Moneywise24 Personal Finance

Yesterday, I met up with a friend of mine for a coffee. As we exchanged some interesting topics, the topic started changing towards career issues. At a certain point, she stated:

“I don’t understand, I am a hard working employee, I deliver the best possible quality, I have been with the company for years, and meet all possible deadlines. And yet, this work is not getting me anywhere. My colleages get all the best options in the company, they get promotions, or new challenges”

Sounds familiar?

As our conversation progressed, I started to develop a better understanding of her situation. Her goal is to be fully committed to her work, and her manager. She wants to make herself irreplacable through the quantity and quality of her work, hoping management will see the great potential that lures inside of her.

The only problem is, that by having made herself irreplacable by all the knowledge she has and the hard work she delivers, management does not want her to leave her current position. She has become so irreplacable, that it has started to work against her. Whereas she has been taking upon all the work, others have had the opportunity to get involved into other activities and build a network throughout the company.

For anyone seeking an interesting career, it is essential to build a diverse network of contacts throughout the company, attend meetings, give presentations, or go for lunch with colleagues and managers. Extremely hard working employees will often skip such events in order to get some more work done. But this is an approach, which will work against you on the long run.

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If there is one thing I learned during childhood and my teens, it is how important good friends are.  Then, during education and throughout my career, I learned in addition to that how important a good network is; not only in respect to the many social contacts, but also to opportunities which may arise through the network, for example a job posting at the company you always wanted to work for. Many job postings nowadays are not even publicly advertised, as they are being filled through existing networks of friends, co-workers, ex co-workers, family, etc.

If there is one thing I did not learn during childhood, it’s how be a great networker; I had to acquire all the skills during my adulthood. Nevertheless, from what I have learned I believe everyone can be a great networker, no matter wheter they have experience or not, whether it involves a personal network or a professional network.

I have written below five basic considerations, which are the result from my own experience. You do not have to follow these, and as I mentioned these are some really basic considerations, something to keep in the back of your head when meeting new people; real professional networkin goes far beyond these five steps.

1. Be open to meeting new people

When I did not know anything about networking, I was quite sceptical when meeting new people. I tended to keep my distance, awaiting to get some more insights about their motivations. I felt much more comfortable in my old group of friends and acquiantances than I did when meeting new people. When I did meet new people, it was usually via the friends and family and friends I already have, and usually I tended to think of them as their friends, not mine.

When I went abroad for my studies, I recognized how important it is to be open to meeting new people, since I didn’t know anybody in the new, big city. I started to open up, and escape my old habits. While I was doing that, I started to notice how closed other people often are when it comes to meeting new people and building personal relationships.

The best way for me to start being more open was to engage into small talk with just about anyone: the waitress at the bar, the people at university, my co-workers at work, and sometimes even some complete strangers in the bus. This has literally replaced my old habits with a set of new habits, being an open personality, enjoying to meet new people with the most different backgrounds and stories. Often the conversation just stays as it is, but sometimes personal contact details are exchanged.

2. Focus on the relationship, not the outcome

For many people, networking does not have the best possible image; it has the image of meeting people for the purpose of wanting favours from them. Although I have met quite some ‘networkers’, who do exactly that, their networking attempts will usually result in a very superficial network with little meaning.

A very powerfull mindset is to focus on the relationship, rather than the outcome. With building relationships, I mean being in regular contact with that person, and really focus on getting to know each other. Depending on the type of contact, you may want to go for a drink or meet up regularly if you are working on a more personal network, or you might keep a bit more distance if you are building a network with customers, business partners, or generally work-related. Nevertheless, the relationship will need to be worked on from the moment of meeting that person, and the right mindset focuses on intensifying that relationship continuously.

Focusing on the relationship does not mean you can not ask or give favours; it simply means that this is not where you want the focus to be; people might sense that there is something strange about the situation of meeting you.

