Should You Be a Business Owner?

Retirement for Small Businesses

Tip-Toeing Through The HR Minefield

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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, a

raging boss, or a heckler in an audience, chances are that the unhappy

individual is not unhappy with you. "He may be having a bad day.

He may have gotten bad news. He may have poor self-esteem," says

DiResta, ticking off just some of the reasons that this person is

inclined to give you grief.

Detach. There is no way, absolutely no way, to win —

really win — a battle with a sour subordinate, cranky boss, or

quarrelsome member of your audience. "Don’t engage," advises

DiResta. "It’s a lose/lose situation. If you engage, you’re the

enemy." Even if you win the skirmish, there is an excellent chance

that 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 what

the problem is, and work on the problem itself. If the other person

is not ready to talk about the problem rationally, walk away,

promising

to talk things out at a calmer moment.

Before clashes grow to consume the work day or ruin the

presentation,

look for signs of resistance, a sure signal that trouble is brewing

below the surface. Examples of resistance, says DiResta, include

silence

or one-word replies, closed off body language, and side talk. Be open

about this behavior. "Start a dialogue," says DiResta.

"Say

`I’m sensing a little resistance.’" Get to the root of the

problem.

Perhaps an employee doesn’t understand how to do a project. A failure

to be clear about expectations and deadlines is a frequent cause of

balkiness.

Perhaps an employee needs more independence. The latter is a common

problem, DiResta says: "if you’re a hands on boss, you may have

to back off."

DiResta has seen that careful listening, clear guidelines, and a

respect

for an employees’ egos and work styles will bring most difficult

workers

around. Bringing a difficult boss to heel is a much thornier problem.

One suggestion she offers is to be sure to communicate in the way

the boss prefers. If he is an E-mail sort of guy, grabbing him in

the hall for an impromptu conference may be off-putting. If, on the

other 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 present

solutions

along with problems. Let him know what you have already tried to do

to resolve the issue, and what else you would like to try. This works

better than throwing up your hands and putting the whole mess in his

lap.

With a difficult boss — someone who is perhaps disorganized,

arbitrary,

and mercurial — DiResta says many employees are left with no

option.

A request for a transfer or a new job may be the only answer. "You

have to cut your losses," she says.

Top Of Page
Should You Be a Business Owner?

Do you have the stuff it takes to succeed as an

entrepreneur?

If you can feed on joy and angst in almost equal degrees the answer

may be yes. Both emotions routinely greeted Gail Eagle when

she awakened in the morning, and when she was jolted awake in the

middle of the night too. For 15 years, Eagle ran Gail Eagle Associates

Custom Publishing, an East Brunswick-based business she sold just

about one year ago.

Eagle, whose company had as many as 10 employees, has moved from

running

a business to advising others on whether the life of a small business

person is for them. She is now assistant regional director of the

Mercer/Middlesex Small Business Development Center. She moderates

a panel on "Thinking About Being Your Own Boss?" at the New

Jersey Chamber of Commerce 2002 Small Business Conference, which runs

from 8 a.m. through 3 p.m. on Friday, May 10. Other panels include

"Traditional Marketing, Advertising and PR," "Marketing

Using Technology," "How to Get Financing for Your

Business,"

and "The ABCs of Buying a Business." Cost: $69. Call

609-989-7888.

Eagle sold her business because "plain and simple an offer was

made." Also, she says, it was time for the company, which

published

a number of specialty publications and did marketing and public

relations,

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 the

never-boring

lifestyle of an entrepreneur brings with it tremendous excitement,

it also carries heavy responsibility. Shedding some of that

responsibility

was a relief.

"Owning a business," Eagle says, "becomes an obsession.

It overtakes your life in some ways." That can be good. "It’s

so exciting," she says. "It requires you to accomplish things

you never thought you could do." But it can be wearing. Anyone

thinking of taking the plunge would do well to do so with eyes wide

open. Here are some key considerations:

Make a business plan. This is not new advice, but this

it could not be more important. "Would you drive from New Jersey

to Wyoming without a map?" asks Eagle. Creating a business plan

is 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 of

creating

a business plan, says Eagle, that is a pretty good indication that

he is not cut out to be an entrepreneur.

Be ready to wear a rack-full of hats. "Can you be

the CEO, CIO, COO, CFO, facilities manager, marketing director, and

then, 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 about

someone

who is prepared to assume three or four or five of the above job

titles,

but knows he would be no good as a CFO? Or who thinks he can do it

all — except the marketing? No problem, says Eagle. Self-knowledge

is critical. If a would-be entrepreneur knows he has no talent or

maybe no patience for one or more essential tasks, he needs to set

aside 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, and

risk 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 personality

who might not make it as a business owner is the non-flexible,

super-organized

type. An entrepreneur has to be ready for anything, must realize that

change 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 touch

with lenders, but the lenders expect to be repaid. What they look

at, 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, many

more — fail for lack of cash flow than for any other reason. So,

is bigger cushion going in the answer? No, says Eagle. The key is

planning, scrupulous planning for every facet of the business.

Ask the SBDC for advice, and keep asking. The SBDC exists

to help all entrepreneurs, those for whom a business is still just

an idea, and those who have been working a business for many years.

