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Starting your own business - or starting any new business
-These are the simple rules for planning and starting your own business. The principles also apply to planning and starting a new business within an organization for someone else. In amongst the distractions and details of new business planning, it is important to keep sight of the basic rules of new business success:
Your successful new business must offer something unique that people want. Uniqueness is vital because otherwise there is no reason for customers to buy from you. Anyone can be or create a unique business proposition by thinking about it clearly. Uniqueness comes in all shapes and sizes - it's chiefly being especially good and different in a particular area, or field or sector.
Uniqueness can be in a product or service, or in a trading method, or in you yourself, or any other aspect of your business which makes what you are offering special and appealing to people.
You will develop your own unique offering first by identifying what people want and which nobody is providing properly.Second you must ensure that your chosen unique offering is also an extension of your own passion or particular expertise or strength - something you will love and enjoy being the best at - whatever it is.
Every successful business is built on someone's passion. New business start-ups by older people:- If you already have a career behind you, and you wonder if you've got it in you to compete and succeed in the modern world, consider this.First - you have definitely got it in you to succeed. Experience and wisdom are fundamental building blocks of success, and will be for you from the moment you start looking at yourself in this way.
The reassuring wisdom that older people generally possess is extremely helpful in forming trusting relationships - with customers, suppliers, partners, colleagues, etc - which are essential for good business.Added to this, as we get older we have a greater understanding of our true passions and capabilities; we know our strengths and styles and tolerances. This gives older people a very special potency in business.
Older people know what they are good at. They play to their strengths. They know which battles they can win, and which to avoid.Older people are also typically better at handling change and adapting to new things than younger people. This is because older people have had more experience doing just this. Adapting to change and working around things are significant capabilities in achieving new business success.
If you are an older person considering starting a new business, think about the things you can do better than most other people - think about your strengths and use them. Business start-ups for younger people:- Younger people can be very successful starting new businesses just as much as older people can be.
The essential principle of playing to your strengths applies, although the implications are different for younger people compared to older people. Younger people are likely to have lots of fresh ideas. This is an advantage, so avoid people pour cold water on them.
Test your ideas on potential customers, rather than to take advice from those people who are ready with their buckets of water. Next, get the help you need. It's difficult for young people to know all the answers. You'll have the ideas and the energy to make things happen, but consider the gaps in your experience, and the things you don't enjoy doing, and seek good quality reliable help for these things.
Getting good help at what you can't do or don't want to do will enable you to put all your energy into what you are good at and what you want to spend your time doing. Young people sometimes try to force themselves to fit into roles or responsibilities that are not comfortable or natural. This is de-stabilising and stressful. Learn what you love and excel at, and focus on building success from this.
Which brings us back to playing to your strengths.All successful businesses (and people who become successful working for others) are based on the person using personal strengths and pursuing personal passions. Success in business is always based on doing something you love and enjoy, which is fundamentally related to your natural strengths and unique personal potential, whatever that is. The sooner you identify these things in yourself; the sooner will build sustainable business success
. Businesses You Can Start at Home:- When it comes to selling products and services, the best home business is one that fits your interests and abilities.First Of All, Why Would You Want To Start Your Own Country? This is usually people’s first reaction to the idea of starting a country, and rightfully so. The simple answer is: you think you can make a better one. Maybe where you currently live the government is annoying you in some way (like wars, taxes, environmental policies, oppression, extortion, etc – whatever you care about).
So after doing some strong letter writing campaigns that don’t accomplish anything, you start to look at what other countries are out there. If you still haven’t found one you like, people eventually get the idea in their head that they could do better if they started one of their own! But there is a more complex and serious answer to this as well. Which is that there is a market for governments just like for anything else. Allow me to explain.When you go out for dinner you have to pick a place to eat. You give the restaurant some money, and they give you some food and service in return. If the food sucks you won’t go back, and if it’s great you tell all your friends about it and the restaurant thrives. In short, there is a market for restaurants. No surprise there.
This idea of “voting with your dollars” obviously works and encourages good restaurants. But just like restaurants, there is a market for countries. You choose to pay money (taxes) to a government in exchange for some sort of services (military, roads, health care, etc). And if you aren’t happy with the service, you can always leave and choose to patronize another country with your business.But people rarely, if ever, choose to switch countries despite constantly complaining about the service. Why is this? Why doesn’t anyone seem very happy with their government, but you can find a pretty decent Italian restaurant in every city? The answer turns out to be that the market for governments is inefficient.
We can see this by looking at two questions, and comparing the restaurant market to the government market: How easy is it to start your own? RESTAURANT: It’s relatively easy (get investors, incorporate, lease a space, hire some chefs). Whether you will be successful or not is another story, but it’s at least not that difficult to try if you think you can make a better restaurant. As proof of this you can see the thousands of new restaurants opening each year.
COUNTRY: You need to discover new land (not possible anymore, every square inch of dirt on Earth is claimed by someone at this point), conquer another country by force to take their land, or pull off a military coup. You could argue winning an election for president should be on this list, but that’s not really the same as having your own country – any country democratic enough to allow elections probably doesn’t give the president 100% power to do whatever they want in the same way an owner of a restaurant could.
How easy is it to switch (as a customer) if you don’t like your current one? RESTAURANT: Easy. Go down a few blocks. COUNTRY: Hard. You’d probably have to quit your job, sell everything you own (house, car, etc), move away from everyone you know (unless you could convince them to come with you), and go through lots of paperwork to establish citizenship elsewhere. What is the major consequence of this? Well, it means that, on average, the service provided by governments is worse than the service provided by restaurants.
They can get away with it, because they know it’s such a pain for you to actually leave, and there are few other options even if you wanted to. Simply put, it’s an inefficient market. To say “on average, it’s worse” may actually be too kind. Indeed, governments on occasion actually murder thousands of their own citizens, so in some countries it’s not even close. But even in the U.S. people have still occasionally gotten fed up enough to leave (when the draft was instated during the Vietnam War for example). Compared to restaurants, the threshold is much lower. I might not go back to a restaurant if the waiter was rude, or I just like the salsa at the other place.So how can we make countries more like restaurants and get better service from them? Those two questions above hold the key. Somehow, you’d have to make it easy for anyone to start a country, and easy for citizens to switch if they saw one they liked better. Economists would call this lowering “barriers to entry” and reducing “switching costs”. This is, at the risk of oversimplifying, what makes markets more efficient.
And more efficient markets make for better service because they have to compete against each other to win your business. Now, you could easily say “but countries will never be as efficient as restaurants, they are far apart, natural barriers, etc…”. And I agree with you. But efficiency exists along a spectrum, and the closer we get to the ideal, the more improvement we’ll see in government service. To prove this to yourself you can take a quick look at cable companies
. They exist somewhere in between restaurants and governments on that spectrum (both in efficiency and service). It’s harder to start a cable company than a restaurant (more capital required) and consequently fewer of them. It’s also more difficult for customers to switch if they don’t like their cable company, because there are contracts and only one or two options in most neighborhoods.It’s no accident that service provided by cable companies is far inferior to restaurants (“your food will arrive somewhere between the hours of 8am and 6pm tomorrow…”) but not nearly as bad as governments (cable companies haven’t murdered anyone yet, that I’m aware of). My point here is that there is a range of efficiency in markets and it seems to correspond with a range in quality of service. Any gains in making government markets more efficient would have some benefit, even if they don’t get all the way to restaurant levels. So now that we’ve seen why someone might want to start their own country, you might be wondering…
Launching Your Big Organic Business Idea Friends laughed when twin brothers Ron and Arnie Koss announced in the early 1980s that they wanted to start the nation's first organic baby food company. Yet they succeeded in launching Earth's Best Baby Food, the first nationally distributed organic food to sit next to its mainstream competitors on supermarket shelves. Taken from their new book, The Earth's Best Story.
10 Steps to Starting a Business
Starting a business involves making key financial decisions and completing a series of legal activities. This guide provides information to help you plan, prepare, and manage your business.
1. Step 1:
Research and Plan Your Business:- Use these tools and resources to help you prepare your business plan and become a successful business owner. A well-written business plan is essential to starting and running a business. Business plans are required when applying for business loans or seeking investors. A good business plan describes in detail a business' mission and goals, and how these goals will be achieved. The following resources will help you develop a sound business plan.2. Step 2:
Get Business Assistance and Training: - Take advantage of free training and counseling services, from preparing a business plan to getting financing, and help expanding and relocating a business. Several free counseling and training programs are available to help you get started and expand your small business. These services cover all aspects of starting and running a business, from getting a loan to developing business plans and marketing strategies.
3. Step 3: Choose a Business Location:- Get advice about choosing a customer-friendly location and complying with zoning laws. Selecting the right location involves basic considerations such as proximity to customers, ease of access, and leasing and zoning restrictions. Financial incentives and tax credits offered by your local government may also influence your decision. These resources will help you understand some basic legal and regulatory issues you'll encounter when selecting a business location, as well as practical advice for choosing right business location.
4. Step 4: Finance Your Business:- Find government backed loans, venture capital and research grants to help you get started. Federal, state and local governments offer a wide range of financing programs to help small businesses start and grow their operations. These programs include low-interest loans, venture capital, and scientific and economic development grants
.5. Step 5: Determine the Legal Structure of Your Business:- Decide whether you are going to form a sole proprietorship, partnership, LLC, corporation, non-profit or cooperative. When beginning a business, you must decide what form of business entity to establish. Your form of business determines the amount of regulatory paperwork you have to file, your personal liability regarding investments into your business, and the taxes you have to pay. You may need to contact several federal agencies as well as your state business entity registration office. Business.gov has detailed information on the most common business structures:
6. Step 6: Register a Business Name ("Doing Business As") Register your business name with your state government. The legal name of a business is the name of the person or entity that owns a business. If you are the sole owner of your business, its legal name is your full name. If your business is a partnership, the legal name is the name given in your partnership agreement or the last names of the partners. For limited liability corporations (LLCs) and corporations, the business' legal name is the one that was registered with the state government. Your business' legal name is required on all government forms and applications, including your application for employer tax IDs, licenses and permits. However, if you want to open a shop or sell your products under a different name, then you may have to file a "fictitious name" registration form with your government agency.
