The 3 Ps that add up to Profit

“The future belongs to the common man with uncommon determination.”

Baba Amte

When I was in junior high school, I joined the local Junior Achievement chapter. My “company” made Christmas tree skirts which we later sold to our parents.

The lesson I learned from this:

cheap material + even cheaper labor + parental connections = profit

Find your unique gift; create a product or service that fills a need, than sell it to your network. How did I get that from felt skirts? Our product weren’t poorly constructed Christmas accessory; they were handcrafted symbols of ourselves that our target audience would pay a premium for.

What is your product?

What makes it (or you) unique?

Who is your audience?

Why do they want your product?

Who is your competitor?

What are they doing better (or worse) than you?

What is your cost of sale? In other words, what does each sale (income) cost you to produce (expense)

How will you market your product to your audience?

What will that cost?

Where do you want to be, in terms of production, in 1 year-2 years-5 years?

What will it take to accomplish this?

Your business plan should answer all of these questions, and more. Some people (e.g. me) prefer a deep strategic plan over a conventional business plan. In a strategic plan, you create your company culture as you create your plan for success.

A strategic plan typically includes a company’s mission, vision and value statements, and an expectation about how you’ll conduct business. If you plan to have partners, this step is vital

Successful people:

are passionate.

Your passion is the reason you get up in the morning, work late at night or borrow money from your family to finance start-up costs.  Without passion, you’ll quit at the first sign of trouble or when a better offer comes along. Are you following your passion?

solve problems.

If you can solve other people’s problems, they’ll throw money at you. Easy, right?

Find a job no one else wants and do it. Find the knowledge few know and learn it.

To sell yourself and your product or service, define what value you bring to the table.

Are you faster?

Cheaper?

Better?

Any 2 of the 3 will do.  If you’re faster than your competition, you don’t have to be cheaper, but your quality has to be at least as good as theirs.  Your customer will pay a premium for speed, but won’t accept inferiority at any price.

produce.

Do you have a business plan (see above)? Are you working it every day?  Do you account for your results?

Does your plan focus on the problem you’re solving for the customer and/or the unique value that you’re adding to the transaction?

Who are your customers? How do they find you?

Every sale results from you talking to your customers or would-be customers.  Talk to them everyday.

Don’t waste time with mediocre people, thoughts or actions. Just take daily steps toward your goal

By the way, I still have the Christmas tree skirt. Now an antique family heirloom, it’s value has no doubt increased accordingly.

If you’re ready to stop treating yourself like an employee, and instead develop the skills and leadership of a CEO, signup for the online version of The Business of your Business: Formula, Financials, Function and Freedom.

This article originally ran in the Las Chapter of the Women’s Council of REALTORS newsletter.

The Thrill of Creating Wealth

I’m featured on the One Million Entrepreneurs website. Check out my profile and, while you’re there, add your own story.

Play the Game

 

“This is too difficult for a mathematician. It takes a philosopher.”

That’s Albert Einstein talking about out tax code.

Formally, federal tax law is a particular chapter (Title 26) of the United States Code. The federal tax law contains 11 subtitles, which among them comprise 9,833 sections.


The number of words in the tax code? No one knows. Seriously, no one knows. The lower bound seems to be 16,000 pages, and even that’s not definite. A conservative 250 words per page, and that’s 4 million words. Even counting the number of sections is exhausting. They go from 1 to 9873, and counting, but plenty of numbers are missing.


Politicians may tout the virtues of our “progressive” tax system, but it doesn’t really favor the poor over the rich.
Nor does it favor the rich over the poor, not when 40% of federal tax receipts come from 1% of the population. Fairly or otherwise, the tax system favors the diligent over the unprepared. (As most things in life, so maybe the system is fair.)

Specifically, the system favors independent businesspeople over salaried workers.

You can do what almost everyone can but few bother to: play the IRS’ game. Only make sure you’re on the winning team.  Read my recent article in the Women’s Council of REALTORS e-newsletter.

I’ll be on the Balancing Act in April

DOES YOUR NET WORTH REFLECT YOUR LIFE’S WORK?

AUTHOR & ENTREPRENEUR BETTY KINCAID WILL BE FEATURED ON THE BALANCING ACT ON LIFETIME TELEVISION

LAS VEGAS, NV January 26, 2011—Las Vegas entrepreneur Betty Kincaid will be featured on “The Balancing Act” on Lifetime Television in April at 7am Eastern and Pacific times.  She’ll be sharing tips from her recently published book Control Your Cash: Making Money Make Sense to help viewers get their finances under control.

