Starting a business is a dream for which an owner plans and prepares. Market research is done to ensure there is a market for the product or service and that it is an area of need for potential customers. You check out a location for a storefront or office and plan all the different ways you’ll be able to promote your business.
What is a Business Credit Card?
A business credit card is much like a personal credit card. A business credit card extends the credit available to the business. When financing is tight, the business credit card can be used to pay bills and buy supplies to keep the business afloat.
Everything seems to be coming together until you start adding up the costs for starting the business and for keeping it going for a year until there is a regular income stream coming in. There may be costs for licenses or other government requirements, costs for space, internet access, equipment, supplies and employees.
A business plan is a must for making sure an owner covers all the bases and doesn’t lose the dream due to poor planning. A business plan includes listing all sources of potential financing. These may include personal savings, taking out a mortgage on a home or other property and loans from the banks, friends or family. These are all fairly fixed amounts, but business expenses ebb and flow.
Not a Personal Credit Card
Business credit cards often offer different terms than a personal credit card. They also have the larger credit limits required to efficiently run a business. Of course, like a personal credit card, anything spent has to be paid back.
Credit cards are loans and owners need to take care to use a business credit card account wisely. Paying back any funds spent needs to be part of the overall business plan. Like personal credit cards, there is the temptation to consider the credit free money and overuse the card. This can undermine the solid financial basis of the company. However, there are good reasons to use a business credit card.
Accounting can become a nightmare for the small business owner, especially when supplies and products are purchased with different accounts. Keeping receipts together can get frustrating and putting everything together difficult for an owner who already has way too much to do just keeping the business running.
If, however, everything is purchased on a business credit card account, the business will have all expenses listed in one place. The owner can quickly check when something was purchased, where it was purchased and for how much. This proof is invaluable should the government call into question, at tax time, whether something was purchased and whether one or more purchases qualifies as a deductible expense. A business credit card also keeps tabs on the purchases of employees.
Business credit cards, depending upon the card, offer a variety of perks that assist the business owner from discounts on supplies to free flying miles.
Author’s Bio: The articles of Ethan Grunt have been proving very useful for the customers who look forward to get information on business credit cards. He suggests them to visit Businesscreditcards.com for further information.
Avoid falling flat on your Facebook. The fall and fall of Facebook’s stock has been the stuff of investors’ nightmares. Starting with a stock price of $38, by 31st August the stock had lost approximately 52% value with no sign of a bounce. The real issue isn’t just Facebook’s shares so much as a lack of probity in investments these days and many businesses who choose to ‘float’ may find there’s a leak in their boat.
The average duration for a shareholding in the USA currently stands at an almost instantaneous 22 seconds!
Compared with an average holding of 8 years in the 1940’s, the stock market has become the ‘get rich quick’ scheme (substitute ‘dream’ for a more apt description) of the 00’s. Shareholders just aren’t in it for the long game any more and this creates a multitude of problems for businesses great and small.
The demand to create shareholder value overnight keeps many an Executive Suite buzzing into the ridiculous hours of the night; sees downsizing and corporate initiatives bluntly delivered across departments to deliver savings and greater profit margins and dissatisfaction in the stock market quickly translates into a knee jerk reaction kicking the HR department into action, moving from co-production to consultation as the company’s most “valuable assets” become “deadweight” creating drag merely as a result of bottom line cost.
Shareholder value, as a concept, is fine but it’s become very one directional in recent years and creates little benefit for the business, less a short term cash injection and longer term drain on your profits and profitability.
Before you launch your business into the choppy stock market seas, consider a few alternatives:
Raise additional funds through other means:
Investment pots and pensions aren’t delivering growth in low interest economies just now.
Money in the bank is more of a tax liability than a cushion. Get family; friends and acquaintances to consider becoming a minority investor in your venture with the prospect (but no guarantee) of long-term returns;
Ask – “Do I really need to grow?” Many businesses chase growth like a dog chases it’s own tail. It’s the perpetual motion that creates the illusion of progress when, in reality, you’re just expending energy chasing an elusive, moving and often undesirable target. Growth’s not a bad thing; it’s just not the be all and end all of business. Sustainability and longevity are much more important.
