Record Unemployment Hits Small Businesses
posted by Ian Wyatt | November 10, 2008
The U.S. economy continues to show signs of prolonged weakness with a report last week from the U.S. Labor Department that 240,000 jobs were lost during the month of October, bringing unemployment to a 14-year high of 6.5%. The negative report for October follows worse than expected job losses of 284,000 in September (versus an estimate of 159,000).
Small businesses have long been considered a driving force in the creation of new jobs fueling economic growth. However, along with the thousands of jobs being eliminated at major corporations throughout the country, small businesses are also holding back on new hires and looking for positions to be eliminated.
Small businesses such as my company, Business Financial Publishing, haven't been immune to the suffering economy. Many small businesses, while entrepreneurial and high growth during the good times, have had to cut back as a result of the economic slowdown and collapse of the financial markets. Unfortunately, many small businesses have been impacted by reduced spending and tightening budgets at larger companies. While we may not be directly impacted by the tightening credit markets, our customers are. And the consequence of this is less spending on all things ranging from R&D to advertising and marketing.
In a 2008 survey of companies included in the Inc. 500 by Inc. Magazine, all of the companies indicated that they planned on increasing their employee headcount in the next year. I suspect like us, many of these great growth companies have put the brakes on their growth plans.
While we included ourselves among those Inc. 500 companies that had ambitious growth plans for 2008, we are now in the unfortunate position of being forced to eliminate three full time positions in the last few weeks in an attempt to reduce our costs and bring expenses in line with our declining revenues. While these decisions have been difficult, our need to sustain a healthy business have forced us to proactively confront issues related to our cost structure.
I'm hopeful that 2009 will bring renewed interest and recovery for the financial markets. 2008 has proven a more challenging year than expected, but I'm confident that we have a great team in place to help get us back on the path of growth and prosperity.
Barack Obama Tax Increase
posted by Ian Wyatt | November 5, 2008
Posted in Financial Markets | Comments
Yesterday Barack Obama won the election for U.S. President, and will become the first African American to lead our great country. It has been a remarkable campaign and election, and this historical outcome is something we will remember for the remainder of our lives.
I got some great feedback to my blog post from Monday titled "Why Barack Obama’s Tax Plan Hurts Small Businesses, Entrepreneurs, and the Economy." I've posted their emails to me as anonymous posts to the blog. Check out the comments section by clicking the title of that blog post, as my friends have some interesting thoughts and feedback. I'll take a moment in this post to respond to some of the key issues.
A couple comments focused on taxation of companies that file as S-corporations. At the end of the year, the net income from a S-corp that has not been invested during the year is considered income to the shareholders. This income flows directly to the taxable income of the owners. Whether the owners actually take this money from the company as an owner draw and move it into their personal accounts, or leave it in the corporation's accounts, the income is taxable as personal income at the individual's personal income tax rate. Therefore, even if the company earns income which the owner intends to retain in the company for investment in the next tax year, that income is taxed.
Few small business owners have the best interests of the economy and job growth at heart when making decisions. But all consider their own best interests. Growing a company and increasing its revenues and income is in the small business owner's best interest. Why? Because they earn more. But the consequence of a small company's growth is job creation and economic activity that benefits other companies. So regardless of whether or not we think the business owner earns more income with lower taxes has the best interest of the U.S. economy in mind when making decisions, he or she clearly does have his or her own best interests in mind. And those interests will guide the business owner to make intelligent decisions about their investment of capital to grow their business and increase their net worth (or to make other decisions about where their money is spent or capital invested). And even if they don't reinvest in their own business, but instead buy stocks, build an addition on their home, or spend that money on a new BMW, isn't that activity also stimulating the economy and / or generating tax revenue for Uncle Sam?
Some of the numbers I included in my original post were incorrect, and didn't include some of the tax breaks that Barack Obama has proposed for small businesses creating jobs. I think the more than the new president can do to give small businesses a break and stimulate the economy, the better off we will all be. But I don't believe that raising taxes on people earning greater than $250,000 will stimulate the economy, and historical evidence shows that it will in fact have a negative effect on growth and job creation, two things that I feel are necessary to help pull the U.S. economy out of the current downturn.
