“Pick Two”

There is a great diagram out there. I have seen it in the context of designers, saying that clients can have their project with two of three characteristics: fast, cheap, or good.

I feel there is definitely some of this in the business world as well, but that those descriptors aren’t quite right. So, I thought it would be fun to make an Accountant’s Venn Diagram.


You can have it Cheap.
You don’t pay much. You want to pay over time (or next week). You want to discuss all the forms, time sheets, and steps involved to determine exactly how a fee was generated. You want to discuss or negotiate every bill that you get. The check is “in the mail.” You assume that staff is free and office space is donated.

You can be Absent.
You are disorganized. You have a business but have no idea what an income statement is. Forget about knowing what assets and liabilities are. You use a shoebox for anything other than storing shoes. Your record keeping is that you have “almost all” of your receipts in this box. You don’t want to (or can’t) answer questions or organize anything. You can’t return a phone call or an email in less than four days.

You can be Informed.
You have very specific ideas about how your books/tax returns/project should look. You want to understand every single option, method, and choice and the pros and cons of each. You want concrete answers to amorphous ideas. You ask for the FASB or Revenue Ruling citation. You want all the details on a strategy, and weekly updates, forever.
Having all three of these things is impossible. But you can have any two of them. Each pair creates a very different type of relationship between you and I. Let’s look at how those look, so you can know what you want or need.

Cheap & Absent
Drop your stuff off, let me at it. I promise I’ll handle it. But you’re putting yourself in my hands and you need to trust me. This is really easy and requires almost no work on your part, but you better have trust in your CPA.

Informed & Cheap
This is a teaching relationship. You will have to keep bringing things up, but I will re-explain alternative minimum tax every year for you. Most of the relationship management (and oftentimes the work) falls on you. Most of the knowledge and teaching falls on me. I coach you, but I don’t do the work for you. Great for the DIYers, but be prepared for longer lead times and to crunch some numbers yourself.

Absent & Informed
I’ll be honest. This relationship is a TON of work for me to manage. Constantly chasing you down to give you the details you asked for can be exasperating. I don’t mind doing it. I really don’t! But if you want to demand that much knowledge from me and that little work on your part, be prepared to pay. This is the classic “for $400 an hour, I’ll do whatever work you want”.
As much as this may sound like a complaint, it isn’t. There is a place for all these types of clients and relationships in a business. As long as you and I understand the parameters, we will get along great! But if you expect to have the “trifecta” I can promise you will be disappointed.







Career Capital Project

The book So Good They Can’t Ignore You talks about the idea of purposeful study and learning. This is one of the most powerful things that came out of that book for me.

With that in mind, I created a new project for myself that I call the Career Capital project. After a light bulb went off in my head and some encouragement from my editor, I thought this blog would provide a great way for me to really focus this new project. I realized that, with my reading lists, I have a built-in and constant store of ideas to learn. I officially have more ideas than I can learn in my lifetime.

But how do I become more purposeful about it? How do I make sure I assimilate all the information that I am taking in, especially the more complex and academic ideas? It’s one thing to read a paragraph slowly to myself in the quiet of my house and think, “Yeah, okay, I get that,” and another for that new idea to impact my decision making when shooting from the hip in a pitch meeting with a potential new client.

To prove you know something, you have to teach it back. They say that any idea you can communicate to a lay person is an idea you have truly mastered. So, I need to practice relaying ideas to other people. “However can I do THAT?” I wonder. If only I had a platform to publish …

Right. You see where this is going.

My idea is to have a “what I learned this week” series. I’ll write down one thing that I found interesting from one of my books, mostly to explain it to myself again. After making sure I understand the idea, I’ll let you know why that idea might be interesting or useful for you.

My reading lists were already built for being purposeful for my own study. The Business Guru reading list was designed specifically to help business owners sort through and distill the ideas that are out there in the world. Economics has always been a passion of mine and underpins everything in the freaking world, so it is always applicable.

What I DID change, however, was my focus. Some of the lists were turned off: History, Physics, Philosophy, High Finance, and General. These are all great lists and things I find interesting but will not help me get better at what I do. At least not right now.

