Lessons on life and money management

“Experience has shown that some strategic actions fail more often than they succeed. Ten examples of strategic moves that usually produce poor results are presented below:

a) Imitating the moves of leading or successful competitors when the market has no more room for copycat products and look-alike competitors.

b) Spending more money on marketing and sales promotion to try and get round problems with product quality and product performance.

c) Establishing many weak market positions instead of a few strong ones.

d) Using debt to finance cost-saving investments in new facilities and equipment, then getting trapped with high fixed costs when demand turns down, excess capacity appears, and cash flows are too small to cover interest costs and debt repayment.

e) Allocating R&D efforts to weak products instead of strong products.

f) Attacking the market leaders head-on without having either a good competitive advantage or adequate financial strength.

g) Making such aggressive attempts to take market share that rivals are provoked into a strong retaliation and costly “arm-race” struggle. Such battles seldom produce a substantial change in market shares; the usual outcome is higher costs and profitless sales growth.

h) Initiating price cuts to win added market share without having a cost advantage.

i) Going after the high end of the market without having the reputation to attract buyers looking for name brand, prestige goods.

j) Depending on cosmetic product improvements to serve as a substitute for real innovation and extra customer value.

These mistakes are usually born out of acts of desperation, poor analysis of the industry and competitive conditions, and/or misjudgements.”- from unknown source.

This is where many small business operators have the potential to throw money away. Small businesses often have less complicated needs than their larger business counterparts. This is in referring to Solicitors, Accountants, Consultants, and Advisors etc.

· Shop around, these people sell a competitive service … the price is probably negotiable. There’s no shame in asking for a cheaper price. Remember, if you don’t ask … you don’t get.

· What is actually included in the chargeable time of these professionals? Understand how they charge and ensure you receive an itemised billing statement.

(Note: Many of these types of organisations offer employee bonuses based on the proportion of time that is invoiced, and it’s quite common to find more chargeable hours than attendance time)

· Always be mindful of, ‘you get what you pay for’, so work out what you intend to get.

· The scope of the services to be provided should be well defined, as a negotiated price for a poorly defined service is no different to giving the supplier an open cheque.

· Do you really need the professional service? Or could you learn how to sort your issues out yourself? What tools do you need? Have you looked into this or simply taken the easy route? Remember their hourly rates are likely to be substantially higher than yours are.

· Are you talking to the right person? People often speak to solicitors about accounting issues and vice versa, remember they charge by the minute!

· Could you use less expensive service providers i.e. debt collection agencies?

· Clarify up front what documents need to be supplied to the service provider. A billable amount for time spent searching for documents the professional never had is an easy method for them to boost billings artificially.

1. When it comes to teaching kids about money, the sooner the better.

Up until they start earning a living, kids are apt to spend money like it grows on trees. This lesson will show your kids to handle money responsibly.

Long before most children can add or subtract, they become aware of the concept of money. Any 4-year-old knows where their parents get money - the ATM, of course. Understanding that parents must work for their money requires a mature mind, and even then, the action has its wrinkles. For example, once he learned to accept that his father worked for a living, a 5-year-old asked, “How was job today?” “Fine,” the father replied. The child asked again, “Did you get the money?”

2. Once they learn how money works, children often display an instinctive conservatism.

Once they learn they can buy things they want with money - e.g., candy, toys - many children will begin saving every nickel they can get their hands on. This behaviour can determine what kind of financial manager your child will be as an adult.

3. Seeds planted early bear fruit later.

It’s important to work on your child’s financial awareness early on, for once they’re teenagers, they are less likely to seek your advice. Besides, they’re busy doing other things - like spending money.

4. An allowance can be an effective teaching tool.

When your kids are young, giving them small amounts of money helps them prepare for the day when the numbers will get bigger.

5. Teenagers and college-age kids have bigger responsibilities.

Checking accounts, credit cards, and debt are as important to the college experience as books and music. Teaching high-schoolers about banking and credit will make them wiser when they leave the nest.

6. Investing should be learned early.

High schoolers can and should be taught about the market - using real money.

1. Insurance costs a lot but having none costs more.

There are reasonable means to save money on insurance, but skipping coverage isn’t one of them. Medical bills from a small car blow can deplete your savings - a major health problem can lead you into trouble.

2. If your employer offers insurance, grab it.

Group coverage, when it’s employer-subsidized, is better than getting it on your own, even if you’re young and healthy. If you’re old and unhealthy, it’s absolutely a bigger deal.

3. Comparing plans is difficult but necessary.

Unfortunately, there is no such thing as standard coverage. Benefits and costs differ broadly from plan to plan. If you were given choices, you’ll have to consider each one carefully to get the best deal.

4. The lowest premium isn’t necessarily the cheapest plan.

What your plan covers is as important as, and sometimes more important than, what you pay up front. Ultimately, the cheapest plan is the one with the best price of benefits you’re going to use.

5. Even good coverage can have loopholes.

You can depend on your health insurance for a hospital stay. Most plans cover doctor visits, but coverage for mental health, prescription drugs and dental care are mostly optional.

6. You’ll pay more for freedom.

Plans with the most absolute advantage at the lowest price require you to use a defined arrangement of hospitals, doctors, labs, and added providers. The more flexibility you demand, the more you’ll pay, in either premiums or co-payments.

7. You can analyse networks before signing up.

A growing number of public and private sources keep informations on the track records of individual doctors, hospitals, and health plans.

8. Your insurance stays if you lose your job.

State and federal regulations assure you from losing coverage in case you lose your job. Unfortunately, they offer little protection from high premium costs.

9. Working couples have more to decide.

If you and your spouse both get health insurance at work, you must decide whether it makes more sense to have two policies or for one of you to cover the other. If you have children, you should decide who will cover them.

10. Tax breaks can help.

Ordinarily medical expenses, including insurance premiums, are not tax deductible until they exceed 7.5 percent of your income. However, if you’re self-employed or your employer offers a flexible spending account, you can get a tax break without meeting threshold.