A fictitious name (or assumed name, trade name, or DBA name, short for "doing business as") is a business name that is different than your personal na A fictitious name (or assumed name, trade name, or DBA name, short for "doing business as") is a business name that is different than your personal name, the names of your partners or the officially registered name of your LLC or corporation. For example, let's say Mary Smith is a sole proprietor of a catering company she runs out of her house. Mary wants to name her business Seaside Catering instead using her business' legal name, Mary Smith. In order to use Seaside Catering, Mary will need to register that name as a fictitious business name with a government agency. Which government agency, depends on where she lives. In some states, fictitious names are registered with the state government; in others, you register fictitious names with the county clerk's office; and in others, there are no laws requiring businesses to register a fictitious business names.
7. Step 7: Get a Tax Identification Number :- Learn which tax identification number you'll need to obtain from the IRS and your state revenue agency. All businesses are required to pay federal, state, and in some cases, local taxes. Most businesses will need to register with the IRS and state and local revenue agencies, and receive a tax ID number or permit. The following resources will help determine your tax registration requirements.
8. Step 8: Register for State and Local Taxes:- Register with your state to obtain a tax identification number, workers' compensation, unemployment and disability insurance. In addition to business taxes required by the federal government, you will have to pay some state and local taxes. Each state and locality has its own tax laws. The links below provide access to key resources that will help you learn about your state tax obligations. The most common types of taxes requirements for small business include: Tax Permit: In most states, business owners are required to register their business with a state tax agency and apply for certain tax permits. For example, in order to collect sales tax from customers, many states require businesses to apply for a state sales tax permit. Income Taxes: Nearly every state levies a business or corporate income tax. Your tax requirement depends on the legal structure of your business. For example, if your business is an LLC, the LLC gets taxed separate from the owners, while sole proprietors report their personal and business income taxes using the same form.
Consult the General Tax Information link under your state for specific requirements. Employment Taxes: In addition to federal employment taxes, business owners with employees are also responsible for paying certain taxes required by the state. All states require payment of state workers' compensation insurance and unemployment insurance taxes. Five states (California, Hawaii, New Jersey, New York, and Rhode Island) and Puerto Rico require businesses to pay for temporary disability insurance.9. Step 9: Obtain Business Licenses and Permits:- Get a list of federal, state and local licenses and permits required for your business. Every business needs one or more federal, state or local licenses or permits to operate. Licenses can range from a basic operating license to very specific permits, (e.g., environmental permits). Regulations vary by industry, state and locality, so it's very important to understand the licensing rules where your business is located. Not complying with licensing and permitting regulations can lead to expensive fines and put your business at serious risk.
10.Step 10: Employer Responsibilities:- Learn the legal steps you need to take to hire employees. Guide for New Employers The good news is that business is booming. The bad news is there's only one of you. It's time to take the plunge and hire some help. There are many good sources of information about finding the right people, writing job descriptions, interviewing candidates, and managing people once they are on board. While those are all important issues, understanding your regulatory requirements as an employer is crucial to the success of your business. This guide lays out ten easy steps for new employers to follow to ensure compliance with key federal and state regulations. How to Write a Business Proposal
If you want to know how to write a winning business proposal, the best person to ask is your customer. The goal of business proposal writing is to answer your customer's questions and persuade them to select you. Business proposal writing should be more about your customer than it is about you. Following a business proposal template won't help you with writing a proposal that speaks directly to the customer. Below is some advice for how to write business proposals that win...A simple proposal formula: - Here is some guidance for when you don't have written proposal instructions or guidance from your customer. Here is a simple approach to help you cover all the bases in your proposal. For each section/requirement that you must address, make sure you answer: who, what, where, how, when, and why. Repeat it until it rolls off your tongue and you have it memorized.
Who: who will do the work, who will manage the work, who does the customer call if there is a problem, who is responsible for whatWhat: what needs to be done/delivered, what will be required to do it, what can the customer expect, what it will cost
Where: where will the work be done, where will it be delivered
How: how will be work be done, how will it be deployed, how will it be managed, how will you achieve quality assurance and customer satisfaction, how will risks be mitigated, how long will it take, how will the work benefit the customer
When: when will you start, when will key milestones be scheduled, when will the project be complete, when is payment due
Why: why have you chosen the approaches and alternatives you have selected, why the customer should select you This simple little phrase (who, what, where, how, when, and why) can help you ensure that your proposal says everything needed to "answer the mail." For each of the customer’s requirements, go through the list and you will probably have everything covered. You can use it for inspiration when writing, and you can use it like a checklist for reviewing a draft proposal.
How to Write a One Person Proposal Sooner or later you are going to have to give someone a proposal, either because they ask for it, or because it can help persuade them to do what you want.
Where do you start? What are the rules? What should you include? Here is what you need to know to do a proposal by yourself that is for yourself. If you are a consultant, your product is often the services that you will perform yourself. Sooner or later you will need to give your customer a proposal, either because they ask for it, or because it can help you persuade them to approve the project. To approve the use of a consultant, many companies will need a written statement of work and other information. Putting it in their hands can expedite the process.
If you are not a consultant, you may still need to prepare a proposal from time-to-time to expedite a decision or persuade someone to take action on your behalf. Your goal will define the content of your proposal. People sometimes write proposals to persuade the reader to take an action, make a selection, reach a decision, spend money, offer a job, or grant a raise. Large, formal proposals are often prepared in response to a written Request for Proposals (RFP). One person proposals often do not have a written proposal to provide guidance. You must anticipate the information that will be required by the reader to take the action you desire and then design a document that will achieve your goal
. Your proposal should be more than your resume and a work plan. As an individual, your proposal will be partly an introduction, partly a statement of qualifications, partly a work plan, partly pricing, and partly an articulation of the reasons why the client should approve your recommendations. Your resume only addresses your qualifications, and even these a resume tends to address only in a generic way. You should customize your resume every time you use it to emphasize the qualifications that are most relevant to the person you are trying to persuade.For example, are you a network technician, an administrator, an engineer, or a project manager? Many networking consultants could play all of these roles. But which is more important to this project and this client -- your education, your experience, you certifications, or your capabilities? You should customize your resume to make the relevance clear, to prove that you have the qualifications required to do what you propose, and to support you rationale for why the client should accept your recommendations.
In addition to your resume, you have some explaining to do: What will you accomplish for the client? How long will it take? What resources will be required? How will they benefit from the project? How much will it cost? Who are you to be making these recommendations? Why do they need you? Why should they have confidence in your ability to do the work correctly? Why should they accept your recommendations? Here are some additional topics for more complex proposals:In order to answer these questions, your proposal should start with an introduction to what you plan to accomplish and how they will benefit (start by explaining what's in it for them). Then provide your work plan, including methodologies, resources, and schedule.
You might also provide your resume to support your ability to deliver as promised. Once you've laid this foundation, provide your pricing and rationale, emphasizing the return on investment and value.
Depending on the complexity of your work plan, this can usually be accomplished in a couple of pages. You can use any format that will fulfill the client's expectations. Your proposal could be in the form of a letter, memo, report, document, email, or contract. When to require a contract is a matter of personal and legal judgment.
When you do, I recommend that you include it as an attachment to your proposal. Contracts tend to be perceived skeptically, so you want the message delivered by the proposal, with your goal being to persuade them to sign the contract.Whether your goal is the signing of a contract or something else, and whether your proposal is delivered in the form of a one page memo or a three-inch binder, the entire proposal should revolve around persuading them to take the action you desire. You must be clear about your goal and turn that into a clear call to action in writing. Because you will probably be producing your own proposal, you should make sure that you design the layout of the document around your own capabilities to produce it
. In other words, don't get too fancy. Go for simple elegance instead of complicated sophistication. Just make sure that it fulfills the reader's expectations. This is harder to do when you don't have a written RFP. If you don't know their expectations, make an effort to discuss their expectations and issues such as:This is especially true if there is no formal evaluation process. There is a school of thought that says that you shouldn't submit the proposal until you know what the decision will be. If you can't achieve this, then make sure that you have a personal follow-up plan for after the proposal is submitted. The follow-up can be crucial for supplying additional information and validating what you put on paper. You don't have to be pushy to follow-up, just be helpful, and remind them that you can be even more helpful if they accept the proposal.
22 Things You Must Have to Win Your Next Proposal
It may be surprising, but when you ask people what it will take to win their proposal, they often don't have a good answer. And yet everything is riding on it. So we thought we'd help out by providing a list that can get you started.
What will it take to win? Start a list. Think about what you need to do for the customer to select you instead of the competition. This list not only provides you with a set of goals to achieve, but it also provides an objective definition for the quality of your proposal.
Now prepare a list of action items based on achieving the items on your list. Make sure you look at each item and think about what it will take to get there. Doing this with some of them will carry you back in time all the way to before the RFP is released. Instead of managing the proposal by simply crossing off the items on the outline and counting the days that remain until the deadline, measure your progress by how many of the items you have fulfilled on your list of what it will take to win.
You can also use this list to guide your review process. Instead of simply asking your reviewers whether the proposal is any “good,” ask them to validate that you have achieved the items on your list (and therefore have achieved what it will take to win). What should go into a business proposal? Since one of the goals for a business proposal is to answer your customer's questions, you should think through everything that you should include in your business proposal. There are some things that tend to be similar across business proposals. These are tendencies and not rules.
