Managing your Assets

Yeah, this sound quite complex. In the first place, a lot of people aren’t even sure if they even have assets!. In my view, i think everybody does, whether that’s a physical asset, a unique attitude (like this thing they always call PR), liquid assets (like money /cash) or properties. It is important to know that whether you have less or you have a lot of these, it has to be managed.

How do we basically manage our assets? Let’s take for example a bank account. Assume you have 1M of any currency. The issue here is that all your liquid asset is in one account. Fair enough, you don’t want complications, but is it manageable? how do you track where this money goes and for which purpose? and even if you do, how much is it from a categorical or an objective point of view? Ever heard or putting all your eggs in one basket? I used to be in that boat. But there comes a time where you have to diversify. My advise is to designate multiple accounts (or in this case, create new accounts from different banks as much as possible) for different purposes. One account for petty cash or liquidation (meaning, everyday expenses and ready cash), another which house your savings, and perhaps another one which house your saving but for a different purpose like investment and gains or simply redundancy (you never know what happens with banks!). Few weeks ago, in the Philippines, one Bank just simply closed one day, bidding farewell to all its depositor with a smile on their face while saying “bye! just get your money from the insurance, and if your money is beyond insurance coverage, guess what, tough luck!“. Yup, sh*t happens. And we don’t want it happening frequently. Better safe than sorry.

That’s just one example. In my personal case, right now, I have a certain dilemma. I have certain assets in USD, bought from another currency. And boy how much it dipped in the past 2 years!. Now I am contemplating on giving up the policy by May of 2012. Such that my asset has already earned, something close to 4K USD after a holding time of 3 years. Is that enough to cover the loss? I don’t know, and given the circumstances, i don’t think the dollar is going any further up, and even if it does, the  end currency’s strength shall still prevail, and heck it just gets stronger and stronger!. The lesson here is about prioritizing currency which in the end you will be utilizing or the currency that will give the best value for your asset. In this case, my home currency. I admit, bad investment?? No, but bad choice of currency. Why did i indulge to that? Because after the recession, i was hoping the dollar would catch up in the next 2-3 years. I was wrong. It just dipped a bit more, it will somehow pick-up im sure, but with today;s situation, only God knows when. In the time when I was still a regular dude in the employment streets, having USD was such a privilege, it was too damn hard to get a hand of such, unless you are travelling and buying it from the airport (and it is still limited). Fuel that with the anti-money laundering practices in my country, it was really tough, and USD is literally like Gold…. that was then. Now, I believe my home country has a steady supply of these, and the economy is so far catching up. And that is why, dollar is becoming more affordable.

Anyways, going back, so what am I going to do now?, I am going to pull out that money soon and re-invest it to something else. Perhaps a commercial property which will give me some returns soon. Yup, one of the most viable industry back home. That’s another example of managing your assets;, diversifying, making sure that it is well-tended, working for gains and profitability, and avoiding losses.

Strategic Alliances

Business, as we all know is just like any grouped entity in our personal and social life; it revolves on relationships. For those who think that business is like a food chain, where there is a prey and a predator , and one becomes the other at  a higher or a lower level, they in my view are absolutely wrong. The supply chain in business is like a 2 way road. Just imagine during the ancient times when people weren’t using money yet to trade. People directly trade products and resources, until a measurement system was invented and until a medium for a trade (which we now know as money) was made. Relationships are always developed, specially with quantifiable trade and with frequent trade.

Business, as we all know, also has a its own life-cycle. Business owners of course needs to do what it takes to prolong its life-cycle and never forget the long-term plans and the future of their business. Because of this, good relationships are a must, and yes, both on the supply and the demand side.

This is where the concept of Strategic Alliances come in. I know i sound very corporate,….well, a lot, or i would say most corporate terms are simply flea market ideas wrapped in a silk blanket and with a gold lining ;).  But the thought is simple, building good, and long-term business relationships with certain clients and certain suppliers. In any business, this is obviously necessary. Necessary, specially in times when things become so complicated, competition left-right-center, and everybody can do what another could, the element of loyalty and bonds are very important to sustain the life cycle of the business.

Sometimes in life, when you get too selective or choosy, you end up with the wrong decision. Too many choices, too little time to choose, and worse, in the end, nothing done at all. That is why it is also very important, to evaluate the value one (whether that’s a customer or a supplier) brings to the table, and you can collaborate towards a common goal, before committing. And once you commit, it’s like marrying someone in a country where divorce is also allowed, but costs you a lot of money. We don’t want to end up to that bad messy situation which will jeopardize the business.

