Business Lessons from Paula Deen

Paula Deen is not your typical entrepreneur. Or is she? I just finished her memoir Paula Deen: It Ain't All About the Cookin' in which she tells us her success story. One thing is very clear, it wasn’t easy. She began her business in 1989 at the age of 42, a recent divorcee who had suffered from agoraphobia for twenty years. Starting small, with only a $200 investment she began “The Bag Lady”. She made sandwiches out of her home and sold them to her co-workers and neighboring businesses at lunch. This led to private catering and ultimately to a restaurant of her own.

She shares the lessons she learned along the way. You need to be legal; she licensed her business thru her friend's pool hall. Entrepreneurship is hard work; while working 16 to 24 hour days she let her own home literally become a roach invested pig sty. You can’t be afraid to take a risk or work under a little stress. When she decided to open a restaurant in downtown Savannah she entered into a long term lease that needed renovations with just a handshake. The day her new restaurant was to open her checking accounts were overdrawn. She surrounded herself with the best people she could find and strived to bring out the best in them.
Paula’s lessons aren’t necessarily new, yet her story has a realistic spin. If you have always wanted to sell your famous egg rolls, salad dressing, caramel nut torte or whatever to the public I would recommend reading this book first.

Yogurt is really pudding

"Yogurt with high fructose corn syrup is more like pudding (a treat) than a healthy food," stated Eliz Greene of Embracing Your Heart, whose seminar "Women's Heart Health" I attended last week. After hearing this, I had what Oprah would call an Aha! Moment. If yogurt is considered a treat, the majority of the food I eat is really a treat. I decided it's time I got serious about losing weight; to do this I need to change what I eat.

Background:
I have wanted to lose ten pounds for as long as I can remember. For the past ten years I have gained a couple of pounds each year; resulting in many of the classic clothes I purchased to wear year after year no longer fitting. I have never tried dieting; I didn't think I had to. I exercise religiously three times a week; pack what I considered to be a healthy lunch; a granola bar, yogurt, and a piece of fruit. For dinner I limited my red meat and usually ate sensibly. Following these steps I thought eventually the weight would just come off.

What am I doing wrong?
I don't eat enough for lunch. To compensate each afternoon around 3:00 I hit the snack machine or raid the candy bowl at work. In addition, in order to have enough energy to workout I almost always grab several handfuls of chips or a couple of cookies as I head out the door on my way to the gym. During summers I entertain frequently; consuming fattening appetizers, desserts and high calorie drinks.

What changes am I going to make?
After hearing that yogurt is a treat, I finally realized I need to be honest with myself about my food choices. First and foremost, I need to eat a more substantial lunch. Since I am not fond of sandwiches, I am going to add a large salad or soup to my lunch. I will substitute plain yogurt with real fruit instead of the yogurt pudding I've been eating and raisins mixed with nuts for the granola bars (which is really a glorified candy bar). A piece of fruit will be my mid-afternoon snack. Sweets and chips will be eliminated from my diet. When entertaining, I will attempt to include healthy appetizers and low calorie drinks.

What is my time frame?
I plan on immediately making these small food adjustments permanent lifestyle changes. I will keep you informed of my results.

Could it be Jack Welch's 20-70-10 model?

My company is hiring a new in-house HR Consultant. She is a personal friend of the owners and rumored to be good. In the past, our company's HR duties were split amongst the employees in my department. None of us are degreed in HR and most feel these activities to be time consuming and a burden to our department. So why does the anticipation of this new hire bother us.

Could it be Jack Welch's 20-70-10 model? In case you didn't know, Jack Welch used to be the Chairman and CEO of General Electric. During his tenure he developed a model which determined that 10% of his workforce was slackers, 70% were average, and 20% were top performers. Each year he would fire the bottom 10%, leave the 20% alone to do their thing and groom the middle 70% to become the next top performers. Over time his employees would shift into new categories. After the bottom workers were let go and the top performers left the company, a new group would move into the bottom 10% and the top 20%.