The only time there are rules is when the customer issues a Request for Proposals (RFP). An RFP, if it has sufficient detail, will tell you what should go into your proposal and how it should be presented. Sometimes, the nature of a product or service being offered or industry practices provide some guidelines for proposal composition and/or layout.
Business Thank You Notes Your Customers Will Love
The lost art of sending a personalized business thank you notes to your customers is an easy method to stand out in a sea of average businesses. In today’s hyper social networked age, the simple act of sending business thank you notes to your customers is often overlooked. Saying thank you is a forgotten act and done by so few. It’s the reason why a thank you note leaves a strong impression, reduces customer remorse and builds referrals.
Writing a business thank you letter is a great opportunity to show you personally care about your customers. It requires you dedicating time to write the letter. The worst approach is to use your computer to crank out hundred’s of impersonal thank you notes to your clients. The computer generated form letter detracts from the original intent of the letter. The kind of thank you notes your customers will love are the ones you take the time to personally write.
When to Send Business Thank You Notes When You Didn’t Get the Sale: It is disappointing not to get the business especially after you put in the time and effort but it’s a sign of professionalism when you thank the prospect for taking their time.
Closed the Deal: It’s common and easy to think of the sale as closed and the deal as done. But closing the sale isn’t the final step in the sales process. Sending a thank you note helps reduce buyer remorse and sets the stage for a solid relationship. When You Get a Thank You Note: Rick Kiley of Thank You notes in his blog on employee gifting, that he met Harvey MacKay and had asked him to sign a copy of his first best seller, Swim with the Sharks without Being Eaten Alive. Killed later sent him a thank you note and Harvey sent back a thank you note thanking him for his thank you note.
When You Get a Referral: The best time to send thank you notes are when a customer has provide you with a referral. Not only has the referral help you reduce your prospecting time but has also reduced your marketing costs. This is a gift and times to show your appreciation. The lost art of sending a personalized thank you note to your customers is an easy method to stand out in a sea of average businesses. Take the time to be exceptional, it will show in your bottom line and in how you make your customers feel special.
Here are 10 tips to make sure that your clients will love and value your services:,
. Know your customer. The key to good client relationship is leveling-off of expectations. Before taking on a client's business, ask them what they expect to get out of your service. Then explain how you may be able to respond to their need. It is good policy to investigate your client's needs by asking simple questions such as "How do you want this done?" If you are a hairstylist, for example, ask the client how she wants her new hairstyle to look. Unless you are the "best hairstylist" in the country with a reputation for doing-what-you-want-to-dowith-no-questions-asked, your customers will appreciate you more if you ask them first if they
want a radically short haircut before proceeding to cut their long tresses. If it will be helpful to you, keep a record of your client's needs and wants, as well as their little idiosyncrasies. If they have previously used a service similar to yours, probe their experiences and learn from what they have to say in terms of what they want and don't want. As you work with a client, express an interest in your client's work. Listen to what your customer does, take a moment to learn something personal about them, and listen to what they need and expect from you.2. Follow the Golden Rule. Treat your customer well. The work you are doing is extremely important to your customers so you have to assure them that it will be done professionally and on time. Terri Seymour, founder of Web Success Central, says, "The customer is the reason for your business success. Treating people with respect and building those personal relationships are one of the most effective ways of providing your business with a solid foundation." Janice Byer, Docu-Type Administrative Services, further agrees.
"I believe in this statement completely! Your clients are your means of income and the best people to spread the word about you and your work. Keep them happy!" Making your customers feel important is one of the best ways to ensure continued business. You want to remember how each client likes to have his or her work done.3. Dependability is key. If you agree to complete a project by a certain date, you must be prepared to meet that deadline even if it means sacrificing personal activities or money. Offer to go the extra mile at no additional charge. Thoroughness is part of being dependable; your clients will soon realize that they can count on you to catch their mistakes. If you build a reputation for dependability, you can rely on repeat, as well as referral, business.
4. Keep the business between you and the client. It is best to consider all work confidential.
This means that you do not discuss your client's business with anyone - even your mother. Make a habit of clearing papers from your desk before you go away. If ever you decide to use your work for them, maybe as part of your client list or testimonials, be sure to seek their permission first. If they refuse, honor their decision.5. Let your customer know you. There’s the maxim that the customer is always right. But the customer must learn to play by your rules. Right at the very beginning, set your guidelines and parameters as to what you can and cannot do. Deborah Brown, a noted Personal Coach and founder of SurpassYourDreams.com, stresses, ”Being straightforward with customers is critical. Why should they buy from you if they know you are not telling them the truth? Discuss your rules, and set the groundwork for working with you. Talk to them about your rules when the project deviates from the original agreement, its costs implications and procedures in dealing with new tasks. Don’t be shy to discuss your fees and payment
schedules. It is best to clarify these things at the onset; after all, nobody likes surprises.6. Protect yourself and your customers. As a business owner, you must make sure that your business is protected from losses resulting from fire, liabilities and other hazards such as a client slipping and falling in your office. Call your insurance agent to ask for the right kind of insurance that will protect your business. If you have equipment like computers, fax and printers, don't assume that all your expensive equipment is covered by your home insurance policy. It may not be unless you buy an add-on policy or rider. You must also safeguard your business against professional liability. While no one wants to think of lawsuits when starting a business, you may be liable if your business causes harm to individuals and businesses. You could be sued for their losses, and as a result, your entire business and even personal assets could be at risk.
If you are operating in the United States, an insurance premium is deductible as a business expense, whether you work at home or in rented office space, so you do not lose by having it.7. Accept only what you can do. During the start-up phase, chances are you will try to accept as many jobs as you can. When you say yes to a client, be sure that you can deliver the service requested by the time the customer needs it and within the cost budgeted for it. Only accept accounts that you think you could do a solid job. Never accept assignments that are way beyond your head in your eagerness to prove yourself.
If you feel it might not be possible, say so and request more time or suggest another alternative.It is worse to be late with a project than to ask for more time. If your clients are willing to take a gamble on you, make sure that you are on the same wavelength in terms of expectations as so what can be accomplished. As Deborah suggests, “Under promise and over deliver. This is the fastest way to grow your business.”
8. If you have to say "No." Like most entrepreneurs, I am sure that you never want to refuse a particular kind of work if you can help it. However, if there is a job you absolutely do not want to do for some reason, it is better to say that your schedule does not permit it rather than saying that you don't like that kind of work. Or you can also be honest with a client and say that their project is beyond the scope of your expertise and they may be better off with someone who has the skills they require. You may want to suggest another service provider that you think will match their requirements. They will value you more for your candor, rather than take on the job and deliver a sub-standard service. If you really have to say "no," say it politely and never, ever criticize a client.
9. When you are late in delivering the service. Despite your very best intentions, you sometimes slip up and fall behind a project's deadline. If you find yourself in that situation, don't act as if everything is ok and hope that the client will not notice your delay. Talk with your client and offer your apologies, with the promise that you will complete the project as soon as possible. Janice Byer gives this advice. "By showing initiative and ensuring you have the right information for the project, your clients will see that you are professional and, even if you are late with a project, they will understand that you trying to make the end result the best you possibly can thus keeping them happy." As Terri Seymour has learned in her Internet marketing business, "Telling lame excuses or blaming this or that is not the way to deal with this situation. Simply apologize and assure the customer it will be done ASAP and maybe throw in a little discount or something for free. Let the customer know that you care about getting the job done and doing it correctly."
Schedule a meeting with your client to discuss any stumbling block that are hindering the completion of the project. Maybe you have an unresolved question to one of the client's demands, or some factors beyond your control are making your assignment difficult to complete. Keep the client abreast of what is happening with their projects or accounts.
One cardinal rule you shouldn't forget: don't tell them that your reason for being late was because of your work for another client. No client would want to hear that his or her business is of less importance to you. You don't want to be put on a spot where you have to explain why the business of client B is more important than that of client A!10. The longer picture. At the end of the day, you must ask yourself the important question: “Does this client’s business contribute to the growth of my business? Do I want to continue working with this client?” You accept an account for various reasons, maybe for profitability, exposure, or the learning opportunity that it provides.
During the start-up phase, you may think that you have no choice; after all, beggars can’t be choosers.But as you go along, you will have a better sense about the true value of a client’s account. While an account may generate a sizeable cash flow for you, but if your client wreaks havoc on your mental state with her demands and attitude, you may have to rethink the long-range potential of the account. There are some accounts that are simply not worth it.
It is pretty easy to set up a new business but the actual challenge lies in surviving the cutthroat competition and to stimulate growth over the years. One of the prime reasons why most of the businesses face a very tough time is the lack of proper marketing plan and minimal focus on branding. After all, only when you are able to market your products properly to your target segment will you have a chance to generate revenue to take your business forward.
While a business success is largely dependent on concerted effort of various major functions, during the early years it is most important to focus on branding. Your branding effort should be strong enough not just to introduce your company name to your target segments but also create an impact on them. For a new business the marketing and branding strategy should ideally be able to establish its presence, create name recognition, build credibility among the target market segment and contribute to its status and reputation. Here are seven tips that would actually help you to achieve success with your new business.
Write Down Your Business Plan
– This should be the first step. Probably the most common and biggest mistake that most entrepreneurs do is not creating a proper documentation of their business plan. We all know what we plan to do; yet it is important to write it down in a formal business plan. It is always easier to follow a written plan. Your business plan should contain your business description. Objectives, marketing strategy and budget, Business overview, facilities and infrastructure, description of products and service, Industry overview, Regulatory Issues, Implementation plan and financial plan.
