Posted By Anthony Wilkinson-Denny

Henry Ford once said, “There ain’t no rules round here. We’re trying to achieve something.” At the risk of upsetting Henry – who did know a thing or two – we’ve got to say that there are some things, or rules, that do work. What used to work in the past doesn’t necessarily work now and here are some rules that will drive the way business people think and what they are focusing on for 2010:

1. Staying lean: The Credit Crunch forced businesses to cut costs and review efficiency. The recession is not over yet and businesses should continue to look for efficient delivery systems and resist the temptation to “add fat” yet.

2. Oldies rule! In UK/Europe (and USA), 25% or more of the workforce (and customers) will be over 50 within ten years. In 2012 the over-45 customer group becomes 40+% larger than the 20-45 range and they will have the most money to spend. Don’t forget your older customers and staff. Research shows the over-50s have good or better skills than their younger peers.

3. Global village: Globalisation is here to stay. People will continue to be more mobile and business methods and products/services move from country to country more quickly now. Watch what’s happening overseas – it will soon be here!

4. Caring for people and planet: Social responsibility and green issues will not go away, with customers, suppliers, lenders and investors comparing your business with others on these measures.

5. Change is not changing: The pace of change will only increase. Creating a clear vision for everyone in your business will give staff (and you) something to base their decisions on (whatever change occurs) and a sense of security in a changing world.

6. Narrow the bulls-eye: Reduce, reduce and reduce, yet again, the number of targets that people need to aim for. Where effort is aligned to a small number of key deliverables the benefits are significant.

7. Keep it simple, sweetheart: With the world becoming more complex, it’s easy to add complexity. Customers and staff prefer simplicity while complexity hampers a company’s ability to respond.

8. The customer is always right: With more access to information and rising consumer assertiveness, customers are liable to be more discerning about your products, promises and performance. With growing customer choices, it’s easier for them to switch away from you. Keep in contact with them and let them know what you’re up to and why. Their knowledge is your power.

9. Nurture successors: With the mobility of people (the global village, above), many of your staff will leave your business at some time. Keep a look-out for those who shine and who show promise. Tell them they are valued and do it with tangible proof – give them training and bigger responsibilities. If they feel valued, they will likely add more value to your business and stay longer.

10.  Leadership: There are very few heroes in our world today. Leaders in politics, religion, entertainment, science and in business have all had bad press. We have very few people we trust any more. So, this is your chance to fill the void as people are looking for mentors and others they can trust. Find your vision and integrity and think about the attributes you’d like to see in a leader – develop those and become a magnet for greatness.

Posted by Anthony Wilkinson-Denny

Where there is no vision, the people perish ~ The Book of Proverbs.

The above quote is as true in business as in life … and as true today as it was 3,000 years ago. Without vision, there is nowhere to go, no direction to work towards. Organizations with no vision are run by people who think, “If it ain’t broke, don’t fix it.” They stay with what they’ve always done and get what they’ve always got. However, true leaders think, “If it ain’t broke, you aren’t looking hard enough!” These leaders are always looking for better and more effective ways to do things.

True leaders change the organisations around them – they make a difference to the business. Leadership is about what you do and how you do it. It involves learnable skills that can be applied to the tasks that occur in every business. The characteristics of True Leaders are:

They are untidy

Because they are constantly evolving their organizations and their teams, constantly improving and fine-tuning things, little is ever the same as it was. Some people are uncomfortable with this constant state of flux but this is where true leaders flourish.

They lead by example

These leaders make a point of getting “down” with their team and doing what they’re asking others to do. David Ogilvy and James Caan are two English examples of these types of leaders. They come to work earlier and leave later than everyone else, they act rather than preach and, because of that, they usually have empathy with those who are struggling. They are great at listening and helping the fallen rise again, because they’ve done it themselves!

They enjoy creating leaders

An army of sheep lead by a lion would only defeat an army of lions lead by sheep ~ Arab proverb. They are secure enough in their own leadership and their strengths that they purposely foster and train others for leadership roles, knowing that any organisation is not strong unless everyone in it is strong.

They have a sense of purpose that others believe in

A team is a group of people who may not be equal in experience, talent or education but in commitment ~ Les Brown. True Leaders have a vision that:

1.    They share with others, and

2.    Others believe in.

True leaders know that their organisation does not run by only their efforts and so they create a believable vision that everyone wants to join in and move towards. They are clear about what their vision is, they make sure everyone else is clear about that and they encourage others towards it.

