Thursday, January 29, 2009

Insurance styles of the rich and famous - protecting their assets

Personal insurance is up and liability sales are booming


By Darla Mercado December 7, 2008, 6:01 AM EST

... Carriers that provide personal line coverage for jewelry, yachts and mansions say that business is still good, even though signs point to an upper class that's less than sanguine about the economy.

For instance, the Chubb Group of Cos. wrote some $995 million in personal insurance during the third quarter, a 2% gain from the year-ago period. That unit of the Warren, N.J.-based insurer covers yachts, jewelry and personal liability, said Jim Fiske, vice president of Chubb.

In addition, interest in personal liability coverage — insurance to cover affluent individuals in the event of a lawsuit — has increased in the last few years, he added. ...

Anecdotally, some insurance executives say that people are more likely to sue for personal liability in a down economy, though the suits aren't numerous enough to be statistically significant.

For instance, the most affluent clients may have household staff or a business, and they could face pressure to lower expenses and cut employees when the economy gets tough. However, those clients could be facing a liability claim if a former worker comes back with a suit against the employer, Mr. Fiske said. ...

"I think we're dealing with a savvy insurance customer, individuals with assets that need to be properly insured," said Derek Ross, vice president of CM Meiers Co., a Woodland Hills, Calif., insurance brokerage. "We may not see an increase in people adding additional vehicles, but we will continue to see increases in liability coverage." ...

Types of requested coverage have varied from excess liability insurance for an 800-person Republican shindig to protecting a mansion and the art collection within from wildfires, according to Charles E. Williamson, president of AIG Private Client Group, a high-end property/ casualty subsidiary of New York-based American International Group Inc. ...

"As the years go by, personal liability umbrella coverage is most often overlooked and not taken care of," said Scott Ford, president of Cornerstone Wealth Management Group in Hagerstown, Md., which manages $150 million. ...

"You can be doing the right things with your investments and have your long term care and estate planning taken care of," he said. "But if you're sued, you may not have enough protection to cover yourself."

E-mail Darla Mercado at

Preparing The Floodgates

Private Wealth Magazine

By Gary S. Shunk , Megan Wells

... People who find themselves overwhelmed by a sudden liquidity event express a ... mix of emotions: disbelief, elation and bewilderment—even grief, depending on their relationship with the person who left them the money. But people do not come out of this experience the same way and the outcome is not always positive. We’ve seen some clients careen off course before righting themselves and attempting a rational investment of what remains....

A Flood ... As new wealth floods in, a person’s identity and old ideas of self are suddenly tested. They are faced with numerous questions. “Will this new money change who I am?” “Will it change how I behave?” “Do I trust myself to remain true to my values or will I be tempted to pursue a lifestyle I previously disdained?” “How will my relationships change?”

No matter how stable and composed a client may seem, the new money will have a psychological impact. And the intensity of the emotional response is not entirely determined by the amount of wealth received. ... For some, new money brings exciting possibilities. For others, new money brings a downpour of disruption. ...

Trust And Fear The stress created by a big financial gain can be difficult. Change can be frightening. Certainly it can be uncomfortable. ... Sometimes money is imagined to carry the qualities of the person who bequeathed it. ... Consequently, the heirs might start furiously spending their inheritance—because they’re trying to be rid of it. ...

Curiosity And Resistance ... Studies show that people with curiosity respond to change better. On the flip side, a person resistant to change may shut down. Just waiting for wealth can trigger purposelessness. ... Their lives are “on hold” until the money comes. When it does finally arrive, the new wealth can stun their identity and derail their calling, as well as alter their character or cause it to disintegrate. ...

Gary Shunk is a consultant to families of wealth and the advisors who serve them. His primary mission is to help integrate wealth, character and calling. He is based in Chicago. His Web site is

Megan Wells is a writer and communications expert. She uses writing and storytelling for leadership, creativity and innovation. She works in Chicago. Her Web site is

Wednesday, January 28, 2009

Next year could be your best year, that is if you plan for that kind of success

Employee Benefit Adviser

By Jack Kwicien

December 1, 2008

... It's a great time to reflect upon what we can do differently to improve results and to make adjustments in operations to respond to the changes in a very dynamic and recently tumultuous marketplace. Clearly that job is considerably easier if you have a written business plan for your business. Since we know that the majority of you do not have written business plans, perhaps now is a great time to consider the creation of a written document for your business. ...

... Consider a business plan a road map, a guide to running your business. It should articulate your business purpose and your mission. Who are your customers? What is your value proposition? How will you grow your business? How much realistically can it grow? Will it still be profitable? And what resources will you need to make it all happen? ...

You may be asking yourself, why does my business plan need to be written? ... First, the very discipline of writing out the plan forces you to think through all the issues that are involved in managing your business and to succinctly articulate why your business matters. ... Putting your plan in writing makes it more definitive or permanent, and it will solidify your commitment to the plan. It will be easier to clearly and effectively communicate your plan to internal and external audiences without any misinterpretation. ... Historically, businesses that have a written business plan have a higher success rate.

... Knowing where you are is essential when starting a journey. Gather the key financial metrics for your business, and also put together information about your marketing positioning, service standards and any guarantees, and client perceptions. ... At a minimum, think about:

Who does your business serve? Who are your target customers? Who should be interested in your services? Who are the critical business relationships (carriers, vendors and advisers)?

What is your business? What products and services does your business sell? What will your firm sell in the future? What is your value proposition? What is your competitive advantage? What strategies will you employ to grow your practice? What strategies will you employ to improve profitability? What role will technology play?

When was your business established? When do your clients need your services most? When the marketplace changes ... will your business be ready?

Where will a prospect be likely to hear about your business? Where will your future clients come from? Where do your best leads come from? Where will your future management talent come from?

How will your business grow? How quickly? How much? How will you recruit the talent that you need? How will you know when success is achieved? ...

Ultimately a plan will begin to come together, including the financial resources and human capital that will be required to achieve your objectives. The plan will cover a lot of territory ... Every thing from client value proposition to growth to operational structure and succession planning should be addressed.

Clearly the document you will be creating can be used with your own management team to run your business. It can be referenced when important strategic decisions need to be made. You will want to periodically update it so that it remains current and reflective of how you are conducting business at a point in time. ...

Kwicien is a managing partner at Baltimore-based Daymark Advisors, a consulting and advisory firm. He can be reached at

Price cuts coming to 401(k) fees

Plan providers being pressured to trim their cost structures


By Lisa Shidler December 7, 2008, 6:01 AM EST

In an effort to maintain a tight grip on retirement assets, some major 401(k) providers ... are considering lowering the investment management fees they charge to employers.

Executives at San Francisco-based Schwab ... are working with plan sponsors to come up with more "creative" deals.

While the company is being tight-lipped on whether those deals will result in lower fees, "there has been a trend to lower fees, including lower investment fees," company spokesman Mike Cianfrocca wrote in an e-mail.

Malvern, Pa.-based The Vanguard Group Inc. meets with clients throughout the year to discuss fees, according to spokeswoman Linda Wolohan. ...

Indeed, advisers who specialize in working with corporate 401(k) plans said dismal market conditions have given employers the upper hand when it comes to negotiating fees.

In some cases, they said, providers have dropped their investment management fees by 0.05 to 0.2 percentage points to keep plan sponsors happy.

"They're open for the discussion more now than ever before in the past," said Mike Hudson, an adviser with Captrust Financial Advisors of Raleigh, N.C. ... "You'd think fee reductions would slow down because the market is down 30% or 40%. They're worried about losing their business."

In some cases, 401(k) providers are even going so far as to initiate conversations with plan sponsors about ways to cut costs, said Stace Hilbrant, managing director of 401k Advisors LLC in Wilmette, Ill ...

"I think they feel like they have to negotiate," he said. "There is such pressure. Their business is down. They're not gathering new assets, so they have to be more aggressive about retaining assets under management." ...

That willingness to make concessions may soon be coming to an end, however. If the stock market continues to tumble, 401(k) providers may hit a point where they simply cannot afford to lower fees. In fact, they may have to start raising fees to make up for shrinking assets. ...


Going forward, it'll likely be more difficult for advisers to negotiate fees unless they're quite creative, said Fred Barstein, chief executive of 401kExchange Inc. in Lake Worth, Fla.

He believes fees are headed up in 2009.

"To lower hard-dollar fees or asset-based fees is suicidal," Mr. Barstein said. "But some have said, 'I have to, because the competition is doing it.' There are so many weird things going on."

More likely, negotiations will be based on absolute price and not on a percentage of assets. This way, if the assets grow, it won't affect the fees, Mr. Barstein said.

