As a business owner it is important to study and understand what works and what does not. One trend I noticed in profitable and sustainable businesses is a low overhead. Many of the corporations that are over 1000 years old have an overhead of between 10 and 20 percent. Also they tend to apply a rule of thumb regarding compensation – that is all rise and fall together. If one part of company fails it affects other parts of the company this included bonuses. All share in the success of the company and everyone who works is considered a stake holder in its success.
Knowing this is shocks me that our own government if we use that model has 25% overhead – what can we derive from this fact? Why do we pay taxes? What is the purpose of the Federal Government?
Source: Tax Foundation.
The nation had few taxes in its early history. From 1791 to 1802, the
In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. It was a forerunner of our modern income tax in that it was based on the principles of graduated, or progressive, taxation and of withholding income at the source. During the Civil War, a person earning from $600 to $10,000 per year paid tax at the rate of 3%. Those with incomes of more than $10,000 paid taxes at a higher rate. Additional sales and excise taxes were added, and an “inheritance” tax also made its debut. In 1866, internal revenue collections reached their highest point in the nation's 90-year history—more than $310 million, an amount not reached again until 1911.
The Act of 1862 established the office of Commissioner of Internal Revenue. The Commissioner was given the power to assess, levy, and collect taxes, and the right to enforce the tax laws through seizure of property and income and through prosecution. The powers and authority remain very much the same today.
In 1868, Congress again focused its taxation efforts on tobacco and distilled spirits and eliminated the income tax in 1872. It had a short-lived revival in 1894 and 1895. In the latter year, the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.
In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the
In 1981, Congress enacted the largest tax cut in
On Oct. 22, 1986, President Reagan signed into law the Tax Reform Act of 1986, one of the most far-reaching reforms of the
Following what seemed to be a yearly tradition of new tax acts that began in 1986, the Revenue Reconciliation Act of 1990 was signed into law on Nov. 5, 1990. As with the '87, '88, and '89 acts, the 1990 act, while providing a number of substantive provisions, was small in comparison with the 1986 act. The emphasis of the 1990 act was increased taxes on the wealthy.
On Aug. 10, 1993, President Clinton signed the Revenue Reconciliation Act of 1993 into law. The act's purpose was to reduce by approximately $496 billion the federal deficit that would otherwise accumulate in fiscal years 1994 through 1998. In 1997,
President George W. Bush signed a series of tax cuts into law. The largest was the Economic Growth and Tax Relief Reconciliation Act of 2001. It was estimated to save taxpayers $1.3 trillion over ten years, making it the third largest tax cut since World War II. The Bush tax cut created a new lowest rate, 10% for the first several thousand dollars earned. It also established a slow schedule of incremental tax cuts that would eventually double the child tax credit from $500 to $1,000, adjust brackets so that middle-income couples owed the same tax as comparable singles, cut the top four tax rates (28% to 25%; 31% to 28%; 36% to 33%; and 39.6% to 35%).
The Jobs and Growth Tax Relief and Reconciliation Act of 2003 accelerated the tax rate cuts that had been enacted in 2001, and temporarily reduced the tax rate on capital gains and dividends to 15%. In 2004, the
Two tax bills signed in 2005 and 2006 extended through 2010 the favorable rates on capital gains and dividends that had been enacted in 2003, raised the exemption levels for the Alternative Minimum Tax, and enacted new tax incentives designed to persuade individuals to save more for retirement.
The federal government of the United States is the central current reigning United States governmental body, established by the United States Constitution. The federal government has three branches: the legislative, executive, and judicial. Through a system of separation of powers and the system of "checks and balances," each of these branches has some authority to act on its own, some authority to regulate the other two branches, and has some of its own authority, in turn, regulated by the other branches.[1] The policies of the federal government have a broad impact on both the domestic and foreign affairs of the
President
Courts
Law
Agencies
Some agencies are legislative, some are executive, some are judicial.
