Kiss Your Boss Goodbye. It's Time to Be an Entrepreneur

Kiss your boss goodbye--it's time to become an entrepreneur

I recently read a reliable report on the attitude of the American workforce.  To my surprise I learned more than half of all employees are not engaged at work. In other words, most workers are not happy, not satisfied, not productive, not loyal, not inspired and will jump ship if another opportunity arises.  In fact, most are looking to leave now and have polished their resumes.   If this is the case, I would also assume that the managers who supervise these disillusioned employees are probably jerks, or are carrying out the mandates of thoughtless upper management.

If you’re a company leader who doesn’t focus on keeping employees engaged, make note; your days are numbered.  I suggest you change now, with sincere intent to take care of your people, or suffer the disastrous consequences of your own unemployment.

How to Create a Winning Business Idea--in Six Easy StepsAlan HallContributor

The 7 C's: How to Find and Hire Great EmployeesAlan HallContributor

5 Sure Signs A Startup Firm Will SucceedCheryl ConnerContributor

The Top Communication Traits of Great LeadersAlan HallContributor

I have more to say on this topic to company management.   Who do you think does all the work in your business?  Who do you think makes your products, sells them, provides support, collects receipts and pays workers? It’s not you, my friend.  Have you forgotten that you hired these people as a resource to help you build a highly profitable business? Have you forgotten they are a precious asset to be valued and protected? How long do you think you can mistreat quality workers until they bolt? In a word, it’s not very long.  Do you get the picture?  Am I making sense? In sum, your financial success, your promotions, your glory, all depend on how well you treat those subordinates who have placed their trust and confidence in you.

Now a word to Les Miserables.  If you are going to quit, for heaven’s sake, don’t go to work for another pathetic firm. Do something wild: Kiss your boss goodbye and launch your own business.  If you have had enough, become your own king.   The money you have made for others now shifts to yourself. Take that idea that’s been in your mind for months and turn it into a profitable company. If you are an engineer, a programmer, a salesman, a teacher, an accountant, a whatever, start today planning your escape from corporate prison.

I am sure you are similar to the entrepreneurs I spend time with everyday.   As a principal investor, I put money into emerging companies that have all been founded by someone who, for the most part, previously worked for a clueless company.  They left seeking their own destiny and fulfillment, hoping life would be much better on their own.  I know their employment history, their state of mind and the decision process they followed as they took a leap of faith to follow their dreams.

Over the last few months, I have spent several evenings giving advice to a gentleman who is a full time employee of a large company. He possesses a great business idea.  He is anxious to understand the steps he needs to follow to properly organize his own company.

Today, I am pleased to share with you the same information he is learning.  So, if you are ready to soar, please make note of the following initial guidelines:

1.  Keep your day job until the time is right to leave.  Keep in mind; you really have two options to consider:

A)  You can leave tomorrow if you have the resources in hand to sustain your efforts long enough to reach profitability. Give yourself at least one year to succeed.  If you can’t reach your goal in that time frame, look for other ways to survive and prosper, or, B)  You can ponder, prepare, organize, and execute plan overtime, at night and on weekends until everything is ready to go.

2.  If you have signed a non-compete with your current employer, honor it.  Wait until you can legally pursue your opportunity.  Find some form of income to sustain your personal life in the interim.

3.  Determine your purpose, your vision, your strategy.  Why are you in business? What do you hope to accomplish? What must you do to be successful? Are your answers sound and realistic?

4.  Test your assumptions.   Determine who your perfect customers are.  Know everything about them.  Talk to them, listen and respond accordingly. Know how many total potential customers there are.  Learn if potential customers will want to buy your product or service.   Learn about their needs, pain and current solutions. Determine the right price and where buyers expect to make a purchase.  Understand what they watch, hear and read. Know how to promote your offering.  Understand the competition.  Know their value proposition and why people buy their products.

5.  Evaluate a product’s viability.  Consider the design, development and manufacturing of the perfect solution at the best possible cost. Understand why your solution will be chosen by customers.

6.  Evaluate and test a plan to sell your product and collect revenues.  Will you sell directly to customers using the internet, your own sales team or independent reps; will you sell your products to distributors; will you sell to retailers or resellers; will you sell to the government?

