« January 2013 | Main | March 2013 »

February 2013

Finding your "match" with social media

CathyCathy (Photo credit: Wikipedia)

I met my husband online (where ELSE would a digitally focused girl meet a guy!?). The lessons I learned from my (ahem…) 10 years of dating (all sorts) can also be applied to finding your “match” in social media for personal or business purposes. 

#1: Variety is the spice of life… If you looked at all of my past boyfriends, you probably wouldn’t find many common denominators. You have to try all the frogs to find your prince. It’s not much different as you begin your social media quest. Get crazy and try lots of different platforms (at minimum, claim your name/business on them). Give them all time to breathe and grow and see what happens. You may be shocked to find out that Instagram really actually does work for your financial planning business (probably not, but if you start showing pictures of a lot of happily retired couples you helped – maybe? The point is - you won’t know until you try!)

#2: Not everyone is a good fit… Right? Am I right? Yes, take a moment and think of your past relationships that ended up “not a good fit” (yikes). Just like it doesn’t end up working out with everyone, neither will your social media efforts. It’s good to try, but it’s even better to hone in on what works. Since you’ve already tried all of your options, make sure you’re really looking into which communities you’ve built are getting the most interaction – not just the most likes/followers. Talking is important! 

#3: You get out of your relationship with social media what you put into it… Yes, even in social media you have to “work on your relationship” (sorry). You have to nurture it everyday. If you create a page, in the beginning it’s exciting so you’re obsessively logging on every minute to see who new has found you and you’re coming up with new posts constantly. Then pesky time takes over, it’s a month later and you’ve posted nothing. People have asked you questions and you never responded. Not good. That won’t work for relationships and it won’t work for social media. If you can’t take care of it the right way – find someone who can for you.

#4: Overlook the tiny flaws… Maybe they leave the toilet seat up, or they say “like” every other word – annoying = yes, but if it’s a good fit you’re probably looking past these tiny flaws. The same should be applied to your social media. Is it annoying when Facebook constantly begs you to “promote posts?” Yes. Or you SWEAR you had more Twitter followers, but the count is off? Annoying! It’s no reason to break up, though. Go to your couple’s counselor, Google, and search your issue. Sometimes you’ll find a work around, but at minimum you’ll probably find others with the same frustrations to vent with.

#5: Be proud of your new relationship… Once you’ve been dating a few months and decide it’s probably going to work (at least for a while!), generally it’s time to introduce your new beau to your friends and family. You go home and show them off with pride, so why not do the same with your chosen social media. You’ve worked hard to make an effort to have social media in your life right? So why not show it off! Tell everyone about it, encourage them to “like” your page or follow you, etc. You are your own best advocate. You’ve already decided you really love your new social media companion, so tell the world!


Tweet me and tell me what you thought: @interactivekate



Enhanced by Zemanta

Demise of another Lustron house

Over the weekend, I heard the trucks and equipment of DeCarlo Demolition tearing down a historic Lustron house on Tonawanda Drive just west of the Salisbury House. I should have tied myself to the house as the bulldozers approached! The Lustron is an endangered species of early sustainable design. In fact, I would say it is much more sustainable than most homes made today.

Lustron was arguably a very green solution to home building for returning GI’s after WWII. Lustron homes were manufactured by a company in Chicago from 1948-1950 before going bankrupt. The Lustron Preservation says 2,680 homes were sold for about $10,000 each and after 60 years about 1,500 homes still exist. Of the remaining stock there are 152 Lustron homes in Iowa and many Lustron homes in Des Moines less the one on Tonawanda Drive. Look for one on Chamberlain near Roosevelt High School.

What made the homes sustainable?  Porcelain steel panels for the roof, exterior, and interior walls. And in eight timeless exterior colors, including pink! It is the same material which makes up the interior of most ovens or cookware. No maintenance for 60 years is incredible. No painting of the interior so no off gassing or ongoing cost to repaint. The ceilings were metal perforated panels for even heat and no ductwork. Kitchen cabinets made of metal so you could wash them off easily.

What was their demise? Lustron Preservation says to some degree it was building inspectors and construction unions wary of new technology. Lustron homes were even banned in the very city of the manufacturer. 

Hopefully the green movement does not encounter the same issues today!

