Happy New Day

Today is New Years Eve.

Flush away the past year and look forward to fresh beginnings. Looking back and seeing all the shit, it seems like a lot of people are happy to freshen up the toilet, not realizing there's a fresh batch of dung waiting for them in the coming year.

I get the concept. Have a few drinks. Enjoy a party. Put away the old clothes and look to brighter days as the new year get rung in at midnight.

But wait a minute. This is all just figurative thinking.

January 1 is no different than July 18 or March 5 or October 21.

They are all just days.

Under the thinking of figurative thinking, why aren't we celebrating every day at midnight.

Every day at the strike of 12 am brings in a new day. We can flush the day before and hope for new promises as we bring in a fresh set of 24 hours.

That would be too frequent. No one can party that much, except for my buddy Bernie.

A new year is nothing more than a fresh set of downs. Like in football, you'll either score or you'll have to kick the ball back to your opponent.

The same goes for a day.

But since we put so little value on days, we don't hold them as precious as we do years.

We only have double digit years in our lives. Days are too numerous to count, so we don't.

New Year's Day is JUST another day.

Like my grandpa told me once, everyday I'm above ground is another good day.

So instead of wishing people Happy New Years, I wish you instead "Happy New Day".

Unpopular decisions

I'm going to say something that is going to be unpopular.

Before you gather together and plan out a lynching, please hear me out.

Popular decisions are made to please the majority of the audience.
They aren't necessarily good.
They aren't necessarily right.

If I wanted to be popular with my kids, I'd give them everything they ever wanted.
Doesn't sound that smart.

I make decisions in my household that I think are best for my family, despite how unpopular they may be.

But I'm not looking for re-election as daddy in four years.
I'm not looking to boost my ratings in the polls.

In consultation of my co-parent, we make decisions even if the rest of the household is pissed off.

Maybe that's the problem with a democracy.

If you are in a democracy, give the people what the want.
What do they want?

MORE.

This is a rant based on one of my "pet peeves". I recently heard about another minimum wage increase.

And it pisses me off.

I believe everyone should be able to earn more.
But minimum wage doesn't do anything but put more taxes in the governments' pockets.

Let me demonstrate:
If the average person words 40 hours a week with 2 weeks vacation per year, he will work 2000 hours per year.

An increase of $0.50 will give that employee an extra $1000 in annual earnings, before taxes.

Assuming a tax rate of 25%, the employee taxes home an extra $750 in the year.

Yay! That's great news. $750 is more than they had the year before.

But let's look what happens in a free market.

The employer who hired that employee doesn't like to lose profit margin.
So she raises her prices and so do her competitors. If the $0.50 represents a 5% increase in labour costs, the employer raises her prices by 5%.

So if the employer owned a grocery store, prices across the sales mix go up an average of 5%, just to cover off labour. If there other inflationary pressures like energy, interest rates or exchange rates, that number could easily be 10%.

An average family of four will spend about $100 per week on groceries. That's $5200 per year. A 5% increase in the cost of groceries will result in an increase of $260 spent on groceries the following year.

Minimum wage increase has now put an extra $490 in the family's coffers. But if the prices at the grocery store had to go up by 10%, the family now only has $230 extra at the end of the year. That's an extra $4.42 per week. That's barely enough to buy two coffees per week. The price of coffee will also have gone up due to their employees making the minimum wage increase.

Now imagine this. The amount of people exiting the workforce is the biggest it has ever been. Retirees no longer work for minimum wage. They no longer depend on government assisted wage legislation.

Retirees, on fixed incomes, have less and less disposable income because the price of necessities continue to rise.

Minimum wage increases are popular decisions. But it doesn't change anything. The base of poverty moves to a new higher number. And by doing that, new categories of people fall into the poor class.

Minimum wage increases reduces jobs and increases taxes. It doesn't encourage investment. It is an economy killer.

There will always be abuse. Employers have taken advantage of the unskilled labour force and for that government stepped in to protect the employee.

Unions have done the same.

Minimum wage is the least of our problems. In the politics playbook, it says, "when you're down in the polls, increase minimum wage to increase your popularity."

Who does minimum wage increases help?
I believe the only winners are politicians who've dipped in the polls.

But this is a democracy.
If yon't don't like it, leave.
If you don't like it, vote in a new party next time.

