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February 2009

VMware's "Accelerating the Business of Innovation" Ad

I was reading the Wall Street Journal the other morning and came across an interesting half-page ad in theBlog Personal Journal section. It stated simply, "Accelerating the business of innovation." They had a big head shot of John Hill, CTO of Siemens IT Solutions and Services, where he provided the quote around better return on capital investments, faster responsiveness to their customers, et cetera.

The one statement that Mr Hill made that resonated with me was, "freedom to focus on business innovation, not rudimentary IT plumbing." Perfectly stated Mr. Hill.

I couldn't agree more.

We have all seen, for many years now, that IT is working hard enough to just keep the lights on and not enough time on helping the business innovate, increase competitive advantage, et cetera. The business depends on IT more than ever before and business executives do see the strategic importance of technology as core to their product and service strategy and central to their differentiation and competitive advantage. But the rub here is that executives I've talked to are concerned about the ability of their IT organizations to support it. Now that isn't to say that some IT executives aren't working hard to fulfill the business' needs using all the tools and processes at their disposal, but..

Here is where the ad got me to thinking. This is where IT can get out of the vicious cycle that it finds itself in when it comes to the old standard, design-build-operate model that has plagued it for years. By using virtualization technologies like VMware ESX and Citrix XenServer along with a solid application and desktop delivery infrastructure like Citrix XenApp and Citrix XenDesktop, now combine that with a new strategy of business technology, IT can make the transformation to business enabler and achieve what I called in a previous post "convergence".

The technology of virtualization and application delivery speak for themselves, so I won't do a deep dive here, but these technologies need to be a key, base components of an IT Portfolio.

IT needs to take steps to transform itself from Information Technology to Business Technology by utilizing these technologies along with ITIL, Six Sigma, Balanced Scorecard, et cetera. IT executives cannot afford to maintain status quo. They must replace standalone, product-oriented support functions through business-oriented services and focus the remaining IT organization on a proactive governance model of the company's ecosystem.

Business-Technology-as-a-Service (BTaaS) is what needs to happen. With the virtualization and application delivery infrastructures as the base of the BTaaS formula, IT can be transformed.

Brain Drain is a symptom, not the problem

Since the economic crisis hit, you don't hear many people bring up the issue of Iowa's Brain Drain anymore. We falsely believe since there will probably be a lull in the expected generational workforce transfer that the brain drain issue has gone away. Wrong!  Actually, this economic crisis probably only makes it worse.

The truth is, Iowa’s workforce is peaking in size. According to both federal- and state-level data, in 10 yearsBraindrain Iowa’s workforce will lose about 60,000 people every five years. That would roughly be the equivalent of losing a Principal, Allied or Rockwell Collins every year.  Look no further than the 2010 census, where Iowa is scheduled to lose yet again another congressional seat, as to why this should concern us all.

Funny thing is Iowa tops the Midwest in attracting students for college. Our universities and small liberal arts colleges are well respected and highly coveted, but once students graduate, there's a great stampede for the exits. Iowa is a “net exporter” of its young professional workforce, losing about 4 percent of its young professionals since the beginning of this decade, ranking our loss of educated people in the nation the forth worst.

Another way of looking at it: Iowa is losing about 10 percent of its economy. This outflow of educated people leads to slower economic growth, productivity and innovation and increases in the poverty rate.

Brain Drain is not the problem. It's a symptom of the lack of jobs for people with advanced degrees. Simply put, either we stop sending kids to college or we must provide more college required jobs.

Last year, the Generation Iowa Commission surveyed 1000 YP Iowans about their job preference priorities. There highest priority: a high paying job in their field of study.

Other lower ranked priorities were demographic-specific amenities and attractions, options for career advancement, mentoring opportunities, cost of living and student debt repayment.

Why do wage and field of study rank so high? Let's look at what an Iowa workforce looks like to a college graduate:

62 percent of Iowa’s high school graduates go to college
33 percent of Young Professional Iowans will get a bachelor’s degree
24 percent of workforce aged Iowans already have a bachelor’s degree
12.2 percent of available jobs require a bachelor's degree or higher

Even after cost of living had been adjusted, Iowa still ranks second-to-last in the Midwest in the key wage metric. Iowa has relatively fewer advanced degree career opportunities, without concentrated industry clustering and new economy capital-efficient industries.

We need young, educated Iowans to secure our future. Young Professionals want to stay, but can’t find an appropriate job. We need to close Iowa’s wage and salary gap, not through state-mandated laws, but through job creation programs, expanding Iowa’s career pathways and connecting wages with age-appropriate amenities. This will put Iowa on a path to solve its Brain Drain issue.

The Rule of 10

I believe in the power of social media. As a matter of fact, I just recently used both Twitter and LinkedIn to to ask for help on a project I'm working on for a client. The response I had was impressive. And within a couple of hours I was given referrals to other people who were very helpful to me. By the same token, I have also found myself being to reliant on this tools. You can talk to a lot of people at one time but how do you know if you're talking to the right people? Clearly I have a lot of learning to do.

Now, I was one of those kids growing up (like many of us I suppose) that thought my dad was totally full of bologna.  He was always passing on ridiculous, esoteric advice that he learned from being in business back in the 1960s, 70s, 80s and 90s. I mean what can a guy who's been a part of the life insurance industry for nearly 50 years teach me? Well, plenty. And here's a piece of advice he gave me years ago that I will never let go of.10_3

Talk to at least 10 people a day about your business. This does not mean leaving a bunch of voice mails. Your spouse does not count as one of those 10 unless she is a potential client. I'm talking 10 people in your industry who have an influence on growing your business. And better yet, get face to face (or as my dad would say, "belly to belly") with these folks as often as possible.

If you talk to ten people everyday five days a week fifty-two weeks a year (for those of you who don't celebrate holidays and take vacation)...well you do the math. It will not take long for the people in your industry or niche to know who you are and what you do!

And if you can couple this advice while also learning to use social media as an effective sales and marketing tool, you'll stay miles ahead of your competitors.

Fatal Mistakes Made by Business Owners

Arizona attorney Scott Gibson (Twitter profile: @Tradesecretlaw ) recently published a list of 10 FatalBlog Mistakes Made by Business Owners. I encourage you to go to his Twitter profile and check them out. You may need to dig a little bit because Scott is continually updating his profile to provide helpful information.

I wanted to address two of the fatal mistakes on his list.

