Starting fresh in 94: what you need to know before making any career, financial and business moves this year.
Black enterprise set out to find some of our readers who are starting the new year in control. What we found was a group of practical thinkers who embrace change as a positive force, rather than buckle under its pressures. As you'll learn from them smart planning, skillful networking, a willingness to take calculated risks, and a commitment to make new opportunities work helped give each of them a fresh start in 1994. It can do the same for you.
FINDING FINANCIAL FREEDOM
This Atlanta couple knows how to fly. Three years ago, Millard Woods (a computer programmer for BellSouth) and Genie Vidal (a technical writer at Dun & Bradstreet) hit the stock market jackpot, with a $3,000 investment in their favorite airline, Southwest. it was a leap of faith that has helped their finances soar: Thanks to two stock splits and stellar company performance, the shares are now worth roughly $20,000, a more than 500% gain. Are they thinking of cashing out? Hardly. "It's still going!" exclaims Millard, pointing out that the carrier has just expanded east to Baltimore.
The Southwest bonanza wasn't a fluke - or beginner's luck. In fact, Millard and Genie, both 39 had been testing their investing smarts for a decade. Good savers since their marriage in 1983, they selected their first stocks - Beatrice and Apple Computer - through an investment club they helped found in 1982.
With a combined income approaching $100,000, the couple is doing fabulously. Twenty-two years before retirement, they boast a cache of $142,000 in stocks, mutual funds, 401(k) plans and IRAs - a portfolio that returns between 8% and 12% annually. How'd they swing it? "We gain a little confidence each year," explains Millard. "Maybe a takeover happens, or a company cuts its dividend. Every stock is a learning situation."
Things, of course, didn't always go that smoothly. Ten years ago, the couple bought Home Depot, earning 35% in just a few months, and took the profits. Big mistake. "It turned out to be one of the rare stocks that doubled and even tripled investors' money," laments Millard, who vows never to let "knee-jerk reactions" cloud his judgment. "We are long-term investors."
It's a good thing, too. For even stock market crash of 1987 didn't derail their finances. "We didn't sell anything." Instead, the couple scooped up more stock. Says Millard: "We saw buying prospects there."
Thanks to diligent set-asides from their paychecks, they purchased their first home in 1983, before trading up to their three-bedroom dream house. Membership in their investment club and persistent tracking by computer of every dime spent has helped them sail on to financial prosperity. As for their biggest financial shortcoming Millard mentions Home Depot, then laughs, "We'd like to have more money," he says.
To enhance their financial education, the couple recently joined the American Association of Individual Investors.(the Chicago-based group has software for stock research and a newsletter packed with investment tips.) Weekly trips to the library's financial shelves are a must, as is combing the newspapers and magazines for any news about promising companies. "Investing is a partnership," insists Millard, adding, "we're confident that there's nothing we can't handle."
Yes, this pair is financially savvy, but if they seem - well - superhuman, don't despair. What they've accomplished is possible for anyone. So mark this January on your calendar as the first month on your journey to financial freedom.
Greet the New Year with pared-down consume debt. The average consumer carries a startling $2,600 in credit card debt annually. If you're a plastic junkie, there's no better time than New Year's Day to kick the revolving credit habit. (The couple agrees: they pay for most items in cash, including vacations). With interest rates pushing 23% who needs a deck of cards? One is plenty, says Patrice Wooten, president of the Pathway Management Group, a Houston-based financial planning firm. Our advice: Toss your excess cards in the Cuisinart.
You might even consider swapping your 19.8% credit cards for one issued by a regional bank. Gaining in popularity, cards issued by your friendly banker have interest rates that are five to nine percentage points lower than the biggies. Unlike some of the larger cut-rate card issuers, they are often easier to qualify for. To locate a regional card issuer in your area, contact BankCard Holders of America, 800-553-8025
Start small, but thing big. Stuck in a savings rut? Financial planners often cite the 10% rule. But if that's an impossibility right now, start out by squirreling away 5% - or even 2% - of your gross income each paycheck.
First on your agenda should be signing on to your company's 401(k) plan, a tax-deferred savings program that matches your contributions - sometimes dollar for dollar. You can contribute 25% of your annual salary, or up to $8,994 in 1993. Millions of people are eligible for these plans, but only half participate.
Aside from helping your to save, these plans let you control your investments by giving you the spurs to move on to the next step - mutual fund and individual stock investing. (To get started, refer to three BE articles, "Are You Ready to Ride a Bull Stock Market," May 1992; "6 Great Buys In Mutual Funds," Oct. 1993; and "How to Start an Investment Club, " April 1993).
Create a budget you can live with. The couple owes its solid finances, in part, to good planning. "A budget frees you up," says Genie, who with Millard, tracks their expenses by computer each month. Unfortunately, their diligence is rare. Most people - even those sit down with every intention of confronting their financial demons on paper - fib big time when it comes to crafting a spending plan.
