Smoke and Mirrors

"It was all good just a week ago." - Jay-Z

Seven days ago, I woke up in Las Vegas.
Yesterday the Federal Reserve reported that the economy is still contracting, but at a slower pace.

Nine days ago, the wait for a taxi at McCarran International Airport was 20 minutes long on Monday morning.
According to our driver, cabbies used to make upto $400/day driving in Vegas, today it's is half that.

Eight days ago, I fell asleep in a suite at the MGM Grand.
Today, MGM Mirage's stock closed at $6.18. Within the past year it's been as high as $53.67.

A week ago, I had an in-room breakfast at The Four Seasons hotel Las Vegas. Those were some very expensive eggs.
Before it was taken private, by none other than Bill Gates and a Saudi Price, shares in the Four Seasons traded at $60.66.

A week ago, the strip was packed with visitors trying to see the water show in front on the Belagio.
Never mind that Las Vegas is in the middle of the desert.

This past weekend I had dinner at Maggiano's in Hackensack, N.J. with a dozen friends to celebrate a birthday. The bill came to $750. Finding a place to park took 4 loops around the lot.
One friend at dinner has been unemployed for over a year.

This morning, I saw the sweetest Maserati Quatroporte on the Long Island Expressway.
Yesterday, GM announced another round of layoffs.



It is no secret that we are in the middle of a recession, but like Vegas, the world in which we live is full of smoke and mirrors.

Regardless of what's going on, the number one objective is to not lose all your chips.

-whatdabusinessis.com

The Right Business Model

Is there such a thing as the right business model? Or, the perfect business model, or the best business model?

I posed this question to a friend of mine last night, but I can't honestly say we figured anything out.

The conclusion that we came to is that there are many different business models, each with its own pros and cons.

Without getting too theoretical this is what we came up with.

1) There is the retail business model, where you buy a product, and sell it either directly or through a distribution channel. This is probably the most common.

2) There is the subscription business model, where an individual or group pays a flat fee with minor fluctuations in costs for a service or product for a fixed amount of time. Your utility, phone, or cable company fits into this group.

3) There is the insurance business model, where again, an individual or group pays a premium for access to service or product for a longer amount of time, but doesn't always use or need the product. Medical, auto, and homeowners insurance are the usual suspects in this group.

4) There is the Multi-Level marketing business model, where a product or service is sold through a defined network of distributors who benefit from the sale of a product across various levels of involvement in that sale. Franchising is similar to a MLM, but is generally more rigid and capital intensive to get involved with.

5) There is the consultation business model, where services are rendered on a per-diem or set term basis for a fixed fee. However, consultants have to continually seek out new clients to maintain a steady stream of income.

6) Lastly, we have the contractual business model, where a basic service is provided at a set price for a set time-frame and is expected regardless of outside market forces. This arrangement can be found in just about any field, but is prevalent when dealing with services to large organizations or the government. This model is great if your budgeting an management skills are excellent.

We figured that for any business, there might more than one business model that might apply. However, as it relates to your business, you have to define what kind of structure you are most comfortable working within. It should also be noted that even though a business might have one business model, it is possible to have more than one revenue stream.

For example a publisher might make a little money from selling subscriptions, but makes substantially more from selling advertising. In addition they might take in revenue from the sale of branded products, or from consulting for other publications.

Your job as a business owner, entrepreneur, or investor is to seek out business models that feel right to you.

It's only right if it works for you.

-whatdabusinessis.com

Continue To Deliver

Dear Readers,

A couple of months ago I posted a piece about "Executing the Basics, Flawlessly" and I must say that at no other point in time is this truer than today.

Regardless of your occupation or business, project or venture, there remains a constant need to perform as though today was your last.

In business, as in life, you never know what is going to happen. Today customers could be lining up at your door, tomorrow they can be down the block. Today you gain a new client, tomorrow a client could tell you they no longer need your services. Today you could bring new investors on board, tomorrow they can cancel the check. There are no guarantees.

However, in business as in life, you must continue to deliver.

By deliver, I simply mean that you must constantly exceed expectations. I've spoken before about going that extra step, making that extra call, and doing the necessary follow-up. Those are all givens.

It is imperative to continue to deliver. There is nothing more impressive than when a customer or client walks away 110% satisfied.

