Allowing for Extra

How do you start? Building Capital so that you can gradually become less dependent on your earning ability, seems like a game reserved for the wealthy. Advice is tricky because we have different lifeboats in a shared storm. When people talk of being “self-made”, they are often referring to whether, or not, they inherited Capital or a pre-packaged business from Mom or Dad. It is more complicated than that. Most of us have weird relationships with money. Wrapped in our sense of worth. In our relationship with our parents. In their relationship with their parents. In our politics. The advice I give is deeply wound up in my own story. Our self is a bigger container. The bubble we grew up in. Mine is based in Apartheid and Feminism. One based on inequality and gender roles. For me, starting starts with constraint. Having a firm and absolute hold on what “enough” looks like. Then not feeling like more than that is better. I wasn’t trapped in debt, and had the option of choosing a path to develop skills & knowledge to get an income. So my first steps were pragmatism, spending discipline, and delayed gratification. Building a buffer. A few months spending in the bank. Then putting the extra to work. I realise that extra is a foreign concept for most. That is what needs to change.

Marlboro Man

There is no point in being angry at God if you are an atheist. There is no one to direct the anger at. I am anationalist and an acorporatist. Not in the sense that I don’t believe in Nations and Corporations. Just that I don’t believe they are people. There are people that believe in them, and they have power to impact actions. But they are stories. Stories that influence the choices of others and create vested interests worth protecting. The tobacco industry loves high taxes and zero advertising. This stops new entrants and protects the lingering story of the old titans. Similarly the Asset Management industry wouldn’t be happy if the cost of investing fell to zero. To manage money for others requires Capital, a buffer for insecure income, and financing a stream of expenses. Needing money to make money protects those who already have money. They want the associated expenses as a barrier to entry. A way to prevent staff from getting ideas. Senior analysts don’t break away to do their own thing because they have fired enough junior analysts to know the lightning that started their careers has to hit twice. They know the emperor is wearing no clothes. They also know that winners tend to keep winning. Starting is hard. If we want real change, we need to empower starters.

Old Stories Have Power

Deafening Silence

For any business, but particularly a small business, a hiring decision is a big decision. Meeting Payroll is the primary stress of most owners I know. The caricature of fat cats is not one that resonates with my experience. Rational people will work at big Institutions where their contribution is amplified by the success of those who have come before. Most small businesses are in the survival period before significant growth kicks in. It is long term belief in potential growth that keeps the owner going. The most successful entrepreneur I have met said it took him 7 years post pulling the trigger to earn what he was getting as a salary man. And he was the definition of an outlier jumping over aligned stars. The rational approach is to be an underconfident overachiever and let someone else stress over payroll. A salary is like a bond. You are lending your labour to the owner in exchange for a predictable, consistent, income. But that income is normally pass-the-parcel. The owner has to get the money to pay you from the customer. To commit to the risk that the customer will be there. Even Big Institutions can over commit to how many parcels they can pass. Going to zero is a reality when the music stops. Silence is deafening.