Focus on your Branding –
Do everything you can to promote your brand. Get a professionally designed logo that would justifiably represent your business to the people. Get your business cards, letterheads, brochure and marketing collaterals designed and printed by professional design and printing house. Ensure that your logo design is properly placed in all these. Don’t fall pray to those cheap DIY logo and branding solutions, they might save you a few $$ to start with but it would actually take a toll on your brand image.
3. Create a Web Presence –
It is most crucial for every business, irrespective of its size, to have a website of its own. Most consumers do their initial research on the web before making a buying decision. It is important that they are able to find you at that stage. Also a website adds value to your brand and gives you an added medium to communicate with your customers.
Get your website designed and developed by professional web developers. Your website should ideally be an extension to your brand and provide complimentary information to that of your brochures and print materials. Try to update your website often with useful information; this gives your visitors a reason to check back your website regularly.
4. Create an Advertising Strategy –
Most business organizations invest in advertisements but often a business does not get the maximum ROI on its advertising spend because the advertising strategy is not effective or at times, there is even no fixed strategy. Make sure your advertisement is targeted specifically at your market; for example, if you are a local store, it doesn’t make sense for you to advertise on a global media, rather the local newspaper is a much better option for you. Be consistent in your advertising effort.
The more your customers see your company ad, the deeper impact it creates on them. It has been observed that a 5-minute ad film served 10 times creates a greater impact on the consumer than a 50-minute ad film. For your ad composition, it is always advisable to consult a PR agency. If you are trying it yourself, ensure that your advertisement leaves your customers with a good reason to contact you and your brand and USP is properly presented.
5. Publicity is the Key
– Yes, do whatever you can to put your business on the forefront. There are various things that you can do for publicity. Send out a press release announcing a Grand opening for your new business, with a short description of your products and services. Keep your press release short, error free and interesting. Write letters to the editors of local newspapers and magazines about your industry and product.
Send out further press releases to communicate other business happenings. For example, if you win a business award, get membership to a professional organization, offer services to any charity or even if you are hiring an industry recognized for a key position in your business.Try writing articles and reviews for local publications and industry magazines. This would help to build your credibility as an expert and would add value to your business brand as well. The amount of trust people place on such experts is much more than what you can get by buying the best ad slots on top magazines.
6. Business Networking
– Word of mouth is undoubtedly the best form of advertisement and the more you expand your business network, the more you can have such publicity. Try joining professional organizations in your industry; be a member of Chamber of Commerce; attend networking meets and special events that give you a chance to interact with more people. Volunteer to join a NGO, get associated with a charity organization, or school board. You will not only be paying back your community but also be putting yourself and your business in front of the public.7. Measure, Analyze and Decide –
These should actually be continuous processes in your business life cycle. You have laid out a business plan but this doesn’t mean you will be blindly following it. Measure the output that you are getting from all the efforts that you put into your business. See if it is more or less than what you projected. Analyze the reasons for any variance, whether positive or negative, and then use the result of this analysis to make educated decisions for the future. You need to keep in mind that you should not be too quick to judge anything. To get a decent understanding of your business processes, you should give them sufficient time to run, which will allow you to have enough data to perform a fruitful analysis.
7 Tips for a Successful Business Partnership:
Business partnerships take on a variety of forms. They may be a long term formal legal commitment or a simple short term venture to test a market concept. The same principles apply in all cases.
Use the following strategies for a partnership that starts strong and stays strong.
1 - Start by creating a shared Vision & Mission As in any business, it's critical for the partners to define the Vision and Mission of the venture as the very first step. If all brains aren't going in the same direction in the same way, problems are bound to arise.
The motives for each partner can be different. The overall objectives and methods, however, need to be the same. Tom chose to partner with Dominic because each saw the market need for a commercial kitchen facility. Tom was a commercial contractor who had worked on restaurants and catering facilities. Dominic was Manager of a cooking school and well connected within the food preparation industry. Their agreed upon Vision was a 2,000 sq. ft. facility that would have 3 shifts of production, serve as a test kitchen for the cooking school and contract with other long term and project clients.
Tip:
Take time to discuss your company's Vision and Mission with your partners. Look for what energizes and motivates each of you about your business. Give it a purpose and define what the ideal business will look like.
Put the joint Vision and Mission in writing and use it as the reference for everything else you do.2 - Make sure each partner's needs and expectations are addressed Each person in the partnership has his own reasons for being in the partnership. Sometimes people seek a partner for capital, sometimes for expertise, sometimes for connections. These are not always expressed, yet they remain as an underlying expectation. If the expectation isn't met, the relationship can become strained.
Because each person's expertise, motivation and personality are different, it's important to have this discussion before anything is committed contractually.Because individual needs and expectations may change over time, a clear dissolution or modification plan needs to be in writing also, Gabe and Rosa had a wholesale distributorship that was limping along. Then Gabe became ill and couldn't work for several months. In the interim Rosa had to carry the entire business alone.
While she was able to do so, when Gabe came back he didn't have the energy or motivation to pick up his role again. Rosa wasn't prepared to carry it alone long term. Until they sat down together to discuss expectations, each was feeling let down and soon the bad feelings took over.,
Tip: Find out what your partner expects from you in the partnership. Share your expectations as well. Have a plan for when personal or business circumstances or interests change so, when needed, expectations can be readdressed.3 - Identify and utilize the strengths of each partner Because partners join forces for a variety of reasons and expectations, sometimes the strengths of each individual may be overlooked. The most obvious strengths will probably be recognized; however, underlying strengths, when brought out can often make a big difference in long term motivation, commitment and success.
Ted and Rudy's restaurant had reached a plateau after two years in business. Ted was in charge of the kitchen, Rudy the business end.With the help of a coach, Rudy realized that one of his personal strengths was his artistic ability and interest. When he decided to connect his art with the business, the average sales were up 35% the first month and another 25% the following month. He used his restaurant as a gallery for himself and guest artists. The restaurant frequently received mention in the art media and related calendars. And Ted was inspired to create "artistic" dishes.
Tip: Bringing out and utilizing the strengths of the individuals within the partnership will add to the motivation, the energy and the odds of long-term success. Make note of your personal strengths and ask your partner to do the same. Then sit together and discuss how you can apply these to the business.
Support the Partnership's Limitations:
In an effort to save money, little things often pile up in areas where partners have neither expertise nor interest. Over time, these can literally sink your business. Limitations can be in any area: strategy, product/service development, marketing and sales, personnel and operations management, financial management and administrative. Wherever they are it's important to identify them as early as possible and have a plan to manage them so they don't get out of hand.
Amanda and Tracy opened an organic spa where all products used and sold were organic. They also offered private consultations for personal wellness. Business was great, but they didn't know how to manage their cash flow. They soon found themselves in a cash crunch with debt that was continuing to build. The answer, of course, is that they needed support with business and financial management.
On suggestion from an advisor they hired a business manager who was able to provide support in their area of weakness. Tip: Look at the areas that are problems for you. Chances are these are areas that could benefit from some extra support.
If you think you can't afford it...think again. You can't afford not to support limitations. These gaps are where the value of the business slips away little by little. Don't let it happen to your business.Set company and individual goals
The ideal way for partners to approach goals is to start with goals for the company, then each create goals for themselves. Individual goals should support the company goals. Goals should measure and support expectations.
Writing these is especially important for partners. Theresa and Irena were on a good track with their two year old specialty marketing business. They verbally set company goals, but didn't consider what each would be accountable for in reaching these goals. When they didn't make their goals they blamed each other and things turned ugly.Tip: Review and update your company goals together with your partners. Then get each partner to set individual goals that support the company goals in their area of expertise. Put all these in writing and get each to commit to their goals. Then at the end of the period there is no question about who's accountable for what.
6 - Handle disagreements, disappointments and frustrations early. As in any type of partnership, disagreements will happen. Handling them effectively is the key to keeping the relationship on an even keel and the partnership in good order. Don't let bad feelings build and fester over time. Make it a rule that each can approach the other when something needs to be addressed.
When Art became sidetracked with personal issues and was spending much less time in the business, the relationship became strained. Charlotte didn't want to upset things by challenging how Art was spending his time. She didn't say anything directly to Art, but made negative remarks about how she was "carrying" the business. Charlotte became disenchanted with the business and allowed it to get into bad shape before she finally called for outside help.Tip: Sometimes it's difficult to approach a partner, especially if it's a long standing relationship that has deteriorated. A regularly scheduled sit down together is definitely a good idea. Once a week is needed in some situations, but minimally once a month allows everyone to come with their agenda. It's always best to talk about what you'd like to see for the business and be positive. Present a plan for change as you see it. That gives everyone something to work with and respond to.
7 - Define job roles for each partner, including accountability Do you and your partner have written job roles? If not you may be operating under false assumptions. Job roles look a lot like job descriptions in that they carry the connotation: "responsible for" with a list of tasks and outcomes.
Lack of clarity around job roles is a major source of frustration and disappointment in many partnerships. Pamela knew she was the primary sales person for their insurance business. But she expected her partner, Charles, to bring in some of the business, even though that had not been discussed in depth or clarified in writing.When she saw he was handling personal business during regular business hours she became furious. His mental picture of his role was obviously quite different from Pamela's. Discussion and clarification of each job role was definitely in order.
Tip: Clearly define the tasks you will perform and have your partner do the same. From this you can each be accountable to yourselves, to each other and to the business. Where there are uncovered tasks, contract for or hire a specialist. The objective is to make sure all jobs are covered and accountability has been assigned and acknowledged.
Follow these simple tips and you'll have a solid platform for a successful partnership and a strong and profitable business.
1. Keep your head up: Looking for a job can feel like a job in itself. Don't let it get you down. With patience and hard work, you will find the right job. Keep in mind that networking is about being genuine and authentic, building trust and relationships, and seeing how you can help others.
