Archive for the 'Entrepreneurship' Category

Date: August 8th, 2008, Filed under Entrepreneurship

Chicago, IL

By A.B. Dada

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On a recent slashdot article, I had posted a response to why I believe that 1099 work (contract work) makes more sense than W2 work (employment) for more people than one would consider.  W2 work means getting a job with an employer: working your 40 hours a week in exchange for “stability”, some benefits, and hopefully a committed employer/employee relationship.

I find W2 work ghastly for a great many reasons.

There’s an old adage: “don’t put all your eggs in one basket.”  When you get a W2 position with an employer, you’re doing exactly that.  The stability that people think they have comes from a few things the employer provides:

1. They find you work.  Instead of having to cold-call and make visits to possible future customers, your employer has their own department or team to find work for you.
2. They collect money.  When you’re on your own, a key element that kills many entrepreneurs is cash flow.  Customers rarely pay on time.  Sometimes they don’t pay at all.  Others will complain about the minutiae of a bill, wasting your valuable time over pennies and nickels.  Your employer handles cash flow so you don’t have to.  You just get your regularly scheduled paycheck.
3. They handle group benefits. Health insurance is a huge reason some people stick to a W2 job.  I will detail my views on the inefficiency of health insurance at a later date.
4. They manage your schedule. Get in by 9, leave by 5, hopefully do the amount of work you’re supposed to do without delays from other people.

This is all great, but it is such a limiting factor for your income and future, because all of these issues are a burden, not a gain.  Your job is stable, until it’s gone.  When it’s gone, you have nothing other than possibly some unemployment income and savings.  100% of your income is gone the moment the pink slip hits your desk.  All your eggs are shattered when the basket goes away.

The 1099 contractor can take all of these items, and do much better for themselves:

1. Finding your own work is time consuming, but profitable. In order to be a good networker, you should become a confident businessman.  Confidence is not something most people are born with, but develops over time.  Finding work initially is the biggest obstacle to becoming your own boss.  The positive side is that you can undercut your competition initially to at least get your foot in the door.  I’ll post a small series of ways to acquire your first customers, and do so in a way that is similar to going to school rather than feeling like a business move.
2. Collecting money becomes habit and ritual. All it takes is your first experience with firing a customer to realize that collecting money is not as bad as it seems.  When you get to the point that you have a few clients, getting rid of a bad payer can be a net gain, even if it is a short term financial loss.  Contractors are not as easy to hire as you’d think.  Integrating new contractors into a business operation can be very costly, time consuming, and horribly inefficient.  When you realize you’re doing the best job that can be done for a client, you have the upper hand in payment delays. I will add to the series posts regarding how to manipulate your work schedule around those who fail to pay on time, or who pay less than you deserve.
3. Group benefits are a sham. Except for the rare few people who have benefit costs significantly greater than average, most group benefits are truly a sham.  The reason why most people don’t acquire their own benefits is due to the ridiculous tax laws that provide incentive for group plans over individual ones.  Once you find the secrets (which I will share) to acquiring your own health care coverage, disability coverage, and other benefits, you will see a great savings in your financial future.
4. Schedule management is the deal breaker. Every entrepreneur I’ve seen fail has done so because they mismanaged their time.  They took too many days off, they showed up late or not at all, and they refused to plan for the juggle of self-employment.  Some days are work days, some days are billing days, some days are collection days, some days are marketing days.  Most days should include a little of all those types of days.  When you focus too much on one work process over the others, you’ll fail.  I’ll detail the secrets to balancing your work life with all the processes rolled into one.

I do believe that many employed W2 workers could do far better as 1099 contractors, even to their current employers.  Putting your eggs in a variety of baskets is the best way to prepare for wealth and stability.  In the coming series, I will detail the process to extricating yourself from the grind, along with a detailed story of my own failures in the business world.

If you have any questions, feel free to contact me so I can develop more answers on this site.

