New Year’s Resolutions (OK, new fiscal year for some of you): Time to Re-evaluate Your Life

Two New Year's Resolutions postcards

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OK, I get to have two New Year’s celebrations.  But, I use the one that comes in September/October to re-evaluate my life and my choices.  Since many of you (still) operate using fiscal years (or cater to the government), this is an appropriate time to evaluate your own enterprise and life.  Here is a list of questions that should be addressed.

1. What systems need installation to afford me a better means to control my work (and personal) life?
Yes, as entrepreneurs, we tend to adore chaos, but our families, clients,  and employees DON’T! And, I know you hate my preaching for a plan- but you really need one (business and/or marketing).  For the next 45 days (until the new moon that arrives [7 November 2010]), keep a log of your work hours and how you spend your time for the next six weeks. Do the same for your personal life for a week or two.
Each week, determine which  one or two key activities used more than a few hours of your time doing things you do not enjoy.  Then, ask your consultant (I AM available 🙂 ) what tools or systems can automate those processes.
Your goal is to eliminate about 15 hours a week (about 20% of your time) doing things you least enjoy, and to creating systems for them by the end of the test period.
Regarding your family time, make sure you are spending enough time with each of your loved ones, and that you do things THEY enjoy (sometimes you won’t) to ensure what I call shalom bayit [domestic harmony, excellent family relations].  It will make things smoother at home- and, at work.

2. What avenues can I pursue to reduce my sense of isolation?
When we feel isolated or alone, our enthusiasm and creativity suffer. (Neither “coffee klatches” nor “water-cooler discussions” pervade smaller enterprises.) I have recreated that by finding a group of people with whom I interact every morning – in a coffee shop, of course!
Here are a few other ways.

  • Find two or three key projects where you will involve your staff and/or business partners.  This will also serve to increase their sense of participation and collaboration.
  • Find one or two professional peer groups in your area and get permission to visit  an upcoming meeting.

3. What is it costing me to be right all the time? Or… How can I stop holding onto my fantastic idea just a little too long?
Keep your own bravado in check: Make an accounting of all those ideas you are still carrying around with you; they’ve overstayed their welcome. If you can’t find at least 5, ask your employees or a consultant for help. Find a way to sell off or release those dead projects from life support by 7 November 2010. (Yes, I live my life by the moons…)

4. Can I be more effective If I outsource certain functions/ projects?
Can you name two or three projects worth outsourcing in your company right now? PC maintenance, HR support, administrative assistance and back office functions are good places to evaluate.

5. What would the value be of outsourcing the “people development” to someone else in my company? (Or, what leadership or peer groups would help me refine those skills?)
Many of us can hardly find the time to manage our own schedules and performance, let alone our employees’. Attrition due to poor leadership and people management can cost 2-5 times that employee’s salary!

If you are serious about becoming a leader, find some great development programs, and surround yourself with the leaders you emulate (see step 2 above). Join their business groups. Make it an ongoing process and be prepared to do the work. Ask your consultant (need I remind you again 🙂 ) to recommend some training for you. Be prepared to offload assignments that are consuming your time and are non-strategic, because this will consume significant and unnecessary energy.

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Starting a business is like falling in love… No, it is falling in love…

The Partners

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Starting a business is like falling in love- no, it IS falling in love.  We love the idea and mentally feel the same as falling in love with another person.   And, starting a business with another person is like getting married.  The difference is there is no sex to keep the relationship going.  And, just like many people getting married prepare prenuptial agreements, your business relationship needs governing documents.

The first place to start is with the end.  What will happen when your partner leaves or has lost interest in the idea?  Whether you call it an operating or shareholder’s agreement is immaterial, cover the question of who owns the entity in case of a partner’s exit.  Describe in detail if the interest of the other is to be “bought out” and how that should be determined.

Which brings up the next most important question- who has the deciding vote.  Trust me when I say, a 50/50 partnership is fine, but joint decisions don’t work long term.  Think of your own marriage (or divorce, as the case may be).  If you have a 50/50 partnership, you must have outside advisors (Board of Directors?) who can insure that a decision is made, instead of a stalemate. [By the way, EVERY enterprise needs an outside board, one that can examine operations and directions  from without.]

