Tag Archive for: capital

Scarcity versus Abundance

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by Don Simmons

Many of us suffer from a “scarcity” mindset in which we believe that life is a finite pie and if one person takes a big piece, there will be less for everyone.  Counter to this is an “abundance” mindset in which there is plenty available for everyone.

The Apostle Paul challenges the scarcity mindset in his discourse on sowing and reaping in 2 Corinthians 9:6-10.  As you read, you will see words like generous, abundant, abounding, increase, and enlarge—which are an obvious contrast to the limits of scarcity:

“Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. Each of you should give what you have decided in your heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work. As it is written:

‘They have freely scattered their gifts to the poor; their righteousness endures forever.’ [Ps 112:9]

Now he who supplies seed to the sower and bread for food will also supply and increase your store of seed and will enlarge the harvest of your righteousness.”

Wealth Creation: Making More Pie

What Paul seems to suggest is that giving  leads to abundant blessings so that the giver is not depleted, but rather added to. The addition should not be misunderstood to be for our own benefit, but it is given so that we can continue to bless others. The same principle can apply to harnessing the power of investing to increase the wealth in our worldwide economy. Read more

Matching A Steward Investor’s Goals with God’s Goals

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by Don Simmons

In my previous post I offered the good news of engaging in worldwide missions through investing into missional businesses.

In order to effectively move capital from where it is stored up (retirement accounts, charitable funds, savings accounts) to where it is in short supply (SMEs in emerging markets, corrupt communities, or impoverished lands), we need to reconsider our personal investment goals.

What are your investment goals?  If you are like most people, your goals probably include high financial return, minimal risk, and tax avoidance. Have you ever thought about why you have those particular goals?

What do you believe matters to God? Frequently people respond by saying that the Great Commission and the Great Commandment matter to God. Have you ever considered that your investments should be aligned with God’s objectives and His purposes since He is, in fact, the true owner of your investments?

What is the connection between our wealth and the kingdom of God?

The familiar story of Jesus’ conversation with the Rich Young Ruler, in which he asks him to sell everything and give to the poor, challenges the common blindness we exhibit when viewing the connection between our wealth and the kingdom of God.

Fiduciaries are obligated  to manage another’s resources according to the true owner’s wishes. As God’s fiduciary, managing God’s resources, we must do some hard work and think through questions like these:

1. Does my portfolio look any different than someone’s who does not proclaim Jesus as their Savior?

If we are merely investing to achieve financial returns and protect our holdings either for our own comfort or to pass on to our children, then we are not investing any differently than the majority of investors on the planet.  We cannot ignore Jesus’ teaching on Mammon in Matthew where he challenges the assumption that a person can serve both God AND Mammon. Read more

God’s Steward Investor and the Great Commission

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by Don Simmons

I want to challenge those of us who have achieved basic financial competency and have plans in place for our investments to earn financial returns. If we truly believe that God owns all of our resources, we must believe that includes our investment holdings as well.

We need to become God’s steward investor, one who is charged with managing His resources for His purposes.  He is the true owner, and we are his managers, his oikonomos. An oikonomos, in a Greek household, was the manager of the owner’s resources. As God’s oikonomos in the 21st century, the investments under our management are actually assets that belong to God himself.

An oikonomos commits capital with the expectation of furthering the kingdom of heaven on earth. These steward investors do this by seeking to achieve not only financial returns, but also positive spiritual, social, and environmental impact. A steward investor knows first and foremost that they are a fiduciary,  managing someone else’s resources.

Fulfilling the Great Commission through Investment

Inherent in the term “Business as Mission” is the word mission. Ever since Jesus sent out the seventy-two  into his harvest field, and then charged the believers gathered after His resurrection to go and make disciples of all nations, many followers of Jesus have accepted the call to go as missionaries.

Often willing to risk what’s familiar for what’s foreign, what’s comfortable for what’s complicated, what’s predictable for what’s problematic, men and women stake their lives on God’s faithfulness to go ahead of them and produce fruit from their ministry for His kingdom. Read more

God’s Steward Investor: Investing for Eternal Impact

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by Don Simmons

To the BAM Global audience: thank you for the chance to engage with you this month through a series of blogs dedicated to themes of investing God’s resources for eternal impact.

