Category Archives: economy

March 29, 2010 · 5:57 am

Announcing Entrescape Online

There are a thousand good reasons to start your own business. You may want more toys, need to build a college fund, or want to pay off debt. You may just want to do it for the pure joy of accomplishment. All are good reasons, but probably the best is to prepare for an uncertain future. Rapidly changing technology can make your job obsolete almost overnight. Companies gain and lose by the decisions of their leaders, which may not always be competent or have your best interests at heart. Last, the government has taken a radical lurch toward socialism. Higher taxes for jobholders are a near-certainty. Some predict consequences even more dire.

Some people I talk to think this is the time to hunker down. I disagree. Being frugal is fine, as far as it goes. Investing your money is probably wiser than that jet ski right now, unless you make money riding a jet ski. Buying a used car makes sense, as does shopping around for the best deal on life’s other necessities. None of these will save you, though, when income from your job stops coming in.

I think that this is the time to become an entrepreneur. Forget the stereotype of the steely-jawed hero, silk scarf fluttering in the breeze or the socially-inept genius who invents the next Big Thing. Think more in terms of the regular person, like you and me, who knows how to do some things better than other people do. Ones who may want to hang on to that job while they build a side-stream of income.

Where to start? Learning, that is where. My dream is to help people who want to build a business learn how to do so easily and affordably. Entrescape now offers a course in fundamentals for entrepreneurs. More are being created and will be available over the coming months. There is also a free guest login to the Entrescape community, where we will be providing a forum for questions and free limited access to course materials. Visit us at entrescape.com and release your entrepreneurial spirit.

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March 4, 2010 · 5:45 pm

The Greatest Risk of All

Risk is a funny thing. We all seem to have a different idea of what things are risky. When I took flying lessons, the Cessna 152 my instructor rented happened to be stressed for aerobatics. I have never done anything quite as much fun as learning cloverleafs, barrel rolls, and loops. Not once did I ever feel in danger. Most people I talk to say they would have been petrified.

You know what scares me the most these days? The idea that I might quit taking risks. I have blown out a knee in a martial arts tournament at the age of 45, gone broke (twice), and gotten pounded in my first real estate deal. I have accepted a job offer only to discover that the people who hired me were liars and thieves. For heavens sake, Noel, would you just STOP IT? Stay home for a while and make a cup of tea. It’ll do you good.

No thanks.

My forays are nothing compared to many people. Adventurers, great entrepreneurs, and free-spirited thinkers abound. So do the timid–those whose idea of risk is renting a movie they may not like. Staying huddled up in our jobs seems safe. I have to admit that there have been times when I wanted to crawl under the bed, especially when that little voice said, “You idiot. What on Earth made you think THAT was a good idea?” It didn’t help that most of the people I knew agreed.

Ironically, being safe is the greatest risk of all. Take some risks. I don’t mean foolish risks–drunk driving is stupid no matter how you dress it up. Car surfing, too. (Watch Dr. G. Medical Examiner sometime on the Discovery Channel for a view into the aftermath of that kind of thing.) Sinking all your money into an investment you do not understand also qualifies.

Flying upside down is dumb–unless you know what you are doing. Then it is fun. Know what else? Flying upside down, stalling the plane out, and getting into a spin on purpose gets you ready for an emergency in which that happens for real. Relying on a job as your sole means of income may seem safe, but that strategy may be the riskiest of all. Get yourself in tight situations intentionally. Make some mistakes “on purpose” and learn how to deal with them before you have to. You’ll be glad you did.

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Terry would probably agree to go ahead and cross over J

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February 19, 2010 · 7:49 am

Pension? What Pension?

I read something interesting yesterday in the Wall Street Journal. Turns out that states are facing a $1 trillion gap between the money they have promised pensioners and the money they have set aside to pay them. That does not count the massive investment losses they faced in the second half of 2008, from which they have not recovered.

Did I say “interesting?” Let’s try “criminal.” I, for one, have not believed states would be able to pay pensions for some time now. Some third-grade math was all it took. The zeros were a little hard to manage until I saw this neat little analogy on the national debt clock web site. If you were to spend a dollar a second, it would take 12 days to spend a million dollars. Now, how much time would it take to spend a trillion? (I’ll wait for you while you calculate this.)