How to Create a Winning Business Idea--in Six Easy StepsAlan HallContributor

The 7 C's: How to Find and Hire Great EmployeesAlan HallContributor

5 Sure Signs A Startup Firm Will SucceedCheryl ConnerContributor

The Top Communication Traits of Great LeadersAlan HallContributor

7.  Determine if you can make a profit. Know your costs, expenses, revenues, and margins.  Know how much working capital you will need to sustain the business and grow it.  Know where you can find money beyond your own resources.  Determine if financial resources will be available and committed.   Establish a financial system to provide accurate and timely reports to manage the operation.

With positive answers to these initial points, I suggest the following next steps.

• Determine your business location; street, city, and state.
• Name your company. Decide what your firm will be called by clients, vendors, employees and all other entities. Reserve this name for your legal documents and for your internet website. You do this by contacting the Secretary of State, Business Division, to learn if your chosen name is available. At the same time, search the internet domain names to learn if the name is also available for your use.  If available, proceed to register and pay the related fees to secure your ownership of your company name.
• Secure a business license and any necessary permits from your local city business office.
• Obtain a Federal tax ID number, form SS4, from the IRS. With this information, you will be able to establish an account with a local bank for checking, savings, merchant account and other services.
• Meet with an attorney to establish a legal entity.  The attorney will give you several options to consider, such as whether you should operate as a sole proprietor, a general partnership, an LLC, an S corporation or a C corporation.   He or she will explain to you the risks, responsibilities, costs, liabilities, taxes, duties, and reports that are associated with each entity. I also recommend you spend time understanding these various formats via the internet which covers in depth what you will need to know.  The law office will also prepare articles of incorporation, by laws, contracts, patents, stock/shares of ownership and provide guidance on company board agendas and minutes, key transactions and state annual reports.  In addition, you will be given advice on various labor laws – work hours, safety, breaks, immigrants plus any other legal service you might need.
• Meet with an accountant.  He or she will help you understand what responsibilities you will have with the IRS; namely, taxes related to the company, yourself, and employees. This vendor can also assist with state and federal tax filings. An accountant will also help you with financial reporting and various accounting software options.

Now that you are ready, meaning you have legions of customers who will buy your superior product for the right price yielding good profits, it’s time to act.  Yes, act, moving fast, with faith and a determination to overcome every obstacle on your way to greatness. Don’t look back. Keep your eyes on the bright horizon. It’s your time to shine. It’s your future to enjoy. You’re now the boss.  Be a great one! Good luck.

See Also:

How To Create A Winning Business Idea–In Six Easy Steps

5 Sure Signs A Startup Firm Will Succeed

The Top Communication Traits Of Great Leaders

http://www.forbes.com/sites/alanhall/2012/07/15/kiss-your-boss-goodbye-its-time-to-be-an-entrepreneur/

Salaried rich versus the Super rich. Those making $1 million or more are the "salaried rich," since they make more of their money from ordinary income.

The Rich, Very Rich, and, Now, the 'Volatile' Rich

By Robert Frank | CNBC – Fri, Jul 13, 2012

The rich tend to be lumped together as one economic group, as if people earning $250,000 a year (or even $1 million a year) are pretty much the same as those making $50 million.

But a new analysis of top incomes tells us that there is a big difference between the super-rich and the merely rich in how they earn money.

The paper, from Roberton Williams of the Tax Policy Center, compares two sets of 2009 IRS data. One group is American tax filers reporting income of $1 million or more. The other is for the 400 top earners in America, who made an average of $271 million each.

[More From CNBC: The World's Most Expensive Car Crash]

Americans with an adjusted gross income of $1 million or more make about a third of that from salaries and wages. Capital gains used to account for more than a third of their income, but since 2000 that share has fallen to 17 percent. Today, the largest share of their take comes from "other income" - mainly earnings from partnerships or S-corps, as well as other capital gains.

The "fortunate 400" - or top 400 earners - make much more of their income from capital gains and other income than from salaries and wages, which account for only 9 percent of their income. Capital gains as a share of their income has also fallen, from 72 percent in 2000 to 46 percent in 2009.