3. Networking is an imbalance of giving and taking

Family members, friends, and members of a network do favours for each other. That’s what they are for, and that is what makes the connection with another person special. Once a relationship exists, it is perfectly normal to ask someone for a favour, or for someone coming to you for a favour.

Some people I know keep a journal of all favours they had given or received… I am not a big favour of that. To me, it does not matter that I have done two favours to someone and have not received anything back. In my opinion, there is always  fine imbalance between giving and taking. I am always prepared to give, as long as the imbalance does not become too big. People, who are only our for a profit, have lost nothing in my network.

I have to note, that a favour does not always have to occur free of charge. A friend of mine, for example, is a lawyer. Once I had asked him to look into a topic for me, that he is specialized in. Of course I paid him, although he did give me a small discount; in the end he is putting time and effort in my request, and I honestly believe that it should be rewarded in one way or the other.

4. Be present

With being present, I basically mean that people notice you, and are invited to chat with you. It does not matter whether I am at a party, a networking event or a party, I try to show presence as much as I can. For example, I might talk with one person for 20 minutes, and agree with him we should stay in touch for an after-work drink some time… then I go to another place or room, and initiate a conversation with other people. I do not want to jump from one conversation to the other as if it were speed dating, but also do I not want to clinge to the known and comfortable.

5. Self-Marketing

When I just started with networking, I needed at least a few minutes to explain someone what I do for a living, and what I had done in the past… and I wasn’t doing it effectively either. I recognized, that self-marketing was extremely important when building a network, if I wanted others to really get to know me and my strengths within a short period of time. Because else why should someone within my network offer me a job if that person does not know my strengths and what I am all about? This is an important point to think about: how can I communicate what I do and my strenghts in the shortest possible time?

Networking truly covers much more that only the few points mentioned above, but these few steps have helped me tremendously.

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I have to admit: on several occasions I have really thought about starting my own business. And in fact, most people I know have had the same thoughts. The thought alone made me do some investigations about what to do in the initial stages, and how to approach setting up a company. And one topic I have consistently encountered is the business plan; a good business plan is absolutely mandatory prior to setting up a successfull business. Writing an excellent business plan serves two main purposes for the upcoming entrepreneur:

1. The business plan forces upcoming entrepreneurs to think over each and every aspect of their future busines; it forces entrepreneurs to dig into every detail of their idea, from the basic concept to the market and market developments, the name of the company, legal issues, financing, competion, personnel, and to put them on paper. A great amount of new businesses actually go bankrupt because of flaws in the business plan, or the complete inexistence of it.
2. The business plan is an important tool for convincing third parties to do business with you, be it banks, venture capitalists, friends and family, or investors. It is a marketing and presentation document, without which any company or person is unlikely to do business with you or lend you money.

The form of the business plan is quite irrelevant, it may be made using Excel, a word processing program, or another program specifically designed for creating business plans. Whichever method you choose, each business plan should be clearly structured, and should contain the following information:

The Management Summary

The Management Summary is the final summary of your business plan. It is usually at the very front of the plan, and it is intended to sum up the most important information for managers, who may not have the time to read through the entire document. The Management Summary is usually written at the end, when the rest of the document has been completed, and should contain the most important key facts of the business plan. Additionally, the Management Summary should convince the reader why the business will be so successful based on these key facts.

Business Concept

The business concept should provide the opportunity, that you have thought over all the aspects of your idea, its products and services, suppliers, and the market. What is it exactly what you want to sell? What makes it unique, or why is it going to be successful? How or where did you get the idea, and why are you so passionate about it? Explain the idea as detailed as you can.

Have you already identified your market? Who will be your customers? Where do they live, what are their living habits, and which age do they typically have? Are they individuals or corporations? And last but not least, how is your product going to serve your customers, what benefits will they have, and how will it make their life easier? Why should these people actually buy your product?

Additionally, find out who will be your suppliers, and include it also in the business plan. At what price will you be buying goods and equipment, where are the suppliers located? Will you be using only one supplier or multiple suppliers?

