Monthly Archives: March 2018

How to Prepare for & Prosper from the Next Recession

We are currently in one of the longest economic recoveries ever recorded. That is excellent news, but on the flip side, we are due for a recession. Who knows when that will happen, but there are steps to take to prepare yourself and possibly take advantage of any future downturns:

Don’t Live on the Edge: Before making a major purchase or change in your life, calculate the costs and risks of your actions. For example, before you assume that you will purchase a fixer upper, make massive improvements, then resell it for a large profit, you should calculate different scenarios. Instead of just looking at the best case scenario, calculate a likely outcome and then also a worse case scenario. If you won’t be able to handle the worse case scenario, then may be you should pass up the opportunity. Don’t take my word for it, but try to remember what happened during the last recession.

Build Up Cash: Sometimes cash makes people anxious  as they feel that it is just sitting there practically earning nothing ,and they are missing out on appreciation from the stock market or some other investment. Be patient and know that if your income gets cut in half or you lose your job and collect the paltry amount of unemployment benefits, then you will have a cushion. On a positive note, when there are downturns in the economy it tends to present itself with opportunities to purchase real estate at a discount, buy a business,  or to invest in the stock market at depressed prices, which all increase your returns.

Pay Down Debts: The lower your debts, the lower your risk, and the more cash flow you have available. You’d be surprised by how much less income you need to live if you eliminated some debts.

Line of Credit: If you don’t have a large cash cushion or don’t see one in the near future, then a line of credit can be a good second option. The caveat though is to make sure that you use it wisely and don’t overspend just because you know that you have access to funds.

Market Your Business and Yourself: Employees should be prepared by having their resumes updated and keeping in contact with their network. Business owners should continue to market their business for two reasons: First, if they increase profits then they will be able to weather the downturn better both before and during. Second, many businesses reduce marketing when there is a downturn, but if you increase marketing then you will stick out and increase your chances of prospering during the downturn.

All of these tips can help you to survive a recession, and they can also be applied even if there isn’t a recession. Don’t be afraid.

Don’t Worry if the Timing is Not Right to Conquer the World

Ever feel frustrated that your business or your career isn’t going as well as it should? I’m sure that most people feel like this from time to time, but sometimes there are valid reasons for this. Not excuses, as the “success” coaches may call them, but as human beings we have many moving parts to our lives. Some reasons for not being able to conquer the world right now and what to do include the following:

Health Issues (Physical & Mental): They may come at any time and can be minor, permanent, or severe. Health issues can put you out of work for months or even years. The main objective should be to focus on getting your health back so that you can take care of yourself and your family. Next, you should look into how future health problems may be prevented, if possible. You may also find that you have to attend to family members that get sick, such as spouses, children, and aging parents. First things first.

Raising Children: Raising children is not an easy task and many parents feel the tug between working and taking care of their children, especially mothers. This is especially true when both parents work, which is the majority of parents nowadays. I’ve written about the trap when both parents work full-time as the financial benefit is not usually as great as it seems when factoring in taxes, additional expenses, etc. Some options to help juggle responsibilities are to change your work schedule, have a flexible schedule, or work part-time, especially during school hours.

Addictions: Addictions can be in the form of alcohol, drugs, pornography, and gambling to name the major ones. No one likes to talk about this because of the stigma of addictions, but these will have a devastating impact of your business or career, even if you are indirectly impacted by addictions, such as with a child or spouse. Healing and overcoming addictions needs to take place.

Family Issues: Divorce or separation is a common family issue and may go hand in hand with the other examples above. Marriage struggles, especially divorce, will not only impact you and your children emotionally and spiritually, they tend to destroy family finances. Who care if they are successful if their family is torn apart? Marriage therapy, family therapy, or spiritual guidance from a priest or minister can help to save your marriage. Also, all kidding aside, they are much less expensive then a divorce attorney.

We are not machines, but people that have problems, emotions, and are all fighting our own battles. Some battles are greater than others, but we must build a solid foundation before conquering the world.

Bad Credit Card Policy?

Some business owners are penny wise and pound foolish with their credit and debit card policies. Even worse some do not even accept credit cards. Here is why you should review your credit card policies:

Higher Purchase Amounts: Statistics show that when consumers use a credit or debit card it increases the amount of their purchases. Several studies show an increase of approximately 10% to 15%, but when the purchases tend to be small the increase in purchases can easily climb to 50% or more. Why do you think McDonald’s and other fast food restaurants started to accept credit cards? I believe McDonald’s shows an increase of over 50% for customers that use a credit card. That is why a business should never place a minimum for credit cards either due to this phenomenon. On the flip side, this is why I advocate that consumers use cash!

