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| Last night’s post was an accidental re-post of our November 5th newsletter, “Overnight” version 2.0 under the wrong title. Here is the sequel, expanding on the topic of Good Decisions.
Good DecisionsMy most recent newsletter, “Overnight” version 2.0 (about becoming and overnight financial success) was one of the most read and shared of my recent publications. If you haven’t read it, read it now. The feedback from “Overnight” tells me to expand on a related topic of making good business, personal, and financial decisions. The plan outlined in this newsletter has been used by my business clients and modified and used by families. The initial purpose is to execute significant and rapid debt reduction. The plan works! I have walked through it with my clients thousands of times. The planning process that I use includes (in reverse order) four steps:
I call this plan the Automatic and Systematic Planning Process. I think I developed this planning method, but frankly, I’ve used it for so many years that I do not remember the early days of how this planning process evolved. There is so much common sense in the process that it seems disrespectful to claim creation rights to the Automatic and Systematic Planning Process. Automatic When appropriate, use automatic payments, such as recurring bank drafts, automatic bill payments, and anything else that can be automated. Make it automatic. For example, the technology exists to make the time clock obsolete. Likewise for auto mileage logs. In the construction trades, tracking employees and jobs can be, to a large degree, automated. Automatic operations significantly reduce the potential for human error or interference with the plan. Automatic processes minimize the need to make decisions. Make decisions but make fewer of them. There is a famous story about a meeting between President Bush and President Elect Obama in which President Bush explained this process of ‘automatic decision making’ to then President Elect Obama. President Bush told Mr. Obama that he only owned two suits – a gray suit and a blue suit – of which he had nine each. On day one, Barbara laid out the gray. The next day, she laid out the blue. He told Mr. Obama, ‘Barbara even lays out my shirt and tie. I never have to think about what I’m going to wear. I save my decision making for bigger issues. Your job, as President, is to make decisions.’ If you look at photos and videos of President Obama, he always wore a dark gray or a dark blue suit on alternating days as did President Bush. Automatic processes have other advantages The larger economy understands automatic processes Systematic Another example is the Roth IRA. I particularly like Roth IRA accounts when they are available. A Roth IRA account is a “system”. You fund a Roth IRA, and the Roth IRA invests the funds in a planned and systematic program. The Roth IRA can be funded in an automatic or un-automatic manner. For example, you can write an annual check for up to $6,000 ($7,000 if you’re age 50 or older), deposit that amount into a Roth IRA account and let the Roth IRA system take over. A far better alternative is to have an automatic monthly bank draft in the amount of $500 deposited into a Roth IRA account. A Roth IRA is more effective if it is automatically funded. Business systems always work better with an automated front-end. You can invent your own systems Automatic and Systematic: An Example
Deliberate Deliberate behavior and deliberate decisions will put you in charge of your finances! Deliberate is a public word. In business or family decision making, deliberate requires consultation and discussion within your business and, possibly, with outside counselors such as your CPA. The most productive of these discussions are the three-to-five-person discussion clusters that form around a business issue. These ad hoc, informal meetings most often accomplish the real management work. The formal written business flow chart and the informal decision-making structure are always very different! Once a decision is reached, the automatic-systematic structure to support the decision is designed and installed. The deliberate behavior drives the creation of the automatic-systematic support structure. The automatic-systematic support structure is easily modified as it evolves to support the deliberate decision-making. Premeditated Why does Widgets Inc. exist? What is its long-term mission? The premeditation determines how to best accomplish that mission, your mission. The mission may not change. How to best accomplish that mission will change. What is your mission? The mission of our CPA firm is two-fold and well understood. Many of you have heard me explain our mission in plain English.
