Business Management

I’m undertaking my first attempt at daily blogging for the month of November. After 12 years of blogging (that’s right, I had my first blog in 1998, before they were even called blogs) I hope I will be able to stick to blogging daily for just one month.

Tonight I am prepping to teach my Intro to Marketing class about pricing and its role in marketing strategy. Pricing is a funny subject for we Canadians, loathe as we are to discuss money or toot our own horns. Most businesses I work with are chronically underpricing their market offerings. I struggle with pricing my own work, caught between the desire to be accessible and fair for businesses that need me, and the desire and (some tell me) right to be paid in recognition of the value clients get from the work. Consulting fees, like lawyers fees, seem awfully high to a small biz owner such as myself. Just because “everyone” charges a certain rate doesn’t make it right, my integrity tells me.

So instead I approach my pricing along the lines of what the textbook describes as “value-based pricing.” I charge based on what I believe is the value to the client. That’s based on the size of the client and how integral the work is to the core functions and success of the business.

It’s still not a scientific formula, but it’s something I can live with, and feel consistent with my values.

How do you determine pricing in your business? Do you have questions about pricing strategy that I can help you create answers for?

Further to my earlier post about doing it yourself, I started delving a bit into tax planning. I have a humdinger of a corporate tax bill coming up (the price of success) and was wondering if I could reduce that by declaring a bonus for myself and paying it out as regular employment income. I wanted to see what the overall effect of that would be on my total tax situation.

The Canadian Tax Calculator was a very useful tool for me to model different personal tax scenarios for myself. I tested out the difference between paying dividends and paying a bonus, adding it to the employment income I make from teaching at Camosun College. In addition, I calculated roughly what my tax bill would be inside the company if I paid out a bonus to reduce the corporation’s year-end profit, factoring in the employer’s share of EI and CPP. Then I looked at the difference between the scenarios, in terms of how much total moolah was being paid in income tax, and assessed my cash flow situation to determine whether my company could weather the strain of one big whopping tax bill, or a series of smaller payments in the last 4 months of the year.

The actual numbers are not the point of this… I’m not going to tell you what’s working for me, because that might be construed as tax advice and I am completely unqualified to do that. I just wanted to tell you about that super-handy link, and also demonstrate that when it comes to tax planning, there is SO much to take into consideration. I’m pretty ballsy when it comes to making assumptions that I know enough about taxes to do this math for myself. Your mileage may vary!

I haven’t yet begun actually doing my corporate taxes, but since I use Quickbooks and have it set up with each account mapping to a tax line (that’s a function in Quickbooks’ account setup form), I suspect it will not be hugely difficult. I have done corporate income taxes once before and with a program like Quicktax for Business, it’s not that much of a headache. Also, the marginal savings in taxes do not make up for the accountants’ fees. When ya make money, ya gotta pay a foundational level of tax. That’s all there is to it. If I wanted to be tax-free I’d go live in the Caymans.

Hmm. There’s an idea.

A friend of mine is idly looking at new job opportunities, and drew my attention to a posting which included a requirement I haven’t seen before: when asking for references, it specified that one reference must be from a current manager or supervisor. There are two major flaws in this requirement, and both of them could get an employer into trouble:

1. This is discriminatory. It limits job eligibility to those who are currently employed, which is not a bona fide requirement for the role. There are many people who could be perfectly qualified for the position but, for one reason or another, not have a supervisor they can ask; more likely, a good candidate might be out of a job due to being on parental leave, having had an injury which put them onto disability, having quit a previous job due to a toxic environment. There’s an underlying assumption, with this requirement, that anybody worth employing for this job is already employed by somebody else. This is, in a nutshell, discrimination on the grounds of employment status.

2. In order to get a reference from a current manager, two conditions need to be met: a) your current manager has to like you enough to give you one despite the fact that you’re planning to leave them; and b) you have to be willing to jump ship from an employer which likes you enough to give you a reference. Either way, it’s kind of like looking for a new spouse among adulterers – chances are, you’re going to be cheated on too. Do you really want to hire a person who’s willing to jump ship from a happy place? What sort of corporate culture does that imply?

