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
Posted by Stephanie Valentine on Sep 24, 2009 in
Small Business Leadership,
Small Business Strategy 
With the economic uncertainty swirling around us all the time, many people are turning to home-based businesses as a way to create an alternate stream of income in their lives, even if they are currently employed.
If you are a new home-based business owner, then you are probably up to your eyeballs in getting your new business off the ground. In the midst of all of this activity, though, one important step that will really help your business grow is to define some initial goals for your new business.
The Importance of First Goals for Home-Based Businesses
While it may seem obvious that every home-based business should have goals, you’d be surprised at how many new small business owners jump from the starting line to the “millionaire” goal. They skip all the steps in between when setting goals for their business, including very short terms goals that make a huge difference.
Having achievable goals in the near future for your new home-based business is psychologically important. Starting a new business consumes a lot of time and energy (especially if you still have a day job), and as a new business owner you need have goals to show you that you are making progress. Achieving goals gives you the encouragement to keep going in difficult times.
Examples of First Goals for Home-Based Business Owners
First goals are like baby steps. They aren’t very far away from the starting line, and they are something that you can definitely achieve. They are also causes for celebration. Here are a few examples to get you thinking. Your short term goals might include:
- completion of your business incorporation and getting a tax ID number
- completion of your company’s website
- the hiring of your first employee or contract worker
- the first inquiry about your products or services
- the first sale
- the first referral from someone in your network
- the first $1,000 in revenue
Are you starting the get the picture? The first goals for your business are ones that you can definitely see and achieve from where you stand today. They are small goals that will give you a huge sense of accomplishment. It’s important to acknowledge these steps along the way toward the “millionaire” goal. If you don’t, you’ll wear yourself out before you’ve gotten very far from the starting line.
Creating a small business that generates a steady alternative stream of income is no sprint. It’s more like a marathon. So pace yourself, celebrate the small but important accomplishments along the way, and enjoy the journey.
What are you waiting for? Turn on your computer and start making a list of first goals for your small business. If you have already got a small business going, what first goals have been useful for you? Which goals do you wish you would have celebrated but didn’t? Drop me a line … I’m a veritable sponge when it comes to stuff like this!
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Photo credit: http://www.flickr.com/photos/zhurnaly/ / CC BY 2.0
Tags: goals, home-based business, startup goals
Posted by Stephanie Valentine on Jun 3, 2009 in
Small Business Strategy 
Thinking Days - The Importance for Small Business Owners
I often wonder if small business owners are more firefighter than business people. Between product development, sales and marketing, management, and general business development, it can be hard for the average Joe to figure what’s just urgent and what is plain important.
Urgent items demand our immediate attention but may not be crucial to furthering our business in a significant way. Important things will move our business forward but are often put on the back burner. We should pay attention to the important things rather than the urgent one, but most small business owners. That’s why we need thinking days.
The Importance of Thinking Days
If you look at some of the most successful leaders in the corporate world, one trend you will see is the prevalence of “thinking time.” In other words, these people set aside a specific time each week or each month to gain new perspective on their business.
For instance, Bill Gates, co-founder of Microsoft, regularly schedules “thinking days” throughout the year that allow him to reflect on his life and his business. These pre-scheduled days are inviolate, meaning he rarely takes phone calls or messages during this time.
The same goes for Tai Yu Kobayashi, former Chairman and CEO of Fujitsu. He once shared the secret of his success: he gets up each morning at 5:00 am and spends an hour in his Bonsai garden, immersing himself in nature and moving in tranquility. Maintaining this state throughout the day allows him to make decisions in a high-pressure situation with detachment.
Questions for Thinking Days
As a small business owner, scheduling thinking days, even if they seem inconvenient, will give you the perspective necessary to sift the important tasks from the merely urgent. In a very basic way, thinking days give you a chance to reflect on your business and ask questions like:
- What’s happening?
- What’s not happening?
- What can I do the influence the outcome?
You will often find that thinking days give you a wider view of your business, and your life. This detachment may give you the necessary insight to make tough decisions for your small business, and choose a new path, if necessary.
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Source: used with permission from The Art of Business: In the Footsteps of Giants
Photo credit: Anwar
Tags: bill gates, important versus urgent, small business owner, thinking days
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 Valentine on May 12, 2009 in
Small Business Strategy 
Need a Ouija Board for Your Small Business?
