Despite the threats of tight credit, and concerns about the effect of the failure of the ‘bailout’ on “Main Street,” not everyone is worried. I spoke with two people today who received startup loans. One got a loan for a professional practice with 10 percent down and no co-signer. The second got an SBA loan (I thought the SBA money was not available); the second person is a woman, if that makes any difference.
On the other hand, a friend who works for a large national bank said they are pulling in lines of credit (cutting them off, in other words) for two types of borrowers (1) those who haven’t used their credit lines in a while, and (2) those whose credit ratings are below par (I don’t know what that means, but it doesn’t sound good).
For everyone who has bad news, someone else has good news. I have a friend who is out right now buying up income property. Donald Trump, look out!
Back in 1984, Alvin Toffler wrote The Third Wave, in which he said we were in the midst of a change from the Industrial Society to the Information Society. The world of business has been heading in this new direction for over a quarter century. Are you?
In the October 2008 issue of Entrepreneur Magazine, Robert Kiyosaki (author of Rich Dad, Poor Dadand other books) says that older business owners need to “get with it” (my phrase, not his). Are you?
Do you live in the past? Or are you thinking about change in the future? How will you manage those Gen Y and Gen X employees? Will you think of new ways to do things, taking advantage of new technology? Or will you keep on with the same old ways?
There is a lot to be said (and my husband says it often) for the good old tried-and-true ways of managing people and running a business. But in the 21st century, are those ways still valid?
Paul Newman died Friday of cancer at the age of 83. It’s hard to imagine this world without Paul Newman in it. He was not only a great movie actor, but he was a humanitarian, a businessman, and, in a culture where people get divorced at the drop of a hat, he was married to actres Joanne Woodward for more than 50 years. He once said, “why go out for hamburger when you can get steak at home?” Classy guy.
What do you most remember about him?
His hit movies - like Butch Cassidy and the Sundance Kid? Hud? Cool Hand Luke? The Sting?
His salad dressing? (I have a bottle in my refrigerator right now, along with some really good cookies with the “Newman’s Own” name on them)
His race car driving?
I most remember his beautiful blue eyes. The grabbed you and wouldn’t let go.
I also remember a little known movie of Newman’s called The Verdict _(1982), in which he plays a run-down drunk of a lawyer who gets involved as the lawyer for a plaintiff in a malpractice case. I used to play the movie in my Business Law classes, and I never got tired of seeing him act - he was nominated for a best actor Oscar for the role; it’s worth seeing if you haven’t already seen it.
My husband is now a “double dipper.” It used to be that the term “double dipper” referred to people who retired from the military with another post-retirement government job . In my husband’s case, he retired from his company and is now working part-time for a company that does work for his old company (got that?). Well, I guess it’s not strictly double-dipping, but close enough.
My husband’s cousin is a four-time (yes, I’m not making this up) double-dipper. I guess that makes him a quadruple-dipper. It doesn’t seem possible, but he told us how he did it: He joined the military at 18, left after 20 years, then took a job at the military base, worked enough years to get a government pension, then worked for the city where he lives, so he gets a military pension, Social Security, and Iowa Public Employees Retirement, then a couple of other jobs that have brought him to age 62 with four different retirement checks. Wow!
Some people call this “retirement dabblers;” I’m not sure why except that they don’t stay retired very long. I am sure a lot of people get tired of a job, leave when they have collected enough for a pension, then move on to another job.
The bailout does include limits on pay of executives. Most of us would agree with that, except for those execs, that it. And the legislation contains measures to help prevent home foreclosures.
Now all we have to do is keep consumer confidence up, which won’t be easy. I spent some time reviewing my 401(k)s and IRAs, and they are, of course, down. But I’m biding my time. I suggest you do the same. Unless you need the money in your 401(k) for an emergency, don’t take the loss by selling. The business cycle will come back up again (the stock market moved upward Friday in anticipation of the bailout), and we baby boomers will have a chance to make some moves later.
For now, take the opportunity to think about long-term strategies for your investments and your business. And enjoy the fall weather.
I went back to school at age 53 to get a PhD. I thought I was too old, and that I would be learning alongside kids. I was surprised to find that most of the people in the school were baby boomers, just like me. And we aren’t alone. According to the University Continuing Education Association, over 60 percent of the students in public undergraduate institutions and 50 percent at private schools are “non-traditional.”
Why do baby boomers go back to school?
1. They have been “downsized,” a nasty little euphemism that doesn’t tell the whole story of age discrimination. As I mentioned yesterday, during recessions, people go back to school, in part because they need to learn new skills to get back in the job market.
2. Women who haven’t worked in a while (raising kids) decide to get more training to go back to work. Men sometimes do this too.
