Do you know your customers? How do they like to interact with you? How well are your online channels performing? Can you anticipate their changing needs? Are they advocates for your brand or will they easily move to your competitor?

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Brainstorming’s a winner, but how to do it right? Generally performed in groups, it’s a fun way to get lots of fresh ideas out on the table and get everyone thinking and pulling together. Over the years, I’ve participated in and facilitated brainstorming sessions ranging in size from just several people to about 40.

But to start out, I recommend you keep your group on the small side. The participants should be relatively at ease with one another, and as you continue to brainstorm together over time, they’ll become more comfortable throwing out off-the-wall ideas–which often generate the best results.

Begin by choosing a facilitator to record the ideas on large, poster-size sheets of paper that can be stuck to a bulletin board or along the walls of the room. This will keep all the ideas clearly visible. And follow these important ground rules:

• Suspend criticism. All ideas, no matter how crazy they may seem, should be encouraged and recorded without comment or criticism from the group. The general goal of brainstorming is to collect as many ideas as possible, making quantity much more important than quality at this initial stage.
• Postpone evaluation. Brainstorming sessions are not the time or place to evaluate the merits of the ideas suggested. So don’t suspend the process to evaluate the projected results of any single idea.
• Build on others’ ideas. At their best, brainstorming sessions are fast-paced and fun. Participants should try to build each consecutive idea on the previous ones. This can sometimes result in surprising twists and turns.

Though all brainstorming sessions should follow these basic ground rules, there are numerous ways to approach the idea-generation process. Here are three proven methods to try:

• Pose an initial question. Suppose you had created a product for small businesses and were looking for a new marketing approach. The facilitator might open the brainstorming session by posing a question such as “What do small business owners want?”

  Participants would then throw out ideas, such as “to save time” or “to increase sales.” Or you might select a feature of your new product-one-button operation, for example–and open with a question such as “How does one-button operation help small business owners?”

• Use word association. This method involves brainstorming lists of words and then finding linkage between key words on each list. For example, imagine you want to create a new slogan for a hair gel product. You could start with the root word “gel” and use word association to come up with a list of ideas, such as “flexible hold.”

  Then you could brainstorm another list beginning with “flexible.” In the end, you might have four or five lists of ideas based on word association. To build your slogan, you’d choose a word from each of the lists and creatively link them together.

• Identify a challenge. Even the most difficult questions can be tackled by brainstorming, provided you have the right group of people. When I was called in by an auto parts manufacturer to find ways to use the company’s roll-forming expertise to produce additional products, we gathered together a large group of experienced workers from throughout the plant for brainstorming.

So while inspiration may come to you in the shower, a more structured approach to creative idea generation is often the best bet. Try using these effective brainstorming techniques to come up with terrific ideas for marketing your own business.

You’ve decided to strike out on your own. So, what kind of business structure will you choose? Answer these two questions and you’ve got your answer:

1. How can I get the best protection from general business liabilities that will threaten my business assets and my family’s assets?
2. How can I get the best tax breaks out of the business entity that I select?

The answer to Number 1 above is best answered by first talking with decent business attorneys, then talking with your potential business partners (if any) and finally deciding for yourself. It is also beyond the scope of this article.

The rest of this article will try to help with your answer to Number 2 above. The search for shelter from high taxes is what we’ll be trying to help you with.

How to Save Taxes with Your Business Entity

New business owners are quick to learn that confiscatory tax laws have a profound influence on the success or failure of all small business operations. As a small business owner, you want to get every break available under the law, and you don’t want to see the results of all your hard work get eaten up by the IRS and the tough tax laws.

The problem, however, is that those tax laws have become so painfully complex that new business owners automatically assume they could never make the best of their available options without conceding the strategy planning to the tax professionals. Interestingly, the tax professionals themselves are often at odds with each other as to the best tax saving options in this ever-changing environment.

