Small Business 101: How To (Almost) Always Get The Winning Customer Bid

These days everybody is an “entrepreneur” which is usually code for “I don’t know how to run a business.”  For over 20 years I owned a small business and experienced all its different phases from the start-up process to the exit sale, and everything in between (and I do mean everything).  

In this series I will share some of my insights so that if you are currently running a small business or thinking about starting one, you can benefit from my experiences and hopefully avoid my mistakes (and there were a lot of them).  And remember, every small businessman is an entrepreneur, but not every entrepreneur is a small businessman.

As a small business owner, one of the things I hated most was having to bid on a job in a competitive environment. There are just too many unknowns.

You know what your costs are, but how much margin can you add to the job and still make sure you’ll get it? What about your client? Are they looking for the ultimate bottom barrel price, or is there some other intangible they’re willing to accept in order to award you the job?

What about your competitors? Is one of your competitors willing to make a rock bottom, money-losing bid in order to get a foot-in-the-door and establish a relationship with one of your long-term customers?

Small business owners don’t like uncertainty and that is exactly what the bidding process involves.

It wasn’t until I had lunch with a family friend who had run a successful construction company for over 50 years that I began to understand how you could get around this process and win on almost every bid.

He introduced me to the “baker’s dozen” concept of bidding. A baker’s dozen is when you order twelve items, say donuts, and get the thirteenth one free. The concept, applied to bidding, is to overbid with services or product instead of underbidding with price.

For example, say you’re a manufacturing company, and you manufacture widgets that cost 30 cents apiece to make. On a bid for 20,000 widgets, you believe that you can sell them to your client for a dollar each and still get the bid, but you’re not 100% sure.  What do you?

You offer your client a 10% overrun on the widgets, in essence, giving them 22,000 widgets at the cost of 20,000 widgets. You’re basically leveraging the margin built into your product in order to make sure you get this bid.

From your standpoint, the extra 2000 widgets only cost $600, and divided by the 20,000 in the order, comes out to a meager 3 cents per item, a very minor reduction in margin. But from your client’s standpoint, they receive $2000 more in product, at no extra cost. Invariably, they’re going to resell those widgets to their customers at higher price points. That exponentially adds to the benefit they get from the overrun you’re offering them.

But how does this work for a service company?

Let’s take another example. You own a local carpet cleaning company and you’re asked to bid on a 30-room hotel. You submit the bid for the cleaning and offer to give one free “touch up” per room in the following 12 months, based “upon scheduling availability”.  In essence, what you’re doing is saying, “We will clean these 30 rooms and if at any time in the next 12 months they need to be touched up again, we’ll do it at no cost, once per room.”

This is a tremendous value and benefit to your customer. They know that if something happens to one of the rooms after six months, they can have you come out and clean it at no extra cost.

However, you know that the likelihood that any of those rooms will need to be touched up in the next 12 months is very low. And even if there are, it should only be a small percentage of the rooms. Because you have inserted the clause, “upon scheduling availability,” if rooms do need to be touched up in the next 12 months, you can schedule those touch ups to coincide to times when your crews are already in the area on other jobs, thus reducing your actual costs tremendously.

Obviously, you will always have some clients whose bottom line will be the almighty dollar. Nothing you can promise them will sway them from getting the lowest price possible. In those cases, you’ll have to sharpen your pencil, get out your slide rule, and figure out what the best price you can give them is.

You may have to accept the fact that the price you need to give in order to secure the bid may not be profitable for you and thus you will have to decide if you should “pass” on the bid. But for the vast majority of your customers, by giving them an added benefit, whether economically, or just in peace of mind, you’re almost always guaranteed to come out as the winning bidder.

Small Business 101: The Market Segment To Avoid At All Costs.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Check Your Ego At The Door: Notes On Stocktoberfest

We’ve all been to one of those clubs or events where you have to stand behind a velvet rope while some neckless goon decides who will get the supreme honor of entering the venue.  If you do finally get inside you then find that the room is endlessly divided into a series of “VIP rooms” and where the people you really want to meet are sequestered with their bottle service and Kardashian wannabes.

You end up drinking your watered down twenty-dollar cocktail and leaving with a “swag bag” which consists of mostly  of promotional materials for the next event.  That would be the exact opposite of how the Stocktoberfest event was this past weekend in Coronado, California.

One of the best things about the StockTwits community is not only the access it provides you to some of the brightest and funniest people out there, but how there is such an utter lack of ego present when you talk with those people, and that same vibe was in effect all during the event.

I went to Stocktoberfest not only as a StockTwits blogger and member of its community, but as a fan as well.  I was looking forward to meeting some great people, most of whom I only knew online, and to having an awesome experience. I was not disappointed.

Here are some random, stream of consciousness thoughts about the event and the people I met there….

Coronado Island (The Venue) – I am sure it has stuck many as strange that this little island community in the very Western corner of the country was selected as the Global HQ for StockTwits.  What about New York?  Chicago? San Francisco?  Heck, even a native Southern Californian like myself questioned it at first.

