2015 Prediction? Be ready for anything—and don’t stop getting ready

At a family dinner over the Holidays, my father in law leaned in to me and said, “Hank, you’re a blogger. You have access to a lot of research and smart people. What’s your big prediction for 2015?"

Now my father in law’s going to be 95 in March, but he reads 3 or 4 newspapers cover to cover every day. He constantly analyzes his investments, and is still active in local politics. He’s sharp as a tack and I wasn’t going to get off easily with an off-the-cuff prognostication.

I said, Dad. “I don’t really know.” “Why not?” he grumbled.

I said, “it seems everything’s just more volatile than it used to be. The good stuff gets better at an increasingly better rate (think stock market, low-oil prices, improving job market) and the bad stuff gets worse at an increasingly depressing rate (depressingly low interest rates for savers, a global economic slowdown, record number of working age people out of the  official workforce, global warming, currency devaluation, Ebola, ISIS, cyber terrorism, etc.).” Even worse, sometimes the good stuff is what causes the bad stuff, I explained.

“Hmm,” he muttered, taking a painfully long pull from of his wine glass. I braced for the worst, hoping that a less-informed family member at the table would jump into the conversation with a suicidal comment that he’d quickly dissect and dismiss with a sardonic chuckle. Most of the time someone pulls through for me, but no such luck on this day. “OK,” he said. “Nice analysis, but what’s your opinion.”

I thought I had just given my opinion, but my father in law come of age during all night bull sessions in college and the corporate and military command and control era. A member of the Depression Era silent generation, he was a Fortune 500 exec, a Navy man and a chemical engineer. Each direct question requires a direct answer in his world view. Ambiguity and the knowledge sharing/link-and-tweet economy is an enigma to him. He assumes anyone with a byline is obligated to have a singular clear-cut opinion about something.

But that’s my point. There are just too many variables in the equation. By the time you have your strategy and game plan together, the playing field has changed. YOU HAVE TO BE READY 24/7/365 to change on a dime. As we’ve mentioned many times before in this blog, the winners are not necessarily the strongest or the fastest, they’re the ones who are the smartest and most agile.

Doesn’t matter if you’re in sports, business, the military, agriculture, the arts or any other human endeavor. You’ve got to be agile. You’ve got to be good at partnering, collaborating and sharing your knowledge. To that end, here are some excellent quick reads on the subject that came across our radar this week….

Justin Wolfers -- From Unemployment to Oil: The Big Unknowns of 2015
Thomas Friedman -- Is Vacation Over?
Paul Krugman -- Tidings of Comfort

Conclusion

As Steve Jobs liked to say, “Stay Hungry, Stay Foolish.”  Let’s have a great 2015. There are going to be some lows and some highs, with lots of roller coaster rides along the way. Let’s enjoy the trip and get after it!

Best, HB and team

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6 Dumb Things That Business Owners Do at Year-End

With Christmas trees trimmed and Chanukah menorahs fully lit, the last thing that most of us want to talk about right now is year-end planning and tax mitigation. But you’ve got to, or else experts say you and your clients could have a heck of a fiscal hangover in the weeks and months ahead.

Josh Patrick, CFP®, a wealth manager who specializes in working with owners of privately held businesses, checked in with us recently about some of the really dumb things he sees business owners do at year-end. “If you’re spending money unwisely, you’re taking at least 60 cents out of every dollar you spend and just flushing it down the toilet, said Patrick, head of Burlington, Vermont-based Stage 2 Planning Partners.

Here are 6 of the biggest mistakes Patrick sees his clients make again and again at this otherwise festive time of year. Make sure you and your clients don’t fall into these common year-end traps.

1. Buying capital equipment you don’t need. Just because you’re having a good year doesn’t mean you should go out and buy equipment to get a tax write-off. Before buying capital equipment, do an analysis to see if there is a payoff for the expense.

2. Pay bonuses because you had a good year. Patrick warns about the “pennies from heaven” bonus. Employees don’t know why they’ve received the bonus. They surely will appreciate it, but if you haven’t told employees why they received the extra money it can turn into an annual sense of entitlement—not an incentive to work hard every year.

3. Rushing to acquire a business before year-end. There is nothing magical about December 31. “If you’re really not ready to close the transaction, don’t do it,” advised Patrick a frequent contributor to the New York Times “You’re the Boss column” and our client CEG’s Elite Advisor Report newsletter. “Rushing into any transaction, let alone buying a business, is always a bad idea. It’s really hard to do an acquisition that’s accretive under the best of circumstances. The only way to make a business purchase that actually works is to follow a purchase process very carefully that you’ve designed before you start.”