Back? OK. The first thing you found out was that your calculator does not work with that many digits. If you are math-compulsive, you got out a piece of paper and started to work. If not, you waited for my answer: 32,000.

YEARS!

In other words, don’t wait for that gap to be filled. Ain’t gonna happen. Here’s why. If states start to go bankrupt, something that was unthinkable until now, the money obviously will not be there. But the Feds! They can save us! After all, they can always honor their obligations–by printing more money. There, my friends, is the real problem and a good reason to be worried about your retirement even if you are not a public employee.

Historically, printing more money has been the favored solution of governments when things go bad. They say they won’t do that, but in the end they always do. From Ancient Athens to Zimbabwe in 2008, the result is always the same–a swift and ugly currency crash wherein money becomes worthless overnight. Zimbabwe’s inflation rate reached 98%…PER DAY. That means it took slightly over 24 hours for prices to double.

There is only one solution at the national level, and that is for politicians to face up to the fact that they have promised way more than they can deliver and cut expenditures. Whew, that was a good one. I crack myself up every time I say it.

There are some things we can do, however. It is sometimes said that the best attitude when going into battle is to pretend that you are already dead. Do what I do and pretend that your retirement is already dead. Figure out how to retire without it. One person I heard of recently bought two haircut franchises even though she is years away from retirement. Why? Because people will probably buy haircuts even when they can’t afford luxuries. And inflation? Well, if we experience true hyperinflation, all bets are off, but she still stands a better chance than most because her prices will rise accordingly. If none of this comes to pass, so much the better. She will have her company retirement and her franchise income.

Learn to make money in a side business or invest in things that stand at least some chance of surviving the coming earthquake. If you think the politicians will save you, I have a business deal I’d like to discuss with you…

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Terry is constantly amazed at how little people learn from history. He is also amazed at what he saw in New Orleans in 1976, but that’s another story.

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January 28, 2010 · 7:42 am

Start a Business NOW

There is one book you must read if you worry even a little about today’s economy. The title is Empty Nest Egg: Why You Must Start Your Own Business NOW. Yes, it’s my book, but if it weren’t, I would still recommend it. Here’s why.

First, having a business to supplement your income is just plain common sense. We all know that “things” happen. Loss of a job, relocation of a spouse, and the child that arrived off-schedule make life interesting and scary. Extra money never hurts.

Second, we may not have jobs if things don’t turn around soon. You would think mine–being a university professor–would be about as stable as you can get. Not so. The State of Illinois is furloughing employees on some campuses to make up a budget shortfall. I read recently that we rank second only to California in terms of how badly we have screwed up our budget. Yours Truly is busy hoping for the best and planning for the worst. You should too.

Third, there will come a point at which we are either no longer able or no longer willing to work. My grandmother is 99 years old. She is truly astonishing, getting around better than many 60-year-olds. I kind of doubt she could get a job, though. I remember her when she was my age, and it is a little unnerving to think how fast the intervening time has passed. Retirement will hit us before we know it.

In my view, a time of reckoning is upon us all. As a nation, we have chosen to pretend that we can spend without restraint, make the rest of the world behave, and protect everyone from everything. The bill is coming due and our collectively disastrous decisions will come back to haunt us. For those who continue to think a J-O-B is their only means of income, life may take a nasty turn. For those who see the coming disruptions as an opportunity to prosper by starting a business, life may get much better.

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Terry practices what he preaches. After he found out about the furloughs, he checked to see if Chippendales was hiring. No such luck, so he writes books and teaches people how to start businesses in addition to being a professor.

