Financial Literacy is not just for middle class

OBSERVATION
Spoiled rich kids? Wealthy parents have little faith in their heirs

WHAT'S HAPPENING
The super affluent aren't just worried about the economy; they're worried about their kids' incompetence with cash. In a survey of Americans with at least $1 million in liquid assets, just 20% said they believed their children would "keep their family's wealth secure for future generations" (WSJ.com 2.10.09). Only a third thought their kids would ever "make financial sacrifices."
Analysts at U.S. Trust blame materialism. Over the past decade and a half, the affluent have taken conspicuous consumption to new heights, and their kids identify primarily through fancy clothes and exotic automobiles.
The extreme wealth generated during boom times means that about $50 trillion will be passed to the next generation in the next 50 years — probably the greatest transfer of wealth in history.

WHAT THIS MEANS TO BUSINESS
Financial literacy isn't just for the middle class. In fact, the children of wealth may be even more at risk for financial mismanagement, since life has been pretty easy for them so far.
Savings, entrepreneurship, philanthropy, and investing: these are the areas rich kids need to focus on, according to the authors of the study.

Best Business To Start: Going Global Firms

Even though the value of the dollar and the trade deficit may fluctuate, globalization is here to stay. We all know about multinational corporations, but even an increasing number of small businesses are finding it possible to take their businesses abroad. A 2007 UPS survey found that a third of all small businesses are already involved in international trade, and the think tank Institute for the Future wrote in a February 2008 report that half will be involved by 2018.


But that number doesn't show the practical side of the matter: Who is going to make all these global deals happen? Naren Balasubramanian, a member of the board of advisers for Global Crosswalk Inc., is the first to tell you it's not easy. Too many players in trade are sending white males to offices to lead groups of Indians, he says, without knowing what they are getting into. That's where his company comes in. Global Crosswalk, owned by Radha Nath, a Canton, Mich.-based entrepreneur, helps employees of local corporations being sent abroad prepare for the cultural differences they will encounter. It also offers services to help employees of foreign companies sent to work in the area adjust to life in the States. "Being able to build bridges with different cultures brings me joy," Nath says.

The burgeoning field of global consulting also brings Renato Beninatto joy. "I have a goal of visiting three new countries a year," he says. Beninatto has been able to achieve that goal as "chief connector" for Common Sense Advisory Inc., the Boston-based global research firm he cofounded in 2002. Common Sense Advisory provides research about the global marketplace to foreign language translation service companies and works with other global companies on how they can better provide services to foreign countries. For example, a company might not know how to write a user guide for a product in a foreign country, or might lose global customers because it cannot offer the right payment option. Common Sense offers expertise on those kinds of issues. "Language is an enabler and a multiplier of business," says Beninatto.

What does it pay?
According to the Bureau of Labor Statistics, the mean annual wage for executives in the management, scientific, and technical consulting industry in May 2007 was $182,790.

What kind of background do you need?
Direct experience with international business is a prerequisite. Beninatto had been an entrepreneur in his native country of Brazil and had expanded that business to Argentina. What allowed him to generate clients right off the bat, he says, was that he and his partners already had a reputation as "thought leaders" in the area of globalization, specifically on issues of foreign languages. Knowledge about a specific area of international business and global trade can be used for public speaking or blogging, providing the perfect launching pad for a start-up. Nath says that her connections with the Detroit-area Asian-American community were one of the most helpful parts of her background. She used that network of friends as the starting place for her marketing strategy. Experience in human resources—Nath worked in that field for over a decade—can also help you find talented people to work as consultants with your customers.

How do you get started?
Traditional start-up costs—like renting an office—aren't necessary in this line of work. "It lends itself to virtual offices," Nath says. She mainly works from her home, and when she needs to formally meet with clients or hired consultants, she has arrangements with the local chamber of commerce for office space. Being a member of the Detroit Chamber of Commerce has also been a great way to find businesses in the area that are in need of her services, she says. The main start-up cost, however, will be intellectual capital, as the quality of your service is only as good as the quality of your ideas. Beninatto's cofounder of Common Sense Advisory, Don De Palma, was an early researcher about globalization at Forrester Research. Beninatto says it was useful to divide the work so that his partner focuses on the research products and he handles the face-to-face meetings. They also have a separate executive run the business side of things to allow them to concentrate on their services. "When you're working, you're not selling. When you're selling, you're not working. We needed somebody above us," Beninatto explains.

