Archive for Home Business Lessons
Exuberance Can Kill Your Home Based Business
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I was listening to the news today about Ireland being bailed out by the European Union and the International Monetary Fund. It struck me that this event has a lesson for home based businesses.
Ireland has been flying high economically. It’s land prices were jumping. It’s banks were lending money wildly. Companies were building factories and warehouses. All the economic indicators were headed up.
Everyone was dancing in the streets. There was no end in sight.
Then came the world wide economic crisis. Land prices crashed. Factories closed. The banks were left with loans that were shaky or even no good. The bubble had burst.
Suddenly, the government was meeting in emergency session and dark clouds were everywhere. The result? Ireland went with hat in hand to the European Union looking for a bailout. The good times that could never end …….. had suddenly ended.
I live in Las Vegas. We saw something similar here. Massive building everywhere. Multi-billion dollar hotel/casinos. Shopping centers and industrial parks. New houses everywhere.
And then the crash.
Now there are unfinished billion dollar projects. Vacant shopping centers. Empty homes. The idea of "build it and they will come" had crashed in flames.
So how does this relate to your home based business? There are two ways.
First ….. you can get comfort from knowing a whole lot of very smart people didn’t see the meltdown coming. And if you didn’t see it either, you can know you weren’t alone.
Second …. is a reminder that life has cycles. Nothing lasts forever. Good times are fun. It’s wonderful to celebrate and enjoy the fruits of your efforts, but you also need to be prepared for when the winds change.
Remember, Ireland may get bailed out by the EU and the IMF, but you and I have to be prepared to bail ourselves out. Our home based businesses depend on us.
A Little at a Time Brings Success to Your Home Based Business
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Bill Walsh was a long time National Football League coach. His philosophy for his offense has an important lesson for your home based business.
Have you seen the movie Blindside? I haven’t yet, but I’m reading the book. I’m at the part that talks about Bill Walsh’s game plan for his passing offensive. Most teams like to go for the long pass. It creates excitement and gains yardage quickly. The short pass is used to set up the long pass or to save the quarterback from getting tackled.
Walsh took a different approach. Long passes may be exciting, but they’re harder to complete than a short pass. There’s also more chance for an interception, and while the quarterback is waiting for his player to get down field, he’s more likely to get tackled and possibly hurt. Walsh preferred going for lots of short passes and once in a while going for the long bomb.
And the result? ….. Many more completed passes. Long steady marches down the field. Many winning seasons. He was willing to trade the flash for the win.
How does this apply to your home based business?
Too often there’s a desire to go for the big success. The big win. Maybe that means getting a HUGE sale. Or it could be a one time splash in your local newspaper. It feels really good. But when you sit back and reflect, how much further has it gotten you to your vision? And how many things didn’t work out?
What would happen if you had lots of smaller successes? Each one would move you closer and closer to your dream. Slow and steady instead of flash and crash. Yeah, I know. This sounds like the story of the Tortoise and the Hare. The message was true in the fable and it was true for Bill Walsh. It’s also true for your home based business.
Take baby steps with lots of success and you’re get where you want to go. Or you can focus on "the big play" and find yourself with an incomplete pass. It’s your choice. Flash or success.
Ty Cobb’s Lesson for Your Home Business
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Ty Cobb was one of the best hitters in the history of baseball. But he wasn’t well liked. Even by the members of his own team.
There’s a lesson here for the success of your home based business.
In 1910 Napoleon Lajoie of the Cleveland Indians was battling Cobb for the batting title. The winner would be determined after a double header the two teams were playing at the end of the season. Cobb’s manager told their third baseman to play in shallow left field each time Lajoie came to bat. In the two games Lajoie batted seven times and each time he bunted successfully towards third base. The seven hits raised his average enough that took the title away from Ty Cobb.
The day after the game, Lajoie got a congratulations telegram ….. From Ty Cobb’s teammates.
What’s the lesson for your home based business? How you treat the people around you, vendors, subcontractors, and even customers will determine how successful you’ll be. And that even if they pay a price, they could undermine your success.
Treat people well, and they will treat you well. Mess with them and be prepared to pay the consequences.
Costs for Your Home Based Business can Easily Get Out of Hand
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There are only two ways a home based business can increase it’s bottom line: increase it’s the sales or decrease the expenses. Too often, the business owner is focused only on increasing sales.
Hey, it’s much more exciting to get a new customer or have an existing customer buy more, than to spend time going over your bills to see what you can cut. I get it.
But, as hard as we work to get more business, it’s silly to see that money wasted on costs.
It’s true that most of us are cautious when we first incur an ongoing expense. We look for the best possible price before buying. The problem is that over time, it’s easy to ignore watching to make sure the costs are still the best available.
Here’s a real life example: this past year we go a slight increase in our auto insurance. We’d been with the same broker for many years and never questioned the bill. This time we decided to check around.
