconsulting.com

5050BIZ Launches New Generation Virtual Office That Bundles Business Management, Social Networking and Communication Tools All in One Website

5050BIZ today launched an innovative, low-cost, easy-to-use virtual office different from other business solutions. It bundles together, in a single Website, many of the digital management and communication tools, as well as social business networking tools that businesses need to succeed today.

]]> PRESS RELEASE - Software flourishes. Platforms proliferate. Applications abound. And for many small and medium-sized businesses, the promise of new technologies — increased efficiency, teamwork and sales — too often devolves into a bewildering, cacophonous digital bazaar. What tools are right for us? How much should they cost? What are their benefits?

In answer to these questions, 5050BIZ has two words of advice: Bundle up. 5050BIZ today launched an innovative, low-cost, easy-to-use virtual office different from other business solutions. It bundles together, in a single Website, many of the digital management and communication tools, as well as social business networking tools that businesses need to succeed today.

5050BIZ was created by business people, for business people, with the intention of making it easy to understand and simple to use for everyone from the not-so-tech-savvy to those who are familiar with the ins and outs of all of today's technology,” said Leif Hartwig, the company's founder and chief executive officer. "The idea was to offer businesses a one-stop shop that truly offers everything – from social networking to project management and communication and self-improvement – and eliminates the hassle of having to seek out all these tools individually – think of it as the digital version of paying every bill with one check.”

5050BIZ subscribers may make unlimited use of its features, which include:

* Video conferencing, including conferencing with non-subscribers
* Chat and instant messaging
* Bulletin boards
* Industry experts to answer business questions
* Link box to external business applications
* Social networking within and across companies and industries
* Job Posting/Searching Store
* Share and organize documents online (in development)
* Advertising
* A version for Web-enabled devices (in development)

Upon subscription, 5050BIZ automatically creates a company network, a network for each individual user and an industry network (based on a company's field of business) so that users can immediately begin creating relationships and sharing strategies and ideas. As 5050BIZ grows — company projections call for 1 million-plus paid subscribers within five years — its social networking reach will grow accordingly.

"Social networking is a valuable tool and we have found that people in business want to be part of a community,” said Karen Connors, 5050BIZ's senior vice president of operations, "but too often, it's used passively or never again after sign-up. Our Website enables people to use social networking proactively to create meaningful professional connections.”

Besides streamlining operations, reducing costs and strengthening employee relationships, 5050BIZ's virtual office also offers an extremely low barrier-to-entry.

Because the office is Web-based, it's accessible almost anywhere. There is no software to install, no hosting charges to incur, and training and highly responsive technical support are included in the subscription price. Individual subscriptions begin at $24.95 per month, corporate subscriptions at $49.95 per month.

"We recognize in this economy that businesses want to reduce costs and are turning more and more to the virtual office solution to do so,” Hartwig said. "It's our goal at 5050BIZ to help businesses accomplish this by providing a virtual community with access to the most valuable digital tools available today in and easy-to-use, affordable package.”

About the company
5050BIZ, LLC is a privately funded limited-liability company based in Tucson, AZ. The company, founded in 2008, developed and now offers a low-cost, easy-to-use, subscription-based virtual office that bundles together, in a single Website, a host of digital business management and networking tools. For more information, visit www.5050biz.com

Using Article Marketing to Create Continuous Evergreen Traffic

by Ed Duvall - Marketing via articles is one of the best forms of free advertising on or offline that is available for bringing new visitors to our websites.

]]> by Ed Duvall - Marketing via articles is one of the best forms of free advertising on or offline that is available for bringing new visitors to our websites.

Why is that you ask?

Writing articles can lead to increased visitors to your website. The main reasons you're writing an article is for people to read and learn about your topic and you. After writing an article you want it published of course. Getting it published is how you're going to drive traffic to your site.

If you know your target market then the hardest part of the work has been done for you - that of assembling a list several thousand individuals to read your article.

You'll want to submit it to ezine publishers, article directories and create a web page on your site to display it and to submit to the search engines.

There are several things to consider if you decide to write and submit articles to ezines. The format for writing the article itself, finding ezines to submit it to and figuring out the right way to submit it to publishers so that it gets an above average chance of being used by the publisher.

Writing is hard work. At least for me that is. I tend to generally keep up with how the Internet is evolving and develop an article from changes that I see going on.

Writing articles for ezines takes on a basic format that you should become familiar with.

If you haven't already subscribed to several good, high quality ezines do so immediately. You want to review the articles in them so you can get a basic idea of the layout of an article that publishers expect when you submit an article to them.

You'll notice it has:

- A Title
- The Authors Name
- The Body or Content of the Article
- An Authors Resource Box
- Sentences are under 65 characters per line

Those are the five main components of articles that are typically submitted to ezine publishers. Your best bet is not to vary from it in your initial writing efforts.

Let's take a look at each one of those components.

** The Title **

Often times you may not even come up with a good attention grabbing title until after you have finished your article. If you have a general idea of what your article is going to cover it may be helpful later on if you jot down some ideas right away.

**The Authors Name **

Hey you should be able to come up with this on your own. Include yours just under the title of your article.

** The Body or Content **

By far the most important aspect of your article. The best articles address some kind of problem or concern that readers may be experiencing and are looking for help, guidance or a solution for. If you have identified a bonafide problem take the time to do the research to find a solution for it.

The solution could be in the form of a unique solution you yourself have found, an existing one that few people know about or you could provide several solutions from which the reader can choose the one best suited to their needs.

Some good articles also address concerns of people in certain areas of their life or business for which there is no clear cut solution. If you can present the facts, known or obscure data that will keep a reader informed on the subject or help them come to a conclusion on their own, it will work just as well.

Within the article it is always a nice affect if you can provide some online resources or links that a reader can use to help solve their own problem or gather information from which they can draw their own conclusions.

Keep in mind that you are not writing your article(s) for the fun of it. At least I hope you've given some thought to what you want to accomplish using this method.

Your main purpose is to get a few if not several hundred of those readers to visit your website so that you can present them with your own offers for subscribing to your ezine, joining your affiliate program, membership site or buying one of your products.

Your efforts should be in presenting a good quality article to the publisher. Take your time writing about the subject you've chosen. Clearly the best method of writing on the Internet is a personal, one-to-one approach to writing, write as though you're talking to a friend or relative you know very well.

** Authors Resource Box **

This is your byline. This allows everyone who reads your article to learn more about you and your business. You'll include it at the end of your article and it should contain a short description of your site, product or service you offer, along with your url.

It's the second most important section of your article. Here you can put between 4 to 6 lines of text. This is the only acceptable format for advertising yourself, your website, ezine, product, etc. Describe it in as great a detail as you can get into these few lines.

Publishers will exercise their own judgment and may shorten it to meet the standard criteria they have set for all submitted articles.

Here are some more Quick Tips to remember about writing your article:

- Keep your sentences and paragraphs short
- Use action words throughout your article
- Use examples from your own experience
- Write as though you're talking to one person
- Personalize your message
- Use plenty of white space
- Use small understandable words
- Use subheadings
- Don't hyphenate words at the end of sentences

Just one good article on a subject that is relevant to your target market and the target market of the ezine that you're trying to get it published in, will produce some great publicity for you. Invite publishers of ezines with similar interests as yours to publish the article.

You really don't want to slant it towards one of your products, an affiliate program or have your own links plastered throughout your article. Most experienced publishers will recognize that kind of writing for what it is - a cheap effort to advertise a product at their expense - and it won't get published.

Think about it - if a publisher wanted to see a product, etc promoted in his ezine he would put one of his own in it - not some stranger he has never met. Don't try to disguise an advertisement for one of your products as an article. Most publishers will see right through this scheme.

The length of your article should probably be between 400 to 1000 words. Any less than 400 doesn't give enough depth to a subject. Any more than 1000 can be too long for some ezine publishers who try to keep the content of there ezine to a maximum size for purposes of distribution and reader attention.

OK, so you've got your article written and it's a gem and you know everyone will want to read it. Two things you now need to focus on - finding publishers and getting publishers to look at it.

The easiest place to start looking for publishers is in your own email program. Have you subscribed to any ezines? If so how many? If not - why not? If you haven't subscribed to a lot of them then you need to 'go forth and subscribe' to as many as you can.

The reason you want to do this is to build a database of ezines that are similar to your target market and at the same time become familiar with the ezines format.

You can also do a search on Google or any of the other major search engines to look for ezines and article directories that your article would be appropriate for.

Here are a few article directories to get you started:

goarticles.com
ezinearticles.com
articlecity.com
article-emporium.com

Well how do you get your article accepted in ezines?

Guess what? As long as you're in the writing mood, you're going to have to write a short email to each publisher and ask them to publish it. Or you can invest in member only sites or software that will automate this process for you.

I'm including a sample email template for you to look at. My experience is that you modify the text and personalize any template to your own style and writing.

Using a template as is from a resource like this soon becomes recognizable and automatically deleted by most publishers who receive it. Use your imagination when you draft your own letter.

--------------------
Sample E-Mail Letter To A Publisher
--------------------

Dear Publisher,

My name is (your name) and I subscribe to your (ezine).

I've found it to be informative and helpful in my endeavors on the net.

I have written an article that may be of interest and helpful to your subscribers. If you find it suitable to your readers I would appreciate your considering publishing it in the (ezine).

Thank you very much for your consideration,

Sincerely,

(Your Name)
(Your Email Address)

--------------------
End Of Sample Letter
--------------------

This information should get you well on the road to writing articles for publishing in ezines that meet the criteria for your target market.

I highly recommend it as a way to get more visitors to your website without spending any money on advertising.

