Book Review - Rich Dad Poor Dad

This is a book which i heard about reading in my first job at infosys. But like many other nerds or other 'worker' people, i neglected the advice thinking i hate finance. At 37, when i just happened to pick this from a footpath and read it recently, i realized what a waste of 15 years had been.

This is a MUST READ book for any human being who makes a living. It should be rather part of school curriculums so that so many lives can be saved. You must be wondering about the hyperbole, but here is what it is about -
"Poor ppl work for money, and rich ppl make thier money work". Now, you must have been intrigued. Yes, the book unveils a thinking around finance principles needed for a healthy life. It talks about assests and liablities, cash flows, income and expense but in a manner that a layman can understand.

I would just mention a few key points from the book that might make you pick it up if you havent -

1. Poor ppl work for money, and rich ppl make thier money work.
2. Poor ppl look at expensive things and say, i cant afford it. Rich ppl look at same things and say, how can i afford it.
3. Poor ppl look at the biggest thing in thier life - house, as an asset, rich understand that its a liability.
4. Poor ppl work day in day out to increase thier active income of salary while rich work on thier passive incomes ( stocks, bonds, real estate etc).
5. Poor ppl first pay thier bills and taxes and then pay themselves. Rich ppl first pay themselves and push themselves to then pay the bills and taxes.
6. Poor ppl understand that the only way to realise thier dreams is through harder education and then job labour giving higher salary, thus perpetual rat race. Rich ppl know that rats race and hence to not to become a rat means financial freedom, and hence dreams.
7. Savers are loosers, Investors are winners. Savers are risk averse, investors are opportunity makers.
8. Winning at financial game is - Its not how much money u make, its about how much u keep.
9. The rich buy assets. The poor only have expnses. The middle class buy liabilities they think are assets.
10. The rich focus on thier asset columns while everyone else focus on thier income statements.
11. The biggest asset we all have is our mind. If it is trained well, it can create enormous wealth.
12. Failures inspires winners. Failure defeats losers.
13. Find a reason to be rich greater than reality - the power of spirit.
14. Make daily choices.
15. Choose friends carefully, birds of same feather, flock together.
16. Learn new formulas quickly and keep up with the times.
17. Pay yourself first. Focus on cash flow, people and personal time.
18. Be an indian giver - the power of getting sth for nothing.
19. Use assets to buy luxuries. Eg if u want to buy a car, invest into sth which can get u a car rather than create a liability thru a car loan.
20. Power of giving, spread the knowledge, make others rich and you shall recieve in kind.

Amazing book, read it asap, the earlier the better. And a great word of admiration to Mr Robert Kiyosaki for spreading such vast knowledge to people.

Retailing - Offline > Online?

With so much happening in the retail industry in India; Online Vs Offline is a topic touching emotions anytime in a room. There has been huge hue & cry about how online retailing is changing the way consumer shop or how it is killing the offline retailing or how offline retailing is under pressure from Mall rentals or how offline retailing's touch n feel cant be replaced by online and offline retailing understands economics while e-commerce players don't. I am penning my thoughts around something called retailing as i learned it from my childhood days in a family owned retail business to organized retailing work experience in offline/online world.

Selling a product/service to an end-consumer is primarily retailing. Does its principles change when the mode of transaction with end consumer is immediate (offline) or distant (online)? Are these so different that people who run these businesses apply different skills to run them? Does the consumer of the two modes of retailing different? Answer is No. Lets start from basics.

What are the key focus areas of a retail business? I call them as BIG 5 Pillars of Retail -

1. Product/Service - These are the "goodies" you are selling to the consumer. These are goodies as they are supposed to be 'good', making a consumer happy after purchase. If you sell them well, it becomes a part of life of consumers adding value to them. If you dont sell them, they remain part of your inventory adding to your costs. Its important to keep the product at its best levels & measure the indicators through various activities.

• Customer Feedback/Satisfaction - Work on the goodies basis consumer feedback. Consumer knows on what she like about you and also wants to tell you on what can make it better.
• Competition Bench-marking - Work on keep improving the goodies Vs competition.
• Product Performance - What are the various indicator's of its performance -
• a) Inventory Sell Through - If the goodies are good, then how fast are you selling them? What are the activities which can speed things up?
• b) What is selling better? - Out of an assortment of goods kept in store, what is selling better, so that you can change the mix accordingly? What categories give you better profits (margins)? (Category Performance)

2. People - These are the "human beings" that advocate your goodies to end consumer and sell to them. If these are good/well-trained/motivated sales force, they ensure fast selling of goodies and ensure consumer keeps coming back basis the last interaction (Customer Service). If they are'nt happy/not trained; it shows on customer experience and consumers wouldnt connect with your goodies & lead to poor sales/repeat sales.