They understand that leadership is a relationship, not an action

They are action-oriented people, yes, but they also know that to lead, they must also relate strongly with the people they lead. They may change and adapt to changing circumstances but they always remain true to themselves and true to their expressed vision. By their constancy, they engender trust and a following.

Posted by Anthony Wilkinson-Denny

We advise CEOs and business leaders to focus more than ever on value, to exploit opportunities presented by the current situation and to act on both quickly ~ Centre for CIO Leadership, USA. [CIO = Chief Information Officer]

Value

There are two aspects to value.

The first is staying with your core vision or beliefs. For example, Dutch Rabobank Group, along with several other commercial banks, performed well by avoiding high profit, high-risk offerings such as sub-prime mortgages. Instead they held to low-risk lending principles. So here you create value for clients by consistency and trust.
The second is sharing your vision (your value) and having others buy into it. If customers can see a tangible benefit – not just the “same old” in new packaging – they will support you. For example, Netflix and Strayer Education (an online service) use technology in clever ways to slash prices by introducing revolutionary new business models.

Exploit opportunities

Shawna Martin used to be part-owner of an antique store in Mesa, Arizona – “In the summer months we would sometimes have days where less than ten people walked through the store, and even fewer bought anything. Then we went to work selling our items on ebay, where we made enough to at least pay the overhead, allowing us to keep the shop afloat during the bad months.” What other ways do you have for selling your services and/or products?

Act quickly
Barclays acted quickly – leaping regulatory and other hurdles – to acquire Lehman Brothers assets by September 23, 2008, just days after Lehman’s September 14 collapse. Within hours of the acquisition, the screens wrapped around Lehman Brothers headquarters at 745 Seventh Avenue in Manhattan switched from the Lehman name to Barclays’ blue logo. Equally decisive was Tesco’s move in 2008 to introduce a new Discount Brand line to avoid losing customers to lower-cost competitors.

Ten simple and practical success strategies:

1.     If your leased office is too expensive, consider working from home.

2.     Focus on the 20% of customers who provide you with 80% of your income.

3.     Reduce advertising and spend more time contacting existing customers – it’s seven times more expensive to get a new customer than to get an existing one to buy.

4.     Do your budgeting and know exactly where you are, every day. The truth may hurt, sometimes, but working on it will yield more results than working on an illusion.

5.     Don’t let the news media influence your business decisions. Take stock of your own financial climate. You might be doing great despite this economic downturn

6.     Shop around for everything – stationery supplies, fuel, accountant, lawyer, cleaner … every expense you have.

7.     Talk to your banker – it’s free and your success is his/hers. If they are of no help, find another one who has constructive and practical business ideas.

8.     Don’t give up.

9.     Still, don’t give up.

10.  Don’t ever give up!

Posted by Anthony Wilkinson-Denny

The previous blog explained how money flows through a new business and it looked like:

Assets <-  Expenses <- BUSINESS <- Lenders <- Owners

For a new business, money comes from two places and goes out to two places.

Where money arrives from and departs to

Once your business is up and running, you will be receiving money from three (not two) places and it will be going to three (not two) different places:

1.  The money will come in from:

·      The owner(s) – funds introduced, shares paid for,

·      Lenders, and

·      Income from customers – fees received, sales, rental income and so on.

2.  The money will go out to pay for:

·    Expenses,

·    Assets, and

Owners – drawings, wages, dividends and/or interest.

Your business is operating and customers are buying. The flow will look like:

Owners <- Assets <-  Expenses <- BUSINESS  <- Lenders <- Owners <- Income
Debits                                                       Credits
Accountants call everything on the right-hand side (incoming) a credit and everything on the left-hand side (outgoing) a debit.

When starting a business, it is unusual for the owner(s) to get anything back immediately. They have already paid out for set-up costs (see previous blog) and the inflow of income may not be enough, at the start, to even cover the expenses of rent, phone, power, loan repayments and so on. However, there will come a time that the income builds up enough to pay the owner(s). After all, that’s the main reason they started the business – to get a good income out of it!

Profit versus Cash

With a credit crunch still haunting us, this is particularly important to know the difference between profit and cash flow … and why many businesses fall over and go ftttt. If you sell something to a customer on credit you call that a sale – that is included as income and the lovely HM Tax people will tax you on that. However, because it is on credit, you have not received the money yet. So your profit goes up by the amount of the sale but your cash balance does not change.

