Saturday, January 31, 2009

Building Employee Capability and Accountability with Delegation. New Manager's Guide to Delegation.

The Importance of Delegation
Delegation is the transfer of responsibility for a specific task from you to one of your employees. It can either be a one-time or a continuing responsibility. This means that you’ll depend on the employee to handle that task and meet the required performance standards. Sounds easy, doesn’t it? It isn’t! When you delegate, you must make sure the employee thoroughly understands the new responsibility and has the knowledge and ability to successfully handle the new task.

What’s in it for you to delegate?
You can devote more time to important management matters because some of your other functions will be handled by your employees. Most managers feel that they don’t have enough time to perform all their job functions. By delegating work, you’ll be able to devote more time to those matters that require your attention.
You can challenge and motivate employees. Many talented employees feel underutilized. Assigning challenging responsibilities to them will often bring about increased interest in the job. Many times, these employees show enthusiasm and ability that previously had not been apparent.
You can develop employees and make them more valuable. Additional responsibility may increase an employee’s value. New job responsibilities provide additional job experience and training and enable the employee to contribute more. Just feeling more valuable to the organization can be motivating.

The Four Key Questions
There are four key questions to ask when giving someone a work assignment. Most managers, interestingly enough, ask none of the four questions:
1. Will you do it? Amazingly, most managers just say, ‘‘Here’s what I want you to do,’’ or ‘‘Do me a favor,’’ and they never ask for a commitment. To significantly increase the likelihood that the person will actually do what you’re asking, get the person to say out loud that she will do it. Don’t just assume she will. Also, if the employee says something like, ‘‘I’ll try,’’ then respond the way Master Yoda did in The Empire Strikes Back. Yoda asked Luke Skywalker to levitate the spaceship out of the swamp. Luke made the mistake of saying, ‘‘I’ll try.’’ Yoda responded just the way a good manager should:
‘‘There is no try. There is only do. Do or not do.’’ So, like Yoda, don’t accept any ‘‘maybes.’’

2. How will you do it? It’s one thing to agree you’re going to do something and quite another to put together a plan on how you’re going to accomplish it. A good manager will always ask for an action plan. Many managers have foolish, worthless conversations. ‘‘I need you to cut down on your errors,’’ the manager will say. The employee says, ‘‘Okay, I’ll try to do better.’’ The manager says, ‘‘Good. I’m glad we had this little talk.’’
That talk was worth nothing. A smarter manager will say, ‘‘What exactly are you going to do differently?’’

3. What could prevent you from doing it? Excuses after the fact aren’t worth anything. But, before the fact, they’re very useful. Ask the employee all the things that could go wrong. If he doesn’t know, have him talk to those who have worked on similar projects or assignments. Have employees give you all the excuses for failure before they even start on the task.

4. What could you do to overcome that problem? For each of the excuses, have employees think through what they could do to take preventive action. If the preventive action doesn’t work, then ask them what they could do to get back on track. Very early in my career, I thought my job was to get my manager’s approval to do something and then get out of his office as quickly as possible. I would be barely out the door when things would start to go wrong. That’s the way life is. Murphy had it right: ‘‘If anything can go wrong, it will.’’ My people would say, ‘‘What do we do now?’’ I’d have to say, ‘‘I don’t know.
Let me talk to my boss.’’ Wasted time! But I got a little smarter and began to say to my boss, ‘‘These are all the things that I think are likely to go wrong, and these are the actions I’d like to take if these things do, in fact, go wrong.’’ That way, I got advance approval and was empowered to take a variety of actions. I’d be barely out of my manager’s office when my people would tell me things were going wrong, only now I’d immediately be able to tell them what to do. They’d say, ‘‘Don’t you need approval to deviate from plan?’’ I’d say, ‘‘Don’t worry about it. It’s taken care of.’’ What a difference!

The best managers are devoted to two things—meeting the needs of the organization and meeting the needs of their employees. To do just one of these things is not being a complete manager. To do neither one of these things puts you in the category of taking up space and not really having any added value. To do both of these things makes you invaluable to your organization. You’re never done with the effort since the needs of the organization and the needs of its employees are constantly changing. But, if you’re good, you walk the tightrope and somehow never fall off.


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Sometimes you may run into cashflow problem.
While you are still employed, due to unexpected circumstances, your expenses requirement may exceed your cash reserve. So, where do you go if you are looking for short term cash?

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Friday, January 30, 2009

Credit Card Dos and Don'ts

Here are list of credit card Dos and Don'ts to avoid falling into credit card problems.

• Stop charging your credit card recklessly. Use only for emergencies or purchase for neccesity.
• Don't spend the maximum limit offered - it all adds up!
• Always pay balance in full monthly. Pay attention on the Grace Period required. If full payment is not possible, try to pay more than the minimum payment due in order to reduce your balance and stop using the credit card until the balance is paid in full.
• Don't pay late - some late fees are as high as $25.
• Don't fall for marketing gimmicks and don't take the first card offered. Ask lots of questions (fees, grace days,etc.) and shop around for the best interest rates.
• Limit the number of your cards according to your debt needs and ability to pay your debt monthly.
• Don't get more cards to pay off debts! Paying debt with more debts doesn't solve the real problem.
• To avoid credit card fraud, review your monthly statement for accuracy.
• Don't ignore your credit card bill.
• Don't throw away your receipts until you compare them to your statement. Then shred them.

How many Credit Cards do you have?
Different individual have different answer. Typical American has between 4-10 credit cards on average, with some individuals carrying many more. Sometimes, you may need more than one card. For example: If you need to make a purchase that exceeds 50% of one card’s balance, it may be wise to split it between two accounts. In general, it is better to hold fewer cards with higher maximum limits than to hold several cards with smaller limits.

If you decide to require multiple Credit Cards, you can choose a combination of Visa, MasterCard, Discover, and American Express, which have the highest acceptance rates. At Extra Credit, you can compare and choose different credit card offers according to your needs. What is interesting about this site is, they have range of card offers with extra bonus and rewards. In addition, you can stay informed about the most recent industry news that affects your credit with their Industry News and Articles.

