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Investing in passion Thinking ahead for success

How Elon Musk is taking on big oil Is your work challenging enough? Business is like sport – master the basics and success will follow Dos and Don’ts when selecting consultants Make your seasonal business viable

It’s time you dealt with the decision maker Fifo Capital’s business partners aren’t your typical finance people. We know business can be hard enough without having tough conversations with conventional types following rigid approaches. We’re more like friendly colleagues who champion your success. Or the confidant you call to help guide you through any situation. You can talk straight with us knowing you’re in a safe zone. And the person you talk to is a decision maker, so you’ll get answers fast. When you’re ready to experience a caring and efficient approach to business finance, talk to Fifo Capital. We’re good listeners armed with modern tools for success. Contact Fifo Capital today for more information. 1300 852 556 fifocapital.com.au

specialising in solving short term finance needs fast with purpose-fit solutions and one-on-one expert consultancy. With over ten years supporting clients across all industries, our specialists work with the unique complexities of business clients, to identify finance solutions that are appropriate for both short term needs and long term sustainability. Working alongside clients’ financial professional advisers and in harmony with their existing banking facilities, our finance solutions are very often bespoke to each client and designed to fit their specific need at that point in time. Since launching in 2004, Fifo Capital has established more than 70 offices across New Zealand, Australia and the United Kingdom and provided business owners nearly $1 billion growth capital finance.


Fifo Capital is a leading provider of business finance solutions,


Marketing communications has come a long way since the Egyptians carved public notices into steel, thereby arguably inventing outdoor advertising in 2000BC. It’s a huge communication assault that sees us exposed to thousands of messages daily.

Implementing the right marketing communications mix is important to all businesses, which is why we recommend engaging the experts.

The evolution of technology has seen marketing move from oneway message blasts to a two-way dialogue space that is ultimately controlled by consumers. Digital communications have made our planet smaller yet noisier. You no longer require massive television budgets to reach the masses, but with the explosion of media channels, marketing communications is fragmented, making it harder than ever to get noticed. People are no longer simply watching or listening to traditional media such as television and radio, or reading lengthy newspaper and magazine articles. They’re engaging directly with each other and brands through multiple channels like podcasts, YouTube, Twitter, Infographics, Facebook, Instagram, Periscope, Snapchat and more. Despite change being so rapid, one marketing fundamental remains true: know thy customer. Whilst your competitors are chasing shiny

objects and developing content for every new social media channel, you can get closer to your audience and serve them better than anyone else. Take advantage of the Internet’s depth of freely available data. With all these status and usage reports available for all to access, there’s a wealth of information for smart marketers to mine. Choosing the right media channels can be easy when you know your customers’ habits. But stick to two or three channels at most, and serve those with really great content, otherwise you’ll be forever playing catch up. Next, ask “How am I adding value to my customers?” If you’re not sure or you’re not ticking the value box, it’s time to re-evaluate your business, because loyalty isn’t what it once was. Implementing the right marketing communications mix is important to all businesses, which is why we recommend engaging the experts. Work with them to get it right, and the end result is worth every penny spent. Enjoy this quarter’s Headway – it’s another good read. Nigel Thomson Fifo Capital Founder and CEO

Investing in passion


How Elon Musk is taking on big oil


Is your work challenging enough?


Business is like sport – master the basics, and success will follow


Develop a personal brand


Do’s and Don’ts on selecting consultants


5 must-have insurance policies


Life insurance: 5 common mistakes to avoid


Business is about social relationships


Make your seasonal business viable


The top reasons SMEs run out of cash


Published by Fifo Capital International Ltd. Headway magazine is published four times a year. Copyright © 2016 by Fifo Capital International Ltd. Email info@fifocapital.com. Visit www.fifocapital.com. All rights reserved.


Gaining fresh perspectives:

Investing in passion Investment doesn’t have to just be about real estate and stocks. As the number of superwealthy people increases, the value of passion investments like collector cars, jewellery, and art has become more and more significant.

What’s Passion Investment? Regular financial investment is all about corporate growth, and economic productivity. This utilitarian approach assigns value to your investment purely on the basis of what kind of economic output it can produce, rather than on the cultural or aesthetic value. Passion investment, on the other hand, works in a fundamentally different way. Luxury purchases like rare jewellery, art, and cars don’t work the way your investment in a business would. Rather, their value is defined by their rarity, quality, and what they represent culturally to the communities who appreciate them. As this value is increasingly recognised by communities of passionate investors and enthusiasts, and as global wealth grows, more people pursue these luxury purchases. This, in turn, raises the demand and the value of those items more.

A Glimpse into Passion Investing Getting a good overview of global passion investing as a whole requires a broad worldwide overview of the sale and possession of luxury goods and collectibles. The Knight Frank Luxury Investment Index (KFLII) uses a variety of other indexes to track a selected basket of collectible luxury goods, including luxury cars, art, jewellery,


and other popular passion investments in order to create that broad overview. In 2015, the value of the KFLII rose by 7%, showing that luxury investment is growing worldwide, despite a 5% drop in the value of the Financial Times Stock Exchange (FTSE 100) equities index, and an anemic 1% growth for the top end of London’s residential real estate market. Despite this healthy general growth, it’s important to keep an eye on exactly which asset classes on the KFLII are are doing exceptionally well, and which aren’t. In 2015 investors have broken numerous price records for all kinds of amazing luxury collector’s items, while some asset classes have stagnated. That’s because different types of assets attract different types of investors in different parts of the world who have a wide variety of different cultural backgrounds and interests.

