Inbound Marketing Solutions to Replace Traditional Advertising and Cold Calling

Many salespeople have been critical of cold calling as a sales strategy for several decades. At the same time, marketing departments have been struggling with how to use traditional advertising techniques to reach current and potential customers.

It turns out that customers have always preferred being in charge of the sales process. Cold calls and ads were probably doomed to failure from the very beginning. But for at least 50 years, marketing and sales managers seemed dedicated to these losing sales strategies.

One successful replacement is commonly referred to as inbound marketing — providing educational content for potential customers with a customer-centric sales process rather than a marketer-centric process.

Educational Content for Inbound Marketing Success: 5 Strategies

For businesses and organizations of all sizes, the concept of inbound marketing is emerging as the successor to traditional sales and marketing techniques. Discerning consumers have largely dictated this outcome by rejecting old-fashioned cold calling and advertising campaigns. Today’s internet-savvy customers have increasingly made it clear that they are seeking high-quality educational content when making buying decisions rather than a controlled sales process that routinely withholds key information.

The challenge for C-Level executives and business owners is to deliver educational content that meets the high expectations of potential buyers for products and services. Here are five primary examples of content that can satisfy potential and current customers when the content is produced with relevant information and attention to detail:

• YouTube and SlideShare presentations — a video or slide presentation is preferred by many potential buyers during the decision-making process.
• Extended articles — the inbound marketing focus means little or no promotion while concentrating on helpful information.
• Press releases — not just any news release will do: the customer-centric focus is on concise, non-promotional and informative content.
• Case studies — to demonstrate how you solved a specific problem for a specific customer.
• White papers — a longer treatment designed for niche audiences that already understand the basics of a product or service.

If you want more details about how to improve business writing by avoiding common mistakes, here is a YouTube video that I produced:

Respecting Your Customer’s Time

Just as patients never enjoy spending excessive time in a doctor’s waiting room, customers want their time to be well-spent when reviewing educational content in any form — from extended articles to case studies, slide presentations, press releases and white papers. Time is always part of the equation when first-time visitors review educational content. Depending on first impressions, some potential buyers will leave the page or presentation within 30 seconds or less.

One of the most important factors in influencing how long internet visitors stay in the same place is the perception of high-quality content. As you might expect, low-quality content produced by the low bidder on a crowdsourcing site is not likely to be part of a winning content strategy. To keep your visitors engaged enough to make a favorable buying decision, high-quality educational content is routinely the common denominator.

But high-quality content and your customer’s time can also get in the way of each other. Very few consumers have an unlimited time budget — so don’t overlook the value of being concise. For example, a thoughtful 10-slide presentation will often succeed where a 25-slide approach falls short. In a similar vein, a 3000-word white paper might not be the “smart move” when a 750-word article can make a similar point much more efficiently. As another compelling illustration of how brevity can be remarkably effective, a one-page proposal often “works” better than longer business proposals.

The lesson to remember — longer is not always better, even when the expanded version represents the highest possible quality.

True or False: Thought Leaders

Thought leadership involves multiple strategies.

The concept of thought leadership appears to mean widely different things to companies that have decided to make it a primary corporate goal. One consensus definition involves answering the questions of consumers, buyers and readers on a consistent basis. But this approach should start with a critical question — what is the most effective way for thought leaders to do this?

One Practical Alternative: True or False Questions (and Explanations)

For a variety of reasons, a straightforward true-or-false format is often overlooked when publishing business content. Please keep in mind that using true or false statements in an extended business article is not the same thing as using T-F questions in an academic setting. With business writing (and thought leadership), the goal is to inform and educate — and T-F statements have the potential to do this effectively.

If you want an illustration, here is one that covers topics like zombie foreclosures and life after bankruptcy: Overcoming Personal Finance Challenges

Becoming an effective thought leader is a recurring challenge.

What Is Thinking Outside of the Blog?

Potential customers for products and services are increasingly seeking high-quality educational content that will help in making well-informed purchase decisions. To find this content, buyers are primarily relying on social media and search engines. Meanwhile, a high percentage of blogs are not showing up in search engine results and social media recommendations. Among the reasons for the dwindling popularity of blogs are two key factors — too many links and over-promotional content.

