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Mike Henning’s Family Business News & Insights Summer 2011

publication date: Jul 23, 2011
 | 
author/source: Mike Henning
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Mike Henning’s Family Business News & Insights

Summer Edition 2011

Millionaires see creative intelligence as a major factor in explaining economic success.  Creative intelligence includes:  seeing opportunities that others do not see, finding a profitable niche, specializing, loving your career or business. 

 

America Can Do Better than 1.8% Yearly Growth

According to Forbes, the U.S. needs a step-by-step program to recover its long-term (1947 – 2000) 3.5% annual growth potential.

1)  Raise the fed fund rate to 2% plus---then tie the dollar’s value to a gold like standard.  This action would signal dollar strength and remove uncertainty.

2)  Freeze the federal budget at 2008 levels.  Result would be a budget of 18% of GDP.

3)  Flatten the tax code and make it simple so those of us who cannot afford expensive tax attorneys to reduce the rates, can make good investment decisions.

  4)  Ban public employee unions.  Our states and municipalities have been driven to the edge of bankruptcy and have damaged public school performance and student prospects in a global competition for smart industries and educated workers.

5)  Enact “the loser pays” legal reform.  The best way to stop silly lawsuits is to raise the price of failure.

6)  Make it easier to start a business.  Institute a one-stop website covers all tax, regulatory and business license issues.

7)  Dump Sarbanes-Oxley.  Enacted in 2002 to prevent another Enron, it has severely slowed the U.S. market for IPOs, since companies earning less than $200 million in revenue can’t afford the legal and accounting costs of being a public company today.

8)  Dump ObamaCare.  There is no reason that health care can’t simultaneously get better and cheaper.  Think about innovation that will intersect with IT and the Internet. 

9)  Privatize Social Security.  Nothing says Social Security privatization has to be a free-for-all.  Limit risk by allowing only a mix of conservative stocks and bonds.

10)  Recruit more foreign-born entrepreneurs.  From 1946 to 2000 the world’s best young business minds beat a path to our shores.  However, the flow of talent is not permanent.  America must compete for and nurture talent like every other country. 

 

Reminder:  Tax Credits Extended through 2011

·          IRC 41 research and development credit

·          IRC 45D new markets tax credit

·          IRC 45L new energy-efficient home credit

·          IRC 45M energy-efficient appliance credit

·          IRC 51 work opportunity credit

 

Deductions extended through 2011

·          IRC 62 deduction for elementary and secondary school teachers

·          IRC 163 treatment of mortgage insurance premiums as interest

·          IRC 164 state and local sales tax deduction

·          IRC 168 15-year straight-line cost recovery for qualified leasehold improvements and for qualified restaurant improvements

·          IRC 170 contributions of capital gain real property made for conservation purposes

·          IRC 222 deduction for tuition and related expenses

·          IRC 408 allowance for $100,000 of tax-free distribution from IRA for charitable purposes

·          IRC 1367 basis adjustment to stock of S corporations making charitable contributions of property

 

“Wealth is not of necessity a curse, nor poverty a blessing.  Wholesome and easy abundance is better than either extreme; better for our manhood that we have enough for daily comfort, enough for culture, for hospitality, for charity.  More than this may or may not be a blessing.  Certainly it can be a blessing only by being accepted as a trust.”  Roswell Hitchcock

 

Visions as Idealized Designs (Thoughts by Russell L. Ackoff)

Positive visions that can mobilize transformations can be produced by idealized design.  In this process those who formulate the vision begin by assuming that the system being redesigned was completely destroyed last night, but its environment remains exactly as it was.  Then they try to design that system with which they would replace the existing system right now, not at some future time, if they were free to replace it with any system they wanted.  The basis for this process lies in the answer to two questions.  First, if one does not know what one would do if one could do whatever one wanted without constraint, how can one possibly know what to do when there are constraints? Second, if one does not know what one wants now how can one possibly know what they will want in the future? 

An idealized redesign is subject to two constraints and one design principle:  technological feasibility and operational viability and it is required to be able to learn and adapt rapidly and effectively.  Technological feasibility means that the design only incorporates technology known to be feasible.  This does not preclude new uses of available technology.  This constraint is intended to prevent the design from becoming a work of science fiction.  Operational viability means that the system should be designed so as to be capable of surviving in the current environment if it came into existence, but it need not be capable now. 

The product of an idealized design is not an ideal system, and therefore, not utopian, because it is subject to continuous improvement.  The design produced is the best ideal-seeking system that its designers can currently conceive.  Thus, they should be able to conceive of a better one in the future by realizing the design objective of rapid and effective learning. 

Summarizing, a transformational leader is one who can formulate or facilitate the formulation of an inspiring vision of something to be sought even if it is unattainable, although it must at least be approachable without limit.  The leader must also be able to encourage and facilitate or inspire pursuit of the vision, by invoking the courage required to do so even when short-term sacrifices are required, by making that pursuit satisfying & fun as well as fulfilling.  This requires a plan. 

(More on this topic in the next issue)

 

Thank you for reading our News & Insights Summer Edition 2011.  Mike Henning works with business owning families to lead their efforts in planning for the future of their companies and family members.  Henning has published four books and a CD about the overall generational transition process of family businesses.  Contact him at 217-342-3728 or email hfbc@mikehenning.com.  Website:  www.mikehenning.com

 

Mike Henning

Henning Family Business Center

Phone: 217-342-3728

www.mikehenning.com

Products are available through our website.

 



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