Marklin Financial Services LLC

One morning I was in a particularly good mood and ready to have a productive day. However, my mood quickly changed as I walked through my store and an employee stopped me to complain that the night crew did not do their job. She said they left the department a mess and didn’t clean up properly. And I will say the employee seemed to make a compelling argument that I needed to get involved and immediately correct the situation.

Now I had a few choices to make that day:

1-Immediately call and discipline the night crew for not doing their job,

2-Tell the employee to stop whining and do her job,

3-Investigate the facts before deciding appropriate action, or

4-Do nothing.

Admittedly I have used #1 quite often in the past. #2 response gets used by me a little less than #1, but more recently for some reason. I never do #4 and leave the problem hanging.

#3 response is the one I like to use. I usually find the employee complaining is only half true. Certain important facts have been left out (such as the night department was short a person due to sickness) to provide the whole story.

Sometimes I will use the following approach. After the employee rants about the problem, I tell her I want to schedule a face-to-face meeting between her and the night crew personnel, so she can adequately explain why they are not doing their jobs. It is amazing how this suggestion is often declined by the criticizing employee, and that there really isn’t a problem after all.

Yesterday we learned of two new issues plaguing the White House. One where the IRS targeted select groups and delayed allowing tax-exempt status and another where the Attorney General used wide scale wire-tapping to find out who leaked some information of national security interest. Some people are already calling these scandals. But we don’t know the facts. Let Congress do its work and reveal the facts about the allegations. Once the facts are known we will find out about culpability.

Facts don’t lie. People do.

John Marklin

www.marklinfinancial.com

This post is not to debate the concept of the Affordable Care Act, also known as Obamacare. The law has been passed and unless Congress changes its mind, will go into effect on January 1, 2014.

But for business owners to stay or become successful, they must keep their eyes and ears open, do their research and plan accordingly so that new laws don’t have an adverse impact on their business.

Although the numbers have been debated by the main-stream media, there is no doubt that healthcare costs will rise as a result of Obamacare. One doesn’t add 30 million people to the system without it costing more. Premiums and deductibles will go up or some services will be cut. This is simply logic and fact.

The last time a law of this magnitude went into effect like this was the Social Security Act in the 30’s and the Medicare Act in the 60’s. Similarly in those situations, many millions of people were added to the roles and the country had to adapt to the subsequent massive sweeping changes.

But many people are quite fuzzy over the impact Social Security and Medicare had on the economy and business when it was enacted. Quite simply, we don’t remember because it happened so many years ago and in those situations it was much different: more people were paying into the system than receiving benefits. So the cost impact of the decision was not known until much later, such as today.

But there is one cost that is not getting much press about Obamacare. And that is the opportunity cost of not growing a business!

There is a well-known law now that if you have over 50 Full-time or Full-Time equivalent employees that you will be under the rules of Obamacare. The law also combines all of the businesses a small business owner might have under common ownership.

So if an owner has a couple of businesses with the same ownership percentages and is below 50 employees, then he escapes the implementation and costs of Obamacare. But if he is just under the 50 person threshold, then the next purchase of a business could trigger Obamacare not only on the new business but on the existing businesses.

The cost of Obamacare to a small business could be dramatic. It is estimated at a minimum of $2000 per year per employee penalty for not providing a qualified plan. This penalty or the additional costs of providing affordable health care, unfortunately, might be the reason a small business owner chooses to stay small and not expand.

This concept of staying small and deciding to not expand is counter to American ingenuity. Many of our large businesses today started off small and were driven by a relentless pursuit of rolling the dice to create something much bigger. I hope that entrepreneurial spirit continues to live in spite of the costs of Obamacare.

John Marklin

www.marklinfinancial.com

In 2000, I was 45 years old. The Dow Jones was around 12,000. The next year it dropped to 8000 and lost 33% of its value.

In 2007, I was 52. The Dow Jones was around 14,000 and dropped the next year to 7000 and lost 50% of its value.

Today, I am 57. The Dow Jones is again at 14,000. What it will do this year is anyone’s guess.

What I do know today is that I am not willing to ride out another serious drop in the market for it to take 5-7 years to recover.

As I age, I look at things differently. Trying to be a bit more conservative, I move financial holdings from equities into cash, bonds, the bluest of blue chips producing dividends, and my own companies.

People will say these are uncertain times: (European debt crisis, Obamacare costs, Cyprus bank run, Sequestration, North Korea sabre-rattling, etc.). But when are times ever certain? They haven’t been in my lifetime.

If I was younger, I would look at things differently and ride out this wild stock market ride into its next chapter.

