Count the Cost

From the moment we have a Thought, all the way through the process of what we Do, there will be a Cost to every choice we make, guaranteed.

Count the CostIn every decision we make, two resources are at risk: Time and Money.

One, or both, will either be consumed, or invested.

The management of each is within our control.

We choose whether to spend, or invest.

We either choose, or the world will choose for us.

In fact, even when we choose, the world is prepared to laugh at us. That’s OK if we have put forth the effort to become all of which we are capable. The laughter of others, then, is simply their opinion of our effort. Success is the peace of mind in knowing we did our best.

Our best is only possible with Planning, Preparation, Practice and Performance. In any endeavor, these components form a circle of learning and growth.

All We Do Begins With A Thought

These seven magic words (above) ending in a seven letter word (THOUGHT), with U in the center, are the Alpha and Omega of the Four P’s.

In the beginning, is a Thought; the bigger and bolder, the better. Because, that initial thought becomes a target, a Goal if you will, worthy of what we choose to Do. The Four P Horsemen of Planning, Preparation, Practice and Performance will carry our effort through to a result and the appropriate Celebration of accomplishment, at the end.

This is the natural progression of a single Thought:

1.) Goal
2.) Planning
3.) Preparation
4.) Practice
5.) Performance
6.) Celebration

All We Do Begins With A Thought

From the moment we have a Thought, all the way through the process of what we Do, there will be a Cost to every choice we make, guaranteed.

From the Good Book, comes this encouragement:

But, don’t begin until you count the cost. For who would begin construction of a building without first calculating the cost to see if there is enough money to finish it? Otherwise, you might complete only the foundation before running out of money, and then everyone would laugh at you. They would say, “There’s the person who started that building and couldn’t afford to finish it!”

In every decision we make, two resources are at risk: Time and Money.

Of the two, Time is the most precious. Those who consider themselves Idea People, with runaway thoughts, fail to recognize the Cost for their flavor of the moment. If they are thinking about This, it is impossible to think about That.

There’s a Price we pay for, absolutely, everything.

As the progression of activity moves forward through each stage, from Thought, to Planning, Preparation, Practice and Performance, there is either an actual monetary Price, or an opportunity Cost of forgone alternative options. Even, the occasion of joyful Celebration requires the resources of Time and Money for the opportunity to tie ribbons and bows around the accomplishment.

Guess what, though? With accomplishment, come even bigger dreams. They will arrive in the form of more and different thoughts about new opportunities, heretofore, unseen. The cycle of learning and growth repeats.

All We Do Begins With A Thought

Please, count the cost.

www.kimfoard.com

Sexy Math

When people say money is not important, they will lie about other things, too! My grandfather was right when he opined, “Figures can lie and liars can figure.”

Sexy MathAs I was walking down the sidewalk on my way to lunch, two women passed by.

Subject of their conversation:
Men and Money

A man had misbehaved over $45 worth of flowers.

When people say money is not important, they will lie about other things, too.

My grandfather was right when he opined, “Figures can lie and liars can figure.” For the last couple of decades, we’ve experienced that in spades. Speaking of cards and the games people play, let’s take a look at the strategy of playing our hand with grace and poise.

There is another four-letter word on the minds of many — Jobs. The debate rages on and on about who creates them and why they disappear. While fingers are pointed and waved at the other guy, the real solution is left waiting for someone to do the Sexy Math of discovery for the answer — Work.

We don’t need Jobs. We simply need people to take their gifts to the marketplace, in the old-fashioned way of providing value. In the vernacular, that delivery process is known as Work.

And — here begins the Sexy Math of the Entrepreneur.

For the sake of conversation, let’s say you need $40,000 for your Family. 40 hours per week for 50 weeks, with a 2 week Family vacation, is a bank of 2,000 productive hours (40 hours times 50 weeks). You’re a talented individual, quite gifted, and extremely intelligent. There is something you can do that has value to others at a minimum rate of $20 per hour ($40,000 divided by 2,000 hours).

Wait ~ There’s more to know about this — before you launch your first business. There is Overhead, which is the price to be paid for the joy of having your very own Company. Again, for the sake of continuing our conversation, let’s acknowledge this amount to be $60,000 — everything from Advertising, Dues, Fees, Insurance, Rent, and Utilities, to the multitude of other costs necessary for your Company.

You still need $40,000 for your Family and this Sexy Math example still has 2,000 Productive hours in a year. What is your minimum target rate to Customers, now, in consideration of Overhead? Answer: $50. Wow — from $20 to $50 in the blink of an eye.

We better pause for a moment to check for any dishonesty in our figures, or presentation. $40,000 (for Family) plus $60,000 (for Overhead) equals $100,000, which, when divided by 2,000 (Productive hours), equals a minimum target rate per hour of $50.

