Ways to fatten the wallet

How To Get More Sales part 1

noreply@blogger.com (jake w) — Thu, 02 Feb 2012 02:31:00 +0000

How To Get More Sales part 1

Getting new sales is not easy. Sales leads do not often come to you. That said, be patient and follow some of our strategies and sales leads will come to you.

One way to get to the end conclusion is asking yourself how do you purchase a new service or product?
While they might not leave you with your answer it should help you a little. However, I doubt it will lead you to one way I got a sale recently...

I am certain there are ways to get new sales from SMM (Social Media Marketing) and SEO (Search Engine Optimization). I know, I've got sales from both. However, that's not the topic of discussion today.

Networking without networking events- Meeting people the old fashioned way!

This actually happened to me recently...

I went to fix one of my computers and the IT man who runs the local shop suggested that as someone who runs a media company I should contact web designers to see if they need videographers and photographers. I thanked him. I contacted friends and then business life took over and I worked on some projects and largely forgot about contacting the cold leads he'd mentioned.

Fast forward, I go back in. Another computer issue. I then ask him about if he knows any leads. He thinks and then says ' Ahh, yes I do actually' and then he gets me the card and said that I should say 'M' recommended me. It worked a charm.

I'd like to say I planned that, but I didn't. I didn't need any Search engine optimization tips for that sale! Networking, outside of networking events, can get you sales. Think of some businesses you can use and see if you can get new sales in this unconventional manner. If you tell people you are starting out, or that things are 'slow' people often find a way to help out..Small businesses people in particular are willing to help each other out. They know what is like.

Be warm and friendly to your customers and your suppliers... they can pass on business to you. If they don't, throw in a line or two about your business when they ask 'How are you?'.
Give them your card, smile and keep upbeat. This can lead on to a discussion about your business and can give you a hot lead, without the need to pay a salesman!

5 Ways You Can Save Money on Contracts

noreply@blogger.com (jake w) — Tue, 31 Jan 2012 01:55:00 +0000

5 Ways You Can Save Money on Contracts

Ask a lawyer friend to help you out in exchange for a favour later down the road or a charity donation
Look online for off-the-shelf contracts you can buy and then alter
Ask other business friends if they have any contracts you can use
Go to a law school/university and ask if anyone wants some experience if they can help you draw up a sample contract
Go to a networking event to meet people- and later email to ask about contracts- they might be able to help you out

However, by whatever means, just do get got contracts. The bigger the deal, the better the contract needs to be. It just saves time, anger, frustration, loss on all fronts... saves it all. I think amongst the jazz of logos, business cards, networking, working any hour you want yada yada, contacts are just not..... sexy. They're dull. But they are necessary.

Build them into future cash flow projections and into any launch. They are a hidden cost, but, well, they're very necessary.

Should I start a business? Self employment part 2- freedom of location

noreply@blogger.com (jake w) — Fri, 27 Jan 2012 14:15:00 +0000

Self Employment in the UK part 2

One of the main reasons why I have chosen to move away from employment, into first being self-employed, and secondly into running my own companies (see other posts for info on companies I run) is the freedom self employment and being a business owner allows.

Before I was told where to be, what to do, for 35-45 hours per week. It only gets worse the further up the ladder you go. Your freedom declines with salary increases. This, to me, seemed counter productive. If I wanted to spend my time doing what I wanted to do, the more I worked and the better I got in my role the further I moved from this goal. Granted, some people will be doing what they want to be doing, great! If so, they might not want to move into running a company or being self-employed.

Freedom of location

1. Work where I want
2. Work when I want
3. Choosing customers and suppliers

Working where I want

Working where I want matters quite a lot to my personal self-esteem. I now choose to work on the beach, or work on the train or work while in bed or, which I find the best, chilling out in coffee shops, before or after meeting up with friends.

Working when I want

This is equally as important. Personally I have productive and non productive parts of the day, I am sure most people do. Indeed Tim Ferriss points out in his Four Hour Work Week book (recommended), that workers often waste a lot of time by coffee machines, or just idling time away. When you work for yourself, you choose when you work, so you can pick the most productive times of day for you.

Choosing Customers and Suppliers

I find this concept great. You cannot choose your boss. But you can choose your customers and suppliers.How great is that.

It is quite important for a businesspersons' self esteem and feeling of self-worth. Picture this. A negative boss, someone who puts you down, stressed you out, maybe even humiliates you intentionally. Customers and Suppliers are not like that, you have the power to say 'No' to them.
That is quite a good freedom to have, a freedom that most people do not enjoy.

Summary

A business/self-employment can help give you more freedom, but do not believe that is the route to easy street. Working for yourself is not easy, and is not for those who are work-shy. That said, for those that yearn for excitement, freedom of many kinds and more money, the lure of starting out on your own or starting up a company is often to great to ignore.

Self employment in the UK part1

noreply@blogger.com (jake w) — Thu, 26 Jan 2012 16:11:00 +0000

Selt employment in the UK- should I go Self-employed/ start my own company?(Part 1)

There are many arguments for and against self-employment vs employment and indeed from self-employment vs a limited company. I am going to focus on the jump between going from an employee to being self-employed. Some people find this jump the hardest, as you go from the relative 'safety' of a job to being self-employed. In fact, the field of self employment often involves the in between stage where someone is earning in a different capacity, outside of their work.

My friend was having some financial difficulties recently and I spent one hour with him. On his tax return I showed him that off setting costs, including equipment, could not only reduce his tax bill but he got £400+ back in a rebate. A £500+ return in less than one hour! There are many perks, both financial and non financial, to being self-employed.

Most common reasons to go down self employed route -
More flexibility - To earn more - To be in charge of one's day - Tax reasons - To be creative - To have freedom of location.

I have already hinted at the potential savings of being self-employed, I'll continue with the hinting.
One major difference is spending. If you are self employed and need a piece of equipment, (lets say you enjoy painting and plan to sell the occasional painting or two) you buy it. Great, new paintbrushes or whatever. You then store away the receipt (or give it to your bookkeeper or accountant). Later in the year they can then use this information to offset for tax. Therefore if you make £10,000 one year, above the non taxable threshold (that changes every year- so for longevity's sake I'll leave out) and you spend £5,000 on equipment then that £5k is no longer liable for tax!

This means you can get some tax savings. As an individual wage slave, no luck. You still pay tax on all your income, receipts or no receipts. Self-employed, your income comes down. That sounds bad on first thought, but not when you save money as you then do not need to pay that extra money in tax. Carrying on with the 5k example, if hypothetically speaking (again tax rates change all the time, and are different in different countries) if the rate was 20% tax on this 10k income and 5k was expenses then you only get charged tax on the remaining 5k. Thereby saving £1000 in tax!

What about a Limited Company?

If you do the same example but suppose that the situation we are comparing is a top earning executive earning 100k a year with 40% going to the tax man, ie £40,000. As a opposed to a consultant who owns their own small consultancy practice who then paid himself in dividends or kept the money within the company, only paying himself £30k and having expenses- travel,food, equipment (nice new laptop/phone anyone?) of 10k per year...Then he might only be 'earning' 20k (over the year).Therefore he might only be taxed- probably in the smaller tax band of about 20%- equaling 4k. Quite a difference.

