Tag Archives: digital nomad

Harsh Economics: Invest in Growth at a Reasonable Price (GARP)

This post of mine was published recently on American Express’s OPEN Forum.  I’ve reproduced it here for my readers.


Tough Times

Harsh times provide opportunities. Our current economic distress has dislodged entire industries. The legal profession in is the midst of a soul-search that will end up with a lot fewer partners and associates to support them. Investment banking is a shell of its former self. My field, financial advisory, is seeing a sea-change in both how the industry is structured and how services are delivered. New firms are being built on the ashes of former historically relevant businesses.

In any period like this, many people will find themselves pushed out the door or sitting on their hands waiting for things to recover. Other businesses will realize that opportunities are to be had while everyone is scrambling for cover.

Taking Risks are Risky, Right?

Those more aggressive businesses must be able to quanitify the risk inherent in pushing ahead in treacherous times. Those investing in their businesses must content with the following hampering — nagging — questions:

  • What if the markets don’t bounce back?
  • What happens if I go after growth only to realize there isn’t any?
  • What if my business has evolved away from those spots I’m investing in?
  • What if more economic shoes drop and things grind to a near-standstill?
  • What is my backstop?

I’d like to provide a framework for quantifying the risk in expanding during times of crisis and apply some homespun rules to help guide small businesses through these times.

Fidelity Investment’s Peter Lynch: GARP Guru
Peter Lynch was a men amongst boys in his career as a mutual fund manager. Handily beating most benchmarks for years, Lynch devised a strategy of investing in GARP, or Growth At a Reasonable Price.

From Investopedia.com

Lynch attributed his success to being able to invest in winning, growing businesses at fair prices. He didn’t mind paying up for a winning business, but he did mind overpaying for a winning business.

What was Lynch’s success?

GARP, or Growth At a Reasonable Price, allowed Lynch to swing for the fences but made sure to cast a skeptical eye on outlandish growth. Lynch would pass on potential investments if growth prospects were too high. For Lynch, taking on risk was OK but companies growing by leaps and bounds were just too risky for his portfolio.

How to Lower Risk When Shooting for the Stars

For Lynch, much of his analysis boiled down to using a metric called the PEG ratio. This metric throws past earnings, current prices, and expectations for future growth into a blender and spits out a number that shows whether or not a company is currently undervalued or overvalued. Most insightfully, it compares how a company’s current valuation stacks up against the market’s expectations for its growth. According to Lynch’s methodology, the lower the PEG ratio, the more cheaply investors can invest in future growth.

So What Does GARP Have to Do with Small Business?

Lynch believed the major step to achievement is investing in growth. In taking chances. In swinging for fences. But he also believed that investors needed to hedge their bets. Go for middle of the pack growth. In Lynch’s terms, invest in those projects that offer pretty sure return on investment and don’t carry the risk of firehose growth.

In other words, incrementalize your growth by launching smaller projects requiring minimal investments.

8 Examples of How Small Businesses Can Find GARP

  1. Hire or tap a team member to start a blog. Blogging is not about merely having a foothold in the blogosphere. It’s about carving out a space for you to show the world that you and your team/business are experts in whatever you do.
  2. Create a low budget, high impact social media strategy. It costs nothing and both surgically targets your market participants and along with your blog, can further brand you an expert in your vertical. Twitter and Facebook are like a powerful marketing drug.
  3. Explore ancillary revenue sources: Ghostwriting, keynote speaking, outsourced projects. Vertical integration, consulting, advisory work. Your position in the industry opens you up to many different potential, revenue-producing activities. Getting involved with new revenue-producing projects may enable you to stumble on the future growth vehicle for your business.
  4. Focus on referrals: Financial advisory work thrives on the word-of-mouth, old-school referral. “You should meet with X; he’s a really sharp guy…” Think of referrals as a marketing channel within your business and get serious about strategizing how to get more. Target happy customers and overlapping business partners.
  5. Write a book: It just takes time and you probably have an entire tome of material floating around in your head. The content of the book should represent that you’re an expert and focus on a theme that you think target clients/customers would like to read about. Find a publisher or just self-publish on Lulu.com.
  6. Start a radio program: Little cost, high impact. Find new prospects and let existing customers know about your content. Use BlogTalkRadio to broadcast and promote yourself and your program.
  7. Partner for profits: Reach out to a valued partner and develop a new product or service lacking in your industry. You’ll find new revenue opportunities, create a new source of sales prospects, and grease the referral channel.
  8. Educate others and yourself along the way: Education sells. Bad job markets provide an opportunity for adults to retrain and invest in themselves and get new skills. Can you expand your business by teaching others? Chinese medicine practitioners who teach Chinese medicine in local schools will find that students are also potential clients.

