Strothman and Company Named a Best Place to Work in Kentucky!
Strothman and Company is thrilled to announce that The Kentucky Chamber of Commerce, the Kentucky Society for Human Resource Management (KYSHRM) and Lifestyle Health Plans have named our Firm as one of the 100 Best Places to Work in Kentucky!
The winner rankings will be announced at an awards dinner Tuesday, April 23 at Heritage Hall in the Lexington Convention Center.
The selection process, managed by Best Companies Group, is based on an assessment of the company's employee policies and procedures and the results of an internal employee survey.
The competition is a multi-year initiative designed to motivate companies in the commonwealth to focus, measure and move their workplace environments toward excellence. Numerous studies show a strong correlation between profitability and employee satisfaction and engagement.
Mark Your Calendars: 2019 Strothman and Company Seminar Series
How can our Firm help your Professional Services Firm?
At Strothman and Company, we're always growing and improving our people and offerings to help our clients
grow their businesses. With so many changes happening so quickly in technology, workforce, and other aspects of business, it's becoming more and more important for entrepreneurs to have real partners who can offer advice and assistance that meets the challenges that are specific to their particular focus area. With that in mind, we've formed a team around the professional services industry segment of our firm to serve our clients in this space. Today I'd like to introduce you to our team and tell you more about what we're doing.
Our professional services clients include law firms, dentists, physician practices, advertising and PR firms, and various types of technology, financial and business consultants and advisors. If you are a service provider, our team's goal is to find specific solutions to add more value to the services we make available to
you and to help educate you on items relevant to running your business. As professional service providers ourselves, we understand the personal nature of your business, and that your most fulfilling time is spent helping your own clients or patients in your particular expertise. We want to learn more about what you do, so we can help you do it better, and allow you the time to focus on what's important. We want to meet you where you are. We want to gain a deeper understanding of the space you're in.
We have a group of dedicated individuals working together to make this happen. Currently, our team consists of Quinn Hart,
Partner in charge of the professional services segment; two of our managers, Megan Ball
and Kim Jordan; Jessica Harbeson, a senior staff member; and Vince Cain, our firm's practice growth manager. As our firm grows, our team will too and I look forward to sharing our progress with you. Look for articles from the team in future newsletters.
We would love to hear from you. If you have questions about what we're doing and how we might be able to help your business, or if you'd like to share information with us about your particular needs that might help us as we tailor our services to people like you, please reach out to me or anyone on the team anytime.
Strategic Advisory Services - The Definition of Insanity Is...
We have all heard the old saying "the definition of insanity is doing the same thing over and over and expecting a different result". Everyone recognizes that in order to change something we probably need to change the one thing we can absolutely control in this world - our own behavior. Change by its own nature is extremely hard and the recognition or admission of the need to change is even harder. It requires a breakdown of our own egos and self-validation. The world is constantly changing and if we don't adapt and change with it we will be left behind.
Whether you are a business owner, employee, executive, or parent we all recognize that there are things we don't control and we can either adapt to thrive or we can live in a frustrating and stressful bubble. As the father of two teen age daughters I can tell you that control of others is not something that really exists. Influence yes, control not so much. So how does one adapt to the environment that seems to be changing at light speed all around us? Where do we find the foundation of truth and reality in order to make impacting and positive change?
The first principal in any change environment is that there are no absolutes. Everything must be on the table without preconceived notions. If there are sacred cows in the equation, then the entire change process is suspect and probably flawed. This is the first and without doubt the most difficult principal in the change equation. Everything you thought was real needs to be validated again and proven to be so. I cannot tell you how many times I have seen business owners, corporate executives, and even friends try to make changes in their worlds only to fail while hanging on to some behavior or belief that is unshakeable or too scary to let go. That one thought, process, or fear then sets everything else that is put into motion into a different orbit and the crash is inevitable. Think about your own world - business or personal -I am sure with some honest evaluation you will find the trail of unmet expectations starts with whatever it was that you couldn't give up or be willing to change.
