Basic Budget Priorities: The 3 P's

One of the most often neglected, overlooked, or under- emphasized needs for most organizations is creating, and effectively using a properly designed and formulated budget. I have created many hundreds of budgets, and assisted/ guided/ counseled in the preparation of hundreds of others. One of the greatest frustration to someone like me, with a substantial background in financial services, as well as leadership training and consulting, is the attitude that many involved in leadership positions seem to possess about budgets. I have seen some who just believe it is a somewhat meaningless exercise, and others who even believe it is a waste of time. Others still, who often seem to believe that they are properly preparing budgets, seem to simply look at previous budgets, and, in essence add a percentage from year to year! Whether this is being utilized for a not - for - profit organization, any business entity, in personal financial planning, or, for example, as it pertains to realtors, in terms of operating their businesses, marketing themselves, and their client's houses, a keen understanding and/ or grasp of budget essentials, is helpful and needed. Those who feel strongly about the need for budgeting effectively and thoroughly believe in the three P's for creating a budget: Predicting; Prioritizing; and Preserving.

1. Properly prepared budgets predict the needs of any organization, or entity. They look at revenue and revenue trends, and give realistic estimates instead of pie in the sky, or overly optimistic predictions. On the expense side, they thoroughly examine the operations and needs of the organizations, in every and all areas where there are possible expenditures. Will present levels of staffing be sufficient, are they too high, or is greater staffing needed? What are the costs/ benefits involved? What factor or factors might impact revenues? What is organization doing (or not doping) to attract and maintain members, as well as sponsors and donors? What is the overall business plan, vision, goals, and mission of the organization, and how might certain actions impact that? Is there an anticipation for any large expenditures? Does the organization maintain reserves in the areas of maintenance, etc., to address these potential expenses in a proactive, prepared manner?

2. What are the priorities of the organization/ entity on a short- term, intermediate term and long term basis? Are monies being spend in a prioritized basis, and is the money on programming, communications, and other areas being done on a priority basis, where the most essential, relevant, pertinent, and pressing matters being given priority treatment?

3. What is the organization doing to safeguard its monies, and other resources? Have alternative approaches been continuously examined and re- examined to assure the group is getting the most bang for its buck. Have operational efficiencies been employed fully? When was the last time the budget was prepared on a zero- based budget basis, where every expense item, program, etc., is reviewed independently, to see if it optimally meets the needs of the organization? Are reserves monitored, and fiscally prudent policies in areas such as investments, accepting and using donations, etc., the rule, rather than the exception?

The strongest organizations realize that while there may be times that an organization may get away with less emphasis on budgeting and budget policies/ philosophies, in the long run, the groups that take this process seriously, on a continuous basis, remain strong, throughout both good times and leaner times. Individuals, and those handling funds, or expenses, in the course of their businesses, should merely apply these organization rules, to their own scenarios!

Understanding Human Nature - They Key to Effective Communication

How often have you personally wondered, or overheard someone else pondering the key components of successful, effective and meaningful communication? While perfecting communication skills undoubtedly encompasses numerous aspects and acquired traits/ knowledge, unless it begins with a clearcut focus on enhancing one's abilities and skills in terms of understanding human nature, there can be no way to effectively communicate. One of the most famous and successful life insurance salespersons of all times, Ben Feldman, insisted that success in any type of interpersonal sales required only about one percent technical knowledge, while requiring ninety nine percent understanding human nature. How can anyone effectively communicate his message if he lacks the ability to appreciate and understand the perspective, needs, nuances and preferences of others? The reality is that best salespersons, leaders, managers, etc., invariably are those that realize that the probability of getting one's message across necessitates effectively communicating, and that requires proactively seeking out learning as much as possible about human nature.Whether you are a Real Estate professional, Investment/ Financial Adviser, or Negotiations professional, it is essential to realize that it is often dangerous to over - generalize, rather than follow a one - size - fits - all mindset/ approach.