Taxes ~ As model Citizens, we believe in supporting the greater good of all Society. Through the ages, a tithe — 10% — was acknowledged to be adequate for the support of orphans and widows. For the modern builder of dreams into reality (YOU the Entrepreneur) the rates are quite different.

We have a 15.3% Self-employment Tax, a 15% Federal Income Tax, and at least a 5% State Income Tax. That’s a total Tax Rate north of 30%. (Does anyone else see the irony? God asks for 10% and Government demands a minimum of 30%.)

We still need $40,000 for our Families and $60,000 to keep the lights on. Now, what?! How do we do the Sexy Math to determine our Price in the marketplace? CPAs are professionals — trained to do these calculations in a controlled and regulated environment — yet, I want you to practice this at home.

The $40,000 needed for our Families is, now — at best — a 70% slice of the whole pie, because Government helped themselves to a 30% chunk. $40,000 divided by 70% equals $57,143, which, when added to the $60,000 equals $117,143. This is the amount Customers must pay. For those who think by the hour, $58.57 is the new target rate.

Once more, we will pause to check the veracity of our facts and calculations. $117,143 (Customer Price) minus $60,000 (Overhead) equals $57,143, which when multiplied by 30% equals $17,143 (Taxes). This leaves $40,000 for our Family — and, the minimum Rate per Hour for us to provide Value to our Customers has gone from $20 to near $60.

Is anyone brave enough to do the Math (sexy is long gone at this point) for a total Tax Rate above 30%? Even under current law, the unwary Entrepreneur will pay close to 55%. This is comprised of the 15.3% Self-employment Tax (a combination of Social Security and Medicare tax rates) plus 33% Federal Income Tax, plus 7% State Income Tax.

Solution: $40,000 divided by 45% (Our percentage remaining after Government takes 55%) equals $88,888 (Yes, we’re really behind the 8 Ball, now.) which, when added to the $60,000 of support from Vendors equals $148,888. This is the new price, which Customers must pay, to keep us in business and provide for our Families.

For the benefit of any Doubting Thomas (and, my late Grandfather) here’s the Proof: $148,888 (Customer Price) minus $60,000 (Overhead) equals $88,888, which, when multiplied by 55% equals $48,888 (Taxes). This leaves $40,000 for our Family — and, the minimum Rate per Hour for us to provide Value to our Customers has gone from near $60 to about $75 ($148,888 divided by 2,000 Productive Hours).

Every household budget will be different — $40,000 will be adequate for some, not enough for others. The point, though, is that the needs for every Family are real. You pick the amount for yours. It is factual and a fixed amount in the calculations, above. Productive Units (hours in the examples, above) are also relatively fixed. In a stable economy, the amount of Overhead will be relatively fixed, too.

The variable in all of this are Tax Rates. As they increase, so do the Prices on everything. The result of higher prices is that we need a greater amount of money for our Families — and, Vendors need an increasingly larger amount to stay in business. Ultimately, the Price for everything goes Up.

As Pogo so eloquently expresses, “We have seen the enemy and it is US.” Companies don’t pay Taxes. People do. You and I — as Customers — we all pay more for the “free” lunches so generously offered by our Government to those who refuse to Work.

Now, that we’ve done the Math, we can focus on the Sexy part of this equation:

S ~ Success is the most powerful of aphrodisiacs. Much more than the opportunities that money can buy, it is the sense of accomplishment and the desire to share sustenance with another person.

E ~ Enlightenment, Empowerment, and Encouragement can move us to Excellence in all that we do. In the marketplace of Life, those in pursuit of creativity and innovation will always offer a boutique display.

X ~ Marks the spot of opportunity in every direction. Go ahead — do it — mark an X on the ground . Stand right in the center of the intersecting lines and tell me how far you can see in the direction of each line.

Y ~ We’re at the fork in the road. Indecision is not an option. There is no Maybe, or Try, to it. Left — or, Right — is the choice. The decisions we make today will determine the brightness of our tomorrows.

Now that you’ve done the Sexy Math necessary to provide for your Family, please, share this novel idea with others. A category in desperate need of this information is the one of our Politicians. If true that we get the Government we deserve, then, we need to start asking for real Leadership to inspire every one of us to offer our, very, best to others.

The time has come for all of us to — just — do it!

Sexy Math, that is.

www.kimfoard.com

Sacrifice

One word, sacrifice, is the essence of ‘Giving to Receive’. It is an individual choice executed by the internal will of that person for the benefit of others.

