by The HLH Team
“Deep summer is when laziness finds respectability.”
-Sam Keen
Is the Summer Slump a Thing?:
Feeling sluggish lately? As the temperature rises and employees turn to thoughts of margaritas and campground, down goes the productivity. This can amp up not only your waste of talent, but could also spiral to create more defects, decrease safety, and ultimately erode your bottom line. Here’s how the dog-days affect your productivity:
- It takes 13% longer to finish tasks
- 45% of your workers feel distracted
- Your workplace attendance drops 18%
And that’s not even the bad news. Employee behaviour shifts dramatically as the temperature rises. You can expect to see:
- 63% more socializing
- Longer lunch breaks 51% of the time
- 49% of people ducking out a little early
Heat Matters:
Temperature plays a big role. We’re at our productive best around 20 degrees C or even cooler. David Letterman notoriously kept his studio at around 14 degrees C. He claimed that the cool air made the jokes crisper.
As the heat mercury rises, attention spans plunge. Productivity drops significantly after 25 degrees. If you don’t have A/C in your office, or even if you do, you may want to bring in a couple fans and close the blinds on south and/or west facing windows.
What Tactics Don’t Work:
Companies have tried and failed and tried again over the decades to perk up the summer slump. You’re fighting against nature, but there are ways to do it.
First, here’s what history has shown doesn’t work all that well:
- “Summer Fridays” (ie. making people work longer Mon-Thurs so they can take Friday off). This tends to results in increased stress levels and a productivity dip.
- Early arrival/ early departure: this is a “siesta-lite”, and involves making people start earlier so they can leave in the heat of the afternoon. But they’re tired from lack of sleep and the apathy rises quickly.
What Works:
You can’t mandate productivity from the corner office. Talk to your staff individually. Engage them frankly; they’ll appreciate that more than pretending there’s not an issue.
Tailor the solution to their needs. Do they have kids who are home from school? Then perhaps a day working remote a week is the best option.
In the office, try giving more frequent, shorter breaks during the day. Set up a comfortable spot where people can unwind for 10 minutes. Your staff will be thirsty, so have some cold water on hand. Giant companies like Google provide free catering to their staff and always have snacks and drinks available. Google isn’t doing that for charity; they’re doing it because it decreases waste.
Be flexible. Every employee has a different situation and is going to have different needs. Engage them instead of dictating to them. This is another way to eliminate waste, and like all waste management, the more proactive buy-in you have from your team, the more efficient you’ll be.
by The HLH Team
“If failure is not an option, then neither is success.”
-Seth Godin
“I’ve missed more than 9000 shots in my career. I’ve lost almost 300 games. 26 times, I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life. And that is why I succeed.”
-Michael Jordan
Everybody Fails:
What was the last thing you failed at? Was it a small failure, like forgetting to buy milk last night so you had to have toast instead of cereal? Or was it monumental, like a business venture you poured years and countless dollars into falling apart?
The business world is like the racetrack. We’re constantly looking over our shoulders to see how our competitors are doing. We think of a fail as a stumble, a chance for others to take the lead. Failure is not a stumble; it is a teacher. And those who fail the most, tend to succeed the most.
How Failure Makes You Successful:
Seth Godin, our modern bard of failure, spells out the link between failure and success.
- People who fear failure don’t take chances. When opportunities arise they stay a part of the chorus while others seize the spotlight.
- You usually fail because you’ve engaged with a project and taken on specific, measurable goals.
- The definition of the goal is what drives us to success. If we keep the goals vague, we will neither fail nor can we ever really succeed.
- If you fail, you know how to change your actions for next time. If you succeed, your success is measurable and real.
Instead of thinking of failure as a stumble, think of it as the opportunity to be able to look at your mistakes in the eye and learn from them. People who don’t invite failure never get that opportunity.
At the Bill & Melinda Gates Foundation, employees assemble for “Failure Fests”. Instead of ostracizing those who fail, they’re recognized as taking a chance and the team discusses what lessons they can learn for next time.