About the Author:
Find more traffic building articles and add your own articles to promote your online business http://cashway.com

Business Law Savvy - Protect Your Company From 5 Common Legal Risks

by Marjorie Jobe, J.D. - Unfortunately in today's business world, it is only a matter of time before your company is sued by someone or investigated by some governmental agency. However, you can lesson the odds by understanding and identifying the most common legal problems that could come your way and protecting your company against them.

]]> by Marjorie Jobe, J.D. - Unfortunately in today's business world, it is only a matter of time before your company is sued by someone or investigated by some governmental agency. However, you can lesson the odds by understanding and identifying the most common legal problems that could come your way and protecting your company against them.

1. Criminal Investigation

State and federal law enforcement and governmental agencies proliferate with each passing day. Depending on your industry, you could be regulated by as many as ten agencies, not counting the normal and customary policing departments. The power of government agencies is blinding. Recently, a trend has emerged targeting more and more businesses, executives and owners for investigation and prosecution. It has become so prevalent that all companies should focus considerable effort toward insulating their owners, employees and operations from risk.

Adopting a policy that your company will cooperate in all government inquiries and investigations with the assistance and counsel of an experienced criminal law attorney is the best way to insulate you and your employees from waiving your rights or creating more risk. Educate yourself and your employees on your constitutional rights and what procedures to follow with the advice of a criminal law specialist or attorney familiar with this trend and danger.

2. Employee Lawsuit

Employment law is the new lottery for Plaintiffs' lawyers who have watched tort reform narrow their playing fields. For every perceived harm - real or imagined, there is a creative lawsuit waiting to be filed. Sexual harassment, age discrimination, pregnancy discrimination, racial discrimination, gender discrimination, disability discrimination, wrongful termination, retaliation, and injuries, are only some of the fertile ground for disgruntled employees.

Clear and thorough employee rules and policies are the first area of defense against this kind of legal threat. Develop an employee manual and document employee files. Treat all employees with respect and with equality and consistency. Engage a business or employment lawyer to review your policies and rules.

3. Cyber Issues

With the move of all businesses toward more and more dependence on technology and the use of internet communications and resources, cyber legal issues grow exponentially every day in ways that are just beginning to be understood and anticipated.

Specific rules and policies regarding employee computer usage, privacy and access are critical in today's business. Adopt, revise, review or amend your policies and rules as soon as possible. Neglecting this area of legal threat is just asking for trouble.

4. Marital and Divorce Issues

If you are married or if any of your fellow owners or partners are married, significant risk exists in the divorce arena should any marriage fail.

Contractual protections in your entity documents or business agreements should address these risks so that you can continue conducting business regardless of someone's divorce claims and proceedings. Marital property agreements can also provide additional insulation from this threat.

5. Business Contract Lawsuits

Attorneys' fees and expenses can wreck your bottom line and distract you and your employees from your core business operations. Your goal should be to utilize contractual provisions to minimize the chance of being sued or having to sue third parties with whom you do business.

With the appropriate contractual clauses, you can avoid being drug into a courtroom by requiring arbitration, choose the state in which you will be sued or in which the arbitration will be conducted, limit damages, and require that the loser pay the costs of dispute resolution. Many more advantages can be built into contracts in order to give you control over the legal process.

All business owners and executives have the obligation and duty to their employees, shareholders, partners and families to insulate and protect their companies and operations from the legal threats that haunt businesses. By understanding the threats and risks, and by taking proactive measures to prevent lawsuits and legal disasters, you can control your own legal destiny and win the advantage in any future legal battles.

About the Author:
Marjorie Jobe is an experienced business attorney who has been practicing law since 1987. She has tried cases in courts of all levels, representing business owners as both plaintiffs and defendants. Licensed to practice law in Missouri and Texas, Marjorie’s private practice, The Jobe Law Firm, is located in El Paso, Texas.

Originally from Missouri, Marjorie received a degree in English with honors from the University of Missouri and her law degree from the University of Houston. She always knew that she would become an attorney and due to her fierce drive and determination, Marjorie received her law degree when she was just 22-years-old. She resides in El Paso with her husband, a successful business owner, and together they have five children and three grandchildren.

For additional information, resources and reference material, visit www.marjoriejobe.com.

Why Managers and Supervisors ARE NOT the Best Communicators During Times of Change

by - Marcia Xenitelis - Everywhere you look these days the focus in Human Resources and Employee Communication is managing change within organizations. But most of these programs fail to achieve their objectives. During bad economic times the focus is usually on providing coaching on understanding the emotions people go through during change, helping employees deal with the complex emotions of watching colleagues leave, communication strategies that utilise management hierarchies to communicate face to face with their teams on what is happening next in organizational restructures and so on. The reason why this approach does not work is because the focus is on managing fear, not change.

]]> by - Marcia Xenitelis - Everywhere you look these days the focus in Human Resources and Employee Communication is managing change within organizations. But most of these programs fail to achieve their objectives. During bad economic times the focus is usually on providing coaching on understanding the emotions people go through during change, helping employees deal with the complex emotions of watching colleagues leave, communication strategies that utilise management hierarchies to communicate face to face with their teams on what is happening next in organizational restructures and so on.

The reason why this approach does not work is because the focus is on managing fear, not change. And this is why managers don't follow through with the key messages and face to face discussions with their teams that you have so cleverly crafted. I realise that some "studies" show that employees trust their immediate manager or supervisor more than anyone in the organization. Therefore it must follow that if you are designing a communication and change strategy focused on organizational restructures and downsizing the smart thing to do would be to utilize them as a key part of your face to face strategy.

Actually this is not the case and there are many reasons why this is not the way to approach change during these times. Think about it. Here you have an entire organization paralysed with fear. Budget cuts all around, negative media speculation, no one is secure. And the only person who really knows what is being planned is the CEO. Is it any wonder, when you give a script for managers and supervisors to communicate to staff, their teams ask what's going to happen with our jobs, and the manager or supervisor in the spirit of trust and honesty says, "I don't know, I don't even know what is going happen to me." So this is why you need to take a different approach to face to face communication during these times.

So here is an example of how you can still give accountability for specific messages to managers and supervisors and at the same time utilize your CEO as a key communicator during times of change .

During another "bad" economic time, during which the organization had 9 new competitors during one year I implemented the following strategy.

1. Firstly I had arranged for the CEO to meet with each of the state managers of the business divisions in each state individually. The win for the CEO was to hear first hand how business was in each business division in each state and to meet with key clients at the same time.

2. He explained honestly to each State Manager the reality of the situation with the business and why he had to rely on them.

3. He gave them specific actions of what he wanted from them and they in return delivered and stepped up and managed in some instances the total closure of state offices in true leadership style.

4. We then held "Business Reality" workshops for one day in each state which all managers and supervisors attended. The CEO was present at each and shared with them real business data and the issues facing the organization and asked for their input in coming up with options and innovative ideas to grow the business.

5. These ideas were then considered by the Executive team and the best were implemented in each business division and state.

6. The supervisors and managers now had something to share with their teams – specific action plans for their division. And more importantly the key issues that the CEO had asked them to focus on.

The outcome was that despite going through extensive downsizing, restructures and everyone having to reapply for new roles, we grew the business by 25% in that year. Obviously the strategy was much more detailed than outlined above, but the purpose of this article is share why I think managers and supervisors are not the best face to face communicators during times of change.

About the author:
Marcia Xenitelis is a recognized authority on the subject of change management and has spoken at conferences around the world. For access to case studies and more information on the types of strategies you can implement to engage employees visit www.changemanagementtips.com for a wealth of free informative articles and resources.

What Is Winning?

by Andre Taylor - As an author, speaker, and leadership development consultant I tell individuals and companies all the time: "You Can Still Win!" I have also authored a book by the same name and give talks to groups of all sizes on the subject. It's a given: If you ask most people whether they would like to win they'll say "yes," without hesitation, but how often do we truly examine what we mean by winning?

]]> by Andre Taylor - As an author, speaker, and leadership development consultant I tell individuals and companies all the time: "You Can Still Win!" I have also authored a book by the same name and give talks to groups of all sizes on the subject. It's a given: If you ask most people whether they would like to win they'll say "yes," without hesitation, but how often do we truly examine what we mean by winning?

The current economic environment does not have many believing at their core that they can win. I believe the people who are marketing the recession are the ones winning. They have many individuals and companies retreating even though many of these people don't know why they are doing so.

I hear so many people talking about "the environment," but to me that's a code word for a world psychology they are afraid to go against. You see this is why it is hard for so many people and companies to win. They think "the environment" matters and are more concerned with the conclusions developed by others than the positive conclusions they can create through true leadership thinking.

Let's examine what winning is; winning is the process of reaching a goal -- usually while overcoming the impact of opposing forces or adversaries. It requires that you "play" within an established set of rules and aspire toward an expression of your best. Most important it requires that you know what your true obstacles are. This is where most miss the mark.

I don't think that most people or companies really know what their true obstacles are. They think it's the economy, or the Dow Jones Averages, or some other economic indicator. I believe that is nonsense. There are always people and companies winning. In reality, for those companies not winning, they are the enemy. The opposing force or adversary is actually the way they think.

The common notion of beating others to a pulp is not what I mean by winning -- though I must admit that winning in a particular situation will undoubtedly cause one side to conclude that they have lost. Nevertheless, winning is much more of an internal process rather than an external process. A true winner must overcome the internal adversary of fear and doubt. I'm talking about the little voice that repeatedly says, "Times are hard," "Companies are folding," and "The economy is bad."

By definition, winners have obstacles. To be a winner you must apply your best "in the game" while someone or something is trying to prevent you from winning. Many think of winning as a situation where a person, company, or group merely dominates over another, but it isn't how you stack up as compared to another person but rather how you stack up as compared to your potential that matters.

