Building a Recession Proof Business Might be Easier than you Think – Part One

how to build a recession proof businessHow Do You Build a Recession Proof Business?

Simple. Listen carefully!

Your financial destiny does not depend on what  happens outside of your decision making process. Sure there are external circumstances that play a factor in your strategy and certainly the timing of such, BUT … It’s all up to you really!

You are the deciding factor, you are the determining variable in the SUCCESS formula. Work on that, and mitigate against against everything else you don’t control.

You build a recession proof business based on needs and pains that your clients have. Then you make sure that you are the best damn solution for them!

In the meantime here are a few tips of what you can do from a hands on and paper assets basis to protect while at the same time continue to build your Legacy:

Fix as many expenses as possible. One of the great ways to combat inflation is to buy a home because you fix your monthly payment. When you sign up for a mortgage, you are agreeing to a fixed monthly payment for fifteen or thirty years , this is of course assuming a fixed rate mortgage. In the last couple of years financing has become a challenge because lets face it, banks are playing defense and protecting their TARP money. So cash is KING as the say!

Nevertheless, scooping up discounted properties nowadays is not difficult to do if look good on paper. Real Estate should always be part of a strategic portfolio approach.

Limit both, fixed and variable expenses as much as possible. Credit card companies usually step up their advertising and deals to get you in debt even more so during times of recession. Don’t open up new credit cards accounts unless you have a way to force yourself to pay on a 30 day cycle. Example:  AMEX.

In other words, PAY AS YOU GO. Does that sound too foreign to you?:

Think about this for a sec …  Sometimes we are still paying interest on stuff we flushed down the toilet weeks ago. Get yourself a Debit Card and Pay as you Go!

Re-balance your household expenses on a monthly basis and see which expenses are justified and which aren’t. Make decisions accordingly. You’ll be surprise how much you spend on stuff you don’t use. Figure out what expenses can be deducted and which ones are total dead weight.

Re-balancing your personal expenses will take us into a lifestyle design conversation at the end of the day, but we’ll have that one on another post. Stay tuned for it!

Invest in assets that are seen as “stores of value.”  Asset classes that hedge against inflation are for ex:  fixed income, gold, currencies, emerging markets and equities.  The point here is to hedge dollar erosion with a physical asset that is moving in the opposite direction.

As an individual or a business you can buy these through mutual funds wrapped by a retirement plan structure of some sort. Simple Ira, SEP Ira, 401k.

Emerging Market Opportunities. Global economies are now more than ever interdependent of each other. The dollar is cheap so it makes sense to invest in countries with strong fiscal policies and growing middle class. BRIC (Brazil, Russia, India, China) countries are an example of this.

Most retirement accounts especially IRAs, allow options where you can hedge a small percentage of your portfolio in order to balance out an overall decent return on your hard earned dollars.

If you’d like to consider any of these strategies within your Portfolio let me know and we can have a chat about it. As far as building a recession proof business, REMEMBER:  Keep adding remarkable value to your customers while take care of your own house.

Other Options

Now there are also less traditional local options that you should at the very least be familiar with. Needless to say that investing back in your own business is probably by far where you might get the best return on your dollar.

However, you’ve done this in addition to having  applied all other paper based and portfolio allocation optimization strategies to your mini-empire, you might still be hungry or curious to know where else can you put your money to work.

Have you ever heard of Crowd Funding?

Bolstr is an example of one that seems to be doing it right. Kickstarter is another one you are probably familiar with. Is less commercially driven but operates under the same concept.

Supporting local business is something that I’ve always done directly or indirectly. Crowd Funding is something that is gaining momentum and as far as win-win scenarios I like what I’m seeing.

I’ll keep you posted on what else I research and dig up on this option in particular.

Till then my friends 🙂

 

Embrace Your Feminine Side When Investing

women make better investorsEasy boys … It’s not what you are thinking!

What I mean is that women are generally more level headed, calculating and conservative that men are when it comes to money.

Not to mention, they can deal with stress a lot better that we can. Just look around and see if you can juggle as many things (Successfully that is!) at once that your Mom or your wife can.

I got inspired to write about this after I bumped into this post:  “Why you should invest like a girl” 

 As it turns out, it’s not. A growing body of research shows that men are more emotional than women in ways that can be detrimental to their success as investors — and women generally make better money managers, even in the highest-risk folds of the industry.

In 2001, researchers at the University of California, Davis analyzed the stock investments of 35,000 households and found that men traded 45 percent more than women, racking up more transaction costs and netting returns that were 1.4 percent lower. The numbers were even more pronounced for single men and women: 67 percent more trading and 2.3 percent less in returns.

In many ways, our overconfidence hurts our bottom line when it comes to investing. I know that’s a hard pill to swallow but keep reading boys!

The latest data comes from Vanguard, the mutual fund company. Among 2.7 million people with I.R.A.’s at the company, it found that during the financial crisis of 2008 and 2009, men were much more likely than women to sell their shares at stock market lows. Those sales presumably meant big losses — and missing the start of the market rally that began a year ago.

Male investors, as a group, appear to be overconfident, said John Ameriks, head of Vanguard Investment Counseling and Research and a co-author of the study. “There’s been a lot of academic research suggesting that men think they know what they’re doing, even when they really don’t know what they’re doing,” he said.

Women, on the other hand, appear more likely to acknowledge when they don’t know something — like the direction of the stock market or of the price of a stock or a bond. (read more)

 

Women put safety first. They are also more inclined than men to wear seat belts, avoid cigarette smoking, floss and brush their teeth and get their blood pressure checked. They even have been shown to be 40% less prone than men to run yellow traffic lights. Not to mention their innate ability to deal with stress and pressure.

In general they are also less prone to attribute success or failure to event outside of themselves like fate or luck.

I don’t know what to make of this data, but the more I dug the more I found making the case for women as being stronger investors and financial decision makers. Something to think about when it comes to putting teams together, from household to corporate teams.

So nothing to fear my friends … If you can’t beat’em join’em 🙂  They seem to be better at this money thing than we are!