The rocky economy has everyone guessing what’s coming next. In fact, that Magic 8-ball is starting to look pretty good to some people. A crystal ball or Ouija board might work, too.
Well, if you need a little help in the visionary department, check out “The Next Millionaires” by Paul Zane Pilzer. The guy is pretty savvy when it comes to putting his finger on current and coming trends. In his book, he offers some simple formulas that might help you evaluate where you are in your life and career, and where you might want to go from here.
Three Kinds of Skills You Must Have in This Economy
One of the best things I like about Paul’s book is the way he identifies the three kinds of skills that we all need to have in the coming years: basic skills, functional skills, and adapting skills.
Most of us already know about the first two kinds of skills. Paul defines basic skills as “you ability read, write, speak, calculate, and process information.” These are the basics that we learned in school, and are needed in just about every kind of work or job. If you gaps in any of these basic skills, Paul suggesting taking the time to fill those gaps now.
Functional skills are the specialized skills that we have developed since we left school. These include skills from “on the job training” and from further schooling. For instance, accountants have functional skills in accounting and number-crunching. Auto mechanics have functional skills in fixing vehicles.
In the past, we learned that having basic and functional skills guaranteed us a job for life. No longer. These days, having specialized skills in a specific niche can be deadly to your career. It’s like having special skills as a carriage driver as the automobile makes its entrance onto the transportation scene. Talk about being a dinosaur! These days, people with niche skills are going the way of the dinosaur faster than ever.
Why Every Small Business Owner Needs Adaptive Skills
The speed at which business and industry are changing means that we now need that third set of skills - the adapting skills. Paul defines adapting skills as “the ability with which you learn new things.”
If your business goes the way of the dinosaur, do you have the skills to adapt and change quickly? If a competitor comes up with a copycat product, can you take advantage of something else, like a new marketing technique, to distinguish your business from your competitor’s?
With the economy unpredictable, your ability to generate and sustain wealth is dependent, to a large extent, on your ability as a small business owner learn something new. You have to be able to learn something new quickly and thoroughly.
This kind of gives you food for thought when it comes to the old business standbys like:
“Not invented here.”
or
“This is the way we’ve always done it!”
Do you need to come up with a new affirmation or mantra for your business?
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Photo credit: Fortune Telling Collectibles
Tags: adaptive skills, basic skills, functional skills, Paul Zane Pilzer, small business, three kinds of skills
I never joined the military but, having worked in the family businesses from a very early age, I nevertheless grew up knowing the value of a good sergeant. They say that sergeants run the military. Sergeants also run the best small businesses. Having good sergeants is the difference between being a small business owner and being self-employed.
The Difference Between Small Business Ownership and Self-Employment
Someone who is self-employed may “own” her business, but nevertheless does everything herself. She’s not afraid to get her hands dirty, but she can never claim all the benefits of being a true small business owner. Since she does most of the vital work of the business, the self-employed person can rarely leave the nitty-gritty of the business. Vacations are usually impossible, as are other high-level business activities like strategy and product development.
On the other hand, the small business owner knows how to get her hands dirty, but doesn’t have to if she doesn’t want to. The true small business owner has sergeants. Who are sergeants? Sergeants are well-trained employees who help run the majority of the business, and who are invested in the success of the business. Sergeants keep the business running smoothly and to the owner’s standards, whether the owner is present or not.
The Pros and Cons of Small Business Sergeants
As with everything, sergeants have their pros and cons. The pros are obvious. Small business owners who employ great sergeants can focus more on business development, strategy, and high-level networking. These owners don’t have to spend all their time in the trenches. Plus, they can actually go on vacation for rest, rejuvenation, and inspiration.
There are also the cons. You have to pay a quality sergeant well. Also, good sergeants can be hard to find. The truly great sergeants are in high demand, and are usually already employed by other businesses. That leaves the option of discovering a “diamond in the rough” and training your own sergeant. Developing a good sergeant takes time, energy, and a lot of trial and error. But, the rewards are rich.