So that explains it, as this new hire with a stellar reputation joins our company she may just knock some of us out of the top 20% or worse yet push some of us into the bottom 10%.

A Basic Understanding of the Income Tax Code Needed

Since I work as an accountant, I am frequently asked income tax questions by friends and family. Here is the latest from a college student:

"Ms. Colere, could you please review my 2006 federal income tax return, my tax preparer calculated that I owe money this year. I don't understand how this could possibly be correct. Last year, I got a refund. I didn’t work any more hours this year or change my tax withholdings." Upon further review, I discovered this particular college student owned a taxable mutual fund account in her name that had incurred a large capital gain distribution in 2006. The tax-withholdings withheld from her part-time job earnings did not cover her tax bill once she included the capital gain distribution into the tax calculation resulting in money owed.

This scenario led to my conclusion that as part of a financial literacy program everyone should be able to complete a 1040EZ tax return and have a basic understanding of the Federal Income Tax code. This is important even if you hire an accountant to do your taxes. It could save money on taxes; not to mention interest and penalties for unreported income or unallowable deductions, lead to better investment decisions and save money on tax preparation fees.

“The hardest thing in the world to understand is the income tax.” — Albert Einstein, physicist

"I don't think you want to do that!"

My ultimate dream has always been to someday teach financial literacy in my community. I would keep my options open to whom my students would be: children, young adults, single moms, widows, senior citizens or even non- financial savvy entrepreneurs.

Occasionally when the opportunity arises, I will share this dream with someone I meet. I had just such an occasion this week. I met a woman who is very active volunteering in Milwaukee's inner city. The program she is involved with provides hot showers and meals for families in need. Seeing this as a perfect opportunity to discuss my dream; I asked if her volunteer organization taught financial literacy and expressed my desire to some day do so. To this she stated that the people she works with have much more pressing needs than financial planning and are not ready for a financial literacy program. I continued pressing my issue to which she replied, “I don't think you'd want to do that.” She expounded by saying these people have a different value system. She has been in homes where families will have two big screen televisions but no food to feed their children. They are not ready to hear my message and my time would be wasted.

How timely that last night I read the following in "Black Enterprise" magazine: In 2004, black buying power rose to $723 billion, up from $585 billion in 2000, according to The Multicultural Economy of 2004, a report by The Selig Center for Economic Growth. The report defines buying power as the total personal income available to individuals after taxes for spending on goods and services. The report also found that blacks spend more money on telephone services, shoes, personal care products, and children's apparel and less on healthcare, reading materials entertainment, and household textiles, compared to other groups. Although buying power is increasing in the African American community, experts say consumers should not mistake that statistic for a sign that the community is becoming wealthier. In fact, to the extent that African Americans spend more of their increased income rather than save and invest it, in many cases their wealth might even decline in light of the increase in their income.

I have never responded well to someone telling me, “You don’t want to, can’t or shouldn’t do something I have already set my mind on doing. Obviously, there is a great need for my services and I will not be deterred.

One more thing to do before it is too late

Having recently experienced a death in my husband’s family, we have spent several hours over the past few days looking through boxes of old photographs. How saddened we were to discover that many of the very old photographs were thrown haphazardly into a box and were not labeled. How unfortunate. There are far too many pictures that we will never be certain who they are of or what the occasion was.

Take the time now to sort through your family photos; you never know when it will be too late.

Tips for an infrequent baker

I am an infrequent baker. This is not because I don't like baking. I happen to love baking. It's because baking is time consuming and one thing I don't have a lot of is time. But more importantly and perhaps more truthfully, it is because I like to eat baked goods. If I come home from work and am faced with the option of making myself salad or eating a plate of cookies I will more often than not eat the cookies. So, I don’t give myself this option and do not bake.

When I do have to make the occasional dish to pass I am usually faced with a few ingredient obstacles. Here are some tips for an infrequent baker like myself:

How to soften hardened brown sugar: If you notice signs of hardening but the sugar is still somewhat pliable, place an apple slice in the bag and leave it for a couple of days. If it has already reached the concrete state place the brown sugar in a glass dish, cover with a small piece of waxed paper, then top with a slice of bread to provide a bit of moisture, then loosely cover the plate or bowl with plastic wrap and microwave until softened about 30 seconds.

