Financial IQ #12

depreciation

Definition 1

A noncash expense that reduces the value of an asset as a result of wear and tear, age, or obsolescence. Most assets lose their value over time (in other words, they depreciate), and must be replaced once the end of their useful life is reached. There are several accounting methods that are used in order to write off an asset's depreciation cost over the period of its useful life. Because it is a non-cash expense, depreciation lowers the company's reported earnings while increasing free cash flow.

Definition 2

A decline in the value of a given currency in comparison with other currencies. For instance, if the U.S. dollar depreciates against the Euro, buyers would have to pay more dollars in order to obtain the original amount of euros before depreciation occurred.

buy me a chai tea, I'll do more...

If a manager or leader in charge, asked their employees what made them more motivated during the day, and fulfilled those things (within reason...), would it be worth the expense?

If a boss asked me that question, I would say, "I am more motivated and productive when I have my morning chai tea", which is $4.01 with tax. It would more than pay for itself in my productivity, for me it's the surge of caffeine in the morning that I need, and my day is golden and on track.
If they only knew to ask...

Financial IQ #11

cash flow

Definition

A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time; or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization.

Money is not real...

We are chasing an imaginary item.... ...losing hours of our lives (never to be found again), missing out on precious moments, choosing "the green bill" over family....
If you are living for money, you will one day wake up and realize your life has passed you by, and all you have to show for it is a huge pile of green fibrous paper, that is supposed to be worth something.

Think about this:
What would happen if everyone were to trade from business to business in our towns, trade goods, services, labor, etc. We would have much less total income, expenses, and of course taxes; On paper it would look like less coming in, but in reality we would have much more than before, and probably better and closer friends and family relationships.

Financial IQ #10

dividend

Definition

A taxable payment declared by a company's board of directors and given to its shareholders out of the company's current or retained earnings, usually quarterly. Dividends are usually given as cash (cash dividend)but they can also take the form of stock (stock dividend) or other property. Dividends provide an incentive to own stock in stable companies even if they are not experiencing much growth. Companies are not required to pay dividends. The companies that offer dividends are most often companies that have progressed beyond the growth phase, and no longer benefit sufficiently by reinvesting their profits, so they usually choose to pay them out to their shareholders. also called payout.

Financial IQ #9

gross sales

Definition

Total invoice value of sales, before deducting for customer discounts, allowances, or returns.

Find the Balance...

One of the hardest things for myself is finding the balance between professional life and personal life. It is very challenging because parts of both blend in to each other in a few different areas.

When I am working professionally, I do it to support my family (now and for the future), to grow myself and my companies in business knowledge and successes, to grow business contacts and friends, and to look for the next opportunity that might just get me where I want to be just a little bit faster. I enjoy the professional side of my life, I enjoy having more knowledge and meeting more people. One thing I don't look forward to, is the business crossover (when business starts to effect your personal life). If I am to be dedicated to creativity and growth in business, I have to let my mind stay open all of the time. I end up letting the "crossover" take control and effect the things that I hold dear (family, friendships, pets, and hobbies).

Don't get me wrong, I know it is a choice to let the "crossover" interfere, but how can I just switch it off? Can I shut it off and still be successful? I have yet to find these answers, and I am bound and determined to find the balance. I AM NOT going to become a famous CEO or President of some great fortune 50 company that I started and be on my 4th wife, because I can't balance my life. That is not the life I want to live, and I wont!

The "crossover" and the "balance" is difficult to understand for most people that don't have an interest in business. Some people believe that our lives could be much more simple if we structured them in a certain way... ...well, I'm waiting... ...what is this certain way that will spare myself and my family this frustration?

If anyone has any suggestions or ideas how to manage business and personal lives together, please let us know. I would love to learn from someone that has past experience and has figured out how.
`chais

Now what am I doing with 10,000 pieces of hemp jewelry? That is a different story...

What determines a fad or trend (F/T)?
This thought comes to me when I am sitting in my office starring at almost 10,000 pieces of hemp jewelry. Hemp is not the "hot" or the "in" thing right now, it's not a current F/T. It's position is back to where it originally started (for a select group). I start thinking to myself about how to change it, how to make people see it differently. It is no different than how everyone instantly started loving the color pink (yes, even males). How can I make that impact? Is it possible to change society's view on a current product?

