Monday, April 21, 2008

Are You a Doer or a Spectator?

American Idol is the #1 show for Fox and it has a strong audience. I do not watch it, however, I am quite familiar with it. The other day I was having a cup of coffee reading my newspaper and minding my own business when two older men sat two tables away from me, they spoke so loud I was able to hear their conversation, they were bashing the current American idol contestants, one of the man said "they are terrible, I can do it better!" I refrained from voicing my opinion but I thought well "why don't you?" Obviously, those two men did not have the courage to go on stage to perform, otherwise, their conversation would have a different tone.

When entrepreneur decides to open his/her business many people begin to give their advice, most of the time without asking and most of these are poor advices. You may feel you do not want to hurt their feelings but you will need to decide to whom you should listened to.

As an entrepreneur you should know where to find your answers. You should have a team of advisers: CPA/Accountant, Attorney/Paralegal, Banker, Financial Planner, Insurance Agent. You should be a member of at least a couple of Chamber of Commerce, the more people you are exposed to the more you will be promoting your business and service, plus you will meet other business owners that may share the same challenges that you are facing, you may even learn from their experienced and apply it to your business. On today's paper on the Financial Times a headline stated: "Citi turns to HP for crisis advice" as you can see even big corporation learn from each other. Below is the article.

Citi turns to HP for crisis advice

By Francesco Guerrera and Kevin Allison in San Francisco
Published: April 21 2008 22:04 Last updated: April 21 2008 22:04

Citigroup has turned to Hewlett-Packard, the information technology group, for advice on how to revive its fortunes without breaking up the company – a novel move that underlines Citi’s efforts to defend its controversial business model.

People close to the situation said Citi’s top executives had recent talks with their counterparts at HP to learn how, over the past three years, the IT group managed to overcome a crisis similar to Citi’s.

The decision to tap the expertise of HP, which rebuffed investor pressure to spin off its computer business from the rest of the group, comes as Citi has been urged by some investors and analysts to split its wholesale and retail banking operations.
A big union – the American Federation of State County and Municipal Employees – is expected to renew the call for a break-up of Citi’s universal banking model at Tuesday’s annual shareholder meeting.

Other investors could also urge Vikram Pandit, Citi’s chief executive, to take radical action to reverse a 54 per cent fall in its share price over the past year and restore the company to profitability after two quarters of multi-billion dollar losses.
Citi on Tuesday prepared to sell up to $6bn of hybrid securities to bolster its balance sheet. Traders said the bank was offering the securities, which will pay a fixed interest rate over 10 years, in the market but terms had not yet been set.

Citi’s consultation with HP comes as Mr Pandit restructures the bank’s sprawling information technology operations in an effort to curb expenses, and cut jobs and layers of bureaucracy. The talks between the two companies have focused on IT issues, as well as general strategy, say people close to the situation.

Since replacing Chuck Prince in December, Mr Pandit has sought advice from several current and former executives, including John Reed, former head of Citicorp, one of Citi’s predecessor companies. Mr Reed was an enthusiastic proponent of the idea that efficient IT systems were crucial to the success of banking groups.
Citi and HP declined to comment.

People close to the situation say Citi officials see parallels between their situation and that faced by HP in February 2005 after the acrimonious departure of Carly Fiorina as chief executive. Ms Fiorina’s departure re-ignited debate about whether HP should spin off its personal computer business, whose low margins had been dragging down profits.

Morale was also at rock bottom after a tumultuous six years that had seen the dotcom boom and bust capped by HP’s controversial $19bn merger with Compaq.
However, Mr Fiorina’s successor, Mark Hurd, ruled out a break-up, and focused instead on making better use of HP’s PC business. HP began using its PC group’s scale to save costs. By the end of last year, profitability at HP’s PC group had almost caught up to that of HP’s archrival Dell. HP’s shares have risen nearly 17 per cent over the past year.

