Monthly Archives: April 2010

Productivity and Personalities

personalitiesThis show is inspired by Celebrity Apprentice. If you’ve been watching, you’ve probably noticed that the women just can’t get along. It’s really cost them on a few of the tasks.

There have been some serious personality clashes!

And when personalities clash, productivity will crash!

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icon for podpress  Hear George & Mary-Lynn discuss productivity & personalities on The Bigg Success Show! Click the player to listen while you read: Play Now | Play in Popup | Download

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The fine line you should not cross

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George KruegerIt makes me think about something one of my mentors said. “I knew I couldn’t like everyone I worked with. But I tried very hard not to dislike anyone I worked with.”

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Mary-Lynn FosterThat’s great advice. It really highlights that’s there a fine line you should try not to cross with your co-workers. If you do, productivity will suffer.

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There’s one sure sign that you’ve crossed the line. It’s easy to spot with a little introspection.

You’ve crossed the line if you:
1. disagree with someone on everything
2. can’t see any good in anything they say or do
3. never think they have a good idea

The worst subordinate you can have

Entrepreneurial leaders must welcome differences. The worst person in your charge is a “yes” person. You’ll get “group think” if you don’t have people who are different from you.

They often initiate the best ideas. They may keep you from stumbling. They can shore up weak spots in your thought process.

So foster people with differences to create the most value for your firm.

The ground rules

It’s important for entrepreneurial leaders to set ground rules:

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Mary-Lynn FosterAs the saying goes, “just because you disagree doesn’t mean you have to be disagreeable.” Make this clear to your whole team. Encourage constructive disagreements

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George KruegerShow them you’re serious by stressing that if someone on your team always agrees with you, you probably don’t need them. I’ve selected people because I knew they were really different than me. It’s almost always worked out great.

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One time when differences spell trouble

You need a shared vision and values. Without a shared vision, there will be conflict over direction. You won’t be focused. The result will be a misallocation of resources at best or a complete waste of resources at worst.

Ethical dilemmas rise to the top. An ethical dilemma occurs when two or more core values are at odds. Without shared values, there will be conflict over day-to-day operations.

Shared vision and values are especially important among key employees and other stakeholders in an entrepreneurial firm. They must share your vision and values to maximize your company’s productivity.

A shared vision and values help create business value. That’s BIGG success!

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00580-042910.mp3

(Image in today's post by foobean01)

The Small Business Tax Penalty

paying_taxesOur mission here at BIGG Success is to help entrepreneurs and the organizations that serve them. So we talk with a lot of small business owners as part of our work. One thing is clear:

Small businesses are still struggling. The conversations with many entrepreneurs can be pretty bleak.

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icon for podpress  Hear George & Mary-Lynn discuss the small business tax penalty on The Bigg Success Show! Click the player to listen [5:17m]: Play Now | Play in Popup | Download

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Reducing the corporate tax rate won’t help small businesses

We’ve heard calls to reduce corporate taxes. We’re not here to take a position on that.

We’re just here to say it won’t help most small business owners.

Public companies are organized as C-Corporations. So they pay tax at the corporate level. Then if they distribute the profits in the form of a dividend to their stockholders, the individual stockholders pay taxes again.

So the same money gets taxed twice.

And with small businesses, the entrepreneur may be the only shareholder!

That’s why most entrepreneurs choose a pass-through entity like an S-Corporation or Limited Liability Company. Then they don’t get taxed twice on the same money!

Many politicians just don’t understand small business

But as we’ve listened to many politicians talk, it quickly becomes clear that many of them really don’t understand this aspect of small business.

And they definitely don’t understand how it impacts entrepreneurs.

This misunderstanding results in the small business tax penalty. You might be surprised at how taxing it is!

The cause of the small business tax penalty

The penalty occurs because income at the entity level and the individual level is combined forcing the small business owner into a higher tax bracket. It’s similar to the marriage tax penalty, which Congress has now largely eliminated.

But they haven’t done it for small business owners. In fact, we’ve never really heard anyone talk about it. That’s why we’re talking about it!

The large company scenario
The best way to understand it is by looking at an example. Let’s say a large company makes $100,000 in profit after paying its CEO $100,000 in salary. So there’s $200,000 of total income.
 
We’re making a simplifying assumption that the CEO’s entire salary is taxable income. The total taxes paid between the corporation and the CEO would pay be about $39,600 at current rates.

The small company scenario
Let’s apply the same set up and the same simplifying assumption to the entrepreneur and his or her business. The small business owner (who is also the CEO) takes out a $100,000 salary and the business clears $100,000 after paying this salary.

The entrepreneur ends up paying a little over $44,200. That’s almost 12% more in taxes than the large company and its CEO paid!

The reason is that the income of the business passes through (hence the name) to the entrepreneur’s individual taxes. This bumps the small business owner into a higher tax bracket than the large corporation and its CEO. That’s the small business tax penalty.

So why don’t more entrepreneurs choose to be a C-Corporation?

Some pass-through entities allow for more flexibility. It’s also very expensive for closely-held corporations (those with just a few owners) to take profits out as dividends because they get double taxed. And they can really get slammed when they sell their business.  

This penalty really hits growth businesses hard

So entrepreneurs pay more taxes now because their business income gets grouped with their personal income. This is particularly troublesome for fast-growing small businesses that have to reinvest to keep the growth going.

And think about it …

Don’t we want small business owners to reinvest their earnings?

Isn’t that what starts the engine for job growth?

Isn’t that what leads to BIGG success for our whole economy?

What do you think about the small business tax penalty?

Direct link to The Bigg Success Show audio file:
http://media.libsyn.com/media/biggsuccess/00579-042710.mp3

(Image in today's post by GMDee)

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