Is a Doom and Gloom Mentality Impacting Your Performance?

May 31st, 2016

Consider these 3 facts.  All are verifiable.

  1. As of 5/27/16, the S&P 500 is up 3.67% for the year. Not huge returns but the stock market is up year to date.
  2. US Q1 GDP was revised up last week. Yes, the numbers are still low (0.8% growth vs. 0.5% initially) but it’s still growth.
  3. Consumer confidence is at its highest level since June 2015.

Despite all this positive news, a feeling of doom and gloom still dominates people’s mentalities.  Every “expert” predicts a stock market crash is coming.  Every “expert” tells us a recession is coming.  Eventually they’ll be right.  Stocks do go down.  Recessions do happen.  I’m pretty sure the US will survive whichever candidate gets elected president.  If you spend your time worrying about events beyond your control, you’ll miss the opportunities in front of you today.  Focus on what you can control, which is your attitude and your actions.  It sounds trite but it works.  Look around at the businesses and people having a good 2016.  I will guarantee you their success is correlated with a positive attitude.

Don’t be Chicken Little.  The sky is not falling.  Embrace reality.  The reality is, the economy is growing.  If your business is not growing, more than likely, it’s time to change your attitude.  A positive attitude isn’t sufficient for success but it is necessary.

 

 

 

A Timely Event in Preparation for Memorial Day

May 24th, 2016

I was driving to a meeting yesterday and heard a news story that brought a tear to my eye and a smile to my face.  An 89 year old Holocaust survivor sang the National Anthem at the Detroit Tigers’ game on Saturday.  Hermina Hirsch survived being imprisoned in Nazi concentration camps, including Auschwitz.  In the interview I heard, she said The Star Spangled Banner was an inspiration during that unimaginable horrific time in her life.  She was freed when the war ended and eventually moved to Detroit and became a Tigers’ fan.   (I won’t hold being a Tigers’ fan against you, Hermina!)  She had on her bucket list singing The National Anthem before a baseball game.  She got her wish on Saturday.  Asked if she was nervous about singing, she said, “If I lived through the concentration camp, it couldn’t be that bad.”

As you enjoy a weekend of family and friends, play the video below.  Take a moment to be grateful for Hermina’s inspiration.  Take a moment to remember freedom is not free.  Take a moment to remember Memorial Day is about those who died so Hermina could sing.

http://abc7news.com/sports/holocaust-survivor-sings-national-anthem-at-tigers-game/1352064/

 

American Flag

New Overtime Rules: A Gift to Lawyers

May 17th, 2016

Any day now, the Department of Labor is expected to release its new overtime rules, which will dramatically broaden the scope of employees eligible for overtime.  Most impacted will be white collar employees.  Among other changes, it is expected that the salary range for administrative and clerical employees eligible for overtime will increase from approximately $23,000 to approximately $50,0000.  So employers now need to track time for a large group of salaried employees.  Oh, and most businesses will likely have to comply within 60 days of the issuance of these rules.  The compliance costs are going to be staggering.  And the government wants more jobs!  Really?

One of the perks many companies (including mine) offer employees is opportunities to work from home and/or flexible time.  I tell people all the time, “I don’t care when and where you work, unless a customer complains.  As long as customers are getting the service they need, you can work from home.”  Guess what?  I now need to track people’s time to make sure I’m complying with the law.  Do I move them to an hourly wage?  Do I take away flex time?  I guarantee you I’m going to do something because “Do we cheat him and how” and all his cronies will be circling this issue like a vulture on roadkill.  Corporate law firms are salivating for the opportunity to re-write employee handbooks.  Our legal system serves a purpose and is necessary for the economy to function properly.  But more and more, our legal system is becoming a wealth transfer mechanism rather than a means to facilitate wealth creation.  More complicated rules equals more legal disputes.

People should be compensated for their time.  Most employers are reasonable and expect reasonableness in return.  A benefit of being a salaried employee is you don’t have to clock in.  If people were overworked and underpaid, they’d leave.  If employees abuse the privilege of flex time or telecommuting, they’d get fired.  Believe it or not, government bureaucrats, the employment market functions pretty well without your interference.  Remember, the laws of physics get amended in a  bureaucracy.  Every action does have an equal and opposite reaction.  But there’s also the law of unintended consequences.  See my examples above.  I’m sure there will be other consequences the bureaucrats who have never had to meet a payroll never intended.