No. 5:  Failure to Set Up a Buy-Sell Agreement. More often than not, this is a major reason why business partners end up in litigation. Every business that has multiple owners should consider having a buy-sell agreement. The typical buy-sell covers how an owner can sell shares and how to value those shares. A good buy-sell will also set forth what happens in the event of death, disability, retirement, divorce, bankruptcy or other considerations. Without a buy-sell agreement, owners may end up in court and business may suffer.

No. 8:  Failure to Follow State and Federal Employment Laws. Want to end up with a lawsuit quickly? The failure to abide by state and federal employment laws is perhaps one of the the easiest ways. But maybe even more important is how the employer actually interprets and administers its own policies and procedures. While it is technically not a "legal requirement" I have long suggested that treating employees with respect is the best way to avoid employee lawsuits. Treating others as you want to be treated is a concept that even young children understand. But while the concept is easily understandable employers often have a difficult time being fair.

In building on Scott's thought about fatal mistakes made by business owners, you may want to check out my post on Five Ways to Avoid Lawsuits Against Your Business. I wrote it some time ago but it is just as applicable today.

Is Your Work Real Work?

You work hard. Real hard. You go into work early, stay late and then carry a briefcase of work homeBlog along with your Blackberry to stay in the loop on important projects. Is all of that work "real" work or is it "fake" work?

Brent Peterson and Gaylan Nielson, authors of the engaging 2009 book Fake Work, claims half of the work we do consumes valuable time without strengthening the short- or long-term survival of our organizations. That's fake work. It drains a company's resources without improving its bottom line. It steals commitment, care and morale from employees and leads to turnover, communication problems and low productivity.

We've all experienced fake work. We've done it, seen it done, or been a victim of it. We often joke that the endless meetings we sit through are "meaningless." In other words, fake. But meetings, e-mails and endless cell phone time are not necessarily the culprits. The work environment has changed so much in the last few years that identifying fake work is complex. In fact, sometimes real work and fake work can be exactly the same work, just under different circumstances.

Peterson and Nielson define fake work as "effort under the illusion of value" -- work not aligned with the goals and strategies of the company. Such work is clearly rampant when you consider the statistics that Peterson and Nielson's research uncovered :

  • 54 percent of all workers feel they have more creativity, resourcefulness, talent and intelligence than their job requires or allows.
  • 56 percent of workers don't clearly understand their company's most important goals.
  • 73 percent of workers don't think their company's goals are translated into specific work they can execute

Think about the work that's going on around you daily. Your own work, the work your team does, the work your senior leaders do and the work of your organization. Focusing just on your own work, how would you answer the following three questions:

  1. Are you sure you're doing real work (work that's critical and aligned to company goals and strategies)?
  2. Do you understand the importance of your work to the mission of your organization?
  3. Is your work critical? How critical? Why?

It's not easy to totally eliminate fake work and replace it with real work, but in order to do so, first you have to find it. Thomas Edison said, "Seeming to do is not doing." Fake work is the "seeming to do.

Who could you delegate to? (D.D.A.E. part III)

Charlotte gray seatsImage by umbexvia Flickr

Okay... as a review... over the past few weeks, we've been talking about schedules and digging into our D.D.A.E. equation

That's deciding what we need to Do, Delegate, Automate and/or Eliminate.

Today... we're looking at creative ways to delegate.

Yes, that's right.  Delegate.

Now, some of you may already be saying... "Hey, I'm a solo-entrepreneur!  The only time I get to delegate is my copies at Kinkos and my coffee order at Starbucks!"

Or maybe, you have a small staff and EVERYONE seems to be stretched right now!

Well... hang in there because we're going to explore the concept of hiring a Virtual Assistant.

Have you been toying with the idea?  I know I have. 

If so, here are some tips from the experts...

Start with something small.  Something that is pretty easy to define... such as a research project. 

For example, I know a local entrepreneur who is working on a web/book idea.  He's tapped into a virtual assistant that he found via www.elance.com to do some of his background research.  He was able to clearly define what he was looking for, how he wanted the information cataloged and the types of sources he wanted to be used. 

By the way, his VA did the work for him in the fraction of the time that it would have taken him and for a fraction of the cost that he expected to pay. Plus, it gave him an opportunity to check out this VA's quality of work and decide whether he wanted to work with them again.

Look for tasks that need to be repeated... daily... weekly... monthly. 

An example of this is a local real estate broker who used a virtual assistant to help with some weekly and monthly marketing activities.  These were tasks that he was only able to do sporadically due to a busy and unpredictable schedule.  When he decided to go with a VA, he was able to hand off his e-newsletter and weekly e-mail updates.  He gave some specific guidance and pointed the VA to his on-line newsletter service.  Then, his VA plugged in updates and sent out the newsletter on a consistent basis.  She just checked in with him for updates on content and took care of the rest!   

This move to hiring a Virtual Assistant has helped this broker to be more consistent and it's enabled him to have more time to work on the the day to day tasks that tend to bring more immediate ROI.  

According to experts... its best to start on specific projects like this, but after working with a VA for a while, you can start to delegate more tasks. 

For example, Josh Kaufman at virtualMBA even uses a VA to sort through his e-mail and respond on his behalf. 

Stay realistic! 

You may have dreams of handing off all of the work you don't like and moving into a Tim Ferris inspired 4-hour work week, but experts say that using a VA effectively can take some time. 

You need to get accustomed to delegating and you need to be ready to put in some work to get your VA up to speed.  

Longerdays.com has some specific recommendations to help on this front.

How about you?

Are you willing to jump in and give it a try?  

Josh Kaufman recommends services like Ask Sunday and Longer Days which both offer free trials. 

It might be easier than you think to get started!

Why not check them out and experiment with the "Delegation" part of your D.D.A.E. equation? 

So... How about you? 

  • Are you going to give it a try?
  • Or... Have you already tried a VA? 
  • How did it go? 
  • Who do you recommend? 
  • What are some of the pitfalls or successes that you experienced?

Click comments and join in the conversation!

Keep kickin' and keep dreaming BIG!

Mitch Matthews

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Top 10 Ways to Get Fired By Your Lawyer

Fired by your lawyer? Seems like an odd concept. Won't a lawyer take any client willing to pay? Indeed some will. The best ones will not. Life is simply too short.Blog

If you treat your lawyer like a commodity, you run the risk of losing the most important part of the attorney/client relationship. Even if you think you only need the lawyer for a single project, there are certain things you, as a client, can do to sabotage the relationship:

10. Lie to your lawyer. This is the number one thing you can do to get your lawyer to fire you. Your lawyer is your representative. Every case has its warts. Your lawyer can only help you if he or she knows the whole story. If you lie to your attorney, or fail to disclose pertinent information, by the time the lawyer finds out from the other side, it is often too late.

