Have you ever thought about striking out on your own? After all, being your own boss can be an exciting prospect. However, owning a business isn’t for everyone. To be a successful entrepreneur, you must have — or develop — certain personality traits. Here are nine characteristics you should ideally possess to start and run your own business:
Entrepreneurs are enthusiastic, optimistic and future-oriented. They believe they’ll be successful and are willing to risk their resources in pursuit of profit. They have high energy levels and are sometimes impatient. They are always thinking about their business and how to increase their market share. Are you self-motivated enough to do this, and can you stay motivated for extended periods of time? Can you bounce back in the face of challenges?
2. Creativity and Persuasiveness
Successful entrepreneurs have the creative capacity to recognize and pursue opportunities. They possess strong selling skills and are both persuasive and persistent. Are you willing to promote your business tirelessly and look for new ways to get the word out about your product or service?
Company workers can usually rely on a staff or colleagues to provide service or support. As an entrepreneur, you’ll typically start out as a “solopreneur,” meaning you will be on your own for a while. You may not have the luxury of hiring a support staff initially. Therefore, you will end up wearing several different hats, including secretary, bookkeeper and so on. You need to be mentally prepared to take on all these tasks at the beginning. Can you do that?
4. Superb Business Skills
Entrepreneurs are naturally capable of setting up the internal systems, procedures and processes necessary to operate a business. They are focused on cash flow, sales and revenue at all times. Successful entrepreneurs rely on their business skills, know-how and contacts. Evaluate your current talents and professional network. Will your skills, contacts and experience readily transfer to the business idea you want to pursue?
5. Risk Tolerance
Launching any entrepreneurial venture is risky. Are you willing to assume that risk? You can reduce your risk by thoroughly researching your business concept, industry and market. You can also test your concept on a small scale. Can you get a letter of intent from prospective customers to purchase? If so, do you think customers would actually go through with their transaction?
As an entrepreneur, you are in the driver’s seat, so you must be proactive in your approaches to everything. Are you a doer — someone willing to take the reins — or would you rather someone else do things for you?
One of your responsibilities as founder and head of your company is deciding where your business should go. That requires vision. Without it, your boat will be lost at sea. Are you the type of person who looks ahead and can see the big picture?
8. Flexibility and Open-Mindedness
While entrepreneurs need a steadfast vision and direction, they will face a lot of unknowns. You will need to be ready to tweak any initial plans and strategies. New and better ways of doing things may come along as well. Can you be open-minded and flexible in the face of change?
As an entrepreneur, you won’t have room for procrastination or indecision. Not only will these traits stall progress, but they can also cause you to miss crucial opportunities that could move you toward success. Can you make decisions quickly and seize the moment?
Warren Buffett is generally considered to be the best long-term investor of all time, so it’s no wonder many people like to listen closely to Buffett’s words of wisdom, in order to apply them to their own lives. With that in mind, here are seven of the best personal finance lessons I’ve learned from Warren Buffett over the years.
1. “Someone’s sitting in the shade today because someone planted a tree a long time ago”
The lesson here is to be a forward thinker when it comes to personal finance, whether you’re talking about investing, saving, or spending. When you’re deciding whether to put some more money aside for emergencies, think of a financial emergency actually happening and how much easier your life will be if you have enough money set aside.
Similarly, few people get rich quick by investing, and most people who try end up going broke. The most certain path to wealth (and the one Buffett took) is to build your portfolio one step at a time, and keep your focus on the long run.
2. “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years”
In addition to this, one of my all-time favorite Warren Buffett quotes is “our favorite holding period is forever,” which is also one of the most misunderstood things he says. The point isn’t that Buffett only invests in stocks he’s going to buy and forget about — after all, Buffett’s company Berkshire Hathaway sells stocks regularly, and for a variety of reasons. Rather, what Buffett is saying is to invest in stable, established businesses that have durable competitive advantages. That is, approach your investments with the long term in mind, but keep an eye on them to make sure your original reasons for buying still apply.