I added a new one: Career Capital. These are books that are all very technical and very focused on a specific task. I want to get more involved with clients who have larger businesses, in operational and strategy ideas, and in valuations and exit planning. I have done this kind of work before, but usually as it presents itself to me. My hope with these guides is to really hone my skills and knowledge to give me the confidence to aggressively pursue that kind of work.

The books are all part of The Economist’s “Guides” series. They are each focused on specific topics. The one I am currently reading is called “The Guide to Economic Indicators.” I am learning all about how GDP, housing starts, unemployment figures, etc. are reported and intended to be used to determine where the economy is going.

So, I am taking the advice that I got from So Good They Can’t Ignore You, and you should, too. Decide what you want to do or be, figure out what skills you need to become that, and start studying. Hopefully, before we know it, we will both be so good they can’t ignore us.

Why Economics Should be Required.

I came across this bill being proposed in the CA Senate recently:


The short version, is they want to raise the minimum wage from $8 an hour in CA to $9 next July and then $10 an hour July of 2016.

Really? Don’t we usually decrease the price of something when we want to sell more of it?

Economics people: We have relatively high unemployment in CA right now. Do you remember your supply and demand graphs? Unemployment means that the supply of labor currently exceeds the demand for labor. How do we fix this imbalance?

We can cut the excess supply. Given that our supply is “people” I don’t think that eliminating them is a really great option…

So we have to increase demand. OK, how do you immediately increase demand? That’s right! Put it on sale. A.k.a. decrease the price. When the milk and veggies are about to expire at the grocery store, the manager does not jack the price up. They decrease the price, to encourage you to buy it.

So, we have a bunch of people who want to work, and can’t find a job at $8 an hour. Do you think that they will find work if we increase the minimum pay to $10? You don’t have to be an economics genius to figure this doesn’t work.

Maybe instead we need a minimum wage holiday. A temporary decreasing of the minimum wage. to boost the demand for labor. When the economy goes into recession we lower interest rates to encourage spending, why not lower the wage rates. Maybe it will keep some people employed (albeit at a lower amount) than otherwise would have. $6 an hour isn’t great, but it is better than $0 an hour.

I don’t disagree with the idea of a minimum wage, per se, but with this bill it is clear someone just isn’t paying attention. Maybe next time the economy tanks we should talk to our politicians about a minimum wage holiday!

And yes, I fully expect to get an email from my brother in 5… 4… 3… 2…




When Someone Says it Better…

Cafe Hayek is an economics blog with a decidely “laissez-faire” tilt that I follow and enjoy a great deal. One of my favorite things about that blog is their quotation of the day, which exposes me to a great many other excellent books, blogs, essays, and videos.

Recently, a quote came up that resonated with me. I wrote a post a while ago entitled Work Makes Wealth. The basic thrust of my post is that no investment will make you wealthy. Investments protect and/or grow wealth, they don’t create it. There is no magic bullet.

I made that point using 576 words.

This guy did it in 28.

So, when someone says it better, give them credit and show it off.

From page six of Edmund Phelps‘s hot-off-the-press Mass Flourishing:

Understanding the modern economies must start with a modern notion: original ideas born of creativity and grounded on the uniqueness of each person’s private knowledge, information, and imagination.

Like I said, the most valuable ideas are hard to replicate. Creating something of value is the only way to accrue more valuable things to yourself.




Age of Turbulence – Book Review

downloadI just recently finished The Age of Turbulence: Adventures in a New World by Alan Greenspan. For those of you living under a rock, Mr. Greenspan was the Chairman of the Federal Reserve Board for the twenty years from 1987 to 2006. In addition to that, he has been involved in government and economics for nearly 50 years.

The book is broken into several parts. The first few chapters are Mr. Greenspan’s story: what got him into economics, his career, the people he met, the work he did, etc. I found this to be the most fascinating part of the story. I always enjoy the life story of any famous business figure, and this section did not disappoint.

Spoiler Alert: Even someone relatively young like me will recognize MANY of the names of people that have been in government for the same extended period of time. It really is true sometimes. There are something like 100 people that run everything. Sheesh. The good news I learned from this though, was that the stories of these people are, most often, stories of people who really are trying to do the right thing, often in situations with no good choices. But how they approached financial crises was a fascinating read.

