Each Thursday we will bring you a financial tip or article. Mostly supplied by our Wealth Coach and Financial Mentor, Clive Bydawell from 7 Year Wealth Plan. This week Clive’s message is short and plummets straight to the heart of the matter.

The best way to generate long term wealth is to continually focus your energy on buying appreciating assets with your hard earned income. Period.

Ok, time to go shopping!

With February at mid point, this is the time when business owners should be actively involved in cash flow management. I wrote earlier that Feb is the hardest month to survive of the year due to various issues and these need to be managed. Any business owner who anticipates staying in business this year through the World Cup has to make some adjustments to what may be normal business routine.
If your business plans to thrive or survive during the June/July period it is all about having enough cash to pay the bills, staff and yourself during this period. February has given us a mini trial run for this. Stop today and look at how you are doing with the business. Draw up a dashboard to measure various activities and communicate all aspects to affected parties. If you make it through Feb, you can make it through to August.

This post by Clive at The 7 Year Wealth Plan. Worth a read.

“The thing that most separates winners from losers in life, is that winners take action. If you want to live your dreams, not only must you decide what you want, turn your dream into measurable goals, break those goals down into specific action steps, and visualize and affirm your desired outcomes. You must start taking action”. – Jack Canfield.

Most successful people have been through failure at one time or another in their lives and some of them, huge failure. Take Lee Iacocca for example. …Read More

Every business comprises three components: the owner, the entity and the employees. The business financial planning process includes information gathering to understand the various components in greater detail which can then be used to analyse the current position and identify any problem areas or needs. After the needs have been quantified, the formulation of strategy to solve the needs is imperative and prompt implementation of the strategy is followed by regular evaluation and adjustments if required.

The needs for the various components are listed as follows, and every week a more detailed description of each need will be provided.

The Owner: Business – Business continuity, Income replacement, Capital extraction plan, Credit loan account, Capital acquisition

The Entity: Suretyship protection, Credit loan account protection, Business overheads cover, Key person cover, Debtors cover, Alternative finance replacement plan, Asset replacement plan, BEE financing, Business short term insurance, Mining rehabilitation

The Employees: Staff retention schemes, Productivity improvement, Retirement provision, Group risk solutions, Medical aid, Medical prefunding

Ryan Samuels

“It is only when the tide goes out that you can see who is swimming naked” a quote from Warren Buffet. This is becoming too true in the tough economic times as we begin to see those small business who have not done their foundation preparation in their businesses. As things get tougher some are becoming more exposed and are been found out by their Creditors, SARS and the dreaded banks and their customers.

I paid my bank manager a visit this week to discuss our current financial situation with him to keep him informed of what we are doing and what we had planned for the business in the next few months. He was taken aback that a customer was being proactive in their finances. He mentioned that most people only come in when it is too late and need some sort of rescue plan.

If you feel the tide going out, either wade in deeper or get covering, nobody wants to see you naked.

You have an idea, may even have a business plan but no money. You have gone to the banks and they turned you down, you approached a venture capitalist of angel fund and they turn you down, you revert to the government grants for small business but they tell you that you do not qualify. Now what?

This is a common story that we at the Entrepreneur Incubator get to hear each day as people make enquiries about their seemly hopeless situation. The fact is that almost any business can be started on a very small amount of money. The mistake a lot of people do is build a business plan around the assumption that they will be somehow granted this startup capital with a wave of some magical wand. They do not consider the possibility that their business could be planned and developed around a small base of financials and expertise.

A common business plan is developed primarily for the purpose of funding and is never used to create a strategic framework to build a sustainable venture. If you begin with the facts of no capital in mind and develop your business under the guidance of a coach or mentor you have the foundation of a business that will not only grow as you grow but do so without incurring huge debt before you make any money. Makes sense, doesn’t it?

The press is all over the death of small businesses and unemployment and it makes me sick. Yes, small businesses are facing some troubled times but if we continue to be bombarded with negative articles we will never get out of this situation. Each day I am confronted with people who are in financial trouble and asking us at the Entrepreneur Incubator for help.

My attitude is one of Thrive not Survive. If you set your mind to the survival mode then that is what you will do, just survive. If you on the other hand set your goals to higher income, better customer service, higher profits and wide impact then maybe just maybe you will get there but there is a greater chance of it if you plan in that direction.

This week we do a workshop for our members on the better use of Social Media to enhance and grow your business. Lets hope that as we gather together we will all be able to shed the negativity of failure and survival and replace it with a positive attitude of expansion and to Thrive.  

With the financial economy at its worst and the buying power of businesses and individuals at an all time low, we need something other than the ‘gut feel’ to judge our buying decisions for those new business items. Here is a simple yet effective formula to help you make those purchase decisions.

W = How much do you WANT this item (1 – 10) 10 being new sports car

N = How much do you NEED this item (1 – 10) 10 being a new liver

I – How good an idea is this to have (1 – 10) 10 being will open up a new untapped market

M = How many months have you taken to select and research this product

S = Your monthly income into your business

B = Your monthly bills and expenses

R = Your monthly rental or bond payment

$1 = Your current balance in your business account

$2 = The cost of the item

 Substitute the values and compute the equation working from within the brackets outwards. If Buy is greater than 1 then go shopping. If you fudged the values just to justify your expenses then do not give your business partner my email address, this one is on you. Enjoy.

The Entrepreneur Incubator has extended their offering to small businesses who are finding it more difficult to make it in these tough economic times.

 Even with an interest cut on the near horizon many small businesses are beginning to feel the real pinch of the slowing economy, this is a time when businesses need to buckle down and think more strategically about what and how we do business.

 Business owners are often too close to their own business and market to analysis it unemotionally. The incubator is now offering EI-Mentor a monthly mentoring workshop with groups of entrepreneurs and business owners at various locations in and around Cape Town. Each session will be 3 to 4 hour long and will focus on strategy, planning and business development using proven tools and techniques.

 If you find your business in a state of stuckness and pending doom, then consider the option of meeting with a business mentor and others in the similar state to plan and work together to once again find that financial freedom and growth within your business. For as little as R850 per month you get to attend the workshop followed up with notes and worksheets as well as access to a coach for any follow up issues. Additional one-on-one sessions are available at a reduced price for those on the EI-Mentor programme.

 Give us a click or call for more information

I got to attend a meeting of the Cape Regional Chamber this week and got to listen to Prof Wolfgang Thomas from USB chat to us about the challenges of working in a small business in these economic times.

 Here are just a few points to ponder on:

Stay away from businesses in or related to any of the following:

• Motor Vehicles
• Mining Sector
• Tourism
• Building
• High-end specialty services or products

These areas have and will continue to show negative growth for some time.

Get involved in:

• Functional foods and services
• Lipsticks (this is a very interesting one)
• Bottom of the pyramid products

 Action to take:

• Reduce costs at every point of the supply chain
• Improve efficiency
• Maximize production
• Sharpen advertising efforts
• Continue to build value add business channels

 Never:

• Cut back on Marketing
• Cut back on training
• Cut back on education
•  Reduce the BEE programmes
• Stop CSI

 Some interesting food for thought: If you need an explanation on any of these give me a click back and we can chat. Lets build together to survive these times.