When Disaster Strikes

To Our Clients and Friends:

Business Disaster & Recovery
Our year started with a disaster!  We’re going to be ok; in fact, I believe, before the year is over, we will be back to “good”. There is a fair probability that we will be back better, but for right now, better is a work-in-progress.

This will be very hard to write.  Thinking back over these past few months is painful.

Disasters are Catastrophic. 
This newsletter is not about “problems”. Disasters are matters of life and death.

Disasters affect every aspect of your business and personal life. They are big, frightening, and dangerous, threatening many lives and livelihoods.

Planning to manage a disaster requires both personal and professional plans.

Disasters Happen to Everyone
Disasters happen. You have already experienced a disaster or will experience one in the future; they are, to some degree, unavoidable. The main lesson for managing these disasters is one I have often taught: learn from failure, overcome it, and come back better.

It is the speed and quality of your recovery that matters most.

Is it a Business or Personal Disaster? Does it matter?
You will have your own disaster at some point.  I hope your disaster looks very different from ours. Be as prepared as possible.

Our Disaster
Just prior to Christmas 2021, David, my son, and a key workhorse in our CPA firm was diagnosed with cancer.

Everything froze.

Time slowed to a crawl and every other important thing became a secondary issue.  This diagnosis began an ordeal that is, hopefully, over.  David recently finished his chemo and is regaining his strength.

Cancer is a horrifying disease.

In March, we thought we might lose him; not to cancer, but to complications related to chemo.  Even a month removed from chemo, these powerful lifesaving drugs still have brutal lingering side effects.  We believe that David will recover from these and return to his hobbies of running marathons and hitting the gym hard and heavy, but not today.

The Personal Costs of Disaster
You can imagine the personal and emotional battles we have had to fight, together as a family and in my own life as a dad.  David truly was in a fight for his life.

It was not all bad. There were good things that happened directly related to David’s illness.  Our family grew closer.  We were amazed to see David’s core group of friends rally around his family in love and support.  This was a long-term commitment by David’s cohorts; I am deeply humbled by the commitment and quality of David’s friends.

There seemed to be nothing these dear people would not do to support David, Nikki, and the four “Rowdy Richardson” children.  Including providing childcare, food, transportation, supervision of sporting events and complex schedules, and even grabbing a kid or two for short vacation trips.

The larger cancer community also stepped up.  I have often heard about how cancer professionals and survivors rally around cancer victims, but now I know for myself how remarkable this community truly is! These people are amazing, providing literally lifesaving advice.

Unanticipated Friendships
During our disaster, a person that I, for good reason, sincerely do not like [the feeling is mutual (for equally good reasons)] hugged me; he cried with me and told me that we would be ok.  He did this because he went through the same thing. Disasters bring people together and forge unanticipated friendships.

The Business Costs of Disaster
Production
Any personal disaster will have professional consequences.  In our CPA firm, David is a major workhorse. With David’s illness, we lost a significant portion of our firm’s production capacity.

Internal Controls
I’m a dad first.  When David got sick, my ability to produce work was significantly impaired.  Overall production suffered and internal procedures (i.e., the To-Do lists) were not followed.  Because David is a significant cog in our internal control (I/C) structure, his illness also caused operations of that I/C structure to fall to subordinates.

Staffing
Because of David’s illness and my impairment, everyone on our staff needed to step up but not everyone did.

One of our junior staff members stepped up in a big way and got a post-tax season promotion.  Another Junior staff member was invited to seek employment elsewhere. A disaster will showcase strengths and weaknesses in your personnel.

Efficiency
Our CPA firm is efficient.  Perhaps I should say, has always been efficient. While in the past, we have always been able to turn work around quickly and accurately, our turnaround time has stretched out much longer than I find acceptable. Most of our clients have been understanding. Not all.

Workplace Environment
David’s illness was unfair to our staff and to our clients.  Cancer is unfair.

We have always enjoyed a low stress, pleasant work environment. Structural inequities built into our environment never became issues until the disaster. Disasters introduce stress into a workplace not accustomed to managing stress. Fractures occurred!

The costs of workplace stress are high. We lost a junior staff member we did not want to lose, I think, in part, because of the increased stress levels in our work environment.  That was unfair to our CPA firm and to that young person.

We are going to reestablish that low stress environment – soon.  Our internal work environment is already much improved.  More importantly, we are addressing strategic inequities that fractured under stress. This next year will be important.

