APRIL 2019 April 11th Legislative Roundtable April 8th Sales Roundtable
April 19th Monthly Meeting
Inside This Issue:
KRIST: YOU DON’T NEED A ‘YES’ MAN
CARLSON: THE 5 SECOND RULE: DO YOU WANT TO CHANGE ? DO YOU WANT TO GROW?
KEATING: ON THE ECONOMY: THE FEDS PERPETUALLY GLOOMY FORECAST
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Executive Director Steve Kohlmann
President
Dan Hansen
Secretary Charles Fry
Baird
Treasurer Tony Palmen
Sikich
Directors Jim Leef
ITU AbsorbTech Ann Barry Hanneman
Von Briesen Law OďŹƒce
John Weber
Hypneumat
Lisa Mauer
Rickert Industries
Robert Gross
Gross Automation
Scott Seroka
Seroka Brand Development
Tom Parks
Annex Wealth Management
Jake Hansen
Jacsten Holding
Scott Hirschfeld
CTaccess
Andy Oliver
Gear Wash
Al Leidinger
Mathison Manufacturing
IBAW Mission: To advance business prosperity through insightful programming, executive networking and member-driven public policy and advocacy.
! H T N O M NEXT
REGISTER NOW - TIME IS RUNNING OUT… DON’T MISS THE FUN! Newbies Welcome! • You Don’t Need To Be Any IBAW Member To Participate!
Independent Business Association of Wisconsin Monthly Meeting
MONTHLY MEETING
Friday, April 19, 2019 | Time: 7:00 am - 9:00 am Location: The Wisconsin Club, 900 W. Wisconsin Ave. Milwaukee
There's a new Governor in Wisconsin and with that comes a different direction and a different team leading departments that impact your business and way of life in Wisconsin. The Department of Revenue (DOR) is now under the leadership of former state representative Peter Barca. Secretary Barca's previous area of representation was the Racine / Kenosha area - one of Wisconsin's fastest growing regions for business growth - he's no stranger to working with manufacturers and other small business.
Register now at IBAW.com
LOCATION
THE WISCONSIN CLUB 900 W. WISCONSIN AVE. MILWAUKEE
7:00 AM
CHECK IN, COFFEE & NETWORKING
7:30 AM
BREAKFAST & PROGRAM
9:00 AM
PROGRAM ENDS
Sales Roundtable Monday, April 8th, 2019 | Time: 7:30 am - 9:00 am Location: CTaccess, 740 Pilgrim Parkway, Elm Grove
This Event: • Sales • Branding • Marketing
30 seconds is all the time you have to make your sales pitch. Actually, it's probably less than that. Do you have proper pitch or are you hitting hit a sour note? At this Sales Roundtable you'll give your sales pitch and we'll work on it as a group to help you strike the proper chord for your audience.
7:30 AM - 9:00 AM. (Please arrive by 7:25 - we start at 7:30 SHARP. Location: CTaccess Conference Room 740 Pilgrim Parkway, (Lower Level) Elm Grove
Cost: Free, a benefit of your IBAW membership. Registration is required. This event is only open to IBAW members. Coffee provided by CTaccess, bakery provided by IBAW.
Why No Governor Evers at IBAW? Steve Kohlmann, IBAW Executive Director
I’ve been approached by several IBAW members, who I believe are more liberal in their political persuasion than I, gleefully ask me, “So, are you going to have Governor Evers come to an IBAW meeting to speak?” I’ve been asked this question more and more lately so I wanted to give you an update on where I am in this endeavor. In late December, before he took office, I contacted the Evers’ campaign to get in my request to have him appear at IBAW. I know it can take some time to get on the schedule and you can’t do a reach out too early. After all, a new, incoming governor has a lot going and the sooner you make a request the sooner you can get on the list. I did the reach out several times by phone and email and got not response. After he took office, I again contacted Governor Evers’ office and the phone just rang. And rang. And rang. And rang. Not even an answering machine pick up to take an incoming call. I thought that was very strange - and it was. I suppose the new people in his office didn’t get the instructions from the previous administration on how to operate the machine and it just stood idle. Anyway I tried. Since that time I’ve sent email requests, went through the proper scheduling protocols on the Governor’s website, called several more times (this time getting an answering machine) left messages and tried several connections to try and get some type of response. No return emails. No return phone calls. No response whatsoever. With one final attempt (I’m a glutton for punishment) I thought I would try the phone call route one more time. To my shock, a very helpful - and sympathetic to my plight - young lady gave me an email address to write to for an inquiry. Which I did (attempt #9). There was no response. I can tell you now that with no response to attempt #9, there will be no attempt #10. I’ve been in sales a for a few decades and I was a geeky guy in high school, so I know what rejection looks like. I get it. Message received. You would think that at least a phone call from someone saying ‘You know, we’re really not interested in your invitation’ or ‘The Governor’s really busy and we’ll get back to you’ or ‘The Governor is washing his hair that day and sends his regrets’ would be in order. But no response of any kind sends me a very strong message; The business community really isn’t that important to this administration. I’ve told this story before and I’ll tell it again; When Walker was governor I would typically get a response of some kind the within a few hours or within a day. The response was usually one of three: 1: The Governor can’t make it. 2: The Governor will attend. 3: We’re looking at your request and get back to you. But at least someone got back to me either by phone or email to let me know my request was received. You might call it politics. I call it common courtesy. A few weeks ago I attended Business Day in Madison put on by our friends at Wisconsin Manufacturing and Commerce. Governor Evers was invited to attend and speak at that event. He did not attend that statewide event (held in Madison, by the way). Governor Walker always attended that event. It should be noted that I contacted the new Secretary of Revenue, Peter Barca, to invite him to speak at IBAW and his staff is on top of it - calling me back within a few days saying he would be ‘delighted’ to speak at IBAW. He’s our speaker this month and I’m excited to have him with us. Governor Evers has a standing invitation to speak at an IBAW meeting any time. I’ll even create a meeting around his schedule. Unless something changes, my days of calling his office - and not getting a response - are over.
