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Archives for August 2007

The Entrepreneurs Action Toolkit: Turning Lemons into Lemonade

Seeing lemonade

Entrepreneurs rarely have a solid business plan. They fly blind and frequently jump into things they know very little about.

That’s true. It’s also necessary.

Entrepreneurship is Vision

To be an entrepreneur, you have to take above-average risks. The risk comes from venturing into uncharted territory, and while sometimes that territory is only new to you, other times it’s truly unique. It’s new to everybody.

To take the risk, you have to see an opportunity where others see none. You have to see a tall refreshing glass of lemonade when everyone else just sees a piece of sour fruit. The opportunity is everything. You figure out how to buy lemons, how to make lemonade, and how to sell it as you go.

An Action Toolkit for Entrepreneurs

Ideas need action or else they just stay ideas. With some business savvy and some actionable strategies, you can get your vision rolling and keep it rolling in the right direction …

  1. Be unstoppable. There are a hundred hurdles to jump just to get started. Everything from procrastination to being surrounded by people who love your lemonade idea, but don’t believe it’s possible. Stoke the fires every day and keep your momentum going. The best question to ask is “how can we take it further”? Answer that question every day with action.
  2. Sell early. Pre-sell … you see ads selling condos all the time for places where they haven’t even broken ground to start construction. Selling before you purchase gets you in tune with your market and gets you to profitability better than anything else can. It bankrolls your business.
  3. Keep on keeping it simple. Every great business idea starts out as a simple, kick-ass, visionary marvel. And every day after that adds another complication. A big threat is trying to be too many things to too many people which happens when you try to capture a dollar here and a dollar there to force profitability. Evolve and expand but keep it simple every step of the way.
  4. Never flog a dead horse. As much courage as it takes to take the risk in the first place, you need even more to admit defeat and jump off a sinking ship before you go down with it. Pride is not a good friend. This is fight or flight, and when you can’t win the fight, the only way to live to fight another day is to get outta there. There are always other ideas and other opportunities.

Lemonade doesn’t grow on trees.

But if you’re willing to climb the tree to get the lemons, it sure does taste good on a hot summer afternoon.

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Get Out of Debt, Part 3: Thinking Rich

Mountain vista

« Read Get Out of Debt, Part 1: Stop the Bleeding
« Read Get Out of Debt, Part 2: Grab the Bull by the Horns

It’s very easy to add up everything you owe, figure out how long it will take you to pay it off, and get extremely discouraged.

That’s why it’s important to focus on the things you’re doing to get out of debt and not on the debt itself.

The Snowball Effect

As you work your plan to cut expenses, manage your debt, and increase your income, something amazing will happen. You’ll gain momentum. And speed. You’ll start paying your debt off faster and faster until suddenly, you find yourself out of debt and saving massive amounts of cash.

You can thank the universe for this. The universe loves momentum; just look at these catchphrases:

  • It takes money to make money
  • The rich grow richer
  • Success breeds more success

That’s the universe at work. All these ideas say the same thing; if you start down a path, that’s the path you’re on. It’s like practice makes perfect. The more you do something, the better you get at it. And with a 3 point plan (expenses, debt, income), you’ll get very good, very quickly.

Once the snowball effect kicks in, your thinking will start to change. You’ll start to think rich. And once that happens, there’s no stopping you.

Thinking Rich

In a horror movie, the biggest tension doesn’t come after the monster jumps out and attacks the heroine. It comes before we know what to expect. Or when to expect it. The biggest tension sits in the quiet dark corridor before we ever see the monster.

Debt happens the same way. It’s the monsters we can’t see yet that cause us the most tension.

For example, if you’re worried your beat-up old car will break down and leave you stranded somewhere; that tension is worse than the tension of going into debt to buy a new one that’s reliable. It’s easier to take on the debt because that’s a monster you can see.

But if you can buy a brand new car tomorrow, debt free, that tension doesn’t exist. And the chances are excellent that if you have the money, you have better things to do with it, like investing it.

Suddenly you don’t need a new car.

That’s the essence of thinking rich. As you make progress paying off your debts, not making those payments will cause you more tension than the thought of your beat-up old car breaking down. And when you start saving and investing your money, not doing that will cause you more tension than the things that might happen.

