Archive for the 'Business' Category

Apr22009

On the Record

For historical purposes, I would to be on the record for a few musings that I hope will find there way into Google’s search indexes so as to be preserved for my children to read one day (kind of like cryogenics for your thoughts).

Lately, I have been reflecting on the absolute madness of what is going on in virtually every market imaginable (stocks, bonds, real estate, etc.).  One day, a hundred years from now, kids will be reading about this stuff in their history classes - or, perhaps having things beamed into their heads telepathically.  They will perhaps wonder: ‘what were they thinking?’ The overwhelming answer will be: “they weren’t”

My pipe dream for the day, which usually involves time travel or playing in the NFL, is that someone could get through to the pigs at the trough in the government before Old Major and  Napolean take over.

  • This bailout stuff is a bad idea - borrowing to de-leverage? does this sound a bit screwy to anyone? A Wall Street personality was on NPR the other day saying that if there was no bailout the recovery in banks would take 10 years.  My thought: “so…?”  All we are doing with this bailout stuff is creating more moral hazard, more future problems that perfectly embodies the spirit of “push it off to the next generation - at least we won’t be here for the shit storm” that has prevailed in recent years.
  • America will forever be addicted to leverage - two generations (soon to be three) have come of age where the culture of “buy now, pay later”, “you deserve it”, and “..but all the other kids have one!” is ubiquitous.  It’s hard to remove something from your DNA - it’s just kinda there.
  • Our country had many years of freedom and prosperity - both will diminish in the future.  However, we should be thankful that we had any at all - remember, several generations passed in countries like the former Soviet Bloc where subsistence and repression was a way of life.  More government control (by default if anything else with all of the spending and administration) means less freedom. More restricted markets mean less overall prosperity.
  • The size, scope and level of government intervention is analogous to pouring oil into the drinking water supply - America will soon resemble the nations of western Europe as they currently are - old, stodgy, bloated, bureaucratic and functionally obsolescent  in terms of creating higher standards of living and being a beacon for those with high aspirations.
  • The American Taxpayer will soon be an indentured servant all the way around - to his government, to foreign governments and to foreign and domestic corporations and financial institutions
  • The American Entrepreneur is being cast aside -when was the last time President Obama or any of these other so called political ‘leaders’ paid any  meaningful verbage or time to small businesses and entrepreneurs?  My question to them is: “where is your future tax base going to come from?” (you can’t tax the foreign companies and countries that are buying up America by the day Mr. Obama)  What will inevitably happen is that the entrepreneurs (and other producers) are going to be expected to pick up the slack for everybody else- all the government spending and programs will be heaped on the “producers’ by those that produce nothing - this makes me sick to my stomach. State and local governments take every chance they get to stomp and spit on small businesses - whether it is hiking their taxes, passing encumbering ordinances or taking land through eminent domain for “public good”.

I don’t want this to sound too much  like a whiny rant.  I generally hate it when people present problems and do not put forth solutions.  My solution is simple: when you find yourself in a hole, the first thing to do is STOP DIGGING.

Published
by
Adam Davis
on April 2, 2009
in Bailout and Business
. 13 Comments
Mar32009

Feeding the Machine

All apologies for my posting hiatus.  I enjoy writing this blog just about as much as I enjoy grabbing deals…but not quite as much!

At times, when I get really busy with  my company, I feel like I don’t spend enough time on self-improvement (e.g. reading, listening to podcasts, etc.).  As such, I recently rolled back my alarm clock an extra 45 mins (yes, 4:45 am is early) so I could squeeze in some extra neuron stimulation in the morning before a day of swashbuckling.

In the spirit of sharing, I thought I would throw out what I’m reading/listening to in hopes that anybody out there reading this might pick up something good and helpful.

What I’m reading:

Blogs:

Books:

What I’m Listening to:

Well, there is my eclectic mix of what’s pouring into my brain.

Hope you can find something in there worth giving a shot to.

Back with more soon.

adamjdavis.com brain homer simpson

Published
by
Adam Davis
on March 3, 2009
in Business and Business Books
. 1 Comment
Dec152008

How to get ahead…the Magic “P” Word

If I could impart the most important lesson that I have learned to date in business and investing, it would be: “patience.”

