Good Feathers

Our brand new site!

2009-11-17T18:32:00.002+02:00

As brilliant as this Blogger page has been for us, we've moved over to our brand new, independent site! So, unfortunately, there won't be any more posts put up here - please head over to GoodAdvice to get the latest there...

Thanks for all your support, and see you on the new site!

How to build a following...

2009-10-27T20:46:00.003+02:00

When I started my Finance Coach group on Facebook a year ago, I set myself a goal of having 1,000 members within a year. I remember a number of people saying to me that that was a very high bar to set, and I shouldn’t be surprised if I fall well short of that. Well, last Friday was one year exactly, and I had 902 members. So, I didn’t quite make it to 1,000 in time, but I ‘scored’ 90.2% on my own ‘test’, and I’m pretty damn happy with that! So, I don’t confess to being the world’s best blogger (far from it), but here’s some of what I learnt in the process. While the lessons were learnt from blogging, they can easily be translated into a business context…

Give people something they want/need. Find a niche that’s not being served, or that’s not being served well enough, and fill it. If people want and need what you’re offering, half the battle is won. What spurred me to start my Finance Coach group was coming across more and more people that were in a real financial pickle, or whose businesses were struggling. I knew then and there that people would take to a group where they were given free, practical financial and business advice…

Keep your promises. Following on from the first point, do what you said you were going to do. If you suddenly start going off on a tangent, people will quickly become disillusioned, and drop you like a rock. There’s nothing wrong with diversifying, but don’t stop doing what it was that attracted people to you in the first place…

Get the word out. When you’re first starting out, take ANY opportunity you have to tell others about what it is you’re doing. Put up flyers, email everyone on your contact list, mention it in the conversation at dinner parties, hand your business cards out to everyone you meet, etc. The hardest part is getting out there, so be prepared for the hard yards, and to do whatever it takes…

Engage your audience. Invite feedback, and respond to it. Join the conversation about your product. Don’t be afraid of criticism, or try and cover it up – people will pick up on this straight away, and you’ll lose the trust that you’ve built up with them…

Give regular updates. I was told that, for blogging in particular, the single-most important thing you can do is to do it to write regularly. This principle can extend out to the business world as well – keep in touch with your customers, send them news, forward them articles that might interest them. This jogs their memory about you, and keeps you close to top-of-mind…

Measure, measure, measure. There’s no point in trying to grow a group of readers or customers, if you’re not tracking how you’re doing. This could be any metric that applies (reader numbers, rate of growth, increases in sales, etc), but monitor it closely to help you keep track of what’s working and what’s not…

Be sincere. Come across in all of your communications as professional, but still human. Remember that your audience/customers are, ultimately, still people – so talk to them in their language every so often, if not all the time. Being sincere will also pay off big time when you make a mistake (and you probably will sometime) – your followers haven’t forgotten that you too are human, and will be much quicker to forgive you your trangressions…

Ask for referrals. Once you’ve built up a relationship with your followers or customers, leverage off of their networks. Ask them who else they know who would like your product; and ask them to invite their friends to give you a try…

Set goals, and then break them down into manageable parts. Don’t just have a vague idea of where you want to be – be specific about targets, what they look like, when they must be achieved by, who’s responsible for what. Then, once you have a goal in sight, break it down into smaller goals (or milestones) that need to be reached along the way. This way, you won’t be overwhelmed by the sheer size of your big goal, as you’ll be focused on the smaller, more realistic mini-goal…

Speak to people who’ve been there. Seek out those who have been successful in the area you want to get into, and ask what they did, and what lessons they learnt. You’d be surprised how happy most successful people are to give you advice. I was very fortunate to have the support of very experienced bloggers like Chris at Imod and the guys at Cherryflava – their encouragement and advice was priceless…

Remember your motivation. There will be times when you hit a stumbling block, come across a massive obstacle, or start to lose heart. When this happens, go back in your mind to what your motivation was for doing what you do, and bring that forward. There have been times when I just haven’t felt like writing anything, but I always remember that the point of the group was to help and inspire others to manage their finances and businesses better. That idea – that I was helping others in some small way – is what kept me going, even when I wasn’t feeling so hot about doing the work…

Finance Coach - Vol. 35

2009-10-18T23:21:00.002+02:00

Finance tip: Transport

Make your vehicle as aerodynamic as possible. One of the best ways to reduce your fuel consumption is to make your vehicle aerodynamically efficient, as it then creates less resistance as it moves through the air (using less fuel in the process). Now, we don’t all have low-slung sports cars, but there a number of simple ways to help your fuel go further: Firstly, take off any removable roof racks that aren’t being used – all they are doing is creating more air turbulence as you drive. Secondly, keep your windows closed whenever possible – driving with one or more open windows can increase your fuel consumption by as much as 10%. And thirdly, give your car a regular wash. Not only will regular washes help to maintain its finish – and thus its value – and be some good exercise for you (that’s right, do it yourself!), but having a dirt-free car keeps its exposed surfaces smoother; decreasing air resistance while it’s moving. It’s one thing we can learn from the airlines – they have teams dedicated to keeping their planes clean, which helps to knock a few percent off of their fuel-burn rates…

Business tip: PR/Marketing

The timing of your PR and marketing efforts is everything. While it’s obvious that when you do your marketing is important, it’s even more so when working on public relations material through third-party publications. If you are trying to get an editorial though into a particular magazine or website, be sure to ask about their lead-times. Many publications plan their issues far in advance (sometimes as far as 6 months ahead), so be sure that you take this into account when approaching them, if you are looking to have your material out around a specific date. If you are wanting to advertise your Christmas promotions, for example, planning to start work on the campaign on 1 December will be far too late. In fact, if you haven’t approached your target publications at all yet, you’ve probably already missed the boat. Also keep in mind the theoretical ‘sales cycle’ – the theory that what you advertise now, you’ll start to see results on in six weeks. So pull out your calendar, and start planning now for your future campaigns…

Finance Coach - Vol. 34

2009-10-11T23:54:00.001+02:00

Finance tip: Leisure

Consider fractional ownership. For those of you looking at spending some of your hard-earned money on a ‘leisure investment’ (think holiday house, boat, plane, jetski, etc.), consider going the fractional ownership route. This is where, instead of buying the object or property yourself, you pool up with a number of other interested buyers, and each pay a proportionate amount of the total. The idea is then to share the usage of what you have bought, based on calendar days or some other equitable formula. The reason that this form of ownership has gained in popularity in recent times, is that people are realising that they actually get better value for their money – they were never going to use the property or object all year in any case, so they may as well only pay for a smaller proportion of it, and let others use it when they’re not. This then ties up less of their precious capital (which they can then invest in other things), and they still get to enjoy the benefits of using what they have paid for. For even more convenience, the next level is to pay a small levy, and get a third party to administer and maintain the property or object for all the owners, freeing them up from the potentially time-consuming aspects of ongoing maintenance and trouble-shooting...

Business tip: Marketing/PR

Write for publications to increase your profile. If you’re looking for an avenue to increase your exposure to the public, or to a particular industry, consider writing articles/submissions for publications that your target market would read. Most editors are constantly on the lookout for content to fill their pages (if it’s relevant and of a high enough standard), and gratefully accept submissions from those interested in writing them. Writing like this has a number of benefits to your business: Generally, if you do submit an article, the editor will allow you to put in a short footnote, where you can mention your company and perhaps some contact details. Even if they are a bit restrictive on this aspect, they would at least attribute the submission to you and put your name on it – if people want to find out more, they could simply Google you. If you do this regularly over a period of time, you’ll start to build up a reputation of being an expert in your field, which will put you at top-of-mind when people are looking for more information on your particular product or service – leading to more contacts and sales leads...

Finance Coach - Vol. 33

2009-10-05T23:41:00.000+02:00

Finance tip: Utilities

Insulate your roof. One of the simplest ways to save on your electricity and energy costs is to have your roof/ceiling insulated. Going into summer here in the Southern Hemisphere, it will help in keeping your house/office cool, and reduce your reliance on energy-chowing air conditioners. For our Northern Hemisphere readers, going into a cold winter, it will help to keep the warmth in your building and stop it from escaping out through the roof. This then has the benefit of reducing the need for heaters and thermostats to be left on non-stop. While you can obviously contact the experts to come in and do it for you, there are also cost-effective ways to do it yourself. Speak to your local handyman or hardware store about the best materials and layout for the job…

Business tip: Finances

Create a ‘slush fund’. This is one of the most prudent financial habits that a business can get into, yet so few actually follow the principle. Essentially, what it revolves around is taking a little bit off the top each and every month (this might be based on revenue, profit, or whatever), and putting it into a separate savings account. This slush fund then serves two purposes: The first of these is to provide an extra source of income, from the interest generated off of the capital in the account. This may only be a few extra bucks a month, but it may be enough to cover something small like your phone line rental or coffee/tea expenses (remember, every bit helps). The second purpose is to build up a buffer against bad times or unexpected expenses. From personal experience, I have done this with my limousine company. Every month, once I have run the income statement and calculated profit, I only pay out 90% of the profit. The extra 10% then forms part of the company’s slush fund. Over the years, following this principle strictly has produced the following result: If I were to turn off my phones today, and stop running the business in its entirety, I would still be able to pay salaries and overheads for a full six months. That’s right, six whole months! How long would you last?

Finance Coach - Vol. 32

2009-09-27T23:52:00.002+02:00

Finance tip: Income

House-sitting. With a nice break coming up shortly, I was reminded of how necessary a service that of house-sitting is – and how simple a source of extra income it can be as well! Almost everyone knows how it operates: When people go away on a trip, they generally want somebody to either stay in their property in their absence, or pop in on a regular basis just to keep an eye on the place. As almost all home-owners do go away at some point or another, there’s a huge market for the service. The traits you would need most are those of trustworthiness and responsibility – you are, after all, looking after what is often someone’s most prized possession. The income side of it can vary, but as a rule you can make a nice chunk of extra cash for doing very little – especially if you get asked to do long-term stays. Looking after bigger properties with gardens would generally allow you to demand a higher fee, as would having to look after pets as part of the job. Finding work would generally come from word-of-mouth (good house-sitters come very highly recommended), but you could also look at doing mail-drops in your area, or putting an ad in your local newspaper – especially as you get closer to common holiday times…

Business tip: Pricing

Offer a ‘hail-mary’ choice. If you’ve been battling to sell one of your products or services, which falls at the top end of your quoted price range, consider putting in an even more expensive one to boost your sales. While this may seem ludicrous at first, just follow the logic for a second: Say, for example, that you run a restaurant, but have been struggling to sell your most expensive dish, which goes for a hundred bucks. This dish is a high-margin offering, and increasing the number of ‘units’ sold would do wonders for your business. The problem comes in where customers want to buy it (as it’s a wonderful dish) but they’re uncomfortable doing so as it’s the most expensive item on the menu, and they feel that it comes across as excessive and unjustifiable. Adding another, even more extravagant dish at, say, two hundred bucks, could be just the solution to increasing the number of people opting for the first dish, being the one you actually want to sell. This is because, you see, the first dish is not perceived as extreme and excessive, as that mantle now falls on the new dish. The result is that more people will feel comfortable opting for the first dish, and you then have your desired increase in sales. The beauty of doing this is that, if someone does actually go for the new, extravagant option (a.k.a. the ‘hail-mary’ choice) then you’re smiling anyway, as you get a big sale from an expensive offering!

Trend: The return of pyjamas...

2009-09-27T23:14:00.000+02:00

I came across an interesting article the other day, mentioning a trend which has been picked up across the globe over the last 18 months. The article started by saying how many clothing retailers have had a torrid time of late, thanks to the economic crisis, but there seems to be one department which is bucking the trend: sleepwear.

Apparently, sales of sleepwear have seen a marked increase over the last couple of seasons – up to as much as 30% in some cases. The most interesting part about it was that it’s not your slinky nightie and boxers brigade which is doing so well. It’s the old, full-length flannel and cotton type!

Now, this does actually make a lot of sense to me, for a couple of reasons. Firstly, as the economic crunch started to bite, one of the first areas that people started to cut down on was entertainment. This means that there are less people out at pubs, clubs and restaurants in the evenings, and more having a quiet night at home. And if you’re at home vegetating in front of the TV, are you doing it in designer clothes? No, you’re slouching around in your PJ’s!

Secondly, these long, comfortable pyjamas are also a lot warmer than your average night-slip or T-shirt and boxers. So, for those looking at saving a bit on their heating bills, this option also makes a lot more sense. Instead of the pumping the thermostat, you settle in for a movie on the couch with your warm pyjamas, a blanket, and maybe a hot water bottle!

The third reason is a bit more psychological. In uncertain times like these – with people losing their jobs, seeing their investments decline, feeling their relationships strained – they turn to those things that make them feel safe and more secure. People cast their minds back to better times, and re-connect with people or items that transport them there. And honestly, what could bring you back to those happy times of childhood and your youth more than climbing into a pair of big fluffy pyjamas?

Just some food for thought… Sleep tight!

Finance Coach - Vol. 31

2009-09-20T17:50:00.001+02:00

Finance tip: Entertainment

Restaurant specials. If you’re fond of eating out, but find the expense of it killing your budget, make sure to take advantage of restaurant special offers. Many restaurants are struggling at the moment, and have introduced these offers to entice patrons to their establishments. If you’re determined to get good value for money, consider going out for a meal between Monday and Thursday – many restaurants have reduced prices or freebies thrown in on these days, as it’s not their peak time, and they’re just happy to have feet through the door. Also keep an eye out for ‘early-bird’ specials, even over weekends. This is where the restaurant offers a significantly reduced price on meals served earlier in the evening (in by 6pm, out by 8pm, for example) – they are generally able to fit in another sitting afterwards, and are keen to get the extra revenue pumping through…

Business tip: Sales

Get your prospects to try out your product or service. If a potential customer has the opportunity to physically experience the product or service for themselves, they are up to 300% more likely to buy it. This is because they are able to experience first-hand the benefits or enjoyment of it, instead of having to theoretically conceptualise what it would be like. Why do you think car sales-people are so keen to get you in the driver’s seat? Similar psychology applies to promotions and give-aways. If you’re handing out freebies or product samples, try and get your promotions staff to open the packaging in front of the customer. If they take it home all still wrapped up in plastic, the chances of it never being opened and used increase exponentially. The same applies to Christmas presents!

Finance Coach - Vol. 30

2009-09-13T18:07:00.002+02:00

Finance tip: Savings

Harness the power of compound interest, and start saving early. There are many examples of the power of compound interest (essentially interest on interest), but here’s one that I remember seeing recently: Imagine you have two people, Mr A and Mr B, who are the same age. Mr A saves ten thousand bucks a year for the first 12 years, and then stops saving altogether, leaving his investment to grow. Mr B does not save a cent for those first 12 years, but then saves ten thousand bucks a year for the next 28 years. At the end of 40 years (12 + 28), assuming a real return of a few percent a year, Mr A’s investment will be worth substantially more than Mr B’s! Mr A only saved for 12 years, versus Mr B saving for 28 years, but the fact that Mr A started earlier means that he had compound interest working for him – with his investment being worth more in the end. The moral of the example is thus, if you’re not saving anything at the moment, to start saving NOW (not next month, or when you get your raise next year). The sooner you can get started, the sooner you can have the power of compound interest working for you!

Business tip: Sales/Marketing

Sell benefits, not features. Whether you’re selling a product or a service, make sure that your marketing message entails the benefits of what you’re offering, and not just the features. By explaining the benefits to your potential customers, you are going straight to the heart of the matter – which is ‘what the product/service will do for them’. For example, a bad car salesman will go on about how the vehicle has ABS brakes and multiple airbags. A good salesman, however, will mention these features, but then put them into context by explaining that the car is very safe to drive. The good salesman has put forward the benefit of driving the car, whereas the bad salesman has just listed features of the vehicle (which one could find in a brochure). Or if you had a small business offering accounting services to companies, a feature would be that you can cover the full financial function. A benefit, though, is that your customers no longer need to worry about paperwork, and can concentrate on growing their businesses. Do you see the difference in the two messages, and how much more effective the latter would be?

Nice international readership!

2009-09-04T00:42:00.001+02:00

Just had a look at who’s been visiting this blog, and over the last month, I’ve had readers from 10 different countries! Now, that’s not exactly mind-blowing for an established blog, but I’ve only been doing this since January, so I’m pretty chuffed :)

What’s even more exciting is the spread of countries that the readers have come from… Here’s the list, in order from most readers to the least:

1. South Africa (obviously, thanks guys!)

2. Japan

3. Indonesia

4. Ireland

5. Norway

6. United Kingdom

7. Poland

8. Brazil

9. USA

10. Singapore

That’s five out of seven continents represented – all I need to do is get a couple of Aussies and some polar scientists and I’m seven out of seven! You might notice that there’s also an above-average representation from Asian countries. That’s probably due to the holiday that I had over there earlier this year, and some networking I managed to get in with a few of the locals (as if I would actually ever just relax on a holiday!)…

Definitely puts a smile on my face :)

Learn, learn, and learn some more…

2009-08-31T18:50:00.002+02:00

I fully believe in the principle of continuous learning. This is where a person chooses to actively learn something that is not necessarily prescribed to them to do so by their boss, teacher, mentor, etc. They find something that interests them, or something that could help them in some way, and take the time and effort to study it – taking what they learn on board in their everyday lives.

When the subject of learning comes up, many people I meet feel that they’ve done all the learning they need to. “I did well at school” they say, or “I’ve paid my dues at university”; and they have no intention of taking any more courses ever again. I can’t help but feel that they are really limiting themselves by having that mindset. The way I see it is: Learning is growing, and if you’re not growing, you’re dying. There is so much to this wonderful world of ours – how could you not want to find out as much as you can?

