The Way to Wealth (3 page)
Authors: Steve Shipside
6
SLUGS, SPEEDSTERS AND DEAD SHARKS
‘Laziness travels so slowly,
’ observed Franklin,
‘that poverty soon overtakes him.’
The obvious modern interpretation of this is that anyone who takes their foot off the pedal and slacks off is eventually going to find financial worries snapping at their heels.
DEFINING IDEA
…The fact that I have entered into IT-related business is proof that businesses have to evolve and keep with time. One has to re-invent continuously.
~
KERY PACKER, NORMALLY PERCEIVED AS A CRICKET PROMOTER
Fair enough, and as true today as it was back in 1758, but the march of time has added another dimension to Franklin’s wisdom. Woody Allen famously declared that ‘A relationship, I think, is like a shark, you know? It has to constantly move forward or it dies. And I think what we got on our hands is a dead shark.’ Replace the word ‘relationship’ with the word ‘business’…
Physical laziness is easy to recognise, but intellectual laziness tends to be harder to spot and much easier to disguise with rationalisations. With the rapid pace and constant evolution of today’s business landscape, simply working hard is not enough to guarantee success. The truly successful are also constantly scanning the horizon for new opportunities and threats.
Established back in 1873, Barnes and Noble was the giant of the American bookselling industry with over 800 shops by the 1990s. The company could quite reasonably claim to be the barons of bookselling. But a quick-witted entrepreneur called Jeff Bezos had already latched on to the potential that this new-fangled World Wide Web thingy offered for remote sales, and while he professed no knowledge of the book trade he chose books as a good starting point for a new company selling online. The result was that the barons of bookselling suddenly found themselves under attack from an unexpected upstart. The ‘Amazon effect’, in which a new competitor appears out of nowhere thanks to technology, has since kept CEOs awake at night all over the globe.
The point is that if you’re not evolving your business then you are surely killing it off. Here’s an example. A smart business keeps abreast of developments in its own market sector. A really smart business looks beyond its own trade or market and follows trends in other, seemingly unconnected, areas with a view to poaching good ideas or practices that can give them that crucial boost. You don’t have to work in the clothing business, for instance, to learn lessons from Marks and Spencer’s automated supply line—items sold at the till automatically trigger an order to restock right down the line to the suppliers themselves.
A few hundred years ago a successful business model would be good for a generation, and, with a bit of tweaking from your children, might see that business carry on for another generation. Now standing still means you wind up with a big dead fish on your hands. Your business isn’t healthy if you’re not already working on how to take it to the next level.
HERE’S AN IDEA FOR YOU
…You can begin to look beyond your own business area for learning opportunities quite easily. Get hold of the trade magazines from a completely different industry and see how they are innovating in the management of people, products, processes and services.
If Franklin was around today he’d be on Oprah.
‘Industry pays debts, while despair increaseth them’
as his advice. It’s a pity that so many of us fail to heed it.
Debt, drug dependency and depression are pretty much the grim horsemen of the modern apocalypse, intertwined and mutually provocative as they are. What Franklin was pointing out all those years ago wasn’t just that hard work pays debts, but that frozen immobility actually fuels them. What’s often forgotten is the painful truth that throwing yourself into work may not be enough to dig your way out of the hole and could even just contribute to the problem.
DEFINING IDEA
…He who promises runs in debt.
~
THE TALMUD
In the animal kingdom there are countless examples of small beasties that freeze to avoid the attentions of larger, hungrier ones. Fair play, and if it wasn’t a successful strategy then there wouldn’t be so many beasties still around pretending not to be there. The catch is that while this will probably save you repeatedly from peckish predators, it does precisely diddley squat for your chances when it comes to avoiding the dinosaur that is about to stomp on you simply because you’re in its path. Debt is that vast, short-sighted diplodocus plodding your way. It doesn’t matter whether you act the stick insect and freeze, or the ant and toil all the more furiously because that’s how you’ve always dealt with life. Either way, the arrival of the overgrown lizard is going to leave you equally flat.
So deal with the debt dinosaur before the debt dinosaur deals with you. Debt happens; indeed it is a normal part of life for all but a rare few. Whether we’re talking personal finances or company balance sheets, the problems occur when debt grows beyond our ability to manage it. And this is the point at which it quickly transforms into the scaly, unavoidable behemoth.
The first thing to do is to recognise it and stop pretending it’s not thereIf there is a quick-fix means of cutting your debt down to size then do it immediately—whether that means chopping up your credit card and transferring the balance or reining in the executive expenses. The chances are that by the time you recognise the problem the quick fixes will only buy you time and won’t be enough to clear the backlog. The next step is to talk to your creditors. This will not be easy especially as the natural instinct, whether personal or corporate, is to put doing it off. So make a virtue of a sticky situation and be as open and transparent as possible. You’re not going to look good for getting into debt, but any creditor who suspects that you are hiding even more debt is going to lose faith in you altogether. This is as true for banks as it is for anyone—trading partners, foreign governments and maiden aunts.
Coming clean is the first step towards coming up with solutions.
