BankerGirl

Posted by Heidi on May 14th, 2008 in wedding

As a future bride, I found this AP article on msnbc.com to be of great interest.  Not because of what it says about the economy, (looks like we’re experiencing more than just a period of “economic tightening” if even recession-proof industries are feeling the effects), but what it says about the costs of an “average” wedding.

The wedding industry has long been considered one of most recession-proof. Most brides, grooms and their parents see the “big day” as a once-in-a-lifetime event not to be skimped on. But unlike Cinderella and Prince Charming, who didn’t have to worry about a mortgage on the castle, more couples are finding it hard to swallow the average pricetag of items like wedding cakes (about $500), bridal gowns (around $1,300) and flowers (near $2,000).

I was shocked to read that the average bride spends $2000 on flowers.  I understand spending $1200 on the dress (but that seems a bit high), and even $500 on a cake (especially if you’re favorite food in all the world is buttercream icing) - but flowers are one of the more forgettable elements of a wedding, unless you’re really doing something spectacular with them.  Maybe I just feel this way because I prefer nearly any gift (food, clothes, jewelry) to flowers - why spend so much on something that dies in a day or two?  Maybe I’m just not girly enough to understand the allure of freshly cut stems.

According to the Wedding Report Inc., the average cost of a wedding is down $28 over last year - to $28,704. 

Many other couples… are cutting some corners as they put their weddings together. Wedding trend tracker The Wedding Report Inc. estimates the average cost of a wedding will dip slightly this year to $28,704, compared with $28,732 in 2007.

That runs counter to the trend of the past 15 years, when wedding spending has nearly doubled, according to Conde Nast data. Tammy Elliot, president of the Perfect Wedding Guide wedding planning Web site, noted that the market is growing quickly due to the children of baby boomers.

Wow. 

My heart really goes out to those poor people who make a living off the industrial wedding machine.  Assuming that this can be correlated to a decrease in profit, their average revenues have be down less than a tenth of a percent - they must really be feeling the pain.

Who are these people that can drop $30,000 on a single day? 

The article goes on to explain one way cut some expenses is forgo your dream honeymoon: 

Portofino, Italy, had been 30-year-old Kate Witten’s ideal honeymoon destination for four years. Witten, a yoga instructor who lives in Atlanta, and her boyfriend chose the Mediterranean fishing village just a few weeks after they started dating. But when they realized a few months ago how expensive it would be with the euro worth about $1.55, they nixed the idea and decided on South Africa instead.

“Who knows how long the euro is going to stay this way?” said Witten. She noted that their two-and-a-half week trip to South Africa will add up to a relatively hefty $8,000, but they will be able to stay at high-end hotels. “We would’ve had to really pick and choose carefully in Europe.”

Poor Kate Witten - she’s “settling” for an $8000 honeymoon in South Africa.  I was feeling guilty about even considering a $3000 trip to the Bahamas (although, I bet that Kate and her fiancé have zero credit card debt or student loan debt, where as we have a lot of both).  Maybe I should feel guilty.

Even if I had $100,000 to spend on the “dream” wedding mentioned in the article, there are so many other things I’d rather do with that kind of coin.  Paying off debt is at the top of the list, naturally, followed by gifting a percentage to my church or local non-profit.  I suppose if you have $100 grand to spend getting hitched; you probably don’t have any debt and are already quite the philanthropist. 

Perhaps I’m just jealous.  If I had managed my finances better in my 20’s, I’d probably be able to take an $8000 honeymoon, too.

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Posted by Heidi on May 13th, 2008 in college, teaching

I ran out of time tonight due to my class preparations (and since I work 16 hours tomorrow, I need my beauty sleep), so I thought that I’d post some of the questions from the exam I’m giving my Introduction to Contemporary Business students tomorrow night (I never appreciated how long it takes to write a text until I became an instructor!). 

