Here is a quick method to evaluate all those external business ideas that pursue business owners like a plague of mosquitoes in biblical Egypt.

As a business owner your time is important. It seems, however, that the more focused your vision, the more likely it is that somebody or something will conspire to distract you. There is a simple way to keep focused.

Each activity we’re involved in has 3 core financial values. Firstly, what are you being paid to even consider this opportunity? I bet you've lost count of the many folk willing to try and sell you a concept that is really good for them, but doesn’t offer you a great deal of value. Once we know what our time costs [divide my income by 160 hours] it’s really easy to decide whether the time spent meeting/evaluating/deciding is going to generate any real value. This happens because most folk are much happier wasting your time than their own. [Actually that's a tad cynical, but you know what I mean.]

Secondly, what is the idea worth in terms of income stream? How much money will it generate for the amount of your effort it consumes? Many of us get a little bored and chase new ideas with high initial costs [usually time and often money] but without any clear idea of the real value the ideas will generate. This means we get involved in activities that might well generate higher income, but which need MUCH higher effort.

Thirdly, what is the 'equity' value? How much can you sell the final result for when you want to retire or go do something else? Many of us are trapped in a job that has no future value. The beast is unsellable! Most of us are too busy in the daily grind to even envisage a time when we might want to run away. Consequently we spend all our time running on the treadmill inside the cage instead of working on the cage itself. Yet any effort spent on ensuring that our businesses are sellable is going to generate much more value than the equivalent amount of time on administration.

Robert Kiyosakis book - Rich Dads CashFlow Quadrant - devotes lots of effort to this equity value concept. It's a really fascinating read in simple English that's essential for every small business owner. If you can't find it at your local CNA, Wordsworths or Exclusive Books - click here to have Kalahari.net deliver it to your door. [Don't you just loooove the simplicity of the Internet?]

Somerset West, September 16, 2002

Renting and buying…
We South Africans are almost defined by our cars. When I was in Australia a few years ago I became used to folk driving decrepit rustbuckets. But each time they needed to make a long trip they would hire a vehicle on an unlimited mileage plan, and head out into the wild blue [or brown] yonder. This would add a fair cost to the trip, but when compared to the purchase price of a car, as well as the interest, maintenance and insurance it made a heck of a lot of financial sense. Which leads to a simple thought. Why can’t we rent for short periods as we need assets, rather than constantly BUYING things? This applies to virtually anything a business might need - vehicles, computers, software, plant, …

© Peter Carruthers, www.petesweekly.co.za

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