Business advice

Running a business requires a budget
November 29, 2007, 10:15 pm
Filed under: Business Advice

Stop trying to convince yourself or anyone else that you can run a business without a budget. I am still running across ecommerce sites claiming they can’t pay for services because they are start-ups.

Business costs cash to work and grow, or lines of credit if available. Initially, you may have access to resources that make the job easier. Magazines have been started with college interns, Kinkos for presentation and pasted up dummies to present to advertisers.

Ecommerce became a buzz word around the time of 911. Somewhere, somehow the word was spread that all you needed to start a business was a website. If you already had a Net hookup and taught yourself web design, then you are on your way. The proper retort to that statement is: well, maybe.

We also have to consider Microsoft’s beginnings along with Apple and others of their time. Many read the story and think, if someone else can do it so can I. The aforementioned examples are the exception to the rule. These startups, along with similar ones, had products the world seemingly had been waiting for. They had the product and the timing. They also had more than the usual dose of luck.

Ok, maybe you have your site up. You have learned how to use a digital camera and you are showing off handmade items you and your friends make as a hobby. Ok, let’s stop here. Even if you manage to pass around business cards and chat this up enough so that you start getting orders, then what. It’s all fine and good when the items are sitting on your kitchen table – they have to be shipped. Who is going to do the packaging, the record keeping and the shipping? All of this costs money. Your family members are eventually going to tire of staying up all night doing these tasks.

After your initial inventory is gone, what now? Your friends are going to tire of working around the clock for additional orders. You will need a Plan B for additional production. There are hobbyists that wouldn’t mind making some extra dough. However, this requires a budget .

There are others who think they can start a magazine or a newsletter without money because they only view it as ‘something’ they are going to post on the Net. Things don’t go well unless you can pay the writers to produce and pay for marketing to get traffic coming to your site. We all know about Google ads, but they don’t do you any good unless you have a good number of daily visitors. It’s takes, patience and yes, money to make that happen.

Time and again alleged publication entrepreneurs solicit writers telling them they are a start-up so they can’t pay. This should never be the writers’ problem. It is unethical to ask someone else to take on your problems. If you want someone to produce anything for free, then you offer them a percentage of your business once it is up and running.

There is, however, nothing wrong with the concept of having a test run. Sell a small mix of products and you then have the numbers to prove to potential investors that you have a waiting market.

Another misconception that the Net seems to have sprouted: you get a great idea and folks are going to come running ready to buy. The field of dreams concept works only in baseball. You cannot sell or advertise an idea unless you are another one of the thousands of scam artists using the Net.

Make a plan. Try a test run if you have the resources. Then expand your business plan and start shopping it around. I attended a session of SCORE years ago and I was covering their advice program for a local newspaper. They allowed me to sit on a couple of their interviews. Their reasoning was basic. What have you got? What’s the idea? How have you tried to market it? What are your projections for sales? How much of your own money have your already put in to it? They would either advise them to go back and do some more work on their business plans or recommend possible funding choices.

Guess what folks? This common sense still holds 20 years later. If you think it doesn’t, you are in for a very frustrating time.

For further examples of my work:

Laura Bell



Foreclosures: why?
November 26, 2007, 8:43 pm
Filed under: Uncategorized

I was checking on the latest oped additions to the New York Times and ran across the oddest article. Well, at least I thought it was odd. The rest of the country’s liberals will probably cry a few tears over it. The author predicted the expectation of over two million foreclosures next year. He inferred the whole problem was tied to the sub-prime loans, but I have my doubts.

He had a discussion with an elderly woman facing the loss of her home because of a refinancing mortgage she couldn’t keep up with. She lamented that she was going to ‘lose her home.’ Apparently, no one ever informed he the home still belonged to the bank.

I am not going to argue that the explosion of the sub-prime mortgages has not created a mess that the world is scrambling to clean up. But, there is more to this. There wouldn’t be a problem this big if there common sense was being used in the realm of buying and selling real property.

The real estate bubble has been in the process of bursting for quite awhile. The world chose to stay in denial. Prices weren’t increasing as fast and homes were staying on the market. Along came sub-prime loans. And, that’s not all. I recently learned that a young woman I knew had gotten a loan a couple of years back requiring no down because she had a good credit rating at the time. She and her husband are now behind in their payments.

Nonsense has prevailed. Loans made with higher rates; loans with no money down, loans with variable rates, those with balloon payments are all ticking bombs. The goal seemed to be to put folks in homes no matter what. They had bad credit. There was a hope they would stay in the home, make payments and increase their credit rating. Well, folks with bad credit have a tendency to be poor at managing their finances. Bad habits die hard. Shock oh shock when a few years into the loan, the payments are either late or missed.