While a few blogs still provide stellar examples of excellence, that is proving to be the exception rather than the rule. Here are five major problems that have emerged in the blog universe during the past 15 years:

• Blog Networks — For example, BuildMyRank (BMR) went out of business when it was discovered by a leading search engine that BMR was creating hundreds of blogs simply to provide paid links to subscribers of their service.
• Links and More Links — While one or two links can be appropriate in a typical blog post, adding excessive links (5-10 is not unusual) becomes distracting (and annoying) to readers.
• Brief Content with Few Details — If a blog post contains only 50 to 250 words (as many blog posts do), the content is likely to fall short of what is required to fully educate a prospective buyer about a service or product.
• Content Spinning — In a rush to publish frequent blog posts, an ill-advised decision to spin content (by using algorithms that create many articles from one original) results in duplicate content rather than high-quality original content.
• Blogs Designed for Search Engines Instead of Readers — Too many blogs are primarily produced to enhance search engine optimization factors rather than communicate with a real audience.

A common outcome due to the multiple blog problems described above is that the impacted blogs (and perhaps blogs in general) lose readers as well as traffic generated by search engines. As I observed in a comprehensive 2017 overview of the problem, “Both business clients and search engines have devalued the use of published content that is not original, accurate and informative.” Nevertheless, many businesses continue to feature a blog as a primary tool for communicating with website visitors.


One Solution: Think Outside of the Blog

Perhaps it is time to think of the blog as a vintage relic that no longer deserves to be featured and promoted — much like 8-track audio tapes and videocassette recorders eventually reached a point of decreasing functionality compared to better alternatives. Today’s customers want to be in charge of the buying process and do not want a marketer-centric sales process like cold calling, advertising and promotional blogs. What is emerging as a viable solution is a customer-centric and inbound marketing sales process that emphasizes Thinking Outside of the Blog with educational and non-promotional content — examples include extended articles, case studies and white papers.

Common Themes in Thinking Outside of the Blog

The Bottom Line:

I consistently see several common themes in a successful transition to Thinking Outside of the Blog. Here are two of them:

• Providing high-quality educational content for consumers
• Replacing marketer-centric sales processes with customer-centric sales processes

Remember First Impressions — High-quality customer-centric content can provide a solid foundation for making positive first impressions when prospective consumers visit websites. Instead of publishing a promotional and short blog post, Think Outside of the Blog by supplying comprehensive educational content like white papers, extended articles and case studies. If you need another reason to do this, please remember the timeless wisdom offered by Will Rogers — “You never get a second chance to make a first impression.”

Business Writing and Inbound Marketing Strategies

In the rush to implement inbound marketing strategies within a business, the importance of content writing often gets lost in the shuffle. This is a serious mistake that can ultimately doom inbound marketing to failure.

Those responsible for inbound marketing processes must be especially vigilant in matters concerning content quality. The potential for problems is often increased when business writing is outsourced to a “low bidder” from a crowdsourcing website.



Customers seeking educational content have high expectations — is it reasonable to expect that a low-bidder mentality will meet and exceed these expectations? In particular, inbound marketing content like press releases, extended articles, white papers and case studies deserves the high-quality treatment that might require selecting a high bidder instead of the lowest bidder. Your potential customers will form long-lasting first impressions based on your content — what will they find?

Upwork: A (Costly) Piece of Work to Be Avoided

While crowdsourcing in general has proven to be ineffective in both broad and specific terms, Upwork is turning out to be a particularly costly and frustrating example of the concept. Upwork was created by the merger of Elance and oDesk — and this is a huge part of the problem. For both clients and freelancers, Elance had a relatively “good” reputation while oDesk was typically viewed at the other end of the spectrum with low quality and low costs usually found together.


The First Upwork Mistake: Adopting oDesk Instead of Elance Philosophies

The initial troubling sign with Upwork was the adoption of oDesk fees and procedures. For example, oDesk charged a standard 10 per cent fee while Elance used 8.75 per cent. The standard Upwork fee was quickly fixed at the higher oDesk rate of 10 per cent.

With Elance, payments to freelancers were made immediately upon project approval by the client. Upwork has decided that is much too fast and has slowed freelancer payments to a glacial speed of 6-7 days after work is accepted by the client.


The Second Upwork Mistake: Greedy (and Greedier) Fees

As if 10 per cent was not enough to take off the top of each and every project, Upwork has recently (May 2016) chosen to double the fees for the first $500 of every client’s work with a specific freelancer — that’s 20 per cent for every single project to start with and then 10 per cent for amounts from $500 to $10,000.

