Monthly Archives: January 2017

Getting Wrong About Investing

Starting a business takes a lot of savvy. Many entrepreneurs border on genius when it comes to their particular niche, and that’s why people are willing to invest in, buy from, and do business with them. While a particular entrepreneur may thrive in her/his field, they may struggle in one common arena: Personal wealth management.

Entrepreneurs spend so much time garnering investments that they often don’t take the time to make any of their own. If you’ve ever started something you probably know all too well how easy it is to invest in a project, with no promise of a return. You pour all your time, energy and in this case money, into a venture hoping that it takes off (and eventually pays off).
One founder has set out to solve this problem. Paul Adams, CEO and Founder of Sound Financial Group, has a passion for helping fellow entrepreneurs reach personal financial success. As a result, his Seattle-based investment firm manages millions in capital for its clients. Paul has some great insights on where and why founders often struggle to manage their own personal finances.

Personal Wealth Management Tips

1. Legacy vs. Retirement Dreams
When most of us think of retirement, we think of vacations, houses and no debts. Adams and Sound Financial recommend an alternative perspective. Instead of putting your focus on how you’re going to spend your savings, think about the legacy you plan to create. “First, cast your vision of the future; then set an intention for any financial advising relationships you engage in, establish a plan and strategy and track your progress going forward.” Having this mindset helps vision driven founders find purpose in their financial planning.

2. Selecting the Right Kind of Assets for Long-term Withdrawals
Adams also details that “Anticipating a lifetime of withdrawals from a defined asset pool over an indefinite period of time is a complex challenge for which there is no simple solution. Pursuing this challenge can require creative approaches and persistent vigilance.”
Once you retire/exit/sell you’re essentially out of a job, so you’ll need to have saved well.
Solution? Plan for market fluctuation and have clear expectations of what your desired retirement lifestyle is going to cost. You’ll need to ensure that your investments are able to meet those expectations.

3. Your Business is Great, But it Might Not Be Great for Investment
The other mistake entrepreneurs make when relying on their businesses for personal success is banking on a sale price down the road. “I know entrepreneurs that have based their retirement plans on the current value of their business. The problem is, 10 years from now when they plan to sell, no one might be willing to purchase it for that price. It’s important to create a strategy that doesn’t rely on such variables.” Adams shared.
Loving your business is great. It’s natural for founders to believe that their ventures are also worthy of personal investment, but startups are risky and markets are volatile by nature, so you shouldn’t just rely on your ventures for retirement funding.

4. Mistakes in Calculating Net Worth
So much of getting a business started is pitching to the right people and selling the value of a venture. It’s not uncommon for entrepreneurs to present the best version of things in order to get people on board. Unfortunately when it comes to self-valuation things get a little tricky.
Often entrepreneurs simply calculate the most current value of the business and use that as a baseline for their own net worth. Adams shares that “There’s a difference between your personal balance sheet and that of your business. Entrepreneurs who are new to financial management also make the mistake of including the wrong assets in their calculations.
Vehicles, homes and similar assets have real value, but they shouldn’t make it into your net worth calculations unless you plan on selling them soon and not replacing them.”
Measuring your net worth is a critical part of your financial strategy because it helps you determine what investments you need to make to plan for retirement. An inaccurate assessment of your current worth may lead to shortfalls down the line.

5. Don’t Make Commitments Without Having Them in Your Existing Plans
Adams shared “I can’t tell you how many entrepreneurs get themselves into trouble by committing to things without including them in their financial strategy. Expenses like vehicles, college tuition or a better house are easy to aspire to or promise, but planning for them is a whole different game. Whenever you want to commit to something in the future for you or your family, start including it in today’s plans.
The key is having the patience to incorporate these goals as a part of your long-term strategy. It also requires a degree of self-awareness and self-control. You have to be able to realize a want or a desire and postpone it until you can assess its impact.