"They have to figure out a new dynamic," he added.

E-mail Lisa Shidler at

Tuesday, January 27, 2009

Premium Financing

Private Wealth Magazine

By Frank W. Seneco , Alan Kufeld - 12/4/2008

As Business Owners build PERSONAL wealth, they typically want to ensure that, in the event of their death, the value of their business equity will pass to a surviving spouse and heirs.

A variety of premium financing techniques—involving permanent life insurance comparable in value to the owner’s business equity and borrowed premiums—offer a potentially attractive solution to this challenge. ...

Borrowing the premiums could be a beneficial option for the following reasons: • Permanent life insurance policies have a cash surrender value that, under current laws and regulations, can provide collateral for a secured loan. • New types of permanent life insurance offer attractive options for the policy cash value that can diversify the business owner’s portfolio and outperform the cost of financing premiums. • Borrowing has federal estate/gift tax advantages when used with an Irrevocable Life Insurance Trust (ILIT). • A thriving industry of specialty lending, called “premium financing,” has evolved to facilitate this type of transaction by arranging personalized secured loans.

Fine-Tuned Leverage ... In a premium financing transaction, leverage can work on three levels: • The contract provides the immediate benefit of leveraging a first-year premium payment into a far larger death benefit. In the example cited earlier, this leverage is 75 to 1—a $15 million death benefit acquired for a $200,000 first-year premium. • The contract creates the potential over time for the cash value to compound on a tax-deferred basis and eventually exceed the cumulative cost of premiums. • The contract can have “tax leverage” because the death benefit is normally free of federal income tax. It also can be free of estate tax when properly structured and owned by an irrevocable trust.

The advantages of borrowing life insurance premiums are tangible and valuable. The strategy can potentially increase personal net worth modestly during the business owner’s lifetime and increase the after-tax estate substantially after death. Premium financing also creates the flexibility to adjust the amount of leverage built into the life insurance contract at the time of purchase and periodically over time.

For example, a business owner could “dial up” the premium financing leverage at age 40, reduce it in increments starting at age 50 by repaying some loan principal and eliminate it by retiring the loan as retirement approaches. For younger owners who are just starting to build serious net worth, premium financing can be a bridge until personal assets grow or a sufficient income stream becomes available to fund life insurance.

The Structure Of A Typical Transaction Although each premium financing transaction is customized, the basic terms and techniques are somewhat standard, as follows: • The loan typically is non-recourse—secured by the policy’s cash value and a letter of credit (LOC) equal to any shortfall between loan principal and cash value. • The policy is permanent life insurance in which coverage is guaranteed for life or to a very high age (e.g., 110). In form, it may be whole life, fixed universal life or indexed universal life with a “secondary guarantee” of coverage. Variable life insurance is typically not used in premium financing because of regulatory restrictions on borrowing against securities. • The loan interest is a floating rate typically tied to the 12-month LIBOR plus a spread. Spreads have recently ranged from LIBOR + 2.25% for loan commitments up to $2.5 million to LIBOR + 1.75% for commitments above $20 million. The loan interest is not tax deductible for an individual, trust or business entity. • A loan arrangement fee of 1.0% to 1.25%, depending on loan size, is charged and can be capitalized into loan principal. • The policy must be owned by a “bankruptcy-remote” entity so that the premium finance lender has clear priority claim against cash value collateral. An LLC or ILIT can qualify as bankruptcy-remote. • A common arrangement is to fund the policy at the maximum level for the first seven to 10 years, which can guarantee the death benefit. This creates rapid cash value build-up and leverages policy benefits. Funding should avoid Modified Endowment Contract (MEC) status. In a “non-MEC” policy, loans and partial withdrawals of cash value may be made on a tax-favored basis. • The policy is typically purchased by an ILIT so that the death benefit can be paid free of federal estate tax (a three-year look-back period applies on policies transferred to an ILIT). The business owner normally is the insured person. Some “survivorship” or “second-to-die” policies allow two lives to be insured—a business owner and spouse—with the death benefit payable on the second death. The trust’s beneficiaries may be a surviving spouse, children or, in the case of a business buyout arrangement, the LLC or other partners of the firm.

Estate And Gift Tax Advantages The ILIT can help to avoid inclusion of the life insurance proceeds in the grantor’s taxable estate. With a competent institutional trustee, it also can provide continuing management of assets and planned distributions to beneficiaries according to the grantor’s wishes.

There is, however, complexity involved in setting up ILITs funded with large amounts of life insurance. The trust normally owns the insurance and pays premiums, and the grantor can gift to the trust an amount needed to pay premiums annually. Such gifts can qualify for the annual gift tax exclusion—currently $12,000 per beneficiary—if they are of a “present interest.” Then, any premiums gifted to the trust in excess of the annual gift tax exclusion can be sheltered under the grantor’s lifetime gift tax exemption, which is currently $1 million. At the grantor’s death, lifetime gift tax exemptions previously used will reduce the “applicable credit” for federal estate tax purposes, dollar-for-dollar. ...

By reducing the out-of-pocket premium payment obligations, premium financing can soften the impact of gifted premiums on the grantor’s estate planning. The annual gift to the trust could be limited to the amount necessary for the trust to pay financing charges, which normally is far less than premium cost. ...

Exiting The Loan ... In addition to paying off the loan with liquid cash as it becomes available, the options include: • Having the trust or estate pay off the loan after death, using insurance proceeds. • Surrendering the contract and using its cash value to pay off the loan. • Restructuring the loan. • Using a combination of personal assets and policy withdrawals or policy loans to pay off the premium finance loan. This is not usually recommended because large withdrawals or loans may jeopardize the guaranteed coverage feature of the policy. ...

Policy Performance Premium financing works best when the policy has the potential to grow cash value at higher rates than the cost of financing. An analysis of prevailing interest rates over the past 20 years by the British Bankers Association shows that one-year LIBOR rates have averaged 5.19%. A premium financing arrangement at LIBOR + 1.75% would have averaged 6.94% interest annually over this period.

Most whole life policies’ cash value growth, including any dividends paid by mutual companies, is less than 7% annually. ... Fortunately, a type of permanent policy called Indexed Universal Life (IUL) has emerged to fill the gap. IUL credits to cash values an interest rate that is the higher of a percentage of returns produced by a market index such as the S&P 500 or a guaranteed minimum annual rate, such as 2.0%. Policy values are not subject to market fluctuations. Any cash value gains from year to year are locked into the contract.

We are seeing even more attractive “next generation” IUL products emerge. They credit cash value with interest based on an averaged “basket” of leading investment indexes, including those that invest in U.S. and international stocks. Other advantages of leading-edge IUL products include: • Lowest return dropped–The index that produces the lowest performance for the basket over a given period of time is dropped from the average. • Variable basket weightings–The highest performing index in the basket is given a greater weighting in the averaging process, on a look-back basis, than lower performers. • Five-year point-to-point measurement–Index returns are measured on a five-year rolling point-to-point measurement, which helps to smooth out temporary dips and produce the most favorable cash value crediting rates for policyholders. ...

When Does Premium Financing Work Best? Premium financing strategies can work best for business owners when the benefits align with owners’ personal needs, in the following ways: • The owner has a need for permanent guaranteed life insurance coverage and has limited liquidity or cash flow to pay premiums. • The owner expects liquidity or cash flow will improve at some point in the future and would like the flexibility to “dial down” life insurance leverage. • The owner has significant personal net worth tied up in the company and is confident it will keep performing well. • The owner believes the IUL basket of indexes has the potential to outperform the cost of financing premiums. • The need for life insurance coverage is large enough to create gift/estate tax issues because gifted premiums would exceed the annual gift tax exclusion.

Because IUL cash value crediting rates can fall below financing cost over intervals, it is essential to implement premium financing programs with the help of professionals who can monitor results and maintain program advantages. If the program begins to deliver less benefit than planned, it is best to know this fact and take remedial action sooner rather than later.

In the right circumstances, and with experienced professional support, premium financing can be a valuable technique for helping business owners pursue wealth accumulation and distribution goals, including protecting and ultimately cashing out the value of their business equity.

Alan S. Kufeld, CPA, is a tax principal in the Rothstein Kass Family Office Group, specializing in the federal, state and local tax matters affecting high-net-worth individuals. Frank W. Seneco is the principal of Seneco & Co., a Connecticut-based advanced planning operation that specializes in high-end life insurance solutions for the ultra-affluent and their advisors

Airlines Add It Up | Fees are here to stay, while routes may come and go. That makes air travel your biggest challenge in the year ahead. | Oct 2008

Financial & Insurance Meetings

Nov 1, 2008 12:00 PM, By Rob Carey

With oil prices spiking up more than 70 percent since early 2007 and jet fuel now representing up to 40 percent of airlines' total expenditures, airlines are doing what they must to survive. Most carriers have imposed several increases in their fuel surcharges...— on top of fare hikes. They're adjusting plane sizes to the demands of individual routes and making fewer trips to and from fewer cities, resulting in a significant loss of seat inventory in many markets across the country ...