In the same way, you may buy goods on credit. When you purchase them, that is recorded as an expense, it reduces your profit and also reduces your tax. But you have not paid anything – your profit goes down but your bank account does no t move.

This may sound all very simple but it is the simple things that trip people up – we had a client who had made £1,000,000 (of which he was very proud) and wondered why his overdraft kept getting bigger and bigger. He was selling lots of products but he was not chasing up customers to pay him.

And that, my friend is why, if you’re buying a business, you should ask for both an Income Statement and a Cash Flow Statement. It is also why your accountant, if they are a good one, will also produce both statements for you each year or each month. The Income Statement tells you what your profit is (and what your tax will be) and the Cash Flow Statement tells you what is happening in your bank account.

Knowing this, you’re now a financial genius!

Posted by Anthony Wilkinson-Denny

This blog, and the next, explains how finance flows into and out of a business so:

1.    You will understand what is basic to any business – but most people don’t understand – and what is happening to it, whether it’s going well or not.

2.    You can understand exactly what your accountant is talking about – accountants are not usually gifted with great communication skills!

3.    You can understand what the accounting statements mean and can take effective and informed action from them,

4.  You can impress your bank manager – and anyone else you do business with – by being able to speak the language of accountancy and finance.

Where money arrives from and departs to

Before you start running your business, you have to set it up. You may employ lawyers and accountants to prepare documents and plans, you may have to pay for rent and stock in advance, you will have to set up accounts with telephone and utility companies and you will probably spend money on research. You may even pay for an existing business.

All these preliminary expenses (set-up expenses) will have to be paid before you earn a single cent. When James Caan set up Alexander Mann, it was over three months before he got his first cheque. You may not have to wait quite so long but it’s unusual to have any income turn up immediately.

So, in this set-up phase, your business has money coming from two sources and it goes out to two places – in accounting terms:

1.    The money will come from

·      The owner(s) and maybe

·      Lenders – anyone who is not an owner but provides finance, like your bank, an investor, a finance company, Aunt Molly or Uncle Joe.

2.    The money will go out to pay for:

·    Expenses and

·    Assets.

So, at the start, the flow of money will look like:

Assets <-  Expenses <- BUSINESS  <- Lenders <- Owners

Assets and Expenses

Now, you might ask, what is the difference between expenses and assets? Whether it is for the phone account or for a new car, you still make a payment and it still comes out of your bank account. Absolutely true! The difference between expenses and assets is time – if the benefit of the payment disappears within a year, it is an expense. If the benefit lasts more than a year (or you still have something to show for the payment after a year) then it is an asset.

The payment for your phone account is for calls you have already made and there is nothing to show for after that – it is an expense, as are wages, power, rent, stationery, interest paid, subscriptions and so on.

When you pay for a new car, there is something to show for it after a year – a car! It still exists and so it is an asset, like buildings, equipment, land, bank account, debtors and so on. When money goes from you (the owner) into the business account, the money is still there so your bank account is an asset.

The next blog will explain the flow of finance once your business is up and running.

Posted by Anthony Wilkinson-Denny

1. Money Does Not Exist

Money is not real – it is an illusion, a mirror of what you think you’re worth. If you change how you feel about your own worth, you will notice that more money comes to you. Change your mind and change the value you place on yourself. Instead of turning down invitations, compliments and gifts, thinking that you don’t deserve them, start accepting them, knowing you certainly are worth it. Suze Orman says that money has no power of its own – you will not be more powerful with a lot of money. The power is in you and your belief in yourself.

2. Truth Creates Money, Lies Destroy It

Suze Orman says that if you go out to eat, afraid that your credit card will be declined, you are breaking this law. Living in hope, rather than certainty, is living a lie. Be honest and clear with what you have and more will be there for you. Money loves honesty and is attracted to it.

3. Care For Money And It Will Care For You

Ben Franklin’s rules were similar to rule 2 and very practical: never squander it, don’t be a spendthrift, be very careful, you have to account for what you’re doing, you must keep track of it, and you can never ignore what happens to money.

4. Follow Your Bliss

Joseph Campbell said, “Follow your bliss.” Mike Phillips said, “Do it! Money will come when you are doing the right thing.”

This is hard for most people to accept. Worry about your ability to do it (whatever your bliss/passion is) and competence to do it, but certainly do not worry about the money. It will follow you when you are happy doing what you love.