What does this tell us? That those making $1 million or more are the "salaried rich," since they make more of their money from ordinary income. The super-rich make more of their money from one-time capital gains from the sale of stock or a business.

[More From CNBC: The Billionaire Who Stopped Giving]

Since the super-rich are so dependent on capital gains, their incomes have become much more volatile, falling 40 percent between 2007 and 2009. As a group, they also change members rapidly, with 73 percent of them showing up on the list only once between 1992 and 2009.

Income for this super-rich group "has become much more volatile during the Great Recession, "Williams writes. In contrast, income for the merely rich dropped 18 percent.

The higher they fly, the harder they fall.

-By CNBC's Robert Frank

About Judgment in Successful Stock Evaluation and Selection

About Judgment

An indispensable ingredient in successful stock evaluation and selection is the application of ―judgment. While not nearly so complicated as some would have you believe, this is nonetheless more of an art than a science. It‘s a personal skill that you will develop and fine tune as you gain experience.

However, don‘t be intimidated by your lack of experience if you‘re new at it. In fact, because you‘re apt to be more conservative than the investor who has been doing it for a while, you could very well have better results.

The essence of judgment, in this context, is the application of the wisdom that you gain about industries, the natures and ―personalities of companies within certain industries—or just in and of themselves—and the significance of the factors that contributed to the history that you are studying. Such items as the extent to which acquisitions—rather than increases in sales— contributed to growth, the extent of past and potential competition, the changes in management, and so on, all contribute to your judgment. Nor are these at all mysterious. They are all common sense issues that you will simply be more mindful of as you progress.

The approach described below is a very basic approach to help those of you who may be still learning fundamental investing to make the crucial judgment decisions. Each of these suggestions is directed toward the most conservative action to take on the basis of the numbers and the pictures that you see, alone. You may very well change these steps as you grow in experience and gain confidence.

The Three Levels of Judgment
There are three distinct levels of ―judgment:

1. Discounting irrelevant data or ―Cleaning up data to be sure that only applicable data is used in assessing historical trends or performance.
2. Estimating future trends or performance based upon the historical assessment.
3. Estimating future price performance based upon those future trends.


1.  Discounting Irrelevant Data
With respect to the relevancy of data, we know that history cannot be denied. What has happened has happened, and the only decision that you can make about an historical event is whether or not it is applicable in your study to influence your vision of the future.

Eliminating ―outliers is your way of discarding irrelevant data to make historical information more useful and to guide you toward the next step.

2.  Estimating Future Trends
Using your conservative historical trends as starting points, you seek to predict what the future trends in the company‘s performance might be. Here again, you will want to be reasonably modest in your view of the future.
Analysts are paid to be accurate. You are rewarded for being right.

The more modest your estimates, the more likely you are to be right!

3.  Estimating Future Price Performance
By making careful and conservative estimates of the company’s performance, you can then forecast, within limits, how the stock‘s price will perform—and therefore what kind of return you might expect your investment to give you. 


Generally, it pays to accept the conservative alternative in all cases when decisions must be made. Lower estimates in projected growth rates will result in less optimistic price predictions. Since you are focused upon investing rather than speculating—and since there are many stocks available that can meet your requirements—it would seem foolish indeed to ―fudge the figures just to justify the purchase of a particular stock.

Five Basic Fundamental Investing Principles

History has demonstrated that there are five basic principles that 
you should follow if you want to be truly successful.

Invest Regularly in the Stock Market

Reinvest all of Your Profits and Dividends

Invest for the Long Term

Invest Only in Good Quality Growth Companies

Diversify Your Portfolio

Buffett on JPMorgan, Wells Fargo, Bofa, ConocoPhillips, Facebook

By editor Jul 13, 2012, 11:39 AM Author's Website  

Warren Buffett co-hosted Bloomberg TV’s “In the Loop” with Betty Liu this morning, where he discussed the U.S. economy, JPMorgan (JPM), Wells Fargo (WFC), Bank of America (BAC) and other Berkshire Hathaway (BRK.A) holdings.

On JPMorgan, Buffett said, “I’ve had enough mistakes of my own that I’m very forgiving when something like that happens” and advice to Jamie Dimon is to “keep your head down.”