In the second part of the book, Mr. Greenspan offers a chapter on several different countries and economic ideas. Some of these chapters were a little slow for me. It might be the timeliness. I am a little late to the game on this book, since it was published in 2006. The issues facing the countries might have been news at the time of the book’s publication. But all of the issues facing these countries have been their economic story for the last seven years. Maybe that is a testament to Mr. Greenspan’s foresight. This section almost read like a history book. Example: Yes, we all understand the problems facing Russia if they continue to base their economy on natural resources. But if you have no experience in economics at all, you might learn some new things and be exposed to some new ideas that you can easily relate to real-world events.

The third part of the book was the most academic and, accordingly, the most difficult to get through. It is a series of chapters giving Mr. Greenspan’s thoughts on different, relatively discrete, topics. Not having any serious economics training myself, the chapter on Current Accounts and Debt and their effect on global economic growth required me to re-read a few chapters. But I very much appreciated his non-political and purely academic approach to explaining these issues. You might be surprised to find that the economic issues many people worry about don’t concern Mr. Greenspan and which issues are largely ignored that really could be our undoing.

The fourth part of the book starts to transition from looking less at an economic explanation of the present and more about the extrapolation into the future. I particularly enjoyed the chapter “The World Retires, But Can It Afford To?” The way these things are treated was just fascinating. I think it is very well written in that these chapters are, to my mind, a perfect combination of academic rigor and approachability. When I learned something that did not make sense, I was able to identify the assumptions and understand in which scenarios the assertions were likely true or not. In many cases, Mr. Greenspan elegantly explained both sides of an argument, as well as the extenuating factors. There are simply far too many ideas and arguments to explain in something as limited in scope as a blog post, but suffice it to say that I now have a good handle on the issues facing the world for the next 50 years.

It has been said that if you can’t explain your position or suggestions to a lay-person, then you don’t truly understand them. It is clear to me that, despite our thoughts on politics and economics, Mr. Greenspan is one of the most accomplished and talented economists of the 20th century.

If you are a small business owner, this book is probably not going to make your busienss better, so it is not going on my “Business Guru” reading list. But if you have any interest in economics, I highly encourage you to check this book out!

Hurting to Help

Another tax season has come and gone.

Well, for most of us. I am still getting incomplete returns randomly mailed to me. People stare at me, dumbfounded, when I tell them that I don’t really do taxes outside of tax season.

“Wait, but you’re a CPA!”

Somehow our profession, and our love of our clients, has built an entire system of enablers. A system of professionals, just like myself, who allow our clients to wander in late, unorganized, in drips and drabs, and we will bend over backwards to help them. What kind of business is that?

I advise my business owners that systematizing is how you grow and stabilize a business. You want to sell your business for a bunch of money? That’s great! But no one will buy a business that isn’t repeatable. No one wants the business that will only function if you are there to do things just so. And even if they do, it isn’t worth much.

Any business that has any amount of success operates under systems that have been refined over time, making the business more efficient and more profitable.

The same is true for a CPA firm, yet while we tell business owners about how to make their business more valuable, we allow and enable them to behave in ways that will actually damage their business. The fact is, you have a business, and that requires some maintenance. You have to keep track of your income and expenses. Would you go to a doctor’s office and tell him that you don’t know any of your symptoms, but that he should diagnose your problem anyway?

You have to report and pay taxes. Every year. Every stinking year. And you know what? It’s the same time every year! Are you shocked when you wake up and have to be at work at 9 am every morning? Of course not! You know the schedule and you plan for it.

Maybe you don’t even have a business. Maybe you are a regular W-2 person. Even you have to pay taxes. Anyone who goes an entire year without paying any sort of taxes and then complains about a tax bill is just behaving like a spoiled child.

Yet I see these people every year, hear the same stories every year, the same shock, the same disbelief.

We are now in that time of year where I piss off the most clients. Why? Because I say no.

No, I won’t come in on Saturday in June because you couldn’t get things together in January, February or March when I WAS here on Saturday. Would you go to a furniture store at midnight and be angry that they weren’t open?