The next issue is one that may or may not be part of your operating agreement, but will help the rest of the cogs fall into place.  Discuss (even if you think you already know it all) both of your priorities- children, family, other interests.  What about family illness, maternity/paternity leaves, leaves of absence and the like?   This can then be addressed with a one or two page addendum (call it “Manager Policies”)- it’s a document that can be referenced when such issues arise (years later?); it will either serve to solve problems, or make it clear whether one or another needs to leave- permanently or temporarily.

As you would expect, this now sets the stage for determining what your corporate structure will entail- a partnership, a limited liability entity (LLC), or a corporation.  Partnerships split revenue and losses based upon percentage ownership.  An LLC allocates profits and losses at will each year (you will need a document or section in your operating or shareholder’s agreement to govern how you will make such decisions).  Corporations either don’t allocate profits or distribute same via dividends (you will also need a document or a section in your operating or shareholder’s agreement to govern how you will make such decisions).

Once the concepts are defined, have a legal and financial advisors help you formalize the document.  Don’t forget to define who will comprise your board of advisors (or directors), as well.

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Alternative Medicine Demonstrates Physiological Changes

A graph of age-adjusted percent of adults who ...

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Let me first state, I’ve never had one done.  And, my ex- was a prime user of them- as are about 10% of all Americans.   What am I talking about?  The multi-million dollar massage industry.  (No, NOT that kind! Darn, you need to stay focused!)  The issue is whether or not there are any physiological changes that result from a single massage session.

Enter Dr. Rapaport (and Schettler, Bresee) from the Psychiatry and Behavioral Neurosciences department of the Cedars Sinai Hospital in Los Angeles.  With funding from a division of NIH (the National Center for Complementary and Alternative Medicine), their research found that a single session of massage caused biological changes. They found 53 volunteers, ranging in age from 18 to 45; of them 29 were assigned to 45 minutes of deep-tissue (Swedish) massage; 24 were provided light massage. They were also fitted with intravenous catheters so measurements of cortisol, oxytocin, ACTH, and arginine-vasopressin (AVP) hormones, as well as certain lymphocytes and interleukins could be performed pre- and post- therapy.

The results will be published soon in the Journal of Alternative and Complementary Medicine. (An advance copy is available here.) Surprisingly (to me, at least), the results demonstrated marked changes in the hormone, lymphocyte, and interleukin levels.

The Swedish massage subjects had decreased cortisol and AVP levels, as well as interleukin concentrations. (AVP is thought to promote aggressive behavior; cortisol is a stress hormone.)  However, the subject’s lymphocyte levels increased (when the white blood cell levels increase, it means the immune system was augmented).  Those subjects provided light massage therapy had elevated oxytocin (contentment hormone), when compared to the Swedish massage subjects, and larger decreases in ACTH levels (which eventually leads to cortisol release).

These biological indications mean that there may be some utility for massage in the treatment of inflammatory and autoimmune diseases.

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We are social animals- at home, at play, and at work

Anterior cingulate cortex.

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We keep learning more each day that  the brain is a social organ, very different from our original suppositions.

Remember, when we were kids in school and we chose up teams during recess.  If you were the last person chosen, you felt (real) pain.  Well, Dr. Eisenberger  and her colleagues at UCLA have tried a grown up version of those sort of games,  using avatars.  The results demonstrated that when one’s avatar were suddenly excluded from play, the subject felt snubbed, judged, or angry.  And, since this was an experiment (and not on the ball field outside), the fMRI (functional magnetic resonance imaging) device connected to the subject indicated that their anterior cingulate cortex (the dorsal portion) was excited.  That is the portion of the brain that is involved with discerning distress and pain (the “suffering region”)- and the results were not much different from that exhibited when physical pain was registered.  It is thought that, since mammals need caregivers to grow and survive, our brain is shaped by social networks (the real ones, not the computer ones).

When we meet someone new, our brain makes (immediate) decisions as to whether they are friend or foe.  We develop empathy and trust if they seem to belong to the same group as us (teams in sports, other side of town in communities, etc.).  When we make that positive connection, our brains produce oxytocin, which is the hormone associated with maternal behaviors.  (Oxytocin via nasal spray has also been shown to decrease our threat response.)

These points have relevance to business.  As management theory has shown (and this goes way beyond MacGregor’s “Theory Y”, which relates positive results to when employees feel worthy and trusted), our business interactions are a bona-fide social network.  And, when we feel betrayed or unsupported,  we feel the pain (just like we did when we were left standing in the school yard).  While we may temper our reactions (because we are adults and because we need the pay), we cease being fully committed to that same social network that seemingly has abandoned us.