You Don’t Need A “YES” Man. Tom Krist, CEO of WFA Staffing
This quote from a famous ‘name’ jumped out at me and provoked some serious thought:
When two men in business always agree, one of them is unnecessary. ~ William Wrigley Jr.
What struck me was the opposite of what the quotation was telling us. If we never have competing opinions in our businesses would we be as successful as we could be? It is so often the differences of opinion that help us to refine our ideas. There are companies where all employees bow to the positions of the leader of the firm. How much more successful could those firms become if there were some discussion, at least, about how best to proceed. Before that healthy internal dialogue can exist, we who lead our companies need to make known that discussion is valued, and that disagreement is not always unhealthy so long as the disagreement is constructive and not destructive. In the final analysis the boss must make the decisions about the major directions of the company, but wouldn’t it be better if there were healthy discussion, both pro and con, on these decision points before they are made official? If our employees feel comfortable in expressing somewhat opposing points of view, is that not a better environment than blind obedience? It takes self-confident person to be able to place an idea on the table and to then invite constructive criticism, but that person is a much more adept leader for being willing to expose his or her ideas to that constructive criticism. If we don’t get that criticism, maybe we need to step back and apply some introspection. Tom Krist is CEO of WFA Staffing. Specializing in staffing and executive placement services for Southeastern Wisconsin by providing entry-level through executive placement. For more information about WFA Staffing, click here.
An M&A Advisor Will Scare Away My Buyer, Complicate Things and Cost Me Lots of Money. If You Think Any of These Things - You’re Wrong Timothy Oleszczuk, TKO Miller
It is shocking how often we hear this from Sellers. Nothing could be further from the truth for all three of these ideas, and this is what a buyer WANTS you to believe. Let’s take a closer look at each of these fears. An M&A Advisor will scare away my buyer. The answer here is, only if your buyer is trying to steal your business by paying a sub-market price (read: bottom fisher). Remember, a buyer wants to catch you at a weak moment and isolate you from talking to other buyers. This way, the buyer can say things like, “If you run a sale process, I won’t participate,” or “This is the way we (buyer) do deals like yours,” or “All an M&A advisor will do is cost you money, you won’t get any more from us.” These are all threats because the buyer knows he or she is trying to buy the business below market, and a qualified M&A advisor will never let that happen. Don’t fall for this one. A real buyer (one who is not afraid to pay a market value), will willingly participate in a process. Such a buyer knows that a qualified M&A advisor will often help collect the information the buyer needs to make a bona fide offer and facilitate the path to closing. An M&A advisor will complicate things. This one actually may be true if you want to accept a value well below what your business is worth, but if you are looking for a market value, this is hogwash. If your business has any meaningful size, a certain amount of information about the business will need to be gathered, compiled, and presented to potential buyer(s). Qualified M&A advisors are experts in this area and will streamline the process. After the M&A advisor compiles the information needed to sell a business, why not show it to more than one buyer, just to check the price. There is only one way to see if you are getting a market price for your business, run a process and check the values being offered. An M&A advisor will cost me a lot of money. It is true - investment bankers charge a fee. However, in nearly every instance (very closely approaching every), a qualified M&A advisor will get you between 20-50% more than if you act as an isolated seller. This is precisely why buyers that get a seller’s attention will do whatever they can to keep an M&A advisor away and say things like the threats in paragraph one. The rule in this case should instead be, if you, as a seller think you know who the best buyer is without running a process, you will leave 20-50% of your value in the buyer’s pocket and will have your business stolen from you. Remember, for most buyers, this isn’t the first business they have bought. They are as skilled as a first-time buyer is naïve. The skilled buyer will always use his or her skill to the detriment of the inexperienced seller. Think about it this way, if your business is worth $15 million and you sell it to a buyer for $10 million, make no mistake about it, you have transferred $5 million of value to that buyer. On top of that, that buyer will likely use your inexperience to extract favorable terms and a structure.
The Expiration of Windows 7 Scott Hirschfeld, President of CTaccess, Inc.