No, I won’t get your disaster of a return turned around in 12 hours because my office isn’t geared up like it was in first quarter. Would you be upset if you showed up to a football stadium in May and there was no game? Of course not!

And no, I won’t make an exception for you because you were too busy. I have other clients who waited patiently through the season for my help on other matters and now I am working with them. When was the last time you walked to the front of the line at the movies, completely ignoring the line of people waiting to buy tickets?

I do whatever I can to help my clients, but sometimes you have to hurt them to help them. Sometimes they have to have a problem you won’t bail them out of before they can develop the good habits that ALL successful business owners have.

Luck is Made – Over and Over Again

As we begin to come out the recession, I am noticing a disconnect again. You heard me: End of the recession.

Yes, we are nearing the end of the recession. This does not mean that government policy will not put us back into a quarter of decreasing GDP. This does not mean that anyone who wants a job can get one or that everyone will be getting raises and living the high life.

But we are getting to the point where labor productivity is at very high levels (to get more productivity you have to hire more people). We are getting to the point where the expectation of higher inflation is driving people to seek to earn more than the, well, nothing on their savings in the bank.

But there is another number I have seen that I find interesting. The amount of time that employers are holding a job open is still relatively long. There is something like 5 million job openings and 12 million people looking for jobs. Now, we all know it takes time to interview and hire people, but in some cases the job is being held open for an average of 30 days.

This tells me that the people who are looking for work often don’t have the skills hiring companies are looking for. Remember when I said that people need to be real about the value they add?

The disconnect I am noticing is this. Two years ago, if you said, “Well, with how the economy is …” people would nod knowingly.

But today if you say that, to me it rings false. Why? Because I know lots of hard working people who are having banner years. Making money, starting businesses, and generally kicking butt.

Remember when I said luck is made?

The economy can kick anyone in the ass, it’s true. But the “lucky” ones have gotten it together and are making things happen. So, are you waiting to get lucky? Or are you making it happen?

Productivity & Accounting – Not So Strange Bed Fellows

imagesPeople sometimes wonder why I like productivity so much. “Don’t you just do taxes all day long? How hard is that to organize?” Well besides the obvious answer of “I do lot’s more than taxes”, accounting and productivity actually make perfect sense together. Or, stated better, it should be no surprise that accountants can (and should!) take to productivity systems (dare I say ‘lifestyle’?) so well. Why? It’s simple. Productivity: GTD, OmniFocus, Workflowy, Apps, Pomodoro, Emergent task planner, etc is all about one basic thing: Organizing Information.


You have information swirling around your world, your head, your email, etc. Everyone has a system for dealing with this info. Some of us have better systems than others. That is what the “productivity revolution” is all about. How do I handle the giant onslaught of information that comes with living in the modern world?


Guess where the first onslaught of critical information and minutia was? Yup. Business. A merchant had money coming in from lots of sources, money going out. Some was owed back to him, some he owed others. He converted money to other assets like inventory. And at the end of the day, he needed to know how much profit he made. A Friar, who was friends with Leonardo da Vinci, invented what we now know as double entry accounting.


Accountants are specialists in figuring out where information comes from, where it should go, who will need to use it, and how to make sure no one can tamper with it. Businesses, like most people today, run on information. Without information it is literally impossible to be successful in business. The more control you have over your information, the better your chances of being successful. This can mean a lot of things to lots of people. A Fortune 500 company needs help with internal controls, minimizing malfeasance, and getting critical information to the decision makers. A small business might just need help figuring what information they should be looking at and where it will come from. In both cases, they turn to accountants.


I am not sure why so many accountants are not very good at being organized (something about a cobbler’s kids having no shoes?). Or how so few of them really realize all the strategic value that their knowledge has beyond just keeping numbers straight.


But it seems obvious to me:


Feeling overwhelmed with information? Trying to get a handle on all the information flows in your life?


Maybe you just need a better accountant!


How to Grow Your Business

imagesA new day, a new year. Since many business owners are likely setting a goal to “grow my business in 2012″ I thought I would offer my tips and tricks for growing your business.