I think very few people know what determines or starts a F/T. F/T's can last weeks or years, but what and who decides that? My thought (which in no way am I a professional thinker), is that anyone or any business, anywhere in the country can make it start.

If it happens to be an individual that starts the snowball, they have to have something about them personally that will make the F/T contagious, or relationships with infectious people and/or companies. It would appear to me that taking the lonely road of starting the said F/T by yourself would be the most difficult and most time consuming. Even though the web has made it much easier to spread your message (you tube, blogs, forums, and other media sites), you would still have to make an impact on the readers, viewers, and listeners. But could we (the individuals), create a F/T in the market of our choice? I am challenging myself and anyone else out there, that wants to sell a product, a service, or an idea, to make that thing the one that everyone wants to get their hands on. Don't just market your item, make it the next big F/T, be creative!

I will try to do this with hemp jewelry and hemp accessories. Whether I am successful or not I will keep a log (and post it on our blog as they happen) of what I've tried and how it turned out. Let me know what works (or doesn't) for you.
`chais

Financial IQ #8

net sales

Definition

Gross sales minus returns, discounts, and allowances.

Financial IQ #7

Revenue

Definition 1

For a company, this is the total amount of money received by the company for goods sold or services provided during a certain time period. It also includes all net sales, exchange of assets; interest and any other increase in owner’s equity and is calculated before any expenses are subtracted. Net income can be calculated by subtracting expenses from revenue. In terms of reporting revenue in a company's financial statements, different companies consider revenue to be received, or "recognized", different ways. For example, revenue could be recognized when a deal is signed, when the money is received, when the services are provided, or at other times. There are rules specifying when revenue should be recognized in different situations for companies using different accounting methods, such as cash basis and accrual basis.

Definition 2

For the government, the increase in assets of governmental funds that do not increase liability or recovery of expenditure. This revenue is obtained from taxes, licenses and fees.

Financial IQ #6

Liability
Definition

An obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed. For example, if John hits Jane's car, John is liable for the damages to Jane's vehicle because John is responsible for the damages. In the case of a company, a liability is recorded on the balance sheet and can include accounts payable, taxes, wages, accrued expenses, and deferred revenues. Current liabilities are debts payable within one year, while long-term liabilities are debts payable over a longer period.

The Issue of Time

While reading Small is the New Big, by Seth Godin, more specifically his article on "Relax...., I Mean, Work on the Difficult"; I realized the real issue of why time management is so hard and how to overcome the impossible.

Our efforts to control time, and its delegation towards "top priorities", doesn't always correlate with real life events. We often find ourselves caught up in the immediate urgency of the present. Emergencies tend to pop up unexpectedly and our attention naturally focuses on the current issue at hand. Companies are continually expecting more hours from there employees to make up for unexpected complexities or snags in projects or services rendered. Business owners and entrepreneurs work late into the night to either stay afloat or outrun there competitors.

Is this the way business should be conducted? Is this the only way to be successful in an evermore fast paced environment? Could it be possible that these unexpected shifts of time delegation, be related to careless preparation and decision making? Certainly it would be impossible to predict every possible obstruction in relation to a well structured time outline. However, if just a little more time were spent on proper decision making and preparation for upcoming projects, events, and services, these unexpected delays would most definitely be more few and far between. Would they not?

Ok, that sounds great hypothetically, but who has time to carefully prepare far in advance for these types of occurrences? Nobody does, not while running in this vicious cycle. Instead, break away from the cycle, take a few steps back. Consider this: What if we left work at 4:00PM everyday instead of 5:00, 5:30 0r 6:00, etc. What would that do to our work ethic? What would that do for our mind? If we had proper time to regain our strength and focus intently once again on our work ahead of us on a daily basis, would we not be more sharp in our thinking and our overall productivity?

This vicious cycle of needing more time to pick up the fragmented bits and pieces of urgency while falling behind on future planning and preparation for upcoming events must end. Relax, spend some time away from the fast lane. Look ahead, prepare adequately for upcoming events, reflect on strategies and make wise decisions.

What are your thoughts? In what ways do you overcome the time management dilemma?

Make it available to the masses...