HERE’S AN IDEA FOR YOU
…Talk to someone; Oprah and Franklin would be united about this. Your debt isn’t unique. Sharing the load will go a long way to dealing with the despair, making it easier to shift into action and deal with it. The first, and hardest, step is to stop the denial and address the problem.
‘The second vice is lying, the first is running in debt,’
says Franklin, implying that while honest people can run into debt, the act of being in debt may make them lie about it.
DEFINING IDEA
…Oh what a wicked web we weave, when first we practice to deceive.
~
SIR WALTER SCOTT
Which comes first? Debt or denial? According to Franklin it is failing to keep your finances on the straight and narrow that leads to falsehood and from Which is true, but not necessarily in the way there to the slippery slope. Which is true, but not necessarily in the way you’re thinking. It’s not that everyone in debt lies to others, but that the vast majority of those in debt lie to themselves. Don’t believe it? Try a simple question: how much do you owe?
A debt audit is rarely as clear cut as you think because everyone in debt rationalises their situation by mentally rebranding debt as something else. It’s a remarkably efficient technique—just consider how much less attractive a credit card would sound if it was called, more accurately, a debt card.
So let’s start with credit cards. Do you really know how much you owe, exactly, on your cards this month? Are you completely sure you know how many cards you have that debt spread over? Nor is it enough to be able to glibly reel off the precise figure—in order to really know how much debt you have, you also have to know the current interest rate your card is charging you because that will affect how much you owe. A fair few of us might be able to say with some certainty how much they owe, but few of us could give the rate exactly, not least since it has undoubtedly changed since you took out the card.
Now what about the mortgage? I know, it seems churlish to consider the mortgage as a debt since almost everyone has got one and it’s undoubtedly the most socially acceptable form of debt. But it is a debt, nonetheless, with a monthly repayment of which—again—you should know the exact rate.
Any other loans? Cars? Consolidation loans? Overdraft? Home improvement? OK, toss them into the pile. Now the nasty ones. Store cards? Go and find out the interest rate; chances are, you’re in for a very unpleasant shock.
Finally, don’t forget that anything you don’t pay for until after you’ve used it is effectively a loan, even if it’s (initially) an interest-free one. If you have a pay as you go phone then it’s fine, but if you’re on a contract then you’re already running up a bill you haven’t yet been asked to pay.
When you take into account everything you really owe, you’ll probably find it a bit of a shock. Personally, when forced to look at my total debts, I find it best to do so from behind the relative safety of the sofa. Scary? You betcha, but not as bad as pretending that the debt’s not there and will go away by itself.
HERE’S AN IDEA FOR YOU
…Some debt can be balanced at less cost; take a look at the interest rates you’re paying. Start with the store cards, they’re probably the worst. If you can’t pay them off with cash (the optimum solution), consider using an overdraft—a much cheaper way of borrowing. Then shred them.
9
CONDUCT YOUR OWN ANNUAL REVIEW
‘If you were a servant, would you not be ashamed that a good master should catch you idle?’
notes Franklin, before concluding then that
‘are you then your own master, be ashamed to catch yourself idle.’
So, as your own master, how do you think you’re getting on?
DEFINING IDEA
…What is interesting about self-analysis is that it leads nowhere—it is an art form in itself.
~
ANITA BROOKNER
Whether you are employed or self-employed, take a moment out to assess yourself. Be realistic and honestly rate how well you’re doing. Now, like so many people I set up my own business mainly because I loved the idea of being my own boss. But, also like so many others, I suspect that if I were honest with myself, I would admit to being a lousy boss with a notable inability to clamp down on day-long lunch breaks. Hmm—see what I mean?
Time to get stuck in. Be as objective as you can. Now, as with any annual review, this shouldn’t just be about putting a person (OK, you) on the spot and asking them what they think they could do better. Instead it should be part of a process aimed at encouraging you to think more about what you’ve achieved and what you could go on to achieve. As such, it should be accompanied by an annual audit of exactly what you have done, and a brain-dump of goals to be set for the next year. At the risk of developing schizophrenia, this is quite a good moment to stand on both sides of the divide and see your goals and achievements both as your employer and as your employee.
As your employer, do you feel that the last year’s workload, targets and ambition were completely satisfactory? As the employee, do you feel that your employer is perhaps being over-optimistic, given the undoubted demands on your time?
Remember that the more you break down the achievements and/or goals into their component skills and stages the clearer an idea you will have of exactly where you are shooting wide. Don’t just tick the box and say ‘yup, I did fine’ but try to think about where you did well in achieving something, where you could have done better, and who else had valuable input from which you could learn something useful.
Any good review is not simply about appraising degrees of success but about actually learning from them and plotting a path to improvement. The result of your assessment should therefore be a plan for moving on from past problems. The first step of that, as with so many ten-step plans, is admitting that you do indeed have failings. A self-assessment is strictly hush-hush, so this is one of the few opportunities to really be honest with yourself. And if you genuinely don’t think you have any failings then you can put ‘lack of self-awareness’ right slap at the top of your list.
HERE’S AN IDEA FOR YOU
…Review your job description. Most self-employed people don’t really have one, so if you’re self-employed think about what your title would be if you were part of a larger company. Is that where you want to be? This is a great way of focusing on what you really do.