March 31, 2011, 6:00 am

The Dark Side of a Business Partner

by: MD    Category: Alternative Income

Negatives of a Business PartnershipLast week when Mike mentioned how much he loves having a business partner and I couldn’t help but think about the other side here. Mike and his partner have gotten along well, set goals, kept each other focused, and hustled to grow their online company to be very successful. Is this success a guarantee? Will every business partnership be as successful? I really don’t think so to be honest.

If you watched The Social Network or heard any stories from personal experience you may be thinking that a business partner might not work out for you and your business model. The following post will examine the dark side of a business partner and what you need to watch out for:

Lack of goal congruence.

What are the chances that two unique individuals will have the same goals over an extended period of time? One of the partners could be more interested in making money with the business while the other partner views it as a profitable hobby. Goals also change over time. As the business grows, so do the two partners involved. Once some time has passed, one of you may start to view objectives differently. It’s surprising how much goals and views can change over time. The scary thought is that you both might want to go in totally different directions with the business.

Greed getting in the way.

We as human beings have our moments of greed. Even the kindest and friendliest folks will feel a strong sense of greed at some point. I’m not here to be cynical, I just want to be realistic. Just because you go into business with a good friend it doesn’t mean that you’re completely protected. It’s always advisable that you get everything down in writing and that a third party is witness. You just never know when greed can become a factor in the business partnership.

One of you working harder.

What if you realize after 6 months that you’re up late at night working on the company while your partner is out drinking with friends? Some of us enjoy working long hours and putting in effort. Others place more value on their relationships in life and would rather only spend a few hours on work here and there. This can become a major issue. I personally am very productive in the middle of the night (you can ask Mike) and then I might sleep in during the morning. How would this work out with a partner that’s a morning person? One of us might get frustrated.

The next issue revolves around deciding what to do when one of the business partners isn’t working as hard. Do you pay that person less? What if they don’t agree to a pay cut? For me there’s endless questions that go along with the work load in a business partnership. This is a major issue that you need to decide on as you and your business partner put your plan together.

Decision making process issues.

When your business is making no money the decisions are pretty straight forward. At that point the both of you are just excited about growing the company. All you can both think about is the idea of your business hitting it big one day. What happens when large contracts and colossal clients come your way? I’m thinking that the decision making process will drastically change at this point. One partner might want to expand while the other business partner is more conservative. Decision making can also get awkward when a boss-employee relationship starts to slowly form between the business partners. How will you make business decisions with your future partner?

External forces.

The two business partners might get along well when together, but anything can happen once external forces get involved. What if one of the partners ends up in a relationship with a controlling person? What if one of the partners wants to bring in a third person into the business? My concern with dual business owners is what happens when third parties get involved and start trying to get some input on the business and the future direction.

Exit strategy.

Leaving the business is a topic that nobody wants to discuss. The reality is that at one point many other opportunities will come along. A potential buyer can get involved. A new business venture will come along. The work load of the business can become too tedious and one of the partners might want to get out. What will the exit strategy be? How will the two of you decide on exiting the business?

Mike has listed the benefits of a business partner and I have now listed the negatives. I hope that I didn’t come off as overly cynical. I just wanted to go over the realities that most people try to avoid thinking about. Where do you stand on this idea?

(photo credit: idf-fotos)

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March 30, 2011, 3:42 am

Preparing Our Next Shareholders Meeting

by: The Financial Blogger    Category: Business,Make Money Online

In a month from now, I’ll be cheering with my friend, beer in hand; on a nice terrace in the historic section of Quebec City… well this is what most people think I’ll be doing anyway ;-). Actually, the last weekend of April, I’ll be attending our annual shareholder meeting – the real one! Some people think that this is a weekend of pure pleasure; 2 guys on a weekend in a beautiful city 3 hours away from home… Well… huh… when you say it that way, it may sound like a party ;-). However, the truth is different. We are actually going to work really hard during those 2 days.

Why the shareholders meeting is so important

If you think of starting any kind of business, the best investment you can ever make is to take a weekend off business as usual to think solely about what you are doing and what you will do in the months ahead. As I have said in the past, we run our business exactly like a big firm (mission, values, objectives, earnings reports, meetings, etc.) but we do it without the BS. The annual meeting in 2010 gave us the opportunity to try different things throughout the year and defined what our primary goals were. Now that we have seen the benefits, we think that it’s a must that we have to follow through annually each spring. Here are a few things that we look at (and you should be looking if you are thinking of starting a business):

Revenues and Expenses

The biggest problem I can see this year is our temptation for expansion. We have committed to several expenses we didn’t have last year. Spending is not really the issue. In fact, spending is usually a good thing as long as:

#1 Spending is controlled and justified.