I spoke at an event last week about how public policy impacts middle market businesses.  The costs of complying with employment regulations have increased dramatically over the last few years.  These new regulations will add more expense to the employment equation.  A line I used that was well received last week is even more true today.  I said, “As a business owner, these costs irritate me but I’ll figure it out.  The person who gets hurt is the employee on the margin who would get hired if my costs of compliance didn’t increase for hiring that person.  That’s what is really sad about our current environment.”

And Then There Were Two

May 9th, 2016

After a contentious primary season, it appears the two major political parties have decided upon candidates for the November presidential election.  Hillary Clinton, the champion of the common person who raised more money from Wall Street than every other primary candidate combined, will represent the Democratic Party.  Donald Trump, a non-member of the establishment who says he gives money to politicians so they do him favors, will represent the Republicans.  As I’ve written before, you can’t make this stuff up.  We also can’t live in denial.  Donald Trump surprised a lot of people (including yours truly) by getting this far.  A socialist, Bernie Sanders, won primaries in Midwestern states.   The people clearly aren’t happy with the status quo.

Both candidates are intensely disliked by a majority of the population.  So how did they win their party nominations?  According to polls, both are perceived by their supporters as people who can get stuff done.  Despite inadequacies in other areas (and a weak overall candidate pool from both parties), the perception that Clinton and Trump can make things happen led them to victory in their respective party’s primaries, even if getting something done involves lying or bankrupting a business.

Since the year 2000, we’ve had anemic economic growth, along with the great recession.  We’ve had a bunch of politicians promising change (and hope).  For most Americans, that change hasn’t worked out well from an economic perspective.  Check out wage growth – stagnant for most of the population.  Most of us in the private sector are used to the fact results count.  If you perform, you have a job and an income.  If you don’t perform, you’re out.  Many politicians have made careers out of being obstructionists with few accomplishments and a lot of bluster (see Cruz, Ted).  The people have spoken and they want action, not just promises.   Speaking against something will no longer win an election.

How did this happen?  In no particular order, here are my thoughts:

  1. Based on their support of a socialist, millennials are scared. They saw their parents lose jobs.  They have huge student loans.  Create a path forward for the millennials in your workforce or that you sell to.  They need help understanding we all don’t get trophies and that performance is rewarded.
  2. Despite what the media will have you believe, Trump is supported by more than the “angry white male” voter. While many of his supporters disagree with a lot of his positions (or don’t know what his positions are because he really doesn’t say a lot), they value his bluntness.  Be bold in your communication.  You don’t have to be a bully or outlandish, but boldness gets you noticed.
  3. Experience matters. Last year when the presumptive nominees were a Bush and Clinton, I wanted to vomit.  One party broke away from the past; the other did not.  (As a side note, it is fascinating to me that the Republican “establishment” is getting vilified for being reluctant to support an outsider while the Democratic “establishment” and its role in Clinton’s presumed victory has been rarely mentioned in the media.  But there’s no media bias in this country.)  Clinton won because she’s the “safe” candidate.  Tying boldness and experience together, Trump has created an image of being an experienced, successful business man and negotiator.

We have another six months for this election to play out.  A third party candidate emerging from this mess wouldn’t surprise me.  The uncertainty won’t help the economy.  But we’ve lived through uncertainty before and we certainly will live through this.

It’s the Demographics and Government/Federal Reserve Policies, Stupid!

May 3rd, 2016

I’d like to thank our former president and potential First Man (Is that the title?  First Husband?  Boy will Saturday Night Live have a field day with that one!) in a few months for inspiring my title this week.  We had another quarter of anemic economic growth.  This lack of growth is inspiring support for presidential candidates that would have been on the fringe at best only a few years ago.  Barring a year end growth spurt, the US will have its 11th consecutive year of under 3% growth in real GDP.  Our country has never gone this long with such pathetic growth.  At the risk of offending readers on both sides of the political aisle, I’ll outline why I think we have had such poor growth.

