Category Archives: Finances

Why You Need Momentum to Live

Sunday, 21 September 2014 15:48
Written by Kevin S. Bemel
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Being an entrepreneur requires you to take that first step out of your comfort zone, even if you start part time and keep you “day job.” The entrepreneurship press abounds in exhortations to take action. Rightly so, since to paraphrase Newton’s First Law of Motion:

Your Life Tends to Remain on Its Course Unless You Force a Change

Changing your business or professional life requires your initiating a new direction. Perhaps the only thing more difficult than beginning a new venture is starting it up again if it founders. Better to maintain momentum.

Mometum is Key in Buinsess & LIfe

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About four years after starting my real estate company the market collapsed. Leading into the recession of the early 1990s, my business stagnated. Shortly before I had borrowed a lot of money to finance expansion. Faced with a load of debt and shrinking client prospects, I teetered on the verge of bankruptcy. Regrettably, while I had been preaching the folly of believing real estate prices would endlessly rise, I did not take the steps necessary to keep my company moving forward. I had to start up again. The second time was arduous compared to the first.

There is no magic formula to maintain momentum. It requires tenacity and planning. And,

The Critical Step to Sustaining Entrepreneurial Momentum-Avoid Complacency

Here are actions you can take to keep your momentum going:

  1. Think counter to the crowd. If most of your competitors think the market or your industry is going in a particular direction, find the source of this collective wisdom. You may be surprised how often it is baseless. The economy is not a plutocracy. If everyone thinks prices have to go up, they are probably headed down.
  2. Think counter-cyclically. While you want to exploit an improving market, this is also the time to be planning for the inevitable downturn. In the previous 160 years, there have been 32 cycles of expansion and contraction, on average one every five years. Just about when you realize the good times are here the bad times are about 18 to 24 months away.
  3. Business development above all else. Whether you are new to your business or a veteran who relies solely on referrals, and no matter what your product or service, you exist to serve people. Your primary task is finding the next person whose life will be improved by your entrepreneurial endeavor.
  4. Never grow up. As your business matures, you will be tempted to routinize processes. While this is important for accounting, inventory, and other similar functions, the roots of your company must remain adolescents. Remember that time when you were not sure about pretty much anything so you tried just about everything? Such is the essence of entrepreneurship.
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Each of these four will compel you to constantly re-examine your products, services, market position, and customer base. By doing so you maximize the chances that if one or more of them changes you will be at the forefront rather than being caught flat-footed.

What do you do to maintain momentum in your life? 

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One Night Stands Don’t Work for Business Either

Sunday, 31 August 2014 03:30
Written by Kevin S. Bemel
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Prospecting.  New business development.  Finding more customers.  Whatever you call the process, an organization must expand its client base to survive and grow.  Despite having years of practice in the necessary skills, most people are oblivious as to how to go about it.

One Night Stands Don’t Work for Business Either

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This was highlighted to me when a friend brought to my attention the large number of people who show up only once at the meetings of an organization to which we belong.  My response to him became the headline for this post.

Throughout my real estate career, I realized that the cost to acquire and maintain a new client was high. Because of the low margins in the property management and appraisal businesses, generally, it took six months to a year before a relationship became profitable.  As such, I quickly learned:

It is Pointless to Pursue One Off Clients Who Negotiate Hard on Price. 

Aside from their insistence that they squeeze ever last penny out of a situation, repeat business from them was rare. My having learned all of their negotiating tricks the first time we did business meant they had to find someone new to squeeze.  Rarely did I get referrals from them since by the time the matter was completed they had already moved on to someone new.

Most of us carefully choose the people and organizations with whom we do business, especially in the areas of professional services.  Think about how you chose your doctor, lawyer, real estate broker, or pastor.  You probably knew the person well or were referred by someone who previously used his services.

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Why as someone with something to sell would you expect people to suddenly decide the first time they meet you to give you their business?  This is why networking seems so fruitless.  Most people have the unrealistic expectation that one meeting is sufficient to establish them in people’s minds as legitimate for giving referrals.

Finding New Customers is Like Making New Friends.

The difference is that often friendships develop organically as you go through day-to-day life.  But if you examine your friends undoubtedly you note commonalities on which your relationships are built.  Finding new clients is a more intentional process but the end result is the same:  Enough interaction has taken place for prospects to be comfortable with your handling their business.

