Asking if you suck at personal finance can seem insulting, but the question is not meant to be insulting. It’s just that, being a small business owner and having recently taken a deep look at my personal finances, I have to say that I suck at personal finance. A lot of my small business owner buddies do, too. How do I know this? Because we have all been taking the 30-Day Challenge by Ramit Sethi of the Scrooge Strategy, and it has been truly eye-opening.
What is the Scrooge Strategy 30-Day Challenge?
Basically, it’s an ebook written by national bestselling author Ramit Sethi. The challenge is to see if you can save $1,000 in 30 days by doing the steps in his ebook. There is one step per day.
There’s nothing really revelatory in the book but one message comes through loud and clear, especially for small business owners:
Most of us are far too busy maintaining our business finances that we let our personal finances fall by the wayside.
Or, to put it another way, we are too tired, lazy, or burned-out at the end of a business day to do the steps that Ramit suggests in his ebook. Being a small business owner can be difficult, and at the end of the day many of us want to take refuge in comfort rather than engage in the drudgery of personal finance.
An Enlightening Example of Why We Suck at Personal Finance
When it comes to saving money, most of what Ramit talks about is common sense. He calls it the “well, duh!” factor. An educated small business owner might read one of the personal finance tips, find it to be common sense, and say, “Well, duh! I already know that.” And that’s the end of it.
That’s all well and great, but just knowing about something and taking action are two completely different things. One example he gives in the book is pretty relevant as we move into winter and colder weather. One of his tips is to turn your thermostat down by three degrees to save money. He gives specific savings figures for several major cities so that you can estimate the amount of money you will probably save by turning down your thermostat.
Well, duh, right? OK, suppose you actually decide to turn down your thermostat. You bounce out of bed in the morning full of enthusiasm for saving money, and crank the sucker down by three degrees. Fabulous. Good for you.
Off you go to your small business, where you have a lousy day and waste lots of time fighting fires and producing little. You drag your butt home at night, feeling worn out and looking forward to a cozy evening on the couch with dinner and a glass of wine.
What a shocker when you open the front door and are greeted by the arctic temperatures inside your house. Oh yeah, you cranked your thermostat down by three degrees that morning. It seemed like such a good idea at the time. Now it seems like a totally lousy idea invented by a complete moron. You are tired, hungry, and not in the mood to suffer. You rush to the thermostat, turn the dial up to 85 degrees, and promise that you’ll do better tomorrow. In actuality, the thermostat stays at 85 degrees and never goes back down.
That’s what Ramit means about the “well, duh” factor. We know better than we act, and thus our personal finances suck the big one. To fix this problem, he suggests that we stack a fuzzy robe, hat, and warm slippers by the front door before we leave for work in the morning. That way, when we drag our butts home at night, we will not only be reminded of why we turned the thermostat down, but we will have some immediate warmth to help us get through the shock of the cold air inside the house.
What’s the Moral of This Story?
The moral of this story is that if you are like most small business owners, you work yourself to the bone to squeeze the maximum profit out of your business, only to squander it with lousy personal finance skills.
Hmmm … sounds like a quandary to me. After all, why am I busting my butt at work only to end up with very little to show at the end of the day, week, month, or year? That seems silly. I might as well quit my small business, flip burgers for a living, and use some savvier personal finance skills to get ahead.
That’s why the Scrooge Strategy ebook has been so valuable to me. It helps me retain more of what I earn through my small business. Sound like a good idea to you? You can download the book for free and read it for 30 days. If you hate it, you don’t get charged. If you love it, there’s a one time charge of around $28. It’s been a heckuva deal for this small biz owner.
Check out the Scrooge Strategy for yourself here.
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Photo credit: http://www.flickr.com/photos/jonas_brothers_luvs_ammy_lou/ / CC BY 2.0
Tags: personal finance, Ramit Sethi, Scrooge Strategy, small business, small business owners
It pays to be a maverick these days because nothing seems to work like it used to. Sure, a lot of people are doing their best ostrich act, sticking their heads in the sand and hoping that when the alarm beeps in the morning the world will have returned to its normal order.
Not gonna happen, folks. “Business as usual” isn’t going to cut the mustard in this new economy, this time of prolonged uncertainty. By the way, did you know that prolonged uncertainty is one of the greatest causes of stress a human being can suffer? They’ve done studies that prove it. So here we are, in a time of prolonged uncertainty, and we are, well, uncertain.
We live in a strange emotional mix that resembles those multi-layered cocktails: hope floats on top, “business as usual” hovers somewhere in the middle layers, and at the bottom is the dismal swamp of despair. We try to drink in only hope, but if you’ve ever tried drinking one of these layered cocktails, you know that as soon as you tip the glass you get a little of each layer. So we swallow the hope with the despair and end up doing “business as usual.”