Windows 7 has an expiration date. Like that past-date gallon of milk in the fridge, it won’t be good for long. Hopefully, this does not come as a surprise to you! Windows 7 went out of mainstream support on January 13, 2015. This date was of little impact, because Microsoft continued to update and keep Windows 7 secure. However, we are approaching a date that we do need to pay attention to – January 14, 2020, which marks the end of extended support. This upcoming date means the end of Microsoft patching the Windows 7 operating system. This is critical, because it means that when a hacker finds a flaw that allows him to get into Windows 7, Microsoft will no longer create a patch for that flaw. When discovered, most hackers either freely disseminate this type of information or sell it on the dark web. This means that if you continue to use Windows 7 after January 2020, you are at a very high risk. For this reason, it is highly recommended, if you have Windows 7 still in operation, you set a plan to get rid of it during the next year. Here are some simple steps to determine what to do with those Windows 7 machines: 1. Upgrade the hardware and the OS – In MOST cases this is the right answer. If you are running Windows 7, the machine hardware is at least close to the 5-year mark and likely older than 5 years. This means that the machine needs to be replaced for two reasons; its performance is not up to today’s standards, and the likelihood of failure goes up significantly after about 4 years of use. The hardware may even be limiting the productivity of the user, because it has been bogged down over the years by all the updates and patches. Most of the Windows 7 machines fall in the category, so it is time to replace the whole unit. 2. Upgrade the OS to Windows 10 but keep the hardware – This is a rarer circumstance, where the hardware is newer, but is still running Windows 7. In fact, if this is the case, when you bought the machine, you likely downgraded the operating system to Windows 7. You may have wanted to stay with something you knew, or you had a certain application that needed Windows 7. Before doing the upgrade, make sure your hardware can handle Windows 10. I would recommend 8GB of RAM and at least an i5 processor. To upgrade, you can buy box product Windows 10 to do the upgrade, or if you have a “Business” flavor of Office 365, it may have an included Windows 10 upgrade. An in-place upgrade is not possible. This means to get to Windows 10 from Windows 7, it requires a reload of the machine and a re-install of all your applications. The process takes a significant amount of time, so it pays to make sure the hardware is worth it. 3. Don’t upgrade at all – There are some odd cases where a machine upgrade is not possible, because the machine is tied into an expensive piece of production hardware that only works with Windows 7. This is a rare instance, but when it does happen, it is important to put some safeguards in place. First, after January 2020, Windows 7 should not be used to check email or browse the web. In fact, we strongly recommend that you remove the ability to access the Internet entirely from
these machines. In addition, we recommend that if you must keep Windows 7, it be moved to its own separate virtual network. Even with these precautions, this is not a good long-term solution. Eventually, you will need to upgrade. Supporting an old operating system for the long term is cumbersome, risky, and not advisable. You may be concerned about the move to Windows 10, but it has proven to be a relatively easy transition for most users. Some of the concern has been created by the fallout from Windows 8 which was much more cumbersome than Windows 10. In Windows 8, they removed the START button in early versions, which proved to be a bad move. This was corrected in Windows 10, and it now works much the same as Windows 7. The START button is there and navigation is as expected! The look and feel is slightly different, but the functionality is much the same as Windows 7. Windows 10 has been out since July of 2015, which has given it plenty of time to be tested and solid. Interestingly, Microsoft is touting Windows 10 as the last version of Windows. This is because they have changed their process for updating their software. Windows now calls them “updates”, not to be confused with security patches, and they now come via downloaded delivery. This means that when these “updates” are loaded, you are on the new version. With this change, we should not hit the same boundary we are now experiencing with Windows 7. A quick side-note about expiration dates, Windows Server 2008 has the same January 14, 2020 end-of-life date. Running an out-of-date server OS is perhaps riskier than staying on Windows 7, although neither are good. Servers are more of a target for hackers because of their processing power and storage capacity. If you haven’t already, plan to retire it and move up to either Server 2016 or the newly released Server 2019. If the Windows 7 expiration or the Server 2008 expiration dates come as a surprise, you may want to consider setting a strategic plan for IT. These things and most IT items can be planned for, budgeted for, and the IT surprises can be limited.
Legislative Roundtable Thursday, April 11, 2019 | Time: 3:00 pm - 4:30 am Location: The Wisconsin Club, 900 W. Wisconsin Ave. Milwaukee The IBAW Legislative Committee presents an open format for you, the Wisconsin business owner, to meet and connect with our representatives in Madison. We'll have Democrats and Republicans in attendance. This is your opportunity to address business concerns directly to your elected representatives from Madison. It's also an opportunity for the Representative to communicate to you what is on deck for the 2019 Legislative Session and to get your feedback. Light refreshments will be served. Free for IBAW members, $25 for non members.
