Business owner and author with 25 years of entrepreneurial and executive experience in the health club industry featuring high levels of performance and breakthrough results.

I have been yelling at my television quite a bit in the last few days because of one of the most moronic statements I have ever heard. That statement is “Oil speculators are driving up the price of oil”. Anyone who says this, repeats this, or thinks this is a complete NIT-WIT. Oil speculators DO NOT drive up the price of oil or anything else. I will explain this so even an illiterate economical dunce can understand this.

Oil is a commodity. It is sold on the futures market. This means people who purchase oil will have that oil delivered to them sometime in the future. Oil futures contracts are how oil is purchased. The contracts expire in each month. If I want the oil delivered in October, I would buy the appropriate oil contract.

Oil speculators do buy oil contracts. They buy oil from other speculators who are selling it. Oil speculators SELL oil. They have to. If oil speculators don’t sell the oil they have purchased, it will get delivered to them. Selling drives down the price of whatever is being sold. Buying drives up the price of whatever is being bought. For every oil contract buyer, there is a seller. For every oil contract transferred between speculators, there is a winner and a loser. Every oil speculator who buys oil also sells it. That’s a wash.

Supply and demand are the underlying factors that determine the price of oil. This means the amount of oil and how much of it is being used are the major driving factors of the price of oil. Oil and all other products also cost more for people with a devalued currency. In other words, a week dollar causes prices to go up. Blaming the price of oil or gasoline on market speculators is laughable.

So what will make oil prices go down? The answer is drill for oil and stop printing dollars. An increased oil supply will drive down the price of oil and gasoline. Fewer dollars will make them more valuable and increase buying power.

An exploratory committee formed to investigate speculators is pathetic. I guess this is just too complicated for politicians. Especially stupid ones.

When investing I believe it is crucial to evaluate the potential risk versus reward. It is one thing to read this on paper and think, “How basic!”, it is an entirely different thing to learn it from the “University of Life.” I have made more failed investment decisions then successful ones! The key is that fortunately all the failed investments have had very small consequences. In other words, the losses have been small comparatively. Whatever you do, do not bet your first-born child on number seven at the roulette table. Make sure the odds are in your favor. If the odds are not in your favor then make sure the potential loss will be small while the upside potential is large. There is nothing wrong with swinging for the fence, just make sure you get the right pitch.

Leaders have great responsibility. They are responsible for success and failure. They must take responsibility for all actions under their authority. If a front desk employee in a health club is rude to a member it might not be the club operator’s fault but it is the operator’s responsibility. The operator or leader must address and rectify the situation. Many actions which occur in a health club might be unknown by the leader and are not the leader’s fault but everything is the leaders responsibility. Fault and responsibility are not the same. The most effective leaders take responsibility without blaming, but give credit for success to others. A leader should never say it is “not my fault”, or make excuses. This will set an example of what is expected of others.

A leader is someone who has followers. People follow leaders for a number of reasons. Some people follow because of fear. They fear that the consequences of going against the leader could be detrimental to them. It could get them fired. The problem with leading through intimidation is that the followers will leave the organization or will become hostile toward the leader when it is safe. A loss of power on the part of the leader can make followers feel safer and begin to challenge the leader. When leading through intimidation, it is just a matter of time before the leader loses effectiveness.

Some people follow leaders because they believe it is temporarily in their best interest. Followers will choose a different leader when a better opportunity presents itself with another organization. A leader will be most effective if he or she paints a vision of hope and opportunity. Followers who buy into the vision will be onboard for the long-run.

Once the leader paints a vision followers can get excited about, she must lay out a plan for the vision. Leading by example will demonstrate the leader’s belief in the vision and be an example of what is expected of followers. Without leading by example the leader will come across as just a boss. If the leader takes her turn cleaning the toilets the followers will follow when it is their turn.

A leader must always do what he says he will do. Tasks which are the leader’s responsibility must be completed on time. Leaders who do not keep their commitments cannot expect followers to keep their commitments. A leader who keeps his commitments will increase production in the whole organization through leading by example. Leaders who always do what they say they will do earn respect and trust. If a leader always does what he says he will do, followers know they can take that to the bank. Followers will also feel confident and secure. Leaders who do not do what they have committed to will just be seen as hypocrites when they project expectations on followers. This will cause followers to doubt the vision and feel insecure.

Followers will lose hope and faith in the vision if progress is not tracked. Progress is tracked through setting and obtaining goals. As goals are obtained, followers will get more excited about the vision and positive energy will be spread throughout the organization. If a leader is consistently positive about the vision, that positive attitude will trickle down.

