Background

A little background:  in April of this year I decided to test a theory I had long held about the importance of motivation in trying to lose weight.  During my last physical my doctor told me that based on my BMI, I was borderline obese (what do they expect – they make you weigh with all your clothes on!).  She also said my cholesterol levels were a little on the high side, and she could put me on statins, or I could lose 30 pounds and come back for a re-check in 6 months.  She suggested that if I just stopped drinking alcohol, I could lose the weight pronto.  Easy for her to say!

 The appointment took place in February, and of course it took me a couple of months to decide to act on her advice.  Around that time my brother Hank (www.issetrak.com) introduced me to Facebook, and the old wheels started spinning. 

 Trained as an Industrial Engineer at the University of Michigan (Go Blue!),  I remembered about the Hawthorne Effect.  Look it up on Wikipedia if you want the details – but in a nutshell some industrial engineers were trying to improve productivity at this huge GE Plant, and kept meticulous production records to help them study the impact of certain things.  They turned up the lights – and sure enough productivity increased.  They turned the lights back down – and guess what – productivity increased again!  They concluded it was the attention from management, knowing what was being watched, that led to the improved performance.  We see the same effect when SurvivalWare is used in a small business – when you make explicit what the performance measures are, and make them visible to all who can impact performance, you see improvements over time.

 So I thought that if I did nothing more than post my weight on Facebook (www.facebook.com) every day, I would be forced to make good decisions throughout the day in order to avoid embarrassment the next.  I started out at 224.5 on April 8, 2009.  I know what you’re thinking:  I must be shameless to start with in order to post a weight like that, and how could I possibly be less embarrassed if I get it down to still-chunky  220?  Well, it worked for me – for a while, anyway.

 I got myself to start by NOT setting an outlandish weight loss goal (e.g. 30 pounds in 6 months). I’m in the software business after all (www.survivalware.com).  I try not to get too worked up about deadlines.  Rather, I made to commitment to post my weight on Facebook every day for 30 days – and then decide if it was worth continuing.  How hard could that be?

 That worked for a bit – I actually lost 15 pounds in 90 days.  The encouragement from friends and family was really helpful. My brother Hank (www.issuetrak.com) asked me to see what the impact of not drinking alcohol would be.  Don’t you love it when family members make suggestions about how you should live your life?!  But  I had opened myself up for that type of thing by posting on Facebook (www.facebook.com) to begin with.  Plus he had a point – I would gain information about the impact, and then I could decide if it was worth it.  Plus I had the added benefit of an opportunity to prove that I wasn’t a total souse.  I stopped for 10 days.  I finally gave in with encouragement from my wife (it’s not every night we go out to dinner – you’re telling me you can’t have a glass or two of wine?).  It was at a Macaroni Grill or something like that where they put a huge open bottle of wine on the table and have you keep track of what you drink on the honor system.  I’m only human, after all.  Those 10 days did help with the weight loss.

 But I found I would rather cut back elsewhere – say on the peanuts that normally accompany the alcohol consumption.  Or maybe up the exercise to compensate.  Hank (www.issuetrak.com) suggested that I post the number of miles I rode my bike, so I started doing that as well.

One problem was that I was uncomfortable with the unpredictability of my daily weight.  It didn’t always correlate with the previous day’s performance.  I felt like I needed a better measure to monitor and control.

The other problem was trying not to sound like a self-absorbed dork when reporting my weight and bike miles each day on Facebook (www.facebook.com).

 Toward the end of July I experimented with calorie counting.  I was in the habit already of logging my daily bike riding, so I just needed to track the occasional walk with the wife or mowing of the lawn.  I use a push mower and awarded myself the same 600 calories per hour that you get for jogging (400 for biking, 200 for walking).  I decided I could handle the calorie counting, and made the commitment to do it for 30 days, and track my actual vs. theoretical weight.

