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The Morning After

Wow! You really tied one on last night! Half hung over, you roll over and look at the person sleeping next to you and immediately a conversation begins in your head. "What was I saying last night? I can't remember all the people I spoke with. Gee, I hope I didn't make a fool of myself." And perhaps the most important question of all, "What do I do with all the business cards I just picked up at that mixer?"

Yes, it's the age old question: will the people you were networking with last night still respect you in the morning? Or, put another way, they were really interested in what you had to say last night when they thought they might be able to sell you their product/service, but if you left them with the impression that you were a "no sale," what will motivate them to want to meet with you now?

Hmmmmmm, didn't think about that last night either. You see, "follow up" is as much about the set up as it is about when and how you follow up.

Everybody, even you, yes you reading this right now, wants to hear music played on the same radio station, WII-FM. Now if that voice in your head is saying "I've never even heard of that station, let alone listen to it," let me assure you, you do. WII-FM is a station that plays that type of music critical to our very survival called "What's In It For Me?" As a business owner, you must always be listening for that music or you won't be in business much longer.

Understanding this fact is critical to your effectiveness in the game of networking.So many of us are so conditioned to resisting anything that even kind of smells like a "sales pitch" that we've developed automatic defense mechanisms to protect ourselves from the "pitcher." Unfortunately, in the game of networking those automatic defense mechanisms will kill most any chance you have of being effective in growing your sales and your income.

Now, does this mean that you have to suffer through somebody's 14-minute sales pitch in order to be an effective networker? Absolutely not. In fact, in the course of any given month, great networking opportunities are extremely limited. Therefore, you must not allow anyone to control that much of your time!

So, you may ask, "What should be done?" The answer is simple.

  • Introduce yourself, your company, and give your elevator pitch (30 seconds, no more).

  • Then ask what they do.
  • As soon as you have an idea of what they do, ask your qualifying questions. MAKE SURE THEY ARE THE DECISION MAKER FOR YOUR PRODUCT/SERVICE!
  • If they are, terminate the conversation and set a time to get together with them one-on-one within the next 48 hours! But you MUST leave them with the impression that the meeting is an opportunity for them to sell you! You do this by saying something like, "You know, it's so noisy in here I'm having a hard time focusing on what you're saying. Would it be possible to get together tomorrow or the next day so that you could tell me more about your product/service?" When they agree (and they will), get their contact information and set a specific time and place to meet. Then move on to your next suspect.

I believe you'll find this approach generates far more opportunities for success than "Don't sell me your product/service, but let me sell you mine!" or some variation of that.After mastering this skill, you will end up with a pile of business cards and appointments. Which brings us back to our original question: How do I follow up with all the people I just met at that mixer?That, too, has a simple answer:

  • prioritize
  • organize
  • contact your prospects with songs from WII-FM. We'll have more on those three steps in our next issue.

Want Venture Capital?

Congratulations!! You've done all your homework! You've crunched the numbers, come up with a solid marketing plan, analyzed your competition, and created a brilliant business plan. Now all you need is the money!

The best business plan in the world isn't useful for anything more than birdcage liner without the money to implement it. But ever since your rich Uncle Louie filed bankruptcy, seed capital has been hard to come by. So where do you go after you've tapped your savings, mortgaged your home, been turned down by the bank and the SBA?Venture capital companies!

But there are two problems:

  • How do you find them, and, more importantly,
  • How do you find one that has the amount of money you need, is interested in financing businesses in your particular industry, and atyour particular stage of growth?

The best way to find a good venture capital company is through your CPA or attorney, assuming they have experience in this area. Unfortunately, very few do. The second best way is through a friend or family member that has experience in this area. Unfortunately, very few do. The last option is to find your own. But since you don't generally find a large selection of them in the Yellow Pages, where do you find them?

Well, Level IV, of course!! We think our web site is one of the best kept secrets around. We've gathered together a tremendous number of resources for business owners and put them all in our web site. Everything from where to get a free business checking account, to free color business cards, to the Governor's email address, to a free list of more than 1,600 venture capital companies.

You might want to take a minute to familiarize yourself with our Business Resources pages. We have two. One has links to products and services that every business owner needs or uses at some point, all of which are discounted or completely free. The other has links to information resources that every business owner needs at some point, and many are needed often, like how do you find the zip code for Podunk, Iowa?

