There are two types of partnership models you might want to look at:
If you have a wedding decoration business, for instance, you might have a preference for working with a certain cake decorator or a given caterer. If so, you could form an alliance. Look at business owners that complement your own business and agree to give each other referrals or to tender for new business as a single unit.
Many people prefer to work within a joint venture (JV) or a partnership because the partner brings funds or skills which they don’t have. In such instances working alone isn't an option; if you have the idea and someone else has the money then you need to work with them and vice versa.
Partnership inevitably leads to a loss of control. This is the reason I have generally preferred to go into business on my own or to partner on an event basis. I prefer to have full control. I value other people's opinions but ultimately I want the buck to stop with me, I want the right not to listen.
That said, I know under the right circumstances I would partner up.
If you want to partner with somebody, here are some ground rules you should follow to increase your chances of success:
1. Write a partnership agreement
If you can’t afford to pay for a lawyer, ask a lawyer friend to draft something for you pro bono. If that fails write your own partnership agreement using templates from the internet. Outline exactly what you expect of each other.
2. Avoid going into partnership with friends
Sometimes great friends don’t make great business partners. If you have very different goals to your friend you will end up losing both the business and your friend.
3. Assign each partner very specific, mutually exclusive objectives
One way of maintaining control over the business is to keep control of specific aspects of the operation whilst your partner controls others. If your roles and objectives are designed so that they don’t overlap, you have a better chance of working well together.
4. Understand the difference between wages and equity
Be very clear on the distinction between wages and equity. A partnership-based business where each business partner has contributed 50% of the equity does not necessarily result in each partner receiving the same amount of cash out of the business.
If you decide to pay out dividends then in a 50-50 JV your dividends will be equal. However, if one partner does more of the work than the other then that partner may receive a higher wage.
Imagine a business that is not profitable and where one partner contributed equity but does not work on the business. In this case the partner that does work on the business will receive a wage whilst the funding partner receives nothing until a profit is being made.
5. Discuss what your exit plan is, if there is one
It’s possible that you want to run the business until it reaches a certain size and then you want to sell it whilst your partner wants to run the business for life. If you don’t discuss exit plans at the start it could lead to adverse outcomes later on.
“When two friends have a common bank account, one sings and the other weeps.” Proverb
Are we as Malawians too short-termistic and lacking in vision?
Many of us have been brought up to believe that the only or main reason anyone would pursue something is because it makes money. Not only should that thing make money, it needs to make money from day one.
If you tell your friends about a project you’re working on one of the very first questions you’re guaranteed to receive is, "So, how does that make money?" or "How much money are you making?" That is all people want to know.
Yet, if we look at the development of Western nations we see that a great part of their success can be attributed to people that pursued non-monetary passions. People like Einstein, Mendeleev, Newton and other scientists weren't hoping to make money, they enjoyed science and achieving scientific results was adequate compensation for them.
Even today there are a cornucopia of people in the West who will tell you they are not that interested in money they are only interested in whatever their passion is and if it produces money, great; if not, it's not a problem.
As a whole, we Malawians seem to only value education to the extent that it increases our income, beyond that, there is little intrinsic interest in the education itself. This is probably what will keep us poor.
"If it don't make money, it don't make sense," so the African American rap song goes – this line explains many people’s sentiments to the letter.
If you hear someone is furthering their education in some way you want to know how much more they will be paid with that extra piece of paper.
Perhaps this is a natural corollary of us being so poor for so long. We’ve been one of the ten poorest countries in the world for the longest time. Our mortality rate has also been very high, especially when death from AIDS was so rampant. Living for today could naturally result from those circumstances.
However, today, life expectancies are improving and knowledge is so easily available. So many young people are becoming something with nothing; for instance, our very own William Kamkwamba was a laughing stock when he was trying to create energy from wind power but look at him today – he’s spoken at the TED conference and his story has been widely read and told on international TV. Could he have envisioned that his interest in creating wind power would take him so far, never!