What does Upwork do for this 20 per cent? I would argue that they are largely acting as a glorified Craigslist of jobs listings and freelancers and facilitating payments to be made from clients to freelancers — and they charge a separate fee (about 3 per cent) to cover credit card processing expenses, so that’s not even covered in the 20 per cent! Quality control is still the responsibility of clients, so quality is something else that is not covered by the 20 per cent fee.


The Third Upwork Mistake: A Name That Everyone Seems to Hate

While Elance was a popular brand that also happened to be a name that perfectly reflected the combination of e-commerce and freelancing, the name was ditched in favor of a new name: Upwork. It was a dumb move by all accounts — on a par with “New Coke” in the annals of marketing failures.

Other than the Upwork employees and investors who are seemingly required to say that they like the brand name of Upwork, who actually thinks it is an effective and appealing brand?


The Fourth Upwork Mistake: Inability to Retain Quality Freelancers

The Upwork team supposedly placed an early priority on retaining the “best” freelancers in their large community — and then proceeded to ignore this important goal at virtually every turn.

First (and very quickly), fees were increased by 15 per cent (for those previously using Elance) and then by another 100 per cent a few months later. Second, the time to be paid for completed projects was increased from immediate to a week or so — and during the past couple of weeks, there were periods when payments via PayPal were not functioning at all (even after patiently waiting for a week). Third, there were feeble internal attempts to create “higher quality” assignments for “high quality” freelancers, with little to show for the meager efforts by Upwork. Most of the high quality freelancers are still waiting for even one assignment that makes any economic sense.


What Can Be Learned from This Upwork Overview?

One lesson: Avoid Crowdsorcing — Clients and freelance consultants should probably avoid crowdsourcing websites (and Upwork in particular) for anything but low-quality and low-cost assignments. In fact, this is probably already occurring on Upwork, as many argue that the move to double fees to 20 per cent for projects under $500 was a direct indication that is where almost all of Upwork’s current business is (i.e., small projects under $500).

Another lesson: The Return of Legitimate Consulting — In many respects, attempts to crowdsource projects was an attempt to use the internet to replace business consultants hired directly via other means (like talking to them first by phone). The anonymity of crowdsourcing has a long list of painful and costly disadvantages, and Upwork is performing a valuable service by illustrating almost all of them.

Books About Banking: Why Did We Bailout the Banks?

A surprising number of bank books have been published during the past 10 years. Why is this and what does it mean for most of us who are not closely involved with the banking industry?

Certain books frequently become relevant and popular because of problems in society at large. Other books become "must read" because they address specific issues that directly impact our daily lives. A third category of books becomes popular because they entertain us, often dealing with gripping drama that makes us wonder how the story will end.

While bank problems often qualify for the first or second category, banking stories have rarely entailed much in the way of entertainment value. However, the financial and banking chaos that emerged during the past decade has not only made it clear that these problems can change our lives forever but has also left us with a dramatic plot that keeps changing before our eyes. Here are some books that will help unravel at least some of the underlying mysteries.

Yes, these books about banking are all based on true stories and actual events.

Will Banks Survive?

Banking problems have surprised many people because for a number of decades bankers were viewed as the last individuals who would ever take unnecessary financial risks. To a very large extent banks were not legally permitted to take risks as a direct result of the Glass-Steagall Act that was passed during the Great Depression era banking reforms of President Franklin D. Roosevelt. This legislation was intended to stop excessive bank risks that were one of the major contributing factors to the financial chaos that led to the Depression.

Eventually bankers came to resent the regulations imposed by the Glass-Steagall Act and lobbied unsuccessfully for many years to remove what they considered to be excessive restrictions on how they ran their banks. The banking institutions finally succeeded when this law was deactivated in 1999. However, there was a banking crisis during the 1980s involving the failure of many savings and loan associations (S&Ls) because financial regulations were removed and banking officials promptly assumed excessive risks. Despite that graphic evidence of what happens when banks have less regulation and undertake more risks, the removal of Glass-Steagall proceeded.

One of the best bank books that effectively ties the events of the S&L crisis to recent banking problems is aptly-titled "The Best Way to Rob a Bank Is to Own One" (by William K. Black).

Why Did We Bailout the Banks?

Why do governments save banks from their own mistakes? The most recent bailout of banking institutions occurred during 2008. The best bank book about this troubling financial event is by Neil Barofsky and is simply titled "Bailout," although there is a longer and informative sub-title: "An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street." Like many books about banking, this is stranger than fiction at times. This is a behind-the-scenes accounting of the most recent banking bailout.