Winning is not something that happens by chance. Winning occurs when a person or company decides to win. It is not about the competition – it is about you, an individualistic and highly specific process. So the next time you are wondering if winning is possible in your life, career, or business, forget about the environment. Tackle the enemy within. You can still win!

About the Author:
André Taylor is the author of "You Can Still Win!: Break Through, Bounce Back, Come From Behind And Flourish." He's the chief executive of Taylor Insight a New York-based leadership development firm helping individuals, growing businesses and other organizations lead and win. He's held executive positions on Wall Street, led the marketing activities of multi-national organizations, and built successful entrepreneurial companies. Get "You Can Still Win!" and free newsletter at www.andretaylor.com or download the You Can Still Win! audio at iTunes.

Abraham Lincoln and the 10,000-Hour Rule

by Gene Griessman, Ph.D. - The Beatles did it before becoming world famous. Bill Gates did it before becoming one of the world's richest men. And Abraham Lincoln did it before becoming one of America's most honored President. Malcolm Gladwell, author of Outliers, maintains that anyone who expects to become world-class at anything had better plan on doing it. And what is IT?

]]> by Gene Griessman, Ph.D. - The Beatles did it before becoming world famous. Bill Gates did it before becoming one of the world's richest men. And Abraham Lincoln did it before becoming one of America's most honored President. Malcolm Gladwell, author of Outliers, maintains that anyone who expects to become world-class at anything had better plan on doing it.

And what is IT?

IT is practicing thousands and thousands of hours. Gladwell says 10,000 hours.

In the case of the Beatles, they played night after night in Hamburg, Germany's strip clubs. Here's how John Lennon remembered the experience: "We got better and got more confidence. We couldn't help it with all the experience playing all night long....In Hamburg, we had to play for eight hours, so we really had to find a new way of playing." When the Beatles returned to Liverpool, they had become a seasoned, musically disciplined band with their own sound.

In the case of Bill Gates, he started doing his 10,000 hours when he was in the eighth grade. His high school purchased a teletype machine that was linked to a mainframe computer in Seattle. Gates and his buddy Paul Allen used that system to the limit, then found a way to get computer time at a software company where they spent literally thousands of hours learning how to use the new technology. Here's Bill Gates on that topic: "It was my obsession. I skipped athletics. I went up there at night. We were programming on weekends. It would be a rare week that we wouldn't get twenty or thirty hours in."

And Lincoln? Historian Gerald J. Prokopowicz writes: "Over the 25 years that he practiced law, Lincoln (and his partners) handled an average of more than two-hundred cases a year, an awesome workload."

Do the math. Two-hundred cases for twenty-five years come to 5000 cases. (Actually there were more than 5000 cases.) Let's say Lincoln spent just two hours on each case. (On some he certainly spent less time, on others far more.) That easily comes to the magic number 10,000 hours that Gladwell has written about.

Lincoln, like everybody who has ever made a lasting mark in any field, got to be good at what he/she was doing by putting in thousands of hours of practice.

About the Author:
Gene Griessman, Ph.D. is a professional speaker and Lincoln portrayer. He is author of The Words Lincoln Lived By and co-author of Lincoln Speaks To Leaders: 20 Powerful Lessons From America's 16th President, with Pat Williams and Peggy Matthews Rose. Griessman's website is http://www.presidentlincoln.com

Adapted from The Achievement Digest, No. 66; (for a beautifully written account of this phenomenon, see Malcolm Gladwell, OUTLIERS: THE STORY OF SUCCESS, NY: Little, Brown, & Co. Chapter Two)

Entrepreneur: Do you want to be one? Are you prepared to be one?

by Joe Vaccaro, CBM - Do you want more independence, money, and quality time with the family? Are you experiencing career stagnation? Are you worried about downsizing, mergers, or going into an early retirement that you never wanted? Do you need a new challenge? You might be saying to yourself that you have always been successful in everything you have done in the past, so how difficult can going into business for yourself really be?

]]> by Joe Vaccaro, CBM - Sounds good to me, but have you reviewed and analyzed what it really takes to be successful in building and maintaining a business in today's extremely competitive environment? Here are two basic questions that you should first take the time to carefully consider before proceeding forward.

What is really motivating you to go out on your own?

Do you want more independence, money, and quality time with the family? Are you experiencing career stagnation? Are you worried about downsizing, mergers, or going into an early retirement that you never wanted? Do you need a new challenge? You might be saying to yourself that you have always been successful in everything you have done in the past, so how difficult can going into business for yourself really be? For example, let's say you managed an division of consisting of 450 people with an operating budget of $35,000,000 for a large multi-national corporation, or that you and the sales team led were responsible for generating over a $100,000,000 in sales over the last 3 years. You may fool yourself in thinking that this alone will ensure success for your new venture. Guess again!! A positive attitude with a track record of accomplishments is good to always have but it will not guarantee success in the future.

First, let's dispel that notion about being independent. No one responsible for providing a goods and / or services for customers is ever independent. Your customers are always your bosses!! You need your suppliers who in fact are your strategic partners in fulfilling your customer needs. Start-up capital is another key variable in that it has to be readily available before you make your go or no go decision. For example, do you have enough cash or access to lines of credit to carry you for six months, for example, in the event that you may have a negative cash flow? You may find yourself spending more than you are collecting from clients / customers who always seem to pay their invoice late. Or what you thought was a "sure thing" and going to take the market like a storm is still sitting on the shelf! Remember that old saying, "The best laid plans of mice and men are subject to disarray".

Do you really think that when you do go into business, you will be happier and more satisfied than in continuing to work in corporate America?

You will spend more time working and have less time, if any, for family, friends, hobbies, and any other non-working activities. Your focus 24 hours a day, 7 days a week for 365 days a year will be" the business". Why? Because "the business" you believe will provide you with job security, financial independence, a summer home, a new car, pay for your children's education and last but not least enable you to enjoy a comfortable retirement free of financial worries. Are you willing to trade-off enjoyment today and many days to come for the chance to fulfill your needs and wants future? Are you emotionally, financially and physically ready to stretch your self to the limits of your being? Bear in mind that what you could do at age 30 may or may not be possible at age 50+. Life has a way of changing us over time. You have to acknowledge this and factor this in your decision-making process.

All life is risk. Are you willing now to roll the dice and bet on yourself? If not, thank you for taking the time to read the beginning of this article.

If you still want to start your own business and really be an entrepreneur, read on.

Research: Do It Now Or Pay The Price Later:

Listen and hear what other people did prior to going into business. Learn from their mistakes and incorporate in your business plan what was successful. Go to seminars. Attend lectures. Take courses. Read as many books and magazine articles on the subject. Listen to audiocassettes, watch videos and television shows and absorb and retain anything that you think will better prepare you for your new endeavor. Take your time. What you learn might make you change your mind. Think of how much time, sweat, money and effort you might save if your decision is not to leave the corporate world after doing all your homework. Then again, if you still decide to go ahead into business, you will be better prepared than if you didn't do your research.

The Business Plan:

You have to take the time to sit down and write, re-write and re-write again and again the plan for your business. What is your vision for your new enterprise? What is special or unique about the product or service that you have to offer? What segment of the market do you intend to present your goods or services? How do you intend to actively market and advertise your products or services? How will you structure your organization? Who will you handle the marketing, sales, and operations, accounts receivable, and accounts payable, purchasing, human resources and any other essential function in your own business? Where will your business be located? In your house? Sure, that will impress your prospective clients! How will you attract your first client? Friends? Former co-workers? How much capital do you have to put at risk? Is it enough? Is it ever enough? Can you support your self, spouse & children for at least six months without drastically altering your life style? How do you intend to grow the business in 1, 3 and 5 years? Remember, closing a deal and getting ink on paper is one thing, but collecting money due the business can be more difficult than the average person expects. The plan should be your guide for action. Having a well-developed business plan will not assure success but not having a plan (it must be written and not in your head) can lead to disaster! Back in 1992, I wrote the business plan for an outsourcing business that I co-founded with my partners who at one time were my consulting clients. My partners and I gave it a quick review and filed it away. In 1994, I looked at the plan. We never reviewed the plan until then. We far exceeded our expectations in the plan. Great!! However, we might have grown even more if we had periodically reviewed the plan and adjusted our views and actions accordingly. You never know. Remember, the business plan is not an academic exercise; it's a tool to be used.

To Truly Go It Alone Or Form A Partnership:

If you go it alone, you will receive all the rewards but you will assume all the risks! Is it worth it? Only you and only you can make that decision. If you begin to have a negative cash flow, do you tap into your 401K, IRA or your children's college tuition funds? There is definitely a thrill in being an entrepreneur. You have the opportunity to live the dream. The ideas that have long fueled your desire are now placed to the test. Your adrenaline is flowing! It's ShowTime!!

If you should decide to form a partnership, remember that you share the risks but also the rewards. Being in a partnership can be best compared to being in a "marriage". You begin with the honeymoon period, where all partners are thinking positive, happy and euphoric and share the same vision. Then as in all in life, things can and will change. If the money doesn't start rolling-in or if one partner feels that he is more committed and generating more business and working than his peers, anything can and will happen. Relatives and friends that you thought you knew and respected and maybe even loved, may turn on one another. Why you ask? Power, jealously, envy, and greed are just a few of the possible reasons. Success has many fathers. Failure is an orphan.

Some partnerships like marriages that last a lifetime. The people in these successful partnerships most likely shared the same vision and adjusted and adapted to changes in their business and personal lives. They must have had many differences of opinion over the course of time but they were able to communicate, respect and appreciate each other's point of view.

