Sloan Creative

Here’s a site full of interesting ideas.

www.lifehacker.com

here’s a guy who’s pushing the envelope in terms of using technology to live an interesting, productive life.

www.fourhourworkweek.com

I find his blog the most interesting part of all this. To get a sense of how and who he is, watch his chat with Google staff in London.

When I was four, my father started a business.

While I was young he was building that business. It took everything he would give it. With five kids, he had little choice but to succeed. Of course, it all came at a cost.

After college, and some time travelling and in real estate, I negotiated to buy my father’s business. He was burned out. I was 24 years old, younger than most of the employees, but I was committed to earning my money before I had a family.

I ran that business up, via organic and M&A growth, to $5 million in revenues, doubling revenue while doubling productivity all while Office Depot and Staples spent hundreds of millions trying to put us, and others, out of business. I sold that business in 2000, the year before our first child was born.

Before I sold it, I bought a small marketing firm, and started a software company… my lily pads.

Now, I’ve closed the software firm (not every venture succeeds, but every ventures teaches!) and I’ve sold the marketing side of Sloan Creative Group to my key employee.

Now, I do what I love.

I help small business (and NGO) leaders live the lives and have the businesses they desire. I know the hopes, the sacrifices, the worries, and the rewards. I’ve learned the skills required for success.

Why I work on an hourly basis:

• It keeps things affordable, controlled, and flexible for my clients
• It lets me control my schedule and commitments
• It lets me move quickly through projects, the way I work best; intensely on, intensely off.

As I write this, in my little office shed out in the yard (my jobba hut), I hear our children playing in the yard. I see the sun shining over the Grand Forest and the Brothers. It’s a long way from my days zooming down freeways multi-tasking.

I’ve arrived, but I know that there are fellow travelers, like you, who could use a hand here and there from someone who’s been down the road before.

Contact me if there’s anyway I can help, or if you’d just like to chat.

Here’s a voice worth listening to. A bright and amazingly experienced economist and author, Loretta Napoleoni. That’s her most recent title there >>>>>>>>

I just caught a bit of her interview on KUOW.

The idea that the US economy is now, by her definition, a rogue economy, one operating outside of laws and regulations, is startling and seems surprisingly accurate.

Business leaders beware!

She is worth a listen because her analysis explains much of what we are seeing these days in the news:

Our government has found it necessary, today, to seek to rewrite it’s oversight of the financial system. Why?

How did Bear Stearns, a crucial piece of the banking system, borrow more than it was worth as it invested in hugely risky assets (CDOs of sub-prime mortgages)?

The problem is…

She sees things getting a lot worse before they get better as these rogue practices come to light and are sorted out.

All this unregulated fun is leading to a hang over. The bartender, the banks, sounded last call late last year. Now, many are taking aspirin and vitamins, drinking a lot of water, and going to bed in hopes of avoiding what they fear is probably inevitable. See my blog post on one of the biggest causes of our hangover.

Warning: Tunnel and metaphor change ahead!

This is one of those moments in life that I think of as hurtling toward a very tight tunnel entrance in a fully loaded semi you’ve just learned how to drive. Am I lined up correctly? Am I going to clip my mirrors off, or worse?

I’ve developed a new tool to bring greater clarity and understanding to your financial statements.

Of course, these exciting times create opportunities as well as challenges. If you’d like to take a bit of time to get clearer about your current alignment, let me know.

Contact me for a free consultation.

It seems to me, that most small business owners glance at their operating statements every few months to make sure that:

• They are accurate
• They’ve got enough receivables to cover their payables
• Their expenses have not gotten out of line

This is certainly enough to keep the business running and moving forward. but is it all that operating statements can offer?

3 questions:

• Deep down, do you think that only bankers and CPAs really care about financial statements?
• When was the last time you looked at the ratios between various parts of your balance sheet and you’re operating statement? The current ratio? Return on investment? Return on sales?
• Before you make decisions about how you and your staff spend your time, do you ever look at your balance sheet?

