Archive for May, 2008

May302008

So, What Don’t You Want?

no

There never seems to be a shortage of people who are willing to tell you what to do. No matter what aspect of life it is: career, entrepreneurship, parenting, marriage, spirituality, fitness - there are innumerable experts and pundits that are happy to tell you what you should do and how you should do it.

I’ve read dozens of success and self-help books. Some of them good, some of them bad. One of the recurring themes throughout these books is an emphasis on getting clear about what you want. What are your goals? What are your dreams? Where do you want to be in 5 years? etc.

While I’m not going to attempt to usurp authors like Zig Ziglar and Anthony Robbins, I want to make a point of how reverse psychology can help you get closer to where you want to be.

Focusing on what you want in life in terms of lifestyle, money, health, family and other areas is good. But, what I have had even more success with is defining what I DON’T want.

“How is this different?” you might be asking. Well, to me it is profoundly different for several reasons.

Let me lead with one of Thomas Edison’s most famous quotes: “Results! Why, man, I have gotten a lot of results. I know several thousand things that won’t work.”

Perhaps I should just end with that quote, I can’t really claim to out-wit one of the greatest inventors in American history. But, here goes.

First of all, I think finding out what you don’t want puts something finite and concrete in your brain and your brain likes it. We are conditioned this way from when we are young. For example: cross the street, but only cross within in the white lines of the cross walk. I think we force ourselves to focus more when we know there are certain rules. Developing a list of things you DON’T want is kind of like having a set of rules that govern your life.

Setting goals about what you DO want is great, but what knowing what you DON’T want is often derived from experience, which makes it set more permanently into your psyche.

Secondly, defining what you DON’T want helps you realize in more profound terms what it is you DO want. For me, this epiphany came when I quit a fairly well paying corporate job to strike out on my own. One day I just realized that working in a cubicle farm under florescent lights and having 8 different bosses drone on about mission statements was not for me (ok, I borrowed that last part from Office Space).

billy

Lastly, defining what you DON’T want, under any circumstances, helps instill a stronger sense of discipline into your daily life. A lot of people think discipline has to do with punishment, but it really means adhering to rules and principles and making no excuses or exceptions. I have been more successful in my endeavors when I have kept to a disciplined focus. The discipline is strongly derived from keeping away from what you DON’T want.

Here’s another example: I want to build my business bigger and better each day. Each day brings forth opportunities. Some opportunities are potentially lucrative, and I am inclined to pursue them, but pursuing them would violate one of the things I absolutely do not want in my business life: complexity (too many moving parts). I prefer to stay with a strict and simple value proposition. To me, life is complicated enough and just about every human being on earth is involved in a mad conspiracy to complicate things further and muddy up their lives. Therefore, knowing what I DON’T want helps me stay disciplined in pursuing my end business goals.

Now, what to do?

I think it’s going to be pretty easy for you to get clear about what you don’t want to do. It might even be fun. We’ll revisit this topic in a future post and I’ll share some of my absolute DON’T list (it’s getting larger by the day - does that mean I’ll be trapped in my own cocoon pretty soon?).

Published
by
Adam Davis
on May 30, 2008
in Goals and Self Improvement
. 2 Comments
May272008

Tuesday Top 5: 5 Ways To Tell You Need a Growth Spurt

When we’re growing up we can’t help but grow physically and mentally. Our bones, tendons, ligaments and muscles mature each year until we reach around 18 years of age. We also grow in knowledge of the world. We learn how to walk without falling down, cross the street without getting hit by a car and feed and cloth ourselves. All of this comes pretty naturally.

baby

Then, something strange happens.

We enter into adulthood and we have to start exerting more and more effort in order to grow. We have to study if we go to college or technical school. We have to exert ourselves physically if we want our bodies to improve. We have to be extra careful not to get hit by cars as we wander across the street in iPod oblivion with a venti latte in our hand.

It’s a sad fact that many American adults hit their growth peak when they have lived only 25% of their life. How many people do you know actively push themselves to learn and do new things on a regular basis? How many people do you know continue to learn new skills and ideas beyond the bare minimum requirements to keep their jobs? How many married parents do you know who actually take the time to learn how to become better spouses and parents (reading books, researching, etc.)?

I think the majority of American’s would rather spend time out in their yards mindlessly picking through weeds and planting new things in their backyard gardens than learning or experiencing new things that would help them to grow as people.