5. Be Clear About The Cost Of Earning Money

The time you put into money will be time you cannot put into other things – family, personal reflection, hobbies, healthy exercise and other desires. Start your journey to accumulating money with the very clear knowledge of what you’re prepared to give up and what you’re not, or you could also become yet another unhappy millionaire!

6. An Abundant Universe

Brian Tracy says we live in an abundant universe in which there is sufficient money for all who really want it and are willing to obey the laws governing its acquisition. In the study of economics, there is a formula: the supply of money is mainly governed by the speed of its circulation – if people hoard it, the supply dries up; if they circulate it, the supply increases. We cannot share freely unless we believe there is enough for everyone!

7. Keeping, Not Earning

It’s not how much you make, but how much you keep, that determines your financial future.

8. One Small Step For Mankind …

Every great financial achievement is an accumulation of hundreds of small efforts and sacrifices that no one ever sees or appreciates.

9. Look At What You Have, Not What You Had

The past is gone and the only place for action is now. Like dishonesty, money dislikes regret. It loves action and realistic financial planning.

10. Attracting More

The more money you save and accumulate, the more money you attract into your life.

Posted by Anthony Wilkinson-Denny

Our previous blog explained why you need a business plan – this one gives you ideas on what to put in your business plan and how you’ll know if it is a good one or not.

A business plan will help to keep you on track, so you do not to lose the original idea for your business:

1. Your goals: What do you want your business to provide for you, in terms of time, money, freedom, who you work with and other benefits?

2. Customers: Who are your customers and what do they want/need?

3. Products and Service: What products/services will you provide your customers?

4. Markets: Where are your customers and what do you know about them as a group? “Where” might be geographic, what kind of places they hang out, or where they go to find products or services like yours. What is their age, income, gender, hobbies, family structure, etc. %placeToCut

5. Your Style: How will you reach customers, what will you say and how will you say it? Your methods of reaching customers should match the type and location of your customers – a message they can relate to.

6. Competitors: Where else are your customers likely to get this need met? Find out about how your competitors price, market, and provide their products/service.

7. Your Uniqueness: How will your product/service meet customer s needs differently from your competitors? What’s unique about you and your business?

8. Your Abilities: What do you do well, and what do you need help with?

9. External Resources : What people/technology/services will you need to employ or contract for?

10. Fulfilling your Dreams: How will your business provide your goals as in 1. above?

The Main Ingredients/Headings of a Business Plan:

1. Executive summary: It is written after the plan is finalized. It briefly provides an overview of the business plan in terms of the approach employed and key considerations in terms of business offerings, key staff and expectations in terms of financial results.

2. Introduction: It consists of a brief description of the business, the policies, mission, vision, purpose and objectives of the business for the specific business period. A short review of the previous business period would be appropriate.

3. Marketing plan: What are the best marketing strategies to sell your products and/or services?

4. Operations plan: This is the how and what of the business in terms of structure, location, rules and regulations, key operational processes and such other details.

5. Management plan: This explains how the business is to be managed including key personnel, their qualifications and experiences as well as relevant business credentials.

6. Financial plan: The dollars and cents that will realize the business including costing and financial projections. Charts and graphs would be beneficial.

Your business plan must be easy to understand, logical and promising.

Posted By Anthony Wilkinson-Denny

How many times have you thought of a brilliant idea – something that everyone needs and it would make you a lot of money – and then done nothing about it? How many people do you know who have done the same thing – exclaimed “Eureka”, become all enthused and eventually the idea dies a sad death?

Having a business idea is different from having a business. There is a bridge to cross – from idea to reality – and that bridge is a business plan. I know you will say that many businesses have been started without business plans and I agree. What I would remind you; however, is that around 80% of businesses fail in the first two years of operation … even without a credit crunch! And, of those that do succeed, both you and I know that they would have gone much smoother if there had been a plan – instead of building and crossing the bridge, the entrepreneurs have chosen to wade through the water, over the slippery rocks, bumping shins, twisting ankles and getting very wet.

There is an easier way and it is with a business plan.

One of the key benefits to having a business plan is that you will know what you need to do to get your business up and running – it’s a to-do list. For example, if you know what type of customers you will be targeting and how, you have a better chance of success.

Business plans are also essential to:

1.      Attract capital to invest in your business. Lenders want to know what they’re investing in – your business plan will tell them.

2.      Selling your business.

3.      Selling your idea, even if you haven’t got your business off the ground.

There are some basic rules to drawing up a business plan:

1.    A business plan should be easy to read. A good business plan is a complete business plan. It contains all the information but it mustn’t be too long. Certainly, if it is over 20 pages it’s not a business plan but an encyclopaedia.

