Let’s Tax Those Darn Private Jet Owners

Recently Congress passed a bill on the debt ceiling increase, and while many are cheering, there is more to the story.

As an average American, you may look at those fortunate enough to own a private jet as greedy or having an easy life. You may be frustrated with the amount you are spending in taxes and feel as if those darn private jet owners get away with not paying as much. This is not exactly true.

Many of these individuals run or own companies that employee hundreds of people. They are providing health plans and financial benefits to their employees. Many of these individuals create charities to give back to the community (and yes as a tax break)! However, even if they benefit from their charitable contributions, the community benefits more. By creating charities, the community is served and more jobs are created. When we focus on taxing the rich, we force things like job cuts, benefit decreases and poorer working conditions.

There is definitely a spending problem in America, but heavily taxing the rich may not be the solution.

Turn the key for a powerful business

What author Michael Gerber (The E Myth) calls “The Turn-Key Revolution” began in the 1950’s with the McDonald brothers. Ray Kroc took notice of how efficiently and rapidly the brothers prepared their burgers and how fast people lined up to be served. Fast forward about 60 years and there are more than 30,000 Mickey D’s around the world.

What makes this concept so successful...It works!

Every company has a way of doing things. We typically hear this called policies and procedures. In a turn-key business, or franchise, these policies and procedures are extremely detailed. How to run the business is laid out step by step and allows the owner to focus on things like customer satisfaction and retention. Customers of turn-key businesses love the consistency they receive. No matter what McDonald’s you go to, a Big Mac is a Big Mac.

While some of the most successful turn-key companies are in food service, they are not limited to this market. There are several service industries that are turn-key as well. Many can be operated from home, or in a small office space, with minimal employees. Studies show that almost 8 out of 10 franchise businesses will survive 5 years verses start-ups which typically fail in the first 2 years (4 out of 5).

So if you are considering business ownership, consider a turn-key business or franchise. But take note, the success is in you!

The New Gold(en) Standard for America

This post is not about the shiny brown metal or international monetary policy, actually it is much more important and crucial to the future of America. It all started with me over 15 years ago, I was a Junior Achievement leader and was in front of 8th graders. Over my career of three years in the schools, I challenged the students to the following: As you are about to jump on the bus tonight you find a $100 bill and pick it up as you enter the bus. Because you don't know exactly what to do you bring it to your Mom and Dad for their coaching. Next week we will discuss their help and what you do with the money. Over the three years, here are the unscientific results. The 1st year 40% of the students would keep the money. Three years later almost 60% said they would keep the money. Though this is dramatic, the increase is less important to me than maybe half the kids, with the concurrence of parents, would keep the money. You can imagine the reasons for keeping the money, from "finders keepers to How would you even find the real owner".
My next statement is what I believe in my heart and may be too bold for you, but here goes. What I have just described in this classroom is a symptom of the real problem in America and why I believe if we don't fix this, America as we know and love it,,, is doomed. Fortunately there is a simple solution which is not a partisan idea or a deeply religious axiom although all in those groups will see the logic. Back to the classroom, and I can remember it like it was yesterday. while we were discussing why it makes sense to keep the money, a pretty girl with blond curls said, "You know if I was the one that lost that bill, I would be crying and wanting to die." The class was silent. I then asked what about you? How would you feel? Maybe that was your savings for a year and after school you were heading to school to buy your first pair of Air Jordan's. Or maybe you were heading to your elderly Grandma's house, this was her food money for the next month. Your father had trusted you to make that delivery and you lost the money.
In that three years, only 2 or 3 children thought about the other person. Many knew they shouldn't keep the money but only a couple could articulate a good reason why. What if, most of Americans rarely think about there decisions as they relate to others. In business it is disaster! I was standing in a McDonald's waiting for my burger when a young man with a Domino's Pizza hat came in next to me. He showed the manager the hamburg he had just received through the drive in. The burger in the box was completely covered with ketchup and mustard. An employee had seen a competitor in the drive in and wanted to make a statement. What was the statement? I don't care a bit about you Mr customer. Remember Enron? Behind closed doors some very smart accountants and attorneys created a way to stay ahead of the law by creating shell companies that would show losses while the operating company looked fine to the investors. Do you think anyone said "How will this affect shareholders and employees longer term?"
I will be talking Gold in a second and most of you know what is coming. First though, I want you to think about the two or three big issues in America that you think might bring our country to its knees. See if the following change in thinking for America might turn those issues around. Later I will give a few more unusual examples. The Golden Rule may be the simplest cross culture rule ever stated and is accepted by most serious religions that know how important morality is to sustaining cultures. It is so simple, that really smart people tend to ignore it as an opium of the masses. What if every American was immediately exposed to the power of the Golden rule again (because most adults know it). What if the President used his bully pulpit to share the GR and how it could almost overnight transform America. What if one day a year we could all talk about how this foundational rule could be applied at school, in the workplace, and at home.
If you are a baby boomer you may remember when President Kennedy (a pretty smart guy) exhorted White Americans to think what it would be like to sit at the back of the bus or be refused service in a restaurant. This is the Golden rule: Think about the other person and treat them like you would want to be treated in the same circumstance. Instead of "Just Do IT" maybe we should think about it first. I can here folks now, oh Bob that's so mamby pamby. If I don't think about # one, people will walk all over me. It is a jungle out there! They are right and it is getting worse. So how could the GR become important to that guy. He should think about the woman he is trying to attract as a mate. How about the job interview he attends. He owns a restaurant and his employees treat customers like he treats them. This rule is Golden for a reason. It pays dividends for the user. Great companies have used the GR as a sole mantra and mission for their employees to treat their customers. I said great successful companies.