In addition, human social behavior means that when we develop teams and groups at work, we need to ensure that any perceived threat is, at best, minimal.  We need to provide time to develop trust among other members.

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Mobile, Simple, FAST eye test developed (no training needed, either)

A typical Snellen chart. Originally developed ...

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[Author’s aside:  What to write about?  Oh, I never have that problem.  And, right now, with all the annual meetings, new fiscal years, finished projects, and my holidays, I have a million things (ok, maybe only 842,123 of them) I want to share- but lack the time.  So, I may seem to jump from subject to subject more than usual now, trying to at least touch on some hot items….Please abide me- I probably have terminal ADD, anyway!]

We all clamor for smartphones- the newer the better.  Of course, with the new fees the providers are adding on, there may be some subsidence in demand, but I doubt it.  Even in developing countries, smartphones are the rage.  Afghanistan are paying their protectors (soldiers/police) via smartphones, so they don’t have to leave post to get funds to their families.  And, now, a group at MIT (two are on loan from Instituto de Informatica) have developed clip-on eyepiece to perform eye exams.

“So, what?”, you ask?  Well, there are 2 billion people with eyesight problems- at least 1/2 billion of them with no access to eye exams.  With this clip-on device ($2) and a smartphone ($300-500), almost any adult can have his eyesight analyzed and be on the way to better vision.  It tests for nearsightedness, farsightedness, and astigmatism!  (Smartphones now have cameras with sufficient resolution- on the order of 1/2 the width of human hair, or about the same resolution that the optometrist is using in his/her office.)

You are all familiar with the Snellen eye chart.  It’s a relatively easy test.  It is subjective (the patient response is critical), but one also needs lens kits ($ 600-1400) and a “theater” (a place where the chart, lenses, and patient can be in a controlled environment).  Enter NETRA, championed by Dr. Ramesh Raskar et. al. of the MIT Media Labs.  (The results were presented at Siggraph 2010.)  One looks through the eye piece and arranges red and green circles together. The number of clicks you need to align the dots provides your refractive index.

Compared to the Snellen method, the NETRA is:

  • subjective (same)
  • fast (much faster)
  • resolution of <0.5 D (0.25 D for Snellen)
  • requires no training (enough said)
  • total cost of $ 302 (vs. $1000 or more) for the apparati

You can read the paper here:

Click to access Pamplona_et_al_SIGRAPH1010.pdf

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A receivable is only a valuable asset if you collect upon it!

Accounting=Human Sacrifice

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Receivables are the lifeblood of business, an indication of business performed- but only if you collect.  As such, it is critical that receivables are RECEIVED.  If you are manufacturer, invoices go out with the product.  If you provide services, invoices go out as soon as a milestone is achieved.  Invoices get paid when the client/customer sees the direct link between the invoice and value received.

Another critical factor to collecting receivables is understanding when/how your client/customer pays invoices.  Do they pay every week?  Do they pay monthly?  Time your invoice to arrive at least four days before processing is effected.

Obviously, your invoice must provide a description that matches the verbiage the customer/client employs for ordering your product.  If you customer orders a widget to fix toilets, an invoice for part 12093 with no explanation will not necessarily get your invoice paid. If you widget can fix toilets, transmissions, and airplanes, either use all three terms or give a better explanation still.

In today’s economies, many establishments have “extended” their payment policies to 45 days.  Make sure your client/customer understands why that is unacceptable to you- AT THE OUTSET; inform them that there is a discount for payment in ten days or a non-negotiable surcharge for payments received after 30 days.

The other key point to recognize is that all unpaid invoices (What? We are not always paid on time?) require reminders on the day they are due- or even on the 11th day, if a discount were offered for prompt payment.

And, if your business has long term projects (like we do), there are two possibilities.

  • For a one year, $100,000 project, we receive a retainer of $ 6,000 on the first day of the month; a progress invoice is sent out on the 15th of each month, with detailed explanations.  Any additional effort is due and payable with the next retainer.
  • For smaller duration projects (let’s use the same value for this example), we would take a $ 10,000 retainer.  Then, at each milestone, we send a detailed invoice that requires payment within ten days.
  • In either case, an untimely payment means we stop work; there is also a penalty imposed for this stoppage.  Nonpayment means the loss of confidentiality for all work performed.
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Business Sales and Valuations (even if you don’t want to sell)

Annual balance sheet of a State-owned farm, dr...

