Capital Solutions

It is not how much you make that counts but how much money you keep Robert Kiyosaki, investor, businessman and author of best-seller Rich Dad Poor Dad Is this email not displaying correctly? View it in your browser. Simplify your Accounting, Lower overhead, & Increase Profits The Capital Solution I have worked with a number of small businesses to simplify their accounting systems.  The Capital Solution is a program developed to allow the business owner to concentrate on their specialty, while freeing them from the financial management issues that every owner is forced to deal with.  My program helps ensure your books are set up correctly, your invoices are accurate and efficient and your vendors are working for you, not against you.  After 6 months I guarantee that your business will be more profitable and your books are easier to manage.  Throughout the entire process I will ask the right questions to determine what is holding your company back. It’s your turn. Getting started: Sign up with me today. I will immediately start working through the steps to the ultimate solution, so you can get back to concentrating on the reasons you first started your business. Step 1: Accounting Clean up. Once I sign on with your company I will review your current accounting system, ensure all taxes have been filed and payments up to date, reconcile any past credit card or bank statements, and begin to allocate expenses and income to correct accounts. Step 2: Track the Customers. After any backlog issues are completed I will concentrate on the accounts receivable.  Who owes you money? When are they paying you? Who’s not paying and why?  I will review invoicing system and be certain invoices are going out on time, to correct contacts, and in the correct format.  I will then set up invoicing standards, late payment solutions, monthly reminders for customers, late fees, and if necessary stop work letters.  Once this stage is complete I will contact customers for feedback. Step 3: Examine the vendors. How are the vendors being paid and when?  I will negotiate terms, discounts, and payment plans for vendors.  What types of bills are being charged, can any be billed as a reimbursable to the customer?  Again, after this stage is complete I will contact vendors for feedback. Step 4: Overhead review. Review all costs and determine cuts that can be made, that will not affect productivity.  This is not a review of employee productivity, but a review on the fixed costs of the business.  Examples of fixed expenses whose costs can easily be reduced include: phone lines, fax lines, cell phones, web hosting services, credit card charges, and bank charges.  Contact vendors for discounts for grouping services, automatic payments.  Review cash flow, any fees or interest caused by reduction in cash on hand. Step 5: Project Profitability. Analyze individual projects to determine project costs and profitability.  Can you set up budgets by job?  How are you tracking profitability?  Are costs allocated to the correct job?  Can additional costs be billed to client? Step 6: The next step. Now that the finances are clean, understandable and profitability is increasing, what is the next step?  Marketing to new clients or industries?  Meeting with banks or investors for additional capital to help business reach next level?  Once the financials are in place, the true fun can begin. follow on Twitter | friend on Facebook | forward to a friend Copyright © *|CURRENT_YEAR|* *|LIST:COMPANY|*, All rights reserved. *|IFNOT:ARCHIVE_PAGE|* *|LIST:DESCRIPTION|* Our mailing address is: *|HTML:LIST_ADDRESS_HTML|* *|END:IF|* *|IF:REWARDS|* *|HTML:REWARDS|* *|END:IF|* unsubscribe from this list | update subscription preferences*|IFNOT:ARCHIVE_PAGE|* | view email in browser*|END:IF|*

Tax Planning

Please note this post is for informational purposes only, please contact your accountant for tax advice.

It’s tax filing season and I wanted to share a couple tips for those business owners to try to make the tax season as painless as possible. What I usually do is reconcile all accounts. This means bank accounts and credit cards. Hopefully you’ve been doing this every month, but if you if you haven’t most credit card companies now offer year end summaries that groups all your purchases in categories so you just have to give that to your tax preparer.

Next, review your income. Is everthing that got deposited into your account income for last year? For example, where there loans, deposits, retainers? Any deposits or retainers should be in separate accounts, but occasionally they’re entered incorrectly and end up being shown as income when they are not.

Next is expenses. Is everything you paid out accounted for correctly? Is everything an expense or are their repayment of loans or equity? Did the owner take any distributions? If so, was this income or a return of equity? Did you have any payments to subcontractors or employees? If so you will have to file the correct forms to document those payments.

