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Using the Highs and Lows of Business Cycles to Create a Thriving Business

Every business, no matter the product they sell or service they provide can fall victim to the highs and lows of the business cycle. How you handle these highs and lows can mean the difference when working to create a thriving business. It is true each business is subject to different cycles, but every business can react to these cycles in the same manner as it works towards creating a thriving business.

When we talk about business cycles many immediately think of the roller coaster ride associated with economical recessions and booms. However, business cycles can also be as subtle as seasonal or weather cycles or cycles caused by vacations or shutdowns.

Having systems in place to help you cope with both the highs and lows of industry cycles will help to ensure that your business will continue to thrive. If you are not prepared for a boom it can cause just as much damage for your business as a recession. Here are some of the examples of ways to combat business cycles:

Offer a Complimentary Service

For those affected by weather seasons, offering a complimentary service can provide your business with the business needed to weather the seasonal cycle. For example, a Northern Canadian lawn care business would not have a vast demand for their services in the winter, but if they were to offer snow plowing in the winter to offset this slowdown they could find a consistent and steady income. Another example, if you do outdoor construction projects and you can’t work in the summer because it is too hot, why not target an indoor construction project until temperatures cool enough to return outdoors.

Target Opposite Markets

Look to the cycles of your target market and find someone at the opposite end of a cycle to assist during slow times. For example if you are a bookkeeper whose clients are mostly construction workers and the construction season is slow during tax season, why not offer your services to an accountant, who could probably use your help. Another example is if you target women to buy your product and right now they are not purchasing your product, figure out what changes are necessary to encourage men to buy your product.

Outsource or Subcontract During Busy Times

When many business owners hit a peak period or busy time they begin to feel the pressures and stress of meeting all the associated deadlines. It does not always make good business sense to hire employees to help you during busy times, although in some industries (e.g. farming and construction), seasonal employees have become the norm. An excellent alternative is to outsource or utilize a subcontractor during busy times. The advantage of outsourcing is there are no obligations other than those associated with any contract you might sign. By utilizing subcontractors you can still have quality assistance with the knowledge there are no long term commitments required.

Offer a Reduced Rate or Discounted Rate

During slow times offering a discount may give you the competitive edge you need. I have heard of many companies offering different rates depending on their workload or the interest in their product or services. Just consider the retail industry; many times they have sales in January and February because this is their slow season and they are looking to generate interest in their products.

Increase Your Price to Deter Business

Just as many will offer a reduced rate during slow times, the same holds true during busy times. Don’t be afraid to increase your price when you are busy. After all, much of our pricing is based on the laws of supply and demand. Many will still be willing to pay your price even if it is inflated because they require your services immediately and for those that aren’t willing to pay the price now, it might hold them off until your business slows down a bit.

Offer Your Services to Someone as a Subcontractor

During slower times, why not consider offering your services as a subcontractor. Although subcontracting doesn’t necessarily pay as much, it is better than having no income.

Develop a Marketing Strategy to Create Interest

Perhaps the most obvious strategy for dealing with cycles is to look at your current marketing strategies and make adjustments. Perhaps you could introduce a contest or start a promotion that is exciting and gives people a renewed desire to check you out. In the same regard taking a close look at how you are spending your marketing dollars and trying something different might be the key to helping you get through an industry low.

Plan for and Learn to Live with the Cycles

As they say, if you can’t beat them join them. Perhaps the easiest way to handle industry highs and lows is to just accept they will happen and develop a way to live through them. Perhaps during the lows you see this as an opportunity to take a much needed vacation and a high as an opportunity to really get out there and show them just what you can do.

However, you deal with the highs and lows of your business, only someone that can learn to fasten their seatbelt and enjoy the roller coaster ride will truly have created a thriving business for themselves.

Business Insurance Costs, Don’t Cut Corners

When we go into business for ourselves, either purchase an already existing business or start a business up from scratch, it is usually because we have a flair or it is our trade. That is the part of the business we know very well. There are many areas we will find ourselves not knowing all the ins and outs and an important one of these areas is the business insurance. It is also important not to cut corners with your business insurance costs.