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We were requested to help two clients sell their businesses this year.  While we did succeed in one case, neither of our clients was thrilled with the results. (Of course, you should not be surprised that the client whose business did NOT sell was disappointed [perhaps]).

What was the problem?  In the case of the sold business, the offers were much lower than the client expected.  In reality, though, the offers were higher than he deserved.  Why would we say that?

Just because your firm is profitable and is providing you a reasonable income do not mean that your firm is worth a million dollars- even with a strong balance sheet (receivables seem to have exceeded payables by some 42%; the premises could be included in the business sale).   Why not?

For starters, our client’s salary was on the low side (to minimize his employment taxes).  In addition, except for the COO (who would stay, given the right chemistry), most of the (40+) staff required (or expected) supervision.  Our client played his business operations very close to his chest.

In addition, this client was one of our “favorites”.  He did use QuickBooks, but really only to invoice his clients.   Client receipts were via credit card payments; only at the end of the month did he reconcile receipts with invoices (with about a 95% certainty).  That other 5% was reconciled. when he sent dunning letters and determined who really paid him.  (No, I am NOT making this up.)  Expenses were clumped together (“marketing”, “travel”, “meals”) once each month, when the credit card bills were paid.

Moreover, this client (and the one whose business did not sell) had no true database that detailed what products each customer bought.  (The product offerings for one company exceeded 2000 pieces and no inventory data was maintained.  The other company has some 3000 product offerings- but we knew the total was closer to 125 items that repeatedly sold.)

Both firms exhibited at trade shows, collecting business cards and scraps of paper for the potential leads.  Neither even used Excel or Outlook (insufficient, we might add) to track down whether they converted or not.  It was virtually impossible to determine if a trade show provided a financial return.

These firms should have begun preparations two years earlier for the eventual sale of the business. The customer and prospect database(s) could have been developed, since buyers demand such intangible assets.  (This affords them a gauge to monitor future business operations.)   Salaries and business expenses would have been formalized, so the potential owner could determine the potential profitability under their supervision.

And, even if you think you are not planning to sell your business, ask yourself this question:  If you are providing the bulk of the income to your family, what will they have to do, should something preclude you from continuing on (death or disability)?  Get your house in order- now.

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At least annually- but quarterly is better…

One of my friends sent me this story, with a completely different analysis.  Of course, I know mine is better :-).  (BTW, I don’t follow football, so I hope I have not ruined the basic elements.)

The Green Bay Packers were on a roll- perfect losing for about ten years.  They jugged the bottom of the standings and morale was non-existent.  You should know that the Packers are the only non-profit, community-owned franchise in American professional sports major leagues.   Obviously, with so much community pride at stake, things had to change- and fast.

Enter, On February 2, 1959, Vince Lombardi from the New York Giants,  as the new coach. His sole function was to turn this team around. So, he did the usual- held practices, tried to motivate his team, get them together.  It was not working.  He blows his whistle….”Everybody stop and gather around,” he said. Then he knelt down, picked up the football, saying, “Let’s start at the beginning. This is a football. These are the yard markers. I’m the coach. You are the players.” He went on in the most elementary of ways to explain the basics of football. That’s the story.

The results- over the next seven years, the Packers won FIVE championships. Lombardi knew he needed to get his team to employ a common

Packers v Broncos at Camp Randall Stadium

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language and goals.

Yes, we all know things- but we may not use the same terms for each action.  An

d, as Lombardi did,  we need to insure that our team (our staff) needs a common language to insure that everyone understands his/her role in the success of the

enterprise.  Our team must buy into the major goals (less than three- always) we have established.

Well, what are you waiting for?  Go, team!

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Another early detection test for Alzheimer’s and a potential treatment

Diagram of the brain of a person with Alzheime...

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As we’ve discussed previously, we are seeking to detect Alzheimer’s as soon as possible- before the amyloid proteins (plaque) form in the brain (with the concomitant brain cell death).  Now, instead of a spinal tap (to test the spinal fluid), there may be a blood test (easier to complete).

Now, in the Archives of Neurology, Dr. O’Bryant of the Texas Alzheimer’s  Research Consortium, published the second of two studies.  The first study, published in June,  was aimed at determining if Alzheimer’s patients could be accurately determinedThe second study, in the September issue, described the results involved in ruling out subjects NOT at risk for Alzheimer’s.

