STRATEGY #5 TO SURVIVE A DOWN ECONOMY

By Kevin M

In the dreary job market of the moment, people are having difficulty with two major areas in particular: keeping a steady income flow and increasing that flow. The increasing level of unemployment is not only eliminating jobs, but it’s also putting a lid on raises and promotion opportunities. This is in large part, the driving force behind the credit crisis and the epidemic of foreclosures and bankruptcies. Is there a way to deal with it without taking unnecessary risks?

In 10 Ways To Survive a Down Economy (published on Christianpf.com June 1) we listed ten strategies to help us deal with the bad economy. Our topic for today, Strategy #5:

Be prepared to cultivate and balance multiple income sources. You may have a full time job and a part time business, or vice versa. Think of your work in terms of an investment portfolio, in which diversification adds strength. There are probably several jobs you are potentially good at; always be on the lookout for new opportunities.

Why increasing income or broadening the income base matter

Recessions produce a storm cellar mentality, a time when most people become concerned primarily with keeping what they have. But even if you keep what you have—your job and your current income level—you’re still falling behind. Official consumer price index (CPI) numbers aside, most of us realize that it costs more to live each year. Health care costs, education, utilities, real estate taxes, auto insurance, car repairs and many other expenses that we pay for products and services we can’t live without have been rising much faster than published numbers suggest. Meanwhile, gasoline and food costs bounce in unpredictable patterns. And what about preparing for retirement? If it often seems overwhelming it’s because it is!

If you’re in a job or business in which options to expand income are limited, it may be time to look outside the box for solutions. If you have a job that’s stuck in neutral, a part time job or side business may be the only way to increase your income. If you have a business already, it may be time to consider working in lines that are unrelated to what your business does as a primary function. If you can take on business lines that run in counter cycles to your main business, one for which peak season occurs when your mainline is in slow season, you may have found a solid way to even out your income stream.

Additional income aside, adding multiple sources will help to strengthen your income base, making you less vulnerable to job loss or income declines. Just being involved in different lines of work can often open doors to opportunities that would never surface if you stay exclusively in your regular occupation. Think wide, rather than deep!

I’m not saying that this is going to happen, but I will suggest the possibility…we may be on the edge of a time when job and income security can no longer be trusted to a single job or employer. We’ve known since well before the current recession that we don’t have anything like the job security workers enjoyed a generation or two ago. In fact, it’s now close to impossible to plan as much as a five year stint with one company with any certainty.

It’s worth noting that major changes often take root in society years before they’re even identified and labeled. True, we’ve been operating in an environment of one worker/one job for decades, but there’s more than a remote chance that a change to multiple income streams is in the pipeline already. Recessions often amplify and accelerate trends that were developing before the downturn hits. We can’t know for certain if that’s the case right now, but it may be worth some preparation just in case.

I’m having trouble keeping one income source, how do I get a second, or a third?

While it might be tempting to throw up our hands and resign ourselves to the fact that the economy stinks, and there’s little to do but hold on to the job or business we have and hope to tough it out until the next recovery comes and lifts all boats—including ours—but is that a plan or just a hope? I’ll dare to suggest that we need to be proactive, even now when opportunity seems to be hard to achieve. For the following reasons there may be more opportunity out there right now than there has been in a long while…

1. Many companies can no longer afford full time employees and are hiring part timers and outside contractors
2. With large numbers of people unemployed and underemployed, non-traditional work arrangements are becoming more common and accepted than ever
3. Un-/under-employment is advancing networking as the unemployed and marginally employed band together seeking opportunity
4. The internet has enabled would-be entrepreneurs to market to people across the globe at relatively low cost
5. In nearly every industry, large enterprises are in retreat, opening markets to upstarts and smaller competitors who can offer a better way
6. New trends—like thrift, energy efficiency, and cleaning up the credit mess—are emerging creating opportunities that didn’t exist two years ago
7. Financial hardship is causing both people and organizations to seriously consider new ways of doing business that they wouldn’t have entertained in more prosperous times

Each of these factors represents a single overriding dynamic: change. And each presents an opportunity either to stabilize or increase our incomes.

Worried that you job is in jeopardy? Offer to stay at your current job at reduced hours, making up the income loss with a similar arrangement with another company. Did you try a business idea a few years ago that didn’t make it? Maybe it’s time to dust it off and try again—a lot of the competition has quietly disappeared. Have a product or service that you haven’t had much luck selling locally? Maybe you were thinking too small; start a website, link it to other websites and try peddling to the whole world—you can have a marketing budget of zero, which will give you the staying power to keep at it until it works. Not having any luck finding a new job? Get connected with anyone and everyone you can on the social networks—Facebook, Linked In, etc.—and start looking for an *opportunity* rather than a job.