Lastly, take a step back and review you company set up, customer and profit and loss. Is there anything you would like to track better this year? What customers still owe you money? Is your company set up correctly to limit liability to the owners and employees?

Please contact me with any questions. Did I miss anything? Anything you think deserves it’s own post?

Financial Consulting

I apologize for the limited posts the past couple weeks. I dove head first into my business and things are going great. I have learned a lot and am having fun helping the companies I am working with. They seem appreciative of my time and I am making some progress. The last couple weeks I was playing catch up reconciling an entire years worth of credit cards and bank accounts and preparing 1099, W2s and the yearly P&L for the accountants. It was a lot of work, but I finally feel like this week things have started to slow down.

While I am embarking on this adventure I will be concentrating more on writing about some of the small business / financial things I’m working on and less about green building. I hope to get back to writing about this more often, and Tony will put up a relevant post every once in a while.

The Big Short

I just finished The Big Short by Michael Lewis.  I read a lot of books and this may be the best book I have ever read.  I read Too Big to Fail, by Andrew Sorkin, which was also a great book, but it was more about what happened to the banks after the crisis hit.  It told the story of the effects of the crisis on the big banks and how they tried to survive.   However, when I finished the book I still didn’t understand why the banks were so close to failing.  Lewis’ The Big Short answered all my questions.

The book follows three groups of people who foresaw the mortgage crisis.  They then figured out a way to “invest,” or place bets, that would increase in value if mortgages went bad.  The book gets very detailed about how they did this, but the basic idea is that they bought insurance against mortgage bonds.  Mortgage bonds are groups of mortgages bundled together.  Their intent was to reduce risk and be able to be rated.  The ratings would tell investors the riskiness of the bonds and charge higher interest rates for riskier bonds.  A mortgage bond made up of interest only mortgages would be graded lower (riskier) and pay a higher interest then a mortgage bond made up of all 30 year conventional mortgages.

These separate groups at different times all came up with the idea to look through these mortgage bonds and find the groups most likely to default.  They bought insurance that would pay out the full value of the bond if the price went down.  The price of the bond would go down if the mortgages that made up the bonds stopped being paid.  They all realized that there were mortgages that the homeowner had to put very little money down to get and received a teaser rate for the first two years.  They predicted that after 2 years, when the rate reset to a higher interest rate, homeowners would begin defaulting.

The information provided in this book was so interesting, but the stories of the investors who shorted the mortgage bond made the book read like a fiction.   The investors had the foresight to see that the housing market was unstable.  They then created an investment that would pay out if the housing decreased in value.  Lastly they had the courage to put hundreds of millions of dollars on the line that supported their idea, and to stick with it for 2 years or more, while they waited for what they thought would happen to actually occur.

The book was interesting, informational and inspiring.  I would recommend it to anyone who is even remotely interested in business or the housing market.

Stuff and Green Material

I recently began the spring semester and one of my course’s is Design for Green Materials. This course will introduce us to green materials and the process these materials follow throughout building, and design. In class we watched a short film about the cycle of stuff and how we consume. Here is a link to that film.

It got me thinking about the cycle. Here is a what I came up with;

Being able to change the way we consume products is a task that will alter the way we have become accustom to living.  We would all like to think that it would be easy and attainable to curb the desire for more stuff, but we still go out and buy. How many times have you gone to a store with one item in mind and left with bags full?  To help the cycle become more sustainable we have to look to and integrate green materials into the design. Some people will buy the product because of its impact, but most don’t care to think about it. Do you think about the type of plastic your phone was made from?  Was it the deciding factor that made you purchase that particular item?  Consumption is a large part of the problem, but until we can all realize that we don’t need all this stuff, we have to look at design to take us back to the cradle we came from.

My professor also set up a class blog. http://sdn-604.blogspot.com/ There are no posting from our class yet, but keep an eye out they’ll be coming soon.

Leap of Faith

Below is part of an email I sent out to some family and friends yesterday.  The responses have been amazing and makes me much more confident that the choices I am making are the correct ones.  Thank you to all that have emailed/called/texted.  I am extremely grateful for everyone’s support and look forward to the future. 