Most have imposed $25 fees for the first checked bag, plus fees for pre-assigned seats and other small conveniences. To compound the problem, several smaller carriers ... could not stay in business, further narrowing flight choices. In just over three months in mid-2008 ticket prices paid by business travelers went up 12 percent, according to the American Express Business Travel Monitor, a service that tracks travel expenses, including published and purchased airfares.

The good news is that the still-escalating economic crisis may force airlines to adjust their survival strategies moving forward. Kevin Mitchell, chairman of the Business Travel Coalition in Radnor, Pa., notes that the mushrooming credit crisis and resulting travel cutbacks at most companies has killed the airlines' ability to push up prices. “In 2008, they hoped to cut capacity 10 percent while raising prices 20 percent,” he says. “The problem is, very few people are buying at those prices. This means that the recent fare hikes are coming off the table. ...” ...

...As of early October, the airlines showed no signs of ending the a la carte menu of ancillary fees for things such as checked luggage. ...

In addition, airlines have declared their intentions to cut seat inventories by another 10 percent in 2009. Even profitable Southwest has said it will cut 196 flights from its schedule, a 6 percent reduction. Some destinations will be more hard-hit than others. “With the route decisions I've seen lately, there is a disproportionate amount of capacity coming out of destinations where the major airlines compete with the low-fare carriers,” Mitchell says. ...

One trend that may help: While air costs are going up, some hotel costs are starting to go down. ...

Monday, January 26, 2009

Obama's sustainable-energy ideas give hope to some fund managers

Tax breaks courtesy of Stabilization Act aim to bolster the sector


By Andrew Coen November 30, 2008, 6:01 AM EST

During his campaign, Mr. Obama unveiled an aggressive energy plan aimed at decreasing America's dependence on foreign oil. His energy plan calls for a $150 billion investment in clean technologies over 10 years and programs to create renewable energy.

Sue Asci contributed to this story.

E-mail Andrew Coen at

Dave says-ETFs are a convenient, low-cost way to get portfolio exposure to green energy.

On the Same Page

Financial Planning

By Ingrid Case

January 1, 2009

Investment policy statements (IPSs), viewed as protective by some advisors and potentially hazardous by others, are getting more attention in this transformed market. An IPS is a document that explicitly outlines the goals and philosophy of investing for a given client, setting general preferences.

Users regard IPSs as an effective tool for keeping planners and clients on the same page, guiding the planner's efforts and keeping the client's expectations reasonable and realistic. "Whenever you have a really good market, people don't tend to look at the details," says Blaine Aikin, chief executive officer of fi360, a financial services consulting firm near Pittsburgh that provides planners with a web-based tool that generates IPSs.

While advocates stress the advantages of having a document on hand to remind the client of what they bought into, critics believe that IPSs can cause as many problems as they might solve. "I worried that keeping up with the requirements set out in an IPS for hundreds of accounts would be a liability issue," says Randy Ruggaard, president of Ruggaard & Associates in Twinsburg, Ohio.

Today's IPS will likely be a recovery plan for many clients, a blueprint for how you and your clients will reexamine goals and attempt to make up for losses.Ingrid Case is a Minneapolis-based freelance writer.

Ingrid Case is a Minneapolis-based freelance writer.

Dave says: I write IPS for 401(k)s.

Wednesday, January 21, 2009

Rejecting the Turnstile Relationship

Instead, invest more in your best customers.

By Scott Hornstein, consultant, Hornstein Associates

Posted Dec 1, 2008

...I’m a customer of many companies, and the concept of CRM, from my customer perspective, feels really good. Put simply, the implied contract says that if I invest my trust and respect, it will be reciprocated. I concentrate my business with that company, and the company and I both benefit. ...

[An] example concerns a friend’s grown kids. A week before my friend’s birthday, they decided to get him an Apple iPhone, so off they went to the AT&T store. Mind you, every member of this family has been an AT&T customer for years. The response from the salesperson, and the supervisors, was “Sorry—your contract isn’t up for renewal. You can either pay twice the price or wait.” ... And yet, if my friend’s kids had been new customers who walked in off the street, they’d have been helped, right? ...

Click here to learn more! This is corporate America’s complete focus on short-term sales. ... We are creating turnstile relationships with drive-by value. If a customer loses patience, she’ll simply opt out.

The reflexive response to widespread panic is to redouble our short-term efforts. I am strongly suggesting that we balance that investment by creating the long-term value that causes customers to opt in. Here’s how:

  • Invest more in your best customer relationships. Right now, we invest the same in everyone, or we max out on prospecting. ... That’s crazy—they’re the 20 percent that are responsible for 80 percent of our revenue.
  • Let me tell you a story—...: A small manufacturer I know woke up one morning to find an ad from a new competitor, cutting the bottom out of his pricing—lower than cost, in fact. His first response was to talk to his best customers. He asked, “Have you seen the ad? What do you think?” They said, “It’s interesting, no doubt—but you know the intricacies of our business. You watch our back. You’re a member of our team.”
  • The bellwether is your customers’ satisfaction, which we too frequently see as a cost to be driven down instead of an opportunity to be seized. Yet it’s the most compelling competitive differentiator in a world gone flat. ... It’s messy and uncomfortable to us, but in the customer’s eyes, it’s simple—either you’re delivering on your promises or you’re not. ...

Consider this quote from hockey legend Wayne Gretzky—recently referenced by Warren Buffett, a businessman some might consider mildly successful: “I skate to where the puck is going to be, not where it has been.” It’s time to get serious about CRM—as perceived by the customer—and to lay the foundation for tomorrow’s business. ...

Happier customers stay longer and buy more.

Scott Hornstein is principal at Hornstein Associates, a direct marketing consultancy in Redding, Conn., and co-author of Opt-In Marketing. He can be reached at

10 Things to drive business success in a new year

Aspiring Business Blog

by Shawn Kinkade on January 3, 2009

photo by wili hybrid

... Here are the 10 things you need to do to make sure you and your business achieve the success you’re aspiring towards.

Chances are that you’ve already got a good start on a few of things, but the key to really making things happen is take consistent action. It’s not enough to make a great plan, the real benefit comes from the follow-through. How many of these are you currently doing? ...

1. Carve out time to work ON your business

The biggest problem most businesses owners have is a lack of time. ...

It’s not ever going to get better until you can make the time to really work ON things. You should be able to clear out 4 hours a week that are specifically targeted at strategic planning and development of you and your business. (Maybe you need some ideas on How To Get More Done…).

2. Figure out what you really want

...Growing your business, doing things differently, thinking big thoughts are all hard things to do. ... What is it that you want out of your life and your business? ...

This effort of figuring out what you want is a continued work in progress, but without it the other 9 things in this list don’t really matter. For some inspiration, check out this post on Zen Habits on How to Press the Reset Button or this post from the excellent Jonathan Fields on Are you living a significant life or on a related topic, check out Start finding your life’s work from Pamela Slim (always a great read!).

3. Create a written plan

I’m sure you already know what your plan for the year is - maybe you even made some notes and put down an outline. But have you put down a month by month forecast of revenue, costs and cash flow for the year? Have you clearly broken out where the money is coming from, how you’re going to attract it and what’s different from last year?

If not, you’ve got to do that now (well not right this second, but put it at the top of your list!). It’s amazing the insight that comes out when you convert your annual goals into the forced clarity of a spreadsheet. ... You should have line items for each major source of income and those should match up with any corresponding costs that need to go along with that. ...

It may seem like a lot of work, but in the long run it will save you an immense amount of time, money and effort and dramatically increase your chances of success.

4. Build a practical plan to exercise

... [Assuming] that you are an important part of your business, then it’s critical that you are regularly exercising. Not only is it a great way to relieve stress, but it will give you some important time to not be constantly fixated on your job...

To really make this meaningful, you must build at least 4 to 5 exercise appointments into your weekly calendar. ... If you’re like most people and believe that you can’t find the time, then literally schedule the time as an appointment with yourself. ... You can go to the gym, work out at home or just go for a walk. The important part is to start somewhere.

There are tons of great resources on fitness, but I’ve been impressed with Tom Venuto’s blog Burn the Fat, he knows what he’s talking about and he doesn’t make it too complicated!

