Business Consultant Archives

Have You Been a Victim of Scams?

I love our clients. Usually, before they make a financial move (small or large), they contact us. Sometimes it results in important decisions. Take for example the client who calls about an email form his bank that states that his account will be closed down unless he logs in and fixes a problem. The client would send the email to me (we control his account), and we would immediately email him to not respond because it is a phishing email trying to steal his login. We find these problems when we run our cursor over the authentic-looking logo. It points to a site other than the bank site.

The IRS system is a target of fraudsters also. Here are some examples they warn you about:

Three common year-round scams are identity theft, phishing and return
preparer fraud. These schemes are on the top of the IRS’s “Dirty Dozen” list of
scams this year. They’re illegal and can lead to significant penalties and
interest, even criminal prosecution.

Here’s more information about these scams that every taxpayer should know.

1. Identity Theft. Tax fraud by identity theft
tops this year’s Dirty Dozen list. Identity thieves use personal information,
such as your name, Social Security number or other identifying information
without your permission to commit fraud or other crimes. An identity thief may
also use another person’s identity to fraudulently file a tax return and claim
a refund.

The IRS has a special identity
protection page on IRS.gov dedicated to identity theft issues. It has
helpful links to information, such as how victims can contact the IRS Identity
Theft Protection Specialized Unit, and how you can protect yourself against
identity theft.

2. Phishing. Scam artists use phishing to trick
unsuspecting victims into revealing personal or financial information. Phishing
scammers may pose as the IRS and send bogus emails, set up phony websites or
make phone calls. These contacts usually offer a fictitious refund or threaten an
audit or investigation to lure victims into revealing personal information.
Phishers then use the information they obtain to steal the victim’s identity,
access their bank accounts and credit cards or apply for loans. The IRS does
not initiate contact with taxpayers by email to request personal or financial
information. Please forward suspicious scams to the IRS at phishing@irs.gov. You can also visit IRS.gov and select the link “Reporting
Phishing” at the bottom of the page.

3. Return Preparer Fraud. Most tax professionals
file honest and accurate returns for their clients. However, some dishonest tax
return preparers skim a portion of the client’s refund or charge inflated fees
for tax preparation. Some try to attract new clients by promising refunds that
are too good to be true.

Choose carefully when hiring an individual or firm to prepare your return.
All paid tax preparers must sign the return they prepare and enter their IRS
Preparer Tax Identification Number (PTIN). The IRS created a webpage to assist
taxpayers when choosing a tax preparer. It includes red flags to look for and
information on how and when to make a complaint. Visit www.irs.gov/chooseataxpro.

Be very careful with your personal information. If in doubt, don’t click or answer anything.

IRS Podcasts:

Protect Yourself from Identity Theft – English
| Spanish
Are You a Victim of Identity Theft? – English
| Spanish
Dirty Dozen – English
| Spanish

Bad Strategies are Like Undercooked Pasta…Nothing Sticks

I worked in my family’s Italian restaurant as a pizza cook during my teen years and even today I still have to taste pasta to know for sure that it is done. Another way is to throw it against the wall and see if it sticks. That’s too messy.

So it is with a bad strategy. No matter how hard you try in implementing it, it will remain a bad strategy. Charles Roxburgh tackled this problem in his article, Hidden Flaws in Strategy, and why executives back them. His article addresses the problem from the point of veiw of the human brain function. I refer to that article from time to time, but will point out other practical aspects:

