Archive of ‘Grow Your Business’ category

Ways to Negotiate with a Liar

Image courtesy of stockimages at FreeDigitalPhotos.net

I came across both this and this article on negotiation the same day and so I took it as a sign that someone wanted me to sharpen my negotiating skills. Actually, it’s probably some algorithm that knows I’m inclined to read these types of articles, but not surprisingly, this seems to be a topic of interest for many. The original article on How to Negotiate With a Liar by Leslie K. John was one of Harvard Business Review’s most popular articles this past summer. The art of negotiation is a fascinating topic because, well, it’s just that—an art. It’s a skill that takes practice. In order to be good at it, you must study it and, most importantly, practice it.

John offered these tips on how to handle a challenging negotiation:

  1. Spur Cooperation
    • The challenge: People are closed off and guarded during a negotiation, you need them to open up
    • Solution: Be the first to disclose on an issue of importance, our instinct is to match their transparency. As a result, people will gain trust and offer information of their own
  1. Ask the Right Questions
    • The challenge: Many negotiators guard sensitive information that could give them a competitive advantage—they lie by omission, failing to volunteer pertinent facts
    • Solution: People are less likely to lie if you make pessimistic assumptions (“This Business will need some new equipment soon, right?”) rather than optimistic ones (“The equipment is in good order, right?”)
  1. Make Sure Your Questions Get Answered
    • The challenge: Not getting direct answers
    • Solution: Remember the question—write down question. Leave space to jot down your counterpart’s answers and only move on to the next question when the answer to that question is “yes”
  1. Don’t Put an Emphasis on Confidentiality
    • The challenge: Assuring others that you will maintain their privacy and confidentiality may raise their suspicion and cause them to clam up and share less
    • Solution: Pose questions in a casual tone rather than formal one when addressing topics of privacy or confidentiality
  1. Listen for Leaks
    • The challenge: Not receiving enough information to move the negotiation forward
    • Solution:
      • Listen to your counterpart and try to gather nuggets of information from the conversation
      • Try to get your partner to show their hand. Give your counterpart two choices—if she expresses a preference for one over another, she’s offering information about her priorities and giving you insight into reasoning
      • Request contingency clauses in the form of financial consequences in case she doesn’t come through—if she doesn’t want to agree to them, it may be she’s lying

Motherly Advice on Investing: How A Stay-At-Home Mom Creates Income PART II

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In Part I, I began to discuss how a career as an investor could be a way for mothers to create a flow of income while staying home with their children. This week, Christina Suter, a real estate investor and founder of Ground Level Consulting will explain how she created this type of career for herself.

Before we jump into how to create this lifestyle, we should take an introspective look at why this type of lifestyle rarely exists in society. If creating passive income can offer mothers more control over their time, then why don’t we have more female investors?

Christine mentioned that it could be that women are not inherently wired to consider making an income this way. It’s an interesting topic and worth delving into. In prehistoric times and even in more recent times, men have provided for their families. It’s feminine instinct to look to the man to provide for the female and her children. Christine encourages women to become more conscious of their thoughts and actions and create a different mindset when it comes to managing finances. Rather than say, “HE can deliver the kind of life that I want”, Christina encourages women to say “WE can deliver the life that I want. I am the one with the prestige. I am the one with the job. I am the one with the thing that I respect in him. I’m the one that holds that.”

Maybe it’s a women’s maternal instinct to not be involved in planning financially to be a stay-at-home mom or maybe women have never been presented with the idea that they can stay at home and have a career as an investor. According to this article, women are looking for better educational tools to understand how to invest. It’s an interesting topic and something to think about as we raise and mentor our children, especially daughters and the coming generations.

Now let’s explore how Christina was able to create a stay-at-home lifestyle through investing:

That’s Pretty Powerful (TPP): How did you get started?

Christina Suter (CS): I started at 17 and I’ve been investing for over 20 years. I’ve owned about 350 units over the 20 years. I use that experience to help investors reinvest their portfolio to make sure it fits their personality and their retirement.

TPP: You started investing early in life, so at what point did you decide you were going to use your investments to be a stay-at-home mom? How did you begin to plan for this type of lifestyle?

CS: Looking back at it, it was in the moment. Something let go inside of me and said that I can have children. I didn’t completely realize. I knew in my 20’s that I was planning my career so I could have children. I knew I had this prospective because I was raised in a matriarch. My mother earned the money in the family and my step-dad worked with my mom at her company. I was raised with a role model where the woman really was one of the primary breadwinners in the family. So I had this role model that said you can do it this way. She was a single mom with three kids running her own company until she got remarried.