But a common theme I heard voiced by attendees this weekend was, “Oh…Coronado….NOW I get it.”

Coronado has a small town feel, but is right in the heart of an area that is home to a surprising number of financial professional, entrepreneurs, and start-ups.  It is the best illustration I can think of how technology allows us to create the life we want and live it wherever we want.

And believe me, the irony of standing on a beautiful beach with blue skies and cool breezes while the “right coast” was preparing for “Frankenstorm” was not lost on even the most hardcore East Coasters.

Suck It East Coast!

Sean McLaughlin (@chicagosean) – I do not generally do well at “networking” events, but from the moment I stepped into the “beer garden” at the StockTwits HQ, Sean made me feel right at home with his “B-C-Lund!” exclamation and welcoming handshake.

Sean is a great guy, the type that if theoretically he were to convince you to grab “one more drink” before heading back to your hotel, and because of that you woke up the next morning with a hangover, you would just say, “Eh, I was hanging with Seany….it was worth it.”

Phil Pearlman (@ppearlman) – I owe a lot to Phil.  He is the reason I’m a blogger with StockTwits in the first place, having reached out and plucked me from obscurity, and though I Skype with him on a regular basis, this was my first time meeting him in person.

What you immediately notice about Phil when you meet him is a wonderfully frenetic energy that is at the same time both engaging and infectious.  But Phil also has a “sage-type” vibe that kicks in and which draws people to him. Numerous times over the weekend I saw attendees chatting him up and seeking his advice on a range of topics.  It makes perfect sense to me now that Phil’s background is in psychology.

Ivan Hoff (@ivanhoff) – I’ve met Ivan once before, and even before that I liked him because anyone who can play the straight man to Howard with such grace is okay by me.  Ivan is so smart and if you are not following his work on the StockTwits 50, you are missing out.

Watching the way Ivan explained his trading style during his presentation, one could almost get the false sense that he is detached from his work because he just let’s it speak for him, which it does loud and clear.  But there was a telling moment when you knew that wasn’t the case.

Somebody during the Q&A session asked him how his screening process was different from IBD’s.  A previously relaxed Ivan came right to edge of the stage, and prowling back and forth, looked right at the questioner and gave him a focused, concise, and almost aggressive delineation on the difference between the two methods that you could see was rightfully driven by pride of ownership.

Fuck yeah Ivan!!!!

The Ladies of StockTwits – Everyone knows I like to play the over-the-top, tongue in cheek, Cro-magnon guy on the streams, but I have big respect for the women in the community. That respect is two-fold for those who attended this male dominated event, something I could see as being fairly intimidating for the fairer sex.

One of the ladies I enjoyed talking to was Lydia Idem Finkley who writes a forex blog on the StockTwits Networks.  Lydia waded right in with the guys at one of the after show venues and I found here to be charming and sharp as a tack.

My favorite moment was when we were talking about family and life in general, and someone brought up the question of when were the best times for liquidity in the currency markets. Without missing a beat, Lydia went right into an analysis of the optimal times to trade the different currency pairs.

Hopefully we will see more great ladies like Lydia joining the StockTwits community and attending live events in the future.

Julian Hebron (@thebasispoint) – For me Julian is a kindred spirit because our blogs were both added at the same time and I love his taste in music and knowledge of pop culture references.  Everybody who reads his stuff knows he is a monster in terms of knowledge in the real estate and mortgage markets.

But what I found out by meeting him in person is that he is also a very laid back and cool guy, the type you feel comfortable with the first time you meet them.  He is one of the people whom I wish I had more of a chance to hang out with.

Greg Harmon (@harmongreg)- Greg has over twenty thousand followers on StockTwits alone, which is a testament not only to his knowledge of stocks and trading, but to his willingness to share.  In fact he excused himself (relatively) early on Friday night in order to put together charts to share on the stream for Saturday morning…..twenty three of them.

Greg’s humor has always been a favorite of mine online, but it comes across even drier in person, which I love.  Though a veteran of the trenches in NYC and Boston,  he has a “Cleveland Zen” type quality about him that is just very calming and explains perfectly why he makes Ohio his home.

J.C. Parets (@allstarcharts) –  J.C.’s presentation was perhaps the biggest surprise of the weekend for me.  I’d known J.C. as a good guy with a passion for technical analysis from the streams but I assumed his presentation would be along the lines of “let me show you some trendlines and moving averages.”  Boy was I wrong.

J.C. illustrated his “top down” approach to investing and technical analysis that was more comprehensive and more nuanced that I would ever have imagined.  The way he went through different macro charts and put the pieces of the puzzle together was fascinating.  There wasn’t an asset class that he didn’t touch on and it was very apparent how broad and deep his knowledge of the markets is.

The best part though was his enthusiasm for what he was doing.  You could see in his face and hear in his voice that this was his passion, something that he loved to do. J.C. is starting up his own shop right now, and I have no doubt that we will look back in five years and find that he has become a hedge fund star.

You can check his presentation deck out here.

