Different Levels

The secret to success is beyond the labels of levels; it is discovered by enlightening, empowering and encouraging the desires of People to grow and build!

Different LevelsArriving home from school, the little girl was deep in thought. The frustration with the day was written all over her face.

As she found a listening ear, the story began to unfold. One of her 4th Grade classmates had an opposing view on an important subject. By explaining the two beliefs, the little girl seemed to find the answer to her dilemma.

With acceptance in her voice, she understood and announced, “People are just on different levels!”

All natural growth occurs through levels of maturation. Whether children into adults, seedlings into plants, or entrepreneurs into companies, there is a logical order: from the bottom, up; and, from the inside, out.

This hierarchy of levels begins with a foundation. All that follows is supported from that beginning.

After thirty years in business and within a span of seven days, I was reminded of the “Levels”.

Two stories, two story-tellers, two very different views, about one CPA:

Level 1:

“A bit of constructive criticism for future successful customer interaction: Don’t assume that your potential clients know exactly what your product is.

You are good at forwarding prepared documents. Might I suggest a single page with bullet points of the steps and actions that your products entail. I wouldn’t purchase a floor machine unless I knew what the pad pressure delivered to the scrubbing pads is, as the wrong machine may deliver undesired results or reduce productivity.

I would want to see a specifications sheet, just as I asked many time from you of your products.”

Level 2:

“I am a young man who has decided to come back to my hometown to manage and run our family ranch. I worked as a counselor for the last 4 years and was very content with my life and career.

As life happens, due to circumstances, I was brought back to my childhood roots and knew that my family needed me. I was not key on the idea at first but then I was introduced to our family’s accountant and he helped me look at the country life in a whole different way.

Since I have known Kim the last four years he has helped me and my family rebuild our financial status. We have purchased more efficient machinery, doubled our commercial Angus line of beef, and in the works is a pivot sprinkler system.

I remember when I met Kim he told me “You Dream it I will help bring your dream to reality”. He has been so helpful in every aspect a person could imagine, very knowledgeable, very dependable and you can access him anytime.

Kim has helped me grow into a business orientated person. He has the tools if you have the ambition and drive. Thanks Kim..”

How can two views about one person be so different?!

Answer: The young man at Level 1 has a Product based view; the young entrepreneur at Level 2 has a Service based view.

The mentality of some people is so limited that they are Product bound; unless they can understand the “tangible”, any inherent benefit is limited. Other people think at higher levels; they acknowledge and want the perceived value from the “intangible” of quality Service.

Gravity, for example, is a very powerful and valuable intangible. It is a real force to the extent of its Cause-and-Effect results. We have a choice to recognize its value by living within the reality of its influence. Depending on the height of the object on which they stand, those who choose to ignore this intangible presence might only get to do so once.

Individually, we are unique. As individuals, we will always perceive the world differently. The secret to success is beyond the labels of levels. It is discovered by enlightening, empowering, and encouraging the desires of People to grow and build.

We learn by doing and the fun is in the doing. As we, individually, choose our next step on the journey to a higher level, let’s have fun learning!

www.kimfoard.com

Success in a Can

Success is found in Cans. Whether you think you Can, or Can’t, you’re right. Guard your heart above all else, for it determines the course of your life.

Success in a CanThere is a, guaranteed, way to success and happiness.

In fact, we already have all of the ingredients necessary to make the lives of which we dream. The secret is in the mixing, baking, and serving.

We begin with a Can.

“Can of what?!” you may ask.

There is one four-letter word uglier than all others: Can’t. It paralyzes, taints, marginalizes, and prevents richness of life. By eliminating the “apostrophe t”, we Can. In fact, by choosing to see that T as a positive; we can transform it into a powerful catalyst: Think.

We Can Think.

All we do begins with a thought.

Maybe that’s why we are instructed to, “Guard your heart above all else, for it determines the course of your life.

It, literally, is impossible to guard an absence, a void, a lack, or a negative. Mother Nature hates a vacuum. We either plant good seeds to produce crops of value, or weeds will grow. Once seeds of good character are planted, we have something to nurture and guard.

From the core of who we are, what we want, how we give, why we care, and where we direct our efforts, flows the essence of Can.

This is my Can: I can offer a disciplined commitment to Enlighten, Empower, and Encourage entrepreneurs to: consider options, set goals, and continuously innovate.

The contents of your Can will be different.

Why is my Can important to success and happiness?

Because, regardless of any attack on my heart, I can respond positively to the threat by choosing to apply the Three-E Formula: “Enlighten, Empower and Encourage.” By giving that, I receive the same back. My heart is safe.