2. Ask yourself what your goals are in participating in networking meetings so that you will pick groups that will help you get what you are looking for. Some meetings are based more on learning, making contacts, and/or volunteering rather than on strictly making business connections.
3. Visit as many groups as possible that spark your interest. Notice the tone and attitude of the group. Do the people sound supportive of one another? Does the leadership appear competent? Many groups will allow you to visit two times before joining.
4. Hold volunteer positions in organizations. This is a great way to stay visible and give back to groups that have helped you.
5. Ask open-ended questions in networking conversations. This means questions that ask who, what, where, when, and how as opposed to those that can be answered with a simple yes or no. This form of questioning opens up the discussion and shows listeners that you are interested in them.,
6. Become known as a powerful resource for others. When you are known as a strong resource, people remember to turn to you for suggestions, ideas, names of other people, etc. This keeps you visible to them.
7. Have a clear understanding of what you do and why, for whom, and what makes you doing it special or different from others doing the same thing. In order to get referrals, you must first have a clear understanding of what you do that you can easily articulate to others.
8. Be able to articulate what you are looking for and how others may help you. Too often people in conversations ask, "How may I help you?" and no immediate answer comes to mind.
9. Follow through quickly and efficiently on referrals you are given. When people give you referrals, your actions are a reflection on them. Respect and honor that and your referrals will grow.
10.Call those you meet who may benefit from what you do and vice versa. Express that you enjoyed meeting them, and ask if you could get together and share ideaTop 10 Tips for Creating Successful Business Presentations: Business is all about selling -- a product, topic or concept. When making a business presentation, the most important thing is to know your material. If you do not know everything about what you are selling, it is not likely that the audience will be buying. Keep your audience focused and interested. Making effective business presentations takes practice, but with a few tips up your sleeve, you are ready to take on the challenge.
1. Use Key Phrases about Your Topic Note - These business presentation tips refer to PowerPoint (any version) but all of these tips in general, can be applied to any presentation. Seasoned presenters use key phrases and include only essential information. Choose only the top three or four points about your topic and make them consistently throughout the delivery. Simplify and limit the number of words on each screen. Try not to use more than three bullets per slide. The surrounding space will make it easier to read.
2. Slide Layout is Important Make your slides easy to follow. Put the title at the top of the slide where your audience expects to find it. Phrases should read left to right and top to bottom. Keep important information near the top of the slide. Often the bottom portions of slides cannot be seen from the back rows because heads are in the way.
3. Limit Punctuation and Avoid All Capital Letters Punctuation can needlessly clutter the slide and the use of all caps makes statements more difficult to read and is like SHOUTING at your audience.
4. Avoid Fancy Fonts Choose a font that is simple and easy to read such as Arial, Times New Roman or Verdana. Avoid script type fonts as they are hard to read on screen. Use, at most, two different fonts – perhaps one for headings and another for content. Keep all fonts large enough (at least 24 pt and preferably 30 pt) so that people at the back of the room will be able to easily read what is on the screen.
5. Use Contrasting Colors for Text and Background. Dark text on a light background is best, but avoid white backgrounds -- tone it down by using beige or another light color that will be easy on the eyes. Dark backgrounds are effective to show off company colors or if you just want to dazzle the crowd. In that case, be sure to make text a light color for easy reading.
Patterned or textured backgrounds can reduce readability of text.
Keep your color scheme consistent throughout your presentation
.6. Use Slide Designs Effectively When using a design theme (PowerPoint 2007) or design template (earlier versions of PowerPoint), choose one that is appropriate for the audience. A clean, straightforward layout is best if you are presenting to business clientele. Select one that is full of color and contains a variety of shapes if your presentation is aimed at young children.
7. Limit the Number Of Slides Keeping the number of slides to a minimum ensures that the presentation will not become too long and drawn out. It also avoids the problem of continually changing slides during the presentation that can be a distraction to your audience. On average, one slide per minute is about right.
8. Use Photos, Charts and Graphs Combining photos, charts and graphs and even embedding digitized videos with text, will add variety and keep your audience interested in the presentation. Avoid having text only slides.
9. Avoid Excessive Use of Slide Transitions and Animations
While Transitions and Animations can heighten your audience’s interest in the presentation, too much of a good thing can distract them from what you are saying. Remember, the slide show is meant to be a visual aid, not the focus of the presentation. Keep animations consistent in the presentation by using animation schemes and apply the same transition throughout the presentation.10. Make Sure Your Presentation Can Run On Any Computer Use PowerPoint's Package for CD (PowerPoint 2007 and 2003) or Pack and Go (PowerPoint 2000 and before) feature when burning your presentation onto a CD. In addition to your presentation, a copy of Microsoft’s PowerPoint Viewer is added to the CD to run PowerPoint presentations on computers that don't have PowerPoint installed.
1. DON'T WRAP IT UP The Summary or Objective at the top of your résumé is the wrap-up; It tells the reader, "This person knows who s/he is, what s/he's done, and why it matters." Your Summary shows off your writing skills, shows that you know what's salient in your background, and puts a point on the arrow of your résumé. Don't skip it, no matter who tells you it's not necessary or important.
2. USE CORPORATE SPEAK Any résumé that trumpets "cross-functional facilitation of multi-level teams" is headed straight for the shredder. The worst job-search advice tells us to write our résumés using ponderous corporate boilerplate that sinks a smart person's résumé like a stone. Please ignore that advice, and write your résumé the way you speak.
3. DON'T EVER POSTPONE A PHONE SCREEN A very bad bit of job-search advice says "Whatever you do, don't ever miss a phone screen! Even if you're in the shower or on your way to be the best man at your brother's wedding, make time for that phone interview!" This is good advice is your job-search philosophy emphasizes groveling.
I don't recommend this approach. Let the would-be phone-screener know that you're tied up at the moment but would be happy to speak at 7 p.m. on Thursday night, or some other convenient time. Lock in the time during that first call, but don't contort your life to fit the screener's schedule.
4. DON'T BRING UP MONEY Do bring up money by the second interview, and let the employers know what your salary requirements are before they start getting ideas that perhaps you're a trust-fund baby and could bring your formidable skills over to XYZ Corp. for a cool $45,000. Set them straight, at the first opportunity
ECONOMICS
This is a Social Science Concerned with the Analysis of Commercial Activities and with how Goods and Services are Produced. Economists, define Economics as the Study of how Goods and Services get Produced and how they are Distributed. The Field of Economics Studies how the Things People need and want are made and Brought to them. It also Studies how People and Nations Choose the Things they buy from among the Many Things they Want. In Economic terms, the Children, the Shop Keepers, and the Nation, all must Economise in Order to Satisfy their most Important Needs and Wants. This Means they must try to use the Resources they have to Produce the Things they Most Want.Economics is divided into two Kinds
(a) Macro Economics: - Is that part of Economics which Examines a Complete System rather than Individual Sectors in it. E.g. Macro Economics Study of a Nation would Probably Examine and analyse the Gross National Products; National Income, Investment, Employment and Money Supply. It would Look at the Relationship between these Important Economic Indicators and Attempt to Explain the Changes which had taken Place over a Time Period may be (5) Five Years.
(b) Micro Economics Study, is different. It Looks at an Individual Sector of the Economy and Influences on it in great detail. The Sector Might be a group of Consumers, a Particular Company, or a Commodity. A key objective of Micro Economic Study is to Find Out how the Decisions and Activities of the Consumer, Company, or Other Unit being Examined, affect the Prices of a Particular good or Service.
ECONOMIC PROBLEMS
Every Nation must Organise the Production and Distribution of Goods and Services wanted by it’s Citizens. To do this, a Nation’s Economic System must solve Four basic Problems:- (1.) What shall be Produced? (2.) How shall Goods and Services be Produced? (3.) Who shall get Goods and Services?
(4.) How Fast shall the Economy grow? (1.) What shall be Produced?, No Nation can Produce Enough Goods and Services to Satisfy all it’s people. But which Goods and Services are Most Important? Should Land be used to rear Animals or grow Wheat? Should Factories be used to Produce Rockets, Tractors or TV sets.
(2.) How shall Goods and Services be Produced? Should each Family grow it’s own Food and Make it’s own Clothing? Or Should Special Industries be Developed to Provide these Products? Should many Workers be used in an Industry? Or Should more machines be built to do Various Jobs?
(3.) Who shall get Goods and Services? Should Every one have an equal share of Goods and Services? Which Goods and Services Should go to People who can afford to buy them? Which Goods and Services should be Distributed in Some Other ways?
> (4.) How Fast shall the Economy grow? An Economy grows when it Produces more Goods and Services.
A Nation must decide what Proportion of it’s Scarce Resources should be used to Build Factories and Machines and Provide Education for it’s Young People, all which will Increase Future production.How much of a Nation’s Resources should be used to Produce Goods and Services, such as Food and Clothing, for Immediate use? In addition, the Nation must decide how to avoid Unemployment and other Economic Setbacks that waste Resources
.HOW THE ECONOMY GROWS
An Economy must grow to Provide People with an Increasing Standard of Living – i.e. More and Better Goods and Services. In general, the Faster a Country’s Economy grows, the Faster the Peoples’ Standard of Living rises.
MAKING AN ECONOMY GROW
There are Four (4) main Elements which make it Possible for Nations to Produce Goods and Services; They are Called Productive Resources.
(1.) Natural Resources: Defined as all Land and Raw Materials, such as Minerals, Water, and Sunlight.
(2.) Capital: Includes Factories, Tools, Supplies, and Equipment.
(3.) Labour Force: Means all People who work or Seeking work, and their Education Skills.
(4.) Technology: Refers to Scientific Business Research and Inventions.