-Rob Smith

If a fire is worth fighting, it's worth fighting in style. But the firefighter still can't deduct the Benz.

Iabiz20130218Deductions for personally-owned vehicles are hard to get. A San Francisco firefighter learned that the hard way in Tax Court this month.

Mr. & Mrs. McCormack had a Schedule C home renovation business. They decided it needed a vehicle. So naturally they deducted it. From the Tax Court opinion:

The business was named Northside Construction and was identified as such on Schedule C. During 2009 Northside Construction had two jobs that generated $5,360 of gross receipts. The $41,818 loss deducted for the business was based primarily on $33,600 of depreciation and section 179 expense taken for the purchase of a 2007 MB 450 GL automobile that was acquired on October 5, 2009.

"MB" stands for "Mercedes Benz."

The IRS poked around, and found the car wasn't just used in the Schedule C business. The taxpayers then stumbled over the obstacle that disallows so many auto deductions: poor recordkeeping.

Petitioners claim that the car was used 100% of the time for business use in Northside Construction and for transportation by Mrs. McCormack for her San Francisco Fire Department responsibilities. Mr. McCormack kept a log for his business use of a Silverado truck on behalf of Ranger Pipelines, Inc., but did not keep the log in the automobile. Mrs. McCormack did not keep a log

If you don't keep an automobile log, you have at least two strikes on you if you try to deduct auto costs. The IRS had no trouble getting strike three across. Mrs. McCormack was an employee of the San Francisco Fire Department. Sec. 179 allows taxpayers to elect to deduct costs of assets that would otherwise be capitalized and recovered through depreciation. You can't take Sec. 179 for use of a car as an employee "unless such use is for the convenience of the employer and required as a condition of employment."

On top of that, you have to use a vehicle more than 50% in a qualifying business to take a Sec. 179 deduction. So things went badly:

There is no evidence in the record that the city of San Francisco required its fire department personnel to use their own automobiles while employed for the city, nor is there any evidence to suggest that the city failed to supply vehicles to its employees to provide fire department services for its citizens. On the contrary, Mrs. McCormack testified that during 2009 she used fire engines and ambulances provided by the city and did not otherwise keep a record of mileage for the automobile use as an employee. Consequently, Mrs. McCormack's use of the automobile as an employee of the city of San Francisco is not treated as business use for purposes of the Internal Revenue Code. When Mrs. McCormick's use of the automobile as an employee is coupled with the admitted personal use of the automobile for family and household purposes and the limited business use by Mr. McCormack, the Court holds that the business use of the automobile was less than 50%...

Petitioners may not deduct section 179 expenses for the MB 450 GL automobile purchased October 5, 2009. Furthermore, because of the failure to substantiate business use by means of a log or otherwise, no depreciation on the automobile, a listed property, may be claimed.

What can we learn from this tax conflagration?  Several things:

  • If you want to deduct business use of a car, you need to keep a log as you go.  Telling your tax preparer "Oh, 30,000 miles, 100% business" doesn't work well if you are audited.
  • If you do use your car as an employee, it's much better to turn in your mileage and get reimbursed than to try to get it as a tax return deduction. Employee business expenses are only deductible when they exceed 2% of your adjusted gross income -- and not deductible at all for alternative minimum tax.
  • If you deduct a car on your Schedule C, you can count on the IRS taking a close look at it on examination. If it's a luxury car, more so.

Cite: McCormack, T.C. Summ. Op. 2013-9.

Follow-up on January 4 post. Governor Branstad has signed into law a bill adopting most of the January "Fiscal Cliff" legislation for 2012 Iowa tax returns. As expected, the bill conforms most of the retroactive provisions of the Fiscal Cliff tax bill, including expanded Section 179 deductions, but not the expansion of "Bonus Depreciation."  More here.

Image Credit: Wikimedia Commons.

-Joe Kristan

How to survive in a post-report card world

Report CardReport Card (Photo credit: AJC1)

I recently read an article in the Harvard Business Review called “Women Need to Realize Work Isn’t School.” It can be summed up by this one simple but kind of radical idea: “In school, being disruptive might get you sent to the principal's office, but in business, disruption is a proven path to success.”

Having spent my whole life as a good, well-behaved student, this really caught my attention. But to be honest, I think it’s much more than a woman’s issue...

