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Welcome to the Wild Side – Going Entrepreneurial
My dad worked for General Motors for 37 years, his only full-time employer. My wife’s dad worked for DuPont for 35 years after a brief stint with IBM. Who knows – he might have been with IBM for 37 years if they had permanently assigned him to the Nashville office rather than sending him to Upstate New York. They used to be the norm – but now their career paths would be considered anomalies.
Have you considered – or been forced to consider – going entrepreneurial? I love the independent work world – but it’s a wild ride!
My career, which began at a local church as a youth pastor, and which includes three significant “employment” eras – plus a 5-year run of having my own company serve as my sole means of support – has been a much different path. This past week I concluded a three-year return to the corporate world. I moved to Nashville in late 2005 to launch a specialty book division with Integrity Publishers. When Integrity was acquired by Thomas Nelson, I served in the same publisher role with a much larger company over a well-established business unit.
With the publishing industry in a major funk – and no bailout being trumpeted on CNN – now was and is the time for me to get back to running my own business. One of the first responses I got to my announcement was from a good friend, also independent and entrepreneurial in mindset, who sent me a text that said “welcome back to the wild side.” As someone who thought he might be bankrupt and then wealthy and then bankrupt all in the same year, I can only smile – I can’t argue with his choice of words.
I’ve been asked if I’m worried about not being with a company in what may be the worst economic times since the Great Depression. Well, last I heard on TV, General Motors needs money from the government this week or it may be forced into Chapter 7, which means the doors would close. What safe place is there in the workforce today?
I’ve been told I’m the luckiest guy in the world. I’ve been told I’m crazy. Both statements are undoubtedly wrong – and right – for different reasons! Bottom line, I don’t think there’s a one-size-fits-all plan for navigating the white water rapids of today’s workplace. My inclination is that I won’t return to corporate (never say never), but I wouldn’t recommend that as the plan for everyone. Know thyself.
Have you considered – or been forced to consider – going entrepreneurial? I love the independent work world – but it’s a wild ride! I would offer three simple observations that might serve as counsel and advise for someone reading this.
- Everyone needs more than one “customer.” Your employer may be your boss and your means of financial support, but your employer is also a customer for your services. Is it smart to have one customer? Maybe it was in a bygone era but in times of economic turbulence, when many companies are struggling to stay alive, that’s probably not the case. But isn’t that kind of thinking disloyal and dishonest? I’m obviously not condoning or advocating the stealing of time and resources from the one paying you, but there’s nothing dishonorable in using gifts and skills, some of which may not have an outlet in your primary job, in ways that meet the needs of other customers.
- Hard work is the order of the day. Duh. That may seem too obvious to mention but let’s face it, we do live in an incredibly comfortable epoch of world history – with lots of our free time devoted to entertainment. A friend – and yes, he, too, is independent and entrepreneurial in his mindset – sent me this word of wisdom recently: “He who works his land will have abundant food, but he who chases fantasies lacks judgement” (Proverbs 12:11).
- Ultimately, there is no security in your own labors. So what’s the point in trying? There is great reward in working hard and working savvy, but the only true security is found in faith in God. The words of Job, who was the wealthiest man of his day, who lost his wealth, his health, and his family in a series of calamities, still ring true today: “Let him not deceive himself by trusting what is worthless, for he will get nothing in return” (15:31). Trust God more.
So whether your company is definitively in the black or the red, whether your career is booming or languishing, whether you have made the move to the independent work world or are happy in corporate, all I can say is it’s a jungle either way, so ‘welcome to the wild side!’
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The Subprime Crisis and Your Future
For most, the American dream has included owning ones own home. One of the most important reasons is that it has traditionally been a key component in ones retirement portfolio.
Will home values bounce back? I believe the answer is yes. But I think it’s going to take a few years. There seems to be too much inventory with so many people insisting on building new homes. But new house starts are finally going to slow down, which will be one more stressor on an already stressed economy, but which is required to tighten the housing supply and raise prices. How can I be so sure? Simple. If it costs $130 per square foot to build a new home and it costs $90 per square foot to buy an existing home less than 10 years old, home buyers are going to figure ways to freshen up and personalize the existing inventory. The per square foot cost gap is at its highest ever on a national aggregate.