Grow from within: Re-invest your profits. It’s the simplest and most economical way of growing any business; it doesn’t sell off any part of your holding and doesn’t expose it to the jitter of shareholders demanding short-term results.
Or consider selling shares to the employees and give them a stake in their own sweat and toil.
Consider the 3 C’s:
You don’t need to do it all on your own. Find other businesses or individuals that are either doing something similar and work together to increase market share or find complimentary products and services and share the costs of increasing your joint offer to the market. Cross selling could help you both.
All these options allow you to retain control of your business and keep your long-term goals in focus.
If you decide that you do want shareholders, make sure major shareholders you bring in possess more than just the financial wherewithal to invest.
Get investors that are passionate about what you’re trying to achieve; who have experience and expertise in an area that’s relevant for your business and that can actually add something to the business and the Boardroom (other than banging fists; a scary glare and the demand you make them rich instantly or they’ll withdraw their investment).
That way, when the storm hits the good ship (insert your company’s name) you can call all hands to deck rather than your shareholders racing to the lifeboats as the rest are left to bail out.
Bio: Colin Millar is an entrepreneur and Founding Director of Cloud Management Systems [Link: CloudManagementSystems (.) co( .)uk ], a consultancy with a difference. Colin is also the Chairman of a Scottish based charity. Colin blogs on leadership, management; business and enterprise. In 2011, he won the Chartered Management Institute’s ‘Top Blog” award.
A comprehensive research conducted by Goldman Sachs titled “The Olympics and Economics 2012” precisely attempts to answer this question. The researchers analyzed the Olympic Games which were conducted in Beijing and Sydney, few years ago, and thus made a few projections for London 2012. What is of significant interest is that a lot of these projections are destined to come true and revitalize the economies, which are somewhat in a sombre mood in early 2012. Even the Prime Minister of United Kingdom, David Cameron, thinks that the Olympics will roll in 13 Billion pounds for the nation (even though that may help little to douse the fire burning within the economy).
The British economy really needs a boost, thanks to a protracted double-dip recession that has pushed down GDP for three quarters without even an inkling of a break. The Olympic Games hosted in London 2012 (underway currently) have been projected to be extremely profitable for the “British Empire”, and the revenues have been forecasted to exceed the operating cost of hosting the major event. Tickets sales are expected to generate over 500 million pounds or 785 million dollars and generate direct revenue for the management. This itself is a huge amount for a nation trapped in a continent facing rampant economic slowdown at large.In addition, a short-term financial boost in the third quarter of 1.2–1.6 percent of GDP at an annualized rate has been forecasted. This will also generate a lot of employment to a nation strapped with excess workable hands with very little to do. In addition, the tourism industry will get a healthy dosage of fuel to the slumbering embers, and this may just be sufficient to the industry slowly lumbering to a dormant stage.
With such a concern over economic health revision, a public-private partnership to ensure the success of such grand fiestas could be a shot for success. While such boost is sure to affect many sections of the society both directly and indirectly, the long term boon of employing workers for digging a trench and employing another set of workers to fill it up, are also evident in this case, though the analogy may be less fitting. Considering Ireland, which is in dire straits, will the benefits of the Olympic games overflow to Britain’s closest neighbor?
What is more important at this stage that will Brazil also benefit in the same big way, in 2016? With so much focus on her economy, will the benefits boost Brazil’s stake in the cake as an economic superpower? Only time can tell more how this story unfolds itself.
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The financial crisis in late 2000, sometimes referred to as the Credit Crunch or the Global Financial Crisis, is generally considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. The financial meltdown resulted in the collapse of super Financial institutions with power status, the bailout of mega-banks by the central governments, and plummeting stock markets around the world. However, in 2011, the world may be witnessing something which may be equally big, or maybe even bigger. The WWII economic crisis and conditions are still extremely fragile. Probably turning short-term debt into long-term loans was the biggest trigger for this economic recession in 2011.
Some may call me to be somewhat more pessimistic in my outlook than is required, but here are my reasons to believe so.