Mr Pandit also has rejected the idea of a break-up, arguing in a recent interview with the Financial Times that Citi’s model is a strength, not a weakness.
Like Mr Hurd at the beginning of his tenure, Mr Pandit has launched a cost-cutting programme, hoping to slash Citi’s $60bn cost base by up to 20 per cent.
Mr Pandit also intends to sell non-core businesses.

Tuesday, April 15, 2008

The Medical Business... Who is making the money?

During the past weekend I received a medical bill from my previous health care provider... Kaiser Permanente. It showed that I had a balance of over $800.0 due, pay upon receipt.

Monday morning I called Kaiser's customer service to let them know this was a mistake, the Kaiser representative told me my insurance was cancelled by my previous employer, I explained that I had COBRA and that I had made all the payments "well, it does not show that you did" Kaiser representative replied, so I called the COBRA provider Ceridian, I explained the problem and the gentleman explained..."we do not make the payments, we only collect the money and send it to the employer for them to make the payment." Come again? The purpose of my former employer to hire you is so that you manage the collection and payments for employees under COBRA. The representative repeated the same script... I said thank you,but I knew that he was giving me the run around, so I called the head of the HR department from my previous employer, right away we did a conference call with Ceridian, my former employer and myself. The conversation had a different tone, Ceridian acknowledged their mistake and the representative said the mistake should be solve within 7 to 10 days. Now I will check in 10 days to make sure they did what they were supposed to do in January.

This incident made me think... if Ceridian did not make the payment to Kaiser, it means that Ceridian kept the money in their bank account and earned interest on the float, then Kaiser did not receive the payment for the service provided to my family, Kaiser paid the doctor and the technician. Kaiser was out of the money. Then I though about the bill, $820.00 for two echos, why so much? Then I pondered, how can doctors and hospitals stay in business with insurance companies holding their payments for service rendered to patients. On the say day the Wall Street Journal published on their editorial "The Health Insurance Mafia" this piece confirmed what I thought of the current medical business model, why not cut off the middleman and deal direct with the hospital or doctors. Below is the complete article written by Dr. Kellerman, clinical professor of pediatrics and psychology at USC's Keck School of Medicine.

The following was published on the Wall Street Journal on Monday April 14, 2008

The Health Insurance Mafia

By JONATHAN KELLERMANApril 14, 2008; Page A15

Most discussions about the rising cost of health care emphasize the need to get more people insured. The assumption seems to be that insurance – rather than the service delivered by doctor to patient – is the important commodity.

But perhaps the solution to much of what currently plagues us in health care – rising costs and bureaucracy, diminishing levels of service – rests on a radically different approach: fewer people insured.

You don't need to be an economist to understand that any middleman interposed between seller and buyer raises the price of a given service or product. Some intermediaries justify this by providing benefits, such as salesmanship, advertising or transport. Others offer physical facilities, such as warehouses. A third group, organized crime, utilizes fear and intimidation to muscle its way into the provider-consumer chain, raking in hefty profits and bloating cost, without providing any benefit at all.

The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of "protection." But even the Mafia doesn't stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional "cost of doing business" increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.

Insurance is all about betting against negative consequences and the insurance business model is unique in that profits depend upon goods and services not being provided. Using actuarial tables, insurers place their bets. Sometimes even the canniest MIT grads can't help: Property and casualty insurers have collapsed in the wake of natural disasters.

Health insurers have taken steps to avoid that level of surprise: Once they affix themselves to the host – in this case dual hosts, both doctor and patient – they systematically suck the lifeblood out of the supply chain with obstructive strategies. For that reason, the consequences of any insurance-based health-care model, be it privately run, or a government entitlement, are painfully easy to predict. There will be progressively draconian rationing using denial of authorization and steadily rising co-payments on the patient end; massive paperwork and other bureaucratic hurdles, and steadily diminishing fee-recovery on the doctor end.
Some of us are old enough to remember visiting the doctor and paying him/her directly by check or cash. You had a pretty good idea going in what the service was going to cost. And because the doctor had to look you in the eye – and didn't need to share a rising chunk of his profits with an insurer – the cost was likely to be reasonable. The same went for hospitals: no $20 aspirins due to insurance-company delay tactics and other shenanigans. Few physicians became millionaires, but they lived comfortably, took responsibility for their own business model, and enjoyed their work more.

