Money is a funny thing in Hollywood movies. Popular films are designed to make lots of money, not to explain prudent financial ideals to viewers. Some good ones, like The Big Short, offer a pretty accurate glimpse into financial realities. Others stick to pure fantasy. (Despite the big-money stakes, I don’t think anyone learned any sound financial planning strategies from Now You See Me 2, which was in theatres this summer and came out on DVD this month).
But even in the silliest Hollywood caper, some sound financial lessons can still sneak through – though they’re not always obvious.
When finance is your life, great stories about money are especially fascinating. It’s important to remember, of course, that movies are entertainment, not financial advice. Gordon Gekko isn’t a real person, and the SEC has been the least of Charlie Sheen’s legal concerns.
But, you could do a lot worse than follow a tip or two embedded in some of the best, most re-watchable financial movies of all time:
1. ‘Wall Street’: Greed isn’t always good
Let’s start with one of my favourites. In Oliver Stone’s Wall Street, Michael Douglas plays Gordon Gekko as the ultimate corporate raider, becoming a classic Reagan-era anti-hero in the process. In the film’s story, Gekko’s unmitigated greed catches up to him, but the real lesson is the one learned by Charlie Sheen’s character, Bud Fox. Fox spends money he doesn’t have on the big apartment, expensive dinners and fancy art to emulate Gekko. Yet his entry-level stockbroker job can’t sustain that kind of spending spree. Fox resorts to using insider trading to pay his bills, even betraying his own father in the process. And, for what? A nicer suit?
Lesson: A little greed can keep us motivated to succeed – everyone likes the perks that come with a fat wallet. But making the acquisition of money the sole reason to wake up in the morning is an act of self-sabotage.
2. ‘The Money Pit’: Don’t make acquisitions based on emotion
Tom Hanks’ and Shelley Long’s characters in The Money Pit think they’ve found the house of their dreams: They fall in love with the seller and rush into a purchase without doing their due diligence. Needless to say, it costs them – in hilarious fashion. Before long, the extensive repairs the house needs swallow all their assets whole. It’s a funny story, but sadly one that’s too true for many home-buyers.
Lesson: Always do your research and budget calculations before jumping into any big purchase. It saves a lot of regret.
3. ‘Glengarry Glen Ross’: High-pressure tactics damage both salespeople and customers
Alec Baldwin’s “Always Be Closing” speech never fails to get the blood pumping through any salesperson worth his or her salt, but Glengarry Glen Ross is ultimately the tale of high-pressure sales tactics wrecking lives on both sides of the transaction. The pressure to succeed against all odds turns the film’s sales staff into desperate men: Lying, participating in infighting, even stealing to keep their jobs.
Lesson: No job is worth compromising your dignity and integrity for “success.” By the time the movie’s characters have learned this lesson the hard way, it’s too late to recover.
4. ‘The Wolf of Wall Street’: Instant gratification is no long-term solution
Leonardo DiCaprio’s character in The Wolf of Wall Street, Jordan Belfort, is a master at selling junk stocks to clients for big commission checks. He “earns” millions by appealing to people’s greed, enriching himself and leaving his clients busted. In real life, Belfort was eventually brought down by his lies and illegal tactics, but there is a new Jordan Belfort born every minute, hoping to make you into a sucker.
Lesson: When making an investment, you can’t listen only to the things you want to hear. Challenge the people trying to sell you. Seek out advice from experts, not salespeople. If an opportunity sounds too good to be true, trust your instincts.
5. ‘The Social Network’: Safeguard your bankable ideas
Every entrepreneur dreams of hitting upon a billion-dollar idea before anyone else. Few of us do, of course, and when we do, it’s crucial to take the necessary steps to protect that idea. That was the message many of us walked away with from The Social Network, a great movie about the rise of Facebook.
The Winklevoss Twins had an incredible idea for a social networking site before such a thing even had a name. They brought Mark Zuckerberg in to help, but they never gave him a formal employment contract or specified any terms regarding intellectual property ownership or non-competition.