ION T A TR N! S I G RE W OPE NO
Do You Have a Desire To GROW? Do You Want To Change? Kristin Carlson, Focal Point Coaching & Training
The first step is the hardest. Our brain is constantly trying to keep the status quo and prevent us from change. How do we fight back and motivate ourselves to move forward? My new favorite book is “The 5 Second Rule” by Mel Robbins. She shares how this invention changed her life. She had bottomed out and her life was crumbling - career, marriage, family, finances and friends. She could not even get out of bed in the morning - leaving her “behind the 8 ball” the rest of the day. She was inspired by watching a rocket launch one evening and decided that a countdown from 5 would get her out of bed the next morning. She tried it and it worked! She continued to count 5-4-3-2-1-GO each morning to change her behavior and get out of bed on time. When you count backwards your mind makes a mental shift, interrupting your current thoughts and forces your focus in a new direction. It doesn’t allow your brain time to talk you out of taking the first step. You have to count down to make this work! The medical research is in this post! Do you struggle with that inner voice that talks you out of doing that one thing you need to do? Our brain is built to protect us from our fears and likes to keep us in our comfort zone. The inner voice can be unrealistic and even harmful, paralyzing us into inaction. Are you ready for CHANGE? Use the “5 Second Rule” to help you make that first step. It is considered a “starting ritual” that helps change behavior. When you have those “gut feelings” that you should do something, you have less than 5 seconds to win the battle with your brain and take action on those feelings. 5-4-3-2-1-GO! Every day we are challenged by our brains “protecting” us from danger by killing our thoughts & feelings to take positive ACTION towards a goal. We need to be able to fight back and avoid sabotage. The “5 Second Rule” is a powerful tool to take charge of your thoughts and start the change to help you grow! If you would like to discuss your GOALS and how to achieve them faster than on your own, please contact me at kcarlson@focalpointcoaching.com.
Join us for our ENTREPRENEURIAL GROWTH CLASS
BEHAVIOR | MINDSET | STRATEGIC PLAN | METRICS | CUSTOMERS | MARKETING | SALES | CONSTRAINTS
Weekly Starting April 10th 8 AM - 9 AM 3 - MONTH COACHING ENGAGEMENT / WORKSHOP
For More Information Contact: KCARLSON@FOCALPOINTCOACHING.COM
6 Dangerous Behaviors of Disengaged Employees Click to Watch Video
President’s Circle IBAW / DALE CARNEGIE PRESIDENTS CIRCLE A LEADERSHIP PROGRAM FOR CEOs, PRESIDENTS, AND BUSINESS OWNERS
As the CEO, President, or Owner you are asked to produce more results with fewer resources, meet and exceed competition, innovate and motivate. This creates very difficult teams and leadership challenges. Leaders must encourage teamwork, bottom-up idea generation, alignment, loyalty and above all commitment. Rather than direct and dictate, leaders must inspire and motivate!
The Presidents Circle: The IBAW and Dale Carnegie Training have developed an exclusive Leadership program for IBAW members only. The Presidents Circle combines peer group engagement and highly targeted executive Dale Carnegie Training among peers to help you achieve significant results. These results will be achieved by providing insights, peer challenges, and developing leadership skills which are aligned with your organization and which will help drive agendas. By combining corporate mission, vision and values with our unique methodology employees will begin supporting a world they helped create.Ultimately, the only sustainable competitive advantage is the innovation, motivation, and creativity of the employees of an organization. Establishing a strong leadership culture provides the environment where innovation and creativity can flourish.
Program Specifics: • Meetings with other IBAW CEOs/Presidents/Business Owners • 10 monthly meetings • Dale Carnegie Executive Leadership Training workshop each session. • Round Table Issues Discussed and Resolved • Guided Yearly planning • •
Accountability among peers. Business Results
The President’s Circle will help you achieve results by: • Providing training among peers • Creating and sustaining change initiatives • Ensure continuous improvement and bottom-line impact • Align the organization behind a common vision • Develop a habit of fact-based decision making at every level. • Strengthen and implement strategic planning • •
Create a value based culture to ensure loyalty Build energy and trust up and down the organization to insure customer loyalty.
Program Leader: Steve Bobowski
“Knowledge isn’t power until it is applied.” -Dale Carnegie
Commitments: • Attend meetings • No cost for meetings, a benefit of IBAW membership • Referrals or 3 enrollments For more information, contact Program Leader Steve Bobowski by clicking here.
Our Unique Dictionary in Which March Madness Meets Tax Madness Jim Brandenburg, Sikich It’s that special time of year. As a long cold winter begins to melt away, potholes pop up on every road, and everywhere you go brackets are in the air. You might be thinking about March Madness and the brackets for the NCAA basketball tournament. Yes, this is a thrilling sports time of year when college hoops, the start of another baseball season, and the Masters golf all come together. But there are some other brackets folks are concerned with now. Tax Brackets. This is the first year dealing with the recent tax reform bill, the “Tax Cuts and Jobs Act” (TCJA). There are many changes to consider, including lower tax brackets, but there are also several new deductions and limitations on other deductions that we must keep in mind. In addition, there are many complex rules and regulations from the IRS intended to help interpret these new changes. It’s March Madness of a different sort—“Tax Madness”—as everyone (individuals and businesses alike) tries to dribble through these new rules to score some tax savings. We thought we would rollout our unique dictionary in which March Madness meets Tax Madness; where some basketball terms intersect with tax terms found in the TCJA. Some of these are lay-ups and you’ll follow along, while others you’ll need to jump up to make the connection. Read through the following definitions between games this weekend and maybe even score some points for you or your business: •
Airball. An airball by the shooter comes up short – it’s worth nothing. A TCJA airball might relate to many itemized deductions that had some value before TCJA, but now are worthless. Some examples include investment expenses, unreimbursed business expenses, tax preparation fees, and most interest expenses on home equity loans.
