Debt Free

The problem is that, in many businesses the organization gets caught up in the existing way of doing things, and that status quo ends up robbing them of the success they should be enjoying. Weather that means they’re just not generating the profit they should be, or the business is foundering on the edge of insolvency, the overlooked profit capability in your business is often easy to tap into with just a few minor changes.

Here are some examples-

Make Money Example 1-
Apple growers in Washington State are turning former waste products into revenue generating crops with minor marketing changes. In the past, premium apples with minor flaws, such as cracks, were sold as scrap for juice or applesauce. For such uses, apples fetch less than 10 cents a pound. Not a huge help for a grower that must support a large and complex operation.

Now, however, some have found a way to increase the revenue generated by these former waste products by 1,000%! The secret is in changing the marketing strategy so that the apples can be sold not as waste, but as pre-sliced, packaged fruit. When pre-sliced the flaws are unnoticeable, and now the growers are getting around $1.00 a pound instead of a dime. It could be the difference between winning and losing in the apple business.

Make Money Example 2-
A consultant friend of mine once turned around a business that was losing about $1 million per month in one of its divisions. Needless to say, the burn rate was putting a serious crimp in the business’s operation. By investigating new markets for the company’s products, he was able to recommend minor changes in the company’s product mix that would allow them to utilize their existing raw materials, plant, and equipment to produce a premium, specialty product mix that turned out to be a big hit with the company’s customers. They had a higher price and provided greater incremental revenue for the company.

The combination of higher prices and greater margin created a huge turnaround for the company, which went from a division losing a million dollars a month, to one that was highly profitable. To make a good thing even better, the new product mix opened up additional markets for the company. The diversification in its customer base helped it ride out subsequent economic problems that adversely affected the industry.

Make Money Example 3-
Specialize in profitable products, leave the others behind. Financial consultant Stephen J. Kerr, of Business Marketing Consulting, counsels publishers he works with to shift their marketing emphasis to specialty products and shy away from mass market outlets. In this way he gets his clients to more effectively seek out targeted prospects for their books and other publications, while not wasting marketing resources on less productive efforts. By revising marketing strategies in this way, he sees publishers go from money losers to earning up to 10 - 30%.

So, the bottom line is you can turn a money losing part of your business into money maker. You just have to be a bit creative with your marketing.

Posted by debtblog at 12:18 AM | Permalink | Comments (0) | TrackBacks (0)

This dichotomy was very interesting to me. These 2 individuals were obviously at very different places in their financial lives. It brilliantly illustrates the importance of proper financial health. The young man was, from outward appearance, not much different economically from the woman. In fact, the woman was more nicely dressed than the man was, yet was seemingly a gnat’s whisker away from financial disaster, living paycheck to paycheck. The other person however, was exploring the best way to deposit fairly large amounts of money on a regular basis. One would expect he was doing something differently financially than the woman who was living paycheck.

From what I was able to discern (not that I was listening, but when you hear “regular $25,000 deposits” from someone that age, it makes your ears perk up), he ran his own small business. That brings up the statistic that 80% of American millionaires started their own business. Actually, Georgia State University marketing professor Thomas Stanley, who has been studying the affluent in America for about 30 years, says his research indicates you are an astonishing 10 times more likely to become a millionaire if you own your own business.

According to a Wall Street Journal report, small business owners are the largest class of millionaires; larger than investors, executives and those who got lucky and inherited their money. The report also had this little tidbit if information. It wasn’t the running and profiting from the operation of their small business that made most of these business owners wealthy, although the man at the bank may achieve that status. Actually, most of the small business owners made their fortunes when they sold all or part of their businesses. Now that typically requires years of very hard work in order to make the business worth enough that you’ll get that kind of profit from it’s sale.

Many of these businesses are being bought by retiring baby boomers who are cashing in their retirement plans to be their own bosses, after toiling for years under the thumb of corporate America. Some of their hard earned cash also goes into other venues. According to a CNN/USA Today poll last year, in addition to their small business holdings, 46% of American millionaires also held investment real estate, even though that was not their primary source of wealth.

So get out there and look at the numerous small business opportunities to be found. Maybe one day in the not too distant future, you’ll be debt free and asking your bank teller how to make regular $25,000 deposits.

Posted by debtblog at 03:15 PM | Permalink | Comments (0) | TrackBacks (0)

The following was sent to me in an email last week. I have no idea where it originally came from.

Makes a person want to cry.

  A Japanese company ( Toyota ) and an American company (General Motors)
decided to have a canoe race on the Missouri River . Both teams practiced
long and hard to reach their peak performance before the race.

On the big day, the Japanese won by a mile.

The Americans, very discouraged and depressed, decided to investigate the
reason for the crushing defeat. A management team made up of senior
management was formed to investigate and recommend appropriate action.
Their conclusion was the Japanese had 8 people rowing and 1 person
steering, while the American team had 8 people steering and 1 person
rowing.

