January 2017 Blog
Principles are Principles
January is the month of renewal. It is preceded by a month full of goodwill, good messages, hope, love, giving and reflection in all areas like family, business, careers, friendships etc. Much hope hinges on the prospects of a well-planned but yet unknown future. Numerous philosophical messages were shared during the festive season. Advice is spread about how to capture and maintain everything good that has befallen us; how to treat our fellow man, taking stock and being thankful for what we have etc. The art of giving is perennial, it is there as long as man continues to live, I like to think. In fact, there is more giving and support throughout the year than in December. Yet the magic of Christmas crystallises all our good works into a magic of bright colours, beauty and celebration.
This annual reflection is necessary and opportune to package all our good works during the year and consciously prepare for some more good works in the New Year. While there is only a second between the year ending and the New Year, if one did not prepare during the long months to the end, there is little chance that the new year would be any different. Reflection is a good practice because it enables us to review our actions. Reflect on what you said or on what you are going to say. Reflect on what you have done or on what you are going to do. Get ready January here we come!
This month is about the principles that spur us on year in and year out. Principles enable us to persevere and carry an idea to conclusion. In the midst of all the goodwill messages around the high Season was the emphasis on giving, loving, caring etc. These principles we must apply whether we are starting a business, running a business or indeed interacting and exchanging information with others. Emphasise on our external environment; what is out there that I can use, in addition to what we already have, is a good question to ask if we want to find a sure way of growing our businesses. How else does a business grow if not by stretching and increasing our footprint in our markets? How do we grow our investments if not by the healthy growth of whatever we are invested in? Where there is growth there is life and therefore potential for more of the same. As human beings our role is to nurture that potential via our own behaviour and actions.
In my post last one month I described the women I had met and interacted with during 2016. I mentioned how their confidence had increased to the point where they were actually revealing how much money their businesses gad generated and the assets they had acquired. This growth also gave the women courage to give us a snippet of what their future plans were regarding where their businesses were going. I also mentioned that the one thing they needed to do next was to start leveraging their assets so that they are able to achieve much higher goals. Leverage is a very important principle, which many SME’s and individuals miss. Even people who seemingly already have money use leverage if they want to make more money. The financial and capital limitations we see in small businesses are primarily a lack of leverage or ability to. I must state here that in order for one to do so, they must have something to leverage with. Leverage by definition is the ability to lift or influence or pivot. Implied in there is power, advantage, influence, effort etc. If you have none of the above, you cannot expect to take advantage of situations as they arise. It follows that if you are running a business it will be easier if leverage is a part of the equation. Before one can leverage here are some things you must think about, prepare and build.
Building up of resources is necessary. Over time your savings and investments are your first line of defence. These assets should provide the value against which you can access liquidity from financial institutions. The assets must have a clean root of title with the owner(s) clearly identified. While borrowed assets can also be accepted, it is the traceability of title that any lender wants to be sure of as authorisation is given. Businesses and individuals without exception require a time when this accumulation takes place.
With respect to individuals, acquiring expertise, building network of contacts, building credibility also takes some time. There is no doubt that in time of need some of these contacts prove invaluable to get ahead with your plans. A word of caution, it takes time to reach fruition for you to use or leverage these resources. It is also a conscious endeavour, as it cannot happen by chance. I believe this separates a successful business from those destined for failure. Power, trust, influence and other resources are earned and their value is in the size of the trade-off you can achieve. In a nutshell, leveraging is trading off what I have with what you have with the objective of making both sides better off.
Small businesses survive on this in the early stages. If the promoter has the status and the business is new with no track record, the promoter must stand in and use his position. Women who may not have achieved such a status often run small businesses. They have to look around and find something else to trade off. This could be landed assets, a house, vehicles, savings even their networks can come in at this point. They must understand the leverage concept and determine how they can use it. I have just finished reading 2 books that emphasise on these things. As practitioners or entrepreneurs, we must first start to understand what ‘money’ is and how it may be made to work for you. Mere passion for the business is just not enough.
I see it all the time, women with zeal and commitment but no knowledge of leverage or people with other resources. I have a good friend who is constantly short of cash. Because of her situation, I have even toyed with the idea of starting a fund to deal with this matter that she manifests as a business idea. I suspect this problem is widespread. The lady is bright, with many good ideas and is aware of what works. Some had promise while others were a non-starter but she tried them anyway. She is not short on resilience. I look at her circumstances and she is ripe to do great things. Of all her complaints to me about her business challenges, she has never mentioned leveraging what she has or how to go about it. It is quite obvious that she does not know. It is not even about risk because the extent to which she has pursued her ventures tells me she is aware of her risk environment. I have offered to give her free consultation on the same in 2017 and will see if other obstacles are at play.
Leveraging is not risk free. It has a determined cost that both parties agree to. Ultimately the objective is to lower costs but still enable both you and the other party to achieve what you want. The beauty of leveraging is that at the end of the day, one is restored with what one started off with.
Leveraging is stepping on the backs of those that have gone before you that are willing to stretch out their hand to pull you up where they are. It is a piggyback ride and many people in business will tell you one similar story or another. If we actively ride on the backs of experience, resources etc. of others that have already made it, we must humble ourselves; we must be truthful to ourselves and expose the depth of our commitment. Remember these people don’t have to do this. Sometimes they are only interested in the business model and if it makes sense and has a chance of success, they throw you a lifeline. From your side, they want commitment, integrity honesty and hard work. 2017 therefore offers 12 months of building up process.
There is no magic that the New Year offers other than a commitment to prepare yourself to reach new heights by the end of the year. To look back and say I saved an amount in 2017 to leverage in 2018. Let’s do it!