Chesterton Academy is response to Kelly’s call-to-action

I have been a fan of Matthew Kelly for a few years. In preparation for a book study group I am going to begin leading at my parish next month, I just finished rereading his best-seller “Rediscover Catholicism: A Spiritual Guide to Living with Passion and Purpose.” This book is the most compelling call-to-action for 21st century Catholics that I have ever read. If you are Catholic and have been away from the church for a while, I encourage you to pick it up and read it.

And you don’t even have to buy the book. The Archdiocese of Saint Paul and Minneapolis is conducting a very ambitious evangelization project around the Rediscover theme. It is giving away tens of thousands of copies of Kelly’s book. Go into almost any Catholic church in the area and you will find free copies of the book available to anyone who wants one. I took an extra one for an out-of-town relative and mailed it to him.

Every chapter in the 320-page paperback is filled with ideas worth contemplation. In this essay, however, I want to focus on chapter 19, entitled “Time for a Change.” Beginning on page 277, it opens Part 4 of the book. I have long had an interest in education, serving on the board of advisors for my parish grade school, and being involved in the founding of Chesterton Academy. Kelly has some exceptional comments to make about the state of education today. Consider these direct quotes from the book:

The Catholic education system as a structure is one of the marvels of world history. It is the cause of envy among countless other groups and organizations. Those with an agenda dream of getting access to a system as powerful as the Catholic education system. Why? Because they realize how powerful it could be if it was actually employed. That’s why it is under attack, and why so many people have forced their agendas upon the Catholic education system. All the while, we have failed to use it for the good it was created to produce in students, families, the Church, and society.

Do we want to teach our children about Jesus, the value of virtue and character, and the beauty of the Church? Or do we just want privileged educational environments to teach them what they need to get into the best colleges? Do we want to prepare them for life? Or do we just want to prepare them to become cogs in the global economic wheel? Do we believe that by teaching them about Jesus and the role the Church can play in their lives we are better preparing them for college and for life? Or have we resigned ourselves to the spirit of the world? Page 283.

The Catholic educational system is perfectly positioned to ignite within the hearts and minds of young Catholics a sense of passion, awe, and hunger for truth. It is critical that we reassess at this juncture what we wish to bestow upon those who attend Catholic schools. If it is simply an elite education for a privileged few, then surely we are in direct conflict with the very Gospel that we claim to be guided by. But if we wish to bestow upon our children the values and beliefs that emerge from the life and teachings of Jesus Christ, then clearly it is time for a change. Page 287.

…It seems to me – and I may be wrong—that the Catholic education system will actualize its potential not by shying away from all things Catholic, but by doing what it claims to do and offering a Catholic education..

…with so many of our Catholic high school students rejecting the faith in high school or shortly after they graduate—and I assure you the percentage is enormous—it is impossible not to question our current approach… Page 288

Matthew Kelly is spot-on with all these remarks, and it is precisely this kind of thinking that led Dale Ahlquist and me to start Chesterton Academy six years ago. The school will be opening next week with more than 100 students; while we are not an official archdiocesan effort, our school incorporates Mass into the daily schedule, every member of our faculty takes an annual oath of fidelity to the magisterium of the Catholic Church, and our entire curriculum is organized and taught around the mystery of the Incarnation.

The school is growing because many parents are asking the very same questions that Kelly asks. As parents, we are responsible for the education of our children. We don’t get a second shot at this. Our children are teenagers only once. As parents, we have to give this our best effort and Chesterton Academy is the fruit of that effort.

Fall is a marvelous time of renewal. As the new school year gets underway, it’s a great time to renew our faith. The Archdiocese of Saint Paul and Minneapolis has given us a magnificent tool in Matthew Kelly’s work. Dig into the book, and then hear him speak at the Archdiocese’s Rediscover event at the River Center in Saint Paul on Oct. 12. Kelly and many other inspirational speakers will offer encouragement for those trying to live their faith.  

 Then, after you’ve studied the book and heard the speakers, think about your life and what you need to do to respond to God’s invitation to come to Him. Live your faith and you, your children and our world will be better off.

