Pragmatic Advice for the Coming Year….

The winter solstice is a time for reflection and rejuvenation. Just as we look toward spring, we also look toward an improved new year. No matter how well or poorly we did in the last year, we want to improve.

How New Year's resolutions are maintained as time goes on:
- past the first week: 75%
- past 2 weeks: 71%
- after one month: 64%
- after 6 months: 46%

While a lot of people who make New Year's resolutions do break them, research shows that making resolutions is useful. People who explicitly make resolutions are 10 times more likely to attain their goals than people who don't explicitly make resolutions.

So although you may not actually achieve your stated goal, simply making a goal will improve your performance against it. The fact that you will take the time to review your financial performance throughout 2009 and set a goal to improve it will improve your chances of having more success in 2010. The review and subsequent goal setting doesn't have to be sophisticated. Many times a business makes the review and planning process so burdensome that the process itself renders the results ineffective.

I would set no more than five specific goals with measurable milestones. If you can't measure it, you can't manage it. Too many goals may drive your business toward fragmentation as employees work to achieve disparate objectives. Now make them public. Create a measuring rod, something that will display results against goals in an intuitive way. Pie charts and thermometers are usually very good graphical displays of performance. Update them regularly.

Here is a caveat to keep in mind… when you stop measuring it is a sure sign that you are not performing. People get discourage when things aren't going as planned. Rather than review the plan, make adjustments where required and move on, they abandon the plan as not useful. So if you find yourself not tracking your results, it just might mean that your original plan needs review. Don't give up… Reassess….

Here is one other helpful hint…. Many times investing in outside expertise can dramatically improve results. An impartial third party may see thing you don't. Look for the payback. If bringing in a third party isn't going to improve performance more than the cost, don't do it. But don't assume because you don't see the payback, it's not there. Understand the difference between data, information and intelligence.

Whatever you do, don't procrastinate. Even a poor plan put in action is better than a great plan that never sees the light of day. You can adjust a poor plan as new information becomes available.

 

Short Thesis on December 25th (Christmas)

Let me conclude something before I even start. Christmas is the celebration of the birth of Christ; it is not intended to be his birthday. This is significant for those who believe it is a made up holiday used to highjack pagan celebrations. As you will read, the winter solstice is commonly used by most cultures and religions to signify rebirth. I don’t believe Christian should be excluded from this practice.

The Winter Solstice occurs exactly when the earth's axial tilt is farthest away from the sun at its maximum. Though the Winter Solstice lasts an instant in time, the term is also colloquially used like Midwinter to refer to the day on which it occurs. For most people in the high latitudes this is commonly known as the shortest day and the sun's daily maximum position in the sky is the lowest. The seasonal significance of the Winter Solstice is in the reversal of the gradual lengthening of nights and shortening of days. Worldwide, interpretation of the event has varied from culture to culture, but most cultures have held a “recognition of rebirth”, involving holidays, festivals, gatherings, rituals or other celebrations around that time. 45 BCE December 25th was established as the winter solstice of Europe by the Julian calendar. (http://en.wikipedia.org/wiki/Winter_solstice

Johannes Kepler, with backing from Tycho Brahe, in 1609 published the First and Second Laws of Planetary Motion and ten years later, the Third Law. These are still used by astronomers, NASA, the European Space Agency and everyone else studying the stars today. These laws do not change. With the advent of computer we are able to calculate sky maps showing the exact positions of all of the stars and planets in the night sky. Not just for that evening's observations, but for any day in history, as viewed from any place on the surface of the Earth.

Flavius Josephus (37 AD-95 AD), was a member of the Jewish Pharisee sect and interpreter for Titus (39 AD-81 AD), commander of the Roman expedition in Judea. Titus had ordered the destruction the Jewish temple. In one of Josephus works, Antiquities, he mentions Jesus, John the Baptist and other New Testament characters, including the murderous King Herod of the Gospel of Matthew, Chapter 2. The Bible recounts that Herod learned of the Messiah's birth from astronomers who had seen the Star of Bethlehem.

Using this information, Kepler’s calculations and passages in the bible, three dates can be scientifically calculated. The first is in September 3 BC when the heaven revealed the right astrophysical phenomena that the bible predicted as the conception of Christ. Nine month later, June 2 BC would have been the birth of Christ and the Magi from the east would have arrived around December 25 of 2 BC as Jupiter entered retrograde, reaching a full stop in its travel through the fixed stars. Magi viewing from Jerusalem would have seen it stopped in the sky above the little town of Bethlehem.