Understand the Differences Between the Entities

Before we discuss the specific tax advantages and disadvantages of the various business entities, it is important that you know some fundamental tax considerations between a:

1. Sole proprietorship
2. General partnership
3. Limited partnership
4. Corporation
5. Limited liability company

The Sole Proprietorship

The sole proprietorship is thought of as the quickest and easiest way to set up a business operation. There are no blanket prerequisites, nor are there any specific costs in starting a sole proprietorship. There may be some minor formalities, however, that will need attention depending on your state or your jurisdiction. These formalities, which of course apply to all business entities, mean that you will probably have to:

• Obtain an occupancy permit for your place of business
• Secure a business license
• Apply for a franchise or registration number for your operation. This registration number will be used by the state agency to monitor the collection of sales tax and other regulatory matters

All of these procedures are simple and can be done without the assistance of an attorney or accountant regardless of the state in which you are doing business. Once you start a sole proprietorship, you are the sole owner. Unless you are in a community property state in which your spouse is vested with a one-half interest, you alone have full control and responsibility for the operation.

The General Partnership

Like the sole proprietorship, starting up the general partnership could be a relatively easy process. No costs or formalities are required. Wise counsel, however, will give you about a dozen reasons why you should have a detailed partnership agreement drafted whenever you put yourself on the line with any other individual. A few items that you would be best advised to spell out in writing are:

• The amount of capital each partner is expected to contribute up front
• The rights and duties of the partners
• The method for sharing profits and losses
• The authorization for cash withdrawals and salaries
• The methods for resolving disputes or taking in new partners
• The method for dissolving the partnership should dissolution become necessary

The Limited Partnership

A limited partnership is much like a general partnership except for one important fundamental difference. The limited partner is protected by law because the limited partner’s legal liability in the business is generally limited to the amount of his or her investment.

It enables this special type of investor to share in the partnership profits without being exposed to its debts in the event the company goes out of business. This protection exists as long as the limited partner does not play an active role in the partnership operation.

Unlike the partnerships described above, the corporation is considered an artificially created legal entity that exists separate and apart from those individuals who created it and carry on its operations. With as little as one incorporator, a corporation can be formed by simply filing an application for a charter with the respective state. By filing this application, the incorporator will put on record facts, such as:

• The purpose of the intended corporation
• The names and addresses of the incorporators
• The amount and types of capital stock the corporation will be authorized to issue
• The rights and privileges of the holders of each class of stock

It is true that operating as a corporation has its share of drawbacks in certain situations. For example, as a business owner, you would be responsible for additional record keeping requirements and administrative details. More important, in some cases, operating as a corporation can create an additional tax burden. This is the last thing a business owner needs, especially in the early stages of operation.

Remember, aside from tax reasons, the most common motivation for incurring the cost of setting up a corporation is the recognition that the shareholder is not legally liable for the actions of the corporation. This is because the corporation has its own separate existence wholly apart from those who run it. However, let’s examine three other reasons why the corporation proves to be an attractive vehicle for carrying on a business.

• Unlimited life. Unlike proprietorships and partnerships, the life of the corporation is not dependent on the life of a particular individual or individuals. It can continue indefinitely until it accomplishes its objective, merges with another business, or goes bankrupt. Unless stated otherwise, it could go on indefinitely.
• Transferability of shares. It is always nice to know that the ownership interest you have in a business can be readily sold, transferred, or given away to another family member. The process of divesting yourself of ownership in proprietorships and partnerships can be cumbersome and costly. Property has to be retitled, new deeds drawn, and other administrative steps taken any time the slightest change of ownership occurs.
• Ability to raise investment capital. It is usually much easier to attract new investors into a corporate entity because of limited liability and the easy transferability of shares. Shares of stock can be transferred directly to new investors, or when larger offerings to the public are involved, the services of brokerage firms and stock exchanges are called upon.