Whispers

Your financial statements, are speaking (well, maybe whispering) words of wisdom (Let it be. Let it be.). Are you listening?

Amid the clang and bang, steam and heat of the daily busy-ness of business, how can you?

Financial statements -just numbers
Double entry bookkeeping and its resulting reports, financial statements, were first codified by an Italian mathematician, Luca Pacioli.

If you are not a math person (and how many entrepreneurs are?) they probably don’t speak very clearly to you. If we were so great at math we’d all be well-paid engineers! Alas, we need a translator.

A new view

I’ve developed a new tool that allows mere mortals, like us, to hear, even see, what our financial statements are trying to tell us about our current situation, strategic direction, and priorities for today and tomorrow.

Wouldn’t you want to listen to the best source of insider information about your business? To hear not only what your customers are saying with their voices, but what they are saying with their pocketbooks?

Free sample
if you’d like to start listening to your financial statements in a new way, contact me for a free half-hour sample consultation.

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As small business owners we need to make decisions that will have long-term consequences.

Therefore, we need to make long-term assumptions about what will happen in our industry and to the economy in which we work. There is a huge amount of financial data and news these days. There are so many signals that it is hard to keep up with absorbing and analyzing them all.

I look for simplicity. Here’s a simple financial indicator to watch.

Debt Service Ratio.

First, I start with the following assumptions:

• Most Americans don’t have much net worth (see chart below)
• Most family’s net worth is tied up in their house
• Most houses, and other large items, are purchased on credit (if our net worth is low, how else can we buy things?)
• Housing has had a huge run up lately- lots of sales, lots of appreciation
• 2/3rds of the US economy is based on consumer spending

Therefore, most Americans live either paycheck to paycheck, or close. Here’s an indication, the data is from 1996, but I’m confident the numbers have changed little of late.

Source

If so, then folks who loaded up on debt will have to cut back on spending.

If that’s true, then the spending will have to drop pretty dramatically to let folks get back down to a debt level they can comfortably manage.

Based on the Debt Service Ratio (basically debt payments divided into income) chart below, good times and easy money in the 80’s and 90’s, led Americans to take on debt payments of around 12% of their monthly income before recession forced them back down to a more comfortable level of 10% during the recessions of the early 80’s and 90’s.

Source

Notice that the debt service ratio has now risen to over 14%.

Are we that much more sure of our jobs now? (A: No)

Is America in a much better position in the world? (A: No)

Does the government have budget surpluses to spend in hopes of creating a soft-landing for the economy? (A: No)

Unfortunately, since our last tough time in the early 90’s, the following has occurred:

• We have gone from the being the largest creditor nation in the world to being the largest debtor… that’s our government, not just us as citizens.

• We’ve shipped a lot of manufacturing jobs overseas.

• We’ve spent a lot of good lives, hard cash, and international goodwill on some questionable military adventures. (whether we had any choice but to do so is outside of the scope of this article.)

• Our government has relied on the Chinese to buy the bulk of its debt for the past several years, now they hold over $1 Trillion of it. As the dollar has weakened, they have lost a lot of value, so it makes sense for them to buy less of it in the future.

Cycles of Creative Destruction
As an undergraduate, I studied economic history. One thing that became clear was that as economies expand, shift, and contract there are always winners and always losers. Here’s the good part, the economy expands and contracts in somewhat predictable cycles, based on human psychology and a number of other factors.

There are a number of cycles, a general business cycle and also a real estate cycle (among others.)

These cycles are generally created by times of easy money and speculation leading to rising prices and lots of investment, expansion, and building followed by all the excesses of the previous years coming home to roost; poorly-run businesses folding, companies and families with too much debt losing a grip on the assets they were so excited about grabbing up while things went up, up, up.