For the past couple of months I have set up my business and prepared for the future. I set up a business checking account, got a business credit card and applied to hundreds of jobs looking for part-time work. Last week I finally found a position that was right for me and made the leap. I no longer have full-time employment and am out on my own as a financial consultant in the real estate industry.

Since I made that decision my entire perspective on life has changed. I always acted like I was my own business but now I feel it.  I am determined to find new opportunities for myself and meet with people who could help me find those opportunities.

I believe I can do the most good for the companies in the real estate industry as a part-time short-term consultant.  As a short-term consultant I can work with the company to develop  how the company should be set up based on its strengths, weaknesses and long-term goals.   I can then work with the existing accountants bookkeepers and administrators  to put the plan in place. I will review the accounting system to insure the correct accounts are set up and classified in a way that corresponds with the company goals and policies. I will then work to train the staff to enter income and expenses to the correct account and billed efficiently to the client. Once the plan is in place I am available to check in weekly or monthly to answer any questions, perform a company review and work with the staff to develop responses and updates to any problems.

“Faith is taking the first step even when you don’t see the whole staircase” – Martin Luther King.  I look forward to finding the rest of the staircase.

Purchasing Power

I read a blog the other week that called our current times, The Age of Choice.   It was about all the information that is available now and the choices we can make because of this additional information.   They looked at it from a more global perspective, but I wanted to take a look at consumer purchasing power.  In our current times we have some of the best information available.  This allows us to use the purchasing power we have to affect change in the marketplace and the world.

A brief history of purchasing power would go something like this –

Early in the market economy consumers were just happy to have the ability buy the goods. This was a transition from people producing everything for themselves to specialization in a trade or industry.  As the market economy expanded increased specialization led to increased market efficiency.  For example, a seamstress would concentrate on making clothes.  He or she could make higher quality clothes cheaper and faster than a farmer trying to make his family clothes while producing the food as well.  The farmer realizes that if he trades some of his food for clothing he can concentrate more time on farming and produce more food more efficiently.  This creates a market where there are more goods available at lower prices.

This small example repeated itself in almost all industries all over the world until most of the population had a specialty and traded the excess goods they produced for other necessities.  As the market became more efficient certain people began to accumulate wealth and invest this money to produce faster and cheaper.  This created the industrial revolution which eventually led to the production line.  The production line is extreme specialization; the workers do not specialize in one product, they specialize in a single part of the product.  This also took power away from the individual employees and put it in the hands of those that owned the machines and factories.

After the industrial revolution and the invention of the production line, producers had all the power.  They were able to keep wages low, control what was produced and ultimate goal was to produce the cheapest way possible.  Consumers were getting paid less but also had cheap goods available to them.  Both world wars and the depression put strains on the supply and demand of goods.  After World War II the market was more concerned with producing enough goods for the public, then the quality of those goods.  Only in the past 20 years as generation X and Y have grown up without having to worry about the quantity of food or other products, or memories of the great depression have consumers decided to pay more to get better quality goods.  Consumers started to look at how goods were produced and not just price.

This trend needs to continue.  Consumers need to realize the true cost of goods including the cost to the environment and the labor market.  Energy intensive food production with large amounts of fertilizers, pesticides, and genetic modification is not producing the quality of food we need.  The same can be said for most other industries.  Inefficient housing produced with low quality material create a housing stock that uses to much energy to operate and do not have the indoor air quality that improves the life of its inhabitants.  A car industry that consistently produces larger cars with more horse power rather than concentrating on energy efficiency.  However, the industries will not change without the public demanding it.  We need to use the information and purchasing power we have to make better decisions that will influence industries to produce more efficient and higher quality goods.

Response to the Pessimism

I felt like my last post was too pessimistic and I wanted to do another post with an idea I think would be good to stimulate the economy.

In this current economic environment there is no good reason to spend money.  People are still afraid of losing their jobs, and even if you are confident in your job stability most are trying saving more.  I always heard that the best time to invest is when no one else wants to.  The only problem with this is that if you don’t have a job or are worried about losing your job you may not have the cash to invest.   Especially when it comes to investing in your house.