Sheila Bair was in charge of the Federal Deposit Insurance Corporation during the recent bank chaos and bailouts. She is one of the few people who accurately identified the subprime mortgage crisis before it brought the banking system to its knees. You should listen carefully to what she has to say in her book, “Bull by the Horns.” By the way, this is what she had to say about the bailout — “The banks should have been let go.”



For a few other relevant perspectives about banking, please visit the following website to view a SlideShare presentation that I prepared —

A Few Candid Comments About Banks

Small Business Careers

Smart Career Choices

The practical need for a new career is an increasing reality for many individuals through no fault of their own. The old career planning methods have not worked for some time, but it frequently takes a severe event to bring the true colors to the forefront of the picture.

For example, banking and real estate were both engaged in excesses that were problematic for a number of years. But most individuals chose to overlook these financial problems as long as they were making money or at least not damaged by the risks and illegal acts. Eventually the banks went too far and caused the house of cards to collapse.

What Could Go Wrong?

As it turns out, the chaos caused by banking institutions has effectively destroyed or severely damaged many careers as a direct result. That is certainly a major reason for thousands of individuals to be examining their career options at this point.

But perhaps more importantly, the banking crisis also helped many of us to see how ineffective some career choices have been. In a booming economy, even ineffective career paths can still work out to everyone's satisfaction.

But what happens when something goes wrong?

Something has indeed gone very wrong with employment, education, politics, and the economy. In a human version of "The Perfect Storm," we are now faced with all kinds of unexpected happenings.

•     How many thought General Motors would go bankrupt?
•     Did anyone really expect Merrill Lynch to fail and fall into the hands of Bank of America?
•     Who thought that our biggest banks would be making payday loans at annualized interest rates of 300 percent and higher?
•     What were the odds of our biggest banks laying off and firing over 50,000 employees while still paying their CEOs salaries in excess of $10 million?
•     Is anyone surprised that almost 20 percent of homeowners in the United States are still "underwater" with their mortgage (owes the mortgage company more than their house is worth), while in some states the number is as high as 30 percent to 40 percent?

Yes, the cumulative impact of these and other "financial surprises" has felt like one body blow after another. Having a Plan B for both investments and careers might have been some help, but "The Perfect Storm" will always produce more damage than anyone expects. Most of us are currently evaluating Plan C, Plan D, and beyond.

Do You Have a Plan B and Plan C for Your Career?

One of the career choices that has stalled out and fallen to earth for many individuals involves an expensive college education that literally results in student loan debt bigger than the cost of some houses. Six-figure student loans are increasingly common. As someone who acquired both an undergraduate and graduate degree without accumulating any debt whatsoever, it is impossible for me to imagine how differently my life would have been with a huge debt burden at the very start of my business career.

It is always worthwhile to re-examine the wisdom of spending the amount of money now required for a college degree. Except for those specialties such as medical ones which require that a specific educational path be followed, the time is right to find another path.

Small business careers are clearly not the only alternative available for those who want to consider any and all practical alternatives to an ultra-expensive university sabbatical. But it is a practical career path that I can speak authoritatively about in terms of how to do it effectively and efficiently.

For example, I can train most individuals (in the United States and Canada) in a period typically ranging from three to nine months (depending on both personal schedules and backgrounds) to become a small business finance consultant. The cost for the specialized and individualized career training program to do this usually ranges from $2500 to $5500.

You can do the math:

•     $5500 or less versus a potential six-figure student loan.
•     Earning income within a few months versus four years from now.
•     Working in a field that is diverse and flexible enough to provide a permanent Plan B.
•     Positions work very well either part-time or as second jobs.

While the way that I portrayed the career choices above was ideally suited for someone contemplating a long-term college period in comparison to individualized and specialized career planning, I do not want anyone to overlook the larger potential and possibilities of this prudent and cost-effective approach to their future career. This particular career solution can work very well for anyone currently involved in a career or one who has just been outsourced by their employer.

Perhaps my proposed Plan B should be your Plan A?

Recent Business Writing Topics

Many individuals and small business owners rely heavily on the internet as a source of information. However, some search engines (especially Google) have made this more difficult during the past several years. It should not come as a surprise to learn that Google and others have done this under the guise of “improving the internet.” But is it really an improvement from the perspective of someone looking for help about a topic as important as restructuring their business to be led by the search engines to paid advertisers, newspapers and university research?


How Objective Are Search Engines Funded by Advertisers?


