Don’t Make These Mistakes With Your LLC or Corporation

A business entity can provide personal liability protection for its owners. The problem is that many people start business without proper instruction on how to run and manage agreements between parties, agreements with customers, internal paperwork, cash controls, voting rules, state and Federal reporting requirements and a host of other issues. In fact, we have found between 20 to 25 actions, behaviors, or neglected tasks which commonly cause a business structure to be forfeited and can result in personal liability for the owner or owners. Here are 5 of them: 1) USING THE BUSINESS FOR FRAUDULENT ACTIVITIES: YOU CANNOT, SHOULD NOT, AND SHALL NOT USE YOUR BUSINESS TO CHEAT OR DEFRAUD! For example, John Smith gathers money from investors claiming that he will develop a new product for his company. He never had planned to use this money for product development. He is sued by the investors, but John claims that his personal assets are protected since he was acting as the president of his limited liability company. No court will honor the limited liability company since fraud was involved. His personal assets and business assets will be at risk. You may think that since this is an egregious example, it won’t ever happen to you. However consider the fact that many deals struck with the so-called ‘motivated sellers’ could give rise to a lawsuit under your state’s Deceptive Trade Practices Act (DTPA) or similar statute. Sometimes the line is not so clear. One bit of wisdom is to make sure that your agreements are fair: a. You also can’t be wholly unfair or flagrantly one-sided when dealing with customers. A court can always look at a one sided transaction and either decide against you. Even worse a judge could declare that you are using the business to promote unfair dealings. This is bad news for you! b. ASK YOURSELF: Would you want to be the buyer/customer on the other end of your deal? Despite popular conception you can structure ‘win-win’ deals with motivated sellers and make money. Ever hear of karma? Everything you do to or for another person will one day be done to or for you…so be fair! 2) FAILURE TO RESPECT THE BUSINESS AS SEPARATE FROM ITS OWNERS. YOU SHALL NOT MIX FUNDS FROM BUSINESS ACCOUNTS WITH YOUR PERSONAL FUNDS, ACCOUNTS, ETC. DO NOT USE COMPANY MONEY TO BUY PERSONAL ASSETS, GROCERIES, ETC. Simply put, if you do any of these things routinely (or perhaps only once) then your business structure is not likely to hold up in court. If you think this is another easy one…then WATCH OUT, because there are other more complex issues relating to the use of business and personal assets in the business. For more information see some of our top-rated courses. 3) INSUFFICIENT CAPITALIZATION: THE FAILURE TO PROPERLY CAPITALIZE THE BUSINESS. IN OTHER WORDS, A LACK OF RESERVES AND/OR INSURANCE COVERAGE. If your business does not have enough capital and/or insurance to cover operating expenses and potential liabilities then a state court will likely ‘pierce’ the business entity and hold the owners personally liable. Why would a court do this? The reason is to ‘find the money’. Your business must have enough insurance and/or savings to cover expenses, liabilities, and obligations. The amount of capitalization generally refers to the total value of assets (equipment, cash, etc.) in the company and the amount of insurance coverage. This is another COMPLEX area because you may need more or less ‘capitalization’ based on your business type. A general rule is: The more you deal with the public, the generally the greater your required level of capital. 4) FORGETTING TO FILE STATE REPORTS – Your secretary of state’s office will require you to keep up with reports and state taxes (sometimes called franchise taxes and/or business privilege taxes). If you don’t keep up with these reports and/or taxes (even if nominal amounts are owed) your business privileges will likely be revoked. Guess what privilege goes first?: The personal liability protection. 5) OTHER FORMALITIES – These include meetings, paperwork, required records, proper roles and obligations among the parties, and transfers of ownership interests, and more. It is very rare that we see full step-by-step and easy-to-follow details on creating ‘iron-clad’ records in these areas. For state liability protection and the ability to satisfy IRS auditors you need to understand these rules! The list does not stop here, because we have found between 20 to 25 areas which are common traps for the business owner. While we have covered 5, many of the others are very easy to miss but just as important. Please make sure you get proper instruction on how to run your business entity after it is created! The true ‘lost art’ is learning how to maintain the protection of your LLC or corporation. To learn more about the remaining traps, mistakes, and errors, which entity may be best for your business and how to file, create, run, and maintain your own ‘iron clad’ LLC or corporation, please see Mr. Barazandeh’s, Incorporate for Wealth ™ and Wealth Building LLC ™ courses at www.theinformedinvestor.com and www.attorneysecrets.com I want to wish you all the best in your business and email me if you ever need help: taxenterprises@yahoo.com

