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.
Financial Literacy Key To Business Success – Especially In A Tough Economy
What can South African SMMEs do to position themselves for success in tough economic times? Arming their people with basic financial literacy is a good place to start argues UCT Graduate School of Business Associate Professor Mark Graham.
In times of economic hardship, good financial and management skills in a business can make all the difference. According to a recent article in Business Day, international investors are sniffing about South African SMMEs that have proven themselves to be well-run during this time of subdued economic growth – and are also attractively undervalued.
Strong balance sheets and stable management in an environment of slow growth economy with low liquidity adds up to some bargain long-term investment opportunities for international consortiums it seems. Among those who have been involved in investment or buyout offers in the past few months are Clover and Interwaste.
It seems self-evident to suggest that well-run businesses attract investment and success. But what actually makes a business – of any size – well-run in the first place?
There is obviously no short answer to this; good leadership, a clear strategy and a strong and motivated workforce all play their part, but one factor that is often overlooked is financial acumen – throughout the organisation. While the accountants and members in the finance team are expected to understand the numbers, this is not always a core competency required in other departments. Yet, having a good working knowledge of finance at every decision-making level, from new managers to members of the board, can be key.
Even if people don’t need to know a lot about finance in their day-to-day job, the more conversant they are on the subject, the better off they – and the business – will be, according to Richard Ruback, a professor at Harvard Business School and the co-author of the HBR Guide to Buying a Small Business. “If you can speak the language of money, you will be more successful,” he says simply.
Financial savvy will give the marketing manager the ability to demonstrate not only that something is a good idea/product or service, but that it makes financial sense too, for example. And it will make sure that the people in the HR team understand more clearly why reducing staff churn is a good idea not only for company culture but for the bottom line as well.
A knowledge of some basic financial decision-making tools (the all-important balance-sheet, for example) and an appreciation of the difference between profitability and cash flow will ensure that non-financial managers are more likely to effectively participate in business strategy and decision-making. Someone who understands the financial statements of a business understands the business in a way that is not otherwise possible. It’s like looking beneath the hood of a car and understanding how it all fits together and why the car can move forward – or not.
Such people can more confidently identify potential problems and inefficiencies before they impact the overall financial performance, because those warnings are almost invariably reflected in the financials first – and often at departmental level. Critically, they can also help identify financial irregularities, enabling them to call out and stop fraud and corruption in its tracks.
Equipping its people with financial skills is therefore a good strategy for a business looking to position itself for growth and investment. And it makes sense for individuals too – Joe Knight, a partner and senior consultant at the Business Literacy Institute in the US and the co-author of Financial Intelligence, says that an absence of financial savvy is “career-limiting.”
Let’s not ignore the fact that there are challenges however. Finance matters tend to scare a great many people. Traditionally, these areas of knowledge carry the stigma of being impenetrable, and financial literacy is not ideally developed at early levels. According to a study by the Financial Services Board, South Africa currently has a financial literacy rate of just 51%.
This means that roughly one out of every two people is likely to prefer to abdicate from financial decision-making – leaving it to the “numbers” people. But with some intervention and training it is possible to empower individuals to decode these mysteries and get to grips with the language of finance.
All things being equal, it’s not pure luck that allows some businesses to operate well and thrive while others fail. Well-run businesses are generally run by well-informed people. In short, decision-makers who don’t understand basic financial concepts and the language of finance simply don’t know what is going on.
While the SA government is currently talking up the need for foreign direct investment to rescue the country from the economic doldrums, there is much that ordinary businesses can do to position themselves for success. And ensuring that their people are adequately equipped to understand the nuances of business through the language of finance is perhaps a good place to start.
Trade Agreement Tips That Will Save You Costs
If you are looking to benefit from trade agreements, you need to keep the following advice in mind.
Trade benefits all parties involved. When a country has scarcity of certain resources or lack the capacity to satisfy their own needs, they have the opportunity to trade the resources which they produce in surplus, for the products they need or want.
