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.


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.


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.



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.


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.

Living in a buyer's market
How do you capitalize on the current environment of too much inventory and too few buyers?

By knowing when to be ruthless and when to be realistic. How does this translate in the real world of real estate, work & business?

Real Estate

If you’re buying:

Look for troubled properties in good areas. Most buyers can’t see beyond the ugly carpet & dead lawn; if you can, you’ll reap the benefits at a reduced price. You’re on the right track when the property’s been for sale longer than its neighbors. With your agent’s help, figure out what similar properties are selling for. Add the cost of repairs, then offer 25% less. Buy at 20% under market price. Don’t get emotionally involved in the property or the outcome. If one property falls through, go to the next similar one.

You’re not a buyer at the bank. Loans require great credit (credit score >650), hefty down payments (15-20%) & patience. For this you’ll get a fixed rate of 5% for 30 years.

If you’re selling:

Unless the lender’s going to foreclose, don’t sell. If you can’t afford the payment, and you’ve economized as much as you can, rent a cheaper place and lease out your home until the market stabilizes.

If you absolutely have to sell, you’ll be competing with bank-owned properties. A smart buyer doesn’t care if your home is in better shape than the bank-owned properties; he’s looking for the best deal.

Can’t make the payments? Contact the lender to arrange a deed in lieu of foreclosure or short sale.

Job Market

If you’re hiring:

Now is the time to hire the staff of your dreams. The market is flooded with competent people looking for stability. Post an ad that specifies what you’re looking for and watch the résumés pour in. If you don’t want to pay too much, offer benefits like insurance or vacation days. Or set the base salary low and tie increases into company profitability. Applicants who want guarantees & demand high salaries and benefits are ignoring the new rules.

If you’re applying:
Look at compensation differently. Prioritize what you want, starting with salary but including health insurance, stock options, paid vacations, etc. First get hired, then make yourself indispensable. Look for ways you can transition from employee to consultant.

Goods & Services

If you’re buying:

It’s the perfect time to get that car, sofa or phone; as long as you really need it. Don’t buy just because it’s a great deal and buy nothing on a credit plan. Shop around, ask for discounts and don’t buy it if it’s not on sale. You shouldn’t pay retail for anything.

Many retailers will offer 0% financing (or 3, 4 or 6 months same as cash) on expensive items like big screens & appliances. Do it, but obviously, pay off the balance before they start charging interest. Have the money in a money market account the day you buy.

Car dealers are offering everything from company stock to 0% financing. Still, watch out for extended warranties, undercoat protection, security systems, etc. Buy with as few options as possible – add them later if you want. The easiest way for a dealer to upsell you is by “not having” a basic car on the lot. Tell him that’s okay, you want to order a car. Then watch the discounts fly. The one thing a dealer wants least is another car in his inventory.

If you have to sell a car, calculate the loss into the price of the new vehicle. And of course, don’t trade your old car in. Sell it on eBay Motors, Cars.com or Craig’s List.

If you’re in long-term contracts for services (cell phone, long distance, cable), renegotiate. Tell your provider you might have to cancel if you can’t reduce your expenses by 10-15%. While you’re at it, do you really need 87 channels of HBO?

When aren’t you a buyer? Health insurance premiums rise as coverage shrinks. Shop around and change carriers annually if it means keeping your premiums low.

If you’re a seller:

You don’t have to be the cheapest if you’re the best. We’ve all experienced bad service, so much so that when we’re treated with respect it stands out.

Do you have to pay Nordstrom & Ritz-Carlton prices to get exceptional service? Good service doesn’t have to be expensive, just personal. The most common customer service complaints are:

1) Being placed on terminal hold, being transferred to too many people who can’t solve the problem, never getting to speak to a live person, never getting a call returned.

2) Inconvenient appointments, cancellations with little or no notice, being kept waiting.

Solve these issues and you’ll see repeat and referral business. If you can’t pinpoint your weakness, create a customer feedback system.

When a problem does happen, prove your commitment:
-Address the problem immediately
-Take responsibility to fix it
-Tell the truth even if it makes you look bad
-Fix the problem quickly even if it costs you money or time
-Keep the customer in the loop

Position yourself. It won’t be a buyer’s market forever.

If you’re worried that you’re going to be just another victim of what’s looking more like a double-dip recession every day, act as if you’re starting all over again.