~ Enlighten

We always have options. Even if physical resources are limited, we still have the emotional, mental, and spiritual sources of inspiration, to choose our response to any situation. A choice to say, “I can!” will enable us to continue forward progress.

~ Empower

We arrive at a destination by choosing one. To move from here to there, we need a There: a destination, a target, a goal. Some goals are tangible; others are intangible. They are unique to the individual. Pick one.

~ Encourage

We grow by pushing at the edge of the artificial boundary of who we were, yesterday. Right here, right now, it’s great to be alive. The greatest gift is a chosen, purposeful effort, often done in the face of fear, to nurture our own growth and the growth of others.

As we are “mixing” in the blender of life, remember to remain enlightened; we always have options. As we are “baking” in the oven of trials-by-fire, remember to stay empowered; we can focus on the end result. As we are “serving” in the delivery of goodness to the world, remember to be encouraged; growth is possible by giving our efforts to make the best of any situation.

It all begins with a Can.

I think I can!

www.kimfoard.com

Young Pilots

With our hands on the yoke, wheel, or mouse, we learn by doing and the fun is in the doing. Let’s have fun learning, to fly, drive and click our way to success!

Pilots at the Controls

At The Controls

The hand of the young businessman reluctantly reached toward the mouse. After he swirled it a few times to synchronize his mind with the cursor, he looked at me for the flight coordinates. We were ready for a new adventure!

Yesterday, he was sitting behind my desk in my executive chair and I was standing beside him, to be his guide. Waiting for us was an unexplored frontier, which I wanted us to look at together. As the CFO of a family business for the last couple of years, he has done everything asked of him, plus some. Rather than more words of instruction, I wanted him to have the experience of sitting at Command Central.

Since we learn by doing and the fun is in the doing, the purpose of our mission was to have fun learning!

A conversation with a businesswoman, earlier this week, is also a facet of this Thought du Jour. Recently, she enjoyed the opportunity to experience an aerial tour of a project, on which she is working, as a passenger aboard a large corporate helicopter. Part of our conversation included a discussion of best practices for bringing the next generation into an existing, and very successful, business.

How can we expect young entrepreneurs to captain the large ships of industry, when they seldom have the opportunity to sit at the controls?! That helicopter pilot learned the basics by flying small machines and, eventually, worked his way up to mastering the big ones. Guaranteed, he did not learn artistry of his craft by someone telling him how it is done!

Classrooms are not the same as Boardrooms; Professors are not the same as seasoned Veterans; and, Talking about something is not the same as Doing.

Young pilots, in training, sit at the controls. Next to them, in the co-pilot seat, is the instructor. The primary job of this instructor is to engage in a wonderful combination of activites which will build student confidence and scare them silly. The instructor will: by their words, tell their students what they need to know; by their actions, show them how to do it. Then, the real education begins, as the student learns by doing.

Typically, as in everything, the first few attempts are ugly. Improvement is made by practice, until the student thinks they know it all. At that moment of pride, their instructor makes a new believer out of them; by introducing an element of surprise. In the world of business, that is commonly referred to as a Variable.

For instance, a “stall” in the air is similar to one in business. The first time it happens to a young pilot and the new entrepreneur, hearts stop and breathing ceases. Same reaction: “Now, What?!” Same response: “Nose down, throttle up, regain composure and let the universal laws of physics and finances be your friend.”

Speaking of which, another conversation this week yielded, yet, one more gem of wisdom related to the importance of “hands on” education and experience. As a young man, my friend worked as a horse wrangler on a large ranch, which operated primarily for the benefit of encouraging and empowering adolescents.

The young people who came as guests, all, had one thing in common: they suffered from the insecurities of never having accomplished anything on their own. For six weeks on the ranch, they had a project and a choice. The project: a horse; their very own horse. The choice: work to connect with the horse as a friend; or, endure the relationship with the horse as an enemy.

As parents, we think training wheels on bikes are helpful and cute. Believing, they are a facet of building confidence. Generally, they are a crutch. The real joy on faces, only, comes after we provide the freedom to fail. Oh, sure, there are the looks of pure terror as our young people wobble, and crash. Yet, there are no words for the exhilaration of finding that first balance, on their own, and the accomplishments, which follow!

Later, our teenage student drivers discover a similar feeling, in the course of earning a license. The foundational principles learned in the classroom are important; what is practiced behind the wheel with an instructor, even, more so.

As we transition from the stories above into the world of business and finance, these same principles have merit. For instance: Spending an allowance is different from Budgeting a net employee paycheck, or business profit. The first is analogous to training wheels given to us; the second is the reality of producing results with our own hands on the yoke, wheel, or mouse.