The Real Issue: Disaster Recovery
Disaster Shows Your Weaknesses
Recovering from disaster is more than getting back to normal.  Disaster showcases your internal weaknesses. Disaster recovery for us is, and will be, a deliberate process of addressing these weaknesses.  We expect to be, for the most part, finished this year.  The full recovery will take a year or even two. In this reorganization process of the operations of our firm, Todd is taking a lead role, but the process will be collaborative.  Already, the communication between our senior staff is much improved.

Todd
I mention Todd often in my newsletters assuming everyone knows him. Todd is one of our most senior staff members and he is the CEO of our firm.  That is correct: Todd oversees firm operations, i.e., he’s the boss!

His opinion carries a lot of authority in our firm, and he rarely receives any push back from me.

These anomalies occur when I think Todd is trying to change the firm’s unique culture.  Our culture evolved in a small firm environment, but we are not a small firm anymore.

Our Firm is Very Personal
This is a strength and an important part of our firm’s culture.  Our clients like knowing who to call and what to expect. We want to keep this same level of personal care and attention at the forefront throughout the reorganization process.

The issue for us is how to keep a high level of personal care when faced with the inevitability of disease, disability, and death.  These three “d’s” often equal disaster.

Reviewing Work
Our senior staff will do more quality review work over a broader range of client work.  The quality review will not be so niche oriented.

We are already seeing the benefits of having accounts evaluated from multiple perspectives. As a result of this change, our staff can discuss various tax and other preparation ideas and techniques that improve the quality of work produced for more of our clients. This is becoming a tax and financial planning incubator.

We are learning.  This week, Amy has taught me a few things about S-Corp returns that I needed to know.

This level of intellectual cross breeding will keep us sharp. (As iron sharpens iron.)

Internal Controls
Todd is keen to push the demands of our internal control management structure to the clerical level and to make it more dependent on systems and less dependent on personnel.  When your staff is sick or unable to work, the controls may fail unless your I/C structure is system driven. Todd is 100% right; this is a necessary change. Systems can operate independent of key people.

But he is getting push back from me of all people.  “My problems” are that I like to:

• Do my own filing
• Sort my own papers
• Write my own letters
• Keep my own work-in-process logs and to-do lists
• Do a dozen other things that are obviously clerical

Even I see that this is ‘bad behavior’. The two most obvious problems are:

• These are time stealers. If I’m wasting time on clerical issues, I’m not doing the tax and financial planning that I am so very good at doing.

• To quote Todd, by allowing these time stealers, “I am being unfair to my clients”.

• If I’m incapacitated by worry, fear, and grief, my failure to do my “clerical” job leaves a serious hole in the firm’s structure and management.

• If I’m incapacitated, client service suffers.

Increasing Capacity and Staff Training
We are going to slowly, in a deliberate manner, add staff.  We pay well and do have a great work environment. We intend to hire quality people.

If you look at that short list of “my problems” above and based on our review of other internal control structures, you can easily see how bringing new staff up to operating speed could be hard.  If new staff must adopt “my work procedures”, I can see that as being a bit daunting.  We have a long history of doing exactly this.

We make jokes about it: “Steve will just toss you in the deep end and tell you to get it done!”  Todd, Amy, Rachel, Liz, David, etc., were all trained this way.  It works when you are a really small firm and when the boss (that would be me) is really patient and can work one-on-one with the staff.  But we’re not a small firm anymore and we have more than one boss.

Looking at it now, this is unfair to our junior staff people.  We need to change how we train our staff. We cannot burden our junior staff with all the junk that I do (administrative overhead) when they really need to learn how to service clients.

Newsletters Should be About Helping You
There is a point to this. My newsletters are about helping you.

I do not want you to read this newsletter and hear:

• Disasters happen
• There is nothing you can do to prepare
• The only thing that matters is how you recover

There is a lot you can do to prepare for a disaster.

Todd Again!
We knew about the strategic flaws in our management and internal control structures. Todd, our CEO, has been telling us, in detail, about these flaws for 15 years.  Todd has also been telling us that when we have a disaster, these are the things that would happen.  1-2-3, by the numbers, he nailed it.

Todd has a strategic picture for our firm that I did not allow him to implement.  I was wrong.  I was afraid of losing our small-firm culture.