The point is, part time jobs, job sharing, contract arrangements and side businesses are out there, but require a bit more thinking than in the past. Start looking at situations from outside the box, and the opportunities may be more obvious. The part time side business you start today—yes, right here in the middle of the worst economy since the Great Depression—may be your full time career a couple of years from now.

By Kevin M

A few weeks back a comment was placed on this site by a visitor who’s url address included the letters “tv”. Since I’m always on the lookout for new and interesting career and business ideas, I had to follow up on this profile. If he was involved in television in any way, that might be a career profile worth looking for a story in. But upon following up through his website, I found out he certainly does have a most interesting career, but one that has absolutely nothing to do with television.

His career? Day trading.

It never crossed my mind to consider day trading to be a career of any sort. I’ve mostly tended to think of it as an investment scheme of some type, and not one for the faint of heart. (That part is most definitely true—see the “Disclaimer” from his website below if you have any doubts.)

I emailed Chris Dunn through his website, The Blog of Chris Dunn, Chronicles of a Day Trader, then arranged a phone interview in which I received a detailed education on what day trading is and what it isn’t.

A different approach

I had certain reservations after reviewing his website since it isn’t my intent to write about investment programs on OutOfYourRut. But, what drew me immediately was Chris’s description of his life’s work as essentially a business. I have no experience as a day trader, and therefore I’m in no position to give a truly objective assessment on the realities of day trading. But like most of the human race, I have certain preconceived notions of what’s involved and I can say without reservation that I’d never associated day trading as a business.

Not only is Chris a regular day trader, but he also is involved in a training program for would-be traders. A typical day for him is split between trading for his own account, usually for 1 ½ to 2 hours in the morning, spending much of the rest of the day on the training side of his business.

We spoke for over an hour and what impressed me is the respect in his voice for the power and risk involved in the stock market. He’s a young man already earning a living from the market, and yet he has a deep appreciation for the damage that the financial markets can inflict, a concept’s that’s often lacking in the mainstream financial community.

Chris warns that 95% of people lose money day trading—how’s that for shameless promotion of his craft! He came into day trading during his brief tenure in the mortgage business, where a coworker made $2300 in less than 15 minutes. Chris tried to follow his lead, then promptly lost $5000—but it whet his appetite to go deeper. He began trading in 2002, but the money became more serious in 2007, ironically the year the markets turned.

For what it’s worth, Chris does not have a college degree, and learned day trading by doing it. He says you can day trade anywhere there’s a good internet connection, and he plans on doing some extended overseas travel in the not too distant future, laptop in tow of course.

The parameters

Chris seems to be as aware of the risks in day trading, as well as in the markets in general, as anyone I’ve ever spoken with. Part of what motivated him in approaching the market through day trading is what he calls the “buy and hope” mentality often associated with stock market investing. Ultimately there are so many variables involved in stock securities that hope often seems to be all there is on long term plays.

He fully expects to lose. His target however is a 60/40 win-loss ratio, in which inevitable losses are offset by more frequent gains. Much like sales (and every other business) then, the day trading business is also a numbers game.

Interestingly, Chris maintains that volatility is a plus when day trading. He made more money after the market began to slide in 2007 than he in earlier years when the markets were on an elevator ride up.

One way he minimizes risk is by not holding overnight positions. After all, you can’t know what’s happening while you’re asleep. He also recommends starting with a simulated account until you’re comfortable with what you’re doing, and showing a trend of successful trades.

Citing “slippage” as a risk with smaller, less liquid securities, he makes it a practice to trade in the larger, more liquid markets. You can trade in stocks, commodities, currencies and indexes. He favors trading the indexes for size and liquidity, since thinly traded securities can see substantial trading ranges in a matter of hours.

Day trading is not a business for someone tight on funds. The minimum to open a stock trading account is $25,000, however if you trade e-mini futures as Chris does, the minimum is $5000. There is great leverage (RISK) involved; $1000 controls $50,000 worth of investments, so the potential to lose more than your investment is very real.

”Simple, but not easy”

Chris characterizes day trading as “simple but not easy”. “It’s a work-a-day process, a discipline, and not a get rich quick scheme.”

“You have to master your emotions,” he advises, “You learn who you are when you trade—and money affects who you are. Discipline has to control emotions—emotions are where money is lost. You can’t get caught up in emotions by chasing the market.”

