Archive for July, 2010

The 1099 Shakedown

It seems that with each passing day another new tax, carefully buried in the healthcare reform bill, is being exposed.   This time it is in Section 9006 and comprises just a few lines in the 2,409 page document, yet it has the potential to turn the lives of business owners upside down.  

Beginning in 2012 there is a mandate that all companies will have to issue 1099 tax forms not just for contract workers, but to any individual or corporation from which they are buying more than $600 dollars in goods or services in a tax year.

So what does this mean for the average small business?  In a nutshell, increased costs for accounting services which in turn will be passed along to customers in the form of higher prices.   It also means millions more tax forms which will require more government bureaucrats to sift through the paperwork, paid for with higher taxes.   How’s it sounding so far? 

Currently, 1099’s are only used to document income from individual workers other than wages and salaries.   Typically they are used to report income to independent contractors, who will coincidentally become more frequently used as healthcare reform forces companies to lay off traditional employees. 

Under the new rules, if a business purchases a new computer from Best Buy, they will have to send a 1099.   If a beautician purchases shampoo from a supplier, they will have to send a 1099.   If an entrepreneur flies or rents cars, they will have to send 1099’s.   If lunch is catered for employees, a 1099 will have to be issued.   If you weekly lunches at Taco Bell, you will have to send them a 1099.

As if this isn’t enough to force a going out of business sale, 1099’s will have to be issued to corporations which are currently exempt.  

The rationale, which has absolutely nothing to do with healthcare, is that this tool can be used to bring more income into the federal coffers.   According to the Democratic aide for the Senate Finance Committee who conjured up this idea, “information reporting improves tax compliance without raising taxes on small businesses.”  Perhaps, but any tax savings is more than offset by the manpower needed to maintain compliance which will come at the expense of the American consumer.

It’s not that this tax wasn’t disclosed, it simply wasn’t investigated by the mainstream media.   As early as last October, SMC Business Council warned of this impending tax being buried in the mountains of red tape being debated in Congress.   The Cato Institute has called it a “costly, anti-business nightmare” and Dan Lungren, R-Calif., introduced legislation last week that would repeal this ridiculous new mandate.  

Complicating matters will be compliance.   Just how are small business owners supposed to collect names and tax identification numbers for everyone with whom they do business?  The reality is that this mandate will create more scofflaws than the 55 m.p.h. speed limit.   But then again, would you expect anything else from an administration and a Congress doing everything in their power to prolong the recession? 

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Chris Tidball is the author of Kicked to the Curb who provides businesses with innovative solutions to dramatically improve productivity and profitability while reducing costs.  Learn more at www.christidball.com or email chris@christidball.com.

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July 21, 2010 at 3:50 pm Leave a comment

How to do it Better, Faster, Smarter and Cheaper

Better, faster, smarter and cheaper; four words that describe how companies succeed even during these difficult times.    Southwest Airlines, Wal-Mart, Union Pacific, Apple, and Sequoia Financial  are finding success because they have identified processes that cut costs, limit overhead and provide customers with more bang for their buck. 

Many companies are struggling in an economy riddled with regulatory roadblocks, increased employee costs, higher taxes and now financial reform that is destined to bring any glimmer of recovery to a screeching halt. 

But even amidst this government induced chaos, there are some who have found the key to success which is providing solutions to companies needing to grow but having to cut costs.  

Better, faster, smarter and cheaper.   Perhaps it sounds too good to be true, but this is exactly how a beneficial B2B partnership works.   By dissecting your organization and understanding the end to end workflow of every process, it is possible to identify gaps in the organization.  This can come in the form of waste, overhead, bureaucracy or inefficiency.  

Companies succeed when people, processes, infrastructure and technology work hand in hand; a stool with four legs upon which success rides.   If any leg is missing, the risks of tumbling is a virtual certainty.  

This is where the B2B relationship comes into play.   By leveraging the expertise of an external organization, be it attorneys, call centers, energy efficiency experts,  account receivables or bad debt collection,  business can gain an immediate competitive edge. 