Go to our Business Resources page and you are 2 clicks away from the answer. You'll also find a link to get the names and addresses of more than 1,600 venture capital companies.

Now the company that provides this information is clever. They give you the company name and address for free, but, if you want the name of the contact person, that's extra. Want to find out what products or industries they fund?

That's extra, too. Want to narrow your search by what stage of growth they fund? That's another option. And so on. In the end, it can cost you a few hundred dollars to narrow down your search to the right companies for your particular situation, but it may be worth it.

Start by going to our Business Resource Links page and then click on the appropriate link. Then you can decide if you want to do your own legwork or pay them to do it for you.

Good luck!

Regarding Money… (Part 1) by Robert Chun

We have been taught growing up that money is a medium of exchange, or, more specifically, a method for measuring and tracking the value of an exchange. Some have said that it is scarce and limited. Others have said that it is the root of many things. The number of definitions out there is staggering.

But I don't think any of these provides a complete definition of money - at least not the definition that I want.

Why? Because I think if we knew what it really was, we would have control over it and be able to make as much of it as we wanted. You would literally be able to make it out of thin air. (Ok, maybe not thin air but you could come close.)

So in this column I am going to make up another definition of money. If I am successful, I think it will give you power over money. Now that would be interesting, wouldn't it? So these are some of my observations and thoughts:

If you and I were flies on a wall watching what happens with money, we would see humans hanging around doing some strange things.

For example, we would see two or more people talking. Then those people would shake hands or write on a piece of paper. Then one hands the other a piece of paper or metal that is intricately created. There would be activity. The person that receives the paper does something for the giver. This would be happening everywhere across the globe. Perhaps in different sequences or in different sized paper or metal, but this phenomenon we would see over and over again.

As a fly, we would not be able to make sense of it. But as a human being, we could probably figure it out.

One person might be making a proposal to trade something. It might be about exchanging one magazine for five dollars or his sheep for three chickens. It might be about fixing something or moving something in exchange for something else.

But what got exchanged?

Many of us would say that what was exchanged was goods and services. Others might say goods for experience. And they would be correct.

But what else was exchanged?

Take a few moments and see if anything was left out. If we spent some time talking, you would find that we forgot to include the intangibles. Intangibles? Yes, non-physical things. Intangible things like promises, requests, value, trust and view points as well as future and dreams. How does all that fit into this conversation?

The answer to that question and many more in Regarding Money… Part 2.

More Money In Your Pocket Every Month

As a business owner, the money you end up with every month, and ultimately the very survival of the business itself, depends on making the right choices. The choice of what to buy and what not to buy, the choice of who to hire and who to fire, the choice of what business to take and what to avoid, the choice of when to expand and the best way to do that, and finally the simple choice of what to do, what not to do, and which to do first. The better your choices,the more money you will make every month.

If only there was a way to consistently make the right choices and a way to take the stress out of seemingly life and death decisions. Well there is. And you've had the power to make them all along, Dorothy. Just click your heals three times, grab Toto, and read on.Technical decisions aside, one of the greatest advantages of being self-employed is being able to choose what you're going to do and how you're going to do it. But this advantage is also one of the biggest disadvantages. This is because our decision-making skills are ultimately a product of a whole host of things, including:

  • our past experiences
  • our education
  • our cultural and spiritual upbringing.
These things often leave us ill-prepared to make sound decisions when the heat is on, or without the ability to make them without creating a concomitant need for a quadruple bypass. (Now, if only you could remember where you left those ruby slippers!)Too many business owners believe that efficiency is the answer. That if they simply focus their decisions on making sure everything is as efficient as possible, the business will automatically be successful.

This, unfortunately, is not the case.

But in order to gain real power in this area, you must see things in a completely different way, adopt a fundamentally different paradigm. Albert Einstein once said, "We cannot solve problems at the same level of thinking we were at when we created them." I had to read that three times before I really got what he was saying, and then it stuck with me for life.

Until we really accept that it is our current way of thinking and doing things that has us stuck where we've been stuck for as long as we've been stuck there, we will never get unstuck!

Making the right choices in our business does not involve efficiency. That's right. I said that if you focus on efficiency, you will not get where you really want to be!You must instead focus on effectiveness!

For example, let's say you were climbing the ladder of success, one rung at a time. Your arms and legs were moving in one fluid motion. You were pacing yourself to be sure you didn't run out of energy. Only to get to the top and discover the ladder was leaning against the wrong wall

You were being really efficient, but not very effective.

