tag:blogger.com,1999:blog-44556677249267251882024-02-22T02:05:49.146-08:00Organized Businessby Tommy Mack McEldowneyTommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.comBlogger35125tag:blogger.com,1999:blog-4455667724926725188.post-16780329862308043182012-01-29T14:06:00.001-08:002012-01-29T14:20:27.987-08:00A Laissez Faire-y Tale<br />
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<span style="font-family: Arial, sans-serif;">Libertarianism
and deregulation successfully trashed the US economy. Americans lost their
savings, their homes, and their jobs in record numbers unprecedented since the
Great Depression. Former Federal Reserve Chairman Alan Greenspan’s libertarian
philosophy that markets know best is responsible for the U.S. financial crisis
that erupted at the end of George W. Bush’s presidency. Greenspan’s acolytes – Treasury
Secretaries Robert Rubin, Larry Summers, and Timothy Geithner – also bear
responsibility for the existing international economic debacle. And it all
began with Ayn Rand. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Rand immigrated
to the United States from Russia in 1926, the year Alan Greenspan was born. The
celebrated fiction author of the novels <i>The
Fountainhead</i> (1943) and<i> Atlas
Shrugged</i> (1957), Rand championed libertarianism. She famously told Mike
Wallace in a <a href="http://www.youtube.com/watch?v=7ukJiBZ8_4k">1959 CBS
television interview</a> that she believed in “the separation of state and
economics.” She opposed all regulations of markets. Greenspan became her pupil
and she was present when he was sworn in as President Gerald Ford’s chief
economic advisor. That she came from an oppressive government regime likely
explains her extremist <i>laissez-faire</i>
attitude – something that Republicans love.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">By the time
Rand became a Hollywood screenwriter, President Franklin Roosevelt signed the
Banking Act of 1933 (<a href="http://topics.nytimes.com/topics/reference/timestopics/subjects/g/glass_steagall_act_1933/index.html">Glass–Steagall
Act</a>). This New Deal legislation established the Federal Deposit Insurance
Corporation (FDIC) and introduced banking reforms to control speculation. Following
an era of corruption, financial manipulation and "insider trading"
resulted in more than 5,000 bank failures following the 1929 Wall Street crash.
The Glass–Steagall Act also allowed the
Federal Reserve to regulate interest rates in savings accounts. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Deregulation fever
took hold in 1980 with the enactment of the Depository Institutions
Deregulation and Monetary Control Act (DIDMCA) that gave the Federal Reserve
greater control over non-member banks. Among other things DIDMCA allowed banks
to merge, forced all banks to abide by the Fed's rules, and removed the powers
of the Fed under the Glass–Steagall Act to set the interest rates of savings
accounts. Ronald Reagan became president that year, famously saying that
government was not the solution to the country’s problems, “government is the
problem.” <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">The Alternative
Mortgage Transactions Parity Act of 1982 (AMTPA) removed regulations that barred
banks from making anything but the conventional fixed-rate loans. That gave
birth to the kind of mortgages that put borrowers in default situations; Adjustable-Rate
mortgages (ARM), Balloon-payment mortgages, and Interest-only mortgages crushed
borrowers. The option-ARM allowed borrowers to underpay by as much as they want
during the first few years of the loan so that the unpaid monthly interest got
tacked onto the size of the loan. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">A $300,000
mortgage could become a $350,000 loan. Homeowners could find themselves out of
equity, upside down, and into default.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">As for Alan
Greenspan, he continued to build upon his libertarian Wall Street-friendly
influence in Washington. On August 11, 1987, the Senate confirmed Greenspan as President
Reagan’s nominee for chairman of the Federal Reserve. Paradoxically, the Ayn
Rand influenced, anti-regulation, free-market economist Greenspan became the
ultimate regulator as the head of the central bank. Two months later, on October
19, the Dow Industrials' plunged 508-points and the New York Stock Exchange crashed.
<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">But as a
disciple of Ayn Rand, <a href="http://www.huffingtonpost.com/2012/01/12/timothy-geithner-alan-greenspan-tribute-federal-reserve_n_1202546.html">Greenspan<span style="font-family: Calibri, sans-serif;">
</span>presumed</a> that “the self-interests of organizations, specifically
banks and others, were such as that they were best capable of protecting their
own shareholders and their equity in the firms,” as he testified before
Congress. He sought and attracted fellow believers in free-marketeering who
grew in their influence and power during the Clinton administration. Greenspan’s
inner circle included Wall Street financier Robert Rubin, Harvard economist
Larry Summers, and the Treasury Department’s Timothy Geithner. Each of them
became Secretary of the Treasury. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">The so-called
go-go ‘90s seemed to confirm Greenspan’s hands-off approach to regulation. But
as a result the financial world suffered a <a href="http://www.businessweek.com/2000/00_37/b3698078.htm">fiscal heart attack</a>
in 1998. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Long Term
Capital Management (LTCM) started to meltdown. The secretive computer model
driven firm made huge leveraged bets on various forms of arbitrage, in
particular securities called over the counter derivatives. Derivatives made up
an unregulated $27 trillion dollar international market. Unfortunately, LTCM’s proprietary
computer models failed when a financial crisis in Russia fractured their virtual
financial world and crashed those models. It took a private bailout, overseen
by the Federal Reserve, to prevent systemic financial catastrophe.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Congress
summoned Fed chairman Greenspan. He again assured them that markets know best.
He told them that he knew of no regulations that could prevent people “from
making dumb mistakes.” So despite the systemic meltdown, Congress took no
regulatory action. The following year Congress sent President Clinton the Financial
Services Modernization Act of 1999 (<a href="http://banking.senate.gov/conf/">Gramm–Leach–Bliley
Act</a>) which he signed. The Gramm–Leach–Bliley Act allowed commercial banks,
investment banks, securities firms, and insurance companies to consolidate. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">From 1999 to
2008 the grateful financial industry spent $2.7 billion on lobbying, while
individuals and committees affiliated with it made more than $1 billion in
campaign contributions. During this time, the banking industry hid its use of off-balance-sheet
derivatives and its excessive use of leverage. That created a <a href="http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html">shadow
banking system</a> in which the banks
relied heavily on short-term debt. The lobby got what it wanted and Greenspan got
the praise. However, Greenspan's <a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102300193.html">apparent
successes</a> in managing the economy from 1987 to 2006 are a façade. That
management created the largest credit bubble in world history.<o:p></o:p></span></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQnhUrBDJYYeJ0NQfoCSiMjWovy5xqVwkty4j2wRFwsw0vhg0mwcouP_phbYZgL3NB3pUKpp-cCo18lOSKNqa-X1qFNHa-V68Y3uY2Hu-LBG9QEK_oQ-AIKuCehHdoHO0apKR4QbpxJW5H/s1600/Greenspan+Time.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQnhUrBDJYYeJ0NQfoCSiMjWovy5xqVwkty4j2wRFwsw0vhg0mwcouP_phbYZgL3NB3pUKpp-cCo18lOSKNqa-X1qFNHa-V68Y3uY2Hu-LBG9QEK_oQ-AIKuCehHdoHO0apKR4QbpxJW5H/s200/Greenspan+Time.jpg" width="151" /></a><span style="font-family: Arial, sans-serif;">President
George W. Bush awarded the Presidential Medal of Freedom to Alan Greenspan
after his 18 years at the Federal Reserve In 2005. Hailed as a financial
wizard, Greenspan retired in 2006. Dr. Ben Bernanke, a Princeton University Economics
Professor, succeeded him. Goldman Sachs Chairman and CEO Henry M. Paulson
became Treasury Secretary. Greenspan’s protégé Timothy Geithner served as the
CEO of the Federal Reserve Bank of New York. The U.S. housing bubble continued
to swell. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">In 2008 a
systemic failure like the LTCM meltdown a decade earlier hit the Wall Street.
The investment house Bear Stearns began to meltdown. It imperiled the interconnected
global financial market, largely because of derivatives that had been created with
toxic mortgage backed securities. Federal intervention in the form of a loan to
J.P. Morgan Chase as an intermediary allowed Bear to be bailed out, but it did
not solve the underlying problems such as secrecy, avarice, and fraud.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Next, the epidemic
mortgage crisis forced the Treasury to nationalize Fannie Mae and Freddie Mac,
putting each of the mortgage giants into conservatorship. Secretary Paulson
said that "that conservatorship was the only form in which I would commit
taxpayer money to the GSEs [Government Sponsored Entities]." The Treasury committed to invest up to $200
billion to keep the GSEs solvent. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Wall Street’s
Lehman Brothers faced bankruptcy next. Secretary Paulson decided to teach Wall
Street a lesson. He told Lehman management that the government would not step
in. Lehman needed a buyer but found none. Forced into bankruptcy, the
government allowed Lehman to fail. With that, the systemic risk plunged Ireland
into trouble. The Bank of England had to start bailing out banks. Iceland went
bankrupt. China faced 0% growth. At home U.S. banks stopped lending. The world
financial system began to meltdown.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Then one of
the world's biggest insurers, American International Group (AIG), fell victim
to the mortgage backed security crisis. This time, however, the government
decided AIG truly was <a href="http://online.wsj.com/article/SB122156561931242905.html">too big to fail</a>
and seized control. The $85 billion deal demonstrated the government’s extreme
concerns about the danger of what such a collapse could pose to the financial
system. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Secretary
Paulson and Fed Chairman Bernanke called congressional leaders to Nancy
Pelosi’s office and bluntly requested $700 billion dollars to save the US
economy. At first rejected by the House, the Emergency Economic Stabilization
Act of 2008 was signed into law by U.S. President George W. Bush on October 3.
It created the Troubled Asset Relief Program (TARP) which allowed the United
States government to purchase assets and equity from financial institutions. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">To solve the
lending crisis, Secretary Paulson summoned 9 of the largest banks’ CEOs to the
Treasury. He forced them to accept capital injections that made the United
States a stockholder. To prevent the failure of Wall Street’s Merrill Lynch,
Paulson arranged its buyout by Charlotte based Bank of America. Under TARP some
<a href="http://money.cnn.com/news/storysupplement/economy/bailouttracker/">banks
got bailed out</a>. Other banks were seized by the FDIC and placed into
conservatorship until they could be purchased. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">In retrospect,
many analysts and economists now blame weak Fed policies for the 2006–2008 housing
crash, the Wall Street financial crisis, and <a href="http://www.washingtonpost.com/business/economy/greenspan-image-tarnished-by-newly-released-documents/2012/01/12/gIQAvh0mtP_story.html?hpid=z2">resulting
recession</a>. Failing to take action to stem the bubble in housing prices,
inadequate oversight of financial firms, and keeping interest rates low for an
extended period are major contributors. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">Alan
Greenspan now says, "I made a mistake in presuming that the self-interests
of organizations, specifically banks and others, were such as that they were
best capable of protecting their own shareholders and their equity in the firms."
He testified to congress that he “found a flaw.” Greenspan said the crisis had
shaken his very understanding of how markets work. He also agreed that despite
his former opposition to it, financial <a href="http://www.washingtonpost.com/wp-dyn/content/article/2008/10/23/AR2008102300193.html">derivatives
should be regulated</a>. <o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">The Ayn Rand-inspired
laissez faire libertarianism that Greenspan and his fellow US financial
regulators practiced not only failed on a colossal level but led to phenomenal
government interventionism. Deregulation and the absence of regulating allowed
for massive investment fraud hidden in an opaque and secretive international
monetary system. It also concentrated Wall Street firms and U.S. banking, which
will continue to pour money into opposing past and future regulations. Rand’s
philosophy emanated from a world coming into the 20<sup>th</sup> century. It failed
the world coming into the 21<sup>st</sup>. </span><br />
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<span style="font-family: Arial, sans-serif;"> <o:p></o:p></span><span style="font-family: Arial, sans-serif; font-size: 8pt;">Originally
published as </span><a href="http://blogcritics.org/politics/article/a-laissez-faire-y-tale/" style="font-family: Arial, sans-serif; font-size: 8pt;">A
Laissez Faire-y Tale</a><span style="font-family: Arial, sans-serif; font-size: 8pt;"> on Blogcritics.</span></div>
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<span style="font-family: Arial, sans-serif; font-size: 8pt;"><o:p></o:p></span></div>
</div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-4517399489244149682011-12-29T13:50:00.000-08:002011-12-29T13:50:48.174-08:00Budget: What Budget?<br />
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<span style="font-family: "Arial","sans-serif";">The so-called
Ryan budget that occupies so much news space, as its author does televised
news-talk shows to explain it, misses an important point. Its center piece is to
go after one of the large transfer payment generating machines in government,
Medicare. Government payments to individuals, whether they are mailed or direct
deposited, are called transfer payments. Two of the other large transfer
payment generators are the Social Security Administration and the Veterans
Administration. <o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">The important
point to consider is that government programs are overhead and therefore are
fixed expenses. While it is true that transfer payment amounts are trending
upwards and will continue to do so as the post-WWII generation reaches
retirement age, they are still fixed expenses which are only part of a budget
equation. The other two parts of the budget equation are variable costs, also
known as the cost of doing business, and revenue. Business revenue comes from
sales. <a href="http://www.usgovernmentrevenue.com/revenue_history">Government
revenue</a> comes from taxes. <o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Budgets that
propose to reduce revenue work when a business plans to downsize as a company
strategy. For example, instead of making a 2% margin on a volume of $20M in
revenue, a $400K profit; the downsize strategy is to make a 10% margin of $10M
revenue, a $1M profit. You can see why a budget that cuts fixed expenses and
reduces revenue is unsellable to a board of directors and to stockholders
unless the strategy is to downsize the business. So is the idea of downsizing
the federal government and reducing taxes. But that is a political digression. <o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">A budget or the
lack of a budget is an elephant in the living room of a business. Many times,
as a <a href="http://www.bls.gov/oco/ocos019.htm">management consultant</a>, my
job has been to say to business owners, “Hey, you have an elephant in your
living room. What are we going to do about it?” Then come the excuses that it’s
in their head or that their accountant does it or that they have a spreadsheet
that they purchased with their business plan online or that they are working on
it, etc.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Any planning
that a company tries to make without a budget is a shot in the dark or some
other metaphor connoting guesswork. Many times entrepreneurs lack business
training <i>per se</i>, which is why they go
to <a href="http://www.score.org/">SCORE</a> [Service Corps of Retired
Executives] or they bring in a consultant. Many business owners make the faulty
assumption that their accountant takes care of their budgeting for them. The
accountant is a good person to ask about the arithmetic, but generally speaking
a budget is not an accountant’s job.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">An
accountant’s job is tax, just as an attorney’s job is law. In my view, the only
times that a business owner needs advice from either profession is when they
are dealing with the IRS or dealing with contractual matters. They both are without
doubt the wrong professions to ask for business advice. Asking an accountant for
business advice is like driving a car and trying to see where you are going by
looking in the rearview mirror. An attorney can only tell you for certain what
routes not to take and will find ones not to take that you never knew existed. <o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">To be fair,
the accountant and the attorney and the banker, for that matter, all look at
the same financial data. Each is a different audience, if you will. They look
at different things in addition to how they are going to get paid for looking,
which is its own consideration. The major sections of the financial data that
everybody looks at are overhead, considered a fixed expenses, and costs, which
are considered variable expenses. Revenue is the paramount consideration for
business.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">“Why are you
in business?” is a straight forward question with only one correct answer: to
make a profit. You would be amazed at how many times business people tell
elaborate tales in answer to that question about providing something for their
fellow human beings or some such thing. Others seek to revolutionize something
or to create new atmospheres. It sounds good but it does not matter. Making and
protecting profit is the only thing in business that matters. Business cannot
succeed at that venture without a budget and an organized, annual budgeting
process.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">But
government is not a business. Balanced budgets exist in business. Revenue minus
expenses minus costs equals profit. Prudent business management is all about
balancing revenue and costs to achieve profit. Successful management thinks
inside the box, because that’s where the money is. Budgets make profits happen.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">The idea of a
<a href="http://technorati.com/politics/article/another-fake-debate-raising-the-debt/">federal
budget</a> is relatively new. You will not find a federal budget mentioned in
the Constitution. The Budget and Accounting Act of 1921 created the U.S.