Posted in education | 1 Comment

Hire for success

Walter Bond is a former NBA basketball player who speaks to groups about what it takes to succeed on the court and in the office.  When Bond played college ball at the University of Minnesota, he won the most improved player award four seasons in a row. Successful people, he said, always seek improvement.  “Average people are okay being average, but successful people what to improve,” he told a group of Iowa bankers last summer.

I pulled out my notes from his talk to an Iowa business group last summer because it struck me that it has never been more important to hire the right people. Bond’s comments offer insight into who those people might be.

Improvement means change, so a successful person is someone who is willing to change. “Is your organization becoming obsolete because everything around you is changing and you’re not?” he asked.

Successful people also pay attention to detail, and they are confident. They don’t complain. Too many people like to throw themselves a “pity party,” Bond said. “Ninety percent of life is pretty good, yet too many folks focus on the 10 percent that is negative.”

Bond challenged each member of his audience to consider whether they are likeable. “People want to be around people they like, so do people like you?” he asked. “If someone likes you and you screw up they are likely to give you another chance. If they don’t like you they will walk away.”

Likeable people brighten up a room. Bond said his college coach Clem Haskins could brighten up a room. Recalling the recruiting visit Haskins made to Bond’s family home, Bond stressed that the most important evaluation points in a new relationship occur the first time someone sees you and the first time they hear you speak.  Smiling and making eye contact, Haskins made a good impression, he said.

Bond said any office wants people who smile and make eye contact. Those skills help a person not only to communicate but to actually connect. Deals get done when people connect.

At 6-foot-5, Bond is short by NBA standards but he carved out a niche for himself as the top sixth man in the country. He always dreamed of being a starter but found he was best suited to come off the bench. He made the most of his niche, which lasted eight years in pro basketball. He urged bankers to find their niche and make the most of it.

Hiring the right people is never easy but Bond’s comments give us a little better idea of what to look for.

Posted in business | Leave a comment

Note to Minnesota lawmakers: Business-to-business tax proposal should be dropped

As the legislature considers a variety of tax reform options, I urge lawmakers to reject the implementation of a business-to-business sales tax.

In his tax reform proposal, Gov. Dayton advocates for a reduction in the state sales tax rate but a broadening of the sales tax base, including a new business-to-business tax. If additional state revenue is truly necessary, I urge the Governor and lawmakers to focus on the income tax. A business-to-business sales tax is both regressive and opaque, making it an objectionable option for tax reform.

As the sole owner of a small publishing company dependent upon advertising revenue, I quickly calculated the impact of the proposed 5.5 percent tax on advertising, one of the business-to-business services targeted in the Governor’s proposal. The amount would be about 16 percent of my company’s net income, on top of the income tax I already pay.

Advocates for the tax will argue that I should be able to pass that sales tax cost onto the purchaser. While that may have been possible in the pre-financial crisis environment, I can assure you that is not possible today. My business competes with publications based in surrounding states; these competitors can offer ad rates free of sales tax. If I want to compete, I have to respond to the market; ad buyers already negotiate hard and there simply is not 5.5 percent leeway in those negotiations. Implementation of the tax will mean customers will buy less or I will have to pay the tax.

Painfully, I will be required to pay for this tax regardless of my net income. Even in years when things are slow, I will be subject to the tax. Although I am not a fan of paying taxes I am willing to pay my fair share according to my earnings. An income tax has the semblance of progressivity; this business-to-business tax approach ignores ability to pay, making it regressive.

If the argument is made that all sellers of business services can pass the tax along, the obligation to pay the tax ultimately hits the working consumer. There is no place for the average citizen to pass along the tax. He or she is stuck with it in the form of more expensive goods and services. And again, the obligation applies regardless of ability to pay, making it unacceptably regressive.

Furthermore, it will be very difficult for consumers to determine what portion of the purchase price is the result of taxation. As vendor after vendor in the supply chain build in new layers of tax, the consumer will be hard pressed to discern what portion of the purchase price reflects the cost of the product and what portion represents taxation. That kind of opacity also is unacceptable.