So the birth of Christ would have been around June 2 BC with the celebration of that birth potentially in December. (www.bethlehemstar.net )

The earliest identification of the 25th of December with the birthday of Christ is in a passage, otherwise unknown and probably spurious, of Theophilus of Antioch (A.D. 171-183), preserved in Latin by the Magdeburg centuriators, to the effect that the Gauls contended that as they celebrated the birth of the Lord on the 25th of December, whatever day of the week it might be.

"Year 1 after Christ, in the consulate of Caesar and Paulus, the Lord Jesus Christ was born on the 25th of December, a Friday and 15th day of the new moon." Here again no festal celebration of the day is attested.

Christmas - 1911 Encyclopedia

An early reference to the date of the nativity as December 25 is found in the Chronography of 354, a manuscript compiled in Rome in 354. In the East, early Christians celebrated the birth of Christ as part of Epiphany (January 6), although this festival emphasized celebration of the baptism of Jesus.

Christmas was promoted in the Christian East as part of the revival of Catholicism following the death of the pro-Arian Emperor Valens at the Battle of Adrianople in 378. The feast was introduced to Constantinople in 379, and to Antioch in about 380. The feast disappeared after Gregory of Nazianzus resigned as bishop in 381, although it was reintroduced by John Chrysostom in about 400. Puritans strongly condemned the celebration of Christmas, considering it a Catholic invention and the "trappings of popery" or the "rags of the Beast.

In Colonial America, the Puritans of New England shared radical Protestant disapproval of Christmas. Celebration was outlawed in Boston from 1659 to 1681. The ban by the Pilgrims was revoked in 1681 by English governor Sir Edmund Andros.

In 1870 Christmas Day (December 25th) became a federal holiday in the United States.

In all of this let us not forget why this is important. Christ was born so that he may live and die for our sin. Whether you believe Christ died for your sins or not, you have to admit he is probably the best known historic figure of all times. There has to be a reason for that. It might be worth finding out why……

How do I determine a quality accountant?

Recently I was involved in a web chat concerning the question "How do I determine a quality accountant?" At first it seemed like a straight forward question, but the responses brought out many important issues that surround this very basic question.

The first question is how do you define an accountant? Are you looking for basic bookkeeping, tax accounting, audit services or financial planning? All CPA's are accountants, but not all accountants are CPA's. For example, in the state of Texas you have to be a CPA to call yourself an accountant. The state board of public accountancy regulates, and punishes the improper use of either title. Other state may not be as strict. If what you're looking for is basic transactional processing, a bookkeeper may do fine. Bookkeepers sometime refer to themselves as accountants especially if they have an accounting degree. You don't have to have an accounting degree to be a bookkeeper.

So when you're looking for a quality accountant, what do you really want? As bookkeepers, accountants and CPA's chimed in a trend became evident. First of all let me say that no matter what I say at this point one side or the other will take issue. I am not a bookkeeper, accountant or CPA. I have a formal education and experience in Financial Analysis. So here is a rough summary of what I believe to be true and the dialog seemed to support.

Bookkeepers are extremely good and cost effective at transactional processing. They understand debit and credits. They understand amortization and depreciation. They can create the information required to develop a Profit and Loss Statement or Balance Sheet. A bookkeeper with a degree in accounting is better than one without. Four years of setting in a class room, not to mention the dedication to spend four years learning before you make a dime, says something. That is not to say a bookkeeper without a degree cannot be extremely affective.

CPA's in most cases would prefer not to do transactional processing. They can, they prefer not to and you'll pay a lot more for a CPA than a bookkeeper. Their higher level value is making sure that the accounting books truly reflect the condition on the company. Are funds applied in a consistent manner that can be used one year, two years or more out in the future to make sound management decisions? For example: Is the labor associated with a software engineer development, support or cost of sales? If not applied appropriately the business might determine that their development costs are too high when in fact it either has too many support issues or is too difficult to explain to prospects. Are sales taxes over stated? Can a cost of repair be capitalized as opposed to expensed? These are management decisions. How I go about fixing something might be partially determine by the way it is accounted.

My conclusion is that degreed bookkeepers are good for day-to-day transactional processing, but everything should be reviewed by a CPA before month-end close. If you just wait for tax time to roll around you may not retain the institutional knowledge required to give accurate guidance to your CPA. Once you know what you are looking for you can start to determine the attributes of a good one. We'll discuss that next.