I have been a financial planner for over three decades and a follower of Jesus during my entire career.  In recent years, God has opened my eyes to truths I cannot escape regarding the role we all have to play in connecting our financial resources with God’s eternal purposes. In short, I have come to believe that we are all God’s resource managers, his fiduciaries, and as such we are to become his steward investors. Simply put, we must move beyond financial competence to proactively investing God’s resources to achieve His eternal purposes such as the Great Commission. We must not simply invest for our own temporal financial goals.

What is a Steward Investor?

A steward investor is a person who acknowledges that God owns it all and seeks to invest in a way that accords with God’s purposes.

By definition, a steward is a manager of someone else’s resources. It derives from the Greek word oikonomos, who was the manager in an ancient Greek household. A steward knew he didn’t own anything but had an obligation to manage the resources and affairs of the owner as the owner himself would.

All of our resources—financial and otherwise—have been given to us by God, the true owner. God tasks us as his stewards with managing those resources according to His values, goals, and precepts communicated in scripture.

While many of us value “good stewardship” of our finances, making sure we live on a budget, save, and give generously, most of us have not considered how to steward our investments. Read more

2 Company Leaders Look Back: Financial Planning Highs and Lows

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Read this classic blog from our Archives, first published on The BAM Review blog in November 2016 and republished for the Summer Series 2022.

 

When we have a major decision to make, we often ask those around us for input. Sometimes we follow that advice and other times we don’t. Occasionally we might look back and wish we had followed the advice we received from others. Hindsight is a beautiful thing!

Drawing on the wisdom of others can be helpful and the benefit of hindsight is illuminating. With those two things in mind, we asked a couple of well established BAM leaders for their advice about financial planning. We asked them to share what has been fruitful and has enabled them to grow companies that are doing well. We also asked them to share the lessons they’ve learned the hard way and what they would do differently in hindsight.

Hospitality Company 

Company A is a Hospitality company with 125 employees, it has two owners and was established 12 years ago.

What financial planning have you done to grow your company to the place it is today?

The growth of our company over the past five years has been quite substantial. We have seen our revenue increase 475%, and our earnings grow 540%. Though our financial planning was not the driver of that growth, it was certainly the foundation. Without the steps we have learned and taken over the years, we would not have been able to facilitate the amazing growth we have seen.  Read more

Two Company Leaders Look Back: Financial Planning Highs and Lows

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When we have a major decision to make, we often ask those around us for input. Sometimes we follow that advice and other times we don’t. Occasionally we might look back and wish we had followed the advice we received from others. Hindsight is a beautiful thing!

Drawing on the wisdom of others can be helpful and the benefit of hindsight is illuminating. With those two things in mind, we asked a couple of well established BAM leaders for their advice about financial planning. We asked them to share what has been fruitful and has enabled them to grow companies that are doing well. We also asked them to share the lessons they’ve learned the hard way and what they would do differently in hindsight.

Hospitality Company 

Company A is a Hospitality company with 125 employees, it has two owners and was established 12 years ago.

What financial planning have you done to grow your company to the place it is today?

The growth of our company over the past five years has been quite substantial. We have seen our revenue increase 475%, and our earnings grow 540%. Though our financial planning was not the driver of that growth, it was certainly the foundation. Without the steps we have learned and taken over the years, we would not have been able to facilitate the amazing growth we have seen.  Read more

Cash Flow Mishaps: Stories from BAM Practitioners

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We asked BAM practitioners to share their insights about cash flow. Here are 6 mini-stories of BAMer ‘cash flow mishaps’ or near misses!