When I had developed enough capital, in that moment I heard myself say “I have enough now I can have children. But wait, I’m dating someone who doesn’t want to have children. I’m having a crisis.” I was 35 at the time where my capital had hit that point. That was the point where I knew, with a husband, without a husband, I could do it alone, but I didn’t want to do it alone. That was never my plan. But I heard the voice in my head say, “I’ve reached it. Ok, now I have to change partners. I hope I find someone who wants to have a child with me. I’m now 36.” The plan was in me when I was young. It was a given because of my matriarch upbringing.

That’s why I would say to someone who is 17 or 25 years old, you have that choice. If you commit to that choice you can have that type of life. If you start planning your investments at 17, you can have a child at 27. If you start at 22, you can have a child at 32. You can make it so.

TPP: What was it at age 35 that you knew you had this number? You said you had this voice in your head. How do you suggest someone strategically plan for your type of lifestyle?

CS: Easy, it’s an envisioning process I do with my clients all the time. You can’t save without vision. You need to know why [you’re saving]. The good news about women is that we will sacrifice once we know what the vision is. We think, “No one is messing with my baby”. It might be ten years away, but no one is messing with it.

You go inside of your head and ask “what do I want it to look like”? If I commit to being a participant fiscally with my child, what does that look like? Does it look like a home or does it look like an apartment? Do you have a dog? Are you living in Pasadena or are you living in Santa Monica? What does it look like if I’m paying for 50% or more of what’s happening? What do I need in able to be able to pay for that lifestyle?

Second, you need to come up with a cash flow number per month. In other words, how much does this lifestyle cost and how much money do I need to make to keep up this lifestyle? How much do I need to be a Mom?

So do you need to have multiple sources of income coming in at the same time? Yes. Here’s what was going in on my head [in my 20’s], “I want to be a teacher. A teacher makes $42,000 a year. That’s $3,500 a month. I need $9,000 per month to have the child. $3,500 per month is not enough for a 50% or more participant in my child’s life. I only need about another $1000 to make it work. What if I had my investments working in such a way that I had another $1000 in passive investments coming in to supplement me being a teacher so I can be a mom?

The last financial thing you need to know if you want to earn $1000 per month is you figure how much capital you need to get 4% return off that capital. Four percent is a very conservative number. If you want to be aggressive you can say 8% return.

TPP: Why 4% return?

CS: 4% is the traditional standard return for stocks and bonds. For instance, if you plan your retirement, how much capital do you need to plan your retirement? If you do stocks and bonds then you can try to get dividends of about 4% so you are not eating into capital.

The 8% is my personal experience in real estate. I can put my money into relatively passive deals like hard money or into a fund and usually get 8%.

Lastly, you figure out how much capital you need to get $1000 per month at 4%?

$300,000 at 4% return gives you a $1,000 per passive income a month. [An investment of $300,000 with 4% return per year gives you an income of $12,000 per year or $1,000 per month] Now the way I work, I need $350k because I always have cash reserves. And cash does not bring you any money. The more I have out there, the more reserves I want at home in case something happens. At 8% return, you need half that amount so you would need $150,000.

TPP: How does someone find an investment that will net $1,000 per month?

CS: Either get a professional or get educated. Real estate, dividend stocks (research who is paying a 4% dividend),

But there are so many options, even getting educated is difficult.

Put yourself where investments are available to you. Get educated or find a professional or both. Then you put yourself in an environment that allows you to find investments. In real estate it’s incredibly easy. You go onto Meetup.com and type in the word real estate, and attend networking events.

TPP: I attend these events, but I feel like I only get the topline information. How do I dive deeper into individual investments?

CS: You find a low cost course on the type of investment that interests you. For instance in real estate, it can be Bruce Norris, Bill Tan, Kevin Ward, or Reggie Lal’s courses. Plan on taking a couple of those from a couple of different people. Set aside $500. Plan on going to one meeting a week for a minimum of six months. Plus there’s a load of YouTube videos out there like J Massey, Bigger Pockets, FotuneBuilders, and Rich Dad. After six months, you’re going to feel like you finally understand what real estate is composed of. Maybe you have no sense where to start, but you have some idea of what is the horizon look like, what does a CAP rate mean, what does a GRM mean?

Then you can hire a professional to cross check you. And you will at least have enough knowledge to start the conversation.

Investing can be confusing, but put yourself in the middle of the confusion until it make sense.

