Why keep business records?

When you’re passionate about your company, keeping accurate business records can seem like a boring chore. It’s not the most glamorous or engaging task, and it requires patience and good organizational skills. But while dealing with paperwork can seem burdensome, a thorough and up-to-date record system can save you headaches and work down the road – and best of all, save you money at tax time.

It can also help you improve your client relationships and accurately assess your company’s performance. In fact, maintaining immaculate business records is critical if you want to:

• Prepare financial statements and tax returns
• Track and substantiate deductible expenses
• Monitor your business profitability and plot growth strategies
• Maintain attentive relationships with vendors and customers
• Protect yourself in the event of lawsuits

While specific industries sometimes have specific recordkeeping regulations, the practices described below are fundamental to all businesses.

What business records should you keep?

• Legal Records: Make sure you keep the following documentation organized and accessible: articles of incorporation, permits, by-laws, state filings, trademark registrations, patents, licenses, insurance policies, and employee records. And of course you’ll keep all of your own client contracts on file, along with the contracts you’ve signed from your suppliers and distributors.
• Accounting and Tax Records: Your financial records will usually represent the bulk of your records and involve the most complexity, so spend some time developing a comprehensive system. Many small businesses are launched with just a spreadsheet for their books, but most eventually move onto accounting software such as QuickBooks to help organize records and prepare financial statements. Do be aware that you will need a rudimentary knowledge of accounting basics like debits, credits, and journal entries. In addition, you should understand your profit-and-loss statement, balance sheet, and cash flow statement.Beyond recording your income and expenses, you will need to maintain these types of financial records: bank and credit card statements, annual tax returns and quarterly filings, inventory, sales records, invoices, purchase orders, and payroll.
• Client Files: Here’s where some legwork really pays off in client relationships. Not only should you maintain accurate records of work performed, contracts signed, and bills paid, but you should maintain a file of the client’s preferences, culture, dislikes, and goals. Recording this in a customer relationship management (CRM) system will help you accurately tailor your work to their needs and avoid strategy misfires.
• Strategy and Business Planning Records: While these won’t be as formal as your other records, it’s helpful to document your business decisions, initiatives, and goals. Date these records, just as you would with any invoice or transaction, and document the results. You will be able to quickly chart your company’s evolution, determinate the most effective strategies, and create a more profitable roadmap for the future.

What’s the best system for maintaining business records?

The recordkeeping system you choose should be tailored to the size and purpose of your company. Generally it is best to separate your official records – those required by the Secretary of State’s office in order to maintain your business’ legal status – and your financial documents. Your day-to-day documents, such as payroll and purchases, should be yet a third and highly accessible category. File hard copies in three-ring binders with index tabs for quick consulting – but whenever possible, preserve your records digitally as well.

Finally, make sure you schedule record maintenance on a recurring basis. Receipts pile up, contracts get lost, and client files get neglected. It’s easy to let paperwork devolve into chaos while you’re chasing “real” business. So stay organized, stay current, and perhaps most importantly – keep your digital records backed up.

Good business records are much more than a filing system. They’re the foundation of your company’s success. Devote some time to creating a comprehensive system now and you will thank yourself in the future.

An old friend named Tim stopped by the office recently to talk about innovation in the electrical utility industry in the United States. Tim has spent 45 years in the business of generating and moving electrical power; he has spent the past 15 years consulting with entrepreneurial companies in the U.S. and abroad.

It turns out that Tim is very frustrated because there have been many amazing innovations in the transmission of electricity from where it is produced to the customer, and yet, the industry, for the most part, refuses to embrace these advances.

Sure, we have alternative ways to generate energy – such as solar and wind power – but the areas in greatest need of innovation lie in the transmission from the source to the customer. This is commonly referred to as the “smart grid.” Tim said, “Do you realize that in the next seven years, China will build a transmission and distribution system that it took the U.S. utility industry 100 years to build, and it will be a smart grid?”

What is a smart grid? Siemens AG (NYSE: SI) defines a smart grid as the convergence of “products, solutions, and services for the protection, automation, planning, monitoring, and diagnosis of grid infrastructure.”

So, we had to ask the obvious question: If there are important benefits to introducing smart grid technologies into the utility industry, why have the utilities ignored these obvious improvements? The answer is interesting.