General Accounting Office as part of the Legislative Branch to audit the federal
books and prevent fraud. The 1921 legislation created the Bureau of Budget in
the Executive Branch to coordinate budget submissions by various departments and
agencies. By the 40s, the idea of a balanced budget was so much old political
rhetoric. Political parties say things they think that voters want to hear. That
is what the Ryan budget does. That is all that it does. <o:p></o:p></span></div>
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<span style="font-size: xx-small;"><span style="font-family: "Arial","sans-serif";"><o:p> </o:p></span><span style="font-family: Arial, sans-serif;">Article first published as </span><a href="http://blogcritics.org/culture/article/budget-what-budget/" style="font-family: Arial, sans-serif;">Budget:
What Budget?</a><span style="font-family: Arial, sans-serif;"> on Blogcritics.</span></span></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com1tag:blogger.com,1999:blog-4455667724926725188.post-50331813216429584602011-11-26T14:46:00.000-08:002011-11-26T14:54:41.776-08:00Sorry, Cain Fans<div><br /></div><div><p class="MsoNormal"><span style="font-family: Arial, sans-serif; ">Within the first few minutes of his appearance with <a href="http://www.washingtonpost.com/blogs/post-partisan/post/herman-cain-and-a-skeptical-david-letterman/2011/03/04/gIQA4bbeiN_blog.html">David Letterman</a>, Herman Cain told the host and audience two things that disqualify him for public office. First, candidate Cain proclaimed that he is “not a politician.” Second, he stated that the “country should be run like a business.” It does not work that way. If a person is not a politician, they do not qualify for an elected government position – appointed, maybe, but not elected, where being a politician is requisite. As to running government like a business, that is a false analogy. It does not work that way.</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">“<a href="http://onegoodmove.org/fallacy/falsean.htm">Government is like business</a>” is a text book example of the false analogy. In such an analogy, two objects, A and B, are shown to be similar. Then the argument is that since A has property P, B must also have property P. <a href="http://onegoodmove.org/fallacy/falsean.htmhttp:/www.fallacyfiles.org/wanalogy.html">The analogy fails</a> when the two objects, A and B, are different in a way which affects whether they both have property P. You have heard this populist argument that just as business must be sensitive primarily to its bottom line, so also must government.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">The problem is that the objectives of business and government are completely different. Business is all about profit and governments are all about people.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">Both business and the government have budgets. Budgets are based upon revenue and expenses. However, business revenue is based upon sales and government revenue is based upon taxes. The revenue mechanisms are entirely different, hence the false analogy. Governments can only increase revenue by passing laws to raise taxes, which may have irksome political implications beyond the grasp of the finest CEO. Businesses can only increase revenue by increasing sales. <o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">In either case, reductions in spending do not increase revenue. Less spending only impacts margin, which is not a government consideration at all. The government does not have a Profit and Loss Statement or a Balance Sheet, where there is such a thing a negative equity. The concept of equity is not governmental. <o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">The whole idea of a <a href="http://technorati.com/politics/article/another-fake-debate-raising-the-debt/">federal budget</a> is relatively new anyway. The Constitution does not even mention such a thing. The Budget and Accounting Act of 1921 created the U.S. General Accounting Office as part of the Legislative Branch. Its purpose is to audit the federal books and prevent fraud. That 20s legislation created the Bureau of Budget in the Executive Branch to coordinate budget submissions by various departments and agencies. By the 40s, the idea of a balanced budget existed but was considered just so much old political rhetoric.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"></p><p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"></p><p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">Speaking of the Constitution, the balanced budget amendment, <a href="http://thomas.loc.gov/cgi-bin/query/z?c112:H.J.RES.2:">H.J.RES.2</a>, came to the House floor and went to committee last January. Last week Congress <a href="http://politics.nytimes.com/congress/votes/112/house/1/858">failed to pass</a> it, as the Super Committee succeeded to fail. <o:p></o:p></span></p><p></p><p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Budgets that propose to reduce revenue only work when a business plans to downsize itself as a company strategy.</span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">Let’s say that a company makes a 2% margin on a revenue volume of $20M, which is a $400K profit. The company’s downsizing strategy is to make a 10% margin on a revenue volume of $10M, a $1M profit. The $600K difference is sellable to a BOD because it cuts fixed expenses and reduces revenue. The idea of downsizing the federal government and reducing taxes may sound good, it is just that the government has no mechanism to reduce its size. <o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">President Reagan said, “No government ever voluntarily reduces itself in size. Government programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we'll ever see on this earth!”<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">Balanced budgets only exist in business. Prudent business management is all about balancing revenue and costs to achieve profit. That is why successful business managers, as Cain claims he is, think inside the box. That is where the money is. Likewise, successful politicians think inside the box, because that is where the votes are.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">At his word, Cain says that he knows all about being a business person but not about being a politician. So, why should anyone vote for him? He is missing the point. Politicians do not just say things they think that voters want to hear. Politicians say things that are calculated to appeal to an electorate constituency. Candidate Herman Cain says things that may sound good to him, but they did not sound good to television show host David Letterman. Sorry, Cain fans, your candidate does not qualify.<o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif"">Bragging about not being a politician and expecting to become president is like bragging about not being a business person and expecting to become a CEO. <o:p></o:p></span></p> <p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: center;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; font-size: 11px; line-height: 12px; ">Article first published as </span><a href="http://blogcritics.org/politics/article/sorry-cain-fans/" target="_blank" style="font-family: Arial, sans-serif; font-size: 11px; line-height: 12px; ">Sorry, Cain Fans</a><span class="Apple-style-span" style="font-family: Arial, sans-serif; font-size: 11px; line-height: 12px; "> on Blogcritics.</span></p><p class="MsoNormal" style="margin-bottom:10.0pt;line-height:115%"><span style="font-size:8.0pt;line-height:115%;font-family:"Arial","sans-serif""><o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com1tag:blogger.com,1999:blog-4455667724926725188.post-75405627341222773462011-10-06T13:47:00.000-07:002011-10-06T14:04:11.634-07:00Easy To Buy<p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Ten years after my first entrepreneurial failure, I had to force myself to learn sales, at which I seemed to have to work harder than everyone else. It was hard in a simple way. Like playing a musical instrument, it took a lot of practice. The sales cycle begins and ends with prospecting. The routine is seeing new people and following up on them. The difference between success and failure is the dogged tracking of everything and constant measuring of minutia. But, the thing that finally got my attention was easy to understand and embrace. To quote the psalmist <a href="http://www.youtube.com/watch?v=XLYomt_cSZs">Jimmy Buffett</a>, “it was so simple like the jitterbug it plumb evaded me.”</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Make it easy for the customer to buy.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Exceeding customer expectations, human connection, and relationship building are key components of making it easy. So, how about hardware gadgets and software applications? Does technology make it easier? My answer is a definite “maybe.” Let me make it easy for you to buy this essay on whether or not social media accomplishes my axiom. Remembering that hindsight is 20/20, let’s look at the innovations that founded our present situation.</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Consider an analogue Internet connecting people by a web of railroad tracks and postal routes that allows for two-way communication utilizing printed multi-page websites. Welcome to the dawn of the 20<sup>th</sup> Century.</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">President Abraham Lincoln signed a law on May 20, 1862 called the <a href="http://www.archives.gov/education/lessons/homestead-act/">Homestead Act of 1862</a>. Applicants who were over 21 and who had not born arms against the United States got a “homestead” or grant of 160 acres of undeveloped federal land west of the Mississippi River. They had to live on it for five years and improve [farm] it in return for a deed. Eleven states had left the Union at the time and there would be political and regional issues as a result, but aren’t there always when a government gives people anything? The point here is that the Act expanded western settlement which followed the growth of the railroads.</span></p><div> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The postal system implemented <a href="http://postalmuseum.si.edu/exhibits/2b2_reaching.html">Rural Free Delivery</a> (RFD) in 1896. Since the country was literally wireless, telephone wireless, two-way communication was by post. RFD also made the mail order business possible. By permitting the classification of mail order publications as aids in the dissemination of knowledge, it entitled those catalogs a one cent per pound postage rate. That </span></p><p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">made the rural distribution of catalogues quite economical while the railroads provided distribution to delivery points.</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4H5IGkhOojC78O9RegEYS3qFVnGHy52COFOsOBgYNXW4aRwqibVQEibg2BUgP3YlDwZ0kUHSdpu0J7u-OnKdZXSQ5WzE8DjRK7JokYfZzz-YGeF-4MoUwnHZGJuc9DziQD14evBkmlFkb/s200/sears_catalog01.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 150px; height: 200px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5660487367602039298" /><p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The <a href="http://www.searsarchives.com/catalogs/history.htm">Sears, Roebuck and Co. catalog</a> called itself the "Book of Bargains: A Money Saver for Everyone," and the "Cheapest Supply House on Earth," claiming that "Our trade reaches around the World." At the apex for mail order merchandise, you have the model website for its time that included testimonials from satisfied customers. The catalogue made every effort to assure the reader that Sears had the lowest prices and best values. The 1903 catalog included the commitment, "Your money back if you are not satisfied." <span> </span></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The point is that it is not just one thing that makes a milestone, but a combination of things that is transformative. The combination of catalogue, RFD, and the rail system made it easy for customers to buy.</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "></span></p></div><div> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Talk about making it easy, here are some more combinations for consideration. The increasing use of the <a href="http://www.pbs.org/wgbh/pages/frontline/shows/credit/">credit card</a> from 1958 is a significant development for consumers and culture. Add that to the introduction of the American Telephone & Telegraph (AT&T) 800 <a href="http://www.phonepeople.com/history-of-toll-free-service">toll-free service</a> in 1967, so that subscribers like Sears could allow their customers to reach them without toll charges, and you have a milestone.<span> </span></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The next milestone occurred when the development of an <a href="http://www.youtube.com/watch?v=9hIQjrMHTv4">Internet from 1957</a> is coupled with the relative affordability of the <a href="http://www.computerhistory.org/timeline/?category=cmptr">personal computer</a> in about 1986. Add to that combination the growth privately owned shipping services with incredible logistics like UPS and FedEx and by 1994 the <a href="http://timelines.com/topics/dot-com-bubble">Dotcom bubble</a> is on with the founding of Amazon. The next year brought Craigslist, Yahoo and eBay. That being noted, the milestone is that consumers could look at an online catalogue, call a customer service agent, process and pay for an order and have it delivered the next day.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Just for the record, Sears decided to quit producing its “Wish Book” catalogue in 1993 in favor of making it easy for customers to buy online.</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">We arrive, finally, at the business use of social media. I will argue that the first social medium is analogue – a bulletin board in a common area that uses paper and thumb tacks. I will further argue that Twitter and Facebook form the electronic generation of the same. How important are they?</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <div><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgF3gfXnq2AR13n0K683Jx41vBonDbflavtMF9afJyoFl4iywNozE2R-7DO_aEVjV7_gTgEDqQhJFLcNQCEBrt1v-WBeYhPopaKxUevAo9H8ooudVmlkQ2ybpKLyG4Y-Toalrg8UdbCfTFZ/s200/texting2.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5660487368237336066" style="float: left; margin-top: 0px; margin-right: 10px; margin-bottom: 10px; margin-left: 0px; cursor: pointer; width: 200px; height: 200px; " /></div><p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">According to <a href="http://blog.onlinemediadirect.co.uk/company-sites-outstrip-facebook-and-twitter-for-online-marketing/842/">Demandbase CEO Chris Golec</a>, “Despite its increasing influence, it’s important to keep in mind that no business sale is made without the buyer going to the corporate website first.” In fact research shows that such sites are seven times as effective at generating sales leads as social networks such as Twitter and Facebook. 25% of survey respondents admitted the most sales leads came from their website, followed by 14% who selected email marketing campaigns. Online advertising followed that. Social media accounted for 3% of respondents’ recommendations. What’s on your website?</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">I am not suggesting that social media should be ignored. Neither am I suggesting that business has to have a Facebook page and a blog because everybody else does, although that is tempting. Instead I will argue that businesses need to think about implementing social media as part of its message mix, if for no other reason than to accomplish three things: engage their customers and exceed expectations, make a stronger human connection, and build better relationships. If those can be done strategically, by which I mean being able to measure the results, perhaps another milestone will occur.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: center;"><span style="font-family:"Arial","sans-serif""><o:p> # # # </o:p></span></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span"><span class="Apple-style-span" style="font-size: 12px;"></span></span></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span"><span style="font-size:8.0pt;font-family:"Arial","sans-serif"">Article first published as <a href="http://blogcritics.org/culture/article/easy-to-buy/" target="_blank">Easy To Buy</a> on Blogcritics.<o:p></o:p></span></span></p><p></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-9702491555812151982011-08-10T11:22:00.000-07:002011-08-10T11:31:46.575-07:00The Human in Human Resources<p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span> </p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Assume you are the CEO, president, or owner of a company and you have the responsibility and authority to make decisions. Some of them can be delegated but the ultimate responsibility is yours. Your company has an executive management position to fill. In the Human Resource department of your company you have a person working for you with the responsibility for selection and placement of personnel. They have posted the position opening on an on-line job board. In this economy with its extreme unemployment rate, especially in the management ranks, that someone is now buried.<o:p></o:p></span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">While they have merit and arguable utilitarian value, the number of Job Boards has increased dramatically since <a href="http://thefastertimes.com/news/2011/05/25/faster-scoop-the-new-york-times-gushes-over-monster-com-without-acknowledging-partnership/">Monster</a> appeared. That cute name brand has been copiously copied since 1999. Job boards now have boards. Just like everything else that started on the Internet as a free service, many job boards, such as Ladders, are fee based -- not free. For fees that range from low monthly rates to high single pay prices, the boards sell their customers résumé writing services to rewrite a job seeker’s copy using language that a person might read into language that a computer program reads.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span>Your responsible Human Resources person has received a plethora of applications and cover letters in response to the job posted on the job boards on your company’s behalf. You likely have some bright person in charge of the application screening process and they may be using some flavor of HR software to scan résumés and cover letters for key words and key phrases that display the highest probability of matching the criteria of the job description. The software helps HR people automate the selection process.</p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Job seekers know this and many spend money to have job board companies apply their résumé writers with their proprietary HR adapted software to make sure that the processed résumés that your person receives have the highest probability of making the probability cut. The software helps the job board people make résumés and cover letters more acceptable to an automated process. Think of it like homogenization. An odd word choice, perhaps, but forensically it’s true. Both postings and résumés become exercises in cliché as a result.<span> </span></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span>Bear in mind that the Human Resource function has other critical and largely legal ramifications for which HR software has become important. Document creation and filing, such as employee agreements and employee handbooks, are but two examples of the kind of paperwork that has become highly significant in our litigious society. Such documentation helps prevent an enterprises’ administration from accidentally giving away the proverbial keys to the company. HR is much more than just creating selection hoops through which prospective candidates must jump.</p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span>Depending on the level of the functional position, other layers of sifting through applications can be used to find the most desirable criterion matches. Profiling is another passive discriminator, as opposed to an active one which would be illegal. Similar to <a href="http://www.myersbriggs.org/">Myers-Briggs</a> personality testing, or <a href="http://www.glassdoor.com/Reviews/eHarmony-Reviews-E20901.htm">eHarmony</a> profiling for that matter, corporations can pay outside HR enterprise companies to screen selected applicants and play matchmaker to select the best fit. Human Resource is not about dating, however.</p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span>The cost benefits of HR software applications and the efficacy of personality profiling as interesting topics themselves aside, sooner or later decisions have to be made about people that can only be done by a person, either you or someone you have designated to make that decision for you. There is no application for that other than, perhaps, a coin toss. It might sound facetious, but the cliché “all things being equal” is a circumstance in fact. If the automated process has done its job, presumably, you can pick a large coin and flip it. Throw a dart.</p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span>At the executive level in an organization the criteria changes. There are <a href="http://www.slideshare.net/TommyMack">four areas</a> at which successful management executives must demonstrate their skills: organization, delegation, functional management and supervision. Industry experience is always a plus. However, it is less important that the software business executive have experience writing code, or that the grocery business executive have experience in buying produce, than it is for the software executive to deal with the code writing manager or the grocery executive to deal with produce buying manager. Executive experience is personal.</p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span>Eventually, a name and phone number appears on the screen of a screener. At this juncture, a person talks to a person to arrange a telephone interview. From that point on the Human Resource function become human again. The idea of better technological hole and peg fitting process pretends to reduce errors in judgment. But do better holes make better pegs or <i>vice versa</i>? The fallacy of the idea is that the human quotient of Human Resources can be outsourced, and that turn-over and training costs will necessarily be reduced.</p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span>To me this is a case of if you believe it is so; you will buy in to it being so. I remain pessimistic about the increasing automation of the Human Resource process of candidate selection. That pessimism is based on what the ultimate management function is: making decisions. If something helps a decision makers make better decisions, I can support its use. <span> </span>By the way, there is an <a href="http://www.nytimes.com/2011/05/19/technology/personaltech/19smart.html?_r=2&scp=2&sq=monster.com&st=cse">app for Monster</a>, an application for the so-called smart phone, which is actually not a phone but a radio devise. However, as you may have gathered, I am concerned that software does not solve everything; people do, like the human in Human Resources and you.