[Read Part 1: 10 Cash Flow Tips and 10 Red Flags from BAM Practitioners]

6 Cash Flow Stories

One cash flow mishap we’ve experienced is significantly underestimating cash needs to service a period of significant growth. This can happen when long lead time raw materials are needed, with up-front payment. It can also happen when financing growth requires organisational learning and capacity building, it then takes extra time to ramp up production, and the working capital cycle is longer than expected. Another real danger is when a series of smaller mishaps all happen at the same time, for instance low quality raw materials, late delivery of materials, late payment by customers for finished products. Each of these on their own are manageable, but create a serious issue when stacked together. We have been able to develop some cashflow forecasting tools using MS Excel which give us visibility on future cash needs, including graphs, which feed into weekly reporting. This has been invaluable to us. – MH, Manufacturing, Asia

 

A few years ago I led a new initiative at our company to build a software product for retail banking. I was hoping that the recurring revenue from product sales would offset the erratic cash flows that are typical of a project-based software company. A project team of eight members spent 18 months building the product and we spent another year having a sales team sell the product. For a small company like ours the outflow of funds in this experiment resulted in a major blow to our cash flow for a couple of years. What I learned from this costly mistake is that a project oriented service company is not automatically good at being a product sales company. They are two different types of organizations with different team structures and competencies. – Joseph, IT, India/USA

Read more

10 Cash Flow Tips and 10 Red Flags from 10 BAM Practitioners

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In a truly great company, profits and cash flow become like blood and water to a healthy body: They are absolutely essential for life, but they are not the very point of life” – James Collins, Good to Great

As Jim Collins so wisely said, cash may not be the ultimate point of a company, but it is like blood to the body – essential for survival.

We asked 10 BAM practitioners to share their insights about cash flow. Read below the 10 tips they shared and also 10 ‘red flags’ – the tricky situations they have encountered where cash flow can easily trip you up.

In Part 2, we share 7 short stories of ‘Cash Flow Mishaps’ – real-life cash flow challenges that BAM practitioners have encountered

As one BAMer summed up, “Cash flow is an important indicator of how a business is doing, don’t take your eye off it!”

Cash flow tips from BAM Practitioners – Do:

1. Always watch your cash flow very carefully and plan ahead at each stage.

2. When business planning, find a cash flow projection template and someone who will force you to fill it in!

3. Use forecasting tools and technologies to help you watch and manage cash flow on an ongoing basis. Read more

Watching Your Numbers: How to Be Realistic About Your Financials

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Our panel of mentors regularly answer your practical business questions. Send us your questions!

 

Dear BAM Mentor,

I am aware of the tendency to be a bit idealistic when working through the Financials section of a Business Plan. As I start thinking about the numbers, what are the hard questions I need to ask myself – or invite others to ask?

~ Crunching the Numbers

Dear Crunching,

The financial section of a business plan – this is where the rubber hits the road! Unless the BAMer pays attention to the finances, the business will not be around for very long, and any missional impact will be cut short. 

Whether you are a business person looking to raise capital for a growing business, or a new entrepreneur looking for start-up funds, you will need to to work on your figures. You can be as enthusiastic as you like about all the potential opportunities and impacts, but unless this enthusiasm translates into numbers, based on some valid assumptions, you will be walking on very thin ice.

Over the last 10 years I have been constantly astounded by the lack of financial acumen in the BAM movement. One major challenge I’ve found in working with BAMers is getting a valid set of financial statements. This lack of acumen isn’t necessarily intentional in many cases but it certainly is prevalent. I think this is largely down to two reasons: Read more

Ask Critical Questions: Number Crunching Quickly and Responsibly

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Our panel of mentors regularly answer your practical business questions. Send us your questions!

 

Dear BAM Mentor,

I am aware of the tendency to be a bit idealistic when working through the Financials section of a Business Plan. As I start thinking about the numbers, what are the hard questions I need to ask myself – or invite others to ask?

~ Crunching the Numbers

Dear Crunching,

There always seem to be two extremes when it comes to the issue of financials in business planning. The first is what I term “magical thinking” and says, essentially, “Since I believe that God is leading in this business it is sure to succeed. Why waste time on financial plans?” The second and opposite says, “My business plan needs to look like something for a Harvard MBA project so I will be perfect on the numbers.” Both, as most extremes, are wrong.

I can fill volumes with stories of businesses that God “led” people to start that failed miserably. I can also point to businesses that either failed or failed to start in spite of incredibly deep and thorough financial analysis. However, I think we can resolve this dilemma based on some words that Jesus spoke related to discipleship:

For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it? Otherwise, when he has laid a foundation and is not able to finish, all who see it begin to mock him, saying, ‘This man began to build and was not able to finish.’ – Luke 14:28-30, ESV

The point of this passage is to make sure of some basics before you launch into following Him and, by way of extension, before you launch into business. Loosely translated, it would be something like, “Don’t launch without thinking and don’t overthink launching.” In business planning, I’d suggest the following critical questions. Read more

Financial Planning: How Do I Prepare to Present to Investors?