Passion Investment is Diverse The first obvious example we tend to jump to when we think of high value passion investments is art, and the passionate collectors who spend

years hunting down unique pieces from their favourite artists. While that’s certainly one type of asset that passion investors might pursue, investors actually collect all kinds of high value luxury items, from gems, to wine, to musical instruments, to coins, to cars. The “best” choice is the one you’re most knowledgeable about and most comfortable with; it’s about expressing yourself through your investments. Further, it’s important to consider that different cultural and geographical factors influence what types of luxury investments are popular in different regions of the world. A sample of popular passion investment choices might include: Luxury Cars The most popular and also fastest growing passion investment today is luxury collector cars. Not only have they worked as symbols of

independence and power for a century, they’re also an accessible genre to investors from all over the world, which makes them extremely promising for the future. Some high end automakers are even beginning to roll out more off-road models to accommodate tougher roads in emerging countries, and the entertainment goals of younger investors. This is designed to feed the appetite of major luxury car aficionados in countries in the Pacific region and in Africa, where high end automobiles are far more popular than the global average. Only Europe has a higher rate of luxury car investment. Art Art might be the original passion investment, and it’s still very popular all over the world. Besides its inherent aesthetic value, art

provides a unique perspective into the times, cultures, and particular artists that produced each piece. The primary global hub for high value art collecting is still Europe, which shouldn’t come as a major surprise considering the continuing dominance of European art in the art collecting world. Yachts Yachts offer the ultimate private sanctuary for people with plenty of money and not enough time. They’re a great lifestyle investment, and are a great choice for adventurous people who want to be able to make active use of their assets. Globalising wealth is having an enormous effect on yacht ownership, and the SuperYacht Sector (boats over 24 meters) reported over 40% growth in sales ... continued page 21

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How Elon Musk is taking on big oil

In business as well as in the world at large, a few people tend to step up to oversee and catalyse major changes at pivotal moments in time. In the past, those have been government leaders, scientists, businesspeople, and inventors from all over the world. In finally bringing about the world’s conversion to clean energy and the decline of the oil industry, change is coming quickly, and the person bringing it is Elon Musk.


Even though renewables have been ripe for investment and implementation for years, we’ve largely remained stuck on oil as our primary energy source due to a lack of investment, alogn with interference by oil companies. Musk made a fortune founding PayPal, but instead of retiring on a private island, he quickly moved on to offering the cashflow solutions that renewables innovation needed to gain a foothold. While many of his ventures might look like exciting passion projects at first glance, a closer look reveals that he isn’t just developing a few isolated futuristic-sounding projects; he’s systematically taking on the oil industry’s global grip on energy.

Making electric vehicles viable

Building electric energy infrastructure for transport

Perhaps Musk’s most famous venture along with SpaceX is the new car manufacturer Tesla Motors. Unlike previous, relatively anemic electric cars, the vehicles rolling off the assembly line at Tesla easily outperform comparable traditional cars. This didn’t just prove that electric could replace the combustion engine, it also lent electric cars the prestige needed to reform their previously poor image.

The beauty of burning fuel in your vehicle is that when you run out of energy, you can simply add fuel and continue on your way. We already have gas stations dotted along every road all over the world, so travelling great distances without being stranded is no problem. Early electric vehicles had few effective options for refueling.

Of course, to really be taken seriously, electric cars needed to address one more major hurdle that gas-powered cars are incumbent and virtually unbeatable in: re-fueling.

To address this Elon Musk has gone on a nationwide construction spree in the United States. There are now 705 Supercharger stations in

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plants (usually between 8-15%). The big barrier to making this a reality is reliability; the sun isn’t always shining, but Musk, as always, is a few steps ahead.

Addressing energy storage issues In 2015, Musk announced the Powerwall. It’s a new kind of battery meant to affordably store and put out enough power to run your entire home while charging your electric car. Better modular energy storage

is an essential part of a robust solar energy grid. A system where every home is a mini power plant is very difficult to break, especially if they’re also hooked into the grid. The grid can take on excess power to charge batteries in other places that are having a low-power day.

North America, which can charge a vehicle with 170 miles of range in 30 minutes, up to the maximum 300 miles in less than an hour. That makes charging fast enough to do while you grab a bite to eat, and charging stations plentiful enough to see you across the United States without the risk of running out of juice. Tesla is already signing agreements in other countries and soon these “re-fueling” stations will be everywhere. Unfortunately, to challenge big oil, it’s important to think about where the energy that’s used to charge these new vehicles comes from.

Taking solar to a new level Electric vehicles have been criticised for decades for only making the issue


of fossil fuels less visible instead of actually solving it. The electricity used to charge an electric car would most likely come from coal, oil, or nuclear power plants, which wouldn’t solve anything. Moreover, just revolutionising transport energy would only address a small portion of our total energy consumption. Musk is looking to tackle this issue as well. He is SolarCity’s biggest investor, and is working to scale up solar energy worldwide to bring costs ever lower. Additionally, another stated goal is to decentralise the power grid. This isn’t just to support his personal libertarian philosophies, it’s also to eliminate the vast amount of electricity that is wasted in transporting power to every home from distant power

Of course, it’s unrealistic to think that everyone will be willing or able to invest to outfit their homes with this new energy infrastructure right away. However, it’s promising to be cost effective enough to make it a reasonable choice for new construction as well as for forward thinking people who are willing to wait a few years to earn their money back in energy savings. Additionally, this popularisation of solar frees other, less residential-friendly energy sources, such as wind and hydro power, to begin to address industrial energy needs. Taken to its extreme potential, Musk’s audacious push for progress could all but eliminate the roughly 70% of the world’s oil consumption that is dedicated to gasoline and diesel fuel. How long that will take is anybody’s guess, but it’s clear that it’ll be the end of the road for big oil’s energy oligarchy.

