Business Fleas and Thanksgiving

Being a business owner has a great many advantages but there also disadvantages. There are great opportunities and there are frustrating challenges. Sometimes those challenges are little irritating – a bit like fleas. T

Fleas are small.  They seem to be everywhere.  They are not going to destroy you – they are just going to make your life miserable. Their bites are itchy and sometimes painful, and getting rid of them is hard.

Back in the dark ages, the mid 70”s, when I was a youth pastor I had the opportunity to meet Corrie ten Boom. I became a fan of this wondrous woman of God who had endured so much and yet was so gracious, joyous and wise.

In her book, The Hiding Place, Corrie ten Boom tells about an incident that taught her the principle of giving thanks in all things. It was during World War II. Corrie and her sister, Betsy, had been harboring Jewish people in their home, so they were arrested and imprisoned at Ravensbruck Camp.

The barracks were extremely crowded and infested with fleas. One morning they read in their tattered Bible from 1 Thessalonians 5:16-18: Rejoice always, pray without ceasing, in everything give thanks; for this is the will of God in Christ Jesus for you.

Betsy said, “Corrie, we’ve got to give thanks for this barracks and even for these fleas.”

Corrie replied, “No way am I going to thank God for fleas.” But Betsy was persuasive, and they did thank God even for the fleas.

During the months that followed, they found that their barracks was left relatively free, and they could do Bible study, talk openly, and even pray in the barracks. It was their only place of refuge. Several months later they learned that the reason the guards never entered their barracks was because of those blasted fleas.

This Thanksgiving I plan not only to thank God for the meal, my family, all of God’ provisions and grace, but give thank even for the fleas in my life. How about you?

Dale Hutchcraft

Friday Five November 21 2014

It’s been a busy week, so here goes.

A tedious (are not all Fed papers tedious?), but fascinating paper from the Federal Reserve that discusses monetary policy and homeowner balance sheets is worth your read – both as an individual and as a Christian business owner. Houses are usually the largest asset an individual or family owns. As such, they are often the initial source of collateral when a homeowner attempts to access credit. In the last few years, the Feds easy monetary policies (known as “Quantitative Easing” (QE) in which they pumped ~$3.2 trillion new dollars into the economy) drives up asset prices, I think, to artificial levels. Even small fluctuations can cause substantial changes to borrowing capacity. While the paper doesn’t conclude this, I do: Those who make significant purchases out of their home values – such as buying a truck or a boat – may be caught short in the future when the full effects of the end of QE are felt by the grassroots. At some point, the Feds will need to unwind the $3.2 trillion dollars they have pumped into the economy over the last six years. If they leave this money in the economy, then something else must give. Remember, M · V = P · T, where:

M: the total amount of money present in the economy

V: Velocity: how often each dollar (bill) is used over the course of a year. This quantity depends on the saving habits of the people in the economy. If they are keen on saving, the bills will only pass through a few hands each year, thus V is small. The combination of these two quantities is the total spending in the economy. For example: if there are M = $100 billion in the economy and each dollar is spend V = 5 times per year, the total annual spending must be M · V = $500 billion.

P: Price. It tells us the average price of a good in the economy. If there’s inflation, this is the quantity that will increase.

T: Transactions – the total number of goods sold over the entire year. The product of these last two quantities is the total sales revenue in the economy. If the average price of a good is P = $25 and there are T = $200 billion goods sold in a year, the total sales revenue must be P · T = $500 billion. It is no accident that the total sales revenue equals the total spending. Rather, this equality is the (reasonable) foundation of the Equation of Exchange.

Now, back to our discussion. In 2007, the Feds balance sheet showed ~$800B. Today, it is sitting at ~$4T, or an increase of $3.2T. So if M increases by $3.2T, either V must decrease significantly (which occurs when savings increase – which isn’t happening in our country) or P (price must increase) or T (transactions) must increase or both. If the prices increase too much – beyond the 2% target inflation rate the Fed is charged to achieve each year, then they may pull dollars from the economy, resulting in a lower P. Such “pumping” then “extracting” isn’t something we’ve seen before, so monetary policy may (likely will IMHO) viscerally impact housing values and personal wealth in America for years to come. Housing prices might fluctuate more than normal in the coming years. Just because the value of your home goes up doesn’t mean that you’ll have that value in the following years. The Feds monetary policies of the last few years have put us in unchartered territory. We don’t really know what the long-term effects are of the QE we’ve seen over the last six years. So don’t bank (pun intended) on the value of your home always increasing.

