What Does RICH Mean To You?

by: Paul Mara

Have you ever been asked that question?

I was!

Back in 1979 while doing a “pressure cooker” course on selling with an insurance company!

I wondered how relevant that question was, considering my personal and financial situation at the time.

No wife!

No job!

I was a solo dad with three children, one of them a baby less than a year old.

“You must be kidding”, I thought to myself at the time!

What relevance can that have to me learning to sell insurance policies?

How naive I was!

The course that followed had an unbelievably positive and a life changing effect on me. Although it only took affect several years later. The seed had been sown!

You’re probably saying to yourself, “How can a course on selling life insurance have that much effect on anyone?”

Well that Insurance Company was the one created by W Clement Stone.

I found the course to be very challenging, because in New Zealand at that time we weren’t really aware of the “Hype” that Americans used to motivate their workers to perform at their optimum. It pleases me each time I think about it now, to know that I passed, top of the class and received a book as a reward, this book was already a best seller, but I’d never heard of it.

Success Through a Positive Mental Attitude, of which W Clement Stone was co-author with Napoleon Hill. They shared their secrets on becoming wealthy and having a healthy, productive lifestyle, utilising the power of a "positive mental attitude". Sadly my motivation and my persistence waned and I stopped selling insurance.

I kept all the information, studies and the book I had won.

The “BOOK” Success Through a Positive Mental Attitude, which I never opened or read for probably 3 years.

However I did continue two very positive things! I continued to read on a daily basis some of his quotes and I even put them on the wall. My two

favourites were;

“Success is achieved and maintained by those who try and keep trying” and “Whatever the mind of man can conceive and believe, it can achieve”.

The second thing and the one which I believed the most important was “Goal Setting” I enjoyed the challenge and had learned enough during the course to realise its long term value. Life began to take several steps in the right direction not major ones, but positive ones. Several important things happened in my life over the next 12 years.

Around 1981-2 I began reading, Through a Positive Mental Attitude, I applied so many of their ideas and formulae, and by 1992 mine and my families life had completely turned around, this included a wonderful wife and two more children and a list of goals I had made in 1986 after father passed away, became a reality. I had arrived finally, or so I thought, and was ready to respond to the question that still continued to bother me after all those years. What Does RICH Mean To You?

I had some answers! That’s what I believed anyway! 1 - " A consistent income created from hard work 2 - " A healthy family 3 - " A loving wife and loving children 4 - "A nice car 5 - " A great holidays There are other things, but they are either directly or indirectly related to the above list. Even now when I look at that list it seems to have “hit the nail on the head”. Then within three years it all slowly began to fall apart, business wise, thankfully not family wise our “Polynesian Inheritance” is so strong, family always come first!

Where was I going wrong? What was I doing wrong? Whose fault was it? Why now when we seemed so successful? A myriad of questions passed through my mind, I began to blame myself, I was making wrong decisions. I had begun a downward slide a personal one that took away my mental fortitude, my belief, my self-confidence, I lost motivation, the thing that really hurts me when I think back is that, “I didn’t really care anymore” I began to think that the world owed me, I was a good person so for that I should be rewarded.

What a “Pity party”, darn pitiful is all I can say now! After all these years I am finally getting back on track! I realise that age and the new generation means I can never be what I was back then, why? Well that’s the past and I now live for today! Not tomorrow! I have found a “Certain Way” that has been available to each and every one of us for more than ninety years. Probably what W Clement Stone and Napoleon Hill and thousands of others used to become rich, but forgot to tell us some very vital points, whether they did it consciously or just took it for granted that we would figure it out, I am really not to sure.

Want to find out as I have??? The real meaning of what “RICH” is, go to my website “Right Now” and find out how you to can have a “RICH” balanced and fulfilled life with “Prosperous Equilibrium”.

What is in a Franchise UFOC?

by: Bob Richman

There are 4 parts to a UFOC:

* Cover Page

* Table of Contents

* Items 1-23

* Exhibits

The format for each of these sections is very specific and covers the following:

Cover Page The Cover Page identifies the franchise business, including the name under which the franchisee would operate and what type of business it is. It also includes the amounts of the initial franchise fee. In addition, any additional risk factors are included on the cover in all capital letters. Risk factors that may be included pertain mostly to which state is governing the franchise agreement and where any litigation is permitted to be filed and heard.

Table of Contents

The Table of Contents contains the specific 23 items listed below, as well as the exhibits, in a standard format.

Items 1-23 Item 1: The Franchisor, Its Predecessors, and Affiliates This section gives you a background on the Franchisor, including anyone he/she has purchased the franchise from, and any affiliates, meaning anyone else who has a controlling interest in the franchise. Do your research on these representatives, including a credit check if possible. You're quite possibly investing your life savings with these people and knowing any other businesses in which they have been involved and how well they manage financial aspects is important.

Item 2: Business Experience This section gives you a background on the officers and directors of the franchise for the past five years. Similar to the information you will review on the Franchisor itself, you want to carefully review the expertise these people bring to the table. These are the people you will be working with and who will contribute greatly to the success of your franchise. You should get to know them as well as you can.

Item 3: Litigation Any history of litigation, including cases terminated by settlement, must be disclosed in this section. Any Franchisor who is under some kind of restrictive injunction is one to stay away from. Additionally, if a franchisor or any officer has a criminal history or any litigation pending that may affect his or her ability to maintain a franchise then this opportunity is not a worthwhile risk.

Item 4: Bankruptcy The bankruptcy disclosure requires that they tell you up front about any bankruptcy in the last 10 years concerning, "the franchisor, its affiliate, its predecessor, officers, or general partner". Entrepreneurs often have several failures before they are successful. Learning from failed business is not the experience you want to have, which is why you are considering a franchise. This doesn't always mean that having a bankruptcy in the disclosure is a sure prediction of a bankruptcy in the future, but you want to review the circumstances of the bankruptcy carefully, including the amount of time that has lapsed since that bankruptcy. You typically don't want to give your money to someone with a proven track record of not being able to manage it.

Item 5: Initial Franchise Fee The initial franchise fee is the fee you pay to purchase the right to operate as a franchise. This does not include all of the other fees that may be required to get started or continue operation. The important thing to know about the initial franchise fee is exactly what you are getting for those dollars. Knowing how they came up with that number is important. A large initial franchise fee does not equate to a larger earning or a better investment. Consider this fee in addition to the Other Fees (Item 6) and Initial Investment (Item 7) before concluding what it will actually cost to open a franchise.

Item 6: Other Fees Other fees include any other monies you will be required to pay to the franchisor, including royalties, advertising fees, service fees, training fees, or any other ongoing or one-time fees that you as a franchisee will be expected to pay directly to the franchisor.

Item 7: Initial Investment This is the key item in terms of figuring out what is will cost you to get a franchise up and running. This section is laid out as a table, and includes the estimated costs for training, equipment, opening, inventory and other costs associated with starting your franchise. For each item in the list, you are given the amount, the method of payment, when it is due and to whom the payment is to be made. Review this information carefully. Speak with other franchisees and see if the estimated costs were realistic. Expect that you will need more for unexpected expenses. Remember that most businesses are not profitable for at least a year, so include the amount of money it would take you and your family to survive for a year without income.

Item 8: Restrictions on Sources of Products and Services If the franchisor requires you to purchase or lease from designated sources, investigate further. Sometimes the purchase restrictions are because the franchise has negotiated a lower price for certain goods in return for guaranteed orders. However, sometimes the cost of the supplies is not competitive and the franchisor makes a bit of money from the procurement of supplies. This makes the franchise more expensive to run, even if the startup costs look attractive. If the costs are reasonable, the restrictions are not a big issue. Again, talk to existing franchisees to see if they feel these restrictions are reasonable and whether or not they are satisfied they are receiving their money's worth.

Item 9: Franchisee's Obligations Your obligations as a franchisee can be laid out in various agreements, including but not limited to the franchise agreement. This section explains what your obligations are and exactly where in the legal documentation you can find the information governing your obligations. This is an important section for you to review carefully, as they define your contractual obligations and if you breech these obligations your franchise can be terminated. Talk to current franchisees and see whether meeting these obligations has presented any difficulty. If the obligations seem unreasonable, move on.