Help includes one-on-one counseling to determine feasibility, sessions

with lawyers, accountants, marketers, and other professionals, and

workshops. Counseling sessions are free, and workshops carry, at most,

a small charge.

Business is now brisk at SBDC workshops, Eagle says. Clients

are showing interest in a number of opportunities, including

consulting,

retail, and technology. A former SBDC client herself, Eagle says she

is enjoying shepherding others through the process. Succeed or fail,

she says, owning a business teaches so much that "you can apply

to every part of your life."

The lessons even spill over to the next generation. Both of Eagle’s

children have benefited from growing up in an entrepreneurial family,

she says. Her son, Scott, is a national sales manager for Disney-owned

radio stations, who brings an entrepreneurial spirit to his job. Her

daughter, Dana, is a comedian and actress, who recently moved from

New York City to Los Angeles. Dana, she says, understands the business

side of entertainment.

For Eagle herself, a decade and a half as a business owner continues

to pay dividends. "It gives you such a sense of confidence,"

she says, "a feeling that you can do anything."

Top Of Page
Retirement for Small Businesses

Small business owners deserve to retire too. Heaven

knows, they work hard enough. But, focused on their companies and

often working 24/7 to make them profitable, some neglect retirement

planning. Take some money out of the business, and put it to work

in 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 Annual

Business Resource Day on Tuesday, May 14, at 11 a.m. at the New Jersey

Convention and Expo Center in Edison. Other speakers at this free

event address issues of interest to small business, including human

resources, accounting, insurance, and credit card processing. Call

732-821-1700.

Seamon, who studied accounting at Rider University (Class of 1991),

has worked for Merrill Lynch ever since, first at the company’s home

office, and then as a financial advisor at its East Brunswick office.

Saving for retirement is an issue for everyone, but it can be

particularly

tough for business owners, who sometimes put all of their resources

into their businesses. "Diversify," says Seamon. He hesitates

to pull out the old saw, but "don’t put all your eggs in one

basket,"

fits the situation perfectly. "Separate out some of your

wealth,"

he advises. "Take some money from the business to fund

retirement."

Make a plan, he says, offering this advice on doing so.

Figure out where you are. Retirement planning — for

a business owner and for his employees — starts with an analysis

of 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 step

of 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 years

tending

the garden in front of his humble Cape Cod will want a different

strategy

than a business owner who wants out in five years, has a daughter

headed to medical school, and dreams of traveling the globe —

maybe in his own sailboat.

Decide how much money can go toward retirement. After

analyzing expenses, and clarifying goals, designate money to go toward

retirement savings.

Look to tax-advantaged vehicles. Business owners can

choose

among a number of retirement plans that carry tax advantages. Among

them are SEP accounts, 401 (k) plans, and profit sharing. Often

employees

need to be covered, too, and allowed to contribute — or have

contributions

made for them — in the same percentage as their boss’s

contribution.

Maximum contributions to some of these plans have been raised this

year, and will continue to go up for the next several years. "You

can put up to $40,000 in a SEP this year," says Seamon. All of

these plans are relatively easy to set up, and carry low

administration

fees.

Consider a Roth IRA. Many business owners who have set

up a companywide, tax-advantaged plan, say a 401 (k), can still put

money into a Roth IRA. This retirement account does not confer an

immediate tax advantage, as a standard IRA does, but withdrawals are

tax free.

Look to other investments. After setting up tax-advantaged

plans, a small business owner should consider other investments. Real

estate, a portfolio of stocks and bonds, and CDs all help cushion

the transition to a life after work. A recent Wall Street Journal

poll finds that those who invested in a number of these vehicles enjoy

a 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 accounts

nearly a decade before his 30th birthday, but he says that even

50-something

business owners still have time to save themselves into a comfortable

retirement, "as long as they’re realistic." At that point,

he figures, a million dollar house by the sea might not be in the

cards. But a comfortable retirement is still within reach.

Top Of Page
Tip-Toeing Through The HR Minefield

The biggest HR mistake employers make, says attorney

Brett Harris, is "being a little over eager in statements

to new hires." New Jersey is an employment at will state, which

means that any worker can be hired or fired for any reason, as long

as 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 of

our family here at XYZ Corp." can be enough to create an implied

contract of employment, especially when combined with a couple of

other equally innocuous-sounding statements or policies.

A good attorney, says Harris, keeps employers from drafting documents

that can help sink them, while at the same time encouraging the

creation

of documents that provide protection — not only in wrongful

discharge

suits, but also in such matters as the protection of trade secrets

and intellectual property. Harris speaks on "Top 50 HR Do’s and

Don’t’s" on Tuesday, May 14, at the 48th Annual Middlesex County

Regional Chamber of Commerce Business Resource Day, a free event that

runs from 11 a.m. to 7 p.m. at the New Jersey Convention and Expo

Center in Edison. Call 732-821-1700.

Harris, a partner in Wilentz, Goldman & Spitzer, graduated from

Washington

and Jefferson College in 1988 with a degree in psychology and English

and earned her J.D. from New York University. She spends her days

counseling corporate clients. A vivacious woman with a good sense

of humor, she takes a down-to-earth view of the limits of putting

a moat of legal protections in place.