Google has unilaterally decided what content is worthwhile and has effectively assigned everything else to an internet trash pile. So it is now much more difficult for interested readers to find many special reports published by me and other business experts. This is primarily because an increasing number of online publications have failed some mysterious test in the secret Google search engine algorithm that determines what you will find. So now, when you are looking for help or information about “legal due diligence for investing in businesses” or “building a home with a silent partner,” you should lower your expectations about how helpful a search engine like Google will really be.

Here are some of the topics I have written about recently (all of which are published somewhere on the internet even if Google pretends that they don’t exist):

• Impact of Working Capital in Manufacturing Companies
• Why Are So Many Condominiums Sold for Cash Only?
• Corporate Debt Restructuring Guidelines
• More Questions Than Answers?
• How to Cut Your Cable Bill
• Legal Due Diligence for Investment in Companies
• What Is a Roku?
• Making Smart Career Transitions
• How Can Businesses Invest in Foreclosures?
• Effects of Inflation on Self-Storage Investments
• How Do Franchises Divide Territories?
• Practical Business Writing Help
• Does Medicare Pay for Prescription Medications in Nursing Homes?
• How to Build a Home With a Silent Investor
• What Is Needed for a Business Restructuring Plan?

Authority Value According to Google


One of the criteria now relied on by Google to determine “authority value” for a website is whether the publisher is a newspaper, university or “none of the above.” While some of my special reports are in fact published by universities and newspapers such as the Houston Chronicle, the majority are published by other highly-respected sources such as Zacks Investment Research. But good luck in finding them in a normal search unless you happen to enter the exact title. Google has its own agenda in deciding what to show you in search results. Their agenda is not necessarily resulting in the “best” or “most complete” search engine results for internet users. However, based on Google’s profits, it is clear that their search engine agenda is very popular with their advertising clients and other paying customers.


Two Questions About Search Results

Should we depend on Google to determine what internet information is highly-respected?

When you have a question to research on the internet, do you want Google to emphasize the organizations and advertisers that write the biggest checks to Google?

Plan B Strategies and Solutions

The need for practical business solutions is not new. What has changed during the past decade is the growing importance of having a “Plan B” because an initial strategy has fallen flat on its face. Failure is the best possible reminder of the following wisdom:

Always Have a Plan B.

Individuals and companies might have different illustrations that make a similar point: new solutions and strategies will be increasingly necessary. How many times does a strategy or solution have to fail before it is appropriate to try something new?

Many years ago Albert Einstein offered his own wisdom about the cycle of repeating the same thing over and over again. I have included his memorable quote below.

Plan B for Banking Services, Cable Companies, College Education, and Internet Publishing

I believe that Albert Einstein's definition of “Insanity” is illustrated by a number of areas in which businesses and individuals keep pursuing a similar solution and strategy despite the apparent lack of success:

• Banks
• Overpriced and ineffective services from cable companies and universities
• Internet publishing of articles and websites

For those that haven't noticed, banks have changed dramatically during the past 15 years. In part this is due to the elimination of many legal requirements since the Glass-Steagall Act was taken off the books in 1999. These changes were sought by the banks for several decades. There have been numerous financial problems as a result. Many of the biggest banks have begun “payday lending programs” which charge individual borrowers annualized rates of interest that generally exceed 300%. Meanwhile many small businesses have been unable to get normal levels of commercial financing. Tell me again why we bailed out the banks in 2008?

Universities and cable companies are both now providing services that most observers view as overpriced and ineffective. Many people are already using a “Plan B” approach to replace both, but traditions take a long time to disappear even when they have stopped working. In the case of colleges, costs keep increasing while employment prospects for college graduates are decreasing. For cable companies (which are rapidly becoming phone companies as well), there is a growing question about whether they will even exist in ten years given how inept they have proven to be at dealing with consumers while continuing to charge more and more. How many people want to fire their cable company? (We have pulled the plug on cable television and phone services at our house.)

In the world of internet publishing, Google keeps on changing and forcing internet publishers to guess about the next shoe to drop. This might represent the most challenging place of all to formulate an effective Plan B strategy. But the verdict is already in about several old publishing strategies and solutions that are not working anymore. These include article marketing and article spinning. There are also publishing websites that have gone from best to worst as a result of the evolving standards on the internet. What is working and what is not working?

New Solutions and Strategies

When the old approaches stop working, it is a prudent time to seek new ideas. While some might refer to this as having a Plan B, you should call it whatever makes it more actionable for you. “Moving forward” and “It’s time to face the facts” are just two common-sense alternatives if “Plan B” doesn't seem catchy enough for you.

