Business advice

Watch out for those bargains; they may bite
March 29, 2009, 11:35 pm
Filed under: Uncategorized

I have been paying more attention to coupons lately.  They are everywhere.  They used to hold a niche in the Sunday paper.  But, now a days, you can’t escape them.  They are part of your receipt at checkout counters.  Watch, for those, as sometimes they are good.  They show up in your email and in your snail mail box.  You couldn’t run from coupons if you tried.

The thing to keep in mind is that many coupons are luring you into buying products you don’t need or wouldn’t ordinarily put on your shopping list.  And the quantities that you have to buy in order to use the coupon keep on increasing.  It used to be you bought one item and you got the discount.  Now, it may require you buying two or three of the same item in order to qualify.

There are also a lot contingency coupons.  The latest one I have seen is buy $25 of frozen food and get a $10 coupon.  Not many buy that much frozen food.  Apparently, there has been a slowdown in purchases of that product.  It would be interesting to see how well that promotion is going.  I wouldn’t fall for it unless I had a large family and a freezer to go along with it.

Then there is the thing about we were all taught that making things from scratch in the kitchen would always save us money.  Well, not any more.  I got in the mood to cook a stew and searched for a recipe.  I went to the store to pick out ingredients.  One small package of stew meat now equals to more than $5.00.  By the time I would have been finished with the vegetables and the needed spices, the price would have been near $15 or more.  Buying one of the skillet dinners frequently advertised on television was only $5.99.  It took only a few minutes to warm it up.  Cooking from scratch unless you find a discount grocery store or warehouse is not good for the budget anymore.

Also look out for grocery stores’ rewards programs.  Most only give you back a small discount after you have bought a couple hundred at their store. And maybe you get the discount sent four months down the road.  Consumers, for the most part, are into instant gratification.

I find myself saving coupons that I might use on a day that I have some extra cash since it’s a product I’d like to have, but in most cases, would pass up.  Kind of the opposite of what coupons are suppose to do for us.

If you happen to find a Sunday newspaper that has coupons you would use without hesitation, then it might be a good idea to buy two copies.  Or, look around to see if someone in your circle buys the same paper and offer to swap for the one’s he/she might use.

Don’t settle for the coupons in the store’s circular or the Sunday paper.  You can Google grocery coupons and find offers any day.  Most sites ask you to enter your zip code, so you have a better chance of finding coupons useful locally.

If you prefer to use a store’s site, there is always the chance you can find a product that your store doesn’t carry.  So, you need to be prepared.

Coupons can be useful, but it takes a fine eye to read the small print and sit back and think before jumping into the fray.  Do I really need this brand?

The evening news in Southern California has been running tidbits on women who are making a name for themselves with a blog or website that deals in, clipping coupons.  They show the results of their shopping.  This isn’t the complete picture.  If this shopper usually earns say, $10 an hour and she has spent 40 hours a month with her coupon thing, and saves $200 a month on groceries, now look at the picture.  She has actually lost $200 in her effort to saves.

I am not saying to give up on bargain hunting.  I am saying to look at the whole picture before jumping in.  A bargain is a bargain if it is a good deal today and 30 days down the road.



Let’s look at the 30s compared to our current economic state
January 21, 2009, 6:25 pm
Filed under: Blogroll, Business Advice

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Let’s look at the 30s and our current economic state

Are we going down farther than we already are? Even though I couldn’t find a reference to farmers burning their crops during that time on the Web, they did. When they couldn’t get any money at all for their hard work, they set their crops on fire. They did hold onto corn since it could be used as fuel. If markets go down so far, then the goods are either handed over or destroyed. That is what we are seeing. The reins of corporations are changing. Let’s hope other businesses, like Enron aren’t abandoned and closed completely. Those who held the reins violated the principle of economic efficiency. If you don’t use those resources to run a profitable business, you lose them.

Hopefully, we wouldn’t get to that point during this downturn. We don’t want to see people burning their homes in lieu of turning them over the sheriff when they come calling.