Business insurance for small to medium businesses can be like a minefield but you need to know you have the right cover so that all areas of your business are protected sufficiently. There is insurance for these size businesses called a Business Owners Policy or BOP.

This type of insurance package combines protection for all the main property and liability risks you could face in one package. Of course you can obtain all these covers separately if you wish. The business insurance packages were developed for small to medium sized business that had similar risks. A larger company would normally customize their policies to suit their circumstance.

Business Insurance Packages for small businesses, would include:-

1. Insurance cover for the property, which included the buildings (if you own them, if you are leasing the premises then the owner of the building carries this insurance) and the contents, this includes the fixtures and fittings you have installed to set up your business and you would need to make sure about the stock you have on hand. A business carries basic stock normally, so you would be asked to nominate a value. If you have peak periods, like holiday trading where you carry extra stock, then this is the value you should nominate, as disasters don’t pick normal trading times to hit.

2. Business interruption insurance, this covers any loss of income that results from things like fire or other catastrophes disrupting the operation of the business. This could also cover any expense for you having to run your business from temporary premises.

3. Liability protection, this will cover your businesses legal responsibility for any harm caused to anyone by you or your employees during the operation of your business. Things like injury to persons or property caused by defective products or faulty services and installations.

What is not covered by these type of business insurance packages are professional liability, worker’s compensation, health or disability insurance and auto insurance. Separate policies are needed to cover these.

When you are in business, having an independent insurance agent or broker can be very beneficial. Getting to know this person and them getting to know you and your needs for your business insurance, will take so much pressure from you and as this is their business to know the insurance field, then they will make sure you have the right coverage. There are areas you may not think of that need cover

You will need to keep your business insurance broker informed regarding any changes to your business, like expanding, downsizing, major purchases, employing more staff or staff reductions or you may change your premises. This will ensure you have the right insurance coverage to suit your needs.

Ask about higher deductibles. You could save on your insurance premiums by electing to pay higher deductibles, the higher this figure is, the less you pay. Depending on your circumstances this could be false economy, so make sure you understand what your broker tells you about this area of a policy.

There may be other ways to reduce your premiums too, so follow your insurer’s recommendations for workplace safety and disaster preparations.

The important thing is to get the right business insurance at the right price and for the right coverage so you have all the protection you need.

Starting Your Own Home Based Business To Create Multiple Streams Of Income

As with anything, it’s extremely important to begin with a solid foundation in the world of money and generating income. So let’s begin there…

In the world of money, there are two types of income. Linear income and residual income. “How many times do you get paid for every hour you work?” If you only get paid once, then your income is “linear”. If you get paid multiple times for the work you did once, then your income is “residual”. “Residual Income” is what you should be working towards.

The secret of the wealthy is not that they have more money but that they have more TIME freedom. With more time, you can create more residual income streams. It becomes important then to begin shifting your income streams from linear to residual. So how do you do that?

First, you need to pick the right income stream that will soon create residual income for you. I have a formula that I use to pick the right income stream. All opportunities are passed through the filter of the money tree formula – the nine characteristics of the ideal income stream. It’s called the “MONEY TREE” formula because it spells the word MONEY TREE.

M in the Money Tree formula stands for Multiple Streams of Income

Multiple Streams of Income

The first goal in starting your own home based business is to add another stream of income to your life as a safety net for when other of your streams of income dry up. But the home based business you select should be a source of more than just one stream of income. It should eventually be a source of multiple streams of income all by itself.

For example, suppose you’re considering buying an existing restaurant. What possibility will you have to grow? Can you add more shops? Is your idea franchisable? Can one of your food entree’s be sold nationwide as a frozen item? Can you license your special cooking secrets to other restaurants. Is there a cookbook in there somewhere? What about bottling and selling your special sauces? Get the drift? Don’t even consider a business that doesn’t have expansion potential for additional streams of income. That’s why the first M in the formula reminds you of Multiple Streams of Income.

The O in the Money Tree formula stands for outstanding.