The Company, he owns, though will have a lot of money in the bank. Money, or freedom, to do what it wants/needs to.

There's the difference. The difference between separating yourself, from the business.

Big earning individuals. Good. Good for an ego. Great for the taxman.

Big earning company who pays their 'staff' (ie You!) a regular salary but keeps the money for future growth within the company. Great for you, not so great for the taxman as the company, ie Your Company, keep the money.

I'm no accountant but being Self-employed in the UK (and probably in other countries too) allows you to legally save money on tax. Great for people who are interested in working for themselves and/or owning a company/companies!

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If you own a company or have started one, or are starting, please do comment and let us know your experiences... Wishing all our readers all the best!

Pros and Cons of writing a business plan part 2

noreply@blogger.com (jake w) — Mon, 09 Jan 2012 02:29:00 +0000

In this second part I am writing mainly from my personal experience, which some readers may or may not agree with... Having started two small companies recently I was told it was needed for me to write a business plan. Unlike in past ventures, where I have planned and sketched out years in advance- this time I thought i'd do things differently. Instead of doing a plan I wrote goals. Strategic and financial goals. How has it worked out?

Well the bank required a small business plan and my accountant recommended one too- so I did sketch one out when asked to, after about 6 months. Guess what? Without realising it, it was remarkably similar to the monthly goals I had set from day.

What are you planning for?

If you are a just starting out, or indeed if you have been going 6 or 12 or even 18 months, you may not yet know how you are doing. You might be trading, doing business, but might not know about your business. Where are you going? What gross profit margins do you need for the next stage of your business?

The main thing any entrepreneur needs to plan for is viability. The stage where your own or other peoples' capital works for itself; where the business generates enough money to sustain itself.
Mcdonalds was losing money even when it had hundreds of stores, until Ray Kroc realised that the way to make money from the fast food business was to own the properties/land. If he had not realised that we would not have Mcdonalds today. There is often no choice but to change, in order to become viable/profitable.

My Story

What I have noted is that with time, strategy changes. I started off doing lots myself, I graduated to delegating more to part timers and contractors. I have changed goal posts mid year based on resources and energy levels and have responded to unforeseen events, for example doing trade shows and filming them to get publicity. Was any of this in the plan? Not really, no. Remember you should be doing a business plan for you first, unless trying to secure investor or bank funding. Plans change.

One thing that I personally find difficult is if I do spend too long planning the future I end up putting off the here and now. My strategy? Set daily and weekly goals and make sure I do most, or at best, all of them. Have monthly goals too. Then I speak with people I can trust about my company's direction and my industry and make an informed decision on the best course of action. The business plan route can be a type of determinism, restrictive. For start ups and small businesses I think dynamism and the ability to change course quickly are essential.

Let me know if you are an entrepreneur going through, or have been through similar things.

Pros and cons of running a start up alone part 1

noreply@blogger.com (jake w) — Sat, 08 Oct 2011 00:10:00 +0000

The Pros and cons of running a start up. Alone!

So I've embarked on running a start up. Why? Well Stagnant growth in the money markets, poor savings options and the lack of employment opportunities lead me to the conclusion that running a start up is a good way to a) make money b)do something productive/add value/gain new skills.

I once did a test online about something to do with what type of businessman are you? Something like that. Anyway, I was hoping that I would be told that I was a leader, or on route to do well, or something else equally positive and reassuring. No such luck. I was told that I was waiting and that what I was waiting for was other people, a partner. It went on to say I would never start a business.

Well, I'm proving that waste-of-time test wrong! Far from wanting to prove anyone wrong, the logic suggests that running a start up, certainly for a young person, is quite a good option (for those with a little bit of start up capital). The alternatives in the jobs market are things like

- Doing free work experience/internships
- Taking a pay cut
- Losing your job due to companies' tightening up their budgets
- Long term unemployment/state benefits
- Sit and pray that my investments triple in the next few years, leaving me with a pitiful dividend income.

Nope. None are these for are for me. I am a risk taker. And yes, I'll do it alone. Or will I?

Very few business owners work alone, in fact I don't know any that do. They might be the only =shareholder in the business, but businesses are built on strong teams. If you have a good team you won't feel like you are working alone.

The cons can be everything associated with working alone. This depends really on your attitude and experience. For the inexpereienced and demotivated person working from home can be challenging, with lots of distractions. However, I've done it before, and made those mistakes. Now I'm able to comfortably put in the hours, because I am focused.

Focus is key with any business but even more so for the entrepreneurs who work from home.
I am sure you know this, so I won't drivvle on about this...

Instead, I'll leave more pros and cons for the Part 2!

The ups of retail

noreply@blogger.com (jake w) — Fri, 30 Oct 2009 18:12:00 +0000

There are several ups for retail stocks.

You can see and feel the progress by going into the shops, you can talk directly with the staff, and maximizing profits is often about ok management and expansion.

An added bonus can be turnaround plays.

However, be careful with out of favour, crappy brand retailers, or those expanding too quickly and/or with a debt problem. Look for stable brands, expanding at a reasonable pace with decent management and a dividend history and you should be ok for a decent grower.

in reference to: Google (view on Google Sidewiki)

The ups and downs of Retail stocks

noreply@blogger.com (jake w) — Wed, 28 Oct 2009 23:15:00 +0000

There are many ups and downs to retail stocks, the tough bit is getting to know how to get to know them!

What makes a good retail stock?

A number of factors. A few are here.

Good balance sheet
Modest expansion plan- not too fast, but steady
Potential for international or wider growth- internet/ national etc
Excellent systems in place and/or good management
Bullet proof products/services
Good track record of growing profits
Low Debt-to Equity ratio
Good Return on Investment/ Return on Capital Employed (more than 15-20% is good, above is excellent) Many years of good ROCE signifies could be a very good company

Other notes

The ease of enty to market means how easily a competitor can start up and directly compete with you. In retail, this is relatively easy, lets say compared with the Oil and Mining stocks.

Managememt too, plays an important part as fads, fashions and brands are judged harshly by the general public.

Lastly, the economic cycle can also play a big part. Buy good companies cheaply. Keep the winners, sell the losers. Try not to sell companies before holding them for 5-7 years, once you have done a good analysis of them. If they were good a few years ago you need to ask yourself what has changed? If nothing has changed and there is still good long term potential selling when the stock goes down is not a good reason to sell. Nor is selling when the stock goes up.

If you do pick a winner, you can do very,very well from retail stocks.

The 5 euro experiment- living on 5 euros for 10 days

noreply@blogger.com (jake w) — Tue, 23 Jun 2009 20:46:00 +0000

I like reading and writing about frugality, but this situation was unexpected.
Having been overly zealous with conserving money, and having transferred a reasonable amount of my earnings, including a bonus, I was left with enough. Then things popped up.

My landlord wanted the rent in advance, take away 250euros. It became ridicously hot here in Portugal (where I am currently) so a decent fan was needed, minus 35 euros. My friend's presents for her birthday, along with a meal- which was overpriced and the collective obligatory 'we are paying for her', minus 25 euros. All in all, plus other minor expenses that went unforeseen and unchecked, I was down 400e. Now I am left with 1 euro in the bank, or actually, being precise 58 cents.

