Monthly Archive for December, 2016

In defense of the oft-misunderstood scrooge

This is Jim’s traditional Christmas column.

Some say I’m a scrooge. They might be right.

Here are three exhibits (some say excuses) in my defense of this indictment:

1. The early part of my career was spent in retail. Retailers know what that does to your holiday spirit. There’s a syndrome for everything else; why not one for retail survivors? Let’s call it PTHSS: Post-Traumatic Holiday Shock Syndrome.

2.  Since I don’t wait until the holidays to give someone a gift, I just don’t get all worked up about holiday giving. Not that the ladies mind getting stuff all year (let’s not lose our heads!).  It’s just that they want me to be giddy about giving at Christmas-time. Giddy? Bah! Humbug!

3. As an avowed and devout contrarian it would be antithetical for me to feel obligated to do what everyone else is doing. And if there is one thing that has become part and parcel of the holiday season, it is obligation. For example:

a) If someone gives my significant other and me a last-minute Christmas gift, “Other” feels obligated to reciprocate. I don’t. I’ll do something nice for them in March.

b) After the Christmas cards have been sent, if an incoming card is received from someone not on your list, do you rush to get a card out to them? Not me. Maybe next year. In “The World, According To Blasingame,” giving should be voluntary, not obligatory. In fact, to a scrooge, not reciprocating is endearing.

It’s not that I don’t like the holidays. As a Christian, this is an important time in my faith life. As a capitalist, the importance of holiday spending to our economy is not lost on me. But I just don’t care for what we self-absorbed humans hath wrought on the holiday season. And if that makes me a scrooge, guilty as charged.

So on behalf my misunderstood brethren (this isn’t politically incorrect – apparently, there are no female scrooges), let me clear up a few things:

1. Scrooges can be lovable, huggable, and yes, even cute.

2. It’s a myth that all scrooges are skinflints; some are actually quite generous. But their generosity isn’t obsessive, isn’t tied to a calendar, and doesn’t come with giggles.

3.  Scrooges can be quite caring and compassionate, without saying, “Bless their hearts” over and over.

In order to influence an acquittal, I offer two challenges into evidence; one for me and one for us:

I challenge myself to be more receptive to, and tolerant of, the silly parts of the holiday season, and those who perpetuate the silliness. But please, be patient; the mill of a scrooge grinds slowly.

I challenge us to be more generous, loving, thankful, and spiritual all year long – not just during the holidays. Imagine what would happen if we all practiced peace on earth, goodwill toward everyone, every day. It might sound something like this:

“Let’s help those people right now. Yes! In the middle of July!”

Write this on a rock … Peace to you and yours. Shalom.  Salaam. Que la paz este con ustedes.