Comments: 2

Date: July 16th, 2008, Filed under Entrepreneurship

Chicago, IL

By A.B. Dada

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There’s an old adage people are familiar with about getting services from others: “You have 3 options: get it done fast, get it cheap, get it high quality. Pick two.” I have my own law on income that tilts this adage: “You have 3 options to making money: make it fast, make a lot, make it with little work. Pick 2.” I call it Dada’s Law on Income, although I’m sure someone else coined the phrase before me and already gave it a name. Props to those who can find it.

Read this entire article titled Dada’s Law on Income at the G.U.N. Entrepreneur site.

Comments: none

Date: July 2nd, 2008, Filed under Accountability and Responsibility, Entrepreneurship

Chicago, IL

By A.B. Dada

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One simple fact of business that many entrepreneurs and employees ignore is the idea of efficiency: doing more in less time.  We generally want to find ways to save big amounts of time only, which is a mistake that almost everyone in business makes.

One key area to increasing efficiency is to shave seconds off of tasks you do commonly.  From buying a printer with a faster warm-up and first page out to reducing overhead on your desktop are ways that I find to make myself much more efficient.

It’s July 2, which is the time of the year when I do the most important thing possible to save myself a ton of time in the long run: wiping my workstation clean.  Sometimes I prefer to buy a new workstation completely, but lately I’ve found that starting fresh is better than buying new.  My most used workstation is 3 years old, and works just fine if I take the proper steps to maximize that micro-efficiency.  Saving a few seconds here and there every minute can mean almost an entire work-week saved annually.  Consider the following situation:

Is your web browser running a bit slower than expected?  Does loading up a needed website take 10 seconds instead of appearing instantly?  Does double-clicking on a program to load take 30 seconds instead of 5?  How about simple processes like pulling down the file menu and clicking “open”?  These are areas where cutting down on the time it takes to do a task can save you significantly.  I find that as my workstation bogs down, I lose important seconds.  By starting fresh, I can save more than a work week per year.

A slow computer (meaning latency of doing fast operations, not operations that always take long) can lose me up to 90 seconds per work hour.  Doesn’t sound like much.  If you lose just 1.5 seconds of work time per minute worked, that’s 90 seconds per work hour.  Getting that time back is precious.  90 seconds per work hour means 720 seconds lost per work day, or 3600 per week and 187,200 per work year.  That’s 3120 work-minutes lost per year, or 52 work-hours lost.  1.3 work weeks a year are lost to inefficient computing!  If you make $40,000 per year at your job or business, you’re losing $1000 per year in lost efficiency.

Here’s what I do quarterly:

1. I upgrade the memory in my workstation to the maximum, based on what it costs.  I went from 512MB to 1GB to 2GB to 4GB in my workstation over 3 years.  Extra memory means the computer has to “swap” to the hard drive less, which saves you a TON of time in terms of micro-efficiency.

2. I upgrade my hard drive to a faster hard drive.  I went from a 5400 RPM drive to a 7200 RPM drive to a 10,000 RPM drive in 3 years.  The 10,000 RPM hard drive is surprisingly zippy, and files open and save MUCH faster, possibly saving me more than the whopping 6 minutes per day.

3. Once you replace your hard drive, put your old one in an external case, which costs about $15-$20 locally or online.  Use that USB based drive to retrieve the data you need.  On the fresh drive, reinstall your operating system and needed applications.

After you finish these fairly simple tasks (I can do it in under 90 minutes each quarter), your PC will be completely refreshed.  Programs will launch quicker, the web will feel zippier, files will open and save much faster.  You’ll save mere seconds here and there, but you’ll save a huge amount of productive time in the long run.  Even if you do this at a job you’re employed at, you’ll be more productive than the person in the cubicle over, which means you’ll finish your projects early and make an impression on upper management.

Another little secret is to replace your Internet network’s DNS server with an open one from OpenDNS.com or another.  I prefer to run my own little DNS server on my own computer, which makes web sites pop up significantly faster than relying on my ISP’s DNS server.  Again, saving a few seconds here and there on common tasks adds up to a huge savings.