 See my last post for the month by month account of what I did:

http://www.survivalware.com/rustysblog/2009/11/03/rustys-diet-a-soft-landing-after-losing-30-pounds-in-6-months

The SurvivalWare Diet

In a nutshell the SurvivalWare diet is this:

• invest the time and effort to determine your food intake and how much time you exercise. 
• Log calories and exercise minutes every day.  Write down somewhere (paper or in a computer file) the Total Calories Consumed and Minutes of Exercise by each of three main categories (walking, biking, running).
• Do the analysis: keep a running tally of how many calories you have burned vs. consumed.  
• Set a goal based on your desired weight loss over 30 days. (I did 10 pounds one month, but I had to average 3 hours a day of bike riding to achieve it. 3 to 5 pounds a month is a more reasonable pace).
• Calculate the calories you need to burn in excess of calories consumed by taking the total for the month divided by 30 to get an average per day.  That is your daily goal.

I found two things really helpful when tracking food calories: 

1. the CalorieKing food database (www.calorieking.com) and
2. buying a food scale.  I loved mine until it broke recently.  I bought it on Amazon.com for less than $40.  I might try to upgrade next time.

 Also, it helps that I like to cook, and that enables me to jot down ingredients and read from the food labels as I prepare dinner.   Also, I find that if you prepare dinner for your spouse every night, it is hard for the spouse to be mad at you for any length of time.  Unless, of course, you overcook the salmon or overspice the chili.

Restaurant meals were tougher.  Not all restaurants publish the nutritional contents of their meals, or there may be a lag when a new menu item is added – and of course, that’s what everyone orders, the new stuff.  But it was amazing what I could find out with my iPhone using the Food Scanner app.  ($2.99 from Apple’s App store).  It helps kill the time between placing your order and having it served to you.  Plus what social interaction – such as lunch or dinner with a spouse or friends – can you have today that doesn’t lead to at least one Google search?   Food Scanner gave me an excuse to play with the iPhone, and then I naturally would keep it out just in case.

You can search for Caesar Salad and you get to choose from about 12 different restaurants.  If you don’t find the exact establishment you are eating at, you can compare yours (when it comes) to the pictures of the others and pick one that looks closest.

Food Scanner also claims to read the UPC codes on labels that come on packaged foods.  I found that feature to be unreliable in my tests.  Also, if you have the label in front of you, there in plain text  is the serving size and number of calories, and it is really easy to jot that down on a scrap of paper.  That’s what I do – just jot down what I eat soon after every meal,  or during the meal preparation.   Then once a day I tabulate all the scraps, and look up any calories that need looking up (e.g. fresh fruit).  I try to remember everything I ate and drank.  Depending on your memory, and how many drinks you have – you may be able to jot things down just once a day without having to do it throughout the day.  When you get all that in one place,  record the total calories consumed in a spreadsheet.

It gets easier over time.  It is amazing how you tend to eat the same thing for breakfast or lunch every day (with a few variations).  I’ve learned to estimate fruit weights and serving sizes just through repetition. 

I never did find a food logging program I liked – either on the iPhone or on the PC.  I found my hand method of recording to be a good hybrid approach that fit my style.  I’d say don’t bother with entering into a computer every single food item that you eat – it is the total calories each day that counts.

 When I was at my PC,  I used the Calorie King database (www.calorieking.com) instead of the iPhone to look up calories because it was more efficient and easy to use (no iPhone keyboard!).  It would correct my misspelling of broccoli, and make it easy to express my consumption in standard servings, dry measure, or weight in ounces or grams.  For fruit it would show me the weight for small, medium, or large pieces of fruit (e.g. fresh apples) and you could use that to estimate if you didn’t have a food scale.

 In my next posting about the SurvivalWare Diet, I plan to make available and explain the actual spreadsheet I used to track my weight loss performance since August, 2009.

Post from: Rusty's Blog

The SurvivalWare Diet

I’m getting ready to analyze what I ate (and drank) during those 3 months, during which I lost 14 pounds.  I will say this: I’m not very good at controlling what I eat.  I find it much easier to get more exercise than to cut down on caloric intake.  Also, I made sure I had room for alcohol.  I drank bourbon every single day during the last three months.  I did pretty much abandon beer – because I discovered bourbon gives you more bang for the buck.