I typically teach high-level corporate finance (think bond pricing and asset-backed securities) or marketing management classes, so this course has been a break from the norm for me.  I was surprised by the breadth of knowledge these students are responsible for - this is one of the early required courses in the cirriculum - but I guess they have to start building a foundation somewhere.  This exam covers an extremely broad range of topics, so I bet most readers know the answers to a high percentage of these questions.

Are you smarter than an associate’s student?  Take the short answer section of my exam and find out. 

1. List the four Factors of Production and explain how these factors influence the overall supply of goods and services.

2. What is dumping? How do countries counteract this practice?

3. What does SWOT stand for?

4. Name and describe the five types of teams in the workplace.

5. What does SBA stand for?                                       

6. Discuss each of the four motives frequently cited as major reasons why people become entrepreneurs.

7. List four of the major challenges regarding e-commerce for both consumers and businesses.

8. Name the four primary functions of the Internet

9. List the steps involved in the decision-making process.

10. Name the four forms of incentive compensation.

11. Name the five needs in Maslow’s hierarchy.

12. Name the four P’s in the Marketing Mix

13. Name the Federal Reserve’s three major policy tools

Good luck!  I’ll post the answers tomorrow.

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Posted by Heidi on May 12th, 2008 in household spending, track expenses

I reconciled my checking accounts this morning, a process which entails categorizing all of my expenses.  While I’m spending less and saving more than I was this time last year, I have been spending more on entertainment (quite a bit more) than I did in March.

I typically associate seasonal spending with the holidays, but I looked at my records from this time last year, and my forensic accounting has revealed a trend - April and May are disproportionately large spending months for me.

A few of the reasons are obvious.  First of all, Matt’s birthday is in April, as is my best friend’s.  While we don’t buy expensive gifts for each other, we typically do go out for a nice dinner or two.  Second, as I have already mentioned, spring means it’s time to spend some time on money on the yard.  I plant annuals, buy a few hanging baskets of flowers, and plant fresh herbs.

Finally, we entertain at home much more when spring arrives.  Our house is small, but we have a nice outdoor space that becomes our second living room during fair weather months.  On any given weekend evening between now and October one can usually find us on out on our deck, enjoying good food and good adult beverages with good friends.

I love to entertain.  More specifically, I really enjoy cooking for friends and family.  I don’t make anything fancy (tonight, for example, it was Niman Ranch sausage, grilled and served with fresh mozzarella and a homemade sweet pepper relish on toasted ciabatta rolls), but I do like to use quality ingredients.  We budget a bit more for food in the summer, and with the fruit, veggies, and eggs I’m scoring from my CSA - we should spend much less on food this year than we did in 2007. 

All and all, I feel pretty good about my planned expenses this summer.  We’re doing a couple of days of a bicycle tour, volunteering at a two-day music festival, and attending a few weddings - as well as planning our own.  This year I’ve offically given up golf (it’s an expensive hobby - I never played enough to become good at it), we have most of the bike gear that we need, and we never take much of a vacation - so our summer spending should be kept in check from here on out.

Summer hobbies (biking, golfing, boating are all pretty pricy), summer travel, and all those summer weddings really add up.  What’s your summer weakness?  Do any readers experience a similar uptick in spending this time of year?   

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Posted by Heidi on May 11th, 2008 in Week in Review

Spring officially began last March, but this weekend it finally felt like spring.  The flowers in my backyard are all in bloom, the outdoor patios at the local restaurants are all open, and we went to the first farmers’ market of the season yesterday!  These are a few of my favorite things…

In honor of mother’s day, this week’s round-up is brought to you by a bunch of fabulous females:

Squawkfox rocks a smart and fun post on How to be a Woman.  This one made me wish you could send applause via email.  

SVB reminds us of the benefits of odd jobs.  I’ve worked some odd jobs myself, including being involved in a 10-year university study. 

SingleMa reflects on being a mom to BabyGirl and a mother’s unconditional love.  I can’t even imagine what motherhood must be like, but her post provides some frank insights.

Mrs. Micah shares some thoughts on personal responsibility.  It took me a longer than most people to figure out that I was in charge of my own destiny - but once I did, my life changed incredibly.