So to recap, Adams recommends that you:
Plan your legacy before you plan your retirement,
Plan what your retirement withdrawals will be based on both the kind of assets you have and the lifestyle you plan on living,
Don’t base your retirement on the future sale price of your ventures,
Accurately measure your net worth to help determine what’s needed to accomplish your retirement goals,
Don’t commit to expenses before including them in your strategy.

Many leaders and founders spend more time managing the success of their business than their own finances. The fact of the matter is you’ve worked hard to achieve the success you’ve earned, so you owe it to yourself to manage it well.

Know The Best Mobile Payment Systems for Retailers

The easier you make it for your customers to do business with you, the more likely they are to consider you first when they need something. According to Pew Research, 90% of Americans own a cell phone, 64% own a smartphone, and 57% use it for online banking. Your smartphone is likely more important to you than a wallet or anything else you would carry with you, according to research.

All of those facts illustrate why companies like Apple, Google, and numerous startups are so interested in mobile payments. It has not yet caught on en masse but it’s coming.

A quick search reveals plenty of options. Which should you choose?

Two Types

Using a mobile device to process payments isn’t new. Many companies have offered the technology for years. The “new” technology involves consumers using their phones in place of a credit card. If you’re not ready for the latter, here are some options to accept credit cards using your smartphone.

PayPal Here- A lot of companies have fallen victim to cybercrime. Despite the widespread attempts to infiltrate PayPal’s systems, it hasn’t happened. This is a company that has earned your trust. PayPal requires you to have a PayPal account and a small credit card reader that plugs into your smartphone. Download the app, and you’re in business. No monthly fees and 2.7% per swipe.

Square- Hats off to Square’s marketing team. In large part, when people think of scanning credit cards with smartphones, they think of Square. You’ve probably seen the commercials and know the brand. Like PayPal, simply plug a reader into your phone, download the app, and you’re set to go for only 2.75% per swipe.

Square is even ready for the switch to EMV and NFC technology. In the Fall of 2015, Square will ship its contactless reader.

Intuit GoPayment- If you use QuickBooks, and there’s a good chance that you do, look at Intuit GoPayment. You get the card reader and the app for free and swipe rates are 1.75% plus 25 cents if you pay the $19.95 per month fee or 2.4% plus 25 cents without the monthly fee.

Amazon Local Register- You may not know that Amazon has a mobile payment service. Swipe fees are lower than PayPal and Square at 2.5% but you have to purchase the card reader for $10. However, Amazon gives you a $10 new account credit making the card reader essentially free.

Contactless Options

If you’re just now looking to get into mobile payments, the above options work, but from a technology perspective, they’re old. If you don’t want to get into contactless options, go with Square until the others have an EMV card reading device or take your chances with a third party EMV reader that hooks into a computer or mobile device.

But let’s talk contactless! Customers simply hold their phone or mobile device over a contactless reader and the payment is complete. It’s that fast—and the more tech savvy consumer is already using it and wants to use it more. There are two systems worth talking about.

Apple Pay- Apple knows how to market and it has the money to do it. If you’re even a little techie, or you watch TV, you’ve heard of Apple Pay. A customer loads their card into Apple’s payment app. When they visit a store that accepts Apple Pay, they simply authenticate the payment with their fingerprint, hold their device over the payment terminal and transaction is done. All you have to do is have a payment terminal that is NFC enabled and you have everything you need. NFC enabled terminals are as little as $250.

Signing up for Apple Pay is easy and free. All you do is contact your payment provider and they’ll do the rest. Apple Pay doesn’t charge you anything so whatever you were paying in credit card fees before you’ll pay the same with Apple Pay.

Contactless payment systems are more secure. Apple Pay assigns a unique number to your transaction instead of transmitting your card number—“Tokenization” in geek speak. This number is used only once so even if a cyber thief got the number, there’s nothing they can do with it.

