Certified Entrepreneurial Advisor

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25

Feb'17

Will a LLC give me Liability Protection?

Response:  business advisors often suggest that a business form a LLC to protect the owner from liability… after all, it is called a “limited liability company.”  They may infer that the liability protection is absolute, and many a business owner with a LLC thinks this.   Nothing could be further from the truth.  What follows is business advice:  you should always consult with a qualified business attorney when dealing with legal issues. The title should give you a clue:  “Limited Liability.”  It didn’t say “absolute liability protection,” and for good reason.  There are many loopholes and “gotchas” in the law, and limiting liability for a business owner is fraught with problems. The first problem with liability protection is the most problematic:  separating the business from the individual owner.  Many LLC owners act as though the business and their personal affairs are one in the same.  They pay personal expenses from their LLC bank accounts, co-mingle assets, and operate the business in a manner that is indistinguishable from a sole proprietorship; in other words, the LLC is just an owner’s  “alter ego.” That leaves a wide open door to a lawsuit alleging that there is no difference between the company and …

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25

Feb'17

How Can you Benefit from a Bear Market or Recession

Question: what is it like to live through a Bear Market or Recession?  How can you benefit from it? Response:  For many people, a “bear market” will have little if any impact upon their daily lives. I’ve lived through many, and quite frankly, was oblivious to most of them. Yes, things may slow down if there is a recession mixed in, and you know the definition: it’s a recession if your neighbor loses his job, it’s a depression if you lose yours. A market crash is a rare event, and may not be associated with a recession. Clue: the 1987 market crash and recovery. (it was over and done with in less than a week) So, recession and bear market are not empirically linked. Your question is how to benefit from a bear market, and how to benefit from a recession. Two different things. In a bear market, stock prices are trending downward, but in spurts. Then there are a lot of up days. Volatility is up. You can make money by active, intelligent trading. This is not for amateurs, however. You have to be a good player of the technicals, and have a gut sense of what’s happening. Remember that …

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25

Feb'17

Is a S-Corp the Best Choice for a Real Estate Company?

Question:  I have a real estate development company.  I was told to form a S-Corp. Is this right? Response: Who told you a S-Corp was better for anything? I would suggest exactly the opposite. You NEVER want to have real estate in ANY corporation. EVER. NEVER. PERIOD. A LLC gives you the option to select the method of taxation that is best for your particular situation. OK, so let’s say you decide that for some quirk of fate that S Corp taxation is better than any other method. You can elect to be taxed under S-Corp rules. LLC’s are typically taxed as partnerships if there is more than one owner, and a disregarded entity if only one owner. Many tax preparers and attorneys love S-Corps. They think that they can pull a fast one on the IRS. Let’s say the company earns net income of $ 150,000. If you are a sole proprietor (not incorporated), the entire amount is subject to self employment tax, as well as income tax. But what if you were a S-Corp, and you took a salary of $ 50,000. How would that be taxed? Only the salary would be subject to self employment tax. (the entire …

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09

Feb'17

How can I Reduce the Costs of Production?

Question:  What are some suggestions to reduce the costs of production? Response: This is the question Operations Management people ask themselves all the time.  Here’s a list of things to do: Look at the product. How is it engineered? Can it be designed to use less parts? Can it be designed to be assembled faster? Can features be eliminated? Look at the systems by which the product is assembled. Can they be streamlined? Is there a natural flow, a logical set up and a more efficient process? Are you using a batch method when a process flow would be better? Look at tools. Do you have the best tools/ machines for the processes? Do you have enough of them? Are they positioned correctly? Are they maintained properly? Are their bottlenecks which cause wasted time and disrupt production? Look at labor. Can it be mechanized, automated or enhanced? Can the quality of the labor be improved, by additional training, better tools, better conditions? Look at materials. Can less expensive materials be used? Can better materials, with less defects be used? Can materials be purchased in different sizes to reduce waste? Look at the shop. Is the environment conductive to efficient production? …

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05

Feb'17

What’s the Best Free or Low Cost Do-it-yourself Tax Software for an Entrepreneur?

There isn’t one. If you are self employed and you think you should be doing your own taxes, acting as your own accountant, I have only one piece of advice: don’t. Instead of chasing down some “free” software to save yourself a few nickels, you ought to be going to see a CPA or EA. If you can’t save double what it will cost you, then I’ll eat my hat. I am as frugal as they come. After all, doesn’t CPA stand for cheapest person around? But the most frugal people always understand that you can sometimes save a dime and lose $ 10 in the transaction. This is one of those situations. People who are self employed should spend their time at what they are best at. Unless you are a CPA or EA, you ought to be devoting your time to what has the most return for the time invested. I can assure you that spending 40 hours a year keeping up with tax code, then fiddling with all your own parts is just not time or cost effective. Don’t even try to convince me that you know the code as well as a well trained CPA specializing …