And it’s not only to cure your inquisitiveness that I prescribe ongoing learning, either. Learning more, and having an open mind, makes you a better friend, a better parent, a better employee – just a well-rounded person in general. Think about it: If your kid one day asks you about how electricity works, would you not rather be able to give them some form of educated answer, rather than “Uhhhh, I don’t really know…”? Or if two people are applying for the same position at some company: They’re the same age, have the same qualifications, have the same experience, but one happens to have done a course in marketing, or speaks an extra language. Who do you think they’re gonna hire?

I’ve practiced this principle for most of my teenage and adult life, and I feel it’s made me a much more balanced individual. Having studied seemingly random courses, and having seen things from the viewpoint of industries I previously knew very little about, has opened up my mind to the world of possibilities out there, and given me a much wider perspective on almost everything. Knowing a little about many industries or topics allows you to see the common threads that run between them, and perhaps even spot opportunities for them to combine and collaborate, creating a whole new industry or area rich with possibility (and potentially profit!).

Right now, I’m 25 years old, and here’s a summary of what I have studied “officially”:

At age 16, while still in high school, I qualified as a cocktail bartender. Not even old enough to work behind the bar, on the surface I learnt how to combine flavours and alcohol to make a killer cocktail. Over and above that, though, I learnt about stock control, up-selling, reading patrons, crowd control, and the nightlife industry in general.
After finishing high school, I did a degree in Accounting at university. Not only did this teach me about the technicality and processes of being a good accountant, but I also learnt about the different inter-dependent parts and functions of a business (like marketing, operations, staffing, cost control, growth) as well as the business world in general (finance, economics, statistics, valuations).
Not content to just learn about business, I took French and Spanish as extra subjects while at university. I haven’t been able to use them as much as I’d like to have, but they’ve exposed me to the culture and lifestyle of these fascinating people (and never fail to impress women!).
Also while at university, I passed the Estate Agents Board Exam, and became a certified estate agent. Again, this was about more than learning to sell houses – it taught me about the housing market cycles, property types, housing legislation, how home-owners can get caught out, how to nail down a bargain, developers methods, and much more.
After finishing my undergraduate degree, I decided to take a year off from studying and focus on growing my limousine business. Two months out of university and the environment of learning, I started to get fidgety. So I registered to do a Paralegal Diploma through a private college. The course was part-time, so I was able to spend time on my business, and it really opened my eyes to the legal side of the world. I learnt about criminal law; civil law; what happens to your assets when you die; contract law; the legal system; and plenty more.
Deciding that I needed a bit more than an undergraduate degree to pass muster in the cut-and-thrust corporate world, I then did my Honours degree in Taxation over the next two years. While this obviously taught me the nitty-gritty of our tax system, I also learnt about how to read and decipher legal judgements and legislation, as this was the essence of the course material. It was fantastic, as I went in a number-focused accountant, and came out thinking like a sharp-minded lawyer. Being extremely demanding, this course was also an exercise in time management – we were expected to put in a couple of hours of study every day, while we all had full-time jobs or businesses to run! It also made me raise my game in terms of the people I associated with – I was the youngest member of the class by a good few years, and it introduced me to a brilliant network of professionals and business owners.
This year, I have just finished a certificate in Guest House Management (through www.getsmarter.co.za – a great learning provider, check them out). Well over and above what the title suggests, it has given me amazing insights into the travel and tourism industry in general, which will be priceless for the future!

And it doesn’t stop there! As I’m looking at opening a coaching and business advisory practice later this year, I’ve just started a life-coaching course. Not only will this give me the knowledge and tools to help others and run a successful practice, but I’m also applying the principles inwards, and learning an absolute ton about myself in the process.

Having read this, don’t feel that you have to run out there and sign up for your nearest university course, either. There are many other ways to broaden your mind: pick up a book or two on a topic that interests you; read a newspaper; follow blogs about your particular industry; ask questions of people you admire. There’s so much to learn out there, just pick a topic, and get going. One day you’ll look back, and be glad you did!

Finance Coach - Vol. 28

2009-08-27T17:34:00.002+02:00

Finance tip: Assets

Buy appreciating assets. Many of the more expensive, or big-ticket, items that we purchase lose their value over time. This is known as depreciation, and your car is generally a good example. Many people view their car as an asset, but fail to realize how much value it actually loses over time. As a general rule, a car will lose 20% of its value in a year (this number is higher for certain makes, and lower for others). A good financial habit, though – especially when buying big-ticket or luxury items – is to aim for assets that appreciate in value. Essentially, this means that you should aim to own assets that will increase in value over time. As this is not always possible, a close second is to have assets that at least hold their value well and do not depreciate much or at all. There are certain assets or luxury items that are generally regarded as having a good chance of holding or increasing in value: Boats; planes; art (especially if by a recognised artist); collectors items; antiques; etc. The application of this principle in everyday life would be when looking at buying a car, for example. If you are simply needing a vehicle as a run-around, rather look at one that has lost most of its value already – it’s value should remain fairly static, and you will not lose much when it comes time to sell it on. If you are looking at buying a vehicle as a reward for years of hard work, though, consider looking at buying a classic car instead of a brand new one. You could find one going for a steal, spend a little restoring it, and then be the proud owner of a collectors item that’s in hot demand, and appreciates in value every year. Or if you’re doing some re-decorating at home, rather than wasting money on decorative knick-knacks, look at buying a few choice pieces of art by up-and-coming artists. If the artist is only just starting out, you could get them for almost nothing and, if they start to grow a following in the art community, you could have your hands on some valuable pieces in a few year’s time…

Business tip: Staff

This week’s Finance Tip was a bit lengthy, so I’ll keep this one short! Think carefully about how you refer to your employees. When you’re talking to people about your business, how you refer to your employees can make a big difference. Using the word ‘employees’ can give the impression that you are somewhat autocratic or condescending. Rather use words such as ‘colleagues’ or ‘associates’. These are both fair reflections of your relationships with your staff, and shows that you value and appreciate their contributions to the business…

Finance Coach - Vol. 27

2009-08-15T14:58:00.002+02:00

Finance tip: Debt

Speak to you creditors. For most people, when they owe someone money, they try their hardest to avoid contact with them. They ignore their calls, don’t reply to messages, delete their emails, etc. If you owe people or institutions money, and are having trouble meeting your payments, don’t go down this road. Pick up the phone and call them. If you explain your situation, and make it clear that they will be paid, and that it’s just a matter of when, they will feel more at ease. Alternatively, offer to pay a smaller amount, just so that they can see the debt is being reduced somewhat. What lenders want to know is that they will get their money back, and it’s only when they’re ignored that they start to get aggressive. Also, these days, everything is negotiable. So speak to your bank about dropping your interest rate slightly, or chat to the stores that you have outstanding accounts with about reducing your finance charges. You may get stonewalled, but the chances are good that they will give you a break of some kind, especially if you make it clear that you do fully intend to pay off the debt…

Business tip: Strategy

Plan for a worst case scenario, before it happens. Most business owners would like to think that their businesses will carry on functioning as long as they want them to, and don’t like to dwell on what would happen if disaster were to strike. Planning for a worst case scenario, however, is an exercise that all businesses should go through. What would happen if you or one of your key employees were to die unexpectedly? Is the succession plan clearly laid out? Are your operating systems written down so that someone could step into the breach and take over? What if your premises were hit by extreme weather? Is your insurance up to date? Or what would happen if you were to lose your biggest customers? How would you go about replacing them? These are just some of the questions you should ask. Each business is different, and is exposed to risks of different types, so these questions will vary. But they are necessary questions to ask – and they should be asked now, before disaster strikes. This way, if something terrible were to happen, you would already have a plan in place. You would be better prepared to deal with the blow, and would stand a much better chance of recovering from it…

Yours in finance,

Gareth Cotten

Making money at the movies...

2009-08-11T19:39:00.003+02:00

I recently saw a small article on our local newspaper, about a website called RunPee. Essentially, what the site revolves around is providing information about the best time to go run and pee during a movie at the cinema, to ensure that you miss as little as possible of the film. I think it's great, cos we all tend to overdo it on the Coke at the movies, don't we? And then not only do you miss some of the film, but you've gotta bug the people you're with, to find out what you missed! Check the site out at www.runpee.com...

Seeing this, though, triggered thoughts about the cinema business in general. A cinema's business model is an interesting one: They don't make a lot of money off of the actual ticket sales - most of their profit comes from selling you snacks and drinks at huge margins. As many big cinema chains have been struggling somewhat recently (with the advent of everybody just downloading the movie, or copying it from friends), they've been looking for other ways to boost their profits.

Apparently one of the front-running ideas is to bring back intervals for every movie, and not just the 3-hour epics. The rationale behind this is that it then gives them a second shot to sell you something to chow on, over and above the pre-movie rush. Just think about it: How many times have you been running late, and skipped the popcorn to catch the start of the movie? I know I have, plenty of times!

The last movie with an interval that I saw was Titanic, waaaaay back in the day. Now it makes sense why it was given such a long run (here in SA, it probably stayed on the circuit three times as long as any other movie) - not only would youngsters come and watch it again and again, but they'd have two lots of snack-buying in one movie!

And, out of interest, when I say big profit margins on snacks, I mean beeeeeeeeg margins. Apparently, in some cinema chains around the world, the margin on popcorn is 1000 percent - now that's what I call profit!

Finance Coach - Vol. 26

2009-08-06T23:27:00.003+02:00

Finance tip: Income

How to ask for a raise. Getting a raise at work is no longer a given, especially in these new economic times, so how you approach the topic with your bosses becomes all the more important. Firstly, you need to showcase your value to the company, so show them what you have achieved recently – this could be a reminder of a project that went off perfectly, or very positive feedback from clients about your work. Secondly, explain why you feel you are worthy of getting a bump up in salary – you have taken some of the workload off of your immediate superior, for example, or feel you are ready to take on some more responsibilities. Thirdly, be prepared to actually have more of these afore-mentioned responsibilities put onto your shoulders. Companies these days often feel that raises are not automatic, and must be linked to an increased scope of work – so don’t think you can talk up what you’re prepared to take on, and then just pass it on at crunch-time. And finally, timing is everything. Try and wait until there is some good news to preface your request for an increase – this could be the release of better-than-expected company results, or the fact that you’ve just landed a new client. Also remember that the person you’re pitching to is human, and will have good moods and bad moods – there’s not much point in approaching your boss if he’s still fuming from a screaming match on the phone with his wife!

Business tip: Marketing

Always remember to have a ‘call to action’ in your advertising. The final part of any piece of effective advertising material is a call to action – where you want the potential client to act on what they’ve seen and take some form of immediate action. This could be a prompt to pick up the phone and call you now, to visit your website to take advantage of a special offer, or to email you for further information. The public (and thus your particular target market) is so bombarded with media and messages every second of the day that, if you don’t get them to act immediately, your message could be lost and forgotten. Also ensure that they have as many ways to contact you as possible – not everyone uses a computer, for example, so even if your preferred form of contact is email, have a phone number displayed as well. And make sure that your contact details are clearly visible – there’s no point in having a roadside billboard asking people to call you, but your number is printed in a font that’s impossible to read from a moving car…

Finance Coach - Vol. 25

2009-07-29T23:00:00.002+02:00

Finance tip: Household

Spread out your washing. Whenever you are doing laundry, or if you use a dishwasher, rather wait to have a full load before turning on the machine (not that you need an excuse to put your chores off!). Using the washing machine or dishwasher uses up quite a fair amount of water and electricity, so having less than a full load at a time is a waste of both. Using your dishwasher to do a lot of dishes, though, is actually a smarter choice than washing them by hand. Hand-washing is inefficient for anything more than a small amount of dishes, as there is a lot of water wasted in the process - so unless it’s only a couple of bits and pieces, rather wait till you can load it up into the dishwasher. Another way of saving energy on these machines is to refrain from using the hottest setting. Other than in exceptional cases, using a lower setting will give you the same result, and use a lot less electricity…

Business tip: Finance

Look to your friends and family first for financing. Small businesses generally need to raise less money than larger ones for start-up or bridging purposes. So if you’re looking at raising finance for your small business, and you’ve exhausted your personal resources, consider approaching your friends and family first for the extra that you need. But don’t go cap in hand; make it a business proposition for them, and treat them in substantially the same way as you would a bank or financing institution. (1) Show them your business plan: It may not be as professionally presented as if you were approaching a bank, but it shows them that you’ve done your research. (2) Show them your passion: Tell them from the heart why it is that you want do what you want to do, and how passionate you are about the idea – this is a lot easier with people you know and love than it is with a bunch of suits from your bank. (3) Make it worth their while: There is generally a broad band of interest rates between what they could make on their savings and what you could get finance at (lending institutions see small businesses as risky, and aren’t afraid to charge the earth on the money they lend you). Offer to pay them at a rate somewhere in the middle – this way, they have the chance to make an increased return on their money, and you pay a lower rate of interest than you otherwise would. (4) Respect their investment: Realise that they have gone out on a limb for you, so make sure that you put every last ounce of energy into the business to make sure it works. And don’t even think about skipping payments – you wouldn’t dream of doing that to the bank, would you?

Finance Coach - Vol. 24

2009-07-15T19:06:00.001+02:00

Finance tip: Income

Show-house sitting. There’s a great opportunity to make some extra money by offering your services as a show-house sitter. These are basically people who sit in a show-house on show days, and hand out information flyers to the potential buyers that come to have a look. You don’t have to be an estate agent, and you get paid for doing extremely little! With agents and realtors battling to sell houses at the moment, they’ve got too much stock on their hands – this means that they generally don’t have enough in-house staff to sit at each and every house in their portfolio on show days. Approach a few agencies in your area, and ask if they’re looking for standby sitters. It works out to be only a few hours at a time, generally over the weekend (when you can spare it), and if you do it reasonably regularly, you can pocket some nice extra cash!

Business tip: Marketing

Always remember the spouse/partner. When you’re looking at selling your product or service to a potential customer, and it involves a little more thought or decision-making, always remember to include their partner or spouse in your approach. For many purchases, people would generally discuss it with their other half before committing to buying, so find a way to get to them as well. If, for example, your target customer is a man, and he needs to think about it, pitch it in a way that would appeal to a woman as well. He can then take this message back home, and bring it into the discussion he’d have with his wife or partner. Include an incentive or gift to win over the other half, get them on your side, and you could find it a lot easier to close the sale…

Day jobs are risky...

2009-07-13T22:28:00.002+02:00

Many people I've met come up to me and ask: "Don't you worry where your next paycheque is coming from?" or "Why don't you get a stable day job? It's less risky..." While I understand where they're coming from, and my income does fluctuate from time to time, I'm of the opinion that relying on a day job is just about the riskiest thing you can do.

Most people have one job - they have a position where they work for one company, go to their office every day of the week, do their work, and get a paycheque once a month. And they probably feel quite safe and secure, looking at an entrepreneur like myself with a querying glance, maybe even a hint of fear. "You could lose it all", they say. "What if it all fell apart?", they ask. "Working for yourself is far too risky!", they cry. Au contraire, I reply...

You see, here's the thing. Working for myself, I decide how much I'm going to get paid. I pay myself when I want to. I don't have to go begging someone else if I need an advance, or if I need some time off - I just take it. Yes, I might make more in some months than in others, but the way I've structured my income, I get it from three or four different sources. You, miss scaredy-pants, only have one source of income. One. Think about that. If your boss suddenly decides "You know what, I don't think we actually need Sarah in accounts anymore, we need to cut back" BOOM!! SLASH!! You're gone. All of a sudden, you've got no income. Zero. And it happens all the time. Just ask around - I guarantee you know, or someone you know knows, someone who's lost their job in the last 12 months. Now that's risky...

Now, in my case, if I were to lose a client or, God forbid, some disaster were to happen to one of my companies, I'd be bleak, yes. But I'd still be in control of it - it wouldn't be the whim of some nameless suit in corporate cutting costs across the board. If one of my businesses failed, it would be because I'd let it happen (or some freak Act of God occured, but let's not go there!). And even if one of my businesses did go under, I'd still have another two or three sources of income. So I wouldn't go from working to destitute overnight (and I know that I'd claw my way back!). I'd be relatively covered and still working - I'd still be able to pay the bills and live my life.

The second scenario above seems a lot less risky now, doesn't it? I guess I'll just never understand how people could put their entire lives in the hands of one company or one boss. It just boggles the mind. But hey, if they think it's the safe option, then who am I to judge?

Finance Coach - Vol. 23

2009-07-13T22:25:00.002+02:00

Finance tip: Food

Meal-sharing at the office. With most people eating lunch at work,there's a great opportunity to save some serious money by organising to split the cost of your meals between you and your colleagues. You could either pool your money and buy your meals in bulk, or alternate days on which one of you cooks for the group. You never know, if you really enjoy cooking, it could even turn into a chance to cook for your colleagues on a regular basis, and make some extra money on the side!

Business tip: Sales

Incentivise your staff to increase sales and profit. While this may seem obvious to those who have sales staff working on commission, there are other ways to implement this across all staff. One way could be to offer commission to non-sales staff if they bring in business (you'd be surprised how many contacts your other staff will suddenly have when they know there's money in it for them!). Another plan could be to set aside a percentage of profit, to be distributed amongst the staff on a monthy or quarterly basis. This will not only serve as an incentive for everyone to pull together to drive sales and revenue, but could also result in some innovative cost-saving ideas which, until now, your staff had never thought of mentioning...

Finance Coach - Vol. 22

2009-07-04T13:31:00.001+02:00

Finance tip: Debt

Consider consolidating your debt. If you have various small debts which you are trying to pay off (such as credit cards, store accounts, etc) as well as a mortgage or bond on your property, consider consolidating your debts into one payment. Essentially, what happens is that you would extend the amount you borrow against your property, and use that money to pay off all of your other smaller debts in one fell swoop. The rationale behind it is that the interest rate on large debts (like a mortgage bond) is significantly lower than that charged on smaller consumer debts (like your credit cards). It also becomes easier to manage, as you only have to focus on making one payment every month, instead of a handful. If you choose to go this route, though, you must be disciplined and still pay off the same amount every month that you would have been paying on all your smaller debts. If you aren’t disciplined like this, all that you are doing is stretching the short-term debt over a longer period of time – in which case you’ll end up paying much more in interest over the long-term.