9. Ask your lawyer to lie for you. Contrary to what you might have seen on television, it is rare for an attorney to lie. Skilled attorneys pride themselves on finding equitable solutions within the law. Asking your lawyer to lie speaks volumes about you as a client.  If you ask your lawyer to lie for you, it is unlikely you will get a second chance.

8. Slow pay. Failing to pay your bill within 30 days of the invoice is no guarantee your lawyer will fire you, but it certainly does not help. If you have a concern about the bill, contact your lawyer immediately to discuss it. If you wait until your lawyer contacts you, it is more likely that your lawyer will view a dispute as a delaying tactic, rather than a genuine issue with his or her services.

7. Nitpick the bill. This does not refer to genuine fee disputes. Your attorney should clearly explain and itemize work on the invoice, but all lawyers occasionally make mistakes. Most good lawyers are eager to discuss and remedy fee issues.  If you consistently have issues with your lawyer's bills however, it is likely time to find a new lawyer.

6. Throw common courtesy out the window.
Believe it or not, lawyers are people. While you are by no means required to sit through stories of your lawyer's new puppy's bladder infection, and certainly should not be charged for it, the more you treat your lawyer like a human being, the more likely you are to receive better service.

5. Call your lawyer after hours. While I receive calls after hours, it is almost always a genuine emergency. If you you discover a genuine problem after hours, your lawyer should provide some way to contact him or her for immediate advice. There are no hard and fast rules regarding after hours contact. Some clients, by the very nature of their business, require more after hours assistance. Fortunately, it should be fairly apparently from the tone of your lawyer's voice, whether or not you are abusing this privilege.

4. Demand everything immediately. Some types of businesses require immediate action on a lot of projects. If you have one of these businesses, make it clear from the start of the attorney/client relationship. Your lawyer may suggest an alternative fee arrangement for expedited service. At the very least, avoid violating any of the other nine items on this list to keep the relationship on good terms.

3. Be difficult to contact. Your lawyer receives a lot of time sensitive information on your behalf. Nothing is more frustrating than losing a great opportunity for a client just because the lawyer could not reach the client in time to capitalize. You end up spending more money for a worse result, leaving everyone unhappy.

2. Hold everything to the last minute. If you anticipate having to request your attorney doing something at the last minute, let them know so they can make room in their calendar. One last minute request is not going to sour a relationship, but if it starts to become a habit, your lawyer may decide to end the relationship before your next eleventh hour request comes 59 minutes too late.

1. Ignore your lawyer's advice. Lawyers are not always right. If you do not agree with your lawyer, tell him or her so. If you want to proceed along a different path, a good lawyer should be able to lay down the best strategy for this new approach. If your lawyer believes you have agreed to pursue one course, however, and you unilaterally pursue another, this is a warning sign for any attorney that large problems loom just around the corner.

Other than lying to your lawyer or asking him or her to lie for you, it is unlikely that violating one of the foregoing rules will get cause your attorney to end the relationship. These are not hard and fast rules. If the violations stem from the nature of your business and/or you are an otherwise good client, most attorneys will overlook most of these issues. Unfortunately, once you have pushed too far, it is unlikely the relationship will ever recover. All too often, clients do not realize what they have lost until they go looking for a replacement. If you think finding a good attorney is hard, try finding one after being fired by your last attorney.

The key to any attorney/client relationship is communication. Open and honest communication (on both sides) is key to getting the most out of your lawyer. Remember also, this is not a one-way proposition. It is just as easy to turn the foregoing rules around. If your lawyer is the one violating any of the foregoing rules, talk to them about it immediately. More than likely, agreement can be reached to avoid problems in the future. If not, you, rather than the attorney, may be the one doing the firing.

Brett Trout

The Power of Input

 3657823_thl                                             The company had always given everyone break food every morning.  Wonderful, homemade goodies that were delicious and not necessarily healthy.

The company became employee owned and asked the new employee owners to start thinking like owners.  One day the question was asked "How much do we spend on break food every year?"  The answer was $10,000.

After a few days it was brought forth by the employee owners that maybe the money should be spent on dental insurance instead of break food.  The research was done and it was announced that dental insurance would cost $12,000 per year.

In short order a company meeting was held to decide what to do.  It was agreed that a vote would be held, one vote for one person, and that the majority vote would decide - dental insurance or break food.  It was explained that if voting on issue was to work, if you were not in the majority you could not throw stones and complain about it.  People raised their hands in agreement.

So a vote was called for by a show of hands.  The results - I will let you think it through.  After the vote one employee owner came to the CEO and said "I am not happy with the outcome, but at least I got to vote!"

The moral of the story - give people the chance for input and they will be more accepting of the decisions that are made and help you improve the bottom line.

If it ain’t broke …

Life preserver Do you know someone who has gone on vacation and come home to find two inches of water in the basement because a pipe broke or their sump pump stopped working?

Intermittent changes in our weather can wreak havoc on plumbing systems. As a matter of fact, frozen and broken water pipes are the second largest catastrophe next to hurricanes, in terms of the cost of damage. This may surprise some of you, however, water damage often goes undetected for several days before it is found ... and by then the damage is already done.

The good news is that water damage can be prevented.

Here are some tips and steps you can take to make insurance losses less likely during extended severe weather.

  • Watch for ice dams near gutter downspouts. Keep gutters free of leaves and debris so melting snow and ice can flow freely. Ice dams can cause water to build up and seep into your house or business. 
  • Keep your building heated to a minimum of 65 degrees. The temperature inside the walls where the pipes are located is substantially colder than the walls themselves. A temperature lower than 65 degrees will not keep the inside walls from freezing.
  • Identify the location for the main water shutoff in your home or business. Find out how it works in case you have to use it.
  • Disconnect hoses from outside spigots.
  • If you are leaving your home to go on a trip or closing the business for a period of time, ask a neighbor to check your home or business regularly. Or simply have the water system drained by a professional to keep pipes from freezing or bursting.
  • Install an alarm system that can detect water or low temperatures.

Most insurance policies will cover the resulting damage from broken or freezing pipes, however many policies will not cover backups in sewers and drains or flood unless you have the appropriate endorsement or flood policy in place.

And, of course, make sure to check with your agent to ensure that you have the proper coverage in place. If something is going to break, be prepared.