#2 Spending is manner to produce more income over the long run.

So while we will take a few minutes to tell each other how great it is to make money (this is the “looking at the revenues” part, we will take a good hour to analyze our spending. We must make sure our money is well invested in our VAs and writers. Look at the individual cost of each website to make sure all sites are profitable (or show some potential!).

Goals reviewed

The next step, once we know that we are not going to be bankrupt in the upcoming months is to look at our previous goals. We need to take a look at what really worked out and what did not. I know that we have been pretty aggressive with our 2010 and 2011 goals. We will not only determine where we are but also how we will achieve what is left to be done this year.

I bet the Ebook writing will be at the center of our conversations as this is the project that is the slowest right now. While we are far from making $100/month per niche website, we have already 4 websites under construction and have 3 sites in “draft”. With all the resources and experience we earned over the past 3 months, building a niche website will now take less than 2 months when we look at content creation and web design. The challenge will lie with getting traffic through different promotional techniques.

Setting priorities with a schedule

Last year, we had put together a list of priorities that was going to be completed within the next 12 months. For each task, we described it, determined who will be in charge and when was the due date. Out of 24 points, 20 of them were achieved. The others were postponed for some reason (one of them being that we have too many things on the roll 😉 ).  A big point this year will be the security of our network and backup plans.

Before we leave on April 29th, we exchange several emails and we use Google Docs to add all our ideas. The point is to discuss everything that comes to mind so we can brainstorm before the real meeting. This is going to be a fun ride!

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March 29, 2011, 5:00 am

How Many Weeks Can You Hold On Without Working?

by: The Financial Blogger    Category: Alternative Income,Make Money Online


surviveThis is usually a question that can be answered by the size of your emergency fund.  In fact, this is the whole point of having an emergency fund. If you don’t know it by now, I’m not a big fan of emergency funds. I actually don’t have one and I use my lines of credit/credit card as an emergency fund. So you are probably going to tell me; “if you ever need liquidity, you will pay a huge load of interest!”. You are right… well, if I ever get to this point though.

“How can you be so sure that you will never need your emergency fund?”

The question seems legitimate; nobody is shielded against catastrophe. This brings me down to the most important question: How Many Weeks Can You Hold On Without Working? The very first step to answer this question is to answer first answer another question:

How much do you need per month?

When answering this question, you need to get down to the basics; paying financial obligations, eating and taking care of your family. Restaurants, wine and activities are not part of your priorities ;-).

I have calculated that I could live on a budget of $3,500 per month. Therefore, I need to know where can I withdraw my $3,500 per month and how many months I can hold on before things get very bad…

The normal reflex would be to check with easy ways to withdraw money:

– look at your emergency found (my case: $0)

– look at my lines of credit (my case: $7,000 so 2 months)

– look at my retirement investments (my case: $23,000 so another 6 months)

So in my case, I could hold on for 8 months or so without having to sell anything (like my second car or my house).WRONG WAY OF THINKING!

What if I tell you that I can hold on forever on a $3,500 monthly budget?

Instead of looking at how much and where I can withdraw money, I have asked myself how much and where I can make money ;-D. This is where my company comes into play. We have a special agreement my partner and I (told you I was happy to have a partner!): if one of us loses his job, he can work full time for the company and be paid according to his monthly budget needs (survival budget needs 😉 ). So far in 2011, the company income is averaging between 7K and 8K per month. If I was to lose my job, I could cut my business expenses to roughly $24,000 per year. In fact, I could cut down on my VAs and most of my writers’ budget (which is, by far, the biggest part of my expenses). This would leave me with basic expenses (telecommunication, accounting, hosting, etc).

Therefore, this would leave the company with a net income of about $5,000 to $6,000 per month. This is more than enough to cover my $3,500 budget. Then, I could technically live without my day job and keep my house, my cars, my insurance and feed my family without any problems. This is the first step in my quest to financial freedom; being able to live without a day job.

What is interesting about this thought is also to wonder where I could bring my company if I was to work full time. I’m already seeing some interesting improvements with my 2 VAs (wait to see my March income statement!) so I guess it would just go faster if I was working 40-50 hours a week ;-).