Tim explained that “the electrical utilities in the U.S. are risk averse.” He says, “Think of it this way: if the industry has over a 99.6% reliability rate and is highly regulated in every aspect of its business, why should executives risk their job security for a new innovation? Furthermore, it is very difficult to get paid for employing new technologies because the cost of these innovations – which include replacement of equipment, training and re-training and documentation – is significant when you consider that the ability to recoup these costs do not exist in the utilities regulated rates. In other words, the cost plus the risk of change is huge.”

We asked Tim why the electrical utility industry hasn’t changed like the telecommunications industry has changed. Both are regulated. The telecommunications industry went from analog to digital, went from copper to fiber, and is moving from largely hard wired service to cellular. Tim’s response was simply that “in the case of telecommunications, the industry changed because the market forced the change.” That is not the case in the electrical utility business. For the most part, says Tim, “the customer is ambivalent. Why would the customer want change any more than the utilities that serve them as long as they are getting their electricity with 99.6% reliability?”

Well, if the industry does not want to change and the customer doesn’t care, why are we wasting ink on this blog post? The answer is that the utility industry in the U.S. is the only major industry to be operated and managed with analog systems. Every other industry has gone digital. And, as the demand for electricity continues to grow, these systems will not be able to protect, measure, monitor, and diagnose the infrastructure in a practical and efficient manner. Change has to come. Tim says, “not to be an alarmist, but a cyber-attack on the utility industry is far easier today than it would be if it were properly protected by communication, encryption, and identification systems that are available in the market right now.”

We found a January 2012 Bloomberg article titled, “Power-Grid Cyber Attack Seen Leaving Millions in Dark for Months” that mirrored Tim’s concerns. In part, the article said “Energy companies including utilities would have to increase their investment in computer security more than seven-fold to reach an ideal level of protection, according to a survey done for Bloomberg Government by the Ponemon Institute LLC, a data- security research firm based in Traverse City, Michigan. Electric utilities fail to recognize the risk because, unlike banks and telecommunications companies, they aren’t prime targets for Internet theft or espionage, said James Lewis, technology program director at the Center for Strategic & International Studies in Washington. Yet ‘if there was a cyber-attack, the electrical grid would be target number one’ for terrorists, he said.”

It appears that the electric utility industry has some big issues and our friend, Tim, has every right to be frustrated at the slow pace of change in the industry. There may be some lessons to be learned for entrepreneurs. First of all, markets drive change. If the market does not see a problem and is not willing to pay for it, the change will be hard to come by. That doesn’t mean that change isn’t necessary. It just means that change will be slow. Secondly, just because one market doesn’t see the need for change doesn’t mean that all markets will ignore innovation. If you are a U.S. based entrepreneur and you are having trouble finding customers in your home country, look elsewhere.

Compared to Fortune 500 titans, start-ups and small businesses often seem at a disadvantage when it comes to marketing. Big corporations have vast resources at their disposal; small and new businesses rarely do. Established companies can build their new marketing initiatives on an existing infrastructure, where newer companies must start from scratch with many projects.

But a smaller budget doesn’t have to mean smaller results. The proverbial advice to work smarter, not harder applies to many aspects of marketing, and one of the best examples is branding. By selectively employing clever and effective strategies, you can elevate your company profile and create as strong and memorable a brand as your biggest competitors.

So what exactly is branding? While many people think of a company’s brand as their logo and graphic design, the full concept is more complex. Many factors contribute to your brand, including your customers’ experience, your retail personality, your web presence, and yes, your marketing. All of those add up to a perception that can expand your market share or shrink it.

It’s important to realize that you’ll never have 100% control over your brand. Although customer behavior and a certain amount of chance play a role, it’s still critical to deliberately shape your brand’s direction as much as you can. Fail to define your brand and the public will define it for you.

So how do you craft a successful brand?

