Wealth and Wisdom

A while back I received a request to participate in the launch of a book on business plans. At first I was a bit leery. I tend to favor short business plans that focus on your key metrics (customer and market based). Also, I am always considering our community at Wealth and Wisdom. I get approached by people all the time but rarely find someone that I would be willing to work with.

Then I got a copy of the book and started reading it. I was surprised at how thorough a job Dan Boudreau did with his book. It was 400 pages of crafting a business plan. The end result is an in depth 25 page business plan that is more than adequate for any company. The other thing that impressed me was that Dan included a fast track business plan. This 7 page document is perfect for most entrepreneurs.

Other business planning tools have come up short

One frustration I’ve had with other business planning books and tools is that they always come up short. Often they don’t give you enough detail to build a business plan. One book I read said to do market research but didn’t include any tools or instructions. Needless to say I didn’t do the market research!

Another frustration is that the books and tools are inflexible. Unless it can be easily adapted to your market and needs you are wasting your time.

Business Plan or BUST! gets around this with the sheer scope of detail it provides. While this can initially be overwhelming in the end it will be needed. He takes you by the hand and goes through it step by step. This begins in the planning stage as he provides tools and the process to prepare for your business plan.

While I found this to be comforting I can see how it would frustrate others. I’m analytical so I’m looking for details. A pragmatic may be put off by how far in depth Dan goes. That being said, by the end of their business plan even the most pragmatic entrepreneur will be thankful for the depth of information and tools. Also, Dan writes in a way that is down to earth. This is written by an entrepreneur not an academic trying to impress you with his extensive vocabulary!

Other tools

Dan’s website includes tools and forms to help make your business planning easier. What this means is that you won’t have to create them from scratch. This is a huge timesaver.

He also has a blog that provides great info. It provides great info from an angle I see nowhere else.

What about the one page business plan?

One area I see lacking is a one page business plan. Many entrepreneurs don’t need financing and their markets, products, and services shift quickly. Others have several micro businesses and a full fledged business plan (for each) would be overkill. In these cases what is needed is a one page plan that focuses on the market, marketing strategy, and the customer. It is a living document that is used to frame day to day decisions.

This is an area that Dan plans on addressing in the next edition of Business Plan or BUST!, but I would not recommend waiting. It is a minor deficiency and a one page plan can be easily written.

Business Plan or BUST! is an excellent resource for the one page plan. You can pick and choose what sections of the book are applicable. The final document may be one page but you still need a lot of supporting information, forms, and documents. You basically distill a mid length-market focused-business plan to one page.

When is the book available?

Dan is launching Business Plan or BUST! at Midnight (EST) tomorrow. As part of the launch Dan is offering 20 free gifts to Wealth and Wisdom readers. This offer (and the launch website) will only be available for 24 hours. I’ll send out a post when it is live so you can all participate.

Hurricane Ike recently ripped through Houston. While we were blessed to escape with little damage we did need to replace our roof. I won’t go into how poorly our insurance company-Allstate-treated it’s policy holders. This post is about how our roofer grew his business by doing the right things.

What are the right things?

• Offer a fair price for your service: Their price was fair and their service was the best. They exceed your expectations and leave you feeling like you got a deal. That is a powerful combination.
• They did not take advantage of the situation: They could have used the hurricane as an excuse to charge a premium. Their customers were at their mercy but they didn’t take advantage of us.
• Be fair and honest: I knew I could trust the owner. I watched how this company treated my neighbors and saw that they were forthright.
• Be trustworthy: The owner and this company consistently showed integrity. It was apparent in the people he hired and the work they did.

The end result is that they are doing most of the houses in my neighborhood. And this isn’t due to a lack of competition. Most of us (myself included) had planned to use other roofers. Juan started with one roof that he got as a referral. Basically one neighbor had a roofer friend at church but he had his crew committed. He recommended Juan. From that one job he will end up with over 50 customers in my neighborhood alone. All of this was done with no advertising.

Contrast this with the competition

The competition came in quickly and landed a lot of roofs…then disappeared. Like most of the roofers they follow the storms. This meant that their crews were still in Florida and Louisiana working and wouldn’t be in Houston until next year. Once they got their sign in your yard it was almost impossible to get them to return your call.

As a result I see their signs disappearing and Juan’s signs going up all over the place. By the time they can react Juan will have replace most of the damaged roofs.

Where does that leave Juan when the storm damage is repaired?

