Tag: small business

Newsflash: GOP Begs Obama for Tax Cuts via Radio? Seriously?


ImagesDear readers!  We interrupt our previously scheduled postings for a series of very special announcements:

Radio waves are the last political resort. 

Apparently all other political channels are either broken or backed up by "more important" problems.  This passed Saturday, frustrated by the House/Senate stalemate, GOP asked Obama to keep Bush tax cuts intact via their radio address.   Is that what's going to work?  What is this the 1920s and everyone is glued to their Radiolas?    

Clearly, the issue that affects not just the monetary policies of this country, but also "minor" sociopolitical concerns such as, for example, the economic principles of true capitalism and definitions of social classes, cannot be successfully discussed in the policy-making branches of our government – the partisanism overpowers the reason.  So, the republicans decide to address the President directly… on the radio.  Moreover, on Saturday.  Don't they know that radio is primarily a weekday medium?  Most listeners tune in either on their way to and from work, or online in their offices.      

On the other hand, who the fuck cares? It's just an empty, check-mark step.  In reality, everyone is resigned to wait until November elections for the resolution anyway, because it's not the fiscal reasoning or survival logic that will dictate the decision.  The only thing that matters for the outcome of the tax-cut issue is which party prevails.  Meanwhile, GOP is trying to impress on their constituents that they are "doing something about it."   Just don't call it "pressing Obama" – that's way too blatant even for politicians.

Proof-positive: politicians are not real people.

Nearly 18 months ago, when President Barack Obama first threw the number $250,000 into the tax-cuts discussions, at least some financial publications, including MSN Money, questioned the suitability of that number as a middle-class ceiling.  Now, overwhelmed by the barrage of bad news, nobody talks about the number itself anymore.   

But I was always interested in understanding how the fuck they came up with that number?  What made "them" (whoever they are)  think that $250,000 salary qualifies someone as "wealthy?"  What kind of perverse minds decided that a small-business CEO, a senior financial executive, an adman, an average doctor, a sales person who spends 300 days a year on the road, don't belong in the middle class?  Are they an upper-crust?  Is it correct to bunch them up together with the private-equity billionaires or public companies' CEOs and make them pay taxes at the same rates? 

Yes, the majority of the general population will never make over $250,000.  But the same majority do not possess talents, perseverance, and drive of people who apply themselves to the best of their abilities and work 16 hours a day in order to make 6, 10, or even 15 times more than an average schmuck, who doesn't really try too hard and spends his workday surfing the Internet for TMZ news and shopping bargains.   

In fact, people who make $100,000 – $750,000 a year are usually the hardest-working sector of the middle class.  Most of them have built their careers or businesses from scratch.  And guess what?  They are not really that reach.  I know CFOs, doctors, lawyers, who make $300-$350K a year and worry that they will not be able to afford $245,000 a head in tuition, room, and board to send their children through a good college.   

And here lies the truth: the reason a random number is picked to determine who belongs to the middle class and who doesn't is because politicians are not real people.  Just like the super-rich, they are far removed from the reality of the every-day life.  Many of them are actually wealthy people.  And even those who are theoretically "middle-class" enjoy a lot of paid perks.  How can you possibly formulate the idea of social classes if most of your meals are paid by lobbyists and their clients?   

Administration doesn't care about the economic recovery of this country.

In principle, I would be very reluctant to agree with any official political statement.  But, whoever is actually behind the text of the GOP radio address got one thing right: small-business owners will be the first to suffer from increased taxes imposed on the earnings above $250,000.  Maybe the plastic people in Washington don't know this, but the majority of privately-held businesses are S-Corporations and transfer their incomes to owners' individual tax returns.

So, let's imagine such small business ran by two single partners, who work very hard to keep their business going, retain their 15 employees, and maybe even create new jobs.  If they are very good at what they do and also lucky, they may overcome all the difficulties of today's economic conditions and make $1,000,000 in net income. Good for them! 

