Tag Archives: financial

Iron Rice Bowls and the Impact of Government Funding

  There was an interesting editorial item in The Economist that unintentionally says a lot about the impact of government intervention on industry. In the last generation, the average number of working hours needed to purchase an automobile, clothing or other … Continue reading

Posted in Economic Trends, John's Opinions, Politics and Regulation | Tagged , , , , , , , , , , , , , | 11 Comments

11 Responses to Iron Rice Bowls and the Impact of Government Funding

  1. craig eastman says:

    We must never let our guard down.

  2. David Basri says:

    While I completely concur with the article with respect to education and housing, healthcare is a different beast entirely. The United States has by far the least efficient healthcare system of any developed country because of a deficiency of government involvement, not an over-abundance of it.

    By depending on a vastly greater level of market-based forces, instead of control, the U.S. has created a monster. This is because healthcare by definition does not work on market principles. When any individual’s health is at stake they do not care what it costs, they just want to be treated. That means the suppliers have total coercive control over the “market”.

    Can anything realistically be called a market when it a) is difficult or impossible to even determine what a product costs before it is purchased; and b) there is not really choice about whether it should be purchased? Do you operate that way in any other aspect of your life?

    U.S. healthcare has evolved to a level of insanity beyond what even a pure market system might produce. The stakeholders: people, providers, insurers, employers, state government and the federal government all have competing interests. The result is that if you are lucky in terms of employment, insurance, income and location, you might get absolutely world class healthcare. If not, you might get none at all. Meanwhile the entire system thrashes against itself creating unbelievable inefficiency and overhead, resulting in costs 3 to 4 times higher than necessary. Small example: our local hospital system has 12 executives making over a million a year.

    ANY other business operating this way would have been bankrupt a very long time ago. Some things should not be market driven. I submit access to roads, clean water and healthcare for starters.

    I would say, “Don’t get me started. . . .” but too late for that.

    • John F. Dini says:

      Well stated, David, although I don’t entirely agree. Correcting healthcare won’t come from further government intervention. The competing special interests you mentioned hold too much sway over Congress. They will never address the twisted incentives that drive the system, where unnecessary work (both direct care and regulatory) makes everyone more money.

  3. Jeff Shapiro says:

    To take the average working hours concept a step further: (1) the average working hours to purchase an automobile has decreased, yet vehicles haven’t remained static — they’re loaded with many more safety, comfort, and entertainment features today than ever before; (2) a student leaves school with about the same amount of basic knowledge today compared to say the ’70s or ’80s and pays considerably more.

    • Jeff Garvens says:

      Don’t forget (3) healthcare: The amount we SPEND on healthcare is up considerably, but the value we receive is up considerably too. I agree healthcare isn’t a normal marketplace, but 40 years ago we did not have the choice to have life saving and life improving MRIs, Cat scans, organ transplants and many prescription drugs. All of those innovations come with a cost.

      As the slice of our income pie needed for basic needs shrinks, the rest of the pie necessarily grows. If not to healthcare, housing and education, then to where? Smaller homes with larger flat screen TV’s?

      • David Basri says:

        My issue is not with MRIs, medical technology, research or even prescription drugs (though that is also an outrageous “market”), or anything else that directly relates to delivering healthcare. I get riled up over the incredibly high overhead, inefficiency and waste. These are the direct result of competing interests and multiple layers of profit motivated entities exploiting a distorted system.

        For example, billions of dollars are spent annually on prescription drug advertising. That is entirely a function of profit motive, not any objective to improve health. If everyone had access to preventive care on a regular basis, decisions about prescription drugs would be made by doctors and patients discussing someone’s health, not a TV or magazine ad.

        Add to that the fact that a significant portion of the population has limited or no access to healthcare, and the overall situation is just plain dumb.

  4. David Basri says:

    Sadly, your response is entirely correct.

  5. Thanks for introducing me to the Iron Rice Bowl concept. You guys in the beltway and Washington DC area, it is time to listen up!

    When will we bring back an objective money standard, i.e., gold or silver?

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Investing in Your Own Business: Will It Pay Off?