Juan already is lining up renovation work. I know of three people on my block alone who are having him update their kitchens. I will have him do some trim repairs around my house as is another friend. Once his crews are done with storm damage they will have over a year of backlog.

And all of this by word of mouth.

I originally was going to post this last week. Something held me back. I think it was the anger I felt at the bill and with US citizens being stuck with the tab. As my best friend once told me “be careful what you put out on the internet as it will stick around forever.”

This one has been tough for me. For some time we have been hearing about the financial markets collapsing. We hear about possible government bailouts. We have to wonder where the next collapse is going to come from

One one hand I fear the government doing nothing. If the banking system collapses the results could be catastrophic. The damage to everyone’s savings and retirement would be profound. The blow would crush our economy and would drag down economies around the world.

On the other hand I firmly believe in the free market. In my experience (and looking back at history) government intervention almost always makes matters worse. Americans are at our best when we are solving our own problems and that is easier when the feds keep away.

When I look at the bill that was proposed-and passed-my initial thought was hallelujah. Then the exuberance settled down. I realized that I knew nothing about the proposed bill. 24 pages had sprawled to 442 pages of legal jargon. No help there unless I need help curing my insomnia.

I’ve been reading articles and listening to the experts. The general dislike of this bill is growing and cuts across party lines. With an estimated potential cost of $1.8 trillion it may cost each household $17,064 to finance (source: Reuters).

CNET had a good article about the bailout bill. It broke it out based on expenditure and discussed some of the non-bailout measures. It does a great job laying things out and I recommend you check it out.

This may just be the tip of the iceberg

California has already said the state may need $7 billion. Why? Because their $14 billion (or more) annual deficit has driven them to the brink of bankruptcy. My concern is that other states will step forward as well.

Then there are the other industries that have been hurt by this subprime downturn. Now that we’ve saved the financial industry, what’s next?

So where does this leave a small business owner?

I see increased taxes to finance this financial behemoth. This will be an added burden on businesses and may (in the long term) hurt our economy. It also will make it more important to make the most use of corporate (including LLC) structures to help minimize your tax burden.

It may speed up the return to credit fluidity. This would be good news for everyone. The problem is that it doesn’t appear to be working yet but it would be unrealistic to expect things to improve overnight.

I am concerned with increased scrutiny from the IRS. While I never advocate tax evasion I don’t think increasing IRS powers is good for anyone. Even if you are 100% correct with your returns an audit is daunting and expensive. As entrepreneurs we need to be focusing on our customers and growing sales, not getting buried by paperwork and red tape.

The bill may also create opportunity.

The most obvious area is in real estate. The government will be offloading billions in subprime assets. I see a market in buying mortgages at pennies on the dollar or in foreclosed properties. This could be massive.

This can also create a whole support industry. How do you find and evaluate these properties? How about packaging chunks of properties? All of these foreclosures will need significant repairs and upgrading. This will help drive the construction market.

Increased IRS power will revitalize the tax preparation market. Demand for tax attorneys and accountants will increase. There will also be a need to have improved tax planning. As our tax bills increase we will need to legally find ways to relieve the burden.

There are also opportunities with the green initiative. Increased tax credits will drive clean energy development. It will also drive it down to the consumer as they find more incentive to install solar panels and energy efficient appliances.

What do you think?

This is what I’ve found in my research. It is my conclusion based on the input I’ve received and filtered by my past experiences. What I want to know is your opinion. Do you see the bailout as good or bad…or maybe a necessissary evil? Did I miss any parts of the bill in my synopsis? What impact do you see this having for entrepreneurs? Where do you see this creating opportunity?

This weekend started off pretty uneventful. Just a basic projects weekend to get several things off my to do list. And compared to the last few weeks it was a cakewalk. No hurricanes. No hunting gasoline to fill the generator. No clearing trees and branches. No fences to rebuild.

At least that was the plan. What started as several hours of work ended up taking two days.

How does a post on my weekend relate to the title? No this isn’t a bait and switch article. It is just that the weekend showed me that we need more entrepreneurs.

Task 1

We mounted a safe to our floor. No, we don’t have massive amounts of cash or jewels. We just wanted a safe place (no pun intended) to keep our passports, social security cards, blank checks, etc. It is a basic identity protection measure to put these items in a safe. And if the safe is not bolted to the floor then it can be picked up. Not much protection if a thief can walk out with it!

