Introduction:
In Africa, our part of the world, time is used to define historical events. In the western world, time is a base line for planning. For Entrepreneurs in any part of the world however, time is money. Ladies and Gentlemen, I am always glad to impart my knowledge to you, the youth. For one very simple reason: You are the future of our country and you are our insurance. As you know, in all countries it's the youth of the day who work to take care of the infrastructure and the senior citizens of that country. Ghana is no exception. The burden is on you, the youth, to work and look after us in our old age on this earth. So today we will talk about how to make money and how to take our destiny in our own hands.
Who is an Entrepreneur?
Now, lets begin by defining who or what an Entrepreneur is. The dictionaries and people have come up with different definitions of an Entrepreneur. Let me give you my definition.
Entrepreneurship: Innovation – Knowledge – Opportunity – Resources – Risk - Implementation – Reward In other words an Entrepreneur, is someone who identifies an opportunity, be it an idea or a dream, organises the needed resources to convert the opportunities into marketable products or services, assumes the risk in a competitive marketplace and realises the rewards.
To achieve that we need to know, that our lives are NOT determined by what happens to us, BUT by how we react to what happens; not by what life brings to us, but by the attitudes we bring to life. In other words in life you don't get what you deserve, you get what you negotiate for. Some of these phrases have appeared often in my speeches due to its importance.
I can't emphasis enough. You need a positive approach, which causes a chain reaction of positive thoughts, positive events and positive outcomes. It is a catalyst; a spark that creates extraordinary results. That's an Entrepreneur's power of attitude. So as an Entrepreneur you don't think within the box.
You think outside the box. You don't adopt the habit of finding excuses for your failures. You find solutions to problems. You need to resolve to succeed. The greatest discovery one can make is that "nothing is impossible".
Leadership:
To be an Entrepreneur you need to be a leader. You must want to lead. Becoming an effective leader takes hard work. Leaders are not born or made. Leaders mould themselves into Leaders. Where ordinary people see obstacles, a leader sees challenges and opportunities to resolve the challenges that face the community or organisation at large, not just for himself.
They are optimistic in their approach to problem solving. The difference between management and leadership is that management is doing things right but Leadership is doing the right things. Leaders seek long-term solutions to long-term problems not short-term solutions to long-term problems.
A leader will stick with a vision and execute it even in the face of adversity because the leader has a passionate commitment to the cause he has chosen. A sense of humor is part of the art of leadership. Getting along with people and getting things done is an art of leadership.
Leadership is based on inspiration, not domination, on cooperation, and not intimidation. You do not lead by hitting people over the head, that's assault, not leadership.
The best leaders possess the ability to lead without authority. Leadership is ideas versus position. Leading with your heart, your values and your mind is a good start of leadership. Moving a company from one point to another to raise profit and create jobs is a good example of leading with your heart, your values and your mind. Leaders must earn commitment by giving it.
Leaders must possess a great deal of integrity, which cannot be learned from textbook or classroom, but in the homes. Charity begins at home! Too many people wrongly believe that leadership is really all about demanding and controlling.
True leaders are not those who strive to be first but those who are first to strive and who give their all, for the success of the team they build. They are first to see the need, envision the plan and empower the team for action.
The final summation for a leader or an Entrepreneur is bringing together the threads of a complicated theme and weaving them into a clear, convincing vision. Mastering a subject and persuading an audience to interpret it as you do is akin to the art of leadership.
Then you require discipline and willpower.
Willpower is defined as the ability to control one's self and determines one's actions. It means the firmness of your will to face challenges. Those of you who engage in sports would appreciate, what it means to have willpower, especially, when an opponent who is perceived as a better performer confronts you. You need determination, indeed willpower to engage the opponent. It is said that the difference between a successful person and others is not a lack of strength; it is not a lack of knowledge, but rather a lack of Will.
Like everything else we need Inspiration to be an Entrepreneur and not obstacles: Obstacles are those frightful things you see when you take your eyes off your goals. Your attitude in general almost always determines your outlook on life.
What inspired me to have the Entrepreneur's attitude:
1. A statement from my mother when I was deciding on a suit to wear to church.
2. The characteristics of a good document. What makes a document a good one.
3. A head teacher's statement to one of the students…"young man, you don't help the woman because she is a lady, you help the woman because you are a gentleman."
4. Being truthful to myself.
These four lessons guided me along the path to becoming an Entrepreneur. Each of us may have different inspirations. What matters is putting them to use.