Disaster Plan Step One: Draw a Strategic Picture
Anticipate your disaster by drawing a strategic picture of your business.  It’s not hard.  Here’s the recipe:

• List your key people.
• What happens to your business if they die?
• How can you mitigate the fallout of that death?

You have completed step one of your disaster plan.

Disaster Plan Step Two: Get Professional Help
Step two of the disaster plan will likely require professional help.

Call us. We can help or, in your unique case, we know who can. We have recent experience.

Is Your Business Too Small to Have a Disaster Plan?
No.

Sincerely,

Steve Richardson, CPA

Steve Richardson & Company, PC
2618 8th St
Tuscaloosa, AL 35401
(205) 349-3580

Entrepreneurship

To Our Clients and Friends:

Entrepreneurship
Ninety percent (90%) of all new business startups fail within the first five years. That statistic is 100% true and yet very misleading!

Statistics
My wealthiest client failed in four prior businesses. Each of his “failed” businesses contributed to that “statistically” accurate 90% failure rate, but he does not consider himself a failure. The question then becomes, What does a 90% failure rate actually mean?

Mark Twain said there are “lies, damned lies, and statistics.” He’s 100% right (pun intended).

Mushrooming Entrepreneurship
According to the Wall Street Journal, new business start-ups increased by 60% in the last three years. This is a completely accurate statistic and, also, misleading.

When statistics are being tossed about in a presentation or an argument, (to paraphrase Mr. Twain) people are attempting to:

1. Obscure their lack of knowledge, or
2. Mislead (i.e. to lie)

In my opinion, the only honest way to use statistics is in presentations of scientific or mathematical data to others trained to understand the limitations and uses of statistical data.

Unless you are trained to understand and use statistics, statistical data is largely useless to you.

Back to the Wall Street Journal
The Wall Street Journal (November 30, 2021) implies that Covid is the driving force in this new wave of entrepreneurship.

Entrepreneurship has been accelerating at increasing rates over a decade, but “Covid Compression” has accelerated many already-existing trends. Remember this term.

“Covid Compression”
One of our key staff people, Rachel Hollingshead, I think, created this economic term. She can’t remember if she created it or borrowed the term.

“Covid Compression” means that the economic trends destined to happen in the next decade are being “compressed” into a single year, creating much disruption and anxiety.

Rachel uses this term to discuss the economics of higher education, an important discussion in Tuscaloosa. Rachel manages several large student housing real estate clients. Their future is very much tied to the rapidly changing economics of higher education.

(I plan to write a newsletter addressing the changing economics of higher education. Very important issues that impact family decisions are quickly developing due to “Covid Compression”.)

Why do people start a business?
By far, the most common reason is lifestyle.

As a young person of 25 years, I started my business as a lifestyle decision. There were three reasons I left traditional employment:

• Economics: I wanted to make more money.
• Family: I wanted to spend more time with Jane and our children.
• Personal Philosophy: I was unhappy with the fluid nature of professional ethics to which I had been exposed with two traditional employers in my industry.

The factors driving modern entrepreneurship haven’t changed.

On the other hand, the Millennials are driving modern entrepreneurship and have changed the landscape in very positive ways.

Economic and social forces
People are distressed by our economy that requires two-earner families. This economy demands jobs that require too many sacrifices of our families, especially our children.

Our Millennials, to their credit, are less likely to compromise on their social and ethical ideals. The Millennials are seeing the sacrificial prices being demanded of them and they are not happy!

The Millennials
Our Millennials are smart, well-educated, team-oriented over-achievers. They are highly motivated and tech-savvy. Best of all, to me, they are family-centric. And they are not afraid to act.

I love our Millennials.

All the statistics you often hear of about “The Millennials” that “prove” how inadequate they are, to quote Mark Twain, are “lies”. To quote me, “it’s jealousy.” Our Millennials are so much better than us Boomers. The Millennials are exceptional!

Our Millennials see the economy as a rigged game. They are very much aware that most of them will never make as much money as mom and dad, and they see that as unfair. With the superior education and skill sets common in the Millennial generation, the economic opportunities are simply not there. It is unfair and they know it!

The Millennial solution: they often start their own businesses.

How do the Millennials beat the 90% “misleading” failure stat?
As a group, the Millennials do a few things better than any prior generation that I have worked with:

1. They plan.
2. They get qualified advice.
3. They act.

When I say they plan, I mean the Millennials assume that they know nothing. They are not embarrassed by any lack of knowledge. One more thing: Millennials assume that what they think they know may not be complete or correct. They research everything. Prior generations are not this humble.

