By Rob Severson on May 7, 2010
I have worked with 100′s of small businesses and have seen a few things that cause financial problems for them. I think they are very similar to individuals who have problems.
First, some businesses take much more personal compensation than the business can support. Sometime they do this to avoid corporate income taxes but do not tuck it away for liquidity when they need it. Individuals are doing something similar if they spend too much of their money on unnecessary things that are financed by some cash but more debt.
Second, some businesses have too many family members on the payroll and when times get tough have difficulty reacting. Individuals have this problem by spending more than they can afford to give their children all the things they want, rather than they can afford. “But is for the children”
Businesses may buy real estate above their needs in the interest of building equity for retirement rather than considering the costs for the business and the risks of long term debt. Individuals sometimes stretch for a house loan as they believe their income will go up and they can grow into a new mortgage.
Business sometimes are lax on their accounting procedures and financial reporting. They may ignore that information until it is too late. Individuals may have no clue to their financial position at all.
Businesses may borrow as much as they can by leveraging every asset they have to do so. Some make it doing this, but only if they are very profitable and reduce the debt over time. Banks don’t like permanent working capital loans. Individuals do it by over extending credit cards to the point where they are perpetual.
Business may ignore what is happening to demand for their product and continue to believe they can sell what they have. Individuals may not see changes in the market for their skills and do not invest in learning others before it is too late.
Businesses may become complacent with a high concentration with one customer. When that customer goes away, they scramble to replace it. Individuals do the same by trusting that their employer will always have a place for them and don’t watch what is going on at work.
Many of these issues are considered warning flags by credit people in banking. When they occur they watch their loans more closely until the business proves they can make their decisions work. These are not just flags for bankers, businesses and individuals should also understand the risk of what they are doing in their decision making.
Posted in General | Tagged attitude, business finance, careers, financial prosperity, life priorities, prosperity, success
By Rob Severson on May 7, 2010
Are you interested in writing and publishing? You are invited to join me, Felice Gerwitz, author of “Information in a Nutshell: Writing and Publishing,” along with my guests as we explore the exciting world of becoming a published author. This broadcast airs every Monday afternoon at 3:30 ET. I will challenge you with information and inspiration as you work closer to obtaining your dream….that of becoming a published author.
I connected with Felice on Linkedin and she has been a great contact and friend for me. I have used her consulting services a bit and she helped a lot as she knows what she is doing in the publishing field. She also is a fun person to work with I value our internet friendship very much. She invited me to be on her radio show this Monday to talk with her about my book adventure. Here is information from her site about Monday:
Rob Severson grew up in Harmony, Minnesota, and graduated from Luther College. An “average guy” and academic underachiever he decided to write a book that shares how he overcame obstacles to personal and professional success by adopting basic, proven principles. Learn how Rob took an idea and turned it into a book for his two daughters, that has impacted the lives of many people. Rob will share his adventure as a new author and the ups and downs of finding a niche market and selling books
Posted in General | Tagged attitude, blog radio, careers, financial prosperity, life priorities, prosperity, relationships, success
By Rob Severson on May 5, 2010
I recently wrote on social injustice reflecting on what some churches promote. I believe their intentions are good, but question the result. I also received some comments that these churches think the government has to do the entitlement stuff because the people in their churches do not give enough money to do it.
If I were in a member of a church that is in to social justice, and re-distribution of wealth I could have several reactions. First, I would be convinced that the government has a all the responsibility for helping people and that it can and should be done by them. Second, I would believe that the taxes I pay are for this purpose and therefore I do not need to give much to my church. Lastly, I would be convinced that only the wealthy are responsible for helping people as they pay the most in taxes. I would also quickly buy in to the idea that only the wealthy are greedy and that I am not because I am not wealthy.
So, I would put $1 in the offering plate and feel good about it. Is that the desired result? Shouldn’t I be taught about greed also? “Feel good” ministries may bring in lots of people, but are they teaching people to be unselfish? Many think that is our main social problem today in Wall Street, big business, government and everywhere. I think the best place to teach these values is in church. Are they?
