Small Business Strategies: Leadership Failure…Causes, Consequences & Cures

Effective organizations are led by individuals who have a clear strategic vision of who the organization is, what it is about, where it is going and how it is going to get there. They articulate their vision throughout the organization, in a manner that inspires everyone to enthusiastically buy in. When such leaders are seen as credible, asking of their people only what they are willing to do themselves, their people follow.

On the other hand, leaders who fail to communicate a clear vision inevitably risk losing control and endangering the organization.

As a business strategist who has worked with many organizations of varying sizes and across a broad spectrum of industries, I have a lot of experience with all  C-suite types of organizational leaders.  The one critical factor I’ve learned is that the results of our efforts are much more effective when the leadership goals are aligned; and, the executable plan to attain those goals are clearly communicated throughout the entire organization.  

In this second installment of my five-part series on small business strategies, we will look at the causes of leadership failure, the consequences of not correcting or replacing ineffective leaders, and what can be done to remedy leadership problems.

10 major causes of leadership failure

In his seminal work published in 1937, “Think and Grow Rich,” Napoleon Hill shared what he learned from interviewing and observing 45 of the most successful individuals of the day. I have read and re-read his book, and I highly recommend it for anyone who aspires to be a leader in business and in their personal life. Among his many findings and recommendations, Hill focused on 10 major causes of leadership failure, which I have excerpted here from his book:

  1. Inability to organize details: Efficient leadership calls for the ability to organize and master details. A leader should never claim to be too busy to change their plans or give attention to an emergency. The successful leader must be the master of all details connected with their position, including acquiring the habit of knowing which details to relegate to capable lieutenants in the organization.
  2. Unwillingness to render humble service: Truly great leaders are willing to perform any sort of labor that they would ask another to perform. “The greatest among you shall be the servant of all” is a truth that all able leaders observe and respect.
  3. Expectation of pay for what they “know,” instead of what they do with what they know:  The world does not pay people for what they know. It pays them for what they do or induce others to do.
  4. Fear of competition from followers: Leaders who fear that one their followers may take their position are likely to realize that fear. The able leader trains understudies to whom they may delegate, at will, any details of their position. Only in this way may leaders leverage themselves and prepare to be at many places and give attention to many things at one time.
  5. Lack of imagination: Without imagination, leaders are incapable of meeting emergencies and creating plans by which to efficiently guide their followers.
  6. Selfishness: Leaders who claim all of the honor for their followers’ work are sure to be met with resentment. Great leaders claim none of the honor. They are content to let it go to their followers because they know that most people will work harder for commendation and recognition than they will for money alone.
  7. Intemperance: Followers do not respect an intemperate leader. Intemperance in any of its various forms destroys the endurance and vitality of all who indulge in it.
  8. Disloyalty: Leaders who are not loyal to their trust and to their associates — those above and below them — cannot maintain their leadership for long.
  9. Emphasis of the “authority” of leadership: Efficient leaders lead by encouraging, not by trying to instill fear in the hearts of their followers. Leaders who try to impress followers with “authority” come within the category of leadership through force. Real leaders have no need to advertise that fact except by their conduct, sympathy, understanding, fairness and a demonstration of knowledge of the job.
  10. Emphasis of title: Competent leaders require no “title” to gain the respect of their followers. Leaders who make too much of their title generally have little else to emphasize. The office doors of real leaders are open to all who wish to enter, and their working quarters are free from formality or ostentation.

An organization whose leadership continually exhibits one or more of these traits can develop a toxic culture that infects its followers. People are products of their environment; and if subjected continually to this type of cultural failure, they will begin to adopt some or all of the same traits.

Consequences of ineffective leadership

Dictionary.com defines the verb “lead” as “to act as a guide; show the way.” We look to leaders in our lives to inspire, direct, understand and teach us, and to exemplify behavior we want to emulate. Leaders who do not possess these abilities can end up imparting the following negative influences on employees and the organization’s operations:

  1. Difficulty inspiring confidence: The ability to inspire confidence is associated with the values of courage, respect for others, and commitment; and it is demonstrated by taking responsibility for the consequences of decisions, creating a pleasant working environment, fulfilling professional obligations, and behaving in a manner beyond reproach. The more that people perceive their leaders to have such qualities, the more they grant those leaders credibility and legitimacy. Leaders who exercise poor judgment have much more difficulty inspiring not only employees but business partners, colleagues and stakeholders.
  2. Lack of a collaborative environment: Leaders need strong interpersonal skills that enable them to build bridges within and outside the organization. They need to be open to new perspectives and to permit co-workers and subordinates to question, analyze and discuss issues in a safe and welcoming environment that encourages engagement and creativity. A leader with an attitude of “my way or the highway” stifles creativity and discourages the sharing of ideas that could result in valuable insights, thereby undermining attempts at collaboration.
  3. Employee turnover: When employees are not permitted to put their talents to use, do not feel like their efforts are important, and are not able to make positive contributions to the organization’s goals, they feel unappreciated and stagnant in their careers. More than ever, people are looking for meaning in their jobs and need to know that their ideas and points of view are considered. Employees leave an organization when their needs are not served.
  4. Toxic culture: When “authority” overtakes “influence” in the workplace, a toxic culture develops. Leaders compound this problem when they resort to fear in order to achieve the organization’s goals. Leaders may be driven to blustering, threatening and pontificating so they can “hit their numbers” or bring a project within budget. However, such tactics leave employees feeling anxious, embarrassed and incompetent — like they are pushing a rock up a hill every day. Oftentimes, this can backfire and put the leader and the organization at risk.
  5. Consensus: Whether formal or informal, the ability to influence is the cornerstone of leadership. Leaders must be able to clearly communicate their proposals in order to persuade others to buy in. However, influence is conferred on leaders by those they lead — not by virtue of title or office. That’s why poor leadership systematically leads to the rejection of ideas.
  6. Fear of failure: A leader focused on perfection can create unrealistic expectations and miss opportunities for teachable moments. When people fail at a task, they can be overcome with feelings of disappointment, discouragement, inadequacy and even shame. Leaders who demand perfection breed a reluctance among their followers to take even the smallest of risks. In doing so, such leaders erode their employees’ willingness to tackle challenges through innovative and possibly unconventional methods.
  7. Poor financial performance: To optimize production, sales and efficiency, an organization needs employees committed to their jobs, the organization and their leader’s vision. Distractions generated by a toxic work environment, high employee turnover, and a lack of consensus severely handicap employees from making such commitments. And when you add up these consequences, they usually subtract from the organization’s bottom line.