While other partnerships have a short life cycle either by design or through circumstances. There are occasions where people come together a form a partnership with the intent that the partnership will only last for as long as the deal or contract that they need and want lasts. Sounds similar to a marriage of convenience. Other partnerships may cease to exist because of poor financial planning, a down turn in the economy, a decrease in clients, a significant drop in sales and income, the death or desire to leave of the "rainmaking" partner and a host of other reasons. This happens all too frequently. Usually, the partners see this coming way in advance and start to bicker, fight or too often, not communicate with one another.

To Incorporate Or Not? That Is The Question:

Back in December, 1995 while on a plane, taking me from New York to Chicago to visit some of my clients and staff for outsourcing business that helped to create, I picked-up an INC magazine and saw an advertisement about forming your own corporation for slightly under $400. I quickly took down the phone number. When I arrived at my office in Chicago, I called the 800 number in the advertisement and using my credit card, started the process of forming my own consulting business. Three weeks later, my consulting business was formed as a Delaware corporation. No legal or accounting fees incurred. It worked for me in creating my new consulting venture at the time but it may or may not work for you. Do your research and only do what you feel comfortable doing.

You ask, what prompted me to do this? That's easy; I saw the handwriting on the wall. Two (2) years before, venture capitalists had put money into the business. Nothing is for free. They had systematically bought-out or arranged for some of the founding partners to be pushed out the door. Nothing personal. Remember, they were just looking for a return on their investment. By the way, when I returned from that business trip at 7am on the Monday morning of my return, my partner called me into a meeting with our corporate attorney and told me that "the investors wanted to put in more money and someone has to go". He quoted a price and I immediately said "done". I knew his negotiating techniques and that his best price would be his first price. My turn had come! Whatever happened to friendship and loyalty? Wake up! Business is about money. Was I surprised? No. I saw it coming long before that day. All the indicators were there. I was fortunate enough to pick-up that magazine on that December morning or was it fate? When I formed the outsourcing business with my partners, I thought it would be my last job until I retired. I should have had a contingency plan for my departure from the business. Lesson learned! However, I had already taken the first step in becoming a full-time consultant. My first engagement was with a client I had in the outsourcing business. A few years later I became an employee of that company.

Let's Go Back to the Beginning: The Entrepreneurship Begins!

I met my future partners in October, 1991. Some times it seems like a lifetime ago. Other times it seems like yesterday. I was their consultant on a project for a multi-national accounting firm. A mutual friend, owner of an air courier company, had recommended me to them. They owned a ground transportation and third-party logistics company in New York City. They bought their company in 1979. They were extremely successful and were looking to grow even more. They had been entrepreneurs their whole lives. They owned a diaper service in the 1950's (most people never heard of this type of business) and were in the food service business in the 1960's till the late 1970's. They were tough men and always focused on the bottom-line. They were neither saints nor thieves. They just knew how to make money by working hard. Nothing was handed to them. They earned their money.

I was still working for a law firm at the time. I had worked many weekends over the course of three (3) months on a move to a new building. The firm as a way of compensating me, for my time and effort allowed me to take time off. I could do what I wanted as long as it did not conflict with the firm. In early, October, my prospective clients and I had a meeting. We hit it off! They explained to me what they needed. We negotiated a fee, which was both reasonable and fair to all parties. The engagement was to propose, if feasible, an outsourcing solution for their client. Their client generated about ten percent (10%) of their revenue. I knew I had to be diplomatic and thorough as I conducted my review and analysis. I completed the project and we presented the findings and recommendations to their client. She loved it and planned to recommend it to the vice-chairman. She never got to present the report. Her position was eliminated two (2) weeks after we presented the report. I still got paid my fees and life went on.

Soon after the start of the New Year, I got a call from one of my future partners asking to meet me for breakfast at a coffee shop on 36th Street and Broadway in Manhattan. We met and over breakfast and Mike asked me why wasn't in business for myself. I said that I had a young child in intermediate school and a sick wife. He wanted to create a separate business with his uncles and me to provide outsourcing solutions. I would be one of the partners with twenty five percent (25%) ownership of the business. All I had to put up (no $) was my hard work and (sweat equity). I told him that I would get back to him. I discussed the opportunity with my wife. We weighed the pros and cons. We decided to go forward with the deal.

I contacted Mike a week later, scheduled a meeting with his uncles and him and began to plan for the new business. They had almost three hundred (300), yes 300 accounts! Their customers were in various industries. Their book of accounts included entertainment companies, investment banks, law firms, advertising agencies, accounting firms; etc. I knew with this potential client to start with that I could find clients that needed outsourcing. I was right. We booked our first deal three (3) months after we started the company in June of 1992.

Exit Strategy Or Knowing When & How The End Will Come, You Hope:

As part of your Business Plan, include, repeat, and include a section detailing your exit strategy. Maybe you should plan this first and work backwards to starting the business. All things end. Sometimes not the way we originally planned. By focusing on the end, you will direct your time & resources to this objective. Your exit strategy could be anything from going public in 5 years to selling and retiring in 20 years or anything in between. Periodically, you have to re-think your exit strategy. What seemed fair, reasonable and attainable last year may not be appropriate now. Think of your life in the long-term but don't forget about the short-term. Early retirement may seem attractive, if you have good health and enough dead presidents (money) to maintain your life style, but what other mountains can you climb? Then again, what if you stay in the game too long, do you want to die at your desk? There is no right or wrong answer.

Dipping Your Toes In The Water Before You Take The Plunge:

If you can, start working in your new business before you leave your job. As I stated before, I met my future partners when I did a consulting project for them The project consisted of reviewing, analyzing the mail distribution services function of one of their large clients to see if outsourcing was a viable alternative solution for the client organization. If it was viable, then presenting a proposal to outsource. I had done this before for other clients, with the written approval of my then employer, because it did not conflict with the confidentiality or business interests. In the job I had, I worked a lot of weekends and overtime on various facilities & construction projects and accumulated a lot of time that I enabled me to take time to pursue leisure or business activities. I chose business. This enabled me to see what was happening in the outsourcing industry. When the time came and I chose to be in the outsourcing business I was able to make an informed decision. I knew the competition's strengths & weaknesses. My time to venture into business and become an entrepreneur had arrived. Remember to be patient, don't rush in too soon. On the other hand don't let your "window of opportunity" close without you capitalizing on it. The combination of knowledge and instinct will enable you to make the best go or no go decision.

If after a while you still cannot decide, walk away.

Dealing With Conflict, Decreasing Revenue and Demanding Clients:

First, there will always be conflict. Whether it's with your clients, suppliers, bankers, partners or anyone else, it's there. Just because you are the boss or co-owner, it doesn't mean a thing. The problems you had in the corporate world remain the same, deal with it! Only now, you are involved in more details since your organization is smaller. You wear many hats during the course of the day and some fit better than others. Your job is to learn all those other functions that you had other people responsible before. Human resources is a good example. Now you may have to do all the recruiting, hiring, training, developing and if need be firing people!! Don't forget payroll and regulatory reporting. Sounds interesting. It's challenging to say the least. And you thought you would only be selling. Someone has to do the work and that's where the conflicting priorities begin.

Your business won't grow up like a straight line but more as a curve on a graph. There will be peaks and valleys. Your job will be to anticipate them and adjust your plans and resources accordingly. There will be clients that won't renew contracts. There will be times that you lose a deal due to things beyond your control. There will also be times where you bring on new clients and expand your business without breaking a sweat. You will live through these times and learn by both your successes and failures. Those demanding but fair and reasonable clients will be the ones that teach you the most. The higher the standard the customer raises and sets, the greater you will stretch to exceed their expectations. Because of them you will bring value more to your other customers.

Surrounding Yourself With Winners….Customers, Suppliers And Staff:

Seek out only the best in all your endeavors. Build your client base strategically and carefully. Taking on a new account because it has a highly recognizable name and reputation and may attract other new clients to you sounds reasonable but beware. Some of these companies may be dreadfully slow payers and your money could be tied up in accounts receivable and not in your corporate bank account. Do your due diligence on your prospective customers before you have ink on paper. You have to re-think your pricing structure to factor in slow or late collections. Remember, you have to pay your staff and suppliers before you pay yourself. Get to know your suppliers. Take the time to understand the nature of their businesses, corporate values and perception in the marketplace. Let them show you their most recent financial statements. If they are having problems, then how do you expect them to provide you with quality service?

Hire only the best people available. When you hire them, hire them with future positions within your organizations in mind. Encourage and support your staff to be free and open in their communication with you. Give them the time to share their experiences with you. Be patient, tolerant, and receptive to change. Have multiple people involved in all client relationships just in case someone from your team leaves. Make sure you compensate your staff for their contribution not their personality.

Separating The Wheat From The Chaff Or Selling Only What You Would Buy:

Don't allow challenging business condition (declining revenue; increasing overhead; surplus capacity; etc.) be an excuse for you to package and sell a good or service that does not fit the customer's needs. Your reputation, values and integrity are worth more than money. Better to tell a potential client that what he wants is not what he needs or if the occasion arises, tell him you can't do the job he needs but can recommend a better solution. Maintain your integrity.

Clients Will Surprise You, Some Good And Some Not So Good:

One time when I was working full-time in my consulting business, a prospective client who I had known for many years through my membership in professional organizations approached me. He wanted me to come in and help his people with a proposal for outsourcing. He wanted me to help improve the content and quality of their initial draft as well as give them pointers in making the actual presentation to his client. I quoted him what I considered to be a justifiable fee for my services. He agreed and we proceeded with the project. When I presented my invoice for payment, he smiled, said that he would have a check cut. When the check was ready, he handed me the check and I was surprised. He paid me 50% more that I invoiced him. I wanted to know why. He said that the job I did for him was greater than he expected and that he wanted to show his appreciation. I said he did not have to give me more money, since we had agreed on a fee for my services before hand. He insisted. I thanked him and will never forget him. By the way, they did win that contract.

