Author Archive for Jim Blasingame

Remember America’s militia on Memorial Day

This is Jim’s traditional Memorial Day column.

Reasonable people disagree on the origins of Memorial Day, but most accept that the practice of decorating the graves of Americans who died in military service began in earnest during the Civil War.

On May 5, 1868, General John A. Logan, Commander of the Army of the Republic, made Memorial Day official with General Order No. 11, which stated in part, “… the 30th day of May, 1868, is designated for the purpose of strewing with flowers or otherwise decorating the graves of comrades who died in defense of their country …” And other than Congress making Memorial Day a national holiday on the last Monday in May, America has since honored its fallen heroes from all conflicts pretty much as General Logan ordered.

When America issued its first call to arms before we had a professional army, it went to the militia, which was identified as “all able-bodied men.”  Called “Minutemen” because they could be ready to fight on a minute’s notice, they were primarily shopkeepers, craftsmen, farmers, etc. Today we call them small business owners.

From as far away as Scotland, America’s Minutemen were impressive. Writing about the colonies’ quest for independence in “The Wealth of Nations,” Adam Smith predicted America would prevail thanks to its militia which, “…turns from its primary citizen character into a standing army.”

Early in the 20th century, state militias became the National Guard and the National Defense Act created the Reserves. In every war or conflict since, America has deployed these latter-day Minutemen (and women) alongside regular forces, where they represented a proportional number of casualties.

On this Memorial Day, as we honor all who paid the ultimate price in service to this country, let’s also remember the long tradition of America’s militia, including small business owners and employees, who served courageously on behalf of a grateful nation. It’s hard enough leaving family to march into harm’s way, but the degree of difficulty of that commitment is compounded for volunteers who also disconnect from businesses and full-time careers.

Contemplating the blessing of freedom wherever it may be found, there is one prime truth: Freedom is not free. As beneficiaries of those who paid the ultimate price for our freedom, our only method of repayment—the only way we can ever be worthy of their sacrifice—is to do all we can to maintain the freedom that they paid for and gave to us.

Write this on a rock … God bless those who paid the ultimate price for our freedom, including past and present Minutemen.

11 financial fundamentals every small business CEO must know

Regardless of the size of the business, ultimate responsibility for success lies with the CEO. If you’re a small business owner, that’s you. And the most critical CEO tasks that result in success or failure lie in the knowledge and practice of financial management fundamentals.

Statistics show that over half of small businesses fail within the first four years. Clearly that mortality could be significantly reduced if, before a business opened, the founder/CEO was required to pass a course that teaches business financial fundamentals and how to operate a business with them.

If you could use a little help in this area, allow me to identify some of the key elements that would be part of the curriculum of such a course.

-  CEOs shouldn’t do their own accounting, but successful ones learn how to manage with regular (at least quarterly) financial statements (balance sheet and profit-and-loss) that an internal and/or external accountant produced.

-  Successful CEOs know what their gross profit margin needs to be and what it is.

-  Smart CEOs track monthly sales-to-expense ratios in order to know when to adjust spending.

-  Savvy CEOs monitor inventory levels against projected sales, receivables and cash.

-  Real CEOs know how to calculate Accounts Receivable days and Accounts Payable days, understand the relationship between the two, and the impact of that relationship on cash.

-  Disciplined CEOs develop a capitalization strategy that blends retained earnings with short and long-term capital sources, like bank debt.

-  Capable CEOs identify the critical financial indicators and ratios that are revealed on the balance sheet and its relationship with the profit-and-loss statement.

-  Surviving CEOs believe and prepare for the cruel irony of how sales growth becomes dangerous when not properly funded, indeed, that you can succeed yourself out of business.

-  When a business isn’t profitable, professional CEOs identify the top impediments to profitability and deal with them quickly, decisively, and without emotion.

-  Perennially successful CEOs delegate many things well, but they stay close to the company’s cash picture from tomorrow to the next 12 months.