Liar, Liar, Pants On Fire…"Liar Loans" Lead To A Spike In Mortgage Foreclosures

It starts out all so innocently, the loan application (1003) is filled out while gathering the income and debts verified through credit reports and mortgage payoffs. Then the Debt To Income Ratio (DTI) is calculated dividing the debts including the new housing expense by the income and wham, it happens. The DTI is over 60%. Conventional loan guidelines historically have been around 28% for housing expenses including taxes, insurance, private mortgage insurance and homeowner maintenance fees. The total debt ratios had been around 36% for all monthly debts including the housing expense. With computer modeling and automatic approvals some DTI ratios have been allowed to float up in some cases to 50% to 60% if the borrower has lots of assets and the loan is on a full doc basis. As time passed, more and more hybrids began to show up. Mortgage Brokers were inundated with this new loan product called Stated Income. Simply the borrower would state their income on page two of the 1003 loan application and ratios would fall within lender acceptable limits. The original thinking by lenders were grounded in the premise that many busy well to do borrowers didn’t have time to compile tax returns and a litany of proof of their assets. This especially applied to borrowers who owned a multitude of income producing properties or had filed for extension on filing a personal or corporate return for a self-employed borrower. This was a very popular plan and billions of new mortgage originations were sold using the Stated Income or other derivations of the basis plan. It was great for self-employed borrowers who found it difficult to compile in a timely manner all the documentation for a fully documented loan which would use tax returns and a year to date statement from a CPA. Later on, due to the heavy volume of mortgage business and a desire on part of lenders to expand this popular niche into other areas W-2 wage earners were allowed to state their income as well as those on fixed income such as social security, disability and pensions. For a few years this seemed to be ok. However, as time went on, and the economy in various parts of the country began to slow down, borrowers with stated income loans began to have an inordinate amount of foreclosures. At this time, Stated Income mortgage loans rival the Option ARM for frequency of foreclosures. Fraud reared its ugly head as participating players in the loan process were structuring deals with phony baloney borrowers who didn’t exist. These phony buyers are called “straw buyers” by prosecuting attorneys. Many times the first payments were never made. Most mortgage brokers and lenders have buy back agreements from the secondary markets so when a loan goes bad the originator is on the hook to buy the loan back. If fraud was involved, that shop many times already closed up and had run away with any ill-gotten gains together with the rest of the crew who were working the scam. Those players are prosecuted and serve prison time for their sins. The other borrowers who were just trying to get a loan to pay off debts and a few months down the road after the new mortgage was in place were not able to make their payments. A Notice of Default is sent to the borrower with foreclosure action following when mortgage payments are not made. In a foreclosure process, the lender holding the bag goes back through all the files looking to perform an autopsy on the loan to determine what happened. Every piece of paper is examined, verifications are double-checked with a high powered microscope. All who committed a fraudulent lending practice are sought out and demands are made for redemption and loan buy back. Some enterprising participants had provided false bank statements and other loan documents, which were in fact fraudulently created on a fine computer word processor. The fix had been in. Many of these stated loan products were all the rage then the fraud hit the fan. Borrowers could not afford the payments and did not even come close to having enough to even live on. Major changes are afoot. Many mortgage brokers exercise much self-discipline and will not even consider a Stated Loan with someone on fixed income. Where is the “real” money going to come from? Guidelines are tightening well after the horse has escaped from the barn. There is a web page called www.salary.com that gives the high and low range of income for various occupations. Lenders will immediately check this to see if the Stated Income is within this range. In the past, many times, these loans were done with a wink. This is no longer the case. Recently, Form 4506, which is an IRS form that a borrower signs allowing the lender to check with the IRS and determine income from the borrowers tax returns and W-2s if any. Formally this verification process with the IRS was a time consuming endeavor, but this is not the case anymore. For like $4.00 per file, a lender can access, with the borrower’s written permission, an online web site and access the IRS site to verify income. Many lenders will not close the Stated Income loan without an IRS Form 4506 being signed. Many of these loans are sold into the secondary