campaigns : Campaign Archive

Introduction

Weathering The Economic Storm

Practical Prosperity

Dear Appreciated Clients and Friends,

If you are like me and Cincinnati/Northern Kentucky is your home, I hope that your residence and business came through last week’s storms unscathed. Fortunately, the weather forecast shows clear skies in the foreseeable future.

The economic storm we are experiencing however is not localized and is ongoing. Our goal is to assist our clients with prospering through all economic cycles. If you are a wealth management client, we encourage you to call or e-mail us at any time with your concerns.

As is our policy, we are in the process of calling all of our corporate clients for summer visits. If you would like to move to the top of the list, call Pam at 859-331-7755 ext 100 instead of waiting for her to call you. We look forward to sitting down with you one-to-one to discuss your business, your concerns and your goals.

This month’s article is entitled “Weathering the Economic Storm” and is written primarily for business owners. If you do not own a business, I encourage you to skim the article, as virtually all of the tips are translatable to your personal wealth management.

We are experiencing prosperity and growth in 2008 from the generous referrals of our clients and friends. Our continued gratitude and appreciation for the most sincere form of flattery, your referral.

May prosperity be yours,

Mackey

Weathering the Economic Storm

While the press and the government debate whether or not we are in a recession, real people are experiencing economic challenges in their daily lives. At a recent CEO roundtable I was with a dozen CEO’s, three of which expressed concerns about the ability of their businesses to continue operating through the end of this year. We brainstormed ways they could weather the economic storm by cutting prices, finding a new niche or dramatically cutting expenses.

While I read several economic forecasts each week, I find that the best way to check the economic status quo is by talking to my clients, friends and neighbors. I don’t need to hear the jobless report when I learn how many of my neighbors are looking for work or how many of my peers are struggling for solvency.

For what it’s worth, my prediction is that we won’t see a significant business turnaround until 2010. If I am wrong and the recovery comes sooner, you’ll still be advantaged to take a strategic look at your business now.

For several years we have been encouraging our corporate clients to focus their strategies and lower their debt-to-equity ratio. Most have done so, and are therefore in a good position to come through these economically challenging times.

But what if you haven’t practiced good fiscal discipline to date? What if you have been carefree with your money during the economic expansion of the last few years and now find yourself with lots of overhead and dwindling revenue? Or perhaps you find yourself in an industry like construction, where the entire sector is in the doldrums.

Get into action now. The longer you wait, the less likely you will be a survivor of the storm. This isn’t just about your business; this is about your personal future and wealth creation. As a business owner, your business is likely your largest asset. Protect it now.

Take these steps immediately:

Determine your burn rate

Your burn rate is how many months you can survive based on current revenue and expenses. Considering your cash resources, cash on hand, collections, lines of credit, etc, how long can you sustain the business? If you have insufficient resources to get to 2010, your situation is Code Red. Proceed immediately to the next step. If your burn rate takes you past 2010, continue with the next steps to improve your bottom line now.

Triage your expenses

Look at every line on your income statement. What can you cut, renegotiate or lower? Will your key employees consider more time off for a lower paycheck? Do you have employees who are not critical to your business? What expenses are not driving your top line? Leave no stone unturned.

Monitor cash flow like a hawk

Create a rolling twelve week cash flow projection. Forget expense categories and traditional accounting, just focus on cash in and cash out. What are your cash requirements and how can you fund them?

Assess your vision, mission and core purpose

Stretch your mind with some new material, like The Experience Economy or Blue Ocean Strategy, or read business trend magazines like Fast Company. Draw together a strategic team to consider who you are, what you do and who you serve. Ask your customers for feedback. Is your business model outdated or on the cutting edge?

Reassess your marketing plan

What is your ROI (return on investment) for each of your marketing strategies? If you don’t know, find out. Do more of what is working and cut or eliminate what is not. Assess your strengths and develop guerilla marketing and networking strategies that minimize outflow and maximize inflow.

Involve your team

Keep your team involved. You can’t afford to lose your superstars. Let them be a part of the solution. Be transparent with your communications. People like to know what is going on. If you don’t give it to them straight, they will make up their own truth. You’ll end up losing your best people and find yourself struggling along with your worst performers.

Those businesses who weather this storm will find the Promised Land on the other side – less competitors – improved pricing and a lean competitive business to handle growth. Your personal net worth will soar from the growing valuation of your business.

While I do not engage in stock market predictions, history reflects that the market is a leading indicator of recession and typically recovers before we see the results in other indices. If you have concerns about your personal portfolio, consider your strategic asset allocation and call your advisor (hopefully that is us!) for a one-to-one meeting.

Practical Prosperity

How Much Annual Income Can Your Retirement Portfolio Provide?

Do you go to a doctor when you get sick? Of course! Do you take your car to the mechanic? You bet! This makes it interesting why so many people choose to act as their own financial advisor. Having 6 different mutual funds might cause someone to brag about how they are diversifying, or perhaps a recent retiree might say, “Well, I calculated how much I can take out of my portfolio each year, you know there is a rule of thumb.” Your retirement lifestyle will depend not only on your assets and investment choices, but also on how quickly you draw down your retirement portfolio. Figuring out an appropriate initial withdrawal rate is a key issue in retirement planning and presents many challenges that the do-it-yourselfer likely overlooks.

