2015 ANNUAL CONFERENCE ON ANTI CORRUPTION ANDDEALMAKING IN AFRICA

Ruark Pepler

Bcom Entrepreneurship - University of Pretoria

Postgraduate Diploma Financial Planning - University of the Freestate

Advanced Postgraduate Diploma Assets, Investments & Portfolio Management - University of the Freestate

WHO MAKES DEALS?

• Businesses

• Foundations

• Trusts

• Governments

• The first 3 = different forms of running a business

• The last has a vested interest in all of them.

WHY DO WE ALL WANT MORE BUSINESSES?

• Employment = 60% to 80% of all US Jobs

• Stability

• Tax

• Governments can’t meet the demand for infrastructure fast enough. Need partners.

• Consumer demand growing by 8%pa

• Africa’s time has come get ready

WHY DO YOU WORK?

• To express a passion?

• Live a certain lifestyle?

• Secure your future?

•Attain Financial Freedom?

•To do what you want to do?

•When you want to do it?

FINANCIAL FREEDOM IN AFRICA

• What is the difference between being Rich and being Wealthy?

• “Rich have a lot of money”

• “Wealthy people don’t worry about money” – Robert Kiyosaki

• How do you measure wealth?

• “The definition of wealth is the number of days you can survive without physically

working (or anyone in your household physically working) and still maintain your

standard of living.”

• How do you attain wealth?

Robert Kiyosaki – Cash Flow Quadrant

Employee

Self

Employed

Business

Owner

Investor

90% of the

Worlds

People &

10% of the

Worlds

Wealth

10% of the

Worlds

People &

90% of the

Worlds

Wealth

Employee

Self

Employed

Business

Owner

Investor

Active

Side: Sell

Time – The

longer and

harder you

work the

more you

earn

Passive

Side: Own a

system

employees /

money

works for

you

Employee

Self

Employed

Business

Owner

Investor

EMPLOYEE TO SELF EMPLOYED

• Go from working for a boss to working for yourself

• Still only have limited hours in a day that you can sell

• Usually work a lot harder with a lot more stress

• When you work for yourself your boss is a Tyrant!

• YOU OWN A JOB

• NOT A BUSINESS – YET!

SELF EMPLOYED TO BUSINESS OWNER

• Go from owning a job to owning a system

• From working for yourself to people working for you

• Move from active income generation to passive income generation

• You do not have to be there for the business to work and make money

• You have more time to live the lifestyle you want

• That’s nice so I must just start a business that doesn’t need me?

• Great how exactly must we do that Mr Smarty Pants?

BECOMING A BUSINESS OWNER

• Is it going to be easy?

• NO - if it was easy everyone would do it.

• Is it worth it?

• YES

• Start with a plan!

• Remember an idea is not a plan – The world cares little about what you think, it

cares about what you know!

• Planning is a mental exercise but more importantly it’s an information gathering

and testing process.

• “If you fail to plan you plan to fail”

THE BUSINESS PLAN

• Who is it for?

• YOU

• – IT SHOULD BE IN PLACE BEFORE THE BANK OR AN INVESTOR ASKS FOR IT

• It’s your road map to where you want to be.

• Can it change?

• Yes it must. You will run into things you didn’t expect, life likes to send us on detours.

• It acts as a point of measurement so you can determine if you are on off track and need to

come back on OR if you need to change the track.

WHAT YOUR PLAN WILL DO FOR YOU

1. Get you to research your opportunity

2. Identify and avoid problems before you are invested

3. Show interested parties that you are serious and committed

4. Make you test your assumptions – Just because you believe it, doesn’t mean it is

true

5. Help align your heart and you head

BASIC BUSINESS PLAN OUTLINE

• Overview – General description of what you do / want to do and why

• Executive summary – Compile this last after all other sections

• Business concept, Financial features, Financial requirements, Current business position, Major achievements

• General company description

• Name of the company, type of legal entity, ownership, significant assets, Mission statement of the business, Company goals

and objectives, The main features of the industry in which you will operate,The most important company strengths and core

competencies

• The opportunity

• Where is the gap in the market? What has given rise to this gap? How was this gap identified? How will the gap be filled?

• Industry and Market

• Industry: Barriers? Customers? Suppliers? Competitors? Substitutes? Changes in industry?

• Marketing: Size? Growth? Your Share? Trends?

Templates and links will be posted on: https://www.facebook.com/machriebrokers

BASIC BUSINESS PLAN OUTLINE CONT’D• Your Strategy

• Positioning? Focus? Value proposition? What makes you unique?

• The Team

• Founders? Management? Qualifications? Experience?

• Marketing plan

• Product, Target Market, Positioning, Promotion, Pricing, Distribution

• Operational plan

• Operating Cycle, Payments Cycle, Skills and Equipment, Outsourcing

• Financial plan

• Start-up Capital and Expenses, 12 month & 3 year profit and Loss Projections, Breakeven Calculation, Projected

Balance Sheet yr 1 -3

• Appendix

• Brochures and advertising materials, Industry studies, Blueprints and plans, Maps and photos of location,

Magazine or other articles, Detailed lists of equipment owned or to be purchased, Copies of leases and

contracts, Letters of support from future customers, Market research studies, List of assets available as

collateral for a loan, Detailed financial calculations and projections

https://www.facebook.com/machriebrokers

THE TEAM

PERSONALITY TYPES

ENTREPRENEUR VS MANAGER

ENTREPRENEUR VS MANAGER

• It’s difficult to be both . Polar opposite thinking styles

• Both are equally important and needed

• Identify your style early so you can get the right team to compliment your style

• A wheel doesn’t turn with 1 or 2 spokes

• There is no wrong or right. The right style for the right job at the right time

• Be honest about your short comings. Investors will appreciate it and respect that

you have identified it and come up with a solution.

