Category Archives: Business

Business Travel and Your Finances

CB048735I just got back from a week-long business trip where I stayed at the most expensive hotel I’ve ever been to. The restaurants offered $15 soup, $18 hamburgers, $35+ entrees and $17 cocktails. Fortunately I don’t drink coffee, because if I did, I would have been forced to purchase it for $5/cup since the ritziest hotel ever doesn’t think it necessary to stock your room with a couple packets of coffee. That’s what $250+/night gets you!

Now all of this seems shocking, but I was there on business, so I’ll get reimbursed for all the money I spent. (In fact, I’ll even end up earning money in cash back rewards!) But there were two things that were utterly frightening to me. First, the majority of the people staying at this hotel were clearly there on vacation, meaning they were willingly doling out hundreds of dollars per night for their coffee-less hotel rooms, and piling obscene food costs on top of that. Second, I feared that after a week in fantasy land where it was just a given that your dinner would cost $60, I’d have a hard time readjusting to normal life.

Continue reading

Can You Reach Early Financial Independence if You’re Not an Entrepreneur?

financial independenceWe all want to have enough money that we can live comfortable lives without having to work every day at a job we don’t enjoy. Many people however, have resigned themselves to the notion that they will only be able to reach that point after 40 years of suffering through that miserable job. Then there are the others who read books or take to the internet to learn from people who have managed to achieve financial freedom much earlier. And one thing becomes quickly apparent: a huge portion of those people are entrepreneurs.

One of the best ways to reach financial independence early is to start your own business, be it a plumbing company, a real estate business, a mortgage broker, a bakery, a monetized blog, or something as ambitious as a software company. But what if you’re interested in getting ahead financially, but don’t have an entrepreneurial spirit? Is there no hope for you? I should say not! Let’s take a look at how hard it really is to reach financial independence. Let’s pick a nice round number, $1 million dollars, to represent financial independence. In reality, your number may be lower or it may be higher, but many people still set $1 million as their goal which can be financed through high risk lenders like CapVance, so let’s go with that. What would it take to build up $1 million in 10 years? 20 years? 30 years? 40 years? Looking at the required monthly savings at a few different growth rates, it’s really not as scary as you might think.

Monthly Savings Required
Years to $1 million 6% 8% 10%
10 $6072 $5430 $4842
20 $2154 $1687 $1306
30 $991 $667 $439
40 $500 $285 $157

Ok, maybe the 10 year numbers are scary, but are any of the others really so bad? In fact, saving $1 million in 40 years is downright easy! Anyone working a regular 9-5 job should be able to save $1 million in 40 years. But of course, the whole point was to reach financial independence as quickly as possible, and 40 years isn’t very fast. So is it feasible to achieve the higher savings rates required for a quicker path to financial independence if you’re working a regular office job? According to Wikipedia, the 2012 median household income was $45,018. To reach $1 million in 20 years at a modest 8% growth rate, you would have to save $20,244 each year, or about 45% of the median household income. It may require some sacrifice, but with careful budgeting, finding little bits of extra money on the side, and taking steps to minimize your taxes, it can be done. Or you could aim for 30 years, which would require only $8004 of yearly savings at an 8% growth rate, or about 18% of the median household income. Now that’s doable for just about anyone!

Continue reading

Don’t Run Your Personal Finances Like a Business

The title of this post probably has you wondering what on earth I’m talking about. In many ways, it’s good to run your personal finances like a business. You should track your spending, project future income, analyze costs, and look for ways to be more efficient. But in one very important way, you do not want to run your personal finances like a business, and that is your income:expenses ratio.

Let me start off by saying I know next to nothing about business finances. So I was shocked as hell when my company’s CFO put up a graph during a presentation that looked something like this:

Please note: this is not real data, I made up numbers to generate the trend lines

Your reaction may be similar to mine. I thought, “how can a business possibly be sustainable if they’re always spending nearly all the money they take in?” My company certainly seems successful, but I started to worry that we were spending too much money and eventually it would catch up with us. I also began to understand why our finance team is always checking the mail to see if any checks arrived and asking me about any bills that might be coming up in the next month for my department. The budget is so tight they need to have an accurate estimate of expenses for the coming months.

Continue reading

2013 Goals

new yearsJust like that another year is gone and it’s time to make some new year’s resolutions. For the next month gyms all across the country will be overcrowded with people who made the resolution to get back in shape. By mid-February things will revert back to normal as over-zealous resolutionaries (best made up word so far this year!) lose their enthusiasm and return to their sedentary lifestyles. One of the nice things about having a blog is that by writing out my goals for the new year and keeping a link to them right at the top of my blog, I can’t pretend they don’t exist once my fervor has waned.

I did a pretty good job with my goals in 2012, and hopefully I can be just as successful this year. Last year my goals were mainly financial goals, with one health/fitness goal that turned out to be too difficult to measure accurately. With that in mind, I tried to expand my goals a little to cover a few more aspects of my life and make sure they’re measurable.

Continue reading

Demographics Affect Your Benefits

demographicsAs we approach the end of the year, it’s time for open enrollment. If you’re like me, you’re anxiously waiting for your HR department to reveal the new benefits package for 2013. Will your benefits improve? Are costs going to go up? I’m particularly anxious this year because for the first time, the HR department issued a benefits feedback survey to the employees. And since they used the same survey platform that the rest of the company uses, you can easily go in and look at the results.

