Monthly Archives: August 2018

Don’t Use Your Employees and Employees Don’t Use Your Employers

When I was a kid, sometimes a friend would say, “Don’t be friends with so and so because they are users.” I have to admit that I really did not know what that meant back then, but since I now have the Internet nowadays, I was able to look it up. According to urbandictionary.com, a user is someone who takes advantage of another’s kindness or generosity. They pretend to be a friend but are only in it for what they can get out of it. A user takes and takes, rarely gives. When it comes to employers and employees it can easily happen, but here are 4 ways to avoid using each other:

Be honest: When an employee takes a job there should be honesty on both ends. First, the employer should set expectations about the responsibilities, compensation, work environment, hours, advancement opportunities, etc. Employees should be honest with their employers about their experience, their ability to perform their job functions, their availability, and their own expectations. If you do not tell your employer that you plan on moving out of state in 6 months, especially after your employer has spent time and money on your training, then that is lying by omission. The same holds true for an employer that plans on moving their location in the near future without informing a new employee. Be upfront and honest.

Don’t dawdle or overload: A business makes money when employees are productive and loses money when they dawdle. Keep this in mind as an employee. Alternatively, if an employer overloads their employees then this can lead to burnout.

Give, don’t just take: Employees should not focus solely on their own paychecks, but on the overall success of the business. Think about what you can give to make your job better and for the business that you work for to succeed. Most likely, unless you work for a user, you will be compensated for high achievement. Employers should compensate their employees fairly and reward them when they are helping the business to be more profitable.

Do a good job: Do an excellent job and take pride in what you are doing whether you are an employee or an employer.

Don’t be a user!

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Does it Matter How You Dress?

A man preparing to go to work

I dress up rather formally for work with a tie, dress shoes, and dress shirt, although I don’t usually wear a suit jacket. When I look around, no matter where I go, including the office, dinner, schools, or even at Church, dressing more formally seems to be the exception. But does this really matter?

In the book, “Influence: The Psychology of Persuasion,” by Robert Cialdini, he elaborates that clothing does have an effect on the likelihood of people to be influenced. To summarize, a person’s clothing has a lot to do with the expectations and authority that is perceived by others. He notes that it is important to dress at a level that matches one’s expertise and credentials. I have noticed that when going to a restaurant, if I am dressed more formally, the servers seem to be more attentive towards my guest and I, and also tend to focus more attention on the person who is dressed more formally (which means that the bill is usually given to me, so maybe I should take off my tie).

As for the study, it seems as though expectations play a large role in how others perceive you. For example, you expect a police officer to be in a police uniform, a doctor to wear a white coat, an attorney to wear a suit, and a fast food worker to wear the same embroidered shirt as all of the other workers they are with. There are numerous other studies about how you dress that you can read in psychology journals, but if the studies have too many variables or not enough participants, then the studies will carry less weight.

A big thought to ponder is how your clothing makes you feel, your attitude and expectations for yourself, and your performance. For example, a school uniform signals to yourself that now is the time to be a student and focus on studies. Work attire means that it is now time to be productive and get to work. Pajamas mean that it is time to relax and go to sleep.

The way you dress is just one factor with how you are perceived, your performance, and how you feel about yourself. It seems as though you are a maverick if you dress up nowadays vs. the trend of dressing more and more casual.  Experiment and see if it changes your life.

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How and Why to Strengthen Your Personal Finances to Increase Profits

Most people view their business to be a completely separate entity from their personal finances, and rightly so. This is generally true from a legal, tax, and accounting standpoint, whereas your business operations and finances should be separated from you personally. However, most small business owners are completely dependent upon their business to support them, as they feed off each other. So how and why should you strengthen your personal finances to increase your profits?

Why:

The business won’t starve: By withdrawing every single penny of profit from your business, it will make it much harder to invest in technology, equipment and capital improvements, and people. One of the main reasons that businesses fail is due to a lack of capital.

Increased profitability: If you have a large personal expense that is coming due, such as your mortgage, then you are more likely to take on less profitable customers, jobs, or may even sell your products at a discount due to desperation.

Better business decisions: It’s no secret that people make better business decisions when they are not feeling stressed or anxious. A common example of a bad decision is to cut expenses that support the main operations of a business to save a few pennies, but it ends up costing you dollars of revenues.