  1. We’re getting older.  Older people produce less.  Earth to Republicans: the US economy grows when the population grows.  We need immigrants.  I’m pretty sure most of you are descendants of immigrants.  I am.  We need immigration policies that work, not walls.
  2. Government policies.   NLRB rules.  Tax increases on capital.  Bank regulations.  I could go on and on.  Earth to Democrats: when you make something more expensive, you generally get less of it.  Check out Economics 101 and the supply/demand curve.  If you make it more expensive to hire someone, you make alternatives (automation, outsourcing, overtime) relatively cheaper.  Rationale economic actors choose the cheaper alternative.  That leads to lower employment growth.  If you want more jobs, make it easier to hire people.  If you want economic growth, reduce the regulatory burden on businesses.
  3. Federal Reserve policies. I do give the Fed credit for trying to counteract #1 and #2 by keeping interest rates low.  Their theory is people will invest more if money is cheap.  It helped a little and gave our banks time to re-capitalize themselves.  But the punch bowl is empty and I think their policies are now having negative consequences.  Go back to demographics.  If you are retired, how do you generate income with interest rates near zero?  If you can’t generate income, will you spend a lot of money?  Of course not.  If you’re a business facing a low-growth environment, does cheap money outweigh the lack of demand for your products?  No, it keeps marginal competitors afloat longer than they would be able to stay in business if they had to pay to borrow money.  Raise rates.
  4. Anti-capitalism/anti-business rhetoric. I recently saw survey results that claimed more than half of millennials do not believe in free markets.   We’ve got presidential candidates on both sides spouting how “rigged” the system is.  (It is interesting to hear Democratic candidates talk about how bad the economy has been under a Democratic president.)  We’ve got extremist professors with tenure teaching our youth what a bad place the USA is.  Shame on all of you!  I have a simple solution: while we might have people talking about building walls to keep people out, there’s no wall keeping you here.  If you’re not happy, go somewhere else and spout your negativity.  We’ll be just fine without you.  I do encourage you to talk to someone who came here recently.  You might realize it’s not so bad here.

Despite all these challenges, let’s not forget the most important thing: the economy is growing!  We aren’t contracting.  Could and should the economy be growing faster?  Of course.  Will it?  Yes.  If I knew when, I’d be blogging from a much nicer place than my current locale!  Keep a positive attitude, make decisions based on facts, not rhetoric, and good things will happen.

 

 

 

It’s OK to be Wrong (Sometimes)

April 26th, 2016

Our fourth grade son had to do a book report on a famous person.  Imagine my delight when he said he wanted to do his report on business man Elon Musk.  Maybe, just maybe, the capitalistic bent my wife and I indoctrinate him with is working! From a distance, I’ve admired Musk since his PayPal days.  I love the private sector “space race” occurring right now, in which SpaceX is participating in.  Tesla is an incredible product.  He has a unique ability to identify opportunities and see a future state like few executives today.

Part of the report required assembling quotations from the famous person.  The first quotation he picked from Elon Musk was, “Failure is an option here.  If things are not failing, you are not innovating enough.”  Picked by a non-jaded ten year old.  Wow.  (Fortunately, he hasn’t used this line to explain a poor grade, at least yet.)  We need to be OK with failing.

I define innovation in a broad sense.  To me, it’s trying something new or different.  That requires taking a risk.  We discourage risk taking in a world in which we seek instantaneous gratification and do not accept mistakes.  If we discourage risk taking, we discourage attempts to make things better.  Not everything we do works.  If you think everything is perfect, you have a serious case of denial or aren’t doing enough.  I tell our team at I.D. Images all the time that I get things wrong. As the head of the business, the biggest “wrongs” should be authored by me.  Of course, the flipside is true – the biggest wins should come from decisions I am involved in as well.  I can assure you some of my decisions haven’t worked out so well.  Fortunately, we’re still alive and kicking as a business, so some good decisions have counteracted the bad.  That’s what I mean by sometimes – if you are making more bad decisions than good decisions, there’s a problem.  We still have to keep score and we are still measured by the results we produce.

Take Elon Musk’s advice.  Take a risk.  Challenge the status quo.  And if it doesn’t work, channel your inner ten year old self.  It’s ok to be wrong (sometimes)!