Here is what I averaged per day in caloric intake the last 3 months:

August:  2,452

September: 2,617

October: 2,574

August was the month I set out to prove this would work.  I set an ambitious goal of burning 35,000 calories more than my intake – which should result in a loss of 10 pounds.  It turns out to be 1,130 calories per day, and I decided I had a shot at doing it if I could ride my bicycle 3 hours per day.  My bike ride became my priority, and it worked.  I came 2,000 calories shy of my goal, but still lost the 10 pounds.  I found my actual weight varies from my “theoretical weight”  by as much as 3 pounds, but usually they are close. 

I felt I needed a rest from the diet in September, and set my goal at zero the first two days of the month, and then an excess of 500 calories per day for the rest of the month.  I missed that goal by 4,000 calories, but still managed to lose 1.5 pounds.

I left the goal unchanged in October due to inertia, and performed even worse:  I burned 5,575 excess calories vs. a goal of 15,500.  I still lost 2.5 pounds, half due to luck.

So for November, I’ve decided to dial down the goal to 233 excess calories burned per day, which should result in 2 pounds per month of weight loss.  It should be comfortable and easy to do – and will allow me to redirect some of the biking hours to work.  The first day of the month I missed that meager goal by 300 calories, but made up for it today with an extended bike ride.

Post from: Rusty's Blog

Rusty’s Diet: A Soft Landing after losing 30 pounds in 6 months

October 15th is the official day – when new content will appear on the site, press releases will be sent out, email blasts sent to prospects and customers, and the debut of the company Facebook page and Twitter account.

Daily Flash Model

I spent more time than I ‘d like to admit the last 2 or 3 days tweaking the Daily Flash model to help guide me through this exhilarating period of growth.  (Sales this year are already double last year’s on a year to date basis through September).  It is my secret weapon in two ways:

1. It helps me monitor our weekly progress toward our ambitious sales goals for Q4, 2009.

2. It is a sexy product in its own right, and should add significantly to the appeal of SurvivalWare.

Here’s what the dashboard looks like for the latest week – prior to any launch related marketing efforts or advertising:

I’m not sure yet whether I will continue to make the info public.  Enjoy it while it lasts!

Post from: Rusty's Blog

What we’re doing this month at LSI

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Protected: Latest Website Stats – LSI – as of 9/27/2009

Then I started looking into how I came up with my original 2,300 calories per day number for my Basal Metabolism Rate (BMR).  I’m preparing an in-depth “how-to” article on Rusty’s Diet.  I wanted to explain how to come up with the number of calories burned per day assuming no exercise.  Then you layer on top of that the calories burned from timed exercise sessions to get a total approximation for each day. 

I couldn’t find it on the CalorieKing site, but when I started poking around I discovered that it is dependent on weight, or what they call lean body mass.  Not having the tools to calculate my lean body mass, I decided to go with my total weight, as this website recommended as a way to get an approximation.

 (Here is the site I’m referring to: http://www.build-muscle-and-burn-fat.com/how-many-calories.html#Fat )

To make a long story short, my assumption of 2,300 calories burned per day at rest is probably too high, and should actually be about 2,145 at my current weight.  That is a swing of 2,000 calories month to date!  My comfortable 800 calorie stockpile not only vanished, but now I have a 1,200 calorie deficit to make up. I gained a theoretical 6/10ths of pound overnight.  I feel like I just moved to a higher tax bracket.  The more successful I am, the more I am penalized!  And sometimes a big tax bill takes you by surprise. 

Only thing to do is put my head down, and make up that 1,200 calorie deficit before month end.  I think I will crank up the bike riding and crank down the alcohol.

You may have noticed that I keeping changing the name of the diet.  I think I will go with Rusty’s Diet because Entrepreneur’s Diet doesn’t exactly roll of the tongue, and using its abbreviation would not endear it to the male population.  If you get my drift.

Here’s the scorecard for September as of this morning (9/14/2009):

Calories burned vs. consumed as food and drink

Actual vs. Theoretical Weight (Calculated based on calorie intake and exercise)

Post from: Rusty's Blog

Rusty’s Diet: mid month progress report for September, 2009

I went public (Facebook early August) with a goal of losing 10 pounds during the month of August.  From a starting point of 205, I vowed to lose 10 pounds by September 1st.  My plan was to do it by averaging 3 hours a day of bike riding, covering 1,000 miles or more; and counting calories.  I had calculated that I needed to burn 35,000 more calories than consumed during the month in order to lose the 10 pounds.  This translates to 1,130 calories per day.  Breaking the problem down into smaller pieces helps. 

