Six Tips that Make Good ‘Cents’

19151085What do you mean money doesn’t grow on trees? Rats.

Now that we’ve got that nasty truth out of the way, it’s time to get serious. It’s time to start saving.

This Forbes article describes six easy ways people in their thirties can do just that – and how it will pay off in the long run.

Three of the tips include:

  • Embrace stocks: The financial crisis took its toll on many thirtysomethings. Nearly 40% of Gen Y-ers say they’ll never feel okay investing in stocks, MFS Investment Management has reported. Take note: Since 1926, a portfolio mostly in stocks has never lost money in any 20-year period while averaging gains of more than 10.8% a year, versus 4% for bonds. At age 30, you should have most of your portfolio in stocks, with about half in U.S. equities and nearly 30% in foreign equity.
  • Don’t cash out: More than half of workers in their twenties who leave a job do not roll their 401(k) into an IRA or their new employer’s plan, says Aon Hewitt. Bad move: On a $10,000 balance, you could be left with just $7,000 after taxes and penalties. If, instead, you keep that money growing at, say, 6% a year, you’ll have an extra $100,000 or so by the time you retire.
  • Sweat the small stuff: If you carry multiple credit card balances, you’ll save the most money by paying off your highest-rate plastic first, right? Wrong. Two Northwestern University professors have found that people who focus on their smallest debts before tackling bigger, higher-rate loans are more successful at erasing debt. The psychological boost from eliminating a loan entirely gives you the mojo to keep paying down debt.

What’s New With Apple?

8024486It’s time.

The world’s been holding its breath … the iPhone 6 has arrived.

At this point, for me at least, nothing is shocking anymore. Nothing is so new that I cannot contain myself and I MUST own the new iPhone immediately!

According to a recent article in Forbes, this will be Apple’s most challenging launch. Why? Because for once, Apple is actually late to a trend. Last week the rumors of an extra-large iPhone were confirmed when Apple announced the new design for the 6. Apparently, the latest trend in smartphones is to make them “phablet” size. This word was just recently added to my vocabulary, and the best way to define it is as what would happen if a smartphone and a tablet had a baby — a phablet.

This particular smartphone design has proven to be most successful in developing nations because it is small enough to be a phone, yet large enough to function much like a tablet for watching videos and other such activities.

The Forbes article gives some statistics, “Over 70% of Internet users in Ghana, Nigeria and South Africa, 47% in Saudi Arabia and 44% in India use their smartphones to watch online video.”

I understand and appreciate the many benefits of this phablet phenomenon, but for me, I think I’ll stick with my pocket-sized iPhone 5.

———-

Paige Ferise, a sophomore at Butler University, is interning in the Indiana Chamber communications department this summer.

Billionaire Beginnings

Ralph Lauren is worth $7.7 billion. Oprah Winfrey’s empire has skyrocketed to $2.9 billion. They are among the mega-rich and regarded as celebrity royalty.

Their achievements are all the more inspiring when you consider how far they’ve come. Like others featured in a recent Business Insider post – “15 Billionaires Who Were Once Dirt Poor” – both overcame poverty.

Are you familiar with Howard Schultz? I wasn’t. At least that’s what I thought until I discovered that he runs Starbucks (I’m all too acquainted with the company’s lattes). In the piece, he recounts childhood memories residing in a complex for the poor:

Growing up I always felt like I was living on the other side of the tracks. I knew the people on the other side had more resources, more money, happier families. And for some reason, I don’t know why or how, I wanted to climb over that fence and achieve something beyond what people were saying was possible. I may have a suit and tie on now but I know where I’m from and I know what it’s like.

Today, he’s amassed $2 billion. Let me digest that.

Leonardo Del Vecchio’s story is one of the most poignant. As a child, he and four siblings were sent to live in an orphanage after their father died. While working in a factory, Del Vecchio lost part of his finger in an accident. In 1961, he founded Luxottica, the largest producer and retailer of sunglasses and prescription glasses in the world (think Ray-Bans). He’s now worth $15.3 billion.

Fortune may have smiled on these business legends, but their tremendous talent and determination paved the way.

New Job, New Faces, New City

Congratulations! You’re about to embark on one of life’s most exciting experiences: starting a new job. It’s also one of the most stressful. Now let’s add another element to the mix: The position is in a different state. That’s right – it’s time to relocate.

Moving can bring many positive life changes (imagine all of the memories you’ll create in your new home!), but often not without some bumps along the way. So, where do you begin?

A story on Forbes.com provides several helpful tips. Staying organized, asking for relocation assistance (even if your employer doesn’t typically offer it), taking time to familiarize yourself with your new environment before you move and building a social support network can help ease the transition.