Give your business the boost it deserves Innovative short-term finance facilities designed to help businesses and start-ups get ahead. Speak with our business finance specialists about a unique way to get more cash into your bank account, without disrupting present banking arrangements. Set up a standby facility now, and only incur fees when you use it. It’s as simple as 1-2-3.




Tell us what you need.

We’ll present a nonobligation offer.

Set-up, grant access, and use.

If we can help, we’ll tell you how along with all applicable terms and charges. If we can not help, we’ll do our best to refer you to someone who can.

We’ll establish an ondemand standby finance facility for you to call on when you need it. If your circumstances change, we’ll change the facility to suit.

We will visit you, and you tell us about your business and what you need: your industry, your turnover, your customers and your finance need.

Our national Business Finance Specialists are available at all times, and are waiting for your call. Contact Fifo Capital today. 1300 852 556 fifocapital.com.au

Is your work challenging enough? When a lot of people think about their work goals, the first thing that usually comes to mind is making it out of the door as soon as possible on Friday afternoon. Many workers spend the work week dreaming about what they’ll do when they leave their place of employment. What they don’t consider is that if their career posed a worthwhile challenge, they might actually enjoy showing up.


Modern work can be a drag The modern working world was created with the industrial revolution and the increased specialisation it brought with it, but it came at a cost. Modern workers typically have highly specialised jobs that are repetitive, boring, and time-consuming while often also being very difficult. As a result, workers are stressed, unproductive, and unhappy. Only 13% of workers worldwide report that they actually enjoy their work. Ouch. These issues have been known for some time, and businesses have tried to address them by providing benefits and leisure activities at work, ranging from free gym memberships, to snacks, to unlimited vacation days and more. While these help to reduce stress marginally, they don’t address the core issue, which is that modern work is often unfulfilling to workers; it’s very difficult to love what you do. The issue is that our jobs today don’t feel like they really tie into our personal success and well-being, so they feel like a waste of time. The way to address that is to make work challenging again.

Challenge provides motivation and meaning Challenging work is work that requires ingenuity and skill to achieve a goal that’s worth pursuing. Most of our jobs today require skill and ingenuity, which makes them difficult, but they tend to lack that the sense of achievement that comes with overcoming those difficulties. That’s not because we generally don’t pursue our own goals at work. We might have performance indicators to hit, raises to earn, employee of the month awards to win, but those goals are defined by employers, not by workers themselves. Because of that, they only work for people who are interested in those things.

Defining and pursuing personal work-oriented challenges helps to make work a means to a meaningful end, and not just a place where we lose all of our precious daylight.

Making work challenging is about you The fundamental problem with our approach to making work meaningful is that our goals are defined by our employers. Employers are focused on profits and on ensuring that their workforce is productive. The incentives they set for workers are oriented around both negative and positive reinforcement, and are focused on how well the worker is producing for their employer. Because of that, the burden of making a job challenging is on workers themselves. Of course, some employers are more accommodating about this than others. Depending on the type of job you have, and what your personal life-goals are, there are a huge variety of ways to challenge yourself through your work. For example, structured programs sometimes can offer what employers themselves don’t. Chartered Accountants challenge themselves by keeping up with annual professional development learning requirements to maintain their status. This keeps them on top of their game. It’s not just about accountants, of course. People in any field can use online hubs like Coursera and Udemy to educate themselves about their industry and to update and develop their skills further to help them advance at work, or to help qualify themselves for another job. Beyond that, the sky’s the limit. You might decide to pursue a raise, a promotion, an award, a new job, industry-wide recognition, or anything else. The point isn’t the goal itself, it’s about taking control of your work life to get something that you want out of it.

Briefly... It’s important to challenge yourself in ways that’ll help you grow and develop your career the way that you personally want it to.

A good challenge provides positive motivation and direction, and helps to reframe and mitigate the stress and boredom of the modern work environment.

Often, professionals can best challenge themselves by developing their skills, educating themselves, or gaining influence in their business and their industry. At the end of the day, though, these goals could be nearly anything, and have to be defined by the individual.

The payoff The result of challenging yourself at work is more than just the sense of achievement that you get if and when you succeed. Having a goal gives you a reason to show up, and reframes your everyday work stresses as obstacles that you’ll overcome to get somewhere, rather than oppressive nuisances that exist to torment you while you’re trying to reach Friday. This altered focus will help you reduce the amount of stress you’re feeling, improve your productivity, and help you achieve your work and personal goals. So, what are you waiting for? Figure out how you can make your job work for you.

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Business is like sport – master the basics,

The key to understanding where your focus belongs can be found by examining another competitive arena: sport.

Running a business can feel overwhelming and confusing to an entrepreneur who’s just starting out, and the inherent difficulty in maintaining good oversight is one of the most important reasons that so many start-ups fail in their first few years.

Juggling all the different responsibilities that come with running a business is a monumental task. The first thing any successful business owner needs to do is to understand how every aspect, from finance to purchasing, to production, to marketing, to sales, to distribution works together to create a functioning system. This is essentially parallel to studying and understanding the rules of the game you’re trying to play.