Finally, Penelope Trunk offers up a list of four ways to boost productivity.  My new job is way more demanding than my previous role, so I’m always looking for ways to do more with the limited time that I have.

Mom, thanks so much for all that you have done to make me the strong, smart woman I am today.  I know that I’ve been especially challenging, and there are not words for my gratitude.   

When I write next year’s post, I will officially have a second mom.  Happy mother’s day to you, Linda -and Happy Mother’s Day to all of the moms out there!

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Posted by Heidi on May 8th, 2008 in Entrepreneur, banking

This is the second of a multi-installment series on starting your own business.  If you’d like to start reading this series from the beginning, click here.

As an entrepreneur, your number one resource should be your banker.  The sad truth is, most bankers won’t spend a lot of time with potential customer who need to borrow less than $50,000.  From a simple cost-benefit analysis stand point, small business loans of this size are typically highest risk and the least profitable.  Here is a standard list of self-help resources I typically point my small, start-up clients towards:

•1.    The SBA (Small Business Administration) is a wonderful resource for those who have no idea where to begin.  Their website has helpful information for starting, growing, and exiting your business. 

•2.    SCORE often partners with the SBA.  SCORE volunteers are retired and current executives and entrepreneurs who donate their time and expertise to council entrepreneurs.  To find a mentor near you, just enter your zip code in the “In-Person Mentoring” section on the SCORE home page.

•3.    Entrepreneur.com and BusinessWeek are also pretty good resources for marketing and operational information, and CNNMoney.com has a Small Business section and forum.

Next week’s post will be about organizing your small business.  I’ll discuss the benefits and challenges faced by business owners operating as sole proprietors, partnerships, LLCs and corporations. 

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Posted by Heidi on May 7th, 2008 in career, work

I celebrated a birthday earlier this week and I think I made a big career mistake during the festivities.

I told my boss the year I was born.

His reaction was, “‘What?!  You’re kidding, right? Wow, you’re young.  I thought you were at least five years older than that!”

Looking back, maybe I should have been offended by the fact that he thought I was nearing 40 (nah, I have always looked older than my age), but the way he reacted got me thinking about a conversation I had with my pervious leader a few weeks before I transferred to my current job.

It went something like this:

Her: You have hit your earnings ceiling here.  At least for now.  You’re awfully young to be at your salary. 

Me: I don’t understand. 

Her: We usually require people in your pay grade to have at least 10 years of experience.

Me: I’ll have 10 years under my belt next June.  Plus, I have a master’s degree.

Her: I have people on my staff who have been here for 20 years and don’t make what you do.   

Me: The other people on your staff don’t have the responsibities for profitability that I do.

Her: You know what I mean.  You’ve reached the end of your career path in this business unit.  At least until the CMO retires.

As I’ve mentioned before, this woman has never been my biggest fan, but she didn’t actively dislike me until she knew what my salary was (I was a new direct report - my hiring manager left for another opportunity).  I have a sneaking suspicion that my pay wasn’t much less than hers - and she had a fancy title and had just celebrated her 50^th birthday.

My partner and I were discussing these two events last night, and he suggested that I start lying about my age.  This is not an original idea - most women pretend to be younger than they really are - but in my case, Matt thinks it may work to my advantage if I tell people I am older than my actual age.

Maybe he has a point - I’ve never had a leader or boss that was fewer than 10 years older than me.  Is there a certain age requirement for acceptance into the C-suite?  The financial services industry seems to employ more than their fair share of middle aged white guys.  Maybe it’s my gender combined with my age that’s an issue - but I’ve never been one to play the “girl” card - at least not outside of my blog.    

Do you think that age matters in the workforce?  I never did - until Matt got me thinking about it.  Perhaps he’s on to something. 

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Posted by Heidi on May 6th, 2008 in Uncategorized

After a ridiculously long winter, spring has finally arrived in the Midwest.  There are only three or four perfect days (i.e. 71 degrees and sunny with zero humidity) per year in this part of the country.  Typically, Matt and I like to take advantage of such days by enjoying a bike ride or a scenic drive and picnic at a nearby state park, but when a perfect day presented itself last weekend, we did what everyone else on our block was doing - yard work.