The more people that we can help with a single product, service, idea, or system, the more profit will be available. I'm saying this with a true heart for people, not allowing capitalism to be put ahead of the individual.

Let's take rental properties as an example. We can provide homes for individuals to rent out, solving one persons needs at a time, or we can provide apartment complexes for a mass of individuals, allowing us to help multiple people at one time. The obvious advantage from providing housing to more people at one time is the initial gain in profit, but that is just the beginning if it is done with the right heart. If we are developing ways to help more people, it is a well deserved reward to get additional profit from this type of thinking.

When someone crosses into the extreme capitalist side, losing the individuals, that is when they become a slumlord. (Not in every instance) The slumlord's priorities are not for the individuals needs or wants, the slumlord's focus is the bottom dollar, and the biggest profit. If we are able to help more people at one time, the profit will grow by itself in more ways than one. Helping people should never be overrated...
`chais

Financial IQ #5

Asset
Definition

Any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate, a car, and other property. On a balance sheet, assets are equal to the sum of liabilities, common stock, preferred stock, and retained earnings.

From an accounting perspective, assets are divided into the following categories: current assets (cash and other liquid items), long-term assets (real estate, plant, equipment), prepaid and deferred assets (expenditures for future costs such as insurance, rent, interest), and intangible assets (trademarks, patents, copyrights, goodwill).

Network Contacts...

In order to have good network contacts, what is needed? Do we need to personally know them? Should we do a favor for these contacts before we ask something of them? Does a network contact know that in your relationship that is their role? Is there anything wrong with that?
`chais

Financial IQ #4

Balance Sheet
Definition

A quantitative summary of a company's financial condition at a specific point in time, including assets, liabilities and net worth. The first part of a balance sheet shows all the productive assets a company owns, and the second part shows all the financing methods (such as liabilities and shareholders' equity). also called statement of condition.

Financial IQ #3

Capital
Definition 1
Cash or goods used to generate income either by investing in a business or a different income property.

Definition 2
The net worth of a business; that is, the amount by which its assets exceed its liabilities.

Definition 3
The money, property, and other valuables which collectively represent the wealth of an individual or business.

Financial IQ #2

Entrepreneur
Definition
An individual who starts his/her own business.

The Black Swan

Tom Peters shares his thoughts on how A Black Swan Moment has impacted our society through political perspectives, financial models, and personal confidence. We live our daily lives assuming the world around us will maintain a certain level of consistency, in relation to our current level of knowledge, without considering possible Black Swan events creeping up on our familiarized environment.

What can we do about these Black Swan moments? We can't ignore or avoid them. Instead we must change our way of looking at things. We must reorganize our way of relying on assumptions, based on past experience, and anticipate the unknowns of the future. Instead of looking at past history as fixed data (something we have conquered), view experiences as variable, leaving room for new techniques and strategies. What areas do you see as potential danger zones for invisible Black Swans? What can we do to prepare ourselves adequately for these unexpected events? How can we use them towards our advantage? In what ways can we guard ourselves against Black Swans in business? ...

Nassim Nicholas Taleb's book, The Black Swan: The Impact of the Highly Improbable

Now that is marketing...

I never really thought of it before...
When the Nissan Xterra first came on the market, I absolutely loved it. I didn't love it because it was just another standard SUV. I loved it because it was an SUV that was "Xtreme". But there had to be more than that, what was it...

So, I started thinking about what made the Nissan Xterra an Xtreme car, and I came up with one solid thing. Nissan did something that no other car company has done, they focused on injuries, and doing things that are so "Xtreme" that they might require medical attention. That brings us to the introduction of the "first aid kit" built into the SUV. This "first aid kit" wasn't just included with the SUV as an accessory or something that you could have extra. No, this first aid kit was actual the topic this car revolved around. The back of the SUV (on the hatch), was designed with a 10"x9"x3" opening built for this first aid kit. There was absolutely no reason for someone to like this back gate design (a bulge on the outside of your vehicle when the rest of the back is smooth). People liked this design because they knew when others see them driving their Xterra, they would know that they had a "first aid kit" at their disposal (If needed). If someone is driving a car with a first aid kit built in, they must have the type of outgoing, crazy, and "Xtreme" personality to need a first aid kit. To center your car and your marketing around a first aid kit, now that is marketing...