With credit tightening, previously unassailable banks losing solvency, and even government bonds becoming risky, it’s tempting to remain static. But opportunity always exists – only now the way to embrace it is by riding the wave of creative destruction.

The market continuously re-invents itself – that’s capitalism.  Old, complacent companies & technologies outlive their usefulness and give way to new, dynamic ones; ugly, unattractive K-Mart & Sears with their uninspiring product lines yield to the sleek suburban facades of Target & unmatchable high-volume prices of Wal-Mart. IBM’s stodgy mainframes are rendered obsolete by the personalized convenience of Microsoft and an operating system accessible to almost everyone.  Top-heavy, union-whipped, lugubrious GM loses market share and consumer confidence to the famed efficiency and more workable business model of Toyota.

Examine your business model, and determine which old ways you’re still hanging onto.  Even if you’re not Hindu, take a lesson from Shiva and clean house.

1) Cut expenses. Look at everything.  After you’ve made the first series of cuts, repeat – only this time, eliminate all the items you didn’t have the guts to cut the first time.

2) Rethink your message.  Today, customers care (or should care) a lot more about value than image.  Can you deliver more value with fewer resources? What incentives can you offer to loyal customers? Give your customers a compelling reason why they have to do business with you.  You’ll still have to compete on price, but that’s a lot easier of clients are already sold on you.

3) Recreate your business.  What one thing that no one else is doing should be done? Pretend you’re starting anew. Examine every aspect of your business model. Don’t think that just because no one’s ever done something, that something can’t work.

4) Get support.  Seek out similarly minded people to brainstorm with. Contact your role models and mentors, whom I know you have and speak to regularly.  You might even end up doing business with them.

5) Be fearless.  Turmoil and uncertainty hit everyone eventually.  The only way to grow and learn when they hit you is to face your fear and move beyond it.

Have you ever looked at someone and thought: “I’m smarter than that guy; why is he more successful than me?”

Being smart is not the only factor for success, nor is it the primary one.

Desire is the path to success.

If that sentence has you stumped, it’s time to read (or re-read) Think & Grow Rich by Napoleon Hill.

Hill’s basic premise (passed on to him by Andrew Carnegie) is this: Focus on your outcome to the exclusion of everything else.  Be willing to do anything to achieve your goal.  Your craving for the result drives everything you do everyday.

A great example of this is demonstrated by the character of Susan Walker in Miracle on 34th Street*. The 1947 movie featured single career woman Doris Walker and her daughter Susan.  Despite Mom’s insistence on indoctrinating Susan into a life of working for the man and accepting her lot, Susan believes things can change-if she wants them to badly enough.  Susan prevails, with the help of Kris Kringle, when she draws a picture of herself, her mom and her future stepdad in their dream home a drawing that comes to life.

If your goal doesn’t make you yearn for it-you have the wrong goal.

Take a look at your overall success goal.  What is the object of your desire?

Write it down-say it out loud and write down your reaction.

Did you get excited or scared?

Did you smile when you said it or frown?

Did you say it out loud but heard a voice in your heard scoff at ever attaining it?

Did you hear someone else’s voice?

Each successful person has the following 3 characteristics (in descending order of importance):

*a crystal clear goal

* An overwhelming desire matched with a willingness to do anything to achieve that goal

* The talent/knowledge/skills to achieve the goal

Look for coincidence & inspiration. Your subconscious creates these events to keep you moving in the right direction. When you’re on the right path, working with your talents instead of against them, you know what to do.  Obstacles appear but you find solutions.

One way to speed up the process is to meditate.  Spending quiet, purposeful, contemplative time will let you hear all that you need to know.

Don’t wait any longer.  Start creating your perfect life today.

*I bet you thought I was going to use Ralphie and his quest for a Red Ryder carbine-action 200-shot range model air rifle from A Christmas Story or maybe Lloyd Dobler in Say Anything.

Movies make great examples because they’re written to follow a straight line from want to attain with some obstacles thrown in between for dramatic tension. It’s called escapism because the story rarely reflects reality. Forget the movies; make your own happy ending.

Lessons from the lemonade stand: Contact management, Harvey Mackay & wasting time “As a general rule the most successful man in life is the man who has the best information.” Benjamin Disraeli Harvey Mackay, bestselling author and CEO of MackayMitchell Envelope Company, knows customer service.  He believes you must build a long term, intimate relationship with your customers and to that end he created the Mackay 66: a form on which you list 66 things you must know about your customer. The Mackay 66 is too detailed, but still h … Read More

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