Root Cause & Burning Down the House

Root Cause
In health issues, the difference between treating symptoms and curing a medical problemseems obvious. We know that taking painkillers for a broken toe, will not cure the toe but will dull the pain.

Moving into the world of business, finding the root cause is like finding the medial problem. When a problem arises at work, how you approach it will either fix the surface issues with the problem likely happening again or you can find and treat the root cause by developing a process to eliminate the problem.

Using Root Cause Analysis helps answer questions of why the problem incurred in the first place:
Determine what happened
Determine why it happened
Figure out what to do to reduce the likelihood that it wil happen again

Most root causes will fit into these three areas
1. Physical causes - Something broke or didn't perform. The brakes were faulty; the door won't latch properly; the faucet is leaking.

2. Human causes - Someone did something wrong or just didn't do something that was needed. Human failures have their own causes including "I forgot", "I thought so-and-so was doing that", "That's not in my job description", "Sue did it that way" and . . . a myriad of other excuses when things go wrong.

3. Organizational causes - A system, process or policy that staff use to make decisions is faulty or no longer is applicable but still being used. This often has "but we've always done it that way" in the excuses.

Root Cause Analysis can be applied to almost any situation. Asking questions is essential to getting to the bottom of a problem. Questions are essetial and be wary of finding blame. Blame will often help mask a root cause.

Copyright 2010 Linda Lucas Fayerweather MBA EA
http://www.changinglanes.biz/
419-897-0528
linda@changinglanes.biz
Business Plans Make Profit!

Burning Down The House
Election Day is almost here, and that means it's time for candidates to start flinging you-know-what at each other like monkeys at the zoo. Taxes are a key issue this election, so it's no surprise that candidates are scouring each others' tax returns for anything they can use for political ammunition.

Former Portland Trailblazer center Chris Dudley is running for Governor of Oregon. He's a Republican, so you would expect him to oppose higher taxes. But he's come under fire, almost literally, for some personal tax planning that may have saved him as much as $140,000.

In 2002, Dudley paid $1.12 million for a 4,927 square foot house on nearly two acres overlooking Oswego Lake Country Club. Most of his prospective constituents would have been perfectly happy with four bedrooms, four bathrooms, three fireplaces, and a four-car garage. But Dudley wanted something bigger. He could have renovated the existing house. He could have bulldozed it and started new. But neither of those would have been tax-deductible. So instead, Dudley donated the house to the Lake Oswego Fire Department. Firefighters used the house for a series of drills in June, 2004, and Dudley took a charitable deduction for the house's $350,000 appraised value.

Back in 1973, the Tax Court issued a decision specifically approving this strategy (Scharf v. Commissioner, TC Memo 1973-265). But since that decision, Congress has changed the law on losses related to demolition of property, and the IRS has cracked down on similar gifts. Earlier this year, the IRS won a high-profile cases against former Ohio State quarterback and ESPN analyst Kirk Herbstriet, who claimed a $330,000 deduction for donating his Columbus-area home to the Upper Arlington Fire Department. However, the Tax Court's decision in Herbstriet's case turned on the validity of the appraisal that Herbstriet used to establish the value of the donation, and noton the validity of the strategy itself.

The Dudley controversy is actually a great example of what goes into proactive tax planning. Charitable gifts are typically allowed only for gifts of "complete interests" in property. Does burning down a house qualify as a gift of a "complete interest"? And gifts of property are generally valued at "fair market value." How much was Dudley's house really worth? Would anyone pay $350,000 for the house without the land underneath it? Would the fire department actually pay that much just for live fire training?

Clients sometimes mistakenly believe that taxes are just about "the numbers." But tax law and tax planning are really about far more.
What sort of expenses are deductible from your income?
How can you justify them to an increasingly skeptical IRS?
And how can you document them to protect your deductions?

Copyright 2010 Tim Pinkelman, CPA
Accounting Center & Tax Services, Inc.
419-882-9255 or 734-847-0400
http://www.accounting-centers.com/

Waste and Wasting

The Seven Deadly Wasters - Lean Waste Identification

When someone asks me "what is Lean Office or Lean Service" I will go to the short answer and say "Lean is a continuous improvement process that helps businesses put systems in place leading to sane employees, happy customers and increased profits."

The true key to Lean is a identification and elimination of waste! Muda is the Japanese word for waste and the seven deadly wastes identified by Taiichi Ohno (1912-90) of Toyota are:

1. Overproduction: Anything that is more than customer demands. Overproduction can hide other defects.
2. Waiting or Delay: Waiting for anything - people, materials, machines or information are all wastes. Often in a service business waiting can lead to taking the "low hanging fruit" or business that is easy to get but often not matching your perfect customer.
3. Unclear communication: Communication needs to be clear and understandable to staff, customers and vendors. The time spent re-communicating is better spent building strong relationships.
4. Over processing: This can be anything from re-entry of data to duplication of a task by different department.
5. Inventory: Having too much or not enough of supplies. Running out of toilet paper or having toner for the "old" copy machine still on the shelf are great examples of inventory tracking.
6. Unnecessary Movement - waste of motion: This can be from bad ergonomics to poor layout of business machines.
7. Defects or Errors: The cost of redoing or correcting anything! As my dad would say, "Linda, if you don't have time to do it right the first time, when will you find time to correct it?"