• People Competence - Is my staff trained & competent on giving your desired customer service? What are the drivers? Invest in right talent & training. Are they clear on what they are selling? Are they sold on the product themselves to sell it to consumers?
• People Satisfaction - Is my staff happy/motivated so that they can wow the consumer? What are the drivers? Keep them engaged, make work a fun place, recognize their performance, reward them with commensurate rewards/benefits,
• People Performance - Is their performance evaluated at periodic times so that they can make changes to improve? Are there simple monitoring systems & improvement methods known to them?

3. Consumer Experience - This is the ultimate driver of a retail business which leads to sales & growth of a company. A good consumer experience entails everything - From the kind of ambeince in which goodies were delivered, from the kind of interaction with the salesperson that added value to the consumer's life, the kind of after sales journey consumer goes through; all add to the chances of her coming back to the company for more!

• Consumer Satisfaction Scores & Feedback - Keep working on understanding levels of satisfaction and what they are saying about your products. This helps in improving again and again.
• Consumer experience is an amalgamation of everything and you need to understand exactly whats going wrong. It could be any cog in the wheel, that might derail you - Store ambience (was it lit enough? Was it clean?), Product/Assortment (Product quality wasnt good? I couldn't find the product? (Supply Chain/Layout), It wasnt appealing? (Quality/Visual Merchandising), Customer Service was not good? (Training/Motivation), Price wasn't right and so on..

4. Topline (Sales Revenue) - This is objective No 2, out of investments in first 3 drivers to generate value for the business. One needs to understand various drivers and relationship leading to revenue. In retail, it is as simple as -

Sales = Footfalls X Conversion X Basket Size (BS) X Average Sales Price (ASP)

And then one just needs to work on the cause effect ladder for all the drivers to arrive at levers of these drivers & list down activities & indicators to create a plan. For eg -

• Footfalls = (Old customers coming back again & again) + New customers
• Retained Sales drivers = Activities for greater engagement leading to them coming to buy and coming back multiple times, usage of loyalty program benefits to bring them back, usage of sweeteners (points, points back, discounts), exclusive events.
• Acquisition Sales drivers = Activities to add new footfalls like trial generation activities, alliances with non-compete brands, attracting footfalls within catchment through an event or a mega broadcast through advertising.

Footfalls = (Retained customers X frequency) + (Acquisition of new customers)

• Conversion - This is the success factor in a retail store; how many footfalls get converted into buyers or invoices. In order to boost conversion; you work on training on selling skills or product knowledge (people cant sell properly), or discovery of desired products in store is an issue (layout change) or desired merchandise is missing (category mix issue or poor estimation of demand leading to stock outs) and so on. Activities can include a in store promotion/in-store communication/etc.

Conversion = # of Invoices/# of Footfalls

• Basket Size - BS or UPT(Units per Transaction) is no of items in a customer's basket. To boost BS, one needs to work on product knowledge of sales persons. One starts training people on cross-selling to educate customers to buy a matching trouser with a shirt. Or buy a shampoo, conditioner & serum of same variant. Apart from cross-selling, retailer work on basket building promotions like - Buy 3 get 2 Free, inducing the consumer to buy more items or bundled packs with a price off (Buy 3 soaps at price of 2).

Basket Size = Total items sold / # of invoices.

Average Sales Price (ASP) - Average Sales Price is nothing but the average selling price of a unit sold. To boost the ASP, one needs to work on the merchandise mix in a store. As retail space is expensive, one needs to stock & sell merchandise with higher ASP. In garments category, its about having a mix of merchandise at Entry, Mid & Premium price points. The retailer will always work to move the average to Mid & Premium price points. You also need to educate salesperson to "Up-sell", which means selling a Rs 2000 shirt instead of Rs 1500 by talking about the benefits of Rs 2000 one (a wrinkle free shirt Vs a normal cotton shirt). You need to highlight premium options in a store like a special section with inviting visual merchandising so that consumers get attracted, and so on.

Average Sales Price = Total Sales / # of items sold

• Average Transaction Value (ATV) - ATV is another factor important in retail; which is nothing but average sales value of a transaction. In order to boost ATV, one can boost Basket Size or one can boost Average Sales Price or both. A retailer running an offer of - Shop worth Rs 10,000 & get a duffle bag free; is trying to push the ATV to 10,000.