Item 10: Financing Sometimes the financing required to start-up a franchise comes from the franchisor him/herself. As with any financial contract, review the conditions and be sure that they are competitive and make sense. Have an accountant or banking representative review the terms and give an opinion. Having a credit check would, again, be handy here.

Item 11: Franchisor's Obligations Just as the UFOC lays out your obligations as a franchisee, the obligations of the franchisor must be clearly disclosed in this section. You are putting your financial future into the hands of the franchise that you purchase, at least in part. Be sure you understand exactly what you are getting for what you are paying. You may want to approach this section in a different manner than the others...perhaps backward. Rather than reading what they will provide, begin by making a list of what you think you will need to be successful. Determine what kind of training you will need and see whether they provide it, when it will be offered, what kind of training it is, and whether or not it meets your needs. What kind of ongoing support or documentation do they include? Also determine what you would need after you have opened the franchise and see whether those items are included in their list of obligations. If they are missing things that you think you will need to be successful, ask to have those things added to the franchise agreement. Verbal promises from salespeople are not sufficient - promised items should be added to this section.

Item 12: Territory Opening a franchise just to see another franchise open up a half mile down the road would be enough to make anyone crazy. The territory section of the UFOC is designed to lay out exactly what rights you have to any territory. Having the right to an "exclusive area" cuts down on the competition, at least from within your own franchise. Unfortunately, not all franchisees are alike. Some will take full advantage of their area and develop the market to its fullest. Others will assume that the lack of competition in their immediate area means they have a right to the business and therefore don't work quite as hard to develop that area. There are many other situations in which an exclusive area causes issues for a franchisor, and most will not grant them. Some will grant an exclusive area only for a specified amount of time or only as long as a certain level of achievement is reached by the franchisee. Understanding what options the franchise offers is very important.

Item 13: Trademarks This section discloses any trademarks, service mark, service name or logotype used in the franchise business and whether or not that trademark or service mark are registered with the US Patent Office. Using a trademark symbol (™) is not the same thing as having a registered trademark. The registered trademark (®) means a certificate of registration has been granted to the franchisor. A trademark registered in the Supplemental Register does not have the same legal rights and there should be a statement in the Trademarks section disclosing this information.

Item 14: Patents, Copyrights, and Proprietary Information This section is important to you only if patents are important to the franchise. If so, get a copy of the patent from the U.S. Patent Office and review the status of the patent. Be familiar with any copyrighted or proprietary information outlined in the UFOC, as the franchisor has a right to modify or prohibit use of anything patented, copyrighted, or proprietary information disclosed in the UFOC.

Item 15: Obligation to Participate in and the Actual Operation of the Franchise Business This section outlines any requirements for the franchisee to personally be involved in the operation of the franchise. If the franchise does not require the franchisee to run the business him or herself, then there must be a statement outlining whether or not a manager running the day-to-day operations of the franchise in place of the owner must complete the franchisor's training program and/or own an equity share of the business, and any limitations placed on the manager (such as being approved by the franchise).

Item 16: Restrictions on What the Franchisee May Sell Restrictions on what you may sell will affect those franchisees who want to operate an expandable business while they own the franchise. This section is also important if you are limited to selling goods or services that won't make you enough return.

Item 17: Renewal, Termination, Transfer, and Dispute Resolution This section is one of the most important in the entire document, and is presented in a table format for easy browsing. The best contract is one stating that as long as you do not breech your contract you can renew your franchise agreement, forever. Contracts that place a limit on your possibility to renew solely at the discretion of the franchisor are bad. Also pay close attention to extensive repairs or decoration that will required as a condition of renewal. The amount of money expected to be spent should be reasonable and there should be some kind of formula so that costs are not incurred all in the same year. Additionally, the refurbishment should keep you industry competitive.

There are many types of transfers. Transferring among business entities, such as from a sole proprietorship into a corporation, should definitely be allowed. A good agreement will also allow your franchise to be transferred to your heirs. If this is not allowed and you're still interested in purchasing the franchise, try to make some provision for the repurchase of your franchise by the franchisor. This section also outlines the causes for termination of the franchise agreement, states whether the franchise can be sold and who has the right of first refusal (your own blood relatives should not, ideally, come after the franchisor on first rights), and delineates your right to arbitration. Essentially, the more rights you have to control the renewal and transfer of your franchise, the more rights you have for the continuation of your business and the better the agreement. Make sure your franchise attorney reviews these rights as well as your rights to litigation (or requirement to use arbitration). Any additional risks for litigation will also be on the cover page, remember.

Item 18: Public Figures This section requires the disclosure of any public figures the franchise uses as a spokesperson, how much they were paid, and how much control they have in the business (if any). Find out how this arrangement relates to you, whether you can use that figure in personal appearances or advertising, how much it would cost and how frequently you would be allowed to do so.

Item 19: Earnings Claims It is very tricky for a franchisor to project, estimate, or in any way forecast financial sales. There are so many variables in play for an individual franchise that it would be mostly guesswork and optimism to project for a prospective franchisee how much money they will make with their business. Any claims made by the franchisor to this effect must be substantiated, so rarely will you see any earning claims included in a UFOC. The best way to get an idea of what to expect for earnings is to talk to existing franchisees. Find out how long they've been in business, when the business turned profitable, and what their average profits have been. Remember that each business is unique and that each franchisee does not run a business equally well. Speak to several franchisees to get a clearer picture of a range that you might be able to expect.

Item 20: List of Outlets All of the existing franchise locations, along with the franchisee's contact information, is listed in this section. This is the pot of gold, right here. Contacting franchisees with questions about their relationship to the franchisor, their ability to meet their contractual obligations, their general earnings, and how realistic the start-up projections are is the best bit of research and review you can possibly do before purchasing your franchise. Prepare your questions and schedule time with franchees in advance; this one is important.

Item 21: Financial Statements This section points you to the exhibits containing the audited financial statements of the franchisor for the last three years. Take these statements to a qualified accountant for review. The financial status of the franchisor is a track record, showing you not only the ability of the franchisor to run the business, but also the likelihood of success or failure.

Item 22: Contracts All contracts or agreements a franchisee will need to sign must be attached to the UFOC. This includes the Franchise Agreement, purchase agreements, lease agreements, and others.

Item 23: Receipt This document is a receipt of acknowledgment of the UFOC. This has to be provided as the last page of the document for the franchisee to acknowledge that they have received it. This is only important because no monies can legally be exchanged until 10 days after the receipt of the UFOC (the "cooling off" period provided for by law).

Exhibits Any documents that have been identified in the UFOC for the franchise to review or sign must be included as an Exhibit. The exhibits will include copies of such things as the financial statements, Franchise Agreement, leases, or Loan Agreements.

How To Write A Successful Business Plan

by: Jason Kay


Whether you are planning to start a brand-new business, expand an existing company, or get financing for a business venture, you will need to write a business plan. A business plan not only lends your business a sense of credibility, but also helps you to cover all your bases, increasing your chances of success.

Although writing a business plan can be a lengthy, intimidating project, it is not necessarily difficult. Here is an overview of how to write a successful business plan.

What to Include in Your Business Plan

Your business plan needs to demonstrate that you have thoroughly considered all aspects of running your business. To that end, the standard business plan has nine major sections, covering everything from your business’s mission statement to a detailed financial analysis.

Executive Summary

The first – and most important – section of your business plan is the executive summary. This section is so important that it should literally be the first thing the reader sees – even before the table of contents! However, it should also be written last, as you’ll have a better understanding of the overall message of your business plan after you’ve researched and written the other sections.

One of the most important parts of the executive summary is the mission statement. The mission statement is only three or four sentences long, but it should pack the most punch out of everything else in your business plan: Those four sentences are responsible for not only defining your business, but also capturing the interest of your reader.

The rest of your executive summary should fill in the important details that the mission statement glosses over. For instance, your executive summary should include a short history of the business, including founder profiles and start date; a current snapshot, listing locations, numbers of employees, and products or services offered; and a summary of future plans and goals.

This section is a candidate for a bulleted format, which allows you to list main points in a manner that is easy to scan. Avoid using too much detail – remember, this section is a summary. A page or two is usually sufficient for an executive summary.