But unfortunately I am not younger anymore. I look at the next stage of my life through a different lens. I have a grandchild now, three companies and a bunch of employees depending on me. In 7 plus years I will be 65. I would like to have options then to travel and do what I want to do. I will always work, but work will take on a different definition. So I make decisions differently than before.

To my “older” readers, look at the future realistically with a shorter time span, and consider making appropriate financial adjustments to your portfolio.

John Marklin

www.marklinfinancial.com

Over the past couple of months, two topics have received an enormous amount of attention in the financial world: Obamacare and taxes.

Obamacare is starting to gain attention since the rules are beginning to be researched for its eventual start date in 1/1/14. Many small business owners are going to seminars and reading literature in the hope of trying to understand this extremely complex piece of legislation. The reason is that failure to understand its rules could throw many small businesses into Obamacare compliance and could result in fees starting at $2000 per year per full time employee.

Higher taxes have evolved as a hot topic because the tax deadline of April 15^th for most Americans is right around the corner, and because rates were recently raised on the wealthy to help pay for budget deficits. Again, small business owners (another word for the wealthy) are spending lots of time looking for ways to increase deductions to offset these higher rates.

It used to be that sales, marketing and operations were the most important functions in a business. You had to make the widgets and sell them in order to have any money. The financial arena of business used to be purely a robotic, compliance facet of business: counting the money and closing the books.

Today that is not the case. Competition is prevalent in seemingly every industry resulting in lower prices and margins. Systems are being streamlined through technology, pc’s, smart phones and apps to do more with fewer people. This highlights a new avenue to make money for business: financial ingenuity.

Never before are accountants and financial analysts in such need. It will take an army of cpa’s to figure out ways to minimize the cost of Obamacare and offset the higher taxes coming down the road. Strategic analysis of new opportunities, eliminating risk and new ways to evaluate return on investment will be needed to grow in tomorrow’s workplace.

To do business as usual is not the answer. I see a future where accountants and financial people will also rise to the top of companies where positions were once held sacrosanct by sales and marketing gurus.

John Marklin

www.marklinfinancial.com

To my younger readers who are considering whether to buy life insurance, here are my suggestions:

Why?

The only reason to buy life insurance is to have money available to pay bills after your death, such as: a mortgage, student loans, taxes on your estate, and living expenses for your spouse or dependent family members. Life insurance is not for passing huge sums of money to heirs for no apparent reason.

Type?

Life insurance, in its simplest form, is a contract between you and the company, each betting on how long you will live. This is called term insurance. A premium paid based on your age, medical condition and the amount of death benefit. Term insurance premiums are cheap when very young (below age 30) and get very expensive when older (after age 55).

Whole life insurance mixes a term policy with an investment. The premiums are much higher than term because you are “earning” money on your premium. Whole life policies are usually very complicated and come with a bunch of rules regarding payout of the earnings and can have a significant tax effect if you borrow against the policy to pay the premiums. I usually advise people to stay away from whole life insurance; you can probably do better investing the higher premium on your own through the stock market or bonds.

How much?

I generally advise a minimum of $500,000 to a maximum of $1,000,000. This is a customary amount for loans and other debts when you are between 30 and 50 years old.

When?

When you marry, have kids, buy a house, have loans, etc. you have a need for insurance to pay bills after you die.

But there is one reason to get insurance when young, even if you are single, rent and have no debts. Not only is insurance cheaper and more affordable when young, but you are usually healthier and more willing to qualify. Generally, once you qualify and continue to pay premiums, you cannot lose term insurance.

As you grow older, you may develop health conditions that will disqualify you from getting new insurance, from any insurance company. Please do not overlook this.

John Marklin

www.marklinfinancial.com

I have lived through six Popes in my 57 years.

-Pius XII died in 1958, so I knew little about him.

-John XXIII died in 1963 and I knew quite a bit about him from the nuns since he called the 2^nd Vatican council during my grade school years at Holy Cross in Baden, MO.

-Paul VI was next and was the Pope for the next 15 years during my rebellious days.

-John Paul I only lasted 32 days, so I didn’t know much of him at all.

-John Paul II was the Pope for most of my life for the next 27 years. I knew him to be a “people’s” Pope and especially liked him for his visit to St. Louis for 31 hours back in 1999.

-Benedict XVI, unfortunately, inherited a bunch of problems and presided over often-troubled times during the last 8 years before he resigned.

-And now we have Francis. The first non-European Pope in the modern area and the first from the Americas.

My initial reaction to Francis has been very good, more so than all the other Popes in my life. His humility has caught my eye and much of the world.

In less than 24 hours since becoming Pope, he has:

-Stood, instead of sitting in a throne, when greeting each cardinal who vowed obedience to him and the church.