Many of my peers are a handful of years removed from college. Most of our lives have been dictated by a system that favors following the rules, picking up on what others expect of you and generally doing what you can to make interactions as painless as possible.Those things are good; disruption is bad. Or so we’ve been trained to believe!

However, many young professionals - both male and female - graduate and enter the workforce only to find that the skills that propelled them to the top of the class may just be holding them back in the office.

So what’s a YP to do? The article offered five suggestions to “disrupt yourself,” and I’d like to adapt them to apply to this young professional demographic as a whole. So here are their tips with my take:

1. Their tip: Figure out how to challenge and influence authority.
My take: It’s not about making others happy. It’s about trusting your ideas and being confident enough about them to stand up and challenge the status quo. Instead of working your tail off to figure out what your boss wants from you, figure out what you can solve, on problems they haven’t even thought of.

2. Their tip: Prepare, but also learn to improvise.

My take: If you were the studious type who spent long hours in the library and felt well-prepared going into every exam, this one’s for you. Believe in yourself! Take a chance. Speak up in that meeting. Volunteer to do something out of your normal comfort zone. It’s scary, but it’s bound to pay off.

3. Their tip: Find effective forms of self-promotion.

My take: In school, you got a report card to validate your exemplary performance. In order to make an impact in your office, you have to work hard, perform well and make sure people know about it. It’s easier said than done, but if you can master it, you’ll go far.

4. Their tip: Welcome a less prescribed, full of surprise, career path.

My take: Our whole pre-adult life, our lives are on a fairly straightforward path... We go from 1st Grade to 2nd Grade to 3rd Grade; from Algebra 1 to Algebra 2 to Pre-Calc; from elementary school to middle school to high school. Real life doesn’t work like that - and that’s OK! Most careers paths are a lot more random. In fact, millennials are projected to hold 14 jobs by the time we’re 40. Once you accept that, you can welcome the surprises and see them for the great opportunities they are.

5. Their tip: Go for being respected, not just liked.

My take: This one is especially hard for those rule-followers. In business, your ideas aren’t always going to be popular and you’re not always going to please everyone. However, you can have an opinion and gain the respect of your colleagues, and in the end, respect is always better than popularity.

The working world is not the classroom, but that doesn’t mean you have to leave all of those skills behind. The most successful will be the ones who can blend the skills of the school place with the skills of the workplace. A bit of both will help you get ahead.

-Emilee Richardson
Enhanced by Zemanta

The pros and cons of the catalog

Retailers have long weighed the pros and cons of a print catalog for their products, -- and the easy lure of posting everything on the Internet these days has only made the decision that much harder.

For my business, the decision to go with a print catalog was been an easy one. It's also been a profitable one.

Let's start with the "easy decision" part. Before the Heart of Iowa Market Place produced a print catalog, people could call or go online to order. But the catalog's results were quickly obvious. People would come into the store, catalog in hand, with various items circled. Or, when calling to place an order, they would provide the item number.

The catalog made their lives easier and their shopping experience more productive and enjoyable, especially for businesses and those individuals who do not like to shop online. So in addition to generating more sales, it generated a positive shopping experience for our customers. 

How do I know it was profitable?

We spent approximately $1.15 per catalog plus postage. While the investment upfront was large, it also allowed for us to have improved photos for our website and advertising purposes. And, for an expenditure to be worth the time, money and effort, I always expect it to bring back at least twice as many dollars. By keeping track of sales directly attributed to the catalog, I knew when we reached and passed that mark.

Where did we send all those catalogs?

Existing customers for starters, of course. A print catalog is an easy way to stay connected with the people who are essential to your company's life and profitability.

We also expanded our business-to-business mailing list by using the Business Record's annual Book of Lists and area chamber of commerce contact lists.

While it's important to be creative and expansive with your contacts, it's equally important to realistically look at your potential market. Catalogs are expensive and you can't afford to throw away money with a scattershot approach. In other words, you have to get your catalog out there, but you have it get it into the right hands.

In addition, the catalog was used in electronic format. It was placed on our website so customers could easily download it (saving postage costs for us). Another bonus: When making marketing calls on businesses, I could easily use my iPad to review product options for my clients or easily email the catalog to the potential client. These are all benefits that sometimes get left out of the cost per catalog equation. 