Giving and ReceivingThe answer to the human condition, literally, leaped from the screen into my consciousness. Last week, a Fellow vented his frustration at me by announcing, “I never sacrifice, even for friends because: a) if they are true friends they would not want me to sacrifice, or b) I would be willing to do it and therefore was not a sacrifice.”

First, let me share the rest of the story. As you read through the conversation thread, below — which was the catalyst for the Fellow’s remark — remember to always listen carefully to what people say and you can, vividly, see into the core of who they are.

The topic of discussion — on this professional forum for the exchange of ideas — was about which word is best: Customer, or Client.

(Kim Foard) Much more than a matter of semantics and the focus on our ‘professional‘ command of the English language, the concept is to build a relationship and produce positive results. From experience, I have found some (of those for whom I work) like the word Client, others like the word Customer — and, everyone (who pays me) loves to believe they are my Friend. Let’s raise the bar and think of those we serve as Friends.

(Fellow) Friendship can happen, but the vast majority are business relationships and not friendship, IMHO.

(Kim Foard) One thing I have noticed — My ‘enemies’ respect me. They don’t do business with me as Customer, Client, or any other label.

(Fellow) True, but being friendly is not the same as being a friend.

(Kim Foard) Again, it’s a matter of semantics. Included in my definition are these parameters: “Friends deserve the best in everything. No sacrifice is too big — or, task too small — when friendship is being nurtured.”

(Fellow) I never sacrifice, even for friends because a) if they are true friends they would not want me to sacrifice, or b) I would be willing to do it and therefore was not a sacrifice.

(Kim Foard) You’re right. It’s a spectrum of thought. You and I have clearly identified the ‘Pots of Gold‘ on each side. The real secret is to be passionate about our beliefs — because, we will attract those of like mind.

In my humble opinion (IMHO), he is ‘right’, only, in the context of being entitled to his opinion. What is your belief? As you can see, the conversation morphed from a matter of semantics into one of foundational issues at the core of any relationship. The label choice between Customer vs. Client pales into insignificance, when measured against the word: Sacrifice.

Is sacrifice important? Is it old-fashioned? Is it taken, or given? What do you believe?

Let’s set the stage for our thoughts by considering two simple Proverbs:

When people’s lives please the Lord, even their enemies are at peace with them.

Calloused (social) climbers betray their very own friends — they’d stab their own grandmothers in the back.

Thoughts of the vernacular, which might come to our minds “With friends like those who needs enemies.” — and, “The enemy of my enemy is my friend.”

Yet, we are encouraged to move our thoughts, words, deeds and character to a higher level.

You’re familiar with the old written law, ‘Love your friend,’ and its unwritten companion, ‘Hate your enemy.’ I’m challenging that. I’m telling you to love your enemies. Let them bring out the best in you, not the worst. When someone gives you a hard time, respond with the energies of prayer, for then you are working out of your true selves, your God-created selves. This is what God does. He gives his best — the sun to warm and the rain to nourish — to everyone, regardless of the good and bad, the nice and nasty. If all you do is love the lovable, do you expect a bonus? Anybody can do that. If you simply say hello to those who greet you, do you expect a medal? Any run-of-the-mill sinner does that.

In a word, what I’m saying is, Grow up. You’re kingdom subjects. Now live like it. Live out your God-created identity. Live generously and graciously toward others, the way God lives toward you.

Right about now is when we, all, start squirming and looking for the semantic Exit. With thoughts running wild — great idea, cute concept, life changing — we accept the realization that Knowing and Doing are very different. Yet, we remind ourselves of life’s Universal Principles and move forward through the pain. We remember we’ve been taught the battle cry: Hard is easy — Easy is hard.

And so, dear brothers and sisters, I plead with you to give your bodies to God because of all he has done for you. Let them be a living and holy sacrifice—the kind he will find acceptable. This is truly the way to worship him. Don’t copy the behavior and customs of this world — but, let God transform you into a new person by changing the way you think. Then you will learn to know God’s will for you, which is good and pleasing and perfect.

Because of the privilege and authority God has given me, I give each of you this warning — Don’t think you are better than you really are. Be honest in your evaluation of yourselves, measuring yourselves by the faith God has given us.

The idea that one person can define what sacrifice is to another individual reeks of arrogance and ignorance.

When we ask for anything from another person (as simple as a glass of water — or, as complex as the price for an exchange of goods and services), they make a choice between ‘Yes‘ and ‘No‘. If the request is beyond a boundary of theirs, they will choose: No. If the request is within their will to deliver, they will choose: Yes.

To fulfill our request, another individual might offer a sacrifice.

What is a sacrifice?

Forfeiture of something highly valued for the sake of one considered to have a greater value or claim.

To forfeit (one thing) for another thing considered to be of greater value.

