Should You Be a Business Owner?
Retirement for Small Businesses
Tip-Toeing Through The HR Minefield
Corrections or additions?
This article by Kathleen McGinn Spring was prepared for the May 8,
2002 edition of U.S. 1 Newspaper. All rights reserved.
Difficult Employee? Or Just in the Wrong Job?
There was a secretary who was discontent. A smart woman
and a hard worker, she was frequently late for work and demonstrated
other signs of passive rebellion. After trying any number of methods
to get the secretary in line, her boss tried one more. “She
promoted
her,” recounts Diane DiResta, a communications consultant
based in New York City. In her new, more responsible position, the
former secretary’s foot dragging behaviors vanished.
“Most people are in the wrong job,” says DiResta. “It’s
not skills,” she adds. “It’s a disconnect between their values
and those of the jobs. Sometimes people are over their heads, but
not usually.” The case of the secretary was a matter of a capable
person who did not see herself as a secretary. A change of situation
turned her into a model employee, and, says DiResta, the same type
of tactic can turn many — if not most — difficult employees
into adequate performers — if not stars.
DiResta speaks on “Dealing with Difficult People” on Thursday,
May 9, at 5 p.m. at a meeting of the Society for Human Resources
Management
at the Holiday Inn in Somerset. Cost: $35. Call 732-356-8905.
DiResta studied speech at Brooklyn College and earned a master’s
degree
in speech pathology from Columbia. She worked for the New York City
Board of Education for 10 years, then moved into the private sector,
where she worked for several Wall Street firms.
“I have experience working with difficult people,” she quips.
“They don’t get any more difficult than the people on the trading
floor.” In her last position as an employee, her title was
assistant
vice president of sales and trading training for Drexel Burnham.
“I
like the fast pace, the money, the recruiting, and the training,”
she says of her life on Wall Street. What she did not like was the
culture — “the back biting.”
Seeking a breather, she left Drexel Burnham and began to freelance,
thinking it would be an interim move. Finding, however, that she
thoroughly
enjoyed working on her own, she formed Diane DiResta Communications
(www.diresta.com) in 1989 and has run the business ever since.
She gives a number of speeches and has written a book dealing with,
among other things, how to cope with difficult audiences. It is called
Knock-Out Presentations: How to Deliver Your Message with Power,
Punch,
and Pizzazz.
Here is her advice for turning a difficult employee — or boss,
or audience — into putty in your hands:
De-personalize. Whether it is an employee in a funk, araging boss, or a heckler in an audience, chances are that the unhappyindividual is not unhappy with you. “He may be having a bad day.He may have gotten bad news. He may have poor self-esteem,” saysDiResta, ticking off just some of the reasons that this person isinclined to give you grief.Detach. There is no way, absolutely no way, to win —really win — a battle with a sour subordinate, cranky boss, orquarrelsome member of your audience. “Don’t engage,” advisesDiResta. “It’s a lose/lose situation. If you engage, you’re theenemy.” Even if you win the skirmish, there is an excellent chancethat your adversary will rally support, and will strike again.Defuse. “Preserve people’s egos,” says DiResta.”It’s not `you’ and `I,’ it’s `it.’” Listen. Find out whatthe problem is, and work on the problem itself. If the other personis not ready to talk about the problem rationally, walk away,promisingto talk things out at a calmer moment.Before clashes grow to consume the work day or ruin thepresentation,look for signs of resistance, a sure signal that trouble is brewingbelow the surface. Examples of resistance, says DiResta, includesilenceor one-word replies, closed off body language, and side talk. Be openabout this behavior. “Start a dialogue,” says DiResta.”Say`I’m sensing a little resistance.’” Get to the root of theproblem.Perhaps an employee doesn’t understand how to do a project. A failureto be clear about expectations and deadlines is a frequent cause ofbalkiness.Perhaps an employee needs more independence. The latter is a commonproblem, DiResta says: “if you’re a hands on boss, you may haveto back off.”DiResta has seen that careful listening, clear guidelines, and arespectfor an employees’ egos and work styles will bring most difficultworkersaround. Bringing a difficult boss to heel is a much thornier problem.One suggestion she offers is to be sure to communicate in the waythe boss prefers. If he is an E-mail sort of