I discovered the reason why I loved that SUV. I loved it because I knew I could get as crazy as I wanted and still be "ok" (because of my built in hospital). Could you imagine a type of car that would sport a defibrillator ? That might require some sort of license...
`chais

Financial IQ #1

I have not always been interested in finances, but I know that to be successful in business, we need to have a good financial IQ. Without it, we wont be able to mind our money and become financial leaders in our organizations. I am going to put one financial word/phrase on this blog every day. If you are interested in learning about finances, check back in daily and we will have a new word followed by a definition.

Adventure Capitalist
Definition
An entrepreneur who helps other entrepreneurs financially, and often plays an active role in the company's operations (such as by occupying a seat on the board of directors).

The Complete 2007 Personal MBA Recommended Reading List (Business Books)

We did have a fully printable list on our blog, but we removed it to respect Josh Kaufman (the creator of the PMBA Recommended Reading list).

If you would like a fully printable list, please go to the link provided here.

http://personalmba.com/recommended-business-books/


We thank Josh for all of the time and hours of reading it took to develop this list.
`the Three Dot Team

What is it?

What makes one person hate a product and another person love a product? I think the first thing that comes to my mind, is of course, personal preference. Second, could be a number of different things: I realize people right now might be thinking (if the product worked or not, if it met my needs, if it was worth the price, was the entire experience good or bad.. and so on). For me, I think it comes down to this: did the company meet my expectations? After all, isn't the company the one responsible for everything that happens good or bad? Think about that... If a company of any type (food, clothing, toy, automobile), developed a product or service and it worked the way you wanted it to, until you ended up replacing it, would you be happy with the product and the company? It is when these products or services from a company didn't meet your expectations, that you decide you no longer like this product and sometimes the company.

What would happen if a company that made you dissatisfied or unhappy had a team of people that were designed to not only take care of your problem, but to make sure you walk away happy. Not a team that took your phone calls and said "I'm sorry that happened", but a team that looked for the unsatisfied customers (sought them out), and made them believe in their company again. They would have to meet their expectations and surpass them (then again, calling the customer might be surpassing the current expectations now days).

A disadvantage to the company is, not every unhappy person will tell when they are unhappy. Not even giving the company a chance to resolve the issue. What would happen if a company let the public know they will give away either a gift, money, or a discount on future products, if someone were to give them a solid lead of an unhappy customer? Would people want the gift, money or discount bad enough to call in about their neighbor that is spreading around a negative viral campaign? Would you call in?

Can businesses change so as to be centered around a customers world, and still be profitable at the same time? Could spending the money to focus on customers end up paying for itself 10 fold? Strictly because the customers wouldn't leave you when they have a problem? Why or why not...
`chais

More on 'Exclusivity and Low Quantities...'

Consider this:

A restaurant accepts limited guests per year and is open once every quarter (Spring, Summer, Fall, Winter) , maybe 25 guests per quarter. Cooks are brought in from several different countries and prepare a unique dish that they have perfected over the years. Guests could reserve a seat in advance (first come first serve), by referral only, and would be given a menu containing the limited entries (5 or so). It would be entirely exclusive.

It wouldn't be your typical fine dining. No, this would be an exclusive event, set aside for those with a particular status. Consider the advantages the owner would have in this type of market. It wouldn't be for everyone but that's the point.

`David

Exclusivity and Low Quantities...

What would happen if a random company, department, or business chain were to offer products that were a limited quantity (a real limited quantity, not like Reeses coming out with a limited peanut butter and banana candy bar that is all over the US). Would they be able to sell the products at higher margins or be able to control what time of day people came in their stores by stocking the products only at certain times. Supply and demand is an amazing thing, certain products are more expensive because there are less of them or they are located in fewer locations. But why?

Could a business survive if they were open only half the time of their competitors, and they offered products that were limited quantity and exclusive to them? It would have to be an extremely solid product. But, if the quality was there, I would be tempted to go and spend more money to have something different, something that very few people have.

What could be one SD (supply and demand) thing that you can do/sell to either make people excited about your store (online or physical), or to push your buying traffic to your store at a specific time. Be creative...

`chais

A Quote for you...

