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What I learned after 3 years doing business – part 3

Continue from Part 2, let’s talk about the last 2 lessons that I learned over 3 years of managing a business; talk less, listen more; and a new world of opportunities.

Tl; dr;

  • Talk less and listen more.
  • Access to a whole new world of possibilities.

Interactions with other people

I have always been a quiet person, which I find it a lot easier when I realized this approach actually works. People tend to complain about their issues, brag about their achievements, and talk about their plans. All of these can be converted into opportunities. All I need to do is to ask the right questions to keep them talking. Looking back, most of my meetings will consist of about 80% of other people talking about their businesses and their issues. At the end of the conversations, I know more about them than they do about me, but that 20% of me talking is embedded in their mind, and I make sure that they remember me and my services through talking about how my services can help them.

Credentials are often overrated. I find that when dealing with a person, they care a lot less about what achievement you have, and more about how you can help them solving their problems. So I don’t even bother telling them about my companies size, how much clients have we served, etc. I listen to their issues first, and if I can help them with Digital Envision‘s services, I will align the discussion that way. If they query about the credentials, then I briefly talk about that, but it never is the start of my conversation.

Negotiation skills are something that I have been working on in the last few months. I practice methods in Never Split the Difference book, which is suitable to my style of interactions. So far it has been helping me securing a few contracts, so I will continue on practicing the methods. There is one sentence in the book that I like the most: “Negotiation is an art to make other people have your way.” I guess once you really understand this quote, then you will be an effective negotiator.

Opportunities

There are things that will never be available to non-business owners, simply because we don’t even know about it. One example, everyone uses American Express cards. Some even use multiple credit cards, which we call them card churning, which is a method to rack up bonus points, often flight points, to be able to claim for free flight travels. The major down side of credit cards is they cannot be used to pay invoices with bank transfer payment method.

Well, not really. Amex allows business owners to access something called Access Line, which allows us to pay our employee salary, our invoices, and even our tax returns with Amex account. And we can rack up the points with these payments. Through card churning, you need to apply to multiple credit cards, damage your credit scores to get a few hundred thousands points. For us as business owners, we just need to pay everything with our credit account and the points are quickly stacking up. (We’re not there yet) Imagine we spend like 100k each month as employee salary, and with 1 Qantas point per dollar spent, it’s already 100k Qantas points per month. That’s like a free ticket back to Vietnam every single month.

Apart from exclusive services, I also have access to certain conversations that contain information before it was reveal to the public. I know about how Federal government rolled out their COVID-normal plans probably 2-3 months before it took place. And that privilege really helped us realign our business to fit the direction from the government.

Summary

2 words to sum up the lessons: Quiet and Opportunity.

It has been a life-changing experience for me over the past 3 years. Lots of lesson learned, and there are still numerous things out there waiting for me to know about them. Life has never been more exciting for me.

“The quieter you become, the more you are able to hear.” – Ram Dass

By Tuan Nguyen

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What I learned after 3 years doing business – part 2

Continuing from Part 1, in this post I will discuss on another 2 massive lessons that I learned, managing people and work-life balance.

Tl; dr;

  • Managing people is getting more and more complicated as the team grows.
  • There is no such thing as work-life balance for the owners (or at least myself).

Managing people

When there were only 2 of us, life was simple.

Then we added an admin, and a developer. It was something that we needed to get used to.

And then, everything changed, now we have 18 in Indonesia, and 3 in Australia. Now things like company values, company cultures, etc. are something that we need to create and effectively communicate to our employees.

I read a lot about these topics, trying to figure out how other companies do it and grow to over 100 employees. I like Simon Sinek’s way of thinking, I adopted some of that principles into the company. We put employee benefit first before our clients, believing that they will deliver better results and in turn, the clients benefit from it. A lot more was spent into creating an enjoyable working environment than we spend on marketing, which is basically just our time at this point. We have not seen a persuasive way to spend our budget on marketing effectively (yet). So far we managed to keep our staff happy and productive. But that does not mean we don’t have people resign or get fired from the company.

So far we had about 6-7 people who left DE. Most of them resigned because of various reasons. I only had to fire one person due to his performance. And it was a devastating experience. Before the day, I had to find a friend and had a drink with her, which I don’t normally do, to prepare for that. Firing people is not easy, the first time you do it, it was hard.

We can’t get to over 20 staff without doing A LOT of interviews. I started to be able to feel what other people don’t talk about. Sometimes I see the desperations in their eyes, the lack of food, the distress in trying to find another job, etc.. And it was hard to turn them down because their skills are not good enough for us. We have to put our company before all else, otherwise it is a crime against our current employees. And that means we have to be cruel sometimes. The other day I interviewed someone who is in my dad’s age, and it is hard to put him into the declined status, his skills are not what we looked for, but still, his eyes showed me the misery of life.

interview count
As of today we have completed nearly 600 interviews

Looking back, my business partner and I have sacrificed quite a lot for the company. Over 3 years, it was and still is our top priority from morning till night. We do everything to nurture it. In a way, I understand more about being a parent, and I am ready to sacrifice a lot more to see it grows.