Plan of action? I have borrowed 5 euros and I have rooted around in my room, collecting the cents that have been misguided, and mismanaged. My mismanagement of the cents, ie them not being in my wallet, is what is saving me here. Now, with this blog being all about how to develop financial control you are probably thinking- what the hell?

Well, I am not really scraping around, there are many ways to get out. I could re-transfer the money I'd previously sent over to the UK. I could borrow more money from friends or get a credit card. Nope. That's too easy. It's harder, more of a challenge and ie. more fun for me, to try to live on this meagre amount of hard cash.

The biggies have been paid. The rent. And I have some food in stock already, though not a king's amount. So how do I get around? I am borrowing friends travelcards (similar to the London one, equivalent to an oyster card), no one can tell as its just a swipe system.

For fruit and veg I go to the local shop. Local shops often have cheaper prices, though you'll need to find the right local shop. I had found one months ago, used it, tended to spend 3 euros a go and then leave smiling, fit with the knowledge that I had bought something of true value, great healthy food, for cheaper than any supermarket. So what's the difference now? 50 cent shopping trips. 3 oranges, a kiwi, an apple and a carrot(to go with plain rice and bits of potato)- all healthy and nothing too luxurious, so nothing to break my limit. In fact, I only do these trips maybe once every 2 or 3 days, thus bringing the total to 4 x 0.50= 2 euros. 3 euros left.

So far it has been two days and I've been enjoying it. Tomorrow's goal is to not spend anything! Follow for more tomorrow.

noreply@blogger.com (jake w) — Sat, 23 May 2009 17:55:00 +0000

Producer/Provider vs Consumer

Which are you? Are you a provider, producer or consumer? Most of us are a mix of the three. I talk about this purely in its financial meaning. Do you produce goods, provide services or just consume?

When I was younger I used to dream about starting to work and when I finally did I did what any future master of his own financial and non-financial destiny would do. I saved the income I was producing. Then, unfortunately, I spent it on the things I wanted to consume. I bought videos, tons of videos, those were things that I was interested in. Could you blame me? Do I blame myself? Well, I had to learn.

In fact, it took a few more lessons in financial management, it took spending of other peoples' money, debt and other such minor mishaps for me to come about to the thoughts that I am currently typing.

How did I get myself into this mess? I thought when I realised that I had spent money, without realising where it had gone. I had consumed. Music, clothes, anything I was 'into' at the time.

What do I do now? Address the balance. Instead of consuming so much, I try to produce and provide. I'm into dancing. I consume free things, sell products I produce and provide others with services that pay me financially and feed me spiritually. So now my bank balance is healthier and my spiritual bank, how I feel about myself, compared to me ten years ago, is wildly different.

If you have patience and produce and provide the right services and goods, at the right time and place you'll get the financial rewards you desire, and if it is something you enjoy you will probably feel great about providing those things to your customers.

Strike the right balance and you will do well.

Work out the aim

noreply@blogger.com (jake w) — Sun, 08 Mar 2009 13:28:00 +0000

Working out the aim is half of it.

Let's face it, if you do not know where to go, how are you going to get there?
Some of the readers of this blog will have an aim, a finacial goal, or goals. That is what you need.

If you want the lifestyle of someone rich, you can probably rent it. You can rent the yaught, you can rent the villa, hell, you can even rent the ladies. But, honestly, is that what you really want?

I know what I want. The furthering of my aims, towards the financial freedom of pursuing any business or personal venture I choose to spend my time and energy on. How much is that. Well, quite a bit. I think I will be able to do what I want when I can value my net worth in the tens of millions.

Indeed, money rarely makes a person happy. Felix dennis, in his book on how to get rich says this. He is very rich, and knows lots of rich people but confirms that money is the tool, not the answer. Therefore, dear readers, work out your answer first. Then get the money in order to acheive your dreams, that is if you need money in the first place. Felix now spends his time writing poetry, something that does not require tens of millions to do.
Work out your aim, work out if you need millions, if you do, follow me on my blog and we can get there together!

Choices , choices: Where to put your money?

noreply@blogger.com (jake w) — Mon, 23 Feb 2009 12:27:00 +0000

Most people see disaster. Most people see a crisis.
I see opportunities,....

The housing market has dropped significantly in both the US and the UK. European values are also dropping. Confidence is waining. What should you do? Do the maths.

While the prices are dropping rents won't fall dramatically. The banking rate has fallen to a historic low in the UK, which will be passed on to borrowers. If you can get the money for a mortgage it will be significantly lower than those that took out a mortgage back in 2007, before the crisis.

Repos are up, meaning more bargains.

Stocks, likewise, are continuing to cheapen. Some businesses will suffer in this recession. Some will suffer a lot. Others will only be mildly affected. Some might even benifit from it. The thing to realise is that the stock prices are no longer linked to the actual businesses, just on the general negativity floated around the mythical land that is the 'market'. As Benjamin Graham said, Mr Market, if it were a manic depressive, would be having a low day, even a low year. MY advice?

Don't chase after the new 'growth areas'- markets are acting cyclically and will continue to do so, instead look for outstanding long term value at the cheap prices that are available now, now, now.

I would say good luck, but as you know, dear reader, it is nothing to do with luck. Good action, for if you take action (and have faith) I have faith that you will do well.

Let me know how it goes!

Someone who made money out of stupid lending

noreply@blogger.com (jake w) — Sat, 18 Oct 2008 18:51:00 +0000

For those of you interested in making money and having a life, I seriously recommend reading 4 hour work week. The following letter comes from the blog, sourced from

http://www.fourhourworkweek.com/blog/2008/10/18/investment-series-preview-the-good-bye-and-f__k-you-letter/#more-717

Its a good letter and I certainly agree with most if not all of what he has to say,...

Investment Series Preview: The “Good Bye and F__k You” Letter 9 Comments

Written by Tim Ferriss Topics: Investing * big hat tips your way* (added my w2fywallet)

Is this a hedge fund manager? (photo: dannyhammontree)

I’m in the process of preparing a series of posts on the investment lessons I’ve learned in the last 18 months.

To preface the series with some humor (and insight), I thought one particular farewell letter would be appropriate. The author is hedge fund manager Andrew Lahde, who produced a one-year 866 percent return betting on the subprime mortgage collapse.

This is quite a good letter…

Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.

Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy, only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list those deserving thanks know who they are.

I will no longer manage money for other people or institutions. I have enough of my own wealth to manage. Some people, who think they have arrived at a reasonable estimate of my net worth, might be surprised that I would call it quits with such a small war chest. That is fine; I am content with my rewards. Moreover, I will let others try to amass nine, ten or eleven figure net worths. Meanwhile, their lives suck. Appointments back to back, booked solid for the next three months, they look forward to their two week vacation in January during which they will likely be glued to their Blackberries or other such devices. What is the point? They will all be forgotten in fifty years anyway. Steve Balmer, Steven Cohen, and Larry Ellison will all be forgotten. I do not understand the legacy thing. Nearly everyone will be forgotten. Give up on leaving your mark. Throw the Blackberry away and enjoy life.

So this is it. With all due respect, I am dropping out. Please do not expect any type of reply to emails or voicemails within normal time frames or at all. Andy Springer and his company will be handling the dissolution of the fund. And don’t worry about my employees, they were always employed by Mr. Springer’s company and only one (who has been well-rewarded) will lose his job.

