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The Newsletter
Should You Loan to Employees? Know Your Options First
When employees turn to you for payroll advances to meet their unexpected cash needs, be sure you understand the impact of turning your business into a lender. While helping an employee with an immediate financial need is a virtuous act that promotes loyalty, there are downsides.

When word gets around, other employees may step forward with requests. If some requests are granted and others are declined, it will impact morale. And since a cash advance is usually repaid from the employee's future wages, if he or she leaves the company before the debt is repaid, you may have trouble collecting.

Longer-term loans: Unlike a cash advance that is paid back from the next paycheck, an employee loan may be long term. Long-term arrangements should be set out in writing with an interest-bearing promissory note executed by the employee. These promises for repayment are business assets, not expenses. Your bookkeeping simply shows less cash assets and more notes receivable assets.

Failure to establish guidelines could open your business to claims of unfair or illegal discrimination. So if you do decide to provide loans or advances, establish a written policy that specifies qualifications, maximum amounts, and repayment terms.

A gift, not a loan: Lending to an employee also may lead to future requests from the same individual. To avoid this, the employer could make it a one-time gift with clear financial limits that should deter future requests.

Staff gifts are generally accounted for as payroll wage expenses. Employment taxes are applicable, and the transaction is typically treated like any paycheck.

Speech to Computer Interface: Are "Robo-Butlers" Our Future?
Robot Butler
Computer-dictating systems have been around for years, but until recently they were notoriously - and often laughably - inaccurate, imprecise, and prone to errors.

These days more people are interacting with technology using the spoken word. The newest generation of voice-enabled devices makes dictating memos, e-mails, and text messages reliable enough to be practical, and voice assistants, such as Apple's Siri, are available on most smartphones. Voice-driven apps can control smart appliances, furnish directions, answer questions, and give instructions.

But voice is not ready to replace other forms of computer interface (i.e., keyboards and touchscreens), at least not for a while.

"Deep learning" is the technology that enables voice recognition software to recognize and decipher human speech. It "teaches" computers to identify and interpret human speech using complex algorithms. Using deep learning, machines are now able to transcribe more accurately, and sound more natural, less robotic.

However, despite their deep-learning algorithms, computers can't carry on coherent conversations. They mostly can't comprehend the nuances of languages or the context in which words are spoken, and usually only respond to simple, one-off voice commands.

Mark Zuckerberg's "robo-butler," Jarvis, may be as close as we now get to a bot that can interpret and respond to human speech; but according to his Facebook post, even Zuckerberg himself currently prefers texting Jarvis to giving it voice commands.

Still, in many situations, speaking would be more convenient, safer, and natural than other means of communication. You can talk while driving, working out, jogging, shopping, or doing chores. As well, voice interface is already extending the power of computing to people who are unable, for whatever reason, to use screens and keyboards.

It's just not quite ready for prime time. Yet.

Making a Difficult Decision? Maybe You Should Sleep on It
Sleeping on job
When you were young, making a difficult decision could be daunting. "Sleep on it," your mother advised. And it turns out she was right.

In a LinkedIn article, Ryan Holmes, CEO at Hootsuite, writes: "There's great merit to being a decisive leader and trusting your gut. ... However, when it comes to making more complicated, high-impact decisions, it is crucial to take some time out - or to 'sleep on it.'"

Referring to research by neuroscience professor Justin Davis, Holmes reports that our brains have two systems for decision making.

The first is useful for quick decisions and is often based on gut feelings. And while it works well for less important decisions, it can blind us to the facts or, worse yet, to our personal biases.

The second, says Holmes, is a "slower system - a 'higher order' network that allows us to objectively reason and make rational decisions."

In New Scientist, Gaia Vince agrees: "Complex decisions are best left to your unconscious mind to work out ... and over-thinking a problem could lead to expensive mistakes."

Vince quotes Dutch social psychologist Ap Dijksterhuis: "At some point in our evolution, we started to make decisions consciously, and we're not very good at it. We should learn to let our unconscious handle the complicated things."

Suggests Holmes, "When you're faced with an especially complicated or consequential decision at work, try not obsessing on it ... instead, let it 'spin' in the back of your mind for a while."

Big decision? Resist your gut reaction and take a breather. Why not sleep on it?

Business Owners Should Track These Monthly
Mentioning accounting and finance may be a sure way to clear a room full of members of the public. But a room of entrepreneurs? Not so much. Entrepreneurs realize the failure of small business ventures is primarily attributable to poor accounting practices or improper financial management.