In deciding how many credit cards you want or need, it is important to keep your debt-to-income ratio low. Keep this ratio is below 25%, taking into consideration other obligations like your rent or mortgage, car loan(s), and other debts. Don't get more cards to pay off debts! Limit the number of your cards according to your debt requirements and ability to pay your debt monthly.

Always remember to use your credit card with sense of restraint, discipline, and responsibility.

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Thursday, January 29, 2009

Basic Guide for choosing Student Credit Cards.

Tuition and study-related costs are rising, and the pool of grants and subsidized loans doesn't always keep pace. Students are increasingly relying on a burgeoning market in private bank loans and credit cards to finance their study-related expenses. It is easy for students to get credit cards nowadays due to their limited/no credit history and aggresive marketing by financial institutions.

To avoid the trap of bad credit card debts, students must build their financial plan, have the discipline of clearing the bills FULLY and ON TIME, and spending responsibly. Do not spend on everything unless you are able to pay it off each and every month. Don't fall into the minimum payment trap. If you just pay the minimum due on credit card bills, you are just barely covering the interest you owe, and little on the principal. It will take years to pay off your balance, and potentially you'll end up spending thousands of dollars more than the original amount you charged. Handle your student credit card with respect and thoughtfulness.

Choosing the right credit card to finance your study-related needs require careful consideration. Different credit cards have different Benefits, Rewards Program, and Perks, Fees, Interest Rates, Customer Service, etc. If you are looking for student credit card, take a look at They provide information and tips for selecting right credit cards for students. They have Top 3 Best Student Credit Card Offers for quick comparison. I like their credit education blog that offer many information on credit facts, credit card pitfalls and advice. I think they need to expand their limited credit card pools to give reader better options to choose from.

Always remember to use your credit card responsibly and pay promptly.

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Wednesday, January 28, 2009

Questions List for your Sales Planning. Prepare Well, Build and Sustain Your Sales Readiness, Achieve Your Sales Objectives.

The Sales Planning Guide

The more organized you are, the greater your chances of achieving your objective.
Here are some questions that you can keep in mind for each sales call that you intend to make, so that you’re better able to do that job well.

 Who is the decision maker?
 What is their current situation?
 What are their goals and objectives, as you understand them? And what are your goals and objectives as it relates to them?
 What potential problem areas or need areas will you need to uncover, probe, and focus on?
 What objectives should you be seeking to achieve with this account on this sales contact?
 How about on the next call or contact? And how about overall, what would you like to achieve with this client? If the key contact that you have now is not the decision maker for this, how can he or she influence the outcomes that you’re trying to achieve, how can they be an asset to you even though they’re not the decision maker?
 What questions can you ask - specific questions - to uncover, clarify, or amplify prospect problems, needs, or goals?
 What decision-making criteria are really important to this prospect?
 What possible benefits could this prospect be seeking?
 What services or company features do you have that provide those benefits for them?
 What kind of proof do you have? In other words, what kind of letters, testimonials, brochures, and demonstrations could you use to prove to the person that they will in fact get what you’re promising?
 How can you be of more benefit to this prospect than anyone else who has called on them?
 What possible concerns or objections might come up and how might you answer those?
 Based on your objectives for this call, what specific commitment will you ask this person to make?
 Why should they want to make that commitment? Write it down.
 By what criteria will this person judge whether or not you or your company were a satisfactory solution to their problem?
 What methods, what procedures or forms can you use to measure whether or not the actual results they got did in fact meet the criteria that they were judging those results by?


Tuesday, January 27, 2009

How To Generate Abundant Sales and become Top Tier Performers. Build Essential Competencies for your Performance Improvement.

Before discussing techniques for generating abundant sales, here are the characteristics of Top Tier Performers:
 think differently about what they do. (They are building, not just doing.)
 build relationships in advance of needing them.
 take personal responsibility for making things happen.
 intelligently work the odds.
 intentionally form habits and cultivate patterns that work.
 know the payoffs of each of their activities.
 are impatient with those who don’t take charge of their own lives and careers.
 are generous with their time and resources toward worthy recipients.

Those at the top understand that one must become and remain eligible for what they want. If you want the top people to seek you out, you must be the kind of person they would benefit from seeking out. If you want to be influential, you must continually learn more in order to have more to offer.

Here is a quick formula for generating abundant sales right away without compromising your reputation, profitability or long-term goals.

1. Notice more. Assess your current situation from many angles. Examine product, price, place, promotion, and people factors. Assess the eight competencies in yourself. What’s working and what’s not?

2. Cover the gaps. Assure stability in your delivery of value to those who buy. Get everyone’s agreement to be accountable for doing their job well. Be sure you can be relied on to deliver what you promise.

3. Increase human contact. Make calls, send messages and emails, get others working with you and be more visible.

4. Begin a series of chain reactions. Start the processes that result in sales, focus on steps one and two for now (but be ready to follow through).

5. Keep the ball in your court. Take initiative to follow through; don’t rely on others to get back to you, call them.

6. Maximize your leverage. Use your best skills and resources, call on your best prospects, focus on your best products, and do good work during the prime selling hours. Spend at least 15 minutes each day during non-prime time sharpening your sales skills.

7. Think beyond today. Remember that today’s choices select tomorrow’s challenges, so keep in mind your need to continue generating business in the future. Don’t compromise your standards or tarnish your image.


Saturday, January 24, 2009

Innovation Taxonomy - Discover 8 Types of Innovation every Enterprise should pursue to establish Competitive Advantage and Distinctive Competence.

Here are 8 Types of Innovation every Enterprise should pursue to establish their Competitive Advantage and Distinctive Competence.

1) Disruptive Innovation. Gets a great deal of attention, particularly in the press, because markets appear as if from nowhere, creating massive new sources of wealth. It tends to have its roots in technological discontinuities, such as the one that enabled Motorola’s rise to prominence with the first generation of cell phones, or in fast- spreading fads like the collector card game Pok√©mon.