So how do we distinguish which choices are the most effective for our business? By following a few simple steps. Namely:

  • Knowing first where you are going
  • Knowing the steps necessary to get there
  • Prioritizing which steps are the most important
  • Organizing which must be accomplished first
  • Consistently checking to make sure you are on track.

If you make a habit of following these steps, the right choices will seem obvious, your effectiveness will skyrocket, and so will your income. Unfortunately, this is not a habit most of us have formed. This is why we provide our Priorities seminar. One of the foundational principles taught in this course is the distinction between efficiency and effectiveness and how to use that to move your business forward powerfully. Every participant that applies the principles taught reports a decrease in stress and a dramatic increase in income.

The Priorities seminar also provides a fundamentally different system of time management to support, manage, track, and prioritize your choices. This system is unlike anything you have ever been taught about managing time. It is so powerful at producing results, its principles have been taught to more than 10,000 of the world's corporations, and many make attendance at one of these seminars mandatory for all new employees.If you haven't done so already, we encourage you to read more about Priorities

If you haven't done so already, we encourage you to read more about Priorities. You can find it on our Seminars page or by clicking the link below. And after you've read about it, ask yourself what would running your business feel like if you had the security of knowing with certainty that you were being highly effective in your choices every minute of every day? Ask yourself, how would the second half of this year be different from the first if every choice you made for the rest of the year were the right choice? And then register for the seminar.


Free Advice for Business Owners at One-Day Tax Fair

Are you a business owner who is feeling overwhelmed by tax laws and reporting requirements? Perhaps you're unsure if you can claim exemptions, or maybe you just need help recovering funds from a bad check someone passed on to you. Well, help is on the way.

John Chiang, Fourth District Member of the State Board of Equalization, announced recently that several federal, state, and local government agencies will team up to offer a free, one-day tax fair to Los Angeles area small businesses.

Here's your chance to attend a variety of free seminars and talk to the experts. Representatives of the BOE, Employment Development Department, Franchise Tax Board, Internal Revenue Service, Small Business Administration, as well as other local, state, and federal agencies, will be present to answer your questions. As a small business owner, you won't want to miss this opportunity.

Date:  Friday, June 25, 2004
Time: 9 a.m. to 2 p.m.
Place:  West Los Angeles College
4800 Freshman Drive
Culver City, CA 90230

Business Affairs by Kevin Khalili

In our last issue we introduced the five different ways one can set up and own a business. Listed later in this column will be a side-by-side comparison of each type of business structure, including the pros and cons of each. Choosing the right one for your business is a combination of understanding the advantages and disadvantages of each type, the nature of your business and its ownership, as well as what your business plan says your future will be, e.g. one owner, more than one owner, publicly traded company, one location or franchised in every city, etc., and then making the best choice. Notice we did not say perfect choice. This is because the perfect business structure has not yet been invented.

Making the best choice requires careful consideration and is not as simple as one might think. There is a great deal of misinformation out there about business structures, and people with a vested interest in pushing you towards one form versus another.

For example, there are companies referred to as "corporation mills." These are businesses that will sell you on the idea of forming a corporation as a magic pill that will make all of your problems and fears go away. "Like what?" you ask? Well, your fear of being sued will go away because of the liability protection offered by incorporating. Your bad credit won't matter anymore because the corporation can establish credit of its own. Your tax problems will go away because the corporation can take all kinds of special deductions.As with any good scam, there is always a certain element of truth in their words, but the devil is in the details. For example:

  • It is true that a corporation can establish its own credit. However, what they don't tell you is that most companies have been burned so many times by shell corporations (companies set up for a specific purpose, like to buy a lot of goods and services on credit and then shut them down as soon as the bills come due) that they have developed policies that they will not extend credit to any corporation until at least 2 years after the date of incorporation with a personal guarantee. What's a personal guarantee? That's when you personally guarantee to pay the debts of the corporation should it default on its obligation to pay. This means that they check your credit first. And if you have lousy credit, no sale, no credit.
  • It is true that a corporation provides liability protection, i.e. protection from creditors. However, unless all the strict rules and procedures required of corporations are adhered to completely, your liability protection is non-existent. A good lawyer will use any deviation to "pierce the corporate veil." Something as simple as leasing an office or a car and the landlord or finance company requires you to personally guarantee the obligation will be enough to eliminate any protection you might have enjoyed from incorporating.
  • It is true that a corporation enjoys many wonderful tax deductions and many corporation mills will give you a long list of them to prove their point. But so does every other business structure, including a sole proprietorship. There was a time that corporations could take certain deductions, like health insurance premiums, that sole proprietors couldn't, or at least not fully. But in the last decade or so, congress has eliminated the disparity between the two almost entirely. Health insurance premiums are now fully deductible for every form of business, including sole proprietors. Sole proprietors and other business structures can also offer the same great tax-deductible retirement plans formerly offered only by corporations.