Every client tax return, audit, consulting engagement is, to some degree, focused on our primary issue: the financial success of our clients. Our second goal is to offer a quality lifestyle for our employees and staff. The CPA industry – primarily through overwork – has a very bad reputation of destroying its employees and staff, particularly its young staff. Overwork is not the only weapon the CPA industry uses to undermine a healthy work environment. These are our goals. This is the DNA of our CPA Firm. What is your goal? You must answer that question. The answer to that question will color your deliberations and how you establish your automatic systems. Hint: making enough money to take care of my family is, by itself, not strong enough. You need to have more substance to your goals. Conclusion
Sincerely, Steve Richardson, CPA
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| Visit Our Website: www.srcocpa.com |
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Steve Richardson & Company, PC |
Monthly Archives: November 2021
Good Decisions
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Good DecisionsI rarely scrap an entire newsletter and start over. This is the re-do. The newsletter in my trashcan was pretty good, but it focused too much on one client that experienced a one-hundred-fold increase in revenues from 2019 to 2021 (with no end in sight). That’s exciting. It makes for a fun story. The educational value of such a newsletter is, however, limited. I have a dozen or more clients that have enjoyed remarkable growth since 2019: consistent and sustainable growth rates between 10- and 100-times revenues and profits. This, instead, is a story we can all learn from! As diverse as these clients are as people and in their businesses, they have a lot in common. Overnight Success! In every case, success was painfully built over many years of hard work. Many smaller successes and some failures always paved the way to the larger, ultimate success. Success is built on a foundation Many would say that this is ‘unfair’. I disagree. I worked hard to give my children every competitive advantage possible. That is part of parenting. We want our children to be more successful than we are personally, spiritually, and financially. Building the foundations of success is a two-step process; personal foundations and a wise plan are crucial. First, build your personal foundations. It can be done. It’s not easy for anyone. For some, building personal success foundations can seem an impossible goal. Some essentials of your personal success foundations are:
Education Ethics It has been my experience that personal ethics can be learned and enhanced at any age. The true value of basic ethical training is not always apparent until after a painful experience. But ethics can be learned Even the best of us learn from our lapses in judgement and moments of just-plain-dumb. Yes, you are hearing the voice of personal experience. Without these core-level ethics, the ethics of your profession or career are meaningless. You can memorize them, cite them, and recite them, but they will not accomplish any intended purpose. Here’s the caveat. We all know of “successful” people who apparently have no ethics. They may have a lot of money, but I would not call them successful. I have counseled with more than a few as they are in despair. A few were even suicidal. I would not trade my life for theirs with a 20-billion-dollars bonus thrown in to boot. You understand how much ethics matters when you deal with these lost souls. What does it profit a man if he gains the whole world and loses…
his wife, his children, his health, his moral compass, and his soul?
Ethics matter.
Common sense
Common sense is important. This list is too short, but it’s a good list.
Managing successes and failures
I’m kind of a geek, so let me geek-out a bit here. In math, there is a “Bernoulli Distribution” that has only two values: the winner and the loser. The winner is awarded a plus-one; the loser is assigned a minus-one. When graphed, it shows a rocket-steep curve concentrating the multi-winners in the upper 2% of the population-curve (wealth?) and the rest of the population on a sharp sliding board into Loserville with the other 98%.
Google the “Bernoulli Distribution” curve and look at a graph. It’s not political. It’s math. But the “Bernoulli Distribution” is just a math trick. It doesn’t mean anything because it fails to consider human determination. Like Hobbits, human beings are “Tricksy” creatures. We can and should beat the “Bernoulli Distribution,” especially in economic matters. Success breeds successes Ask questions. How did my education help me succeed in this situation? How should my education be enhanced? What did I learn? What role did common sense play in my success? Did common sense help me manage my work or schedule, or balance my family life? What part of this success can I capitalize upon and use to build my next success story? By far, the most under-utilized tool in management analysis – especially management self-analysis – is the use of questions. Questions are far more powerful than statements. Second, it is essential to have a plan. Most people (and I include me in “most people”) are incapable of forming a business plan with multi-million-dollar profit potential. That’s ok. Not everyone needs to be a gazillionaire! Successful entrepreneurs developed business plans. And, often, they fail. They revisit and revise the business plan; again, and again. And it failed again – and again. Managing failure is essential to success. They will go over the new, improved, and revised business plan (often with me) and try again. Successful people always address their failures. Each plan is better. They have a process. Their process works. It is a process of revise, adapt, overcome, plan, and execute, and plan again; and, if necessary, repeat the process. Static plans do not survive in a business environment.
Failure must become a learning tool and mistakes an asset (don’t accept failure as absolute). If not, you are doomed to repeat the failure cycle, or worse, you are frozen into inaction.
Success is built on a process I can help I also believe every family, especially families of limited financial means, needs a family financial plan. I can show you how to plan for you and your family. To enjoy maximum success, your small business needs a plan unique to you, your family, your customers, and your business. It’s not hard to do. There are two hard parts when planning for a family or a small business:
This newsletter is far too short. Many excellent textbooks have been written on the topic of personal and business financial success. Even here, be choosy. I have read some bad books on management and economic strategy. If your reading is broad enough, you will have the ability to sort the two. The one book I often recommend is The 7 Habits of Highly Effective People by Stephen Covey.