5. Review your marketing fundamentals

The purpose of marketing is to get your prospective customers to contact you with the intention of possibly trading money for your products or services. ...

You’ve got to know who your best target market is. You should have a niche that you serve best. The natural tendency is to broaden your focus over time, so even if you’ve defined your target before, it will be worthwhile to do it again.

Beyond that, your marketing message needs to be effective, it should be focused on overt benefits, it should establish your credibility and it should stand out. If you want to learn more about creating an effective marketing message, check out my workshop at the end of January.

6. Audit your 2008 Revenue

Now is a great time to look back at the previous year and how your company made it’s money. Be detailed and go down a product level and look for the following:

  • What products generated the most revenue?
  • What products generated the most profits (by percentage)?
  • What activities drove most of those revenues? (Apply the 80/20 rule, can you figure out what your top 3 marketing and sales channels were?)
  • If you have a sales team, is there a clear leader? What do they do differently?

Look for trends, seasonality, drivers that you can use to prioritize efforts for 2009.

7. Join a Mastermind group

... If you’re like most business owners, you don’t have anyone to talk about about the issues you’re dealing with. ... Generally you’re too close to the problems to really get a good perspective on them - and it’s especially difficult to brainstorm by yourself. ...

I’m biased, I would suggest that you check out my Brainstorming, Accountability and Networking Groups (BANG!) It’s a Peer Group Advisory board (Mastermind group) that’s facilitated by a business coach - a great, cost effective way to get some quality focus on your business. However, even if you don’t want to consider BANG!, I believe every business owner should be in a mastermind group of some sort - start your own or ask around to see if you know of anyone that’s doing some like that.

8. Do a people review

... Everyone on the team needs to have the strengths needed for their job to go along with the desire to do that job as well. If you don’t have the skills (or the desire) in-house, then seriously look at outsourcing those tasks. ...

Whatever it is, do a full review of who’s doing what and find a way to make improvements. Work with your (and your team’s) strengths and find solutions for things that you don’t do well or don’t like doing.

9. Develop a process and procedure manual

This isn’t as painful as it sounds and it can really make a huge difference both in running your business now and planning for an exit strategy in the future (your business is worth a lot more if it’s well documented and consistent!).

Start out by identifying at a high level all of the major processes that you do to run your business. ... Your list will end up with at least 8 to 10 things on it, with no more than 20 (if you’ve got more than that, you need to combine and simplify).

... [Use] use some of the time you’ve got carved out to gradually start filling in the steps. Make it a goal to do at least one per month - make it a team effort, or delegate it out and do a team review. ... (Once you’ve got a first round of everything documented, go back around and start improving those processes…).

10. Plan and take at least one vacation

... There are several great reasons why you need to plan and take an actual vacation that gets you away for at least a week - here are a couple of them:

  1. Personal sanity: A big reason why people burn out is because they never take the time to recharge. ...
  2. Perspective on you versus your business: It’s extremely important to recognize that your business is not you. ... Getting away will help you plan and visualize how your business can run successfully without you.

Pick a week that works with your personal schedule and block it out now. Pick a destination that you can afford and will look forward to and start letting everyone know that you will be out that week (and to plan accordingly). If you’re really feeling crazy - plan a second week as well.

So that’s the list

Let me know what I missed, what else you think is important or if any of these don’t really work for you. ... Best of luck in 2009 - and if you follow this list, your business will likely be in great shape to grow!

Shawn Kinkade Kansas City Business Coach

Custom Logos: Essential For Small Business Marketing

Feeling Wow Blog Posted using ShareThisby Caressa Waechter A company, and sometimes an individual is represented by a graphic design, also know as a logo. This is a carefully thought-out visual representation of a company, and/or its products, that can be instantly recognizable by customers. Logos are used in the brand marketing of a business, or individual. A logo is a memory aid for the consumer that is used as part of a brand marketing strategy. Humans generally remember visual symbols better than text by itself, so a logo gives people something they can remember and instantly recognize while associating the symbol with your company. A small business must work to establish itself in the marketplace, and they can do that by having a custom logo designed for their business. Therefore, having a logo designed is a big step for a business to take to market their brand. For a business entering an innovative market, or wanting to sell a unique product, a high-quality logo is a vital marketing tool. Leading edge companies use them to help explain what they are all about, while new companies use them to gain brand recognition. Having a logo designed for your company is step that should not be taken lightly. It is going to represent your business, and if you find out down the road that it is not portray the correct message, you are going to have a hard time rebuilding your brand that was built around a poorly designed logo. Therefore, the logo you choose for your business needs to be highly representative of your company and your products. It must be a design that will stand the test of time and clearly and quickly convey what your company (or product) is about to the target market. A logo does not always just consist of a graphically designed image. It can also have a catchy phrase or shows the name of your company or product. Properly designed, a logo tells your customers that your business is highly credible and is to be trusted. A logo designer that knows what they are doing can communicate your company’s character and personality, making customers want to do business with you. The better your logo design, the better chance of you winning customers and having a successful business. About the Author: Caressa Waechter is an entrepreneur who feels that creative logo design really aid in marketing a small business. Learn more about, including where to get your graphic design logos by visiting her website.

Timely Tips For Recession-Racked Entrepreneurs

Maureen Farrell, 01.20.09, 07:00 PM EST

Stop moaning--it's time for action.


In Pictures: 10 Tips For Recession-Racked Businesses

How gloomy are entrepreneurs? ...

Few think the pain will subside anytime soon. There comes a point, though, when it's time to stop worrying and get down to the business of, well, staying in business.

While every small company has its own specific challenges, there are plenty that span all industries. ...

How can I plan when I can't project?

... Short answer to this problem: Face the uncomfortable fact that not all customers are created equal, says Doug Tatum, founder of his eponymous consulting firm and author of No Man's Land: What to Do When Your Company is Too Big to Be Small But Too Small to Be Big. Focus hard on profitable customers, even if that means restructuring your business a bit. ...

Should you chase lower-margin business just to keep the doors open?

Demand for laser-eye surgery has plummeted 30% in six months, says Dr. Michael Furlong, owner of a San Jose, Calif., ophthalmology practice. That slump really hurts, considering those $5,000 elective procedures traditionally pull in 90% of revenues. Doing more cataract surgeries would keep the lights on, but those operations carry significantly lower margins.

Do them anyway, says James Nolen, professor of finance at the University of Texas at Austin. Meanwhile, don't lower prices for laser surgery--that may tarnish the practice's reputation--but do offer incentives and friendlier financing, such as monthly installment payments. ... Worse case, sell some of the non-performing loans to a medical receivables shop at a discount to keep cash flowing.

How can I get my customers to pay me?

... To fend off problems before they start, try drafting contracts that tack on interest for debts 30 days past due, says Nolen. ... "When you're aggressive, you move up on the priority list of who gets paid," adds Nolen. "They might pay you just to get you out of their hair." (For more, check out "How To Collect From Deadbeats" and "Is Your Customer A Deadbeat?.")

If I have to cut staff, how do I do it?

... If you need to shrink salaries, try to shrink them across the board--that includes yours. Four-day work weeks may stave off job cuts (for more, see "Is A Four-Day Work Week Good For Business?"), as might renegotiating your lease.

If you must let people go, slice with a scalpel. ... Instead, figure out where you have excess capacity, and even what functions you can outsource to shrink overhead. (For more on making strategic cuts, check out "How To Slim The Ranks.")

How do I raise money and run my business at the same time?

... The lesson here: Raise as much money as you can, when you can. ... If you must, syncing up with strategic partners who can speed up product development and lend credibility with other investors.

"Entrepreneurs often don't want to raise more money than they need early on because it's dilutive," says Philippe Sommer, director of entrepreneurship programs at the Batten Institute within the University of Virginia's Darden School of Business. "But do you want to own 10% of a really big company or 70% of a company that might never see the light of day?"

In Pictures: 10 Tips For Recession-Racked Businesses

In Pictures: Eight Resources Entrepreneurs Should Know About

Saturday, January 17, 2009

10 Steps to Building Trust in Your Business Relationships

I found this fascinating quote today:

Martin Haworth writes, there are some simple things you can do with your people to ensure that they start to trust you. As a letter from Mike Emmott of the Chartered Institute of Personnel and Development in the UK says, in April 2005’s UK Management Today says:-"Our surveys show that only one in four employees trust senior management to look after their interests."10 Steps to Building Trust in Your Business Relationships, Jan 2009

You should read the whole article.