They plan on paper. They brainstorm mostly in informal groups. Then they assume that they have missed critical points and retrace everything. Millennials assume they are clueless and take delight is seeking to remedy that state. I like that.

By the time I see a business plan, it is often on the 13^th or 15^th draft.

When it comes to family and financial matters, they are careful but not fearful. They use groups to hone and sharpen their thinking and focus before they act, but they are not afraid to act.

Failure
Sure, they fail – often. They anticipate failure, learn from it, and move on. They prove that the 90% failure rate is both true and a springboard to success.

I’m not seeing a true sample.
A false sample in “statistics” is called “anecdotal” data. It is true that Millennials who see a CPA early in the process are more likely to be successful. It is also true that Millennials who see a CPA are a select group and not a “statistical” sample.

That does not render my observations inaccurate. The Millennial entrepreneurs who come to see me are far more successful than the mythical 90% failure rate for new business startups. But it is also true in the larger population that Millennial entrepreneurs are more likely to succeed than prior generations. There are good reasons for this improved success rate.

In many counselors there is wisdom
Millennials will come seek my advice as a part of the planning process. If not from a CPA, then from other people they trust. Millennials take my advice and, for the most part, try to apply it.

Minority Citizens and the Poverty Cycle
No matter what I write about the minority poverty cycle, I’m going to get hammered by everybody, left, right and center. For years I have been planning to write an article focused on the minority poverty cycle, but, if I do, I will ask my friend, Tyshawn Gardner, PhD, to co-author with me (to share the heat). There will be plenty of heat to go around. I’ve also considered drafting an article with a respected minority small business owner focusing on his experiences.

Minority business startups have unique challenges.

The 21^st Century has seen a sharp rise in minority owned new business startups. The motivation is obvious. Building a better life for you, your children and their children is a dream of every family.

Poverty in America is largely avoidable. Multigenerational cycles of poverty are criminal. Until we defeat this multi-headed Hydra, our society can never achieve its potential.

Becoming an Entrepreneur
Start with an idea and plan. And plan some more. Early in the process, get professional advice from a trusted CPA and from other successful people. Truly successful people want you to succeed; they will help you if they can.

You are going to fail and that’s ok
To be an entrepreneur is to know failure. That 90% statistic may be misleading, but it still has teeth. Failure is part of the process. Do not waste a failure; learn everything possible from every failure.

Plan and plan, and plan again
Pencil to paper:

1. What are you going to do?
2. How much will it cost to do it?
3. How will it make money?

Without pencil to paper, there is no plan. It’s not that complicated. The complicated part is vetting the plan. Recruit advisors and counselors early in the process. Your first plan is always trash. Your 12^th or 15^th plan may have merit. If you can’t trash your first plan, you’re not doing it right.

Carefully vet all your many plans.

Create your process to enhance the possibilities of success
The process could look like this, but it needs to be your own process, your creation.

1. Find people who are successful and create a mentorship. In many counselors there is wisdom.
2. It takes hard work and time. There are a ton of get-rich-quick schemes floating about. None of them are worth a thin dime! If it’s too easy, it’s a scam.
3. If the income projections are too good, you have missed something vital to your success. Look again. Ask for help!
4. To-Good-To-Be-True is, well, we know what it is.
5. Be very skeptical.
6. Learn to put yourself in the pathway of luck. Learn how to create luck and forge connections. Luck, in the business world, is not a random event. Good connections matter. Luck can also be called opportunity. Good connections and good luck are the same thing.
7. Persevere. Learn from failure. Fail and fail and fail again, but don’t quit.

Your process can be created in collaboration with trusted advisors, but it must be your creation.

There are four reasons why people start a new business.
The four demarcations listed below are a bit arbitrary and certainly fluid. A Lifestyle business start-up can become a Legacy and so on.

1. Lifestyle
2. Legacy
3. To Sell
4. A Philosophy

Lifestyle
I discussed “lifestyle entrepreneurship” on page 2. It is, by far, the most significate reason that people start a new business.

Gina Allen, now my editor, was at one time a key employee of our CPA Firm. Gina started her small business to spend more time with Mr. Allen and their first-born son. This is a perfect example of “lifestyle entrepreneurship”.