3. Boomers want to move up, get a promotion, make more money. Although some of us are nearing retirement, others of us are still “climbing the corporate ladder.” Getting an additional degree is a good way to do that. My PhD helped me move up to a Dean position in the college where I work.
4. Some of us want to change careers. After many years in teaching, a friend of mine went back to school to learn how to fly. She is now a private pilot and she’s having a ball.
5. Speaking of having fun, some of us want to go back to school just because…. It’s called, in some circles, “life long learning.” In my case, I want to become a Master Gardener; maybe I’ll start a garden/pond planning business.
Have you considered going back to school? Why? If not, why not?
I recently visited a Frank Lloyd Wright-designed home in Iowa. On the wall, there was a little red plaque about 8 inches square. The guide said that Wright only would put one of those plaques on a house if the owners agreed to let him design it exactly as it wanted. They couldn’t change anything. Nothing. These owners wanted this “Wright seal of approval” so badly they agreed to let him tell them how they would live in their home.
I was appalled at the stuff they let him dictate:
Wright didn’t believe in garages (in Iowa! in the winter!), but he let them have a covered open place for their car.
He was a small man, so everything was designed for his size. Good thing the owner’s weren’t tall. All the ceilings are low and the furniture is slightly smaller than you would expect.
He designed the dining “room” not to be able to be used for large dinner parties. And they loved to entertain.
The furniture, the dishes, the floor coverings, etc. were all part of the design. The kitchen, in particular, would horrify most of us in its un-usefulness. He even told the owner how many pots and pans she could have. She was allowed to keep one item that was precious to her, if she would put it back in a remote corner of the kitchen, where no one could see it.
The owner’s previous cabin on the property, which they wanted to keep, Wright wanted torn down. He finally agreed to let them keep it, but they had to move it to a corner of the property, and he put lots of foliage around it so it’s hard to see.
The master bathroom was a tiny place, and one fixture served as bath, toilet, and sink. You have to see the thing; it’s quite innovative, but it would take a lot of work to maneuver the fixtures.
The one demand that made me most upset was the bed. He put in twin beds. When the woman said they had always slept in one bed, he said, “You’ll get a better night’s sleep in your own separate bed,” and he refused to budge.
Now THAT is the power of authority. We let people who are judged as “experts” tell us what to do without question. Maybe that’s what got us into this current financial mess.
I recently watched Wright’s appearance on the old game show “What’s My Line,” on the Game Show Network. Watch here and notice his response to the question, “Do people come to you?”
76 percent of college students (most with no visible means of support) have credit cards. They are accumulating student loan debt in order to pay the minimum on their credit cards. And they drive better cars than I do.
A Federal Reserve study said that Americans had almost $1 trillion (with a “T) in consumer debt as of mid-2008.
And we wonder why these investment bankers don’t know how to manage their money. We aren’t doing so well ourselves, and we’re teaching our children the same bad habits.
I suppose calling for a moratorium on consumer debt isn’t the answer. But I do know that if we all of us can’t learn to live within our means (and I mean you, too, baby boomers), the “debt mountain” will bury us alive.
I love helping people start their own businesses, and I don’t see any reason why you shouldn’t start one right now. Am I crazy? Maybe, but not for that reason. If you want to start a small business in the midst of this “recession/depression,” consider a business that will be “recession-proof.”
I’m not sure what the term means, and I can’t find it in any dictionary, but here’s what I think about the two types of businesses anyone can start at any time, even in the middle of a recession:
1. Businesses that sell things people must have. This includes, of course, food, clothing, and shelter. It also includes health services and their adjuncts, like drugs, natural remedies (less costly than drugs). It also includes energy, fuels, and their adjuncts. If you can sell something people need, you will always have customers.
2. Businesses that sell things people think they must have. This includes those addictions we think we can’t live without. Like chocolate, alcohol, tobacco….
3. Businesses that sell things people want to keep their minds off bad times. In other words, entertainment. During the depression, people still went to the movies because, for a little while, they could forget that there were people in bread lines and homeless everywhere.
4. Businesses related to education. During difficult financial times, people go back to school. In past times, they just wanted to be trained for a new job. Today (sadly), they use student loan money to pay for living expenses. If you can teach something, or coach people, or help them learn a new skill, you have a value to people during a recession.
5. “Make-do” things. People don’t buy new cars, and new homes during recessions, but they repair old ones. If you can fix things - like cars, plumbing, heating systems - or do home renovation, you can find work.
So, what kinds of businesses are not on this list - in other words, what are “recession-prone” businesses? I believe any business, if marketed correctly, can provide value to customers, even during a recession. What do you think? Is there a kind of business that you should not start during a recession?
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