As my young student clicked the last window closed and leaned back in my chair, our conversation turned to his frustration with some of his peers, who fail to consider the effect of key universal financial principles. When I asked him how he learned them, his response was, “You taught me.”

What began as a routine training exercise ended with a glimpse of the heavens; my spirit soared.

Let us, always, encourage our young people to fly!

www.kimfoard.com

A Better Business Plan

This is a blueprint for how to begin building dreams into reality. Literally, in 5 Minutes, you can understand the cornerstones of a brilliant Business Plan!

BlueprintsBlueprint For Success

A seasoned carpenter shared this secret to success: “You must begin — and, begin again.”

For the dreamers among us, the question is: “Where do I begin?”

The purpose of this article is to provide the parameters for a quick analysis of an idea to determine its possibility, and probability, of actionable success. As with any legitimate construction project, we build it on paper, first.

This is our blueprint.

Owner Compensation
The concept of beginning here is novel for a Business Plan. Yet, this number will keep our attitude right and provide the Retained Earnings for business expansion. One of the principles of success is: Begin with the End in Mind.

Debt Service
Unless adequate funds are available for start-up, the early years will include a Banker for a partner. The goal is to buy them out as quickly as possible to retain their share of profits, which are paid out of our business as Interest.

Taxes
Self-employment, Federal income, and State income taxes must be paid timely. Because of severe penalties for non-compliance, governmental entities are a bad source of financing.

Overhead
This is the delivery system of providing value to the marketplace. It is everything from the brick-and-mortar to indirect expenses. It is the price we pay to have a Company.

Direct Costs
Each project and customer will want, and need, something different. The flexibility to “Wow!” them requires additional expenditures.

Productive Units
All of the above is accomplished by understanding the finite number of units available for distribution. For service enterprises, this will be a reservoir of “Hours”; for a products company, this will be the capacity of the “Shop”; and, for an inventory business, this will be the “Goods”.

Formulas:

Net Income = (Owner + Banker) / (100% – Tax Rate)
Value to Customers = Net Income + Overhead
Sales Price = Value to Customers + Direct Costs

Example Variables:

Owner Compensation: $80,000 ~ [For the Family, after taxes]
Debt Service: $40,000 ~ [Loans $200,000; 5 Year maturity]
Tax Rate: 40% ~ [S/E 15.3%, FD 20%, ST 4.7%]
Overhead: $144,000 ~ [Ads, Insurance, Rent, Utilities, Etc.]

Solution:

(Owner $80,000 + Banker $40,000) / (100% – 40% Tax Rate)
Is same as: $120,000 / .60 = $200,000 Net Income
$200,000 Net Income + $144,000 Overhead = $344,000 Value

For those providing Services to the marketplace, the final step is to divide Productive Units into the Customer Value. Full-time employment is 2,000 hours per year. Entrepreneurs will work much more than that — with only a percentage actually billable to Customers.

If our Start-up Enterprise team can be 86% productive (after allowance for duties of internal and external management) each Employee has an annual reservoir of 1,720 billable hours.

$344,000 Value to Customers / 1,720 Hours = $200 per Hour: Price for Value

Those providing Products, or Inventory, for sale to customers, will factor in the Direct Costs. In fact, they will consider the number of meals (if a restaurant), or suits (if a boutique), as their Productive Units and establish their Mark-up, accordingly.

Now, step apart from the crowd and consider the most important variable of all: “What is my passion — the one unique thing about me, for which the world waits?”

The rest of the story from our successful builder, quoted at the beginning of this article, “Find something you love to do and do a lot of it.” If we are able and willing to tap into that passion and grasp the foundational principles of a Business Plan, we are simply minutes away from A Better Business Plan — and, a new beginning!

kimfoard.com

Price We Pay

Every business wants to be competitive in the marketplace and they know Price is one measurement of Value, subject to the perception and judgment of Customers.

The Magic FormulaBy eliminating variables, we arrive at one thing certain.

This is a story of three entrepreneurs: Eric the electrician, George the geek, and Lorna the landlord. The mystery for us to solve: Although unrelated by blood and marriage, how can they all have the same big sister, Iris, who requires their support?

Lucky for us; we have The Magic Formula as a guide to the answer. It is available by clicking the image above, or this Link. Much more than a guide, the Magic flows from an awareness of our resource choices: Time and Money.

Eric is an industrious fellow, who has a passion for service. He has completed years of formal training; has worked his way through the ranks of Apprentice, Journeyman, and Master Electrician; and, now wants to live the dream of being his own Boss. Captain of his own ship, Master of his own destiny, a Servant of the people: taking care of his very own Customers.