Now comes the tax season.  Even though they left the entire million in the business, they have to split it and report $500K each  on their individual tax returns.  If the proposed tax rates are applied, together they will have to pay $335K to the federal government.  Add to that, state and local taxes – about $150K more, and the hard-earned $1,000,000 is immediately reduced to $515,000.  The $485K is taken away from the struggling business.

So, where is the incentive for the entrepreneurs to go on or go into the business?  What about the "middle-class" employees of these small businesses, those who make under $250K?  What will happened to them, when their employers go out of business squashed by these additional fiscal burdens on top of all other difficulties?  Do you think that the government cares about them, or the "economic recovery" altogether?  Or do they care about having enough money to bail out the next banking giant or a failing automaker?

Newsflash: Even NBC’s Economy Watch Finally (Somewhat) Wakes Up


Stuck in the Mud

Wow!  Like a fucking parrot I have been repeating the same thing for years now.  But it's okay, I can do it again:

People (not just the economists and market analysts, EVERYONE!), stop applying old concepts to current economic situation!  This was not a recession and we are not experiencing recovery!  This is our new reality.  Get used to it! 

Look at the graph above.  That historical +15.6% gain after severe recessions of the past – it's never going to happen again.  Moreover, even the 1.7% reptilian movement upward, we supposedly experience right now, seems to me miraculous.  And it is definitely not assured – we may start rolling down at any given moment.

The picture is so undeniably obvious, even the politically-controlled outlets, such as NBCNews.com, have no choice but to talk about it.  They are the ones, who published this morning the Credit Suisse's chart above in their Economy Watch blog's post cautiously named "Economy may be permanently stuck in slow-growth mode."  The more appropriate title would be "Economy May Be Permanently Stuck." Period. 

The article is basically a compilation of data and quotes obtained from various resources, including a number of "prominent economists" and the Federal Reserve Chairman Ben Bernake.  The blogger, John Schoen doesn't express his own opinion or adds any commentary.  Nevertheless, the piece as a whole leaves an impression that all cited contributors and the policy-makers are also stuck in a perpetual state of having no clue, of not knowing what to do. 

This doesn't surprise me at all.  These people have been in denial far too long, but they cannot hide from reality anymore.  And now fear seizes their beings, because they start realizing that it's only going to get worse.  It's beyond depressing, it's funereal.

Invariably, one particular tidbit of information puts me into a vile mood, whenever it catches my eye.  In this assortment of bad news Mr. Shoen mentions in passing that 70% of US economic activity comes from consumers.  To me this is a reminder of terrifying fact that our country predominately retails (largely imported goods) and creates services for end users instead of producing industrial products for domestic commercial market or export.  

And it's astonishing that not a single of the quoted "dignitaries," not even for shits and giggles, raises a voice of reason and demands that the politicians stop sticking crutches into the armpits of clay giants and let them fall; that the Feds stop buying long-term bonds with our social security contributions; that the Supreme Justices stop passing laws guaranteeing highest ever compensations for CEOs of health-management companies.  Is Lynn Tilton and I are the only people who understand that only by supporting smaller privately-held DOMESTIC businesses we may be able to revive the economy?  That if "the powers that be" don't start this process right away, the country will become more and more restless? 

Marina’s Nightmare


ImagesI must've dozed off, or something…  And I dream that I died and went to hell.  There my soul is tortured by things I fear the most…

…I see the country that used to be a beacon of freedom for the oppressed being perverted into a security vault.  I see cameras, metal detectors, x-ray machines, bag searchers everywhere.  There are satellites looking straight at me.  Someone always watches, hears every whisper, reads every word I type on my computer… 

…I see that the notion of merit is dead.  All that matters now is who you know.  Connections and "club" memberships are the hottest commodities… 

…I'm forced to watch people merging into two groups: millions of those who barely manage to eke out a living from whatever professions or trades they forced upon themselves and a small number of comfortable others – nothing in between.  And on the top, there are a handful of secret billionaires who have been quietly buying up the world… 