2) Application Innovation. Takes existing technologies into new markets to serve new purposes, as when Tandem applied its fault-tolerant computers to the banking market to create ATMs and when OnStar took Global Positioning Systems into the automobile market for roadside assistance.

3) Product Innovation. Takes established offers in established markets to the next level, as when Intel releases a new processor or Toyota a new car. The focus can be on performance increase (Titleist Pro V1 golf balls), cost reduction (HP inkjet printers), usability improvement (Palm handhelds), or any other product enhancement.

4) Process Innovation. Makes processes for established offers in established markets more effective or efficient. Examples include Dell’s streamlining of its PC supply chain and order fulfillment systems, Charles Schwab’s migration to online trading, and Wal-Mart’s refinement of vendor-managed inventory processes.

5) Experiential Innovation. Makes surface modifications that improve customers’ experience of established products or processes. These can take the form of delighters (“You’ve got mail!”), satisfiers (superior line management at Disneyland), or reassurers (package tracking from FedEx).

6) Marketing Innovation. Improves customer-touching processes, be they marketing communications (use of the Web and trailers for viral marketing of The Lord of the Rings movie trilogy) or consumer transactions (Amazon’s e-commerce mechanisms and eBay’s online auctions).

7) Business Model Innovation. Reframes an established value proposition to the customer or a company’s established role in the value chain or both. Examples include chestnuts like Gillette’s move from razors to razor blades, IBM’s shift to on-demand computing, and Apple’s expansion into consumer retailing.

8) Structural Innovation. Capitalizes on disruption to restructure industry relationships. Innovators like Fidelity and Citigroup, for example, have used the deregulation of financial services to offer broader arrays of products and services to consumers under one umbrella. Nearly overnight, those companies became sophisticated competitors to old-guard banks and insurance companies.

The breadth of the above list can be problematic. How are managers and executives to decide where to focus? Which types of innovation should they pursue?
There was a time when the notion of core competences was invoked to solve this problem: Pick the things you are best at and focus your resources accordingly. But companies have discovered that being the best at something doesn’t guarantee a competitive advantage. A distinctive competence is valuable only if it drives purchase preferences. Customers frequently ignore companies’ core competences in favor of products that are good enough and cheaper.


Friday, January 23, 2009

Achieve True Corporate Growth using Innovation. Five Fundamentals for dramatically boosting Innovation Efficiency.

Everyone knows that true corporate growth, not just agglomeration—springs from innovation. And the common wisdom is that companies must spend lavishly on R&D if they are to innovate at all. But in these fiscally cautious times, where every line item of every budget in every company is under intense scrutiny, many organizations are doing just the opposite. They tighten their belts, subject nascent product-development programs to rigorous screening, and train R&D staffers to think in business terms so the researchers will be better able to decide whether an idea for a product or service is worth pursuing in the first place.

Such efficiency measures are commendable. But frugality is not a growth strategy, they point out, and, in truth, there is very little correlation between corporate performance and the amount spent on innovation. Companies like Southwest, Cemex, and Shell Chemicals have shown that businesses don’t have to spend a fortune on R&D to reap the benefits of innovation.

To produce more growth per dollar invested, companies must produce more innovation per dollar invested. Businesses can dramatically improve their innovation yields bu using these five imperatives: Increase the number of innovators among existing employees (whatever their job titles) by involving them in innovation processes and events. Focus on developing truly radical ideas—ones that change customers’ expectations and behaviors and industry economics—not just incremental ideas. Look for innovation sources out- side the organization, as well as inside. Increase the learning from small, low-risk experiments. And commit to long-term, consistent development efforts.

Real Growth depends on innovation. Oh sure, a big acquisition can inflate a company’s top line, but it’s hardly fair to call this growth; agglomeration would be a better word. Deal making of the sort that was used to jack up revenues at companies such as Tyco, Vivendi, HealthSouth, and DaimlerChrysler is unlikely to produce above-average growth for more than a few years at a time. Study a company that has delivered strong revenue growth over a decade or more, and you’re likely to find evidence of world-class innovation. Maybe the company invented a new industry structure, like Microsoft did when it “de-verticalized” the computer industry. Maybe the firm pioneered a bold new business model, like Costco did with its upscale warehouse stores.

We live in an age of austerity. Every line of every budget in every company is under perpetual scrutiny. Innovation budgets are no exception. Increasingly, R&D units are required to negotiate their budgets directly with key operating divisions, in hopes of tying their research spending to real-world customer problems. Companies like IBM are sending their R&D professionals into the field to interact directly with customers. Organizations are subjecting nascent development programs to ever more rigorous screening with the goal of focusing their resources on a few big-win projects. Additionally, companies are training their R&D staffs to think in business terms so the researchers will be better able to decide whether an idea is worth pursuing in the first place.

These efficiency measures are commendable, but they don’t go far enough. A company can’t outgrow its competitors unless it can out-innovate them. And in these austere times, that is only going to happen if a company is capable of substantially raising the yield on its innovation investments. Achieving such a step function improvement requires more than just a bit of R&D belt tightening. It demands a fundamentally new way of thinking about innovation productivity, as well as a set of strategies that have the power to deliver a whole lot more bang for every innovation buck.

To dramatically improve innovation yields, companies must believe that innovation outputs (new processes, products, services, and business models) are less than perfectly correlated with innovation inputs (cash and talent). This assumption is more unorthodox than it first appears. When we recently asked more than 500 senior and midlevel managers in large U.S. companies to identify the biggest barriers to innovation in their respective organizations, the number one response was “short-term focus” followed by “lack of time and resources.” In this view, innovation is highly dependent on investment, and it is senior management’s presumed obsession with near- term earnings that most limits a company’s innovation productivity. We think this view is wrong.