Upheaval is unsettling. Many of us will fret ourselves into lethargy. Others will take the opportunities given by the market to invest in growth. Some will whiff big while the smart, well-thought-out business leaders of today and the future will make hedged bets during this period of uncertainty to grow their way to future profits.

Like what you’ve read?  Don’t forget to subscribe to receive free daily updates from New Rules o fInvesting.  You can also follow us on Twitter.

Additional Resources


Triage Customer Service: Treat your Customers Like You Would a Sprained Ankle

Overview of the Financial Advisory Business
The current financial crisis has small business owners scrambling to bring in new customers and batting down the hatches to protect their existing client bases.  Nowhere is this more acute than in the financial advisory business — ground zero for the current financial crisis.  Advisors make money in 3 ways — all significantly hit in this troubled market:

  1. Fees on assets: Some advisors charge a fee based on a percentage of assets under management (AUM).  With performance down anywhere from 25% for typical retirement accounts to near 50% for more aggressive accounts, fees are significantly down, even assuming no attrition.
  2. Commissions: This is more the traditional brokerage model where advisors are remunerated via a commission tacked onto trading activity.  Most investors, if they haven’t sold out already, are sitting on their hands and activity is way down.
  3. Per hour: Some advisors are moving to a model that compensates them just for time.  In a move to be as objective as possible, these financial experts consult on portfolios and receive money for their time.

With these traditional revenue sources down, I’ve been advising my peers (see my post on Jim Cramer and the future of the financial advisor) about finding new revenue streams that are ancillary to their current financial practices.  For financial advisors, it may be speaking engagements or teaching finance at a local university.  In addition, there are still hard and fast ways to continue to bring in new prospects through the front door.  Here are four things advisors can do right now to boost their businesses.

More importantly, I think hunkering down and focusing on current clients during this crisis will impact future business more than prospecting for new clients.  Customers are scared, hurting, and unsure of their futures and if a service provider goes the extra mile to provide service beyond what’s expected, not only will clients stay sticky but the referral business on the other end of this crisis will be awesome.

Hurting clients must be treated as patients

Acute ankle sprain

Customer service is about providing what clients/users/customers need on their level, not the service provider’s level.  If clients feel wounded right now, I suggest treating them as such.  When I was a high school and collegiate athlete, we learned a very easy mnemonic for treating everyday ankle sprains, called RICE, for Rest, Ice, Compression and Elevation.  I think RICE, and the treatment of ankle sprains, can shed a lot of light on best practices in customer service during these trying times.

Rest: Ease clients out of shock and help accept our new reality
Rest is all about repair.  When people experience shock and many body systems shut down, the result on the body as a whole is a heightened sense of stress and fear.  It’s these feelings that allow us to fight or outrun predators.  Investors/customers are living in an extended state of shock and it’s taking an emotional and physical toll on clients’ health.

So, the first thing a service provider has to do is help their clients acclimate to what’s occurred.  It’s about acceptance.  If this means a change in quality of life due to a shift in financial health, a financial advisor must not beat around the bush but take active steps in explaining this to clients as well as making concrete plans to help the client steer through this change.  By helping the client accept and unload the burden they feel, this will help clients better cope with the current scenario and make any necessary changes required from the crisis.  I work with many religious clients and work with them to help regain their faith.  With others, we’re redoing financial plans to see how bad the damage is and what we can do about it.