Find your critical success factors In rugby, the biggest factors in winning the game are maintaining possession, and controlling territory. Focusing on those two issues is the top priority, because without them you probably won’t be able to achieve your purpose, which is scoring points. In business we can similarly narrow our focus. Not every business has the same critical success factors, but three


that an entrepreneur might identify for their start up are financing, teamwork, and service development.

Financing Securing solid financing in business is key to starting a reliably functioning business. Most small businesses don’t start out with massive amounts of excess capital that can be used to absorb natural fluctuations in revenue throughout the year. Getting proper financing is like turning an amateur sports team into a professional one. Professional athletes can devote their full attention to becoming the best at what they do. Similarly, having a serviceable line of credit means your business can make purchases and continue to operate effectively during slow months, or while waiting for late payments to be made. This ensures a stable work environment and gives your team the freedom to fully focus on their work.

and success will follow


Product/service development

What’s Next?

In the same way that entrepreneurs need to understand how the business operates as a whole to do your job as a business owner, employees need to understand how their own job fits in with those of the people they work with.

In sport, it’s essential to develop new tactics, train, and push the envelope to take the sport to a new level. Relying on old plays and the same old ideas is the surest way to be left behind by the competition.

Once you’ve prioritised and given the proper attention to those critical success factors, everything else will become much easier. It’s much easier to score if you already have possession of the ball, and control of the field. Furthermore, once the basics are covered, you can focus on developing more intricate plays and interesting tactics that wouldn’t have any chance of being executed properly otherwise.

That includes understanding and respecting what co-workers do, and what their strengths and weaknesses are. In short, they need to work as a team. Good teamwork allows athletes as well as your employees to effectively delegate tasks to each other and compensate for each other’s weaknesses to create a more effective whole. In business, as in sports, this allows them to operate more flexibly and with less top-down micromanagement

Achieving long-term success in business is the same. It’s only possible if your business is always committed to innovation and optimisation to ensure that it’s the best option available to your customers. As in sports, this is best done by analysing the competition, improving on it with your own ideas, and creating something new and better. The engine of progress is always running, and you have to find a way to be a part of it to avoid being left behind.

When your business’ critical success factors are being properly managed, you will be able to spend more time working to close new clients, building relationships, managing growth, and setting goals for your business that’ll help to turn it into an industry leader.

At first that might sound like a luxury, but it’s a critical factor because it’s essential to freeing time and focus for you to deal with higher-level tasks.

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Develop a personal brand Whether we like it or not, we all have an online presence. It could be your social media or LinkedIn profiles or work-related information. Maintaining a strong online brand is just as important for you as it is for any company. Here we look at tips on developing a strong personal brand.

Google yourself You won’t know exactly what information is available until you Google yourself. What key data is missing and what needs to be taken down? Many employers are now double checking the online reputations of potential employees. You will want to make sure there are no embarrassing photos or content from long since abandoned social media profiles or tagged posts from your friends.

Social media privacy settings The privacy settings on social media are constantly changing and so it’s worthwhile checking periodically that yours are correct. In this way a post that you would have preferred to stay private won’t slip through. Privacy settings are not entirely fool proof though and so when posting content to social media it’s worthwhile having this question in the back of your mind: would I be happy for outsiders to see this? Exercising some judgement just in case the privacy settings fail is a sensible precaution.

Be consistent Anytime you do anything online, you should first consider how it will contribute to your personal brand. Being consistent in your approach and overall message is an essential aspect to perfecting your personal brand.

Promote yourself All successful brands need to be promoted and that includes yours. So if you write an article or start a blog make sure that you promote it through the channels in which you have a presence so that people can find and follow it. Tweet about it or post an update in LinkedIn. In addition, guest posting on websites or blogs is a great way to develop your brand and connect with a wider target audience. Making the most of any opportunities to guest post will enhance your online brand.

Be yourself A personal brand needs to be genuine. Don’t try and be something that you are not or you’ll soon be exposed. Your brand needs to be reflective of your personality and goals. Nowadays many lifestyle bloggers include information about their personal day-to-day lives. This is potentially more difficult for corporate professionals where that sort of intimacy generally isn’t expected. So be mindful of your objectives and audience when considering including aspects of your personal life within your brand. In the digital world that we all inhabit, the importance of personal branding is now inescapable. Make sure your personal brand is one that you can be proud of.


We’re here to help. Business finance when you need it. Working capital to support and grow your business We know that the working capital your business needs to support and grow can easily exceed what other financiers can approve. And that’s where we can help, with flexible financial options from $10,000 to $1 million. We understand, because we’re business owners like you When you talk to us, you’re talking to a business owner like you. We’re a privately held finance company, which means we can be innovative in our approach and work closely with our customers.

Contact Fifo Capital today for more information. 1300 852 556 fifocapital.com.au

We’re all about keeping things simple – from a single point-of-contact who’s also the decision maker, to a 24-hours turnaround time… all with minimal paperwork. We don’t require long term contracts or property security – and it’s up to you when you choose to use our services and when to stop. All with no impact on your existing lending arrangements In fact, banks often recommend us as preferred short-term funding option. And because we work as a complementary service, there’s no need to refinance your current funding facilities.

Gaining fresh perspectives: Dos and Don’ts on From time to time most businesses require the expertise of external consultants. The varied perspectives that consultants bring to a project together with their expertise and experience can be the difference between successful completion of a project and floundering in the doldrums. But how do you make a selection when there are so many available? In this article we look at the dos and don’ts to make that process easier.

Do 1


Make sure you do a thorough background search. This will include the potential consultant’s work history, education and qualifications as well as reviewing testimony from previous clients. Find out as much information as you can so that you are making an informed choice.

