15 TIPS for BUSINESS

If you own a business or manage a business unit for a major corporation these following tips will shelter you from the storm that’s heading our way.

  1. Look after your loyal staff – but start planning cuts. This is inevitable if you want to survive. I know this sounds a little ruthless but when the crash is over, you owe it to your hard-working loyal staff to maintain a healthy company. Focus your energy on partnering with your loyal staff. Pay what is fair and necessary to keep the talent you have but don’t tolerate mediocrity. Expect and demand excellence.

  2. Start a rainy day fund – Put money aside – put 30% of your profits for the next 6 months into a reserve fund. After 6 months reduce it to 20%. After 12 months reduce it to 10%.

  3. Bullet-proof yourself from the Tax Office. Ensure that your bookkeeping is accurate and up-to-date. During tough times the tax office will be looking to get it’s revenue any way it can. Anyone with a weak set of financial statements will be vulnerable to an audit that will drag on and on and take you away from managing your business.

  4. Spend less on new technology – extend your hardware warranties and do not upgrade your software unless you absolutely have to. Software upgrades not only cost you more in fees but also in implementation and training.

  5. But, don’t save money by doing something that costs much more in time. Don’t skimp on purchases that will otherwise make you more efficient.

  6. Move operations out of expensive CBD rentals. If you are in retail, boost your online presence and turn your CBD retail space into a showroom as well as a point of sale. The Apple store is one perfect example. So is the Nespresso store.

  7. Cut your lease time – If you rent showroom or office space, make sure your lease allows you to leave on short notice or allows for rent reductions in line with the market.

  8. Do not renew all your supply contracts just yet. There will be bargains for real estate space, telecommunications (voice and data), computers, office machines etc… Try and not lock in for longer than 12 months. If suppliers insist on a 24-month contract ask for a cost review clause in 12 months.

  9. Hire staff from your local area. People that spend too much time commuting are much less effective at work, period!

  10. Cut down on unnecessary business travel. It’s costly and takes your staff away from their families; which is not good for morale. Happy family equals happy work. Use teleconferencing or video conferencing.

  11. Sell your business – If you have been thinking of selling your business, don’t wait any longer. Today’s circumstances may be your best opportunity for a long time. If you decide to hang on and ride out the storm, then read the following 8 Tips to Business Excellence.

  12. Reduce Inventory – If you are in retail, reduce your stock levels. However, if your business relies on the supply of specialty items that are difficult to obtain, stock up.

  13. Delight Your Customers Even More – The customer will be even more ‘king’ as business competes for a dwindling share of wallet. Share of heart will become more important. So do what the likes of Apple and St George Bank do. Go beyond the call of duty when serving customers. The 9th and most important tip for Business Excellence.

  14. Work Harder Not Just Smarter – Here are 3 Tips to keep you focused on building  your business

  15. Start planning for the upswing, but don’t be premature. The media will be quick to talk it up because that will be the sexy story. Don’t be the first to jump in and be bullish. Wait for two quarters of good economic data before you upscale and invest in new capital. Being in the right position could ensure success for years to come.

10 TIPS for your PERSONAL LIFE

“The rich get richer but the wise get wealthier.”

Remember that being wealthy is a state of mind and not the state of your bank balance.

(The picture on the right was taken of a tree growing on the side of a rock – at Sydney Botanical Gardens. It made me think – We are no different to trees. We can survive and thrive however tough our circumstances may get.)

  1. Keep your cool – at home and at work. When things are going well, anyone can be positive. But it takes an extraordinary person to maintain grace under pressure. So be a pillar of strength. Don’t crumble. Reach deep withinyourself and lift your standard. Life is not perfect. We don’t make it throughlife without setbacks. As Sarah Kay, poet, puts it, “Getting the wind knocked out of you, is the only way to remind your lungs how much they like the taste of air.” I believe that it is in these moments that we have the opportunity to rise above our circumstances and make the choice to be strong. It is in these moments that we use stumbling blocks as stepping-stones to a better life. This isn’t motivational talk. I live by this as a truth.