</p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span"># # # </span></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span"><span class="Apple-style-span" style="font-size: 12px;"><span style="font-size:9.0pt;font-family:"Arial","sans-serif"; mso-fareast-font-family:Calibri;mso-ansi-language:EN-US;mso-fareast-language: EN-US;mso-bidi-language:AR-SA">Article first published as <a href="http://blogcritics.org/culture/article/the-human-in-human-resources/" target="_blank">The Human in Human Resources</a> on Blogcritics.</span></span></span></p>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-88531543860784438142011-07-20T14:30:00.000-07:002011-07-20T15:30:26.502-07:00Still an Analogue World<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhMyvSAmaRUm3TaW1O08QwszANX26yQHANj6ThNM7bGiefC6ni_QA89u2yRvxPWWY5_nOiwTTPK-Sf41Jwqc_NjPvwBTUW4kESjQ3VAPpDCVHe_bRfe1tqMkD8Vli_7FaJKzQEbclZVvoXb/s1600/Nap1.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><br /></a><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">As much as I use PowerPoint and Excel to make a point, I still think it is a good idea to know how to use a paper napkin or a white board. There is something almost magical in that kind of performance because it is personal, almost intimate, especially when you are dealing with professional sales people. If you are too cool to draw a picture, there are a lot of people you are going to miss. Lest we forget, for many people it is still an analogue world.</span><br /><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaLob4Zrrb1jEUn_R3kB-OrRXvY0yPAKyr6ZcZhW6d9-RN_VVGWxACz4hU14xYWpyZZExvpMx3lKcjgMu4NQqq9_jabLI1C-nBYGOdlb5xzds-kyiQaKy3_xz98vPc9PuVoGAF6PFcF477/s1600/Nap1.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"></a><div><p class="MsoNormal"><span class="Apple-style-span"></span></p><span class="Apple-style-span"> </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">One of my clients was a digitally inclined auto dealer who employed 10 to 14 sales people. Automotive sales forces are of a variable nature because they tend to have a 30% attrition rate. It’s not for everyone. The client faced two major problems in sales. Basically, he hated his sales people and they hated him in return. It was a digital divide. The other problem was pricing. The client discounted vehicles below break-even and posted them on the Internet. Sales did not know about it but their computer savvy customers did.</span></div><div><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><br /></span></div><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiABXS1-7GKMegeRdxJ0Qh0rMj4DKwH67XTqkbOjPxHcaG42fHxWs0iZT3gXbGvtjK9tMqSZLlITMRMA8RKXcZJO8-JWbxAiDgzPRTa3B0zGkPjVOzktAzNuPUoCNiasOJJl6ASykygUQfE/s200/Nap2.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 124px; height: 124px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5631559573765934706" /><div><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The client invested in ten furnished computer cubicles with really nice big monitors, whiz-bang phones, and the super-duper training seminars that were included. His sales force grudgingly endured the latter and pretty much ignored the former, except for outbreaks of pornography watching and chat-room chatting. The client could not understand why “his guys” did not use the great </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">tools he had given them. When they did use them, he said, “They’re like a bunch of monkeys with typewriters.” He told them that.</span><p class="MsoNormal"></p><p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">It didn’t help that the client had been through a Dale Carnegie sales training program. His framed certificate of training made him conclude that that he was a great salesperson. Unfortunately, he sucked air as a sales person. He genuinely lacked people skills. He did not know how to listen to prospects. That made him impatient with them. Nor could he understand how people refused to follow his robotic and raced through presentations. It did not help that the client told his sales people that they didn’t know what they were doing, which he did.<o:p></o:p></span></p><p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">One thing that self-described great sales people like auto dealers have in common is that they are marks. They are called “lay-downs.” They will buy anything. They have no sales resistance. Because they are such great sales people, they overcome their own objections. They are especially vulnerable to the bane of all professional sales people existence called “Susie Sales Girl,” who is the willowy well-heeled blond who sells sales seminars, full-page color newspaper ads, websites, bus advertising that forgets to include the dealership phone number on a 30 vehicle fleet, novelty pens, and enough balloons and helium for the Macy’s Parade. When they sell computer hardware and software, clients can’t write a check quickly enough.<span style="mso-spacerun:yes"> </span><o:p></o:p></span></p><p></p><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWroBCFTXZCKZeUWirKnoscqOqDWmFb4FLeHThju8OE7mO_rYFm1WrZ7p9cfzxORTub98RBtLCqs7cXpACQJnd0lRjc7YhYVDOne_CcQL4Te-EOumTi8UdsaCJOrsptJSPH8CdV3OLyZcB/s200/Nap3.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 124px; height: 124px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5631557478166682194" /><p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Dealers are not the only people who get sold hardware and software. Many business owners buy into the idea that software by itself can solve everything, or at least that it should. It is the using of the </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">software, along with everything that implies that can be problematic after the sale. The biggest after sale problems are technical support and user training. Support and training are rarely onetime events but tend to be treated as if they were. However, when such a tool as a </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">complex computer application cannot be used, the hardware might as well be a boat anchor. Except for sailors who just bought a new boat, no one wants to admit they bought a boat anchor for their business. <span style="mso-spacerun:yes"> </span></span></p><p class="MsoNormal"><span class="Apple-style-span"> </span></p><p class="MsoNormal"><span class="Apple-style-span"><span style="font-family:"Arial","sans-serif"">My client had purchased 10 boat anchors as well as a jumbo monitor for the conference room, where he routinely put his sales crew to sleep with PowerPoint presentations and webinars. That created a hate-hate relationship enhanced by technology.<o:p></o:p></span></span></p><p></p><p class="MsoNormal"><span class="Apple-style-span"></span></p><p class="MsoNormal"><span class="Apple-style-span"><span style="font-family:"Arial","sans-serif"">Organization integrity was the management issue in this case. As an owner, the client had assumed to position of General Manager and Sales Manager. He employed a Service Manager, Finance Manager, Parts Manager, an Office Manager, a Personnel Manager and a Facilities Manager. But in those positions they had no one to report to because the owner was so busy in his area of least competence. So those managers were more or less on their own. The organizations’ lines of communication atrophied and business suffered as a result.<o:p></o:p></span></span></p><span class="Apple-style-span"> </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmrRwdhr3YphEqFOAHQP56bbuoosBginxAJajeG7BfADTBn4qvask3UyrMswYfIW9ipnibRl3PKOA2kpjJ9VN1kJ_syf6SSlTfVddv457fX6S81zH2yyv5JNVwvlOLNvBYbBQBBt1pFsLQ/s200/Nap4.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 124px; height: 124px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5631558522545301298" /></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">To correct this situation required me taking on the position as General Manager myself until a new GM could be selected and hired. Next came the tasks of appointing a Sales Manager and establishing a balanced management organization with a routine reporting and communication process. By establishing an organization structure that put a management buffer between department managers and ownership, it became easier to coordinate department functions to take care of the business. </span></div><div><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><br /></span></div><div><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">I am not suggesting that it was easy. Routines had to be changed and there was a sort of smiling resistance. Everybody wanted to keep doing what they had been doing, such as the owner meddling with customers and sales people and department heads running their own shows. By the end of 13 weeks of regime change, the operation began its recovery. </span><p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">About the sales department and the boat anchors, that issue was to get the sales people to see what was in it for them to use the tools that the business owner had purchased. As I explained almost daily to the client, his guys were good sales people. They were analogue people who were skilled at listening to customers and overcoming objections as if it was a game. All they needed was a product to sell, a pen to write with and a piece of paper to write on. What they needed to believe was that there was value in learning to make the “Internet machines,” as they called them, help them with their sales work – prospecting, following up and tracking results.</span></p><img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhrObhr_TlLjavACluU4wsZa1vTJB1KHxaCcZfAwFZdHxfrxNJunC4GlZVC8vqkLyGNrkK3ly6ys3I-obDhhfJmwXQ1kFzcY677uEob-jkNHoBKiFAL2I9O6kTsV2TO6X92BQkIVW7mP286/s200/Nap5.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 124px; height: 124px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5631558752334465426" /><p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">To do that required me putting a white board in my office so that my department managers and I could draw on them. It did not require telling them what I was doing as much as just doing it and </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">getting them used to doing it. Together, we used the analogue tool to hash out what we wanted the digital tool to do for them. With time the managers began to own their Excel spreadsheets and use them in their reporting, as opposed to shoving programs down their proverbial throats. It also helped to supplant the jumbo screen with a jumbo white board and to make sales meetings more interactive. <span style="mso-spacerun:yes"> </span>I replaced emitted light with reflected light. No one got sleepy.</span></p><p></p><p class="MsoNormal"><span class="Apple-style-span"></span></p><p class="MsoNormal"><span class="Apple-style-span"><span style="font-family:"Arial","sans-serif"">Even the owner succumbed to something as simple and analogue as me writing on a cocktail napkin to demonstrate the difference between mark-up and gross margin pricing. I succeeded in showing him that MSRP (Manufacture Suggested Retail Price) was not a markup but a margin above the break-even point. All of the overhead costs involved in selling a vehicle, including the helium and balloons, were absorbed plus adding a gross margin. When I showed him how a mark-up price of a vehicle over invoice left money on the table, I got his attention. When he saw that discounting a price below his break-even cost him money, he picked up the napkin and put it in his pocket. The next day he showed me a pricing spreadsheet he created from the napkin. He still has it.</span></span></p><p></p><p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">If there is a moral to this story, it is that how you get your message across is not important. Getting the message across is. The sales people took ownership of their workstations to increase their personal sales and quit resenting sitting in front of a monitor. The dealership quit leaving money on the table by pricing and discounting correctly. People developed new routines for a new General Manager to oversee. Whether or not those folks lived happily ever after I cannot say. What I can say is that software does not solve everything. People do. It is just that sometimes you have to draw a picture with them.</span></p><p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><br /></span></p> <p class="MsoNormal" style="text-align: center;"><span style="font-family:"Arial","sans-serif""><span style="mso-spacerun:yes"> </span><o:p></o:p></span><span class="Apple-style-span" style="border-collapse: collapse; font-family: arial, verdana, helvetica, sans-serif; font-size: 12px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; ">Article first published as <a target="_blank" href="http://blogcritics.org/culture/article/draw-a-picture-its-still-an/" style="color: rgb(0, 0, 255); text-decoration: underline; ">Draw a Picture: It's Still an Analogue World</a> on Blogcritics.</span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-11293332478978970712011-07-10T17:33:00.000-07:002013-03-02T01:50:08.145-08:00Family Advisor and Business Savior<div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p>If you tell someone that you are a college professor, you get asked, “What do you teach?” If you tell someone you are a management consultant, you get asked, “What do you do?” In my consulting practice I organize small companies as the person they call in to get rid of former best friends, spouses or family members from the operation. [Specialty: getting Pops to retire early.] </span><span style="font-family: Verdana, sans-serif;">Here are three case examples. </span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p>The wife was in tears as her husband told me that their $17M a year international wholesaling company was tearing their marriage apart. She had been working as a registered nurse until a thieving employee, who the couple had regarded as part of the family, was arrested and charged with embezzlement. Now the woman in tears revealed that the arrested party had been the company bookkeeper and that she, the tearful one, had left the nursing profession to take the embezzlers place. The marital problems began about the same time, two years earlier, and the discussion of divorce had begun.</span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p><span class="Apple-style-span">The owner’s son would not look me in the eye as his father explained how everything had been running along just fine in his $8M a year filling station franchises, one at each end of the town. The son had closed his own profitable motor cycle repair business to come into the family company and try to get the operation back into the black from red hole that was swallowing the family alive. The son took me aside later and confessed that he didn't know how much longer they could stay open that the banks were calling every day for loan payments. As to paying for consulting services to help save them, he didn’t know how the invoices could be paid.</span></span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p>The client’s wife and business partner in the $14M a year lumber company asked me if I was in law enforcement, as I walked through the office to step outside for a minute break. When I asked her why she thought that, she noted that I would ask a casual question each time we met and each time the questions seemed unrelated, but she was certain that they were related. Later, when the computer with the company books crashed, she retrieved a computer from home that had a copy of the books. Asked why she had been paying vendors from the client’s personal account, she mentioned the IRS lien on the business that had not been previously revealed.</span></div>
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<span style="font-family: Verdana, sans-serif;">These three cases are diverse but have elements in common that are typical of small multi-million dollar businesses. They all involve family members in some capacity or another. They are all on the brink of foreclosure, bankruptcy or collapse. They involve businesses that generate strong cash flow but produce a negative profit. In other words, they were all doing just fine and making money when they were million dollar companies and home life was good. Getting bigger was not better.</span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p>Incidentally, the three examples I have chosen are all from the pre-recession economy.</span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p>I have no objection to family members working for a company so long as the integrity of the business organization is uncompromised. To determine integrity I mean honestly answering some questions that need to be asked. Do working family members have job descriptions? Are they competent in their company position? Are they properly supervised? Do they conform to all company policies and procedures? Is their compensation appropriate?</span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p>These are the same questions that should be answered for any company employee, by the way. Look at it like this, Boss’s Spouse is not a job description. Being a business owner is not the same as being a competent business manager. Being a family member does not ensure proper supervision. Non-conformity to policy and procedure is what other employees look for, such as anything that appears to be special treatment. Working in a business without compensation is as bad a plan as being paid more than a non-family member would be paid.</span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p>A $100K a year salary for a $30K position looks like theft to employees. Not being paid for a $30K position is a terrible compensation plan and a false economy that is inconsistent with competent management.</span></div>
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<span style="font-family: Verdana, sans-serif;"><o:p> </o:p><span class="Apple-style-span">The first case required solving the work-family boundary issues that created the marital problems. The second case required reorganizing the company and changing its management. The third case required law enforcement intervention. It is all part of being a family advisor and business savior. That is what consultants are.</span></span></div>
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<span class="Apple-style-span"><span style="font-family: "Arial","sans-serif";"><o:p> </o:p></span><span class="Apple-style-span" style="font-family: 'Times New Roman', serif;">Article first published as <a href="http://blogcritics.org/culture/article/family-advisor-and-business-savior/">Family Advisor and Business Savior</a> on Blogcritics.</span></span></div>
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Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com1tag:blogger.com,1999:blog-4455667724926725188.post-20487950771863044492011-06-30T14:55:00.000-07:002011-06-30T14:59:52.072-07:00Modern Business: Flintstone or Jetson<p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Imagine getting off the train and lugging your suitcase without rollers. You are also lugging a locking latch briefcase with your monogram on it. It weighs about twenty pounds since it contains a field manual, your last project binder, a three-hole punch, box of colored pencils, case containing protractor and drafting tools, a sheaf of carbon paper, half a ream of lined paper, another half of white paper, a heavy duty stapler and staples, and reference material you have been toting along because you haven’t been home in three weeks.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">You are looking for a payphone so you can “drop a dime” and make a three minute call to your office and you are lugging the newest and baddest gadget that transforms how you do your business as a traveling management consultant – the all new Remington Rand, full key-board electric <a href="http://www.flickr.com/photos/vieilles_annonces/4038655272/">adding machine</a>. For $169.50 plus tax, this baby means you do not have to use your client’s equipment. It weighs a little, but the convenience is worth it. Your carry your portable manual typewriter in your suitcase for ease. You manually produce your spread sheets, pie charts and graphs.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The year is 1960. The average <a href="http://www2.census.gov/prod2/popscan/p60-036.pdf">annual income</a> is $5,600, according to the US Commerce Department, and you are making almost $10K after taxes. You travel by train because costs a lot less than air travel. For example, a round trip <a href="http://www.irememberjfk.com/mt/2008/08/flying_in_the_1960s.php">airline ticket</a> cost about $75 to fly from Cleveland to Washington, D.C. That would be around $400 today. Your client got invoiced for it but they sure liked your electric machine.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">In a world without apps, business had been expanding over the previous decade and saw the <a href="http://www.epips.com/djia/1950-1960s-baby-boomers.html">Dow Jones Industrial Average</a> climb from just under 200 to knock at 700’s door, briefly. People, not programs, made investment decisions. Modern business was like passenger train service – 1960’s improvements to 1940’s technology.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">People like George S. May realized that business was composed of algorithms. Ratios and percentages ruled decision making. That meant that newer and better technology was interesting but only in so far as it added convenience and expedience to decision making. The idea that business is business prevailed. Business did not care about anything except making and protecting profit. It is not that people were not important, they were. It is just that profit motive dominated business thinking.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Liberal minded humanists tended to resent the focus of the business community on profit over people. In every era they have raised their voices in objection to the perception that business exists only for profit and, in fact, they are correct. Successful business tends to be myopic because, as I say, business is business. That brings us to the latest breed of technical minded social networkers who see themselves as the new humanists and seek to transform the business community in modern ways.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">So let’s consider Fred Flintstone and George Jetson. Brilliant creations of Hanna-Barbara, the characters are enamored of gadgetry in their respective gadget centric societies. They do their jobs working for companies run by bosses whose sole interest in making a profit. Business does not care about fads or gadgets. Just ask Fred or George.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><span style="mso-spacerun:yes"> </span><o:p></o:p></span></p> <p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span" style="border-collapse: collapse; font-family: arial, verdana, helvetica, sans-serif; font-size: 12px; -webkit-border-horizontal-spacing: 2px; -webkit-border-vertical-spacing: 2px; ">Article first published as <a target="_blank" href="http://blogcritics.org/culture/article/modern-business-fred-flintstone-or-george/" style="color: rgb(0, 0, 255); text-decoration: underline; ">Modern Business: Fred Flintstone or George Jetson</a> on Blogcritics.