Market Analysis

The next section of your business plan focuses on market analysis. In order to show that your business has a reasonable chance for success, you will need to thoroughly research the industry and the market you intend to sell to. No bank or investor is going to back a doomed venture, so this section is sure to fall under especially close scrutiny if you are looking for financing.

Your market analysis should describe your industry, including the size, growth rate, and trends that could affect the industry. This section should also describe your target market – that is, the type or group of customers that your company intends to serve. The description of your target market should include detail such as:

• Distinguishing characteristics

• The needs your company or product line will meet

• What media and/or marketing methods you’ll use to reach them

• What percentage of your target market you expect to be able to wrest away from your competitors

In addition, your market analysis should include the results of any market tests you have done, and an analysis of the strengths and weaknesses of your competitors.

Company Description

After your market analysis, your business plan will need to include a description of your company. This section should describe:

• The nature of your business

• The needs of the market

• How your business will meet these needs

• Your target market, including specific individuals and/or organizations

• The factors that set you apart from your competition and make you likely to succeed

Although some of these things overlap with the previous section, they are still necessary parts of your company description. Each section of your business plan should have the ability to stand on its own if need be. In other words, the company description should thoroughly describe your company, even if certain aspects are covered in other sections.

Organization and Management

Once you have described the nature and purpose of your company, you will need to explain your staff setup. This section should include:

• The division of labor – how company processes are divided among the staff

The management hierarchy

• Profiles of the company’s owner(s), management personnel, and the Board of Directors

• Employee incentives, such as salary, benefits packages, and bonuses

This goal of this section is to demonstrate not only good organization within the company, but also the ability to create loyalty in your employees. Long-term employees minimize human resource costs and increase a business’s chances for success, so banks and investors will want to see that you have an effective system in place for maintaining your staff.

Marketing and Sales Management

The purpose of the marketing and sales section of your business plan is to outline your strategies for marketing your products or services. This section also plans for company growth by describing how the growth could take place.

The section should describe your company’s:

• Marketing methods

• Distributions methods

• Type of sales force

• Sales activities

• Growth strategies

Product or Services

Following the marketing section of your business plan, you will need a section focusing on the product or services your business offers. This is more than a simple description of your product or services, though. You will also need to include:

• The specific benefits your product or service offers customers

• The specific needs of the market, and how your product will meet them

• The advantages your product has over your competitors

• Any copyright, trade secret, or patent information pertaining to your product

• Where any new products or services are in the research and development process

• Current industry research that you could use in the development of products and services

Funding Request

Only once you have described your business from head to toe are you ready to detail your funding needs. This section should include everything a bank or investor needs in order to understand what type of funding you want:

• How much money you need now

• How much money you think you will need over the next five years

• How the money you borrow will be used

• How long you will need funding

• What type of funding you want (i.e. loans, investors, etc.)

• Any other terms you want the funding arrangement to include

Financials

The financials section in your business plan supports your request for outside funding. This section provides an analysis of your company’s prospective financial success. The section also details your company’s financial track record for the past three to five years, unless you are seeking financing for a startup business. The financials section should include:

• Company income statements for prior years

• Balance sheets for prior years

• Cash flow statements for prior years

• Forecasted company income statements

• Forecasted balance sheets

• Forecasted cash flow statements

• Projections for the next five years – every month or quarter for the first year, with longer intervals for the remaining years

• Collateral you can use to secure a loan

The financials section is a great place to include visuals such as graphs, particularly if you predict a positive trend in your projected financials. A graph allows the reader to quickly take in this information, and may do a better job of encouraging a bank or investor to finance your business. However, be sure that the amount of financing you are requesting is in keeping with your projected financials – no matter how impressive your projections are, if you are asking for more money than is warranted, no bank or investor will give it to you.

Appendices

The appendix is the final section in your business plan. Essentially, this is where you put all of the information that doesn’t fit in the other eight sections, but that someone – particularly a bank or investor – might need to see.

For instance, the market analysis section of your business plan may list the results of market studies you have done as part of your market research. Rather than listing the details of the studies in that section, where they will appear cumbersome and detract from the flow of your business plan, you can provide this information in an appendix.

Other information that should be relegated to an appendix includes:

Credit histories for both you and your business

• Letters of reference

• References that have bearing on your company and your product or service, such as magazines or books on the topic

• Company licenses and patents

• Copies of contracts, leases, and other legal documents

• Resumes of your top managers

• Names of business consultants, such as your accountant and attorney

Writing a Successful Business Plan

Despite the quantity of information contained in your business plan, it should be laid out in a format that is easy to read. Just like with any piece of business writing, it is important to craft your business plan with your intended audience in mind – and the bankers, investors, and other busy professionals who will read your business plan almost certainly won’t have time to read a tedious document with long-winded paragraphs and large blocks of text.

Business plans for startup companies and company expansions are typically between twenty to forty pages long, but formatting actually accounts for a lot of this length. A strong business plan uses bullet points throughout to break up long sections and highlight its main points. Visuals such as tables and charts are also used to quickly relay specific information, such as trends in sales and other financial information. These techniques ensure that the reader can skim the business plan quickly and efficiently.

Think of your audience as only having fifteen minutes to spend on each business plan that comes across their desks. In that fifteen minutes, you not only have to relay your most important points, but also convince the reader that your business venture merits a financial investment. Your best bet is a well-researched business plan, with an organized, easy-to-read format and clear, confident prose.