  2. Focus on being wealthy not rich. What you invest in, ultimately defines your wealth. I have learned that the safest and most rewarding investment that yields the most abundant wealth imaginable is the investment in yourself. Aim to wake up every morning and do the simple things. Eat well, exercise, spend quality time with your family, keep learning and improving, choose to love your work, have fun with friends and be kind and generous. Focus on creating wealth  not just money. Living a complete and happy life is your wealth. But here is the magic. When you invest in yourself you start to attract good things and good people to you. And these often come with opportunities to work and invest in new ideas that excite you and make money for you.

  3. If you have a huge mortgage that relies on your current income to finance it – sell. Aim to own your home outright, if possible. Be willing to downgrade to make this happen. If a mortgage is unavoidable, keep your eye on the variable rate. Chances are it will drop lower than any fixed rate currently on offer (but please don’t take my word for it – get advice).

  4. Don’t unnecessarily upgrade your car. It costs much less to repair a car than to spend the extra money on buying a new one. And never buy brand new cars. There is better value in second hand cars. You pay a premium for new cars for no apparent reason other than to be the first to drive the latest model.

  5. Make sure your pay is in money form. Cash out any stock or stock options that your company has issued to you.

  6. Reduce stock market risk as much as possible. Get out of speculative and derivative positions, especially bullish ones. If you must stay in stocks, move to investments that are high quality, liquid and commonly traded.

  7. Sell underperforming real estate investments – If you have real estate investments returning less than 5%, aim to sell now and buy later when the market nears bottom. There will be plenty of distressed sales and you will have the opportunity to buy prime pieces of property; especially commercial buildings in local shopping strips.

  8. Invest your money in cash spread across 2- 3 banks with high liquidity. In Australia, my pick is CBA and Westpac. I would even put 15% of that cash in actual notes stored in a cash deposit box.

  9. Get frugal! Strengthen your family’s finances. It’s a fact that families who manage expenses well are often the most successful. Here are a few ideas that my family adopts. I know that you may not be short of a dollar. Neither am I. But this is not just about budgeting and surviving, it’s more than that. It’s about setting an example for your family and proving something to yourself. It’s about taking back control. Read more 16 Tips to get frugal this christmas.

  10. Get fit and stay fit! When times get tough you need to be in top condition for excellent performance. Energy is the new currency. In my January newsletter I will be listing my top nutrition and exercise tips for 2012.

16 Tips to Get Frugal this Christmas

Why are we addicted to spending too much money at Christmas time? Is it the easy way out? Sorry to be confronting but I know some parents who prefer to buy their children expensive gifts to shut them up instead of taking the time to really connect with them.

As we enter a period of turmoil and financial uncertainty, my family is adopting the following lifestyle changes. We may not be short of a quid and neither are you but we feel that there is something empowering about not being a slave to consumerism. Here are our 16 tips. If you have some of your own please share.

