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The Only Three Ways to Grow a Business Did you know that there are only three ways to grow a business?
1. Increase the number of customers.
2. Increase the average transaction value.
3. Increase the frequency of repurchase.
Find a way to maximize each one, and your business will experience an astonishing rate of growth. In his "9 Pillars of Business Growth" program, acclaimed consultant Jay Abraham outlines hundreds of proven, frequently unrecognized, and almost totally underutilized ways to grow these three key areas of your business. If you own a business (or would like to), be sure to take a look at Jay's program.
- Charlie Byrne
Margins Are Not Marginal, Part 1 By Andrew Gordon How do you know if a company you're invested in is being smart about utilizing its resources? Do what I do and make the company's margins one of your top criteria. Profit margins help to tell you how profitable a company is. Specifically, they tell you how much of a company's sales revenue is being turned into profits. A company with solid margins is more likely to endure economic downturns and hold its competitors at bay. Furthermore, when the economy or sector is about to rally or otherwise enter a period of expansion, companies with the best margins will be poised to make the biggest gains. Here are two key profit margins you should always take a close look at:
- Net Profit Margin is simply a company's net profits after taxes divided by sales. If there is any one number that tells you how much of a company's sales are being transformed into corporate profits, this is it. The higher the number, the better.
- Gross Profit Margin is a company's sales minus the cost of goods it has sold divided by sales. This is a good indicator of how well management is allocating labor and materials in turning out the company's product. Again, the higher the number, the better.
You can find profit margins on any stock site, such as Reuters.com. Click on Reuters' "Industries" link, choose an industry, and then click on "Company Rankings." On the "Margins" link, you'll see a list of companies in that industry ranked by either Net Profit Margin or Operating Margin (a close cousin to Gross Profit Margin). In my next article, I'll tell you how you can use margins to make great stock picks.
(Ed. Note: Andrew Gordon, ETR's financial expert, is the editor of our new investment service, The Wealth Advantage. Join now and you'll get a free special report on three companies that have the very real potential of giving you up to 1,000 percent on your investment.)
"Philanthropy is commendable, but it must not cause the philanthropist to overlook the circumstances of economic injustice which make philanthropy necessary."
- Martin Luther King Jr.
A Charitable Foundation for Entrepreneurs? By Robert Ringer Time magazine recently named Bill Gates one of its three "Persons of the Year" (along with his wife, Melinda, and rock star Bono). Queen Melinda was certainly deserving of her share of the honor, as she long ago demonstrated her enormous ability to marry well. And Bono appears not only to have good intentions but also possesses a surprising amount of knowledge about world affairs. But the heavyweight in the crowd is, of course, Bill Gates himself. Though Gates' reputation for ruthlessness has made him the Darth Vader of our age , he has now moved on to take his obligatory place in history as a great philanthropist. In doing so, he follows in the footsteps of such legendary softies as Andrew Carnegie, John D. Rockefeller, and Joseph Kennedy. All this may bring your more cynical side to the surface, but it's simply the way the world works. Philanthropy is the next logical step for anyone who makes enough money to buy his own planet. To be sure, a $29 billion foundation dedicated to fighting, among other things, third-world disease and poverty is a noble cause - even if some might suspect that vanity is the driving force behind its creation. As all rational adults recognize, the end often justifies the means. History, however, has made me a cynic for reasons having nothing to do with vanity. You can feed people, vaccinate them, and help them in myriad ways - but only until your money runs out. However, from a long-term point of view, it's all in vain if you don't address the underlying causes of disease and poverty. And the biggest cause by far is - and always has been - brutal, corrupt, dictatorial governments that suppress and terrorize their own citizens. In this respect, the United Nations is the ultimate enabler. The UN not only does little or nothing to help those in distress, it actually makes matters worse by endorsing the very dictators who rule over them. That the United States continues to be a member of this shameful, corrupt, and farcical organization is bad enough. But to allow Kofi & Friends to hatch their crooked schemes on U.S. soil is beyond the realm of moral comprehension. So long as third-world dictators and/or corrupt governments remain in control of their countries, people will be impoverished ... and randomly tortured and murdered as well. Look what happened to Rhodesia - renamed " Zimbabwe " after its civilized government was overthrown - which was once one of the two most prosperous and civilized countries in Africa . (The second, of course, was South Africa , before its government caved in to the global frenzy over Nelson Mandela.) So, what can be done about the ruthless dictators who rule the world's most downtrodden inhabitants? Unfortunately, short of nuking them (which would kill hundreds of millions of innocent people), not much. The U.S. certainly can't put boots on the ground in every country where people are in distress and search every rat hole in an effort to find their dictators and bring them to justice. Which brings me back to Bill Gates. Even if every dime of Gates' $29 billion foundation reached the needy in Africa , it wouldn't do much good over the long term. The reality is that $29 billion is a drop in the bucket when it comes to providing people with food, medical care, and education. And even Gates has limited resources. The only thing that will permanently solve the problem of widespread poverty and slavery is freedom - which, by definition, includes free markets. When market forces are unleashed and people are free to pursue their own well-being, everyone's standard of living rises. In all honesty, I guess I'm neither vain enough nor smart enough to come up with solutions for third-world countries controlled by serial killers. But if Gates really wants to help impoverished people, perhaps he should just buy a third-world country of his choice from its corrupt rulers. Then, he could appoint himself as a benevolent dictator and allow people to pursue their own happiness in any way they chose. You're right. That's not going to happen. So, the next best thing is to make the civilized world even richer than it is and hope that some of the increased wealth will find its way to third-world countries - not just to feed and clothe people, but to promote economic growth. (Think, for example, of the way outsourcing and so-called sweatshops in such places as Indonesia and Pakistan have been a godsend to millions of previously desperate, unemployed people.) How could Gates accomplish this? By doling out his foundation's entire $29 billion in interest-free loans to Western entrepreneurs - particularly entrepreneurs who are down and out and have absolutely no collateral to back their loans. Entrepreneurs are those greedy guys who, for "selfish" reasons, constantly strive to create better products and services - and provide people with job opportunities in the process. Smart entrepreneurs clearly understand how the invisible hand of the marketplace works. They recognize that the most certain road to success is to give people what they want at prices they are willing to pay. That's why so-called capitalism (a.k.a. business freedom ) is the ultimate win-win philosophy. Having said all that, I'm sorry to have to add - and this will probably come as a surprise to you - that there is no chance whatsoever that Gates is going to take my advice. Instead, he'll dutifully listen to properly bred Melinda and throw good money after bad.