3. “Price is what you pay; value is what you get”
When you’re buying an investment (or anything else for that matter), the price you pay and the value you receive are often two very different things. In other words, you should buy a stock if you believe its share price is less than the intrinsic value of the business — not simply because you think the price is low.
For example, if a market correction hit tomorrow and a certain stock were to fall by 10% along with the overall market, would the business inherently be worth 10% less than it is today? Probably not. Similarly, if a stock rose rapidly, it wouldn’t necessarily mean that the value of the underlying business had risen as well. Be sure you consider value and price separately when making investing decisions.
4. “Cash … is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent”
One of the reasons Berkshire Hathaway not only survives recessions and crashes, but tends to come out of them even better than it went in, is that Warren Buffett understands the value of keeping an “emergency fund.” In fact, when the market was crashing in 2008, Berkshire had enough cash on hand to make several lucrative investments, such as its purchase of Goldman Sachs warrants.
Granted, Berkshire Hathaway’s rainy-day fund is probably a bit bigger than yours; Buffett insists on keeping a minimum of $20 billion in cash at all times, and the current total is around $85 billion. However, the same applies to your own financial health. If you have a decent stockpile of cash on the sidelines, you’ll be much better equipped to deal with whatever financial challenges and opportunities life throws at you.
5. “Risk comes from not knowing what you’re doing”
In Buffett’s mind, one of the best investments you can make is in yourself and the knowledge you have. This is why Buffett spends hours of every day reading, and has done so for most of his life. The better educated you are on a topic, whether it’s investing or anything else, the better equipped you’ll be to make wise decisions and avoid unnecessary risks. As Buffett’s partner Charlie Munger has advised: “Go to bed smarter than when you woke up.”
6. Most people should avoid individual stocks
This may seem like strange advice coming from Warren Buffett, since he’s widely regarded as one of the best stock-pickers of all time.
However, Buffett has said on several occasions that the best investment for most people is a basic, low-cost S&P 500 index fund, like the one he is using in a bet to outperform a basket of hedge funds. The idea is that investing in the S&P 500 is simply a bet on American business as a whole, which is almost certain to be a winner over time.
To be clear, Buffett isn’t against buying individual stocks if you have the time, knowledge, and desire to do it right. He’s said that if you have six to eight hours per week to dedicate to investing, individual stocks can be a smart idea. If not, you should probably stick with low-cost index funds.
7. Remember to give back
Warren Buffett is a co-founder of and participant in The Giving Pledge, which encourages billionaires to give their fortunes away. Buffett plans to give virtually all of his money to charity, and since he signed the pledge, he has given away billions of dollars’ worth of his Berkshire shares to benefit various charitable organizations.
Buffett once said, “If you’re in the luckiest one percent of humanity, you owe it to the rest of humanity to think about the other 99 percent.” And even if you’re not a member of the 1%, it’s still important to find ways to give back.
In its cover article last week, The Economist (a British publication), suggested there is not enough competition among American companies. It pointed out:
“Aggregate domestic profits are at near-record levels relative to GDP… High profits might be a sign of brilliant innovations or wise long-term investments were it not for the fact that they are also suspiciously persistent. A very profitable American firm has an 80 percent chance of being that way 10 years later. In the 1990s the odds were only about 50 percent.”
At the end of last week, U.S. headlines indicated concern about declining corporate profits:
Consumers prop up U.S. economy, but profits under pressure
S. Fourth-Quarter GDP Revised Up to 1.4% Growth but Corporate Profits Fall
Corporate profits fall in 2015 for first time since Great Recession
S. Corporate Profits Fall 8.1% in 4th Quarter
So, are U.S. companies experiencing record profits or are they in trouble?
Last week’s press release from the Bureau of Economic Analysis indicated corporate profits (after inventory valuation and capital consumption adjustments) declined from the third quarter of 2015 to the fourth quarter of 2015; hence, the headlines.