Don’t lost productivity by wasting seconds here and there.  Open a file and see if there is noticeable lag.  Save a file and note the same.  Visit a common website and see if your PC takes time to “think.”  Open a program and see how long it takes.

Then follow my simple 3 step process above, and make the same comparisons.  After you realize I’ll save you at least $1000 a year, send me $10 via paypal today as thanks to making you more efficient, more productive, and more profitable.  Then share this secret with friends and family by providing a link to this site.

Comments: none

Date: July 1st, 2008, Filed under Entrepreneurship, Finances, Full Reserve Banking

Los Angeles, CA
By A.B. Dada
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I’ve been a promoter of the idea of a full reserve bank for many years. So far, we’ve never had the chance. Lately, though, I’ve come to realize that one of my “investment” vehicles is the closest thing to a full reserve bank, ever. That vehicle is Prosper.com.

Prosper.com is a website where lenders (you and me) offer small loans to borrowers, usually in amounts of $50 or greater. You can pick what candidate you want to loan to, bid on the loans, and then you collect over the term of the loan. You pick the risk and reward.

Prosper uses your money, tied up for the life of the loan, to create the loan. It does not use fractional reserve lending to create leverage to try to make more money for itself. It is the only full reserve bank in existence, other than possibly paypal, which does not offer investment opportunities like Prosper.

I love Prosper, because it rates the borrower’s credit, tells me how extended or over-extended the borrower is, tells me what they need the money for, and lets me ask questions of the borrower. I’ve been fairly lucky with my Prosper loans, making over 10% regularly with no significant losses yet.

I pick my Prosper loans to lend based on a number of concerns I have in the market as a whole. Here is how I pick who to lend to:

1. I generally aim for people with a credit rating of “B”, rather than A (better) or AA (best).  The reason I pick people with a lower credit rating is that I get a better interest rate return, albeit for a higher risk.
2. Since I pick people with not-prime credit, I also look at their DTI, or debt-to-income ratio.  I try to pick people below 20%, with 15-18% as my primary goal.  Even if they historically had some credit problems, they’re not over-extended.  People with previous credit problems will usually explain why they’re a higher risk.  If their reasoning is acceptable, they’re a lower risk to me than someone with AA credit who has a higher-than-20% DTI.
3. I look for borrowers who need the money for specific reasons that should not rely on market troubles.  I will never loan money for property investments or maintenance.  I will never loan money for businesses that blossomed during the housing boom (coffee shops, restaurants, marketing groups, etc).  My favorite area to lend to are people who need to purchase equipment for work or for their businesses.  As a small business owner myself, I know how hard it is to buy something you desperately need, such as a new printer or vehicle or other acquisition.
4. I look for borrowers who have a good grasp of the English language.  People who misspell or can’t use proper grammar are out, instantly.

One nice thing about Prosper is that you can be as prejudiced as you want.  If you don’t like a certain industry, don’t lend there.  If you don’t like what a person says or how you feel they live their lives, you don’t have to lend there, either.  Because Prosper also allows you to choose your own collections firm, you have a second back-stop to trying to prevent permanent default.  Since you can lend as little as $50, you can vary your total loan money to many different people, hoping to reduce default rates.  I tend to loan a lot to one person rather than a little to many, especially if I see an opportunity that others ignore due to a lower credit rating or an odd request.

If you’re looking for a reasonable place to invest, I highly recommend Prosper.  They’re as close to a full reserve bank as possible, and you have unlimited options to manage your risk/reward ratio.

Prosper offers me a $50 bonus for signing up friends and collegues.  If you’re interested in signing up, please e-mail me today and I will send you a referral link.  Proceeds I receive from referrals go to pay for the Global Unanimocracy Network.

Comments: none

Date: June 23rd, 2008, Filed under Accountability and Responsibility, Be a Man, Entrepreneurship

Los Angeles, CA
By A.B. Dada
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I hate the idea of teamwork. In high school, a teacher used to tell me “There is no I in team,” to which I replied “That’s why I’m not part of the team.” Teamwork is an illusion created by those who want to control the team, or restrict individuals from progressing for their own selfish benefit.