Work-life balance

As an employee, all we want is having 8 hours of work, 8 hours of rest and 8 hours of entertainment. And that’s how the whole revolution started and now we have Labor’s day to memorize that.

I am here to tell you that once you become a business owner, you can forget about that. Maybe later on, once you have someone run it for you, but I’m not there yet, so this is what I noted down for myself in the future.

Over 3 years, my schedule has been 16 hours of work and (maybe) 8 hours of rest. And it is necessary, we had to plan the next catch ups, who to meet next, creating processes for staff to follow, etc. There are a lot of work that come with having employees as well as keeping the leads coming in. Mental breakdowns are expected. And I sometimes feel overwhelmed with all of these. I am scared, but I can still push on. Most people will not understand this, and I don’t bother telling them.

Lockdowns have been really good for me. I don’t need any excuse to go out on weekends, no planned dinners and other social conventions. Over 18 months, I have been able to focus on growing Digital Envision, and it will be better next month, next year and beyond. While most people complain, I kept my mouth shut, and keep pushing through all barriers.

Summary

2 words to summarize the above lessons: empathy and sacrifice.

I learned how to read people when they need something from me, and it is not pleasant most of the time. I get used to it, but still it stings everytime.

When you’re working to provide for your kids, you would do anything to keep them happy. I have the same feeling when it comes to Digital Envision. There is no compromise to that, and it makes me happy.

In the Final part I will talk about how I interact with other business people and the opportunities that I captured.

“Nothing is miserable unless you think it so; and on the other hand, nothing brings happiness unless you are content with it.” ― Boethius, The Consolation of Philosophy

By Tuan Nguyen

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What I learned after 3 years doing business – part 1

People say that over 50% businesses fail after 2 years, and over 90% fails after 5 years. Given that Digital Envision Pty. Ltd. has been running for over 3 years, it’s time to look back and reflect on the lessons learned.

Tl; dr;

  • Start from scratch is a lot heavier than purchase existing businesses.
  • Building contacts and networks takes time, A LOT of time.

How did we start?

The journey begins in September, 2019. A friend of mine worked for a clinic and the IT company who supported the clinic went out of business. She asked me whether I knew another IT company. Coincidentally, I was planning to participate in an event called Startup Insider, which was a Shark Tank – like event. “Right now I don’t know, but give me a week and I’ll send you the details of an IT company.” – I told my friend.

In 1 week, my business partner and I created everything from nothing. We registered the business name, created the profile website, created a brochure representing our services, basically everything needed to present to the clinic. And we got that contract the week after. It was simply just maintaining and further developing a few WordPress websites, nothing too special. However, part of me was surprised of how fast one can build up a company just like that. All we needed was the will to do.

So we got our first client, how did we get our second one? This was difficult for both of us, but we managed to get 2 more small projects from the first client as well as the employer of my business partner. However, both of us were just working on this company part time, there was no commitment and therefore the sales became rarer and rarer. And because of a misunderstanding from within the company, my business partner got fired and we faced the first opportunity of having him doing full time for DE.

Everything changed.

He started doing full time for DE. I introduced him to BNI and we decided to join under web development category. We started the most difficult time of our company, survival. BNI has been really important for our growth, my business partner spent a lot of time making connections and joined meetings with business owners in BNI. I did a lot less networking than him due to working full time for Adslot still. I was in charge of all technical aspects and around this time we had our first staff, a general admin and a developer.

That was a lot of work for 2 amateurs trying to start a small business. Looking back on that, it was good that we started from scratch. We now understand what needs to be done to build the business from ground up. However, next time, we will look around first and try to buy an established business instead of growing from scratch.

Growing business networks

Like I said before, BNI has been a key factor for our growth. However, it took us a year and a half to finally see the fruits. Through the first and second lockdown in Melbourne, everything froze and we managed to get most of the grants, which were tremendously helpful. We had barely enough to pay our employees, while continuing to conduct meetings with more and more people within BNI networks.

After a while, we made some people think of us whenever their clients said they needed a website or a mobile application. And it all started to explode, especially in the first half of 2021. Before that, we had doubts on whether this actually works. We had a hard time discussing on whether we needed to extend BNI membership because we didn’t see anything fruitful at that time. But we persevered on that chosen path. Since then, we joined 2 more business networks, one being Victorian Chamber of Commerce, where we had the opportunity to meet with the politicians and listen to their plans ahead; another one is Club of United Business, which we found extremely helpful on our path of building a better business.