Do You Invite Failure:
All the business theory aside, failure still sucks when it happens. You feel like a deflated balloon, and it seems like a long road to inflate yourself again. So what kind of person invites it to happen?
You probably won’t fail a lot if you:
- Never take risks or tackle ambitious projects
- Stay safely and anonymously in the background
- Blame others for when things go wrong
- Worry about everyone else’s project but your own
- Not establish measurable, accountable goals for yourself
The person who fails is the person who takes risks, differentiates themselves from the crowd, and who is confident enough to look their own mistakes in the eye. If things don’t work out, they resist the urge to blame others and take responsibility.
Learning how to, in Seth Godin’s words, succeed at failing builds the attitude that will propel you to success. Accepting our failures conditions us to achieve success.
by The HLH Team
“A person who never made a mistake never tried anything new.”
– Albert Einstein
So you wanna sell your practice?
There are 2 important questions to ask. The first is whether or not the value of your practice is at its peak. This is gut feel, and largely determined by your energy levels as the key driver.
The second question (speaking of energy levels) is if you feel ready to move on. That’s not necessarily retirement. It may be that you’ve built up enough value to finance the next big step in your professional life.
How to Minimize Taxes:
Avoid the kneejerk “I should sell next year.” Starting 2-5 years out will have the best tax benefits. Here’s how:
- – You’ll have the time to consider whether to transfer the practice that you own personally into a professional corporation (your accountant can set one up)
- – You’ll have ample time to organize the assets and liabilities of your business to better present to a future buyer
- – You can consider whether you sell the assets of the practice/business (including goodwill) or the shares of the corporation. Selling your shares will ultimately help you tap into your lifetime capital gains exemption.
You’ll need to own the shares for at least 2 years before selling to get the exemption, plus time to set up the corporation and get the ball rolling. Not being in a hurry is your best bet tax-wise. The wait can help lead to great results from a tax perspective.
Consider that any gain on your personal income tax return (in the highest tax bracket in Alberta) will cost you 24% in taxes where a gain using your capital gains exemption will, in most cases, be tax-free.
Purifying your Practice:
No, it doesn’t involve any ancient rituals. To claim the capital gains exemption, and save a boat-load of tax, your shares must meet these criteria:
- – Must meet the 24 month holding period test (above)
- – Must be in a small business corporation (SBC – it’s how your accountant will structure your professional corporation)
- – Must meet 90% fair value test.
“Fair value” is the purity part. If more than 10% of your cash/ investments aren’t being actively used in the company operations (ie. excess investment capital), you’ll need to purify the corporation.
Sometimes purifying is straightforward (ie. using investments to pay down business debts), but other aspects, like extracting non-business assets, will require professional advice.
What’s it Worth?:
Now that we’re proactive about taxes, let’s ask the big question: what’s it worth? Selling your practice is like selling your home, in that its worth is ultimately determined by the amount someone is willing to pay, and you run the risk of losing your shirt without professional assistance.
Valuation is both complicated and surprisingly subjective. The key factors are:
- – Ongoing financial performance of the practice/business
- – Number of patients/ clients, and overall presence in your geographical marketplace
- – Economic climate
- – Number of potential bidders (hopefully more than 1)
Don’t rely on a canned formula to derive valuation. There’s too much at stake. This is where you need a professional the most, one who will take your business seriously and treat you like a unique entity with its own unique opportunities.
by The HLH Team
“You either disrupt your own company or someone else will.”
-Peter Diamandis
Manufacturing is changing. Quickly.
Companies are adopting advanced technologies quickly in order to stay competitive. Disruption is the new reality, and those who embrace it as an opportunity, instead of fearing it as a challenge, will sharpen their advantage.
When it comes to hiring, you can expect things to get a lot more competitive for high skilled positions. The people creating and operating the disruptor technology will have their pick of companies, whereas the low skilled workers being replaced will face an uphill road.