With all the excitement over sustainability myself and other people out there will tell you that you should put money into your house and make it more efficient so that it saves money.  However, if you’ve ever walked through the steps to actually upgrade your home, it is a large investment of time and money to make your home more efficient.

I believe this is why we need government stimulus tailored to energy efficiency.  The government can help increase the returns of sustainable investments and offer guarantees to help investments in your home more rewarding.  The first bailout was to the banks to stabilize our economy.  The next must be an investment in our future to make the U.S. more efficient.  These could be providing loans to homeowners to make energy improvements, giving financing to sustainable building manufacturers to produce more product or making the investment in its own buildings to stimulate demand.

When this recession started everyone was already predicting the “V” recovery and how great things were going to be in just 6 months or a year or worried about a “W” recovery with a lot of ups and downs.  I never imagined the recession would be so long or deep but I always imagined it would be more like a slightly tilted “L”.  A decline followed by leveling off or a slight increase.  Assuming this is correct or even close to right, the only thing to jump-start our economy and get it producing its own jobs is spending money on something that is going to save us money in the future.  Investing in sustainable building, mass transportation and new sustainable technologies will do this.

2011 Pessimistic Predictions

I sat down with a client this week and discussed the current real estate climate, economy, and world politics and even through out some predictions for 2011.  We had a great conversation that got my mind stirring so I thought I’d share some thoughts, comments and predictions that developed because of the meeting.

My client is looking to invest in a multi family property.  He’s been looking on and off for about a year and is debating whether to get serious again.  He asked me if it was a good time to buy as many investors do when we sit down to talk about the market and in the past year I usually give the same answer.  It’s a good time to buy for someone who has enough capital, good income and doesn’t want to sell for at least 5 years.

Last year at this time I was foolishly thinking that spring 2010 was going to get New York City real estate back in gear.  The 2009 market was so terrible because of Lehman Brothers and the precipitous drop in the stock market in 2008.  Why would anyone want to buy or sell such a valuable asset in a market that was unpredictable at best?  I assumed that everyone who had to sell in 2009 did.  Those properties that were still on the market, or coming on the market, would be priced to sell. With the supply adjusted if the demand was stimulated Spring 2010 would bounce back. This would give the market some momentum and lead to a year with price improvements and inventory getting back toward normal levels.  I wasn’t expecting a 20 or 30 percent increase in sales or decrease in inventory but I was expecting things to improve.

The pace of sales this year has been stagnant at best due to continued unemployment, foreclosures, lack of financing available, and the debt crisis in Europe.  I underestimated the continued uncertainties in the market and I do not see many resolutions coming in time to create an improved Spring 2011.  There are also so many properties waiting for an uptick in demand to go on the market that any increase in demand would be met or exceeded by an increase in supply.

Unfortunately I believe this is probably the best case scenario – demand picks up enough to clear out some of the shadow inventory and hopefully in 2012 we return to a market equilibrium where sellers actually have more than one offer to consider that is at or close to asking with the ability to get financing.  I hope that I am wrong again this year and that gains in the economy will stir hiring which will bring new buyers in to the market to clear out the excess inventory, but I don’t see that happening.

What are your thoughts? Am I being too pessimistic?

Green Wall Pics

We finished the green wall last week! AENA provided the design and installation with help from Blondie’s Tree House, who chose the plants, developed the layout, and sourced all the plants..  I’ll provide a link to the AENA update when it’s finished. Below are pictures of the installation with some notes.

We started by putting water proofing on top of the existing wall and then framing it out with aluminum tubing.

On top of the aluminum tubing we installed pvc panels. We also installed the copper drainage basin.

After the pvc panels we installed the first layer of growing medium. This almost felt like carpet padding and a second layer went directly on top of this.

This shows the wall, basically completed. We installed a teak wood trim to cover to copper drainage basin and ran water lines on top of the first layer of growing medium.

This is the wall with the second layer of the growing medium and the plant layout on the wall.

The first planting!  This also shows the pockets that were cut in the growing medium.  The plants are put in the pockets with just a bit of potting soil.

The finished product!  It looks great and the client is really happy with the results.  I’m excited to see how it effects the work space.  I’ll check back in every once in a while with updates.