market that helps keep the mortgage money supply flowing. As more and more foreclosures ensue from the Stated Income Mortgage Products there will be a major shake out with tightening of regulations and a search for any player, including the borrowers, who may have had a hand in this “Liar Loan” product. The fallout is already underway. What is a borrower to do? For one, look for mortgage products that do not require stating a phony income number. A No Doc loan requires stating No Income on the 1003 loan application. A No Ratio does not require income to be listed but verifies employment and term on the job. It has to make sense. The days of loose lending may be over for many. Bottom line, if it doesn’t make sense, it probably is not a good loan. Think long and hard about using a Stated Income loan product. If it conforms with what it originally designed loan program for the busy borrower with lots of cash and assets and no time to pull things together, great. If not, think about passing for some other loan product. It could impact your walk around freedom. A negative loan experience will certainly impact a borrower’s credit and help precipitate a long and painful recovery from this credit blemish resulting from a foreclosure. Find another mortgage product to achieve your financial goals. Dale Rogers http://www.brokencredit.com http://www.sellerhelpsbuyer.com

Top 10 Holiday Tips For Career Success

Every year as the holidays approach, most jobseekers and career changers make the mistake of halting all their efforts. They believe there is no point in pursuing new opportunities during the holidays, and that nobody is making hiring decisions until January, so “why bother?” Many decide to do absolutely nothing from mid-November to the second or third week in January! Making these kinds of assumptions about the holidays is, again, a huge mistake! When it comes to the holidays, I suggest you become a "contrarian" – and do what all the other job seekers are not doing. Since most of them are taking an extended break, this opens up real opportunities for you! The reality is that the holidays are an excellent time to develop and create new contacts for your job search or career transition. Many companies are completing their budget planning for the next fiscal year. This is often the best time to get in front of hiring managers to create a position for you next year. Many managers have to fill openings early in the year or they may lose the budget for that position. Also, once year-end bonuses are paid, a predictable percentage of employees will leave their jobs, creating new vacancies! Here are 10 career-savvy tips for the holidays from Ford R. Myers, President of Career Potential, LLC, an executive career consulting firm based in Radnor, PA: 1. IT’S ALL ABOUT RELATIONSHIPS Business is all about establishing relationships – and relationships are developed in social settings! During the holidays, most people are naturally more convivial and generous in spirit. There is simply no better time to solidify existing relationships and forge new ones! 2. TUNE IN TO THE NETWORK There are many networking events in November and December – in your social life, in your community, and in your professional circles. Think of all the companies having holiday parties. Many charities have their last fundraisers of the tax year in November and December. Book sales, holiday fairs and other celebrations make this the best time of year for productive networking! 3. SMALL TALK REAPS BIG BENEFITS Most professional associations have a holiday party for their December meeting, with a more informal atmosphere than the formal presentations held throughout the rest of the year. Do not bring a resume to these events. Create a simple, tasteful business card with your name, phone number and e-mail address. Be prepared to make interesting small talk to establish new contacts. Ask the people you meet about themselves, their work, and their interests. Remember, everyone’s favorite subject is “themselves!” 4. CONVERSATION STARTERS AND STOPPERS Prior to a social or networking event, prepare at least three neutral questions you can ask, such as: * How do you know the host, the company, etc.? * What made you decide to come to this event? * What other organizations in this industry do you belong to? When you find it’s time to move on and talk with someone new, you’ll need some phrases to help you transition during the event. Here are some good “exit lines:” * I’ll let you go now, so you can continue circulating around the room. * I’ll stop monopolizing your time so you can meet some other folks. * It was great speaking with you. I’ll follow up as we discussed. 5. VOLUNTEER There are more volunteer opportunities around the holidays than at any other time of year. This is a good way to help other people, feel good when you need a boost, have a renewed sense of purpose during your search, and meet other professionals. Volunteering also gives you something interesting to discuss with the new people you meet! 6. CALL PEOPLE Use the day after Thanksgiving to make both follow-up calls and cold calls. You’ll find that whoever is at work that day will not only be available for a conversation, but will be grateful to speak to someone! If there are people who you’ve been having a hard time reaching, be sure to take advantage of this unique opportunity. 