I consult with businesses with a focus on increasing their efficiency. I have one person I answer to: the boss. I care little about middle managers or lower end employees, except for those who come to me with the only important question: “How can I do better for myself?”

Successful “teams” are not successful because they work together. They’re successful because the individuals within the team are out to better their own lives. A smart go-getter will understand that they do have to work well with others, but only if those others are also self-involved.

Look at professional baseball: it isn’t about team play, but about each individual taking advantage of their skills and trying to be the best man on the field. If an outfielder has to make a play at home plate, the focus is on him, not on the team. He wants to shine with a perfect throw that will be played over and over on the evening news. He wants his statistics at the plate to shine, too, so that youngsters can trade his card in delight at his high batting average or pitching stats. If he fails at that long throw to home, it’ll be on him. If he succeeds, it’ll be on him. It isn’t the teamwork that matters, it is making each play with perfection.

Do you remember even playing a little tag football and not getting a pass when you were wide open? Maybe you were ignored because you were just a team player. If you were the one who had the motivation to always make the touch down or at least the next first down, regardless of how many people were defending you, you’d get the pass. You’d then go to make the play. That’s how teams succeed: selfish individuals want to be in the spotlight. Together, when many selfish individuals triumph over conflict, some people will say “What a great team.” I don’t. I’ll say “What a great bunch of individuals.” Each one wants to be the one in the spotlight. What makes a great “team”? Competition from within, not competition against the enemy.

If you have a 9-5 job in a cubicle, you’re not really part of a team. You have a job, responsibilities, and if you focus on doing the best job you can, you’ll be in the spotlight. If you see someone ahead of you in rank and salary, it is in your best interest to find out what they lack that you can fulfill, and work to implement those tasks so your bosses and managers can see that you’re not a team player, you’re a profit-maker. The company that talks about teams is the company that would rather keep you in your place. It isn’t the top boss that cares, he needs bottom lines that make sense for him. His money is at stake, he wants to see a return that is better than sticking it in a savings account or a CD. Be selfish. Take risks. Find the reward. Replace the guy above you. Take his salary and send him to the bullpen. He’s not there to make your life better. Neither is the guy in the cubicle next to you.

Those who shine in business, in sports, in relationships and in life overall are those who take selfish calculated risks to make their lives better. They save their money rather than spend it extravagently. They stay out of debt. They don’t listen to what the Joneses are doing, or care about who is going to win the next fake singing or cooking reality show. They look at choices they can make, and try to find new choices that will make their lives better. Are you going to work tomorrow only to talk about which character is cheating on which character on Sunday night TV, or are you going to work thinking of how you can shine in front of your boss or his boss, so one day you can climb the ladder?

Are you sitting in your car or on the train or bus each morning, wondering why life is going nowhere, or are you thinking about what talents you have that you can sell to another employer who could pay you more to do more than you do now?

You’re not part of a team. You’re your own person, and no one will be looking out for you except for yourself. Jump today on the “There’s no team for me” bandwagon, and join me in finding ways to make your own life better today. Work hard. Save hard. Bring the spotlight to you. Do better for yourself.

Comments: 2

Date: December 10th, 2007, Filed under Entrepreneurship

Someone at a church I work for asked me this weekend “How can I make money fast?” It’s the third most common question I’ve heard this year. My fast respond is: “Learn how to spend it slow” but that doesn’t help people who are in dire straights. As far as I can tell, there is no way to help yourself when you get to the point that you become desperate for money. My recommendation for most is “Get a second job” right after “Stop spending.” Yet I hear so many ridiculous schemes for making fast money, that I realized I had to write something quick — and email the link to everyone who has asked me the magic question.

Before we can even look into opportunities in making money, fast or otherwise, we need to look at the four primary ways one can make money. I say primary as there are other ways to receive an income, such as gifts and inheritances. Those are rare enough that they’re more a bonus than something you can aggressively find a way to receive.

Read this entire article at the entrepreneurship site.

Comments: none