Legacy
An entrepreneurial legacy is a deliberate multi-generational move into the middle class. An example would be a business started by mom and pop that creates a platform from which the children (and their children) can start their own business or become successor owners of mom and pop’s business.

A good example of legacy entrepreneurship in practice is the fact that we have fewer Chinese restaurants and why that’s good for the economy. The children do not want to operate mom and dad’s Chinese restaurants. Economically, they have moved on. Asian Americans are a driving force in American entrepreneurship and have become essential to the national economy.

Building a multi-generational economic legacy is the second most common reason the start a business.

A lifestyle business start-up, such as a Chinese restaurant, can become a legacy start-up as the children start a modest manufacturing company – parents paving an economic road to success for their children.

To Sell: part 1, the individual.
Starting a business with the intent to sell as an exit strategy is the third most common reason to start a business.

I have one much-loved client that has brought me five or six business plans that end with, “… this will make $30- or $40-million dollars and then we can sell it!!”

Nothing ever worked out until now. Now they have a legitimate business that can be sold at a substantial gain. Five business failures for one very significant success.

These venture-oriented risk takers are aware that most of their business plans will fail. They have a preconceived loss ratio that they can live with, such as 5 failures to 1 success. Or 3 failures to 1 success, depending on the context of the business plan. Even Warren Buffett had 15 highly publicized failed investments.

Do not be afraid to fail.

To Sell: part 2, an existing business can be entrepreneurial
Entrepreneurship is not unique to individuals. Existing businesses can and often should be entrepreneurial. A former Google CEO, Eric Schmidt, had a well-known rule for internal entrepreneurship called the “70-20-10” rule. He spent 70% of his time on the core business. 20% of his time was spent on legitimate entrepreneurial planning and opportunities. 10% of his time was spent on the weird, wild, and wonderful. Not bad.

CEO Schmidt was willing to take a 1 in 5 success rate on the 20% investment in entrepreneurship. He was willing to take a 1 in 10 success rate on the weird, wild, and wonderful investments.

Most businesses explore new product introductions. When framed as acts of internal entrepreneurship, the success rate of these business expansions are much improved. Asking for a 1 in 3 success rate on new product introductions is appropriate.

Internal entrepreneurship can organize a long-term pattern of success for existing businesses.

A Philosophy
I started my business, in part, due to a personal philosophy. My first two jobs as an accountant taught me that our industry had serious problems with the ethics and work-life balance offered in the traditional CPA employment. I simply could not work in that environment, so I created an environment where I could work.

There is a bit more to it than this simple retelling. The philosophy that drives our firm is:

• External: Our clients’ welfare comes first.
• Internal: We seek a healthy balance between family and work.

We do this legally, ethically, and with a high degree of professional competence.

The value of a philosophy
A philosophy helps create a sense of mission and purpose. We teach more than job and technical skills to our staff. Mentorship is required to help people understand what our philosophy is and why it matters.

As a result, we have technically competent professionals of the highest ethical standards. And we are here to serve you.

Sincerely,

Steve Richardson, CPA

Steve Richardson & Company, PC
2618 8th St
Tuscaloosa, AL 35401
(205) 349-3580

Good Decisions

My most recent newsletter, “Overnight” version 2.0 (about becoming and overnight financial success) was one of the most read and shared of my recent publications. If you haven’t read it, read it now.

The feedback from “Overnight” tells me to expand on a related topic of making good business, personal, and financial decisions. The plan outlined in this newsletter has been used by my business clients and modified and used by families. The initial purpose is to execute significant and rapid debt reduction. The plan works! I have walked through it with my clients thousands of times.

The planning process that I use includes (in reverse order) four steps:

1. Automatic
2. Systematic
3. Deliberate
4. Premeditated

I call this plan the Automatic and Systematic Planning Process.

I think I developed this planning method, but frankly, I’ve used it for so many years that I do not remember the early days of how this planning process evolved. There is so much common sense in the process that it seems disrespectful to claim creation rights to the Automatic and Systematic Planning Process.

Automatic
The first step (last step?) to a successful business operations plan is to make it as automatic as possible. I am introducing these four steps in reverse order for reasons that I will explain.

When appropriate, use automatic payments, such as recurring bank drafts, automatic bill payments, and anything else that can be automated. Make it automatic. For example, the technology exists to make the time clock obsolete. Likewise for auto mileage logs. In the construction trades, tracking employees and jobs can be, to a large degree, automated. Automatic operations significantly reduce the potential for human error or interference with the plan. Automatic processes minimize the need to make decisions.

