Software Design's Impact on Productivity

The design phase of a software project will have ramifications to the users far beyond just getting it to work. The users’ productivity itself will be impacted by decisions made in the design phase. Here is a list of productivity issues to think about in the design phase of a software project:

1. People need to see what is only relevant to them in what they do. Too much information slows people down. This is probably the biggest productivity issue of all.

2. Minimize options. The more buttons on a screen, the more the user has to think about the process and how to proceed. This also has a negative impact on new employee training. They have to try all the buttons to really understand how the software works.

3. Involve the Users early in the design process. Release beta versions of the software as soon as possible and make it easy for the users to respond with their likes and dislikes. Finding out what works and does not work for users early in the project allows for relatively cheap changes with a big impact on productivity down the road.

4. Minimize innovation. Innovate only to solve technical challenges or to gain a specific business advantage. Innovation for innovations sake is hard to resist for most technical people, but it is more expensive and the outcome is less than certain. Changes to the look and feel of input screens, while neat, makes it tougher on the users.

5. Keep the coding simple. Simple coding is easier to read and understand a year or more later when all the design details are no longer fresh. Easier reading makes it easier to throw some little change into the mix and avoiding any cascading impact on other programs.

Better Passwords

Here is a super idea on using passwords. Most of us probably have a couple of basic passwords that we use to sign up with on various websites. The problem is that if any one of those sites becomes compromised, the key to all the other sites could become available to a hacker. To better control this problem, David H. Freedman wrote an article in the NY Times suggesting that you design a different password for each site using the following.

Come up with a simple formula for generating passwords in your head that’s based on the name of the site or organization you’re signing up with. For example, you might take the name of the site (tractortires.com), drop everything but the first six characters to the left of the “dot” (tracto), reverse the first three letters (artcto), add the number “5″ after the third character and a capital “Z” at the end (art5ctoZ). By this formula, “plan9movie.net” gets the password “alp5n9mZ,” and “cellphone.org” yields “lec5lphZ.”

You’ll also need a trick for dealing with site or organization names that have fewer than six letters, because you’ll want an eight-character password. You might, for example, just add in extra “5″s, so that the password for beer.net becomes eebr555Z. Make up your own formula, and don’t share it with anyone. It may sound a bit complicated, but after doing it a few times you’ll be able to do it in your sleep, and you’ll have a unique, impossible-to-guess password for every one of your accounts and sites without having to write anything down. The formula could be easily cracked, of course, but a hacker would need to get his hands on at least a few of your different passwords to figure it out.

This rather simple approach beats all of the others I have heard of including the idea of changing passwords every 30 days which nobody will do more than 3 months in a row.

How to Improve your Construction Firms Profitability

Every economist will tell you that the key to making more money than you make today is to increase your productivity. So, just how the heck do you do that? The answer is simple, improve how you do business. For small construction firms, the major deficiency that I see in their processes is how they do bids.

Most small firms don’t know what it costs them to bid a job. Absolutely no clue! Some of them can ball park what the last one cost, but they could not even hazard a guess on what their annual cost is. So, if everybody is bad does it make a difference? The answer is yes, if you want to make more money than the rest of the industry.

Just picture what an advantage you would have, not only knowing what it costs to bid, but having the cheapest bid system around. You could bid more often than your competitors for the same amount of money. You could also know when it’s profitable to bid and when it’s not. Just think about what this advantage could do for your bottom line over the life time of your business.

Once you begin to realize how important your bid process is to your firm, the next question is how do you make it more productive. The answer to this will never be a cookie cutter approach of downloading some software package from the web and begin pounding away. The problem is that many factors come into developing a better process that must be customized to your business and its strengths and weaknesses. Here are a few of the things to think about when it comes to getting started on improving your process.

1. This project will never be complete. Nature never remains static and your business is part of nature and always changing. Therefore, you should adopt a mindset that your bid process will always need more improvements and you need tools built into that process to monitor how it is doing.

2. It is the entire process and how it works together that determines its productivity. Bidding does involve a lot of accounting and software will be a major part of the process. But a lot of other factors are also included such as how experienced are the field people at inspecting the site and how efficiently are they scheduled for those visits.

3. Every business process has an error rate and fixing errors are far more costly than getting it right the first time. Your bid process should be able to monitor this error rate and its costs.

4. Your business and its bid process are unique to every other business. Given the cost of bidding and the potential benefit of getting it right, this is probably great time to consider outside help to get a customized approach to making bids more affordable.

How will the Fair Tax Impact you?

Our current tax system is costing us big time in compliance costs. The complexity is legendary and reached a point of absurdity. The most moral and ethical person in the world devoting 100% of their time to calculating the correct tax has no good reason for believing that they have succeeded at their task. It’s time for real reform and that means consideration of the Fair Tax, a national sales tax on consumption to replace the Income, Payroll, and Estate tax system. For information about the proposed Fair Tax Act, go to the Fair Tax Organization website at http://fairtax.org.

How will the adoption of the Fair Tax impact the different parties in society? I have compiled the following list to make it easy to figure out.

All Businesses:
• Corporate Income Tax Returns and 941 go away.
• All individual Income tax returns, including those of the self-employed and related self-employment taxes go away.
• Eliminates the need to hire professionals for tax planning purposes. All decisions, such as whether or not to purchase a piece of equipment or another business, can be made purely on the economic merits without considering the tax impact.
• Will be required to report employee gross pay once a year. This information is used to calculate individual social security eligibility and benefits.
• Exempt from paying the Fair Tax on any of its purchases provided the property is used in the business or is for resale. Failure to show a profit in at least 2 of the last 3 years could result in being reclassified as a hobby rather than a business.
• Must register as a sell with their state sales tax authority.
• May claim reasonable fees do to a direct dispute with the Government unless the Government can establish that its position was substantially justified.
• Must keep records of all purchases that were exempted from the Fair Tax for a period of seven years.
• Must remit the Fair Tax on goods or services given as gifts (i.e. Christmas turkeys, employee discounts) if purchased with an exemption certificate.