Check out their client list. Is there a particular industry or field that they mainly work in? Often businesses select consultants on the basis of their expertise in a particular area and this can take you down the path of simply replicating what everyone else is doing. Sometimes it pays to look at consultants from outside your industry as they may bring different techniques and a new methodology that hasn’t been used before in your field. So try and be flexible depending on what it is you want to achieve with the consultant’s help.


Review their work. Most consultants will have some published examples of their work available. These could be articles, blogs, webinars, podcasts or YouTube videos. Check that their style and presentation is a match to your organisation.


Have a face-to-face interview. It’s essential that you first meet the consultant face to face before making a final selection. You will be working closely together and you will want to make sure that you are comfortable and can have trust in the relationship. An interview is also a good opportunity to go over some of the finer details such as terms of engagement and payment arrangements.



Be clear about the project brief. Once you have made your choice of consultant it’s important that you develop a clear project brief that identifies their roles and responsibilities. And make sure you review it on a regular basis.

Don’t 1

Go with the first consultant you come across. Time may be short, but it pays to shop

around in the marketplace so that you can be confident the consultant is a good match for you and that you have secured the best deal possible.


Skip any of these steps! It’s likely that the reason you are looking for external help in the first place is because you have an urgent need that cannot be met internally. This may well be driving you to just get on with it, but it will be a false economy if you try to curtail the selection process. Many businesses have made some very expensive mistakes because they didn’t conduct due diligence when selecting consultants.

Consultants are a necessary part of commerce. They provide a fresh perspective, helping you to achieve projects and grow as a business in ways that wouldn’t otherwise have been possible.

Taking the time to select the right consultant for your business will increase your return on investment.

selecting consultants

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5 must-have

insurance policies

Protecting your most important assets with comprehensive insurance is a no-brainer. Accidents and disasters can and do happen, and if you aren’t adequately insured, it could leave you in financial ruin. Taking steps to safeguard your earning power and possessions from unexpected and unforeseen events is, therefore, a must. But with the wide variety of insurance policies available on the market, it can be difficult to work out which are the critical ones to have. Here we identify the five most important insurance policies that everyone should have.

Life insurance Making sure that our love ones do not face financial hardship in the event of our deaths has to be a high priority for everyone. Before deciding on a policy, think about how much you earn each year and the number of years you have in the workforce, and go for a policy that will cover that income if you were to die. It’s also a good idea to include funeral costs as often this is an overlooked and expensive financial burden for loved ones at what is a very difficult time.

Long-term disability insurance Sticking your head in the sand and saying ‘it won’t happen to me’ is a foolhardy approach to what admittedly may be a remote possibility, but nevertheless is still a possibility. Instead choose a disability policy that provides enough coverage to enable you to maintain your current lifestyle even if you are no longer able to work.

Health insurance Some people see health insurance as being an optional extra, but the potential cost of not having adequate health insurance can be enormous. Even a simple visit to the GP can result in a hefty bill so imagine the many thousands that would result from surgery or a lengthy stay in hospital. That’s why it’s a must-have insurance policy.

Homeowners insurance The cost of replacing or rebuilding your home as a result of some catastrophic event could be financially ruinous, and so it’s a good


Shop around The world of insurance is highly competitive and each policy will have its own benefits, coverage and prices. It pays to shop around, but before signing up make sure that you read the small print and fully understand what’s covered and what’s not.

idea to have insurance in place that will cover you. When choosing a policy make sure that it covers the replacement of the house and all the contents plus the cost of living elsewhere while your home is being repaired.

Car insurance Car insurance is not compulsory in New Zealand; however, it’s a good idea to at least have third party insurance so that if you do cause an accident, you are covered for any damage to other cars. Sadly, accidents do happen and if you are at fault, you can find yourself facing hefty repair bills not only for your own vehicle, but also for any others involved. So even if your car is an old banger, make sure that you have adequate third party insurance as a minimum.

Life insurance

5 common mistakes to avoid If you have life insurance, then congratulations! As many as 43% of us do not have any form of life insurance. They are taking grave risks with the well-being of their families should the worst happen and they die prematurely. Life insurance should be an essential part of any insurance portfolio. But how do you choose the right one for you when there are so many options available? Avoiding the five common mistakes we identify below will help you make the right choice for your situation.


With life insurance it’s not always possible to compare like with like. There are many variations to the different policies so simply making a choice on price alone is not a good idea. Just because the policy from Company A is cheaper than that from Company B does not mean that you are getting better value for money, nor does it mean that you are getting the right cover for you.

1 Procrastination As we get older our health inevitably deteriorates. You may already be suffering with a medical condition by the time you start looking for life insurance. Not surprisingly in this scenario, your options for good cover at a good price will have also decreased. Therefore, don’t leave it too late before putting life insurance in place.

Making choices based on price


Not having enough cover Often we make the mistake of under-insuring ourselves. You will need to factor into your calculations the costs of medical care, any existing debt commitments you have as well as your inability to work. A common rule of thumb is that life insurance should provide seven to 10 times the insured person’s annual salary. Make sure you

have enough cover to protect you in the worst case scenario.


Not insuring your spouse A debilitating illness or the death of a partner can be just as devastating to the family’s finances as you are forced to take time off work to care for you partner or the children. Making sure you have adequate cover for both parties will take some of the pressure off at a very difficult time.