The economy in US is in dire straits. The housing sector is yet to recover and high unemployment is troubling the super-power. The US is drowning in negative equity and job-less homes. Tax cuts may be short term evasive measure, medium and long term fiscal reforms may be necessary to pull US economy through this period. The recession in 2008-2009 is still making its presence felt in US, by depleting the reserves of the economic super-power. The tremble caused by BNP Paribas and Lehman Brothers is yet to subside full. Recently, US has been downgraded from its rating by Standard and Poor. The economists are suggesting long term reforms in banking, such as raising capital ratios and switching from wholesale to retail funding, while filling in short-term gaps in capital. However, the banking industry would be subjected to a slow recovery in this track.
Japan has lost its AAA rating long back. The growth prospects for the once economic super-power is pretty poor. Currently Japan’s national debt actually in excess of 200% of its GDP but its bond yields remain extremely low, since the growth prospects are not looking bright. As an effect of this, Japanese production has declined by over 15% in recent times.
The major debt that Greece is facing and the crisis thereof not cured by the massive Eurozone and IMF bailout. The current bailout support may expire by 2013, and there has been no major financial restructuring in Greece. While the Greece government is sold out to Germany, this is even a bigger cause of concern because now the government will not even be able to print bills to increase inflation to depreciate its own assets. With the huge debt on Greece, the rest of EURO-Nations are equally strapped in the rear to come out with policy changes that may liberate them from this dire straits.
The crisis in the Irish national banking sector far from over. Even after receiving a staggering level of bailout assistance from the EU and IMF to cover the country’s insolvency, thanks to the Anglo Irish Bank and the other minor Irish banking institutions, the Dublin decision makers were forced to inject nearly $5 billion into Allied Irish Banks, another bankrupt institution. Ireland policy makers really need to figure out how to service this public debt, without triggering a shiver down its economy.
Europe in general is under severe economic stress. Without a major restructuring of debt, progress seems almost impossible. Debt burdens may continue to spiral upwards, and in several EURO using nations a debt write-down is very likely. German, French, and British banks hold most of the national debts, and a shiver there may trigger a collapse of the balance which apparently is resting on a spindle.
China, which seemed apparently less touched by the economic crisis in the west, is suddenly increasing its interest rates in an almost desperate effort to control price inflation. While China, the manufacturing super-power of recent times, strives to control the inflation within, this is almost an indicator of less attractive options to invest, outside the country, and even maybe within the country. Are we witnessing a scenario where the market demand has been saturated and the manufacturing sector is growing wary of the same?
India, which is evolving as an open market economy is not free from the crisis. Although Agriculture is still India’s most engaging “career”, most of the recent economic growth has been fueled from the services sector (IT, ITeS, Banking, or even tourism in few states). The welfare of these industries thrive heavily on the welfare of the counterparts in USA and to an extent in Europe, whose needs the service. The IT and ITeS alone has an average exposure of exceeding 52% to US markets and 34% to European markets, as per a report in Financial Times. On an average the services sector enjoy an exposure exceeding 82% to European and US markets. The meltdown of the economy in the western powers may be sufficient to trigger one in India.
With the advanced economies under such severe stress, emerging economies, may be slightly insulated from major impacts, which can cause a huge eruption of their regular life. Worldbank says that the financial stress for the emergent economies may be over. However, since the development in these economies are heavily dependent on foreign direct investments from the economic super-powers, the development is likely to hit a stagnation. Is this an indication that the next financial tremble will arise from the developing economies?
Who knows how deep we actually are in this mess? Commodity prices are coming down, but that is probably the only brighter news in this downcast. Do let us know what you feel.
Being a tax professional going through the budget changes is what we have to do as a part of our job. When the government presents a budget, the Finance Minister tries to convince that they keep the best interest of the common people in mind while imposing tax on the general public. This year through budget 2011, the Finance Minister of India has levied service tax on A/c hospitals having 25 or more beds.