Business tip: Networking

Join your local trade association or organization. Nearly every industry has its own trade association, made up of all relevant role-players and stakeholders. Find out about your local chapter, join it (or if there isn’t an existing one, start one), and actively take part in it. Not only will it present you with growth opportunities – like forming joint ventures with other companies in your area to grow your market, or finding out that one of your competitors has excess demand that it can’t fill – but it can also act as a great source of troubleshooting advice. Speaking to others will give you a fresh perspective on any problems you may be having, and it’s also almost guaranteed that someone there has been in exactly your position, and can advise you on how they got through it.

Finance Coach - Vol. 21

2009-06-18T22:19:00.001+02:00

Finance tip: Transport

Driving style. There are certain things that you do while driving that may be contributing to you using more fuel than needed. One to watch is driving for too long in too low a gear. The higher the revs that your engine operates at, the more fuel it uses. To be efficient, change up to a higher gear as soon as possible, without putting your engine under pressure (you’ll know you are if it starts to chug and jerk). Having said that, you should also be wary of trying to accelerate too much once in a higher gear. If you’re in a high gear (say, fifth gear), and need to climb a hill or overtake someone, it’s more fuel-efficient to quickly change down a gear or two, pass the other person or climb the hill, and then change back up into the higher gear. If you try to do it in the higher gear, you need to depress your accelerator pedal harder (to get the acceleration), which shoots up your fuel consumption. Generally, don’t put more pressure or weight on the accelerator pedal than is absolutely necessary to maintain your desired speed. Try lifting your foot just a millimetre or two once you’re at your travelling speed – you’ll stay at that speed, and I guarantee that you’ll use less fuel…

Business tip: Appearance

Make a strong first impression. When meeting people for the first time, they are likely to form an opinion of you within the first seven seconds. It sounds simplistic, but keep the following in mind when meeting someone for the first time (and this applies both in and out of business situations): Be dressed appropriately – if you’re meeting a supplier to negotiate prices, don’t pitch up in shorts. As you approach the other person, make sure that you’re standing up straight, and not slouching or looking at the floor. Make eye contact, and keep your voice firm and level as you introduce yourself – you’ll come across as more confident. Be sure to give a firm handshake, but don’t overdo it – if you try and crush their hand in yours, you’ll come across as domineering, and their guard will go up immediately. If you’re a man shaking a woman’s hand, and don’t know how hard to do so, let her initiate the ‘squeeze’, and respond at exactly the same pressure. And don’t forget to smile – you’ll subconsciously relax yourself and release any tension you may be holding in your face, while also putting the other person more at ease…

Finance Coach - Vol. 20

2009-06-11T22:50:00.001+02:00

Finance tip: Entertainment

You can still enjoy yourself on a budget. One of the first areas that people cut down on when they fall on trying times financially is their entertainment expenditure. It’s still very possible, though, to have a good time and let off some steam without breaking the bank – just be innovative in your thinking. For instance, if reading is your way of ‘escaping’, there’s no need to pay through the nose when the new bestseller comes out. Sign up as a member at your public library – it’s generally free and you’ll have access to thousands of books all across the spectrum. If you’d usually fork out for a movie at the cinema, consider waiting for the DVD, or taking in a performance at your local amateur theatre instead (they’re normally so glad to have an audience, they barely charge anything!) Or if expensive dinners were your indulgence, rather organize a dinner party with some close friends. Get everyone to bring something different (eg. one brings a starter, one brings a main, one a dessert, one a bottle of wine) and you can all revel in each other’s company, while saving good money as a group…

Business tip: Strategy

Beware of paradigms. When trying to innovate in your business, always be wary of people who tell you why you can’t do something. They’ll be very quick to tell you that “You can’t do that”, “You can’t charge that little/much”, “It’s always been done that way”, but don’t fall into the trap of their way of thinking. Many industries have unwritten rules or ingrained practices that have formed over time. They’re not necessarily the best or most efficient way of doing things, but they’re there, and people don’t want to be seen questioning them, for fear of being ostracized. But be different. Break the mould. Always ask “Why?” or “Why not?” And if you (or they) can’t come up with a logical, sensible answer, then go ahead and do it!

Breaking down a break-down...

2009-06-08T22:35:00.002+02:00

Last week, while driving to and from the office, I couldn’t help but notice the amount of vehicles that had broken down on the side of the road. Now, there would usually be one or two that I would see in a day’s return trip, but last week it must have averaged 7-8 vehicles a day! While most people would only see the inconvenience caused as the traffic slows up, I couldn’t help but try and see what the contributing factors would be…

Assuming that people would not voluntarily stop their vehicles on the side of the freeway in rush hour, there are only really two reasons that a car would come to a stop. The first is that it ran out of petrol or gas; and the second is that it’s had a mechanical or electrical failure. I feel that both of these causes can be quite directly attributed to the stressed economic climate that is affecting everyone. The first is very straightforward: People, in their efforts to stretch their pennies as far as possible, are not filling up as often. They are trying to get as much mileage out of a tank as possible, and consequentially, some of them misjudge just how much they will need to get to work or to get home. They run out of fuel and cough, cough, splutter, splutter – they’re stuck on the side of the road.

While this is evidence of a slight lack of foresight, or trying to push one’s luck one too many times, the second reason has slightly more substance to it. For a car to break down suddenly, there is generally a very serious failure behind it. These serious failures can sometimes happen out of the blue, yes, but I’d say that you’d generally have an inkling that something is not right. In good economic times, when you’re relatively flush with cash, you would have your concerns checked out by a mechanic, and hopefully rectified before they develop into something worse. In tough economic times like these, though, people are obviously not seeing vehicle maintenance as a priority. So they miss a service or two, and try and ignore those worrying shakes and rattles, in the hope that they will go away by themselves. I mean, putting food on the table is more important, right?

The problem comes in, though, when your car does break down (and it will eventually if it’s not maintained – as much as we’d like to think otherwise, it’s still a machine). If you’ve reached this point, you know that it’s going to cost you an arm and a leg to get it going again. And the pain really kicks in when you realize that it would have cost you a lot less to simply have bitten the bullet and repaired it at the first signs of trouble. “But I didn’t have the money!” you exclaim. Well, you could’ve borrowed it, or found a way to make a bit extra to cover the repairs; as it is now, you have to borrow or find it anyway, and you have to get your hands on that much more.

This is just an example of the downfalls of short-term thinking, and how it can lead to never getting around to the things that need to be done. In this example, the short-term view of not wanting to take the hit at first means that the hit hurts that much more when it does come. But the principle applies to everything: I’ll start saving next month; I’ll reinstate my insurance when the economy recovers; my diet starts on the first; I’ll pay off my debt when I get my bonus – heard these before?

Do what needs to be done now: Don’t leave for tomorrow what can be done today.

Finance Coach - Vol. 19

2009-06-03T22:16:00.002+02:00

Finance tip: Education

Increase your financial education. To be able to better manage and control your finances, commit to learning more about your money and the financial world around you. You might think this is a daunting task, but it’s really not – start small and slowly, and build a progressively higher knowledge level over time. Read the business section of the newspaper; watch the financial news roundup; listen to your colleagues when they talk about money or their finances (don’t tune out like you normally would); follow financial blogs (like Finance Coach!); ask questions of family and friends who have a better grasp of it than you do; take a short course (banks often offer them for free); whatever you do, just expose yourself to the commercial side of the world. And if you feel completely perplexed at first, and have no idea what it is you’re reading or hearing, don’t worry. If you keep at it you will, over time, start to recognize terms and themes, which will then help you understand others, which will then help with others, and so on and so on. Whatever you do, just get started!

Business tip: Communication

Follow good phone habits. When you’re using a phone for business purposes, there are a number of small things you can do to maximize your effectiveness. For instance, when you answer an incoming call, sound professional. Don’t just say “Hello?” – try and have a more standard answer such as “Hi there, Gareth speaking.” This immediately tells the caller that you value their call, by being professional and courteous from the moment you pick up. If you’re a small business (especially if you’re a one-man operation) get someone else to record a voicemail message for you – it gives the impression that you have staff working for you. Studies have also shown that having an attractive female voice on your voicemail makes you seem more trustworthy and authoritative. And stand when you talk, don’t hunch in your seat. Standing opens up your airway, and allows you to better project your voice – helping you to sound confident and on top of things.

The Power of Attraction

2009-05-31T17:24:00.002+02:00

I’ve written about the power of attraction before, but an experience I had on Thursday and Friday just reminded me of exactly how powerful this principle is:

On Thursday, I attended and spoke at a marketing conference (Cherryflava Brand Hooligans – www.cherryflava.com). I was there in my capacity as the owner of Chariot Limousines, and had one of my vehicles there to shuttle a few lucky delegates between some of the venues. After the day’s speakers were done, we had a networking function at the Daddy Cool bar at the Grand Daddy Hotel. There, I got talking to the owner of the hotel and his business partner, and the conversation worked its way towards how we could use my limo’s to do airport transfers for his hotel/s. The two brands would work well together, and hopefully something will come of our conversation, but the real power came through the next day…

The four months between February and May are generally the quietest months of the year for my limo business. Understandably, this year has been exceptionally quiet, as our service is seen as a luxury, and would be one of the first things to be cut out of people’s budgets when they fall upon hard financial times. The business has still been ticking over, but I’ll admit that, of late, I have put nowhere near the amount of time and energy into it as I should have. I’ve been quite content to focus my time on my new ‘day job’ as a financial manager, and have put in the minimum of effort for my own businesses. For the conference on Thursday, though, I made the effort to take one of my cars out for pretty much the whole day, without being paid a cent, and made a point of talking about my business to as many people as I could.

On Friday, my phone didn’t stop ringing! At this time of year, I would probably take 2-3 calls a day for limousine enquiries, but on Friday I took well over a dozen. Even better than that, of the calls I took, four turned into confirmed bookings by the end of the day – confirmed, paid, the lot! All in all, it was an exceptionally good day for the business…

This just served as a reminder of how powerfully the principle of focus and attraction operates. What you focus on expands; and what you pour positive energy into attracts a positive response. I had been ignoring the inherent potential of my business, hadn’t been focusing on it, and had let it stagnate to a degree. Soaking up the atmosphere at the conference, I got a jolt of inspiration to talk about and focus on my business, and it paid off handsomely! It was a lesson to me (and hopefully now to you) that, no matter how down and out you may feel about something, never accept the negativity. Re-focus your time, energy and spirit, draw the original reasons for wanting to do whatever it is up out of the recesses of your mind, and get inspired. Get off your ass, get out there, just do something, and you’ll start to see results!

Finance Coach - Vol. 18

2009-05-27T23:50:00.002+02:00

Finance tip: Spending

Treat yourself. In these times of hearing “Save, save, save!” at every turn, the suggestion of indulging may seem to be out of touch with reality. It’s been proven, though, that people will stick more readily with regimens or budgets if they ‘break the rules’ every now and then. For example, diets are more effective when the dieter knows that they can ‘cheat’ every so often with a chocolate bar or a piece of cake, as the dieter does not feel restricted to the point of depression and ultimately giving up. This reward principle can also be used in your financial life. Set yourself milestones on the road to your financial goals, and reward yourself with something small when you reach them. You could, for example, treat yourself to a night of take-aways if you’ve brought your food expenditure down by 20%; or have your hair done as a reward for paying off a credit card; or get that gadget or pair of shoes you’ve wanted once you have a certain amount in a savings account. The possibilities are endless, but having a reward system will definitely make you feel more balanced about following a responsible financial plan, and the positive reinforcement will pay dividends many times over…

Business tip: Staff

Rotate and cross-train. If you have employees that work specifically in one department (as is generally the case), consider doing some on-the-job rotation of staff between different departments and functions. You could have your accountant work with the production team for a week, get your designers out on the sales floor, or have an HR staffer assist with compiling management reports. Not only does this allow other staff to take up some slack and ensure continuity in the event of an employee’ sudden illness or resignation, but it also helps employees to get a better picture of the business as a whole. This leads to better inter-department communication, increased morale, and can also produce some innovative suggestions for improvement in areas previously un-thought of…

Finance Coach - Vol. 17

2009-05-22T23:26:00.001+02:00

Finance tip: Mindset Assets vs liabilities.

Many people think about this concept quite straightforwardly - their possessions are their assets, and what they owe others are liabilities. I think about them quite differently. For me, an asset is something that makes you money, while a liability is something that loses or costs you money. Now, this flies in the face of some ‘conventional’ wisdom, as others will say that your car is clearly an asset, for example. The way I look at it, if you use your car to make money, then it’s an asset, but if all you use it for is transport, and you fork out dearly every month for that, then it’s actually a liability. But you need your car to get to work, you say, and you earn money there! Yes, but do you need a fancy, fully-kitted out sports car to get from home to work? No, you don’t. An entry-level, reliable one will be just fine. On the subject of liabilities, I do carry some debt. But all of it is ‘good’ debt, as I have used the money I have borrowed to start businesses that make me more money than the debt costs me. Thus, for me, those debts could even be seen as assets! Now, I’m not telling you to go and sell everything you own, but just keep this thought process in mind next time you’re looking at a big purchase…

Business tip: Management

Follow the 80/20 principle. Also know as the Pareto principle, this law states that 20% of all the things you do produce 80% of the total results, and vice versa. The trick, as an effective manager or businessperson, is to identify the 20% that produces the most results, and focus on those areas. This could be the 20% of customers that bring in 80% of your business, or the 20% of your marketing-spend that brings in 80% of your qualified leads – whatever it is, identify it and refocus some of your time spent on the other 80% of things you do, to capitalise on the areas identified. You don’t necessarily have to drop the ineffective 80% completely (and you often can’t), but look at perhaps delegating that work to someone else who has the capacity or initiative to make the most out of it. Being the best manager you can, or building your business to it’s full potential, depends on it…

Finance Coach - Vol. 16

2009-05-12T23:16:00.001+02:00

Finance tip: Electricity

Save energy when cooking. One of the first ways to reduce your electricity usage, and thus your energy bill, is to plan one day in advance what you want to make for dinner. Make your decision, take the food out of the freezer, and put it in the fridge – it will defrost there, and take less time and energy to cook the next day. Another energy-saver is to use your microwave for defrosting – a microwave only uses about half as much energy as a conventional stove. With stoves, resist the urge to open the door and peek – every time you do this, about 20% of the heat inside is lost. Another handy trick is to make sure to keep your stove-top clean – if it isn’t, dirt on the surface will absorb heat instead of reflecting it back to the cookware, resulting in you needing more time (and energy) to make sure your food is prepared the way you want it.

Business tip: Communication

Be positive in public, and negative in private. When one of your staff or colleagues has done something good – such as completed a project successfully, or brought in a new client – make sure to congratulate and laud them in front of others. This positively reinforces the good behaviour, and acts as a signal to others who see it that good work is recognized and rewarded. On the other hand, when one of them has failed or underperformed on a task, resist the urge to come down on them in public. Rather take them to one side and have a quiet word with them – ask them for their side of it, and find a lesson in the failure. They will respect you for handling it this way; and cutting them down to size in public can instill a sense of fear of failure amongst others, which can stunt creativity and innovation within your business.

How I'm growing my net worth...

2009-05-10T23:11:00.003+02:00

With many people having asked me about my saving and investing habits recently, I thought I’d share the processes and habits I follow to grow my net worth as quickly as possible. Some of them are generally held investment approaches, some are common sense, and some are unique, but here goes:

I always pay myself first. I get paid by my employer on the 25^th of the month, and pay myself (from my two businesses) on the 27^th-28^th. On the first day of the following month, I do my monthly allocations (explained in the points below) to my saving/investment accounts. This way, before any bills are paid, I ensure that I have tucked away money for my future. My future prosperity is more important than paying small bills (and besides, I know that I can always make more money to cover the bills somehow, so they never go unpaid).

My first monthly allocation is as follows (as adapted from T. Harv Eker’s book “Secrets of the Millionaire Mind”): I take 10% of everything that came in the previous month, and put it into a ‘retirement account’. I treat the money in this account as no longer mine – it is to be accessed when I retire, and not a day before. This I use to buy retirement products (annuities, pensions, etc.), or invest in various unit trusts.

My second allocation is my ‘small business’ allocation. I take 5% of what came in the previous month, and put it into an account which is dedicated to lending to, and investing in, other peoples’ small businesses. I remember how hard it was (and is) for me to find funding whenever I have wanted to launch another business, so this is my way of giving back to the small business community which is very much responsible for my success so far. I generally lend this money at a decent interest rate (to give me a good return on the money), but I don’t request as much security as the banks do. I invest in the entrepreneur, but am quite prepared to lose the money that I allocate this way.

For my ‘retirement’ allocation, I adjust the percentage tucked away upwards by 10% every 6 months. Thus, when I started, I was putting away 10%. 6 months later, I increased the allocation to 11%; and then another 6 months later, to 12.1%. This method was adapted from Dr. Demartini’s book “How to Make One Hell of a Profit and Still Get to Heaven”, and is based on the premise that the human mind can take a 10% change in anything without any mental disruption.

Once I’ve made these allocations, my money is free to be spent in any way I see fit. I could pay bills, spend it on entertainment, save it for a holiday, whatever. Generally, I keep my living costs very low, to ensure that most of my income is freed up to use differently from month to month (as I’m guaranteed to come up with some new thing or idea to spend it on!).

I drive a 21-year old car, which is fully paid off. This doesn’t mean I’m a miser driving around in a heap of junk, either. It’s a 1988 BMW 325i. I’ve had it for 8 years, and it runs as well as the day it came off the production line. It still goes like clappers when I need it to, and fulfils my need for speed without any problem! I maintain it meticulously, and it looks after me just as well. I don’t see why I need to have the worry of a bank repayment hanging over my head every month, paying for a car that looks as good and goes just as well as the one I already have. Yes, I will ultimately buy a fancy-ass sports car one day, but I have other aims and dreams to fulfil first (like being a millionaire by my 27^th birthday).