If you manage to get good, qualified job candidates in response to your posting, asking them to provide recent references (i.e., relating to their work in the past two years) is useful information. Expecting somebody to produce a reference from their current employer is going to limit your choice of candidates unnecessarily, and possibly lead to some trouble.

You’ve heard it before: Forming, Storming, Norming, Performing. The four stages of team development, right?

This old chestnut is rolled out by teachers and facilitators everywhere (myself included) to help teams understand the changing dynamics as they get used to working together. On anything from a group class project for college to a change management team for a big client project, I’ve seen evidence of these four stages. Storming especially likes to come up and smack people in the face, which is especially demoralizing if you think you’re ready for it and the “storm” comes from a totally different direction than you expected.

In the most recent issue of the International Association of Facilitator’s IAF Journal, a scholarly publication focused on facilitation, there’s an article from 1977 in which Bruce Tuckman reviews his famous model and looks at the evidence/studies that support it. There are some interesting nuances in the review article that were new to me, so I thought I’d share them here. read more…

In the April 2010 Business Examiner newspaper (Vancouver Island edition), there is a feature on the Courtenay/Comox/Cumberland success in attracting visitors and building a legacy to outlast the Olympics. In a nutshell, Comox Valley put themselves out there as a training destination for National Olympic Committees, and the NOCs responded. Comox Valley invested in infrastructure (such as a biathlon range) and had their local schools act as welcoming committees for various national teams. The efforts paid off, with 14 Nations, 33 teams and over 350 athletes and coaches. Seven National Olympic Broadcasters visited the slopes of Mt. Washington and the Comox Valley community and covered the story of the little community that DID.

I can’t help but contrast this to what I’ve seen from Victoria’s tourism community. Tourism Victoria offered a series of media story suggestions on their website, but the only major broadcaster who I heard visited was NBC’s Today Show: they flew over, had tea at the Empress, fish at Red Fish Blue Fish, then flew out again. Didn’t get beyond 500m of the harbour. I heard from tourism operators that the Olympics pretty much killed their business: the President’s Day weekend is usually a busy one, but the streets were empty. Business was down from last year.

Victoria played host to the Chinese curling team, but instead of having an exhibition match against another Olympic team, they played against local Victoria teams… an interesting game for local curling fans to be sure, but not quite the fireworks of the China-Sweden exhibition hockey match in Comox. Our pubs and schools and gathering places showed TV broadcasts of the big events while they were on, but there wasn’t any kind of lead-up or welcoming of the world here.

Shame on us. I think what happened is we rested on our laurels, and squished them in the process. So what if we’ve got the Empress? Who cares if we have quaint, quiet city streets with old-world charm? That’s not what Olympic visitors or National Olympic Committees were after. We completely failed at understanding our target customers’ needs and responding with something relevant to THEM. We have just as many (if not more) arenas for skaters to practice in, yet the big hockey teams were up in Comox, because we didn’t sell something relevant to the market.

Victoria assumed that because we’re cute and charming and oh-so-close-to-Vancouver, we’d get plenty of visitors, and we got complacent. We fell victim to the old “if you build it, they will come” philosophy and boy did we lose out as a result. Let this be a lesson to small businesses: it’s not about how great you are, but how well you anticipate and respond to your customers’ needs. That is what Comox Valley did, and they are winners through and through!

What do you think Victoria should have done to make sure we capitalized on the Olympic Games?

Want a tool that will help your employees stay productive and organized? Want to make sure your customers always get a consistently great experience when they do business with you? Try an operations manual. Here’s why… and how! read more…

Many entrepreneurs believe that succession planning is something that belongs in the corporate executive suite of large companies. This is only partly true. The initial founder of a company will always have a deep passion for the business that may be hard to find in anyone else, but having a replacement ready to step into your shoes is not just possible but a very good idea to ensure the continued growth of the business! read more…