I have no interest in any deals in which anyone would like me to participate. I truly do not have a strong opinion about any market right now, other than to say that things will continue to get worse for some time, probably years. I am content sitting on the sidelines and waiting. After all, sitting and waiting is how we made money from the subprime debacle. I now have time to repair my health, which was destroyed by the stress I layered onto myself over the past two years, as well as my entire life — where I had to compete for spaces in universities and graduate schools, jobs and assets under management — with those who had all the advantages (rich parents) that I did not. May meritocracy be part of a new form of government, which needs to be established.

On the issue of the U.S. Government, I would like to make a modest proposal. First, I point out the obvious flaws, whereby legislation was repeatedly brought forth to Congress over the past eight years, which would have reigned in the predatory lending practices of now mostly defunct institutions. These institutions regularly filled the coffers of both parties in return for voting down all of this legislation designed to protect the common citizen. This is an outrage, yet no one seems to know or care about it. Since Thomas Jefferson and Adam Smith passed, I would argue that there has been a dearth of worthy philosophers in this country, at least ones focused on improving government. Capitalism worked for two hundred years, but times change, and systems become corrupt. George Soros, a man of staggering wealth, has stated that he would like to be remembered as a philosopher. My suggestion is that this great man start and sponsor a forum for great minds to come together to create a new system of government that truly represents the common man’s interest, while at the same time creating rewards great enough to attract the best and brightest minds to serve in government roles without having to rely on corruption to further their interests or lifestyles. This forum could be similar to the one used to create the operating system, Linux, which competes with Microsoft’s near monopoly. I believe there is an answer, but for now the system is clearly broken.

Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won’t see it included in BP’s, “Feel good. We are working on sustainable solutions,” television commercials, nor is it mentioned in ADM’s similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant — marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other additive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let’s stop the rhetoric and start thinking about how we can truly become self-sufficient.

With that I say good-bye and good luck.

All the best,

Andrew Lahde

Hat tip to Ryan Holiday for pointing me to the letter. More on rethinking investment soon.

A reply to current market conditions

noreply@blogger.com (jake w) — Sat, 11 Oct 2008 16:50:00 +0000

Well, as with all bubbles this one had to burst. But how could it have been foreseen? The only thing I knew, and wrote about, was the obscene nature of the earnings needed by many average earners in the UK to purchase average property, with some lenders offering 7 x an individuals earning power, not checking credit records and offering 100% mortgages!

Seeing all that written down looks crazy, it looked crazy to me two years ago, unfortunately it didn't look bad in a 'buyer's market'. I must admit I never knew of the complexity of the situation, I didn't know the extent to which the banks were involved, especially those that didn't offer mortgages. However, much has already been written about the state of the sub-prime market and what it is and I don't need to add to it. What I will do is comment on the governments' response to the crisis.

This week has seen losses in all major markets, many markets have set new records, Selling is the order of the day and by the end of the week the UK government had to do something. They propose to pump money into the banking system, though not in the same way as the US. The US is concerned with selling the assets that no one wants. Even Buffett thinks that this is a good idea, and thinks that if the investor can get leverage of 80%, and the government gets the gains of sales first then everybody wins.

Personally I think if you have a rotten egg, no matter how you gloss it up it'll be hard to sell. Governments pumping more money into this route, I think, will be throwing good money after bad, effectively saying adios to it. For once, I agree with the UK's stance. The UK gov is pumping money into 8 of the top banks, as a stakeholder. They will effectively be part-nationalizing the banks.

Ordinarily I'd say that the market should dictate who goes out of business. In normal conditions that would be fine. Present day conditions suggest that if the market was let to run course, banks, financial institutions and even whole countries could go bankrupt! Judging from what can happen, looking at Argentina, and many African countries that cannot get credit, letting the market decide, in its manic depressive present state, is not a good idea.

A person, wouldn't go as far to say a friend, but someone was talking to me about this issue a few weeks ago. They called me a communist when I suggested part nationalising banks- this was about 2 weeks ago. Ordinarily banks, being the wholesome prudent institutions that they are (we wish!) would be fine managing themselves, as I said. As we all now know, they cannot run their own businesses. They need money and guidance, like amateurs.

In these dark days one can hope that with the whole nation buying a share in the banks we can collectively all get a good deal. With my RBS shares hitting the low 70s this week *previous high over 700, I truly hope the banks bounce, imagine me getting a 10 fold (I plan on purchasing some bank stocks, the part nationalised ones of course) and the whole nation getting a 10 fold return. That's my kind of communism!!!

What about the rest of the economy?

Well, there are a few businesses out there making money. Consumers are still spending. I think once the banks are dealt with, we can side step disaster. Though, looking at the press I tend to think if there was a disaster, more of a disaster than there already is, I'd blame them. They micro-report (like micro management, but reporting EVERYTHING), they are not balanced and they are the mirror that MR MARKET stares into. Greedy and Fearful, but never forward looking. I enjoy learning languages and I'm yet to find a language that sees shortsightedness as something worthy of praise.

And on that note, keep in the market, and if you still have money left buy the best businesses at nice and cheap prices!

Duncan Bannatyne's tips for Business/Success

noreply@blogger.com (jake w) — Wed, 03 Sep 2008 16:37:00 +0000

Duncan Bannatyne's tips for Business

Success, Getting rich and Business tips from the greats.

Duncan's rise to sucess can be found in his entertaining book, 'Anyone can do it', well worth buying!

Self-made millionaire Duncan Bannatyne's
offers his top tips for entering the den:

1. You should never let it get personal

2. You have to make your own chances

3. Ask to see the accounts

4. An entrepreneur in debt is an entrepreneur in business

5. Success depends on recognising when your moment has come

6. You can only really learn about business by being in business

7. You can run a business any way you like, but you'll run it
better if you build it around your strengths

8. The government produces a leaflet for everything, so you never
need to pay for an expensive consultant

9. If you're looking for a reputable company, try the guy who's
named the company after himself

10. Anyone can do it!

Simple ways to Make money online

noreply@blogger.com (jake w) — Tue, 26 Aug 2008 15:37:00 +0000

Simplest Ways to Make money online

Making money online is easier than you might imagine.

People used to think that the only way to make money was to buy and sell things.

The internet has now changed that.

Simple Ways to Make Money online-

Reselling- buying a product wholesale and reselling online through websites like www.ebay.com
Teaching your skill online via www.skype.com
Making and selling a product on www.ebay.com or setting up your own website and selling via your own website
Producing an instructional book or DVD- the infomercial market. Hire talent if you have no talent.
Selling your junk on www.ebay.co.uk
Writing reviews for new books and products- there are many websites for this
Blogging! Writing interesting and popular content online and placing google ads on your site- when readers then click on the ad- you get a small (unfortunately quite small!) percentage of the total value of that click.
Doing something better than someone else, a better cafe, a better car, a better anything- with the right marketing to promote it, of course!
Create video content and list the videos on youtube.com if they become popular again you can earn money from people clicking on google ads! Some people make a lot of money this way!
Learning a language via skype lessons and then teaching that language online: http://www.eurolanguageholidays.com/skype-lessons/

Well, that's just a few of the easiest ways to make money online.

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If you have or are in the process of doing some of the above, leave a comment to let us know how it is going..