Start small this week and see what errors you can detect in your company. Identification is the first step to correction. Before you "start correcting" look around and make sure you find the ROOT cause! We will talk about that next week.

Copyright 2010 Linda Lucas Fayerweather MBA EA
http://www.changinglanes.biz/
419-897-0528
linda@changinglanes.biz
Business Plans Make Profit!

Waste Management
In a 2007 study on municipal solid waste (MSW), Americans generated roughly 254 million tons of solid waste. Further, 169 tons were discarded into the municipal waste stream to be disposed of for energy recovery efforts like recycling or becoming contents in our landfills. Many people assume that "junk" mail makes up the bulkof the MSW. Here's the real deal about what's going into our landfills and recycling efforts:Making the most of marketing has become a opportunity of looking where the discards end up.

2.1% Standard Mail
2.2% Disposable Diapers
2.3% Plastic Bags, Sacks & Wraps
2.3% Magazines and Newspapers
3.0% Glass beer and soft drink bottles
4.9% Corrugated Boxes
5.5% Furniture & Furnishings
6.9% Yard Trimmings
18.2% Food Scraps

Copyright 2010 Rebecca Booth
Marketing Goddess
Imagine That!
419.855.3399
Celebrating 13 years of delivering results for our clients.
http://www.rebeccaboothmarketinggoddess.com/
Source: 2007 MSW Characterization Report. Source Note: "The items show here do not represent all items in MSW, and therefore do not total 100%.



Muda QuotesWasteful Quotes! Who would have thought this was such a popular topic. Enjoy.

"A man who dares to waste one hour of time has not discovered the value of life."  Charles Darwin

"All the waste in a year from a nuclear power plant can be stored under a desk."  Ronald Reagan

"Architecture is the art of how to waste space."   Philip Johnson

"Be in the habit of getting up bright and early on the weekends. Why waste such precious time in bed?"   Marilyn vos Savant

"Boredom is the feeling that everything is a waste of time; serenity, that nothing is."   Thomas Szasz

"Don't waste your time away thinkin' 'bout yesterday's blues."   Jon Bon Jovi

"Take time for all things: great haste makes great waste."  Benjamin Franklin

"I wasted time, and now doth time waste me."  William Shakespeare

"Feeling sorry for yourself, and your present condition, is not only a waste of energy but the worst habit you could possibly have." Dale Carnegie

Gary went for a ride!

That is my office window upper left!

What beautiful day in the garden today and before winter, the sludge that settles to the bottom in a small garden pond needs to be removed.  Well, my front pond - better known as my office entertainment center - has three wading pools for birds and a holding pond that is deep enough for a couple fish to live through the winter. 

This front pond started with 3 gold fish which are considered lucky and 3 is an auspicious number.  Several years later, I added some minnows after fishing and two of those minnows were really very small blue gills, a variety of sun fish.  After eight years, they've never produced young, have eaten the goldfish, and do a great job of keeping the mosquitoes at bay.  My daughter named them Barry and Gary Bluegill.  Barry will actually get 80% of his body out of the water for a worm. Not as cute as a dolphin, but he is really cute to me. 

So while scooping out the sludge, I look carefully to make sure that I don't accidentally catch a fish.  By the way, sludge is smelly, really smelly but also it is very rich in nutrients which is why it needs to be removed from the pond to save the oxygen in the pond.  With each scoop, I'd look carefully for movement and then dump it in the wheel barrow.  With a full load, I headed to the garden to dump this free fertilizer.  You guessed it, Gary, the small blue gill had been in the wheel barrow for who knows how long, swimming and breathing in the muck and now he was flopping around in my garden.  I carefully scooped him up and returned him to the pond.

So what does this have to do with business?  I think it is just as simple as don't throw out the baby with the bath water or if you dig enough in a pile of smelly stuff you might just find a prize.  Have a great weekend.

Problem Solving

Solve the Problem . . . Systematically

A hose is a delivery system and even as a wonderful garden tool, it does have its problems. Hoses kink, twist and become knotted and if like me, you actually purchased a new fangled "non-kinking" hose, alas, it too will kink when you least expect it. In the end if it has no leaks, it delivers the water. When you find solving a problem is a twisted knotted mess, take a deep breath and try this 7-Step Problem-Solving Model for serious problems.
-------------------------copy, print & keep--------
1. Describe the Problem
2. Describe the Current Process
3. Identify Root Causes
4. Develop a Solution and Action Plan
5. Implement the Solution
6. Review and Evaluate the Results
7. Reflect and Act on Learnings
-------------------------------------------------------------

When faced with a problem from a unique employee or a failed process, often we miss steps 1, 2, 3 and go directly to number 4 and forget that implementing the solution must be followed by evaluation and reflection to maximize success. At least I have the winter to contemplate the root cause of my garden hose dilemma.