There are pros and cons to operating your business as a corporation. One of the biggest tax disadvantages for the ordinary C corporation is the dreaded double taxation. Many business owners opt for electing to operate their corporations under subchapter S of the Internal Code. Also known as an S corporation, this entity allows income to pass through to the individual shareholders.

The Limited Liability Company (LLC): New Kid on the Block

In earlier editions of this Top Tax Savings Ideas, the S corporation had been referred to as the logical choice for those small businesses that need to steer away from the regular corporation and its potential tax pitfalls. Increasingly, however, the LLC has been coming to the forefront as another viable alternative. This is especially the case now that much of the air is clearing within the various state laws and professional organizations that deal with LLCs. In fact, many practitioners argue that the LLC is now the preferred choice in the following situations where:

• Legal liability protection is a primary concern
• A simplified “one time” tax on the owners is preferred to dealing with cumbersome corporate tax liability
• The entity cannot qualify for subchapter S status

An LLC is a hybrid entity that has the legal protections of a corporation and the ability to be taxed (one time) as a partnership. In many regards, LLCs are treated much like S corporations for tax purposes. However, there are some additional advantages over S corporations, including the following examples:

• The LLC usually offers better leeway for owners who wish to write off business losses in a business that relies on entity-related debt that is incurred
• The LLC allows greater flexibility for the owner to take assets out of the company without incurring unplanned tax liability

Remember to check with your lawyer or accountant about the advantages of the LLC in your particular state. Ask up front what it would cost to form a corporation versus the cost of forming an LLC. You may be surprised to learn that in some states an LLC could be established by filing a simple, one-page document, which lays out the Articles of Organization of your LLC, with the secretary of state.

You can form an LLC for any lawful business as long as the nature of the business is not banking, insurance, and certain professional service operations. By simply filing articles of organization with the respective state agency, an LLC takes on a separate identity. Similar to a corporation, but without the tax problems of the corporation, it will be taxed like a partnership.

Working with angel investors means acquiring venture capital from individual investors. These individuals look for companies that exhibit high-growth prospects, have a synergy with their own business or compete in an industry in which they have succeeded.

This type of capital is appropriate for early-stage companies with no revenues or established companies with sales and earnings. Companies seeking equity capital from angel investors must welcome the outside ownership and perhaps be willing to relinquish some control. To successfully accommodate angel investors, a company must also be able to provide an “exit” to these investors in the form of an eventual public offering or buyout from a larger firm.

The supply of angel investors is large within a 150-mile radius of metropolitan areas. The more technology driven an area’s economy, the more abundant these investors are.

The best use of this type of capital runs the gamut, from companies developing a product to those with an established product or service for which they need additional funding to execute a marketing program. Also, angel investors are appropriate for companies that have increasing product or service sales and need additional capital to bridge the gap between the sale and the receipt of funds from the customer.

This type of capital is expensive. Capital from angel investors is likely to cost no less than 10 percent of a company’s equity and, for early-stage companies, perhaps more than 50 percent. In addition, many angel investors charge a management fee in the form of a monthly retainer.

Angels are easy to find but sometimes difficult to negotiate with because they usually do not invest in concert and may demand different terms.

First Steps

Angel investors are at once difficult and easy to find. The situation is analogous to searching for gold. Generally, it’s difficult to find, but once you hit a vein…all your hard work pays off in a big way. Here are the places angels might be hiding:

• Universities: According to Bob Tosterud, Freeman Chair for Entrepreneurial Studies at the University of South Dakota, angel investors tend to hover near university programs because of the high level of new business activity they generate. He advises that if you are looking for money, call the nearest university that has an entrepreneurship program, and make an appointment to speak with the person who runs it. Generally, he says, such people can point you in the direction of angels.
• Business incubators: According to the National Business Incubation Association (NBIA), there are about 1,000 business incubators in North America. At first blush, incubators appear to be the mere bricks and mortar facilities that offer entrepreneurs reasonable rents, access to shared services, exposure to professional assistance and an atmosphere of entrepreneurial energy. But according to NBIA president and CEO Dinah Adkins, many business incubators offer formal or informal access to angel investors.
• Venture capital clubs: The tremendous wealth created through the commercialization of technology, as well as the robust stock market of the 1990s, have resulted in a large number of angel investors who have begun to formalize their activities into groups or clubs. These clubs actively look for deals to invest in and their members want to hear from entrepreneurs looking for capital.
• Angel confederacies: Some angels, shunning the formality of a venture capital club, band together in informal groups that share information and deals. Members of the group often invest independently or join together to fund a company. So-called confederacies are not easy to find, but once you locate one member, you gain access to them all, a number that could top 50 investors.