Retail & Service Businesses (includes quasi government units such as the USPO and Amtrak that receive payments from private individuals for goods and services):
• Must collect and pay the sales tax.
• Get a fee of .0025 of gross collections for their efforts.
• Liable for the tax unless they retain a copy of the registered seller certificate or other qualification statement issued by their state.
• Credit for sales tax paid on bad debts (assumes the seller elected the accrual basis).
• Insurance companies must report and pay Fair Tax on the amount paid for the service i.e. not the claims portion of the premium.
• Refunds for Fair Tax overpayments must be made within 60 days of the claim.
• Fair Tax return is due on the 15th of the following month.
• Small sellers that collect less $20K tax for the previous 12 months must remit by the 15th of the following month.
• Medium sellers that collect between $20K and $100K in any of the previous 12 months must deposit the collected taxes in a separate bank account each week within 3 business days. Remittance is required by the 15th of the following month.
• Large sellers must deposit all Fair Tax collected in a separate bank account and remit on a weekly basis. Additionally, they must post a bond equal to the greater of $100k or 1.5 times the average monthly tax liability for the last six months.
• Burden of proof regarding exempt sales is on the Government if the seller has the properly completed intermediate sale or export sale certificate.
• Must keep records to include copies of all tax receipts provided to customers, copies of intermediate and export sales records, copies of certificates received from customers.
• Must provide customers with a receipt for each transaction that includes the price without the Fair Tax, the Fair Tax amount and rate, date of sale and the name and registration number of the seller. Exceptions for vending and financial intermediation services.
• Gaming businesses must report the tax based upon their gross receipts rather than when they sell lottery tickets or chips.

Not-for-profit organizations:
• Issued a “Qualification Certificate” by the state.
• Services provided at no charge are exempt from the Fair Tax.
• Products or services sold are taxable.

State Governments and Agencies:
• Can elect to collect the federal tax on behalf of the federal government for a fee.
• Must pay the Fair Tax on all purchases including the gross wages paid their employees. (Because governments normally do not charge for their service directly).

All Individuals:
• All income tax returns go away.
• All withholding and social security taxes go away from pay checks.
• Get a monthly “Prebate” check to reimburse them for the Fair Tax paid on basic living requirements.
• Liable for the tax unless they pay it to the seller and has a receipt with the amount of the tax separately stated.
• Liable for the tax on direct imports.
• Liable for the tax on goods purchased for business use and subsequently converted to private use.
• Up to $1200 per year in payments received by a person not in connection with a business are exempt i.e babysitting jobs.
• First $400 of directly imported goods per year does not have to be reported.
• Can expect an average price increase in the products they buy of between 1 and 2 percent. The tax itself is 23% but economic studies have shown that the average price paid today includes the buildup of income and payroll taxes of 21% which will be eliminated.

Investors:
• Earnings from investments are not taxed.
• Fees related to earnings are taxed.

Improving Business Productivity

In the end, it is productivity that will produce better long-term profits and nothing else. Yes, you could come up with a great sales slogan or package your product in such a way that people will pay a higher price for it. But such techniques will not produce superior profits for the long-term simply because your competitors will emulate you and commoditize the product. Improving productivity is the only reliable technique for getting more money to your bottom line.

So, how do you get your business to be more productive? This boils down to having better processes for doing business and who would better know how to improve those processes but the people working in them. However, as we all know, getting those people to think about efficiency and then actually speak up about it is a monumental task all in its own. So here is an idea that I recently read about that might work.

Have an “Idea Campaign” that runs for maybe 2 weeks soliciting suggestions that might reduce waste and inefficiency. To provide the right incentive to participate, offer a reward to share the first year’s savings with whoever makes a suggestion this is actually implemented. Be upfront in your requirements that the suggestion be measurable in order to qualify.

There are lots of stories about big companies using this approach to save millions. I can think of no reason why it couldn’t be used by small companies to save thousands while giving employees a good reason to think of their company in a different light.

Understanding your Cost Curve

I recently visited a new company using high tech equipment to frame pictures that were uploaded from the web by their customers. It is an impressive operation and it got me to thinking about a useful tool for anybody in lite manufacturing. A Cost Curve Graph showing the operational cost of producing the product at various levels of production.

The basic breakeven formula of (Variable Cost Percentage * Quantity) + Fixed Costs / Quantity would produce the total cost for any particular quantity. The steps in producing the Cost Curve Graph using a spreadsheet would be as follows:

1. Set the Variable Cost Percentage and the Fixed Costs at the top of the sheet.
2. Create a column for the Production Quantity.
3. Create a second column for the calculation of the per unit costs using the breakeven formula.
4. Create a range of the various quantities from zero to the maximum quantity your operations could handle in the first column.
5. Copy the calculation formula down the page.
6. Create a graph of the two columns.

What could you do with the graph?

• You could use it as an easy reference when quoting orders.
• You change the fixed costs to equal your weekly nut and use it as an estimator of profit for that week.
• You could use it to plan your capital improvements. At some point in time, maybe around 80% of capacity, your cost per unit begins to climb as bottlenecks in the production process start to develop.