The thinking goes like this: buy a starter house, fix it up, leverage the improvements and appreciation that have increased your equity stake, sell it, and then sew the proceeds into buying a bigger and better house; repeat those same steps with your new house to secure your next upgrade; repeat until sometime in your mid-thirties to late-forties at the oldest, buy your dream house with terms that insure it will be paid off no later than the day you retire, thus eliminating and in essence “fixing” one of the biggest variable expenses at retirement age, when odds are your income will go down or be eroded by cost of living adjustments.
Even as America got mobile and people cris-crossed the country with moves, the above scenario worked because of a persistent and unrelenting appreciation of home values. A transitional lifestyle might create a few lateral side trails, but the assumed destination has been the same: a home owned free and clear to live in — or to sell in order to pay cash for a downsized home (while pocketing the proceeds) or in a more desired retirement location.
Something quietly shifted in the equation that is a direct corollary to the boom in the use of consumer credit as a way of life. Home prices continued to rise well beyond the inflation rate, thus increasing equity, which is another way of saying, “wealth.” But rather than letting the home nest egg grow, we turned this windfall into a new revenue stream for living expenses, usually by refinancing an entire mortgage with debt added in or by taking a second mortgage(s) to pay off credit debt rather than to do home improvements, another traditional way to increase equity.
It’s been said that retirement should not mean no more work — idleness is bad for your health — but rather it should lead to the ability to do whatever work you want, ranging from volunteerism to a second career.
A few of the potential impacts on our future in light of the subprime crisis and ensuing loss of home values include:
* we may have to work more years full or part-time than we planned because part
of our retirement package has been damaged;* it’s tougher to move — unless a company is guaranteeing the sell of your home (and a lot of companies have been forced to eliminate this program) — and watch your home sit on the market; even if there are great deals where we want to move, most of us can’t afford to buy without first selling;
* with less “wealth” we don’t have as much credit available to spend on those goods and services outside our normal income stream — which will hurt the easy-credit-fueled economy;
* you might not be able to move where you want to at retirement age — not all regions are equally impacted by the subprime crisis in relation to home values; there’s a reason small “ghost towns” in areas of the country that have experienced
population loss for decades are filling back up — cheap mortgages.
Will home values bounce back? I believe the answer is yes. But I think it’s going to take a few years. There seems to be too much inventory with so many people insisting on building new homes. But new house starts are finally going to slow down, which will be one more stressor on an already stressed economy, but which is required to tighten the housing supply and raise prices. How can I be so sure? Simple. If it costs $130 per square foot to build a new home and it costs $90 per square foot to buy an existing home less than 10 years old, home buyers are going to figure ways to freshen up and personalize the existing inventory. The per square foot cost gap is at its highest ever on a national aggregate.
As someone who has benefited tremendously from the appreciation model — and then taken an “equity beating” during a recent move (that included building a new home) — I am realistic but optimistic that owning a home still needs to be a key strategy in securing your best financial future. Obviously, our future, financial and otherwise, is not just up to us, but I’ll throw out a couple modest suggestions:
1. Get on a schedule to pay off your house before retirement. If you aren’t familiar with the simple little secret of making double principal payments, which will allow you to cut your 30-year mortgage in half, visit any reputable financial website to learn how — it’s not nearly as daunting as it sounds. If you’ve elected one of the dreaded interest-only loans, put a principal payment into your monthly automatic payment schedule and start paying down — yesterday.
2. Don’t treat appreciation as a revenue stream but rather a long term investment — retirement. Second mortgages and refinancing as an ongoing strategy to eliminate debt needs to be eliminated.
3. Don’t put your eggs in one basket — your retirement nest egg should be a diversified program with IRAs, 401ks, Social Security, personal savings and investments, company retirement plans, ideas for post-retirement income, AND a home that is paid for!
4. Get bad spending habits under control. Enough said.
5. Outgrow your problems. To have more, you have to become more. Don’t float along in life, make a plan and build disciplines in your life for growing emotionally, socially, mentally, and most of all, spiritually.