Leaders must help the organization and followers in setting goals. “A goal without a plan is just a dream. A goal that is not obtainable is impossible. A goal that is too easy is not a goal.” (Main, 2006. p 9) Setting goals is a basis for evaluation. Goals should be a part of every health club business every day. Goals should be set at every level of a business. Goals must have timelines set for them or the organization will always be working toward the goal. It is easy for procrastination to set in without a timeline for every goal. The club operator or leader’s vision directs the goals. A goal’s feasibility is tested by working backwards from the goal. If the goal is to sell $30,000 in new memberships in one month, objectives are built in order to meet that goal.

The first objective will be to gross a minimum of $1,000 in new membership sales per day. If the average dues membership is $39 for first and last with a $129 processing fee that is $207 received for a dues membership. If the average paid in full membership is $400 then the club must sell three dues memberships and one paid in full each day. That is the second objective, three dues memberships and one paid in full each day. The feasibility of the goal is now coming into view. If a club has three sales reps working each day we must then set tasks that will help obtain the objectives.

The first task for each sales rep is to set six appointments for each day. Additional tasks are added that will help each sales rep obtain six appointments each day. Each sales rep has six appointments for a club total of eighteen. This should yield a 40% show ratio on appointment. That means seven appointments show up for a tour of the club each day. Each sales rep should have at least a 60 % closing ratio. This equates to four memberships each day. It is very important to emphasize that required tasks are not goals or objectives. They are requirements. Each person in the organization chooses to complete their tasks every day starting with the leader. When the tasks are performed at the required skill level the objectives and goals will be obtained. If a sales rep is not accomplishing an average of six appointments per day with a 40% show ratio and a 60% close ratio one of two things is occurring: a) the sales rep is choosing not to perform the daily required tasks or b) he does not possess the required skill level to perform the tasks. It is the leader’s responsibility to motivate the rep by re-emphasizing the vision and the rep’s future. If the rep is unable to perform the tasks it is the leader’s responsibility to lead the sales rep in increasing his skill level in the needed area. The leader must positively motivate and train the rep in order to increase the skill level of that person. If the rep continually chooses not to perform daily tasks it can jeopardize the positive environment of the business and undermine the leader’s authority.

The most important thing for a leader to remember is that leaders that perform to the level of their own expectations will earn respect and set a positive example. If a leader goes left but expects their followers to go right that is pushing not leading.

Reference:

Main, S. (2006). Total Health Club Management.

Main, S. (2006). Club Success Magazine, November

There is a difference between comparative advantage and competitive advantage. It is important to understand the difference in these terms in order to maximize profit.

A competitive advantage is when a company or individual has an advantage over their competition in delivering their products or services.

Comparative advantage has to do with natural and human resources. Every country has a comparative advantage in at least one industry. A Country that has gold rocks laying on the ground has a comparative advantage over a country that has very little gold thousands of feet deep. This is because of the easy accessibility and abundance of the resource compared to other countries.

A comparative advantage compares the feasibility of producing a product or delivering a service between countries, companies and individuals.

Many advanced countries do not produce products because their labor force can produce more income by buying products from other countries and using their labor for other purposes. Even though the advanced country might have a competitive advantage over another in producing a product, it might not be worth it to do so. This leaves a comparative advantage to another country.

People also have comparative advantages. A lawyer who earns $400 per hour might be an exceptional landscaper. He might be the best landscaper in his state. That doesn’t mean he should do the landscaping in his own yard. He can simply pay someone to do his landscaping for $50 per hour while he focuses his efforts in his law practice. Even though the lawyer has a competitive advantage in landscaping he does not have a comparative advantage. It would be a disadvantage to perform landscaping.

Markets and governments have there head in the sand when it comes to the financial state of the world economy. Many people with an entitlement attitude are protesting and demanding benefits and entitlements. They are demanding that those with more give up some to those with less. They don’t realize they are demanding labor that they are unwilling to perform. For those of you who know me, you know that I define money as labor. Currencies must represent labor performed or it is just smoke and mirrors. Entitlement activist are demanding paper money but don’t have a clue to the fact that if that piece of paper doesn’t represent something produced, it has no value.

The fact is, more and more people want more than the equivalent of what they produce. Just apply a little common sense to what that means for the future if more is given than what is earned.

THERE’S A BIG TRAIN WRECK COMING!