On a different topic, an appalling story comes to Bible and Business via Jonathan Turley’s site concerning the rape and enslavement of girls for purposes of converting them to Islam. As many as 7000 girls have been captured and enslaved by the Islamic fighters. The New York Times article is a chilling account of some of those girls. Gallup tells us that some 38.5 million people world-wide are enslaved today. The seven most dangerous countries: Brazil, Ethiopia, Indonesia, Nepal, Nigeria, Pakistan and Russia. Christian women in Egypt are being sold into slavery and forced marriages as a way to convert them to Islam too. Slavery is alive and well on this earth. Think twice before you let your daughters travel to these countries.

The lack of interest in golf by the Millennials is having a negative impact on the sport itself. MarketWatch notes that golf course closings are up and sales are down as Millennials jettison golf for other interests.

The Bureau of Economic Analysis says that income is up 2.0% on average, in 2013. Most counties experienced moderate growth in income.

Finally, one Terry Turnage seems to be a busy man. He has reported fathered 26 children via some 20 women and is behind, as you might expect, on his child support payments. Police continue to seek his whereabouts. Let’s hope he is found before he fathers more children who will probably grow up in poverty.


The Stark Reality of our Debt

Our Federal public debt now stands at $17,955,861,759,790.12, which is larger than our annual GDP (here too). Congress has been borrowing Federal employee pension funds to avoid default, creating an unfunded liability of $761.5+ billion dollars. There is no reason to believe this figure will not exceed $1T in the next few years. In addition, most states have unfunded pension debts that combined, exceed $5.1 trillion dollars. Boomers are retiring at a rate of 10,000/day and yet, the vast majority have not saved enough to fund their retirement. The average 55 year old has about $40,000 in their retirement accounts, but they will need over $1M to sustain them for the balance of their life. Boomers have money, but they are spending it on education, adult children and mortgage debt. And this doesn’t account for the increased interest that we will pay on our debt once interest rates start to rise – as they surely will. To quote:

That rising interest rates are practically inevitable means the price of servicing the federal debt is about to jump. A study last fall by the bipartisan Committee for a Responsible Federal Budget noted that total interest payments on the federal debt in 2013 were approximately $255 billion. To put that in perspective, the sequester that was the focus of such debate in 2013 and ultimately led to a government shutdown only cost $85.3 billion in its first year.

But that figure is somewhat misleading. The $255 billion is about the same amount the government paid to service its debt in 2006, when the debt outstanding was equal to only 40% of today’s total.

The difference? Low interest rates. Right now, the Treasury pays 0.01 percent on three-month T-bills and 2.98 percent on ten-year notes. The historical average for those two securities are 3.3 percent and 5.2 percent.

According to the CFRB, if interest rates rise as most estimates expect (3-month Treasuries to approximately 4 percent by 2018 and 10-year Treasuries to approximately 5.2 percent) interest payments on the Federal debt will soar to $505 billion in 2018

Combine our raw debt with the unfunded pension liabilities at the state and federal levels, the lack of savings by boomers which will surely tax our safety nets in the years to come and a rising interest rate that will result in interest payments that exceed the Department of Defense budget, and you’ll begin to see why:

  1. Small business owners will need to work well into their 70’s – in fact, most reading this post will not ever be able to fully retire
  2. Starting a new career in your 50’s is not such a bad idea
  3. Living at 70% or less than your earnings is a lifestyle choice that you and I should make
  4. The church will have increasing opportunities for ministry and service to the poor and needy

One piece of advice for Christian business owners: trust God and set aside monies each month both for the future and for giving away. God’s purposes for business do not change just because we’re in an increasingly tight economic environment. He still expects us to create profit for His kingdom and give away excess profits for the good of our church and community. Don’t use the economy as a reason to shrink from your stewardship responsibilities before the Lord.

Bill English

Friday Five for November 14 2014

Our total national debt now stands at $17,941,406,575,143.38. Debt held by the public stands at $12,872,812,914,521.72 and intragovernmental debts amount to $5,068,593,660,621.66. An example of the latter is when the Social Security Trust Fund purchases special issue Treasury Notes (which they are required to do by Federal law) and then Congress spends that money on one thing or another. Another example is when you or I purchase a United States Savings Bond. That bond becomes a payable – or debt – of the Federal Government. Given that our current Gross Domestic Product (GDP) stands at $17.535T (chained 2009 GDP is at $16,150T) at the end of the 3rd quarter for 2014, one can see that our total national debt exceeds our annual output as a nation. If anyone thinks this is a manageable situation, think again. Servicing our debt is expensive. The interest we paid in October of 2014 was $8.7B – in one month! At the time of this writing, we have paid over $430B in interest this year. Our Federal outlays (Table 1.1) in 1978 were $478B. It looks like we’ll spend in interest payments alone in 2014 what the entire Federal Government outlays were in 1978, just a mere 36 years ago. Does anyone really care? We don’t think so.