Feeling a deeper study was in order, American management hired a
consulting company and paid them a large amount of money for a second
opinion. They advised, of course, that too many people were steering the
boat, while not enough people were rowing.

  Not sure of how to utilize that information, but wanting to prevent
another loss to the Japanese, the rowing team's management structure was
totally reorganized to 4 steering supervisors, 3 area steering
superintendents and 1 assistant superintendent steering manager.  They
also implemented a new performance system that would give the 1 person
rowing the boat greater incentive to work harder. It was called the
'Rowing Team Quality First Program,' with meetings, dinners and free pens
for the rower. There was discussion of getting new paddles, canoes and
other equipment, extra vacation days for practices and bonuses.

The next year the Japanese won by two miles.

Humiliated, the American management laid off the rower for poor
performance, halted development of a new canoe, sold the paddles, and
canceled all capital investments for new equipment. The money saved was
distributed to the Senior Executives as bonuses and the next year's
racing team was out-sourced to India ..

Sadly, the End.

Sad, but oh so true! Here's something else to think about: Ford has spent
the last thirty years moving all its factories out of the US, claiming
they can't make money paying American wages. Toyota has spent the last
thirty years building more than a dozen plants inside the US

The last quarter's results:

Toyota makes 4 billion in profits while Ford racked up 9 billion in
losses. Ford folks are still scratching their heads.

IF THIS WASN'T SO SAD IT MIGHT BE FUNNY!

Note: For much of that 30 years time, a majority of the blue oval's products left something to be desired. This is possibly due to the cancellation of the canoe deveopment programs (and the billions in health care costs). 

Posted by debtblog at 06:18 AM | Permalink | Comments (0) | TrackBacks (0)

The age in which we live has been equated by some to the gold rush days of the 1840's and 1890's. Never before has it been possible to so easily find and take advantage of a home business opportunity. Thanks to the Internet, such opportunities are strewn about like so many grains of sand on a beach. The different types of home business opportunity are almost as varied as the number of them out there, waiting for you to jump in and pan for your fortune. One insurance industry survey in 2002 found there are approximately 12 million home businesses in the U.S., so you'll have plenty of company.

Like the gold rush days of yore however, many of the would be entrepreneurs grabbing at the golden ring of home business are destined to come away with little or nothing. There are a myriad of reasons for this. Some of the most common reasons for home business failure are these:

1 - Lack of focus – Too many home business entrepreneurs get awed by the multitude of different opportunities available to them. They try to get involved in too many different ones, never focusing on one specific business. This occurs more often in home business than a more traditional bricks and mortar business. This is often attributable to cause #2 of home business failure, below.

2 - No business plan – Your business plan is a necessity for a multitude of reasons. It helps you to plan for eventualities and have a strategy for dealing with them so you can be proactive, rather than the more common scenario of reacting to situations. At the startup phase, a solid business plan will help you cover all the details that make a home business (or any other business for that matter) successful. It's easy to overlook something and a business plan will help keep that from occurring. If you're seeking outside financing, the financiers will want to see a solid business plan to help gage your commitment and chances of success. Depending upon their level of involvement, they can offer suggestions based upon your plan that may improve aspects of your home business.

You'll need to address all aspects of your business in your plan; you must choose a legal business structure (either a sole proprietor, partnership, S-corp, C-corp), decide how you'll be making money, lay out a financial and marketing plan, and define the businesses key personnel, their experience and their positions in your home business. It's okay if that's only you, your spouse and your uncle Earl right now.

3 - Treating your home business as a hobby, rather than a real business. This leads to a failure to apply solid business principles and methods. You need a real accounting system for example, not a shoe box in which to store your cash and scraps of paper to use as a journal.

4 – Ineffective marketing strategy and/or implementation. Many who try a home business opportunity have no real business or marketing experience, have never studied marketing and don't really have an idea how to market their product and/or services. This is why some entrepreneurs choose to investigate one of the many franchise opportunities. The advantage here is that the marketing plan is well laid out and has been followed successfully before. In addition, most franchisers offer marketing assistance. The disadvantage to franchise opportunities are high start up costs and relative lack of freedom. Some home business entrepreneurs are seeking freedom after careers in a large, corporate environment. With a franchise, you'll be required to adhere closely to a set business plan. That's both a blessing and a curse for those individuals.

5 – Never really getting started. Too many entrepreneurs fail because they never seize the initiative. They piddle around, and before they know it, they've condemned themselves to failure in their home business.

6 – The most common reason for failing in a home business opportunity – Lack of persistence! You've got to stick with it, often in the face of daunting adversity. Many successful entrepreneurs have failed multiple times, on multiple levels, before experiencing their first taste of business success. Expect that you may experience some bumps along your road to success as well. The key is to never quit and to make the adjustments to your business that are necessary to ensure your success. Countless successful business owners can attest to that.