TPP: How does someone who already has children find time to learn about investing?

CS: It doesn’t mean you can’t start now. It doesn’t mean you can have your baby right next to you while you’re watching the YouTube video. It doesn’t mean you can’t have your sister, your mom, or husband watch them when you go to a meeting once a week. You can go to short classes. You can arrange for babysitting. You don’t have to pay for babysitting. You are only going to do three of them over three years. One weekend out of every year. Can you find someone to watch your baby? Yes you can. It doesn’t take that much. Can you do it? Yes you can.

SUMMARY ON HOW TO CREATE PASSIVE INCOME

  1. Envision the lifestyle you want:

You will need to also envision the type of lifestyle you want. For instance, do you see your child attending public school or private school? What types of activities do they participate in?

  1. Calculate your cash flow:

Now that you can envision the type of lifestyle you want to live, calculate how much that lifestyle will cost. In other words, you need to know how much money you spend per month. That’s the minimum you need to make in passive income to cover your expenses. If you don’t know how much that lifestyle will cost, do some research. For example, if you want your kid to attend private school, find out how much that will cost.

  1. Figure out how much capital you need to create a 4% return:

Once you know how much you spend each month, then figure out how much capital you will need to create at least 4% in passive income per month. For instance, if you’re expenses are $1,000 per month, you will need $300,000 in reserves to create $1,000 per month in passive income. (example: an investment of $300,000 with 4% return per year gives you an income of $12,000 per year or $1,000 per month)

  1. Hire A Professional

A professional can help you create a strategy based on your goal. They also have the expertise to get you where you need to go within your timeline. As I mentioned before, make sure you hire the right person with great qualifications and a strong track record. You may want to take small steps with the professional advisor so you can get to know each other before making any big decisions.

  1. Get Educated:

It’s important to understand what your professional financial advisor is recommending, so read up on the subject, attend a course, join an investor group in Meetup.com.

Two of my favorite quotes are “Time is the new money” and “Being rich is having money; being wealthy is having time”. Spending time on the things you want to focus on is today’s version of hitting the lotto. People are more creative than ever about how they create an income. Most entrepreneurs create more than one type of income stream and investing can be one of those ways.

The key to remember is that it’s never too late to start. Whether you’re in your 20’s, 30’s, 40’s, and beyond.

 

What questions do you have about creating this type of lifestyle?

Motherly Advice on Investing: How A Stay-At-Home Mom Creates Income PART I

Many women feel that they have to choose between making an income and staying at home with their kids. Christina Suter, a real estate investor and founder of Ground Level Consulting seems to have figured out just the formula. By the time Christina had her daughter at the age of 40, she had created a reasonable stable source of passive income allowing her to be a stay-at-home mom. She did this by building a portfolio of investments. Christina’s story made me think, “What if we could teach women how to invest their money so they can be stay-at-home moms?”

I asked Christina if she would offer insight on how she accomplished such a feat as an investor. She was such a wealth of information that this has become a two part series. In Part II of this series, we go into how Christina created this type of lifestyle. I wanted to kick off this series by highlighting a few key points that came up during my conversation with Christina:

Your salary is created from passive income: The thing I like about investing particularly for mothers is that there is consistent passive income when done right. The definition of Passive income is an income received on a regular basis, with little effort required to maintain it. The benefit to investing is that you can live off the money you make through passive income.

Stay-at-Home Mom’s Still Work: Notice that the definition above about passive income mentions that there is “effort required” on the investors part. What I learned about Christina is that she still works. She manages her investments and is advising other investors through her company Ground Level Consulting. However, she is her own boss, which means she works from where ever she wants, makes her own hours, and doesn’t have to answer to anyone (except maybe her 5 year old daughter).

It Takes Time to Get Off the Ground: You can’t wake up tomorrow morning and say, “I’m going to be a stay-at-home mom and live off my passive income starting today.” When you invest money, it takes time to grow. First you have to build your pot of money that you use to invest (called Principal), then after you invest it, you must let your investment grow. The profit you make each month is your passive income.

Christina calls it the “10-year Mommy Plan”. She says it takes about 10 years of successful investing to get to a place where you can live off your passive income. Investing, whether it be real estate or another type of investing (and there are many), is something we can teach girls at a young age. If you start when you’re 17 then you will be up and going by 27. Now that’s not to say all is lost if you’re beyond 30 which leads me to my next point…

It’s Never Too Late to Start: One of my favorite proverbs is “The best time to plant a tree was 20 years ago, the second best time is today”. This couldn’t be more true with investing. If you start when your child is born then you have the chance to enjoy their childhood. And if you start when they’re a teenager, you have the chance to enjoy other chapters of their lives (and yours), as well.