You know you can buy a new car when you need to. Just knowing that, slays the monster. Knowing is everything.

Now you know.

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Get Out of Debt, Part 2: Grab the Bull by the Horns

The bullfighter

« Read Get Out of Debt, Part 1: Stop the Bleeding

Like most things, getting out of debt is about doing the right things in the right order. So it’s no accident that Part 1 is about how to cut your expenses.

Cutting your expenses is the easiest part. And making some progress there will give you just enough momentum and enough light at the end of the tunnel to do what you have to do next. Which is manage your debt and increase your income.

It’s time to get in the game. It’s time to grab the bull by the horns.

Managing your Debt

Consolidation is NOT the name of the game.

The problem with consolidation is it usually requires you to get more credit like a big low-interest loan to put all your debts into. But the danger is, you still have access to all the credit that’s hurting you now. It’s better to consolidate using existing credit. If you already have a low-interest line of credit, transferring your expensive credit card debt to it will cut the amount of interest you’re paying every month.

The best way to manage your debt is to use a simple set of rules.

  1. Pay off high interest debt first. This means making minimum payments on your low-interest loans and making the biggest payments you can afford on your high-interest credit cards.
  2. You only need one card. You can do anything, anywhere in the world with a single Visa or Mastercard. All you need is one of those cards. Cut up the rest and pay them off first.
  3. Pace your payments. Cutting your expenses and increasing your income is what wins in the end. If you make a debt payment that you really can’t afford, and then have to rely on your credit to pay the electric bill 2 weeks later, you’re keeping a bad habit alive. Pay what you can pay while still living your life.
  4. Practice smart habits. At some point, you’ll pay off all your credit cards including the one you’ve decided to keep. Use it, but only for things you would normally buy like groceries. While you’re working to pay off the rest of your debt, pay that credit card off in full EVERY single month.

Now, you’ve cut your expenses and have started managing your debt. It’s time to put the final piece of your plan into action.

Increasing your Income

The flip side of cutting your expenses is increasing your income. It’s not enough to do one or the other. Doing both will literally double your results and get you out of debt faster than you ever imagined.

Here’s a list of the obvious:

  • Get yourself a pay raise
  • Work all the overtime hours you can
  • Get a second job
  • Work odd jobs that you find through friends, relatives, or neighbors
  • Find a different job that pays better
  • Start selling all the stuff you really don’t need
  • Concentrate on one thing with your own small business; selling

The list is just a reminder. You already know what to do and how to do it. The trick is to make it your mission to make at least 2 of these things happen.

Increasing your income might be the hardest part of getting out of debt. But by now you’ve got the bull by the horns. The bull is tired. And the crowd comes to the arena for one reason; to stand up and cheer.

They need you to win so they can stand up and cheer.

We’re not quite done. In Get Out of Debt, Part 3, I’m going to talk about the mindsets of debt vs wealth. As you make real progress in eliminating your debt, how you think about money will change.

You’ll start to “think rich”.

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Get Out of Debt, Part 1: Stop the Bleeding

The blood money of debt

Several years ago, I had a mass of debt that I just couldn’t shake free.

This might sound familiar if you’ve ever struggled with debt yourself. I’d gain a little ground and pay some of it off, and then a couple months later I was right back where I started. Whenever I worked out a plan to get out of debt, the numbers always told me it would take a few years to pay off.

But it only took me one year.

This is a 3 part series on how you can get out of debt.

You Have to Stop the Bleeding First

Just like running a business, your personal finances have 2 components; income and expenses. When your expenses are greater than your income, you’re digging yourself deeper into debt. And this can happen gradually over time, or it can happen after a catastrophic event in your life.

You have to deal with these expenses before anything else. Just like a trauma surgeon, you have to stop the bleeding first.

Make Two Lists

The first list, we’ll call Fixed Overhead. These are the regular bills you have every month, including your minimum debt payments. Things like the mortgage, the electric bill, cellphone contract, car payments. Make a list of everything.

The second list, we’ll call Variable Costs. These are things that you buy all the time where the costs change depending on what you’re doing, and how much of it you’re doing. This is everything from buying coffee on the way to work, to food, to entertainment, to buying a big screen tv.