While I know I can do it, I am far from being ready to quit my day job. I think I have too much debt right now and I would feel uncomfortable leaving such a great job. In addition to that, I would rather keep my 2 VAs working for me as I really appreciate them and I would be torn to lay them off. On the other hand, it’s always comforting to think that I can hold forever without working at my day job ;-).

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March 28, 2011, 5:00 am

My Interview Tricks

by: The Financial Blogger    Category: Career


interview suitThat’s it, I’m on a roll again! After turning down a 250k job based lifestyle quality, I had an interview for an interesting position in the area I am looking for: Downtown. The job is pretty similar to what I do right now (e.g. financial planner) but for a wealthier clientele. This would not represent a huge climb in income as the previous job was but I would be getting my foot in the door in the wealth management department. One of my financial goals for 2011 was to pay off my debts, there is nothing better than a raise to pay them off ;-).

So far in my career, I’ve been quite successful with my interviews. I didn’t get every job I applied for but I have always left a very good impression. Sometimes, leaving a good impression is as good as getting the job. I’m not an expert of any sort, but I have realized that some minor details make a big difference when it comes to the interview. So here are a few of my interview tricks:
Interview Trick #1: My Super Suit

We all have one. There are a few pieces of clothing you own that make you feel good, are comfortable and good looking. It is very important that you wear your favorite suit, shirt and tie. You will enter the interview room confident and proud. You will be at ease and your interviewer will notice that as well. Basically, you need to feel like a million bucks. Smiles and solid handshakes can’t hurt as well ;-).

Interview Trick #2: Writing a letter

Along with my resume, I always write a letter. This is usually a short one pager that explains a few of my abilities and the motivation I have to apply for a new job. Since employers receive tons of resumes on their desk, you need to find a way to stand out from the crowd. By writing a letter, you have more chances of getting read. At the time of the interview, I always bring 2 to 3 copies of my resume and my introduction letter. Just to make sure all the interviewers will have a copy in hand. While one interviewer is asking a question, others can take a look at the documents you just provided.

Interview Trick #3: Knowing the Job

My first manager once told me: “if you want a promotion, you must know how to do the job first”. This may sound a bit tough depending on the field you are working in.  This is why I cut it down to “know what the job is about”.  If you stopped at reading the job’s description, you are bound to be in left field. Find people working in that department, ask them interview questions, try to know what their day-to-day looks like. Ask them what they like, what they don’t like about their position. During the time of the interview, you will look like someone who doesn’t take application process lightly and that you go a little bit further in your investigation.

Interview Trick #4: Knowing the interviewer

Here again, this might be hard to know a lot of information before your interview. However, when you schedule your interview, it doesn’t hurt to know who will be present. Just tell them that you are curious as who will run the interview. After you get some names, you can always ask around to know what kind of individuals they are. I don’t advocate to change your personality during the interview (you will be happier and your boss too if both of you know who you are from day #1). However, trying to know your interviewers’ background and interests can only help you create a quick connection during the interview.

I’ll get news from my interview in a few weeks (probably by the end of April). I don’t what it will look like as there were several candidates and I know that they are not clowns. This will be a fierce competition! I’ll let you know how it goes!

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March 25, 2011, 6:00 am

Yakezie Roundup

by: MD    Category: Financial Rambling

This week we went over life without a business partner. As you all consider business ventures the obvious though that hits you is the idea of partnering up. In this article we stress the importance of having someone to hold you accountable and work with you on your goals. Have you ever thought about going into business with a partner?

Time for the Yakezie roundup:

1. The 7 Steps to Starting a Business @ Investor Junkie.

2. Legal Debt Elimination Options @ Deliver Away Debt.

3. Labeling Debt To Make It More Palatable @ Watson Inc.

4. When Filling Up At Costco Doesn’t Make Sense @ Money Beagle.

5. Life As A Landlord – The Approval Process @ Personal Finance Firewall.

6. Why do Gas Prices Rise? @ The College Investor.

7. Legal Debt Elimination Options @ Deliver Away Debt.

8. How To Deal With A Bully @ Financial Samurai.

9. Best Stocks For Dividend Investing @ Buy Like Buffet.

10. Blogging Full Time – The Target Number @ BITFS.

11. Canceling My Cell Phone Insurance @ MJTM.

12. The virtue of discomfort @ ERE.

13. How To Protect Yourself From Credit Card Related Cyber Crimes @ Canadian Finance Blog.

14. How To Financially Prepare For A Disaster @ Smart on Money.

15. How to Get A Short Sale Package Approval Done Fast @ Wealth Pilgrim.

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