The second principal in any change environment is to give up any assignment of blame or responsibility for past failures or transgressions. As all change invariably affects other people and their interaction with you and others it is imperative that you remove all potential divergence from the common goal of improvement. The ability for someone to own the past means that no one can own the future. This does not mean however that once the change is made there is no accountability as that is the third principal.
Accountability begins as soon as change starts to be executed. It is imperative that everyone involved in the change process has input and buy in. It is equally important that everyone involved in the change process is also held accountable by installing metrics of when, what, who, and how the change will be delivered. This is true in a group project just as it is true in any act of solo self-improvement. Without accountability you cannot measure success. If you cannot measure it, you cannot achieve it. If you cannot achieve it, you will only achieve frustration and a sense of unmet expectations.
Change is hard. Change is challenging. Change can be tremendously rewarding when done with strategic purpose.
Strothman Strategic Advisory Services helps our clients achieve great and challenging changes through the installation of a turnkey guided process. We walk our clients through the difficult passages that they will encounter and utilize the three principals above to help them evolve to the next level. If you are wanting more out of your business, looking to maximize value to harvest what you have built through a sale, or want to grow then we can help. Don't hesitate to contact us anytime.
What Leading Economic Indicators Tell Us
One of the reasons investing is tricky is because it involves so many factors that we cannot control. One factor is the specific investment itself. In the case of a stock, the share price relies on company management and leadership; manufacturing, marketing and distribution; and balancing expenses with revenues. Another factor is investor and market sentiment, which can change on a dime based on economic uncertainty, the day's news or a presidential tweet.
Then there's a third component, which encompasses broader economic events and how they impact investment market fundamentals and the business life cycle. One way we monitor the economy and try to predict market cycles is through economic indicators. These are trackable data points that economists use to get an idea of the direction of specific aspects of the economy.
The following is an overview of regular economic indicators considered reflective of the current economy and indicative of future activity.
Gross Domestic Product (GDP)
GDP measures the total monetary value of all finished goods and services produced in the United States over a specified time period. Economists believe it is the most accurate measure of a country's overall health.
There are several types of price indexes, which are basically a way of tracking prices - and thus cost increases and decreases - in order to measure inflation. The most popular measure is the Consumer Price Index (CPI). It is published monthly and tracks the prices of a "basket" of many of the most common goods and services that urban consumers buy, including food, transportation, clothing and medical care.
The Producer Price Index is used to help monitor data from a commercial (wholesale) perspective. It tracks product price changes from a cross-section of sectors in the U.S. economy and is published on a monthly basis.
Jobless Claims Report
The jobless report tracks the number of workers who file for unemployment benefits, which tend to increase when the economy slows. The report does not track self-employment, contract or part-time employees (none of who qualify for unemployment benefits). It is published weekly but typically evaluated as a four-week moving average to account for short-term variances.
The New Residential Housing Construction Report tracks the number of new building permits issued, which indicates increases or decreases in new construction activity. For reference, new construction usually picks up during the early expansion phase of the business cycle. This housing report generally refers to supply, while the Existing Home Sales Report, compiled by the National Association of Realtors, reflects the current demand for home sales. When viewed together, they offer a balanced assessment of the housing sector.
Because consumer perspective can influence market fundamentals, economists track what is called a Consumer Confidence Index (CCI) that measures the general outlook of the American population. The CCI monitors a sample of 5,000 U.S. households with regard to consumer spending, which represents 70 percent of the economy. A rise in consumer confidence is typically viewed as a positive indicator for strong economic growth.
The Purchasing Managers' Index (PMI) gauges the confidence level of businesses, based on their spending patterns with regard to new orders, inventory levels, production, supplier deliveries and employment. The PMI is comprised of a sample of 300 purchasing executives in the manufacturing sector. For reference, an increase in new orders typically indicates a rise in prices, while a decrease points to a drop in prices. This indicator is generally used to anticipate GDP growth.
There are dozens of key economic indicators that signal changes in the direction of the economy. These regular reports help investors, market analysts and wealth managers make day-to-day buy and sell investment decisions.
How Will the 90-Day Freeze on Tariff Increases Impact the Markets?