Posted in General | Tagged attitude, careers, church giving, financial prosperity, life priorities, prosperity, social injustice
By Rob Severson on May 3, 2010
Except for the really rich, we all need to watch our spending. Money management is a very simple concept; spend less than we earn! Easy to say, but difficult to do especially at various stages of our lives.
When we are young we are like a growing business, we need to invest in homes, our families and other things for getting established. This makes it almost impossible to spend less than we earn, so it is necessary to use debt to build our lives. It is also necessary to establish priorities for what we buy with cash or debt.
If we prepare a budget early on it will help us get control of our necessities very quickly. If we are honest we discover that it doesn’t take a lot of income to just survive. Then we need to focus on making enough money to pay for them and have some money left over, or a profit as a business would call it. Our profit should be invested in a backup fund and other things we need to build our lives and live free. This is a very over-simplified financial model but it is a very fundamental one.
Prioritizing our expenditures that are not necessities is where we often get into trouble. Over spending results in high credit card balances that are difficult to be free of and only makes it more difficult for us to invest in the things we really want, such as a house and improved living standards.
So, how do we establish priorities on how we use our discretionary cash? There are many resources for guiding us in making these decisions, but I have another way to look at it. We should prioritize our discretionary spending on what will make us happy!
My definition of happiness it to have inner peace, an other’s centered purpose, and to make a living that gives us freedom. If we have credit cards that are over extended we will worry and have stress that inhibits our inner peace. If we focus too much on just ourselves, we will only see tons of things we want for self fulfillment. We may also fall in to envying others for what they have and seek to get those things for ourselves. We can become greedy, even if we are not wealthy. We often fall into a “pity party” when we get to self centered and believe we are “victims” as we are not paid enough, and don’t have as much money as we deserve. This will only take us down and destroy our inner peace.
If we learn to be thankful for what we have and understand how much others don’t have, our attitude can change. We can even consider using some of our discretionary money to help others.
So our spending priorities should be based on a higher level, that of having real happiness; inner peace, purpose and freedom that comes from controlling our debt. Some would call this avoiding instant gratification, I call it seeking total happiness.
With each expenditure we make we should ask ourselves the simple question, will this really make us happy?
Posted in General | Tagged attitude, business finance, careers, financial prosperity, life priorities, prosperity, success
By Rob Severson on April 29, 2010
Social injustice
I heard this term a lot in the 60′s when I was in college but didn’t think about it too much as I was doing other things than protesting stuff. As it keeps coming up I looked it up on Wikepedia to learn more about it.
There is a lot on there, but the parts that I picked up on were the concepts of re-distribution of wealth for the collective well being. It has its roots with communist and socialistic theories. That sounds good to many and I wonder why. (I am not one of the wealthy by the way)
I think it is very well meaning to help those in need. I think we should all help people and organizations that are helping people make their way in the world. I do it by volunteering and donating money to places that do this.
My concern is that the movement seems to be based on the concept of having wealthiest people do this, and do it via taxation so the government can do it. I have two problems with that. First the government is know for inefficiency, bureaucracy and wasting resources. It may have gotten to big to manage. Second, don’t we all have a responsibility to help the poor?
Many churches have bought in to this idea also under the grounds of helping poor. I question their involvement in this movement and wonder if they are not simply abdicating their responsibility in this to the wealthy folks rather than contributing themselves. There are many millions of church folks in the country who could make a big impact if they each gave only a few dollars to do so. Using the government to help the poor only leaves the responsibility to 1/2 or less of the population. I also think it may be counter to what churches teach as it makes government one’s higher power rather than God.
The other issue for churches is the experience the apostles had that is recorded in the New Testament. They pooled their resources and set out to live on those funds and to continue to pool their income as they spread the gospel. A problem developed with some not working so Paul admonished them and told them that “if you don’t work you don’t eat”. I don’t think they were bad or lazy people, they just found that they could do what they wanted and others would take care of them. Is that happening today?
I firmly believe we need to help the poor who cannot help themselves, but we really need to focus on helping those who can learn how to make a living. We are robbing many of the self esteem and joy that comes from success, how modest it may be. Why don’t we focus our energy on educating people on making a living rather than promoting a new economic system that has not worked well wherever it has been tried? We have the best example of how poor can make it with our President Barack Obama. If he could make it this far, why can’t we teach others to do what they can rather than build entitlement systems that take their focus off how to do it rather than “what I am owed”?