1. What does understanding human nature actually mean? In the vast majority of situations, it requires proactivity, rather than passive behavior, because one must use many of his senses, including his sight, hearing, etc., and pay attention to how others behave and act, and why. For example, the most successful salesperson is generally the one that finds his potential buyer's "hot button" and focuses on how the service and/ or product will improve something for the buyer. Understanding human nature means that the discussion must encompass needs, and unless one is willing and able to understand the various nuances, preferences, and even quirks, his ability to effectively communicate is limited and even diminished.

2. It is important to understand that others are generally far more interested, and therefore potentially motivated to action, when the discussion is about them, and their needs. Great communicators invariably discuss issues and ideas in terms of how they impact and serve others, and not merely in terms of services offered. Most people need to know how something impacts and effects them, and why, rather than merely being told about services provided. In order to do so, the priority must be placed on getting a better idea and understanding of human nature.

Great communicators invariably are those that prioritize participatory discussions, because once you get others to participate, you learn far more about them. A two way discussion is true communication, while merely making a statement without participation is talking at, rather than the necessary speaking to, one's potential audience. Remember and understand that we each have two ears, but only one mouth, and therefore, we should listen far more often, than we speak!
 

How We Interpret Economic Data & News?

Economic data and financial news might be the most analyzed and, at the same time, the least truly understood information in the news today. For example, is the fact that China's economy continues to grow good or bad news, and why? One analyst might report that China's continued growth is indicative that there is still growing worldwide demand, which should be good for the world's economies. At the same time, other analysts will see this growth as occurring as a result of the Chinese government pumping large infusions of monies into their economy, and at the same time, artificially keeping the value of the Chinese currency "cheaper" than it would be if it were permitted to be freely traded on world markets. Still another economic analyst states that this growth is causing runaway inflation and an overheated economy, that the analyst then refers to as "The flip side of the American economic problems." Every issue seems to have multiple interpretations, and the US Federal Reserve, appears to be quite sensitive to the potential ramifications of any actions they might take. However, aren't there also ramifications of doing nothing? How we gather and interpret Unemployment, joblessness rates, inflation, COLA (especially as it relates to indexing Social Security benefits), etc! Here, in Nassau County, Long Island, NY, where there is a supposed real estate tax cap, there is often a significant difference between that cap figure, and how much individual real estate taxes go up!

The economic analysts breathtakingly await the various weekly "reports," including the jobs reports (which should actually be referred to as the 1) Those submitting new preliminary unemployment applications; and 2) The official unemployment rate. Then, they argue about the numbers, which are invariably either better or worse than "expectations." Whose expectations, and why do we continue to refer to them if the actual numbers are almost either better or worse than anticipated? The official unemployment or joblessness rate is another curious number because it only includes those that are still actively searching for employment- that is, are presently collecting unemployment benefits. Therefore, this does not refer our count the under-employed, the consultants whose income have dwindled, commissioned salespersons incomes, or small business owners (who are ineligible for unemployment benefits). Many believe that the approximately 5.8% official rate becomes closer to over 10%, when these situations are also included.

The inflation rate, or the manner in which the Cost of Living rate are calculated is another controversial situation. When gas at the fuel pump, and home heating oil have risen dramatically, and airfares are significantly higher, and tolls and train fares have jumped, and food per ounce is significantly more money, am I the only one that wonders how the official inflation rate is stated as being very, very low? The price of eggs, the price per ounce of many foods (for example, many companies merely make smaller sizes, so they can claim prices are steady, and many other factors, tells anyone with common sense, that there is a significant difference between these official figures, and reality. When Donald Trump claims his father gave him a small loan of only $1,000,000, do you realize that inflation - adjusted, it comes to well over $8 million? Terms like seasonally adjusted, commonly used, essentials, non essentials, etc., further confuse the issue. Suffice it to say that I doubt there are too many people who believe that inflation number. Of course, for we conspiracy theorists, we might find it curious that the same government who has a vested interested in keeping the official numbers low (political, Social Security Indexing, government union contracts, etc), are also the ones that calculate this index.