The Eyes Have It

Eye Recently, I took my mom in for the second of some planned outpatient surgeries on her eyes.  The first one didn't go as well, and so she was experiencing a lot of double vision.  Always the optimist, I tried to encourage her that her upcoming Hawaii trip would allow her to see twice as much tropical beauty, but she didn't buy it.  Hence, the second surgery successfully brought both eyes back into alignment so she's seeing one of everything again.  (Just don't introduce her to any identical twins in the near future... it might freak her out, okay?)

One of the reasons why many projects derail is because of the exact same issue my mom was experiencing... different vision from different stakeholders.  There was a great article recently by Satya Narayan Dash on the PM Hut blog about this very phenomenon.  Comparing three projects, Dash concluded that project success is not the same as project management success, and shared three points of consideration:

  1. Define target success for the project and the project manager
  2. Define target success for the organization considering the project involved
  3. Define failure for the project and the project manager

Recently, I facilitated a half day session where senior managers were sharing their views on integrating their business functions.  While they had fairly specific visions of what they were striving for, there were open doors for misinterpretation.  Who hasn't had a misstep in defining what "user friendly" or "open access" mean for different stakeholders?  When you define the target success, make sure you use specific criteria and are as objective as possible in the outcomes.  My preference is to list criteria as simple yes/no results (either the project solution meets the requirement or it doesn't).  Then weigh the specific criteria to score the overall project success.  To do anything less is the project management equivalent of what my mom experienced with her vision - the eyes will be shooting in different directions and you'll wind up with organizational double vision.

This is one area where a wise project manager will leverage the skills of a solid business analyst to help in the definition.  It will keep your project vision in alignment.

Also, make sure the discussion about success and failure criteria is held at the beginning of the project (preferably during initiation or no later than planning).  To define these criteria at the end of the project will ensure one thing:  failure.

Carpe Factum!

Service is a "Top Down" Enterprise

One of our clients has a relatively small sales and service operation. There are only a handful of front-lineBlog associates taking orders and another handful providing customer service. On one of my initial visits to the clients office, I was surprised by a loud beep that could be heard throughout the building. I was also surprised to see a few people scrambling back to their offices in response. Fire drill? Air raid?

The beep had nothing to do with weather or disaster. It was a warning of another kind. It was the warning of customers not being served. I learned that day that everyone in the company is responsible for answering the phones when things get busy. It doesn't matter what level you are within the company. If the customers are calling and calls are in queue, then everyone drops what they are doing to take care of the customers.

One of the most frequent complaints I hear from front line associates is that supervisors, managers and executives are unwilling to pick up the phone and talk to customers. In many cases, I've found it to be true. Customer service culture is a top-down enterprise. There is something to be said about a company that will truly make taking care of the customer their top priority - and will drop everything to take care of that customer when he or she calls.

What kind of service culture do you work in? Do you agree that the attitudes of those at the top of the organizational chart affect the service attitude on the front line? Why, or why not?

Who owns your social graph?

2591366230_6ec445b68f I'm hearing lots of people freaking out today - in blog posts and Twitter - about Facebook's recent changes to their Terms of Service (TOS) and how this impacts your privacy and the content you post there.

Essentially, Facebook removed this phrase from their TOS:

You may remove your User Content from the Site at any time. If you choose to remove your User Content, the license granted above will automatically expire, however you acknowledge that the Company may retain archived copies of your User Content.

Essentially this means that any content you upload there is Facebook's property, forever. Yup, they own it, and they can do whatever they want with it in the future. Even if you cancel your account, according to this snippet from the TOS:

The following sections will survive any termination of your use of the Facebook Service: Prohibited Conduct, User Content, Your Privacy Practices, Gift Credits, Ownership; Proprietary Rights, Licenses, Submissions, User Disputes; Complaints, Indemnity, General Disclaimers, Limitation on Liability, Termination and Changes to the Facebook Service, Arbitration, Governing Law; Venue and Jurisdiction and Other.

I'm not as panicked about this (or even surprised) as some people are, because I believe you should always understand the Terms of Service implications of social networks as you explore them. I understand, it's asking a lot to read all that legal verbiage before you sign up. Inside Facebook, you've never actually owned your Social Graph - the company does.

Blogger Chris Brogan points out in a recent post that both banks and health insurance companies own your records, so it should come as no shock that Facebook owns what you put on their servers. Brogan also reminds us that every Web service owns our data to varying degrees, whether it's Facebook, Google Docs, Twitter, Dopplr, et cetera.

In summary, if you're really concerned about the change of verbiage on Facebook's TOS, go out and research the terms of every social application you interact with. Another general rule: Don't upload anything you wouldn't want them to own.

What are your thoughts? Are you less inclined to share on Facebook after this news, and will it impact your social networking habits?

Photo credit: adactio via Flickr

Stimulus tax breaks: what's in it for your business

The "stimulus" bill passed by Congress last Friday has some tax breaks that will generate cash forBlog those businesses fortunate (or unfortunate) enough to qualify. 

Estimated tax breaks
.  If more than half of your income comes from a small business, your "protective" estimated tax payments might go from 100 percent or 110 percent of your 2008 tax to 90 percent, if you qualify.

Bonus depreciation and asset expensing.   The "Section 179 deduction" allows businesses to currently deduct the cost of some assets that would otherwise be capitalized and expensed over several years through depreciation deductions.  The bill extends the 2008 cap on the deduction, $250,000, through 2009.  It would otherwise have been limited to purchases of $113,000. 

The bill also extends the 200 percent "bonus depreciation" rules through 2009.  You may deduct half the cost of assets qualifying for bonus depreciation in the year of purchase; you depreciate the rest of the cost under the usual rules. Qualifying property is generally new depreciable business property other than real estate.

Five year Net Operating Loss Carryback.  If you are unfortunate enough to have had a really bad 2008 - bad enough that you end up with a net operating loss on your 2008 tax return - the new law may allow you to carry it back five years, rather than the normal two years, to get refunds of prior year taxes.  This will benefit those who either had a loss that exceeded combined 2006 and 2007 taxable income.  It will also help some taxpayers who also expect a 2009 NOL; they will be able to offset 2008 losses against 2003 - 2006 income that would otherwise have offset 2007 income; that will leave some 2007 income available for offset.

Unfortunately and stupidly, the five-year carryback only applies to 2008 losses; it looks like 2009 will be the big loss year for many more taxpayers.  The five-year carryback is limited to taxpayers whose gross receipts averaged $15 million or less during 2005-2007.  Congress decided not to let larger businesses get refunds of their taxes from the good years to keep their doors open and their people employed, in favor of taking that money to "create jobs."

