Home' Trinidad and Tobago Guardian : September 21st 2014 Contents Curtis, a single 30-year-old
messenger, works in an
office with a 100 or so other
employees. Unlike many of
his colleagues, he packs his
lunch for work and often
throws in a snack or two.
One day after his meal he tore open the wrap-
per of a treat and the smell of its contents
wafted over the adjoining cubicles.
A coworker getting a whiff leaned over the
partition and appealed for a share, offering to
pay. Since then, Curtis walks with a few extra
packs just in case someone asks. The word
got around that Curtis accepted "cash for
snacks" and people began ordering all kinds
of stuff. When making his rounds to drop off
mail he would take a box of his goodies and
often return with it empty.
Curtis explained that the extra cash he earns
comes in pretty handy when he needs spending
money. He sceptically wonders if a simple
messenger, with no more than a Standard 5
primary school education and a few dollars
in his pocket, could ever turn a tiny trade into
a million dollars.
When asked how much he pays for his
snacks and how much he sells them for, he
said this: "If I buy it for $1.00 I sell it for $1.50;
if it costs $2.00 I sell it for $3.00" adding that
every week he gets a new customer who spends
an average of $5 each day.
Nick's assessment and advice
The basic flaw: his mindset
If he continues to think sideline business,
it will always be a sideline and he would always
treat it as such. But if he formulates a vision
and believes it can turn into a millions, then
his thought can become his reality. "A tiny
mustard seed can grow into a huge tree." Armed
with a vision, a healthy drive and the belief
that it can work would enable him to see
opportunities that he would not normally pay
Successful entrepreneurs who grow their
businesses organically (gradually) often reinvest
most or all of their earnings in the early stages.
In Curtis case his profits are spent on daily
living; starving his businesses of precious cap-
For comparison: if he were to invest $1.00
in a money market account at an annual rate
of 1.0 per cent (monthly compounding of
interest earned on interest) leaving it for 20
years it would grow to $1.22. Alternatively, if
he invested the same $1.00 in a stock mutual
fund allowing the semiannual distributions to
compound also, it could grow to $4.80 in 20
years---assuming an average annual return rate
of 8.0 per cent---not bad but still not
Now if he were purchase a snack for $1.00
and sell it for $1.50 today then repeat the com-
pounding process for 20 days he would have
$3,325.26 (See Table 1).
Move the decimal point two places to the
right and his $1.00 is now $100 then his capital
at the end of 20 turns would be $332,526; not
far from his $1,000,000 target!
Whist this may not be practical in the con-
text of his present market (size and demand),
if he were to generate sales of $150 each work-
day (30 employees at $5.00 each) which
includes the start up capital of $100 plus the
50 per cent markup, he could set aside his
profit of $50 in an envelope and keep turning
the $100 over and over for 20 days until he
has $1,100 (Table 2).
At the end of a year he would have $12,100.
Now if we multiply this by a factor of 2, which
means his daily sales are now doubled to $300,
his annual nest egg would be $24,100.
For this reason many micro enterprises such
as Curtis "cash for snacks" can start off as
a simple office trade and eventually grow into
a snack shop, mini-mart or even supermarket.
If he chooses to expand beyond the confines
of his office---where he enjoys no overheads
and a guaranteed market---it is advisable for
him to do a proper business plan and evaluate
the feasibility of such a move.
(Details were modified to protect client s iden-
Nicholas Dean (Cer-Fa) is a financial coach
and mentor who is the managing director
of the Financial Coaching Centre. He can
be contacted at:
SEPTEMBER 21 • 2014 www.guardian.co.tt SUNDAY BUSINESS GUARDIAN
FINANCIAL ROAD MAP | SBG9
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