He claims you can earn money in both up and down markets, by going long or short. But you can also lose more than your investment so you need to know what your doing and how to prevent that. Trading in the larger, more stable and more liquid markets is a big key.

One other point he cautions on is that day trading is not for everyone! “The worst traders are successful business men who have big egos, but you have to check your ego at the door. Housewives actually tend to be better at it.”

The training program

Based on his experience, Chris strongly recommends that you don’t engage in day trading until you’ve had training. He offers a training program, complete with ongoing training even after the basic program is completed.

The basic program takes two to six weeks to effectively learn the program, which includes 40-50 hours of video. System and software are included, as well as interactive webinars.

You start with a simulated account until you can prove that it can be done, and only then do you start trading live.

The program also stresses exercises to develop self-discipline and trading psychology.

Even with his own training program, Chris cautions that “There’s no ‘holy grail’ in trading systems”.

If you’re well capitalized, and have some money to take chances with—money you can afford to lose—and you’re looking for a way actually work in and with the markets, this could be a way to do it.

You can get more information on Chris Dunn’s training program at Emini Academy.

Disclaimer

U.S. Government Required Disclaimer – Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with money you can’t afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results.

CFTC RULE 4.41 – HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

FRIDAY INCOME & CASH FLOW FORUM

Kevin M

Working a part time job or side business in combination with a full time situation can be a tough juggling act, especially over the long haul. Some people can manage it, but probably most can’t, at least not for extended periods. It’s called having a life!

But sometimes you just need a little bit of extra money. Maybe you need to build up some cash in your emergency fund, clean up some bills, cover some repairs or a major purchase, or maybe for an upcoming holiday or special event. You aren’t looking for a lifetime arrangement, just a short term burst of extra income to clean up your finances.

Seasonal jobs offer an opportunity to tap into such a short term source of cash. At virtually every time of the year, one or more businesses are going through their busy season, and are often desperate for extra help. Since they may not be in a position to offer year round employment, it can be hard to fill positions. If you’re a homemaker, a retiree or a business owner or full time employee looking to supplement income on a short term basis, this could be the way to go.

Another plus: if a business is at it’s peak season, there’s a far better chance of negotiating a higher rate of pay, especially if you have even some experience in that business. Some part time seasonal arrangements can earn thousands of extra dollars for a season lasting just a couple of months. Others will just provide a few dollars working at something fun and close to home.

If you’re running your own business, it’s also very likely that you have an “off season”, a time when your business is especially slow. Supplementing your income with a job or side line in an in-season business may be a way to bring balance to your cash flow.

Some seasonal favorites

For winter/spring…

Income tax preparation. With my accounting background, this is a seasonal business that I participate in myself, but you don’t necessarily have to be an accountant to do it. Even if you’ve never prepared income taxes, you can still find a place in the field. Tax preparation courses are offered by a number of companies, including H&R Block and Liberty Tax Service, as well as work situations upon course completion.

However you don’t necessarily have to prepare income taxes to enter the field. Staffers are needed in support roles in accounting firms and other businesses, to handle collating, customer contact, document gathering, telephone duty and other pre- and post-preparation services. The season generally runs from late January to mid-April, but can extend beyond April 15th since many returns are put on extension for later filing.

Yard and garden centers. My first job was at a local, independently owned hardware store. Far and away, the biggest season was spring. This is the time when homeowners plant, seed and fertilize. It’s also high time for gutter cleaning, painting and general repair work. Any business engaged in these areas is a very likely to be in need of additional help during the spring season. Even if you aren’t into the obvious physical aspect of this type of work, there’s always a corresponding need for people in inside support roles. And of course, the seasonal side business opportunities are substantial if you have the skills and desire.

Real estate sales. In many markets, peak home selling/buying time runs from late winter, through spring and into early summer. This is the time of the year that’s after the winter freeze but also before summer vacation season, the start of school, and the late year holiday season, so it makes sense. This isn’t to say that you need to get into real estate sales or to work for a builder—which you certainly can—but you can also participate in other ways. For example, appraisal firms, real estate attorneys, moving companies and furniture sales tend to run with home sales.

High summer…

Travel. The annual summer vacation has become something of a fixture in many households, even during recessions. There are a number of ways to play this, such as by working in hotels or at local resorts, but there are others that aren’t so obvious. Pet sitting/dog walking and yard maintenance are often in demand when people are away, and these present an opportunity for a seasonal side business.

Recreation. Even if you don’t live near a popular summer resort, there may be income opportunities closer to home. Theme parks and swimming pools in your local area will also be in need of seasonal help. I know an ambitious young man, a full time teacher, who spends his summers working as a lifeguard at a local community swimming pool. Summer is also the obvious time when pool maintenance services will be in high demand.