Not reviewing your policy Our circumstances are changing and evolving all the time and so the life insurance you purchased 15 years ago may no longer be the best choice for you. Perhaps your children have now left home or you have a bigger mortgage, whatever it may be it’s important that you regularly review your life insurance to ensure that it is still working for you.

Life insurance is not an expendable expense. Don’t be like the 43% who have no cover. Make sure you make the sensible choice and get the right life insurance to protect your family.

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Business is about social relationships


In theory we like to think of business as a series of transactions. Businesses produce goods by buying labour, equipment, and resources in exchange for money, and earn profit by selling those goods to customers. In reality, however, this is a deeply oversimplified model of how companies really succeed. In the real world, business starts and ends with relationships, and successfully managing those relationships is the secret to success. Making a business work requires some level of expertise in everything from accounting, to management, to finance, to communications, to marketing. At the end of the day, though, the secret to success boils down to successfully building and managing relationships between your business and the people who make it tick. We call these kinds of professional relationships “business relationships”, to distance them from our personal lives, but we’d like to challenge that idea and make the case that if these relationships are built properly, they aren’t as impersonal and political as that label makes them sound.

We need more than “just business” from our workers Getting employees, contractors, and vendors to give you their best effort, and to pursue the spirit of their job description rather than just the letter of it, has been the subject of countless books and endless research. Many (maybe most) of these articles, books, and experts come to the goal of building “company loyalty”, or “commitment

to the job”, because they need something more than just a worker’s desire to get paid their salary to motivate that worker. Employers aren’t really interested in having impersonal transactional relationships with the people they count on. To succeed as a business, they need employees and contractors to care about the end result beyond just their own particular role. Really caring and developing loyalty to a cause or a person is about relationships, not transactions.

Clients need businesses who care Just as businesses need their own workers to work toward the business’ best interests as a personally invested team member, clients also need that business to operate in their best interests. Building the client relationship necessary to understand and meet those needs not only means that this business will be able to provide superior service, it also transforms the business into an indispensable part of the client’s operation. This way, simple business relationships that offer just basic mutual benefits on paper can grow into powerful symbiotic partnerships that offer much more consistent and reliable benefits to both parties.

Businesses need investors and financial institutions Always choosing the financial institution that offers the cheapest credit or the fastest approvals is appealing on paper, but it doesn’t compare to the value of building personal connections with a financial expert you can trust. A business owner will always be able to get the

best service when they work with someone who they know, and who understands them and their business. A lender, or an investor, who’s personally rather than just financially invested in a business’ success will work to help that business succeed, while someone who’s trying to do business will treat it like any other transaction. Committed Business Finance partners understand the power or relationship to provide the best results for our SME customers.

Natural selection favours social businesses The reason personal relationships make for highly successful business is surprisingly intuitive. It’s a form of natural selection that perpetuates itself by virtue of its own success. A business, a lender, or an investor that understands their client very well might be able to offer support that can save that business, or just make it more successful in the long run. That client’s survival, in turn, ensures that the business retains the ongoing revenue from that client. The result is that the business is strengthened by the relationship. Similarly, employees that become personally invested in their team and their work will go above and beyond to help drive the business’ success, while an environment that discouraged this would be outcompeted by the first. The next time you make a new business connection, remember: It’s never “just” business. We need social connections with the people we rely on at work to make our businesses successful in the long run.

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Make your seasonal business viable Understanding what it takes to keep your business afloat doesn’t sound like rocket science at first glance, but not all businesses work the same way financially. Some certainly can just follow the intuitive model of figuring out how much revenue they can earn in a month, and comparing that with their costs to get an idea of their profits or losses. Seasonal businesses, however, need to take a very different approach, because sometimes revenue just stops coming in. Whether they depend on literal climatic seasons, tax season, the Christmas season, or cricket season, seasonal businesses only survive if they plan ahead and are ready to deal with poor revenues when they come. Here are a few important steps to take to help weather-proof your seasonal business.

Find cashflow solutions The most immediate question for any seasonal business is how to keep the lights on when business is slow. If you haven’t been in business for a very long time it might still be difficult to predict exactly when slow times should be expected, which can lead to cash flow problems. In a pinch, it can be very effective to turn to these strategies:


Invoice financing Invoice financing or invoice factoring is a way to get outstanding invoices paid right away as opposed to later. Your financial institution purchases your invoice from your business for most of its value and then collects the payment from the client when it comes due. At boutique cashflow finance companies, there is usually no minimum number of invoices you have to commit to selling, making it a great tool for paying your business a much-needed advance when quick cashflow solutions are needed. Free standby finance facilities Standby finance facilities are perfect for dealing with unexpected cash flow problems. Instead of trying to take out a loan when your business is running into difficulties and your credit may be damaged, you can preemptively set up a standby loan. That means your loan terms are already sorted out and ready to go, but you

don’t have to pay anything or take out the loan until you need it.

Keep investors clued in A major risk for businesses that are operating with the help of investors is losing their funding due to a loss of investor confidence when revenues slump. Losing investors during a seasonal downturn can be fatal, so it’s very important to manage their expectations well ahead of time. The only way to do that effectively is to go out of your way to educate them about how the business operates, and how it’s designed to generate profit in the long run. While many investors take steps to understand the businesses they invest in, many don’t and may panic the first time they see a major slump in revenue in a quarterly report.

Build alternative revenue streams Many seasonal businesses find a way to make ends meet by generating additional revenue through other services. The trick to making this work is to find something that complements your primary business.