Best Small Business To Start: Export Manager

If you want to know what has kept the U.S. economy afloat during hard times, you have to look at exports. They've been responsible for two thirds of the nation's economic growth from 2007 to 2008, says U.S. Trade Representative Susan Schwab. While it is true that the dollar's recent rebound, which is likely to continue, has put a damper on exports, one important driver is not going away anytime soon: the growing demand for U.S. products in emerging markets like China and India. The problem is that this demand has cropped up so fast that many American businesses are not ready. "Most American businesses are woefully behind the rest of the world on exporting," says George Solomon, associate professor of management at George Washington University. Export intermediaries are the small-business sector's solution to this big problem. Their basic mission is to connect domestic sellers to foreign buyers. There are two ways to do this. Export trading companies take title to goods made by domestic companies and directly sell them to buyers overseas. Export management companies have a simpler role. They don't buy the exports in question—they just find the foreign buyer. Andy Reinke of Indianapolis, who has run the export management company Foreign Targets Inc. since 1996, says that difference cuts your risk. "In export management, you share the risk with the manufacturer," he says. If something should go awry between buying the goods and exporting them—let's say the market goes belly up in the country in question—the export trading company would be stuck with the full bill for the goods it bought.

How much does it pay?
Specific wage statistics for export managers aren't available. But according to the Bureau of Labor Statistics, in May 2007, the mean annual wage for chief executives in the wholesale trade industry was $166,870.

What kind of background do you need?
Running an export management company requires considerable knowledge of international trade. Reinke explains the steps he goes through in one case: First, you have to figure out where in the world demand for the goods is highest. That requires looking at trade statistics and doing marketing research. Then you have to combine that research with knowledge of the relevant tariff rates. Next, Reinke says he contacts companies that manufacture similar products to the one he is trying to export but that are not in direct competition—for example, if you're trying to sell a sort of industrial valve, you would look at where companies that sell a different kind of valve have found buyers abroad.

From there, you contact the overseas companies you have identified. Here, knowledge of a foreign language might help but is not necessary. Reinke says he knows enough French and Spanish to get by, but the countries he deals with—which include China, Vietnam, Indonesia, and Jordan—are so diverse that he could never know enough languages to keep up. The fact that he deals mainly in high-tech industrial products makes it easier to find people on the other side of the bargaining who speak English, the language of technology today.

A background that is sure to make the process simpler, however, is having worked in the export field. Reinke worked at the Indiana State Department of Commerce and then did export development for a small manufacturer in South Bend. Any experience in international business would increase your likelihood of having contacts to find clients and foreign buyers.

How do you get started?
One benefit of starting in this field is that you may not find yourself with much competition. When he first started, Reinke says, "we opened up the phone book and identified the fact that no one else was doing this." But there's a challenge hidden in that benefit—you have to convince people who may be unfamiliar with export managers that your services are worthwhile. To do that, Reinke says, you need to lay out a specific timeline for clients in which you can deliver tangible results.

How do you find clients? "I don't advertise myself much.... It's a tightknit community," Reinke says. He found his first clients through trade shows, which he learned about through his previous job in export development.

Other resources

Starting an export trading company—Small Business Technology and Development Center
Small Business Exporters Association

Guy Kuwasaki Important Rules to Succeeding in Selling

Guy Kawasaki is the managing director of Garage Technology Ventures, and the ultimate decision maker for new business owners trying to make the sale of a lifetime. Here are the major tips you need:

How do you present yourself to get attention?

- I’m giving you :30 seconds to explain what you do.
- I don’t want your life story – I don’t care.
- Get to the point – this is business and investing
- Remember, we’re not dating, this is a business meeting

Follow the 10, 20, 30 Rule:

- 10 powerpoint slides
- 20 minutes – max
- The smallest font is 30 points.

What is included in the perfect pitch?

- Get to the meeting early
- :30 seconds to explain what you do
- 10/20/30 format
- Shut up and listen

How do you close?

- Don't look to have an order or agreement right off the bat... rather, look to not be eliminated as opposed to be accepted
- Do your due dilligence, and look for a second conversation with the potential investor

The Third World Entrepreneurs & The Power of Microfinancing

Loaning a few bucks to third World entrepreneurs may not sound like cutting-edge banking. Indeed, microfinance might attract more investors, as "actorvist" Tim Robbins suggested at a recent U.N. gala, if it had a hipper name, like "MiFi" or "MiPod." But Vikram Akula is using advanced technology—smart cards—to make venture capital available to more of the 800 million people in India who live on less than $2 a day, says Time Magazine.

In the hinterland, where there are few landlines, let alone ATMs, the founder of SKS Microfinance is starting to dispense loans, typically $116, on smart cards, which its loan officers had been using to record repayments electronically. The plastic approach intrigued Visa International, which is now pairing SKS with cell phone-based card readers. The cash-free system is more efficient and safer too. As Visa's emerging-markets chief, Debbie Arnold, put it, a cash-laden loan officer "might as well carry a big bull's-eye on his back." Akula, 37, has already made SKS one of the fastest-growing microlenders, having dispensed $52 million to 221,000 clients since 1998. SKS keeps its default rate below 2% by using software that provides real-time data. When he spots a red flag, he says, "we're on it like a swat team." Such transparency has attracted Silicon Valley types, with David Schappell of Unitus, a nonprofit venture-capital firm devoted to microfinance, likening SKS to the little coffee shop that became Starbucks. Microccino, anyone?

