Jeffrey A Campbell - April 2021

Jeffrey A Campbell - April 2021

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April 2021

Anchors Aweigh! 3 Things All Successful IPOs Have in Common

After reading that headline, you’re likely thinking that having a good company makes for a successful initial public offering (IPO). There’s some truth to that: Google’s IPO was unlikely to fail when it finally hit the market. Then again, some readers will remember it didn’t go exactly as desired, opening well short of Google’s projected stock price. They made up most of the difference by the day’s end, but the fact remains that even the greats benefit from a little strategy. What makes for a good IPO and what can sink a promising one? Before pulling up anchor and heading into the seas of public trading, look at three key areas of your business.

well the company’s leaders balanced their reasons for going public with their professional duties. Hopefully, they did the math and had a clear picture of what the company would be worth on opening day and six months later. Founders who want an exit plan commonly push for an IPO, and hey, I get that. This can be a great way to secure one’s future, and a well-valued company will provide some options that privately held companies don’t. It allows founders to offer security — especially if stock prices are expected to keep rising — to the executives they’re trying to hire to replace them. However, going public means jumping through a lot of hoops. Some of those hoops, like regulatory compliance, won’t go away, either. Neither will the obligations to your shareholders, the hundreds or thousands of people who own a little slice of the pie. If the ship goes down, the costs and consequences are much higher. And a poor performance at the IPO can be the start of a shipwreck. Timing the ‘Favorable Wind’ Sometimes the wind blows just right, and all ships sailing east are going to have a good day. The same thing happens during public offerings. Like days at sea, some years are just better than others. However, like weather predictions, business and economic climate predictions are notoriously unreliable. Everyone was expecting great things for 2019, and many held off on their IPOs to take advantage of the favorable forecast. When the year arrived, the companies went public, and … well, nothing much happened. People just weren’t biting on new stocks. This is the opposite of being too hasty: These businesses waited too long to get into the game. They were ready, but they were afraid to go for it. All I can tell you here is that the best time for your business to go public is when you’re good and ready. If you have been following a solid plan, don’t wait too long to offer — things might not get any rosier. Some businesses, seeing how sluggish 2019 was, decided to wait until 2020 for their IPOs. You can see for yourself how well that turned out.

Charting the Course You can have a sound

vessel from sails to stern, but if you send it to distant shores without a navigator, you’re asking for trouble. Failed IPOs have shown that building a company from the ground up does not by itself qualify a team

— or its leader — to launch the business into public trading. Like any big venture, that task requires having both skills and a long-term plan. And “Let the investment bank handle it; they’ve done this before,” doesn’t count. Let Twitter’s IPO be a lesson for you. Twitter executives jumped rather hastily into the market in late 2013, announcing the move barely two weeks prior. Without the time to really dig into the company’s actual numbers, price projectors instead had to rely on comparisons to “similar” companies. That’s probably why the valuation was lower than the opening day price — which, in turn, is probably why the stock closed lower than it opened that first day. Almost a decade later, Twitter’s stock is worth only $10 more per share than its opening day price. The takeaway: If you’re a company and you’re considering an IPO, plan for 1–2 years before opening day. And hire experts who’ve done it before to help. Understanding New Obligations There are a lot of reasons to go public, but they might not be right for your company. When I see an IPO go poorly, I often wonder how

Wishing you fair seas and favorable winds as we head into the second quarter of 2021.

-Jeffrey Campbell

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Vacation Destinations That Will Pay You to Visit

In the wake of COVID-19, tourist destinations worldwide have been hit hard. To lure travelers back, some places are offering steep discounts and other incentives throughout all of 2021. With cheap airfare and great deals on accommodations, tours, food, and more, you can take a luxury vacation on a dime this year.

being an affordable place to travel, Thailand also has great food and an amazing climate. To make up for the financial hit due to suspended travel because of the virus, the Cape Fahn Hotel is offering incentives into 2021 including a complimentary upgrade to the next class of care, which gives economy spenders access to executive accommodations. Other incentives include free meals, round-trip airport service, and discounted beach picnics and boat tours. Check out CapeFahnHotel.com/offers for more information.

