Does the Federal Reserve Understand Small Business?

 

To answer the question, I have a simple one-word answer: No. It appears at least one of the Federal Reserve’s 12 districts does not have a practitioner’s understanding of small business. 

Small business is really the straw that stirs the drink in the nation’s ability to increase the number of jobs in this country. 

According to Small Business Administration (SBA) figures, small businesses make up more than 99 percent of all employers and employ more than half of all workers. Another SBA stat stands out: Small businesses have created 64 percent of all jobs in the last 15 years. 

But small businesses have really suffered during and after the Great Recession. 

So why is it that a 2011 study by the Federal Reserve Bank of New York draws the wrong conclusions as to why small business employee rolls dropped a lot more than big-business employment in the recent recession? 

The Fed’s study concludes that a drop in consumer demand triggered the cutbacks. Huh?

Fortunately, a blog by Dr. Scott Shane nailed the reason.

“I think two factors – reduced access to credit and the concentration of small businesses in the worst hit sectors of the economy – play a bigger role than the Fed researchers acknowledge,” he wrote.

I like his work, and have quoted him previously (Is the U.S. in Danger of Becoming Second-Rate in High Tech?). Dr. Shane is an entrepreneurial scholar – the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.

The Fed was right about the loss of small-business employment rolls — 10.4 percent among companies with fewer than 50 employees. And Dr. Shane agreed. As Biz Coach, a business-performance consultant, I see it every day. Small businesses did lose more jobs than their bigger counterparts during the Great Recession. So, we’re in agreement on the job losses.

“Businesses with fewer than 50 employees accounted for 28 percent of the 121 million Americans employed in the private sector in 2008, the latest Small Business Administration figures show,” wrote Dr. Shane. “That’s too much employment in small businesses for policymakers to find a way to fix the job problem without getting the smallest companies to boost hiring.”

He’s right again.

“Small businesses are underrepresented in two sectors that have weathered the downturn relatively well: exporters and those in research-and-development-intensive industries,” he wrote. “And small businesses account for much more of the employment in the sectors hardest hit by the downturn.”

As an example, he cites construction.

“While total employment fell only 4.4 percent from 2007 to 2009, employment in construction dropped a 19.4 percent. With so many small businesses in construction, this has meant heavy job loss,” he explained.

“The Fed researchers also play down the importance of tightened credit markets in accounting for the losses, arguing that most of the decline in borrowing by small businesses during the recession came from a decrease in demand for loans – not a reduction in supply,” he asserted.

He cites figures from the National Federation of Independent Business: “In March 2009, at the depth of the recession, only 29 percent of small business owners reported that their borrowing needs were being met, down from 40 percent back in February 2007.”

Dr. Shane points out home-price declines adversely impacted small business credit.

“A 2007 survey by Barlow Research Associates shows that one-quarter of small business owners use the equity in their homes to fund their businesses,” he wrote. “And research by Kean University professor Samuel Bornstein shows that many of the loans used to tap that equity were the Alt-A, adjustable-rate and interest-only mortgages at the toxic heart of the crisis…”The decline in housing prices sucked a large amount of small business credit out of the system.”

Dr. Shane indicated home equity loans for small businesses decreased $25 billion.

“If policymakers want to counteract the job losses in small business, they need to do more than say that the cause is decreased demand,” he concluded. “Rather, they need to stimulate the small business heavy industries that were badly damaged by the recession and keep credit flowing.”

Amen. Naturally, it follows that new strategies for small business credit are needed. However, now there’s a bigger problem.

My sense is that the small business credit situation – in the aggregate – won’t qualify such firms for loans. The chicanery by big banks led to reduced credit limits and they got away with charging 38 percent interest on business credit cards for dubious reasons.

From the Coach’s Corner, here’s a resource link:

11 Strategies to Keep your Small Business Floating above Water

“Dreams come true if you survive the hard times!”
-George William Curtis

 

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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

 

Options to Navigate This Marketplace Bedlam

Part one of two-part series: “Solutions for a Roller Coaster Marketplace”

 

OK, it’s been a wild ride, right? Uncertainties regarding Wall Street and funding are setting off alarm bells. But if you’re looking for capital, there are reasons to hope, according to leading consultant Joey Tamer.