While I was working on a consulting project for a major international health and beauty aids conglomerate I had a client contact that was different in his style and behavior than the one I previously mentioned. My associate and myself, were brought in to prepare a Request for Proposal for outsourcing various support services. The client contact was in fact, an interim project manager who helped to facilitate the move of the client's headquarters offices. I guess you can say he was a consultant himself. I was brought in to work on the project by a vice president of the company who then stepped back and let the project manager interface with us. While negotiating the terms and conditions of the consulting engagement, some issues did arise. I originally quoted him a reasonable price given the scope of the work. He wanted to reduce the costs considerably. After much back and forth discussion, we agreed on a price. I wasn't too pleased with the outcome but I still believed that I could deliver a quality product and make a modest profit. The project began and some communication issues began to arise between my associate and the contact person. Most of my time was spent in the background reviewing my associate's work product and meeting once per week with the client contact. My associate was upset with the way she was being treated by him. His comments and conduct were at times less than professional. He was overly critical of her work. I suspected that he felt threatened by our presence since his one-year project management contract was coming to an end. Also, he really had limited knowledge about support services since for over 25 years he was involved in real estate, building management and corporate moves for a large computer company. I arranged a meeting with him to review the status of the project as well as resolve the issue of invoices that were submitted and approved and not been paid. He started the meeting criticizing the performance of my associate's work. His comments were unfounded. We reached a point where I told him that unless he adjusted the tone of his voice and his abusive behavior I would terminate our engagement. He was stunned to say the least. I wasn't bluffing. I was prepared to stop work on the project. My associate and I had met previous to the client meeting and discussed our options. She agreed that it wasn't worth working on the project any longer unless he changed his behavior. I respected her opinion and was willing to accept the consequences. We had to stand on principle or we were nothing at all. Do you know what happened? He apologized for his behavior, had us continue on the project and we got the late payments that were due us within a week. Are you ready to stand for what you believe and face the consequences? Fortunately for us it worked out fine. The client was more than satisfied with the RFP and we got all our fees. No hard feelings. Feelings don't matter, only money is important.

Working For Dollars And Not Cents:

Establishing the right price or fee for the goods or services you are going to provide is crucial. Factor in all your associated expenses and don't take on any business unless you can make a good profit. Remember, you're working for money not love. If you quoted a price or fee that you later found to be too low and instead of making a profit, you will incur a loss, go back and try to re-negotiate and explain it to your client what happened. It might surprise you and agree to an upward revision in your pricing or he may hold you to the original terms. Either way it doesn't hurt to try.

No Nickel And Dime Management:

As you grow your business only hire men and women and not girls and boys. A boy could be a man at 18 or a man could act as a boy when he's 65. Maturity, dependability, integrity, good work ethics, values, creativity, ambition, tenacity, intelligence, tact and diplomacy come in all sexes and ages. Treat your staff, suppliers and clients as professionals. Don't over manage, stifle and frustrate people. Never become a micro-manager. It takes too much of your precious and valuable time. Learn to let go and let others take on more so you can do more.

New Beginnings Or One Thing Leads To Another:

Never say "never" to anything because you never know what will happen from one day to another. If you become successful in your business, enjoy, be happy and proud!! If not, move on with your life. If you return to the corporate world, you will have a greater skills-set than you had before you left. Just remember to run any organization that you are responsible for like it was your own. Be an entrepreneur only now be a "corporate entrepreneur".

Leaving the corporate world and going into business for yourself is not for everyone. You have to take the time to do your research before you commit yourself to any course of action in life. If for example, you want to open a hardware store in St. Louis, a temporary staffing agency in Miami or a web site design business in Seattle, you need to know before you start a course of action the risks and rewards. Carefully and patiently evaluate all your options. Select the one that you feel most comfortable pursuing. Prepare a detailed business plan and use it for what it should be, a guide for action. Be flexible, adaptable and realistic. If you see that your business is not generating the revenue you expected and needed, be prepared to execute your contingency plans. This, for example, may mean taking on a partner or possibly closing the business and moving on to another opportunity. Timing is everything. Whatever you choose to do, going into business and leaving the corporate world, will be a learning experience while traveling on the continuum of life.

About the Author:
Joe has returned to the client's side of the desk. He works for a state governmental agency. However, he still performs Small Business Consulting Services when called upon. He likes to help people succeed as entrepreneurs. He considers himself fortunate to have been helped along the road of business by many who shared their time and expertise.

He is a Certified Business Manager (CBM).

Joe is a Viet Nam Veteran with a 100% total service-connected disability.

He can be reached at 917-566-5147 (The Vaccaro Business Group) in New York City

Protect Your Business From Criminal Investigations – The Worst Legal Disaster Imaginable

by Marjorie Jobe, J.D. - Most business owners and executives think that because they are good people who do their best to follow all laws and rules, they are immune from worrying about criminal business investigations and issues. However, nothing could be further from the truth. Everyday conduct and occurrences can be construed as criminal.

]]> by Marjorie Jobe, J.D. - Most business owners and executives think that because they are good people who do their best to follow all laws and rules, they are immune from worrying about criminal business investigations and issues. However, nothing could be further from the truth. Everyday conduct and occurrences can be construed as criminal like the following:

- Forgetting to include income on a tax return
- Misstating your income or expenses on a financial statement when applying for a bank loans
- Using loan proceeds for a purpose other than that for which you applied
- Bouncing a check
- Talking to competitors
- Making a mistake on an application for a federal grant, funding or certification

Without exception, the most serious legal disaster that could befall your business is a federal criminal investigation or indictment of you, or any other manager, officer or the company itself. Individuals or the operating business entity, together or separately, can be named as a witness, suspect, or target in an investigation. Enron and Arthur Anderson are famous of such business crime cases which resulted in the collapse of the businesses themselves and imprisonment of the executives. Many national business and legal experts have concluded that the demise of those two giant companies was not caused by the illegal activity of which they were accused, but the damage to their reputations that immediately drove their investors, lenders, and customers away in a panic.

The following business practices can help protect you and your company from being wrongfully accused or convicted of a federal or state crime:

1. Adopt a Government Investigation Policy

This policy should state unequivocally that your company and its employees will cooperate with any government investigation, but only with the assistance of a qualified lawyer. This policy should be adopted at a time when there is no threat of an investigation or hint of any problem. Write the policy down and include it in all company documents, employee handbooks and materials.

2. Hold a Government Investigation Seminar

Conduct an annual, required in-house seminar on business criminal issues, just like safety seminars and courses, for your employees. The seminar should be conducted by a criminal lawyer to instruct employees on individual constitutional rights and how to protect those rights, to explain the workings of a government investigation, and to suggest ways to handle government investigators and law enforcement officers in the context of an accident, a worksite death, a search warrant, and other investigations.

3. Understand and Utilize Your Constitutional Rights

You, your business and your employees have a constitutional right to a lawyer's counsel before answering or cooperating in any investigation. It is known as the Sixth Amendment. You also have the right to remain silent when questioned by investigators or prosecutors to protect against self incrimination. This is the Fifth Amendment guarantee. It means that you have the right to decline to answer questions that might tend to incriminate you. Use these rights aggressively whenever the circumstance warrants them.

4. Understand that Lying to a Federal Agent or Officer is a Federal Crime

Lies to officials are generally referred to as "false statements." To be a crime, the lie does not have to be given under oath and can be oral or written. Nor does it have to be made in the context of a formal or court setting. Any statement given to a federal officer that can be said to be false, even if mistaken, meets the very low bar of the offense. Most often, the only evidence of the statement is notes or testimony of the federal agent. It is not a requirement of the offense that the government or officer be misled, deceived, or persuaded by the false statement. All that is required for the crime is that the statement have some connection, even though tenuous, to some matter within the jurisdiction of the United States. Today, in America, lying is a federal crime in just about any business context and every business person or executive must be aware of this state of affairs.

5. Contact your Criminal Business Lawyer Immediately

If your company receives a business records subpoena from a grand jury, receives a call from a government investigator or gets raided by a government law enforcement team, call an experienced expert criminal defense lawyer before you answer a single question or do any other thing.

These simple actions can go a long way toward protecting you and your company from criminal business investigations. They are incredibly smart business practices.

For additional information, resources and reference material, visit www.marjoriejobe.com.

Have You Sold Yourself?

by Mark Hunter - You will always be your number one customer. It's not the big account you service, nor is it the hot new prospect you just uncovered; it's you. The reason is simple. If you're not completely confident in what you're selling, you will never come close to maximizing your sales potential.

]]> by Mark Hunter - You will always be your number one customer. It's not the big account you service, nor is it the hot new prospect you just uncovered; it's you. The reason is simple. If you're not completely confident in what you're selling, you will never come close to maximizing your sales potential.

The current sales environment makes the need to sell yourself even more important. If you think you're the exception to this rule and you're not completely confident in the products or services you offer, ask yourself this simple question: Have you ever offered a discounted price to either keep a customer or attract a new one? Few salespeople can honestly say they have never done this. If you have, it means that you were not 100% sold on your product or service.

As a consumer, when we don't fully believe in what is being offered to us, we naturally expect a discount. We want something in return for not being completely confident about what we're buying. Since the salesperson hasn't communicated the level of confidence we need in order to buy the product at full price, we want some type of concession to make us feel better about the purchase.

To be completely sold on your product or service, not only do you need to use what you sell, but you also need to understand all of the benefits that your product or service provides. As a sales consultant who works with thousands of different professionals each year, I'm amazed at the number of salespeople who admit that they don't even use what they sell. How can anyone be totally committed to a product or service if they don't even use it? Furthermore, it's not uncommon for me to see salespeople shortchanging themselves because they are unable to identify and explain the value of what they are selling. Although this sounds basic, many salespeople cannot name five benefits their customers receive from using their product or service. They can usually only list five features. Without understanding the full array of their product's benefits, there's little chance the customer will ever see them too.

