The title refers to a very good book about what it takes to be an entrepreneur and build a great business. The authors of the book are Anthony Tjian, Richard Harrington and Tsun-Yan Hsieh and the book is called Heart, Smarts, Guts and Luck published by Harvard Business Review Press, Boston, Mass, 2012. The authors tried to figure out the basic components of what it means to be an entrepreneur. The four attributes the authors came up with are heart, smarts, guts and luck.

Each of these attributes must be seen if the business is to be successful and it is as simple as the passion for something (heart), the ability to be able to do something about it (smarts), the guts to do (just do it) and meeting the right people at the right time to make it work (luck). Each of these attributes have to be in place to be a success, but once the attributes are in place, it seems like the stars are unfolding they way they should be. The next few blogs will be referenced from this book – it is very good one to have in your library of materials. The group also has a website.

The Heart refers to passion and purpose. It is wonderful to be passionate, it is better to have a idea what the results of the passion will take you. You have a great idea, that is wonderful, but what do you want to do with it? What achievement are you working towards. It is important to note, a survey in the book showed more than 70% started their successful business without a business plan. The business plan is needed to raise money after people can see your vision and sales/profit growth. To start with and to stay with the business day in and day out, there needs to be passion about what you are doing and why you are doing it. In theory there are other non passionate jobs you could be doing that earn you similar income.  The next part of heart is the nuance or what makes your company different and better than the competition – or why you? The nuance is the tangible proof of your passion and purpose of the company.

Heart is not lust or merely to make money from what is hot at the moment. It certainly helps to make money, however every hot market cools, then what? not interested, why would you continue unless you are driven by passion and purpose.

Linking to dividend paying stocks, besides being profitable and able to pay a dividend, it is important to read the Chairman’s message or the Principles and Values of the company. As a profitable one, the principles and values are readily seen and reflected in the Chairman and President’s messages. In many dividend paying companies the senior level of executives are well paid, why do they continue to come to work? why this company? was is the passion and purpose of the company and does it do what it says it is doing?

There are more questions than answers, till the next time – to raising questions

At this time of the year, the holiday movies are in the theaters and people tend to go to the movies during the holidays. If you want to know how Hollywood operates, a book called Moneywood by William Stadiem, St. Martin’s Press, NY, 2012 will help you understand what goes on in Hollywood. Although times change a bit, when Democrats and Republicans look for money to fund the increasing high cost of running for President, Democrats often went to Hollywood, while Republicans went to Orange County for big cheques. Hollywood was and is where the actor/actresses lived and that is where most people focus on. The book Moneywood focuses on the studio bosses who are well compensated, have large expense accounts, and move between studios retaining their positions.

Similar to most industries, Hollywood started heavily orientated to the domestic market and as time went on, people learnt diversification into the non US market or foreign markets. Although every year there will be great movies, not all movies made are good ones. Hollywood tends to go through cycles where there is a disconnect between the public and the studios of what is good and marketable to the those that are or could be avid movie attendees. Similar to most industries, the box office results are seen quicker and the costs to make, market and distribute the movies have risen. The book Moneywood focuses on the lives on those who make the decisions of what we see at the movies. If you wish to be a studio executive, having a law degree helps.

Linking to dividend paying stocks, while many in Hollywood seem to have excessive lives, when you buy a dividend paying company, the lives of the executives should be non excessive. They should have what is generally accepted  as normal lives for their job is to ensure consistency, finding innovations to remain close to the consumer and ensuring high margins to remain profitable. The studio bosses may be entertaining as some of the actors, but executives of dividend paying companies do not have to be.

There are more questions than answers, till the next time – to raising questions

You have a business which is great because you are servicing a need and making money. Another side of the business is protecting yourself from fraud – everyday there  are people who are trying to feed off your positive energy you have in order to have your money go into their pocket. Fraud protection is part of business that you need to take into account or you will have no money in your pocket. A book which helps small business not to get ripped off is by Carla Carr called Business Predators, Insomniac Press, London, 2009.

