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Volume 3 | Issue 3
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March 2011
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Dear
Mark,
The economy has roared back to its highest production
ever! Yes, that is correct, even after adjusted for inflation the US
economy is now producing more goods and services than ever before!
Having a hard time believing that? Is it because the unemployment
rate is still above 9% vs. under 5% just a few years ago at the prior
peak? Is it because your home isn't what it was worth a few
years ago (and most houses are the same price as they were in 2001)?
Or could it be your retirement account has rollercoastered for over a
decade and perhaps it as recovered to its previous height, but only
when you added your new contributions to it.
The world has changed in many ways in the past several
years and so has our economy. The old saying is true, "the
only thing that stays the same is change." How well do you
adjust to change? Do you roll with the punches? Do you have a
backup plan? Do you have a plan? Do you just get mad and
frustrated?
Many small businesses, especially those who depend on
other small businesses and consumer discretionary spending, it will
take years for the recover to trickle down. How can your business
survive? It must change and change and change some more. Your
business must evolve on a continuous basis in order to be efficient
in production, service and competition.
Remember to keep your head up; the stock market is
keeping its head up! Good news is good and bad news is
ignored! What a concept, but isn't that how we got into this
mess in the first place? And then we get weird events which the
market claps for anyway. For instance, the unemployment dropped
to 9% (still high), but did so without one job being
created! How did the unemployment rate drop without creating any
jobs? The market doesn't seem to care! Perhaps the lesson
is not to fight the good news right now.
Thrive and survive,
Mark
Wyssbrod, CPA
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The Right Leadership
for Your Company
Does Your Company
Have the Right Leadership and Vision?
 The average tenure of Chief Executive Officers (CEOs)
of major corporations is 5 to 7 years depending on the study you read
(only 3 years for Fortune 500 companies). This is not necessary
a long time (no wonder we are short-term focused!). Additionally,
the main and major companies of the 1920s, were not the companies of
the 1950s, which were not the companies of the 1970s, which are not
the companies of today. Does your company have the right leadership
and vision to ensure your company's existence and relevance in the
future? If you are doing things the same today as you have
always done in the past you might be en route to becoming a part of
the statistics. What can you do to survive?
- The Right Leadership: Determine the right
leadership for your organization - you might be a great owner
and worker, but you may need a temporary management team to
reach and lead you to the next level or survive a transformation
- The Right Vision: Work on your vision!
- hire a coach or consultant to help you realize, plan and
implement the transformation of your business
- Understand Economic Drivers - Keep up with
business and economic publications; not the newspaper or evening
news, but technology and manufacturing publications, economic
research and theory papers as well as weekly (unbiased) economic
and investing periodicals
- Best Practices In Your Industry: It is
astounding the number of business owners who do not read their
own industry's periodicals and updates. This is one of the best
ways to see the leaders in your industry, the current
innovations and future industry challenges and
opportunities. Take time to introduce yourself to the
leaders of your industry, how can you learn from them? How
can they share their insights with you?
It's
time to invest in your company's future! Please call us if we
can help you in this matter/
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Important
Dates to Remember
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 March 1
- Business Personal Property Tax Returns are due
(for certain Georgia Counties)- March
15 - Corporate Tax Returns are due (for calendar,
12/31, year ends)
- March
15 - First quarter Corporate tax estimates are due (or
extension and any taxes for 2010 are due)
- March
20 - Georgia sales and use tax returns are due
- April
1 - Business Personal Property Tax Returns are due
(for certain Georgia Counties)
- April
15 - Individual Tax Returns are due (or extension and
any tax for 2010 is due)
- April
15 - 1st quarter individual tax estimates due
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Future Signal of
Challenge
Keeping an Eye
on Interest Rates
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 An "interest"ing move in interest rates may
cause some economic hiccups later this year (perhaps the fall of
2011). Long-term rates have begun rising at a faster pass than
short-term rates. This has the potential to disrupt financial
markets over time and for a correction to be a volatile move of
monies between long-term and short-term money funds.
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Black Swan Events
Bet
You Didn't See These Coming!
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 Only white swans existed, until a black swan flew
in. Black swan events are events which were unforeseen.
Unforeseen events are not taken into consideration in forecasting
models. How accurate can models predict if Black Swan events
happen on a regular basis? Below please find a list of recent
Black Swan events:
- December
2010 -
Republican Congress and Democratic President compromise on taxes
through 2012
- January
2011 -
Egyptian demonstrations turn revolution. I predict a power
vacuum and struggle will leave Egypt in a fragile state for the
near-term.
- February
2011 -
China over runs Japan as the second largest economy - faster
than expected! In the 1980's economist predicted Japan
would become the largest economy in the world. The result?
20 years of stagnation.
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Mental Recovery
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 The economic recovery may be more mentally than
financially. That is, the best thing to come out of the
recovery might be a sense of feeling better. We have observed a
few items to draw this conclusion:
Commodities
are rising on any good economic news, not declining with any bad
economic news, and rising on the lower US dollar
- Conclusion:
your net life-style may not improve with an increase in earnings
due to spending more on basis food and energy
Interest rates are rising and
should continue to rise
- Conclusion:
your net life-style may not improve with an increase in earnings
due to spending more on interest costs
Home prices will continue to be
under pressure for the long-term
- Conclusion:
If wages do not increase as fast a inflation due to unemployment
the budget a family has for a home purchase (the amount of
monthly cash outflow) will stay stagnant. Combine stagnant
wages with rising interest rates and the result is pressure on
the price of a home.
- Monthly
cash outflow for mortgage payment = amortization of mortgage
(principle and interest)
- If
mortgage payment is stagnant and interest rates rise, principle
(or the purchase price) must decline
Please contact us if you would like to discuss how
these items may affect you and your business.
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IRS
Circular 230 disclosure: To ensure compliance with requirements
imposed by the IRS, we inform you that any U.S. federal tax advice
contained in this communication (including any attachments) is not
intended or written to be used, and cannot be used, for the purpose
of (i) avoiding penalties under the Internal Revenue Code or (ii)
promoting, marketing or recommending to another party any transaction
or matter addressed herein
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Financial
Ratio Of The Month - General & Administrative Payroll To
Sales
This
ratio can inform you how efficiently your labor is operating. Management
can use this ratio for rightsizing their labor force.
G&APR
to $ = General & Administrative Payroll / Sales
What should your ratio
be? It really depends on your industry!
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Contact
Information
11770
Haynes Bridge Road
Suite
205
Alpharetta,
Georgia 30009
phone:
(770)
664-8583
fax:
(678)
762-9413
www.pro-active-cpa.com
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