What did we find? Yup, you guessed. We found better coverage for less. Lots less. So much that we decided to shop our homeowner’s policy too. (We had that coverage with the same agent that had our car.)
By now, you’re probably not surprised to learn that we were paying too much there too. Combined, we saved over $1,000 per year and had better coverage.
Here’s the rule: to maximize the profits in your home based business, you need to review your costs at least once a year. That doesn’t mean you need to leave your current supplier. But you do need to go through the conscientious review you did when you first bought the product or service. And no, the lowest price is not always the best, but you need to be able to make an informed choice.
15 Minutes Could Save You ….. and Your Home Business
Posted by: | CommentsIf you watch any amount of TV, it’s hard to miss the commercials for the auto insurance companies; everyone claiming to save you hundreds of dollars if you switch to them.
Why is this important for your home based business?
Because you may be making the same mistake they are.
Let’s assume for a moment that all the companies are using valid information. That is, if you switch, you’ll save lots of money.
Where are all the people who switch coming from? Other companies.
So what that means is companies are focused on getting new business, not keeping the business they have. If they were focused on their current customers, then other companies couldn’t be attracting them away. Right?
Years ago I heard it cost 7 times more to attract a new customer than to keep an existing one. If you’re not paying attention to your existing customers, you may have new customers coming in the front door while existing customers are going out the back.
For your home based business to be successful, you need to pay at least as much attention to your existing customers as you do attracting new ones.
Home Business Math: How Much is 2+2?
Posted by: | CommentsThis is a variation of an old joke. However, there’s also an important lesson here for all home business owners. I’ll have a comment after you’ve read this version.
The Accountant
There once was a business owner who was interviewing people for a division manager position. He decided to select the individual that could answer the question: "How much is 2+2?"
The engineer pulled out his slide rule and shuffled it back and forth, and finally announced, "It lies between 3.98 and 4.02."
The mathematician said, "In two hours I can demonstrate it equals 4 with the following short proof."
The physicist declared, "It’s in the magnitude of 1×101."
The logician paused for a long while and then said, "This problem is solvable."
The social worker said, "I don’t know the answer, but I’m glad that we discussed this important question."
The attorney stated, "In the case of Svenson vs. the State, 2+2 was declared to be 4."
The trader asked, "Are you buying or selling?"
The accountant looked at the business owner, then got out of his chair, went to see if anyone was listening at the door and pulled the drapes. Then he returned to the business owner, leaned across the desk and said in a low voice, "What would you like it to be?"
Cute, huh? But what’s the message I was referring to?
I like this because it demonstrates how people will look at a situation based on their perspective. Each of the answers is correct, and each is very different. You might even say some are more relevant or useful than others. But that would be from your perspective.
The point is, each of us sees things differently. When you include advisors in your strategic planning and in the running of your home business, you often get ideas that may be even better than what you would have come up with on your own.
Beware of being the Lone Ranger. All successful home business owners have some kind of help. None achieves their success alone.
Lessons for Your Home Business from Bernie Maddoff
Posted by: | CommentsYou’ve probably heard about Bernie Maddoff. He just went to jail for creating a 50 billion dollar Ponzi scheme and will spend the rest of his life behind bars.
In case you don’t know what a Ponzi scheme is, here’s a quick overview:
Investors are enticed to put up money based on the promise of above average returns. The promoter gives a good sounding story about how the returns will be generated. People hear about the rate of return and want to join.
The reality is there is no investment. The first investors get their money from the investments made by later investors. Eventually the scheme, or pyramid, collapses.
Bernie’s story made all the newspapers but the truth is this process gets played out everyday in a much smaller way.
Lets say you get a credit card and you make a few purchases. When it comes time to make the payment, you only make the minimum. You keep that up, paying the minimum payment each month. Then something happens, maybe you lose your job or your expenses go up. You don’t have the money to make even the minimum payment.
Fortunately, you have another credit card that allows for cash advances. You take an advance and make a payment on the first card.
Next month, still no money so there’s another advance. Only this month you now have two payments – 2 credit cards.
You can see where this is going. Unless you increase your income or reduce your expenses, you’ll never catch up. In which case, I hope you know a good bankruptcy attorney.
Two lessons from all of this:
First: Be sure you manage your debt appropriately so you don’t end up in this situation.
Second: The US government is giving away billions as part of a stimulus plan. Next year’s deficit is estimated at 1.5 TRILLION DOLLARS. Estimates for the next 10 years show budget deficits every year … Even with significant tax increases. My reading of this says the only stimulus available to small business is the one we create for ourselves.
NOW is the time to start your own business.
NOW is the time to set it up properly.
NOW is the time to be sure it’s run for extremely high profits and sustainability.
The government may be there to help us out, but I’d rather be prepared to provide my own bailout.
How about you?