Business Impact Of Japanese Earthquake And Tsunami

Unless you have been living under a rock since Thursday, no offense to those of you who actually do live under a rock, you know about the huge 9.0 earthquake that rocked Japan. If that was not bad enough, the earthquake was followed by a major tsunami that flooded much of Northeastern Japan. The events impacted most of Japan and will have a major impact on the Japanese government and economy for some time in the future. But how does this affect you and your small business?

Before I get started, I don’t want to overlook the human toll. I feel for the people of Japan and I hope that anybody who can be rescued will be, and that things will get back to normal as soon as possible. I also extend my condolences to anyone who lost a loved one in Japan.

Impact on Oil and Commodities

Most small business people put gas in their car and buy commodities like food (wheat, corn) and paper (wood).  Japan is a big importer of oil and buys many raw materials from other countries to produce electronics, automobiles, and heavy machinery.  The near term impact of this disaster is that many businesses in Japan are off line and will not be buying raw materials.  This is likely to bring down costs of commodities in the very near term.  Hopefully this means that gas and food prices will go down in the U.S.

Having said all of this, I would expect commodity prices to also swing higher, perhaps much higher, as Japanese industry comes back on line.  Companies elsewhere will try to keep up with demand for items that are traditionally Japanese, and once Japanese companies start buying commodities again, this will produce an above average demand.

Impact on Japanese Imports

It is likely that there may be shortages of goods produced in Japan and that the costs of existing inventory and replacement products will rise.  Many finished goods may be impacted, such as automobiles, computer accessories, industrial equipment, engines and parts, semiconductors, machine tools, and telecommunications equipment (http://www.worldsrichestcountries.com/top_us_imports.html).  There may be US-based manufacturers that try to keep up with the demand, but we may see some near-term shortages and price spikes.  Longer term we may see an oversupply of finished goods as Japan begins supplying the market again.

Impact on Nuclear Power

Many countries talk a good game about wanting to end nuclear power use, but when it comes down to it, it is hard to generate enough electricity for a world population that demands more and more.  The near term effect may be to slow or stop existing projects, or especially in the case of the US, prevent starting new projects in the near term.  People’s memories are short though and eventually nuclear power projects will start up again.

The near-term impact may be to companies involved with the nuclear industry and an increasing demand for energy alternatives for nuclear, such as solar and wind.  Unless something changes though, solar and wind will not create enough supply.  Natural gas may help somewhat but with increasing demand for natural gas, we may eventually find ourselves short on supply with rising prices.  Eliminate nuclear and it will put increasing pressure on fossil fuels, raising prices, until it makes economic sense to find more supply or spend more money on research and development for alternatives.

So in the near term we may see nuclear fade away, but in the longer term it will be back to try to quench our unquenchable thirst.

The General Economy In The Midterm

With the Japanese disaster, I see countries spending more to help rebuild Japan, which can only be a positive impact on the world economy.  Countries tend to reset their priorities after a disaster of this magnatude, until the bill collector knocks at the door again.  If the United States helps without offsetting the spending through cuts elsewhere, we could see rising taxes now or in the future.  I think government likes to go after company profit and tax it like crazy much more than going after the income or spending of individuals.  In either case rising taxes will have an impact on our economy for the negative, unless the government can also pay down debt.  Decreasing debt could see an increase in business investment especially with the aging population, as long as deficit reduction is attained mainly through spending cuts.

Of course spending cuts is somewhat bad for the economy as it affects jobs and programs.  Pushing jobs out of goverment and into the private sector may see an increase in overall productivity… so ultimately, who knows?

What do you think our economic future will look like after the Japanese earthquake?

Other Opinions:

Remarriage After Divorce

In the blink of an eye, that which you worked so hard for can be dissolved, leaving you out in the cold.  And while you may think I’m referring to a marriage between a man and a woman, this is actually a business blog, so I am referring to a business failure.  I used to say that the failure of my network marketing business was like a divorce and I wasn’t ready to be remarried.  So I went on to school in 2001, getting my MBA in 2009.  You may know this if you’ve followed my blog for a while.  You may also know that I formed an aimless corporation in 2008.  I wanted to start a business again but wasn’t sure exactly what.  I thought, well maybe I’ll start my own network marketing product company, but I wasn’t completely sure what I was going to do.

