The Texas Comptroller has issued a publication explaining the Energy Star sales tax holiday that will take place on Memorial Day weekend, from 12:01 a.m. on Saturday, May 24, through 11:59 p.m. on Monday, May 26 (Memorial Day). The products qualifying for the exemption are air conditioners priced under $6,000 (room and central units), clothes washers (but not clothes dryers), ceiling fans, dehumidifiers, dishwashers, light bulbs (incandescent and fluorescent), programmable thermostats, and refrigerators priced under $2,000.
Qualifying products will display the Energy Star logo, which may appear on the appliance, the packaging or the Energy Guide label. There is no limit on the number of qualifying items one can purchase during this sales tax holiday, and an exemption certificate is not required.
The tax-free holiday also applies to the following: specified catalog and Internet sales; layaways; delivery, shipping, handling or transportation charges connected to the sale of a qualifying item purchased tax-free during the sales tax holiday; and, installation charges for a free-standing or mobile qualifying item purchased during the sales tax holiday that retains its identity as tangible personal property after installation.
Texas Tax Publication 98–836, Energy Star Sales Tax Holiday, 01/01/2008
I am now going to be a regular contributor to the blog Startup Houston along with Kurt Stoll. Kurt and I share a vision of creating a forum for local entrepreneurs to discuss issues and thoughts that come up as they look to start new ventures. Take a look and let me know what topics we should be covering.
I still am amazed at the amount of companies that I encounter that operate without any sort of business planning whatsoever. There are many types of business planning activities that a company should spend time on:
- Marketing plan: what do you sell and to whom do you market toward? This is rudimentary analysis and modeling that is a must…how can you expect long term value creation of you do not even know your market? I recommend the work of Geraldine Fennell as a primer for creating a good marketing plan (Fennell, Geraldine, and Greg M. Allenby (2003) “Market Definition: A Strategic Task,”Marketing Research, 15,2, 32-37.)
- Pricing analysis: what type of pricing strategy should you employ that addresses both tactical and strategic objectives? What are the economics of your product or service. There is a great article from back in the day entitled “Beyond the Many Faces of Price: An Integration of Pricing Strategies” by Gerard J. Tellis, Journal of Marketing, Vol. 50, No. 4 (Oct., 1986), pp. 146-160 (here is a link to the article on JSTOR.) Remember, pricing is both a financial and marketing function that is both tactical and strategic.
- Financial modeling: given a set of assumptions, how much capital will the business consume or create over an extended period of time? Every decision we make in life is based on risk and return…yet many in business do not take this process to a more structured level. I have seen more business models fail because they outgrow their capital base as opposed to bankruptcy or lack of sales.
Whenever the question of planning comes up, I almost always hear that it is postponed because of a lack of time to spend on it or inexperience in going through the process. Sometimes business leaders will point to a budget that they are held accountable to but rarely understand how it was prepared. I am personally not a fan of budgets as they are limiting and tend to be a waste of time. My position is to focus on rolling forecasts that are driven from the bottom up and sail accordingly (here is a link to a webcast from last year that talks more about implementing rolling forecasts.)
I will try and spend more time on future posts on planning and the issues and opportunities that can be created from them.
Referring back to a recent post, here are some talking points about the market frenzy in how aggressive lenders have been recently:
- Corporate liquidity is at record levels;
- Interest rates continue to remain low; and
- Default rates are at record lows.
In reading several articles (none of which I will quote since they require me to pay for licensing and I am a cheap bastard), the following observations have been made:
- leverage multiples are up tremendously;
- covenant-less loans are appearing more often; and
- risk premiums have all but disappeared.
If this doesn’t indicate a pullback soon, I don’t know what will. It’s incredible how quickly we forget the past cycles and claim that “the world is different.” My advice, get the deals while these lenders have appetites bigger than their stomachs but make sure you have alternatives to support you if things go south.
New legislation aims to reduce the “financial burdens” put on small and midsize businesses having to comply with Sarbox.
Three congressmen plan to introduce a bill tomorrow that they say will ease the financial burdens felt by smaller businesses affected by the internal-controls provision of the Sarbanes-Oxley Act.
Check out the article at CFO.com
If you have some time to surf, check out Venture Hacks. Having read through their posts, it seems apparent that these guys are well versed in the art of the start. Their first pieces are very spot on and provide very useful information on making your company investor friendly.
You really need to be either a very heavy sleeper or dead to not see how eager the capital markets are to place capital in the hands of entrepreneurs these days. Banks are also joining into the fray but there is more to this than just loans. Banks need to be viewed as strategic business partners. The WSJ recently had a great piece that explains some of this (subscription needed) but here is my perspective.
When selecting a banking partner, I suggest evaluating them using the following criteria:
- Access to capital: can they get you loan availability and can you access it according to your business needs. Getting a $3 million loan but only getting to borrow $100K of it may not be what you need.
- Treasury management: technology has enabled many smaller, regional banks to provide many of the same online and electronic banking options of the larger banks but look into this deeply. Your cash cycle is critical life blood to your business and any delays in processing can really hurt where it counts. Make sure you demand the same quality that you can get through your home banking portal.
- Pricing: there is a bit of an art to this but how you structure your accounts, services and lines of credit affect your pricing more than you realize. Setting minimum balances at a level to accrue adequate earnings credits to offset you fees is key. There is more to bank costs than just interest rates.
- Relationship: make sure that you like your loan officer and believe that he/she is an advocate for your business. You may have to kiss a lot of frogs to find the prince here but it cannot be undervalued. A good banker makes all the difference in the world. You want them by your side in good times and bad.
Weighting of each of these depends on you but this is a great start.
I remember when I was just starting out and everyone was telling me that you needed a CPA and a controllership under my belt if I wanted to sit in the “big chair.” Well I am here to tell you that that was poor advice. Recent studies have shown that the Controller is low in the list of promotion choices when a board or CEO considers a CFO candidate.
Now I am not adverse to suggesting the controller path for many accountants out there trying to advance themselves along the corporate ladder. The controller is an important position for companies of almost all shapes and sizes, private or public. However, the CFO needs to have broader leadership skills and a more strategic vision for their team and company.
Think of it this way: in baseball, the pitcher and designated hitter are both specialists at their identified role on the field yet one would not be expected to step into the other’s shoes on a daily basis. Granted that their are some pitchers that are fantastic hitters and some hitters that could probably through a wicked curve. However, these are the outliers and not the norms. Accounting requires attention to detail, structure and form, a forensic intent on understanding the details of transactions while financial leadership demands a mosaic ability to synthesize various aspects of business economics into the framework of risk and return. You show me someone who can swing from both sides of the plate like that and I will show you a future hall-of-famer.
Dr. Jeff Cornwall has an excellent blog for entrepreneurs that I recommend highly. Here is a comment I posted on a piece written discussing the decision points around hiring a CFO, Controller or Bookkeeper.