Zoom networking meeting
Me at the top left corner in a meeting from Victorian Chamber of Commerce

After talking to people who referred us business, I realized that it is crucial to keep in touch with the key referral partners, as they need to remember us first thing when they hear anyone talking about needing our services. If they don’t remember us at that time, most likely other company took our place in their mind. This aligns well with one of BNI’s principle: be visible. And we will continue to be visible in all of our networking events, by participating in the conversations, people will remember you and your services.

Summary

If someone asks me to sum up my experience on the above lessons, I have 2 words only: decisive and persevere. We saw an opportunity, we took the leap of faith. Business partner and I all agree that I have a lot of patience when it comes to business matters. And so far, it worked out for us.

In Part 2 I will discuss 2 more lessons about people management and work-life balance.

“Be decisive. A wrong decision is generally less disastrous than indecision.” – Bernhard Langer

By Tuan Nguyen

Is it bad to move to a new place?

Recently I moved to another apartment, and I just want to note down what I went through and whether it is a reasonable choice for me.

Tl; dr;

It was a great choice. Both in financial and mental aspects.

  • Financially: saving on rent per week, and it is actually a lot.
  • Mentally: soft reset on life, and re-evaluate the items in my possessions.

Financial numbers

Since I am more attracted to numbers, this is normally the first point of view that I consider.

With the rent price going down across Melbourne CBD, I did some research and decided that I currently pay a bit more than what the market has to offer. Therefore I decided that it is time to do something.

What did I do first? Well, I asked the current landlord to drop the rent down. They didn’t go down to the level I expected, and they were going to sell the apartment anyway, so I realized that I need to find what I want elswhere. I sent my 1-month notice to the property manager and started to find another apartment. It is necessary for me to do so since now I have a deadline to adhere to.

It is easy to find something good in the CBD with the budget of $300/week. You wouldn’t imagine the view and the convenience some of these apartments offer in this price range. However, that is not my budget. My budget is a modest $250/week.

I have a hypothesis that some landlord would be motivated to drop their pricing a bit more in this weather, especially in the lockdown period. Yes, I gave notice just before Melbourne went into the 5th lockdown. And I have 30 days to play with that idea. I cannot inspect the apartment physically, only through images and videos. And I need to put in a lot of offers to confirm the hypothesis.

The steps I took are as follows:

  • I spent a few hours in the first weekend, shortlisting the apartments that are in my range and around $50 above. So anything less than $300/week is considered.
  • Prioritize the ones that I would like to live in, with good view, good natural lights and preferably unfurnished.
  • Contact all the property managers asking for the videos if it was not available, and normal conversational questions to keep them engaged. Also tell them that I need to move by that date.
  • Wait a week and then apply to all those apartments, with the rent offers scale back 10-20%, e.g. $300 -> $250, $250 -> $210, etc.
  • Keep monitoring the market and add new listings into the shortlist if they satisfy the criteria.

From all apartments I applied (probably around 40-50 of them), I have 2 offers accepted by the landlords. Both apartments dropped their rent from $300 -> $250 per week. Now I have the ability to choose. And I ended up choosing the one that I think suits me better. The hypothesis was proven right.

Now is the fun part, how much do I save, considering all the cost I needed to spend?

Above is the moving cost as well as my previous rent.

  • I hired a removalist company to move all my stuff, and only need to pack them up.
  • I hired a cleaner company to thoroughly clean the old apartment.
  • There is a small setup fee for the internet at the new apartment.
  • I pay for 6-months mail redirection from Australia Post to ensure that my mails are not missing. I do have a few bills that are still going through the mails.

The meaning of the above table is, I need to live in the new apartment for 10.63 weeks (around 2.5 months) to recoup all the moving costs, and anything after that is basically what I can save from the moving exercise. Not to mention that I will free up some money that was stuck in the bond for the previous apartment.

Mental aspect

Lots of people are afraid of the thought of moving houses. And it is for good reasons. People like to settle down, whether it is their parents and friends told them to, or they believe in having a stable base and then they can take off in their career. Asking someone and you will get a reason why they don’t want to move, or trying to find a place to stay for a very long time.

I believe that I am always home. I don’t need a physical place to remind me of that. That can change once I have my own family, but by that time, I will be in a much better place comparing to where I’m at now. However, we are living in the present, and I feel quite good about the decision to move. It is like hitting a reset button in life, moving to a new place, but not so strange that I feel lost, and I spend time to look through all the luggages I brought with me until now.

It’s a good exercise to audit all items that are in my possession every once in a while. I found that I could throw away a few unused items, restock medicine cabinet, and re-evaluate wardrobes.

I also did a small experiments on my friends, I selectively told certain people that I was going to move and see how they react throughout the period. So far, only my family keep up with what I have been doing regarding the move, the rest don’t care enough to ask. Which is quite interesting. I shall note this down for future references.

Summary

Overall, the move went smoothly. I could have bargained for removalist and cleaner services. But given the tight timeline I ended up going with what I have, knowing that after a year I will be in a better place anyway. And who knows what will happen after a year, I may move again.