One month we show improvement in housing starts or housing sold. Another month a drop. However, is this an increase or drop from what levels, and how long does a homeowner have to wait to have his home sold today versus a few years ago, and at what price point?

The point of this discussion is simply that we should all be cautious and beware when we see these financial and economic indexes and numbers. While they no doubt, may have some limited value, I question whether that value makes up for all the 'spin," confusion, and misinformation that we receive whenever any of this data is released.

Happiness Comes From Helping Others

The Founder of the renowned civic organization, Grand Street Boys, the late Judge Jonah Goldstein was fond of saying, "Happiness is the one thing in life that multiplies by division. The more you give to others, the more you have for yourself." Goldstein used this expression repeatedly at meetings in the 1940's. If everyone followed this, wouldn't the world be a better place? Dictionary.com offers two definitions for happiness: "1. the quality or state of being happy 2. good fortune; pleasure; contentment; joy." At the same time, Dictionary.com offers three definitions of happy: "1.pleased or delighted 2. pleasing 3. bringing good luck; fortunate." Obviously, Judge Goldstein felt strongly that for one to be truly happy, he must repeatedly bring joy to others as well as himself, thus providing one with a sense of joy, pleasure, delight and contentment.

So many people today seem to follow the "What's in it for me?" philosophy. It seems that too many people today often only "do the right thing" if they believe it will somehow materially benefit them. However, when one realizes that many of the wealthiest individuals in the world are also amongst the most miserable, it takes far more than merely the accumulation of material things, or self- satisfaction, to bring about true happiness. How many truly happy people can you honestly say that you know?

Have you ever truly considered what makes you happy? Does your profession/ job give you a sense of happiness or self - fulfillment? Only when there is a consistent synergy between your personal happiness and what you do for a living, will you provide the best quality service, etc! Whether you work for others as a wage - earner, or you provide services such as a Real Estate professional or Financial Adviser, unless you prioritize your client/ customer, rather than merely making a living, how can you possibly enjoy what you do, and be able to take pride? Many only look at the short - term, and attempt to take a shortcut towards their personal integrity, but, in reality, only when there is a direct relationship between your efforts/ endeavors, and your commitment to absolute integrity, will you ever truly be happy, and in the longer - term, meaningfully successful.
 
Besides being a well known judge in New York, Jonah Goldstein was famous for founding a civic and philanthropic group known as Grand Street Boys. Almost all the members of Grand Street Boys were professionals- - most of which were attorneys. The legal profession has often been much maligned, yet it is one of the first professions or occupations with an organized methodology of "giving back" to the most needy, via the "pro bono" process. Attorneys are regularly expected to, and do, perform a certain amount of "pro bono," or free legal work, for those unable to afford the cost of legal representation. Judge Goldstein encouraged widespread discussion and fabulous debating during the Grand Street Boys meetings, and in an interactive manner, encouraged members to "give back" to society, in any number of manners.

Why are so many "troubled" individuals so very unhappy? Some people have attributed this unhappiness to a variety of items, including financial reversals, financial pressures, "personal problems," or the often-stated, "He's just not a very happy person." Yet, all evidence points to the fact that those individuals that appear to be "happiest" are often those that "give back" more to society and to mankind. "Giving back" does not have to be financial, but it can be. However, merely donating money generally does not create the level of happiness that non- financial volunteerism does. Think about the people you have met who are the happiest - - - aren't they invariably the ones who volunteer more, are more charitable, and/ or more philanthropic? Should this not be a valuable lesson to all of us, and to society, especially in these difficult economic times, when many worthwhile charities so much need assistance?

Judge Goldstein was certainly a sage. He was an incredibly successful man professionally, yet he got more pleasure, fulfillment and happiness from "giving back" than from anything else. Wouldn't our world, especially in these troubling and trying times, be far better off if more of us emulated him?

The Importance of Setting Goals

One of the major reasons that individuals often do not achieve to their potential is that they fail to effectively set goals. Setting a goal gives one the opportunity to have "something to shoot for," and to focus on. There can be no true achievements if we do not set goals.