I still live at home with my parents, which obviously saves me a small fortune. Now I know that this option is not always viable for everyone, but there are always ways to bring your accommodation costs down (share with others, move in with a family member for the short-term, downsize where you live, etc.). Personally, I have made the choice to take the funny looks from people (“You’re 25 and you still live with your parents?!?”) in my stride, because I know it’s accelerating my advance on financial freedom exponentially.

My other living expenses are minimal. Entertainment-wise, I obviously still go out and have a good time with friends and colleagues often (I am still a young man, after all), but I just don’t go completely mad and splurge every time. I’ll have people around at my place, or alternate nights on the town with house-parties. I have a great social network, so it’s definitely not like I’m sacrificing my youth for financial gain!

I reward myself for my hard work and financial discipline. Eker’s book suggests that you put away 10% of your income to a ‘play’ account. This is meant to be spent every month on things that makes you feel wealthy and happy, and is a balance against the 10% put away for retirement. I don’t quite follow this principle to the T, but I do indulge myself every now and again. Whether it’s a meal at a really fancy restaurant with my girlfriend, or a new gadget for myself, I don’t feel any regrets about spending money on myself. I put in the hard work to make that money, so I owe it to myself to enjoy it.

Another way I reward myself is taking time off often. It might change slightly now that I’m working for someone else too, but generally I would go away on holiday 4-5 times a year. Even if it’s only a 4-day long weekend an hour down the coast, it allows me to recharge my batteries, re-connect with myself, and stoke my fires of inspiration.

Every time I walk past money on the ground, I pick it up. Every time. This is my way of saying to the universe that I appreciate it presenting me with a money opportunity, and always look forward to it bringing me more. You might think this is silly, but I come across business opportunities (and have them brought to me) nearly every day, so I must be doing something right!

With the money that I have left, after doing my allocations and paying for monthly expenses, I have plenty of options. Generally, if I don’t have a specific purpose for it, I will invest it in growing one of my businesses, or put it away into alternative investments. Currently, I am saving up for an extension to my limousine fleet, so I put away some for that when I have it. I have also set myself the target of having a million bucks in a liquid investment by the time I’m 30 years old. For now, my chosen vehicle to get there is investing in unit trusts. If, a few months or years from now, that goal changes, that’s fine. Whatever I have in that account or vehicle will have been a good investment up until that point, because I know that I saved the money, and didn’t squander it on useless junk. I will then be able to use it to start another business, or invest somewhere else – only the future will tell!

Over time, I’ll probably remember something else useful, or come across an interesting wealth-building strategy – I’ll be sure to share it with you…

TravelBlog 1: Singapore – Information

2009-05-06T22:20:00.002+02:00

Having recently been to three different countries in Asia on holiday - Singapore, Hong Kong (China) and Bali (Indonesia) - I’d like to relate my experiences to you, the reader. For each of the three destinations, there will initially be an ‘info’ blog post, with mainly short, point form notes about the area. This will then be followed by a post with insights, where I will try and relay a slightly more in-depth view of the place. Having been most impressed by Singapore, I thought I would logically start there…

• The first thing that hits you when you walk out of the airport is the heat and humidity. We were there during April, and every day was around 30 degrees Celsius (86 degrees Fahrenheit), with roughly 80% humidity. Being very near the Equator, that does not change much throughout the year.

• Outside of the built-up areas, it is extremely green and lush. It rains almost every day, although this is generally in the form of a brief shower in the afternoon.

• While there is one main island, Singapore actually consists of 66 smaller islands as well.

• While the total land area is only 4700km2, the population is estimated at 4.8m.

• There are 4 main race groups, being Chinese, Malay, Indian, and Eurasian.

• The four main languages are Mandarin, English, Malay, and Tamil. English is widely spoken, though.

• Buddhism is by far the dominant religion, with approximately 78% of the population following it. The remainder is split between Christianity, Islam and Hinduism.

• Historically, they have had a 100% employment rate, although that has now dropped to 95% with the global financial crisis.

• There are no homeless people anywhere – if a person falls on hard times, their living will be subsidized until they get back on their feet, or they will be put in a home or shelter, and assisted in finding employment.

• The crime rate is very low. There are harsh fines for many smaller crimes (such as littering, spitting, importing chewing gum, smoking in a no-smoking area, etc.) and the death penalty is applied to those convicted of drug trafficking, murder, kidnapping and hijacking.

• They are currently experiencing a negative birth rate, and are incentivising young people to have children with monetary grants.

• Because of the lack of space, residential density is extremely high, with 98% of the population living in high-rises.

• As property is so expensive, 85% of the population lives in government-subsidised housing.

• The average price for a simple, 5-roomed apartment is roughly US$1.5m. A penthouse would set you back in the region of US$3m.

• Their income tax rates range from 2% to a maximum of 20% (very low relative to our tax rates in SA of 18-40%).

• Sales tax (GST or VAT) is 7%.

• There is a compulsory government social security savings scheme, with a contribution of 20% of your monthly salary. This is matched by a further 14% from your employer.

• As crowded as it is, the government is still keen to attract foreigners to live there if they are skilled at a specific occupation, or have a minimum of US$1m to invest.

Finance Coach - Vol. 15

2009-05-04T19:42:00.001+02:00

Here’s your Monday serving…

Finance tip: Investing

Asset classes. You might hear people talking about different ‘asset classes’, and how their investments are ‘diversified’. An asset class is a grouping of assets (or investment types) that have similar characteristics. The general classes would be deemed as: cash, bonds, property, and equities (also known as shares or stocks). One major difference between asset classes is the amount of risk associated with that particular class, with some being seen as more risky than others. For example, equities are seen as more risky than cash – this is because the return you get on cash is generally guaranteed within a certain range, whereas there is no guarantee with equities, and it’s quite possible that you could lose money. Matched against this risk is the possible return from that asset/investment. More risk = chance of more return. Using equities vs cash again, there is a chance of a much higher return on equities, whereas you would never really get more than a few percent on cash. From the least risky to the most risky, the classes would be in the order of cash, bonds, property and then equities. Being diversified means that you are invested in more than one asset class, which one would generally do to minimize risk (as negative returns in one area could be balanced by positive returns in another).

Business tip: Marketing

Make a scene. If you are looking at launching or advertising a product or service, and want to make a bit of a splash in public, consider making it look like it’s being filmed for TV. Find an area which has high foot traffic (a busy area of a mall, or on a busy sidewalk or park walkway, for example), and set up some lights and a camera or two (they don’t have to be recording, but have them manned). People will always be intrigued by such a set-up, and will be drawn to come closer and see what all the commotion is about. You can then have a stand or small stage set up, where you are showing your goods or talking about your services. Having a small crowd already gathered will also bring more people in, as they may be too shy to be the first ones there, so consider a ‘rent-a-crowd’ (complete with instructions to applaud and make a noise every so often), or rope your family and friends in to fill some space. Pick a time and day when people are more likely to be receptive to your particular offering, and you’re away!

Finance Coach - Vol. 14

2009-04-28T20:24:00.001+02:00

Finance tip: Extra income

Baby-sitting. Offer your baby-sitting services to friends, family and colleagues to earn some extra money in the evenings or over weekends. There are plenty of parents out there who are working night shifts or second jobs in the evenings, who need peace of mind about their little ones. Most people have some form of experience with looking after small children (whether their own children or small siblings), so translate this experience into earning potential. You can choose to do it every now and again for a little extra here and there, or take it more seriously and perhaps set up an evening child-care service at your home. The beauty of having more than one child to look after is that your earnings can multiply substantially, with only a small amount of extra effort. And if you’re any good, word of mouth spreads faster in the child-care industry than almost any other, so prepare to become popular!

Business tip: Innovation

Read anything and everything. Whether you’re looking for an industry to get into, an idea to expand your product range, or just a spark to rejuvenate your business, read whatever you can get your hands on. Personally, I read newspapers, men’s magazines, women’s magazines, business magazines, billboards, pamphlets, wall-posters, anything! You never know where your next idea or inspiration will come from, so be open to anything. And always remember to read between the lines, and make the leap to the next logical step. Say, for example, you read an article about how many mothers are being forced back into the workplace to make ends meet. More mothers at work = fewer mothers at home = children still need to be cared for = start a babysitting service! This is reducing the entrepreneurial thought process to its barest, but the point is that there is generally always something behind what you are reading at face value – dig deeper and find out what it is.

Finance Coach - Vol. 13

2009-04-25T23:48:00.002+02:00

Here's your Thursday edition (running two days late, oops)...

Finance tip: Holidays

Stay with family and friends. If you're looking at going on holiday, but the costs seem prohibitive, consider staying with family and/or friends, even if only on some nights. It can reduce your overall bill by a massive chunk. Recently, I went to Ireland with my girlfriend, and the fact that we were able to stay with her family reduced the total cost by close to 50 percent! Alternatively, if you don't have family in the area, consider couch-surfing. This is a new way to travel where you simply crash on someone's couch, generally for free. Networks are springing up worldwide (check out www.couchsurfing.com)

Business tip: Relationships

Vet your customers and suppliers. If at all possible, try to get to know a new customer/supplier before taking them on, especially if they are going to be a major part of your business. Read their marketing material, speak to staff members, ask their management about their goals and aims. Get to know them both in and out of their own environments. Are they easily flustered? Are they organised? Do their staff work well as a team? How long have their employees worked for them? Are they regarded as good payers? Are they willing to go the extra mile to accommodate you? You'd be amazed how much you can learn about a company just by sitting in reception on an unannounced visit!

Finance Coach - Vol. 12

2009-04-20T19:36:00.001+02:00

Hi everyone,

I’m back from my holiday in Asia (absolutely amazing!), so here’s your Monday edition of Finance Coach…

Finance tip: Electricity

Check your freezer. If your freezer is only half-full, fill empty milk bottles (plastic ones) with water, and place them in the gaps. Once these freeze, they will help keep the temperature down, and your freezer won’t have to work as hard to maintain its desired temperature – saving you electricity, and lightening the load on your wallet. Also check the seals on the edges of the door – worn ones will mean that coolness escapes, and the unit will have to use more energy to keep your supplies frozen.

Business tip: Management

Delegate your weaknesses. As a business owner or manager, it can be very easy to fall into the trap of trying to do everything yourself, and micro-manage others. Get past this by identifying your strengths and weaknesses, and then delegating your weaknesses. If, for example, you are a whiz at marketing and bringing in new business, but the thought of doing your month-end accounting scares you to death, delegate the bulk of the accounting to a partner or employee, or consider outsourcing it to a professional. Your initial reaction might that this means giving up control, or costs money, but the increased benefits of being able to focus your time, effort and attention on your strengths could well outweigh the costs. If the work is delegated to an employee, it also serves as a sign of trust and encouragement, and could be the spur that pushes them to operating at their full potential.

I'm taking a little time off...

2009-03-25T23:43:00.002+02:00

This is just a short note to all of my readers: I am going to be on leave from Friday 27 March 09 to Monday 13 April, and will probably not be blogging much between those dates. I've been pulling 14 hour days at work this week - hence the low number of posts of late (sorry!).

To fill you in, I'm going on holiday to Asia! Hitting Singapore, Hong Kong, Macao and Bali (yes, I know, life can be hard) and looking forward to every minute of it. As I don't have too long in any one spot, it might prove difficult to find the time to sit down and write a decent blog post. I will be taking in absolutely everything I see, so look forward to some good insights and observations from the Far East when I get back!

Until then...

Finance Coach - Vol. 11

2009-03-20T13:43:00.000+02:00

Finance tip: Utilities

Manage your air conditioner usage. Having been through an extremely hot patch of weather recently, I was reminded how many people rely on air conditioning to keep their homes and offices bearable. Air-cons are one of the biggest users of electricity, and can make a huge impact on your energy bills. To keep your costs down, make sure that the air-con unit doesn’t have to work harder than it needs to. If you have the unit on, keep windows closed (otherwise the air-con has to work harder to maintain a constant temperature in a fluctuating environment). Also be aware of doors being left open unnecessarily, as the cooled air can escape (and hot air enter) if they are left even slightly ajar. Also ask yourself whether you really need it set to freezing, or whether a slightly cooler temperature will suffice – the cooler the temperature it’s set to maintain, the more energy the unit uses.

Business tip: Organisational dynamics

Office planning. If you hold a management or executive position, and work in an environment where you have your own office, the way you utilise your office space can impact on your effectiveness. Firstly, have your door open as much as possible. This promotes an improved flow of communication and will improve the relationship you have with your staff as, even if they don’t make use of the opportunity, they will feel that you are more approachable, and will feel more at ease about coming to you with new ideas. Secondly, if you are having a meeting where you need the upper hand (for example, where negotiating with a supplier to reduce their prices), make sure that the other person will be sitting with their back to the door. The person facing the door has the stronger position in the room as, psychologically, the one with their back to the door will feel more exposed, and this will weaken their resolve.

Some do benefit from a property crunch...

2009-03-18T22:35:00.002+02:00

As I'm sure you're all aware (unless you've been living under a rock somewhere) the world is going through a massive financial crisis. One of the major areas where this is playing out is in the property market. Over the last 12-18 months, there's been a significant drop-off in property values around the globe, and the ramifications have been widespread...

The reasons for the property-price tumble are many. One of the primary drivers has been the global credit crunch, where banks are lending less and less, and it becomes harder to get a mortgage. As fewer people get mortgages, the buyers pool for properties gets shallower. With less demand, prices of properties come down, as sellers have to drop their asking price to attract a buyer. Then there is also the argument that prices were rising at an unsustainable rate, and were due for a reality check (or a 'correction', as the experts say).

The negative repercussions have been thick on the ground: People have realised that property values don't necessarily climb automatically; some have lost their homes as banks have called in sub-prime mortgages; older people, who may have had much of their wealth tied up in their home, have taken a knock to the value of their biggest 'investment'; people who bought at the top of the boom now have a property worth substantialy less than what they owe on it, and are factually bankrupt, etc. etc.

But there is always a positive side to any downturn or bad news. I, for one, have been watching the cost of a home accelerate away from me in the last few years, and have felt sick to my stomach when calculating what it would cost me to get an average starter-home. Apparently, 10-20 years ago, the average person bought their first home at 24/25, whereas the equivalent age today is in the early 30's! Now, I am fortunate in that I am well ahead of the curve in terms of what someone my age (25) earns, and I'll probably be able to purchase a house in the next 2-3 years, but the way that prices were going, I was going to have to settle for 'student' accommodation on an 'executive' income. With prices coming off their highs, I may well now be able to get something something more along the lines of what I had in mind. And I know that many of my peers and friends feel the same way - it at least gives us a look in...

And while estate agents and developers are getting kicked in the nads, there are other businesses that are booming. Going for a run around my neighbourhood the other day (I hadn't done so for a good while), I couldn't help but realise that nearly every second house had done alterations! When you think about it, it makes perfect sense: People haven't been able to buy their dream house (because they couldn't sell their current one, or couldn't get a loan for the one they want), so they've had to do the next-best thing and upgrade what they have. This would mean that the associated industries - such as DIY stores, building supply warehouses, contractors, etc. - would all be noticing a nice uptick in business (or at least keeping the business ticking over while everyone around them is going bust). I noticed in the newspaper the other day that Massmart (the owners of Builder's Warehouse - a local building supply warehouse franchise) came out with relatively strong results, at a time when everyone's competing to report the biggest loss. Maybe companies like these could be a reasonably safe bet for investing, while everything else is tanking?

Oh, and if you have been living under a rock somewhere, don't feel bad - it probably hasn't lost as much value as a real house...

Making money on the Web...

2009-03-15T16:07:00.002+02:00

In a day and age when everyone could use a little extra coming in, I thought I’d share some of the research I’ve done into making money on the Web. There are obviously thousands of different ways of making money using the Internet but, for simplicity’s sake, I’m going to split them into two main streams, and then focus primarily on the one.

The first type of money-making avenue would be having an e-commerce site of some sort. This is where you offer a product or service, and you use the Web as a sales channel. Here, your customers would find your site, use it to make their selections and purchases, and often process their payment as well, all in one. This could be an extension of a business that has a physical presence in one or more countries (think of an online shopping site for your local supermarket); or it could be a stand-alone business, based solely on the Web (think Amazon or Yahoo!). I would refer to these as ‘active’ Web businesses – where the revenue is generated from the sales process, and is actively worked for.

The second type of income stream would be more of a ‘passive’ Web business – where income comes in, even without physical sales being processed or services rendered. This is the type that I’d like to focus on in this blog post. One of the most common (and easiest) ways to generate an income in this manner is through advertising on your site or blog. In my mind, the easiest program to use to do this is Google Adsense. Basically, what happens is that you would sign up with Google to have ads placed on your site (you get to choose what types, how many, where they’re placed, etc.) and they would provide you with the HTML code to embed into your pages. These ads will then come up and show on your site when others are accessing it. If a reader or customer clicks on one of these ads, you can then be paid for it. How much you are paid depends on how much the advertiser paid for the click, and sometimes whether the person who clicks through takes another step (such as signs up as a user, buys a product, etc.) Generally, you would make a few US cents per click, but this can add up if you have enough traffic on your site, clicking on ads.

You’ll notice that I have a few such ads floating around on this blog. To be completely honest, the reason for me starting a blog was two-fold. First and foremost, it was to give me a channel to share some of the hundreds of thoughts flowing through my mind at any one point in time, and to share some of what I have been fortunate enough to learn in my life so far. The second aim, tied to the first, was to try and generate an income stream from the Web. I thought that, if I can make the content of my site interesting enough so that it appeals to a wide audience, I could leverage off of that audience and make a little bit of extra cash. Hence the ads around the site. If I write an interesting post that attracts you to read it, and you then click on an ad, I should (in theory) make a little bit off of that.