Like her book, Betty Kincaid is honest and uncompromising in her delivery.  “Most of us were never taught how to invest, the difference between fixed- and adjustable-rate mortgages, the way the stock market operates, or how (or even why) to buy a house.  The result is a sea of uninformed consumers who are practically asking to be fleeced. We’re seeing the results of this financial ignorance in increased foreclosures, bankruptcies and small business closings.” She says.

“I’m excited about this opportunity to share with The Balancing Act’s audience my top tips for controlling your cash and, ultimately, your life.”

Part call-to-arms, part instruction manual, Control Your Cash goes beyond patently obvious advice you can find anywhere. Instead, it shows you what classic pitfalls to avoid and what quiet opportunities to take advantage of. It impels you to be free – which of course, means being responsible. Control Your Cash explains every financial concept you could possibly need to know, and demonstrates how you only have to live hand-to-mouth if you want to. The book is available in trade paperback and electronic formats on Amazon, BN.com or at your local bookstore.  Or order directly from the book’s companion site, ControlYourCash.com.

Betty Kincaid is among the most accomplished women in American real estate. When naming her a founding member of the UNLV Center for Entrepreneurship, Dean Richard Flaherty called her “…the poster child for entrepreneurs.” She is a self-made woman having built and subsequently sold a multi-million dollar business. In 2005 she served as president of the national Women’s Council of REALTORS®. To schedule an interview or book Betty for your next event www.BettyKincaid.com

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About The Balancing Act: The Balancing Act on Lifetime Television is America’s premier morning show about women, for women, trusted by women. Celebrating life and all there is to accomplish, The Balancing Act inspires and empowers with entertaining and educational segments, placing women in the best position to achieve success in every area of their lives. The show is produced by O2 Media Inc and airs on Lifetime Television 7 a.m. Eastern/Pacific (check local listings). Additional information and each segment can be accessed on the show’s website, http://www.TheBalancingAct.com.  Sign up for the show’s newsletter at http://www.TheBalancingAct.com/join.php.

No Strings Attached?

From a utilitarian perspective, giving gifts makes no sense. Generally speaking, you buy gifts for people who are likely to buy you gifts – hence the term “exchanging”. Receive a gift from someone you had no intention of buying anything for, and you’re selfish and inconsiderate. Do the opposite and you’re a sucker or a suck-up. And if you do buy something for someone who buys something for you, custom dictates that the gifts can’t be of disparate value: hence the ludicrous practice of removing price labels. After all, nothing ruins the joy of receiving a thoughtful and apposite gift than finding out the donor spent too little on it.

Think about it: you spend money to get people things that you hope they’ll like. If they don’t, you’ve wasted your time and resources. Thus the most useful possible gift is the one perfectly adaptable one: cash. But again, the suitability of cash runs into the brick wall of decorum. ‘Tis the season to be gauche. And again, if the recipient adopts the same logic about gift-giving, you end up exchanging cash for cash. Reduced to its fundamentals, the transaction is easy if quotidian: instead of you buying me a $150 gift and me buying you a $160 one, I should just give you $10. Then we can spend the next year discussing how I’m tacky and you’re cheap.

If you’re the parent of a young adult, or otherwise have someone in your life whose net worth isn’t yet where yours is, here’s a mutually beneficial idea for a decidedly American gift that isn’t cash: the next best thing, credit.

The average college graduate receives that bachelor’s degree with a five-digit Sallie Mae obligation. As for the prudent and responsible students who manage to graduate with no or minimal student loans, doing so usually means there’s hardly enough money remaining to create any kind of nest egg. The wealth-building years have begun in earnest, but there’s almost nothing to lay a foundation with. Renting an apartment for the next few years (an investment with a guaranteed rate of return of -100%) wipes away much of the equity a young person could be building.

If you can afford it, lend your upwardly mobile kid enough to cover the down payment on a modest little domicile. Even buying the tiniest of townhomes gives him or her the opportunity to build equity, and to exercise the care and consideration for one’s things that renters have no incentive to.

Say you find an $80,000 condo that requires a 20% down payment to avoid private mortgage insurance costs. Financing the remaining $64,000 at today’s 4.24% 15-year rates means your kid would write monthly checks for $481.13, which makes far more sense than spending $800 on a larger rental house in a fancier part of town.