As I have noted, poor leadership has major consequences, but too often it is tolerated by employees and organizations. Fortunately, new behaviors can be learned and skills developed. Making a leader aware of how their behavior is impacting the organization is the foundation for positive change.

Cures for ineffective leadership

“Failure is simply the opportunity to begin again, this time more intelligently.” — Henry Ford

Wisdom born of failure can make a person a stronger leader by providing them the perspective to develop a clearer vision and by revealing their humanity and vulnerabilities. This self-actuated epiphany enables a leader to grant permission to their followers to accept the same experience and, as a result, achieve more. Ultimately, it can allow a “fallen” leader the opportunity to re-establish their influence.

In a 2013 article for the Harvard Business Review, Jack Zenger and Joseph Folkman — authors of “How to Be Exceptional: Drive Leadership Success by Managing Your Strengths” — wrote about a study they conducted of 71 leaders, using 360-degree feedback data, to track issues on which the leaders had made the most significant progress during a 12- to 18-month period. Through the use of the feedback data, over 80% of the leaders were able to significantly improve upon their ability to execute the following nine leadership skills.

  1. They improved their communications effectiveness. This was the most common skill that the leaders improved. For many it was less about learning new skills than about using the skills they already had more often and with more people.
  2. They made an effort to share their knowledge and expertise more widely. By doing so, they could simultaneously impress and develop their direct reports.
  3. They began to encourage others to do more and to be better. When leaders challenged their direct reports to do more and be better than they thought they could be, the leaders were perceived to be better themselves.
  4. They developed a broader perspective. Getting leaders to stop and look at the bigger picture helped them see potential problems sooner and focus more on strategic issues rather than tactical issues.
  5. They recognized they were role models and needed to set a good example. Leaders frequently ask others to do things that they don’t do themselves — whether unintentionally or unknowingly. This never works. Many of the leaders were surprised to discover that they were perceived as hypocritical.
  6. They began to champion their team’s new ideas. Positive changes began to occur when the leaders shifted from discouraging new proposals to encouraging and supporting innovative ideas and thinking.
  7. They learned to recognize that change was needed. The successful leaders, by becoming more proactive, learned to willingly support and embrace change. They also encouraged others to do so.
  8. They improved their ability to inspire and motivate others. They did a better job of keeping people focused on the highest priority goals and objectives. In addition, they made a special effort to stay in touch with the concerns and problems of their teams. Providing support and assistance to an employee in difficult circumstances not only helps that employee, but also reassures others that they can expect to receive the same treatment.
  9. They began to encourage cooperation rather than competition. In the long run, internal competition causes every participant to lose. Leaders who find ways to encourage cooperation and generate common goals become more successful.

Note that nothing in this list of actions was extraordinary in any way. On the contrary, the actions were based on common virtues that we should all aspire to, but that the leaders were not putting into practice.

Which is why, if you desire to be a successful leader, it is imperative to strengthen your abilities through persistence, practice and feedback from colleagues or coaches.

End of Year Tax Letter 2018

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As the end of the year approaches, it is a good time to think of planning moves that will help lower your tax bill for this year and possibly the next.

Year-end planning for 2018 takes place against the backdrop of a new tax law-the Tax Cuts and Jobs Act (TCJA) that make major changes in the tax rules for individuals and businesses. These have marked the most changes to income taxation since the Tax Reform Act of 1986.  Most of the provisions in the TCJA passed at the end of 2017 and became effective this year.  In addition, the landmark decision in the Wayfair case dramatically altered the state tax landscape for sales and use tax.  These changes bring a host of uncertainties as well as planning opportunities.

For individuals, there are new, lower income tax rates, a substantially increased standard deduction, severely limited itemized deductions and no personal exemptions, an increased child tax credit, and a watered-down alternative minimum tax (AMT), among many other changes. For businesses, the corporate tax rate is cut to 21%, the corporate AMT is gone, there are new limits on business interest deductions, and significantly liberalized expensing and depreciation rules. And there’s a new deduction for non-corporate taxpayers with qualified business income from pass-through entities.

We have compiled a checklist of actions based on current tax rules that may help you save tax dollars if you act before year-end. Not all actions will apply in your specific situation, but you (or a family member) will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you to tailor a personalized plan.