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02

Feb'17

Cutthroat Management Style

Many business owners think that a cutthroat pressure-cooker management style works.  Turn up the heat and things will cook.  Be ruthless with people and only the best will survive. It’s almost a cliche — put on the pressure and you’ll get results.  Does it really work? High pressure organizations may think their approach works, but it has consequences.  The stress results in higher healthcare costs, more workplace accidents, and a revolving door with employees. Who can be loyal to a company that treats its employees like automatons, throws out the “bottom” 10 % each year, and creates internal conflict and strife as a management approach? Studies have shown that cutthroat organizations are actually less productive.  They have less employee loyalty and higher turnover. It negatively affects workforce health, sucking the life out of people. What exactly is a cutthroat organization?  What things characterize that management style?  As in most things, there’s a spectrum, from mild to extreme.  Most  cutthroat environments have these ten characteristics: 1. They overwork people. Bring on those 50 hour workweeks! Create artificial deadlines and pile on the tasks.  Be sure to put high priority on  all tasks, and as a kicker, when one project is only half done, …

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02

Feb'17

How To Deal with Bullying At Work

Question:  I work for a small business and the manager is a total jerk, a bully in full form.  His management approach is pressure cooker.  It’s not uncommon to see him blow up at an employee, berating them for a minor problem.  He relishes firing people in front of other workers.  He assigns impossible tasks with unreachable deadlines and explodes when things aren’t up to his expectations. What do I do?   Response:  My sense of it is that the culture of an organization is established by one or two key opinion leaders. It may be a small group, where the leadership dynamics have descended into a desperate competition of egos and will to succeed.   The first step is to understand the dynamics of what is really happening. To do this, a person has to be able to step back and evaluate what’s going on and why. This is often much harder than it seems. Next, you are going to have to identify who are the opinion leaders. Where is the power, and who is pushing the “mean” button. Where is the pressure coming from, and why?   Then, you’ve got to have a turtle shell. The flow of …

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02

Feb'17

How to Deal with the Bitch at Work

It’s a problem.  We’ve all run across that woman in a leadership role who ends up being called a “bitch” behind her back.  She manages to create the perfect storm of resentment and fear  among her co-workers.   But is she really a “bitch?”   Is she acting in any way that different from what her male counterparts would do in a similar situation? Often, my sense of it is that women in the workplace fail in “tough management” jobs due to (1) a disconnect between the way they look and the way they act, (2) the particular way in which they address confrontation, which often is much different from men, and (3) and this will sound weird, but I think it’s true the different intonation in a female voice versus a male voice. Before everyone jumps on me for sexism, let’s be clear: there are distinct difference between men and women, in case you haven’t noticed. Un-PC thing #2, we all live our lives to varying degree by stereotypes. Sorry folks, it’s biologically built in. So, when we get a disconnect between what we subliminally expect and what would be normal male leadership behavior, our minds go tilt. Cognitive …

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27

Jan'17

Will a LLC Protect Me From Liability?

Here’s the long and the short of it: a LLC will protect you from some liabilities, but not all liabilities. Here is a non-lawyer’s  business person’s response ( always consult a lawyer for specifics.) If you are doing business as a LLC, you are still participating in the LLC and you are personally liable for any tort liability that you cause or are responsible for allowing to be caused. If I am to simplify this further, let’s just say that there is an “illusion” of protection, which may help you in limited circumstances. If you get into a battle, the attorney on the other side will sue your company, you, and your dog. Will they be able to pierce the LLC protection? It all depends, and it could be a function of how good your attorney is, the attitude of the judge on that particular day, and what the phase of the moon is. Do not, repeat, do not ever assume that an LLC will completely shield you from responsibility. We live in a litigious society. You have to protect yourself, and here are the best ways: Vet your customers. Don’t do business with jerks. Know your customers. Never, ever …

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26

Jan'17

What are the Psychological Implications of Starting a Business?

Question: I am working on a startup. I want to know how to be psychologically ready for the challenge. Response:  There are a variety of things that hit you: There’s a rush, excitement when you start out. Watch out, the bubble will burst, and you can’t predict when. Then there’s the overwhelming impact of the zillion things that have to be accomplished simultaneously now. Getting used to it is difficult for those who have been linear thinkers in a corporate environment. There’s the anxiety associated with every decision, the wait time, the gestation period from inception to survival, and finally, what comes next. There’s a strong chance that you may experience bipolar like euphoria and depression, sometimes almost simultaneously There’s the constant worry about cash flow, metrics, sales, cash flow, personnel, production, cash flow, marketing, cash flow There’s an exhaustion that sets in somewhere between 6 months and a year when you realize that you really are on a treadmill, and that you better run faster and better than all the other fools out there who are competing with you. Then there is the family. The spouse has been reading Inc Magazine and /or Entrepreneur, or has a friend who …

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