And finally, arguably the most important financial management CEO discipline:

-  Understand and monitor the relationship between Blasingame’s Three Clocks of Small Business: The Expense Clock, the Sales Clock and the Cash Clock.

If you already own a small business and cold sweat is popping out on your forehead right now that should motivate you to kick your financial education into high gear and become an expert on these fundamentals.

If you haven’t started your business yet, don’t until you can pass this course.

Write this on a rock … The ultimate responsibility for your business’s financial performance belongs to the CEO - that’s you.

To listen to Jim talk more about the 11 financial fundamentals for CEOs, click on one of the links below:

6 financial fundamentals every small business owner must know

5 of the 11 most important small business financial fundamentals

Poll Results: Your small business performance in 2015 and expectations for 2016

The Question:
How did your business do in 2015 and what are you expecting for 2016?

31% - We had a good 2015 and it looks like 2016 will be just as good.
24% - We had a good 2015 but are less optimistic about 2016.
24% - We did not have a good 2015 but are more optimistic about 2016.
21% - We didn’t have a good 2015, and it doesn’t look like 2016 will be better.

Jim’s Comments:
For the seventh year in a row, the yeas and the nays about the economy haven’t changed that much. It’s worth noting that we haven’t seen a double positive response at almost a third in a long time. And when the two 2016 positives are combined, that creates a 55% response, which is stronger than we’ve seen lately.

I’m attributing the slight positive increase to businesses being more financially solid than in the past. As I’ve said many times before, it would be difficult for any business to survive this long in this kind of economic environment without operating in a very parsimonious, and therefore profitable way.

For my part, I’m looking forward to an economic environment where more than 55% of small businesses are optimistic about the new year. How about you?

Thanks for your abiding support of our poll each week. To participate in this week’s poll on gas prices, click here.

POLL RESULTS: New Obamacare compliance is coming for small businesses in 2016. Do you know how it applies to you?

The Question:

New Obamacare compliance is coming for small businesses in 2016. Do you know how it applies to you?

11% - I am prepared to comply with new Obamacare rules.
9% - I am not yet in compliance, but know what to do.
23% - I am not in compliance, and still don’t know what to do.
57% - My business does not have to comply with Obamacare.
Jim’s Comments:
Most small businesses have fewer than 50 employees, which is currently below the criteria for having to comply with Obamacare under the employer mandate. So I’m not surprised to see that our sample responded with 57% in this category.
But I am surprised to see that about a third of our folks still aren’t yet in compliance. The reason is likely that we’ve all seen how many times the law has been unilaterally changed by the Obama administration — more than 30 since 2010 — including moving compliance date deadlines. Why jump through a bunch of hoops if you don’t have to, right?

However, I think Obamacare is where it’s going to be for now, so if you have to be in compliance, either do so or know your exposure for non-compliance. Good luck.

Thanks for your abiding support of our poll each week. Check out our new one below.

Jim Blasingame’s 2016 Crystal Ball Predictions

Here is the 16th edition of my New Year predictions.

· Wall Street’s digital greed, Washington’s anti-business policies and collusion between the two continue to create a moribund Main Street economic environment for small businesses.

· With a declining global economy and having exhausted financial manipulation options since 2008, capital markets will struggle in 2016.

· Main Street small businesses that are mature and established will fare well in 2016.

· Economic and regulatory pressures, plus demographic trends will perpetuate an unprecedented population decline in small businesses.

· New Crowdfunding rules lowering the standards for direct investment in small businesses will not become a funding silver bullet for this sector.

· Unlike its investor equity sibling, Crowdfunding lending will proliferate across the small business sector (especially with Generation Y) at the expense of traditional banks.

· Global headwinds, the specter of terrorism, seven years of anti-business policies from the Obama administration, and the unprecedented drama of presidential politics will all contribute to a flat 2016 economy, with annual GDP stuck below 2.5%.