Overconfidence: Roxburgh’s article discusses the overconfidence of companies like start-ups. In other words, “rose-colored glasses.” We prepare business plans in addition to strategic plans. I always try to interject a business strategy for those companies that hire us to prepare business plans. I have found that entrepenuers that are trying to impress their investors usually fall into this category. So, as a CPA, I have to gently bring them down to earth. One of my approaches is to lay out all assumptions so potential investors in order to inform potential investors. Another approach is to have the client embrace their weaknesses. Most clients ignore that, but want to dwell on their strengths. In several instances we were able to turn their weaknesses into strenghts. In any event, as CPA’s we have a special point a view because we see both the big picture and the minutia.
The Sunk-cost effect: I like this concept from Roxburgh because I have seen so many small companies continue on a bad strategy until they implode. I have found it very hard to change the course of an executive whose company is plummeting downward. The gambling instinct comes out and they refuse to address the problem. I refer to it as the “ostrich stage,” because they will stick their heads in the sand and not make the hard decisions that usually require a different strategy. I have found the solution to this is to closely monitor your startegy with metrics, and if the metric(s) start pointing south, do not hesitate to explain it. This is why it is imperitive to have a current set of accurate accounting records, a condition we don’t find very often with new clients.
The herding instinct: Roxburgh cautions about following the herd off a cliff. The situation that comes to my mind are bankers in the United Kingdom who backed the Southern Confederacy’s “Cotton Bonds” in 1863. Due to the taking of New Oleans and the Union’s victory of Vicksburg, the price of cotton skyrocketed because of the Union blockade. Some UK investors of that time herded together to buy the Confederate Bonds presumably backed by cotton) which supported the war. Unfortunately, they usualy couldn’t get their hands on the cotton collateral, the South lost, and so did the investors. This is a simplistic view of the events, but Illustrates how the herd can lead others into financial ruin.

Another example of the “herd” factor was when my brother-in-law tried to get my wife and I to buy into a ponzie scheme where people were doubling their money in a week. We laughed, but didn’t like hearing of family and friends who “bought” into the hype and lost their $1,500 investment within thirty days.

The main takeaway from this article is to measure. Like many say, “If you can’t measure it, you can’t manage it.” These points can help you to measure your strategy and to make the necessary adjustments.

The Strategy of Living a Balanced (Business) Life

One of my kids, (honorable number one son), is a poet; a comedic poet. He is in graduate school at UC Davis in the creative writing department. He is the first to say that he is disorganized.

Even though he is an artist, that skill does not give him a license to be disorganized. As an entertainment CPA business manager, I have heard that excuse many times from clients. Sadly, what I have found are those who are disorganized in business tend to live an unbalanced life full of stress and “emergencies.”

Whether it is your business life or your personal life, in order to fulfill your potential, you need an organization strategy. May I suggest the following:

Vision: If you have read my previous articles , you will find that I always ask persons to start with a “vision.” This is as true in your business life as it is in your personal life. A vision goes out ten to twenty years. A good start may be Jim Collin’s hedgehog concept in his book Good to Great. Read up on his three concentric circles on how a business (and arguably an individual) can become great.
S.W.O.T: Understand your Strengths, Weaknesses, Opportunities, and Threats are to accomplishing your business or personal vision. Make the difficult decisions to eliminate the weaknesses and threats.
Craft a Strategy to your Vison: This strategy should be a result of working backwards to long-term objectives, or milestones.
Create a System: Every business and life needs to be organized if they are to accomplish its vision. In other words, a system. It may be as simple as doing specific tasks each day or a task on the same day of the week.
Evaluate with metrics: You must know where you are in relation to your vision with some type of measures. Businesses can have a whole host of measures. A personal life have on like spending time with your kids all day Saturday or Sunday. Or maybe, coach a Little League team.

As far as business, there are a couple of books that can help, The E-Myth by Michael Gerber and Predictable Success by Les McKeown. You may find in going through these steps that you need to adjust your business or personal vision. That’s OK. The sooner the better. If you let your business or your life “run itself,” you are setting yourself up for a disappointment(or maybe midlife crises).

If you visions are limited, e.g., spending a lot of time playing fantasy football, then you don’t have a vision; you have a pass-time. It “passes time.” Time is your biggest enemy and ally in a strategy depending how the strategy is implemented. A balanced business leads to a balanced life. A balanced life leads to a quality life.