None of the steps were beyond my ability. I just don’t do this every day. By the time I figured things out and factored in the rework a one hour task took me most of the day. Since I calculate my time at $250/hour that was $2K in time. An entrepreneur could make a killing if he marketed top notch handyman skills.

Note: this is a hole it the market. Most handymen highlight their price. Few advertise their skill and quality, often because their work is second rate. While I enjoy doing these jobs it isn’t the best use of my time. The main reason I don’t hire out the projects is that most professionals do substandard work. Basically I do a better job.

Task 2

We switched from MS Money to Quicken. Simple right? Not even close. I’ve used MS Money for years because I comes with Tax Cut (and Tax Cut is comparable to TurboTax but for less). A month ago I got a surprise. MS Money stopped updating online. While the software still worked it would require me to manually enter everything. After a bit of research I found that Microsoft builds in obsolescence. Your license only includes two years of online service. After that you either need to pay $20 a year or buy the version.

Unacceptable!

The challenge is that Quicken has no easy way to import MS Money. The version I bought (starter) was bare bones as I don’t need the silly tools the deluxe version throws in. Why pay more to bog down my computer? Silly me. The simple version doesn’t track investments. It also doesn’t allow you to import you accounts from MS Money (or Quicken for that matter).

A quick upgrade (and $30) later and we were in business…or so I thought. Importing MS Money requires a separate program. While it was free it was cumbersome. Go to MS Money. Clean up you accounts and categories to make sure none were more than 15 characters. Also make sure there are no repeats (major pain in the @$!%). Do the same for your investment accounts. Create a transaction report (requiring extensive setup) and download to your desktop. Do the same with your investments. Click the import button. When the error message appears go back and spend half a day figuring out why it won’t play nicely.

Then the fun begins. You need to spend another day getting your accounts cleaned up. The nice (reconciled) MS Money accounts are now a mess.

So what does this have to do with the post title?

Both tasks represent great opportunities for the right entrepreneur. In fact, this is what entrepreneurship is all about. Look at your market and identify a need. Talk to your customers to refine the basic idea. Work with your customers to develop a product or service.

In fact this is what brought Wealth and Wisdom to life. We were watching Dave Ramsey one night and someone asked if there was a Dave Ramsey community. What a great idea! However we quickly found was that:

• There are a lot of people focusing on personal finance 101
• While we know a lot about the topic-heck, I used to counsel people on person finance-it wasn’t our passion.

We took the feedback and adjusted our product. We shifted to an area under served: what is the next step? Now that I am debt free and have my finances under control how do I grow it? This question is made harder because the traditional investment models don’t seem to work. Every crash drives home the point-in several weeks the market has given back the gains of the previous few years.

Our view is that the key is to start your own business. But owning your own business can mean endless work for the same (or less) pay. How do you balance your life, business, and wealth? Hence the slogan wealth and life balance through entrepreneurship.

As we listened to our customers (readers) we have slowly adapted. We have several changes coming up. In the next few weeks look for our first special report, a couple widgets, and more orderly posts (schedule and topics).

What do you think? What changes would you like to see? Let me know as I believe in building my business around my customers.

Smart money wrote a great article that was forwarded to me yesterday. In 10 Things Millionaires Won’t Tell You they debunk several myths. It is verry millionaire next door and shows how much millionaires are like you and I.

Several things jumped out at me:

• Most got rich by owning their own business.
• They still display financial responsibility and don’t like to overpay.
• They spend money on what matters. While some spending is for pleasure most is to grow their wealth.
• It is all relative. To you and I $1M may be a lot of money. To millionaires it just means they don’t make enough to join that elite country club. And just because they make more than the Joneses doesn’t mean they aren’t competing with the Hiltons!
• Ownership doesn’t matter, control of assets does.
• The top 1% may pay 40% of the total income taxes, but their business deductions tend to drive down their total tax bill.
• Money may not buy happiness but it sure does make it easier!
• Education is important but hard work is vital. Also, Ivy League educations are not what made them rich.
• They use personal concierges and assistants. This is something I need to research!

One thing I disagreed with is “You don’t get rich by being nice.” Being friendly and having common courtasy is critical for sucess and business. In fact, most sucessful and rich people I know are also the most friendly and helpful.

Just because you are nice doesn’t mean you are a pushover. A more accurate statement would be “You don’t get rich by being a sap.”

A while back I wrote a post on making small changes. The theory was to make small but important changes and spend 3 - 4 weeks building them into a habit. Only when they are part of your routine do you move on to the next change.