Perhaps I shouldn't say it publicly, but, as I've told Bill so often, if he doesn't start to heed my advice, I may have no choice but to resign as his financial advisor.
Today's Action Plan
Interesting subject. One that we hope you'll weigh in on in ETR's Speak Out forum. Is Bill Gates doing a good thing with his money? What could/should he do differently?
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The Safest 100% in Technology Today Right now, one of the world's most successful technology firms is selling at the same price (adjusted for splits) that you would have paid 10 years ago! And the company's prospects could not get any better! Wall Street has overlooked MASSIVE hidden value in this company and I expect this stock to at least double in the near term. In the coming years this stock should easily trade at six to ten times where it is today. I tell you all about it in The 1000% Report ... click here to learn more about it.
Worth Quoting: Michael Masterson on Making Money ... "Making money is not the most important thing in life. When you're just starting your career, it may not even make your top-10 list of things to accomplish. That's fine. "But if you do something about making money when you're young - if you follow some of the recommendations I make in Automatic Wealth for Grads ... and Anyone Else Just Starting Out - you can still attend to your other goals and get rich at the same time. That wouldn't be so bad, would it? "That's the purpose of my book: to show you how you can make the moneymaking part of your life automatic . When wealth is automatic, you have the time, energy, and peace of mind to focus on other, more important things."
(Source: Automatic Wealth for Grads ... and Anyone Else Just Starting Out, Michael Masterson's newest book)
What You Drink Before and After Exercise Can Make a Difference By Jon Herring If strength training is a part of your exercise routine (and it should be), you want to maximize the return on your effort. To do that, you need to provide your body with the right nutrients at the right time. In sports nutrition circles, this is called "nutrient timing." And in the case of resistance exercise, protein is the right nutrient to have immediately before and after you train. In a recent study performed in Denmark, researchers had subjects go through a 14-week strength-training program. The subjects, split into two groups, drank either protein or carbohydrate supplements immediately before and after exercise. At the end of the 14 weeks, those who were given the protein had greater increases in muscle size and performance. Meanwhile, those who consumed only carbohydrates did not build a significant amount of muscle.
So when you're putting together a muscle-building nutrition plan, you won't get anywhere unless you have protein in the mix. An easy way to do it is to have a glass of milk (preferably raw and organic) or a scoop of protein powder mixed with water before and after training.
It's Good to Know: Two Books to Put on Your Quick-Reading List
By Michael Masterson I haven't read them yet, but I've read two reviews each on Crazy Busy and Sweet and Low that have piqued my interest. Sweet and Low is the story of the family that inherited the Sweet 'n Low artificial sweetener empire. Rich Cohen, a writer for Rolling Stone magazine who was disinherited from the fortune, tells a tale of greed, corruption, and the difficulty of doing any good by leaving money to heirs. CrazyBusy is about how ordinary people today are trying to keep up with the frenzy of technology. In a chapter titled "The Ten Key Principles to Managing Modern Life," author Edward Hallowell provides suggestions for slowing down and simplifying.
These books sound like good, quick, instructive reads. I'm going to get copies and read them. You might want to do it too.
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Imagine Being A Sucessful Children's Book Author
If you think that's unlikely, think again. First-time children's writers get published a lot more often than you realize. Once you know how to avoid the common mistakes that other beginners make, getting your children's book on bookstore shelves can be easier and faster than you've ever imagined. Click here to learn more.
Word to the Wise: Gemmelsmerch According to Edward Hallowell, author of CrazyBusy (see above) and coiner of the word, "gemmelsmerch is the force that distracts the mind or steals it away from what it wants to do or ought to be doing." Examples of things that are high in gemmelsmerch: accidents along the highway, a jackhammer outside your window, and getting news that you will be audited by the IRS. A few more words coined by Hallowell to define productivity-killing activities:
- Screensucking ("wasting time engaging with any screen - for instance, computer, video game, television, BlackBerry") Frazzing ("multitasking ineffectively")
- Logonorrhea (You can guess what this one means.)