Wednesday, January 14, 2009

Manage Through Appreciations

OPEN Forum by American Express

Scott Belsky of Behance January 14th, 2009 - 03:29 PM

appreciationCareers are developed based on new opportunities and feedback exchange. Traditionally, feedback is constructive and is exchanged to put a spotlight on your weaknesses. Of course, the greatest barrier to acting on constructive feedback is the offense we take along with it. Often times, our ego makes us defensive and marginalizes the potential benefits. Especially among the creative set that is especially passionate about their work, negative feedback doesn’t always work.

It is worth considering other methods to improving the skills of others – and helping all people capitalize on their strengths. One of the greatest storytellers in the world, Jay O’ ...a pioneer of Appreciations, a technique to improve the skills of storytellers without any demoralizing consequences. As O’Callahan develops his own stories and those of others, he insists on a method known as “sharing appreciations.”

Here’s the concept behind appreciations: Having just shared a story (or, in other contexts, a presentation, idea, etc…), you would go around and ask people to comment on the elements they appreciate. After hearing the aspects of your story that people appreciate most, you are likely to emphasize those components more (and thus de-emphasize the other components that are not appreciated) in the future.

... O’Callahan explains, “It is strange that, in our culture, we are trained to look for weaknesses. When I work with people, they are often surprised when I point out the wonderful crucial details - the parts that are alive.” O’Callahan goes on to suggest that, “if our eyes are always looking for weakness, we begin to lose the intuition to notice the beauty.”

Of course, the contrarian view to Jay O’Callahan’s approach is that more direct feedback and criticism might help one “cut to the chase.” One member of the Behance team attended a workshop and explained some initial frustrations, “I tend to like hearing ‘this is what you did well, and this is what didn’t work.’ At first, I was frustrated as I tried to figure out, from the appreciations that I received, what was noticeably missing in my stories. However, toward the end, I noticed the appreciations molding my stories.”

... “People need to relax to be able to discover. …Sometimes someone will say, ‘I just want to know how to improve, not what is good.’ People think that pointing out faults is the only way to improve. ... Appreciations are not about being polite. They are about pointing out what is alive. ... .”

The power of “appreciation” can have a role in any business. Another example is the rapidly growing network of creative professionals at ... When someone likes the work by a particular professional in the network, they simply click the “appreciate” button. ... Over time, some projects in a member’s portfolio become more appreciated and rise above the rest. This sends a very direct message to the member about which projects require more thought.

As you develop ways to improve your team and share feedback that makes a difference, consider the power of appreciations.

***Behance articles and tips are adapted from the writing and research of Scott Belsky and the Behance team. Behance runs the Behance Creative Network , the Action Method project management application, the Creative Jobs List, and develops knowledge, products, and services that help creative professionals make ideas happen.

Give Customers What They Don’t Expect

Raise the bar, instead of falling short of it.

By Anirudh Kulkarni

Posted Jan 1, 2009

...The CRM initiative’s mandate is often narrowly focused on addressing customer expectations through large technology-driven change management projects. And while these initiatives play a critical role in advancing customer centricity, customer satisfaction often fails to match the resources expended on these efforts.

The Accenture 2007 Global Customer Satisfaction Survey bears this out: 75 percent of participating executives felt their customer service was moderately or extremely good, but 57 percent of consumers described themselves as upset or marginally to extremely dissatisfied with their experiences. The temptation is to close this gap by pouring more resources into understanding what these dissatisfied customers do expect—and then trying to exceed these expectations. However, there is a growing realization that small initiatives designed to deliver what customers don’t expect can also have a significant impact. ...

Small, unexpected customer service efforts can be valuable within the context of a broader CRM strategy. That said, identifying those initiatives—and executing them—requires a strategic organizational approach incorporating the following elements:

  • Voice-of-Customer approach—To know which gestures would show your customers that you value them, you have to get inside their minds. What have they grown to expect? ...
  • Competitive analysis—A commodity service (hotel rooms, office products) can still create memorable customer experiences, using small gestures as competitive differentiators. ...
  • Internal organization maturity—Some things that seem easy to do are hard to execute. ... Make sure you understand the organizational implications of any gesture (no matter how small). ...
  • Keep it simple—The gesture needn’t be elaborate or complicated—just something unexpected that gets the customer talking about it with friends and colleagues.

The role of process and technology in improving customer service is indisputable. Organizations intent only on large-scale improvement initiatives, though, may neglect the small but impactful efforts that go beyond the expected. These gestures enhance customer satisfaction, improve customer loyalty, and attract new customers.

Anirudh Kulkarni ( is founder and managing principal of Customer Value Partners, a customer lifecycle management consulting firm.

Tuesday, January 13, 2009

Top Ten Technology Trends for Small Businesses - 2009

Small Business Trends website Posted using ShareThis Every year two things happen in the world of technology overall and especially in the world of small businesses. 1. Technology remains the same (cell phones, computers, web browsers - ho hum) 2. Technology evolves and gets better (think iPhone, Netbooks, Google’s Chrome - match them to the list above) What this means for your business is that if you want your business to grow through leveraging technology you simply can not continue to rely on the same old technology you have always used. ... What are the top 10 technology trends you need to be on the lookout for in 2009, for your small business? Let’s take a look: 1. Netbook Adoption Accelerates Mini computers, weighing around 2 pounds and the size of a large book, are ideal tools for busy executives and professionals on the go. ... If you need a portable computer for basic computing tasks and find that your main notebook is too heavy and bulky and your smartphone’s keyboard and screen are too small, a Netbook could be something for you to consider. ... 2. Built-in Wireless Broadband Usages Widens Many of us use external wireless cards that provide cellular phone connectivity for mobile computing just about anywhere in the United States. ... Instead of having to use an external wireless card, most every notebook [vendors sell] an option to embed broadband wireless access into their notebooks. ... 3. Cell Phones Get more Software ... Instead of wireless cell phone carriers controlling the applications that reside on cell phones, Google and Apple have changed this model. ... Google and Apple are working directly with developers to ensure applications are developed for their respective platforms. In 2009 you’ll still see more cell phones released in the traditional model (such as the BlackBerry Bold and Storm), but you’ll also see more cell phones on the market led by software vendors. ... The software options available on these devices, as exemplified by the breadth of tools on Apple’s iPhone, increase productivity for businesses. ... 4. Unified Communications Increase ... These systems place the power of telephony onto the computer and include an integration of telephone, CRM, chat, address book, calendar and other things. Many companies are also developing feature rich and low cost UC platforms specifically for small businesses. Many of these systems work in conjunction with voice over the Internet solutions and allow one to use a telephone, PC or smartphone to access the UC features. ... For example, if customers call your office, you should be able to see their profile on your computer screen automatically. ... Another example: If you get a fax, there’s no reason why you should not be alerted to the fax and even see the fax from your smartphone. ... 5. Online Data Backups Proliferate ... In 2009 you’ll see vendors offering more online backup solutions. ... There are many “consumer” oriented backup solutions, many free. In 2009 these consumer backup solutions will offer options for more storage and more enhanced backup solutions for small businesses - through the Internet. ... Online, or cloud computing backup solutions, makes the backup solution completely automated and hassle free. 6. Social Media Becomes Strategic ... In 2009 expect more businesses to use social media as a way to communicate with customers. While web sites and email newsletters are still important communication tools social media tools as a standard (not exception) communication tool will increase. For example, more people will be aware of Twitter (beyond just geeks) and start to use it to receive information from businesses they want to keep in touch with. LinkedIn is a powerful tool for finding connections, but users often under-utilize it. ... It is important that you learn as much as you can about enhancing your use of social media in order to network with other businesses, find new customers and better communicate with existing customers. 7. Online Video gets Cheaper and More Widespread ...As more companies produce low cost and quality tools for video production and sharing of those videos (such as YouTube, Flickr, Vimeo and businesses can leverage video as a powerful marketing tool. Video can complement a blog, email newsletter or Facebook page quite nicely. 8. Video Conference Solutions Expand ...The systems of 5 and 10 years ago, with grainy images and low quality are much different than the feature-rich and higher quality systems of today. Being able to connect with customers, prospects, vendors or employees “face to face” via video is often better than simply email, telephone or instant messaging. ... There are dozens of good, inexpensive, video conference solutions - Skype and Sightspeed are two you might want to try out. 9. Hosted Software Applications Go on the Fast Track ... Hosted applications continue to be used more and more because of its benefits over traditional software. Traditional software has to be installed on a server, rolled out to individual computers, could cause other applications to crash and adds more complications if remote employees must use the application. Hosted applications, or software as a service (SaaS), on the other hand, removes all of these complications. All you need is a web browser to access the hosted application. The downside? If you lose access to the Internet you lose access to your application. ... 10. Online Presence Gap Widens ... Those businesses that strategically use online media to communicate and market their businesses will have more loyal customers and can better attract prospective customers. ... You must be online and visible if you want to thrive and beat your competition. ... ... The reason for more businesses not embracing online communication tools is the lack of understanding of its importance for their business, the perception of its complexity and the lack of understanding of the benefits. Part of the Small Business Trends 2009 Trends Series. * * * * * About the Author: Ramon Ray is the founder and Editor of He is also the founder of the Small Business Technology Summit held in New York each year. He is the founder of Taste of technology, an ongoing series of small business technology events held each quarter.