The Federation of Indian Chambers of Commerce and Industry along with several prominent health care institutes throughout India has raised a voiced against this measure. In India it is impossible for a blood bank or operation theatre to function without proper air-conditioning. Further, the life of several patents would be at stake if they get admitted in a hospital without an A/C. The Government has proposed that they are levying such tax only on people who can afford it. But most importantly, i think the Hon’ble Finance Minister, however educated he might be has forgotten that nobody goes to hospital to relax. Most people who are admitted in hospitals are facing a life and death situation. Further, there are so many unprivileged people who put everything at stake, sale or mortgage their fixed assets to save their beloved ones.
The entire liability of service tax would be passed on by the clinics to their patients. What appears to the Government to be a mere tax collection , can make a lot of people beg on streets just to add a few more days to the life of their dearest one.
According to FICCI, India today is in dire need to expand its healthcare infrastructure which is extremely inadequate. The quantity of bed allocated is 0.9 for every 1,000 people in our country when compared to the global average of 2.7, or 3.0 in China and 2.4 in Brazil.
I really pray that the Government bows in front of the combined pressure from all areas and removed this clause from the Finance Bill. If they cant control inflation, they better not make sure to add more plight to the poor and ailing who are already being neglected by our so called “Prospering Country”.
Signing off for today
People spend a third of their lives learning to earn money, a third to earn money and another third of their lives to save their money. It is a matter of debate which third of their lives is more important than the others. No risk no return is the fundamental law of money, if you have less qualifications to earn good money, chances of good income are still there but people will agree that probability is low and risks are high.
What we consider here is the government’s role in defining someone’s savings pattern? The government allows a person to hoard only a certain amount of cash or assets, the rest has to be either paid in taxes or locked into the free market or with the government. While this is a fundamental reason that keeps the economy running from an individual’s point of view, it is highly perplexing what to do with his money.
On one hand the government gives you the option of depositing your money with it and losing your money like slow poisoning thanks to higher inflation rate than deposit interest rate, or losing it altogether if you belong to one of those countries whose government is more unstable than a twig in a storm. On the other hand, the government encourages you to invest in the stock market and also incentivizes you by offering tax savings on long term capital gains, the catch being you can’t get out of the market without losing if you are caught in a downturn and anyways in the long term a balanced portfolio will give you an inflation-adjusted return of only around 10% on an annual basis. A lower than 10% return with the half dozen hedges so that you don’t get a heart attack when you are being hit left, right and centre makes a common man a most unlikely candidate to succeed in saving his money too much.
While GDP defines the spending power of a country’s population is it really good to have a population which spends all of its money for goods and services, or a population which saves and increases its asset base? The answer to the question is same as whether it is better to have a perfect process line producing output from input with zero inventory, or to have some inventory in place. A perfect system is only good as long as it lasts, in an imperfect world concessions have to be made, only time will tell if the concessions provided by the government to save our income can really boost the country to the status of most desirable place to live in or just a huge economy.
SME lending in India has been a neglected target market since the independence. Though, government tried to propagate SME lending using regulations and incentives, however, somehow beneficial impact was never visible and SME lending always remained a poor cousin to other activities of lending institutions.
It needs to be initially identified what the current constraints are existent for the SME lending. It is recognized that Government should take initiative to operationalize SFCs in big Scale, and professionally run rather than bureaucratically. Subsequent sections focus on how SFCs or financial institutions need to first evolve a strategic focus on the sector by understanding the client & his needs. The SFC needs to re-engineer the SME lending value chain with the intention to develop a long standing relationship with the SME clientele set. The modifications needs to be executed across the critical areas via marketing execution, product development , streamlining of operations through internet integrated delivery channels & application of advanced risk modeling techniques.
As the relationship evolves over time, the firm is able to indulge in relationship lending due to reduction of information asymmetry which lowers supervisory costs & increases account profitability for the firm. Through retrained & empathetic staff dealing with SME clients, the interaction level deepens. Finally the SFC by donning the role of a Financial Consultant transforms from a lending institution into a one stop solution for all the financial needs of the SME client.
At the end the concept of Fund Financing is also suggested as an approach. The focus in the further studies has been made on traditional sources of Financing as SIDBI, is coming out with processes to replicate and innovate the present schemes to suit SME needs.