Buffett said that Wells Fargo has “a sensational mortgage operation.”

Buffett went on to say that Americans are “quite disgusted” with Congress and that Congress should raise the debt ceiling “this afternoon.” He said that the debt ceiling shouldn’t be used as a “pawn” to embarrass the opposing side and that health care is the “tapeworm” of the economy.

Buffett also said that Berkshire reduced its holdings in ConocoPhillips (COP) and bought into “some of the refining operation.”

Buffett on whether he was surprised by JPMorgan’s $4.4 billion loss:

“Not surprising then bank in terms of the loss from a transaction of that size. My guess they pretty much worked out of it by now. They lost a whole lot more than that in loans and mortgages and reps and warranties that are coming back. It sounds like a whole lot of money, but it is not that significant relative to JPMorgan…I have had enough mistakes of my own so I am very forgiving.”

On whether he believes JPMorgan is doing the right thing in relation to the loss:

“Oh sure. They had losses on reps and warranties on mortgages that were substantial. They had loan losses that were substantial bearing the 2008 period. I just heard the Wells Fargo figure. That was $5 billion a few years ago. Banks are in the business of taking some risk. If they take risks, they are going to have losses as well. If you put it under a rock, you will not have any losses, but you will not earn any money.”

On whether he’s spoken with Jamie Dimon about the trade:

“We work on a panel together at Microsoft shortly after it broke. I heard him talk about it. It is pretty clear what happened. He does not need any advice from me.”

On Wells Fargo:

“They’ve got a sensational mortgage operation. The total mortgage market was at the $3 trillion level not that long ago. If it goes back up to $3 trillion, I hope Wells is going a third of those.”

“Wells did the best job of the big players in the mortgage market and therefore they’ve garnered a share as the other fellows have fallen by the wayside.”

On the housing market:

“It is starting to recover. The general economy has probably slowed down a little in the last few months. The bank the housing market is recovering…We are seeing an improvement. We have moved noticeably in the last few months. It was just a question of getting households in balance with housing units. That happens at different paces in different parts of the country. You have seen a much better balance developing here in recent months. That is why you are seeing a pickup in prices.”

On what advice he’d give Jamie Dimon:

“Keep your head down and you have a fantastic institution, and you are making money every day. You are going to run into things like this….I think it is the best shareholder letter. It is very, very good. He is a candid guy. When he made that statement in April, that is what he thought. I have no question about Jamie Dimon telling the truth.”

On Wells Fargo:

“I like Wells Fargo better than anything by far. It complicates life when I and buying things as opposed to the Berkshire Hathaway. I get what is left over…I like Wells Fargo better [than JPMorgan]. We have been buying Wells Fargo month after month for a lot of years. Among the big banks, I think it is the best. “

On whether Bank of America declined his investment:

“That is absolutely not true. The first time I’ve ever talked to Brian [Moynihan] was the day I called him and we made a deal…We have over nine years left. It is an attractive price. I wish I had done it for $10 billion.”

On whether the deal was a vote of confidence in Bank of America and Brian Moynihan:

“Both. Bank of America is a remarkable institution…Wells Fargo may have the best deposit base in the United States, but Bank of America’s deposit bases are absolutely fantastic. The real asset of a bank is its liability. Bank of America has a deposit base that is terrific. They got in trouble with a couple of acquisitions, but that was not under Brian’s watch. Brian has been doing exactly the things in terms of correcting problems in the past. I think he has done a terrific job. He is getting it back to basic banking.”

On the euro:

“It cannot survive with the present rules. That is what they are learning. The question is can 17 countries get together in a way to do something that will require much closer cooperation when their individual conditions are so different?”

On the Supreme Court upholding President Obama’s Affordable Care Act:

I think it is the right decision, but I think the health care problem is the number one problem of America and of American business…It is the tapeworm of the American economy. We have not dealt with that yet. Obamacare is a step in the right direction in many ways. In terms of cost, it is going to require a huge change. We have seen that number go up to 17%. That is a huge cost factor. I think Berkshire Hathaway’s costs are over $2 billion a year for health care.