Human capital already constitutes the single biggest cost in any organization.  Coupled with the inevitable rise in healthcare costs, employee benefits could add another 25% to 33% to the already expense salaries.   As these costs go up, businesses who don’t adapt to the changing  dynamics risk losing a competitive edge.  

Better?  Many businesses partners are focused on a single niche which often translates into unparalleled legal and regulatory knowledge, incredibly efficient workflows often as the result of a higher average tenured workforce. 

Faster? Less is often more and since many business partners are smaller, they aren’t riddled with internal bureaucracy that impedes productivity.

Smarter?  Implementing processes that improve productivity and reduce costs is not only smart, it is essential in today’s economy of ever shrinking margins.

Cheaper? Many companies opt to do processes in house because of the traditional belief that it is cheaper.  To the contrary, rising costs of human capital and employee benefits coupled with technology have changed this.   When looking at the net back results to the bottom line, it is often far cheaper to outsource various components of a business than maintain everything in house.  

To best understand where to gain efficiencies, a process and workflow analysis is a great way to start.  There are many ways to reduce expenses, with two of the most identifiable being maximization of staffing and improving energy efficiency.  

Better, faster, smarter, cheaper are all words you can take to the bank as your profitability improves, quality rises while your costs go down which is guaranteed to give any company a competitive edge in the marketplace. 

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Chris Tidball is the author of Kicked to the Curb: 20 Rules for Coming Out on Top When Your Life Has Been Turned Upside Down.   He provides businesses with innovative solutions to improve profitability with no new money required.   To learn more, please visit www.christidball.com or email chris@christidball.com.

July 20, 2010 at 6:56 am Leave a comment

33 Ways to Use LinkedIn For Business

Is your LinkedIn account mostly sitting idle? You can do so much more with it than simply look up contacts: find gigs, sell products, expand your networks, grow your business and gain free publicity.

Here are 33 ways to use LinkedIn more effectively.

  1. Fill out your profile completely to earn trust.
  2. Use widgets to integrate other tools, such as importing your blog entries or Twitter stream into your profile.
  3. Do market research and gain knowledge with Polls.
  4. Share survey and poll results with your contacts.
  5. Answer questions in Questions and Answers: show expertise without a hint of self-promotion.
  6. Ask questions in Questions and Answers to get a feel for what customers and prospects want or think.
  7. Publish your LinkedIn URL on all your marketing collateral, including business cards, email signature, email newsletters, web sites and brochures, so prospects learn more about you.
  8. Grow your network by joining industry and alumni groups related to your business.
  9. Update your status examples of recent work.
  10. Link your status updates with your other social media accounts.
  11. Combine your social media approach: when someone asks a question in Twitter, respond in detail on LinkedIn and link to it from Twitter.
  12. Use the search feature to find people by company, industry and city.
  13. Start and manage a group or fan page for your product, brand or business.
  14. Research your prospects before meeting or contacting them.
  15. Share useful articles and resources that will be of interest to customers and prospects.
  16. Don’t turn off your contacts: avoid hard-sell tactics.
  17. Write honest and valuable recommendations for your contacts.
  18. Request LinkedIn recommendation from happy customers willing to provide testimonials.
  19. Post your presentations on your profile using a presentation application.
  20. Check connections’ locations before traveling so you can meet with those in the city where you’re heading.
  21. Ask your first-level contacts for introductions to their first-level contacts.
  22. Interact with LinkedIn on a regular basis to reach those who may not see you on other social media sites.
  23. Set up to receive LinkedIn messages in your inbox so you can respond right away.
  24. Link to articles and content posted elsewhere, with a summary of why it’s valuable to add to your credibility.
  25. List your newsletter subscription information and archives.
  26. Find experts in your field and invite them as a guest blogger on your blog or speaker at your event.
  27. Post discounts and package deals.
  28. Import vCards and contacts from other applications to find more connections.
  29. Export your contacts into other applications.
  30. Buy a LinkedIn direct ad that only your target market will see.
  31. Post job listings to find qualified talent.
  32. Look for connections related to a job you want.
  33. Find vendors and contractors through connections.