In Order to grow, a Nation’s Economy must add to it’s Productive Resources. e.g. A Nation must use some of it’s Resources to Build Factories, Heavy Equipment, and Other Capital Goods.These Capital Goods can help to Produce more Goods in the Future. A Nation also must Locate and Develop additional Natural Resources, Create new Technologies, and Train Scientists, Workers, and Business Managers, who will direct future production. The Knowledge of these People is Called “Human Capital”.
DISTRIBUTION OF INCOMES
Under Capitalism who shall get the Goods and Services Produced depends mostly on who can afford to buy them. And the amount of Goods and Services People can afford depends mainly on the Size of the Income they receive. Under Capitalism, People Earn Income by Producing the Goods and Services that Consumer demand.
In many Industrial Countries, Workers have Joined together to try to Increase their Incomes. Through Trade Unions, Workers bargain with the Employers to determine Wages, Hours of Work, Safety Rules, and Other Conditions. Workers in some Industries are protected by Minimum Wage Laws, which are Passed by Governments; These laws set the Smallest amount of Money that an Employer can pay for doing an Hour’s Worth of Work.
In a Free Economy, Private Savings and Investments have an Important Influence on Economic growth. When People Save part of their Income, they Spend Less Money on available Consumer Goods and Services. More Money is then available for Construction of Machines and Factories. People who Save may put Money in the Banks, which Lend to Bonds Sold by Corporations. With the Money of Investors, Business can Increase their CapitalGoods.
In a Capitalist System, “How fast shall the Economy grow?” depends greatly on how much Consumers and Business Companies Save and Invest.
GOVERNMENT AND THE ECONOMY
Under Capitalism, the Government takes part in many Important Economic Activities. Capitalist Government usually has Four (4) Major roles:-(a) Laws: - Under Capitalism, the People depend on the Government to Pass Laws that Ensure Economic Fair Play. These Laws aim at Preventing Individuals and Companies from taking Unfair advantage of each Other, but do not always work very well.
(b) Public Utilities: - Are Companies that Provide Services Essential to the Public. These Often Include Electric Power, Water, Gas, Sewage, and Telecommunication Services. In many Public Utility Businesses, Competition would be Wasteful.
(c) Public Services: - Central and Local Governments provide many Services that could not be Furnished as well by Private Companies. E.g. Police, Fire Protection, Public Health Programmes, Schools, National Defense, Postal Services, and Roads and Rail networks. Government also offers Medical Services, Public Housing, and Other Economic aid to Needy People.
Some People in Capitalist Countries receive Financial aid from the Government Administered National Insurance, or Social Security Programs.These Programs are Financed by Special Taxes on Workers and Employers. They (Taxes) replace the Income Lost because of Retirement, Unemployment, Disability, or Death of a Provider. They also help Some Elderly, and disabled to Pay for Medical Care. All the Goods and Services Provided by the Government make up the Public Sector of the Economy. Government Pay for most of the Services that they Provide with Money they Collect in Taxes.
Economic Stability:- Tracing the Growth of the Free Economy is Like Following the Path of a Roller Coaster. Sometimes the Economy Zooms to great heights of Prosperity. At other Times, it follows to low Levels of Production and Employment. Periods of the above Business activities are called Booms.
Recessions
Are brief and Small declines in Business activity.Depressions
>Are length and large drops in Business Activity. During a Boom, total Spending rises, Consumers Demand many Goods and Services, and Companies Invest in new Equipment that will Increase Production. But Production cannot always keep up with Consumer Spending during a Boom.If the Supply of Goods and Services become Smaller than demand for them, a Nation may Experience a Period of Inflation (Rapidly Increasing Prices). If Inflation becomes extreme, Prices may rise so High that many People cannot afford Products they need. The Economy does not grow all during a Recession or a Depression. Total Spending drops, Production slows down, and People lose their Jobs.
Deflation
Is a Period of Falling Prices. As this period sets in or Spreads, Business makes Smaller and Smaller Profits. During a depression, a Government may Spend More Money on Goods and Services. It may Build New Public Buildings or Improve Major Roads.
This additional Government spending aims to Create new Jobs for Unemployed People. Government Spending also attempts to Increase the general demand for Goods and Services. Increase demand Encourages Business activity.
A Government may also try to Increase demand by Cutting Taxes so that People have more Money to Spend. Inflation generally occurs during a Boom.A Government may try to Curb Inflation by; Spending Less Money and thus, reducing the total demand. Or a Government may try to reduce demand by raising taxes. Then People would have Less Money to spend on Goods and Services. Reduced demand pushes Prices down.
World Trade
Nations can gain by Trading with one another because the resources of the World are not evenly distributed.Restriction of World Trade
(a) A Tariff: Is a Tax on Imported Goods. It raises the Prices of Products from other Countries. (b) An Import Quota: Allows only Certain Quality of an Item to be Imported each year. Some Nations devalue their Currencies in an Effort to Increase Foreign Sales. Some Countries adopt a System of Floating Exchange Ratio in which the Price of a Nation’s Currency rises and falls in relation to the World Demand for it.Balance of Payments: Is the Total amount of Goods and Services plus Money and Gold that Flow into and out of a Country during a given Period. Deficit: Is where by a Country Pays more Money to other Countries than it receives from other Countries. Surplus: Is where a Country receives more Money than it Spends to other Countries.
Common Problems in Developing Economies
They may Experience Periods of Extreme Poverty or Even Famine. Often the distribution of Essential Supplies is Hindered by Poor Roads and Rail Networks. There may be Slums with Poor Housing.Schools, Medical Centres, and Hospitals may be Scarce. Water shortages are Common and are Often the cause of diseases, because People cannot Maintain Necessary Standards of Hygiene
> Inadequate Family Planning, together with general attitude to the Size of the Family, results in high Birth rates, so Population grow Fast and Create demand for Food and Housing which cannot be met.
And Usually there is not Enough Investment to develop the Economy.Many of the Richer Industrialised Nations give aid to Developing Countries. This may be Technical Assistance, help with Educating the People; Money to buy Imports or to Invest in New Companies to Employ Local People. Help may be given from one Nation to another or Through International Organisations.
Important Terms in Economics
(a) Balance of Payments:- Is a Statement of all Goods, Services, Investments, and other Money Payments that Flow in and out of a Country during a given Period.
(b) Bond: Is a Certificate Issued by a Government or a Business Company Promising to Pay back with Interest Money it has Borrowed.
(c) Boom: Is a Period of rapid Economic Growth, when Production, Consumption, and Employment are High
. A Boom also Called a Period of Prosperity.
(d) Capital: Refers to Factories, Equipment, and Property, other than Land, that can be used to Produce Wealth.
(e) Capital-Goods: Are Goods that can be used to Produce more Goods in the Future.
(f) Capitalism: Is an Economic System in which Private Individuals own and direct most Productive Resources. It also refers to Free Enterprises.
(g) Company: Is a Business or Organisation formed and owned by a Number of People. These People are Known as Shareholders of the Company (h) Competition: Exists when a Number of People try to sell the same kind of Goods to the same Buyers (i) Consumer: Is an Individual who uses the Goods and Services.(j) Consumer Goods and Services: Are Goods and Services Produced for Individuals and Families. They Include such Goods as Food and Clothing and Such Services as Transport and School.
(k) Consumption: Is the act of using Consumer Goods and Services. (l) Cost of Living: Is cost of buying the Goods and Services used in the Daily Life.
(m) Depression: Is an Extended slump in Business activity.
(n) Distribution: Is the Process by which Goods and Services are divided among Consumers.
(o) Exchange Rate: Is the Price of one Nation’s Currency in terms of another’s Currency.
(p) Goods and Services: Means everything bought and sold.
(q) Gross Domestic Products (GDP): Is the value of all Goods and Services Produced with in a Country during a given Period, regardless of who owns the Production Facilities.
(r) Gross National Product (GNP): Is the value of all Goods and Services Produced by a Country during a given Period, even if Production Facilities are in another Country.
(s) Income (Y): Is Money, Goods and Services received, earned by Labour or use of other Resources.Inflation: Is a Continual Increase in Prices throughout a Country’s Economy.
(u) Investment: Is the use of Money to Provide Income or Profit.
(v) Labour Force: Includes all the Men and Women who are Employed, or who are Seeking Paid Work.
(w) Laissez Faire: Is the Theory that Government should not Interfere in most Economic Affairs.
(x) Macro Economics: Is a branch of Economics concerned with the Economy as a whole, Including Total Production, Overall Employment, and General Price Level.
(y) Micro Economics: Is a branch of Economics Concerned with the activities of Individual Consumers and Producers. (z) Money: Is anything that People agree to use to pay for Goods and Services.
(a.) Monopoly: Exists when there is only one Seller of a Product in a Market.
(b) National Income (NY): Is the total of all Income earned in a Country during a given Period./
(c) Net Income: Refers to the Business Profit that remains after all Costs of Production have been Paid.
(d) Production: Is the Process by which Goods and Services are made or Prepared for use.
(e) Productive Resources: Are the Elements used in Production; They Include Natural Resources, Capital, a Labour Force, and Technology.
(f) Profits: Are Earnings of a Business over and above all Costs.
(g) Recession: Is a Period of reduced Business activity. During a Recession, Production, Consumption and Employment are Low than they are during Prosperity but not as Low during a Depression.
(h) Standard of Living: Usually refers to the Economic Level at which an Individual, Family, or Country Lives. ( Economists sometimes measure this Level by determining the value of Goods and Services Produced or Consumed by the Individual, Family, or a Country during a given Period.
(i) Supply and Demand Law: States that Prices rise with Increased demand and Fall when the Supply of Goods Increases, if other Forces do not Change.(j) Tariff: Is a Tax on Imported Goods.
INVESTMENT
This is the use of Money to Earn Income or Profit. It also refers to the Expenditure of Funds for Capital Goods; Such Items as Factories, Farm Equipment, Livestock, and Machinery.