Mexican Caribbean Few words evoke the image of beaches, sun, and saltwater like “Cancun” does. This Mexican locale has become synonymous with leisure, as have other destinations in the Caribbean — beautiful places like Isla Mujeres or the Riviera Maya. Tourists can visit all of them at a steep discounted rate until the end of 2021 thanks to promotions from the Hotel Association of Cancun and the Quintana Roo Tourism Promotion’s council. Head to En.Come2MexicanCaribbean.com to find vouchers for two free nights in a hotel for every two you pay for, steeply discounted airfare, and even options for free food and drinks.

Whistler, British Columbia Although this destination in British Columbia

might be known for its winter activities, there’s a lot to love about Whistler in late spring and early summer! One great thing? The amazing array of money-saving options you can find here. The Riverside Resort, for example, is offering mountain-view cabins at a 3-for-2 discount — pay for two nights and get a third for free! Traveling to Canada can be tricky at

the moment, but if you use a good travel agent, you can take advantage of some great deals. Other incentives in the region include free meals (or a per diem meal rebate) as well as discounts on guided tours

Thai Paradise Although it’s no longer the hidden destination it once was, there are still a lot of good reasons to visit Thailand. In addition to

2 Simple Budgeting Strategies You Can Implement Today No Spreadsheets Required

Paying off debt and saving money are the building blocks of a healthy financial life, but the statistics are dire: One-third of Americans haven’t saved a single penny for retirement, 38% of households have credit card debt, and 44% don’t have enough cash saved to cover a $400 emergency expense. If you see yourself in those numbers, there’s no better time than now to start working on healthier financial habits because April is Financial Literacy Month. Even with myriad apps available to help, budgeting can still feel intimidating. So, why not keep it simple with these two systems you can implement today? The 50-30-20 Strategy Before she was a U.S. senator, Elizabeth Warren was a tenured law professor at Harvard, specializing in bankruptcy. During that time, she published the widely acclaimed personal finance book, “All Your Worth: The Ultimate Lifetime Money Plan.” Some 16 years later, her advice still holds up. That’s because Warren’s approach to money is simple and flexible. She suggests allocating 50% of your income to needs like housing, groceries, and utilities; 30% to wants like entertainment, vacations, and eating out; and 20% to savings, which starts by building a three-month emergency fund and then allocating savings to a retirement fund thereafter. If you have credit card debt, Warren

suggests allocating that final 20% to debt repayment before you start saving. Otherwise, you’ll just backslide as interest mounts on your existing debt. If you’re able to save more than 20%, adjust the ratios accordingly. If you can’t save 20% just yet, start with less (even 1% each month adds up!) and make a goal to increase your savings by 1% each month or quarter. The Anti-Budget Strategy If Warren’s budgeting strategy feels too complicated, try financial expert and “Afford Anything” podcast host Paula Pant’s anti- budget. Each time you get paid, skim 20% (or whatever your current savings goal is) off the top, put it in a savings or retirement account, and spend the rest however you’d like. Pant’s logic here is that if you tell yourself you’ll save “whatever’s left over at the end of the month,” you’re unlikely to save anything. Free yourself from the worry by saving first, then spend the rest guilt-free.

If 20% feels like too lofty a goal, start with whatever feels doable and work to increase that by 1% each month or quarter.

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TAKE A BREAK

They say money makes the world go round — so, then, why are so many people financially illiterate? According to a study that examined 150,000 people across 140 countries, only 57% of Americans were financially literate as of 2015. Other studies, like those done recently by the National Financial Educators Council, have found that only 16% of Americans ages 18–26 are hopeful about their financial future. How TikTok Is Influencing Personal Finance (And How to Use It Appropriately) Finances in 60 Seconds

TikTok influencers are hoping to change that.