When goods are transferred from one country to another, it stimulates the economy as products and money is switched between hands. Over the years, the competitive nature of moving goods from one country to the other, negotiating prices and opening new markets has caused certain agreements to immerge to promote trade between the member countries.
A trade agreement is an arrangement between two or more nations in order for goods to move more easily between borders with mutually beneficial tariffs imposed on imports. These agreements ensure that duty tax is removed or reduced on condition that the importer and exporter provide the correct documents. This is all the more reason for traders to familiarise themselves with the current trade agreements in place.
Tip1# Know Whether You Export To Or Import From A Country With A Trade Agreement
There are a few trade agreements that you need to be aware of which will significantly cut duty tax. The Southern Africa Development Community (SADC) Free Trade Agreement (FTA) is one of them. The fifteen SADC member states included in the agreement enjoy an impressive 85% free trade on goods.
Another trade agreement commonly used by South Africans is the South African Customs Union (SACU) which allows duty tax free movements of goods. This means zero duty tax is payable on trade between these countries. Trade agreements with European countries include the SADC-EU Economic Partnership Agreement (EPA) and the SACU European Free Trade Association (EFTA). We have prepared a list of all the trade agreements as well as the countries involved here.
Tip 2# Know Which Certificate Of Origin Is Necessary For The Specific Trade Agreement
Only traders who can prove that goods were produced or processed in a member country may benefit from these agreements. This is why importers and exporters need to submit paperwork attesting that the goods were made in the country listed as the beneficiary of the trade agreement. The proof provided is called a ’Certificate of Origin’.
A certificate of origin often abbreviated to C/O or CoO is a printed form or electronic document completed by the exporter and certified by a recognised issuing body, validating that the goods in a particular export shipment have been produced, manufactured or processed in a particular country.
The exporter has to submit proof that either a) the products were wholly obtained from that country; this means all components and manufacturing originated in that country, or b) that it is sufficiently processed in the country of origin.
In other words, although some components might have been imported, the product was sufficiently transformed, or value was added in such a way that the final item can be deemed as new or original. Furthermore, if a company was registered in one country and the manufacturing plant in another, the certificate of origin would be issued from the manufacturing plant’s country. There are various certificates of origins used for different countries. Read here for more details about the different documents required to ensure you benefit from lower duty tax.
#Tip 3: Ensure The Certificate Of Origin Is Completed In The Right Manner
These documents must be completed correctly. Most of the information provided has to come from the exporter. If the wrong information has been reported, it can influence the relationship between the importer and exporter negatively.
Common mistakes when filling out a Certificate of Origin may include:
- Identifying the wrong country of origin
- Using the wrong H.S. code
- Providing an incorrect or incomplete and rather ambiguous description of the goods
- Not including a description on how the cargo is packed or reporting a total weight that does not include packaging
- Exporting goods made from imported material and not sufficiently processed to be deemed as originating from the exporting country.
A lot of information can be misrepresented on the certificate of origin. For this reason, we recommend making use of companies specialising in trade administration to ease the stress and to ensure that all the t’s are crossed and i’s are dotted.
Backing You With Smarter Tools
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You work too hard to work this hard. The good news is that you don’t have to break your back or the bank to run a successful business. Managing your business is easier when you’re using smarter tools with QuickBooks.
Since its launch over 20 years ago, QuickBooks has aimed to power prosperity for small businesses and the self-employed with services that help you with income management, expense tracking and more, allowing you to focus on growing your passion.
The new “Backing You” campaign extends this commitment to support small business owners through the challenges of business ownership – with a little help from Danny DeVito.
“The importance of small business is personal to me. At a young age, I watched both my parents and my sister build their own business from the ground up and struggle to balance family obligations with growing their businesses,” says DeVito.
“When Intuit QuickBooks approached me for this campaign, I felt this was a way that I could give back to this very important industry, show them how to make their lives easier and make them laugh along the way too.”
QuickBooks gives you a set of business tools that’ll do all the hard work for you, making sure you get the time to do what really matters to you. “Because collecting receipts is so 80s, and who has time to chase payments?” says Danny.