Average Transaction Value(ATV) = Total Sales / # of invoices

Also, ATV = BS X ASP

5. Bottomline (Profits) - This is No 1 objective for a business; and one uses the earlier 4 pillars in such a manner that you generate profits. When i look at bottomline as a key focus area; i look at various costs which impact the revenue generated leading to bottomline.

One needs to list all costs & work towards minimizing them (without impact on the earlier 4 pillar) and create positive bottomline. Again, you list all factors of costs & activities to boost bottomline. Eg -

Cost of Goods, Cost of Discount, Cost of Inventory, Rentals , People , Utilities

With all these 5 pillars well monitored & executed for perfection, one can expect a good return out of a retail business. There are surely many other factors or jargon you might find; but you can bucket them in these 5 pillars, thus bringing clarity of thought and focus. Just, keep these 5 pillars under your control like 5 fingers of your hand & you shall do well. In the next piece, I shall write about how the same 5 pillars matter in Online retail as well & the basics never change.

Termites > Earthquakes + Hurricanes

“Hurricanes and earthquakes get all of the publicity, but termites do more damage and they take such little bitty bites!” 

Thats what Zig Ziglar once said, referring to the power of small steps leading to big changes. All radical changes on the planet are an outcome of minute steps done on a daily basis for a long time!  

Apply in your lives. A small workout done daily adds to your health. A brief periodic connect with old friends adds to your happiness. A daily time spent with your family adds to your life. A daily 5 pages of a book, adds a book's wisdom in a month. All in all, a day thus makes you a better version of yourself. Makes you complete a marathon, not a sprint.

"Daily" is the biggest value-add to your life. 

Ecommerce in India will ever make money?

#Ecommerce is on a high, but will it ever make money? Will investors keep putting in money in enterprises which sell similar products at throw away prices with similar delivery/site experiences?

My take - A #differentiation/price premium game or A #volume/low price game.

First one is about that factor that competition cant copy (hard to find - CoD, Ppl, Tech, Selection all copied) & lets you scale up bcoz competition cant deliver it.

2nd one is what is happening in the indian horizontals. Leading to a game between top 2  #Homegrown Vs #Global. Scaling to be the biggest fastest to keep the challenge. But consumer doesnt care if x or y, till the need gets over. As volume game is commodities. This will end till the money is over as the article says.

But what is the differentiation in a horizontal play? Building private labels that are big drivers (Echo/Roadster). Building exclusive tieups which are strategic and long term (mi or one+). Building additional services around the common core which differentiates ( prime video or a loyalty pgm with offline experiences).

How about offline connection which is strategic and long term across all categories? Online/Offline - #OneRetailerNetwork!!

A dated article below but insightful.

Private Labels in India - A brewing storm

With Indian economy becoming the fastest growing economy in the world (2017) and a demographic dividend in its stride; consumption is the key theme of India's growth story. And if you are in retailing - online and offline; you know what i am talking about.

Private Labels, or Retailer Brands/ Store Brands as a strategy, is fast becoming a MUST HAVE in this industry. Given every business (online/offline) has a dire need for better profitability in a scenario of increasing costs (costs of rentals, manpower, logistics, demand generation), increasing competition (more brands, more channels) ; the role of Private labels has suddenly shot up to be supreme.

But Private Labels have been there for such a long time? Be it '#Stop' from Shoppers Stop or '#Bare' from Pantaloons, these are there since inception of organized retailing in India. Why so much hue & cry now? The reason is the 'new role' private labels are supposed to play. Earlier, the key role was to boost margins as cost of a private label was way lower than mainstream brands; mostly becoming a cheap & economic solution for masses.

However, now the new role is to find a gap in the assortment of brands in the category or a gap in the customer needs (not fulfilled yet) & then create a private label. This is phenomenal on part of retailers applying consumer behaviour; buy why sudden role change? Its because of the power of BIG DATA. Whether it is an online player like #Flipkart or #Amazon, the kind of shopper data that is available on ecommerce platforms is mind boggling; and the kind of data that offline retailers dont have in black and white. What a customer shopped is available in shopping history in both offline/online; but what did he search first, how he discovered (filters applied), which recommendations he clicked and so on, is something which is available in online space in wholesome manner. And add to it the power of SEO and SEM; the etailer has the power to follow you with the product you searched through the internet - whether you read news, or do Facebook or do anything else.

