Contributed by Noah B. Rosenfarb, a member of the Entrepreneurs’ Organization (EO) and a certified public accountant who helps entrepreneurs increase cash flow, sell their companies successfully, manage their wealth and create predictable passive income.

1. Invest in Yourself

We all invest our time and money in people and things. The best investment for entrepreneurs is always going to be in themselves. This could mean your health, education, well-being or relationships—anything that can fine-tune and improve your life will bring the highest return on investment because the cost is often very small.

Invest in yourself in both small and big ways. For example, hire a housekeeper so that you can stay focused on higher-value tasks. Get a massage every week to relax. Spend time with your family without distractions. Often, prioritizing time to exercise your body and mind will produce great returns.

Giving yourself set times to think and focus is a valuable investment. Look at the schedule of the world’s wealthiest entrepreneurs and you’ll uncover that comprehensive wellness is a high priority.

My best personal investments include memberships in EO and YPO, coaching programs, mindfulness training, as well as reading a book a week and taking three workdays each month to enjoy alone time with my wife.

2. Invest in Your Business

If you can’t create the highest return on investment in your present company—then maybe you should rethink continuing to operate your business. Entrepreneurs should flow to the area where they can generate the highest returns on time and money.

When you think about investing in your business, consider adding talent and equipment. Look toward creating new sales and marketing structures that perpetuate your sales cycle. Oftentimes, entrepreneurs focus almost exclusively on top-line revenue growth that will lead to bottom-line profit gain. However, it is still critically important to focus on risk factors in one’s business.

All companies are sold using a simple formula of earnings times a multiple. The multiple is driven by the risk factors inherent in the business. If we can reduce the risk factors, we can increase the multiple. Sometimes, decreasing the risks provides greater returns than one can achieve by focusing on increasing profits. This is especially true in the years leading up to a sale.

My most productive recent business investment has been building our back office team in the Philippines, which expanded our capacity at half the cost of a team in the US. I’ve also generated a surprisingly high return from content creation and social media.

3. Invest in Tax Strategy

Successful entrepreneurs may not realize that their single biggest personal expense is their income taxes. By evaluating options to lower their taxes, entrepreneurs can often increase their net income anywhere from 10 percent to 50 percent with only small changes in the way that they operate their business and personal life.

This increased cash flow, if reinvested wisely, can dramatically impact your future. We believe that once an entrepreneur is making more money than they need to cover their living expenses, then they should be focusing on building their tax structures.

Our most effective tax strategy was to open two businesses in Puerto Rico, where we pay only 4 percent in corporate taxes. We also structured these companies to be owned by a Roth 401k plan, so we never pay taxes on our dividends and we can invest our profits tax-free for our lifetime.

4. Invest in Real Estate

Real estate is another area where entrepreneurs should allocate capital. Real estate can often be used to house the business of the entrepreneur. I’ve seen many instances where the entrepreneurs’ net proceeds from the sale of their real estate are greater than that of the sale of their business.

Real estate has many qualities that enhance its attractiveness, including tax benefits, the ability to use as leverage, inflation protection and more.

My real estate strategy is to buy apartment complexes where we can implement our Infinite Return model.

5. Invest in Life Insurance

Entrepreneurs too often dismiss investing in life insurance structures. Most life insurance is sold, not bought. Unfortunately, that creates a conflict of interest for the person that educates the entrepreneur about the insurance. When an entrepreneur purchases life insurance, the advisor receives a big commission. That is definitely something to be aware of, but life insurance is an incredible tool that can be used to enhance an overall financial plan.

One thing most entrepreneurs don’t realize is that banks will pay the majority of insurance premiums on their behalf. This can create positive leverage that produces net returns that can rival real estate investments while also providing protection to the entrepreneur’s family if they die unexpectedly.

I purchased my first whole life insurance policy at 27, before I had children, as a place to park cash that I could borrow as needed. I purchased term insurance when my kids were born to make sure my family could live the lifestyle I created even if I died. More recently, I’ve used premium financing to acquire insurance that will provide me with tax-free retirement income.

6. Invest in Private Debt

High-performing entrepreneurs have good cash flow and little need for ongoing significant liquidity, especially if they’ve been able to establish lines of credit. As a result, we find entrepreneurs often have more cash and liquid investments than they need to accomplish their goals. By allocating their conservative investments to private debt instead of publicly traded bonds, the entrepreneur trades liquidity for a higher yield. Often this results in 3 percent to 6 percent per year of additional returns.

I started a private debt fund in 2011 to take advantage of this reality for my family and our clients. We make short term loans where the borrower can use our capital to make more money for their business. Often the collateral is real estate, purchase orders, accounts receivable or even business equity.

7. Invest in Other Companies

When entrepreneurs have succeeded in growing their own business, they may find value in investing in other people’s companies, either actively or passively. Private equity returns are some of the highest of any asset class, but they also come with significant risks and a greater standard deviation between return expectations.

In layman’s terms, that means a lot of people lose money investing in companies. The best private equity investors can make 30 percent or greater annual returns. It’s critical to develop your own opportunity filter so when you begin to seek investments, you know precisely what to look for.

I built a unique company, FIGI, that enables me to invest in online businesses using the power of a royalty structure. I also hold significant minority interests in small private companies where I provide strategic advice, but have no role in daily operations.

8. Invest in Stocks

I would be remiss to not suggest that entrepreneurs also should build a diversified portfolio of publicly traded stocks. Over time, publicly traded companies produce average returns that exceed inflation by 4 percent to 8 percent. The primary advantage of stocks over the above items is the ability to sell them and generate cash within days.