Company / Organisation

A company can have different legal structures. What will the legal entity of your company? For example, in the U.S. a Limited Company (Ltd.) is a legal entity, so is a sole trader. Legal entities differ strongly per country, the best source of information is your local chamber of commerce. What are the pro’s and con’s of that legal entity?

Also describe the future workflow in your future company. If you need personnel, how much do you need, and what tasks will there be for them? Who will be reporting to whom? Will they be full-time or part-time employees?

Location

Your business will need a location, and often the location makes the difference between earnings or losses. Explain thoroughly why you have decided for a particular location. By doing so you should take into account the infrastructure, costs for telecommunication, heat, water, average salaries and wages, taxes, buying power, etc. Gather as much information as possible. Perhaps you have access to databases, which are able to provide this information.

Competition

Researching competition can be quite time consuming. As with the rest of the plan, be as specific as you can: who will be your competitors, and which are the most important ones? What is the market share of these competitors? What is their pricing policy, and their method for distribution? How will your competition probably respond to your market entry, and what differentiates you from your competitors, i.e. what do you intend to offer what they can not?

Employees

This section is a more detailed elaboration of the requirements of the future employees. What tasks will they be having, who will reporting to whom, and where will you get your employees? Additionally, which qualities do you find important, and which salaries will you pay to which employee? How about taxes? Where will you find your employees? Will you advertise in the local newspapers or perhaps online? How much do such advertisements cost?

Advertising

How do you intend to make your potential customers aware of your product? Will you advertise, and if yes, where? How much does this cost? Be as specific as you can, you may even already design your future advertising campaign and attach it to the business plan. This will show others that you have truly thought about your concept in the greatest detail, and that you are serious about executing your plan.

Opportunities & Threats

Opportunities and threats are aspects of the business which are ‘out of control’ of the entrepreneur, and should not be confused with ‘strengths and weaknesses’. An opportunity of threat might be a specific trend, governmental developments, changes in buying power or tax, specific actions of your potential competition… anything that you can not control directly, but which should still be taken into account. A well written opportunities and threats analysis demonstrates that you are focussing long-term , and you are taking each and every possibility into account.

Goals

Here you can define the goals of your business. Where do you want to go after setting up the business? Where will you be in 1 year, in 3 years, 5 years and 10 years? Try to quantify your goals as much as you can, for example by stating:

In 5 years time, the business should have a market share of xx%

In 3 years time, the annual revenue should be xx US Dollars.

Finances

Last but not least, you will need to write down the projected initial investments, operative costs, and projected reveneues and taxes as detailed as possible. There are many factors to be considered here, and there are many templates available on the internet which you can download for free. Additionally, perhaps the best first point of contact would be your local chamber of commerce; they might have templates available which are specifically customized for your market, or they might know where to obtain such templates.

Writing a good business plan of high quality will take up much time, but it is essential for your future business to succeed. Perhaps, the business plan will in the end even demonstrate that your initial idea is not feasible at all, or that the company would not make any profits. In that case, be happy that you found out during the planning phase and that you had a chance to abort, rather than setting up the company without a plan.

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China alone has more than 1 billion inhabitants. Worldwide there are more than 800 million native Mandarin Chinese speakers. With the Chinese economy booming, is Chinese on its way to becoming the dominant global language?

The question is very legitimate, since the Chinese economy is outperforming, and an increasing number of companies are starting doing business with China. In addition, Chinese products are flooding the world markets, and the world is becoming smaller and smaller in a sense. In common business situations, language is still a barrier, and many occasions require a translator to be present.

English has mainly become the dominant global language due to the widespread presence of the British during history. The participation of the United States during WorldWar I and II. As such, English has become increasingly popular as well as important. Additionally, both Great Britain and the United States take very important position in the global economy. Looking at this history, however, the popularity and acceptance of English as a dominant global language has grown slowly over time.