(Thanks to Webworkerdaily for providing these great suggestions for this post.)

For more information on how to our innovative bottom line solutions can instantly improve your revenue stream, stop by www.christidball.com.

July 13, 2010 at 7:27 am Leave a comment

The Time Has Never Been Better to use Subrogation to Improve Your Bottom Line

Employees are forgoing vacations, average salaries are down and employer contributions to benefits are shrinking.  Despite this people are working harder than ever!   As employers are learning to do more with less, some are recognizing that less isn’t always more.   This is particular true for insurance subrogation where billions of dollars continue to be left on the table annually. 

Subrogation Facts 

  • 82%:   The percentage of uninsured claims closed with no recovery.
  • 80%:    National rate of uncollected judgments
  • 79%:    Findings of comparative negligence by Florida juries.
  • 37%:    The percentage of comparative negligence that should be identified by insurers.
  • 25%:    Findings of comparative negligence on collision claims by insurers.

 So where does your organization stand?  Are there claims being closed that have subrogation potential?  With increasing workloads and disposition demands, it is quite likely that bottom line income is potentially being left on the table.  

In speaking with a variety of insurance leaders, many have implemented processes in an attempt to increase subrogation identification and recovery.   The problem is that many of these solutions are used after the fact, often on claims that have been closed for months or even years. 

For a solution to be effective, it must be proactive!  Debt is like concrete, the longer it sits the harder it gets.   Speed wins when it comes to pursuing subrogation money.   Consider that subrogation claims pursued within 10 days of closure have a success rate of nearly 70% compared to only 3% after 180 days.   Contrary to what is often assumed, there is a direct and quantifiable correlation between timeliness and recovery.

Many carriers utilize an internal process, focusing on captive staff to aggressively pursue subrogation money.   While this process can be optimal for certain types of claims such as clear liability with identified insurance on the other end, it is one of the least effective for uninsured motorist claims.  

While there is no one size fits all solutions, there are several steps that an insurer can take to improve subrogation recoveries.  

  • First Notice of Loss needs to accurate identify all parties.
  • Claims Adjusters need to contact with all parties within 24 hours of report of new claim.
  • Inspection of damaged vehicles should occur within 48 hours of report of new claim.
  • Improved accuracy on adjuster liability investigations and negligence assessments.
  • Steps to identify insurance need to be exhausted.
  • Business partners to handle uninsured claims need to be identified.
  • Metrics need to be implemented to accurately gauge effectiveness of process.

When considering business partners to improve bottom line subrogation recoveries, insurers should focus on a number of variables including mix of business and adjuster tenure.   The following diagram is designed to assist insurers in best identifying solution best for them.  

Chris Tidball is the author of Kicked to the Curb and provides businesses with innovative solutions to improving their bottom line.   He has used his twenty plus years of insurance claims, management and Six Sigma experience to write procedure manuals, design effective workflows and metrics and develop analytics to find missed subrogation dollars.   He can be reached at chris@christidball.com.

July 12, 2010 at 8:21 am Leave a comment

Traitor or Smart Business Sense?

Is Lebron James the greatest traitor in sports history or simply a smart businessman snubbing his nose at local politicians who have made living in heavily tax dependent states too cost prohibitive?  Many are saying that taxes had nothing to do with his decision, suggesting that he already makes so much money that taxes don’t matter.  But is this really the case?  Does anyone really make so much money that they truly don’t care how much of their hard earned cash is being kicked to the curb with wasteful government spending?

Let’s put this into perspective using a five year deal with the Miami Heat, and the ensuing endorsements, at a very conservative $100 million.   The income tax paid in New York would be $12 million, New Jersey $11 million and Cleveland $8 million.   There is no income tax in Florida.    To bring this into our realm of reality, consider the business executive making $100,000 who would pay 12 grand in New York, 11 grand in New Jersey, 8 grand in Cleveland and nothing in Miami.   Now does it start to make sense?  