-Dressed down from other Popes by not wearing his “Mozzetta”, the short red cape, when he first addressed the crowd in St. Peter’s.

-He did not wear the “jeweled” pectoral cross given to him by the Vatican curia, but preferred the more simplistic cross from his days as a bishop.

-He did not use the elevated podium on the balcony at St. Peter’s, and instead chose to stand side-by-side with the other cardinals.

-After addressing the crowd, he returned to have dinner with his former fellow cardinals instead of eating in his new residence.

-The next day he went to say Mass at St. Mary Major in a Volkswagen, rather than a limousine.

-During the Mass, he preached a short, simple homily without notes.

-On his return trip to the Vatican, he stopped to pick up his luggage and pay his bill at the Domus Internationalis “Paulus VI” where he had stayed before entering the conclave.

Francis may not solve all the problems of the church during his papacy, but in a very short period of time, he has demonstrated acts of humility, exemplifying the life of Christ.

John Marklin

www.marklinfinancial.com

I am sure you have been part of a meeting where there seemed to be dozens, maybe hundreds, of power point slides being shown. Sometimes this process becomes exasperated when it is accompanied by a huge handout. And as the presenter methodically goes through the presentation he seems to be losing the attention span of his audience with each additional slide.

It seems that some people think the quality of the information comes with the size of the deck. I think just the opposite.

Once when I was a young auditor, a mentor gave me a good piece of advice. He said that each audit work paper should stand on its own. Each work paper should have a mission and conclusion, with the supporting detail in a clear cut manner for easy review. I never forgot this.

Today, no matter what I am working on, I try to get it on one piece of paper. That’s right-one piece. Impossible you say? Not true.

When you have this mindset going into the project, the work becomes cleaner and more focused. It whittles the minutiae down to only the very important stuff.

When I lead meetings, my agendas are always one page. When I report on sales, the data is summarized to only fit on one page showing only the highlights. When I do a calendar, I format it to fit nicely on one page.

When you only have one page, you have to lead the discussion. It gives you an opportunity to catch the audience’s attention with your words, rather than someone else’s numbers. Hence, the discussion usually becomes shorter, less rigid, less mundane and less boring.

I urge you to try it. You may find that your one page, given the right attention, could become your work of art.

John Marklin

www.marklinfinancial.com

I really don’t care much for technology. Oh, I use my laptop and iphone every day and wonder what life would be without it. But I really don’t care for surfing the web, getting the latest gadgets, or trying to figure things out when they go haywire.

Recently, disgusted with computer crashes from the Microsoft Vista program, I upgraded to Windows 8. Generally speaking the install went well, except for the fact that many programs were not yet compatible with Windows 8, which is baffling and annoying.

So I am still trying to get used to the new look and features. Last Sunday I saw the little Windows icon blinking in the lower right corner which used to mean that updates needed to be downloaded. I quickly clicked on it and waited and waited.

When the screen returned it looked nothing like before. All settings were different. And all programs had been erased!

Upon further investigation, it appears I hit a “refresh” button, rather than an “update” button. Classic operator error (although I believe it was poorly marked)!

After the cursing subsided I set off to the task of downloading all programs.

I have had to restore programs and data several times over the past 15 years. And each time bringing over all the contacts and emails from before. All 4500 contacts and 150 email folders, when it finally dawned on me to stop the madness.

Why not start fresh? I’ve down-sized my house and personal belongings, why not data? Heck 90% of those contacts have incorrect data. And who really does look at old saved emails?

So I started Microsoft Outlook with no contacts and no previous emails. I started to manually add email address only if I received an email. After 3 days, I am up to 57 contacts, 5 email folders, and 8 emails in my inbox.

I have the other 4450 contacts on my iphone in case I need someone and my iphone calendar is now my main one (synced up to icloud for backup).

But the feeling of being unencumbered by all that past saved information, is “refreshing”.

In 1974, I was filling out my application to attend the University of Missouri. I came to the question asking what major I wanted  to select. I stopped and thought about it for a while. I wanted to try something different, something my friends wouldn’t choose. After a few minutes, I picked “Forestry”.

I was off to Columbia, MO headed to the School of Agriculture. When asked what I was going to do with a forestry degree, I quickly replied, “I want to be a forest ranger”. It seemed like a noble profession.

During that first semester, as the leaves were falling to the ground, I remember cursing the leaves and being asked by someone what type of leaves we were raking. Not only did I not know, but I did not care. I was in the School of Forestry and couldn’t tell the difference between a Maple or a Spruce! Shortly thereafter, I switched majors.

Next semester, I tried “Management” in the School of Business. I would have to manage people someday, so it seemed a logical major. I hated it. Nothing specific and a bunch of psychological subjects. Not for me.

