Thursday, March 25, 2010

Rewarding your employees when money is tight

As an entrepreneur, you need to always be mindful of your expenses (no matter what the economic conditions might be). Hard-working, trustworthy employees are one of the most important elements to a successful business. Obviously, you want to reward your employees to keep them motivated and dedicated to your business, but how can you do that if your budget won't allow it?

Praise is a simple way you can reward your employees (and it's free!). In a recent article on bnet.com (a business management site), Bob Nelson, a workplace consultant who has advised Fortune 100 companies on the use of praise, explains why employees need praise. "The only time you hear from the boss is when you made a mistake. And bosses think they don't have to do this because you're lucky to have a job now. People need it more but tend to get it less." Nelson's book "Keeping Up In a Down Economy" describes how managers and business owners can change their mindsets into acknowledging a "job well done". The key is to acknowledge the accomplishment as soon as possible by writing an email or note, making a phone call, or telling the person face-to-face.

However you decide to deliver your praise, you must be diligent in the words you use. In the book "The People Keeper: How Managers Can Attract, Motivate and Retain Better Employees", author and employee-retention consultant Mark Holmes says that it is very important to find specific qualities to show that you are truly sincere in your praise. Holmes suggest saying things like, "The thing I appreciate about you Joe is you're consistent," or "Suzie, you are great as a mentor with our younger employees." Holmes also stresses that praise, not money, inspires employees. "Money isn't inert. A few thousand here or there isn't going to be the reason you leave a job. What's important is how you feel about how you're fitting in, producing, contributing as part of the team, all non-monetary issues."

Praise article

As an entrepreneur, do you regularly praise a good worker? If you do praise your workers, do you think this has helped retention? Besides money, are there any other types of rewards that you think motivate employees?

Thursday, March 18, 2010

What does banning trans fats mean for the agricultural industry?

You may have heard news recently about the harmfulness of consuming too much trans fat. To combat this, California has implemented a ban on trans fats in all foods. All oils, margarines, and shortenings used in cooking must contain less than 0.5% trans fat per serving. If a restaurant is caught using trans fats, they can face fines up to $1,000. This law took effect on January 1, 2010 and is similar to bans in parts of Maryland, New York City, and Philadelphia.





I will assume that most consumers would want harmful fats removed from their foods, but what affect does this ban have on the agricultural industry? The biggest concern is obviously cost. Trans fats are used in foods because they are cheap. By banning cheap raw goods, food producers will have to use more expensive oils and therefore pass the cost increases onto to the consumers. Since this ban only began 3 months ago, I haven’t been able to find any data from food producers on cost increases and therefore cannot provide statistical information in this post. I am more so trying to alert food producers of a possible ban in their city or state and I am also looking for feedback from agricultural entrepreneurs about how this ban has already or would in the future affect their business.

Questions for agricultural entrepreneurs
If this ban spreads to your city or state, how will this affect your costs/sales/profits? Would changing the type of oil you use alter the taste of your food product?

For consumers
If the ban reaches your city or state, are you concerned about paying more money for foods affected by the ban? Do you think that other consumers might get a false sense that foods labeled as “trans fat free” are healthy?

Friday, March 5, 2010

How does an independent contractor differ from an employee?

As April 15th quickly approaches, you or your accountant has probably started preparing your business's taxes. Do you have people that work for you? If you do, they are either employees or independent contractors, but what is the difference?

In an article on openforum.com, New York CPA Paul Herman describes the differences between an employee and an independent contractor.

Employee
-under the direct control of the employer
-supplies, work space, and tools are provided by employer
-rate of pay determined by employer
-may work part-time or full-time with schedule set by employer

Independent Contractor
-not under the control of the employer
-uses own supplies (may be reimbursed for expenses)
-negotiates rate of pay with employer
-works on a project-to-project basis
-usually works for other employers as well

For more classification rules, please visit http://www.irs.gov/businesses/small.

After reading some of the differences, do you feel that you may have misclassified some of your employees? If you have, you need to make the appropriate changes before finishing your taxes. If the IRS finds evidence that someone you are calling an independent contractor is actually an employee, the IRS will charge you, the business owner, penalties for reclassifying the employee and back payroll taxes.



In a recent USA Today article, writer Dave Gram reports that claiming an employee as an independent contractor has cost the IRS and state governments billions of dollars in lost revenues. To recoup their losses, the IRS and 37 states are cracking down on this illegal practice. Make sure your employees and independent contractors are classified correctly to avoid audits which can lead to thousands of dollars (or more) in penalties and back taxes.



As an agricultural entrepreneur, do you feel that you may have classified your employees incorrectly? If you have been audited, what was your penalty?