Yesterday (Memorial Day in the U.S.), I took my dog for a walk through my neighborhood. As I passed each house, I couldn’t help but wonder what my neighbors were up to. Were they having fun with their families? Were they doing laundry? Were they any further to where they wanted to be in life on this Memorial Day versus last Memorial Day?

Making my way back home from my walk, I thought about what the warning signs would be that you need a growth spurt in your life. I came up with a Big 5.0 of them.

1. You know the hometowns of the American Idol contestants

idol

Put down the remote control and pick up a book. Instead of plugging into The Matrix at night when you get home from work (or never leaving The Matrix), swallow the red pill and read a book. It can be a book about anything, just fire some neurons instead of letting them idly sit in your brain. Eventually you will let go a sigh of relief when you realize how fun it is to think for yourself.

2. You can’t remember the last time your heart rate exceeded 150 beats per minute

If you aren’t regularly exercising, you are missing one of the best parts of life. Exercising can help you push your personal limits, build confidence and give you unbelievable health benefits. Unless you are truly incapacitated, find some type of physical activity that will accomplish the following:

-make you sweat

-make you tired

-make you wish, at one point during, that you weren’t doing it (this is where the growth part comes in - making yourself do things you haven’t before)

I promise that you won’t regret this and you will find things out about yourself that you never knew.

yoga

3. Your child asks you who you are going to vote for and you quote Rush Limbaugh word for word

pols

Turn off CNN and attend your next city council meeting. Most of the political changes that effect your personal life and jobs in your area are going to be at the local and state level. Your county sheriff’s and prosecutors help keep your streets safe and your city planning commission helps decide what buildings and new business developments are going to come to your town.

4. You can’t name 5 technological changes that will effect the future of your job and/or your business

This should be a no-brainer. In your heart of hearts, you know that technology is shaping the future of your career right now. You know that your skills could be rendered obsolete with the creation of the next great Google algorithm. If this is the case, then why aren’t you learning what those little dots on the horizon are so you can, at the very least, maintain your economic value and, at best, capitalize on these coming changes to be better at what you do?

laser

5. You can’t remember the last time you did something crazy

Maybe you won’t go base jumping tomorrow, but you should try to do things on a regular basis that you might consider completely nuts. Why? Because it will get your blood moving and make you think about things a little differently, if even for just a second. But, thinking differently for that once second could the difference maker you need.

So, what would be something nuts? It all depends on your scale, but here are some suggestions:

-sing karaoke with the music turned down

-tell a few of your favorite jokes at open mic night at your local comedy club

-take a random sick day off for no reason in the middle of the week and read a book or newspaper at a coffee house

crazy

If any of the above applies to you, I suggest you get moving. If you are thinking of an excuse as to why you aren’t moving, please see my post from last week on excuses by clicking here.

Published
by
Adam Davis
on May 27, 2008
in Motivation and Self Improvement
. 1 Comment
May262008

Work/Life Balance - Myth or Reality?

Since my wife is vacationing in Europe with family, the whole concept of ‘work/life’ balance has been occupying my thoughts of late.

I often wonder if my work/life scale is in balance or in a state of constant flux. Sometimes I feel like I am back in 9th grade science class, trying to balance one of those metric scales with strange substances on each side (one of which was sure to cause a chemical burn).

How do we ever really know if we are balancing our businesses or careers with the other aspect of life?

When I worked in corporate America, it was widely assumed that anyone who had a ‘work/life’ balance was not serious about their career and they were doomed to the droves of mediocrity. I remember having lunch with about 7 or 8 co-workers one day and the subject came up. Here’s an excerpt from the conversation:

Person A: “Jim? Yeah, Jim has a pretty good work/life balance.”

Person B: “True. But he’s probably not going to get anywhere that way.”

Person C: “Right. He’s just not at that level yet.”

For some people, I doubt that serious thoughts about anything other then work or career advancement enter into their psyche. For others, I think they dedicate as few neurons as possible to work.

I admit to being only a partially painted canvas, specks and blotches of paint slapped on with the beginnings of shapes taking form. I am evolving.

What amazes me is how many people wear the markings of a zero balance life like a badge of honor. Strained relationships, poor health, chronic fatigue, high stress. I have too often worn these markings proudly, only to realize that nobody really thought they were cool.

Work/life balance is not something easily divvied into piles of type A and type B personalities. It goes much further than that. For many, work defines their life. Therefore, the subject of balance is non-existent - there is nothing on the other side of the scale.

Have you ever heard an American make fun of the fact that many European countries take extensive summer holidays? I am not sure if this smacks of only pure jealousy or downright contempt, but it always seems to be said in a tone that implies that ‘Europeans are lazy.’ Lazy? Or perhaps more balanced?