“Change will not come if we wait for some other person or some other time. We are the ones we’ve been waiting for. We are the change that we seek.” – Barack Obama

By Tuan Nguyen

New normal – are we fked? – Part 3

Last 2 blogs are about my observations, and this one will be about my assumptions and actions to deal with this “new normal”

Tl; dr;

Assumptions

  • The pandemic is here to stay, maybe downgrade to a seasonal flu.
  • People will be working remotely more.
  • There will be financial/economic consequences after we get out of the pandemic status.

Actions

  • (Try to) ignore the news that is not related to my goal(s).
  • Keep a consistent daily schedule.
  • Research and prepare for future real estate investments.
  • Improve Digital Envision and VA For Everyone businesses.

Assumption – COVID-19 is here to stay

cat with cute eyes

Since September 2020, when we just got out of the longest lockdown in Melbourne, I started to expect that the pandemic will not be gone any time soon. We have made great progress on vaccinations, but as long as there are still a significant population who are not immune, we still face the chance of mutation and therefore, outbreaks. Not to mention people are irrational and there is always a thirst for physical connections. Which is why I was not surprised when there were other lockdowns and outbreaks afterwards, as they are all expected in my mind.

With that being said, we are living in the best time in history. All previous pandemic experienced a lot more cases and a lot more death. Black Death plague in the 1300s, it killed over 30% of Europe’s populations. Spanish Flu in the 1900s, which infected 500 millions people and 100 millions people died. We should be grateful that we are in a much better place now.

Assumption – Working remote will be more common

work from home meme

With social distancing rules applied, offices cannot put as many people like they could before. There is a chance that some of the workforce will be working remotely as a norm. This will change a lot in the professional services industries. I am still unsure if blue-collar industries will be affected or not.

I have been working from home since March 2020 and my personal experience is that sometimes I get distracted of certain issues in the house, therefore reducing my performance. Moreover, the line between work and life fades when I work from home. Long term it may lead to work-life unbalance, which is not what anyone wants.

Therefore my thought is that we will come back to the office part-time instead of full-time. How many days? I don’t know. People are still trying to figure out the balance.

Assumption – There will be an economy consequences

frog meme

Since the government has to publish a lot of fiscal as well as monetary policies to support businesses as well as citizens during this time. There will be a time when we need to pay back what we spend today. Will it come any time soon? I don’t know. For now everyone is happy because their asset values are climbing up day by day, week by week. Who cares about the downturn, right?

I am no economist, and surely everyone has their own judgement about the future. I only want to ensure that my future is somewhat predictable in financial term.

Action – focus on what matters

yoda on focus teachings

We have too much distractions today. Our attention has become a currency that every business out there try to buy. This is why advertising businesses are so successful. They broker those deals.

We all know that to be good at something, we need to spend a lot of attention to it. Therefore, I decided to block out all news and information that are not relevant to my goals and my interests. This started when we started going into lockdown last year (March 2020).

I realized that if there was something really, really bad, I would know it from my friend and business circle. So I don’t need to read the news to know about it first hand. People have the need to share disastrous news anyway. We had a tiny earthquake a few days ago for like 20 seconds and the whole social media is already flooded with it for a few days. As a result, I unfollowed all news site, drop my email subscriptions to minimum, and only check social media during my breaks throughout the day.

This frees up time for me to do things that I deem more important to me. I started to spend more time cooking, do some exercising (not much but I keep it consistent), improving important relationships and working on my business. I also started to research the spirituality topic and find it very useful to keep me stay in my track. Through my spiritual journey, I feel at peace with Death, when the time comes, I will welcome it and walk along side with Death like an old friend. But I know that I can still contribute to Life, so I have a strong faith that until I cease to prove my usefulness, I’m not going anywhere. This helps me stay calm during life and death situations.

Action – research

During this time, I read a lot of books related to real estate investments and do researches on them. All to prepare for the case when there is an economy down turn. My patience is somewhat higher than average, so I believe that I will be able to wait for a good deal to strike.

Researching is not an easy thing to do. I need to keep an open mind, as well as managing my risk level to figure out which assets can be comfortable for me to hold long term. To me, anything that is less than 5 years is considered short term, 5-15 years are medium term, and longer than 15 years are long term holding. Obviously I would like most of my assets in the 15+ years. Therefore a thorough research is required before I jump into a new investment deal.

Action – work on my business

Lately I decided to quit a high paying job to fully work on my business, which is a big decision because now I only get paid for half of what I used to get. However I get to work for myself, and it is really a different world to me. I worked 2 jobs for the last 2 years and it was time to eliminate one thing in life and fully focus on the other one.

The businesses are flourishing, in both Digital Envision and VA For Everyone. I believe as a business we can hit 20 staff by the end of the year, probably more. We are still small but our growth has been great in the last Financial year. And there is a different world when it comes to business finance. I am looking forward to taking advantage of it. This financial way will help me purchase more and more real estate assets in the future. And who knows, I may dabble in other investment assets as well.