There is much talk about how Obama is going to jumpstart the economy either via tax cuts or another private economic stimulus package. This is short term money dealing with day-to-day expenses and purchases. We have much bigger problems to churn over.

We had an economy that was running on hot air, sort to speak. It was all based on the premise that prices and value would continue to go up. If value, on real property, durable goods and the stock market, continued then escalating prices would continue. Someone came up with the idea that we needed business plans. Inherent in this concept is that sales will increase dramatically. A limited article on Wkipedia pointed out how much trouble that caused during the explosion. New business owners all envisioned tons of money coming their way. When it didn’t happen, problems; well, you know the story.

Ok, everything, price wise doesn’t go up by large percentages. The price of homes in the 50s rose only about 10k by the end of the decade for the medium range. Prices were stable. There were no inflation worries and we had few sources of credit in that time. We didn’t need them. Stable wages and stable prices make for a happy group of people. No one had informed us yet that we should buy things, other than homes and cars, and pay for them later.

To keep an economy going with the constant use of credit, there has to be a belief that salaries, values and prices will continue moving up into the stratosphere. We also need a population of consumers willing to go along with this vision. All this is to say that we have seen the end of unheard of rise in the value of real property. There is more to this than just real estate. The value of autos has to be also included. I have a feeling that car dealers are going to be about as popular as someone selling sand on a beach. The value on this product is decreasing, and the terms of the alleged dealers are getting more sleazy as the days goes buy. I have seen commercials by a guy hawking cars in the greater Los Angeles area with the promise of selling to anyone for a $95 down payment.

Times aren’t even going to be back where we were even with the promise of tax breaks and more refund checks. Those promises only deal with the short term. They say nothing about the other values we have discussed here. It also doesn’t deal with the fact that businesses are still caught up in the track of projecting gigantic increases in sale volumes. That’s how they were able to pull in investors. If things got, better, than everyone gets paid off, big checks and everyone is smiling. Sales projections are going to have be downsized for future projections.

Ok, what’s next and how are we going to deal with it? The biggest problem in my humble opinion will be acceptance. Can we deal with the idea that things are not going to back seeing the profits that we did with flipping houses, etc.? This is not to say that those folks will die out. There will be a smaller amount of folks trying to make a profit in this market niche. Profits will also diminish in other market niches.

Everything will be in disarray for quite awhile. There is really only one way to deal with all this rationally, one step at a time. Plans for spending, housing, employment and business expansion need to be looked at in a while new manner. Look at what you can afford today with the realization that there may never be more money in the future. There may not be raises coming down the tube. Businesses may continue to shrink. Sales may stay stable, no new growth, at least for quite awhile. Do not make a move in any part of your financial life that will ask for money you may or may not have down the road.

Keep your eyes on the economic forecasts and ongoing changes in the economy. Keep yourself informed like it was a matter of life or death. And, it is, your financial life.

Change is still coming in big waves. Exactly what and how is anyone’s guess until the new president has a chance to settle in.


How does the government mess with the economy?
December 28, 2008, 7:47 am
Filed under: Blogroll, Business Advice | Tags: , ,

We have all heard that our credit problems are because of the government. I don’t think so. Prior to the depression, the government’s attitude towards the economy (aggregate market), was to leave it alone. We all know the results.

Now we have a government that uses fiscal policy (public spending) to adjust the economy. If you have never heard of this, simply Google the term and you will get a brief definition. Previous to the government spending aspect, the only way governments could get money if they needed it was either taxation or seizure of private property.

Fiscal policy/government spending is a tool used by the Federal government. You know the government allocates a good portion of money every year to government contracts. If all this was left to the private sector, things would be worse than they are. Now, I am not saying that I endorse the way the government awards contracts. I’m just saying that they do.

They also have the right to either lower or raise taxes and institute new ones if they are able to get such a law through Congress.

The other side of this coin is monetary policy. Monetary policy refers to how the Federal Reserve’s use of interest rates and the money supply to guide economic growth.