Most people think of it as a publicity factor, a feast for the press…. Yes, that is so true, but that’s just part of it. Alliances are something that will strengthen each other’s businesses, it is a symbol of commitment, value, strength & business stability. It is something to be proud of, and the world has to know of course!

The question now is, do i really need to be an entrepreneur in order to appreciate this idea? Well, preferably yes, but No, not necessarily. In our lives, everyday we build relationships in the supply and demand chain. If you buy for example a car, you are building a supply & demand relationship with your car dealer. Depending on the situation it can be very short or long-term. You will need post sales support, you will need registration assistance, maintenance, improvements, even referrals for commissions to some extent. These are considerable relationships. It is not one way, because for those things i mentioned, of course, they have to be compensated, you  are  basically doing business with them. And of course, depending on that purpose  in which you bought the car, it probably gives you some value or benefit in return (whether monetary or not).

Just imagine if, on an individual level, you have a very good relationship with your dealer (or its agent), you will have those stuff i mentioned above, and on top of it, you get discounts, you get small freebies, and in return, you refer a lot of other customers to this agent/dealer, and again you get a little bit of commission for doing so……. Yup, that itself can be called a Strategic Alliance.

Time to Market

I can’t stress enough the importance of this thought. There’s a saying that when an idea comes right through you, don’t let go of it, or else, others will take it from you. What do we mean by this?

Have you been wondering why, an organization’s Marketing Department, specially those who are dipped on the advertising/marketing communications area are the ones most stressed and spends sleepless nights on a campaign? Because they are the ones who will bring a product or a service out in the company’s door, into the streets and into each and every targeted individual out there…. and they have to do this in a very tight deadline. People get fired just because they missed the day of launch, for 1 day or 1 week.

When i was younger, specially during my technical engineering days, i always wonder why. I always ask “if they have waited for months, how come they can’t wait another day?”.But now I understand the importance of time to market, there are both business and political reasons. From a business standpoint, this is very crucial. Let’s make it simple. If I have a campaign or a promotion which is set on Christmas day, what happens if i launch on Dec. 26?… Pointless right?. What if i have a Valentines promotion, but a glitch made me launch it on Feb. 15 instead. Just the thought of it makes us infuriated, and even as a customer, you’ll laugh with dismay.

So what actually triggered me to write this post. 2 weeks ago i was talking to an old friend of mine, discussing my ideas, and how i want him to take part of it someday when I am ready to put it into life. A business idea back home, which i know is some kind of a semi-green field i would say from where I came from. I said, I know some are doing it, but the point is not much are doing it. I want to do this, i want to do that, and few weeks earlier before we spoke, I was drafting a business case for it. The thought is ready, but no, I cannot do it yet. It needs more study on which services/products to offer, as well as the tactics of hiring people. And most of all, I am still abroad, and still in an odd situation which will give me chaos once i disrupt it…………..

So i discussed this plan with him, and then a few days later, i saw one job ad, from a company, who just started months ago, with the same exact business idea i discussed with my friend. They aggressively need people, the same kind of people for the same posts which i drafted……… yes, they just started 3 months ago…. yeah so i guess as days go by my supposed semi-greenfield is slowly getting brown. And I’m sure 3-4 years from now, it is already brown.

grrrrrrr!… i felt helpless!, i could have done the same!, I had the same idea!, myself and other people cam somehow fund it. But yeah, my hands are simply tied up right now. From my personal point of view and assessment it is not yet time, i had so much to risk compared to if i do it 3-4 years from now. But what happens if the market is too saturated by that time?.. or, I can also put it to my advantage, and treat those operating now as guinea pigs, and learn from their lessons and mistakes, and hope that by that time, I am not yet too late, and the main event has just started. Well, that’s the upside and the downside.

Time-to-Market. You probably have a slight glimpse now of what I’m talking about here. Not everybody have the opportunity to put a thought to life. So every time you have one, one that you believe, and you can risk enough, do not lose it, work on it, otherwise, there is someone out there who will go ahead, it’s the competition.

But if there is a thought of consolation from my side from what i felt after seeing that ad, it’s about what Sir Richard Branson said, which also gives us the better side of waiting for the right time-to-market.

“Business is like a Bus, if you miss one, there’s always another one coming”

And yes, it will come hopefully in the right time. Cheers!

 

Putting numbers on that Price Tag

I used to think that it’s easy doing this exercise. If I want to sell something all I have to do is know how much does it cost me, put something on top and wallah!!. Well, unfortunately as per my experience, it’s not as easy as it looks.  But yes, that’s how the idea works!

