Why Corporate Social Responsibility Means Good Business

Much has been said about the role of corporate responsibility in modern businesses. It cannot be emphasized enough that most CSR efforts are geared towards giving businesses positive exposure; in other words, it is good PR—and good press can be leveraged to attract and retain a customer base. Whenever donations are made to registered charities, there are also financial advantages to be had in the form of tax exemptions.

There are also latent advantages to a good corporate social responsibility program. Spectrum Business Ventures, of which I am CEO, supports organizations that engage in healthcare, sustainability, and innovation, which are three things that I am very passionate about.

SBV has funded four major foundations in the Kansas City area that work in the field of healthcare. Among these are Autism Speaks, the University of Kansas Hospital, the Rally Foundation, and the Kaw Valley Behavioral Health Care Center. As a man who has witnessed how autism builds a wall between children and the world at large, I have noted that the lack of educational opportunities about this condition has hindered the adjustment of both kids with autism and their families, and has closed doors to those who would otherwise have made an impact on their communities. Autism Speaks conducts research on helping children with autism reach their full potential as a resident of the world that engages in everyday activities, including business and industry.

We have also donated to the Kansas City Art Institute and Cristo Rey High School. While the majority of educational foundations focus on developing STEM capabilities among our students, we decided to complement these efforts by giving aspiring artists a chance to hone their craft. SBV prides itself in doing things unconventionally, and we believe that the “outsiders”—those who think differently—can come up with the next big idea; one that could change the world for the better.

Supporting the youth by providing healthcare and funding art programs might seem totally unrelated to SBV’s lines of business, but in the long run, it is an investment for the future. Today’s children are tomorrow’s chairpersons, presidents, and CEOs, and it is important for them to develop not just the mind, but also the heart and soul. The next great business concept might be the brainchild of a kid who came from one of the programs we help fund, and SBV will be more than eager to help nurture that concept until it becomes self-sustaining.

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Family offices: Nurturing wealth for multiple generations

Recent business trends have seen a number of wealthy investors turning to family offices to address many of their financial and life concerns. This observation has even led traditional providers such as private banks and firms in launching their own family office practices.

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A family office has a primary responsibility for managing the wealth of an individual or a family. Comprised of specific products and services based on the expressed needs of its clientele, a family office thwarts any attribute, factor, or behavior that could inadvertently affect investment decisions. Mainly working for profit and growth, a family office offer customized solutions, specialized expertise, and responsive service.

In order to produce superior returns on investments and propagate an affluent individual or family’s wealth, a family office performs the following specific functions:

1. Financial education and governance and support services for the family;

2. Tax compliance work and expense management;

3. Bookkeeping services and document management;

4. Confirmation of investment possibilities and viable business ventures aligned with the family’s philosophies;

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5. Identification of potential investment opportunities outside of the client’s field of expertise;

6. Integration of modern strategies into traditional methods of the selection of investment; and

7. The performance of tasks related to budgeting, insurance, charitable giving, managing family-owned businesses, wealth transfers, among others.

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A family office assumes the role of an administrator and a manager of a client’s financial affairs. Although the scope of support in terms of duties and responsibilities maybe a combination of many possibilities, the family office is expected to effectively and efficiently supervise tasks and troubles without deviating from the basic operating structure, no matter how unique and tricky the situation may be.

Amit Raizada is a co-founder of Spectrum Business Ventures, a firm that looks beyond convention to find promising alternate investments. Learn more about the company’s investment perspectives and services here.

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Multifamily real estate investments: A walk-up to opportunity

Investments in multifamily rental properties (and rental properties in general) have grown in recent years as more people, millennials among them, forgo the rigors of homeownership in favor of renting. This demand, however, is tempered by stiff competition and high investment costs. To capitalize on the growing demand for rental properties, investors must look for unexplored opportunities that other investors might be late at realizing.

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Apartment buildings and other multifamily residential developments in particular offer economic advantages that their single-family counterparts can’t. These upsides offset their disadvantages and contribute to their growing popularity. As of 2014, multifamily real estate comprises 37 percent of all real estate acquisitions, and with good reason. Opportunities and challenges abound in this new market, which is foreseen to grow further.

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Typically, most residential apartment buildings are constructed within the urban core and attract single young adults and smaller families that prefer to live closer to their place of work. A new market for apartments—growing families—is emerging as more and more families find it economical to rent. Apartment developers and investors are looking to capture this market by moving closer to suburban areas and providing more space and lower costs. Millennial tenants weary of high urban rents are finding relief in the less economically draining suburbs.

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Investors also need to rethink the way they develop their properties to command better rental rates and attract their desired market. Location is no longer the sole factor in determining desirability. Apartment hunters look for amenities not only from the surrounding area but also from within the developments themselves. Urban developers, therefore, strive to make their buildings more hotel-like, that is, equipped with desirable amenities. Meanwhile, suburban neighborhoods offer not only proximity to schools but more verdant open spaces to accommodate children at play.

Amit Raizada and Spectrum Business Ventures have included several multifamily real estate developments and ventures across the U.S. as part of their investment portfolios. Visit this page for more on their holdings.

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Lateral diversification: Moving into multiple industries

Businesses and sectors dedicated to a single product or service are vulnerable to fluctuations in supply and demand and adverse events. Neither businesses nor their investors can flourish in the long run by merely being one-trick ponies. They must eventually diversify to multiply possible revenue streams.

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On one hand, companies and individual investors often see growth opportunities from horizontal diversification, which focuses on branching out to products and services that cater to a similar market segment. While this move promises the ease of drawing from existing business experience, it also focuses too much on the current target market rather than branching out to new ones. Lateral or conglomerate diversification, on the other hand, involves entering and investing in multiple industries completely unconnected to one another. This move taps new markets to multiply revenue.

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Hedging bets across multiple players has its own set of disadvantages in the short term. For instance, some companies in the portfolio will perform better than others in normal circumstances, especially if the diversified industries are unfamiliar territory.

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However, the long-term benefits of lateral diversification outweigh its short-term hiccups. Laterally diverse portfolios produce more returns with the same amount of risks. Chosen carefully, a portfolio can perform well without the drawbacks of businesses underperforming in lockstep as in the case of companies in closely correlated industries.

Putting eggs in more than one basket is sound advice in reducing and managing risks while maintaining high ROI. The adaptive entrepreneur and investor know the value of lateral diversification as a long-term growth strategy.

Firmly believing in looking for opportunities from a different perspective, Amit Raizada and his company, Spectrum Business Ventures, diversify investments to several industries. Visit the company’s website for more on its investment paradigm.

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