Summary

I believe that everyone must have a plan for the future. Sadly most of us walking around with no idea about tomorrow. Is it the lack of education? Is it just human nature? I don’t know. But the fact is that we are irrational creatures, and logical thinking is basically unnatural to us. It takes a lot of courage to actually follow the plan we set out for a better future.

“Try not to become a man of success. Rather become a man of value.” ― Albert Einstein

By Tuan Nguyen

New normal – are we fked? – Part 2

Let’s talk about what I see in other people when we are all put into an unexpected situation.

Tl; dr;

Most people I know have negative thoughts about the future. They all have different ways to deal with the pandemic.

  • Some withdraw into their self-built containers where they just wait for the storm to pass.
  • Others break the rule repetitively to go where they want, do what they want, and justify it as freedom of choice.
  • Some others pursue new habits, hobbies.
  • Only a tiny portion of people that I know, who can and commit to take advantage of the circumstances.

The hibernators

Source: libraryvisit.org

As the name that I just made up suggested, this type of people will create a safe haven for themselves and stay there until everything is over. And as long as they are comfortable, staying out of troubles and other issues that are happening, it’s all good right?

I am lucky enough to surround myself with friends who have stable jobs and income. They are generally did great in university, being respected in their fields, and therefore secured jobs and in some cases, career. It is understandable that when the whole pandemic happened, and if they are not being affected by the economy, then defensive cocoon is definitely an appropriate choice to go. (Defensive cocoon is a term in chess where you just put all the pieces next to your king to weather the enemy’s attacks).

It is quite easy to spot these people, especially with limitation in travels and reason to go out. Some behaviours include:

  • Being lazy to go out (within the rules), and if going out, they are the ones who look at the time first in the group.
  • Avoid drastic changes, even if they know it’s right for them. Changes can be relationships, jobs, place to live, etc.
  • Often use the phrase: “Once we get out of this…” Every exciting things are pushed into the future, leaving all other things in the present.

I think it is a perfectly reasonable way to deal with the crisis. However, there are little contributions from these people to other people, or to the humankind as a whole. But at the end, they may survive, and that is important.

The rule-breakers

Let’s put aside the anti-vax and anti-mask people, since they generally fall into this category. In this section, I only want to talk about those who break the rules in a more subtle way, but still think they are in the right.

One thing to note is that I have done breaking the rules as well. This is only what I observe from myself and from other people. Most common things that we do is that despite curfews and restrictions, we find every ways to get out of the house, even though it’s not deemed necessary. And we tell ourselves things such as:

  • I can’t stay at home, I’m an outgoing person.
  • It’s only a few hours.
  • I just want to have some fresh air, I didn’t come into contact with anyone.
  • I have work permits, they can’t fine me. (my all time favourite, also apply people who has permits to do charity works)
  • I have freedom and rights, noone can restrain me.

My thought on this is, it is somewhat selfish to justify going against the rules to satisfy oneself the “need” to go out. The 3rd and 4th lockdown in Melbourne happened partly because of the one unlucky person who did exactly that.

So, if you don’t want to break rules, or get tired doing so, what else could you do?

The hobbyists

“I am experimenting something new”, “I just started on the thing that I’ve always wanted.”, “I plan to do this and that”. These are the typical sentences that I hear my friends say every now and then in the last 18 months. And it is quite exciting and beneficial to start a new hobby or a new business idea. But I have some concerns when certain signals appear. Considering this scenario: a person who has never touched anything musical, suddenly announced that they want to start on not one, but two different musical instruments. Or a person who has never started a business, and then plans to start 2 different businesses within a span of 6 months. Something doesn’t add up here.

My hypothesis is that these people are just looking for something, anything, to distract them from the real issues. Most common ones are binge-watching movies and TV-series, but I purposely exclude them from this category. I only want to look at people who start something new during this time. The truth is that to build an actual hobby or a business, you need to focus on doing just that one thing. Juggling multiple things at once will either exhaust you, or you will end up with nothing done, because everything is half-baked.

This is me speaking from experience, I used to do a lot of different things in my free time, all at once, e.g. building electrical circuits, playing guitar, playing piano, rubik speed-solving, etc. And let me tell you, I ended up knowing a little of everything, but nothing to be proud of. I would rather do one thing and be an expert in it.

From the observation, it seems like these people does not have any goal in life. They simply live and go with the flow. “You Only Live Once” mentality. People with goals behave differently. They are focused on one thing at a time and do not stray from it. This is why those people are quite boring to talk to sometimes. As all they know is that one thing and you will end up listening to the same thing all the time when you talk to them. But those people are the ones that actually make things happen and change the world around them.

The world changers

These are the ones that I admire the most. They believe that it doesn’t matter what is happening out there, how they respond to it is the only thing that matters. They happily adapt to the new circumstances, and even thrive from it. They rarely listen to news, but they know everything related to the topics that interest them. World changers believe in helping people get what they want, and in turn, they receive what they deserve.