•
BEAT. After all the hype, the games finally begin, and the teams battle it out to beat each other. TCJA also established its own BEAT program. One of the new international tax reforms was a tax known at the BEAT, or the “Base Erosion and Anti-abuse Tax.”
•
Bonus. You may have already figured this one out. One of the key provisions in TCJA was the expansion of “bonus” depreciation. Companies can now write off 100% of qualifying capital expenditures (CapEx), which is up from 50%. In addition, the “double bonus” is that the 100% bonus depreciation now applies for new and used property.
•
Brackets. As mentioned above, everyone is filling out their brackets. But tax brackets were also one of the main changes in TCJA. The corporate tax brackets were significantly reduced to 21%. Individual tax brackets were also lowered, and the income ranges for these brackets expanded. Brackets, Brackets, Brackets.
•
Baskets. TCJA brought about many changes in international taxes, including complicated new rules for separate “baskets” of income for foreign tax credit purposes.
•
Double Dribble. In the past, some taxpayers only had a handful of itemized deductions. The slow dribble of deductions may have left them claiming the standard deduction. One of the key individual changes in TCJA was to double the standard deduction up to $24,000 for married couples and $12,000 for single taxpayers. This doubling of the dribble is worth more after TCJA.
•
Dunk. After TCJA, several deductions were dunked and thrown away by Congress. This includes entertainment expenses (the 50% that had been deductible is no longer), employee parking expenses, and certain fines and penalties.
•
Elite Eight. This is when the field gets down to eight teams – only one win away from the final four. TCJA made many changes for businesses and most of these were permanent. For individuals, however, many of these changes and savings last only eight years from 2018 through 2025.
•
Final Four. This isn’t in reference to the four teams that end up in Minneapolis this year, but four accounting methods from TCJA directed at providing tax incentives to small businesses. Please click here to see if your business might benefit from one or more of these.
•
Opportunity Zone. Teams look for good shooters to make shots from the opportunity zone beyond the three-point arc. TCJA offered its own opportunity zones that permit taxpayers who recognize capital gains from deferring these gains by investing in qualified opportunity zone funds. IRS guidance is still needed on this topic.
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Paid Leave. Many of you may be at work over the next few days but might “occasionally” check in or watch some of the many games. You are still getting paid, but you leave your work alone. Well, we have another tax article that covers this as well. It addresses a new tax savings tool by TCJA that provides businesses a tax credit if they offer paid family and medical leave. While the leave is required for most employers at the federal and state levels, it does not need to be paid. But, if businesses do pay employees for this leave, they may be entitled to this new tax credit. Read up on this new incentive.
•
Sweet Sixteen. Teams that survive the first weekend of the tournament end up in the “Sweet Sixteen.” This year there was an expansion by TCJA of the child tax credit from $1,000 to $2,000 for dependent children ages 16 or under. And the range at where this credit is phased-out was significantly increased. A sweet tax savings for 2018.
•
Technical. In TCJA, one of the major CapEx changes (discussed above) was for “Qualified Improvement Property” (QIP). QIP was supposed to qualify for bonus depreciation, but a technical glitch (a drafting error in Congress) resulted in no bonus depreciation. QIP should have qualified for this accelerated deduction, but it technically didn’t meet the letter of the law. This glitch has yet to be fixed by Congress.
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Traveling. If you want to travel overseas, make sure you have settled all your prior tax obligations. If you have any unpaid federal taxes owed from previous years, you will not be able to obtain or renew your passport until that tax is paid to the IRS. This change was not part of TCJA but still something to be aware of.
•
Upset. Every year there seems to be a surprising upset or two. That’s what makes the tournament so exciting and fun to follow each year. An upset also applies for many taxpayers with several of the TCJA changes, especially with the new limitation on business interest expense. Not only will many taxpayers possibly have some interest expense disallowed, but they will also need to deal with complicated rules and added compliance. Many taxpayers are upset with these new rules, and more will join them as they learn about this new provision.
That’s it for now. Wall-to-wall basketball, and some tax tips as well. Speaking of tips, it’s almost tip-off time. Enjoy March and Tax Madness!
IBAW Members Score Wine By Giving Referrals IBAW members can get a free bottle of wine every time they refer a business friend to IBAW and that persons joins. We want to grow the IBAW and since we are a member driven organization, we rely on you to help grow the group. Who makes a great candidate for IBAW? Any person or business that has a ‘pro business’ attitude is an ideal candidate. This can include businesses both large and small along with individuals who are entrepreneurs and/or who are free market thinkers! Contact IBAW director Steve Kohlmann for details on how you can invite a guest to a monthly breakfast meeting.
