The Business Alliance Grapevine - It's All in the BAG!

Letter from the Editor

The BA is winding up the year of "Enhancing Your Personal Skills to Grow Your Business." In 2007 the BA enjoyed two successful Business Expo’s, a wonderful alliance with the Greater Raleigh Merchants Association, the commencement of the mentoring sign-up program "Futures For Kids" and our Third Thursday Joiners Table continues to grow.

Next year’s theme is “Sparking Your Business through Innovation;” innovation of thought, process, application, management, etc. You can look forward to exciting programs already scheduled for next year. Your continued participation, enthusiasm and support are appreciated and your input on program suggestions is welcome. Please forward any “innovative” thoughts you may have for the Business Alliance to me, or Lee Heinrich.

While we are looking ahead, I would like to welcome Ben Briggs, CEO and President, with S.L.S. Commercial Lending, to the Business Alliance Steering Committee. We are always on the lookout for volunteers to serve on committees and help with the BAG. In particular I am seeking an Assistant Editor for our General Business Column and am open to suggestions as to the topic. An ability to write and edit is necessary. This would require one (possibly two) written columns up to 800 words and at least one guest columnist for 2008 (a total of 3 columns). Your bio and company information would be represented in each BAG Newsletter (a total of 6). If you are interested in being a BAG Assistant Editor, let me know. If you are interested in Business Alliance committee work, contact Vickie Nelligan.

Best wishes for a safe and festive holiday season.

Warm Regards,
Jean Wiley, Editor in Chief

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Inspirvations

Jean Wiley, Editor Business Alliance Grapevine – jean@jeanwiley.com
View Bio

MOTIVATION (Part Two)

In October's Issue I discussed Process theories, which focuses on how and by what goals people are motivated. Process theories of motivation look at what people are thinking about when they decide whether or not to put effort into a particular activity.

In addition, Content theories are centered on finding what makes people tick or what appeals to them. These theories suggest that people have certain needs and/or desires that have been internalized as they mature into adulthood. These theories look at what it is about certain people that make them want the things that they do and what things in their environment will make them do or not do certain things. Two popular content theories are Maslow’s Hierarchy of Needs Theory and Hertzberg’s Two Factor Theory.

The Two Factor Theory states that there are a set of factors in the workplace that causes job satisfaction and a separate set of factors that create dissatisfaction. Hygiene Factors include status, job security, salary and fringe benefits. Now, these do not cause satisfaction but rather causes dissatisfaction if not in place. The second factor is Motivators, which include responsibility, challenging work and recognition. Motivators can result in personal growth and a "job well done" arising from the job itself.

Maslow's Hierarchy of Needs Theory arose from a paper he wrote in the 1940's where he studied high functioning achievers such as Albert Einstein, Eleanor Roosevelt and Frederick Douglas. He broke needs down into five categories: Physiological (the most primitive of needs including water, food and shelter), Safety (physical health, employment, family, morality), Love and Belonging (friendship, family and intimacy), Esteem (self-esteem, confidence, achievement and respect by and of others), and Self-Actualization (a term we have seen increasingly used over the years which includes morality, creativity, problem solving, spontaneity and lack of prejudice).

Maslow kind of broke from the pack of psychologists at the time because he was interested in studying high functioning people. He found that all of the needs from the most primitive, Physiological, up through Esteem must be meet before people moved into Self-Actualization. At this pinnacle point people sought to be the best they could be and to make the most of their abilities.

Maslow wrote the following about self-actualizing people:

• They embrace the facts and realities of the world (including themselves) rather than denying or avoiding them.
• They are spontaneous in their ideas and actions.
• They are creative.
• They are interested in solving problems; this often includes the problems of others. Solving these problems is often a key focus in their lives.
• They feel closeness to other people, and generally appreciate life.
• They have a system of morality that is fully internalized and independent of external authority.
• They have discernment and are able to view all things in an objective manner.

In short, Self-Actualization is reaching one's fullest potential. In aligning with the Business Alliance's theme of Innovation in 2008, perhaps we could all seek to do so.

Happy New Year!

Warm Regards,

Jean Wiley, Editor-in-Chief

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December Issue 2007

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View the Winter 2007 Directory!

Send your company announcements to Jean Wiley to go in the next Grapevine!

It’s Your Cash Flow – Use It!

I ran into a long-ago colleague recently. He’s now a well-known business consultant, and he said he had clients who could use my business financial services. The next morning (Tuesday) I received an email in which he introduced me to his son and encouraged the son to call me. Thursday afternoon the son called. He wanted to sell a $400,000 invoice – by next Tuesday.

His biggest customer is an international company with a large presence in the RTP area. He had enough receivables to sell them to raise he needed. The funder wouldn’t have to check out the customer, so that would save time. With that size deal and that customer, an advance of 85-90% would have been easy. It would be hard to make Tuesday, but I might find a funder so hungry for that kind of relationship, that he’d drop almost everything to make it happen.

Then came the kicker. Payment of the invoice was out of his hands. 45 days after his customer received his invoice, the money went via ACH to his account. It would take weeks to get his customer to reroute the payments. Worse yet, he couldn’t have them reroute just one payment. He didn’t want an ongoing factoring relationship. This would be a one-shot deal. Back to the story after some basics.

Factors buy your accounts receivable. They check out your customers for you, so if they turn down a customer, you probably should, too. They deposit 70-90% of the invoice into your account 24-48 hours after they receive it. They create a bank account with your name that they have the only access to, so the customer pays the bill directly to them without knowing it. They subtract the advance and their fee and pay you the rest. You have (most of) your money and no debt on your balance sheet. Cool!