In a remarkable breath of fresh air, we learn what those who were writing the ACA (Affordable Care Act) thought of us normal Americans. After a series of frank but embarrassing statements on the strategies behind the Administration’s passage of the ACA, Professor Gruber has shown the utter disdain this administration has for the average American, the purposeful writing of “tortured” language so as to mask the true intent of the bill, their purposeful lack of transparency, their support of the ends justifying the means and the immense hubris that he and others possess:

“This bill was written in a tortured way to make sure CBO did not score the mandate as taxes. If CBO scored the mandate as taxes, the bill dies. Okay, so it’s written to do that. In terms of risk rated subsidies, if you had a law which said that healthy people are going to pay in – you made explicit healthy people pay in and sick people get money, it would not have passed… Lack of transparency is a huge political advantage. And basically, call it the stupidity of the American voter or whatever, but basically that was really really critical for the thing to pass… Look, I wish Mark was right that we could make it all transparent, but I’d rather have this law than not.” (Video here, here, here and here)

The lack of mainstream news coverage on this is remarkable. What is equally surprising is that voters by a 50% to 44% margin still have a more unfavorable than favorable view of Obamacare. But that’s the lowest level of dislike in over a year. While voters are clearly getting used to the law, the favorables and unfavorables have moved very little since its passage in 2010. It will be interesting to see if the expected jump in policy costs impacts these numbers.

We, too, read this book. The Hard Thing about Hard Things is a good book for any business owner – Christian or otherwise – to read. While the language is a bit salty in some places, the books thrust is spot on: It takes courage to run a business. Not just competence. In fact, we would postulate that it takes more courage than competence to run a small business.

Obamacare was front and center in most major political races this year, and half of voters say last week’s Republican takeover of Congress was a repudiation of President Obama’s party rather than an endorsement of the GOP. Democrats don’t disagree.

When it’s time for Happy Hour, most Americans order a beer or wine. Personally, I like White Zins……

Bill English
CEO, Elevate
Associate, The Platinum Group

Insights from the Global C-suite Study by IBM has Implications for Small Business Owners

The most recent published C-suite study from IBM, from their IBM Institute for Business Value, is their Customer-Activated Enterprise report. (Note you will need to register to receive this free report.) After more than 4,000 conversations with C-suite executives world-wide, what they found is highly interesting – and rather applicable for the Small Business Owner.

Their first finding is just common sense: one of the features that distinguishes outperforming corporations from underperforming corporations is how well the C-suite works together as a team. Not surprisingly, the CEO is at the center of the team’s interactions, but there were strong interactions between the CFO, CHRO and CIO as well. A well-functioning team results in higher revenue growth and profitability.

CEOs consider technology to be the single most important external force shaping their organizations. Dynamics that have been birthed in social media continue to grow and are emerging as a new set of dynamics for the C-suite to manage. For example, customers expect to be treated as individuals which is requiring a much closer collaboration between organizations and their customers. Increasingly, even the largest of organizations are finding that they can’t “go it alone” – they now must collaborate with customers, partners and employees in order to be successful. CxO’s foresee major changes in the next 3-5 years:

  • 73% see a larger partner network
  • 68% see increased social/digital interaction
  • 61% see partnering to increase value
  • 54% see focus on customers as individuals
  • 52% see increased organizational openness as essential

Notable Quotes:

“CEOs say customers come second only to the C-suite in terms of the strategic influence they wield.”

“We want to hear everything and anything our customers have to say. That will help us establish one-on-one relationship with our customers and offer them better services more efficiently.”

Small Business Owners Pay Attention

When you stop to think about it, small business owners and large Fortune 100 companies face similar dynamic changes. It’s just a matter of scale. What large organization have over small businesses are more resources to invest in the social and digital areas of customer relationship management. But small business owners can pay attention to these signs as well. In fact, small business owners might be better placed to develop strong customer relationships than many of the impersonal processes that form customer touch points at the larger organizations.

What can learn if you’re a small business owner?

First, pay special attention to the customer and employee relationship. While not all relationships will be rosy 100% of the time, many can be great nearly all the time. But it will require your effort and attention to detail over time.

Secondly, learn how to build alliances with partners to provide your customers a fuller, more expansive set of solutions so that they have fewer buying choices to make as their solutions grow more complex.