Fraud is one of those areas where it will save you and the company money, but it will not make you money. If you have never been hit with fraud, congratulations, but there are great many stories to heard. Part of the protection is simply delaying decisions, if someone wants you to make a decision in an instant, slow the process down to next week or next month. In your business, part of the process is you have to trust someone, and those doing the fraud, will go to great lengths to sound and feel very similar to the legitimate businesses. We all use the internet, it is a great tool and our lives would be different without it, but you can not assume everything on the internet is legitimate. Every year it cost less to do a website, there are free ones, information is collected and can be used. The large companies tended to collect millions of names are not necessarily concerned with yours, fraud is the opposite – it is concerned with your name.

Linking to dividend paying stocks, these are the companies which are profitable and have been in existence for a number of years. While there is fraud in various divisions of all large corporations, we have seen the large banks in the US pay billion dollar fines but are not guilty, most of the people are trying to do a honest job. As long as most people are still trying to do a honest job, owning the stocks which pay a dividend means the likelihood of avoiding fraud is very high.

There are more questions than answers, till the next time – to raising questions

The title refers to the book Decisions by Jim Treliving, Doubleday, Toronto, 2012. While there are many life lessons in the book and ideas about operating a business the focus for this column is a checklist for making decisions about money. Money in itself is a merely a exchange for goods and services. Everyone understands the concept, the more difficult aspect is when you have excess or owe  money. At some point, you can  make more money and there is a number which you do not want to be below which is an individual basis. This is why you see some people wondering if they will have enough money to live even though they have well into six figures of assets and other people seemingly have enough and their main support is the basic government pensions. In both cases, the less debt you have the more options are open to you.

Mr. Treliving checklist particularly for entrepreneurs is:

Finances are a Face-to-Face Deal. go see your advisors, your investors and creditors or do not hide behind technology. Put a face to the name.

When in Doubt (and Debt) Choose Transparency It is easy to be transparent when things are going well, it if harder when they are not going well. However the more transparent about your ideas on repayment, you schedules, what you are trying to do to repay, the better for everyone. It is usually not the money, it is the lack of information that causes concerns.

Readjust, do not Renege  When you are transparent, payment schedules can be adjusted to what is going on. Does your business have a sound financial structure? In personal life often you want to pay bills near the day received. In business does your cash flow match your expenditures? are you taking advantage of the discounts being offered?

Financial Uncertainity Breeds Ingenuity  In all businesses not everything works great, some things work better than others, what works best in your business? In Mr. Treliving’s case regarding restaurants, his business, the food was priced too low resulting in very thin margins, his solution was to raise prices and to increased quality and value that his customers recognized. The work was to maintain and exceed quality and value.

Linking to dividend paying companies, when investing in profitable companies, they should be very transparent, if they are not red flags should be waving. All companies and industries go through cycles, it is very hard not to, when doing your homework you want to know how the company fared when it was hit with a downturn in the economic cycle. If the company was not transparent and circled the wagons, it is not worth holding, unless something was clearly changed.

There are more questions than answers, till the next time – to raising questions.

The title refers to Jim Treliving’s book called Decisions, Collins, Toronto, 2012. Mr. Treliving is the co-founder of companies such as Boston Pizza and Mr. Lube as well as being involved in a host of other things he finds interesting. From watching him on CBC’s venture capital show called Dragon’s Den, he is generally seen as the nice Dragon. As December approaches January and New Year’s Resolutions – this book is a one you may wish to read.

Mr. Treliving path has gone from a police officer to multi-millionaire as a owner of a franchised restaurant chain. The path has not been a straight one, there were many twists, turns, sleepless nights and an exciting journey along the way. Looking back on the journey, Mr. Treliving believes simplicity is the key to success and his pattern of making decisions is “I make decisions about my work with my heart, about money with my head, and about people with my gut. In other words, I am emotional about work, practical about money and instinctual about people.” The outcomes are about work enthusiasm, about money being disciplined and about people loyalty trust. For example, in terms of work – he wants to be with people who love their jobs and can see both the big and small pictures. In terms of money – be rational and disciplined, and in terms of people do you want to work with them? to partner with them? do you like them?

