Tax Law Confusion

As I write this I have just sent my CPA a note asking if they’re sending out a summary of the new tax law and how it affects small businesses. I’m not sure what I’ll get back. Not because of my CPA firm but because of the way the tax law was sloppily slapped together (probably with a lot of lobbyist input).

On my table are four articles from the Wall Street Journal with the following titles:

  • Apple set to pay big tax bill, touts U.S. spending
  • The one tax change that really bites businesses
  • Tax law to drive savings, buybacks
  • Some small business to miss tax break

While a tax layman I think I’m sharp enough to draw some conclusions from all I’ve read about this. One is if it’s a large corporation the odds are it will get a tax break. If you’re a small business, an LBO specialist, or emerging company (especially with a lot of debt) you don’t know what’s in store for you.

A Florida accountant who works with entrepreneurs said (in the last WSJ article listed), “My head is spinning. I have been doing this for decades and even I don’t feel comfortable.” Marshall Goldsmith, noted coach and author (What Got You Here Won’t Get You There and many more books) was quoted about taking the new pass-through entity deduction saying, “My accountant is not sure how this impacts me. I guess my answer is, ‘I don’t know.’”

Bottom line, don’t run your business like the government does tax laws. Take your time, pay attention, and do things right the first time.

“Every new year is the direct descendant, isn’t it, of a longline of proven criminals.” Ogden Nash

Timing is Everything – Proven

On December 30, 2017 the Wall Street Journal featured a column by Daniel Pink, How to Be Healthier, Happier and More Productive: It’s All in the Timing, which was an excerpt from his new book When, The Scientific Secrets of Perfect Timing. I’ve started reading the book and found this article to be an excellent introduction to the book.

The article concentrates on timing during the day. Pink writes that we all have cycles, most of us on a cycle of peak-trough-rebound, although about 20% of people are truly night owls, with a cycle of rebound-trough-peak. Because of this cycle, most of us are creative in the afternoon, during our rebound period. Our analytical skills tend to be best during the late morning, after we’re energized and in a groove, and before we hit the mid-day slump, i.e. trough.

What I found interesting was the study’s research on exercise. Exercising in the morning allows for:

  • Building a routine (we do it before we get tired and/or distracted).
  • Boosting our mood.
  • Losing weight, because people generally don’t eat before early exercise and therefore burn fat not food.

Exercising in the afternoon or evening gives:

  • Fewer injuries because as our body temperature rises during the day our muscles are warmer.
  • Better performance (cardio and strength).

Last fall I wrote about a book titled, Rest. Similar to what’s in Rest, When recommends we take more breaks to increase productivity. This was shown to be true in a study of students and their taking of tests during different times of the day. Morning tests generate higher scores. But afternoon tests after a break yielded much better results than without breaks. The efficiency of working with others also improves after a break.


What was really interesting was that when the break included being outdoors, people who took a short outdoor walk were happier and more rested than those whose break included walking around indoors. In the book Rest, one of the focal points was how Charles Darwin took daily outdoor walks. He also took (what I’ll call) super breaks, aka naps.


It appears the more we study human patterns and tendencies the more we get away from the philosophy that everybody needs to work, work, work. This is especially true for people who use creativity to some extent. This could be writing, art, sales, problem solving, and much more. The concepts above don’t apply to those of us on an assembly line, running a CNC machine, hanging drywall, or similar. But, it’s also known regular breaks from physical work increase productivity (I remember this from my Production 101 class).

The above lends credence to what I tell students in my Dynamically Grow A Consulting Business at the SBA office, find your best time of the day for certain tasks and do those tasks at those times. And, in the final topic, on life balance, I emphasize taking breaks.

Integrity and Relationships

I was reading an interview with a noted Seattle real estate developer and when asked about what he learned from his first mentor he stated it was the value of relationships, and the value of integrity.
Pretty good lessons I’d say. It’s tough to do business without great relationships and integrity. Sure, people can make a lot of money with questionable ethics but, in my opinion, at some point it catches up with them.
As many people know, I preach the power of relationships to my clients in the buy-sell world. In small to mid-sized deals nobody buys from or sells to somebody they don’t like (or trust). When one client disagreed with me I pointed out how the seller gets along with the customers and employees and if the buyer and seller don’t get along how will the buyer keep the customers and employees, which are what is really being bought.