Best and Worst Writing Sites

Things have changed so much on the major internet publishing sites during the last three years that many writers are dizzy and stressed-out from the changes that have been forced upon them by the shifting landscape for writing of all kinds. Some of the internet publishers pay writers to place content on their sites and some do not.

Even if you do not care about making money (or it is not a high priority) with your writing, it is highly recommended that you choose a site based on how they handle revenues for their writers anyway. If you are on a site such as InfoBarrel that was using AdSense to pay their writers and then Google pulls the plug on their advertising program for that website, you have just received the best possible signal that something is going on with a site that merits your serious concern and attention. When Bukisa lost their AdSense partnership, that was also a sign of troubles to come as that site recently announced that they were no longer paying their members anything at all.

For those that have missed all the warning signs, Google is on a serious mission to clean up a diverse collection of internet messes. While there are those that think what AdSense does is not related to this, I strongly disagree and use what they do as a very important data point in decisions about what constitutes the best writing sites and the worst internet publishing websites.

While they have had a good run, non-paying article directories such as EzineArticles are now nothing more than a waste of time for most writers at all levels. These sites unfortunately provide almost unlimited raw material for unscrupulous internet publishers to steal material from on a daily basis. Because they have been the largest article directory, EzineArticles has regularly been a favorite source for internet publishing thieves. Over the years I have published about 100 articles at EzineArticles, but I stopped submitting new articles earlier this year when it became obvious that duplicate content is published based on their articles almost as soon as they are live on the internet. Google has rightfully included the elimination of duplicate content when they are indexing articles based on their current search engine algorithm. This problem cannot be ignored any longer for those writers who either want to have their content rank highly in search engine results or produce maximum revenues (or both in many cases).

Some article directories have already disappeared entirely, and ArticleBlast is just one example. In this case, it was possibly due to a combination of inadequate revenues to keep the lights on as well as having spammy articles de-indexed by Google. While Bukisa has stopped paying their members a share of any revenues, it is not yet clear whether they will keep their doors open for free publishing for very long. After all, who would really want to publish anything at all there after the recent inept treatment by Bukisa of their loyal writers?

Squidoo is among the publishing websites that have gone from best to worst in a period of two years or less. While some of their quirks were tolerated by many writers because of revenues, the recent travails have made a number of weaknesses more obvious. A secretive approach to how advertising revenues are shared (or not shared as the case may be) is still in place at Squidoo, and this total lack of transparency is all that most prospective writers should need to know when scratching Squidoo off their list for the final time. (Update: Squidoo finally threw in the towel during the summer of 2014 and sold their content to HubPages. During June 2015, Zujava also stopped publishing articles and disappeared entirely.)

HubPages is treading water currently, and it is too early to tell which end of the best-or-worst spectrum they will be at over the next year or two. InfoBarrel is also at a make-or-break point, but their recent loss of AdSense advertising places them closer to worst than best at this time.

When it comes to the best publishing websites, it is a very short list. I have been actively involved in the internet publishing world during the past eight to ten years and it has been an area that has been characterized by one train wreck after another. The winning strategy for serious internet writers at this point is primarily to focus on websites that provide a proper balance of personal control, flexibility, visibility and smart choices.

In terms of revenue possibilities, writers should insist on choices that include Google AdSense and Amazon as well as Plan B advertising programs such as Chitika for those individuals who are unable to qualify for AdSense. The most viable alternatives that include the smartest choices are your own websites.

Good News and Bad News About Business Finance Planning

The past decade has provided an array of changes and problems for business finance planning. Because of the growing need for flexibility and contingency plans, a recurring piece of wisdom has emerged from some of the business and finance chaos: 

Always Have a Plan B.

Plan B is the good news.

So that I do not bury the lead, I want to make it crystal clear that the expanded appreciation of how important Plan B can prove to be for any individual or business is at the top of my list for the good news portion of this business finance planning discussion. Of course, I have never hidden how I feel about the critical value of having a Plan B. As you can see from the mosaic image which I produced above, I rarely miss an opportunity to feature Plan B in a front-and-center kind of way.

Another purpose for the business finance planning mosaic was to demonstrate in a visual way that everything can fit together quite nicely with a little (or a lot) of planning energy. Key concepts like strategy, solutions, experts, and help also deserve a seat at the table when formulating your own Plan B.