Monday, January 12, 2009

5 Things to do with your small business to survive the recession

NetworkSolutions Blog

January 12, 2009 :: Steve Fisher

... Like I have said previously, now IS a good time to do great things for the future.

I have read tons of advice around the web and I have come up with five things that have worked for me in past economic downturns.

1.) Manage Your Cash Flow. ... Crack open your accounting software and really look back at your previous year and how your cash went in and out. ... You need to prepare for things to be slower in the good periods and really slow in the normally slow periods. It is harder to get business lines of credit these days if you need to bridge for 60-90 days. ... Having a good cash position makes you look good to a bank and having confidence you can pay it back will keep you going through this period.

2.) Launch new products or services. Now is the perfect time to test the market for new ideas. ... Use the time to test out what is working and what doesn’t. This will help you diversify your products, services or industries ... Not only that but you will have launched something that has value during a tough time which means selling during good times will be super easy.

3.) Avoid death by frivolous discretionary spending. ... In good times ... most people don’t really look hard at expenses because they are profitable and can afford it in the name of “doing business”. It is time [to] seriously evaluate all expenses and more effective use of free services and alternatives to accomplish the same things you did before.

4.) Take customer service to a new level. ... Love them 10X more than you ever have before. ... Take nothing for granted. Make sure your pricing is competitive, your service is exceptional and your attitude reflects how much you value their business.

Also, open up that Rolodex and call dormant customers and see what you can do to bring them back. ... Resurrecting a past customer is less expensive than finding and breaking in a new one. ... Ask your customers for referrals.

5.) What ever else you do, don’t stop marketing. ... You should never stop marketing. ... Low cost but effective things you can do to market and have conversations with people are to attend networking functions, spruce up your Web site and leverage social media effectively. You can also go the traditional route by sending out post cards or put out a new sign in front of your office if that applies to you.

What’s in your brain?

So do you have any things you are doing with your business to ride out this challenging economic period? Please share in the comments below.

4 Overlooked Strategies to Grow Your Service Business

Small Business Trends Posted using ShareThis January 12, 2009 By Matt Rodela ... How can you stay above water when it seems all external forces are working against you? Now is not the time for business as usual. It’s time to get creative and think outside-of-the-box for ways to increase profit. It’s always a good idea to tweak the services you offer to keep them fresh and competitive. Lets go over a few techniques that I am using to diversify my computer consulting business that can easily be translated to your own service business. 1. Provide Optional Add-ons for Existing Products or Services ... Take a look at your primary product or service and brainstorm ways you can add low-cost options. For me, I’m doing this by offering the “Go Green” service, for a small fee, as an add-on to my primary computer support services. Customers who choose the “Go-Green” option will receive a personal eco-consultation from me. ... Options such as this are important to business growth. You are showing your customers that you’re willing to take the time to go above and beyond what the “big boys” are offering in personal service. Pricing will vary, but make sure the add-on services are around 10-30% of what customers will be paying for your primary services, that way they’ll be more enticed to spend the extra money. 2. Partner with Other Small Businesses Collaboration , ... if you can find a business that is not a direct competitor of yours, it may be in your best interest to team up and pool your resources and your customers. ... 3. Package Deals ... Bundling your products together is a great strategy to get others to consider certain offerings that they may not have considered otherwise. ... You should still offer all of your regular stand-alone services alongside the bundles. This way your customers can really see the value of the package versus the a la carte stuff. By combining your services together, you save time and resources, and the customer saves money. This is a win-win situation! 4. Volunteer This may not seem like the most obvious way to gain more customers, but there’s no better way to get your name out to the community in a positive light than volunteering your services for a charity or local organization. ... Four or 8 hours a week should be enough to make a lasting impression on your community. It’s also a great opportunity for you to hone your skills and practice new service strategies. Make sure you highlight some of your volunteer work on your website or in your advertising as well. When times are tough, think outside of the box for options that your customers will care about. The results will be more business, higher esteem, and increased revenue. ... * * * * * About the Author: Matt Rodela, aka Your Friendly Neighborhood Computer Guy, writes about his experiences running a part-time computer consulting business on his blog,

Red-carpet retention

Economic slowdown spurs employers to take more aggressive measures to woo, retain employees

Employee Benefit News

By Kelley M Butler

November 1, 2008

In light of the economy's downward slide, holding on to top employees is more important than ever. At September's Benefits Forum & Expo, ... attendees were especially keen to hear speakers' opinions and guidance on "recession-proofing" their businesses by maintaining or - if they could afford it - adding benefits offerings.

Attendees heard two diverging views on how to best roll out the red carpet for employees to make sure they stay in the company fold. On one hand, a speaker encouraged benefits pros to increase benefits around wellness, to the point of incentivizing nearly everything. On the other hand, benefit managers were guided toward a more frugal approach: simply making sure employees understood the value of the benefits that they already have.

Answer the phone, get $75

... At a full-capacity BF&E session, Philia Swam, director of health benefits and employee insurance at Lafarge North America - a building materials firm headquartered in Paris with 8,500 U.S. employees, told attendees of her company's efforts to increase employees' preventive care utilization, disease management enrollment and prescription drug compliance. After spending nearly $91 million in claims in 2007, half of which were expenditures on high blood pressure, high cholesterol and heart attacks, Lafarge initiated an aggressive wellness approach that boiled down to incentives, incentives and more incentives.

Lafarge pumped more than half a million dollars into wellness incentives and education, Swam said, offering employees gift cards and steak dinners for wellness efforts like completing a health risk assessment, getting an annual physical and participating in the company's disease management program. Even employees who simply accepted the call from the company's disease management nurse were rewarded with a $75 gift card. ...

"We didn't make it about cost," Swam said of the incentive campaign. "We made it about how this will help you and help your family, and to hook them in we simply asked, 'Do you want your steak rare or well done?'"

Fighting one 'R' word with another

... Discussing how benefit managers could "recession-proof" their benefits package, Maia Lucier, director of compensation and benefits at Virginia-based Dimension Data, told BF&E attendees to fight one "R" word with another: retention.

To this end, she said, Dimension Data has issued detailed total compensation statements to show employees there is more to their salary that just what they take home in their paychecks.

"For example, our 401(k) match is 100% vested at all times, and we put that on the statement," she said. "It's made people think twice about considering another job offer when they see that another company might be offering more in base salary but a less generous retirement benefit. We've saved a few employees just with that."...

"It's helped us to leverage both employees' rational and emotional commitment to the company," Lucier explained, as employees both understand the value of what the company offers, while also seeing that the company cares enough to make sure they understand it.

"Because of the economy, benefits have become more and more important; we're seeing a more passionate interest in them than before," she said.

"Even though we can't put any more money toward benefits, this way employees see that we take what we do offer just as seriously."

Ingenious Way to get Twitter Followers and Advertise Your Business

Posted using ShareThis Upon checking into my hotel room at the Rio in Las Vegas, where I am attending the Affiliate Summit for a few days, I received what appeared to be a typical hotel room key — plastic, about the size of a credit card. ... It turns out, it was a key branded with the logo of one of the sponsors of the Affiliate Summit event, which is being held in the Rio’s convention center. But I’ve actually seen that before. So while I was impressed with the sponsor’s marketing savvy, I wasn’t exactly surprised. No, what REALLY surprised me was that the sponsor’s Twitter address was also printed on the key. ... I have 4 take-aways from this for vendors that exhibit at or sponsor events: (1) Get on Twitter — like yesterday — if you are not already on it. ... (2) Make sure you have a Twitter strategy for any events you sponsor or exhibit at. ... (3) If you advertise a Twitter address, then be sure to use your Twitter account to full advantage. ... (4) Get used to using “hash tags” if you are exhibiting, sponsoring or attending events. ...

The Four Types of Recession Businesses

Scott McKain : Viewpoint Blog

There are four types of businesses during this recession, and it’s vitally important to understand where your organization fits in during these challenging times.

Some are “recession revitalized – because of the economic pressures, some segments are primed for growth. Typically, these organizations are ones that can leverage a tighter economy to their advantage. If you have a debt collection business, clean up repossessed homes for a bank, do credit counseling, and the like, you are revitalized from this difficult economy. ...