7. SEND HOLIDAY CARDS Pick a seasonal, nondenominational theme – usually a depiction of a winter scene is best. This is the time to send cards to everyone on your “career list,” including executive search firms, Human Resource professionals, and hiring managers with whom you have interacted over the past year. Don't write about your job search in the card. Send your cards early enough for people to remember to invite you to their holiday get-togethers, and to send you a card in return! Be sure to include your contact information with the card, so the recipient can also reach you. 8. ‘TIS BETTER TO GIVE THAN TO RECEIVE Remember the old saying popular at this time of year, “Tis better to give than to receive.” This is certainly true when you’re attempting to connect with people during the holidays. The fastest and most effective strategy for getting help is “give to get.” Ask the people in your network if you can be of help to them in any way, or if there is anyone who they might like an introduction to. Become a real “connector,” and in turn, you will become “connected!” 9. PLUG IN AND TURN ON Technology has come a long way. Use the holidays to connect and reconnect with people on business networking web sites, such as http://www.linkedin.com, http://www.ryze.com and http://www.ecademy.com. Connect with local businesspeople in cyberspace and then take your connection “live” with a face-to-face meeting. You can also use these web sites as a great system to follow-up and keep in touch! 10. BECOME AN OPPORTUNITY MAGNET At holiday time, some jobseekers tend to become overly negative or cynical during what they perceive as a “lull” in their career transition. Don’t fall into this trap. Get into positive action precisely when others are “giving up” until early next year. Think and speak positively, and you’ll become a magnet – ready to attract, interview, and “hire” your next employer. If you’re currently in career transition or looking to move-up at your organization, these strategies should give you a new perspective on the holidays! Instead of “taking a vacation” from your career development activities, take full advantage of this overlooked opportunity to make real progress in your quest. Then, you’ll really have something to celebrate! _____________________________________ Permission to Reprint: This article may be reprinted, provided it appears in its entirety with the following attribution: Copyright © 2006, Ford R. Myers and Career Potential, LLC.

1000 New Catastrophe Adjusters Needed Right Now in the USA

Yes, it's true...there currently is a need for 1000 trained catastrophe adjusters in the United States. As a consumer advocate I'm always looking for new career opportunities for the people that have been downsized. So I heard about catastrophe adjusting and went to the top expert in the country, Howard Williams, to learn more. Here is my interview. Recently I had a chance to sit down with Howard and discuss his years as a storm adjuster. Hugh: “Howard, what exactly is a “storm adjuster” and what do you do?” Howard: “When a major storm or other catastrophe hits anywhere in the country and the claims load is larger than the local adjusters can handle, the insurance companies turn to a core group of storm adjusters. These adjusters are available to respond to disasters wherever they are and whenever they are needed. Working as an extension of insurance company's claims department, adjusters assist the company's policyholders in evaluating and preparing their claims for damages.” Hugh: “I think that you have created a slogan that pretty well says it: “Going where needed, when needed.” Howard: “Yes, that is true and it has certainly been true in my case. In the past 35 years I have been to almost every natural disaster and even several man-made ones that have made the headlines in the United States. Most recently I spent six months in the Hurricane Katrina ravaged areas of Mississippi and Alabama.” Hugh: “Six months?” Howard: “Yes, I was there in the area for six months except for coming back home several weekends. That is one of the requirements of this profession. You must be able to go any time and any where they need you. For instance, with Katrina I was on the road heading to Mississippi as soon as the roads were open for rescue trucks to get in there. I arrived there to find no motel rooms available in either Mississippi or Alabama. I finally found a condo that I was able to rent in the panhandle of Florida. Therefore I had to make that long trip daily back and forth. So you have to know how to take care of yourself and I credit a great deal of that ability to my former police training.” Hugh: “Yes, I knew that you had been a police officer in your earlier years. What other training have you found valuable?” Howard: “As you know I'm also a personal coach and that training has been immensely valuable. For instance, in Florida, when I have worked the big hurricanes like Andrew I have found numerous senior citizens who were in a total state of shock. I would arrive at their homes to find them sitting in living rooms that had no roofs with water soaked carpets. Many had no