Larry Brauner

A Brief Historical Note

I’m old enough to remember when the norm in the America was to work 40 years for a corporation and retire at age 65 with Social Security benefits and a company pension. I grew up with such an expectation.

Technology and economics reshaped the workplace during the last part of the 20th century, and nowadays people will necessarily change jobs a number of times during their careers and receive little or no employer help along the way meeting their long term financial objectives.

Employment relationships are severed with little reluctance by either party. Employees have become a commodity. Both job security and employee loyalty are very much relics of the past.

It is certainly difficult to assert that business is risky but that jobs are risk free, especially during troubled financial times like these. People in all sectors of the economy are losing their jobs, and unemployment will get much worse before it gets any better.

Robert Kiyosaki Revisited

Robert Kiyosaki, author of Rich Dad, Poor Dad and Cashflow Quadrant, compares four different ways to generate income:

  1. Job - You work for an employer. You earn income by selling your limited time. You’re overtaxed by the government. You may however acquire valuable skills and receive access to affordable health insurance.
  2. Self-Employment - You own your job and must work very hard. You receive tax breaks but still earn your income by selling your limited time. You pay in full for your health insurance. You have some autonomy but must nevertheless satisfy your clients’ demands.
  3. Business - You own a system, and you leverage other people’s time and various resources at your disposal such as the Internet. You work hard, but you essentially earn your income by selling other people’s time. Since you’re not selling your limited time, your income potential is unlimited. Many types of business are very risky, but there are others that are not very risky at all. Businesses have many tax advantages.
  4. Investing - You own assets that are called investments. You earn income from these investments. Knowledgeable investors use insurance such as stock options to manage and eliminate the risk of investing. They also achieve the most favorable tax treatment for their income.

Where Theory and Practice Intersect

It doesn’t take a rocket scientist to understand that business and investing income are much superior to job and self-employment income — all other things being equal — and having a business and investing mindset is a wonderful personal asset.

Yet there’s a catch.

Most people are not in a position initially to rely either on business or investing to provide the income that they need for life’s basics. Some people may not have the wherewithal now or ever to make a business or investing work for them.

Jobs or self-employment provide immediate income for food, clothing and shelter. In that sense they can be a good thing.

If you have a job and the right mindset, you can use the base of income afforded by your job as a springboard to future business and investing. You’ll seek ways to develop new business, and you’ll use part of your paycheck and business proceeds to buy income producing assets.

Your progress might be slow at first, but it will accelerate over time as your results are compounded.

My Change of Heart

I used to put down jobs saying that J.O.B. stood for “just over broke”. While there’s much truth in that, I believe today that I was stuck in all-or-nothing thinking.

So don’t you think job or business. Think job and business, or whatever makes sense.

Your comments and input are invited.

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Larry Brauner

Home Business Survival Crash Course

People launch all types of businesses every day.

Despite enormous investment and months or years of preparation most new businesses fail. Their once well lit storefronts and offices are now dark, and their employees are searching for new jobs.

I don’t have precise statistics for a home based business. I estimate that perhaps 98% of new home businesses never earn a dime. If my estimate is too high, it can’t be too high by much. Don’t let anybody tell you otherwise.

My first home business with Excel Communications lost money for five years before finally turning a profit. I have since embarked on other ventures. Some have worked out well, and others not.

Let’s discuss why home based businesses usually fail and what you might be able to do to succeed. First I’ll share my thoughts about this, and then you’ll have a turn to express your point of view.

Reasons for Failure

The following list of causes for failure is arranged with readability in mind, rather than the relative importance of the contributing factors:

  1. YOURSELF - You have an uphill battle if you lack internal motivation, commitment, relevant skills (such as organization, communication, sales, marketing, online social networking or prospecting), proper training, posture, preparation, productivity, or some combination of these.
  2. Others - Other people can lack all of the above. Sadly, they can also lack integrity. I believe that people not doing as they say they will is very disappointing and the greatest business obstacle. Read the story of Orovo and Network Success Builders for a good example of this.
  3. Hype - Exaggeration and misrepresentation of products, services and business opportunities are all too common today as people try desperately to differentiate themselves from their competition in an over-crowded marketplace.
  4. Company Affiliations - Your success is likely to be tied to the success of a parent company. New companies are unstable and inherently risky to do business with. However, old companies tend to have insufficient momentum.
  5. Wrong Side of the Marketing Equation - Your cost per acquisition or sale exceeds the value of the sale. The more you sell, the more money you lose. Every business, even a major corporation, can find itself on the wrong side of the marketing equation.
  6. Over-Reliance on Systems - Your business depends on a system, and when that system stops working, just as systems usually do, your business also stops working. People who preach that people don’t duplicate but systems do are lying big time. Do not fall for this one! What is the truth? Please read on.