If you're trying to get debt free and stay that way, a home business opportunity may provide the vehicle in which you can travel. In many cases however, you'll accumulate substantial debt, especially during the start up phase. Different home businesses will require different levels of financial commitment. The level to which you are willing or able to make a financial commitment will be one of the determining factors that will help you decide the right home business opportunity to pursue. Some on-line business for example can be started with little more than a credit card and a hundred dollar limit, while another home business opportunity, such as a franchise, may require hundreds of thousands of dollars in start up capital.

Posted by debtblog at 01:32 PM | Permalink | Comments (0) | TrackBacks (0)

1 - Although it's possible for you to end your journey through self employment / home-based business debt free and happy, there are countless pitfalls along the way that make the journey somewhat harrowing. A little personal risk aversion assessment is in order for you and any members of your family directly connected to your little (hopefully one day not so little?) venture. With that in mind, here are some free resources you can turn to for advice to make your journey to debt freedom a little easier if you've chosen to follow the home or small business route.

There is a group of old soldiers, well, retired executives actually, that got tired of puttering around the house or playing golf everyday. They want to have others benefit from their considerable expertise and benefit the economy by helping out small business owners at the same time. They are the Service Corps Of Retired Executives (SCORE). They have offices in many U.S. cities and are a great resource you can call on for business guidance. It's like having a high priced consulting firm at your disposal, except they aren't high priced. They actually don't charge for their services.
They can be reached here: http://www.score.org/

2 – A wealth of information can be found pertaining to many facets of business at the Free Management Library. It's a large repository of business related information with sections on many subjects including financing, interviewing, business planning, resource allocation, publicity and media relations, advertising and promotions, and much more for both for-profit and non-profit businesses. It can be found here: http://www.managementhelp.org/

3 – The Achilles heel of many small and single person businesses is business planning. Although many experts continue to insist on the importance of proper business planning, and everyone with a business school background had it pounded into their heads in college, the fact is that many business owners get started with insufficient planning. In many cases the if business plan exists at all, it's only in the owner's (overwhelmed) mind. BusinessPlans.org is a resource where you can get sample plans you can adapt to your specific business needs, in addition to countless other business planning resources. Find them here:
http://www.businessplans.org/index.asp

4 – One other resource that can provide you with valuable information to help start, grow, or maintain your small business is your state or local Small Business Development Center. They and many, many other business resources can be reached through http://www.buzgate.org/ . Buzgate has business resources relating to planning, marketing, consulting and much more. They do sell things on the site, but the amount of free information is really substantial. You can search for resources by state.

Hopefully these resources can give you an insight on avoiding the pitfalls, of which there are many, encountered by many small business owners.

Posted by debtblog at 02:57 PM | Permalink | Comments (0) | TrackBacks (0)

Once in a lifetime they not only find a way to mitigate the risks, but turn the product development itself into a profitable business, one that generates millions of dollars, and, in so doing, generates a groundswell of consumer demand for the product being developed. The demand generated is so great that when the product is released, it generates huge sales figures right out of the gate. When that occurs, you have the phenomenon that is American Idol.

It's just plain brilliant marketing. Why pay armies of A&R guys to hang out in dank clubs throughout the nation, hoping to discover the next big thing, when you can create it? Not only that, but create it in such a way that will be immensely profitable and guarantee tremendous popularity from the get go. It's normally a tremendous risk for the major manufacturer (record label) to develop a new product (artist). Typically a new artist must sell about 500,000 copies of their debut album before they turn a profit for the label (This is for the major labels. Small, indy labels can do it with fewer sales). Sure, some will sell without requiring the mountains of marketing and promotion dollars, or endless hours of expensive studio time that normally precede such success in the marketplace, but those successes are few and far between.

Where American Idol really exhibits it's genius is not only the way Simon Fuller has managed to eliminate the inherent risk from the new product development cycle, but to do it in such a way that creates tremendous demand for the product. In addition, the show has a myriad of revenue streams that are actually created by this very process. Pure genius. Take the voting system, for instance. Each night, the viewing public (future customers) call in to choose the winner, or rather determine the loser of the evening. They actually pay $.99 for the privilege of doing so. I don't know the exact revenue sharing arrangement that Idol's producers have with the telephone companies, but at 25 to 35 million votes per show, their take amounts to a pile of cash. See, have your future customers choose what product you should concentrate on in the development cycle, and make them pay you to do so! Amazing.

Due to the show's immense popularity, they are able to charge top dollar to advertisers as well. According to Advertising Age, 30 seconds on American Idol costs advertisers about $600,000 so far this season This is about 50% more than the number 2 in cost per 30 second spot, ABC's Desperate Housewives. There are quite a few of those slots available on a 1 or 2 hour show. Ca-Ching! There's another revenue stream for Fuller and company. Then you have the sponsorships and product placement revenue. If you've ever seen Idol, you've no doubt noticed that the judges have Coca-Cola cups prominently featured on the tables in front of them. No accident, that. Notice too how the label is always turned so as to be visible to the cameras. Who knows what beverage is actually in those cups, but at least the label generates a solid hour of exposure for Coca-Cola.

