The E-Myth Revisited: Small Business Book Review

I bought The E-Myth Revisited: Why Most Small Businesses Don’t Work and What to Do About It by Michael Gerber at a outdoor market because it was a finance “bestseller” and I’d seen it on a few reading lists. It’s been sitting on my bookshelf since (along with many others…), but once I picked it up and read a chapter, I went ahead and finished over the next two days.

Why Businesses Fail

The “E-Myth” stands for the Entrepreneurial Myth, which I’ll paraphrase as the belief that all a successful business needs is a hardworking, skilled, fearless entrepreneur. When we think successful small business, we think of Bill Gates or Richard Branson of Virgin. Is it really that simple? 40% of small business fail within one year. 80% of them fail within 5 years.

This book states that, in reality, a successful business needs three roles to be fulfilled:

• a technician which understands the technical aspects of the business,
• a manager which plans and organizes, and
• a entrepreneur who provides the vision and energy.

You might think you have all of these characteristics already, but these roles are often in conflict with each other. Most businesses start out with only one role really filled – that of the technician. A plumber starts a plumbing company. A baker starts a bakery. A graphic designer starts a design shop. Usually, the motivation is that they don’t want a boss. The end up have a poorly trained boss – themselves.

When things get hard, usually the technician wins out. The perceived solution is to work harder, do everything by yourself, so that you can “do it right”. This is where many businesses start to fail. Now, if you’re really stubborn and hardworking, you can make this stretch out for a long time. You’ll also be really tired and unhappy.

I actually see this first part of the book as separate from the next part. It teaches you to look at how you are running your businesses. Are some of the roles being too strong, or being neglected? The manager tends to micromanage, and the entrepreneur tends to be the frustrated dreamer.

The Solution

Okay, so now what? How do you take your business to the next level?

Gerber says to look at the franchise model, and uses McDonald’s as an example. Don’t focus on the fact that you may hate the food there. The true power of McDonald’s is that every single aspect of the business was broken down step-by-step and laid out that a random person off the street could “read the manual” and open up their own McDonald’s restaurant. Where to locate the restaurant. The layout of the kitchen. The menu. How each hamburger is ordered, stored, cooked, assembled, and finally delivered to the customer.

What’s your system? If you were to train a reasonably smart person without any knowledge in your field, how would you break down your business to them? What is the unique value proposition that you offer, and how do you achieve it? What does each roleplayer do? As the saying goes, “Explain it to me like I’m a 10-year old.”

Recap

I view this book as “big picture” type of book that will definitely get you thinking differently about your business and business goals. Since it is also relatively short and easy to read, I would recommend it to anyone who wants to work in a small business, or is already working in one. (It’s also really easy to find at the library or used for cheap – try Amazon or Half.com.)

The book is definitely more applicable to a small business where you plan on one day being more “hands off”, like a restaurant, a store selling widgets, or a big design agency. But even for the many people out there who are perfectly happy being a one-person show, you can still apply the concepts of this book. You can break yourself down into what your special roles or tasks are. Write it down. You may not have ever thought of yourself in this way. Then you can focus on those areas, and either get rid of or outsource the tasks that you don’t need.

Now, some critics will call this book common sense from a self-appointed guru. In this way, I feel this book is a bit similar to Rich Dad, Poor Dad by Robert Kiyosaki. I didn’t really like the rest of his books, but the idea that you should buy assets that grow instead of liabilities like cars or gadgets can be helpful. But reading it was definitely a net positive for me, as was reading The E-Myth Revisited. Both are not the best writers out there, but still manage to convey their message.

Posted in Book Reviews, Entrepreneurial | 8 Comments »

Borders & Waldenbooks 50% Off Coupon

Borders has a printable coupon good for 50% off any one single item. Valid 12/14-12/16. The coupon says you need a Borders Rewards number, but it’s free to join. Maybe I’ll actually buy a book not from Amazon!

