Wealth and Wisdom

Note:This is one of the hardest things I’ve written about. I’ve personally gone through it and know how it can tear apart a family. In my case it was because I decided to help.

“Joe, you look awful.”

“Wow, is that a good way to greet a friend?” Joe asked me. “But now that you mentioned it, I haven’t been sleeping well.”

Joe then proceeded to tell me about his family situation and the stress it was causing. His brother wasn’t able to pay the rent-again-and came Joe for a loan.

“I’m getting tired of always having to bail him out. I love him, but loaning him another grand won’t solve his problem. And I’m getting tired of everyone assuming that because I run my own business I have money to loan them.” After a bitter chuckle, Joe added “I don’t know why I call it a loan. They never pay me back.”

It wasn’t the first time

Joe and I have been friends for years-heck, he gave me my start in sales! I was familiar with this drama in his family and saw it repeat several times a year. If it wasn’t his brother it was his cousin or uncle. One time their car was in the shop. Another time they were a bit short until payday.

It was like his family thought that because he was an entrepreneur he was their personal bank machine.

The straw that broke the camel’s back

This time things were different. The economic downturn was hitting Joe’s industry hard. He was struggling to keep the doors open, and the last thing he needed was this. In fact, the reason Joe and I were meeting was that I was advising him on his company’s sales and marketing.

Bottom line: he had nothing more to give.

Loaning money to your family is a lose-lose situation

When it comes to family, money, and loans you can’t win. You are a bad mother/son/brother (fill in the appropriate relationship) if you say no. It will poison your relationship even if you say yes. No matter what you do it can tear a family apart.

For entrepreneurs it can be even worse. People assume that just because you own the company that you are rich and that they are entitled. You can easily become their personal bank…or their welfare system.

With this in mind I’ve developed the following guidelines to help deal with the situation. Some sound cold and heartless, but that couldn’t be further from the truth. This is a decision that can have serious consequences. The decision must be based on facts and on what is best for everyone involved. Remember, the best answer is sometimes the one that hurts the most. People often tell me that the best thing that happened to them was that someone told them no. It forced them to grow up and solve the problem themselves.

7 Guidelines when family asks for money

1. Your not the bad guy…

You know the drill. The guilt is being applied. “Just this once…” “Don’t you love me?” You can afford it.” “Blood is thicker than water.” To make it worse other family members are calling you and asking why you won’t help.

You have done nothing wrong. They put you in a bad position, one that you often can’t win.

2. Step back and take a deep breath

The only thing that makes this so hard is that you are dealing with family. With anyone else it would be much easier. When family members ask you for money they don’t use logic. They push your buttons. This sets the stage for a major family crisis.

Now is not the time to make a decision based on feelings. You need to step away and get some space. If they push tell them you need time to think about it. If they keep pushing start asking them questions. This will put the responsibility back on their shoulders. Remember this is their problem. They are coming to you for a favor.

3. Separate emotion from fact

Now I know I’m going to get an earful about this. “It’s your mother. You owe her.” “How can you be so heartless?” “Don’t you love your family?” “Why do you hate your sister?”

Let me put that to rest right now. Decisions based on guilt rarely work out. Don’t be afraid to use decision making tools (I personally love a weighted pro/con list). Feelings and relationships are a factor, but the decision needs to stand on it’s own without the emotions to prop it up.

4. Am I helping or enabling?

This is tough because of the guilt involved. One thing to keep in mind is that often you are only making things worse by handing out money. People need to take responsibility for their own problems. In extreme cases they need to hit bottom before they can start to get better. In these cases the only way to help them is to stand firm.

Now I’m not saying you should always say no. You just need to make a clear headed logical decision that is in everyone’s best interests.

5. What are they doing to solve the problem?

Just bailing someone out won’t solve the problem. Are their expenses exceeding their income? Then they need to take steps to fix the problem. Do they have a gambling problem? Then they need to get help for the underlying addiction.

They need to take responsibility and be willing to fix their own problem. Otherwise this will come up again and again. Each time it will be a little worse.

6. You have the right to say no

Just because it is family doesn’t mean you are obligated to give them money. I hear the argument all the time that you should “honor you parents.” That doesn’t mean you are indebted to them for eternity. Yes you should respect and thank them for bringing you into this world. Just remember that this is a two way street. You deserve the same respect and appreciation as well.