To date, it has been a mild success. I have made a little bit of change here and there, but I’ll be the first to admit that I have not been the most dedictated of writers – I have tried to put up at least a couple of posts a week, but if I was seriously serious about building an audience, I should be posting nearly every day. Having spoken to some very experienced bloggers (notably Chris Mills of Imod – www.imod.co.za), they have all said the same thing: If you want to grow a successful blog, it’s all about content, content, content! Make sure that you always have something fresh and new on you site, and your readers will respond with their loyalty. Now I realise that it’s not completely ‘passive’ – if you don’t write anything, you have no readers, and thus no income from ads – but I hope you understand what I’m getting at.

What I can say is that I’ve realised that certain types of blog-posts definitely have a broader appeal. I’ve generally had people clicking on and reading every post that I’ve put up, but I had a tremendous response on the last one (“How to draw up a budget”). Nearly 5 times as many people clicked on it compared to the next most popular! Thus, as a blogger, you have to walk the fine line between posting what you want to write, and what people want to read. It’s not easy, and the Web is littered with stories of blogs that just never took off…

So, I’ve decided to re-frame my approach to this whole blogging thing. I’m going to make an effort to put up at least two to three posts a week (and keep them interesting, not just doing them for the sake of doing them). I’ve also added another weapon to my arsenal. You’ll notice that there is now a Google search-function at the top of the page. This is another product of the Adsense program, and acts as a conduit for readers to be able to access the full power of Google search without leaving the page. If one of you performs a search using the strip above, and clicks on a link in the search results page, I should – in theory – get paid (I think if the link had originally been paid for). It’s only been up for a day or two, so I’ll see how it goes!

Now, this has been an extremely simplistic summary of the way I see it. I am definitely no IT-whiz, and am ready to stand corrected on anything I’ve mentioned here. But, if I can do it, anyone can!

Finance Coach - Vol. 10

2009-03-12T20:17:00.002+02:00

Here's a copy of the latest message from my Facebook Group - "Finance Coach (by Gareth Cotten)"...

Finance tip: Investing

Aim for real returns. When you invest money in a savings or investment account, the money that you make on your initial input (or capital) is known as the return. While most savings accounts will give you a return, and grow your money, you need to make sure that it’s a real return. You are getting a real return when the return is higher than the current rate of inflation. Inflation is the general price by which goods increase over a period and, because of it, your money is worth less in the future than it is today (because prices will generally increase over time, and you can thus buy less with the same amount of money). So, when measuring investment or savings opportunities, always aim to put your money in something where the return offered is higher than the inflation rate (which is roughly 11% in SA at the moment). If it’s not higher than the inflation rate, you may be earning interest, but you are theoretically losing money, due to the effects of inflation.

Business tip: Marketing

Have an ‘elevator pitch’. Whether you’re wanting to explain what you do, get potential investors involved in raising funds for growth, or just tell others about your business, create and perfect an elevator pitch. This is a short explanation which summarises the most important facets of your business into something no longer than 8-10 seconds. The name comes from business people who have pitched their ideas or businesses to others while traveling in an elevator – they only had a few seconds of the other person’s attention, and needed to get across a decent general idea, which would inspire the other person to want to find out more. Make sure that the pitch/summary is not too technical, but still gives the impression that you know what you are talking about. Also try to convey your passion in the short clip, as this will register with the listener more than facts and figures. Try it out on family, friends and colleagues, and ask them to give you an honest appraisal of whether they would get a good enough idea from just that short pitch if they’d never heard of you before.

How to draw up (and stick to) a budget...

2009-03-10T22:04:00.000+02:00

When wanting to draw up a budget, there are essentially two main categories that one looks at: income and expenses. The idea behind a budget is to have a plan every month of what your income is and what your expenses are, and then make sure that expenses are less than income (I know this sounds a bit simplistic, but you’d be amazed at how some people struggle with the concept).

Generally, you would start with income, and then work out your expenses based on that. This is because, for most people, their income is defined and they have a fair idea of how much it will be for the month. For the entrepreneurs among you, it is quite possible to define your expenses first, and then set about earning the income required, but that’s an approach to write about another day!

So, here’s a step by step approach to drawing up a budget:

1. Pull out a piece of paper, and write down your income at the top of the page.

This is what you bring in every month, and what you spend has to come to less than this amount. If it doesn’t, you’re living in debt, and heading for bankruptcy down the line.

2. Underneath that, write down your monthly expenses.

Don’t write down any actual numbers yet, just take 10-15 minutes thinking of everything that you would spend money on in a month, and putting them down on the paper.

3. Categorise your expenses

This is an important step, and will help you decide when faced with decisions on what to spend your money on. Next to each expense written down in step 2, write down which of the following categories the expense falls into:

Basic human needs (what you need to physically survive – shelter, food, water, rest, etc.)
Basic ‘societal’ needs (what you would be paying for if you live in the real world – car/transport, fuel, insurance, retirement contributions, tax, electricity, basic clothes and toiletries, etc.)
Nice-to-haves (what makes life worth living or creates some sense of balance – basic entertainment, eating out, smart clothes, etc.)
Luxuries (always nice, and always a treat, but can easily live without them – expensive gadgets and accessories, holidays, luxury clothes, extra entertainment, expensive cars, etc.)

4. Put down your ideal spending allocations

In a perfect world, this is how your income would be split. This will vary from person to person, but there are basic guidelines which are generally regarded as prudent. For example, spending more than 25-30% of your income on accommodation (rent/mortgage payments) could be seen as excessive. Likewise, spending more than 20-25% of your income on car payments or transport is not smart either, if you can help it. In my mind (and this is just my opinion) my ideal after-tax allocations would look something like this, in this order:

Savings/retirement contributions: 10-20%
Accommodation: 15-25%
Food: 10-15%
Transport: 10-20%
Insurance/utilities: 10-20%
Entertainment: 5-10%
Other nice-to-haves: 5-10%
Luxuries: 5-10%

5. Now write down what you ACTUALLY spend

This can be a difficult one, as you may not have an exact idea of what you spend month-to-month. To get a firm idea, carry a small notebook with you at all times, and write down everything you spend on a day-to-day basis. When I say everything, I mean EVERYTHING – from the groceries, to fuel for your car, to those drinks you had with your friends, to your morning coffee, to the small change you put in that charity box. Another way to achieve this is to keep the slips every time you spend money on something – still keep the notebook, but just for those things you don’t get slips for. Then, after doing this for a month, go through your bank statement and add all of your monthly expenses (such as loan repayments, insurance, pension deductions, etc.) to this list.

6. Compare what you actually spend to your ideal spending allocations

I’m sure you’ll be unpleasantly surprised! Identify how much of your income is being spent on nice-to-haves and luxuries. If you’re battling to pay your rent, but you’ve gone out with your friends twice a week, you’ve got your priorities wrong. Or if you have no provision for savings and retirement, but you’re driving the latest model car, you’re also setting yourself up for a problem. Have a long, hard look at the differences between what you should be allocating your money to and what you actually do.

7. Put savings into your budget

If you’re not putting aside any money for savings, for a rainy day, or for your retirement, the best time to start is now. Today. You’ll notice that in my budget breakdown, it’s the first item on the list. I believe firmly in paying myself first – I’m essentially making provision for my future before I spend a cent on anything else. As fit and healthy as you feel today, you won’t always be able to work, and you’ll need an income to live off of when you can’t. The alternatives are working forever, sponging off your family, or living off the state – none of which are terribly appealing.

8. Write down what your goals are

Once you’ve written up a budget (see the next step), you’re going to need a reason to stick to it. Many people draw up budgets, but fail to stick to them, and quickly fall back into their old ways. To stick to your budget, you need to have a goal – a reason for wanting to do it. It could be anything: you want to start providing for retirement; you want to pay off your debt; you want to stop the sleepless nights worrying about your finances; you want to save up for that amazing holiday/car/TV/mail-order bride. Whatever your goal is, write it (or as many as there are) down on the paper with your budget. Every time you start to feel despondent or restricted, pull out that piece of paper, and remind yourself of why you’re doing it. Picture yourself enjoying the rewards of your discipline (cruising down the coast in a convertible in your retirement, or watching a movie on your massive flat-screen a year from now), and you’ll bring yourself back in line.

9. Now write down what your budget will be from now on

You’ve had a look at what you spend your money, and where you should spend less. Now write up a budget that’s realistic, is in line with your goals, and applies your income to your basic needs first, steadily escalating up to nice-to-haves and luxuries if there is any money left over. Take your time, you don’t need to rush it. Chat to your family, friends, and colleagues, and ask them whether they have one, what criteria they use, and how it’s working for them. Ultimately, you want to have a solid idea of what you make every month, what you should be spending, and what’s left over. Then relax and give yourself a pat on the back, safe in the knowledge that you’ve taken some more control over your finances!

10. Check and update it regularly

As your circumstances change, so will your budget. Commit to checking your budget regularly, and comparing it to your current spending levels. It’s a flexible tool, and can be updated whenever the need arises. Personally, I go back to mine every 6 months, but how often you do it is up to you…

Good luck!

Finance Coach - Vol. 9

2009-03-09T23:08:00.002+02:00

Finance tip: Insurance

Consider paying your insurance upfront. Most people are under the impression that you can only pay your insurance monthly. What they don't realise is that you actually have the option of paying upfront for the year, it's just not that well communicated by the brokers/insurers. When you choose to pay monthly, most insurance companies charge a built-in interest charge into your premiums - anywhere from 8-20%. So you actually pay for the privilege of paying monthly! Check with your broker or direct insurer, and if this is the case, weigh up the option of paying upfront for the year. Yes, your cashflow will initially be affected (this is what the insurers bank on), but you'll be paying a pretty fair amount less for your cover. If you've got some cash tucked away, and you're earning less in interest from it than you'd save, it's the smart thing to do!

Business tip: Marketing

Carry your business cards everywhere. I mean EVERYWHERE. The thing about networking is that you never know when you might meet someone who could bring something positive to your business. How many times have you been out somewhere, and thought "This person would be great to chat to again, if only I had my cards on me"? The proactive among you would have at least scribbled your name on some scrap paper, but having your cards ready at all times is much more professional. And hand them out liberally - that guy you chat to at the coffee shop might seem like a nobody, but he could have some serious connections. The point is, you never know, so always be prepared. Invest in a little card-holder that you can take everywhere and anywhere, and make sure it's the first thing that goes in your briefcase/luggage/suit pocket/jeans/gym bag...

COPEing at the rugby...

2009-03-01T14:28:00.002+02:00

While watching a Super 14 rugby match yesterday - the Lions vs Bulls game to be precise - I couldn't help but notice that COPE (the new political party, Congress of the People) had banners and adverts all over the stadium. This piqued my interest as, in the nearly 20 years that I've been watching rugby, I can safely say that I have never seen a political party advertising so blatantly at a sports stadium. But, looking past that initial surprise, there's a fair amount that can be read into it...

By them choosing to dedicate a decent chunk of their marketing-spend on ads at the rugby, it shows who one of their main target audiences is. Before getting into the politics of it, one must remember that advertising at a sports ground or stadium is actually a two-dimensional marketing angle. Obviously, the supporters at the actual stadium itself are exposed to your advertising message, but smart marketers realise that you can actually target a much wider audience - being those people watching the game on their TV. Depending on where your ad is placed in relation to the actual playing field, TV viewers can have your message in their field of vision for most of the game as well. This is why you may see ads for SA companies on the advertising boards at a cricket match in Australia, for example - the advertisers realise that the pictures are being streamed around the world, and there will be plenty of interested SA supporters watching the game in their own country.

To give a little bit of political background, COPE was only formed in the last few months, and is generally seen as a break-away from the ruling ANC. Initially dismissed by the ANC as a bunch of no-hopers, COPE is now seen as a force to be reckoned with, with some high-level defections from the ANC and other parties, as well as a groundswell of support from the business community and general public (thanks in part to the huge media hype about them). While they may be a bit thin on policy, their general appeal lies in the fact that they are an alternative to the ANC, with a broad-based appeal that the other 'minority' parties lack. While these other 'minority' parties have a uphill battle to prove that they don't only have the interests of one particular group in mind (the DA is perceived as somewhat of a 'white' party, the 'ID' as a 'coloured' party, the IFP as a 'Zulu' party, the FF as an 'Afrikaans' party), COPE has the advantage of not having any historical perceptions to overcome. They have managed to unite people on the simple basis that they are disillusioned with the ruling party, and fed-up with the way things are being run at the moment. While this may not be the strongest message to run a campaign on, it seems to be working, with South Africans from all races and walks of life saying that they would consider voting for COPE in the upcoming general elections.

Now, let's get back to the adverts that sparked this train of thought. For those who were under the impression that COPE was only targeting the majority black vote - essentially looking at stealing votes from the ANC - I feel that this set of adverts has blown that impression out of the water. Historically in SA, rugby has been a bit of a 'white' sport (I know I'm generalising a bit here, and dipping into the race debate, but bear with me for the sake of argument). It has come on in leaps and bounds in terms of attracting supporters from across the spectrum, and has a massive coloured following in the Western Cape, but it doesn't yet have the same appeal to black viewers as soccer does. So when COPE decided to advertise at a rugby game, I feel that they made their intentions quite clear in terms of attracting the white (and coloured) vote. What struck me even more was the fact that they were advertising in Johannesburg, at a a game where the two teams playing are based in Johannesburg and Pretoria respectively. Now, these two locations could be seen as bastions of conservatism, with a strong leaning towards white (and often Afrikaans) supporters. The way I see it, COPE has basically stated that they want a decent portion of the white, conservative, Afrikaans vote. For a party that could be seen as a spin-off from the party most reviled by this group of voters (the ANC), this seems pretty bold to me.

This is just my opinion on the matter and, for now, all I can say is good luck to them. Seeing their ads has obviously made an impression on me, and I hope that their marketing analysts have done their homework, but I guess only time will tell...

(On a side note, I went to the Stormers game (playing the Blues from NZ), and had to sit through possibly the most frustrating performance I have ever seen. If they carry on playing the way they are at the moment, I'm going to apply for a trading licence at the stadium. If it gets approved, not only will you be able to buy cooldrinks, chips, and hot chocolate in the stands, but also hair plugs - to replace the piles that you pulled out watching them spill the ball every time they got possession.)

Ever wondered why they're called 'soapies'?

2009-02-26T21:42:00.002+02:00

Today's soapies, or soap opera's (as they're officially known), may seem to be thick on the ground and thin on plot lines, but do have any idea how they actually came to be, and why they're referred to as soapies?

To chart their beginnings, one would have to look back as far as the 1930's. Back then, radio was considered as one of the primary marketing channels, and advertisers would use it to push their products. A number of cleaning material companies, looking for a way to tap into the lives of their target market (women, who were mainly stay-at-home wives back then), decided to air serials with fictional characters. Each serial 'episode' would follow on from the previous one, and was intended to be a companion to the women of the day while they were doing their household chores. These serials' plot lines were fantastical, with a different, outrageous drama happening almost every day to the characters. Making the day-to-day happenings of the characters so far-fetched was intended to placate the listener (the woman), and make her feel as if her relatively monotonous life was not such a bad one to have. Wouldn't you rather clean the house and do the laundry, knowing that you'll please your husband, than have him lose interest and sleep around with your sister/brother/mother/neighbour/boss/dog-walker?

As time progressed, these serials gained in popularity and became an identification point for the women of the day. In due course, they moved over onto television, and haven't looked back. Today, there are hundreds of soapies broadcast around the world, and many have evolved into prime-time television. The underlying formula remains unchanged, though: Have fictional characters, not too unlike your target market (so that they can identify with them), who lead impossibly dramatic and unsettled lives. Build them into a plot line which continually builds on what has gone before, and keep the series going in perpetuity. A cash cow if there ever was one.

But still you ask: Why 'soapies'? Well, back in the 30's, the advertisers bank-rolling the production of the series were all cleaning companies, who produced laundry soaps, bath soaps, cleaning soaps, etc. Eventually, the series took on the identity of the adverts being played, and they became known as the 'soap operas', which was then colloquialised into the word 'soapies'. Just another example of marketing having the most profound effects on the way we live today...

Finance Coach - Vol. 8

2009-02-26T19:50:00.002+02:00

Here's a copy of the message sent out to my Facebook group - Finance Coach (by Gareth Cotten)...

Finance tip: Shopping

Avoid big carts. When doing your grocery shopping, avoid using the bigger carts available. It has been shown that shoppers buy more (potentially more than they need) when using a big cart - psychologically, they may feel more compelled to fill the space available to justify using such a big cart. Rather use a smaller cart, or even better, a hand-basket or two. That way, you will only buy what you need (you should be shopping off of a list if you've been following Finance Coach!), and will save a small fortune on unnecessary goods.

Business tip: Market to watch

Baby-boomers. If you are looking at starting a new business, or wanting to expand into a profitable market, consider developing a product or service aimed at baby-boomers. These are roughly defined as people born in the 10-15 years after WWII (ie. 1945-60). Many businesses that have become huge successes have targeted this market, as it represented a sudden burst of consumers, over and above the average birth rate. Some companies have marketed to this group over their entire lifespan, but the best thing about targeting them now is that they are at or near the peaks of their careers, and thus have enormous spending power and a relatively high degree of disposable income. This has created a vast new range of offerings, from senior care facilities, to plastic surgery services for the middle-aged, to holiday packages and resorts aimed at older couples, etc. Is there something you could offer that could target this highly profitable group?

From my side, while I love sending out these messages, and sharing what I have learnt, I would really like to get some feedback from you, the reader. Tell me what you think: Did a particular edition speak to you? Inspire you to action? Have you made regular use of one of the tips provided? I'm happy to admit that it can be daunting to write out into the big wide world, but it makes it so much more worthwhile when you know you're having an effect. So, drop me a message, post something on the Group wall, and invite people to join - we're hitting a little bit of a plateau in terms of member numbers, and I want to blow past it, so keep those invites going!