Posted in business, government | 1 Comment

Dad shows one person can make a big difference

2012 was a year of many blessings but I will remember is as the year my father passed away on June 7. In December, television typically offers “It’s a Wonderful Life,” a film that means a little bit more to me now than it did before. George Bailey gets to see what life would have been like had he not been born. I always considered it to be sentimental Hollywood fantasy but not anymore. After Dad’s funeral, I got a real-life glimpse at the impact one man can have on others.

Among my Dad’s personal things was a scrapbook containing newspaper clippings, mostly from Big Ten football games when the Gophers were national champion material. But on one page there is a picture of my Dad from a newspaper dated December 13, 1950. My father, a 21-year-old student teacher at the time, made the papers because he saved the life of a man named Clarence Bonham.

Mr. Bonham was the industrial arts teacher at Bryant Junior High in Minneapolis and my Dad was studying under him. Mr. Bonham was operating a lathe when something went wrong and the wooden spindle he was making shattered; one piece went through a window 30 feet away, another piece went into Mr. Bonham’s arm, severing an artery. My father applied a tourniquet to stop the bleeding and doctors later told him his quick action saved Mr. Bonham’s life.

My father rarely talked of this incident but after seeing the newspaper clipping I got to thinking about Mr. Bonham. What became of him? So last summer I set out to see what I could learn.

A Google search on the name turned up nothing useful, but I had more luck at There, I was able to find Mr. Bonham’s name among data collected for the 1940 U.S. Census. I learned that Clarence Bonham was 43 at the time of the accident, and that he and his wife had two daughters, Mary Jo and Betty Jane. They would have been 15 and 16 years old in 1950. From there, told me that Betty Jane married Thomas A. Lies on Sept. 19, 1959. Googling the name Thomas A. Lies, I found a 2005 obituary for him. It was published in a newspaper from Princeton, N.J. An online phone book for Princeton readily produced a phone number to Betty. I called her and she answered the phone.

I think Betty was a little dumbfounded by my call but we had a wonderful 20-minute conversation. She remembered the accident and said that her mother was sick that day so that when someone from the hospital called with the news, she took the call and almost fainted with anxiety.

Clarence Bonham recovered, eventually left teaching, and built a home on Lake Beltrami in northern Minnesota. Betty said she and her sister have wonderful memories of living on the lake. Mr. Bonham lived to be 69 years old, dying in 1976.

So if my Dad hadn’t been there in 1950, Mr. Bonham would have been cheated out of 26 years of life. He wouldn’t have seen Betty Jane marry Thomas Lies in 1959. He wouldn’t have built that home on the lake; Betty Jane and Mary Jo wouldn’t have any of those happy memories of life in northern Minnesota.

Sometimes there is symmetry in history. Ten years (almost to the day) prior to the accident in the woodshop at Bryant Junior High, my father’s father died, leaving two young children and a wife. Fate denied my Dad and his sister the happy teenage memories they otherwise would have had with their father. It could have been the same for the Bonham girls, but Dad made sure they got something better.

Posted in Inspiration, memories, reflection | Leave a comment

Micobusiness entrepreneurship is key to job growth

The “micro” end of the small business sector offers valuable opportunity for employment growth; policymakers interested in expanding employment in Minnesota should do everything they can to encourage microbusinesses, also called SOHO (small office/home office) businesses.

Use the term “small business” and many people think of a factory, store or professional services firm. These firms, which may employ dozens of people and collect millions of dollars in annual revenues, are actually among the larger businesses in the small business category. They are the exception more than the rule. Across the country, most businesses actually are much smaller. Twenty million businesses — or seven in ten — have fewer than five employees and less than $100,000 in annual revenue. It is this microbusiness category which is creating so much recent employment opportunity.

Since 2008, when the employment market tightened up, more people have ventured into entrepreneurial territory, launching their own business, typically out of their garage or spare bedroom. Many of these become vibrant businesses, selling or making everything from cosmetics to dog food to software. Some of these businesses will grow beyond the microbusiness classification, but most will not. Nonetheless, many will provide meaningful employment for their founders and others, not to mention great products and services to customers.

Microbusinesses are highly personal, get very close to their customers, and are free to attempt innovations that would be stymied in committee at a larger company. The smallest end of the small business sector is incredibly important to the overall health of our economy and even to the quality of living in our state.

