“Land is so expensive; how can I get started”? There are plenty of people who have started with very little and created a nice business for themselves. We’ve identified five critical steps on getting started. If you want to ‘plan’ for success follow these, otherwise you are relying on ‘hope’ as your strategy.
N.B. These steps are applicable to anyone who wants to progress in business, not just those starting out.
1. Have a clear goal
Where are you headed? What is it that you actually want? The importance of goal setting is well known and documented. You will be constantly presented with opportunities and hence decisions that you’ll need to make. If you aren’t clear on what you are working towards then you’re more likely to make wrong decisions. Not having a clear goal in life is a lot like playing darts… blindfolded… at 3am after an enjoyable BBQ at a friend’s place. You could throw the dart anywhere – it doesn’t matter if you don’t know where the target is!
2. Financial discipline
This is critical for two primary reasons. Firstly, to increase your savings so that you are actually able to invest in something. Secondly, to demonstrate to investors (banks, JVs, equity partners etc) what you’re capable of. There are two aspects to good financial discipline.
a. Control money – budget and monitoring
What is your money story? Where does your money come from and where does it go? Sources of income could be wages, dividends, profit, drawings etc. If you are a wage earner, then I’d encourage you to split your expenses into two categories – mandatory and discretionary. Mandatory expenses are those costs that you’ve got to spend each month/year. This will change depending on your circumstances however could include costs such as insurance, phone bill, medical costs, groceries, loan repayments etc. Discretionary costs are those that you don’t have to spend each month such as grog, tobacco, recreational travel etc. One client mentioned recently that until he started to monitor this he didn’t realise just how much was being spent each month on counter meals!
If you are running a business then get to know your direct costs by enterprise, overhead costs, finance, capital etc.
b. Disciplined savings pattern
Who gets paid first at your place? Is it mandatory expenses, discretionary expenses or your savings? We recommend ‘paying yourself first’ which means that you take a portion of your income and put it into savings first – before expenses. A good rule of thumb is at least 10% (I recommend everybody read the book “Richest Man in Babylon” by George Clason). One reason for this is that we tend to spend what we earn! If you are only earning $20,000 a year, then put away $2,000. If you are earning $65,000 then save at least $6,500 etc. If you can’t save a portion of what you earn, then you will never fatten your purse!
3. Increase net worth every year
Once you start monitoring your finances, keep an eye on what happens to your net worth every year. Net worth is the value of what you own (assets) less the value of what you owe (debt) and is seen on a balance sheet. Your net worth should increase every year. It can increase via savings, increase in asset value (e.g. land or investments), or by debt reduction. I encourage everyone to track their balance sheet on a spreadsheet across the years. If you’re reading this newsletter, there is a high probability that you’ll kick some goals in your life! This is a great way to see what you’ve achieved. By tracking this it also keeps you focussed on how you are going and could influence your financial decisions (ask yourself ‘will this increase my net worth’?)
NB. A beggar on the street with $20 of loose change could potentially have a greater net worth then someone who borrows $50,000 to buy a car that is worth $45,000 once they drive it off the car lot!
4. Increase knowledge and skills every year
“An investment in knowledge always pays the best interest” Benjamin Franklin.
Regardless of where you work or who you work with, there is something valuable to learn if you are looking for it. Sometimes it is a clear picture of what you don’t want to do – doesn’t matter as it is still a valuable lesson.
During a course I did last year by Keith Cunningham, he made a statement referring to his employees that went something along the lines of “Just because you breathed oxygen for another 12 months, that doesn’t entitle you to a pay rise! Specifically, what books have you read, audio you listened to, courses have you attended that has developed your skills to make you more valuable to the business?” So, if you are an employee within a business, what have you done? If you want to be paid more, so you can save more, then you need to be more valuable to the business! If not, the business may not be viable if it increases wages without earning more!
If you have the goal of owning a property/running your own business, then you will need a pretty good skill set to know how to do it successfully. For an agribusiness you’ll need good skills in people, land, production and business management. Get hungry to learn as much as you can from wherever you work. Look to take on more responsibility and take your skills to another level every year. You don’t want to wait until you have a business before you try and work out how to run it!
5. Continually focus on what you want.
This final point is here to remind us what we are aiming for. What are our goals/targets/dreams etc? If you lose sight of what you want, then it is really easy to go off on a tangent when an obstacle/distraction gets in the way.
The harder you focus on something, the more likely you are to find ways to achieve it as well. We are exposed to so many forms of stimulus and information every minute, our brain filters out everything that we haven’t deemed important by focusing on it.
Finally, I think Steve Jobs summed it up well when he said “If you are working on something exciting that you really care about, you don’t have to be pushed. The vision pulls you”.
Focus on these 5 steps and I’m confident you’ll do well in your future business endeavours. Good luck and as always, give the RCS team a call if you need a hand.
RCS General Manager
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