There is no point being a successful entrepreneur, or selling a startup if we have no idea how to handle the money we get. So here is my top 10 financial life hacks.
- Spend less than you earn, no matter what that amount is. The net result is happiness.
- Allocate cash to savings & investments before anything the day you get your profits, pay or dividends.
- Never go into debt for anything which does not appreciate in value.
- The real definition of an Asset: Anything that puts money in your pocket. The accounting definition of an asset is flawed.
- Do not trade stocks. Trading makes the broker and tax man rich and you poor.
- The greatest financial instrument is ‘compounding’. It only happens when we hold assets, not by trading them.
- If you can’t afford a consumer product in cash, you can’t afford it.
- There is no such thing as ‘financial engineering’. It was invented by Wall street to trick you.
- The best type of share investment is an Index Fund. They are investments in civilization. If that fails, we have bigger worries than our money.
- Invest more in education than entertainment & ‘things’ and you will outdo society financially.
The good people at Ibis World just released a report on which industries are facing the biggest declines. You can probably guess a few of them, and the major culprit behind the decline is another mainstay of change: Technological Development. The numbers are from the US economy over the past decade, but I think it’s a fair representation of what is occurring in most first world developed economies.
So while you peruse the list, have a think about the incumbents and if they saw it coming or were in denial. Also have a think about where technology is taking us and if you can be a driving force behind flipping an existing industry on it’s head with your new startup! Enjoy.
1. Apparel Manufacturing
Has declined by 77% over the past decade. Simple reason. Cost of wages in labour intensive industry.
2. Music Stores
In the past decade almost 80% of all music stores have closed down in the USA. Sales recorded music sold on a physical transportable device (Tapes, CD’s, LP’s et al) have declined 76.3% in the past 10 years. The only chance for survival is to be very niche, like some ‘drive in cinemas’ have done. even cultural icons, like Tower Records below have succumbed to the inevitable. If you look closely at the pic below, you might even see the who was behind it all…
3. Manufactured Home Dealers
Declined by over 70% in the past decade. Who knew?
4. Photo development
Photo finishing faced a 69% decline, which digital photography is entirely responsible for. Facebook and Flickr are quickly replacing the photo album, and Kodak got caught napping as this happened. The truth is that 1 hour is still 59 minutes and 59 seconds slower than digital. The question is whether the increasing level of awesomeness of cameras in mobile phones will make stand alone digital cameras redundant?
5. Wired Communications
Wired telecoms declined by 54.9% since the year 2000. The evidence exists with how many people you know who’ve ‘turned off’ their fixed line connection. Long distance and overseas has equally been decimated by Skype which comes at peoples favourite price point – ‘free’ – with the added benefit of video. It’s pretty clear that I life without wires is better than a life with them.
Manufacturing suffered a 50% decrease. Seems they are closing all the factories down in Allan Town – as 23% have closed down since 2000. It’s a pretty simple formula here as reduced trade barriers and low wage markets have concocted this reality.
7. Newspaper Publishing
You’re reading this on-line, and you probably get most of your news the same way. Hence it isn’t a great surprise that newspaper publishing has declined 35.9% in the past decade. What’s really interesting is that most of us consume more news and content than ever before, we just get it in different places from different people. The problem with most publishers is that they confuse the delivery mechanism (the physical publishing) with why they actually exist. Granted, lower barriers to deliver any form information has made the old model almost impossible to maintain. I’d also argue that the pay walls being put up by Rupert Murdoch and the New York Times won’t cut it when valid substitutes are ‘free’.
8. DVD, Game & Video rental
A percentage decrease of 35.7% which is easy to see as local video & DVD rental stores close down. The on-line alternative is simply superior. Enough said.
9. Formal Wear & Costume rental
A curious one as this industry has declined by 35%. Most probably a combination of reduced prices for textiles in general and the casualisation of dress throughout society.
10. Video Post Production
With standard simple digital manipulation tools on our desk top, services of this nature have been hurt. They’ve declined by 24.9% in the past decade. Only the very high end have survived.
As we embark on new projects we hope will be the one, a lot of money gets invested. Hard earned money we’ve saved from busting out a living on week days. The left over money after we’ve paid the mortgage and paid the bills. Sadly, much of it never returns. It’s easy to feel cheated when our projects don’t pay off.
But let’s for a few moments consider the alternatives:
A flat screen TV
Dinner at fancy restaurants
A better car
A new gadget for the kitchen
Other stuff which will eventually gather dust
Turns out the money we lost in startup projects was never really wasted. In fact, it wasn’t lost at all. It’s the investment we have to make to get that elusive win. The alternatives are very poor substitutes with zero chance of a return. Which means we should never be afraid of investing in our projects. What we should really be afraid of is succumbing to pointless consumption.
Why we still have so many of them is beyond me. We know they waste a lot of time. We know they probably cost us more revenue than they generate. So what if we actually tried to quantify the real cost of meetings. Especially those with a cast of thousands, or say 5-10 people. Let me break it down.
Cost of meeting with 10 people in it:
10 people with an average annual salary of $100,000
Total salary of human resources = $1,000,000
Weekly cost of the salaries = $19,231
Cost of $480 an hour. So a 4 hour meeting costs just under $2000 to conduct in pure wages. Not to mention the cost of stuff not getting done while the meeting is happening. Or the cost of another weeks wages while people go away and think about it, before returing next week with the same 10 people to make the final decision.
Here’s an idea. Put the $2000 in the middle of the table (the cost of the meeting in wages). If it finishes in half the time split 50% of the money between the participants. If it finishes in a quarter of that time, split 75% of the funds amonst the participants….
Startupblog says: the best decisions are those that get made. The decisions which have a chance of being wrong so we can cross them off the list. Having expensive meetings just elongates the process. Avoid them where possible.