Employment at many of the mid-size companies and larger firms in our state has fallen flat or is evening declining. Any incentive the state could offer these companies to boost employment would surely come at a high cost to taxpayers. Encouraging employment in the microbusiness sector, however, is much more promising.

Following are four things the state could do right now to encourage microbusiness employment at no taxpayer cost.

No. 1 – The state should work with municipalities to allow entrepreneurs to operate low-impact microbusinesses in their homes.

Currently, many municipalities have ordinances which prevent homeowners from operating a business in their home. Other ordinances prevent a homeowner from employing more than one person in their home. These ordinances were created a long time ago when operating a business typically meant manufacturing (which involved the use of loud, perhaps dangerous machinery) or retailing (which involved significant customer traffic).

It is appropriate for city ordinances to protect residential neighborhoods from noticeable commercial intrusion. However, many businesses are in no way noticeable to their neighbors. Thousands of businesses impact their place of business no more than the typical activities of a family of four. Many businesses today happen on laptop computers and telephones, involving no customer traffic, no deliveries, no industrial machinery or even on-site exchange of funds. Rules which discriminate against these kinds of businesses should be stricken from city codes throughout the state.

An entrepreneur running an internet business with two employees would not be allowed to operate in a home in Minneapolis, or many other municipalities in the state. This is a significant disincentive for many budding entrepreneurs. To force a nascent business into a commercial space is a needless economic burden. For most people, their home is their greatest asset; why prevent an entrepreneur from leveraging that asset for the start-up of their business?

No. 2Anyone starting a self-employment venture should be allowed to continue receiving their full unemployment benefits.

Getting laid off is a difficult experience for anyone; Minnesota’s unemployment insurance program provides some income for the person until he or she lands another job. But for some people, self-employment would be a much better fit than a job with another employer.

Our current unemployment system, however, discourages a person from entering entrepreneurial territory. If someone collecting unemployment earns money operating their own business, their unemployment benefit is reduced, typically by 55 percent of the amount they earned in the business. For example, if an unemployed person is receiving a $300 per week unemployment benefit, and then nets $200 selling hand-crafted birdhouses, his insurance income will be reduced by 55 percent of the $200, or $110. Instead of adding $200 to his $300 unemployment benefit for $500, he would add $200 to $190 in unemployment for a total of $390. In other words, his entrepreneurial work only yields $90 in this example. This kind of penalty on entrepreneurial work by recently-laid off workers is a huge disincentive for people to try entrepreneurial ventures.

Laid-off people should be able to collect the entire unemployment benefit for the duration of their unemployment insurance payment period, usually 26 weeks. This kind of a safety net would encourage many budding entrepreneurs to try ventures they otherwise might dismiss. People are much more likely to try something if they know the fruits of their work won’t diminish income they may already be receiving.

For some people a half-a-year’s income stream is sufficient for them to get a meaningful business venture off the ground. Income from the business, of course, would be subject to normal income tax, and standard payroll taxes would apply to any employees.

Minnesota’s unemployment insurance system is funded by private companies. It is true that if people are allowed to collect their full benefit while earning self-employment income, the fund will likely pay out more money, thus creating a need for it to charge higher premiums. However, the additional income tax generated by this kind of activity could be used to fund the difference in the unemployment insurance premium. This keeps this idea revenue-neutral for the state and for the companies that pay into the unemployment insurance fund. Most importantly, however, this idea creates an opportunity for a small but important group of people who simply need a little encouragement during a difficult time in their lives to try something entrepreneurial which may end up providing a valuable and useful product or service to the rest of the world.

No. 3Minnesota entrepreneurs should be allowed to take a tax deduction on fractional use of their home office for business.

Current federal tax law permits a business owner to deduct expenses for the maintenance of a home office only if the room in the home is used exclusively for business. So if a person works in a home office all day, but they sleep in it at night, they are not allowed to take any deduction for the home office. The tax code – at least in Minnesota — should be changed so the entrepreneur can deduct expenses proportional to business use.

For example, if a business owner figures that $1,000 per year are going toward the maintenance of his home office, which he uses 50 percent of the time for his business, he should be able to claim a $500 deduction against his income. Currently, the law would not permit any deduction because the home office is used only partially for business. Minnesota business owners should be able to take this deduction on their state income taxes, even if they are not allowed to take it on their federal income tax forms.

