Sexy Math

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

Little Things

For Want of a Nail

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.

All for the want of a horseshoe nail.

All of us encounter big challenges throughout our lives. Some are of our own making — others, from the hand of fate. When we are standing nose-to-nose with the Monster, there are two choices. We can either forfeit our dreams and the prize — or, chisel the beast down to size.

Mile by mile, it’s a trial,
Yard by yard, it’s hard,
Inch by inch, it’s a cinch.

Little things make a big difference:

1.) In the entire universe, there is only one YOU. The fingerprint of your touch is unique in the lives of those, within the sphere of your influence.

2.) While respectful of the very tangible Role Power by those in authority, you hold in your hands the greater intangible Relationship Power to enlighten, empower, and encourage.

3.) The person most mature in any relationship will lead the way by being proactive, patient, and kind. You have the ability to break down dissenters — by, loving them to pieces.

4.) All good things in life must be built. By doing your planning and preparing to succeed — in being a good steward of Time and Money — the sanctuary of a home nurtures innovation.

5.) Construction is an ugly business. From the bits and pieces of a beginning, masterful creations are the result of your passionate brick-by-brick effort, to deliver value to the world.

6.) By asking, seeking, and knocking — you will hear ideas, find truth, and walk through open doors. Each person has something to share.  Care abundantly, Listen intently, — then, Do good.

7.) Focus only on changing ‘Things’ within your control. ‘People’ change, only, when they make the decision to behave differently. Forget about pleasing others. Work on yourself.

Big things and big people have their reward in the daily headlines. They are so proud of their largess. The bigger they are, the harder they fall.

Salvation of the realm will be done by the little people — who humbly tighten the nails to save the shoe, save the horse, save the rider, save the day, and preserve the kingdom for the benefit of everyone.

www.kimfoard.com

Innovators

InnovatorsNew Creations

Doers are focused on Giddy-up Go!

Naysayers are happy with the Status Quo.

“Because something has been done a certain way,”

Is cause for the effect of “the same results each day.”

Those, seeking for a better way, know,

The secret to success is a passion to grow.

Doers are an enigma to the Naysayers.

Those who Do are ostracized by those who Can’t.

The ones who say, “It can’t be done.” are, by choice, in a rut. They might be comfortable there; yet, they have stopped growing. When individuals decide to stop growing, they start dying. The purest definition of a rut: a grave with the ends kicked out.

Let’s break down the word Innovator to see that of which they are made.

In-no-vator

In: They are all in, as in Committed. We might think of the Poker player, who goes “All in.” Or; we consider the athlete, who is “In the game.” Maybe, even, the warrior engaged “In battle.”

No: They are motivated by this little word. At the precise moment they hear it, they gear up. Where, just a heartbeat before, they were tempted to give up, think the goal impossible, believe the effort futile; now, they focus on doing what others say can’t be done.

Vator: They are a fearless combination of Darth Vader and Stealth Raptor. For those of the Star Wars generation, that fictional character was mysterious; for those patriotic souls with a belief in our national symbol, the swiftness and grandeur of the Eagle in flight is exhilarating.

All things new begin with a thought, by an innovator who believes in the “magic” of discovery. A sage proverb advises against stitching new onto old. That which has become old is no place to display that which is new; the new appears out-of-place and, in fact, makes the old look bad. The greater lesson is that, when stress is applied, the new will tear away from the old; the value of both will be diminished.

The moral of this story: For those happy in your ruts, look up to the edges of the known to observe those discovering new frontiers. For those innovators wondering why your efforts are received with less than enthusiastic response, remember and be encouraged: The joy is in the Doing and we learn by Doing; we will, always, enjoy the rewards from learning and growing!

www.kimfoard.com

A Better Way

Thinking In A Different Way

Innovation only comes from those willing to think differently.

Since all we do begins with a thought, new thoughts lead to new actions. While new thoughts are frequently accepted as entertaining, new actions give the world cause for pause!