One more thing: The catalog is part of your company's image and brand. A high-quality catalog sends the clear message that you deliver high-quality products and service. It tells your customers they can trust you.

Catalog customers are a very, very important piece of the Heart of Iowa's business -- and we treat them accordingly. So much so, that I always remember the words of a true pioneer in the catalog business, L.L. Bean, who made his mark with the 100 percent money back guarantee. His philosophy was as powerful as it was simple: "A customer is the most important person ever in the office -- in person or by mail."

Truer words for a successful retail business were never spoken.

-Kelly Sharp

Don't plan the funeral yet - marketing is not dead!

CasketflowersAs social media and all things digital/mobile become more mainstream, I've been seeing a rash of articles declaring that traditional marketing is dead. And this isn't from some hack with 12 blog readers.  We're talking  Forbes, Harvard Business Review and many other reputable publications have announced the passing of marketing.  

Here's what HBR had to say, in part:

Traditional marketing — including advertising, public relations, branding and corporate communications — is dead. Many people in traditional marketing roles and organizations may not realize they're operating within a dead paradigm. But they are. The evidence is clear.

First, buyers are no longer paying much attention. Several studies have confirmed that in the "buyer's decision journey," traditional marketing communications just aren't relevant. Buyers are checking out product and service information in their own way, often through the Internet, and often from sources outside the firm such as word-of-mouth or customer reviews.

Second, CEOs have lost all patience. In a devastating 2011 study of 600 CEOs and decision makers by the London-based Fournaise Marketing Group, 73% of them said that CMOs lack business credibility and the ability to generate sufficient business growth, 72% are tired of being asked for money without explaining how it will generate increased business, and 77% have had it with all the talk about brand equity that can't be linked to actual firm equity or any other recognized financial metric.

A few things to note:

  1. It's ironic that publications that exist because of traditional advertising revenues are making a big deal out of this.
  2. Didn't we say the same thing about radio when the TV came on the scene?
  3. Aren't we painting marketing with a pretty wide brush?

Is marketing changing?  You bet.  Should it?  You bet.  But that hardly means it is dead.  It means it's evolving.

It's suggested that most consumers (both B2C and B2B) do about 60-70% of their shopping online -- BEFORE they ever contact the company or visit the store.  So is having a strong search strategy important?  Of course.

As smart phones become ubiquitious, can we ignore being ready for the mobile invasion in terms of our web presence, payment options etc?  Not if we want to stay in business.

But that doesn't mean marketing is dead.  Marketing's job is the same as it always has been.  Marketing's purpose is make sure your product, service or company gets on the short list.

Most people consider three options before making a purchase.  Whether it's a car, a toothpaste or a new accountant -- most of us have the capacity to study and consider up to three choices.

Marketing's purpose is to make sure that when your consumer is ready to start their consideration -- you're on the list of three.  If your marketing is really strong, it might trim that list down to two.  And if you're Apple or Harley -- your marketing and branding efforts may mean you're the only one on the list.  If they can't have you, they don't want anything.

Today -- with consumers doing more of their shopping on their own -- marketing, if anything, is even more important.  

What consumers are telling us is that they want our marketing to be less intrusive, more helpful and more accessible -- when and where they want it.  So that's the evolution we're seeing.  

But have no fear -- marketing is just as vital and valuable as it's ever been.

-Drew McLellan


Reduce your energy to heat and cool

My last blog reviewed how to reduce your office electrical consumption since office buildings consume nearly 20% of the electrical consumption in the USA. About 25% of the energy is for space heating and cooling. How can you reduce your energy for heating and cooling?

  1. Install a programmable thermostat. At our office the temp is set to 62 on the weekends during winter and 85 during the summer. That way the furnace or air conditioner barely runs on the weekends. Just make sure you program the system to meet your desired temperature before people get to the office.
  2. Before you head out on a long car trip you get your car serviced. Do the same for your system before the heat of summer or cold of winter hits. You should get it serviced at least twice a year. If you do, chances are it won’t go down on the hottest day of the year and lower the office productivity to zero because everyone went home. Just think what that costs!
  3. Keep the sun out during the summer. Provide internal window treatments like vertical or horizontal blinds, or better yet don’t let the sunlight get through the glass. Many companies make attractive exterior sun shades which can be attached to the building.

