Business Support Systems: The Stake

This blog post is a semi-continuation of the Money tree series posted in late July.

Please make reference to that post if you are to get a full picture of what I am discussing today.

There are certain business systems that are efficient in production and output, but they in their very nature face some serious challenges in standing on their own.

When starting up business, it is usually expected that a certain level  of reinvestment or recapitalization of the business will be necessary. It is critical to realize that sudden changes, or the natural progression of the business will require you to invest time, physical and financial resources into the business.

This may be due to the fact that, the business may expand much faster than what was expected, requiring a growth in the capital requirements of the business than what was originally foretasted.

The advantage of such things is that once a business is operational, there is a bit more substance to it and obtaining financing through external investment becomes much easier than when a plan is just on paper.

I have personally felt this pinch with one or two excellent plans that have been well researched but requiring a certain level of start up financing. Especially when you are  a new venturer and everyone else is looking through your portfolio seeking your prior achievements before they can surrender their finances into your hands.

But once a business is operating, even at a small scale, it bears testimony to what it is capable of, and income cases, through due diligence and cash reinvestment, minding cash flow management there is a very high chance that the business may even be able to recapitalize itself.

It may do this even through the acquired goodwill, that increase its value over and above the actual physical and financial asset value it has in its portfolio.

An example of a business system that may require extensive levels of recapitalisation that may take even decades to recover but will definitely be worth it is mining. Substantial amounts of assets have to be bought before production can commence. In cases such as oil rigging, billions may be invested at regular intervals even as the business itself is generating a sizable cash inflow.

However, care has to be taken that recapitalization does not become a perpetual occurrence. A good system is one that ensures that there comes a point when the business reaches maturity, and becomes stable enough to stand on its own and even provide a support base for other expansion plans of businesses in the portfolio of the owners.

Investment in other people’s businesses is also useful because as my mentor always says, “I am not  the smartest person in the world.”


The Root: A Lesson of Persistance – Part 1

There is no need to be a failure as a success.

Plants and their nature never cease to amaze me. You will find them literally everywhere, given half a chance a place that previously seemed to be totally desolate can reveal so much hidden potential.

This should be the same drive by which you need to follow through with your dream. Go ahead and dream big even amidst the most challenging of situations. A certain young man once worked for me as a general hand. He was unfortunate enough not to have completed his secondary education, and I told him he had potential to get ahead in his life through making use of his hands.

For a moment he stared at his hands and could not even believe what he heard me say to him. He just shook his head in disbelief, and replied, “with these hands… I dont think so.” In his mindset, because of his perceived disadvantage of not having gone further with his education, he saw himself as forever banished to being a “failure as a success.”

In his eyes, there was no way he could not ever become any more than what he was. “They have eyes, but they do not see.” He could not even see what he was already doing with his own hands that was already bettering his life. He had already made an active decision to do something with his life but he could not even see what he already had.

Many times, we look at our life, the end picture…. and immediately are blown away by the magnitude of the dreams that we have or the destiny that may be. We often fail to see what resources we already have, some of which we may already be using that have the potential to take us to even greater heights.

The limits to which we may reach simply depend on how much we allow our minds to stretch and wonder and discover the secrets that life has in store for us.

However, it does not always come easy. Bumps and roadblocks are something that can never be totally guarded against, but you just have to hang in there, think postively and allow some unexpected solutions to some of the challenges you may face.

There are very few entirely new concepts, businesses and methodologies that you may come across. Somewhere, somehow, somebody out there has faced the same or similar challenge as the one that you may be facing.

The “six degree” theory, states that we are all seperated by six people in our networks to everybody else in the world. However, subjective that theory may be, it just goes to show just how well connected and intergrated we all are.

So imagine how many solutions and experiences are available for our education from the very people we socialise with on a day to day basis. The key is to know which combination of people is the right one. In the face, of challenges, you can safely take comfort that there is a solution out there for you to get, all you have to do is rich in and reach out to get it.

Plants just dont seem to know when to give up, I especially admire weeds, they are particularly persistant and will grow out of any crack or crevice that they can fit into. They are a constant menace to farmers and gardeners anywhere.

As such successful people are those that are a constant menace to their destiny.