Make decisions but make fewer of them.
A human being can only make a certain number of high-quality decisions each day. It is unwise to waste decision-making capacity on insignificant issues that can be easily automated.

There is a famous story about a meeting between President Bush and President Elect Obama in which President Bush explained this process of ‘automatic decision making’ to then President Elect Obama. President Bush told Mr. Obama that he only owned two suits – a gray suit and a blue suit – of which he had nine each. On day one, Barbara laid out the gray. The next day, she laid out the blue.

He told Mr. Obama, ‘Barbara even lays out my shirt and tie. I never have to think about what I’m going to wear. I save my decision making for bigger issues. Your job, as President, is to make decisions.’

If you look at photos and videos of President Obama, he always wore a dark gray or a dark blue suit on alternating days as did President Bush.

Automatic processes have other advantages
Automatic processes can be easily modified or changed. These processes evolve and grow as you and your business grow, and as plans and decisions change.

The larger economy understands automatic processes
In today’s economy, there are times where you are not given a choice. It’s automatic or go home. Most home mortgages issued in the last 5-years require payment by bank draft. That’s automatic. The reason that you are not always given a choice is the business world understands the power of automatic processes.

Systematic
Systematic seems like automatic, yet they are different. An example of systematic is the 401(k) retirement plan. The process of getting money out of your paycheck and into the 401(k) is automatic. What the 401(k) does with the money is a system; it is systematic.

Another example is the Roth IRA. I particularly like Roth IRA accounts when they are available. A Roth IRA account is a “system”. You fund a Roth IRA, and the Roth IRA invests the funds in a planned and systematic program.

The Roth IRA can be funded in an automatic or un-automatic manner. For example, you can write an annual check for up to $6,000 ($7,000 if you’re age 50 or older), deposit that amount into a Roth IRA account and let the Roth IRA system take over. A far better alternative is to have an automatic monthly bank draft in the amount of $500 deposited into a Roth IRA account. A Roth IRA is more effective if it is automatically funded.

Business systems always work better with an automated front-end.

You can invent your own systems
The cool thing about systems is that you can invent or customize systems to accomplish specific tasks. The marriage of automatic and systematic creates powerful management tools. Inventing systems is management genius. Last week, I had a substantial client conference wherein the client invented systematic ways to reduce and manage future debt related to equipment acquisitions.

Automatic and Systematic: An Example
Consider Widgets Inc. and the business’ future equipment purchases.

1. I know which piece of equipment I will need and I know approximately when it will need to be acquired.
   1. I know that in three years, on or about December 2024, Widgets Inc. will need a new Plastics Extruder.
   2. Expected Cost: $600,000
2. I must minimize debt.
   1. Systematic: Widgets Inc. will set up a system called an escrow savings account to the Plastics Extruder.
   2. Automatic: Widgets Inc. will bank draft from the operating account $16,600 each month and have it deposited into the Plastics Extruder escrow account.

Deliberate
Automatic. Systematic. Deliberate. The short paragraph above is an example of deliberate behavior. It’s Widgets Inc. taking control of their own money instead of being at the whim of customers, contracts, and creditors.

Deliberate behavior and deliberate decisions will put you in charge of your finances!

Deliberate is a public word. In business or family decision making, deliberate requires consultation and discussion within your business and, possibly, with outside counselors such as your CPA. The most productive of these discussions are the three-to-five-person discussion clusters that form around a business issue. These ad hoc, informal meetings most often accomplish the real management work.

The formal written business flow chart and the informal decision-making structure are always very different!

Once a decision is reached, the automatic-systematic structure to support the decision is designed and installed. The deliberate behavior drives the creation of the automatic-systematic support structure. The automatic-systematic support structure is easily modified as it evolves to support the deliberate decision-making.

Premeditated
Premeditated is listed fourth, yet it is actually the first and most important step because it asks the most important of all business questions: Why? Why?

Why does Widgets Inc. exist? What is its long-term mission? The premeditation determines how to best accomplish that mission, your mission. The mission may not change. How to best accomplish that mission will change.

What is your mission?

The mission of our CPA firm is two-fold and well understood. Many of you have heard me explain our mission in plain English.

1. We will do everything we can to make sure that our clients do not get old and poor at the same time.
2. Our Firm’s goal is to offer a quality lifestyle for our employees and staff.

