The State of the Auto Industry

Brett Fingerhut blog post –

Auto industry brett fingerhutThe decline of the American auto industry is something that’s fresh in the minds of many Americans.  It’s what turned eastern Michigan from a thriving industrial center into the buckle of the Rust Belt.  You can argue that Detroit is making a gradual comeback, but that’s in spite of, rather than because of, the auto industry.  While the European auto industry was going strong for a long time, I recently read an article that discussed how a plunge in sales of diesel cars in two of Europe’s biggest markets could drive down the value of used vehicles, and in turn hinder the lucrative financing plans that major carmakers use to sell millions of automobiles.

After Volkswagen’s emissions scandal, authorities across Europe are trying to raise taxes on diesel vehicles that are polluting more than previously thought, and in some cases restrict or even ban them in some cities.  This has decreased demand, with new diesel car registrations this past month dropping in both Germany and the UK, in turn weighing on used car prices.  In addition, the shift to cleaner vehicles doesn’t hint at any sort of recovery.

In Britain, where car sales hit a record high last year thanks to finance packages accounting for 90 percent of sales, this is particularly disconcerting.  Customers under “personal contract plans” pay a small deposit toward a new car, then make monthly payments for the next two to three years.  They can then choose to either buy the car outright or return it to be sold second-hand, then use the equity to take on a new car and start this cycle of monthly payments over again.  The finance company then determines how much they can borrow by determining how much they think the vehicle will be worth at the end of the payment period.  If it falls more than expected, then customers won’t have as much money to buy a new car, hurting demand for all new vehicles.

In recent years, the US has seen a sharp fall in residual values as demand decreases and automakers try to keep up by slashing prices.  Both leasing and finance contracts are priced through an assumption of stable residual values, and a similarly sharp fall across the Atlantic could trigger a spike in leasing prices that in turn could hurt demand and increase defaults.  A mere 5 percent cut in residual values in Europe could equal 1.6 billion Euros.  This would hit the “big three” German carmakers – Volkswagen, BMW and Daimler – the hardest.  Concern about how finance packages are sold has led to the UK’s Financial Conduct Authority to conduct a review due to a potential “lack of transparency, potential conflicts of interest and irresponsible lending”.

 

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The Starbucks Boycott

Brett Fingerhut’s latest blog entry –

Starbucks cupStarbucks has recently come under controversy after CEO Howard Schultz sent out a company-wide letter detailing plans to hire 10,000 refugees in countries where the coffee giant operates.  This move, in direct response to Trump’s decision to ban the citizens of seven majority-Muslim countries from entering the US.  It’s met with a strong reaction with social media, with some declaring their support of Starbucks while others have called for a boycott.

The executive order signed on Friday temporarily bans citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen from entering the US.  Schultz declared that this was an “unprecedented time”, when “the promise of the American Dream [is] being called into question”.  He outlined some of the actions his company is taking, including plans to hire 10,000 refugees.  The UN recognizes some 65 million people around the world as “refugees”, and Starbucks is developing plans to hire at least 10,000 of them in the many countries where they do business.  Starbucks isn’t the only company who have been critical of the Muslim ban; Google, Facebook, General Electric and others have been knocking it since it was first signed.

Not long after the announcement, the company faced backlash from Trump’s supporters, and the #boycottstarbucks hashtag began trending on Twitter.  Some of them have attacked the company for hiring refugees instead of veterans, yet Starbucks already has a program dedicated to hiring veterans.  The hashtag transcended political views, and has been used by those who want to support the company.

Schultz’s letter also makes reference to Mexico, partially because social media users in Mexico have called for boycotts of American companies (including Starbucks).  He pointed out that Starbucks has strong ties to the country, sourcing coffee from Mexican growers and employing thousands of Mexicans.  So while Schultz’s letter has called for a boycott from some Americans, this move could also endear the company to customers south of the border and beyond.

If you’d like to learn more, you can click here!

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Why Entrepreneurs Make Great Employees

Brett Fingerhut blog post –

An entrepreneur“Entrepreneur” isn’t what typically comes to mind when people are thinking of a great hire.  It almost feels counterintuitive to bring somebody into the workplace who works outside of a traditional “workplace”.  Nonetheless, some people with an “entrepreneurial” mindset might want to work with an established business.  Not only could established businesses be the right choice for some entrepreneurs, but entrepreneurs could be right for some established businesses!  I recently came across an article about the upsides of hiring an entrepreneur, and here’s what they had to say:

They take risks: Entrepreneurs are natural risk-takers; it comes with the territory.  While this isn’t always a good thing, it is a huge plus if you know how to use it to your advantage.  Risk-taking, while it does often include failure, can also yield a high return on investment, which could occur through increased market channels, new product lines or exciting investment opportunities.

They have a unique perspective: An entrepreneur can see potential opportunities that other people in a traditional “business” might not be able to.  Entrepreneurs are able to look beyond operational structures, policies, procedures and product lines.  They can envision something not yet in existence, and then bring that to life.  Even though not all of these ideas are (or can be) implemented, but it’s still important to foster the continuous growth of ideas.

They can solve problems: In addition to taking risks, many entrepreneurs are natural problem-solvers, working to resolve any problems that may arise from their risks.  Problem-solvers serve as natural moderators who are good at discussing controversial topics.  This can help your company through times of crisis by finding a middle ground in situations.