Outstanding product or service

If your product, service or information isn’t distinguishably excellent it will eventually become a casualty of competition. The goal of creating a money tree is to do the work once and to have the money flow for the rest of your life. What good does it do to create a business and eventually have it succumb to competition. In order for your source of income to survive through the next ten recessions…as there will be many more recessions in your lifetime…you must select a product, service or source of information that has the possibility to be permanently and perpetually profitable. When times get tough, people gravitate either to price or to quality. Don’t get stuck in the middle. That’s a sure formula for disaster. And don’t compete with the rest of the world on price. Make sure the quality of your produce is outstanding…the best in the world at a fair price. And you have a good chance of succeeding long term.

The N in the Money tree formula stands for Nothing Down.

Nothing Down

Why nothing down? Well, it doesn’t have to be completely zero down…but as little of your own money as possible. If you’re like most people, you probably don’t have a couple of hundred grand lying around to invest in your business. But what if you do have a nice chunk of cash. Should you run out and find a business to match your money and launch in? I think that one of the greatest curses is to have a lot of money to put into a new business.

Suppose you want to buy a hot franchise. It might cost you $100,000 and that’s just for the franchise rights. Then, you need to purchase inventory, leasehold improvements, special equipment. And what do you get? For most franchises, you get the right to be tied to a business 12 hours a day, to manage a lot of undereducated, under motivated employees, and make a steady paycheck for yourself. In a sense, you are just buying yourself a job. Why spend tens of thousands of dollars of your own money just to buy yourself a job…with a lot of risk?

I’m going to show you businesses that you can launch with little risk, little or no money down and the possibility of creating what I call “walk away” cash flow –money that flows to you whether or not you show up.

The E in the Money tree formula stands for “Employee-resistant.”


That’s right…you don’t want employees. Employees are dangerous! They begin to feel they are entitled to their jobs. (“You can’t fire me. I own this job.” ) The rapid increase in employee/employer litigation should be enough to convince you that you want to find a home based business that can be done by yourself, with a very low employee to income ratio.

I used to be the president of a seminar company with over two hundred employees. I made the decision to downsize when one of the employees sued me for age discrimination. He was in his late sixties when he came to work for us and when we laid him off during an economic downturn, he slapped us with a $500,000 lawsuit. We settled out of court for $2,000 but that was the last straw. I decided to never again put myself in a position where one disgruntled employee and his smart attorney could take it all away.

Today, I have zero employees. I make as much today as I used to make with 200 times less hassle. I like it that way. All of my streams of income can be monitored from a telephone anywhere in the world on only a few hours a day.

A friend of mine, Dan Kennedy puts it this way, “When it comes to employees, hire slow and fire fast.” Most business people do just the opposite. They hire fast and fire slow. I say, try to find money tree businesses that don’t require any employees and then you don’t have to worry about either hiring or firing.

The Y in the Money tree formula stands for the world “Yield”


The streams you choose should be high yielding, high profit cash cows. Five years ago a friend of mine, Collette, started such a home based business. In less than a year she was making about $10,000 per month. What’s more, this business was a money tree business. It generates cash flow even if she stops working! But why stop when she is having so much fun? Today, after five years, she has grown her business till she now earns over $500,000 a year net, net, net.

What’s the yield on that kind of income? It’s the equivalent of having TEN MILLION DOLLARS in the bank earning only 5% interest! That’s my idea of yield. In this book I’ll be sharing exactly how Collette did this…as well as other business that meet the same kinds of money tree characteristics.

The T in the Money Tree formula stands for the words Trend and Timing.

Trend and Timing

Starting a business against the trend is like swimming up stream against the current. . Running a business is hard enough without trying to swim upstream. But when you choose a business that is with the trend it’s like floating downstream with the current. How do you select a business that’s on trend?

The first time I started a business was just after college. I started buying real estate…and as luck would have it…it was the exact right time. The baby boomers wanted real estate and the demand drove prices upward. Anyone who owned property made a killing. You could almost do no wrong.

Then, I started teaching people how to buy real estate with little or no money down. My little classified ads brought hoards of calls. It was a feeding frenzy. I was on trend. My seminar businesses took in more than a hundred million dollars in the next decade.