Joe Fahmy (@jfahmy) – Joe is one of the few attendees at Stocktoberfest whom I had previously spent some time with and he is one of my favorite people.  Passionate, focused, funny, energetic, insightful, these are only some of the words to describe his presentation entitled “5 Qualities of ALL Great Traders.”

Joe is a student of history’s great traders and has a wonderful ability to crystallize their best traits and make them relevant and understandable in today’s market.  He is also a natural on stage and knows how to get the crowd engaged.  Joe will be speaking at the Traders Expo in Las Vegas on November 15th, so if you are going to be there make sure to catch him.

Brian Shannon  (@alphatrends) – Brian is one of the “big dogs” on StockTwits and I admit that I was a bit apprehensive in meeting him, although my friend Steve Gomez (@todaytrader) told me Brian was a great guy.  Steve was right.

Down to earth is the best description I could think of.  No pretense.  No arrogance. No aloofness seemed to be a part of Brian’s personality.  His presentation on using multiple timeframes for trade entries was so solid, so right on the money, and one that I heard many participants talking about at the break.  Brian will also be appearing at the Las Vegas Trader’s Expo on November 15th, and seeing his presentation is a must.

Dynamic Hedge  (@dynamichedge)- At this stage in my life I thought I was pretty much passed the point of having preconceived notions about people, but I admit, I had one about Dynamic Hedge.  For some reason I pictured him as a grizzled old-school quant, who sat in his computer lab all day writing algorithms.  Again, boy was I wrong.

Young, good-looking (no homo), and wickedly smart would be the correct description for Dynamic Hedge.  I was fortunate enough to see him do a demo in a breakout room of his new product for determining outcomes in scenario based trading, and it was one of those times where you say to yourself, “Oh, wait a minute……that is pretty frigging’ cool.”  Throw in the fact that he has a great sense of humor and he’s got the whole package going for him.

Josh Brown (@thereformedbroker) –  What can you say about Josh?  He is what all of us bloggers want to be when we grow up.  Author, investment advisor, rap connoisseur, CNBC personality, creator of ungodly amounts of quality content, these are all the things we already know about Josh.  But what struck me about Josh was the way in which he engaged people.

High profile people like Josh who have great demands on their time often limit their interaction to a few select people, but that was not Josh at Stocktoberfest.  I saw him talk with anyone and everyone that wanted some time with him.

What’s even more amazing for a person in his position is that when you do talk with Josh, there is no checking his watch, interrupting phone calls, or glances past you to see if there is someone more important he should be talking to.

I honestly think Josh would be as willing to talk with the President of the United States as he would the guy who vacuums up the oval office on the night shift.

Josh gave me some great advice regarding the direction of my blog, and although I probably won’t initiate the “bclund shower-cam,” some of his other insights I am going to take to heart.

Howard Lindzon (@howardlindzon) – Howard was the prime mover for Stocktoberfest and I suspect the reason a number of people came from so far away was just to get some access to him.  Well, if you wanted “Lindzon access,” man did you get it.

At the StockTwits beer garden, there was Howard.  At the pre-event meet up, there was Howard.  At the event, if you were in the lobby, there was Howard.  If you were hanging out front, hey, there was Howard.  At the post event get together, there was Howard.  I even ran into him myself while I was walking down the streets of Coronado looking to get slice of pizza.

By the end of the weekend, those same people who came from so far away just to get access to Howard were saying, “Jesus Christ, enough already……I’ve had as much access to Howard as I can take.”

As the host of the event, Howard didn’t just introduce a guest and then slink back to the green room, but often acted as onstage interviewer, and for those who had their own presentations, he would just hang out in the front row with the rest of the crowd.

It was there that you could see that this event was not a burden in the least to him, but was something he looked forward to as much as anyone, and that he was having just as good a time as everyone else at the event was.

Brian Lund (@bclund) – I came to Stocktoberfest with a mixture of excitement and trepidation.  Traditionally I do not “work” networking events that well as I have never instinctually felt like a social person.  But something funny has happened to me over the last year of blogging and being a part of the StockTwits community; I’ve found my social voice.  Who would have known that interacting in an online environment would have had such benefits in the real world.

I also realized that StockTwits is a much broader platform for ideas than I originally thought. Markets and trading might be the “gateway drug” but once you get involved in the community, you find yourself exposed to a much wider range of ideas and topics than could be imagined.

One of the best parts of the event for me was actually listening to the non-trading presenters whose topics ranged from bonds, to technology, to the role of data and content in our lives, to the incredible start-ups they were running and the products they were creating.

Being in the presence of so many intelligent and accomplished people reminded me that I am not as smart as I like to think I am.  It was reminiscent of when I first heard Neil Peart play drums.  I had been playing for a few years myself and thought I was pretty good, but hearing someone with such talent put me in a quandary.  I wasn’t sure if I should say “what’s the point?” and just throw my drums away, or keep them and woodshed even harder in order to raise my game.

This weekend at Stocktoberfest was an incredible experience for me on a number of levels, the most important of which was that it made me realize that I definitely want to “keep my drums.”