Whether this relates to a specific group, or any individual, it is important to recognize that goal - setting is an essential component to making a meaningful difference. How can anyone expect to get desirable results, if he does not focus on, and pursue a course of action, based on achieving a goal? The best salespeople always focus with this mindset, as to true statesmen, and the highest quality service providers, including professionals we might not ordinarily think of, in this regard, including providing the best service and performance as either a real estate or financial professional.
 
When any organization starts a project, it needs to set goals, in order to measure if the project was a success. In order to set goals, one should do the following (think about these, also, in terms of how they might relate to a variety of individuals, on a personal level) :

(1) Think about what is the purpose or aim of the project.

(2) Think of an Action Plan to complete the project (See any of my articles on action plans).

(3) Determine a financial budget.

(4) Forecast a manpower - usage budget.

(5) Create a realistic timeline.

(6) Be realistic, but "aim high."

(7) Figure out what assets or characteristics you and others have that will be helpful in accomplishing the necessary action to achieve your goal.

(8) Create a "wish list."

(9) Draw a line down the middle of the page. On the left side, list anything that might be helpful in achieving your aim. On the right side, list the obstacles that you can conceive of.

(10) Next to the obstacles, create an action plan to overcome those obstacles and challenges.
Many people speak of goals as if the mere creation of goals will cause you to achieve them. In my over thirty years of consultative sales and marketing experience, I have discovered that the creation of goals is merely the first step in accomplishing anything. Goals give you a parameter, to then create and work an action plan. Just as the mere creation of goals does not automatically cause success, the creation of an action plan likewise does not guarantee success.

In order to have success, one must first set the goals, then determine the best course of action, and then, most importantly "work the action plan." Nothing will get done unless all these steps are effectively done in sequence.

There are always individuals who look for a simple way to do something, bypassing effective and comprehensive planning, or stalling and setting no goals. Weak individuals become weak "leaders," and weak leadership is no leadership at all. When someone doesn't follow through on a personal matter, it hurts only that individual. When someone gets involved in an organization, and assumes a leadership position, lack of proper planning, organization and goal setting, is potentially disastrous. Goal setting is extremely important, but for one to achieve one's goals, action is necessary!

Price Is Always Important, But Not The Only Thing/ Consideration!

Especially in challenging economic times, people seriously consider how much things cost and what the price is. When I was the Chief Operating Officer of a natural products manufacturer years ago, I remember that our price point was a serious consideration, in order to best position our products optimally in relation to others. However, while pricing and costs are important factors, when it comes to conferences and conventions, a far more important factor is almost always perceived value.
In my three decades of hotel negotiations, event planning, and conference and convention planning and operations, I have witnessed repeatedly, situations where organizations over-emphasized only the price that participants would pay. In doing so, they often neglected creating a program and agenda that would attract attendees. Sometimes even more importantly, these organizations did not sufficiently emphasize the attendee's conference experience, and when that attendee went "back home," rather than being the organization's best ambassador, he reported a less than stellar experience. When selecting the best real estate professional or financial advisers, to serve you, understand that performance, skill, understanding, and negotiations, as well as other factors, are generally, far more essential than merely looking at something like the commission paid. What's the net impact, etc?
 
The almost laughable, if it were not so incredibly short-sighted, part of this is that the amount of "cost savings" that these organizers implemented, had little impact on attracting significantly more attendance. However, at the same time, this reduction created financial risk for the organization and an inability to provide a superior attendee experience.

Organizers must recognize that a small price decrease in the fee for attending a conference often has little real impact on attendance. If it works at all, it only works in local events, where there are few expenses incurred by attendees besides the registration fee. However, many conferences require travel and hotel costs, and those costs often "dwarf" the registration fees.

In addition, if an organization is going to lower its registration fee, by how much will they reduce it? How much is a significant enough reduction to encourage additional attendance? What will be the overall impact on what conference organizers can do, when revenues are reduced?