  1. Buy a smaller/fuel efficient car. Aim for a car that spends less than 7L per 100km.
  2. Walk short distances instead of taking the car. I know many senior executives who are now commuting by bike. Read this great book: Simply Car Free
  3. At Christmas, involve your children in making gifts instead of buying them.
  4. Cook at home 6-7 days per week. It costs much less and is healthier for you. It costs an average of $10,000 per year to buy groceries. To eat out would cost you $30,000. Cooking at home is also a great way to bond with your family. (If you have trouble connecting with your family at the best of times. Here are 5 Awesome parenting tips)
  5. Take a packed lunch to work.
  6. Drink water instead of soft drink.
  7. Grow your own vegetable garden. More and more people are doing so. It saves you money and is healthier for you.
  8. Stay healthy. It can save you tons of money on doctor’s visits, hospital bills, and medicine over the long run. Prevention is cheaper than the cure. Eat healthily, exercise and relax. Simple and effective.
  9. Don’t buy clothing from designer brands. There are many local designers who sell clothes for a fraction of the price that are just as cutting edge. Fashion is transient and not worth the expense. Often we are paying big dollars just for the label. I’ve heard of garments sold for over $1,000 which costs as little as $1.50 to make in China. How do they justify that?
  10. When it comes to children’s clothing, select one special outfit from your favourite store and opt for hand-me-downs or scour the web for last season specials – online children’s clothes shopping is easy and so much cheaper.
  11. Limit use of mobile phone and especially text messaging. I’ve waste up to $5.00 for a conversation on text. Now I pick up the phone and call someone instead – costs me 14 cents!
  12. Save energy. Hang washing in the sun instead. Limit use of air conditioners and heaters to extreme weather conditions only.
  13. Don’t book expensive venues for Christmas parties, have them in the park or somewhere free, focus on enjoying the company of your friends, family and nature.
  14. Don’t sign up for expensive gym membership. Exercise outdoors with family and friends. I know a guy who only uses body weight for his exercises (push-ups, sit-ups, squats etc…) and he has an amazing physique!
  15. Wash you car at home. My family and I have fun doing it. It’s another great way to spend time together.
  16. Stop using credit cards. A lot us use a credit card for the convenience of not having to keep an eye on our budget. Manage your cash flow instead and save hundreds in interest.

Are you slave to the dollar?

Frugality is Power! Here are 8 Tips to help you take control.

Last Friday I wrote about ‘living within your means’ as a way of fostering a happy family. This week I feel compelled to write more about this important issue and provide some practical tips on how to be frugal. Don’t switch off just yet? I know, I know, you may not be short of a dollar and neither am I. But this is not just about budgeting and surviving, it’s more than that. It’s about setting an example for your family and about proving something to yourself. It’s about taking back control. Please read on and share this with people you care about.

CONFESSIONS OF A SHOPAHOLLIC

People and businesses are still hurting from this Great Recession. Some are even struggling to put food on the table. To learn how to live in this new economy, which has been described as the “worst in a generation” we must go back and remind ourselves of what caused the problem. I think Newsweek magazine put the answer simply: It was caused by “A frenzy of irresponsible borrowing.”

On a macro level I believe that corporations and governments have to accept that they created this issue by peddling a culture of greed. A message of ‘buy! Buy! buy!’ whether you can pay for it or not. Consequently, “A generation has learned the hard way the dangers of borrowing too much,” explains economist Chris Farrell in his book The New Frugality.

On a micro level I think that it’s time for us individually to take back control. Its time for the little guy to say ‘no’ to the advertising agencies that con us into buying stuff we don’t need. And time to say ‘no’ to the stock market that measures a corporation’s performance by the number of high-margin widgets it can sell to unsuspecting consumers. And time to say ‘no’ to growth in GDP as a measure of a community’s wealth.

Whilst the mainstream media is telling us a lot about the problem, there is little information provided on how to be frugal.  In this journal I want to share with you how my family is taking back control of our spending patterns. We have been doing so since August 2007, when the GFC was first felt.

Controlling spending is the best way to beat the system that has let us all down. If you know how to live frugally and keep your greed in check you will live life on your own terms, without regard for money. This is the ultimate freedom of choice in a democracy.

There is power in knowing that you can control your spending habits. There is power in knowing that you can live a great happy life without regard for money. There is power in knowing that you can grow your vegetables if you have to. There is power in knowing that you can walk or cycle to work instead of driving a car and burning fuel. There is power in knowing that true happiness comes from having close family and friends and not from buying material belongings that eventually find their way into the attic collecting dust.

Here my Tips (Please share these with people you care about):

First, when you go through good financial times, save some money! Put aside as much as you can. Start a ‘rainy day’ fund. Having this will take the pressure off. And you won’t feel like you are carrying a financial burden around with you all day. This advice also applies to businesses large or small. (Please make sure that you deposit your savings with  bank that is government guaranteed.)