Ms. Tamer acknowledges that the wildly gyrating stock market and withdrawals of initial public offerings are top-of-mind concerns.

“…the change in IPO activity may be the most significant,” she writes in a blog post, “Will stock market chaos create venture capital downturn?”

“Venture capitalists are excited by a predictable exit market, either strong M&A (mergers and acquisition) activity or several powerful IPOs coming in the near future,” she writes. “If they believe they must wait for these liquidity events, or cannot predict when these will be active, the VCs will become more conservative in their choices, and protect their portfolios.”

Ms. Tamer is imminently qualified to comment. As a trusted source on this business portal, she’s a strategic consultant to entrepreneurs in software, internet, technology, and tech/media.

Having experienced five downturns, she recalls the trends from the last two recessions – patterns, which could repeat now.

She says the patterns include:

• Deals that were not completed at that time rarely were completed.
• VCs took, justifiably, defensive measures to ensure that their existing portfolio companies had enough capital to move forward on their growth cycle.  The VCs allocated much of their existing Funds to those investments already secured.  This left much less for “venturing” into new risks. And the VC’s return on investment (ROI) on their portfolios was threatened, and that ROI is the basis of the VCs being able to raise their next Fund and so to survive.
• VCs became more conservative in the risks they would take.  On my various VC panels in the tech industry (Digital Hollywood, CES, and others), they admitted (this was 2008 and early 2009) they were “broadening their early stage searches” to include those startups that had revenue and market traction.  This criteria became a standard, leaving seed and Series A capital more and more to angel investors and angel groups.
• Deal terms became more aggressive against the entrepreneur, to protect the VCs from potential downside.
• Years of limited capital drove entrepreneurs to bootstrap their companies (since there weren’t jobs for them anyway) and get their companies into a much safer stage once the capital began to flow again.

Ms. Tamer cautions “the cycles of boom and bust are coming too close together.”

Specifically, she warns:

• After the downturn of 2000/2001, the VCs didn’t get truly active again until 2004.
• The next bust was 2008, with investment beginning again in 2010, and more actively in 2011.
• Three to four years of an active investing cycle is not enough time for entrepreneurs to recover from these downturns, especially if the uptick in investing lasts only 3 years going further.  This cycle stresses the VCs and their new Funds as well.
• VCs are handling portfolios with an exit cycle of 6-8 years from funding.  Entrepreneurs may launch and get traction in 3 years after funding (which means 4-5 years after they begin the company), but they are rarely scaling until year 4 post-funding.
• Notice the age of the potential IPOs — up to 8-10 years to build value and find a good IPO window (perhaps now closed again).

But as a knowledgeable veteran strategist, she knows fear leading to procrastination is unproductive for entrepreneurs.

I agree and often use two acronyms in illustrating the dangers of yielding to FEAR:

• “Frantic effort to avoid responsibility”
• “False evidence appearing real”

So, Ms. Tamer offers these strategies:

• Keep building your companies, your technologies, your breakthroughs.  Who knows what will happen next week or next month?
• Consider alternative forms of funding — private funding for an idea re-conceived for this new economic reality; strategic funding from a win/win bigger company that needs what you have; licensing and strategic revenue and no equity or debt funding at all;
• Consider a different take on your product or service idea, or your target market sector, or your market timing, and create a company that builds wealth for you independent of the vagaries of the stock market and other people’s ideas about capital, risk and what is real. This is my favorite kind of company to build.

See 6 Values for Financial Protection for part 2 of this two-part series: “Solutions for a Roller Coaster Marketplace.”

Ms. Tamer’s Web site and blog: www.joeytamer.com.

(Note: I highly recommend Ms. Tamer. She and I are longtime members of Consultants West, a roundtable of veteran consultants and authors, www.consultantswest.com.)

From the Coach’s Corner, be sure to read Ms. Tamer’s opinions on other topics:

10 Characteristics of a Successful CEO

Surviving Economic & Industry Downturns  

What Should You Divulge When Asking for Investment Capital?