Maverick Tricks and Old-Fashioned Values for Small Business Owners
As small business owners, we may not know what we need during these times, but it’s not the usual stuff. If you’re doing business by rote, stop! Times have changed, and your small business needs to as well.
I’ve recently been on some teleconferences and webinars offered by small business leaders who are expert in everything from online marketing and social media to accounting and cash-flow generation. While the topics of these seminars are all different, a peculiar theme is emerging in all of them:
… small business owners need to both become mavericks and return to old-fashioned values …
This may seem a contradiction, yet it is what those who are successful are saying.
Maverick Tricks for Small Business Owners
Let’s take the maverick part first. The webinars and teleconferences are all about maverick-ism — how small business owners need to do things differently. For instance, one webinar covered 13 new ways small business owners can ask for and get paid by their clients more quickly. This is important because cash flow means the difference between staying alive and closing the doors on your small business. Are these methods always polite, conventional, or socially acceptable? No, a lot of them are not. But these are new times and small business owners and clients alike are adapting to maverick ways of doing business.
Another webinar introduced the maverick idea of creating your own hedge funds in your small business. Southwest Airlines has been hedging fuel prices forever: they pre-buy large quantities of fuel when it’s less expensive, and then take delivery of that fuel when prices go up. Small business owners can create hedge funds in a slightly different manner. Instead of pre-buying something in bulk, you stash money away in a hedge fund when prices are low, say for inventory items. Then when the prices go up, you use the money in your hedge fund to keep your cash flow going. So there are a lot of ways to use new maverick techniques to keep your small business afloat.
The Value of Old-Fashioned Values
At the same time that these experts are teaching maverick methods for small business owners, they are also talking about a return to old-fashioned values. In a word, they are saying that we have become lazy. Recent studies show that more people believe that they can “get rich quick” with a small business than ever before.
Despite the wise words of business leaders like Robert Kiyosaki, the majority of people who start small businesses today expect to “make it big” within a year or two. Kiyosaki warns small business owners to set aside at least 5 years before expecting a pay back. Back in the day, it was expected that a small business was a lifetime endeavor, not a get rich quick scheme. “Get rich quick” is a bad idea … it’s how we ended up in this financial mess to begin with.
So if you are starting a small business or you already have one, prepare to dig in. Don’t spend all of your resources at once, preserve cash and cash flow, and give your business at least five years to start paying you back for your efforts. Those are the old-fashioned values that made the U.S. of A. one of the strongest economic forces in the world. To those values we will need to return if we want to maintain that status.
The Maverick in Me and My Small Businesses
As for me, despite all the flak I’ll probably catch for saying this, I’m profoundly happy about this economic correction. It has forced me to make changes I have wished to make for years, but have never had the motivation or necessity to make. I am grateful for the outer economic forces that provide the motivation for the changes I am making to my small business and my personal financial situation. So be it!
What about you? See any sunshine yet?
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Tags: maverick, old-fashioned values, small business owners, small businesses, Southwest Airlines
Posted by Stephanie Valentine on Jul 23, 2009 in
Small Business Opinion-Making 
Greetings from sunny (hot) beautiful Zion National Park!
That’s me with Milagro, my leggy chihuahua and partner in crime.
I’m off on a series of thinking days (another word for that is … vacation!) in Zion National Park. So this blog will be on vacation until the first part of August. I’m following in the footsteps of Bill Gates and taking some thinking time. What will I be thinking of? More tips and tactics for small business owners, of course!
I’ll leave you with one tip before my vacation starts in earnest:
Have you taken some thinking days lately? If not, might it be time?
Enjoy the enchantment of your small business, whether you are engaging in thinking days or building your queendom (or kingdom!).
Tags: thinking days, zion national park
Posted by Stephanie Valentine on Jun 1, 2009 in
Small Business Opinion-Making 
The Forgotten Man — Book Review
Guest Post: Madalyn Ward, DVM
The Forgotten Man, A New History of the Great Depression, by Amity Shlaes is one of the most powerful books I have read in a long time. This book is a history book and it does not give much in the way of opinion or commentary. What Amity Shlaes does is take the important public figures during the era and give you the story of what they did, why they did things the way they did and what was the result of their actions.
It is such a refreshing experience to get the facts without being told how to interpret them by someone who has an agenda. I found myself trying to pick heroes and villains but as I would read on it became more apparent to me that all the leaders were doing what they believed at the time was best for the country. It was interesting to see how people’s beliefs changed as history unfolded.
The Forgotten Man is not an easy read. I found myself underlining almost every line of the 420 pages. The similarities of what led up to the great depression to what we are experiencing today are striking and frightening. If our leaders read this book they can possibly avoid the same mistakes and act more quickly on the successful actions taken.