However, a one-quarter decline doesn’t provide a complete picture of the health of corporate America. As CFO.com pointed out, over the full year, corporate profits were up 3.3 percent year-to-year.
Trading Economics offered additional context. From 1950 through 2015, U.S. corporate profits averaged about $395 billion annually. Profits hit a record low for that period, $14 billion, during the first quarter of 1951. Profits rose to an all-time high of about $1.64 trillion during the third quarter of 2014.
Fourth quarter’s profits of $1.38 trillion remain well above that average.
Data as of 3/24/16
Standard & Poor’s 500 (Domestic Stocks)
Dow Jones Global ex-U.S.
10-year Treasury Note (Yield Only)
Gold (per ounce)
Bloomberg Commodity Index
DJ Equity All REIT Total Return Index
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT Total Return Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com, London Bullion Market Association.
WASHINGTON—As the Obama administration works to expand economic relations with Cuba, it is competing for influence with a familiar rival: China.
Since the White House embarked on restoring relations with Cuba—an effort culminating in President Barack Obama’s historic visit next week—the U.S. has run up against China’s efforts in recent years to build an economic relationship with the country.
China’s trade with Cuba grew by 57% in the first three quarters of 2015 to $1.6 billion, rebounding from an usually weak period the year before, according to Beijing. Direct flights from Beijing to Havana started in December. And China is leading efforts to build Cuba’s Internet infrastructure.
“You have Chinese influence really across the board,” said Richard Feinberg, a former U.S. diplomat who studies the Cuban economy at the University of California, San Diego, and the Brookings Institution in Washington. “From the Cuban point of view, they’re still paranoid about America.”
Though China is Cuba’s second largest trading partner, it is far behind Venezuela, illustrating the limited business opportunities for most countries under Cuba’s current system. Joint ventures and foreign direct investments from China are relatively small—though plans for a cluster of resort properties are estimated to be worth $460 million, including a luxury housing project near the Marina Hemingway that will house Chinese tourists.
But China’s investments in Cuba are likely to grow, said Xu Shicheng, a leading Chinese expert on Cuba at the state-backed Chinese Academy of Social Sciences, as a loosening of U.S. restrictions opens Cuba’s access to the broader, global economy.
“This improvement in relations between Cuba and the U.S., if it brings about a relaxing of restrictions, would benefit future Chinese investment in Cuba,” he said.
Unlike other places where Washington and Beijing compete for influence, Cuba’s cultural attachment and proximity to its American neighbor may offer a potential advantage to the U.S. The White House is betting that connection will help Washington rival Beijing not only in economic influence, but also in the battle for the country’s political future.
Those dynamics loom large as a series of deals with major American companies work through U.S. and Cuban pipelines ahead of Mr. Obama’s visit. Several major U.S. companies are poised to secure deals that give them a foothold in Cuba, including AT&T. On Thursday, the U.S. Postal Service said it had resumed direct mail service with Cuba for the first time in more than 50 years, while Cuba said it would lift a 10% penalty on dollar exchanges.
Most advances for American companies have been in the tourism industry. The Obama administration has granted particular leeway for telecommunications firms in loosening regulations. But the most notable achievements there have been roaming agreements that benefit American travelers.
Lingering tensions between the U.S. and Cuban governments remain notable in the telecommunications industry. Mr. Obama has authorized U.S. telecommunications companies to operate in Cuba. But Havana has resisted.
China, on the other hand, leads in helping to build Cuba’s Internet framework, although there likely are future opportunities for U.S. companies, in part because Cuba’s existing, planned system is already outdated, said Larry Press, a professor at California State University, Dominguez Hills, who writes about Cuba’s Internet infrastructure on his blog, The Internet in Cuba.
“The biggest opportunity isn’t going to be in the short-run,” Mr. Press said. “The Wi-Fi they’re rolling out is today’s Wi-Fi. The home connectivity, the DSL they’re talking about rolling out is yesterday’s home connectivity.”