Do You Have Trouble Paying Back Taxes? The IRS Cares! No, Really. But to a Point.

As CPAs, every year we acquire clients who need help negotiating with the IRS regarding their back taxes. This apparently seemed to be such a problem, that the IRS has actually made it a little easier to satisfy the debt. It’s called the “Fresh Start” which offers more flexible terms in paying your taxes using its Offer-in-Compromise Program. I gathered this information from the IRS Tax Tips–July 9, 2012.

An offer-in-compromise (OIC) is an agreement between a taxpayer and the IRS
that settles the taxpayer’s tax liabilities for less than the full amount owed.
An OIC is generally not accepted if the IRS believes the tax liability can be paid
in full as a lump sum or through a payment agreement. The IRS looks at the
taxpayer’s income and assets to determine the reasonable tax collection potential.

This expansion of the “Fresh Start” initiative focuses on the financial
analysis used to determine which taxpayers qualify for an OIC.

Here are the OIC changes:

Revising the calculation for a taxpayer’s future income
The IRS will now look at only one year (instead of four years) of future
income for offers paid in five or fewer months; and two years (instead of
five years) of future income for offers paid in six to 24 months. All OICs
must be paid in full within 24 months of the date the offer is accepted.
Allowing taxpayers to repay their student loans Minimum
payments on student loans guaranteed by the federal government will be
allowed for the taxpayer’s post-high school education. Proof of payment must
be provided.
When a taxpayer owes delinquent federal and state or local taxes,
and does not have the ability to fully pay the liabilities, monthly
payments to state taxing authorities may be allowed in certain
circumstances.
Standard allowances incorporate average expenses for basic necessities for
citizens in similar geographic areas. These standards are used when
evaluating installment agreement and offer-in-compromise requests. The
National Standard miscellaneous allowance has been expanded. Taxpayers can
use the allowance to cover expenses such as credit card payments and bank
fees and charges.

One thing to remember is once you start the payment plan, you cannot miss a month. To do so could result in unpleasent consequences. You must keep the communication open with the IRS. Discuss this with a tax advisor before taking any action since all situations are different.

______________________________________________________________________________

IRS CIRCULAR 230 NOTICE: To ensure compliance with requirements imposed by the U.S. Department of the Treasury and Internal Revenue Service, we inform you that any tax advice contained in this e-mail (including any attachments) is not intended or written to be used, and may not be used, for the purpose of (a) avoiding penalties under the Internal Revenue Code or state tax authority, or (b) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

Are You Anti-Social Networking, or Is Your Social Networking, Not Working?

Almost two years ago, I invited my social networking guy, Gregg Towsley (of WSI Quality Solutions), to speak at the Association of Strategic Planning, Los Angeles Chapter dinner. He showed my CPA business consultant company’s social profile before and after I hired his him. The screen shot that got a big laugh was my Facebook photo as a CPA business consultant. The before picture was me and my family hiking in Costa Rica. The after picture was me with a blazer, open shirt, leaning against a tree. People laughed and said it was a a make-over.

Afterward, I spoke to Gregg and another social network provider and labelled their industry as individual companies acting as street “criers” proclaiming the benefits of social networking to a world who was passing by them. Every now and then, they would get a shilling tossed into their hat, almost never from CPA business consultants.

That day has gone, and the advent of social networking is about to mature. And you, like the CPA business consultants of the world, can benefit. The article Why You Can’t Escape Social Media Marketing Any More by Brian Proffitt speaks of the current trends. Brian speaks of the social media management tool, HootSuite.

Now Brian cites some “experts” who say that “inbound marketing” is the new thing because it negates the law of who pays the most gets the most from SEO (search engine optimization-bringing people to your site.) Inbound marketing is the concept of earning the attention of prospects by driving them to your site.

They state this fact because with “inbound marketing, there is really a greater value placed on developing relevant content and being genuine.

In other words, the content of this business consulting article will drive people to your web site like it may have done to you.

