Friday, February 26, 2010
The book I read this week was The 21 Irrefutable Laws of Leadership by John C. Maxwell. I really enjoyed this book. I was skeptical of any book that used the word "irrefutable" in it's title, but I would have to agree. Some of the laws are a little more generic than others, however, they are all needed to be the best of the best. That's what I am going for and I hope you are too.I'm going to focus on the fundamental concepts of building an amazing leadership focused organization.
Leadership is incredibly important within any organization. Whether you are working on a class project with eight people or running a company with 8,000 employees. You need to be very deliberate in organizing the structure of leadership within the organization, then putting the right people in those leadership positions to create the potential for growth and development, and lastly, encouraging empowerment within your leaders, to have everyone, from the bottom to the top, focusing on ways to make the organization better.
What is the ideal structure?
Organizations work most effective when each person has a single leader. Clearly, communication is one of the most important portions of business. If you have more than one leader per person, communication gets quite skewed. The problem with multiple leaders is that each person will have expectations and those expectation don't always exactly match. Most organization's structure looks like an upside-down tree. You have one leader at the top and you trickle down, but at no point, in a successful company's tree, do you see more than one leader attached to an employee.
How do you get the right leaders in place?
My favorite concept from this book is The Law of Magnetism. Leaders will attract people like themselves. Now, the people attracted won't be an exact match to you, but they seem to correlate in a few areas: Attitude, Background, Values and Energy. This idea is logical because you know you. When you are taking applications for a hiring or recruiting for an organization, you are attracted to the people that are like yourself. When you talk to someone you will subconsciously be aware of the small details in conversation that match the qualities you excel in. This is a powerful concept that really makes an organization shine. If you have great leaders in place, act as a face of your company than those people will be hiring rock-stars- like themselves- into the organization. Conversely, if you have someone that is just average you will magnetize a multitude of average people into the organization.
Now that you have the right people in the organization you must understand The Law of Progress. Leadership skills don't manifest overnight once someone is brought into an organization. Some people have a natural gift to learn how to lead quickly and some don't. You have duty to mold the people you have attracted into the organization to be the next version of yourself. And you only get as much as you give. Spend time developing your people and you will see the rewards of your hard work in time.
They are important to all managers. They must be clear and well defined. Priorities are important for many reasons. Maxwell's Law of Priority is well said with this paragraph "First, when we are busy, we naturally believe that we are achieving. But busyness does not equal productivity. Activity is not necessarily accomplishment. Second, prioritizing requires leaders to continually think ahead, to know what's important, to know what's next, to see how everything relates to the overall vision. That's hard work. Third, prioritizing causes us to do things that are at the least uncomfortable and sometimes downright painful." Well said! Each level of an organization needs to have priorities well established. They create a road map for success. If they aren't there, the leader is likely to create the road map on their own and while the rest of the organization is going north that leader will be going south and ultimately that leader will working against the progress of the organization.
Becoming the most valuable person in the organization...
The World has been a gross misconception about leadership. Leading is not about enriching yourself... it's all about empowering other people. In television and movies you see leaders portrayed as positional powerhouses that are controlling everything and everyone within an organization. They are seen micromanaging all the leaders within their companies. A lot of people use this philosophy in their own leadership. It sometimes stems from misguided fear. Everyone should be using The Law of Empowerment, but managers think if they empower their leaders, they will train them to do everything and they will work themselves out of the job and their superiors will not recognize any work done by them. The truth is that if you empower your staff and if you ensure that your leaders can accurately fulfill the duties you delegated, you will make yourself absolutely indispensable to the organization. You will have more time to focus on special projects. Focusing on developing leaders to be like yourself, instead of merely attracting followers is using The Law of Explosive Growth. You'll build yourself a reputation of an amazing leader because you developed more leaders for the company. And then you'll find yourself in the spotlight of the company... accepting promotion after promotion. Here is a few versus that Maxwell uses that illustrates the difference in focuses.
