Garbage in, Garbage Out

The old saying comes from a mental picture of school children in a computer class. Computers as we know them were developed to reduce the time and errors of manual computing. I’d like to call them- 'the help'. Now imagine, that you are the CEO of a small business, a parent with toddlers and in your own home-your own dependent parents also live with you. The number of tasks you need to complete at any given hour would be enough to employ a whole village and so you decide to get help - the computer. But, you just go to a shop and buy one, toss the box into the shop’s trash and head home with your computer. You already get the drift of where this is headed right? … Don’t toss the manual out… always read before you use the device … bla bla bla. Well to who it may concern, has it ever occurred to you in that moment when you are yelling and screaming at your maid, house-help or steward about how they do not use their senses properly– it can be likened to buying a Korean laptop and expecting it to command it in English. Heck, If the maid understood your wants, needs, lifestyle, expectations and hopes (which even your spouse may not fully comprehend), do you think that they should be your maid in this age and time? It takes a commendable utility of communication techniques to get your instructions across clearly and that they be interpreted just as you would want it. This is actually work that you would have to put conscious effort into developing because these ‘helps’ come with their many specifications. Point? Never assume that the maid knows what you mean in one paragraph of instructions that you have handed out. Why? Unless, the help is well trained to interpret such, you are plainly speaking to thin air; as your idea of communication is utterly different. This is not to disparage those who understand the additional responsibility that comes with getting a new help. Rather, it aims at pushing the horizons of thought for getting one – up siding the assumption that a help comes sweetly to solve all your problems. I mean, if you take a walk in the mall and get lucky, you could go home with a computer that you understand and that fits your requirements well. Otherwise, the tedious process of adjustment must commence and grow. Save for unethical misdemeanours, your journey should be nothing short of sweetly tedious and if you’re persistent enough, you may train a develop a very rare improved version (of yourself).

How're you making your project decision?

There are several reasons and conditions that could surround the appraisal of projects. It could be the case that an investor is faced with multiple projects to choose from OR decision makers faced with one project to either accept or not, OR it could even be the case of a project already underway that needs to change hands and the new investors want to assess the project's performance.
Asides from non-discounted measures like the payback period and the accounting rate of return which are relatively easy to measure, do not factor the effects of time value of money-per the effects of inflation, there is also the importance of analysing project/investment decisions that do require more importantly the knowledge of how valuable/costly net cash flow would be over the life of the project.
In real life, people investing in huge and capital intensive projects require specifics on parameters like what is the risk free rate of interest now versus what's the cost of the capital invested or to be invested in this project? Is there a premium on the cost of capital? Or is the project even going break even at any point in the short to medium term? And at what rate ? This is what techniques like the Cost-benefit Ratio, the Internal Rate of Return (IRR) and the Net Present Value (NPV) can help to answer.
The NPV can give the best picture if the discount rates are as close to accurate during the tenure of the project because it discounts the cash flows over the project life using a specific cost of capital. The downside to this method is the difficulty in being accurate with discount rates and the specific timing of these capital expenditures. So to combat this, the analyst can try to estimate the IRR, in order to give the investor a fair idea of the interest rate at which the project yields on. This ultimately gives the investor the chance to compare alternative investments based on their yields.

Entrepreneurship vs. Business Administration

When you hear someone say: 'I studied Business Administration', the want to assume a whole business mogul and savvy person background can easily follow; especially if the individual is dressed well and personal grooming is done to a perfect finish.

Why? Well why not ? How does a person go and study how to manage or handle business activities and operations and not own a business, know how to start one or even grow one? After all, if you can't practice what you've learned, what use is it to anyone else ?

So here's our drill. Studying how a business or a typical business model operates is one thing that can be done in theory. In reality, Businesses can differ as pearls on the seashore; hence there is really no one size fits all model. Although, there can be similarities - let's not lose that in the discussion- but each business creates it's own model as it is being built and continues to grow. Therefore, studying one model in a book can only possibly be a fireproof realistic approach if the model's assumptions and principles apply to the business under consideration. These principles and assumptions are what become underlying similarities that case scenarios can be analyzed from; because as is with every problem in science, the root cause is isolated either by deduction or addition.

