Wednesday, July 29, 2009

In Business, It's All About The Bottom Line: Your Profit

In baseball, batting averages and ERAs earn players' big contracts and All-Star appearances, but wins get them and their teammates championships.
In business, it's all about the bottom line: Your profits. Profitable companies win the championships at the end of the day.
It's not about the number of employees, what you'll be in the future or even revenues.
Sometimes entrepreneurs forget this as they motor through each day, always looking for the next great conquest. Civic organizations and our political leaders also overlook this small fact. In fact, I notice that many of the smaller (old-fashioned) businesses often get overlooked like they don't exist. I'm talking about the dry cleaners, the restaurants, small retail shops, etc. Although in many cases, those businesses are actually making a profit.
For example, if you had to pick between Frank's Dry Cleaning on the corner and Facebook, which would you think is making a profit? Well, it's not Facebook.
Surprised. Even though the company takes in between $300 and $500 million a year in advertising and has great marketing leverage, it has never made a dime of profit. In the game of business, Facebook is striking out.
YouTube is also losing. The video site owned by Google sells ads but has always run at a loss. ALWAYS.
What about Twitter? That sensation of a website with 40 million members. It must be profitable, right? Think again. It doesn't even try to generate revenue, let along profits.
The ironic thing is that when I meet folks out networking, some will approach me with helpful online ideas for our company. I dig that. However, the conversation usually ends like this, "...and you can turn it into the next Twitter."
Thanks, but no thanks. I would rather run a small operation with a profit.
--Ron Ameln, SBM

Wednesday, July 22, 2009

Finding The Right Banking Partner

Why do so many good commercial lending deals fail? Not because of lousy business plans, poor personal credit or over-inflated numbers. In many cases business owners simply go to the wrong bank. Every bank has a different appetite for certain types of lending. Businesses should look at their particular circumstances and find a bank that best fits their needs. The decision of where to find business capital involves more than just comparing interest rates. Here are some questions to ask when evaluating lending sources:
1. Can you meet regularly with your banker? Choosing the right banker is similar to choosing a good doctor. You want someone who is competent, personable and a good listener. The right banker can become an integral part of your management team. Meeting face-to-face and discussing your future plans is an important part of building a successful banking relationship.
2. Are loan decisions fair and balanced? You’ll want a lender who can provide a balanced credit decision that takes into account your total picture, including all of your business assets and potential.
3. Does the bank understand small business?
4. Does the bank understand your industry? When bankers don’t understand how an industry operates, they don’t understand how they’ll be repaid. And when bankers don’t understand how they’ll be repaid, they decline loan requests.
5. Is the bank small enough?
6. Is the bank large enough to meet your needs?
7. Does the bank have the ability to advise?
--Ron Ameln, SBM

Saturday, July 18, 2009

Health Care Reform And Small Business

Years ago I had an interesting conversation with an entrepreneur that owned a local Handyman Hardware store. We were standing outside his shop and watching construction crews build a brand new Home Depot across the street. "I don't have a problem with competition," he said, thinking about his future. "I just think we should all be on the same, level playing field."
You see, Home Depot received tax breaks and property tax breaks to build across the street. Now, I understand that the Home Depot will employ many people and bring lots of sales tax to the area, but the Handyman entrepreneur had been a good citizen (paying full tax rates) for 30 years. Why not offer him the same deal.
"I don't think they really care if you are here or not," I told him.
Well, some things never change. With the country on the edge of health care reform, it was great to see the recent House Bill that expects small businesses to pay for the many uninsured Americans.
Under the House bill, businesses with payrolls of more than $400,000, must either provide health insurance for their employees or pay a penalty of 8% of their payroll. For those of you who don't own a business, most businesses don't even make 8% (of overall revenues) as a profit. Many are in the 2%-4% range, if they are lucky. This plan would destroy many small firms.
That's not all. The second part of the double whammy is a surtax of at least 1% small firms would have to pay when business earnings exceed the threshold of $280,000 a year.
Don't you think small firms would provide health insurance for employees if they could? I mean, small firms are competing with larger companies for talent.
Here's an idea: If health care is that important to this country (which I believe it is), why don't we have everyone (including the 40% of the population that currently pays NO taxes) help pay the cost.
Politicians love to give lip service to the fact that small firms are "the engine of the economy." Yeah, right. Reality: I don't think they really care.
--Ron Ameln, SBM