Leaders who Attract Followers … Need to be Needed
Leaders who Develop Leaders … Want to be Succeeded
Leaders who Attract Followers … Develop the Bottom 20%
Leaders who Develop Leaders … Develop the Top 20%
Leaders Who Attract Followers … Focus on Weaknesses
Leaders Who Develop Leaders … Focus on Strengths
Leaders Who Attract Followers … Treat Everyone the Same
Leaders Who Develop Leaders … Treat Individuals Differently
Leaders Who Attract Followers … Spend Time with Others
Leaders Who Develop Leaders … Invest Time in Others
Leaders Who Attract Followers … Grow by Addition
Leaders Who Develop Leaders … Grow by Multiplication
Leaders Who Attract Followers … Impact Only People They Touch
Leaders Who Develop Leaders … Impact People Beyond Their Reach
So get out there and lead people. Invest time into educating yourself on leadership techniques and pass that onto everyone in your team. Don't try to be the smartest person in the room. Be a leader of people and make your organization propel itself into unparalleled growth. This book was great. If you are a leader in any arena; home, church, or work, take a look at this book! If you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.
Saturday, February 20, 2010
The book I read this week was What Every Real Estate Investor Needs to Know About Cash Flow by Frank Gallinelli. I feel I have gone back in time... sitting in the University library stewing over an accounting book. If I were reading an accounting book for this blog, I wouldn't even know what to tell you without risk of having you pass out due to boredom half-way through my first sentence. This will not be a long post because I will not be going in to detail on how to calculate a present value or future value formula. I will not be computing simple or compound interest and I certainly won't be laying out a amortization table. If that's something you are interested in learning you can buy an old accounting book on amazon for pennies (literally).
There is no doubt that the formulas and knowledge in this book have a purpose. Even though computer programs can compute the majority of these formulas it is nice to know what is really happening and what it means. For instance, you don't need to know how to do your own taxes and create a maximum refund, but you should know the skeleton of what your tax pro is going to be doing for you and what formulas are used. For real estate, pretty much every computation that you'll ever have to do can be done in Microsoft Excel. The more familiar you are with setting up an excel formula, the easier it will be to complete your pro forma.
The author has a website that has almost every formula you'll ever need. It makes a great reference when you are making your own formulas. Here is where you can find them http://www.realdata.com/book/download.html
The biggest eye-opener for me from this book were the 4 different means of making money from a real estate investment. I never thought of two of the ideas as means for making money, but they really are. I always combined appreciation and, what he calls, loan amortization in one over-arching field called equity, but it makes sense to separate the two because they can't be calculated with a single formula and can value independently of each other. The obvious ways to create money are through cash flow and appreciation. The two less looked at are loan amortization and tax shelter.
Cash Flow: This is a obvious function of real estate. The fruits of your labors.... the money left over from your rent payments after mortgage, taxes, maintenance, property management etc. This is the key to any investment property.
Appreciation: More often than not, real estate will increase in value over time. The difference in the building price between now and 5 years from now is the appreciation on that property. It can be due to several factors including: inflation, developing area, better school systems, crime rates and more.
Loan Amortization: With your investment property, the tenants will be paying off your mortgage payment and you interest payments associated with your mortgage. That means that they are helping you buy the property. So, if you originally have equity equal to your down-payment, in 5 years your equity will be much more than that because your tenants have been adding to that.
Tax Shelter: This is a means of making money through net profits. You don't directly receive any money when using an investment property as a tax shelter, but you will be paying less taxes than you normally would so you indirectly have more money in your pocket. With current regulation you have several methods of cutting back taxes with real estate. A couple include depreciation and interest. Depreciation is a funny one because even though your property is appreciating in value, you can write off the wear and tear over a certain amount of time. And you can write of the interest paid on the mortgage, which is actually being paid by your tenants.
This book will stay on my book shelf as a good reference because it has plenty of formulas that might be nice to consult someday (if there is a blackout and I can't use a computer). The first chapter when the author explains evaluating properties is very helpful and a lot of the commentary about the other calculations are helpful because you can get into the mind of the seller and ensure you aren't getting "taken." I think this book could be helpful for any soon-to-be investment property investor. If you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.