To top it off, the show does create good product that sells well, generating even more money for the show's producers. Reportedly the contestants contracts guarantee that even non-winners will be contractually bound to the Fuller & company for an unspecified period. Previous show contestants have turned out 42 singles that have spent time on Billboard Magazine's Top 100 singles chart, with 6 reaching the top 10. Six of the contestants are also multi-platinum album sellers, with season 1 winner Kelly Clarkson selling, to date, about 8.5 million albums. Two of the contestants, season 1 winner Clarkson and season 4 winner Carrie Underwood, have won industry leading awards, the Grammy and CMA, with Underwood winning both awards. The show airs in about 30 countries, ensuring that the demand for the show generated stars will be truly international.

In another bit of marketing savy that generates ever more money for the producer's coffers, and bolsters contestants visibility, the top 12 contestants embark on nationwide tour to typically sold out arenas. Backed by major sponsors, the tour generates additional millions of dollars, both directly and through the additional record sales produced by the performances. This is to say nothing of the dollars created by that traditional concert revenue stream, product merchandising. Sales of promotional items bring in more cash, and the marketing machine rolls on.

Pure marketing genius!

Posted by debtblog at 02:36 PM | Permalink | Comments (0) | TrackBacks (0)

Actually, a strong argument could be made that Ford could abandon its core North American and European markets while focusing on the emerging South American, Indian and Chinese markets. Their sales in North America were down almost 20% last year alone, even though they introduced an award winning pickup, the new F-150, and the hot selling new Mustang just 2 years ago. To be fair, about half of the loss comes from costs associated with the huge restructuring plan the manufacturer has undertaken in order to right the ship.

The F-150 and Mustang notwithstanding, Ford just hasn’t offered the buying public vehicles they could get excited about. They’ve failed to repeat the sales success of the dearly departed Taurus in the bread and butter family sedan category. This has cost them plenty. The new Fusion, released in the tail end of 2005 as an ’06 model has sold well and has been profitable for Ford, even more profitable on a per unit basis than the Taurus. It’s possible that the Fusion could return Ford to respectability, if not leadership, in the segment. In this product centric business, failure to deliver what the driving consumer is after will all but ensure defeat. Just ask Oldsmobile, AMC and Rambler.

So, what about China? The good news for beleaguered Ford is that sales leapt by an astounding 89% in the Chinese market in 2006. Wow! The bad news is that represents sales of less than 160,000 units, about the number of cars Ford sells in North America in a week. As the Chinese public discovers the joys of driving, and Chinese economic prosperity increases, Ford’s Chinese sales can only increase with it. If sales continue at the present rate, however unlikely that may be, Ford will eclipse its US sales in a decade. Chinese vehicle sales are projected to top 8 million units this year. For Ford’s sake, as many of those as possible should wear a blue oval.

Should Ford just turn its back on the entire North American car market? Even though they’re pouring tons of capital into retooling and building new plants, maybe they should stop pouring good money after bad. They could become a design and engineering company and leave the building to the Chinese. Ford’s building plants in China anyway. Sure, the American economy would take a huge hit if all the car-related manufacturing and supplier jobs went away, but hey, if Ford goes under, they’ll be gone anyway. At least this way Ford can keep paying it pensioners. It’s possible Ford could use some of the same suppliers they do now, so we may be able to retain many jobs at those firms.

If you, or someone you love, works at the Big, Blue Oval, you better hope ex-Boeing chief Mulally can effect a turnaround at Ford, much as he did at the Lazy B. His execution of the “Way Forward” plan is absolutely critical to Ford’s future viability. The chances of anyone reading this working at Ford is dwindling, as Ford is slashing jobs in effort to regain some semblance of profitability. Actually, working at Ford may be similar to working in the cyclical aircraft industry, where huge layoffs are common place. At least Mulally is well versed at making huge cuts.

One way Ford could keep production and sales operations in North America would be if they stick to selling trucks here, a market they’ve proven to know well. That’s possible, but that wouldn’t be a walk in the park either. The American auto makers don’t have this all to themselves anymore. Their nemesis, Toyota, has gotten into the market with the Tundra, a legit contender in the full size pickup market. It grows even bigger for 2007, promising to give Ford and GM execs even more sleepless nights. It doesn’t stop there. Nissan is at the party as well, with their Titan. Another legit contender for the full sized pickup crown, the Titan sports a big V8 with over 300hp, just like its American counterparts.

The hometown boys had better look out. There’s gonna be a brawl. At least Ford, GM, and DC haven’t been resting on their laurels; something they got caught doing in the car side of the business about 30 years ago. GM just released a new, vastly improved Silverado pickup and full sized SUV line. Weather or not the newly lowered gas prices will be enough to reignite the “I don’t really need it, but I’m buying a full sized truck anyway” market is open to debate. Let’s hope for the American auto makers sakes the Chinese love trucks as much as we do.

