Automation and Online Businesses

Automation and Online Businesses

There are so many people who are intrigued by the idea of entrepreneurship. There’s something really inspiring about the way entrepreneurs can call the shots in their lives. They also have a level of freedom that people with full-time, traditional jobs don’t have. If you’d like to experience the benefits of entrepreneurship, it’s important to be ready for the sacrifices. At the beginning of the journey, you’ll have to work harder than you might have worked when you were an employee. However, once you set up specific systems and processes, things chance and you can kick back a bit. It’s important to use the magic of automation to keep your business running on all cylinders.

Making a List of Tasks

 Sit down to make a long list of everything you’d like to accomplish with this business. Use the example of an author. If you’re an aspiring author, your list will consist of tasks like writing books, editing and proofreading. You’ll also want to develop a marketing plan, a sales funnel and more. If you’d like to increase the streams of income, it’s wise to create workbooks, audiobooks and supplemental products. You’ll need to build a website, secure social media handles and more. Setting up an online store to sell dropshipping products internationally is a huge undertaking on its own. Knowing this, you’ll want to educate yourself on the process. Don’t forget about the financial aspect of the business. Taxes, expenses and profit margins play major roles in keeping your business afloat. Obviously, there are a million tasks to consider when you’re starting a business as an author. Even if you decide to operate as a solo entrepreneur at first, realize that you won’t be able to operate without assistance in some way. Automation, systems and other people are essential. Otherwise, you’ll never have time for anything outside of your work. Today, there are platforms like Oberlo that allow you to sell products internationally by facilitating the creation of your online store.

Using People and Systems 

Take advantage of the resources around you. It’s also wise to take advantage of the resources on the internet. Do not make the mistake of trying to do everything on your own. One of the first ways you can let go is by hiring an assistant or an intern. If you hire an intern, make sure they’re aware of the payment system. Whether you’re offering college credit or small stipend, get that information in writing. If you choose the route of a virtual assistant, this is another sustainable one to consider. A virtual assistant can handle everything from emails to managing social media content. It’s all about finding someone with the skill set that matches what you need. If you know that you’re extremely disorganized when it comes to filing, find someone who is a whiz in this area. Even if they come in and work for you on a part-time basis, you’re automatically making your workload lighter by delegating it to someone else. Systems are also effective because you can use them to automate everything from payroll to social media publishing.

Streamlining the Process

 Eventually, you’ll get to a place where you’ve found a new normal for your work-life. When you achieve that balance, it’s best to take a look at the gaps and holes. There’s always a way to improve your current workflow. Talk to your employees about things they don’t like. Have conversations regarding how the process can improve. As you make different tweaks and experiment over a period of time, this will help you avoid complacency. It will also help you to perfect your company’s ability to produce quality products and services in an excellent manner. As an entrepreneur, you’ll quickly realize that everything falls back on you. Knowing this, you’ll want to make sure you have laid a solid foundation. If there are cracks in the foundation, it’s always best to fill them before you move forward. The same applies to a business. What seems like a small problem in the present can easily morph into a nightmare in the future.

Expanding the Brand 

Brand expansion is always necessary when you’re looking to grow an online business . However, you’ll want to think critically about how you can expand without taking on more work. When you’re looking to automate the processes, keep that goal the main priority. It’s easy to see that the workload is growing and as a result, take more responsibilities into your lap. Truthfully, the correct response might be that you need to hire a new employee, virtual assistant or intern. Get into the habit of delegating continuously so that you can maintain the breathing room to call the shots, cast vision and maintain the health of the company. When you’re able to commit in this way, your company will eventually thrive. Automation is uncomfortable for those who are used to doing everything on their own. However, it is essential for an entrepreneur who desires work/life balance and time freedom.

 

Why I’m No Longer Trying to Beat the Market

Why I’m No Longer Trying to Beat the Market

Back when I used to troll the dividend growth crowd over in the comments section of Seeking Alpha, a tried and true way to really get somebody’s goat was to just point out how their dividend portfolio didn’t beat some index, usually the S&P 500.

These folks would inevitably respond with how they didn’t care about beating the S&P 500 and how all they worried about was investing in good companies that increased their payments each year. Getting trolled in a comment section was just a bonus, I guess.