While it is difficult to predict the exact net tax effect of this concept, it is likely the net effect would be zero. While the creation of a partial home office deduction would encourage some people to take a new deduction, it would also encourage some people to reduce the deduction they currently are taking. With the law specifically permitting partial deduction, some people who currently are take the full deduction and foregoing personal use of their home office space, will decide that they now will use their home office space for personal use and take a corresponding smaller deduction. Many people who set aside a room in their home for business use either refrain from using the space occasionally for personal use because of the 100 percent business use requirement, or do in fact use the space for home use but take the full deduction anyway. This provision will allow them to align their actual intended use with the Minnesota state tax code.

No. 4Exempt online businesses less than three years old with less than $100,000 in annual revenue from collecting sales tax on internet transactions.

The legislature is very interested in requiring Minnesota businesses that sell online to collect sales tax, which they say would put them on parity with brick and mortar retailers. The collection of sales tax is a burden on small and start-up businesses. If the state decides to mandate the collection of such tax, it should give microbusinesses three years to get its sales-tax collection system in place.

Keep in mind it is the purchasers who technically are responsible for paying the sales tax to the state of Minnesota. This would not change. People who purchase items from small start-up businesses on the internet would continue to be responsible for paying sales tax.

It is presumed the Minnesota Treasury will see a significant increase in sales tax revenue should it mandate the collection of sales tax on internet transactions. It would help small businesses if they were given three years of start-up time to perfect their online sales processes before being required to forward sales tax onto the state.

These four ideas are modest but they would make a big difference in the minds of many people contemplating starting a new business. Many people have the experience, skills and knowledge to succeed in their own business venture. Many of them simply need a bit of encouragement to take the first step. Minnesota policymakers could be the ones to provide that encouragement.

Posted in business, government | 3 Comments

Speaker shares leadership message: engage those around you

My professional colleague and friend Rich Chapman delivered an excellent leadership message to a group of managers I recently brought together. Rich is a consultant with an investment banking firm that does a lot of work with churches and non-profit organizations around the country. Prior to that, he was president of a very successful compensation consulting firm.

Chapman frequently speaks on leadership and is currently writing a book on the topic to be called “True Line of Sight.”

Managers can energize their organizations by taking steps to engage their employees beyond traditional levels, Chapman said. Noting that as many as 70 percent of the people in the workforce regularly tell pollsters they don’t like their work, Chapman challenged his audience to engage those workers more fully. He said fully engaged employees are happier and more productive.  Chapman said it is up to us to empower our employees so they feel engaged.

“People want to be around attractive people, so be an attractive person,” Chapman said. “What makes someone attractive? It’s the primary virtues you probably learned as a young person: wisdom, justice, temperance and fortitude. People who exhibit these qualities attract the attention of those around them.”

Real leaders, he said, want their employees to succeed. “I love to be around people who want me to succeed, who are interested in my life and empower me to do things,” Chapman said. “Think about ways you can serve, give, equip and empower. Be an attractive person.”

Chapman explained that many people in the workforce have insecurities or fears which make them defensive about their work. Often, their fears are unfounded, but they limit an employee’s productivity because such employees work with one hand and protect their turf with the other. Managers who are able to eliminate that fear empower employees to work with both hands and office productivity doubles.

Chapman said the best way to eliminate fear is to communicate a clear sense of purpose. People grow skeptical when they are unsure about their management’s intentions. When a manager makes his or her intentions clear, employees generally respond positively. “Drive fear out of your organization by engaging your employees with a sense of mission or purpose,” Chapman said.

Chapman cited survey information which noted about 80 percent of employees working at Fortune 500 companies could not articulate their purpose. “I ask you, can you articulate the purpose of your organization, really?” Calling “character, mission and culture the strength of any organization,” he said “mission is the sustainer of any organization.” He said an organization’s culture is “either working for you or against you,” and he said managers who engage their employees with a sense of purpose are most likely to win the culture they need to succeed.

