4-8-10
 

Your Lifeboat

The Titanic has hit the iceberg. It's just a question of lifeboat availability.

A widely held perception is that being employed is the low-risk, easy option in life. "Get good grades, go to college, get a steady job with benefits." Sound familiar? It should; it's what society tells you from childhood.

Employment: you just have to show up, shuffle some paper around, look busy, hide in the stationery cupboard, bitch to the union if you have one, and collect a cozy paycheck while the stressed-out owners of the company worry about things (meanwhile the Chinese and Indians work for next to nothing with no benefits and are grateful). Oh, and don't forget to call a lawyer if you trip on something at work so you can sue the company.

Next thing you know, you're fired.

This week's newsletter is about your lifeboat: what will you do if or when the rug is pulled from underneath you? Claim benefit? What about when that runs out?

Hope is not a financial strategy.

I tell you this because I trust you see me as your friend- long-time readers sure do, I hope, and a true friend would tell you the truth however much you might not want to hear it.

We stand on the brink of not only a major economic correction, but also a technological advance that could dwarf the developments seen to date. There will be big winners and big losers as we watch order evolve from chaos. Which side will you be on?

Whether you're employed and/or have your own business, how can you ensure you're not one of the inevitable casualties in the unfolding cataclysm?

Simple: OPEN YOUR EYES to the industry you're in/planning to be in.

Let's take an example of just one industry- you should apply this method to your own. The publishing industry consists of the following independent entities so that you can get your hands on critically-acclaimed novels like The Pandora Prescription:

1. Talent: an author writes a book.
2. Literary Agent: matches author with a publisher.
3. Publisher: edits and produces the book.
4. Printer: physically prints the books and ships to distributor.
5. Distributor: warehouses and ships books, in bulk, to retailers.
6. Retailers: sell books to readers.

That's a lot of people to split up the $8.95 you spent on that book! More specifically, that's a lot of middlemen.

Corporations are, by definition, required to maximize profits for shareholders. Any attempt to resist this inherent objective is detrimental for all (shareholders, employees, and the economy as a whole). It's therefore a requirement that costs should be slashed whenever possible, and that means jobs. Firing people isn't done reluctantly; it's done with joy (regardless of the public face they put on).

Enter Amazon.com and their Kindle e-reader (this is a tablet computer that downloads books directly from their website). I used to think this was a gimmick. Then I bought one. Ummmmm...

If you're in the publishing industry today, you need to open your eyes and figure out who the winners and losers will be in this revolution (much like all the revolutions taking place in various industries today).

1. Talent: an author writes a book.

Nothing Amazon can do about this expense except drive a hard bargain through their muscle.

2. Literary Agent: matches author with a publisher.

This is already an evolution that took jobs from the publishers.

3. Publisher: edits and produces the book.

Amazon has started their own publishers and will probably buy out existing ones.

4. Printer: physically prints the books and ships to distributor.

The Kindle eliminates the need for a printer.

5. Distributor: warehouses and ships books in bulk to retailers.

The Kindle eliminates the need for a distributor.

6. Retailers: sell books to readers.

The Kindle eliminates the need for 'bricks and mortar' bookstores (Borders is about to close). Moreover, the Kindle eliminates even the need for Amazon's shipping department.

In effect, the Kindle makes Amazon a virtual business with a skeleton staff and a website. Profitability soars, as do redundancies across the nation. Ah, but some company somewhere will benefit; the people who manufacture the Kindle! Which company? I don't know, but you can bet your sweet ass it isn't an American one. Ideally, Amazon would (will?) eliminate all parties involved apart from authors (and only because you can't automate talent).

All corporations, if managed shrewdly, have a plan like Amazon's.

Automated tellers are taking over banks (I rarely speak to anyone at my bank these days). Airline check-in computers are taking over airports. You can even check out your own groceries now.

As a matter of great urgency, you must take a long hard look at the industry you're in or thinking about being in, and the direction it's heading, who the players are, and who the losers are likely to be. See things from the boardroom and figure out how you or your business could be replaced or eliminated because rest assured, that's exactly what is being discussed in any decent boardroom.

Your counter-actions don't have to be defensive either. Amazon management simply saw a fragmented, mismanaged industry and went for the jugular. Before they know what hit them, major book retailers and publishers will be left for dead. If you look around, you'll see other fragmented industries waiting to be consolidated. Out of chaos comes order, and you can be the one to profit by this.

In very little time, the only bricks and mortar book retailers will be ones for the purpose of selling children's books, photography books, and anything you probably wouldn't buy on a Kindle. In fact, this is an example of how a savvy book retailer could thrive from this development.

When you see Amazon shares crashing in the months ahead (and you can profit by this), it's because they were, perhaps rightly, very overvalued in the first place, not because it isn't an outstanding company (and that's an investment lesson right there).

So find a quiet moment and evaluate your position regarding the industry you're in, or might be in, or how dependent your industry is on another industry. In your analysis:

DO be honest.

DON'T be naïve.

DO SOMETHING ABOUT IT.

And when I ask you to do something, I'm not talking about how you cast your vote in the mid-term elections! Planning your own home business would be a good start and we have a list of recession-proof blueprints here.

Best regards,

Mark Patricks
 

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