Saturday, February 13, 2010
The book I read for this week was Kangaroo Millionaire by Marc Hrisko. The Kangaroo reference in this book is about his wife. She is from Australia and motivated and encouraged him to reach his potential. There are so many tips and advice in this book about getting rich I don't even know where to start. I suppose I will give what Hrisko considers the 7 Counterintuitive Secrets to Springing Ahead in Life and Wealth. However, as a disclaimer, this book offers so many resources and tips within it's short 155 pages I will not be able to cover the entire scope of this book. But I will do my best...
1. Ignore the Advice of 99.99851% of the Planet: Hrisko has a great point here. There are over 6.6 billion people on the earth that have not made a million dollars and a lot of those people try and give advice on how to get there. You should take the advice of the people who are there... people who have done it. It is wise to find a good mentor that fits into the million-dollar category, so you can sponge up their wisdom. This point illustrates why I do this blog the way I do... Many people have suggested that I don't write about books, but give my own predictions and advise based on what I know. Well... I don't know much more than what I can be taught. I am just starting my life and I would be lying if I tried to pass off the information I receive as my own. The authors I review are the millionaires/amazing leaders and I am merely the middleman between you and their wisdom.
2. Debt Isn't All Bad: Debt to make money isn't for everyone, however, if debt is used correctly it can make you boatloads of money. Hrisko states that a man that is 30 million dollars in debt is a very rich man. All rich people are in some sort of debt. Additionally, it is very hard to be millions in debt if the lender doesn't think you have something to make you worth that much. Now I will give you a tidbit used in this book that I think is risky, but it is genius...
Raising $50,000 in 20 Minutes Using Credit Cards Without Interest or Finance Charges
You get Courtesy Checks from your credit card companies in the mail several times a year. Normally, people just discard these. Save them. They cost nothing to use and have incredible potential if you plan correctly.
1. Figure out what you need the capital for... flipping a property, investment property, business, etc...
2. Write a Check From Card A, for as much as your limit, (After you have increased your credit limit as high as you can, just call and ask) to yourself and deposit it into your checking account and pay for the down-payment of your investment.
3. Before Card A's due date, write yourself another courtesy check from Card B and deposit in your checking account.
4. Use the money deposited in your account from Courtesy Check from Card B and pay off Card A's Balance.
5. Do this as many times as necessary to have free capital raised. I advise you to have a plan of return on investment that will surpass the amount of capital you have "raised." It's obvious, but I don't want anyone to think this a great idea and go buy a big screen TV and see how long they can go without paying for it. That's just dumb.
3. Be the Stupidest Person in the Room: The smartest people in the world are not the richest people in the world. "If IQ equaled riches, Albert Einstein would have been the world's richest man. He wasn't." The trick to riches is surrounding yourself with the smartest people you know and using their knowledge. Marc Hrisko contends that any person with average intelligence, armed with the right education and a Kangaroo mentoring their path can be a millionaire within 2 to 3 years. Use the knowledge of those around you and rocket yourself to riches. The old saying used to be "If you want something done right, do it yourself"... That's not a smart saying.... "If you want something right, have the right person do it"... That seems a little more reasonable. To think that you are the best at everything you do is arrogant and ignorant. Use your team, and analyze each person's skill sets to best serve your purposes.
