Category Archives: Business

Banks and their place in the world

Nearly every person on the planet uses the bank, whether it’s withdrawing money from a teller or making an online payment. How often, however, do you stop to think about how banks came about?

To understand why banks came into existence, we have to look back in time and explore the roles money and the bank play in society.

Money makes the world go round

The world is a disproportionate place, where some people are more skilled than others, and some people have skills that are considered more important than those of others. Compare a surgeon’s skills and what it can accomplish, for instance, to those of an artist’s:

The painter, being a human, will have health problems which can be solved by the surgeon. The surgeon might have a love for art, and might want to ask someone to paint his portrait, but the chances that he’ll die if this does not happen is very slim. The picture is different for the painter, whose only hope of life might be the skills of the surgeon. And imagine the only payment the painter had to offer was his painting skills. What happens if the surgeon isn’t interested in this form of payment? Now you have one person with valuable skills and another with skills, but those skills are considered less valuable.

This is where money comes. It was created to erase the inequality between two partners with mismatched skills, or offerings. This is an inequality that has existed for eons and will continue to exist for thousands of years into the future. We’ll never be able to eliminate money, no matter how many people think of it as the root of all evil.

The next step in the evolution of money, one could argue, was deciding where to store the money that was created. The question was answered through the creation of banks – places that serve as storage and distributors of money. Of course banks do much more than this, performing many other functions people require on a daily basis.

When and where did banks start?

The first banks were around in ancient Babylonia and Assyria, about 4 00 years ago. Organisations, like the Knights Templar, grew wealthy from their loans, storage and security. By taking a small cut for services, groups could grow richer and richer. Today, the concept remains the same: provide a service and take a certain percentage of that client’s money for services rendered. The latter, of course, despite the fact that the money belongs to the client.

Let’s look at loans and bonds as modern examples:

If you wish to get a car or house, most people usually don’t immediately have cash on hand to make such a purchase. Banks make bond calculations by assessing various aspects of the client, the transaction, and so on. This means they look at elements like your risk factor and purchase history. The agreement must work more to their benefit than yours, of course, since they are the ones forking out all the money.

Now it’s clear that banks exist to make and exchange money; not just for storage of the world’s money. This allows banks to cater to a natural need and necessary dimension that arises from the natural and necessary existence of money – in whatever form it takes.


How to Get Investors to Take Notice of Your Start-Up

You’re ready to set the market alight with your revolutionary new product. There’s just one thing you’re missing, and that’s capital. It’s normal to approach 50 investors before finally getting your ‘yes’, so don’t get discouraged. However, there are a few ways you can help investors sit up and take notice.

Have a great business plan

Many budding entrepreneurs think that so long as they have an innovative idea, that’ll be enough to get investors knocking on their doors. Not so. Don’t underestimate how important having a solid business plan is. Not just something estimated and vague, but really detailed and well-researched.

A business model is the heart of your business strategy. Show that you understand the nuts and bolts of how to nurture a start-up into a grown-up.

Show that you know what you’re doing

As glamorous as the garage start-up has been made out to be, investors don’t want to invest in amateurs. Most start-ups fail within a year and investors are very much aware of this fact. Backing a talented horse isn’t enough. They also want to know the horse is trained, experienced and in peak physical condition.

What does this mean for you? Show that you mean business and you know what you’re all about. Having a great business plan is part of this. As is being professional at all times. Show that you will know how to manage the project, even if it means employing someone with a project management diploma or getting one yourself.

Have an amazing pitch and presentation

First impressions count. Don’t expect that your potential investor will be able to see through a muddled presentation to the core of your genius product. Investors get many pitches and hear many presentations, so you need to make sure both your pitch and representation has been fine tuned.

Also remember to practice your elevator pitch. You never know who you’re going to run into and where.

Give investors the chance to reach out

Investors wade through a lot of requests, sometimes dozens a day. Why not change things around and get an investor to come to you? Your start-up will stand out more if an investor seeks you out, rather than the other way round.