TikTok was launched in 2016 and slowly grew before booming in 2019 and becoming a household staple in 2020. Personal finance experts, like advisors, teachers, and economists, saw an opportunity amid the dance crazes and lip-syncing. Today, personal finance TikTok creators are becoming increasingly popular on the app and offer quick tips about common financial mistakes, saving for retirement, and understanding weird market trends, like the insanity with GameStop, Reddit, and the stock market in January 2021. However, there is a caveat to those relying on TikTok for financial advice: Don’t. While the good influencers creating the videos do offer sound advice worth considering, there are plenty of uninformed “experts” that spout bad advice. Plus, the short length allowed on each video means video creators have to boil down complex market advice into short sound bites. The bottom line is that TikTok personal finance accounts are great introductions to financial literacy, but they cannot replace expert advice and information. If you want to check it out or offer the Gen Z in your life some quick finance tips, check out these well-established influencers. Humphrey Yang — @humphreytalks Yang is verified by TikTok, which means he’s been authenticated as an online public figure, and he’s amassed more than 21.8 million likes. His advice ranges from breaking down the latest trends in the market to highlighting common financial ideas in simple terms. Rahul Rai — @thelaymaninvestor Any investment advice should always be properly vetted, so Rai’s videos feature him performing “duets” with other personal finance accounts to critique or promote their advice. Delyanne Barros — @delyannethemoneycoach Pulling from her personal experience and candidly sharing her best practices, Barros has amassed nearly 173,000 followers and offers insights into how the market works. Barros’ goal is to retire by 45, and followers can watch along as she pursues that dream.

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6110 Mayfield Road Mayfield Heights, OH 44124 www.MayfieldHeightsCPA.com (440) 720-0959 INSIDE THIS ISSUE

Why Do IPOs Fail?

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Vacations That Pay 2 Easy, Effective Budgeting Strategies

Young Viewers Are Learning Financial Literacy With TikTok

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‘Zero to One’: A Book Review

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How to Get From ‘Zero to One’ Create and Nurture Original Business Ideas

“What important truth do very few people agree with you on?”

“Zero to One” is all about coming up with and nurturing unique ideas, which are the foundation of game-changing businesses. As a co-founder and investor in a number of companies that have changed the business landscape, Thiel has some authority on this subject. He co-founded Cofinity (which later became PayPal) and invested in startups like Facebook, SpaceX, Lyft, and Airbnb whose ideas were so novel at the start that they were perceived as risky by many. Throughout the book, Thiel shares his wealth of knowledge garnered from a long, successful career of recognizing and acting on original ideas. According to him, and anyone else who has ever tried creating something wholly unique, developing an original idea is no easy task. The difficulty of originality even led Mark Twain to once say “There is no such thing as a new idea. We simply take a lot

of old ideas and put them into a sort of mental kaleidoscope.”

That’s entrepreneur and author Peter Thiel’s favorite interview question. To Thiel, a person’s answer to that question provides insight into whether they’ll be able to find success as an entrepreneur. Ideally, if you can answer with something like “Most people believe in X, but the truth is the opposite of X,” then you’re

But in “Zero to One,” Thiel proves that coming up with original ideas is possible, and he provides readers with helpful tips and lessons for how to get there. One such lesson: Stop trying to be the next Bill Gates or Mark Zuckerberg because “if you’re copying these guys, you aren’t learning from them.” Thiel uses his favorite interview question to try to identify original thinkers. These are the people who take their businesses from zero to one because they looked at past successes and thought, “I can do it differently, and I can do it better.” If you want to be in that group, then reading Thiel’s advice in “Zero to One” is a great place to start.

well on your way from zero to one and creating an original business idea. That’s what Thiel explores in his book “Zero to One: Notes on Startups, or How to Build the Future.”

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