The question of whether work/life balance is myth or reality is most definitely not going to be settled over the course of a blog post.

As I sit and type in the early morning of Memorial Day, I can only ponder further and continually evolve in the direction of my optimal lifestyle. I like the challenge.

Published
by
Adam Davis
on May 26, 2008
in Success and time management
. 2 Comments
May232008

Excuses are like ____, everybody has one….

Have you ever heard that before? If you haven’t, I’m glad you heard it here first.

I think one of the most undiagnosed medical conditions in the world is ‘excuses-preventus’. (I don’t normally speak Latin, but that’s what 3 cups of coffee in short order will do to you). It is a chronic condition. A 2 phase affliction that begins with some rationalized reason for not doing something presents goals from being met and achievements going undone.

Let’s briefly break this condition down into plain English. Excuses Prevent Us.

So, you are probably getting on my wavelength now: excuses prevent us from our goals and dreams and ultimately lead to an unfulfilled life and disappointment.

In the business world, excuses-preventus is prevalent. Here is how the condition commonly presents itself:

  • “I can’t get any new customers on account of the recession that’s going on,” moans the entrepreneur
  • “I would have done (fill in the blank) except (fill in the blank)” cries the operations manager
  • “You don’t understand, my shop is just in a tough location,” yells the store owner
  • “American Idol was on last night,” whines the service professional

I’m sure you have seen these symptoms before. Maybe you are feeling the onset of excuses-preventus. If you are, I suggest reading this months issue of Inc Magazine. There is a great piece in this issue about entrepreneurs that started businesses in “rough” times. These companies made no excuses and forged ahead despite the winds of ‘conventional wisdom’ blowing against them. Here is an excerpt about what Method founders Adam Lowry and Eric Ryan were up against:

—-When they look back on the early days of their start-up, Adam Lowry and Eric Ryan remember that a lot of potential investors laughed at them. The Bay Area, where they were living, was awash in Internet start-ups. Each week in 2000 brought another glitzy launch party or news that the scantest of business plans had attracted venture capital. Even office landlords were demanding equity from their dot-com tenants. Lowry and Ryan, who wanted to start a company to make — of all things — humdrum household products, were decidedly out of step with the times. “You had the sense that there was this real historical thing going on in the region, even if it was not going to end well,” says Ryan. —–

Talk about being immune to excuses-preventus! If you have a hard time not making excuses for being a vegetable in front of the TV, just imagine having sophisticated and wealthy investors laugh at your business plan at the same time you were sailing into the eye of an economic storm.

Anytime I think about excuses-preventus, I remember a great line from the movie The Edge, starring Anthony Hopkins and Alec Baldwin, that I believe sums up how to cure excuses-preventus in short order.

In this movie, Hopkins and Baldwin’s characters are stranded in the Alaskan wilderness and they are being pursued by a hungry grizzly bear. They come to the realization that they won’t be able to outrun or outmaneuver the bear on their journey to safety. They decide that they must kill the bear in order to survive.

Alec Baldwins character (Bob) seriously doubts their ability to kill the bear and survive. To ensure survival, Hopkins’ character (Charles) must motivate Bob.

Charles: “Did you know, in many African tribes, 11 year old boys must kill a lion with a spear in order to prove their manhood.”

Bob: “What’s that got to do with us?”

Charles: “What one man can do, Bob, another man can do.”

Bob: “What?!”

Charles: “Repeat after me: what one man can do, another man can do”

Bob: “What?!”

Charles: “Repeat after me, Bob: what one man can do another man can do!”

Bob (getting the picture now): “What one man can do, another man can do!”

And there it is: what one man (or woman) can do, another man (or woman) can do. Take a dose of that the next time you feel yourself coming down with excuses-preventus. Somebody else is getting things done - so why aren’t you?

Published
by
Adam Davis
on May 23, 2008
in Leadership, Motivation and acheivement
. 1 Comment
May202008

Tuesday Top 5: 5 Reasons To Be An Investor vs. Speculator

buffet

gambler
Are you more Warren Buffet or riverboat gambler?

The reason I ask is that what you might think of as investing is really speculating and the consequences could be disastrous for your financial future.

I might be starting an argument of semantics, but I guess that’s the whole point, right?