The stimulus bill has some more narrowly-focused business provisions, including some "built-in gains tax" relief for some S corporations and some relief for those who have debts forgiven.  It also has the 2009 version of the "AMT patch," keeping many businesses out of alternative minimum tax for another year.  It also has a bunch of tax provisions that aren't strictly business-related, which you can read more about here, here and here.

None of this stuff is simple, unfortunately, so consult your own tax advisor before you do anything to secure one of these tax breaks.

The New Improved Internet - 200 Web sites, only $79.95 per month

I just had a discussion via Twitter (@BrettTrout) regarding Net Neutrality. The conversation revolved around ESPN's proposal to charge Internet Service Providers (ISPs) for access to online video. "What is the harm in this?" the argument went, "isn't that what the cable companies already do? I pay for MTV and CNN in my basic package, whether I watch them or not."

Cable television is the perfect analogy. If ESPN has its way, the Internet may indeed become exactly like cable. You get a basic package allowing you access to a few hundred websites. For a few extra bucks, you can access a few hundred more. And the remaining hundred million or so other websites? To visit those websites, all you will have to do is move to a country which had the foresight to guarantee Net Neutrality before it was too late.

What? I will only be able to access a few hundred Web sites? That is impossible. That could never happen. The Internet will always be free. Won't it?

Well campers, it is not only possible, but the longer we sit on our tails the more probable it becomes. From the prospective of your ISP and large Web sites, the cable paradigm is much more profitable than what we presently have. If they pare down your access from one hundred million Web sites, to a few hundred, several things happen:

1) These few hundred Web sites will be able to charge enormous amounts for advertising.
2) Some will be able to "kick-back" a portion of this increased revenue to your ISP in exchange for carrying those now extremely profitable websites. 
3) Other websites, like ESPN, will be able to invest this revenue into producing more desirable content for which they can actually charge your ISP a premium.
4) Your ISP passes these additional costs on to you, either in the form of increased monthly fees, increased advertising and/or requiring you to pay for access à la carte.

These few hundred Web sites make more money, your ISP makes more money, and you get left holding the bag. You pay more, for much much less. The worst part is that by the time you realize that there is a problem, it will be too late.

Can you imagine approaching lawmakers with the following pitch: "There are thousands of free video channels out there which cable subscribers would like to access through their existing cable connections. Why don't we pass a law that cable companies have to allow us access to any free video channels willing to plug into their cable system?" Regardless of how great this would be to consumers, or how little it would cost cable providers, you are never going to convince a lawmaker to legislate against an industry pumping millions of dollars into the political machine.

Conversely, if voters act before a system gets set in stone, we may have had a chance. All it takes is for your congressional representatives to vote "YES" on a Net Neutrality bill. Consumer advocates are strongly in favor of such a law. President Obama has even made it one of the priorities in his first year in office:

The only question is who is going to win the race for control of your Internet access. Are you going to convince your lawmakers to protect your access to the entire Internet?Or are you going to allow 800-pound gorillas and ISPs to conspire to irreparably change the face of the internet forever?

To find out more about what you can do to maintain fair and free access to internet, visit SaveTheInternet and the Open Internet Coalition. I would advise checking back here frequently for updates on the issue but if you fail to act soon, you may not have a Web site to come back to.

Brett Trout

How Should Millennials React to the Stimulus?

In case you've been living under a rock somewhere. The country is fighting off a financial catastrophe and when asking so called experts how we got into this mess, you're bound to hear a plethora of reasons. When asked how to solve it, you're bound to get a number of responses there, too. However, the one unifying statement is that doing anything is better than doing nothing. So that leads us to our powers that be; they have determined our best course of action is a huge infrastructure spending bill that will in theory "stimulate" the economy. When we say huge we are talking nearly a trillion dollars. Let me say that again (insert pinky to corner of mouth) - $1,000,000,000,000. FYI, our current national debt is nearly 11 trillion dollars.

What should Millennials think about all of this? Is it worth it?  Is it wasteful spending or is it a huge investment in our future?  I would argue it depends on what we get in return. Some will argue that Millennials will stand to benefit directly from the stimulus. Besides an improved national infrastructure, we are also looking at increased job training, loan guarantees for small businesses, funding for college, funding for service within the military and service outside of it, as well as low income assistance. Others, like (former presidential candidate and silent generation figure) John McCain, call this stimulus package "generational theft" others will also cite that it only creates a horrific financial burden on future generations with the added negative of growing government.

A compelling case can be made either way. It would seem we are stuck between a rock and a hard place on this one.There are a number of amazing things scheduled to happen during the lifetime of Gen Y and Gen Z and its not clear if this stimulus will help or hurt these accomplishments. Millennials, so far, seem to have a lot more faith and expectation from the government than the previous generations and, given their experiences, it's understandable why. Let's hope that for once the government lives up to these expectations for much is at stake.

So what is it? Is this thing good or bad for Millennials? I've gotten pretty good feedback on this topic on Twitter and Facebook, it would be interesting to see if there is a consensus here or if there are diverging opinions

Momentum Shifts

It was sixty degrees in Des Moines today, which had nearly everyone in the community thinking of spring. And if you're a dreamer like me you started thinking Chicago Cubs Baseball (pitchers and catchers report on Friday). As hard as I tried I could not help but think of how disappointing the end of the season was for the Cubs.

One game in particular was played in early September against the St. Louis Cardinals. It was impossible not to feel the October playoff like atmosphere as the Cardinals took the field. But like in nearly every National League Ballpark, there seemed to be as many Cubbie fans as there were Cardinal fans. The Cubs were experiencing a season like they hadn't seen in many many years so the fans out in full force.

The Cubs got out to an early lead by scoring two quick runs in the top of the first inning. They then scored again in the third inning and now had a nice three run lead. Ryan Dempster seemed to really be in command. The St. Louis fans had very little to cheer about and seemed to be sitting on their hands. It was quiet...almost boring. But then it happened. I got up to get something to drink and when I returned the Cardinal's had managed to get a runner on base. The crowd politely cheered. Then a second base runner reached base and the noise continued louder, like someone was actually turning up the volume. Smallteeter

There was a momentum shift happening.

Then what before my wondering eyes appear but Albert Pujols and a really big bat step up to the plate. The crowd noise went from zero to really loud in about rour seconds. Then it happened. Pujols crushed a home run. As you can imagine, Bush Stadium erupted and the game was tied. The crowd was back into it and ready to cheer there team on to a 4-3 win in the bottom of the ninth inning. Very exciting if you were a Cardinal's fan.