How:

Decrease your personal spending: There are numerous ways to decrease your spending, including groceries, dining, entertainment, taxes, auto, clothing, and virtually every category of spending. Some of my other posts will give you ideas regarding cutting expenses, but a few tips including: using cash more, cash budgeting (aka the envelope system because almost no one actually prepares a real budget), reviewing all of your “necessary” expenses, and delaying expenditures/gratification.

Increase cash reserves: Most people are poor at this (no pun intended), including those who save well for retirement. Savings should be allocated for short-term needs, such as emergencies, mid-term needs, such as for a house, and long-term, such as retirement. The easiest way to start saving is to allocate a very small percentage of every deposit that you make in your personal account towards a separate savings account. You can even start with 1%, just to get used to doing this and you’ll quickly realize that it is not that difficult. Over time you can increase your savings rate as you increase your business profits.

Reduce debts: Similar to increasing your cash reserves, you can start with applying a small percentage of every personal deposit towards your debt balances. The big question is which debts should be paid down first. Since finances are very behaviorally driven, then one technique is to start with the smallest debts first while ignoring the interest rate. The reason for this method is because it creates a sense of accomplishment once a debt is paid off, and will motivate you to continue moving forward.

 

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What is the Best Type of Business to Own?

What’s the best type of business to own? One that makes money of course, but let’s dig a little deeper . . .

Simple: The more complex a business is then the harder it is to operate. For example, if your business requires the talents of very technical people, then this complicates the delivery of your products and services. Unfortunately, it also requires more time and expertise of the owner. Such businesses include engineering, law, healthcare, IT consulting, accounting, and other technical fields.

Low capital requirements: If you need to invest heavily in equipment, real estate, or large amounts of inventory, then this can create a drain on your cash. Supposedly, lack of capital is one of the main reasons for business failures.

Repeat business: A perfect example of a business that receives repeat, recurring sales is a subscription based software company. An example of the opposite type of business is a general contractor. There is a wonderful book called, “The Automatic Customer” by John Warrillow that outlines the value of a having a business with predictable, steady, recurring sales. He gives numerous examples on how this can be applied to many businesses, and not just software companies. I’m a big advocate of businesses trying to maximize their recurring sales.

Easily duplicated: Any business that can easily replicate the tasks that the owner performs is a plus. Did you ever notice that many of the chain restaurants do not serve overly complex dishes? If they did, then it would complicate the way the run their business.

If you are thinking of starting a new business, an additional business, or even a side business, then you should strongly consider a business with these traits.

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Cost of College = $1,000,000?

If it costs approximately $30,000 per year to attend college, although that figure can be much higher, then the cost of college for my children will be over $1,000,000 when the time comes, especially as rates keep on rising. In case you are wondering about the math, here it is:

7 children times $120,000 (for 4 years) = $840,000. Multiply that by an average annual tuition increase of 3% over the next 7+ years and the cost is over a million dollars.

When I get asked the question, “How are you going to send your children to college?” I usually reply with a snide remark that I am going to discourage them from attending college. However, there is some truth in that, and here are some alternatives from paying high tuition that we have discussed with our children:

Military: One of my sons wants to be in the Army. This is extremely noble and brave and not for everyone. If he stills wants to be in the Army when he comes of age, then he can also apply to and hopefully get accepted to West Point to accelerate his military career. There is no tuition at West Point.

Entrepreneur: I’m very biased with this one because I work with entrepreneurs all day long. Aside from certain professionals, such as doctors, attorneys, CPA’s, etc., you usually do not need to go to college to start your own business. Some do very well and some don’t, but I would hope that they would receive my guidance to help them to succeed.

Nursing: There are many good local colleges to choose from, which will eliminate the cost of room and board. This will dramatically reduce the cost.

Famous: Who says you can’t get paid to be famous?

Mom: My older daughters say that they want to be moms. Although it is not in vogue to be a stay at home mom nowadays, I believe that it is one of the greatest gifts that can be given to your children.

YouTuber/Gamer: I’m not sure what this one means exactly, but I think that it means recording yourself playing video games while narrating what is going on. Although, I am not sure if you can make a living wage from this or for how long, but if so, then great.

My children are not even teenagers yet, so let’s see what happens. I am definitely keeping an open mind and not taking this too seriously at this point!

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