Taiwan

drip, drip, drip – wealth accumulation is silent!

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Drip, drip, drip! Is that the sound of rainwater dripping from the guttering? Or is that the sound of your wealth dripping gradually into your account?

We’ve owned a number of different assets and asset classes over the last fifteen year: property, a business, stocks, mutual funds, bonds, bank accounts, etc.. and each of them has prospered over that time in the same fashion – Drip, drip, drip!

In Taiwan, house property is measured per ping. A ping is generally the size of a traditional Japanese tatami mat. Since we purchased our house, we’ve seen our house value increase about 50% or more per ping in seven years. In addition, we were fortunate enough to be able to buy an additional car park. More than that, we’ve spent the last seven years paying down our mortgage slowly. All of these have resulted in a net increase in our equity stake in our house to approaching 60% from the initial 20% at outset. But all of this has been achieved quietly, regularly, and opportunely.

Our business, too, rarely has much excitement, though the students making progress and developing mastery of a complex linguistic system is thrillling. As a business, the mechanics are silent: counting the bills, updating the accounts, paying the bills and taxes, figuring out our profit margin (if there is any!), and so on. There is little hype compared to working for an Internet giant, like Google.

Stocks and mutual funds, too, move up and down silently. They pay (usually) dividends that are paid quarterly into your account. There is little fuss, excitement or pzzazz over the payments, profits, or losses. The numbers just sit there mocking you if you are doing badly, teasing you if you are doing well.

Bonds, CDs and bank accounts pay interest in similar ways: you go into the bank, update your passbook, check your account or renew your CD, and suddenly the interest payments are there. Silently. Mechanically.

There are no whooshing sounds, no zaps of lightening, no cheering or clapping: just the sound of footsteps to the banking machine to pay the regular payments, and to take care of the other regular details. It’s the silent wealth effect. It’s a lot less glamorous, less fun, less attention seeking than winning at Las Vegas on the poker table, getting a jackpot at Atlantic City on the slots, or winning the Lottery.

Which would you rather have – the drip, drip, drip or the heavy thunderstorm of wealth building?

Choose your business partner – CAREFULLY!

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One of the best pieces of business advice I ever got was “You can’t do a good deal with a bad partner.”Having had many partners over the years, I can say that this statement holds true. So I thought I’d offer some personal experiences I’ve had with partners both good and bad. Finding the Right Business Partner by Robert Kiyosaki.

A new line of business

We’ve been considering expanding our business to include ‘after school’ classes for students as a way to supplement our main program and stench defections to other schools that already provide ‘after school’ classes. We have lost a fair number of good students on this issues, students who were making great progress in their language development, but whose parents didn’t quite understand what we were doing, and how our student development programs differ from the more ‘traditional’ programs.

After school classes
In Taiwan, there are many schools that provide these kinds of services; in fact, the ‘industry’ hires thousands of workers to provide for tens of thousands of students. We already know that this is a viable business. And, if we wish to grow our main program further, it may be something that the market requires us to do. However, none of the partners have the skill set to provide this kind of teaching to students, and we’re already quite busy anyway. Inevitably, this means we are forced to choose between hiring an employee or finding a partner.

Finding a partner
We’ve already investigated the possibility of finding a partner, and we found a person who might be very suitable. Unfortunately, she didn’t have any cash to invest in the business. While investing your labor is, indeed, a well recognized form of investment in many countries, it had repercussions for the person concerned. So she brought in a friend of hers, a self-confessed business woman, who had BIG plans, much bigger than we could afford, much bigger than we imagined, and much bigger than we felt viable in our market area.

Therein lies the problem: in finding one partner, we’d have unwillingly gotten into bed with two partners, one of whom was an unknown entity to us; and one who would certainly have wanted a larger piece of the pie.

Cashflow, cash low and rosy predictions
But that wasn’t the only problem: it is likely that the addition of an extra staff member and partner combined with the additional cost of running a business on life support would have drained our primary business beyond what we could have reasonably handled. We’ve always been quite conservative in our predictions from day #1. In fact, when the school managed to pay a full rent on its first three months in business and pay nominal salaries, too, we were all QUITE surprised. We’d budgeted for six months of full rental payments and expenses, until the business started generating cashflow.

Cash, loans, cashflow: Going, going, gone…
 In Taiwan, over the years, I have seen so many businesses come and go. In fact there are several slots on the main street near where we live that regularly change business. In some examples, the businesses are gone in just two or three months. In one location near here, the first business started out as a baby or children’s clothes store, then it became a woman’s clothing store, then it was empty for a while. Now it is a hair salon.

In other places, I’ve seen supermarkets open and close in less than six months, bakeries come and go, etc.. Perhaps in some cases, the business owners have misunderstood the market. In many situations, though, insufficient provision for cashflow while business is building has been the principle problem. Combine this with overly rosy income projections for the first six months, and you’ve got a recipe for disaster. In some cases, I suspect the initial capital was borrowed from friends, family, banks, etc., and once used, there was nothing to follow up!

It pays to be cautious…
So, choosing a partner who understands your business and your own situation, who accepts the risks of running such a business, and who has the financial wherewithall on their own account (without borrowing the cash) is crucially important.

Have you experience working with unsuitable partners? Or suitable partners? How did you find them? Did you deal with the problems?

IBackup.com: essential service for your business, and inexpensive

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Does your business or home business adequately back up its data? Let’s imagine a scenario where one day you go into work, and all your pcs are gone! Not only have you lost the hardware (which can be replaced at some expense, perhaps even with an insurance policy), but your data is likely gone, too. Who’s going to replace your data now? Where is your back up data?

If this seems far fetched as a story. Consider this: it happened to a friend of mine in Taipei. He ran a small school and he had quite an expensive set up for his computing facilities. In addition, he was in the middle of writing a series of text books for his students, one that he was intending to publish once it was gone.

Well the thieves (some young ‘uns with a hankering for pc games) broke into through an upstairs unsecured door and they made off with all the hardware they could find AND all the CD-roms that he had backed up his data on, INCLUDING, of course, his unfinished textbooks. Although his backups were made, they were not offsite, thus negating some of the benefits of making copies. Boom! All gone.

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He had made some printouts of his work, but he had lost almost all of his recent work, including business accounts, email, addresses, etc..

Nowadays, it’s much easier to create an offsite backup with an Online Backup service for your business. It’s certainly much more effective than putting copies of your CD-roms right beside the PC! It even functions just like a drive on your pc:

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Additionally, you can schedule backups automatically to ease the strain and allow you to focus on managing your business, not your pcs. Access is also facilitated via a web-browser, so you can find the stuff, should you not be at your workplace.

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