Thirdly, take time to show how your organization is giving back to the community. Be open and ready to resolve problems on a moment’s notice. When your company screws up – just admit it and find a way to make it right with your customers. No one expects perfection, but they do expect your effort at resolving problems swiftly.

Finally, figure out ways to listen to your customers for strategic insights into where your company should be going. Your customers may have excellent ideas about new products or directions your company can take that will help you be more successful while strengthening your relationship with your customers. Everyone likes to be heard and understood. Especially your customers.

Bill English




Call of God is Irrevocable

I can point to many people – including myself – who have committed significant sin (or at a minimum, have been involved in sin) who feel that after gaining God’s forgiveness, they were still put on a shelf in terms of their usefulness in serving God. I recall after my divorce in the early 90’s that I felt as if God had placed me on indefinite leave from ministry. I had been put “out to pasture”, “placed on the bench” or “put on the shelf” until sufficient time had passed from my divorce that I was considered ready to be used by God. Little did I know it would be over 10 years before I was teaching again.

The hard part was that I knew I was called to preach, teach and write. I had graduated from seminary and had God’s call (or so I thought). But that didn’t matter to my denomination – they essentially revoked my ministerial licensing. But God’s call on my life for public speaking and writing was still with me. Frankly, it’s difficult to live with a call when you can’t fulfill it.

I was encouraged one day by a pastor who reminded me that in Romans 11.29, Paul wrote this: “for God’s gifts and His call are irrevocable.” Some will explain this away and say that some sin (like a divorce) permanently removes God’s call on your life, but they’ll have a hard time explaining that in light of this passage.

Christian business owners are not better than anyone else – we’re just forgiven. Temptations abound for the Christian business owner – greed, lust, pride, love of money, love of status and so forth. In some ways, our temptations are more intense and more varied than those who don’t own businesses because of our unique stewardship responsibilities before the Lord and our unique opportunities to penetrate a lost and dying world with the light of Jesus Christ.

If you’re a Christian business owner – take heart! No matter your sin, God’s call on your life to own and run a business is irrevocable. His gifting in your life is not diminished just because you have sinned (perhaps greatly). God’s call to steward a business, to create profit for the Kingdom, to provide products and services that enable the community to flourish, to give employees a way to express their God-given talents and creativities and to give your profits away for the sake of the Kingdom – all of this is still a call on your life.

God may take you through an extended “pit stop” because of your sin. But as you walk in holiness, he will “heal your land” (2 Chronicles 7.14) and will restore you to service in His kingdom (Romans 8.28). In this world, you will have trouble. But take heart – Jesus Christ has overcome the world! (John 16).

Bill English

Voluntary Quits are Up

I’ve personally never thought of the metric that measures how many people are voluntarily quitting their jobs as a leading economic indicator, but apparently the BLS (Bureau of Labor Statistics) thinks so. In a recent blog post, The Labor Market gets JOLT, Chief Economist Heidi Shierholz remarks that “a large number of workers voluntarily quitting their job is a sign of a strong labor market, one where workers who want to move on from the job they are in are confident they will be able to find a new job that pays better and more closely matches their skills and interests.” I understand her reasoning, but perhaps less quitting isn’t a sign of a deteriorating economy? Perhaps this is a concurrent indicator rather than a leading indicator.

I’ve not dived into the calculations for this metric, but I hope they are controlling for the 10,000 boomers who are retiring every day. They will voluntarily quit a job too, but that doesn’t mean the economy is getting stronger.

If you’re a Christian Business owner, there are some steps you can take to make it harder for your valued employees to leave.

First, be sure that all conflict between your valued employees and their managers is fully resolved.  Most often, employees leave a manager long before they leave a company or a job.

Secondly, consider off-loading some of their responsibilities to others and then enlarge their job with higher level of responsibilities.  Tie increased compensation to the attainment of new goals.

Thirdly, offer new or upgraded professional development training.  Most people will stay longer at a job if they feel they are growing professionally, are fairly compensated and are growing in their career trajectory.

Finally, if you suspect they might be looking around, then get out and start networking with potential candidates, even if they are not looking for a new job.  Frame the lunch or breakfast with them as a networking appointment – “you never know when the opportunity might arise for us to work together in the future – let’s get acquainted now.”  Even if they never work for you, networking to find new employees will pay huge dividends down the road.  They might refer great people to you who are looking for work or they mull it over for a few months and decide they want to make a change to your company.

Work hard to keep the people you have.  And work hard to be sure you know the people you’ll need in the future.