How important is Plan B?

To say it as succinctly as possible, always having a Plan B is a winning strategy. Having a solid Plan B mentality during the past five years has more often than not proven to be a critical difference between business survival and failure. What is your Plan B?

Always Have a Plan B

The bad news:
You can tell there is an oversupply of bad news when the primary good news is the increased appreciation about the importance of having a Plan B.

I am sorry to say that there is more bad news than there should be. This is due in large part to a political climate that is increasingly governed by the largest corporations, big banks, and of course their lobbyists. When the incomes for average individuals decline during what is hailed as a "recovery" by some biased politicians, you have the first clue as to the underlying problem that small businesses and individuals are currently facing.

During the last three years, the average income for individuals has shrunk from $51,000 to $45,000. Meanwhile corporate profits and the stock market have done very well. As they say, the rich get richer and the rest are still searching for Plan B.

Banks are still hoarding their riches and not lending normally to either small businesses or most individuals. In their own little good news bubble, the banking industry has launched an aggressive campaign to move into what they see as the next front. The world of payday lending programs is beckoning to the bankers. How could any respectable banker not pay attention to payday loans when they offer the easy opportunity to charge annualized interest rates of 300% to 600%? Never mind that they are illegal in some States (as they should be). This is why banks pay the big bucks to their lobbyists, isn't it?

The bad news lesson to be learned from what banks are now doing with the money used to save them just five years ago is to realize what they are not doing with it at the same time. Commercial mortgages and working capital financing are just two of the things that most banks are not presently doing with their money in any significant way. By the way, many banks have also resumed their investment activities involving financial derivatives. For those who are not aware, the use of risky real estate derivatives by the banking wizards brought the economic world to its knees several years ago. I can only suppose that the bankers have figured out what they did wrong and are going to test their new theories with more taxpayer money.

Unsurprisingly, my small business finance planning solution for addressing the abundance of bad news is as follows:

Always Have a Plan B.

Are There Tax Deduction Limits for a Limited Liability Company (LLC)?

There are many small businesses established as a single-member LLC (Limited Liability Company). In most cases there was a primary reason for a business owner to use this form of legal organization, and except in a few circumstances special tax treatment was not one of them.

Equally important, for the many individuals contemplating a business start-up or buying a business, the limited liability company structure is probably at least under serious consideration. For those of you who are still making up their mind about a legal form of ownership, detailed discussions with your tax and legal advisors should be a top priority. Although an LLC can have more than one owner (member), my discussion here will focus on the single-member version which is permitted in most States.

It is worth noting that LLC members can be individuals, other LLCs, corporations, or a foreign entity. Two examples of businesses that cannot legally operate as limited liability companies are insurance companies and banks. When there are two or more LLC members, the Internal Revenue Service will treat the LLC as a partnership unless Form 8832 (Entity Classification Election) is filed in order to declare the desire to be treated as a corporation.

Whether or not tax considerations were a secondary issue in your decision to operate as a single-member Limited Liability Company, filing our annual tax returns often raises some new issues and questions. If you have questions about some LLC aspects that you think are unique for your situation, you should have another visit with your tax expert.

As for an answer about the tax deduction limits for an LLC, there are no limits in the strictest sense. The IRS does have tax rules about what assets are actually at risk from losses, and based on the at-risk rules deductions cannot be greater than the assets actually at risk.

With the Internal Revenue Service, there can always be the risk of an IRS audit if reported tax losses appear unusually high. It is somewhat more realistic for a company in its initial year to justify losses in general. Once an LLC has existed for several years, the Internal Revenue Service is likely to review any patterns in losses versus profits. A general IRS expectation is that a business should be profitable for three of every five years.

If an LLC reports losses for three or more years out of a five-year period, it is at risk of being treated as a hobby. The primary tax consequence if this happens is that there will be some additional restrictions imposed on tax losses.

Get It in Writing

“Get it in writing” is a common piece of legal wisdom often shared by attorneys and business experts. It is true that many verbal agreements become disagreements under a wide variety of circumstances. But getting it in writing does not always prove to be a magical solution.

There are frequent examples of litigation and legal proceedings when a written document is the subject of argument and lawsuits. Is that contract clause enforceable? Did the officers and directors of the corporation really mean what they said in the corporate by-laws?