I am fortunate to work with one fabulous sergeant exclusively, and two others on a contract basis. Having trained my main sergeant from the ground up over the last seven years, I’m not about to let her go. I offer a handsome bonus each year and strive to make sure our relationship is mutually beneficial. She keeps all three of my small businesses running smoothly, so that I mostly handle any exceptions on a daily basis. I spend the rest of my time on marketing, business development, and product creation.
Have there been rough times in the past? Absolutely. Screw-ups and miscommunications happen on both sides, but that’s just part of being human. We’ve gotten past them each and every time. With my sergeant running the businesses most of the time, I can spend 5 weeks in Mexico each year, and focus on the parts of my business I really love.
Based on the idea of having sergeants, are you a small business owner or someone who is self-employed? Which model are you more interested in? And if you want to be a small business owner rather than self-employed, do you know of any potential sergeants in your network?
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Photo credit: Staff Sergeant Goodwin
Tags: self-employed, sergeant, small business owner
Are You a Square Peg Aiming for a Round Hole?
“Not so fast! Your answers indicate there is room to grow before you consider starting a business,” said the Oracle of Delphi.
Not really. Actually, this was the response from the Small Business Administration Assessment Tool, which is a free online test you can take before starting a small business. It helps you figure out whether you are cut out to be an entrepreneur at this point, or not.
This test fascinated me. I took the test as if I were just starting my business, instead of being more than a decade into entrepreneurship. I used the answers I would have given a decade ago. The results? I was unfit for small business ownership. Wah!
Actually, the test is very accurate. Back then, I was totally unfit for small business ownership. I could not answer “Yes” to questions like:
- Are you prepared, if needed, to temporarily lower your standard of living until your business is firmly established?
- Would others consider you a team-player?
- Do you know why some consider business planning to be the most important factor determining business success?
- Do you know how to compute the financial ‘break-even point’ for your business?
- Do you understand the tax requirements associated with your business?
- Do you have a payroll process planned for your business?
- Do you know where to obtain information about regulations and compliance requirements that impact your business?
I had not a clue about some of these questions. I do now, after getting a masters degree in the school of hard knocks.
If you are considering starting a small business, or even if you already have a small business, take this test. It’s fun, informative, and revealing. You will learn about your strengths and your weaknesses. Best of all, at the end of the test, you don’t just get an assessment. You get a list of resources where you can get more help. So even if you get less than a passing grade, you get help. It’s like after-school tutoring for small business owners. Way cool.
Take the Test Here.
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Photo credit: Your Choice
Tags: SBA, small business assessment, small business tools
Small Business Owners: Who Do You Know?
Some days I sit staring at a blank computer screen and wonder, “What do I know?” What expertise do I have that I can share with small business owners? What would actually help?
Some days this question just stumps me because some days my brain is filled with nothing more than the equivalent of a fart (hence, the brain farts). That’s it, nothing more, just hot stinky air. Then it occurs to me that I’m asking the wrong question. I should be asking,
“Who do I know?”
That’s a good question for any small business owner on any given day. Who do you know?
On days when business sucks, your brain is stuck in park, or you otherwise have no other good ideas, ask yourself this questions and let it rattle around in your brain for a while, like a big shiny marble.
5 Ways to Partner with People You Know in Small Business
Who do you know who can help your small business? You know lots of people, you just don’t remember who they are. Or you’re not thinking about them in the right context. Here are five examples of how small business owners have called on me in the last week to network, barter, share, exchange, joint venture, or buy. Who do you know who you could call on for these things?
1. Go Ahead, Ask Me!
I know this one is obvious, but it remains one of the most effective ways to get business. I was chatting on the phone recently with Rick at the local smoke shop. At the end of our conversation, he said to me, “We just got some new cigars in. Stop by let’s take a look at them.” Guess what? It’s on my list. I like the guy, I like the occasional cigar, and I trust him. He asks, I go.
2. Trade Tiddlywinks
On one of my business networking sites, an enterprising entrepreneur advertised a very specific offer. He offered to promote a one-sheet about your business at an upcoming fair in giveaway bags if small business owners in his network signed up for his upcoming event. The barter offer was very clear with no hidden agendas. A lot of people took him up on his offer.