1. Your first job is to evaluate the existing impression of your company. Interview people who aren’t immersed in your company culture and get their perspectives on your business’s strengths and weaknesses. What do they think about your company? What have they heard? What would motivate or turn them away as customers? Don’t flinch from the negative feedback – it’s often more valuable than the positive.  Analyze the answers, find the root cause of any image problems, and take steps to correct it.
2. Next, you should take a look at your competitors. What are the power players in your industry doing? How about the smaller or local businesses? Who has an alluring brand and what factors seem to play a part in creating it? What should you copy, and how should your branding be differentiated?
3. Now it’s time to develop your branding goals. Do some hard thinking about how you want your company to be perceived, then compare that with the feedback you received. If there’s a gap between the two, then either your branding or your business needs an overhaul. A powerful brand makes a promise to the customer – and that promise must be one your business can realistically deliver.
4. Next, draft a plan. Put together a brand playbook that includes your objectives, target markets, budget, and strategies, with metrics for assessing results. Make sure you allow room for flexibility; external influences can take your brand in an unforeseen direction, so stay open and ready to adapt. Trying to follow too tight a roadmap might cause you to miss out on new opportunities.
5. Infuse every facet of your company with your branding. The décor of your showroom, the tone of your social media, and the personality of your mobile app should all convey the same impression. Be thorough and be consistent. The best marketing plan in the world can be sabotaged by cheap collateral and an off-message sales force.
6. Continue monitoring public perception through feedback. One advantage small businesses often enjoy over big corporations is agility; established companies can get caught in their public histories like dinosaurs in a tar pit, while smaller companies usually have more freedom to rehabilitate their  public image after a misstep. Monitoring the success of your brand will allow you to correct mistakes before they take hold.
7. As time goes on, review the changes in your products, customer base, and industry. Is your traditional branding still relevant and appealing? Don’t be afraid to reposition – but do make sure that you maintain your brand equity by respecting your loyal customers. The idea is to honor that initial promise you started with, while expanding the public’s perception.

The right brand is an invaluable asset for your company, attracting the right clientele while solidifying your market profile.  Taking time to craft and monitor your brand can save you additional marketing effort down the road – and can help you compete with the biggest names in your field.

We don’t know who coined the term “Five-tool player,” but it has been a common phrase in baseball for many years. My suspicion is that it may have first been uttered by a sports writer for the Sporting News, a publication which has been publishing continuously since 1886. Its first use may have been to describe Big Ed Delahante, a superstar for the Philadelphia Phillies in the 1890’s. The term has always been used to describe special baseball players such as Willie Mays, Duke Snyder, and for those of you who may not go back quite that far, Barry Bonds (San Francisco Giants) and Alex Rodriguez who continues to be an active player for the New York Yankees.

The term describes a player other than a pitcher who excels at all aspects of the game. Five-tool players are able to (1) hit for power, (2) hit for average, (3) possess great speed on the bases, are (4) solid fielders, and can (5) throw quickly and accurately.

It occurred to us that the most successful entrepreneurs are also Five-tool players. Sure, the tools of entrepreneurship are a bit different, but they still must be exceptionally talented and skilled in at least these five areas:

• Great knowledge – Successful entrepreneurs always seem to clearly understand the products or service that they sell and the markets into which the products or services are sold. They understand, perhaps better than anyone, the competitive landscape so that they can develop and sustain competitive advantages.
• Passion – While it is often said that successful people must lead balanced lifestyles, we often notice that the entrepreneurs we work with usually have amazing drive. They care deeply about customers, employees, and partners. They are intense, confident, highly motivated, and totally committed to their businesses. Oh, and very importantly, they love to sell.
• Ability to listen – What an absolutely critical quality for any entrepreneur! There is so much opportunity out there, but it is very easy to miss these chances if the human antenna is not totally engaged. As Stephen Covey wrote, “seek first to understand, then to be understood.”
• Winning attitude – The most successful entrepreneurs just know they are going to succeed. Not only that, they will not let anything stand in their way. This is a quality that employees can see, and so can customers. A winning attitude is not something that you express; it is something that you embody each and every day.
• Perseverance – Each of the four tools mentioned above must be employed in conjunction with the ability to withstand adversity. Let’s face it, business is brutal. Success is never easy, and every successful entrepreneur has the innate ability to withstand those daily problems and challenges and keep moving in the right direction.

Do you possess all five tools? Sometimes it’s hard to be honest with ourselves, so it may help if you ask those around you for their opinions. Once you’ve identified which tools you might be missing, you can develop a plan for self-improvement. That should get you well on your way to becoming a startup All Star.

What is the one thing that every single entrepreneur says “distinguishes” his or her company from all the others? That’s right: it’s consistent, high-quality customer service. Yep, every single client for whom we write a business plan claims to have the world’s greatest customer service. This got us to thinking that if great customer service is really that important, what exactly is it? It also occurred to us that it probably isn’t great customer service that distinguishes one competitor from another; it is more than likely poor customer service determines whether or not a customer will buy from you or from someone else.