Work on Number One

You are #1. Your long term business success hinges upon your mastery of life and business skills and upon your growth as a person. Read books such as biographies, business books and books on personal development. Read blogs, watch videos and associate with successful people. You will improve your chances of succeeding in your personal life and your business endeavors.

Check Out People and Companies

Do the best you can to check people’s backgrounds. Request references.

Look up companies at the Better Business Bureau, and see if they belong to the Direct Selling Association — even though neither guarantees a company’s legitimacy!

Google people and companies alike, and don’t stop after page one or two. Keep going. Try adding in keywords such as scam, rip-off, accused, alleged, cheated, lied, stole, swindled, cheated, convicted, etc.

Limit the extent to which your success depends on people and organizations doing exactly as they say they will. Try to diversify your business so that it doesn’t collapse if a single person or company flakes or rips you off.

If you’re honest like I am, you’ll tend to place too much trust in others. Trusting people is good, but be sure to limit that trust and the damage that any single person or business can inflict on you.

Don’t Fall for Hype

Do you believe everything you hear? Then I know somebody who will sell you the Brooklyn Bridge. Old New York joke, but I can assure you that the joke doesn’t date back to before 1883.

All kidding aside, there are people out there who will say just about anything to get you to buy from them or to recruit you into something.

Do your homework. Use common sense. If something sounds not quite right or too good to be true, assume that it is until you believe that you’re proven wrong.

Consider getting a second opinion from a highly knowledgeable independent third party. Don’t ask Uncle Harry, your neighbor or your accountant. Ask an expert. You will probably have to pay for the advice you get, but the time and money you can save by avoiding a scam or jumping into a business with the wrong expectations may far exceed the cost of a qualified consultant.

Old vs. New Companies

Mange your risk.

Younger people can assume more risk than older people, because they have more time to recover from setbacks. A startup business will best suit a young person. High risks, high rewards.

Older people ought to be more conservative and choose a business with a proven track record.

If you are middle aged or older, here’s another option for you. Spend part of your time and energy on a new business that’s just launching and the rest of your time and energy building something safer.

Even a young entrepreneur can use this strategy, but it does have a drawback. It’s harder to focus on two ventures than on one.

Business Analysis 101

If you’re math phobic, this one is going to be difficult, but help is available.

Your cost per acquisition should be less than the net present value of your expected future profits from the acquisition, also called the customer lifetime value.

CPA < NPV

In plain English, don’t let your cost per sale (in both time and out-of-pocket dollars) wipe out your profit. You can never make it up in volume.

If you cannot figure this one out, get help from a business analyst or a qualified accountant. You’ll have to do your part. You will need to track your sales and your expenses very carefully in order to reach a correct conclusion.

If the basic marketing equation (CPA < NPV) doesn’t balance in your favor, consider using an ethical funded proposal to fix the problem.

Sell another more profitable product or service to “get the customer in the door”. Then sell your main product, service or business opportunity to the customer on the back end.

Systems Don’t Work

Last but not least, despite all the hype about the SpiderWeb System and the Reverse Funnel, systems don’t duplicate. They don’t work for long. In the home business world these systems produce a bunch of clones that run around competing with each other. Believe me, that’s not a pretty sight.

Unfortunately people don’t duplicate either. We know this from the childhood game of Telephone. The message always gets distorted. Any person can become a weak link in the duplication process.

Now, the one thing that does duplicate…

Leadership

Leadership does duplicate. Leaders will get the job done. If more leaders are needed, they will find them.

How do you find leaders?

Be one! Leaders attract leaders.

Now It’s Your Turn

Be a leader. Write a comment.

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Larry Brauner

My tongue in cheek April Fools post Alphabet Wars was right on. Owners of social networking sites are increasingly facing tough naming choices that strain the 26-letter alphabet.

One of the newest players on the online social networking scene is Wowzza. The name tells us little more than that perhaps somebody’s keyboard tends to stick on the letter z. Why another social networking site? What’s different about this site?

Wowzza is an exclusive members-only site, not a free social networking site like MySpace, Facebook or Yuwie. All members are premium members.

Founder Jim Vigilante’s aim is to attract serious marketers and entrepreneurs. Jim is also playing up the referral income potential of Wowzza’s 3×9 forced matrix payout.

In an upcoming post I’ll explain why I am not networking at Wowzza.

Don’t miss any posts. Register, it’s easy, or subscribe to my RSS feed!

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