Use this five imperatives for dramatically boosting innovation efficiency, each of which can be encapsulated in a simple ratio:
 Raise the ratio of innovators to the total number of employees. The greater the percentage of employees who regard themselves as innovators, whatever their formal job descriptions may be, the greater the innovation yield.
 Raise the ratio of radical innovation to incremental innovation. The higher the proportion of truly radical ideas in a company’s innovation pipeline, the higher the innovation payoff.
 Raise the ratio of externally sourced innovation to internally sourced innovation. The better a company is at harnessing ideas and energies from outsiders, the better its return on innovation investments.
 Raise the ratio of learning over investment in innovation projects. The more efficient a company is at exploring new opportunities, learning much while risking little, the more efficient its innovation efforts will be.
 Raise the ratio of commitment over the number of key innovation priorities. A firm that is deeply committed to a relatively small number of broad innovation goals, and consistent in that commitment over time, will multiply its innovation resources.


Thursday, January 22, 2009

Developing A Positive Learning Environment for Employee. Opportunities and Incentives for Employee Retention and Engagement.

A Positive Learning Environment

“A positive learning environment (PLE) encourages, even demands, that every employee at every level be in a continuous learning mode, constantly searching for new ideas, trying new methods, sharing ideas and learning with others, and learning from others, to find new and better ways to achieve individual, group, and organizational business goals.”

Real learning comes when employees apply new ideas to their work, discovering what works and what doesn’t. More learning occurs when they share their results with other employees and/or learn something new from the others to help them achieve better individual, group, and organizational results.

If an organization lacks a positive learning environment, employees are not encouraged, nor will they seek opportunities to learn, to use their knowledge on the job or to share with others. They will use their learning energy elsewhere or look for another job.

A positive learning environment is a powerful attraction for young professionals. They want to learn and progress in an organization and in their careers. They look for organizations that foster and encourage that learning. They like working for managers who take an interest in helping them learn and who are themselves learners. Everyone benefits from the constant sharing that occurs in such an environment.

Some examples of company policies that support a positive learning environment include tuition assistance plans, company-paid professional memberships and conference attendance, corporate membership at university libraries, and sponsorship of employees to write papers for publication and to present at professional conferences.


Wednesday, January 21, 2009

Applying Action Learning thinking into modern classroom and workplace. Reducing the time between learning and application.

Action Learning

This important idea was invented by British management thinker Reg Revans, action learning is a deceptively simple idea. So simple, in fact, that its power was overlooked for years. The basic idea is that managers learn best when they work on real issues in a group, rather than in the traditional classroom.
According to Revans, 'Action learning harnesses the power of groups to accomplish meaningful tasks while learning'.

To explain action learning, Revans created a simple equation: L = P + Q. Learning (L), he says, occurs through a combination of programmed knowledge (P) and the ability to ask insightful questions (Q). In essence, action learning is based around releasing and reinterpreting the accumulated experiences of the people in a group. Working in a group of equals (rather than a committee headed by the chief executive or a teacher), managers work on key issues in real-time. The emphasis is on being supportive and challenging, on asking questions rather than making statements.

While programmed knowledge is one-dimensional and rigid, the ability to ask questions opens up other dimensions and is free-flowing. The process is a continuous one of confirmation and expansion. The structure linking the two elements of knowledge and questions is the small team, or set, defined by Revans as a 'small group of comrades in adversity, striving to learn with and from each other as they confess failures and expand on victories'.

Action learning is the antithesis of the traditional approach to developing managers. It is only now, belatedly, being embraced by many business schools as a way to ensure that the neat classroom theory is accompanied by a modicum of useful learning. (Revans correctly argues that many educational institutions remain fixated with programmed knowledge instead of encouraging students to ask questions and roam widely around a subject. He is contemptuous of business schools and of the flourishing guru industry.) Business schools are only now catching on.

Until quite recently, most executive education programmes were packed with concepts and ideas. Content was king. Business schools crossed their fingers and hoped that when participants returned to their jobs some action would arise. It was the learning equivalent of shooting arrows in the air: shoot enough and you just might hit something. Today, that approach is no longer adequate. Companies want learning that's targeted to hit the spot - their spot.

Modern organizations want executive education to do more than fill managers' heads. They want it to transform the way they work. Firms want to see connections between the concepts business schools communicate and their own internal issues. There is a movement away from traditional formats - chalk and talk - toward new approaches, including action learning. It asks managers to focus on their own experiences, not dissect dead cases.

'In the past there was an idea of a business school as knowledge factory, where knowledge is handed to participants. Now we want to bring participants inside the knowledge factory. We're moving towards co-creation of knowledge with our customers,' explains Vijay Govindarajan, professor at the Amos Tuck School of Business Administration in New Hampshire. He continues: 'In the traditional model - learning - the arrow goes from learning to action; in action learning, the arrow goes from action to learning'. Executives, Govindarajan says, learn more when they do things.

Asking questions and listening to answers is an increasingly important managerial skill. Action learning encourages both. Contrast this with executives being 'forced' to go on training courses. The potential benefits of action learning, however, cannot disguise the challenge it presents. Action learning is no quick fix. It requires a fundamental change in thinking.

'The essence of action learning is to become better acquainted with the self by trying to observe what one may actually do, to trace the reasons for attempting it and the consequences of what one seemed to be doing,' says Revans.

All action learning shares a number of features. It:
 uses a genuine current problem or issue as a learning vehicle (not a past case study);
 takes a group approach (peers working together provide support and different perspectives);
 accepts that there are no experts (naive questions illuminate the issues);
 requires commitment from the sponsoring organization and management; and
 focuses on asking questions rather than providing solutions.

Action learning provides benefits for both individuals and organizations. The key benefits available for the learner from action learning include moving beyond the limits of thought, behaviour, and belief, putting behaviour in line with beliefs and values, and making individual behaviour more effective.

The following benefits have been attributed to action learning:
1. reducing the time between learning and application;
2. concentrating the learner's attention on results and process;
3. focusing on the present and the future;
4. reducing costs;
5. providing feedback to group members on performance;
6. delivering innovative solutions;
7. increasing organizational commitment; and
8. enhancing organizational learning.