Remember, this isn’t a gift in the traditional sense. As the giver, you’re expecting something in return – regular payments, with interest. If you can give your kid a 100-basis point break on market rates, she could pay back that $16,000 loan back to you in $112.35 monthly installments. Which should be pretty easy to do, especially if she’s collecting rent from a roommate. Of course, we’re assuming she’ll be making gradually more money throughout the life of her concurrent loans.

The real “gift” in this situation is something intangible but vital: an introduction to real-world finance, and a chance to exercise responsibility. It’s the ideal meeting of a recipient whose ambitions outweigh her wherewithal, and a donor with the ability to make the recipient’s transition into the world of commerce run a little more smoothly.

Cash in on Your Dreams

“If you don’t know where you are going, any road will get you there.” Lewis Carroll

Imagine you’re sitting in an airplane. The captain gets on the intercom and says: “Folks, we’re 2^nd in line for takeoff. Where would you like to go?”

If your perfect life is the destination, don’t you want to get there as quickly, easily and cheaply as possible? Maybe you can do so without creating a business plan, but I can’t imagine how.  A plan will help you make better and faster decisions, decide how you spend your money or time and track your progress.

Start now.

“A good plan executed today is better than a perfect plan executed next week.” General George S. Patton

Complete your annual plan by November so that you can relax and sit on your plan for a month or so before executing it.  Review (and revise if needed) your progress quarterly.  This is not a New Year’s resolution to be enacted in January and discarded by February.  This is an action plan that will get you to your biggest life goals.

It’s time to focus your energy onto your goals and dreams. Find a place with trees and fresh air where you can concentrate on your future.

There are myriad ways to create your plan and they all start with a vision.

“I love it when a plan comes together.” Hannibal Smith-The A-Team

What do you want to do, be or have in 2-5 years?

What motivates you to jump out of bed in the morning, or work late into the night?

Your vision must be:

Specific- What will it look like once you’ve reached your goal? Where will you live? What will you do each day? Who will your friends, neighbors or co-workers be?

Vivid- Realism is the key to visualization so use all of your senses when describing your goal.  The goal is to make your mind believe your future outcome is happening now.  With consistent visualization, your mind accepts the image of success and suddenly you’re seeing inspiration and opportunity everywhere.

Compelling-How will your life (or the lives of your family members) improve once you’ve achieved your goal?

Desirable-Is this your dream or only something you think you should want?  The more you want the outcome, the more likely it is you’ll achieve it. If your goal isn’t compelling, you’ll quit at the first sign of trouble.

Realistic-Do you have enough time, energy and support to reach your goal? Have others done it before? If it’s been done, there’s a proven strategy to do it, you just have to find it.

Focused- Instead of creating a to-do list, concentrate your energy on accomplishing up to 3 bigger goals.

Flexible-There are lots of ways to get to your outcome.  If your goal is to provide your son with an Ivy League education instead of concentrating on just one way to get there (saving lots of money), brainstorm all the ways you could make it happen (scholarships, part-time work, etc.)

Easy to communicate- Can you describe your end result concisely in terms anyone can understand?

Close your eyes and imagine your future.

Having trouble visualizing?

Look for someone who’s already achieved your goal.  What does that person’s life look like?  Draw, paint a picture, or write a story as if you’re reporting on your future self.  Then distill that scene, picture or story into your vision statement.

Once you’ve articulated your vision, make it real.

Step 1:  Writing your goal down makes it tangible and on those days when you’re frustrated or unfocused, you can look at what you’ve written and get back on track.

The more accountable you are, the more likely it is you’ll achieve your goal. Find an accountability partner who’s committed to her own goals. Better yet, find someone who already attained your goal.  Tell that person your goals and ask for help in keeping your commitments.

Step 2: Determine what it will take to get there. What skills, knowledge and resources will you need?

If you want to live in France, you’ll need to learn French (skill), find a place to live (knowledge) and save money (resources.)

Step 3: Break each task down into short-term goals you can accomplish in 1,2 or 3 months.

“Set your goals high and don't stop until you get there” Bo Jackson

Write down your top 5 values in order. If your goal conflicts with your values, you’ll never achieve it.

If you’re not sure what constitutes a value, this list can help. When you commit to your values and have written goals, choosing between competing demands gets easier. As does making decisions.

Sally’s top value is family, followed by financial independence.  A single mother with 2 kids, she’s been offered a job that doubles her salary but requires her to leave town every weekend. She has to either decline the job, or rerank her values.