Posted by debtblog at 12:51 AM | Permalink | Comments (0) | TrackBacks (0)

Well, there are a few possibilities. Many of those who are living the so called “good life” are incredibly hard workers. You’ll notice it’s 7:30 at night, you’re heading home from the gym, and they’ve still got their Armani on. That’s because they’re just finishing another 12 hour day. Some do have spectacularly high incomes. Millions of them own their own successful businesses. However, many of those people that look outwardly successful are really just leveraged to the hilt. All the accoutrements of success they display so proudly for all to see are really just a house of cards, secured by massive debt. While these people look to be successful, in reality they are leasing the good life. Imagine the pressure they have to live with every day. It can be pretty hard to make such a big nut every month.

Here’s a sample of what it can be like for one of those “House of Cards Millionaires” -You’ve got $679 for the BMW lease and another $599 for the Lexus. Insurance for such nice rides isn’t cheap either. Add another $300 a month for the insurance. That killer house on the golf course that’s the envy of your friends and business associates is really a fine pad, but although you’ve managed to build a nice bit of equity, you still need to cover the $5,200 mortgage payment every month. Add in other necessities like electricity, gas, cable TV, insurance and Internet access, and that stellar monument to suburban architecture sucks over 6 bills a month out of your wallet.

The country club membership is de rigeur if you’re living on the back nine anyway, so add another $750 to the monthly total. If you’ve got your own business, maybe you can find a way to claim it’s a business expense, but you’d better talk to someone about business out there once in a while. Putting away a little bit for retirement and the kid’s college fund will require still more; say another $1,000 – $1,500 a month. Getting your hair done, buying food, health or tennis club memberships, cell phones, and recreation can easily add an additional $2,000 to the monthly bills. Let’s see, that’s about $12,000 a month in cash going out, before taxes, each and every month. Ouch! I hope you both work. You’ll have to gross about $18,000 a month, depending upon your tax bracket, to pay for all this stuff. You’d better not have any disruptions in your income, or look out!

Now you’re starting to see why even so many of those who you may think are living the good life are, in reality, racking up massive credit card balances like so many other folks. They’re committing one of the cardinal sins of personal finance; living beyond their means.

There is a chance, however, that they really are a successful entrepreneur. Their business paid for the new Escalade (nothing wrong here, but please, leave the dubdubs to someone else) because it has a gross weight over 6,500 lbs. Ditto the portion of the mortgage payment earmarked for the home office and “conference room”(Home Theater). Both the husband a wife are employees of the business, which pays them a handsome salary every month. To keep corporate income, and thus taxes, low they also receive a healthy bonus every quarter. Now, that’s probably more of what you had in mind when all those thoughts of the good life went coursing through your brain.

Why are some entrepreneurs successful, while others are doomed to failure, or worse, eternal near success? There are a myriad of reasons. Some businesses are founded with a great premise, others aren’t. The basic idea has to have merit, and the marketing plan must be sound, or even the most astute business person will have trouble making the business successful. There’s no denying however, that you can give two different people the same product or service, the same market, and the same financing, and they can experiencing vastly different levels of success. Why?

According to a study by the University of Alabama, successful entrepreneurs share some important characteristics. Some of these are innate, but others can be learned, and you can always work to improve any area where you need a little boost. Here the important characteristics they found that had the most impact on success in an entrepreneur:

• Drive – Successful individuals are highly self motivated.
• Follow Through – Do what you say, and make things happen.
• Staying positive – Nothing kills success like a negative attitude.
• Objectivity – Successful business owners can realistically assess risks
• They respect money – Frivolity has no place when trying to be successful
• Being proactive – Successful entrepreneurs anticipate both problems and opportunities and act accordingly. Those that only react are doomed to mediocrity.
• Communication – One of the hallmarks of success in all areas of life is the ability to effectively communicate ideas, weather in writing, electronically, graphically, or verbally. Never stop in your quest to improve the communications skills of yourself and others in your organization.
• Technical knowledge – The successful individuals were technically sound, both in the business and operational aspects of their business.

In addition, you can’t be afraid to take risks. There is a definite relationship between risk and reward in business. They key is in knowing which risks to take and how to mitigate them. Furthermore, as I noted already, many successful businesspeople are unafraid of hard work. Many work extremely hard and are rewarded handsomely for it. However, it’s even more important to work smart. Effort, correctly applied, will always be more successful. It's much better than being eternally in debt.

NOTE: This article was one of the five chosen for the Carnival of Career Intensity, Jan 20th edition. Thanks Dave 

Posted by debtblog at 03:17 PM | Permalink | Comments (0) | TrackBacks (0)

Obviously the two products aren’t directly comparable. Who here thinks your camera phone will be able to rival the image quality of the Canon Digital Rebel you’re clickin’ off shots of your drunk cousin Ned at the company Christmas (excuse me, Holiday)party. A camera phone will always be a second rate substitute for a true digital camera, if for no other reason than a real digital camera will sport much better optics. The laws of physics, you know.

