Month: April 2017

Positively Negative

As a business owner, it is imperative to stay positive since there are a number of risks that I must take in order to be profitable.  Recently, I spent several thousand dollars to submit a proposal to an organization in hopes that they would award a contract to our company for consulting services.  If we win the contract, the money spent is worth the investment.  If we do not win the contract, we lose our investment.  As you might imagine, keeping a positive outlook can be a tremendous asset when your proposals are declined.  However, as a business owner it is hard to remain optimistic when a large amount of time and effort is spent preparing for life “in the event of” catastrophe.  Let me explain.

It is required by most of my contracts that I carry Error & Omissions insurance in the event that one of our consultants makes an error.

I must pay unemployment insurance fees to the state in the event that a consultant performs poorly and has to be terminated or our business earnings are lower and we have to lay-off any employees.

I am also required to purchase full-coverage auto insurance in the event that someone driving our vehicle is involved in an accident.  To make sure I also receive compensation in the event that someone without insurance damages my vehicle, I also purchase uninsured motorist insurance.

Because I realize that it’s important to maintain my health (and now thanks to the government’s insistence on taking care of me), I also purchase health insurance so that in the event I get sick, I can get treated quickly.

In the event my health insurance does not do the trick, I have also purchased life insurance.

I have also purchased insurance for my office in the event that a wild tree falls or a random spark ignite the nearly 100-year old building.

The great news is that as I do better in business, these insurance costs are immaterial, right?  Wrong!  As the business grows, I get older, and my vehicles get newer, these insurance costs increase annually (which is also the length of the policies).  Granted, if everything in the world were to go wrong in the same year, I would be covered financially.  The bad news is that the more I need insurance, the costlier it becomes.

Don’t get me wrong.  Being your own boss and running an organization that does things you believe in is a wonderful experience.  I love to take chances and try new things.  It’s just the law and our culture make it hard to remain focused on long-term winning when we are required to purchase annual insurance policies that punish short-term failure.  While the financial costs are definitely an issue for small businesses, I believe the annual obligation to evaluate the cost of failure wears on many business owners and discourages them from taking chances.     It took Thomas Edison more than 1,000 tries to create a functioning light bulb.  Would he have given up if he had to annually purchase insurance in the event of…

If you are a business owner or someone considering business ownership, keep your head up.  Despite all the people requiring you to invest in your short-term failure, there are millions of us in the world who are counting on you and want you to succeed.  Chances are you will fail and it is ok.  Get up, learn from your failure, and go again.  Without your unique product or service, the world is boring.

If you know a business owner, encourage them.  They need it.  Especially, in the event of…

by Christian Del Rosario

80/20

The 80/20 rule sounds like a mathematical formula and in some ways it is, but don’t worry, this isn’t a lesson on statistics.  The rule came from an Italian economist, Vilfredo Pareto, who stated that 80% of the Italian income was earned by 20% of the Italian population.

Years of research has shown the 80/20 rule applies to almost any activity.  What this means is that 80% of your results come from 20% of your efforts.  To put this another way, 20% of your activities equate to 80% of your fulfillment.

To prove this theory, consider your workplace.  Do 20% of your daily activities equate to 80% of your productivity?  Studies show that they probably do.  Think about the business sector as a whole.  The top earning companies in every industry are a small percentage of companies and yet they earn the largest portion of income.  And if you look at your own habits, you may find you spend a majority of your time watching television or participating in other activities instead of investing in your dream.

So how can you use the 80/20 rule to your benefit?  My mentor, John Maxwell talks regularly about the fact that he is only good at a few things.  So, he decided he wouldn’t waste his time doing things he couldn’t do or doesn’t want to do.   He focuses on doing the few good things he does well.  This maximizes his efforts.  It also helps him to improve his skills.

Malcolm Gladwell says that to become an expert, you should spend 10,000 hours perfecting your craft.  If you spread yourself across the board, become a Jack of all trades, master of none, then your efficiency rate decreases and no longer will the 80/20 rule work in your favor.

Take a moment and consider what you love and what you are really good at. Then list out those things that cause you to waste time and decrease your effectiveness.  You may not get it completely right the first time and it may take some time to sort out what your good at doing and what takes a lot of effort.  In fact, I am still revising my strengths and weaknesses on a regular basis to make sure I am using the 80/20 rule to my benefit.

Once you get a good handle on what you’re good at doing and those your not, consider ways to delegate to someone else those tasks that fall in the latter list.  Share duties with your children (Warning: they will complain loudly), spouse, roommate, significant other, co-worker, team members, etc.  Trade your time and skillset for theirs.  If you are able, maybe you need to hire someone to perform those tasks. (My wife and I hired someone to clean our house when we realized how much time we were losing versus the cost of paying someone else to do it.)  You will find that focusing on the 20% of tasks that provide 80% of the benefits will be worthwhile.

Michael