How to test baking powder for freshness: Baking powder loses its ability to leaven with time; if it's older than 6 months to a year you will need to test it for freshness: Mix 2 teaspoons of baking powder with 1 cup hot water, if there is an immediate reaction of fizziness and foaming the baking powder can be used. If the reaction is at all delayed or weak throw it away and buy a new can.

Substitutions I have used in a pinch:
Cream: For one cup use 1/3 cup butter, plus ¾ cup milk.
Sour Cream: Substitute an equal amount of plain yogurt.

What to do with unused evaporated milk: Instead of leaving the unused portion of evaporated milk sit in the refrigerator for weeks eventually to be tossed, freeze the unused portion in an old ice cube tray, thaw and use the cubes as needed.

What's wrong with this picture?

One of my co-workers firmly believes that it is his job as a parent to do whatever he can to give his son a good head start on life. To achieve this he has paid his son's college tuition, paid his rent when he moved out to be closer to campus, bought him furniture and a car. He made sure that he had health insurance and paid his car insurance. He achieved all of this despite both he and his wife were laid off from their jobs. He did whatever he had to do, including not rolling over his 401(k), so that he could pay all the bills. Even now, almost two years after his son has graduated and has a full time job, he continues to pay his car insurance.

On a recent visit home this man's son said, "Gee Dad, why don’t you buy yourself some new furniture yours is really looking shabby and by the way next week I'm going on vacation to Florida with my girlfriend.”

I firmly believe that you should not jeopardize your own retirement and financial future to subsidize your children’s college education. There are many resources available to assist your children with their college expenses, but relatively few to assist you with expenses if you run short each month after retirement. How will these same children respond when they hear their elderly parents are experiencing financial difficulties? I imagine they will say, “Gee Mom and Dad you should have saved more.”

Take advantage of 401(k) match

The lifetime pension (a retired employee receives a set amount of money every month for the rest of his or her life) is no longer a benefit for the majority of American workers. Of the five organizations I have worked for since 1985, not one of them offered a company lifetime pension plan. Four out of the five did offer a company sponsored 401(k) plan. Most of the plans included a 401(k) match in which the company matched a portion of my contribution.

It continues to amaze me how many employees do not contribute at all or enough to take full advantage of the 401(k) match. People, this is leaving free money on the table.

Last week, I asked a co-worker, who was complaining about his lack of retirement savings, if he contributed to our 401(k) plan. He did not; our company matches half of our contributions up to a measly 2 percent. He is so angry about such a small match he refuses to contribute to the plan. He learned years ago that he had to take care of himself, nobody else, especially his employer, was going to do it for him. I agree a 1% match isn’t much, but it’s something and it’s free. I suggested in 2007, he take care of himself by taking advantage of our company match.

401(k) contributions are deducted with pretax dollars. This means your contribution reduces taxable income, cuts your tax deduction which makes saving a little easier. For example, let’s say your weekly gross pay is 1,000 and you pay 30% in federal and state taxes. If you put 2% of your pay in a 401(k), you'd contribute $20 a week. But, your net paycheck would be reduced by only $14 a week.

Bottom line: Start taking care of yourself in 2007; make a contribution to your company's 401(k) plan that takes full advantage of your company match.

Recent Loss

I recently lost a friend and colleague to breast cancer. I clearly remember the last time I saw Jeanie. She had recently finished her first bout with chemo and looked radiant in her bright red suit. Her attitude was optimistic and determined. She had been such a courageous fighter; I was sure she had beaten her cancer and was destined to be a survivor for many years to come. That was two years ago.

Experts claim that breast cancer treatment is most effective when detected early. To do this we must perform self examinations, schedule annual clinical breast exams and receive mammograms one to two years after the age of 40.

