Seven steps to getting rich
The accumulation of wealth is easier than most realise. Once your antenna is raised to embrace wealth potential and you commence the journey riches will follow. In recent times wealth and its creation have been seen as less than desirable perhaps even a little dirty, not quite the done thing.
I find this attitude strange as throughout nature creatures nest and those capable of building a better nest live longer, breed more successfully and generally enhance their bloodlines and community. Surely that’s a good outcome for all?
Wealth and its creation should not be considered ‘dirty words’, but remember the discrete and careful enjoyment of its benefits are attributes to be admired. True wealth is a state of mind and an ongoing way of living which embraces so much more than your bank balance.
As with so much in life a steady, incremental plan, will deliver a surer chance of success in the creation of wealth. Yes it is slower than “doing the great deal” but it is also more certain in outcome and you will have more chance of holding onto and enjoying the wealth you create.
It doesn’t matter how much you earn, whether you are a Gen Y first time investor or a seasoned baby boomer with multiple assets, there are seven key strategic behaviours that set apart the wealthy from the rest of us.
Spend less than you earn – this sounds obvious but many of us live from pay cheque to pay cheque, which indicates it’s a lesson that is quickly forgotten. Save and invest because the law of compound interest will help ensure your nest egg grows quickly. Start as soon as possible because time is your best friend.
Invest as much as you can in assets whose underlying capital value will grow – remembering income is usually taxed at a higher rate than capital growth.
Reinvest any capital growth – as this adds to the amazing power of compound growth.
Do not be afraid of debt – leverage accelerates your net worth but keep a suitable buffer for the unexpected.
Invest in yourself – it pays to broaden your fundamental investment knowledge.
Have a mentor – a coach will help drive you and keep you focused on your long-term goals.
Have a team of experts – remember you don’t have to be the smartest person in your team.
Above all, generating wealth is about having a purpose and focused determination. We are all living longer and will need more wealth to look after ourselves when we are older. State pensions are no longer the safety net they once were and advances in medical research keep us healthier for longer, but at a cost.
Start today by determining how much wealth you want to hold and by which dates. Write a game plan detailing how you are going to achieve wealth, refer to it daily and update it regularly as change occurs. The sooner you start the easier it is!
The Barking Mad Blog
Business Advice with Bite
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Why is my business stalling?
If you were to receive a substantial capital investment into your business would you engage outside expertise to help further develop and improve your business? There are few business leaders I know who would seriously answer no to this question, which if you really think it through is very odd.
Why is it odd? Because if you need help after receiving a substantial capital investment you needed it even more before that receipt!
The conundrum is the reluctance of small to mid-cap businesses to spend money on the sound professional advice which they need. Within larger organisations external advice is sourced as a matter of course; marketing, strategic, structural, legal and accounting advice is outsourced on a regular basis.
A recent Forbes article stated:-
98% of Small-Caps or Start-Ups seeking equity investment fail to attract it
Over 95% of Small-Caps or Start-Ups fail to proffer a business or investment plan suitable to allow a measured investment decision or to attract funding.
These statistics hurt because for a relatively small investment these businesses could have been funded.
As an example at WCP we are frequently sent IM’s or funding requests from entrepreneurs seeking to fund growth or a start-up and after reading through pages of technical and product detail we seriously have to ask: “what exactly does your business do and how are revenues generated?”
The idea may be sound but the presentation is poor. I and many others like me simply do not have the time to invest in learning what potential might lay behind a poor document. As a consequence I miss out on making good investments and the entrepreneur misses out on a capital raising.
A very high percentage, 90%+ of new client enquiries we receive at WCP are from businesses which have generally:-
Left their approach to us too late
Lack a sufficient skill base or framework to meet their business goals
Run perilously short of working capital
Failed to develop a professional support structure
Most of these businesses are sound, most of the entrepreneurs are intelligent, most can be helped but why did they not seek professional external advice from day one?
After asking the question many times over the past 25 years there are two main answers given:
There are so many shonky “consultants” we were sceptical
We did not think we could carry the expenditure
Both easily addressed! Take the last question first; you simply cannot afford to build your business in the dark, budget for professional assistance and let that assistance enhance your revenues. As to the first question do your research, how long has the consultancy been in business, will it provide testimonials, what are its core competencies, which team member will handle your business and how good a fit is that person?
Good professional advice should be a self-funding proposition. Seeking advice and engaging a consultant is not an admission of failure it is the corporate equivalent of using your doctor, dentist, tailor or hairdresser – you use them to stay on top!
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HELP! – I am out of cash & going down!
At which stage do you accept that without a cash injection your business is probably doomed? Looking at the ABS statistics they show that in any three year period around 42% of registered SME’s fail. So the answer is that we should look for and accept cash and or help a lot sooner!
It is very hard when investing the enormous time, energy and focus needed to start and build an SME, to then find the time (and to provide the mental distance needed), to properly analyse and re-assess your management and direction. Being naturally entrepreneurial, SME owners have a tendency to fight on, often to a very bitter end.