Superior Leader - Warren Buffet

by: Michael J. Spindler


Superior business leader and American investor Warren Buffett is often called “Oracle of Omaha” or the “Sage of Omaha” and philanthropist. (Wikipedia, 2007) Buffett is the CEO, and the biggest shareholder of the Berkshire Hathaway Company. Buffett’s has an estimated current net worth of approximately $52 billion in US funds. Forbes Magazine ranks Buffett the third richest person in the world in September 2007 behind Carlos Slim and Bill Gates. Warren Buffett is known for his economical and plain lifestyle. Buffett still lives in the same Omaha, Nebraska house that he purchased in 1958 for $31,500 with a current value of $700,000. In 1989, Buffett spent $9.7 million of the Berkshire’s funds on a corporate jet. He jokingly named it “The Indefensible” because of his past criticisms of such purchases by other CEOs. (Wikipedia, 2007) Warren Buffett decided to make a commitment to give his fortune to charity back in June 2006. Buffett’s charity donation is approximately $30 billion, which is the largest donation in the history of the United States. The donation was enough to more than double the size of the foundation with 83% of it going to the Bill and Melinda Gates Foundation. Buffett believed that his family had enough money to get started in life so Buffett decided to give his fortune to charity. Buffett’s annual salary in 2006 was only $100,000. In 2007, Buffett was listed among Time Magazine’s 100 Most Influential People in the World. (Wikipedia, 2007) What makes Warren Buffett a good business leader? This is what everyone wants to know because Warren buffet is so successful. It all starts with leadership. Warren buffet is a true leader where his leadership makes a difference in the world. Leadership is very much related to change and Warren Buffett has the capabilities of leadership change to fit the changing world. Warren Buffett has repeatedly demonstrated the ability to map read in the irregular waters of change. Is Warren Buffett born a leader? The authors of this paper believe not. Experience and research has shown little evidence that an individual who comes to power is a “born leader.” Warren Buffett took the falls that any other leader has to take. Warren Buffett learned from his mistakes and turned his mistakes into a positive thing. Warren Buffett shares his leadership at all organizational levels and Buffett is empowered to share leadership responsibilities. In the world of business, many titles related to leadership roles are actively used in business and Warren Buffett wears those titles to make him effective in multiple leadership positions in business. Distinction between good leadership and good management is made often. Managers are made to be organizational, controllers and budgeters. Warren Buffett has leadership in all three departments and one must have these traits to be a good business leader. Another important trait in Today’s business leadership is communication. Warren Buffet is a skilled communicator in all aspects of life. Communication is the real key of leadership. Skilled communicators have an appreciation for positioning in the business world. Warren Buffet is experienced at positioning himself at the right place at the right time. Warren Buffet has the understanding of the people he is trying to reach and what he can and cannot hear from the people. Knowledge of audiences’ needs and wants gives the orator the ability to listen. Warren Buffett is an excellent listener with the ability to convey his understanding. When Warren Buffett talks, people listen. Warren Buffett can send a message through an open door and does not have to push the message through a wall. Leadership is crucial to any successful business and good leadership is what Warren Buffett is all about. This is what makes Warren buffet a good business leader. Mr. Warren Buffett’s investment strategies and course of leadership are shining examples of characteristics shared by cognitive theorists. Cognitive theory is an approach of explaining behavior through perception, anticipation, and thinking. Mr. Buffett’s continual approach of analyzing both possible investment choices, market trends, and the ability to place management resources of the right caliber in the right position has consistently brought this investor to the forefront amongst peers and the marketplace. At the core of every sound investor is a creative innovator. Innovation demands creativity. Creativity in turn draws on our cognitive faculties, across the full amplitude from emotion to reason. In the number-heavy world of global investing, innovative thinking is critical. Innovative investors decipher future trends, spot likely winners by combining science (financials) with art (acuity and perception) and continuously mitigate risk. They assess user needs, product features, the proper deployment of money, professional organizational structures and risk management. (Kore Kalibre, 2006) Mr. Buffett’s instinct and ability to interpret market trends is also held by tight reigns. Despite over 50 years of growth, Mr. Buffett always adheres to one of the most basic business principles: “…only compete where you have a competitive advantage. Warren Buffett refers to staying within your circle of competence. Social psychologists tell us, though, that we are prone to overconfidence when it comes to assessing our abilities…” (Arthridge, 2006) A man of Warren Buffett’s position and track record could easily be derailed to a sense of over confidence. The principle of only competing within your range of competitive advantage is a principle that can be applied to many other areas in life, and Mr. Buffett’s ability to work and live by this idea has allowed him to continue forward with minimal bruising. By establishing the previous examples, the authors can reinforce the principles of cognitive theory in that Mr. Buffett behavior patterns are clearly dictated by thought processes, which include interpretation, analysis, and foresight. “As experiences and events gain meaning and value, the process becomes increasingly top down as the mind in (a) attempt at an orderly process influences perception though beliefs, goals and external process” (Gardener, 2007) Warren Buffett’s is a self empowered leader, because he is loyal, sets goals, plans a strategy for achievement, and stays committed until he accomplishes his purpose. Up to date, he is the greatest stockbroker of all-time. He is a very conservative investor that prefers to invest in companies that sell name brand products that he uses. For example, Coca-Cola, Gillette Razors, See’s Candy, Gulfstream Jet, and GEICO are the major companies he invested in. In the nineties his assets quadrupled in less than five years. He is a smart investor that usually does not take big investment risks. For example, he will not invest in internet stock, because the return is unpredictable. He likes to invest in companies that he is sure will be successful 20 years later. He buys the company with the intentions of keeping it forever. Usually, the management team of each company is the same staff that sold it Warren Buffett from the beginning. He stays loyal to his partners, and the team workstheir best to keep him happy. After Warren Buffett’s wife died, he decided to donate 85% of his money to charity. However, “he wants his money to be used the same year he donates it”.(Harris, 2006) The requirement will accelerate the process to help the world. According to Fortune magazine, five-sixths of his money will go to the Bill and Melinda Gates Foundation. This foundation which focus on finding cures for diseases that are common in poor nations. The rest of the money will be split among four other charities, that are each run by his three children and one that is in his late wife’s name. Warren Buffett is not a huge spender. In fact, he still lives in the same house he bought 40 years ago. Warren “told ABC News “Nightline” that being born into wealth did not entitle his children”(Harris, 2006). In addition, he told Fortune magazine that, “A very rich person would leave his kids enough to do anything, but not enough to do nothing.”(Harris, 2006) In other words, he wants his children to work earn their money and value hard work and smart choices. In the year 2006, Warren’s first annual donation to the Bill and Melinda Gates Foundation was $1.5 billion and the rest was divided among the four charities. He was the first person to make a donation better than Bill Gates, the richest man in the world. It seems as if Bill Gates and Warren Buffett set a good example and lead others to be more generous, because now the Barron Hilton has committed to donating half of his fortune to charity also. Barron Hilton is the founder of the Hilton Hotels and is worth $2.3 billion. Hopefully, a trend started among the fortunate to give to the less fortunate. The personality of Warren Buffett ties to the Social Cognitive Level, because he tries to understand and make sense of other people. He observes the differences in social knowledge when dealing with people. Social cognition refers to making sense of ourselves, others, and how the information is used. In the sixties and seventies Albert Bandura and Walter Mischel were psychologists, studying personality development. They found that social learning and cognitive principles improve ones abilities to self-regulate and to follow goals. Warren investment choices were successful, because he conditioned his the way he processed information, choices, and expectations.