Recapping my 2016 crystal ball predictions

Here are my 2016 predictions, what happened and my score. My prior, 15-year record is 73% accuracy.
1. Prediction: Wall Street’s digital greed, Washington’s anti-business policies and collusion between the two will continue a moribund economy for small businesses.
Actual: The 44-year old NFIB Small Business Index reported flat Main Street sentiment for the 8th straight year - Plus 1, unfortunately.
2. Prediction: With a declining global economy and exhausted financial manipulation options, capital markets will struggle in 2016.
Actual: What was I thinking, applying economic fundamentals and reality in my analysis? All stock indexes are in record territory for the year - Minus 1.
3. Prediction: Mature Main Street small businesses will fare well in 2016.
Actual: Small businesses surviving the Great Recession continue to report deleveraging while finding a way to operate profitably in a 2% GDP economy. I call this phenomenon “Invisible Hand Operating”: the balance sheet gets stronger whether the owner intends it or not - Plus 1.
4. Prediction: Economic and regulatory pressures, plus demographic trends, will perpetuate an unprecedented decline in small business numbers.
Actual: According to a Gallup report, for the first time in 35 years, American business deaths outnumber births - alas, Plus 1.
5. Prediction: New crowdfunding rules for direct investment in small businesses will not become a funding silver bullet for this sector.
Actual: New Securities and Exchange Commission rules make it easier for direct investment in small businesses, but won’t change inherent impediments to direct investment for most small firms, like unsophisticated financial records and misaligned exit expectations - Plus 1.
6. Prediction: Unlike its investor equity sibling, crowdfunding lending (aka peer-to-peer) will proliferate with small businesses.
Actual: Morgan Stanley reported recently 2016 P2P lending growing by more than half, from $23B to $36B - Plus 1.
7. Prediction: Global headwinds, the specter of terrorism, seven years of anti-business policies, and presidential campaign drama will contribute to a flat 2016 economy, with annual GDP stuck below 2.5%.
Actual: U.S. economy remained in the now 8-year perpetual recovery mode with GDP growth under 2% - Plus 1, unfortunately. For the third year in a row, the real economy doesn’t reconcile with the record-breaking stock market (see #2). What’s wrong with this picture?
8. Prediction: The perfect storm of a slowing global economy, a crude oil glut, newly approved exports from U.S. producers and OPEC’s loss of pricing power, will keep crude averaging below $50 per barrel.
Actual: Crude averaged approx. $42 bbl. in 2016 - Plus 1.
9. Prediction: Slow global growth and deflationary threats will prevent the Fed from making more than one rate increase in 2016.
Actual: All my economist friends disagreed with this prediction, and the same one I made in 2015. They were wrong and I was right both years - Plus 1.
10. Prediction: Putin and Iran will become more desperate and dangerous.
Actual: Putin continues to flex his Soviet-like designs in Eastern Europe and the Middle East, meanwhile Iran thumbs its nose at the Obama Administration after signing the nuclear deal - Plus 1.
11. Prediction: In an unprecedented response to ISIS, moderate Muslims around the globe will denounce intolerance and violence in the name of their religion.
Actual: Alas, my hope springs eternal, but we’re still waiting on the Muslim majority to take back their religion - Minus 1.
12. Prediction: You’ll hear more about blockchains and distributed-ledger technology applications, disconnected from Bitcoin.
Actual: Global financial institutions - as much for defense as offense - announced adding blockchain technology to their business and financial security plans, plus the U.S. government will begin introducing it in 2017 - Plus 1.
13. Prediction: A mere shadow of its former self, Obamacare will continue to collapse under its own structural defects, causing the President’s namesake policy to go from legacy icon to caricature.
Actual: Clearly the perfect storm timing of more premium increases for the not-so-Affordable Care Act just prior to Election Day contributed to the loss by the candidate who defended Obamacare, and the win for the one who promised to repeal it - Plus 1.
14. Prediction: In his last year, Obama will increase anti-business executive actions.
Actual: According to the Competitive Enterprise Institute, the 2016 Federal Register of new regulations and rules will exceed the previous record, also under the Obama Administration. The poster child for this behavior is the DOL’s plan to double the overtime exemption amount, which was so excessive it was struck down by an Obama-appointed federal judge - Plus 1.
15. Prediction: Obama will go after the 2nd Amendment in his final year.
Actual: The President was no more vociferous about this in 2016 than any other year - Minus 1.
16. Prediction: Obama’s Justice Department will not indict Hillary Clinton in 2016, but the critical mass of her baggage will cost her votes.
Actual: The proof was in the pudding. I should take two on this one - Plus 1.
17. Prediction: The GOP primary process will not produce an apparent nominee going into their convention, unless it’s Trump or Cruz.
Actual: Trump was the nominee - Plus 1.
18. Prediction: Republicans will not win the White House unless the ticket includes a Hispanic and at least one person from Ohio and/or Florida. Look for Trump/Rubio or Cruz/Kasich.
Actual: This looks like a push, since I included Trump, but it’s more like one-fourth accurate, since I missed the FL/OH connection, soooo - Minus 1.
19. Prediction: The social conservatism of Republicans and the socialistic economics of Democrats will create electoral challenges for both parties in 2016.
Actual: Let me say that another way: President-elect Donald J. Trump - Plus 1.
20. Prediction: If Trump wins the election, it will be because he’s the only candidate most likely to avoid defending the bankrupt elements of either party.
Actual: Isn’t that exactly how he won?  - Plus 1.
21. Prediction: A liberal member of the Supreme Court will exit in 2016, probably in the first half.
Actual: A member of the court did exit in the first half, so that’s two of three elements. Scalia died in February, but I said “liberal,” so I’m calling this a push.
22. Prediction: With every member of Generation Y, aka Millennials (80+ million), old enough to vote in 2016, the electoral influence by this generation is now at critical mass.
Actual: Young voters didn’t turn out for the Democrat in 2016 as they did in 2012, but turned out about the same for the Republican in both elections. I really expected the Gen Y impact to be more dramatic, sooo - Minus 1.
23. Prediction: More than just a president, the 2016 election results will reveal the future trajectory of America.
Actual: With Real Clear Politics reporting a “Right-track/Wrong-track” number of 57:33, the 30-state, heartland-America electoral majority loss by Clinton, diverse by both state and demographically, repudiated and reversed the eight-year political trajectory under Obama - Plus 1.
24. Prediction: Alabama will become the NCAA Football Division I Champion.
Actual: Alabama 45, Clemson 40 - Plus 1.
Write this on a rock … My 2016 accuracy number is 78%, with my 16-year record at 73%. Notice that ten months before the election, I went 4 for 4 on Trump (without endorsing him). How’d you do? Look for my 2017 predictions in two weeks.