</span><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com1tag:blogger.com,1999:blog-4455667724926725188.post-26505445832910904282011-06-14T13:52:00.000-07:002011-06-14T13:57:20.698-07:00Are Their Lips Moving?<div><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></div><div> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The adage goes like this: How can you tell when a client/customer is lying? Their lips are moving. Adages come from somewhere, especially when they are deprecating. I do not know where that somewhere is. If I did I would tell you. I am not your client. Nor are my lips moving. And why would I lie to you? The reality is, however, that the adage must be based in some arcane fact because in my consulting practice I have found it almost painfully true. <o:p></o:p></span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The worst part of this bitter truth is not the distortions of fact but the lies that clients tell themselves so often that the falsehoods might as well be truths. I call this phenomenon “breathing one’s own ether.” I am not talking about the <a href="http://scienceworld.wolfram.com/physics/Ether.html">ether</a> that was proposed by the Greek philosopher Aristotle and later used in optical theories as a way to allow the propagation of light, although I could. My ethereal euphemism refers to the ether usage during the 1930s that was the first anesthetic to make patients lose consciousness quickly and completely.</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Clients slap on an invisible <a href="http://www.sciencemuseum.org.uk/broughttolife/objects/display.aspx?id=3964">face mask</a>, turn on the regulator, inhale deeply, and remove the mask from their face, lungs filled with the vapor. They look me squarely in the eye and begin to recite well-rehearsed lines from the abyss of falsehood. What is worse is the look on their face when the expect me to believe them and see clearly that I do not.</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">As a consultant it is not my job to believe anything that a client says anyway, unless it can be verified in writing. The absence of verifiable documentation is at least a good place to start. Even if there is documentation, its veracity must be challenged because to do otherwise is to engage in a world of ambiguity, which is something I expect from salespeople and the essence of another essay.</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Here is an example. “Having my spouse work in the business saves the company money.” The false economy of having a family member work off the payroll creates other issues than a compensation plan that sucks. It compromises the integrity of the business, creates huge boundary issues between personal relationships and work relationships. Job description, supervision, company policy and procedure are all compromised. It is not a successful plan.</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Let me cite a couple of television shows to exemplify what I mean. One is a comedy and the other is a reality show. One is about delusion and the other about denial. First, the comedy:</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Breathing one’s own ether is the reason I have a hard time watching <i style="mso-bidi-font-style: normal"><a href="http://www.theatlantic.com/entertainment/archive/2011/04/the-office-says-goodbye-to-michael-well-always-have-lake-scranton/238019/">The Office</a></i>. Its central character of the American version, Michael Scott is played so well by Steve Carell that it is painful for me to enjoy. The character is delusional. He believes he knows everything and that he is a great boss. Grant you, good comedy relies on a dose of pathos. If only Michael wouldn’t believe his own bull, but then the show would become a tragedy. In business, it frequently is a tragedy and Michaels exist more than you might think.</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The reality show about people breathing their own ether is <i style="mso-bidi-font-style: normal"><a href="http://www.fox.com/hellskitchen/bios/gordon-ramsay/">Kitchen Nightmares</a></i>. Gordon Ramsay’s confrontational style aside, his clients are beyond delusional, they are in denial. It is kind of like watching grown people having their faces rubbed in their own poop by the genial bombastic “Chef” with a capital C. The owners that Ramsay confronts have signed on for abuse when they insist that wrong is right. Although I have entered the frontier of outright confrontation in my practice, you do not get letters of endorsement with bombast. Nor am I producing a reality style show.</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Whether it results in delusion or denial, the problem is that the behavior becomes an obstacle to success. Michael Scott and Ramsay’s restaurateurs are in their own way.</span></p> <p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">If I were to produce a show about the management consulting practice, I would call it Extreme Make-Over: Business Edition. Come to think of it, let me slap on my own invisible mask and take a snort or two. Heck, I could sell it to Cadillac, or Donald Trump, or Budweiser, that’s it. I could star in it too; I used to be a TV weatherman and was every bit as good as David Letterman. It will be perfect for Fox or the Learning Channel. We’re talking, you know. Are my lips moving?</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: center;"><span style="font-family:"Arial","sans-serif""># # # </span></p><p class="MsoNormal" style="text-align: center;"><span style="font-family:"Arial","sans-serif"">Originally published on <a href="http://blogcritics.org/culture/article/are-their-lips-moving/">Blogcritics</a>, June 11, 2011<o:p></o:p></span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-25595261297333658752011-06-04T10:24:00.000-07:002011-06-04T11:20:45.698-07:00Factory Tours and Facts<p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">When politicians and pundits talk about small businesses and job creation, many of them seem to rely on Chamber of Commerce created public relations photo opportunities and televised factory tours for their information rather than finding out the facts. Here are some facts that most politicians and pundits ignore in their fantasy world of U.S. businesses.</span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "> </span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The <a href="http://www.sba.gov/advocacy/7495/8420">Small Business Administration</a> defines a small business as “one with fewer than 500 employees.” Here is the short version </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">of what the SBA says is important about small business to the U.S. economy.</span></p> <ul style="margin-top:0in" type="disc"> <li class="MsoNormal" style="mso-list:l0 level1 lfo1"><span style="font-family: "Arial","sans-serif"">Represent 99.7 percent of all employer firms.<i style="mso-bidi-font-style:normal"><o:p></o:p></i></span></li> <li class="MsoNormal" style="mso-list:l0 level1 lfo1"><span style="font-family: "Arial","sans-serif"">Employ just over half of all private sector employees.<o:p></o:p></span></li> <li class="MsoNormal" style="mso-list:l0 level1 lfo1"><span style="font-family: "Arial","sans-serif"">Pay 44 percent of total U.S. private payroll.<o:p></o:p></span></li> <li class="MsoNormal" style="mso-list:l0 level1 lfo1"><span style="font-family: "Arial","sans-serif"">Have generated 64 percent of net new jobs over the past 15 years.<o:p></o:p></span></li> <li class="MsoNormal" style="mso-list:l0 level1 lfo1"><span style="font-family: "Arial","sans-serif"">Create more than half of the nonfarm private gross domestic product (GDP).<o:p></o:p></span></li> <li class="MsoNormal" style="mso-list:l0 level1 lfo1"><span style="font-family: "Arial","sans-serif"">Hire 40 percent of high tech workers (such as scientists, engineers, and computer programmers).<o:p></o:p></span></li> <li class="MsoNormal" style="mso-list:l0 level1 lfo1"><span style="font-family: "Arial","sans-serif"">Are 52 percent home-based and 2 percent franchises.<o:p></o:p></span></li> </ul> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Want to astound your friends? Ask them, “Who produces 13 times more patents per employee than large patenting firms?” The answer: US small businesses do. Furthermore, you can add, according to the SBA, “These patents are twice as likely as large firm patents to be among the one percent most cited.” You’ll </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">get “wow” and puzzled looks. But I digress.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The <a href="http://www.nase.org/Files/Documents/Self-Employed_and_the_US_Economy-_Charts_&_Stats.pdf">National Associatio</a></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><a href="http://www.nase.org/Files/Documents/Self-Employed_and_the_US_Economy-_Charts_&_Stats.pdf">n of Self Employed</a> adds that of those businesses employing less than 500 people</span></p> <ul style="margin-top:0in" type="disc"> <li class="MsoNormal" style="mso-list:l1 level1 lfo2"><span style="font-family: "Arial","sans-serif"">77.6% are non-employers, or self-employed. <o:p></o:p></span></li> <li class="MsoNormal" style="mso-list:l1 level1 lfo2"><span style="font-family: "Arial","sans-serif"">17.3% employee 11 to 19 people. <o:p></o:p></span></li> <li class="MsoNormal" style="mso-list:l1 level1 lfo2"><span style="font-family: "Arial","sans-serif"">2% employ more than 20 folks. <o:p></o:p></span></li> </ul> <img src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgd8DSZo_zARR_OvfKUvEEflvYXtd1KQQbJAYa_Ho-qD6FU4RlIWfftHsdErQ9D2e7SGqchpQ0LTKKLx0DDocJ9CnRueXqH8JrXrG7JGPt21JXBYmbAwp3skljUy9tCnPuh86XPjz0kkxC7/s200/cascosign1.jpg" style="float:left; margin:0 10px 10px 0;cursor:pointer; cursor:hand;width: 200px; height: 150px;" border="0" alt="" id="BLOGGER_PHOTO_ID_5614430967422540594" /><p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Some perspective is in order. Go to the sports page and think about Pro Football for a minute. I am not talking </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">about the sports teams themselves, but about the financial impact the NFL wields on franchise towns like Green Bay, which is not a major market. <i style="mso-bidi-font-style:normal"><a href="http://www.businessnewsdaily.com/nfl-strike-small-business-1032/">Business News Daily</a></i> says an “NFL Lockout Could Sack Small Businesses.” <span style="mso-spacerun:yes"> </span>According to the <i style="mso-bidi-font-style: normal">Daily</i>, “The livelihoods of thousands of small business owners and their employees are at stake in each of the </span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">NFL’s 32 cities. Restaurants, bars, team apparel stores and other small businesses located within walking distance of NFL stadiums are bracing themselves for a potential lockout and the ramifications it may have.” Would you like to talk about a seasonal business?</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">So let’s talk about Washington political rhetoric. It continues to suggest that the slow recovery is because banks will not lend to credit worthy borrowers. According to the non-partisan National Federation of Independent Business, that is not the case. The <a href="http://www.nfib.com/Portals/0/PDF/sbet/sbet201104.pdf">NFIB reports</a> that the economy generated a lot of jobs by making bad loans and they are gone now. Community banks across the country have plenty of money to lend, but “the pipeline of good applicants collapsed in the recession.”</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Remember the football lockout I mentioned? The NFIB says that on the job side “it is going to take a rebound in consumer spending, particularly in the service sector to make a significant dent in the number of unemployed. The manufacturing sector is doing very well, but it does not create many jobs.” Factory tours and the Chamber are good for television, not so much for business facts. Facts are boring.</span></p><p class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><br /></span></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><span style="font-family: 'Times New Roman', serif; " >Article first published as <a href="http://blogcritics.org/culture/article/factory-tours-and-facts/">Factory Tours and Facts</a> on Blogcritics</span><span style="font-size:12.0pt;font-family:"Times New Roman","serif"; mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin;mso-ansi-language: EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA">.</span></span></p>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-32574904398584562392011-05-13T10:52:00.000-07:002011-05-13T11:09:13.626-07:00Screw the Unemployed<div><br /></div><div><p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The House of Representatives is finally getting around to jobs, the number 3 thing on its 2010 campaign agenda. House Ways & Means Committee Chairman Dave Camp (R–MI) has introduced the legislation, “To improve jobs, opportunity, benefits, and services for unemployed Americans, and for other purposes.” The bill does not have a number yet but according to <a href="http://waysandmeans.house.gov/UploadedFiles/JOBS_Act_Introduced_050511.pdf">its text</a> may be referred to as the ‘‘Jobs, Opportunity, Benefits, and Services Act of 2011’’ or simply the ‘‘JOBS Act of 2011’’. But it does not have to do with jobs; it has to do with unemployment benefits. It cuts them back.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span style="font-family:"Arial","sans-serif"">Despite the noble wording of its title, what the bill does is to encourage states to </span><a href="http://blogs.wsj.com/economics/2011/05/05/bill-would-allow-states-to-use-unemployment-funds-for-other-purposes/?mod=WSJBlog"><span style="font-family:"Arial","sans-serif"">whittle back</span></a><span style="font-family:"Arial","sans-serif""> their unemployment insurance systems. The bill gives states the option of using federal unemployment-benefit dollars to repay federal loans or provide tax breaks to businesses. Not continuing to pay jobless benefits to long-term unemployed people somehow counts as “job creation.”</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Representative Sander Levin (D-MI) put it this way, “This is the opposite of a jobs bill — it is a hatchet job on the unemployment insurance program.” The Ranking Member of the Ways & Means Committee, Levin said, “With this legislation, Republicans are proposing to end this year’s guaranteed benefit for the long-term unemployed.” If states follow Michigan’s example by cutting benefits and instead using federal dollars to repay loans rather than providing weeks of aid, it could take billions of dollars away from jobless Americans.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span style="font-family:"Arial","sans-serif"">Even though federally extended benefits could </span><a href="http://www.slate.com/id/2293410?wpisrc=xs_wp_0001"><span style="font-family:"Arial","sans-serif"">stay in place</span></a><span style="font-family:"Arial","sans-serif""> for the remainder of the year, some states let those benefits expire, benefits already budgeted and paid for in Washington. By not passing simple legislative measures to ensure that the federal government’s share of weekly benefits continues, a number of states failed to extend those benefits, as Missouri did on April 2. North Carolina, Tennessee, and Wisconsin followed suit on April 16. As a result they all denied 20 weeks of federal benefits to their jobless women and men.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span style="font-family:"Arial","sans-serif"">Last week Florida’s Republican-controlled House and Senate passed a compromise measure, just before the session expired at midnight, that would cut maximum state benefits from 26 weeks to 23 when the state jobless rate is 10.5% or higher. Florida has one of the highest unemployment rates in the country, 11.5%. It also has some of the </span><a href="http://www.nytimes.com/2011/05/08/us/08florida.html?_r=1&ref=politics"><span style="font-family:"Arial","sans-serif"">lowest unemployment</span></a><span style="font-family:"Arial","sans-serif""> benefits. Republican Governor Rick Scott is expected to sign the bill.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span style="font-family:"Arial","sans-serif"">New claims for unemployment insurance are again going up and 13.7 million Americans are looking for work. According to the Congressional Budget Office, <a href="http://cboblog.cbo.gov/?p=1557">federal unemployment insurance</a> kept about 3.3 million people above the poverty line in 2009. Job growth is weak. At the current monthly rate, it would take more than five years to return to the pre-recession unemployment rate of 5%, back in December 2007. While more aid to states could help stanch job loss,</span> <span style="font-family:"Arial","sans-serif""><a href="http://www.nytimes.com/2011/05/07/opinion/07sat2.html?_r=1&scp=9&sq=unemployment&st=cse">legislative fixation</a> on the federal deficit has silenced talk of more fiscal stimulus.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span style="font-family:"Arial","sans-serif"">On election eve the new Republican House Speaker </span><a href="http://www.cbsnews.com/stories/2010/11/02/politics/main7014482.shtml"><span style="font-family:"Arial","sans-serif"">Boehner promised</span></a><span style="font-family:"Arial","sans-serif""> to hold weekly votes to cut federal spending, make jobs the top GOP priority and fight to repeal the health care law. Representative Darrell Issa (R-CA) called the election vote <a href="http://www.foxnews.com/politics/2010/11/02/republicans-majority-house/">a "mandate"</a> on limited government. Issa said the message to Washington was, "Advance an agenda that will create real jobs, not government jobs, but real jobs to get our economy moving again.” So far that has not happened.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">As abortion foes continue to <a href="http://www.washingtonpost.com/politics/obama-expected-to-sign-another-stopgap-budget-bill/2011/04/09/AFtnFL8C_story.html">lobby Congress</a>, the Republican House majority has been at odds with itself on handling the deficit and raising the debt ceiling, ignorant that the near-term fiscal situation that embroils them is largely unimportant to investors. The US Treasury has no trouble selling debt and is still able to borrow money quite cheaply. It can do so because investors continue to have high confidence that debts will be repaid in full. The make-believe fiscal crisis is largely made-for-television to create celebrities out of elected politicians.</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The real crisis is unemployment. Our political class does not seem to understand that it is the millions of American men and women who cannot find work that needs their attention, not the defunding of anything having to do with abortion or repealing the Health Care and Education Reconciliation Act. America’s future is at stake. According to <i style="mso-bidi-font-style:normal">New York Times</i> columnist and Nobel Laureate <a href="http://www.nytimes.com/2011/05/06/opinion/06krugman.html?_r=1">Paul Krugman</a>, “The longer this goes on, the more workers will find it impossible ever to return to employment, the more young people will find their prospects destroyed because they can’t find a decent starting job.”</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Congress has passed at least <a href="http://thomas.loc.gov/home/bills_res.html">113 bills</a> so far and sent them to the Senate. Not one of them mentions of the words “employment” or “unemployment.” Only two resolutions contain the word “jobs”, as opposed to “job-killing,” and neither of them have anything to do with the public. Only the “JOBS Act of 2011” has a chance in the 112<sup>th</sup> Congress because it does deal with unemployment. It screws the unemployed.</span></p><p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><br /></span></p><p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; "><br /></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: center;"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: 'Times New Roman', serif; ">Article first published as <a href="http://blogcritics.org/politics/article/screw-the-unemployed/">Screw the Unemployed</a> on Blogcritics.</span></p> <p class="MsoNormal"><span class="Apple-style-span"><br /></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><span style="mso-spacerun:yes"> </span><o:p></o:p></span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-86558299534143779692011-05-02T11:05:00.000-07:002011-05-02T11:10:45.211-07:00Big Oil: Obama's Fake Debate<div><br /></div><div><p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Last year President Obama <a href="http://www.npr.org/templates/story/story.php?storyId=126834539">got on Big Oil</a> over “environmental procedures for oil and gas exploration and development,” in response to the huge oil spill in the Gulf of Mexico. A year later <a href="http://www.washingtonpost.com/blogs/political-economy/post/obama-slams-oil-company-profits-as-gas-prices-surge/2011/04/29/AFwx7wHF_blog.html?hpid=z2">he is on Big Oil’s case again</a> over their “making huge profits and you’re struggling at the pump.” The president jumped their case in his weekly radio address following one of the biggest oil companies, Exxon Mobil, report that its profit rose 69 percent to $10.65 billion during the first three months of the year. Unfortunately, huge profits are different from huge oil spills.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">In addition to Obama saying, “these tax giveaways aren’t right” and “we need to end them,” Senate Finance Committee Chairman Max Baucus (D-MT) released a plan to end “billions of dollars in tax breaks for large, multinational oil and gas companies.” Echoing the president’s charge with the headline, “Skyrocketing Gas Prices Necessitate Action to Address Energy Costs,” Baucus <a href="http://finance.senate.gov/newsroom/chairman/release/?id=f3f2f50e-8f94-4b36-9318-6b74466d52a4">called his plan a blueprint</a> for legislation that he intends to craft in the Committee.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Its first big bullet point is, “Repeal tax breaks for the largest oil and gas companies – end tax incentives for the five largest oil and gas companies that announced tens of billions of dollars in first quarter profits this week. This includes the elimination of the section 199 manufacturing deduction, reduction in the foreign tax credit for royalty payments to foreign governments and the imposition of an excise tax on certain Gulf leases.” It is the targeting section 199 of the tax code that makes the ensuing political debate a fake.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">According to WTAS, one of the largest independent tax, valuation, and financial advisory firms in the United States, <a href="http://www.wtas.com/newsletter/2010/september/section199.php">Congress enacted Section 199</a> in 2004 “to encourage the retention and growth of U.S. manufacturing without regard to whether the output of those manufacturers was exported out of the country or consumed domestically.” What it does is to reduce the income tax assessed on the profits of targeted industries, principally manufacturing, construction and natural resource extraction (oil and gas, mining, forestry, etc.).” <span style="mso-spacerun:yes"> </span>In its newsletter WTAS also noted, “For good measure, software developers, filmmakers and music publishers were also tagged to benefit from the new incentive.” No one complains about their huge profits.