Now what Business adminstration studies can guarantee is that the possible solutions to the problem are highlighted, either from prior case scenarios or thoughts of the consultant. What Entrepreneurs should be guaranteed however, is that the solutions proferred do not upturn the process flows and create multiple problems from solving one problem. The essence of bringing on board a business administrator/consultant is to assure the entrepreneur of fine tuning the internal run ins of their business, it's management, processes and functions; such that the entrepreneur can focus on planning the future and growth of the business without having to worry about business issues that can be resolved by specialists of the such processes.

At the end of the day, a business administrator and an Entrepreneur may or may not be the same person; the focus is to understand the functions of the two roles; and in very complex organisations, they are separate entities that function as executives and consultants respectively.

Why Invest anyway?

People always talk about either investing and becoming wealthy, or striking gold all of a sudden and becoming rich, while there are many others who have been scammed and swindled of their legacies, inheritances or their hard earned incomes. So why would you invest if you've been burned before ? Or why should you invest if you're already doing well and amassing wealth ?

First off, investment requires some positive return upon maturity, which means that like setting goals, it requires value to be added to whatever funds have been committed to the project. 🥴 Someone's weary of the term 'project'? Well really, deciding to rent an apartment to live is as much a project as deciding to rent a space to run your Enterprise or business. So whatever you choose to purchase for a purpose can be considered a project, but when you expect a certain minimum level of positive returns on your purchase - we can definitely say - it is an investment.

Yes, when you buy a basket of black and blueberries with dark chocolate and red wine because you want to serve your health a heck of a treat? That's an investment in your health! Place the emphasis on positive returns. Likewise, if you decide to dedicate an amount of funds for a five to ten year period so that you can send that child to college while (allowing a viable business borrow the funds for a bit to also add value to your community); do you feel the double relish!?

Really, investment examples can vary as much as the colors in our entire world, but whether you'd be willing to admit it or not (we can talk about it in the comments section below 😊😎). The point of this whole post is to let you know that as long as you seek to add value to your life, your family or community, your business or your funds; you are making investment choices every now and again.

I think you should choose with the aid of proven tools and analysis or maybe just discuss first over a cup of coffee or tea. Strike a smart investment chat today, so that your tomorrow can have added value.

Yours truly,
A Value added lnvestor

IDM - Investment Decision making

Investments are commitments (usually of funds) with the expectation of certain positive yield or returns. Any decision to invest must have some expectations of what you the investor wants to get in return. Otherwise, you might as well keep the funds in a savings account.
(Trick question in the last paragraph for my visitors).

So when does it really get interesting? Thats when the expectations of my investors are like fifty pages long with constraints of what can or cannot happen with their investment. So IDM complexity is because of the dynamics of constraints the investor is working with: that's real life! But you know the good thing about math and science is the way it is able to isolate one problem at a time and solve for optimisation.
As a financial analyst in the making, I am faced with several investment choices and the option to choose what works best or suits the (me) decision maker best. You can picture where an investor's primary constraint is not financial but say a constraint of technical expertise to execute the project option. That would be relatively easy compared to a situation where you have about six to seven people as primary decision makers and they all want different things and prioritize constraints differently. Who's house of chaos is this ? I can relate to both situations and quite frankly there is a broad spectrum of decision making complexities which is what I love about analysing such projects and whipping them all up by techniques, so everyone can see if there's actually cream to be skimmed off of it or not. The point to IDM is essentially to ensure best match of risk to returns as you don't want to walk blindly into dead or irrecoverable exposure. But that aside, you don't even want to lose out on what could have been a better choice had you considered.

So typically as an investor, here are some of the things you should know before speaking to an expert.

1. You should know how much you want invest with and how much exposure/risk you're willing to take on.
2. You should know in the very least what serves as an attractive rate of return or sum of value added in your interest. If you're expecting to get served what seems best in the advisor's mind; you're already working a hot potpourri you may never really be confident nor at ease with.
3. You should know how long it can take to get the desired results. Sometimes people assume the big bang happens to a novice every day or every week and although you may experience the bang, it may not be beneficial. Investment projects take time to grow and yield, so don't be in an absolute rush to make an uninformed decision~ A good chicken marinade never hurt nobody ✓

Question of the day.
Would you consider a savings account an investment?
Please enter your thoughts in the comment section 🏦