The individual effect of each change may be small but they snowball and have a profound effect over time. One example is getting in shape. It really is a series of changes:

• Diet: Take your pick of low carb/high protein, low fat, watching your calories, or just eating healthy. Heck, this alone is several change.
  • Eating multiple meals
  • Eating quality food
  • Changing the composition of your diet
  • Controlling portion size
  • Dealing with cravings
• Exercise: Again, this is several changes.
  • Getting up early to exercise before work
  • Lifting weights to increase lean body mass
  • Aerobic exercise to increase lung capacity and burn calories (I prefer intervals)
  • Stretching to increase range of motion and prevent injury
• Lifestyle changes to lead a more healthy and active life
  • Picking up a sport you enjoy
  • Walking and taking the stairs more often
  • Spending more time outside in the sun
  • Eliminating unhealthy activities (bar hopping comes to mind)

Is it any wonder people quit after a few weeks? This is a lot for a person to change all at once!

My changes

The first month I committed to starting each day with a plan. Note I said nothing about execution or setting up an elaborate system. Just a simple list of what I wanted to accomplish. For two weeks I was spot on. Week three saw me in the middle of a major household project as we installed hardwood flooring throughout our downstairs. While I didn’t start each day with a plan I knew what I would be doing! Week four was on target again.

While my execution was less than perfect this was not what I was focusing on. Even with imperfect execution I saw a significant increase in productivity.

Last month I focused on starting each day with a workout. I kind of cheated on this as I also introduced two changes: getting up an hour early and an intense workout routine. This quickly sorted itself out as I dropped the early to rise part!

All in all I was diligent with this change. I missed one day completely, but that was planned and not an issue. I skipped my Kenpo workout since I had a racquetball tournament. I figured the three hours of exercise more than made up any I skipped!

What’s next?

This month is all about organization. We tore apart our home office to be more organized and efficient. I have implemented a Get Things Done (GTD) approach to my day. No this is not two changes. The office was a project we had been planning for quite some time. Only when it was completed did I make the next change!

My plan is not to become a GTD disciple. It is to get the work flow under control. It is to gain a level of structure and order. I ultimately will be doing a top down approach (most likely 7 Habits of Highly Effective People). I truly believe we are more effective when we focus on what is important not just what is on our list. It just becomes challenging when you are dealing with a massive influx of information, tasks, and projects.

My modification

I also applied this to my racquetball game. Since this was a discrete area of my life I made the changes in parallel to the ones above. What did I change? The first month I worked on my shot selection. The end result was my taking second in a regional tournament.

Last month I reworked my swing. This one took it’s tole on my game and it was only after several weeks that I was back to where I started. In the long run it will have a profound impact on my game as I become more familiar with hitting the ball right!

This month I’ll be working on footwork.

What about you?

Did you make any changes? Why not? Think of how far this one idea can take you. In one year you would make 12 important changes that could change your life.

I’m a people watcher. I love watching the interplay-and conflicts-that arise due to different personality styles.

It is especially fun to watch people like Mack and Bill at meetings.

Mack is a pragmatic New Yorker with no patience for anything that gets in the way of making a decision. Just give me the facts is one of his catchphrases.

Bill is a southerner through and through. As an amiable he is more interested in how it would affect his workers. Adding fuel to the fire is his need to answer any question with a drawn out w e l l .

After a few minutes of frustration on both sides I step in.

How do I talk to two people with entirely different needs?

Bill and Mack speak different languages. I’m not talking about languages like Swedish and Russian. I’m talking about how they process information and make decisions.

First I identified their personality styles so I understood how to address individual needs. In this case Mack is looking for facts and data in a concise form. Bill is looking for emotional information in detail.

Once I know how they think and what they need it is relatively easy to match their style. With a little practice this becomes second nature.

It’s not just for salesmen and managers…

People often avoid learning communication skills because they don’t feel they need it for their jobs.

“I’m an estimator not a salesman.”

“I’m not is customer service.”

“I’m just a worker bee.”

They miss the point that this is a skill that will improve every aspect of your life.

• Is your husband driving you nuts with excessive details (get on with it already!)?
• Do you find it irritating that your friend makes flighty decisions based on emotion but no facts?
• Does your boss drive you crazy by coming up with wild new plans but never following through
• Does your coworker cut you off mid explanation and tell you to get to the point?

Chances are good that this conflict is a direct result of different personality styles. Each style has different needs, both in the amount and the type of information. Once you learn to understand this you can figure out more effective ways to communicate.