For example, landscaping companies often also work as snow-removal contractors in winter, and essentially managing their clients’ outdoor environment year-round. In some cases this kind of alternate side-service can tide your company over entirely, while for other businesses it might be a partial solution that can be coupled with seasonal cost cutting measures.

Minimise off-season costs Not all seasonal businesses can generate alternative revenue streams, which means they need to push through the off season. “Pushing through”, however, doesn’t mean pretending that nothing is happening. To make it through the figurative winter, you’ll need to put your business into hibernation. Manage off-season staffing If you don’t have regular work for your staff, you’ll be forced to lay off non-essential workers to cut costs. That isn’t just a business reality, it’s also better for your employees if they have clear-cut off-seasons during which they can pursue other work. Individuals are more flexible than

businesses, and they’ll be able to support themselves better without being on call on the off chance that there will be something to do.

Price your services carefully The core point of seasonal work is that revenue is going to be irregular, and that means you’ll need to plan ahead in every respect. Seasonal businesses have to price their goods and services competitively, but also high enough to cover costs in the long term, including off-seasons. Setting low prices can undercut competitors and pay the bills while business is booming, but it will likely leave you vulnerable later. Running a seasonal business offers some unique challenges, but if you deal with them very effectively those same challenges can actually offer significant protection from wouldbe competitors. They form a natural barrier to entry, so less experienced businesses are less likely to establish themselves. This keeps the market for seasonal work relatively attractive, and certainly makes it well worth the effort to pursue a career with a seasonal business.

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The top reasons SMEs run out of cash More than half of all new businesses fail in their first year, and making it that far doesn’t mean you’re safe. Small and medium sized businesses don’t have the deep pockets that large enterprises do, which is why even short-term cash flow problems can sink an otherwise successful business.


Briefly... How can a business unexpectedly run out of cash? There are a lot of different reasons that your business could suddenly run into liquidity issues, but let’s take a look at some of the most common culprits to give you an idea of where trouble is most likely to rear its head. Unsustainable growth Surprisingly, too much success too quickly can wreak havoc on your finances. High demand for your products can overextend your ability to provide services, which means you need to build up your business’ infrastructure with more employees, more tools, more materials, and maybe more management support. If, for example, a long-time client suddenly wants to scale up their service by an order of magnitude, you might end up trying to scale your operations up part-way (as your budget allows), only to lose the client entirely because they’re now unhappy with the service you can provide with your lagging infrastructure. You won’t be able to recover the investment you made in the time you had planned, and your revenue is now even lower than before you made that investment. Clients who pay late An issue every business owner is familiar with is clients who pay late. It’s so common that entire industries are built collecting those overdue debts. Unfortunately, most SMEs don’t have time to wait for collections agencies to do their work. Businesses need reliable revenue to pay for operational costs. When a small business doesn’t get paid, things go downhill fast. Tools break and don’t get repaired, materials run out, payrolls fail, and employees leave.

Sudden loss of credit Sometimes everything will be going fine, until you get a letter in the mail letting you know that your bank is closing down your line of credit. This essentially pulls the safety net out from under your business. If you were counting on that facility to cover any expenses due to another issue (like a late payment from a client), you’re out of luck. These issues pose massive risks for SMEs all over the world, and the most important way to fight them is by understanding and making use of the financial tools available to SMEs.

What can an SME do to protect itself? There are a variety of different financial arrangements that SMEs can make with business finance firms like Fifo Capital to protect themselves from these common cash flow problems: Free standby finance facilities A standby finance facility is essentially a business loan that is ready to go, but won’t be issued until you need it. It doesn’t cost anything to set up, and you don’t have to pay anything until you use it. They’re designed to provide immediate financing exactly when you need it. They’re perfect for situations where you suddenly need a significant injection of funding for growth, or to cover an unexpected budget shortfall due to seasonal changes or a loss of credit. Invoice financing Invoice financing allows you to sell outstanding invoices to a financial institution for most of their value. They collect the payment from the client, and you can get paid within hours of issuing the invoice, instead of when it comes due.

SMEs work on tighter budgets than large companies, and that means even small financial problems can sink an unprepared business.

The most common problems that can sink otherwise good small businesses are: unsustainable growth, clients who pay late, and a sudden loss of credit.

These issues can’t be totally avoided, so SMEs need prearranged facilities that allow them to manage these kinds of cash flow problems when they occur.

There are a few different types of invoice financing depending on the kind of institution you’re working with. Large banks often require you to sell them all of your invoices for a year or more, and come with a variety of other strings attached. Boutique lenders like Fifo Capital offer much more flexibility and allow you to use invoice financing as a tool to give yourself a quick advance on your income exactly when you need it, and only when you need it. The trade-off is that the cost for every individual invoice tends to be a bit higher. Despite that, unless you plan to have most or all of your invoices financed, it’s still a much more affordable choice. The threat of running out of cash costs small business owners a lot of sleep all over the world, but they can rest easy knowing that their backs are covered if they just take a few clever preventive steps.

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Investing in passion ... continued from page 2

from 2014 to 2015. They’re especially popular in the Pacific region, where there’s plenty of beautiful coastline and open blue seas to explore. Less nautically inclined Asia, by comparison, has the lowest rates of yacht ownership in the world. Jewellery Another classic choice for passion investors is jewellery. More than nearly any other type of investment, gems and precious metals make an excellent hedge against economic volatility. Given recent political turmoil and economic events, assets that retain all of their value for an indefinite period are an excellent insurance policy against unexpected inflation and currency devaluations. Jewellery, coins, gems, and other collectibles are far more popular in Europe than anywhere else in the world, though the number of collectors worldwide is increasing rapidly. Where the world’s top 200 art collectors came from only 17 countries in 1990, 2015’s list boasts members from 36.

