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Another One Bites The Dust
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Walter,
Thanks for the detailed answer, It might help others to
fine tune their business model. However I suggest you visit the
following link and discuss with your accountant.https://www.irs.gov/businesses/small/article/0,,id=99921,00.html
This will cover what I called “Payroll Taxes”
which are alot more than what you withhold.I once hired a
Temp for 2 days from an agency to cover for my receptionist who
got sick unexpectdly. This Gal worked at my place for two days,
was paid by the temp agency, who I in turn paid.
Jump ahead two weeks and this girl applies for unemployment insurance
listing me as her last employer. This brought down such a sh-tstorm
you just can’t imagine, An audit of my payroll going back 3 years.
I never appreciated my anal bookkeeper so much as then. These people are ruthless, unforgiving, and they want your Money. In addition I suggest that you find a health plan for your people and make them pay a percentage with before tax dollars and the other portion is tax deductable for you as well. A good bang for the buck.
That being said, My son who just graduated college is getting job
offers that feature 2 weeks vacation, 7 sick days and 3 personal days
and an 80% company paid health plan & a .75 to the dollar matching
401K contribution. So I would advise him not to
work for a compensation package as you outlined.
Thank the stars he is not in this
business but is into global logistics. -
[Neil Hurwitz] “y. In addition I suggest that you find a health plan for your people and make them pay a percentage with before tax dollars and the other portion is tax deductable for you as well. A good bang for the buck.”
We have looked at those, but none work with our budget right now, particularly after opening this building.
Walter Biscardi, Jr.
Editor, Colorist, Director, Writer, Consultant, Author, Chef.
HD Post and Production
Biscardi Creative Media -
Neil,
We meet with our CPAs quarterly and we pay big money for taxes, insurance, legal services and a whole lot more.
We pay VERY good wages to our employees and they have taken to giving it a name, THEY say that we “pay career money, not wages.” I take that as a compliment.
We also pay 100% of their health insurance, paid by our company.
We do NOT hire permalancers. We have full-time employees, thank you.
We also give our people IRAs and we pay all withholdings and workers compensation.
BUT…
That doesn’t mean anything in a world where things are changing so rapidly that companies like Howard Schwarz Recording fall like dominoes. And before you chide me as having not been around for 38 years, you did say you don’t think people should speak unless they’ve been around HALF that long, and I’ve been doing this 16 years (not exactly half but close enough in a world where speeds accelerate greatly year-to-year and so I think 16 years gives me a bit of perspective on this issue).
If you disagree with that, I will throw in the this year I was named one of the 40 most influential publishers in the world of print, chosen by the leading print magazine journal, and so someone must think I am doing fairly well.
With that said, I’d like to tell you that the world is changing so fast that EVERY company that isn’t consciously and actively trying to put itself out of business and replace itself with something better is just working itself slowly towards the cliff…
We are in a time of such chaotic and turbulent change that the death of companies like Howard Schwarz Recording is no surprise to me, in fact I am surprised they lasted this long with the business model they were using. Truth be told, they were probably feeding it money for years, waiting for things to “turn around.”
This isn’t a recession and it isn’t a bump in the road. This is the New Normal and welcome to the future that none of us wanted.
Me, I do not bemoan the death of companies as much as I bemoan the collapse of our educational system, which is completely failing in its duty to educate our young people to know how to compete in today’s world.
Now that’s a tragedy…
Best regards,
Ronald Lindeboom
CEO, Creative COW LLC
Publisher, Creative COW MagazineCreativity is a process wherein the student and the teacher are located in the same individual.
“Incompetence has never prevented me from plunging in with enthusiasm.” – Woody Allen
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This just got more interesting.
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PatrickOrtman, Inc.
Los Angeles Digital Agency and Video Production Company -
Ron said
We also give our people IRAs and we pay all withholdings and workers compensation.Please explain How you GIVE your people IRA accounts?
It has always been my understanding that this is a vehicle
for the individual to set up,hold and keep with their money
either with before tax dollars (tradional IRA) or with after tax dollars (Roth IRA)With that said, I’d like to tell you that the world is changing so fast that EVERY company that isn’t consciously and actively trying to put itself out of business and replace itself with something better is just working itself slowly towards the cliff…
Total Agreement
We are in a time of such chaotic and turbulent change that the death of companies like Howard Schwarz Recording is no surprise to me, in fact I am surprised they lasted this long with the business model they were using. Truth be told, they were probably feeding it money for years, waiting for things to “turn around.”
The surprise here was that this was a very successful firm for decades, with substantial high paying clients and reputation.
So the bigger question is exactly what went wrong? Was it their
Business model(great studios,equipment,people)? Owner starving the company to maintain lifestyle?
The cost of providing a living wage? Medical Insurance? Lease renewal on the studios in NYC?