Now most people have parents that gave them love and nurtured them. That is a different story. Then again, most people with loving parents aren’t put in this position.

You have to make the right decision for everyone involved. This needs to be based on facts, not some emotional tug at the heartstrings. If the right answer is no say no.

7. Always a gift never a loan

If you decide giving is the right decision make it a gift. You should never loan money to family. I don’t care if you get the terms in writing, you will never be able to enforce the contract. What are you going to do? Take them to court? I don’t care if they tell you they won’t take charity.

A loan will only poison the relationship. Each time you have to call to collect on the missed payment it will damage both of you. Even if you don’t have to make the call (unlikely) it will always get in the way of your family.

Note: a gift means no future expectations. You don’t have the right to ask for it back. They don’t owe you. You can’t use it for emotional leverage. It must be given freely.

Over the years I’ve made some amazing strides in personal development. It is always fun to look back a decade or two and see how far I’ve come. In spite of all the gains I have several areas where the improvements don’t stick. Time and time again I get committed to change only to see it unravel a couple weeks later. Heck, sometimes it comes apart in days!

F r u s t r a t i o n

I’ll be the first to admit that this drives me crazy. The worse part is that these are basic areas that would have a significant impact on my life. For example, I have had an enormous problem when it comes to time management. I start most weeks off with a bang, but run out of steam midweek. It doesn’t matter what tool I use. My wife jokes that I own more day runners than the average Franklin-Covey store!

The solution that I didn’t grasp at first

For quite a while I’ve been reading Leo at Zen Habits. Leo is a big proponent of breaking your goals into mini-goals and focusing on them one at a time. Ah, it all seems so clear now, but at the time I had the opposite opinion. I always tried to build mega goals that wrapped several smaller goals into one. Kill two birds with one stone was my mantra. Yet I fell down time and time again.

Then a couple weeks ago Leo posted Autopilot Achievement: How to Turn Your Goals Into Habits.

One thing at a time

When you are making a major change you really are setting many smaller goals. His premise is that we can only focus on a limited number of things at a time. Take weight loss as an example. This is a simple sounding goal, but when you look at what it involves it is really a series of steps:

• Daily exercise
  • Resistance training to build lean muscle mass
  • Cardio/interval training
  • Stretching
• Nutrition
  • Monitor your caloric intake.
  • Eat the right balance of food.
  • Multiple meals
• Stress reduction: stress hormones interfere with fat reduction and increase fat storage.
• Consistency: you need to eat well and exercise daily.

Is it any wonder this “simple goal” is so hard to obtain? It is really more than eight distinct goals!

Turn that goal into a habit

The solution that Leo offers is to break these major goals into what I call micro-goals. You then focus on one goal at a time for three to four weeks until it becomes a habit. Only then do you move onto the next micro-goal and repeat the process.

What ends up happening is that you actually create lasting change in your life. It is easy to maintain a habit once it is developed.

But it takes so long!

This is what kept me from using this technique until now. I understand how it is hard to wait. You see the change you desire and want it now. So you make a major change and hit the ground running. The big question is how long will it last? A day or two? A week? How many times will you make the change only to fall back into bad habits? How long does that take?

It’s a marathon not a sprint

We need to change our mindset from instant gratification to long term gain. On the surface it looks like the slow and steady approach takes too long. It is only when you look to the future-and at our past failures-that we realize how quick this really is.

This is where your goal setting comes in. What do you want to accomplish or become? Break your goal into micro-goals. Prioritize those micro-goals and focus on changing one thing. Wait, this sounds awefuly familiar. This is continuous improvement on steroids!

My change…

For the next three weeks I will be focusing on one thing. I will start each day with a plan. Will I execute that plan? Will I procrastinate? Will I let minor things intrude? These questions don’t matter. Right now I am working on having a daily/weekly plan. I can work on my execution in a few weeks once I’ve developed this habit.

My challenge to you

What one change would have the biggest impact on your life? Is it to eat more consciously? Maybe you need to prioritize your to do list. Do you need to exercise daily? Should you start each day with a plan?

Today, my post Recession Proof Your Sales was published at GetEntrepreneurial. If you have a moment, please head over there to take a look. If you are GetEntrepreneurial readers, welcome to Wealth and Wisdom. Please take a few minutes and look around.

A tale of two companies
The contrast couldn’t be sharper.