Posted in Deals & Offers | 1 Comment »

eBillme Offer Fine Print: 10% Off Home Depot Gift Cards, $15 Rebate on $100 Amazon.com Gift Card

For some reason, I always thought the website eBillMe was a service that lets me pay over time (and also pay interest charges). I was confusing it with BillMeLater. Upon further review, it seems like eBillMe tries to do the opposite. The way their site works is that it lets you pay for things using your own bank’s online BillPay service. The advantage of this is that you are “pushing” your payment to vendors, and are thus not sharing any sensitive information like credit card numbers or even your checking account number from a personal check.

The disadvantage, in my view, is that you lose any potential credit card rewards you could otherwise get. You can still “live debt free” if you pay off your balances every month.

In any case, I took a second look because they were promising some enticing things: 10% Off Home Depot Gift Cards and a $15 rebate on a $100 Amazon.com Gift Cards. However, you always have to read the fine print. One offer turns out a lot better than the other…

$15 Mail-in Rebate on $100 Amazon.com Gift Certificate

I’ll start with the better one. If you buy a $100 gift card from Amazon.com through eBillMe by 1/15/2011, they have a mail-in rebate for $15 cash. Here is the rebate form PDF. First-time eBillMe customers only.

Other than the fact that you have to do a mail-in rebate, this offers seems otherwise pretty straightforward. Very worst case, you still have the Amazon.com gift certificate. Selected fine print:

Buy any Amazon.com Gift Card using eBillme before January 15th, 2011 and receive $15 by mail. Customer must fill out the rebate form and mail in. Offer applies only to Amazon.com Gift Card purchases using eBillme between September 15th, 2010 and January 15th, 2011. Your Amazon.com Gift Card must be a minimum of $100 and your bill must be paid in full to participate in the promotion. Rebate must be postmarked within 15 days of purchase date. There is a limit of one (1) rebate per person, household or address. Order must be paid in full.

10% Off Gift Cards at Home Depot, etc.

Gift cards for 10% off at retailers like Home Depot, JC Penney, and Zappos.com? Sounds nice. What’s the catch?

Well, to start off instead of getting the savings upfront, you accumulate “cash back” in an account. After you reach a minimum of $10, you can use the money as a coupon when shopping through stores that accept payments through eBillMe. These are rather limited, and include Sears.com, Kmart.com, and Tigerdirect.com along with a bunch of smaller stores. Once you accumulate $50, then you can request actual cash via a mailed check, but only in $50 increments.

There’s more. You can only earn up to a limit of $20 “cash back” per order, and $200 total per 12 month period. Your earnings expire after 24 months. Finally, the 10% cash back is only valid for first time use of eBillme. You’re probably back down to 1% back after that first purchase. So I couldn’t just buy $500 of Home Depot gift cards and get a $50 check mailed to me.

Honestly, that’s just too many hoops for too little reward. I’m staying away unless they greatly simplify the process in the future.

Posted in Deals & Offers | 1 Comment »

Practical Uses For American Express Gift Cards

American Express Gift Cards are basically prepaid credit cards that work anywhere that accepts American Express. The good thing is that they have no inactivity fees, no maintenance fees, no balance check fees, and they never expire. Other than for gifts, they are especially useful whenever you need to accelerate or time-shift your credit card purchases to be earlier than they actually are.

Here’s what I mean by that. A common problem you might have is that your credit card that earns frequent flier miles, and need to earn a certain number of miles to reach your next award or qualification tier. However, you want to redeem now, so with these gift cards your miles can show up faster.

Also, recently there have been a lot of great credit card sign-up offers that require you to spend $XXXX within a certain amount of time. For example:

• Chase Sapphire Preferred offering $250 in cash or $312.50 credit towards any major airline purchase – requires $3,000 in spending within 3 months.
• Starwood Guest Credit Card from American Express offering 25,000 Starpoints worth several free hotel nights or other perks – requires $5,000 in spending within 6 months.
• Citi AAdvantage Visa offering 75,000 American Airlines miles – requires $4,000 in purchases within 6 months.