Several years ago, I suffered a sports injury that necessitated an MRI. The "fee" for a 20-minute procedure was over $3,000. My insurance company refused to pay, so I informed the radiologist that I'd be footing the bill myself. Immediately, the "fee" was cut by two thirds. And the doctor was tickled to get it.

A few highly technical and complex procedures that need to amortize the purchase of extremely expensive hardware will be out of reach for any but the wealthiest patient. For that extremely limited category, insurance might work. A small percentage of indigent individuals won't be able to afford even low-cost procedures. For them, government-funded county facilities are the answer, because any decent society takes care of the weakest among us. But a hefty proportion of health-care services – office visits, minor surgeries – would be affordable to most Americans if the slice of the health-care dollar that currently ends up in the coffers of insurance companies was eliminated.

When I was in practice as a psychologist, I discussed fees up front with prospective patients, prior to their initial visit. People appreciated knowing what to expect and my bad debt rate was less than 1%. That allowed me to keep my charges reasonable and, on occasion, to lower them for less fortunate patients. And I loved my job because I was free to concentrate on what I went to school for: helping people, rather than filling out incomprehensible forms designed to discourage me from filing them in the first place.

Physicians and other providers need to liberate themselves from the Faustian bargain they've cut with the Mephistophelian suits who now run their professional lives. Because many doctors are loath to talk about money, they allowed themselves to perpetuate the fantasy that "insurance is paying." It isn't. There is no free lunch and no free physical exam.
If substantial numbers of health-care providers shook off the insurance monkey on their back, en masse, and the supply of providers was substantially increased by opening more medical schools, the result would be a more honest, cost-effective system benefiting everyone. Except the insurance companies.

Dr. Kellerman, clinical professor of pediatrics and psychology at USC's Keck School of Medicine, is the author of numerous crime novels and three books on psychology. His latest novel is "Compulsion" (Ballantine, 2008).

See all of today's editorials and op-eds, plus video commentary, on Opinion Journal.
And add your comments to the Opinion Journal forum.

Monday, April 14, 2008

Know Your Rates... Or It Will Cost You!

What do I mean by the above subject?

Many times I meet with new business owners that do not understand how rates are calculated. The more experienced and sophisticated business owner will know how much his/her loan will cost. Here is what you need to understand, know and where to find the following information.

Consumer Rates/Business Rates can be found daily in the Money & Investing section of the Wall Street Journal, in the Financial Times it is located in the Companies & Markets section and in any other newspaper it is located in the Business section. Next, look for a box titled "Bonds, Rates & Yields" the title may change from paper to paper and here is the information that you will need:

Prime Rate

What is the Prime Rate? The Prime Interest Rate is the interest rate charged by banks to their most creditworthy customers (usually the most prominent and stable business customers). The rate is almost always the same amongst major banks. Adjustments to the prime lending rate are made by banks at the same time; although, the prime rate does not adjust on any regular basis. The Prime Rate is usually adjusted at the same time and in correlation to the adjustments of the Fed Funds Rate. The rates reported below are based upon the prime rates on the first day of each respective month.

Prime rate is the "Base" that banks use to charge their clients when they request a loan. For example: A banker tells you that your loan will be "Prime + 3" what does it mean? Well, we need find out what is prime. Currently Prime is 5.25%, now, the rate on your loan will be 5.25 + 3 which will be 8.25% how do you know this is a good rate? you will need to compare it with another bank. You will have to compare this rate with other banks in order to find out which is the best rate. There are cases when a lender will give Prime minus 0.25% or Prime minus 1% this is usually given to the best of the best of their clients.

As a business owner this is the most important rate you will need to know and understand so that you are not taken to the cleaners.