As this starts, the banks who made so much money lending on the way up suddenly decide that the climate is too risky and make loans much more difficult to get. Suddenly, you can’t sell a property or refinance a business if you have to, so prices begin to drop. No one wants to be the one left with the expensive house or business still on the market while, logically, no buyer wants to sign on the dotted line when the price next month will probably be lower.

Is any of this sounding familiar?

Suddenly, the market just dries up and some folks take big losses and business close their doors. Some economists call this churn Creative Destruction.

Amidst all the rubble, some folks get rich. My great grandfather owned an auto body shop in Michigan during the Great Depression. He made money fixing the cars no one could afford to replace. He rolled that money into buying up shares of local banks that no one else dared to buy. Of course, when the economy finally recovered during World War II, he reaped big rewards as suddenly those banks seemed like the greatest investment around.

Musical Chairs
Take a look around. Is there a chair close by that you’d feel comfortable in?

The needle is lifting off the record, the music is stopping. It’s time to find a nice place to sit while our nation recovers from this easy-money induced hangover. It may take a few to several years to get our debt levels down to more manageable levels.

Of course, I may be wrong… but I’d hate to be the one who bet against history. Take a look at that chart again, what’s the shape of that curve? How far above the average band are we?

Oh, and today, a big shocker, non-farm payrolls shed 63,000 jobs last month, far more than the markets and economists expected. So, how are those folks going to pay their bills next month? It’s no wonder that foreclosure rates hit a 23-year high last month.

What do you need to do to prepare yourself and your business for the coming days?

What might you do to position yourself to benefit from the Creative Destruction ahead?

Do you wish your business was making a bigger contribution to your personal net worth?

Stephen Sloan is the Extendo-CEO. He not only advises small business owners on leadership issues, he helps them with their work on a project basis. Learn more here

Sometimes a decision is we don’t often think about are the ones that affect our lives the most.

Many years ago, a friend of mine asked me, “How can you go to Europe from month every year?”

He’d begun to notice my pattern of quietly leaving for Europe in the first days of February for the past several years. He was successful, a young attorney, with a nice house in a cool neighborhood near the beach and a hip car. I had a business, a house, and her car too, but…

The difference was, that I had realized several years earlier that if I could keep my ego out of two decisions I could maintain a fair amount of freedom in my life. The key decisions were:

House and car

If I could keep my ego out of those decisions and do only what was practical, I would have the financial freedom to do many other things. So, rather than live in Laguna Beach like most of my friends, I lived in a tiny, bland house in a less expensive area about a 20 minute ride in my used, generic car.

So, as a small business owner what are your key decisions?

Of course, the house and the car still matter. But what small business related decisions affect your experience of freedom? So many times I’ve noticed small business people who experience, behind the pride of business ownership, the horror of feeling owned by their business. Their business sets their schedule, or controls where they live, and interrupts their peaceful enjoyment of life both day and night.

The key decisions for most small businesses seem to be:

Wages paid to staff

• Well-managed staff can free owners from most time and space constraining business demands.
• Poorly-managed staff can be the heaviest anchor an owner experiences. Sometimes the best management means letting them seek employment elsewhere.

Growth curve

• Growth requires investment in product development, sales, marketing, improve operational systems, additional staff, and receivables financing.
• Our current business culture glorifies growth as our popular culture glorifies painfully thin youth
• The right size and growth rate for your business depends upon many factors. Ignoring or sublimating any can lead to uncomfortable or even disastrous results.

Have you been is conscious of the decisions that you’ve made in these areas as you would like to be? Have your prior decisions lead you to some place uncomfortable or even potentially disastrous?

If this resonates with you or someone you know please let me know. I’d be happy to chat.

Stephen Sloan offers small business consulting from Bainbridge Island, Washington, 98110 (near Seattle, on the Kitsap Peninsula) to small business owners all over the world.

You’ve probably at least heard of Napoleon Hill’s classic, Think and Grow Rich. The basic idea is that by putting real focus into thinking your path to riches can be made shorter and smoother.