With respect to networking, you should have two goals:

  1. Establish rapport with a prospect.  Be interested in the person.  The more talking he does the better off you are.  There will be plenty of time later for you to make a presentation, if necessary.  At this stage there is only one question to answer – is this person a viable prospect?
  2. Get contact information.  The point of networking is to get people’s cards, not give yours out.  How will you follow up without a name, email address, and telephone number?

The process is no different being involved in a networking group or professional organization.  Your task is to identify the people who will be the best referral sources rather than clients.

Once you have chosen your prospects, continue the process of getting to know them and their situations while they get to know you.  It is probably not going to happen as quickly as you think.  But the business you do build will be more enduring.

When did restraint improve a situation?  When did it worsen one? 

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The Reason You Have to Work for What You Deserve

Wednesday, 13 August 2014 03:30
Written by Kevin S. Bemel
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Parsha Nugget Eikev – Deuteronomy 7:12-11:25

Often I use the metaphor of G-d as our heavenly parent.  And like every good parent there are things He gives us simply because we're his children.  But since the Almighty is omnipotent, it seems like He could be much more generous.  Parshas Eikev explains why life entails so much hardship and toil:

“The Lord your G-d will safeguard for you the covenant and kindness that He swore to your forefathers.” (Deuteronomy/Devarim 7:12)

The Reason You Have to Work for What You Deserve

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In this week’s parsha Moses talks about the reward the Children of Israel will reap if they stay true to the mitzvahs (usually translated commandments). He warns them against being seduced by prosperity and reminds them of their history.

The above verse says iG-d rewards us because we are the descendants of Abraham, Isaac, and Jacob.  This makes sense when eikev translates as “because” or “when.”  However, eikev can also mean "heel."  Often people don't care about what seems to be unimportant things G-d wants them to do. They tread upon them with their heel.  In that sense, the same verse says G-d rewards us for our behavior.

Which is it?  Do we receive the Almighty’s protection and favor as offspring of our forefathers or because we earn it?  Put another way, does G-d have a choice how He rewards us?

To be sure, the Creator bestows His bounty either because our behavior merits it or through fulfillment of the covenant with our forefathers.  He can also do so as an undeserved act of pure kindness.  But it seems that the covenant negates the other two, requiring G-d to show us favor.

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Indeed because of the covenant, G-d protects us even when we are unworthy.  But at times He does not need to do so because our conduct, performing even those mitzvahs that are sometimes treated lightly, merits His guardianship.

People Most Enjoy What They Work For

When we are given an undeserved reward we often feel guilty.  G-d wants to spare us from shame.  So, He decreed that benefits must be earned, even those we would otherwise receive by right according the covenant.

When we do earn it, G-d’s kindness makes His beneficence truly limitless, far exceeding what would be a just reward based on our merit.  So it turns out that there are no “minor” acts for G-d.  We must perform all of the Creator’s will, even those aspects that we usually relegate to our eikev/heel, in order to truly feel the satisfaction of earning the Almighty’s favor.

When have you felt G-d’s reward was justified or purely an act of kindness?

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Every year beginning on Simchas Torah, the cycle of reading the Torah, the first five books of the Bible, ends and begins again. Each Sabbath a portion known as a sedra or parsha is read. Its name comes from the first significant word or two with which this weekly reading begins.

Do you have a question about the Old Testament? Ask it here and I will answer it in a future Parsha Nugget!

Pursue Entrepreneurship Like a Marine – II

Sunday, 20 July 2014 03:30
Written by Kevin S. Bemel
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A few weeks ago I examined how maneuver warfare applies to entrepreneurship. Hopefully, you see it as a key aspect of your plan to more quickly defeat the negative attitudes and uncertainty holding you back.  An essential aspect of employing this concept is determining where and how to focus your effort.  The Marine Corps calls the practice of concentrating combat power the Main Effort.  Let’s translate this idea to entrepreneurship.

Pursue Entrepreneurship Like a Marine – II

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While I advocate living a balanced, purposeful life based on the Three Pillars of Fitness – Physical | Mental | Spiritual, attempting to focus on all three simultaneously will dilute your ability to reach your goals. On a daily basis, concentrate on a single outcome.

