Welcome to a new week. Just like that, we have 39 days left in the year 2020.
Yesterday, the National Bureau of Statistics (NBS) formally confirmed that the country had entered into its 2nd and worst recession (2 consecutive negative growth) in 5 and 33 years respectively.
In Q3 2020, Nigeria’s GDP contracted by 3.62% from -6.10% in Q2 whilst cumulative GDP for the 1st 9 months of the year was -2.48%.
Oil GDP further contracted by -13.89% from -6.05% in Q2 whilst Non Oil GDP contracted by -2.51% from -6.05% in Q2 2020.
Whilst a lot has and will be said of this fact, the key takeaway is that we need to continue to fortify our investments as we are also contending with raising inflation and continued devaluation (at least in the parallel market). Kindly refer to the previous articles for more information.
This week we will be looking at highlights from the book written by Leonard Lauder – the emeritus Chairman and son of the founder of cosmetic giant, Estee Lauder. The book – The Company I Keep, My Life in Beauty – discusses how his mother Josephine (later Estee) Lauder built her empire from scratch.
Below are the key takeaways:
- Carve your niche: when the company was established in 1946, there were already established players such as Elizabeth Arden and Revlon. In order to compete, Mrs Lauder had to determine on the segment of the market to play in (she chose the luxury end of the market).
Like Estee Lauder, we also have to choose our wealth creation and management strategies. Late bloomers particularly have to be intentional about the strategy to adopt.
Irrespective of what path we choose, we have to ensure it is specific to our respective journey and plays to our strength.
For instance, a younger person can afford to choose more risky investment types than a pensioner (who will be interested in the security of his or her funds than the rate of return).
It is key to always remember that wealth generation and management is a marathon and not a sprint; as such consistency and patience matter.
- Train up your child: The author – Leonard who was the founder’s oldest child was groomed to take over from his parents – his father managed the operations while his mother was the face of the company.
He attended Wharton and joined the military before joining his mother’s company in 1958 but was not made President until 14 years later after growing through the ranks.
Leonard was responsible for the company’s expansion to various brands (such as Clinique), product lines and global operations. Turnover grew from $1.75 million in 1960 to $200 million in 1975 under his watch.
In his own words, “Everyone imagines that I was heir to a great family fortune. They forget that I had to build the fortune first.”
Many times, parents amass the wealth but fail to prepare their heirs to adequately manage or multiply the inheritance in their absence.
Research has shown that 70% and 85% of wealth is typically lost in the 2nd and 3rd generations respectively.
To prevent this from happening, several wealthy families across the globe have private investment companies managing their assets. Such teams tend to include younger members of the family who are being groomed to take the helm of such companies.
- It takes a village: In the book, he focused and spent time acknowledging and praising the contributions of key members of staff and brand collaborators that played major roles in building the company to a $14.3 billion annual sales empire.
Mr Lauder, correctly knows that we all need to have people in our corner and that we are as good as our crew.
The key lesson here is that we need more than personal knowledge; we need a team. Who is in your corner? Do you have an advisor, mentor or lawyer?
Know them, appreciate them! Know them, change them if need be!!
- Never make an important decision without a woman at the table: in the book he talked about leadership lessons he had learnt in his years at the helm of affairs.
After watching and learning from his mother, he recognised the fact that empowering women was key.
Even though a lot has been and done about empowering women financially, we all owe it to educate and empower women around us especially those in the lower income spectrum. It can be our own way of giving back.
- Always have an end game plan: The game plan for him was taking their family owned business public.
This decision was taken to unlock the value in the business and make money for the family. It also took care of succession planning which limited the possibility of a family feud.
Like we had mention several articles ago, one key factor to address in wealth management is the execution of a will or trust to take care of one’s estate.
The popular lawsuits regarding the estates of the late Festus Okotie Eboh and Akintola Williams reinforce the importance of having the end in mind about one’s estate.
Please remember that new COVID 19 cases are still being reported in Nigeria, especially in Lagos State and as such we must continue to take personal responsibility for ensuring our safety.
Although vaccines are being approved in the US and UK, they are not expected to be readily available globally until 2021; as such it is very important that we remember that prevention is better than cure.
Keep washing your hands, maintaining social distancing and wearing your face masks in public.
Till next week, do have a wonderful week ahead.