Check out Eight Tips for a Successful Job Relocation and share your input with us. What do you wish you would have known prior to moving to another city or state for a new job?

Working from Home? Don’t Make These Mistakes

With the recent emphasis on flexible scheduling in the American workplace, many workers — at different levels — are now afforded the opportunity to work from home at times. However, if you’re like me, the few times I’ve actually done this, I didn’t make it out of my flannel pajama pants. This article from Forbes explains why that’s not a great idea, and offers the 10 mistakes people often make. Here’s a bulleted list, but read the entire piece:

  1. Failing to smile when you pick up the phone. Just as customer service reps are taught, you come across on the phone better when smiling.
  2. Not getting dressed. Looking good gives you confidence.
  3. Having bad posture. It can lead you to acting too casually.
  4. Looking like a terrorist on Skype……..don’t do that.
  5. Having unflattering props around in a conference call. Beer mugs, kids’ toys, ashtrays, etc. don’t inspire confidence in your peers.
  6. Saying "no" in emails. If you’re giving someone bad news, call them. The personal touch is appreciated.
  7. Poor e-mail length. Be clear in what you’re asking others to do. Lengthy emails can lead to confusion of what’s expected, and short emails can appear stuffy (e.g. "Fine."; "Thanks.")
  8. Ignoring the noises around your house. If you’re on the phone, hearing lawnmowers or kids yelling "Marco! Polo!" may not win your client over.
  9. Forgetting the virtual handshake. Start a conversation with personal information to set a pleasant tone.
  10. Thinking you’re alone. You’re still connected to the professional world, so don’t multitask too much with personal tasks like laundry.

Forbes on Mega Millions and Lottery Strategies

Apparently — and this may shock you — you really can’t guarantee a win in the upcoming Mega Millions lottery drawing (with the jackpot at about $640 million at the time of this posting). While it seems that one could technically have the money to do it, the time and resources would render it impossible. Although, it seems optimal lottery strategy has paid dividends in the past. Forbes writes:

Over at the Washington Post, Brad Plumer looks into the question of whether a wealthy person could guarantee himself a win by buying every possible ticket in the Mega Millions lottery, and discovers that the answer is no:

Of course, another strategy would simply be to buy up every single ticket combination. That would cost $176 million. But you’d be guaranteed to win about $293 million after taxes. Good deal, right? But there’s one big hitch: “First, if it takes five seconds to fill out each card, you’d need almost 28 years just to mark the bubbles on the game tickets. You’d also use up the national supply of special lottery paper and lottery-machine printing ink well before all your tickets could be printed out.” (Also, if just one other person picked the winning number, you’d end up losing $30 million all told.)

It’s true that you can’t guarantee a win in this Mega Millions game, because it’s too likely that you’ll have to split the jackpot. If 300 million tickets sell, the average jackpot winner ends up with only 48 percent of the jackpot. If 600 million sell, you’ll only get 28 percent on average.

But it is not true, as a general proposition, that a lottery can never be cornered. In 1992, an Australian investor syndicate succeeded in cornering the Virginia Lottery. At the time, the odds of hitting that lottery were about 1 in 7 million, and the jackpot had grown to $27 million dollars. The Australians bought about 5 million tickets (logistics prevented them from buying every combination) and won the jackpot.

There were a handful of key differences between the Virginia situation and Mega Millions. The most important is that there was not a similar frenzy over the jackpot: even though playing the lottery had become a positive-expectation endeavor, there was not a similar rush to buy tickets, so the Australians could feel better about their odds of winning the jackpot alone.

The Australians also figured out the logistics of buying tons of lottery tickets. Plumer talks about how you would never have the time to fill out all the Scantron forms you would need to buy every lotto combination. But the Australians didn’t have to fill out any Scantron forms—they paid retailers to sell them blocks of lottery tickets in bulk. At least one retailer closed its lottery terminal to the public in order to constantly produce tickets for the syndicate.

Even so, the Australians only managed to purchase five million lottery tickets. And after their win, Virginia and some other states instituted rules to make it more difficult to buy lottery tickets in bulk. So, their feat would be difficult to replicate.

Virginia isn’t the only place where a lottery game has reached positive expectation. When I was in college, the jackpot on Mass Millions (then the big jackpot game of the Massachusetts Lottery) reached over $42 million, with win odds of about 1 in 13 million. This is because nobody hit the jackpot for nearly two years. Yet, there was very little attention focused on the huge jackpot—probably because lotto players were drawn to Mega Millions, which featured bigger jackpots with much longer odds of winning.