In much the same way, you’ll always be able to have room for more storage and better sound quality with a stand alone MP3 player, but here the two products could get much closer. Ultimate sound quality isn’t the most important thing with these players anyway. As long as it’s good enough when you jack it into the stereo in your new Jetta, there’ll probably be no complaints. Here, effective marketing could make things much closer. As compression algorithms and memory improves, you’ll be able to stuff most of your music collection on your phone.

According to Telephia Customer Value Metrics, at the end of 2005, 18-25 year old males, the leading cell phone user group, placed an average of 340 calls, and spent 1,304 minute per month with that Moto stuck to their head. This group of consumers is overly concerned with status, one of the reasons the iPOD has done so well. Not only did it break barriers on the ergonomic and industrial design front, it was deemed the thing to have. The right MP3 cell phone, backed by a great marketing campaign, could make things much closer. After all most people have cell phones with them almost 24/7 anyway.

Last month Motorola introduced Bluetooth music streaming, so you can stream music from your phone directly to your Bluetooth compatible car stereo. That kind of innovation, and phones such as the supremely popular Moto Razr (Motorola has sold over 51 million Motorazrs worldwide), has contributed to a revival at Motorola. Can they take on Apple, a company founded on innovation? Time will tell, but you can bet someone over there is contemplating the prospect. A better question may be, will they have to?

A few weeks ago, Motorola announced an agreement to acquire Good Technology, a producer of enterprise grade mobile computing applications, aimed at mobile data, messaging and wireless security. The acquisition will help them position the phone/MP3 player/PDA/heart monitor/microwave oven/PC/video player to further take over your life. Yesterday, Motorola, was voted as the second most influential Fortune 500 company in China by Chinese business publication Southern Weekend. Motorola employs over 10,000 people in China. If they can make the emerging Chinese market believe in the combined power of the MP3 player and cell phone, it may not matter what we think in the U.S.

Posted by debtblog at 04:33 PM | Permalink | Comments (0) | TrackBacks (0)

First, pause to take this in for just a minute. Wal-Mart is positively huge. It's annual sales are more than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined! In 2003, Wal-Mart sold more worldwide than IBM, HP, Dell, Microsoft, and Cisco Systems combined, by over $2 billion! Until this year's high fuel prices boosted the revenues of Exxon-Mobil, Wal-Mart had more revenues than any other company in the world, and had for three consecutive years. Almost 15% of our trade deficit with China can be attributed directly to Wal-Mart's purchases of Chinese made products. As a contrast, in 1995, Wal-Mart imported only about 6% of its merchandise from overseas. Wal-Mart, by itself, comprises about 3% of the U.S. GDP. You can bet they have the power to affect our economy!

Wal-Mart does have equal hiring practices, despite what you may have read. It hires both U.S. citizens and illegal immigrants. In 2003, the U.S. (then) INS raided 61 Wal-Mart stores in 21 states. They ended up arresting 250 illegal immigrant Wal-Mart employees, although, of the around 1 million people employed by the retail giant at the time, 250 is a very tiny percentage.

Number of Wal-Marts in the U.S.
2006 - 1,123 Wal-Mart stores, 2,142 Supercenters, 570 Sam’s Clubs, 108 Wal-Mart Neighborhood Markets

1995 - 1,995 Wal-Mart stores, 239 Supercenters, 433 Sam's Clubs, 0 Wal-Mart Neighborhood Markets

1985 – 859 Wal-Mart Stores, 0 Supercenters, 11 Sam's Clubs, 0 Wal-Mart Neighborhood Markets

Number of U.S. Wal-Mart Employees
2005 – 1.1 million

1995 – 600,000

1985 – 104,000

U.S. trade deficit with China (U.S. Dep't. of Commerce) -
All dollar figures in MILLIONS!
2005 $ -201,544.8

1995 $ -33,789.5

1985 $ 6.0

U.S. per Capita Personal Income (U.S. Dep't. of Commerce)-
2005 - $34,495

1995 - $23,076

1985 - $14,427

It can be convincingly argued that Wal-Mart has a significant effect on U.S. economic statistics as a whole. There is a direct correlation between the size of Wal-Mart and both the Chinese trade deficit and U.S. per capita income. It's analogous to how the mass of the land displacement that caused the 2004 tsunami was so massive, and in the direction of the earth's rotation, that it actually caused that rotation to slow, lengthening the earth's day.

Now, for the other side of the coin. Wal-Mart has a probably deserved reputation for cutthroat business and employment practices. No other retailer is resisted so fiercely by local citizens and businesses when they attempt to enter a new geographic market. But, for all the hubbub generated by the Butcher of Bentonville, no one seems to realize that, like many other addictions, if you live by them, you'll die by them.