If you want to learn more about day trading and the markets, all while helping to kick pediatric cancer’s ass, check out my book, Trading: The Best Of The Best – Top Trading Tips For Our Times.  It includes over 200 market tips from 60 active traders and investors, and all proceeds go to the McKenna Claire Foundation to help support research for a cure.  Just click the banner below or go directly to Amazon by clicking here.

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Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

The Rules Of Stocktoberfest

(With apologies to “Fight Club”)

1st RULE: You do not talk about Stocktoberfest.

2nd RULE: You DO NOT talk about STOCKTOBERFEST.

3rd RULE: If someone says “stop” or goes limp, taps out or pukes…..Stocktoberfest is OVER.

4th RULE: Only two VC’s can fight over a start-up candidate at a time.

5th RULE: Only one beer bong at a time (you know who I am talking about).

6th RULE: No shirts, no shoes, no non-preferred, pre-money valuation equity investments.

7th RULE: Stocktoberfest will go on as long as it has to….or until someone threatens to streak through downtown Coronado.

8th RULE: If this is your first night at Stocktoberfest, you HAVE to buy me a beer.

If you want to learn more about day trading and the markets, all while helping to kick pediatric cancer’s ass, check out my book, Trading: The Best Of The Best – Top Trading Tips For Our Times.  It includes over 200 market tips from 60 active traders and investors, and all proceeds go to the McKenna Claire Foundation to help support research for a cure.  Just click the banner below or go directly to Amazon by clicking here.

Updated Amazon Banner

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in). Check out “The Best Of bclund” to get started.

Click here to “Like” the bclund Facebook page.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Why Friends Don’t Trade Other Friend’s Money

Jeff Watson is a veteran of the pits and has forgotten more about trading that most of us retail guys will ever know.  His blog masteroftheuniverse  goes into extended periods of hibernation (like now) because Jeff is an active trader and that is his priority. However, when up you can probe the archives of his blog to find trading wisdom that is as relevant today as it ever was.  Note: Jeff’s blog is being revamped and will be back up in early December.  Bookmark it now anyway.

Back in 1984-85, or somewhere in that time frame, I had a lawyer buddy ask me to put on a couple of trades for him.

I was leery at first but he talked me into opening an account for him with my clearing firm and I got the them to open an account with just $1,000 in it, which wasn’t a big deal back then.  Guys who weren’t brokers but still members did this kind of stuff for friends all the time, so my firm felt that it passed the Kosher test.

My buddy got a deal on commissions, paying $12 per round trip, which was pretty good in those days.  I didn’t make a dime off the account and was just doing a friend a favor.

I remember the first trade was for a couple of wheat puts, where he made a few hundred dollars.  Then I started trading 10,000 bushels (2 contracts) of wheat for him capturing several cents a week, net.  We went for the base hits, the low risk trades, never the big spec size.  I ran his account for 3+ years and he ended up with $46,000 (after taxes had been paid).

Kansas City Board of Trade wheat pits.

He wanted to trade bigger size (at that time we were putting on 25,000 bushel (5 contracts), and I disagreed due to my strict money management system. But eventually I went along with as it was his money to lose after all and lawyers can be very persuasive.

One morning, he asked me what I thought the market was going to do.  The cash market was very firm, and I thought that wheat was going open a dime higher (the whole floor had been bullish for a couple of weeks).  He told me that he wanted to buy 100,000 bushels (20 contracts) at the open, at the market.  I objected, but he demanded that I get it down.  Needless to say, when the market opened 12 cents higher, he bought the very top tick.

Within 90 minutes the market sold off hard and  closed down a dime.  I talked to him on the phone after the market had sold off, and he was pissed, telling me to sell and that he never authorized that trade.  I sold his wheat near the lows of the day.

His account lost well over $20,000 and he was really pissed at me for “losing his money.” Nevermind the fact that he started with $1000, Three and half years before and nevermind the fact that last fateful day, I would have been selling hard into that strong open and probably would have made a few dollars for myself if I hadn’t been trying to get his trade down for him.

I told him that I preferred not to trade for him anymore and had my clearing firm cut him a check for the balance.  To the best of my memory, the check was for $22,000 and change.  We didn’t speak after that.

Several weeks later, the exchange started an investigation of me for acting as a broker(I was never a broker or dealer, just a local trader).  Since most locals ”helped” our friends from time to time, I didn’t think that it would be a big deal, but the exchange was being prodded by the CFTC, with whom he lodged a complaint.

I was friends with the CFTC rep for the exchange and that complaint ultimately ended up disappearing.  To make a long story short, I ended up getting suspended by the exchange for 30 days, and fined $5,000.  I was OK with that, and took my lumps like a man. I had been suspended for many little things like foul language, fighting etc, so I was cool with this.

And when my ex-friend dragged me into Civil court, my lawyer advised me to settle, which I did.

This expensive lesson made me realize that I should never, ever do anybody a favor when it comes to trading and markets.  I made a guy an enormous return on his money, and he sued the crap out of me when he lost half.  He was still $23,000 richer than when we started.  I did him a big favor, made him a whole lot of money, and  still got fucked. I ended up having to pay him $24,000 plus various lawyer fees and court costs, plus I lost a month of work.