Second, before buying an expensive item, consider whether it is really necessary. Sleep on it. Don’t be impulsive. If you think that this purchase is going to make you happy, its time to step back and examine what is going on in your life. Buying things to make you happy is often a sign of insecurity and having ‘no life’.

Third, if you decide you really need to buy something, search for items that are on sale or look for good used items. In my business, I do not buy the latest software. When people were buying 2007 version of Microsoft Office, I went and bought the 2003 version. It did the same job and we saved thousands of dollars in software licensing fees.

Fourth, don’t buy new cars. A business associate of mine recently bought an S class Mercedes Benz for a tenth of the price of the new model. He said something to me that was thought-provoking. He said, “the new model is not worth paying the extra $100,000 for.” And he is right. We pay so much more for the privilege of being an early adopter. Why? It makes no sense. We would have gladly bought the car 5 years ago for a bargain price, why the difference now?

Fifth, don’t buy clothes from popular name brands. There are many local designers who sell clothes for a fraction of the price. When it comes to children’s clothing, rather than buy the latest styles at expensive stores, why not use hand-me-downs?

Sixth, cook at home. It costs less to buy ingredients and cook meals than it does to eat out, period! My wife and I go to the farmers market every week and get the kids to help us select produce. On Sundays, we sit and talk as we prepare the meal. We bond and the children learn so much. We also teach the kids to prepare sandwiches for school.

Seventh, Grow your own vegetable garden. More and more smart people are doing so. It is not only relaxing and healthier for you but also saves you lots of money. By growing six of the most common vegetables, an average family can save up to $3,500 per year!

Eighth, here are a few more that I learned from my parents: a/ Limit use of cell phone, it’s costly and bad for your brain. b/ limit use of a dryer, hang washing in the sun. c/ Limit use of air conditioners and heaters to extreme weather only.

If you are in debt, please email me and I can send you information on how to get out of debt. And don’t worry, I am not gonna try and sell you something! My email: sam@sammakhoul.com

MY CONFESSION

I have to confess that I only blog, post, and tweet when I am inspired to. But today my EA ordered me to make a public pledge. The pledge is that I will start sharing my journal with you at least twice a week – One for the workweek ahead and one for the weekend. So here is my weekend journal entry.

It’s personal. It’s about family. I remind myself of this important lesson every Friday.

LIVE WITHIN YOUR MEANS

This is something I usually share with my closest friends. But with your permission I would like to journal it today because this is something that is very important. It is frankly where most families go wrong.

In my early career as a lawyer I handled many divorce cases. It was heart breaking to see couples that once adored each other break-up simply because they did not know how to manage their finances. And the biggest mistake they made was not living within their means. I especially came across many executives that bought a big house in a fancy neighbourhood and a flash car – this was their idea of wealth.

There is of course nothing wrong with having a nice home and a nice car. The problem however comes if you borrow too much money to be able to afford it. To me true wealth is about having the freedom to do what you want when you want. So where’s the freedom in working hard to pay off things that you do not get to enjoy because you are too busy working to pay them off?

So, my message here is that we should all aim to keep it simple. Our children don’t care whether they sit on a $20 Ikea chair or a $500 designer chair when enjoying the evening meal. Instead of going to a restaurant to have dinner, why not go to a farmers market and buy produce that you can prepare yourself as a family team. You will be developing a bond, having fun and learning how to cook.

There are many other ways to live a frugal life without compromising your lifestyle. It’s true; the simple and most delightful things in life are in fact free. You just have to be creative and make a conscious effort to think of them. You must be just as efficient in managing this aspect of your life as keenly as you would your career.

You know, I have heard that in some religions a couple must get spiritual advice before they get married. Well I think that couples should also get financial advice before they commit to building a future together. Finance is something we cannot ignore in our life. I have witnessed that the families that manage it well are often the most successful.