Are we so badly off?

I’ve just spent several weeks travelling in Argentina. A huge and fascinating country. By all accounts it should be a wealthy country; it has heaps of resources and a well educated population. But it’s not at all well off; its economy is stuffed! There is rampant inflation, 3 tier (at least) exchange rates and everyone wants US dollars because their peso isn’t worth anything. There’s an official exchange rate, but it’s not much so they have what they call a “blue” market rate through hotels and private institutions which is a better rate and the “black” market rate from people on the main shopping streets touting the best exchange rate for $US. However, this black market rate is highly risky.  We caught a ferry across to Uruguay on a Saturday morning, it was packed. We found out later that it was Argentinians going across to get $US out of the money machines and take back and sell on the black market, or simply trade in $US. It’s so confusing.

Everyone blames the government, apparently it’s totally corrupt. They just seem to accept this as a fact of life. When I suggested to someone that a majority of people must have voted for them I got a list of stories about how the president had “bought” the country people with give-aways. E.g. they purchased the television soccer rights, so everyone could watch soccer for free on TV every week! Which in a soccer mad country, has been a major coup.

Travelling always makes me thankful to live here in New Zealand. This trip also made me realise that, no matter how much we moan about our various governments, it’s great to live in a stable and relatively simple economic environment. And while we’re still not seeing much evidence of our so called “rockstar” economy here in Wellington, there are many places where it’s so much worse.

They do make great (and cheap) wine though.

Do you have a great business idea but are worried about the risks?

I’ve met with people from several of the banks recently. Interestingly they’re out networking; they must be hunting for business. They’re finding here in Wellington that there’s just not enough going on yet. They want to lend, even coming up with some cool new ways to secure business lending (rather than relying on the family home). Apparently it’s all go in Auckland but it just hasn’t trickled through here yet, no one’s sure why, there’s lots of theories but nothing obvious. They do seem to think it triggers from the housing market being glum. If that steps up then people will do more in their businesses. I’m not sure I understand the connection but it seems to be there.

What is it going to take to get our businesses growing again?

Are people still just too nervous to plan new business ventures or growth?

If you have an idea for a new or expanded business but are just worried that it’s too risky give us a call. Risks can be mitigated with preparing a business plan and budgeting.

You have to know whether your ideas can be put into practice, and then what the likely costs and cash flows are. We’re able to help with this.

Then you can talk to the banks to help with the funding.

Have you got a Shareholders Agreement?

Following on from our previous blogs about buying or selling businesses, the importance of having a good shareholders agreement is evident.

Like wills these can be very easy to put in the too hard basket, but take a moment to think what would happen if your business partner(s) were to suddenly die or decide to sell their shares?

It isn’t all about value of shares (although having a method for valuating future sales/purchases is important) it is more about considering potential events. Even just having the discussion is great as it gives everyone a chance to establish priorities, find out if you are on the same wavelength and address any areas that may cause concern in the future. Do you have the funds/insurances in place to cover unforeseen circumstances? Do you want rules about selling shares, who to, notice period?

Even if you are already in business it isn’t too late to do a shareholders agreement.  If cost is contributing to your procrastination, the more groundwork you put in to get an understanding of your needs the easier the agreement will be for your lawyer/accountant and the lower the cost.

Parts of the conversation required can be pretty difficult but the importance cannot be stressed enough. Most people find that when they go through the process they not only learn about their partners priorities but also their own and it helps to clarify why they got into the business and what they want to achieve from it.

Give Peta or I a call and we will be happy to point you in the right direction, help start the conversation or act as an independent facilitator at a meeting of the partners.

We look forward to hearing from you