Why is your withdrawal rate important?

Take out too much too soon, and you might run out of money in your later years. Take out too little, and you might not enjoy your retirement years as much as you could. Your withdrawal rate is especially important in the early years of your retirement; how your portfolio is structured then and how much you take out can have a significant impact on how long your savings will last. No longer do we work until Age 65 and live another 5 to 10 years. Many people will spend nearly ½ of their lives in retirement, and that is why the simple math just doesn’t work.

Conventional wisdom

So what withdrawal rate should you expect from your retirement savings? The answer: it all depends. One study of annual performance of hypothetical portfolios that are continually rebalanced to achieve a 50-50 mix of the S&P 500 Index and intermediate-term Treasury notes found that a withdrawal rate of slightly more than 4% would have provided inflation-adjusted income for at least 30 years. More recently, similar assumptions show that a higher initial withdrawal rate--closer to 5%--might be possible during the early, active years of retirement if withdrawals in later years grow more slowly than inflation. Of course, adding asset classes such as international stocks and real estate helped increase portfolio longevity, but you already know that, right? A withdrawal rate can be fine-tuned from year to year, but one has to start somewhere to find a base for them. We think the best place to start is with something we call Prosperity Planning®. (Call me and we can talk more about this one.) One retiree might be comfortable with a 75% chance that his or her strategy will permit the portfolio to last throughout retirement; another might need assurance that the portfolio has a 100% chance of lifetime success. Exploring your goals and comfort needs should always begin before crunching numbers.

Inflation is a Major Consideration

For many people, even a 5% withdrawal rate seems low. To better understand why suggested initial withdrawal rates aren't higher, it's essential to think about how inflation can affect your retirement income. Here's a hypothetical illustration; to keep it simple, it does not account for the impact of any taxes. If a $1 million portfolio is invested in a money market account yielding 5%, it provides $50,000 of annual income. But if annual inflation pushes prices up by 3%, more income--$51,500--would be needed next year to preserve purchasing power. I have heard the story too many times when someone has said I need 5% of my money and CDs usually get 5%. That’s great, but inflation means you need to get at least 8% if it’s going to last. That big cash account should probably be invested in the market.

Calculating an appropriate withdrawal rate

Your withdrawal rate needs to take into account many factors:

1) Asset Allocation
2) Projected Inflation rate
3) Expected rate of return
4) Annual income targets
5) Time/Investment Horizon
6) Comfort with uncertainty

Well, I will let you go ahead and get started with that. All you need is a calculator and a few spare days off work. Myself, I tend not to like wandering around for a week feeling awful trying to cure an illness with time and my own ingenuity. My car is probably in much better shape since I only know how to pop the hood, check the oil, and put air in the tires. Exploring our futures and retirement should be a fun and exciting process, and is far too important for guessing games and “rules of thumb”. It is never too early to begin preparing for the future, however; something this important usually requires a professional…now just where will you find one?

by Andy Pulsfort

Meet Karen Kruml…

How delightful it is to introduce Karen Kruml, Senior Manager responsible for providing CFO, Controller and tax services to her client base for Mackey Advisors! Karen wears many hats as she works closely with business owners in providing financial statement analysis; identifying, developing and monitoring of key performance indicators that lead to business profitability; tax planning and preparation and general business consulting. Before re-joining Mackey Advisors in 2005, Karen had previously been an auditor with Mackey McNeill Mohr, the predecessor to Mackey Advisors since 1988 and left to enter private industry in 1991. She became Controller and then Director of Operations for PrimeSource Corporation for the next 12 years. We were thrilled to have Karen return in a part-time capacity after giving birth to her twin daughters. Karen states that, “After leaving Mackey the first time, I always said that I would never work for any other public accounting firm but hers. I have always admired not only her expertise and drive, but her genuine caring and devotion to the well being and success of her clients.”

“The client interaction, getting to know my clients and their businesses” is what Karen loves about her position here. She says, “I find a lot of self satisfaction in knowing that I may have helped them in some way.” “The people I work with, the clients that I serve and the general atmosphere of the office” are what Karen cites as the reasons that she finds Mackey Advisors to be such a wonderful place to work. She states, “We work very well as a team and support each other. We have a casual and yet professional environment and Mackey is not only in tune with her clients’ needs but also her employees. She (Mackey) has been very flexible with me and my professional vs. home life needs.” One of Karen’s fondest memories is Mackey’s 25^th anniversary celebration. Karen says, “The crowd of people that came to celebrate the occasion was a true testimonial to the achievements and success of Mackey and the firm. I was proud to be present and a part of it!”

Karen and her husband, John, son Carson, age 11 and twin 6 year old daughters, Amanda and Alyssa live in Union, Kentucky. John recently opened a Papa Murphy’s Pizza store and hopes to open a second location this fall. Please stop in and meet Karen on your next visit to our office!

by Trish Sevier Barnes

Go Green!