For many people there's a multi-year lag before their passion leads to a business. Yet others continue to pursue a hobby that will never make money but they enjoy it anyway.
A good number of us now have access to a cornucopia of information via the internet but for the most part we aren’t taking advantage of it; we’re still not seeing people forming clubs and societies to pursue a common interest.
People seem to get married, have kids, go to work and have no productive pursuits outside of that. Our men go to bars to watch sports and have a drink; the women go to weddings, baby showers and bridal showers.
If this is how we live our lives what hope does Malawi have? We can complain about the Malawian economy as much as we like but change starts from the individual. Do you represent the change you want to see in Malawi?
If you want to do something but fear you’ll be embarrassed if it fails, don’t be – just go for it.
“You must be the change you wish to see in the world.” Mahatma Gandhi
Keeping Up With the Bandas
Everyone likes to win, everyone likes to be the best and to look their best, this is why many endeavour to "keep up with the Joneses".
How often have you looked at an object that your friend has - a handbag, a dress or even a house and wished you had the same? For some, it happens almost every day. It's a real problem.
This quest to keep up with and look better than our neighbours can be positive or negative.
If it drives you to work harder and to focus on bettering yourself, it's a positive
If it causes you to find a sugar-daddy or to go for other people's husbands then it is a negative.
For the most part we don't know what our neighbours have had to go through to purchase the things that they have. We don't know how many sleepless nights they have had to suffer nor do we know how much debt they are in.
The Cost of Keeping Up With The Joneses
I believe it's better to spend the first years of your working life accumulating wealth rather than accumulating possessions that fall in value from day one. Invest in decent clothes for work but beyond that you might achieve more over the course of your life if you put all your money and effort towards developing an asset base.
Small amounts of money quickly add up. This week you buy a lipstick on a whim, the next week a pair of shoes, the week after a dress. However, if you chose to save this money instead you could soon have enough to grow maize, rear animals for sale or invest in a machine to start a business.
How Do You Fight The Urge To Keep Up With The Joneses?
It can be a very hard urge to fight especially in a country where people know and refer to others by their number plate. However, here's what you could do:
1) Think about what you are working towards instead
It might take you 18 months to save $1,500. You can either choose to save that $1,500 to invest in a machine that produces a monthly profit of, say, $300 per month; or you can spend it. If you spend it, you have nothing to look forward to. If you save the money you'll have the pleasure of being a business owner and you'll make the money back within 5 months once you get the machine.
Not only that, if the machine lasts two years you'll make $7,200 that you would not have made otherwise. This is the trade-off between enjoying life now versus saving and enjoying life a lot more later. What do you prefer?
2) Find a way to derive enjoyment from something other than looking good and having all the nicest things.
This is one of the best things to do because once you get to a stage where you derive fulfilment from a hobby that doesn't cost you anything, you're onto a money-saving, asset-building, envy-free future.
3) Stop caring about what other people think.
I've once heard it said that if everyone threw their problems onto a pile you would quickly pick your own problems back up again. Next time you’re admiring something that someone else has remember this fact; if you saw their problems you’d be much less envious of their situation.
"Keeping up with the Joneses was a full-time job with my mother and father. It was not until many years later when I lived alone that I realised how much cheaper it was to drag the Joneses down to my level." Quentin Crisp
How often do you think about how you're going to live life in your 60s? Here are alternative outcomes.
Living Off The Kiddies
Some will reach the age of 60 without a single saving. You will depend on your kids for money, for food and perhaps even need them to house you somehow. For many this will not be because life has been unkind to you, it will be the result of a series of bad choices such as having more children than you can afford to support.
Be in no doubt that if you find yourself in this situation you will be a burden to your children.
Could this be you?
Oh, This Isn't My House?
Some will reach retirement age and realise that the company they work for owns "their" house and "their" car. It is easy to forget these things when you are enjoying life but at this point you will be forced to either live off your children or invest your savings in a business.