Since 2008 I have taken on some consulting, here and there, but in 2010 my decision to go into consulting full time was solidified with the pink slip.  I was laid off from my employer and I had enough luck to land, the next Monday, at another company doing full-time consulting.  Then I verbally signed a contract with a friend and did a few hours for him every once in a while.  This contract was dissolved a bit later, I guess you shouldn’t work for friends.  We were heading into the winter and it was the busy time for my other client, so I just went full time with them through March.  March is now approaching and I’m considering asking for another year, which I really don’t think is going to be a problem.  So I will be full time in my own business for more than a year as of June.  That is better than I did in my first business, when I was full time for about 6 months before I went back to work.  The difference this time is that I am “working”, i.e. selling time for money, so it doesn’t feel like I’m working for myself.

When we had our first business, it was a lot of work for very little initial return.  But by the time I quit my job, there was very little to do and plenty of money.  It was kind of weird.  I wasn’t prepared for the change.  After a few weeks, I knew I had to go back to work.  This was before the beginning of the end; I knew I wasn’t ready to be flooded with time.  But before I had quit my job I was so burned out.  We had worked our tails off, my mind was mush, very little sleep for a couple of years, virtually could not do my job any more.  Six weeks later, I couldn’t stand all the time.  Then within 6 months, virtually no more business.  It was painful.  I was very bitter and I “never” wanted to do it again.  We put in all that work and it was destroyed in a flash.

A lot has changed since then.  In addition to my consulting, I am starting to build a network marketing business again.  This with a company I’ve been associated with for 18 years.  I signed up when I was 28 years old and did a little bit, but when success wasn’t instantaneous, I quit trying.  But I did renew the membership every year.  Then we started our “first” business in 1997, our first successful business at least.  So I came back to my original network marketing company full guns last year and am actually doing pretty well.  It’s a lot of work but it’s growing.  I’m happy to be doing it again, and this time I don’t think I’ll have problems with the company.  It’s a little weird to be using the same muscles again after all this time, but the memory is still there, and I feel like I’m actually pretty good at it.

Have you ever had a major business failure, and what did you do to come back from it?

How To Help Small Business Create Jobs

Several things have to happen for me to decide to hire: 1) I have to have the business to support the new employee, 2) I have to have work for that new employee to do, 3) I have to be able to know that the employee is doing an appropriate amount of work, 4) I have to be able to find a qualified person, 5) I have to have no other choices.

I have to have the business to support the new employee. For my consulting business, I need a new project that I can place an employee at, that I probably cannot take on myself with my current workload.  There may be a day when I hire to support the consultants in the field, but right now it’s about getting business that a new consultant will do.  Getting this business may be about proper marketing and sales, and I am not sure what our government could do to help me get new business except for overall growth in the economy.

I have to have work for that new employee to do. Today this means getting that new project.  Tomorrow it may mean supporting the business by answering telephones, filing, paperwork, and billing.  There has to be some need to fill.  Government is not going to create needs within my business to fill unless they make things more complex for me, meaning that I am hiring to do things that will not add value to the business.  Adding value makes me more money, adding complexity and administration ultimately helps nobody.

I have to be able to know that the employee is doing an appropriate amount of work. People are different.  One may love to work and will get tons done and another may have many distractions and will do little for you.  While you don’t need to crack the whip, you need to be aware of what value employees are adding to the business, or if they are just dead weight around your neck.  They do not have the motivation (profit) that you do, and there is nothing you can do to change that.  Even something like profit sharing will mean nothing if the employee does not feel that they contribute to profit.  They can and often do, but that can be difficult to communicate.  So employees do need to be managed.  In my case, I might just call them regularly to see how everything is going or follow up with the client.  Not sure what government can do to help me manage employees.

I have to be able to find a qualified person. As much as some people would disagree, it can be extremely difficult to find the right person to fill an opening.  In the past few weeks I have been trying to create a network of people I am willing to work with and I have asked for resumes of potential consultants for projects.  I have gotten one resume.  I have also asked people flat out, people I know are being cut from their position soon, if they would be interested in doing consulting for my company.  I have actually gotten very little interest in return.  I tried to fill a marketing position with an independent consultant and spent weeks trying, and finally I found somebody but why is it so hard?  It might be my particular small business that is not appealing.  However, with 10% unemployment in this country you would think people would be jumping at a potential job… and note that I have been extremely negotiable on salary or rate… The problem is that there is a shortage of qualified people for knowledge jobs.  Government can help by getting more American citizens trained.  There are so many people who want to go to college, or to be trained in other ways, but they are frightened by the costs.  And they should be.  Who wants to wind up with $100,000 in debt for a BS?  We need more of our population educated, and not loaded down by all kinds of debt.