Why strategic alliances are a 21st century imperative

In the 1990s, when I began thinking about how to help entrepreneurs prepare for the 21st century, I condensed the areas requiring a heightened level of importance into three critical disciplines:

1. Leveraging technology in every aspect of your business;

2. Professional networking, as opposed to just meeting new people;

3. Building strategic alliances as a growth strategy.

If by now you haven’t become at least somewhat proficient with the tech stuff, you don’t have much time to adapt, adopt and survive. Better get busy.

And thanks to the work of people like the legendary Ivan Misner, founder of Business Network International (BNI), most of us now subscribe to what I call Misner’s Razor: “It isn’t netplay; it’s network.”

But what about that alliance thing?

Blasingame’s Second Law of Small Business states: It’s redundant to say, “undercapitalized small business.” It’s a natural law that small businesses come to the end of their resources - people, assets, technology, cash and credit - much quicker than do our big business brethren and sistren. So by that definition, we have to do something as primordial as when Og asked Gog to hold the chisel while he carved out his new stone invention that looked a lot like a donut. We have to seek and develop alliances.

Answer these questions:

  • Is your business growth hampered by a lack of people, capital or other assets?
  • Would you like to bid on a request-for-proposal (RFP) that has specifications beyond your company’s ability to perform?
  • Are you reluctant to ask a large customer about their future plans for fear that your organization may not be able to step up to the answer?

If you answer any of these - or variations thereof - in the affirmative, perhaps it’s time to pursue one or more of these three alliance examples, in descending order of formality.

Partnership

A partnership is more formal and typically longer term. Regardless of how it’s structured, in general, all partners have a vested interest in the success of the entire enterprise. Think of two business owners buying a commercial duplex and sharing the space because neither has the cash or credit to swing the deal alone. Most partnerships are best organized with the help of an attorney. But remember, because it’s more formal, probably even legally binding, choose your partners well.

Once, when consulting a mentor about choosing a business partner, he used hyperbole to encourage caution by saying, “A partner is only good for two things: sex and dancing.” But it isn’t hyperbolic to say that alignment of values between the parties is imperative to a successful partnership. This is a natural law: Regardless of how symbiotic the combined contributions may be to the venture, a partnership founded by parties with conflicting values is doomed from the beginning. Choose your partners well.

Subcontractor

By definition, a subcontractor becomes a contractual participant you bring in to help fulfill a larger project for which you are the lead vendor or general contractor. Unlike a partner, a sub expects to get paid for delivery of work or products regardless of how the project turns out.

