Simple Uncomfortable Questions

Companies have already prepared their budget for the FY 2015-16. So let me ask you some very simple uncomfortable questions.

• What is your Net Worth today?
• How much will you save in FY 2015-16 in absolute terms and in terms of percentage of your income?
• How much cash will you have at the end of the year?
• When will you convert your savings into investments?
• What is the yield on your investment- is your money working for you?
• What is your Pi index? What percentage of your financial needs (necessity, comfort and luxury) is met by passive income?
• What percentage of your net worth is protected from inflation?
• What measures are you taking today to grow your active income? Is it in addition mode or is it in multiplication mode?
• Do you need professional help from a wealth coach?
• Do you have adequate medical and life cover?

Hope you had a tough time answering these simple uncomfortable questions. Do write in to share your experience at aipichai@gmail.com

How I leveraged my Ai!

When I started my career,  I made an agreement with money- Till the age of 40, I will work for you; after 40, you will work for me. Even today I work; the difference is that today, unless an assignment excites me and I feel that I can make an “impact”, I don’t accept the assignment. I charge for my work; but I don’t work for money. There is a big difference.

Being from a business family, “naukri” (employment) was just not in my system. I wanted to be my own boss. For me ‘naukri, sounded like ‘no curry’! When I started, I was self-employed. I was spending a major portion (my prime time) coaching CA students for their exams. That gave me a lot of satisfaction and improved my understanding of the subject immensely. However, I soon realized that this was an extreme form of Ai. The only reason I should continue doing this was if I wanted to start my own coaching class (I dream of this even today). However, I realized that the entire coaching class “business” was star driven. Certain professors have the magnetism of pulling in the students. So either you become the star (Ai model) or depend on other stars, who can be lured away by others and bring your business crashing down. Most importantly, in those days, the top professors in the stream did not have an inspiring story. They were slaves working from 6 am to 10 pm. The top 3 stars in the coaching industry had gone through a divorce. I love my wife (even today!) and did not want this life. So within 2 years, I stopped coaching.

I was engaged in a retainership assignment with a large CA firm. One day I bumped into my first mentor, who believed that if we could do it for others, we could do it for ourselves too. He had the belief that we will attract good clients because we do good work. I always credit him for having such high self-belief.

We started our practise by employing over 30 people. So now we would be earning on our own time as well as on the time spent by others. Great idea! However, the only problem was that 99% of the capital was borrowed capital that we had to service by way of interest and repayment of principle. Secondly, we also had to find work for feeding this team of 30. In the initial days, we were actually borrowing to even fund our withdrawals for home expenses! We soon realized that we needed some ground speed before we can take off. So we shed some excess load by downsizing the team and then we were able to take off.

We also realized that most of the clients were coming for our advice. We were becoming the “stars” in our practice. We wanted some activity that did not depend purely on the “star” power. We needed some service activity that was process driven, rather than star driven. Fortunately, we found an opportunity in selling and servicing financial accounting software which was a sunrise sector. We were adventurous and took a path that was off-beat. The risks paid off. I realized the power off Human Resource development that was the foundation of making others work for me – using other people’s time.

Do you have such stories of leveraging your Ai? Write them to me at aipichai@gmail.com

Who moved my cheese?

Traditional business are losing money, they are not as profitable as they used to be. I’m from a family of traders in automobile spare parts. This used to be a very profitable business. In our community marriages happened based on the goodwill of the business of the family. However, gradually these traditional businesses have been on a steeply sliding slope. The situation is the same in textile business or in electronic trading business. The traditional business model is no longer working as it used to work in the past.

What happened? I remember reading a book “Who moved my cheese?” by Spencer Johnson about 12 years ago. The book tells the story of a rat who would go to a fixed place where he would get cheese every day. Gradually the cheese started dwindling and they would complain “Who moved my cheese?” instead of going elsewhere to find the cheese.

Business has become too dynamic; the pace of change has increased multi-fold. What used to work earlier, no longer applies.

Tomorrow if the Income tax rules become friendly and audit of private companies is made optional, many of my fraternity will complain, “Who Moved my Cheese!”

A Vision and a Plan

Every great building or every great device was conceived with a Vision. When Steve Jobs started designing the iPhone, he first had a Vision. What will the iPhone do? What will the entire eco system around iPhone be? How will it impact the life of a customer? He had a vision of what he wanted to achieve.

Then he & his team got around designing the iPhone. They planned every feature, every wish list meticulously.

Then they started creating it. I am sure it must not have started suddenly one morning, where Steve Jobs got out of his bath tub in a Eureka moment shouting “Let’s create an iPhone”.

Your journey to Financial Freedom also starts with a Vision. It has to be your vision. Your Relationship Manager from the Bank will never create this vision for you. It is your Vision- what inspires you? You want to build Taj Mahal or do you want to build Red Fort. What will give you maximum joy?

Vision cannot be created in one day. It takes time. Moreover, it will not happen automatically without any effort on your part. You will have to keep studying the environment. You will have to keep introspecting. Do you have the temperament to own and manage certain type of assets? If it does not match your temperament you will have to modify your vision. A friend of mine created his fortune in Art. He runs an Art Venture. Can I also do it? It depends on my temperament. Do I really love Art? Do I understand Art? If the answer is no, then maybe I should try and learn something about it. If I just cannot do it, then maybe Art as an Investment is not for me. I should look elsewhere.

Once your Vision is formed, you need to start putting numbers on your vision and start converting it into a Plan. Once the Plan is prepared, you will have to set GOALs. You might need a Wealth Coach to help you in this process. You may also form a group of like-minded people with whom you can share your Vision, your Plans and your Goals. This is serious stuff and it demands dedicated efforts. How many of you have devoted sufficient time to do this exercise? Don’t expect your CA who files your tax returns to play this role. This is simply not his role. So how are you formulating your Vision, your Plans, your Goals? Do write in to share your experience so far.