Welcome New IBAW Members! Edge - Where Leadership Begins Dan Freschi Solutions to organizational challenges with leadership and organizational development.
Invite Them Home Herb Guenther Web Site SEO Solutions
Voya Financial Advisors Alan Fisher Financial Advisor
IO Technologies David Martin Custom Software Development & Support
In Case You Missed It: Healthcare Solutions, Manufacturing Grows and More Taxes For Wisconsin Farmers Chris Rochester, MacIver News
As Gov. Tony Evers’ budget continues to make news, and more and more analyses are published, the economy continues to move along. This week, new data shows manufacturing is growing again in America, and new reports show one approach to make employer-based healthcare better. Here are a few articles from this week that every fiscal conservative should read. Evers’ Tax Increase on Manufacturers Would Hit Farmers, Too A memo from the nonpartisan Legislative Fiscal Bureau reveals that Gov. Evers’ plan to raise taxes for some would also end tax relief for food manufacturers. This memo said that a quarter of manufacturers who claimed the Manufacturing and Agriculture Tax Credit (MAC) have deep ties to agriculture. This memo shows that the tax increase would affect farmer and other food producers important to the Wisconsin economy, despite Evers’ administration claims otherwise. Nationwide Manufacturing and Construction Grew in January The Census Bureau released numbers Wednesday indicating a rebound after a lackluster end to 2018. In January, construction spending nationwide rose 1.3 percent after falling 0.8 percent last December. New orders for manufacturing goods also rose 0.4 percent. Economists are hopeful that this uptick means the economy will rebound after the struggles of late last year. How Employers are Fixing Health Care In an article for the Harvard Business Review, Lisa Woods, Jonathan Slotkin, and M. Ruth Coleman explore a new approach to health care that Walmart is trying in an effort to improve quality while decreasing costs. The study has found that Walmart’s new travel program for healthcare allows costs to go down, and allows employees to return to work sooner. Cohn: U.S. Losing Tariff War Former White House chief economic advisor Gary Cohn said that the Trump administration’s tariffs are not working, and the United States is losing the trade war as a result. The U.S. trade deficit continued to rise last year, despite an increase in tariffs placed on aluminum and steel. Cohn blamed Peter Navarro and Commerce Secretary Wilbur Ross for the trade wars. The full interview with Freakonomics can be found here.
On The Economy: The Feds Perpetually Gloomy Forecast Raymond Keating, Chief Economist, SBE Council, Washington D.C.
The Federal Reserve issued its latest statement on monetary policy on March 20, along with its economic projections. In its statement, the Fed summed up it take on the economy this way: “Information received since the Federal Open Market Committee met in January indicates that the labor market remains strong but that growth of economic activity has slowed from its solid rate in the fourth quarter. Payroll employment was little changed in February, but job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Recent indicators point to slower growth of household spending and business fixed investment in the first quarter. On a 12-month basis, overall inflation has declined…” So, the FOMC left its targeted range on the federal funds rate unchanged at 2-1/4 to 2-1/2 percent, and apparently there’s little stomach for fed funds hikes in the near term. Of course, it also needs to be noted that the fed funds rate remains very low historically speaking (see the following chart).
Source: Federal Reserve Bank of St. Louis, FRED We’ll have to see what this means in terms of the Fed’s recent effort (starting in late 2017) to rein in the monetary base, which, of course, exploded in unprecedented fashion for more than a decade starting in late summer 2008. As for what might be ahead of us on the economy, the median projection from the FOMC shows expectations for real GDP growth of only 2.1 percent in 2019, followed by 1.9 percent in 2020, 1.8 percent in 2021, and a longer-run average annual growth rate of 1.9 percent. However, inflation is expected to stay tame at about 2 percent.
Despite March 20 being the first day of spring, the Fed continues with its gloomy economic forecast. Indeed, it’s hard to take the Fed’s economic outlook seriously as it never seems to vary from expectations for a rather dismal slow-growth economy as far as the eye can see.
Of course, economic forecasting is a game fraught with uncertainty. But the Fed seems quite certain that the U.S. economy is doomed to slow growth. I’m not so pessimistic. In many ways, U.S. entrepreneurs, businesses, investors and workers remain a pro-growth bunch. Things, of course, go astray when politicians and government – from Congress to the Fed – impose misguided costs and uncertainties that send growth off the rails. _______ Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.
Coach’s Corner Don’t Criticize, Condemn or Complain Steve Bobowski, Dale Carnegie Coach Dear Carnegie Coach Bobowski: We had our Annual Review meeting before the end of the year and it was a technical disaster. The slides were fuzzy, the sound system was echoed, was too loud and then too soft and the food was brought out late. I had my best person handling everything. How do you suggest I handle the situation with them? Matt from Kenosha
Dear Matt: Mr. Carnegie liked to tell the story of Bob Hoover, a famous test pilot and frequent performer at air shows. Hoover was returning to his home in Los Angeles from an air show when suddenly, both engines stopped in mid-flight. Fortunately, he managed to land the plane and nobody was hurt, but the plane was badly damaged. Upon inspection the airplane's fuel had been fueled with jet fuel rather than gasoline. Hoover asked to see the mechanic who had serviced his plane. Hoover didn't scold the mechanic; he didn't even criticize him. Instead, he put his big arm around the mechanic's shoulder and said, "To show you I'm sure that you'll never do this again, I want you to service my F-51 tomorrow." THE ACTIONS I WANT YOU TO TAKE: • Don't Criticize, Condemn or Complain: Instead try to understand him or her. • Give Them A High Reputation To Live Up To: Let them do the task again. THE BENEFITS TO YOU: • You saved and created a loyal employee!