Private Jets A private jet, much like a yacht, isn’t just about holding or growing wealth, it’s an asset that you can put to work. Besides being a clear status symbol, private jets offer easy and convenient travel with a level of comfort and privacy that isn’t available any other way. Investors in Africa and Latin America, in general, own private jets at a far higher rate than the global average. This is a result of a number of factors, most significantly a combination of poor commercial travel infrastructure and the vast geographical distance between business and travel hubs on those continents. Wine Wine is a popular passion investment all over the world. Not only is wine relatively accessible to investors of more moderate means, wine culture also introduces a social aspect to the investment that many people find rewarding and engaging.

Luxury Spending is Growing Rapidly As emerging markets all over the globe grow and bolster the global economy, more wealthy investors are joining the ranks of passion investors, effectively growing the demand for a relatively finite supply of luxury items. While not all passion investors necessarily intend for their investments to appreciate in value over time, the rapid growth of the market in recent years is making passion investment for financial gain increasingly profitable. The car market is exploding On the KFLII, the classic cars market


has grown by 17% in the last year, and by 490% over the last decade, making it by far the fastest growing asset class on the KFLII. A Ferrari 250 GTO became the most expensive car in the world in 2014, when one was sold for over $38 million in 2014. Since then, it’s been rumoured that others of the existing 39 have traded hands at or over $40 million in private transactions between individual collectors. Besides this, Jaguar, Porsche, and McLaren all had new all-time-high prices set for their respective makes, all above $10 million. Jewel collectors are breaking records Jewellery has grown 4% in the last year, and 156% over the last 10 years. This continued upward trajectory was marked by the record 48.4 million dollar bid that The Blue Moon, a fancy vivid blue diamond, received at auction in November. This makes it the most highly valued gem or piece of jewellery in history. Art is holding its own While art might not be the fast growing juggernaut that luxury cars clearly is, it’s a timeless classic that isn’t going anywhere soon. With respectable 4% growth in the last year, and an impressive 226% in the last decade, art remains a financially viable investment. Most notably, Paul Gaugin’s When Will You Marry?, a painting of two Tahitian girls, was sold for $300 million in Qatar, making it the most expensive work of art ever sold. Another priceless work of art, Picasso’s Women of Algiers, sold for $179 million in May. Wine is growing rapidly The Knight Frank Fine Wine Icons Index showed that wine is up by 5% this year. According to Nick Martin of Wine Owners, many investment-

grade Bordeaux wines are now recovering well from the blow that was caused by the sudden drop in demand from China. Over the last decade in general wine has also performed very well, growing a total of 241% during that period. Furniture, on the other hand... Unlike nearly all other assets on the KFLII, furniture investment actually shrank by 6 percent. For passionate investors, however, that didn’t result in any serious issues. Despite this general setback, furniture secured a new record at auction when a Marc Lockheed Lounge sofa sold for $3.7 million this last April.

What About the Economy? The global economy in the past 10 years hasn’t been particularly stable with the American housing crisis in 2008, the sudden slowdown in China, and the economic crisis in the EU. Because of this, it might come as a surprise to less experienced passion investors that the luxury investment market has been positively booming during this entire period. Despite ongoing issues in established and emerging markets, wealthy collectors are continuing to thrive. Contrary to what many might expect, this is not a fluke. These types of investments typically do very well during times of economic uncertainty. This is because tangible and durable investments like jewellery, coins, cars, and paintings will appreciate in value as they get older, or at the very least retain their value without depreciating. Ultrahigh net worth individuals (UNHWIs) in Europe are much more likely to currently own a collectible than their counterparts in Asia and Latin America. Rising demand in those emerging countries as the UNHWIs

there work to stabilise their wealth is a large part of what’s driving the growth of passion investments globally. It’s a Great Time to Get Involved There are a variety of reasons that growth continues unabated and bids on these types of items break records year after year. As they get older, their history and relevance in their respective collector community grows. Furthermore, the growing number of passion investors with an interest in these items is increasing rapidly, and not just because of growing global wealth. Beyond simple economics, globalisation is driving a global cultural homogenisation that makes these traditionally western pursuits more accessible and more relevant to potential investors all over the world. Of course yachts are unlikely to become very popular in landlocked countries, and private jets will always be most popular in places where they are most practical. Other goods, however, like luxury cars, wine, precious gems, and other collectibles aren’t strongly restricted geographically, and are likely to continue rise in popularity all over the world. While this process is still ongoing, we can expect the prices on the world’s most valuable collectibles to continue to rise rapidly. Passion investing is a great way to marry your personal interests to your investment goals. If you’re not a member of the world’s super wealthy elite, you don’t have to don’t let that stop you. It might take $40 million to get your hands on a Ferrari 250 GTO, but you don’t have to start there. Look into the things you’re passionate about to see what kinds of investment opportunities might await within your means.

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When expertise counts. Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help:

• One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability.

When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital.

National Head Office Call Fifo Capital today on 1300 852 556

Fifo Capital offices Australia National Head Office L16, 390 St Kilda Road Melbourne VIC 3004 Neil McMillian, Managing Director info@fifocapital.com.au. P +61 3 9866 2930

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info@fifocapital.com.au www.fifocapital.com.au

Profile for Headway magazine

Fifo Capital Headway Magazine, Q4 2016 Australia  

Fifo Capital Headway Magazine, Q4 2016 Australia