Some are “recession resistant – because of our household priorities, we still find the money to purchase some select items, regardless of the economy. Wal-Mart is doing great — in part, because if consumers perceive products to be non-differentiated, then price is the primary means of comparison. ... Parents will choose to do with less for themselves – cutting back on entertainment outside the home, for example — so they can still purchase a game or toy for their children. And, we obviously will need to see a doctor when we become ill, no matter the economic indicators. Therefore, health care continues to be a strong sector.

A few, however, are what I call “recession renewed.” These organizations examined the market – either at the onset of these difficult times, or with vision prior to its impact – and found a way to renew their company, independent of what was happening within their industry. The fundamental point that creates this renewal is the ability of the organization to set itself apart from its competition.

Silicon Valley Bank decided to differentiate itself from other institutions and focused upon commercial and industrial loans, rather than mortgages. ...

... Buckle found a way to set itself apart for the teen shopper, ... that there was room in the market for a store that focused on denim, sold all the hottest brand names, as well as mid-priced designer jackets, shoes, and dresses for teens.

The hallmark of these renewed businesses is that they follow the four-step process I outline in my upcoming book, “Collapse of Distinction: Stand Out and Move Up While Your Competition Fails.”

The fourth group, however, is “recession ruined.” These companies are finding themselves on the ropes, or down for the count, because their lack of distinction made them practically irrelevant as the economy tightened. Look no further than General Motors for an example here. ...

I write in my new book about noticing a sign at a meeting that said, “Sales Cures Everything.” ... If you have a bad product, selling more of it does not cure your problem. If you have horrible customer service, selling more just creates more dissatisfied customers. If your costs are out of line, selling more just means you squeak by a little longer.

Sales extends everything ...– but it doesn’t cure a thing.

In this economy, to become “recession renewed,” you have to develop points of demarcation to distinguish yourself in the market. As counterintuitive as it sounds, if you focus singularly on sales, you will fail to take the steps necessary to renew your organization. Focus on differentiation – why someone should do business with you instead of your competition.

If you cannot think of what makes you unique for your clients…you should now have a pretty good idea of where you should start.

Light at the end of the tunnel

Experts see rebound in 2nd half thanks to stimulus jump-start

Pensions & Investments

By Robert Porterfield and Timothy Inklebarger

Posted: January 12, 2009, 12:01 AM ET

James Swanson

The economy will rebound in the second half of this year, fueled by federal government stimulus and consumers reopening their pocketbooks, money managers, economists and investment strategists say.

“The good news is that fiscal and monetary authorities are throwing their kitchen sinks at the crisis," said Jay Feldman, director of economics at Credit Suisse Securities LLC, New York. But, he cautioned, “the policy medicine is also very experimental and there are no guarantees it will work. Any outcome will be determined more by the political process than by the underlying economic process than at any time in recent memory.” ...

“It’s difficult to look around corners and say when this is going to bottom out and what shape we’ll be in,” said Chris Probyn, chief economist for State Street Global Advisors in Boston, “but I expect moderate recovery in the second half based upon aggressive federal policy and reaction to it.”

Many experts agree that gross domestic product will be down 3% to 5% in the first quarter and flat during the second quarter, perking up in the last half of the year.

Mr. Probyn and others believe the key tests will be what happens after the housing market bottoms out — perhaps later this year — and whether debt-burdened consumers loosen their grips on their wallets.

Matt Eagan, vice president of Loomis, Sayles & Co., Boston, said consumer spending would continue to be a drag on the GDP, but the government’s Troubled Asset Relief Program and subsequent government spending by the incoming Obama administration would serve to offset the impact of consumer belt-tightening.

... If consumer spending drops 5%, that could be made up by $800 billion to $1 trillion in new government spending, ... Mr. Eagan said.

Optimistic view

James Swanson, chief investment strategist for Boston’s MFS Investment Management, is more optimistic that the consumer will drive the recovery. The tea leaves tell him “daylight comes this summer as low mortgage rates, government stimulus actions and housing availability” kick in.

“You just can’t get consumers spending,” said Mr. Swanson. “The credit mechanisms just aren’t there. But this downward spiral will stop.” ...

“I don’t think it will be a V-shaped recovery,” said Steve Walsh, chief investment officer of bond manager Western Asset Management Co., Pasadena, Calif.

He said consumption patterns will be significantly lower than in recent years, and the U.S. is entering a “slow-growth period” that would last longer than 2009 or 2010.

“Absent a quarter here or there, it might be a long while before we see 4% sort of growth,” he said. ...

“Housing led us into this merry mess,” said Russ Koesterich, managing director and head of investment strategy at Barclays Global Investors, San Francisco, “and the housing market is critical to recovery.” ...

Andy Stenwall, CIO of Nuveen Investments’ taxable fixed-income team in Chicago, said Nuveen’s forecasting models show the housing markets to return to normal by 2011.

“I think it’s a function of affordability,” he said. “If homes are down 30% to 40% and you can get mortgage rates at the 4% range, then that will entice people to step in.”

Assets are cheap

For financial institutions sitting on the sidelines flush with cash, or “healthy players” as James W. Paulsen, chief investment strategist for Wells Capital Management, Minneapolis, characterizes them, there will be bargains galore once the paralysis of investor fear that precipitated the economic crises subsides.

“The spark to watch for will be investors beginning to buy distressed assets in sufficient quantity for their prices to rise, boosting capital ratios of financial counterparties and encouraging lending to resume,” said Stuart A. Schweitzer, global markets strategist for JP Morgan Asset Management in New York. ...

“Illiquidity has exaggerated spreads in the corporate bond market,” he said, “and implied default rates are well in excess of anything witnessed in the past 25 years.”

Nuveen’s Mr. Stenwall said the high-yield market is his No. 1 pick for the year. He’s also betting on asset-backed securities, credit, structured products and foreign exchange. “We tend to balance our exposures,” he said.

... “Traditional valuation measures such as earnings and book value multiples, as well as in-house stock-bond risk premium, look highly attractive by historical standards, but considerable uncertainty hangs over the prospect for corporate earnings,” Mr. Schweitzer wrote clients in a recent report. ...

“So much money is now being parked in zero-return assets, but this will move into the market sooner or later,” MFS’ Mr. Swanson said. One sector Mr. Swanson thinks might be a good bet is large capital goods — engineering and equipment companies that will get a shot in the arm from a very huge infrastructure program proposed by Mr. Obama. Other sectors to watch, he said, are health care and technology.

Contact Robert Porterfield at and Timothy Inklebarger at

Q&A with Fred Reish on the Impact of Mandated Fee Disclosure, Otherwise Known as ERISA Section 408(b)(2)

Fixing the 401(k) Blog

Here’s an email interview with Fred Reish, one of the country's leading ERISA attorneys and an expert on fiduciary responsibility. ...

Fred has graciously agreed to provide his thoughts on the upcoming 408(b)(2) regulation which mandates the disclosure of compensation and conflicts of interest by retirement plan service providers to plan fiduciaries. The regulation was first proposed by the Department of Labor (DOL) in late 2007 as a way to increase the transparency of retirement plans and to shift the burden of disclosure to service providers. ERISA requires that fiduciaries determine whether plan expenses are "reasonable" in light of the services being provided.

Until now, this has been very difficult to do because of the lack of transparency regarding compensation, conflicts and fee arrangements. Since service providers have not been obligated to provide this information it has been difficult for fiduciaries to make an apples-to-apples comparison between plans and providers. ...

1. Could you please provide a brief overview of the upcoming 408(b)(2) regulation?

The proposed regulation has a number of requirements, some of which are very significant and others of which are more detailed. The most significant provisions of the regulation are that all covered service providers (which includes most service providers to ERISA plans) must have written agreements with the plans and must make disclosures about the following matters to the "responsible plan fiduciary:" services provided; direct and indirect fees for those services; and specified conflicts of interest.

2. How does the proposed regulation differ from current practices?

Current practices vary, depending on which category of covered service providers you are talking about. ...

3. Could you provide examples of some of the most common conflicts of interest you come across?

A conflict of interest occurs any time a service provider is receiving compensation from two sources. For example, a service provider could be receiving compensation from a plan or plan sponsor and, at the same time, be receiving compensation from investments. ... That, and variations of that, are the most common forms of conflicts of interest. ...

4. It seems as though RIAs will be least affected in terms of disclosure. What does the proposed regulation mean for broker-dealers as well as TPAs and/or recordkeepers who may be receiving indirect compensation in the form of 12b-1's and sub-TA fees?