I agree that given the many mistakes of the Bush presidency, the U.S. government needs to increase tax revenues. Unfortunately, the U.S. taxpayer has to pickup the bill for the mistakes of the last eight years. I recognize that generally speaking, those people earning greater than $250,000 are better able to afford higher taxes. But at the core of my argument for not raising the highest marginal tax bracket is the fact that historically, decreasing the highest marginal tax rate (and tax rates across the board, for that matter), stimulates the economy and actually increases overall tax revenues. It will be interesting to see what Barack Obama does to to taxes in this country once he takes office in 2009.
Why Barack Obama’s Tax Plan Hurts Small Businesses, Entrepreneurs, and the Economy
posted by Ian Wyatt | November 3, 2008
Posted in Financial Markets | Comments (7)
Election day is tomorrow, and I've been meaning to weigh in on Barack Obama's tax plan and what I believe it means to small business owners and entrepreneurs across the United States. Let me start this off by stating I'm a big fan of Barack Obama. As an independent voter, I'll likely vote for him in tomorrow's election for a whole lot of reasons beyond this one issue, where I find fault with his judgment on what is best for the U.S.
At the crux of the Barack Obama tax plan is a tax cut on the +95% of the American population who earn less than $250,000. This group of the population would see the following tax cuts: $500-per-worker tax credit for people who earn less than $150,000 and do not itemize. $4,000 credit per child in college. And seniors who earn less than $50,000 would pay no federal income tax.
Barack Obama would like to have every American thinking that anyone earning over $250,000 a year is fabulously wealthy, and therefore can afford greater taxes without consequence (and that it is their responsibility to pay more). $250,000 in annual income is a lot, and puts these households in the top 5% of income earners in the country.
The problem is that many of those people in this country who earn greater than $250,000 are small business owners. Lets take a hypothetical small business called Widget Factory. Widget Factory is a sole proprietor LLC (a very common business formation for small businesses) owned by Joe (not Joe the plumber). Widget Factory has annual sales of $3 million. Joe is paid a healthy, but not excessive CEO salary of $150,000. After expenses, Widget Factory earns a profit of 15%, or $450,000. The company is successful, and has grown over the years creating lots of jobs.
As a sole proprietor LLC, Joe is taxed on his regular income. But with an LLC that files as a S-corporation (again, very common), the income from the company flows directly to Joe's personal income tax, and is taxable as personal income. So Joe's taxable income is $600,000, not $150,000. Even if Widget Factory retains 100% of its income for future investments such as a new factory or salaries for new employees, Joe must pay taxes for Widget Factory on his personal income tax return.
Under the current tax law, Joe would pay 33% on income between $164,550 and $357,700, and 35% on income above $357,700. His total federal tax bill is $181,575. Under Barack Obama's tax plan, Joe would pay 39% on all income above $250,000. Assuming that his taxes on all income below $250,000 remained the same, his new federal income tax bill would be $197,729 ($61,229 on the first $250,000 of income, plus 39% X $450,000 = $136,500). His federal income taxes increase by $16,154 under Barack Obama (note that my back of the envelope calculation doesn't take into account all the other intricacies of the tax plan from Barack Obama).
But that is only the start of the increased taxes. Barack Obama also plans to apply a social security tax on all income above $250,000. As a small business owner, Widget Factory pays 7.5% of his social security, and he individually pays the balance. But since Joe owns the company, he is essentially picking up the entire tab. So on the $450,000 in income above $250,000, Joe pays another 15%, or $67,500.
Joe the small business owner will see his taxes increase $83,654 under Barack Obama. I'm not suggesting that we should feel sorry for people earning over $250,000 per year. Assuming that the average Widget Factory employee earns $40,000, this $83,654 that will now go to the government could have instead paid the annual salary for two new employees.
There are two problems.
First, small businesses typically lead the charge in job creation. The more the government taxes these small businesses, they less capital they have available to do things like invest in infrastructure and hire employees. The less they invest in these things, the slower their growth becomes. In turn, their profits (future taxable income) grows at a slower rate. And as their growth slows, they are less likely to hire more employees (or may hire fewer). This means there are less new jobs, and fewer people to participate in the economy (and be taxed).