 

Click here for our full End-of-Year Tax Letter 2018

How to Avoid Failure: Put a Strategic Business Plan in Place

Small to mid-size businesses often are so busy working on their day-to-day tasks that they leave little time to plan for the future, to envision a journey the business could or should be on.

If you scour the numerous books and professional journals on the market offering small-business advice, they all pretty much agree on the top five reasons for business failures:

  • Lack of planning
  • Leadership failure
  • Lack of differentiation: Failure to communicate a value proposition
  • Lack of meaningful customer engagement
  • Inability to learn from failure

In this five-part series on small-business strategies, I will show you how to avoid these root causes of failure and, instead, create building blocks for the success of your enterprise based on these critical factors.

There’s a reason why “planning” tops the list. You cannot have a successful strategy without planning. As the old adage goes, “By failing to plan, you are planning to fail.”

Plan Your Business’ Route to Success

When I grew up in the 1960s and ’70s before our family headed out on vacation my parents would stop by the office of the American Automobile Association, or AAA, to pick up a TripTik — a spiral-bound, 4-by-9 inch book with maps detailing how to get from point A to point B. The route would be highlighted by the AAA travel agent based on whether my parents indicated they wanted the quickest or the most scenic route to our destination. We trusted AAA because its agents had more travel experiences to a lot more destinations than my parents. And it worked. When we hit the road, we had a plan.

One of the greatest inventors of the 20thcentury, Thomas Alva Edison, at first blush did not seem to be too concerned about planning. He once said: “I have not failed. I’ve just found 10,000 ways that won’t work.” The point one might miss from this anecdote was that Edison actually planned his work that way. He failed fast and furiously in order to quickly unpack what had happened and learn from it. That could very well be why Edison was also known to have said, “Good fortune is what happens when opportunity meets with planning.”

One of the greatest mistakes many people make with their businesses and the projects they work on is that they plunge in without first having a solid plan. This may not have a disastrous effect on a well-established business owner pivoting into something new; however, a startup without a well-thought-out plan can be out of business before it opens its doors.

Gino Wickman, in his book Traction, unpacks the Vision component of his Entrepreneurial Operating System, or EOS, in eight basic questions. Within those questions are the 10-year target, the three-year picture, the one-year plan, and the quarterly priorities. These, along with core values, core focus, marketing strategy, and an issues list create the “vision/traction organizer” which provides the fundamental basis for identifying where a business wants to go and how it intends to get there. Without employing Wickman’s EOS or some other deliberate process, business owners are merely trying to “pitch their sail” whichever way the wind is blowing. That method may continue to work as long as there is a decent breeze, but what happens when the wind fails to blow? What Plan B do they have to sustain the business when they need to employ other means? Again, the consistent theme is that they need to have a plan.

Drive Your Business Plan’s Execution

Now, thousands of businesses have expended resources of time and money to construct elaborate, well-thought-out business plans and yet they have failed nonetheless. Why? Lack of execution. Period. In Stephen Covey’s remarkable book, The 7 Habits of Highly Effective People, the second habit is “Begin with the end in mind.” While this habit is important in constructing a well-thought-out business plan, it is even more critical to the successful execution and implementation of that plan. That success rests with PEOPLE, and it begins with the people at the top.

Any significant business strategy involves some degree of change — in direction, focus, structure, process or a number of other factors. What makes that change successful is how well it is championed by management in both words and actions. You won’t achieve strategic objectives by driving an action plan — no matter how aggressively — if the plan is simply layered on top of what has been the status quo. Instead, accountability must start at the top to ensure that the entire organization is working toward your objectives.

The organization’s people must be involved in the development of the plan so that they have some “skin” in its execution. You need to connect the strategies in the plan to each individual’s role and appeal to the individual’s own rational self-interests. To do so, apply these management methods.

  • Listen and learn: Understand what employees’ greatest concerns are and create opportunities for people to engage with managers to voice those concerns.
  • Explain the “why”: People who are needed to execute the plan need to have “buy-in,” so let them in on the reasons behind the plan.
  • Let people see your passion for what needs to be done: If they don’t believe you believe in the change strategy, why should they? Don’t tell people what they want to hear, tell them what they need to hear, in a way they will hear it.
  • Be authentic: No one likes or believes a person they sense is not being straight with them, nor will they follow such a person enthusiastically. Focus on purpose, create common ground. This will build a base of employees who act like owners — owners who execute and are accountable.

Napoleon Hill, the famous author of The Law of Success, said: “Create a definite plan for carrying out your desire and begin at once, whether you are ready or not, to put this plan into action.” To be a success, a plan has to have action; an action that is executed by people; and people who believe in the plan and will, therefore, be accountable for its implementation.

If you would like to discuss how Santry360 can assist you with getting your own personal “TripTik” for your business, email me at Kevin@Santry360.com. I would appreciate the opportunity to share my experiences with you and be your guide for your business’ exciting new journey.

 

Coming next in our five-part series: Part 2 — Leadership failure.

Kevin Santry

10 Tax Tips for 2018 You Should Consider… Now

With the close of 2018’s third quarter, taxpayers need to take a moment to determine how their personal income tax situations have been impacted by the Tax Cuts and Jobs Act (TCJA) that Congress approved and President Trump signed into law in December 2017. The White House touted that “the average American family would get a $4,000 raise under the president’s tax cut plan,” while House Speaker Paul Ryan stated that “with this plan, the typical family of four will save $1,182 a year on their taxes.” Most people saw a little extra in their paychecks due to the 1%–4% change in their tax bracket, but you won’t know the full impact until you compare your estimated 2018 tax return to your 2017 return.