Between these two lists you should account for every single dollar that you spend on a monthly basis.

Now Use these 3 Simple Rules

To get out of debt and get your life back requires change. To make that change happen, you have to change the rules. There are 3 rules and you have to apply at least one of them to every single thing on both your lists.

Rule #1: Simplify

Simplifying your life is the simplest way to cut your expenses. There are things you have that you just don’t need. If you get the newspaper delivered, have an internet connection and 300 cable news channels, it’s time to simplify. Pick one.

A friend of mine got rid of her house phone and just kept her cellphone. Get creative.

Rule #2: Downsize

Downsizing means getting rid of things you have that are a big drain on your cashflow and replacing them with cheaper options. And downsizing usually works best with big things like where you live and what you drive.

It means getting rid of that massive $600 a month SUV lease payment. Sell the truck or find someone to take over the lease. Get yourself into a vehicle that’s half the price. Or take it a step further and start commuting. Take it another step and you might buy yourself an old bicycle at a garage sale.

Whatever it takes.

And when you downsize something you own (an asset), you’ll lower your monthly costs, and end up with some extra cash in your pocket too.

Rule #3: Replace Old Habits

Some things are not easy to simplify. If you’ll absolutely die without your morning coffee, then instead of cutting it out all together, start brewing yourself a cup and taking it with you. You’ll save an enormous amount of money over paying 5 bucks a day for capo grando whatever-o.

And even if you have to buy a coffee-maker to replace the habit, the money you save will pay for it in a week or two. That’s a killer return on investment.

Replacing old habits also works great for cutting back your entertainment budget. Spend more time with your friends and family instead of going out to costly events. Or find a new passion or hobby that can fill your time without emptying your wallet.

It’s Time to Get Started

Even if you’ve already cut everything you think you can, make your lists and apply the rules. It’s a very powerful exercise and you’ll find things you don’t need, things you need less of, and things you can replace.

In Get Out of Debt, Part 2, I’ll give you some action items to help wrestle your debt down to the ground and build up the income side of your finances.

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Blogonomics Part 2: Your Best Competitors are your Best Friends

Finding your way

There’s something strange that happens in business over time. Your competitors will often become your friends. And should. This is true in any business. But in blogging it’s doubly true.

So while great content might be the first pillar of good blogonomics. The next, is other bloggers.

When your competitors become your friends, you make each other better. After all, who better to share ideas, stories, and strategies with than the people who have the same goals that you do. The people, doing what you’re doing.

So let’s go learn something about blogging from a few friends …

Some Blogging Secrets

First, Trizle teaches us that there are no secrets worth keeping. A marketer once told me a brilliant idea for a new beer. Bikini Beer. Catchy, viral, you could have a lot of fun with the packaging. I’ve told quite a few people in the bottling industry about it … haven’t seen it yet. Your secrets are safe.

Allen Taylor teaches us that online marketing is much like offline marketing. If you can do one, you can do the other. If you need help with one, get help with the other.

Chris G teaches us that compelling content means you’re only as good as your last post. Hollywood filmmakers live and die by that philosophy. And in the last couple weeks I’ve had a nice jump in RSS subscribers, simply because I wrote less often. And more betterer.

Liz teaches us how to clearly know what to do. Someone in the comments quoted Yoda; “Do or do not. There is no try“. It doesn’t get clearer than that.

Tynan writes a guest post that teaches us that radical change requires … radical change. Clearly, if you want to change the results you’re getting, the first step is to ask yourself, “by how much”?

Nate and Josh teach us how to make that change by just doing it. That’s what they did with their first video blog. They just fired up the camera and went for it.

Steve Roesler teaches us how to not fear success. From your peers. Or for that matter, the success OF your peers. And check out the classic No Fear shirt he replicated for me at the bottom of the post. I miss that shirt. I learned a lot from it.

Martin Reed teaches us that building your community is about making it a place where people want to get involved.

Life Remix teaches us the power of what we can build if we do.

And Gregg Hawkins teaches us that everyone strives to be the best. Even Hooters girls.

Learn. Teach. Trade your secrets of the trade.

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