Second, studies have demonstrated that increasing the highest marginal tax rate does two things. It results in slower growth rates for the economy (since the government is taking capital away from businesses), and it results in lower overall tax receipts. This has been seen in European countries including Ireland and Russia. The opposite was also in the United States, following the Bush tax cuts (lower taxes = higher growth).
Historically, lowering the highest marginal tax rate increases growth, creates more jobs, and increases overall tax receipts. Sounds like a proven recipe for success. It is not a zero sum game of taking money from the rich to fund the government's spending. There are consequences to increased taxation, and unfortunately, the resulting slower growth coupled with fewer new jobs won't help to bolster the already struggling U.S. economy.
So why DOES Barack Obama want to raise taxes on those earning more than $250,000? Not in order to pay the upcoming bills for new government spending (he could do that by maintaining or lowering the highest marginal tax rate). It is unclear to me, and seems that this aspect of Barack Obama's economic plan may be flawed and is based upon the assumption that all people earning more than $250,000 are very wealthy, and have the responsibility to pay incrementally more in taxes.
If Barack Obama is elected, which I believe he will be, and he passes his tax reforms (which I believe he will, with Democrats controlling the House and Senate), taxes for profitable and successful small businesses throughout the country will increase. The result will be lower investments by these businesses, and the creation of fewer jobs here in the U.S. (and perhaps a greater need to outsource by small businesses in order to increase profit margins). And the economy may continue to suffer.
Hopefully once elected, Barack will reexamine the potential real negative consequences of a tax increase.
As one of my business advisors said to me last week, Barack Obama's plan is "trickle up poverty, not trickle down economics."
Back from Italy, and back to work
posted by Ian Wyatt | November 2, 2008
My new wife Carrie and I are now back from a great three week honeymoon that took us on a tour throughout northern Italy. Out travels took us to Venice, Bologna, Florence, Siena, Porto Ercole, and Rome. It was an amazing three weeks of visiting city sites, touring the Tuscany countryside, and relaxing at the beautiful coast on the Mediterranean Sea. With warm people and outstanding food, and wine, combined with an amazingly beautiful countryside and historically impressive cities and art makes Italy a top vacation spot in my book. I am however ready for a no-pasta diet after three weeks of consuming Italian food every day, at every meal.
I'm now back in the United States following our wedding and honeymoon, and am getting back into the swing of things at work. The past four weeks have seen significant losses in the stock market, and this has been having a negative effect on our business at Business Financial Publishing.
I have been monitoring the financial markets during my trip abroad, and was in regular contact with the Business Financial Publishing leadership team in Washington, DC discussing the impact of the financial crisis on our business. Last week brought some big gains to U.S. stocks, and the election on Tuesday will likely eliminate a certain amount of uncertainty that is weighing on the market as a whole. So long as there is a decision on Tuesday, I believe the markets will fair better, and the worst may be behind us. While the financial markets may have bottomed and could be on the road toward recovery, the underlying fundamentals that led to the current financial crisis (sub prime mortgages, over borrowing by consumers, high oil prices, declining home prices) remain in tact, and are unlikely to be solved in the coming weeks or months. I believe these are deep rooted issues that may take one or more years to filter through the economic system and see some sort of resolution, regardless of the actions taken by this and the future administration in Washington DC.
It is good to be back at work catching up on the rapidly evolving economy, stock market, and business environment. It is likely to remain a challenging business environment for weeks and months to come, but I would rather be on this side of the Atlantic working with my great team to overcome these challenges.
Carrie + Ian: Married October 4, 2008
posted by Ian Wyatt | October 7, 2008
Posted in Vermont Living | Comments (2)
I'm pleased to announce that on Saturday, October 4 Carrie and I were married at our home in Vermont with 130 guests from around the country and traveling from as far away as China and France. We had a wonderful weekend of events and enjoyed sharing this special place that we call home with our family, friends, and loved ones. Thank you to everyone who made the trip to Vermont to share this special weekend with us.