The solution is simple enough: If you know you're apt to shell out $3,000 on clothing a year - fees up. "It's important for people to recognize priorities - no matter how trivial - and work around them," advises Wooten. (See "The B.E. Guide to Easy, No-Nonsense Financial Planning," October 1993.)
One money pit to watch is the "miscellaneous" spending category. A way to ax this problem, suggest Wooten, is to withdraw the exact cash sum you plan to spend each week. By avoiding multiple trips to the ATM, you'll save on transaction fees and be more alert in your spending habits.
Broaden your money vocabulary. No matter what your financial IQ, an excellent source for beginners is the National Association of Investors Corp. (NAIC), in Royal Oak, Mich. A non-profit group the educates the public on investment techniques (clubs in particular), the NAIC publishes Better Investing. Packed with advice and primer-type information, it comes free with an annual membership of $32. (Write, NAIC, 1515 E. Eleven Mile Rd., Royal Oak, MI 48067).
More advanced financial student might try some additional reading on topics from precious metals to IPOs. But with over 600 specialized financial newsletters, where should you turn? One good bet is the Dick Davis Digest, which tracks over 400 reports, and reprints choice snippets of advice from each ($140 annually; call 800-654-1514 for a free copy).
RELOCATING FOR A CAREER
Even the swirls of activity enveloping New Year's Eve couldn't rival the whirlwind the Vela McClam faced as 1993 wound to a close, In late October, McClam packed up her Midwest household and bolted for Atlanta. She moved into temporary housing and a makeshift office at WORLDSPAN, a three-year-old company whose global computerized reservations system serves more than 11,000 subscribers. WORLDSPAN's only black woman director, McClam oversees associate marketing, and is responsible for making those numbers increase.
But as the New Year takes off, McClam's routine - typically crammed but ultra-organized - is just settling down. Now in her own office and her new five-bedroom home, with the last of the moving boxes unpacked, McClam truly begins the job of establishing a new life in a new place. It's a daunting task, compounded by the fact that she is single and has only herself to manage the transition. She is also, however, a savvy go-getter who relishes just this type of challenge.
To build the career you want, McClam declares, "You have to be a risk-taker and a tough negotiator." On a more personal level, "Atlanta's like going home for me," says this South Carolina native. "I wanted to move closer to my parents, who are getting older. But I wasn't going to leave with out someone moving me."
With change being the only constant in today's workplace, more professionals than ever are figuring relocation into their career plans - whether by design or circumstance. Though such a move can be disruptive, being flexible is tantamount to staying marketable these days.
Big moves are old hat for 39-year-old McClam, an MBA with a master's in education from Howard University. In 1984, she left a marketing post at Data Transformation Inc., in Silver Spring, Md., for Honeywell Inc. in Van Nuys, Calif. Three years later, she leaped again, to nearby Hughes Missile Systems Group, where she rose four notches in five years, becoming perhaps, the only black woman in the country selling guided missiles. Then in 1992, a headhunter called trying to lure her into a new industry in a new city at a new level. The company? Northwest Airlines in St. Paul, Minn. Her title: director, national and industry sales programs. McClam jumped at the opportunity.
What might have been a pinnacle in some careers proved a mere layover for McClam - not that she didn't make most of it. Although her staff of 23 was sliced in half through downsizing, the group still topped $500 million in sales. Away from work, she embraced the Twin Cities lifestyle, buying a house, becoming a mentor and reaching out to her fellow black MBAs and Delta sorority sisters. Despite McClam's best effort, though, St. Paul just wasn't her kind of place. So, when another chance arose at WORLDSPAN, which is jointly owned by Northwest and three other companies, McClam, once again, went for it. And, once again, she had to grapple with the myriad details that such a move involved.
Her advice is to take heart in what can be a great opportunity. But also take heed: Making it work requires lots of planning, and a great deal of diligence and initiative in structuring both your professional and personal transitions.
Don't ignore the bottom line. Even if a company is footing your moving bills, be vigilant about any personal financial repercussions created by the relocation. If your cost of living increases substantially, seek a salary adjustment. And beware: Any expenses the company picks up for you will be tacked on to your income at year's end, carrying a tax burden that may shock you. Again, seek an adjustment minimizing that hit.
Many companies will agree to help sell your home but, as McClam explains it, "These are deals that the company won't usually offer you. You have to decide what you want and ask for it. This is especially important for minorities, because we don't often get the big move."
Learn all you can before you move. Long before you start packing, thoroughly research your future home base. Call everyone you know there and quiz them. Visit, buy a good map and explore. Relocation services listed in local directories can be helpful, providing invaluable data on local schools, real estate, entertainment, even the best places to shop. Also, check out resource guides targeted to transplants. One to watch for is SuccessGuide: The Networking Guide to Black Resources, soon to cover 10 major cities. For information or to order, write SuccessSource Inc., 1949 East 105th St., Suite 100, Cleveland, OH 44106; or call 216-791-9330; $29.95.