Eight Strategies to Consider Before Starting A Tech Business

“Do the thing we fear, and death of fear is certain.”
-Ralph Waldo Emerson

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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

 

Primer for Best Practices in Preparing Financial Statements

 

A good financial system is vital for your business. Not only will a properly prepared financial statement tell you what’s transpired in your business, it will give you a snapshot regarding your future. 

Measurement of cash flow is paramount. 

In the two forms of accounting – cash basis vs. accrual basis – the cash-basis system is much simpler. 

In essence, the salient focus in the cash-basis system is getting money into your bank account. Then, you worry about paying the bills. When you make a sale, you deposit the funds. The date you receive the funds is recorded as the selling date. It doesn’t matter when you made the sale. 

Naturally, you pay your bills when the money is available. FYI, it doesn’t matter when the expense was incurred. In a cash-based system, the expense is recorded when it’s paid. 

Also, in cash-basis accounting, very little focus is given to matching the time period when the money is earned or the duration when they are incurred. 

In contrast, accrual-basis accounting is more complex. It will match your revenue to the actual period of time in which it’s earned; plus, it matches your expenses to the corresponding period of time in which they’re incurred. 

Again, it’s not nearly as simple as a cash-based system because it supplies a lot more data concerning the financials of your company. An accrual system gives you more meaningful information. You’re more able to keep records of the payments from the customers to whom you give credit. And it presents more information on your amounts due to your creditors. 

So, to keep your fiscal house in order, there is a common-sense approach for preparing financial statements. By using data from your ledger accounts, entries can be made on a worksheet. 

For the worksheet, it’s suggested you prioritize your entries in the following order: 

1. Income statement
2. Statement of retained earnings
3. Balance sheet
4. Cash flow statement

Here’s an explanation of each: 

Income Statement. You should include your expenses, revenue, and your net income. That means, of course, you convey your ledger account balances from your expenses, revenue, and your capital gains or losses. 

Statement of Retained Earnings. This report contains information from the start and ending of your retained earnings. 

A statement of retained earnings is derived from the following sources: 

• Using your previous statement of retained earnings, list your beginning retained earnings.
• From the prior income state, show your net income.
• Indicate the dividends paid from this accounting period.

Balance Sheet. Your balance sheet shows the following: Assets, liabilities and equity of shareholders in the company. 

How it’s assembled: 

• Show the remaining amounts of your asset accounts. They include cash on hand and your accounts receivables.
• Indicate your liabilities in what’s aptly named your liability accounts. This will include all accounts payable and notes.
• List your capital stock balance.
• Record your retained earnings – this is taken from the statement of retained earnings. 

Cash Flow Statement. All the data is vital, and my sense is that the cash flow statement is all-important as it reflects your ability to succeed in business. 

It includes the numbers that show why there are fluctuations in your cash on-hand. The cash flow statement will indicate your sources of cash. Further it will indicate how you use cash in all phases of your business – including operations, finances and investments. 

Remember the difference between accrual and cash systems. As a cash-basis report, your cash flow statement can’t be drawn from the ledger account balances of an accrual accounting approach. 

So, you use one of two methods to create a cash flow statement from accrual-system data. 

Your optional methods are: 

1. Direct – subtract your cash disbursements from your cash receipts in this method.
2. Indirect – from your net income, you add or subtract your non-cash entries.

From the Coach’s Corner, here related resource links: 

8 Simple Strategies to Give You Pricing Power 

Step-by-Step Solutions for a Company Turnaround 

Management Strategies for a Successful Turnaround

What No One Tells You about Raising Investment Capital

What Should You Divulge When Asking for Investment Capital?

Eight Strategies to Consider Before Starting A Tech Business

“The fact is that one of the earliest lessons I learned in business was that balance sheets and income statements are fiction, cash flow is reality.”

-Chris Chocola 

 

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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Management Strategies for a Successful Turnaround

 

Businesspeople everywhere are preoccupied by budget woes – the need for turnarounds in business and government. Fortunately, the U.S. government debt-limit issue is temporarily solved.

Policies in the nation’s capital affect business. 

