First Financial Bank, Butler U. Event to Help Businesses Plan

First Financial Bank and Butler University are hosting a special business panel discussion on many issues critical to your business. Local industry experts will discuss important business tools and resources to help you plan and prepare for next year. Topics will include: understanding legal issues, managing your financial relationship, access to capital, tax incentives, forecasting and more. This will be a great opportunity to learn from experts and identify strategies to help take your business to the next level.

  • Alice Morical, Hoover Hull, LLP
  • Anita Sherman, Greenwalt CPA, Managing Partner
  • Gail Gesell, Small Business Administration, Indiana District Director
  • Mary Jo Kennelly, First Financial Bank
  • Chris Stump, Business Accelerator, CFO Services
  • Larry O’Connor (moderator), Business Accelerator, Executive Director

Space is limited. Please RSVP to [email protected] or 317.237.1581.
Wednesday, October 26, 2011
11:30 a.m. to 1:30 p.m. (lunch provided)
Indianapolis Museum of Art, Deer Zink Events Pavilion
4000 Michigan Road, Indianapolis, IN 46208-3326

Why Stock Markets Rise While Economy Struggles

Like me, many of you may wonder how the stock market can rise while an economy continues to slump. And, also like me, some of you may wonder if NBC thinks you’re a fool — switching the actresses playing the mom on "The Fresh Prince of Bel-Air" with hardly a satisfactory explanation.

Well, Steven Dolvin, associate finance professor at Butler University, at least tackles the first question in a recent column for Inside INdiana Business.

Consider: Unemployment is still high (9.1 percent in May 2011). The depressed housing market is the most undervalued it’s been in 35 years (according to Capital Economics), with foreclosures expected to jump 20 percent from 2010. According to Gallup poll data, average daily consumer spending has declined 39 percent since May 2008.

Meanwhile, since March 2009, the stock market has basically doubled from its lows. Is this a disconnect with reality?

Not necessarily. Studying data from the 2011 Indiana CEO Survey indicates three reasons why the stock market has risen while the economy continues to struggle:

Companies serve global markets. The survey shows what business issues are important to the Indiana CEOs. While several, such as health care costs, employee retention and recruitment, and consistent execution of business strategy have remained flat in terms of importance, “growing the business internationally” has grown in importance. After slipping in 2008 and 2010 as CEOs focused on keeping their businesses afloat, this issue has increased in importance to its 2007 level.

The larger the company, the greater its international focus. For businesses in the S&P 500 Index, more than half their revenue typically comes from outside the United States. Some receive 80 to 90 percent of their revenue from outside our borders. While this international focus keeps their bottom line strong and their shareholders happy, it doesn’t necessarily translate into money spent in the U.S., helping our economy.

Job growth is a lagging metric. The Indiana CEOs were asked if they were going to reduce or add jobs. The survey indicates what you’d expect in a tough economy and recovery: After the recession hit, the likelihood of reducing jobs rose from 2007 to 2009 before beginning to decline. Meanwhile, the likelihood of adding jobs declined steeply from 2007 to 2009, before beginning to increase.

While the likelihood of more hiring has increased, actual hiring hasn’t yet. Actual job growth lags behind the stock market, which tends to be a forward-looking metric. People make investments based on what they think will happen, rather than what’s happening now. That’s why, in terms of job creation as a component of business performance, the stock market anticipates a rosier picture than current reality.

Trickle down takes time. In the survey, the Indiana CEOs said they believe there is more public and private funding available for business success, compared to last year. They say the amount of funding has increased on both the equity and debt sides since the recession. As funding increases, companies can leverage their positions more. This translates to better returns, which leads to happier shareholders. On this idea of more money = more profits, the stock market rises.

ExecConnect Event Sheds Light on Indiana Mid-Markets

In 2008, the Indiana Chamber Foundation released a study titled "Accelerating Growth in Indiana’s Mid-Market Companies," which focused on how established Indiana organizations could learn from each other. Today, the Indiana Chamber, Barnes & Thornburg and Butler Business Accelerator hosted a seminar to further discuss issues impacting mid-market companies.

Some notable facts that came to light in the study:

  • 3% of all Indiana-based, for-profit firms landed in the mid-market definition of between $5 million and $100 million in annual sales
  • But those 3% of Indiana firms accounted for 30% (386,808) of the jobs and 40.4% (more than $55 billion) of total sales for Indiana-headquartered businesses

Governor Mitch Daniels opened the discussion today by educating the nearly 150 business leaders in attendance about the positive steps Indiana has taken in recent years to become more business friendly.

