Tip of the day is:
Set high prices on your products and services and give unique selling points to what the customer will be getting after they have paid. You will sell only to a few customers, but you will also raise the profit level you will be getting. And at the same time, you will gain a lot of free time to actually enjoy the money you make.
How is that for a tip? Enjoy.
torsdag 26 juni 2008
måndag 23 juni 2008
Geo arbitrage
Geo arbitrage has become a little bit of a new hype word. What Geo arbitrage means is: currency difference in living standard between different countries. More or less.
This means that, if you live in Sweden like me, for every 1 SEK you can recieve 10 times more in purchasing power in Kenya. That means you don't even have to amass one million SEK (or approximately 60,000-70,000 USD) in order to be regarded as a millionaire in Kenya. In Kenya you are considered a millionaire with only 100,000 SEK (or approximately 6000-7000 USD). At least if you use the SEK/Kenya shilling comparison. You have to look at the difference between your currency and the Kenyan shilling in order to see what you can gain yourself.
So why do I bring this up? What is the great thing I want to display here? Simple:
If you make 1000 SEK in Sweden and then spend in Kenya as a resident you will have the purchasing power of 10,000 SEK. That means, you don't have to work hard at all anymore. You can cut hours from your mobile job (if you have any such job that is) and just relax more than you do now (or do something more meaningful if you do hate your current job). But, of course this hinders you to one specific country of course: Kenya.That is the bad part.
As they say: There is good things, but even good things has it's particular dark side. Yin and Yang you might say. For every bad part there needs to be an equally good side to balance the situation.
This means that, if you live in Sweden like me, for every 1 SEK you can recieve 10 times more in purchasing power in Kenya. That means you don't even have to amass one million SEK (or approximately 60,000-70,000 USD) in order to be regarded as a millionaire in Kenya. In Kenya you are considered a millionaire with only 100,000 SEK (or approximately 6000-7000 USD). At least if you use the SEK/Kenya shilling comparison. You have to look at the difference between your currency and the Kenyan shilling in order to see what you can gain yourself.
So why do I bring this up? What is the great thing I want to display here? Simple:
If you make 1000 SEK in Sweden and then spend in Kenya as a resident you will have the purchasing power of 10,000 SEK. That means, you don't have to work hard at all anymore. You can cut hours from your mobile job (if you have any such job that is) and just relax more than you do now (or do something more meaningful if you do hate your current job). But, of course this hinders you to one specific country of course: Kenya.That is the bad part.
As they say: There is good things, but even good things has it's particular dark side. Yin and Yang you might say. For every bad part there needs to be an equally good side to balance the situation.
lördag 17 maj 2008
Savings VS Investing
People these days, at least those I associate with, seem to hate saving money. It is all about "investing". The problem is, all these people "invest", "invest" and "invest", but have no savings.
Let us begin with discussing why someone should save money? The only reason I can come up with is: to recieve passive interest income that secures your private economy. That's all.
Second, why should someone invest or even speculate? The only reason I can see is in order to get capital gains and use that capital gain to put in a savings account. That's all. You make more money and then put that money into a savings account that is secure and reliable.
The thing is: You make deals in order to then live of the interest of that same money. The easiest and best place (I am biased as you may understand) to place that money is in a savings account that beats inflation every year and then pay you cashflow that you then can use to pay your living expenses with.
Let us begin with discussing why someone should save money? The only reason I can come up with is: to recieve passive interest income that secures your private economy. That's all.
Second, why should someone invest or even speculate? The only reason I can see is in order to get capital gains and use that capital gain to put in a savings account. That's all. You make more money and then put that money into a savings account that is secure and reliable.
The thing is: You make deals in order to then live of the interest of that same money. The easiest and best place (I am biased as you may understand) to place that money is in a savings account that beats inflation every year and then pay you cashflow that you then can use to pay your living expenses with.
tisdag 13 maj 2008
How to give something of value in order to raise networth and cash
When starting a new business venture entrepreneurs need to focus in delivering value. Many people talk about "give value and you will recieve money". But they usually think on a low scale. What I want to introduce you to today is how to create massive value and recieve a billion dollar status and also recieve cash in your pocket that you can then put into your savings account (and then live of the interest for the rest of your life).
Before we can get a billion dollar valuation and a lot of cash to put in the bank, we need to define what kind of value our venture can offer an investor. If you have positive net cashflow then you have a great advantage. You can then offer this cashflow to the investor in return for a P/E valuation of 10X earnings. In return for that value you ask the investor to buy only a small piece of your company. The smaller the part, the higher the valuation. Say you can offer $400,000 a year in income from the company and you ask for a P/E valuation of 10, you could then recieve $4 million in cash (tax on it and put it in the bank and live of the interest).