4. Rush because it’s year-end. Don’t rush to finish up a project just because the end of the year is coming, advised Patrick. “I made that mistake when I launched our new website. For some reason I decided that I had to rush to get our site up and running before the end of the year. One of the things I missed was making sure that all of the pages from our old site were linked to the proper pages on our new site. Our old site was never mapped to our new site. Because we didn’t map our site properly, Google penalized our site for almost a year. This happened just because I rushed a project for no really good reason.”

5. Increase your inventory. If you or your client is a cash-based taxpayer, you can deduct inventory as you buy it. The problem with loading up on inventory is that you then have to sell it. If you have too much inventory, you can be sure that some of it is going to go bad. Don’t fall prey to end-of-the-year deals. They’re always just so your suppliers can make their numbers. Before loading up on inventory, make sure it’s returnable. Otherwise Patrick said you’ll be in the market for a full-size dumpster.

6. A tax write-off still means you’re spending money. The days of tax credits for buying stuff are long gone. Don’t buy stuff just because you have money burning a hole in your pocket. Your clients shouldn’t either. “A tax write-off is only part of the money you spend. It really does come out of your pocket,” admonished Patrick.

Conclusion
Be smart and think about your year-end purchases just like you would for one in April. If you need it and

Wishing you and your families a safe, happy and fiscally festive Holiday.

Best, HB and team

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TAGS: Josh Patrick, Stage2 Planning, dumb things year end tax planning

Don’t Overlook the Quiet Voices in the Room

This is the time of year when many of us start thinking about brainstorming and drilling down into our organizational strengths and weaknesses. We look closely at our clients and customers to see which ones are most profitable, and which ones are sucking the life and energy out of us. We look at who we’d like to have on our client list and ask ourselves if we have the financial, technology and people resources to get those ideal clients—and keep ‘em happy. Makes sense, right?

If you have doubts about your people, think twice before casting your line into the outside talent pool. You’ll be tying up countless hours of staff time as you vet, argue, interview and recruit new talent that may or may not work out. Before looking outside, ask yourself  how well you really know the team you already have in place. Doesn’t matter if you’ve got two people or two thousand people on your org chart. Chances are you may not be aware of everything they bring to the table—especially the quieter ones.

The loudest aren’t the brightest

Phil Gilbert’s recent piece Hearing Every Voice in the Room got me thinking about how often the introverts--the serious, quiet contemplators who actually think first before shouting out their ideas and opinions. They’re the ones who often have the best ideas, but tend to get overlooked when organizations or all sizes are looking for fresh ideas. It doesn’t matter if it’s a quick coffee room conversation or a formal offsite brainstorming session—the squeakiest wheels tend to get the organizational grease. Unfortunately, that’s another form or organizational complacency and rarely leads to innovation. Why? “Because team dynamics can easily get in the way of good ideas and the loudest voice often wins,” observed Gilbert.

“There’s always someone who dominates the conversation and others who defer to that person out of frustration—or worse, complacency,” wrote Gilbert a general manager of IBM Design. But the article reminded me of a conversation I had last week with Frank Rudd, new president of the Florida Society of Association Executives (FSAE), a 1,000 member organization with six full-time staff. Rudd is spearheading FSAE’s merger with another organization and he told me of the first things he did when he came on board was ask everyone at the combined organization—regardless of their position—to revisit all of FSAE’s programs and services and assess whether those programs were really things members wanted or were just continuing out of habit.

“One of the first things organizations can do is keep doing things the same way, just because that’s how it’s always been done in the past,” Rudd noted. He looked to see where each member of his team (and army of volunteers) could be best deployed—and not a single person at either organization lost their job during the merger. On Day One, Rudd replaced the automated voice mail system with a live human operator and soon he and his team began driving around the state and to hand deliver welcome packages to all the new members they’ve acquired during the merger. That’s right. Hand deliver! Don’t think that approach helps you get to know your stakeholders and your staff?

At Gilbert’s division at IBM, they focus on two things: (a) getting everyone to contribute and (b) letting everyone’s contributions be heard. They start with stacking up sticky notes filled with ideas onto a whiteboard. Everyone is free to post or “popcorn” in IBM-speak until the ideas slow to a dribble. Then the team leader groups the sticky notes into overlapping and logical area. That, he said is how you go from thinking about “what’s not possible, to thinking about what’s possible,” wrote Gilbert. Because everyone has buy-in.

Conclusion

If you, or a talented but quiet person on your staff is afraid to step up and champion ideas, we recommend Susan Caine’s book “Quiet-The Power of Introverts.” She’s also a terrific speaker for your events. A former corporate lawyer and negotiation specialist, Cain said that when it comes to adapting to change, it’s important to understand that the introverts on your team aren’t “lesser contributors or less successful in social interaction.” Instead, they process knowledge and interact with their surroundings in a quieter way. “They tend to be passionate, but somewhat shy and value periods of solitude which allow them to be [optimally] creative,” she said.

Food for thought, especially when you’re “popcorning.”

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