So, here are the changes you need to be aware of as a result of the TCJA, which are in effect through 2025:

1. Withholding

While you might have seen a slight rise in your net paycheck due to the TCJA’s tax-rate changes, you might not have withheld enough and could end up owing taxes. If you do not make estimated tax payments in addition to the withholding from your paycheck and you are accustomed to getting a refund or owing little on your taxes, you could be in for an unpleasant surprise. Individuals who live in states with high state income and property taxes and/or have more than two children should consider talking to their tax adviser — now — to see if they will be sufficiently paid in by the end of the year.

2. Job Expenses and Itemized Deductions

If you have a job with an employer who requires you to bear the cost of travel, union dues, job education or a home office, those expenses are no longer deductible. Also, deductions can no longer be taken for tax preparation fees, investment advice, safe deposit boxes and estate-planning costs. (These expenses used to be reported as itemized deductions on Schedule A of your personal income tax return.) However, if you are self-employed or an active farmer, you can still deduct many of these expenses through your business on Schedule C (self-employed) or Schedule F (farmers).

3. Child Tax Credit

The child tax credit has been doubled, to $2,000, for each qualifying dependent under 17 years of age. The credit can now add a refund of up to $1,400 for each dependent child. Many more taxpayers are now eligible to claim the credit: The phaseout begins for an individual filer at $200,000 of taxable income (it previously was $75,000) and for a married couple filing jointly at $400,000 (versus $110,000).

4. State, Local, and Property Taxes

Prior to the passage of the TCJA, deductions for state and local income and property taxes were unlimited. Under the TCJA, deductions for those taxes cannot exceed $10,000. This change could significantly impact upper-middle-class and upper-class taxpayers who live in states with high income and property taxes. For taxpayers with lower incomes, the effect of this change may be mitigated or eliminated with the increase in the standard deduction.

5. Standard Deduction

The TCJA made major changes to the standard deduction which, depending on your situation, could result in you paying more to the IRS. For single filers and married couples filing separately, the standard deduction has been raised from $6,350 under the previous tax code to $12,000 under the TCJA; and for married couples filing jointly, the standard deduction has gone from $12,700 to $24,000. On its face, the larger deduction looks like a great deal, but its significance can be eroded by another change in the tax law — the elimination of personal exemptions, which had been $4,050 each. As an example, under the old law a single filer with one dependent could claim the standard deduction of $6,350 plus personal exemptions of $8,100 for themselves and their dependent (2 x $4,050) for total deductions of $14,450; and for a married couple filing jointly, with a dependent, their total deductions — the $12,700 standard deduction plus three personal exemptions totaling $12,150 (3 x $4,050) — would have been $24,850. So under the new law, in these scenarios, the single filer would have $2,450 less and a married couple $850 less in deductions.

6. Credit for Other Dependents

To mitigate, somewhat, the elimination of the personal exemption, Congress created a $500 nonrefundable credit called the Credit for Other Dependents or “family credit” which allows you to claim a credit for dependents in your household who don’t meet the definition of a “qualifying child.” This will enable you to claim the credit for children who were age 17 and over before the end of 2018, and for dependent parents. However, there is one catch: the definition for qualifying relatives remains the same under the new law as it was under the old law. Under the Internal Revenue Code, a qualifying relative is an individual whose gross income during the tax year “is less than the exemption amount.” Since the personal exemption has been eliminated, the exemption amount is zero. Which prompts the question: In order to receive the credit, does your qualifying relative have to have zero income? Stay tuned. Regulations will be issued to clarify this situation.

7. Qualified Business Income Deduction

Owners of pass-through businesses (partnerships, LLCs and S corporations), self-employed individuals and farmers were entitled to the 9% domestic production activity deduction until the end of 2017 if their business generally involved farming, manufacturing, construction, production or mining. The deduction was limited to 50% of W-2 wages. That deduction was eliminated in the TCJA and replaced with the qualified business income deduction.

The qualified business income deduction basically is equal to 20% of the qualified business income of each of the taxpayer’s qualified businesses. The provision is considered a significant tax benefit for many non-corporate businesses and was passed on the premise that a sizable tax rate cut for C corporations (14%) justified a collateral tax benefit to non-C corporation businesses. The full calculation of the qualified business income deduction, however, involves a multi-step process that may phase out some or all of the deduction. This is one piece of the new tax law that you won’t want to navigate on your own. See a tax professional

8. Charitable Contributions

The new tax law made only a minor change in relation to charitable contributions — it raised the adjusted gross income limitation from 50% to 60%. However, due to the significant increase in the standard deduction, many taxpayers will not see an additional deduction coming from their charitable contributions due to the amount of those contributions being under the standard deduction. This has given rise to “bunching” strategies in which taxpayers may not make charitable contributions for two or three years. Instead, saving up to make all of their charitable contributions in a year when the amount is sufficient to itemize and achieve deductions.

However, this scenario creates a potential funding nightmare for charities, as they would be significantly impacted without two or three years of funding from these types of donors. Enter what is called the “donor-advised fund.” These funds allow contributors to donate money and take a tax deduction in the same year, then pay the money to selected charities over time, thereby eliminating a potential funding crisis for charities. A charity would get the same amount each year, even in years when the donor doesn’t itemize deductions.