Those committed to Process Improvement will have powerful new tools at their disposal. Those who let waste slip through the cracks may find that, without a committed team, technology does little to increase their efficiency and bottom line.
The Robots are Coming:
Robotics is the most feared disruptor sweeping down on us. But while it’s easy to imagine fully automated factories putting swaths of people out of work, the reality of what’s happening is more complicated.
Fully automated factories are more popular overseas, especially in Asia, than in North America. We tend to be more skeptical of computers, here. Cobiotics, which is the pairing of a robot with a human operator, is becoming more popular in Canada than full automation.
One of the problems with computers is that they do exactly what we tell them to. Automation only works if there’s enough human talent on hand to build, program, and monitor it. If something goes wrong, it’s usually human error and the more automated you are, the more expensive tiny mistakes can be.
Robots can beat humans at many things, but they aren’t problem solvers. Tiny symptoms of waste don’t “bug” robots like they do us, and a computer isn’t compelled to make small changes to fix their environment.
The mainstreaming of robotics will herald a change in the job market. Like the other technological disruptors, it will threaten traditional factory floor jobs but will increase competition for high skilled jobs in software, development, and operators.
The Internet of Things:
Seemingly overnight, we’re able to lock our doors, adjust the thermostat and water our plants with our smartphones. When you apply that tech to manufacturing’s complex systems, you have the makings of a fundamental innovation disruption.
A connected factory would allow us to synthesize massive amounts of data quicker and analyze it on a deeper level than we ever could before. Expect competitive manufacturers to link all aspects of their assembly chain in real time in order to maximize efficiency.
Stanley Black & Decker adapted the Internet of Things into one of its plants in Mexico. The resultant change in efficiency, just by being able to tweak things like required voltage, optimal temperature, and monitor time waste, was impressive. Overall equipment effectiveness increased by 24% and output by 10%.
The Internet of Things is a potential boon for Process Improvement. Those wanting to eliminate waste incrementally over time will have access to more data and insight into where their waste comes from than ever before. Expect companies that embrace this disruptor pro-actively to start to emerge from the pack.
by The HLH Team
“Education is the best economic policy there is.”
-Tony Blair
What’s Your Perspective?
So much depends on attitude. Alberta’s economy was cut down when oil prices tumbled. It’s growing again, but modestly. And the sectors hit hardest, like energy, aren’t making the cavalry charge back to prosperity.
In 2017 and beyond, most forecasts point to a slow rebound. Whether that’s good news or not depends on your perspective. If you haven’t reduced your spending in the last 2 years and are pacing your office waiting for the boom times to return, modest growth is a bitter pill.
But, if you’ve cut all the expenses that the customer is not willing to pay for, then you’ll probably have trimmed enough waste to remain in the black, however painful it’s been, that modest growth could all go to the bottom line.
In other words, did you get brutal with your internal waste when oil started to plunge, or did you hold onto the expense accounts and are just waiting for the boom to come back?
Oil & Jobs:
2 key indicators for our economy, jobs and oil, tell the story. We’ve had some very strong jobs reports, but the dominant trend is caution. The sheer volume of layoffs in the past couple of years have changed Alberta’s job market and our consumer buying power in a fundamental way. We got used to the “boom” being normal, and things are not going to return to normal anytime soon. While that’s good news if you’re hiring talent, it’s bad news for selling pretty much anything.
The World Bank forecasts that although oil prices are heading up, it’s a long, sustained road upwards. Their forecast doesn’t have crude crossing 470/ barrel until 2025 and no $100 marks in site. The U.S. Information Administration forecasts that a barrel will average $55 in 2017 and $57 in 2018.
While a long way from the low of $26.55 it hit in January, 2016, it’s not enough to bring back “the boom.” The consensus is that our economy is growing like a turtle: slow and steady.
While growth is forecast, it’s not guaranteed. Events out of our control, from El Nino to Trump, can be disrupters. Also, while oil is on a slight upswing, big industry lags a couple years behind. Big projects planned for 2016 are winding down, but new ones aren’t following.