The overall theory goes like this: once interest rates go down; there will be more activity in the aggregate. If interest rates are down it is a green light for borrowers to go ahead and apply for more loans. It also makes it easier for the lenders to get customers to sign on the bottom line. It is an encouraging sign for the stock market. If there is more borrowing, there will be more corporate expanding and an increase in products sold (GNP). When such announcements come out, they, the stock market, respond by having a day where there is more buying than selling.

The Fed has other tools by which to expand the money supply. An expanded money supply encourages growth. (In case you are wondering the definition of the money supply is so complex, it takes an economist to try and explain it. There is also controversy over which figure the Fed uses to make its decisions. Enough already.)

When the Fed feels there isn’t enough money in the money supply, they can lower the banks reserve ratio. All banks have a reserve ratio. The rest of the money they take in, they put out in loans to earn money. You really didn’t think they kept all that money right there all the time I hope. When they are allowed to loan out more, then there is more money in circulation.

Then there is the business of government securities. You have all heard of T-bills and other treasury bonds. The Fed has the right to buy and sell them. If they want more money in circulation, they issue a buy order. Customers with bonds they had been holding go to the nearest Federal Reserve Bank and sell their bonds. They are issued a check, which they are going to go and deposit in their bank. This money prior to this deposit never existed. There is, as we know, nothing to back it other than the full faith of the United States government. The bank, on receiving the seller’s deposit, only keeps its reserve requirement portion of the deposit. The rest is circulated to others who apply for loans. They then take the loan check and deposit in their personal bank. The same thing is repeated until that original check for the sale is exhausted. Now, that money is in circulation, less whatever the reserve ratio was for the individual banks.

As bad as things are in the current economy, if the government didn’t have the tools of monetary and fiscal policy, we would be a lot worse off and have fewer options. When things are bad, we always tend to blame the government. They are doing all they can to keep the wildfire that’s sniffing out our financial system from causing a complete collapse. As I said, the only thing that keeps the monetary system going period is that we have confidence in the United States government. Once that confidence is gone, everything will collapse and we will be looking at a situation that makes the depression of the 30s like child’s play.

The only thing we can do now is take care of our own personal finances and write to the legislators if we don’t like what they are doing at their end. Their adjusting the system is not what caused the mess we are in. We had a bunch of greedy corporate bigwigs who thought they could do what they want and we had a whole financial system that came very close to mirroring Enron.

If the government didn’t have the tools it did when those banks collapsed, we would be looking at a situation close to the end of the movie, “Rollover” in 1982. The whole economic system collapsed and there were worldwide riots.

The title of this article was me being factious. We better be glad that the government ‘can mess’ with the economy. This doesn’t mean that we shouldn’t be watching their actions. There is more on the horizon. We need to be dutiful watchers.

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Networkinghas never been so important
December 28, 2008, 2:00 am
Filed under: Uncategorized | Tags: , , ,

With our world crashing about us, there is only one way not to feel hopeless. You need to have a better golden rolodex (virtual) than the next guy. (I understand that some folks are dong well despite the credit mess. I am addressing this article to the rest of us.)

Networking no longer means scheduling power breakfast or dinner meetings. In fact, you probably don’t have to move out of your seat in front of your computer. You would have to have been hiding in a monastery to have missed the new rage of Social Networking.

There are so many social networks that I can’t imagine the numbers. With my own networking, I get constant invitations to join others. The membership numbers on the majors: Linkedin., Ecademy and Facebook are mind blowing. That doesn’t include You Tube or My Space. The latter two deal more with social issues rather than finding your next position.

There are topics of interest when you login to Linkedin. It amounts to who is discussing what. You scratch your head. I need a job. My mortgage is about to be foreclosed. I don’t have time for this. Questions and answers on Linkedin, allows you to put your expertise out for millions to spot. You may get a job or consulting offer simply based on an answer you write. You may also create a signature line to end your answers with. A signature line (sig line) can list your website, a list of your professional skills and how to get in touch. A very nifty calling card.