Despite their challenges in business, by a wide margin, the most-viewed news videos on this business portal have been the reports on the debt-limit debate in Congress. To summarize the fiscal doldrums of the United States – the nation has been managed poorly – a turnaround is necessary. 

A quote by financial-world wizard Warren Buffett is apropos. 

“I could end the deficit in 5 minutes,” he said on CNBC. “You just pass a law that says that anytime there is a deficit of more than 3 percent of GDP, all sitting members of Congress are ineligible for re-election.” 

To Mr. Buffett’s observation, I’d add another thought about politicians: Cancel the security blankets – their lifetime benefits. Relatively few politicians are paying attention to the available reams of risk analysis. 

In considering management strategies for successful turnarounds, certainly one of the considerations is the evaluation of risks. In this regard, another relevant quote by Mr. Buffett strikes me as funny, but true. 

“Risk comes from not knowing what you’re doing,” Mr. Buffett said. 

My response: “Touché.” 

It’s all about capital mobility created by effective management. 

Indeed, companies can be successful when they’re managed well. It stands to reason that turnaround success starts at the top – management must know what it’s doing. 

Not to oversimplify because every situation is different, here are 11 principles in turnarounds: 

1. Before acting, get the right information. Don’t get paralysis from too-much analysis, but know the difference when to act quickly or to be still. That’s where having experienced advisors will be productive for you.
2. For a 180-degree turnaround, use a 360-degree approach – many solutions lie within your company. Employees should be assets. Conduct an organizational assessment. Some employees can provide valuable insights about company culture, accountability, middle management, processes, internal communication, and customer preferences.
3. Consider yourself a CEO of your profession, not just your company. Complete balance is necessary. Whether you’re in the automobile business or technology, consider the perspectives of all your stakeholders not just your company.
4. Be careful to whom you listen. Lawyers don’t always know best. After the Gulf oil spill, my sense is that BP suffered by listening more to lawyers than reputation experts.
5. Become a master in tough-love management. Don’t allow yourself to become uncomfortably straitjacketed. You have to make tough decisions on which to act. This is not a time for people-pleasing. Get rid of unproductive employees.
6. Analyze the root causes of your situation. They usually include the poor-employee performance, marketplace competition, inaccurate sales forecasts, unproductive strategies, weak execution of strategies, expenses, inadequate cash flow, ineffective financial controls, and weak economy (which is why my writing also focuses on public policy).
7. Assuming your firm is worth the turnaround effort, assess your prospects.
8. Consider time-proven tactics, which include dumping poor assets, increasing revenue, lower costs, and making strategic purchases.
9. Develop and implement an emergency cash-flow plan.
10. Restructure your company by improving company culture, making operational changes, adding or changing products, and by fixing your branding approach.
11. Think big picture – start working to become the authority for your industry. That includes public policy.

If you can’t enjoy a return to profits, an exit strategy is your last alternative. An immediate abandonment strategy means you might have to sell to another company or liquidate your assets. 

Otherwise, you might consider harvest strategies, which allow you to evaluate your success against benchmarks. Options include preparing an initial public offering or selling to your employees in an employee stock option plan (ESOP). 

For an ESOP, you’ll need a positive company culture. Poor morale or divisions among employees will lead to their failure as a company. 

From the Coach’s Corner, consider these financial-resource links: 

Step-by-Step Solutions for a Company Turnaround 

8 Simple Strategies to Give You Pricing Power 

“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”

– Peter F. Drucker

 

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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

 

Russell Investments Survey: 88% of Financial Advisers Change Approach

 

Sept. 9, 2010

 

Dynamic marketplace changes have prompted many financial advisers to change their approaches for clients, according to the new quarterly survey by Russell Investments.

“Many (financial advisers) tell us they are either being more conservative or reducing risk in client portfolios,” indicated author Phill Rogerson, who is the managing director, consulting services at Russell. “Client fear and uncertainty appear to be the primary motivation for this shift.”

Here are some of the Russell Sept.2010 survey responses:

• 45 percent – moving to fee-based accounts from a transactional basis
• 39 percent – selling more annuities
• 9 percent – staying the course
• 3 percent – inactive

Regarding risk-aversion fear of clients, 22 percent of advisers have become more conservative by decreasing the level of risk.