Chinese could well be on its way to become a more important language in business life. In fact, the popularity of Chinese, as well as other language contributing to the global economy, is increasing. However, the language itself poses also some important limits in the way it can be used. Probably the most important limits are the use of characters and the number of limited sounds available. As soon as foreign companies become active in China, they will often have to change their name completely, in order for the company name to be written in Chinese. The same applies to names of people. In addition, schools, colleges and universities will need to adopt Chinese as an integral part of their educational program. This is a very big step, since Europeans and Americans will have a great difficulty learning the language as it belongs to a totally different language family. And still, for this to happen, the Chinese economy itself will also need to take the dominant position in the global economy.

Although it is unlikely for us to (still) experience Chinese being the dominant global language, the Chinese language is gaining importance and popularity in general; there are still many people worldwide, some of them very educated or in high positions within large corporations, who do not speak English adequately. Speaking Chinese might indeed prove to be an important asset, increasing one’s value on the emloyment markets.

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As I surfed the internet last week, I came across an interesting article on Wikipedia about academic inflation. It is a phenomenon that we could have observed over the last 10 years, but for which I had no way to call it by name; academic inflation is an inflation process of minimum requirements as a result of too many college education individuals compete over too few jobs requiring these qualifications. As a result, minimum qualifications for the same jobs are increased, requiring a higher form of education in order to obtain the job.

I remember, when I started my education in 1998, that having a bachelor’s degree was really good, and a prerequisite in order to acquire a job in a business environment, whereas an academic university’s degree was only required for some specific types of business jobs (e.g. business consulting, Mergers & Acquisitions), which required skills not taught during a bachelor’s degree. Furthermore, university education had always been an important pre-requisite for the academic type of career.  In some cases, a bachelor’s degree would even allow graduates to take part in traineeship programmes, allowing them to take upon a lower management level job within 1 or 2 years of graduation.

I finished education in 2003, and the tide has turned. Half of the vacancies, which focussed on the type of work I had studied for, already required a university degree, or Masters degree. Those vacancies, which required bachelor’s degrees, I found were quite below my capabilities, and typically involved much administrative work.

Academic inflation will probably not come to a halt, since more and more people can afford to go to college and even university. Today there are large streams of young professionals pursuing an MBA, in order to be able to advance their career faster. Language skills will also become increasingly important. I recognised that in order to keep my current job, advance my career, and remain competitive in general, I will need to become pro-active, in every way I can, during my entire life.

Continuous academic advancement

Academic inflation does not only take place at a bachelor’s level. More and more individuals are attending university, and MBAs are increasingly becoming popular. Therefore, each individual will need to advance his academic graduation to the maximum possible. For people having full-time jobs, there are many part-time programmes to take part in. The more well-known universities may offer these programmes at a high price, but there are many other universities, which are not priced that expensively and which are still accredited. After a Bachelor’s degree, one could pursue his Master’s degree, an MBA, a doctorate or PhD.

Continuing Professional Education

Apart from the classical academic path of education, many organisations offer certificates that demonstrate a specific skill in a certain area or expertise. This can be the Organisation of Certified Accountants, or the Association of Proposal Management Professionals. Obtaining such a certificate from a recognised professional organisation is not an academic degree, but does demonstrate experience and expertise. These last two traits are at least as important as an academic grade.

Languages

Companies are increasingly becoming more and more international, if they are not so already. Additionally, nations are emerging. Think about China for a moment; there are more Chinese speaking people around the world than there are English speaking people. Nothing speaks against such languages gaining importance in the future. As a measurement, I have already taken upon a Chinese course, and I intend taking a Japanese and an Arabic course in future.

Gaining experience in different fields

As a measurement to stay competitive, I have decided to make different experiences with different companies in different roles. This keeps my mind sharp, and I see how different organisations and departments within corporations function. If you have worked all your life as a salesperson, might be very difficult to get into marketing or finance at some point.

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