I happen to be a part of a small group of people who strive to be the best at what they do. We all have our own goal written down and carried with us all the time. It’s the compass that guide us when we feel lost. The written text prevents us from doing anything that does not contribute to achieving that goal. I pretty much have the text in front of me all the time when I’m working. And when I’m walking outside, the tiny piece of paper is felt in my pocket as a constant reminder.

It’s not that hard to spot these kind of people. They can always recite their goal in a 1-2 sentences without even thinking. The best thing is that I always have a feeling when I talk to different people, whether they are focused on their goal or not. Sadly I have not encounter anyone outside the group who is determined to get to their destination, by any means necessary. But maybe one day I will.

Summary

People have different ways to respond to the change in circumstances. Above are just 4 different ones that I observed. Without a doubt, I want to be one of the world changers, because if I only live once, why not lead a life that affects as many people as I can in a positive way.

In Part 3, I note down a summary of what have I done in the last 18 months that contribute to my goal, and how I ignore almost all news that are non-related to my goal.

“Clarity and simplicity are the antidotes to complexity and uncertainty.” – General George Casey

By Tuan Nguyen

New normal – are we fked? – Part 1

Just my thoughts on the “new normal” that has been talked about in both social media as well as government official announcements. What I observed other people’s behaviour after a year and a half under COVID-19 influence, and how did I respond to the same circumstance.

Tl; dr;

I think we are heading towards a cliff as a whole. Big explosions are expected to go off at anytime. However, it depends on what can I do if and when they happen.

I choose to hold close to my investment assets, and not selling anything as of now. Holding as much cash as I can in the offset accounts, while looking for more investment opportunities. I will only expand my portfolio if I find something that fits my calculations and risk tolerance.

The economy

Did you ever look back 2 years ago, when a 2-litre bottle of milk is $2.00? Now, it is $2.40. Same brand, same bottle. What happened? Did inflation go up so much that we did not even notice? Other food products have gone up too, maybe not 20% in the case of milk, but surely, 10% is the norm. While people are looking, researching on stocks, real estates, cryptocurrencies, other aspects of our lives are also going up at a high pace. And nobody bats an eye.

So why did it happen? According to investopedia, there are 3 forces that may affect the inflation rate of a certain product. Cost-pushing, Demand-pull, and Expansionary Fiscal Policy.

  • Cost-pushing: with the restrictions in travelling as well as worsened relationships with foreign countries, we are not importing as many materials in the last 2 years. As a result, a lot of subsequent products are going up due to the lack of materials. We can see it in the increment of new property builds.
  • Demand-pull: this probably can be observed the most when there are disconcerting news, like the first lockdown in Melbourne last year. People flocks to purchase food, and not surprisingly, toilet papers. We did have some people hoarding them and resell with a higher price. And sadly some people bought the items.
  • Expansionary Fiscal Policy: I strongly believe this is the cause of all food prices going up. With various supports coming from the government, suddenly there is more money in people’s pocket, and they can afford more. Corporations are probably the best people to take advantage of this fact, and they raise the price, just a little. I don’t blame them, if I were in their shoes, I would probably do exactly the same.

However, our economy has not been thriving at all. Lots of money going into people’s hand end up in properties. Let’s consider 2 streams, one is purchasing established properties, the other is purchasing new builds.

  • Established properties: this purchase, in my opinions, does not contribute to the productivity of the whole economy. It’s just moving money, or mostly credits in this instance, from one bank to another. And because the price of properties has been rising, there is more and more credits being created every time properties change hands. Which may lead to the breaking point where people realize that there are just too much debt to pay, and we have a time bomb waiting to explode.
  • New builds: contribute a temporary boost of productivity and jobs, due to the fact that someone has to build the property. However it is not sustainable. Some people will argue that we can keep building houses, but we only have like 30 millions population. Who are you building these properties for? Unless the government has a better migration policies, and hoping that people will flock into Australia, we might not end up where we think.
Source: ABS

Since when are we borrowing to buy properties more than we invest into our business, and therefore the economy???

Employment

I have seen companies who wants to employ an experienced level person for 6 months, but unable to do so. They put their compensation to more than $160,000 per annum but there was no hope. At the end, they needed to source the resource from oversea.

We are facing an issue where most of our senior level employees are from migrations, and not a lot locally. This may be the reason why employment is still high, and even if it’s low, the people who got employed may not worth it. The longer our border restriction is, the companies become more desperate and they will need to either go for offshore resources, or agree to a sub-optimal local one.

I know about this because I’m running a service to help businesses finding their offshore resources. The business is called VA For Everyone. And I talked to a lot of business owners with resounding answers that are similar to what I described above.

Summary

I guess that’s long enough for a rant. The economy and the employment aspects are pretty weird and I manage to take advantage of it by providing people what they need. However if this drags out for another year, I am not sure what is going to happen.