According to a press release issued by the United States Trade Representative (USTR) in the middle of September, tariffs of 10 percent on $200 billion of imported Chinese goods went into effect on Sept. 24, 2018. The same tariffs, according to the press release, were set to increase to 25 percent on the same $200 billion in Chinese imports on Jan. 1, 2019.
However, after talks between the leaders of the United States and China during G20 meetings in Buenos Aires, Argentina, the United States agreed to freeze tariffs at the 10 percent rate for 90 days starting Dec. 1, 2018. If the negotiations don't lead to long-term settlements, the tariffs will increase to 25 percent on March 1, 2019, according to a White House statement. With this recent announcement, how will markets react in the first quarter of 2019 and beyond?
Along with the negotiations, there seems to be thawing in the icy relations developed during the trade spat. The White House statement also stated that China agreed to buy a substantial variety of American goods, including agricultural products, industrial goods and energy in order to lower the trade deficit America has with China.
The talks during the 90-day negotiations also will address issues raised by the current U.S. Administration, such as China respecting American intellectual property, how to reduce tariffs on both sides, and re-mediating
Looking at Current Global Economics
According to the Council on Foreign Relations, American exports to China dropped 20 percent since June 2018. However, imports into the United States have increased. As of October 2018 - the first month to reflect the impact of Trump's 10 percent tariffs, U.S. imports from China were reduced by about $5 billion on an annualized basis..
Per data from the Council on Foreign Relations, non-US imports into China have increased by 18 percent. This is particularly notable because for the 24 months leading up to July 2018, China imported about 22 percent of America's oil exports, while present Chinese imports of U.S. oil is negligible.
Despite China's promises to restart importing U.S. oil, Russia is already seeing an increase in exports to China and future opportunities for the former Soviet Union to export one of its well-known commodities are quite favorable.
U.S. trade data from October 2018 showed that there's more oil production, reducing its deficit in oil production, while there's an increase in the trade deficit ex-petroleum goods trade. The services surplus has essentially been constant. Brad Setser, a
former staff economist at the United States Department of the Treasury,
explains that beginning in 2014, imports into the United States have increased by 100 percent because the U.S. dollar has increased in value. Based on data from the U.S. Census Bureau and Haver Analytics, for every two dollars of imports, the United States manufactures one dollar's worth of goods, not including refined petroleum.
With Americans relying on increased imports and a lack of domestic manufacturing infrastructure, if tariffs move from 10 percent to 25 percent at the end of the 90-day freeze, consumer spending is expected to drop - and this will weigh on the economy going forward.
When it comes to Chinese imports, Setser points out that semiconductors, crude oil and petroleum-related products make up approximately 25 percent of its total imports. With oil prices averaging about $50 per barrel, coupled with the potential for Russia to increase its crude oil exports to China, there's a question of how much China will need to rely on American petroleum exports during and after the 90-day tariff freeze negotiations.
How to Build Your Savings Using Technology
According to a study by Cornell University, the human brain is wired to earn money more so than save it. As such, when we find we need more money in our lives, our instinct is to earn more and not spend less. In fact, this instinct tends to grow over time, and is one reason why people tend to spend more money when they receive a salary increase rather than save it.
However, researchers believe that by being cognizant of this fact, we can take proactive measures to develop effective savings habits. One way to do this is by using new technology to make saving easier. The following are a few high-tech examples.
· Set up your bank account to make automatic transfers between your checking and savings account on a regular basis. When you are able to reduce or eliminate a regular expense, set up an automated transferal of that fixed amount. For example, if you start taking your lunch to work each day for savings of $50 a week, automatically transfer $50 each week from your checking to your savings account. That $200 a month in savings can build up quickly.
· Go online to shop for a savings account at an internet bank. These virtual companies generally offer a higher interest rate on savings accounts since they have lower overhead expenses than a brick and mortar bank. This one move can help your savings compound faster.
· Download an app designed to help manage your spending habits and automatically transfer money to a savings account every time you make a significant savings decision (like buy a washing machine for $50 less than the one you were considering). Consider popular apps such as Digit, Clarity Money or Saver Life.
· Consider using an app that helps you delve into the world of investing with small sums of money. These apps offer information and tips to help you understand the basics of investing and make it easy to set up automatic transfers to an investment account. Consider popular apps such as Stash or Acorns.