Lebron’s departure from Cleveland may have had more to do with taxes than anything else.  The New York Post warned   that if  he goes to the Miami Heat instead of the Knicks, “blame our dysfunctional lawmakers in Albany, who have saddled top-earning New Yorkers with the highest state and city income taxes in the nation, soon to be 12.85 percent on top of the IRS bite. There is no state income tax in Florida.”

While James may have more money than anyone could ever spend in a dozen lifetimes, there is principle involved which is why so many athletes, executives, retirees and other affluent Americans, declare residency in Florida just as the Post warned.  

Perhaps Lebron’s exodus from Cleveland can serve as a wakeup call to politicians who view taxes as their only salvation.   Amidst the cries that more taxes are needed for schools and infrastructure, perhaps these same politicians should look to Florida and the numerous well manicured towns with some of the top schools in the nation and palm lined parkways with nary a pothole in sight. 

How is this possible with no income tax?  Simple, the wealthy from New York, New Jersey and other states where so called “millionaire” taxes have been enacted are relocating to the Sunshine State and spending their money on goods and services here.  

As any good student of economics knows; the higher the taxes, the lower the revenue to government. People will simply find better uses for their money, and in the case of the northern tier of states, many on the verge of bankruptcy, residents are simply packing up and leaving a smaller and smaller pool with the burden of supporting a larger and larger government which will only perpetuate the mass exodus, turning what is now a snowball into an avalanche.    

Consider the case of Buffalo Sabres owner and billionaire Tom Golisano who was paying $13,000 dollars per day in New York state income tax.   He had enough and moved to Florida.   Media mogul Rush Limbaugh who recently signed an $800 million dollar contract has voted with his feet by leaving New York for Florida.   Donald Trump has cited excessively high taxes as the single biggest reason many in his circle of affluent friends and associates have left for southern tax havens.  

This is a problem that will persist as long as these state’s feel the need to feed their spending addiction with higher taxes.   Unfortunately with fewer and fewer residents to support their habit they will soon be forced to make critical decisions which will dramatically alter the quality of life to which they have become accustomed.  

As for us in sunny, income tax free Florida, life continues on as we reap the benefit of an influx of wealth from the north.   While I would have preferred to see Lebron in a Cavaliers uniform, it’s hard to blame him for kissing the brutally cold winters and high taxes good bye for the warm ocean breezes that sway the palms on South Beach where he can sip a mojito knowing that Florida’s Constitution guarantees that he gets to to keep what he earns.

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Chris Tidball is the author of Kicked to the Curb: 20 Essential Rules For Coming Out On Top When Your Life Has Been Turned Upside Down.  He is a native Clevelander who now resides in Florida, albeit with far less money than Lebron James.   He provides businesses with innovative solutions to increasing their bottom line with no new money required.   To learn more visit www.christidball.com or email chris@christidball.com

July 9, 2010 at 7:15 am 1 comment

Getting Lean By Going Green and Beat the Heat with Lower Electric Bills

Thank you to our friends at the Greener Team for contributing today’s tips and testimonial on going green, reducing electric bills and increasing your bottom line…all with no new money required!

This summer is beginning to look like one of the warmest on record, with triple digit temperatures up and down the east coast.   Even those accustomed to heat in places such as Florida have been taken aback by a record shattering June.   So what does this mean for businesses already struggling during these tough economic times?  As a rule of thumb the sizzling heat results in substantial increases in utility costs and demand charges. 

But this doesn’t have to be the case!  While conducting an energy audit for a customer using our state of the art combination of power factor correction (PFC) and transient voltage surge suppression (TVSS) I took note of the substantial monetary benefit being realized by this independent grocer.  

Despite the average temperature this past June being 94.1, a substantial increase from the 90.7 a year ago, they saw a dramatic 17% reduction in their electric bill!   In fact, looking at the following chart tracking this companies electric bill since installation shows a quantifiable savings, even in months where there was a significant difference in temperature.  