The key points of the Main Effort in Marine Corps doctrine are:

  1. Of all the actions going on within your business, recognize one as the most critical to success at that moment. As you work on your business, each day should focus on the activity crucial to moving it forward, be it marketing, sales, product development, or something else.
  2. The Main Effort involves a physical and moral commitment, although not an irretrievable one. While the Main Effort embodies the action you will take, your commitment must be deeper than task completion.  Dedication at the highest level is required to propel you through the inevitable vicissitudes.
  3. Faced with a decision, ask yourself: How can I best support the Main Effort?  Having made such a profound commitment, reinforce it by making all future choices through its lens.
  4. The practice of concentrating all your power toward the Main Effort necessitates the willingness to accept prudent risk elsewhere.  When focusing on a singular direction by definition you are excluding everything else.  This entails some risk.  Occasionally, your family may feel neglected or your fitness may decline.  End each day by assessing your physical, mental, and spiritual resilience so you will know when the risk is no longer prudent and requires a shift in your Main Effort.
  5. As the situation changes, you may shift the Main Effort. Seek to exploit success rather than reinforce failure.  As demonstrated by maneuver warfare, your ability to identify and quickly exploit opportunity increases your likelihood of success.  When you make the inevitable shifts in Main Effort, do not wait for a crisis, rather look for situations in which you can address the issue requiring the change without weakening your overall thrust toward your goal.  Add an extra day or two onto your business trip dedicated solely to time with your spouse and family.  Change a sit-down meeting to a walking meeting.

Essential to unity of effort by your team, as the leader, strive for a clear expression of the intent and expectations supporting your Main Effort.  Then ensure that everyone involved realizes the burden of understanding it falls on all team members.  You must make your purpose perfectly clear but in a way that does not inhibit initiative.

Applying the short-term focus of your Main Effort will dramatically increase your ability to achieve your goals.

What is the Main Effort in your life right now?

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How to Increase Your Income While Lowering Stress

Sunday, 13 July 2014 03:30
Written by Kevin S. Bemel
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80% of the effects come from 20% of the causes – Joseph M. Juran

If you are like me one of your biggest challenges is not having enough time to accomplish everything you want to get done.  I do numerous things to work more efficiently.  But during my time in business I found something worse than needlessly time consuming projects: handling needlessly time consuming matters for people who were ungrateful and emotionally draining.

How to Increase Your Income While Lowering Stress

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The Pareto Principle, as Juran called it, applies to business just like everything else. According to Richard Koch in Living Life the 80/20 Way:

  • 80% of a company's profits come from 20% of its customers
  • 80% of a company's complaints come from 20% of its customers
  • 80% of a company's profits come from 20% of the time its staff spend
  • 80% of a company's sales come from 20% of its products
  • 80% of a company's sales are made by 20% of its sales staff

I would add to this list that 80% of your daily emotional grind comes from 20% of your clients.  Is it coincidence that they seem to be the same ones who negotiated the hardest and won the largest price concessions?

Free up a tremendous amount of time and mental energy by firing such clients

You need to be intentional about the process of weeding out your worst clients, otherwise the tendency might be to fire the ones with whom you most recently had a problem even though over the long run they were profitable and reasonable. Here is my process:

  1. Make a list of your clients and the fees they paid during the previous period (for example every six months) as well as the average annual fees they paid since becoming a client.  Rank them with the highest being 1 and then on down from there.
  2. Next, determine the time you spend servicing their accounts.  Rank this aspect with 1 being the least time consuming and again on down from there.
  3. Assess the amount of emotional energy it takes to work with the each one.  Think back over the previous period and quantify the number of times each client treated you or your staff inappropriately, made outrageous time demands, and did other things that unduly tasked your patience.  Once you have done this assessment rank them like you did with time, where the least emotionally taxing is 1 and then on down.
  4. Add up the score for the three issues.  Those clients with the highest scores are the candidates for firing.

If you set up your assessment on a spreadsheet like Excel you can more quickly re-assess when the need arises.

Note I called them candidates.  You highest scorer may also be your largest source of income.  In that case you may have to replace some or all of this income before you fire the client.  Nonetheless, one by one you need to get rid of the worst clients so you can replace them with higher quality ones.

If you conclude that you do not need to fire any of your clients, this may be an indication that you are not being aggressive enough in going after business.  You are not stretching your capability in dealing with challenging people.  Aim for striking a balance.

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Another benefit of this exercise is you will create a profile of your ideal client.  When you prospect for new business you can interview prospects to determine how well they fit this profile.

If you have a retail business, rather than assessing individual clients, develop customer profiles, each of which you assess as if it were a client.  Identifying the qualities of your best customers will reduce the time you waste on chasing prospects that in the end take up too much of your time and emotional energy relative to purchases they make.

While this process will not repeal the 80/20 rule, it will improve your overall work experience and reduce your mental burden.

What other ways do you assess the quality of your clients?

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