Don't be shy. Once in your new locale, McClam advises, reach out to others. If you're truly a stranger in a strange place, established networks like churches, fraternal and civic organizations are a great starting point. You will be surrounded by chaos for a while and it won't be easy, but make the most of it, she says. If it doesn't work out, start plotting that next move, but be patient. "I'm into visualization," McClam says. "I visualize myself in jobs, in houses, in situations, and I make it happen. This fits in just where I wanted it."
TAKING THE PLUNGE
For Kenneth D. Webster, 1994 is the year for a big change. After eight years punching someone else's time clock, Webster has a new role: full-time entrepreneur. He joins thousands of African-American careerists who, whether by choice or necessity, will leave their jobs to become employers. But unlike many of his peers, Webster's company is already up and running.
In June, the 34-year-old Webster, opened the doors of Quality Color Printing Ink Inc., a Tallahassee, Fla.-based distributor of printing inks and lithographic supplies. Webster started the company as a regional arm of Quality Color Printing Ink, a 27-year-old Houston-based manufacturer. That company, owned by black printing pioneer George Glover, grossed about $600,000 in 1993. The 62-year-old Glover also owns 49% of Quality Color of Florida, while Webster and fellow Floridians Dwan V. Kornegay and Kennedy Mumford own the balance.
Webster unwittingly started on the road to business ownership in 1983, shortly after his job with the Tallahassee Department of Labor was eliminated by Reagan Administration budget cuts. During a visit to Houston, Webster met Glover through a mutual friend and Tallahasee entrepreneur Fred Peacock. A lunch date with Glover yielded a job offer as a sales representative for Quality Color.
Seven years later, the Florida A&M University (FAMU) graduate returned to his native Tallahassee, becoming an economic analyst in the state's Small and Minority Business Advocacy. While reviewing some figures on the job, Webster noticed that there no minority - owned ink distributors serving his city. Immediately, his entrepreneurial juices started flowing: "It was a tremendous business opportunity," he says.
Webster spent some spare time analyzing the regional market for inks and lithographic products and having daily phone discussions with his mentor in Houston. By March of 1993, Glover had agreed to help his protege start a regional distributorship. Webster then recruited the 32-year-old Kornegay, a former real-estate salesman, and the 63-year-old Mumford, a retired school administrator, as equity partners.
As director of sales, Kornegay began working full-time for Quality Color of Florida in June, servicing accounts with customers that include FAMU's Graphics Department and Florida's Department of State.
Meanwhile, with his boss's okay, Webster began pulling double duty; he was overseeing programs for Florida's small and minority businesses during the day, and spending evenings establishing the ink distributorship. Despite the grind, "sales meetings and strategic planning were my priorities between 7 pm and 9 pm daily," Webster explains.
The Florida distributor moved his five employees into offices owned by the FAMU School of Business in October. Webster, who took a two-month leave of absence before leaving his job in January, wants to start the year by hiring three additional employees. With a first-year sales target of $250,000, his major goal for 1994 is to set up regional manufacturing operations so that the company can produce inks as well.
Meanwhile, Webster is already familiar with both the passion and the anxieties of business ownership. "The toughest thing is going from the security of a government job to the uncertainties of entrepreneurship," he explains. "It's also tough taking responsibility for someone else's money. Everyone tells me I'm too cautious. But I believe that it's more important to be able to say I can pay [an employee] $50,000 than to say I make $50,000."
Those looking to duplicate Webster's transformation from employee to employer should keep the following in mind:
Stay on good terms with your employer. Be mindful of your company's policies regarding outside work, and be aware of potential conflicts with your job duties (for instance, starting a company that competes for your employer's customers). Never let outside business interests affect your job performance.
Developing a solid business plan. This may be the most important factor in attracting partners, manager and investor.
Don't leave your job prematurely. It helps of you can, like Webster, share the responsibilities of launching the company with other who can work part- or full-time developing the business. If not, seek out flextime arrangements or extended leaves.
Get your finances in order. Get rid of outstanding debts, unnecessary expenses and any blemishes on your credit record. Build up a cushion of savings - at least a year of living expenses - to tide you over until your business becomes profitable.
Network, network, network. Webster made the most of his connections as a state employee and as a FAMU alumni. People and information - not capital - are a new entrepreneur's most important needs.
Don't use entrepreneurships as an escape hatch. Hating your employer, your job or your career doesn't mean you're cut out to run your own company. If you're not ready for the pressures of business ownership, circulate your resume, not a business plan.
Inspired by his mentor, Glover, Webster realized his entrepreneurial potential.
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|Article Type:||Cover Story|
|Date:||Jan 1, 1994|
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