I live in a wonderful neighborhood - it’s a older part of town and the people who reside here take a lot of pride in their homes.  We own a very cute little 1930’s brick and stucco Tudor that sits at the top of a pretty steep hill.  Our neighbors are a very diverse group - DINKs like Matt and I, families with young children, and retirees who have lived on this block for more than 30 years.  For the most part, we really enjoy our neighbors - except during this time of year. 

I’m not sure what the deal is, if there is some secret pact that all of our neighbors made without our knowledge or what, but it seems like everyone on our street spends a lot of time and money on their yards.  I’m not just talking mowed and trimmed lawns - I mean manicured, landscaped, beautiful yards.  Most of the adjacent properties are occupied by retirees and stay-at-home spouses - I figure they must spend half of their days planting annuals and mulching this time of year.

Last weekend I spent $187.28 on annuals and perennials for the front of the house in an attempt to keep up with the Joneses (actually, they are the Smiths and the Parkers, but you get the idea).  I tried to go low-maintenance and purchased decorative grasses and phlox, but while I was planting I discovered that our retaining walls - old railroad ties - are rotting and infested with carpenter ants.  It looks like the previous owners just filled them full of foam and painted them black prior to listing the home - and now they are our problem.    

Oh, and just to make things interesting, our front steps (concrete) have begun to crumble with the spring thaw.  Yay!

We have more labor than money, so we’ve been brainstorming ways to replace the retaining walls ourselves with an inexpensive alternative to landscaping stones.  We think that we have a solution, but it’s going to be extremely labor-intensive.  You see, my dad is a farmer and we have access to tons of free fieldstones (literally, tons).  The challenge is that we have a lot of square footage to cover, and the rocks that make ideal cornerstones and bases are extremely large and not exactly something we can just throw in the back of my C-RV and haul home. 

Right now we’re doing a cost-benefit analysis regarding hiring a contractor to move and place the rocks against the cost of using concrete retaining blocks from Lowe’s. 

I had no idea we would have to tackle a landscaping job this size just two years after buying the place - and we still need to fix the deck and replace the patio door as well.  Inside the house, the fridge, hot water heater, furnace and air conditioner will also need to go sometime in the next few years (we had anticipated these appliance updates  - but they will likely take a back seat to the yard stuff).   

I wish someone would have warned me about the “joys” of owning an older home before I signed on the dotted line (not that I would have listened). 

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Posted by Heidi on May 5th, 2008 in wedding

This is the third article in my series: BankerGirl Plans a Wedding - a honest account of my wedding decisions and related expenses as they occur.  New readers can click here to start the series from the beginning. 

Today I had hoped to publish a post celebrating the fact that we finally confirmed a wedding caterer. 

This is not that post.

Last week, I made arrangements for Matt and me to meet with a prospective food vendor for our October wedding.  I was super-stoked to see her menu recommendations - I had heard that she was a big proponent of using only locally produced, organic foods.   Her credentials were impeccable - she even catered a 1000-guest fundraising dinner for Bill & Hillary Clinton.   I had heard nothing but wonderful things about her abilities as a chef, but after our interaction last week - I’m not so sure I can hire her. 

When I first visited with her over the phone, I was completely on board with her vision for our menu.  Some of her ideas included pork prepared three ways, no fewer than half a dozen salad and vegetable dishes showcasing seasonal produce, and two styles of potatoes - all for $20 per plate.  She even promised to throw in free use of her china and flatware (to encourage use of real dishes instead of land-filling paper waste). 

It all seemed too good to be true, and that should have been a red flag.

I emailed her a few days prior to our scheduled appointment, reminding her of the directions to the wedding/reception site and telling her that I was looking forward to seeing what she had put together for a menu.  I even talked to her on the phone the day of our meeting and verified the time and my expectations. 

My expectations were not met.