Closing his presentation with a quote from European philosopher Albert Schweitzer, Chapman quoted: “Life’s greatest tragedy is what dies inside of a man while he is still alive.” Chapman said a leader’s challenge is “helping people to grow, change and transform. It is about engaging that energy that is in their life that is dormant today; leadership’s greatest challenge is to help your people come alive. Engage them in the life of your organization.”

Posted in business, Inspiration | Leave a comment

Take time to live in the present

One of the things I have always appreciated about privately-held or family-owned businesses is that their management can think long term. They don’t have quite the earnings pressure which managers at publically held firms face. When your stock is widely held, you have to think about the stock price every day, and rarely can you focus out ahead farther than the next quarter’s earnings report. I think it is a lot tougher to build something of value when you are forced to think in 90-day increments rather than in one-, three- or five-year blocks.

But in the current interest rate environment, even managers of closely-held companies are being forced to think short term. Speaking at a recent seminar I attended, an economist urged business owners to think short term when managing their investment portfolio. Managers who tie up their asset for years to come in search of yield will get burned when rates start to rise.

It is good for those of us in privately-held businesses to get a reminder every now and then about the importance of thinking in the present. It is too easy to focus on the future at the expense of the present. Rather than being grateful for the present, we end up being presumptuous about the future. Doesn’t that sound like a recipe for misery?

I think we can alleviate a lot of stress in our lives by acknowledging what we have today rather than focusing exclusively on what we want for tomorrow. Gratitude is cultivated by thinking more about what you have than about what you want. Thinking about what you have can yield surprising thoughts: Oh my gosh, most of us have so much more than people living in other parts of the world! What a good thing to remember just a week before Thanksgiving.

A colleague of mine always urges fellow business managers to acknowledge the support and help of those around them. For many, that starts with family and friends; staff, colleagues and customers are right there as well. When we think about what we have, it is the relationships with those closest to us that make gratitude easy.

There are 525,600 minutes in a year. If we can easily count each minute, then let’s make an effort to really live each minute. Long-term thinking is important but I can see that it’s not enough. Whether managing your investment portfolio, your business or your life, the best long-term plans start with a profound appreciation for the present.

Posted in business, reflection | Leave a comment

Amendment to determine who gets to vote on marriage question

The outcome of the Nov. 6 vote won’t stop the debate over the legal definition of marriage in Minnesota. Importantly, however, it will determine which Minnesotans get a meaningful voice in that debate. If the “vote no” side wins, only 201 state legislators and the governor will get to vote on future attempts to change the civil definition of marriage; if the “vote yes” side wins, every voter in Minnesota will have an opportunity to participate.

Much of the debate on the amendment so far has been over the pros and cons of the current definition of marriage. However, the proposed constitutional amendment – no matter which side wins — won’t change the definition of marriage. Rather, the practical outcome of the vote will be the scope of future debate.

In the last three sessions, legislators have considered bills to remove gender from the state’s marriage law. As legislative issues, public discussion was minimal. That’s a shame. The definition of marriage is too big an issue to limit to the legislative arena. Clearly, Minnesotans on both sides of the issue think the definition of marriage is a big deal. Consider the time, resources and energy that have fueled the debate over this issue during the last year and a half.

Our representative democracy effectively excludes constituents who hold strong views divergent from their local elected officials. A Republican in Linden Hills or a Democrat in Wayzata, for example, will rarely find their legislators voting along their interests. We understand and accept this system on run-of-the-mill legislative issues such as budgets, taxes or speed limits but when it comes to society’s foundational issues, every voter deserves a direct say in the process. No one should be denied a vote simply because of where he or she lives. The definition of marriage belongs in the constitutional realm.

Certainly if everyone has the opportunity to vote on a sweeping question like the definition of marriage, the outcome will be a bit easier to take knowing everyone had their say.

Minnesotans have a history of robust civic engagement; we regularly lead the nation in voter turnout. Minnesota, of all places, should be a place where foundational issues are subjected to a broad, citizen vote.


Posted in government, State law | Leave a comment

Tax policy clarity would give economy a boost

Planning is essential to good business management, but lately it has become very difficult for most business owners to plan out very far.  I am convinced the inability to plan is preventing many small business owners from expanding. Economic, political and market conditions now are so volatile, no one knows what to expect. Caution is a natural reaction to uncertainty. Too much caution is a sure recipe for recession.