Mr. Treliving talks about his training as a police officer helps to be able to look over a person and make a decision. From then he flushes out questions which gives the ability to affirm or change the decision. If you need help in this area, taking a course about police investigations procedures or how the police read people is something you may wish to consider, Mr. Treliving believes the skill to be invaluable and has remained a cornerstone of his decision making process.

Linking to dividend paying stocks, one of the reasons for choosing these types of stocks is they are profitable which helps you make a better decision. Everyday you are presented with many opportunities, if you start with does the company make money? has it paid and continues to pay a dividend? these questions will narrow the field and ensure a return of your investment. The capital gain will become the secondary part, yes we all want the wonderful capital gain, but if you focus on the return on your investment you can choose a healthy return with a low risk, and as a bonus, history shows all profitable companies stock will rise in value.

There are more questions than answers, till the next time – to raising questions

One of the routes where the author walks the institution is in the process of changing its walkway again. Originally, the institution had no walkway, but for walkers it was easier to walk across the lawn as a shortcut, which meant a well worn path was soon to be seen. Next the institution installed paving stones – the big square type and although a few cracked and had to be reset, the stones held up well. For the past few weeks a new brick walkway is being installed. There are a number of advantages of the brick walkway including decorative, as well as the theory is the bricks would not cause as much a runoff when it rains or they are more environmental sound. The disadvantage is cleaning the walkway is more of a chore and when the bricks become uneven after a few years, extra work has to be done to reset the bricks. The answer to which is the best one is it depends.

Linking to dividend paying stocks, it also depends on what result you wish. It is possible to buy some dividend paying stocks and double your money, most years that will not happen. The reason why it is possible is the entire market or industry has to fall in price because of outside forces, if you bought and held, the best companies including the profitable dividend ones would move back to where they were before and increase. If you want long term value for your money – the collecting of the dividends plus the capital gains will increase your investment. The dividends ensure the company is not too reckless, it ensures profits remain and in many stock market cycles – sustaining profitable companies should be worth more than companies trading on a lot of hope.

There are more questions than answers, till the next time – to raising questions.

The Big Score was written by Jacquie McNish, Doubleday, Toronto, 1998 and the names involved were Robert Friedland, Inco and the Voisey Bay nickel find . The basis of the book is a penny stock promoter who has a wonderful ability to hype the possibility of a big score, but under normal circumstances is nowhere close to getting it, however by luck is involved with the biggest nickel discovery in the world. The other cast of characters include major nickel mine operators one has held the number one spot for generations Inco and the other is the number two company (Falconbridge). There is an old Avis rent-a-care slogan called we are # 2, we try harder. Rightfully or over time, the type of individual who gets involved with different companies includes their personalities linking to the companies. The market leader, in this case, Inco, tends to be a very distinct image of who gets to be the President and what associations or clubs they tend to go to. From an outsider viewpoint, this typically means the market leader has greater access to decision makers or is seemingly very stable in their earnings – the question is not if they are profitable, but how much? The second company, in this case, Falconbridge, are seemingly nicer people, but to get the same respect as the first one, they have to be more profitable or have greater production or seemingly take on greater risk to match the number one company. The stock promoter has a function but is generally seen as the running into the grey areas of the law on a regular basis.

Linking to dividend paying stocks, while the stock promoter offers the greatest upside potential, the more likelihood of losing money, unless you are an insider, should be consider normal. From an investor point of view, the styles of management of the first and second company will be different, however both will tend to be profitable and it depends on how you like senior management of the companies. Every profitable companies go through cycles, in the case of these two mining companies, they both owned low cost mines, but Falconbridge owned more around the world and Inco’s costs were beginning to increase. When the reality set in with management of the top company, cheques books are open for business and acquisitions, till they settle into the normal habits of the top company.