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Monday, January 19, 2009

Customer Service Techniques you can use when the Customer Swears or Yells on you. How to handle difficult customers more effectively.

When the Customer Swears or Yells on you

It is important to know how to handle derailing customer rants, or inappropriate behavior. You'll see what Approaches/Techniques can be used for this purpose.

Techniques/Approaches you can use:
 Distraction (1)
 Empathy Statements (2)
 Finding Agreement Points (3)
 Refocus (4)

Conversation Example:
The customer is upset because he received a parking ticket that he feels is unwarranted. He visits the town clerk (which is where tickets are paid), and starts to yell and swear at the clerk at the counter.
Customer: What the [ooo] is going on here. One of your stupid meter maids gave me a ticket for parking near a hydrant and I wasn't within ten feet of the goddamn thing. I'm not paying this thing, and I want you to cancel the [oo] thing now. I have children to take care of and a job where I don't get paid if I'm not there, so don't waste my time here…[customer appears to be starting a long rant without stopping]
Employee: How many children do you have. (1)
Customer: Well, three. What does that have to do with my [ooo ticket]?
Employee: I know it's a challenge enough to have to take care of children and go to a job everyday. (2)
Customer: Damn right it is.
Employee: Yes. It is. (3) Let's go back to the ticket, to see what we can do to provide you with an avenue to appeal. (4)
Customer: OK.

In this situation the employee uses Distraction—specifically a technique called "topic grab" (1). It is used to try to derail an angry customer by providing an unexpected response. In this situation, the employee "grabs" the reference to the customer's concerns about childcare, and asks the customer how many children he has. When the customer responds with a specific and short response, control of the conversation returns to the employee.
The employee responds with an empathy statement (2), followed by finding an agreement point. (3) Notice the artistry involved in creating a point of agreement. In (2) the employee offers an empathy statement, which the customer agrees with. In (3), the employee reaffirms the agreement, creating a sense that the customer and employee are on the same side.
Finally, the employee makes the transition from dealing with the customer's angry feelings, to dealing with the specific issue of the ticket and what the customer can do. This is done with a refocus statement. (4)

The topic grab must be based on something the customer has said. You can't choose something at random, but must use something the customer has referred to that really has no connection to the customer's problem. Your topic grab question or statement must be short.
If the customer refuses to answer your topic grab, and responds with something like "It's none of your business," then you simply agree with that response "You're right, it really isn't. Let's see what we can do with the ticket." If the customer responds, and then stops to let you speak, the technique has done its job. Then you use the opening to refocus.


Sunday, January 18, 2009

THE FOUR IMMEASURABLES QUALITIES OF A LEADER. Bringing the Principles of Buddha into the Workplace to cultivate Lasting Success.

The following Four Immeasurables Qualities generates a genuine ability to soften and broaden your view about your place in the world, and therefore reflect the Buddha nature.
These four qualities can serve as your nonnegotiables and are the core of your mission.

Loving Kindness
When we relate to our self or another person from a place of loving kindness, we ask for happiness to surround them and us. The loving kindness practice affirms: "May all beings enjoy happiness and the root of happiness."
When we consciously declare thoughts of loving kindness, we connect with our authentic self to cultivate that success and happiness. In the business model, this quality requires that we work with a positive intention to serve ourselves and others in the organization ethically, generously, and with kindness. In situations that involve negotiations, loving kindness takes off the edge of aggression and clears the way for open communications.

Compassion is the conduit to increasing the growth of your organization and for impacting the world. The basis of compassion is to stay open enough to feel the pain or needs of others, which expands your view beyond your personalized, absorbed self.
When you access your compassion, you communicate from the heart, and that communication transcends the borders of hierarchy and position to allow for the flow of effortless creativity. As you write your mission statement with a mindset of compassion, you can see how your efforts in human resources, sales, research and development, customer service, and so on contribute to the health of your organization and the world at large.
When a mission statement demonstrates compassion, a natural cycle of prosperity is created. The CEO and board direct the organization with values and genuine caring, which in turn motivates the employees and enhances productivity and which ultimately increases profitability and growth. This cycle of management by compassion then flows full circle back to the shareholders, CEO, and board.

When you practice a joyful mindset, you delight in the happiness and success of others and eliminate the need or temptation for jealousy and aggression. Joy promotes a vibrant work culture internally and externally. When you and your organization practice joy, you ask that, "all beings not be separated from their own happiness, free from suffering."
In this sense, the mission and values of the organization acknowledge a goal to enjoy prosperity and success and to use the benefits of that success responsibly and with integrity. Thus, this practice guards against the risk of the inappropriate use of profits, pension plans, and other improprieties that would negatively affect the employees, management, and shareholders of a corporation.

Equanimity allows us to accept the good and the bad in all situations; having the peace of mind that everything is workable. When managers engage the quality of equanimity, they establish a motivated work environment that engages everyone in their department or company. Equanimity also provides a workplace free of prejudice or discrimination, and this freedom encourages open-minded thinking and cultivates innovation.
In this practice we ask that, "all beings dwell in equanimity free from passion, aggression, and prejudice." Equanimity is an essential condition of a values-driven mission. It expands the possibility for growth and opens the doorway to attracting new talent and knowledge that will be recycled into the organization.


Saturday, January 17, 2009

Tactics for Stocks Investment and Shares Trading. Common Sense Investing Tips for Successful Trading. Professional Guide to Investing.

Tactics you can use for Successful Stocks Investment.

? Tactic #1: Always, always sell all large-cap and high-P/E stocks before earnings are due to be reported!
Good news is rewarded only slightly, but disappointment drives immediate, steep price declines. So holding literally stacks the payoff odds against you. Institutional ownership raises the size of selling deluges, as does a long record of prior successes.
Today's minimal commissions make stepping aside before the event very cheap insurance. Besides, learning to place sell orders readily is good practice that will make this unfamiliar activity seem more natural over time. Internet databases list expected EPS-report dates; phone the company to check.