Next part I will share my thoughts on people’s psychology from observing people in my circle.

“You see, but you do not observe” – Sherlock Holmes

By Tuan Nguyen

stock investment

My guess on CBA Share buy back

Recently I received an offer from CBA about their share buyback program. They are offering to buy back shares with the total value up to $6 billions. And I am curious of how it affects my existing holding. I took a bit of researching and come up with a guess on how the share price will change.

Tl; dr;

The share price may drop slightly (4.44%) due to the difference of share outstanding and shareholder equity, before and after the event. The drop is too small to do anything meaningful and fit my investment strategy.

What is share buy back?

A company can offer investors to buy back shares from their portfolio. This reduces the floating shares on market, and decreasing the market capitalization as the result.

In the case of CBA, they offer to buy back shares from investors with a certain discounted price, as specified in the booklet. I am sure there are cases where people need to relinquish the share that they are holding, but it is not easy to dump a few hundred millions worth of share into the public market. Therefore these share buy back may be a great way to get rid of the shares without people knowing.

Assumptions

  • The Price/Book ratio is unchanged.
  • CBA successfully buys back the maximum amount of shares that worth $6 billions.
  • CBA buy back price is the market price at the time this blog is written.

The calculation

First, let us see what are the current figures of CBA. For the calculation, I need to find the following details.

  • Current share price;
  • Current share outstanding;
  • Current market capitalization; and
  • Current Book value, or Price/book ratio

Luckily, we can easily find all these information in Yahoo Finance.

At the time of writing, the information is as follows.

CBA current figures
Current CBA related figure

Note that the green values are the manual input value, while the other fields are calculated from the green field.

Next, I attempt to calculate the new share price, by following this logic.

  • After share buy back, the outstanding share will be $6 billions worth of share less.
  • CBA will spend $6 billions from its pocket to buy back these shares, which means the shareholder equity will decrease by $6 billions.
  • The new book value per share will be recalculated by dividing the new shareholder equity by the new share outstanding.
  • Recalculate the new share value by multiply the book value by the price/book ratio.

The result will look like this.

After buyback calculations
Final calculations

As we can see the expected share price is smaller than the current share price. However it is a very small amount. And therefore it is meaningless for me to do anything about it.

Summary

Off market share buy back is a good way to release capital from CBA shares. However since I don’t like selling shares, especially shares of a seemingly stable company like CBA, I will not participate in this buy back opportunity. And based on the above calculation, I feel that there is no use in doing anything related to the price drop estimations.

I will keep an eye out for the price. The buy back date is 04 October, so I expect the share price to be adjusted to the price above within days of 04 October.

Everyone has the brainpower to follow the stock market. If you made it through fifth-grade math, you can do it. – Peter Lynch

By Tuan Nguyen

A cocktail in your hand, and on your wrist

Imagine you’re in a bar, you walk to the bartender and say “Get me something that looks like my watch.”

The bartender looks at your wrist, and say, “A mockingbird, sir?”

You laugh.

He laughs.

Seiko laughs.

Tl; dr;

I bought a Seiko Presage watch for my birthday. It is the most valuable watch in my collection so far.

The watch signifies a milestone in my career, and my life. Looking at it reminds me of that milestone, and in the future, it will be an invaluable memory. And this timepiece will be there to remind me of that.

The watch I bought.

Seiko was my choice of brand when I decide to buy a watch for my birthday. Mainly because I need a dress watch, and it fits my budget.

This watch is part of the Midnight Cocktail collection. There are 5 different designs, which represents 5 different cocktails. I chose the Mockingbird due to the simple design, and suitable for a good dress watch on my wrist.

I almost picked the one that features a whisky-based cocktail, however decided against it because I don’t feel like the face and the strap has the same colour. Maybe in the future when I can ask for a strap replacement, I’ll consider purchasing that kind of watches.

Price differences

It is very hard to track the watch price in the market. The Presage Mockingbird RRP is $699, but a quick google search and you can find various pricing from different dealers.

I have been browsing the market for a while, and have my eyes on a few other watches from different brands, such as Rolex and Omega. However the price is surprisingly unpredictable and there are a lot of people buying/selling for a profit.

Google image for Seiko Presage Mockingbird prices
Source: google.com.au

I ended up picking the one in Myer, mainly because I can obtain the watch in store and can inspect it immediately. It was an exciting day when I picked up the watch and tried it on my wrist.

The feeling

Wearing this watch is very comfortable, the strap and face is not too big to overwhelm my wrist. It sometimes feels like I don’t wear a watch at all, very lightweight. I feel a lot more confident, more empowered when I have it with me.

The great thing is that there is no battery, it recharges itself through my movements. So theoretically, it can run with me until the end of days, and plus 2 more days. 😀

Symbols of the watch

So what is this one signifies?