Motivation to Work

One of the challenges I face in my business, and I see in almost every business I work with, is that I spent too much time doing things that I am 1) not good at, 2)takes me away from my passion, and 3) sucks me dry of my enthusiasm. This in turn makes me dread my job, which I normally love, on the days I have to do these important but in my opinion counter-productive tasks. I love meeting with people. I love listening to complex problems. I love finding eloquent yet simplistic solutions. I am far less enthusiastic about documenting my findings. I dread the repetitive, mundane task of transactional processing. I love to analyze financial data. I hate to do the underlying accounting.

Hertzberg in his book "Motivation to Work" published in 1959 he explains a lot of this to me. He talks about two sets of somewhat unrelated dynamics that affect the way we look at and perform our jobs. One factor is the things that drive dissatisfaction. These are known as hygiene factors. The other is the things that drive satisfaction. They are considered motivators. Interestingly the removal of something that drives dissatisfaction does not necessarily motivate.

For example: removing a negative administrative task will remove a source of dissatisfaction, but won't necessarily motive a worker to work harder. Meeting a difficult goal or overcoming an obstacle will improve job satisfaction, but not achieving it will not necessarily make the employee dissatisfied with their work.

So back to my original problem: many of us do things that are required but distasteful. Maybe we are an exceptional administrator but hate making sales calls. The opposite is generally more true within entrepreneurs, talking to people about our work is exciting, doing paperwork isn't. If we are not experiencing the passion we once had in our jobs we need to look at two things. First we have to remove that which is contributing to our dissatisfaction. The second is we have to engage more in what motivates us. If I remove the repetitive mundane (to some) task of financial compliance, i.e. accounting, I have removed a source of dissatisfaction. But I am not more motivated. I'm just less unhappy. Now if I take the time allocated to accounting and engage in activities I love, I've completed the circle.

I have removed a dissatisfier and engaged a satisfier. If I only had to spend more time on what I love, my life would be better. But I have to assume that I am already doing as much as I can. So I must first remove a negative hygiene factor to free time. Play to your strengths. Outsource that which takes you away from that which truly drives you. Then apply the new free time to pursue your passion.

How can eProcess Pros reduce the cost of providing essential business tools to small businesses?

Most small business owners didn't get into business because they wanted to build a better administrative environment. They got into business for several reasons, being the best administrator was not one of them. They wanted freedom to chart their own course. They wanted to take responsibility for their own future. They had an idea or a passion they wanted to chase. To accomplish this they had to build the typical administrative infrastructure required of all businesses. Aside from the regulatory compliance issues of reporting and paying all levels of taxes from business taxes to sales taxes to income tax, a business must be able to track progress against revenue and expense goals.

Think what your world would look like if all you had to do each day was to pursue your passion. The company ran itself from a bureaucratic standpoint. Purchase orders and invoices were processed. Revenue was booked according to government regulation. Expenses were applied correctly. Marketing collateral was created and deployed automatically based on predictable rules. All you had to do each day was manage the customer and prospect interaction. For those that are creating and delivering a product or service, you spent some of your time managing that critical process. The view was not in the rear view mirror dealing with events that have already happened, but looking forward to impact events yet to come… this sounds too good to be true.

For a small businessperson to achieve this state of business nirvana two important resources have to be captured and they have to be captured at a cost below what the businessperson would pay to do it internally. There has to be access to subject matter experts that can provide expertise faster, more accurate and more cost effective than the current environment. There has to be a technology infrastructure in place that makes the business processes seamless to the business owner, more reliable and highly cost effective. In both cases more cost effective is maybe the most critical element. I say this because in a small business "cash is king". Small businesses can't afford elaborate solutions with multi-year paybacks. They would like them, but they generally can't afford them.

Subject Matter Experts – There is no shortage of subject matter experts (SME) calling on small businesses. The problem is that most small business can't afford to take advantage of them. In a lot of cases their cost is not unreasonable; the payback just doesn't support the expense. These SME's can be accountants, marketers, HR professionals or business consultants. eProcess Pros has solved this problem for many small business by allowing them to take advantage of only what they need. We have a pool of resources available through our partner network. Think of it as group insurance. We contract for excess capacity within our partners, which enables us to deliver highly cost effective resources to our clients. Because we can commit to higher volumes of activity than any one small business can, we can negotiate a better price then you could get on your own. We even have access to college level resources (professors for advice, students for labor).