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">In a <a href="http://www.cbo.gov/ftpdocs/67xx/doc6792/10-18-Tax.pdf">2005 study</a>, the Congressional Budget Office reported that capital investments “like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry.”</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">But that is only interesting. Big Oil has big pockets. For that reason any efforts such as Senator Baucus’ to curtail the tax breaks are likely to face fierce opposition in Congress. The oil and natural gas industry has spent $340 million on lobbyists since 2008, according to the nonpartisan <a href="http://www.opensecrets.org/politicians/index.php">Center for Responsive Politics</a>, which monitors political spending.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Other than the president and Senator Baucus, Americans are not complaining about profits or blaming Congress, which they dislike anyway. They are complaining about prices. A <a href="http://www.mcclatchydc.com/2011/04/20/112524/poll-high-gasoline-prices-forcing.html">McClatchy-Marist poll</a> reported that far more Americans blame oil companies for surging oil prices than they blame either political party. “Drivers split their blame, with 36 percent pointing at the Middle East and 33 percent blaming oil companies. Only 11 percent blame Obama and Democrats, while 6 percent blame congressional Republicans.”</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Gallup began asking the "most important problem" question in 1939 and established monthly updates in 2001. <a href="http://www.gallup.com/poll/106498/US-Satisfaction-15-Lowest-Since-1992.aspx">Economic concerns </a>became dominant for Americans in April 2008 and have since tied or outpaced non-economic concerns in all but four months and gas prices are not on the top of the list. “<a href="http://www.gallup.com/poll/146558/Americans-Concern-Economy-Rises-Month-High.aspx">The top five</a> economic problems named this month are the economy in general (28%), unemployment (26%), the federal deficit or debt (13%), gas prices (6%), and lack of money (4%).”</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">It should be remembered that 68% of the pump price for gasoline is the price of crude oil, which is a commodity. Refining, where most of the jobs are, makes up 13%. Taxes account for 12% and the remaining 7% goes to distribution and marketing, according to the <a href="http://www.gallup.com/poll/146558/Americans-Concern-Economy-Rises-Month-High.aspxhttp:/www.eia.doe.gov/oog/info/gdu/gasdiesel.asp">US Energy Information Association</a>. With the exception of diesel, pump prices have gone up more than a dollar a gallon across the US since last year. In California, we have been paying more than $4 per gallon since January.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">My crude price analysis of a “Sampled History of Crude Oil Prices at The <a href="http://www.nyse.tv/crude-oil-price-history.htm">New York Mercantile Exchange</a>” reveals the following. Five years ago the barrel price of crude cost $72. April 2007 it was $66, April 2008: $117; 2009: $52; 2010: $86; 2011: $114. Low prices below $50 occurred in November 2008 and remained there until March 2009 at $46. The record bottom was the week ending January 16, 2009 when it cost $37 a barrel. The public did not complain about Big Oil profits, although there were big profits anyway. By contrast, high crude prices occurred in February 2008 at $145 through September 2008 at $107. So far this year prices have averaged $111 per barrel. Accordingly, pump price is high.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">By the way the record low was January 16, 2009 at $37. The record high to date was July 4, 2008 at $145. The cost of raw material is always passed along to consumers. Profit margins are not accidental.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Speaker John Boehner <a href="http://abcnews.go.com/Politics/transcript-abc-news-jonathan-karl-interviews-speaker-john/story?id=13455021&page=2">told ABC news</a>, “I don't think the-- the big oil companies-- need to have the oil depletion allowances. But for small, independent-- oil and gas producers-- if they didn't have this-- there'd be even less exploration in America then there is today.” When asked about doing away with subsidies for Big Oil altogether, Boehner said, “We certainly oughta take a look at it.”</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">My great-grandfather had a similar expression to Boehner’s. An Irish immigrant and labor leader with the Congress of Industrial Organizations in the 40’s, when he wanted everyone think he was agreeing with them he would say, “Won’t it be fine when we do.” The translation is, “As if that’s going to happen.” Noted.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span" ><span style="font-family:"Arial","sans-serif""><o:p> </o:p></span><span class="Apple-style-span" style="font-family: 'Times New Roman', serif; ">Article first published as <a href="http://technorati.com/politics/article/big-oil-obamas-fake-debate/">Big Oil: Obama's Fake Debate</a> on Technorati.</span></span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-71470878140913350992011-04-06T10:37:00.000-07:002011-04-06T10:52:21.814-07:00Not an MLM Anymore or Less<div><br /></div><div><p class="MsoNormal" style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Recently, a friend invited me to a local hotel to hear a presentation about a terrific work-at-home opportunity that reminded me of my former neighbor Carol. She always needed extra money, really wanted to help people and wanted to work from home. Every other month or so she would come over, bubbling with enthusiasm about some “great opportunity” she had been introduced to by new friends of hers. She couldn’t wait to “share it” with me. So I would get out my check book and ask, “How much this time, Carol?” <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">I always hoped one of those programs would work for her, as I made another contribution to her learning curve. As a former executive member of the American Marketing Association, my suspicions were always aroused when I would hear her repeat one of four statements that for years have been used to recruit people into Multi-Level Marketing [MLM]. What do you think?</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">1. [True] [False] The <i style="mso-bidi-font-style:normal">Wall Street Journal </i>has said that by the year 2010, 60 to 70 percent of all goods and services would be sold through MLM.</span></p> <p class="MsoListParagraph" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">2. [True] [False] Network marketing is taught at Harvard and Stanford business schools and in numerous other leading colleges and universities throughout the country.</span></p> <p class="MsoListParagraph" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">3. [True] [False] Some 20 percent of all the millionaires in America were created through network marketing.</span></p> <p class="MsoListParagraph" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">4. [True] [False] John Naisbitt, in his best-selling book, <i style="mso-bidi-font-style: normal">Megatrends</i>, says network marketing is the wave of the future.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">If you answered False to each of them, you are correct. If you answered Yes to any of them, you are certainly not alone. According to <a href="http://www.mlmwatch.org/01General/mlmlies.html">mlmwatch.org</a>, the answer to each is False with a capital F. But you just can’t keep a good false statement down, as was the case with Carol.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The Multi-level marketing strategy is one in which a sales force is compensated not only for their personally generated sales, but also for the sales of others they recruit. That creates a downline of “distributors” and a hierarchy of multiple levels of compensation. Other terms for MLM include network marketing, direct selling and referral marketing.</span></p> <p class="MsoListParagraph" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">MLM companies have been frequent subjects of criticism as well as the target of lawsuits. <a href="http://www.rickross.com/reference/herbalife/herbalife_lawsuit.html">Herbalife</a>, <a href="http://mlmnewssite.com/shareholders-hit-prepaid-legal-lawsuit/">PrePaid Legal</a>, <a href="http://www.mlive.com/business/west-michigan/index.ssf/2010/04/distributors_lawsuit_alleging.html">Amway</a>, <a href="http://www.insurancejournal.com/news/west/2007/06/27/81159.htm">Usana</a>, and others have all spent time in court to defend themselves from claims brought against them, just as any other multi-billion dollar company. They have paid large financial settlements. They have also demonstrated that they are not fraudulent pyramid schemes.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Much of the criticism leveled against MLMs has focused on their similarity to illegal pyramid schemes, high initial start-up costs, and emphasis on recruitment of salespeople over actual sales, requiring salespeople to purchase and use the company's products. Cult-like enthusiasm techniques and exaggerated compensation schemes are not uncommon complaints either, especially from people who tried it but didn’t like it.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">However, cases filed in United States Federal Court are quite different since verdicts can result in jail sentences, such as <a href="http://www.huffingtonpost.com/2009/06/29/madoff-sentencing-today_n_222110.html">the Madoff verdict</a>. Federal agencies get involved when the venire of legitimacy is removed from an MLM, exposing it as a pyramid scheme.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Some people believe that MLMs are nothing more than legalized pyramid schemes. So, what is the difference between a pyramid scheme and MLM? Pyramid schemes are a form of fraud.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The <a href="http://www.fbi.gov/scams-safety/fraud">Federal Bureau of Investigation</a> states, “Pyramid schemes . . . are marketing and investment frauds in which an individual is offered a distributorship or franchise to market a particular product. The real profit is earned, not by the sale of the product, but by the sale of new distributorships.”</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The <a href="http://www.sec.gov/answers/pyramid.htm">Securities and Exchange Commission</a> says, “In the classic "pyramid" scheme, participants attempt to make money solely by recruiting new participants into the program. The hallmark of these schemes is the promise of sky-high returns in a short period of time for doing nothing other than handing over your money and getting others to do the same.”</span></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif""><o:p>T</o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">he <a href="http://business.ftc.gov/documents/inv08-bottom-line-about-multi-level-marketing-plans">Federal Trade Commission</a> warns, "Not all multilevel marketing plans are legitimate. Some are pyramid schemes. It’s best not to get involved in plans where the money you make is based primarily on the number of distributors you recruit and your sales to them, rather than on your sales to people outside the plan who intend to use the products."</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">The critical question for the FTC is, if I may paraphrase, do commissions come from selling the product or from selling the right to sell the product.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Ever hear of the Latin expression <i style="mso-bidi-font-style:normal">caveat emptor</i>, let the buyer beware? It all boils down to you, as a consumer, to be wary of things that sound perhaps a bit too good to be true. Before you get out your check book and commit to raking in huge bucks for little extra effort in the comfort of your home, do some research first.</span></p> <p class="MsoListParagraphCxSpFirst" style="text-indent:-.25in;mso-list:l0 level1 lfo1"></p><ul><li style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif""><o:p> </o:p></span><span style="font-size:12.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Find and study the company’s track record</span></li><li style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Learn about the product(s)</span></li><li style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif""></span><span style="font-size:12.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Ask some who, what, when, where, how questions</span></li><li style="text-align: justify;"><span style="font-size:12.0pt;font-family:Symbol;mso-fareast-font-family:Symbol; mso-bidi-font-family:Symbol"><span style="mso-list:Ignore"><span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Understand any restrictions, such as licensing</span></li><li style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Talk to other distributors (beware of shills)</span></li><li style="text-align: justify;"><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">Use a friend or adviser as a neutral sounding board </span></li><li style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Take your time</span></li><li style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif"">Think about whether this plan suits your talents and goals</span></li></ul><!--[if !supportLists]--><p></p> <p class="MsoNormal" style="text-align: justify;"><span style="font-size:12.0pt;font-family:"Arial","sans-serif""><o:p> A</o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">s an income opportunity based on the mathematical idea of a pyramid, technically referred to as “an exponential expansion system”, MLMs have great emotional appeal to a growing number of people in our economy. Multi-Level marketing or Network Marketing opportunities appeal to a need for extra income for millions of households. Even so, regardless of celebrity endorsements, such systems promising financial salvation are not for everyone, especially for my former neighbor Carol.</span></p> <p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial","sans-serif""><o:p> </o:p></span></p> <p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial","sans-serif""><o:p> </o:p></span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-88304108988520989702011-03-13T18:39:00.000-07:002011-06-04T13:19:39.377-07:00Requiem for the May Company<div><span class="Apple-style-span"><br /></span></div><div><p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span">Here was my Tweet. “</span><span class="apple-style-span"><span class="Apple-style-span">After 85+ years, George S. May Company is no longer in business. Perhaps the consulting company should have hired outside consultants.” </span></span></span>I could have left it at that, but in the last ten years of its existence, this once great company churned and burned so many consultants and small companies, either you or someone you know has been touched by it. It touched me. Now it is no more.</span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>George S. May identified business as a set of algorithms and began his management consulting business in 1925 with a consulting project for a company that would become Sunbeam, the blender maker. His new Chicago based company did so well that it opened offices in New York and San Francisco. Despite the Great Depression, </span></span><a href="http://www.fundinguniverse.com/company-histories/George-S-May-International-Company-Company-History.html"><span>May Company history</span></a><span class="apple-style-span"><span> includes its posting revenue of $1 million in 1937, more than $15 million today.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>May himself became best known for getting golf televised, among other things. Post war America was good for his company, which advertised “Business Engineering” in leading business magazines and journals.<span> </span>He died in 1962 leaving the company stock to his family. In 1966 the May Company left downtown Chicago for the suburb of Park Ridge, where the 41-thousand square-foot world headquarters is now closed and for sale, </span></span><a href="http://www.loopnet.com/Listing/16932722/303-S-Northwest-Hwy-Park-Ridge-IL/"><span>price $4 million</span></a><span class="apple-style-span"><span>. More about the “Ridge” in a moment.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>In the ‘90s the May company hit the $100 million revenue mark and by 2000 it began operations in Mexico, under Donald J. Fletcher, its third President. In 2002, Israel Kushnir replaced Fletcher. According to one of the companies </span></span><a href="http://www.prlog.org/10624947-new-day-at-george-may.html"><span>last press releases</span></a><span class="apple-style-span"><span>, “</span></span><span>The company’s former president </span><a href="http://www.americanexecutive.com/archived-spotlights-industry/professional-services/6739-george-s-may-international-life-savers"><span>Israel Kushnir</span></a><span> has left his post to pursue his own ventures, but the company is in the best of hands as Mrs. Kerry Sam Jacobs, George S May’s granddaughter is overseeing the transition to ensure prosperity as the company moves forward.”</span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>That expression, “. . . </span></span><span>left his post to pursue his own ventures,” is usually a ubiquitous way of saying, “You’re fired.” The company’s Managing Director, </span><a href="http://www.paulrauseo.com/paul-in-the-media"><span>Paul Rouseau</span></a><span>, a frequent Fox Business News personality, is also pursuing his own ventures as are many other former top executives who presided over the May Company’s financial collapse inherited by Jacobs and the May family lawyers in 2010.</span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span>As one of the replacement senior executives put it to me, in an email confirming the company’s demise, “I left at the beginning of the year, but it was a slow, painful end to a once great company. <i>2010 </i>was like sitting on the deck of the Titanic watching people rearrange the deck chairs while the band played on.”</span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span>The Ridge building has a cornerstone: “1960.” Eisenhower, a golf enthusiast, was leaving office. Cadillacs were 22 feet long. Gasoline cost pennies. Business had boomed. Inside the conservative office building, a photo mural of golf’s greats inspired awe. I never knew whether to genuflect or salute when I entered and breathed in that 1960’s air.</span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span>It has been said that the Kushnir-Rouseau regime monitored every phone call and every email. Yelling was the preferred mode of communication. The way they saw it, clients needed to be controlled by analysts and consultants. Intimidation meant control. </span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>Israel Kushnir made an impression on me in an awkward moment at the Ridge, as I stood outside the training building on a cigarette break during a conference with a colleague. The dapper and bald gent strode across the parking lot and pointed at me.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>“Stop smoking,” he declared, briskly.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>“Grow hair,” I exhaled.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>He passed me, smiled and entered the building. My colleague bit his lip, trying not to laugh. “Do you know who that is?” he choked. “That’s the president of the company.”</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>Paul Rouseau convinced me to pursue my own interests that Christmas.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>There were others who worked alongside Kushnir and Rouseau who got sacked, albeit too late for new management to save May. Apart from a large headquarters staff of executives and support personnel, there is a telemarketing staff, a field sales staff, a field survey service [analyst] staff, a field consulting staff and a smaller client service staff that is now looking for work around Park Ridge, Illinois.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>The </span></span><a href="http://www.bbb.org/chicago/business-reviews/business-consultants/george-s-may-international-company-in-park-ridge-il-5028#ratingdetails"><span>Better Business Bureau</span></a><span class="apple-style-span"><span> gave the George S. May International Company an F before the company shut down.<span> </span>The company had previously boasted the Bureau’s Excellence in Ethics Award. The BBB also gives an F to May company rival </span></span><a href="http://www.bbb.org/chicago/business-reviews/business-consultants/international-profit-associates-in-buffalo-grove-il-54000004"><span>International Profit Associates</span></a><span class="apple-style-span"><span> and its alphabet named clone companies. IPA is also the target of litigation by the Illinois State Attorney General's Office, but that is another story for some other time.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><a href="http://www.ripoffreport.com/Search/George-S_-May-International-Company.aspx"><span>Rippoff.com</span></a><span class="apple-style-span"><span> and many similar consumer rating sites have been on the May company’s case for years. At a client meeting in Sitka, Alaska, a May analyst, a consultant and I, as Project Director, were met by police, given a cease-and-desist order and individual property restraining orders after our client had gone online and read Rippoff. The office in Park Ridge did not appreciate my report, I can assure you.</span></span><span class="Apple-style-span"> </span></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span>Evidently, what had been called “the May way” quit working. But, you know that your business is in the wind when </span></span><a href="http://en.wikipedia.org/wiki/George_S._May_International_Company"><span>Wikipedia deletes</span></a><span class="apple-style-span"><span> your page. It is really kind of sad. Business Engineering failed. One can only wonder what the May family will do with 85+ years’ worth of project binders filled with meticulous documentation. It is a Titanic load of American small business history.</span></span></span></p><p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span"><span class="apple-style-span"><span><br /></span></span></span></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span"><span class="apple-style-span"><span><span style="font-family: 'Times New Roman', serif; "><span class="Apple-style-span" >Article first published as <a href="http://blogcritics.org/culture/article/requiem-for-the-may-company/">Requiem for the May Company</a> on Blogcritics</span></span><span style="font-size:12.0pt;font-family:"Times New Roman","serif"; mso-fareast-font-family:Calibri;mso-fareast-theme-font:minor-latin;mso-ansi-language: EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SA">.