My research on the web came up with a figure of 400 calories burned up during an hour of bike riding.  (About 200 calories for walking, amd 600 calories for running).  If I could do 3 hours a day of bike riding (a big if!), I would burn 1,200 calories a day over and above the 2,300 calories I burn from a person my age and sex living a sedentary lifestyle.  This means that I could consume 2,370 calories per day, and still meet my agressive weight loss goal.

Toward the end of July, I invested in a food scale and found a nutritional database on the internet that I really liked.  I did a few trial runs to see if it was even feasible to do the calorie counting necessary to execute my plan.  I also upped my bike riding to a furious pace, to see if I could really achieve 3 hours a day over an extended period.  The last 10 days of July, I averaged 32 miles a day.  That also helped me get used to the routine. 

One of the things I decided early on was to NOT give up drinking alcohol.  I was in the middle of trying to get a new version of SurvivalWare released, while juggling major customer projects, and trying to assemble a team at Luhring SurvivalWare, Inc. to take us to the next level, and do it without running out of cash.  I needed stress relief above and beyond 3 hours of bike riding a day.

I hit the ground running on August 1st,  exercise-wise as well as recordkeeping-wise.  I’ll document the details in a separate “how-to” article, and focus here on the results.

On a daily basis, I concentrated on surpassing the goal of 1,130 calories burned in excess of consumption, and to stay above it on a cumulative basis month-to-date.  I found it was easy to do when I was able to take a monster bike ride, but real hard when I was shut out of exercise.  On a few occasions, I tried to stockpile my excess calories burned in anticipation of some difficult days.  I didn’t realize until the middle of the month that I had a 4 day anniversary weekend getaway that involved 10 to 12 hours of driving all told.  It was in the mountains, and it would be futile to bring a bike.   Besides, this was an anniversary after all, and the proper thing to do was spend time with the missus.  Nobody told me that we would stay in a B&B for two nights whose specialty was a 4 course breakfast.  Or that we would go drinking at a college bar with my son Thomas and his friends.  It was painful the next morning – not from a hangover, but from counting the calories in an Irish car-bomb (and then applying a multiplier).

It turns out my stockpile wasn’t quite big enough.  I had 1,500 calories “in the bank” the Friday morning we left, and had used that up and 3,500 more by the following Tuesday.  I whittled that down slowly and finished the month with a deficit just under 2,000 calories.  That means that by one measure, I really didn’t hit my weight loss goal of 10 pounds – a more realistic measure would be the 9.4 pounds of theoretical weight loss.  So I got lucky on weigh-in day to the tune of .6 pounds!

I was pretty determined and obsessed about the diet as I saw how well it worked, and how much it seemed to use the same principles I use as an entrepreneur to grow a new business.  The last day of the month, when I weighed 195 for the second day in a row, I was tempted to declare victory and quickly report on the results.  I knew that the 195 was due to luck and for sure I would gain a pound or two.  God’s way of keeping me humble.  At that point I had accumulated 928 miles of bike riding.  I had been on track to break 1,000 miles all month, and then came the 4 day getaway.  I even snuck in 25 miles the morning we left.  (The only way I managed the time that day was to be at my desk by 4:30 a.m. to crank away for a good 4 hours before breakfast and the ride).  Three full days of no bike riding means that I have 28 days instead of 31 to reach 1,000 miles.  I would need to average 35.7 miles per day instead of 32.3 miles.  Clearly there were good reasons for missing the goal.

But, the weather was nice.  Low 70’s, low humidity.  Light NW breeze.  I had started work at 5:40 a.m. and managed a good 6 1/2 hours of sheer productivity by the noon hour.  So I said to myself “what the heck?  I’ll give it a try.”  I packed a lunch, filled up my Camelbak with water, forwarded the office line to my iPhone, and I set off.  First stop was the bank.  Sometimes one of my employees will ask me to deposit his paycheck right away.  This is a service I offer to family members until I figure out how to get the Direct Deposit working with my bank and QuickBooks Payroll.   I always get a kick out of going through the drive-through lanes on bicycle.