Monitoring your small business's financial statements is the only way to know how well you're doing and where improvements are most urgently needed. So carve out a little time each month to conduct a proper financial analysis, and begin by focusing on the basics:

The income track

Revenue growth and/or stability is key to your business's sustainability, so start with the top line on the income statement. Compare last month's revenue to the month immediately preceding it. Then compare it to the same month the year before. While you're at it, consider revenue per hour worked by all employees, including you. This a very informative measure of productivity.

Have you experienced a singular event, such as a particularly large sale? If it's a one-off, treat it as a singular event. But if you want continued large sales, you'll need to focus your marketing efforts on ensuring this happens.

Looking at concentrated income can also be informative; for instance, if a single customer provides a large portion of your revenue, it can be a problem if that customer buys less in the future.

Don't become so focused on top-line revenue that you ignore profit margins, which validate efficiency. Net profit margin (shown as a percentage) is derived by dividing profit by total sales. While a lower number can be acceptable in the short term, prolonged negative margins are cause for alarm: either your expenses are too high or your prices, too low.

Gross profit margin is the difference between sales and the product costs divided by sales. If you resell products, you need a consistent gross margin; rising costs would necessitate a commensurate increase in prices. Know which of the things you sell are the most profitable based on gross profit margins.

The operations engine

To be efficient, a business must promptly collect accounts receivable, remit accounts payable, and resell inventory. Know how many times last month these financial figures turned over. Receivables' turnover is the period's sales to customers on credit divided by the period's average accounts receivable. Payables' turnover is the period's expenses billed by vendors divided by the period's average accounts payable. Inventory turnover is the period's cost of goods sold (for inventoried items) divided by the period's average inventory.

The important information is the frequency with which new receivables, payables, and inventory replace the old. Consistently high turnover numbers represent management efficiency; low turnovers are warning signs.

Help is available

If you don't want to crunch the numbers yourself, accountants and bookkeepers can help by compiling the financial data needed for evaluation, assessing this data, and comparing your business to others in the industry. Once you have this valuable information, you can adjust. And succeed.
Michele Ball
Perfect Additions
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Worth Reading
Work. Walk Five Minutes. Work
By Gretchen Reynolds
The New York Times
Walk for just five minutes an hour and you'll elevate your mood, and, for those of us tempted by the muffins at the coffee shop around the corner, even curb your hunger. A recent study suggests that short interludes of activity spaced throughout the day may be a simple, practical, effective way to improve employees' health and well-being without diminishing productivity.

What You Need to Stand Out in a Noisy World
By Dorie Clark

Harvard Business Review

How can you make your ideas stand out among the noise? Simple. You need social proof (for credibility), content (to define yourself as an expert), and networking (to generate as well as disseminate ideas). Says Clark, without at least two of these, it's almost impossible for your message to break through.

Successful People Use These Techniques to Speak Up for Themselves - and Stay Likable
By Adam Galinsky

This "lightly edited" Ted Talk highlights the importance of speaking up and helps the mild-mannered among us to get there. Whether you're relaying a difficult truth, expressing an unpopular viewpoint, or advocating for your own interests, you can push yourself out of your comfort zone and speak up. Galinsky can help.

This Month: Essential Technology
No business can survive in today's digital market without using some of the many essential technological tools of the trade. The secret is knowing which tech tools are essential and which are passing fads. Following are helpful guidelines on the use of technology to help build your business:

Here's how to transform your business model to be a leader in the digital age:
7 Essential Steps For Digital Transformation

What technology should you incorporate into your small business?

Here are nine tech categories that are key when spending your tech dollar:
Checklist of Essential Small Business Technology in 2017

Which technologies are the best? These eight have risen to the top:
What are the eight essential emerging technologies for business?

Where is technology trending?
Five emerging technology trends essential to business success

Find your essential tech tools for start-ups here:
4 Essential Tech Tools for Startups
This newsletter and any information contained herein are intended for general informational purposes only and should not be construed as legal, financial or medical advice. The publisher takes great efforts to ensure the accuracy of information contained in this newsletter. However, we will not be responsible at any time for any errors or omissions or any damages, howsoever caused, that result from its use. Seek competent professional advice and/or legal counsel with respect to any matter discussed or published in this newsletter.
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