Small Business Tips

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A small business blog featuring tips to help entrepreneurs succeed in the small business world. Topics include family business, human resources, marketing, money, networking, operations, ownership, startup, taxes and technology.
It’s all in the Family: How to Setup a Family Business

An estimated 95% of all businesses in the US are family-owned, whether it be through stocks or directly running the company. However, the difficulties that come along with a family business account for the fact that few make it past the first generation, 33% survive through the second, approximately 10% make it to the third and only 3% see the fourth generation or farther.

There are three main factors that contribute to this failure: sibling rivalry, financial problems and the fact that there is no one qualified enough to take over when Dad retires. Unless you take these crucial steps in developing a strong family business, the odds will be stacked against you.

Can You Handle It?
If you want the business you create to remain in the family, you must first determine if you family can handle the pressure. It is important that you have a strong, close-knit relationship with your family members before-hand. If there is already tension within the family, a family owned business might not be the best idea for bringing you closer. However, if you have already come through some challenges and remained arm-in-arm, chances are you could handle it.

Set Criteria
It is important that you don’t just let anyone in the family become part of the business just because you want them involved. Not everyone is qualified to run a business. Let each of them know that you have criteria in place that they must meet before being considered for a spot in the ranks.

Consider stipulating in your company bylaws what the requirements are to have ownership in the business, such as experience in the trade or a degree in business management. Another option is to let your young children or grandchildren know that, should they ever want to get involved in the business down the road, they need to prepare themselves with a competent education and by taking time to learn the business early.

Clearly Define Goals and Roles
Determine the goals of the company, and get the input of each family member. If it is a company you’ve already started and you are considering bringing your family along for the ride, give them an opportunity to voice their opinion about where the business is headed. Keeping an open mind and taking everyone’s thoughts into consideration will allow for better communication down the road.

Define the roles of each family member, including your expectations for that person in the role they carry. This is one of the most important aspects of avoiding serious conflict within the business. Consider having a written job description for each family member on file as a reference point.

Also, define the chain of command. This includes determining wages, the evaluation process and who each member will report to. Wages should be based upon salaries in a comparable position outside your business or qualifications for their position. Defining the roles of your family members will help unrelated employees to feel as though they are valued too, as well as provide a more stable environment.

Work Time vs. Family Time
It is crucial to the structure and well-being of your family that you draw clear lines between work time and family time. Do not allow work time to take away from family, whether it be spending too much time at work with your children and not enough time outside the office, or in keeping your children away from their own spouses and children by requiring too much of them. Clearly define when the work day begins and ends. Obviously there will be times when someone needs to work a little overtime, but this should not be a regular practice, as it only adds to stress and tension among family members.

Also, learn how to determine whether an issue is personal or professional. Deal with the issues accordingly by setting aside a specific time and place to do so. Be sure to create an environment that allows for open and honest communication between you and your family members/employees. In other words, do not belittle each other’s feelings or opinions, but always fully hear each other out and determine a legitimate resolution. If everyone feels as though they can be honest with one another, it will allow for less conflict.

Plan for the Future
Only about 28% of all family-owned businesses have a succession plan in place. 68% of business owners wait until they are ready to step down before beginning a plan for who is to take over. The smarter route: start planning who gets the big man’s chair approximately ten years before handing it over.

Focus on the needs of the business, not emotions. Choose someone to take over that knows the business nearly as well as you do and has shown and interest in running the company. Understand that the best person for the job may not always be a family member. You may also consider dividing the role of successor up among, say, two of your children, who show equal potential and gumption.

You also need to have an estate plan in place. If you don’t the business can be taxed 37-55% of its total assets on the death of a founder or single business owner. For example, if, as the owner of the company, you pass away, and your company has revenue of $20 million a year and an additional $5 million in assets, the IRS can take upwards of $14 million in estate tax if you do not have an estate plan in place. Provide protection for your family and your company by having a will, a life insurance policy and/or a buy-sell agreement for the distribution of company stocks.

These steps are crucial to helping your family-business and your family survive. However, the most important thing to remember is that family comes first and you must do what is necessary to ensure that your relationship with your family stays strong and close.

Sources:
• Entrepreneur.com: Running a Family Franchise
• FindArticles.com: Keeping it in the Family

Family Business Resources:
• Business Link: Family Run Businesses
• Family Business Magazine: Current Issue
• Loyola University Chicago: Family Business Center
• Small Business Association: Challenges in Managing a Family Business
• Family Business Magazine: America’s 150 Largest Family Businesses


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By Michelle Cramer
Wednesday, March 29th, 2017 @ 12:01 AM CDT

Family Business, Startup |

Breakfast in a Whole New Way

There is a new hit at some of our nation’s university campuses that is quickly headed toward popularity as widespread as Starbucks and McDonald’s. In September of 2004, David Roth and Rick Bacher started an innovative new business called Cereality — a cereal café on the campus of the University of Philidelphia. Since that time they have opened three other locations.

Huh? What’s a cereal cafe? Well, Cereality’s pajama-clad employees serve 30 varieties of cold cereal, with the option of mixing together and topping with anything from fruit to M&Ms, and even ice cream, served in a Chinese food style container. This couch filled environment, with cartoons always playing on the TV, is reminiscent of those Saturday mornings when, as children, we didn’t have a care in the world.