What if: -The wall street protesters thought about or were concerned about there fellow americans and the mess they are creating for their city.
-Leaders of public and private schools decided that education was out of reach for most people. We can't afford to build new buildings we must find a way to use technology to reduce costs. I know the government pays but we all know it is not sustainable.
- Ditto on Health Care costs. Insurance and the Federal Government (third parties) do not provide one bit of health care, but add 30 to40% of costs. Do they think of patients or the tax payer?
- Billy, Did you think about the Golden rule? What if I bullied you, would you like it?
- I could see politicians raising little signs with GR when others were attacking them.
- Attorneys ask the question to their clients, If I was their attorney would you want to be treated this way? Sorry forget this idea it could never happen! What could happen is trust between folks based on the Golden Rule. Handshakes could become popular again.

John Adams the second President said that our constitution would only work for a moral people, it was designed for no other. How could the most prominent guide for a civilization be only a few pages? Maybe Under God meant something and the Golden Rule was a simple test of the Judieo-Christian commandment of "Love God then love your neighbor as yourself." Here is my question. We claim to be a country of laws. With thousands of laws and torts and a million Attorneys, how is it working??

Let's tax those darn private jet owners

Today is an important day in politics as Congress passed the debt ceiling increase and we are going to avoid that boogieman called federal debt default. I would just like to defend and define some terms used constantly in this recent debate, because behind the rhetoric are real working people and families. First a little history. Almost 20 years ago the private small aircraft industry was decimated by legal suits and federal regulation. These were mostly small prop driven aircraft and for many years no new small planes were built. Imagine the impact on that industry, jobs, and families. Used airplanes kept flying in one of the safest forms of travel so, what gives? A quality industry was killed for no good reason. Small jet aircraft continue to be built (and now some prop planes) but the industry, over all, remains on the edge, as does all air travel.

When politicians attack the private jet owner as depriving the government of revenue (not paying their fair share of taxes)they make a common error for the purpose of forwarding their tax and spend agenda. Folks who own and fly jets are typically the most productive and driven wage earners in America that is why they fly in jets. This group make more money and pay most of the taxes. Allowing most of the rest of us to pay lower and half of Americans to pay no taxes. As a group they tend to own businesses and run big companies that employ hundreds of thousands of people. These are the people who respond to Federal tax incentives (loop holes)to buy equipment and facilities that help employ more people. They take risks, to be rewarded in higher profits which, you guessed it, now they pay higher taxes. Envision a country like the former Soviet Union. No incentive to make profits means lower standards of living( for all classes). The federal government creates incentives to energize the economy and increase employment and yet in this recent debate, you would think jet owners are killing babies. And who is defending the hard working employees who are building their lives by building, servicing, and flying these jets. And of course paying their taxes. So really, jet owners are really just innocent faceless symbols of the rich people that are not paying their fair share of taxes.

There are two real good productive reasons why rich folks and corporations don't pay taxes. And we should cheer them on. Sometimes an enterprise is so successful, they give their excess money away to avoid paying taxes on money they would invest. They give the money normally to a charity that they choose or they create a foundation that is managed by honorable citizens that carries on the giving after the benefactors death. They would rather give the money according to their choosing (wouldn't you?) rather than the government where 30-40% goes to bureaucracy. The other great places to invest are in" loop holes" incentives. If General Electric is not paying taxes, let me assure you they are taking legal advantage of incentives created by the federal and state government. These investments almost always result in job growth which is sustainable (not just do nothing jobs) and generates more tax revenue because of the risks the company is willing to take to generate the jobs and profits. So when someone talks about taxing the billionaires and jet owners, remember all the men and women who work for those folks.