Fundamentally, great customer service boils down to helping customers solve their problems quickly and easily. Here are a few obvious ways you can do this:

• Making it easy to buy – How many times have you been to a brick-and-mortar or online store and you simply cannot find what you are looking for? You know it’s there, somewhere, but you just don’t know where. Some might call that poor merchandising, but to us that is poor customer service. Sometimes it can get even worse when the sales attendant takes you on an epic journey up and down every aisle because he/she doesn’t have a clue either. Carefully placed, easy-to-read signs and labels tell your customers that you care about them, respect their time, and appreciate their business.
• Product & Service knowledge – Another common time waster – both yours and your customers – is not having important information easily at hand. According to blogger Shari Waters, “Knowledge is power and for retailers, product knowledge can mean more sales. If a customer isn’t fully committed to completing a sale, the difference may simply be the presence (or lack) of confidence a salesperson has towards the product. Becoming educated in the product and its uses will help cement that confidence.”
• Honesty, integrity, and responsiveness – No company will last very long without each of these qualities. These qualities start at the top of the organization and work their way down through every layer and every department to every person on the team. By the way, you don’t have to tell your customers, other stakeholders, or even employees that your company has these qualities. Everyone already knows that you do or do not.
• Listening – So much has been written about how important it is to listen. And yes, it is one of the keys to the customer service puzzle. How can you possibly hope to give your customers what they need if you don’t listen to them? In the words of the late Steven Covey, “Seek first to understand and then to be understood.”
• Product & Service Support – We’ve left this one to the end because it is probably the most important and probably the most obvious. According to the Customer Service Training Center, In the Pursuit of Wow, author Tom Peters talks about two things that companies known for outstanding service do better than anyone else – they step out and they stand out. Delivering WOW service is a commitment to do whatever it takes to serve the customer, and that commitment must be imprinted on the hearts and minds of every single employee. Only then can any organization stand apart from their competition.

We would share with you a few questions and answers that came out of an interview that Geoff Colvin did with Paul English, the Co-founder, President and Chief Technical Officer of Kayak Software Corporation (NASDAQ: KYAK), the very cool online travel site. The title of the interview is, “Kayak Takes on the Big Dogs.” The interview appeared in the October 6, 2012 issue of Fortune Magazine.

Here is a brief excerpt:

Colvin: When you say most of the people are on the tech side, does that mean you don’t have separate customer support people? English: Yeah, our product support is actually done by myself and the engineers. I know that sounds ludicrous because we have millions of people coming to the website every day, and in Boston, which is the largest office we have, where all the engineers are, we only have 100 people. But there’s some magic there.

Colvin: So if a customer calls up with some kind of issue, it’s going to be a tech person giving an answer. English: It’s often me. You may have heard about the infamous red phone.

Colvin: The red phone with the loud ring. English: With a loud ring, yeah, because we sit in an open area. No offices. I want to make sure that when a customer is having an issue with our product, it’s visible to the entire team. As to how 100 engineers can support millions of people a day, it’s a bit of a tautology. From day one I made the programmers do the support, and that means when a customer calls and yells at us because we’ve screwed something up on the site, by the second or third time we get that criticism, the programmer is tired of answering the same question. So they stop what they’re doing, they fix the code, and we don’t get that question anymore. It’s a very, very fast cycle. When customers find problems, we try to fix them instantly.

That sounds like pretty sensational customer service to us. By the way, the subtitle of the interview is, “Founder Paul English battles the likes of Expedia and Priceline by recruiting great talent and making the customer king.” So, for all of our clients who brag about how great their customer service is, we will believe you as long as you are hanging with Paul English.

It seems like everyone is using Twitter to market themselves these days, from celebrities to corporations. But how do you know if Twitter is right for marketing your small business – and how do you make it work for you?

First you need to understand what Twitter can do for you. Most people know that a “tweet” is a very brief message that can’t exceed 140 characters. For this reason, they consider it a limited and often pointless form of communication. How can such a short message hold value? But that’s where Twitter’s two main benefits come into play: conversions and relationships. If you manage your Twitter account skillfully, you can drive traffic to your websites while forming potentially profitable new relationships.

True, you’ll never post a long, insightful blog article on Twitter, or advertise all of your business’s product line in a tweet. But you can share links to those blog posts or product pages, and you can do it with unprecedented immediacy. And because your tweets can be re-tweeted by other people, the potential viral reach of one message is virtually infinite.

