Spotting ‘Scalability’ – And How to Avoid The Elephant Trap of A Lifestyle Business

Spotting ‘Scalability’ – And How to Avoid The Elephant Trap of A Lifestyle Business

If you’ve watched the TV programme ‘Dragons’ Den’, you’ll know that scalability is an important factor when it comes to investing in a business.   Scalability is all about having a business that delivers future rewards exponentially as a result of the time and money invested. Without it, a business is going nowhere – and yet, many would-be entrepreneurs don’t stop to think how many years may be wasted in chasing a dream that will always be just that. So, can scalability be achieved against all the odds? Or does there have to be an almost pre-ordained likelihood that it’s there from the start? And if scalability can be achieved when a fledgling business doesn’t appear to ‘have it’, what are the tools an entrepreneur can use? The tired aphorism (and back-handed compliment) that Britain is ‘a nation of shopkeepers’ must stem in part from the realisation that so many people who achieve their dream of being self-employed are, in reality, setting up a ‘lifestyle business’. Some would say that these aren’t ‘real’ businesses. If you can’t employ a dozen or so people in the first couple of years, you’ve probably got a lifestyle business on your hands that will never grow to the heights you dreamed of when you first set out on your glorious venture. Dream On  What are the pointers to look out for when you’re first starting out? Or when you may be tempted to go into partnership with someone? Or even become a business investor, Dragons’ Den-style?! We’ve all heard of ‘economies of scale’. Applying the concept in real life does in fact have some... Read more...

The Slings and Arrows of Outrageous Lending

Sub-prime money lending in the UK is alive and well.  Demand for Payday Loans, Logbook Loans and Guarantor Loans is soaring.  And with the country’s recessionary phase now into its fourth year, these high-interest short-term loans that were previously only popular with the sub-prime sector are now being taken up by so-called ‘Middle England’. In many cases, this group of newly-stretched individuals is also resorting to more ‘respectable’ sources of personal credit such as P2P Lending (aka Peer-to-Peer or Person-To-Person Lending), pawnbrokers and pre-paid credit cards.  For the more prudent, there are always old standbys such as Credit Unions. What’s going on in our economy that’s driving so many people into the arms of ridiculously expensive lenders and online opportunists who are charging outrageously high interest rates of up to 4,000 per cent APR in the case of Payday Loans? Let’s take a closer look at the type of credit we’re talking about: Payday Loans The bête noir of the sub-prime stable, these online loans are surrounded by controversy, largely on account of their sky-high annual interest rates (APR). Although Payday Loan companies were originally given a green-light by the Office of Fair Trading, a rash of recent complaints about their aggressive chasing of defaulters has led to closer scrutiny of vetting procedures and in some cases the withdrawal of their licences to trade.  Logbook Loans On the face of it, a short-term loan using your car as security seems like an OK kind of idea. You hand over your V5 Registration Document (formerly known as a ‘log book’) for the duration of your loan.  When you’ve paid it... Read more...
Why I’m not going to buy “shares” in Facebook

Why I’m not going to buy “shares” in Facebook

It’s nearly two weeks since Facebook was floated on Nasdaq. Things started so bright for Mark Zuckerberg and his “beloved” Facebook, with share prices starting off at $38 a pop catapulting Zuckerberg into the world’s rich list, valuing Facebook at $104bn. Since May 18th (the date Facebook was floated) there have been numerous events that don’t bode well for the future of Facebook. It started with GM (General Motors) dropping their Facebook advertising campaign, followed by Facebook share prices dropping on a daily basis to an all-time low of $29 yesterday (May 29th). Is Facebook Really worth $104bn? Personally, all the hype surrounding the Facebook flotation never got me excited. The obvious question is: How can Facebook be valued at $104bn? Despite the company’s attempts to generate profit from “Facebook ads”, it can’t be enough to justify the $104bn price tag placed on the company. I mean, do people actually click on Facebook ads? Developing countries don’t even use Facebook! Well not quite, but developing countries don’t seem to favour Facebook. Instead, they opt for what, to us, seem like obscure social networks. For example, in India we see that Orkut is the market leader in social networks; in China a little-known (to us in the West) social network called Qzone has over 388 million users; and again, in Brazil, we see Orkut dominating. These are three of the world’s fastest developing countries and judging from this evidence, Facebook has failed to capitalise on this. There are now serious competitors to Facebook out there Only a couple of years ago Facebook was a operating in a monopolistic market.  MySpace was... Read more...