Daily Archives: January 3, 2008

Why Build A Business, Long Beach

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The first thing you will probably hear from anyone’s mouth when you ask the question: “What is the purpose of having a business?” will be to make a profit. I don’t think it is and I see it is one of the biggest problems many businesses face today, big and small.

The problem with focusing entirely on “making a profit” makes you forget how to build a successful foundation. Without a successful foundation, a deep ingrained culture and happiness at work, you are fighting an upstream swim of dissatisfaction.

This is where a Business Coach comes in handy. Many entrepreneur, and I should know, lose their focus and get caught up with being solvent. Rightfully so, it is scary wondering if you will be able to pay the bills next month. However, we need to remind ourselves why we have a business. Why are we on our own? We do we leave to comfort of a 9 to 5 job to pursue a dream? We want more and we want to meet a need out there. We come up with businesses that big companies cannot fill.

Obviously establishing a financial security is important but it shouldn’t drive the reason. The real reason is to offer quality service CUSTOMERS will like and come back to. This makes a business viable. If you have a great idea and treat your customer as simple cash flow, they will sense it and could easily turn to the competition. Take for instance big computer manufacturers or service providers. How many times are we move to go elsewhere or swear we will never do business with them?

When we are clear that taking care of the customer is the number one priority, it becomes easier to concentrate on what makes it a good experience in order for them to come back. And guess what? They come back and you make a profit based on the extra service you provide. This is something most big companies have long forgotten and the reason why so many people flock to smaller personal companies.

Profit comes when customers are satisfied and come back for more. Thinking only in terms of profits is a great way to lose track of the essential, those who give you the profits. Let’s not put the cart before the ox. And for those who need help growing their ideas and staying on track, why not contact me. Let’s talk.

Affordability, that Is The Issue, Long Beach

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Everyone talks about when the market will correct itself but few talk about what is the correct level.

With affordability gone out the window, I met many sellers putting their $1.5 to 2 million homes on the market saying they knew their children could not afford a home in this market. Indeed, not even those same sellers could have afforded their homes had they bought a year ago.

The La Times had a good article that reflected on how far this market went and how unsustainable it became for many. Thanks Calculated Risk.

Indeed, consider in 2002, the median price of a home around Los Angeles was $270,000 and the median homeowner’s income was $65,000. And that with a $50,000 down payment, the annual cost of that house would add up to about 33% of the median household’s income — just under the 35% mark that the Federal Housing Administration calls the upper limit of “affordable.” Now take into consideration this, in 2006, the cost of that same house doubled, to $540,000 but median income rose a paltry 15%. So today that same set of costs come to 60% of gross income and it is not uncommon to hear some households sinking up to 75%! Yikes! Three quarters of what is left in your bank after taxes ad other fun stuff goes to your home. Who exactly can afford this? Sometimes it feels someone tried to create a generation of mortgage paying people.

Yes prices will come down. Yes prices are coming down. Yes prices need to come further. Even of they come down 33% it still would make for a nice appreciation curve. And don’t listen to overly-optimistic people telling you the market will go up soon. It can’t. Simply said, it has plateaued and hit the ceiling. There is a certain point when it becomes unaffordable.