Learn from spoilt children, dont give up until you get what you desire. Jacob refused to let go of God until dawn broke and God was forced to bless him. It was not that God failed to escape, but the blessing was so massive, that he had to make sure that the recepient, Jacon, would really appreciate what he got and not take it lightly. Only then could he become, ISRAEL.

The hollow in his joint an everlasting reminder of the night God visited him with a blessing that would last the ages and be remembered for all time.

So as I sign off I leave you with a question, “what opportunity are you being prepared for by the challenges you think you are facing?”, because it might not be a challenge, but a lesson embedded for the purpose of increased valuation.

Take Root – Be Established

I read somewhere that the chinese bamboo takes about five years before it sprouts some shoots or begins to germinate. Most soft cuttings take a few weeks to a few months just barely holding onto dear life sustaining themselves on what they already have stored within them, except for water which is drawn in in minute doses.

So what will be happening within this relatively stagnant period? One this for sure, the plants will not just be sitting around hoping for some devine intervention in order to begin to grow. This is the time they realise that their original source of nourishment has been removed and they have a choice either to do something about it, or die!

Most choose to live, not all succeed, but most put up a good fight. More often than not, we as human beings find ourselves in that very same scenario, after years training and growing in a particular vocation we become preety good at what we do and fall into a dependency on the system. If as an employee, your boss just happens to go to a party or optimisation workshop or something and suddenly begins to implement retrenchments and you are caught on the “wrong” side of the program life suddenly turns from a sweet orange to a bitter grape fruit.

The key in such an incident is not to panic and lose all hope in desperation, but like my little cuttings realise what has happened and gather up your available resources whilst you still have a bit of life within you and begin to put up your own new system to support yourself. Unlike plants however, so long as we are breathing and sometimes even further than that, we still have potential to make a difference in this world that we live in.

So yes, even if we falter, stumble, and sometimes give birth to still born businesses, there is still yet hope for us. All we have to do is gather our wits about us and go at it again never losing the passion by which we started out with.

It never ceases to fascinate me at the vast network of roots a seemingly small plant develops whilst in the very initial stages of growth. When you look at it from the top of the plant above the soil, it seems as if nothing or very little is happening, but just a few millimetres below the surface growth is taking place at a phenominal pace.

To prove this, just try pulling out a little plant from the ground and see what happens, It seems as if the entire little patch around it has been wired into the little plant’s system.
That is the true sustinance of the plant, in the ever growing network of roots.

Time taken developing the roots of a business system, will determine its strength of resistance to negative external forces. Some truly grounded systems may be totaly wiped out, by an economic disaster, but you can be sure that so long as the roots remain intact, the industry shall rise again.

Some plants only need just a single piece of root to remain intact, and the system can be rebuilt to its fomer glory.

So it is of my opinion, that more time needs to be dedicated towards establishing a fully functional root system, that will stand the test of external pressure

Relationships, Risk and Investment

If there is anything that I have ever learnt from farming is that risk is inevitable. There is no one fullproof method of investment or doing business that will give you a 100% success rate in the long or short run depending.

A farmer has to put a seed in the ground and at every stage of development there is a risk that there will be failure. At seed stage there is risk that the seed may fail to germinate, hence farmers sometimes plant seeds in pairs.

Not every seed will germinate in all the cases, but the farmer is not daunted by the failure of a single seed to germinate. Likewise in business, everything you put into it, is an investment.

Actually, in life everything we do is an investment, either we are investing in ourselves through education, in business through financial investment, in others through building relationships via communication, physical, verbal or mental.

We are always investing at every point, and in each investment that we make, you have to realise that there is a certain degree of risk that is involved. When investing in education, for example; computer programming, because it may be the “in” thing at the time a new software may just be developed that renders your vocation completely obsolete. So what used to be the big deal, suddenly isn’t so big anymore and suddenly the invested years become wasted years.

People invest in relationships all the time, human beings are gregorious beings. There is a need for co-dependancy, nobody exists in an island and personally, I feel that relationships are the biggest investment anybody can ever make. Relationships are the cement that hold the bricks of legacy together.

Relationships are the true essence of life, your relationship with God, your peers, your mentors, your wife/husband, your children and relatives, your business network and your casual acquintances.

These all vary in their degree of complexity and the level of feeding that has to be done in order to ensure that they survive. In gardening, there are certain plants that you can afford to leave for days or even weeks at times without watering and they still remain fit and healthy, but the moment you over do it by watering them daily they WILL die.

