Archive | February, 2013

Age of the Entrepreneur

25 Feb

Through out history there have been turning points which have heralded in new eras. Some of the more famous eras have been the industrial age and the information age.  While many people are only just catching up with the information age the switch to the Age of the Entrepreneur has started.

In 2007 the banking crisis hit the headlines with a run on Northern Rock Bank.  By February 2008 the banks were bankrupt as we faced the credit crunch.  The repercussions of which are still being felt today through mass unemployment as once lauded companies disappear from the high street.  Not immune, the government tightened the purse strings and reduced spending hitting millions who relied on benefits.

The entrepreneurial age started as thousands of people began their own business. In 2010 Office of National Statistics reported the biggest growth area was start up business.  In 2012 they reported 65% of over 55 year old people were starting business to supplement their pensions.  The population is waking up to the fact that the government will no longer look after them and it is up to each individual to provide for themselves, their families and their futures.  Entrepreneurs create jobs not the government.  The age of the entrepreneur has begun.

So, how does this information affect the investor?

This year we’ve been discussing the 4 investment categories.  As a reminder they are Business, Property, Shares and Cash.   We know the shift has started to the age of the Entrepreneur so where do you see the opportunities for the future?

What services or products do these new entrepreneurs need?  Can you supply them through your own business or do you know a business that can?  Is that business worth investing in?

With shares what type of business do you see for the future?  Many of the high street stores reported disappointing sales in 2012 but online shopping boomed.  How are all the online products delivered?  In times of austerity and the switch to smaller business models what are the business needs going to be?  Many of the new businesses operate from home but they still need gas, electricity, water, food, stock and office supplies. 

Where is the growth area in property?  Is it in commercial or residential?  What type of property is going to be needed for our aging population?  What type of property do our new entrepreneurs need?

As we enter the age of the entrepreneur the most successful investors will be those who can adapt quickly to the new environment and start or find businesses to invest in that meet that can meet the needs of the entrepreneurial age.

www.karennewton.co.uk

 

 

 

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Why Do You Need A Business Plan?

17 Feb

“A business doesn’t plan to fail, it fails to plan” is a quote that summarises the problem with many businesses and why they end up failing.  A business plan is simply a road map for a business.  It describes how to get from start up to a successful operating business.  Once those targets are achieved it continues to set the route for further growth and development.  If there is no plan there is no business.

As an investor a business plan tells you a lot about any business you consider buying in to.  It should tell you why the business needs an investor.  Is it to allow a business to move to the next level of development?  Is it to prop up an already failing company?  You should also be able to work out from the plan how much is a reasonable return on your investment and how quickly you can expect to get your money back. 

If it’s your own business your business plan should provide warning signs if you are not following the plan and achieving the desired results.

What should be in a business plan?

The business plan is very much a personalised plan for each business.  Some of today’s successful businesses have started with a note on a piece of paper to a plan that has 10, 20 or 30 pages.  Below are some of the things I look for in a business before investing in it.

  • Has the business plan been written by the business owners or has it been written by a third party who are not part of the organisation.  If the owners don’t invest time and effort into their own business why should you invest your money?
  • How realistic are the plans and how successful has the business been in the past at achieving what it says it will do?  If the business plan says there will be a 10% growth for the year and past plans show the company only managed a 1% growth do you believe the company is capable of achieving the 10% target?
  • Does the plan cover all aspects of the business?  For example is there a plan for marketing, sales, training, business development, investment in the business?
  • What monitors are in place to ensure the business achieves the targets in the business plan.
  • Does the profit and loss statements look sound or are there any warning signs
  • How healthy is the balance sheet?  Is the company investing in the assets necessary for the development of the business?
  • Is the cashflow a good sign of the business being run efficiently or is there waste that needs to be eliminated?
  • How quickly do you expect to get your investment back?

A business plan tells you the investor, a lot about a business and the people who own or run it.  As a business owner, if you keep referring to your business plan, it will help to keep you on track to achieving the success you planned for.

for further information visit http://www.karennewton.co.uk/ or email info@karennewton.co.uk

Start with a Business

4 Feb

We recently discussed the four categories for investing – cash; paper; property and business. Now let’s start looking at each of them in more detail.  When all four categories work together we create synergy.  Synergy is the combining of two or more things producing a result far greater than each individual.

For many thinking of a business as an investment is strange but when you build your own business you learn many of the skills needed to be a successful investor.  A successful business will also produce additional income which can be used for further investments.

Warren Buffett is one of the greatest investors of our era.  He started by buying business.  Some were successful some not.  His credibility as an investor soared when he bought an insurance company giving him access to large sums of money – insurance pool – which he used to reinvest in other investments.  Using the principals of compounding interest (see previous blogs) he kept reinvesting and quickly became a billionaire.  His investment strategy started with a business.

Other famous and wealthy investors also started with a business – Bill Gates has Microsoft;  Richard Branson has Virgin and Carlos Sims (the wealthiest man in the world) has Grupo Carso.  For each entrepreneur a business provided a starting point for further investments the compounding effect result being each became a billionaire.

So how does this affect you?

As someone new to investing it can be difficult to find spare cash to start your investment portfolio.  It is sometimes simpler to find cash to start a business.  Often a business can be started with a £100 or less.  The profits from the business can be used for other investments.   As synergy kicks in your investment returns explode.

For many the thought of starting a business is frightening.  But don’t despair, there is a right business for just about anyone.  Think about your interests, your hobbies or the last thing you complained about.  There should be at least one business opportunity there or maybe 10. 

If you have never run a business before and are not good with figures or sales, or have absolutely no idea what to do for a business then a network marketing business could be the best place for you to start.  Good network marketing companies provide all the training – usually free of charge – to help you build a successful business.  Their support infrastructure is second to none.  They are fantastic at building your knowledge and confidence provided you are prepared to put the effort in.  Network Marketing is a cash intensive business and every little bit earned can increase your investments substantially.

Now you have a starting point for the first step in your investment portfolio what are you waiting for?  Starting a business is a quick and easy way to start your investment strategy.  You are on your way to creating financial independence.

For further information visit http://www.karennewton.co.uk or email info@karennewton.co.uk