They don’t need handholding: If you need somebody who can take the initiative, then look no further than an entrepreneur.  A self-responsible employee is both coachable and intelligent, making them a valuable and lasting asset to your company.

They don’t quit: It’s easy to get discouraged by failure, but entrepreneurs are used to it.  Entrepreneurial employees, if they stay happy at your company, will stay for the long haul.  Be direct, honest and positive in your feedback to keep this employee happy.

 

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How Lego Saved Itself

Brett Fingerhut blog post –

Pile of LegosAs one of the most recognizable toys, Lego has been in operation for nearly 70 years.  From their base in Denmark, they’ve expanded to the entire world.  While they’re now extremely successful, there was a point in recent history that they were facing annihilation.

According to business analyst Michael McQueen, the rise and competition of video games and over-innovating were what almost killed Lego.  Innovation is great, but too much of anything can be a bad thing.  And Lego was over-innovating, with only six percent of their new ideas making any money.  For example, in the early 21st century Lego stuck their beak into the video game market, yet it came at a massive cost; Lego was stretched too thin, and the company began to over-produce without making much of a profit.  There was also a huge amount of manufacturing costs, with Lego toys expanding their number of colors from six to 50.

By 2004, the new Lego CEO saw the writing on the wall, and focused on a back-to-basics run, returning to Lego’s core products.  This shift ultimately saved the company’s life; by the end of 2005, the company rebounded from a $292 million loss the previous year to a pre-tax profit of $117 million.  Profitability has more than tripled, and just two years ago Lego overtook Mattel to become the world’s biggest toymaker.  Thanks to strong demand in Europe and Asia, Lego’s sales show no sign of stopping.  The company’s extensive networks of factories churn out an impressive 500 Lego bricks a second.

Such momentum, however, only comes from the fact that Lego was willing to adapt sensibly, as opposed to pursuing senseless over-innovation.  While innovation is necessary for success, you want to do it intelligently, and be ruthless with what you’re good at.

If you’d like to learn more, you can click here!

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Habits That Foster Success

Brett Fingerhut blog post –

Success victoryIf you want to be wealthy, you need to cultivate daily habits.  Maybe you’ll get lucky and you’ll become rich by accident, but most people need to commit to habitual wealth-building actions if they have any hope of building wealth for themselves.  Here are some tips for accomplishing that, based off an article I found online:

Evaluate your habits: A lot of our financial habits have been ingrained in us since childhood.  This can be a good thing if you grew up running a lawn mowing business every summer, but it will be a bad thing if you weren’t that responsible as a child.

Think critically: Hacking a life problem or changing your habits means distancing yourself from the issue and thinking about it critically.  Experts say the best way to unlearn a habit is to critically analyze its structure, and once you understand that you’ll be able to find something better that provides the same benefit.

Surround yourself with smart people: Your financial decisions will benefit more from intelligent feedback and informed perspectives, so surrounding yourself with smarter people is better than being around rich ones.

Save: You need to save and invest more than you spend if you want to become richer.  You can try prioritizing investing in your financial goals, then focus on bills, and spend the remainder.  This lets you keep your financial goals at the forefront of your cash flow.

Stay healthy: Creating wealth takes energy, and being out of shape takes away from energy.  With physical health increasingly correlated with other measures of well-being, the image of the “fat cat” businessman is a thing of the past.

Simplify your possessions: Don’t buy what you don’t need, and toss what isn’t necessary, helpful or inspiring.

Take risks and look forward: Look towards opportunity instead of focusing on damage control.

Wake up early: People who wake up early tend to be both more productive and proactive.  Take, for example, Tim Cook and Richard Branson, both of whom start theiSuccess victoryr workdays before 6am.

 

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Lessons From Seoul Taco

Brett Fingerhut blog post –

Korean tacoWhen he started “Seoul Taco”, David Choi had just $18,000 to his name.  Five years later, Seoul Taco turned into a $4.5 million Korean-Mexican fast-casual chain with four restaurants and a food truck.  How did he do it?  I came across an article that explored this, and here’s what it had to say:

Navigate your beginnings: Choi started Seoul Taco at the peak of recession.  He sold his car and cashed out his bank account before raising $18,000, then found a food truck for sale in Philadelphia for $40,000.  Even if this was more than twice Choi’s net worth, he was able to buy it at an affordable price, and then drove it from Philadelphia back to St Louis.

Sell what you know: Of Korean descent, Choi grew up eating Korean food prepared by his mother and grandmother.  He started making these recipes in taco form for his friends, who helped him raise $22,000.  The first day their food truck opened, there was a massive line, and they ran out of food.  Choi then used his experience in food service to learn how to replicate dishes at a fast pace.

Improvise: Starting out as a food truck, Choi needed to improvise as much as he could, whether that meant navigating the weather or running out of gas.  This allowed Seoul Taco to beta test its proof of concept.  Since overhead was so minimal, Choi was able to recoup his initial investment within a few months.

Grow wisely: If you want to grow, find leaders who can take ownership.  A great cook won’t necessarily be a great manager.  Everybody at Seoul Taco starts entry-level, so that they can learn all aspects of the business.

Be creative about setting up shop: All four of Seoul Taco’s brick-and-mortar locations took over spaces of former restaurants, making it easier to get favorable terms on a lease.  Since Seoul Taco started out in a truck, it’s been easier to adapt to various spaces; revenue increased by 52 percent in 2013, a number that went to 153 percent in 2014.

 

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