-Rob Smith

Hello from Katie Stocking: An admitted social media addict

Hi, my name is Katie Stocking and I’m a social media addict. Now that we’ve got that out in Katie Stocking the open please let me introduce myself further. I’m the founder/owner of Happy Medium, an interactive agency in Des Moines. What does “interactive” mean? In broad terms it basically means we do anything that has to do with advertising digitally including building websites, SEO, SEM, online ads and social media management. I started Happy Medium in February 2011 as a traditional advertising agency and quickly saw a gap for clients trying to transition their businesses to be more digitally focused. So, we switched our focus and have been fanatics ever since.

In my blog I’ll be focusing mostly on everything relating to social media. There is so much information available for social media, whether you’re using it for personal use or business purposes. My goal is to help guide you through everything from the basics to the more cumbersome tips and tricks.

I plan to discuss all the types of social media here – even fill you in on new and up and coming platforms. However, if you’re feeling overwhelmed with social media, my best tip for you is to choose one or two platforms and just work on those for now. Go ahead and claim your name or company on other platforms, but as far as updating goes, just focus on one or two to get started. Not every social media is a good fit for every person or brand. My company has them all, but that’s because it’s literally what we do for a living. When it comes to recommendations we make to clients, we manage their social media for, we do research and have multiple discussions to decide which platforms we’re going to focus on.

I’m very excited to be on board with IowaBiz and can’t wait to jump in to help you make social media work for you.

-- katie

Alternatives to EBITDA Multiples

On a regular basis, we seem to be driven to want to know the current Earnings before interest, taxes, depreciation and amortization (EBITDA) “multiples” that apply to businesses in various sectors. We strive to find comparables that we can use to provide a prospective seller with an expectation range of price that he or she can anticipate for the sale of the business that they have worked a lifetime to create. We want them to believe that we will be able to find the right buyer, at the optimum price and that they will not be made to look foolish in the eyes of their peers... who are always parlaying the latest Industry scuttlebutt as to what Joe got for his business and why they think they deserve more. I would like to visit several aspects of price as there is much analysis to insure the optimum value. 

The first aspect to address when speaking to our potential sellers is the tax liability that is being created when the business is sold. If he or she sells assets, they will likely have recaptured depreciation – which is ordinary income. It can be taxed as high as 53% when combining various state and federal taxes. The allocation of purchase price could assist them here. If the purchase price allocation were to set out only the depreciated value for assets that they have taken depreciation, the seller may not have to endure the ordinary tax rate on recapture. This is highly unlikely, as the purchaser wishes to take the tax shelter on those assets acquired in the future. So, the current market value will likely be reflected in the allocation.

If the seller sells the shares of his firm, they can be assured of only paying the capital gains tax. This is a distinct tax benefit and will result in a materially larger after tax proceeds for the seller.

One must consider the advantage of using 1042 Election for the proceeds which will defer all taxes. This is the methodology, wherein you use an ESOP as the acquirer and as a result any and all proceeds that are reinvested in an eligible investment. The proceeds carry the old tax basis and are tax deferred. What an incredible win for the seller in that his net proceeds will likely have grown by 30% or more now that there is not a tax bite. Talk about blowing the EBITDA multiples!

Further consideration should be focused on dividing the sale into real estate and operating assets by using a 1031 Election. Exchanging the real estate for a like property, the seller can defer any recapture of depreciation and capital gains tax as they take this basis to the new property. The purchase price may be funneled into the real estate perhaps through the purchaser paying down or paying off mortgages, etc. on the real estate. A significant portion of the purchase price may now be tax deferred.

Conversely, one must be careful if acting for the seller that any employment agreements that are taken as a portion of the purchase price. Employment income is at the ordinary rate (as opposed to capital gain rate generally half that of ordinary). If we are acting as a buyers’ agent, we would certainly encourage as much of the purchase price in the form of employment agreements as all of this consideration is tax deductible. So, in effect it is almost halved as to net after tax cost. In this instance, we can also pay a very hefty EBITDA multiple (if that is important to the seller) as that portion of the purchase price that is allocated to the employment agreement is tax benefited by at least 30%.