Anybody familiar with the 1987 film Wall Street is likely familiar with the following quote made by Gordon Gekko, whom I believe summarizes the difference between investing and speculating:

“The public is out there throwing darts at a board, pal. I don’t throw darts at a board. I only bet on sure things.”

gekko

This quote is symbolic of what differentiates investors from speculators. Investors buy because they believe the asset they are purchasing is undervalued and/or is likely to increase substantially in value AND the performance of the asset, independent of others’ perceptions, will provide a significant enough return to justify the risk taken and opportunity cost to purchase.

Speculators, on the other hand, buy an asset because they believe they can likely sell it at a higher price (or sell it and buy at a lower price) to another person. The decision making is mostly determined by the appetite of others for the asset and does not largely depend on the characteristics of the asset itself.

Simply put, investors buy because they believe an asset holds value in and of itself and speculators buy because they believe they can offload it to somebody else for a profit.

You are going to notice that the undertone of this post is heavily influenced by the writings and teachings of Warren Buffett and Ben Graham (Buffett’s teacher at Columbia).

1. Good Investors Make Money Independent of What Others Think Of The Investment

A good investment will yield returns to an investor despite what the market thinks of the investment at a given point in time. Let’s look at investment real estate, for example.

A speculator might look at single family homes in Metro Detroit as a bad idea right now, because they could not (at least not very easily) just buy a house and sell it to someone else at a higher price with the ease that they could of 3-4 years ago.

An investor, on the other hand, might look at single family homes in Metro Detroit right now as a good investment. With a rock bottom purchase price and monthly cash flow, the investor would get a solid return over time no matter what happened with retail home prices

house

2. Investors Do The Work Up Front - So They Don’t Have to Worry About The Back End

Have you ever heard the phrase: “you make money when you buy, not when you sell?” I think this phrase better captures the mindset of the investor versus the speculator. A speculator is always buying because they believe that they can sell the asset to someone else. But, what happens when the buyers dry up? My first guess would be that they would be stuck with an overpriced asset.

Think about the condo developers and ’spec’ home builders across the country right now that are hemorrhaging red ink. Many of these builders continued to build in spite of the supply and demand of basic economics staring them in the eye. They just kept building and building, betting that someone from somewhere would come and buy the house or condo. Credit this as a large part of why housing and condo prices are plummeting across the board in what were formerly hot markets across the U.S.

3. Investors Know That The Market Will Always Fluctuate - So They Insulate Themselves From It

If you actively buy and sell stocks, stock options or futures, what would happen if the markets blew up suddenly? What I mean by ‘blew up’ is that there was some global geopolitical event that shook the foundations of the markets down to their very core. What if there was an oil embargo on the United States? What is there is a terrorist attack on U.S. soil (like Sep. 11, 2001)?

These wild market fluctuations are more likely to happen than not (causes could vary). Speculators constantly have to change their strategy to capitalize on market fluctuations, their very survival depends upon it. Investors don’t have to worry about this, they know that the asset they bought has a fundamental value, based on it’s intrinsic characteristics that will generate returns independent of the turmoil of the financial or real estate markets.

4. Investors Can Have More Control

Investors can have more control over their investments than speculators. How? Because the speculator is always worried about what the market will do that they have added another variable into the equation of investment performance. The only variable the investor has to worry about is whether or not the asset was a good buy at the price they are paying. The speculator has to always worry about what the next guy will pay.

There is another way that investors can have more control, too. Let’s turn to real estate again as an example. If I purchase a piece of commercial real estate, say a strip mall, I can make money from the rents on the stores alone. I can also do things to increase the cash flow, such as remove certain types of stores for more appealing ones, bring in larger tenants, increase parking, etc. All of these things are in my control to increase the performance of my building (and hence increase my ROI) and are not dependent on what other people think it is worth. I have more control to drive my investment performance.

A speculator, in this scenario, would only think about what he could sell it to the next person to and would likely not invest as much in driving the cash flow performance of the asset as an investor would. Time frames for holding make a large psychological difference.

5. Investors Enjoy Better Tax Treatment

The longer you hold and investment, the better the U.S. Government will treat you when it comes to taxes. Speculators (the ones that make money) incur short term profits each time they trade during the year. This results in ordinary income tax treatment of all the profits made.

Investors, on the other hand, usually hold their investments for longer periods of time (they are focused on the asset performance, not the markets pricing of the asset). Investments held for longer than 1 year are treated at lower tax rates in the U.S. (capital gains versus ordinary income). Dividend and passive income tax rules will often apply as well, throwing further tax benefits in the direction of the investor and not the speculator.

taxes

Now, I am not saying that there are no speculators that do well financially. Quite the contrary, I know several stock speculators that do well, year in and year out. It just may be in your blood to be a speculator. However, it has been my experience that investors make more money over the long term and build more substantial net worths because they pursue assets that will generate returns no matter what the market says the value of the asset is worth.