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by Mike Baer

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking:

  • What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me.
  • What is the market demand for this? Is it a cool idea, a “me too,” or is there a real demand? In other words, do people really need/want your product or service?
  • Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? This second set of questions is about you. Can I count on you? Read more

Important Issues to Consider in Financial Planning

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by Colleene Isaacs

Let me start by saying, I hate dealing with financials! In a perfect world, I wouldn’t have to think about or plan for the financial aspect of doing good business. Or better yet, I would have some really smart CFO-type deal with it, and be done with it. Unfortunately, as far as I know, we don’t live in that world. So just like everyone else, we have to do the financial “due diligence” (homework), necessary to do business well. There are a lot of great resources to assist as you begin your planning process, particularly when it comes to the financial matters of business. One suggestion I would make is save yourself a lot of grief, and apply a template like the “Business Model Canvas” to your planning process (see the book Business Model Generation.)  This model follows a somewhat lean startup methodology, and is a great way to visually scan and plan for all the aspects of business planning and design. 

Let’s really focus on some things you should be thinking about financially when you start the business start-up journey – a journey that is a very winding road, never a straight path!

Expect the Unexpected

A general principle is start with Plan A, but always have a back-up plan(s). You only have a limited insight into what the future will bring. You may be faced with geo-political situations, product development delays, weather, material sourcing issues, local permitting requirements and delays, transportation issues, broken equipment, etc. that you were not expecting. Any of these external elements, can severely impact planning and business execution schedules, as well as the finances required to support those activities. Just know that wherever there are opportunities for something outside your control to fail, there is a real possibility that it will.  Read more

Bootstrapping your Business vs Seeking Outside Investment

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What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Before you walk down the road of approaching an outside investor, why not consider the possibility of self-funding – also known as “bootstrapping” – your company? If you decide to bootstrap, you may be surprised at how differently you approach your business, as well as the funding process. Bootstrapping can create a healthy foundation from which to begin your business, and can provide invaluable lessons to entrepreneurs. Lessons learned from bootstrapping can include:

  • Tests your business plan – A bootstrapped business that can bring a product or service to market, develop a customer base, and create a revenue flow will help you identify the strengths and weaknesses in your plan. You now have the solid proof you need to affirm your ideas and build on them. You will have determined if the market needs or wants your product, what the market is willing to pay for your product or service, and what will be required to put the business on a path to profitability. In addition, you will have a better sense of true costs, not just cost of goods, but hidden costs that are usually not considered or may not be known when a plan is developed. Bootstrapping will also force you to consider how the product or service is being developed, and it may cause you to re-consider aspects of product development as being unnecessary for product or service launch.
  • Provides incentive for a low burn rate – Limited financial resources will greatly influence the decisions required to operate your business, while at the same time maximizing efficiencies. This may include hiring employees that can function in more than one role, outsourcing certain roles until you can afford to bring them in-house, minimizing overhead like office space (know anyone with a spare garage?), as well as using a creative approach to marketing.
  • Skills and values development – Self-funding can be a useful mechanism in helping you gauge your true passion and commitment to your business. It will help you develop a higher level of accountability as well as resourcefulness, resilience and courage. It will most certainly test your risk aversion.

Read more

How to Prepare for Investors

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What would you say were the most important things to prepare or think about as I approach a BAM investor? What are some typical pitfalls or mistakes I could avoid?

Funding for your new business is obviously crucial – no cash, no business. So let’s think about this from an investor’s perspective. What is it that interests him or her? What does he or she want to see? What questions answered?

Here’s what I’d be asking:

  • What exactly is the product or service that you intend to sell? Don’t assume that I understand it. Make it simple for me.
  • What is the market demand for this? Is it a cool idea, a “me too,” or is there a real demand? In other words, do people really need/want your product or service?
  • Who will your competitors be? How is your idea better than and different from theirs?

This first set of questions is about your viability in the market place. Is this a real business? This second set of questions is about you. Can I count on you? Read more

Tag Archive for: capital