Understanding the Mortgage Meltdown; What happened and Who's to Blame

by: Richard Gandon


People are losing their homes and many more will lose their jobs before the mortgage meltdown works its way through the system. To paraphrase Alan Greenspan's remarks on March 17th, 2008, “The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War. The crisis will leave many casualties.” How many casualties? Experts are predicting that in the next few years, between 15 and 20 million homeowners could have homes worth less than what they owe. Walking away from a bad situation may actually make sense for people who mortgages that are 'upside down' considering the fact that refinancing is out of the question and home equity is nonexistent. It seems quite easy to point fingers at greedy Wall Street titans for causing the sub-prime mortgage crises. They after all, put together the deals that allowed banks to underwrite mortgages and then offload these liabilities to investors. What many fail to realize is that there is no shortage of blame to go around from homeowners buying more home than they could afford to real estate agents looking for more commission dollars. Mortgage brokers and bankers, the banks themselves, ratings agencies such as Moody's and Standard & Poor's, Wall Street, the Fed and last but certainly not least, the Federal Government. Let's start with the homeowners--the people who are now in the process or soon to enter the process, of losing their homes. Some of these people had never before owned a home and as such, may not have been prepared for the costs associated with homeownership. Basic financial literacy is sorely lacking in this country despite there being no shortage of budgeting and tracking programs readily available such as Quicken and Microsoft Money. The lack of financial literacy does not absolve these buyers of their responsibility. Every borrower receives a truth in lending disclosure statement. Here is a portion of what the act covers: The purpose of TILA (Truth In Lending Act) is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling. Much of the subprime mortgage crisis can be traced directly back to variable-rate mortgages. As is clearly stated above, “TILA does not regulate the charge that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumers dwelling.” It also clearly states that TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling. One has to wonder whether or not these homeowners: 1. Bothered to read the truth in lending act disclosure at all. 2. Understood what the truth in lending act disclosure meant. 3. Chose to ignore the information printed clearly the truth in lending act disclosure. A number of months ago, just as the subprime mortgage crisis was beginning to unfold, The New York Daily News ran an article about a family in New York City, who had bought a home and were now faced with the prospect of foreclosure. The article was sympathetic to this family, highlighting the fact that they're living the American dream and that this dream was about to come to an end. What I found to be distressing was the fact that clearly visible in the photo that accompanied this sympathetic article was a very expensive flat screen television hanging on the wall. Perhaps I'm naïve, but I can assure you that if I were faced with the prospect of losing my home and having my family put out on the street, there is absolutely no way that I would still have that expensive television hanging on my wall. It would have been one of the first things to be sold and some financial relief would be found by jettisoning what I'm sure was the expensive cable bill. Clearly the public needs easy access to financial literacy courses. Too bad we don't see the need to make this a mandatory course of study in our educational system. Mortgage bankers and brokers have in the last four or five years been raking in cash by the bucket load in the form of commissions paid when mortgages they've originated, close. Many of these people have not needed to do much in the way of prospecting. Instead, their phones have run off the hook as people have jumped on the homeownership and refinancing and take out extra cash bandwagon, despite their ability to pay for their home. No-document loans were readily available without the borrower having to produce documentation that backed up their income. Clearly this practice can and indeed has, lead to substandard loan underwriting processes. Were some of these mortgage bankers and brokers dishonest? Sure. Were all of them dishonest? I think not. To have a massive nationwide conspiracy, where thousands and thousands of people involved in the mortgage banking and mortgage brokering profession got together to create this situation is simply not feasible. Yes, some of the blame does belong with those in the mortgage industry, but they were simply a small cog in the huge machine that created this mess. Let's discuss real estate agents. In 2007, we bought a home, and also sold a home. The agent we used to purchase our home was absolutely fantastic. In our opinion, she went above and beyond to make our deal happen. She answered every phone call, followed up on every concern and was the epitome of professionalism. We consider this individual to be a friend, and we have sent referrals her way that have resulted in her earning additional commissions. We will continue to recommend her to all who ask or mention that they'd like to buy or sell a home in our area. The real estate agent, we used to sell our home, could not have been more different. We got our old home ready to sell prior to closing on our new home. We decided to list it as “For Sale by Owner.” In the event that we didn't sell this home on our own, it was our intention to list it with an agent as soon as we had closed on the purchase our new home. Literally, from the day we put the sign in front of our home and listed it on a “For Sale by Owner” website we were inundated with phone calls from real estate agents. We were told many lies and were constantly harassed; although we had already made it quite clear to every agent who called, and there were more to 60 who did; that we were willing to pay half the commission-the same as they would have received had they sold another agent's listing. We also told every agent that called that we had already lined up an agent to sell our home in the event that we chose to no longer sell it ourselves. Our deadline was the closing date of our new home purchase. We did have an interested buyer who shortly after our closing date decided to keep looking so we listed our home with a local agent so that we could concentrate on getting our new home ready for our moving date at the end of the school year. This agent showed our home a maximum of two times and got an offer which we accepted. We ended up getting $1,000 less than we had wanted in a declining Real Estate market. The agents who had called many times to harass us called our listing agent on a number of occasions and he lied telling them that the house was under contract when in fact it wasn't at that time-clearly a breach of our agent's fiduciary duty. Quite frankly an ethical agent would have continued to show our home until closing in the event that the deal fell through. But wait, there's more. Our agent also acted as the buyer's mortgage broker. At the closing table, we learned that he had signed documents from the buyer stating that he (our agent) represented them and we had signed documents stating that he represented us. We also learned that the buyer had effectively put down approximately 2-3% of the purchase price when financed closing costs were factored into the equation. Their first mortgage had what we thought was a high fixed rate and their second mortgage came with a rate in excess of 8.5%. Because the closing happened in August, literally in the midst of the first wave of the meltdown, if they didn't close on the day they did (August 31st, 2007), Citibank wasn't going to extend their rate. When my wife & I have bought houses in the past, it had always been a very happy day. These people looked absolutely shell-shocked at the closing table. I'm not convinced that they knew just how much their monthly payment was going to be until closing day. We knew down to the penny well in advance having budgeted and planned everything on a spreadsheet. Were these people stupid or just inexperienced and mislead by a greedy combination of real estate agent & mortgage broker? I'm extremely confident that they are intelligent people but inexperienced and taken advantage of by an unscrupulous agent. The banks are also culpable. Prior to bank deregulation, Savings and Loans provided mortgages to home buyers and kept these loans on their books. Non-performing loans had a negative effect on the S&L's profitability which of course caused tighter lending guidelines such as job stability and decent down payments in order for prospective home buyers to be approved for a mortgage. Way back then, a home buyer had to actually save up enough money for a down payment 10 or even 20% before a bank would ever consider underwriting a mortgage. The checks & balances kept banks solvent and borrowers responsible. Although this approach worked, some cried foul stating that the regulated system was racist and discriminatory-and there certainly was some truth to this. Skipping forward to the present, banks made a bundle on mortgages over the past five or six years. For the most part, they allowed their underwriting criteria to be stretched so far out of alignment that almost anyone could and indeed did, qualify for a mortgage despite their ability to pay. Some folks even applied for and received mortgages for more than the property was worth. Sometimes for as much as 25% more than their property was worth! Under the prior system, 125% mortgages would not have been possible because of course these loans were held on the banks' books and could have led to losses that would have had to have been absorbed directly by the bank. So what went wrong? Under the current system, these loans were sold to the big Wall Street investment firms who repackaged them as collateralized mortgage obligations (CMO's), Mortgage Backed Securities (MBS's) and other similar acronyms. These instruments were then sent to the ratings agencies for their blessing and more importantly a letter rating. Many of these structured finance deals receive AAA ratings-the highest ratings available meaning that in theory, these instruments were least likely to default. How does one create a 'triple A' or AAA rated financial instrument out of sub-prime mortgages? Herein lies the magic. These Asset Backed Securities (ABS) are made up of different tranches or slices, each carrying a different risk and reward level. The first dollar of principle and interest is applied to the securities with the highest rating, and the first dollar of loss is applied to the tranche with the lowest ratings. The lower slices are designed to provide a security blanket that in theory protects the higher-rated securities. The investment banks that package or 'structure' these securities in order to earn fat fees when they sell them to investors are the same entities that pay the ratings agencies to rate these instruments. Clearly the possibility for conflict of interest is present. If investors and not the investment banks that stand to rake in millions in fees were to pay for the rating, the potential for this conflict of interest would be negated. Furthermore, the investment banks have a vested interest in convincing the ratings agencies of the credit worthiness of these securities. So we've already pointed fingers at homeowners, some greedy, many more I suspect, naïve or uninformed, real estate agents-one out of more than 60 in my experience was a gem, mortgage brokers & bankers, banks, Wall Street and ratings agencies so who's left? The Federal Reserve and the Government of course. The Fed as its known is responsible of the country's monetary policy and for supervision and regulation of banks. This is the definition of the Fed's roles in their own words: Monetary Policy The Fed is best known for its role in making and carrying out the country's monetary policy-that is, for influencing money and credit conditions in the economy in order to promote the goals of high employment, sustainable growth, and stable prices. The long-term goal of the Fed's monetary policy is to ensure that money and credit grow sufficiently to encourage non-inflationary economic expansion. The Fed cannot guarantee that our economy will grow at a healthy pace, or that everyone will have a job. The attainment of these goals depends on the decisions of millions of people around the country. Decisions regarding how much to spend and how much to save, how much to invest in acquiring skills and education, how much to spend on new plant and equipment, or how many hours a week to work may be some of them. What the Fed can do, is create an environment that is conducive to healthy economic growth. It does so by pursuing a goal of price stability-that is, by trying to prevent inflation from becoming a problem. Inflation is defined as a sustained increase in prices over a period of time. A stable level of prices is most conducive to maximum sustained output and employment. Also, stable prices encourage saving and, indirectly, capital formation because it prevents the erosion of asset values by unanticipated inflation. Inflation causes many distortions in the market. Inflation: · hurts people with fixed income-when prices rise consumers cannot buy as much as they could previously · discourages savings · reduces economic growth because the economy needs a certain level of savings to finance investments that boost economic growth · makes it harder for businesses to plan-it is difficult to decide how much to produce, because businesses can't predict the demand for their product at the higher prices they will have to charge in order to cover their costs Bank Regulation & Supervision The Fed is one of the several Government agencies that share responsibility for ensuring the safety and soundness of our banking system. The Fed has primary responsibility for supervising bank holding companies, financial holding companies, state-chartered banks that are members of the Federal Reserve System, and the Edge Act and agreement corporations, through which U.S. banking organizations operate abroad. The Fed and other agencies share the responsibility of overseeing the operation of foreign banking organizations in the United States. To insure that the banking system remains competitive and operates in the public interest, the Fed considers applications by banks for mergers or to open new branches. The passage of the Gramm-Leach-Bliley (GLB) Act in November 1999, was the culmination of a multi-decade effort to eliminate many of the restrictions on the activities of banking organizations. Some of the main provisions of the GLB are: · Repeals the existing limitations on the ability of banks to affiliate with securities and insurance firms · Creates a new organizational form that allows banking organizations to carry new powers. This new entity called a "financial holding company," (FHC) and its non-banking subsidiaries are allowed to engage in financial activities such as insurance and securities underwriting The Fed's enlarged role as an umbrella supervisor of FHCs is similar to its role in supervising bank holding companies. The Federal Reserve Banks will supervise and regulate the FHCs while each affiliate is still overseen by its traditional functional regulator. The Fed has to delineate the financial relationship between a bank and other FHC affiliates. Its primary goal is to establish barriers protecting depository institutions from the problems of a failing affiliate. To do this efficiently the Fed has to ensure increased communication, cooperation, and coordination with the many supervisors of the more diversified FHCs. The Fed has access to data on risks across the entire organization, as well as information on the firm's management of those risks. Regulators will be in a position to evaluate and presumably act on risks that threaten the safety and soundness of the insured banks. It would appear that the Fed has failed to curb housing inflation which played a role in this entire debacle then made matters worse and in their efforts or lack there of, to properly supervise banking institutions. Finally the government, a.k.a. Uncle Sam, the big Kahuna 10,000 pound elephant etc. Where do we begin? How about with: 'Where were they?' It now appears that after millions of horses are out of the barn (some horses ran, others were foreclosed upon) the government wants to step in with a bailout to save the rest. While nobody wants to see people lose their homes, the question that must be raised is this: What about all those of us who were responsible? Those of us, who scrimped and saved up a decent down payment, bought less-house than we could afford and who live below our means? Many of us drive older cars and keep them longer. We don't run out and buy the latest and greatest at inflated prices, we watch, wait and budget. When the World Trade Center was attacked, families who decided not to sue received government payouts and we certainly don't begrudge them as I'm sure that given the choice, they'd prefer to still have their loved-ones over the money. The problem, in typical government fashion is that those who were responsible and had insurance policies in place received less than those who were irresponsible and didn't plan ahead. I'm not talking about dishwashers at Windows on the World and blue collar workers; I'm talking about executives, traders and people who should have known better. Now our government, the same government that sat by idly watching as this bubble got bigger and bigger despite many warnings, wants to step in and bailout people who are in danger of losing their homes. There has been no talk about educating people, let's not teach people to fish, rather, let's give them a fish and bail them out once again at the expense of those who are responsible. Clearly, by keeping the majority of the population financially ignorant, there is a lot of money to be made by the poverty industry.