The one major opportunity all three have in common is groups. Mind you many networks call them something different. Ecademy refers to them as clubs. They all serve the same purpose as forums did in the past for other online platforms. You can post messages/discussions you wish others to read and add comments to. You can, on Linkedin, post that you are looking for more work/consulting or a full time job. After joining a forum, every time there has been a new message posted, you will receive an email update.

Mass mailings are allowed on Linkedin to your contacts. The system constantly advises you to increase your network. Do you have old classmates or colleagues that may be a part of the system that you haven’t heard from in years? This is the time to connect. When signing up, send out invites to all those who may have a desire to join. The more you are active on any of the networks, the more invitations you will receive from others who are impressed by your comments. It doesn’t matter if you really know them or not. (Although Linkedin, constantly reminds you not to join with those you don’t know.) Once a need for a mass mailing comes up, you can send the same note to all of your connections, as well, of course, to the general population. You can’t think of a reason for this? How about: I need an expert to help me with my mortgage, I need some more consulting work in my expertise, I just lost my job, know any recruiters who work in my area? As you get started, you will think of others.

If you are thinking of: opening a new business, need to expand the business you have, need additional employees, need a consultant, want to just brainstorm, you will find help in one or all of the social networks. Some recruiters use this media as their preferred method of recruiting. There could be job postings out there right now that you are missing out on because you haven’t jumped aboard the social networking bandwagon.

It’s quite painless. There are free accounts on all of these networks. If you want to be very aggressive with your messaging and postings, then you will find the need to pay for more access. I haven’t had the problem of feeling limited yet. If you have thought about it or heard about it and wondered what it was all about, it’s time to jump in. I can’t imagine anyone who can’t benefit from this great networking tool.

I most add a cautionary note. When it comes to platforms on the Internet, they can be very addictive. Don’t find yourself spending hours here without reaping the rewards you were seeking when starting out Be patient and wait for those email updates.

Happy networking.

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The wealthyput their money to work
December 27, 2008, 11:17 pm
Filed under: Blogroll, Business Advice

However, the only thing we are teaching our children is how to spend money. What if anything have you done to show your kids that money can make our future better? We need to learn how to put our money to work.

There are a few ways to go about this in a way that the kids think they are just having a good time. Monopoly has been a family favorite for many generations. It teaches anyone willing to listen and apply the logic, how to make your money to work. It also shows that if you invest wisely, you will then be collecting rent.

There has been an addition to this mix. “The Rich Dad Poor Dad,” game teaches cash flow basics. You can get more information about this game and related reading materials by Googling the title.

The majority of people look at money as a way to pay for their daily living expenses. The problem lies is that viewing money this ways means one thing. You will be spending the rest of your life working to do just that.

You need to look at what you can possibly do generate cash flow for the future that doesn’t require you showing up at a ‘normal’ 9 to 5 job. Reasonably speaking most of us are strapped for cash and worry about making bill payments rather than what we can do to change the future.

Let’s start small. As a matter of act, let’s start with a project the kids can also be involved with. Of course, if they do part of the work, they will get to keep part of the profits. After playing a few rounds of these games, sit down and have a chat with the kids.

As a group, you are going to try and put a few of your dollars to work. If it is in the warm weather, suggest that you will help the kids build a lemonade stand. You might also add that you are going to add a batch of cookies for extra sales. You do some research and find out if anyone else in the neighborhood is doing anything similar. I bet you can put your collective brains together and find some innovative ways to make this lemonade stand different from others; and as such draw customers.

It just might be that this is such a success that other kids get the idea to start a similar one. If you register this lemonade stand as a business, actually filing a DBA, doing business as, with the state, then other kids will not be able to use the same name. If such an opportunity does open up, you might have found a door to start a franchise of specialized lemonade stands.