Fifty-nine percent anticipated shifting funds to global equities. That’s an increase of 11 percent over the results from Russell’s June 2010 survey.

Most are using strategic asset allocation vis-à-vis tactical for diversification of client portfolios.

Advisers confirm they feel challenged by their clients, as a result of volatility and decreasing revenue.

“In response, some advisors are taking a longer-term approach by transitioning their clients to a fee-based planning focus, while others are making short-term changes in response to investor demand for guaranteed income products and tactical market calls,” the study indicated.

“Modest signs indicate that investors may be slowly creeping back into the market, as the percentage of advisors who plan a shift away from cash increased 10 points from the June survey to 43 percent,” according to the survey. “The movement out of cash is tempered by opposite sentiment for other more conservative asset classes. Compared to three months ago, an average of 27 percent more advisors indicated they are shifting assets into corporate bonds, high yield bonds, and U.S. Treasuries.”

Our global digital age is also prompting changes in how advisers communicate with their clients:

• 45 percent – use customer relationship management technology
• 43 percent – “I’m leveraging technology to help scale my practice”
• 35 percent –  “I’m discontinuing the use of hard copy material by emailing or delivering electronically”
• 20 percent – “N/A; I’m not leveraging technology to communicate with clients”
• 1 percent – “Engaging with existing and prospective clients on Facebook”

Russell tells advisers that revenue per client is most salient.

“Russell’s analysis in conjunction with advisory practice data from Moss Adams® suggests that the most profitable firms in the industry earn revenue per client ranging from $7,000 to $13,000, depending on the type and size of firm,” the study indicated.

So what’s a key take-away from the study?

“Russell believes that the most successful financial advisors will be the ones who focus first on goals-based planning and second on providing a diversified, global investment solution to implement the plan,” the study said.

From the Coach’s Corner, actually, while not a big surprise from my perspective, the survey results are interesting in confirming the issues facing advisers and their clients.

You can see the Russell survey results.

The Russell site: www.russell.com

The Moss Adams online address: www.mossadams.com.

SBA Web Chat: Tips on Healthcare Tax Credits

 

Aug. 4, 2010

If you need up-to-date information on healthcare for your small business, the Small Business Administration is holding a Web Chat. The SBA’s Web Chat will highlight small business health care, with a focus on how the Affordable Care Act will benefit small business owners through available tax-saving incentives.  

Participants can learn about the newest tax credits they can take advantage of, and additional tax provisions to be implemented during the next several years.  

John Tuzynski, chief of Employment Tax and Specialty Programs for the Small Business Self-Employed (SB/SE) Division at the Internal Revenue Service, will host the August web chat on “Healthcare and Small Business.” 

SBA’s Web chat series provides small business owners with an opportunity to discuss relevant business issues online with experts, industry leaders and successful entrepreneurs.  Chat participants will have direct, real-time access to the Web chats via questions they submit online in advance and during the live session, with instant answers. 

WHEN: August 12, 2010, 2010, 1 p.m. ET. Mr. Tuzynski will answer questions for one hour.      

HOW: Participants can join the live Web chat by going online to www.sba.gov, and clicking “Online Business Chat.”  Web chat participants may post questions before the August 12^th chat by visiting http://web.sba.gov/livemeeting/Aug10/ and posting their questions online. 

To review archives of past Web chats, visit online at http://www.sba.gov/tools/monthlywebchat/index.html.

From the Coach’s Corner, however, please note these columns:

Healthcare Reform Increases Costs to Workers, Study

How Healthcare Law Would Affect Small Business

Oxymorons: ‘Healthcare Reform’ and ‘Public Servants’

Look for Significant New Fair-Value Accounting Standards

 

Aug. 4, 2010

As a company shareholder, you will see more transparency as the result of new fair-value accounting standards proposed by the Financial Accounting Standards Board (FASB). But the transparency means substantially more work to prepare financials, according to Daniel Figueredo, manager of San Francisco Bay Area accounting firm, Burr Pilger Mayer.