one to turn to since their neighbors were too busy taking care of their own problems. So the first item of business is for me to get them out of that house. I want to get them into a nice clean, dry motel room if possible. Hugh, you have to learn to EMPATHIZE with their situation and not get caught up in the drama going on. That's where my personal coach training has been invaluable. Most storm adjusters either are too business like or they get caught up in the drama happening. You want to help but you still have to focus on the situation – determining the damage done to their dwelling.” Hugh: “So what do you do to determine that damage?” Howard: “This is where you have to use your skills of estimating and also having a background in construction certainly does not hurt. I have to begin to look at the overall situation to determine what has been damaged by water and what has been damaged by wind. As you are aware as a consumer investigative reporter, there have been numerous stories in the media regarding this with Hurricane Katrina victims. No one seems to understand that certain damages are not covered by insurance. Estimating and surveying the damage is where it can get very interesting. You may find yourself climbing up to a roof to explore damage and the next minute find yourself crashing through that roof! It has happen to me. Also usually in areas like Mississippi you are likely to find numerous snakes beginning to take up residence in the houses. Not to mention the heat that usually returns after the storm.” Hugh: “Well with my fear of heights over 10 feet this is certainly not something that I would do well with.” Howard: “That's where a husband/wife team comes in real handy. We find a number of husband/wife teams in storm adjusting. Usually, but not always, the husband will do the climbing and the wife will write down the findings. Both need to know how to estimate and a background in construction is a plus" Hugh: “Well, I'm sure people reading this interview will want to know: 'How much can one make in this business?'” Howard: “This can be a very lucrative career especially if you are doing major events like Katrina. I earned in the neighborhood of $120,000 for the six months work.” Hugh: “WOW, $120,000 for six months work? Howard: “Yes, when you learn the ropes like I will be teaching at my new school in North Carolina, it is possible to eventually be earning that amount for six months work. And both fortunately and unfortunately, this type of work will not have any downsizing in the near future.” Hugh: Yes, as you know I also own an emergency preparedness consulting business. Our reports from Max Mayfield, chief meteorologist for the National Hurricane Center, are that the powerful hurricanes like Katrina will increase in number over the next ten years.” Howard: Yes, and that is just hurricanes. Think of all the earthquakes, tornadoes, wild fires, wind storms, floods, etc. occurring in the United States every year. According to our industry association there will be a need for 1,000 new storm adjusters in 2007 alone.” Hugh: Howard, you mentioned your new school. Tell us more about it and how people reading this interview can learn more.” Howard: “Yes, I have decided to take my 35 years of experience in storm adjusting and offer a two week school for those looking for a new career. Also I will be sharing all the updated information in this field from my recent classes that I have attended. A person taking this course will learn about estimating, construction information that can make their job easier (I want to assure people that you do NOT have to have a background in construction to apply), writing the reports, communicating and working with the insurance companies, etc. For those that would like to learn more they can visit our web site at http://www.stormadjusterschool.com and after reading if interested can contact me at stormboss@earthlink.net.”

Trading, Gambling & Las Vegas

I was recently taking a little R&R with my parents in Las Vegas. While I am not a big gambler, I thought I would do an experiment. I decided to use the same rules that are essential for profitable trading and apply them to gambling. Rule 1: Choose the right game. In gambling you need focus on a particular game that that is easy to play and understand. The same is true in trading. You should never trade markets that you don\'t understand and are difficult to trade real-time. I think alot of traders trade something just because it is popular. That is very foolish as you can have your head handed to you if you don\'t know what you are doing. Rule 2: Choose a bet size that is within your comfort level. I decided on a bet(unit) size of $1. To some of you that may be small, but I chose this amount simply because it is nothing to me and I know that my emotions would not affect the game over this small amount of money. Many traders’ downfall lies in betting too big! Take forex traders for example, when they trade a regular sized forex contract each point(pip) is worth $10.00. If they lose just 20 pips on a trade, that is $200 and that may be way too big both financially and psychologically for the trader to stomach. As a result they start trading out of fear and anxiety and make a lot of mistakes. If this