Archive for January 2014

Small Business Tip: Build Financial Margin For Your Business

If you want your business to thrive long term, you must establish financial margin. In fact, the lack of making saving a priority is one of the top reasons small business fail. Even profitable companies have failed because they failed to make savings a top priority.

Let me share a real-world practical example of “margin in action” – the Hoover Dam.


Before the establishment of the Hoover Dam (and the entire system of dams and reservoirs), the West was subject to wild water calamities. At times, the river would flash flood and destroy everything in its path. At other times, drought would cause water supplies to dry up. It was very difficult for the area to inhabit the area until the establishment of the dams.

I took the above picture of the Hoover Dam, and it really shows how your business’s financial margin account should work. The dam was built very strong so it could hold back the raging river. As the Spring melt begins, the dam captures excessive water and saves it up. This helps prevent rampant and destructive flooding. During times of great drought, it allows the area to continue to thrive because the water was stored up!

Chances are your business has cyclical revenue – “good” times and “less than good” times of sales throughout the year. Apply this “dam principle” and be sure to “store up” during the good times. This will position your business to continue prospering during times of drought.

This post is part of a Small Business Series here at the wildly popular Click HERE to read all of the posts in the series.

Teach Your Child To Be Generous

I’m not sure anything moves my heart like watching my children be generous. Whether it is sharing a toy with their friend or deciding to play the other person’s choice of game, it moves me!

But we must be honest with ourselves: Generosity is not natural behavior. Among our first words are the dreaded “No!” and “Mine!” along with precise timing to exact maximum frustration in the lives of our parents and siblings.

Here are three practical steps any parent can take to help their child develop the gift of generosity:

  1. Live it in your own life!  Children imitate their parent’s behavior – both desired and undesired! This is THE KEY to developing generosity within your children – be a living example of it. Invite your children to participate in your generous actions – giving to your church, volunteering to clean up your favorite hiking trail, attending a charity fashion show, and buying Christmas gifts for a family facing a tough financial situation are just a few examples. Let them be a part of it!
  2. Be grateful – and say so in front of your children.  Use words of a thankful nature. Choose not to say statements that start with, “When I get … I will be happy then.” Have a roof over your head? Be thankful you are not in the rain! Have heat in the winter and AC in the summer? Express out loud just how thankful you are for it! Does your car get you from point A to point B? Give the car a name and be thankful! Say, “Well, old Betsy is humming right along, and I’m grateful I don’t have to walk to town!”
  3. Make giving part of their money management system.  Every single time your child receives money (birthday, holiday, graduation, work, etc), require them to prepare a budget for every single dollar prior to touching any of it! Ensure the planning goes in this order: (A) Give, (B) Save, (C) Invest, (D) Spend – Let them choose (with your guidance, of course) who the money will be given to.

Gratefulness can take hold of your heart and literally transform your entire worldview. It’s one of the greatest gifts my parents could have ever instilled into me!

I’m blessed.

I’m so grateful.

NOTE: This post was written as part of the “Kids & Money” series here at the wildly popular! Click HERE to access all of the tips in this series.

Small Business Tip – Conduct SWOT Analysis

One key activity that is important for every small business owner to do on at least an annual basis is to conduct a SWOT Analysis.

  • Strengths
  • W Weaknesses
  • O Opportunities
  • T Threats

I’ve prepared a free basic SWOT ANALYSIS FORM for you to download and use.

Here are a few questions to help you start the process:


  • What are your strengths?
  • What makes your organization so successful?
  • What differentiates your business?
  • Why do customers use your product or service?
  • What allows you to beat the competition?
  • Do you have any personnel that really give you a competitive advantage?
  • What is your current financial status? Is it a strength?


  • What makes you lose sleep at night?
  • Where do you see opportunities for improvement?
  • What products or services do your customers ask for that you currently do not provide – and it causes them to go elsewhere?
  • Do you have any personnel that lack necessary training or skills?
  • What is your current financial status? Is it a weakness?


  • What products or services could you add?
  • Are there any similar businesses that you could acquire?
  • Could you serve new markets beyond your current service area – new geographic areas?


  • What move could the competition make that would jeopardize your business?
  • Do you have non-competes in place for “mission-critical” personnel?
  • What makes you lose sleep at night?
  • What economic conditions would greatly affect your ability to do business?

The overall goal of an annual SWOT analysis is to force “macro-level” thinking that challenges you to prepare for challenges and to identify and take advantage of opportunities.

Teach Children The Value of Work

In my book, Oxen, I share about two different ways to produce income:

  1. Type 1 is “Work = Get Paid” || Don’t Work = Don’t Get Paid”
  2. Type 2 is “Get paid whether or not you are working”

These two types of income production are also commonly referred to as “Aggressive” (Type 1) and “Passive” (Type 2) streams of income.

While we all aspire to receive as much income as possible from Type 2 sources, most people start their financial journey with only Type 1 income at their disposal. I recommend teaching children this principle as soon as possible so they do not get afflicted with “magic money tree syndrome” where they believe money just magically appears upon command.

You can do this even when a child is 3 or 4 years old by instituting a “chore chart.” This is a chart where you can assign specific tasks to the child, and they can receive payment upon successful completion. Basic tasks can be assigned at this age including emptying little trash cans into the big trash can, feeding the cat or puppy, and cleaning their room. All of these tasks will, of course, require parental “assistance” at this age, but you are incentivizing appropriate behavior and teaching the Type 1 Income principle!

Conduct a weekly review of the chart with the child. Have them “self-grade” their performance with each chore. Make payments accordingly.

Key Points To Consider:

  • Consider having a picture of their next desired purchase posted next to the chore chart to help keep the child focused on “why” they are doing this.
  • I really like chore charts that also include “fines” for obstinate and ridiculous behavior (like throwing themselves onto the floor in a tantrum or open and outrageous disobedience).

Key steps to implement your chore chart:

  1. Establish age appropriate chores
  2. Assign a monetary value for each chore
  3. Have the child “self-grade” performance each week
  4. Have the child “self-grade” regarding “fines” that should be administered
  5. Make payments accordingly

You will see your children learn how great it is to work and be productive and that good financial things can happen as a result!

Dave Ramsey’s Financial Peace, Jr. is a terrific resource that includes a dry-erase chore cart and even includes envelopes for giving, saving, and spending! We’ve used this to help our children learn these principles. HERE IS AN AMAZON.COM LINK to that resource.

NOTE: This post was written as part of the “Kids & Money” series here at the wildly popular! Click HERE to access all of the tips in this series.

How To Teach Investing To A 3 Year Old

We tend to make investing more difficult than it really is. The goal of any investment is to make money.

Here’s a simple way to teach investing to a 3 year old.

  1. Select their favorite cereal
  2. Ask them, “Do you like this cereal?”
  3. Desired Response: “Yes!”
  4. Then ask, “Do you think other little boys and girls like this cereal?”
  5. Desired Response: “Yes!”
  6. Do you think there will be MORE little boys and girls in the future or LESS?
  7. Desired Response: “MORE!”
  8. Then maybe we should own part of the company that makes this cereal. Would you like to own part of the cereal company?
  9. Desired Response: “Yes!”
  10. Purchase stock (using your favorite stock trading company) – Maybe General Mills (GIS) or Post Holdings (NYSE: POST)
  11. Better yet, purchase a mutual fund that owns cereal companies within it

I’ve done this with my daughter when she was 3. I’ve continued the conversation. As a teenager, she is an informed investor who I’m proud to say is becoming a financially confident leader.