States and territories
Comparison
Web site and works
So if we apply a corporate model the Government is the overhead of the company being the
What is the difference between management and leadership? It is a question that has been asked more than once and also answered in different ways. The biggest difference between managers and leaders is the way they motivate the people who work or follow them, and this sets the tone for most other aspects of what they do.
Many people, by the way, are both. They have management jobs, but they realize that you cannot buy hearts, especially to follow them down a difficult path, and so act as leaders too.
By definition, managers have subordinates - unless their title is honorary and given as a mark of seniority, in which case the title is a misnomer and their power over others is other than formal authority.
Managers have a position of authority vested in them by the company, and their subordinates work for them and largely do as they are told. Management style is transactional, in that the manager tells the subordinate what to do, and the subordinate does this not because they are a blind robot, but because they have been promised a reward (at minimum their salary) for doing so.
Managers are paid to get things done (they are subordinates too), often within tight constraints of time and money. They thus naturally pass on this work focus to their subordinates.
An interesting research finding about managers is that they tend to come from stable home backgrounds and led relatively normal and comfortable lives. This leads them to be relatively risk-averse and they will seek to avoid conflict where possible. In terms of people, they generally like to run a 'happy ship'.
Leaders do not have subordinates - at least not when they are leading. Many organizational leaders do have subordinates, but only because they are also managers. But when they want to lead, they have to give up formal authoritarian control, because to lead is to have followers, and following is always a voluntary activity.
Telling people what to do does not inspire them to follow you. You have to appeal to them, showing how following them will lead to their hearts' desire. They must want to follow you enough to stop what they are doing and perhaps walk into danger and situations that they would not normally consider risking.
Leaders with a stronger charisma find it easier to attract people to their cause. As a part of their persuasion they typically promise transformational benefits, such that their followers will not just receive extrinsic rewards but will somehow become better people.
Although many leaders have a charismatic style to some extent, this does not require a loud personality. They are always good with people, and quiet styles that give credit to others (and takes blame on themselves) are very effective at creating the loyalty that great leaders engender.
Although leaders are good with people, this does not mean they are friendly with them. In order to keep the mystique of leadership, they often retain a degree of separation and aloofness.
This does not mean that leaders do not pay attention to tasks - in fact they are often very achievement-focused. What they do realize, however, is the importance of enthusing others to work towards their vision.
In the same study that showed managers as risk-averse, leaders appeared as risk-seeking, although they are not blind thrill-seekers. When pursuing their vision, they consider it natural to encounter problems and hurdles that must be overcome along the way. They are thus comfortable with risk and will see routes that others avoid as potential opportunities for advantage and will happily break rules in order to get things done.
A surprising number of these leaders had some form of handicap in their lives which they had to overcome. Some had traumatic childhoods, some had problems such as dyslexia, others were shorter than average. This perhaps taught them the independence of mind that is needed to go out on a limb and not worry about what others are thinking about you.
This table summarizes the above (and more) and gives a sense of the differences between being a leader and being a manager. This is, of course, an illustrative characterization, and there is a whole spectrum between either ends of these scales along which each role can range. And many people lead and manage at the same time, and so may display a combination of behaviors.
| Subject | Leader | Manager |
| Essence | Change | Stability |
| Focus | Leading people | Managing work |
| Have | Followers | Subordinates |
| Horizon | Long-term | Short-term |
| Seeks | Vision | Objectives |
| Approach | Sets direction | Plans detail |
| Decision | Facilitates | Makes |
| Power | Personal charisma | Formal authority |
| Appeal to | Heart | Head |
| Energy | Passion | Control |
| Dynamic | Proactive | Reactive |
| Persuasion | Sell | Tell |
| Style | ||
| Exchange | Excitement for work | Money for work |
| Likes | Striving | Action |
| Wants | Achievement | Results |
| Risk | Takes | Minimizes |
| Rules | Breaks | Makes |
| Conflict | Uses | Avoids |
| Direction | New roads | Existing roads |
| Truth | Seeks | Establishes |
| Concern | What is right | Being right |
| Credit | Gives | Takes |
| Blame | Takes | Blames |
Without going any further I will ask this simple questions:
With all of the things happening today this thought has been ringing in my head. I debated on whether to post because I know some will find offensive. It is my belief that most people operation emotionally at a 6-8 year old level from a maturity standpoint and further they have no concept or desire for things like accountability, responsibly, etc – their concerns only lie with how things affect them and have little regard to how what they do affects those around them.