I have to have no other choices. I am not going to hire a person where I can easily do the task myself.  Or maybe I’m overwhelmed by admin today, but I can improve my situation with technology.  I don’t want to spend money for an employee to do things that can be handled a different way.  Even at $10 per hour, an employee ultimately will cost at least double that with employer-side taxes, unemployment insurance, benefits, office space, computer, etc.  So if software means that I don’t have to hire, software it is.  Spending $5000 on software to avoid a hire will pay for itself very quickly.  Because of technology in the past 20 years, many manual jobs have been eliminated.  And businesses have benefited in productivity.  Goods of all kinds are much cheaper than they used to be because technology has helped us squeeze out costs.  This is all good except for the people who have not been retrained for doing thinking jobs rather than muscle jobs.

As I said last week, complexity is business’s enemy.  But the enemy of the American economy and the reason for high unemployment is the severe lack of skilled workers and the overwhelming numbers of unskilled workers.  We need to do much more for the individual who wants to be educated so they can get what they need and not be burdened with a lifetime worth of debt.

One thing that might help is if more (or all of an education) could be paid with Stafford loans with their current rules.  We could even eliminate subsidized Staffords.  With income sensitive repayments, students are only on the hook for 15% of their income over poverty for 25 years with the remainder of the loan forgiven.  If somebody is extremely successful, the loan is repaid.  If not, they are not overburdened.  It’s really not about helping the individual student, but about helping business, society, and the American economy become stronger.

What do you think can be done to improve conditions for small business now or in the future?

Small Business Person *not* Making $200,000 Per Year

I am a small business person now.  I have my own consulting practice and two clients.  I live comfortably and make enough money, although I could always use more.  I make nowhere near $200,000 per year in realized income.  If I did, I really wouldn’t mind sharing more of my income with the federal government, as long as they were using it wisely.

Realizing or showing a $200,000 personal income usually means you’re spending too much.  Your fixed expenses are high.  Maybe you’re living in a million dollar home with a big mortgage.  Maybe you have an expensive car you’re paying for.  Something is causing you to spend a lot of money.  Because I know that if you don’t need to realize a high income you won’t.  You can put as much as $42,000 year year in a 401k.  You can hold money in your business if it is a corporation (and pay corporate taxes on it), unless you have a subchapter S corp.  Even still, you have so many business expense choices to keep you from realizing an income as high as $200,000.

The real killer to the small business person is administration time, the stuff we don’t know, and the stuff that could change.  If you want to do me a favor, get rid of the complexity so that I don’t have to spend so much time working on my business administration and trying to figure out what the tax laws really say.  Do I really need to put an attorney on retainer or use a tax accountant?  I cannot possibly afford either’s fees, so I have to do it myself.  And that takes time away from billing my client and making more money for my business.  This brings down my income much more than a tax increase would.

So to the politicians who say that the small business guy making $200,000 can’t afford a tax increase, you’re probably right.  But it’s his own fault that he can’t afford it.  Otherwise he wouldn’t be realizing that much income.  The vast majority of small business people, though, make nowhere near this.  Some are by choice but most are because they are struggling to get by.

If you really want to help the small business person, the ones who provide most jobs to the economy, make it easier for us to do business.

How To Be The Big Fish – A Little Review

I have been talking about a lot of different things on my blog, but today I thought I would like to give a high-level summary of what it means to be the big fish in your multi-level marketing company.  Being the big fish is about image which is made up of several different things:

1. Professionalism

You are building a business so having a business name and business cards are important.  How you present yourself, especially during official business, is also extremely important.  The way you dress, how you groom, and if you have showered recently, are all important elements of creating a professional image.  Having your own web site can contribute to your professionalism and your image to others.

2. Marketing Method

The way you market your company contributes to your image.  If you pester your family and friends over and over to join or buy your product, you are probably creating a negative image.  If you create a marketing plan that identifies your market and seeks to deliver your marketing message to your market, this will create a positive image to those who matter most to you: people who would be your customer or distributor.