On those who say that Obama’s push into health care will cost him the election:

“We will know in November. Not only what he does but what his opponent as. The American public is going to have their choice of two people bending. They will come to a judgment about which of two men they preferred to run the country. I think Obama is clearly the superior. Events from now until then will have an effect on that. Some people will be for or against because of the health care act.”

On why he’s investing more in newspapers:

“These are smaller newspapers generally. Newspapers used to be primary virtually everything. They have lost their primacy in many areas. If you lived in Nebraska and you are interested in at Nebraska football or your high school and what is going on with your neighbors, you are only going to find it in the independent papers. The smaller paper is still primary to many areas of interest.”

On whether he’d invest in News Corporation’s publishing unit that was recently spun off:

“I would rather buy newspapers myself directly…I like buying individual papers at the right price. The prices should be low because their revenues are going to decline over time. We are not buying into a business where revenues are going to increase. We have to buy them at the right price. We have to buy papers that are subject to less erosion because they have lost their primacy.”

On whether he’ll buy more newspapers this year:

“I think so…it depends on who calls us. We don’t go out searching for them. They come to us.”

On Facebook’s IPO:

“It either came out at the wrong price or it was handled the wrong way. A lot of stocks go down. All kinds of stocks go down. The question is whether Facebook is worth $100 billion or$50 billion or $200 billion. Probably a higher percentage of the people bought it because they thought it would go up the next day. That is a terrible reason to buy a stock. They were not buying Facebook (FB) because they thought the business was worth $100 billion. People bought it because they were told that it was going to be hot. You should not buy a farm because you think you could sell it the next day for more money.”

On ConocoPhillips and Phillips 66:

“They spun it off and actually one of the two [Buffett’s deputy stock pickers Ted Weschler or Todd Combs] bought some of the refining operation.”

On whether the U.S. will fall off the fiscal cliff:

“It depends on the election, but I think people are quite disgusted with Congress. The idea of having a debt ceiling — as this country grows, our debt capacity grows. To go through this charade, we are going to increase the debt ceiling, so why Congress does not do it in five minutes instead of spending weeks and weeks posturing and complaining and holding other things hostage, I think it is disgusting. I think they ought to do it this afternoon. They know they are going to do it, and they are all just sitting around using it as a little pond in the game to try to embarrass the other side. Only Congress passes bills, and the debt ceiling is up — to me it is the most obvious of all. I do not know why the majority and minority leaders of both houses do not say we are going to do that this afternoon. I think it would give the American public the confidence that at least these people will not use everything in the world as a political.”

http://wallstreetpit.com/93690-buffett-on-jpmorgan-wells-fargo-bofa-conocophillips-facebook

Buffett: Facebook Was Wrong Price or Handled Badly

http://www.bloomberg.com/video/buffett-facebook-was-wrong-price-or-handled-badly-Nx0oXWNSTNGfWNF_JKe6kg.html

To Sell or to Hold Checklist

To Sell or to Hold Checklist
http://www.bivio.com/crowriver/files/Webpages/To%20Sell%20or%20to%20Hold%20Checklist.pdf


Portfolio Management Workshop


PORTFOLIO MANAGEMENT

Portfolio Management essentially consists of the activities that help investors reach desired investment goals. It is the art of optimizing holdings and increasing the value of a portfolio. And it takes some common sense and diligence to do it successfully. At times, it even takes a little courage.

This workshop will discuss the process and the tools at your disposal to make the most of your investments. It may also suggest some answers to some of the questions you may have about when or why you should sell your stocks and what you might want to do in today's market.

Investing is simple. We need only to see the management do these!

In a nutshell:

*A company is a good candidate for investment if its management is capable of producing a solid history of steady and strong sales and earnings growth.

*If the management of such a company demonstrates it can consistently retain a steady or increasing profit from its revenues, its track record is likely to continue.

*In the long term, the price of a share of stock is tied to a company’s earnings hence, if earnings grow so will the price of that company’s stock.

*If you buy a good company’s stock when the ratio of its price to its earnings is at or below its historical average, you can expect the value of your investment to grow at or above the rate of its earnings growth.