Subcontractors are a great way to leverage your business without giving up control of the opportunity. But remember that with this step you’ve created a performance chain. And we all know that any chain is only as strong as its weakest link. A weak subcontractor could undermine your performance, harm your brand, and may even take you down.

Like partners, choose your sub-contractors well.

Strategic alliance

This relationship is typically less formal. Let’s say a web designer, a programmer and a search engine optimization expert plug each other in on projects as peers, instead of as subcontractors. After a project is executed and paid for, the participants go their own way until the next symbiotic scenario. The most successful professionals I know claim, nurture and go to market with many and varied strategic alliance relationships. And most were born from networking.

Going forward, I believe we’re going to see more enthusiasm and growth in the marketplace than in the past few years. That should mean more business, which should present more opportunities for alliances.

Before giving up on a project because you don’t have the in-house resources, look around for ways to create alliances that allow you to take advantage of an opportunity.  Start establishing them now - before you need them.

Write this on a rock … If Og the caveman can create an alliance, you can, too.

5 year-end steps to take while you’re closing out this year

Fourteen hundred and forty - the number of minutes in a day.

Since we can make more money, arguably the greatest challenge of any small business owner is balancing the demands of the forces that compete for those minutes.

“What is the best use of my time right now?” is the constant management question on Main Street. And in no other part of the year are we more time-management challenged than in December, when we’re faced with allocating time to two very powerful management imperatives: The tactical focus on closing out the sales year as strongly as possible, while simultaneously taking strategic steps to set the business up for a fast and clean start on January 1.

In his book, Blue Highways, William “Least Heat Moon” Trogden said his Osage Indian grandfather once told him, “Some things don’t have to be remembered, they remember themselves.” It’s a natural law that the year-end sales push doesn’t have to be remembered, it remembers itself. But as we come to the two-minute drill in the last quarter of the marketplace game our business plays all year, committing precious time and energy to preparing for the future requires the discipline to remember it ourselves.

There are many areas to focus on this month to help you start the New Year clean and fast.  Here are five to get you started.

1. Throw stuff away

Even if you’re not a pack rat like me, you’ve accumulated stuff you don’t use anymore.  For example, one of the markers of a 21st century office is the digital graveyard. Unused or broken computers, monitors, etc., may have some value, so call a tech recycler and convert it into cash. If you can’t sell it, give it away or throw it away, because it’s in your way.

2. Empower producers - cut the dead wood

Year-end is also a great time to take stock of employees who’ve demonstrated leadership and engagement. Recognizing the performance of those individuals will motivate them to a fast start in the New Year.

The only thing worse than firing someone is letting an unproductive employee hold your team’s performance hostage for another year. A byproduct of identifying those who perform is it also shines a light on those who don’t. You owe productive people the most effective organization possible, which means you have to let the unproductive pursue their careers elsewhere.

3. Classify customers

Classify customers by gross profit into four groups, from the most profitable As to the least profitable Ds. Worship the As, cater to the Bs, encourage the Cs and teach the Ds about self-service. When the cost of a customer’s expectations encroaches on your profit margin too much, allow them to join your unproductive employees - elsewhere.

4. Purge inventory

As with customers, take a new look at your products and inventory by identifying the most profitable As to the least profitable Ds. Stock all the As, a few of the Bs and maybe a couple of Cs. But never let a D spend one night under your roof unless it’s paid for. Remember, profitable inventory management means just-in-time, not just-in-case. And write off obsolete and damaged inventory. Take the hit now.

5. A/R reality

Take another hit by writing off uncollectable accounts receivables now, so you can start January with a clean list. A/R write-offs are tax deductions this year, and if you wind up collecting them next year, it’s gravy. The only thing more troubling to a banker than uncollected A/R is a customer who doesn’t have the discipline to deliver a clean balance sheet.

Each New Year deserves to have the maximum opportunity to be successful, so don’t saddle it with obsolescence, waste and bad decisions. By taking these steps - and others from your own list - you’ll prove to yourself, your team you’re your banker that you have the discipline to make the critical decisions for which successful managers are known.

Write this on a rock … Have the discipline to set up your New Year for a clean and fast start.




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