The secret is to get in front of a trend and ride the wave. The biggest wave of our century is the Baby Boom – 76 million people. This generation is four times the size of the previous generation. As this mass of humanity rolls forward through time it creates a huge demand wave. Picking businesses which are at the leading edge of this age wave has created thousands of fortunes. You need to make sure that your new business is leading this trend and not following it. It can make a huge difference in your lifestyle.

The R in the Money Tree formula stands for Residual

Residual Income

We’ve already talked about the importance of this part of the Money Tree formula.

But to emphasize this concept even further, let’s compare it to an escalator. Have you ever walked up a down escalator…the wrong way? When you walk up the down escalator, you have to walk fast just to stay in the same place. And to get to the top, you have to walk at double speed. People on the Up escalator don’t have to work hard at all. They just stand there holding the hand rail and the escalator takes them to the top.

These two escalators represent the two kinds of income that you can earn…linear income and residual income. Our economy is a down escalator. You work hard for your money but with inflation you have earn 3-5% more next year just to stay in the same place. But this puts you in higher tax brackets. The more you make the more they take. It seems you work harder and harder without making any progress. Your bank account balance earns 2% and your credit card balance costs you 20%. You’re going in the hole 24 hours a day. You wonder why you can never catch up. And if you stop…the escalator just takes you right back down to the bottom.

That’s what it’s like to earn linear income. When I think of this kind of income I think of how they catch monkeys in Africa. A native takes a coconut and cuts off one end to make a small hole just the size to allow a monkeys fist to enter. To the other end of the coconut they attach a long cord. They place a few peanuts inside the coconut, place the coconut in the middle of a clearing and hide behind a tree to wait for the monkeys to come. The monkeys come and smell the peanuts inside the coconut shell. One monkey reaches inside the shell to grab the peanuts, but with the peanuts inside, his fist is too large to escape the hole in the coconut. And then the native yanks on the cord and hauls that silly monkey to captivity because the monkey will not let go of those peanuts to save his skin.

Are you working for peanuts?

If you’re walking up the down escalator, you are caught in a Monkey Trap. What you want is Up Escalator Income. Which escalator are you on?

Here’s a list of the many types of residual income that you want to be exploring:

Savers earn interest

Song writers earn royalties on their songs.

Authors, like myself earn royalties from their books and tapes.

Insurance agents get residual business

Securities agents get residual sales.

Network marketers get residual commissions

Actors get a piece of the action

Entrepreneurs get business profits.

Franchisers get franchising fees

Investors get dividends, interest and appreciation.

Visual artists get royalties from their creations

Software creators get royalties.

Game designers get royalties.

Inventors get royalties.

Partners can get profits.

Mailing list owners get rental fees

Real estate owners can get cash flow profits

Retired persons can get pensions

Celebrity endorsers get gross percentage profits

Marketing consultants get % of profit or gross revenue

When you go to bed tonight, ask yourself this question, “What percentage of my day did I spend creating residual income?” If the answer is zero, you’re in trouble. You’d better wake up tomorrow and get busy. More on residual income later. I hope now you see why it’s such a vital part of our money tree formula

The E in the Money Tree formula means Essential to Everybody Everyday.


Whatever you sell, try to pick something that’s essential or is perceived as essential by a large and very motivated segment of society. Let me give you the real reason that real estate has always been a great wealth creation vehicle and a prime source of residual income for hundreds of thousands. It fits the Money Tree formula. Check it out for yourself and you’ll see why..

Whatever product you choose to market just make sure it’s essential. The more people need it and the more often they need it, the more successful your business can become.

The final E in the Money Tree formula stands for Enthusiasm.


You’ve got to love what you do. If you hate what you sell, you’ll never be any good at it. The prime admonition from Gary Halbert one of the all time great marketing gurus is this; SELL WHAT YOU LOVE. Truth is, you’ll never be truly great unless you do.

Well, there you have the 9 major characteristics of the Money Tree formula. These 9 characteristics are essential to the kind of hands off, hassle free businesses that create lifelong streams of cash flow.