It Takes Planning: Another thing about this lifestyle is that it requires planning. In Part II of this series, I’ll explain how to create a plan.

You May Want to Consider Hiring a Professional: It’s always important to have professional help to advise you about your money, especially if you’re new to investing. A professional will also help you get to where you need more quickly. Make sure you hire the right person with great qualifications and a strong track record. You may want to take small steps with the professional advisor so you can get to know each other before making any big decisions.

It Takes Education and Practice: More importantly than hiring professional help is to know what your financial advisor is doing. There are a lot of fast talkers and they will show you charts, websites, and research to prove their point. Unless you know what’s happening in the market and how that particular investment works, you’re putting your savings in someone else’s hands. The reason you’re probably hiring a financial advisor is because you don’t have the time to learn all of this on your own, but knowing the basics of your investments is essential.

You don’t need to be a multi-millionaire to have this type of lifestyle: You don’t need to have millions of dollars in the bank to create a lifestyle as an investor. You just need to create enough passive income to cover your expenses each month. Most basic expenses include rent/mortgage/home repairs, transportation, utilities, food, entertainment, clothes, medical, insurance, charity and savings. And if your partner is taking on the responsibility of these expenses with you, these expenses are divided. When you calculate how much you need to make in passive income each month, you just need to calculate how much is needed to cover your expenses.

Investing can be a great way to create a consistent income that offers you the ability to have control over your time. Next week we’ll take a deeper dive into how Christina was able to create this type of lifestyle.

What questions do you have about investing or creating this type of lifestyle? I’ll try to cover it in next week’s article.

Girlfriend’s Guide to Buying Real Estate

for sale sign

I’ve heard a couple of girlfriends say that they’re not buying a home because they can’t find one they like. They prefer to rent until they can save enough money to buy a home with all the bells and whistles. If I heard it from a couple of my girlfriends then there are probably a whole lot more of you out there who feel the same way. There may be reasons when buying real estate doesn’t make sense, which I’ll save for another blog post. But if you are in the market to buy, I’m here to tell you to buy that home even if it’s not perfect.

Just like it’s difficult finding the perfect mate, it’s difficult finding the perfect home. Especially in more desirable neighborhoods, where home prices are higher, it takes time and money to find the right home in the ideal neighborhood. In most cases, we have to compromise on either a renovated home or the right neighborhood. But if you’re waiting to save money to buy a perfect home, then you’re missing out on a valuable opportunity to grow your wealth.

Let me put it in perspective for you. Here are several ways buying a home can grow your wealth:

  1. Building equity: As you pay off your mortgage, you begin to build equity. Equity = money in your pocket.
  1. Home increases in value: As you build equity, your home is also increasing in value. Bonus! According to Zillow, home values in Los Angeles have gone up by 7.9% over the past year and they predict they will rise 2.6% within the next year.
  1. Tax benefits: As a single person living in California, do you about fall out of your chair when you see how much of your salary goes towards taxes? Chances are that taxes will only go up over time. If you are one of those that don’t think taxes will increase in the future, then let’s hope you’re right. But in the meantime, I’m taking advantage of all the tax savings possible. As patriotic as it is to pay taxes, you will most likely need money for retirement or other important expenses, so those tax savings could really add up. Talk to your accountant about how purchasing a house may help you save on taxes.
  1. Renovate your home: So you “settle” for a home that’s not as nice as the rental you were living in, but this is a chance to make this the home you envisioned, which may also increase your home’s value. Make sure the home has a solid foundation and is in a neighborhood that you can live in for at least 5 years. See more about 5-year Rule below.

If you buy while home prices are still affordable, the value of your home will appreciate overtime. You can trade up for a bigger home or a home in a better neighborhood using the home’s appreciation and the equity you’ve built. Even if your home doesn’t increase in value, you’re still building equity. Many people adhere to the 5-year Rule when owning real estate to make closing costs worthwhile.

As home prices and interest rates rise, you’ll have to put a larger down payment for the same home. Don’t work harder than you have to. And don’t wait until real estate is expensive. It’s easy to get priced out of the more desirable neighborhoods as prices increase.