Late summer/early fall…

Back to school retailers. This can begin as early as July 4th weekend and run through the end of September, depending upon when school starts in your area. You can work in retail clothing outlets or any stores selling school supplies, but it doesn’t end there. Stores selling musical instruments are typically in a busy way around the start of school as this is peak season for budding student musicians to acquire their first instruments, or to trade up to new ones.

Fall/winter…

Fall festivals. Labor Day weekend begins a steady flow of festivals and celebrations, often well into the holiday season, in a kind of cornucopia of many things. Fall festivals spring up in many communities, selling everything from handcrafts to the late season harvest bounty. Entire communities sometimes exist primarily for this season. There can be both employment and side business opportunities attached to these festivals and celebrations, especially if you have a related product line to sell.

The holiday season. Most people think primarily of Christmas here, but this season starts with Halloween and runs straight through New Years Day, with little recovery time in between. For Halloween, temporary costume shops open in formerly abandoned spaces in shopping centers all over town—usually on or just after Labor Day—and all of them need staff! For some permanent establishments, like Party City, Halloween is the peak season.

Most people think of toys and retail for Christmas, but the Thanksgiving to New Years period is also the peak season for restaurants and liquor stores. New Years Eve is often THE biggest day in many restaurants. And once again, you don’t have to work this on the front lines, in this case being a bartender or waiter. Back office and support functions also need to be filled.

With any seasonal business, it pays to look beyond the obvious, to the less heralded businesses and support functions which benefit from the surge. Since they aren’t as well known or understood, they can be especially good opportunities.

For many seasonal businesses, the easiest route to extra cash in is to work for an established business. However if you have the skills and experience, you may also consider establishing a seasonal business of your own.

At virtually every time during the year, one or more businesses are experiencing their busy season. What seasonal opportunities are you aware of, or have you worked in?

If you’re a salaried worker, retiree or a homemaker, what are you doing to find new sources of income? If you’re a business owner, or in some capacity responsible for bringing business in the door, what is it you’re doing to attract customers and cash flow in this economy? What ideas have you heard about or know others to be doing? What’s working, what’s not?

By Kevin M

This is a weekly open forum dedicated to increasing income, cash flow and customer base, for anybody who needs to increase business or supplement a paycheck. Salaried employees, homemakers, small business owners, commissioned sales people, entrepreneurs, retirees—this is FOR you, and we’d like to hear FROM you. What works in one household or business may not work in another, but then again it might. Or it might be modified and adapted to different situations.

Barter services. There are barter clubs set up for this purpose, and it may help to join one or two, but it doesn’t necessarily require an organization.

Everyone has services they can perform, or items they no longer need that can be traded for what others might need or want. This can be easier if you’re self employed or if your circle of friends includes a number of small business people who can provide the types of service you might need, especially any type of repair work.

Let’s say your car or your computer need to be repaired; rather than bringing the car into the nearest repair shop or calling the Geek Squad for your computer, try contacting someone you know who does such work, and then think about what services you may be able to offer in return.

It may help to make a list of skills you can do to have ready before a need arises. This can include work skills, home skills or even recreational skills. If you do data input at work or you’re a master organizer, the auto mechanic or computer repair guy may have a need for those services. Would you be willing to teach English to an immigrant or his children? This is no small point because many of today’s skilled workers are foreign born.

Can you play tennis or golf? Do you swim or play an instrument? Can you tutor students in math, science or writing? Would you be willing to teach someone in exchange for other services?

Think about all the things you can do and don’t give short shrift to any ability you have. Remember, someone somewhere is running a successful business with skills you now possess but aren’t selling to the general public.

Subletting office space—yours or someone else’s. This is similar to the boarder concept we discussed two weeks ago, except it’s an arrangement through your business.

If you have unused space in your office suite, rent out a portion to another business, preferably one which might be in a position to refer business to you, and you to them. In addition to offsetting rent costs, you might also pick up some additional business.

Conversely, you may consider downsizing by completely abandoning your office space to sublet from another business. Same situation, but in reverse; look for space in an office with companies that might send some business your way. Mortgage companies, title companies and attorneys often do this by opening branch offices in real estate companies.

Do some brainstorming to come up with a list of businesses that would compliment yours, then make some phone calls. Aim for smaller businesses that either might be interested in downsizing office space, or who might be in a position to know of one.

Job splitting. This may not offer the prospect of additional income, but it may be the thing that keeps you from being let go. There may not be enough work or revenue to support your position on a full time basis, so by combining your job with another one in the company you may keep the paychecks coming in a while longer.