Every client tax return, audit, consulting engagement is, to some degree, focused on our primary issue: the financial success of our clients.

Our second goal is to offer a quality lifestyle for our employees and staff. The CPA industry – primarily through overwork – has a very bad reputation of destroying its employees and staff, particularly its young staff. Overwork is not the only weapon the CPA industry uses to undermine a healthy work environment.

These are our goals. This is the DNA of our CPA Firm.

What is your goal? You must answer that question. The answer to that question will color your deliberations and how you establish your automatic systems.

Hint: making enough money to take care of my family is, by itself, not strong enough. You need to have more substance to your goals.

Conclusion
This is a good letter. I spent a lot of time drafting it. It needs to be well used.

• Learn the plan: Upon receipt: read this letter together with your key decision makers. Discuss it at length. It has profound implications.
• Repetition and Drill: The first month, read the letter together again and discuss it weekly. Make it a part of a required short staff meeting (even if Joe Bob is out of town). Ten or fifteen minutes is all the time required. Jane and Joe Bob can read and discuss it on FaceTime if necessary, although meeting in person would be better. Face-to-face meetings stimulate more and deeper discussions. ‘Repetition and Drill’ will make this planning process a part of Widgets, Inc’s management DNA!
• Thereafter: Once each quarter, read and discuss this letter. Use this letter like a textbook. Make it a part of the Widgets Inc. long-term planning culture. This is the continuing education to which I referred to in my most recent newsletter. If you have not read my last newsletter, please do so. Make this letter a part of your on-going professional education.
• Lifetime Education: Finally, never stop asking questions. Always seek competent counsel. Follow the plan. Revise the plan and follow the plan. Failure to plan is a plan to fail.

Sincerely,

Steve Richardson, CPA

Steve Richardson & Company, PC
2618 8th St
Tuscaloosa, AL 35401
(205) 349-3580

Good Decisions

I rarely scrap an entire newsletter and start over. This is the re-do. The newsletter in my trashcan was pretty good, but it focused too much on one client that experienced a one-hundred-fold increase in revenues from 2019 to 2021 (with no end in sight). That’s exciting. It makes for a fun story. The educational value of such a newsletter is, however, limited.

I have a dozen or more clients that have enjoyed remarkable growth since 2019: consistent and sustainable growth rates between 10- and 100-times revenues and profits. This, instead, is a story we can all learn from!

As diverse as these clients are as people and in their businesses, they have a lot in common.

Overnight Success!
When the term “overnight success” is mentioned, they scoff. The term is bogus. Only outsiders looking in use this term.

In every case, success was painfully built over many years of hard work. Many smaller successes and some failures always paved the way to the larger, ultimate success.

Success is built on a foundation
Success in business rarely happens without a foundation. As a very young teen, Bill Gates had unlimited access to state-of-the-art computers and an upper middle-class family that supported his interests. It’s a good foundation.

Many would say that this is ‘unfair’. I disagree. I worked hard to give my children every competitive advantage possible. That is part of parenting. We want our children to be more successful than we are personally, spiritually, and financially.

Building the foundations of success is a two-step process; personal foundations and a wise plan are crucial.

First, build your personal foundations.
Even if you do not have anything approaching the Bill Gates’ advantages or even the more modest advantages that I gave to my children, you should deliberately build your own success foundations.

It can be done. It’s not easy for anyone. For some, building personal success foundations can seem an impossible goal.

Some essentials of your personal success foundations are:

1. Education
2. Ethics
3. Common sense
4. Managing successes and failures

Education
The most successful people that I know embrace lifetime education. At some point (ideally in elementary-through-high school), successful people embrace the need for education. All successful people continue a lifetime of professional and technical education in their field. Many, I would say most, read and study far outside of their technical literature in history, biographies, and the sciences. A passion for education is a key foundation for success.

Ethics
Most of us, thank God, learned basic ethics sitting on mama’s knee. Unfortunately, not all of us enjoyed the benefits of early childhood ethics training. Do not despair.

It has been my experience that personal ethics can be learned and enhanced at any age. The true value of basic ethical training is not always apparent until after a painful experience. But ethics can be learned

Even the best of us learn from our lapses in judgement and moments of just-plain-dumb. Yes, you are hearing the voice of personal experience.

Without these core-level ethics, the ethics of your profession or career are meaningless. You can memorize them, cite them, and recite them, but they will not accomplish any intended purpose.