Remember back in grade school and high school.
Childlike behaviour in adults – 8 Articles
If you are old enough you remember the song “For the love of Money” by The O'Jays .
Bottom lines are:
The purpose of business is to make money and a business is literally nothing more from a legal standpoint than a virtual person. So I guess you could argue that a business owner has a split personality and it is even a socially acceptable one not needing medication (smile!) I am sorry just needed to inject some humor – I know sort of dry but back to topic – the person of business if the make money – that is non negotiable and is a fact.
Lets focus on how you make money – regardless of the type of business you are in (goods or services) you can either make money one of two ways – earn it or steal I, worded less offensively – you can either provide a benefit for someone so that they are willing to compensate you in an equitable fashion for that solution or you can seek ways to take advantage of people and prey on their weaknesses exploiting them to only your own benefit. Here is the caught – the first is sustainable the latter is not and yet many choose strangely enough the latter and are shocked when their efforts implode.
There is an old saying “people do not care how much you know until they know how much you care” – so as a business owner you should seek to make sure you are putting the needs of your client first – by taking car of them you have the opportunity to create a positive cash flow and generate good will which in turn leads to more business. If you at some point want to grow your business you have to expand it by growing past the point of trading time for money. So long as you are in the day to day operation of your business you are your business and you are not really a business owners. Because we by nature like to keep our hands in everything this is the hardest thing for a business owner to learn – to let go and trust because lets face it many of us started our businesses to regain a sense of control or because we do not trust other people to have our best interest at heart. Often we started off as corporate employees with ambitions to climb the ladder and then we found out the price and in some cases it involved violating out ethics or selling our soul – not something we were willing to do. Something to be careful of and a group I am not really going to address are those that consistently self sabotage – not much I can say about them or to them except get professionally help.
As a business owner to make money providing solutions there are many things you must learn, the least of which is who you are. Your nature as a person already gives you a disposition regarding the type of business owner you will be – exploitive selfish people tend to run those sort of ventures, but as giving people tend to run service and solution oriented ventures. The key here is knowing yourself and then making a decision as to who you are and what type of business owner you are or want to be and whether you want a sustainable business.
So, the questions are:
All of these factors need to be taken into account in what you do and how you do it.
Often as a business owner people assume we have more money than have. People often think we are rich when in fact so often our employees or suppliers make more than we do. Unlike the people we provide for our incomes are not steady and in fact our revenue is based not on the work we do as much as the solutions (be they good or services) we supply. Our true money is made because of our brains as such keeping a clear head is important.
This global economy has affected me and yet I am working to position myself such that to survive. Focusing on things that generate revenue and people committed to helping me and cutting loose of those things and people who are not. Reducing and eliminating expenses and working on generating more revenue.
Cash flow is important ant and mastering how it works for any business is important. For money to flow (like a river) there must be streams feeding it and it is important to create enough streams such that barring a catastrophic event your reviver is always supplied with fresh water (cash). Further the discharge should not be drained faster than the inflow or the river will eventually dry up.
On a personal note my goals are to erase my debts by the end of the 3rd qtr 2009 and by 4th quarter 2010 have 6 months of cash reserve.
Investopedia explains Cash Flow
Definition - A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time; or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization.
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| Pay yourself every payday | |
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| Create space in your budget to save Calculate how you can reach your savings goal |
| Cultivate a rainy-day account | |
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| How to build an emergency fund 15 simple ways to stretch your budget |
| Invest your savings wisely | |
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| Know your savings products Earn the best yield on your savings Choosing between a CD or a money market |
Also suggest reading 10 Steps to Building a Complete Financial Portfolio