Whether you have a Visa, MasterCard, or AMEX, you can simply buy these gift cards and they’ll count as rewards-earning purchases now, and you can use them up later at any merchant that accepts American Express. All the grocery stores I frequent take AMEX now. This way, you can either make the deadline or simply meet it early without worrying.

Finally, they can provide some anonymity when shopping, while mostly preserving your flexibility.

There are two additional fees that you have to worry about. First is the purchase fee, which is usually $3.95 per card. There is usually a promotion code floating around to waive these. They send me a promo code via e-mail EMDECWEL that will waive any purchase fees until January 31, 2011.

Next, there is a shipping and handling charge. Right now, 2-day expedited shipping is $5.95. However, if you sign up for their “Premium Shipping Plan”, you can get free next-day air shipping trial for 90 days. You must cancel before the 90 days is up, or get charged $99 per year. I actually opted just to pay the shipping fee this time.

During this promotion, customers who have enrolled in the Premium Shipping Plan may use the Plan at no cost for the first ninety (90) days after enrollment (“Trial Period”). The Premium Shipping Plan membership fee of $99 per year will be charged to customers ninety (90) days after initial enrollment if customer does not cancel membership through the Gift Card Account portal online prior to the expiration of the Trial Period.

By the way, for some reason, American Express does not ship gift cards to the states of HI, LA, and VT.

Posted in Deals & Offers | 9 Comments »

‘Tis The Season For Giving… Away Your Extra Stuff

It’s the Season of Giving, so why not give away the things you don’t need anymore? I think right now is even better than “Spring cleaning”. We just spent a chunk of this past weekend making a box of stuff to give to various charities. Here’s why, along with some tips:

• Get started. In order to break out the Christmas or other holiday decorations, you’re already rummaging around the attic, basement, or garage. Don’t stop there! One helpful tip I read about recently was to get three big boxes and mark them Keep, Undecided, and Toss. Then you can just barrel through quickly without getting stuck on any single semi-sentimental object.
• Full Closets? Most people probably have gone through all four seasons of 2010 and not worn a lot of their clothes. If you haven’t worn something in an entire year, it’s seriously time to consider donating it. This time of year, places are always looking for winter clothes like coats, gloves, and boots. If you need some extra spending money, sell your trendier stuff to vintage and thrift shops like Buffalo Exchange.
• Getting kids involved. The young ones are probably very exciting about the incoming gifts. Now that they are a “big boy” or “big girl”, isn’t it time to look through their toy box and see what they don’t play with anymore? Santa may not bring them as much stuff if they don’t have any more room… Gently used toys can easily be donated, even if you can’t re-gift directly.
• End-of-year tax deductions. If you donate by December 31st, you can claim any charitable donations as a tax deduction for your 2010 taxes and reap the benefits sooner (assuming you itemize). Here are a few donation valuation guides from a Salvation Army, another Salvation Army, and a Goodwill branch. I used ItsDeductible from the Intuti TurboTax folks last year and liked it.
• Use the internet to maximize your effectiveness. Sites like Freecycle and Craiglist allow you to give your stuff away to someone who can actually use it. There are also many niche charities popping up here and there, specializing in redistributing everything from sporting goods to business clothes for job-seekers to partially used gift cards.

Take a break from the holiday accumulation frenzy and declutter instead. Even though I put it off as well, it always feels great afterward.

Posted in Giving Back, Simple Living | 3 Comments »

$1 for Three DVD Rentals from Redbox – Groupon

Here’s a little deal that won’t break the bank. Groupon has a national deal this weekend (Fri-Sun) that will get you three one-day rentals at RedBox kiosks for $1. Retail is $1 per day, so $3. If you don’t have a Groupon account already, please use my sign-up link, and I’ll get some Groupon credit for referring you. Then visit the deal link.

Expires Mar 10, 2011. Limit 1/person. Valid only at physical Kiosk US locations. Valid for 1st night rental only. Not valid for video game or Blu-ray. Code usage is subject to standard Redbox terms & conditions. Card will be charged if rental is not returned by 9pm next day.