If there are no kids to bring into mix, here are a couple of fairly easy ideas for adults to start out with. They will also be easy on the budget. Take a look at Penny Stocks. They are labeled such because of the low cost. Find someone who is an expert in the field and decide if this is a road you wish to take. Do your own reading before deciding to go with an advisor.

If you work in an office, I bet you could find out very easily what types of baked goods are favored with your co-workers. I know who wants to bake in this day and age? If you are good at pastries, cookies, brownies, bake up a sampling of what you think might appeal to your coworkers. Have a plate by your desk, labeled ‘free samples.’ Be explicit in letting them know, the free samples are one time only. Find a price, if successful, that will cover costs and let you pocket some money, profits.

There are also investment clubs. A group meets, along with the help of a financial advisor, to layout the goals of the group. Don’t join a group unless the monthly dues are something you can handle. I had a friend involved once. The dues were $200 a month. The idea of the group is to gather a pool of money and invest larger amounts than you could possibly do on your own. It cuts down on potential risk when it is divided among club members.

Before a club like this launches, the group usually meets and decides what types of investments they are interested in. Are you going to invest in socially conscious areas? Are you staying in one particular industry? Also to be decided are monthly dues, the frequency of meetings and then penalty for non attendance. These are the very basics.

Do not be fooled into thinking that at least Social Security will be there for you on retirement. I have a son in his mid 30s who told me his recent letter from Social Security about his potential retirement had a cautionary note. By his retirement age the fund will be broke as it is in the red already. There are more people retiring than in the workforce, so this situation is going to get worse.

If you don’t grasp the fact now and put a plan in action about putting your money to work, you can plan on the fact you may never be able to retire. It isn’t easy to change your way of thinking. The only way is one step at a time. You will begin thinking like the wealthy.

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Can we benefit from the subsitution effect?
December 27, 2008, 3:31 am
Filed under: Blogroll, Business Advice | Tags: ,

There has been a lot of substitution going on during the Christmas holidays. I have never seen the discount stores so crowded.

The substitution effect comes into play by consumers when their previous favorite good is now priced so high that continued purchases hurt their budget. Some go along with the increase for awhile and cut back in other areas.

Finally, the Southern California gas guzzlers cut down on their driving and we finally saw the results. Public transportation numbers reached record highs.

So, ok, how does this benefit individuals? Well, there are two issues, if you are running a business or thinking about starting one. Can you introduce a product line that could be thought of as ‘generic’ compared to what customers are used to. Generic drugs are probably one of the biggest expanding product markets internationally. There are more people retiring than there are in the workforce. This translates to millions on Medicare who can’t afford to pay for brand names. The expansion of the $4 dollar drug plan in local pharmacies is every where in Southern California. (For those are unaware, these programs are only viable if your prescriptions have a generic equivalent.) This is an international trend, as generic drugs also sold in Canada.

Nobody has labeled this trend generic, but it amount to the same thing. Television stars are big on their wardrobe for special events. Up popped consultants promising to provide the same thing for other consumers at an ‘everyday price.”

Certain dress designers decided to take their talents to a ready-to-wear market niche. This can’t be labeled generic, but has the same effect. Those who would love designer duds can shop at the discount department stores to get the same label.

Business owners, find a way to incorporate some of these tactics in to your product line. If there isn’t an available addition, then package your services and label it “discounted.”

Give discounts for: early payments, referrals who purchase, payment by a deadline, and those who order more. Customers now are used to hearing: 0% interest for a year, no money down, no interest payments for a year and mail-in rebates. Customers want to shop where they are told they are getting a break.

Look at similar market mixes and see how you can apply these premises to how you run your business. Customers have been cued to these triggers and as long as they are looking to deal with their wants when they can’t afford such goods, there is money to be made when understanding this valuable economic lesson.

Investors also have an opportunity to use this same guideline for stocks they pick. I would not advise anyone on a specific stock pick. But, if I did, I would choose a company selling generic drugs. The next would be a retail clothing store that offers designer labels at every day price. The next on my list would be any form of public transportation. Despite the fact that gas prices have gone down, people are still going to be using their cars less as the hard times continue.