Ouch! Dow tumbles 777 points today
posted by Ian Wyatt | September 29, 2008
Posted in Financial Markets | Comments
I don't have much to say other than that today was a terrible day for investors. Dow Jones Industrial Average was down 777 points, a record one day point loss for the benchmark index. The U.S. House of Representatives voted down a $700 billion bailout package being pushed by the Bush administration.
Not much else to say other than this is an incredibly challenging environment. Action is clearly required, and the disappointment of investors was evident in today's market action. Like it or not, the U.S. economy faces a liquidity crisis which is unlikely to be resolved in a timely manner without government intervention. The free marketer in me says "leave the market alone." However, the realist in me says "we need action, and we need it now."
Have we hit rock bottom? Or is more bad news on the way? For a couple months now, investors including me have thought we've hit rock bottom time and time again. Is this actual the end to the decline? Perhaps. But I have trouble believing we are going to have a fast turnaround to the prosperous times. It feels to me like we may hover in this unpleasent bottom for a while.
We shall see what happens in the market tomorrow. While this blog wasn't intended to be a commentary on the market, I think the recent events in the capital markets and stock market highlight some serious challenges to our economy which are having a profound negative impact on small businesses and entrepreneurs throughout the country.
Business Breakthroughs and Adventures
posted by Ian Wyatt | September 26, 2008
Posted in Entreprneur's Organization | Comments
Earlier this week at an Entrepreneur's Organization event in Washington DC, Cameron Herold introduced me to Yanik Silver. Yanik is built a successful online business (InstantSalesLetters.com) and more recently started an events business targeting entrepreneurs.
His newest company, Maverick Business Adventures, creates world class events for adventure and risk seeking entrepreneurs. The company's events combine once in a lifetime experiences with learning and experience sharing.
While speaking with Yanik, he said that most of his business breakthroughs don't come from time with others within his same industry. But rather that he is much more likely to achieve a breakthrough by spending time with a commercial real estate developer whose ideas and experiences will be new and different than his. This makes a lot of sense, and I think it is one of the things that makes Entrepreneur's Organization worthwhile for so many members. It isn't about learning from those who have done exactly what I have done before. Rather, the benefit comes from outside perspectives of those who are in different businesses and have varied experiences that I can draw upon (and vice versa).
Through Maverick Business Adventures, it appears that Yanik is providing entrepreneurs and CEOs with the opportunity to share great experiences and business ideas with other over achievers who like to combine work with fun. The 2009 calendar is posted on the web site, with some really cool events lined up for the next year, including the Olympic games in Lake Placid, Baja racing and super bowl party in Mexico, exotic and classic car road trip from NYC to Montreal with F1 race driving school, or diving with Great White Sharks and enjoying wine in northern California.
I hear the events are amazing, and plan to make it my goal in 2009 to attend one of these Maverick events.
Focus On Things Within My Control
posted by Ian Wyatt | September 25, 2008
Posted in Work Life Balance | Comments
In business, as in life, I've learned the importance of focusing on those things that are within my control.
Last night I was speaking with my fiancée Carrie and she told me that the Weather.com forecast calls for cold weather and a chance of rain on our fast approaching wedding day, October 4. She and I are, not surprisingly, concerned about the weather on our big day, since rescheduling the event isn't really an option. (I checked Accuweather when I got home, which forecasts sunny weather with clouds on the same day).
Later in the evening over beers and snacks with my good friend Brandon at the Black Squirrel in Adams Morgan (Washington DC), we were talking about the turmoil in the economy and the stock market, and what that means for my business. I told him these are challenging times for lots of businesses, ours included. And that we've seen a slow down in advertising and subscription sales as a result of the volatility and uncertainty in the market and our economy. We talked about how these events make now a particularly inconvenient time for me to be out of the office for four weeks for my wedding and honeymoon. But when is a convenient time for a one month break? I actually think now is a good time to be away, since things are unlikely to improve much in the coming weeks. Its not as though we're in the midst of an important partnership opportunity or have big advertising prospects lining up to give us lots of new business, which might require my time and attention.
I have given some thought to both of these very different conversations about very different personal and business situations. And I realized that the key take away and reason I don't feel anxious about either situation is because I choose to focus on those things that remain within my control. I can't control the weather on October 4, nor can I control the stock market or economy. But I can control many things in my personal life and business life in order to be prepared for the good, the bad, and the ugly.