If you're lucky you'll find positions on boards that provide an income whilst you make up for lost time on the investment front.
Living Off The Rentals
Some will reach the age of 60 with a tidy property portfolio. You will own the house you live in outright and you will have at least two rental properties.
Your rental properties will produce enough money to cover all necessities, bills (including the internet) and wants such as holidays at the lake or abroad. When your children come to visit you, they will come with pride. Pride that they have forward thinking parents that had the wisdom to cover their own retirement. You will have no unnecessary worries and will be safe in the knowledge that you never have to go to bed hungry or cold.
The Art of Visualisation
Visualising is like fantasising. You visualise a specific event in the future in very specific and detailed terms and think about how much you will enjoy it. Scientists have confirmed that visualising can lead to the achievement of real results.
In a well-known study on creative visualisation in sports, Russian scientists compared three groups of Olympic athletes:
Group 3 had the best performance results. This indicates that some types of mental training, such as consciously invoking specific subjective states, can have significant measurable effects on biological performance.
Further to this, some celebrities have argued that they have achieved certain results in their life by visualising them first. These include Oprah, Will Smith and Jim Carrey.
Visualising helps you to focus on a goal. If you can find just ten minutes a day to meditate and visualise the things you want to achieve you will increase your chances of achieving them.
Most people don't think too far beyond the next couple of years. Those that do are at an advantage. Of course you shouldn't live so far in the future that you cannot enjoy the present. That said, thinking about and planning for the future is enjoyable in itself – Just do it!
"Ordinary people believe only in the possible. Extraordinary people visualize not what is possible or probable, but rather what is impossible. And by visualizing the impossible, they begin to see it as possible." Cherie Carter-Scott
Are You Setting SMART Goals?
Did you know that in experiments with lab rats, scientists found that when rats are running towards food, they run faster as they get closer to the food? Source: 'Brainfluence' by Roger Dooley.
What does this mean for you?
If you give yourself short-term goals and rewards, you will work towards them with more zeal and enthusiasm than longer term goals.
For your goals to be meaningful you need to make sure they are SMART:
"I will start writing a book" is not a specific goal.
"I will start writing a book on saving and I will finish it within 6 months" is a specific goal. You can make it even more specific by stating how many words or chapters you will write per week, e.g. 2,000 words per week.
What is your specific goal?
Measurability is all about being able to account for whether or not you have made progress. Continuing with the example of writing a book, if a month later you have only written 4,000 words then you can say you are running two weeks behind schedule.
How are you going to measure your goal or goals?
If you set a goal that is very hard to achieve you'll probably give up. For example, "I will go to the gym every day," is probably not an attainable goal if you work 5 days a week. "I will write 1,000 words every day," is also not attainable if you have a full-time job. It is very hard to write 1,000 good quality words in one evening after a hard day at work.
Is your goal overambitious? Can you achieve it without feeling like you are suffering or giving up too much?
In my opinion this is the least important criteria in the SMART schema.
Relevance is about focus. A goal should fit within a bigger picture objective. For example, if your goal is to be a world class writer then having the goal to play 5 games of chess a week for a year may be Specific, Measurable, Attainable and Time-specific but it probably isn't relevant to being a writer. It might be relevant to your relaxation goals but it certainly isn't relevant to writing.
Are your financial goals relevant?
A goal means nothing if it doesn't come with a deadline. Deadlines are crucial when it comes to achievement. Due to circumstances you might have to adjust your deadline but not having a deadline to begin with is pure folly.
Are your personal financial goals SMART?
Your financial goals do not have to directly involve “making money” right now. Just make sure you incorporate the SMART format. Financial goals can include:
As you create your goals think through the following:
“Goals are dreams with deadlines." Diana Scharf
For 2 years until early 2014 I wrote a weekly personal finance and business column for Malawi's leading media house, The Times Group. The target is middle-class, working African women.
This is a reproduction of the articles that appeared in the weekend edition of Malawi News.