During this time, I bought a few Mass Millions tickets, and if I hadn’t been a capital-constrained college student, I probably would have bought more. But why didn’t somebody with lots of cash come in and do what happened in Virginia? The answer is probably that logistics made it too difficult to buy the 13 million tickets you would have needed to guarantee a win.

Buying 176 million tickets to guarantee a Mega Millions win would be even more difficult, and you would have less time to do it, since the game is drawn twice a week, unlike most states’ once-weekly big jackpot games.

So, cornering a positive-expectation lottery is difficult, and it probably will never be possible with Mega Millions. But with state-level games, if you have a few tens of millions of dollars to throw around and are in a place with the right rules about ticket sales, you might find an occasional opportunity.

Should CEOs Send Mass Responses to Criticism?

The question in the headline makes me think of the recent Netflix flap, in which its CEO emailed the company’s customers basically apologizing for some unsuccessful moves. As Best Buy now battles online retail giants like Amazon and faces criticism about annoying upselling and not meeting order demands around Christmas, company CEO Brian Dunn offered the following response on his blog. Here’s the post in its entirety (below). From a PR perspective, was this the right move?

Best Buy has been taking some criticism lately. As CEO, I know that criticism goes with the job, and I’m well aware we have some challenges. I also know that errors we make often translate into a poor experience for our customers, and that is simply unacceptable.

Still, while I agree with some of the commentary on areas we need to improve, I feel it’s important to set the record straight on statements about our company that are, in my opinion, not completely grounded in fact. And I feel the need to do so, in part, to make sure our 180,000 hard-working employees understand the whole story – and have the full context that allows them to develop their own opinion about what’s written and said about Best Buy.

Let’s start with a couple of examples where I think the critics got it right.

The cancellation of some internet orders just before Christmas was our fault, and it’s not representative of how we EVER want to treat our customers. I’ll spare you the technical explanation of how and why it happened, but we know we did not deliver a good experience and we’re truly sorry. We’ve worked to make amends with customers whose holidays were made less happy because of our mistake, and we’re working diligently to make sure it doesn’t happen again.

Another area where we have received fair criticism is the overall speed of the transformation of our business model – something we are working hard to address. We’ve accelerated changes to key elements of our model already (the significant expansion in the number of products available on Bestbuy.com and the launch of our online Marketplace are two recent examples), but we need to move even faster, particularly in creating a more seamless experience between our stores, web sites, call centers and services teams. We recognize people can and do shop from anywhere, and they expect thoughtful, helpful interactions from us every step of the way. We continue to invest in a number of areas – from employee training, to critical system enhancements – to ensure our customers always receive the kind of experience they deserve and expect from us, wherever and whenever they choose. But, simply put, that work needs to happen faster – and we’re taking significant steps to accelerate the pace.

Now, onto a couple of topics where I disagree with the critics.

First, some believe the internet has made physical retailing (i.e., stores) irrelevant. There’s no doubt that the internet, and the mobile web in particular, have changed the way people shop, but there is strong evidence that consumers continue to value the experience of shopping in stores. A recent study by the NPD Group, a leading market research company, notes that nearly 80% of consumer electronics revenue still moves through physical stores. Additionally, approximately 40% of customer purchases made through Bestbuy.com are picked up in one of our stores. And the truth is, traffic in our physical stores increased in our third quarter and has been trending positively for most of the year.

Finally, there are those who question the validity of Best Buy’s business model. This misguided perspective is especially troubling for me, because it blatantly and recklessly ignores overwhelming evidence to the contrary. Best Buy is a financially strong and profitable company that has generated more than $2.6 billion in cash flows from operating activities in the first three quarters of the fiscal year. We also delivered positive operating income in each of the first three quarters of fiscal 2012. We grew total market share in the third quarter according to the most recent public data available. We have closed down certain operations that were not profitable, which we expect to have a positive impact on our earnings going forward. And we are focusing the company on areas where we see the greatest opportunities for growth and profit: mobile devices and connection plans; enhanced digital and e-commerce strategies; growth in our services business; and expansion of our established business in China.

As I mentioned earlier, we fully expect to receive our share of criticism – we’re a big company and we don’t always get everything right. But this is one of those times when I felt it was necessary not only to acknowledge our shortcomings, but to set the record straight on issues where facts are being obscured by rhetoric.

Brian J. Dunn
CEO
Best Buy Co., Inc.

Interactive Intelligence Gets National Recognition from Forbes

Those in the Indianapolis area have likely heard of Interactive Intelligence by now. Founded in 1994, the company has emerged to become one of the world’s leaders in business communication systems. And now, behold this prestigious honor, as Forbes has ranked the company eighth among America’s best small companies:

Interactive Intelligence Group Inc. (Nasdaq: ININ), a global provider of unified IP business communications solutions, has been ranked No. 8 by Forbes Magazine among America’s Best Small Companies.
 