9. Timing of Income and Expenses

The advent of the qualified business income deduction for non-C corporate businesses turns the tried-and-true, year-end tax advice of tax professionals on its ear. For decades, I have encouraged clients to defer income and accelerate deductions in order to minimize their tax liabilities. The multi-step process involved with the qualified business income deduction and the potential prize of 20% of that income being excluded requires a reboot on that thinking. In a large number of cases, it may make more sense to increase income to maximize the deduction. However, if you are a business owner, I cannot emphasize enough the need to consult with a tax professional so that you can properly determine the best strategy for your unique situation.

10. Job Hunting and Moving Expenses

With the uptick in the economy and wages, many people are looking to improve their position in the job market. However, if you are looking for a new job, you may be better served looking in your local market. Job hunting and moving expenses are no longer deductible. Therefore, if you are being courted by an organization outside of your current metropolitan area, try to negotiate for reimbursement of these expenses as part of your total compensation package. Most human resource departments are acutely aware of the changes in the law and will be receptive to this as part of the negotiations.

 

Reach out to me if you have any questions at Kevin@santry360.com

Why I Started Santry 360 and the Lessons We’ve Learned

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On numerous occasions, I have been asked by my staff, “Why did you decide to start your own firm?” I tell them that as an entrepreneur at heart I did not want a company deciding my future. I was determined to be in control of what I did with the remainder of my career.

We often find that our most extraordinary, fulfilling and rewarding experiences come from overcoming times of challenge and difficulty. It is in these difficult times that we understand what Dr. Martin Luther King Jr. meant when he said:

“The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”

I knew I needed something more. I knew I would not be happy owning a traditional accounting firm.

I gained confidence in my decision to start my own firm from Jody Padar, who has been labeled a “disruptor” in the accounting profession. When she energetically shared with me her vision for creating a new kind of business-development operation, it was like hearing from my inner self.

My greatest professional joy has always been found in problem-solving. My greatest personal joy has always come from helping people. I then realized that, as a “recovering CPA,” I wanted to be a trusted business adviser who could realize the greatest impact with my current and future clients.

A consulting organization would give me the ability to focus more on the client’s long-term success.

This required me to ask myself some key questions:

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I had recently read PayPal co-founder Peter Thiel’s book: Zero to One Thiel imparts to his readers the enormous value that can be created when a business discovers something new and fresh. He also implies that little relative value is created when a company only slightly improves and competes with existing products and services.


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The American Institute of Certified Public Accountants (AICPA), for almost 15 years, had been trying to get accounting firms to remake and rebrand themselves as trusted business advisers. Additions to existing products and services are easy to imagine, but new and innovative ideas require focus, dedication and creativity. Perhaps if AICPA had provided tools, processes or studies to help them, more CPA’s would have learned how to provide new value to the accounting industry. Instead, CPA’s generally found little value in trying to rebrand their positions.

In his book, Thiel says that vertical progress is doing something that has never been done before. This inspired me: Take a toolbox of skill sets that had been perceived as a commodity by a large segment of the population and repurpose them in a manner that had not been previously attempted. I would use this toolbox to drive metrics, processes, collaboration, and innovation into my business and my clients’ businesses.

I envisioned creating a company that would challenge the status quo operations of traditional CPA firms — like those I had worked for. To support my mission, I would require a staff of people with drive, who would be energized by the opportunity to have a say in shaping their future —individuals not afraid of hard work or the unknown. They would need to be creative and resourceful, have the ability to embrace challenges, enjoy working collaboratively and have the courage to try new ways of solving problems.

This venture would not be my first. I had my own firm 25 years ago. Since then, I have experienced a number of failures in my life. My old way of thinking was that failure was not an option. But, during one of my failures I had an epiphany. After being sick and tired of wallowing in self-pity, I sat down and unpacked what happened and why. At that moment, I understood one of the single most important lessons in my life: Failure is a tremendous teacher, if you listen to her.

Since I started this firm two years ago, my staff and I have not had nonstop success. We have made mistakes and learned some tremendous lessons. As a result, we have developed an encouraging work environment where people are not afraid to share ideas. They feel free to propose unconventional solutions and to even, occasionally, check the boss on what he is saying. Our collaborative dynamic now fuels the creativity that spurs our innovative talents.

At the AICPA Engage 2018 conference this past June, I met Wesley Middleton from the Houston CPA firm of Middleton, Raines + Zapata. Wesley is a true maverick and innovator for the accounting profession. In his book Violent Leadership, he describes his journey of starting a firm and why it became successful: “Our style of getting things done, our innovation and willingness to change, and our search for ideas and improvement.” He continues: “Part of that style is not fearing the outcome of change and being okay with potential failure…. This means being willing to take a chance on an idea that a trusted member of the team proposes even if I do not understand it, and vice versa.” His words were validation that I had embarked on a worthy journey, and they were further confirmed when I had the opportunity to talk with him.

I am proud of what we have built at Santry 360. Growing from one staff member to seven like-minded individuals in less than two years has been a great accomplishment. We share a sense of purpose and direction.

I am excited for what the future holds. Excited not only for myself but for where each of these tremendously talented young professionals will steer the future direction of this firm.