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January 21, 2010 · 7:46 am

Build a Business Model That Works

If you know what unique value you bring to others, it is time to turn that into a business model. A business model is to a business as a toy jet is to a real one. The toy does not fly or drop bombs, but given sufficient detail, it gives us a good idea of how the jet functions. Your business model needs to include a description of how raw materials (even intangible ones like ideas) are turned into value-added products. Sometimes, a graphic depiction is helpful. Keep it simple, along the lines of the following:

Stuff goes in > I make it more valuable > Stuff goes out (and customers pay me for it)

For example, I take flour, sugar, eggs, and other stuff, mix it together, shape it up, and out come wedding cakes. Separately, those things are not worth anything like what the beautiful cake is worth. Sound silly? Well, I have worked with any number of people over the years who have not a clue what they are really doing. Their business model is vague, too complicated, or simply won’t work.

Start with figuring out your “input.” In the above example, this is the flour, etc. Where do you get it? The store? Do you grow the wheat and sugar cane yourself? Raise the hens? Once you know that, you can figure out what those inputs cost you.

Next, make those inputs more valuable. Remember that you are the magic ingredient. If I were to take those inputs and attempt to make them more valuable, it would look like Armageddon in our kitchen and my wife would throw me out of the house. Wait, she did that yesterday. Well, you know what I mean. If you are good at that kind of thing, the result would be a picture of beauty and good taste.

Last, figure out how to sell what you make. You might cater cakes, sell them in a store, or bake them on site. You might deliver them in a van. No matter how you do it, remember the customer. The way you “harvest” the value depends on what is convenient for the people who buy.

Drawing out your business model may seem unnecessary, but trust me, this is important stuff. Many business owners try to do it all. Let’s say that Wilma of Wilma’s Wedding Cakes grows her own wheat, raises her own chickens, and grinds her own sugar cane. Not only that, she delivers each cake by hand and sets it up on site. Now Wilma is great at baking, but only fair at farming and delivery service. She is wasting her time and energy doing things that other people could do better. To make it work, she would have to charge much more because it costs her more to, say, deliver a cake than a delivery service.

In other words, pick out what you do best and focus on it. There are thousands of people out there ready to do everything else. When your business model starts to look like a clean, sensible proposition, it is time to move on to more detailed planning.

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Terry takes specialization seriously. He won’t change light bulbs in his own house because writing is what he does best. That is why his wife threw him out yesterday. Since he needs a new place to live, maybe you could sign up for a course at entrescape.com. Thanks. It’s cold outside.

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January 19, 2010 · 7:55 am

Destination You

So if social networking leads people to you, what then? In a sense, the destination is always you. No matter whether you sell dog food or surgical instruments, you and your values are a part of the exchange. The first step in creating a second income is to ask yourself what benefit you bring to others that they cannot easily get elsewhere.

A local business here where I live is a great example. Some time ago, I talked about the lady who founded Specs Around Town. Tired of being unable to find eyeglass frames she liked, she starting selling them by appointment, visiting customers in their homes. Who’d have thought it? After a while, she earned enough business to open a boutique, though she still makes “house calls.”

You just can’t find a better example of zeroing in on something unique and personal to build a business around. Her frustration helped launch a thriving business. That prompts the rest of us to ask ourselves, “What can I do to help other people?” Wish there were more sugar-free recipes? Start a web site/blog discussing that topic, then write a recipe book. Think there are not enough clothes tailored for people with disabilities? Make some and start going to people’s homes to sell them.

The world needs you–your solutions, your ideas, your contributions. Figure out how to start pulling people in to your gravitational field and making their lives better. You will add to your own wealth and make the world a better place just by being you.

__________

Terry thinks you can do it. Prove him right.

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January 15, 2010 · 7:27 am

Specific Gravity

The purpose of a social network for business is to drive traffic to a particular place. When we interact socially on Facebook or some other network, we send people all kinds of places–funny sites, music videos, and games. Nothing wrong with that, of course. The chaos and spontaneity are part of the fun.

A business is different. Using social networks to promote a business means you have to know what you want. Specifically, you want people to do something. Let’s say you find homes for abandoned pets. At this point, it does not matter whether it is a for-profit business or not. What is your goal? I like to explain this with a story–how I got Moose. Not a moose–Moose, a dog. The funny thing about this story is that not one bit of it involves the Internet. It does show, however, that networks can lead to good things.