Suffice to say I didn’t feel too bad when he later got a spinal injury and was confined to a wheel chair.  Well actually, the only thing I felt bad about was that I wasn’t able to push him and his wheelchair down a flight of stairs.

Not Jeff…!!!

This is why I don’t trade other people’s money.

Moral of the story.  Don’t do a favor in the market for anyone who’s not an exchange member and in a position to reciprocate. It just isn’t worth it.

Also by Jeff Watson  “Could You Handle What Really Trading Is Like?”

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Small Business 101: The Market Segment To Avoid At All Costs

These days everybody is an “entrepreneur” which is usually code for “I don’t know how to run a business.”  For over 20 years I owned a small business and experienced all its different phases from the start-up process to the exit sale, and everything in between (and I do mean everything).  

In this series I will share some of my insights so that if you are currently running a small business or thinking about starting one, you can benefit from my experiences and hopefully avoid my mistakes (and there were a lot of them).  And remember, every small businessman is an entrepreneur, but not every entrepreneur is a small businessman.

If you’re thinking of starting a small business or currently running one, the title of this post may strike you as strange. “Why would I want to avoid any market segment?” you might ask. “I want the whole market to be my potential customer.”

Well, I’m here to suggest to you that this idea may not only be outdated, but dangerous to your company’s health.

Generally, the potential market for any small business is divided into three segments: the top end, the bottom end, and the middle.

The top end are your clients that need a higher quality of service or product, but are willing to pay for it. The bottom end are your clients that want the best price points, but don’t need the highest quality of service or product.  Often, but not always, the top end customer’s product or service is high-margin, low-volume, and the bottom end customer’s are low-margin, high-volume.

By targeting these two segments of the market, you can make your company very profitable, as well as secure in any market environment.  For example…

Let’s say you want to start a wedding and event planning business.  In order to target the top end of the market, you create a custom event package for your clients, meaning they won’t flip through pre-set options for their special occasion, but instead you will tailor each experience based exactly on what they desire.

You can do this because you have the design talent and the personal touch that sets you and your business apart from all others.  You bring something special and unique to the table and your clients know it and are willing to pay top dollar for your services.

These high-end events are so intricate and involved that you can only put on one per weekend, but because you can charge a premium for each one, they are particularly profitable for you.  Low volume, high margin, top-shelf service.

Now since you already have chairs, and tables, and linens and such in your warehouse that you use for your premium events, you decide to segment your business and provide party rentals for the lower end market.  These customers just need basic items on a temporary basis and in a cost efficient way, for the odd birthday party or bar mitzvah.

For this segment you can’t charge as much, but the jobs are much simpler.  You provide drop off and pick up service only, no set up or design included.  You give your customers a two-hour drop off and pick up window and charge them a reasonable fee that makes you a small profit.

However, because of the nature of the service, you can load your truck up with seven or eight different orders, batch schedule them, and have you crew knock them all out in a couple of hours.  High volume, low margin, minimal service level.

The are the two areas of the market you WANT to focus on.  The area of the market you want to AVOID at all cost is the middle of the market.

This is the area where the customers want the same quality of service or product as your top-end clients, but they want the price points of your bottom-end clients. This also happens to be the largest segment of the market, because let’s face it; most customers want to get more for less. And since it’s the largest segment, it’s also where you’ll find most of your competition.

So ask yourself this question, “Why would I want to go up against the largest amount of competitors, with the jobs that cost me the most, yet get me the least?”

In addition, this is the area of the market that will get crushed first during a recession or during hard economic times.

Think about it. Your customers at the high-end want the best quality but are willing to pay for it.  A recession or a downturn in the economy is going to affect them less. Your customers at the low-end want the best price points, and probably run their lives or businesses very lean. Once again, they will be less affected by slow times.

It’s that middle section that will get decimated when bad times come.  And because the amount of competitor’s will stay static, but the pool of potential customers will diminish, it can get very ugly. Need a mental picture?  Have you ever seen a group of sharks vie for a single piece of food?

Profitability in that market sector will go out the window, and if you avoid, you can watch your competitors will tear each other up, which only strengthens you company’s position.

I experienced firsthand how targeting the middle of the market can be fatal when I went to sell my small business.

I had carved out a very successfully niche servicing the interior design trade, targeting only the high-end customers and the low-end customers. The people who were going to buy my business had come from an entirely different industry, the lock smiting industry.

That type of business competed right in the middle of the market. They sold the same products and the same services as every other locksmith, thus they had no uniqueness in product, service, or customer base, and hence no pricing power.

The only way they competed was to put a bigger ad in the Yellow Pages than the locksmith down the street did.  Their customers were the definition of the “middle” of the market and had hundreds of locksmiths to choose from, whom they could play against each other.

I tried to explain to the buyers that my company did not compete just on price, but price related to service.  We had the jobs at the high-end where we gave more service at higher prices, and the jobs at the low-end where we had lesser service and lower prices.