Cuba announced in January that it was launching a pilot project to provide broadband home Internet access in Old Havana. Residents there, as well as cafes, bars and restaurants, will be able to order service through fiber-optic connections operated with Chinese telecom operator Huawei Technology Co. Ltd.
Huawei equipment also was used in the installation last year of dozens of Wi-Fi hot spots across Cuba. In January, Cuban state telecommunications company Etecsa said it would open 30 more Wi-Fi hot spots in Havana alone. But for most Cubans, access to these hot spots remains expensive at $2 per hour.
Overall, U.S. officials have said Cuba has responded coolly to American telecommunications proposals, including from Google and other companies, saying they want to move forward on their own terms.
“Partly that’s a result of the fact that historically we’ve tried to use telecommunications as an avenue to undermine their government, and so consequently they really don’t trust our hardware,” said William M. LeoGrande, a professor of government in the School of Public Affairs at American University in Washington, D.C., who has written a book on U.S.-Cuba relations.
Cuban officials’ reluctance to broaden Internet access stems in part from fears about losing the tight controls they wield over data access. These suspicions aren’t totally without merit. The U.S. in the past has launched digital efforts to try to undermine the Cuban government, including Zunzunzeo, a Twitter-like service whose users didn’t know the service was sponsored by Washington.
“If this is a national-security issue, I want to do business with my ideological partners or allies, not with what I see now as the enemy or the Trojan horse,” said Ted Henken, a professor at Baruch College, City University of New York, who has studied social media and the Internet in Cuba.
China has been investing in Cuba over several years, although its ventures haven’t always been lucrative, according to Mr. Xu of the Chinese Academy of Social Sciences.
The U.S. embargo has made it difficult for Chinese factories in Cuba to sell their goods in the region, while Cuba’s restrictive rules on foreign investment make it hard for Chinese companies to hire the workers they want or send money back to China, he said.
China’s Ministry of Foreign Affairs didn’t respond to a request for comment.
The competition between the U.S. and China extends beyond Cuba into the region more broadly. The U.S. is playing catch up in Argentina, where Mr. Obama will visit after spending just short of three days in Havana.
Over the past decade, China increased commercial and diplomatic ties as Argentina’s government eschewed U.S. policy initiatives in favor of Beijing.
In 2014, Chinese President Xi Jinping visited Buenos Aires and pledged to loan Argentina $7.5 billion at a time when Argentina couldn’t tap credit markets because of a legal dispute with U.S. bondholders. The China Development Bank agreed to lend Argentina nearly $5 billion to build two hydroelectric dams in Patagonia. A Chinese company previously had won a highly criticized auction in Argentina to help construct the dams.
Opposition legislators were critical of the deals, arguing that the dams were unnecessary and too costly. President Mauricio Macri’s government, also skeptical about the agreements, has been studying them. But aides to Mr. Macri say he will likely let the deals go forward, partly out of concern about antagonizing China.
More controversially for U.S. officials, Argentina’s Congress voted last year to let China build a space station antenna in the province of Neuquén, giving China the right to use the station for 50 years. U.S. officials have voiced concerns about the nature of the antenna, fearing it could be used for both civilian and military purposes. Argentine officials have played down those concerns, saying the facility is strictly for civilian scientific purposes.
Last November, the countries agreed to a deal that would have China build two nuclear power plants in Argentina. The $15 billion deal would be financed mostly by China.
Mr. Obama is seeking to reset U.S. ties with Argentina following the election of Mr. Macri.
In time, the Obama administration’s policies on Cuba might make China less attractive as an investor in Latin America, said Jason Marczak, a Latin America expert at The Atlantic Council who has studied China’s role in the region.
“By opening up with Cuba we’ve cast aside the veil of imperialism that has oftentimes befuddled us, and shown that we can really be a partner with the rest of the region,” he said.
Written by Carol E. Lee and Felicia Schwartz of The Wall Street Journal
Wall Street released a deluge of positive reports about Fitbit on Monday, as the quiet period following its June IPO was lifted, giving the stock a boost.