He was interviewed by Sue Ostrowski at the Smart Business Network.

“The new standards in the exposure draft will help converge the U.S. generally accepted accounting principles (GAAP) with international financial reporting standards (IFRS),” says Mr. Figueredo. “It’s a pretty robust draft with many new disclosure requirements. If it’s issued as is, it will be challenging for businesses.”

Mr. Figueredo says companies will be required to divulge how they arrive at conclusions when presenting fair-value financials based on changed assumptions.

“One of the most significant disclosure requirements that could affect businesses is the need to disclose a sensitivity analysis that attempts to measure the uncertainty in your fair value measurements categorized as level 3, which are the items that require the most management judgment to value,” Mr. Figueredo tells Ms. Ostrowski. “You will have to disclose the range of that price change, thus giving a reader a sense of the degree of possible swings to your balance sheet for other likely fair values that one could have arrived to.”

As an example, he cites banks with mortgage-backed securities.

“These instruments require a fair amount of judgment by management to value, and would likely be categorized as level 3,” he explains. “Factors considered in measuring the value of a mortgage-backed security could include pre-payment assumptions, default rates, loss severities and discount rates, to name a few.”

He says banks will have to establish the most-salient valuation assumptions. Then, they will have to ascertain other sums that were possible to consider in determining a different conjectural fair value.

Another significant change:

“As part of the new provisions, the exposure draft indicates that you should not consider blockage factors for level 2 or 3 fair value measurements,” he explains. “That essentially means that you should not take further discounts to fair value just because you own a large chunk of shares, such as with large investors like Warren Buffet’s Berkshire Hathaway or hedge funds.”

He explains the difference if a company should have to liquidate:

“…that sale will affect the price of the stock (typically downward),” he says. “But you could very easily sell smaller chunks of stock over longer periods of time. Blockage discounts are viewed as transaction costs, and the effects should be recognized when the decision to sell a block is carried out, rather than as period to period fair values.”

The article also explains more on how the changes will affect companies, what types of firms will be impacted and how they can prepare. For more details, here’s the link to the article:

From the Coach’s Corner, if you’re like a lot of companies in a financial turnaround situation, here’s a resource: Step-by-Step Solutions for a Company Turnaround. 

Tax Increases Will Cost Washington Businesses, Consumers $6.7 Billion Next 10 Years

 

July 15, 2010

The well-documented lack of transparency and suspension of voters’ rights by Washington state lawmakers in the 2010 legislative session will soak taxpayers an additional $6.7 billion over the next 10 years, according to a new study by the Washington Policy Center (WPC).

“State lawmakers raised taxes at the worst possible time – in the midst of a recession with record-high unemployment levels,” says Dann Mead Smith, WPC President. “We compiled this report to help give taxpayers a clearer picture of the details and cost for each tax increase.”

The respected think-tank’s study is comprised of 12 pages of data, which includes an explanation of each tax increase and details of how each tax increase encumbers businesses and consumers for the next 10 years.

As it has done repeatedly over the years, the Legislature suspended the protections voters passed in Initiative 960, which required transparency and a two-thirds legislative majority vote in order to hike taxes. The Legislature passed SB 6130, which suspended the voter protections against unwanted new taxes.

“The bill temporarily repeals provisions of voter-approved Initiative 960 until July 1, 2011,” states WPC’s report at www.washingtonpolicy.org. “Washington voters passed Initiative 960 on November 6, 2007.”

The $800 million in new taxes include:

• Business and Occupation taxes
• Canceling Real Estate Excise Tax exemptions
• Increasing taxes for Public Utility Districts
• Hiking the 911 excise tax
• Hospital Bed taxes
• Bottled water, soft drink, beer, candy and gum taxes
• Tobacco taxes including a 500 percent increase on cigars

“Lawmakers increased total state spending by 43 percent in the last five budget cycles, a period in which state population grew only 11 percent, and inflation increased just 19 percent,” states the Report on 2010 Tax Increases in Washington State.