Because these thoughts and actions are new, they are different from the old. If everyone is doing the same old thing, the innovator gets noticed. Our comprehension of anything stems from language. Until we have a word, title, or category for something, we are limited in understanding its reward, or risk.

This is a story about being different.

There are days of pleasant surprises. Yesterday was one of those for me. The gift was wrapped inside my email Inbox.

Hi Kim,

I’ve added your blog to my AccountingBlogList.com under the category of General which, after reading some of your blog, doesn’t seem quite accurate to me. Can you skim my list and tell me if you see a better spot? Or suggest if I should create a new category and, if so, what might it be called?

Thanks and congrats on a good blog!

Michelle

This is my response.

~

Michelle,

Thank you for the great honor to be included on AccountingBlogList.com!

Your comment about finding me “hard to categorize” did make me laugh! It is not the first time I’ve heard that. In fact, many tend to believe there needs to be a special classification in the neighborhood of “Off The Wall”.

Seriously, though, I have noticed that, as I tell my stories, eyes get big and soon laughter follows; usually, with a comment of, “Kim, you’re unique!”

The greatest documented compliment was offered by Ron Baker when, at the bottom of my Trailblazer article, he provided this valuable feedback: “More importantly, congratulations to you for having an open mind, looking for a better way, and contributing to the dignity of our profession by doing the right thing for your customers.”

That comment is what, I believe, defines Accounting:

  • Care about the people.
  • Listen to them.
  • Deliver value.
  • Learn.

Then, repeat the cycle.

Meeting you at the AICPA Tech+ conference was a treat for me. The excitement of being with a thousand of the sharpest minds in the country was only dampened by the frustration of not being able to meet and share with each of them.

Sitting in the session of One-on-one with Peter Sheahan and listening to the methodology of promoting ourselves to others resulted in a moment of clarity. The questions from the audience were relative to the specific steps in offering our marketing more effectively. It dawned on me that the problem is not with our sales tactics; it is with our ability to communicate. Communication is what the listener does.

We, simply, need to listen to our customers. Their desires, today, are different from what they were, yesterday. Each day is a new opportunity to deliver value to them, and the marketplace.

Listening to our clients is another of those Win-Win propositions: We learn what they want and they learn how much we care. What I know, now, after thirty years of sitting at their feet, pales in comparison to the formal college degree. Sure, our clients come to us for our qualities as a Master in the realm of accounting; yet, we (and they) benefit when we become their Students and learn even more about them and the multifaceted world we share.

That’s a very long introduction to my point: In my original Tribute email to Ron on Memorial Day, I shared a story of growth to that moment in time. Now, it is different. I was doing the best I could with what I knew, at the time. With new education and experience, I’ve discovered A Better Way.

Originally, the thought was to have a Business blog and a Personal blog. Silly me! Great accountants eat, breathe, sleep and live this chosen profession, passionately, 24/7. So, the design has been re-tooled to provide introductions from my Website blog; then, to tell stories at the SageTalk blog.

In a telephone conversation with a Client last week, I heard a new twist on that friend’s impression of my efforts. She said, “Kim, you’re a gladiator! You refuse to sit on the sidelines; you are engaged in battle to make a difference.”

Maybe it’s the Scotch-Irish ancestry and the parable that goes with it: “You know what Irish tact is, right? It’s the ability to tell a man to go to H-E-double L and have him looking forward to the trip.”

Personally, I want to believe it stems from a Teddy Roosevelt shtick quoted in this Coattails blog post:

The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs and comes up short again and again, because there is no effort without error and shortcoming; but, who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end, the triumph of high achievement, and who at the worst if he fails, at least fails while daring greatly!

My purpose is to join you and Ron in your efforts to make a difference in the lives of many.

If there is a category for our type, I believe a fitting title is: A Better Way

New, Different, Better; regardless of the semantics, we intend to, truly, be Trailblazers for the benefit of all.

Thank you, again, for your kind and thoughtful recognition.

Best regards,

Kim

~

www.kimfoard.com