He noted that not only are companies from many other states relocating to Indiana, but the Hoosier state has gone from 37th in per capita spending in 2004 to 45th in 2008. Daniels added the state’s debt is down 40% since 2005, a time span that saw most debts around the nation increase.

"You’ll be amazed at how much government you’ll never miss," he quipped.

He pointed to Indiana’s budgetary position as being in far better shape than many in the region, or even the country.

"When I can’t sleep, I don’t count sheep," he said. "I count all the states I’m glad I’m not governor of."

Breakout sessions took place on a variety of topics, including strategic planning and health care reform.

Regarding strategic planning, Scott Webber of Volatus Advisors explained, "As a guy who invests and helps young companies grow, we want to determine what we want to be three to five years down the road and identify a path to get there.

"We’ll do an off-site retreat and figure out where we want to be, then track the steps in reverse. That way you can identify any gaps in advance."

Perhaps David Lindsey of Defender Direct most aptly summed up the need for companies to focus when developing a strategic plan by harkening back to an old proverb: "If you chase two rabbits, they will both escape."

Alliance Brings Leaders Together — for 20 Years

In the November-December 2009 issue of BizVoice, we featured a short story on the Alliance, a networking and business development forum for senior leaders of established Indiana-based companies. The group recently celebrated its 20th anniversary with an event sponsored by Oxford Financial Group, Ltd. Among the highlights:

  • Daniel W. DeHayes, a co-founder of the group and professor emeritus at the IU Kelley School of Business, noted that the 150 different member companies through the years (there are currently more than 45 businesses involved) have generated nearly $60 billion in sales revenue and currently account for more than 30,000 Hoosier jobs.
  • William L. Haeberle, also a Kelley professor emeritus, was recognized for his "intellectual and sovereign leadership" for 15 years.
  • Butler University President Bobby Fong shared insights on the subject of excellence: "Enduring excellence is a matter of values. Excellence depends on a firm and consistent commitment to mission. Excellence means identifying the things you do well. Excellence resides in your people and the culture you build to sustain them."

The manufacturing, retail and service sectors each make up one-third of the Alliance membership. Groups like it are excellent examples of business leaders learning from each other — as well as outside experts. While Indiana often seems to feature too many organizations working separately toward similar interests, the Alliance does not fall into that category. Congratulations to all involved and best of luck in your next 20 years.

Gov. Daniels Gets More National Ink

In a commencement speech at Butler University Saturday, Gov. Mitch Daniels offered his usual straightforward candor regarding issues du jour. The popular political blog of Chris Cillizza, The Fix, reports on the Governor’s take on baby boomers and the future — and speculates on his political future, as well:

Indiana Republican Gov. Mitch Daniels delivered a condemnation of the "Baby Boomer" and a call for generational change during a recent commencement address at Butler University, a speech drawing considerable national attention as the Republican Party continues its search for fresh faces and new leaders.

"As a group, we have been self-centered, self-absorbed, self-indulgent, and all too often just plain selfish," Daniels said in the speech. "Our current Baby Boomer president has written two eloquent, erudite books, both about . . . himself."

Daniels went on to offer a sweeping indictment of his own generation’s financial and moral selfishness, concluding: "It’s been a blast; good luck cleaning up after us."

He offered a brighter prospect for the graduating class, however, insisting that great generations (with apologies to the man from South Dakota) often follow mediocre ones and noting that: "True greatness can only be revealed by large challenges, by tough circumstances. And your opportunities for greatness will be large."

Butler’s Jukes Stands Tall Off the Court

Avery Jukes is a basketball player at Butler University. Being a key player off the bench for an always competitive and sometimes overachieving program would normally be enough to define a young person during his or her college days.

Much more than an athlete, the Georgia native founded the Jukes Foundation for Kids after a volunteer trip to Uganda last summer. The mission is to collect resources, clothing, food and funding for educational needs in the African country. A mechancial engineering and mathematics major, Jukes also plans to assist those in need in his college home by building a youth recreational park in Indianapolis.

The Jukes Foundation is hosting the 2009 Champions for Children Gala on April 17 at the NCAA Hall of Champions. The family friendly event will honor the 2008-2009 Butler basketball team and include other special activities. But it’s not about basketball; it’s a young man doing what he can to help others in need.

Kudos to Avery and best of luck with all his efforts.

You can learn more about the foundation or donate here.