This power of BIG DATA is what is enabling etailers to launch private labels more successfully coupled withavailability of quality OEMs today ensuring better delivery on innovation as well. Marketers or Data Crunchers are finding gaps like - Need of a bigger Jars for mixers for Indian Families to need of a lighter, faster & economical power bank to need of economical Smart TVs to economical/quality fashionable denim brand to need of quality accessories and so on. Result is brands like #MARQ, #AmazonBasics, #Billion, #PureHomez, #HRX and so on. The rise of mid and small cap companies is a phenomenon in last 3 years.

As far as offline players are concerned, they arent left behind either. Be it FMCG products brands like #TastyTreat, #CleanMate from BB or #royal from BigBasket and several of private labels in grocery space; the unbranded or commodity nature of category like dals, spices, or even high aspiration at budget price categories like smart TV, Mobiles etc has given rise to such labels in this space as well.

Unknown or mostly unorganized categories like furniture is another area where private labels give faster scale. Thats what players like #Pepperfry or #UrbanLadder have been able to do. Even in budget hotel space, Oyo play was nothing but standardising the available sub par inventory to a label called #OyO. And so is #Uber or #Ola.

Retailer bundle such labels with sweetners like deals, points, loyalty programs like Amazon prime or Flipkart First or Profitclub and consumers sway to thier side.

But is this rise of private labels, an alarm for established brands? Yes, but that is because of this big data availability followed by quality execution on identified gaps. Marketers of established brands also need to match up to this need discovery and innovation done at retailer's end.

To further add to the growing might of private labels, here are the key facts -

1. Europe has staggering levels of private label share in retail - from 20% to 50% in switzerland.

2. US has overall share at around 15-20% while companies like Walmart (25%), Amazon are continuously boosting the same in pursuit of better margins.

3. In india, the share stands at 1-2% of retail, thus giving an exponential path for private labels to tread in the world's fastest growing economy.

With cutting edge work happening in technology across online /offline players and advent of private label products like #echo or #kindle; the path seems shorter from here! Check your basket next time across categories of what you buy, how many are private ones?

Eighth wonder - Power of Compounding

This article is based on a common thread of thoughts across various walks of life - be it investing, career, personal growth and so on. The common thread is the discovery of the inflection point when results far outweigh the ongoing efforts. When money grows at a much faster rate than the ongoing contributions; when the efforts put in a job are far less than the results coming out of it; when the physical output of the body (in a race) is far faster then the recent routines; when your followers on social media engage with you more than it used to; and so on.

In my opinion, the common thread in all the above scenarios is Power of Compounding. As #Einstien famously said - "Law of Compounding is the eighth wonder of the world"; it actually applies everywhere. What is compounding? Compounding is multiplication of small contributions done on a frequent basis till a fixed time when the output results much more than a linear addition.As learnt in mathematics, Vs a simple interest (SI=P*R*T), it is CI = P*(1+R/n)^nT where P is principal, R is rate of return, n is frequency of contributions within T, and T is time period and is always higher than SI. The key elements in this power are - P, R,n & T.

Lets look at investing, if you keep focusing on these 4 parameters - Start the investing process early say at the age of 18 (T is on your side), pick instruments which give higher returns (R) & keep putting these amounts at high frequency (say small investment but every day/week/month/yr (n), so that amount invested grows faster (P); you are looking at financial freedom. SIPs in mutual funds is an implementation of the same idea.

Lets look at sports/fitness, if you need to run a marathon in a stipulated time, you have to start with a discipline of effort every day (frequent contributions); followed by increase in durations (5k->10K->15K and so on); multiplied by a duration of such effort. At one stage, you will realize that you are clocking a mile much faster, also the effort it needs to consistently clock a 5K is slowing down. Most runs get converted into easy longer runs Vs when you first started. That's the inflection point. And what it means is that compounding of small disciplined efforts is now paving way for faster results.

Malcolm Gladwell, in his book, "Outliers" talks about 10,000 Hrs rule - If you invest 10,000 hrs into something; you master it. He says Why Beatles or Bill Gates were extraordinary success because the circumstances around their lives made them invest 10,000 hrs in playing or programming leading to mastery. Now, that's to an extent is also a result of application of power of compounding.

Take Career. The effort needed to make the first sale obviously is more than when you have mastered it. First you apply more hours and make up for lack of skill through quantity; but later as you develop the networks, the persuasiveness; you put in lesser quantity as power of compounding of consistent action is on your side. That is precisely the reason, as why most successful people mention 'Daily Habits' as the number one reason of their success. Good things done daily make themselves excellent over a period of time. And that is exactly why great quotes like these exist -

"You will never change your life until you change something you do daily”— Mike Murdock. “Little strokes fell great oaks.” –Benjamin Franklin

Slow and Steady wins the race - from the Hare & Tortoise story, is nothing but power of compounding! Small but consistent contributions will result in far greater results vs infrequent sprints. That's what stock markets are about. That's what careers are about. And i think, that's largely the life is about. Keep believing in the process, put in consistent efforts and you shall see the results coming through! Believe in the Power of Compounding. Ending this piece with another Einstein quote - "He, who understands the power of compounding, earns it and he who doesn't pays it".