: S E L A S
2nd Monday of the Month SALES ROUNDTABLE 7:30 am - 9:00 am Free & open to IBAW members only Register at IBAW.com
Sales can be a tough road of ups, downs, potholes and a few bumps. But it can also be fast paced, exhilarating and rewarding. If you’re in sales, you know there are things only other sales people understand; the thrill of scoring the big account, the uncertainty of “let me think about that.”, the frustration of phone calls or emails that don’t get returned. IBAW’s Sales Roundtable is a support and knowledge resource for sales professionals, business owners, marketing and branding experts who are charged with driving sales. Join us to discuss the strategy, tactics, inspiration, and motivation to increase sales. It’s a FREE benefit of your membership! Who should attend: • Sales professionals of any level. • Business owners • Sales Managers • Marketing & P.R. Professionals
“For many years I ran sales meetings for as few as 3 and as many as 22 sales rep’s now I can go as a participant once a month to IBAW’s Sales Roundtable.
BONUS! Join the IBAW Sales Roundtable and get a compact disc with the BEST in Sales Survival Music. Play it to pump you up before that big meeting or to console you if you hit a sales slump. Guaranteed to make life better.
It’s a focused meeting and everyone wants the same thing – to be more effective at selling.” - Jerry Wick, CEO, Custom Data Too Mail
IBAW Public Policy Committee Hosts Legislative Roundtable in Brookfield
The IBAW Public Policy Committee hosts a Legislative Roundtable every spring and fall featuring representatives from Madison to discuss important issues business owners face. It’s your opportuntity to speak to your elected officials. Past meetings have had representatives Senator Lena Taylor, Senator Chris Kapenga, Representative Rob Hutton, Joe Sanfelippo, Christine Sinicki, Samantha Kirkman and Representative Dale Kooyenga. Meetings are held at the offices of Sikich in Brookfield. Welfare reform, excessive business regulations and the ever increasing shortage of a competent workforce were the main concerns of business owners as well as crime and the state of Milwaukee Public Schools. Save the date - our next Legislative Roundtable is April 11th!
IBAW is on an upward trend of growth and we are actively recruiting businesses just like yours to join! When you join IBAW your entire company is a member - anyone from your team can attend our fine educational and networking events. Help yourself, your business AND your Team Members. Come on in...we’re open for business!
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2019 Membership Committee
Jake Hansen Jacsten Holdings
Charles Fry Robert W. Baird
Mike Poludniak Merrill Lynch
Dan Hansen
Legislative Fix Moving Ahead for Wisconsin’s New Manufacturing & Agricultural Credit Jim Brandenburg, CPA, MST - Sikich LLP
In IBAW meetings and publications in recent years we have introduced you to Wisconsin’s new tax incentive - the Wisconsin Manufacturing and Agriculture Credit (referred to as the “MAC”). The MAC came about in 2011 to provide an incentive for Wisconsin manufacturers and agricultural companies to remain and grow here, and also perhaps to have out-of-state companies move here. It was scheduled to begin in 2013, and when fully phased-in by 2016 it would essentially exempt any Wisconsin manufacturing and agricultural income from Wisconsin income tax. The MAC was championed by Representative Dale Kooyenga and Senator Glenn Grothman in the legislature.
Magazine Content Needed Consider Submitting an Article!
The MAC, however, had some problems for individual taxpayers when it was drafted and this glitch was recently identified. Here is the issue in a nutshell: the MAC would reduce a taxpayer’s Wisconsin individual income tax, but then would trigger a Wisconsin minimum tax for nearly the same amount. Thus, there may be little, if any, net savings for the MAC in 2013 (a “MAC Attack?”). The legislature is trying to remedy this situation now so that taxpayers can realize the proper tax savings with the MAC on their 2013 Wisconsin individual tax returns.
The IBAW magazine is in need of content, we rely on our members and sponsors to supply us informative articles. The digital magazine is sent out to over 650 contacts statewide and the magazine is parked on the web where, on average, it gets over 1100 views.