Second stop was lunch.  This was the day the Wall Street Journal published an article about large companies taking longer to pay their bills, but requiring payment from smaller companies more quickly.  “What a bunch of ass-holes!” was all I could think.  Don’t they realize that their cost of capital is much lower than ours?  The smart thing to do would be to do the opposite, and thereby lower the cost of doing business with them.  We would be happy to share the savings.

So – two hours in I had a grand total of 9 miles under my belt.  I had this slightly uneasy feeling that time might be a problem.  I had about 63 miles still to cover before it got dark.  I had not yet installed my new bike light set on the bike I was riding.  But I trudged on.  I decided to just do a straightforward 36 miles out and 36 miles back.  I took the Mount Vernon trail to where it meets up with the 4 mile run trail just south of National Airport.  That takes you to milepost “0″ of the W&OD trail (about 2 1/2 miles). Then I just needed to get to milepost 23 and turn around and come back.  The rest is history, of course.  I managed to clock 73 miles that day in over 6 hours of riding time.  I ate more than usual, but still managed to beat my daily goal of 1,130 calories burned in excess by about 800 that day.  And the next day – September 1st – after 6 hours of riding and good healthy eating – I weighed the same:  195.0 pounds.  What’s a brother gotta do to lose a pound or two?

Here are some charts that show what happened during the month:

• Calories burned vs. consumed
• Difference between Actual Weight and the theorectical weight
• Bike miles ridden
• Time spent exercising

Calories burned vs. consumed

I averaged about 2,452 calories per day in food and drink.  I estimate about 20% of the calories were in the form of alcohol.  I calculated calories burned at an average of 3,518 per day based on my bike riding, and the occasional walk with the missus, and lawn mowing with the reel-type push mower.

Difference between Actual Weight and Theoretical weight

It was remarkable how closely the two measures tracked.  My actual weight was always within 2 or 3 pounds of the theoretical, and often within a pound or less.  I never went more than three days in a row with my actual weight still above the theoretical.  It always drifted back down.

Bike miles ridden

This was not exactly a life of hard labor.  We have some of the nicest bike trails in the world here in the Washington, D.C. area.  I love riding outside.  I have a variety of rides to choose from depending on how much time I have, and the time of day.  I did 1,001.5 miles for the month, an average of 32.3 per day.   Some days were easier than others.  I like it best when I can break the ride up with lunch, or errands. At least 11 of the rides were in 90 degree heat.  It’s not that bad once you get going.  You make your own breeze.  You only get hot when you stop.  You just have to be sure to take a good supply of water.  There are lots of places to refill your water bottle or CamelBak all along the trails, but sometimes they do go out of order.  I figure on about one liter of water per hour of riding when it is hot.

Time spent exercising

I supplemented the bike rides with 6 walks averaging an hour a piece, and 6 sessions of lawn mowing.  I gave myself credit for the lawn mowing at the rate of 600 calories per hour based on the volume of sweat produced and the feeling of exhaustion afterwards.  I use a reel-type push mower, and I get a real good workout.  I have been doing it all summer, and think it has helped my arm strength.

Steady as she goes

Now, a week later, I am happy to report that I haven’t gained it all back.  I gave myself two days off (goal of 0 excess calories burned) and on one of those days ate and burned exactly the same number of calories (a piggish 3,094) without intentionally fudging the numbers.

I feel like the first time in my life I have control over my weight.   This morning I weighed 194.5, down 30 pounds since April 8th.  My T-Shirt size is down to L from XL.  I can wear shorts with a 36 inch waist, down from 40.  I’m about to go to the last notch on my belt – for the second time.  I found a BMI Calculator online (http://www.nhlbisupport.com/bmi/) and found that my BMI is now 26.4, down from 30.5 when I started.  Over 30 is obese.  25 to 29.9  is merely overweight.  A weight for me of 180 with a BMI of 24.4 would be at the upper threshold of “normal weight.”  I will probably require intensive psychotherapy to stop from thinking of myself as fat.