</span></span></span></span></p><p class="MsoNormal" style="margin-right: 0pt; text-indent: 0pt; margin-top: 0pt; margin-bottom: 10pt; line-height: 13px; text-align: justify; font-family: Arial; font-size: 8.8888pt; color: black; "><span lang="en-US" style="font-size: 11pt; line-height: 17px; font-family: Arial; "> </span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com30tag:blogger.com,1999:blog-4455667724926725188.post-69655476810990495792011-02-24T12:45:00.000-08:002011-06-04T13:28:30.920-07:00Borders: Was Bigger Better?<div><br /></div><div><p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >What happened to Borders? It is a classic American business tale of rags to bankruptcy in little more than a generation. Their classic marketing plan, “Let’s Get Big,” made it happen. Here are some of the key details concerning it US operations.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >Brothers Tom and Louis Borders founded their first bookstore in Ann Arbor, Michigan, in 1971. With its book wholesaler sister company, Borders primarily serviced more independent book stores than its own book stores until 1989 when company management decided to expand. It did and it got bought.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" ><span style="line-height: 115%; ">Kmart had owned the mall-based book chain Waldenbooks since 1984 when it <span> </span>bought Borders in 1992. But not long after, Kmart faced management and stockholder problems with its acquisition, not to mention fierce competition from rival Barnes & Noble. So Kmart spun off Borders and by 2003 the new Borders Group had grown to 1249 stores using the Borders and Waldenbooks names, worldwide.</span><span style="line-height: 115%; "> <o:p></o:p></span></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >In 2004, Borders reached an agreement with Seattle's Best Coffee to operate cafés in its domestic superstores. In 2007, Borders installed digital video monitors in select stores and in 2009, it offered customers a free WiFi network. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >Borders went international in 1997 with expansion into Asia and the UK. However, by the end of 2009, all of Borders directly owned overseas locations had been sold or closed. Only the franchise stores in Dubai, Malaysia and Oman remain open. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >The company showed its last profit in 2006. On February 16, 2011, Borders announced that it had filed for Chapter 11 bankruptcy protection and that it would be closing up to 275 of its 642 bookstores. All of the stores to be closed would be superstores. Borders listed $1.275 billion in assets and $1.293 billion in debts in its filing. It employs approximately 19,500.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >It can be argued that Borders failed to respond correctly as the retail book selling industry has evolved. It is also true that as book sales have been in decline, books and other media have become more available online. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >But the real deal is perhaps more like consummate book buyer and college professor June Sullivan told me, outside of the closing Borders in Union City, California, “They began specializing in best sellers, put in easy chairs, and offer coffee and free Internet. So now they’re like a public library where you pay to buy used books.”<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span style="line-height: 115%; " >A similar fate happened to Circuit City, whose core business included knowledgeable sales people, but its corporate management decided to replace them with wage-and-hour clerks to cut overhead. As the retail electronics industry evolved, the competition, Best Buy, clobbered Circuit City. <o:p></o:p></span></p> <p class="MsoNormal" style="text-align: justify;"><span class="Apple-style-span" style="line-height: 18px; " >From my point of view as a management consultant, Borders’ failure reflects the faulty business plan of “Let’s get big.” One can do that as long as one is true to the core business that made it successful in the first place and resists growth, even though the money looks good. Bigger isn’t always better. </span></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span" style="line-height: 18px; "><span class="Apple-style-span"># # #</span></span></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span" style="line-height: 18px;" >originally published on <a href="http://blogcritics.org/books/article/borders-was-bigger-better/">Blogcritics</a> as Borders: Was Bigger Better? February 20, 2011</span></span></span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com1tag:blogger.com,1999:blog-4455667724926725188.post-17892755646542412762011-02-06T18:26:00.000-08:002011-02-06T18:59:35.071-08:00I Talked to the Spouse<div><p class="MsoNormal" style="text-align: center; margin-right: 0pt; text-indent: 0pt; margin-top: 0pt; margin-bottom: 10pt; "></p><div style="text-align: left;"><br /></div><div style="text-align: left;"><p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Sometimes we management consultants get caught up in the jargon of our profession – you know, the words that only another person in the same field uses that have special meaning only to them. Some consultants assume that our clients understand us as our peers do, so words like “strategic” or “implementation” and an entire lexicon from Six-Sigma get tossed about loftily, as if our clients are paying us for our vocabulary. Of course the more money we charge, the loftier that vocabulary can become. That is before we get to statistics and graphic analysis, always the life of the party.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Many consultants lose sight of the fact that our clients are looking to us to help them do something they do not know how to do and how to do everything else better. In running their businesses, just about the last thing our clients want is for us to give them large packs of paper to read after their day is done. In addition, there is so much written material available, it is almost too much. The job of a consultant is not to help his client read more stuff.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">In preparing to update this website, I conducted an inventory of my clients over the past five years to see what leaped off the page at me. Doing a customer inventory is one of the practices I use with my clients when I am looking for more business. It helps define who I should be looking for so I can save both time and resources. Specifically, I was looking for what the clients with whom I had the most success had in common. What I found was so simple that it surprised me and I can sum it up in five simple words.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">I talked to the spouse.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">To be sure I talked to family members in addition, but the discovery is certainly consistent with the studies having to do with small businesses in this country. Here is the short version of those party favors having to do with US business. According to <a href="http://www.businessweek.com/smallbiz/content/feb2006/sb20060210_476491.htm">statistics</a> reported by the University of Southern Maine's Institute for Family-Owned Business: “Some 35% of Fortune 500 companies are family-controlled. Family businesses account for 50% of U.S. gross domestic product. They generate 60% of the country's employment and 78% of all new job creation.” Unfortunately, “only one in three family businesses succeeds in making it from the first to the second generation.”<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">There are lots of reasons for that phenomenon, but I am willing to bet that communications – specifically that between the family members from one generation to the next – has something to do with it. But I will save that for another article at another time. I want to stick with my “talked to the spouse” theory. Sometimes, it’s a tough job, but someone has got to do it. Let me share a couple of examples.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">One client neglected to tell his wife that he had called me in to help him get his business in shape. The business had grown from a hobby and generated over $2-million a year when I showed up. I tried to get my client to arrange a meeting among him, me, his wife and anyone else who might have a stake in the outcome of the consulting project. The client kept hedging.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">“She doesn’t have anything to do with my business [decision],” he insisted. But I insisted harder and the client relented. The next morning I showed up at the business site early, hoping to be there ahead of my client so I could better make my case as to what I thought we should do. My client was waiting for me – not a good sign. Then I noticed the tears in his eyes, definitely not a good sign. As I learned, he had gone home to tell his wife about the meeting the outside consultant wanted to facilitate. She hit the proverbial ceiling and the name calling began. It turned out that she had been paying the bills for the client’s former hobby and had not agreed to have anyone come in to help, especially at the hourly rate I had to charge for it. Harsh words turned for the worse, pushed turned into shoves and at the point of my discovery, my client was on his way to court and a restraining order.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The company I worked for could not understand why I could not get a working agreement [a contract for services] signed.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">On another occasion, I started a consulting project’s opening conference one morning with my husband and wife team client, my company’s business analysts and project consultant and I to have the meeting get shaky from the got-go. It was another tear jerker. The clients kept interrupting each other to tell us how their crummy business was tearing their marriage apart and that they thought they just wanted to sell out and that they no longer saw any point in having consultants in to help. Oh, I talked to the spouses, alright.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">I stood up abruptly and said, “Knock it off, both of you, right now! Who do you think I am? A marriage counselor?” Actually, in that case, I was. I stuck out my hand to the husband to shake his hand.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">“Stand up.” He did. “You are the President of a multi-million dollar, international company that has been in business almost 10 years, right?” He shook my hand and nodded affirmatively. “Then act like it! And you,” I said as I turned to Mrs. Client, “What did you do before you got sucked into this company disaster?” She told me she was a Registered Nurse. “Good. That’s what you are going back to after we are done with this project.”<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Sure, it stunned both clients and my company colleagues. You can imagine their faces and, if you can’t, let’s just say there were jaws that bounced off the floor. But, as I say, I talked to the spouses. It turned out that the clients had been victims of embezzlement and Mrs. Client came in to take care of the books because of the trust issues involved. My team and I prevailed, by the way, and so far as I know the clients and company lived more happily after the project concluded.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">I have lots of other tales I could tell you that emphasize the importance of consultants talking to spouses, parents and siblings involved in any business, whether they admit to being in the decision making process or not. For one thing, each one is impacted by business decisions one way or another. For another, valuable information can be obtained from sources that are not familiar with the day-to-day activities in a company. Besides those considerations, a consulting project can be killed before it starts if family members are not taken into account from the beginning of an engagement.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Family businesses face a lot of problems, the family itself being a potential one. The reason is that family members all have names, as opposed to position titles, which can be difficult for them to comprehend. Another issue has to do with boundaries. At what point do people cease to be family members and become employees? Is it at home, on their way to the business or at the door? And there are a host of other issues, which I will get to another time.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Let me wrap up here by noting that effective communication is the key to business success, whether the topics of communication are statistical data, like opinion survey results and balance sheets, or they are people issue, like promotion decisions or embezzlement. Large corporations governance looks after the interests of the company’s stock holders just as family businesses operations looks after the interests of the company’s stake holders. Family business owners must expect that for a consulting engagement to be successful, the professional consultant they retain is going to talk to their spouse.<o:p></o:p></span></p> <p class="MsoNormal" style="text-align: center;"><o:p> # # #</o:p></p><p class="MsoNormal" style="text-align: center;"><span class="Apple-style-span">originally published on <a href="http://tmackorg.com/tmackorg_files/Consulting.htm">tmackorg.com</a></span></p></div><span lang="en-US"><span class="Apple-style-span"><div style="text-align: left;"><br /></div></span></span><p></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-20715322038202613742010-12-25T10:38:00.000-08:002010-12-27T09:25:44.839-08:00Who's In Charge Here?<div><br /></div><div><p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><o:p>W</o:p></span><span class="Apple-style-span" style="font-family: Arial, sans-serif; ">hether you are a sole proprietor running a small company of family and friends or the president of a company that employs thousands of people, there is something called “depth of management.” It is similar to the military “chain of command” and can be diagramed in an organization chart. Research has shown that a supervisor is required for every three to five people performing a unit task. If there are three to five supervisors, they need a supervisor and so forth. The larger a company gets, the structure is more about managing the flow of information than the activities of employees, but supervision is supervision whether it is peoplework or paperwork.</span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">A common problem for all is how they answer the question, “Who is in charge here?” An owner’s offspring is put in charge, a worker is promoted to supervisor, and a principal hires a friend or outsider. Negative repercussions can result unless those people who are put in charge of other people understand what being a supervisor is about. It is not about being “the boss.” Boss is not a job title or a position. Supervisor is a job title and the position is about getting a job done.<o:p></o:p></span></p> <p class="MsoNormal"><b><span style="font-family:"Arial","sans-serif"">A supervisor is a person who is responsible for the work being accomplished by one or more employees.</span></b></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The supervisor must have the ability to handle the function to which they are assigned and the ability to control and direct those employees whom they supervise, or subordinates. The capacity of supervisory personnel is largely dependent upon their personality, background, education, and work experience. Good supervisor are open-minded and alert to new ideas, allowing them to be flexible in handling varying situations that must be faced daily.<o:p></o:p></span></p> <p class="MsoNormal"><b><span style="font-family:"Arial","sans-serif"">Successful supervisors display three main qualities: stability, decisiveness and understanding.</span></b></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Emotional stability is essential. Good supervisors must be able to control their tempers under all conditions, especially when the going gets tough. They must follow an orderly, well-planned procedure that is flexible enough to permit changes when necessary. Decisions must be handled positively and quickly because shaky and uncertain decisions will cost the respect of both subordinates and other supervisors. Subordinates who are made to feel that they are understood enjoy working under their supervisor's steady and dependable direction.<o:p></o:p></span></p> <p class="MsoNormal"><b><span style="font-family:"Arial","sans-serif"">The qualifications for supervisors include impartiality, leadership, confidence and balance.</span></b></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Supervisors must be impartial and impersonal, not allowing their personal likes and dislikes to influence their decisions. Good supervisors are leaders rather than drivers. Subordinates take pride in their work when they feel it is worthwhile. Supervisors must be able to train subordinates in their tasks and be able to instill a feeling of confidence in their abilities. A good supervisor also knows when to praise a subordinate for work well done as well as to correct a subordinate privately for unsatisfactory performance.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><b>The responsibilities of supervisors share core attributes regardless of their company size.</b><o:p></o:p></span></p> <p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Arial","sans-serif"">· Accepting and understanding all duties delegated to them.<br />· Developing recommendations to modify tasks assigned to subordinates.<br />· Establishing coordination and discipline among subordinates.<br />· Evaluating the performance of subordinates.<br />· Training subordinates at all levels and developing selected individuals to become assistants and to assume the supervisor's duties when the need arises.<br />· Simplifying all activities to necessary essentials by eliminating marginal work and non-productive effort.<br />· Maintaining operating records of the quality and quantity of work performed.<br />· Planning, and rescheduling work to obtain improved workflow and increased production.<br />· Performing the operations within approved standards by attending to all assigned duties and acting on matters as they arise.<br />· Observing and practicing all policies.<o:p></o:p></span></p> <p class="MsoNormal"><b><span style="font-family:"Arial","sans-serif"">The authority of a supervisor includes responsibility, jurisdiction, and morale.</span></b></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">Regardless of the delegation of duties to subordinates, supervisors remain personally responsible for the proper performance of all duties assigned to the position and to the organizational unit they supervise. Under no circumstances should the authority of any supervisor be destroyed by the direct issuance of instructions to personnel under that supervisor's jurisdiction by other supervisory personnel, regardless of the organizational rank of the latter.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">The supervisor must have exclusive jurisdiction and authority over all personnel, equipment, and facilities for which they are responsible. Supervisors are entitled to the full cooperation of their own supervisor in the event that an employee is judged unsatisfactory and must be transferred or terminated.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif"">All supervisory personnel are expected to develop and maintain a high standard of morale and production in addition to being fully familiar with all company policies. Each supervisor may make recommendations concerning subordinate employees. However, only a functional manager has the authority to hire, promote, demote, discipline, or terminate any employee within the functional section.<o:p></o:p></span></p><p class="MsoNormal"><b><span style="font-family:"Arial","sans-serif"">Supervisors share some core administrative and general duties regardless of company size.</span></b></p> <p class="MsoNormal" style="margin-left:.5in"><span style="font-family:"Arial","sans-serif"">· Achieving a well-organized, smooth running unit by making competent selections, providing sufficient training, and closely supervising assigned personnel.<br />· Securing effective, productive use of all personnel, equipment, and supplies in their unit.<br />· Building and maintaining employee morale.<br />· Operating their unit within established guidelines and budgets.<br />· Maintaining productivity and improving methods and procedures whenever possible.<br />· Providing proper maintenance, control, and proper use of all equipment, including a preventative maintenance program when applicable.<br />· Ensuring strict adherence to safety rules and practices at all times.<br />· Reducing potential hazards in the work place.<br />· Reducing wasteful use of resources.<o:p></o:p></span></p> <p class="MsoNormal" style="tab-stops:0in"><span style="font-family:"Arial","sans-serif"">Proper supervision is the prime activity for top management. Its agenda is to operate an organization productively and smoothly. Supervision is the way companies obtain the necessary coordination, cooperation, and communication required to succeed. Supervisors must always put emphasis on the details of doing a job, not just on accomplishing the end result. That is what being in charge means.<o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Arial","sans-serif""><span style="mso-spacerun:yes"> </span><o:p></o:p></span></p></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-45873782076246125532010-11-30T13:15:00.000-08:002010-12-05T19:24:59.808-08:00Management Lessons [No Charge]<p class="MsoNormal"><span style="mso-bidi-font-size:10.0pt;font-family:"Tahoma","sans-serif"; mso-bidi-font-family:Arial;mso-bidi-font-weight:bold"><o:p> </o:p></span></p> <p class="MsoNormal"><o:p><span class="Apple-style-span"><br /></span></o:p></p><p class="MsoNormal"><span class="Apple-style-span" ><o:p><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span">The job of many business consultants, in addition to invoicing their clients and collecting, is to appear to write management lessons for a substantial hourly rate. But I have rebelled against the practice and offer the following management lessons to you at no charge. Use them and prosper.</span></span></span></span></o:p><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span"> </span></span></span></span></p><p class="MsoNormal"><u><span><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span" >Lesson One</span></span></span></span></u></p><p class="MsoBodyText"><span><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span" >An eagle was sitting on a tree resting, doing nothing. A small rabbit saw the eagle and asked him, "Can I also sit on my ass like you and do nothing?" </span></span></span></span></p><p class="MsoBodyText"><span><span class="Apple-style-span"><span class="Apple-style-span" >The eagle answered: "Sure, why not."<br /><br />So, the rabbit sat on the ground below the eagle, and rested. All of a sudden, a fox appeared, jumped on the rabbit and ate it.<br /><br />Management Lesson: <o:p></o:p></span></span></span></p> <p class="MsoBodyText"><span class="Apple-style-span" ><i><span><span class="Apple-style-span"><span class="Apple-style-span">To be sitting on your ass and doing nothing, you must be sitting very high up.