Legislative Update: It seems that all key legislative leaders are now on board to correct this issue. It was approved by the legislature’s Joint Finance Committee last week. The Senate and Assembly will be in session in March and voting on final passage for several bills, one of which is this tax bill with the MAC correction. It looks like the legislative timetable will have the bill passed near the middle of the March, before going to the Governor. Thus, a best guess now is that the bill would be enacted into law somewhere in the latter half of March, 2014. MAC Attack Options: For any of our individual taxpayers taking advantage of the MAC, this may present some filings logistics. Here are the possibilities:
1. Best case scenario - in some cases the taxpayer’s share of the MAC for 2013 will be used and not result in a Wisconsin Minimum Tax. A taxpayer in this situation could go ahead and claim the MAC and file their 2013 Wisconsin individual return. There would be no need to wait for the legislation to pass.
Consider writing an article on a timely business related topic to your particular field of business. This is an outstanding opportunity for you and your company to gain exposure and increase your brand awareness to a statewide audience. There is no cost to submitting an article.
2. Next, a taxpayer has generated a MAC for 2013, but it will trigger a Wisconsin Minimum Tax. The taxpayer in this case could wait until the law is changed (and then wait a little for the WDR to update its computer processing systems) and then file their Wisconsin tax return and claim the MAC, and not incur the Wisconsin Minimum Tax. This could present a tight timeline for the April 15 deadline, and you may need to file for an extension.
3. Similar case as #2, but this taxpayer could file their Wisconsin individual return with the MAC, but also incur and pay a Wisconsin Minimum Tax for 2013. Then, once the corrective law is enacted go back and file an amended 2013 Wisconsin tax return to obtain the proper tax benefit of the MAC. You would not need extend, but you would need to amend. We’ll keep you posted as this legislation moves forward. If you have any questions, please contact Jim Brandenburg or Brian Kelley at Sikich, LLP in Brookfield (262)754-9400.
Contact Steve Kohlmann for details.
Articles submitted by our members & sponsors.
Welcome New IBAW Members!
Meeting Recaps 2014 Wisconsin Manufacturing Knowledge Summit
Power Test
On June 20, 2014 the IBAW partnered with the Tool, Die & Machining Association of Wisconsin (TDMAW) to offer Wisconsin manufacturers and their suppliers a unique look at trends within the industry and to also report on some of the challenges the industry faces in the next 5 years.
Power Test, Inc. is an industry leader in the design, manufacture and implementation of dynamometers and control systems.
Special thanks to the event sponsor, First Business Bank for their efforts in helping organize this event.
For more than 37 years, Power Test has provided specialized test equipment to manufacturers, rebuilding facilities and distributors globally. Our products can be found in use at these facilities in nearly 100 countries on six continents.
Chris Halaska
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Our headquarters and manufacturing operations are located in Sussex, WI with sales representatives worldwide. Our unparalleled customer service is well known throughout the industry. Power Test employs a dedicated staff of talented machinists, fabricators, electronic technicians, assemblers, designers, engineers, software developers, and administrative and customer service personnel. Our exceptional product life and excellent customer service is well known throughout the industry and has made us one of the industryleading dynamometer manufacturers. Our dedication to the customer and to the advances in powertrain component testing keep us there.
Power Test N60 W22700 Silver Spring Drive Sussex, WI 53089 Phone: 262-252-4301
4 Advanced Waste Services Advanced Waste Services is an environmental services company that provides wastewater recycling and other waste and risk elimination services to manufacturers in all industries. Each day, AWS helps hundreds of businesses, both large and small, meet their community and environmental obligations. Annually, we collect, treat and recycle more than 50 million gallons of contaminated wastewater into clean, reusable water and other valuable resources like fuel, steam and electricity. AWS is constantly helping our clients manage, reinvent and improve their sustainability successes. For example, we recently partnered with Forest County Advanced Waste Services Potawatomi Community to help Wisconsin food and beverage manufacturers convert 1126 South 76th Street food waste into clean, green renewable energy. Suite N408B West Allis, WI 53214 Founded in 1993, AWS employs 55 people in the Milwaukee area and a total of 150 people companywide in 5 states. 414-847-7100
Photo Key 1: A full house in the main ballroom of the Wisconsin Club as IBAW & TDMAW members prepare to hear about the state of manufacturing and the challenges the industry faces in the workforce.
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2: David Vetta of First Business Bank delivers opening remarks and highlights the importance of a strong relationship between banking and manufacturing working together for success. 3: New IBAW President, John Weber of Hypneumat addresses the change in IBAW Bylaws and calls for voting in new board officers. 4: Kent Lorenz of Acieta gives the main presentation on “Manufacturing Matters” pointing out the trends on manufacturing now and what to expect in the future. 5: Outgoing IBAW President, Steve Van Lieshout receives his award for his efforts as 2013 - 2014.
6 Photos courtesy of Tim Townsend.
6: IBAW Executive Director, Steve Kohlmann (Left) presents David Drumel with an award for his service on the IBAW board.
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THERE’S ROOM AT THE TABLE
As an advocate for small business, the IBAW offers intimate meetings on relevant topics such as Leadership, HR, Sales, and Political Issues. Business Leaders...Leading Business
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“ I almost always come away from an IBAW meeting with useable material that helps me with my business. Many times, a speaker will give me something that applies to ITU AbsorbTech. Other times, it is a conversation over breakfast that gives me value.” Jim Leef, President & CEO, ITU AbsorbTech
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