I am trying to dial back the instensity this month, and then take advantage of some of the free time.  I’ve set a goal of 1 hour and 45 minutes a day of bike riding, which is about 20 to 21 miles a day for me.  I want to burn an excess of 500 calories a day which will result in a weight loss of 4.3 pounds per month.  I still want to make up the 2,000 calorie carryover from August.  I figure I can get down to 180 by the end of the year without a whole lot of stress, and then decide what to do from there.  I hope to follow up with a more detailed “How to” article about some of the mechanics of counting calories, and monthly reports on how it goes.

Post from: Rusty's Blog

Entrepreneur’s Diet: Report Card for the Month of August, 2009

I think this thing really works. 

The parallels to running a business continue to hit home.  There’s all this uncertainty, just like in the daily life of an entrepreneur.  You really don’t know if or when any given deal will be closed.  You generally cannot predict accurately when someone you make  a sale to is going to fork over the cash (unless you have a cash only business).  Same with the weight loss program.  I don’t know if I really could burn 400 calories per hour of bike riding,  the closest estimate I could find at the time.  Maybe I will have better information in the future.  Same with the 2,300 calories per day burned by someone my age and sex living a sedentary lifestyle.  (Sorry for the bolding, I just wanted to increase readership of this paragraph).

There is the key assumption that 3,500 excess calories burned equates to losing a pound of fat.  I think I read it somewhere a long time ago – maybe when I was a kid and was on one of my various (and usally not terribly successful) diets.  Suppose it is really 2,500 or 5,000?

Finally there is the hassle of good record keeping: taking the time to count calories, and recording them by meal.  I use the Calorie King database to look up foods for which there is no nutritional label.  I’ve been measuring stuff like: how much cereal fits in my standard cereal bowl, how much milk I pour on it, and how much sugar is really contained in those two heaping teaspoons (turns out to be a tablespoon).

A lot of the measuring and weighing I just do once, and can then use the information over and over.  A lot of my meals, especially breakfast and lunch, are the same every day, or chosen from 3 or 4 variations.

The exception has been fresh fruit, which varies quite a bit in size from one shopping trip to the next.  And then stuff like cheddar cheese where the portion sizes are hard to equate with the standard serving size.  Who thought that an ounce of cheddar cheese could turn out to be so small?  

We eat a whole lot of fresh fruit – probably 3 to 5 servings every day.  (Laurie told me the FDA recommends 9 servings a day – but who in the world eats that much??).  I’ve been weighing fruit portions recently so I can equate “1 medium pear” from Calorie King with the amount of weight in what I consider to be a medium pear.  Bananas vary a lot in size – the one I had this morning was 3.2 oz, which Calorie King considers to be between extra small and small.  One nice thing about Calorie King is that it is real easy to change units and it updates instantly the total calories and other nutrients (3.2 oz of banana = 82  calories).

My wife Laurie and I have a running battle on what constitutes a small vs. large banana (she prefers the small ones).  I am sure it will drive her absolutely nuts if I start measuring the weight of the bananas to monitor whether I have purchased the latest bunch according to a pre-agreed upon definition of what constitutes a small banana.  This whole food weighing thing is going to be more fun than I thought.

So here are the results of the first 9 days of August.  I was out of town (and without my scales) on August 1st, so I am using 205 as the starting weight, which is halfway between 207.5 on July 30th and 202.5 on August 3rd. 

We drove back to Alexandria from Va. Beach on August 2nd. As a result, I could squeeze in just a short 9 mile ride before we left.  I’ve been riding like a madman ever since, and even did 54 miles yesterday.  So calories burned (Sales) have been above plan, month to date.  Calories consumed (Expenses) have also been above plan, but by a little less than calories burned.  For the first 9 days of the month in total, the cumulative excess of calories burned (Profit) is 10,796.  I did this while averaging 3 hours and 8 minutes a day of bike riding, plus eating and drinking 2,457 calories a day.   I found that including 3 or 4 shots of bourbon in my planned diet (mixed with diet ginger ale of course – 100 calories a pop) made it a whole lot easier to keep to the plan.