What is the secret to growing your business? As simple as I like to make things, “growing your business” is way too broad a topic to be explained simply. There are, however, several relatively simple ideas that you should be keeping in mind. If you are growing quickly (or even growing at all!) you are likely very busy. When you are moving a mile a minute, it can be easy to get derailed. As always, remember to not over-complicate things, business really is simple!



Keep It Simple

Which brings me to the first point: keep it simple! When you were one a one-person operation the way you ran your business was simple. Then problems, mistakes, little snafus here and there started to pop up. Being a responsible business owner, you started adding steps and systems and controls to help you keep tabs on things. Then one day you wake up and find out that everything takes twice as long to do as you think it should. All your “systems” are clogging the pipeline. This is not to say that you don’t need controls as you grow. I know I just told you “What got you here, Won’t get you there”. But sometimes people don’t consider the cost of a system. 100% accuracy can be prohibitively expensive to maintain. Unless you make things like heart valves or airplane wings, it probably isn’t even necessary. Before putting in a control system, think “What is the downside to this going wrong”? If it is just as simple as “the client will be annoyed” then maybe the better system is to just plan to accept a certain amount of failure, to refund the client, and send an apology letter. The client will be content and you can keep producing more efficiently. Often times the cost of the refund and apology for the once in a great while you have a problem is significantly less than the cost of slowing yourself down. You should always be evaluating your systems with an eye towards making it simple. Remove complexity wherever you can!



Avoid “Thrashing”

As with most things in life, moderation in business and growth strategies is a good strategy. Don’t take failures too hard. Also don’t assume that a success will continue indefinitely. Making course corrections is a great idea. Almost all successful businesses make changes constantly. Changes to products and services, changes to marketing, changes to their models, etc. But don’t let one bad experience make you change everything. If you put real effort and research into your business plan one unhappy customer shouldn’t be enough to change it. Making changes off-the-cuff can also be killer. When the time comes to make changes, and the time will come, it should be done strategically as part of your annual planning process. The same care and effort that you put into your original business plan should be put into looking at what the next steps or changes your business needs for growth. And, generally speaking, incremental adjustments have a better risk-reward trade-off than the big ones do.



Buy Low, Sell High

Throwing money at a problem typically won’t solve the problem. Neither will not throwing any money in. Validation is a very powerful emotion. Business owners are highly susceptible to being blinded by the success of their business. You had the idea, you did the work, you took the risk and now it is paying off! Why shouldn’t you feel good? The truth is you should. But just because you were right once, does not mean you will be right again or right always. Business moves in cycles just like the stock market. Boom times and trough times. If you want to really supercharge your growth don’t spend the “easy money” that comes with being at the top of a business cycle. Save it to reinvest it when the trough time comes. Because your competitors will not do this and will be struggling to stay alive when the slowdown comes. But if you have a war chest to get you through that period, you will come out of the trough tremendously successful. As I write this, we are still muddling along in the end of a recessionary period in the US. But there are lot’s of people making a killing right now. Why? Because they were conservative when the top was here and saved money. When the crash came, their competitors went out of business. Now they have money to reinvest in growth and are picking up business left and right.


This is exactly the same strategy you would use to invest in the stock market. Sell high, buy low. But just like most investors do the OPPOSITE of this, most business owners spend when the money is “easy” and barely scrape by when then trough comes. Have the foresight to flip this usual behavior on it’s head and reinvest when the bottom comes. You will shocked at how much you can grow.



Slow Yourself Down

When you start your business you can make decisions easily. You know your business inside and out. There is very little (relatively speaking) going on. Which means that you have a handle on the heartbeat of your company. This allows you to make tactical decisions quickly because you instinctively know what you want to do. But you can trust your gut too much. When your business is simpler, your gut is probably pretty accurate. As your business grows, it will naturally get more and more complex. At a certain point, your brain cannot integrate all the variables necessary for you to make “gut” level decisions. That is when your “gut” will start to not be right any more. As with overreacting point above, care and research is required to support growth. Force yourself to slow down and consider the options. In this day and age, it seems ridiculous to not move as quickly as possible. But the reality is that all our modern technology only moves information to us and away from us faster. We have not yet invented something that can make decisions for us. Only a human being can take in the data and make a decision. And none of our current tablets, phones or computers has increased the processing speed of our brains. So don’t kid yourself into thinking that you need to “think faster”. It isn’t possible. And please, don’t kid yourself into thinking that you “need to move faster” and you don’t have time to do the research. That is just excusing laziness.