Copyright 2010 Linda Lucas Fayerweather MBA EA
http://www.changinglanes.biz/
419-897-0528
linda@changinglanes.biz
Business Plans Make Profit!

How You Treat People in Public . . .
How you treat people in public will ultimately determine your referral success. My business partner, Bob Burg, has taught me an important rule; "All things being equal people will do business with, and refer business to, those people they know, like, and trust." So what's that have to do with the way you treat people in public? Everything! I've heard many clients tell me "We've got customer service down pat!" or "We put "U" in customer service." only to fall flat on their face when it comes to simple etiquette.

• How do you interact with others around you when you're serving a customer?
• How do you communicate to your employees while clients are within hearing?
• How do you treat unexpected visitors - or salespeople - when you're busy?
Don't be too quick to dismiss any of those questions because your clients aren't!

One of the rule's qualifiers, trust, actually has a double meaning. Of course your clients and customers have to trust what you say and what you provide otherwise they wouldn't be doing business with you. But here's the real meaning. If you want people to refer business to you they have to be able to trust that you'll treat their referrals as well - or better - than you do them. Perception is reality. Treat your employees, your family, or even the unannounced salesperson, with same respect you'd give your best customer and they all will keep coming back. And they'll bring their friends and peers.

Copyright 2010 Todd Pillars. Todd teaches business owners and sales professionals how to generate virtually endless referrals, easier and faster than they ever thought possible. Contact him today at 419-855-2273 or toddpillars@burgintl.com. You can also find out more information about his Endless Referrals Workshops at http://www.burgintl.com/toddpillars.

Capture and Taxes

Capture That Thought
What is your capture tool? Is it your PDA, your notebook, your laptop or maybe a little of each? The purpose of a capture tool is to catch and retain all that comes in each day. This takes those thoughts out of your mind and puts them all in the same place to retrieve later. This capture tool should be designed to help you be more productive by staying with the "do-nows" and not being dragged into the "not-doing-now" or "never-doing-now" world of work.

Step 1 - Capture: Deciding on how you want to capture information may require redesigning some of the things you are doing. Oh, yes, what works for me may not work for you. The key to a good capture tool according the Brian Stuhlmuller from "Mission Control" is having it with you at all times. So unless you sit in an office all day, the three most popular for those that roam around are a PDA, a microcassette recorder or a 3 "X 5" spiral notebook.

Step 2 - Save for retrieval: Now, when you return to your office, you need to decide what will you do with this information. A PDA should nicely sync with your personal information manager system (like Outlook). If it doesn't, find out how to make it. This is important if anyone other than you needs to see your calendar. With any handwritten notes you will either file them or scan and digitally file. Think of the final resting place for information as a process that you always will follow.

If all this sounds like too much work, think about the last time you lost that piece of paper . . . how much time did you spend tearing your office apart trying to find it?? A capture tool and process will mean Ben Franklin was right when he said "A place for everything, everything in its place". He was Lean before it was cool!

Copyright 2010 Linda Lucas Fayerweather MBA EA
http://www.changinglanes.biz/
419-897-0528
linda@changinglanes.biz
Business Plans Make Profit!
Investments and Taxes
If you buy mutual funds in your taxable portfolio (meaning outside your IRAs or retirement plan), here's a timely warning for avoiding an ugly year-end tax trap.

Mutual funds -- especially stock funds -- generally pay two types of dividends at the end of the year:

• "Income" dividends consist of income earned by the fund's portfolio - bond interest, stock dividends, etc. These are generally taxed as ordinary income whether you take them in cash or reinvest them in new shares. (However, income from "qualified corporate dividends" is taxed at special lower rates and capped at 15%; Treasury income is free from state income tax; and municipal bond income is free from federal and most state tax.)

• "Capital gain" dividends are profits from sales of fund assets. These are generally taxed as long-term capital gains, regardless of how long you own the shares. They're taxed when distributed whether you take them in cash or reinvest them.

Paying tax on income you earn is bad enough. But paying tax on income you don't really get is worse!


How can that happen?
In today's market, you may be thinking of taking cash off the sideline and putting it back in the market. If you do that before the fund you buy pays its dividends, you'll get stuck paying the tax on that dividend -- even though you haven't really "earned" the income or capital gain that you're paying tax on!

If you're looking to invest now, find out whether the fund you like is anticipating substantial dividends. A little homework here can save a lot of tax down the road.

You might also consider index funds or exchange-traded funds, which passively track indices like the S&P 500. These funds avoid the frequent sales that rack up taxable gains. That's because they generally sell only when they need to redeem shares, or when the underlying index itself changes.

What's the bottom line? If you're looking to shuffle your portfolio, pay attention to taxes. You don't control whether markets go up or down. But you do enjoy a surprising amount of control over the taxes you pay. Take advantage of that control whenever you can to turbocharge your investment performance.

Remember, it's what you keep that counts!

Tim Pinkelman, CPA
Accounting Center & Tax Services, Inc.
419-882-9255 or 734-847-0400
http://www.accounting-centers.com/