If it rains on our wedding day, it will remain one of the most amazing and memorable days of my life. And if the challenges in the stock market and economy continue through October (which I have every reason to believe is the case), my business will still be standing and making forward progress in spite of the challenges. We have an amazing group of employees led by a seasoned leadership team, and I know they will continue to make forward progress even in this difficult economic environment.
As I've grown as an adult, in my personal life and entrepreneurial pursuits, I have become more focused on those things in my life that can be controlled, and tried to spend as little time possible worrying about those outside of my control. I think it simply makes life more relaxing and enjoyable.
Painted Picture: Business Financial Publishing 2011
posted by Ian Wyatt | September 23, 2008
Posted in Entreprneur's Organization, Business Financial Publishing, Painted Picture | Comments
The best way to ensure that dreams become reality is to take the vision from our minds and share it with people. The following vision, what I call my Painted Picture, is a vivid mental image of what Business Financial Publishing will look like, feel like, and act like by December 31, 2011. The goal of this document and process is to share my vision for the company’s future with our leadership team, employees, advertisers, partners, and customers. By sharing this vision, together we can turn this dream into a reality.
Our Business
We are in the business of building an engaged online audience through our websites, blogs, seminars, online videos, newsletters, and e-letters. Our target audience is individuals with compelling demographics who have a tendency to buy products online. We capitalize on the aging baby boomer population by developing online content products that appeal to their interests in the areas of wealth and health, with topics including personal finance, investments, healthy living, anti-aging, and wealth creation. We monetize our audience through advertising sponsorships, direct product sales, and product partnerships. Our audience depends upon us to deliver investment ideas that outperform the market, business opportunities that will exceed their expectations, and insights and tips about health and wellness that will improve their well-being.
We have expanded with successful divisions in the health and wellness, and small business / opportunity seekers markets, diversifying our revenue streams and helping propel the overall growth of the company. Our products include interactive newsletters, membership websites, webinars, home study courses, and live events.
We have re-branded our company as a diversified new media Internet company, with a new name that encompasses our expansion in areas outside of the investment information market. Business Financial Publishing remains a division of our new company, and all employees are now part of our larger organization, creating additional growth opportunities for everyone within the company. We have additional divisions and operating companies in the areas of health and wellness, and small business and opportunity seekers. Our company is recognized as a highly credible diversified media company, participating and presenting regularly at events including Specialized Information Publishers Association, Direct Marketing Association, Mequoda, Marketing Sherpa, and Financial Publishers Association.
We are successful in part due to our rapid product development, and diverse product offerings that allow us to market different products based upon market fluctuations, and the changing interests of our audience.
Knowing Our Audience
Our audience is the aging baby boomers and those within 25 years of retirement. Baby boomers are in their 50s and 60s and are in the middle to upper middle class, and are nearing retirement. They don’t expect Social Security to pay for their retirement, and are concerned about their finances in retirement. Most of them haven’t saved enough, and may have to cut back expenses in retirement, continue working past age 65, or develop alternative sources of income. They seek sound investment advice and wealth-generating opportunities. They are also concerned about their health, diet, and general wellness. They are familiar with the Internet, and most have been online for +10 years. They are comfortable buying products online from credible sources and trusted brands.
It’s All about People
People make our business successful. Our employees are passionate about their work, and motivated to work hard to build and grow this company, and seek professional growth opportunities within our organization. We retain our best employees through great benefits, flexible schedules, competitive compensation, and outstanding bonus and profit sharing plans that allow them to share in the financial success of our company. Through group interviews and Topgrading, we’re able to find the best people for our job openings. We hire smart people who have a track record of success, and have a formal new employee orientation program that aims to help them understand who we are. With every potential hire, we ask ourselves "will this person raise the bar at our company?" Our employees have good work / life balance, and excel both in and out of the office. They consider it a privilege to work for our company.
Our leadership team includes a full time Chief Operating Officer, who runs the day to day operations of our company. Our leadership team is complemented and advised by our formal board of advisors, which provides needed outside insights, advice, and guidance. We meet with them individually, and also hold an annual meeting that includes employees, the leadership team, and the board of advisors.