? Tactic #2: Be nimble, or the crowd will surely trample you!
Neither buying nor selling is a for-life decision; learn doing both as readily as ordering lunch when the situation requires. Instantaneous worldwide internet transmission of fact and opinion means the crowd takes virtually no time to move a stock's price. To avoid consensual victimhood, you must move rapidly. Investors/traders are paid well to anticipate change, but badly for reacting with the crowd after new facts arise. Companies change, so your opinion and position must. Today's price already reflects whatever you'll find in print or databases; you are not the first to see it!

? Tactic #3: Gracefully and promptly accept unreasonable profits!

Draw a line from your buy price and date to your target price and time. When fortuitous news, a major brokerage recommendation, favorable media coverage, or market euphoria shoots a stock notably above that line, sell! Not doing so means you're now accepting a lower future return rate from today to your target
Think opportunity cost of capital. You can always buy back. When the buying crowd swells well beyond normal that condition is unsustainable, so the stock must retreat. Understanding that, why hold on? Constantly ask if you'd buy today what you're presently holding, at today's price. (Holding is buying again!) What you'd not buy, you should sell.

? Tactic #4: Rid your decision process of ego's misguiding influences!
Overcome perfectionism: humans cannot always be right or routinely get the best price. Admitting mistakes early reduces money loss and ego pain. Resist temptations to ‘demand your money back’. Too many investors refuse to sell unless they get back every cent paid (for what has proved not a great choice). Meanwhile, many opportunities elude those ‘locked in’. Why demand getting back those last few percents in your proven laggard? Think opportunity cost, not blind loss aversion!
Forget three irrelevant facts: what you paid for the stock (the worst mental anchor), what it sold for at its all-time high (now proven a market mistake by subsequent evidence), and its high since your purchase (a strong but often wrong goal). Stocks over-run both up and down. A high was a temporary price error, not a deserved value.

? Tactic #5: Watch the wider world for clues that a trend reversal is due.
Not all relevant information about markets is found in the Financial Times, The Times or The Wall Street Journal. Watch humor and advertisements (whose success requires wide, understanding consensus) for signs of a bubbly, overconfident societal mindset. Cartoons, TV sitcoms, and print and electronic-media ads reflect well-established (late) trends. Do jokes feature easy riches (time to sell), or instead people leaping from bridges and windows (panic, a bottom)? When auto and holiday-trip ads refer to our market gains, time has come to hit the exits!

Good Luck for your trading success.


Wednesday, January 14, 2009

Increase Traffic with Entrecard. Lesson Learned in Achieving Top 3 Position on EntreCard Campaign Listings. Tips to increase Popularity Rating.

Today, I noticed that this blog have achieved #3 Position on Education Category with Popularity Rating=641. Our nearest competitor's Rating is quite close. Therefore, it will be close battle.

I like to thank my EntreCard Top Droppers:

The Path to the Pegasus Letter
Retro Yakking
Theme lib dot com
Arohan's investing life
flitting on fiction
Pepper Spray, Stun Guns, and Tasers… Oh My!
Outlandish Observations
The Fashion Lovers
Money Maker Times

Every month, I intend to publish my Top Droppers.

Lesson Learned after using EntreCard:

1) Traffic Growth by 30%
My original #1 objectives of using EntreCard was to drive more traffic. I love Quality, Organic Trafic ( ie: search engine traffic).
Indeed, I noticed that Traffic Quantity grow by 30%. Before I joined EntreCard, almost 90% of my site traffic come from Search Engine (ie: Organic). Now, the proportion shift into Search Engine 70%, EntreCard & Others 30%.

2) Alexa Ranking, Google PageRank, Technorati Ranking are unchanged.
I was expecting some changes on Alexa Ranking, but it hasn't materialized yet. For Google, I have to wait every 3 month.

EntreCard Tips - How to increase your EntreCard Popularity Rating.

1) Design an Attractive, Compelling 125x125 Card.
Honestly, my own Card Design need further improvement.

2) Place your Entrecard Widget above the fold.
People must be able to find your Entrecard Widget easily, without having to scrolldown the page. Topdroppers will love and favourite your site.

3) Be a Hardworking dropper
Many people suggest 300 drops/day. But due to limited time, not everyone can do it. I have done it only once for experimentation only. It doesn't really matter if you just drop 251 cards/day because you are 'Awesome' for 251-300 drops/day.
I think for the first 3 days, do >200 drops/day, then subsequently 100-260 drops/day, 3-6x/week should be sufficient.

4) Optimize your Drop by selecting targeted site.
Drop on:
a) Active sites.
Active sites update their content regularly.
b) Reciprocating sites.
On your "Drops Inbox", you'll find list of sites who drop back on you.
c) TopDroppers.
Many people advertise list of TopDroppers. Beware that 'TopDroppers on Site A' may not be neccesarily be 'TopDroppers on Site B'.
d) Popular sites.
On 'Campaign', you'll find Top 3 Popular sites on each EntreCard Category. You may try to expand into Top 5-10 High Popularity Rating sites on each Category. Select suitable Category with similar interest.

Refrain Dropping on:
a) New sites
Many new sites are clueless about how entrecard system works. Eventhough you drop/advertise on them, they are still confused on what to do.
b) Cheap sites
Usually cheap sites is either new or inactive/unpopular sites.

The beauty of EntreCard system is the Reciprocal element. Entrecard rewards reciprocal behaviour. The more you drop, the more you get drop back.
But, How many Card Drops do you get back? Around 5-50% will reciprocate back. So don't get upset if people don't drop back on you.

Try to improve the Card Drop-Back rate by selectively dropping on:
a) Top Droppers
Many High Popularity Rating site ( Top 5 on each Category) are also Top Droppers. I prefer High Popularity Rating ( usually with High Advertising Rate) site, because they will most likely advertise on you too (ie: indirect bonus).
b) The one who dropped on you before. You can check them on your "Drops Inbox".

5) Advertise often
Once you have accumulated EC points, you can start advertise on other sites. It seems that the more you advertise on other, the system reward you.