Easy-to-get-loans for those with questionable credit along with the decrease in prices are two sticks of dynamite rubbing together. Then, there are the loans that were made for those with good credit that didn’t demand down payments. This put people into homes without being able to achieve any equity for many years. That provides a situation where owners are going to be just that quicker to walk away from the dwelling they once imagined to be their home. Without any equity, you are also left without any leverage when it comes to any chance to refinance. The only thing you are left for years is a mortgage and a roof over your head which could disappear if there is a blip in your cash flow.

Deals without equity are not new. This began in this generation about the time I started covering real estate in the early 80s. Prices have inflated so high along with interest rates, owners were sitting on properties that couldn’t be moved for love nor money. Owners and brokers came up with a way to get that title transferred. It was known then as wrap-around-mortgages. In many instances the sellers held the paper until a second could be paid off. The seller in those instances was choosing a monthly payment in lieu of being stuck in a property they no longer wanted. Variations of this craziness have been going on ever since.

Increased pressure/regulation is needed on every person involved in real estate deals. This includes agents, brokers, escrow trustees, mortgage brokers/bankers all the way down to the appraisers. Each of these individuals makes money every time a deal closes. They have a vested interest to go along with the flow. It is obvious by now that no one has the guts to stand up and shout: “…this is a risky deal.” If someone opened his/her mouth then they would not only lose out on that deal, but future deals would go elsewhere. The whole industry needs to be called into question.

Congress is arguing over what they are going to do to bailout this mess. The California Governor is also putting his two cents into the mix. It is going to take awhile to unravel. Those involved in the real estate industry can certainly feel the pressure to wise up and put together less risky deals. They will eventually get tired of reading about themselves in the paper.

There are also the consumers willingly sign anything put in front of them if it means getting what they want. Want to take that route? Then, don’t whine when the foreclosure notices come in the mail.

For more examples of my work:

Laura Bell


More on the Fed’s actions
November 16, 2007, 9:11 am
Filed under: Business Advice | Tags: , , ,

It appears folks are worried about the latest Fed’s actions and so much so that there was a question about it recently on Linkedin. That’s what gave me cause to think about it again so soon.

Lowering the discount rate is one of the three ways the Fed has to increase the money supply. The others include buying outstanding T-bills from consumers and lowering the percent banks have to keep on deposit, thus allowing them to lend more.

The writer on Linkedin was worrying, prematurely, that now there was more money in circulation there would be an immediate push to increase our inflation rate. He had a mother on social security and was projecting troubles that would impact her ability to pay her bills.

Reactions to changes in the economy tend to provoke citizens who like to find things to worry about. Unfortunately, many are big traders on Wall Street and tend to do more damage than those of us sitting on the sidelines.

This man’s worry boils down his belief that more money in the money supply automatically creates an inflationary reaction – a rise in prices. Ok, let’s take a breather here. First off, nothing like that happens immediately. Secondly, economists never have been able to agree on what causes inflation or in some cases, what it is.

The Fed’s reasoning for their lowering the Discount rate is their concern over the fallout and continued postulating about the troubles related to the sub-prime mortgage fallout. If they hadn’t lowered the rates, it could have meant a continued slowdown in the economy. This means that both consumers and investors start to think twice before either spending, borrowing or investing. These actions will push a slowing economy into a recession if the effects last long enough.

The Fed is well aware of this. This doesn’t mean that their actions have averted a disaster from this mess. England’s economy is also suffering since their mortgage brokers, or what they are called in the United Kingdom, were also horsing around in the land of stupidity when it comes to granting mortgages. Do not place the blame on any one party when it comes to this. All consumers are not so stupid that they are going to sign on the bottom line no matter what. There has to be an equal share of this nonsense. Let’s hope that mortgages brokers, and all those involved in the industry, will return to some sense of sanity.

However, if the Fed hadn’t acted, there would have been a slowdown on: hiring, expanding new business, shopping at the end of the year and trading on Wall Street. A slowdown means less for everyone and a hard row to hoe for awhile. The recession of the early 90s cost me an inheritance as it was all I had to live on. I know no one wants to see a rehash of that time.

Let’s go back to inflation worries. There are those who will swear on a stack of Bibles that if there is more money floating around, it means sellers are immediately going to sense an alleged willingness to spend more of that money on their products. Over the long haul, a decade for instance, this might be true, but it is not a current threat.

And, for those who haven’t been watching because they send someone else to do their shopping, a rise in prices has been around for awhile. Grocery increases are killing my limited income. I don’t know about yours. I went to buy hamburger meat the other day and almost fainted at sticker shock.

