Enron the smartest guys in the room transcript

Once they receive their funding, they put their plan вЂњon the shelfвЂќ and do nothing further with it.В While it is important to have a Business Plan, it is also very important to have specific goals and objectives for the first twelve months of operations.In your planning process, create goals and objectives for your business. Lack of Operating Goals and Objectives Many business owners create a Business Plan to obtain a loan. That will tell you whether or not you have sufficient funds to sustain the business until it is profitable.

A properly developed Business Plan will tell you exactly how much money you require for start up expenditures and to operate the business until cash flow is positive.A business owner should develop Income Statements and Cash Flow Statements for the first two years of operations. Under Funded Many businesses fail within the first few months, because the owner runs out of money.В When starting any business, you will need money for all of your start up costs as well as money to sustain the business for the first few months of operation (until cash flow from operations is positive).В Running out of money is a result of poor planning. They simply вЂњopen their doorsвЂќ for business and then expect to succeed.В Before starting your business, take the time to develop a Business Plan.В Your plan will identify what you want your business to accomplish (where you want to go) and the strategies that you will utilize (how you will get there). No Business Plan YouвЂve heard the old saying вЂњIf you donвЂ™t know where you are going, how will you get there?вЂќВ Too manyВ business ownersВ start their business without a plan. There's a big difference - and as Kinder and Papa proved, there's a big opportunity in that difference.ENRON: THE SMARTEST GUYS IN THE ROOM WHY BUSINESSES FAIL Chesapeake, Patterson, and Paccar? They're at least doubles since then.Д¬aught up in the new economy, Wall Street started treating these old-economy consumer stalwarts as if they were trash. Today, Enron is bankrupt and the other two are down 25% or more. The 'new' economy would power these companies to extraordinary growth, or so the logic went. Perhaps like them, you can make a fortune in the stock market, too.Д¬onsider this: In 2000, you could have purchased overlooked businesses such as Chesapeake Energy (NYSE:CHK), Patterson-UTI Energy (NASDAQ:PTEN), and Paccar (NASDAQ:PCAR) at lows (all three stocks were in the red from 1998 to 2000), even as investors bid the prices of Enron, Xilinx (NASDAQ:XLNX), and Cypress Semiconductor (NYSE:CY) to record highs. Follow the examples set forth by Kinder and Papa: Look for value in discard piles or boring and distasteful businesses, keep your new-economy biases in check, and be a patient, long-term investor. That's what always happens in the market - investors discount the old in favor of the new.Дon't let that happen to you. It's no coincidence that Enron wanted to sell its old-economy pipeline assets for pennies on the dollar to concentrate on e-commerce and energy trading instead. Buy valuable assets for less than they're worth.ДЄs stock investors - purchasing a small part of a business - we'd do well to heed these precepts.What's more, its derivatives Kinder Morgan Energy Partners (NYSE:KMP) and Kinder Morgan Management (NYSE:KMR) are worth $11 billion and $3 billion, respectively. How can $40 million be a bargain? Well, Kinder Morgan - the company Kinder and Morgan started from Enron's discard pile - is today worth more than $14 billion. Pipelines were a part of Enron's old-economy business, and Lay abhorred them. With business partner Bill Morgan, Kinder bought some pipelines from Enron for $40 million. Though no one knows exactly what happened (there are several theories), Kinder didn't become CEO, and he quit Enron in 1996.Д«ut he didn't walk away empty-handed.

During their company's fast rise, a few savvy businessmen got the best of them.ДЄ $40 million bargain Richard Kinder was supposed to become Enron's CEO when Key Lay stepped down, but something went awry. Even our own resident curmudgeon, Bill Mann - maybe the most skeptical investor we know - called Enron ' revolutionary' back in 2000.Д«ut Lay and Skilling weren't always doing the duping. Enron was dubbed 'America's Most Innovative Company' by Fortune. After all, Ken Lay and Jeff Skilling duped hundreds of Wall Street analysts. The facts about Enron's legendary tumble are now well known, but it wasn't always so.

Enron the smartest guys in the room transcript