Posted in General | Tagged attitude, entitlement, financial prosperity, life priorities, poor people, redistribution of wealth, social injustice, success
By Rob Severson on April 26, 2010
Do some things that really matter
I can’t sing, I can’t dance, but I can make a fool our of myself with the best of them so I did this weekend.
I have watched the dad’s dance at my granddaughters’ dance recital at O”Shaughnessy for the last four years, and laughed at the guys so hard I almost cried. This year my son-in-law and I became part of the “dancing dads”! It was one of the best things I have done with them, and they will never forget grandpa dancing and looking silly. And, this year everyone laughed at me!
If anyone reading this has kids, grandkids or whatever, I can’t encourage you enough to do things with them. I tried to spend a lot of time with my daughters when they were growing up and never regretted a second, even when I was coaching softball and the other dads were out playing golf.
So, I may look silly as Elvis, but it is worth it!
Posted in General | Tagged attitude, dance recitals, death, family, life priorities, relationships
By Rob Severson on April 25, 2010
I lost an old friend today
Just heard that an old high school friend of mine passed away last night. I am sure this happens to us all when it does it always puts many things into perspective.
My friend had struggled with alcohol and other things for many years. He was at Mankato State in the 60′s while I was at Luther in Iowa. Mankato was much more of a party school than Luther was and many found alcohol and grass to be their entertainment. I found a lot of alcohol myself and often wonder how I would have come out if I had gone to a wilder party school. I also wonder how I would have come out if I hadn’t married early and been forced to settle down and go to work. I know what it did to my friend, and feel very badly about it as he was a very talented guy who was pretty much let it control his life. Great guy with awesome promise; but don’t think he accomplished any of what he could have.
I haven’t seen him for years, but know he has tried to turn his life around for several years via treatment programs, the last just recently. I am very thankful that I caught the problem before it took me down.
The mortality part hits home and I realize what little control we have in our lives, or deaths. I used to hear that we should live each day as thought it would be our last; kind of impossible maybe, but we do have opportunities every day that we shouldn’t pass by. I was going to contact my friend and visit him, but I didn’t get around to finding him. Could I have made a difference? Probably not as he died from a heart attack, but I could have encouraged him and maybe shared my story with him. Could have helped, I’ll never know.
It is our 45 year class reunion this summer; he will be missed.
Posted in General | Tagged alcohol, attitude, death, financial prosperity, friends, life priorities, treatment, untimely death
By Rob Severson on April 22, 2010
Do you want to be a consultant?
I am a consultant/coach but I never planned to be one. I just fell in to it when my job changed at Norwest (now Wells Fargo) and I didn’t want to find another position there. So, I took my severance and hung up my shingle!
My goal was to assist businesses in getting financing, something I knew a lot about. I saw a need for this because of a current credit crunch by banks and a lack of awareness of alternative financing sources for non-bankable businesses. Additionally, I had met a lot of consultants that introduced clients to us at Norwest Business Credit who really didn’t understand what we looked for in our credit decisions, so I knew I could do it better. It was the start of a great learning experience for me!
First was the marketing part. I confess I didn’t have a clue as to how I was going to get clients! I had heard a consultant speak to a group of us aspiring consultants on the necessity for using at least 1/2 of our time on marketing and sales calls; my biggest tip from that guy. So, what worked for me?
First, I had the skills and reputation for providing the service I was offering. I had been a commercial banker as well as president of NBCI and had learned the business from the bottom up. I knew how lenders looked at things and what they wanted to see. Most important, I had a lot of experience in problem solving during my Norwest career, a skill that continues to serve me well.
Second, I had a good reputation with my customers and peers in the industry. I consulted with a few of my former customers fairly early on and established a track record of getting the results they were seeking. I also began contacting my peers to tell them what I was doing, and as a result of good relationships I began to get referrals for financing projects. I soon learned that referrals were a must to survive in consulting. My relationships with lenders and my knowledge of what they do also proved to be most valuable as I could get to the issues quickly and get them resolved or find someone that could meet the needs of my client. I was honest with them and they reciprocated by giving my clients great service because they knew I wasn’t trying to sucker them in to bad loans.