We have in our mist a young up and coming Entrepreneur whose inspirations are somehow different from mine. Michael Sarpong has the golden rule and something he got out of a movie as his inspiration:
1. If you don't take care of your customer, someone else will.
2. If you spend too much time in a sugar factory, you forget the real taste of honey.
I will give you my interpretation of the second one at the end of my address. In addition to inspirations, an Entrepreneur needs to have the right mindset to identify opportunities. Many people dream of success, while others wake up and work at it. Let's belong to the latter group. We can't wait for opportunities to come to us. If you want opportunity to come to you, you will wait till hell freezes over.
Now let's take a look into few terminologies. After that we will embark on the path to make money and create wealth for ourselves. That's the only reason why we want to become Entrepreneurs.
Understanding Assets, Liabilities & Wealth
As an aspiring Entrepreneur, there are some things you need to know. You must know the difference between asset and liability and buy assets, which is NOT the number one rule but the ONLY rule to become financially independent.
Asset is something that puts money in your pocket and liability is something that takes money out of your pocket. It's as simple as that. You must also know the difference between being broke and being poor. Being broke is a temporary situation but being poor is an eternal one. And none of us here wants to be poor.
We often say, we are not interested in money or money doesn't matter. That's not true! Of course money matters. You know why? Because money is one form of power! However, what is more powerful than money is financial education. You must master the power of money, not to be afraid of it.
Money comes and goes, but if you have the education about how money works, you gain power over money and then you can begin to build wealth. Someone defined wealth as a person's ability to survive so many days forward. In other words, if you stopped working today, how long will you survive?
Just keep this in mind: the rich and wealthy buy assets and generate a cash flow, the poor only have expenses and the middle class buys liabilities but they think they are buying assets (luxury cars, clothes etc.). So it's up to us as individuals to decide which category we want to find ourselves. Buying assets to generate cash flow or buying liabilities but thinking you are buying assets.
I want to share a phrase from the first letter I received from my late elder brother when I was a student in Germany. "If you are given a fish, you have one meal, but if you know how to fish, you always have a meal," suggesting that I should teach myself how to fish. I am glad I did.
Ladies and Gentlemen, teach yourselves how to fish so you can always have a fish. That will be a good start to create wealth for yourself.
Proactive and Reactive Thinking
Ladies and gentlemen, I want to introduce you to, two concepts of how you should think as Entrepreneurs. They are "Emotion' thinking", and "head thinking". I am sure some of you have read that one time or the other. I define emotions thinking as reactive thinking and head thinking, as proactive thinking.
There is a big difference; in the way these concepts affect our daily lives. Emotions' thinking or reactive thinking is a short-term solution to a long-term problem. Looking for long-term solutions to long-term problems is the beginning of 'head thinking' or proactive thinking.
As we all know emotions are what make us human and real. So as an Entrepreneur you must be truthful about your emotions and use your mind and emotions in your favour and not against yourself. That's 'head thinking' for you.
Education has always been and will continue to be the foundation of success. Our parents expect us to become Engineers, Accountants, Medical Doctors, Lawyers etc., out of societal demands. Their concept is simply the old idea.
Get good grades and find a good job. We are always advised to work for companies, but never advised to own a company instead. Although both paths require education, the subjects of study are completely different. Unfortunately, the subject of money is not taught in the classrooms or lecture halls.
Formal education focuses on scholastic achievements, but not on financial skills. Thus we become Engineers, Accountants, and Lawyers etc. with excellent grades but still struggle financially throughout our lives because we are one skill away from the source of great wealth, which is financial skill.
Unfortunately, most of the highly educated people making financial decisions have little or no training at all on the subject of money. Otherwise they wouldn't say every day that ''we can't afford it'', instead of asking, "how can we afford it?"
So, for those with the Entrepreneurial spirit, instead of, "study hard so you can find a company to work for", the attitude should rather be study hard so you can own your own company, create jobs and help build our country. I had a formal education, an engineer, but it's my financial skills, which I am using to create wealth and not my engineering skills.
Now let's go look for money by first identifying opportunities that true Entrepreneurs don't miss.