· 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.

· Slow global growth and deflationary threats will prevent the Fed from making more than one rate increase in 2016, if that.

· Due to the sustained price decline in crude oil, Putin and Iran will become more desperate and dangerous, using nationalism to distract citizens from their declining economies.

·  In an unprecedented response to ISIS, moderate Muslims around the globe will denounce intolerance and violence in the name of their religion in more actively claiming their role as the 21st century stewards of Islam.

· You will hear more about blockchains and distributed-ledger technology applications, disconnected from Bitcoin. This is very complicated stuff, but it’s the future of currency and capital management, so just start learning.

·  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.

·  Already referred to by pundits as “the lawless president,” in his last year Obama will increase his assault on the Constitution with more unprecedented, and now desperate, executive actions.

· Obama’s newest Constitutional assault will be on the 2nd Amendment. Buckle up.

· Obama’s Justice Department will not indict Hillary Clinton in 2016, but as evidence of her lying achieves critical mass it will cost HRC Millennial votes, who value honesty over political ideology.

· The GOP primary process will not produce an apparent nominee going into their convention, unless it’s Trump or Cruz.

· 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.

· The social conservatism of Republicans and the socialistic economics of Democrats will create electoral challenges for both parties in 2016.

· 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.

·  A liberal member of the Supreme Court will exit in 2016, probably in the first half.

· With every member of Generation Y, aka Millennials (80+ million born 1978-1998), old enough to vote in 2016, the electoral influence by this generation is now at critical mass.

· More than just a president, the 2016 election results will reveal the future trajectory of liberty and opportunity in America.

· Alabama will become the NCAA Football Division I Champion.

Write this on a rock …My 15-year record is almost 73% accuracy. Politics may put that average in jeopardy this year.

Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.

Making fear a motivator, not an immobilizer

Anyone who has contemplated forsaking the perceived, if not real, security of employment to start a small business has come face-to-face with the fear of failure.

Indeed, countless would-be entrepreneurs have discontinued their self-employment pursuits for fear of losing too much—the risk being just too great.

But if you pushed through these concerns and actually became a business owner, you know that this isn’t the last time you’ll experience fear. And time will teach you that fear can actually be a good thing.

Not paralyzing fear — like when you’re ignorant of how to prevent or recover from danger. But rather the kind of fear that motivates you to take the steps to be aware, knowledgeable, capable, prepared, decisive and effective. You know – so you can seek excellence.

Remember these two things about fear: It’s a shape-shifter capable of appearing in many forms. And successful entrepreneurs learn how to recognize and deal with fear it in all of its shapes. Let’s take a look at some of the manifestations of fear, followed by what each one might sound like.

First on the list is the mother of all fear — unremitting, cold sweat, cotton mouth fear in its default entrepreneurial shape: “What if I can’t cut it as an owner?” Meet the others:

Terror: “What if I’m buying the wrong business?”

Fright: “What if I order all of this stuff and no one buys it?”

Panic: “What if my pricing for this bid is too high—or worse—too low?”

Dread: “I hate it when I have to fire an employee.”

Trepidation:  “I need a business loan; what if the bank turns me down?”

Anxiety: “How will I ever be able to compete with the Big Box competitors?”

Shock: “What do you mean our best customer signed a contract with a competitor?”

The best way to minimize—if not eliminate—these fears is through performance. But performance only happens when you use the fear-fighting tools: awareness, knowledge, experience, training, planning, preparedness, decisiveness and execution.

Armed with the fear-fighting tools, fear can become manageable and a productive stimulus that can actually create opportunity. But if you don’t use these tools, the fear you feel is probably well founded and giving you good advice.

The only way to make sure your fear is a motivator and not an immobilizer is through performance. And small business performance only happens when you’re armed with the fear-fighting tools.

Write this on a rock —

Fear-fighting tools help you replace fear with its archenemies: confidence and excellence.

Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.

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