The POTENTIAL V: Assets, Liabilities
Potential is life; and life is potential; since potential is the
ability to be and to do. Life is itself a collection of cells, after
all, the cell is the basic structural and functional unit of life. A
cell is that device that converts (inherent) chemical energy into
electric charge – even the biological cell generates charges:
phosphates, in ATP and DNA, for example.
The fuel cell, like solar energy from the Sun, itself a mega cell, is
the future – at least for transportation. Therefore the cell, like
each of us, has potential: The potential of a cell, a battery, is a
measure of the (electromotive) force acting across its terminals; it
is the force experienced by a unit charge as it moves from one pole to
the other.
The cell, like everything else with potential, has assets, raw
materials, and liabilities, wastes. For non-rechargeable cells, the
waste clogs the system, hinders the reactions, stops power generation,
stops productivity- and usefulness; now you know why your wall clock
or torch battery leaks water in the long run. For rechargeable cells,
passing current in the reverse direction undoes the hindrance of
productivity by forcing precipitates back into solution, liabilities
back into assets.
At this juncture, I consider it rather repetitive to again say every
business has potential, and rather instructive that I say that, like
every cell, each business has assets and liabilities, and that
businesses run down when liabilities clog the system, when the point
of rechargeability is crossed. And rather than agitate words and prove
theorems like I did in The Profit PERCENT, I shall simply share a
common scenario and hope you sift the grain from the chaff:
Mr. A started a business and in a short while, he hit the jackpot. What
should he do with the proceeds? Most people would agree that that
money ought to be spent; the dichotomy is invariably in how! (Yes, a
few people would advocate saving and seeing how the business next
fared.)
Of those in support of spending, some would suggest he pay himself for
his time and effort and sacrifice, that he share his good fortune with
family and friends, that he spread the wealth, that he buy an
automobile to feel among…, maybe even marry (another) wife, or build
(another) house.
Some would suggest that he reinvest the money, that he put it back
into the business.
I would not suggest any of the aforementioned options, however, and this is why:
Common sense suggests that Mr. A not spend the money needlessly. Need I
say more? What happens if the market crashes? What happens to having a
little savings, a little backup? As Jesus said, a wise man builds on
a rock in anticipation of the storm; a wise man keeps money in fishes’
mouths.
In modern times, markets are ever dynamic, a factor that continues to
produce Recession after Recession. That the market is profitable today
does not speak for tomorrow: anything can happen; the future is not
written in stone.
If Mr. A invests his profit in his business, he will increase his
stock, but not likely his carrying capacity. This of course will
affect his business. Cramming goods affects presentation, appeal,
marketability, as well as shelf life and durability.
But whether or not that happens, this is sure to: More people will
flock into Mr. A’s business. (Who doesn’t like a profitable business?)
Consequently there will be a glut: supply increases, prices fall, and
profits crash, just when Mr. A has increased stock! Lóbátán!
Hence, there is no doubt that Mr. A must keep his money. But how? In
hand, in banks, or in something else?
As a bird in hand is worth more than two in the bush, is cash in hand
worth more than bonds and cheques, bank drafts and promissory notes,
in emergency and especially in robbery? (The latter case however may
be one reason to be cashless.) On the other hand, while cash in banks
is safe, it does not appreciate as such, and can easily be trapped.
Ever queued at a bank or an ATM point?
In essence, Mr. A should keep his profits in a venture that is secure,
that appreciates over time, that can be easily converted into cash or
used as collateral. And that, more importantly, can be useful to him
(and his business) in the future.
A car is what everyone thinks of first. The first “asset” Father had
was a car, for which he paid dearly in envy and rents – and, of
course, cars depreciate. (And just before you laugh, please be
reminded that he remains the best businessman I know.) He subsequently
kept me off his cars, the best thing he did for me besides education.
(Now you may laugh: at moi.) The rest is history, story for another
day… Maybe in the next article in this series, The POTENTIAL VI: The
Way You Eat Your Mango.
That said, the only venture that comes to mind is LAND. And that to me
is the ultimate asset…
Yes, that business can yet be salvaged if you will treat it as a
rechargeable battery, pass life into it and see it revive: Break
forth, stay within limits, mind your own business, and stay true to
purpose. If you will build assets and part with liabilities, and see
your business thrive.
Catch my drift?… Assets; not liabilities, not luxuries, not cars.
And you may even buy for two; you and me nooni, I need it just as much
as you do.
Why land? It secures the future. It makes for a good collateral. It
appreciates over time. It is not commonplace, not replaceable, not
destructible. It is the future.
Of course, there are rules pertaining to where and how – and where NOT
– perhaps in a future article (if) prompted by popular demand.
However, suffice it to say at this time that one must get his
documentations right, and NEVER forget to hire a good lawyer – his
commission will never kill, it merely makes you stronger.
For legal aid, contact me; I happen to know just the lawyer for you.
#Youths, Save Nigeria. Start businesses. Acquire assets (and no forget
me o). It’s our turn!
Ayokunle Adeleye.
Sagamu.
