Showing posts with label investors. Show all posts
Showing posts with label investors. Show all posts

Wednesday, October 3, 2012

Who Gets Credit For Business Success?

There has been a debate recently as to who deserves credit for building a successful business. On one side, you have people who say the founders or the person in charge of the business is worthy of the accolades. The other side says the community as a whole deserves the credit. Even though both deserve much credit, each deserve a different type. In the paragraphs below, an attempt will be made to explain that it is the community that deserves the overall credit for building a successful business while at the same time very specific credit should go to the owner or person in charge. 


Have you ever been to a business dinner and heard the person in charge say:"This business' success could not have been done without your hard work!"? This pretty much is a clear admission that the success of the business does not lie with them alone. That is not to say that they do not deserve some form of credit. The founder of a business has ideas and a plan for a business. They find the initial materials, labor, partners, and customers to run the business. They provide the initial motivation for a successful business. But there comes a point where the idea and business responsibilities outgrow the abilities of a few human beings. Even when the person is still in charge, a successful business is still run in a way that far outweighs the individual's talents. There just isn't enough time for one person to run a successful business on their own. Some of the credit that should go (and normally does) to the owners are a proportional share of the financial rewards. They also are given credit for the idea of the business by being interviewed and shown in the press. Most individuals that are successful with a business idea and plan are looked to to comment or help on building other similar businesses. 

That brings us to the community, and how much credit it deserves for a successful business. To understand how important the community is in a business' life, some questions need to be answered. Does the company have other employees? Are there other shareholders? Have there been ideas proposed for the business that did not come from the owner? Did the company ever need financing? Does the company have customers? Do public service institutions help the business along the way? If the answer to these questions is yes, then you get the idea of how important the community is to a successful business. 

The reason that there are issues with where credit is deserved is due to the egos of the relevant parties. Some individuals that put so much of their lives into an idea but doesn't get full credit sometimes get hurt. Some communities also need to understand that without the appropriate credit given to the individual, ideas do not end up being realized. There needs to be a mix so that the most important thing happens; making the idea come to fruition. 

There are many impactful parts to a successful business. Credit is to be shown to all in different styles and measures. A successful business cannot be successful without both the individual and the community. Many good ideas have not taken off due to the lack of credit given to either the individual or the community. Let's make sure that as individuals we accept acknowledge the community's help in bringing success to the idea. As well, we as a community need to recognize how courageous and awesome people who stick their necks out in presenting and planning a successful business really are. 



Saturday, April 28, 2012

Investor vs. Labor Part II - Who are the investors?

This is part II of a series being done on the topic of Investor vs. Labor. Part 1 of the series introduced the topic and can be found here. This post will focus primarily on how labor is a large part of the investing community. You may have heard your company's CEO make a statement such as "We are trying to maximize shareholder value." That is one of the most popular statements made by CEO's today. But that begs the question "Who are your shareholders?". The answer might surprise you.

The largest shareholders of Fortune 500 companies outside of company executives tend to be retirement funds representing the country's labor force. If you are to look at the largest retirement funds that regularly invest their money, you will find most are workers pension funds or mutual funds that are packed with retirement dollars. If you research most Hedge Funds, you will find the bulk of their capital comes from workers retirement packages also. Union pension fund investments into the stock market are in the billions each year. If you go to MSN Money, you can type in a stock and see that clearly worker retirement funds are the major investor in the stock.  

Workers with blue collar salaries depend on the stock market for their retirement more than white collar executives because they have to. White collar salaried workers are able to take risk off the table and invest in safer instruments due to their higher salary. Blue collar workers do not have that luxury.

When a CEO makes that statement " We are trying to maximize shareholder value.", make sure it isn't preceded or followed by the statement "That is why we keep worker costs down.". If it is, he or she needs to find out who the company's shareholders actually are.