“RIGHTS OF ADMISSION RESERVED” : TIME TO BUILD

Being a progressive & constructive discussion forum, we, as always, again restrict ourselves to find solutions than to be critical – lets go back in history to clearly understand the concept of “rights of admission reserved” and at the same time establish its existence even in today’s modern era, no matter how strong we try to advocate in defiance


If we glance through ground realities in the old days, in India, all across Africa, parts of far East and most of the Central America – we know those people used to exercise great caution, not to go near “no entry zones” such as high end shopping areas, public parks, restaurants etc., we have read, seen sign boards displaying “dogs & _______ not allowed” – lets not get into this debate of making accusations, as it was an acceptable practice during the time which was originating from days of slaveryIn today’s forward looking times, we know, that the West discourage “racism” strongly, yet, there are sure signs of “after effects” in the oppressed zones, no matter how hard they try, they still lack confidence, actually seeing themselves as inferiors, less intelligent and so on – bottom-line remains, they have accepted their state of  poverty, inability to stand right next to “a white man” –

Now that question is, what is the end product of being in this state of mind for generations? some of them die poor, but most tend to rebel, get into street crimes, not to take out their frustration, but to manage food for that particular day – which means, we need to see them & treat them with kind & helpful attitude – these youngsters committing crimes, taking drugs are actually in need to our care than our hate & will to punish them – this wouldn’t help at all, instead, it would destroy our new generation, God forbid

While the affected people continue to struggle to meet ends, the West has become more richer & continue to enjoy, not any intention to suppress anyone, they are just being benefited due to gaining on availability of surplus resources & opportunities – that’s why most of us, including the writer, starts believing in distress, that the West has changed its strategy from putting up   “dogs & _______ not allowed” sign boards to making daily use consumer products &  good food so expensive that no unwanted person dare come near them – well, this is not true, problem, actually is the absence of competition, and non existence of small business operators to tap into an ever growing world economy – this quote “you can lead a horse to water, but you cant make it drink” situation across 3rd world economies is no different, opportunities are there, its upto them to stand up, and start walking – as opportunities doesn’t come to us, we have to go to them – they have to come out of their “self pity” attitude, take control of their lives, be confident and go out with a “never give up” body language – end result is guaranteed, no one would ever complain of any sign boards


Realistic/Accurate Business Forecasts | SME’s lack of understanding & Possible Imbalanced Bank Credit

This is one area small business operators find very frustrating, leave alone getting excited to find out what they should earn in the new

year, in advance. Its a shame, banks claiming to be SME specialists fail to understand the root cause of this inherent short coming in majority of their potential customers. In my opinion, problem doesn’t lie in lack of understanding on bankers part, instead, its the “lack of responsibility” attitude which is only looking to attach “any forecast” to the applicant’s file just to satisfy documentary requirements. Few things that needs to be taken care of, either on bankers or SME operators’s part with only 2 benchmarks to focus on- CAPACITY & BUSINESS IN HAND

  • finding the right capacity to delivery each month – in order to pin point a realistic number
  • once capacity is known, see past months actual performance to gauge as to what percentage of capacity, been utilized
  • check for factors responsible in “under capacity” situation
  • set realistic growth, month-wise, giving room to progress steadily in order to reach optimum capacity levels – because if someone is hitting 10 laps, knowing he/she can do 15, there is no way one can achieve 15 overnight – small steps needed to gain good momentum

All above parameters are related to understanding & setting accurate capacity levels, lets look at the other side of the coin – “business in hand”

  •  no matter what our capacity is, bottom line remains that what volume of business does one have at the beginning of each year, so as to insert actual targets
  • being in this situation, one has to work backwards – since business in hand is known upfront, we simply divide it in months – again, 2 sub benchmarks, a) we divide business in hand by our own monthly capacity to establish realistic timeline to finish each job, or b) we get restricted time line from customers, in this situation, one needs to see what’s the best possible volume achievable given our capacity available each month – this will surely save us from last minute embarrassment & penalties in the event we fail to deliver promptly

While we discuss capacity & business, its equally important to establish accurate amount of gap between what SME owners has as his/her equity and what is there to be taken in bank support – this is critical, knowing no one refuses more money coming in – however in the absence of establishing accurate capital requirements, the ability to service bank credit remains a big question mark – it is therefore imperative for bankers & SME operators to realize the need to understand business credentials, in order to ensure sustainable growth, leave alone saving bank from losing out its capital deployed – its being most negative on bankers part to try seek beefy collaterals at the time of sanctioning loans, which in most cases is either business owner’s house or his place of work – meaning, if something goes wrong God forbid, bank would try to extract the last drop that is there to come out clean, lets not discuss what would happen to the business owner & his/her family

Its only being human to realize one’s responsibility to his family, friends, business associates – I don’t think that’s too much to ask dear friends

 