How to Successfully Navigate Your Business through an Economic Downturn

by: Terry H Hill


An economic downturn is a phase of the business cycle in which the economy as a whole is in decline.This phase basically marks the end of the period of growth in the business cycle. Economic downturns are characterized by decreased levels of consumer purchases (especially of durable goods) and, subsequently, reduced levels of production by businesses.

While economic downturns are admittedly difficult, and are formidable obstacles to small businesses that are trying to survive and grow, an economic downturn can open up opportunities. A well-managed company can realize the opportunity to gain market share by taking customers away from their competitors. Resourceful entrepreneurs capture the available opportunities, from an economic downturn, by developing alternate methods of doing business that were never implemented during a prior growth period.

The challenge of successfully navigating your business through an economic downturn lies in the realignment of your business with current economic realities. Specifically, you, as the business owner, need to renew a focus on your core clients/customers, reduce your operating expenses, conserve cash, and manage more proactively, rather than reactively, is paramount.

Here are best practices that will help you to successfully navigate your business through an economic downturn:

Goals:

The primary goal of any business owner is to survive the current economic downturn and to develop a leaner, more cost-effective and more efficient operation. The secondary goal is to grow the business even during this current economic downturn. Objectives:

Conserve cash.

• Protect assets.

• Reduce costs.

• Improve efficiencies.

• Grow customer base.

Required Action:

• Do not panic… History shows that economic downturns do not last forever. Remain calm and act in a rational manner as you refocus your attention on resizing your company to the current economic conditions.

• Focus on what YOU can control… Don’t let the media's rhetoric concerning recessions and economic slowdown deter you from achieving business success. It´s a trap! Why? Because the condition of the economy is beyond your control. Surviving economic downturns requires a focus on what you can control, i.e. your relevant business activities.

• Communicate, communicate, and communicate! Beware of the pitfall of trying to do too much on your own. It is a difficult task indeed to survive and to grow your business solely with your own efforts. Solicit ideas and seek the help of other people (your employees, suppliers, lenders, customers, and advisors). Communicate honestly and consistently. Effective two-way communication is the key.

• Negotiate, negotiate, and negotiate! The value of a strong negotiation skill set cannot be overstated. Negotiating better deals and contracts is an absolute must for realigning and resizing your company to the current economic conditions. The key to success is not only knowing how to develop a win-win approach in negotiations with all parties, but also keeping in mind the fact that you want a favorable outcome for yourself too.

Recommended Best Practice Activities:

The Nuts and Bolts… The following list of recommended best practice activities is critical for your business' survival and for its growth during an economic downturn. The actual financial health of your particular business, at the outset of the economic downturn, will dictate the priority and urgency of the implementation of the following best practice activities.

1. Diligently monitor your cash flow: Forecast your cash flow monthly to ensure that expenses and planned expenditures are in line with accounts receivable. Include cash flow statements into your monthly financial reporting. Project cash requirements three-to- six months in advance. The key is to know how to monitor, protect, control, and put cash to work.

2. Carefully convert your inventories: Convert excess, obsolete, and slow-moving inventory items into cash. Consider returning excess and slow-moving items back to the suppliers. Close-out or inventory reduction sales work well to resize your inventory. Also, consider narrowing your product offerings. Well-timed order placement helps to reduce excess inventory levels and occasional material shortages. The key is to reduce the amount of your inventory without losing sales.

3. Timely collection of your accounts receivable: This asset should be converted to cash as quickly as possible. Offer prompt payment discounts to encourage timely payments. Make changes in the terms of sale for slow paying customers (i.e. changing net 30 day terms to COD). Invoicing is an important part of your cash flow management. The first rule of invoicing is to do it as soon as possible after products are shipped and/or after services are delivered. Place an emphasis on reducing billing errors. Most customers delay payments because an invoice had errors, and therefore, will not pay until they receive a corrected copy. Email or fax your invoices to save on mailing time. Post the payments that you have received and make deposits more frequently. The key is to develop an efficient collection system that generates timely payments and one that gives you advance warning of problems.

4. Re-focus your attention on your existing clients/customers: Make customer satisfaction your priority. A regular review of your customers' buying history and frequency of purchases can reveal some interesting facts about your customers' buying habits. Consider signing long-term contracts with your core clients/customers which will add to your security. Offer a discount for upfront cash payments. The key is to do what it takes to keep your current customers loyal.

5. Re-negotiate with your suppliers, lenders, and landlord:

i) Suppliers: Always keep your negotiations on the level of need, saying that your company has reviewed its cost structure and has determined that it needs to lower supplier costs. . Tell the supplier that you value the relationship you have developed, but that you need to receive a cost reduction immediately. Ask your supplier for a lower material price, a longer payment cycle, and the elimination of finance charges. Also, see if you can buy material from them on a consignment basis. In return for their price concessions, be willing to agree to a long-term contract. Explore the idea of bartering as a form of payment.

ii) Lenders: Everything in business finance is negotiable and your relationship with a bank is no exception. The first step to successful renegotiations is to convince your lenders that you can ultimately pay off the renegotiated loan. You must point out to your lenders why it would be in their best interest to agree to a new arrangement. Showing them your business plan and your action plan that includes your cost-savings initiatives, along with "the how" and "the when" of the implementation of your plan is the best way to achieve this goal. Explain to them that you will need their cooperation to insure that you can survive, as well as, grow your business during the economic downturn. Negotiated items include: the rate of interest, the required security to cover the loan, and the beginning date for repayment. A beginning date for repayment could be immediate, within several months or as long as a year. The key is to realize that your lender will work with you, but that frequent and continual communications with them is critical.

iii) Landlord: Meet with your landlord. Explain your need to have them extend the term of your lease at a reduced cost. Make sure you have a clause in the lease agreement that entitles you to have the right to sublet any or all of the leased space.

6. Re-evaluate your staffing requirements: This is a very critical area. Salaries/wages are a major expense of doing business. Therefore, any reduction in the hours worked through work schedule changes, short-term layoffs or permanent layoffs has an immediate cost saving benefit. Most companies ramped up hiring new employees in the good times, only to find that they are currently overstaffed due to slow sales during the economic downturn. In terms of down-sizing your staff, be very careful not to reduce your staff to a level that forces you to skimp on customer service and quality. Consider the use of part-timers or the current trend of outsourcing certain functions to independent contractors.

7. Shop for better insurances rates: Get quotations from other insurance agents for comparable coverage to determine whether or not your present insurance carrier is competitive. Also, consider revising your coverage to reduce premium costs. The key is to have the right balance-to be adequately insured, but not under or over insured.

8. Re-evaluate your advertising: Contrary to the other cost-cutting initiatives, evaluate the possibility of increasing your advertising expenditures. This tactic realizes the advantage of the reduced "noise" and congestion (fewer advertisers) in the marketplace. The downturn period a great opportunity to increase brand awareness and create additional demand for your product/service offerings.