What You Can Do:
You can’t control the price of oil. But you can control the money that’s wasted needlessly in your company every day. Oil prices don’t sink companies; the 8 Wastes do. (Intro To The 8 Deadly Wastes). If you commit to eliminating waste, you’ll see the impact.
Attitude guides actions. Instead of “I’ll weather this storm and make it up in the good times,” consider “I’m going to find out what my customer isn’t willing to pay for and eliminate it.” Perspective starts with you and percolates down to your team and company.
Cutting waste doesn’t mean firing people. From inefficient transport schedules to machine downtime from lack of regular maintenance, waste is everywhere. Devote a portion of each day to finding it and pulling it out like a weed.
Being brutal with waste isn’t about dramatic actions. It follows the same pattern our economy is taking: small changes that, when sustained cumulatively over time, add to big cost savings. It’s the art of discipline, patience and, most importantly, perspective.
by The HLH Team
“If you’re trying to create a company, it’s like baking a cake. You have to have all the ingredients in the right proportion.”
– Elon Musk
Incorporation 101:
A lot of professionals have their own businesses. If you have one, you’ve probably wondered about whether or not to incorporate. If your business is growing, it’s likely more a question of “when” rather than “if”.
There are no formal rules as to when to take the plunge. It really should be tailored to each individual situation and depends on factors such as:
* Personal Liability – Once incorporated, typically only your corporate assets can fall victim to creditors or lawsuits. These third parties will not have as much ability to threaten your personal finances.
* Income Splitting – Does your significant other fall in a lower personal income tax bracket? A corporation can become a way to even out your personal incomes to reduce the overall tax burden on your family.
* Deferring Income – If you don’t need all the money that your business is making in any given year, you can keep the extra in the company for as long as you would like before having to bear the burden of personal taxes. This often allows you to delay tax payments until you fall in a lower tax bracket which leads to overall tax savings.
Pros & Cons:
Let’s break this down:
Pros:
Reduces Personal Liability: If an unincorporated business hits rough financial waters and you can’t pay your bills, creditors can go after your personal assets (house, bank accounts, etc). Corporations are considered separate legal entities, so your creditors will typically go after your corporation and its assets, not you and your personal assets.
You have Options: With an unincorporated business you have one way to get paid, and the taxman knows it. In a corporation you have a choice between salary, dividends, bonus or a combination, whichever is the most tax efficient. You can also take advantage of income splitting (Income Splitting Article).
Defer Your Taxes: If you don’t need business earnings for personal use, you can leave them in the business and defer your personal tax.
Debt Repayment: If purchasing an existing business, incorporation of a holding company may allow you to make your debt repayments to the vendor on a tax-preferred basis.
Employee Benefits: You’ll have more tax-favourable options to offer tax-free benefits to your employees to increase retention and attract the best candidates.
Cons:
Fees: You’ll need a lawyer and an accountant to incorporate, so plan to incur some professional service and filing fees. However, it pays for itself quickly (often in just a year or two) in tax savings. Remember that you get what you pay for, and going for the cheapest consultants won’t maximize your advantages.
Can’t Claim Losses: The shield against your personal assets goes both ways. If your business fails, you’ll only be able to write off the amount you invested personally against your personal income, not the corporation’s accumulated losses.
There’s Paperwork: You’ll need to file a separate tax return, an annual return, etc. It’s standard stuff, but you’ll need to be another level of organized if you’re going to do it yourself. Finding the right professional advisors to help guide you through these additional challenges will definitely be a worthwhile exercise.
How to Get it Done:
This is one of the biggest steps of your professional life, so find a qualified professional who won’t rush you, but will take the time to discover the opportunities that your personal situation allows. Every individual (and their business) is unique, so the structure and ownership of every corporation will be different. Take the time up front to ensure your accountant gets to know where you’re coming from, and more importantly, where you’re going. The proper foundation will help your business ensure both its current and future success.