Technology Platform – The problem with dedicated resources is, like time you can't recover unused resources. The typical business that has a server running in their IT closet pays for that server 100% of the time even if it is only used once in a while. The dedicated server has to be configured for peak traffic, even if that is only once a month or once a quarter. The same is true for the applications running on the server. In many cases it includes the human resources required to keep the server, network and applications up and running. eProcess Pros helps reduce cost by using the "cloud computing" approach. Our architecture allows multiple companies to share physical resources without compromising security. This approach not only improves overall performance of the application, it reduces the ongoing support headaches and reduced cost.

It's the perfect solution. We take on the tedious every day repetitive business processes freeing the small business owner to focus on the strategic and dynamic daily activities of building their business.

Hiring in a bad Economy

I just saw the title of a newsletter saying "Now is the Time to Upgrade Your Clunker Talent". Nice take off from the Obama Clunker program, but probably just as ill advised. Let me start my premise with some facts. The Automobile Association stated that on average 220,000 clunkers have been traded in per month over the last few years. The Department of Transportation reported that in July there were 245,384 clunkers traded in, a net increase of 45,384. These cars cost the taxpayers $1B. That's a little over $45,000 per incremental new car sold. Basically 220,000 people got a better deal on a car then they would have gotten anyway. The tax payer paid an incredible price for the incremental improvement.

So what has this to do with upgrading your talent at work? A bad economy and high unemployment is not the right reason to decide to look at your employees. The Obama Administration rushed out a program to make their bosses happy. The concept on the surface looked good, but the true numbers didn't wash out. Don't roll out some employee upgrade program just to make your boss happy. If you have employees that shouldn't be there, then a bad economy and high unemployment isn't the reason to change them. You should change them because they aren't the best employees.

This brings me to my second point. You hired and kept them up to this point. What in the economy makes you a better decision maker? Rushing out to hire someone else just because people are begging for jobs, won't make you a better hiring manager. If anything you are likely to hire someone who normally wouldn't take the job and will leave you after things get better.

Hiring the right people entails matching a lot of attributes including the job, the compensation, cultural fit, skills, aptitude and more. A bad economy might make more people available, but it won't improve your ability to hire and manage. You still have to find the right talent. The people out of work who wouldn't work for you long term, still won't. The job isn't a right fit for them. They will work for you until they can find the right fit.

The last point is this; just like the Clunker Program, everything has a price. Productivity of new employees is always below existing employees. The new employee has to learn your products, your culture, your procedures, and the way you do business in general. This not only takes up the time of your new employee, it takes time away from others on your staff. Replacing a consistent mid level performing employee with a new one will decrease productivity in the short term. There is a cost associated with hiring a new employee that is not just dollars and cents. If the employee isn't going to stay long enough to recoup that cost, like the Clunker Program, it's just bad math.

We are not defined by what happens to us, but how we react to what happens to us.

Today I met Elijah, Elijah Sebuchu from Kampala, Uganda. Elijah is the eighth of thirty-eight children. His father has twelve wives. His grandfather was chief over 60 villages. He was twelve when he got his first blanket all his own. He was fifteen when he got his first pair of shoes. He was twenty before he knew food was sold in stores. He was over thirty when he met his first westerner. He never had anything. Drinking water was as scarce as food. He has to travel six kilometers to get water and bring it home in a bucket. That water has to be boiled before it can be consumed.

He now runs an orphanage for 460 orphans whose parents have died of AIDS. These orphans just come to him because they are hungry, thirsty and alone. They sleep on the ground or in bushes. Finding shelter is a very big problem for them. Elijah feels blessed and is happy that he has the opportunities he has. When he first came to America in 2007 he couldn't sleep for three days because of the abundance all around him. We water our lawns with water his people would die for. But he is in no way angry. He knows we are blessed so that we can bless others.

WOW, can I be an Elijah? We are all dealing with problems in this down economy. I am certainly no exception. I haven't blogged in several months because I was just heads down trying to cope. I certainly don't mean to trivialize our problems, but maybe put them in perspective. We are blessed to be born and live in one of the greatest countries in human history. We have access to almost unlimited resources, opportunities and ideas.

Plato said "Necessity is the mother of invention." On Maslow's hierarchy of needs, we as Americans very seldom go without the physiological needs of food and water. We seldom truly deal with the issue of true safety on a regular basis. We may at times feel insecure or even afraid, but it is typically transient. The needs that drive our invention are belonging, self esteem and self actualization, the higher needs.

Today I was reminded that I am blessed beyond my comprehension. I will survive and prosper. I always have. I am blessed so that I may bless others.