Convenience Factor: Recently, I went to a really good burger place that I knew doesn’t take cash, and if I didn’t have any cash on me I would have went somewhere else. To make matters worse, the man in front of me placed a fairly large order and was told that he had to walk across the street to get cash from the closest ATM. I wonder how often he will go back there but, the business saved approximately 3% plus $.25 of transaction fees. Next time they will save the transaction fees, but lose the sale.

You Actually Get Paid: Businesses need to get paid to survive, which is why they should accept credit cards. If a customer has an outstanding balance, then it may be easier for them to pay with a credit card.

Businesses may be able to mitigate credit card fees by implementing a few strategies. First, they may be able to charge a surcharge when a client uses a credit card, secondly, they can accept ACH’s, which have lower transaction fees, and lastly, they can shop around for lower-cost processors, such as Square.

3 Ways to Wealth (Almost Anyone Can Do)

Aside from inheriting your wealth, there are 3 main ways to become wealthy over time that almost anyone can do and there really are no secrets. They all depend upon income, savings and investments as follows:

Slow and Steady Corporate Route: This is the most common, easiest, and accessible way for most people even with average wages or slightly above average wages. It may take some time, say 25 to 30 years, but you must do the following: increase your wages by at least 3 – 5% per year, start investing no later than your 30’s, save approximately 15% of your income, earn a rate of return of about 7%, and don’t touch your investments. Many people have a match from their employers, which can be included as part of their savings, so essentially they are saving around 12% of their own money. It’s a very practical, but slow way to wealth, with the largest obstacles being the starting age and your savings percentage.

Corporate Executive Route: This way is available to less people, but if you want to accelerate your wealth then the corporate executive route is much quicker. Your wages will grow double-digits, along with large, but variable bonuses, and access to stock options. Stock options can really increase your earnings and wealth, which will enable you to become wealthier sooner. Since your income accelerates so quickly you should be able to save a much larger part of your income than 15%, plus the rate of return on your stock options has the potential to be very high. There is a smaller pool of people who can take this route, but it works. The downside to this approach is variable income, risk of stock options dropping in value or becoming worthless, and the ups and downs of the corporate world.

Successful Business Owner Route: Running a small business can be challenging, but very rewarding. If you run a small business well, then your earnings will be way above average and your business will increase in value over time. The quicker you grow your business and increase profits, then the quicker you will become wealthy. Additionally, some business owners purchase the real estate where their business operates, which generally increases wealth even more and faster. You need to invest your income just like the other ways, but an added bonus is the value of the business. If you create a saleable business, then this can be your ticket to early wealth and retirement if you decide to sell. But who wants to retire in their 40’s? I can think of a few.

Other factors to consider that can help you are: minimizing debts, staying healthy, having a strong, supportive family, and taking smart risks/good decision making.

Don’t Change for the Exception

Most people don’t like conflict and make a great effort to avoid uncomfortable situations with people, especially those who are difficult to satisfy. It’s important to learn from these situations and consider their feedback, but you probably should not change your business practices because of them. Actually, if you listen to them you may seriously harm your business. Here are a few examples:

Pricing: There is always going to be someone who thinks that your product or service is priced too high. Most likely this is not that case as most businesses actually underprice their services. This is true in all industries, from software developers to manufacturers. If you do not price your product or services properly, then there will not be enough money to invest back in your business to support operations or make improvements.

Speed: Everything takes time. This can take the form of turnaround time or communications. Today, communications are instant, but it doesn’t mean that a business owner can communicate instantly. If you rush or perform work out of its place, then it can negatively impact the quality or your product or service. An example of this was on the show The Profit regarding a furniture manufacturer that would rush furniture production when a customer was over eager to receive delivery, but then their quality would decline dramatically.

Technology: There is always someone who will resist the implementation of technology, but it doesn’t mean that you shouldn’t move forward if technology will help your business. You may be able to make exceptions, but you should still change.

The bottom line is this does not mean that you should over price your services or perform poorly for your customers, but to be careful not to listen to the wrong people. Sometimes you should put in ear plugs when you hear the squeaky wheel.