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Don't Make This Costly Mistake

Which is better – a $100 decrease in costs or $100 increase in income?

It’s always good to increase our income, but more people get in trouble on the cost side. This applies to your business as well as your personal finances.

Your business
Assume that you own a retail store. Every product in your store sells for $100 and costs $40. So you keep $60 every time you sell a product.

Now let’s say you’re able to cut your expenses by $100. You get to keep all of it!

So, which is better? Cutting expenses by $100! That yields $40 more!

Now, you may ask, how do you do that? Here’s something we have learned …

As you get busy running your business, it’s easy for costs to creep in that aren’t increasing sales like you thought they would. Get rid of these costs!

One of the biggest complaints bankers have about small business people is that they are too focused on their top line (sales) and they don’t spend enough time thinking about the bottom line (profit).

In the long run, your profit can only grow as fast as your sales. But in the near-term, your bottom line will grow much faster if you keep a close eye on costs.

Your personal finances
This is the same story, but for a different reason. It’s all about taxes.

Let’s assume that you will pay 30 percent on your next $100 of income. So, if you make $100 more, you get to keep $70 after taxes.

But if you can spend $100 less, you’re $100 ahead because you’ve already paid the taxes on that money!

Let’s say you get a $5,000 a year pay raise. You decide to celebrate by buying a new house … you upgrade! Your mortgage payment is now $4,800 a year higher than it was before. But hey, you have $5,000 more income, so you’re still $200 ahead, right?

That’s BEFORE TAXES.

Once we factor in 30 percent for taxes ($1,500), you’re $1,300 behind!

And the bad news has just started. This new, bigger, more expensive house probably has higher property taxes; it costs more to insure; it requires more repairs and maintenance.

Before you know it, you’re $5,000 in the whole!

What should you do with the raise?

Once again, your specific situation will determine what you should do. Consider giving yourself a SMALL reward – you’ve earned it! Then, if you have any debt – particularly credit card debt – pay that off because your return will exceed almost any investment. And it’s a guaranteed return!

Once you have that debt paid off, the money becomes yours! Now you can invest it in things that will jump start your passive income.

The bottom line is this – you have complete control over your expenses. You have to convince someone to say “yes” to make a sale or get a raise. It’s much easier to control your costs!

Where have you cut costs in your biz or personal life?
Share your tips with us!

You’ve probably heard our bigg quote today, but it was so fitting that we used it anyway. Here’s Ben Franklin –  

“A penny saved is a penny earned.”

And we bet that, if ole’ Ben Franklin was around today, he’d think about the taxes he was paying and modify his quote to – A penny saved is BETTER than a penny earned!

Next time, we’ll continue the money talk, but with a twist. Comedic writer Jake Novak joins us to share his “Top 5 Signs You're Managing Your Money Like Wall Street.” Until then, here’s to your bigg success!

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Fumble Forward

football on field

With the Super Bowl upon us, we thought we’d discuss how to recover your fumbles and keep moving toward the end zone. One of the most famous fumbles ever occurred on September 10, 1978 in a game between the Oakland Raiders and the San Diego Chargers. It has become known as “the holy roller”.

Listen to today’s show for a recreated broadcast of that fantastic play!

The Chargers led 20 to 14. The Raiders had the ball on the Chargers 14-yard line with only ten seconds left in the game.

Read more

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CYA: Does It Pay?

You’ve probably encountered people who never take responsibility for ANYTHING. That’s what sparked today’s blog –

Does it pay to shift the blame?

On the show, Mary-Lynn said that she believes it DOES pay.

She said she is not a blame-shifter herself, but she has worked with them. In her experience, they often get away with it. Sometimes they even get rewarded with promotions or a better job!

George retorted that it may work short-term, but it DOES NOT pay in the long run. He talked about a manager he had who never accepted responsibility. He knew that meant one of two things – either she wasn’t doing anything, or she was passing the buck. So he fired her.

It hurts morale when employees see people getting away with not accepting responsibility. George said he learned this lesson the hard way – after firing an employee, another employee asked why it took him so long!

As an employee, you don’t have many options when you’re working with a blame-shifter. However, there is one thing you can do – document, document, document. You don’t want to get blamed for THEIR mistakes.

However, as a leader, you can create a culture where it’s okay to accept blame. That’s important because your employees are often afraid of the consequences of owning up to their mistakes.

So focus on fixing the problem, not the blame.

To rephrase an old saying, “It’s amazing how much gets accomplished when no one cares who gets the blame.”

In our society today, we seem to do the opposite – we rush to find SOMEBODY to blame, rather than fixing the problem. Mary-Lynn said that’s why it pays to be a blame-shifter.

George said he remembered an employee who always blamed something or someone. George told him that he had a lot of potential. He wouldn’t get fired for making a mistake, but he was going to get fired if he didn’t start taking responsibility.

He became one of George’s top managers. That won’t work with all employees, but it will work with the ones you want to keep.

Admit your mistakes
Lead by example – when your employees see you admitting mistakes, they’ll feel safe doing the same.

Distribute the credit liberally and focus the blame conservatively. Give more credit to your team; accept more blame yourself. You’ll win the hearts and minds of your team when you do this.

How to get away with shifting the blame
George said that there was one way you might get away with always shifting the blame.

Be a moving target.

If you’re constantly moving from job to job, company to company, place to place, you might get away with it in the long run. But do you really want to live that life – always looking over your shoulder, always worrying that you’ll be found out?

Mary-Lynn responded that blame-shifters do move – and it’s usually UP – to a better job!

What do you think? Does CYA pay?

Our bigg quote today is by the great writer, Oscar Wilde.

“It’s not whether you win or lose; it’s how you place the blame.”

 
In the game of life, great teams experience the thrill of victory and the agony of defeat together, not as individuals.

Next time, we’ll discuss what you can learn from jugglers. Until then, here’s to your bigg success!

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