As we start 2007, I would like to encourage everyone to call their doctor’s office and schedule their annual breast cancer screening. And while you’re at it, if you are over 50, schedule your colonoscopy. I know these procedures are unpleasant, taking time off from work is a hassle, etc, etc. But don’t schedule your appointments because I told you to; schedule them because Jeannie would have wanted you to.

A Fashion Faux Pas

A few years back I bought a smashing black pantsuit to wear to Mr. Colere's Holiday Party. I liked it so much that I wore it to this event three years in a row. As this year’s party approached, I felt I couldn't wear the same outfit once again. I dreaded shopping for myself during the holiday season. I foresaw going into store after store trying on overprized sequined sweaters that didn’t fit quite right. Fortunately, the problem was solved by Mr. Colere. Without my prodding, he decided we were not attending his party this year. A decision that was fine with me.

Many of the women I know would never be caught wearing the same dress to two events that included the same circle of guests. I think it may be prudent to take a lesson from the French, the connoisseurs of fashion; buy one outfit in which you look fabulous and wear it everywhere.

Books on saving money: Are they a waste of time?

I used to be a voracious reader of books and articles providing tips on saving money. I recently came to the conclusion that once I had the basics down; avoiding the daily latte, packing a bag lunch, increasing my deductibles, etc. I just wasn’t reading anything new that was practical. Mr. Colere was beginning to find weird packages of strange substances such as herbs packed in frozen chicken broth covered in freezer burn in our freezer and tossed them out. I was reading articles with bizarre advice such as: take a giant popcorn tub out of the trash when you are at a movie theater and request a free refill, take a shower while wearing your dirty socks to save on laundry or how about flush your toilet every 5th time to reduce your water bill. I have since gone on money saving book hiatus.

My conclusions have been confirmed recently by one of my favorite blog writers “The Nonfiction Readers Anonymous”. Check out her posting on Saving Money with the Tightwad Twins at http://nonanon.com/blog/page/2/. I also enjoyed her post "Would someone please right a decent simplicity book?” Please? at http://nonanon.com/blog/2006/09/01/would-someone-please-write-a-decent-simplicity-book-please/.

Unfortunately when it comes to saving money the best advice, similar to dieting, involves restraint; the only way to really save money is to live beneath our means. How do we do that? I love the old Depression era quote:

Use it up,

Wear it out,

Make it do,

Or do without.

I remember a few years back a co-worker upon returning from an after Christmas shopping sale relayed how much money she saved on her new purchases. Another co-worker exclaimed, "That’s great, but I went to the same sale and saved more money than you. I didn’t buy anything." Enough said.

Medical Identity Theft

Have you heard the latest? According to the article, “Your Medical Records, Stolen!” by Max Alexander in the November 2006 issue of Readers Digest our medical identities are now at risk.

Thieves are stealing our name and insurance information to obtain drugs and expensive medical treatments. But as the article points out, the money isn’t the half of it. When someone steals your name to receive health care, his medical history becomes part of the record – and setting the record straight can be extremely difficult. In a medical emergency having someone else’s medical history commingled with your own could be disastrous.

The best advice for prevention is to never ever give your social security number out to anyone, including a doctor, at a doctor’s office or medical center. It only takes one dishonest person. It used to be a common practice for insurance companies to use your social security number as your insurance ID which was printed on your insurance card. Most insurance companies have eliminated this practice. If your insurance company has not, call and request a new ID number. In the mean time only carry your insurance card with you when visiting a doctor for the first time. Also, read the explanation of benefits forms (EOB's) you receive from your insurance companies. I know from personal experience administering my company's medical insurance, many recipients file or throw their statements away without looking at them. They are a detailed statement listing the medical services your insurance company is or is not paying on your behalf. A couple of phone calls concerning a questionable EOB early in the fraud chain may eliminate a huge problem down the road.

Identify theft precautions

Experts have indicated that 2,000 identity thefts occur in the U.S each week. With statistics like isn't it time to take precautions? Here are a couple of prevention tips:

-Don't print your entire name on your checks. For example, instead of Claire C. Colere, print C. Colere. List your business address rather than your home address.