However, a rise in the Consumer Price Index (CPI) the current accepted definition of inflation, means there will be continued growth. Folks will buy more and investors will build. I checked the latest CPI figures and they are currently around the .4 percent level monthly. Unless this increases, I wouldn’t be that worried.

It’s the Fed’s job to try and maneuver the economy’s oars so we don’t float too far into a downturn or too far into increased prices. It’s is a mighty sticky proposition.

For more examples of my work:

Laura Bell


Isn’t some money coming in better than no money coming in?
November 11, 2007, 11:45 pm
Filed under: Business Advice | Tags: , ,

This question was asked of me recently regarding a mutual unemployed friend. She didn’t take into consideration that he was receiving unemployment. So, he had some basics covered. You might want to consider a low-ball offer if in truth you have absolutely nothing coming in.

There is an under-the-current problem with this question which most folks never understand and end up making wrong decisions their entire lives. (They ignore opportunity cost, which is simply putting your hours in this case to work on one job. This keeps you from working the job you really need.)

They sit and wonder why there is never enough money to cover the bills. Some try coping by working overtime. We all know what happens to that time. The majority of that money ends up in the hands of the IRS. You can always open up a small business so that you get a bigger tax return. All of these efforts to manipulate your way around the problem you have created are attempts at getting around an economic principle. You can bluff your way around it for a short time. It is going to get you in the long run, no matter what strategies you employ.

If you take a job you really can’t afford to take, you have let opportunity cost interfere with a potential profitable life. When you take up your eight hour days on a job that doesn’t cover expenses, you are headed for disaster.

I took a minimum wage job eons ago in retail. My checks were suppose to increase when I started selling. Well, the amount I sold was so little, it amounted to a minuscule addition. It turned out that after taxes, my weekly check didn’t even cover the babysitter’s salary. We went through two months of bouncing checks all over town. I went into a bank branch one day trying to just cash my check and was sent away because our account was in the hole. That wasn’t quite as bad as trying to cash a check at our long-standing grocery store. I ended up having to leave the food. I was handed bounced checks from my husband they had been holding until one of us showed up.

None of this would have happened if I knew what opportunity cost was at that time.

Do not accept a job or work project that is so far below your expenses that you are in effect giving away your time. I once had a friend who was a perfectionist. She created a monthly newsletter for a large auto dealer. She was getting $500 as a monthly retainer. She met a business coach at her local Chamber. He volunteered to help her find out way she had no money left over at the end of the month. It turned out that she spent so much time on this newsletter that her hourly rate turned out to be about $5 an hour. This was an ongoing project. The opportunity cost of spending all that time to make things perfect, meant that she was pricing herself out of business even though her contract read $50 an hour. Spending too much time left little or no time to get additional clients.

Grab a job or project that pays you below what you need to make and you are putting yourself in a hole from which you may never climb out of. Once you are tied up with a gig that is doing nothing but burying you deeper into debt, it is hard to find the time to do a sufficient job hunt for something better.

I have an old friend who is also currently unemployed working on another teaching credential. I suggested he take on some temp work to tide him over. His response was quick in telling me how much money he needed to cover his daily expenses. He knew temp work wouldn’t do the trick.

It’s very easy to make a quick judgment when you are in a financial strain. Now, that you have this information, take a little more time. You will be glad you did.

For more examples of my work:

Laura Bell


Nobody teaches you how to retire
November 7, 2007, 8:40 pm
Filed under: Business Advice | Tags: , ,

This is a new lead on a prime-time television commercial for an investment group. This is a truth that describes our society. The question is why?

My two cents is that this lack of our knowledge starts in childhood. My mother taught me enough about money that I could have been rich and ready to retire, but my husband’s mother didn’t have a clue. That’s my excuse.

We can help others before it is too late. Education about money needs to start at an early age. As our nation’s children mature, we need to explain the horrific future they will have if they take on a partner without the same ideas about money. Disaster is the reality.

My mother started me out with an allowance at 12. Nowadays, of course, kids get allowances at an earlier age. I was taught how to budget the money. I had budget envelopes. One was labeled ‘savings.’ Any time my mother checked I would be in big trouble if that envelope was empty. Just think how better off kids would be today if they had learned this simple lesson.

This is the beginning. And, it is only the beginning. Knowing how to budget and knowing that you have to save part of your cash opens the door to being a step ahead of the rest of the world, who spend their lives pay-check-to-paycheck.

Let’s start with a great axiom I learned from a stock broker who was one of my public relations clients. He used to write advice articles that I placed in local newspapers. So, I read everything. There are only three ways for you to make money during your life: working for a living; charity or putting your money to work.

Most people are not blessed enough to able to put the majority of their money to work. It doesn’t matter. If you don’t find a way to put some of your money to work, you will worry about cash flow until the day you die.