One more example of costly talk. Where I live, we attracted Honda to do research and development on a new small fuel efficient corporate jet. This means hundreds of jobs for our community. Great high paying jobs long into the future. When they hear that we should tax more heavily, jet owners, what are they talking about around their coffee machines and board rooms. Words, mean things and have consequences. Especially to foreign ears. Oil execs, boat builders, car and truck builders, all have ears that hear. Let's get on and tax basketball players and Federal bureaucrats for awhile, not job creators.

Turn the key for a powerful business

Michael Gerber “The E Myth” calls it the turn key revolution. This revolution began in the 50’s with the McDonald brother’s making hamburgers. Ray Kroc saw how the brothers had a system of making burgers that was so efficient and fast, people lined up in droves. Now there are almost 30,000 Mickey D’s around the world.

So why has this turn key model grown so fast as a way of doing business? Simple: It Works! And it works for many different types of owners all with different business personalities. There are more than 3,000 different business models that are turn key. Fast food and restaurants are the categories you think of first; but, most are actually service businesses and most of those are run out of the home with small staffs. I am, for example, a franchise coach. A franchise called, The Entrepreneur Source, and we help folks find the right franchise. A franchise to find franchises. What a country! Find a need then fill it with a business system that can be duplicated and is scalable.

Why it works: it is the system! Virtually every franchise has a cookbook or training manual for the owner. Ray Kroc took the system created by the McDonald brothers and ultimately took it to the doctoral level, Hamburger University. Every employee or team member knows clearly what to do virtually every moment the business is open. Think of the works of a clock. Wind it up or add the battery and all the gears and wheels work in tandem to move the hands accurately. You can depend on the accuracy of this little system, as you can depend on the system in a turn key business. The watch keeps time the franchise makes money. So powerful is this formula, that many take a portion out of their life saving in the stock market or retirement to achieve a greater return on investment and an investment they have more control over.

So how risky is a franchise investment? Almost 8 out of 10 franchise businesses will survive 5 years verses 4 out of 5 failures in 2 years for non-franchise start-ups. But beware, the success is in you! I have owned several businesses and can assure you that the heart and effort of the owner controls the success or failure of the business. Even a great system will not overcome lack of effort, fear, or other personal issues. Fortunately, most viable franchisors will uncover these warning signs and refuse to award their valuable systems when the warnings signs are there. This is another benefit of franchising. If you get a hard sell on a franchise beware. The legitimate sell will be both sides asking penetrating questions. This is truly an eye opening, valuable, and fun process. Most franchises challenge you not only to read a daunting document (FDD) and talk to several existing franchises; but, they may ask you to complete a business plan and cash flow projections. When the prospect writes the check, he should be very comfortable and then he goes to training for the frosting on the cake.

You are never alone! Even with great preparation and a great system, every business start-up is different. Markets, the economy, demand for the service all make for questions and the search for solutions. Perhaps the least understood power of a franchise is the emotional support for the owner. Starting any new business is hard work and it takes 50-60 hour weeks in the beginning. During those tough times, you need more than your mate saying “honey you can do this”. You need someone who has been right where you are to say “here is the solution and if you continue working hard this is the prize. If I could do it you can too”. Typically, through training, important friendships are made that continue for years. This emotional support is a very important part of the system for success.

So what can go wrong? Stuff happens in business as in life; but, the single most important axiom in the turn key system is?? Don’t turn the key if you don’t want to follow the system. In business there are certain personalities that know they are smarter than the system and they will deviate soon into the start-up. They never understand their own belief system is undermining and torpedoing their success. I am sure a huge percentage, I will say even most failures, are hard headed owners that blame the system or their market rather than simply embracing the system. Note: If the government wanted to fund an important study, a test to uncover this gene would save many broken homes and lives.

So do you have what it takes? Engineering types, number crunchers, nurses, teachers, all make good franchise owners because they are system oriented. On the other hand, the inventor, the dreamer, the artist, tends to get bored quickly with the system (not good). There is help! A franchise coach usually is compensated by the franchisor companies so the coaching is low cost or even free. Guys like me, come along side and help the investor evaluate the myriad of choices and models (or you can jump on the internet and drive yourself crazy). The coach will get to know you and only show you ideas that fit your profile. We are the starting point in the system. Did I mention the benefit of the system?

Bandon Dunes Golf Trip, Oregon

A few times in life we are truly Blown away. Leading up to this trip we watched the weather and the forecasts for our Three days in March were High 52, rain and wind. God had a different result. 1st day we even had hail, but the next two day's the heaven's opened and the following photo's were the result. The Oregon coast is rough and the land for these courses is called links land, (Links courses) which is the strip of land between the sea and useful farm land. Ireland and Scotland are renowned for famous Links courses ie. St Andrews, Royal County Down. The three courses at Bandon are equally as beautiful and challenging.