In addition to the energy savings being realized, this small business owner has seen a reduction in maintenance costs associated with equipment downtime now being protected with our innovative surge suppression systems unparalleled clamping power.

With a cap and trade tax likely to pass Congress the stage will be set for your electric bills to DOUBLE by 2016.  There has never been a better time to invest in your bottom line with a system that not only reduces electric costs but is proven to generate positive cash flow because you are now paying yourself instead of your local utility.   In fact, many of our solar and wind alternatives enable you to generate enough power to even sell excess supply back to the local utility!

Don’t wait until rebates and tax incentives pass.  By taking action now, you can get lean, get green and beat the summer heat with lower electric bills that benefit you, not your utility.  

Learn more by visiting www.greenerteam.com or calling today at 904.505.4737.

 

July 8, 2010 at 9:24 am Leave a comment

Doing More With Less By Leveraging Strategic Business Partners

Is it really possible to do more with less?  Imagine ten man football or four man basketball?  Those who have played hockey or lacrosse know just how hard it can be to score when you’re man down.   So why is it that this mantra perpetuates the business world with such frequency? 

Is it possible that the business community understands best what is needed to succeed?  While fielding a four man basketball team may seem like a stretch, what if your four were Lebron James, Amare Stoudemire,  Dwyane Wade and Chris Bosh?  Would you field that team man down? 

Superstars not only help your organization, but put it over the top.   This is precisely why businesses can do more with less.   Would you rather have 100 average employees or 80 outstanding ones.  

In my management experience in companies of varying size, an inordinate amount of time was spent on administrative issues tied to a small portion of the total employee population.   While most people come in to work with a goal of succeeding, there are most certainly a small percentage intent on bringing the organization down to their level.

As bureaucracies get bigger, the pool of superstars tends to get smaller and smaller, resulting in organizational inefficiencies that can be costly in terms of both productivity and profitability.  

Arguably size can create economies of scale, which many times aren’t utilized for maximum benefit.   Size can also create bureaucracies that invariably lead to inefficiencies, self preservation and turf wars that undermine operational dynamics. 

So how is it that a business can effectively do more with less?  By leveraging business partners who are experts in various fields, it is possible to have the best of both worlds.   Businesses can operate more efficiently and more profitably by bringing in outside business partners who can provide value added services, reducing costs and improving customer satisfaction. 

Consider the hypothetical insurance claims organization that uses 100 captive employees in their end to end process at an annual salary cost of $5,000,000 million dollars with another million allotted for benefits.   What if that same process could leverage a core of high performing internal employees with business partners who had to expertise to improve claims productivity by 20% as detailed in the following chart.  

In this scenario, a core of high performing  61 claims professionals are retained with the utilization of B2B process improvements that enables the carrier to increase productivity by streamlining the entire process.   Beginning with First Notice of Loss, the claims outcomes are more accurate as the result of Service Level Agreements that can be leveraged often more effectively than internal metrics.

With increased accuracy in reporting comes a compression of the claims cycle time and increased disposition rates which enable the claims staff to be more effective.  

On the back end, utilizing experts to pursue subrogation and salvage recoveries will not only increase bottom line dollars but will enable carriers to increase recoveries traditionally missed before process optimization.  

In this particular example, the company not only gains expertise but reduces substantial salary and benefits costs.  In addition, the net back increase in bottom line dollars allows organizations to effectively realize this savings!  While these gains are immediate, many companies are taking a proactive approach to enter into B2B relationships to further cut expenses as new government mandates rapidly make traditional hiring cost prohibitive.  

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Chris Tidball is the author of Kicked to the Curb and provides businesses with new and innovative solutions to improving their bottom line with no new money required.  To learn more please visit www.christidball.com or email chris@christidball.com.  

July 7, 2010 at 10:55 am Leave a comment

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Chris Tidball is a claims and revenue management consultant and author of the "20 Essential Rules" series of self and organizational improvement books. You can ask him a question at chris@christidball.com

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