That's what we've been doing in this province for the past 15 years.
How has that rhetoric worked out for us?

It's time for unpopular decisions.
Some of the kids won't like it.
But they don't always know what's good for them.

C'mon daddy, step up and be the leader. Stop your political bullshit.

We can't afford it anymore. Time is running out.

Zoom, zoom

The thrill of the race starts with everyone at the starting position. Ready to take off, revving the engines. The exhilaration of going around the track is all the fun we need the first time we get going.

Get around the track and don't crash. Take it slow if you have to. The goal is to finish. Winning would be great, but not necessary.

The light is red. No one is allowed to move.
Then it turns green, and everyone takes off.

The car starts off slowly, as the engine is full of life.
Picking up speed, the transmission shifts into second gear, then third.

Who cares about finishing, this is fun.
Let's go faster.

Pushing in the clutch, and shifting into fourth and then fifth, the world zooms by as the speed continues to go higher.

100 mph, 110, 120...

Zoom, zoom.

The surroundings become a blur. We can't tell who's watching and who's not.
We're focussed on the race. We have to stay on the road. Speed is the desire.

Zoom, zoom.

The race gets faster as finish line approaches.
The car used to be much slower.
Life used to be slower.

As we look forward to our goals, our vacations, our retirement, time zooms by like a jet fighter until all time stops.

The race will then be over.
We will be dead.
And someone else will take our place as driver of another car in the same race.

Zoom, zoom.

Dealing with my depression

The dark cloud creeps slowly into my mind without a slight hint of a storm.
The storm sneaks up like a burglar, without any notice.
And when it enters, it plays a game of pool with my thoughts, to have a little fun before ransacking my brain.

The pool ball doesn't know that any pocket will do. The burglar doesn't care. He wants to play around. He selfishly toys with my emotions for his own amusement.

And life gets darker in the process.

The slippery slope of depression affects one in three people. I don't know what causes it, just like I'm not 100% certain what causes happiness.

When I'm feeling stormy, I'm useless. I put on a mask and smile, while I cry inside.
Have you ever tried to work and cry at the same time?

I'm not much of an outside cryer, so admitting this is tough for me.

Expressing my feelings isn't easy to start with. Furthermore, the little voice inside me won't stop whispering negative thoughts. Each day that passes, the whisper gets louder, until it gets to a deafening scream.

I cope with my storm by turning off the thought thief's voice.  The only way I have figured out how to turn him off is by getting busy.  Getting busy isn't easy when I can't even find the motivation to have a shower.

In this funk, I secretly wish:
Someone would hold me.
Someone would praise me.

The darkness lifts after a few days.
The storm clouds disappear.
The skies clear with rays of sunshine pouring warmth into my life once again.
Life gets back to my normal while I clean up the debris the storm blew in.

What you want is not what you get

You get what you deserve. Getting is what is given to you when you’re ready to receive it. If you’re not ready to receive it, you get what you are ready to receive.

I'm not talking about the negative things that happen in our lives. I'm talking about the positive desired outcomes that we don't seem to get.

Life is like that. Crunchable, bite size portions so we don’t choke on our food. 

Lottery players dream of winning the lottery only to be pushed into another week of dreaming.

In extreme circumstances, the winner of the lottery spends their new found money within five years. They get rich in money. They stay poor in thinking.

More money makes people stupid.

But there's hope.

Look at your life and analyze what you really want.

Then ask yourself why you don’t have it yet without blaming other people or circumstances.

The life you lead is yours and no one else’s. The reason you might not have something is because you’re not ready for it.

You think you’re ready. But you have a blindspot. 

What could your blindspot be?

What are you not taking into consideration?

Let’s use a different example. Some people want world peace. It’s impossible to want world peace when you can’t get along with your spouse, sister or children.

So how could people want more money when they don’t know how to manage the money they have? More money doesn’t solve today’s problems. It just makes the old problems bigger.

You get what you deserve, because life is played like a game.

You can’t collect $200 until you pass Go. You have to go around the same path a few times before you have enough money to buy that house. You have to accumulate income producing assets to generate wealth.

The lottery isn’t the answer.

That one business idea isn’t the answer.

The answer is you.

You have to work harder, work smarter, think faster and interpret patterns that already exist but no one else sees.

You will get what you deserve.