“Burn a Hole”

Something of a continuation of the last point is an idea that I stole from Patrick Rhone. I searched everywhere I could online and I think that he mentioned it in his podcast, which you should check out. But the idea is that laser like focus will allow you to “burn a hole” through your projects. Productivity has given us all the impression that we can and should be doing more than we are. But the reality is you can only move forward so many projects, ideas and products at a time. Productivity is great but I believe that it should be used to allow you to dedicate more substantial time to a few important projects, not dedicating a little time to dozens of projects. As a successful business owner, you will likely have many opportunities and ideas. In fact, you will have more than you can deal with at any one point in time. You will be more successful if you do them one at a time. My way of accomplishing this is to create “Paths”. I have four paths, two personal and two business. That means that I can only have four projects going forward at any one time. For the business paths, I have one for my online projects and one for my full-time job. But I have many, many ideas and projects that I want to do. So during my quarterly planning I update my “path time-line”. For example, I have a list of all the major projects I want to do at NCH (NCH Tax & Wealth Advisors is where I work). It can be anything from marketing to a new niche, developing a new IT infrastructure, or recruiting more staff to grow the business. After making the list, I review each of them for timeliness, seasonality, and resources required. Then I “time line” them out. Project A will be complete by end of January at which time I will start work on Project B which I estimate will take three months which means Project C will start at the beginning of May, etc. This has allowed me to “burn a hole”. I have accomplished more since I have started doing this than I ever did when I tried to work on everything I wanted to do. It also means that I do not lose track of projects or ideas. I can take comfort in the fact that, when the right time for a project arises, I will have that project ready to go.


The point is: If you have 12 ideas you will likely finish all 12 faster by putting focused effort into one project at a time, than you will trying to move all 12 projects forward at once.



I hope this has been helpful and you are as excited for the new year as I am.


What growth strategies are you planning to work on this year?


“Ready” Life

In golf, there is an expression: “Play Ready Golf”. It is a very simple phrase, but can mean many different things at once. Golf courses, especially at peak times, can be very crowded places. That tends to slow down the pace of play and there are few things golfer’s hate more than a slow round.

If the day is busy, you will be reminded to “play ready golf” when you tee off. That means that, while you are waiting to hit your shot (because the group in front of you is in the way) you should be doing lots of things. Size up the distance and terrain, decide on your shot and club, find your aim point, take your practice swings, etc. The idea is to get everything possible done beforehand, so as soon as it is your turn to swing, you are ready.
Why am I talking about golf on a business blog you ask?
Because I think that people underestimate the power of this idea. How often do you think through the next several things you have to do? I don’t mean at a project level. Every business owner knows that they have to buy materials before they can make something. Or that they need to do this marketing strategy before that one.
What I mean is, are you doing things as the occur to you? Or do you just wander from step to step of your daily tasks? Most of these things are very simple, but in my experience, can make a big difference. Do you know where around town you are going to be and then think about what errands you can/need to run in that area? Do you have a list of things to talk about with different people the next time you talk to them? That way you don’t have to call the person five times a day. It can even be something as simple as: “I know that the back door of my office is a pain to get open, so I’m only going to take half a load out to the car so I have a free hand to prop it open. That way the other loads will be even faster and easier”.
I am constantly amazed at how many people will start a task without having all the tools they will need at hand. I never understand why they do this! Everyone knows the costliest parts of any work is the starting and stopping of tasks!
This can make an impact on your personal life, but it could have an even BIGGER impact on the world . What if you were actually looking around and anticipating other people’s needs, where they were going, and what they are going to do? How much more quickly could we ALL get what we need? A tiny sacrifice for a couple of people can cut out a tremendous amount of time and confusion later on. And end up actually saving you time.
I think we need more people playing “ready life”. Start thinking a couple of steps ahead. Try anticipating things instead of reacting to them.
I bet that you will find less friction in your life overall.
Just a thought.