Here are 10 action steps you can take to find angel investors in your area:

1. Call your chamber of commerce and ask if it hosts a venture capital group. Many such groups have a chamber affiliation.
2. Call a Small Business Development Center near you and ask the executive director if he or she knows of any angel investor groups. Ask the SBA if you don’t know where an SBDC is.
3. Ask your accountant. If your accountant doesn’t know, call a Big Four Accounting Firm and ask for the partner who handles entrepreneurial services. Ask him or her to point you in the right direction.
4. Ask your attorney. Lawyers always know who has money.
5. Call a professional venture capitalist and ask if he or she is aware of an angel investor group.
6. Contact a regional or state economic development agency and ask if anyone there knows of an angel investor group.
7. Call the editor of a local business publication and ask if he or she knows of any groups. These professionals often write about such activity.
8. Look at the “Principle Shareholders” section of initial public offerings (IPO) prospectuses for companies in your area. This will tell you who has cashed out big.
9. Call the executive director of a trade association you belong to. Ask if there are any investors who specialize in your industry.
10. Ask your banker. If you do business at a small bank, ask the president of the institution. If yours is a larger commercial bank, ask your lender. If you do not have a lender, ask for a lender who works with loans of $1 million or less. A good small-business banker knows of such groups because companies that have received an equity investment are good candidates for a loan.

Everyone wants a piece of you. They send you e-mail. It makes you feel important. Love it? Really? Then, please take some of mine! More than 100 real e-mails come in each day.

At two minutes apiece, it will take three plus hours just to read and respond. Let’s not even think about the messages that take more than three minutes of work to deal with. Shudder. For whatever reason, everyone feels compelled to keep you “in the loop.”

Being buried alive under electronic missives forces you to develop coping strategies. Here are some of the non-obvious ones.

Readers Now Bear the Burden

Before e-mail, senders shouldered the burden of mail. Writing, stamping and mailing a letter was a lot of work. Plus, each new addressee meant more postage, so we thought hard about whom to send things to.

E-mail bludgeoned that system in no time. With free sending to an infinite number of people now a reality, every little thought and impulse becomes instant communication. Our most pathetic meanderings become deep thoughts that we happily blast to six dozen colleagues who surely can’t wait. On the receiving end, we collect these gems of wisdom from the dozens around us. The result: Inbox overload.

“But my incoming e-mail is important.” Don’t fool yourself. Time how long you spend at your inbox. Multiply by your per-minute wage (divide your yearly salary by 120,000 to get your per-minute wage) to find out just how much money you spend on e-mail. If you can justify that expense, far out–you’re one of the lucky ones. But for many, incoming e-mail is a money suck. Bonus challenge: Do this calculation companywide.)

Taming e-mail means training the senders to put the burden of quality back on themselves.

How You Can Send Better E-Mail

What’s the best way to train everyone around you to better e-mail habits? You guessed it: You go first. First, you say, “In order for me to make you more productive, I’m going to adopt this new policy to lighten your load�” Demonstrate a policy for a month, and if people like it, ask them to start doing it too.