Ice: Reduce the swelling and inflammation of the crisis
Ice helps reduce the inflammation caused by the body’s response to a physical trauma.  In times of financial crisis, many clients are feeling a 360 degree pinch.  The emotional strain of what’s occurring right now is influencing their marriages, their relationships with their families and their quality of work.  Ice helps focus attention on where the wound is.  Ice is about focus.  Service providers need to help clients whittle down where the real issues are and address them at the spot of trauma.  As human beings, we frequently take feelings in one facet of our lives and apply them universally.  The message to financial advisory clients should be one of seriousness for what’s been lost but also of optimism and hope that really, the world isn’t ending.  We all just have less money — let’s figure out how to protect better what’s left and how to recoup our losses.

Compression: Keep the clients close to nurse them back to health
Really great service organizations are doing things to swaddle clients during these tumultuous times.  This doesn’t mean lavishing clients with gifts (although that’s one way to show you care) but rather making sure the client knows he/she is not alone in this process.  This client compression, or customer hand-holding, will ultimately show that this relationship is about a lot more than business.  It’s about shared life experiences and friendship.  Those bonds are hard to break — no matter how bad things get.

We’re making sure that every month we speak to every single client and repeat the same procedure the next month.  Even clients who are seemingly coping well are touched by the compassion and proactivity of this procedure.

Elevation: Making sure the client knows he’s on the top of the pyramid
You’ve got to treat your customers right and not just because it’s the right thing to do.  They need to feel that the focus of your business is providing them with service.  They don’t want to feel like you’re following the rules in some customer service manual.  From your words and deeds, clients want to see that your business — from the owner down to an assistant — is focused on doing things right for them.  The customer should not only be sublimated, but feel elevated to the top of your business needs pyramid.  This will result in happier, more satisfied clients, stickier relationships and more referrals down the line.

If much of this client service rhetoric sounds like psychotherapy, it does!  Providing a service, more so than producing a product, requires the ability to service in good times and bad.  In times of crisis, clients require more than when things feel easier.  By applying the same rules of first aid, service providers can assure that their clients accept the current scenario, keep it in perspective, feel supported and emotionally hugged by their provider and feel that the business is behind them in everything that’s going on.

If you liked this article and are interested in reading other tips for small business owners or digital nomads, please check out this page of tips for the digital nomad.

Don’t forget to sign up to receive free updates from New Rules of Investing.

New Rules of Investing included in final version of Dell’s Digital Nomads Whitepaper

I’ve mentioned before on these pages about my participation in Dell Computer’s Digital Nomads project.  I’ve written on a few topics on Digital Nomad issues including small business contingency planning, using Sales 2.0 to expand sales, and the work/life balance or continuum.

Much of this work has been edited into a cohesive whitepaper on the subject.  It’s considered the “first crowdsourced whitepaper” as the content was developed ex-Dell via a variety of contributors, including Mike Masnick’s Floor64.

The new, finalized digital whitepaper is out (read about it on the Digital Nomads site).  You can also download it here.

As one of the editors of the Digital Nomads site wrote:

In our minds, this is just Chapter One, the beginning of a term that continues to morph and change every day. Call us digital nomads, road warriors, location independent professionals, business backpackers or work-at-home’ers. The term doesn’t really matter as many of them overlap each other. As I wrote in my first post on this site one thing we all have in common is this: “These days ‘where’ you work really has little significance to ‘what’ you do. Increasingly, each of us faces no boundaries, whether they are geographic, physical or time-related. It’s life in the connected era and, quite frankly, it’s a lot more fun.”

Let me know what you think.

Pushing the envelope of completely losing yourself to your work

This article originally appeared on Dell’s Digital Nomads site.

Are you coming to dinner?” my wife asks after a long day for both of us.  Do I power down and hope to finish writing my report after she’s asleep and risk losing myself to sleep? Or, do I ask for another 30 minutes to complete my work, making her and the rest of the family finish up without me?  As a digital nomad, this tradeoff — the blurring of the boundary between where work ends and the rest of life begins — is one that needs to be continously addressed to ensure productivity remains high.

Facetime in traditional work settings

I define “facetime” as the unproductive time spent in the office trying to present oneself as being productive.  Whether working on Wall Street or in a software startup, much of traditional business is spent demonstrating one’s commitment to his job and his firm.  Many times, this committment is measured in hours spent at the office, regardless of actual production.