sounds like you, then by simply switching to the smaller mini forex contract where each point(pip) is worth just $1.00 you may find that all your anxiety is gone and that you trade easily and confidently. If you are a stock trader, you may found that trading 500 shares is way too stressful, but dropping down to 100 shares makes all the difference in the world. Rule 3: Choose your \"windows of opportunity\" wisely. In every casino there are hundreds of slot and poker machines all trying to grab your attention to get you to play. When I look for a machine that can give me a \"window of opportunity\" I have 2 criteria. First, I only look for video poker machines because you can apply certain strategies that can increase your odds. Second, I always look for ones near the casino entrance area as these machines are often programmed to pay out more frequently so that they attract attention and lure gamblers into the casino. Now in contrast, let’s look at how my Father picked a game. He had no rules and was sucked into the first machine that grabbed his attention. In addition, he would choose regular slot machines which didn’t allow for any strategies and would play machines that were in the middle of nowhere. Time after time he would lose all his money on these machines. In trading you must pick your market wisely too. How do you do this? Only trade markets you can afford to trade and also make sure you understand all the rules and nuances of it. Rule 4: Money management - Use a stop loss. In each new game I would start with the same $100.00 buy in which gave me 100 - $1 units. If I lost 30 units I would end the game and take a break. Many traders have no set money management plan before they get into a trade and just wing it. You absolutely must know what your risk is before you enter the trade and use protective stops to protect your capital. Rule 5: Getting a read on the game. I know from experience that when a machine is really hot I will be profitable practically right away and it will pay out often. These characteristics give me important clues to games that want to stay in until I hit my win target. In trading what often happen is that when the trader is quickly profitable they get really excited and at the same time nervous. This is because they are so worried about losing all the time, that they get the overwhelming desire to get out of the trade and lock in some profit. The problem with this is that they never ride the trade up far enough and to succeed at this game you have to fight the urge to bail out of a winning trade. You must learn to stick with a profitable trade so that you can lock in some big trades. It is the only way to succeed as it will make up for all your losses. On the other hand, I would leave if the machine wasn’t paying out quickly. Sometimes I would sit there for 15 minutes and keep winning a few and losing a few. After all this effort I would still not be above my starting buy-in amount. This type of game was a sure sign that things were not going my way and probably wouldn\'t do so either. When I am in this situation I will walk away. When faced with this situation the average gambler will convince himself his luck will change. This is rarely the case as the casino usually gets the last laugh! In my trading courses I teach that if a trade doesn’t go your way within 5 bars it is more than likely going to turn into a loser. The reason is that there is no momentum. When you observe this type of market behavior then it is usually better to exit the trade and wait for a new setup. Rule 6: Money management - Setting a stop win. When you are in Las Vegas everyone has the “Las Vegas Mentality”. They think that when they start winning that their luck will continue and they are going to get rich. This is exactly the stupidity that the casinos count on as they know the longer a gambler stays at the table the less likely the odds will stay in his/her favor. It was interesting to watch my Father play as he has the “Las Vegas Mentality” and on many occasions he would have a nice profit and I would tell him to walk away. He would always say, “Just a bit longer” and I constantly watched him lose not only his profit but his entire buy-in amount as well. When you trade you must have a “Stop Win” strategy. What this is is a pre-determined profit objective for you to exit at. For example it could be when you are up 5% or $200 or 15 points etc. It could be when the market hits a particular price level. For example, say you buy a stock at $10.00; you would tell yourself ahead of time that if it hits $11.00 then you are getting out. Your strategy cousl also be based on using a trailing stop. You absolutely must decide what your “Stop Win” strategy is before you get into the trade! My “Stop Win” strategy for the poker machines was 50 units. Anytime I was above this level I would simply cash out and take a break. For example, I got real lucky in one game and hit for 220 units on one hand and another time I hit for 1240 units. In each instance, I took the money and ran. After 3 days in Las Vegas, it was interesting to see how I had a very profitable experience while my Father had the exact opposite. The only difference between us was that I had rules and he didn’t. Viva Las Vegas!!!

