Book Review: Microtrends

What are the small forces behind tomorrow’s big changes?  Microtrends by Mark Penn tries to answer this question.

The book highlights 75 “microtrends” that are the cause of a much larger societal movement.  Though the book doesn’t really connect the dots very well, it does outline some interesting smaller trends that do have some force in today’s society.  The amount of influence that these trends actually have in society is debatable.  However, understanding these microtrends can help you in finding a money maker.

While reading the book, I found that I was in fact part of several of these microtrends.  I am an older gamer, part of a religion that doesn’t allow women clergy, and a part time sun hater.  So what does it all mean?

Penn outlines that a microtrend is defined as 1% of the population.  1% of the US population is still 3 million people.  Imagine you had access to 3 million potential customers, could you make money?

The reason why Microtrends is an important read for finding your money maker is rather simple.  By finding what microtrend you belong to, you have found your target market.  Also, since you are already part of said microtrend, you already have some sort of knowledge related to your target market.  By the invention of the internet, you now have access to your target market with greater ease and cheaper barrier to entry.

Microtrends is not an extremely groundbreaking book.  It does have spots that are rather boring to read.  Some of the microtrends that you don’t belong to can be rather lame to read through.  This is due to the fact that he uses statistics to back up his microtrend.  If you aren’t a fan of statistics, I recommend you only read the microtrends that you have interest in and skip the rest.

Overall, Microtrends is highly recommended as a read to help you to understand what potential money makers you have based on the microtrends that you may belong to.  It should be used to help you to start thinking about other microtrends that Penn leaves out of his book.  By finding your 1% target market, you just need a way to get your product out to those 3 million people.

Microtrends receives a 3/5 stars for lack of keeping you interested through the microtrends you don’t belong to.  However, it is still a must read to get you thinking about your money makers.

Book Review: The Automatic Millionaire

I went to the library tonight to search out some new books to read. I picked up The Automatic Millionaire: A Powerful One-Step to Live and Finish Rich by David Bach. Instead of just checking it out and bringing it home, I took a few minutes to read about 20 pages in the library. My initial thoughts were; this book is nothing more than a repackaging of common sense. I decided that it wasn’t worth my time to read through the whole book. So instead of me giving a review, here is someone on Amazon.com that gave a review. His thoughts are exactly what my thoughts are, the only difference being that he read the whole book while I just previewed the book. Here is an excerpt from his review:

“The subtitle of this book is “A Powerful One-Step Plan to Live and Finish Rich.” That’s a bold statement. Instead of a 9-step plan from Suzie Orman, here we have a one-step plan. So it goes, just do this one thing and you are golden. It turns out there is more than just one step, but the gist of the book is that you should pay yourself first, i.e. setting up automatic payroll deduction and electronic fund transfers for saving, investing, and debt reduction. I’m all for that, even though that idea is nothing new. All 401k plans work this way. There’s not much secret in personal finance. So don’t expect a magic wand that fixes everything without any sacrifice.

“The book says his plan requires “no budget, no discipline, less than ten dollars a day of investment.” If only it were that easy! It still requires commitment and re-prioritization. When you want to buy a plasma TV and you don’t have money, do you stop your automatic savings or do you forego that TV? Paying yourself first requires commitment. It means you won’t be able to have as many nice dinners as you want or do today. It means you won’t have leather seats in your car but settle for regular cloth seats. There’s no way around that. Automate however you want. At the end of the day, you have to cut your spending. If your spending doesn’t come down, you won’t be able to continue on your auto-pilot for too long.

“The book also gives the illusion that you don’t have to save much in order to retire rich. The “less than ten dollars a day” part is totally misleading. Investing $10 a day at 5% after inflation for 40 years gets you about $18,500 a year in retirement income before tax. Not bad, but I don’t think anybody can call it Finish Rich if you retire on $18,500 a year. If someone is not saving any money at all, saving $10 a day is better than nothing and we all have to start somewhere. If you really want to Finish Rich, $10/day is not going to cut it. Later in the book the author said you should save 10-15% of your income for retirement. That’s a lot better. Saving and investing $7,500 a year on a $50k income at 5% after inflation for 40 years will generate $38,000 a year in retirement income. But that’s 40 years. If you want to retire in 30 years, your investments can only generate $21,000 a year. Don’t expect that you will be like Jim and Sue McIntyres in the book, at age 52 having two homes paid off free and clear, two kids in college, and a $1 million investment portfolio. I’m sorry to burst the dream, but saving 15% on $50,000 income for 30 years is not going to get you there. It will get you somewhere, a lot farther than where you otherwise would be, but Finishing Rich will require more sacrifice than that.”

Though the ideas in the book are good and solid principles, it’s not the kind of book that will give you ideas on how to focus on your money makers. I would only recommend this kind of book to someone that is just starting out with personal finance.

I can’t give an official review because I didn’t read the entire book, but the guy from Amazon.com gave it a 2/5 stars.

Starting Your Own Business?

I was reading one of my favorite finance blogs, Get Rich Slowly, and one of the frequent readers asked a question about getting advice for starting his own business. Though most of the advice was good and sound (ie. read these books…, get a good accountant and lawyer, make sure you have lots of money, etc.), I thought of a time that I had tried my hand in starting a franchise. My comment was as follows:

“One thing that I would mention is talking to a small business owner that is in retail, but not a direct competitor. Ask him if you can come shadow him for a few months to learn the ins and outs of the business. At that point they will probably let you come and work and let you in essence run the business.

“I did this with a franchise that I was looking to buy. I went to the owner in a neighboring town and let him know I was interested in seeing how the business works and he let me come work with him in the evenings. Soon, I could see if it was really a good fit for me or not. Turns out that I lost motivation really quickly because it wasn’t my cup of tea.

“Some business owners might tell you no, but most don’t have a problem letting you learn from them. In fact, my experience is that they want to help and can even get you going with financing and referring you to attorneys and accountants.

“Hands on experience is by far the best solution.”

This is one of the easiest and cheapest ways of finding out if you have what it takes to start your own business. The owner (it just so happens that my brother and I were trying to open a Cold Stone Creamery) let me basically take over his business for him for 3 months. I was in charge of everything from hiring to scheduling to ordering more product. In fact, the 3rd month of running his store, he and his wife took a two week vacation and left me in charge of the whole place.

What I found out was that I didn’t really like working with high school kids as employees. They were to unpredictable for me. They would have all these crazy requests for days off for school activities, they would sneak free food to their friends, and they often times would not show up for their shift without any notice. Not that they were bad workers, just that they were kids and this was not a carrier for them. What that meant is that I had to fill in the blanks myself. I often had to drop everything I was doing and head into the store just to make sure the shift was covered. Though some people can handle this sort of business just fine, I needed a little more stability from my employees.

The best part about this business owner allowing me to shadow him was that I was able to find out that owning a Cold Stone was not right for me and it didn’t cost me a single dime. I gained valuable experience that has help me in other business ventures and I still have a great relationship with the owner. In fact, he has talked to me a couple of times about other business opportunities.

So if you are thinking of starting your own business and have never done anything like it before, I suggest calling some of your local business owners and seeing if they will let you shadow them. It won’t cost you a dime and you’ll be leagues ahead if you do decide to open your own business.