Passive Income

Have you ever read the book "Rich Dad Poor Dad"?

Well, one topic which caught me the most in this book series is the idea about "Passive Income".
One of the books in Rich dad series is "Cash Flow Quadrant". Robert Kiyosaki, the author, mentioned that there are 4 types of people, 4 types of cash flow.

1. E = Employee
2. S = Self-employed
3. B = Business Owner
4. I = Investor

The first type is very easy to define. Employee has no passive income because employee works in other people company. Employee's cash flow is totally depends on salary they will receive. If they quit their job, no money, no cash flow. That's it.

The second and the third one are quiet tricky to explain. Self-employed is the person is someone who open a small shop which he has to open by himself every day. He has maybe 1-2 employees but obviously, he cannot leave the shop for these employee to look after. He wanna go somewhere for a holiday, he has to close his shop and yes, that's mean his cash flow is stopped. On the other hand, business owner is someone who create a system to run his business even he isn't there. The different between Self-employed and Business owner is Business owner can leave his company for 2 years and come back to see his business growing while Self-employed will come back to see his ruin.

The last one, Investor, is another one who invests in securities and asset such as Bond, Stocks, Real estate and has a passive income such as interest, dividend or rent from their assets.

Kiyosaki suggested that, if you want to have a "financial independence", you must create passive income cash flow which cover your daily expense. The passive income must be a cash flow which always flow in your pocket even when you sleep.

The point here is which one you choose to be. As entrepreneur wanna be, we may scope just self-employed and business owner first. In my opinion, self-employed is easier to be. Most of new venture is start from this part and growing up until they build the system and company becomes self-organizing firm.

Cash is (always) KING!!???

Is it true?

Undeniable, this period of time is the situation we call "Financial Crisis". It happens all over the world right now. Actually, we have some sketch of this crisis since 2007 when USA faced the Sub-prime crisis plus the highest oil's price in history then the real crisis in 2008.

The most obvious incident is come from stock market all over the world, they crashed in just a short period. The investors in stock market facing a big bear market right now and do not know when the bull will come back.

Many people head back to the most fundamental asset in capitalism, it is "Cash". They think that "Don't invest in anything right now, the markets are very bad and businesses are even worse. Keep your cash, wait for the rise". This suggestion is not only for individual but also for companies which have a plan to invest their capital to grow in this period to stop for a while and consider it carefully before let their cash out of their pocket.

Is it true?

hmmmm...

I will start from stock market. When you look into the stock market, you will find many types of investor. Somebody is the speculators. They hold the stock in just a short period, maybe 2 days, 1 day, 1 hour or even minutes. They buy and sell their stock according to the news around the market, their marketing's suggestions, or even someone who said that he is a "guru" who knows that which stock will going up or down. On the other hand, you may find somebody who is the investors. They look in to the business behind their stock fundamentally, invest their money when the price is going down below the real value of the company (they call it's Cheap) then sell it when the market change its direction. Investors play with psychology of speculators, they believe that stock market always over-acting with bad and good situations. They use this strategy and hold the stocks longer than speculators.

Well... You can see that the crisis is bad for the speculators. When they buy the stocks, speculators expect to sell their stock very fast with the profit. But, in the crisis period, whenever they buy, the price always goes down and speculators have to sell them lower than the price they bought. However, for investors who do not care so much for the share's price in just a short period. They can buy stock and hold for longer time. This crisis is the real opportunity to find the really cheap stock with very good company, good business behind that stock. They look for value, not a price.

So, Cash is always King???
Yeah, I have to admit that you must always carry cash to be ready for the market though you are investor or not, otherwise where is the money to invest? But, for the speculators, they hold their investment in crisis period and think that "Cash is King, don't invest" while for the investors, they turn cash to be the stock when the bear market comes and think "It's time to invest now!"

Different, huh?

This is just for individual investment, it may be not the real entrepreneurial activity. Therefore, next time I will serve you with the company's investment, "Cash is King???"

By the way...
Which type of investor you prefer?

Wanna be a Middle Manager???

Well, as I'm focusing on business creation and entrepreneurship, it's quite strange if I say "Yes". Middle manager in my opinion is the middle executive level in the very big company who is the middle man (or woman) between top management team and operational employees. Therefore, they are not the real entrepreneur or highest leader in the organization.

However, in the leadership aspect, it is very interesting to study from middle manager. Because they are leader and follower in the same time so middle manager basically will face many dilemmas between 2 roles more than person who has only one role in the organization.