A poor sales process is usually a good indicator of whether or not the salesperson is sold on the product or service they are offering. Nothing conveys a lack of confidence faster than a sales process that is not professional. Unfortunately, for many salespeople, a disorganized sales process is the norm and it only serves to destroy more sales and, ultimately, a huge amount of profit. Despite the customer's desire to buy, an unorganized sales process creates an air of skepticism that often can only be countered by offering some type of discount to close the deal.

With the current state of the economy, it is imperative that sales professionals be both confident and competent to achieve maximum success. In any sales call, you best communicate these qualities by being completely sold on your product or service. If you are not, find ways to better educate yourself so that you can become your number one customer. Remember, "No customer is ever sold until the salesperson is sold."

Mark Hunter, "The Sales Hunter", is a sales expert who speaks to thousands each year on how to increase their sales profitability. For more information, to receive a free weekly email sales tip, or to read his Sales Motivation Blog, visit http://www.TheSalesHunter.com.

Appreciating The Driving Forces Of Network Marketing

by Kirk Bannerman - Terms such as Network Marketing, 'MLM', and Multi Level Marketing all refer to the same type of business model. This industry has had more than it's share of scumbag crooks and con artists that have used and abused the concept. However, if you do your homework and get involved with a legitimate network marketing organization, this business model has exceptional income potential.

]]> by Kirk Bannerman - Network Marketing can produce outstanding results if you know to harness it's awesome power to secure your business success.

Terms such as Network Marketing, 'MLM', and Multi Level Marketing all refer to the same type of business model. This industry has had more than it's share of scumbag crooks and con artists that have used and abused the concept. However, if you do your homework and get involved with a legitimate network marketing organization, this business model has exceptional income potential.

Network Marketing, MLM, and Multilevel Marketing are unlike franchises or conventional businesses in that they take advantage of all three of the important, yet misunderstood principles of:

1) Leverage (of Time and Money)
2) Residual Income
3) Geometric Growth Through Duplication

Unfortunately these principles are not well understood by many of the people that undertake network marketing. And that's just one of many reasons why so many fail at network marketing. There are lots of other reasons, and it would take volumes to cover them all. But this is one of the more common ones. Because if you don't comprehend and believe in these principles, it's impossible to help others fully understand and appreciate them.

First, lets look at LEVERAGE:

Every successful person or business takes advantage of leverage. There are only 24 hours in a day and no matter how talented you are or how much you get paid per hour, if you don't take advantage of leverage you're limited by the number of hours in a day. As a side note, I have heard of cases where an occasional lawyer was billing more than 24 hours per day...but, I guess that's another story. By learning to leverage your time, you can also benefit from a percentage of other people's efforts, and dramatically increase your income while creating more free time for yourself.

The unique and wonderful thing about the Network Marketing business model is that everyone has the same opportunity to become the 'owner' of his or her own business - with a fraction of the investment of time and money of a franchise or traditional business.

In network marketing the people at the top definitely have a vested interest in helping others on their team succeed.

Would you rather receive 100% of one person's efforts, or 5% of the efforts of 100 people?

Obviously 100% of one is always only ONE. But 5% of 100 is FIVE.

Not only will the total result with leverage almost always be amplified, but your income is not dependent on only one person. If your income is produced by the activities of many, it is much more dependable. Even if something unexpected or negative happens to one or more of those people, it only has a minor effect on the TOTAL production.

It's great to get paid while you're sleeping or away on vacation. That's one of the many advantages of leveraging your time.

Now, lets consider RESIDUAL INCOME:

When someone mentions residual income many people automatically think of actors or musicians.

Residual income is recurring income that you continue to receive long after the work you've done to produce it has ended. There are lots of ways to produce residual income. However, many people don't understand it, and still others have never thought about or been exposed to it. A very simple example of residual income is interest earned on money in the bank or investments. You continue to receive this income without having to invest any more time to produce it.

Suppose you had the choice of doing a job and earning $1,000 once, or getting paid $50/month for the rest of your life...which would you choose? If you chose the $50/month you obviously "get" the concept of residual income.

Clearly, $50/month will surpass a single payment of $1,000 relatively quickly. And if it lasts for a few years, or better yet - the rest of your life - it will really be a blessing.

Residual income is certainly not about "getting rich quickly", even though with the right opportunity it's possible to produce a substantial residual income stream in a relatively short time.

Most people who fail at network marketing either choose the wrong network organization or just give up too soon and quit because they expect overnight results. It is important to recognize that the real beauty of residual income is on the back end, not the front, and that once you build it you have the financial security and time flexibility to do just about anything you desire for the rest of your life!

Last, but not least, lets address GEOMETRIC GROWTH (DUPLICATION):

The classic illustration of geometric growth is the frequently used penny-a-day example.If you save one penny on the first day, and double it every successive day, (day two you have 2 pennies and day three you have 4 pennies, and so on) how much will you have at the end of 30 days?

The answer, to the astonishment of many, is $5,368,708! Amazing, but true.

That's a simple and dramatic illustration of how networking can work. If I can teach you, I've doubled myself. If we each teach someone else, we've doubled again. As this duplication or geometric growth process goes on and on, it can produce some amazing results in a relatively short period of time, just like the penny example above.

So there you have it, understand and apply these three principles

1) Leverage (of Time and Money)
2) Residual Income
3) Geometric Growth Through Duplication

And, given sufficient time and effort, you should enjoy a successful and financially rewarding network marketing experience.

About the Author
Kirk Bannerman operates a successful home based business and coaches others seeking to start their own home based business. Visit his website at Legitimate Home Based Business for more details.

Social Media Marketing Strategies

by Tammy Corbett - Social Media Marketing (SMM) targets users by promoting content through bookmarking, blogging, online video sharing, and social networking to potentially expand their audience and drive traffic to their website. Businesses are beginning to understand the power of these influences when it comes to establishing a reputation and growing their online business. Social media marketing strategies such as a business' engagement in various social media websites can help to generate branding and a personal connection with its users.

]]> by Tammy Corbett - There has been a significant increase in the popularity of social media websites over the past few years. With it has come a shift in the way that people search for information and how they share and consult opinions on the internet when making purchasing decisions.

Social media sites such as StumbleUpon and Digg, give users a voice on the internet by providing tools to connect, exchange views, share content, information, and recommend products and services using the "thumbs up or down" approach. This has caused a huge shift in the way people search for information online. More and more, Internet users rely on the opinions of others before they buy into the validity of a product or service. "Word of mouth" is no longer only from mouth to ear, but is more frequently spread on social media sites and it has never been so powerful. Any product or service deemed worthy are promoted, shared, or discouraged against in these online social communities.

Social Media Marketing (SMM) targets users by promoting content through bookmarking, blogging, online video sharing, and social networking to potentially expand their audience and drive traffic to their website. Businesses are beginning to understand the power of these influences when it comes to establishing a reputation and growing their online business. Social media marketing strategies such as a business' engagement in various social media websites can help to generate branding and a personal connection with its users.

Business Profiles
One of the most important social media marketing methods includes posting business profiles on social media websites such as Facebook and linkedIn. Instead of waiting around for consumers to come to you, you have to reach out to your target audience. Solidifying your presence in the social media community creates a direct interaction between business and consumer that may not dramatically increase conversion rates but is definitely capable of establishing branding power and credibility. The valuable feedback consumers provide promotes insight in determining what business strategies are working and what could be re-evaluated to make a website more user-friendly.

Search Results
The influence of social media sites has changed the way search engines define placement. Images, videos and news content featured on social media sites such as Youtube, Digg, and Flickr are equally capable of sitting comfortably at the top of the search results leaving others, who have not yet jumped on the social media bandwagon, a little confused.

Effective Social Media Marketing Strategies
Take a hint from the popular social media websites by adding some type of interactive quality to your website. Engage the viewer and create an atmosphere of inclusion and direct contact that encourages a user to come back and visit again. Forums and social applications can help you compete for traffic in an evolving market.

Become an expert in your niche. Yahoo Answers is a great place to start. You can create a business or company profile and begin answering direct questions and supplying information to those in your target audience.

Join Social Networks. Social networking provides a means to promote association and the exchange of knowledge while also establishing business contacts and connections. Post your business profile in the popular social and business networks such as Facebook and LinkedIn, but also make sure to concentrate your attention on your niche audience by joining social media networks that represent and support your business or company's ideas.

For example if you are selling organic produce and you set up a profile in a social media network such as Care2.com, an environmental portal, you are then communicating directly with those individuals who will support your product or service because of a shared interest. These types of social media communities will extend their approval by sharing in discussions about your products or services with other users and even in some cases "become a fan" of your featured webpage.

Some examples of popular niche social networks include:

TravBuddy.com for the traveler
Tipd.com for those seeking financial advice
AutoSpies.com providing money saving and insider information on cars

Publish articles to popular social media news sites such as Mixx.com, Digg.com, and Propeller.com. These sites allow you to post articles and vote on news stories.

Share videos and images by setting up accounts with Youtube.com and Flickr.com, leaders in online video and imaging to reach a broad or targeted audience.

Social bookmarking on sites such as Del.ici.ous and Ma.gnolia.com provide an opportunity to store and share links.

Blogging enables you to provide information and updates about your business to customers.

Businesses that incorporate social media marketing into their conventional marketing plan have the advantage of reaching audiences using a whole new approach. The benefits of branding and traffic are just the tip of the iceberg, establishing your business as a leading authority in your industry promotes good quality links, better search engine placement, which in turn increases sales.

