Boards

In the past I’ve mentioned the value of boards of advisors for even the smallest businesses. With advisors you will have a sounding board, mentors, and possibly even hands-on help when you need it. But you need to carefully select your board, nuture it, and most important, listen to what it has to say.

But how do you effectively assemble and use a board? If you are in Northeast Ohio you may find the answers in a seminar by Jumpstart at Corporate College East on February 25. Check out this opportunity at http://www.jumpstartinc.org/Resources/Events/Details.html?EventID=647

Will Limkemann
Siqua Group Limited

Royalty Financing

Here is an innovative financing strategy for cash-strapped businesses. It’s called royalty financing. It works like this: The business borrows money against future sales and in turn pays a small percentage (royalty) of each invoice to the lender until the loan and interest is paid off. I’ve just recently run across this interesting financing strategy, and it may be worth businesses looking into. My suspicion is that it is a costly way to borrow but may be an option for businesses that have exhausted other options. Check out this brief article.

Will Limkemann

Financing small businesses

I’m not sure that availability to capital for small businesses has improved much over the past few months. From what I’ve seen, many small businesses have had credit lines reduced or terminated, and have difficulty finding banks who are willing to extend credit. There seems to be some activity by the administration and congress to improve the business credit situation. If you’re concerned about business credit, take a look at these Wall Street Journal articles:

Stimulus Relief Extended for SBA Loans

Another Chance For Small Business Loans?

Small Business Credit Cards Now Carry Sizeable Risk

Will Limkemann
Siqua Group Limited
www.siqualtd.com

A Standard for On-Line Shopping

From all accounts, more and more of our shopping is done on-line from the comfort of our homes. Retailers, and even commercial distributors, recognize the value of the Internet and keep making improvements to their web sites to enhance our on-line shopping experience.

Very few companies, however, can meet the standards set by electronics distributor Digi-Key Corporation. Digi-Key carries over 1.3 million parts from over 430 manufacturers – electronic components that range from integrated circuits to electronic test equipment, to power cords. Electrical engineers, corporate purchasing agents, and electronic hobbyists all buy from Digi-Key.

I’ve had the pleasure of purdhasing from Digi-Key on many occasions over the past ten years. Here are some of the things that sets Digi-Key appart from other on-line businesses:

1. With over 1.3 million parts an well-designed web-site makes it is very easy and fast to drill down to the exact component you want to purchase.

2. An accurate computerized inventory control system always shows the available quantity of any selected item, and the lead-time needed to replenish the stock.

3. All orders are acknowledged within a few minutes of being placed by e-mail.

4. Any order placed before 8:00PM central time (Digi-Key is in Minnesota) will ship the same day! (I once placed an order that, for some rare reason did not ship the same day, but Digi-Key, at their own expense, shipped it via express).

5. Shipment is quickly acknowledged with UPS tracking number. I once placed an order and received shipping notification twenty minutes later! Wow – what an efficient warehouse.

6. Returning a product for full credit is no problem – regardless of whether you ordered the wrong item or they (rarely) shipped the wrong stuff.

From time-to-time I purchase from a competitor, as even with a huge inventory, Digi-Key can’t possible stock every conceivable electronic component. Yet, due to a great shopping experience, I will always start with Digi-Key. This company has set the on-line shopping bar very high!

Will Limkemann
www.siqualtd.com

What is your IQ (Innovation Quotient)?

Dell Computer Company, Apple Computers, Microsoft, Google, and E-Bay share much more than only occupying space in the computer-sphere. Each of these businesses was founded by people who was not satisfied with the status-quo, who looked at the world differently, and constantly asked “why?”. These businesses not only started with an innovative idea but have thrived on continued innovation.

The December 2009 Harvard Business Review features innovation in business and published findings of research conducted over a six-year period. Among the interesting findings is that innovation starts with top person in a business. In the most innovative companies the CEO personally spends 50% more time innovating than leaders of other businesses.

The study determined that the most innovative people have these skills:

1. They are good at connecting-the-dots – associating diverse ideas

2. They are curious and constantly questioning and asking why.

3. They are keenly observant of the world around them.

4. They are constantly experimenting and conducting mental exploration.

5. They network with other individuals to test their ideas and get insight.

Like all skills these  are partially “genetic” but to a large extent can be learned and honed through continual practice. Leaders who are concerned about growing their businesses or even just surviving should look at developing their own innovation quotient and fostering innovation within their companies.