</span></span></span></i><span><span class="Apple-style-span"><span class="Apple-style-span"><br /><br /><u><span class="Apple-style-span">Lesson Two</span></u><br /><br /><span class="Apple-style-span"><span class="Apple-style-span">A turkey was chatting with a bull. "I would love to be able to get to the top of that tree," sighed the turkey, "but I haven't got the energy."</span></span><br /><br /><span class="Apple-style-span"><span class="Apple-style-span">"Well, why don't you nibble on some of my manure droppings?" replied the</span></span><br /><span class="Apple-style-span"><span class="Apple-style-span">bull. "They're packed with nutrients."</span></span><br /><br /><span class="Apple-style-span"><span class="Apple-style-span">The turkey pecked at a lump of manure, found it actually gave him enough strength to reach the lowest branch of the tree. The next day, after eating some more dung, he reached the second branch. Finally after a fourth night, he was proudly perched at the top of the tree. </span></span></span></span></span></span></p><p class="MsoBodyText"><span><span class="Apple-style-span"><span class="Apple-style-span" >Soon thereafter he was promptly spotted by a farmer, who shot the turkey out of the tree.<br /><br />Management Lesson: <o:p></o:p></span></span></span></p> <p class="MsoBodyText"><i><span><span class="Apple-style-span"><span class="Apple-style-span" >Bull Shit might get you to the top, but it won't keep you there.</span></span></span></i></p><p class="MsoBodyText"><u><span><span class="Apple-style-span"><span class="Apple-style-span"><span class="Apple-style-span" >Lesson Three</span></span></span></span></u></p><p></p><p class="MsoBodyText"><span><span class="Apple-style-span"><span class="Apple-style-span" >A little bird was flying south for the winter. It was so cold the bird froze and fell to the ground in a large field. While it was lying there, a cow came by and dropped some dung on it. As the frozen bird lay there in the pile of cow dung, it began to realize how warm the dung was, actually thawing him out. <o:p></o:p></span></span></span></p> <p class="MsoBodyText"><span><span class="Apple-style-span"><span class="Apple-style-span" >He lay there all warm and happy, and soon began to sing for joy. A passing cat heard the bird singing and came to investigate. Following the sound, the cat discovered the bird under the pile of cow dung, promptly dug him out and ate him.<br /><br />Management Lessons:<br /><br /><i>(1) Not everyone who shits on you is your enemy.<br /><br />(2) Not everyone who gets you out of shit is your friend.<br /><br />(3) And when you're in deep shit, it's best to keep your mouth shut.</i></span></span></span></p><p class="MsoBodyText"><span><span class="Apple-style-span"><span class="Apple-style-span" ><i><br /><span class="Apple-style-span" style="font-style: normal; ">I hope this helps. Seasons Greetings.</span></i></span></span></span></p><p class="MsoBodyText"></p><div style="text-align: center;"><span class="Apple-style-span" ># # #</span></div><div style="text-align: center;"><span class="Apple-style-span"><br /></span></div><div style="text-align: center;"><span class="Apple-style-span" >Edited from an unattributed source as much management consulting dicta, only I admit it.</span></div><span style="font-size: 12pt; "><span class="Apple-style-span"><span> </span><br /></span> <!--[if !supportLineBreakNewLine]--><br /><!--[endif]--><span class="Apple-style-span"><o:p></o:p></span></span><p></p> <p class="MsoNormal"><span style="font-family:"Tahoma","sans-serif";mso-bidi-font-family: "Times New Roman""><o:p> </o:p></span></p>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-11259512508575925252010-11-07T11:58:00.000-08:002010-11-07T12:06:39.295-08:00Just Stuck in It<p class="MsoNormal" style="margin-right: 0pt; text-indent: 0pt; margin-top: 0pt; margin-bottom: 6pt; line-height: 14px; text-align: justify; font-family: Arial; font-size: 8.8888pt; color: black; "><span lang="en-US" style="font-size: 10pt; font-family: Verdana; "><br /></span></p><p class="MsoNormal" style="margin-right: 0pt; text-indent: 0pt; margin-top: 0pt; margin-bottom: 6pt; line-height: 14px; text-align: justify; "><span class="Apple-style-span"><span class="Apple-style-span" style="font-size: 13px;"></span></span></p><p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span class="Apple-style-span"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >As a business management consultant, I would describe a lot of what I see in business families are people stuck in stupid. They are not stupid; they're just stuck in it. The primary reason they are stuck is their lack of flexibility, which inhibits change. Change, incidentally, is why people hire consultants in the first place.<o:p></o:p></span></span></span></p><span class="Apple-style-span"><span class="Apple-style-span" > </span><p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >I ask people "What do you do for a living?" Generally, they explain about some functionality or process they perform. I repeat the question until they to stop. "You make decisions," I say. Then I ask, “If someone is stuck in stupid, what kind of decision could they expect to make?”<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >Learning to ask questions is the first step out of the stickiness. For example, let’s say our Company is expanding its’ scope of work and over the next 6 months it wants to add 50% to its’ gross revenue.<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" > <o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-size: 14pt; font-family: Verdana, sans-serif; "><span class="Apple-style-span" >The questions that need to be answered are:<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Does the Company have the qualifications to expand? [That should not be a problem if the company is currently performing in these areas.]<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Does the Company have sufficient capital or credit to expand? [A projection showing a Cash Flow would provide insight into what the cash requirements would be with the expansion.]<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Does the company have the staffing required to make such a move?<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Are additional employees required, are they available, how much training will they require, and what are the costs?<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· How much competition does the company have and will the expansion enhance or hurt the Company’s position in the community?<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" > <o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >Another issue with being stuck is what I call <i>breathing your own ether</i>. By ether I mean the things that business owners say to other people and to themselves like, “We’re doing just fine.” “I don’t need to write it down. I’ve got it all in my head.” And my personal favorite, “I’m an idea person.” [So are children in a playground.]<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >The best <i>ether</i> I heard recently came from a client who told me, with a straight face, that his spouse was working in the company without any pay or job title or job description. “It is saving us a lot of money because I don’t have to hire someone else.” Actually, the spouse does have a job title – Owner’s Wife. One thing is certain: the compensation plan sucks.<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" > <o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-size: 14pt; font-family: Verdana, sans-serif; "><span class="Apple-style-span" >Let’s ask some more questions:<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Doesn’t such a situation have the net effect of putting all of their eggs in one basket?<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Is the spouse qualified to perform the duties of her functional position, like book keeper or sales manager?<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Have the owner and spouse established clear boundaries? [At what point do their business and personal lives begin and end?]<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" > <o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >The fact is that few people ever want to admit that they do not know what they don’t know. The tendency is to claim that they have been so busy working that they haven’t been able to take the necessary time to make that discovery. Unfortunately, there is <i>ether</i>.<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" > <o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-size: 14pt; font-family: Verdana, sans-serif; "><span class="Apple-style-span" >Three choices are available in these situations.<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Keep doing what you are doing.<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Stop what you are doing and go back to school.<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-top:0in;margin-right:0in;margin-bottom:6.0pt; margin-left:.5in;text-align:justify;text-indent:-.5in;mso-line-height-alt:10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >· Hire a competent business consultant to help you.<o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" > <o:p></o:p></span></span></p> <p class="MsoNormal" style="margin-bottom:6.0pt;text-align:justify;mso-line-height-alt: 10.5pt"><span style="font-family: Verdana, sans-serif; "><span class="Apple-style-span" >There are sub-sections of those three choices, but I am trying to keep this short and to the point. Part of the stickiness is not admitting that some outside advice might be helpful. A person’s ego saying “I can do this better” is what starts business ventures. The same ego saying "I don’t need anyone telling me what to do” is the glue that keeps business people stuck in stupid.</span><o:p></o:p></span></p> <p class="MsoNormal"><span style="font-family:"Verdana","sans-serif""><o:p> </o:p></span></p></span><p></p>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-45371669576539301092010-08-03T13:07:00.001-07:002010-11-07T12:24:02.912-08:00Margin of Error<span><div style="font-family: arial; "><span style="font-family:arial;"><br /></span></div><div style="text-align: justify; font-family: arial; ">How do we calculate a price for something?</div><div style="text-align: justify;"><span class="Apple-style-span"><br /></span></div><span class="Apple-style-span"><div style="text-align: justify;">More often than not business calculates the price of its products or services by some method of Mark-Up. It is a common practice that relies on the assumption that if you take the costs of labor and material and “bump them up” by some percentage, you will make the profit you want. However, Mark-Up pricing leaves “money on the table” and in some cases may result in what we will call a negative profit.</div></span><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><div style="text-align: justify;">The reason for that is the assumption itself. Even though labor and material are considered Direct Costs, they are pretty much fixed. From an accounting point of view they are, anyway, but in life we know that commodities the prices for steel, petroleum, and transportation change, although they tend to go up more often than down. Our pricing has to absorb those differences as they occur.</div></span><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><div style="text-align: justify;">We also know that the cost of labor is more than just the wage paid to an employee, which is the major part. Burdened wages include other costs, like SUTA, FUTA, FICA and paid vacation time. They also have to be absorbed by our pricing. Therefore, we have to look at pricing as changes occur and not assume that Mark-Up automatically recovers such costs.</div></span><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><div style="text-align: justify;">My purpose is to introduce Gross Margin Pricing which prevents leaving “money on the table” by recovering all of our costs however they may change. In order to make it make sense, I am going to us a napkin on the table to illustrate the point. My theory is based on my experience which says that if it can’t be done of the back of a napkin, then it is too complicated.</div></span><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><div style="text-align: justify;">Let’s look at the difference between Mark–Up and Gross Margin pricing. The following example shows the significance. To demonstrate, let’s assume a $7.00 product cost and look at the difference.</div></span><div style="text-align: justify;"><br /></div><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJTy94DzwDOuHmXJHTX_4e3k_cNMjfReEvzJDIAY_YLYzOzf1YTmGItc4AjG7m1oCO2vg8FE2Hi5d8cqX5xF198Rscyq2tkOJhZAEvbZSj4HZg7jaAiP99MuhFGi-bO4vvhWb6N1SDFb9X/s1600/markup+v+margin.jpg"></a><strong></strong></span></span><p align="center"><img id="BLOGGER_PHOTO_ID_5501305809144811362" style="text-align: justify;display: block; margin-top: 0px; margin-right: auto; margin-bottom: 10px; margin-left: auto; width: 400px; cursor: pointer; height: 384px; " alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg43W3um-DFzEQv4yTx9R7kF2isw6hbHWI20UXcDLP5Cx7tK2PC3sXMf1UjufI_2p9fpdP7k2a_2Kaqx8vPoLDehGghQYjr8LkFh70FCzSTFLVVBzM1ooO_8S86mdMoYwHh4jODsneVghGY/s400/markup+v+margin.jpg" border="0" /></p><div style="text-align: justify;"><br /></div><span style="font-family:arial;"><div style="text-align: center;"><strong> an analogue PowerPoint</strong></div><div style="text-align: center;"><strong><br /></strong></div></span><p></p><p align="left"></p><div style="text-align: justify;"><span class="Apple-style-span" style="font-family: arial; "><strong>MARK – UP</strong></span></div><span><div style="text-align: justify;"><span class="Apple-style-span"><br /></span></div><span class="Apple-style-span"><div style="text-align: justify;">30% Mark-Up pricing simply multiplies costs by 1.3: $7.00 X 130% = $9.10 revenue (price).</div></span><span class="Apple-style-span"><div style="text-align: justify;">Revenue minus cost equals gross margin: $9.10 minus $7.00 = $2.10 or 23% gross, or profit.</div></span><div style="text-align: justify;"><br /></div><strong style="font-family: arial; "><div style="text-align: justify;"><span class="Apple-style-span" style="font-family: Georgia, serif; font-weight: normal; "><strong style="font-family: arial; ">GROSS MARGIN</strong></span></div></strong><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><div style="text-align: justify;"><span class="Apple-style-span" style="font-family: Georgia, serif; "><span class="Apple-style-span">This pricing system divides the cost by the reciprocal (100% </span><span style="font-size: 130%; font-family: arial; ">- </span><span class="Apple-style-span">30% = 70%) of the desired gross margin, the profit percentage you want.</span></span></div></span><span class="Apple-style-span"><div style="text-align: justify;">Cost divided by the reciprocal of profit equals price: $7.00/0.7 = $10.00 revenue (price).</div></span><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><div style="text-align: justify;">Using MARK–UP pricing rather than GROSS MARGIN pricing produces a suggested selling price that is 7% less than the correct selling price. Just to keep the numbers simple, on a sales volume of $1M that would be like leaving $70,000 on the table. It must be a big table.</div></span></span><div style="text-align: justify;"><br /></div><span style="font-family:Arial;"><div style="text-align: justify;"><span class="Apple-style-span" style="font-family: arial; ">You can make my napkin presentation into a PowerPoint presentation</span></div></span><span><div style="text-align: justify;"><br /></div></span><span><div style="text-align: justify; font-family: arial; ">The Mark-Up theory of pricing is the way the model worked from after WWII into the late part of the century. It worked because the other components of pricing remained less variable than they are today. There are lot more add-on costs today than there were for business in the 50’s and 60’s. However, Mark-Up pricing is inflexible and does not absorb all of the costs, which in turn erodes profit.</div><div style="text-align: justify;"><span class="Apple-style-span"><br /></span></div><span class="Apple-style-span"><div style="text-align: justify;">This goes to a quick discussion of how often should prices be calculated. Rather than say, “That depends,” which would be a cop-out, the answer is “regularly.” Every time something impacts costs, prices need to be considered and changes made accordingly. For example, in the aftermath of Hurricane Katrina, transportation costs skyrocketed to almost five times what they cost before, all of which had to be passed on to consumers.</div></span><div style="text-align: justify;"><br /></div><span class="Apple-style-span"><div style="text-align: justify;">I have a spreadsheet I use called “The Electronic Deal Napkin.” The idea came from working with people who did their calculations on paper napkins with a pen, instead of on a computer. The fundamentals are the same. By the way, a pen is a hand-held, friction-driven, fluid-medium, analogue, scribing-devise. It is now updated.</div></span></span><p></p><p></p><div style="text-align: justify;"><span class="Apple-style-span" style="font-family: arial; ">How does one price things? Don’t multiply, divide by the reciprocal. It works every time.</span></div><span><div style="text-align: justify;"><span class="Apple-style-span"><br /></span></div><div style="text-align: justify;"><br /></div></span><p></p>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-26525333720274809212010-06-24T14:44:00.000-07:002010-06-24T14:47:45.493-07:00Why Pre-Paid Legal<div align="justify"><br /><span style="font-family:verdana;">Pre-Paid Legal Services Inc. (NYSE symbol: PPD) is one of the first companies in the United States organized solely to design, underwrite and market legal plans. PPD covers many personal, non-work related legal issues. The plan provides an employee, their spouse and qualified dependents assistance with personal legal issues including:</span></div><div align="justify"><span style="font-family:verdana;"><br />· Unlimited telephone consultations<br />· Free phone calls or letters from attorneys<br />· A free Will<br />· Contract and document reviews<br />· Motor vehicle legal representation<br />· Lawsuit defense<br />· IRS tax audits, discounts on divorce and post divorce related matters<br />· Real estate transactions<br />· Identity theft protection and restoration plans</span></div><span style="font-family:verdana;"><div align="justify"><br />80% of Europeans have some form of legal insurance. The idea is favored by many people in situations where they need a lawyer and find the cost prohibitive. Legal insurance is comparable to medical insurance by people paying a monthly premium for access to legal representation when they need it. It also eliminates the stress of having to find someone in desperate times.</div><div align="justify"><br />From a business point of view, a </span><a href="http://www.expertlaw.com/library/consumer/prepaid_legal.html"><span style="font-family:verdana;">prepaid legal services plan</span></a><span style="font-family:verdana;"> is cost effective for small business owners who need collection letters. Since collection letters can cost upward of $150 a piece, the monthly premium is significantly less. A well-chosen prepaid legal services plan can benefit a consumer with a known legal need. </span></div><span style="font-family:verdana;"><div align="justify"><br />One clever use of a pre-paid plan was by a real estate agent. He found a plan that covered the preparation of a deed for a real estate transfer. He would have his clients sign up for the plan, and they would then obtain the deed through the plan's attorney. The cost of the plan was significantly less than the attorney would otherwise charge for the deed. On top of that, the real estate agent received a commission on each plan sold. </div><div align="justify"><br />The clients typically cancelled the policies after the first year. </div><div align="justify"><br />The product PPD offers that is important to business professionals is Identity Theft Shield. At no charge, PPD will send in an Identity Theft Expert to help create a plan to safeguard non-public information. PPD provides the training and necessary written policy, forms and documents that demonstrate Good Faith measures to comply with FACTA, GLB, HIPAA and other laws. The documents provide proof that handlers of sensitive information have attended the mandatory employee training now required by the Federal Trade Commission.<br /><br />PPD's program is not bulletproof insurance against lawsuits, penalties, fines or damage awards, but provides evidence that companies are doing their best to protect the sensitive employee and customer data they have.<br /><br />As an income opportunity based on the idea of an exponential expansion system, it has great emotional appeal to a growing number of people distressed in our economy. Multi-Level Marketing (MLM) or Network Marketing opportunities, such as PPD, Usana, Amway and Herbalife, appeal to a desperate need for new or additional income for millions of households. However, such systems promising financial salvation are not for everyone.<br /></span> </div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com1tag:blogger.com,1999:blog-4455667724926725188.post-70186172896798383932010-04-15T11:05:00.000-07:002010-05-19T14:01:38.467-07:00SBA Finance Assistance Scams<div align="justify"><br /><span style="font-family:verdana;">There is an old expression that states “you can’t cheat an honest man.” Whether one replaces “man” with “business owner” to be politically correct or not, there is a growing number of scammers out there preying on owners of small businesses. The Alameda County Small Business Development Council (ACSBDC) sent me the following letter from the Small Business Administration (SBA). Let us take heed.<br /><br />The U.S. Small Business Administration is warning small businesses to use caution if they are contacted by firms offering to help them apply for funds available through SBA programs.</span></div><div align="justify"><br /><span style="font-family:verdana;">SBA and SBA's Office of the Inspector General have received several complaints from small businesses about abusive marketing practices, scams, and exorbitant fees charged by firms offering to help them obtain a loan, grant, or other federal funds. </span></div><div align="justify"><br /><span style="font-family:verdana;">Some of these complaints include:</span></div><div align="justify"><br /><span style="font-family:verdana;">• Firms charging small businesses high fees to provide assistance applying to SBA funding programs. Some firms allegedly guaranteed that the small business would obtain SBA funding if they paid the fee. SBA does not endorse or give preference to specific private companies or their clients. </span></div><div align="justify"><br /><span style="font-family:verdana;">• Firms charging small businesses for services never requested after the small business gave bank account and routing information to a caller claiming to be a firm offering assistance. SBA recommends that small businesses never provide social security numbers, bank account information, or credit card numbers to anyone; and, never over the telephone.