BMV Below Market Value property- BMV Explained

noreply@blogger.com (jake w) — Tue, 26 Aug 2008 14:56:00 +0000

BMV Below Market Value property- make money from property in any market

BMV- What is BMV? BMV stands for Below market value properties and is a relatively new phrase for a technique that has been around for years. If you want to make money from property the best way is to reduce the outlay, paying less increases your margin and helps boost profit- whether you let it out in the new buy-to-let market, develop it or plan to live in it and sell it in the future. Buying low is always helpful.

So why are some properties below their market value? It's similar and useful to think of it in the same way of valuing other assets (for those interested in multiple streams of income that is). When an asset has been reduced in value there can be several reasons. One is the overall market. Property prices fluctuate based on the overall market conditions, and this alters property prices.

Your aim, if you want to make money from BMV properties (why wouldn't you? If you want to fatten your wallet then you should want BMV's!) then, is to find these properties and assess their true value. How do you assess the value of a BMV property- what is the true value?

The fundamentals of buying a BMV property are the Yield, desirability, opportunities to extend/land, overall neighbourhood, travel links and, importantly, the nuances of the individual property. Surveys are necessary and highly recommended. Major problems will be highlighted in the surveys you do, and if you manage to buy BMVs then you'll no doubt start to recognise the common problems more readily within time and as they are cheap, and a good business, that is not a far off goal.

Establishing what will make you money in a BMV property.

The two most common ways of making money from a BMV are through rent or capital appreciation. Now, where as most of the property investors out there are just concerned with rental of a high end property it is more important to understand the most crucial financial property term that will make you money. Rental Yield determines how much money you can get back from rent and it is worked out as a percentage, after all costs, annualized into a percentage.

For example. You buy a 50k house, spend 5k doing it up and rent it for 550 a month, producing a rental yield of 12%. In terms of how much money you'll see you can work it out in terms of a mortgage. Lets say you put down 10k as a deposit, meaning your mortgage will be for the remaining 40k. At 5% that's 2k per year. If you get 550 a month in rent (annually that equals 6600) then 4600 pounds is pure profit.

The issue with BMVs is that they are harder to come by. They are usually unwanted, or in bad shape. Often the owners may have died. They are BMV for a reason. It's your job to scout them out, helpfully you can buy them at local auctions, then to look at their potential.

How can this make you real money? Well if you choose to sell these BMV once you do them up you will realize a capital gain, sometimes sizable. If you do this enough and you get good at this it can become a successful business. The other side is renting out your newly acquired BMV properties. If you can replicate the deal above 10 times you are looking at an income of 48 grand. Once the morgages are paid off this turns into 60 grand and you'll have the collateral for starting more businesses or buying more/bigger properties.

Save. Research. Skill up. Begin and Do Well.

Business lessons- bouncing back from failure Gerald Ratner

noreply@blogger.com (jake w) — Mon, 25 Aug 2008 15:45:00 +0000

Failure and coming back from it

One of the biggest fears of would-be entrepreneurs, and current business people is the risk of failure. It spears some on to achieve great things and also paralyzes other into doing nothing.
Failure is scary, though there is not better way to counter fears than to take steps to make sure you are not putting yourself at risks from failing. The following story is adapted from Gerald Ratner's autobiography- which is very readable and I recommend reading if you have the time and inclination.

Gerald Ratner's Story

This is a very condensed version of his book, though I hope to concentrate on the key issues, and lessons, I learned from reading the book.

Gerald started in his family business early on, becoming involved as early as he could. He didn't do well at school, but that didn't matter as his path was assured in his family business, which he went to work for full time when he was 16. He was/is very good at arithmetic and learned the business quickly, from the bottom up. Here comes the first lesson, immersion and focus.

Lesson- Immersion and focus meant that Gerald knew lots about business and his trade from an early age. This proved useful even after his name was ruined by the press.

During his twenties he grew his knowledge and before long was heading the company. During the buyout days of the 1980s Ratners did increasing well and the jewellery firm bought out successful rivals along the way. This stategy proved efficient for the late seventies and early to mid 80s, but things started changing during the 1987 stock market stuttered and shares plummeted. There are a number of lessons to be learnt from Gerald Ratner's story up until this point- both from his personal life and how he ran his businesses.

Lessons up until now worth noting

He didn't innovate much, though he looked at the best bits from his competition and re-thought and designed his products and displays to incorporate all the good points of his rivals.

As his business did well he bought out competitors, thus growing market share, reducing the risk of competitors and increasing economies of scale which had a positive impact on his bottom line.

During the heydays of his jewellery business Gerald seemed, and by his own admission, got a bit cocky. He overspent on acquisitions and led an extravagant lifestyle that had a negative impact on his shareholders (who didn't like what they saw) and didn't do much for his own well being. While his salary increased he made several errors along the way that would compound his worries once he was on the slippery slope downward.

Gerald's downfall came after a speech that captured the attention of journalists. In the speech Ratner talked about his products being cheap and fatefully called them 'crap'. Though, people who heard the speech knew the lines in the speech were jokes, the press saw the opportunity to get good copy and manipulated it.

Ratner had used the press on the way up with several warnings from outsiders. Building a business around a person can be useful, though one must be very careful about tying the fates of the two together, as the events that followed provide a start reminder of the risks involved.

The media was set up to bring down this overspending executive. While the UK was in the tight grip of recession, Ratner was doing well personally and his business was flourishing. The press knew this, and reported on how the man had labeled his own products cheap 'crap'. It didn't take long before the company was losing money, being a public company the shares dived and Ratner soon found that with little support from the board (it was no longer a family board) he was ousted from the company that he helped achieve so much success. With over 2000 shops, it had grown substanitally, and now the man that can be credited with most of its success was not left high and dry.

He got a small payment, but all the time that the business had been flourishing Ratner had never thought anything like this could happen, especially from a single event like a speech.

Lessons to be learnt

The public are fickle and match image with products. They are intertwined, thus reinforcing the need for positive PR. Be wary of the press.

Ratner didn't save money from his salary, and had sold shareholdings early on. He was left with no money, few shares and a massive mortagage. This proves that you can seem to be 'successful' from the outside, but Ratner knew- he was ruined. The lesson here is to save money no matter what situation you are in- a cleaner or CEO of an international company!

The comeback

It took Ratner quite a few years to come back, but the details are quite interesting.
He was quite shaken up and wasn't use to life without major luxuries (tip- don't be over reliant on staff- be self-reliant). He couldn't cook, clean or much by himself. With the realities of life on his doorstep and no job offers, he soon learned.

His career had been with the family business up until then. He had had no other jobs. He had no CV. TIP> keep your eyes open to other opportunities, try to diversify, be open-minded.

Luckily he got some offers to do consultancy in the jewellery business. Although it had taken time, a number of years, through contacts he'd landed some work, nice work at that (300k a year!).

Lesson- His knowledge of the trade paid off. It was risky to not have other skills though with social capital (contacts) he got another chance.

Unfortunately this didn't work out, though he'd spotted another business interest when he began taking a long held hobby more seriously. He'd got into cycling and had decided to search out premises and start a health club. Within a few years of starting this second business, he was doing well and eventually sold it for over 3 million pounds.

Lesson: never give in, failure is not permanent.

Surprisingly Gerald went back into the jewellery trade, trading online under the title- www. Even more surprisingly he used the press to launch it!