Capital-Goods:
Are used to Produce other Goods and Services. Many People Invest part of their Income for Future Financial gain; Others make Investment to Protect the Purchasing Power of their Savings against rising Prices.
Investment Promotes Economic growth, and Contributes to a Nation’s Wealth. For Instance, when People deposit Money in a Savings Account in a Bank, e.g. a Bank may Invest by Lending Various Business Companies. These Firms in turn, may Invest the Money in New Factories and Equipment to Increase their Production.
> Most Companies issue Stocks and Bonds that they Sell to Investors to raise Capital-Need for Business Expansion.
Government also issue Bonds to Obtain Funds to Invest in such Projects as the Construction of Dams, Roads, and Schools.
All such Investments by Individuals, Businesses, and Governments Involve a “Present Sacrifice of Income” to get an Expected Future Benefit. As a result, Investments raise a Nation’s Standard of Living.
Before You Start Investing
There maybe several reasons why you to want to invest your money. You may want to retire early, want to build your own business in the future, or to pay for your kid’s education. Should everyone start investing outside their retirement accounts right away? The answer to this question is that it depends on your financial situation.
First, you must have a basic understanding in financial management. What would happen if you lose your job, accumulate large medical expenses, or losing money on your investments? Do you still have money to pay your bills?Do you have to sell your investments that you have worked so hard for, with a loss? No one knows what the future will bring. Therefore, you must have a safety net to fall back on in an unexpected event. The Five (5) concepts that you should follow before you start investing outside of your retirement accounts.
1. Increase your savings rate: Cutting down on your expenses is the easiest way to increase your savings rate. You can also increase your savings rate by working overtime or switching to a higher paid job, but these are usually harder to do. If you want to accomplish your financial goals, you must start saving your money. You can do this by evaluating where you spend most of your money, and adjust your lifestyle to increase your savings rate. You will be surprised how small changes can increase your savings rate tremendously. For example, you can make your own coffee in the morning, shop while the clothes are on sale, and cut down on eating out, can save you lots of money.
2. Emergency cash reserve: Have an emergency cash reserve of at least 3 to 6 months of living expenses. This step maybe the hardest step to accomplish. But in the event that you lose your job, you will be thankful that you have this money.
The best place to put your emergency cash reserve is in a money market fund. If you have relatives that are generous, you could use them as your emergency cash reserve. But make sure that you ask them first.
3. Paying off consumer debts: Pay off your consumer debts, such as car loans and credit card loans can help you financially. Let’s say that your credit card charges you a 10% annual interest rate. Paying down that loan is like investing your money in stocks with a 10% annual return without tax consequences and risk free. Another reason you may want to pay off your consumer debts is that the interests are not tax detectible.
4. Paying down your mortgage: If you want to pay down your mortgage earlier than required, compare your mortgage interest rate to an investment that you intend to invest in to make your decision. However, all investments have risks and you could end up losing money if you chose to invest. I personally think that paying down the mortgage early is too boring. In addition, the interests that you pay are tax deductible.
Another reason that you may not want to pay down your mortgage early may be that you want to contribute more to your retirement accounts. 5. Contribute to your retirement accounts:
Take advantage of the tax benefits of your retirement accounts. If you are in a 30% tax bracket, for every $1000 that you contribute to your retirement account, you instantly saved $300. In addition, any profits inside your retirement accounts (dividends, interest) grow without taxation until you withdraw your money after age 59½.
If your company matches a certain percent of your pay, you should contribute at least enough to receive the maximum company match. After all, it is free money.This is similar to making 100% return on your investment immediately. Can you do that with stocks? Not likely! Once you have developed your safety net, you are ready to take on more challenges, but do it wisely. It took me 2 years to have my finance organized to begin investing outside of my retirement accounts. Use as much time as you need. And remember to diversify your portfolio. Invest wisely!
If you are interested in learning the fundamentals of investing, you have come to the right place. Our primary mission is to educate the people how to invest in the stock market and other investment opportunities.
The information here will help you to better understand the stock trading and other investment vehicles. I will teach you how to invest your money for the greatest possible gains while reducing the associated risks in the stock market and other investing opportunities. The lessons I have learned during my investment career are passed on here to help guide you through the sometimes confusing world of the stock market.
This information will give you the knowledge and expertise to make informed decisions regarding your portfolio. I know there are many people out there who want to learn how to invest, but are apprehensive because they just don't have the education or the background to make informed choices. The advantage here is that I designed this to be extremely user-friendly with step by step instructions on how to invest that other do not match.I am keeping this a common sense, simple to use, to help people start from scratch and be successful with their investment portfolio.
I will show you the things you need to know as you start on this journey and I will be here to help you every step of the way.
Even if you're barely getting by, investing small amounts in mutual funds can pay off over the long run. Here's how to do it, plus a list of fund companies that accept small investors. How do you start investing if you're barely scraping by? Say you're making $25,000 a year and know that (along with feeding yourself, paying for gas, rent, etc.) you need to start thinking about your future. It pays to do that, because even small amounts add up surprisingly fast if you invest on a regular basis.One big caveat: Investing in small amounts isn't about investing in individual stocks. All stock investors, no matter how talented, eventually pick a clunker, a stock that drops 25% or 30% before your first cup of coffee in the morning. That's not so bad if you own 20 stocks. But it would be a disaster if you hold only four or five. Instead, mutual funds and exchange-traded funds make more sense for small investors. Below, I'll explain how to get started using mutual funds.
Why funds?
For starters, mutual funds give you automatic diversification. Most hold dozens, if not hundreds, of stocks. So, when one goes south, its impact on the portfolio is minimal. Also, fund managers have advantages over individual investors. It's their day job, and because their trading generates huge commissions, they have access to better information than individual investors
How to invest $20
Let's start with $20. We're going to assume that you've already paid off any high-interest debt and that you have some money stashed in a safe place (like a savings or money market account) that you can get to quickly in case of an emergency expense. Now you find yourself with a little extra dough, and you want to begin investing for your future. Is it even worth it to invest such a pittance?
Heck yeah it is! One of the best ways to invest small amounts of money cheaply is through Dividend Reinvestment Plans (DRPs), also known as Drips. They and their cousins, Direct Stock Purchase Plans (DSPs), allow you to bypass brokers (and their commissions) by buying stock directly from the companies or their agents.
More than 1,000 major corporations offer these types of stock plans, many of them free, or with fees low enough to make it worthwhile to invest as little as $20 or $30 at a time. Drips are ideal for those who are starting out with small amounts to invest and want to make frequent purchases (dollar-cost averaging). Once you're in the plan, you can set up an automatic payment plan, and you don't even have to buy a full share each time you make a contribution.Drips may be one of the surest, steadiest ways to build wealth over your lifetime (just make sure you keep good records for tax purposes). Do You Know the Equities Rules? You can remember that in the past years, we have seen many losers and winners. The difference between winning and losing was knowing the rules of the game and adopting the right equity investing strategies to suit your individual circumstances and financial planning.
Define Your Investing Objectives
Open your eyes and heed the real advice of those that have come before you. Investigate your investments and define your goals and objectives. Invest and Make Money NOW As you know, there are a lot of people these days investing and making money in the stock markets all over the world. It can really be extremely profitable, safe, fun, very exhilarating and sometimes, its almost intoxicating!Do Not Play
Investing Is NOT a Joke!
You must treat investing as a real job and not as an easy game or a joke. You must start
investing instead of just "playing" and make money fast and now. The final safe investing
decisions and the money will be yours and only yours.
How to Invest in Stock - The Five Types of Assets You Might Own
Generally, there are five types of assets the average investor is likely to own in their lifetime:
1. -Ownership of businesses
2. -Special types of stock that often pay high dividends but have limited upside
3. Bonds – corporate bonds, municipal bonds, savings bonds, U.S. government treasuries,
etc.
4. -Highly liquid funds that are designed to protect your purchasing power; considered to be
a cash equivalent
5. -A special type of company designation that allows no taxation at the company level
provided more than 90% of earnings are paid out to the shareholders. The assets are often
invested in a variety of real estate projects and properties.
6. - Mutual fund including exchange-traded funds, index funds, and actively managed funds.
How to Invest in Stocks - Some Other Tips and Helpful Resources:-
***Leave a margin of safety:- Benjamin Graham, father of modern security analysis,
taught that building a margin of safety into your investments is the single most important thing
you can do to protect your portfolio. There are two ways you can incorporate this principle
into your investment selection process.
Be conservative in your valuation assumptions
As a class, investors have a peculiar habit of extrapolating recent events into the future. When times are good, they become overly optimistic about the prospects of their enterprises; as Graham pointed out in his treatise The Intelligent Investor, the chief risk is not overpaying for excellent businesses, but rather, paying too much for mediocre businesses during generally prosperous times.
To avoid this sorry situation, it is important that you err on the side of caution, especially in the area of estimating future growth rates when valuing a business to determine the potential return. For an investor with a 15 percent required rate of return, a business that generates $1 per share in Profit is worth $14.29 if the business is expected to grow at 8 percent; with expected growth of 14 percent, however, the estimated intrinsic value per share is $100, or seven times as much!
1. Only purchase assets trading at substantial discounts to your conservative estimate
of intrinsic value
Once you’ve conservatively estimated the intrinsic value of a stock, you should insist upon an
additional margin of safety. Going with our prior example of a company with an estimated
intrinsic value of $14.29; you wouldn’t want to purchase the stock if it was trading at $12.86;
that’s only a 10 percent margin of safety. Instead, you’d want to wait for it to fall to around
2/3 of your estimate of intrinsic value, or $9.57. This isn’t bound to happen often, but if you
monitor enough companies and have patience, the securities markets do extraordinary things.