*If the average annual earnings growth of the companies you invest in is fifteen percent or more, you can double your money every five years by holding on to those companies so long as that growth continues, and replacing them when it doesn’t.

*No matter how careful you are, one out of five companies you select will disappoint you and one will exceed your expectations.

This set of statements is elegant in its simplicity. Where in any of this do we find any need to explore how management accomplishes these feats? We need only to see that they do!

The PE: On its way out? For the Intelligent Investor, the PE emerges as the perfect tool to evaluate the degree of disconnect between the herd and reality.

August 31st, 2010

The Wall Street Journal strikes again! This time it’s an article entitled “The Decline of the PE Ratio.” And once again, it was too hard to pass up as a topic for this blog.

The first sentence alleges that the PE ratio “is shrinking in size and importance.” And it points out that, in spite of the fact that U.S. companies announced record profits during the second quarter—beating forecasts by more than 10%—the market dropped 5% this month.

It goes on to connect the dots, making the point that “the market’s average price/earnings ratio…is in free fall, having plunged about 36% during the past year,” and claiming that, because PEs have declined while earnings have risen, that the PE ratio may no longer be a reasonable metric by which to value the market. They’re absolutely right…if the market is what you invest in!

I submit that this article simply puts the cart before the horse and lets the tail wag the dog! (How’s that for mixing a barnyard full of metaphors!)

If the exercise is to analyze the market for the purpose of forecasting where it’s going next—a waste of time for my money, but a preoccupation of the herd—then they’re right in saying the PE has little importance. It never really did! Technical analysis, the tool of the market analyst, never could be  bothered with earnings, or the other fundamentals.  The market is driven by anything but company performance, as the article correctly point out.

However, for the intelligent investor who has only a passing interest in the meanderings of the market, the PE emerges as the perfect tool to evaluate the degree of disconnect between the herd and reality. The lower the PE, especially in the face of growing corporate earnings, the more obvious it becomes that the herd doesn’t understand the nature of investing, and the wider the abyss between the herd and those who understand what investing really is.

And the easier it is to find bargains out there.

To understand the real value of the Price/Earnings ratio, read What’s a PE, and What’s it to Me?

http://www.financialiteracy.us/wordpress/2010/08/31/the-pe-on-its-way-out/#more-2331





Wall Street Journal

The Decline of the P/E Ratio

BY BEN LEVISOHN

As investors fixate on the global forces whipsawing the markets, one fundamental measure of stock-market value, the price/earnings ratio, is shrinking in size and importance.

And the diminution might not stop for a while.

The P/E ratio, thrust into prominence during the 1930s by value investors Benjamin Graham and David Dodd, measures the amount of money investors are paying for a company's earnings. Typically, companies that post strong earnings growth enjoy richer stock prices and fatter P/E ratios than those that don't.

But while U.S. companies announced record profits during the second quarter, and beat forecasts by a comfortable 10% ....

Warren Buffett - This is Always a Bad Investment

Uploaded by WarrenBuffettBlog on 1 Apr 2011

For the latest Warren Buffett, go to http://WarrenBuffettNews.com -

From 2008 to 2009 it was a once in a lifetime year. There was even more panic than the Great Depression because of how fast it came on. Congress came through into the end. We had the right people in Washington. We don't know what would have happened if other men were in that position.

This was a great opportunity to purchase a business that will be around for hundreds of years. It is the most inexpensive way for travel, and it is the best for the environment. Both of those things are going to be important in the future. There will be more people and more goods in America in the future.

If Charlie had agreed with this purchase, then it probably would have been the wrong answer. He just kin of grumbled, which is a good sign. The railroad business is highly controlled, and it is capital intensive. But it will be here, and if it provides reasonable returns, then that it good enough.

Coal is widely shipped by train. We will wean ourselves off of coal, and we will reduce our use of that over time. If someone wants to replicate a railroad company, it might take $100 million. Railroads have become far more efficient over the years. They move far more goods with fewer people.

Cash is always a bad investment. Cash has never produced anything, and its value will go down over time. We will always have cash around, but it's not good to have too much. You would much rather own a good business. Every currency will be worth less in the future. More money will be printed than there will be goods circulating in the economy.