Another significant contributing factor to the EBITDA multiple that can be achieved for a seller is the historical Compounded Annual Growth Rate (CAGR). Revenue, earnings, market share, etc. represent a significant value indicator that allows a purchaser to pay at the top of the range if for example, a 15% CAGR has been achieved over the past three to five years and the marketplace appears to accommodate that continued growth. Compare that against an entity that has demonstrated a 3 to 4% CAGR. Historical growth is a huge factor in determining value. However, it is really the purchaser’s belief that that growth rate can be sustained that truly drives the premium multiple. If the industry is growing, it is merely a matter of stepping on to that moving train and participating in the growth. If the industry is flat or contracting, then all growth has to come from taking business away from the competition...a much more challenging task. So the position of the business in the industry and the growth of the industry has a huge impact on the multiple that can be achieved.

Good Luck,

Steve Sink

You don't know what you're missing

It's an expression you've heard a million times: "You don't know what you're missing."

I think of that expression often when I think about many retailers' reluctance to get serious about business-to-business relationships.

Let's face it: Many retailers only focus on walk-in traffic. That's great, because you want to do everything you can to make sure those customers have a unique shopping experience that keeps them coming back to your business day-in, day-out, year after year.

But it's not enough if you're serious about bringing as much revenue as you can to the bottom line of your balance sheet each year. (And, every small business should be dead serious about its bottom line.)

You really need to be asking yourself, Do I have a product or service that works for business-to-business relations? And, can I grow my business that way?

Get creative. You'll be surprised how far your reach can -- and should -- be. For instance, say your business is custom-made baby clothes. You're probably thinking there's absolutely no business-to-business opportunity whatsoever. Especially not on the local level. But, you'd be wrong.

I was talking to a friend not too long ago who said her law firm is constantly buying baby gifts for associates who are having children. So, why wouldn't you, as a retailer, target a business-to-business opportunity like that? The result would be a steady stream of business and, more than likely, plenty of referrals coming your way.

The truth is, almost every retail business can have a robust business-to-business component.

So, jump in with both feet this year. And do it sooner rather than later.

You won't believe what you've been missing!

-Kelly Sharp

Tough tax return choice for 2012: Pay more now to save later?

20130104-1When taxpayers have an option to deduct an expense sooner than later, it's usually an easy choice -- sooner! Why give the government money now instead of later? A no-brainer.

It's a brainer this year. The steep increase in tax rates for 2013 might make you less eager to take all the deductions you can in 2012. There are two important increases in tax rates this year. The "Fiscal Cliff" legislation increases the top effective "regular" income tax rate for individuals to 40.78%. Many business owners will also have to pay an additional 3.8% "Net Investment Income" tax in addition under Obamacare. That combined rate of more than 44% compares to a 35% top individual rate for 2012. That means deductions will be worth a lot more in 2013.

That leaves businesses with some perplexing choices on their 2012 tax returns. For example, the Fiscal Cliff bill increased the "Section 179" deduction maximium to $500,000 in 2012 and 2013. That means taxpayers can deduct up to $500,000 in expenditures that would otherwise have to be capitalized and depreciated over a period of years. The natural reaction is to deduct as much as you can as fast as you can. The new higher rates could make that costly.

For example, assume a taxpayer places a $500,000 computer system into service into 2012. If a top-braket taxpayer takes a Section 179 deduction in 2012, the tax benefit of the deduction is about $175,000, ignoring state taxes. If the taxpayer instead depreciates the system over its usual five year life, it will get a $100,000 deduction in 2012 and the remaining $400,000 over 2013-17, for a total tax benefit of about $211,000.

That means the taxpyer can reduce taxes from 2013-17 about $31,000 by not taking the biggest possible deduction this year. Is it worth paying less now to pay more later? That depends. If you are short of cash now, you might take the big deduction anyway -- you don't care about future taxes if you can't stay in business until then, and that big deduction might be the difference between staying alive and not. 

But the implied cost of funds for getting smaller tax benefit now for a bigger one later works out to over 11%. That's pretty expensive money.

Bottom line? Every taxpayer is different. You should discuss with your tax advisor whether it's worth paying extra 2012 taxes to save taxes in future years. The Section 179 deduction is just one instance where you might have to make that choice.

-Joe Kristan

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.