I realize that I could be throwing down the gauntlet in a lot of areas here: efficient market theory, value investing versus growth investing and many more. If so, I am quite glad. Let the debating begin.

Published
by
Adam Davis
on May 20, 2008
in Finance and Investing
. 1 Comment
May172008

Saturday Op-Ed: “Are There Consequences Anymore?”

I hope you will forgive me in advance, but I have some things that I would like to get off my chest.

I came across a situation recently in my real estate investing business that I feel transcends all business types and industries. It’s more of a socio-economic analysis of something that is happening in American right now and I am wondering if it is part of a new trend or just the next installment of a recurring theme.

Here’s the situation (names have been changed to assure anonymity)

Jane Johnson buys a condo in a Detroit suburb in 2005. The real estate market in Michigan is robust. Houses are selling and new residential construction is relatively steady. Interest rates for residential mortgages are near historic lows and exotic mortgages like ‘negative amortization’ and ‘110% financing’ are readily available for borrowers of nearly every credit situation.

Jane is a younger woman in her mid 20’s. She is climbing the corporate ladder and her career is progressing steadily. She enjoys living in her condo and entertaining guests and spending time by the pool in the summer. She comfortably makes her $1,300 monthly mortgage payment (including association dues).

Alas, Jane finds love and gets married to the man of her dreams in late 2006. Her husband owns a home near Jane’s condo and the decision is made that they will live in her husbands home. Now, Jane needs to do something with her condo.

The real estate market has started to turn down from when she bought the condo in 2005, when she paid $145,000 for it. Jane decides to rent her condo for $1,100 per month. She reasons that she the will just cover the $200 per month out of pocket until the real estate market turns around and she can sell her home for more then she paid.

Throughout 2007 and into 2008, Jane lives happily with her new husband and collects the rent on her condo. She nervously watches the real estate market dip further and further. Foreclosures are on a meteoric rise. She hears stories of houses and condos selling for only fractions what she owes on her own. Jane starts to worry a little bit more.

Then, it happens. Jane receives notice that her tenant is moving out. She quickly takes stock of the fact that there are still dozens of vacant condo units in her complex that are brand new that are still sitting unsold. The condo developer is offering cut-rate pricing to sell them - $30,000 less than what Jane paid! Jane talks to a real estate agent and the agent confirms her worst fears: she won’t be able to sell her condo anywhere near what she owes on it. Jane starts to worry a little bit more.

With hers and her husbands income, Jane can still make the condo payment even if there is no renter (or even if there was a discounted renter paying $800 per month). Jane and her husband don’t like the thought of this though. You see, that $500 per month could be much better spent on going out to eat and taking weekend jaunts to Las Vegas or Charleston. As her condo renter’s exit looms, Jane starts looking at what ‘other options’ she has on her condo.

Jane has been talking to a lot of people she knows who are in similar situations; zero or negative equity in their homes. She finds that many of her young, well heeled, social and corporate climbing peers have been ‘letting their payments go’ - simply not making their payments. They have discovered that some mortgage companies and banks will allow a “short sale,” wherein they will accept a discounted payoff on the note(s) owed on houses.

Jane revels in this thought. “You mean, I can just sell my condo for less than I owe on it and the bank will be o.k with this?” Jane asks her friends. “Sure,” they say. “But, your credit might get hurt for a while, but you can ‘repair it’ and bring your score up and get another house again within 6 months to a year.” Jane smiles at the thought of this. She is happy that she has a solution to her condo problem.

Jane talks to her husband about what has learned and he concurs. But, her husband wisely maintains that they should talk to someone knowledgeable in this areas of real estate and also consult real estate attorney. Jane agrees.

Before meeting the attorney, Jane learns through the husband of a friend that not making on-time mortgage payments can have a significantly bad impact on her credit score, worse then she initially thought. She further learns that banks usually won’t consider short sales unless there is imminent threat of foreclosure and that she can be liable for debt forgiveness as personal income and pay taxes on what was forgiven.

Jane and her husband meet with a real estate attorney and ask lots of questions. The attorney has, by now, encountered dozens of people just like Jane and her husband. He is smart and knows how the game works. He advises them of all their options and the legal ins and outs. What he says just confirms what Jane and her husband already know. Then, the attorney winks, nods and says: “if you were my little sister, I would say just stop making payments.” Jane beams at these words - just what she was looking for: a licensed professional giving her the greenlight!