Productivity — real productivity — is no longer being held up to paradigm of the iron-man employee, working close to 60+ hours a week in the face of a personal life in shambles.  Hours spent at the office is no longer indicative of the real contribution an employee provides to the entreprise.  Just check out how much time is spent at work on non-work, non-productive activities.

Redefining productivity

I propose we define productivity in the post-facetime, digital nomad world as such:

Productivity = amount of completed work + impetus to complete future work

Modern businesses recognize that knowledge workers work best when stimulated by their work balanced with produtive lives outside of work (family, community, whatever).

Digital nomads have the best of both worlds.  No longer tethered to our desks, we face the ultimate challenge of defining our work and life spaces completely under our control.  While we’ve moved beyond the time-honored facetime required to progress in traditional business settings, though, we’re faced with the prospect of completely losing ourselves to our work.  If our home is our office, our struggle is working too much, not too little, as the lines between work and life are blurred.

How to avoid burnout on the work front

When facing a work day that has no beginning or end, a common digital nomad maladay is burnout.  Here are a few tips gleaned from web workers to stay fresh and productive.

  • create a work schedule: without one, workers tend to work all day.  By scheduling work time and personal time into a hectic day, digital nomads maintain healthy boundaries.
  • taking vacation time: digital nomads tend to thrive on worker hard and worker long hours.  There has to be some way to completely (or close to it) unplug.  Downtime is necessary for future productivity.
  • convene team/group meetings: getting together in person with other team members helps to bring untethered workers back from work nevernever land.  It helps centers workers and put work into a social context.
  • Google workers can appropriate some of their work time to work on projects that interest them personally.  Nomads should learn from the great GOOG.

How to avoid sacrificing your personal life on the altar of digital nomadism

While much ink is spilled over keeping productive on the work front, if we believe that a balanced life brings more productivity for the mobile worker, keeping a healthy personal life is just as important.

  • all the previous points above help create delineation between work and life
  • finding hobbies unrelated to work: many digital nomads take to hobbies that are quai-related to their day jobs, like blogging or podcasting.  While these pursuits are certainly admirable and fun, they are too contextually related to one’s day job to perform separation and recharge.
  • exercise: you can’t work when you’re profusely sweating and breathing heavily.
  • have kids (lots of ’em): kids keep you young.  kids keep you (extremely) busy.  Kids also help keep you centered and focused on what’s really important.

Bringing it all together

Balance is key.  Digital nomads are prone to sacrifice future productivity for current work.  Balancing work and life is essential in finding a groove for workers on the go.  Being able to define our working lives around our personal lives is a tremendous opportunity and challenge, but we really can have our cake and eat it too.  We just need to make sure we can pull ourselves away from work to really be able to enjoy it.

The Digital Nomad’s Lot: Getting through the Data Smog

We’ve got plenty of collaborative technologies to empower remote teams.  Some of these technologies function as beefed-up intranets while others offer more targeted functionality.  While I’m not a luddite, I do think that in the case of keeping digital nomads connected, we have an abundance of technology.  The most pressing issue is preparing our teams to effectively communicate.  We’ve moved beyond empowering communications; we’re overwhelmed with email, twits, facebooks.  We need protocols to help us sort out our pressing tasks and prioritize our responses to clients and peers.  We also need to consolidate and keep focused.

I’m not a purist — while in a best case scenario, technology should merely service the needs of its users but in the case of digital nomads, we frequently need to work around the technologies and optimize our processes via the software because we lack the resources and time to develop these tools from the ground up.

Choking on communication volume

Trying to manage all my various communication channels has become an impossible task.  My team’s messages get lost in the flood of everything else I’m receiving. Here are a couple of field-proven techniques we use to help sort out the clutter.traffic volume

  1. Use a separate email address to communicate with your team than you use on social networks/twitter/etc.  This ensures that important work messages don’t get swallowed up in the sheer volume of total pings we receive.
  2. Be precise with subject lines in email.  If things are urgent, make sure that that’s know to the recipient of the email right away.  Being concise and targeted with email subject lines is kind to your team and allows for easier searching through emails for retrieval purposes.
  3. If things are really important, pick up the phone.  It may sound obvious but emails get lost, ignored or just swallowed up.  Nuances get misread via email.  The tone of a short email blasted off a BlackBerry may sound overly curt.  Pressing or personal issues can be cleared up quicker and easier over the phone.  Teams frequently fall back on an overuse of email and issues fester or aren’t sufficiently addressed.