But the Uniform Commercial Code does in fact require that certain agreements be put into writing. Whenever personal property is being leased or a security interest (collateral) is part of a financial transaction, “Get it in writing” is mandatory. If the parties believe that anything in a contract cannot be completed within a year, “Get it in writing.” Another case where a written agreement is not optional is based on the monetary amount of goods to be sold ($5000 or more).

There are also many important and valuable forms of business writing which have little or nothing to do with legal conditions and contracts but nevertheless serve as excellent examples of another useful “Get it in writing” perspective. As a primary illustration of this, business proposals provide cost-effective solutions for several common small business problems.

Companies of all sizes are interested in increasing their sales and operating revenues. Small business owners are constantly in search of business development strategies which will consistently deliver effective marketing results. While some small businesses are still actively looking for the best solution to this common problem, many companies are relying on a dependable and trusted sales communication strategy that they discovered many years ago:

Business Proposal Writing

It is not totally clear when some businesses lost interest in the business writing activities that surround the proposal process. One tentative conclusion is that expansion of the internet and related technologies caused some executives and marketing managers to go in new directions for developing business and proposals were simply left behind. Another theory is that corporate downsizing targeted specialized employees such as those whose primary mission was responding to Requests for Proposals (RFP).

Whatever the explanation, quality business writing has been in a steady decline for several decades. Without talented business writers, most attempts at preparing proposals are doomed to failure. This self-fulfilling prophecy is yet another reason to explain why business proposals have become virtually extinct in some quarters.

There are several different kinds of business proposals, and some companies will benefit by using every possible variation. For businesses wanting to stick their toe in the water to see whether they should jump in or not, the use of an unsolicited business proposal strategy is both prudent and cost-effective. This approach is diametrically-opposed to the RFP process mentioned earlier and will involve a delicate balance of high-quality business writing and business development skills. It is an ideal solution for small business owners who are willing to be aggressive, proactive, and creative.

Writing is the key to it all.

Many businesses have individuals who possess average to above-average sales skills but somehow the sales results keep slipping. In an explanation using some logic terminology, selling is what is referred to as a "necessary but not sufficient" condition for business success. In other words, sales abilities only go so far but often fall short of the mark. Could it be possible that effective and high-quality business writing is the key missing ingredient?

While everyone should indeed have a Plan B, writing effective business proposals should probably qualify as a Plan A in the great majority of everyday business life. Get it in writing.

Estate Tax Audits by the IRS

Income Tax Audits and Estate Taxes

There is something special about an income tax audit by the IRS (Internal Revenue Service) that causes more stress and anxiety than many other financial events. The possibility of tax returns being audited is actually quite rare so in most cases the stress levels are relatively unwarranted. 

The one tax return area that seems fully-deserving of a taxing level of anxiety is estate taxes. I could not help but sit up and take notice when I saw the most recent tax return examination data reported by the IRS. Just keep these two numbers in mind: 30% and over 100%. (How can you have over 100%, you might ask?)

It is normal for tax return audits to be based on a small representative sampling of all available returns. For higher incomes, this is usually between 2% and 3%. However, for estate tax returns this number becomes 30%. As representative samples go, this is a very big number. But because audits of estate taxes also frequently result in reviewing tax returns for previous years as well, the total audit percentage for larger estates (over $10 million) is closer to 110%.

Perhaps that IRS tax audit anxiety is closer to fact than fiction after all is said and done.

Small Businesses Negotiating With Banks

Business Negotiating With Banks

The process of negotiating with banks is often avoided by small business owners. The failure to implement effective business negotiations with bankers can lead to a variety of problems. By developing business skills in this critical area, several other financial benefits are likely to be realized. The importance of learning how to negotiate more effectively with banking institutions has increased due to the recent bank crisis which has severely impacted the ability of small business owners to obtain commercial financing.

Improving Working Capital Management

Working Capital Management Help

With most banks eliminating working capital loans to small businesses, it is only prudent that small business owners explore practical strategies for improving working capital management. This can start with a candid series of questions such as the following:

• Can I reduce business debt?
• Should I fire my bank?
• Can I reduce operating expenses?
• How can I improve business communication and negotiation with banks and suppliers?

Small Business Plan Strategies

Is it really necessary for small businesses to have a business plan strategy? Some small business owners will take the position that business planning is not necessary for their situation because everything is in "great shape". In this case the need for a business plan can be easily overlooked, but that does not mean that this is really the preferred path given all of the possible alternatives. Things can and do go wrong regardless of how well a business is currently doing. This is precisely the rationale for having a contingency business planning strategy in advance of something going wrong.