3. Marketing Effort

People who go 1000% into executing their marketing plan will create a positive image for their company.  They are fully committed to their product, what their company can do for others, and they don’t hold back (i.e. for fear of rejection).  This is having the faith in yourself to believe you will be successful no matter what others say.

4. Management Execution

You will create a positive image for your company when you can fulfill orders in a timely manner, get people information when they ask for it, answer your telephone professionally, and be there for your distributors.  Creating the right image cannot be all about sales and recruiting, it is about doing all of the right things for the people who depend on you.

5. Selling Yourself and Your Company

You personally and your company are what matter to the prospective customer or distributor, not your upline or your MLM company.  What are the features and benefits of doing business with you?  What can you do for your customer?  What can you do for your distributor?

Put yourself in your customers’ shoes: What do you expect from the people you do business with?  Spend a little time analyzing what you can do better and how you can sell that as a service.

6. Believe That You Are Already Successful, Believe In Yourself

Pump up your ego a bit and believe that you are something special, because you are!  You are the person with the company that is going to help thousands of people become successful and financially independent.  You are only held back by your beliefs, do a little self talk and make your dreams come true.

Now I am NOT telling you to get yourself all worked up and go out and do a bunch of stuff that means nothing to your business.  Get yourself pumped up and work your plan.  Find ways of working your plan that don’t cost you a lot of money, or any money if you can.  This may take a little creativity but it can be done.

Regardless of what you do and how hard you work, building an MLM business is harder and takes longer than you will expect.  Enjoy the little gains and the joy of your customers, and eventually your business will pay your salary and more.

Google Is My Friend

Rather than telling you specifically where to go or what specifically to do, I usually say to use Google to find things or look up information. I do this because that is what I do. Whenever I have a question of any kind that some person may know, I do a search. You can use Google, Ask, Bing, Yahoo, or any number of other search engines, type in your question, and up comes a list of possible answers. Some will be better than others but you look through them and hopefully get the answer you need. Learning to search and research to find the answers you need will be important as you grow and build your business.

Need a tax question answered? Search the question. Need to incorporate? Find somebody who will help you. Want to understand business concepts? Search the concept. Search is not perfect but it can be a great start.

You do need to understand that some information is better than others. Sometimes turning to a professional for help will be in order. But a search may give you basic information to know whether you need more help or not.

When you are building and promoting a web site, search can help you determine what is possible and how you can accomplish it. Do you want a feed on your blog site? There is a way to do it and information abounds for how to. Make sure to look at multiple sources though because some people will want to charge you for what you can get for free elsewhere.

I could do all the research for you and list specifically where to go and what to do, but most of that information does exist on the internet and there will be questions I don’t answer for you. So do what I do and Google it.

Linking To Your New Website

Your website is your sales presentation and much more, but you must advertise to get visitors, warm leads, and or prospects to your website (i.e sales presentation). The way you do this for a website is to have advertisements that link into your website. Advertisements can be long winded or a little blurb that quickly describes what your website is. Sometimes your advertisement is actually built from your website. This is the case when a search engine indexes your web pages.

Nobody will know about your website until you start getting links to your website from other sites. Typically the way this is done is by telling the other website about your site, or submitting your site. You can submit your site to directories and search engines. And there are a ton of them! I would start with Google and Bing, then do a search for search engines and directories from Google for more places to submit your site for free.

Another possibility is to exchange links with other similar websites. You would typically contact the other site by email and ask if they would like to exchange links with you. Then you put a link to them on your site and they put a link to you on theirs. Many web owners will gladly exchange links but others may not reply, but keep trying.

If you have a blog, there are a ton of RSS search engines and other ways to promote your blog. Do a search for “How do I promote my blog” for more ideas. Many websites provide this kind of information to you. Additionally, you may want to post thoughtful comments on other blogs in response to their articles. Most comment forms include your name and website name so people can see what your site looks like. You might also try this with non-blog websites, I’m sure you would get a few visitors.

There are places on the internet where you can submit classified advertisements that include a link to your website. Many are free. I am not sure how effective advertising this way is, but you might get a visitor or two. One last way to advertise your website for free is social networking sites. I have talked about these before but they do often allow you to link directly to your site. Up and coming social networking sites such as twitter.com are often very effective.

There are tons of other ways to advertise links to your site, just do a search for “How do I promote my website”. Many will submit your site for cost, but you really want to try to promote your website for free. Stick to free. I say this because some of the best ways to advertise your website on the internet are free. If you can, I would measure the most effective ways to advertise for free, which website statistics often provide.