For example: my wife is a pragmatic and I am an analytical. I’ve learned to give her an executive summary. If she needs more info she will ask for it.

We’ve learned to accept and accommodate each other’s styles and needs. Over time we’ve come to appreciate our different approaches and how they complement each other.

She has likewise learned to accept my need for data. She knows I need to research things before I decide. While her quick decisions are usually right there have been several occasions where I have saved us from making serious mistakes.

Four personality styles

Most people don’t fall completely into one category, but they do tend to have one overriding tendency. One of the easiest ways to visualize the differences between personalities is to put them on a graph. The vertical axis is their decision making criteria (data or feelings). The horizontal axis is their assertiveness.

• Analytical:
  • Traits: Systematic, organized, and deliberate. Analyticals need facts and data. Logic prevails over emotion. They like systems and procedures. Analyticals are slow to make decisions (paralysis by analysis) but decisions are extremely sound. Dependable workers they tend to be independent and not work well in teams.
  • Typical careers: programmers, engineers, and accountants.
  • Goal: intellectual recognition
  • Keyword: Thinking
  • Favorite question is what?
  • Pro: precise, methodical, organized, rational, detail oriented
  • con: critical, formal, uncertain, judgmental, picky
  • Bottom line: want things done right.
• Pragmatic:
  • Traits: Tends to be leaders. Often called drivers they are practical and focused on results. Pragmatics are direct, to the point, and do a lot in a short time. They are decisive, driven, and results driven. Pragmatics have compassion for the truly disadvantaged but no patience for “lazy whiners.”
  • Typical careers: manager, lawyer, banker
  • Goal: find practical solutions to problems
  • Keyword: results
  • Favorite question is how?
  • pro: persistent, independent, decision maker, effective, strong willed
  • con: aggressive, strict, intense, relentless, rigid
  • Bottom line: produce results in a practical manner.
• Amiable:
  • Traits: Dependable, loyal, and easy going. They like things that are non-threatening and friendly. Amiables hate facts and details because they are cold and impersonal. Warm, sensitive, and wishy-washy. Amiables are rarely leaders but tend to make great followers and team players.
  • Typical careers: HR manager, social worker, physical therapist, counselor
  • Goal: create harmony and cooperation
  • Keyword: feelings
  • Favorite question is why?
  • pros: cooperative, dependable, warm, listener, negotiator
  • cons: undisciplined, dependent, submissive, overly cautious, conforming
  • Bottom line: things need to be done harmoniously and they need to be personally involved.
• Extrovert:
  • Traits: Outgoing, enthusiastic, and high energy. Extroverts are great idea generators without follow through. They enjoy helping and socializing. Talker, overly dramatic, impulsive, and manipulative. Money motivated. They tend to direct and control not ask and listen.
  • Typical careers: politician, musician, sales
  • Goals: making things happen by turning ideas into action
  • Keyword: action
  • Favorite question is What if?
  • pro: enthusiastic, persuasive, outgoing, positive, communicator
  • cons: ego centered, emotional, exploitive, opinionated, reacting.
  • Bottom line: things done with a sense of drama and style.

Conflicts due to personality styles

Amiable vs. Analytical
—-
Pragmatic vs. Extrovert

The challenge with these personality style interacts is the type of information needed. Amiables and extroverts make decisions based on emotions and feelings. Analyticals and pragmatics need cold hard facts.

Analytical vs. Pragmatic
—-
Extrovert vs. Amiable

The conflict comes from the amount of information needed. Analyticals and amiables need an endless supply of information. Pragmatics and extroverts need just enough to make the decision (anything more and they have already moved on).

Amiable vs. Pragmatic
—-
Analytical vs. Extrovert

The conflict is much worse with these match ups. In these cases you have a mismatch with both the type and amount of information.

So how do I apply this to my life?

Start with the people closest to you. These are the people you know best and interact with the most. This both makes it easier (because you know them so well) and increases the impact on your life. Once you have mastered this start applying it to other people you meet. With practice and time this will become automatic.

Once you have identified their personality style you need to start addressing their needs. Remember the basics:

• Analyticals and pragmatics need data. Emotions and feelings count but are data points.
• Amiables and extroverts focus on emotions and feelings. Cold hard facts have little meaning to them.
• Analyticals and amiables need time and information to make decisions.
• Pragmatics and extroverts make quick decisions. Don’t overload them with information unless they ask for more.

Is this manipulation?

No!