Basically Dr. O’Bryant’s group examined the presence of about 100 proteins  to determine if patients possess APOE4 (Apolipoprotein E4), a gene associated with the development of Alzheimer’s disease.  Once the protein analyses were complete, a computer determines the risk the patient possesses.

O’Bryant reported that positive results (finding patients with Alzheimer’s Diseases) were 94% accurate.  In addition, there was an accuracy of 84% in defining subjects not at risk.  Now, the researchers are examining if they can predict who will be subject to Alzheimers’- which the spinal tap does achieve.

In the next issue (online first now), Dr. Geldmacher and colleagues at the University of Virginia, described their studies that examined the effects of pioglitazone (PGZ) on the brains of patients with Alzheimer’s.  This drug (Takeda Pharmaceuticals, “Actos”) is known to activate Peroxisome Proliferator Activated Receptor-gamma (PPARgamma) in patients with diabetes and laboratory studies demonstrated

that drugs that bind to PPARgamma reduce inflammatory responses in microglia when amyloid peptides (plaques) are present.

Dr. Gelmacher’s group administered the drugs to 25 patients- some with Alzheimer’s and some with normal brain function.  None of the patients suffered from diabetes.  Those treated with the drug had improvements in cognition, activities of daily living, and neuropsychiatric symptoms.

Now, there are several early detection tests on the horizon, with a potential treatment that can be used in early treatment,  before the plaques begin affecting the brain.

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Home hemodialysis may resurge…

Simplified hemodialysis circuit.

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Originally (45 years ago), hemodialysis was offered as a home modality to afford lower cost treatments to the patient.  Thrice weekly, 6-8 hours at clip, overnight dialysis was provided to some patients. While this was going on, clinicians noted that these patients did not develop the dependency on others (nurses, doctors, machines) and tended to be more independent.  (Depression on dialysis was and is a big issue; it also affects post-dialysis recovery.)  By the time Medicare began funding the End State Renal Disease (ESRD) program, 35% of the patients were afforded home hemodialysis (total dialysis census was 7500).

And, following the law of unintended circumstances, the home dialysis census decayed precipitously.   Part of the reason was the proliferation of both for-profit and nonprofit dialysis centers, which garnered federal funding and did not see the need to “farm out” the treatment.  Part of the reason was Medicare’s bias against payment for home hemodialysis; it only wanted to provide some $20 more for training home dialysis patients (and for a limited time), which was/is insufficient for the effort.  [About a decade later, in the early 1980’s, a new company Home Intensive Care (HIC) was formed by Dr. Allan Jacob; its premise was to provide technician- and/or nurse-assisted home hemodialysis, as opposed to in-center dialysis.  HIC prevailed until HCFA cut its reimbursement rate dramatically, and was soon merged into National Medicare Care (Fresenius, now)].

Another coincident occurrence (with the advent of Medicare’s paying for ESRD) was the dramatic shortening of the dialysis period- down to about 4 hours.  Urea was considered the prime marker for treatment and, with the introduction of more permeable and higher efficiency dialyzers, it was determined that the treatment goal should be to achieve a kt/V of 1.2 or greater (k being the clearance of urea, t the time on dialysis, and V approximately the volume of water within the patient’s body).  [Longer hemodialysis periods were not found to reduce hospitalization rates or patient death rates.]

Current research demonstrates that both short and long duration daily home hemodialysis may have some benefit (in addition to the depression issue above,  the sawtooth pattern for patient chemistry, cardiovascular and hematological effects).  As such, new devices that would improve home dialysis provisioning are being developed.  [The first complete commercial device, Aksys PHD, was developed by a team led by an old friend, Rod Kenley, but failed after it could not acquire additional funding.  Fresenius just acquired a more modern version of the SorbSystem (Organon/Akzo) that was developed by Dr. Stephen Ash (another long-time dialysis developer); this device diminishes the water treatment requirements for the home. Nx Stage System One is a luggable (I stopped calling my Osborne Computer, all 28 pounds of it, portable decades ago, too) 70 pound unit.] Hopefully, with the advent of the new payment system (to be discussed soon), home hemodialysis will garner more users (it is currently less than 1% of the total patient census) and patients will accrue clinical benefits.

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