My goal, based on wanting to lose 10 pounds for the month, was a cumulative excess (Month to Date Profit) of 10,170 calories for this period of time.  My theoritical weight loss is 3.1 pounds in total.  My actual weight (Total Debt) is down 4 pounds (Cash Flow) to 201 this morning.  You guessed it: my goal is to earn a lot of profit, create positive cash flow, and pay down debt.  All while having fun.

Here is a sanity check to see if my actual weight loss is tracking the theoretical weight loss based on calories eaten and calories burned:

Post from: Rusty's Blog

Entrepreneur’s Diet: Report Card for Week 1

My customer who bought SurvivalWare to prepare projections for an ARC Loan application abandoned the effort after doing 90% of the paperwork.  He had bought the business 12 -15 months earlier.  It had been in business over 9 years.  But he was told he couldn’t qualify because you had to be in business 2 full years.  Not all was lost:  he was thankful the journey lead him to SurvivalWare.

Here’s what’s happening on the other side of the tracks:

The page 1 WSJ article continues on to page 4:

“Law firm Davis Polk & Wardwell LLP, which was brought into AIG at the peak of the crisis last September, is charging up to $950 an hour for partners’ time.  That reflects a 10% discount which “is not a common practice,” says Marshall Huebner, Davis Polk’s lead attorney on the matter.”

I wonder if he billed for the time he spent coming up with that ever so lame quote.

Maybe we entrepreneurs should sign up to take a sledge hammer to AIG for a week.  A week of billing at that rate is all it would take to raise the same funds as from an ARC Loan.

I will try my best to keep sarcasm out of this last piece of reporting on that rarefied world of high finance.  Seems that all is not fun and games for the bankers who stand to reap up to $1 Billlion (that is no typo – Billions not Millions) in fees as estimated by the Wall Street Journal.

Last paragraph:

“This work isn’t always easy for those involved, said a number of bankers.  One gripe: Bankers used to flying business class have to sit in coach when on government business.”

I’ve been a traveling entrepreneur for over 30 years and can count the number of times I’ve flown business class on one finger. Which I’d like to reveal to the whining bankers. It’s the one between the window seat and the aisle seat, if you catch my drift.

Post from: Rusty's Blog

AIG Breakup is Fee Bonanza – page 1 article in yesterday’s WSJ

It is now August 2nd, and I did manage to stay steady the rest of July.  My last weigh-in on July 30th had me at 207.5, about two pounds less that the July 11th posting.    My goal for August is to lose 10 pounds, and get below 200 for the first time in 30 or 35 years.  Also, I have a chance to weigh less than my brother Hank (198.5 recently) for the first time since I was about 4 and he was 6.  Unfortunately, he just joined a gym and may represent a moving target.  Nothing like the additional motivation from sibling rivalry.

I’ve decided that managing a weight loss program is a lot like running a business,  which is why I am calling this a weight loss program for entrepreneurs.  Amidst a lot of uncertainty, I tried experimenting to see what would work, and what would not.  This is something you are constantly doing when you start and run a business. 

I tried to understand better what I was capable of.  I kept good records so that I could come back and analyze performance over an extended period of time.  It helps to distance yourself from the daily and weekly swings in weight, and take a longer view.  Same thing with a business:  you can’t get too excited over daily swings in sales, but you sure as hell better understand the monthly trends so that you can size the business appropriately.  I feel like I have a good idea now of what is possible. 

Continuing the analogy, I’ve made some investments to improve my performance in the future.  I investigated nutritional databases and found a good one to help me get a better handle on my “expenses” – i.e. the colorie content of the food that I eat  (www.calorieking.com).  I bought a food scale so that I can be even more precise when I need to.  I’ve kept a food diary the last 10 days to see if it is practical to do.  

Finally, I made some projections of future calories burned and calories consumed, to see what it would take to reach my target of losing 10 pounds in 30 days.  I am putting a system in place to monitor actual performance against projections.  Now, I just have the minor detail of actually executing the plan.  This blog and Facebook will have a major role in that.  Making the measures visible and public and powerful motivators.