There were even some surprises, almost tame deer. The trip is daunting, 12 hours each way, whether flying to San Fransisco or Portland you must take another short hop to North Bend. Right, never heard of it! Then it is still a half an hour by shuttle. Don't bother with swimming trunks or tennis Raquel, this is all golf. Accommodations are very comfortable, yet understated.

Men design Golf courses and God designs coastlines. When you put great design together, the results are breath taking. It was worth the 12 hour trip.

Aren't we really working for ourselves

Unless you are employed in a large government bureaucracy, chances are you are or were evaluated by the rules of profit and loss. In the “New Career Economy” in fact for decades (maybe centuries) employees and groups of employees bending their backs for the man, have been measured by a simple yardstick, “Is my productivity, profit to the company, outweighing my cost to the company”. Whether we see this in our jobs singly or as a division, profit is the engine of any business enterprise. Even in most “non-profit” enterprises. As a capitalist and entrepreneur, this is how it should be. It happens to be the only economic system that works over the long term giving more prosperity to the most people and generations in our industrial and now high tech society. Perhaps in our future we will be able to create value and wealth out of nothing; I will be the first to say “Now that is interesting”.
So if making money is our report card, haven’t most of us already been in business for ourselves? A lab technician in a doctor’s office paid $21.00 per hour plus $7.00 in benefits should know that if the lab revenue from her work is less than $2500 per week the owner is straining to keep her. If you don’t know how you fit into the P&L equation, shouldn’t you ask? Sure you should and the higher ups will take notice of your interest.
You will also start noticing other things like: Why does Ralph make two trips to parts when he could bring two parts back on one trip or I am the fastest employee on the production line and rumor has it we are still not making money. Can I help others do more and faster, (other wise none of us will be here). Intuitively you probably know what business is all about and if you don’t or don’t care about your employer or free enterprise then you are experiencing the consequences. I have always wondered what America would be like today if organized labor and management had worked hard to partner rather than being adversaries. The pressure to make a profit must be shared (not equally, remember the Pres. makes the big bucks) and understood by all in a company because all have a share of the risk (unemployment) and the reward (continued employment and a raise now and then).
So have you ever thought about your own business? Does it make sense to exercise that business intuition and go out alone and fulfill your dream of real independence? In the book “The ‘E’ Myth Revisited” Michael Gerber talks about what it takes to go it alone. First! Don’t go it alone!
Statistics say that most non franchise businesses fail (4 out of 5 in the 1st two years) for many reasons like: not enough capital, no marketing plan or stamina ($), didn’t understand the market and demand, and dozens more. Many businesses are developed out of hobbies. Wouldn’t it be great to profit from something you love to do? Maybe! I remember out of college, I found a job as an assistant golf professional in Massachusetts. After two summers I realized that everyone was playing while I was working, and I was losing my joy of golf. Starting a business around your hobby at a minimum will force you to find a new hobby and probably worse.
So how do I find something and avoid going it alone. Two ideas! If you have significant capital or money languishing in Mutual Funds, consider buying an existing business that has proven performance and future opportunity. These companies are valuable and will be priced according to the cash flow and profits they produce. A price of 2 to 5 times their net profit before tax, plus the value of hard assets and real estate, is common. These companies are worth the investment because they have momentum, customers, and a staff that is qualified and doing the job. Please understand this idea is still fraught with challenges and you need good advisors and coaches as part of your team. The second idea is to buy a franchise. Franchises are designed for start ups because you will not be alone. Statistics say that a franchise will succeed eight out of ten times over the first five years. Not only are you not alone you will have a system and a cook book. Here is what you do on day one, then day two etc. There are over 3000 different franchise models and when you hear that small business is the real economic engine of America, it is true and most small businesses are franchises. Drive down main street or visit a mall, 80-90% of those stores and restaurants are franchises. Those multitudes of businesses represent only 30-40% of franchises. Most franchises are located in homes or are hidden in business parks (service businesses).
Maybe you are out of work or frustrated by the New Career Economy. You have skills and business intuition. Add a little (or a lot) of capital and you have more options than you think. No one has so much money that a little coaching wouldn’t help. Even corporate CEO’s use advisors to coach new skills. There are even franchise coaches (like me) who help merge your business personality, financial strength, and dreams with the right franchise model. If you have always been working in a profit oriented company, perhaps the option of scaling back to your own personal profit and loss, your own business is an answer for you. There are plenty of other Silver hairs out there to cheer you on and coach you along the way. Let’s Boom!