· Delete any credit card numbers you have stored at your favorite online stores or on your browser. While saved information is convenient, it is more likely to encourage impulse buying. The longer it takes to input your payment information for each purchase, the more time you have to consider whether or not you really need to buy that item.
· Unplug your computers, televisions and cable boxes when you're not using them, as they use energy even when they are turned off. One easy way to do this is to use grounded power strips to turn off several electronics at once.
· Purchase and install a timer device that automatically adjusts your home's thermostat. ENERGY STAR reports that reducing the thermostat by 7 degrees to 10 degrees, eight hours a day, can reduce heating and cooling costs by as much as 10 percent a year.
Tips for Choosing the Appropriate Liability Insurance for Your Business
When it comes to liability insurance, the saying "you can never be too prepared" is quite meaningful. While business owners cannot predict what happens day to day or year to year, they can look into having business liability as way to give themselves peace of mind. The first step is to understand why it's so important.
The Rocky Mountain Insurance Information Association reports that more than one in two home-based business owners lack necessary insurance. Furthermore, the Independent Insurance Agents of America (IIAA) found that 4 of 10 respondents do not have enough coverage because they believe their homeowners policy covers commercial liability. As you can see, education on this matter is essential. Here are descriptions of several different types of liability insurance from the U.S. Small Business Administration.
One of the most common types of liability insurance for businesses is general liability. If the business is a grocery store or restaurant, general liability usually covers customers looking to have their doctor and hospital bills, damaged property or lost wages paid for because they claim they were somehow affected in the course of business operations. General liability also can protect businesses against claims if a third party believes their reputation has been tarnished by written or spoken materials from the company.
Product Liability Insurance
Whether a business makes a product, is a wholesaler, a distributor or sells the product directly to customers, product liability insurance protects a business against monetary losses if said product is defective and harms the user. Examples of a defective product is if there's a chain cracked on a swing or there's an over-the-counter medication with a harmful ingredient and the defective product is determined to have caused the harm.
Professional Liability Insurance
This type of insurance, also known as errors and omissions, protects business owners who provide professional advice or services if they make a mistake or unintended omission in the course of delivery of said services. Examples of this can include a radiologist or one of their subordinates failing to deliver and communicate results of initial and final reports, especially if a medical condition diagnosis has been changed to indicate a more serious problem, and that failure to fully communicate all information leads to preventable medical problems for the patient.
Other examples can include engineers miscalculating combinations of traffic loads on a bridge. If engineers miscalculate the maximum load levels and use incorrect materials and anchors, it could lead to construction delays and/or additional costs to use different materials if a stronger bridge is necessary.
Commercial Property Insurance
When it comes to protecting one's company against damages to their business' assets, this type of insurance can reduce the potential financial impact. Policies can and do cover the business owners' structure from events such as fires, hail and wind events, along with property damage due to criminal activity. This type of insurance may cover business assets as well, such as computers, furniture and inventory.
Home-Based Business Insurance
For business owners who run operations from their home, this type of policy can become part of a homeowner's existing policy. This type of coverage can protect home-based business owners by covering limited amounts of equipment, such as computers, phones and cameras. It also may provide liability coverage for the homeowner if, for example, a client visits and is injured by slipping on steps or tripping over a box.
No matter what insurance policy a business needs, the best way to protect against loss is to reduce risk in the first place. Along with training employees to follow workplace safety procedures and reducing hazards for customers and workers to reducing the likelihood of accidents, finding the right mix of liability insurance lets business owners focus on growing their business
5 Things to Start Doing in the New Year
New Year's resolutions usually involve
things like eating, drinking and spending too much - and so on. You know the drill. However, according to
U.S. News & World Report
, 80 percent of New Year's resolutions fail by the second week in February. Why not switch things up this year? Instead of setting yourself up for disappointment by attempting to abolish negative behavior, why not start doing some positive things? You'll improve your quality of life and maybe even help the world. Here are few ideas to kick things off.