Jane and her husband talk it over. They really want to buy that new plasma TV for the downstairs bar. After all, NFL football season is approaching quickly. They talk about their credit situation and decide that Jane having bad credit wouldn’t really be that bad: they can just use hubby’s credit to get things until Jane’s credit improves and, when hubby is fully extended on his credit, they can then use Jane’s credit again. It’s really a magical formula they feel that they have found.

Jane is really happy with her decision to let her house go and force the bank to a short sale. She thinks about this on her way to work the next day. “Those banks have enough money, anyway,” Jane says to herself. The lessons her grandfather told her about ‘your word being your bond’ and ‘living up to your obigations’ never enter her mind as she weaves her way through the congested traffic. Jane is also glad her husband agreed with her decision. “Besides,” she thinks, “if he disagreed with me I could just divorce him anyway.”

Consequences.

I think this word has been purged from the vocabulary of the majority of the populace in the United States. People always have to have an ‘out’ on something they are undertaking, they always have to hedge their bets.

Think about it:

  • If you don’t like your house payments, just stop making payments
  • If you don’t like your spouse, just get a divorce
  • If you don’t like your job, just get another one
  • If you don’t like your family, just move away
  • If you don’t like monogamy, just be with anyone you want
  • If you don’t like the way you look, keep eating anything you want - just get a ‘tummy-tuck’

No, I am not having the same, age old gripe-fest that “this country is going down the toilet.” I only seek understanding. I am a businessman and I want to know my customers. It is striking me more and more every day that the case is that people don’t want to have any consequences for their actions - they just want to ‘do what feels right’ and move on.

I recounted my recent experience with the mortgage story just to illustrate a point. More and more people are content with not living up to their obligations (signing your name on a legally binding document promising to pay a set amount on a regular basis for something is indeed an obligation).

Another factor may be in play here: people don’t want to admit that they either made a mistake or that they made a decision that turned out to be wrong.

What I want to know is this: is this ‘consequence free’ lifestyle a new trend or is it just a new manifestation of the same underlying current in our culture?

There are strong implications in this question for entrepreneurs and marketers everywhere. I will be keeping my ear to the ground on this subject and others like it in future posts - so be on the lookout.

Do you believe in consequences?

Published
by
Adam Davis
on May 17, 2008
in Business and education
. 4 Comments
May152008

The Power of Inertia - Part 1

Inertia (i-nur-shuh): the property of matter by which it retains its state of rest or its velocity along a straight line so long as it is not acted upon by an external force

If you want to start seeing the changes you want in your life or in your business, then you need to understand the power of inertia. In fact, I think that more people aren’t able to make the changes they want in their business, personal or financial life because they fail to understand and utilize this powerful force.

Have you ever heard someone say: “the first step is always the hardest?” Did you ever wonder how this statement came into existence? I have a one word answer: inertia.

Sir Issac Newton was quoted so many years ago saying: “an object in motion tends to stay in motion; an object at rest tends to stay at rest.”

newton

To me, as a non-physicist, I can apply this to my personal and business life. Once you are moving toward something (your goals), you are infinitely closer to achieving them simply because you are moving. I see and hear so many people who want things like more money, more time with family and improved improved health who just can’t seem to get out of the starting blocks. The main reason for this is inertia (think: an object at rest tends to stay at rest).

On the flip side, I see people who careen from achievement to achievement, bewildering all those observing. They make more money, have better health and enjoy a more fulfilling life. Inertia has a lot to do with this as well (think: an object in motion tends to stay in motion).

In the his classic book Good to Great, author Jim Collins talks about the ‘flywheel effect’. Essentially, the ‘flywheel effect’ is when an organization, product or idea gains steam (e.g. market leadership, profitability gains, etc.) after months or years of steady work or ’small pushes on the flywheel.’ By their nature, flywheels take repeated effort to get up to speed, but then are able to generate high levels of energy. What should be noted about the flywheel effect is that it takes movement to get going and then the power of inertia takes over.

flywheel

No, I am not trying to make everyone relive 9th grade science class. My hope is to alert to the fact that there are forces of nature that effect the level of success you have.

Did you ever have one of those days where everything felt right and went right? Where all objects felt like they were moving in slow motion and you were able to deftly handle problems with the greatest of ease? Perhaps you gained a new customer or did exceedingly well at your job? Do you remember the feeling? Like maybe you were just ‘rolling?’ If you have ever felt this way then you know what I mean about inertia. Momentum was on your side.