Google Wallet- Google Wallet is Google’s mobile payment system. Enter your cards into the app, and you’re set to accept payments. Google Wallet is more geared towards e-commerce but works just fine with NFC terminals in your brick and mortar location. As soon as Android Pay is available to the masses, it will better compete with Apple Pay—likely being accepted everywhere consumers can use Apple Pay.

Samsung Pay- Samsung recently released its beta version of Samsung Pay, a payment platform to compete with Apple and Google. At the time of this article, it was only available to about 1,000 people in it’s home country of South Korea but early reports are positive.

Let’s Learn About Mobile Payment Security Tips

Consumer technology is supposed to make things easier. Credit cards are the payment method of choice for so many because they’re fast, easy, and safer than carrying cash. Arguably the biggest advance in the technology of payments is mobile payments with a smartphone.

Due to its marketing budget, the best-known mobile payment method is Apple Pay but despite the company’s status as a household name, it’s technology is relatively new and unproven compared to more established players in the field like PayPal and Square.

Technology allowing you to pay using only your smartphone is very new and because of that, cybersecurity is a concern for both consumers and the business owners accepting these mobile payments. But most experts advise not to worry.

Mobile payments use NFC or near field communications. It’s kind of like Bluetooth but the differences make NFC more appropriate for mobile payments. Bluetooth signals have a range of about 30 feet while NFC is limited to about 4 centimeters. Because of the short range, the signal is more secure. If a hacker wanted to intercept your data during the transmission from your phone to the payment terminal, they would have to position a device within 4 centimeters of your device.

Second, Bluetooth technology takes longer to connect the two devices and uses more battery power.

The newest mobile payment technologies have multiple levels of encryption. Apple Pay, for example, doesn’t transmit your credit card information. Instead, the credit card processor receives a special number that is valid for only one transaction.

How to Stay Safe

No technology is absolutely safe and regardless of how secure, it’s only as secure as the person using it. Most security concerns come from older but still popular mobile payment gateways like PayPal and Square. Here are a few ways to stay safe:

1. Don’t use public Wi-Fi- If you’re entering credit card information on your phone, either through manually typing the numbers or swiping the card. You never know who is on these networks and the chances of somebody getting your financial information is higher.

2. Don’t store passwords on your phone- Rest assured, as soon as somebody figures out a better way to authenticate your information, passwords will be a thing of the past. They’re already inconvenient but to combat that problem consumers often do everything they can to make them assessable and trouble-free.

But the more convenient you make it for yourself, the easier you make it for a cyber thief to get their hands on your information. Don’t store your passwords on your phone unless they’re encrypted.

3. Strong passwords- Along the same lines, your password should have no link to you personally. Don’t use your birthday, your son or daughter’s name, your street, or anything else linked to you. That information is publically available and hackers know where to find it.

4. Use a Password on Your Phone- If you’re using your phone to do financial transactions, you must have a password—not the month and year of your birthday either.

5. Stay mainstream- Only use apps from official company app stores and well-known companies. Unless you’re an IT expert that understands the under-the-hood details of cell phones, stay away from jail breaking your phone or any app that relies on a jail broken phone.

6. Have a device locator running on your phone- There are apps for all phones that allow you to track the location of your phone if it’s lost or stolen. Make sure it’s turned on and correctly configured.

7. Don’t link to your mobile device to your debit cards- Let’s say somebody gets a hold of your phone and uses it to make payments. If you have the security features of your phone activated, that will be difficult but if it happens, you will immediately dispute the charges because you’re monitoring your bank and credit card accounts with an app of some sort. (hint)

If it happens, you don’t want the thief emptying your bank account. That would mean you have no money until the problem is resolved. That’s why you don’t use your debit card. Use a credit card. At least the only thing you lose is access to your credit card for a brief period.

8. Examine the payment terminal- You don’t have to be a mobile payment expert. If the machine looks tampered with or there are any other items around it, don’t use it. Devices the size of strawberries have been created in labs that can steal data transmitted through NFC but to date, no real reports have surfaced.

What is real are devices being attached to gas pump readers as well as terminals in other stores that can steal your information.