I find that learning about others successes and failures greatly increases my awareness of the possibilities out there in the world. My older posts have some interesting stories and lessons from other business and investing greats, feel free to go back to them. I'll also be adding more to this series as I enjoy writing it and feel you guys might enjoy it as well. That said, it is also worth buying the books to read the full stories in context.

Crunch biting? Debts mounting? Start saving, the easy way

noreply@blogger.com (jake w) — Wed, 20 Aug 2008 11:03:00 +0000

Start saving the easy way

This is the story of how I got rid of my debts and started saving all in one year. Admittedly my debts weren't huge, but they were 2000 pounds and for someone that had never worked full time (back in 2004) that number seemed quite a lot.

I set myself the goal of paying off the debt within a year, and guess what, I did it within 3 months!

I spent everyday applying for jobs, sometimes ten jobs everyday. I had 3-5 interviews everyday and became accustomed to the sorts of questions many interviewers ask and the answers many like to hear. If you are in a similar position now I'd advise the same thing, bang out the applications for a week or two to get lots of interview experience, even if you don't get the jobs you will get lots of valuable interviewing experience.(Word of caution- don't continue to apply for jobs you don't like in your late twenties and after just because you want interview experience, once you've had 10 interviews, in my book, that should be plenty of experience.)

So, next, I was offered two or three summer jobs. They were full time and looked fun. Surprisingly they were jobs I was interested in- teaching Film making and Breakdancing to international kids in London for 9 weeks, although it didn't start for 4 weeks I said yes to that job. It was free board and lodging and I got over 1k a month net.

In the weeks that followed I got a job in a local shop and saved money. By the time I'd gone to London I'd paid off some of my debt already. When I london I made the habit of paying myself first and I made sure to create a savings account that I put all the money into first. Then I used the accumulated cash to pay off the debt. By the time I'd done that job I was debt free, something it my peers 2/3 years to manage, and some still haven't done it nearly 5 years on.

I'm not meaning to big myself up here, I want to just explain a few of the tools I used and still use, to overcome debt and have a healthy financial cushion.

After leaving the London job I temped until I got permanent work in 2006. All through that time I made sure to save in a tax efficient way, by transferring all cash into a cash ISA. An ISA is a savings account free of tax for people living in the UK. There's a limit to it, at the time it was 3k a year. By the time I got my permy job I had saved around 1.5k already. I upped the ante once I was earning more to saving between 400-500 pounds a month (90% of net income after expenses) by reducing my outgoings. I made sure to get the cheapest rent in my city by negotiating with the landlord to get 2 extra people in on the contract but keeping the rent the same. So we got rent half price for 18 months. I also cooked my own food and didn't buy pretentious food or clothes- I've never cared for impressing others with a phony image.
After another 6 months I'd filled up the ISA and started my interest in investing in shares.
I was considered poor by the national average wage, but through saving and living frugally I saved 5k in 18 months, something some people find hard on twice the salary I was earning.

I hope I've never made out I'm super rich by doing this blog. I'm doing it the slow way. I'm not a multimillionaire. I'm an average guy that has an interest in this stuff and wants to share his knowledge. Currently my shares are down, but I'm in it for the long run. I'm still buying, and so are the companies I'm investing in (via share buyback and acquistions). If there still in, I'm in.

So getting a good financial foundation starts with saving. Don't listen to anyone that wants you to buy property and stocks without having something up front- they'll make money and you'll lose out. The great thing about saving money is it develops a number of good warm qualities. Firstly you develop patience. Second, you know that if the worse was to happen- financially speaking- (losing your job, for example) you'll be fine. I can live for 2 years on my savings. I wouldn't. I want to build not take away, save not spend.

Start saving today and start feeling like nothing in the world can disrupt your calm state of being.

How to save money, feel great and become a master at several different skills

noreply@blogger.com (jake w) — Tue, 19 Aug 2008 08:55:00 +0000

How to save money, feel great and become a master at several different skills

It is true that often good businesspeople don't have a large array of skills, they hire talent instead. Though, to be an enlightened and happy entrepreneur I've always advised to invest in yourself, and your own abilities first. There's nothing to say you can't hire talent as well.
Many people, also, assume that you can hire talent first. When starting a business, you need to concern yourself with income generation, cost cutting and cashflow. If you can do the job yourself without hiring someone else great!

So, with the hours in the day where you are asking yourself- how can i use this time more effectively? I've put together a list of useful skills for the budding entrepreneur..

There are always blocks of time in the day, no matter what type of job you do, where you can be doing something productive. I have found that using travel time to do productive things has helped me enormously. So, back to the skills to work on...

1. Web design

If you are like most entrepreneurs you'll be wanting a site online to promote your new business, only natural. Though it may shock you a decent site, designed and managed well can cost (especially if it is an e-commerce site) 3000-10000 pounds, a huge fee for a start up. If you shop around you could get one of two options, a cheaper deal or a cheaper deal done by a crap designer.

As most people just start out with content sites- ie. information sites- nothing fancy- I advise the reader , if money is tight, to look into learning a bit of web design. There are many different ways of getting to the final destination of having a fully working site. Some people prefer using web design programs that do the programming for you. These can be effective, though sometimes don't work well and as you won't have invested any time in learning the skills chances are you might not be able to figure out the problems, if and when they arise.

The benefit of learning coding languages such as html, css, php mySQL is that, once you have built your own site, you can start helping others out too. So, you will have made a huge saving on the site costs (and if you really want you can always hire someone to maintain it) and you now have a valuable skill that you can use on other sites, your own or in the marketplace. Hell, you could even start another business from it! If other people are charging 10k for a site, you'll only need to know a bit about building sites before you start charging a decent amount.

2. Learn some numbers.

If you don't know numbers, you should. Even if you don't plan on becoming a massive businessperson, learning numbers will still help you in your everyday life. Personal finance, shopping, financial decision making- large portions of your life will be affected, positively, if you can learn some basics.

What to learn? Well, there's quite a bit. Multiplication, devision, interest rates, the power of compounding, the power of inflation. When you have time google the words and research into them. A good, useful and helpful calculation you can start with are your everyday costs.. For example, if you eat out every day:

One sandwich(2 pounds) x number of days 365 = 730 pounds per year

If you go drinking once a week and spend 30 quid out in the pub/bar you need to do another calculation:

bar spend(30) x 52 = 1560 pounds per year

So the numbers to remember include:

365 days in a year for daily costs
52 weeks in a year for weekly costs
12 months in a year for monthly costs
26 fortnights in a year
7 days in a week, for weekly costs over one week.

Once you get into the habit of doing this, without a calculator, over time you'll be planning thigns in your head quicker and your math skills will greatly improve, helping many areas in your life.

3.learn about good food, and how to cook it.

This will not only help you to save money on the ready-meals and client dinners- but what better way of entertaining possible contacts than a nice dinner party. Ok, not great for every occasion but learning about good food not only helps your budget, it helps you live longer. Fact.

4. Design skills-

Another good skill to gain in the first few stages of your business is design skills. Most logos, PR and design related tasks won't take long once you know how to do it, especially as youll be your own client. This can save a fortune and once again, once you have mastered it you can start a side line business out of it or offer it as a favour for friends.