Let’s flip it around: did you ever have one of those days where absolutely nothing went right? Problem after problem arose and compounded on you? You kept repeating to yourself: “when it rains, it pours.” Inertia was in effect here too, except it was working against you.

I am begging the question: how can you make inertia work for you?

In part one of my treatise on this subject, I am going to throw two things out there that work for me (though I don’t by any means claim to have this all figured out)

Habits Fuel Inertia

Your habits will define your life. Humans are indeed creatures of habit. You can either build good habits or bad habits. When I talk to people about making changes, and radical changes at that (why ‘radical’ changes? because who wants to just be a little bit better..why not be A LOT better?) I often try to discern what their habits are.

For example, if someone tells me they are trying to lose weight, yet they eat irregularly and exercise only once in a while I start to wonder how serious they are. It’s hard to lose weight when you can’t break the habit of picking up the remote control every night when you get home from work.

Recognize Momentum Swings

Becoming more conscious of momentum swings is a great start toward making it work for you instead of against you. You can start to pick up on trends in your day or your activities that are driving momentum one way or the other. If you start to feel a chain reaction and momentum swing against you, you should stop and change direction. Insanity is doing the same thing over and over again and expecting a different result.

If you have a some good momentum going, ride it out all the way. Here is a prime example:

When we strike paydirt and land a great deal, the next thing we do is re-double our efforts the next split second later to nail another one. Good things come in bunches and riding the positive momentum of a great deal can carry us through and generate all kinds of other good things right in a row (new relationships, more possibilities for revenue, etc.). If you make a sale on the phone in the morning, you should keep right on dialing the phone - chances are you will knock out a few more. Remember that feeling. Try to capture it, harness it and put it back into action the next day.

I will revisit the Power of Inertia in future posts. For now, I trust this is enough food for thought (and, probably enough science!) to go out and start making some radical changes.

Published
by
Adam Davis
on May 15, 2008
in Inspiration, Productivity and Success
. 5 Comments
May132008

Tuesday Top 5: 5 Reasons to Embrace Criticism

In recent months, I have experienced more outside criticism than at any other point in my life. While I have always known, in the back of my mind, that people will always ’say what they will say’, it has been brought to the forefront of my attention recently as I have been made acutely aware of my critics through a variety of means.

I admit that it has taken some getting used to. Our natural reaction to criticism is to defend ourselves, our positions and our opinions. We want to try to convince other to see the merits in our cases. However, the successful persons reaction to criticism must be non-reaction. It has been told to me by several successful people whom I hold in high regard that: “successful people are immune to criticism.”

Well, in order to build up an immunity you must first have exposure. Therefore, this week I wanted to throw out 5 reasons why one should embrace criticism.

thumbs up

1. It means you are taking risks and putting yourself out there

You won’t have much personal growth if you aren’t taking risks. Risk taking, whether small or large, forces us outside our comfort zones (which are often outside the comfort zones of most other people, too). When you step out and do things that other people are too scared or too lazy to do, it makes them want to tear at you. I take comfort in the fact that I do things in business and in life that most other people are either too scared, too lazy or too risk averse to do.

The more things you do that others won’t, the more things you will have that others don’t.

2.It means other people are thinking about you when you aren’t around

For me, it is pretty flattering when someone is thinking about me when I am not around them. For someone to criticize you, it means that they are thinking about you in their spare time. You see, they have to come up with their words at some point in time and most of them don’t say the same things to your face that they write anonymously on the internet.

If you don’t have enough going on in your own life that you have to think about someone else (and negative things at that) then you must not be in that good of a place.

3. It means you are hitting above average

If others are openly criticizing you, relax: those at the top of their profession are almost always under attack.

Think about professional athletes. They are almost always under an absolute barrage of critical media attention. They don’t get a break. Think about the executives that run major corporations: they are probably criticized on a daily basis by everyone from their peers to shareholders and especially from employees.

yell

4. It means you’ve caused someone to think

If you are doing things right and driving as much value as you can, then you should probably be thankful when someone criticizes you because you have pushed all thoughts of Dancing with the Stars, American Idol, and their upcoming weekend activities out of their head and replaced it with you.

This should be good news for anybody. After all, as a business person, you are competing for customer attention and dollars from marketers and information sources from all across the world. If you’ve managed to put your brand, your opinion or your information in front of someone in light of other competing factors then you have just won yourself a big victory.