If You’re in Business You’re Providing Value

Recently we had to take our Kitchen Aid mixer in for repairs. I was amazed at the sight of hundreds and hundreds of small appliances on the shelves of the repair shop. In this age where so much is disposable (think electronics like a DVD player) there were a lot of items being rehabilitated.

It demonstrates there’s a need for all kinds of services. The shoe repair shop near us looks the same, hundreds of items on the shelves. Good shoes or boots cost hundreds of dollars and it makes sense people want to keep them even when the basic parts wear out.

Think about where you add value. The above examples are simple to understand. Your appliance works again or your shoes don’t leak. At “Partner” On-Call we always said our goal is to have our clients better off with us versus without us. Here’s a simple three step process.

  • Determine how you can get in front of more people you can help (it’s using the phone and in-person meetings, not Twitter).
  • How do you figure out the value you can add (ask questions)?
  • Impress them with valuable information before they hire you (no hard sell, have them realize what they’ll be missing without you on their team).

We all can provide value. But if your value stays hidden within you it’s not helping anybody.

“A life spent making mistakes is not only more honorable, but more useful, that a life spent doing nothing.” George Bernard Shaw

Make Yourself Dependent

We recently went out for dinner with some good friends and in our discussions the husband touched on how his customers tell him if he was to leave they don’t know what they’d do (he’s in sales of technical production equipment). In other words, he’s indispensable, at least in the short-term.

I often mention how business owners need to reduce and eliminate dependencies but there’s a flip side to it. Often we need to make ourselves a dependency. This can take many forms.

As described above, an employee with special skills, especially in small to lower middle market businesses, has job security. Not only is it expensive to replace someone, in today’s market it’s darn hard to find great people. Our friend has good job security.

When your company provides crucial services to your customers you’ve become a dependency to them. Without abusing it, it’s revenue security. It’s why repeat business and any “value-add” service is the top choice of business owners (and buyers).

On the other hand, if you are the reason one of your suppliers has customer concentration issues you have some leverage (as long as there are other suppliers). This one is easy to abuse. I remember in grad school learning about how Sears would become the highly-dominant customer of mid-sized businesses and use that to buy the company, and not at what the price would be if they weren’t so dominant.

While I “preach” about the evils of dependencies, if you’re the dependency it can be a good thing.

Getting the Deal Done Recap

On November 7, 2017 we* did our tenth annual Getting the Deal Done Breakfast Conference and had record attendance of about 180 people. Our guest speaker was Joe Fugere, founder and CEO of Tutta Bella Neapolitan Pizzeria.

Joe’s topic was, “Value Based Leadership.” Here are some of the main points I picked up from Joe.

  1. Tutta Bella has their 10 Point Pizza Guidelines and if any pizza doesn’t meet all 10 guidelines it isn’t served and is donated to food banks.
  2. Joe’s business recipe for success has three ingredients: Purpose, Values, and Vision. Purpose summarizes why a company exists and Tutta Bella’s is, “To nourish lives by sharing traditions, authentic food and love.”
  3. Values in our standards of behavior. Tutta Bella’s values are love, innovation, growth (of their people), community, and passion. As part of this they expect their people to, live our values, be our values, and create memorable experiences.
  4. Vision defines the optimal desired future state. Part of Tutta Bella’s vision is providing employees with clarity, giving professional and personal support via constant feedback and coaching, and giving their people a reason to be proud. Overall, their vision is, “To transcend conventional practices and expectations in casual dining so that our enterprise flourishes and is highly respected by employees, guests, and business peers.”
  5. The company is very community oriented. Each of their five stores picks a charity in their immediate community to support and companywide they have two organizations they support.

They live the above, not just say it. That becomes obvious when you hear Joe talk about it.

As per our standard operating procedure, the sponsors then presented a panel discussion. This year it wasn’t a case study to analyze but rather sticky situations in buy-sell deals (and with operating companies). The topics our group of experts covered included:

  • (Given Tutta Bella is such a people oriented company) what are the top people-employee-management issues?
  • The plusses and minuses of selling to management and employees.
  • Dealing with a C corporation when selling, especially if there’s real estate in the corporation.
  • How to handle shareholder squabbles and disputes.
  • What to do when there’s no management development, which usually means a huge owner dependency.
  • When is a quality of earnings report needed and what makes it a good one.
  • And it goes without saying Marc presented on tax law updates.

Another great event and we hope to see you at next years.