Lesson: Zuckerberg ran away with their idea and made a mint, while the Winklevosses scrambled to sue for a fraction of Facebook’s value. Had they been older and more experienced, perhaps they’d have known how to protect their intellectual property.
6. ‘The Big Short’: When you’re right, stick to your guns
If The Big Short taught us anything, it’s that when you’re right, you have to have a little faith and stay the course. All of the protagonists in the movie, from Steve Carrell’s jaded banker to Christian Bale’s eccentric fund manager, were told over and over again that they were wrong – that the U.S. housing market couldn’t crash. No one believed them, but they evaluated the evidence and stuck to their guns because they could see what no one else wanted to. They were vindicated in the end – some of the few who didn’t take a huge hit in the financial crash of 2008.
Lesson: To avoid ruin as they did, first, make sure you’re right. Then refuse to be convinced otherwise.
This article was originally posted here on Entrepreneur.com.
The Simple Way To Pay Wages When Your Staff Don’t Have Bank Accounts
If you have employed casual workers over the busy season, you can pay wages even if they do not have bank accounts.
At Absa Business Banking, the things that are important to you are just as important to us. We understand your business needs, which is why we have developed tailored solutions to help you where it counts. Take CashSend Plus, for example. It is a payment solution that enables you to pay workers even if they do not have bank accounts.
It is safe and secure
Your employee will receive a six-digit access code and a ten-digit reference number, so that they can verify the transaction. The money is instantly available at an Absa ATM.
You can even pay yourself
We have all lost bank cards or wallets at some point in our lives. What an inconvenience. Well, it is good to know then that you can access cash by sending it to yourself. Now, that is what we call better.
Please speak to one of our consultants or call 0860 111 123 or visit your nearest branch.
Absa Business Banking
Do better business. Prosper.
Entrepreneurial Balancing Acts with Debt
Young South African entrepreneurs face many challenges when it comes to debt-related financing. Small and medium enterprise (SME) owners typically require extensive debt financing from bank and non-bank lenders.
Young South African entrepreneurs face many challenges when it comes to debt-related financing. Small and medium enterprise (SME) owners typically require extensive debt financing from bank and non-bank lenders. Unfortunately, many South African entrepreneurs are limited in their ability to access capital markets. Among others, the major challenges facing entrepreneurs include lack of credit history, no collateral, shaky credentials, and unformulated business plans.
Regardless, SA entrepreneurs are forging ahead and using multiple resources at their disposal such as payday loan providers, non-bank lenders, family and friends, crowdfunding and other economic empowerment initiatives to raise the necessary seed capital for investment purposes. Given the staggering unemployment rate in the country (+25%), the only way out for many people appears to be entrepreneurship. The 2008 global financial crisis threw the economy for a loop, and now the hopes and dreams of many South Africans hang in the balance.
ISM Study Sheds Light on SA Entrepreneurial Pros and Cons
An intensive study conducted by the University of Cape Town’s Unilever Institute of Strategic Marketing (ISM) found that the country is experiencing ‘a crisis of aspiration’. Simply put, many South Africans are struggling to attain their career objectives in an economy that has been ravaged by corruption, mismanagement, and scandal. Despite tough economic times, South African entrepreneurs are determined to try their luck. Pressing challenges in the form of rising unemployment, and an economy mired in failure are challenging entrepreneurs to be more inventive than ever before. The most volatile component of the economic spectrum in South Africa is the middle class.
Many South African families have lived the high life, or ascended the rungs and then been knocked down a peg. This instability is creating added volatility in a country where high crime, mismanagement and political rancour pepper the scene. For many entrepreneurs, any access to credit is a godsend. Banks and non-bank providers offering personal loans, business loans, or credit card funds invariably expose themselves to debt default. For entrepreneurs, it’s important to know where to draw the line. Access to lines of credit in a crippled economy is significantly more valuable than the equivalent access in a developed economy.