You can start getting yourself noticed even if your product isn’t live yet. Start discussions on Quora, write guest blogs for relevant blogs, and whatever else establishes you as a thought leader with an innovative offering.

Look at your product from the POV of an investor

You might think, even know, your start-up has potential. However, you need to look at your product through the eyes of an investor. Therefore, don’t just research how to get investments. Also research how an investor would know what to look for in a promising start-up. Read up on how investors would go about a valuation of a start-up. It helps to get some insider info.

Africa and franchising

The same logo and brand delivering the same services and goods, in multiple countries. Yet, primarily, their ubiquity and similarity is precisely what can aid individual people and therefore individual countries. It should not be viewed as automatically a bad thing when powerful industries and brands find their way into different countries.

So powerful is franchising that the Economist invented The Big Mac Index:

a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. For example, the average price of a Big Mac in America in January 2014 was $4.62; in China it was only $2.74 at market exchange rates. So the “raw” Big Mac index says that the yuan was undervalued by 41% at that time. 

While it began as a lighthearted and digestible (ignore the pun!) format to calculate some complicated aspects of differing economies, it has now spawned genuine economic interest. Academic journals have dedicated research to it; it’s a global standard; and is used in textbooks to teach the very principles it was supposedly mocking and yet conveying.

However, this also shows the power of the brand MacDonald’s: that its uniformity is so tightly conveyed, it can be considered exactly the same in different countries. It can become an anchor for assessment, more than cheaper but tasty food.

Africa rising

Dana Sanchez from AFK Insider notes the rapid rise of fast-food restaurants and franchises in East Africa. The reason franchises are becoming more interested is due to a “growing middle class, worsening traffic problems and rising interest among local investors.”

And South Africa is focusing on it, too. As Business Tech notes, franchising contributes as much as 10% to the GDP. What’s wonderful, however, is that the majority of brands in SA were developed here, too. Moreover: “Locally developed franchises [create] organic business-growth opportunities in sectors that otherwise could have become saturated.”

Franchising simplifies the process for entrepreneurs, by providing various incentives – such as cheaper property, access to reliable resources, and so on. For example, the local franchise Chesanyama looked at which way was best to increase its presence. Praxia Nathanael, the CEO, and Stelio Nathanael, the MD of Chesanyama wisely decided to focus on National Braai Day – a uniquely South African event. They recognized a gap: “the grilled meat market was very informal and fast food didn’t cater toward this niche of proper flame-grilled meat.”

Thus, Chesanyama had an opening they could profit from and customers they could provide a service for.

“In order to keep prices affordable and maintain quality, we cut out the middleman. We go straight to the abattoir, we portion and vacuum-pack the meat in our own central kitchen, then it goes to our franchisees at wholesale prices, helping them turn a profit.”

This very local decision however echoes what we saw in East Africa and what we see around the world. Franchising can improve local brands, and as we noted with the GDP and local business people, benefit the country and its citizens, too.

What Ford does right

This is a company that can afford to boast. Ford has declared that the Focus “retained its title as world’s best-selling vehicle nameplate for 2013”. The company obtained this data via vehicle registration data.

The sales were “up 8.1 percent with 1 097 618 cars sold worldwide in 2013 compared to 1 014 965 in 2012, including 317 110 registrations in Europe last year – 29 percent of total registrations. China now is responsible for more than one in every three Focus vehicles sold globally.”

Ford are obviously doing something right but the question is just what that is.

Look to history

Ford has a special place in motor vehicle history. Famously, it was the first mass produced car and car manufacturer that allowed the average person to own one. In order to achieve this, the needed the right technology and management style – which is exactly what the equally famous assembly line. This allowed for fast but efficient creation of cars – this meant the final product could be charged less, since you could put out more of them for a reduced price.