• Use a subject line to summarize, not describe. People scan their inbox by subject. Make your subject rich enough that your readers can decide whether it’s relevant. The best way to do this is to summarize your message in your subject.
  • Bad Subject Line
    Subject: Deadline discussion
  • Good Subject Line
    Subject: Recommend we ship product April 25th
• Give your reader full context at the start of your message. Too many messages forwarded to you start with an answer–”Yes! I agree. Apples are definitely the answer”–without offering context. We must read seven included messages, notice that we were copied, and try to figure out what apples are the answer to. Even worse, we don’t really know if we should care.
  • Bad E-Mail
    To: Billy Franklin
    From: Robert Payne
    Subject: Re: Re: Re: Please bring contributions to the charity drive
    Yes, apples are definitely the answer.
  • Good E-Mail
    To: Billy Franklin
    From: Robert Payne
    Subject: Re: Re: Re: Please bring contributions to the charity drive.
    You asked if we want apple pie. Yes, apples are definitely the answer.
• When you copy lots of people (a heinous practice that should be used sparingly), mark out why each person should care. Just because you send a message to six poor co-workers doesn’t mean all six know what to do when they get it. Ask yourself why you’re sending to each recipient, and let them know at the start of the message what they should do with it. Big surprise, but this also forces you to consider why you’re including each person.
  • Bad CC
    To: Abby Gail, Bill Fold, Cindy Rella
    Subject: Website design draft is done
    The website draft is done. Check it out in the attached file. The design firm will need our responses by the end of the week.
  • Good CC
    To: Abby Gail, Bill Fold, Cindy Rella
    Subject: Website design draft is done
    AG: DECISION NEEDED. Get marketing to approve the draft
    BF: PLEASE VERIFY. Does the slogan capture our branding?
    CR: FYI, if we need a redesign, your project will slip.
    The website draft is done. Check it out in the attached file. The design firm will need our responses by the end of the week.
• Use separate messages rather than bcc (blind carbon copy). If you bcc someone “just to be safe,” think again. Ask yourself what you want the “copied” person to know, and send a separate message if needed. Yes, it’s more work for you, but if we all do it, it’s less overload.
  • Bad BCC
    To: Fred
    Bcc: Chris
    Please attend the conference today at 2:00 p.m.
  • Good BCC
    To: Fred
    Please attend the conference today at 2:00 p.m.
    To: Chris
    Please reserve the conference room for me and Fred today at 2:00 p.m.
• Make action requests clear.. If you want things to get done, say so. Clearly. There’s nothing more frustrating as a reader than getting copied on an e-mail and finding out three weeks later that someone expected you to pick up the project and run with it. Summarize action items at the end of a message so everyone can read them at one glance.
• Separate topics into separate e-mails…up to a point. If someone sends a message addressing a dozen topics, some of which you can respond to now and some of which you can’t, send a dozen responses–one for each topic. That way, each thread can proceed unencumbered by the others.Do this when mixing controversy with mundania. That way, the mundane topics can be taken care of quietly, while the flame wars can happen separately.
  • Bad Mixing of Items
    We need to gather all the articles by February 1st.
    Speaking of which, I was thinking–do you think we should fire Sandy?
  • Good Mixing of Items
    Message #1: We need to gather all the articles by February 1st.
    Message #2: Sandy’s missed a lot of deadlines recently. Do you think termination is in order?
• Combine separate points into one message. Sometimes the problem is the opposite–sending 500 tiny messages a day will overload someone, even if the intent is to reduce this by creating separate threads. If you’re holding a dozen open conversations with one person, the slowness of typing is probably substantial overhead. Jot down all your main points on a piece of (gasp) paper, pick up the phone and call the person to discuss those points. I guarantee you’ll save a ton of time.
• Edit forwarded messages. For goodness sake, if someone sends you a message, don’t forward it along without editing it. Make it appropriate for the ultimate recipient, and make sure it doesn’t get the original sender in trouble.
  • Bad Forwarding
    To: Bill
    Sue’s idea, described below, is great.
    —-
    From: Sue
    Hey, Abner:
    Let’s take the new design and add sparkles around the border. Bill probably won’t mind; his design sense is so garish he’ll approve anything.
  • Good Forwarding
    To: Bill
    Sue’s idea, described below, is great.
    —-
    From: Sue
    Hey, Abner:
    Let’s take the new design and add sparkles around the border.
• When scheduling a call or conference, include the topic in the invitation. It helps people prioritize and manage their calendar more effectively.
  • Bad E-Mail
    Subject: Conference call Wednesday at 3:00 p.m.
  • Good E-Mail
    Subject: Conference call Wednesday at 3:00 p.m. to review demo presentation.
• Make your e-mail one page or less. Make sure the meat of your e-mail is visible in the preview pane of your recipient’s mailer. That means the first two paragraphs should have the meat. Many people never read past the first screen, and very few read past the third.
• Understand how people prefer to be reached and how quickly they respond. Some people are so buried under e-mail that they can’t reply quickly. If something’s important, use the phone or make a follow-up phone call. Do it politely; a delay may not be personal. It might be that someone’s overloaded. If you have time-sensitive information, don’t assume people have read the e-mail you sent three hours ago rescheduling the meeting that takes place in five minutes. Pick up the phone and call.