2.    If it isn’t straight to the point it’s a bad business plan. You should specify your objectives in simple sentences. Someone who knows nothing about your business (or even business in general) should be able to understand it without asking too many questions.

3.    Your plan should be realistic. If you put in unrealistic sales goals or unrealistic expense budgets you will scare off the person or company that you are trying to convince to invest in your business.

4.    You shouldn’t make complex financial models. Rather than forecasts for the next ten years – especially considering how quickly technology, economics and culture are changing – concentrate instead on answering these questions:

·         How fast are we going to use the investor’s money?

·         When does the company s cash flow turn positive? and

·         What margins can this company earn?

If the plan is to include different periods, these can be separately categorized into short, medium and long term plans.

Our next blog will give you some more practical ideas on creating a business plan.

Posted by Anthony Wilkinson-Denny

The bank returned a cheque to me this morning, stamped: ‘insufficient funds.’

Is it them or me? Sorry, it’s always about you. No matter what the economic climate or anything else is, you are the centre and the reason for your world and you can change it right now … and that includes your finances. It does, however, require you to do some work – to do something different.

Here’s what you need to do:

Firstly, realise that your finances reflect your thoughts about money – change that and you’ll change your financial situation … permanently!

Secondly, get organised. I’ll show you how. Keep reading.

The Inside Work

Money talks. Trouble is, mine only knows one word: goodbye.

If your inner dialogue about making money – investing, growing money, being successful in business – is against you, there is nothing, absolutely nothing, you can do in the outer game that will ensure your success. We are all products of our environment and those we grew up with, however this is not carved in stone. Three questions will tell you what your inner money dialogue is:

1.   What were the most memorable/constant things your parents said about money? Chances are they’re the things you say and believe about money … and your thoughts define your results.

2.   What did your parents do around money? Did they hate it, hoard it, lose it, win it, love it, despise it, spend it or save it. Chances are you’re doing the same right now.

3.   What specific incidents around money do you remember?

How your parents thought, spoke and acted is how you’ll be with money, right now.  So, if it wasn’t healthy money-talk and money-act, become really clear about what it was that ended up in your brain and then clear it out. This is your life, your money and you can choose to think, talk and act with it in your (probably) different way.

Your money will only grow as big as you are so do the personal development and keep growing so your money does.

The Outside Work

Step 1 – brains, not guts.

Greg Seker, founder of Trader University, London, and one of Britain’s most successful share traders would tell you to forget the rumours, news and pronouncements around the share market. Just look at the charts. Greg knows that people are illogical, irrational and deal with money from their feelings – they tell lies to themselves (as above) and then justify their mistakes by blaming outside circumstances. Greg doesn’t. He just makes millions. How? By studying the facts, the figures and the science.

Between 1984 and 1995, the average mutual fund had an annual return of 12.3%. Yet the average investor earned 6.3%. These investors would have made nearly twice as much by buying and holding the average mutual fund, rather than chasing around, buying and selling, after each rumour.

Step 2 – organise your finances

T Harv Eker, author of Secrets of the Millionaire Mind and multi millionaire, would tell you (after you’ve done the Inside Work and not before) to set up six accounts into which your income is distributed:

50% – Necessities Account for your usual daily expenses.

10% – Long Term Savings for Spending Account for long term spending goals like holidays, cars, houses and so on.

10% – Education Account for courses, books and seminars on money, personal growth, spirituality and anything that helps you grow

10% – Give Account for giving to others, tithing.

10% – Play Account. This money you must “blow” every month. It’s to balance all the saving you’re doing with your other accounts and is the emotional outlet needed. Otherwise, you’ll just blow your savings and investments.

10% – Financial Freedom Account for investments and buying or creating passive-income streams.

And, lastly (and most importantly) a clear glass jar (so you can see the contents) which is your Financial Freedom jar. Each day, drop some coins into it and watch it grow. This is a powerful psychological tool as you can see your money grow. It also “magnetises” money to you – whatever you focus on grows.

Now, right now, more than 50% of your income may be taken up with daily necessities. That’s OK. Still open those six accounts and put whatever you can into them, even if it’s just 20 pence a week. The above percentages are what you’ll end up with, if you do the work now.

If you do nothing you’ll only get what you have now. If you want a different result, you need to do something different. If not today, then when?