Education & Training
We hire the best employees possible, and continue to invest in their education and training in order to keep them at the top of their game. The company encourages ongoing training and development, and pays for employee training. Our supervisors work with employees to find meaningful, high impact learning opportunities. Employees share their takeaways from training at our weekly education luncheon series.
Guru Driven Business
Consumers prefer to buy products from people and brands they know and trust. With health and wealth information, this is particularly true. Gurus are a core part of our success. We have successfully developed gurus out of achieving employees and from world renowned experts to help us build our business. We have been successful by approaching even those people who we think might be too big, or too well known to work with us. These gurus become the face and voice of our various products, developing personal connections with our audience through newsletters, video webinars, teleconferences, and live events. We aggressively promote our gurus through media appearances, speaking engagements at conferences and industry events, and print and online public relations activities.
The Numbers
We have successfully expanded outside of the individual investor market, and provide valuable information to our audience related to other topics of interest. Revenues from the financial / investment market are 65% of total revenues, growing at 15% annually for the last three years. We have greater transparency in the financial numbers, sharing more comprehensive P&L statements with our staff on an as-needed basis. Advertising continues to represent the majority of our revenues, and we’ve been successful in growing our product / service sales to one-third of our total sales. The company is highly profitable, and we share our success with our employees through our management by objective (MBO) program, 401k, profit sharing, and stock option / ownership plan.
Multiple Locations & Remote Work Options
With offices in Washington DC and Burlington VT, we can offer employees an urban or country work environment. Our employees travel between locations as business demands. Every employee tries to visit the other office at least once a year to interact with colleagues in the other office. Our dual locations offer employees two distinct work / life environment options. While the DC market offers us many more potential employees, we have found qualified people in Vermont seeking employment in our growth industry. Our offices are state of the art, and the environments are avant-garde. We also offer remote / work from home options for proven employees and top talent that we are unable to find locally. This flexibility allows us to hire the best, regardless of location.
Metrics & Accountability Driven Culture
Our business is driven by the numbers. We use numbers and metrics to monitor performance and improve every day. Michael Dell said, "I want to improve our business by 1% every week. Compounded interest is my friend." Like Dell, we seek small incremental improvements every day, knowing that combined, these small improvements will have a profound positive impact on our business.
Throughout our offices, we publicly display our timelines, project status, priorities, goals and progress. Our company "dashboard" displays key performance metrics that are updated throughout the day on LCD screens.
Meeting rhythms are a core of our success. Our regular meeting schedule fosters effective communication company wide, between departments and individuals. Our routine of meetings keeps everyone on the same page, and allows ideas to flow bottom-up, and top-down. Our meeting rhythm includes a daily all company huddle, weekly department and leadership team meetings, and weekly one-on-one meetings. Our meetings are effectively run, starting on time, and ending early. Every meeting has an agenda, which is shared with participants in advance.
International Expansion
Developing countries such as China and India are changing the world. They have large and growing populations of middle class, who are seeking information related to their health and wealth, similar to our U.S. audience. These markets are huge. We have successfully entered one international market, and we are preparing to enter a second international market.
New Products and R&D (Rip-off and Duplicate)
Our successes are embraced by rewarding and recognizing those responsible, and by investing greater resources in these and similar projects with the greatest likelihood for success. We cut our losses quickly. "Successes teach you nothing; failures teach you everything." We don’t dwell on the past or place blame, but instead embrace our failures as learning experiences and move on to the next great opportunity. We encourage our employees to take risks, and realize that if everything we did proved successful, that we’re not risking enough. Nothing risked, nothing gained.
At the same time we recognize that our success doesn’t entirely depend on the development of our own unique ideas. We closely study those companies that are achieving success in our market and others, and we steal smart. We learn from the successes and failures of others. By taking the best ideas from many competitors in the marketplace, and making refinements and incremental improvements in a quick and efficient manner, we are able to limit downside risks and costs, giving us an edge over our larger competitors.