She arrived at the location forty-five minutes late.  And she didn’t come alone.  She brought her dogs.

Who does that?  I love my dog - but I would never bring her to a business meeting. 

Further, she couldn’t control either of her animals.  One - a big, burly black lab - literally pulled her over.  She was grasping his leash when he bolted across the lawn and she belly-flopped right into the grass.  I have never seen anything like it.  Matt had to chase down the dog while I helped her to her feet.  We were not off to a great start.

We put the dogs in a fenced-in park area near the ceremony site - where they proceeded to do their doggie business under her watchful eye.  She made some comment about having plastic bags in the car to pick up after them, but left without doing so.  Instead, she walked away while they barked and carried on as she joined me on a tour of the grounds.  Matt ended up baby-sitting the animals while I asked for her copy of the proposed menu.  Her response: “I have the whole thing planned out.  It’s locked away in my head.” 

At this point I was really starting to become agitated.  I had specifically asked her on two different occasions prior this moment that she bring a written quote with her so that I could share it with my parents (they are the ones paying for this blessed event, after all).  Maybe it’s my project management experience showing through - but I’m not ok paying someone $2400 for a meal that they have only planned out in their head - even if it’s not my money. 

At this point I was ready to call it a day - and Matt looked like he might deck her.  But every time we tried to tie up the conversation she would launch into another story about an event she catered for someone marginally famous - it was painful. 

Finally, she got the hint, gathered her dogs, and drove away - leaving the steaming piles of dog doo in her wake.  Matt and I had to go to a nearby convenience store to get plastic bags to remove the offending deposits. 

I can’t believe that this is the woman that received such raves from our smart, foodie friends.  The price is right, and we share a lot of the same values when it comes to food, but I don’t think I can work with such a flake.

Given all of the warning signs, I don’t think we can hire her in good conscious. 

What would you do?

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Posted by Heidi on May 1st, 2008 in Entrepreneur, career, loans

This is the second of a multi-installment series on starting your own business.  If you’d like to start reading this series from the beginning, click here. 

Most entrepreneurs don’t go into to business for themselves to fill out forms, complete pro forma financials, or write a business plan.  For these individuals, paperwork seems to be nothing more than a hassle or a waste of time.  Unfortunately for most new business owners, a business plan is important and necessary to secure for financing - there is no way most banks, credit unions, venture capitalists or angel investors will loan business owners money without one.

A good business plan, if written and executed correctly, should be both a roadmap and a compass.  It shows the principals within the business where the firm is heading and provides documentation of goals, objectives, and metrics required to perform periodic look-back analyses. 

Before writing a business plan, an entrepreneur should be able to answer the following questions:

1.    What’s your “elevator speech” for you idea?

2.    What purpose does your business serve?  What is your unique value proposition?

3.    How will you market your firm’s goods and services?

4.    How will you finance your business?

5.    What are you goals for growth?

6.    How will you measure your success or failure?

7.    What qualifies you to manage this business?

Once a business owner can answer these questions, it’s time to dig into the three most important components of a business plan:

•  Financial section - include a breakeven analysis and five-year pro forma balance sheets and income statements

•  Marketing section - thoroughly describe the target market segment(s), the marketing plan, and communication tactics.  Clearly articulate strategy for the 4 P’s (product, price, placement, & promotion)

•  Principals’ resumes - include a CV to detail each business owner’s experience and work history (supply these for each owner with a 20% or greater interest in the company)

I also encourage borrowers to include a well-written executive summary (answer who, what, when, where, why, and how questions) and an introduction page that details the general business concept/vision, mission, and objectives of the business.  Remember that objectives should be quantifiable.

If you’re serious about securing financing, I encourage you to take a look at this list of templates provided by SCORE (for those of you unfamiliar with SCORE - it’s a wonderful resource for anyone looking to start their own business).

I will provide more information about SCORE and other resources for small business owners in my next installment of the Entrepreneur’s Guide.

