Budgeting Archives | Page 8 of 8

Strategic Planning with Social Media: If You Are Looking In the Rear-view Mirror, You are Backing Up.

Businesses have to look forward, or die. Too many businesses(including my profession, CPAs) look at historical results and trends to predict the future. The problem with this strategic plan is the business owners do not see what is ahead. In many cases, the strategic planners use old techniques when strategizing for the future. For example, many business owners (and artists) say, “I’m moving into social networking.”

I ask them what they mean by that. They reply, “The strategy of doing what everyone else has been doing for the last five years.”

Big deal.

So, before designing your new company, before resurrecting your old company, before January 1, read this article RWW article which explains where some people think social networking is going in 2011. Then, pick a couple of points and do some future research on these points. If the predictions seem plausible, adjust your strategic plan to be an industry leader, not follower. Very rarely does a “copy cat” strategic plan carve new industries and new ways of doing business.

Let’s take one example from the article: “‘It’s not just about technology, it’s about a fundamental shift into a new age of leadership with new type of executives who behave and operate in new ways,’ said Marc Benioff, Salesforce.com chairman and CEO. ‘Expect to see a rise in companies who, by end of year, will be recognized for socially-informed innovation, customer focus and work environment, much like Zappos and Amazon were a few years back.'”

This comment from the article is not talking about just another strategic plan, no he speaker is talking about a new type of leadership. Step into the shoes of your customers, fans, clients, etc., and see how a new strategic plan involving social networking can bridge the communication gap between you and them. Your strategic plan must first focus on them, not on you, and definitely not in the rear-view mirror. We can learn from the past, but we shouldn’t repeat it in a strategic plan if the landscape is changing.

The New Tax Bill, Don’t Squander the Opportunity

By now, you must have heard that the new tax bill passed both houses and is sure to be signed by the President. But what opportunities does the new tax bill have for you? Well, from a tax standpoint it depends. The impact of the tax bill is different for individuals depending on their tax bracket. For example, if you have children and are not in the top tax bracket, you may still qualify under the new tax bill for your $1,000 child tax credit. Or, if invest a lot in stocks, the new tax bill will allow you to still get your qualified dividends taxed a favorable 15% tax rate. But the main impact of the new tax bill that will affect all taxpayers is the reduction in social security withholdings. I don’t recall Congress passing a tax bill like this in the 30 plus years I have been preparing tax returns.

However, since the tax bill is throwing social security gift to you, you have an opportunity for some cash flow or retirement planning. You can start 2011 by paying down the credit cards that have accumulated over this economic downturn with your extra cash. Likewise, you can increase your retirement contributions by your savings. The trick in cash flow is to live within your means, and if you are not careful, you may squander your tax bill savings. Opportunities like this do not come along often, so use it to your advantage by planning.

Discuss your situation with your tax professional before making any decisions.

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Is Your Viral Strategy Becoming Obsolete?

A little while ago, I wrote an blog that borrowed a quote from from Wayne Gretsky, who said he is successful because he skated to where the puck was going to be, not where was is at. Now, a recent study makes a claim that can affect every business that uses Search Engine Optimization methods. Currently, businesses use various methods to increase their visability on search engines. Some of these tactics include the expensive “pay-per-click.”

The article, Consumers under 35 Ditching Browsers for Apps, disusses a recent study that millennials choose mobile apps over search engines. However, before you fire your SEO consultant, read the article closely. The survey question was not asked properly to arrive at this conclusion.

Still, notwithstanding the article’s basic point, there is a bellwether here. In certain situations, the Mobile App may be the only viable tool for web search. When you are looking for a Starbucks in the car, would you use Yelp! or Google? Most mobile app users I know, at any age, use Yelp! To use Google is way too long and less refined for the area you are searching. This example can be replicated for many situations. The real question is, whether your tactics have been adjusted in light of it. How can your viral strategic plan be implemented as the consumer habits change? Strategic Planning is a circular process. Quantitative results will play a major role (Sales, profit, customer increases), but they must be looked at in context of your strategy, and the every changing landscape.

Business Plans. The greatest of the Great American Novel. (I’ve done both.)

Business Plans. The greatest of the Great American Novel. I should know, I’ve done both.

I came across this timely article A Music Business Plan from Music Think Tank. The author made an honest attempt in trying to simplify a slippery subject while plugging his business plan book. That is OK, I didn’t mind. But, the article really didn’t tell me too much. The example he displayed was what I call a Red Ocean business. In other words, using the Blue Ocean Strategy theory, his business plan did not render the competition irrelevant.

Irrelevant competition is the goal, not the business plan.

The lack of ingenuity in business plans concern me because the music industry has always been one of the most creative industries. Others are taking a risk and trying to achieve this. See a prior blog where this is happening.