Your boy Nelly, meanwhile, was confident his deep value portfolio filled with the trashiest (but cheapest!) companies out there would outperform. Sometimes I did extremely well, like that time I loaded up on Cloud Peak Energy (a coal miner) and tripled my money. I got out right as Trump won, within a dime of the stock’s high. I also made nice gains with trash like Yellow Media, Automodular, Dover Downs Casino, Village Farms, and so on.

But these paled in comparison to some of my losses. I got my ass handed to me on Corus, which is still down more than 50% over my average price. I even averaged down twice on that stock. Winnipeg Free Press lost 90%. Danier Leather at least salvaged something during the bankruptcy process, and I once invested in a Chinese fraud that went to zero. There are more examples but I’ve successfully blocked them from ever entering my consciousness again.

Such a portfolio didn’t have much correlation to the market, which should have made it easier to outperform. At least in theory. But it was also filled with a lot of trash. These were shitty businesses that just needed a small change in sentiment to achieve a satisfactory investment outcome. Except that often didn’t come. Because they were shitty.

This all seems so obvious in hindsight, but younger Nelson actually believed it. Poor guy.

Beating the market 

After stubbornly holding on to this trash portfolio for a few years to try and be different from the masses, I finally got smart and switched to owning a diverse selection of blue chips with a bit of a value bias. It’s working much better.

Let’s compare my portfolio to the TSX Composite. My portfolio has one lingering retail stock, exposure to the U.S. tech market (no Canadian names), energy exposure only through pipelines, and not a nickel invested in any mining or materials companies. This avoidance of sectors is quite intentional. I view them all as crummy businesses without any pricing power. It’s exactly what I don’t want to own.

The TSX, meanwhile, has exposure to all these things.

So what happens if gold and oil soar, while the rest of the economy tanks? These two things generally move inversely to each other, remember. If this happens, my portfolio underperforms the market.

You can probably guess what happens if the opposite occurs. If gold and oil continue to be in the toilet, my portfolio kills the TSX Composite. It’s really quite simple.

So my “outperformance” (or lack there of) depends on two sectors I refuse to own. Nice. Real nice.

Should I compare to another index?

Canada has a number of dividend ETFs that focus on delivering plenty of income while minimizing the impact of a dividend cut. Perhaps I should compare my portfolio to one of those.

My favorite dividend ETF has consistently been ZDV, the BMO Canadian dividend fund. It pays a nice yield — the current payout is 6.5 cents per unit each month, good enough for a 4.75% yield — and it comes with a low management fee of 0.35%. I own five of its top ten holdings and 17 of the 50 total holdings (I guess 18 of 51, since we both have a small cash position). It’s probably the better fund to compare my portfolio to.

But at the same time, perhaps this isn’t the best method. Maybe whichever underlying index I choose loads up on some hot new stock that delivers nice gains. Maybe it gets lucky with a takeover or three. Or maybe I get unlucky and one of the biggest positions in my portfolio blows up. This kind of stuff should even itself out over the long-term, but can have a big impact on year-to-year results.

I think the solution is I track my portfolio versus ZDV or one of the equivalents. But I’m not going to be super serious about it. As long as I’m posting consistent gains and my dividend income keeps going up on a year-over-year basis, I’m good. I’m not going to sweat the small stuff.

Wrapping it up

If I do underperform but I still end up being worth $5 or $10 million, does it really matter? I’m already at a point where our family spends about 80% of our passive income and saves 100% of our active income. Can I call that a 120% savings rate? I WILL NOW.

Remember, a high savings rate can cure a lot of other sins.

As long as I go forward each year, I’m good. And I know that by loading up on large blue chips I’m not going to deviate from the market that much. And as much as it pains Nelson of five years ago to admit this, blue chip dividend growers have a history of outperformance. So I suspect I’ll probably do about as well as ZDV, even if I’m not religiously tracking it.

Which, of course, begs the question. Why not just buy ZDV and be done with it? But unfortunately we’re out of time.

Your Personal Finances Should Be Boring

Your Personal Finances Should Be Boring

Just like this blog post. HEYO. 

Uh, I make the jokes around here, Italics Man. Your role is to go straight to hell and stay there forever.

One of the things about being a sometimes-personal-finance-and-often-investing-blogger (or NAMBLA for short) is you sometimes feel pressure to do stuff so you have blog fodder. A finance blogger most of you have heard of told me that very thing one day, and I didn’t immediately dismiss her as crazy. That came later, when she demonstrated that she was, in fact, batshit insane.