The experts article advises that you take a deeper cost/benefit look at the following in regards to inbound marketing:

1. Inbound Marketing Strategy and Analysis: They state to review, analyze, and adapt your strategy to improve results. (2 hours per month) As a CPA business consultant, I look at my traffic frequently. However, I could do better.

2. Blogging: As I am doing here, blog. It is a big part in lead generation. My topics as a CPA business consultant include: business finances, strategic planning, personal finances, tax planning, and health care.

3. Search Engine Optimization (SEO): This includes key-word research. As you can guess, CPA business consultant would be a key phrase that would identify us.

4. Pay Per Click (PPC): We don’t pay for my leads, we can’t afford it. I bet the terms CPA, or business consultant costs a lot per click.

5. Social Media: The experts state two hours a day. That is too much for a small business, unless they can hire people to do it for them.

6. Advanced Content/Social Media Campaigns: Webinars, videos, etc. We started monthly videos teaching business concepts called The LA CPA Video blog.

7. Lead Nurturing: This is hard to do even for a CPA business consultant. It takes time and organization to follow up on leads.

If this is all new to you, then you can’t waste any time. You must hire a consultant or teach yourself. You main competitor will be one who has already done this, and you will be shocked on why customers are flocking to his business, not your business.

Toughing it Out in Business Without Being a Jerk

Have you ever had a “screamer” boss? I did when I started my CPA career over 30 years ago. Every day I would come to the CPA office on edge, trying to please the tyrant before he yelled at me, or anyone else in the office. I left after one year, vowing never to be a tyrant boss.

What tyrant bosses don’t realize is that they suck out employees’ self esteem. When you rip out an employee’s self esteem, you rob them of performing to their highest ability and creativity. This can also happen with customers. Some customers are tyrants and scream for attention.

These moments of self-doubt create difficult business situations. It could be a tough boss, or a tough customer, or a tough event, but to operate successful, you must keep your head. Barry Moltz discusses some solutions in Improve Your Mental Toughness in 2 Minutes in his interview with Dr. Jason Selk. He lists five points:

1. Focus on solutions. This was a very interesting suggestion, because the bigger the emergency, the harder it is to get back on a positive track. Even in a CPA practice, panic can set in. I have found that if I look at the worst case scenario, and accept its possibility, it helps me to move back to the positive. For example, a mistake could cost me a maximum of $1,000. Once I accept that, I would look for solutions to minimize the damage, many times reducing it down to a meaningless number, if any. If I just focused on the possible $1,000, then I rob myself of creatively fixing the problem.

2. Seek to control only what you can. Sometimes, we make the same mistakes again. So, in a crises, use that anxiety to motivate yourself to fix the system or procedures. This way, you are taking a bad business event and turning it into a future positive result. As a CPA consultant, I have seen business owners bury their heads in the sand. The problem not only does not go away, it gets worse.

3. Find one thing you can do differently to make the situation better. This comment is similar to the one preceding it, but if you can make just one adjustment, you are better off than yesterday. For example, as a CPA, I get tons of documents. If I miss something that is buried on my desk, it motivates me to completely clean off my desk, and to deal with little projects.

4. Keep a success log. I really don’t have the time to do this, but it does remind me of a study done on athletic superstars. Someone studied the likes of Michael Jordan and others on what makes them perform at the most stressful times. What came back was that they knew they could make the clutch shot, or hit the clut hit. The reason was because they did it so many times before. This self-esteem trick is what successful people use by nature. When my oldest son was in the 2nd grade, the teacher had a book report contest where kids got stickers on a board next to their name for reading books. My son originally did not blossom as a great reader, but got into the contest. By the middle of the year, he was leading everyone reading books a couple of years beyond the class reading level. By the end of the year, he had blown the competition out of the water reading middle and high school novels. I made a big deal of it by asking the teacher if we could take the poster home after the school year. I photographed him with it and treated him like he had won an Olympic gold medal. That summer, he read The Hobbit. By time he was in the 4th grade, he had read the three books of The Lord of the Rings. Today, he is in graduate school for creative writing, specializing in comedy poetry. The moral of the story is that he had the ability but needed to stack up victories to get him to the next level. In business, you need to rack up your victories and remember them in tough times.