Counselors Rely on your CPA as a counselor Sincerely, Steve Richardson, CPA |
| Visit Our Website: www.srcocpa.com |
|
Steve Richardson & Company, PC |
Overnight
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“Overnight” version 2.0I rarely scrap an entire newsletter and start over. This is the re-do. The newsletter in my trashcan was pretty good, but it focused too much on one client that experienced a one-hundred-fold increase in revenues from 2019 to 2021 (with no end in sight). That’s exciting. It makes for a fun story. The educational value of such a newsletter is, however, limited. I have a dozen or more clients that have enjoyed remarkable growth since 2019: consistent and sustainable growth rates between 10- and 100-times revenues and profits. This, instead, is a story we can all learn from! As diverse as these clients are as people and in their businesses, they have a lot in common. Overnight Success! In every case, success was painfully built over many years of hard work. Many smaller successes and some failures always paved the way to the larger, ultimate success. Success is built on a foundation Many would say that this is ‘unfair’. I disagree. I worked hard to give my children every competitive advantage possible. That is part of parenting. We want our children to be more successful than we are personally, spiritually, and financially. Building the foundations of success is a two-step process; personal foundations and a wise plan are crucial. First, build your personal foundations. Even if you do not have anything approaching the Bill Gates’ advantages or even the more modest advantages that I gave to my children, you should deliberately build your own success foundations. It can be done. It’s not easy for anyone. For some, building personal success foundations can seem an impossible goal. Some essentials of your personal success foundations are:
Education Ethics It has been my experience that personal ethics can be learned and enhanced at any age. The true value of basic ethical training is not always apparent until after a painful experience. But ethics can be learned Even in the best of us, we always learn from our lapses in judgement and those moments of just-plain-dumb. Yes, you are hearing the voice of personal experience. Without these core-level ethics, the ethics of your profession or career are meaningless. You can memorize them, cite them, and recite them, but they will not accomplish any intended purpose. Here’s the caveat. We all know of “successful” people who apparently have no ethics. They may have a lot of money, but I would not call them successful. I have counseled with more than a few as they are in despair. A few were even suicidal. I would not trade my life for theirs with a 20-billion-dollars bonus thrown in to boot. You understand how much ethics matters when you deal with these lost souls. What does it profit a man if he gains the whole world and loses…
his wife, his children, his health, his moral compass, and his soul?
Ethics matter.
Common sense
Common sense is important. This list is too short, but it’s a good list.
Manage successes and failures
I’m kind of a geek, so let me geek-out a bit here. In math, there is a “Bernoulli Distribution” that has only two values: the winner and the loser. The winner is awarded a plus-one; the loser is assigned a minus-one. When graphed, it shows a rocket-steep curve concentrating the multi-winners in the upper 2% of the population-curve (wealth?) and the rest of the population on a sharp sliding board into Loserville with the other 98%.
Google the “Bernoulli Distribution” curve and look at a graph. It’s not political. It’s math. It’s just a trick of math Success breeds successes Ask questions. How did my education help me succeed in this situation? How should my education be enhanced? What did I learn? What role did common sense play in my success? Did common sense help me manage my work or schedule, or balance my family life? What part of this success can I capitalize upon and use to build my next success story? By far the most under-utilized tool in management analysis, especially management self-analysis, is the use of questions. Questions are far more powerful than statements. Successful people know how to plan Most people (and I include me in ‘most people’) are incapable of forming a business plan with multi-million-dollar profit potential. That’s ok. Not everyone needs to be a gazillionaire! Successful entrepreneurs developed business plans. And, often, they fail. They revisit and revise the business plan; again, and again. And it failed again – and again. Managing failure is essential to success. They will go over the new, improved, and revised business plan, often with me, and try again. Successful people always address their failures. Each plan is better. They have a process. Their process works. It was a process of revise, adapt, overcome, plan, and execute, and plan again; and, if necessary, repeat the process. Static plans do not survive in a business environment.
Failure must become a learning tool and mistakes an asset (don’t accept failure as absolute). If not, you are doomed to repeat the failure cycle, or worse, you are frozen into inaction.
Success is built on a process I can help I believe every family, especially families of limited financial means, need a family financial plan. I can show you how to plan for you and your family. To enjoy maximum success, your small business needs a plan unique to you, your family, your customers, and your business. It’s not hard to do. There are two hard parts when planning for a family or a small business:
This newsletter is far too short. Many excellent textbooks have been written on the topic of personal and business financial success. Even here, be choosy. I have read some bad books on management and economic strategy. If your reading is broad enough, you will have the ability to sort the two. The one book I often recommend is ‘The 7 Habits of Highly Effective People’ by Stephen Covey.
Counselors Rely on your CPA as a counselor Sincerely, Steve Richardson, CPA |
| Visit Our Website: www.srcocpa.com |
|
Steve Richardson & Company, PC |