All you are learning to do is be more considerate. You are essentially giving others what they want most and dealing with them on their terms.

This weekend we were watching The Millionaire Inside on CNBC. The episode was Debt Makeover and one case study hit home.

Paul was a successful entrepreneur who was diagnosed with non-Hodgkin’s lymphoma. He turned his back on his business in order to dedicate himself to his treatment and recovery. He borrowed from savings and started charging inventory to his credit cards in order to keep the business afloat. As a result he is $270k in debt and at risk of losing both his business and his home.

Three things jumped out at me:

• He wants to do right and honor his debts: Recovery starts with taking responsibility.
• By intermingling his business and personal affairs he has put everything at risk: This is why incorporating (or forming a LLC/LLP) is critical. Once you have the structure you must keep your personal life and your business separate. If he had done this it would just be his business in jeopardy. Now he may lose everything.
• This could have been avoided by Business Overhead Expense (BOE) insurance.

What is BOE insurance?

BOE insurance is a subset of disability insurance. It pays your rent, employee salaries, and other overhead expenses while disability pays your paycheck. It basically keeps the lights on until you can get back to work.

BOE insurance is common among profesionals (doctors, dentists, lawyers, etc) but is not so well known by small businesses. It isn’t for everyone but can be a tool to protect your company if something happens to the owner.

More info

Wikipedia

Bankrate.com: When you’re ill, BOE insurance inoculates your business from harm

The CPA Journal: Disability Insurance Planning for Professionals

Financial Web:Disability Insurance for Businesses

QBQ! The Question Behind the Question

John G. Miller. Putnam Publishing Group 2004, Hardcover, 128 pages, $6.15

Personal responsibility isn’t a new topic. It is a core topic for every self help and business guru’s system. Whether you are an entrepreneur or trying to make changes in your personal life responsibility is a key to success.

In QBQ John Miller takes a unique approach to this old topic. He looks at the questions we ask continuously throughout the day. Some we ask out loud: “When are you finally going to finish your project?” Some we ask ourselves: “Why does my boss always say one thing and do another?”

These questions are at the root of personal responsibility. A powerful question leads to action and improvement. A weak question leads to blame and procrastination. By becoming conscious of our internal and external dialog we become more effective. We become change agents. We become better leaders.

In a nutshell we make better choices moment to moment by asking better questions.

3 Guidelines to good questions

• The question must begin with a “what” or “how”
  • Leads to solutions.
  • Don’t ask why: Why is the word of victims. Why me? Why didn’t he finish on time? Why doesn’t he spend more time on my needs? This does nothing to solve the problem. It only adds to stress and worry.
  • Don’t ask when: When implies we have no control over the schedule. This leads to a loss of control and to procrastination.
  • Don’t ask Who: Who is the language of blame. You are basically looking for a scapegoat and it leads to finger pointing. John uses the old phrase “a poor sailor blames the wind.” This could be changed to fit any situation. For example, “a poor manager blames his workers.”
• The question must contain an I
  • I can change only me: The key is to focus on what you can control. Your circle of influence begins with yourself. This is where you have the most influence. You can’t change others. You often can’t control events. It is only our thoughts and actions that we can really control.
  • Take ownership of the situation. Fix the problem and stop trying to blame others.
  • Have integrity: your actions and words must match. This means that you must do what you are asking of your employees. Also, what you say in the office and in your personal life need to match. If you can’t, you either need to enact change or find another place to work. Believe or leave. You must have integrity. What you say in the office and away need to match.

• The question must focus on action
  • People avoid action due to the perceived risk. Remember, there is risk in inaction as well.
  • Action solves the problem and moves things forward.
  • Action leads to learning and growth.
  • Action leads us toward solutions while inaction holds us in the past
  • Action requires courage while inaction is caused by fear.
  • Action builds confidence while inaction destroys it.

What if I’m not in a leadership position?

Leadership begins with personal accountability. He asserts that leaders can be found at all levels. It is something we see in sports all the time. There is often a critical player that helps make everyone else better. It is often a mid level role player, not the star or the team captain.

We see the same things in the businesss world as well. Look in any group and someone always stands out. This person is usually the go to guy (or gal) in the department. The interesting thing is that senority is not the main factor. It is the person who tends to find solutions.

In conclusion

I recommend this book to anyone looking to be more effective or who wants to be a better leader. All in all this is a well written book. The ideas are thought provoking and can be easily applied to all areas of your life. While it is a quick read John comprehensively covers the topic.

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.