5. Practice the 100-second mental workout. Whatever works.

Many businesses fail because the owners think that successful businesses don’t struggle. Read the book, Copy This about the origin of Kinkos to put business in perspective. The road to success is always a bumpy one. People hire us as CPA business consultants and expect us to help them with their businesses. But the real solutions are not from the CPA, but the owner who can deal with day to day problems.

Where Do We Go From Here? Strategic Planning In the Fog

The yellow bus lights glowed in the dark as my only beacon. I couldn’t see 20 feet in front of me on Highway 99 in the central California valley, but we had to get to Lake Huntington. The four cars packed with my companions followed my lead. At last, I saw the exit. Moving off the highway onto a dark farm road, my concern peaked. Where were the street signs behind the foggy shrouds? At last I stopped at an intersection and was able to see a sign, but only after I stood in the middle of a dark intersection looking almost straight up.

If you have been planning for the last three years, this story should sound like your attempt to plan strategically. Hugh Courtney’s Strategy under uncertainty lends us a flare in such dismal times. He offers a four-level framework for determining the level of uncertainty surrounding strategic decisions and for tailoring strategy to the uncertainty:

Level one: A clear enough future: Courtney states that managers can use the usual strategy tools in a clearer future as this. However, I see that medium and small businesses do not know what those tools are. The biggest private producers of jobs in this country, small business, usually work in a strategy void. Thus their decisions and plans are usually uninformed and a product of crises management even in the best of times.

Level two: Alternative futures: Outcomes are clear by hard to predict. Take the Ford Edsel, for example. The car seemed like a good strategy with a ready market, but it went the way of the do-do bird. This is where probability analysis can come in according to Courtney. For small businesses, look at the downside to each alternative. Is one downside greater? You may want to go the other way.

Level three: A range of futures:Taking Courtney’s cue, small businesses must limit their strategic options. Don’t take the shotgun approach and consider ten different strategies, for example, because you can. Your brain will explode, not a pretty site. Again, focus on the downside of your options.

Level four: True ambiguity: This option happens in an economic free-fall, or at least a controlled fall. More than ever, I recommend small business to take a Blue Ocean Strategy viewpoint and focus on the needs of your clients. Eliminate those attributes that your industry is providing clients that they can live with, e.g., meals on a commuter flight. You can take this approach for any other above levels, but at this level, it is usually a matter of survival. The wrong decision could land you in bankruptcy very quickly.

If You Are Reading This, You’ve Proved My Point

Last January, I again participated on the planning committee for the 2011 Entertainment Industry Conference for CPAs and attorneys. We agreed on most of the usual topics to be presented at the conference. Then, I suggested social networking. The idea was written on the board.

Fifteen minutes later, a respectible CPA turned to me and said, “Rick, I know social networking is a sexy topic, but I doubt it is what our attendees are looking for. They won’t come away with anything.” I nodded my head and thought to myself: Thank you. You just gave me an extra 12 months to blow my competition out of the water using social networking and SEO.

Skeptical? 5 Key Social Media Findings That Affect Your Business by Glen Stansberry lists some new findings:

1. Americans spend most of their time online on social network and blogs–If you are reading this blog, you have contributed to the 23% statistic that more time is used reading blogs and social networks than checking emails. You may have also found me because of what I have been doing for over a year. Writing

2. Seventy percent of active online adult social networkers shop online–Sell where your buyers live, online. We are all going there. Have a bigger presence than your competition.

3. Fifty-three percent of active adult social networkers follow a brand(only 32 percent follow a celebrity)–Adults follow brands across social networks.