This article is authored by Mukesh who is an alumni of Indian Institute of Management, Lucknow. He has been associated with Crisil and has been recognized as a young thought leader of India.
The past decade was marked by the increasing role of foreign direct investment (FDI) in total capital flows. In the late 90s, FDI accounted for more than 50% of all private capital flows to developing countries. This growing change in the composition of capital flows has been synchronous with a shift in emphasis among policymakers in developing countries to attract more FDI, especially following the 1980s debt crisis and the recent turmoil in emerging economies. The rationale for increased efforts to attract more FDI arises from the belief that FDI has several positive effects which include productivity gains, technology transfers, the introduction of new processes, managerial skills, and know-how in the domestic market, employee training, international production networks, and access to markets.
If foreign firms introduce new products or processes to the domestic market, domestic firms may benefit from accelerated diffusion of new technology. In other situations, technology diffusion might occur from labor turnover as domestic employees move from foreign to domestic firms. These benefits, in addition to the direct capital financing it generates, suggest that FDI can play an important role in modernizing the national economy and promoting growth. Based on these arguments, governments often have provided special incentives to foreign firms to set up companies in their country.
While it may seem natural to argue that FDI can convey greater knowledge spillovers, a country’s capacity to take advantage of these externalities might be limited by local conditions. In an effort to further examine the effects of FDI on economic growth, research indicates the same from the recent emphasis on the role of institutions in the growth. In particular, there is great emphasis on the role of financial institutions and many economists argue that the lack of development of local financial markets can limit the economy’s ability to take advantage of potential FDI spillovers.
This article had been written by Rajeev Malhotra and edited by Arpan Kar. Rajeev has done his Masters in Financial Engineering from an Ivy League B-School from the United States. Besides his MBA, he also holds a CA and a CFA degree. He is currently working with DSP Meryll Lynch, USA.
The energy sources of China are extremely rich in natural gas and coal, but relatively sources are lower in petroleum. Thus, today China is over increasingly getting more an more dependent on coal, which accounts for 68.7% of total energy that is consumed in the country.On the positive side, the renewable energy segment has increased from 8.8% in 2008 to 9.9% in 2009, but coal is still an essential player and irreplaceable in the Chinese energy market. (Source: Frost and Sullivan Research)
The global economic recession impacted the Chinese energy markets in multiple ways. Demand and supply was affected as the Chinese were forced to change their coal export policies in line with the slump. By reducing the degree of coal exports, the stock and the supply side of coal developed a large surplus over the demand, which decreased the price of coal in the Chinese markets for local consumption. These pulses left by the economic recession have been felt by other industries that are also related to the coal industry, like the thermal power generation and cement industries. Due to this recession in the energy markets and the decrease of the profitability of those 2 industries, China was forced to limit production, thus reducing the use of coal.
Our verdict is in order to follow the rest of the world in energy development, China has to make more use of sustainable energy.
Economic recession’s impact on Chinese solar power market
With the support of the Chinese government, the solar power industry has rapidly grown into the one of the largest industries in the world. However, the solar power industry’s structure and technology have not kept up with the rapid growth. As a result, problems have creeped into this sector in China. Thus surprisingly, cost is high in China for the generation of solar electrical energy. Furthermore, a minuscule civil market exists and the technology is grossly outdated. Thus the Chinese solar power market may face several industrial problems due to the economic situation.
The biggest barrier to further development as faced by local Chinese solar power companies is financing. Although the solar power sector in China is among the fastest growing sector in the world, to develop this emerging sector, the country needs to dedicate a lot of financial resources. Many different solar power projects can only continue with a large dedicated monetary commitments in R&D. The economic recession badly affected the solar power companies. The securities market and banks are the major financial source for such high technology companies. After the economic crisis, the level of supervision and control for Chinese securities market was promoted for issuing IPO and the banks also increased the requirements for credit. This will continue to impact the supply side of the Chinese solar power market. If companies cannot keep their liquidity, they will face bankruptcy.