I was watching CNN when the newscaster narrated a situation that the war in Iraq had caused. A Russian company had an order from the Iraqi Government to produce 20,000 cars at $4,000 per car. The company had manufactured 4,000 out of the 20,000 and waiting to ship the cars to Iraq when the war broke out. The question then was to whom do they ship the cars? There was no government in Iraq. In short they were stuck with the cars. For me that was an opportunity for an Entrepreneur. Because that situation opened up, what is called, a buyer's market.
One could go to the company and make an offer to take some of the cars off them. Same cars were sold in Russia for $5,000 a car. I bet if one had offered $3,000 a car for at least 500 units the company would have accepted the offer. I actually tried to get a Russian visa to first go and give an offer then turn around to the Russian Government and ask for grant for Ghana Government. The handicap I had was that there wasn't a partner in Ghana Government to discuss this with officially.
Such deals with grants are offered to a governments and not individuals. Since I didn't have a "partner" to forge ahead with this opportunity I had to give it up. I mentioned it though to someone I know in the current government but from all indications nothing happened to that opportunity.
Another example of opportunity that I identified and made use of:
Another lesson for up and coming Entrepreneurs: When an Entrepreneur dreams of generating cash flow, he first thinks of professionals whose expertise he can tap. This eliminates the fear that you may have going to unfamiliar areas. The more you understand the subject, the less your fear of taking any risks are. The best part is you are getting this advice for free. So if you want to go into real estate for example, speak to as many real estate agents and developers as you possibly can. Learn as much about the subject as you can. That will minimise your fear of risk in real estate business. Infact the same principal applies in any business venture.
There are three very important lessons you learn in real estate business: location, location, location. Why, because there is a big difference between the cost of a property and the value of a property.
I consult for quite a number of companies abroad who are into real estate and I would like to share with you some of the cash flow generating investments that I brought to their portfolio and of course for me to make money. With these companies I get paid on commission basis, which is another form of generating cash flow.
Again this demonstrates how to seek opportunities and make money in a way that most people either don't see or just overlook.
Again I picked up another opportunity from watching CNN: I had a meeting with a bank in New York, shortly after the September 11, incident. This meeting was simply to open an account with the bank, nothing else
During that time, prices of properties near ground zero had fallen drastically. Some, as much as 60% less than the value just before the incident. I gathered this information during the meeting with the bank. I also gathered on CNN that the US Federal Government had committed $20 billion to rebuild the city. New York City had also committed $4 billion for the same purpose.
Putting the 3 factors together I could see the value of the properties in that area going up when construction work started and of course when the area was back in operation in a few year's time. I enquired from the bank manager the minimum deposit the bank required to finance such a purchase. His requirements were: 20% of the value of the property, a lean over the property and the company's guarantee. These were his requirements.
I went back to London and had a discussion with one of the companies I consult for and their bank to raise the 20% in order to structure the deal. After a little persuasion we identified a collateral for the required 20%, which was the cash flow projection and the deal was structured.
A month later, before all parties completed the paper work for the purchase, the value of the property had already gone up by $50,000 even though the construction work at ground zero hadn't even started, let alone completed.
In searching for a new office in the UK for one of the companies, I came across a house, which the owner needed to sell. Normally most house sellers are more interested in a cash purchase. So before I made the offer, I arranged a facility with the bank. I reached an agreement with the bank in principle. At this stage the funds hadn't been released yet. The bank needed about a week to put the documents in place and release the funds. With that knowledge, I gave a cash offer as if I had the funds in the account, 10% less than the market value of the property.
I also gave them a very tight validity period for my offer. I didn't have the funds in my possession at the time but hearing cash buy my offer was accepted immediately. The benefit for the company was that mortgage was less than the rent they were paying at the time. In less that a year, I sold the same house with 40% profit.
Again, when the timing was right, I negotiated with the bank for a loan to purchase an apartment for another office. This time I negotiated for a loan without any down payment. This time I had only the property and the company's guarantee as collateral.
At the time, the company's yearly rent was £27,000. The mortgage for the new apartment was £15,400 a year a savings of £11,700. The company then owned a property without investing that much seed money. This saved the company £11,700 a year, not to mention the appreciation that the property will bring in the years' ahead.
Cooperation between Entrepreneurs and Government:
Ladies and Gentlemen: I want us to examine the magnitude of opportunities Entrepreneurs could bring to the negotiating table if invited by Government to help solve our national economic problems and create jobs for the working population of the country. All over the world successful Entrepreneurs are vital to the health of their national economy. A deeper understanding of their characteristics will assist in the development of more creative and effective leaders.