4. Be Lazy: I got to say... I don't like the name of this chapter, but the message is good. The idea is not to do more than you have to. There is no reason to micromanage everyone around you or do things that aren't worth the time. If you monetize your life and worth, you may find that an hour of your time is worth X. If you don't like cleaning your house than get quotes for the cost. If the price of cleaning is Y, then you subtract X by Y and you have the real cost or the savings for you. Monetize your worth: If one of your income generators you could be working on instead of cleaning is finding, buying, and renting out multi-family properties. The profit you realize from the average property divided by the time it takes from start to finish is what you could be making. Add that to the hourly net income you receive from your main career. You might find that you are worth $30+ an hour in an 18 hour day and to hire a housekeeper will cost $25 an hour. This means that if you do it yourself (and you don't find it enjoyable) then you are LOSING $5 by not outsourcing. So it seems like a no-brainer. Also on the subject of being lazy, Hrisko points out the same phenomenon that Tim Ferriss did in 4-hour Work Week... Crises don't happen often, if ever. People don't need to get a hold of you all hours of everyday. Teach your team to fish, meaning teach them to solve problems for themselves and you will free up the phone time they might consider a crisis phone call. You'll have more time to do other things that YOU need to get done.
5. Pay Higher Prices: You get what you pay for. If you go with the lowest bidder, in most situations you will get the lowest quality. If you never go with the lowest bidder than you solve that problem. The time wasted on fixing problems created by the lowest bidder are not ever worth it. Usually these lowest bidders will cost you more money and time in the long run than you ever thought possible. For example: if you have the lowest bidder come out and fix your car he may just wrap the engine in duck tape and in one more week you will have way more of a problem. Higher prices also correlate in a social arena. If you are looking for a club or activity you should want to join the more expensive and more elite club. This will put you in contact with the highest achievers. And as we learned earlier, surrounding yourself with the best of the best is a great way to rocket yourself to riches.
6. Be Unoriginal: You don't have to invent the wheel. The richest people in the world did not come up with their ideas from scratch. Hrisko made his fortune in real estate... what a novel idea. Oh wait! People have been doing that since.. forever. Hrisko was even one of the youngest members to ever be inducted into the Real Estate Hall of Fame. He picked something that worked and made it big. Look around and see what made money for other people and jump on that train. There are several ideas that will get you there, so do the one you are most interested in. Real Estate, Stocks, Forex, Franchises, and the list goes on...
7. Give Stuff Away: "We make a living by what we get. We make a life by what we give"- Winston Churchill. It is very important to donate your time, treasures, and talents. Besides it being the right thing to do, it comes full circle. You get what you give. As Hrisko writes, generosity is like a boomerang. Additionally, when you are known for being a generous person, people are more inclined to work with you. If you are known for a scrooge or a miser with your money than people are careful in their dealings with you, less inclined to trust and deal with you for fear of being "taken."
This book is full of resources and I would be remiss if I didn't share them with you... please look at each one, they are worth the glance. I wouldn't take the time linking them if I didn't feel strongly about this.
http://www.Mint.com (I love this site, I have been using it for years and it does a wonderful job of keeping track of all my finances, setting up budgets, and alerting me of uncommon activities)
http://www.Zagat.com (Find a nice place to eat near your home)
http://www.MarcHrisko.com (Type in your name and email on the left and you'll get a free E-Book)
http://www.Rememberthemilk.com/ (A cool site that helps you keep track of "to-do" activities)
http://www.Volunteermatch.org/ (Find a volunteer organization around your area and make some changes)
http://www.Gate1travel.com/ (Last but not least! I can't believe I didn't know about this site sooner... It enables you to travel internationally for less than a thousand dollars in a lot of cases... Including airfare!)
This was a great book and I wouldn't be surprised to see it on "The List" in the near future. I look forward to hearing more from Marc Hrisko. He has a great story and he is a good writer.If you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.
Saturday, February 6, 2010
The book of the week was 7 Lessons For Leading in a Crisis by Bill George. I have a lot of appreciation for this book. I feel that a 'crisis' is a relative term. A lot of young professionals have 'crises' early in their career and what they consider a crisis early in their career is nothing more than a hiccup later on. And the way young professionals handle crises early in their career set the stage for the rest of their life.
Since the book was broken into different lessons I will share each lesson the author uses and tell you why it's so important:
#1 Face Reality, Starting with Yourself: This is all about realizing what is going on within the organization around you. Actually seeing the crisis is step one. It is too easy to ignore a serious issue or just gloss over it. Once you recognize that there is a crisis, you then need to establish your responsibility within it. Too few leaders are capable of accepting responsibility for their actions.