guy, grabbing him inthe hall for an impromptu conference may be off-putting. If, on theother hand, he values face-to-face interaction, E-mail updates,comments,and complaints sent to him may get little attention.Another tactic for dealing with the difficult boss is to presentsolutionsalong with problems. Let him know what you have already tried to doto resolve the issue, and what else you would like to try. This worksbetter than throwing up your hands and putting the whole mess in hislap.With a difficult boss — someone who is perhaps disorganized,arbitrary,and mercurial — DiResta says many employees are left with nooption.A request for a transfer or a new job may be the only answer. “Youhave to cut your losses,” she says.Top Of PageShould You Be a Business Owner?Do you have the stuff it takes to succeed as anentrepreneur?If you can feed on joy and angst in almost equal degrees the answermay be yes. Both emotions routinely greeted Gail Eagle whenshe awakened in the morning, and when she was jolted awake in themiddle of the night too. For 15 years, Eagle ran Gail Eagle AssociatesCustom Publishing, an East Brunswick-based business she sold justabout one year ago.Eagle, whose company had as many as 10 employees, has moved fromrunninga business to advising others on whether the life of a small businessperson is for them. She is now assistant regional director of theMercer/Middlesex Small Business Development Center. She moderatesa panel on “Thinking About Being Your Own Boss?” at the NewJersey Chamber of Commerce 2002 Small Business Conference, which runsfrom 8 a.m. through 3 p.m. on Friday, May 10. Other panels include”Traditional Marketing, Advertising and PR,” “MarketingUsing Technology,” “How to Get Financing for YourBusiness,”and “The ABCs of Buying a Business.” Cost: $69. Call609-989-7888.Eagle sold her business because “plain and simple an offer wasmade.” Also, she says, it was time for the company, whichpublisheda number of specialty publications and did marketing and publicrelations,to move to the next level. Does she miss the life of an entrepreneur?”Not as much as I thought I would,” she says. While thenever-boringlifestyle of an entrepreneur brings with it tremendous excitement,it also carries heavy responsibility. Shedding some of thatresponsibilitywas a relief.”Owning a business,” Eagle says, “becomes an obsession.It overtakes your life in some ways.” That can be good. “It’sso exciting,” she says. “It requires you to accomplish thingsyou never thought you could do.” But it can be wearing. Anyonethinking of taking the plunge would do well to do so with eyes wideopen. Here are some key considerations:Make a business plan. This is not new advice, but thisit could not be more important. “Would you drive from New Jerseyto Wyoming without a map?” asks Eagle. Creating a business planis even more important. It provides key information on demographics,demand, finances, personnel and so much more. But even more than that,it is a test. If a person is unwilling to go through the work ofcreatinga business plan, says Eagle, that is a pretty good indication thathe is not cut out to be an entrepreneur.Be ready to wear a rack-full of hats. “Can you bethe CEO, CIO, COO, CFO, facilities manager, marketing director, andthen, at the end of the day take the garbage out?” asks Eagle.If the answer is no, think twice about the entrepreneurial life.Know your strengths — and weaknesses. What aboutsomeonewho is prepared to assume three or four or five of the above jobtitles,but knows he would be no good as a CFO? Or who thinks he can do itall — except the marketing? No problem, says Eagle. Self-knowledgeis critical. If a would-be entrepreneur knows he has no talent ormaybe no patience for one or more essential tasks, he needs to setaside funds to outsource that task or to hire someone to perform it.Check your personal assets. Successful entrepreneurs,says Eagle, tend to be resourceful, organized, good negotiators, andrisk takers. Add a sense of humor and family support to the list,and all the personal ingredients are in place.Be ready for a roller coaster ride. The one personalitywho might not make it as a business owner is the non-flexible,super-organizedtype. An entrepreneur has to be ready for anything, must realize thatchange is the only constant, and must take it all in stride.Don’t look for free money. Lots of people think it exists,but, says Eagle, it doesn’t. The SBDC can put entrepreneurs in touchwith lenders, but the lenders expect to be repaid. What they lookat, she says, is an entrepreneur’s credit history, his collateral,and the amount of his own funds he is going to commit to the venture.Watch out for cash flow. More businesses — many, manymore — fail for lack of cash flow than for any other reason. So,is bigger cushion going in the answer? No, says Eagle. The key isplanning, scrupulous planning for every facet of the business.Ask the SBDC for advice, and keep asking. The SBDC existsto help all entrepreneurs, those for whom a business is still justan idea, and those who have been working a business for many years.Help includes one-on-one counseling to determine feasibility, sessionswith lawyers, accountants, marketers, and other professionals, andworkshops. Counseling sessions are free, and workshops carry, at most,a small charge.Business is now brisk at SBDC workshops, Eagle says. Clientsare showing interest in a number of opportunities, includingconsulting,retail, and technology. A former SBDC client herself, Eagle says sheis enjoying shepherding others through the process. Succeed or fail,she says, owning a business teaches so much that “you can applyto every part of your life.”The lessons even spill over to the next generation. Both of Eagle’schildren have benefited from growing up in an entrepreneurial family,she says. Her son, Scott, is a national sales manager for Disney-ownedradio stations, who brings an entrepreneurial spirit to his job. Herdaughter, Dana, is a comedian and actress, who recently moved fromNew York City to Los Angeles. Dana, she says, understands the businessside of entertainment.For Eagle herself, a decade and a half as a business owner continuesto pay dividends. “It gives you such a sense of confidence,”she says, “a feeling that you can do anything.”Top Of PageRetirement for Small BusinessesSmall business owners deserve to retire too. Heavenknows, they work hard enough. But, focused on their companies andoften working 24/7 to make them profitable, some neglect retirementplanning. Take some money out of the business, and put it to workin investments ear-marked for retirement, advises Brad Seamon,a financial advisor with Merrill Lynch.Seamon speaks on “Retirement Planning for Small Business”at the Middlesex County Regional Chamber of Commerce’s 48th AnnualBusiness Resource Day on Tuesday, May 14, at 11 a.m. at the New JerseyConvention and Expo Center in Edison. Other speakers at this freeevent address issues of interest to small business, including humanresources, accounting, insurance, and credit card processing. Call732-821-1700.Seamon, who studied accounting at Rider University (Class of 1991),has worked for Merrill Lynch ever since, first at the company’s homeoffice, and then as a financial advisor at its East Brunswick office.Saving for retirement is an issue for everyone, but it can beparticularlytough for business owners, who sometimes put all of their resourcesinto their businesses. “Diversify,” says Seamon. He hesitatesto pull out the old saw, but “don’t put all your eggs in onebasket,”fits the situation perfectly. “Separate out some of yourwealth,”he advises. “Take some money from the business to fundretirement.”Make a plan, he says, offering this advice on doing so.Figure out where you are. Retirement planning — fora business owner and for his employees — starts with an analysisof a business’ current situation. Tote up assets, look at cash flow,and make sure insurance is in place.Set goals. This, says Seamon, is the most important stepof all. Decide when you want to retire, and how you want to live.A business owner with 20 working years left, no children to educate,a wife with a trust fund, and a desire to spend his golden yearstendingthe garden in front of his humble Cape Cod will want a differentstrategythan a business owner who wants out in five years, has a daughterheaded to medical school, and dreams of traveling the globe —maybe in his own sailboat.Decide how much money can go toward retirement. Afteranalyzing expenses, and clarifying goals, designate money to go towardretirement savings.Look to tax-advantaged vehicles. Business owners canchooseamong a number of retirement plans that carry tax advantages. Amongthem are SEP accounts, 401 (k) plans, and profit sharing. Oftenemployeesneed to be covered, too, and allowed to contribute — or havecontributionsmade for them — in the same percentage as their boss’scontribution.Maximum contributions to some of these plans have been raised thisyear, and will continue to go up for the next several years. “Youcan put up to $40,000 in a SEP this year,” says Seamon. All ofthese plans are relatively easy to set up, and carry lowadministrationfees.Consider a Roth IRA. Many business owners who have setup a companywide, tax-advantaged plan, say a 401 (k), can still putmoney into a Roth IRA. This retirement account does not confer animmediate tax advantage, as a standard IRA