When I left the corporate world to start my first SME I got to the end of year one and realised I was emotionally drained, failing and down to my last eight weeks or so of cash. Everything I had was on the line and I had no answers.
Recognising that I was no longer thinking straight I bundled my worried wife and two noisy young children into the car and we headed off for a long (and very cheap) weekend by the beach. It was mid-winter and raining; you can imagine my despair.
Late in the afternoon of our second day I took a long walk along the beach, in the rain and asked myself three questions:-
Is the business concept viable
If its viable have you managed it well
If you had sufficient resources available what would you do differently
My answers were 1) yes 2) fair 3) build a team to leverage revenues.
I returned to the shack motivated and excited for the first time in weeks and when back at work I went about raising the cash and partners needed. It was surprisingly easy and within a year we had a happy and booming business.
Lucky bastard! I hear you whisper. Not really. In a now long career in and around SME’s I have realised a few truths about human nature:-
By and large people want to help you
There are more investors looking to invest than there are good ideas
If your business is a good idea and you are honest, fair and hardworking you will find funding
Investors are usually older, experienced, have suffered and recovered from failure – they understand your position
By understanding your position and taking positive action you earn respect from your stakeholders.
So when do you put up the red flag and shout for help?
Assuming your business concept is viable and you are offering a product or service your customers want then consider the following danger signs:-
Your business is growing, you are profitable and yet you are always short of cash. This happens in growing companies as to service higher sales you need more stock, labour, materials etc and your debtors ledger expands as sales grow. This all eats cash.
You have more potential customers than you can handle and you are falling behind on paperwork and starting to knock back new business. At this stage you need to employ and or outsource more resources but how do you do this when cash is so tight?
You know you could win larger more lucrative contracts and strengthen your business if you had more people, plant and equipment.
Your debtors are slow payers and it is impacting on your ability to meet your payments as and when they fall due.
The bank offers you an overdraft but only if you provide the family home as security.
If you are experiencing any one of the above your business is at risk, if you are experiencing any two you are in trouble and should seek help quickly.
In our company we see so many businesses fail which are fundamentally sound and indeed held so much growth potential.
When we analyse them we invariable find a point beyond which they had insufficient cash to maintain the business. Corners start getting cut, staff numbers are reduced, marketing budgets cut, bills go unpaid, staff morale falls, the staff start leaving and eventually an administrator or other court appointed official is installed
Possibly as many as 90% of the failed businesses (assuming no underlying fraud etc.) we look at could have been saved had appropriate action been taken early enough.
So what should you do if you are at risk?
First of all have an open and frank discussion with your advisors including your accountant and lawyer. Walk them through your business plan and figures and explain your concerns and the amount of investment you think you need to achieve a turnaround. Not only will they offer advice but they may well know of potential investors.
Look on line for SME Turnaround Specialists – a good specialist company should have all of the in-house skills you need and access to numerous investors. You may be able to negotiate an hourly rate or a fee based upon their success or a combination of both. A preparedness to complete some or all of the work on a success fee tells you a lot about their level of confidence!
What will I have to give away to attract an investor? Less than you think. A savvy investor will want to see you remain motivated and happy so as to help build a return on investment. If you are both fair, reasonable and above all offer each other respect you should enjoy a profitable relationship which sees the business turnaround.
Once you have an investor on board start to build a team of business mentors. Many SME’s have an advisory board of a couple of specialists who meet as a regular board would and help you analyse and guide the business forward.
The Barking Mad Blog
SME Advice with Bite!
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Creating an Entrepreneur!
Is it possible….you better believe it!
Entrepreneurs are often the rocket fuel which drives new ideas, creates new businesses and indeed new industries. In common with such inflammable fuels entrepreneurs can often end with a bang but overall they have driven commerce and commercial ideas for millennia.
Most entrepreneurs tend to be highly individual, difficult and unpredictable and lacking in reputation when it comes to team work and the subtleties of the office culture. This is changing as most business schools and universities are turning out graduates with qualifications in entrepreneurship.
Having tame yet empowered entrepreneurs within a company is the dream for most business owners. These are employees who will undertake something new, without being asked to do so. They are innovative and creative – they are people who can transform an idea into a profitable venture for your business. They strike the perfect balance – act like entrepreneurs, but they work for you.
But as any business manager will know, such individual entrepreneurs are a rarity, however, this needn’t be the case. Every employee can become more creative and entrepreneurial if their company adopts a different approach to their development and cultivates a culture where innovation and creative thinking is encouraged and supported.
One of the main problems facing many Australian businesses is that they have lost sight of the importance of fostering creative thinking and innovation. In doing so, they are placing their business at risk and giving the competition a serious advantage.
We can’t lose sight of the fact that the economic crisis has turned many offices into high pressured working environments, where employee engagement and confidence has been eroded. In such businesses energy, creativity and innovative thinking has been lost.
However, what has also emerged is a (it’s not us) blame culture where business people are blaming their current poor business performance solely on the recession and external factors. But this is a bit like complaining that you are wet because it’s raining. How about wearing a raincoat? Businesses have a duty to prepare for the future upturn and ramp up their competitiveness.