Tax Day Has Come and Gone.  I’m Still Waiting for a Thank You.

April 19th, 2016

Every year, I diligently send out tax forms to multiple places.  We added a few this year, including the great state of Tennessee.  Our business or I personally now file taxes in more jurisdictions than I can count on my fingers and toes.  In most normal business relationships, a provider of a good or service often thanks the person who purchases said good or service.  After all these years and all these tax returns, I’ve yet to receive a thank you from a government entity for my purchases.  If it weren’t for taxpayers, none of these entities that levy taxes would exist.

I am not an anti-tax nut job.  I couldn’t do what I do and live the great life I have without some type of government.  Do I think I pay more than my “fair share” of taxes?  Yes.  Of course , there are many people who think I should be paying more, including a socialist running for president.  That’s a discussion for another day.  Fairness is in the eye of the beholder; there is no tax system that is “fair” to everyone.  More importantly, I feel used, abused, and ridiculed by our government officials.  Over the last several years, it has become increasingly acceptable for government officials to stir up class warfare and talk about how the “rich” don’t pay their fair share of taxes.  According to a recent study, over 45% of American households pay zero federal income taxes.  ( http://dailycaller.com/2015/10/07/in-2015-45-percent-of-americans-will-pay-no-federal-income-taxes/)  These 45% benefit from the military, infrastructure, and rule of law our government provides, just as I do.  Is it “fair” that they pay no federal income taxes?  (Before someone attacks that question with the payroll tax argument, I will reiterate I am talking about income taxes only, no other taxes.  There are a plethora of taxes we all pay.)  I don’t have the answer to a fair tax system, but I do know one thing: the government could levy a 100% tax on the group our current administration has labeled “rich” and still not fund its obligations.  The simple math illustrates everyone’s taxes need to go up and/or government spending needs to be cut dramatically in order for the good ol’ US of A to meet its financial obligations.  No wonder no sane person wants to be president.

As we learned in kindergarten, a simple “thank you” solves a lot of problems.  All of the taxing entities know how to find me to get me to pay.  Apparently they skipped kindergarten and don’t know how to acknowledge a paying customer.  My guess is my thank you for writing this will be an IRS audit!

 

Where Are Your Blind Spots?  What Are You Doing About Them?

April 12th, 2016

I was on a highway the other day and preparing to pass a slow moving car.  As I started to accelerate and move into the left lane, my car alerted me that a car was in my blind spot.  It did so before I even turned my head for a quick glance over my left shoulder.  I never had to take my eyes off the knucklehead in front of me who, for some unknown reason, decided to get in the left lane.  I was able to slow down and avoid rear ending him.  The car in the left lane had to swerve into the berm to avoid him.  Fortunately, no accident occurred.   I’ll never get another car without blind spot warning.

This seemingly meaningless incident got me thinking.  Why do certain drivers think it is their civic duty to slow down traffic?  If you want to go slow, stay out of the fast lane!  Let people pass you.  More importantly, it got me thinking about the concept of blind spots.  Technology has helped drivers identify blind spots and avoid accidents.  We’ve all got blind spots in our lives, things we don’t see that can have a dramatic impact on personal or professional success.  As my wife will gladly tell you, I am perfect and have no personal flaws.  More seriously, she’s pretty good at identifying blind spots in how I think and I am grateful for that (usually after the fact, not when she’s telling me).

On a professional level, it seems the higher up the ladder you get, the more opportunities for blind spots you have.  “The Emperor’s New Clothes” is a famous story for a reason.  Quite often, the path of least resistance involves employees telling senior management what they think senior management wants to hear.  Customers usually don’t tell us they’re going somewhere else.  It takes effort to figure out what we’re missing.  We get into patterns of talking with the same people.  Check your browser history.  If you’re anything like me, you regularly go to the same websites for information.  (I often do it in the same order too.)

The first step in dealing with blind spots is to figure out how you are creating them.  Log your activity for a week.  Do you talk with the same people internally?  Do you talk with the same people externally?  Make it a point to mix up whose perspectives you get.  Make it a point to read something that makes you uncomfortable.  Doing so will help you avoid that fast moving car (competitor/technology/etc.) that can ruin your day.