Fitbit, which makes wearable fitness trackers, is dominating a fast-growing space. The company lays claim to a whopping 85% of the U.S. market, up from 59% just two years ago.
Fitbit is a “brand that has become synonymous with the category,” writes PiperJaffray analyst Erinn Murphy. In other words, it has become the Kleenex of fitness trackers.
Analysts are excited about Fitbit’s ability to continue capitalizing on the wearables space, which is hot and getting hotter. Consumer spending is growing faster on these devices than on any other consumer electronics gadgets out there, according to IDC.
“While some investors argue wearables are a niche or fad, our work suggests penetration is approaching levels enjoyed by notebooks in the US and will increase over the next year,” writes Morgan Stanley analyst Katy Huberty.
Here’s what Wall Street is so rosy on:
Fitbit looks poised for long-term growth
Fitbit has room to run, agree analysts, who love that the consumer brand is so well-known. For instance, the company can do more with corporate wellness programs subsidized by employers. Right now, Fitbit gleans just 7% of sales from such programs.
It can also look to international markets to drive growth. It’s already the global leader in the wearables space, with 34% market share, but international markets remain largely untapped. “The bottom line is that very few consumers own fitness trackers to date,” writes Deutsche Bank analyst Ross Sandler. He figures that even 5% penetration in developed markets and 2% penetration in emerging markets would trigger demand for nearly 31 million fitness bands. (Last year, Fitbit sold 10 million devices.)
Plus, product innovation should help fuel growth.
“We believe devices are just one part of the Fitbit story – the part that is immediately visible and has been the growth driver to date,” writes SunTrust analyst Robert Peck, who notes that Fitbit has the potential to expand into fitness-oriented services that complement its physical trackers. Fitbit could become a “one-stop hardware/service solution to peoples’ health and fitness concerns,” he posits.
Deutsche Bank’s Sandler goes even farther, envisioning a Fitbit that goes beyond health and fitness: “There is no reason why your Fitbit device (in the future) couldn’t display email and text messages, turn on the lights to your home, unlock your car, and many other basic life-improving functions – in addition to tracking your health stats.”
Apple Watch is not a death sentence
The Apple Watch has gotten a lot of buzz and is frequently cited as a key threat to Fitbit. But while attention is great, buying is better. People are three times more likely to hear about Fitbit and actually go out and purchase one than they are an Apple Watch, according to a SunTrust survey.
This could change, some analysts point out, when the next generation of Apple Watch comes out and it becomes easier to buy.
Still, there are key distinctions between the two devices and who wants to buy them. For instance, Fitbit is cheaper and therefore accessible to more people. It also has a much longer battery life (it’s hard to monitor your sleeping if you have to charge your device every night) and you don’t have to own an iPhone to use it, like you do with an Apple Watch.
Morgan Stanley’s Huberty sums it up like this: “Apple is too big and Fitbit share too high to not assume some share loss but overlap will be limited by different price points and features.”
It’s actually making money
The San Francisco-based company swung to a profit last year, earning $132 million on revenue of more than $745 million. It has been helped by the rapid popularity of its fitness trackers: Last year it sold 10.9 million devices, more than double the 4.5 million devices it sold in 2013.
These financials are “robust,” says SunTrust’s Peck, who points to Fitbit’s strong revenue growth rate (up 150% in 2014) and gross margins (45-50%). He sees $140 million in profit this year on revenues of $1.4 billion.
Fitbit has drawn comparison to consumer growth stocks like Under Armour UA+3.61% and GoPro from several analysts. It has “superior growth metrics to-date,” writes PiperJaffray, and combines “a powerful consumer brand with technology.” Its stock is also trading at similar levels to other consumer growth stocks in the post-IPO period.
When Fitbit made its public debut last month, the stock gained nearly 50% on its first day of trading to close at $29.68 per share. Since then, it has gained 110% from its IPO price to $42 per share. Share were up another 5% to $44.24 on Monday.