If you’ve never used Redbox before, first-time users that register for a new account on their website also get a code for a free rental after their first paid rental. The unofficial site InsideRedbox is a good source for ongoing free coupon codes. Here is a kiosk locator.

Posted in Deals & Offers | 4 Comments »

Sharebuilder New Account $50 Bonus

I just noticed that discount stock brokerage Sharebuilder is offering a $50 cash bonus as long as you open a new account with $50 by December 31st with promotion code 50WS10. (The code is also mentioned on the promo page.) It doesn’t appear that you even need to make a trade. Fine print:

** You must open a new account with ShareBuilder and deposit $50 or more to be eligible for this promotion. Initial deposit must be completed by 12/31/2010. ShareBuilder will deposit a $50 bonus approximately 4-6 weeks after your first $50 deposit. The $50 bonus offer is available for Individual, Joint and Custodial accounts only. Offer not valid for IRAs or ESAs. The $50 bonus from ShareBuilder is not available for withdrawal for 90 days after it is awarded to your account. This offer is not valid with any other offers and is non-transferrable. Limit one ShareBuilder account bonus per unique customer or custodial beneficiary. [...] Offer expires 12/31/2010.

If you open it quickly, you should be able to take combine this with these several promotional codes worth over a hundred dollars in free trades, both real-time and automatic. Automatic trades differ from the real-time market/limit trades that most brokerages offer, as they are market orders that only execute in batches once a week on Tuesdays. In most cases, this is best suited for people regularly investing a constant amount (i.e. $50 a month) into ETFs or widely-traded stocks. The commissions start at $4 for each automatic trade, and $9.95 for a real-time trade.

Posted in Deals & Offers, Investing | 13 Comments »

Vanguard Total International Stock Index Fund Now Has Admiral Shares

If you own shares of the Vanguard Total International Stock Index mutual fund, you may be interested to know that Vanguard recently announced that Admiral shares of the fund now available to those with balances of $10,000 or more. Here are their respective pages:

Vanguard Total International Stock Index Fund Investor Shares (VGTSX)
Vanguard Total International Stock Index Fund Admiral Shares (VTIAX)

Admirals shares are a separate share class in addition to the standard Investor shares. While owning the same underlying investments, they take advantage of the cost savings of larger accounts and thus have lower annual expense ratios. Back in October, Vanguard reduced the minimum amount required to qualify for Admiral Shares on most of their index funds from $100,000 to $10,000.

Vanguard Total International Stock Index Investor shares have an annual expense ratio of 0.32%, while the Admiral shares are at 0.20%. That’s a difference of only $12 annually per $10,000 invested, but with compounding over time that can become significant. If you qualify, Vanguard says they will convert you automatically sometime “early next year”, but you can do so manually right now with a few clicks. Here’s a step-by-step guide [pdf], so why not?

After the conversion, you will remain invested in the same Vanguard fund. We’ll transfer your account options and cost-basis information to your new Admiral Shares automatically. When the change is complete, we’ll send you a confirmation of the transaction. We’ll also send you a separate confirmation for any account options that we carried over to your new Admiral Shares.

Also worth mentioning again is the fact that the Total International Stock Index Fund itself is making some changes soon. Its benchmark index will switch to the MSCI All Country World ex USA Investable Market Index, which differs from the previous index by adding exposure to Canada and Israel, as well as adding a ~13% allocation to small-cap international companies.

The combination of the benchmark change and this new Admiral shares option, in my opinion, makes the holdings more comprehensive and even cheaper than my current holdings of the Vanguard FTSE All-World ex-US ETF (VEU). I’m going to direct all my new investments into VGTSX/VTIAX. I’m not selling my existing shares of VEU right away though, as I already have some capital gains. I suppose that’s a good thing.