Hosted Apps

I’ve used Salesforce.com frequently on small sales/marketing teams and it’s extremely powerful and cost effective.  For a small team of reps, though, I’ve stopped using it.  It’s overkill — it may sound ridiculous but for a variety of vertical applications, we’ve backed out of using such hosted software and have cut down on the headache of merely managing the software.

  1. It may sound silly but shared Google Apps like Spreadsheet and Docs work really well in certain cases.  For a sales team, instead of collaborating over Salesforce and getting sucked in, we input data into our shared, hosted spreadsheet and collaborate on that document.  You can easily see revised versions of the doc to see first derivative-type info.
  2. While we’ve opted out of most other hosted apps (save Google Docs), I like much of what 37Signals is doing.  From Basecamp to Highrise, the software is so simple to use that it’s been a winner for keeping track of projects or contacts for the team or just chatting.  Google Chat has been a winner for us to communicate over chat.  Make sure you have the “Save chat history” function turned on.  It allows you to store chat transcripts in the Gmail GUI which makes retrieving an old conversation a snap.  We stopped using Skype which has a very nice conference function on chat but the software proved to be to big and clunky to use with everything else we’re working on.

Face Time is underrated (sometimes)people meeting together doing facetime

It’s great to be untethered most of the time.  I’ve worked with people for years whom I’ve never met.  In fact, I’d describe these people as friends.  Close ones, too.  There is no substitute, though, for some good face time.  If teams are local, get together over lunch once a month.  If teams are scattered, try to get together once a year.  It builds morale and lowers barriers and puts a face behing the chat window.


While the software industry continues to churn out very useable and affordable software to help empower teamwork for digital nomads, virtual teams still struggle with implementing work processes to enable them to truly use such software.  In turn, the software isn’t fully implemented and frequently becomes “just another” thing to manage.  Future teams must figure out how best to communicate working either via or around existing technology packages.  We’ll figure it out but ultimately, nothing truly changes.  Pick up the phone once in a while.

Read more about the issues web workers are dealing with and how to cope with an always-on, always wired existence.

Tackling Three Key Issues In Balancing Work And Life

As first appeared in Dell’s launch of the first-ever crowdsourced whitepaper:

As it becomes more acceptable in the work environment for employees to space and time shifting, workers are finding a tremendous amount of flexibility in defining where, when and how they work.  There is a dark side to this flexibility and that comes in the form of the blending of boundaries between one’s work and one’s life.  While technology enables us to receive emails any hour of the day, wherever we are — workers are faced with the challenge of being always on.  While the mobile worker has contributed to historically high record levels of productivity, this productivity has its limits.

Assuming we agree that with the blending of work and life together, certain new stresses are arising in the workplace and at home that influence both job and life satisfaction and can be detrimental to both.  Let’s address certain ways that workers and employers are addressing these issues.  I suggest we address:

  • channels of communication
  • building/raising a family
  • job security

Continue reading

Displacing Corporate Overhead Onto The Digital Nomad

As first appeared in Dell’s launch of the first-ever crowdsourced whitepaper:

This may not sounds politically correct but much of what we’ve experienced in this era of portable workers is while it’s great to talk about productivity and satisfaction from the employee’s point of view, much of the ROI for the business comes from lowering overall overhead and displacing some of that onto the employee.

I think it’s important to look at the ROI from 2 points of view: the worker’s and his employer’s.

Employer’s point of view

office_meetingI recently had a gig with an internet firm which began as a completely distributed workforce.  There wasn’t even a home office.  We managed our time, our teams, and our tasks completely remotely.  From an employer’s point of view, this kept costs bargain-basement low.  Since everyone worked from home, the firm was spending almost nothing on office space.  I ran biz dev so I traveled (but no more than i would have working from a traditional office space).  There was not even a secretary on staff.  No corporate bloat.  The product of this experiment was that the firm stayed lean and mean and was able to reach profitability very quickly.

How was an interent startup with a growing staff able to do this within a year?  Continue reading