Building our future and Declaring Our Independence

DON"T BE A PASSENGER IN THIS RECESSION. TAKE ACTION EVERY DAY

What had us be so productive and achieve so much in this wonderful country? Two things: importance and urgency.

"Urgency" is a crucial component to achieving the unreasonable. Most of us need it to be able to focus. Especially when intense focus is necessary. This urgency is a key ingredient in our 90-day programs at LargerNet Entrepreneur Lab to help entrepreneurs accomplish far beyond what they thought possible.

And the recession we're experiencing is a great example of this. Our economy and businesses are now in a high state of urgency. And as history shows us, time after time, some of our most innovative and creative moments in business and in our nation started during recessions, especially the Great Depression.

It is my perspective that while it is somewhat painful to be in a recession, especially if you are out of work and cutting your lifestyle back, it is a necessary thing for us to go through and don't settle for a passenger or observer's role. It is simply the market and economy correcting itself from past ill-conceived notions, business strategies, lifestyles and mindsets.

So this is a perfect opportunity for us to step back and seriously recreate ourselves, in our businesses, careers as well as our economy. To re-examine our definitions and models for wealth and "success." For they are far beyond the material.

This high state of urgency will heighten our focus and drive and help us accelerate through our mistakes and weed out the less than successful models of business that we have been tolerating for far too long. Let's use this time to fully understand what hasn't been working for the purpose of inventing better and more sustainable business models for our communities and planet.

Take Action Every Day.

If your business seems to be either stagnant or back-peddling, take a look at your product(s) or services. When was the last time you reviewed them for their viability in today's marketplace? (And if you are in between jobs or not happy where you are working, when was the last time you looked to update your skill sets?)

In today's market with a more global economy with competition coming from more and more sources, it is absolutely crucial to constantly reinvent and reassess your business strategies.

Look to see what you can add or overhaul in your business. What kinds of people do you need to bring into the fold to make you "current"? Newly trained employees, going back to school, or hiring a highly training business coach? Attending a well put workshop.

Don't a passenger in this recession and in your own life. Come up with an action plan to start working on this week to overhaul your business, and feel free to stop by and share your ideas. Happy Action Moments!

Even Dr. Doom is Scared. Recession is expected to get worst

What you need to know about Venture Capitalists?

Venture capitalists are simple people. But they are not necessarily forthcoming, so if you think it's hard to get a "yes" out of a venture capitalist, try getting a conclusive "no." The game is to string along entrepreneurs in case something miraculous happens to make them look better.

Alas, entrepreneurs are also simple people; if they don't hear a conclusive "no," they assume the answer is yes. This communication breakdown causes much frustration for entrepreneurs.

To foster greater understanding, here are the top nine lies of venture capitalists.

1) "I liked your company, but my partners didn't." The sponsor is trying to get you to believe he's the good guy, the smart guy, that he's the one who gets it. But this is a cop-out. A true believer would get it done.

2) "If you get a lead, we'll follow." In other words, once you don't need the money, the venture capitalist would be happy to give you more. What entrepreneurs want to hear is, "If you can't get a lead, we will." That's a believer.

3) "Show us some traction, and we'll invest." This lie translates to: "I don't believe your story. However, I don't want to tell you 'no' because you may sign a huge customer."

4) "We love to co-invest with other venture capitalists." Like the sun rising and Canadians playing hockey, you can depend on the greed of venture capitalists. Greed translates to: "If this is a good deal, we want it all."

5) "We're investing in your team." Entrepreneurs hear, "Why would we fire you? We invested because of you." The venture capitalist is actually saying, "We're investing in your team as long as things go well, but if they go badly, we'll fire you."

6)"I have lots of bandwidth to dedicate to your company." Maybe the venture capitalist is talking about his T3 line, not his personal calendar. Counting board meetings, you should assume a venture capitalist will spend five to 10 hours a month on your company. That's it. So make board meetings short.

7)"This is a vanilla term sheet." There's no such thing. Do you think corporate finance attorneys are paid $400 an hour to push out vanilla term sheets? Term sheets are more like Rocky Road. That's why you need a $400-an-hour attorney.

8)"We can open up doors for you at our client companies." This is a double whammy. First, a venture capitalist can't always open up doors at client companies. Frankly, the client company might hate him. Second, even if he can open the door, you can't seriously expect the company to commit to your product.

9)"We like early-stage investing." Venture capitalists fantasize about putting $1 million into a $2 million pre-money company and end up owning 33 percent of the next Google. Why do we all know about Google's amazing ROI? The same reason we all know about Michael Jordan: Googles and Michael Jordans hardly ever happen. Venture capitalists want to invest in proven teams with proven technology in a proven market. We are remarkably risk averse, considering it's not even our money.