Well, it is my 30th birthday. And people have an expectation that these kind of round-number birthdays need to be celebrated differently. So as part of the excuse to mask my true reason, I can simply use this one as an important milestone of my life journey.

For the true reason? I would like to only disclose that to only people that I trust. So if you see me going around wearing this watch, it is an important event. I will treat this as a special jewellery for special occasions.

Summary

This is the first watch that I bought for myself, and for sure it will not be the last. I am somewhat of a watch enthusiast, and I will continue collect other timepieces as part of my life journey.

By Tuan Nguyen

financial review

Financial review – How do I do it?

Every month, I conduct a financial review for myself. I go through what I spent in the last month, making sure that I recognize all transactions and categorize them into different sections. From there I plan my spending for the next month, and have a better forecast for my finance over the next year or so.

Tl; dr;

The steps that I go through (should take less than an hour to do)

  • List out all bank transactions
  • List out all credit card transactions
  • Put the transactions into several categories.
  • Put the final numbers into a spreadsheet.
  • Split the income into the same categories, and move them to corresponding bank accounts.
  • (Quarterly) Review investment portfolio.

You can’t control what you can’t measure

If you aim to achieve financial freedom one day, you need to control your finances. And the only way to control it is to measure what you have done over a period of time. I get paid monthly, so that’s why I do this once a month. I encourage you to do it in conjunction with your pay day.

It is even more important to me because I one day will work full time for my own company, and at the beginning, my income will drop significantly to keep the funding inside the company for growth. That’s why I do need to know how much my expenses are; and from there determine how much I need to take out of my company for living.

I begin the financial review with listing out all bank transactions within the last month in a text document. You don’t need to have the bank statement, just transactions history is fine. Don’t forget your credit card transactions as well. I myself have quite a few bank accounts, so pulling all of them together requires me to log into each and everyone of them at least once a month. I just copy and paste them into a text document. Below is an example.

bank transactions
Bank transactions
transaction text
Transaction list

If you do this step, you’re probably ahead of many many people in terms of financial control. At least you have a rough look at what you spent over a period of time. Therefore it triggers something in your mind, and every change begins with the mind.

Categorize transactions

So, when you have a list of transactions, it’s time to put them into several categories. For me, I follow the Barefoot Investor categorization. You can read more about it in his book.

The categories are as follows:

  • Income: all your income sources (you can split it into salary, reimbursements, side income, etc. if needed)
  • Daily expense: all your necessary living expenses, e.g. food, electricity, gas, water, home loan mortgage payments, etc.
  • Splurge: all your optional expenses, e.g. eat out, TV/internet subscriptions, coffee, etc. Anything that you can live without, but choose not to.
  • Investment: all your investment expenses, e.g. putting money into stock market, purchase of something for work, charity donations, etc. Basically anything that potentially making you money, or at least can claim back on tax.

Note: I don’t count my investment income in this calculations, since I would like to reinvest all of them back into the market. So I keep them in an investment bank account, and only look at that once every 3 months.

The Excel spreadsheet for financial review will look similar to this. I also attach a sample file at the end of this section for you to try out. For people who can use accounting software, I’d recommend Akaunting because it’s free and should be enough for this.

Excel spreadsheet showing financial calculations
Sample Excel financial sheet

Here is the link to the sample document. Each month you just need to add another column to the right, and continue the calculations. Overtime, you can see what’s the average spending is; and from there, calculate your own financial plan. Every year I change to another sheet for clarity purposes.

Plan your expenses

Now you know how much you earn in the last period, it’s time to plan your expense for the next month.

Following The Richest Man In Babylon, I immediately pull 10% of total income into my investment account.

For the first time, I have no average number to plan my expenses, so I can only estimates how much do I spend for each categories. Your last expenses total is a good place to start. The average numbers should be around 6-12 months accumulations to be accurate, which means you need to adjust your plan every month until it becomes stable.

So let’s say your income is $3000.

  • 10% to investment ($300) – put this in a separate account, and review/plan it every quarter.
  • 30% to rent/mortgage ($900) – I split this because I need to measure whether I can move to another rental place, or move back into my own place. You can just put it together with the daily expense.
  • 30% to daily expense ($900) – You will have $900 to buy food and pay various necessary bills.
  • 30% to splurge ($900) – You have $900 to buy all the things you want to buy, no question asked.

The percentage will change based on your own spending habits. However, the aim is that no matter what you spend, at least 10% will need to go into investments for the future. Once the planning is done, move the money into each of their own bank accounts.

Congratulations, you have finished reviewing your financials for the month. In future posts, I’ll share my way of determining the expense a bit more accurately, so that you don’t trip on unexpected bills.

Summary

Financial review, in my mind, is what you must do, not what you want to do. It has to be done regularly so that you have a chance of having a better future. The hard part is doing this repeatedly over a long time. I have done this for almost 2 years now, and my numbers are getting better and better everyday.

By Tuan Nguyen