Finance Coach - Vol. 7

2009-02-23T18:59:00.003+02:00

Hi everyone,

Here's your Monday edition...

Finance tip: Planning

Calculate what you'll need in retirement. Ideally, this should be done with a financial planner, but you can get a pretty good idea by doing it yourself. Here's a simplistic breakdown: Estimate what you'd like to live off of monthly once retired (and decide roughly what your retirement age will be). Are you wanting to live more thriftily once retired, or spoil yourself? Will it be based on a percentage of your forecasted final salary? Remember to take inflation into account for what goods/services will cost in the future, and don't forget that you will likely have higher medical costs. Once you've done this, calculate what lump sum would provide you with your desired level of income. This number is then your goal to save towards, so get cracking!

Business tip: Staff

Recruitment. While most businesses are cutting back on their staff bills during the financial crunch, remember the saying of "When there's blood on the streets, buy." This could well be the time to "buy" staff. Many companies, focusing on the short-term, are letting premium employees go to save costs. Take a long hard look at your finances, and see if there's not a way to take on one or two extra staff. There are now thousands of top-drawer candidates out there, with a wealth of experience and insight, desperate for work. You might be able to bring an absolute super-star into your team, ready to make the most of an opportunity to grow your business, and get him/her at a bargain price!

You gotta pay to work...

2009-02-17T21:53:00.002+02:00

I read a column in the Sunday Times the other day, where the columnist was horrified at the practice of a certain shopping centre, and how they were allegedly 'extorting' the car guards that worked there. Basically, the shopping centre charges the car guards a flat rate of R40 a day to work at the centre - if they don't pay this, they get booted off of the property immediately. (For those not from SA, we have a seemingly unique situation where people - generally unemployed - hang around wherever there is public parking, and 'charge' you for ensuring that your car stays safe. Some see it as extortion, while others see it as a valid way to create employment - that's a debate for another day.) The shopping centre's reasoning behind this was something along the lines of 'it keeps the guards from disappearing, and subsidises their uniforms'. While their argument and reasoning does have some merit, I feel that R40 a day is quite excessive - especially when, according to the guards, they only earn about R80 a day on average. Now, the reason for me re-telling this story is not to whine about a huge shopping centre taking advantage of seemingly underpriveleged people, but rather to enlighten you about some other occupations that require you to 'pay to work'...

The first occupation is that of a taxi-driver. In South Africa, minibus taxi's are the target of much public scorn and anger (although they do provide a very necessary service), but the general model applies around the world. Basically, the way that taxi's are operated is that the taxi owner (who will often own multiple vehicles) recruits a driver to drive his taxi. This driver is then solely responsible for bringing in income. The owner will set a certain amount of money as the required 'pay-in' for the day. The driver then has to bring in that amount of money at the end of the day, and return the taxi with a full tank of petrol. Whatever is left over is then the driver's to keep. As you can probably see, the owner is the one who really makes the money in this situation. While this is a smart entrepreneurial move on the owner's part, perhaps you can now understand why the taxi drivers drive like absolute idiots much of the time - they have to get between their pickups and drop-offs as quickly as (in)humanly possible, in order to maximise their daily takings. In SA, the 'pay-in' is generally set quite high - think R400-500 a day or more. When you consider that most individual trips only bring in a few Rand at a time, and the driver still has to pay for petrol as well, you can see why they are always in such a rush. In essence, the driver has to pay to work, and only when he's bringing in more than his 'pay-in', will he actually make any money.

The other occupation that comes to mind straight away is that of a stripper. In many, if not most, strip clubs, the dancers have to pay a set fee to work at that particular club. This fee can be a daily, weekly, or monthly one, but it has to be paid before the stripper can even set foot onto the stage or the floor. The general model is then that the stripper gets to keep what she (or he) makes from private lap- and pole-dances. This is why, for those of you that have been into a strip club, you get the feeling that the dancers are quite pushy for you to have a private dance - they are essentially in a sales role, and don't make anything if they don't sell any dances. The club owners would then have an income stream from the dancers, and also make margins on food/drinks and merchandising.

Now, before you make up your mind that all these people are being exploited, just remember that many of them make very good money doing what they do. Hence there will always be car-guards, taxi drivers and strippers!

Finance Coach - Vol. 6

2009-02-17T17:52:00.001+02:00

Here's a copy of the message sent from my Facebook group - Finance Coach (by Gareth Cotten)...

Finance tip: Shopping

Cars and other big-ticket items. For those of you fortunate enough to be looking at buying a new car (or similar big purchase) in the foreseeable future, there is a definite strategy to ensuring you increase your chances of getting it at the best price possible. The best trick in the book is to go out, having done your homework before, in the last few days of the month, with your chequebook in hand. At this time of the month, sales staff are pushing to meet their targets, and are more likely to drop their prices to secure a sale. To get the absolute best deals, do this, but at the end of the dealer's financial year - they want to get stock off of their floor to make their books look better (which gets them better terms with their banker for the coming year). And most importantly, when negotiating with them, make it clear that you are prepared to walk away from the deal - you'll be amazed at how much of a jolt that gives them...

Business tip: Customer service

Get out on the floor. If you, or members of your management team, have been receiving reports of a drop in customer service standards, or drops in sales, get back onto the floor, and in your customers' faces. The companies with the best customer service records, and brand loyalty, have an ongoing process of sending managers and senior execs back out into the front-lines of the business. This will improve feedback from customers, and help them to see and understand issues brought up by both customers and front-line staff. It could result in an epiphany for streamlining your systems and/or operations, but at the very least will put your senior staff back into the loop, and help them to keep a finger on the pulse of the business.

Why I'm 9-5ing...

2009-02-14T12:59:00.002+02:00

Firstly, I must apologise wholeheartedly for not posting for the last two weeks. If you're trying to build an audience (as I am), it's a cardinal sin to not have new material regularly, but this post will hopefully explain the situation...

Since 2003, I have worked for myself. Before then I was studying full-time, but I then started my first company at age 19. It was at first a great little sideline, and then developed into quite a successful business, which took up most of my time once I'd finished university. Since 2005, when I graduated with my Bachelor's degree, I have pretty much lived the archetypal small business entrepreneur's life: Wake up when I want to; work like crazy during busy periods; take time off during slow ones; dabble in a few other projects as I see fit; spend time shooting the breeze with other like-minded peers; basically run my own life and my own show. Until recently, I felt that that was a very fulfilling, successful life.

Like most entrepreneurs do at some point, though, I started getting a little restless earlier this year. For a guy my age, I was making good money, had few expenses, made time for myself whenever I wanted it - but I felt I needed a new challenge. I wanted to try getting into the corporate world, where I could expose myself to bigger businesses, apply the knowledge that I've built up, and basically learn as much as I could. I did have my reservations, though: early mornings, working on someone else's clock, less time for my own businesses, restricted holidays, etc. Nothing worthwhile is ever easy, though, so I thought I'd give it a go. I went to a couple of interviews, and was offered one or two positions, but none of them really grabbed me. That was until the end of January...

I had spotted an ad in the newspaper for a Financial Manager position at a fast-growing tourism concern. I am involved in the tourism and leisure industry through my limo company, and have the Accounting and Finance knowledge which was required, so I went for an interview. What really piqued my attention was how the interviewers (the MD and the FD) were talking about how varied the role was (from finance to HR to strategy), as well as opportunity to work flexible hours and locations (they want to move away from the 'in the office 9-5' model). They also didn't have a problem with me continuing to run my businesses on the side, as long as it didn't influence my quality of work. The package was a pretty decent market-related one, and I felt that this might just work out. As the story goes, they offered me the position on the day of my first interview, and I accepted.

I started two weeks ago (hence no posts since then - taking some time to adjust to early wake-ups!), and am really starting to feel like this is going to work out nicely. The office is a great environment - friendly yet professional - and I'm starting to get a decent feel for the role (check them out at www.noxrentals.co.za). Once my training is completed in the next few weeks, I'll be able to do some work from home, and adjust my hours as I see fit (which is great!). Importantly, I've realised that they definitely weren't lying about the variety of the role - no two days are the same, and I can foresee plenty of interaction and involvement at the executive, strategic level. What I really wanted to write about, though, is how the extra salary is going to be extremely useful...

Before I took this job, I used to make pretty decent money for a guy my age, working at his own pace. My limo company (www.chariotgroup.co.za) is now very established, and has grown very nicely over the years, and I also have income coming in from a part-time accounting contract with a nightclub. Now, however, I am bringing in a good salary on top of that. Most people would be very happy with just the salary, and it would allow them to live very comfortably as well as save for their future. As my expenses are very low (I still live at home, and am quite careful with my spending) I have always been able to live comfortably up until now, and still save up for new business investments, as well as my future. Now however, I can kick my saving and investing into hyper-drive! Here's my plan...

Where most people in my position would immediately go out and upgrade their cars, pay for expensive holidays, buy a bigger place etc., I am going to continue to live as frugally as I did before. I might treat myself here and there, but nothing crazy. My main goal now is as follows: By my 30th birthday (I've only recently turned 25), I want a million bucks in a liquid investment. This can then be used for anything, but at the moment my plan would be to buy an annuity of sorts, which will pay out monthly for the rest of my life. Obviously it's subject to a number of factors, but as a general guide, a million bucks would be able to get me close to ten grand a month for pretty much forever. Once I'm thirty, I'd then be able to use that monthly income for whatever I feel like. It could boost the income that I'm earning then, or it could be used to fund a new business, or expand an existing one, or I could decide to not work at all and live off it (albeit frugally). The point is that it would be completely passive income, and it would come into my account every month, pretty much no matter what. The beauty of it is that I will still be plenty young enough to enjoy the extra spending money or free time, whichever way I choose to go.

I've calculated that, with a conservative return of roughy 10% a year, I need to put away 12500 bucks a month to reach my goal. For now, I'm gonna go for it. The worst that could happen is that I change my mind a year or two from now, and I have a nice nest-egg to play with. This twelve and a half grand won't change my living standards too much either. I can still go out for beers with the boys, buy myself lunch when I feel like it, fly up to visit my girlfriend once a month, and do all the little things that make life worth living. In fact, I should still be able to upgrade my car if I feel like it (although I probably won't for a while - I just love her too much)! Some might say that I've fallen with my ass in the butter, but to them I say that I've worked for absolutely everything I have, and never take anything for granted. It might seem easy now, but I put in the leg- and grunt-work when I needed to, whether it was in building my businesses or getting my qualifications. And let me also remind you that I now have to balance a demanding full-time job with running a successful business - so I don't expect it to always be smooth sailing...

I will let you all know how the 'plan' unfolds, so watch this space, but I can tell you right now that it's gonna be interesting. I'm pretty damn excited, so here goes nothing!

Motel schmotel...

2009-01-29T13:20:00.001+02:00

While driving halfway across the country yesterday (to help my girlfriend move into her apartment at her new university) I noticed something which I had never seen in South Africa before: a real motel. Now before you start clamouring that I’m mad, and think that I’m some kind of hermit, let me explain…

I’m fully aware that there are plenty of motels scattered around the country. I’m in the transport business, enjoy driving cross-country, and have stayed in dozens of them. This one, though, was slightly different, and it struck me enough to write about it. It was in Sedgefield, a small coastal town in the Garden Route here in the Western Cape, and its sign stated proudly that it was the Motor Inn. What made it different to all the other motels that I’ve seen and stayed in was how it was designed. Many local motels tend towards being small stand-alone bungalows clustered in a circle or a few rows; and those that aren’t are semi-detached and staggered slightly diagonally, with each one having its own character – almost as if the building has been added to as the demand has grown for more units.

The Motor Inn in Sedgefield, however, was built as if it had come straight out of the middle of the USA. For those of you who’ve ever watched a movie from the US (which means all of you), you will have seen a version of the archetypal US motel. You know the type: simple single-storey building; office in the middle or at one end; each room with a parking bay outside the door; one big window per room, facing onto the parking lot. This is where the term ‘motel’ came from – motor hotel – where weary travellers could drive their vehicles right up to their room, instead of parking them in a central hotel parking lot and going up to their rooms. They are spread out all over the US, and have been a landmark of the vast open spaces for decades. The reason for their popularity is simple: they’re cheap; functional; have what you need (bed, shower, toilet); and, most importantly, they’re right there – in the middle of nowhere when you just can’t face driving another mile for the day.

What I’ve never understood about the design of ‘motels’ in SA is the way that they are built, with the units often separate. To me, building them the way they do in the US is much more logical. By having multiple units in one structure, you save a fair chunk in building and maintenance costs: the units have a common wall; they share the same roof structure; you only have one window per room; plumbing, electricity and ventilation are simpler. It’s also quicker and easier to clean units that are uniform in their layout. All in all, this means that the owners of the motel lay out less up front to build them, and can maximise their profits by not having to spend unnecessarily on maintenance. In fact, motels are very often owned by retirees in the US – they use their retirement package to buy the motel, and then live off of the income it generates. It’s a simple business to run, with minimal effort required day-to-day, and can provide a decent, liveable income. I feel that SA motels, though, have opened themselves up to higher building and maintenance costs, using the layout that they do.

It was thus quite refreshing to see a motel in SA working off a proven ‘model’ – one gets the feeling that the owners have put some thought into it, and I wish them the best of luck with their business. Interestingly enough, our ultimate destination yesterday was a postgraduate village in the university town where my girlfriend will be doing her Master’s degree. From what I had been told, I was under the impression that my better half would be staying in an apartment block. On arrival, though, I was pleasantly surprised to find that her room was a free-standing unit in a little cluster complex, surrounded by similar units arranged in rows. And what had it been used as before the university purchased it? A motel…

25 years on, and Virgin Atlantic still flying high...

2009-01-24T18:14:00.002+02:00

While trawling the Web earlier, I came across a blog post by Richard Branson on his official blog page (http://entrepreneur.virgin.com) mentioning how they have recently celebrated 25 years since the first Virgin Atlantic flight. I am a MASSIVE Branson and Virgin fan - I've read all his books on multiple occasions and follow his businesses as closely as I can - and thought I'd share what I remember about how Virgin Atlantic Airlines came to be...

While on his way on holiday, or en route to a business meeting (the exact details are sketchy in my mind), Richard was due to catch a flight on one of the existing airlines at the time. At very short notice, the flight was cancelled, and he, together with most of the other passengers, were basically stranded as there was not much space on any other airline. People were just milling around in the airport, waiting for news or an update, but Richard decided to do something about it. After realising that there was not much that the airline staff could do (or were willing to do) he walked around the airport, and found where the charter services operated from. He asked how much it would cost to charter a plane to their intended destination, and got a price out of them. He then borrowed a writing board, and went back to where the stranded passengers were waiting around. He set up the board, wrote the cost at the top of the page, and then divided it by the number of people on board, to come up with a cost per person. Pretty much everyone bought into the idea, and they went ahead and chartered a plane. Obviously, everyone was extremely thankful for his efforts, but what must have been a real spur to his entreprenerial spirit was when one of the passengers (an elderly woman, if I remember correctly) went up to him after they'd touched down, and said something along the lines of: "The flight was fine, dear, thank you. Put in some in-flight service, though, and you could even make a business out of this." The cogs in his head must have started turning then and there, and so it all began...

Not only is the story a heart-warming one, but it also summarises a number of the traits that have made Richard Branson (and other great entrepreneurs) so successful:

- Firstly, the do not simply accept what they are told - they question and enquire to find answers. He could have sat there and waited for the airline to make a plan, but he decided to make some enquiries as to alternatives.
- Secondly, they are proactive and realise that action is what counts. He proactively went out and found out what it would take to accomplish his goal; he didn't mention the idea and then sit around.
- Thirdly, they communicate their ideas simply and clearly. He went to where the passengers were, explained what he wanted to do, and displayed it on a board for all to see.
- Fourthly, the know when they are onto a good thing. He didn't just take the compliment as a thank-you for what he'd done - he realised that there was potential for people to use a service like that, who'd be prepared to pay for it.
- Fifthly, they aren't afraid to take risks (after doing some homework). It's not mentioned in the story above, but he had no idea of how to run or start an airline when he decided to give it a go. He believed in himself, though, and was prepared to take a risk and put in the often super-human time and effort required to get it going.

The difference between the entrepreneurs out there, and those not that way inclined, is that the latter group would have simply seen the story as a heart-warming tale with a happy ending. The entrepreneurs among you would have recognised some of the traits mentioned, before I even spelled them out... Which type are you?

Finance Coach - Vol. 5

2009-01-24T16:16:00.002+02:00

Here's a copy of my latest message from my Facebook group - Finance Coach (by Gareth Cotten)...

Finance tip: Income

Dog-walking. This is the first of the suggestions for making extra a little extra cash on the side. It's extremely simple: You go around to your neighbours, or people in your area, and offer to walk their dogs for them. It's a very necessary service, as many people are too busy to walk their own dogs, and feel guilty about not exercising them. You can walk a couple of dogs at a time, doing it in the evening after work, and only work on the days you want to. The extra money is not to be laughed at either - if you're organised, you could create a pretty serious income stream (there are many people in the US who do it for a living, and support families on the income). And best of all, you're getting that much-needed exercise and fresh air, while being paid for it!

Business tip: Staff/Operations

Get staff input. Don't ever be afraid to ask your staff for their input on an idea. Some business owners feel that it's a sign of weakness to not dictate every last thing to their staff, but this is a complete fallacy. There could well be an area or function of your business that has been performed one way for years, but is not very efficient. The breakthrough for streamlining it could lie in the mind of one of your employees. Or there could be a business problem that you just can't seem to solve. Your employees could have a different view on it. Ask them if they feel there's a better way to do something - it could save them time or effort, make them more productive, and save you money. Not everything they come up with will be practical or useful, but you don't have to implement everything they suggest. Pick those ideas or suggestions that make the best business sense, and implement them. Even if they don't come up with a master-stroke idea, they will appreciate being consulted, feel more empowered and part of the business, and work harder for you.