You can always contact me if you have any questions:

Thursday, April 10, 2008

CASE STUDY I: Minimize Cost & Leverage Technology

A few months ago a prospect of mine called me with an issue he faced. He owns an insurance company, the company has been in business for 40 years, it is a well established and profitable company, his sales force is scattered across the U.S and the world. His dilemma was that his sales people wanted to receive their commission checks sooner, instead of waiting four days for the mail to arrive plus the time it would take them to deposit the check in the bank, they wanted the money yesterday. He had a valid concern, he also wanted to keep the cost down, his current banker recommended wire transfers or a payroll vendor. He thought his options were limited.

His options were not limited.

As a good business owner, he wanted to keep expenses low and here is why: His bank will charge him $25 for each outgoing wire, the receiving bank would charge the sales person $15 or $25 for receiving the wire. If you multiply $25 times 30 sales people that would be $750.00! Mr. X would have to pay that amount each time he would wire the funds! then the sales person receiving the commission wire would pay $30 or $50 dollars each month.

The Payroll company would be able to process his request. The only problem was the cost, although it was cheaper than wiring the funds, it was still a few hundred dollars a months that would come from his bottom line.

I asked him if his bank offered business online banking, he replied "yes, it does." Then I recommended him to sign up for business online banking, the business online banking has an option called ACH TRANSFERS (ACH stands for Automatic Clearing House). This option enables the company to transfer funds from bank to bank at a minimal cost. Depending to which bank the money is send to, the funds will post within 24 to 48 hours. The ACH system allows you to create templates for each sales person and their respective banking information (this template can be saved for future transfers). Once you have created the templates you can send them in a batch. If one of your sales people gave you the wrong information, you will be notified via email of any problems. Now, what is the cost? $1.50 per batch (A batch can be from 1 item to 10,000 items). The monthly cost of the Business Online Banking is $60.00 per month. However, I recommended that his business checking account should be upgraded to a Business Analyzed Checking because then his monthly charges would be offset by his monthly balances, therefore making his business checking, business online banking FREE of monthly fees.

He was excited, he thanked me and we ended the conversation. The next day he came to my office and said... Let's do it!. I asked him what happened to the other banker, he said... "well, you gave me the information and you knew what you were talking about, so let's open the account."


Trans World Assurance has been in business for over 40 years, taking care of our courageous men and women in the military and their families. The company was founded by a decorated WW II veteran, the company is well run and managed.

If you like more information about the company go to their site.

Friday, April 4, 2008

The Importance of Management

"Management by objectives works if you first think through your objectives. Ninety percent of the time you haven't."

Peter Drucker

In my opinion the best writer on management, his writings and ideas revolutionised the field of management, business in general and in business academia. He introduced the term knowledge worker, the term Outsourcing was created/introduced out of Peter Drucker's desire to make businesses more efficient and to concentrate on their core products or services therefore becoming more profitable.
If you have never read Peter Drucker, I encourage you to do so. You will become more knowledgeable, more efficient and your business will become more profitable. If you visit Wikipedia and search Peter Drucker you will find more information about him and his work along with helpful links.

What are the traits of good Managers? and how do I become one?

Traits of Effective Managers
Build a team and lead it
Organize and plan
Solve problems
Manage money
Provide superior customer
Build strong public relations
Business Communication
In Your Written Communication:
Be clear and to the point
Keep duplicates
Develop a filing system
In Your Verbal Communication:
Be honest. Don't make promises you can not keep.
Don't say anything you would not put in writing.
Under promise Over deliver
In Your Phone Etiquette:
Sound confident and enthusiastic
Answer with a greeting
Keep a message pad and pen/pencil handy
Always end with a "Thank You"
In Your Networking:
You are building a relationship
Provide Feedback to your referral source
Always say "Thank You"
Management Issues
These are some of the most important management issues a manager will face, but it is not limited to list below.
Learn to delegate
Develop your internal and external team.
Look at the BIG picture: Develop management goals and strategies. Create a workable structure. Assign responsibilities.
Communication is Key.

