Monday, March 28, 2011

Know Your Net Worth

If you don't know what your net worth is, it's time to find out. Net worth is the total assets of you or your company minus your liabilities. (It's what you own, less what you owe.)

It's a very simple metric, but essential that you know it.

I'm offering my simple Quick & Easy Net Worth Statement to all those who care to comment on my blog in the next week. It's a simple fill-in excel spreadsheet that will take a few minutes to complete.

Into the spreadsheet's top section, you will enter your bank balances (checking, savings, investments, etc); then you will input the value of your assets like home or car in the middle section; then, in the final section you will enter all your credit card debt, mortgage, car loans and student loans.

The resulting figure at the bottom of the spreadsheet will either be a negative figure or a positive figure. If the figure at the bottom of your net worth statement is a negative number you owe more than you own and it's time to start looking at ways to attack your debts.

Monday, March 21, 2011

Employment Strategies

Friends of mine at Verso Books in Brooklyn are promoting one of their titles: Intern Nation, How To Earn Nothing And Learn Little In The Brave New Economy.

According to the author, Ross Perlin, "almost half of all internships are illegal under the Fair Labor Standards Act" and this "exploitation saves firms more than $600 million each year".

I'm tempted to believe his data. I've worked for many companies who use interns and, while it appears to be a good way to get a foot in the door, it has always been a wonder to me how they learn anything while they make coffee runs, photocopy, answer phones, pick up dry cleaning, walk dogs and deliver packages. New York operates on a much quicker pace than other cities too, so the humble New York intern must do everything very very quickly; how much then could they possibly learn just by being in the office?

Commenting on Verso Books' blog, Frances Fox Piven, "Distinguished" Professor of Political Science and Sociology at the Graduate Center, CUNY says: "Cloaked in the innocent idea of the intern, aggressive employers are using young people trying to get a foothold to weaken the leverage of existing workers, especially professionals. Ross Perlin gives us an account of another subterranean strategy to undermine working people in the US.”

While I believe that a young, inexperienced intern could hardly usurp a seasoned professional in the way that Piven describes, it's true that every year thousands of students emerge from college ready to work for free for many years. How can a graduate with hefty student debt compete with that?

Hardly any companies are hiring at the moment. Even if they were, they would have their pick of the best and many more who are willing to work for free. Employers appear to have the upper hand.

To the unemployed who have always relied on the comfort of a W2 salary, may I offer a complete reversal of strategy.

- Treat yourself as if you are a business and pursue a handful of part-time jobs. Employing someone is an expensive commitment: payroll taxes, unemployment insurance, worker's compensation, health care and disability insurance, are all things that frighten the modern business owner who is struggling to find customers. You can only succeed, wrongly or rightly, by putting yourself in their shoes and adapting to the economy.

- Join networking groups, get business cards and offer your services as a consultant. Business owners still need help and if they can hire freelancers or other business owners to help them it will be easier on their budget.

- Read non-fiction in your area of expertise and keep abreast of local news and blogs.

- Interest rates on savings have never been lower. There are plenty of business people with money out there who are looking to get a better rate on their savings than 2%. Put your side job or hobby to good use by writing a business plan and finding small loans for local entrepreneurs.

Sunday, March 13, 2011

Stock Market Strategy

What NOT to do
Subject of the week is the stock market. Whether stinking rich or moderately wealthy, nobody wants to invest in it at the moment. When it comes to money we have long memories and most of us got burned in the last five years, losing at least half if not all our investments. We are still licking our wounds.

The above graphic is a fine illustration of how you should not play the market, but unfortunately it's what a great many people do. They get greedy and buy when the market is going up and fearful and sell when the market declines.

The obvious strategy would be to *invert* the above graphic and repeat until rich.

When approached this week by a client for a suggestion of where to put his money, I recommended property. The bubble has burst and there are great deals out there in certain areas for those who are solvent. If I could get another mortgage, I would jump at the chance to buy a rental property with slow long-term gains. If I had an inheritance or tax refund this is where I would put it.

When shopping in the stock market, be frugal. See what's on sale and pick something that will still be valuable in years to come when you retire.




Sunday, March 6, 2011

Business Roundtable

A few statistics from the Office of Advocacy and the SBA: In 2009 there were 27.5 million businesses in the US of which 99% were small business. The latest available Census data show that there were 6.0 million firms with employees (employer firms) in 2007 and 21.4 million without employees in 2008. A small business is defined by the number of its workers: fewer than 500. Small businesses employ an astonishing half of all US workers. In 2009, 660,900 employer firms closed, which is a turnover of about 10%.

So you can safely ignore commonly repeated statistics like "80% of all businesses fail in the first five years" for these reasons and the fact that information on small businesses without employees is especially hard to obtain because they do not need to register with entities like the Department of Labor who assess the data.

The economy is still a challenge for small businesses, however. Finding new custom and income streams has never been more difficult in an age where thousands of new graduates emerge from college prepared to provide for free the same services that you offer.

The unemployment rate is now almost 8.9%.

Therefore, if you're presently a struggling small business owner thinking of closing your business to "get a proper job", the likelihood that your new employer will fail, leaving you unemployed, is almost the same as the likelihood that your own business will fail.

So stick with it.


- Remember why you started your business in the first place and imagine you're in that same place again. What would you change? 
- Think of a person you know who has succeeded in your particular business and figure out how they got there. 
- Think of all the best parts of each year you have been in business and list them; evaluate how you can replicate all those good times in one year and make that this year.