Attention Green Heroes Let's CHAT!

Are you a Green Hero? Are you someone taking action to protect the environment? Then stand up and be counted! Share your story and how you are making a difference for the world.

We are grateful to hear from some of our client's who are GREEN HEROES! Here is a sampling of what I received last month.

Hi Pam - With the onset of summer, don't forget to support our local farmers at the many farmer's market's in the area. Fruits and vegetables are fresher, taste better and, being locally grown, don't require the interstate or even international shipping (fuel consumption) that out-of-area produce does.

Kris

Kristan K. Hodges, DVM
khodges4@insightbb.com

$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $

Hi Pam - Third Sun Solar and Wind Power does quite a bit. By the very nature of our business, installing clean power systems, all of our customers are reducing the carbon emissions from coal power plants by thousands and thousands of tons.

In addition, we try very hard to keep a green operation:

Recycle all paper, cardboard, cans, bottles, ink cartridges - everything we can. This includes all our our job site and installation materials, which means that when our crews come back from a job, the service vans are full of recyclable materials to put in our bins at the office. Reuse the backs of paper for printing or making note pads. Use real plates, cups and silverware - avoid disposables as much as possible.
No bottled water allowed! We have a 5 gallon spring water with a pump for all employees and installers to drink from. Purchased carbon offsets for our vehicles. The nature of our business requires that our four vehicles be on the road traveling to our customer's homes or businesses. We purchase offsets through Terra Pass, which takes our money and invests it in more green energy.
We contribute funds to local organizations such as the Sierra Club, the Buckeye Forest Council, the Athens Conservancy and more to spread the wealth from our business to these worthy environmental organizations.

Thanks for raising awareness of greening businesses!

Michelle Greenfield
Third Sun Solar and Wind Power, Ltd.
340 West State St. Unit 25
Athens, OH 45701

Thanks Kris and Michelle for your great ideas!

Here are some other great Go Green! concepts for your office to try:

Build Green

Use sustainable materials and design to create a space that works with the local environment as opposed to against it. For ideas on green building and how to earn LEED certification, visit the US Green Building Council at http://www.usgbc.org/ or call the Cincinnati chapter at (513) 388-0020.

Start Recycling

For help with recycling, call the WAste Management District. For Hamilton County, that number is (513) 946-7734. Recycling office paper reduces air pollution by 95 percent and saves 23 trees for every ton of paper recycled!!! (According to the National Recycling Coalition)

Implement Storm Water Management

Damage to a stream's ecosystem is caused by unnatural speed by rain washing off buildings and parking lots. Take steps to minimize this byinstalling green roofs, buffer zones, rain gardens and porous pavement. These practices allow Rainwater to slowly release into local streams improving the health of the stream for local wildlife.

Switch Your Bulbs

Switch to energy lights! The bulbs may cost more upfront, but energy efficient lights last much longer than traditional bulbs and use significantly less energy to reduce costs in the long run. Environmental Benefit - Replacing a single standard bulb with a CFL reduces energy use by 75 percent and prevents 450 lbs. of carbon dioxide emissions over the life of the bulb. (Energy Star)

Convert Your Fleet

To increase fuel efficiency, decrease pollution and receive federal tzx credits, utillize hybrid vehicles or biodiesel to build your green fleet, making the public aware of your green commitment at the same time! Environmental Benefit - The production and use of biodiesel, compared to petroleum diesel, results in 78.5 percent reduction in carbon dioxide emmisions. (National Biodiesel Board)

Stay tuned for further Go Green! ideas in the next newsletter!!!

By Pam Vargo

Buy the Book!

The Dynamics of Money

Mackey’s new audio book, the Dynamics of Money, gives you the power to discover your personal key, unlocking the door to your true potential
for unlimited prosperity. Through the power of the Narrative Tradition of The Enneagram, you will hear the three exemplars of each of the nine
personality types sharing their unique perspectives on the subject of money and prosperity.

Order Your Copy Today!

The Intersection of Joy and Money

Warning!! This book will:

●    Expand your confidence around financial decision-making.
●    Increase your prosperity consciousness.
●    Create a more prosperous and abundant life.

Change your relation with money today!

Hear Me Speak!

Wednesday, June 11, 2008 Convention for Unity Churches in Phoenix, AZ

Workshop: "Prosperity Planning Teams - How to Expand Money Consciousness in the Leadership of Your Church"

Mackey will be joined by the Rev. Pat Williamson of the Unity Church at the Wigwam Hotel in Phoenix, AZ. Come join the beauty of the desert as Mackey and Rev. Pat guide you through Prosperity In Action.

Monday, June 23, 2008 at 6:00 PM - Parnell Memorial Library in Montevallo, AL

Mackey returns to the Parnell Memorial Library for a repeat engagement of Cultivating Prosperity. Please join her if you will be in Alabama to hear her thought-provoking, easy to understand theory to "Stay the Course" and stay on target with your financial plans.