Disruption = Demand, Supply and medium. A case of hotels

Disruption = Demand, Supply and medium.

In all industries, its the above 3 factors which define the transaction. And there lies the opportunity of #disruption.

Take example of #Hotel industry, demand was managed thru special travel agents who worked with special tieups and codes, making a booking a closed game. Boom. Came OTAs (Online Travel Agents) - #MakeMyTrip, #Ibibo of the world and disrupted the demand piece opening it for consumers.

Then came, #socialmedia and review sites like #Tripadvisor which forced the supply side to fix things up or perish as #consumer started booking basis reviews, giving power to the consumer and putting focus back on customer service.

And, sheer power movement from supply end to the consumer was not enough, boom, came #Airbnb/#oyo of the world which created newer ways of stays and created newer supply, right from consumers itself.

The disruption is because of change in the Medium which intersects demand and supply where all the above .coms and apps thrive. And it applies everywhere. Taxi industry - From power to suppliers like Meru its now with 'medium' of #Ola and #Uber.

The future belongs to those who take care of consumer and keep looking at disruption opportunities and embrace change.

Patanjali & its captive consumer

With news of #Patanjali realizing its apparel dreams with 'Patanjali Paridhan' coming to fore, one can imagine what opportunity it is trying to tap in this category.

Its the big mass of loyal #customers who use patanjali ayurvedic medicines and FMCG products. Demographics - Everywhere, middle aged to old, across SECs. Psychographics - Faith in roots: be it ayurveda, swadeshi, religion, indigenous culture and so on.

What kind of #apparel will make sense? - All growing categories in apparel - Ethnic wear, athlesiure (read yoga wear), inner wear (closer to skin organics) and basic essentials in western wear.

#Brand Promise - Sasta, Shudh & Swadeshi.

"Clothing is Baba Ramdev's next big bet. His enterprise Patanjali — which has disrupted India's FMCG market — is set to enter the apparel business by May, The Ken reports (behind paywall). ‘Patanjali Paridhan’ will have 600-700 retail stores across the country in Tier 2 and 3 cities, though it has also partnered Big Bazaar’s fashion arm, FBB, for distribution. The products, priced at Rs 300-2,000, will compete with the likes of affordable fashion store V-Mart and FBB itself." - Linkedin News

2018 - Finance Goals

As new year arrives every year, we make a lot of resolutions and goals, out of  which there goals to manage our finances.

One would realize in life, that money can only be multiplied through investing, rather than putting endless hours in a job. Most of us, dont focus on multiplying money that we make, we just focus on making the money which is a much smaller amount than our life goals.

As stated in Rich Dad Poor Dad book, rich make thier money work while poor work for money.

Thus think about how to make your hard earned money work this year.

Here is an article on few thumb rules to fix the basics of your finances. Begin.

9 Thumb Rules Of Investing: Where & How Much to Invest? http://www.magzter.com/articles/2829/237142/599ca0cd36795?mg_pf=android_magzter&utm_ID=6585486

New Year #Resolutions & 'how' to stick to them in #2018!

New Year #Resolutions & 'how' to stick to them in #2018!

We all have this 'resolution syndrome' to pick up all should do(s) at least this year...every new year. But it doesnt happen.

Here is how you can do it in 2018 -

First, the resolution has to be something with a big '#why', something which is more than just a 'should do'. What is it that you want to offer the world? Who do you want to be, what do you want more of in your life? And then asking: “How might I get there? What would create that as a consequence?”

Second, outsourcing #willpower really works. Share your resolution with somebody to have a collective force to force you to stick to it. A friend, partner, etc can really pull you out of bed on your weakest days.

Third, #Bribe yourself. As with any habit making, add a reward after the act or reaching a milestone. A reward that obviously doesnt impact the resolution.  Eg, a shopping spree after a monthly goal.

Fourth, making your #goal public gets you #socialsupport. When you share something in public, say facebook; people's likes/comments add to the fuel.

Go ahead! And make it real this 2018!! It has given me the power to stick to mine in terms of #running as a #habit.

Summarized from this nice article -
https://lnkd.in/fjuRmVh