My son got the entrepreneurial bug at a young age. He put his money to work for the first time when he was eight. He took $2 and bought a bag of candy at the neighborhood convenience store on his way to school. When he got to school, he sold the candy pieces at $.50 each. His guidance counselor wasn’t too happy with his activities. I thought it was brilliant.

Many people feel daunted by trying to find an investment option that will be safe; and one they can afford without breaking their normal budget. It doesn’t have to move heaven and earth. Have friends who like to bake? Join forces using your food budget and start a catering service on the side.

The television show the “Unit” has a group of wives whose activities always involve a dilemma while their husbands are off fighting the latest terrorists. They decided to go into business for themselves one episode, buying real estate. All of them had hundreds stashed in their proverbial cookie jars. They were putting their money to work and reaping a nice profit from it.

Most can’t afford to have a stock account and wouldn’t know what to do if they did. This doesn’t have to be your only possible outlet for using your money. Put your imagination to work and you will find an answer. If, however, investing in the markets is something you see yourself doing, form an investment club. This is another example of pooling your money with others of like interest in order to make a profit .

Without putting your money to work in even the smallest of ways during your working life, you will find yourself in your alleged “Golden years’ relying on charity for your monthly needs. This is also known as Social Security.

If you put your money to work properly, you have a chance to become wealthy or accumulate wealth. I looked up a few definitions on and came across one that was the closest to what economists believe. You own an object that is accumulating value. This can be a piece of art work whose value is going up, a growing company, plots of real estate whose annual assessment shows an increase in value. Not everyone will end up wealthy. But if they learn how to put their money to work, they can obtain a resource that will accumulate value over the course of time. Bill Gates, of course, didn’t have a clue at first how valuable his rights to an universal operating system would be. The rights to DOS was the launching pad to his wealth.

Some people start off dabbling in real estate and end up with the majority of land in a region. This opens the doors to wealth for them and their heirs.

This all boils down to that ‘no one teaches us how to retire’ because no one teaches our kids how to budget, how to save and how to put their money to work. These days, when one discovers these keys, it is more or less by random happenstance.

Have kids? Got grandkids? Know friend’s kids? As long as you are still breathing, you have a chance to change their future with this knowledge.

For more examples of my work:

Laura Bell


Cheap isn’t always cheap
November 1, 2007, 1:09 am
Filed under: Uncategorized

Some people are just born with the bargain gene. You know the kind. They clip coupons and run across town trying to get in on a sale. They never stop to consider that extra gas may cost more than the savings.

My new roommate cut off AT&T when a new offer came along. She soon learned she spent more time with customer service than she ever did previously. She switched back when a new package-deal came along.

Consumers are not the only guilty ones. Employers tend to look for the cheapest hire on the block. They are looking only at the short term bookkeeping, never considering that keeping that person and training is going to cost more than a decently qualified hire would have to begin with.

The only way to get around the “I gotcha” that is coming down the road is to understand the consequences of the decisions you make today.

Two well-known managers in different industries grasped this concept. Henry Ford, back in the day, didn’t want to have to deal with Unions. He raised wages and lowered working hours. He only gave in to Unions because his wife threatened to leave him if we didn’t. But bottom line, he saw the benefits of paying his workers more. He cost him less in the long run, despite having a fussy spouse.

Back in the early days of the Los Angeles Times, the unions were bound and determined to get their foot in the door. That’s the main reason their wages were higher than other newspapers because the publisher didn’t want the workers to feel the need.

Those industry leaders knew the value of looking at the long run consequences of their decisions. Hopefully, you can get a few ideas and change your thinking.

Bargain stores, such as the Dollar and 99 cents store are a great lure for consumers. What many don’t realize as they are plucking in those dollar bargains is they are going to have to come back three and four times to get the same amount they would have paid for half in the regular store. Shop there, but know your pricing.

Be a careful shopper at so-called Christmas sales. Many times, newscasters talk about the after-Christmas sales informing the consumers that they made bad decisions after the fact. A sale is not always a sale.

Offering a cheap price for a service when starting out is fine. Keep your pricing too low for too long and you will have your customer’s wondering why you are not in sync with the rest of the market. Make sure you get some extra perks.(This changes the overall price you are actually earning.) My marketing prof told the story of the gardening service that Jet Propulsion Laboratory hired. Their price was undercut to gain that contract. He asked the chief guy why. The owner answered, “simple.” “I get to use your name on my list of customers. I can’t buy better publicity.”

Learn not to make impulsive pricing decisions, whether buying consumers goods or pricing your services or hunting for manpower. Think of all the consequences before signing on the dotted line.

For more samples of my work:

Laura Bell