This is the second year in a row Interactive Intelligence has made the Forbes list, which is composed of the 100 best-performing American public companies with under $1 billion in revenue. Last year Forbes ranked Interactive Intelligence 26th on its list.
 
The Forbes America’s Best Small Companies ranking features firms with remarkable sales and earnings growth in a host of industries, according to an article in the magazine titled “The Top 20 Small Public Companies In America.”
 
Interactive Intelligence had sales of $192 million for the 12-month evaluation period ending June 30, 2011, with 20 percent sales growth and a 31 percent return on equity.
 
Interactive Intelligence was also included on Forbes list of 15 Small Company Stocks You Should Own Now.
 
“Our inclusion for the second year running among Forbes Top 20 Small Public Companies in America affirms our continued customer-focused approach with an emphasis on long-term value,” said Interactive Intelligence founder and CEO, Dr. Donald E. Brown. “This approach has spurred significant demand for our cloud-based contact center offering and it’s fueling an ever-increasing number of sales to the very largest global enterprises.”
 
Interactive Intelligence develops business communications software that provides contact center automation and unified communications functionality for mid-size to large organizations. The company’s software can be deployed on-premise or in the cloud, and is ideal for all verticals, including financial services, insurance, teleservices, and credit and collections.
 
“With exciting new development efforts underway that marry social media with mobile technologies to yet again transform customer service, we look forward to another opportunity next year to make Forbes most worthy list of best American companies,” Brown concluded.
 
Candidates for Forbes Magazine’s America’s Best Small Companies ranking must have been publicly traded for at least a year, generate annual revenue between $5 million and $1 billion, and boast a stock price no lower than $5 a share. The rankings are based on earnings growth, sales growth, and return on equity in the past 12 months and over five years. Stock performance versus each company’s peer group counted as well. Shares of last year’s members outpaced the Russell 2000 small-company index by an average of 10 percentage points.
 
More information about America’s Best Small Companies can be found in the November issue of Forbes Magazine, or on its website at: http://www.forbes.com/sites/kurtbadenhausen/2011/10/19/the-top-20-small-public-companies-in-america/.

Social Media Not a Priority For All

Does the bad news outweigh the good in this survey of executives regarding social media? You be the judge. I already gave my answer in the way I phrased the question.

First, the good news: Most executives think having a social strategy is important for their businesses.

In a May survey from Jive Software and Penn, Schoen and Berland, 78 percent of executives believe social media to be somewhat or very important, eMarketer reports.

Now, the bad. Only 27 percent of those executives are making social media a priority. About half of the remaining respondents say it’s necessary, but not at the top of their lists. The rest say it’s unnecessary or don’t know.

Those results match up pretty well to a May Forbes Insights poll of U.S. and U.K. marketing executives, where social media ranked next-to-last in a list of a dozen priorities for 2011, including customer retention, branding and direct marketing. However, for 2012, social media will jump to sixth on the list. 

Looking Behind the Ranking Numbers

Two pieces of seemingly conflicting news that came out late last week:

Indiana ranks sixth overall and first in the Midwest on Area Development magazine’s list of “Top States for Doing Business,” but Forbes placed the state 29th on its “Best States for Business and Careers” list.

These are just two of the numerous state rankings that are published throughout the year, but why is Indiana ranked so highly by one publication while falling below the middle of the pack in another?

A little digging reveals that the way the data is compiled varies extensively. According to the Area Development web site, the magazine conducted a “flash survey” of a select group of respected consultants who work with a nationwide client base. The consultants were asked to name their top 10 state choices in eight selection criteria, which include lowest business costs, most business-friendly and corporate tax environment, to name a few. All of the criteria were given the same weighting. Find the complete article and rankings here.

For the Forbes list, the ranking measures six categories (none of which were the same as the Area Development list, with the exception of business costs). Then, 33 points of data were factored in to determine the rankings in the six main areas, with weight given to business costs. The data came from 10 sources (such as the Census Bureau, FBI, Tax Foundation, Department of Education) with research firm Moody’s Economy.com as the most-utilized resource. Find the complete article and rankings here.

Already, these are two dramatically dissimilar methods for calculating rankings. A little farther down in the Area Development article, the writer even admits that if the criteria were regrouped into three categories, the rankings would see significant change.

Just keep in mind that the way the data is interpreted is often subjective and that the rankings one sees may be utilizing very different measures.

The good news, however, is that in general Indiana is ranked very highly and the state boasts a business-friendly environment – evident by the new and expanding businesses around the state despite the difficult economic times. The Indiana Chamber will, of course, continue to be a key player in helping ensure the state’s business success.