4. Sixty percent of social media users create reviews of products or services–When was the last time you reviewed a book on Amazon, or rated a restaurant on Opentable? You are contributing the movement. If your business is not on there, then you are behind the curve.

5. The number of mobile Internet users is up 47 percent from last year–I have actually trashed a rude restaurant that made us wait an hour beyond their seating estimate. We were outside with our 85 year old father-in-law on Father’s Day in the dark. My bad review went into Yelp before I reached my car in the parking lot.

If you are resisting the social network, SEO revolution, you are risking the well-being of your business. But, before you jump in, do some research and learn. There are consultants that can help you. Then, create a strategy and stick to its implimentation. Your online presence will not increase overnight, but the constant creation of content will get you noticed.

2010 Small Business Tax Breaks Revisited

It’s always good to practice the basics, like a major league baseball player who may work on his swing by hitting a ball off a tee. So here I am going back to the IRS tax site to remind small business owners of the Tax Relief Act of 2010. There may be benefits that you may be missing.

Sect. 2011: Temporary exclusion of 100% of gain on certain small business stock

Expanding on the provisions of Internal Revenue Code Section 1202 and the American Recovery and Reinvestment Act, the Small Business Jobs Act provides an additional incentive for investment in qualified small businesses. Under this Act, investors in qualified small business stock can exclude up to 100% of the capital gain upon sale of the stock.

Under the SBJA, in order to claim the capital gain exclusion, the qualified small business stock must be:

Acquired after September 27, 2010, and before Jan 1, 2011, and
Held for at least five years before the stock is sold.

However, Section 760, Temporary Exclusion of 100% of Gain on Certain Small Business Stock, of the Tax Relief Act of 2010, extended the exclusion for qualified small business stock acquired before January 1, 2012.

Under current law, the earliest tax year for which this 100% capital gain exclusion can be claimed is 2015. Additional limitations, qualifications and requirements may apply. Capital Gains and Losses has information on reporting capital gains.

Sect. 2012: General business credits of eligible small businesses for 2010 carried back 5 years

The new law allows an eligible small business to carry back general business credits five years. Previously, the credits could only be carried back one year. The carryback is for credits determined in the first taxable year beginning after December 31, 2009.

An “eligible small business” in general is defined as follows:

A corporation whose stock is not publicly traded, a partnership, or a sole proprietorship, and
The taxpayer must have $50,000,000 or less in average annual gross receipts over the three preceding tax years.

This is a one year initiative applicable only to the tax year 2010 (For fiscal year filers, the effective tax year is the first tax year beginning after December 31, 2009). The five-year carryback period is available only for credits carried forward to the tax year 2010 and/or earned in the tax year 2010.

Sect. 2013: General business credits of eligible small businesses in 2010 not subject to alternative minimum tax

The new law allows general business credits to offset both regular income tax and alternative minimum tax of eligible small businesses as described in Section 2012 of the Small Business Jobs Act (see above). The provision is effective for any general business credits determined in the first taxable year beginning after December 31, 2009, and to any carryback of such credits.

This is a one year initiative applicable only to the tax year 2010 (For fiscal year filers, the effective tax year is the first tax year beginning after December 31, 2009).

Sect. 2014: Temporary reduction in S-Corporation built-in gain recognition period

Under the Small Business Jobs Act, if the fifth year of an S Corporation’s recognition period ends before their 2011 taxable year begins, then no entity-level tax is imposed on the net recognized built-in gain for the 2011 tax year. Sect. 2021: Increased expensing limitations for 2010 and 2011; certain real property treated as Code section 179 property.

An expense deduction is allowed for businesses which choose to treat the cost of certain qualified property, called section 179 property, as an expense rather than a capital expenditure. For qualifying property placed in service during the taxable years 2010 and 2011, the new law increases both the maximum amount of the deductible expense under IRC Section 179, as well as the statutory phase-out amount. The provision also expands the definition of IRC Section 179 property to include the following types of real property: qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.