Find that Vitality: Life with a Purpose

Have we ever realized why God has made kids so inquisitive? they never stop questioning until we get irritated! in all honesty whatever they ask, are all logical questions, and at times we even fail to give a satisfying reply:) the point I am trying to make here, is to make people understand that there is a reason why God make our children so curious – kids mind is most energetic, adaptable in the first few years, its the best time to nurture their raw talent, we must never bulldoze their thought process, which most of us do, unfortunately – science has proved that 75% of a child’s personality is developed by the time he/she reaches 3 years – it means these formative years are critical, they be exposed to all good knowledge, sensitivity, sense of sharing, forgiving, being happy etc

Our continuous care, attention to listen them without showing signs of frustration, take time out to play with them, read them books along with other group activities would develop them into confident, sensitive, socially conscious human beings, just the way God has created nature around us – everything is so beautifully placed, and in such great order

We go a step further, on a macro level, if we witness today’s life, everyone is running in different directions all day long, is there a firm destination that we focus on? ask yourself, do we leave home unprepared if we were to go on a journey? no, we pack all the right things needed so we don’t get stranded, so why we fail to get the same formula work for us in our daily life!

Few words with strong impact, ” being happy, content, satisfied, conscious” most people relate such blessings with money, as they feel only rich people are able to gain such a situation. This is not correct at all, we will find the answer very easily, what if we have money & there is no health? what if we have huge mansions, and no children? everything is for a special reason friends, when God is all able, we cannot pick one mistake in His infinite creations, its only natural, we also leave our fate in His Hands, all we need to do is to remain focused with unshakable faith

Having understood nature, it becomes mandatory to take ownership, and assume greater responsibility – being individuals, there is no way one is able to reach out to assist everyone, thats why The Almighty asked us to help our families, friends, neighbours first as they have right on us, it is simply inhuman if we know our dear ones are in need of our help, financial or otherwise, and if we ignore, continue to help others, either by sheer ignorance or could be deliberate – trust me, we will be questioned, for which we wouldn’t have an answer

God has sent 4 Holy Books – Zaboor, Torah, Bible & Quran – there is no change in the fundamental laws, each of these books call for equality, humility, respect, tolerance, patience, sharing of wealth amongst other many traits of being human – if we sum up only these key pre-requisites, we would understand that God expect us to help each other on the basis of love & care – the world would automatically become a living heaven, and Satan be defeated

Democracy in Development of Emerging Economies – Its role in Progress, Socially & Economically

I have been wanting to write on the subject for a while, today while reading this blog http://blogs.cfr.org/coleman/2012/05/10/mobile-technology-and-global-economic-growth/ I am writing this blog more under a reflex action situation as I couldn’t even finish reading this article

Being part of the emerging economies, having lived, worked in developed economies also, its fair to boast my knowledge & understanding when it comes to judging if the glass is half empty or otherwise. Having said this, being a motivator, as I am, I just cannot see the glass half empty, so lets build a positive outlook while identifying inherent threats and short comings – like I always say, its good to criticise when you also give solutions

Whenever one talks of democracy, things that instantly ring a bell – freedom of expression, free judiciary, accountability, public services, sharing, vote the right person & the list goes on

In all fairness, are we witnessing progress in the name of democracy? do we, as men, give freedom of expression to our women? leave along giving them right to take a decision? why cant we understand that if a Mother can carry a baby to full term, spend sleepless nights, toil the entire day, keeping our wishes on priority, making home a place worth coming back each day after work – why cant we entrust them with giving us hope to make our countries our homes! irrespective of cultures, most families in 3rd world countries give priorities to their boys when it comes to education & health, it is the mindset that we need to address, make parents believe that girls are equally important, if not better

When we talk of backbones, we never visualize how well a country would evolve, if we target youths & women – they are our backbones, no house can turn into a home without mother, wife, daughters, & boys of course – why cant we see this happening on a macro level, and ensure long term sustainability across the board

Teachers, counsellors tell us, there is no shame to learn from a junior student or a colleague, so why cant be focus on women! its high time, we address the problem in its true perspective! let our women be given respect, confidence, allow them to express their opinion, encourage them to take decisions – always remember, women are better managers by default, they are disciplined, more matured – even science has proved that women can think of atleast 3 subjects at a time, men can do only 1 🙂

Why most SME Banks are failing worldwide as an Industry?

This is no secret that banks across the globe are eyeing small medium business customers since early 90s – but most of them have or are failing to make an impact, leave alone make money on this “niche portfolio” as they call it

In my opinion, they will continue to struggle or may just bow out of the race – what is actually needed, to even make a start, is to find the right set of minds (not necessarily bankers) who understand the nature of SME business operators, their inherent shortcomings, inability to develop hifi business plans, lack of exposure of international markets – another very important ingredient that we need to look while selecting our “relationship managers” is the heart, the desire to help those aspiring entrepreneurs desperately in need of a” mentor” and not just a commercial bank

It is critical that banks first send their managers to get trained, oriented to be able to tune-up to come down and be able to sit on the ground if need be, in order to let the person feel comfortable to share his vision with his potential banking partner