3. What’s Up, Doc?
If your brain isn’t working, maybe someone else’s is. A business buddy of mine recently called up and said, “I need 30 minutes. I’ll give it back to you when you need it.” He needed some new marketing ideas to jump start his small business. He wondered if I had heard or read anything nifty lately. His offer? If he could pick my brain for 30 minutes now, he would act as a sounding board for me later. This only works, of course, if you like the other person’s brain, but sometimes beggars can’t be choosers.
4. The Medusa Approach to Business Development
A few years ago, a business gal pal of mine called me up. She proposed that we form a little local business gal pal network to brainstorm business development. Once a year, we four gals get together and brainstorm about business development. We each come prepared with the business plans for our small businesses, as well as the biggest challenges and questions we face. We spend four hours focusing on each person’s small business. We offer solutions, tips, resources, support, and a lot of laughter. We come away ideas, inspiration, hope, and creativity for our small businesses. Can you think of a few business pals you could grab to form this kind of mastermind group?
5. Friend of a Friend
There’s only six degrees of separation between you and anyone you want to meet. Really. Studies have been done (”Six Degrees: The Science of a Connected Age” by Duncan Watts is a fascinating read on this). So if there’s someone you really want to meet, who could really help your small business, find out if that person is a friend of a friend. Or a friend of a friend of a friend of a friend. It’s all good. Just keep goin’ down the line until you hit that sixth degree. You’ll meet that person, even if it is Clint Eastwood or Barack Obama.
Bonus Round: Karma Points
As always, for those who love extra credit, there is a bonus round. If you’re really, really bored, you could always build up Karma Points. Yup, you could do a good deed for a business pal just because you have a heart the size of Chicago. Will you get paid back this lifetime? Maybe, maybe not. But all good karma comes around. Who knows, maybe in your next lifetime you’ll be Bill Gates. You never know!
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Photo credit: 3-legged race
Tags: barter, share, small business owners, small business partners
Did someone cut the strings to your golden parachute? It’s happening to a lot of Americans, with the unemployment rate soaring to 8.1%, the highest in 25 years. So what do you do when you no longer have a golden parachute?
Well, you can join the ranks of those going into “forced entrepreneurship.” That’s what Mark V. Cannice, executive director of the entrepreneurship program at the University of San Francisco, calls the flood of people starting new businesses after being laid off.
Recessions are good times to start small businesses, and traditionally the number of small businesses has grown in these times. Examples include the recessions that spanned 1990-1992 and 2001-2003 (according to the Small Business Association).
But unlike in previous recessions, people are finding more reasons than ever to start a small business now. Here are 7 of those reasons.
1. Zero and Low-Cost Marketing
The internet has made it possible for just about anyone to market their small business for little or no cost. The more you know about online marketing, the less it costs.
2. Business Investors and Partners
The internet also makes it easier than ever to hook up with strategic partners and investors around the globe. You no longer have to fly to a foreign country to have a foreign partner.
3. Microlending Explosion
Thanks to the likes of Grameen Bank the concept of microlending has taken off. Now you can qualify for very small loans ($500-$35,000) with the help of the Small Business Administration.
4. No Stigma
While corporate employers used to view entrepreneurs with some disdain, these days large employers take a more positive view of startup activity. Having seen the positive and Darwinian-like effects of skunkworks and spin-offs, entrepreneurial activity is now seen as a positive factor in a resume.
5. Low Overhead Businesses
Many ex-employees are launching micro-businesses rather than small businesses. They are aiming to serve individuals and other small businesses instead of launching the next Google. When you’re developing a tiny business, the overhead is much lower.
6. Home Business Explosion
Home businesses, network marketing, MLM, and direct selling are all becoming far more acceptable to ex-employees. While these people may have been “snobs” about these businesses in the past, the extremely low overhead (average $200 a month) and the abundance of professionally-run home businesses encourages many to reconsider these opportunities.
7. Turn the Economy Around
The Bureau of Labor Statistics confirms that small businesses are some of the largest employers in the economy. Last year, according to the Bureau, 3.8 million companies were small companies with fewer than 10 workers, and they employed 12.4 million people, which is about 11 percent of the private sector work force.
Maybe you already have a small business. What caused you to start yours? Why should others join you in your entrepreneurial efforts?
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Photo credit: Golden Parachute
Tags: golden parachute, recession economy, small business startup, start small business