Technology Focus
Technology is an important aspect of our business, and we invest capital and human resources in the systems that power our business. We recognize that there are many aspects of our business that are out of our control, including competition, the economy, and consumer spending. We know that technology is something that we can control, and by over-investing in this important aspect of our business, we can stay ahead of the curve and avoid challenges that result in lower sales for the company. We have built out an internal technology team in our Operations department with more than one full-time people to focus on the core technology needs of our company (servers and infrastructure, email delivery, e-commerce and fulfillment, etc.), and they are complemented by talented consultants.
Success
Success is having a lot of fun while doing something you love. Our company thrives because our employees view their work as more than a job. They understand and support the company’s growth objectives, and play a significant role in helping define our direction and plans for the future. We are accountable to one another and the organization. Our opportunistic view of the world allows us to see the glass as half-full, and pursue opportunities that might be overlooked by others. We aim to create and build products that contribute to rapid revenue growth, and healthy profit margins. Our audience, clients, advertisers, and partners love doing business with us and enjoy the experience provided by our employees.
Painted Picture: a 3-year vision of the future
posted by Ian Wyatt | September 21, 2008
Posted in Entreprneur's Organization, Painted Picture | Comments
I had never heard of a Painted Picture until earlier this year while attending the Entrepreneur's Organization / MIT Masters in Entrepreneurship Program.
One of my favorite speakers at this years program (my second year) was Cameron Herold, founder of Backpocket COO. Cameron is the former COO of 1-800-GOT-JUNK?, a high growth company in the fragmented, unsexy junk removal business. With the help of Cameron's leadership, 1-800-GOT-JUNK? grew sales from $2 million to $105 million in six years. Not only did the franchise company expand rapidly, but it became known as a leading employer in Canada by building a world class culture (if 1-800-GOT-JUNK? can turn a junk removal business into a cool, hip company, nobody can have the excuse that their business / industry doesn't allow for "cool"). Cameron spent four days with us at the EO / MIT program, and I had lots of opportunities to pick his brain outside of the normal class presentations.
One idea I picked up from Cameron and 1-800-GOT-JUNK? was the Painted Picture. The Painted Picture is designed to be a three year dream plan for my company and the future state of our business. This plan aims to discuss the WHAT, not the HOW. Our strategic plan is written after painting the picture of the future, and the strategic plan defines the HOW aspects of the plan. Cameron suggests leaning into the future and dreaming about what the business could be, and what it should be. The three year time frame is designed to be far enough in the future to be able to dream big, while being not so far away that the plan seems unachievable (not a Big Hairy Audacious Goal, or BHAG, per Jim Collins).
It is the entrepreneur's job to dream a vision for the company, and put this down on paper as the Painted Picture. However, it is not the job of the entrepreneur to make it come true - this is the job of everyone within the company. It takes more than one person with a dream for the company to turn that dream into a reality. Cameron encourages the sharing of the Painted Picture with everyone. Obviously the company's employees need to understand and buy in to the 3-year vision for the company in order to take actions to move the company forward toward its goals. He also suggests posting the plan publicly, and sharing it with customers, clients, and prospective employees. Because the Painted Picture doesn't share the HOW aspects of the business, there is little that can be stolen from the plan even if it got into the hands of one of our competitors.
Brian Scudamore, founder of 1-800-GOT-JUNK? painted his first company picture in 1998 at a time when sales were flat at $1.5 million and he was trying to figure out how to grow his business. In his Painted Picture, Brian outlined his 3-year goals for the company, and shared his vision for the company. The goals outlined were aggressive, but not unachievable. The document focused not only on goals, but also what the company would look like, act like, and feel like at that future point in time.
Later this month, Business Financial Publishing will reveal our Painted Picture for 2011. After sharing this dream with our employees next week, I'll post my 3-year vision for our company to our company's web site and this blog.
Cameron will be speaking to the Entrepreneur's Organization Washington DC chapter this week, and I'm sure I'll leave with lots of great new ideas to help grow our company and build a world class organization in the coming years.
More on the Painted Picture:
- 1-800-GOT-JUNK? 2008 Painted Picture
- Planning a Vivid Future: Brian Scudamore's Key Move
- BackPocket COO 2010 Painted Picture
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