5. Presentation skills- consultancy

Learning to speak and present in front of crowds is a useful skill. You can take powerpoint courses, or self-learn and there are public speaking courses as adult education courses (in the UK that is). It will do wonders for your confidence and you'll be preparing yourself for when your business is doing fantastically well and you are addressing shareholders, institutional investors or your hundreds (or thousands) of staff. Dreaming is good, preparing for your dreams is even better.

6. Invest in your social capital

This isn't really a skill but it will save you down the line. Having and maintaining friends is important. There are hundreds of thousands of words that have already been written about the importance of friends, I can't better the great philosphers on this. Though I will add that it may double the outcome of other skills if you learn them with a friend. Support each other and go further.

7. Find a hobby for exercise.

Again, doing physical exercise helps you financially and physically. You'll get more out of your work, with clearer thinking and you will be able to live longer as your health won't let you down. Plus, if you are reading this from a country similar to mine, where gym fees are exorbitant, it will save on those boring 'exercise factories' they call 'gyms'. Yeah right.

Right that's it for now. Plenty for you to work on.

don't stress!- making money takes time!

noreply@blogger.com (jake w) — Mon, 18 Aug 2008 16:47:00 +0000

Making money takes time.

Don't worry about the downturn in the markets, markets bounce back and you won't be ruined. Of course, I'm not sure when they'll bounce back, but they judging from the past century, they always do.

Remember that those that offer quick, 'sure' ways of making money are often just making money for, yep you guessed it, themselves. There are steady ways to make money, and in my humble opinion, these are the best.

Steady ways to make money include:

Making money from property
Making money from business
Making money from shares, commodities, bonds etc
Making money online

There may be other ways to improve your net worth, like theft- though I do not advise the reader to engange in unethical means of getting wealth. Even if the activity is legal, like screwing over a business supplier, I would have issues with dealing with the moral ramifications. Ethical business is the only business I'm in as I'll get the feel good sensation of knowing I've added value, rather than caused destruction, in order to have gained wealth.

Can you start a business in a day? Yes. Can you buy shares and trade in a day? Yes. Can you buy a house in a short space of time. Yes. THOUGH all are more profitable when built over time, riding out market bumps. It is a more sure bet to keep with your investments, whatever they may be ( if they are good businesses!) and ride their prosperity through market cycles. Same goes with property.

Be patient and take your time. Save, invest and remember that money is a tool for actually living life- not an end unto itself.

ways to gain from the downturn

noreply@blogger.com (jake w) — Fri, 15 Aug 2008 14:16:00 +0000

Ways to gain from the downturn

Several stocks have fallen considerably in the past few months, some by over 50% in 6 months. The sectors most damaged by the credit crisis have been severly damaged, with stocks plummeting.

Many sites are now advocating that investors should pile into gold and oil, comodities that have seen a terrific boom. What happens after a boom? You guessed it. Bust. Many commidities have boomed over the past few years, especially recently as the average joe investor (and institutions) pile into something that 'is a sure bet'.

I find that commodity prices are much more volotile that both stocks and shares, and cannot be valued as easy. Furthermore, why lock in losses? If you are stocks, specifically, if you are in good stocks- stay in stocks! Selling a good share because the prices have dropped is a bad reason.

Some businesses are cylcical, like property and it's normal for their earnings to go up and down, along with the econimical cycles. Don't panic. If you are lost in the investment forrest with no where to turn, having trouble sleeping and listening to all the 'advice' on the economy i suggest you buy index funds and forget about real investing. Emotions stay out of stocks, if you are emotional maybe you should bung the money in the bank and be done with the matter. For everyone else, when the market rebounds, and if you've stayed true (and maybe even bought low) you'll reap the rewards.

Property vs stocks

noreply@blogger.com (jake w) — Fri, 25 Apr 2008 16:38:00 +0000

Property vs Stocks

Which is better to invest your surplus cash in?

They are two different animals, both that need taming and require different skills.

Property

Property investment is often said, especially in bubbles, to be the easy way to riches. Some make it rich, though its best to know what you are doing at all times (and do well) than rely on the strength (or weakness) of an emerging bubble. So, with that in mind, lets look at the attraction of property.

One of the key attractions to property is the leverage that one can get. Returns from property can often be realized sooner than stocks. For example, the leverage involved in buying a 100k house in the UK might be 10 or 20%, but add value (organically through development, or artificially through overall price appreciation in the housing market) and you could sell it for 110k or 120k (or more), thus realizing a 100% or 200% gain. If you get good at this you can turnover property quickly, and get richer faster than flipping stocks. While it is possible to make big gains in stocks, its unusual to get gains in the hundreds of percent (certainly in the short term anyway).

Stocks

Also known as shares. A benefit of investing in shares is that there are low costs, no deposits needed, no lawyers etc. Returns can also be decent, though are better to mesure in the long term. Some stocks do return percentages measured in the hundreds of percent, though research is needed to analyze good investments.

What you put in

There is major differences with stocks vs property in terms of the effort required to see a return. Normally (not in the bubble times we've seen recently), you need to do something, upgrading or modernization to a property to see a return, especially if you are looking for a short term return. For that you'll have to either employ/sub contract the work or do it yourself (or with people you know). So- there's work involved.

Stocks, on the other hand, don't need much work at all. The occasional checking of the story, maybe once every 3/6 months, though if you've got a good company that you are confident in you don't even need to check it that regularly.

Consistent returns

Some stocks give you dividends, property you can rent out. The returns are similar though high yielding dividends and properties to rent can be found. Stocks, on this point, require no work- dividends will just roll in (though check if the company has a long history- you don't want them to cut it!), whereas with property there are tenants, contracts, worries etc. Though once again, it is a personal choice.

So what do I do?

At present I'm not in a position to want the hassle of property. I'm in stocks(adding every year) and plan to at least double my money in 5 years, hopefully triple.
That way, with my savings as they are I should have between 25-75k depending on how much I keep adding year by year. From there I will likely buy a property (or two) depending on the market. That's my plan anyway,... you'll need to work out what's best for you and your individual position..

Good Luck!

Pros and cons of writing a business plan part 1

noreply@blogger.com (jake w) — Mon, 21 Apr 2008 13:17:00 +0000

Pros and cons of the business plan (BP)

There are plenty of people out there that believe you cant start a business without a business plan.

Bank managers, risk averse friends, those not in the know, will demand a business plan. It is what is done.

Well, up to a certain point. Yes.

There are several stages in a business that one needs to know about.

Start up- investment stage
Viability stage
Small Growth stage
Medium stage
End game

What goes into the start up stage will depend on the type of business you want to start. For example a tee shirt company that only designs tees and sells them online has less overheads and is quicker and simpler to set up than a retail shop selling clothes. Similarly, finanically, planning will depend on the type of business you want to start.

I briefly define the start up stage as the stage the time period when one or more people are investing the capital in order to start, and when the business is not profitable on its own. You might argue this to be false, as many social networking sites, most notably facebook, didn't earn for years yet was not a startup. This much is true, but for our purposes a business that is not turning a profit, in general, is considered a start up (or a failing business!).

The next stage is the viability stage. This is when the business cannot rely on the seed capital (money) from the initial investors or bank. The business makes money. Enough money to cover all its costs and has money left over. Great!

From then on, the business can grow!

And grow!

