business owner

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Get Out of the Corner Office and Hit the Front Line

When Hubert Joly started as CEO of Best Buy earlier this month, he spent his first week on the job as many of the employees of the $48 billion company do, wearing a blue shirt and working the floor.

Joly, hired to turn around the beleaguered electronics retailer, worked at several store locations in Minnesota, being trained to serve customers, accept returns and stock items. “I want to not learn our businesses from the headquarters,” he said, “I want to learn from the front line.”

The most successful CEOs I know follow that philosophy. They walk down the halls of the office, around the manufacturing plant and through the aisles of the store. They stop and chat with people, asking Joe how his son is doing at college or Charlene about her husband’s knee surgery.

You can’t know everything about everybody in your company but the important thing is to engage with people, even if it’s just a friendly wave or by saying hi.

Not only do you show that you care about the people who work for your company, you will learn valuable information to help your business become more productive and profitable.

In addition, the employees get to know the CEO or owner as a real person, not just a face in a big fancy oil painting at the reception desk. Or a name on a memo announcing more lay-offs or plant closings.

Steve Jobs employed this simple strategy of what is known as MBWA, Management By Walking Around. He’d talk to his service reps, answer customer emails and would call customers who were experiencing problems. Can you imagine getting a phone call from Steve Jobs to answer your question about why the CD drive doesn’t work on your MacBook Pro?

When I’m running a business I’m usually given a nice desk, but you’d rarely find me there. When I’m trying to engage with people, that desk acts like a barrier. When I meet with someone, I come around the other side of the desk and sit in a chair beside them, or I suggest we go to a conference table, but I never sit at the head of the table, instead settling down next to the person with whom I’m engaging.

Of course, usually you won’t find me near that desk at all. I’m out walking around and talking with people because like Jobs and Joly I learn a lot that way.

It doesn’t matter what kind of business it is. Whether it’s a brokerage firm filled with cubicles or a manufacturing plant or retail stores, I still walk the floor.

When I took over as interim CEO of an automobile parts company in New Jersey, I told the owner I wanted to visit every one of our stores. “Give me a list of what you’d like to find out, but don’t tell them I’m coming,” I said.

I got quite familiar with the New Jersey toll booths that week as I drove 1,000 miles and walked into every store, operating as a “secret shopper.”

I learned how each store operated and got answers to what the owner wanted to know. I gathered a lot of information that was vital to turning that company around. Most of it was information that the owner didn’t previously have, because he hadn’t been visiting the stores.

It seems like such a simple and powerful concept to me, yet the most common response I get from CEOs or owners when I explain I’ll literally be doing “legwork” and chatting with the employees is, “They won’t talk to you.”

It’s actually quite the opposite. I can’t get them to stop talking to me.

Many owners also say things like, “I have an open door policy. If employees have something to say, they can just come to my office.”

But here’s the thing. Whether an open door policy is effective depends entirely on what employees will find on the other side. As author and motivational speaker Dr. Bob Nelson said, “An open door policy doesn’t do much for a closed mind.”

Your employees want to talk to you. Go take a walk.

(Photo courtesy Best Buy)

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I Want to Introduce You to a New Friend

What do you think of when I say, “The IRS?”

Does your stomach clench up a bit? Does your forehead get warm? Maybe the physiological reaction isn’t so dramatic, but I imagine that your mental associations with the Internal Revenue Service of the United States are anything but positive. Fair to say?

Maybe you got off to a rough start, but perhaps that was due more to schoolyard rumors than anything else. It’s possible, too, that you’ve hit a rough spot in your relationship. But I want you to get reacquainted with the IRS and think about the way you two could be friends.

Certainly the thoughts of being friends with someone taking anywhere from 25% to 50% of your hard-earned dough on an annual basis might seem distasteful. I don’t like the Tax Man any more than the next guy, but as long as you accept that the IRS is taking some of your money every year – and you really come to terms with the fact – you may want to get better acquainted.

There are only two business people who should be concerned by the IRS:

1. Those whose accounting is so terrible that an audit would be an unbearable nightmare, and

2. Those who are trying to cheat and break the law.

If you don’t fall into either of those categories (and a lot of my clients, I unfortunately discover, do), then consider what the IRS can do for you. Remember, the government is going to take a nice bite out of your income, but the size of the bite and the ferocity with which it’s taken might be more variable than you’d otherwise imagined, particularly if you are a business owner, CEO, president or CFO.