It's a fact that Entrepreneurs have partners, associates or establishments around the globe. I mean we have international network with other Entrepreneurs around the world. Those associates, partners and establishments out there, also have other connections in both business and political world in most part of the globe.
That's the magnitude of information database that a Government can access just by striking a good rapport with the business community without having to pay for. The whole worldwide network is available to the Government, just through interaction with local Entrepreneurs.
Yes, the Government may have some of this information that I am referring to but definitely not all of it. In my book that is an asset base which a Government can put in its asset column and start building wealth for all citizens.
This structure is what I want us to examine today. We need to pay our dues to our country Ghana. You know why? The hottest part of hell is reserved for those of us who witness crises and do nothing about it. So we Entrepreneurs and up coming Entrepreneurs should find solutions to our worsening employment situation so we don't find ourselves in the hottest part of hell.
I recall a speaker at a function I attended recently say that current government has created new set of millionaires and that's something we should all be happy about.
Now, if as a country, we need to get rid of old Entrepreneurs for new ones then I think we have a problem as a nation. We should rather add new millionaires to the old ones and not substitute one for the other. That will be progress in everybody's books.
Not too long ago we had in this country various businesses and industries; corned beef factory, tomato factory, pineapple factory, textile industries just to name a few. Where are all these factories now? They don't exist any longer.
Just talk to people who are in the timber industry today. The industry is virtually non-existent. If we cast our minds back we will remember how the timber industry was booming before the year 2001. I know of a timber company that was working on three shifts a day basis before the end of 2000. Since 2001, they have reduced their staff strength by two thirds. They have made two thirds of their staff redundant. As if that's not bad enough, the one third of the staff strength left, only work on a one-shift basis a day. I can go on and on giving you similar examples of loss of employment.
The question is: Who is suffering from the closing down of all those businesses? The ordinary Ghanaians! Loss of jobs to them!
I have given some background of the problems we have in the country pertaining to job creation, which in my opinion is due to lack of cooperation between the Government and the business community of this country. Now I am going to give you some examples of how the business community and the Government can come together and find long-term solutions to our long-term problems.
Some Methods for Wealth Creation
The Stock Exchange
The stock exchange is a very powerful mechanism for wealth creation. Some of us have invested in stocks in other countries and have started creating wealth. We can do the same here in Ghana. The question is why don't we Entrepreneurs invest our foreign exchange in Ghana as much as we invest it in other countries?
Most business people and government officials, be they Europeans, Canadians, Americans, Asians save their earnings and per diems in their respective countries. We Ghanaians are most likely to save such monies in foreign countries. Why? The answer is very simply: It's safer for us to save our monies in western countries than in our own country. We simply don't have confidence in our various Governments to enable us put our foreign exchange in our local banks. It would be a step in the right direction for any Government to put into place what it takes to encourage Ghanaians as a whole to save their monies with our local banks.
We save our monies in foreign countries for safety reasons and yet, we expect the foreigners from those countries to have confidence in our economy and come all the way here with their monies to invest in our economy?
Government versus Entrepreneurs
The main force, driving employment creation, in any country is the Government of the country. Infrastructure is undertaken and financed by the Government of the country and supported by Entrepreneurs and not the other way round. When the Government initiates infrastructural projects they "give birth" to various business activities. Various establishments participate in the process and thus create all kinds of employment for the working community. That is collaboration between government and business community. The more infrastructural projects the Government undertake the more job they creates. Employment broadens the tax base of the country.
It is common knowledge to all of us that our economy has traditionally depended on the export earnings from our cocoa, gold, mineral resources, various wood products and some non-traditional goods. To us Ghanaians, all these are solid asset, which we can use as a base to create wealth for the people of this country.
It is common knowledge that the earnings from these products cannot meet our current needs. So we must go beyond the traditional ways of solving our problems and find long-term solutions to meet our needs. We need to think outside the box and be more creative. The question is what we do with all these assets? How do we use these assets to create wealth for Ghanaians?
That's where the Entrepreneurs and the Government come together to explore various avenues to turn these assets into wealth for the citizens of this country. That is putting our assets into investments that would generate cash flow for the people of Ghana to have in their pockets to spend.
If the Government sat on a round table with local Entrepreneurs, projects like the Presidential Palace, Presidential Planes, National Health Care could have been structured completely different.