I have heard numerous conference and convention organizers state that the reduced revenues will be offset by increased attendance. However, what these organizers often under-estimate is the true cost to the conference per attendee. If it takes more attendees to generate the same revenue, and registration fees are reduced by, for example ten percent, how much will attendance have to go up to offset the drop in revenue combined by the true cost per attendee? In many cases, a ten percent registration fee reduction will require close to a twenty percent increase in attendance and registrations.

Unfortunately, like many things done by many organizations, their conferences are often run by well-meaning individuals, who are, nevertheless, less than professional conference and convention coordinators. Organizations must analyze both the short term and longer term ramifications of addressing solely the registration fee issue, without, at the same time, analyzing the perceived value aspect. It is essential that organizers fully understand all aspects involved, including, especially, understanding their niche or target market.

Remember that there are 2 component parts of value: actual value, and perceived value. BOTH are important considerations!
 

What Really Happened To The US Economy?

For most of the twentieth century, the American economy was considered the "rock" that all economic indexes and guides were based on. The worldwide pricing of most of the world's commodities, such as gold, silver, oil, corn, etc., have been priced based on the U.S. dollar. Of course, in recent times, when the U.S. dollar weakens against many other currencies, commodities such as oil have, at least partially, responded to this weakening, by seeing their prices and their "future" prices go up by an additional amount, to at least somewhat offset this weakening. Of course, many also believe that items such as: supply and demand; possible manipulation; profit - taking; etc., are also significant factors.

Various economists have many different opinions as to what and who were responsible for this weakening in the American economy, and of the U.S. dollar. Those using historical perspective always point out that when in the middle of the twentieth century, the U.S. dollar transitioned from a Silver Certificate to a Federal Reserve Note, that it weakened the perceived value internationally, of the dollar. Others point to the trillions of dollars of accumulated United States government debt, that today has made the interest service on the national debt the second largest component of the U.S. budget, behind only the military budget. In addition, most companies today are multi - national, and thus, the American economy, is often intricately tied to the world economic conditions.

In the 2000 election, with then President Clinton leaving a surplus budget in his final year, Vice President and presidential candidate Al Gore kept suggesting that Social Security payments be placed in a "lock box" instead of how they are presently handled, as just another "kitty" of government funds. This idea was never adopted, and we are constantly reminded that Social Security is running out of money. Isn't it ironic that while President Reagan in the 1980's was famous for, and is remembered for his tax cutting and his tax reduction and government spending reductions, that the Social Security "tax" raised dramatically, and is now about three times greater of a non-tax "tax" than it was when Reagan made his pledge. Of course, Social Security is a tax, and it is a rather regressive one at that, because even those below the level for paying taxes, still must contribute to Social Security, and that higher income individuals only pay on a specific amount of their earnings (which has been consistently raised to considerably over one hundred thousand dollars in earnings). Therefore, shouldn't Social Security be considered an entitlement (because it was financed by taxes, etc), than a benefit, and shouldn't balancing other factors in the budget, be unrelated to this program?

A study of the way our Federal Reserve has manipulated interest rates has caused many to question how responsible that institution might be towards the overall economic mess. Of course, the entire banking fiasco that began in about 2005, and still continues (to some degree), has seen huge amounts of "recovery" funds thrown in to rescue institutions that were "too large to fail," yet selectively certain institutions such as Lehman Brothers was permitted to basically do exactly that - fail. When did inflation become a good thing, and lower unemployment become something less than optimal? NO wonder the economy is so confusing to most of us!

The more one reads about the economy, the more one finds identifiable villains. There is no easy answer, no matter how much either one political party or the other claims there is. No one can be sure that if the recovery funds were not spent the situation would have been even worse, perhaps devastating. That is pure speculation. However, the reality is, that until the politicians begin to study playing partisan politics, and make job creation, energy independence/ policy, and the economy the top priority, we will see a continuation of trying times. It is time for the American electorate to demand responsible government, now. Yet, observation of the political campaign rhetoric currently being employed, it is difficult to feel confident about any of the suggestions or approached!