Staying the Course

Lance Stays The Course Despite Two Crashes

Sticking with your plan can sometimes bring surprises out of the blue.  Some are helpful, some cause problems.

Who would expect to see Lance Armstrong on the ground, twice, both crashes caused by other riders. 

In our business the price of coffee spiked this summer.  Not exactly out of the blue, but a surprise none-the-less.  All of us who own and operate and lead our own business must have the courage to just put our heads down and keep going forward.  You and I must be able to absorb disappointments, even when physically hurt, and keep going.  We are the energy that keeps the business healthy.

The news is reporting that Lance tweeted his intention to continue in the race and help his team-mates.  Good for him.  While winning is out of the question this year, he could still win some stages. 

So let us leaders learn the easy way.  Watch another person handle adversity and thrive.

May your summer be happy, and your Gazpacho cold.

Bob

Coffee Prices on the Rise – Your Business Must Keep Pace

The coffee C has increased substantially this year.  It is due to the rising C contract – the base price for most coffees, and, it is also due to the rapid rise in ‘differentials’ – the component of coffee prices that represent the quality of the coffee. 

To keep it short and to the point.  Managing your business in times like these is not easy but you must keep pace with price increases.  I was born in 1945 and so have experience with several periods of rapid inflation.  You may not remember or know, but the prime rate was over 20% in the seventies.  Nixon, Ford and Carter were Presidents.  Ford wore buttons with the initials WIP - Whip Inflation Now.  Nixon slapped price controls on the American Economy.   The inflation was caused by the huge increase in Government spending for The Great Society and other stuff, and the Vietnam War.

Today we have the Iraq and Afghanistan Wars and Government gone wild.  This is not a political statement for either Democrats or Republicans.  Both share in the economic carnage caused by incredible increases in the debt load.  Bush increased it by 3 Trillion and more and Obama at least that much, some inherited, but none-the-less, on his watch.

My concern is that interest rates are as low as they can go with nowhere to go but …. up.  Inflation may lead the way, or it may follow rates up, but I think we are in for many increases in prices.

So keep watch and keep moving your own price.  You have to maintain margins.

Bob Johnson

Warren Don’t Worry It’ll Be Ok

This is what I’ve read is an economic Reset.  It is a Reset to:

• Moderation
• Savings
• Future Rewards or Deferred Gratification
• Less Instant Gratification

The effect of the paradigm shift on auto sales is the most dramatic example.   Americans will have to work through the inventory of cars sitting in their driveways. before auto sales pick up.  Clearly there are many more cars than drivers.  F150′s for bankers, sports cars for the kids or weekends and small motor homes for football games are just a few of types of vehicles we now own.  Auto sales will slumber until we either convert these vehicles to daily use,  or get rid of them.  Only then will we begin to replace aging cars with new ones.

So settle down Warren.  Last Sunday Mort Zuckerman of US News and World Report appeared on NBC’s Meet the Press.  He was in a panic.  “Someone has to fix this problem” he exclaimed.  I know you Warren are not that paniced but using words like a shambles to describe the US economy is not appropriate. 

This is America.  We are a strong people, focused on the future (perhaps a bit too much since many folks missed the signals of impending economic trouble) and we will recover. 

My business, Kaffe Magnum Opus, can bring sunshine and promise to your life.  Think happy thoughts.

The rediculous run-up in the price of oil caused the housing slump, although it is not identified as a cause by many.  Because house prices rose so fast, commuters began to move further and further away from their jobs in order to afford a home.  The commute expanded and then got clobbered by gasoline costs.  So there were fewer buyers for homes in the distant suburbs.  This worked it’s way into the mainstream housing market and kaboom.

Summer Time is coming, trees are turning green, warmth will help us unlock the lids on our wallets.

Lets get going.  Start fixing the things around you within your control and stop grieving.  We are where we are and we are here as a result of all that we have done before.  We steered ourselves into this corral.  We can steer ourselves out again. 

Bob Johnson

Did Gasoline Price Rise Cause the Drop in Home Prices?

Yes.  Gas is the lowest it’s been in 5 years.  I filled up my Saturn Vue today for $25 and just a short while ago it cost $60.  So I saved $35, or $150 per month.  $150 per month pays for $30,000 in mortgage money at 40 years and 5.23%.  If a bank is working with a homeowner in dire straights the bank might reduce the rate to 3%, in which case the homeowner could pay for an additional $41,000 in mortgage money.  There is a close relationship between the pricce of gasoline and the mortgage payment. 

