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If you're in the business of selling or delivering a commodity product made by someone else, you're an endangered species. You have a target painted on your front and on your back. Your customers are trying to disintermediate you, and buy direct from your suppliers. Your suppliers are trying to disintermediate you and sell direct to your customers.
Interestingly, there are lots of thriving businesses selling and delivering commodity products. How are they doing it? They're providing some value added along with the product, and either charging extra for the value added or getting a premium price for the product because of it.
I had an interesting "value added" experience recently. My wife and I are going on a service/mission trip with Rotary to Honduras this month. Of 38 different countries and US Territories I've visited, this is the first one where I've actually gotten vaccinations. Despite the fact that Honduras doesn't require any vaccinations, our trip leader (a physician) suggested that we get vaccinated for several 3rd-world diseases. Our doctor's office suggested two places to get that done -- either the Health Department or a niche business, Passport Health. I'm absolutely sure we could have gotten the vaccines cheaper at the Health Department.
At Passport Health, on the other hand, a "Travel Nurse Specialist" named Julie spent 1/2 hour with us teaching us a lot of things we didn't know about communicable diseases in 3rd-world countries, vaccination options for same, and also some things we'd forgotten about health-conscious travel in general.
We opted for the vaccines that made sense to us, each got a shot in each arm and then paid them substantially more than we'd have probably paid at the Health Department. As we drove away, we both agreed, "That was worth the stop".
We'd recommend them to anyone, despite the fact that what they sell is available elsewhere for less money. On the other hand, the knowledge that came with it was, in the words of MasterCard, "Priceless".
If you're selling or delivering a commodity product, look for things your customer needs along with the product -- knowledge-based services that you can bundle with the product and make yourself a "priceless" and indespensable element of the buy decision.
A great way to do this came from a Chief Executive Boards International meeting -- "Look Before and After" -- What does your customer use, do or need just before he uses your product and just after? That's what Passport Health figured out -- that people need knowledge of 3rd-world diseases before they choose a vaccination regimen. It would have taken us 2-3 days on the Internet to learn what Julie taught us in 1/2 hour. Priceless.
If you've found some of those, please click on "Comments" below and share them with others.
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TerryWeaver@ChiefExecutiveBoards.com
Many investors made costly mistakes during the 2008-2010 gyrations of the stock market. The January issue of Money Magazine outlined those mistakes, the most recent of which is investing in bonds or bond funds, thinking they're a "safe" place to preserve principal. Not so, considering the near-100% likelihood of a rise in interest rates, starting soon and continuing for several quarters, if not years. A small uptick in interest rates will hammer the principal value of longer-term bond investments.
It's surprising how many business owners who are totally confident making investments in their own businesses are fearful of making investments in other businesses -- namely the stocks of publicly-held corporations. Business owners, in my experience, are some of the least confident investors. They tend to invest too conservatively, if at all, and many times most of their net worth is tied up in their companies, for which they're providing all the working capital. CEBI members are no exception.
If this description fits, you are in the worst possible scenario -- lacking diversification in your net worth, with most of it tied up in your own company. What's the problem with that? There are 2 big problems, the first of which is that you haven't properly assessed your risk -- that your company is only one stroke, one heartbeat, one employee harassment suit or one product liability lawsuit away from extinction. And with it, most of your net worth. A far more risky position than that of a diversified investor.
The second problem with that is the point of Robert Kiosaki's book, Cash Flow Quadrant. No matter how you've earned money during your work life -- whether as an Employee, a Self Employed person or a Business Owner, financial freedom is the domain of the Investor -- the quadrant where you don't have to work at all -- your money works for you.
Now, think of how much time, study, practice and experience you've put into earning money through work. Realizing that by the time you're 60-70 years old you'll still need income for the next 20 or 30 years, what's your plan? It has to be income from successful investing, doesn't it? That's potentially 1/3 of your life. If it was worth all that time learning to earn it, isn't it worth some time learning to invest it?
If you think it's time to get more knowledgeable and confident in your own investing strategies, let me suggest an extraordinary resource I discovered a couple of years ago -- Money Magazine. This is one of the few real "how-to" laymen's guides to personal investing. Nothing flashy -- no hedge funds, derivatives, complicated or exotic strategies. Just simple, bread-and-butter saving and investing strategies that work and have worked (despite headlines to the contrary) for decades. Try it -- risk $15 on a year on this resource: http://www.amazon.com/Money-1-year-auto-renewal/dp/B002PXVZ40/ref=sr_1_1?ie=UTF8&qid=1296925222&sr=8-1
Perhaps your investment acumen is far above this "retail investor" guide. Consider giving your kids a subscription instead. You never know, they might read it and start saving and investing for their future retirement early -- the key to success in accumulating net worth.
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http://www.chiefexecutiveboards.com/
TerryWeaver@ChiefExecutiveBoards.com
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