Posted in Investing | 4 Comments »

Quantitative Easing Is Printing Money

You’ve probably heard the term quantitative easing. You might even have read news or blog articles about what it means. I’ve always thought all that blah-blah-blah about the Federal Reserve buying Treasury Bonds sounded a lot like printing money. How else do you explain a government essentially buying it’s own bonds? Think about it…

Don’t believe me? Well, let’s have Ben Bernanke explain it himself. Once while covering his butt, and once when it was okay to tell the truth. Via The Daily Show:

Hey, maybe it’ll turn out to be a good idea, but at least tell us the truth. Increasing the money supply is as you said Ben, “effectively” printing money.

Posted in Funny | 21 Comments »

Coinstar Promotion: $50 in Gift Cards for $40 in Coins (No Mail-in-Rebate Required)

Coin-changing machine operator CoinStar is repeating a promotion where if you change $40 in coins into a gift card, you can receive an additional $10 gift card by mail at certain retailers. It’s actually better this year because it is no longer run as an annoying mail-in rebate. This time, after you exchange $40 in coins for a gift certificate, they provide a promotional code on the receipt that you redeem online. The $10 bonus certificate is still sent via snail mail, but this time “within 1-2 weeks” and without wasting time with mailing forms and postage.

The participating retailers include iTunes Store, Lowe’s Home Improvement, Borders Bookstores, and Regal-affiliated Movie Theaters. However, the page also says that Amazon.com will join the promotion on 12/9/2010. (Update: Amazon.com is officially added. Redemption is via e-mail code, so no waiting. It mentions toys and games, but appears to be valid for anything else as well.) The page seems to hint that Gap and Starbucks will also join in eventually, but who knows. Personally, I like the idea of getting rid of my coins and getting a 20% 25% bonus since I shop regularly at Amazon anyway.

By the way, if you convert your $40 into a gift certificate instead of cash, you’ll avoid their normal exorbitant 9.8% processing fee. Here is their kiosk locator.

I wrote about Coinstar and other things to do with loose coinage before and people shared some nice tips in the comments.

Posted in Deals & Offers | 14 Comments »

Fidelity Freedom Funds Review: Why You Should Avoid High Cost Target Date Retirement Funds

If you have a workplace-sponsored retirement 401(k) or 403(b) plan, chances are you have some form of target-date retirement fund. The Fidelity Freedom Funds are some of the most popular ones out there. In comparing a few funds, I’ve found that the Fidelity funds have more than twice the assets of even the similar Vanguard funds. However, there are a few reasons why you should avoid the actively-managed Fidelity Freedom funds if at all possible.

This post is a bit long, so here’s a roadmap of what I’m going to try and show:

(1) The goal of owning actively-managed mutual funds is to beat their benchmark. Own the winners and not the losers. Fidelity Freedom funds hold so many different funds with overlapping holdings, that in the end they basically own everything. Thus, it’s exceedingly difficult for them to accomplish such outperformance. Thus, over time their performance before fees is likely to simply match that of their benchmark.

(2) Due to their higher expenses, this means that their net performance (what investors actually get) will be very likely to underperform the their benchmark. The amount of underperformance will closely match the amount of management fees charged.

(3) This expected underperformance is confirmed by looking at their historical performance over the past 3, 5, and 10 years.

(4) Instead, simply picking low-cost index funds to replicate the benchmark give the best chance of higher performance. For IRAs, you should move your money to a broker where are such options. Each year, it is more likely that investors have low-cost options in their 401k accounts.

Read the rest of this entry…

Posted in Investing, Retirement, Reviews | 20 Comments »

Citi Platinum Select Card: 0% APR Balance Transfers for 18 months

Yes, you saw that right. Citibank is now offering 0% APR interest on balance transfers for 18 months on its Citi Platinum Select MasterCard. Not only is it longer, but notice they are not allowed to say “up to” anymore with the new credit card laws. If you get approved – this card requires good to excellent credit – then you’ll get the 18 months. No annual fee.

If you’ve already got this card, check out this list of 0% APR balance transfer offers for similar offers.

Posted in Credit Cards, Deals & Offers | 11 Comments »