So how do we put numbers on that price tag?, well the first step is what I just mentioned. But to go deeper, we must understand and know if what we think it really costs us, really is the amount it is costing us. There are some factors to consider on this step:

1. Depreciation – this itself is like some sort of virtual cost. It’s a cost of the value, not a cost you are paying physically. This is common with buying a car, in which the depreciation (of around 10-20% upfront) happens right after you move it out of the shop. The price you are selling should cover not only profit but also the depreciated value you lost, otherwise, you though you gained money, but in reality you just lost it.

2. Appreciation – very common with real estate. You might be renting out that condominium of yours at a price which you think you is profitable compared to the price you bought it, but what you don’t realize, is that the property’s price  today is higher than the price you bought it 5 years ago!. Hence, instead of earning more, you are earning peanuts!. It’s not greed to earn more, because the price today is what we call  “Market price”, a price set by the industry and the market itself, driven by the inflation, the economy, the demand, tax, etc. These prices are well-regulated and to adapt to this range is of course more than fair.

3. Cost of Sale – of course, it’s not only about how much you bought the thing itself. You might have also bought a lot of other resources or spent more money from your pocket for selling the product. Examples of these are transportation, advertisement, labor or hired help, rent of space, etc. These are all accounted for.

That’s for now on the first step, so what other steps can we still take?.. Second step is what i also mentioned on the first step.. knowing the “Market price”. This step involves knowing your customers, knowing which type of customers are you going to serve. Is it going to be the lower class customers, or the middle class, the upper middle class or the upper class. This also involves knowing the customers’ price expectations, how much they are willing to pay vs. the quality, conducting a survey, observing the business environment and also knowing your playground (the geographical locations, the profile and the behaviour of the  people you are serving, including their behaviour towards their money.)

Is there anything else we can consider as a 3rd step? Well, this leads to the most challenging one. “Knowing your enemy”. If required or if possible, you can conduct mystery shopping, canvassing prices from your soon-to-be competitors and comparing them all, and judging scores vs. the quality of the service and the product they provide (these days, they even rate it with customer experience as well).

Having said all that, it all boils down to one 2 things, “Research” & “Doing Your Homework”. These data are the ingredients for a close to accurate feasibility study, which will serve as a guide to the success of your business.

Internet Ventures

Internet ventures, this is the thing of the now and tomorrow. And believe it or not, it was also a thing of the past. Yes, believe it or not, a lot of big corporations these days, are what we call Internet Ventures…. okay, still didn’t get me?, I’ll give you a few words: Google, Yahoo, Amazon, Facebook, Twitter.

I know, now the element of surprise just died. Of course we all know these things, billion dollar worth of companies doing business over the web!. We might be asking, what’s with these entities that made them so successful given that they are just businesses with internet on its bloodline? Brilliant isn’t it? And if given the chance to go back in time and meet these people, they will tel us one thing. “Do not underestimate the power of net”. These guys saw it coming, they saw a vision on what the internet is capable of providing us in the future.

What worth mentioning too, are the common things about these companies’ founders: Standford & MIT

Now that we have a glimpse of what Internet Ventures are, we are probably thinking it’s that simple!, well, Yes and No.

A. First, you need to be a total computer geek almost at the borderline of insanity (no just kidding 😉 ). Geek, but a geek with vision.

B. Second, share your craft for free. Yes, all of them gave it all for free, and that deed gave them their money back…. “billionfolds”….

C. Still not convinced? Guess what?, when SMS was invented and was first commercialized, it was  a free value added service…. (Now stop being a cheap-shot and send me an SMS!)

D. Third, you need to protect your intellectual property. This is a bloody process but if done right on the right channels and with the right legal advise, then you need not to worry much.

So, are you now thinking about that Online Store you wanted to launch? , frankly, you gotta do better than that… and i mean better. Do you have to be from Stanford and MIT to come up with such brilliant idea? Well, not necessarily (but it perhaps that would help… kidding), but just like my previous blog topics, Internet Ventures are merely products of innovation. Innovation made possible by current technologies and the vision of future needs.

On a personal note, I am also on a lookout now for potential Internet Venture ideas. Technically that would make me an IVC or an Internet Venture Capitalist. Someone who is willing to fund these ideas to make it real, and then take a major share of that venture. But no, I’m not a whale, but I would be someone who is willing to take that gamble with you. So if you are out there! and you think you have a brilliant idea, hit me up and lets see what you’ve got! Who knows, we might end up somewhere with it 😉