Steve Marr Blog

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Category >> Strategic Planning
Oct 20
2014

Division of Labor in a Small Business

Posted by Steve Marr in Untagged 

The division of labor is a fundamental economic principle. As people become more specialized they become more productive. This is one reason the family structure is so important with a mom, dad, and children to divide tasks based on their strengths.

Business expands on this principle. In large businesses many positions become very specialized with workers who become productive because they master very specific tasks. The automotive industry is an example. An engineer may focus on cruise control devices while another tackles improvements in water-cooling pumps.

Oct 06
2014

Is Worldwide Internet Access an Unrealistic Dream?

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The number of Internet users has exploded worldwide. Few people go without an e-mail address today. Nearly everyone I know uses the web for various purposes from leisure to business. While it is easy to think that everyone is on web, this is not true worldwide.  But what if it were true?  What would the ramifications be if every person in the world had Internet access? 

Sep 05
2014

Is a Long or Short Term Loan Best?

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A business owner looked at buying a building and considered different interest rate options. The owner was able to put 30% toward the purchase price as a down payment. The options to consider included a 5-year loan with a balloon payment at 3.6% interest or a 10-year loan at 5.6% interest.

My advice was to take the higher cost interest rate for the longer time. I prefer to know my liabilities. In this instance, the business owner could afford the higher rate. Five years can come fast. If interest rates rise, then a new loan would be more costly if financing is available at all.

If interest rates fall in the future, the loan could always be refinanced at a lower rate. Then, the borrower is not stuck at 5.5% if interest rates drop. In five years, the owner could look at changing the financing to a new 5-year term loan at a lower interest rate, assuming rates stay stable.

 Trying to predict the future path of interest rates has been a graveyard for many investors. King Solomon wrote, “Since no one knows the future, who can tell someone else what is to come?” (Ecclesiastes 8:7, NIV) Given that we cannot know the future, I prefer to eliminate as many variables as possible. I would lock in the longer term deal, even at a higher cost; and refinance if rates drop.
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Aug 18
2014

Test Ideas Rapidly

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Frequently you get ideas, some worthwhile to implement; others not so much. I have learned that if you can devise a simple test for your idea before investing too much time and money, you can allow customers to validate how successful it is. Paul wrote, “but test them all; hold on to what is good.” (1 Thessalonians 5:21b, NIV)

Jul 04
2014

Review Your Growth Plan Now

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Regular readers know that I recommend preparing a business plan with deliverable goals annually. Each year, at the end of June, I evaluate how well I am doing at halftime.  While I evaluate each month, at six months you can’t rationalize anymore why you came up short.  Nor can you excuse yourself by saying that you will pick up the slack for rest of the year to reach your plan. King Solomon wrote, “The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty. “ (Proverbs 21:5, ESV)