Kevin

 

 

 

I’d love to hear your thoughts!

– Kevin Santry, CEO/ Managing Member

Networking for Manufacturers: GovCon

This event was targeted at companies interested in building their network and will specifically target the government contracting market. Attendees learned about the importance of building that network and be given an opportunity to introduce their business and experience in the government market and share best practices. Hosted by CIRAS to provide manufacturers an opportunity to gather and network while learning about tools in their community they can use to grow.

Kevin Santry, of Santry360 shared with attendees an outline of changes made by the passing of the 2017 tax bill and offered an analysis of how these changes will impact small businesses. The discussion focused on changes in business deductions and how to financially plan for the year with these changes in mind.

Important Information to know moving forward through 2018.

HOW TAX REFORM WILL IMPACT MANUFACTURING:

With most of the provisions set to go into effect in 2018, it is important that the manufacturing industry review the changes that occurred with the tax reform to understand the impact to their companies. Below are a few summarized top considerations and implications:

Reductions of the Corporate Tax Rate

Reduces the top corporate tax rate from 35% to a flat 21% This is a huge win for manufacturers. The effective actual tax rate for manufacturers has historically averaged 22%

Immediate Expensing of Certain Capital Expenditures

Companies will be able o fully expense capital expenditures, including acquisitions of used property, in 2018.

This is to encourage more capital spending, potentially driving up sales for hardware manufactures of products eligible for expensing.  Applies until 2022 for purchases made after Sep 28 2017. The percentage of allowable expensing will be phased out at a rate of 20% per year:

  • From 2023 (80%) to 2026 (20%)

Pass-Through Tax Treatment / Section 199A

Pass-through entities may qualify for a 20% deduction on qualified business income under the new tax bill. This deduction is subject to certain W-2 wage limitations. Qualified business income is basically all domestic business income other than investment income, investment interest income, short term capital gains, long term capital gains, etc…


Interested in Learning More?

Successful Conversations: Quad Cities Big Table

Discovering Solutions Together

The event was arranged by Q2030 with the goal to have 500 conversations about a variety of topics. More than 5,000 people representing different backgrounds, neighborhoods and interest groups will participate in conversations to discuss and imagine the future of our region. These conversations will inspire new ways we can work together to make our communities and region stronger and more connected. This act of people coming together to discuss the issues that matter most to them has never been more important.  Progress will only result when residents and organizations collaborate to make contributions that add up to a greater solution.  Quad Cities Big Table will connect individuals and communities of diverse perspectives and backgrounds to do just that.

Workforce Development

Hosted by Santry 360, the Big Table encompassed 10 members of society from different parts of the community. The background of these individuals vary from members of a CPA/Consulting Firm, to High School Teacher, An HR representative, to a member of Iowa Works. 

Going into this conversation, we had done research by talking with local manufactures, attending Hub Huddles hosted by the Quad Cities Chamber of Commerce, and hosting tax seminars. With all of the information collected, and what we believed the pressing issues were, we were shocked that not only is there a skill gap but the lack of motivation to keep the jobs being offered.

The HR representative from Kraft-Heinz shared with us their are a large opening finding workers. Which was not the surprising part. The part that baffled the whole group that even though the average salary for an unskilled laborer is $72,000 a year. This includes overtime but not benefits. The issue is having staff to show up consistently for their jobs.

The argument against these types of jobs is that you cannot support a family, it is a dirty job, you are not compensated fairly. When you look at it from a businesses stand point, how con you expect these companies to take a chance on a person that might not show up after their first paycheck. The fact that a large mass will walk away from a job that has these benefits showed that a job is not chosen just because it pays you. Because of this we must look further into what their motivation is. 

In this meeting we discussed possible solutions. In order to arrive at these solutions, we must look at a few different variables:

  • Age Group
  • Parental Influence
  • Community Influence
  • Educational Involvement

These aspects are important because children are influenced at different points in their lives from several different aspects of life. 

Staffing

Right now there is a prevalent issue, working with students to motivate and showcase the different options available for them in the future is a solution for just that, the future. Right now we have issues with the current workforce. How do we motivate people that have have been living one way, for possibly generations? We are striving to develop the concepts discussed during this event.


Be Part of a Solution

Hub Huddle: Elevate Advanced Manufacturing

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On April 13, 2018 the Quad Cities Chamber of Commerce hosted their monthly Hub Huddle sponsored by Northwest Bank. The topic for discussion was the efforts Elevate Advanced Manufacturing have been spear-heading to help workforce development. Alexandra Monaghan is an Elevate program coordinator, spending her time traveling throughout the state of Iowa to spread a positive perception of the manufacturing industry. This is achieved by connecting with students (K-12th), educators of Iowa community colleges, and manufactures to help fill the skills gap in the state.

Elevate Advanced Manufacturing:

a statewide, integrated marketing campaign to promote careers and educational pathways in advanced manufacturing. This begins with building a positive perception of these careers while addressing misconceptions of work environment, safety, and wages. 

During the event, Alexandra spoke about many different programs offered by Elevate. The Ambassador Program is an important aspect of Elevate. Iowa manufacturers have asked for additional ways in which they can engage their employees in efforts to promote manufacturing and solve the workforce shortage.

