Vintage

Finance tip: Savings/Investments

Always know what costs you’re paying. With pretty much any savings or investment product, there are going to be costs involved. They could be called admin fees, management fees, monthly fees, performance fees, or just about anything. The point is that you are coughing up for them, and they’re coming out of your pocket. They could be upfront commissions paid to the salesman who signed you up for the investment, or they could be ongoing, monthly costs (a fixed fee or percentage). Whatever product or investment vehicle you’re looking at putting your hard-earned money into, make sure you know what the fees and associated costs are going to be. In most cases, the person signing you up has to divulge these amounts to you, but they can be skimmed over if you’re not alert to them. There’s a great quote that goes: “You get what you don’t pay for.” Basically, the lower the fees, the less money is bled out of your investment, and the more money is left to grow and be re-invested. Always do your sums. Say, as a simple example, you’ve got a couple of thousand bucks stashed in a money-market account, and it kicks up a hundred bucks a month in interest earned. You picked that account because it had the highest interest rate on offer at the time. What you didn’t realize was that there was a monthly management fee of sixty bucks. So you’re actually only coming out forty bucks ahead. If you’d put the money in that simpler, straight-up savings account you also looked at, you’d be earning a bit less interest (say seventy bucks), but there are no monthly fees, so you’d actually be coming out better off in the end. Can you see the difference that fees can make? Always, always, always ask what the costs are…

Business tip: Cost containment

Take a serious look at outsourcing your non-essential functions. If there’s one lesson that always comes through from successful businessmen and entrepreneurs, it’s that you should focus your time and energy on your strengths, and bring in others to bolster your weak spots. As a business owner, it’s often the case that your strengths lie in marketing, sales and business growth, with the admin and back-office functions taking a back seat. When the business grows, you bring someone on board to help with the admin, and then you bring on another one, and another. You look up, and suddenly your payroll is enormous – and it’s putting strain on your bottom line. This is when you need to take a serious look at which functions are essential to your business, and which are simply support roles. Do you really need to three PA’s to answer the phone and take messages, when you’re phoning the customers back yourself anyway? Do you need to have a full-time bookkeeper just for payroll? There are plenty of brilliant service providers out there who have built great businesses on supplying support services to small businesses. They have two great advantages: The first is that the issues get hived off completely, and become someone else’s problem – allowing you to spend less time putting out fires, and more time growing your business. The second is that they can save you a small fortune. Imagine if you could cut out just one salary from your payroll, and get that function outsourced. You go from paying someone a few thousand bucks a month, to getting exactly the same service (if not better), and maybe only now paying a few hundred bucks. It could be the difference between running at a profit and not. Or just think what you could do with that extra money pumped into your marketing campaigns? Take a friend of mine, Brian. His company, Workforce Payrolling, specialises in outsourced payroll solutions. Now, instead of having to pay somebody a few thousand bucks a month to do your payroll, you can get it done ultra-professionally for under a grand. Email him on brianma (at) workforce (dot) co (dot) za, or call him directly on 072-244-0056. Mention this article, and get a special deal!