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September 2012

How social are you?

As social media continues to evolve our communications styles, expectations and channels -- businesses scramble to sort out how and where they should be active. There's a misperception that social media is the playground for companies that sell direct to consumers (B2C) but not businesses that target other businesses (B2B). 

So wrong. Many B2B companies are enjoying incredible success as they leverage social media and content marketing as a part of their media mix.  This infographic developed by InsideView spells out the specific channels that (as of today) are enjoying the  most B2B activity.

Part of what B2B companies need to realize is that it's not just about brand awareness or name recognition.  When used well, social is driving lead generation and sales.

Best of all -- social escalates the sales cycle and you can close the deal faster. Check out this infographic and then tell us -- where are your social efforts in relation?



~ Drew

Metal shavings to countertops

It seems not a month goes buy and the recycle industry comes up with another stunning and interesting countertop material. Renewed Materials makes a sheet full of waste aluminum flakes. Flakes are the result of making aluminum bars and other shapes into machine parts, windows, or anything else made of aluminum.

Founder Demir Hamami says “What makes Renewed Materials different from other companies is the initial quest to make a recycled product. Other companies make recycled products as a result of figuring out what to do with a waste stream from the manufacture of a core product or how to add recycled content to a core product.”

The aluminum flakes are encapsulated in polyester or acrylic resins and used for tabletops, and countertops. Make sure when you shop for a countertop you know about the basic differences of polyester and acrylic.

Polyester resin makes for a hard surface but is not very transparent and cannot be melted for future reuse (thermoset). Acrylic resin is very transparent. They make eyeglasses of acrylic; it provides great visual depth and can be melted (thermo plastic) for future use, but is a much softer material.

Demir also shared important insight on the general public’s take on recycling. Demir commented “The focus seems to be on post-consumer waste recycling. What I see are huge opportunities in recycling pre-consumer waste from the manufacturing process. That is where much waste resides.”

-Rob Smith

Timing is everything: capital investments for the last quarter of 2012

20120916iabizYear-end capital investment could make more of a difference than usual this year.  Two important tax provisions favorable to capital investments expire at the end of 2012.  That means it can make a big difference in your tax bill whether you get those assets in place by the end of this year.

Bonus depreciation is scheduled to go away after this year.  The tax law normally requires businesses to deduct the cost of capital expenditures -- equipment, software, etc. -- over a period of years.  "Bonus" depreciation allows taxpayers to deduct some or all of those costs in the year the capital asset is placed in service.  For 2012 taxpayers can deduct 50% of the cost of "new" assets (though not most buildings) in the first year; the remaining 50% of the cost is recovered over the asset's normal tax life. 

Secition 179 is even more important to most entrepreneurs than bonus depreciation.  Qualifying investments can be fully deducted under Section 179 in the year they are placed in service.  Section 179 has two important advantages to Iowa taxpayers.  First, it can be used on purchases of used equipment, unlike bonus depreciation.  Second, Iowa recognizes Section 179, but not bonus depreciation, so it provides a state tax break that bonus depreciation doesn't. 

Taxpayers can deduct the cost of assets under up to $125,000 for tax years beginning in 2012.  That number is scheduled to decline to $25,000 in 2013. 

Section 179 is subject to some important limits.  The abiity to take the Section 179 deduction phases out dollar for dollar in 2012 as fixed asset purchases for the year exceed $500,000.  Also, unlike with bonus depreciation, you cannot create a loss with a Section 179 deduction, so you can't use it to generate a loss carryback to recover prior-year taxes.

To claim either a Section 179 deduction or bonus depreciation for an asset, a calendar-year taxpayer has to have the asset "placed in service" by December 31.  That doesn't mean ordered by year end, or sitting in a box on the loading dock when you close for New Years.  It means hooked up and ready to run.

Year-end planning this year is even more fraught with uncertainty than usual.  Top federal tax rates are scheduled to increase from 35% to 39.6% after this year -- and to 43.4% for "passive" investors in business.  Depending on the outcome of the elections, that increase may or may not happen.  If the tax increase happens, many taxpayers will be better off not taking bonus depreciation or 179; they may even want to delay placing assets in service. 

It's unwise to buy an asset you don't really need just for the tax break.  For assets you will need for your business anyway, it's best to have the flexibility to place the asset in service this year.  Depending on politics and your business needs, you can decide whether you want to plug in that new asset, and qualify for bonus depreciation and Section 179, closer to year end.  You can also wait until you file you return to decide whether to opt out of bonus depreciation and Section 179, in case you want to use the deductions in years with higher tax rates.

With so much uncertainty, it's more important than ever to consult your tax advisor on these decisions.  So do that.

When is bad good?

Listerine-badAs you are looking at your product or service and identifying those elements that make it unique (you are doing that, right?) remember that sometimes what makes it unique is not an inherently good thing.

Which isn't a bad thing.


Take original flavored Listerine. One of the things that made it completely unique was its disgusting taste. Instead of explaining it away or ignoring it - they took the bad and made it good. It tasted bad because it was powerful enough to kill the germs. (check out this TV spot from the 70s with Judd Hirsch)

In fact -- they built an entire advertising campaign around how awful it tastes.

Look at your product or service a bit differently. What's bad about it? How can you use that attribute to your advantage?


~ Drew

Residential wind energy a lot of hot air?

All those large wind turbines along the highway make you want to run out and install a turbine in your backyard. But wait a darn minute because it may just make no sense or cents.

Over the last two months my home averaged 1,000 kwh of electricity. Can I generate all my electrical needs on site? The large ones along the highway generate 800 kilowatts an hour on average and would have to rotate for only 20 minutes a month, but my neighbors would complain and I would too at a cost of $2.5 million.

The large turbines generate electricity that goes into the grid where a home turbine generates electricity and continually recharges batteries. The electicity you would use then comes from the batteries.

The installed cost of the typical system can be $4,000 to $5,000 per kilowatt of generating capacity including a battery system.

I found several systems on the Internet in the 5kw range. In Iowa the average wind capacity factor is 33% which means whatever the rating of the system you only on average get 33%. So that 5kw turbine would generate on average 5kw times 720 hours per month times 33% equals about 1,200 kw.  That would theoretically handle my electrical needs but at a cost of $20,000 to $25,000.

I can buy electricity from MidAmerican Energy at about 9 cents a KWH. My electric bill last month was $100.  At that rate, which is during the summer peak load, the investment would take 20-25 years to pay for itself.  My suggestion instead is to conserve energy or do other measures like insulation or new windows.

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