And I want to be very clear here that everything I am suggesting you do is 100% legal. Do NOT do anything illegal. It’s not worth it, and you will be caught. They’re always caught. Trust me. I’ve seen more fraud than you can imagine.

You might be saying right now, of course there are ways of paying taxes “better” – that’s why I have a CPA. And I bet you have a wonderful CPA, but I assure you he won’t mind you doing a little leg work yourself to figure out how to save your company some money.

An obvious way to save money is to take advantage of the Bonus Depreciation and Increased Section 179 Deduction under the American Recovery and Reinvestment Act, which allows you to fully depreciate a wide variety of assets. That’s right. No schedules this year if you don’t want them. And the IRS is happy to let you do it.

That’s just the tip of the iceberg, though, and the only way you’re going to figure out all of the ways that you could more advantageously be classifying your expenses and spending your money is if you explore www.IRS.gov. Use the search bar in the top right hand corner and start getting acquainted with the IRS. You guys could be better friends than you think.

WARNING: Obviously you shouldn’t go reorganizing your business’s books for 2011, confusing your CPA/account/bookkeeper and doing anything funny. However, since you’re bound to be meeting with your accountant again soon, you should think about all the ways you spend money – consider terms like “petty cash,” “entertainment” and “meals” for starters – and start looking them up. Go to your accountant with a list of questions, suggestions and links, and see if s/he can’t continue steering you in great directions to get, use and save more money in 2012 than you may have in 2011.

If you notice any particularly good tidbits while you’re looking around, share them with us in the comments section below. Happy hunting!

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You’re Personally Guaranteed for How Much!?!? Let’s Do Something about That

Are you personally guaranteed on anything?

I bet you are. Do you have an American Express business card? Do you have a loan from a bank for your business? What agreements have you made for your business?

One thing I’ve noticed is that the older a business is, the more likely it is that the owner (who is also often the CEO or president) has personal guarantees that he’s forgotten about.

And now’s as good a time as any to review all of your paperwork, find out where you’re personally guaranteed and take steps to extricate yourself from those guarantees.

If your business is successful and profitable, not in debt and established enough to no longer need the personal guarantee of your assets, home and your wife’s car, then try to get out of it.

Why Get Out of Personal Guarantees

Personal guarantees are pretty much what they sound like. They say that if something goes south with your business, you will stake your personal assets on making sure those invested can recover their losses.

So, if you have a business that one day goes belly up – even though in my experience these aren’t “one day” situations but long periods of strong indicators that you need to turn things around – the bank or whomever you have a personal guarantee with, has a legal right to try to recover its losses by going after your personal assets. Depending on the personal guarantee that means your money, your home or whatever else you have or staked could be up for debate and taking.

And that stinks.

If your business goes under, you don’t want to lose everything you have in the meantime. I can’t tell you how many dozens of times I’ve had clients tell me that they aren’t personally guaranteed or that there’s nothing to worry about on that front. Inevitably, when we sit down with all of their paperwork and start going back to the beginning, we find personal guarantees they didn’t know they had or that they didn’t think were still in force. But they were wrong. And they were at risk.

You don’t want to be at risk personally, and that’s why you want to try to get out of your personal guarantees – and not sign them in the first place if you can help it.

In All Kinds of Places

Personal guarantees appear in all kinds of places – and in some that seem relatively innocuous. I recently had a client tell me that when he was setting up credit card processing for his business, the merchant bank wanted him to sign a personal guarantee that if he didn’t pay his bill monthly – a simple, low, regular, monthly bill, mind you – then he would personally guarantee them the recovery of what they believed was due them. And at that, the structure of the arrangement was one that already allowed the merchant bank to withdraw money at its leisure from my client’s bank account.

We’re not talking about being out a lot of money here, but if this contract had a personal guarantee then imagine what other contracts you’ve signed have them.

Personal guarantees do serve a purpose – if your business has no credit or history and is a total risk then it makes sense that someone loaning you large sums of money wants you to be responsible for that money somehow. But if your business has been around a while or we’re talking about a monthly bill or something to that effect, then you need to think long and hard before signing any personal guarantees and about getting out of ones you’re currently in.

Just imagine over the course of 25 years how many personal guarantees you could actually have signed if you weren’t paying attention or didn’t know what to look for.

Have questions about how to get out of personal guarantees? Ask me in the comments section below.