"Employers ask," she says, "what can I do to avoid being

sued?" Look, she tells them, "the court house is open to

everyone."

Anyone who wants to file suit will get a hearing. Avoiding casual

statements — written and oral — and having good policies and

procedures in place, however, greatly improve the chances that any

such suits will be settled quickly and with a minimum of pain. The

same strategy can protect a business from loss of customers,

reputation,

a steep drop in value, and even a roadblock when it comes time to

sell the company. Harris’s advice:

Beware the handbook. In other states, the employee

handbook

is no big deal. In New York, for example, courts give it little weight

as a promise of continued employment. In this state, however, the

books, passed out so casually by employers, and quickly thrown away

by legions of employees, can be ticking bombs. "In New

Jersey,"

says Harris, "courts will go along with an implied right of

employment."

A lot of her clients come from New York, bring along the handbook

they used at their former company, change the name on the front and

pass it out. If the book speaks of the long, happy days each employee

will spend with the company, the employee could infer that he was

being offered lifetime employment. If the book mentions a probationary

period, the employee might think that after he got through that two

or three months, he would be home free, unable to be dislodged from

his job. "What it might mean is that insurance would not start

for two or three months," says Harris.

Not all employees who sue citing such language are out to get their

employers, she says. There can be genuine differences in

interpretation.

This is among the reasons that she says a handbook is not a great

idea for a small company. Better to do without than to risk sending

out a message that could be interpreted as a promise of lifelong

employment.

Companies that do opt for an employee handbook would do well to seek

expert legal advice in drafting the document.

Put policies in place. A handbook can cause more trouble

than it is worth, but, says Harris, individual policies and procedures

can save the day. Should an employer, for example, be sued because

of alleged sexual harassment, it is very helpful if he can point to

workshops, training sessions, written guidelines, and posted policies

indicating that his company will not tolerate such behavior.

Don’t give away the company. During the past several

years,

attracting high-quality employees has been a struggle. The situation

has eased a bit, says Harris, but is still an issue. In this climate,

employers have been using every weapon in their arsenal to pull in

the best employees. Offers of stock have become very popular, but

can be dangerous.

"A client of mine owned 85 percent of his company, but gave away

15 percent to three employees, five percent to each," Harris

recounts.

In New Jersey, even minority stockholders have rights, and when the

business owner recently wanted to sell, the stock he had given away

came back to haunt him. The buyer insisted on including the three

minority stockholders in the negotiations. Two, it turns out, were

on 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 greatly

complicated

the sale.

Issue "phantom" stock. Smarter than giving out

actual stock, says Harris, is presenting some or all employees with

"phantom" stock. This is basically a contract that promises

to pay employees a percentage of certain stock events, such as an

IPO or a distribution. This way, she points out, employees share in

the success of the company, but do not have the leverage they would

have as actual stockholders.

Protect non-tangible assets. Through non-compete and

confidentiality

clauses 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 not

to go to work for a direct competitor should they quit and not to

raid their employer’s personnel roster should they start a competing

business.

Harris says employers need to take care in drafting these documents.

"You can’t shut an employee down," she says. He must still

be able to make a living after he leaves your employ, but if documents

are carefully drawn, and do not appear to single out an individual

employee without a good business reason, courts will be inclined to

uphold the agreements. And the agreements could save a business.

Without

them, a former employee, say an individual with knowledge of all vital

source code and relationships with all important customers, could

set up shop across the street, hire his former co-workers, and cripple

his former employer.

Prepare an exit strategy. Firing an employee is a task

few employers relish, yet it is often necessary, and the smart

employer

will be prepared. Among the issues, says Harris, is asking terminated

employees just what company property they have — and asking to

have it back. Along with the laptop and cell phone, be sure to ask

if the employee has downloaded any files from the computer. If the

answer is yes, get the disks back.

Many employers have discharged employees sign a release agreeing not

to sue. To be valid these releases must be accompanied by what the

courts call "consideration." Consideration in this context

often is a severance package. Sometimes an employer fears that a

certain

discharged employee may bring a claim — perhaps for age or gender

discrimination — and he has that employee, but not other

discharged

employees, sign a release. If that employee is given just the standard

severance package, the release will not mean much.

Craft the release carefully, says Harris, particularly if the employee

being discharged is part of a protected class. The release is not

a guarantee that the employee won’t bring a lawsuit — and won’t

prevail if he does — but it’s a help. Or, as Harris says,

"It’s

not 100 percent bullet proof, but at least it’s a bullet proof

vest."

There are dangers in hiring employees, supervising them, and

showing them the door. Missteps can drain time and money from a

business,

and can even bring it down. Being careful about what papers to prepare

and what policies to put in place will minimize the danger. Says

Harris:

"you never know what’s going to blow up."

Top Of Page
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HomeFront offers to send a special card to honor a mother or someone

important in the donor’s life. Donations will be used for the

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expenses — school trips, school pictures, etc. — of school

children who are living in motels.

Cards are hand-decorated by the children and can be mailed directly

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