Lead by Example.

Get advice... don't wait!

Have fun and be creative.

Good Luck!!

Wednesday, April 2, 2008

Public Relations and How it can help your business

What is Public Relations?

Public Relations is also known as PR, the definition of Public Relations is Building good relations with the company's various publics by obtaining favorable publicity, building up a good "corporate image," and handling or heading off unfavorable rumors, stories and events. Major PR tools include press relations, product publicity, corporate communications, lobbying, and public service.

What is the advantage of using PR? Public Relations is very believable, it can be news stories, features in order to promote products, people, places, ideas, activities, organizations, etc. PR can have a strong impact on public awareness at a much lower cost than advertising. To give you an idea: To place a one full page ad in the Wall Street Journal costs about $100,000. Radio, one spot, once a day for five days minimum cost $2,500. What is the cost of Public Relations? The company does not pay for the space or time in the media. Instead, it pays for a staff or agency to develop and circulate the information and to manage the events.

Imagine this: Let's say your staff or agency developed an interesting story about your product or service and your story is picked up by several media groups, let's say the Wall Street Journal, one of the local radio stations and one TV station. How much did you save?! and how much business will this create for you! Public Relations has more credibility than advertising. However, PR continues to be under utilized by many businesses and corporations.

Do not make the same mistake, learn about Public Relations and how it can help your business grow. There are a few steps you can take to help your business:

1. Take a college class (This assumes you have the time to go to class and do the homework)

2. Read on it and learn it. Visit the local library and read up on PR. Public Relations for Dummies is a good book. It gives you a good foundation. There are many others books on PR as well.

3. You can hire an expert. Once you know what you want but need an expert then search for one. (Do your homework!, meet at least three PR experts before you make a commitment, not all "PR Experts" are the same.)

Five years ago when I worked as a private banker with First Republic Bank I met Patrick Galvin, CEO of Galvin Communications in a network group. It was 7 am, a cold and foggy winter in San Francisco, while everyone was still half awake and sipping their coffee, Patrick stood up to give his presentation, I will never forget it, he was so enthusiastic and full of energy very passionate of what he does that I was taken aback. I asked myself, who is this guy? did he load up on sugar? His presentation was great and as I met Patrick, I learned that he is an energetic, passionate person and he truly believes in the power of public relations.
I have been at a couple of his seminars and put into practice some of the many techniques he taught us and I have to say that it helped increased my sales.

Well, here is an opportunity to come a learn about Public Relations, It will be FREE.
I encourage you to come, there is nothing lose but a lot of gain. Below is the information and GOOD LUCK!!

Free Buzz Marketing Seminar in Berkeley

The typical American is exposed to approximately 5,000 commercial messages a day. For most companies, it's too expensive to buy advertising that offers the necessary frequency and reach to break through commercial clutter. Fortunately, most people choose products and services based on positive buzz rather expensive advertising.

You are invited to attend Patrick Galvin's free "Galvanize Your Business with Buzz" seminar on Thursday, April 10, from 8 am to 10 am at OCSC Sailing. Patrick and his PR firm Galvin Communications ( have helped OCSC Sailing land outstanding press ( over the past four year including a recent feature in The Wall Street Journal. This will be Patrick’s third seminar at OCSC and his previous presentations received rave reviews.

Patrick’s seminar will show your how to:
Ensure that your best customers keep coming back
Inspire satisfied customers to refer their friends and colleagues
Grow sales through e-newsletters, blogs, viral videos and search engine optimization
Command free media coverage that is far more powerful than advertising
Leverage media exposure for maximum advantage
The free seminar will be held in OCSC's Club Room at One Spinnaker Way in the Berkeley Marina (full directions at To reserve a space, please RSVP to or call 503-249-8800 by Monday, 4/7. If you know people who might be interested in attending, please invite them. To learn more about Patrick and his speaking programs, visit