Sect. 2022: Additional first-year depreciation for 50% of the basis of certain qualified property

Generally, businesses are allowed to recover the cost of capital expenditures over time through depreciation expense. IRC Section 168(k) allows for additional first-year depreciation, for 50% of the basis, of certain qualified property placed in service after December 31, 2009. The new law extends the additional first-year depreciation deduction to qualified property acquired and placed in service during 2010.

Section 401, Extension of Bonus Depreciation, of the Tax Relief Act of 2010, expands the additional first-year depreciation deduction (bonus depreciation) to equal 100 percent of the cost of qualified property placed in service after September 8, 2010, and before January 1, 2012. It also provides for a 50 percent first-year bonus depreciation deduction for qualified property placed in service after December 31, 2011 and before January 1, 2013.

Sect. 2031: Increase in amount allowed as deduction for start-up expenditures in 2010

For taxpayers starting an active trade or business, the new law increases the amount the taxpayer is allowed to elect as a deduction for start-up expenditures under section 195(b) for taxable years beginning after December 31, 2009. Section 2031 allows up to $10,000 as a deduction for start-up expenditures, but requires a dollar-for-dollar reduction of the $10,000 deduction if startup expenditures exceed $60,000. This expense should be claimed as an “Other Deduction” on business returns, such as the Form 1120, 1120S or 1065, or as an “Other Expense” on the Schedules C or F of the Form 1040. The remainder of any start-up expenditures, not deducted under section 195(b), can be amortized ratably over 180 months on Form 4562, Depreciation and Amortization.

Sect. 2042: Deduction for health insurance costs in computing self-employment taxes in 2010

Generally, small business owners may not deduct the cost of health insurance when calculating self-employment tax. Under the Small Business Jobs Act, and subject to specific statutory restrictions (i.e. deduction is not available if self-employed individual is eligible to participate in an employer-subsidized health plan maintained by the employer of the taxpayer or the employer of the taxpayer’s spouse), business owners can deduct the cost of health insurance for themselves and their family in the calculation of their 2010 self-employment tax.

Always consult your tax professional before making any of these decisions.

______________________________________________________________________________

Business Vision and Goals: Understand the Target You are Aiming For

In the early 1970s, I watched a Stanford professor choose Jim Plunkett, (Stanford’s star quarterback) to demonstrate perception and the brain. The professor placed a pair of glasses on Jim that caused his vision to be distorted, shifting everything he sees to the right about 20 degrees. Jim missed his attended receiver throwing consistantly to the right by 20 degrees.

Drawing his share of laughter, Jim compensated and started aiming 20 degrees to the left, thus hitting his receiver about five times. The professor explained his point about perception and congratulated Jim on his adjustment. As Jim took off the glasses and proceeded to sit down, the professor asked him to throw one more pass with no impairment to show the crowd that the professor did not ruin the star quarterback’s talents. Jim laughed and passed the ball one last time. The ball soared past the receiver by 20 degrees to the left. His brain had not re-adjusted.

The Association for Strategic Planning-Los Angeles (ASP) had the honor of hearing Deepa Prahalad speak on September 13 at the beautiful Dole Corporation auditoium. Deepa spoke of her book, Predictable Magic, and its message to identify company goals. She stressed that if you have only broad goals, both your customers and employees will not understand what the company stands for. She suggested that you must become the interpretor of your message.

As in the case of Jim Plunkett, if you cannot see what you are aiming for, you will miss your target. The start of a good strategy is to have a clear vision of what you want to accomplish. Just to have a vision to be your industry leader is not good enough. Once a business establishes a viable vision, they can create a path with quantitative metrics to move towards that vision. Jim Plunkett’s vision changed, so he has to alter his tactics to get there.

Business today is always changing, so a vision you had five years ago will most likely be obsolete, or commonplace in your industry. The ASP preaches the steps of Think-Plan-Act, but if you are thinking about the wrong vision, your plans and actions will lead you towards a failing destination.