Another impact of the economic recession is the reduction of foreign dependencies in the solar market. Chinese solar power industry is mainly dependent on foreign sales. The economic slowdown has influenced the sales of Chinese manufacturers. When the USA entered the economic downturn, foreign trade with other countries decreased, specifically for China and the export of solar power products. Additionally, other factors to slow down Chinese solar power market developing speed are the inferior technology and high production price.
Economic recession’s impact on Chinese wind power market
The Chinese wind power market has not been heavily influenced by the world economic recession. The wind power market can be considered the most mature among the renewable energy sectors because of its early development, relatively mature technology, and widespread application.
Still it was seen that the economic recession did have significant impact on international market demand; but the market for Chinese wind power is mainly local and the percentage of wind power produced is relatively small when compared with total electricity production using thermal power and hydro-power. Thus the situation for the Chinese wind power market is different from the solar power market, which is mainly located at the beginning of the value chain. The margin for Chinese solar power manufacturers is low enough that the solar power manufacturers could easily go bankrupt due to a poor economic situation. Also the major source of capital investment in the Chinese wind power market is from government funding. Even if many foreign investments quickly drew out from Chinese companies, it would not impact the entities’ normal operations. Overall, the wind power market would likely keep growing, but at a lower speed than before due to the influence of economic recession.
From the whole renewable energy sector point of view, the economic recession had some impact on the development of the renewable energy, but it was a relatively small effect because using renewable energy has been recognized as the best known practice to ensure sustainability worldwide. The Chinese government pushed out more and more stimulus and subsidies policies to encourage investment in renewable energy. Also, the particular nature of the Chinese renewable energy sector have played a part in helping China avoid serious pressures from the economic slowdown. For those reasons, the issues of how to help China maintain their strength in this segment should be the core for the future development of Chinese renewable energy sector.
In order for China to remain a strong market player in the renewable energy industry the following strategies are suggested:
First, the manufacturers must increase innovation in an effort to move into a more profitable area on the value chain.
Meanwhile, the standards and regulations will play an important role in protecting and regulating the industrial participants.
Finally, the government stimulus and subsidies will aid in attracting more FDI, venture capital investment, etc. Chinese manufacturers will have to enhance enterprise competitiveness, especially technologies with proprietary intellectual property rights, to prevail in the intensive competition with foreign companies for Chinese renewable energy market, because enterprise competitiveness is the basis of the survival and development.
This Article is authored by Jake Mazan, who is a guest author at Business Fundas. He is a Senior Research Analyst at Frost and Sullivan. He takes a keen interest on Asian Markets and their impacts on Global Markets.
USA, the largest economy in the world is facing a fiscal crisis, even now. Ever since 2003, its major economy bearer states like California, there was a major projected budget deficit. The Government took adequate care to approach the problem and to tackle the imminent crisis, but even though the black ages are gone, the repercussions from the shock still exists. The goverment launched many programs, one of which is the majorly popular California Strategic Sourcing Initiative, to control spending and stimulate the revamp of the economy. These focused primarily on the way the state purchased goods and services.
These programs aimed to identify saving opportunities. The focus to do so was through strategic sourcing. This was achieved by establishing new contracts or renegotiating existing ones. A team consisting of key professional procurement staff was created to achieve this goal, and not only at a short term goal, but to look towards achieving this as a sustainable long term process. Rather than a one time program, these initiatives were designed as an ongoing program to save money in the long term and position the United States to com out of the economic slump.
e-Governance played a crucial role in the revamp of the economies. Information Technology was widely used to issue electronic RFPs and conduct reverse auctions. The usage of these technologies also helped to streamline processes and speeded up the savings potential. Consulting firms like A.T. Kearney helped in the processes by developing cross-agency and departmental training programs, in which the procurement staff members were taught new skills in the area of spend analysis, e-sourcing, reverse auctions and e-negotiations. This training, which took place in classrooms and on hands, ensured that the team was well positioned for the change. Change management was the crucial success factor in this initiative.
In the coming few years, these strategic sourcing initiatives are expected to create savings in the tune of billions of dollars. The first wave of the program is already completed, and thus the spend categories have been identified, addressed and initial savings have been achieved which helped to forecast future savings. This e-governance strategic sourcing initiative has demonstrated how economies can be revamped using e-governance and information technology.