As mentioned in previous posts on this blog you probably know the valuation system at this point. But let us tell you again. If you sell 1% of the company for $4 million, then the entire company is worth $4 million /1% = $400 million. If you own 99%, then you would be worth $396 million. But this is on paper of course. Unrealised capital gain as they call it. You need to sell it in order to spend it or save it in the bank. But this number still bear a value to your personal balance sheet. The fact is, you have created a company, a value, that an investor has seen being worth $400 million. Be proud.
It's like Microsofts investment in Facebook. They paid somewhat like $240 million for 1,6% of Facebook. Not because of the money or the dividents etc, but becuase they where promised exclusive control over the banner advertising space on Facebook. That "value" made Mark Zuckerberg, the 24 year old a multi billionaire on paper. The "valuation" is just a bi-product of the value you give. And as you can see with the Microsoft-Facebook connection, money is not always the best value. If you have a website that has a lot of well defined visitors, you could probably find an investor willing to purchase a little piece of your corporation in exchange for exclusive banner advertising control on your website. That could equal a cash payment for you as the owner of the shares sold and a new and higher valuation of your company. hence raising your personal networth a lot.
You really need to look at it this way in order to become super rich. And have more money in your savings account, earning you income interest for the rest of your life. Never needing to think about making a living anymore.
Before we can get a billion dollar valuation and a lot of cash to put in the bank, we need to define what kind of value our venture can offer an investor. If you have positive net cashflow then you have a great advantage. You can then offer this cashflow to the investor in return for a P/E valuation of 10X earnings. In return for that value you ask the investor to buy only a small piece of your company. The smaller the part, the higher the valuation. Say you can offer $400,000 a year in income from the company and you ask for a P/E valuation of 10, you could then recieve $4 million in cash (tax on it and put it in the bank and live of the interest).
As mentioned in previous posts on this blog you probably know the valuation system at this point. But let us tell you again. If you sell 1% of the company for $4 million, then the entire company is worth $4 million /1% = $400 million. If you own 99%, then you would be worth $396 million. But this is on paper of course. Unrealised capital gain as they call it. You need to sell it in order to spend it or save it in the bank. But this number still bear a value to your personal balance sheet. The fact is, you have created a company, a value, that an investor has seen being worth $400 million. Be proud.
It's like Microsofts investment in Facebook. They paid somewhat like $240 million for 1,6% of Facebook. Not because of the money or the dividents etc, but becuase they where promised exclusive control over the banner advertising space on Facebook. That "value" made Mark Zuckerberg, the 24 year old a multi billionaire on paper. The "valuation" is just a bi-product of the value you give. And as you can see with the Microsoft-Facebook connection, money is not always the best value. If you have a website that has a lot of well defined visitors, you could probably find an investor willing to purchase a little piece of your corporation in exchange for exclusive banner advertising control on your website. That could equal a cash payment for you as the owner of the shares sold and a new and higher valuation of your company. hence raising your personal networth a lot.
You really need to look at it this way in order to become super rich. And have more money in your savings account, earning you income interest for the rest of your life. Never needing to think about making a living anymore.
måndag 28 april 2008
Artwork and Wealth
Wealth is a subject I like to debate. Art is one very interesting one as well. I am not interested in how the artist has painted a painting, I am more interested in the wealth related part of that painting. The "collector value" so to speak.
For example: Create 4 equally looking paintings (or have a good artist do 4 equally looking paintings). Then sell one of those paintings as expensive as possible.
Example:
4 equally looking paintings is created by an artist (paid by you). You get all 4 paintings. One of the paintings is sold by you at an auction. You recieve $100,000 for this one painting. The other 3 paintings is kept by you. These 3 paintings are valued at $100,000, each, after the auction sale of one of the paintings. That means you hold paintings worth a total of $300,000 ($100,000 X 3 equally looking paintings).
Wealth created out of necesity.
For example: Create 4 equally looking paintings (or have a good artist do 4 equally looking paintings). Then sell one of those paintings as expensive as possible.
Example:
4 equally looking paintings is created by an artist (paid by you). You get all 4 paintings. One of the paintings is sold by you at an auction. You recieve $100,000 for this one painting. The other 3 paintings is kept by you. These 3 paintings are valued at $100,000, each, after the auction sale of one of the paintings. That means you hold paintings worth a total of $300,000 ($100,000 X 3 equally looking paintings).
Wealth created out of necesity.
lördag 12 april 2008
Time Management
Time management is the ultimate way of doing more with less time. It is also the ultimate way of making things happen instead of postponing things. Because when you have a clear deadline everyday where you are forced to do a certain thing in a certain time frame (or wait to the next day) you will do it more effectively. You will find ways of doing it. Otherwise you will lose.
And this working time frame each day is there for a reason. The reason is to tell you that when this time frame is over, the working day is over. And if you haven't reached the effectiveness and productivity in that time frame you will have lost one day of your life to bad time management. If you are working for someone else you have in most cases 8 hours of work. Then you go home and you don't work more hours that day. No for your employer anyhow.
