Financial literacy: knowing what you know

Aligning business intuition with financial arithmetic

You've got a brilliant idea. You make an excellent presentation to the board. A director asks: "What discount rate are you using for NPV over five years on this."

You’ve got no idea what he’s talking about. Your confidence slips. So does your momentum. You say you'll get back to him.

A lack of financial literacy won’t necessarily hold you back. There’s plenty of self-made business people with no business education. The issue often arises with success. You were a great salesmen and an even better marketing director but now you are running the whole shop. There are some things you are expected to know.

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Mental toughness and business performance

What can we learn from sports psychology?

My daughter is a showjumper. She recently competed in a major event at an international venue. She was up against a huge field of Olympic riders on high-class horses bred specifically for the sport. It was a major step up for her. There was no shortage of stress ahead of the day.

Stress turns up in any competitive situation and it’s easy to be distracted by factors that work against your performance. They preoccupy your consciousness, crowding out the ability to focus on the things that matter. It takes a particular mental toughness to let go of the things you can’t control and stay on the things you can master.

Sports psychologist at Condor Performance, Gareth Mole, defines mental toughness as not being distracted by the things over which you have no absolute control. Top performers, he says, focus on the things they can guarantee and leave aside the things that, at best, they can only influence.

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What type of leader can you be?

Start by managing what you manage well

High profile leaders get a lot of attention. They are invariably media-savvy and articulate, able to glibly deliver inspiring speeches on big concepts like mission and vision. Sometimes they even just look good. Never mind what they are saying; you just enjoy watching them say it.

In an age when celebrity status has become the key to newsworthiness, is this the model for leadership? It's as if the glamour CEO defines business leadership in the same way a bony cover girl defines the right body shape. It's a narrow definition that won't include most people, be they aspiring executives or standard-size teenagers. It's just one kind of leader. There are plenty of others.

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The sins of synergy: buying business growth vs building it

One plus one usually equals one, or less

Of all the great strategic buzzwords, the dubious merit award goes to synergy. Often trotted out as the most remarkable logic behind some of the greatest mergers, its track record is dreadful.

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Surfing the business cycle

Darkest before dawn, but a long night

How bad is this economy? Rather than get out of bed, it’s decided to roll over and sleep on. It’s too hard. Unemployment in the US is getting worse, not better. The European debt crisis lurches from one nation to another.

Countries like Australia and Canada that escaped the nastier side of the global meltdown are now struggling with shrinking consumer demand in two-speed economies. China might still be on a roll, but Beijing is trying to rein in excessive lending.

Most of this is unpredictable and out of our control. Is there anything we can be certain about? Take a look at this chart from economist, Bill McBride.

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