So how do you change what you deserve?

How committed are you to changing? How hard are you willing to change in order to be ready to receive life’s next great gift?

Answer those questions and you’ll get exactly what you deserve when you’re ready.

How to evaluate a business

There are a number of different ways to evaluate a business's value.

Here's how I simply evaluate them. There's only one question that matters: Can you make a reasonable return on your investment given the amount of profit left over at the end of the year?

I define reasonable as 20-25%.

A typical rule of thumb that I like to use is 3 - 5 times EBITDA. EBITDA is an accounting term that stands for "Earnings Before Interest Taxes Depreciation and Amortization". To calculate it, you take the profit before taxes and add back in any interest, depreciation and amortization. Multiply that number by 3 and 5 and you have the low and high ranges of the business value.

If you can't calculate a business on profit because there isn't any, it doesn't mean the company is worthless.

If the business has real assets like inventory or equipment, the value can be determined at a percentage of the depreciated asset value on the balance sheet.

For instance, a restaurant that has no profit may have equipment worth $200,000 for sale. There is obviously value in the equipment. The question of how much value is dependant on the motivation of the seller and the willingness of the buyer. 

I recently talked to a business owner who had profits of $100,000 but wanted $800,000 for his business. At 8 times EBITDA, I immediately wanted to look at the balance sheet. The balance sheet had assets valued at $320,000. 

The value of his business is worth $300,000 to $400,000 to me.

Unfortunately, it is worth twice that to him.

A motivated buyer who overpays for a business is going to have below average returns on his investment. The buyer also jeopardizes the viability of the business when he overpays. The financial commitment might be too high for any return. Securing bank financing will almost be impossible. 

When a business is worth more to the seller than it is to the buyer, a deal is hard to do.

For any deal to happen, you need both a willing buyer and a motivated seller.

If the seller isn't motivated, then a reasonable deal will be as difficult as pulling your own teeth with a set of pliers without a shot of whisky.

Evaluate the motivation of the seller before talking price. Don't waste your time with someone who is looking for a 100% premium above the EBITDA value or the depreciated asset value. Make an initial reasonable offer. If the seller doesn't respond positively, walk away.

There can be no deal if the seller's expectation is unreasonable.

A story about what happens with office technology

Once upon a time, a young kid, Sam, graduated from university. He didn't know much about computers, but he was always willing to try new things. Screwing things up didn't scare him.

The boss, Doug, hated computers and limited his usage to sending and receiving emails. Even then, if the young man wanted an answer before next week, he was better off dropping by the office. The boss was used to a different time when all notes were dictated and typed by a secretary on her typewriter.

The young man could see brilliance in his boss's eyes. But his technical skills on a computer were equal to a three year old's penmanship.

There was another person, John, working with Sam who was the same age as Doug. He liked his job, but computers were getting the best of him. He felt like they would break if he hit the wrong key. He was afraid of them ever since the manual work had gone on them.

The computers sensed it.

And the computers got stronger. And with it so did the internet.  Doug and John liked the internet. They could see sports scores and news highlights. Even Facebook was a blessing. They could find friends they hadn't seen in 25 years.

The day to day tasks on the computer got harder and more complicated. Most of the easy stuff got transferred to smart phones.  The young kid was getting older. He grew into the internet, but didn't grow up with it.

Sam was now forty years old. His boss and John were fully struggling in their careers. Doug and John never had smart phones. They didn't even like cell phones. The young kid would do most of their computerized work for them until the company recognized how much of a burden they were. The two older guys were downsized and ended up working at Walmart until they retired.

Sam continued to work but every year got harder. New systems were released every 90 days. Phones made him accessible 24/7. There was no shut off switch from office emails. Change was harder to accept.

Why can't we just do it the old way?
It used to work before.
It will still work now.

Sam's new boss was 25 years old. He grew up with the internet. He had computers in his house since he could walk. Change was the only thing normal in his life.

Sam no longer could keep up to the kids. They were all quicker on the new technology than he was.

Sam was still smart. But a lot of the stuff he knew didn't matter in the way things were done now.

The work world had changed. And he didn't see it.

Then it hit him. He was exactly like Doug and John. He had kept current on the technology he understood. Until it passed him by.

Technology will always move faster than our willingness to learn it.

Unfortunately, our willingness slows down increasingly with age.