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.
(more…)
Modern money mechanics, as described in the banking handbook with this same name, is a system whereby money is created out of debt. This system is used in nearly every civilized country and as of late has been the biggest contributer to the credit crisis. I will explain this system in detail in the following sections, but as a quick foreword, your financial problems are not your fault.
Money, that pretty green piece of paper with official looking seals all over it, doesn’t exist. Money is created out of the need for more money. I’ll give you an example. The government electronically sends the federal reserve a request for ten billion dollars. The federal reserve replies and then starts to print the money and these bills become federal reserve notes. The government in turn begins to print out some official looking pieces of paper called government bonds. A 10% reserve is held out of the ten billion and the nine billion is the excessive. Because that nine billion is consitered the excessive, new loans can be created based off of that amount.
(more…)
Many of you were surprised that there were tax law changes included in the Emergency Economic Stabilization Act of 2008 because most of the coverage has focused on what the Act is intended to do for the economy, specifically, helping the credit markets get back to lending.
One question I have been getting recently is…
How do you keep your wealth strategy moving forward when it’s more difficult to get that business loan or real estate loan?
If you have ever heard me speak about creating and building permanent wealth, then you know that I use leverage as a fundamental tool to build wealth. But, remember, that leverage comes in many forms. Loans are just one way to use leverage in a wealth strategy.
(more…)
Have you ever noticed that the things you buy every week at the grocery and hardware stores go up a few cents between shopping trips? Not by much…just by a little each week but they continue to creep up and up.
All it takes for the price to jump up by a lot is a little hiccup in the world wide market, note the price of gasoline as it relates to world affairs.
There is a way that we can keep these price increases from impacting our personal finances so much and that is by buying in quantity and finding the best possible prices for the things we use and will continue to use everyday… things that will keep just as well on the shelves in our homes as it does on the shelves at the grocery store or hardware store.
For instance, dog food and cat food costs about 10% less when bought by the case than it does when bought at the single can price and if you wait for close out prices you save a lot more than that.
(more…)
Exposing Fraud, Deters Fraud
One mistake management can make is to not let the fraud out into the light. When a fraud is swept under the rug, no one learns: not management, not the employees, and surely not the general public. Though some frauds are best kept with a tight lid, most need to be exposed so that every level of management is on the same page and can then keep key decision makers aware of how to deter the same fraud from occurring again. History will definitely repeat itself if individuals know what and how to overcome weakness in a Company’s internal controls.
Exposing a fraud is smart (see the statistic below on employees), as long as the Company changes how they conduct their business to help overcome future fraud from happening in that specific area.
An Experienced Auditor Can Detect & Expose
In a 1998 KPMG Fraud Survey of 5,000 U.S. companies (note: multiple responses given), 43% of the time the fraud was discovered by an Internal Auditor. As a result of a boom in fraudulent activity around the time of Enron and WorldCom, Auditors Internal and External to a Company have spent a great deal of time acquiring education and training so that they are aware of what to look for. The result, a reduction in securities fraud and white collar ‘cooking the books.’
(more…)
Last month the United States inflation rose a startling 5.6%, the first time it has rose that fast in 17 years. With this number also came a 0.8% rise in the consumer-price index, showing consumers the effect of the increase in cost for food, energy, clothing and airfare. In the previous month there was a 1.1% rise that accompanied a 0.3% rise in core inflation (excludes food and energy). This is a significant rise of 2.5% from the previous year and well surpasses the Federal Agency’s “comfort zone” of 1.5% – 2.0%.
Economists are attributing this rise to recent reports of the U.S dollar and commodity prices. The dollar had increased to its highest value compared to the Euro since February and oil had dropped in price for over a week. As imports have become cheaper, the economy still shows weakness, leading to the inflation.
(more…)
0% finance
An interest-free loan — you repay only the amount of money you borrow. Such loans are often offered on items that manufacturers or dealers are keen to sell, perhaps because it is an unpopular model or it is about to be replaced by a new model. The deposits might be large, sometimes up to 50% of the list price of the item.
APR
Annual percentage rate. The true cost of a loan, including all the interest and concomitant charges and fees. The lower the APR is, the cheaper is the loan.
Balloon payment
The final payment at the end of a personal contract purchase (PCP).
Bank base rate
The interest rate set by the national bank. Finance houses add their own percentage to the base rate to calculate interest on loans. When the bank base rate changes, lenders’ rates change accordingly.
(more…)
As you know, we have been experiencing one of the most challenging times in our country’s history.
During the past few months, we’ve encountered a housing bubble, credit crisis, a bear market in stocks, significant increase in unemployment rate, continuous increase in commodities such as food and energy prices and more.
As a result of these problems, the government has taken serious action to stabilize the country’s economic condition to avoid another “Great Depression.” According to National Bureau of Economic Research, the country is not yet officially experiencing a recession. Despite what the experts say, we should still prepare in advance for any possibility and take the appropriate steps to protect ourselves.
Remember, recessions come and go. Based on previous records, a recession may last anywhere between 8-16 months. At the same time, no other economic crisis within the last 50 years has been compared to the “Great Depression.” What does this mean for you and what should you do? First and foremost, do not worry and do panic. Not only will the economy eventually cycle back to a better condition, but you can still effectively prepare for what’s to come ahead.
(more…)
The business finance world is an area many businesses have to navigate in order to get the appropriate finance to grow their business or improve cash flow. It can be complicated understanding what type of finance is right for your business so here are some of the most common business finance methods explained.
Factoring
Factoring is a form of finance that takes into account value your business has in it’s invoices that are yet to be paid by your customers. Factoring allows your business to be loaned up to 90% of the value of your invoices as soon as they are issued so you don’t have to worry about waiting to be paid.
Factoring allows a business to give control of it’s sales ledger over to the Factoring company which will do your debt collection and help protect you from bad debt.
(more…)
Most school leavers don’t have a great deal of money, so they have to be careful what they spend. If you are heading off to university, you may be even more worried that you won’t have enough money to see you through. But there are ways and means of saving what you have – or at least making it go further. Read on for some financial advice.
The cost of accommodation is one of the biggest for all school leavers. The best financial advice on accommodation is if you are able to stay at home for a few years, then do so, even if you pay your parents a small sum to help cover costs and food. If your Uni is too far to travel to daily, then living on campus is usually cheaper than getting private accommodation. There are often houses around a university that are let to students on a share basis. You may have to share with up to five other people, but these are often work out a bit cheaper than leasing a whole flat to yourself. If you do get a private flat, see if you can share the space and costs with a friend.
(more…)
