TaxCoach Briefs:    December 18, 2008

Volume 3, Number 49

TaxCoach Briefs archives.

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MARKETING MINUTE (EAL)
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YOUR BEST INVESTMENT NOW

This week, the Federal Reserve dropped rates to effectively zero. Investors cheered, sending the Dow soaring to 8900. Back where it was in, oh, 1998.

Here in the Briefs, I sometimes discuss investment tax strategies for those of you who manage client portfolios and those who just want to be more proactive with your clients. But I've never offered my own investment advice. Until now.

You can keep your money in the markets and feel confident that they will come back. Someday. (Food for thought: the Dow hit an all-time high on September 3, 1929, bottomed out 10 weeks later, then took until 1954 to regain its pre-crash high.)

If the market's too iffy, there's always cash. Bankrate.com reports you can get 3.1% with a 1-year CD, or 3.5% if you're willing to lock up your money for 5 years. That's not much to write home about -- but even Warren Buffett would envy that return right now.

If you're really feeling defensive, consider stuffing your basement full of gold bars, canned goods, and shotguns.

I'm no investment expert. (I don't even play one on TV.) But I'll go out on a limb with my own contrarian recommendation. I think you should be investing as much as you can in yourself and your business.

Let's say you spend $1,000 to mail 1,000 letters to 1,000 new homeowners. We'll assume you get just 8 leads and convert just 4 of them into clients. You charge them $250 each for your service. (Can we all agree that those are realistic assumptions?)

You got your money back. Big whoopdeedoo, right?

Well, no. You got your money back -- and you got four new clients. Now you're "playing with the house's money."

Next year your clients come back. You charge them another $250 each. Now you've doubled your marketing investment, in just a year. (I realize you have to work for that next $1,000, but it's the work that makes investing in your business safer than investing in any paper asset.)

Next year your come back again. Now you charge them $300 each. Oh, and don't forget the referral that pays you another $300. Now you've profited $2,500 on your $1,000 investment. In just two years. (For those of you playing at home, that's a 51.83% return. Even Bernie Madoff never claimed he could make that much!)

Next year three of your original four clients come back. Along with last year's referral, and two more referrals. That's another $1,800, on top of the $2,500 you've already netted.

Oh, and don't forget that when you sell your practice, you get another year's revenue or so, without even doing the work!

Where else in this economy can you get that kind of return on your investment? (Without getting indicted, of course.) Seriously -- where else can you multiply your money the way you can when you invest it in your own business?

Look, I know the economy sucks. I know you want to cut back expenses. And many of your competitors think marketing is a luxury they can't afford. But they couldn't be more wrong.

Good marketing that catches clients' eyes and sets you apart from your competition isn't an expense. It's an investment. Yes, the money leaves your hand. But it doesn't leave your life. It comes back in the form of revenue, referrals, and relationships, and builds real security in a way no paper portfolio ever can.

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SPOTLIGHT ON STRATEGY (EAL)
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'TIS BETTER TO GIVE THAN TO RECEIVE

Last week I mentioned that this would be our first Christmas in the new Lyon house, and we didn't even know where our decorations were stored. Well, we found them, shoved away in a corner of the basement, and the place looks like a winter wonderland.

But we've still got lots to do -- our neighbors take decorating very seriously, and it seems like they all have great big inflatable Santas or snowmen in their yard. (I asked my wife if we could get ourselves a Hanukkah Harry, but she says actual Jews might be offended.)

Christmas is a time to remember that it truly is better to give than to receive. Some people just don't get this. Take Illinois Governor Rod Blagojevich. He was supposed to fill President-elect Obama's Senate seat. Instead, he tried to fence it like a flat-screen TV that "fell off a truck."

If you're like most TaxCoach members, you and your clients will do plenty of giving this season. And you know business gifts are deductible. So how can you make the most of your holiday giving this year? More important, how can you help your clients do the same?

Gifts you give to business associates are deductible if you can show a business purpose for the expense or business benefit to be gained. This includes gifts to family and friends if they qualify as bona fide business associates -- clients, prospects, or referral sources.

The downside is a dollar limit that makes the IRS look suspiciously like Ebenezer Scrooge. $25 bucks per person, max. (Bah, humbug!) Husband and wife count as one person. (Humbug again!)

How can you get around that limit? Consider these strategies:

I know, I said it's better to give than receive. But why not receive that tax break for your holiday gift if it's out there?

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NEW TOOL (EAL)
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TaxCoach members, keep an eye out for your all-new Welcome Kit, which went out in this morning's mail. We'll be sending this to new subscribers going forward. But we didn't want our most prized members (meaning those of you who already belong) to miss out.

You'll find a printed Marketing Guide, along with an audio CD of Keith and me walking through how to use the system. We don't expect to challenge Beyonce on the Billboard Hot 100. But we do think you'll find the information valuable, especially right before "the season" starts. And we want to thank our designer Melissa Atchley for the bold look. We really couldn't be more pleased.

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HOLIDAY CALENDAR (KAV)
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Well, it's finally happened. For the first time in TaxCoach history, Christmas and New Years' fall on Thursdays. Not that there's anything wrong with that, but . . . we've always published these Briefs on Thursday. Without fail, too, except on Thanksgiving and a couple of other rare circumstances.

Now, if you celebrate Hanukkah, Kwanzaa, Muharram, and/or the Winter Solstice, Thursday might be business as usual. What if you're jonesing for your "Ed and Keith fix"? Sorry, but here at TaxCoach, there are trees at home that our kids expect us to be in front of. (There's a Wii in my future that some kid's going to have to teach me to use.)

So here's the plan. Rather than just blow off both issues, we'll publish a single combined "Holiday Briefs," squarely between the two holidays, on Monday, December 29.

While we're at it, here's our holiday schedule:

Speaking of lunch on the 29th -- if you've ever heard the "Ed & Keith spiel," you'll recognize Teller's as the place where it all began. Teller's is where Ed and I first met to discuss my business and where he delivered the tax plan that ultimately led to TaxCoach. It's been awhile since we hosted a member event, and it's a bit cold for the traditional ball game. So we'd like to invite any members who will be in the area to join us there for lunch. Teller's is on Hyde Park Square in Cincinnati, and also happens to be just two blocks from our office. RSVP to Catherine at 513-321-2820.

Wherever you are and whatever you're celebrating, Ed and I wish you and yours the happiest of holidays and a prosperous New Year.

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We're happy to answer your questions on TaxCoach content, features, or marketing. While we give first priority to our All-Star and Hall of Fame members, we work to answer all questions. For best response, email support@taxcoachsoftware.com. If we think the answer will be useful to all of our members, we'll publish it (anonymously) here in the 'Member Q & A' section of TaxCoach Briefs.

Regards,

Ed Lyon
Keith VandeStadt
www.taxcoachsoftware.com
(513) 321-2820

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