Here’s the caveat. We all know of “successful” people who apparently have no ethics. They may have a lot of money, but I would not call them successful.

I have counseled with more than a few as they are in despair. A few were even suicidal. I would not trade my life for theirs with a 20-billion-dollars bonus thrown in to boot.

You understand how much ethics matters when you deal with these lost souls.

• Finish high school
• Get a job. Any job. Do the best job you can do.
• Be married before you have a child.
• Nurture your marriage. Divorce is costly.

1. Following the plan. This is the heart of economic success. Some people can plan. Some cannot. The irony is that many people are not even willing to try and create a plan.
2. Revising the plan in a meaningful way when it is not working. Far more difficult than creating a plan is the ability to revisit and revise the plan if it fails to meet expectations. This is essential. It’s also hard to do.

Steve Richardson & Company, PC
2618 8th St
Tuscaloosa, AL 35401
(205) 349-3580

“Overnight” version 2.0

I rarely scrap an entire newsletter and start over. This is the re-do. The newsletter in my trashcan was pretty good, but it focused too much on one client that experienced a one-hundred-fold increase in revenues from 2019 to 2021 (with no end in sight). That’s exciting. It makes for a fun story. The educational value of such a newsletter is, however, limited.

I have a dozen or more clients that have enjoyed remarkable growth since 2019: consistent and sustainable growth rates between 10- and 100-times revenues and profits. This, instead, is a story we can all learn from!

As diverse as these clients are as people and in their businesses, they have a lot in common.

Overnight Success!
When the term “overnight success” is mentioned, they scoff. The term is bogus. Only outsiders looking in use this term.

In every case, success was painfully built over many years of hard work. Many smaller successes and some failures always paved the way to the larger, ultimate success.

Success is built on a foundation
Success in business rarely happens without a foundation. As a very young teen, Bill Gates had unlimited access to state-of-the-art computers and an upper middle-class family that supported his interests. It’s a good foundation.

Many would say that this is ‘unfair’. I disagree. I worked hard to give my children every competitive advantage possible. That is part of parenting. We want our children to be more successful than we are personally, spiritually, and financially.

Building the foundations of success is a two-step process; personal foundations and a wise plan are crucial.

First, build your personal foundations. Even if you do not have anything approaching the Bill Gates’ advantages or even the more modest advantages that I gave to my children, you should deliberately build your own success foundations.

It can be done. It’s not easy for anyone. For some, building personal success foundations can seem an impossible goal.

Some essentials of your personal success foundations are:

1. Education
2. Ethics
3. Common sense
4. Manage successes and failures

Education
The most successful people that I know embrace lifetime education. At some point, hopefully in elementary and high school, successful people embrace the need for education. All successful people continue a lifetime of professional and technical education in their field. Many, I would say most, read and study far outside of their technical literature in history, biographies, and the sciences. A passion for education is a key foundation for success.

Ethics
Most of us, thank God, learned basic ethics sitting on mama’s knee. Unfortunately, not all of us enjoyed the benefits of early childhood ethics training. Do not despair.

It has been my experience that personal ethics can be learned and enhanced at any age. The true value of basic ethical training is not always apparent until after a painful experience. But ethics can be learned

Even in the best of us, we always learn from our lapses in judgement and those moments of just-plain-dumb. Yes, you are hearing the voice of personal experience.

Without these core-level ethics, the ethics of your profession or career are meaningless. You can memorize them, cite them, and recite them, but they will not accomplish any intended purpose.

Here’s the caveat. We all know of “successful” people who apparently have no ethics. They may have a lot of money, but I would not call them successful.

I have counseled with more than a few as they are in despair. A few were even suicidal. I would not trade my life for theirs with a 20-billion-dollars bonus thrown in to boot.

You understand how much ethics matters when you deal with these lost souls.

• Finish high school
• Get a job. Any job. Do the best job you can do.
• Be married before you have a child.
• Stay married. Divorce will destroy your future. Divorce is a dream crusher.

1. Following the plan. This is the heart of economic success. Some people can plan. Some cannot. The irony is that many people are not even willing to try and create a plan.
2. Revising the plan in a meaningful way when it is not working. Far more difficult than creating a plan is the ability to revisit and revise the plan if fails to meet expectations. It’s essential. It’s also hard to do.

Steve Richardson & Company, PC
2618 8th St
Tuscaloosa, AL 35401
(205) 349-3580