Unfortunately, after they purchased my company they moved everybody right into the center. They announced to our high-end clients that they were cutting prices, even though no one had asked them to do so. They announced to lower-end clients that they were raising the service level, even though no one had asked them to.

They took the two extremes of the market that I had spent 20 years carving out for my company, and smashed them right into the middle. It’s no wonder that eight months after they bought my company they went out of business.

Don’t let that fate happen to your business. Know what the market is, but know where your profitability is in that market. Segment your market and you will have a more profitable company and a more secure place in the market going forward.

Do you have a tip or a story about running a small business that you think would be of value?  If so, drop me a line at bclundblog@gmail.com and let me know about it.

Check back in next Wednesday for another blog post in the Small Business 101 series.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

7 Ways To Better Focus Your Trading

When it comes to focus, I have had a life long battle with……………hey, look at that cat over there!

Hmmm…now where was I?  Ah, yes…focus.

For me the inability to focus is a by-product of ADHD.  My ADHD is something that I am neither ashamed of nor wear like some retarded badge of honor.  Throughout history, many intelligent, good-looking, and well-hung people have had ADHD and it’s just a part of who I am.

However, you don’t have to have ADHD to suffer from a lack of focus.

We are pulled in so many different ways these days, with an unending stream of data and information bombarding us at every turn, that it’s easy to get our attention diverted from what we are doing.

And when it comes to trading, lack of focus can be devastating.

Below are some things I have learned over the years that have helped me improve my focus, not just in trading, but in other aspects of life as well.

Tune Out, Turn Off, Crush It

For a the longest time I was an advocate of turning the sound down on CNBC and other channels of its kind.  Then I suggested putting your TV somewhere in back of you so you couldn’t see it.  Now I have gone the full route and just turned my TV off. Next I plan to run over it with a steamroller in front of CNBC’s Worldwide HQ, while wearing a Jim Cramer mask.

There is nothing, and I mean NOTHING that you need to see on CNBC that will have any bearing on your trading.  Any news that is important you will see in price first. And if you just still need to know why price is moving the way it is, you can pull up your StockTwits stream which I have seen be anywhere from 15 minutes to an hour ahead of CNBC in terms of breaking news.

Trust me, just get rid of it, and you get rid of a foe in your quest to get focused.

BOO-YAHH..!!!!

Cut The Chat

There are a lot of great trading services out there, and I have advocated subscribing to a number of them.  Most, in addition to providing nightly commentary, have a chat room that you can participate in during the trading day.  For some people this can be a positive, but for others, it can be a big negative.

Some people have the discipline to only check in with the chat occasionally, in order to get trade ideas or info, but for most I think it can become a distraction.

If you find yourself more interested in responding to what someone just said in the chat room or talking about the latest political news, it might be time to just shut them down.

Katy Bar The Door

Back when I ran my own business, I thought I was the epitome of the cool, hip, boss of the future because I had an “open door” policy.  I never wanted it to seem like I was cutting myself off from my employees or was so aloof that they couldn’t just waltz in whenever they wanted and let me know about the latest minute problem.

Nowadays I prefer the “closed-door” policy.  In fact, I really prefer the “closed, locked, bolted, with a sign on the front that says, ‘Get The Hell Away From Here'” policy.

I recently watched one of those Discovery Channel shows where “prepper” wackos built doomsday bunkers in their backyards.  One guy had his made so that when his unfortunate and unprepared neighbors tried to enter the shelter to find a scrap of bread for their dying infant, a barrage of razor-sharp blades and fire cannons would be unleashed on them, in theory loping their heads off and then burning them to a crisp, possibly to use as an appetizer for that nights “prepped” dinner.

I want that setup at my door.  I don’t want to be in the loop if I don’t have to be.  I want a quiet, dark, and dungeonesque type office, free from outside distractions.

If someone really needs me they know where I am, and in the meantime I’ve isolated myself from all sorts of distractions that cause me to lose focus.

Get The Hell Out Of My Office!!!

Monitor Less

When I first started trading full-time I dropped 5K getting a custom-made Dell computer that could support four monitors.  Then I put two lap tops on either side of me.  I looked bitchen ass cool, but it did not help my trading one bit, and during the summer it made my office unbearably hot.

Multiple monitors work for some, but mostly they give you more opportunity to put up crap that will pull your attention away from the markets and your trading.

Do you really need to have Twitter, Facebook, Pinterest, Goolge+, HotGayDudeCams.com, and other social media sites up on your screens while you trade?

One of the most successful traders I know only uses a laptop when he trades.  One laptop, for everything.  Charting, analysis, order entry, and communications.  This really is a case where less is more.

Let Trades Come To You

One of the things that can really cause you to lose focus is to be constantly flipping through charts, worried that you are going to miss the setups and moves you have been anticipating.

A while back I wrote a post entitled “Making Trade Setups Come To You” where I outlined an alert based methodology that ensured that you would not miss out on any trades and relieving you of the related anxiety

Check it out and I assure you it will help you relax and better focus on what is important during the trading day.

Turn Off The Talk.