After reading all of this, one might be left with the impression that incorporating is a bad idea. To the contrary, there are many sound reasons for incorporating. Just remember, the benefits come with a price… in dollars, time, and, for some people, hassle.A special note: the sub-chapter S type of corporation is a special animal that can provide significant tax savings. But again, special circumstances apply. Check with your advisor to see if this option will benefit you.

The chart below was designed to provide a basic comparison between the five most common types of business structure. Additional information on these structures can be found by clicking on the link provided on our

Business Resource Links page.

Sole Proprietorship One Pass-through for federal and state tax purposes (income and losses pass through to the owner and are taxed by the IRS at the personal level.) Unlimited Is very cheap and easy to start. However, your personal assets have no protection from creditors. All profits are subject to self-employment tax (15.3%).
Corporation Unlimited number of owners (called shareholders); no limits on types of shares (called classes of stock). Profits get taxed at the corporate level and dividend income (a distribution of corporate profits) at the shareholder level; profits and losses stay at the corporate level. Limited Your liability is limited to your investment in the corporation. However, profits are taxed twice and strict formalities must be adhered to creating added administration time and expense.
S Corporation Up to 75 shareholders, however, corporations and trusts (like the ones most commonly used for estate planning) may not own shares; only one basic class of stock Pass-through for federal and state tax purposes (income and losses pass through to the owners and are taxed by the IRS at the personal level.) Limited Your liability is limited to your investment in the corporation. It is possible to save thousands per year on self-employment taxes. However, there is a minimum annual tax of $800 (in California). And there are restrictions on who can own shares, which can cause challenges when selling or doing your estate planning.
Limited Liability Company Unlimited number of owners (called members); no limits on types of shares (called membership interests). Pass-through for federal and state tax purposes (income and losses pass through to the owners and are taxed by the IRS at the personal level.) Limited Your liability is limited to your investment in the company. It is possible to save thousands per year on self-employment taxes. It provides the most flexibility of any business structure. However, California levies an annual gross revenues tax, the minimum is $800 and can go as high as $4,500.
Partnership 2 or more owners Pass-through for federal and state tax purposes (income and losses pass through to the owners and are taxed by the IRS at the personal level.) Unlimited Is very cheap and easy to start. However, the personal assets of all partners have no protection from creditors. All income taken by active partners is subject to self-employment tax (15.3%).


This publication is NOT INTENDED TO SERVE AS A SUBSTITUTE FOR LEGAL ADVICE. Please consult with a licensed attorney if you require legal advice.

Open Forum

Entrepreneur: I'm developing a sales plan for my business. What elements should I include?

Level IV: OK, my sales plan...Let's see, it's around here somewhere...Is it the first week of June already? It's the first week of the last month of the second quarter, and I don't have my sales plan written! Oh, thank you for giving me a wake-up call. I totally forgot to write my 2004 sales plan!

How about you and I create our battle plan together? I guarantee that by the end of this column, you'll know the "who, where, why, when and how" that will drive your sales work so you'll exceed your quota for this year.

A Sales Plan Defined

Our sales plan should be short, simple and to the point. It's basically our strategic and tactical plan for acquiring new business, growing our existing book of business and making and/or exceeding our sales quota within our sales territory. Typically, a healthy mix would include 75 percent of your sales quota from new business and 25 percent of your quota from add-on business from your existing customers.

There are four basic parts of a sales plan:

  • New business acquisition strategies
  • New business acquisition tactics
  • Existing business growth strategies
  • Existing business growth tactics

Before you start, you need to get a handle on some definitions:

Sales quota: This critical element of your plan sets the tempo of your efforts throughout the year and provides quarterly, monthly, weekly and even daily sub-goals for you to achieve.