does, but withdrawals aretax free.Look to other investments. After setting up tax-advantagedplans, a small business owner should consider other investments. Realestate, a portfolio of stocks and bonds, and CDs all help cushionthe transition to a life after work. A recent Wall Street Journalpoll finds that those who invested in a number of these vehicles enjoya substantially more satisfying retirement than those who did not.And, adds Seamon, it’s never too late to start.”Brainwashed”by his Merrill Lynch training, he started his own retirement accountsnearly a decade before his 30th birthday, but he says that even50-somethingbusiness owners still have time to save themselves into a comfortableretirement, “as long as they’re realistic.” At that point,he figures, a million dollar house by the sea might not be in thecards. But a comfortable retirement is still within reach.Top Of PageTip-Toeing Through The HR MinefieldThe biggest HR mistake employers make, says attorneyBrett Harris, is “being a little over eager in statementsto new hires.” New Jersey is an employment at will state, whichmeans that any worker can be hired or fired for any reason, as longas retaliation or discrimination is not involved. Employers, however,may give away their right to fire at will by a simple hearty greeting.Something like “Looking forward to having you become a part ofour family here at XYZ Corp.” can be enough to create an impliedcontract of employment, especially when combined with a couple ofother equally innocuous-sounding statements or policies.A good attorney, says Harris, keeps employers from drafting documentsthat can help sink them, while at the same time encouraging thecreationof documents that provide protection — not only in wrongfuldischargesuits, but also in such matters as the protection of trade secretsand intellectual property. Harris speaks on “Top 50 HR Do’s andDon’t’s” on Tuesday, May 14, at the 48th Annual Middlesex CountyRegional Chamber of Commerce Business Resource Day, a free event thatruns from 11 a.m. to 7 p.m. at the New Jersey Convention and ExpoCenter in Edison. Call 732-821-1700.Harris, a partner in Wilentz, Goldman & Spitzer, graduated fromWashingtonand Jefferson College in 1988 with a degree in psychology and Englishand earned her J.D. from New York University. She spends her dayscounseling corporate clients. A vivacious woman with a good senseof humor, she takes a down-to-earth view of the limits of puttinga moat of legal protections in place.”Employers ask,” she says, “what can I do to avoid beingsued?” Look, she tells them, “the court house is open toeveryone.”Anyone who wants to file suit will get a hearing. Avoiding casualstatements — written and oral — and having good policies andprocedures in place, however, greatly improve the chances that anysuch suits will be settled quickly and with a minimum of pain. Thesame strategy can protect a business from loss of customers,reputation,a steep drop in value, and even a roadblock when it comes time tosell the company. Harris’s advice:Beware the handbook. In other states, the employeehandbookis no big deal. In New York, for example, courts give it little weightas a promise of continued employment. In this state, however, thebooks, passed out so casually by employers, and quickly thrown awayby legions of employees, can be ticking bombs. “In NewJersey,”says Harris, “courts will go along with an implied right ofemployment.”A lot of her clients come from New York, bring along the handbookthey used at their former company, change the name on the front andpass it out. If the book speaks of the long, happy days each employeewill spend with the company, the employee could infer that he wasbeing offered lifetime employment. If the book mentions a probationaryperiod, the employee might think that after he got through that twoor three months, he would be home free, unable to be dislodged fromhis job. “What it might mean is that insurance would not startfor two or three months,” says Harris.Not all employees who sue citing such language are out to get theiremployers, she says. There can be genuine differences ininterpretation.This is among the reasons that she says a handbook is not a greatidea for a small company. Better to do without than to risk sendingout a message that could be interpreted as a promise of lifelongemployment.Companies that do opt for an employee handbook would do well to seekexpert legal advice in drafting the document.Put policies in place. A handbook can cause more troublethan it is worth, but, says Harris, individual policies and procedurescan save the day. Should an employer, for example, be sued becauseof alleged sexual harassment, it is very helpful if