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If you already know the concept of Perpetuities, the concept of Annuities is very easy. It’s very similar to Perpetuities, only that the payments are not forever. Instead of forever, these payments come in only for a fixed time period.

Let’s say I gave you a piece of paper or certificate, and it promised that I would pay you $10 per year for exactly 12 years, and then I would stop paying you immediately after that. Is this still a “perpetuity”? It still consists of regular payments of equal amounts, just like a perpetuity, but it is not forever; it has a limited time period. So in this case, it’s not called a perpetuity, but an “annuity.”

So now, just like in the case of a perpetuity, an important question now is… how much are you willing to pay me for that piece of paper? How much are you willing to pay for this “annuity”?

For this, you would use the Present Value of an Annuity Formula. For general managers, there’s no need to know the actual step by step process on calculating this, as it can easily be done by accountants or by free calculators online as well as smartphone apps. However, if you need to learn the process yourself, you can watch tons of free online tutorial videos from many different websites as well as YouTube.

Real-Life Application

Let’s say you are offered to invest your severance pay (or retirement pay, or similar lump sum) of $10,000 with a pension company or investment company, and they promise to pay you $600/year for 30 years. An ordinary person might think it’s a good deal because $600/year x 30 years = $18,000, which will be much more than the original $10,000 investment.

However, using the Present Value of an Annuity Formula, you will find that the “fair value” of this annuity is actually only $9,223 if interest rates are at 5%… and that you are therefore “overpaying” if you pay anything more than $9,223. In other words, if you pay anything more than $9,223, then you’re just as good or even better off putting your money in the bank instead, and earning interest from the bank (or other “risk-free” investment). At $9,223, the rate of return of your investment/pension will be exactly equal to the rate of return of putting your money in the bank. If you pay more than $9,223 for your investment, then your investment’s rate of return will be lower than your return from the bank.

“The imitator dooms himself to hopeless mediocrity.” Ralph Waldo Emerson

Doesn’t he though? I always tell my business writing skills and presentation skills students that they won’t go wrong if they assume their readers/listeners are intelligent adults paying attention because they want to add to their knowledge. Communicate under that premise, and you will gain respect.

Serial copycat abusers of our mother tongue are anathema to that audience. As I noted a few months ago, mindlessly inserting “going forward” and “due diligence” and “most unique” risks irritating your readers and listeners, which changes the context in which they evaluate your thinking. Remember: That’s you on that email or memo, and if you’re dealing with a new contact, remember this as well: You never get a second chance to make a first impression. That is the essence of effective business communications — reaching and impressing a busy audience.

So, to the third installment of the Language Hall of Shame:

o Low-hanging fruit – When this one pops up I’m tempted to make eye contact with someone else in the room and share a knowing grin. But let’s try to be serious. Here’s the day-to-day “business world” interpretation of low-hanging fruit: When faced with a challenge, you do the easy stuff first. So how about instead: “Let’s confront this problem one step at a time…”? I recall attending a planning meeting where “low-hanging fruit” entered the discussion early and was repeated eight times by four or five other adults. Apparently, all it takes is one brief utterance to turn otherwise bright people into language lemmings.

o Defining moment – I take that to mean the one crucial stage or decision that lets us know whether we’re facing success or failure. If so, then by its very definition, the phrase must be used sparingly. Yet it sounds so precise that we overuse it because we feel authoritative and insightful. But how many “defining moments” can there be? Pile up too many of them, and they lose their impact while you look shallow and unimaginative.

o Rgds and tks – Whoa, you must be one extremely busy and important executive if you can’t find the time to write out “regards” and “thanks.” And lest I forget that, tks for reminding me of your stature every time you send an email. Maybe, as the poet William Wordsworth said, the child really is “father of the Man,” and we should start aping the shorthand that our brilliant offspring use when they “text” each other.

While I’m at it, a word about the etiquette of writing emails: Why are we no longer starting them with a proper salutation, such as “Hi, Bob” or or “Good Morning?” When you pick up a phone for a business call or run into someone at work, don’t you usually start with a “Hi, Bob” or a “How are you?” What is there about email that gives us permission to be abrupt, even rude?

One of the most important things in phone sales is the pitch of your voice, pitch can determine whether the caller sounds genuine, yes they are interested in my business, yes they can solve my problem, yes they are clear and concise in their tone of voice and they may be someone I want to discuss doing business with further. If you sound mundane or uninterested in the client it comes through on the phone, so does scripted jargon that usually turns people off.

Presentation is also a very important point in phone sales. How are you going to present your idea? Better yet, How are you going to present your idea to your specific potential client? What do you know about their business? What is your product or service exactly going to do for them? What are there current problems that you think you can solve? Why do you think you can solve their problems? Have you helped other clients solve the same problems recently? You want to be brief in you initial conversation, have an opening greeting that reveals something about your company, acknowledges their time, and discusses your opportunity with the ability for you to gauge their interest going further. Then if it is useful, spend more time but ensure to get a meeting or follow-up call booked.

Plan, you must have a plan. You must ask yourself specific “what if” questions so when you present you conversation you are able to answer objections. What if some of the information you have gathered about the company has changed or is no longer valid, how are you going to handle that? What if the contact you were given no longer works there? What if they have already purchased a similar product or solution or are in the process of talks and do not want to talk to any other potential firms? These are questions you must think about when you are planning out your conversation to the potential client. What if the client is very turned off by your phone call?, how will you handle this? Also plans may have changed within the company in terms of organization, structure, budget cost and needs, these you will have to determine from asking fact-finding questions.

One of the most important questions may be, What if you can’t get a conversation with the decision-maker? How will you get your presentation and facts to them. You might have to use mail, fax, video conferencing or another tool, or have a promotional event or luncheon that invites them. These are some of the ways you may overcome their rejections. Make sure to follow up at least 3 times with a client in a relevant and timely manner, no one hates anything more than being bothered for the same reason, or just to be sold something.