Does Your Sales Training Program Address Your Sales Performance Issues? Part 1

Here’s a Proven Method to Target ‘Sales Skill Training’ to Resolve Sales Performance Issues Sales training programs encompass a variety of necessary components; things like company policies, sales paperwork, CRM/sales force automation orientation, sales processes, company services, sales skill training and product features and benefits. But when I ask Sales executives and Sales trainers how their current sales training program is aligned with their sales performance issues I get the look of “No speak English’. Let’s first categorize ‘Sales performance issues’. There are (4) distinct sales performance silos that will effect the overall outcome of any sales team, year in and year out. They are: % of Sales reps to Quota Average New-hire Ramp-to-Quota in months Sales Employee Turnover rate Time spent versus Result achieved This is a good place to start in determining what sales skill training to implement to achieve a measurable return on investment. But here’s what will set you apart when you walk the request up to the front office. Start out with the NUMBERS. That’s right. Take a diagnostic view of your current sales performance silos, one by one. Let’s look at a real sales performance issue example of ‘Average New-hire Ramp-to-Quota’. I recently conducted a ‘Sales Performance Improvement Blueprint’ web-cast for this sales organization. The company was hiring 155 sales reps per year. The ultimate objective of any new-hire sales training program is to ramp the new sales rep to Quota. Simply, give them everything they need to effectively reach their monthly sales goal. So how was this company doing? They were obtaining this ultimate sales training program objective in 7 months. So how does one determine if that training outcome is a ‘Sales Performance Issue’? Let’s take a look. Step 1: ‘Run the Numbers’ for any realistic ROI opportunity Each new-hire rep had an ultimate quota of $3500 Sales Cycle was 17 days Average customer term agreement of 36 months Average 'Sub-Quota' revenue per month during ramp of $1300 (This number reflects the average monthly revenue a new-hire achieves before they achieve quota attainment) Step 2: ‘Run the Numbers’ hypothetically for a 1 month improvement In this case, I showed the sales management team what return on investment they would get by helping just 1 sales rep achieve full sales quota in 6 months versus 7 months. Based on their numbers my diagnostic system showed them a ROI of $79,200 just by trimming off 30 days. If they did that for all 155 of their annual new-hires, they could realize $12,276,000. And that got their attention. So, is it now a worthy sales performance issue to attach pin-point sales training to? Not quite yet. Step 3: ‘Run the Numbers’ for a Reality Check The most successful businesses — and certainly, sales departments — have identified their Key Performance Indicators (KPI); individual gateways that directly effect the outcome of a particular process. Then they measure the competency ratios in line with them. A good KPI example in the sales process might be how many times you advance the first sales appointment to the next phase, whether that’s a demonstration, a site visit, a survey or a proposal. Another KPI is how many times you gain a new customer once the first gateway is passed. And when you do gain a new customer, what’s the average revenue you achieve? And how long does it take to gain a new customer on average; i.e. sales cycle? How about how long it takes you to gain 1 new sales appointment, defined by sales prospect ‘conversation’? And as a by-product of all this, how many new appointments are needed each week? We ran these numbers in the system to see ‘if and where’ there were some leaks in the ‘KPI ship’. And here’s what we discovered; not a leak, but a big ‘ole fire hose. Two ‘KPI issues’ were apparent. First, why does the ramp-to-quota for a new-hire take 7 months when the average sales cycle is 17 days? Second, they were only setting 3 new appointments per week when they needed to set 6, based on their other KPIs. So their sales appointment ‘activity barometer’ was only running at 50%. And that will dictate a longer ramp-to-quota. Dig a bit deeper in the system and out popped a 6% conversation-to-appointment ratio; they had to conduct 15 prospect conversations to get 1 new appointment. OK, back to the ‘Reality Check’. Is it realistic to focus on reducing the new-hire ramp-to-quota from 7 months to 6 months for a sales training ROI of $12,276,000 or $79,200 per rep? You bet it is. These folks needed to address the front-end of their sales process; setting targeted sales appointments. To do that, they needed (1) establish an activity standard to reach quota by month six and (2) develop a sales prospecting methodology and supporting system to spend less time in achieving it. Then they needed to plug their sales prospecting ‘system’ into their current sales training program and work to a weekly sales appointment activity goal to assure a monthly revenue result by month 6. Step 4: Set the Goal and ‘Train to It’ A sales training ROI goal of $12,276,000 or $79,200 per rep is for sure a worthy one. And the diagnostic system showed us they would meet this goal just by setting 3 additional sales appointment per week per rep; 6 appointments versus 3. Actually, I lied. The system showed an even brighter picture if the sales appointment activity standard of 6 new appointments per week was met. If they could support their new-hires with a sales prospecting system that could help them achieve 6 new sales appointments per week, they would actually cut their new-hire Ramp-to-Quota by 4 months; from the current 7 months down to 3 months. And that sales training ROI would be $316,800 per rep or a whopping $49,104,000. One of the reasons why sales training fails is a failure to define a useful objective. In this case, our diagnostic method has defined a single useful objective for them to train to. And this same diagnostic method can be utilized if you have a ‘Sales Performance Issue’ of an unacceptable percentage of Sales reps reaching Quota each month. In Part 2, we will take a look at (2) other sales performance issues, ‘Sales Employee Turnover rate’ and ‘Time spent versus Result achieved’ with this same sales management team and see what our diagnostic method to sales performance improvement and ROI turns up.