9. Seek the help of outside advisors: The use of an advisory board comprised of your CPA, attorney, and business consultant offers you objectivity and provides you with professional advice and guidance. Their collective experience in working with similar situations in past economic downturns is invaluable.

10. Review your other expenses: Target an across-the-board cost-cutting initiative of 10-15%. Attempt to eliminate unnecessary expenses. Tightening your belt in order to weather the downturn makes practical, financial sense.

Proactively managing your business through an economic downturn is an enormous challenge and is critical for your survival. However, through well-planned initiatives, an economic downturn can create tremendous opportunity for your company to gain greater market share. In order to take advantage of this growth opportunity, you must act quickly to implement the above best business practices to continue realigning and resizing your company to the current economic conditions.

Comparing Business Credit Cards Can Help Owners Save Money

Posted by admin as Business-Industry

If you are a business owner, you understand that every decision you make is a huge one.? The wrong decision can mean failure for your business, while the right one can catapult it to the head of the competition.? You may not realize it, but choosing a business credit card is just as critical of a decision as any that you will make as a business owner.? Therefore, it is important for you to know how to compare business credit cards in order to find the one that is right for you.

Credit Limits

The first item to look at when you compare business credit cards is the potential credit limit of the card.? Many have a minimum and a maximum potential credit limit.? You should have a good idea before researching business credit cards of how much you need the credit limit to be.? If the maximum potential credit limit is not enough, then move on to the next credit card.? Similarly, if the minimum credit limit is far more than you need, you might also want to pass. ?
Both extremes are not good for a business.? A credit card that does not give you a high enough limit will force you to use more than one business credit card, which makes keeping track of expenses far more difficult and confusing.? At the same time, having too much credit makes it easier to spend beyond your means, potentially bankrupting your business.? Think smart when getting a business credit card and find one that offers a credit limit that is best for your business.

Interest Rates

When you compare business credit cards, you absolutely must consider interest rates.? More than likely, you will not be able to pay the balance off in full each month.? This is common with a business, particularly one that is just starting out, because money is tied up in the business and unavailable for paying the balance off each month.? Therefore, you need to find the business credit card with the lowest interest rate in order to save your business money.? Obviously, if you business is financially stable enough to pay the bill at the end of each month, you don’t need to concern yourself with the interest rate.? The key is to assess your business situation openly and honestly in order to determine if you will carry a balance or not.

Rewards Programs

Many business credit cards offer special rewards programs.? With these programs, you may be able to receive free or reduced goods and services, such as airline travel or office supplies.? At the same time, business credit cards with reward programs tend to have higher interest rats.? Therefore, it might be best for you to pass on one of these cards if you intend to carry a balance on your card from one billing cycle to the next.? When you compare business credit cards, be sure to compare the interest rate to the benefits supplied by the rewards program in order to determine if the payout is worth the pay-in.

Additional Benefits

Business credit cards, like regular credit cards, can have a number of additional benefits associated with them, such as travel insurance, extended warranties, and purchase protection.? The exact benefits, however, vary from card to card.? Even cards issued by the same lender do not necessarily have the same benefits.? When you compare business credit cards, consider these benefits carefully and find out as much as possible about these benefits.? For example, learning that two business cards each offer travel insurance is not enough.? Find out how much travel insurance is supplied.? One may only offer $100,000 while the other offers $1,000,000.? If that $1,000,000 travel insurance is important to your business, then that card may be the best choice for you.? On the other hand, if you only need $100,000 in insurance, the $1,000,000 may not be so impressive.

Coping with Stress Working at Home

by admin as Business-Industry

So what is working at home, and coping with stress, really all about? The following reports includes some fascinating information about working at home, and stress - info you can use, not just the old stuff they used to tell you.

Most of us have been stressed working at home at some point. Aside from the stress of having to find new clients and new jobs, we often encounter stress because jobs come in mad, occasional bursts. Some days our to- do list is almost empty, and the following days it seems like we can hardly keep up.

Deadlines can be overwhelming, and when one is affected, effectiveness plunges. The brain is no longer focused on creativity and action.

When stress level stack up, here what to do. First, reduce stress by… Stopping. Sounds a bit basic, and it’s really hard to do, just stop. Stress can cause health problems or make problems worse if you don’t learn ways to deal with it.

The next step is to find a way to deal with your stress. A simple way is to avoid the circumstance that leads to our stress–but often this is not feasible. Another way is to change how we react to stress. This is often the best way.

Well, it’s time to take heart and set a few simple strategies in place that will keep us in control of our time…and our sanity.

Tips for dealing with working at home stress-

1) Eat a healthy, balanced diet rich in fruits and vegetables. Reduce or eliminate caffeine (coffee, black and green tea, cola drinks, and chocolate). Because caffeine is a stimulant, it can make you feel more anxious.

2) Exercise. It relieves tension and provides a timeout from stressful situations.

3) Try to take time everyday to slow down and do something you enjoy, even if it is just for a few minutes. Reading a magazine, playing with your dog, listening to music, reading a book or any other activity that helps you forget the stresses of your day can calm you and help you remember what is important.

4) Work at being cheerful and optimistic. Use humor to lighten difficult situations.

5) Take very long, relaxing deep breaths anytime you notice you’re feeling stressed.

6) If the nature of any of your tasks allow it, call upon a colleague who can help you. If you’ve never done this before, now is the perfect time to start. The nice thing about this sort of arrangement is your colleague will most likely send jobs your way when he or she gets overloaded.? (Warning: do not hand over tasks that must be carried out only by you as the principal of the business. Your reputation is important.)

7) Organizing and simplifying your life. If one of your main sources of stress is the sheer number of things that need to be done, getting organized should help you feel more at peace. A good sense of organization will also make you more efficient. Simplifying your life also should help you feel less overwhelmed.

Set Achievable Daily Goals. If you finish a task ahead of schedule, start the next… but stick to a definite cut-off time each day. What you are doing this week is set up a system that will continue to work for you.

Follow these tips and before you know it, your home business dream will be on track once again.

That’s how things stand right now. Keep in mind that any subject can change over time, so be sure you keep up with the latest news.

Finding a Job Under Tough Circumstances

By: Joel Vance

Anyone can find a job. That’s right, I said “anyone”. And I meant it. But the caveat is: I didn’t say what kind of job. You can go out and start flipping burgers, and whine about the tough breaks life handed you when your company down-sized, or you can reach higher, and go for that job you really want, and know you have the experience and enthusiasm for.

Reaching higher means being on your toes, in every sense of the words. You’ll have to stretch yourself too- make that extra effort to overcome the obstacles in your way. Nobody said getting the right job would be easy. But it’s there, waiting, if you’re willing to reach.

To show you what we mean, I’m going to give you an example of one executive’s ego-crushing layoff. Down but not out, this man took personal circumstances that could have held him back, and built on them so that he stood on a solid foundation and put that perfect job within his reach.

Sean Davidson* was a senior level marketing manager. His company was downsizing, and in a performance review, it was felt that Sean was the staff member in that type of position that they could most do without. What followed was eight months of frustration, and confidence testing, as he attended job fairs, network events, and searched Internet employment sites. Then he landed an interview for a job that not only matched his skill set, but which he wanted badly. How did he overcome the negativity of his layoff?

When asked about the gap in his employment, Sean took the initiative and spoke about strategic mistakes he had made in his last position, and how the slow growth in their industry, had led to a decision to lay off staff. He then went on to talk about new growth areas and the how a company can make the most of the opportunities offered, and increase their market share. His explanation and proposals, not only showed his awareness of current market conditions, but also displayed his business competency.

He had turned the focus of the question from why he was laid off, to showing what he had learned from the business conditions that caused it, and how he could help the interviewing company to improve their position. And he got the job!

*Names changed to protect confidentiality

Business Networking puts More Money in Your Pocket

By: David A. Bailey, Jr

Business networking puts more money in your pocket by helping you overcome the number one biggest problem facing new business owners. Prospecting for new customers. Business networking events can go a long way towards making the whole prospecting problem go away. There are two main kinds of networking opportunities available to the average entrepreneur. Passive networking and strong networking. Both have unique benefits and drawbacks.

