Sounds like a stupid question, right? But you’d be amazed at the number of people that are operating on borrowed time, never quite sure what their cash flow situation looks like. It’s simple to get tricked into a false sense of security, only to learn differently when you start preparing your taxes!

There are two issues at play. Overhead and cash-flow. Overhead can bankrupt a business if not kept in check. Cash-flow can mask an ongoing problem. Here’s an example:

My buddy has an e-commerce site – 30% of the items are kept in stock, and the rest are drop-shipped to his customers. He did $115K in gross sales for 2008, which sounds pretty good for a 1-man operation. But his profit margin was only about 20%. So that should leave him with $23K. Unfortunately, many of the items he kept in stock sold at a loss (dump it or get stuck with it forever), and he had quite a bit of overhead as well (merchant fees, phone/fax/internet, health insurance, office equipment, software, web hosting, and advertising). When all was said and done, he was left with $7000!

When I heard this, my jaw just dropped.. This guy puts in 60+ hours a week, and he makes less than a part-timer at McDonalds! What went wrong?

For starters, the economy. As a result, his profit margins fell quite a bit. He wasn’t getting as many orders. He tried lowering his overhead (cheaper merchant processor, better phone plan, etc), but it barely made a dent.

His cash-flow hid the problem for quite some time, as there was always money coming in to replace the money he was shelling out. But when sales slowed down, the problem came to light rather quickly.

I feel his pain, as I’ve been in a similar situation. In my case, it was during the .com boom, and operating like that was the norm. (And we all saw what happened as a result of that!)

So how do you protect yourself? Start by keeping better records. I use a detailed spreadsheet that lists my overhead costs and expenditures, as well as my money coming in. It’s broken down by month, and I take 60 seconds to update this spreadsheet when things come in. I always know how my business is doing, and it makes tax time a snap!

May today bring you the luck of the Irish.

On last night’s Celebrity Apprentice, it came down to Tom Green and Dennis Rodman. Tom was the project manager, and was able to bring in over $65K for the men’s team. Dennis Rodman partied too hard the night before, and didn’t even participate in the challenge! Yet once again, Trump threw Dennis a bone and let him stick around.

What gives?! Sure, Tom didn’t execute a perfect event, but this challenge came down to their big donors, nothing more. Both teams sold roughly the same amount of dresses (20 or so), yet the girls managed to bring in an extra $40K! Time and time again, Celebrity Apprentice comes down to the celebrities’ rolodexes, not any sort of business accumen.

Enough with the celebrity editions already, let’s get back to the regular Apprentice shows that we all love to watch!

The Nissan 370Z’s have finally hit showrooms, and I decided to head on over to the dealership today to take one out. I’ve long been a fan of the Z cars, but the 350Z just didn’t do it for me. It was bloated, heavy, and handled like a pig. (Sure, the 300ZX of the 90s wasn’t exactly light on it’s feet, but those twin turbos helped you get past that!)

The car magazines have been raving about how great the new 370Z is, and they’ve been comparing it to the Porsche Cayman S (one of the best handling cars on the road today!) They’ve cut quite a bit of the fat from the 350Z, and carved out quite the profile.. The headlights and taillights are a little bizarre, but I’m starting to warm up to them.

So I walk into the dealership, and proceeded to spend the next 25 minutes waiting for a salesman to find a stick-shift that I could drive. For reasons beyond me, they ordered the majority of their Z’s in automatics, and it took them awhile to find a stick that I could drive.

I finally got the chance to drive a black 370Z Touring with the $3K Sports Package. (Which consists of some 19″ rims, a limited-slip diff, front and rear spoilers, and the magical sync-rev feature)

The car’s sticker price was a staggering $40,680! The Z used to be the affordable sports car, and I think Nissan has made a serious mistake pricing the 370Z so high. At this price point, there are plenty of competitors that are a much better bang for the buck.

The seats are real great, true racing seats that you could go racing with! The interior materials are nice for the most part, though if you don’t opt for the $1800 NAV system, you’re stuck with an ugly cubby hole right in the middle of the dash. Unfortunately, the rear view is just AWFUL! Because of how sloped the rear window is, you have a VERY limited view out the back. (If you remember the old Eclipse GSX’s with the big wing, those really blocked your rear view. This is even worse!)