Today, in the quiet of my office, I began to realize how momentum shifts in business, too, especially today. It swings back and forth all the time, and it’s up to the organization to sense the momentum shift and make adjustments. Sometimes, such as with the fans at a sporting event, it takes an outside viewpoint to notice the subtle signs of changing momentum, and the organization has to be confident enough to listen and act on the outside advice. Outsiders can point out the signs of momentum shift, but it takes action from inside – an adjustment in tactics or a redeployment of resources, for example – to change the momentum back in your favor.

Like a game plan based on talents and the competition’s weaknesses, a sales plan or a recruiting strategy has to have enough discipline to take advantage of the organization’s strengths and enough flexibility to adjust to changing momentum.

What are the momentum changes you're sensing in your business? Is the momentum shifting for or against you?

Preparing LLC Documents Under New Iowa Law

The post that has probably attracted the most attention on my blog is a post titled "Zoom Past Blog LegalZoom," The reason is simple. Most new business people desire to save expenses when starting a business. One of the places these entrepreneurs cut corners is by using a document preparation company instead of a lawyer for incorporation and/or limited liability company (LLC) formation. In many cases, LegalZoom and other similar companies are less expensive than hiring a lawyer. While searching for LegalZoom information on the Internet, people often come across my post discussing why I believe using LegalZoom is a bad idea.

If you look at the comments on the post, you will see that others don't exactly share my view. Several commented that they were happy with the LegalZoom service. I don't make excuses for my bias though. I am a lawyer and I believe professional advice is better than a document preparation company any day of the week. Particularly if the costs are somewhat similar, which is often the case with Iowa business lawyers.

But if you are starting a new LLC in Iowa, particularly one with two or more members, I am even more adamant in my view that you should seek legal advice instead of cutting corners. As discussed in an earlier post, Iowa changed its LLC law effective Jan. 1, 2009. The law consists of several major changes. Frankly, I just don't see how a document preparation company can be up to speed at this point with those changes. (Unless of course they copied Marc Ward's outline from his recent LLC law seminar). As you can see from one of Marc's recent posts, even Iowa lawyers have differing statutory interpretation of some of the changes.

Typically, a company like LegalZoom will assist you in one thing, and one thing only: getting you the documents you need in order to incorporate or form your LLC. The bottom line though is that purchasing LegalZoom's documents is not equivalent to receiving legal advice, and when it comes to new LLCs in Iowa, legal advice is exactly what you will need. Don't cut corners - at least not this year.

Now Hear This...

Our world is so full of chatter --in meetings, through media, with social networking-- it takes hard work to cut through it all and really hear what's being said. It seems like we have to almost "half-listen" sometimes, just to survive. That's a bad habit to fall into. Listening is a crucial skill for everyone, but it's especially critical for leaders.

When we really listen, we:Blog

  • know what others have said

  • know what they meant to say

  • and leave them feeling that they've had their say.

We tend to take listening for granted. "Oh, yeah, I'm a pretty good listener," most leaders will say. And then they'll mention their open door policy and how they try not to interrupt and to listen with empathy. What they don't mention is that --like all of us -- they listen well only when they want to, or have to. What's hard is how to listen when you don't want to.

Try this:

  1. Do you listen?
  2. Or, do you listen intently to some people, neutrally to others, and depending on how well you like them, not at all to others.

There's the rub, huh?

  • Listening starts with the heart...not the ears. We have to get our hearts right first. We have to consciously care and be intentional about hearing what the other person is saying. Focus. Be calm and patient. Remember to breath. And listen. Really listen for the next couple of minutes as if your life depended on it.
  • Listening takes keeping our mouths shut. When our mouths are open, our ears automatically shut down. When we hear something that we disagree with, boy it's hard to not want to refute what we've heard, isn't it? We can think faster than others can speak. So we're tempted to open our mouths and interrupt, suggest words when they hesitate or pause, and finish their sentences for them.
  • Listening requires asking lots of questions to get to a good understanding. Probing questions. Clarifying questions. Confirming questions: "Is that what you're saying?" People signal when they've been heard and then you'll know that you've really listened.

Calvin Coolidge said, "No man has ever listened himself out of a job." Truly, listening is one of those qualities that separates the mediocre from the great.

A Foundation For Your Agile Enterprise

Since Jan. 20th, there has been an excitement for what the future holds. Opportunities will be presented to us and there will be challenges that go along with those opportunities.  We are living in some tough economic times for sure, but now is the time to prepare for the next economic scenario.  This is your opportunity for change.  It will be a long, hard road but the benefits of getting out of this "siloed" and brittle infrastructure will pay off in the end by allowing your company to put themselves in a place where IT and business are one and IT is run like a business to better meet the needs and the demands of their customers.

I stated at the end of 2008 and into the early part of January that I'm making 2009 the year of elevating the conversation and taking up the cause of Business Technology.  I've said it many times, in many different meetings; over the next decade companies will be challenged to change in a way that they may never have thought of and for which there is no precedent.  Which begs these questions; “how quickly can your company identify and respond to change?  If you do identify it, can you leverage it to your advantage?”

As our organizations become more complex and demanding, more resources are required to maintain existing service level agreements, leaving fewer resources available to respond to change in the business.  Since being able to adapt to change is critical to our organization’s success, it is imperative that we develop a standards-based framework that leverages best-of-breed technologies and components to create a new level of integration between the business processes and IT.

There are a few things that are necessary to have an approach to creating/building a flexible, agile enterprise.  I have always approached my client’s organizations with four fundamental design principles in mind; simplification, standardization, modularity, and integration and applying these principles with drivers like:

  • maximize financial return
  • improve performance
  • increase agility
  • minimize risk

and design rules like:

  • service-oriented architecture
  • virtualization and application delivery
  • model-driven architecture

I'm a big fan of this little bit of insight (it's not new by any means, but it's my credo for this crusade); "there is no such thing as an IT project; there are only business projects with IT components."  I can tell you with almost perfect certainty again that companies that have recognized this fact have seen the advantage of elevating IT to the role of strategic partner.  The goal of this strategic partner status is to work closely with the business and to marshal IT resources to support business objectives.  When this happens, companies can move more swiftly to capitalize on those opportunities to change and leverage it to their advantage and take the initiative to deliver their products and services that customers are demanding.

You too can take these fundamental ideals and implement them within your existing organizations.  What will you gain? You will benefit from a reduction in IT complexity and associated operating costs, and also have an infrastructure that is flexible and able to meet business needs, but more importantly, interact with and give customers of your business what they are demanding.