The next semester, I signed up for “Marketing”, again in the School of Business. Although the concepts would fascinate me later in life, at that time, they were nebulous. Again I needed something concrete.

In the meantime, I had taken Accounting 1 and 2. I aced both of them with ease while my friends and fraternity brothers struggled with the concepts. It finally dawned on me that “Accounting” was my destiny. I changed majors again and graduated with a degree in Accounting in 1978.

A few years later I told this story to my boss, the CFO of  Wetterau. He chuckled and took out a piece of paper and drew a football field. He then drew some lines going out of bounds time and time again. And then he said, “John,  life is like running down a football field. Sometime it just takes a little longer!”

I’ve gone out-of-bounds many times in my life. But I realized that making mistakes while young and learning from them can still get me to the goal line.

A few years ago, Debbie and I were on a vacation visiting the Grand Canyon. We were having breakfast at a window table overlooking the majestic canyon when a forest ranger arrived right outside our window. He had a job to do….”cleaning up after the moose and elk”. Debbie, always so quick with the wit said, “Look John, that could have been you!”

John Marklin

www.marklinfinancial.com

Last week, I talked about doing the unexpected and showing value to the client or business owner if you ever expect to become more than just an ordinary worker. You must be indispensible to the owner. Make the owner feel like he cannot do without you…that you are protecting and growing his wealth. If he believes you, why would he ever get rid of you? He wouldn’t. He will promote you!

In 1997, I was 42 and had moved my family five times to different states accepting job promotions within the food wholesaling industry. Each move was for more money, but the responsibilities were similar. New faces, new challenges, but similar job duties. I became disenchanted with the food industry. I didn’t look forward to taking another physical inventory in another town, or closing another set of books. I needed a break and negotiated a severance package. I was free and had six months to figure out my next move.

I read book after book after book, mainly about business concepts. In one book, it described how an advertising guy “retired” and went into consulting. He picked up six small clients and in essence became their “ad man” on a outsourced basis. And he was making a nice living at it!

This thought resonated with me. Why couldn’t I do that in the CFO arena. Small companies need CFO duties here and there…a bank loan, a lease negotiated, a cash flow budget. Just not on a full time basis. So I founded Marklin Financial Services, LLC in 1998 providing outsourced CFO functions on a part-time basis.

 And then I made my first mistake. I said to myself, “I will look to any industry but food.” I was tired of dealing in the food arena and wanted to be in other industries.

At first my strategy worked. I picked up transportation, logging, advertising and insurance clients. But it was tough being the marketer and producer in so many different industries. I was spreading myself very thin and leaving very little free time for my family.

The turning point came by way of a friend who was in management at Procter and Gamble, whom I had met while in the food industry. My friend wanted me to give a speech to his team about how the food wholesaling business worked. As a manufacturer, my friend thought having his team know more about their customer (food wholesaling) would be valuable skills in negotiations.

I quickly declined my friend’s offer, knowing that it was for free and in an industry that I wanted out of. But my friend was persistent. He kept asking. I kept declining. He said, “John, do this and you will thank me someday”.

I finally decided to give the speech, mainly to quiet my friend. But, as I prepared I started to feel a sense of confidence from the 20 plus years spent in the business. I actually thought I had some good and powerful things to say. I went to the Jefferson Hotel in downtown Richmond and gave the speech to 25 food salesmen. Hesitant and a bit nervous at first, I got my cadence, my mojo and my enthusiasm started to build. I was connecting. I saw it on their faces. They nodded in agreement or in astonishment to what I was saying.

I had nothing but black and white templates on an overhead projector. But that didn’t matter. They were interested in what I had to say, not what was on the screen. Then it hit me. It’s all in the story, the presentation and the likeability of the presenter. The facts are a given. But presenting them in a common sense, plain old fashioned English speaking way was what was important. Connecting with them. Making them feel like their problem was your problem, and that you were going stay there until you answered or fixed it.

After the speech, I had a couple of participants tell me that they learned more about the food industry in two hours than in 20 years on the job. Whether that was actually right didn’t matter. I knew I had stumbled onto something.

Then my  consulting career took off. The next day I was asked to give a speech at P&G HQ to some mid level managers in Cincinnati. The fee went from zero to $1000. It was a success. The boss loved it and wanted me back.

Two weeks later I went back and gave another speech to VP’s at P&G. They loved it. The fee went to $3500. I became “booked” with other manufacturing companies. And I went on the road and demonstrated a new skill that had previously been unknown, to them and to me.

I learned a very valuable lesson. Never throw away your expertise. Find a way to leverage it into something that is new, exciting and valuable!

And by the way, I have thanked my friend numerous times for that very valuable advice.

John Marklin

www.marklinfinancial.com