I’m not encouraging you to buy a home in an unsafe neighborhood if you’re a single woman living by herself, but with a little research I’m sure you’ll find plenty of neighborhoods that are safe and still affordable. Keep your options open. If you had the idea of living in an upscale neighborhood and you can’t find anything you like in those neighborhoods, consider expanding your search outside those neighborhoods. Write down what you like about those neighborhoods and see if you can find those attributes in a different neighborhood you may not even considered. If you’re in LA, here are some ideas to get you thinking outside the box. Check sites like Curbed, Time Out, or your local newspapers for ideas.

Don’t sit on the sidelines trying to save for the perfect home. Just start somewhere.

So You Want to Launch An App

Gee Collins

Gee Collins

A little over a year ago, out of frustration with being unable to find the perfect shade of orange lipstick for her skin tone, Gee Collins came up with an idea to launch the social beauty site Bellashoot.com. Her sister-in-law, Saje Sandhu, empathized with her frustration and jumped on board as co-founder to help create a centralized way to follow the latest trends and products in beauty.

Bellashoot is a West Hollywood-based social site for beauty enthusiasts to converge and share ideas on everything and anything beauty-related. The site also allows its members to organize their favorite products, tutorials, and tips, as well as follow their favorite beauty bloggers—think “one-stop shop for beauty”.

Saje Sandhu

Saje Sandhu

Now these entrepreneurs have decided to grow their digital landscape and add Bellashoot app. Since the process for developing an app is still fresh in their heads, I turned to these ladies to get a better understanding of what it takes to develop an app.

What made you decide to launch an app when you have the Bellashoot website?

In this day and age everyone prefers to have access to things they like while on-the-go and we wanted our Bellas to have the same experience. For that reason plus requests from our community, we created an app so they could have beauty advice and inspiration with them anytime, anywhere.

Were you knowledgeable about developing apps before you decided to create one?

We did not have any experience developing apps before we created this one. It was quite an exciting process and its always fun to learn new things, so our team was all hands on deck with it.

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What is the process for developing an app? What do people need to consider before developing an app?

To develop an app you need a good idea, wireframes, a good team and good marketing strategy in place. The process involves outlining all the features and functions of the app, figuring out which platform to design for, designing the flow of screens, hiring a good developer, etc. Do your research and make sure there is a market and need for what you are creating.

How did you find a company to design the app? What factors helped you to decide on this particular company to work with?

We designed the app in-house. Saje ended up teaching herself how to design and create wireframes, design elements and workflow for the iPhone & iPad. It was really important to us that we had a clean design that didn’t take away from the focus of the content.

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What type of people do you need to hire when developing an app?

If you don’t have coding background, like in our case, you need to hire a good app developer. Look at work they’ve previously done, contact their references and since it’s a long term relationship make sure it’s someone who communicates well and someone you can work with.

How did you learn what type of technology was needed to develop the app?  Did you need to know specific programming language to develop the app?

One of our co-founders had a technical background and had the knowledge base to manage and communicate the team’s needs and wants effectively to develop the app. He was an integral part of the puzzle and every step of the way was ensuring that the decisions that were made with regard to servers, back-end databases, scaling, etc. were the best ones for Bellashoot. It’s really important from the get-go that you have a structure in place that can maintain your growth.

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Now that the app is developed, are there costs to maintain the app?  What ongoing challenges are you finding?

In order to continue having a great user-experience you have to bug fix, add and enhance existing features, so the development costs of maintenance continue. As you grow and more users discover your app, your server costs also grow. Other third party tools for analytics, push notifications, emails, etc. all have costs that also increase as your user base increases.

Do you have any recommendations for books or websites that can help an aspiring App creator with this process?

There are tons of fantastic resources available online for any app related question you can imagine. Our online research has lead us to a wide variety of tech blogs and online resources. If you’re looking to create an iPhone app, the first place to start is Apple’s iOS Developer Center. You can also find online classes that will teach you a lot of the basics – we have used Treehouse.

Some of our favorite learnings have come from watching YouTube videos of founders speaking at various events or being interviewed about their experiences. You can learn so much about growing a company from those who have been in your shoes.

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Here is some information to consider when launching an app:

  • Marketing Your App: According to Statista.com, as of July 2014, Android users were able to choose between 3 million apps. Apple’s App Store remained the second-largest app store with 1.2 million available apps
  • Think about how people will find your app. Create a strategy for marketing prior launching the app.
  • According to former CEO of AppVee and AndroidApps, Alex Ahlund, a survey of 96 mobile app developers found that the average cost to develop an app was $6,453.  Another article reports that developing a “small app” can cost $3000 – $8000. More complex apps can cost anywhere from $50,000 to $150,000!

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