Since Eric has all of the tools and seed money necessary for starting his Company, there is no need for a Banker, as a partner. Based on the household budget, he knows that his family needs $40,000 per year, after taxes.

As a self-employed individual, he will pay both halves (Employer plus Employee) of Social Security and Medicare taxes, for a combined rate of 15.3% on all net profit of his business. Much trickier are Federal and State income taxes, which are calculated on a progressive scale. At the lower brackets of income and with benefit of tax credits under current law, income taxes are of minimal concern. He anticipates an effective total tax rate of 20%.

In business, Overhead is a gracious way of saying: There is a price for Eric’s dream. Technically, Overhead is the delivery system of value from provider to consumer. For the joy of having that magnetic sign on the side of his truck and walking into his shop each morning to switch on the lights, at a minimum, Eric will pay $60,000 each year.

Now we’re ready to do 4th Grade math. We will simply Add, Subtract, Multiply and Divide.

Because taxes take 20% of Eric’s total Net Profit “pie”, his after tax $40,000 must be 80% of that same pie. Thus, we Divide $40,000 by .80 to know that Eric needs $50,000 of Net Income for the year. To prove that this target is accurate, we double-check the numbers: First, we Multiply $50,000 by .20 to find that, indeed, Taxes are $10,000; then, we Subtract $10,000 from $50,000 to breathe a sigh of relief in knowing Eric has $40,000 for his family.

Before Eric even gets to Net Profit, he must first make Sales to Customers of $60,000 each year, just to cover his Overhead and “keep his lights on”. Therefore, we Add the amount of Net Income ($50,000) to Overhead ($60,000); Eric knows exactly his sales target for the year, which is also a representative value of his time to provide quality services: $110,000.

Remember that needy sister, Iris? Your suspicion is right. Her nickname is IRS, the Internal Revenue Service; the one in need of that $10,000, above!

Now, the fun really begins, because we are to the point of this story: Who pays taxes? Is it, really, Companies and Businesses, as the Governor of the State of Montana believes? What happens when Big Sister decides she “needs” twice the amount of support and will use new tactics to take it?

Let’s answer these questions by reviewing the components of The Magic Formula. Does Eric need $40,000 for his family? Yes. Is the effective tax rate under current law approximately 20% for those in Eric’s income bracket? Yes. Does every business have expenses of Overhead in delivering value to the marketplace? Yes. Since these are all accurate variables, we find ourselves with the ultimate question: From where does the money come? Answer: Customers.

Who are customers? That would be: You and Me.

We pay Eric for the value he provides to us: the value of understanding the dynamics of electricity and how to bring it into our homes for the benefit of our families. He, in turn, shares portions of this Price with Vendors, Government and his Family.

At this point in our story, some may ask the question: “Why doesn’t Eric just keep on working for his current Employer?” For those individuals who are unemployed, the answer is obvious. For the ones still employed, the answer is two-part:

1.) Eric has discovered a better way to light up the lives of Customers, which his current employer is unwilling to accept.

2.) Because of the Universal Financial Principle above, Eric’s base compensation from any company is limited to, approximately, one-third of what he produces for an employer; Taxes and Overhead take the rest.

Prices are not arbitrarily set by businesses. Every business wants to be competitive in the marketplace and they know Price is one measurement of Value, subject to the perception and judgment of Customers.

Now, what happens when big sister, Iris, wants more? Not just a little more, a lot more!  In fact, she wants to double her consumption. Let’s do the math.

Eric still needs $40,000 for his Family and he still has Overhead to pay. So, by using the structure of The Magic Formula, we can solve for the amount of Taxes and the new Price his customers will pay. $40,000 divided by .60 is $66,666 (Net Income) multiplied by .40 is $26,666 (Taxes), which leaves $40,000 for Eric and his family. If all of Eric’s business expenses (Overhead) remain at the $60,000 amount, his Customers will need to pay $126,666 for the value of his services.

From $110,000 to $126,666, we (Customers) pay $16,666, more!

Remember the rest of our cast of characters: George and Lorna? George provides computer services to Eric; and, Lorna provides the building space for his shop. What do you think George and Lorna will be doing to the price of the value they offer to the marketplace?

If they want to stay in business, they will be doing what Eric was forced to do: raise their prices, too. George and Lorna are part of the $60,000 in Overhead that Eric needs to pay each year. When that $60,000 amount increases, who pays? Yes, once again, the answer is: We the People!

This is for certain: We pay a price for everything.

www.kimfoard.com