Setting a good example only goes so far. You also have to train others explicitly. Explain to them that you’re putting some systems in place to help you manage your e-mail overload. Ask for their help, and know that they’re secretly envying your strength of character.

• Check e-mail at defined times each day. We hate telemarketers during dinner, so why do we tolerate e-mail when we’re trying to get something useful done? Turn off your e-mail “autocheck,” and only check e-mail two or three times a day, by hand. Let people know that if they need to reach you instantly, e-mail isn’t the way. When it’s e-mail processing time, however, shut the office door, turn off the phone, and blast through the messages.
• Use a paper “response list” to triage messages before you do any follow-up. The solution to e-mail overload is pencil and paper? Who knew? Grab a legal pad and label it “Response list.” Run through your incoming e-mails. For each, note on the paper what you have to do or whom you have to call. Resist the temptation to respond immediately. If there’s important reference information in the e-mail, drag it to your Reference folder. Otherwise, delete it. Zip down your entire list of e-mails to generate your response list. Then, zip down your response list and actually do the follow-ups.
• Charge people for sending you messages. One CEO I’ve worked with charges staff members five dollars from their budget for each e-mail she receives. Amazingly, her overload has gone down, the relevance of e-mails has gone up, and the senders are happy, too, because the added thought often results in them solving more problems on their own.
• Train people to be relevant. If you’re constantly copied on things, begin replying to e-mails that aren’t relevant with the single word: “Relevant?” Of course, you explain that this is a favor to them. Now, they can learn what is and isn’t relevant to you. Beforehand, tell them the goal is to calibrate relevance, not to criticize or put them down and encourage them to send you relevancy challenges as well. Pretty soon, you’ll be so well trained you’ll be positively productive!
• Answer briefly. When someone sends you a 10-page missive, reply with three words. “Yup, great idea.” You’ll quickly train people not to expect huge answers from you, and you can then proceed to answer at your leisure in whatever format works best for you. If your e-mail volume starts getting very high, you’ll have no choice.
• Send out delayed responses. Type your response directly, but schedule it to be sent out in a few days. This works great for conversations that are nice but not terribly urgent. By inserting a delay in each go-around, you both get to breath easier. >(In Outlook, choose “Options” when composing a message and select “do not deliver before.” In Eudora, hold down the Shift key as you click “Send.”)
• Ignore it. Yes, ignore e-mail. If something’s important, you’ll hear about it again. Trust me. And people will gradually be trained to pick up the phone or drop by if they have something to say. After all, if it’s not important enough for them to tear their gaze away from the hypnotic world of Microsoft Windows, it’s certainly not important enough for you to take the time to read.

Yeah, yeah, you have a million reasons why these ideas can never work in your workplace. Hogwash. Choose a technique and start applying it — right now.