#2 Don't Be Atlas, Get the World Off Your Shoulders: Great leaders surround themselves with the "right" people. Assuming that you have an amazing team of skilled leaders around you, use them. There is no reason to do everything yourself. You will bury yourself instead of solving the problem. Target's current CEO, Gregg Steinhafel, turned inward shortly after succeeding Bob Ulrich in 2008. Steinhafel was seeing increasing losses in the Target portfolio after Ulrich had multiplied the stock price 10 times, from $5.48 to $54.00 and bested Wal-mart for forty-four months straight. Steinhafel was tired of the pressures put on him by activist investor William Ackerman and turned inward for support. Ackerman started a proxy fight trying to replace the board with his own slate and because of Stienhafel's turning inward, Ackerman lost the proxy contest, with Stienhafel garnering over 70% of shareholder's votes. Since the feud, Target has been back on top.
#3 Dig Deep for the Root Cause: When someone is handling a crisis it's easy to find a temporary fix. A leaky boat's patch will only hold for so long and the leak will be back and worse than before. People have to make hard choices in crisis, but upon making them you can take the reigns of the organization and come back stronger than ever.
#4 Get Ready for the Long Haul: Often leaders will be short-sighted and think the problem is smaller than it is. Analyze the situation and determine the length you will be dealing with. A perfect example of this done wrong is when President George W. Bush declared victory with the war in Iraq in 2003 on the aircraft carrier Lincoln with a giant sign that read "Mission Accomplished." When a leader declares victory too soon in a crisis, it destroys credibility and makes it very difficult to foster good relations and rally support to solve the problem effectively.
#5 Never Waste a Good Crisis: A crisis is your opportunity to change an organization, top to bottom. Use the opportunity to get transformative affect. This can be seen in the current economic climate. When the nation is in a time of progress, it will grows rapidly, spending and staffing expand very rapidly within organizations. Then when a down-turn hits, the organization moves into a time of slow growth or decline. This is seen as a crisis to most organizations and gives time to reflect tightening spending policies and lay-off the least-performing individuals. If companies waste a crisis,and doesn't do a complete spending and staffing over-haul they will sink their organization or worst yet, fail.
#6 You're in the Spotlight: Follow True North: As a leader in a crisis, everyone will be looking at you for direction. Integrity counts for a lot in these crises. People will be watching everything you do and emulate it because, after all, you are their leader. Be cautious of what you do and what you say because regardless of whether you think someone is watching or listening, they are. Being truthful and honest in every approach will trickle down the organization.
#7 Go on the Offense, Focus on Winning Now: A crisis is a wonderful time to gain a competitive edge. Again with the example of the current recession, while most companies are in hibernation, there are a select few that saved for this day and have expanded. Everything is at a discount. You can acquire your competition for pennies on the dollar. Reshaping of markets always happens in economic downturn and you can either hunker down and hope for the best or maintain a laser-like focus to lead the reshaping according to your terms. I prefer the latter.
A crisis has a silver lining, as I hope I have shown you. I want to bring very close attention to this subject for all the young professionals out there. When you are establishing yourself within an organization you will encounter many "crises" early in you career. You have choices with each one of these crises. I prefer you choose to use the choice that encompasses your integrity. If you truly want to get ahead within an organization you will need to be ethical in everything you do. It is very easy to cut corners in a crisis, but doing this will only create a short-term fix and you will not do what is right for the organization or for your professional career. You will be evaluated in everything you do early in your career, by your team and by your leaders, if you want to stand out do it with integrity.
This book is interesting, it uses several cases from top organizations and leaders. I picked it up randomly and I am very glad I did. It gave me a lot to reflect on that I plan to use in my personal life. I don't doubt that it would be beneficial to you too. If you have any questions on the book don't hesitate to ask. I would be more than happy to help anyone that wants it.