I am a "self help" geek and someone that constantly enjoys trying to improve myself in all areas of my life. Here is a quote that I really dig,

"One of the main weaknesses of mankind is the average man's familiarity with the word (impossible.) He knows all the rules which will not work. He knows all the things which cannot be done...Success comes to those who become success conscious. Failure comes to those who indifferently allow themselves to become failure conscious."
-Think & Grow Rich by Napoleon Hill

`chais

Is it Worth it?

I was just in Walmart, and they were giving away samples of 3 new soy meal bars (Soy Joy, 3 flavors). It made me think of a few questions, let us know your thoughts.

What do you think is more worthwhile for the Soy Joy company. 1) spending a lot of money on marketing for a few products that are average? or 2) Forgetting the average products and focusing on 1 good one?

Would Walmart make more sales if the head managers personally tested 20 products of the same genre and just gave samples away from the best one? Or do you think it is more worthwhile to give samples on many different items of the same genre.

Do you enjoy samples? Do they make you buy anything when you taste them or is it just "free food"?

Looking forward to hearing your thoughts...

Sprint and Customer Liability

After listening to 53 minutes of music while being on hold and having my call terminated by Sprint's Customer Solution's help line yesterday, I assumed the following explanation:

• Sprint considers it's customers to be liabilities, not assets.
  

Not only did Sprint waist 53 minutes of my time and drain my cell phone battery completely but they turned down a potential sale. I have been a satisfied Sprint customer for over 7 years, until now. I have happily ignored the minor inconveniences of not always having signal in the rural area in which I live and have loved all of their cellular services. I raved about their low prices and awesome features they provided to my friends and family. I convinced my family and several of my friends to join the Sprint PCS network and would praise Sprint's abilities to offer exceptional cellular services, until now. Sprint may still have the upper hand in wireless technology, but I no longer care. Why? Because they no longer care about me - the customer.

Maybe they were swamped and couldn't get to my call? Maybe they were maxed out on their resources and couldn't spend another dime in customer relations? Whichever way you look at it, they dropped the ball. They undervalued their most valuable asset - the customer. They considered the opportunity cost situation and chose to put their customers in the cost category while pursuing some other opportunity elsewhere, maybe a new feature or an advancement in technology. They overlooked the value of the customer.

What would happen if Sprint changed their mindset and restructured the way they interacted with their customers? What if they made it fun to call Sprint? For example, they could start things out by saying, "We guarantee you will be able to speak with a representative in 5 minutes or we will credit your account $5". What would happen? The customer would be counting down the minutes, not in frustration and anger, but with excitement hoping nobody would take them off hold until the 5 minute time period had passed. The entire customer experience would flip and the customer would become the winner, not the looser.

Or lets just say that Sprint is maxed out and can't pour anymore resources into customer relations. At the very least they should offer a service to the customer where the customer has the option at the beginning of the call to pay $1 to guarantee that they talk to a representative in under 5 minutes, or pay $5 to guarantee that they will talk to a representative in less than 1 minute. Then the customer has the choice of whether their time is more valuable than their money or vise versa.

If nothing else, Sprint should reward their loyal customers by gathering account information when the customer places a call (length of customer loyalty, [2 years, 5 years, etc], do they pay on time, etc) and have designated representatives that are intended solely for a particular customer group (bronze [0-2 years], silver[2-5 years], and gold[5-10+ years]). If a customer was a part of the gold group, they would be able to speak to a representative much quicker than a customer in the bronze group because Sprint would delegate extra representatives towards their gold customers and less to their bronze customers. I see this as a last resort, but at least this way the loyal customer would stay loyal and happy.

**IMHO it is much better to keep your loyal customers happy then to have a high turn around rate and always be searching for more temporary customers. It requires more resources to add customers to a customer base than to support and maintain the customers a company already has in its clientele.

Sprint could set the rules however they wanted but at least loyal customers would be rewarded for their loyalty to the company. Sprint may claim they cannot provide exceptional customer service to all of their customers, but why not at least reward the good customers?