</span></div><div align="justify"><br /><span style="font-family:verdana;">• Firms alleging that a small business would be issued a "forfeiture letter" that would make the small business ineligible for any SBA funding for three years if the small business refused to use the firm's services.</span></div><div align="justify"><br /><span style="font-family:verdana;">When electing to use a third party to apply for SBA funding programs, small businesses should also bear in mind:</span></div><div align="justify"><br /><span style="font-family:verdana;">• Small businesses can get free assistance in person or by calling one of the administration's district offices and from information on SBA's Web site (www.sba.gov). They can also get assistance from Small Business Development Centers (SBDC), Women's Business Centers, Veterans Business Outreach Centers and SCORE Chapters, either free or for a reasonable fee. Location and contact information for the centers can be found on SBA's Web site.</span></div><div align="justify"><br /><span style="font-family:verdana;">• Small businesses should ask for references and confer with trusted colleagues and institutions, such as the Better Business Bureau, when selecting service providers.</span></div><div align="justify"><br /><span style="font-family:verdana;">• Small businesses should clearly establish and document: 1) What they are being charged; 2) When they will be charged; 3) What they must do; and 4) What services they will receive. </span></div><div align="justify"><br /><span style="font-family:verdana;">The administration's inspector general will investigate and respond to all complaints. </span></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-17897870090653790952009-08-28T17:14:00.000-07:002009-08-28T17:23:43.881-07:00ID Thieves Bag Bernanke: Is No One Safe?<div align="justify"><span style="font-family:arial;font-size:85%;"></span></div><div align="justify"><span style="font-family:arial;font-size:85%;"></span> </div><div align="justify"><span style="font-family:arial;font-size:100%;">.</span></div><div align="justify"><span style="font-family:arial;font-size:100%;">“You’ve got to be kidding,” I said to my wife. “Incredulous. The Chairman of the Federal Reserve is the victim of Identity Theft. According to the </span><a href="http://apnews.excite.com/article/20090828/D9ABHUJG0.html"><span style="font-family:arial;font-size:100%;">Associated Press</span></a><span style="font-family:arial;font-size:100%;"> story, thieves got Bernanke to the tune of $2.1 million and the fraud involved at least 10 financial institutions.”</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">“Guess he didn’t have </span><a href="https://www.prepaidlegal.com/Multisite/Multisite?site=idt&assoc=tmceldowney"><span style="font-family:arial;font-size:100%;">Identity Theft Shield</span></a><span style="font-family:arial;font-size:100%;">, huh?” </span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">I knew she was going to say that. I wanted her to say just that. As an </span><a href="https://www.prepaidlegal.com/Multisite/Multisite?site=hub&assoc=tmceldowney"><span style="font-family:arial;font-size:100%;">Independent Associate</span></a><span style="font-family:arial;font-size:100%;"> of Pre-Paid Legal myself, I tell people all the time about their risk. But, people are people and they say what they say, like “my bank takes care of that” and “my credit card company covers me.” If that is what they want to believe and it works for them, great.</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">However, my banker and I had a chat when I opened </span><a href="http://tommymackorg.com/TommyMackOrg.htm"><span style="font-family:arial;font-size:100%;">Tommy Mack Organization</span></a><span style="font-family:arial;font-size:100%;"> LLC and it turned out that she has Pre-Paid Legal coverage as an employee benefit through her employer, or Financial Institution as they prefer. She had declined to take the Identity Theft Shield protection at the time she enrolled.</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">She got a letter from the IRS that claimed my banker owned them income tax on unclaimed wages. It came to be discovered that her ID was stolen and used by someone else to get work. She said that the </span><a href="http://www.fbi.gov/page2/oct04/uncoveridt101504.htm"><span style="font-family:arial;font-size:100%;">FBI</span></a><span style="font-family:arial;font-size:100%;"> told her it could take 2 to 3 years to straighten it out. And just about everyone knows someone who has been a victim.</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">Back to the Bernanke case, the AP story quotes Brian Lapidus, “an identity theft expert with </span><a href="http://www.kroll.com/about/"><span style="font-family:arial;font-size:100%;">Kroll Fraud Solutions</span></a><span style="font-family:arial;font-size:100%;"> said it's not unusual to hear of high-ranking officials caught up by identity theft. His firm has worked with celebrities, senators and others who have been victims.” That company provides the PPD Identity Theft Shield product I recommend to my clients and friends.</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">The story also reports in small details the fastest growing ID Theft scheme – the synthetic person. “The scheme involved using stolen IDs, bank records, personal checks and other items to impersonate victims at bank branches, according to an affidavit signed by Postal Inspector William J. Aiello,” the article said.</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">How could organized crime be anything if not thrilled by ID theft? Other than plastic cards, what inventory is there in sets of numbers? It is impersonally personal as crimes go and a growing menace by all accounts.</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">There are other pretenders to ID theft solution; but they do not do what Kroll and Pre-Paid Legal Services can do – like have professional, licensed investigators go after the perpetrators. Go to </span><a href="https://www.prepaidlegal.com/Multisite/Multisite?site=hub&assoc=tmceldowney"><span style="font-family:arial;font-size:100%;">my PPD website</span></a><span style="font-family:arial;font-size:100%;"> and look. PPD has been in business since 1972 and is publically traded on the </span><a href="http://www.google.com/finance?q=NYSE:PPD"><span style="font-family:arial;font-size:100%;">New York Stock Exchange</span></a><span style="font-family:arial;font-size:100%;">. </span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">It would be an easy target to blame the credit card industry for facilitating ID Theft. It would be easy to suggest that the industry is actually legalized crime, but I will address that later. In the mean time, the PBS series </span><a href="http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/"><span style="font-family:arial;font-size:100%;">Frontline</span></a><span style="font-family:arial;font-size:100%;"> did a revealing story about credit cards you may be interested in seeing.</span></div><div align="justify"><br /><span style="font-family:arial;font-size:100%;">I am sorry that Mr. Bernanke got bagged in an ID theft. But, if he is not safe, who is?</span></div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-64536859156633244702009-05-18T14:53:00.000-07:002009-05-18T14:56:35.944-07:00Take Out the Paper<div align="justify"><span style="font-family:verdana;"></span> </div><div align="justify"><span style="font-family:verdana;">When the United States began, the press meant newspapers -- the venerable </span><a href="http://www.campwood.com/FourthEstate.htm"><span style="font-family:verdana;">Fourth Estate</span></a><span style="font-family:verdana;">. Attributed to British politician Edmund Burke (1729 - 1797), that synonym for newspapers has been broadened to include all of the mass media. The press is protected by </span><a href="http://caselaw.lp.findlaw.com/data/constitution/amendment01/"><span style="font-family:verdana;">law</span></a><span style="font-family:verdana;"> from Congress, but it is not protected from business or technology. Despite pundits’ predictions to the contrary, radio failed to kill newspapers and television failed to kill radio. Neither is the Internet killing its media cousins. As newspapers across the country fail or fold, bad business practice in the present bleak economy threatens all of the Fourth Estate, and this in turn threatens the country.</span></div><div align="justify"><span style="font-family:verdana;"><br />The story of the failing </span><a href="http://finance.yahoo.com/news/Troubled-San-Francisco-paper-apf-14459615.html"><span style="font-family:verdana;">San Francisco Chronicle</span></a><span style="font-family:verdana;"> is just one example of a major metro-area newspaper having been managed into the dinosaur museum of media. It took the paper’s losing $50 million last year for management to make a remarkable grasp of the obvious. Its last-ditch solution is to slash expenses and purge the payroll. "Our current situation dictates that we accomplish these cost savings quickly," Chronicle Publisher Frank Vega wrote in a memo to the staff. "Business as usual is no longer an option."</span></div><div align="justify"><span style="font-family:verdana;"><br />The New York-based Hearst Corporation bought the Chronicle in 2000 in a $660 million deal and has been losing money ever since. The paper is the largest daily in northern California with a paid weekday circulation of 340-thousand and a work force of about 1500 people. According to the </span><a href="http://online.wsj.com/article/SB123551803197064061.html"><span style="font-family:verdana;">Wall Street Journal</span></a><span style="font-family:verdana;">, Hearst said it will seek "critical cost-saving measures," including a steep reduction in the Chronicle's staff. If it can't reach its cost-saving target "within weeks," Hearst said it will seek a new owner for the Chronicle. If it cannot find a buyer, Hearst said it will close the paper. Bankers say there are no likely buyers for the Chronicle.</span></div><span style="font-family:verdana;"><div align="justify"><br />The list of new exhibits to the dinosaur museum of media includes other inductees such as the Seattle Post Intelligencer and the Miami Herald. After 150 years Denver’s Rocky Mountain News is history. Tribune Company, parent to the Chicago Tribune and Los Angeles Times, has </span><a href="http://www.thephoenixprinciple.com/blog/2009/02/is-your-market-soft-or-has-it-shifted-newspaper-failures.html"><span style="font-family:verdana;">filed for bankruptcy</span></a><span style="font-family:verdana;">. So has Philadelphia Newspapers which publishes the Philadelphia Inquirer and Philadelphia Daily Journal. In fact, 33 newspapers have filed for bankruptcy protection. The American Society of Newspaper Editors has cancelled its annual convention for 2009. </span></div><span style="font-family:verdana;"><div align="justify"><br /></span><a href="http://cbs5.com/business/scripps.rocky.denver.2.946698.html"><span style="font-family:verdana;">Mike Hoyt</span></a><span style="font-family:verdana;"> is the Columbia Journalism Review Executive Editor. He says such losses are sad because newspapers are very tied in with their community. “When a city only has one paper,” Hoyt said, "you lose competition, and you lose the edge, and you lose energy. Competition is good. It sharpens the news gathering, and the investigative reporting." Reflecting on Denver and San Francisco, Hoyt said, "The daily newspaper in a major metropolitan market is the voice of a city. It provides a civic forum that everyone can relate to and come together to talk about. And it can take on complicated problems, and be a watchdog for the community . . . You need big institutions to cover big problems and big situations."</span></div><span style="font-family:verdana;"><div align="justify"><br />In 1787 </span><a href="http://etext.virginia.edu/jefferson/quotations/jeff1600.htm"><span style="font-family:verdana;">Thomas Jefferson</span></a><span style="font-family:verdana;"> wrote, “The basis of our governments being the opinion of the people, the very first object should be to keep that right; and were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.” Jefferson regarded a free press as absolutely essential to investigate and criticize the government. It bit him. The press vilified Jefferson during his presidency. Nor would he be the last.</span></div><span style="font-family:verdana;"><div align="justify"><br />A hundred-fifty years after Jefferson’s presidency, Harry Truman joined a long line of presidents who worked the press. “Once a week the President of the United States faces the free press and endures a barrage of questions,” wrote Anthony Leviero in the </span><a href="http://select.nytimes.com/gst/abstract.html?res=F70614FB3958107A93C3AB1783D85F4D8485F9&scp=6&sq=exercise%20in%20democracy&st=cse"><span style="font-family:verdana;">New York Times</span></a><span style="font-family:verdana;"> in 1949. “It is the biggest show in Washington. It is also a great institution, uniquely American. It has become a factor in our checks-and-balances system of government.”</span></div><span style="font-family:verdana;"><div align="justify"><br />Then there was </span><a href="http://www.washingtonpost.com/wp-srv/national/longterm/watergate/articles/080974-3.htm"><span style="font-family:verdana;">President Nixon</span></a><span style="font-family:verdana;"> who, after two years of bitter public debate over the Watergate scandals, bowed to pressures from the public and the press to become the first President in American history to resign the presidency. “We saw a president toppled by a couple of reporters, Woodward and Bernstein, who inspired thousands of young people to take up investigative journalism,” wrote the late author and activist </span><a href="http://www.mcwilliams.com/books/aint/212.htm"><span style="font-family:verdana;">Peter McWilliams</span></a><span style="font-family:verdana;">. “Then, after Woodward and Bernstein were portrayed in the movies by Dustin Hoffman and Robert Redford, tens of thousands applied to journalism schools.”</span></div><span style="font-family:verdana;"><div align="justify"><br />The peril of our free press is that it costs a lot of money and there is not much of that to support it. “Journalists are the watchdogs, and being able to shine a spotlight on corruption or scandal is vital to our democracy," wrote Mike Hoyt. However, the impact of the recession on newspapers ad-based bottom lines has to do with business and not journalism. It is just that there will be less journalism.</div><div align="justify"><br />The worst advertising climate in decades killed the print version of the </span><a href="http://www.baltimoresun.com/news/local/bal-md.examiner30jan30,0,2163935.story"><span style="font-family:verdana;">Baltimore Examiner</span></a><span style="font-family:verdana;"> free newspaper on February 15, less than three years after its debut. "This is very disappointing for all of us. Obviously, this is not what we envisioned when we launched the newspaper," ownership’s CEO Ryan McKibben wrote to Examiner staff. The company will now concentrate resources on an Internet venture where it plans to add space, new columnists and Web editors.<br />Maybe that is an example of good business management. What about the journalism?</span></div><span style="font-family:verdana;"><div align="justify"><br />“Half-truths, obfuscations and apparent deceit -- these are the wages of a world in which newspapers, their staffs eviscerated, no longer battle at the frontiers of public information,” wrote </span><a href="http://www.washingtonpost.com/wp-dyn/content/article/2009/02/27/AR2009022703591.html"><span style="font-family:verdana;">David Simon </span></a><span style="font-family:verdana;">in the Washington Post about his experience as a newspaperman in Baltimore. “And in a city where officials routinely plead with citizens to trust the police, where witnesses have for years been vulnerable to retaliatory violence, we now have a once-proud department's officers hiding behind anonymity that is not only arguably illegal under existing public information laws, but hypocritical as well.”</span></div><span style="font-family:verdana;"><div align="justify"><br />Rather than solutions, there are modifications to the newspaper business failure. The Duluth News Tribune and the St. Paul Pioneer Press, for example, will work with the University of Minnesota's School of Journalism and Mass Communication on a half-million dollar project. The idea of folding newspapers into endowment projects or university systems is being floated. There is my dinosaur media museum. In the end, business is business – enterprise has a market to support it. </div><div align="justify"><br />Unfortunately, business being business, markets contract and companies cease to be viable. GM is a looming example of a failed corporation and yet some of its brands will continue to be be produced. I suspect journalism likewise will survive the fall of the big corporations as a hybrid form of credentialed web-print production, such as blogging with a hard copy back end. I will not be convinced that blogging is journalism, however, until I see a White House Blog Corps.</span><br /><br /><br /> </div>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0tag:blogger.com,1999:blog-4455667724926725188.post-21503016308104154022009-03-09T19:25:00.000-07:002009-03-09T19:47:43.483-07:00Effective Delegation<div align="justify"><span style="font-family:verdana;">An organization is defined as a structure through which individuals cooperate systematically to conduct business, and this is the purview of managers. It has been said that the best manager is the one who has the least amount to do. When you think about it, that axiom is true because a manager’s job is that of a coordinator inside an organization. To be effective, managers need to practice effective delegation.</span></div><div align="justify"><br /><span style="font-family:verdana;">The higher an owner or employee progresses in an organization, the greater their area of responsibility. There is a point at which the scope of their responsibility becomes larger than any one person can handle. That does not mean that they do not try, but another axiom says, “Don’t bite off more than you can chew.” At that point one must delegate authority and responsibilities to other people. Otherwise, meeting the needs of the business through proper performance is jeopardized. </span></div><span style="font-family:verdana;"><div align="justify"><br /></span><span style="font-family:verdana;">Two major benefits of effective delegation are the distribution of the work load and the development of subordinates. </span></div><div align="justify"><span style="font-family:Verdana;"></span> </div><div align="justify"> </div><div align="justify"><span style="font-family:verdana;"></span></div><div align="justify"><span style="font-family:verdana;"></span></div><div align="justify"><span style="font-family:verdana;">The best way to figure out what can be delegated and what should not is to identify the elements of the work at hand. From that identification the elements can be put in different classifications such as A, B, and C items.</span></div><div align="justify"><br /><span style="font-family:verdana;">· “A” items are the few duties that are the most important and cannot be delegated. Only you can perform them.<br />· “B” items are some duties that are important but not critical, so they may be delegated to someone other than to you.<br />· “C” items are the greatest number of duties that are necessary to the business but of lesser importance than the “B” items. These should be delegated.</span></div><div align="justify"><br /><span style="font-family:verdana;">In my practice I routinely teach owners, executives and supervisors the importance of learning how to manage through other people. To be successful it is essential to keep control by holding subordinates accountable for their actions. One must strike a balance. You do not get so close that you are looking over subordinates’ shoulders. Neither do you want to become so far removed that you do not know what is going on. The way to succeed at that balance is to develop a system for getting feedback.</span></div><div align="justify"><br /><span style="font-family:verdana;">I have worked in companies that had reports on reports and conducted meetings on meetings. I never liked it, so whenever I hear someone in business say that they hate reports and meetings, I empathize with them. However, what they are telling me is that the paperwork and the blabberwork have lost reason. Reports and meetings mean nothing unless they have the purpose of keeping you informed. The reports should provide you information at the right time. Meetings should permit dialogue on activities, accomplishments, and problems -- an important part of the communication process.</span></div><div align="justify"><br /><span style="font-family:verdana;">It is not so much that there are rules to follow as accomplishments to achieve. The first thing to accomplish is to make sure that subordinates clearly understand the tasks they must perform. A good practice is to have your subordinates describe what it is they think you want them to accomplish. You also need to make sure that employees have the skill, talent, and ability to perform their job. The last thing you want is to delegate a job destined to result in failure or frustration. </span></div><div align="justify"><br /><span style="font-family:verdana;">Another good practice is to allow your subordinates latitude in how a job should be performed. Your way is not the only way. Having said that, however, make sure that you provide all the resources necessary to successfully perform a job. Let your subordinates do the work, but make sure that you can provide them with help in getting the job accomplished if necessary.</span></div><p align="justify"><br /><span style="font-family:verdana;">Everyone wins when you make a habit of doing the following early and often:<br />· Delegate not only the menial, unimportant jobs but also the significant ones. Employees will see this as a vote of confidence.<br />· Remain accessible. Always provide a safety net for your subordinates. Be available as necessary, but avoid engaging in over-the-shoulder surveillance.<br />· When a job is performed well, praise the subordinates for their performance.<br /><br />In my experience delegation is the hardest job that business owners and managers have to learn. They confuse delegation with giving subordinates many responsibilities but little or no authority. Success requires both the delegation of responsibilities and of the authority. Enough authority must be delegated to accomplish the following:<br /><br />· To get work done<br />· To allow key employees to take initiative<br />· To keep things going in your absence<br />· To develop subordinates<br />· To establish accountability<br />· To free up management time for higher level activity<br /><br />In that way your responsibilities and the needs of the organization are effectively met. The higher up you progress in an organization, the more important the practice of effective delegation becomes. It might seem contra-intuitive, but the old axiom applies. You want to be the manager with the least amount to do.</span><span style="font-family:verdana;"><br /></p></span></span>Tommy "Mack" McEldowneyhttp://www.blogger.com/profile/11398109996393401113noreply@blogger.com0