Business owners don’t expect to be able to predict the future but they do expect, for example, to know what their next tax bill is going to look like. The uncertain tax environment, complicated further by unanswered questions surround health insurance, makes it very difficult for business owners to plan out more than a few months. As the tax extenders in the 2010 Tax Relief Act run their course, no one knows what to expect after 2012. Will Congress really allow all income tax rates to go up, the payroll tax to increase and the estate tax to skyrocket? With government completely frozen, business owners can’t be blamed for hunkering down until something thaws on the fiscal and tax landscape.

Taxpayers face a much more serious situation now than we did two years ago. In 2010, Congress and the president agreed to extend so-called Bush-era tax cuts for two more years. But this time around, it won’t be so simple. The Budget Control Act of 2011 mandates federal spending cuts of some $109 billion per year, starting in 2013. The Congressional Budget Office scores the cost of the Bush tax cuts at about $180 billion per year, so it seems less likely they will be extended beyond 2012. Congress built “sequestering” into the Budget Control Act, which means automatic cuts will take place if Congress fails to identify cuts on its own.

Conventional wisdom has it that Congress will accomplish little between now and the elections. Regardless of which party prevails on Nov. 6, the lame duck session in November and December could be a free-for-all. If Congress does do something on tax policy for 2013 and beyond, it is likely to happen during this session. The upshot for now, of course, is that no one knows how to conduct their tax planning for next year.

Small business owners have real issues to consider. For example, with the individual income tax rates set to rise, subchapter S corporation owners might want to consider converting to C corp status. It’s possible the corporate rate will end up being lower than the new personal rate. Another issue: with the capital gains rate set to go to 20 percent from the current 15 percent, some business owners considering the sale of significant assets might decide to move the timing up to this year to reduce their tax liability on any gain.

Business owners succeed by making such decisions intelligently. Setting aside questions about whether we are taxed too much or too little, it seems at a minimum that Congress should be able to tell us a year in advance what our tax obligation is likely to be. The economy will continue to sputter until we get some clarity out of Washington.

Posted in business, government | Leave a comment

Lessons from Steve Jobs

Steve Jobs,” the biography by Walter Isaacson, is a remarkable treatise on leadership. Quirky and sometimes cruel, Jobs wasn’t much of a manager but he was a tremendous leader. Anyone who runs a business can learn from him. Here’s what I learned:

First, Jobs was both a big picture person and a details guy. Usually, we think of someone being in either one camp or the other but Jobs was both. He envisioned the digital age yet he also was passionate about using the right screws inside each Apple product. As business leaders, we need to be able to envision the future of the industry while tending to the smallest details of operation and delivery.

Second, Jobs was both an engineer and a designer. By marrying technical with aesthetics, Jobs created unsurpassed products. A business owner who understands the inner workings of his products enough to anticipate the customer experience has a better chance of succeeding than someone whose understanding is less complete.

Third, Jobs’ passion for his products was unsurpassed. He cared so much about his products that he designed their interior for order and beauty even though he knew almost no one would ever see inside an iPad or iPod. Employees would certainly come to understand your concern for quality if they saw you perfecting systems they knew customers would never see.

Fourth, Jobs didn’t wait for customers to tell him what they want; he gave them something better than what they thought they wanted. “Our job is to figure out what they’re going to want before they do,” Isaacson quotes Jobs. “People don’t know what they want until you show it to them…our task is to read things that are not yet on the page.”  Leaders who are one step ahead are generally more successful than followers who are one step behind.

Fifth, Jobs wasn’t necessarily a great inventor but he had a masterful ability to pull things together in new ways, like combining graphical interface with the traditional computer screen, or putting digital music files on a hand-held device. Coming up with something new rarely means inventing something from scratch, but more often it means packaging existing components in fresh ways.

And sixth, the guy didn’t slow down. From the first Apple and Mac computers to the iPhone and Cloud computing, Jobs was always coming up with something. In order to establish a legacy even a fraction of the size of Jobs’, it takes a rare enduring passion. Isaacson’s book is about a guy who was born with it; I’m hoping it’s something that can be learned and developed.

Posted in business | Leave a comment