FDR was a great spokesman and the people trusted him, Unfortunately, however, many of his policies did not serve the country well. During the 1930’s there was a criticism of many private companies and these companies were attacked in the press and through the legal system. The message from Washington was that only government could solve the problems of the country.
Many government projects did put some people to work and the infrastructure of the country was improved significantly. It is estimated that the Works Progress Administration put as many as 3 million workers on the federal payroll but as the government ran short of money and began letting some of the workers go they turned the tables on the government and organized strikes to protest. It seems the government workers like the private sector workers, felt they should be guaranteed their paycheck whether their employer could afford to pay them or not.
Many private companies, during the depression, were forced out of business by high wage requirements or by government supported programs that were able to compete without the burden of taxes. One example of this was the Tennessee Valley Authority which took over the generation of energy in the south and undercut private companies by building energy plants in towns that promised to buy from the government. Many private company owners were attacked by the government loving press and others were prosecuted for their supposed parts in the cause of the depression. None of these prosecutions were successful but many fortunes were destroyed causing some prominent businessmen of the time to die penniless.
Who knows what might have happened to the country without the government interventions during the 1930’s. The free fall of the economy was slowed and gradually stabilized. It is clear, though, that WWII brought the country together to move back into a growth pattern. With the war effort, government and business stopped fighting each other and joined forces to create jobs and supply demand for products to support the troops. People came together and put all their energy into a common goal and purpose. America’s greatness came back in the pursuit of freedom and the destruction of tyranny in Europe.
The Forgotten Man does not offer any clear reason for why the crash occurred to begin with. Many assume it was out of control speculation in the stock market but history suggests the market was actually strong leading up to 1929. Excessive leveraging of money by households that had no investing experience is the more likely cause. People borrowed money they could not afford to lose and invested it. Instead of letting the market find its bottom the government intervened to stabilize the markets and the economy.
Others feel the country was making a natural shift from an agriculture based economy to an industrial one and the depression was part of a painful attempt to resist the change. With the war effort the need for the shift of masses of people off the farms to jobs in industry was finally embraced.
I feel we are in a similar shift now from an industrial era to one of entrepreneurship. It is time for many more people to get out of the shadow of government or companies controlling their destinies to taking control themselves through home based businesses or self employment endeavors. I strongly suggest this book to anyone who wants to sidestep the bickering and finger pointing of present day politics. The Forgotten Man shows to frailty of human efforts to control change rather than embrace it and prosper from it.
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Photo credit: Amity Shlaes
Tags: book review, Great Depression, Madalyn Ward, The Forgotten Man
Is Your Job Hanging On by a Hair? Follow Warren Buffett’s Advice
This blog post goes out to all the people who are thinking about diving into the “small business ownership” pool, but are afraid to commit. This post is for those people who are still employed but are worried about the Sword of Damocles hanging over their head by a hair. In other words, the pink slip, the dread “ax” is just a hair’s breadth away.
If you still have a job but are worried about the security of that job, this blog post is for you.
Now is the Time to Own a Small Business
Now is the time to keep your day job and start investigating the option of owning a small business on the side. Why do this? Well, if nothing else, you’ll be following the advice of Warren Buffett. He says,
“A lot of great fortunes in the world have been made by owning a single wonderful business. If you understand the business, you don’t need to own very many of them.”
People always think that Warren Buffett made all his money in the stock market, but really he has never thought about it that way. He says, “I never attempt to make money in the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.” Still think he’s all about the stock market? Not.
Why Small Business Ownership is a Great Option
Owning a small business while you still have a day job has huge benefits. The biggest benefit, of course, is that you have the best of both worlds: the income security of your job and the growth opportunity of your small business.
All of that aside, here are some other major benefits of small business ownership:
Tax Advantages
The small business owner has far more tax advantages than the employee. The deductions for small business are amazing. We help many people start their own small businesses, and help them gain tax deductions of up to $5,000 in the process. This is especially true if the person is still employed.
More Control Over Your Future
You can’t control what your employer does, but if you start a small business on the side, you have a “cushion” in case your employer decides to downsize or goes bankrupt. The key is to get your small business going while you still have a day job or some assets you can invest.
The Economy Never Stops
Bubbles keep bursting in the stock market, but the economy never really stops. People always have to eat, clothe themselves, and entertain themselves. Though the stock market is related to the economy, when the market crashes the economy still proceeds, even if at a slower rate. Small businesses service the economy, even in a recession.
Get a Larger Return
As an employee, your investment options are somewhat limited. A small business gives you access to much higher rates of return-the rates of return that the rich access on a regular basis.
The list of benefits of small business ownership is too long to be covered in just a brief article, but know that there are many. If you are interested in exploring the options of small business, give me a holler.
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Photo credit: Warren Buffett
Tags: benefits of small business ownership, tax benefits, Warren Buffett
Do You Dream the Impossible Dream?