SA's top-selling cars for 2008

2009-01-23T17:38:00.002+02:00

For those of you interested in who buys what, see if you could have guessed the results of the best-selling cars in SA for last year...

For passenger cars, the list is as follows (with the number sold in brackets):

1. VW Polo (29 476)
2. Toyota Yaris (26 102)
3. Toyota Corolla (24 714)
4. VW Citigolf (15 878)
5. Mercedes C-Class (15 124)

One must congratulate Volkswagen for managing to beat Toyota to the top of the pile - a position the Japanese company has frequently occupied in recent years. For me, the Polo coming in as No. 1 was no surprise. It's good styling, street appeal, and relative affordability (backed by the VW badge) have meant it's been snapped up by everyone from students to 'black diamonds' to busy grannies. The Yaris is a solid choice for second, being small, nippy, cute and going on a whiff of an oil rag. I was quite surprised to see the big gap drop-off between third place, and the evergreen Citigolf, though. This must be a symptom of the much wider variety of cheap, get-you-from-A-to-B vehicles on our shores in the last 2-3 years - meaning that there are other options out there for cash-strapped students and starter-families.

The light commercial market standings were as follows:

1. Toyota Hilux (29 481)
2. Opel Corsa Utility (21 297)
3. Toyota Quantum (20 601)
4. Isuzu KB (17 191)
5. Ford Bantam (11 879)

These positions were quite unexpected from my side. The Hilux coming in victorious is a real coup for Toyota, as I would have expected the Corsa and Bantam to be best-sellers. The latter two are smaller, granted, but they are relatively light on fuel, and very popular with the small-business and student market. I would definitely have put the Corsa ahead, purely on its looks (with it's chunky, agressive lines and colour schemes - yes, I'm a guy) but I didn't expect such a big gap between the two, as they are both relatively affordable little runners. Even though it's not the most fuel-efficient or comfortable vehicle, the Hilux has obviously traded off of it's tough, reliable legacy (goodness knows we needed a haven of reliabilty last year!); and it's well-constructed marketing campaign, emphasising these characteristics, has paid off to win it gold. Toyota's other big baby, the Quantum, can thank the taxi recapitalisation project (as badly managed as it is) and positive sentiment about tourism ahead of 2010 for its bull-run into the top five.

Wouldn't be too surprised to see if the trusty old bicycle makes it onto the list this year...

It's no Secret...

2009-01-21T17:11:00.002+02:00

Over the last few years, there's been a huge stir caused by the book and DVD The Secret, brought out by Rhonda Byrne. Essentially, what it revolves around is harnessing the power of attraction to achieve your aims and goals. The power of attraction is based on the premise that if you constantly think about and visualise a particular goal, you will accelerate your progress towards that goal.

Now, while I think that it's great that a lot of money has been made off of this book/DVD, and the concept has gained currency around the world, the idea behind it is really an ancient one, and I've been using it for many years - well before the book or DVD came to light. I myself read a version of it in a book when I was only a teenager, and used it all through high school, university and in my businesses. What has prompted me to blog about it here, was how powerfully it worked for me recently.

The basic phrase which I took out of this book (I can't remember exactly who it was by, but it could well have been Dr. Demartini) was this: What you focus on expands. It's short and punchy (thus seeming like a sound bite) but it's really so much more. Basically, what you spend your time and energy on gains more momentum and 'power', for lack of a better word, and becomes more and more real in your consciousness, until eventually it manifests itself physically. I'm not going to get too 'new age' on the whole thing, but wanted to share how it worked for me recently...

At the beginning of this year, I sat down and thought through what I wanted to achieve this year. I had specific goals in the personal, financial and business spheres of my life, and wanted to commit myself to them. To do this, all I needed to do was write them down. This simple act turns an mental idea into a physical reality - the goals you've set are now on that piece of paper in front of you, staring back at you. A goal or dream not written down is only a wish. Now, one of my financial goals was to up my monthly earnings to x amount of money. It was a figure substantially higher than my current level of earnings, and I imagined it would take me a good 6-9 months to reach it. Accepting this, I started working towards it straight away. That same day, I wrote down several different ways I could reach my goal. I could grow my businesses, take on consulting work, start some new businesses I have in the pipeline, or even take on a full-time job working for someone else. My goal was fixed, and I was open to any opportunity to help me attain it, no matter how different it was to what I was currently doing.

Here is where the power of attraction comes into it. If I'd been like most people, I would've simply sat and daydreamed about earning that much money. But I knew that if I focused on it, it would become a reality, so I did. I focused on it both mentally and physically. Mentally, I would sit quietly and picture myself already earning that amount, and what I would spend it on and invest it in. Physically, I started researching other businesses that give relatively fast returns; I got stuck into even more books about successful businessmen and companies; I started looking on jobs sites for the first time in years - anything that would bring me closer to my goal. I even posted my goal in the public domain, by putting in on my Finance Coach group on Facebook. By doing all of this, I was telling myself, and others, that I was serious about attaining this goal. Through all my reading and trawling, I came across a job on offer (in a publication I wouldn't normally read). I applied, was asked to come for an interview, and was offered the position 7 hours later! I've since accepted the position - it seems to be a good challenge, and should allow me to still run my other businesses - and my goal will be accomplished. With the salary from this new job, I will now be earning 500 bucks more than the x amount I had set as my goal.

Now, just think about that. I set a goal based on an arbitrary number, and after focusing on it intensely, I will now be earning almost EXACTLY that amount. Within a month from start to finish! Now, some out there will say I'm just lucky; but I know that because I focused on that goal, and committed myself to being proactive about it, it expanded and expanded until it became a reality. Now THAT is the power of attraction...

Finance Coach Vol. 4

2009-01-20T22:52:00.002+02:00

Here's a copy of Monday's message from my Facebook group - Finance Coach (by Gareth Cotten)...

Finance tip: Debt

Debt reduction. If trying to pay off various types of debt, make sure to take note of the different interest rates being charged. Generally, store cards, personal loans and credit cards will charge the highest rates, with mortgages and vehicle finance being at the lower end of the scale. Then, to make the biggest savings impact, aim to pay off the debt with the highest interest rate first. So, while, maintaining the minimum payment on all your other debt, put everything extra into paying off the most expensive debt. Once that's paid off, take the money saved from no longer having those particular repayments, add it to the extra from your other debt repayments, and then pay off the debt with the next highest rate of interest. Keep doing this until they're all gone! This way, once each respective debt is paid off, you have a large chunk of extra cash to pay off the remaining debts, and they get paid off faster and faster.

Business tip: Marketing

Email marketing. One of the most difficult things today, with the amount of spam and junk-mail being sent around, is to get potential customers to actually open and read your emails, rather than just binning them as they come in. You can get a much higher read-rate by taking a few extra minutes to work on a compelling email subject line, as well as a heading or headline for your email. For your subject line, using the word 'you' has a strong effect, as the reader feels that the email is specifically addressed to them. Words that inspire action include 'exclusive', 'exciting' and 'introducing'. Also, keep the subject line short, or you risk losing your reader's attention. Now, a good subject line will get them to open the email, but it takes a great headline or heading to get them to read the whole thing. Use exciting adjectives, or action words, to really inspire them to continue reading. Also, ask yourself if the reader will know what's being offered if they only read the header and skipped the rest - is it explanatory enough, while still being punchy?

Education - always a good investment

2009-01-19T18:58:00.002+02:00

In yesterday's Sunday Times (one of the biggest Sunday newspapers in SA), I noticed an interesting trend. Normally, at the bottom of the pages, underneath the larger articles, you would find a variety of adverts. These would generally be a real variety, ranging across every industry and service imaginable. What I noticed yesterday, though, was how many adverts Damelin had, all throughout the different sections of the paper.

In short, Damelin is a privately owned college, that specialises in distance learning. Their course selection ranges from short, multi-week certificate courses all the way through to full diplomas taken over multiple years. They have a variety of courses that cover pretty much everything.

Now, distance-learning colleges are nothing new, and generally not that noteworthy. What was interesting to me was how pervasive their advertising was, throughout such a major Sunday publication. It's not cheap to advertise in that newspaper (although they probably would have been able to pressure for a good deal as newspapers ad revenues are taking a hammering - but that's a story for another post), so their campaign is costing them a pretty penny. I personally think it's a very smart move on their part, though...

Around the world, people are having their jobs cut out from underneath them left, right and centre. Those that are managing to keep theirs, are generally the ones who have made themselves indispensable to their companies. These days, having worked for the same firm for 40 years does not make you indispensable - being a multi-skilled multi-tasker does. And this is exactly where further education comes in. If a manager has to choose between you and your colleague in the next cubicle, where you both have the same history and performance, but you happened to have an extra diploma or certificate in something, chances are you're the one who's bacon is secure. And it doesn't have to be an advanced degree in your field either - even a small certificate or diploma in an unrelated field could play into your advantage. It shows that you are open to other experiences, have exposure to another industry or sector and, most importantlty, that you are trying to learn and improve yourself - an asset for any company.

Personally, I aim to learn something substantial every year. Whether it's a new course, a foreign language, an artisan skill, or how to create a following for a blog (like this year), I aim to constantly expand my horizons and skills base. Not only does it make me a more valuable employee (or business owner in my case), but also a richer person mentally, and hopefully more interesting too! So, my advice for those of you who have lost their jobs recently, or have been battling to find one in the first place: Don't sit at home and mope - get out there and sign up for a course, do some volunteer work in a different industry, learn a skill by shadowing an expert, anything - just get out there and do it.

And this doesn't only apply to entry-level and shop-floor employees - it applies to executives too. A few week ago, I went to a talk for a distance MBA. One of the execs there asked the presenter "I'm already a senior exec, why should I study an MBA?". The presenter replied "To keep your job." Everyone in the room nodded their heads in agreement. He went on to explain that there is a breed of younger, more driven professionals coming through the ranks, with these qualifications under their belts, and no-one's job is safe anymore. This sparked an impromptu discussion amongst the delegates there, with many of them saying that they weren't looking at doing the MBA to leap-frog to the head of their respective companies; they were there to keep their current jobs, and to stop being passed over for promotions time and time again. They'd committed themselves to taking up the challenge of doing the MBA, in the knowledge that it would help them to keep their careers afloat

So, to get back to where I started, I think the move by Damelin to get major exposure (especially at the beginning of the year when many people look to change jobs), is a super-clever one, and they are capitalising on this trend for people needing to study further. If nothing else, maybe they triggered a couple of readers into at least thinking about it...

Nail that interview!

2009-01-16T18:23:00.002+02:00

In the spirit of it being the beginning of a new year, which is when most people look to change jobs after taking stock during their holiday, on top of the fact that retrenchments are flying around everywhere, here are some hints and tips on how to increase your chances of impressing at an interview...

1. Arrive early
Always aim to arrive at least 15 minutes before your scheduled interview time. Not only does this leave a good impression, but it also gives you a chance to settle your nerves and prepare mentally before you go in.

2. Dress up
The way you dress says a lot about how seriously you take your work. Even if you are applying for a lowly, manual position, dress smartly and neatly in clean clothes. It's always best to phone ahead and ask if there's a specific dress-code, but if you're still unsure, rather dress too smartly than too casually.

3. Personal grooming
Always look your physical best for an interview. This means being washed, clean shaven, with your hair under control, fingernails short and clean, and smelling fresh. Brushing your teeth doesn't hurt either, but don't overdo the mint smell - it can give people the impression you're masking something.

4. Entering the room
When called on to enter the room, walk right on in. Don't hesitate and knock on the door (you've been asked to come in) - it will make you seem timid and undecided. Walk upright and as confidently as possible over to the desk/table/chair. If it's not a huge desk, lean over and give a firm handshake to the interviewer, with a smile. Tip for the guys: If you're shaking a woman's hand, and worrying about shaking too hard, wait for her to apply pressure, and match the pressure exactly. Then put your briefcase/effects down, and take a seat. Don't fiddle with your case/paperwork too much, rather have it ready at hand.

5. Do your homework
Before going for an interview, do as much research as you can about the company. Visit their website, read their brochures, speak to staff members - absorb as much as you can, and use this knowledge when constructing answers to questions. This will show you have initiative, which always counts in your favour.

6. Body language
When sitting, don't cross your legs at the ankles underneath your chair - it makes you look nervous and juvenile. Rather sit with your feet flat and facing forward if you're a guy, or with one leg crossed over the over if you're a girl. Make sure that your hands aren't fidgeting, or in your pockets - rest them on the arms of your chair or on your legs. Don't slouch, but don't sit like you've got a vegetable up your ass either - you'll look lazy or arrogant (or like a veggie-porn freak). Leaning slightly backwards shows you're relaxed, while leaning slightly forward shows you're attentive.

7. Questions and answers
This one's up to you. Answer truthfully (professionals can tell when you're lying or exaggerating), and don't take too long to answer or fumble over looking for the right word. Try and put your experience into the context of the question/company. Also, don't forget that an interview is a two-way process - you're allowed (and expected) to ask questions about the company or position on offer.

8. Ending the interview
The interviewer will generally make the first move when closing the interview (by saying so, or closing your file/CV). Once they've said their last, stand tall, thank them for taking the time to see you, and shake their hands firmly again (if possible). Pick up your possessions and walk out proudly. If you're choking in your collar, sweating like a pig, or barely controlling your anxiety, keep walking upright and make sure you're well away from the building before loosening your tie or throwing up in a dustbin...

Good luck!!

Finance Coach Vol. 3

2009-01-16T18:21:00.002+02:00

Here's a copy of my message to my Facebook group - Finance Coach (by Gareth Cotten):

Hi everyone,

Here's your Thursday instalment...

Finance Tip: Income

Make a little extra. Everybody reading this (and I mean EVERYBODY) could use a little extra cash here and there. While some may think some of the suggestions that will be forthcoming might be below them, others might find them to be just what they need. Whether you use the extra to boost your savings, pay off some of your debt faster, or to save up for a special holiday or treat, the principle of making a little extra is a sound one. Think of something you enjoy doing, but couldn't quite do as a full-time career. Maybe it was how you used to make pocket money as a kid, or you saw someone else doing it and thought "That could be interesting". Focus on things that don't take up too much time, and are reasonably flexible in terms of how often you need to do them. There will be suggestions in future instalments of Finance Coach, so keep a look out. You never know - they could spark a sideline business, or even an empire!

Business Tip: Competitors

Form coalitions. Whatever industry you find yourself in, it's likely that you'll have competitors. They might be bigger, smaller, established, or just starting out, but you'll definitely have one thing in common - competing for market share. In the current business climate, it's quite likely that you're all taking a knock, so why not go against the idea of "competition" and work together? Now, you don't have to share trade secrets, or start a cartel, but there are ways that you work together to benefit everybody. There could be excess demand for one of their/your products which they/you can't fulfill - why not pass it along, rather than lose a customer to the industry? You could collaborate on a marketing initiative to draw customers back to your industry, or share resources to bring down costs. You could work on a commission system, or on a like-for-like basis. You never know - they could be in exactly the same position as you, wanting to reach out, but afraid to make the approach. So make the first move, and open up the possibility of a good, positive relationship, where everyone benefits.

Yours in finance,

Gareth Cotten

Sleep your way to the top...

2009-01-13T17:31:00.003+02:00

For those who know me well, I am a bit of a stickler for getting my 8 hours sleep a night. Running my own company definitely helps in that regard, as I'm generally able to wake up when I want to if I've been working late into the night. Some people gasp and ask "What kind of businessman are you if you only wake up at 10am?!?" Well, I found an article that supports my thinking on the matter...

A Harvard report has broken down the impact and functions of the different stages of sleep. It is generally accepted that there are 4 stages of sleep. Stages 1 and 2 are light sleep, where we disconnect from the world around us. Stage 3 is known as deep sleep, where brain and body activity drop to their lowest points. Stage 4 is REM (rapid eye movement) sleep, where our brains become particularly active and we dream.

Now, we all know that sleep is important for our brains and bodies to recuperate, but there are actually very different functions that happen during Stage 3 vs Stage 4. Deep sleep is essential for physical recovery and growth - so this is what you need when you've been sick, on your feet all day, working out at the gym, etc. When deep sleep's in short supply, you're more likely to get sick and gain weight. In REM sleep, however, the brain processes memories and emotions, which is crucial for learning and higher-level thought. A shortage of this type of sleep can result in slower mental processing, as well as memory and concentration issues. For business owners or managers, the complex, strategic tasks which make up most of your day become exponentially harder when short on REM sleep.

The report also found that optimal amount of sleep is 7-8 hours a night. Many people brag about being able to manage on 4, 5, or 6 hours a night (psycho's!), but they are actually doing themselves a disservice. When faced with a shortage of sleep, the body chooses to forgo REM sleep and opt for lighter sleep. This means that higher-level cognitive functions (like strategic or out-of-the-box thinking) are restricted, and you actually perform at a much lower level than you are capable of. You can also miss out on subtleties in conversation, making reading-between-the-lines that much harder - which could impact on networking and negotiation skills.

I might sound a touch arrogant here, but I pride myself on being alert and open to stimuli that surround me every day. I absorb a lot of what I see and experience, and try to relay it onto others and their current situations. I can now see that this could be due to my striving to always get a decent 8 hours sleep. It means that I have a better chance of interpreting something which I come across, and perhaps taking it on-board and using it in my business or personal life. Many of my colleagues and peers (in 8-5 employment) miss a lot of what goes on around them, and only realise it when it's pointed out. The report also mentioned that later sleep cycles tend to have longer REM periods than earlier ones. This might be another advantage for me, as I'm quite a night-owl, and rarely go to bed before 1:30-2am!

So don't short-change yourself when it comes to sleep. You're the only loser if you do, and you could be holding yourself back from personal growth, or that next big brilliant business idea!

New low-cost airline for SA?