But, what if your path to riches has resulted in you feeling that your business owns you more often than you own it.

Have you gained a good income but given up your spatial and temporal freedom? Can you do what you want when and where you want to do it? Can you easily take this afternoon off to enjoy the sun? Can you spend three weeks bicycling on Bali if you choose?

Are you sacrificing:

• Time with your children
• Time with your spouse
• Time with your passions
• Your health
• Your ability to explore the world

For the sake of your business?

The thinking that got you into this situation will not be the thinking that gets you moving into freer more authentic territory.

But how to think differently? How to think better?

Thinking is usually based on:

Information

• Good, solid data clearly analyzed in the spreadsheet
• What assumptions are you building upon? Are they rock or sand?
• What about what your body is telling you?
• What fresh perspective might literature or art provide?

Processes

• Consciously perform deductive and inductive reasoning
• Clear analysis to avoid common logical fallacies
• Using thinking visualization tools to identify areas requiring more clarity

Both information and process can be refined and improved with only a small investment of time. Of course, you can do it yourself. If you’d like a friendly companion along the way to help speed the process and make it more fun, I’d be happy to help.

Call me for a free consultation. (206) 793-4020

Stephen Sloan offers small business consulting from Bainbridge Island, Washington, 98110 (near Seattle, on the Kitsap Peninsula) to small business owners all over the world.

Running a business is fascinating. Running a business is also often difficult, usually more emotionally challenging than taxing to mind and body.

It has always been so…

The fascination of what’s difficult
Has dried the sap out of my veins, and rent
Spontaneous joy and natural content
Out of my heart. There’s something ails our colt
That must, as if it had not holy blood
Nor on Olympus leaped from cloud to cloud,
Shiver under the lash, strain, sweat and jolt
As though it dragged road-metal. My curse on plays
That have to be set up in fifty ways,
On the day’s war with every knave and dolt,
Theatre business, management of men.
I swear before the dawn comes round again
I’ll find the stable and pull out the bolt.

W. B. Yeats September 1909- working as the director-manager of the Abbey theatre

I used to love the Zen koan,

It is not the way that is difficult,

but the difficult that is the way.

And the great American Horatio Alger questions:

• If not me, who?

• If not now, when?

I consciously pursued what was difficult.

• I thought I read too slowly coming out of high school, so I choose a reading intensive major, History

• I felt shy, so I became a Realtor and forced myself to cold call and hold open houses

• I feared poverty, so I stepped up to managing a business with 35 employees, most older than I, when I was 24

• I feared irrelevance, so I took on the chairmanship of our industry’s leading coop.

• I saw a real need and opportunity, so I left that business to create software to help the entire industry

I burned myself out.

Now, 5 years later, I finally threw the bolt! I signed my last payroll check in December 2006, after 16 years of having employees.

I am free to choose new difficulties that fascinate me.

I’ve found that I still must pursue what’s difficult. I haven’t figured out if it’s just in my nature or in human nature.

I think everyone finds it a bit more natural to walk uphill rather than down. This is especially true with climbing. But, so many folks, in our leisure-based culture, seem to spend most of their time avoiding what is difficult - distracting themselves with work, activities, entertainment and consumption.

Now, as I choose new difficulties, I am more respectful of that koan. I try to choose my difficulties more carefully:

Why am I choosing this?

• Reasons that should prompt a pause and reflection

  • Feeling inadequate

  • Feeling bored

• Reasons that indicate the difficulty might lead someplace interesting

  • It takes me towards a more conscious, integrated life

  • It takes me towards more fully expressing what is uniquely me

  • It serves some higher calling you see working near you

Each success only buys an admission ticket to a more difficult problem.
Henry Kissinger

My current projects include:

• Leadership support for small business owners- like coaching, except that I actually do stuff!
• Researching and writing on my family history, the tip of the iceberg here

Enjoy the ride, getting off makes a real mess.