When you are an entrepreneur you don't have those clear distinctions between work and play time. You have to set those time frames yourself. Otherwise you will certainly burn out. Sooner or later.
I work 3 hours and 20 minutes each day (Saturdays and Sundays included).
My schedule looks like this:
-2 hours 30 minutes - checking mail and writing mail.
-10 minutes - reading online businss news.
-1 hour - reading a book of my choosing.
-10 minutes - talking on the telephone (business only). This requires dicipline. I gotta tell you. I usually give delegations by telephone only. Updates is done by my COO or anyone else by email only.
-30 minutes - Reading/writing forum threads to keep up with other peoples ideas. Inspiration purpose.
In order to succeed with this kind of time management you need to use your creativity and your focus on getting things done in much, much less time. And you need to have a clear disticntion between work and play time. It is like when you start a company. You don't use your personal bank account as your companies account. You open up a separate account for the business. The same goes with your time.
And this working time frame each day is there for a reason. The reason is to tell you that when this time frame is over, the working day is over. And if you haven't reached the effectiveness and productivity in that time frame you will have lost one day of your life to bad time management. If you are working for someone else you have in most cases 8 hours of work. Then you go home and you don't work more hours that day. No for your employer anyhow.
When you are an entrepreneur you don't have those clear distinctions between work and play time. You have to set those time frames yourself. Otherwise you will certainly burn out. Sooner or later.
I work 3 hours and 20 minutes each day (Saturdays and Sundays included).
My schedule looks like this:
-2 hours 30 minutes - checking mail and writing mail.
-10 minutes - reading online businss news.
-1 hour - reading a book of my choosing.
-10 minutes - talking on the telephone (business only). This requires dicipline. I gotta tell you. I usually give delegations by telephone only. Updates is done by my COO or anyone else by email only.
-30 minutes - Reading/writing forum threads to keep up with other peoples ideas. Inspiration purpose.
In order to succeed with this kind of time management you need to use your creativity and your focus on getting things done in much, much less time. And you need to have a clear disticntion between work and play time. It is like when you start a company. You don't use your personal bank account as your companies account. You open up a separate account for the business. The same goes with your time.
söndag 6 april 2008
Start-ups and banks
Many start-up companies are stuck when it comes to bank financing. Why is this? Simple, they have no cashflow history. They have no earnings history.
So the simplest way to get a loan from a bank if you have a start-up company is by getting long-term contracts signed and clear.
This works like this:
You have produced a new beer product. You walk around to local pubs and they find your idea very interesting and sign themselfs up for 2-3 year lease or purchase agreements. Why agreements? Simple, with agreements you now have a history (all though a future history of revenue). The bank will like this. With these agreements you have a proven revenue stream 2-3 year into the future. You also have your customers creditworthiness working to your advantage (a start-up company is per automatic not creditworthy).
The next step you need to understand in order to get a bank to give you money to deliver your product/service is how much you will earn on the agreements. Banks will lend only a certain percentage (75% in Sweden) on the annual earnings divided by the cap rate you are given.
So if you make $100,000 annually in earnings (after fixed expenses and before taxes) the bank would give you $75,000 in Sweden divided by a cap rate. In this case we say the bank will give you a fixed 10% cap rate on $75,000. This would give you $750,000 that you could use to finance your company and get things moving (assuming an interest loan).
Sounds overly simplified and unrealistic, but test it before you dismiss it, will you. I think you owe it yourself. The worst thing that could happen to you is getting a "no" from every bank in the world. How horrible can that be? There is always hard money lenders (private lenders) if the traditional banks should say no (which would be very strange by the way).
So the simplest way to get a loan from a bank if you have a start-up company is by getting long-term contracts signed and clear.
This works like this:
You have produced a new beer product. You walk around to local pubs and they find your idea very interesting and sign themselfs up for 2-3 year lease or purchase agreements. Why agreements? Simple, with agreements you now have a history (all though a future history of revenue). The bank will like this. With these agreements you have a proven revenue stream 2-3 year into the future. You also have your customers creditworthiness working to your advantage (a start-up company is per automatic not creditworthy).
The next step you need to understand in order to get a bank to give you money to deliver your product/service is how much you will earn on the agreements. Banks will lend only a certain percentage (75% in Sweden) on the annual earnings divided by the cap rate you are given.
So if you make $100,000 annually in earnings (after fixed expenses and before taxes) the bank would give you $75,000 in Sweden divided by a cap rate. In this case we say the bank will give you a fixed 10% cap rate on $75,000. This would give you $750,000 that you could use to finance your company and get things moving (assuming an interest loan).
Sounds overly simplified and unrealistic, but test it before you dismiss it, will you. I think you owe it yourself. The worst thing that could happen to you is getting a "no" from every bank in the world. How horrible can that be? There is always hard money lenders (private lenders) if the traditional banks should say no (which would be very strange by the way).
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