2009-01-11T16:54:00.002+02:00

In recent weeks, I've been following reports of a new low-cost airline launching this year. Called Airtime, they aim to steal a march on the market by having cellphones as their major medium for ticket sales.

The Operation:

From what I can tell, they are starting out by leasing three Boeing 737's for a period of 6 months. Their ticket and pricing structure is a novel one: instead if using the internet as their major sales channel (as other low-cost airlines do) they are planning on having people buy 'Airtime' through their cellphones. You would SMS a number, specifying how many units of Airtime you want to buy, and it would be added to your cellphone bill. The Airtime that you buy is then exchanged for a flight ticket. The novelty is that you can use your Airtime for any flight on any of their routes. The amount of Airtime required is approximately equal to the flight time of your flight - eg. if you were flying from Durban to Jo'burg, you would need 75 minutes of 'Flytime'. The price of Airtime is then multiplied by the current rate on offer to come out with the ultimate cost of the flight. For example, the usual rate may be R5 a minute. For a flight from Durbs to Joeys, you would then pay R5x75=R375. For higher demand flights, the price per minute, or multiplier, would increase to say R6 or R7, increasing the overall cost of the ticket. Specials or promotions may then come out, offering minutes at R4 or R3 each. From what I can gather, this would allow you to pre-buy airtime when a special offer is on, but only use it later in the year when you needed it. The supposed kicker is that any Airtime you don't want to use is converted back into standard cellphone airtime by your network. They will also have the usual internet and phone-in ticketing options as well.

Based out of Durban (which they say is the playground of SA), they are looking to initially operate the Joburg-Durban route, and then add Cape Town in the very near future.

The issues:

The major one is that they're not operating as a separate entity, but working off a licence of Aquarius Aviation from Lanseria (whom they are also leasing the planes from). Now, while this keeps initial costs down, it is causing problems with licensing and getting authority to fly from the aviation authorities. They have already marketed their flights as commencing in mid-January, but they seem to be hitting some resistance from the CAA (Civil Aviation Authority), who are apparently only due to meet towards the end of the month to decide on granting the licence. This could mean an embarassing backtrack on their promise to be flying, and could dent their credibilty seriously before they even get off the ground. Nevermind how bad it would look if the whole thing gets canned by the CAA!

Also, their marketing reeks of inefficiency and haste. There have been many complaints and comments on bulletin boards on various websites about how their website was not up yet, and no call centre numbers went through (although those were older comments - the website was online when I tried it). Their 'i-Fly' logo is FAR too similar to the 1Time one (with the red tailwing featuring); and, while summarising the service nicely, the whole name 'Airtime' is too easily confused with more-established 1Time's, diluting their brand value immediately. Also, for a company positioning itself as a credible threat to the incumbents in the industry, there's been very little media buzz about their potential entrance (I only happened to spot it as a small mention in a small article in a minor newspaper). This is a symptom of some very bad PR and a mish-mash marketing strategy. If I think back to the launch of some of the other low-cost airlines, they stirred up a fair amount of hoo-hah when they launched. Granted, maybe it's Airtime being cautious, but they could be doing a heck of a lot more...

Also, being based out of Durban is puzzling to me. The other entrants have started on the lucrative Joburg-CT route, and seem to be doing okayish. My first impression is that Durbs is all they could get as a base, but let's see if they prove me wrong.

So, in summary, this could be an interesting time for aviation in SA. I'll be following this one closely, so keep checking for updates, but if they don't jack themselves up soon, this airline could struggle to take off...

Murphy's Law

2009-01-10T14:39:00.003+02:00

Ever wondered where the phrase "Murphy's Law" came from? It actually has a factual beginning...

In 1949, the US Air Force wanted to test out the effects of G-forces on pilots. Edward Murphy, an accomplished pilot who moved into aerospace testing, was involved in these tests. When testing the effects on a volunteer, his assistant messed up applying the sensors to the volunteer's body and, after putting the poor volunteer through much pain and injury, there were no readings to use for his study. Murphy was obviously furious, and this was mentioned during an interview with the volunteer after the experiments, when he said that "Murphy's Law means that whatever can go wrong, will go wrong". The press picked up on the coined phrase, and it gained currency through widespread usage.

Since then, there have been a number of variations - such as Finagle's Law, which states that 'anything that can go wrong will, at the worst possible moment'.

To quote a postcard I bought in Ireland, here are a couple of Murphy's great Laws:

- The other queue always moves faster
- You play your best golf shots when playing alone
- Friends come and go, but enemies accumulate
- The chance of a slice of bread falling butter-side down is directly proportional to the cost of the carpet
- The repairman will never have seen a model quite like yours before
- A short cut is the longest distance between two points

And finally, Murphy' Golden Rule: Whoever has the gold, makes the rules...

Petrol pump pleasure

2009-01-08T17:14:00.002+02:00

Went to put some petrol in my car yesterday (I hesitate to say 'fill up' - see the explanation at the end of this post), and what a pleasure!

Thanks to a sustained drop in oil prices globally, we here in SA have had two substantial price decreases in the prices at the pumps over the last two months. This has meant a drop of nearly 33% since October (from roughly R9 a litre to about R6 a litre), on top of some smaller drops before October.

The real difference is in how people perceive it, though, and everyone will have a different outlook on what a drop in prices means to them. For me, I generally put R250 worth of petrol into my car at a time (2.5l BMW). As prices reached their peak near the middle of 2008, I had resigned myself to the fact that my petrol gauge would only slide up to slightly less than half a tank. The effect of the drops in price really hit home yesterday when, after putting R250 into an unusually empty tank (I don't normally go down to my warning light), my gauge jumped up to the three-quarter full mark! What a beaut! In my car, I get roughly 10km/l, so I was getting 240-260 km's each time I filled up 6 months ago. Now, I should get closer to 400-420 km's per stop at the garage. For me, that's the equivalent of an extra 12 return trips to my girlfriend's house - although if I were to visit her that often, she'd probably throw a fit!

Now, the reason I fill my car up with that specific amount is a sound one. If you only put in small amounts at a time, you are doing yourself a serious disservice - you 'lose' more petrol if your tank is emptier, as there is more space for fumes to form, and you lose a fair amount to evaporation with these fumes escaping. You also spend more of your hard-earned money making small detours to petrol stations as you have to 'fill up' more often. On the other hand, unless you're driving long-distance, it's not advisable to fill your car up to the brim - you lose a percentage of your fuel to increased fuel consumption, due to the extra weight associated with carrying that much fuel. Hence, my happy medium of filling up somewhere between a half and three-quarters of a tank...

Happy driving!

Finance Coach - Vol. 2

2009-01-08T17:13:00.001+02:00

Here's a copy of the Thursday instalment of my Facebook group - Finance Coach (by Gareth Cotten)...

Finance tip: Savings

Pay yourself first. The single biggest excuse people use when explaining why they don\'t save is \"I don\'t have any money left at the end of the month\". Well, quite frankly, that\'s doing it the wrong way round. If you are truly committed to saving up a nest-egg, or building wealth for retirement, the first \'bill\' you should pay every month should be your savings. Think about it: By paying your bills first, you\'re saying that you\'re month-to-month expenses are a higher priority than your financial well-being in retirement. If you believe that, then I hope you know how to live off a social grant when you\'re 65! By \'paying yourself\' first, you are committing yourself to being financially secure when you need it most. And what about that extra bill now not getting paid, you ask? If you\'re worried enough about getting it paid, you WILL find a way to make the extra couple of bucks to do so - the human mind has an amazing capacity for innovation when it\'s forced to use it.

Business tip: Strategy

Adaptability. In the previous edition of Finance Coach, I wrote about focus. At first sight, you might think that focus and adaptability are at odds with each other. Well, they\'re not. Whatever type of business you run, you should focus on what you\'re good at, yes, but not to the point where you\'re completely overzealous, and closed to any other opportunities. Always have an eye out for aligned opportunites, close to your current service or product, that have good prospects. Take, for example, the web photo-sharing company, Flickr. When they started out, they were building a program to share photos and messages within a multi-player game. They realised that the program they were building had huge potential as a stand-alone business, and tweaked it to become the huge success story it is today (a multi-million dollar world-wide business). Now, they were focused (they stayed within the program-development sphere that they were good at) but they were adaptable (they weren\'t stubborn about only using the program in the game, and were prepared to make some changes for wide-spread usage). Look at what you are doing at the moment, and ask yourself whether there are any potential adaptations you have thought of, or turned down, recently.

How NOT to run a transport company a.k.a. the Roadlink mess

2009-01-07T14:50:00.002+02:00

For those of you who haven't been following the story in the news lately, here's some background: Roadlink is one of the larger cross-country bus services operating country-wide here in SA. They have had a few high-profile accidents, scattered around the country, in the past few years, but they've managed to get past them (it's bound to happen every now and then, sadly) and carried on operating. In the lead up to the Christmas season, though, they started having a number of incidents which made the headlines - partly due to the increased traffic enforcement on the national roads at that time of the year.

This culminated in their operating licence being withdrawn in the province of Kwa-Zulu Natal, meaning that their vehicle were not allowed on the roads at all. This was due to a number of accidents (with fatalities) involving their buses, as well as a number of their fleet being found unroadworthy during spot-checks by the authorities. They cried foul, and appealed the decision, which was suspended until this month, allowing Roadlink to operate during the peak season.

What pushed me to write this was reading an article two days ago about how one of their buses, operating on Kwa-Zulu Natal route, was pulled over and impounded for being unroadworthy. The clanger was that their full load of passengers was left to stand in the blazing sun for FIVE HOURS until another vehicle came to pick them up! Now, I've run a successful transport company since 2003, so I feel qualified to comment on this mess.

Firstly, dealing with the latest article, if you are going to run a transport company (especially a long-distance one) you ALWAYS need to have a contingency plan. Vehicles break down, get stuck in traffic, get re-routed due to roadworks and run off-schedule all the time, and you need to cater for this. Whether this means having one vehicle on standby at all times, or having support agreements with other operators, you have to make sure that your customers are inconvenienced as little as possible. The people using yor service often have somewhere to be, at a specific time, so don't screw them around. This need for a contingency plan actually applies to all businesses.

Secondly, if you run a transport company, why do you have unroadworthy vehicles on the road? Especially if your vehicles are large and passenger loads are generally full or close to it! Do you WANT to have an accident to get your company into the headlines? Now, I fully appreciate wanting to maximise revenue at the peak season of the year (especially when many industries are struggling), but you CANNOT do so at the expense of people's safety. Keep your downtime to a minimum, yes, but make damn sure that your vehicles meet basic roadworthy requirements!

Thirdly, the management is guilty if some horrible PR practices, and herein lies a lesson for all businesses. When the province decided to revoke their operating licences, Roadlink management made excuses and claimed that they were being unfairly victimised, with their vehicles being targeted by the authorities for inspections. Lesson: When under attack, or on the receiving end of criticism, never, never, never play the victim card or get defensive. Your customers already have a negative opinion of you (which is why you're getting criticised). The last thing you should do is get defensive, or you lose any last strand of integrity. Apologise, and clearly lay out how you will fix the problem - don't blame others. Would you rather be right, or in business?

In this case, Roadlink should spend whatever it needs to ensure that every last one of its fleet is roadworthy - even if every vehicle is stopped every time it travels. No exceptions. They should then aim to have an impeccable safety and arrival/departure time record for the next 6 months to a year. This should build back some lost credibility. If they don't do this, it could be the beginning of the end of the road for this bus company...

Finance Coach - Vol. 1

2009-01-06T14:14:00.001+02:00

Here's a copy of what's on my Facebook group - Finance Coach (by Gareth Cotten):

Finance tip: Utilities

Saving water. One of the easiest ways to save water, and reduce your water bill, is by 'managing' the use of your toilet/s. The average flush can use up to 11 litres of water at a time (picture 5 and half big bottles of Coke), so just imagine how much money you are literally flushing away! For a cheap solution, put a brick in your cistern (the big ceramic thing generally above and behind the toilet seat) - your toilet will fill up less each time it's flushed, and save wastage. If you can afford it, consider putting in a 'two-flush' system, where you have an option of a light flush or a full flush - it will pay itself off pretty quickly if used correctly.

Business tip: Strategy

Focus. It may be tempting to spend most of your time looking at other options for your business, or other industries entirely, convincing yourself that you are focused on growth. This is quite common when a business starts to stagnate, or fails to take off as expected. A trait of successful businesses, however, is focus. They focus and concentrate on their particular industry, products, services and strengths, and aim to consolidate on these. Only once they've achieved this, do they look at growing into other areas. If you feel frustrated with your current business, but aren't actually spending that much time working on it, rather use some of your 'browsing' time to get back to basics on your business - re-look at your business plan, assumptions and business model, spend time on your marketing strategy, get on top of your finances, etc. These simple steps can inject new life into your business, and may re-ignite the passion you once had for it.

Most dangerous things to eat/drink while driving

2009-01-06T13:36:00.002+02:00

Apparently, an major insurance company has published a study of the most dangerous things to eat and drink while driving - ie. things that are most likely to cause you to have a smash. These are the top 5, in reverse order:

5. Coffee - This is a pretty obvious one. It's damn easy to spill (even if it's in a flask), and if you do spill it, it's likely to burn your chest/stomach/crotch one-time, causing you to swerve like a drunk judge.
4. Soup - Seriously, people eat soup while driving? Why not rice with chopsticks while you're at it? Apparently, according to the report, the major problem comes in when people try to change gears while holding the soup container.
3. Fried chicken - This told me it was an American study. The issue here is that the inherently oily nature of fried chicken means that your hands are oily, and this is then transferred to the steering wheel, which then makes you slide all over the road and mung into walls/trucks/large women (probably like a drunk judge). I can't personally imagine eating KFC while driving, but hey, pass the corn-bread...
2. Soft drinks - I thought this would've been number one, as it logically seems to be the biggest culprit. People think it's easy to hold a can or bottle while steering, but negate to take into account that it tilts when you turn the steering wheel (and we all know that no car maker makes cup holders that actually HOLDS cups). Results in you sitting in a nice puddle, which is difficult to explain to your boss/client/spouse. So you try and dab it up, take your eyes off the road, and end up through some little old lady's vibracrete wall...
1. Chocolate - Surprising winner. Must be because people think that you can't possibly go wrong with eating a chocolate bar - it's small and doesn't leak. Well, they're wrong. We all know that that one piece of warm, soft chocolate will fall onto your clean white shirt, or your neat, pressed pants, and you'll feel that your clothes are ruined. So, you'll try valiantly to scrub at it (only making it worse), take your eyes off the road for a second too long, and... whammy!

Good showrooms make good neighbours

2009-01-05T16:43:00.002+02:00

We've just had some new neighbours move into the house across the street. Now, I know this is not normally the most exciting thing, and probably not something you want to spend time reading about - but it gets better...

Our new neighbour came over on the weekend to introduce himself, and ask us to sign a planning statement as he'd like to do some alterations to his property. Firstly, this struck a chord with me because this is normally the last step in the drawn-out process of doing alterations - most people hate the idea of begging for their neighbours' permission, and some even circumvent the process entirely by bribing city officials to approve it without the necessary consent! What really hit home, though, was when he said he was a classic car enthusiast.

Now, for those that don't know me, I am a complete nut-job when it comes to classic cars, and I have a serious soft spot for spending money on them! The last one I owned was a 1974 Mustang - it was a fully imported left-hand drive, and I just couldn't resist it. I didn't have the money for it, but somehow scraped together a deposit and financed the rest. Now I lost a little bit of money when I sold it (because I'd spent a small fortune redoing the engine), but it was worth absolutely every penny - for the sheer enjoyment I got out of owning and driving it, not to mention the long, envious looks I got from nearly every man (and often the woman on his arm) when driving past.

Anyway, back at the ranch... So, while chatting to the neighbour, he mentions that the alterations are actually for him to build a showroom onto the side of his house - for him to showcase some of his classic car collection! What a guy! Now, we don't live in the semi-rural area on the outskirts of town, or in the commercial hub of the city. We live in suburbia, just as you see it in the movies. And this guy wants to build a showroom for classic cars across the road from our front door! I'm sorry, but somebody up there is definitely looking out for me, and clearly wants me to stay put for the foreseeable future :)

Now, if only all my neighbours wanted to build classic car showrooms - I'd sign the consent forms faster than you can say Shelby GT500...

A new year, and a new blog

2009-01-04T01:22:00.002+02:00

This is my first foray into the world of blogging, so bear with me...

The aim of this blog is to try and write down some of the 25 000 things that tear through my mind every day. By doing so, it might help me distill some of these thoughts, and perhaps organise them into some form of order. Hopefully some part of them will trigger something in you - appeal to one of your interests - and I will be able to expand your awareness and knowledge at the same time.

I don't claim to be an expert on everything that I write about, but I feel I've had a pretty interesting life, and have absorbed plenty into my open mind as I've gone through it. Some of it is useful or interesting, some motivational or 'self-help' in nature, and some of it just downright random. All I can hope for is that some of it appeals to you in some way, because I know it's made an impression on me!

I don't want this to be a blog about the minutiae of my life ('today I had ham for lunch, and then went for a nap'). While I'm sure that they serve a purpose for the people writing them, I can't help but feel that those types of blogs lack substance. I want this blog to be something that people really look forward to reading, and come away feeling that little bit richer as a person - where they never know what they're gonna get on a given day, but they wanna find out anyway. This will be more about my observations of life; or lessons that I have learnt; or stories that I feel need to be told. It could be on subjects that I'm interested and experienced in (like business, entrepreneurship, languages, sports, relationships) or on subjects that I barely know anything about.

I'm sure it will develop its own character as it goes along, so welcome to it...

(And why 'Good Feathers', you ask? Because a client once asked me, after I'd solved a tricky situation for him, "How old are you, by the way?". At the time, I was only 22, and said so, adding "I'm but a spring chicken". His reply, which has stuck with me to this day, was: "You may be a spring chicken, but you've got some good feathers!")