And then, the owners have a general choice of keeping it private, selling it or floating it. Generally.

So where does the planning come in?

Well I'd suggest planning regularly. For each stage. The larger the risk, the more planning. Therefore, if you are needing to invest £500,000 in the start up stage I do not recommend going in without a plan. This is pretty obvious. Indeed, apetite for risk is subjective; based on the individual. You will need to assess that yourself.

So back to the business plan.

I would spend time thinking about your business. Writing it down in a fancy plan is great. But thinking and planning time is very, very important. This needs to be a constant process, especially when things change. When new technology comes out, or external factors change like currencies fluctuate- or anything that affects your business.

I did a business plan for my most recent business and have found that every 4-6 months I need to revisit it, along with the figures, to plan out the next 6 months. That is okay. There are no rules to business- you make them!

I did once do a very detailed plan. The cash flow forecast looked great. It was perfect, it looked and sounded so great. Everyone liked the idea. It never got anywhere. Over planning is not healthy. Analysis paralysis- the idea that too much planning means some people do not make that first move. Make the move.

Test the market. Use the tools available to you. The internet is a great testing ground. Research (which is normally free). Ask people what they think (if it is not a unique idea- if it is a unique way of doing something or a new invention you might want to patent the idea before telling the world about it!)

So it is not a matter of whether to do it or not. You should write a plan, even if it is very basic and it is only for you. Most importantly though,plan for each stage of your business as and when it happens or is likely to happen. If the company is nearing viability, bringing in new business and nearing profitability, plan for growth. If you are growing think about bigger things, mergers, acquisition, geographic growth or growth in other markets, joint ventures and scaling up.

In summary, do not plan for years and years ahead- especially if you are starting small and this is your first enterprise. Things change. Always be thinking, planning your next move.

Nokia was a paper mill and even produced wellington boots before producing telecommunications.
Google is another example, they are always changing.
Great businesses adapt to change.

Continue to change for the better and you will be in business a long time.

Good luck!

Other Popular Posts:

- Self employment part 1
- Should I start a business?
- Duncan Bannatyne's tips for success in Business

When to buy stocks

noreply@blogger.com (jake w) — Mon, 14 Apr 2008 21:31:00 +0000

When should we be buying stocks?

There are several theories of when to buy stocks..

Listed in a lovely list they are:

1.buy when the next big thing is going to happen
2.buy when a stock's 'hot'
3.buy when the stock is low
4.buy whenever you have the cash
5.buy for the sake of buying
6.buy what others and when others are buying
7.Buying in a down (bear) market
8.buying in an up (bull) market

1.buy when the next big thing is going to happen

This is a very common reason for people to start buying shares in a company. From one perspective, it kind of makes sense. Though, not really. A company needs to be a good company first- have good management structures, a good vision, good financials etc.

So let's take an example. Company X sends you something through the post about the new drug they are producing, how it'll revolutionize the world and have billions in potential profits. The key word is potential- everything and everyone has potential- rarely does potential materialize and I'd prefer to put my cash in sure things than some PR manager's idea of their own 'potential'.

If you do feel compelled- look further into the companies story. Alternatively, wait until some of this 'potential' shows itself- the shares will continue to go up if the products/services keep doing well.

2.Buy when a stock is hot

Buying hot stocks is common. This is most common amongst people that have money to invest, are eager to spend but not to research much.

Hot stocks can mean alot of things, generally though its popular stocks in 'growth industries'. What they means? Who knows and who cares?
I prefer to invest like the best peter lynch's (look him up on this site or on the net) ideas of good stocks are:

1. It sounds dull -- or, even better, ridiculous;
2. It does something dull;
3. It does something disagreeable;
4. It's a spin-off;
5. The institutions don't own it, and the analysts don't follow it;
6. The rumours abound: It's involved with toxic waster and/or the Mafia;
7. There's something depressing about it;
8. It's a no-growth industry;
9. It's got a niche;
10. People have to keep buying it;
11. It's a user of technology;
12. The insiders and buying, and;
13. It's buying back shares.

Such rules led him to buy Automatic Data Processing (payroll processing), Taco Bell (restaurants), La Quinta (motels), Cork Crown and Seal (can and bottle cap manufacturing), Seven Oaks (retail coupon processing), Safety-Kleene (waste disposal) and Service Corporation (funerals).

They were all great buys. Not hot stocks. You decide which you prefer.

when does lynch buy?

Taken from his book 'One up on Wall Street':

"Find the long-term growth rate (your guess is as good as mine), add the dividend yield, and divide by the P/E ratio. Less than 1 is poor, 1.5 is okay, but what you're really looking for is a 2 or better. A company with a 15 percent growth rate, a 3 percent dividend, and a P/E of 6 would have a fabulous 3."

Simple enough.

3.buy when the stock is low

Good companies become undervalued, unfortunately bad companies can be bought 'cheaply' as well. So when do you know which company to buy? PE ratios- the ratio of the share price in relation to how much the company earns- is not always the best way.

Let's see why. Company XYZ sells cds- it was priced at £100(P) a share and made £5 per share in earnings (E). That would give it a pe of 20, on the edge of a high valuation. Suddendly the PE suggests its cheap when the stock falls to £10- giving it a VERY low PE of 2! What happened? People stopped buying cds! Just because the stock is cheap- does NOT mean its worth buying.

So what should we all do? Buy good companies at cheap rates- example? Tesco is at pe of 15 (not too bad), RBS is at a low of 4.5 (cheap!!see previous posts on this)- both good companies at decent prices.
What makes a company good? See lynch's definition above for a start and add good management, a good balance sheet, good prospects, good timing, stable products/services etc and you've got a good investment!

4.buy whenever you have the cash

Hmmm. If you did this then you might not be able to cover the emergences in life- meaning you'd have to sell shares when you had to, rather than when you wanted to- always a bad move. Better to invest when you have spare cash- cash you can afford to put away and forget about for 5-10 years.

5.buy for the sake of buying

No way. Research, research, research my brother!

6.buy what others and when others are buying

Would you go to the doctors when others were ill just because they were going? Would you support a big football team just because they have a lot of fans? If you go in with blind faith (and no research) risk is you will fall over and get hurt(with the rest of them!).

7.Buying in a down (bear) market

Most people think buying stocks in a down market is foolish- then most people are fools. How else will one make big money in stocks? Bear markets are few and far between opportunities to buy great companies at very cheap prices- miss them at your own loss, sell and join the fools' club.

8.buying in an up (bull) market

Ordinarily I'd suggest to buy in bears- though its best not to be out of stocks, as you'll lose the long term growth of good growth stocks. Rule of thumb- make smaller purchases when stocks are expensive, save up, and when a tragedy/crisis/bear market comes around BUY!

9. Buy consistently

To avoid the stress of the extra percentage point here and there- one good strategy called dollar cost averaging- http://en.wikipedia.org/wiki/Dollar_cost_averaging. Although wiki gives it a bad press it has the benefit of making sure you stay IN the market and buy when others are selling- the only way to make big returns and clarify yourself as a true investor (opposed to a foolish speculator).

Dollar/Pound cost averaging means you put in a set amount at fixed intervals(in good companies- dont forget that one!). That way when the market is down, with the small prices, means you buy more stock- and when it rebounds you are rich- hey presto!

Good luck!