My Other Thoughts:
It seems that your Popularity Rating depend on #Organic Clicks, #Advertisement placed on you, #Cards that you drop on other, Your Site Ranking (PageRank, Alexa, etc).

When your Popularity Rating= 0-300, you may experience popularity increase of >20-90/day (with hard work)
When your Popularity Rating=>300, you may experience slower popularity increase of >10/day (with hard work). The higher your rating, the slower your increase.

Why Popularity Rating is important?
1) It increases your exposure.
2) More People will drop on you
3) Your Advertising Rate tend to rise in accordance with your Popularity Rating.
Will you buy advertisement (price: 256 EC) from Popularity=5 site? Of course not.
People tend to buy advertisement from High Popularity Rating site for same amount of advertisement rate.
As more people advertise on you, your own Advertising Rate will also rise indirectly, although not immediately.

I will share another lesson learned on future post. Good Luck & Have a Good Day.


Tuesday, January 13, 2009

Principles on When to Sell Stocks and Which Stocks. Achieve Investment/trading success with thoughtful analysis of investment advice.

5 Principles that guide you to decide Which Stocks to Sell, and When to Sell

Principle #1: Always force yourself to move toward discomfort! Dare to be Contrarian.
Investment/trading success cannot come from actions that make you comfortable. Buying or holding when stocks are high (following the crowd because you cannot abide ‘missing the action’) is a comfort-seeking decision. Likewise, fearful selling in a collapsing and low market is moving toward the comfort of cash - again at just the wrong time. Good decisions involve thoughtful analysis including pro-and-con lists. When leaping in/out rapidly, you've thought of only one side and are moving to what is apparently obvious. The crowd, a few million in size, doing the same thing thus collectively is creating temporary maximum pressure and so a predictable price-reversal point. Hold and/or buy when it is scariest and sell when the majority celebrate their brilliant conquests. Right, contrarian actions are always lonely and very uncomfortable.

Principle #2: Avoid the losers' game of owning favorite stocks for the long term.
Rapid and relentless change (technology, regulation, internationalization, competitors' ascendancy) makes the odds of extended corporate dominance extremely
low. In the five highly prosperous years 1996-2000, of more than 8,000 U.S. stocks, only 20(!) managed to avoid a single down quarter in earnings - a 99.8% failure rate. Companies rarely control the top of the hill for long; those situated there are priced very dearly. Holding them exposes your capital to sudden devastating loss at any sign of faltering momentum.
A tiny number of mutual fund managers compiles consistent above-average records. Their shares are worth holding while individual stocks of current corporate winners are at extreme statistical risk of obeying gravity. Xerox, Polaroid, Memorex, Digital Equipment, Sears, and AT&T are a few examples of the article-of-faith names of a generation ago. In the long term, there is no ‘business as usual’.

Principle #3: Never buy a stock without simultaneously placing a sell order at your target.
Failing to have a target reveals fuzzy thinking. Your target should include all three of these: a price objective, driven by a scenario, in a specific time frame.
If your price is reached, or if the scenario does not play in the anticipated time, you must sell rather than rationalize. Don't buy stocks merely because you like the industry, respect management, or agree with their social goals. Require a driver that will push the stock higher - not those other nebulous ‘reasons’. The object is profit, not good feelings!

Principle #4: Believe deeply in the ‘cockroach theory’ and act on it.
Like those lowly bugs, bad news for a company seldom appears solo; a first disappointment is very likely followed by others. With thousands of stocks available, why remain loyal to under-performers? Stocks are not insulted by your selling them! Move on to what is working rather than sticking with the sleeping dogs or bad ones.
Especially, stocks heavily owned by institutions take long periods to regain money managers' trust and to overcome overhanging stock held by those wishing they'd sold before bad news hit. The widely heralded ‘dead-cat bounce’ after a terrible fall is small and brief.

Principle #5: Untie that second hand from behind your back: become able to sell short!
Undoubtedly you've noticed that stocks both rise and fall. Then why be biased and seek profit in only one of two available directions? Shorting is not unpatriotic, morally wrong, or foolish - just an underutilized tool. Stocks get overpriced (fundamentally) and overbought (technically) exactly as many times as they're cheap and oversold - because prices move in waves, whose tops and bottoms are equal in number. Don't cut your opportunity to half the distance prices move. Would you fervently eschew a raincoat or umbrella because the weather is fair more days than not? Discard this self-imposed limitation!

On my next post, I will share 5 Tactics you can use for deciding Which Stocks to Sell, and When to Sell

Stock Trading, Shares Investment Guide
Fundamental Investing Rules, Investment Strategy that Win, Discover Stocks Trading Secrets from a Insider


Monday, January 12, 2009

Framework of Consulting Contracts and Agreements. Guidelines for Establishing Ground Rules between Consultant and Client.

Framework of the Consulting Contract

Here are the main components in a contract between the client and the consultant:

The definition clause (or interpretation clause). This clause serves two main functions: to define the meaning attached to key words and phrases that appear throughout the contract, and to ensure that the same meaning is attached to those words or phrases throughout the contract. Typically, the definition clause states that “The following words or phrases that appear in this agreement bear the meaning assigned to them in this section:
‘The Consultant’ means Skillsoft Consulting LLC
‘The Client’ means the Government of the United States
‘The Department’ means the Department of Health
‘The parties' means the parties to this agreement
‘The Consulting Services Agreement’ or
‘CSA’ means the Consulting Services Agreement annexed hereto as Schedule A.”

Warranties. Contracts are usually awarded to consultants on the basis of their skill, qualifications, knowledge, and general knowhow, usually as a result of representations made by the consultant that he/she is qualified to perform the assignment. It's always a good idea to include a clause in the agreement in which the consultant warrants his or her abilities to perform the task. Such a clause could state the following:
WARRANTIES: The consultant warrants that he or she has the requisite experience, knowledge, stated professional certifications, and skill to perform the assignment as set out in the Consulting Services Agreement. This warranty constitutes a material representation of fact, which induced the organization to award the contract to the consultant.
If it becomes apparent later that the consultant is incapable of performing the assignment as required or has falsely represented any credentials, the contract can be terminated on the basis of misrepresentation.