And the results are largely not in my favor. My company started out as a few recent grads who had brilliant engineering minds. As the company grew, they looked for their kind of people – more young nerds. When I joined the company just over four years ago, well over half the employees were in their 20′s. But for a company to grow and compete in the business world, you need to bring in more experienced people. Over the past two years, the demographics of the company have shifted dramatically.
Continue reading

Working in a Group

I took a poll over on Swagbucks a few days ago (click here to open up a Swagbucks account) that asked if I think I work best alone or in a group. I’ve long known that I have a hard time working in groups and it’s something I always strive to improve on, so I clicked “alone” and earned my Swagbuck. What I saw next surprised me. The results of the poll showed that 71% of people agreed with me. Only 21% of people said they work best in a group. The other 7% chose the rather snarky answer of “been too long since I worked on anything to remember.” Seriously, even if you’re unemployed, surely you’ve worked on something!

Aren’t we taught when we’re children the importance of working together? And I know I remember being told in college that once we entered the real world, we’d have to work in teams every day, so we had better get used to it. So have we failed then?
Continue reading

Giving Up Control and Leaving My Comfort Zone

I know a lot of people hate their first job out of college. With no work experience, freshly minted graduates are forced to accept entry-level jobs that involve a lot of grunt work. If you’re lucky, you’ll find a job with plenty of room for growth, so you don’t have to continue doing menial tasks day in and day out for the next 40 years.

I’m at the turning point in my career right now – we recently brought on two new people in my department, so after four years I’m finally no longer the low man on the totem pole. The extra hands mean I can take on more interesting and challenging tasks. It also means I can delegate some of the menial tasks I had been doing to the newbies. Interestingly, I find myself clinging to many of those menial tasks.

I spent four years figuring out how to optimize efficiency and perfect execution of these menial tasks. They may be boring tasks, but damnit, I do them really well! They give me a sense of accomplishment because I don’t struggle to complete them, I don’t run into roadblocks or procrastination, I just do them and cross them off my list. Some of the new projects I’m working on are difficult and frustrating. I’m doing a lot of writing about one of our products, with three people shouting their ideas at me, and it’s my job to make all three of them happy. When I get particularly frustrating feedback from one (or all) of them, I just want to abandon that project and ¬†turn to my comfort zone of menial tasks I know I’m good at.

Additionally, I have this completely misguided notion that the newbies aren’t going to be able to execute these menial tasks as well as I can. Why I would be concerned that an intelligent college graduate couldn’t figure out how to fill out a form, create a mailing list, or edit a recorded speech to remove “um”s is beyond me. My boss keeps telling me to delegate those tasks to the newbies, but I’m having a hard time letting go.

There are two issues at work here: first is my fear of leaving my comfort zone and taking on new projects that I’m not as good at yet, and second is letting go of this silly notion that I’m the only one who can remove “um”s from a recording.

Four years ago, I was the newbie. I didn’t know how to do anything. The first time my boss asked me to schedule an event, I called up our event manager and she asked me dozens of questions that I didn’t know the answers to. I had to say “let me check on that and get back to you” to nearly everything she asked me. But I learned. And so will the next person. I will also learn how to deal with three people shouting their oftentimes opposing ideas at me. At some point that will become comfortable to me. And then I’ll have to hand that job off to someone else when it’s time for me to move on to my next challenge. And they’ll learn how to deal with it too.

It’s a little early to set my goals for 2013, but I think this might be one of them. I need to learn to let go. Let go of my comfort zone, because that’s the only way I’ll grow. Let go of my need to control all the menial tasks, because in doing so, I’m sending the message to our new hires that I don’t trust them. They are capable people. And so am I. We can all take on new challenges and learn new skills. We’ll make mistakes, but we’ll get through them and come out ready for the next challenge.

Yet Another Business Trip

I only go on two business trips each year, but they’re both in the summer, so my summers are hectic and stressful. I just returned from business trip number 2 and continue to be shocked and appalled at the amount of money we (and everyone else) spend on trade shows.¬†

In the world of B2B technology, there is a very large class of customers who won’t consider your product until it’s been tested by their peers. As a newly-formed technology start up, it’s perfectly acceptable to be scrappy and entice your first customers with your innovative new technology. But once you’ve crossed the chasm into a more conservative market, it’s a whole new ball game. You need to convince them that you’re a big company with a lot of successful clients. How do you do that? By flexing your money muscle.
You’re not going to land the really big accounts unless you have solid references. And the really big accounts aren’t going to bother checking references for a vendor with a bare-bones booth and a couple flyers. Why would a multi-million dollar corporation want to risk their business with a scrappy start up that has only 10 small clients and might be nonexistent in a few years? The big accounts want to see that you’re successful and that your clients are successful. And that means you have to spend money. A lot of it.
It kills me that there seems to be no way around this. I wish we could all just collectively decide that we will no longer focus on flashy trade show booths, expensive dinners, and cocktail hours, and instead focus purely on the merits of our products, pricing model, and support staff. But it’s not going to happen. And if you don’t participate in the overspending, you’re not going to win the big accounts. I guess it’s true what they say about spending money to make money.
Does anyone know of any successful B2B companies that are known for being frugal? Is it possible to build a successful company if you don’t treat your clients to expensive dinners and invite them to fancy parties?