This will probably also require that you learn new skill sets—which in itself isn’t a bad thing either. By learning more skills you will not only make yourself more valuable to your company, but also more employable to others.

This could work to increase your income if you are currently in a part time job—a position many underemployed people now find themselves in—and hoping to go full time. Learn new skills, step up and be the go to guy/girl and your employer may find it can’t function without you.

If you’re a salaried worker, retiree or a homemaker, what are you doing to find new sources of income? If you’re a business owner, or in some capacity responsible for bringing business in the door, what is it you’re doing to attract customers and cash flow in this economy? What ideas have you heard about or know others to be doing? What’s working, what’s not?

By Kevin M

This is a weekly open forum dedicated to increasing income, cash flow and customer base, for anybody who needs to increase business or supplement a paycheck. Salaried employees, homemakers, small business owners, commissioned sales people, entrepreneurs, retirees—this is FOR you, and we’d like to hear FROM you. What works in one household or business may not work in another, but then again it might. Or it might be modified and adapted to different situations.

Volunteer to be a part time sales rep for your company. Right now there’s a lot of anxiety out there over whether or not jobs will last; layoffs and the threat of layoffs are everywhere. It may be time to stop worrying, and volunteer for (paid) duty on the front lines.

Every company needs sales to stay in business; you may not view yourself as a “sales type”, but you may still be able to help in different ways. I can think of three ways to accomplish this:

1. If you’re job has been eliminated or is likely to be, offer to shift over to the sales or marketing side of the business, even if it’s for lower pay. I have a friend who’s doing this very thing right now. It may be an entirely different job than what you’ve known, but if you lose your job, you’ll have a different one anyway.
2. Offer to work in sales or marketing in addition to your regular job. There may not be enough work to keep you on full time in your current position, but maybe a job split will provide some stability.
3. Volunteer to work on the sales and marketing side of the business on a part time basis, in addition to your regular job. Not only will this offer the opportunity to earn additional income, but it will also make you more valuable to your company (and to other companies if the time does come that you need another job!).

When I say “sales” I’m not necessarily talking about banging on doors or making cold calls, though if you could perform those services it might be in everyone’s best interests.
But revenue generation requires more than just direct sales. It often involves follow up customer contact, problem resolution, customer support, database management and database marketing. Find a niche in any of those areas and you may be passed over when the pink slips go out, or better find yourself earning badly needed extra income at a higher rate of pay than you could earn on a part time job outside your company.

Business partnering/combining. This is about partnering or combining with parallel businesses, and it seems to be a trend in certain fields. It’s not unusual to see combinations such as Kentucky Fried Chicken/Taco Bell, Schlotsky’s Deli/Cinnabon, or Dunkin Donuts/Baskin Robins. In each case, two organizations combine in a way of complimenting each other. One offers meals, the other dessert, or two combine to become a mini dessert superstore, or a single restaurant with wider selection.

The key here is that both entities share space and customer base, lowering operating costs and cross selling to the common customer base. Banks and other financial institutions do this all the time.

Are there any businesses you can combine operations with in such a way that you can either reduce expenses or increase/maintain sales or both?

Viral email marketing. A close friend of mine markets his business (nationally) by emailing monthly newsletters to thousands of potential clients. It would of course be very difficult and time consuming to develop a list of thousands (or even hundreds) of prospect emails unless you maintain customer databases, which you should. But assuming that isn’t the case and you’re going from a dead start there may be other ways.

What my friend did when he began was to join certain organizations within his field, which gave him access (for a fee) to contact databases in the industry. 3000 newsletters emailed monthly have kept the cash flow coming in, and surprisingly few recipients have opted out of the mailings. It’s a way of getting your name and product or service in front of likely customers with relatively little time and at close to zero cost.

Many industry and trade groups maintain similar databases that can be obtained by joining the organization and paying a relatively small fee for a large collection of contacts.

One caveat here though, I’ve purchased databases from commercial sources in the past and found them to be not much better than the phone book, so I would advise against spending the money for this purpose.

There are restrictions on email marketing that need to be observed in order to avoid fines. The Federal Trade Commission can provide guidance on this, but you may also need to consult with an attorney who has experience in this area. Like all regulations, the guidelines on this are thick and not always easily comprehended, but you’ll need to be in compliance.

If you’re a salaried worker, retiree or a homemaker, what are you doing to find new sources of income? If you’re a business owner, or in some capacity responsible for bringing business in the door, what is it you’re doing to attract customers and cash flow in this economy? What ideas have you heard about or know others to be doing? What’s working, what’s not?