This was done at a time when even common items, like baths, were not even in every home. Yet by 1916, 55% of all cars on the road were Fords. Today, it is the fifth largest vehicle company – in terms of numbers sold.

Cycles of history

Jim Farley, Ford’s new evp of global marketing, sales and service, seems to have cast his eye backward, too. As Adweek summarised: “[Farley] thinks it’s time to sell the most technologically advanced cars as products for the Everyman.” Notice the summary echoes that of the previous history of the company.

So, as Farley indicates, there’s a focus to reduce the cost of innovation – that means, progressing in design but not so much that damages the buyer’s pocket. Ford then is marketing itself on being an elegant car but affordable: champagne car purchasable with beer money, then. This matters a great deal and is clearly working, considering the success of the sales from 2013.

It also presents itself in other important ways, such as being green long before other companies and cars.

The Ford Dagenham plant in the UK was powered in part by burning London’s waste to the tune of 2,000 tonnes per week until 1939. More recently/relevantly, Ford added “clean” to the green energy practices at Dagenham with the installation of wind turbines.

Thus it is also reducing costs in other ways.

We shouldn’t underestimate what caring the environment can do in terms of presentation and reputation. People are more likely to buy those objects that will get them less stigma – and there is already stigma for cars, let alone cars that do more damage to the environment. Thus, if you have to buy a car, you would get one that is renowned as a green one.

It’s low cost is also helpful in terms of other aspects. For example, if you’re looking for a Ford Ranger for sale, you’re more likely to obtain one that is in good condition since the parts are cheaper to replace and maintain than if the car cost more to create.

In this way, by presenting itself as green, as efficient, as anchoring itself to the history of vehicles, Ford has had time to make itself beloved by customers. Few things can better your image for marketing purposes than a century of innovation and customer service. The secret then is time and intelligence – something, unfortunately, humans don’t have in abundance.

How to Improve Inter-Office Communication

Most people understand the value of communication. However, internal communication in specific is often neglected because it doesn’t deal directly with clients. Apparently, two out of three employees report that the flow of communication in their office is poor.  However, effective inter-office communication is vital for a productive and smooth running business.

Utilise an intranet

Make use of an intranet if possible. An intranet is like a private internet just for your employees. You and your employees will have access to the intranet only while you’re at work. So you can post company info without worrying who is going to read it. You can use an intranet to make important documentation readily available, whereas it might have gotten lost in employees inboxes. Many businesses post their policies, procedures, changes and information about upcoming events on the intranet.

Office layout

The layout of the office used to be divided between private offices and compartmentalised cubicles. Now, however, the trend is shifting towards open floor plans and shared space. While people can still communicate via instant messages and emails, it can be so much more conducive to the exchange of ideas if you’re sharing a space with your colleagues. It’s even great for managers to stay in the loop of what’s really going on in the office, rather than being sheltered away somewhere in an ivory office.

Clearly delineate communication channels

Sometimes, employees lose track of who is responsible for what and who reports to whom in what circumstance. For instance, who is responsible for overseeing those in security jobs, or admin?

It might seem silly, but the property channels of communication or hierarchies of management can get muddled. Especially when a business grows very quickly. There’s an interesting story of a former tech giant who suffered a big fall after it got very successful very quickly. Basically, potentially large deals were lost because the departmental processes got so disorganised, that no one knew who to contact to get anything done.

Make sure this doesn’t happen to you by making sure everyone knows who is responsible for what, and what the correct communications channels are to get anything done.

Face-to-face communication

The digital revolution is a double edged sword. On the one hand, you can instantly get in touch with anyone in the office no matter where they are, even if they work from home. On the other hand, online communication comes at a price, and that is real-time communication. Sometimes, email or instant messaging doesn’t make for as effective a medium for dialogue.

It’s great that you can talk to people so easily and through so many mediums, however, don’t underestimate the importance of face-to-face communication. Be sure to schedule in some face-to-face meetings now and then, especially when there’s a complex topic to talk about or when you want to brainstorm ideas.