Compounding your investments in public companies over a lifetime should result in significant wealth creation.

Personally, I have avoided building a portfolio of stocks and bonds because I haven’t found value in the liquidity it can provide. My cash flow exceeds my lifestyle expenses and if I had an unexpected need for capital, I have sources I could use (like my life insurance or my home equity line of credit) to tide me over. Still, my family office has deep expertise in constructing and managing portfolios of stocks and bonds for our clients.

For more insights and inspiration from today’s leading entrepreneurs, check out EO on Inc. and more articles from the EO blog. 

The post To succeed as an entrepreneur, make these 8 investments appeared first on THE BLOG.

Original Source: blog.eonetwork.org

Dairy farming is a competitive business worldwide. Small and large scale dairy farmers alike face similar obstacles—slim margins, a fragile product and a decreasing market. Kenya produces 5 billion liters of milk every year and the dairy industry accounts for 5%-8% of the country’s total GDP. This large proportion of GDP means that innovations in dairy farming offer significant potential to improve the livelihoods of thousands. In light of this economic fact, new industry actors are emerging to transform dairy farming in Kenya.

EASYMA 6.0

Finding reliable buyers is a difficult task. In many cases, Kenyan dairy farmers are forced to sell to local traders that pay unfair prices. When the digital scale and supply chain system EASYMA 6.0 was introduced in 2014, however, conditions for dairy producers improved. In collaboration with USAID-funded programs, Kenyan tech agencies developed and deployed EASYMA 6.0 into local communities.

The process of EASYMA 6.0 starts with farmers weighing their milk at designated buyer collection centers. Producers then get an automated receipt as well as an immediate advance. This system ensures that farmers receive fair compensation for the quantity of product they supply. Ultimately, this innovation makes it easier for farmers to earn a fair living wage.

In addition to providing security in payments, EASYMA 6.0 also enhances transparency and record-keeping within the dairy industry. As a result, more than 22,000 Kenyan dairy farmers now have access to farm extension services, financial products and even livestock insurance through EASYMA 6.0.

Mazzi Milk Jug

Although a seemingly small and simple issue, spoiling milk can lead to large losses for dairy farmers in Kenya. Spoiled milk can lead to huge losses, negating much of the hard work performed by farmers. Without viable ways to fix the issue, farmers will continue to lose a valuable part of their product—and, thus, their incomes—every year.

In developing countries, safely delivering milk and dairy products is the hardest challenge farmers face. Small-scale farmers produce 80% of the milk in Kenya. Due to small-scale farmers’ insufficient access to quality storage and refrigeration, a significant amount of milk is spoiled during delivery. This struggle prompted the development of Mazzi, a durable and inexpensive jug that prevents spills and slows curdling.

Traditional jugs, or jerry cans, leave dairy products vulnerable to contaminants that cause spoilage. Additionally, traditional jugs are also fragile and very hard to clean. The Bill and Melinda Gates Foundation worked with Global Good and Heifer International to find one key solution to this issue: Mazzi.

Mazzi is a 10-liter reusable plastic container that prevents spills, limits contamination and is easy to clean. Mazzi has a wide mouth that allows farmers to use two hands during the milking process, ultimately increasing productivity. The invention also has a detachable black funnel that enables farmers to determine whether cows have udder infections, as well as a stackable lid that helps with transport and makes the product easy to clean.

The Mazzi jug will only cost $5, compared to competitors priced around $30. By increasing incomes through improved yields, this inexpensive innovation is transforming dairy farming in Kenya and improving the lives of farmers in the process.

MyFugo

Many farmers rely on the dairy industry to make a living, yet Kenya has not adopted technology to improve yield. MyFugo is a software application that is projected to increase milk production in Kenya by helping farmers monitor their cows in real-time. Allan Tollo, the app’s founder, explains that “the app helps the farmer monitor his cows throughout the day enabling them to tell what time their cow will be on heat for it to be served at the right time.”

The MyFugo technology operates by using a Smart Cow Collar. Farmers place the device on their cows and receive notifications on their smart devices of the exact time their cow is in heat. Farmers can increase milk production by reducing the calving period by more than six months. This innovation eliminates prevents farmers from missing cow fertility dates, decreases calving intervals and lowers feeding and treatment costs.

The app is free to use, but the collar costs $150. Although expensive upfront, animals will produce more calves in their lifetime leading to higher milk production, increased revenues and greater economic stability for dairy farmers in the long-term.

MyFugo has registered 8,000 farmers already and is constantly working to grow its user base. The app can track animals at any location, as well as identify their risk of disease. Farmers also gain easier access to veterinary doctors and loans. With many small farms traditionally lacking access to veterinary care and financial loans, this innovation offers the potential to transform dairy farming in Kenya.

Broad Impact

Many farmers are reluctant to embrace new technologies that challenge traditional farming techniques. However, these innovations are steadily transforming dairy farming in Kenya and creating unparalleled opportunities for farmers to earn a successful living. With new technology and easy access to records, dairy farming in Kenya is traveling a new road toward lasting progress. The successful integration of technology in Kenya’s dairy farming industry demonstrates the potential of future innovation in the agricultural industry at large.

– Sienna Bahr
Photo: Flickr

The post Innovations Transforming Dairy Farming in Kenya appeared first on The Borgen Project.

Original Source: borgenproject.org