…Someone murdered the free competition.  Small businesses fall down like slaughter victims.  Banking conglomerates are being bailed out of their greedy fuckups through the ponzi schemes of international borrowing, but the treasury is empty.  In horror, I look at the decaying corpse of the glorious industrialism formerly driven by the production of quality goods - now it's just a feed for the paper-trading worms…   

…I see special interests' money usher through the Supreme Court unconstitutional laws, re-directing average taxpayers' earnings right into the pockets of the paying monopolies…  

…And I see young fools, with no prospects for decent lives and no understanding of underlying reasons for it, burning with desire for a change.  They've been dumbed down to the point that they cannot formulate their purpose or devise an action plan.  They huddle in a tiny space, called Zuccotti Park, near the place they assume to be the source of their distress, simply because they have nothing else to do…

…I stop by a newsstand strewn with tabloids covered by repulsive photographs of insignificant clowns.  I manage to pluck out one "real" magazine.  It excitedly screams into my face that Lena Dunham has received four Emmy nominations for her half-baked mediocrity.  The well-connected and moneyed hipsters, she so skillfully represents, jump up and down like mad rabbits…

…And I see a 5-floor-high advertisement board of Katy Perry in 3-D, but I hear that Fiona Apple's The Wilder Wheel tour is not sold out…

…And I see the Redeemer, the young woman whose words and images have the power to alter people's consciousness.  But nobody can hear her as she is sealed into a cell of fear built by haters… And I know that I contributed to her imprisonment.  She is smashing her body at the see-through walls in exhaustive attempts to break free, and I am not able to help her.  And those who can, refuse to do it…  I feel impotent, paralyzed.  

It hurts so much inside, as if somebody put a grenade where my heart is supposed to be and it's exploding.  I scream in agony.  I claw at my chest, trying to let the pain out.  I whisper to myself, "Wake up, wake up!"

Only, I cannot wake up.  This is not a dream and I am not dead.  This is the hell of my actual existence.  

In Defense of Business Owners: Scope of Responsibility


Many of my fellow small business CFOs and Controllers mistake my singling out a BOSS as one of the main frustration triggers for an ardent enmity towards business owners.  The truth is quite opposite.  As the matter of fact, most of the time I find myself on the same side as my boss; shoulder to shoulder, fighting the daily war of commercial survival. 

Yes, it’s tough to deal with their complex of unlimited powers.  At the same time, I always say that business owners create our jobs and that alone merits respect.  I also never imply that all CFOs and Controllers are made equal.  I’ve met plenty of inadequate, limited, lazy and dangerously indifferent financial execs who damaged the companies they were supposed to guard.  In due time I’ll write about them as well.

But we interact with out bosses more than anybody else and that’s why they are prominently featured in my posts.  Being a CFO or a Controller makes it inevitable that everything a CEO does or doesn’t do becomes a concern and frequently a touchy subject. 

And one of the touchiest subjects is the Scope of Responsibility.  I cannot even count how many CFOs and Controllers have complained to me over the years about perceived imbalance between their scope of responsibility and that of their bosses.  

This disconcert derives from two sources.  First of all, it’s the much-discussed here overwhelming multitasking of the senior financial management.
Secondly, it’s the confusion about what exactly the Scope of Responsibility is.  Even though the position’s breadth of influence on the business is important, it is not just the number of tasks and duties you perform.   The key factor is the depth of the impact executive decisions make on the company’s future.  

The way I always looked at it is as follows.  If you are fortunate to work for a brilliant entrepreneur who, given sufficient time and support, is capable of generating ideas that will ensure your company’s prosperity and growth, that should be his ONLY task.  I consider it my job then to take away from him all functions I can handle myself in order to free him for what he does best.  I don’t let bankers or vendors bother him; I don’t allow him to fiddle with numbers; I don’t ask him to learn the operational system.  As the matter of fact, I prefer them not even know Excel.  All I want them to do is to create business strategies, network, establish new commercial relationships.