It doesn't matter if you are in school, working a 9-5, or launching a start-up, you must continue to deliver. Whether you have 1 or 1000 employees, you and them must continue to deliver, day in, day out, and on the weekends.

Yesterday I picked up my niece from school and she was soooo eager to show me her report card. Public school's in the Bronx use a number grading system; she got all 4s, the highest you can get. After much praise, I made sure she got started on her homework. And, as I told her, "They're going to have to add 5s next marking period."

Whatever space life might find you, there is always room for improvement.

Each day, God willing, is another opportunity for you to deliver.

Best,

-whatdabusinessis.com

My Stimulus Check Just Arrived.........Kinda

WOO HOOO!!!!!

Despite the dismal unemployment figures that were released two weeks ago, some of us
are very happy to be receiving a paycheck.

For me, this happens every Thursday, like clock work.

A minute ago, I looked at my pay-stub and noticed that there was a little something extra courtesy of President Obama.

$10.25, One Jackson and One Washington (coin).

Thank you Mr. President, and Mr. Geithner, and Mr. Bernanke. Regardless of those who criticize your efforts, I applaud you all for my $10.25.

In two weeks, I can take the wife to a movie; in three she could have popcorn and a soda.......if I save up. Better yet, I can buy a couple gallons of gas, or a cd (preferably that Dream Love vs Money which is fire), or get that needed car wash.

Honestly, I haven't done the math to see what the effective Federal tax rate is now, but I do know that for the foreseeable future I will see an extra $10.25 every week. Now if we can only get that FICA character and Mr. Patterson and Mr. Bloomberg to follow suit, we can really get this stimulation under way.

Just think, if I/you had the discipline, in a year you could have $533, all thanks to the federal government. I gladly took that $600 from Mr. Bush, but I think I'm going to enjoy this $10.25 a little more. Had Bush done this during at the start of his eight years in office, I'd definitely be ballin' by now - instead of sitting at work blogging.

Never mind all that, thank you Mr. President, job well done.

Creating Deals in Difficult Times

So I'm riding the train home yesterday with a very beautiful young lady, but this post isn't about her.

While reading The New York Times, I came across an article by R. Perez-Pena which reported how the Times raised $225 million, to pad it's bank account, by selling part of its state-of-the-art headquarters building in New York City. At the same time the Times will lease (pay rent) back the property for a period of ten years then have the option to repurchase it at a set price of $250M.

The deal itself isn't uncommon in the world of real estate investment trusts, however it was artfully executed and should benefit both parties over the long term, but more importantly is what this means to your business as we ride out this recession.

As a business owner, be it a full fledge enterprise with employees, W-2s, benefits, and sick days, or a one-person conglomerate, in these times you might want to consider alternative deals to keep your operation going. If you are just thinking about starting your business, also consider how you are going to fund it over the long term.

The Times is not much different from your local bodega or your own company. They provide a product and services which people pay for. However, the time that lapses between receipt of payment and the actual providing of goods varies greatly, so in order to keep the lights on, businesses often borrow from banks, shareholders, or against their assets in the hopes of having a windfall that will allow them to catch up and possible get ahead.

It's like making the minimum payment on credit card bills then using your tax return to pay them off.

Back to your business. As you go about trying to figure out how to grow your business, gain new customers, or sell more product, keep in mind that you might have to do some creative dealing to get ahead.

As a friend of mine mention recently, you might have to consider bartering your services or goods, in exchange for what you need to move your business forward and generate income.

Outside of visiting a loan shark or theft, one of your ongoing goals as a business owner is to raise capital and stay stocked. Doing so is easier when you have a tangible product, but even if you're a creator of content (blogger), your main job is building your brand and having people fund your ambitions.

So go out there in these difficult times and create deals today that will allow you and your believers to proper tomorrow.

-whatdabusinessis.com

Freeze Layoffs, Save Jobs?

A friend of mine calls me up yesterday with and interesting proposal.

We often go back and forth with business ideas, our observations on the economy, and just the overall state of our financial well-being. We've done this since we were in high school and over the years we've come up with some good ideas, but haven't always
been able to capitalize on them.