I do. Well, not really impossible, but challenging. I love a good challenge, and my dreams are usually based around circumstances that are difficult at best. It’s where I thrive. Lots of my friends think I’m crazy, but as long as it makes me happy, I always say that my craziness is cheaper than a shrink.
I’m very much in alignment with business guru Robert Kiyosaki, who says this about dreams: “People who dream small dreams continue to live lives as small people.” I’m a firm believer that the desire for achievement is what keeps the lifeblood pumping in us from day to day. After all, if you don’t have a reason to get up in the morning - a good challenge to sink your teeth into - why bother to get up?
The Five Kinds of Dreamers
Robert Kiyosaki, in his book “The Business School for People Who Love Helping People,” lists five kinds of dreamers. I’m impressed with this list because it shows five very distinct ways in which people can go about living their lives. I know people in all five categories. Check out this list and see if you recognize people in your life who fit into these categories.
1. Dreamers who dream in the past.
These people don’t have any dreams to look forward to. All they have are past glories and memories that they relive over and over. Often, these people achieved the peak of their greatness in high school or college.
2. Dreamers who dream only small dreams.
These people have dreams, only they are tiny. It’s a matter of confidence. People with small dreams keep them small so they can feel confident of achieving them. The problem is that people who dream tiny dreams usually don’t bother to achieve even these small goals.
3. Dreamers who have achieved their dreams and have not set a new dream.
These are the people who dreamed of being doctors, lawyers, or fashion models in high school, and then went on to achieve those dreams. Once they have achieved their dreams, they sit on their laurels. They tend to be bored with their lives, but don’t have enough juice to start a new adventure.
4. Dreamers who dream big dreams but don’t have a plan on how to achieve them, so they end up achieving nothing.
We see tons of people like this in our MLM business. These people have great dreams and aspirations, but don’t have the right training or support network to help them reach their dreams. They are always saying things like, “This time will be different. I’m really going to make it,” but they never do. They live on dreams and very little else. According to Kiyosaki, these people should stay with their big dreams AND “find a plan, and find a team that will help them make their dreams come true.”
5. Dreamers who dream big, achieve those dreams, and go on to dream bigger dreams.
This is, of course, the ideal kind of dreamer. Most people want to dream big dreams and then achieve those dreams. The people who are in this category not only know how to dream big, but they know where to connect with the people and resources to help them achieve those dreams. Kiyosaki says he sees a large percentage of these people in successful network marketing companies (note: the word “successful” here is key!).
Which kind of dreamer are you? What kinds of dreams do you have for you, your small business, and your lifestyle?
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Photo credit: `169 | High..
Tags: five kinds of dreamers, impossible dream, Robert Kiyosaki
Posted by Stephanie on Apr 22, 2009 in
Small Business Opinion-Making One of my favorite quotes is, “It’s a damn good thing we don’t get all the government we pay for!” If we got full value for all the money we spend on the government, we might very well be living under a Big Brother regime, and I’m just not into that.
At the same time, shouldn’t we get some of the government we pay for? I just read a righteous rant from Andy Grove, co-founder of Intel, in Fortune Magazine on an appropriate way for the government to step in and help the automotive industry build an electric car.
Short Term Consumer Memory
One of the things that drives me crazy is the shortness of the average consumer’s memory. Last summer, when gas prices were headed for the $5-per-gallon market, people were screaming for alternate fuel sources. I show horses and drive a truck-and-trailer rig, so I know. Now that diesel fuel is hovering around two bucks a gallon, it’s like consumers can’t remember the pain of it all. The demand of electric cars has suddenly disappeared, poof, in a puff of smoke. All is well.
Grove reminds us that all is not well. Sure, the sad state of the economy is big news right now, so the need for alternate fuel sources is on the back burner, but Grove reminds us that when the economy bounces back, fuel is going to be big news. Big guns like China and Russia are going to be competing with the U.S. will be competing for the same finite fuel resources, and that could get ugly.
Renewable energy sources could solve this problem, and that’s where Grove suggests the government collaborate with U.S. car makers NOW to create a viable domestic car battery.
Viable Collaboration Between Government and Industry
Grove points to an example of successful collaboration between the U.S. government and industry: the early days of the microprocessor. With help from the government, in 1947 Bell Labs developed the transistor, a crucial component that eventually led to the development of the integrated circuit and the microprocessor. Bell Labs then licensed that technology. A similar story holds true when the U.S. government assisted the U.S. microchip companies.
Andy Groves and Gordon Moore are both heroes of mine. I vote with Andy. Bailouts we don’t need from the government. But support for industry and small business for innovation and technology development? Bring it on!
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Photo credit: CNN-Money
Tags: andy grove, domestic car battery, electric car