If you can factor all your invoices, you can effectively outsource all your receivables processing without any extra cost. Their monthly statements eliminate much or all of your bookkeeping. They do late payment follow up on your behalf, presenting themselves as your representative the way you’d want them to. In most cases, if they’re wrong about your customer, and the customer can’t pay, that’s their problem, not yours. They’re interested in your customer’s credit, not yours; they can even factor you out of bankruptcy or a tax lien.

All they ask is that the payments go to them, unencumbered, even if your customer doesn’t know it’s happening. You don’t have to factor every invoice (payments for unfactored invoices flow through to you), and most don’t ask for a contract for a minimum time or volume. They want to earn your confidence every month. But, they do have set up expenses (they might charge a set up fee), and continuing expenses. That’s their cost of doing business and part of what you’re paying for.

Back to my caller. How could I ask a factor to work hard for a one-shot deal in which he had to trust that when the caller’s customer paid him, the caller would pay back the invoice, the full invoice, on time and without hassle over the fee? I could ask, but I knew the answer, so I thanked the caller for giving me the chance to help, made sure he understood what I actually could do for him, and we hung up.

I hope his Dad doesn’t hold it against me. Big test he gave me, with his own son, no less, and it was beyond what could be done. Had he been able to meet me half way, I’m sure there would have been a solution. I’ve even figured out how to do it.

Some factors are looking for relationships with growing companies; some have high minimums, and everything in between. Some specialize in certain industries. Even a factor who says he’ll do one invoice is hoping you’ll be back for a continuing relationship. A factor who’s willing to do less than $5,000/month for your new small business hopes you’ll grow into a larger client. A good factoring broker knows enough factors well enough to match you with the one that’s right for you.

They’re in this business because they are entrepreneurs and can be pretty flexible. One invented a program that turns factoring on its head. Instead of your vendor, supplier, or subcontractor waiting until you feel like paying them (or factoring, of course), this program pays their invoice immediately, and you pay it back at some agreed time, usually 30-60 days later. You don’t pay for the service. The vendor, supplier, or subcontractor will be happy to give a prompt payment discount that is easier and less costly than factoring would be.

Factors aren’t bankers. There are many types of financing available from private sources, entrepreneurs, etc., that banks don’t do or even know about. Banks offer something that sounds the same – “accounts receivable financing” – but is really a loan. Don’t assume your bank has all the answers, especially when their answer is just plain “No”.

Networking, The Super Seed

Whitney Hill, Owner Carolina Web Consultants, Guest Columnist – www.internetpeople.net

Are you frustrated because networking to get business appears to be a waste of time? Are you getting results? Membership or participation in any networking group does not guarantee business unless you follow some basic principles:

1) Plant in the right field. When you get started, survey a number of different networking groups and find out which ones offer the best exposure for your business, fit best with your marketing plan, and compliment your personal marketing style. In this way you will ensure that you invest your time into the groups that will yield the maximum return. Don’t make snap decisions. For example, if you are in a business to business segment and you join a leads group that is made up of consumer businesses, or if you are in the healthcare industry and you join a group with IT and communications people, you are not putting yourself into a good position for the best results to occur. Spend time to find the right networking forums for you and your business.

2) Plant good seeds. Instead of just focusing on what you can get out of the networking group, make your primary focus to look for ways to contribute to the group in the most efficient, effective manner possible. Make referrals, pass leads, make introductions, promote businesses that are in your group, share business information and take leadership roles where you are needed. The principle here is that you cannot give into a worthwhile endeavor and not get a multiplied return.

3) Tend your field. Building one on one relationships within your networking forums over a cup of coffee or a meal is where the real magic sets in. The individual relationships are the real glue of your personal network. Balance your time between establishing new relationships and maintaining your close contacts. Keep an A list of your closest partners. Maintain communication in a manner that fits your style. If you like to write then send notes, if you like to talk then make phone calls, and if you are spontaneous then send emails.

4) Do not dig your seed up. A farmer invests in seed, spends time preparing and planting, then waters and cares for the field. Early on, when nothing looks like it is happening, he does not go out and dig his seed up or move to another field, but instead waits patiently for his harvest to arrive. Networking is the same way. It will take time in most cases for you to cultivate trust and goodwill in your networking forums. Be patient and keep planting good seed. Your harvest will come, and when it comes, it will be multiplied.

5) Visit other fields. Your main focus should be tending your own networking groups, but take occasion to step out and visit other ones. You can learn from other forums, make outside connections, and spread the word about your business to other professionals. Look for alliances outside of your regular networking forums. These relationships are something of value that you can bring back to your regular networking groups.

6) Be prepared for the harvest. When you start getting results, be ready to receive them. Be ready to professionally and effectively facilitate the leads, contacts, introductions, etc. that you receive.

7) Your harvest does not always come up where planted. Many times opportunities will arise from places that you did not plant. Congratulations! You are experiencing the benefits of the unseen law of sowing and reaping. This is the super seed. Receive it and do not try to figure everything out.

8) Harvest the field properly. When contacts and introductions are given, make sure that you provide feedback to the referrer on what happened. When the referrer sees that their trust in you was wisely given, they are going to feel all the more confident in sending the next referral. This feedback will encourage the referrer to send you more referrals. Rewards given in the right manner are wise. Take the referrer to lunch, give extra focus on helping them, send a note, or come up with a creative way to say thank you.

9) Evaluate your harvest and plan next year’s crop. There is a time when you need to take an honest look at your networking plan. Once a year, look at where your time and resources are being spent. Drop what is not working well, and move to a group with programs that may be more effective. Exit gracefully and maintain key relationships.

In your networking, just remember this quote from the greatest networker of all time whose network continues 2000 years later, “Give, and it will be given to you." Be a patient giver and a seed sower and watch the return come in.