This is so easy and so doable. All you have to do is get an extra trash can and throw your plastic and aluminum cans into it. Then look up where your local recycling drop-off point is and enter it into your GPS. Put it on your to do list, swing by on the way to or from the grocery store and boom, you're done.
Start Taking Regular Tech Fasts
You can start with social media. According to a study funded by the U.S. National Institutes of Health (NIH), people who used social media the most were about 2.7 times more likely to be depressed than participants who used social media the least. Not taking your phone to the dinner table and limiting the amount of television you watch are good ideas. You can clear your headspace of the drama and pain that's going on in the world and focus on your loved ones and most important, your own mental, spiritual and emotional health.
Start Learning a New Language
In addition to expanding your world perspective and understanding another culture, there are other incredible benefits of learning a new language. These include improving decision-making skills, memory and multitasking skills, as well as increasing your attention span and cultural sensitivity.
Start Laughing More
In addition to providing instant joy and changing your mood, laughter also has some very real health benefits. First, it boosts the immune system, decreases stress hormones and increases immune cells and infection-fighting antibodies, which improve your resistance to disease. Second, it triggers the release of endorphins, the body's natural feel-good chemicals that provide an overall sense of well-being and can even temporarily relieve pain. Third, laughter protects the heart, improves the function of blood vessels and increases blood flow, which can help protect you against having a heart attack and other cardiovascular problems. Finally, laughter burns calories, diffuses anger and, according to a study in Norway, just might help you live longer. Clearly, laughter is the best medicine.
Start Focusing on What You Have
In a world dominated by social media, celebrity worship and materialism, it's easy to zero in on what you don't have and focus on scarcity. Instead, start noticing, appreciating and celebrating what's currently in your life. If you need to, make a gratitude list and review it when that ache of lacking rears its ugly head. Your spirit will be refreshed and you just might realize that you have more than enough.
These are just a few of the many good things you can start doing in 2019. Keep your ears and eyes open for other opportunities to build on the positive and cherish the life you've been given.
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Divorce Can Be Taxing
Divorce is expensive. Aside from the emotional toll divorce takes on a family, both the process and aftermath of a divorce can be costly. Below we look at some of the steps people can take to help remove the tax sting out of an already challenging time and arrive at the best financial position.
Changes to Alimony
We ring in the new year with changes to alimony tax law. Prior to Jan. 1, 2019, alimony payments were deductible by the spouse who paid them and taxable to the spouse receiving them. Typically, this provided an overall benefit to the family unit as the alimony recipient, generally being the lower earner, paid a lower tax rate. Often referred to as the "divorce subsidy," this situation was costly to the government. From 2019 and forward, alimony is no longer deductible by the payer or taxable to the recipient.
This might appear to be a win for the receiving spouse; but consider that the change will most likely mean less alimony for the receiving spouse. It could also cause non-working divorced spouses to lose their eligibility to make IRA/Roth IRA contributions since they won't have a source of taxable income.
One note on timing: if you finalized your divorce in 2018, the alimony will still be treated under the old rules for tax purposes - and even if you modify your divorce agreement in the future, the alimony will retain this tax treatment.
Pre- and Post-Nuptial Agreements Could be in Trouble
If you have a pre-nuptial or post-nuptial agreement, it is advisable to have the agreement reviewed. Aside from the impact of the new tax provision on alimony, relevant changes since it was written and more recent court rulings could impact how well an agreement holds up in court. Additionally, knowing where you stand if your divorce gets confrontational will give you the knowledge to negotiate your best financial case via a settlement or in court.
Decide What Really Matters to You
It's unlikely you've stopped and taken the time to parse out what you really want in the next chapter of your life after divorce. Going through your divorce with great clarity on this topic will help you focus your financial negotiations to arrive at the best outcome for you in less time and, as a result, lower professional fees.
Calculate Whether You Should or Not
Settling seems enticing instead of fighting it out, but it's best to
work with both your divorce attorney and CPA or other financial professional to understand the long-term implications of any settlement. On the other hand, if there is little at stake, a long drawn out divorce process might prove to be more expensive than it's worth. Working with the right professionals will help provide an objective view of the financial situation and assist you in understanding if you'll need to change your spending habits, work longer or take other actions.
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