In business we often find ourselves up against a wall. We have limited resources and are not able to delegate 100% of all our resources towards all categories (advertising, marketing, technology, customer relations, etc). A choice must be made as to how much we delegate to each category. But how does one choose? We must consider our priorities, and if you are a company that values your customers you will make them a priority. In business their are assets and liabilities. Assets generate revenue and liabilities take away revenue. We pour everything we have into our assets and try to minimize our liabilities. Sprint has labeled their customers as liabilities by pulling resources and not making them a priority. Instead of investing time and resources, they have cut back. Instead of welcoming customer interaction, they avoid it.

Customers are assets, not liabilities. They feed the company, and in return the company offers services. When a company treats customers as liabilities they are cutting themselves off from the most valuable asset. Let's hope Sprint realizes their mistake before its too late and changes their outlook on customers.

`David

Giving, Getting and Selling

I just got back from Texas today after visiting my in-laws. We decided to fly on American Airlines there and back. Along the way we learned a lot about companies, marketing, and employees.

The first flight we took went from Omaha, NE to Dallas Fort Worth, this flight was your standard AA flight with your choice of a complimentary beverage. The second flight from DFW to Odessa, TX was on the American Eagle Airlines (owned by American Airlines). This flight was very interesting to me, it was the first flight that I have been on where instead of offering you a pillow (when your tired), a blanket (when your cold), or a bag of munchies (when your hungry), they would only sell them to you. Now I can understand the munchies, that probably does add up with 80 people on a plane at a time, but the pillows and blankets? If I'm cold and tired however, tough luck. I am not a master at business or marketing, but I know my point of view as a customer. I would rather be offered the pillow and the blanket and spend my money on something else, like a portable DVD system (that you can rent for the flight) with 10-20 DVDs to chose from (limited quantity of each disc, first come first serve). I would spend $5 on the player and $3 on a disc to entertain my self and my wife for 2 hours. I realize that not everyone would utilize this service, but I believe it would be a much better option than a pillow and a blanket that you can "Take with you!" for $5. I also would rather spend an extra $3 on my plane ticket for munchies (and feel like it was complimentary) then have to buy it while on the plane.

Take a look around you, if you see something that looks out of place or doesn't seem to flow very well with that businesses commitments, think about what they could do to change it or make it better in some way. This will help all of us be more creative and look at any future business from different eyes (the end customer's eyes). ~Chais

Starting a business is a dream for any person that wants out, or wants to be in control of them self...
When a system doesn't push growth between business, owners, managers, and employees alike, they become stagnate. If your living day in and day out filling a void in a company and you have very little opportunities to positively influence change, why waste your time? Not everyone is designed to be a leader, or wants to be one, and that's ok. You can still want something more, if you do go and find it, or go and make it happen. Start or join a business that is designed for positive internal and external growth, allowing the company to change through the times (any type of business can be this). After you've decided to start or join this system/business, invite the people that want to help with change and want to be a part of something more. We believe that these types of people will be the biggest assets to your company (If you can welcome and change with criticism).

Three Dot, Inc. is brought about with the ideas to push the envelope, and "Change The Rules" in business (as Seth Godin would say). David Lano and myself (Chais Meyer) have decided to do something about the things we don't like about our current jobs, and the boring structure of business. The name Three Dot stands for "More to Come", it is like an ellipsis, the three dots at the end of a sentence. We like to leave our thoughts for business always open for growth, so it fits perfectly.

More importantly than the name of our corporation, is what we are going to do with it. While we will be buying, building, selling, manufacturing and servicing brands, businesses, products and ideas, we will be constantly challenging ourselves and others while changing the rules. Nothing in business has to be done in a certain way, and the structure should match the personalities of the individuals who influence change. Every business that we get involved with should be structured a little bit different, then the next one (there is very little chance that a video production company, an accounting firm, and a snow cone vendor will have the same type of team members with the same interests and personalities). We want all of the businesses that we are involved with to have there own personality while growing on a common root structure that is customized for them.

We want to share our business ideas, discuss systems, plan for the future, and share random thoughts. Everything we say, might not matter to everyone, but there might be one person that gets something out of our thoughts and plans. That is what we want to do, help create growth and inspire for future opportunities and successes. We also realize that no one really wants to talk about business failures and disappointments, we all want to act like they wont happen to us. It is a fact that failures happen, Three Dot looks at it as an opportunity to look at ourself in a different way and grow from it. Please feel free to share any of your comments or suggestions along the way. We look forward to growing, changing and becoming remarkable...