The process of being more focused in your trading doesn’t start and stop with the opening and closing bell, it’s something you have to work on in your “civilian” life as well.  One of the best decisions I ever made was to turn off talk and news radio about five years ago, and put music in its place

Now I listen to about fifteen minutes worth of news when I first get in the car in the morning, and then after that the rest of the day is spent “talk free.”

This is another situation where I promise you, you are not going to miss out on anything important, unless you care about listening to people whose job it is to create divisiveness and controversy purely for shock value in order to get higher ratings.

The type of music you replace it with can be anything that you enjoy, but I would suggest that you put in a healthy dose of classical music each day.  There have been study after study done that show  that classical music, in addition to relaxing you, can actually make you smarter just by listening to it.

For the best classical music station on Earth, which you can reach via FM or HD radio, streaming internet, or smart phone app, check out www.kusc.com.

Just turn it off…!!!

Batch The Hell Out Of Everything

Checking email, voice mail, and social media non-stop not only takes up our valuable time, but are activities that just encourage a helter skelter and unfocused way of approaching things.

If you respond to each of those things as they come up, you are never able to keep a consistent and uninterrupted train of thought, which is critical when it comes to retaining focus.

So instead of addressing each of these things as they come up, do everything in batches.  Set aside specific periods of time; ten, twenty, thirty minute blocks of time where you will focus only on returning emails, phone calls, checking social media, or taking care of any repeating and distracting issues, which allows for more efficiency, effectiveness, and focus.

You will also find that you can take this technique into other areas of your life.

We already batch things like going to the laundry or taking the garbage out, but have you ever thought of having sex seven or eight times in an hour so you don’t have to worry about it for the rest of the week?  Come on, get creative and try to think out of the box.

It Will Take Some Work

You can’t just follow these tips and turn your trading from a disjointed mess to laser focused in a day or even a week, but as you implement them and stick to them, you will find that within 2-3 weeks you should have a new-found ability to focus on your trading as well as other important tasks in your life.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Your 10 Trade Ideas For The Week Of 10-22-12

In last week’s post I said that…

“A lot of charts are looking “heavy,” especially in the pharma sector, however, after the selling last week I would expect a 1-2 day bounce, which may set up some good shorting opportunities.”

And that is exactly what happened in the indexes, various stocks, and specifically $AAPL.

On Monday $AAPL bounced right off the support at the top of the blue rectangle, then failed at resistance on Wednesday, and sliced through all support to end the week on the lows.  After three days of selling look for a bounce, but $APPL does seem like it has a date with its 200ma.

The name of the game this week is “relative strength.”  We are looking for stocks that have held up well in this recent drop to A) day trade long if the market gets another bounce and B) keep an eye on to swing trade long in a few weeks if the overall indexes have stabilized and set up bullish patterns.

You want to talk strength, well here it is.  $AGU is not only holding up while the market tanks, but is holding up while others like $POT, $MON, and $MOS in its own sector look weak or like shorts.  In addition, it’s knocking at the door of all-time highs.

Financials have been looking strong as of late, and no matter how hated $BAC is, the chart looks good.

Homebuilders like $LEN, $KBH, and $PHM were not deterred by last week’s selling.  $MDC is in the same sector and it’s chart looks good here.

$SLV sold off over the last two weeks, but $PAAS has shown good relative strength.  If the metals bounce, look to this one to break out.

Not only did $SHOO  rally in the face of a market drop last week, it’s pushing towards all-time highs here.

After bouncing off a support level four times, $X has created a large “W” pattern.  A few days of sideways consolidation below resistance and a big move could be in the cards.

After breaking its downtrend in August, $LVS has slowly grinded its way higher.  Once the market firms up, this will be a stock to watch.

Annoying little Chinese stock, but $ADY is forming a tight flag just below longer term resistance.


3D printing will change our lives in ways we can’t even imagine, but right now, after breaking it’s uptrend and forming this rising channel, $DDD looks like a short sell if it can get a weak 1-2 bounce at the bottom of the channel.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Best Of The StockTwits Network 10-20-12

Let’s be honest, you could pretty much throw a dart any day of the week at the StockTwits Blog Network, and end up hitting a post that is better than 99% of the other stuff out there that passes as financial blogging.  So to say these are “The Best of….” is a little disingenuous; let’s just say these are some of the posts from the last week that caught my attention and I think will interest you.