If I ever felt this pressure (don’t worry, the only pressure I feel is CRIPPLING CHEST PAINS), I can easily get away from it by buying a few stocks and then telling you guys about it. I’m steadily adding money to my investment accounts and then putting it to work. I try to diversify much more these days, which means I’m constantly buying smaller or medium-sized positions in what I view are great companies. The diversification part is in case I’m wrong, which is entirely possible.

But what’s a fella to do if you’re not into active investing? There’s nothing exciting about making your monthly contribution into two or three index funds. And saving 20% of your income each and every month is about as sexy as your grandmother trying on new underwear. IS THAT A THONG? GRANDMA!

Hell, getting rich the old fashioned way might be the most boring thing outside of a computer-generated image of a black hole. NOBODY CARES, NERDS. CALL ME WHEN YOU FIND ALIENS. You save 10% or 20% or whatever percentage of your income, slowly put it to work, and repeat 40,000 times. No wonder people get bored and feel the need to spice it up with all sorts of nonsense that will make you richer slightly faster.

But the boredom should be embraced. It’s a desired side effect, not some complication that needs to be addressed. Keep your finances boring and add the spice to other parts of your life. Like have you ever considered unprotected sex with strangers? I hear that’ll get the ol’ heart pumping.

Introducing My Distressed Real Estate Portfolio (Plus Other New Positions)

Introducing My Distressed Real Estate Portfolio (Plus Other New Positions)

I’ve been pretty busy over the last couple of months, mostly helping out with a renovation for the grocery chain I work for. It’s pretty fun work, actually. It gives me plenty of opportunity to use my imagination and I get to use my hands. The project will wrap up in about a month and then I’ll take it easy for an undetermined time after that. There’s the possibility for more work, which we’ll explore to see if there’s common ground.

So I haven’t been writing on the FU Machine that much, because as always I value income today at a higher level than potential income tomorrow. But I have been pretty much doing the same stuff behind the scenes, including writing for Motley Fool still and buying stocks at a pretty reasonable clip. And sexying up the joint, of course. IT’S IMPOSSIBLE FOR ME NOT TO DO THAT.

Is that enough preamble? I never know. Let’s just into the stocks I bought.

Nelson’s distressed real estate fund

It seems like all the smart real estate investors dedicate at least a portion of their capital to distressed assets. Brookfield has been doing it for years. Morguard is also usually sniffing around when there’s a bargain to be had. And so on.

It’s easy to see why. Bargains are good for the underlying share price. They’re relatively easy to identify, too. There are potentially limitless opportunities to buy these distressed assets. Once improvements are made they provide succulent income or you can flip them and put the cash to work in other assets.

I’m open to buying physical property with this mindset, but it’s gotta be a hell of a deal. I’m looking for a minimum of a 20% cap rate to consider physical property. Active investing and this lazy guy don’t really mix.

Fortunately, I’m pretty sure I won’t ever have to resort to physical property. That’s because there are usually a dozen or so REITs that are pretty beaten up on both sides of the border.

The first real purchase of my distressed real estate fund is American Hotel Properties REIT (TSX:HOT.UN). I kept the position small, picking up 400 shares at $7.11 each. I’ve written pretty extensively about the company before, so I’m not going to get much into it. I’ll just say the cash flow yield on the stock is pretty spectacular, and with a disciplined capital allocation strategy it could grow pretty nicely. We’ll see on that last part. Oh, and I’m getting a 12% yield to wait. Yes, there’s definitely the risk the dividend gets cut, but I don’t care. This is a value play, not a yield play. The distribution is just a bonus.

The other member of my distressed real estate fund is Morguard REIT (TSX:MRT.UN), which I’ve owned for a few years now. It trades at half of book value, and it also offers a pretty succulent cash flow yield. I’ll continue to collect the dividend while the Alberta economy recovers.

More Genworth

Genworth MI Canada (TSX:MIC) sold off after Trudeau and the feds announced CMHC would take equity positions in first-time homebuyer houses. This seems like a terrible fucking idea, but what do I know. I’m just some semi-literate dope with a blog.

I bought 100 more shares somewhere in the $40 range. My average cost for my 200 share position is now approximately $42. This is a full position for me. I’m not in any hurry to buy more shares.

More Scotiabank

I now own 130 Scotiabank (TSX:BNS) shares after buying 40 more in the last week. My average cost shrunk slightly to just under $72 per share.