Ambassador Program:

The Ambassador Program presentations to groups and/or represents Elevate at major community events in his/her region each year.  Presentations may be to K-12 classrooms, teacher in-service days, parent nights, economic development groups, etc.  Events might include county fairs and other places K-12 students and parents are likely to be.  In some cases, Elevate will reach out to Ambassadors with opportunities but Ambassadors are also expected to find opportunities of their own (particularly to present in front of high school student or parent audiences).

Discussions:

During the Hub Huddle, manufacturers not only listened to Alexandra Monaghan; but also discussed amongst each other pertinent reasons for the skills gap. Four main points were discussed: the negative stigmatism of the manufacturing profession, flexible work hours that are family friendly, ownership within the company, and development of comradery/ family type environment.

The Quad Cities Chamber of Commerce hold these events to share information and develop the business that are stationed in and around the Quad Cities.  Sign up for the next Hub Huddle!

What’s the Big Deal With SEO?

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Marketing is developing in new directions every day. Traditional marketing still plays a large role in the community and is integrated into the foundation of small businesses. Some can thrive solely on word of mouth. But that process is slow and not always steady. The functionality of marketing can be complicated and integrated into different aspects of yours business, or simple and straight forward. It depends on the needs of your business.

What is SEO?

Search Engine Optimization is the practice of increasing the quantity and quality of traffic to your website through organic search engine results. As a big picture this definition works, many get a basic understanding of what that means. So, let’s break it down further for clarification:

Quality of Traffic: You could have thousands of visitors but are they the customers you are looking for? If they’re coming to your site because Google tells them you’re a resource for Apple computers when really, you’re a farmer selling apples, that is not quality traffic. Instead you want to attract visitors who are genuinely interested in products that you offer. These are your potential clients that are looking for the same services that you offer.

Quantity of Traffic: Now that you have the right people visiting your site, quantity is important. These are your potential clients. Not everyone that visits your site will be sold and calling to be clients. The more traffic you have the increased likelihood that half of them will become customers.

Organic Results: What is the best form of advertising? Free! If you don’t have to pay for the traffic to your website, it is classified as organic.

How Does SEO Work?

Google uses a complex mathematical formula called an algorithm to give a score to every website and every search people to do in Google to figure out which website should rank best for what people are looking for. Think of the algorithm like a collection of empty buckets. One bucket gives you a score for the quality of your site, one bucket gives you a score for how many sites link to you, one bucket gives you a score for how people trust you. Your job is to fill up more buckets in the algorithm than any other website. You can affect your search engine ranking by having the highest score in terms of quality of your site, of having the highest score in terms of authority of your website, of having the highest score in terms of the most trusted store for that search that people are looking for. The good thing is that there are hundreds of buckets, and for every single one of these buckets these scores put together in the algorithm to figure out where you rank is an opportunity for you to fill it up and rank better. So, optimizing your site for search results really means getting the highest score in as many of these points as you can.

Now, some buckets are worth more than others, and the three main buckets that you need to be aware of for search rankings are quality, trust and authority. So, quality: what Google is trying to measure when they’re trying to figure out what sites should rank is offering something valuable or unique or interesting to googles searchers. For example: good content – if you are selling your T-shirts and you are using the same description that every other t-shirt seller is using on their website then you are not offering anything unique to Google’s searchers. Even though your t-shirts might look cool, the content is the same as everybody else’s, so Google has no way of telling that your t-shirts or your t-shirt site is better than anybody else’s. Instead, offer people interesting content. For example: offer them the ability to personalize their t-shirt. Give them information on how to wash it. What’s the thread count? Is it stain resistant? Is this something you should wear in the summer or is it more heavy for winter? Give people information, or even be more creative. Get people to share pictures of themselves wearing the t-shirt. Create a community of people who are interested in your product. Get a famous person to wear it and share that picture online. Do something different, do something unique. Show Google that you are different and better than the other search results.

Trust is another important bucket that you need to be aware of when you are trying to get your site to rank in Google. Google doesn’t want to show just any website to its searchers, it wants to show the best website to its searchers, and so it wants to show sites that are trustworthy. One thing Google has indicated it likes to do is penalize sites or stores or companies that consistently have poor reviews, so if you have many poor reviews, in time Google is going to figure out not to show your site in their rankings because Google doesn’t want to show those sites to their searchers. So, prove to Google’s algorithm that you are trustworthy. Get other highly authoritative websites to link to you. Get newspaper articles, get industry links, get other trusted sites to link to you: partners, vendors, happy customers – get them to link to your website to show that you are highly credible and trustworthy.

And finally, the other important bucket is authority. Google wants to show sites that are popular. If they can show the most popular t-shirt seller to people looking to buy t-shirts online, that’s the site they want to show. So, you must convince Google – send them signals that your site is the most popular site for the kind of t-shirts that you sell. Fill this bucket by building a fan base. Build a social network, get people to link to you, get people to share your t-shirt pages on their social network saying ‘I want this!’, get people to comment, leave testimonials, show pictures of themselves wearing the product or using the product, Create a fan-base and then rally them to link to you and talk about you. That’s how you prove to Google that you are trustworthy and authoritative.

So, if you think about it, SEO is just a process of proving to search engines that you are the best site, the most authoritative, the most trusted, the most unique and interesting site that they can offer to their customer – the searcher. Get people to talk about you, produce good quality content, get people to link to you, and Google will be more confident that you are the best result that they can offer to their searchers, and that’s when you will start ranking on the first page of Google.