The actual ‘raincoat’ for business is not to cut costs and act in defence; it is to build resources and attack. Sun Tzu in the sixth century said that you may survive though defence but you can only win by attacking. One of the oddest paradoxes of the business world is how many business owners never even see themselves in a competitive situation. Absurd! Competition in so many forms is ever present and can never be ignored.
So what can businesses do to be more competitive? It is in times of adversity that some of the greatest innovations have appeared and in today’s straightened times there is a healthy pressure to differentiate, become more competitive and establish more intrinsic value in the organisation. Does this come about by exhortations by the CEO or by establishing a culture of freedom to think and innovate? It may be the former but it must be the latter.
It is down to business managers and the HR department to establish a culture where intellectual power within the company is harnessed to the betterment of innovation and in so doing equals motivation, productivity and profits. An energised workforce is an effective and content one.
Most people in an organisation have enough insight of what is going on to be able to contribute to innovation. However, we are not talking just about suggestion boxes. I am referring to special projects and cross functional work groups to establish innovation in products, service and operations.
Managers need to make it clear that this is not a one off; to create sustained motivation, people must feel valued. Leadership has to be consistent and authentic in the way that it empowers teams to be create
Here are some ways of encouraging creativity and innovation:
1. Understand and know what the market wants, but know more about what your competitors are offering and how they behave.
Competitors of all kinds are the minimum benchmark for which to aim. Equalling the value of competitive offerings is rarely going to suffice – always ensure you are moving to stay ahead. Look at every weakness in competitor offerings and operations and use advanced brain storming tools such as ‘meta planning’ to develop and refine the winning concepts. To win you must find that point of difference and it’s usually a combination of ingredients which becomes – your winning recipe
2. Empower people to implement their innovations.
3. Make it clear that a business must always rethink, reposition, invest and develop its products and services.
NEVER stand still. Even those lucky enough to have patent or intellectual property protection must seek to acquire more advantages. If in any doubt about this then compare the car manufacturers on the road today with those of thirty years ago. GM laughed at the Japanese cars with their floral carpets and tiny engines. England was the undeniably solid centre of motorcycle production.
4. The customer is always a good start point for innovative thinking and should be a central focus for the whole business.
The customer and their relationship is central to business success. Do not rush to copy some competitors’ ways of caring for customers (e.g. automated telephone services!). Develop new ways to engage with customers in a way that customers want. They will repay you over and over. This is how Virgin took so much business away from the likes of Qantas
5. Treat internal employees as customers and friends.
The best innovation can come from co-operation between employees – this is an effective way of bringing out entrepreneurs. Identify and appoint innovation ‘champions’ around the business. These people will be the leaders on innovation development and manage the process. They must drive the culture.
6. Any function has scope for innovation – always.
HR, finance, customers service, manufacturing, legal, they all must innovate and an innovation culture that embraces all the functions will be a better joined up organisation.
7. Lead people to look externally for inspiration and don’t be afraid to steal other people’s ideas.
Some of the best ideas and simplest innovations are from businesses that already have had such a drive or survived times of stress. Don’t reinvent the wheel copy the world’s best practice then improve it.. Sometimes copying is the best route. However, copy it, and then improve it. Look at how the Japanese destroyed the UK motorcycle industry, they initially copied the UK and then made the products better.
8. Managers should promote external focus from all departments.
Many businesses suffer from internalism and parochialism. They stunt growth, innovation and sap energy. Assume that your business could be killed off by new entrants to the market or new innovations – people or technology based. Get people to think the un thinkable, develop thinking around scenarios that may seem unrealistic. In the 1960’s Black & Decker was the world’s largest and most trusted power tool maker. Which of the analysts and business commentators wrote or though in 2007 the major global banks would fail, that the system was unsupportable and a crash inevitable.
9. Lastly, companies must look forward, and by looking forward I mean 360 degree vision and a strategy to see through it. Most look back when setting budgets and design parameters.
Create a ‘can and will do’ rather than ‘can’t do’ culture. There are ‘no but’s’; only ‘yes and’
In the end, innovation is an state of mind. Train your key people to think and see differently, search every day for the new, the better, form, function, value and service. This is where Steve Jobs was masterful in transforming not only an industry which he had helped create but in transforming the culture of a major global enterprise.
The value of leadership and empowering your management is enormous and in truth no one has a choice in the matter. Everyone must adapt, change and innovate and we can all with training, help and enthusiasm become entrepreneurs.
Empowering employees to be innovative and creative, and encouraging a ‘can do’ attitude can reap rewards for everyone – whether monetary or reward based – and companies that do this are more likely to survive the recession.
A new show on the ABC called Redesign My Brain, hosted by Todd Samson, shows just how adaptable to new ideas, concepts and skills our brains are.
It’s been said so many times but the answer is to look out of the box or in more 21st century terms constantly look beyond the horizon and use 360 degree vision and thinking.
The Barking Mad Blog
SME Advice with bite!
13 October 2003
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