Build or Lease? Advice for small businesses.

One question that occurs quite often in business is - do we buy or do we lease?  There is no quick or easy answer tothis question.  In the same way there are very few times when one business will be in the same position as another.

It is my belief that as a business grows so do the complexities and the advantages and disadvantages of owning property come into their own as the business phases change.  Here's my very basic view on the purchasing of fixed assets -

1. Establishment.  Keep it lean and mean.  I would tend to keep cash flow available rather than tieing up up those funds in assets. 
2. Growth period.  Okay so maybe a few fixed assets like computers and the like would be handy now.  But I would still urge caution against tieing yourself into long term lease agreements or contracts.  Keep them short and sharp.  It may cost you moe in the short term but it will save you money in the long term.
3. Expansion.  Invest in people.  Rent a premises and invest in stock and people.  The time for assets will come.  Now woud be a good time to look at leasing a vehicle.  (Don't buy).  Leasing a vehicle will allow you to keep up to date and all the servicing costs are already built into the price so there won't be any surprises in the need for repairs.
4. Maturity.  This is the time to look at purchasing a small scale property.  Don't take on any grandiose building schemes or pans at this stage unless you get super good interest rates or you can rent out excess space that you don't require.

When you hit the fourth stage - it's time to call in the experts and strategise onhow you will take your business to the next level. 

In summary - keep cash available for you to use when you need it, invest in people before buildings, lease don't buy as much as possible.

Quote of the Week

"The best asset during inflation is your own earning power.  Anything you do to improve your own talents and make yourself more valuable will get paid off in terms of apropriate real purchasing power.

If you do something well, whether you're a major league baseball player, or if you're a good assisstant, whatever it may be, you are your best asset".

Warren Buffett.

(Quote from: Warren Buffett's Management Secrets;
Image: http://www.flickr.com/photos/samanthasteele/3983047059/in/photostream//)

Human Capital Management

PeopleStreme.com have made this awesome video and posted it onto You Tube.  I have put it here and will add my contribution further down the page.

What value do you place on your work?  What value is placed on you?  Do you rate yourself or not?

Conversely - What value do you place on others work?  What value do you place on others?  How do you measure that value and is that measure relevant or accurate?

Here are a few facts of life as far as organisation's go -

• Size matters.  The bigger the organisation the less they know about you.  What happens is the more layers in an organisation the more removed you will be from the central services.
• Front Line Managers matter! The relationship between you and your direct manager is always the most important relationship you will have.  This is true if you are the cleaner all the way through to if you are a Director of the Board.  You must work with your boss!
• The HR Department matters!  Admitted in most organisations the only time you most people will interact with HR is when they are hired or if they are fired.  But it doesn't have to be that way!  Go out of yur way to meet the staff and make sure they remember who you are (for the right reasons of course).  It pays to make friends and keep them for as long as you can.
• The skills and abilities of your staff matter!  Update them!  Watch your staff.  Learn from them.  Be open to having your staff tell you where they think what sklls they need to work on and develop.  If you disagree you can help steer them in a better direction.  Create an audit or questionaire to work through at appraisal time to help lead and guide your discussions about where peoples skills are at.
• Coaching matters!  The best time to coach someone is when they are reflecting and considering their performance.  If your manager doesn'tdo this for you - tell them or look for another manager.

PunkRockHR posted a great piece on employee engagement a few days ago which ties in nicely with this post.  Head over there and check it out - WARNING: it will provoke a response.

People who are paid to do work will do a better job when they feel valued, understood and have the freedom to do what they have to in a way that makes sense to them (while adding value to the organisation).

ROI = Return On Investment

In business accountants, shareholders and investors apply a range of different measures to assess how well a company or organisation are progressing. The simplest method for calculating a return = Return On Investment.

The basic formula works like this -

• what gains can I make from investing vs. what is it going to cost me to invest?

Most people apply this formula intuitively when spending monies. Some do not. My recommendation for the day is for you to start applying this formula to everything you do during your work day. Try assessing different situations such as -

• Meetings.
• Telephone calls.
• Professional Development.
• Engaging new clients.
• Hiring employees.

Is it worth the cost of your time to engage doing these things? Will you make any gains or investments by doing these or would you be better off delegating the task or contracting it out?

You are most valuable to your organisation completing tasks that create the highest ROI.

Swiss Army Knife - Management Lessons Intro.

What is old yet hasn't aged, has hardly changed since it's conception, is an essential item for Boy Scouts and was made popular in a TV program?

After posting a photo of a Swiss Army Knife it got me thinking. Could I use the army knife with it's many tools, facets and quirks as an analogy and an illustration for managers.

The answer? Yes. Yes I can. (LOL)

In order to appreciate the knife we must first understand it's history and where it has come from. Here are some facts about the knife -

• The knife is 125 years old. Great designs, functionality and usefulness make the knife an essential item.


• The knife was originally designed to provide soldiers with - a knife, a can opener, a reamer and a corkscrew. These tools enabled to the soldiers to complete a wide variety of tasks including the assembly of their weapons.


• There are five main variations on the original model.


• MacGyver made the knife glamorous by showing off it's usefulness while trying to get out of many a sticky situation.

So what can we learn/apply so far?

• Usefulness and adaptability lasts. If you are useful and can adapt to different situations - you will always be in hot demand. The ability to apply yourself in arrange of ways is the best trait to have!


• Train and gain competence and expertise in about four or five different areas. Those areas can be overlapping or poles apart. The main thing is to make sure you have a range of skills and not just one skill.


• There are basic skills and competencies that can be carried over across all managers and managerial positions. Find out what those are and work on them.


• Situations that allow you to apply your skills practically is a good thing. MacGyver was always getting himself into sticky situations. What did he do? Every time he went back to basics and used the tools he had to change his situation.

Keep reading the blog as I work my through the basic elements of design and functionality of the knife. Learn with me lessons on management and managing that you can apply now!

Trends - Predict them before they happen.

There are a few keys to winning and remaining sustainable. Here are a few generic ones -

1. Predict what's around the corner.


2. Plan to change to match what's coming.


3. Pass on your knowledge to others.

What will 2010 bring? Read the newspapers in 2009 for a decent place to start thinking about it.

Also try this article by David Armano who outlines what he thinks will be the six big social media trends in 2010.

In life as well as business, you have a few options -

• Ignore the trends and hope they will go away,


• Follow the trends and keep on playing catch up

OR

• Create your own trends!

The choice and the power is yours.

Free Money for Entrepreneurs

Here is a one line story published by the NZ Herald -

"An opportunity for companies seeking funding for growth or expansion to get a loan of up to $1 million on 'favorable terms"

Click out the University of Auckland Entrepreneurs Challenge website for more details.