... The key issues for broker-dealers is the development and use of a compliant service agreement and the disclosures concerning the services to be rendered to the plan, the methodology of calculation for the amount of the compensation for those services and the disclosures concerning potential conflicts of interest.

With regard to recordkeepers, the issues are somewhat different. ... The major change is that the recordkeepers will need to formally disclose all of the “revenue sharing” that they are receiving from mutual funds, their managers and affiliates. ... 408(b)(2) requires disclosure prior to the service provider taking over the plan.

5. What are the consequences of failing to comply?

If a covered service provider fails to comply with these rules, the relationship with the plan will become a prohibited transaction. As a result, the service provider will be required to disclose all of its compensation and to pay it to the plan. In addition, there are excise taxes under section 4975 of the Internal Revenue Code.

6. Who is responsible for paying the excise taxes (is it the service provider or the plan sponsor?)

The service provider is responsible for paying the excise taxes.

7. Do you have any idea on when the final regulation will go into effect and how long service providers will have to comply?

At this point, we don’t know when the final regulation will be issued. It could be within the next two weeks or it could be a period of time after that. ...

8. What impact do you think the new regulation will have on the retirement plan industry and how services are delivered to employers and participants?

In general, I believe that the new disclosures will provide plan sponsors with additional information to evaluate the costs and services for their plans. ... In addition, I think that the changes favor focused 401(k) advisers and providers. ...

Thanks, Fred!

Friday, January 9, 2009

Five common mistakes in nonqualified deferred compensation plans

Employee Benefit News

By Lisa E Silva

November 1, 2008

A nonqualified deferred compensation plan is an arrangement in which an employee is compensated for services after the year the services were performed. The intent of most plans is to allow executives to defer compensation to later years, when they expect to be in a lower tax bracket.

NQDC plans remain the only solution for tax-efficient savings where government restrictions on qualified plans mandate reverse discrimination against executive savings. ... NQDC plans have been attractive to employers because of their minimal regulations and reporting requirements.

In a post-Enron world, where 409A regulations are on everyone's radar, companies are struggling to become and remain compliant. The recently finalized IRS regulations are the first to set forth clear guidelines on the administration of all employer-sponsored deferred compensation plans. ... It makes sense to ensure that you are avoiding five common pitfalls:

1. Miscalculation of FICA

... Deferred dollars are subject to FICA taxes at the time of deferral, not distribution. The only exception is when the employee is required to perform future services in order to have a legal right to the promised payment. In this case, the deferred amount (plus earnings up to the date of vesting) is subject to FICA taxes when all the required services have been performed. Employer contributions that are subject to a vesting schedule require FICA taxes to be paid at the time of vesting.

... Failing to pay FICA is a huge issue - more severe than any other type of 409A infringement. The penalties associated with not paying FICA impact both employees and employers; they include back pay, interest and fines. Willful misrepresentation or miscalculation of FICA could lead to imprisonment.

2. Failing to review and/or update the funding mechanism

There are three approaches companies can take to fund the liability associated with deferred compensation plans: purchase corporate-owned mutual funds, purchase corporate-owned life insurance, or do nothing and pay future liabilities out of cash flow as they arise. ...

This decision is typically made at plan inception. ... Plan sponsors that operate with net operating losses are attracted to corporate-owned mutual funds because they can offset the taxation of turnover within the funds with their losses and avoid paying the costs built into the COLI contracts.

However, once the plan sponsor begins to operate with a profit or has used all of its net operating losses, a conversion to include COLI could make sense from a tax perspective.

3. Insufficient communication.

Plan sponsors should know what they owe, and employees should know what they have. Most lawsuits are a direct result of miscommunication and misunderstanding. Clear outlines of exactly what the plan is, who's contributing what, how it operates and where to find up-to-date account information, must be made available to all participants.

... The program should be readdressed with new information each year, not just at inception. Situations where employees don't know what they have, and employers can't demonstrate what is owed, can be catastrophic. ...

4. Operational noncompliance

Employers can have the best-drafted, most bulletproof plan in the world, but without proper administration, deviation happens. ... Plan administration must sync with plan documentation. Penalties for noncompliance are a pretty hefty tax bite.

5. Underestimating the importance of investments

NQDC plans are not subject to all the rules and regulations of ERISA and do not carry the weight of fiduciary liability. ...

Offering more diverse investment options and monitoring them regularly will increase the attractiveness of the plan, which will boost participation and create greater perceived value.

Deferred compensation plans are a great way to give executives the ability to accumulate retirement savings or short-term savings on a pretax and tax-deferred basis. They afford great flexibility and can be structured to create a highly attractive retention and/or incentive tool. Plan sponsors must always remember that these plans require constant and diligent monitoring.

Lisa E. Silva is a senior vice president, executive benefits, with Longfellow Benefits, a Boston-based benefits brokerage and consulting firm.

Thursday, January 8, 2009

The Top 10 Marketing Mistakes Small Businesses Make

By Susan Burnash

Marketing is critical to the success of every business. Unfortunately, many businesses discount the effect it can have, and they forgo marketing because they believe they can't afford it or simply don't have the time or energy to create a plan. ... Below you will find some of the most common marketing mistakes businesses make.

Mistake #1: Not Developing a Marketing Plan

... What is a marketing plan and why create one? Because it's the foundation of your business and it helps you design your product and service, identify your target audience, and provide a roadmap to head you towards your final destination: Success. But equally important, a marketing plan provides the specific details needed to increase visibility, expand your customer base, and provide quantifiable methods to measure your return on investment (ROI).

Mistake #2: Not Planning a Marketing Budget

Most businesses without a marketing plan also lack a marketing budget. ... From the very beginning, and while you are writing your Marketing Plan, it is important to focus on the financial costs of implementation. A general rule of thumb says that at least 10% of your revenue should be designated for your marketing efforts. That means dollars specifically pinpointed for Web site design and maintenance, logo design and brand development, marketing collateral, both print and electronic, and paying someone, if you don't have the time, skills, or desire to do so, to handle all of your Public Relations needs. But make sure when allocating money for marketing that you also have a means for tracking your ROI. If your ROI is low after several months of trying a particular strategy, go back to your marketing plan and look at trying something different. ...

Mistake #3: Not Targeting a Specific Target Audience

... [Identifying] your target market is critical to your success. It is also critical to choosing the appropriate marketing techniques to reach potential customers. ...

Mistake #4: Not Developing a Clear and Consistent Marketing Message

Messaging is the careful development of the precise and concise language that quickly conveys the key message(s) you want known about your product or organization. ...

Mistake #5: Believing Your Product or Service Will Sell Itself

... The reality is people need to be told why they should buy your product or service. They need to be convinced that they can't live without it. And once they have it, you need to provide them with customer service and personalized attention to ensure they will continue to use it. All of these things require marketing. ...

Mistake #6: Not Clearly Defining Your Product or Services' Benefits

... Educating your customer is critical. ... By defining the unique selling proposition for your product/or service you will help your target audience differentiate you from the competition. ...

Mistake #7: Underestimating the Value of Your Existing Customers

... If you want to stay in business and grow, you must be sure to turn existing customers into lifetime customers. Call to say thank you. Check in to see if their needs are being met. You might feel like you're wasting your time, or being a pest, but ask any customer who stays loyal to a particular company and you'll always get the same answer: "Good customer service!, it's why I stay and when I don't have it, it's why I leave." ...

Mistake #8: Thinking that Advertising is Marketing

... It is a piece of marketing, but only a small piece, and with so many ways to get your product or service out in front of potential customers ... Before you spend a dollar on advertising, spend the time needed on a marketing plan and a marketing budget. Both will provide the roadmap and tools for measurement to ensure that advertising is right for you.

Mistake #9: Ignoring the Benefits of Public Relations

... Public relations is the most inexpensive and effective way to get the word out to your target market that you have a product or service they need and want. ... You'll be amazed at how much recognition and business will result from getting your business and face in the press.

Mistake #10: Expecting Too Much, Too Soon

Often, someone just starting a new business will get terribly disappointed because they developed a brochure, ran an ad, attended a networking event, or sent out postcards with little response. ... To turn a potential customer into a new customer, you must reach out to them with consistent marketing messages (at least six times...more if you're selling a high-ticket item) before they feel like they "know" and "trust" your company enough to take the risk of purchasing a product or service from you. ... And if you are really unsure of what you are doing, find a business mentor or hire a marketing professional. You may find that by avoiding the ten biggest mistakes small businesses make, you are on your way to success!

About the Author: Susan Burnash is the owner of Purple Duck Marketing in Kirkland, WA. Her company focuses on marketing, public relations, and video production for businesses and nonprofits. For more information, please visit