5. It is a healthy reminder to stay focused

Focus is one of the most important elements of success. The human brain will only allow for so many inputs and outputs in its algorithm before it gets thrown off track. If you are focusing in and keying on the right areas of your business, then criticism should serve to galvanize that focus even more for you. It should confirm that you are on the right track: thinking, talking about and doing the right things.

So, there you have it: another Tuesday Top 5.

I know that neither you (or I) will be able to turn our feelings on and off like a light switch. It takes time and practice. I am willing to be that it took Michael Jordan a couple of seasons in the NBA before he got used to all of the media spotlight and negative comments that other players and the press were making about him. He simply went on to become the greatest player of his generation (at least) and revolutionized the game of professional basketball.

Embrace and become immune to criticism or get eaten up by it. The choice is yours.

Published
by
Adam Davis
on May 13, 2008
in Business, Entrepreneurship, Inspiration and acheivement
. 2 Comments
May62008

Tuesday Top 5: Practical Outsourcing Tips for Part-Time Entrepreneurs

After a brief hiatus, The Weekly “Tuesday Top 5″ is back (hey, give me a break, business is on fire here!)

Some of the qualities that I value most in business are: clarity and focus. This is the impetus for the Tuesday Top 5: it is my attempt to provide some nuggets for you to use right away. If you have noticed from my prior posts, I am a very action oriented person. Having something clear and concise to work with does wonders for my psyche.

Many entrepreneurs start their businesses part time. They work a full time job and run their business at night, from home and through email and cell phone calls during the workweek. What I want to do is to give some practical guidance that will help part-time entrepreneurs be more productive so they can drive revenues higher and fire the boss once and for all.

1. Delegate non-marketing/sales functions

As an entrepreneur and small business owner, marketing is the single most important activity that you will undertake. Therefore, you should start outsourcing any activities that prevent you from spending 75%-80% of your time on marketing and selling. Some of these activities include: accounting/bookkeeping, payroll/human resource management, order fulfillment, inventory management, logistics, etc.

You will find these areas to have more redundancies and you can make them system and process dependent much faster and easier as a small business than the marketing and sales functions.

2. Go for quality over quantity

I often talk about using ‘best cost’ providers instead of ‘lowest cost’ providers. What does this mean? It means that you need to chose service providers that give you the best ‘bang for your buck’ - in terms of price, turnaround time, quality and professionalism and communication. The level to which you ignore this principle will directly correlate to dollars drained out of your bank account. Trust me.

3. Use a consistent method of communication

Chose a communication medium that works well for you and your service provider. Examples are: email, private message board and instant messaging services. I strongly advice you to use the same communication method for all interactions with your service provider. This will come in handy if there are ever any issues or problems because you can refer back to prior conversations to sort out any problems in communication or instructions or feedback.

4. Use escrow payment methods with your service providers

Escrow payment methods can provide protection for you if you feel that your service provider has not performed to the agreed upon terms and metrics. Websites like elance and guru provide this service for free and also provide a good website community.

5. Don’t be afraid to fire your providers

You must demand that your service providers perform to your expectations. Make sure you outline your expectations and performance requirements at the beginning of the business relationship. If your system breaks down with an outsourcing vendor that you are using make sure you fire them right away. After all, you are paying them - not the other way around. There is a big world of potential providers

Remember: always focus on revenue generating activities. As an entrepreneur you have to relentlessly focus on your top line and managing your cash flow. Far too many start-up businesses put the brakes on marketing and sales only to see their pipeline dry up at the most inopportune times. Keep stoking the fire.

The Top 5 for today should give you some serious ammunition that will allow you to focus more on sales and marketing. Don’t forsake this aspect of your business. To me, outsourcing is the best weapon that entrepreneurs to focus on the truly important aspects of building a business.

Here is an example of what I am talking about in action in our real estate investing business:

Our revenue generating activities surround providing both experienced and new real estate investors the best deals that fit their financial parameters and investing goals. Our daily activities focus on obtaining new investor relationships and cultivating existing relationships.

As you might guess, there can be a lot of paperwork and administrative overhead involved with real estate. It is very easy (I know from experience) to get bogged down in the process of buying and selling houses (not our business) instead of focusing on the people (this is our business). Our business is about helping people achieve their wealth accumulation goals through real estate investing. Therefore, we outsource any function we can that does not help us reach more people and bring them closer to what they need with real estate.

Since technology has opened the floodgates of globalization, we can focus more and more on helping our clients. This has the added benefit of increasing our productivity and standard of living (we can work from anywhere if we choose).

My challenge to you is to implement today’s Top 5 with gusto. Give me your feedback and make sure you email me with questions or problems you have in the process.