* We means Greg Russell with PRK Law; Kit Gerwels with Columbia Bank; Marc Hutchinson with Hutchinson and Walter CPA; John O’Dore with Chinook Capital Advisors; and me.


Treat People Fair and Reap the Benefits

About five years ago I worked on a buy-sell deal, representing the buyer. Time goes by and I get a call from the seller, asking for help with one of his other businesses.

I got the call because he respected the way I handled things. He knew my objective was a win-win deal. (This is an example of why I tell clients their legal bill is dependent on how well the attorneys play together – some play well and others always want “everything.”)

If on every assignment you treat everybody fair, your short and long-term results will be great.

Walk Like a New Yorker

While in New York City earlier this year we had dinner with one of our former exchange students. Alex recently moved to the New York area from Ecuador and we talked about his adapting to the city, which he’s been to before but not to live.

We talked about the crowds and the pace and I said, “You have to learn to walk like a New Yorker.”

This is a metaphor for adapting to any circumstance in life or business. In my business, relationships are key to success for my clients and me. I like to say, “While cash is king, the queen is relationships and like in chess, the queen is the most powerful piece on the board.”

You don’t get the job you want if you can’t relate to the boss or hiring manager. I can’t get a client if we don’t relate and my clients can’t buy or sell a business if they can’t relate to people on the other side.

I recently heard from two owners who told me how important it was to sell their business to the right person. One specifically mentioned his loyal employees and how he wanted them to keep their jobs.

Everybody reading this relies on relationships to be successful so I’m preaching to the choir. So just in case you forgot….

“Sincerity is the key to success. Once you can fake that, you’ve got it made.” Groucho Marx

It’s All About Perspective

A friend told me how he visited Bozeman, MT and his brother-in-law complained about how (fast growing) Bozeman is becoming “too crowded.” One of my sons went to school in Bozeman, we’ve been there each of the last 8-10 summers, and, believe me, Bozeman is not at all that “crowded.”

It’s a matter of perspective, isn’t it? If you’re used to it taking five minutes to go across town and now it takes seven or eight you’re frustrated.

I find myself wondering about how some things that seem to change faster than we’re used to as we live in a time where change happens with more velocity than ever before. Social media is one area where it’s snuck up on traditional businesses.

Two years ago, I did a little here and a little there. Now, on the advice of PR and marketing friends, I have something going out daily (not all via the same mediums). People tell me about things they saw on LinkedIn, and posting good, solid content there is extremely important (which is why I ignore any posts with a picture of a motivated saying or similar; come on, show your expertise via content not your copy and paste abilities).

It’s unusual for me to meet someone who hasn’t seen my blog, videos, LinkedIn articles, Twitter feeds as well as the usual and customary, my website. I see a lot of other non-tech (traditional) small businesses emphasizing this also, because that’s where the customers and referral sources are.

On the flip side, my recent Getting the Deal Done Breakfast Conference had record attendance of about 180 people (high touch). Of course, all the marketing was electronic (high tech).

What Scares You?

On Halloween I asked: What’s scary to you? Only you can answer it but we’re not talking about eating too much candy tonight, ISIS, North Korea, Trump, Hillary, or anything similar.

What’s scary to a lot a people?

Business buyers: It’s the leap of faith they need to take to be in business. It’s understandable because business ownership is not for everybody. As I say in my book, Buying A Business That Makes You Rich, some people are like my mother, who taught college math and couldn’t imagine anything riskier than a school paycheck every month. Others groom themselves to take the plunge, and they love it.

Business sellers: Selling their baby is super-frightening. These owner’s put in so much time, effort, and love into it they can’t imagine someone else taking it over. Of course, these are the people who often are forced into selling (the three D’s, divorce, death, and disability corner them at some point) because they didn’t plan for and make an orderly exit.

Salespeople, advisors, and similar: Making phone calls. When teaching my class at the SBA on growing a consulting business I tell the story of one of our Partner On-Call franchisees who told me he’d stare at the phone for 10 minutes, finally pick it up, have a great call, and stare at it again for 10 minutes. His version of the move Ground Hog Day.

Salespeople, etc.: Asking for the order, because you just might hear no.

All of us: Doing the things we know we need to do. In other words, having the discipline to do things that aren’t much fun. Often because as in the prior two items, there’s risk.

So, put on a costume and scare the heck out of whichever things listed above frighten you. You’ll be glad you did.

“Living in the past is for cowards.” Mike Ditka