 

Importance of a Social Media Presence for Small Businesses

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With the evolution of business and the relationship with social media; social media has become an important tool for businesses to cultivate exposure and interact with clients, potential clients, and those whom are opposed to the product. Your customers are no longer the farmer down the street or even the family in the next town over. We are at a global scale, regardless if you are a small or large business. The presence you hold on either a website or on social media sites can affect your reach as a company. We rely on technology as a platform for gaining or giving information. But social media isn’t about pushing your information out there. Rather it is connecting to your target audience is hanging around the popular social sites. Social media use on mobile devices is seeing a growth of 30% every year. 2 million businesses today are using Facebook advertising for promoting their products and services. With that many different businesses using Facebook as an advertising platform, is it worth trying to cut through the clutter? The answer is definitely yes! Just because they are using Facebook, doesn’t mean they are utilizing the platform. But that’s a different matter. Right now we are focusing on why social media is important.

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Increased Brand Recognition

When marketers say repetition in exposure is imperative to the success to a business they are not joking. Santry 360 is a small tax, accounting, and business consultant firm that has small media presence. In order for an advertisement to have recognition in the customer, they need to be exposed at least 8 times. It doesn’t matter whether this is just the name, advertisement, or post from the company. The repetition of the name of the company name resonates in the potential customers. When they are needing to have the service that your company offers, they will remember your company in their mind and would be more likely to look into more information about your company that could sway them.

It is important to pay attention to what your company is posting. Repeatedly posting articles, videos, or opinions are not useful unless they are related to your company in a specific way. Take Santry 360, since taking over all of their social media I have posted several articles that resonate with who we are as company and what we are focused on. Many of these articles are related to manufacturing. We are not a manufacturing company, but we are aware of the issues facing the manufacturing companies and look to help resolve the issue, as a way to better the Quad Cities. These posts show that we are interested in the problems that are facing other industries. Taxes can be as simple or complicated, this can also change depending on your industry. Many companies do not do their own taxes. By expressing this interest into the manufacturing community, there is a chance that they will remember: Santry 360 they were focused on helping our industry (Pro Bono). The company will also recognize that they are familiar with the industry and how it works. It showcases that Santry 360 will know how different factors of a manufacturing business fits with tax deductions as well as the accounting side.

The important point to take out of this section is that repetition of your name on social media is imperative, especially when the company is starting out. But it is also extremely important to pay attention to what you are posting. Your name will be related to what you post, and if it isn’t something that relates or holds the same values as the company then there could be negative views. When it comes to social media negative reactions will cause the individual to unfollow or block either the company themselves or the content. If this happens then there will be negative repercussions and you will lose that potential customer.

Improved Brand Loyalty

Brand loyalty is an important concept, depending on the business/ service offered. From a product stand point saying that I only eat Jiffy Peanut Butter; there are no replacements even considered by the customer. This is complete brand loyalty. What makes a business unique?  With several different options out there, why settle and choose one single brand of peanut butter?

Looking at your own company you must figure out what is unique about yourself? What do you offer that either no one else can offer or that you provide the best?

Social media takes a faceless business and gives them personality. As a company you can show what you find frustrating, amusing, what moves you. The people behind the business are unique. These people make up what a business stands for. People are more likely to stay with a company that they feel a connection with.

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More Opportunities to Convert

In a community there are at least six different shops that do the same thing. Regardless if it is mechanical, manufacturing, clothing, or even food. And your have to compete with large companies that have more money available to spend on marketing/advertising. Social media gives the chance to the owner to showcase to the public what is unique about them. Sometimes you have to get your hands a little dirty and take customers. But if you have something that is superior, showcase it! Be proud! Every business that creates the same product are not the same. Every business has values, ethics, community involvement, and the people that work for them. Rather I should say work with them.

Social media gives these small businesses a platform to showcase their differences. These differences are the uniqueness that can sway a customer to decide that they recognize with your business and what you offer better than the business that they have used before.

Increased Inbound Traffic

If you look at a small business without any social media presence their business and customer pool is extremely limited to the people that are familiar with your brand. You could spend a lot of your budget to try and convert those that have decided to choose a different company to fulfill their needs.

Going back to brand recognition, every post that your create, share, tweet, or like can lead to a potential customer. It could be as easy as they were curious about this company that they have never heard of. It’s not just the amount of content, rather the important part is the quality and how it relates your business. This increases the traffic to either your social media page or even better, your website.

Decreased Marketing Costs

The greatest benefit of social media for a business the cost, or lack thereof. Facebook, Twitter, LinkedIn, and Youtube are for the most part free platforms. In marketing, free exposure that you can control is the best tool in your arsenal. There can be a cost associated for those who choose to boost posts, or set up advertisements. But it is still considerably less than trying to reach your target market through the old fashioned tunnels.

Time is a big factor when looking at internal costs. Paying a marketers to create, edit, and share the advertising can take a lot of time. For small businesses that don’t have a large amount of content to share with the community, this gives them an opportunity to reach their target market and share the small information and services without spending a lot of time with advertising firms and wasting their budget that could be better spent on developing the business.

Conclusion:

Social media is an amazing tool for business to utilize. The target market is already sectioned through the algorithms in place to show relevant information for those interested in that specific topic. Or what you have searched for, social media will read this and show you relevant ads.  Social media has many more benefits then what can be shown in this blog post. These benefits are crucial for small businesses that have limited spending on advertising. These platforms help give them a better attempt at a level playing field.