Mica Wulff Kamm, the middle manager from TeliaSonera company, gave us a broader sense of leadership knowledge with her own experiences in the real working life and the first thing I noticed was her energetic and out-going personality during her presentation. It is very impressive and might prove that how she loves her job as well. Moreover, she talked about dilemmas in the middle manager position which we did not discuss seriously during the seminar but it is very important if you are the middle manager. Middle managers must balance the operations and leadership within themselves. They also standing between 2 concepts of re-organization, centralized or decentralized, because they are not the highest management team who always consider about this topic according to the organization's policy. Therefore, the middle managers have to choose the bus (organization), the bus driver(boss), and passengers (members in the team) very carefully to make sure that you have the appropriate working environment and colleagues who will always support you. However, sometimes you cannot choose all of them then I would like to add that middle manager also must adapt themselves according to the environment changing in the office.

Another important topic I would like to reflect is about feedback. Mica insisted that feedback is very important when you work as the middle manager. It is necessary to know that how your colleagues thinking about you. Nevertheless, to accept any feedback the middle manager may received, courage is required. Basically, people always avoid the critic about them and said that it is not true. That is the reason why I think that to accept any feedback, leader must have the very open-minded personality. Unfortunately, they always don't (at least in my own experiences).

Back to the question, Do you want to be the middle manager?
Considering about the dilemmas I may have got, political problems in the organization and also I really would like to create my own company. So, unfortunately, my answer is No.

What about yours?

Warren Buffett is or is not an entrepreneur?

Do you know "The Sage of Omaha"?

His name is Warren Buffett.

Do you know Warren Buffett?

With the latest ranking from Forbes.com on 17 September 2008, Warren Buffett is the second richest richest American with an estimated 50 billions US Dollars fortune.

But.... I think many people know just a little about this 77 years old billionaire because his business is not in a fast growing and interesting as IT or fancy computer appliances or programs.

So... which business he is doing???

The answer is "Investment in securities"

The stock market is the main source of his wealth nowadays. He investing in common stocks with the strategy called "Value Investment" which focusing on "Value of the company" rather than "Stock price". With this strategy, he created the investment partnership and collect money from friends and neighbors to invest in the stock market since 1956.

He bought many companies which he thought that their prices are undervalued by the market. He doesn't interested in any hi-tech business. That's why he could survive from the latest IT bubble explosion in USA.

In his portfolio, there are many great companies such as Coca-Cola, American Express, Proctor&Gamble, Johnson&Johnson and so on.... His rule is "First, don't lose your money. Second, read the first rule" He will invest in the business which he understand everything about it, wait until it is undervalued by the market, buy that stock and keep it with you as long as it is a good business.

He didn't disturb any management process in the companies he bought. He just bought them then let they be the same with just 1 suggestion that don't ruin shareholders' interest.

Now, is he an entrepreneur?

He doesn't sell anything, just buy some companies which have the great products and good performance then wait for the dividend and capital gains from the market.

So easy? I don't think so....

For me, he is the great investor and entrepreneur in the same time. He considered the good business with his entrepreneurial mind set then he invest in it, sometimes it is a billion dollars investment, which need a good decision to decide that "when" you will buy it.

I my opinion, it's very hard to setup a company from the beginning then develop it through the stages of business development then list it the stock market with IPO. But, stock market give me a permission to be the owner of the companies with just buy their stock in the reasonable price as Buffett does.

Someone may said the stock market is the casino and investment in it is a gambling, Buffett is the best example who can prove that it's not true.

See you again

P.S. Latest Update : From the economic recession and crisis in financial market in USA, many stocks in finance sector are undervalued now and then, while other people running away from the stock market, Buffett bought Goldman Sach's shares with his 5 billions US dollar, and yes, in cash...

Source : http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7632766.stm

I have a business opportunity, wanna try?

Here are the informations....

1. It's a trading business which can generate a cash payment from customer first then pay for our suppliers later. So our cash inflow will be absolutely positive.

2. The products we will sell are very famous in Sweden, especially for teenagers. So you will have many customers in no time.

3. We have a very good relationship with our suppliers, for this reason, we can negotiate for our advantages with them.

4. Transportation fee is not a problem. It will cost us just a little money.

5. Our gross profit margin will be 20% or about 150SEK per each.

6. No need any investment, according to the first information.

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Sounds interesting?

Yes, it is.

But it's illegal in Sweden.

Why.....????

I arrived here, in Sweden, about a month ago without any notification that The Peak Performance brand is the hot and really expensive clothes brand here.

As soon as I knew it, I tried to contact with my business network in Thailand to find that is there any company can produce this brand for me and I have found that there are some suppliers who can supply Peak Performance jackets in very cheap price.
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"It's too easy" I think. "There is something wrong???"
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Yes, it's illegal.

Actually, I should realize at the first time I thought about this idea that it won't work but, because it's a common thing to sell some fake products in Thailand (yeah, I have to accept it. It's the truth) so I, unforgivable, look over this point.

Now I'm someone who just almost create a business in Sweden.


"Maybe next time!" I'm thinking....

Bell

Something from “The Beer mat Entrepreneur”

For someone who would like to be an entrepreneur, I’m quiet sure you have many business ideas in your mind now.

Have you ever asked yourself about how good your business ideas really are?