Sunday, July 12, 2009

Social Networking: Making Old Girlfriends Pay

Julie K had better watch out. You see Julie was my first love back in the eighth grade. Until, that is, she turned me down for the Valentine's Day Dance. Now, after 27 years of dealing with the pain, it's time for a little pain and suffering on her end.
I'm going to use social networking to make her pay.
First, a few facts. Her friend Sarah told me she wanted to go to the dance. Then, I asked her and she broke my heart in two. And I must say, I was a catch back in 1981. I sat in the back of the bus with the other cool kids, I wore a concert shirt to school at least two days a week (sure sign of coolness back then) and I even shaved once every few weeks. Heck, I had hair back then.
But Julie ruined my life. (I'm playing Lionel Richie's "Endless Love" as I write this).
Now, it's her turn to suffer. I'm going to use every social networking site I know (Blogs and more blogs, LinkedIn, MySpace, FaceBook, Twitter, etc.) to basically trash Julie.
I was talking with a PR professional last week and he mentioned that PR firms (who used to promote businesses) will now help disseminate messages (for and against others) through social networking sites. These firms make it look like a real grassroots undertaking. (Don't want the world to know it's really four guys in a South County cubicle.) I'm going to hire that PR firm. Ah, the world against Julie K. I can rally every heartbroken 8th grader against her.
Then, I'm going to hire an IT firm to make sure all of these entries end up high on Google's searches. Julie's dog will soon know how bad she hurt me.
I could walk away, move on with my life and not worry about Julie. Yeah, right. Why would I do that when social networking is here to make people like Julie pay.
I'm looking for much more than an apology. I've had years of pain and suffering. I'm thinking a two-week cruise to the Caribbean might help.
Now, Julie will probably hire her own PR firms and disseminate bad information about me or information to make herself look better. She'll probably also hire an IT firm. She may even tell some stories about me to discredit me.
That's OK, my PR firm will just disseminate some more crap about her.
I just want to thank the designers of social networking. Somehow, when the idea of social engineering began, getting back at Julie K was exactly what the founders had in mind.
--Ron Ameln, SBM

Saturday, July 4, 2009

When You Think: Think Big!!!

Former football announcer John Madden was also a great coach in his day. One of his most dramatic pre-grame pep talks came during a Super Bowl when he simply told his team: "Don't worry if the horse is blind; let's load up the wagon anyway."

It's a philosophy most businesses should embrace, especially now as companies start planning for 2010. Don't worry is your ideas or plans have some holes in them (or maybe seem like they won't work), think them through anyway. Think through ways they CAN work, instead of ways they can fail.

You might be surprised at the outcome.

Years ago, 1947 in fact, a competition was held in St. Louis for an architect that could design a monument on the Riverfront. Architect Aero Saarinen actually won the competition with a unique Arch. Although Saarinen had no idea if the Arch could stand without falling into the River (many engineers told him it would never work), he and the City pushed on with the project. Design began in 1963 (some engineers still thought it would never work). In fact, until the final piece of the Arch was put in place in 1965, some engineers still didn't think it would work.

However, thinking big paid big dividends. Even though it was once thought impossible to construct, engineers figured out a way to make it happen.

The Gateway Arch has been the crown jewel of St. Louis. It is the landmark the City is known for around the globe.

As you make future plans for your business, don't let the naysayers derail your dreams. Think big. There is plenty of time to figure out logistics and whether or not your ideas will work.

--Ron Ameln, SBM

Friday, July 3, 2009

The Budget: An Important Part Of Any Firm's Success

When we talk about running a business and the numbers, everyone first thinks about the Big Three (Profit-Loss, Cash Flow and Balance Sheet). Unfortunately, no one talks about the budget.

In talking with business owners throughout the month, I'm shocked at how many owners don't have a budget.

If you don't have a budget, start one today. Break everything down from your "Cost of Goods," "Salaries," "Income," and "Expenses." Then, as the year goes on, re-check your budget. Put percentages next to items each month and make sure the company is staying on target. It's the only way you'll know if (and what) things are going wrong. The sooner you realize these things, the sooner you can take action and correct them.

The budget is really your guide to help you through each month, quarter and year. I know our budget has helped us stay on track, and it has helped us understand all of our numbers better.

Planning for 2010 is just starting. If you don't already have a budget, create one today.
--Ron Ameln, SBM