Warren Buffett has been quoted as follows: “the financial markets involves the transfer of wealth from the impatient to the patient. “  How true this is.

What is worth doing is worth doing well and usually takes time to implement and work.  There are no shortcuts, however much every late night information marketing genius would like to tell you about for three easy installments of $39.95.

The wealthiest investors and business owners that I know do not chase after quick and easy profits.  They don’t go for projects with marginal proforma profitability and based on heavy leverage.  They don’t take risks without commensurate reward.

When business and market conditions are tough and getting tougher, like they are now (and have been before) the route to take is patient, intelligent and rational.  Knee-jerk reactions simply won’t do much good for your net worth.  Unfortunately (or fortunately for some), most people will jump in and out of investments and projects, will push prices to and fro with their actions and open up opportunities for patient and rational investors to grow their wealth.

Keep watching for bargain investment opportunities to fall out of the sky.  Assets are going to continue to go off at ‘fire sale’ prices as the collective global economy “de-leverages” itself and purges the remains of the great credit hangover.

———————-

I’m going to be launching another blog in the near future that is going to focus more on the financing aspect of my businesses and more of my personal interests and thoughts in that arena.  I will continue to post on this blog as regularly as I can, but it will be more of a general business and investing commentary and writing focus.

Stay tuned!

Published
by
Adam Davis
on December 15, 2008
in Business, Finance and Investing
. 1 Comment
Nov132008

Polar Opposites and Nothing to Lose: The Life of an Entrepreneur

Present value cash flow and long term business value creation are often at strongest odds when it comes to  entrepreneurs and small business owners.

There is a need to make a solid and decent living from the business, while at the same time smart small business owners know that they need an exit.  To have a successful exit (e.g. selling their company or passing it down to future generations or employees) small business owners must have a ‘saleable’ business.

Unfortunately, building a “saleable” business means making the decisions and choices along the way that lead to long-term value creation (branding, systems, processes) and making the business able to function independent of its owner is the key variable here - this necessarily impedes the money the owner can take out of the business in the short-term.

In order to build a saleable business, the small business owner must not rob the business of the re-investment of cash necessary to build sustainability.  Few small business get over this hurdle.

In his famous book: The E-myth, author Michael Gerber captures this issue quite saliently.  I highly recommend reading this book if you want to know more about overcoming the business sustainability and saleability hurdle.

Many a small business owner is faced with decisions such as: “I can invest $5,000 into a new marketing campaign or little Johnny can get braces.”

Thus, we are faced with one of the biggest quandaries for small business owners.  Present vs. Future.

The most successful small business are those where the owners are in “nothing to lose” scenarios.  For example, the young factory worker who decides he wants to start a business, moves in with his parents, saves his paycheck, buys and small pizza franchise, works 70 hours per week , reinvests nearly all the profit for the first few years to pay down debt and develop a name brand and then, bang!  Five years later the now slightly older former factory owner owns two pizza franchises netting him $200,000 per year and build a net worth of over $1,000,000.

Main principle: those with nothing to lose are more difficult to defeat than those who have something to lose.

Plain and simple, if you have nothing to lose you will take more risks and have asymmetries of motivation that yield an edge.

The ‘nothing to lose attitude’ is paramount to success as an entrepreneur.

For illustration of this point, read on…

I once had a job as a bouncer at one of largest bars in my home state of Wisconsin.   We would routinely have 300-400 people in on a Friday or Saturday night.  When you throw a couple hundred gallons of alcohol consumption in, this made for a rowdy crowd.

Being the young “tough guy” that I was , I had the idea that any drunk bar patron who looked at me cross-eyed was going to get an arm-bar and an express ticket to the back-alley.

After a few tussles in my first few weeks on the job, one of the restaurant managers, Jim, came up to me one night and pulled me off to the side.

“Adam, you are doing a decent job here.  John (bar manager) likes you, I like you, the bartenders like you.  But, I want to warn you about something.”

He put his arm around me and walked me to the back of the bar and continued.