The exhaust note wasn’t what I was expecting from the VQ engine.. I guess the 3.7L engine puts out a different exhaust note than previous VQs, but there’s always the optional Nismo exhaust to give you some more bark. Power is fantastic, and the 332HP really transforms the Z into a monster! Handling seemed decent from my limited drive, though I’d love to see what this car could do on a track.

Overall, the 370Z is a great car. Unfortunately, I think Nissan priced it way too high! If they had brought it to market at around $32-35K, they would have sold every last one, and could have probably commanded a premium over sticker. Instead (according to my salesman), they’re lucky to sell one per week.

As for me, I’ll take a gently used Cayman S that has taken a HUGE hit in depreciation over the 370Z any day! (Or maybe a Corvette at invoice price with 0% financing..)

I launched a blog for one of my new clients, and I wanted to build some backlinks for them. If you’ve got the budget for it, there are a number of paid directories where you should submit your site. But my client wants to take things slow, and work off the organic traffic first before throwing more money at the site. So I was forced to find some creative ways to build links for him.

Blogs are a great way to get your link out there. But the majority of blogs use no-follow tags in their comments section, which won’t help you in your task. But there are a number of blogs that allow their link juice to flow on to their commenters URLs. You’ve probably seen this image before:

Many bloggers who offer do-follow links will have this image somewhere on their site, to let their readers know that they don’t believe in no-follows. The easiest way to identify a blog that has do-follow links in their comments is the presence of the image above. Now, that’s not an easy task, since Google can’t read text within an image file.

But since most people’s alt text will generally read as “U Comment I Follow”, you can search for this text string in Google Image Search, and you’ll find a list of sites that have this image on their site! Find ones that match up with the niche you’re working in, leave some relevant comments, and you’re well on your way to building some backlinks!

There are other methods to find do-follow blogs (including searching for the filenames themselves, of which there are many variations), but this is an easy way to get started. Good luck!

Are you focused? Or are you just flying all over the place.

Where and on what is your focus?

Are you focused:

• On the down economy or are you focused on the opportunities it creates
• On down sales or the opportunities to take business from your competition and finally get them out of your accounts – take their share of the business.
• On losing the customer, or finally getting free of a customer that you were losing money on.

If you really want to understand focus, then you have to take a look at children.

It is a snowy day, the snow is falling and it is starting to really pile up. You focus on problems with the roads, work and a dozen other things, you might even start whining.

But your child, they focus on the possibilities, they focus on playing in the snow and having a great time.

When your child misses the school bus. Again you focus on having to go out of you way to take them to school, the problems of messing up your schedule.

But your child, they focus on getting to spend more time with you. Getting to ride to school in the car with you. Maybe even stopping for breakfast. They focus on the possibilities.

You have just spent the day at the shore and are getting ready to leave. You go to start your car, and it won’t start. You have to call the auto club and they tell you that it will be at least a 2 hour wait. You focus on the wait, but guess what you children focus on?

They focus on 2 more hours of playing on the beach, isn’t this great?

You see, as adults and business people, we focus on the problem.

Our children focus on the possibilities, they are creative, we are practical.

To be successful in this down economic time, you have to learn to focus on the possibilities, not the problem. You have to start being more creative. You have to start thinking outside that old box.

Start focusing on the possibilities and see what a difference it can make.

Let’s look a bit deeper at the problems we originally discussed:

You focus on the down economy. What would happen if instead you focused on:

• The opportunities it creates
• The fact that as people go out of business, there is less competition.
• The fact that more doors opened that have never been opened before.

You focus on down sales. Again, what would happen if instead:

• You start focusing on the opportunities to take business from your competition and finally get them out of your accounts.
• The need to help your customer and the opportunities to build your relationship with them. A relationship that will really pay off in the future. People remember.
• The need to work smarter and use your time to find new and creative ways to generate business.

You focus on losing the customer. Again, what would happen if instead you focused:

• On finally getting free of a customer that you were losing money on.
• The fact that they will be back and once back you will be able to charge them a price at which you can make a profit.
• That everyone is looking and you now have more time to prospect and find better customers.

This week I want you to be more child like. I want you to start looking at the possibilities. You will be amazed at what you learn.