TACTICAL VS STRATEGIC

• Tactical

• Shorter range planning 12 months or less

• Usually involve a specific business function

• Based & measured on current information

• Strategic

• Longer range planning

• Involves the whole business with all functions

• Based and measured on a future less certain state

BUSINESS PLAN TIPS• 10 to 15 pages (excl- appendix)

• Create a condensed 1 page business plan – “There is more if you are interested”

• Explain what is in it for them the basic idea without telling them how.

• Focus on Executive Summary & Team

• Investors will usually read this first and if you don’t sell it there they won’t read further.

• Know your Stuff! – Be involved in writing it yourself, be able to prove to an investor you

understand your industry, market and customers, not just a completed template

• Invite feedback – Improve as you go.

• Know your Audience – Taylor your plan to the reader

• Banks want security and proof of your affordability

• Investors want return and growth potential

Templates https://www.facebook.com/machriebrokers

YOUR BUSINESS IS RUNNING

• YAY! I’m a business Owner!

• NO! – You are a job owner

• How do I become a real Business Owner?

• Develop a process and systems

PROCESS & SYSTEMS• In the beginning there was………..

• You

• You were the system, each process is in your head

• You know how everything must be done and you can do it better and faster than anyone

else. Right?

• What is the problem?

• You only have so much time and energy

• The purpose of having a process and systems is to replace yourself

• You should not be needed

• Your job is not to work in your business

• Your job is to work on your business

BUILDING A SYSTEM

• Involve the people who do the work

• Identify start and end activities

• Define process objective, inputs and outputs

• Identify customer & supplier requirements

• Manage level of detail – Be careful here!

• Get agreement on the process

• Document the process

• Train on the process NB, NB!

Read: Chet Holmes – Ultimate Sales Machine

BUILDING A SYSTEM

• It doesn’t have to be complicated

• Initially the simpler the better

• Check box system

• Electronic workflow systems - http://www.efchub.com/biznizhub.php

• Read: E Myth Revisited by Michael Gerber

OPTIONS FOR BUSINESS SYSTEMS

1. Build your own – Very rewarding but also difficult

2. Use someone else's system – Franchising

• Tried and tested

• Support

• Established Brand

• 75% more likely to succeed

• Easier to get financing!

3. Network Marketing – Bad rap, but it works, great place to start

• Usually have good education programs

• Low to no start up capital needed

ENCOURAGE BUSINESSES

• It’s hard enough as it is, make it easier for small businesses to grow to big

businesses

• By the end of the first year 25% of new businesses started will have failed

• By the end of the 4t year 87% would have failed

• We must do better, we will all benefit from it

THE INVESTOR

• Saving is not investing! Step 1 of 2 step process

• Most people save in a bank – Fixed Deposit or Money Market Account

• You will save yourself into bankruptcy! – This really happens. Why?

• Simple. Rate of return < Inflation. Your money becomes worth less than the rate it

grows

• Therefore to be an investment you need a real return after inflation

SAVER VS INVESTOR

• Are you saying don’t save?

• NO – It is where you start but not where you stop

• Saving is the accumulation of funds so that you are able to access investment

opportunities

• Investing is acquiring assets that will give you an income or capital return above the

rate of inflation

• Is your house an investment?

TO MAKE MONEY OR TO KEEP MONEY?

• Not taking money out of your pocket is as good as putting money in your pocket

• How easy is it to get an extra 10% out of your investment?

• Will you pay tax on it?

• How easy is it to negotiate a 10% discount on a purchase?

• Are you taxed on the saving?

• Look for opportunities to pay less, they are easier to find than opportunities to make

money

• If you tell me you can’t save I say LIAR! – Because you can always PAY LESS

BUDGET

• It is not difficult

• Once you know where you money goes an where it comes from – Only then can you

manage it properly.

• Help you identify opportunities to save

• Help you measure your progress and gain commitment

• If you need to get help, every Olympic athlete has a coach – If you want to be a

financial rock star you better get help

Budget Template on: https://www.facebook.com/machriebrokers

THE INVESTOR

• Investing has an exponential effect

• The miracle of compounding – Start Early

• Larger capital = Better & Bigger Opportunities

• You make most of your money when you buy – Not when you sell.

• Think about structuring early

RECOMMENDED READING

• Richest Man in Babylon

• Rich Dad Poor Dad – Robert Kiyosaki

• Cash Flow Quadrant – Robert Kiyosaki

• E-Myth Revisited – Michael E Gerber

• Chet Holmes – The Ultimate Sales Machine

Check Out: www.audible.com

THANK YOU

• www.machrie.co.za

• https://www.facebook.com/machriebrokers Slides + Links

• www.offshore@machrie.co.za For any inquires