Acknowledging your values, prioritize your short-term goals.  Your goals should have a deadline as well as a tangible, measurable end-result.  Set goals that are tough but realistic to achieve.

In On Writing, Stephen King compares writing to telepathy. Even though he writes every novel, short story, and magazine article in a certain place and at a certain time, you can be miles and decades away and still receive his communication clearly.

If writing is telepathy, planning and envisioning are clairvoyance. Planning your tomorrow today will bring your vision of the future to fruition.

What to learn more?

Join me on Wednesday, November 3rd at The New Orleans Marriott.

Get details and register here.

Lessons from the lemonade stand: Choose your future

“The future belongs to the common man with uncommon determination.”

Baba Amte

Successful people have at least 3 common traits.  How you embody them will determine your fate in the coming year.

1) Be passionate.

Call it a mission, a goal or your “Big Why.”  It’s the reason you get up in the morning, work late at night or borrow money from your family to finance your start-up costs.  Without passion, you’ll quit at the first sign of trouble or when a better offer comes along. What’s your passion?

2) Solve problems.

If you solve people’s problems, they’ll throw money at you. Easy, right?

Find a job no one else wants and do it. Find the knowledge few know and learn it.

To sell yourself and your product or service, define what value you bring to the table.

Are you faster?

Cheaper?

Better?

Any 2 of the 3 will do.  If you’re faster than your competition, you don’t have to be cheaper, but your quality has to be at least as good as theirs.  Your customer will pay a premium for speed, but won’t accept inferiority at any price.

3) Produce.

Do you have a business plan? Are you working it every day?  Do you account for your results?

Your plan should focus on what problem you’re solving and the unique value that you add to the transaction.

Who are your customers? How will you reach them?

Every sale results from you talking to your customers or would-be customers.  Do this everyday.

Don’t waste time with mediocre people, thoughts or actions. Just take daily steps toward your goal.

Lessons from the lemonade stand: No margin for error

Controlling your cash is the key to surviving in today’s economy.

Income flows into your account and expenses flow out. The goal is to have cash left over at the end of the month and to increase that amount each month. The difference between net sales and the costs of business is known as the margin. As you increase your margin income, you increase your net worth.

The key to success starts with tracking every dollar.

Income:

Where does your income come from? While it’s nice to have one big account, project or client, relying on one source can be risky. Find more income sources and you’ll be less vulnerable in a slowing market.

Is your revenue consistent from month to month, or do you have months with high income followed by months with no income? Regular income makes it easier to plan & budget, but many of us rely on unreliable commission. If you project income and budget, it’s easier to allocate future expenses on every sale you make. Adding sources that produce monthly income (e.g. rental properties, bonds) can temper the extremes.

If you’re carrying accounts receivable, keep meticulous records and follow up diligently. Many small businesses fail because they can’t collect on their invoices. If receivables make up most of your income, get a line of credit secured by the invoices to help you manage your cash flow.

Looking to increase income? You can either get more business from the people in your existing network, or expand your network. Actually you should do both, but I recommend you spend 60% of your time soliciting new business from your existing clients and contacts and 40% contacting potential new clients. Be energetic, be positive, and always follow up.

Expenses:

If you can’t easily estimate your monthly overhead, you’re headed for trouble. Use a program like Quicken track every expense. When it comes time to cut expenses, you’ll appreciate knowing exactly where your dollars are going.

Fixed expenses occur whether you have business or not. Examples are rent, utilities, payroll, auto use, insurance, and professional dues.

Variable expenses occur as your business increases. Advertising, postage, office supplies, mileage, cell phone use all fluctuate based on how much business you’re transacting.

If your cash is running out before the bills are paid, cut expenses. Some areas to look at:

1) Postage- email everything. If you usually advertise by mail, use an e-newsletter or your website instead.
2) Office space-If you can get out of your lease, downsize or work from home. If you’re stuck in a lease, find a complementary business to share space and expenses.
3) Vendor contracts-cell phone, janitorial, landscaping, ISP -call everyone and renegotiate.
4) Advertising & marketing-determine whether you’re getting your money’s worth. Advertising should focus on getting your customer to act now.
5) Office supplies- cut back on paper quality, switch from color to black & white copies, cut out the colored paper.
6) Payroll-Convert a full-time employee to part-time, combine 2 positions into 1 or hire a virtual staff. Whatever you decide, give your employees plenty of notice.
7) Prospecting/Networking-If you rely on expensive leads from websites or advertising, simplify. Start with face-to-face contact with people who can give you business. Update your client database and touch base with everyone you’ve done business with in the last 5 years. Your goal in every contact should be to get more business today.