Folks, please, we cannot sell a Merc without an engine, and we cannot leave our home, aiming to travel, without knowing our destination – it really doesn’t make sense to try make the targeted “SME” speak our language, it must be the other way round, we need to learn to speak their language first- now, having tuned our bankers, its time we show them the road map so they have a clear vision and a good sense of direction to make a start – 2 things need to be focused on; CUMULATIVE IMPACT & CAPACITY BUILDING

As a finance house, one should stop looking at charging hefty mark-ups which we usually do to satisfy our risk managers and secondly, knowing that the customer doesn’t have a choice so whatever we ask, he/she will agree – that’s poor judgement – there are millions of ways to secure one’s credit, instead of charging a fixed percentage, we come out as partners, as take a percentage on each turnover, and help customers to do as many turnovers as possible – it must be realized that someone who has taken the initiative to be in business with all his heart, risking way over his limits, doesn’t have to be told that its high risk business, this will only kill his motivation – responsible, humble bankers, not smart bankers, if there are, would not let their small customers fall down by making their presence felt each day by being mentors, advisers, counsellors and a guide to show the path ahead

From risk management perspective, when we are spreading, say  a million dollars in 1,000 customers to do simple trading, who also come with their seed Capital of say $1000, our risk is well spread as the customer is also carrying half of the stake, we try to make sure there is atleast 1 turnover per month  and if expected profitability is, say 20%, we ask him to let us take 3% of total capital as partners, which would fetch us 6% per turnover, under a fully asset-backed situation

We achieve 2 objectives – we help 1,000 customers to give us a cumulative annual turnover of $24 million & cumulative gross income of $4.8million out of which banks pick up $288,000 on a credit of $1,000,000 or 28.8% pa – banks who are able to understand the dynamics, can visualize the infinite potential of ensuring sustainable growth and income from this small, yet most profitable clientèle

 

 

FULLY ASSET BACKED REAL ESTATE COMPANIES: Lessons to be learned from Dubai’s recent real estate industry Crash Landing

I feel its important if I explain what asset-backed security is, so all readers would have a better understanding of the subject being written. In the past 30 odd years, financial markets have not just grown, they have ventured into many directions, to enable investors choose from a diversified mix of opportunities – while I am making readers understand the concept of asset backed investment, it may not be a bad idea to also look at one of my earlier blogs re MARGIN TRADING, which would give a very clear picture as to how one should differentiate the 2

Very briefly, margin trading is a facility, that your broker usually facilitate to make you trade with a significantly bigger number compared to what you have as your own investment. For example, if I have $5,000 of my own, and I wish to invest in property or go to the stock market, I could easily trade with assets worth upto 10 times of my money, that could give me a trade size of $50,000 – well, it does look too good to be true, but there is another side of the coin too, downside is, if your asset goes down 10% – you lose your entire capital – no in all fairness, lets agree, not to use the terms “profits & losses” – it is only fair, if we restrict ourselves to use “winning or losing” – my humble request to small investors, please don’t gamble your savings – margin trading is only good for people, institutions with deep pockets who have capacity to take delivery in the event market crashes – in case of small savers, we resort to squaring the deal in panic and end up losing our equity (partly or fully)

Coming back to asset backed securities – as the term is suggesting, we get what we pay for – meaning if we have $10,000, we buy assets worth this much only, again, it is critical that we must know/ensure if an asset does exist before we put in our money – let me give couple of examples, what if I buy shares in a company at the stock market, whose share is trading at $1.50 a share, now, this could be genuine reflection of company’s worth or could be result of smart play by brokers, irrespective of company’s actual book value – so this is a bit tricky for new comers in the stock market

As far as real estate industry goes, it is rather straight forward, we can see if the project is actually on ground or not, and if the developer’s company is over-leveraged or not (this is a completely new subject which I will explain in a separate blog) – we have to look at 2 scenarios, a) physical position of the project being looked at, in respect of civil works, various government approvals, builder’s financial standing, his name’s general reputation, past projects delivered etc, and b) we try to dig deep to find out if builder has fully paid for the land, check if the land title is free from claims, and if he has lined up financial resources to fund the construction, rather than depending on only investors money, because if he has not put in his share of capital in development in addition to his capital in the land, it gets risky to remain afloat in this situation

Asset back situation, in real estate is that we have complete match-making scenario, meaning there must be a tangible asset against each cent being invested, so there is no erosion of seed capital in a crisis situation, unlike what we had witnessed in Dubai and neighbouring small emirates like Ajman, where people were investing in high rise offices, flats, exchanging files in speculative trades, merely on a piece of land where the builder has not even started digging for foundation. Now the question is, are we going to blame the market, the broker, or the builder? lets be honest! investors knew it was a gamble, their greed at the cost of losing their livelihood, as most of them had borrowed money from banks against their salaries. Thousands of small investors had even left the country, leaving behind their cars at the airport! this is most tragic for their families, children losing their homes, schools, friends – no matter how harsh we could get on their parents