A few months ago a business owner asked me to evaluate an acquisition offer for his small business. It was from a larger company headquartered in a different region of the country. They had a branch operation in his city, and wanted to expand … Continue reading

Posted in Building Value, Business Perspectives, Economic Trends, Entrepreneurship, Exit Options, Exit Planning, Life After, Selling a business, Strategy and Planning | Tagged , , , , , , , , , , , | Leave a comment

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Goals are More than Just Resolutions

Most of us (at least those who don’t own retail businesses) are in low-power mode at this time of year. Double midweek days off and decompression following the holiday rush allows us time to think. For many, that thinking naturally turns … Continue reading

Posted in Entrepreneurship, Leadership, Managing Employees, Strategy and Planning | Tagged , , , , , , , , , , , | 2 Comments

2 Responses to Goals are More than Just Resolutions

  1. Frank Benzoni P.E. Retired says:

    Once again a great adaptation of what to do and why – Excellent writing John !!

    Frank

    Merry Christmas and a Happy 2015

  2. Claud Gilmer says:

    Hi John!
    Good info & timely reminder!
    Here’s to a successful 2015!
    Thanks, Claud

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Key Man Policies May Not Cover a Buy/Sell Agreement

Over the last few weeks, I’ve had a number of conversations with clients about key man insurance. Let me say at the outset that I don’t sell insurance, and have no financial stake in whether any client has coverage or … Continue reading

Posted in Entrepreneurship, Exit Options, Exit Planning, Strategy and Planning | Tagged , , , , , , , , , | 5 Comments

5 Responses to Key Man Policies May Not Cover a Buy/Sell Agreement

  1. Frank Benzoni P.E. Retired says:

    John

    Another “Wide Awake Article” – To be advised is to be prepares, and you continually do that.

    Always look forward to the next !!!

    Thank you

    Frank

  2. John,

    Agreement that key-man insurance policies should be separate from buy/sell – ownership agreements. Having lived through the unexpected loss of two employees, I would encourage small businesses to look beyond ownership when considering key man insurance as part of their disaster planning process.

    Brad

  3. Mike says:

    Another type insurance to consider is whole life purchased using Section 79 Insurance.
    Allows the company to pay for the insurance ( deduction to the company) owner pays tax on only part of cost, however beneficiary is the stock holders estate ( or wife) .
    Company pays for policy , stockholder owns and benefits from it directly.
    Can tied funding this to some part of stock valve in the future.

  4. RICH FREELAND CBC says:

    John- My 43 years in the life business has taken me into many areas of practice. The usual KEY MAN POLICY is usually designed for one purpose only.It is to cover the loss of a “Key Man” such as a top salesman that brings in more than 50% of the companies business or an engineer or project manager that a company could not operate or complete a job if they should die. Buy and Sell agreements are usually to cover owners , partnerships or corporations for death or long term disabilities to owners or stock share holders to keep the business from imploding or having to deal with non producing spouses or minor corporate owners.All these plans should be drawn up by a law firm that is experienced in Business Law! not Legal zoom! The last thing is making sure that the agreements are funded with the proper products to meet the contracts specifications in the B&S agreement. I would shy away from Sec 79 plans in funding these agreements and look at the latest IRS rulings on SEC 79 use in business insurance? Comments Welcome! RICH FREELAND CBC

    • John F. Dini says:

      Thanks Richard. I agree that key man policies should be used for critical employees as well. I know dozens of companies, however, where key man covers the owner, who does not function in a sales or client management role, and the owners’ belief is that the benefit will be used to purchase stock from their families. As to the applicable IRS codes, you illustrate my point that such instruments must be carefully constructed by a professional such as you.

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Should a Small Business Have a Budget?

“I know that my company is doing OK,” the old joke goes. “I still have checks in my checkbook.” Many small businesses run on a version of checkbook accounting, where anything that isn’t paid out at the end of the … Continue reading

Posted in Strategy and Planning | Tagged , , , , | 4 Comments

4 Responses to Should a Small Business Have a Budget?

  1. Carol Mansen says:

    I found in my consulting practice that the small businesses that have the discipline to create a budget also have the discipline to manage their business well. It is a way to the business perspective to pro-active instead of reactive.

  2. Brad Elmhorst says:

    Extremely important if a business offers healthcare to employees. “Life changing events” include a spouse who loses coverage and now enrolls in your family plan.

  3. I agree, every small business must have a specific budget for their marketing campaigns. A successful business always start from planning to budgeting, to planning and implementation.

  4. In every business there should always be a budget.

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