I took my Labrador Retriever in to the vet for a nail trim. I know, I could have done it myself, but I hate doing it almost as much as Cody (the Lab) hates having it done. The price was right and off we went. While waiting in the lobby to pick him up, I saw pictures of dogs that needed a good home. Cindy and I were not even looking for a dog, but a cute little Shetland Sheep Dog caught my eye. When I told Cindy how cute this dog was, she wanted me to go check her out.

Bella, the Shetland, was already adopted when I got to the kennel, which also served as a shelter. But they told me about a no-kill shelter outside of town. Only an hour before I had not even a thought of adopting a dog, and here I was driving 14 miles just to see if there were any similar to Bella, whom I knew only through a picture. No sheep dogs or similarly cute small dogs were there.

There was, however, a humongous shadow cast from the front of one pen. In it was the largest dog I had ever seen. The attendant said, “That’s Moose.” Realizing she had probably heard the response, “No, that’s a dog” before, I refrained and took her up on her offer to take Moose for a short walk around the yard. Well, one of us took the other for a walk. In the end, I called it a draw. Moose, an English Mastiff who may well top 200 lbs. when he is full-grown, is now part of the Noel household.

A network, whether based on the Internet or just word-of-mouth, is like gravity. Objects enter the fringes of the force and are drawn to the center. Moose, like all the other dogs needing adoption and all the people in the world and all the products and services that exist, are centers in their own right. He just happened to ensnare me because I randomly looked at a picture. From there to a kennel and from there to a shelter and from there to a fabulously happy outcome.

When you make yourself a specific center of gravity, you draw people in. Had the shelter not put pictures in my vet’s office, I would never have even known about Moose. They knew what they wanted– a good home for Moose (and all those other wonderful dogs). And that’s exactly what they got.

As you start your business, think about all the people floating around in the world doing what humans do. Figure out how you can make their lives better by providing something of value. Then, get specific. Become a center of gravity.

Next week: Destination Me

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Terry loves Moose. His wife thinks they are soul-mates. Terry is not quite sure what she means by that.

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January 12, 2010 · 7:39 am

Social Network Nation

OK, I admit it. I am a tech hound. I love what technology has made possible for carbon-based life forms. Within the last six months, I have made contact with friends I had not seen in over thirty years. I have enriched my ability to teach by increasing communication with my students. I have seen tasks that formerly would have taken hours reduced to seconds. All of this courtesy of technology.

Those of you who read my other blog regularly know that I talk a lot about our upcoming economic conflagration. Economic upheaval is distressing. But, like a forest fire, what appears to be a catastrophe is from another perspective a cleansing. Old growth is incinerated in favor of tender and fragile new shoots of life. Animals whose homes were burned to a crisp often return to find a bounty of new food and water sources.

What does this have to do with social networking? Social networking is the new growth straining to get out from under the dead cover of the old economy. If (in my opinion, it is when) the forest fire comes, will you be one of the mammals that learns to thrive or one of the dinosaurs lying on its side, breathing its last gasps?

Here are some things to think about. No matter what your line of work, whether you have a job or your own business, or whether you hug or curse your computer daily, think about how your network of friends and acquaintances works. In other words, what makes your social network tick? In my case, I was astonished that it was so easy to get, and stay, in touch with friends from long ago. I learned things about them that had escaped me until now. My life is richer because of it. Moreover, they have introduced me to numerous other great people.

If you want to be prepared for the future, think about how all the things you do on Facebook and Twitter can serve as the foundation for generating more income. Now, hold on. Before you go spamming all your friends, think about why these networks work the way they do. Why was it so easy to get in touch with so many people? Why do people log on to Facebook regularly? How many people are in your network? If you worked at it, how many could be in it?

Next week, I will talk about your network “destination” and how to increase its value to others. Until then, don’t get burnt!

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Terry is not a dinosaur, but his mother-in-law might be. He thinks you ought to check out the Entrescape community.

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January 6, 2010 · 11:29 am

How Much Money Is Enough?