2. Only purchase businesses you understand (recognize your own limitations) How can you estimate the future earnings per share of a company? In the case of Coca-Cola or Hershey, you could look at per-capita product consumption by various countries in the world, input costs such as sugar prices, management’s history for allocating capital, and a whole list of things.
You understand how these businesses make their money, the corollary
being that you are able to make reasonable assumptions about future performance.
Yet, many investors ignore this common sense and invest in companies that manufacture
products outside of their knowledge base.
If that describes you, you’ll take comfort to know that following the invention of the car, television, computer, and Internet, there were thousands of companies that came into existence, only to go bust in the end. From a societal standpoint, these technological advances were major accomplishments; as investments, a vast majority fizzled. The key is to avoid seduction by a sexy industry; the money spends the same, regardless of whether you are selling hotdogs or microchips. To be a successful investor, you don’t have to understand convertible arbitrage, esoteric fixedincome trading strategies, stock option valuation, or even advanced accounting.
These things merely expand the potential area of investment available to you; valuable, yet not critical to achieving your financial dreams. Yet, many investors are unwilling to put some opportunities under the “too difficult” pile; a reluctance that is part pride and part unfounded optimism. Even billionaire Warren Buffett, renowned for his vast knowledge of business, finance, accounting, tax law, and management, admits his shortcomings.
At the 2003 Berkshire Hathaway stockholder meeting, Buffett, responding to a question about the telecom industry, said: “I know people will be drinking Coke, using Gillette blades and eating Snickers bars in 10-20 years, and have a rough idea of how much profit they’ll be making.
But I don’t know anything about telecom. It doesn’t bother me. Somebody will make money on coca beans, but not me I don’t worry about what I don’t know – I worry about being sure about what I do know.” This ability to realistically examine his strengths and weaknesses is one way Buffett has managed to avoid making major mistakes over his considerable investing career.3. Measure your success by the underlying operating performance of the business You should hold small pieces of excellent businesses with the same tenacity you would if you owned the entire company. Over time, the operating results and the share price are inextricably linked. Years ago, at the height of the dot-com bubble, a reader of this column, angered by my insistence that fundamentals mattered, posed a question in a missive, “Don’t you know that the stock price has nothing to do with the underlying business?” he asked. He was serious.
This sort of absolute mental absurdity is what causes asset pricing bubbles. Common sense tells you that if a company cannot continue to exist as a viable entity, the investors will eventually lose everything.
How many grocery stores and small retailers have been crushed by Wal-Mart due to its superior operating skills? Were you a shareholder in those businesses, the fundamentals – supplier cost, profit margin, volume – were all extremely important. Without the ability to compete, you eventually closed your doors.
For further proof, look at the venerable behemoths of the past that now lie in the junkyard of financial history: Pan Am, the Pennsylvania Railroad. K-Mart and Sears were headed in the same direction until the former was saved as a result of the involvement of famed hedge fund manager Eddie Lampert of ESL Investments and distressed-debt guru Marty Whitman at Third Avenue Funds
4. Have a rational disposition toward price There is one rule of mathematics that is unavoidable: the higher a price you pay for an asset in relation to its earnings, the lower your return. It’s that simple. The same stock that was a terrible investment at $40 per share may be a wonderful investment at $20 per share. In the hustle and bustle of Wall Street, many people forget this basic premise and, sadly, pay for it with their pocketbooks
Imagine you purchased a new home for $500,000 in an excellent neighborhood. A week later, someone knocks on your door and offers you $300,000 for the house.
You would laugh in their face. Yet, in the stock market, you may be likely to panic and sell your proportional interest in the business simply because other people think it is worth less than you paid for it. If you’ve done your homework, provided an ample margin of safety, and are encouraged about the long-term economics of the business, you should view price declines as a wonderful opportunity to acquire more of a good thing.
If those statements aren’t true, then you shouldn’t have purchased the stock in the first place. Instead, people tend to get excited about stocks that rapidly increase in price; a completely irrational position for those that were hoping to build a large position in the business.
Would you have a proclivity to purchase more cars if Ford and General Motors increased prices by 20 percent? Would you want to buy more gas if per-gallon prices doubled? Absolutely not! Why, then, should you view equity in a company differently?5. Minimize frictional expenses In the article Frictional Expense: The Hidden Investment Tax, you learned how frequent trading can substantially lower your long-term results due to commissions, fees, ask / bid spreads, and taxes. Combined with the knowledge that comes from understanding the time value of money, you realize that the results can be staggering.
Imagine that you are 21 years old. You plan on retiring on your 65th birthday, giving you 44 financially productive years. Each year, you invest $10,000 for your future.
If you managed to earn at 10 percent return, by the time you retired, you would have $6,526,408; certainly not chump change by anyone’s standards! Yet, if you had controlled frictional expenses, adding a mere 2 percent per annum, the resulting 12 percent return would have generated $12,118,125 by retirement. That’s nearly twice as much capital!Keep your eyes open at all times
Like all great investors, famed mutual fund manager Peter Lynch was always on the lookout for the next opportunity.
During his tenure at Fidelity, he made no secret of his investigative homework: traveling the country, examining companies, testing products, visiting management, and quizzing his family about their shopping trips.
This led him to discover some of the greatest growth stories of his day long before Wall Street became aware they existed.The same holds true for your portfolio. By simply keeping your eyes open, you can stumble onto a profitable enterprise far easier than scanning the pages of Barrons or Fortune. Need help getting started?
7. Allocate capital by opportunity cost
Should you pay off your debt or invest? Buy government bonds or common stock? Go with a fixed rate or interest-only mortgage? The answer to financial questions such as these should always be made based upon your expected opportunity cost.Here’s how it works: an investor looking to acquire real estate in an urban area could ask themselves several questions such as, “is the average home price for the area increasing at a rate faster than average household income? If so, are there demographic changes taking place such as a rapidly expanding, educated population base that will make it possible for the local economy to sustain higher asset prices?
Will the property be cash-flow positive in the event of a substantial increase in interest rates? “What is my expected return on a rental-income basis, aside from anticipated price appreciation?” If the result of this self-subjected inquiry results in an expected return of 8 percent, yet you calculate the return available on U.S. Bank stock to be 13 percent, you should go with the latter.
Likewise, if none of your potential investments seem to beat some sort of arbitrary threshold, say a real return of 10 percent or more, you should simply park your excess cash in U.S. Treasuries.Note: This approach is only appropriate for an entrepreneurial investor who manages his or her own capital. For a vast majority of investors, simply buying index fund through a dollar cost averaging plan is going to result in superior returns.
Kind of Investments
A Person Should Learn as much as Possible about how the Money should be Used. The Person also should Find out what he or she can gain from an Investment. Every Investment Involves some risks, (a Chance of Loss).
An Individual should Carefully Examine the Expected Income from an Investment in relation to the degree of risk Involved.
A Person should know if he or she can easily turn an Investment into Cash that may be Needed to take care of Unexpected Expenses.(a) Saving Accounts: Are a Common kind of Investment. Money Placed in a Saving Account at Bank, or Savings and Loans Associations Earn Interest at a Certain Annual Rate.
(b) Life Insurance: Serves as a Form of Investment for Many People. A Person may buy Life Insurance to Provide Financial Protection for Family Members in Case a Person dies or is disabled.
The Insurance Company sets aside Part of each premium. This Sum, is Called the “Cash Value” of the Policy, accumulates and Earns a Special rate of Interest, as does a Savings deposit.
(c) Business Investments: The Purchase of a Small Business may be the most demanding kind of Investment. Investors may Find that they must Work Full-Time to get Profit. The Investors should be sure the Business will Provide both a Satisfactory Income and a reasonable return on their Investment.
Before buying a Business
People should Study the Industry, Consider their Operating Costs, and whether they have the ability to Operate the Business.
(d) Property: People Invest in a Property when they buy a Home, Land, or rental Property. Property may have Considerable resale value. It (Property) also may Produce Income – directly, in the Form of Rent; or Indirectly, in the form of Crops, Mineral resources, or Timber.
Property is considered as an especially good Investment during a Period of Inflation, when the Value of Property tends to rise.
On the other hand,
Property Value can Fall Sharply during a Recession or Depression. (e) Bonds: Includes Government Securities and Corporate Bonds. Government Securities: Are Normally Issued by the Central Government. They Pay Interest at a Special rate after a Certain Period of Time.
Savings Bonds: Issued by Central Government are Popular among Small Investors because of their Low Purchase Price and great Safety. Treasury Bonds: Are Tradable on Stock Exchanges. Most Treasury Bonds Pay a Higher rate of Interest than do Saving Bonds because their Prices may Change Considerably From Time to Time.Some Governments sell Securities Called “Treasury Bills”. They yield high Interest during Periods of Inflation and Low Interest during Recessions. Corporate Bonds: Are Loans made by Investors to Business Firms.
A Corporation pays each bond holder Interest every Year Until the Bond Matures.
At times the Corporation must Redeem the Bond by Paying it’s Face Value, which is it’s Stated Value.
The Prices of Bonds may Change due to Variation in Market interest Rates.
(f) Ordinary Shares or Equities: This represent Shares of Ownership in a Company. A Company to use it’s Profits to Expand the Business rather than pay dividends. The Increase of the value of Shares Permits a Capital gain, the Profit received from the Sale of Shares.
(g) Mutual Funds: Are Companies that Invest in Variety of Securities and Sell Shares of their own Stock. They offer Several Advantages to Invest e.g. Mutual Funds Employ Specialists who Select Stock or Bonds that they Consider most Likely to yield Profits.
(h) Stock Markets: Are Organizations which Enable Investors to buy and Sell Government Securities and Company Shares.
Investors deal Through Brokers who are Members of the Exchange.
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