Some of my clients that have changed the way that IT is deployed within their companies have realized considerable cost savings and improved their business processes by taking these ideals and implementing a strategic plan around application delivery and virtualization.

In the next article we will address the methodology of IT Service Delivery and what this can do to drive change and convergence with the business.  This interconnection will highlight how you can build an IT infrastructure that synchronizes business and IT, and gives you the ability to leverage change to your competitive advantage.

Organizational Trauma

5210411_thlYou may have just recently made some hard decisions or have been impacted by them during this economic melt down.  When these types of decisions are made that drastically impact peoples lives through job loss, pay cuts and other forms of suffering, organizations are faced with the trauma of that event.

Companies make these hard decisions to improve bottom line results or the possibility of closure.  Unfortunately companies fail to deal with the trauma, even though the decisions may be needed and appropriate.  When the trauma is not addressed, there will continue to be a decline in productivity, moral and bottom line results increasing the chances of further organizational trauma.

After trauma there is a sense of loss, anger, finger pointing and a need to discuss or vent the issue. Eventually resolution with the impact of the trauma will occur.  How many companies do you know that figure out a process for how to handle organizational trauma?  We all know far to many companies where the tough decisions are made and not a word is said after wards.  The expectation is people should feel fortune that they still have a job and should work even harder.  It does not work this way.

The remaining employees may have lost friends or families.  They know more intimately how these types of decisions will impact individuals, and in many cases feel guilty that they are still employed.  Immediately the impact of anger and finger pointing comes forth - the management should have been able to avoid this that is why they make the big bucks, who should have been let go and who remains becomes a huge point of discussion, and ultimately trust goes out the window.

Many of my blog posts have dealt with ways to prepare employees for tough decisions through education, communication, and involvement.  This is the best way to prepare and cope with trauma.  For those of you who do not believe in these concepts, maybe after experiencing a traumatic organizational event, the light may have come on.  Take the time to review the archives of my posts for multiple examples of how to prepare and cope with organizational trauma or visit this sight for an academic perspective. 

Figuring out your D.D.A.E. equation! (part II)

Day 092/366 - To Do ListImage by Great Beyondvia Flickr

Okay... so... we are continuing our conversation about budgeting our time.

We're wanting to figure out your unique "D.D.A.E. equation." 

(That's deciding what you need to DO, DELEGATE, AUTOMATE or ELIMINATE.)

In my last post, I suggested starting this process with taking a "snap shot" of how you are currently spending your time.  I even included a tracking grid to help in the process.

Today, we are going to start by looking at the first "D" in the equation. 

Yup, that's right.  We're going to talk about what you actually need to be "DOING."

This sounds simple enough... doesn't it?  But whether you are a stay-at-home-parent, an entrepreneur or a high-level executive, we all seem to have a lot of stuff to do!

Some of this "stuff" represents things that we need to be doing... but some of it is stuff that we don't need to be doing anymore... right? 

How about you? 

After tracking your time for a week, did you figure out you were doing some things that you didn't need to be doing? 

Maybe, if you're like me, you found things slipping into the daily schedule due of bad habits, old habits or maybe because nobody else will do it!

Now, there are a lot of places to turn to get help on deciding what to do and not do. 

You can look to Covey's Four Quadrants.  (Click here to check out the quadrants represented in fun cartoon format!)  You can look to gurus like David Allen and read Getting Things Done.

Yup, these are great tools!

But I'm going to challenge you to think BIG PICTURE for a minute. 


Well, a lot of times we wind up doing things that we don't need to be doing because we don't REALLY know where we want to go. 

So, it's as Epictetus said, "First say to yourself what you would be; and then do what you have to do." 

This is what Tim Ferris did in his pursuit of the 4-Hour Work Week.  He got clear on what he wanted life to look like... and what he'd need to do to get there.  Then he started to align his daily tasks with that vision.

So... here are some questions to ponder:

  • What are some of things I want to achieve in the next five years? (Or how about 10 to 25 years?)
  • Who do I want to be?  Who do I feel called to be?  What do I want life to look like?

Then... as you are looking through your daily task lists... ask yourself some of the following questions:

  • Can I link this task to these goals?
  • Will this help me to achieve these goals?
  • How could this task help me in the pursuit of these goals and dreams?

Now, I'll admit that 100 percent of your to-dos won't pass this test.  They won't all clearly link to these big goals and dreams.

But what if you held yourself to a higher standard? 

What if you simply agreed to take a look at this? 

What if you were willing to at least consider these questions and hold yourself to a greater number of your daily tasks lining up with your bigger vision and goals? 

How might that help you move towards these goals and dreams?

Then... as you find tasks that align with your goals... you can start to think about ways to do more of those things.

And for the things that don't pass the test, you can agree to at least consider putting some of them in one of the upcoming categories in the D.D.A.E. equation!  (Delegate, Automate or Eliminate)

Stay tuned... because we'll be getting you specific strategies for these categories in the coming weeks!

Go ahead... take the challenge... think BIG picture... set up some targets to shoot for... and start aligning your day to these goals and dreams.

Give your schedule a kick in the pants!

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Don't be a copycat

Copycat Are you thinking of purchasing a new business? Or expanding your existing one?

Some may say you are “crazy” and others may say that “now is the time.”

While there are many legal issues that you need to take care of before you purchase a business, what I want to discuss are some of key insurance issues  that can arise out of expanding or purchasing an existing business.

When a business owner expands their business – whether they open up a new location or add an addition to their existing one – it is critical to discuss these changes with your insurance agent.  Insurance policies have limitations and you only have insurance for  what you are paying a premium for.

This is especially important when it comes to the increased inventory, improvements that you have made to the building (whether you own the building or rent it) and if you add any new employees. It is critical to let your agent know about these changes so the coverage can be added to the policy.

If you are opening a new location, it may make more sense to add a second location to your existing policy rather than starting a whole new policy. On multiple occasions I have come across this scenario and the owner simply did not know what his options were.

If you are purchasing an existing business – don’t just use a copy of the prior owner’s insurance policy. When you do that, you are “assuming” the prior owner’s coverage.  We all know what can happen when we “assume.”

Instead, take the policy to your agent and discuss your business in detail along with changes you’ve made so your agent can help you determine the coverage you need.

While the existing policy may have been adequate for the prior owner, it may not be the coverage you want or need.