The Bear Collar starring Mellanox and Chipotle 1nvestor

Who wins in an ETF price war? Abnormal Returns

What If The Euro Keeps Rallying? All Start Charts

IBM and INTC Technical Analysis Discussion on Reuters TV w/Phil Pearlman Alphatrends

No Wonder He Hated Me Altucher Confidential

So How Predictable Was 1987? Crossing Wall Street

Last Word on Breadth Derek Hernquist

The Spanish Miracle! Dragonfly Capital

The Science of Analysis and the Art of Trading Dynamic Hedge

“GoogleGate” Highlights the Need For Companies to Own Their Communications Howard Lindzon

What is Causing the Giant VIX Contango Trading With Options

Two Key Takeaways from the Flash Crash In 1987 Ivanhoff Capital

VIDEO: Too Much Distribution Joe Fahmy

WSJ Writes About Lloyd Blankfein’s Locker Room Nakedness Kid Dynamite’s World

Microsoft Earnings Review: Decline of an Empire Osprey Flyer

Fallout from Chesapeake’s Land Grab is Over AlphaVN

The Apple (AAPL) is falling from the tree Peter L. Brandt

October 19, 1987 Points and Figures

A Profitable System is Only The Beginning Rogue Traderette

Japanese Purchase of Sprint is an Act of Desperation Sizemore Insights

Loan agent stories on how hard it is to get a mortgage The Basis Point

My Recollections from Black Friday, 1987 The Reformed Broker

How’s That QE3 Inflation Trade Working For You? The Armo Trader

Black Monday and Buying Fear The Upside Trader

Rail Traffic Remains Elevated Value Plays

And finally, what you may have missed on bclund.com this week…

Part 2 Of The 100 Percent Accurate Trading Newsletter bclund

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Part 2 Of The 100 Percent Accurate Trading Newsletter

I have issues, there’s no doubt about that.  Though I have tried be more “zen-like” over the last few years, there are still things that get me upset that probably shouldn’t.

Very high up on that list are what I call “unimportant clarifications” and the people who say them; things that not only have no bearing on the story, point, or lesson being told but actually detract from the overall idea that is being presented.

Here is an example from a real-life conversation I recently had…..

“Oh, I heard you went up to see *blank* the other day.  I guess she hasn’t been feeling good lately, how did she look to you?”

“Well, I have to say, for somebody that just turned eighty-six she looks very, very…..”

“…..she’s actually eighty-five!”

“Uh….really?  Okay, eighty-six then.”

Now let me tell you what that “really” means in this context.

It means, “Really?  That is what you are fucking interrupting me to say?  That she is one year older than I said?  Forgive me, but didn’t you ask me how she looked?  I’ll give you the benefit of the doubt that you are seriously are interested in how *blank* is doing, so if that is the case, what does one extra year matter?”

“Did you think that your clarification was going to change my story dramatically?  Like, ‘she looks very good for someone who just turned eighty-five.  What, she is eighty-six?  OH…MY….GOD!!!  Then she looks like somebody who is literally knocking on death’s door.  We better call Forest Lawn right now to make arrangements.'”

Alright, hang on for a moment while I breathe and get in touch with my inner spirit animal………ahhhhhhhh!  Better.  I love porpoises.

A few weeks back I did a post called “The 100 Accurate Trading Newsletter” where I gave an example of how someone could scam you into thinking that their newsletter was a consistent money-maker, when in fact it wasn’t.  In that post I used the example of a newsletter that mailed or emailed you a solicitation to subscribe.

And out came the “Clarificators.”  They made a point that nobody markets via snail mail anymore, and that unsolicited emails are already viewed with as spam to start with.

Well, that was not my point.  The methodology of how you find a potentially fraudulent trading service doesn’t matter, nor does it safeguard you from being scammed.  Case in point…

I have recently come across a new trading service whose principal seems to be a former, still sometimes, spokes-model/reality TV participant.  This lovely lady is CRUSHING THE MARKET on a daily basis.  The proof on the site is a daily “screen cap” of the trading profit (never a loss) from her brokerage account.

Look, I am not saying that Vanna White junior is NOT crushing the markets, I am just saying that the “proof” that is being shown is suspect.

If I was an enterprising person who wanted to run a grey area type trading service scam, the first thing I would do would be to get a good-looking, sexy lady as my frontman.  Why?  Because the fact of the matter is that the vast majority of traders are guys.

And the vast majority of guys lose any sense of logic and objectivity when hot women are involved.  It’s why every guy that goes to a strip club thinks that the lady who is dancing for him is doing it because, in his words, “she really likes me.”  And need I remind you of the Hot Trader Chick post.

The next thing I would do is open two different accounts at one broker and fund them with the same amount of money.  Then I would do the modern-day version of the “A/B scam.”

I would buy 500 shares of XYZ in one account and at the same time short 500 shares of XYZ in the other account.  Then whichever account was up for the day, I would “screen cap” that one, conveniently leaving out the account balance, and then display it right next to the smiling face of the stripper…..uh, I mean trader who did the trades.

But that’s just me.

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.

Why Goldman Sachs Is Satan…..Or At Least A Great Contraindicator

The chart of $ACI from last week (click to enlarge).

(Insert standard Goldman Sachs joke here)

 

Why not subscribe to bclund.com for free  Via E-mail or Via RSS and follow me on StockTwits and Twitter?

What bclund is, is the intersection of markets, trading, and life (with some punk rock, pop culture, and off-beat humor mixed in).  Check out “The Best Of bclund” to get started.

Brilliant stuff like this rains down like..well, rain, on my stream during the week. If you want to get wet, follow me on Twitter and StockTwits. You can also pick up my book Trading – The Best of the Best: Top Trading Tips For Our Times by clicking here.