I used to think so. Personally, I do not crave a lot of conspicuous consumption. My pickup goes just as many places as a Silver Phantom Rolls Royce would, and my bird dogs won’t fit in a Lamborghini. I want for nothing extraordinary, having a comfortable home and everything that goes with that. My profession, being a college professor, is fabulous—perfect for me in every way. All in all, I am a lucky man.

Nonetheless, I find myself unable to do some things, at least for now, that I would like to do. Travel, getting my kids into the best college I can, and maybe purchasing some art seem like good things to want. I also dream of some philanthropy—more than my current income will allow.

In other words, I could always use more money for some noble purpose. How about you? Have you been convinced over the years that always wanting more is bad or that rich people are greedy? Examine that thought thoroughly. Money is not good or bad, any more than electricity is good or bad. An electric current can save a life or take it. Money can buy medicine or crack cocaine. The more you make, the more potential you have to do both good and bad. The choice is yours.

Most of the people who were influential in my life as a child were hopelessly bound up by two conflicting notions. On the one hand, they knew they needed money to live and that more money generally meant better living conditions for them and their families. On the other, they heard every Sunday about it being harder for a camel to pass through the eye of a needle than for the rich to enter heaven, which they apparently took to mean that poverty is a virtue. The result was paralysis on the subject of wealth.

I have come to the conclusion that, like health, there is no such thing as too much wealth. As I shift my mindset toward that way of thinking, I realize that our culture’s ambivalence toward money is counter-productive. Making money is good as long as it supports and sustains our other values. And what we don’t spend on ourselves, we can spend on others.

So how much is enough? Answer: There is never enough. Setting our minds to grow in our capacity to create wealth for ourselves and others is constructive and healthy. And don’t worry about your being corrupted by filthy lucre. I find that most people have precisely the amount of wealth that they have the wisdom to keep. They may temporarily get more, but soon they revert to bad habits and counter-productive thinking. Likewise, if you grow in wisdom, you will soon find that your wealth grows to match your character.

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Terry spends most of his time thinking about stuff. He hopes some of his thoughts make sense to you and help you in some way. If they don’t, he hopes it’s not his fault.

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November 11, 2009 · 7:35 am

Diversify Your Knowledge, Not Just Your Stocks

Unemployment is its highest in 25 years. Some say the picture is much worse and is being masked by changes in the way unemployment is measured. No matter where each of us is on the political spectrum, or whom we blame, we have to agree that times are tough and getting tougher.

Financial advisors almost universally recommend a “diversified” portfolio of paper investments: stocks, bonds, and mutual funds. Before I go on, let me remind the reader that I am neither a certified financial advisor nor do I play one on TV. I encourage people to learn more so they can make up their own minds. This traditional advice may have had some merits at one time. A few people probably made it just fine with such a plan. Times are different now, and there are a number of reason to expand your thinking.

First, paper assets such as stocks can bonk. “Bonk” is a technical term for what happened last fall. Stocks fell as much as 40% People who thought they were diversified got clobbered as their entire portfolios dwindled to a fraction of their former worth.

Second, the “value” of the stock market and other similar investments is partly an illusion. When we put our money into such instruments, we are usually planning to use the money later. If that money only buys a fraction of what it did before, the fact that the market is “up” is true, but useless.

Third, and this may be the clinker, the market depends on levels of buying and selling. Since people who are retiring usually get their spending money out of the market by selling their stocks, the value of those stocks can be depressed when the number of sellers increases. We are about to face a massive amount of selling for that very reason. Baby Boomers will soon be retiring in droves.

This leaves us with a problem. How can each of us build a more stable kind of wealth–the kind that at least buffers the vagaries of the stock market?

Knowledge.

library

Learn all you can now about building supplementary income. You will find that true diversification involves non-paper assets like real estate and precious metals. You will learn why having a side business can help you build real, lasting value. And, you will see that with some discipline and desire, you can survive the coming storm.

— Terry writes this blog because he loves you. Well, maybe “love” is too strong a word, but he’s pretty sure he likes you. At least he likes you well enough to encourage you to learn more about your finances. Terry has not been on Oprah yet, but if he were, he would tell you to visit entrescape.com to learn out how to start your own business.

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