Surrender of something of value as a means of gaining something more desirable or of preventing some evil.

Something of value given away or up in order to gain something more important or to benefit another person.

One word — sacrifice — is the essence of ‘Giving to Receive‘. It is an individual choice executed by the internal will of that person. No managing by committee. No having it all. No maybe in approach. Sacrifice is a committed decision to offer. What another person does with the offering is their choice.

In my closing remarks — in the conversation with the Fellow above — the ‘Pots of Gold‘ on either side of the rainbow are Time and Money. In business, the focus is generally on Money — and, the opportunities it can buy. Of the two, Time is more precious — because, of the priceless relationships it can build.

When my Friends offer money in exchange for the value of my time — plain and simple — they are making a sacrifice. From the blood, sweat, and tears of their effort, they produce value in the marketplace. The money earned — through the sacrifice of their time — has great value to them. They exchange it for something perceived to be of greater value. I acknowledge and appreciate their sacrifice.

As their Friend, I believe in — Going far beyond the call of duty, Doing more than others expect, Striving after and maintaining the highest standards, Looking after the smallest detail, and Traveling the extra mile. Sacrifice means giving my best — in everything and every way.

Beyond the realm of business, the gift of Time is a daily sacrifice we all make. The question becomes — “At which altar do we place it?”

On the altar of Narcissism, humility is sacrificed by those who believe they are the center of the universe.

On the altar of Friendship, pride is sacrificed by those who believe they are, simply, conduits of goodness for the benefit of others.

“There is no greater love than to lay down one’s life for one’s friends.”

www.kimfoard.com

Passion or Prostitution

Money is a tool, nothing more. Equally important is how any relationship feels. It must be mutually beneficial in ways beyond the quid pro quo of a financial arrangement.

Passion ScrabbleOur affair was over when I heard her ask, “Is it about the money?”

Without hesitation, the answer was, simply, “No.”

As a builder of relationships, I knew better.

What begins twisted —
ends twisted.

In the beginning, as a young CPA, I said, “Yes!” to everyone who waltzed through the front door. Thirty years later, I still dance with some of them.

Where did the others go?

They are off to find someone able and willing to be paid to perform.

Those little words: To and For. They are innocent in appearance — powerful in meaning. Many times, professionals exhibit an attitude of doing things to their Clients. I believe in performing acts of service for People.

Knowing something and doing it are two, entirely, different things. My philosophy has, always, been to serve. Yet, at times, my actions have been less than honorable. The rationalization was made that, as a businessman, it was okay to take on projects simply because someone asked me to do it — and, they had the money to pay.

“And,” you ask, “the problem is?!”

My reply, “It didn’t feel right.”

Difficult to put into words. Yet, there was something about their attitude that bothered me. There was not a true meeting of the minds or a connection at the core of word and deed. While I wanted to do something of value for them, they just wanted me to do it for the money. There was going to be a financial exchange — nothing more. And, I agreed.

What begins twisted — ends twisted.

So it was with the woman above. For over a period of ten years, she had money and needed accounting services. I was paid well for my services — very, well. In fact, I asked to be paid more each year in search of a better feeling (commitment) for our arrangement.

Silly me, for believing that people are more important than projects. I offered ideas for building wealth and achieving success — she took them and paid me. Right up until she wanted to believe she owned me — and, that I should be willing to accept her abuse.

You see — she is very gifted in intelligence, charm, and social skills. Yet, rather than grow in maturity of business acumen and ownership of the consequences — of her choices — her approach is to manipulate those around her. And, if that fails, to buy them.

When I said, “No. No, thanks. and, No more.” — she asked, “Why?”

I went on to say, “Because, for the last few years, I have felt dirty working for you. While I want to do things for you, you want me to do it for the money. No more.”

Lest anyone think that I work just for the love of it, let’s take a look at the spectrum between logic and emotion.

Yes, money is important. Those who say it isn’t will lie about other things, too. Money is a tool, nothing more. When managed properly, it allows great businesses to serve great people.

Equally important is how any relationship feels. It must be mutually beneficial in ways beyond the quid pro quo of a financial arrangement.

Those clients with whom I have danced for thirty years are the ones who receive much more than the accounting projects for which they ask. They, in turn, share with me their life stories. We have a connection beyond description. Suffice it to say, we share a similar worldview and an enduring bond of family, friends, and community.

Much more than a professional ‘Accountant ~ Client’ relationship, it is one of friendship. Friends go above and beyond to serve the best interests of each other.

So, when I hear one of my Friends say, “You sure do a lot of work for that amount of money!” I know we have discovered the true potential and passion of a mutually beneficial long-term relationship.

www.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