People seem to think the international banking results are bringing the stock down but hot damn those numbers are pretty good. International banking profit grew by 16% in 2018, versus 8% for Canadian operations. And 2019 should be another nice year after the company made some acquisitions down in the region. Is the market anticipating a recession? I dunno. Happy to be picking up shares for less than 10x forward earnings, anyway.

More Transcontinental 

Transcontinental’s (TSX:TCL.A) most recent quarterly results were, to use a technical term, the absolute shits. Disappointing numbers all around. No wonder the stock sank to below $17. I took advantage of the weakness and doubled my position to 400 shares. I took a little confidence in the board of directors increasing the dividend approximately 5%. I’m not 100% sure on this one but it represents a pretty good value here and I like I’m getting 5.3% to wait. Management needs to turn this thing around in a hurry. I think it’s possible, but this stock makes me more nervous than the others on this list.

More Laurentian

In the early part of March Laurentian Bank of Canada (TSX:LB) came out with some craptacular earnings, probably because Quebec sucks and poutine. Or some other such nonsense. I’m still a long-term believer so I took the opportunity to average down and buy 100 more shares. I now own 200 shares at an average cost of a little more than $42 each.

RioCan

Upon further inspection, I turns out I bought 200 RioCan REIT (TSX:REI.UN) shares back in the early part of March too. I barely remember this. Is this what it’s like to turn old? I meant to ask my grandma but I forgot.

I bought RioCan because of its redevelopment program. It’s in the beginning stages of taking some of its lower density property (mostly in Toronto) and turning it into larger complexes that feature a combination of retail, office space, or apartments. Most of the projects feature retail space in the bottom and 10-15 stories of condos. The company will then keep these condos and rent them out.

In the meantime, I’m collecting nearly a 6% dividend on my cost. This is well covered by earnings. I plan to sit back, relax, and promptly forget about owning this position for the next five years. My average cost is $25.39.

Preview for next month

Between my two jobs (remember, one is temporary), the wife’s job, and all our passive income, things look good on the savings front. We should be able to save some pretty serious cash over the next few months. Look for the next few monthly updates to be full of activity. And then we’ll go away this summer and the July one will be “uh, we bought 4 shares of some company I’ve never heard of while drunk.” Should be fun!

That’s A Good Idea, Now Protect It: Patents, Copyrights, and Trademarks

That’s A Good Idea, Now Protect It: Patents, Copyrights, and Trademarks

The world as we know it is built upon brilliant minds and even more brilliant ideas. Our ability to innovate has always been the hallmark of our existence as a species and it is what keeps us as the dominant species on the planet. And that hasn’t changed at all. In today’s age, there isn’t a single thing that we interact with that isn’t the product of someone’s brilliant idea, whether it’s the house we live in, the streets we walk on, or even the food that we eat.

And well, we value good ideas. In fact, that is exactly what successful businesses are built upon. When a good idea happens, and if it’s properly marketed and perfectly executed, money is bound to come pouring in. It is a formula that has stood true throughout the years and will continue to do so in the future.

The only problem with tried and tested formulae is that everyone’s going to want a piece of the pie. And sometimes, that means that people are willing to employ underhanded tactics in exchange for more revenue. The theft of intellectual property is one of those things that I speak of.

And the truth is that it’s an arms race, in a way, for businesses that try to become first in a certain market. And well, there are many instances when some companies may not be the first at what they do in a certain niche, but they were the first to actually protect their intellectual property.

So, how exactly do you protect your ideas?

The Main Differences: Copyrights vs Trademarks vs Patents

There are three main methods that you can employ in order to protect your intellectual property. The difference is their purpose, or rather, the type of intellectual property that they are meant to protect. These are further explained below:

Trademarks

According to this article, “A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others.”

Trademarks do not expire after a set period. They can essentially last forever as long as they remain in use by the company or brand that they represent. Now, getting a trademark isn’t mandatory, however, knowing when to consider getting a trademark can not only save you a lot of money, it can also save you a lot of trouble.

Copyrights

On the other hand, copyrights are meant to secure original works of authorship. These include songs, literature, architecture, and even software. These vary in terms of duration. Copyright for works that are created by an individual lasts for the life of the author and an additional 70 years thereafter.  For works created anonymously or pseudonymously, protection lasts 95 years from the date of publication or 120 years from the date of creation, whichever is shorter.

Patents

Patents are used to protect machines, manufactured articles, industrial processes, and chemical compositions. They are, in a way, a permit that the United States Patent and Trademark Office gives so that companies may disclose their inventions to the public