Ultimately we are more concerned with sales than visitors, so the more targeted your visitors are the better. In other words, when your advertisement is presented to your demographic and they visit, they are most likely to buy.

The way that I promote my website is to spend a little time each day on promotion activities. Set aside an hour or two, research, and post requests for links. It is not hard work and it will produce results in the long run. I often switch from method to method, for instance today I will post responses to blogs and tomorrow I will submit my site to directories.

For those of us doing multi-level marketing, you can assume that the same concepts are generally true of recruiting.

How To Get Free Effective Advertising

Having warm prospects is the gasoline for your business engine. Too little gas and the engine stalls, too much and you can have a fire or explosion. However, too much is usually better than too little. So how do we go about getting warm prospects without spending money?

Networking can be done step by step using the telephone. First you write down everyone you know and their telephone number. Then you call each person and ask them if they know anybody that fits into your demographic profile (don’t literally say this, say “Do you know anybody who cooks?” etc.). Then you get the name(s) and phone number(s) and add them to your list. Then you repeat. If you are unclear what I mean by demographic profile then go back and read my previous blog posts on demographics.

Networking can also be done by meeting new people at the bar, gas station, golf course, grocery store, etc. and exchanging contact information with them. You want their contact information and you want to give them yours. Then you socialize with them. You can add them to your contact list at any time and do what we talked about above, but just like your normal family and friends, you want to continue being close to them and socialize with them. For most people, this kind of networking comes naturally but for introverts like me, this can be difficult.

Other than networking, our option for finding warm prospects is to advertise. You can advertise for cost in many different ways. In addition, you can advertise for free in many different ways, some more effective than others. The most effective advertising you can get is when lots of people in your demographic profile see your ad. However, if you are advertising for free, lots of eyeballs seeing your ad can be a good thing, even if they are not part of your profile. They can filter themselves, you just want to get noticed. The best way to get noticed is to be featured in an article. An article that mentions what you sell and how to contact you is the best. Often companies write their own articles and submit them to newspapers or news outlets, and try to get published. It really is possible to get published and this is one thing you may want to consider attempting.

There are many outlets on the internet to advertise for free and there are websites devoted to telling you where to advertise for free. Just do a google search. Personally, I like the social networking sites but I have also found that responding to blog posts is a good way to publicize your company.

Off line, you can put a big sign in your front yard or a magnetic sign on your car as a couple of ideas. But if you really think about it, there are tons of ways to advertise your business. I often put business cards on bulletin boards at grocery stores for instance.

Use your imagination to see if you can come up with more free ways to advertise. Did you read about the 911 call about the balloon carrying the little boy? DON’T DO THAT. There are limits to what you should do to drum up publicity.

Be ready for when people start to contact you. How are you going to do your sales presentation?

Similarities and Differences Between Small Business and MLM

A multi-level marketing distributorship typically is a small business run by a person, a couple, or a family. It can also be a larger distributorship run by a company with several employees. I have known distributorships to have revenues of several million dollars per year.

In a typical small business, a product is invented, manufactured, and or purchased, and can be sold to a customer or to another business. Similarly, a multi-level marketing distributorship purchases product or the product is purchased on behalf of a distributor from the company, then is sold to a customer. A distributor will recruit other distributors to sell the product, which is similar to finding other businesses to sell the product.

In a small business, you could have the product drop-shipped to your customer (which could be another business). Similarly, the typical multi-level marketing company allows the product to be sold from the MLM company directly to the consumer with the distributor getting the credit. Drop shipping typically allows a company of whichever kind to keep their inventories low or non-existent.

So we see that the typical small business and the typical MLM distributorship function in exactly the same way. They buy and sell products for a profit. They can sell to customers or other businesses. They can both keep their inventories low or they can stock to meet customer demand.

The main way MLM is different is that it earns commission on several levels of business to business sales, i.e. your downline or network. This gives you a great incentive to help out those you sponsor, those they sponsor, and sometimes those 10 levels below you. MLM is a helping business. Multi-level marketing is also the kind of business where you can build up income over time for a less than superhuman effort today. You leverage your efforts with independent business people rather than employees. The income you generate can take you through retirement and you can potentially leave it to your heirs.

Now a multi-level marketing distributorship is a business and it can get busy. Busyness is a good problem to have though.