In a nutshell, he said that the government should put a 3 month freeze on layoffs nation wide. The goal would be to keep people working, so that they can keep spending and paying their bills. If you have a job, you are likely to spend some portion of your income and contribute to the circulation of currency.

On the surface this seems like a noble idea, but after some thought, it would only drive private enterprises into the ground and delay the inevitable.

In theory, placing a freeze on layoffs would curtail the number of people receiving unemployment benefits from the government and ease the pressure on the federal budget. It would also enable employees to prove their worth to their managers and possibly increase productivity in the process.

However, keeping people on the payroll is generally not in the best interest of a company that is trying to save money. Additionally, we would have to factor in the size and employee requirements for such a plan.

Unlike freezing interest rates or converting adjustable rate mortgages into affordable fixed rate mortgages, placing a national freezing layoffs falls out of the scope of government. Of course extraordinary times call for extraordinary actions, but private companies should be regulated by the government, not tied to it. The government can set a minimum wage, set safety guidelines, impose taxes, and foster better working environments, but telling an employer that they can not scale down when there aren't enough customers for growing inventories is not their job.

It's like telling the Gap, they have to keep seasonal employees on until March, even though the holiday season is three months behind them. It's like going into a dealership and having 10 sales associates tending to 2 customers, it just doesn't make sense.

We know that all industries are not the same, so applying a moratorium on layoffs in the auto industry is very different from doing so in retail or health care. A band-aid will not help someone who needs stitches, the gesture is nice, but practically flawed.

As I've said many times before, I am not a financial expert or an economist, but as a small business owner there are many proposals, theories, and ideas on the table about how to keep the financial system from deteriorating further, but freezing layoffs, to save jobs is really not one of them.

-whatdabusinessis.com

If You Don't Have A Team, Then Recruit

So I watched that piece on NEWBOs last night on CNBC and I have to say, I was thoroughly impressed by the way it was put together.

Not to be confused with the organization, New England Women Business Owners, NEWBO's as coined by Lee Hawkins of the Wall Street Journal, refers to the New Black Overclass. It might take some getting used to, but I'm sure this term will make it into the national vernacular in no time. We are no longer relegated to just lower, middle, and upper-class.

This new Black Overclass, refers to a generation of self-made African Americans who have achieved a level of success that dwarfs that of most others in their respective industries.

Last night's show profiled Lebron James and his 3 three partners in LRMR Innovative Marketing & Branding, Kirk Franklin (gospel music), Terrell Owens (football), Torii Hunter (baseball), Robert Johnson (RLJ) and the Williams Brothers of Cash Money Records. There were a host of others who had cameos including, Russell Simmons, Sean Combs, Lil Wayne, and Melody Hobson.


Above and beyond each of their stories and how they came to reach the level of success they obtained, what sticks with me is the team of people they each must have around them to achieve their goals and maintain their wealth.

If one seeks to be a NEWBO, your team must also be in the same mental plane. Vision by itself is copper. Vision coupled with talent is silver. However talent, teamed with vision and management is gold. But if you want to go where others have only dreamed of, it takes an exceptional team of people to mine acres of platinum and diamonds.

The objective here is not to count millions or diamond rings, but to highlight the achievement of these individuals and show the possibilities of what creating generational wealth can do. The great grandchildren of Sam Walton (of Walmart) will never have to worry about funding their education, that worry has been eliminated from their consciousness. Although most of the wealth that is being created in Black America, is concentrated in the sports and entertainment world, it doesn't mean that there are not Blacks in medicine, publishing, law, journalism, real estate, hospitality, and every other field. If managed and organized properly, the combined wealth of today's NEWBOs - when combined with political access - could open plenty of doors for generations to come.

Jay-Z once said that: "All us blacks got is sports and entertainment, until we even Thievin, as long as I'm breathin / Can't knock the way a nigga eatin - fuck you even!"

However, that was in 1995. Jay-Z himself has attained certain levels of wealth that most Americans will never see, but despite is musical talent, his business acumen has been honed by choosing the right team members and partnerships. Roc-a-fella was/is not a one-man show.

So as you ponder your route to success, start putting your team together. You might not be able to approach it as the Steinbrenner's do the Yankees (by throwing money at the best), but you can still seek out those with talent that share your vision.

If you don't have a team, it's time to start recruiting.

-whatdabusinessis.com