The common reaction: Why didn’t I think of that? Many wishing they had and Cereality are now facing some competition. And why not? Cereality already took the risk for them. Bowls, located at North Carolina State, opened in 2005. The Cereal Bowl opened this year across the street from the University of Miami and their projected first-year sales are expected to reach upwards of $350,000. Not too shabby.

Cereality welcomes the competition, but has recently taken steps to protect the franchise they are in the process of building. Roth states that he is trying to act before the big guys, like Starbucks, try and take a piece of the market. Cereality has applied for trademarks for its name and around 50 slogans such as “It’s always Saturday morning,” or “What’s in your bowl?” They have also applied for patents covering business processes, such as storage methods and cereal combinations.

Cereality also sent warning letters to Bowls and The Cereal Bowl, making patent claims on everything from the containers they use to mixing brand-name candy toppings with the cereal. They also sued Ohio’s new business Cerealicious for trademark infringement. The Cereal Bowl followed suit by sending a letter to Bowls and responding defiantly to Cereality.

Roth states that they plan to continue franchising, including partnerships with hotels and retail chains, and providing online sales and catering. Cereality has received 6,000 plus applications for partnerships from all over the world. Roth hopes to have at least 30 new partnerships by 2008. With an estimated 95% of Americans eating cereal, these gentlemen have stumbled onto something “Grrrreat.” Makes one wonder what other business opportunities are staring us in the face, waiting to be presented to the world.

One question remains: When are you opening one in my town?

Sources/Related Readings:
• Entrepreneur.com: Bowled Over
• Time Magazine: In a Real Crunch
• PRNewsWire.com: 1500 Square Feet of Cereal
• USA Today: A Whole New Bowl Game
• FastCompany.com: Customer Service Local Hero – Cereality
• Catalyst Magazine: The Cereal Cafe


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By Michelle Cramer
Tuesday, March 28th, 2017 @ 12:05 AM CDT

Ventures |

Why Trump & Kiyosaki Want Us to Be Rich

We all know who “the Trump” is, so he needs little introduction. To summarize his expansive money-making career, he is a graduate of Wharton School of Finance and prosperous real estate tycoon. He’s the star and co-producer of the ever popular reality show Apprentice and author of seven bestsellers.

Robert Kiyosaki came from a small sugar plantation town in Hawaii, only to move to New York for education. He is an investor and a mining and real estate entrepreneur. He is best known for his book on financial philosophy called Rich Dad, Poor Dad. Published in 1997, and selling over 26 million copies worldwide since that time, this book has been translated into 46 different languages and is available in 97 countries.

These two financial gurus teamed up to write and publish “Why We Want You to Be Rich,” which hit bookstores on October 10th. To the disappointment of most, this is not a book of specific advice on how to make or invest money. It is a book of philosophy, with the intention of providing the middle class with means to change their attitude about money and obtain a financial education.

In a video available on Amazon.com, Trump claims that he is not afraid of failing. “What is there to be afraid of?” he says, further stating that, when one considers all the turmoil in the world, nothing else really matters. Kiyosaki follows with the fact that he and Trump are better people because they have both failed and made a comeback from that failure, which provided them with a sound education about money that the two wanted to share. Because, “financial education is more important than ever before.”

The central principal of this book is that Trump and Kiyosaki firmly believe that, within the next decade or so, our country will be a two-class system — rich and poor. They believe that the middle class is deteriorating rapidly due to the falling value of the dollar, rising national debt, lower wages, higher oil prices and baby-boom retirement. It is time for everyone to learn how to “think big” and “think rich,” otherwise your other option will be the poorhouse.

The introduction of the book states that “saving is obsolete and bad financial advice.” For example, Trump and Kiyosaki believe that the 401(k) savings plan will not be adequate for approximately 80% of all workers to provide for their future. They support investments such as real estate and starting your own business as the best means to building personal wealth.

Trump claims that this book will provide the reader with a “better life.” He contends that money isn’t everything but it “makes life easier.” It is about “attitude” and “creation of wealth.” He also advices that everyone needs to “know your subject.” Investing in real estate without understanding it can lead to your downfall.

Kiyosaki admits that their book is different from the traditional financial book that says to live below your means, save and invest. He and Trump’s advice is that one should learn how to expand his means, like they do. Also, watch long-term trends — see where the money is going so that you know what to invest in.

So what do you think? Have you read the book? What are your thoughts on Trump and Kiyosaki’s financial philosophy? Some believe it is just another way for Trump and Kiyosaki to make more money — do you contend? Or has their philosophy worked for you?

Sources:
• Amazon.com: Why We Want You to Be Rich
• Kiplinger.com: Book Review
• Kiplinger.com: Q&A With Trump and Kiyosaki
• Kansas City Star: Trump book contradicts standard advice

Trump/Kiyosaki Resources:
• WhyWeWantYouToBeRich.net: Book Website
• Trump.com: Donald Trump’s Website
• CashFlowTech.com: Rich Dad Website
• Wikipedia.org: Info on Robert Kiyosaki


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By Michelle Cramer
Monday, March 27th, 2017 @ 12:00 AM CDT

Money |