About the Author:
Tammy Corbett is the resident expert for social media marketing at Red Carpet Web Promotion, Inc.
www.redcarpetweb.com

Six Advantages to Virtual Trade Shows

by Susan A. Friedmann, CSP - A virtual trade show is a cross between a webcast meeting and a video game. And it's the next big trend in trade shows. Although a mere 1% of all trade shows are now held online, industry experts expect that by 2015, more than 25% of trade shows will be conducted in virtual environments. That's a market you can't afford to ignore.

]]> by Susan A. Friedmann, CSP - A virtual trade show is a cross between a webcast meeting and a video game. And it's the next big trend in trade shows. Although a mere 1% of all trade shows are now held online, industry experts expect that by 2015, more than 25% of trade shows will be conducted in virtual environments. That's a market you can't afford to ignore.

Like online meetings, a virtual trade show can be simple or breathtakingly realistic. The simplest assemble a series of pages, each one a virtual booth for an exhibitor, plus instant messaging so exhibitors and attendees can talk in real time. The more complex are complete environments like high-level video games or such online worlds as Second Life. In these, each participant controls an avatar. VOIP (voice over internet protocol) can allow you to talk to attendees, and you can easily email brochures or allow attendees to download them.

But why bother when face-to-face meetings are so much more satisfying and real? Because virtual trade shows offer some solid advantages.

1. Triumph Over Tighter Budgets

Imagine a trade show with no costs for transportation, shipping, hotels, hospitality, or booths, and just a minimal cost for exhibit space. That's a virtual trade show.

With travel costs rising and travel budgets falling, more industries are turning to virtual trade shows as a less expensive way to showcase their wares. Electronics and high tech companies are naturally comfortable with the online format, but they're not alone. Plenty of other industries, from plumbing to candy-wrapper design, have held successful virtual shows.

2. Spread Your Wings

All too often, the sheer size of trade show investment keeps the marketing department stuck in a traditional rut of "what worked last year." The new medium will free you to experiment with innovative exhibit ideas—and rapidly change the ones that don't work. At a virtual trade show, you don't need to worry about the flow of foot traffic or many other design constraints.

Moreover, you'll have help designing your display. Set-up on virtual trade show sites takes less than an hour, and the software is supplied. Depending on the site, you will have an exciting array of multimedia tools at your service. Some offer VOIP (voice over internet protocol), so you can chat by voice with attendees. Most offer instant messaging capabilities, so you can chat in real time with attendees—and keep several conversations going at once.

3. Open a Stall in a New Market

Not only will you be able to test fresh approaches, you will also have the freedom to explore new markets without fear of blowing the annual budget. Because of the low overhead, you can dare to attend non-traditional trade shows you might not otherwise attempt.

4. The Future Is Green

Compared to traditional trade shows, virtual trade shows are "greener." Lowering environmental impact is an increasingly important goal for many companies. Tax incentives for cutting fuel costs are also likely to increase, making virtual exhibits an even more attractive proposition.

5. Follow That Lead!

Traditional trade shows often generate exciting leads. Unfortunately, 80% of those leads are never followed up - a statistic bound to discourage the most enthusiastic marketing professional. The reasons are myriad: disconnects between marketing and sales departments, the difficulties of reading hand-scribbled names and addresses, the tedium of entering contact information by hand into databases.

However, virtual trade shows collect the data for you - and most include built-in lead management software. Suddenly tracking those leads becomes simple. In addition, many systems offer tags so you can make notes on attendees or companies, making it easy to follow up. You can also keep tabs on both staff and attendee activities.

Virtual trade show systems generally allow you to run analytics as soon as the show is over. Instead of entering all the data separately, the virtual trade show tracks and analyzes it for you. You'll be able to start following up leads immediately, which can greatly improve your return on investment.

6. Market to the Twenty-First Century Customer

Most important of all, virtual trade shows will help you reach out to the digital generation. Over time, more and more corporate decision makers will be at least as comfortable with the virtual world as they are with text on a page.

Already members of the digital generation are taking over key positions in government and business. President Obama's transition team was co-chaired by a Wharton professor distinguished not only for his scholarship but for his skill at World of Warcraft, a virtual raiding game. Plenty of people now in their thirties could use a mouse before they could clutch a pencil, and they spend their spare time on Second Life and other virtual realms. A virtual trade show will seem as natural to them as the telephone does to older people.

This demographic trend is bound to continue. Gaining experience now in the virtual world will give you an edge in marketing to this vast demographic.

The virtual trade show may never completely replace the great exhibit halls. Face-to-face contact is just too essential for many people. However, a wise marketing professional will use this exciting new technology to reach out to customers. It's one more tool in your arsenal, and you can use it effectively to improve your company's bottom line.

About the Author:
Written by Susan A. Friedmann, CSP, The Tradeshow Coach, Lake Placid, NY, internationally recognized expert working with companies to increase their profitability at tradeshows. Author: "Riches in Niches: How to Make it BIG in a small Market" and "Meeting & Event Planning for Dummies." For a free copy of "Exhibiting Success" sign up for "Tradeshow Tips Newsletter" at www.thetradeshowcoach.com

Four Simple Ways to Reduce Tech Support and Help Desk Costs

by Scott Gordon - If you are looking for areas in your business where you can 'trim the fat,' you are not alone – many companies are in a similar position. Taking a closer look at ways you can reduce the costs associated with your in-house tech support and help desk is a great place to get started. Thankfully, there are some simple things that your company can do to reduce tech support costs – and increase user satisfaction in the process.

]]> by Scott Gordon - If you are looking for areas in your business where you can 'trim the fat,' you are not alone – many companies are in a similar position. Taking a closer look at ways you can reduce the costs associated with your in-house tech support and help desk is a great place to get started. Thankfully, there are some simple things that your company can do to reduce tech support costs – and increase user satisfaction in the process:

Keep users informed: Notify users, in advance, of any scheduled downtime or maintenance that will be occurring – even if it is outside of normal business hours. Additionally, be the first to let users know of any unforeseen downtime as soon as it occurs. A quick call to let the Sales Manager know that the CRM system is temporarily offline will save the IT department from taking many phone calls related to the issue, allowing them to focus on other situations that need attention.

Outsource some (or all) of your tech support needs: It's no secret that full-time IT support staffers are expensive. For many companies, paying a competitive salary, benefits and perks for an IT professional is often more than their budget can bear. In other situations, companies are able to hire one or several IT staffers, but still find themselves falling short in supporting all of their users' needs.

Consider outsourcing some (or even all) of your tech support needs; it may lower costs. Outsourcing offers the flexibility to hire additional help when you need it, without having to pay for services when you don't need them. Outsourcing provides you with access to specialized IT knowledge at a cost much less than hiring a specialist to work for your company full-time. And it can also reduce overtime costs by spreading the IT support load over a larger number of qualified staffers.

Invest in regular maintenance: What's less expensive…paying for your car's oil change every three months or paying to overhaul the engine? Your company's IT infrastructure is quite similar. Performing regular maintenance, such as updating anti-virus definitions, performing backups, and applying Hotfixes and software patches may cost a little bit of time and money now, but will protect you from more catastrophic losses in the future.

Take advantage of automated tasks: Streamline technical support processes by giving users access to help themselves. Consider adding an IT FAQs section to your business intranet, answering some of the questions your support department most commonly receives. Additionally, automate tasks wherever you can. Something as simple as giving users access to look up or reset their own passwords can save your tech support staff hours, while saving your business money.

About the Author:

Scott Gordon is the Chief Operating Officer at Dataprise, Inc., an IT support company for growing businesses. Dataprises services include Microsoft support, managed services, and IT consulting. Visit http://www.dataprise.com for more information about Dataprise.

IRS Fines Numerous Business Owners, Accountants, Insurance Agents $200k +

by Lance Wallach - Currently, the Internal Revenues Service ("IRS") has the discretion to assess hundreds of thousands of dollars in penalties under Section 6707A of the Internal Revenue Code ("Code") in an attempt to curb tax avoidance shelters. This discretion can be applied regardless of the innocence of the taxpayer and was granted by Congress. It works so if the you have engaged in a listed transaction and failed to properly disclose it, you will be subject to a potentially draconian penalty regardless of any other facts and circumstances concerning the transaction. For some, this penalty has been assessed a million dollars and for many it is the beginning of a long nightmare.

]]> by Lance Wallach - Currently, the Internal Revenues Service ("IRS") has the discretion to assess hundreds of thousands of dollars in penalties under Section 6707A of the Internal Revenue Code ("Code") in an attempt to curb tax avoidance shelters. This discretion can be applied regardless of the innocence of the taxpayer and was granted by Congress. It works so if the you have engaged in a listed transaction and failed to properly disclose it, you will be subject to a potentially draconian penalty regardless of any other facts and circumstances concerning the transaction. For some, this penalty has been assessed a million dollars and for many it is the beginning of a long nightmare.

The IRS may call you a material advisor and fine you $200,000.00. The IRS may fine your clients over a million dollars for being in a retirement plan, 419 plan, etc. As you read this article, hundreds of unfortunate people are having their lives ruined by these fines. You may need to take action immediately. The Internal Revenue Service said it would extend until the end of 2009 a grace period granted to small business owners for collection of certain tax-shelter penalties.

With that deadline approaching, Congress has not yet acted on the tax shelter penalty legislation. IRS Commissioner Doug Shulman said in a Thursday letter to the chairmen and ranking members of tax-writing committees that the IRS would continue to suspend its collection efforts with regard to the penalties until Dec. 31, 2009.

"Clearly, a number of taxpayers have been caught in a penalty regime that the legislation did not intend," wrote Shulman. "I understand that Congress is still considering this issue, and that a bipartisan, bicameral, bill may be in the works."