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Posted by Heidi on April 30th, 2008 in Entrepreneur, career, debt, loans

This is a guest post from my partner, Matt.  Matt is a former photographer - and while I did not know him when he was an entrepreneur, I have enjoyed the stories about his ill-fated venture greatly.  I thought I would share the text from a piece that he did as a design student with you.

My best friend and I went into business together immediately after finishing our associates’ degrees.  We thought we would parlay our combined creative genius into a hugely successful image-capturing empire.  As you can tell by the title of this post, we were wrong.   

Step 1
Choose an industry with a notoriously high failure rate.  I thought that I wanted to be a photographer.  Photography studios have a marginally higher success rate than restaurants (and its common knowledge that 90% of all new restaurants fail). If you know even less about photography than the restaurant business, than opening a photography studio is probably the way to go.

Step 2
Make sure you don’t complete a business plan.  As a matter of fact, it’s best to have no practical business experience. At all. Take a single business class and assume that this is all the information you would ever need to be a successful business owner.

Step 3
Partner with a close friend that also has no experience in running a small business. As long as you have no experience or applied skill in operating a new venture, why not compound the problem and invite an equally inept friend to join you?

Step 4
Buy new equipment and supplies before you have a need for them. Take on significant amounts of debt.  If you have no money to start your new business, it is always a good idea to contact your local banker, and borrow just as much money as they will lend you. Be sure to place everything that you own up as collateral, except the business of course, which is, in fact, worthless, because you have not yet purchased any equipment that could be used as collateral.  It is also wise to avoid contacting an attorney to make sure that you are not putting yourself in a potential liability position.

Step 5
Invest a significant sum of money in leasehold improvements. As long as you are already deeply in debt from over-buying equipment, you may as well sink the rest of your borrowed proceeds into renovating a rental property. This is a great idea because once the money is gone and the space is remodeled, if (and when) the business fails you don’t have any way of recouping your investment. After all of your hard work and substantial financial investment, you can present your landlord with a great new space - which is just a nice thing to do.

Step 6
Place someone with no accounting or bookkeeping skills (ideally yourself) in charge of maintaining the business’ finances. If you have problems with addition and subtraction, you are a perfect candidate to do your own books! Trust the opinion of a clerk who works at Staples, Office Max, or a similar office supplier, as to how to do your bookkeeping (i.e. what accounting log or software you should buy).

Step 7
Open the doors of your business without having any marketing or advertising plan in place. Operate under the “if you build it they will come” mentality. Just do nothing and people will line up at your door and beg for the opportunity to give you money for doing it.

Step 8
Now you are deeply in debt, sitting around doing nothing in your freshly remodeled business, admiring your dry wall skills, and watching as the small number of clients that you have desperately seeking services elsewhere.

After several months with no significant income, you will have to find a way to make your monthly loan payments. Accept a second job working for a company that keeps you out of the state for weeks at a time.  This will make it impossible to make or keep any appointment. Entrust every detail to your “business partner” (refer to step 3). Since he has done less physical work and put up less financial capital than you in this venture, now is the perfect time to give him all of the responsibility and leave him in charge of everything.

Step 9
Hire a newly minted undergraduate to act as your administrative assistant. Put this individual in charge of all bookkeeping, including accounts receivable and accounts payable. Now that you and your partner have done everything possible to run this business into the ground, it is time to give someone else a crack at it. Be sure to hire someone with even less experience than either you or your partner, and even more importantly, make sure to keep everything that you have learned over the past year to yourself. This will make it completely impossible for anyone to have any success at all.

Step 10
Repeat Step 9.
Hire yet another student after the first one completely screws you over and leaves you with a stack of unpaid bills and possible litigation from clients because you took their money and produced no viable product or service.

Step 11
Close Business.  Consider bankruptcy.

Step 12
Hold on to all the equipment that you have purchased and store it in your mom’s basement. You never know when a 10 ft wide roll of background paper will come in handy around the house. Also, lend all of you camera gear out to your friends, because as long as you can no longer depreciate the equipment on your taxes, it may as well still have to suffer wear, tear and misuse.

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