How to Know when you are Overstretched as an Entrepreneur
Debt is considered a prerequisite for investment purposes. Most South Africans simply don’t have the necessary capital to start up a high-tech venture, fund a new business, or conduct marketing and advertising activity. As such, lines of credit are increasingly being used to propel business activity among SMEs – both in the formal and the informal sector. However, once debt reaches untenable levels, the tough questions need to be asked. For example, if multiple loans and multiple payments are required monthly, revenue streams need to be evaluated against expenses to gauge whether this is a feasible status quo.
Related: How To Handle Your Post-Holiday Debt
Many entrepreneurs find it difficult to manage multiple loans simultaneously, although it is necessary to acquire the capital from multiple sources. One of the ways to deal with these types of exigencies is a single loan from a low-cost lender in the form of debt consolidation loans. Simply put, these loans are provided by bank or non-bank lenders at lower interest rates than the prevailing interest rate on other lines of credit. By taking out a debt consolidation loan, the entrepreneur has more disposable income over time by not paying the higher interest on credit card debt.
Escape Debt Before Debt Consumes You
There are several other ways to know when your personal financial situation has reached critical mass. For starters, the nature of your business may require you to continue dipping into lines of credit to maintain business operations. If you don’t have the requisite discipline to stop indebting yourself, you may not be able to get out of debt. Debt consolidation is only effective insofar as you have the necessary discipline to put an end to debt financing of all business-related activity.
Credit should be used sparingly, and profits should be generated to allow your business to prosper. In a tight economic climate, costs are the bugbear that need to be attacked. Lavish trappings are unnecessary for business functionality – modest budgets, and high-quality goods and services are far more effective than window dressing at a premium.
How South Africa’s Small Businesses Plan To Invest Their Money In 2018
Here are their five areas they should focus their attention on in the next year and beyond.
Despite economic uncertainty, South Africa’s small businesses are positive about the future. In fact, our State of South African Small Business report reveals that 40% of small businesses are expecting to grow. However, to achieve growth without overextending their limited resources, small businesses need to invest wisely.
Here are their five areas they should focus their attention on in the next year and beyond.
When times are tight, companies typically reduce their marketing spend. This isn’t the case for 36% of South Africa’s small businesses. These respondents recognise marketing as a critical investment area.
They’d rather make a concerted effort to grow their customer base, than sit still and do nothing as consumer demand declines.
Without access to the latest technology, business growth can quickly stagnate. This is why 23% of South Africa’s small businesses plan to invest in up to date equipment, whether that be new machinery, mobile devices or computers.
The right investment in this area can give a business a real competitive advantage.
It can help boost profits and improve operational efficiency – both of which can help a small business withstand difficult economic conditions with greater success.
Consumers are spoiled for choice. Their needs are constantly changing and companies can’t afford to become complacent. To keep up with market demands, 22% of small businesses plan to invest in product development. Barring a few timeless classics, most products need a regular review and tweak to stay relevant and popular.
Digitisation is transforming business functions across the board. Technologies, like cloud software can take care of laborious administrative work.
This liberates employees from time-consuming tasks, enabling them to focus on more strategic work like customer retention and acquisition.
Technology has the power to improve productivity and efficiency. Which is why 18% of small businesses are going to focus their investment plans on this area of their businesses.
The customer should always be the priority. It doesn’t matter how good a product is, if there are no customers, then there’s no business. As competition increases, the user experience becomes more and more important to win over customers.
Business growth depends on happy customers and to achieve that, 18% of small businesses plan to invest in delivering better service.
All five of the above business areas are worthy investment focuses. The question is, how does a small business work out what to invest where? The only way it can invest effectively is with a full view of its company finances. A small business needs to be able to see which functions have provided the best return on investment to date.
It also needs to consider how much investment capital it has to spend. What’s more, before it makes an investment in say, marketing or product development, it must know exactly how and where the money needs to go.
The right software can help a small business access the real-time insights it needs to make better, faster financial decisions. To combat increased competition and market uncertainty, South Africa’s small business owners need access to up-to-the minute information from any device no matter where they are. An informed investment has the greatest chance of success.
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