MONEY MAKES THE WORLD GO ROUND

This is Friday's post.

Oh well said Renate! I also tell people, that it is very easy to make money - what is more complex and difficult is to make a profit!

One of the other things that I would like to mention here, is 'Never give your power away to anyone'. By this I mean, if you have a business relationship with a partner - always make sure that you have a contract in place. The contract must include how you set the business up, how and who runs and manages it, what payments come out of it, who and how people get paid out of it and if it goes 'belly up' how you get out of the relationship. Too many times I see husbands and wives/lovers/friends get into a business relationship without anything in place and then when the relationship goes sour, so does the business.

So protect yourselves and protect your power!

Money makes the world go round

Manage your money and manage those managing your money
Renate Volpe
11 July 2007 at 10h00

"Money is the root of all evil" These are both popular sayings. I prefer the one I heard recently: "Money magnifies who you are."

The reality is that money influences most decisions in our lives: where we live, how we dress, where we shop, whether we travel, where we socialise, what we drive, who we marry and befriend, whether we remain in South Africa or choose to emigrate …

How we relate to money is influenced by our beliefs and experiences around money. If you explore your first experience as a young child around money, and you determine whether this was a positive or negative experience, you will inevitably find a correlation between this experience and how you currently manage your money on a daily basis.

Are you wise around money, are you miserly and controlling? Or perhaps you are a fool around money, take foolish risks and believe that luck will surely, one day, make you a millionaire. As a leadership coach I am often approached by entrepreneurs who wonder why their businesses are not performing as well as they could, or should be. One of the prime causes is that such people often fail to align the services they render with the amount of money they charge for their time and their effort. For example, they may deliver three weeks of time for a petty amount of money to a demanding customer. When they stop and assess their profit margins they find that by the time they have covered their infrastructure costs (never mind charging for their own competence), it is costing them to service the customer.

The simple rule here is to align the amount of effort, time, costs and resources required by the project with the money charged to the customer. In small business one of the prime reasons for business dissolution is the failure to bill and collect outstanding debt timeously.

Small insights, like understanding that the moment you invoice a customer you become liable for the VAT irrespective of whether that customer pays you or cancels on you, are important to keep in mind. Having cancellation clauses in your service agreement is critical. Resist the temptation of using VAT and tax monies on daily living or business prospects. My advice is to have a separate account into which you put VAT monies so that it is available when the time comes to pay. Never presume that a deal is closed prior to physically seeing the money in the bank. Even when a deal is signed, it may be reneged on.

Do not expect people to look after your money even if you pay them to do so. Do not trust your investment broker blindly. Educate yourself; do not assume that your bookkeeper, accountant or auditor is effective and efficient. Manage the people that manage your money. Ask educated questions, question actions, demand sensible, logical and relevant explanations. You will save yourself large amounts of money by involving yourself in your own affairs. Remain informed about service-related costs, read the small print and beware of escalating rates of long-term providers.

I recall a friend telling us how jealous he was of our apartment, saying that he was only a doctor and did not earn much money. I reminded him that he and his wife had travelled the world and been on continuous expensive vacations for the last 10 years, while we had chosen to put our money into bricks and mortar. He was truly surprised by his own blindness as he acknowledged my comment. There appears to be no correlation between making a lot of money and having enough. As I observe how people are with money I have noticed that often people who make a lot of money, spend it like water and sometimes have little or nothing in the end. Those who earn steadily and are good with their money seem to live well enough, are self reliant and have little or no debt.

As with everything in life, the answers are not found in extremes but in an attitude and approach of moderation. It's never about all or nothing, in essence you need:
Some money for today
Some money for tomorrow
Some money to play.

Dr Renate Volpe specialises in leadership coaching. For a copy of her book Lessons from the School of Hard Knocks, call 011-455-0769, access the website at www.hirs.co.za, or e-mail her on renate@hirs.co.za