There are more questions than answers, till the next time – to raising questions

The Big Score is about the discovery of a very large commercial mine in Newfoundland. Canada. The story is also about a penny stock promoter who founded the mine or staked the grounds where the ore was and is been mined. The other part of the story is the large profitable operator of mines, because finding a mine and operating a mine are two different things and no penny stock promoter wants to operate. The Big Score was written by Jacquie McNish, Doubleday, Toronto, 1998 and the names involved were Robert Friedland, Inco and Voisey Bay. At present Mr. Friedland is still involved with trying to find mines, Inco is owned by Vale and the ore at Voisey Bay is being mined.

The Big Score has many lessons for investors – one is it is very rare, but every once in a while the penny stock promoters are correct. The reason is although the large mining companies have every advantage, you never quite know what is under the earth until you drill. How the earth was formed is still a mystery and many theories are needed to discover what’s under the earth and if there are minerals in existence that justifies a mine. In most cases the answer is no. There maybe gold in many hills but not enough to mine unless your costs are very low or almost nothing. What is good for an individual is not that good for large companies.

Another lesson for dividend providing companies is in the case of Inco, they were operating under many myths. At one time Inco held over 90% of the market for nickel, they were a low cost provider and were very profitable. The profitability was decreasing as was their market share, the only thing increasing was their costs. One of their strategies was to buy and sell including taking delivery on the commodities market or being the middle man and still making money. The good thing was as when their customers demanded more nickel, the company took more deliveries, when their customers wanted less, Inco took fewer deliveries. To the casual viewer from the outside, Inco looked like it was still a market leader, when it reality it was quickly losing market share. It is important to separate myth from reality when buying your investments. Whatever the reasons why you wanted to own the company besides it pays a dividend, are the beginning of the questions you will want to ask to ensure what you believe is actually true.

There are more questions than answers, till the next time – to raising questions

What happened after WW II is an interesting book by Tom Bower called the Paperclip Conspiracy, published by Michael Joseph Ltd. London, UK, 1987. The war is over and as in tradition, the winners divide the riches of the defeated land. Fortunately in our society most of the wars are economic and it is companies getting bought and sold. Everyday it happens, although many times they are friendly takeovers, there are many unfriendly but usually no one dies. Companies get restructured, buy outs happen, the cost of the takeover goes up, communities are affected but generally no one dies. After WW II, the leaders of Russia, US and England had a great desire to ensure the new Germany would not be as powerful as it was before the war. Before the war, Germany had a  strong infrastructure, access to raw materials and a history of craftsmanship. Their schools, training, and precision engineering were all better than the rest of world. You likely have read or heard ads about their cars – BMW, Audi, VW, other countries make cars but German cars engineering is consider the best. When the war ended, Germany was bombed, there were a million things to do to bring life back to what is considered normal, within what was going on, including ensuring millions of people had something to eat, live and have clothing. At the same time countries moved manufacturing machines, files and scientists and their families to U, Russia, France and England. Each country had strengths in different industries and wanted to strengthen their industry and keep Germany’s industries in a weakened state. In Mr. Bower’s book he describes rocket engineering, tanks and fighter planes. Three critical components of fighting a war and the Germans were years ahead of the other countries in their technology. Russian MIGs planes were better than Americans for years, until the Americans caught up, the MiG were based on German engineering which the Russians took from the Germany when the war was over.

Linking to dividend paying stocks, to the victors goes the spoils, but what spoils are important? In the case of the breakup of Germany, Russia took a great deal because the other sides did not realize how good Germany was and were not that interested as they were focused on the other million things. Russia took control over a piece of land which contained many factories, the other countries wanted the resources to pay the debts, because of the war.The leaders in war, were not the best leaders in peace time. The transition from war to market economy was not something the leaders adapted to well. All dividend paying companies need to have people trying to determine how to gain resources from those companies that are the competition. All companies go through cycles and when companies have to much debt, good assets are available if you know what you are looking for. Dividend paying companies have the ability to look to the future, to weather the cycles and still be profitable and are in a position to pick up desirable assets at low prices from the competition. To do so takes homework, planning and patience.

There are more questions than answers, till the next time – to raising questions.