Lessons from the lemonade stand: What’s your problem?

Your customer doesn’t care what title is on your business card, what school you went to or what your grade point average was.  He wants one thing:

His problem solved.

It sounds so simple, yet most companies can’t do it.

So often, we tell customers what we think they should want instead of listening to them.

How to succeed in 3 easy steps:

1) Understand exactly what your customer’s problem is:

Mr. & Mrs. Smith want to buy a restored 1965 blue Mustang convertible for  $35,000.

2) Honestly assess if you can solve it:

Tom Dealer has connections with rare auto dealers across the nation and can find the best vintage cars at the lowest prices.

3) Determine if you’re willing to – and if you can do it quickly, cheaply, and/or with the best service:

The Smiths and Tom Dealer seem compatible. But if Tom doesn’t act, the Smiths will find someone who can.

This is a variation of finding the job no one wants and excelling at it.

Anyone can say she’s going to solve the problem.
Be different: actually do it.

Lessons from the lemonade stand: The underdog advantage

Avis and 7UP each parlayed their secondary status into successful advertising campaigns. Mine that Bird beat 50-1 odds to win the Kentucky Derby.

The story of the underdog is endemic to American culture, which probably stems from our national story. We started as a dependency of the world’s greatest power, only to eventually assume that mantle for ourselves. Tap into this mythos, and you can create tremendous opportunities for yourself and your company.

Here are the top 5 rules for underdogs:

The wheel is always turning.
If you’re already tops in your field, congratulations.  This post is not for you.

For whomever’s on top today, someone else wants to dethrone them. Historically unassailable IBM lost its prominence to Microsoft, a company founded by a college dropout tinkering in his garage.

If you’re the Bill Gates in that analogy, you’re not bogged down by bureaucracy and inertia. By being speedy and nimble, you can ultimately be unique and memorable.

A great story is worth more than a Super Bowl ad.
Susan Boyle became a sensation thanks to an unorthodox background coupled with a phenomenal voice.

What’s your story?  Find a compelling way to share it with your potential customers but:

*Keep it optimistic.  Victimhood is great for reality TV and Democratic conventions, but it weakens your brand.  Your customers need to know you can solve your problems before they’ll give you the chance to solve theirs.

*Stay grounded. Customers want to do business with people they like and who are like them. Get your customers to buy into your story and they’ll become your biggest fans.

*Be honest. Embellishment is one thing. Recreating a history is something else.  As your success grows, your competitors will work to discredit you.  Don’t give them ammunition.

Forge your own rules.
Malcolm Gladwell wrote in The New Yorker about how playing by conventional rules of warfare gives a huge advantage to the favorite.  He explains why the underdog should abandon conventional wisdom and instead play to its strengths.

For decades, every airline assigned you a seat and served you food. There were no law to that effect, that’s just how everyone did it. Until upstart Southwest Airlines realized they could just let people sit where they wanted and bring their own food.

By rejecting conventional wisdom, Southwest could prep its planes more quickly between flights.  Less downtime meant more flights and more revenue.

Where is the gap in the services your competition offers?  How can you fill it in a unique, profitable way?  Imagine that your industry doesn’t exist, and you’re about to become the first company to deliver your product/service.  What would you do differently?

Be passionate and inspire.
The Los Angeles Lakers might be a better team than the Orlando Magic, but I’d rather play for Magic coach Stan Van Gundy than the Lakers’ Phil Jackson. The latter is the embodiment of cool reservation, while Van Gundy is loud, enthusiastic and slightly erratic.  He’s the pugnacious underdog who refuses to let go.

Your employees and customers need you to sustain and to translate your vision to solve their problems.  To maintain your equilibrium, you need a clear written mission and vision statement.  Brainstorm with other entrepreneurs, mentors and your employees to stay connected and energized.

Never give up.
“Success is the ability to go from one failure to another with no loss of enthusiasm.”
-Winston Churchill

Churchill maintained his optimism in the face of unspeakable evil.  After defeating that evil, the British people rewarded him by voting him out of office. If one of history’s strongest leaders can withstand that, you can persevere whatever it is you’re enduring.

Every time you try something new, assess its effectiveness.  Set a reasonable time and a realistic outcome, then act.  Review your progress.  If it’s negative, try something else.  Repeat until success.

The goal is not to be the biggest, but to maintain your vision while serving your customers and employees.  Make a life, not just a living.