If you reverse this process, the people who bought houses, and had to have a reduced rate, or higher prices for the house ,in order to afford it, got clobbered by gasoline and re-adjusting mortgage rates.  In my case I take around 15 gallons  a week and get 20 miles per gallon.  So I’m a light user, a driver of short distances.  What if a person drove say 70 miles one way to work and therefore  700 miles a week, not counting local errands and car rides.  Well that fictional person would have gone in the hole for at least $300 a month.  With a tight budget, this would bring you down.

Here’s the summary.  Five years ago people were going further into the suberbs to get houses that were lower priced than those close to cities or major metropolitan areas.  They could afford the drive.  But they can not afford it when gas rose to the ridiculous levels it reached.  Fine. 

When the price of gas rises the distance they can travel shortens and so the demand for houses in distant suberbs goes down.  And this person can not buy a house close to their job.  So demand goes down some more.  And as the price of gas climbs higher faster, to $4.50 per gallon, yikes, you have to rent or live with your parents.  No more houses.  And of course prices of houses fall. 

Do you agree that gaoline price increases caused the biggest economic implosion in American History?

  Me and my Facebook Friends Celebrating the drop in gas prices.

Bob

Stop Worrying, Get Moving, Tonight

But it’s Friday night.

So I was just watching television news, Channel 3 in my neighborhood, CBS.  Sure you can list many things to worrry about, there is a lot going on right now. 

You have to lead: lead yourself; lead your family; lead you staff; lead your customers; lead your vendors and don’t forget your friends too.

If you know what you want to do then your time is well spent with a pen and pad and quiet.  Write your target at the top, no matter how simple or complex, then think.  Think about: how much time you need; how much money you need; how much equipment you need; who will help you; and who you want to avoid (this is anyone who will not support your goal including your family).

When you are done you will feel very good, and have something everyone will be interested in hearing (but not the people who will hold you back, don’t talk to them, zip it, put duct tape on your mouth, but keep it away from a naysayer.)

Get moving.  Right now.  Tonight.  No matter if it’s Saturday or Sunday.  Get moving.  Focus.  Focus on what you can do tonight or tomorrow.

Please comment.  Tell me about your situation and plan in the comments.

Bob

Wild and Wooly Week

Gee Wiz.  What a Week.

It is sometimes hard to keep a happy face and not commiserate with the down trodden.  But work hard at this trait.  Stay positive, always.  Always tell how well you are doing and where you are going with your business.

Always lead your staff with a happy face.  If you have to scream, go outside or go in the freezer or your car, but scream alone.

A business in a growth mode will want to keep the momentum going.  It won’t always go your way, but you must keep the tornado like momentum going.  (Some call the reverse a downward corkscrew.  Don’t go there.)

People are not really interested in how you children treated you or how you spouse cheated on you.  Or on how far you 401K moved in the wrong direction. 

And the way to always be positive, and it is hard and needs constant attention and focus, is to stay focused and know what you want to do next.  Be prepared with a backup plan for everything.

The Person in the Mirror: Yup, You.

 Are You Happy? 

Bob in Ashville, NC

If you are not happy there is a good chance the stress is coming from your business.  Look in the mirror and tell the truth.  If the stress isn’t in the mirror, then inventory your life – take your time, but find out what it is.

If it is the business, it is probably profits.  If it’s profits, your sales are most likely too low.  Now don’t dare laugh.  You can do something about low sales.  I remember my first meeting with an outside accountant in 1992.  He was a pleasant, friendly man and when I asked him what was wrong he just pointed to the top line, sales.  He said “you need more”.

That was 17 years ago, and since then the company is much larger.  It sometimes, well a fair amount of the time, sells 70,000 pounds a month.  That is up from much less in 1992.  You can do this.

Sweat can be your friend.  You know you have to do something to help you focus, get rid of distractions, even close one of your stores.  If you have one, then get to Sell More Coffee.  Make a big change. It will bring you big relief.   Figure out what you are not doing, then do it.  And do it fast and don’t second guess yourself.

Get your spouse or life partner to help.  Now I’m no psychologist, but if they second guess you, don’t talk to them about your new stuff, until you’ve done it.

So look hard in the mirror.  You might keep one handy – you know the tale of keeping one next to your phone.  You can’t help but smile into the mirror because you really like that person. 

The mirror is there too so you can have a conversation with your closest advisor once in a while.  Tell it like it is.

Then act.  Don’t twist and shout.  Just get going.

This is a proven way to happiness, and vacations and bill paying.

You can find me if you want to talk.

Bob