Eleven Investor Rules to Becoming a Money Maker

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The Money Makers How Extraordinary Managers Win In a World Turned Upside Down, Anne-Marie Fink, Crown Publishing Group, 2009

Have you ever gotten a really good book and flipped to the last page to see the final word or how the ending is written? The Money Makers book is a good book to do just that because the last paragraph in the book says it all.

The author wrote, “Professional investors are in the habit of keeping our insights about what makes a money maker mostly to ourselves. But if you seek us out, you will no doubt find that we are interested in far more than what your quarter’s numbers are going to be. Now is your opportunity to take advantage of what we know.”

The advice given in great detail in the book is the reader’s opportunity to take full advantage of what those professional investors know in the form, as you’ll see later, of “investor rules” that offer tips and techniques for developing your business into a money making business.

Not the Standard Business School Teachings

The eleven rules don’t all follow the normal business school teachings. To say the least, you will certainly be surprised by many of the rules.

The author, Anne-Marie Fink, is a twelve year veteran of J.P. Morgan Asset and Wealth Management. She is part of an investment community that evaluates businesses and represents their owners.

The book is a compilation of criteria and rules that Fink as a professional investor uses to evaluate a company’s money maker potential. Fink lays some groundwork before giving the reader the eleven rules.

Fink wrote, “True money makers are that rare breed who perform consistently; they are the managers we invest with regardless of the business or economic environment.”

The formula used by the author for her own success in identifying money makers include:

  • Meeting daily with the CEO/CFO and division heads
  • Asking pointed questions to get to the heart of the matter or the bottom line
  • Taking an in-depth look at the company’s suppliers, competition and customers
  • Chasing down employees
  • Combing through the fine print of regulatory filings
  • Visiting far flung operations
  • Hiring industry experts.
  • Investor Rules

    In the author’s words, “These investors’ rules differ from the lessons taught in business schools and the standard operating procedures in most companies.”

    Having a business degree myself and reading hundreds of business textbooks and commercial books by the world’s most well known business experts, many of the rules provided by the author go against the grain.

    Nonetheless, the rules make perfect sense especially in today’s economic environment. Face it, today’s economy is out of the norm, so employing rules that differ from the standards used by most companies in the past might be just the way to turn things around.

    The eleven investor rules are:

    1. Think like an investor to establish your edge and remember that economic profit is always king
    2. With information roach motels, problems won’t work out. Problems exist much like cockroaches – there is never just one
    3. Avoid the trap of profitless growth. At times, growth can take a backseat and lowering investments can make more sense
    4. Don’t be a customer fanatic. Listening to your customers too much can drive a company to lower prices and spend too much money to tailor products just to stay competitive
    5. Get more reward for the risks you take. Position for the future versus chasing it
    6. Economics trumps management. Never ignore such basic economic laws as supply and demand
    7. The best companies for investing are the worst companies to work for. Happy employees don’t make high-performance workplaces
    8. Good performance requires inefficiency and duplication. Focusing on squeezing every penny from operations can hinder optimal profitability
    9. Megatrends start as ripples. Position the company to ride out the long term waves but always be ready to jump off if needed
    10. We are all dead in the long run; small steps achieve big results. Overestimating a company’s ability to predict the long term is more deadly than failing to prepare for it. Money making companies take incremental steps to achieve their goals
    11. Shrink to grow and take other backward steps to go forward. Shrink the company down to the profitable core and prepare for long-term prosperity

    In addition to the eleven rules, Fink offers four strategies that investors look at for long term growth,

    1. Bad is good. Be up front and confront your company’s weaknesses so that you can fix practices and procedures
    2. Shrink your company to grow. Cut out the areas or products that are not profitable
    3. Don’t let your customers lead your growth
    4. Prepare for but don’t project the future

    Effective Advice for Making Money

    Fink wrote, “To survive, I’ve learned to distill companies down to their essence-economic profits; that is, the sustainable value they generate over and above the cost of the resources they use.”

    The book is filled with case studies from more companies than I have seen in most other business advice books. The author uses information from major corporations such as Toyota, IBM, Exxon, Disney, Phillip Morris, Cisco, AMD, 3M, Google, Clear Channel, and Microsoft just to list a few.

    Fink does a good job of putting her complex job of evaluating a company’s money making potential into real-life language that a new or experienced business owner can apply to their company – and become the money maker they were meant to be.

    Read the end first with this book and all of the parts will come together very nicely.