“By repealing the non-binding advisory votes, lawmakers expected their names would not appear in the official voters’ pamphlet for 2010 next to a description of the tax increases they had enacted,” the study notes. “The purpose of this report is to provide much of the information the public would have received in the official voters’ pamphlet if the legislature had not repealed the public disclosure provisions of Initiative 960.

Well,  if you’re unsure how your legislator voted on taxes and other issues, visit: www.washingtonvotes.org.

Meantime, here’s a tip of the Biz Coach cap to Washington Policy Center for its usual fine work.

From the Coach’s Corner, you might be interested in the results of these polls:

1. More Voters Say Washington State is Headed the Wrong Way
2. Big Surprise in Washington State Race for U.S. Senator   

If you want to do something about these tax increases, you might also want to consider these organizations:

• Association of Washington Business, www.awb.org
• Enterprise Washington, www.enterprisewashington.org

Business Got You Down? Tips for a Morale Boost

 

If sales are discouraging and you feel like you’re on a treadmill going nowhere, it’s probably because you’re worried about the future. Trust me, you’re not alone. The trick is taking baby steps and not worrying about the future results. Instead, focus on the positive. Business success and strong sales stem are made possible by enthusiasm, and an attitude of service and gratitude.

This means not focusing on the proverbial “results department.” That department door might not open. So only focus on footwork and simply knocking on the “results department door.” Imagine knocking on one door and then moving quickly to knock on another.

Don’t wait for the doors to open because that’s what leads to despair. It’s true that a watched pot never boils.

Moreover, this is a good time to measure your progress – not your obstacles. Consider the acronym, GO, which stands for gratitude and options.

By way of explanation, sometimes discouragement is so bad a businessperson obsesses about what’s not working instead of relishing what is working. By focusing solely on the problems they become bigger. When that happens, it’s an endless cycle of despair. The person feels trapped.

Conversely, if a businessperson focuses on the positive, such an attitude of gratitude opens the person up to a childlike wonder and creates hope. Hope leads to options. So, with hope, anything is possible. Know that for each problem – I prefer the word challenge – there are 10 possible solutions for options.

But how can you get gratitude and options?

First create hope for growth. Examine the progress you have made and start a gratitude list. Pat yourself on the back for any footwork. Start by asking yourself, “Where, how, when, why and with whom have I made progress?” Write or type your answers. No progress is too small to list.

For some examples of progress to list, ask yourself these 10 sample questions:

1. What networking events, lunches or meetings have I attended?
2. What new acquaintances have I made?
3. What recognition or positive comments have been made by others about me?
4. What free publicity have I received either from my efforts or those of others?
5. Have I created a new Web site or marketing collateral?
6. Any new skills or knowledge?
7. Have I attracted any new clients or retained old clients?
8. Are there any companies or businesspersons indicating interest in my capabilities?
9. Have I done any pro bono or volunteer work?
10. Do I have a support system or mentor?

If you can’t give a positive answer to the 10 questions, then do what you have to do for the right answers. That’s just to get you started. Perhaps there are other pertinent questions you can ask.

Now, it’s time for a new vision for growth – here’s how:

1. Write out your vision plan. One page will do.
2. Set goals for footwork – not results.
3. Periodically, each day ask yourself, “Is what I’m doing right now, productive?” (Chances are it isn’t productive, so focus on what is.)
4. Keep records of your baby steps.
5. Honor your progress with gratitude and keep it going with affirmations.
6. Stay in close contact with your support system.
7. Get exercise, sleep and medical care when needed.
8. Practice stewardship of your assets. Focus on cleanliness and organization.
9. Focus on your favorite hobby and recreation.
10. Ask clients for feedback. If a client complains, don’t get defensive just take notes. When you’re complimented, ask for referrals to two people who might also appreciate what you have to offer.
11. Keep on practicing gratitude. Always handwrite a thank you note when someone considers buying or hiring you. Thank people for their business. In fact, in every e-mail, note, meeting or telephone conversation, remember 98 percent of the time a thank you is warranted.
12. Keep in mind the adage, “What goes around comes around.” Try to listen more and avoid treating others as though they’re invisible, and you will be accorded greater respect.
13. Keep smiling. A jovial Joe or Jane is an attraction to others.
14. Look around for someone else to help. This will help you smile.
15. As you succeed, carry this message to others.

