Quick Business Concepts for First-time Business Owners

Business and Financial Literacy
This is a country built on free enterprise and capitalism. So why don't our schools and other institutions give fair time (or any time at all) to these topics? Why do most academicians show a disdain for free enterprise and capitalism (and seem to favor socialism and communism at the collegial level in particular)?  Don't the academicians realize that without the industries and businesses out there taking the risks of being in business and paying taxes and employing many workers who also pay taxes and spend in our economy, they wouldn't have their jobs or an economy that they'd be able to live in? Why do people nowadays think that it's the government's job to provide us with jobs? And to take care of us in our retirement (yeah, right. Social inSecurity?). Makework jobs and Social inSecurity come from somewhere--it's called more taxes. On the other hand, the views in the book, Earning Money Without A Job by Jay Conrad Levinson are a refreshing testimony to free-enterprise and personal capitalism. (You can tell that I get a kick out of his writing!)  (All the books and references mentioned in this area of ranting and raving can be found through the Amazon.com link at the bottom of this page.

Financial Paradigm Changes
My folks were elementary school and high school English teachers. My sister and I were raised with their view of how the economy works. I eventually got a degree in biology with a minor in chemistry--after a short stint of teaching English grammar and composition at a parochial junior high school, I taught biology and basic science at a public senior high school. I hadn't learned much about business and the financial world because I didn't know anyone willing to share their different views and these topics weren't presented as requirements of the science program at the university.

However, during some traumatic experiences such as moving 8000 miles overseas away from my mom and dad right after high school, losing my job as a teacher during a union strike and subsequent work stoppage, my dad's heart attack, getting married, and then working in the automotive, insurance, and contract auditing industry for a while, I ran across some paradigms that sort of shook what I had been led to believe about how the economy works. My mentors in the automotive and insurance industries recommended that I read books such as those in the Money Dynamics series by Venita van Caspel (her Chapter 13 on Insurance is an eye-opener!) and Wealth Without Risk and Financial Self-Defense by Charles Givens. These books are real eye-openers. They are well-written, have information that I can verify from my experience in the automotive and insurance industries (therefore, I can extrapolate that they are most likely accurate for the areas I don't have much experience in). Reading these books got me interested in others about the economy, insurance, real estate, labor, taxes, finance, investments, and alternate economies (in addition to my usual reading in science fiction, high-tech thrillers, and mysteries).

Books such as The Motley Fools' Investment Guide and You Have More Than You Think by Tom and David Gardner (no relation), Nothing Down and Multiple Streams of Income by Robert G. Allen, and the Rich Dad, Poor Dad series by Robert Kiyosaki (recommended to me by a high-school and college classmate from Guam--Thanks Vangie and Tony!) gave me even more insights--and more paradigm changes!

• The simple difference between so-called whole-life insurance (and likewise, "universal life") and term insurance.


• What compound interest can do, and the difference between tax-deferred and tax-free accounts.


• The principle of financial leverage.


• The principle of time leverage.

I'm always willing and interested in holding a conversation and discussion of these topics--because I find these concepts so fascinating and because it's so amazing that so few Americans are aware of them, let alone understand them (I don't yet understand them fully myself--that's another reason why I like to discuss them with others--so I can learn more about them).
 
Time for a Paradigm Change
Sometimes we require a "paradigm" change. Sometimes it takes a major shock to our system, such as a natural disaster, war, involuntary unemployment, divorce, death of a loved one, or some other traumatic experience to force us to *see* other realities. What's a paradigm change? It's when some strong belief you firmly subscribe to is shaken and irreversably changed.

For example, if you BURN a parafin candle, you get the following chemical reaction:

  H H H H H H H H H
  | | | | | | | | |
H-C-C-C-C-C-C-C-C-C-H O2 ---> C(Carbon) CO(Carbon Monoxide) CO2(Carbon Dioxide)
  | | | | | | | | |
  H H H H H H H H H                    *AND* H2O (Dihydrogen oxide, aka WATER)

      (Parafin)

One of the by-products of burning a hydrocarbon (parafin) is WATER. This is a tough concept for many folks to grasp. It makes a fun chemistry lab project, however--holding a test tube over a burning candle to see the black carbon building up on the lip of the test tube and seeing the water droplets condensing at the inside tip of the test tube.

Other Paradigm Changes
Other paradigm changes include:
The first use and control of fire.
The first heavier-than-air, fixed-wing aircraft flight.
Vaccines as a method of providing immunity from various diseases.
Realization that Planet Earth is *not* flat and that it orbits the Sun.
Spaceflight and multiple trips to the moon and back.
Discovery that you could ride a bicycle without falling over.
Learning that heavy metal boats can float (the buoyancy concept).
Many things we now take for granted were paradigm shifts when they were first pondered or discovered and later proven.
Current Paradigms for Many Americans
There are many old-wives'-tales and myths out there that are sometimes considered the wisdom of the day by most Americans.
Here are some:

• The lottery--A scheme devised by our government to tax folks who aren't good at math. You have more chance of being hit by lightning walking across the street to buy the ticket at your local mom-and-pop store than you have of winning the lottery. Comparatively (and statistically) speaking, you'd have a hugely better chance at making it big with owning your own business. Sure, the statistics say that only one in ten businesses survive, let alone make it big. But compare that with the one-in-80-million chance you have of winning the lottery, and the incentive to start a business of some kind gets more real.


• Gambling--This is another scheme to zap folks who aren't good at math. Do folks think that the casinos in Las Vegas, Reno, and Tahoe manage to stay so glitzy by letting all their patrons win?  The only way to really "clean up" is to start your own casino, I guess.
  Buy land--Yup. (Raw Land, that is) This is a popular one among those who don't subscribe to the previous two deals. My mom and dad--humble teachers that they were--bought some raw land in New Mexico and in Montana. As dad said, they're not making more--and people will eventually need the land, so the value will have to go up and we'll have it as our "nest-egg" when we retire. Except that the land was out in the sticks with the nearest civilization almost 100 miles away. With no access roads other than logging roads or desert trails. Not only did the land *not* go up much in value over the past 30 years, but mom and dad got stuck with the taxes on it every year. And the taxes *did* go up every year. Raw land does *not* appreciate much, it's tough to create an income with it <unless you are renting it to folks to store their RVs or perhaps leasing it to cattle owners for grazing land>, and you can't "depreciate" it on your tax forms.


• Whole Life Insurance "Savings" Feature--This one is a doozy. There are insurance accountant types (called "actuaries"out there who calculate the odds of you dying. Hey--statistics. There are also insurance lawyers out there who write insurance policies out there that would require a Boston lawyer to figure out what the heck they really mean. Then there are marketing types who have no clue about what they are writing about, but who, on the word of the lawyers and the actuaries, will cook up advertising to pull on the heart-strings of every red-blooded American out there so they will buy tons of this stuff from sales people who also haven't researched what they are selling but who get awesome commissions for tugging even harder at your heart-strings and your emotions to get you to buy tons of insurance on your little Johnny and your little Janey. (This isn't something you should do--more here.)