Author Archives: Ray Pinard

The Economics of COVID-19

Dear clients and friends:

As we continue to experience the effects of COVID-19, business owners are asking when things will return to normal. The short answer is when we have a vaccine. Everyone has their own risk tolerance level. Some people would go out to crowded bars, restaurants, and sporting events tomorrow if this were possible. Others will stay away from crowds and normal activity until the possibility of contracting COVID-19 is near zero.

So what does this mean regarding the length of a recession? Will it be a V-shaped recession with a steep downward trend, short duration, and steep upward trend? Or will it be a U-shaped recession, with a steep downward trend, moderate duration, and a moderate upward trend?

Let’s review some issues we must consider:

  • With the current stay-in-place orders issued by most state governors, nearly all public and private events and activities are on hold.
  • Some scheduled activities will not occur. This is a permanent economic loss to GDP for at least this year. Will professional hockey and basketball leagues be able to finish their seasons and have playoffs or will they call off their seasons? What is the liability to team owners if they restart their seasons? Liability applies to many other activities, not only sports.
  • Some scheduled activities will occur, but in a delayed or abbreviated fashion. Will Major League Baseball have a 100 to 125-game season? The longer the lockdown continues, they can get in a limited number of games before the World Series. How many people will be comfortable going to a game?
  • Many nonprofits have annual events. While some of these events may be rescheduled, for some this will not be feasible. Dance recitals may be cancelled; weddings will be delayed or scaled back. Will some youth sports organizations cancel their seasons for health and safety reasons?
  • Once restaurants and bars are allowed to reopen, will people have to sit six feet apart at the bar? Will family seating be allowed and how many will be allowed at a table? How far apart will the tables be spaced? Most facilities cannot operate, even at their breakeven point, when their seating is regulated below a certain level. Will these businesses be forced to close permanently?
  • For performing arts centers, how long can their endowments carry their fixed costs? When they reopen, will seating be limited to every three seats and every other row? We all know they have to sell a certain number of tickets to hold a profitable event.

There are numerous other issues and types of businesses we could consider, but you get the point. Without a base level of economic activity, most businesses of all types will struggle. The domino effect throughout specific industries is much greater than most people may realize. Just think of the supply chain involved to serve you a meal at a restaurant, or to manufacture a refrigerator. This points to a U-shaped recovery and the need for a vaccine before a vast majority of people will be comfortable resuming life as they knew it just six months ago.

What should business owners do?

  • Conserve cash. Scale back on capital spending unless it is absolutely necessary. Scale back on discretionary expenses if you don’t foresee a return on investment over the next six months, then reevaluate these expenditures.
  • Collect your accounts receivable. Be very aggressive. Many companies will be conserving cash, just like you. You have to be the squeaky wheel.
  • Negotiate payment terms with vendors. Some vendors may be in a financial position to do this in order to retain your business.
  • Negotiate loan forbearance with your bank if you are in a tight cash position and conserving cash is critical for you to remain in business.
  • Furlough employees. While this is often very distasteful for most business owners, if you don’t have work for everyone, you have to cut your losses.
  • Apply for a Payment Protection Loan (PPP) as soon as possible through your bank. If you don’t have a lending relationship with a bank, many community banks are participating in the program and are easier to deal with than large national banks. I have been receiving feedback from colleagues and businesses that their loans have been approved.

I hope you found this helpful. Please feel free to call or write if you wish to discuss any of these topics.
Best wishes, Ray

Suggested video on supply chain economics

Get a Grip on Your Time—It’s Valuable

When running a business, having the time to accomplish everything you need to attend to (or think you do) is a major issue. Contracts, personnel issues, seeking new business, financial reports, and meetings are just a few items on your agenda. And while email and smartphones can streamline communication, they have mainly served to exacerbate the issue of everyone wanting an answer from you today or right now.

To help you control your time, accomplish more than you planned, and give you more free time to enjoy participating in activities outside of the office, try these tips:

  1. When do you do your best thinking? When are you most creative? Whether it’s first thing in the morning or the last two hours of the day, block out that time in your calendar, calling it “My Time.” This is reserved for you to work on whatever you need to attend to.
  2. Every evening before you leave work, make a list of 5-10 things you want to accomplish the following day. Then check off the items you can delegate. In the morning, delegate those tasks and set firm completion dates for follow-up.
  3. Do you have a line of people at your door all day? Have people send you a request for an appointment of 30 minutes tops. Tell them to bring all the items they want to discuss with you and review the items in one sitting. Set firm next steps or settle the issue then. Be sure to have them do the follow-up. Do not allow them to delegate that to you.
  4. Email, texts, and smartphones are business tools. Don’t let them control your life. Set time aside in the morning and mid-afternoon to a) delegate all emails that you do not absolutely have to respond to, b) respond to the emails you must attend to, c) return phone calls, and d) respond to text messages.
  5. Many people dislike meetings, but much can be accomplished in a meeting. Typically, having all the parties in one room to hash things out is very beneficial. Meetings must have an agenda. If there is no agenda, walk out. Discuss and settle the items on the agenda or set follow-up tasks for those issues that carry forward to the next meeting. A meeting should be one hour, max. Be sure someone sends out brief minutes of the meeting.
  6. Use a personal assistant to set meetings, schedule phone calls, and handle other tasks that you don’t need to be involved in.
  7. Take a clean notepad and for two weeks write down everything you do. At the end of each week review the list and check off what you could/should have delegated and about how much time you spent on that topic. In the future, delegate tasks. Repeat this exercise every three months or so. Most people find that through delegation they can free up to 500 or more hours annually.
  8. Make a list of the outside activities you enjoy and book time to enjoy them.

