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Dear
Mark,
Last month Warren Buffet
stated the recession will not be over until the
Gross Domestic Product (GDP) rises back to the
levels before the recession began. Well, if that
is the case we have a while to go. The GDP before
the recession was $14.062 Trillion ($13.229 in
2005 dollars) and the current GDP is $14.119
Trillion, but only $12.881 Trillion when valued in
2005 dollars (www.bea.gov).
Depending on our growth rate (1% - 2%), we will
not be out of the recession in Warren Buffet's
eyes until June 2011 to June 2012!
Additionally, this shows that the GDP
in dollars is growing, but the real amount of
"stuff" we produce is less. Interesting
contradiction and it shows the power of currency
devaluation.
Do
you know someone who exercises, takes vitamins,
and eats right to maintain their physical health?
Despite these precautions they sometimes become
sick and feel ill. What do they do to feel
better? Typically take more vitamins and some type
of medication.
Many small businesses in
this economy have caught a cold! But, instead of
taking more vitamins and medicines they decided to
take less or none all together. The result?
Small businesses became sicker over time, not
healthier! What medicine does your company
need to feel better? Perhaps we can help you
brainstorm the prescription.
Feel better
soon,
Mark Wyssbrod,
CPA |
| Medicine For Your
Business
Four Prescriptions for Better
Financial Health |
 OK, the environment is
tough! It's been tough for years, like a cold
you cannot shake. Perhaps it was tougher before
you realized it, like a cold you try to fight off
and then you wake up and you are down for the
count.
Americans had a slight cold
which started decades ago. The amount of
household debt slowly, but steadily increased
against household income. Did you know that at the
height of our "consumption bubble" Americans spent
$1.60 for every $1.00 they earned? That is
not healthy for our economy nor for our net worth!
What medicines can we take to improve our
financial position?
Prescription #1 -
Live Within (Below) Your Means
Ouch! Medicine does hurt!
Can you cut costs (the price of something) without
destroying value? Can you go back to eating Mac n'
Cheese instead of steak? Once you are able to
begin living below your means you can use your
savings to rebuild your financial position by
reducing debts and build your savings! You might
not realize how tasty Mac n' Cheese is again and
realize that it is the little things in life, as
opposed to the most expensive things, make the
difference.
Prescription #2 -
Exercise
Exercise strengthens
your body. You strengthen your muscles by
repeating a motion time and time again. You can
even challenge yourself by adding weight and
distance. We need to exercise financially
too! This means we must save and save some more;
and learn more about finances. As business owners
you can learn about the interactions of your
Profit and Loss Statement and your Balance
Sheet. This will let you understand your financial
position and cash flow better. Your financial
exercise will strengthen your net
worth!
Prescription #3 -
Be Creative
"If it ain't broke,
don't fix it!" is an old saying which you might
have heard before. Although you want to agree with
it at first, don't! We need to be leaders who
drive change for a better future; not managers who
just make sure the same thing is done over and
over again. Plus, when was the last time you did
the same thing over and over and received better
results? To survive the current economic
challenges we must strap on our thinking caps and
find new solutions!
Prescription #4 -
Be Courageous
Any way you
measure it fear, stress and frustration are at
decade highs. We are beat up mentally due to life
challenges and physically due to
stress. However, we must not be afraid to
seek out opportunities and new markets. Stay
grounded to reality, form a plan and execute on
opportunities. Don't let fear hold you back from
reaching the next level or achieving your
dreams. |
 Deadline Reminder Important
Dates to Remember
Now!
- Contact us for year end tax planning to ensure
you are not caught off
guard! |
- November 15 - Final filing deadline
for non-profit with calendar
year-end.
- December 31 -
S-corporation shareholders (owner of 2% or more)
must report their employee benefits in their W-2
(i.e. health insurance, dental insurance, HSA
contributions, etc.)
- December
31 -
Deadline to set up SEP, 401(k) and other
retirement plans. You may need to fund the
plans by this date as well.
|
|
Economic Forecast
Reasons
for Concern about another
Recession |
|
 The economy will continue to
be challenging and has a good chance of another
recession within the next 24 months. Key
factors of this forecast include:
Political policy
change (blame all parties
involved):
Political monetary policy
change from Spending to being more Conservative
could reduce GDP by over $360 Billon a year! This
is what is currently keeping our economy out of a
recession based on $ GDP. Lower taxes may be
substituted with a hidden tax called "inflation".
If lower taxes prevail, it is hard not to spend
money when it is not yours (see Congress actions
over the past 30 years), and the printing press
could be used to fund budget deficits. Without a
consistent economic policy to drive this change,
Congress will spend trillions with little results
(i.e. flip flopping economic policies will lead to
minimal benefits and lots of debt)
Unemployment will
continue to remain in the 9 - 10% through
2012
In September 2010
unemployment increased in 27 states. Here is what
a recent poll by SmartPros uncovered:
- 54%
of CEOs mentioned they would rebuild their
workforce to pre-recession levels by 2012
- 47%
of CEOs do not plan on changing the size of
their workforce in the next 12 months
- 65%
of CEOs mentioned they reduced their workforce
in the past 12 months
- Only
14% of CEOs believe their workforce can adapt to
uncertain economic conditions
- Only
25% of CEOs believe they have the management and
leadership needed to navigate uncertain economic
conditions
And
it's no surprise to anyone that unemployed
individuals spend less than when they are
employed.
Americans and
Money
At the height of the
economy we spent $1.60 for every $1.00 of income.
We have to spend about $0.60 for every $1.00 of
income in order to pay income taxes and have
monies for savings. When we save we are not
spending and our spending helps full
GDP |
| Thoughts On One of
Our Biggest Trading Partners |
|
How China's Actions
Affect the Prices We Pay
 Sometimes you learn more about
someone when times are tough or don't go according
to plan instead of when everything goes
well. We could be in that stage with our
trading relationship with China. Apparently,
China does not want to revalue its currency
because it may bankrupt many Chinese
companies. It is interesting to see that
this trading "partner" is willing to take our
intangible and intellectual property and protect
its own companies without necessarily caring for
its partners well being. We believe if China
does not allow its currency to be revaluated then
the US will continue to devalue its currency
forcing reform in China. If this becomes a
reality you may not see higher retail prices
immediately, but you can expect higher commodity
prices and lower margins for businesses.
. | |
| 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 | | |
|
Financial
Ratio Of The Month - Accounts Payable
Days
Accounts Payable Days (APD)
reflects the average length of time between the
purchase of material and labor from vendors and
payment for these purchases. It is different
than Accounts Payable Aging Summary which
indicates the time a bill is
outstanding.
APD = (Accounts
Payable / Cost of Goods Sold) x
365
APD is an indicatory of how
timely a company is meets its payment
obligations. The lower the APD the
better. |
| Contact Information
11770 Haynes Bridge
Road
Alpharetta, Georgia
30009
phone:
(770)
664-8583
fax:
(678)
762-9413
|
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