So, instead of telling you how to write a business plan, I will provide some tips on strategies:

Don’t follow the pack. Yes, I know, record companies, literary agents, and Mother Superior want you to follow tried and true practices. You can learn from the past, but you don’t have to repeat it, if it is not working. The music industry is currently searching for a new business model, but until they find one, they’ll keep doing the same things they have always done.
Focus your business plan on what your audience wants, but is not getting. During the 1960’s, is the reason why the Beatles rocketed to fame(beside their great rhythms) is because they portrayed themselves as cultural leaders to a generation that was searching for an identity? Just look at the impact they had on my generation with Helter Skelter, Eleanor Rigby, Hey Jude, Come Together, Revolution, Lucy in the Sky with Diamonds, and many more. Some impacts were positive, others not.
Utilize every talent you have for your business plan. Can you draw? Can you write poetry? How about cook? I don’t know, just take stock of your core competencies and see how they can send your music and strategy in a new direction.

As a professional that writes business plans, I cannot tell you the answer. You have to discover that yourself. My job, is to lead you in this strategy as a sounding board, and then quantify it into something others will understand.

What 12 Year-old would Want “Penny Stock” for Christmas, and Why?

In December 2008, my 12-year old wanted penny stock for Christmas . I never had any luck in investing in penny stock, even with penny stock newsletters. So, my wife and I looked at stock that we may want to buy that wasn’t expensive, but had potential. In March of 2009, we came up with Ford. It was about $5 per share, and the only auto company not borrowing from the U S government. It had a mountain of debt, but we figured the fed’s weren’t going to let the auto industry die. So, in place of a gift, my son received 40 shares of Ford valued at $200. Two weeks ago(2010), he elected to sell his 40 shares (to us) at $17.20. His $200 investment increased to $688.

This is a good, though a little risky gift you can give to your aspiring child, as long as they know the risk of not getting ANY Christmas present. An article in the Wall Street Journal offers some options that you may consider. How to Give Children the Gift of Investing. The gift can be a learning tool for both you and the child, hopefully a profitable one.

In case you are wondering what our son is doing with the money, he is partially investing it in himself. Right now, he is a 14-year old freshman high school water polo player. For this year’s Christmas gift, he wants a personal weight trainer to get him buff before he plays varsity water polo in 2 years. However, the $40 per hour trainer would eat up his money pretty quickly. So, he requested another interesting Christmas gift in 2010. This time, to us and grandma. However, he sweatened the deal and mortgaged his next birthday gift, too. Instead of receiving a Christmas gift in 2010, and a birthday gift in May 2011, he wants grandma, and us, to pitch in 1/3 each, for his weight training. So, he pays 1/3 out of the Ford proceeds, grandma pays 1/3, and we pay 1/3 for the trainer. In return, he doesn’t get any large gift for either Christmas or his next birthday.

So in theory, he will leverage his 2008 Christmas gift Ford proceeds to pay for 40-50 weight training lessons.

Looking at his strategy, he wants to be the strongest kid of his age next year. Combine that with hard work and great grades, there may be a water polo position open for him at the college level in 3 years. Quite an upside for a $200 risk.

Now, he (nor I) know that many things can happen in 3 years, but there are some good lessons here:

Trade meaningless short-term benefits (like material possessions), for long-term goals that may reap benefit far greater.
Really think about what is important to you over the next five years. Is that expensive car really more important than investing in a little more education or training?
Take a little risk, and plan for contingencies, but make sure it is a calculated risk. Don’t blindly walk into anything.
Above all, don’t look back. Don’t dwell on things that don’t work out. Keep moving forward adjusting your strategy as needed.

By the way, at the time I am writing this article, the 40 shares of Ford stock he sold to me at $17.20 is now $15.94 per share.

Budget Time: Managing Your Money During the Next Thirty Days

This time of year brings out a lot of good articles regarding saving money. I found this one in the Wall Street Journal. 7 Smart Holiday Moves for the Holiday This article amplifies what I have suggested for the last year in various articles. The main word to keep in mind is BUDGET. How much can you afford, and not to be burdened by guilt because you did not spend enough money on someones gift. Even though Black Friday has passed, there are still a lot of good deals out there if you start early and look for them. For example, today, I decided to invest in LED Christmas lights. They use far less energy than normal lights. I didn’t want to replace all of my lights at once because of the cost, so I bought 4 boxes. Not only will this save money on electricity, but the exchanging of my normal lights got me a 30% discount at Home Depot. So, I saved money on the purchase, bought within my budget, and will save money on electricity for the next 30 days.

The same can be done for small and medium businesses. Plan and buy smart. Your bottom line will surprise you, not to mention your lower credit card bill in January.