If you or someone you know is facing the challenges of never having enough time, please give me a call at 603-620-7500 or write to

Best regards,
Ray Pinard

Next issue’s topic: Do you have leaders or followers on your team?

Why Are Minority Interest Positions Discounted?

Last month we discussed several key questions that an owner must consider when awarding or selling a minority interest in their business. Let’s assume you have agreed to move forward. You probably are wondering, “If the fair market value of 5% of my company is valued at $1,000,000, but I am receiving only a fraction of that in selling a minority position, where is the rest of my money?” This month we will discuss minority and marketability discounts and their impact on the fair market value of a minority interest.

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Key Questions to Answer Before Agreeing to Minority Ownership

It is not unusual for owners to receive requests from current or prospective employees about owning stock or a membership interest in the owner’s company. Owners must engage in this discussion with their eyes wide open and be fully aware of the benefits and pitfalls of having minority shareholders. The immediate response to anyone who asks about becoming a minority shareholder should be “I’ll think about it.”

Allowing minority shareholders or members into your business can be a very emotional decision. The options available and the technicalities of each option also may make your head spin. This is why owners should get their business advisor, lawyer, and outside accountant involved early in the game.

In preparation, owners should ask themselves the following questions:

  • Why does the employee want stock? 1
  • Does the employee expect short-term or long-term gain?
  • How might having a minority shareholder improve the company’s performance?
  • Can you achieve the same outcomes with a solid, objective bonus plan?
  • Does the employee expect some form of cash payout each year?
  • How will other long-term and loyal employees react if they find out another employee has minority ownership? What will be your response?
  • Would you expect different annual and long-term outcomes from a minority shareholder?
  • What is the value of a minority interest in your business?
  • Will the event be a stock award, stock grant, stock sale of existing/outstanding shares, new stock issue, stock options, phantom stock,
  • Class A shares, or Class B shares? (Is your head spinning yet?)
  • Are there performance measures involved?
  • What is the appropriate vesting schedule?
  • Many owners allow minority shareholders as an incentive to build the value of the company towards an equity event. Are you planning an equity event?
  • Will the employee be required to pay for all, part, or none of the stock?
  • What is the tax impact to the minority shareholder and the company under various scenarios?
  • What if the employee leaves the company? What will be the buyout scenario?

For the most part, owners cannot answer these questions on their own. Therefore, involving experts early in the process is critical, especially before any promises are made—orally or in writing—to prospective minority shareholders.

If you or someone you know is facing any of the challenges noted above and could benefit from guidance on navigating through the minority ownership minefield, please give me a call at 603-620-7500, or write to

Best regards,
Ray Pinard

Next month’s topic: Minority interest (control) discounts and lack of marketability discounts. They’re not that complicated.

1 For purposes of this article, stock, membership interest, partner interest, etc. are used interchangeably. Be aware that different legal and tax rules apply for different forms of business structure.

In My View

Dear Friends:

This blog post is a guest piece written by Mr. Steven Albrecht, President and CEO of Charter Trust Company, Concord, NH. I hope you enjoy his 2014 assessment of the financial markets. Mr. Albrecht can be reached at 603-224-1350, or via email at

Best wishes,
Ray Pinard


Portfolio Review

This is the time of year when nearly every investment management firm, research organization, professional news agency and media site start to produce economic and market forecasts. Writers and forecasters predominately focus on either the economy or the markets depending on their expertise. They mostly avoid merging the discussions to avoid the danger of attempting to rationalize the relationship between the two forces. Throughout history it has been extremely difficult to bring logic to these seemingly rationally intertwined pieces of our lives.

The reason both economic activity and the markets are not perfectly in sync, is about the relative timeframe in which they operate. Don’t get me wrong. I am a big believer in the position that markets are driven and react to economic activity. Let’s start with the premise that markets are forward looking and economics operates in the current time frame.

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CharterTrust_logo© 2013 – Charter Trust Company | All Rights Reserved | The opinions expressed herein are those of the authors and do not necessarily represent the views of Charter Trust Company. Nothing contained in this communication should be construed as investment advice

Top Ten Most Crucial Goals

When working with clients I am often asked, “where do we start?” Clients, especially new ones, want to start as many projects as possible, leading to project overload. In the end, nothing gets done well, and the management team is overwhelmed with B-level work that does not bring money in the door. Then the owner is upset, and around in a circle we go.