“One day you are going to get rough with the wrong person.  There are people out there that you just don’t know about.  They can and will do anything.   For instance, take a look at that guy over there,” he pointed a rough looking middle aged guy sitting at a high table having a beer, “I saw that guy in a fight here a few years back.  He got hit so hard his eyeball popped out of the socket.  He still kept swinging and put the other guy into intensive care.  Unless you are willing to have your eyeball knocked out, or worse, don’t mess with him.”

Of course, I ended up NOT messing with the eye-ball guy.  However, I DID take a very important lesson from that night that I am reminded of often, particularly as I survey the competitive landscape in my real estate and consulting businesses:  “those with nothing to lose are tough to beat.”

This also reminds me of a scene in one of my favorite movies: American Beauty.  In the scene, Lestor Burnham (main character) is in a meeting with a guy his company has hired to help with downsizing.  After Lestor shrewdly blackmails the hatchet-man for $50,000 + benefits, the guy makes the comment that Lestor is “one twisted f#@&,” to which Lestor responds: “Nope.  I’m just an ordinary guy with nothing to lose.” Thus begins Lestors empowering journey through his self-indulgent mid-life crisis.

The ‘nothing to lose’ mindset is, indeed, tough to beat.

Published
by
Adam Davis
on November 13, 2008
in Business and Entrepreneurship
. 0 Comments
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
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
Mar212008

Oakland Business Forum - Helping Michigan Businesses Succeed and 30 Seconds to Fame

As many of you know, I actively participate in the entrepreneur community here where I live in Metro Detroit.

The monthly meeting of the Oakland Business Forum is a big part of my activity and our most recent meeting this past Tuesday was absolutely fantastic. Entrepreneurs from across the region showed up to learn, network, build their businesses and grow.

Arthur “Bud” Liebler of Liebler-MacDonald Communication Strategies was the keynote speaker for the evening and gave an engaging and informative keynote address about how he sees the Michigan Economy turning around and the role the entrepreneurs will play.

The”Entrepreneur of Honor” for the evening, a local entrepreneur selected to showcase their businesses, was John Rohrbeck, owner of Tax and Financial Strategies. John shared with the audience his story of building a successful business after spending 30 years working in corporate America.

Back by popular demand was “30 seconds to fame,” the extreme business networking segment of the meeting. 5 attendees were selected to advertise their products and services in front of the room and also for the video camera. Check out the March 2008 Oakland Business Forum 30 seconds to fame below!

Stay tuned next month, for our April 15 meeting. The Oakland Business Forum meets at the Northfield Hilton in Troy, Michigan located at 5500 Crooks Blvd. Doors open at 6pm and your first meeting is free.

Published
by
Adam Davis
on March 21, 2008
in Business, Entrepreneurship and education
. 6 Comments
Feb92008

Lead, Follow or Get the Heck Out of the Way!

Take this to heart in your business:

Continuous Change

Continuous Improvement

Continuously Looking for Opportunities

All of these must be a part of your DNA if you want to build and maintain a successful business or career. Give this week’s podcast a listen and find out why.

You can click HERE to listen to the podcast. Feel free to download the mp3 and listen on your favorite music player.

As always, your questions, comments and feedback are welcome.

Published
by
Adam Davis
on February 9, 2008
in Business, Leadership and Success
. 0 Comments
Jan272008

Develop Your Vision and Watch Your Dreams Become Reality

While having some fun here in Miami, I wanted to share some brief thoughts and insights.  

Published
by
Adam Davis
on January 27, 2008
in Business, Inspiration, Motivation and Success
. 0 Comments
Jan192008

Drumroll Please….Introducing…Podcasts (for your listening pleasure - and bigger bank account)

My podcast has indeed arrived! Due to extremely high demand and repeated requests (I was a little hesitant at first - you see, it’s hard to outsource your own voice) to do a podcast, I caved and will be podcasting each week until every business owner is making money hand over fist and ever person that wants to start a business has the ammunition they need to succeed.

Click the here to listen to Podcast 1.

As always, I welcome your comments and feedback.

Published
by
Adam Davis
on January 19, 2008
in Business and Entrepreneurship
. 1 Comment
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