he can point toworkshops, training sessions, written guidelines, and posted policiesindicating that his company will not tolerate such behavior.Don’t give away the company. During the past severalyears,attracting high-quality employees has been a struggle. The situationhas eased a bit, says Harris, but is still an issue. In this climate,employers have been using every weapon in their arsenal to pull inthe best employees. Offers of stock have become very popular, butcan be dangerous.”A client of mine owned 85 percent of his company, but gave away15 percent to three employees, five percent to each,” Harrisrecounts.In New Jersey, even minority stockholders have rights, and when thebusiness owner recently wanted to sell, the stock he had given awaycame back to haunt him. The buyer insisted on including the threeminority stockholders in the negotiations. Two, it turns out, wereon good terms with the, and did not cause a problem. The third,however,had become a competitor and was not on good terms with the owner.The stock he owned gave him leverage, says Harris, and greatlycomplicatedthe sale.Issue “phantom” stock. Smarter than giving outactual stock, says Harris, is presenting some or all employees with”phantom” stock. This is basically a contract that promisesto pay employees a percentage of certain stock events, such as anIPO or a distribution. This way, she points out, employees share inthe success of the company, but do not have the leverage they wouldhave as actual stockholders.Protect non-tangible assets. Through non-compete andconfidentialityclauses in employment contracts and restrictive covenant agreements,employees agree to keep their employers’ secrets, and, by extension,the secrets of their employers’ customers. They may also agree notto go to work for a direct competitor should they quit and not toraid their employer’s personnel roster should they start a competingbusiness.Harris says employers need to take care in drafting these documents.”You can’t shut an employee down,” she says. He must stillbe able to make a living after he leaves your employ, but if documentsare carefully drawn, and do not appear to single out an individualemployee without a good business reason, courts will be inclined touphold the agreements. And the agreements could save a business.Withoutthem, a former employee, say an individual with knowledge of all vitalsource code and relationships with all important customers, couldset up shop across the street, hire his former co-workers, and cripplehis former employer.Prepare an exit strategy. Firing an employee is a taskfew employers relish, yet it is often necessary, and the smartemployerwill be prepared. Among the issues, says Harris, is asking terminatedemployees just what company property they have — and asking tohave it back. Along with the laptop and cell phone, be sure to askif the employee has downloaded any files from the computer. If theanswer is yes, get the disks back.Many employers have discharged employees sign a release agreeing notto sue. To be valid these releases must be accompanied by what thecourts call “consideration.” Consideration in this contextoften is a severance package. Sometimes an employer fears that acertaindischarged employee may bring a claim — perhaps for age or genderdiscrimination — and he has that employee, but not otherdischargedemployees, sign a release. If that employee is given just the standardseverance package, the release will not mean much.Craft the release carefully, says Harris, particularly if the employeebeing discharged is part of a protected class. The release is nota guarantee that the employee won’t bring a lawsuit — and won’tprevail if he does — but it’s a help. Or, as Harris says,”It’snot 100 percent bullet proof, but at least it’s a bullet proofvest.”There are dangers in hiring employees, supervising them, andshowing them the door. Missteps can drain time and money from abusiness,and can even bring it down. Being careful about what papers to prepareand what policies to put in place will minimize the danger. SaysHarris:”you never know what’s going to blow up.”Top Of PageDonate PleaseIn return for a donation to its Special Fund forMothers,HomeFront offers to send a special card to honor a mother or someoneimportant in the donor’s life. Donations will be used for the”extra”expenses — school trips, school pictures, etc. — of schoolchildren who are living in motels.Cards are hand-decorated by the children and can be mailed directlyto the recipient by calling 609-989-9417 with a credit card number.Previous StoryNext StoryCorrections or additions?This page is published by PrincetonInfo.com— the web site for U.S. 1 Newspaper in Princeton, New Jersey.