The first step to Twitter success is getting followers. Trying to get noticed in a frothy sea of millions of voices can seem daunting at first. But the simple tips below should help get you started.

How to do it

1. Begin by networking. Don’t just blast out updates about your business. Listen to conversations and exchange valuable information. Remember that your new Twitter friends might one day turn into customers, suppliers, or even employees.
2. Learn how to use hashtags, as these will help people find your content. For instance, #football would connect you with users searching for content about football. The strategic use of hashtags will help your brand, business name, and tweets attract the right attention.
3. Use Twitter Search to find out what people are saying about your business, your competitors, and your industry. You’ll hear what people really think about certain topics and get a real-time perspective on customer needs and industry news.
4. Be mindful of your brand when choosing the tone and language of your tweets. They might be the first impression a prospective customer has of your business.
5. Be imaginative and engaging. A restaurant can post mouthwatering photos of their daily specials, or an auto shop can post car care tips. Run contests and share articles related to your industry. The idea is to inform, entertain, and start conversations.
6. Conduct your customer service as carefully as you would in real life. Be available and authentic, and show your customers you’re genuinely invested in their satisfaction. This is an opportunity to find out what’s working for them and what isn’t.
7. Use third party apps to multiply your contacts and streamline your process. Tweetdeck will help you find colleagues, experts, and influential people in your industry. If you’re overwhelmed by managing too many social networks, use Hootsuite to manage your content dissemination. Rapportive will show you which of your email contacts are connected to you on social networks.
8. Finally, reward those who retweet you by thanking them publicly and retweeting their content in return. Building relationships is ultimately what Twitter is all about. Be a good citizen of the Twitterverse and you may be surprised at the benefits it returns to you.

Twitter is one of the many social media tools that modern businesses need to integrate into their marketing strategy. Don’t be left behind just because the tool is new or intimidating. Embrace it and stay a step ahead of your competition. To get started, why not follow me on Twitter? My twitter handle is @akira_hirai.

A call came into our office last week from a stressed out small business owner in Florida. He said that he needed a business plan right away that he could submit to a bank for a loan to fuel the growth of his commercial landscaping business.

One of our consultants asked him to provide some details and this is what we learned:

• Business is great. He has about 80 commercial accounts, mostly multi-family and office properties. In most instances, his customers are property managers. New business opportunities seem to come in every week.
• He is running 3 crews and is about to add a fourth. He has 4 trucks and trailers and he can’t really add to his schedule without adding more workers and vehicles.
• He asked, “how can business be so good and I never have any cash?”
• He sends a crew to each customer site on a specific day, once a month.
• He invoices each account at the end of every month and his receivables average about 50 days.
• He pays his crews weekly and has 4 truck payments to make each month along with rent for his office and other operating expenses such as insurance and utilities.

We told him that he didn’t need a business plan and he didn’t need a bank loan. Our consultant recommended that he take two actions immediately, and that if he did so, his cash flow problem would be solved within a month.

First, we told him to have two billing cycles instead of one. He should bill half of his accounts on the 15^th of each month and continue to invoice the balance of the accounts at the end of the month.

Secondly, we told him that he needed to contact an accounts receivable factoring provider immediately. A factor is a finance company or other type of commercial lender that will “factor” or essentially lend you 70% to 80% of the amount of each invoice the day after the invoice has been created. When the customer pays the invoice, he usually pays it to the factor without even knowing it. And, by the way, these days, all this activity is almost always done online.

According to BusinessFinance.com, “factoring is the selling of accounts receivable or invoices in order to secure immediate working capital (cash). Factoring has been used by businesses around the world for more than four centuries to manage cash flow. A factor company purchases your receivables by giving you an advance payment up front. This advanced payment is usually 70 – 90% of the total value of the receivables. After charging a small fee (2% and up) the remaining balance is released upon full receipt of payment for all the receivables/invoices. This allows your business to be able to make those larger sales and still have the working capital to continue operations and further growth.”

Many business people think of factoring as a very expensive form of financing, and it can be if it is not used properly. The most important thing is to not let those receivables get too old. Just because the factor is getting you your money faster doesn’t mean you don’t have to manage your customers and let them know that you expect them to pay their invoices within the agreed terms.

The best thing about factoring is that a factoring line of credit can be set up very quickly, usually within a few days. You need to fill out an application and provide a list of all of your customers including their name, office address, telephone, email, and website address. The factor will advance funds to you based not on your credit rating but rather on the credit rating of your customers. This is very important when you have a lot of other debt like truck loans.

