November 21, 2008

Family Financial Memo

Filed under: Economics — marcstober @ 1:22 am

It think we’ve all been getting these sorts of memos at work lately, and I recently got one from my alma mater. So, I decided to write one of my own. I figure someone’s going to leak it to the blogosphere anyway, so I’ll just post it here in the first place. 🙂


TO: Stober Family Members, Newton Highlands Branch

FROM: Marc Stober, Chief Operating Officer

DATE: November 21, 2008

SUBJECT: The Financial Crisis

With the recent news on Wall Street, I have been hearing many concerns about our organization’s situation and wanted to take this opportunity to detail what we are doing from the top.

First, there will be no layoffs.

As you know, we are operating at a deficit this year, due to extraordinary child care and preschool expenses. It is important to note that this is unrelated to the general financial crisis, and these expenses are fully funded through school year 2008-9.

In terms of recurring revenue, our employers have indicated that they are committed to continuing at present levels on a monthly basis. However, they are also facing pressure, and, based on our discussions with them, we are budgeting for a significantly smaller increase in revenue compared to what we have seen in recent years.

At present, our greatest exposure is highly leveraged real estate debt used to purchase our primary residence. While related debt service is our largest recurring expense, the good news is that this is a fixed expense that will not increase until at least 2013. We believe our investment is fundamentally sound, and will achieve long-term growth while continuing to provide immediate benefits through use of the underlying assets, regardless of the current market.

Our extended family’s long history of continuous operation through difficult times–including the Great Depression–gives us the strength to navigate in the present climate. However, in light of the global financial situation, there are some measures we are taking to cut back expenses. We feel these measures are prudent to preserve cash flow in the face of uncertain growth and unfavorable credit prospects.

The most difficult budget issue is transportation, and we have not made any final decisions. As you know, our second car was scheduled for replacement at the end of this school year, and we may decide to extend its service life. The reason we have not made a final decision is that repair costs required for this course of action are yet unknown. While this is potentially disappointing, keep in mind that our primary car still serves over 80% or our non-transit transportation needs. We committed to meeting those needs, and through a program of regular maintenance (that has not been cut), we have not had any unplanned downtime for a primary car in over 4 years. Additionally, thanks to successful strategic planning undertaken by the Board, we are uniquely situated for a suburban family to be able to utilize the MBTA as a safe, cost-effective option.

In the Travel and Entertainment category, you will find that fewer requests to eat in restaurants will be approved, and requests for desserts in restaurants, particularly, will not be approved (unless they are included in the cost of a kid’s meal). In the case of Cabot’s or The Cheesecake Factory, where ice cream or cheesecake, respectively, is kind of the point, sharing is strongly encouraged. An additional benefit of this will be improved health. Netflix has been put on hold for 90 days, and we will reconsider that offering then; unopened red envelopes left on top of the TV indicate a lack of demand at present. Newspaper and magazine subscriptions are subject to elimination as well. Executives, including myself, are being asked to purchase regular coffee in place of more expensive coffee drinks while traveling, and to utilize meals from our on-site food service provider whenever possible.

Charitable giving will continue, primarily to organizations to which we have supported on a regular annual basis, and new requests will be considered individually.

All major vacations, home improvements, and furniture purchases are temporarily put on hold, unless essential. Pre-approved food and clothing purchases can continue as needed and may be subject to increased budget scrutiny.

Lastly, note that we have no plans to add human resources. Requests for non-human resources (i.e., pets) may be considered in a future fiscal year.

The bottom line is that while the coming years may not be everything we want, we will stay together and have great stories to tell the grandkids.

Happy Thanksgiving.

If only my memo-writing skills could get me a job as a real CEO….

  • With all of my business acumen, I just can’t convince myself to respond in a continued memo-style manner. Memo-speak has become something I now fear.

    I especially enjoyed that we plan to add no additional “human resources.” With the children being 5 and 1, I’m not sure how much of a resource they are at this point, unless you consider their existence as reason to visit the electronics section of Toys R Us as a resource.

    I would also suggest to the readers following this blog that if they have any helpful tips for surviving these tough economic times, feel free to add them in the comments. Chief among such suggestions might be plugging in the Crock Pot after filling it with the intention of eating dinner that evening.

  • Speaking from the parent organization, we are buying a toaster and will then redeem our coupon for a bank and be seeking bailout money. (We know better than to take our private jet to DC when go there.)