Use this new understanding of what the substitution effect is to increase your bottom line in your own business as well as your investments.

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Let’s take a look at present versus future value
December 27, 2008, 3:11 am
Filed under: Blogroll, Business Advice

Value has been a hard concept to grasp since so many investment products (stocks, commodities and real estate property) have had their prices decrease so much.. The changes we are currently seeing are enough to confuse even veteran market watchers. I am not an analyst, but I can give you a good picture of how to get a handle on this.

Understanding present versus future value is a necessary if you are ever going to earn money investing. One basic concept of investing well is buying low and selling high. There one alternative is short selling. This is when an investor gambles on the idea that his stock, bond, etc., is going to go down in price. There are more ins and outs of this, but that is the basic principle.

The investment markets are more detailed since stocks are not only down in value, they are down so far as to make one wonder if and when they will ever rise again. Washington Mutual, before its takeover did fairly well. Currently, its stock is $.03. (One has to wonder why it is still being traded.)

Real estate and other potential investment products are so far down; it feels as they are not at zero, but in the deficit. There are properties in Southern California that have lost almost 50 percent of their previous value in less than three years. Yes, they still have a price tag in the positive on them by virtue of the tax assessor’s office, but they are down so far that it makes one wonder if the value is going to stay under the previous level permanently. (And, well, it might.)

So, you want to buy. It doesn’t matter what. Unless you are into gambling on options, another story, or shorting stocks, you want your purchase to climb in value. With the stresses pressed on our current economy, the values related by the tax guy, and listings, are a value that has been distorted because of outside circumstances that have never existed before. To top that off, there doesn’t seem to be anyone willing to hazard a guess as to when these ‘things’ are going to start going the other way.

So, let’s agree to conclude that current, present value has been distorted. We have to call it a real value because that is what the market is saying these investment options are currently worth. But are they? Are they only showing up this way because investors have slacked off their buying in many markets? When buyers hold back on buying for a time period, no matter what the reason, the market ends up with what the economists call pent-up demand. No one knows the whole story behind all the factors that make buyers do what they do. At some time, buyers will be tired of holding off. Then the prices will move up.

If you want to jump in the market, are you willing to wait until buyers start jumping in? Can you stand to wait until those prices move up? Then, comes another viable question that doesn’t seem to be addressed very often. How long are you going to hold your investment? It starts moving up. Great. Do you sell now? Once any item starts moving up in price, there is always a chance that it might move back down.

Many investors love to buy in when stocks plummet if they feel this is still a viable company and it will come back. Those are not wise gamblers today. Some of those stocks will either stay in the hole or disappear off the trading floor altogether.

Real properties may still be still standing in the lot, but do you want to be holding on to a devalued property if situations don’t change quickly? You could lock on to what you consider a great deal and end up holding it for years with little upward movement.

The overall wisdom is buy if you have finances that allow you to take high risks. Those who can gamble like this will come out like pirates eventually. The key word is eventually. Those who only hope the shift will change quickly and want to take a chance might be looking at a bigger wipe out than those left holding Washington Mutual’s stock.

What we have learned is that even though the market isn’t saying it, investment products are in a deficit in many niches. Before you can make profits anywhere near what’s happened in the past, an investor will have to wait for the selling price to come back up to what might be called a break-even point. (This does not mean a price we have previously seen.) Recognize this and take it into account when you invest.

Oh yes, if prices do decrease even more, you haven’t lost money, because you are not currently selling. Present values go up and down all the time. We just haven’t seen this much down. If investing, do all you can to keep your eye on the market. Make this decision before investing a penny. When are you are going to sell if it moves up and when are you dumping it if things get worse. (It meaning an investment product.)

All investors are envisioning a higher future value than the current price for their holdings. In our market, it is just going to take longer. It doesn’t mean you should stop investing. It just means that you should do more homework before buying and take a harder look at what you can afford.

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