Monthly Archives: November 2010

The US Deficit: Look To What Is Working Plus Fix The Housing Market

The Solutions for Insane Deficit Levels Are There:

The Wall Street Journal published a story on November 27th titled “As Business Goes So Goes Utah”  The story pointed to the economic trends in Salt Lake City being opposite the decline or no growth being reported in many parts of the US and actually the world.  A primary reason for the positive economic conditions in Salt Lake City is the city’s favorable tax incentives for businesses to locate there and build new plants, research centers and headquarters. The result is jobs and jobs mean people make money and spend. Consumer spending fuelsl more than 70% of  the economy.

Obama and congress are now beginning to talk about the deficit. I wonder why this has been largely ignored. Since Obama  has taken office there has been enormous deficit spending.   What’s done is done so the focus should be on solutions. One solution is to substantially cut the administrative burden of the government on small businesses and citizens. This means eliminate regulation hampering business productivity. This also means change the regulatory compliance requirements so banks either begin loaning money to credit worthy companies or they lose their  charter.  A serious commitment to cutting government spending which also means cutting the size of government is one step. A constitutional mandate for a balanced budget is another step. Elimination of all non-essential government regulation is another step.  Get government out the way and let free enterprise work.

Underwater Real Estate Values

Real estate valuations are a big problem.  Foreclosing on homes where the occupant can afford to pay a lower amount in rent and could pay the same on a reduced mortgage balance makes no sense.  Think about it. Let’s say  a home owner has a mortgage for $300,000 on a home now valued at $200,000 by the market. Assume the payments are $1600 per month currently. If foreclosed the bank will have to take a lower purchase price on the house and since investors need to make  a profit and there is likely renovations needed then the settlement with the bank could be $150,000 or less.  It  is clear there will be a mark to market on this property by the bank and the property’s note reduced for the occupant.

There are note buyers interested in buying the paper from the bank. Banks should be encouraged to negotiate these “mark to market notes now” so the process of relieving the burden of those “underwater” with their mortgage can be accelerated. This solution results in the current homeowner being able to stay in their home with lower payments on a reduced mortgage to an investor. The investor is satisfied because they are receiving above average rates of return and the bank is actually better off in most cases because the cost of missed payments and preceding on foreclosure is avoided. This solution should be aggressively pursued.

The basic tenant is spending at the national level and personal level needs to match income and the less burden placed on the citizens the more invigorating the economy will become.  “So Goes Tax and Spending, So Goes Business and The US”


Steve Pohlit

Business Consulting, Executive Coach
Turnaround/Crisis Management
Temporary CEO, CFO, Controller Services

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About: Steve Pohlit CPA,MBA has been the CFO and COO of  major domestic and international companies.  Steve has extensive business ownership experience having purchased and started off line and on line businesses.  Steve offers his  business building experience to companies and entrepreneurs with business coaching and business consulting.  His  focus is on building business  profits and net asset value at above average rates.   All articles published by Steve unless specifically restricted may be freely published with this resource information.

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Build Business Profits Success Stories: 1

Build Business Profits Success Stories are actual experiences of clients as a direct result of following the action steps developed as part of the coaching process. These are verifiable case studies and while the popular marketing technique is to publish testimonials, I consistently protect the confidentiality of all clients.

10 Times Increase in Net Income In One Year

When I asked the question as to the income this client expects to bank this year the answer was $300,000.  That is a very good number for an individual working from his basement office with one employee.  I already knew this was his first year working full time on this business and that he had been working part time on this business in the previous year.  He had no experience in this particular business (real estate investing) prior to two years ago.

I have been coaching him by phone for about 2 months and then we scheduled a day and half session on site at his office location.  During dinner the first day, I asked him to be prepared to finalize a game plan the next day for building his gross income next year to $6 million.  Now going from $300,000 to $6 million and actually a net closer to $3.5 million is quite a leap and I normally would not implement that aggressive of a plan with most clients.

This client was different. I already experienced his “action attitude”  he was in motion everyday on networking and deals that converted into a growing list of funding partners (people with money to put to work) and people sending him profitable deal opportunities.  He was successfully implementing the coaching guidance on focused networking.  He was and still is missing a management system for taking his business to the level I could see that was possible.

The number one issue anytime I work with client  on a model for increased revenue and profits is mindset.  If they don’t believe it there is nothing anyone can do or say that will turn the idea into reality.  In this case, there was not instant acceptance of my $6million plan.  However, he asked me how I arrived at that number and I told him.  He nodded his head and said alright “let’s do it”.

The exact strategy was developed the next day and included defining the niche markets he would pursue as well as the overall profit to be generated by each niche. That work resulted in him being able to see the results happening. It  became believable for him.

Will he achieve performance targets of this plan?  No….he will beat them.  Just two days later he text me at 6AM in the morning with “we need to talk”.  Close to 7 we were review an opportunity for  deal that has he potential for a for $500,000 profit before the end of this year.  In addition I looked at another deal with him yesterday and that one has a $500,000 potential by the end of this year if he flips it or an excellent rate of return if he keeps it.  I could go on but my point is this client has transformed himself into a deal and money magnet.  Does he have any special skills?  He is an effective communicator and he follows the direction of his coach.


Steve Pohlit

Business Consulting, Executive Coach
Turnaround/Crisis Management
Temporary CEO, CFO, Controller Services

Social Media Services
New Digital Media, Inc.

Twitter

Facebook

Linked in

MySpace

727-587-7871

Email

About: Steve Pohlit CPA,MBA has been the CFO and COO of  major domestic and international companies.  Steve has extensive business ownership experience having purchased and started off line and on line businesses.  Steve offers his  business building experience to companies and entrepreneurs with business coaching and business consulting.  His  focus is on building business  profits and net asset value at above average rates.   All articles published by Steve unless specifically restricted may be freely published with this resource information.

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