The most well known example of passive networking is your local chamber of commerce. You can find a chamber of commerce chapter in almost every major city worldwide. Your local chamber of commerce gives you the opportunity to meet with many of the movers and shakers in your local business community. Through the many events they plan on a monthly and yearly basis, they offer you a chance to connect with a number of potential prospects for your products and services.

Weekly networking groups or clubs are an example of strong networking opportunities. These kinds of business networking events can be found in many major cities worldwide. A strong networking group will meet on a weekly basis for the sole purpose of exchanging business leads with one another and learning better ways of networking to grow their business. The most successful networking groups require your weekly attendance and insist that their members provide fellow members with referrals throughout the year. They also allow only one person from each profession or industry to belong to the group. This keeps the quality of the referrals high. One such group is Business Network International (BNI).

So what are the advantages and disadvantages of each kind of networking? They both have their place but strong networking groups represent a bigger commitment than passive networking groups. By belonging to a strong networking group, you are committed to be on the lookout for referrals for group members. Strong networking groups also usually meet on a weekly basis whereas passive networking groups usually meet monthly.

Passive networks can have multiple people from one profession or industry as members. They also have no requirements for passing on referrals to other members. Referrals do occur in a passive networking event but it is not facilitated by the meeting and is totally up to the business owner to initiate. You can belong to multiple passive networking groups. Any business you get from passive networking will most likely be a result of the amount of effort you put in.

Strong networks on the other hand restrict membership to only one person per industry or profession. This greatly increases the likelihood that you will receive referrals from participating members. Meetings are structured in a way to encourage referrals and there is a formal referral exchange that happens every week. It is strongly recommended that you only belong to one strong networking group in order to keep the quality of your referrals high.

In either case, it is important for members of these groups to see you as professional and competent. Referrals will go to people the referrer knows, likes and trusts.

Want more business? Start attending business networking events in your area.

A Guide to Getting a Debt Consolidation Loan UK

By: John Mussi

If you're getting in over your head with credit, you might consider getting a debt consolidation loan UK . This loan is designed to pay off at least a portion if not all of your outstanding debts, allowing you to have either reduced payments or in some cases only the single payment of the loan itself to repay.

If you're looking for a debt consolidation loan UK , there are several factors that you might want to consider to find the loan that's right for you.

Different banks and lenders may offer different terms for a debt consolidation loan UK , and you want to make sure that you get the best deal for the money that you can.

Some of the factors that can affect your chances are your credit rating, the value and type of collateral that you're putting up to secure the loan, and of course the total amount that you need to borrow.

Let's look at each of these factors individually and how to maximize your deal on a debt consolidation loan UK .

Credit Rating

Your credit rating is the score by which lenders and potential creditors determine how much of a risk you are to extend credit to.

The lower your credit rating score, the more of a credit risk you are; the higher the score, the less of a risk.

Obviously, if you're trying to get a debt consolidation loan UK then you're probably closer to the low end of the scale… but trying to get help before you get too low is a good way to lessen the negative impact of your credit rating on the loan interest you'll have to pay.

When things begin to get out of control and you find yourself in debt beyond your means to pay it back in a reasonable amount of time, that's the time to try to get a help… if you wait, your credit rating may drop lower and you'll have to pay more in the end.

Collateral

In most cases, you'll have to put up some type of collateral in order to secure your debt consolidation loan UK . This can allow you to get a larger loan while paying lower interest rates, since the lender has some form of property that they can possess and sell if you fail to repay what you've borrowed.

The most common forms of collateral are automotive titles and real estate deeds, and both are very effective… after all, they're larger-value items, and they give you a good incentive to repay your debt.

Just make sure that you have insurance… if not, the lender may either require it or drop the value of the collateral considerably.

Total Amount

The amount that you want to borrow is obviously a big consideration in getting a debt consolidation loan UK . Borrow the lowest amount that you can while still taking care of all of your debts (or at least the largest debts.)

You also need to make sure that the amount you borrow is much lower than the value of your collateral… this usually entitles you to a much lower interest rate.

7 Work at home mistakes to avoid

By: Tina Barraclough

When I first started my own "WORK AT HOME" business, I had no experience whatsoever , and I did not know how to get started on the right foot. After a lot of trial and error, I have learned [and still learning] on what to do and not to do to get started in my "WORK AT HOME " business.

Any one who had decided to start their own "WORK AT HOME" business , is going to make mistakes along the way. Remember, no one is perfect, so it is expected to make mistakes as you learn. Many "WORK AT HOME" mistakes can be avoided , when we learn from the mistakes of others.

1. First of all, before you start a home based business, you must know what it is you'll be doing. You need to educate yourself about your "work at home" business. For example , Internet Marketing , Placing classifieds , getting a WEB SITE ,Follow-ups ,etc. Look at it this way , say you sign up someone under you , and they need help getting started , how are you going to help them if you do not even know this? Expect your first 6 months or so to be a learning process for you.

2. SPAM

What is SPAM?

Simply put, SPAM is unsolicited advertising. It is our belief that SPAM is in the eye of the person being SPAMMED, not the person sending the SPAM. While you may not consider a message to be Spam, if the person receiving it does, it's SPAM. If you are not 100% certain that the person or persons you are advertising your Surfside Internet site to will not complain, DO NOT advertise your site to that person or persons. Any SPAM complaint is cause for immediate termination, no second chances, no questions asked. This is a very serious matter. Surfside Internet reserves the right to take legal action against any person or persons involved in SPAMMING

What types of advertising are considered SPAM?

Bulk e-mailing (sending an e-mail advertisement to persons listed on an e-mail address lead list).

Advertising with bulk e-mail services (companies who will send an e-mail advertisement to persons listed on an e-mail address lead list for you).

"Bounce back" e-mailing (sending an e-mail advertisement in reply to an e-mail advertisement that was sent to you).

Advertising your Surfside Internet site to people that you don't know, who didn't specifically request the information.

Cross-posting or advertising to Usenet newsgroups, forum or discussion lists, and online chats (IRC) is not allowed.

These are only examples. Remember, SPAMMING includes ANY unsolicited advertising.

For more information about SPAM and how to avoid it. Please visit this site: Friends House In Rose hill: http://www.rosehill.org/spam.htm

3. Posting ads on Forums: Like spamming , posting ads on forums message boards can [most likely will] get you banned. Forums are only to be used as sources of information about business opportunities. You can ask questions , or get/give advice about any "Work At Home" business , or other topics , but absolutely not allowed to place any ads of any kind. When visiting Forums, always look for their rules/regulations , so you know what is and is not acceptable on these Forums.

4. Submitting to FFA's. These are free for all sites that you can post your ads on. Do not waste your time posting your ads on these sites ,because your site will never get seen. Worse ,because most FFA's have such low rankings ,it will give your site a low rank ,because you posted on them. Place your ads on classified ad sites. Here is how to find classified site to place your ads. Go to your favorite Search Engine and type" free home business classifieds" or something like that. I have listed a few places for you to place ads on for your conveince.

Free Classifieds and Promotion at: http://www.inetgiant.com

A-Z FREE Classifieds http://www.freeclassifieds.com/

World profit FREE Classifieds http://www.worldprofit.com/classifieds/

Free Business Ads http://freebizadsweb.com/>

Classifieds for Free http://www.classifiedsforfree.com/

FREE Classifieds Directory http://www.everydaybusinessonline.com/adsites.htm

5. Shouting Other than using caps to emphasize a few words within an e-mail ,or a web page, do not use all caps. Using all capital letters in a text or a correspondence is considered shouting, and shouting at people just causes them to leave.

6. Slow response to e-mails: If someone has taken the time to send you an e-mail for more information about your business, or has some questions, and you do not respond to them in a timely manner, then you probably have lost a potential customer, or an affiliate. Even if you do not know the answers [you may still be learning] let them know that you do not have the answers, but you will find out for them, and get back to them A.S.A.P .

7. No persistence: Let me tell you that there is no such thing as a "Get Rich Quick Scheme" They do not exist. If you want to have a successful "Work At Home" business, then you must be willing to work hard for it. What you put into your business is exactly what you will get out of it. Persistence is the single most important factor in determining a successful "work at home" business.

Be persistent and you will be successful.