Frequently, clients look for the silver bullet that will be the next big thing to catapult their business to success. After more than three decades in the business world, I have seen many breakthroughs, unique value propositions and, with the advent of the Internet, many new ways to conduct business and broaden markets. But I have never seen a silver bullet. The perpetual search for the silver bullet leaves many business owners frustrated.

So, how does a business owner achieve great results in a measured fashion without overburdening his or her team and becoming frustrated when nothing gets finished? The key is in realizing that there is only so much you can do and to set realistic goals.

I begin by asking the client, “out of all these things you want to accomplish, what is going to bring in revenue in the near-term and the long-term, and what will not bring in revenue?” This leaves us with three lists:

  1. near-term revenue
  2. long-term revenue
  3. no revenue but nice to have

Now we are making progress.

After quizzing the owner and team members about the items on these lists, I understand the purpose of the action items and the necessary human and financial resources. Then I retreat to do my thinking.

My goal is to deliver a document to the owner titled The Top Ten Most Crucial Goals. Normally these are goals to be achieved over the next twelve months. Some goals can be achieved sooner than that. For instance if one of the goals is to put together an effective Internet commerce campaign, that could be completed in about six months with tune-ups thereafter. Hiring a VP of Sales may take three to four months. Opening new markets or launching new products could take up to twelve months.

Based on what I learned from the owner and the various team members, plus my knowledge, opinions, and examination of the situation, I present what I view as The Top Ten Most Crucial Goals. Along with the list of goals, I note issues that must be considered, research to conduct, teams to form, and the steps to take in order to achieve each goal. The document may be only two to three pages long. Clients don’t want phone book sized reports; they want clear, succinct, action steps that will move them towards accomplishing their goals.

In my experience, clients are so happy to have a clear roadmap, they normally make no corrections to my plans. We do revisit the plans weekly, monthly, or quarterly to measure progress, review deadlines, resource needs, etc. And we make adjustments as we go.

What are The Top Ten Most Crucial Goals for you and your company this year?

If you need clarity around this issue, not sure where to start, or just need to talk about it, call or write. I’d be happy to discuss your situation. I can be reached at 603-620-7500 or

New Year, New View for Your Success

The hardy souls who arrived in America in the early years, from the Pilgrims to our Founding Fathers, were entrepreneurs in their own right. They sought freedom in many areas of their lives and wanted liberty and the right of self-determination to make their own choices, free from encumbrances.

Our country’s Founding Fathers—and Thomas Jefferson, in particular—developed a unique framework that provides people in the United States with the opportunity to pursue individual liberty, freedom, self-determination and happiness. These principles have allowed us, as individuals and as a nation, to determine our own course and achieve remarkable success.

Jefferson said: “happiness…does not depend on the condition of life in which chance has placed [us], but is always the result of a good conscience, good health, occupation, and freedom in all just pursuits.”

The Entrepreneurial Freedom Program is a plan for success.

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How to Land Interim Consulting Work During Your Job Search

Our friends at The Center for Independent Consulting  published an interesting article on how to offer your skills on a consulting basis:

Finding a good job often takes a long time, but unfortunately your household bills keep coming every month whether you are employed or not. Earning consulting income while looking for a job can bring in needed cash but can also distract you from your job search and confuse your network about whether you really want to find another job or become a consultant.

This article talks about 7 ways to manage this problem.

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Why Working 6 Days A Week Is A Terrible Idea

For many professionals, working on the weekends has become the norm — a way to catch up from the previous week or get a head start on the next.

 Here’s an interesting article for the Business Insider website. Will it make you rethink your work schedule as we approach the new year?

As Business Insider Executive Editor Joe Weisenthal writes, “It seems that totally disconnecting for two days is too excruciating for a lot of people, so that by Sunday morning they’re eager to start getting back into the swing of things.” He believes two days of weekend is too much for many people.

However, decades of research supports the 40-hour workweek and shows that working longer can lead to serious negative effects on health, family life, and productivity.

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Flood of Regulations Coming from Obama Administration

Here’s an interesting article by Brian Wingfield, first published in the Insurance Journal, and reprinted on the Friends of the U.S. Chamber of Commerce website.

Over the next 12 months, the Obama administration is due to issue regulations governing everything from e-cigarettes to smoke-stack emissions in what experts predict will be a second-term rush to put rules in place before leaving office.

“In every administration, these things have to be wrapped up in at least the second to last year,” Cindy Skrzycki, author of “The Regulators: Anonymous Power Brokers in American Politics,” said in an interview. Skrzycki said 2014 will be an important year for agencies to get new rules under way.

It’s all part of what U.S. Chamber of Commerce President Thomas Donohue yesterday called a flood of regulations that the business lobby intends to fight. “There is no such thing as a lame-duck president when it comes to regulations,” he said in a speech in Washington calling for a reform of rulemaking.

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