The issue relates to penalties for so-called listed transactions, the kinds of tax shelters the IRS has designated most egregious. A number of small business owners that bought employee retirement plans so called 419 and 412(i) plans and others, that were listed by the IRS, and who are now facing hundreds and thousands in penalties, contend that the penalty amounts are unfair.

Leaders of tax-writing committees in the House and Senate have said they intend to pass legislation revising the penalty structure.

The IRS has suspended collection efforts in cases where the tax benefit derived from the listed transaction was less than $100,000 for individuals, or less than $200,000 for firms.

Senator Ben Nelson (D-Nebraska) has sponsored legislation (S.765) to curtail the IRS and its nearly unlimited authority and power under Code Section 6707A. The bill seeks to scale back the scope of the Section 6707A reportable/listed transaction nondisclosure penalty to a more reasonable level. The current law provides for penalties that are Draconian by nature and offer no flexibility to the IRS to reduce or abate the imposition of the 6707A penalty. This has served as a weapon of mass destruction for the IRS and has hit many small businesses and their owners with unconscionable results. If the new bill passes, large penalties will still be assessed. The penalties, however, will more realistically relate to the deductions taken.

Internal Revenue Code 6707A was enacted as part of the American Jobs Creation Act on October 22, 2004. It imposes a strict liability penalty for any person that failed to disclose either a listed transaction or reportable transaction per each occurrence. Reportable transactions usually fall within certain general types of transactions (e.g. confidential transactions, transactions with tax protection, certain loss generating transaction and transactions of interest arbitrarily so designated as by the IRS) that have the potential for tax avoidance. Listed transactions are specified transactions, which have been publicly designated by the IRS, including anything that is substantially similar to such a transaction (a phrase which is given very liberal construction by the IRS). There are currently 34 listed transactions, including certain retirement plans under Code section 412(i) and certain employee welfare benefit plans funded in part with life insurance under Code sections 419A(f)(5), 419(f)(6) and 419(e). Many of these plans were implemented by small business seeking to provide retirement income or health benefits to their employees.

Strict liability requires the IRS to impose the 6707A penalty regardless of innocence of a person (i.e. whether the person knew that the transaction needed to be reported or not or whether the person made a good faith effort to report) or the level of the person's reliance on professional advisors. A Section 6707A penalty is imposed when the transaction becomes a reportable/listed transaction. Therefore, a person has the burden to keep up to date on all transactions requiring disclosure by the IRS into perpetuity for transactions entered into the past.

Additionally, the 6707A penalty strictly penalizes nondisclosure irrespective of taxes owed. Accordingly, the penalty will be assessed even in legitimate tax planning situations when no additional tax is due but an IRS required filing was not properly and timely filed. It is worth noting that a failure to disclose in the view of the IRS encompasses both a failure to file the proper form as well as a failure to include sufficient information as to the nature and facts concerning the transaction. Hence, people may find themselves subject to the 6707A penalty if the IRS determines that a filing did not contain enough information on the transaction. A penalty is also imposed when a person does not file the required duplicate copy with a separate IRS office in addition to filing the required copy with the tax return.

Lance Wallach Commentary. In our numerous talks with IRS, we were also told that improperly filling out the forms could almost be as bad as not filing the forms. We have reviewed hundreds of forms for accountants, business owners and others. We have not yet seen a form that was properly filled in. We have been retained to correct many of these forms.

For more information see www.vebaplan.com, www.lawyer4audits.com, www.irs.gov or e-mail us at LaWallach@aol.com

The imposition of a 6707A penalty is not subject to judicial review regardless of whether the penalty is imposed for a listed or reportable transaction. Accordingly, the IRS's determination is conclusive, binding and final. The next step from the IRS is sending your file to collection, where your assets may be forcibly taken, publicly recorded liens may be placed against your property, and/or garnishment of your wages or business profits may occur, amongst other measures.

The 6707A penalty amount for each listed transaction is generally $200,000 per year per each person that is not an individual and $100,000 per year per individual who failed to properly disclose each listed transaction. The 6707A penalty amount for each reportable transaction is generally $50,000 per year for each person that is not an individual and $10,000 per year per each individual who failed to properly disclose each reportable transaction. The IRS is obligated to impose the listed transaction penalty by law and cannot remove the penalty by law. The IRS is obligated to impose the reportable transaction penalty by law, as well, but may remove the penalty when the IRS determines that removal of the penalty would promote compliance and support effective tax administration.

The 6707A penalty is particularly harmful in the small business context, where many business owners operate through an S corporation or limited liability company in order to provide liability protection to the owner/operators. Numerous cases are coming to light where the IRS is imposing a $200,000 penalty at the entity level and them imposing a $100,000 penalty per individual shareholder or member per year.

The individuals are generally left with one of two options:

1. Declare Bankruptcy

2. Face a $300,000 penalty per year.

Keep in mind, taxes do not need to be due nor does the transaction have to be proven illegal or illegitimate for this penalty to apply. The only proof required by the IRS is that the person did not properly and timely disclose a transaction that the IRS believes the person should have disclosed. It is important to note in this context that for non-disclosed listed transactions, the Statue of Limitations does not begin until a proper disclosure is filed with the IRS.

Many practitioners believe the scope and authority given to the IRS under 6707A, which allows the IRS to act as judge, jury and executioner, is unconstitutional. Numerous real life stories abound illustrating the punitive nature of the 6707A penalty and its application to small businesses and their owners. In one case, the IRS demanded that the business and its owner pay a 6707A total of $600,000 for his and his business' participation in a Code section 412(i) plan. The actual taxes and interest on the transaction, assuming the IRS was correct in its determination that the tax benefits were not allowable, was $60,000. Regardless of the IRS's ultimate determination as to the legality of the underlying 412(i) transaction, the $600,000 was due as the IRS's determination was final and absolute with respect to the 6707A penalty. Another case involved a taxpayer who was a dentist and his wife whom the IRS determined had engaged in a listed transaction with respect to a limited liability company. The IRS determined that the couple owed taxes on the transaction of $6,812, since the tax benefits of the transactions were not allowable. In addition, the IRS determined that the taxpayers owed a $1,200,000 section 6707A penalty for both their individual nondisclosure of the transaction along with the nondisclosure by the limited liability company.

Even the IRS personnel continue to question both the legality and the fairness of the IRS's imposition of 6707A penalties. An IRS appeals officer in an email to a senior attorney within the IRS wrote that "…I am both an attorney and CPA and in my 29 years with the IRS I have never {before} worked a case or issue that left me questioning whether in good conscience I could uphold the Government's position even though it is supported by the language of the law." The Taxpayers Advocate, an office within the IRS, even went so far as to publicly assert that the 6707A should be modified as it "raises significant Constitutional concerns, including possible violations of the Eighth Amendment's prohibition against excessive government fines, and due process protection."

Senate bill 765, the bill sponsored by Senator Nelson, seeks to alleviate some of above cited concerns. Specifically, the bill makes three major changes to the current version of Code section 6707A. The bill would allow an IRS imposed 6707A penalty for nondisclosure of a listed transaction to be rescinded if a taxpayer's failure to file was due to reasonable cause and not willful neglect. The bill would make a 6707A penalty proportional to an understatement of any tax due. It is this author's opinion that some legislation will pass. The legislation will have fines for non-disclosure. The fines will be more reasonable but will still be large, in the range of $10,000 or more.

Accordingly, non-tax paying entities such as S corporations and limited liability companies would not be subject to a 6707A penalty (individuals, C corporations and certain trusts and estates would remain subject to the 6707A penalty).

There are a number of interesting points to note about this action:

1. In the letter, the IRS acknowledges that, in certain cases, the penalty imposed by section 6707A for failure to report participation in a "listed transaction" is disproportionate to the tax benefits obtained by the transaction.

2. In the letter, the IRS says that it is taking this action because Congress has indicated its intention to amend the Code to modify the penalty provision, so that the penalty for failure to disclose will be more in line with the tax benefits resulting from a listed transaction.

3. The IRS will not suspend audits or collection efforts in appropriate cases. It cannot suspend imposition of the penalty, because, at least with respect to listed transactions, it does not have the discretion to not impose the penalty. It is simply suspending collection efforts in cases where the tax benefits are below the penalty threshold in order to give Congress time to amend the penalty provision, as Congress has indicated to the IRS it intends to do.

It should also be noted that identical bills have been introduced in the Senate and the House to amend Section 6707A. Each bill has been referred to the appropriate committee, where no action has taken place. There are a couple of points about the proposed legislation:

1. The legislation would reduce the penalty for failure to disclose participation in a reportable transaction, other than a listed transaction, to the amount imposed by section 6662A for an understatement of tax. For a listed transaction, the penalty would equal 200% of the penalty imposed for an understatement of tax. The amount of the penalty imposed by section 6662A is 20%.

2. The proposed legislation is different than the position expressed by the IRS. The IRS would like the penalty to equal the tax benefits obtained from the transaction.

3. The legislation does not change the penalty provisions for material advisors. For example. An accountant who signed a tax return and got paid would still face a large fine. An insurance agent who sold one of these plans would still face a large fine.

About the Author:
Lance Wallach, CLU, ChFC, speaks and writes extensively about financial planning, retirement plans, and tax reduction strategies. He is an American Institute of CPA's course developer and instructor and has authored numerous best selling books about abusive tax shelters, IRS crackdowns and attacks and other tax matters. He speaks at more than 20 national conventions annually and writes for more than 50 national publications. For more information and additional articles on these subjects, visit www.vebaplan.com, www.taxlibrary.us, www.lawyer4audits.com or call 516-938-5007.

The information provided herein is not intended as legal, accounting, financial or any other type of advice for any specific individual or entity. You should contact an appropriate professional for any such advice.