Your needs have changed if you:

  • spruced up the location with a remodel
  • purchased new equipment
  • hired additional employees

So be smart and communicate those changes with your agent to ensure that the coverage you need will be there when you need it.

It doesn’t always pay to be a copycat!

All That Sparkles...

Sparkles I hope you've enjoyed the recent interviews with Chad and Kristin ... I'm lining up a new set of interesting people/topics for early spring, so be on the lookout.

Right now, though, there's a more pressing issue to discuss:  laundry.  At my house, I'm "laundry boy" (sounds like a rather domesticated superhero, doesn't it?).  I have my processes and techniques an secrets.  I know how to queue the washer and dryer for maximum effectiveness.  The hampers are color coded based on type of laundry.  I research different folding techniques (although fitted sheets still get wadded into a ball and stuffed in the linen closet).  There is just something therapeutic about laundry.

Recently, my goal of efficient laundering has hit an impasse with the female offspring in the house.  You see, I like low maintenance laundry.  Sort - wash - dry - fold ... nobody gets hurt.  But my girls - 9 and 4 - like sparkely things that have to be turned inside-out for washing and cannot be dried or the sparkles fall off and attach to other things.  (Trust me, you do not want to have sparkles embedded in your Under Armour on workout day... people at the gym will talk.)  Hence, my design criteria for clothing selection is now different from my daughters... and of course, they will win.

This happens all the time on projects.  Different stakeholders have different needs and criteria.  Unless these are communicated and reconciled during scope planning, there's going to be trouble.  Somebody will be unpleasantly surprised by the time implementation hits.  Scott Berkun posted the top reasons why designs fail in his blog a few months ago... all great stuff.  It all boils down to communication, doesn't it?

The bottom line is that design and scope management are PROACTIVE activities... don't just start executing things until you've come to concensus on what you are doing, what's important to the stakeholders, and why people care about the things they do.  Even if you give every stakeholder 10 note cards, and ask them to write one critical function or feature on each card, you'll still be light years ahead of those who make assumptions and then blindly proceed.

Otherwise, you may find sparkly things on your requirements when all you really wanted was clean laundry.

Carpe Factum!

"No Problem!" is "Unfortunately" a Problem

Great service rides on great communication. Sometimes the difference between mediocre service and service that astonishes is your simple choice of words.

I read a great post by Bill Hogg regarding the phrase "no problem." Bill aptly points out that this commonBlog phrase is a combination of two words customers don't like to hear. Why risk turning the customer off when you could make a positive impression with "you're welcome" or "I'm happy to help"?

Another word that is often inappropriately used in service experiences is "unfortunately." Customer Service Representatives (CSRs) use this phrase all of the time as a substitute for an apology and in a poor attempt at expressing empathy:

"Unfortunately, we don't have that item in stock."

Customers want their issue resolved and they also want to know that you care about them and their predicament. The root of the word "unfortunately" is "fortune" or "luck." So, when you respond with the word "unfortunately" you are basically saying, "Bad luck, dude. Fortune has not kindly shined her face upon you this day." But, it doesn't communicate any kind of empathy for the customer's situation.

What other words or phrases do you hear in customer service situations that we need to reconsider?

A few cures for blogging writer's block

2987926396_87eb3c3494_m Your blog requires commitment, maintenance and constant upkeep, or else it will grow stale and (worse yet) unnoticed. Here are a few tips to get you going when you encounter writer's block.

  1. Write a list about anything. This is probably the easiest "go-to" move for a blogger. A numbered list is easy for the writer to get up on the screen (one sentence or two each and move on) - and it's also easy on the readers' eyes. I'm writing a list right now!
  2. Review whatever book you're currently reading.  
  3. Spice up your blog with video content. It's cheap and easy to grab short snippets of video with a Flip Cam and embed the content in your blog. This makes your blog more dynamic, and suddenly you're showing instead of writing.
  4. Scan the headlines and start writing. It never hurts to be relevant and topical on your blog. Write about how the current economy is impacting your business.  
  5. Go out and interview someone. Make your post about other people, not just you.
  6. Meet an immediate need with a quick howto tutorial. For instance, lots of bloggers get writer's block - including myself - hence, this post was created.
That should be enough to get you started in a pinch, but just in case, here are over 100 more ideas to kick-start your blogging habits!

Photo courtesy of tomsaint11 via Flickr.

IRS, your private equity funder

Times are tough and cash is tight.  If your business lost money last year, you have plenty of company.  There's only one good thing about a bad year. You can get back some tax refunds to help recapitalize your business. 

Your first likely source of tax refunds is the taxes you already have on deposit for 2008.  If your businessBlog is taxed on your 1040 -- that is, if you own an S corporation, a partnership or a sole proprietorship -- these taxes come from your W-2 withholding and from any estimated tax payments you have made.  If you based your 2008 payments on your 2007 income -- a standard way of computing estimated tax payments -- you may have a good refund coming.

If you expect a refund, get your information together promptly.  It's especially important to get your business tax information to your tax preparer right away.  If your preparer provides "organizers" to help you put together your business and personal tax information, complete them thoroughly and accurately.  The fewer times your preparer has to call you, the faster you will get your refund.  Electronic filing also speeds things up.

If you run your business in a C corporation, you may not even have to wait until your return is ready.  C corporations can file Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, as soon as their tax year is over.  You estimate on the form what your tax will be when the return is eventually filed; the IRS will refund your estimated 2008 overpayment -- probably within 4-6 weeks -- without waiting for the actual Form 1120. 

Once your 2008 return is done, you may be able to go back and recover some taxes from prior years.  You can carry back a "net operating loss" two years to recover prior taxes.  For individuals, a net operating loss is (roughly speaking) negative taxable income, but adding back your personal exemptions, standard deductions and your non-business losses in excess of your non-business income.  The computation is made on Schedule A, Form 1045.  The quickest way for an individual to get a refund from NOLcarrybacks is to file Form 1045.

C corporations carry back their negative taxable income, with some usually-minor modifications, on Form 1139.

Iowa has similar loss carryback rules for individuals and corporations.

Of course, complications can ensue; this is the tax law, after all.  You have to compute net operating losses separately for the alternative minimum tax and the alternative minimum tax credit, for example, and special limits can apply.  Also, pending legislation would extend the NOL carryback to five years, but possibly at the cost of 10 percent of your carryback. This all makes it a good idea to get your tax pro involved.

This site is intended for informational and conversational purposes, not to provide specific legal, investment, or tax advice.  Articles and opinions posted here are those of the author(s). Links to and from other sites are for informational purposes and are not an endorsement by this site’s sponsor.