  • Fillis Stober

    Reply to Memo:

    Thanks for copying us on the memo from the Newton Branch. The Newington Branch will take it under advisement, and plans to forward it to the New Haven, New Jersey, Berlin, Clinton, Niantic and California branches. We plan to utilize some of your cost cutting measures, the limit on additional human resources for this branch fits with our overall strategic plan. Food preparation from our central food facility fits with our plans as well, and has the added benefit of utilizing the time of existing personnel. Your CO-CEO’s suggestion of plugging in the crock pot is appropriate. We are extending that to trying to use fruit and vegetables before they turn into science experiments. Off-Season sales will be utilized here for future clothes purchases, this works for our branch as none of our personnel are getting taller, and if we get shorter, we can always take up hems. We will let you know immediately if the personnel in this Branch have any more bright ideas. In the meantime, HAPPY Thanksgiving to all!

  • Danielle Di Bona

    I’m sitting on my couch this Sunday morning trying to finish my Thanksgiving sermon. In order to put it off, I’ve been reading the Globe. Yahoo! I’ve found my Sunday morning reading and grist for the sermon mill! Thank you Mr. Stober.
    Reverend Danielle Di Bona
    Thomaston, ME

  • Cath Morgan

    Our organizations encourages heavy use of the local library system, thus no need for Net Flix and cuts down on expenditures such as out of state newspapers and fantasy romance novels.

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  • I used to live in Oak Square in Brighton, not far away from you. Back in 1989-1991.

    Your memo is good. As the CEO of my family of three (me, 45, wife, 45, daughter, 4) here in Stow, Massachusetts, I can verify that certain expenses are being curtailed. It’s Folger’s for coffee, for starters. Just add in a bit more to the pot than the expensive stuff and it pretty much works fine. Also, if you can spare the time, percolating coffee on the stovetop makes a stronger pot.

    NetFlix is getting kicked back to three movies out instead of five. I’m actually going to the grocery store with a budget, and trying to live up to it. Making tradeoffs at the aisle. Our nights out are limited to the town dive that makes 35 cent chicken wings. Bud instead of Bass. our heater’s set at 65, 55 at night. Cutting out coupons from the ads that come to our mailbox — and God, I hate cutting out coupons. Saving as much money as humanly possible. We stopped cable TV four years ago, so that’s all set.

    In a strange way, it all feels positive. Rally the troops, chin-up, and all that.

  • Alana in Canada

    May I suggest two possible courses of action for reducing your operating costs.
    The first, however, requires some intitial capital outlay. It may therefore behoove you to perform a cost/benefit analysis before undertaking this venture. Should you experience or anticipate experiencing extensive heating costs during the next fiscal quarter, you may investigate various and different means for reducing those costs such as installing such items as weatherstripping, clear polyvinyl coating on windows and other means and ways of controling heat loss.

    The second course of action, however, does not involve any capital outlay and the benefits are immediate. It would be wise to advise your caterer that in order to a cut cost significantly, you will be cutting out nearly all your consumption of meat and meat related products. Utilization of local resources such as your municipal library can furnish the necessary ideas to make such cuts not only feasible, but healthy and tasteful as well.

  • chris

    A good investment that could yield increasing returns is a pressure cooker. I notice your reference to a crock-pot. Beleive me, a pressure cooker can provide the same benefits and more. It is a lost art which my mother – a survivor of the depression – took full advantage of, often having two or three going at the same time. Pot roast in 45 minutes and it tastes like its been cooking all day.. Chicken soup? Now you’re talking.

  • Michael

    While this may all be fine and dandy for some, I have learned valuable lessons from the current politics going on in DC.

    After many years of close examination of my prospective take over target, I plan on a friendly merger with my neighbors co-executive, followed by a break up of their assets, which are I believe to have a greater asset value than book value to my corporation. I calculate this under “goodwill”. I will then use their retirement funds to “bail out” my organizations under funded equities. This “synergy” between the best of my organization, and my ex-neighbors, should supply the needed cash flow to create team building exercises in Hawaii and Paris, thereby cementing a spirit of commitment to the newly expanded corporate structure.

    After all, I am learning from the government that morality is for people without lobbyists on K street.

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  • Kathy

    Another suggestion for food savings I’ve undertaken is a return to bread making. Bread has become very expensive, but think about it – 5 pounds of flour can be had for $2.50. After you’ve tried this out and it seems like a viable plan consider buying a pound of instant yeast from King Arthur or other sources. If you have a food processor it takes 45 seconds to knead a loaf of bread. Takes no more than 10 minutes to do it by hand. (Mark Bittman has a great recipe for no-knead bread at the NYTimes.) The bread will be outstanding, you can control the ingredients, and you’ll be comforted by the smell of bread in the oven. It will call you back to something you’ve lost.

  • Oh Dear God, please do not leak this memo to the press!! It’s hard enough convincing our CEO here at TJ Industries Ltd that it is worth the extra money to buy the name brand peanut butter. No more fuel for the fire please!!!

  • James

    I love this memo, both for its own merit and as a commentary on “corporate-speak”. I’m also a fellow Newtonian and my family and I live near Cabot’s. Having experienced an uptick in our human resources in the past year (she’s 8 months old), I can relate to the budget crunch.

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