Let me leave you with this simile of sorts.  Radiohead’s frontman Thom Yorke cannot read sheet music (neither does Sir Paul McCartney, by the way).  His musically educated multi-instrumentalist  band-mate Johnny Greenwood have been deliberately resisting for 25 years now to teach Thom any musical grammar out of fear that it may diminish Yorke’s creativity.  That’s a great executive support strategy.

And let me tell you: I’ve been to multiple Radiohead concerts through the years and I wouldn’t change anything about Thom Yorke. Nothing at all.


 
  

 

 

 

   

CFO Folklore: You Can’t Teach an “Old” Boss New Tricks


Sleeping-old-dog-thumb6130250It has nothing to do with age. Notice, I adorned OLD with quotation marks. It's rather related to obstinateness, which frequently becomes a distinct mark of business ownership.  Many CEOs deliberately focus themselves on certain  commanding tasks and stunt the expansion of their knowledge in any other areas.  For example, your CEO could be a 30-year-old venture capital hot shot, or a 55-year-old veteran entrepreneur; most likely both possess mere basic computer skills.

Of course, they love electronic chotchkies, especially those that bring their huge mailboxes wherever they go. Then again, it's mostly just reading and writing emails, but not necessarily organizing. Most of them can use Word and Excel. Some can even create their own documents, but formatting, formulas, data manipulation, graphs and somesuch fancies are usually beyond them. Leave alone PowerPoint, Visio, Publisher and so on. God forbid they need to look up a customer's contact information in your ERP system – brace yourself for barrage of slander against "your choice" of software.

Obviously, the founders of high-tech startups don't count – everything "computer" comes natural to them. But I had a CEO only a few years ago who called his secretary into the office every time he needed to insert a column in a chart.  And the funniest thing happens to these people every time you send them a spreadsheet set for printing on a legal-size paper. It's like a fucking stumbling block – they will spend at least 30 minutes trying to reset the printing area to fit the letter size before crying out for help.

For those employees who don't deal with execs on a regular basis this is somewhat perplexing, considering that most of entrepreneurs are quite capable, and sometimes even brilliant, people. But for those of us who daily interact with these semi-savants, the situation is absolutely clear. The limitations have nothing to do with their natural abilities. Their responsibilities lie in developing the business and creating jobs to fill them with people, who can produce pretty reports and fancy presentations. They don't need to occupy themselves with learning new tricks.

And that's absolutely fine. In fact, if I have to choose I'd prefer them perpetuating the business than learning how to create a pivot table. Yet, some situations are simply maddening.

I've been working on a fairly complicated customer-commitment program with one of my client's owner. Now, all steps developed and all kinks worked out, the project is supposed to culminate in an Agreement document.  I drafted the first version and sent it out in the Word format for the boss's review.  

An email comes back – no attachment.  Instead, in the body of the message, there are multiple paragraphs of my document copied and pasted in black followed by his version of the same paragraphs in blue.  The crazy thing is that on the first glance they look exactly the same, but somewhere in the middle there are several words altered.  And it's like a half of the document is there.  Basically, I have to visually compare both versions of each paragraph line by line to find the damn changes.

I was like, "What the fuck?!" and picked up the phone, "Adam, what are you doing?  It seems like you've adjusted only a handful of minor points, but it will take hours to fish them out.  Why didn't you make those adjustments directly in the document?"  He is perplexed (probably thinks that I've gone momentarily stupid),"How would you know what I've changed then?  You would have to comb through the entire document."  The truth dawned on me, "You've never used Track Changes or Compare Documents functions before?"  "I've never even heard of them."

Maybe I should've been ready for this after so many years of dealing with these people.  I was somewhat stunned, nevertheless, and, in stupor, offered a training session free of charge.  "Great," he said, "I am very excited.  I will let you know when."  

I am still waiting.