Leverage -- The Capitalist's Best
Friend
Leverage is usually thought of in financial terms
-- a small amount of cash, along with a lot of debt to finance a large
investment, or a high-return investment financed at a low interest rate.
Yet the idea of leverage can be applied in a lot of ways -- to manpower,
materials, machinery and money -- the factors of industrial
production.
Most important, though, is the leverage of your
own time as a business owner. Are you actually making the best and highest
use of your time? Have you thought of leverage in that context? More.....
Acquisitions -- Constructive or
Seductive?
Acquiring another business is one way to grow a company.
And it's a way that most people find a lot more exciting than just growing the
business they already have. It's surely a lot more fun to talk about on
the golf course -- more people will listen if you start a conversation with,
"I acquired another business", rather than "I grew my same old
business", right?
Are acquisitions a good way to grow a company? Perhaps
not, according to Bob Pritchett, author of Fire Someone Today. He
says, "In Acquisitions, the Buyer is the Loser." What if you
invested the same cash and effort in expanding your existing business? Or
are there, in fact, good reasons to acquire? More.....
Are you Voluntarily Contributing
Unnecessary FICA Taxes?
If you're an S-Corp or a C-Corp, you have the ability to control
your own W-2 compensation. In fact, even an LLC can elect to pay taxes
like an S-Corp, thereby accomplishing the same thing.
The question is, how much (or how little) should you be paying
yourself, particularly if you're forecasting weak earnings this year? Most
business owners believe that the higher FICA and Medicare taxes that result from
high W-2 compensation are contributing towards their eventual Social Security
income. That's true, but the math doesn't work -- it's a lousy
investment.
You might want to give yourself a pay cut, if it's
justifiable. It will surely save you in FICA & Medicare taxes, which
are about the worst long-term investment you can find. And if your spouse
is on the payroll, you're probably throwing all those FICA/Medicare
dollars away. If you're wondering about the actual return on investment of
dollars paid in FICA & Medicare taxes, read
on........
2010 Spring Summit Set
We had overwhelmingly positive feedback on the Eaglewood Resort
and Spa in Itasca, IL, the site of the 2009 Spring Summit. Our
expert venue selection team (Pam) has negotiated even lower room rates
for a return to Eaglewood in the spring of 2010. Mark your calendars
for April 22-23, 2010. And, yes, we'll have bowling and pizza night on
April 21.
And, as always, we're
interested in your ideas for newsletter articles. Would you perhaps write
a guest Editorial? Please let us know if you have ideas or material you'd
be willing to share with others.
Thanks,
Terry Weaver
CEO
Chief Executive Boards International
TerryWeaver@ChiefExecutiveBoards.com
864 527-5917
www.chiefexecutiveboards.com
www.chiefexecutiveblog.com
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