So, where do you find a factor? It’s simple, just search online for “accounts receivable factor.” There are hundreds of them. Some are local outfits right in your area and some are national lenders. Shop around and be sure to find the one that, in your assessment, will provide the right combination of customer support and price. And remember, factoring can be a terrific solution to your cash flow problems.

In a recent post, Breaking Up Is Hard To Do, we talked about the problems that arise when owners of a small business don’t plan for the eventual change of ownership that always happens. In that article, we discussed the two owners of an 8-year old successful business.  The owners were unable to agree on the value of the business when one of the owners wanted to buy out the other. We talked about the need for partner-owners to create a buy-sell agreement early in the life of the business that would stipulate how the owners would deal with these kinds of issues no matter what the cause. We suggested that one of the provisions of the buy-sell agreement would provide a formula for valuing the business, and we promised that a future piece would discuss various valuation methods.

The fair market value of a business is the price that is agreed upon between a willing buyer and a willing seller. The parties will usually begin by applying one or more valuation models, and then adjusting up or down for extenuating circumstances that may apply to the transaction. Some common valuation models that you might apply to your business are as follows:

• Book Value – This is the simplest way to value a business. It is done by subtracting the company’s liabilities from its assets. It is rarely used for the simple reason that it often results in the lowest possible value. For example, assets are usually carried on the books of a company at cost, net of depreciation. Book value makes more sense when the assets are adjusted to their current values, and thus we use the term, “adjusted book value” or “economic book value.” A more popular book value formula would be to only include assets that can be easily valued such as cash, accounts receivable, inventory, equipment, and real estate. This is often called “tangible book value” and is a terrific way to value a business that owns a lot of assets such as a factory or transportation equipment.
• Multiple of Sales or Profits – This is an excellent way to value a business that does not have a lot of assets or, as is often said, a large balance sheet. A software company or a service business might be an excellent example. Under this method, the formula that is agreed upon simply stipulates that the fair market value is a multiple of revenue, gross profit, or operating profit at the time of the transaction. Each industry has its own conventions and its own range of reasonable valuation multiples.
• Market Comp Approach – In this approach, private companies are compared to comparable public companies. For example, if a similar public company is valued at, say, 23 times current earnings, then that multiple can be applied to determine the value of the private company. When using multiples, private companies are usually adjusted downward because of the lack of liquidity in exchanging shares for cash. Non-financial comparisons might include companies with similar products, markets, or industry criteria. Financial comparisons might include size (revenues), EBITDA, cash flow, price to book, price to earnings, or M&A comps.
• Discounted Cash Flow Approach – Simply stated, this means that an analyst capitalizes anticipated future income streams or cash flows. This is accomplished by discounting a company’s future income or cash flow at an assumed opportunity cost of capital based on investment opportunities of comparable riskiness. This is called bringing future anticipated income to “present value.” This approach will generally, but not always, produce the highest value.

Mind you, there are many other methods for valuing a business, and many of those are much more complex than the ones outlined here. In fact, for clients who require a professional valuation, our firm offers valuation consulting as one of our services. If you are a high tech start-up, you can find a valuation estimator on our website. The good news is that regardless of the valuation method employed or how the value is determined, no one can claim, “You’re Wrong.” But, do keep in mind that not everyone will necessarily agree with your assessment, and may question the underlying assumptions that led to your valuation.

We imagine that most people know that it is “debate season” here in the U.S. as the Presidential debates dominate media coverage throughout the month. More than 70 million people from around the world watched the first Presidential debate; over 50 million folks watched the Vice Presidential debate. It is estimated that the second Presidential debate had a higher viewership than the first.

It occurred to us that these debates provide a teachable moment for entrepreneurs.

Now, Why is that, you ask?

The reason is simply that many of the qualities that are required to be successful in an important debate are the same qualities an entrepreneur must have to be successful in a starting and growing a business.