People don't have to shop at Wal-Mart, yet so many do. If the American consumer didn't stampede through the doors to the tune of over 100 million a year, Wal-Mart wouldn't show up in every neighborhood. People choose to shop there, Wal-Mart continues opening Supercenters. It's pretty simple math.

Manufacturers don't have to sell to Wal-Mart, yet they trip over themselves lining up at Wal-Mart buyer's offices in Bentonville, hoping to land the Wal-mart account. Once companies get a taste of massive, Wal-mart generated sales, they have a hard time turning their back on them, even if they should. They're like a heroin addict. Wal-Mart, consequently, is in a position to demand all sorts of concessions, because the firms have now come to depend on the Wal-Mart sales. They make much higher sales figures, yet, in some cases, actually make lower profit, because their profit per unit is so eroded. A classic case of both blessing and curse. They're now in a position to be led around like a dog on a string. Companies need to weigh that before they sign on. In some cases, however, businesses have actually improved because of the demands of the giant. Efficiencies and operations must be improved, or the Wal-Mart suppliers simply can not keep up. This, then, helps the rest of their business.

Thousands complain about the way Wal-Mart treats its employees. The simple solution is: Don't Work There! No one demands you work at Wal-Mart. There is no federal or state statute that compels every citizen to serve 2 years of service at Wal-Mart (just wait 25 years). Potential employees flock to the retailer, despite its reputation for unfair treatment, and the number of lawsuits and governmental actions against it. They don't have to. If people weren't so eager to draw a paycheck from them, they wouldn't be able to pay such low wages or flaunt employment law as they do. Wal-Mart averages 12 applications for every job opening. People have personal choice and responsibility, although too often these days they would rather not avail themselves of it and just complain.

Posted by debtblog at 02:03 PM | Permalink | Comments (0) | TrackBacks (0)

Microsoft made the announcement yesterday that it was formally releasing it's challenge to the ubiquitous Apple iPOD. The long awaited device, dubbed “Zune” by the Wizards of Redmond, is supposed to elbow its way onto store shelves next to the iPOD on November 14^th. The market reacted to this challenge to iPOD's complete market dominance by trembling with fear for the poor iPOD. Well, actually, what really happened is that Apple stock actually gained $.60 on the day, and MSFT had a $.04 hiccup the other way.

You'd think the formal announcement that the Big M was formally entering the lucrative, portable player / content download market would earn it's stock a bit of bump, and it's main competitor a decline, rather than the reverse. This probably would be the case, unless the market had already accounted for the emergence of Microsoft's little gem and, when Punxsutawney Phil's little melon actually did emerge from the hole, analysts were a mite underwhelmed.

What Zune will do for the boys from the Bicycle Capital of the Northwest, aside from the entry into the hardware market, is give Microsoft a nice, little recurring revenue stream, as they plan on offering monthly subscriptions for $14.99. They must feel they've given the consumer some added value over other services, such as Yahoo and Napster, who offer download and streaming services for less cash. Microsoft has indicated they will give the consumer access to millions of songs from the get go. However, as the Zune includes a 3” LCD screen, video probably isn't far behind. The other aspect the Zune brings to the table is wireless file sharing with other Zunes, as Microsoft tries to knit us together into a big, happy family using Zune needles.

Apple responded to this by announcing they'd start offering Disney content for download through iTunes. Will Microsoft's entry into the portable media player engender a fundamental change? Will the revolutionize it the way they did with the PC 20 years ago, and Apple has done with the iPOD? No, not a chance, but they are just looking to get their piece of a pie that was estimated by research firm Mindbranch to be well over $400 million in 2005 and will only get bigger.

Throughout the consumer electronics industry, many firms are offering docking stations that allow iPODs to be jacked into user's home stereo or whole house audio systems. No other player has this type of connectivity being offered by other consumer electronics manufacturers. If, and when the Zune achieves something close to this type of popularity, indicated by broad support of many other players in the CE industry, they will have made meaningful inroads into the market. Until then, no matter the cool innovations the Zune may have tucked away in it's plastic innards, it will be just another also ran in the “Look How Cool I Am” personal media player market.

Posted by debtblog at 01:55 PM | Permalink | Comments (0) | TrackBacks (0)

I've been away at a trade show. Sorry for the absence.

Yahoo reported yesterday that their Q3 financials would reflect Internet ad sales earnings toward the lower end of their estimates. Their stock took a bit of a tumble on the news. Google, with a policy of not issuing quarterly financials, was tight lipped on the issue. Yahoo's largest decrease came in the ad sectors so popular during tennis and golf on the tele; financial services and automobiles. What does this mean for the average person on the street just trying to put aside a little something for retirement? Should anyone care that one of the Internet giants suffered a bit of a hiccup in their quarterly revenue growth that's averaged well over 10% of late?