Will Limkemann
www.siqualtd.com

Appreciative Inquiry

As we are in the season of thankfulness and thanksgiving, it occurred to me that an introduction to the discipline called Appreciative Inquiry would be timely.

Briefly, Appreciative Inquiry (AI) is the process of change management that seeks out the best in people, their organizations, and the world around them. Instead of negativity, criticism, and diagnosing “problems”, AI helps people improve, dream, and offer new solutions through a process of asking positive questions and thus learning what has worked in the past, and learning of achievements, assets, competencies, strengths, unexplored potentials, and opportunities.

The opposite, which I suppose could be named negative inquiry, focuses on what is broken, is pessimistic, and and lead to a downward spiral. AI produces optimism and helps an organization and empowers people see what is possible and find ways to turn possibilities into realities.

There are several books describing AI in detail, including the Appreciative Inquiry Handbook by David Cooperrider, Diana Whitney, and Jaqueline Stavros. For a quick introduction to AI read this paper  by David Cooperrider and Diana Whitney.

Happy Thanksgiving,

Will Limkemann

Cutting costs or increasing profits?

A publication editor contacted me this week asking for my input into an article they are thinking of running about what small businesses can do to cut costs. This got me to thinking that business owners should not be focused on cost cutting but rather on increasing profit and improving cash flow.

In good times, and especially in tough times, business owners should always be concerned about costs. Costs need to be analyzed. Vendors need to be negotiated with. The best possible deals need to be made in purchasing energy, paper clips, and inventory.

But a cycle of cutting costs can rapidly pave the road to extinction.

Rather, owners need to concentrate on profitability and positive cash flow. Sure, cutting costs can contribute to both – but for how long? When times are tough, the owner needs to bolster sales and marketing activities – possibly even increasing expenditures of time and money in both areas. Then the fundamental issues need to be addressed, issues such as: improved productivity, customer service, customer satisfaction, and innovative services and products. For survival the owner needs to play to strengths – not weaknesses.

What is your business doing to improve profitability?

Will Limkemann
Siqua Group Limited
440-871-0976
www.siqualtd.com

Peer-to-Peer Lending

An alternative financing source that has gained traction over the past few years is peer-to-peer lending facilitated by on-line site such as www.lendingclub.com, www.prosper.com, and www.peerlendingnetwork.com. Small businesses hit with high credit card interest rates and which can’t find banks willing to lend money are increasingly funding their needs with low-cost peer-to-peer loans. Investors concerned about the volatile stock market and low interest rates are attracted by returns offered by peer-to-peer lending.

Peer-to-peer lending web sites are on-line market-places that bring together borrowers and lenders, often pooling the investments of many vendors over the loans of multiple borrowers. In some cases lenders can actually bid on individual loan requests.

According to a September Washington Post article, peer-to-peer loans will reach $5.8 billion in 2010, almost doubling the 2009 loan values.

Will Limkemann
Siqua Group Limited

How secure is your data?

Are you confident no one can hack into your systems and access sensitive or proprietary data? See this Wall Street Journal Article called Passwords 101: How to Protect Your Data.

Will Limkemann

Payroll Services

One piece of advice I give consistently to small business owners, even those with only two or three employees, is to engage a payroll processing service. Why? I’ve seen way too many small businesses get into serious financial difficulty by failing to file quarterly tax returns on time, and worse, not making payroll tax payments when they are due. As trustees of taxes withheld from employee paychecks, employers are obligated to timely and properly deposit these taxes. The IRS and other taxing authorities can impose not only interest but severe penalties when taxes are not deposited, and they can go after the owner and anyone else who may have the authority and responsibility to make the tax deposits.

So how is this problem solved with a payroll service, such as Ahola or ADP? The payroll service makes the deposits and files the tax returns. An established and reputable service can be counted on to make all the filings when required. The payroll processing fees are well worth the peace of mind and will most likely be less than the costs of late filings or deposits.

The small business owner needs to keep track of countless details. Delegating payroll-related details is just smart.

Will Limkemann