Bill English
CEO, Elevate
Associate, The Platinum Group

A Man of Understanding

“Seek to understand before being understood” is a phrase I’ve heard repeatedly in my 12+ years as a Christian Business Owner. It’s good advice, frankly, because when you can understand what the other person is saying or understand the “why” behind their actions, the root of the problem or the core issues can be more clearly understood.

In Proverbs, the Bible refers to a “man of understanding” several times in relation to several key scenarios that all of us as business owners encounter. I will submit that becoming a “man of understanding” will make you a better person as well as a better Christian Business Owner and it will have spill-over, positive effects into other areas of your business. Let’s take a look at these passages.

  • Proverbs 1.5: A wise man will hear and increase in learning, And a man of understanding will acquire wise counsel
  • Proverbs 10.23: Doing wickedness is like sport to a fool, And so is wisdom to a man of understanding.
  • Proverbs 11.12: He who despises his neighbor lacks sense, But a man of understanding keeps silent.
  • Proverbs 15.21: Folly is joy to him who lacks sense, But a man of understanding walks straight.
  • Proverbs 17.27: He who restrains his words has knowledge, And he who has a cool spirit is a man of understanding.
  • Proverbs 20.5: A plan in the heart of a man is like deep water, But a man of understanding draws it out.
  • Proverbs 28.2: By the transgression of a land many are its princes, But by a man of understanding and knowledge, so it endures.

The Hebrew word for “understanding” means “skill, intelligence, understanding”; a capacity for discerning a right course of action and then having the self-discipline to follow through on that action.

In these seven verses, we find seven distinct characteristics of a “man of understanding”:

  1. Get Wisdom (1.5): A man of understanding pursues the acquisition of wise counsel. In this vein, not just anyone will do. A man of understanding is careful and discerning about who he learns from. He will sometimes shy away from the latest fad of teachers, knowing that many times, these teachers come and go swiftly and don’t have lasting value to the mature Christian.
  2. Enjoys growing in understanding (10.23): most Americans enjoy one type of sport or another. By comparison, we learn that a fool enjoys committing acts of wickedness as a sport if for no other reason. So to, a man of understanding enjoys acquiring and growing in wisdom. In this usage, wisdom means rightly applying all that God has said in the Scriptures to my situation.
  3. Silent when given the opportunity to talk bad about another person (11.12): A man of understanding keeps his judgment to himself and abstains from arrogant criticisms. He knows that he is not infallible, that he is not acquainted with the heart of the other person and he possesses too much self-knowledge to raise himself above his neighbour as a judge, and thinks that contemptuous rejection, unamiable, reckless condemnation, does no good, but on the contrary does evil on all sides. (Keil, C. F., & Delitzsch, F. (1996). Commentary on the Old Testament (Vol. 6, p. 171). Peabody, MA: Hendrickson).
  4. Focused on Highest Value Activities (15.21): The sense of this comparison is that folly – that which is buffoonery – draws the fool away from his core duties and highest value activities, wasting time and strength. The man of understand perceives and rejects the vanity of such nonsense and keeps his path straight without being drawn aside. He stays focused on his call, his duty, his highest value activities.
  5. Mature control on his emotions (17.27): what is not in view here is some type of emotional repression where the man stuffs his feelings in order to get along with others. Instead, a man of understand has, in contrast to inconsiderate and untimely talk; the equanimity of spirit, in contrast to passionate heat. It isn’t that the man of understanding doesn’t feel intense emotions. It is that these emotions don’t drive his words – a lesson that all of us should learn.
  6. Discernment of Others (20.5): Many have secret plans for their lives that they tell few about. A man of understanding has the discernment and capacity to penetrate into another person and draw out their plans and visceral thoughts and emotions. The sense of this version is that this activity is mean to help the other person, so the man of understanding is a counselor, perhaps helping the other person understand themselves better.
  7. Provides stability in his community (28.2): The New International Version translates the first line “When a country is rebellious, it has many rulers”. A man of understanding holds the community together. Rebelliousness leads to unstable communities as they fracture and follow different leaders. But a man of understanding provides a righteous leadership to which the community may tether itself and thus endure the fracturing that results from rebelliousness.

Think about it. Would you like to be a man of understanding? Then let the Holy Spirit transform you into such a man. You won’t be sorry that you did this and you’ll likely transform your business as you find yourself holding your tongue, being focused on your highest value activities, drawing out the visceral needs and dreams of your employees and providing stability and wisdom for your business.

May God richly bless you today as you pursue this worthy goal.

Bill English
CEO, Elevate
Associate, The Platinum Group