You don't borrow money to construct a Presidential Palace or buy Presidential Planes. Those two projects are not going to generate any cash flow. These will rather cost the nation money to maintain. In other words they are liabilities to the nation. As an Entrepreneur my advice would have been to use the loans for projects that would create employment and generate cash flow. Out of the cash flow we would then build the Presidential Palace and buy the Presidential Planes.
Let's examine a project, in a form of example that the business community and the Government can undertake to create jobs and wealth for the people of Ghana.
Establishment of an Agricultural Authority, which would operate like Cocobod to enable us, feed ourselves.
The aim of this Authority would be to aid our commercial farmers with valuable information that they don't readily have. The functions of this Authority would be to design a map of this country showing the kind of food stuffs which when grown in specific parts of the country would give us the maximum production of food. The Authority would also provide our farmers with storage, distribution and marketing facilities to sell their produce without depending on weather conditions.
This would in addition control waste and aid our commercial farmers to produce food in commercial quantities at affordable prices that with the minimum daily wage of our workers, every citizen of this country can afford balanced meals, quite apart the employment opportunities to the people of this country especially the youth.
I am talking of the equivalent of Cocobod for our staples, such as cassava, yam, plantain, cocoyam and sweet potatoes etc. That would be termed as finding long term solutions to our long-term problems and help get us out of the serious economic predicament. We need a vibrant and dynamic economy owned and managed by Ghanaians. With this approach, we will take our economy to one of self-sufficiency and self-dependency.
How to finance such a project: This program can be structured to be self-financing. Government can either loan money to the project or give a guarantee for its agency to raise money to implement the project, sell the information to businesses to recover cost and make some decent profit.
Now let's examine the reasons why some government companies didn't survive and how Entrepreneurs could have made them survive.
Let's take Ghana Airways as an example. I am not blaming any particular Government for the collapse of Ghana Airways. What I am doing is thinking aloud as an Entrepreneur. If any Government had gotten Entrepreneurs to sit with them at a brainstorming table to find solution to rescue the company, Ghana Airways will still be in business.
Ghana Airways at one time had routes such as: Accra-London, Accra-Düsseldorf-Hamburg, Accra-Rome, Accra-Johannesburg, New York and Accra-Baltimore and also flew to a number of other cities on the West Coast of Africa. They also had the best captains and pilots in the industry and good-natured Ghanaian and non-Ghanaian staff. With such assets Ghana Airways had no business going bust.
We don't know all the factors that collapsed Ghana Airways but what we know is enough to work with and have such a company produce a positive balance sheet. The problem could have been mismanagement or too much Government interference in the operation or a combination of both. Regardless of the reasons, if a number of Ghanaian Entrepreneurs had been invited by the Government, to a round table and sought solution, I am positive Ghana Airways would still be flying all those routes and making a decent profit.
With the quantum of assets Ghana Airways had, the company was a dream for any Entrepreneur. A lot of us Entrepreneurs, including myself, started business with far much less assets than Ghana Airways had, and still made decent profits. It would have been better for all Ghanaians to have a bit of the company in some form or the other than to have it off the screen of aviation completely. It's an unbelievable situation for an Entrepreneur to imagine such a profitable company go bust for any other reasons other than commercial reasons.
The solution to such a problem is not to create a Ministry for Aviation. Creating structures alone don't necessarily solve problems. Finding long-term solutions to long term problems would solve problems and keep such businesses in profit and in turn create wealth for the citizen of this country.
There are a whole lot of other businesses that could be established from the main core business of Ghana Airways. Examples are the catering wing of Ghana Airways and the servicing of other airlines at the airport in various forms. Ghanaians are gifted with a lot of assets. It's up to us to turn these assets into wealth for all Ghanaians. We must, above all, believe in ourselves, face our goals, and then fight as if our life depended on it. That's, what we Ghanaians need to do to create wealth for all of us as a nation.
The terrain of our lives and the strength of the foundation that we set, shape our achievements. In building the life we've imagined, we must be true to our beliefs, dare to be ethical, and strive to be honourable. For integrity, is the highest ground to which one can aspire.
Ladies and gentlemen remember the quote from the up and coming Entrepreneur, Michael Sarpong: If you spend too much time in a sugar factory you forget the real taste of honey.
What this means in simple words is: You shouldn't be myopic and stagnant. There are many ways to generate cash flow; you get yourself a guide.
Ladies and Gentlemen thank you for listening. I will be glad to answer questions from you.