Insurance Advice and Assistance

Payday loan execrices and assessments

Again, you need to strike a balance between task and relationship development every step of the way. You don’t want to start taking each other for granted, especially after your first activity together. This can be hard for many in business—managers do not want to sit around and “waste their time” talking about relationships. But this is a critical investment—you may have thousands or even millions of dollars riding on the success of your partnership. So it’s absolutely essential to discuss the relationship issues with your partner.

In evaluating your initial activity, of course, you’ll also want to identify new information you didn’t have before. You’ll want to look at other opportunities and synergies your partnership suggests. You’ll also want to account for problems or breakdowns in the process. You’ll want to use this stage as a learning opportunity, not just a “pass/fail” appraisal. At the end of the meeting you might want to list what I call the “pluses and deltas.” The pluses are things that worked well in the meeting. The deltas are the items you’d like to have changed for the next meeting. If you or your partner are having trouble in any of the Six Partnering Attributes—Future Orientation, Comfort with Change, and the like—you’ll want to review Part Two and the attribute that’s causing you difficulty. There you’ll find skill-building exercises and assessments you can complete to help you increase your Partnering Intelligence in each attribute.

Establish task credit objectives

Just by working through the “preflight” checklist, you communicate to your partner that you have certain expectations.When you embark on a planned adventure, you’ve already influenced some of the dynamics of the trip. Spontaneity is replaced by planfulness, which opens the way for communication and sets expectations for both partners.

By establishing a trial project with both task and relationship objectives, you have specified the performance you expect from each other. Based on the criteria, rating system, or measurements you established in the first phase with the Agreement Between Partners Checklist, the results of the initial activity should be obvious. If you set a goal of opening ten stores in ninety days, for example, and you’re now looking back after ninety days, you can measure your progress quantitatively. If you set a short-term goal of developing a joint marketing strategy as measured by a written marketing plan you both embrace, you can measure your progress by that evidence. You’ll also want to talk about the Stages of Relationship Development.

Are you an investor?

Investors are ambitious and optimistic. Unlike humble savers, they believe that taking a little risk and exerting a minimal effort will dramatically increase their funds. Investing can be very troubling, but it touches fewer core emotions than savings. When ambition is thwarted and optimism is shattered, investors are miserable. However, they do not storm the capital and start a revolution. Investing concerns one-on-one relationships rather than the role of God and society in safeguarding hard-earned money. Whereas savers trust no one individual, optimistic investors trust too many people. When markets collapse, individuals are blamed, not government or the gods.

Ideally, the investor only invests excess savings. In investing, an individual or a group lends their excess savings to other individuals or groups for a fee. The fee is rent, interest, dividends, or capital appreciation. Groups can be corporations, partnerships, trusts, or other legal entities. The investor relies on the investee to pay the fee over time and to repay the investment.

Investing creates a relationship between the investor and the investee. Each has expectations of the other. Emotions are triggered entering the relationship, during the relationship, and leaving the relationship.

Compound Interest

Albert Einstein, perhaps the most brilliant mind of the twentieth century, had an opinion about compound interest. He’s quoted as saying, “Compound interest is the most powerful force in our universe!”

Now, I know our old friend Albert was being a little sarcastic, but he’s got a semivalid point. Compound interest is a force to be reckoned with. For those who are owed compound interest, it can make them wealthy. For those who owe it to someone else, it can be an anchor around your financial neck.

Guess who loves to charge compound interest? You got it … credit card companies, payday loan providers, and other types of questionable lenders. It’s part of the reason that paying off credit cards is a far greater struggle than paying off a car loan—even when they’re at the same interest rate.

The magic of compound interest is that you are charged interest on your interest until the loan is paid off. In other words, a little bit of interest is added to your debt every month, week, day, or even every second. Then, in turn, you are charged interest on that new slightly higher balance, during the next period.

Like a car that’s lost its brakes on a steep and winding road, it doesn’t take long to go over the edge! Let’s look at an example of a 12% credit card, with a $1,000 balance, that compounds its interest every month.

The Intellectual Capital Landscape

1. Education and experience. Together with talent, these are the key components of human capital. They are typically summarized in an individual’s resume, a document designed in part to establish an individual’s value in the employment marketplace. But the value of individuals is not absolute: It is situational. That is why one is well advised to customize one’s resume for the particular requirements of each prospective position.

2. Traditional intellectual property. Patents, copyrights, and trademarks comprise this domain and are protected by law. In many cases, their value can be appraised, for example, the copyright on an enduring piece of music or a famous movie generates a royalty stream of reasonably predictable value. The same is true of a patent on a commercial drug. Such well defined, income-producing properties are, in fact, equivalent to tangible capital; whether they show up on the books is a matter of accounting convention and/or a business decision. In what may be a new trend, large firms, including Dow Chemical,2 are employing internal or external consultants to appraise and to manage their patent portfolios.

Venture Capital and Diversification

The behavior of venture capitalists (VCs) is interesting in regard to technology risk management and diversification, for many of the companies in which they invest are pure technology plays.

Not only do the VCs seek diversified portfolios overall, but also they strongly prefer a diverse R&D portfolio within a single company—a one-product company is often shunned. However, VCs still are constrained to building relatively inefficient portfolios because start-up capital is concentrated in relatively few fields, such as biotechnology and software, and the performance of stocks within these groups is highly correlated.

We discussed the role of venture capital in creating value from business plans in Chapter 6. However, we are now focusing on how VCs augment their returns because their high-risk portfolios are diversified. We noted that the hypothetical VC’s experience may indicate there is a one-in-ten chance of meeting or beating the plans of the founders, doing an initial public offering (IPO) and hitting a “home run.” There are three chances in ten of a total failure, three chances in ten of a partial failure where the company is acquired and salvaged by a competitor, and three chances in ten that the company survives but produces average business results—a “single.” The VC may create a portfolio of several dozen, or even several hundred, investments on this basis, depending on her financial resources.