Company T had lost it’s direction and was sinking fast. Where sales were once $18M, they ultimately plunged to less than $6M. Where they once set the standard in their industry for customer service, now they were the joke of the town.

Company C was a different breed. It had always been the small respected underdog. At $6M is was a third of company T’s size. Where everyone else in the industry had lost over half their business, they were holding fast and had doubled their customer base. They were poised to exit the recession as a dominant player.

Why was company C thriving in the recession while company T (and the rest of the industry) foundered? They had a strong sales focus. They seized the chance to grow market share. They saw the opportunity to eliminate several bottom feeders that constantly drug down prices.

7 Keys to selling during a recession

1. Go back to basicsWhen things start spinning out of control it is time to reevaluate. What does a good coach work on when his team is slumping? He goes back to basics.It isn’t exciting, but think back to your early days when you were learning sales.Take a deep breath, step back, and look at sales 101.
2. Focus on the customerBusiness starts and ends with your customer. Identify his needs. This becomes the basis for your products/services. No, that doesn’t mean you give away the store. It just means that every aspect of your business needs to support your customer. Anything else is a waste of time and money.Most businesses focus on their systems and expense control. Their criteria for all decisions is making their own jobs easier. Guess what…the customer doesn’t care!
3. Focus on your nicheThis is not the time to try new techniques, find new markets, or launch new products. That is a desperate act that just wastes your time and money. If anything you should actually focus your resources on your top products, services, and markets. Remember, jack of all trades, master of none.Take a minute and define your focus. What is your niche market? What are their needs? What are you doing now to service them? What could you do better? How can you dominate your niche and grow your market share?
4. Increase your sales budgetContrary to what your operations manager says you can’t cut your way to a profit. Business starts and ends with the customer. Yes you need to tighten your belt. Expense control is important. Just be smart where you spend your money. Ask the question “will it grow my business?”Increase your sales expense budget. Spend more on strategic lunches. Give your top salesman a bonus. Reward your sales support team. Thank your top customers for their loyalty and send them a gift.Compare this to what your competition is doing. Right now they are reigning in their salesman. In fact, they probably just fired a few! You stand out and can take market share if you are smart.
5. Dump the deadbeatsFire the bottom 20% of your customers. I can hear the screaming now. “We can’t afford to lose any more business.” This is bunk. These customers take 80% of your time for 20% of the income. Cut them loose and spend your resources on customers you can satisfy!
6. Guard your customer baseRight now everyone is hungry. They are eying your customers like a starving wolf eyes a young lamb. Take care of your customer. Give them such value and service that they wouldn’t dream of going elsewhere. Build deep relationships with the key decision makers-remember that the buying decision is emotional. Logic is used to justify the decision.Make a list you your customers and rank them. Focus your time and energy on your stars.
7. Branch out to new accountsThe flip side of guarding your customers is to go on the attack. Remember that your competition is cutting back on spending. They have let a few salesmen go. The remaining salesmen are overloaded and overworked.Make a customer wish list. Look at the competition and identify their top customers to target.

I’ve been invited to be a Network Expert on GetEntrepreneurial. This is a great resource for entrepreneurs and I’m honored to be included. I look forward to sharing knowledge and helping business owners.

This also should help improve the experience for Wealth and Wisdom readers by exposing you to a wide range of entrepreneurial news and advice.

I also recommend you check out their blog. Our focuses are similar but they have a different perspective.

You’ve anticipated this day for oh so long…

You’ve finally decided to take the plunge and go out on your own. You have a business plan and the savings in place to pay the bills until your business takes off. The first customer is already lined up.

Ok, you are a bit nervous. The usual questions pop into your head. Will I find enough business to support my family? What if the economy heads south? Will I be able to compete with the big boys?

And your spouse asks the big question…”What about insurance.” No problem you think. Then you start getting quotes. Oh my gosh! I only pay $250 a month now. How could it jump to over $1000?

What do I do now?

One of the scary parts of taking the leap and becoming self-employed is health insurance. The typical single policy costs $4,479 while the average family policy costs $12,106 ¹. It is not surprising that this is a major concern for most entrepreneurs.

Several years ago the US government responded to the rising health care costs by creating the Health Savings Account (HSA). It was designed to help people manager their health care costs by giving them control over where their health care dollars are spent.

It essentially applies capitalism to our healthcare system.

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1: 2007 survey conducted by the Kaiser Family Foundations and the Health Research and Educational Trust.