I have found an interesting book called “The Beermat Entrepreneur” (Beermat is a thick paper under a chilled glass or bottle of beer) and it said the good business idea always comes out from the conversation in the pub; so you can imagine that situation, you don’t have any paper to jot it down then you use beer mat instead.

I think it’s something strange which can draw the readers’ attention, that’s all.

Something which I said “It’s interesting” is inside. The authors propose his view about entrepreneur’s characteristics and I would like to share them with all of you guys, my readers.

1. Entrepreneurs are confident and optimistic; it is not they do not feel fear but, when push comes to shove, their confidences just overcome the fear they have.
2. Charismatic; always inspire people
3. Ambitious; this book stated that entrepreneur’s ambition doesn’t based on money or “I wanna be rich” but about wanting to change things. “It’s suck at this moment and we will change it”

But…. Everything has two sides. When you look at 3 things above you will see that are the good parts of entrepreneur. However, with the same characteristic, there are some bad parts inside that you have to consider.

1. Entrepreneur’s confidence may lead to entrepreneur’s arrogance; too much confidence brings entrepreneurs to the illusion about his skill. They may think “I’m good at everything. But I don’t have the time to do everything, so I have to let the people in finance, sales, delivery and so on get on with it” and is this thought is very dangerous. It’s a trap.
2. Charismatic – Manipulative; entrepreneurs may inspire their employees, pay them well – but they still use people.
3. Ambitious – Impatient and cannot complete things; with their own ideas, entrepreneurs always come up with new ideas or new projects all the time. They cannot focus on the same thing for a long time. They want change and they want it now. That’s why too much ambition may bring entrepreneur to the bad parts

What do you think?

I think this is very interesting. Many books always mention about how to be a good entrepreneur but rarely state that good part can be bad at the same time if entrepreneur uses it in the wrong context.

There are many more interesting things in this book which practical, comes from real life and I think it’s better if we can get out from theoretical books and learn from real life cases sometimes

Will see you agian with that!!


Reference

Southon, M.& West, C.(2002), The Beermat Entrepreneur, Pearson education.

I’m not a Star but, please, don’t call me a Jerk.

(This article for Veronica's Creativity module's second blog assignment)

Honestly, I never thought before who is a star, who is a jerk I worked with. May be it is because I always think in the positive way that everyone should have two sides, both bad and good side. The problem which has to be solved is how to use people in the most useful way or how to “Put the right man in the right job”.

When I read this article “What a star, what a jerk”, first thing which came in to my mind was “This is the funniest article which I have been read since I arrived Sweden!” I think many students also accept it. The story about how to deal with some people you don’t like, some people who make a problem to organization always attract me. That’s why I choose this article which caught me up the most.

The different between management culture is the important thing I’m thinking about. In western style, it’s easier to fire someone out from your company but, I would like to share, in Thailand, the company where I used to work with rarely fire someone out. Company always keep employee though he is the low performer or made problems to the company.

If Andy is working in the Thai company where I used to, I think the problem “how to fire him out?” will not be raised. Thai people always deal with relationship problem softer than western. We always avoid directly criticism to someone we do not like. So what Jane has to do is to put Andy the other job which has less working in group. He is very great in his work and in individual routine so I agree with Chuck Mckenzie’s suggestion to isolate him in the place that he rarely could poisoning other employees in the company.

This article made me think about my real life experience, I also have a friend who has a top performance but bad relationship with other colleagues. I wonder if I worked with him, we may not be a friend until now. Anyway, his boss really like him because of his works are so great undeniably. Let’s see what the boss deal with him, he places my friend to the position which just work directly to him, no need to work in group and the result is satisfactory. My friend feel so happy that he has freedom to work with full of his potential, the boss still receive a good performance from my friend and other employees never be poisoned from him anymore.

But, if the company is focusing to the job which has to be done in group, unavoidably need team work, what should we do? The answer is we have to change him and I found it from Edward De Bono’s Six Thinking Hats that the process to play the role-playing game can be used like a “Therapy” for Andy. Jane can give Andy the yellow hat, the role to say everything in the positive way, in the meeting. It may be not work efficiently to change him at first but at least he can stop yelling to someone for a while and that is the first thing the team need. And when Andy play this role more often, who knows, maybe he will become the most positive thinking employee for the team!

Either before or after I read this article, I still thinking that firing him out is not the real answer. No one can be all good or all bad. This article just show the good and bad parts of Andy but, what about Caroline? What about Jane? I’m quite sure they have something as the bad parts which never been told in this article. Nevertheless, manager can use this option as the last resort if Andy’s behavior really made company’s overall performance drop and cannot change him no matter how hard the manger try. But , I still insist, that is the last resort.

References

Cliff, S. (2001). What a Star – What a Jerk. Harvard Business Review, September 2001

De Bono, Edward (2000). Six Thinking Hats. Penguin, ISBN 0140296662.