-When paying bills by check; print only the last four digits of your account number on the check. Better yet don’t carry a checkbook use cash or credit card. Pay your credit card statement online.

- Make photo copies of all your credit cards front and back. Call the 800# immediately if you have a problem.

-If your purse is stolen; report it to the police in the jurisdiction where the purse was lost.

Tips for Getting Motivated

Getting and staying motivated at work is a constant struggle for me. My desk is overflowing with piles of work. When co-workers don't know what to do with something it's usually strategically placed in my in-box. I spend many days not knowing where to begin or working on several different projects simultaneously not finishing any of them. Recently, I stumbled across the following motivational tips taken from the "Get Motivated Workbook" by a colleague who attended a Get Motivated Workshop:

Visualize a clutter-free environment; focus on the desired outcome, not the effort.

Get started, what's bothering you the most? Start somewhere.

Try to remove the small irritants that hinder your achievement. Write it down -- identify your main time wasters, and create an ideal time schedule.

Do daily planning. Take the time each night to manage one of your most precious resources: the next 24 hours.

Avoid distractions - work on only one item at a time.

Clear the clutter-we simply have too much stuff.

Reward yourself-do something nice for yourself after you have completed a specific task. Hang a carrot out there.

Maintain Balance - Our lives consist of Seven Vital Areas: Health, Family, Financial, Intellectual, Social, Professional, and Spiritual. Commit to spend a sufficient quantity and quality of time in each area and then your life will be balanced.

By recapturing a wasted hour here and there, you can make great increases in your daily productivity. Some top time wasters are: Shifting priorities, the telephone, losing things, lack of direction/objectives, attempting too much, ineffective delegating, and procrastination/lack of self-discipline. Does any of this sound familiar?

I am guilty of almost all of the time wasters. I have taken time management seminars in the past and usually come away thinking ~ organization and time management blah blah blah... it's not going to work for me. I think it's time I make an effort to really try. I can't afford not to. Can you?

Dental Insurance: Is it really a benefit?

Five years ago my employer began offering employees a company sponsored dental plan. The plan was instituted due to high demand from employees whose children would soon be in orthodontia.

The plan requires the employee to pay the entire premium using pre-tax dollars. Benefits kick in on a sliding scale. The plan pays benefits at a higher percentage each year, hitting maximum percentages the third year. This prevents members from enrolling, immediately having all their dental work completed, and canceling.

About half of my co-workers are enrolled in the plan. Lately, many of the single and married employees without dependants are doing the math; comparing actual cash output to benefits received. They are finding that even with high usage years (cavities and a crown) the costs are outweighing the benefits over the long haul. Instead they are opting out of the dental plan and setting money aside in a flexible spending account to cover dental expenses. The plan is cost effective if the employee has a couple of dependents, especially if they need braces.

The same could probably be said for some employer sponsored vision plans; the costs outweigh the benefits if you are paying the entire premium.

Bottom line: Not all benefit plans are cost effective. Do the math and consider your options before automatically enrolling in benefit plans

Why a second Blog?

For the past several years, or at least since I have been working in my current position, I have been somewhat obsessed with living below my means. My thinking has been if I spend less than I make someday I will lose the chains of full time work resulting in more free time to, as Oprah puts it, “Live my Best Life”.

The past year I have become somewhat discouraged with this process. Even though I have been making sacrifices and cutting back financially, it seems as if nothing has changed and that I actually have less free time than when I started. I realize some of this has been self-inflicted such as volunteering for more responsibility in my local professional organization. Currently I have been having fantasies of chucking all my frugal ways and heading out to the newly revamped Bayshore Mall to buy really expensive, unnecessary stuff. I know, however, that this is not the way to go and will continue the course hoping someday to have that much coveted additional free time.

I am going to use this second blog to explore my thoughts, feelings and discoveries from a financial point of view as I continue down this path towards a simpler life. I had difficulty coming up with a name for this blog that was catchy and wasn't already taken. So for now it is “A Little Bit of Finance.” Check it out.