I think laying the failure of this type of company on the
catch all phrase of “Business Model” is an oversimplification
at best. I wish more data was available on this collapse so
we could indeed analyze it and learn from it. However
when I see comments from others with a lack of specific
information boasting about how they have figured it out and have a superior business model, I can’t help myself and must ask
for specifics. There was a world of difference between your
response and the other member who responded. I think all
here can benefit from a probing discussion. After all,
we all have the same desires, To do good work, Make good money,
Raise our families in Peace and Prosperity, Preserve the Earth
and then be left alone by all other forces.This isn’t a recession and it isn’t a bump in the road. This is the New Normal and welcome to the future that none of us wanted.
Total Agreement
<i>Me, I do not bemoan the death of companies as much as I bemoan the collapse of our educational system, which is completely failing in its duty to educate our young people to know how to compete in today’s world.
Now that’s a tragedy…
Once again total agreement,
But being someone whose significant
other is a high school teacher, I can say without reservation
or equivocation that a huge part of the collapse of the educational system is not the fault of the people employed by that system, ie: the Teachers. Today’s student (grades 1 thru 12) spend just 10% of
their time in school and in that time the teacher is supposed
to educate them . Unless the student is engaged, motivated
and prepared by their parents it’s just not going to happen.As an additional comment I would say that you are to
be commended for the things that you do for your people.
A good living wage (career wage) Medical Insurance,
and so forth, I do believe that you are the exception in our space.Best Regards
Neil Hurwitz -
[Neil Hurwitz] “Please explain How you GIVE your people IRA accounts? It has always been my understanding that this is a vehicle for the individual to set up,hold and keep with their money either with before tax dollars (tradional IRA) or with after tax dollars (Roth IRA)”
Maybe “give” was a poor choice of words, Neil. What we do is match what our employees can legally withhold and delegate to their IRAs. The bookkeeper is not here today but as I recall, it is up to 3% of their gross that they are allowed to put into their IRA and then we match it. Not great but better than nothing.
[Neil Hurwitz] “The surprise here was that this was a very successful firm for decades, with substantial high paying clients and reputation. So the bigger question is exactly what went wrong? Was it their Business model(great studios,equipment,people)? Owner starving the company to maintain lifestyle? The cost of providing a living wage? Medical Insurance? Lease renewal on the studios in NYC? I think laying the failure of this type of company on the catch all phrase of “Business Model” is an oversimplification at best.”
Surprise is one word I’d NEVER assign to a situation like this. Why? Partly because of chaotics, a phenomenon that is happening in the world today and when understood, it holds great analytical merit for planning and strategic decisions. Books like Philip Kotler’s Chaotics: The Business of Managing and Marketing in The Age of Turbulence hold great value and I think anyone who doesn’t read it wants to kill their own business.
Much of what is happening is due to disruptive technologies (turbulent innovation) that redefines the rules by changing the competitive business landscape through upheaval that actually makes a company’s long standing investment and advantage work against itself, as low cost new tools and new competitors enter a market with much less investment and cost.
Yes, many will fail but in the end the “march of army ants” will redefine the market, and companies that have been asleep at the wheel — counting on their long held position at the top to hold them safe through the chaotic period of equilibrium — will find themselves like Gulliver, staked, tied and overcome by those they consider Lilliputians.
It is happening everywhere and the book “The Innovator’s Dilemma” by Clayton M. Christensen does a brilliant job of explaining the process by which these onetime giants fall prey to poorly equipped and under-capitalized “Lilliputians” because of “disruptive technologies” — or as some refer to it, disruptive innovation.
If you read these two books, Neil, you will see a great view of what is happening in the world today.
Your friend’s company was a victim of the forces clearly outlined in The Innovator’s Dilemma.
You don’t want me to get started on what’s wrong with the schools today, it would just anger both your wife and her bosses — though I would agree, the problem is not your wife.
Best regards,
Ronald Lindeboom
CEO, Creative COW LLC
Publisher, Creative COW MagazineCreativity is a process wherein the student and the teacher are located in the same individual.
“Incompetence has never prevented me from plunging in with enthusiasm.” – Woody Allen
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The other issue is the loss of accumulated knowledge. I grew up in the biz where we worked under the watchful eye of a seasoned pro, we had a mentor, if you will. We absorbed knowledge not only about the tech stuff, but client services, how to keep clients happy and coming back. The kids who never worked as an assistant, intern or gofer in a working studio, miss out on that stuff. It is a great loss for everyone.
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I started in the biz in 1980. At that time, a film mix was done in a studio with a 16-channel mixing console connected to a bank of 35mm MTM dubbers running in sync to a 35mm projector! There were only a couple of facilities in town that could do that work, but that was the technology at the time. That is why the prices were high and clients paid them. Times were good for commercial editors and as the KEM gave way to the Avid, prices for service remained high and clients paid the price because the costs to set up an Avid suite were still very high. The bubble burst when FCP became popular and everyone from high school student to award-winning pros could easily get into the business and call themselves “editors”. I gotta admit, there are some talented high school kids out there. The problem is, they live at home with mom and dad and have no overhead. My son’s 16 yr-old friend showed me some After Effects stuff he did, at home, that blew me away! Yikes!
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