 Starting on Tuesday, August 4th,  I plan to publish my weight each day on Facebook.  I will supplement that with a detailed blog entry specifying the exercise for the day and estimated calories burned, as well as a log of food that I eat, and the estimated colories consumed.

Based on my age, weight, and gender (55, 207.5, Male), I burn about 2300 calories a day with a sedentary lifestyle.  According to CalorieKing, I burn up about 400 calories  an hour when cycling.  I’ve read that a pound of fat is equivalent to 3,500 calories.  So here’s my analysis and plan:

• I need to burn 35,000 calories above and beyond what I consume for the month in order to lose 10 pounds.  That’s about 1,130 per day over 31 days.
• I feel like with some concerted effort, and the flexibility I have from being my own boss, I will be able to do 3 hours of day of cycling.  That equates to 1,200 calories per day.
• This means that I can eat 3,500 calories a day to stay steady (2,300 + 1,200).
• To achieve my 10 pound goal for the month, I can eat 2,370 calories a day (3,500 minus 1,130)

Wish me luck!

Post from: Rusty's Blog

Weight Loss Program for Entrepreneurs

I got a call from a prospect a couple of weeks ago.  The owner had bought an existing business about a year prior, and wanted to do some financial projections.  He mentioned that there was this special stimulus program for small businesses called the ARC Loan program.   My antenna perked up – hmm, a potential boost to the market for SurvivalWare if it turns out to be a good tool to do the analysis and help prepare the loan application.  And did someone say money for a struggling small business?  What small business doesn’t struggle one way or another?!  How can I get in on this action?  Am I eligible to get in on this action?  Is there such thing as a free lunch?

It’s only $35,000 – and what a pain in the ass they make it to apply for.  You have to prove you are in financial distress.  This makes it hard to estimate the probability of being approved – and hence how much effort you can afford to put into it.  Also unknown: the amount of time from application to approval, and from approval to disbursement of funds.  And what is the deal with the drawdown period?  Are you kidding me?  For $35,000 you’re going to make us take it in installments?  I just don’t get it.  But, if you’re willing to jump through the hoops and put up with the conditions, it is $35,000 at zero interest paid back over 6 years after a year of payment deferral.  Now, if the process were efficient, there might be some value in giving it a try.

That’s where the SurvivalWare ARC Loan Analysis feature comes in.  I decided we’re not going to try to mine that government gold directly, but instead we’ll sell the picks and shovels the pioneers used to establish their claims.

One of the requirements for obtaining an ARC loan is a couple of years of cash flow projections to show that you can pay the money back.   My opinion of this worthy government program keeps getting better and better.  Good cash flow projections are not easy to do. It takes careful thought and planning.  A certain amount of analysis and preparation.  A good, solid financial model to crunch the numbers.  Then some way to communicate the assumptions and results.

You have to do your own thinking, but SurvivalWare can now handle the rest.  I decided to add a special feature to make it easier to include the weird drawdown and repayment terms of an ARC loan in a cash flow projection.  It is in our re-designed Forecast Tool about to be released with SurvivalWare 3.0 (some time in August;  advanced copies are available if you beg and plead).  Also, I added an additional 24 months of projections to the Fort Knox model so that the requirement for a full 8 quarters of projections could be met.  This requirement may differ slightly depending on the lending institution.  I wanted to make sure we had plenty of projected months to spare in case it became a requirement.

A quick illustration:

Call up the Forecast Tool from the Projections Module.  Enter the amount: $35,000, and the repayment term: 60 months,  and click on the ARC Loan button.  When you click on the yellow CALC, it calculates the monthly payment and the drawdown amounts.  With zero percent interest, it’s not exactly rocket science.

The nice thing is the way SurvivalWare flows the borrowings into cash flow, and makes all the necessary adjustments to the balance sheet.  It separates out the current maturities from the long term portion of the loan balance for each projected month.  This just makes certain measures, such as your current ratio, more accurately projected.  It adds credibility to your projections.  It appears to your banker that you know what you are talking about.  And you didn’t have to do much at all.

Post from: Rusty's Blog

SurvivalWare – ARC Loan Analysis Feature