And then there are others that if you even miss a single day, all your investment in that plant is flushed down the agricultural drain.

In relationships the same thing applies, imagine giving the same amount of attention you give to your spouse, to… say, your boss or a person on one of your business networks. That would be highly inappropriate and inadverntly be disastrous.

Each relationship you have has to be monitored according to its own merits, but the important thing is to monitor it and give it the attention that is due to it.

Most people are very happy to invest in relationships and often do it without trying, its like breathing to them.

And with the advent of social networks like facebook, myspace, twitter etc keeping up to date with your business, social and spiritual networks has just become a little bit meshed together.

A close friend, a strict parent, a spouse, an employer and acquintances have been brought together at the click of a button away.

This has allowed for the creation or breakdown of relationships at the click of a button, but we will not go into that for now.

After spending so much time building relationships and investing on a daily basis, you would think that people would be readily open to financial investment.

Lecturer after lecturer,after teacher, after doctor, after professor may come preaching the gospel of being fruitfull through investment, I mean even Jesus taught of it for example in the parable of the talents, but when it comes to actual investment people are always hesitant or, “just dont have the time” to learn how.

If I ever learnt anything I learnt that a journey starts with a single step. It may not be a giant leap, but even a shy, small span step is still counted a step.

Growth of Business (The Greenhouse Effect)

As the first leaves break through the ground, that is when the plant is at its most vulnerable.

A business is at its most vulnerable when it is at its infancy, because that is when it becomes exposed to the true environment in which it is to exist. It becomes exposed to competition, in some economies that is when it breaks the minimum tax levels and it becomes to various laws and legislation.

If not protected and well monitored this is the time that it can slink right back into the earth from whence it came.

The seed has to be nurtured by creating a rich mix or medium in which growth is to be fostered. Similarly a business dream has to be soaked in the right nutrients in order for it to have even a single chance at seeing daylight.

A business plan/proposal has to be thoroughly researched and complemented with the right support systems before it is actually launched into the market.

Systems have to be set up to ensure that when the business is rolled out every department and resource is available to kick into action when the relevant function is called into play. It would be a serious hiccup if the company was to produce a product only to realise that a major aspect such as packaging or labeling is not in place. Suddenly, you have an almost complete product sitting in your warehouse crunching money that you do not have to spare out of your pocket every extra minute that it spends there.

In the event that the product is easily perishable every extra minute stored is a minute closer to disaster.
Smart farmers prepare some plants before the season in which they are originally intended to grow in has begun. Some conditions are too harsh for the seedlings to flourish in. Therefore they need to be sheltered before they are exposed to the environment in which they are to spend in their existence in.

Sometimes in business you need to shelter your growing business and protect it from the full scale attack of an open market system, that is why in there are things such as trade restrictions. These are meant to protect the growing firms within a nation from the full scale impact of a harsh and developed economic system.

In this discussion we shall focus on a microclimate of developing a business. In some businesses it is wise to create a business and expose it to a controlled or small market releasing it as a pilot project in order to iron out any unforeseen challenges that would prove catastrophic in a larger scale.

It’s easier to recapitalize a business worth $10000 by 20% of its value than it is to recapitalize a $100000 business. The task of correcting a $2000 mistake is far easier than a $20000 mistake, at times the mistake involves the salaries of your human resources, and human resources are just one resource that you do not want to make a mistake with.

Every single disgruntled employee has the potential to bring down an entire company to its knees, employees are like the roots of a company and anyone of them may be the taproot, which if damaged the entire plant can just shrivel and die.

So the mistakes that are made in a controlled environment are far better than those involved in full scale implementation.

10 disgruntled employees are better managed than a 100. Once a business has grown sufficiently it can gradually be exposed to a larger market growing into new markets and gradually adjusting to correct practice as it grows.

Once it is healthy enough it can fully branch out and realise its full rollout and it has a better chance of success. There is greater possibility of success once you have gained confidence in the viability of your business and you have a few loyal clients to fall back on as well as good contracts with suppliers and markets.

Your human resource base will also be in a better placed position to handle the pressure that is associated with running large scale corporations.

Once an entity has also proven a model at a smaller scale, this means that it is feasible for implementation at a larger scale.