Maybe not. The revenue results are telling if you take a look at the sectors where Yahoo suffered the drop. Both Ford and GM have been hemorrhaging cash in recent quarters. To put this in perspective, in the same quarter of 2005, they showed almost a $1 billion profit in the same category. It was bound to catch up to them eventually. Ford experienced a $48m loss from continuing operations in Q2 of this year. With the recent appointment of the charismatic Alan Mulally as CEO, Ford has a proven cost cutter, so we may see such reductions continue for the near future, even though his experience has been more targeted on reducing the largest corporate expense, labor. One of the problems facing the big two automakers has been their reliance on high margin SUV sales to generate profits. As fuel prices rose during the summer consumers stayed away from the largest of the vehicles. As there seems to be an inverse relationship between the vehicle's fuel consumption and it's gross profit, this hurt the company's bottom line.

Ford has introduced several new cars in the last few years to try and bolster a sagging product line. They were even calling last year the “year of the car”. To a point they've been successful. The new Mustang, with its retro look that manufacturers have been embracing, has been a huge hit. Where Ford needs to hit a real home run, however, is in the mainstream family sedan sector. Ford experienced it's last huge success in the car sector with the Taurus 20 years ago. In the last decade, they've suffered tremendously under the siege of hot import competitors, such as the Camry and Accord, that many consumers felt offered a better value. They've done a decent job of turning around some of their foreign luxury brands, such as Jaguar (Jag and another Ford brand ,Volvo, just finished in the top five in a German quality survey released this week) but again, that's not where they need to shine.

To continue with the baseball analogies, Ford needs to reach the post season again, and it's going to need help from some stars to make that happen. For all its success, the Mustang is essentially a low volume product. If the new Fusion, Freestyle (essentially a station wagon, but the marketing types hate the “S” word), Focus and the Five Hundred can sell well, it will go a long way toward getting the automaker out of the doldrums.

Mulally, however, has a plan. It's known as the “Way Forward”. This plan was actually developed before his arrival, but he's just the one to kick it into high gear, which he has. First, he's targeted 14,000 salaried positions for termination, with some of those cuts announced at the end of last week, so if you're a Ford manager, look out! Next, he aims to significantly revamp 70% of the company's product line by 2008. Ford owned component division, Automotive Components Holdings LLC , will be entirely shut down or sold, also by the end of 2008. As a final bit of news, if you own Ford common or class B stock, too bad, so sad. They'll be suspending quarterly dividend payments for a while. This is all in an attempt to return the company to profitability by increasing sales and eliminating $5B in operating expenses.

Obviously, some of those expenses were going to Yahoo advertising. The Ford media buyers aren't being so friendly anymore. I wonder how effective this strategy will be. What Ford desperately needs is brand loyal, long term customers. The Internet user's demographic fits who they need their new customer's to be for long term success. If the “Way Forward”s new product introductions bring forth snappy, new, vehicles that excite the car buying public into action at the dealerships, Ford needs to make sure they become Ford customers for life. The younger they are, the longer their car buying life will be, and the more more buying cycles they'll participate in.

If enough of the big ad purchasers pull out, maybe Yahoo, and possibly Google, will sweeten the pot for the little guy. There's a thought.

Posted by debtblog at 02:20 PM | Permalink | Comments (1) | TrackBacks (0)

They plan to thank the UAW for all their Democratic votes throughout the years by ensuring the U.S. auto companies have to contend with yet another foreign competitor. To make it just that much more challenging, this time the competition's cars will be built in state-sponsored factories, with infinitesimal labor costs. Thanks for nothing, UAW. It seems that Soros' involvement with Moveon.org must not have occupied too much of his time, or satiated his desire to transform America into his personal vision of (our)hell.

The Chery Automobile Co. has already entered into an agreement with Malcom Bricklin's Visionary Vehicles to market their products in the U.S. While best known for importing the pint sized, P.O.S. Yugo in the 1980's, Bricklin also introduced Subaru to U.S. car buyers. As R.E.I. clad drivers in Washington State and Vermont can attest, his Subaru venture was considerably more successful. We can only hope that his Chery venture will meet with results more akin to the Yugo debacle. With the strength of the Chinese economy behind it, instead of a communist Yugoslavian regime from the '80's, I fear the Chery has a much better chance of success. We'll let the market decide. If it's good, and more importantly, cheap, people will buy, no matter it's origin. Just look at the products lining the shelves of your local Bentonville Boutique.

In a related story, GM has filed a lawsuit against Chery Automobile Co, claiming they pirated one of Daewoo's (a GM property) designs for production in China. I'm sure we should apply the “innocent until proven guilty” standard to this, but the Chinese are nothing, if not expert product counterfeiters. So, unless Chery is borrowing members of the O.J. defense team, the case should be a slam dunk.

Posted by debtblog at 01:33 PM | Permalink | Comments (0) | TrackBacks (1)