Sales territory: This refers to the geographic area, and includes a list of named accounts or a specific market niche you have been assigned to in which you are to sell your products, services and solutions

Strategies: This is the plan necessary to accomplish your goal.
Tactics: These are the steps necessary to carry out the plan.

New Business Acquisition Strategies and Tactics

Include the following four strategies in your sales plan. Remember, these strategies are all designed to capture new customers and new market share. Important note: The strategies are numbered and the tactics are italicized.

  • Send no less than 50 letters of introduction to new prospects each week.
  • Make no less than 50 cold calls of introduction to new prospects each week.
  • Make no less than 20 face-to-face contacts with new prospects each week.
  • Create no less than 10 proposals each week.
  • Make no less than five presentations each week

Important note: Your numbers will, of course, vary. What's important here is that you calculate exactly how many contacts you'll need to make in order to achieve your sales quota. At the end of this column you will find four easy steps that will help you calculate your "prospecting ratio."

2. Increase awareness in the marketplace of my products, services and solutions.

  • Join and participate in no less than three professional associations and organizations in which my best prospects and customers belong.
  • Attend any and all trade shows and conventions that my best prospects and customers attend.
  • Purchase the mailing list of these associations and organizations and send either a postcard or a letter of introduction.
  • On a regular basis, contribute articles and white papers that address the interests and concerns of this population.

3. Increase awareness in the community regarding my products, services and solutions.

  • Attend all Chamber of Commerce networking events.
  • Volunteer to speak at no less than 12 various organizations in my territory that have an interest in my products, services and solutions.
  • Volunteer my time at three nonprofit organizations.
  • Join and participate in no less than three networking groups, such as Le Tip or Business Networking International. Note: Watch for Level IV's networking group, which will begin this fall.
4. Obtain referrals from all my new customers.

  • Within 30 days of delivering my product, service or solution, I will ask each of my new customers for at least three names and phone numbers of their personal acquaintances that might have a use for my products, services and solutions.

Include the following two strategies in your sales plan. Remember, these strategies are designed to capture high-margin, add-on business from your existing customers. Important note: Here again, the strategies are numbered and the tactics are italicized.

1. Create a touch-point program.

  • Contact each of my existing customers no less than once per month with a new idea they cannot get from anyone else.
  • Create a noteworthy monthly newsletter.
  • Create a user-group within my existing customer base.
  • Create some sort of Web-based seminar series for my existing customers.
  • Take at least three existing customers to lunch each month and invite a new prospect to join us.

2. Prospect within my existing customer base.

  • Knock on no less than three new doors, departments and divisions within each of my existing customers' businesses.
  • Ask each of my existing customer contacts to introduce me to one other person within their organization.
  • Personally meet the top executive at each of my existing customers' businesses.

The Time Is Now

The final part of your sales plan must detail the timeline for implementation of each of the tactics in your sales plan. It's best to show a week-to-week schedule. Once you've created your sales plan, don't file it away! Keep it handy and revisit it and revise it on a regular basis. Stay on track with your plan, and you'll stay on quota.


Step One: Targets

Monitor your own sales work for one month (or whatever period is appropriate in your industry) and answer these questions:

  • A. If you contacted 100 suspects (via phone calls, mailings, in-person meetings or a combination of these), how many prospects would result? _________
  • B. How many of the prospects you identified in A. would turn into hot leads? _________
  • C. How many of the hot leads you identified in B. would you turn into actual sales? _________

Step Two: Ratio

Divide the number on line C by 100. The result is your ratio. _________

Step Three: Goals

  • 1. What is your yearly quota or sales goal, in dollars? _________
  • 2. What are your projected sales totals, in dollars, from current customers? _________
  • 3. Subtract item 2 from item 1 to yield the amount of new sales dollars needed this year. _________
  • 4. Enter the dollar amount of your average sale. _________
  • 5. Divide item 3 by item 4 to yield the number of new sales needed this year. _________

Step Four: Your Bottom Line

Divide the number in item 5 by the ratio you calculated in Step Two. _________

Bingo! You're a CPA! Well, maybe not, but this is the number of new suspects you'll need to contact in the coming year to reach your yearly target. Now divide that number by 50 (we figure you'll want at least a week or two of vacation), and you'll know how many suspects you must contact each week to make your quota.

Our thanks to Tony Parinello for his contributions to this column.