As you go along and think of other pointers, add them to these suggestions.

Now, GO! Good luck!

From the Coach’s Corner, here are 30 Time Management, Stress Reducing Skills. 

“The best morale exist when you never hear the word mentioned. When you hear a lot of talk about it, it’s usually lousy.” 

-Dwight D. Eisenhower 

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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

 

Will Obama’s Lifetime Income Plan Confiscate Your Retirement?

 

Feb. 14, 2010

Instead of productive public policies to create jobs, the federal government is pushing an increasingly nerve-wracking idea.

The Obama Administration appears to be taking an elitist approach regarding your retirement plan – bureaucrats ostensibly think they know better than you regarding your retirement planning and money.

Yes, the federal government is considering proposals to convert your 401 (k) and IRA accounts to annuity-type plans.

On February 1, President Obama advocated amending government rules that permit 401 (k) retirement plans with annuities.

There have been multiple news accounts of the government’s scheme. A comprehensive BusinessWeek report concerning the Obama Administration and your retirement was published Jan. 8, 2010 but didn’t seem to attract much attention.

The article by Theo Francis explained the plan, and indicated the U.S. Treasury and Labor Departments want Americans to weigh in on the ideas to exchange their retirement plans into annuities. Carrying the annuity ball for the Obama Administration are Assistant Labor Secretary Phyllis Borzi and Deputy Assistant Treasury Secretary Mark Iwry.

The government has begun soliciting comments.

Naturally, there are several companies that would benefit because they sell annuities including AIG (the company that received a $182.3 billion taxpayer bailout). The major players also include MetLife, Hartford Financial Services, Lincoln National, and New York Life.

In general, annuities would seem attractive because they guarantee funds until a retiree passes away. The thought is they’re a hedge against retirees running out of savings. And some people seem to think that annuities are a viable option for senior citizens because of their losses in the stock market.

The article quoted a 2009 report that stated only 2 percent of 401 (k)s are switched to annuities.

Fidelity Investments reported the average 401 (k) fund decreased by 31 percent between 2007 and 2009.

Hence, the alleged government interest in retirement security for citizens.

A lot of money is in retirement plans: $3.6 trillion, according to a trade group in Washington – the Investment Company Institute.

So what, you ask?

Well, my sense is that the government bureaucrats have another furtive motive.

In 1993, Democrats were looking into ways to get control of retirement funds. During the Clinton Administration, there was a proposal to levy a 15 percent tax on retirement plans to share wealth with low-income citizens. The scheme was attributed to Dr. Alicia Munnell, who was assistant secretary of the Treasury for economic policy. But the idea died with the 1994 voter revolution that swept Democrats out of office.

Early in my career, I enjoyed working for two insurance companies offering annuities. Because of the expensive fees, sales commissions were healthy which conjured images of me driving a new Lamborghini as a 20-something.

But in some ways it was embarrassing. Annuities were not flexible or affordable for many of my policyholders. Plus, the annuities would not have yielded sustainable retirement incomes.

If annuities seem like a good idea for your situation, fine. But for many, they’re not viable, and a government-backed enterprise would not be productive.

Just look at the mismanagement of the Wall Street bailouts. The plan was not transparent and was administered by bureaucrats with a conflict of interest. The big banks still are not loaning money to deserving businesses and consumers, and the investment bankers are once again getting huge bonuses made possible by taxpayers.

Moreover, why give the federal government more power over your finances? If the government succeeds and does try to resurrect the Clinton proposal, redistribution of wealth represents another theft of your economic and political freedom.

A government plan to provide lifetime income. I don’t think so.

My hope is that you give the Obama Administration a loud, ringing earful.

From the Coach’s Corner, by May 3, 2010, here are three options in which you can comment:

• Via post office – U.S. Department of Labor, Office of Regulations and Interpretations, Employee Benefits Security Administration, N-5655, 200 Constitution Ave. NW, Washington, DC 20210, Attn: Lifetime Income RFI.
• Via e-mail – E-ORI@dol.gov
• Via the Internet – Visit Regulations.gov

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