Let’s run through some of these qualities and see if you agree:

• Preparedness – The participants in these debates spend days and possibly weeks of their very precious time preparing for a 90-minute opportunity. They review and commit to memory an amazing array of facts and figures. They practice endlessly their prepared remarks and responses to their opponent’s claims. Entrepreneurs must do the same with the opportunities that are presented to them. Entrepreneurs have meetings with their bankers and investors, meetings with staff or with colleagues, and most important of all, meetings with potential customers. How prepared you are will almost always be the determining factor in whether or not you make the sale. Will you be more prepared or less prepared than the competition? It’s up to you.
• Knowledge – You may not love everything (or even anything) that these politicians have to say or the way they say it, but you have to admit, they know a lot. Sure, they sometimes tell half-truths or actually lie, but they know what they are lying about. Well, we don’t recommend that business owners ever lie, but we strongly recommend that you know your stuff. You must have intimate knowledge of every aspect of your product or service. You must know your financial numbers and what they mean. When you are the boss, your employees and your customers expect you to have all the answers.
• Poise – Don’t think for a minute that these pols aren’t under pressure. They need to be careful, thoughtful, personable, and “quick on their feet” all at the same time. Well Ms. Entrepreneur, so do you. Most entrepreneurs operate under the theory that if the sun comes up today, something will go wrong. That’s how business works. Your success will depend on how you handle these challenges. You must think things through and then make the right decisions. Take your time; just not too much of it.
• Confidence – I don’t know if all of these debaters are always confident, but they sure look and sound like it. They have confidence in themselves and confidence in the people surrounding them. Successful business owners must also be confident in their ability to succeed. Hey, you’ve gotten this far based on your talent and skill. Keep learning, keep listening and keep innovating just the way you have been. You can get to the next level.
• Passion – Passion can be manifest in a number of ways. You might argue that the participants in these debates are driven by power. So, the ability to achieve power is their passion. You might be passionate about success or taking care of customers or your product or service. These are good things to be passionate about. Being a successful entrepreneur is not about going through the motions. If you are a successful entrepreneur, there is a good chance that you can’t wait to wake up in the morning and get to work. You can’t wait to talk to the next prospect or customer. You won’t go home until you’ve solved the problem you’ve been working on all afternoon. That is passion, and it is one of the most important qualities in any successful entrepreneur.

We realize that the Presidential debaters also have some qualities that we really don’t need to emulate as we grow our businesses. You know what they are, so we won’t list them here. Just remember that even people we don’t particularly like can still teach us valuable lessons.

An experienced immigration attorney in Mesa, Arizona – where there is a great a deal of immigration activity, as you may imagine – contacted us to assist one of his clients with a business plan for an E-2 investor visa. He indicated that one of the requirements for an investor visa is a business plan. While we have a great deal of experience in writing business plans that are used for immigration purposes, the attorney was kind enough to share some of his thoughts on the importance of the business plan as well as the elements that make a business plan successful:

“I am helping Mr. Jones to renew his current E-2 investor visa,” he said. “A good business plan is the heart of any E-2 application. It should help the adjudicator to understand the company (the ‘investment enterprise’) and determine whether the company meets the regulatory requirements.”

“The key issue that Mr. Jones needs to demonstrate, in order to gain approval of the visa renewal, is that his U.S. business is producing (or is very likely to produce within the next year or two) more than a ‘marginal’ return on his investment. Under U.S. immigration laws and regulations, a ‘marginal’ investment return is one that only produces enough for the investor and his family to live on, i.e., no more than a ‘normal’ salary. The immigration authorities would look at such an investment enterprise as merely a ‘job’ and not a true investment that is building wealth.

“Seeking the visa (or renewal of the visa) is very similar to going into a bank to get a business loan: the bank will want to know what the business is about, the characteristics of the market it operates in, what competition it faces, management’s qualifications to run and grow the business, and any other factors that will influence whether or not the business is likely to succeed and repay the loan within the next few years.

“In the immigration context, the applicant is not seeking a loan, but rather the right to remain in the U.S. and do business here. But the criterion for approval is still the same: demonstrating to the adjudicator that this business will succeed financially and make a healthy profit, after it has paid all expenses (including the salary of the owner/investor).

“In addition to the company’s financial data, the adjudicator has discretion to consider whether the business has a significant, positive impact on the local economy. A positive impact on the economy can be found where the business creates new jobs for U.S. workers, or helps to preserve existing jobs. Mr. Jones’s company might be able to show a positive economic impact by demonstrating that his efforts have helped other U.S. businesses to stay in business, to develop new business opportunities, hire additional workers, or retain workers that might otherwise have been laid off.”

We’ve written on this subject several times in this space but it is good to have our view confirmed by an immigration attorney who is on the front line every day, fighting for his clients who wish to make an important contribution to the American economy simply by coming to the United States to invest in and run a successful business.