Lost Sales: All About Price? Hmm…

April 5th, 2016

Let’s spend a moment in the land of make believe.  Imagine this conversation:

Sales Manager: “What happened with the potential business with XYZ?”

Sales Person:  “They decided to go with a competitor.  I didn’t prove to them our company and me could provide them enough value versus what our competitor said he could provide.  I need to get better.”

Meanwhile, back on planet earth, here’s the real conversation:

Sales Manager: “What happened with the potential business with XYZ?”

Sales Person: “We got beat by a competitor.  Our prices are always high.  What are you going to do about that?  I need to sell more so I can pay for (a new car, my beach house, my kids’ college, insert want here).  We’re just not competitive and it’s not my fault.” (This situation never happens at I.D. Images!  In all seriousness, we’ve got a great sales team who uses price only occasionally as a reason for lost business.  They know better!)

Yes, we all deal with price competition and it’s not going away.  We’ve allowed price to become the canned answer to every piece of business we don’t win.  Sure, it happens but probably not as much as our sales people lead us to believe.  It’s easy for a customer/prospect to say price is the reason they went somewhere else and it’s even easier for a sales person to not follow up and blame price for not winning the order.  It’s even easier for a sales manager/owner to accept price as the reason for lost business.  Who likes confrontation?  A wise mentor of mine would tell me constantly, “In management, you get what you accept.”  If we accept price as the catch-all for lost business, that’s what we’ll be told.

We really become what we believe.  If our sales team thinks we’re not competitive, we become not competitive.  We start to play the price game.  Remember, you can only play the price game if you know you are the cost leader.  We all like to think we’re the low cost producers.  There’s only one.  It’s probably not you.  As I wrote a few weeks ago, if you can’t sell value, you’ll be automated.  If you’re losing business truly because of price, your company has no choice but to cut costs.  (Side note: watch what happens in California with their new minimum wage law and required family leave requirements.  The cost of labor went up.  Therefore, the cost of automation went down.  This is what happens when politics are controlled by lawyers.  Many lawyers have told me they went to law school because they hated math.  The talking points of a higher minimum wage sound great.  The math is a problem.)

This blog was inspired by my friends from Butler Street.  You can read their words of wisdom here:  http://www.butlerstreetllc.com/#!Secrets-your-Sales-Reps-are-Hiding-that-are-Killing-your-Business/c21xo/56f57f6f0cf213d90db5bdf6

Mastery Takes Time

March 30th, 2016

Early in my career, I was an Excel wizard.  Macros, formulas, I could do it all.  Over time, my skills have eroded.  (Our youthful IT department says I’m getting old.)  Last week, I was working on a spreadsheet.  I did something and got the dreaded line pointing both ways.  I had created a circular reference.  I hit undo as much as it would allow me to.  I got rid of the circular reference but somehow got the #REF to appear in half my cells.  In a panic, I accidentally hit Control S, saving the file.  My mistake was now permanent.  An Excel veteran made a rookie mistake.  Fortunately, most of my spreadsheets these days consist of little more than basic addition and subtraction with the occasional “IF” formula.  It took a few hours but I was able to recreate what I ruined.

As I calmed down and realized the sun would still rise tomorrow, I remembered how much time it takes to master something.  I think I spent the first few years of my professional life in finance learning how to use and manipulate spreadsheets.  I could even use Lotus 123 back in the day.  It took time to develop my skills.  My bosses understood that and gave me tools and the time to master the skills I needed to be productive.  Time is a precious commodity.  We want our employees to be productive from day 1.  Think back in time.  Were you really productive at your first job during the first few months?  Do you give your team the time and tools to master new skills?

Just as it takes time to master a skill, it takes time to develop trust in a relationship.  A customer won’t just hand over business over night.  As I’ve harped about several times in my writings, having your marketing department send a few emails isn’t going to cut it.  Pick up the phone and call your customers.  Even better, go visit them.

In our instant gratification, always on world, it is important to remember that developing skills and developing relationships takes time and effort.  Give people time to develop their skills.  Invest your time in your customers.  Both activities will pay dividends in the long run.