Last, I treated everyone as fairly as I could with reasonable fees and a formula that rewarded me the most when I solved my client’s problem. I have many satisfied former clients and built many references via this process.
If you are in any career I would highly recommend considering consulting as a backup plan as a short-term or long-term option in the event you are ever displaced. It is a way of assuring your survival when the market changes. But to do so, make sure you are building problem solving skills, sound relationships (and put them into a contact system!), and learn the business you are in. it is your reputation and ability to get things done that people will look for when they have a problem.
Posted in General | Tagged attitude, business finance, careers, financial prosperity, jobs, life priorities, prosperity, relationships, success
By Rob Severson on April 21, 2010
In the venture capital business one of the most important factors in an investment decision is the size of the market for the product being introduced. Another important side to this is access to the market. In addition to management skills these are critical when looking for investors.
Individuals have the same challenge. We need to understand the market for what we plan to do and how to access that market. I think this should start when young people graduate from high school and are considering college, trade schools or have other plans. Colleges are getting way too expensive to just “explore” learning, although there is some value in that also. If you can afford to just “explore”, go for it! If you can’t you would be better off doing some market research on what the world needs before making that investment.
We are told that we need to find our niche, what we want to do. That is great but we need to focus on the need for what we want to do if we are going to make a living at it. We cannot rely on colleges to tell us what the need is; they may not have an objective view on this as studying in fields colleges offer created jobs for professors at the colleges. Is this a conflict? I am not sure, but I am suspicious.
The easiest way to get venture money is to identify a huge market need and then provide a solution to solve the problem, via product, software or service. Patents will be necessary to in order to protect the idea from competitors. Individuals cannot get patents of course, but they can identify the huge markets and understand the demands and entry points for people to serve them. The ideal would be to find the huge market for what one really wants to do, then get the education to enter it. If you can’t do that, maybe it would be better to pursue your dream as an hobby and find another way to make a living.
The next challenge will be how to enter the field; that is where networking skills come in. Start building your contact data base now by including family, friends and anyone who gives you a business card so that when you are ready you can turn to folks that will introduce you to people in your field.
Posted in General | Tagged attitude, business finance, careers, financial prosperity, jobs, life priorities, relationships, success
By Rob Severson on April 17, 2010
The unemployment thing is a real problem for many. On the other side, I still hear from business owners that it is hard to get good “help”! How can this be in this market?
I spoke at a high school a few weeks ago and one of the interests was summer jobs. The students had been looking for work as an assignment as well as a way to make some money this summer. Only one had been successful out of a group of ten. I found out that most had just filled out an application and really hadn’t talked with anyone where they were applying. The one who got a job did it by networking via an aunt who introduced her to someone looking for help. She was also the only one in the class who appeared upbeat and happy to be there. The boys in the class almost had the attitude that they would apply for work but didn’t really want to work; as one boy put it “I’m not going to kiss anyone’s butt for a job”! That attitude came across to me with most of the boys and I can see why they aren’t getting any responses.
Attitude is a major thing for young people seeking work. I don’t know if we are born with it or learn it, but if our attitude is bad we will have a difficult time getting any jobs. And when we do get a job, we need to show it all the time in order to succeed. Anyone who has ever been in a restaurant quickly sees the spark in a good waiter or waitress and is much more eager to leave them a good tip when they are through. It is similar in professional careers also, the ones with the positive attitudes are usually the ones who go the farthest. The ones that demonstrate that they really want to work also do the best.
I posted this story on my blog several months ago, it still haunts me!
I was in Door County this week with my wife and grandkids visiting some family. I learned that many restaurants and stores import Russian and other European young people to work in their establishments each summer. The reason? They can’t get people from their area to work!
I also learned that many of these young people can make $5-$10,000 a summer up there and many work two jobs to make as much as possible.
My question is: With all the talk about affording college why aren’t American kids beating the doors down for these jobs? I don’t know how many jobs are available, but it seems some are.
Posted in General | Tagged attitude, careers, financial prosperity, high school jobs, jobs, life priorities, prosperity, relationships, success, summer jobs, work