The duration of the contract. The agreement should specify both the commencement date and the termination date of the contract. It can also state that the contract may be extended by a further period (for example, six months) by agreement in writing and signed by both parties. Unless the contract is extended by agreement between the parties, it terminates on the termination date.

Duties of the client organization. The client organization that hires the consultant has a duty to provide the consultant with assistance reasonably required for the completion of the assignment, including all information, diagrams, reports, or contracts that are relevant to the completion of the assignment.

Duties of the consultant. The duties of the consultant should include but are not limited to the following:
? Reporting. The consultant should be required to provide a comprehensive report on the assignment by a specific date. The clause should state how the report is to be arranged (including the main headings), how recommendations are to be set out, financial evaluation, and so on. The report that the consultant produces is a fundamental aspect of his or her service delivery, as it lays the basis for far-reaching decisions made by the client organization. You must therefore be clear as to what you hope to achieve with the report, and you should insist on clarity and conciseness in the drafting of the report.
? Records. The consultant should be required to keep records of all expenses and accounts, and to make these available to the client upon request.
? Confidentiality. The consultant should treat as confidential any information supplied to him or her by the client organization or that is otherwise obtained in connection with the agreement. Furthermore, the report that the consultant is required to draft should be confidential; the consultant should not publish or discuss any aspect of the report, or any information that he or she acquires as a result of the contract, unless this is done with the written permission of the client.

Payment. The payment clause should explain how and when payments will be made. The payment clause should also make provision for the payment of expenses (travel, accommodation, etc.) upon presentation of original invoices and receipts.

Intellectual property. This clause should state that all intellectual property rights obtained by the consultant in connection with the agreement belong to your organization, that all documents prepared by the consultant are the exclusive property of the client organization, and that the consultant may only use them for purposes unrelated to the agreement with the written consent of the client.

Indemnity. This clause should stipulate that your organization shall not in any way be liable for any damage or losses suffered by any person arising out of any act or omission of your consultant. This clause serves to protect your organization if your consultant (knowingly or not) violates any laws or breaches any of the rights of third parties in performing his or her duties.

Subcontracting. This clause should specify that the consultant may not subcontract any aspect of the assignment to third parties without the written consent of the client organization; that written consent to allow subcontracting will in no way discharge the consultant of any obligation in terms of the agreement; and that the third party (subcontractor) will not have any claim against your organization arising out of the agreement between himself or herself and the consultant.

Training and development. The agreement may specify that the consultant shall provide training for the client organization's employees assigned to him or her in areas identified by the organization and that arise from the delivery of services in accordance with the agreement. This clause will facilitate skills transfer between the consultant and your organization, thus increasing your own team's capacity to undertake similar assignments in the future.

Termination of the agreement. This clause can stipulate that either party may terminate the agreement in the event of a material breach by the other party or by giving one month's written notice of his or her intention to do so.

Penalty clause. This clause introduces a penalty for failure to deliver the required service in a timely manner. For example, the penalty might take the form of a deduction of a percentage of the amount payable for every day that the service is overdue.

Resolution of disputes. This clause should stipulate that any dispute arising from the agreement should be settled through a process of mediation. Should the mediation process prove to be unsuccessful, the matter should be referred to arbitration.

Appendices. The consulting contract can contain several appendices. Appendices should always be clearly marked as Appendix A, B, C, and so on. Appendices should be referred to and explained in the body of the contract itself. Appendices that are attached without explanation create confusion about their relevance. Reference to an appendix should be made in the following way: "The consultant agrees to conduct interviews with managers in the department listed in Appendix A to this agreement." Appendices are not separate documents from the consulting contract; rather, they form an integral component of the contract. Thus, failure to comply with requirements, specifications, or conditions listed in an appendix can be regarded as a breach of contract.

Ground Rules for Consultant and Client
? Test assumptions and inferences.
? Share all relevant information.
? Focus on interests, not positions.
? Be specific—use examples.
? Focus on issues, not personalities.
? Agree on what important words mean.
? Explain the reasons behind one's statements, questions, and actions.
? Disagree openly and with respect (no hidden agendas).
? Make statements, then invite questions and comments.
? Jointly design ways to test disagreements and solutions.
? Discuss "undiscussable" issues.
? Clarify and refine expectations on both sides.
? Keep the discussion focused.
? Do not take cheap shots.
? All members are expected to participate in all phases of the process.
? Exchange relevant information with all interested parties. Make decisions by consensus.
? Do frequent self-critiques and debriefs.
? Keep what's shared confidential.
? Show up to meetings on time.
? Listen actively and respect others when they are talking.
? Be conscious of body language and nonverbal responses. They can be as disrespectful as words.


Sunday, January 11, 2009

Fundamental Rules for Forex Trading. Dos and Don'ts Guide for Currency Investing. A Foreign Exchange Primer for Everyone.

Golden Rules for Forex Trading.

Here are ten rules that I think are important for trading forex. I divide the list into five Dos and five Don'ts.

1. When trying out a new trading strategy, always test it in a demo account, or with a small amount of money, before you commit more money to it.
2. Always keep a record of each of your trades, with details of: why you got in, how you got out and why it turned out the way it did.
3. Have a personalised trading plan and update it as you learn from the market.
4. If you are unsure of a trade, stay out. It is better to miss an opportunity than to have a loss.
5. When trading, keep up-to-date with both the fundamentals and technicals affecting the market. A trader in the dark is a trader in the red.

1. Don't trade with money you can't afford to lose! It will affect you emotionally, and you will most likely lose it to irrational trading.
2. Don't follow someone else's trading advice blindly. Always know why you argetting into a trade, and how you are going to get out of it.
3. Don't be concerned about being right. Just be concerned about being profitable.
4. Don't over-leverage. Chances are that your account will be decimated before you can recoup your losses and go into profit.
5. Don't revenge-trade the market. Vent your frustrations elsewhere after a loss.

Fundamental Rules for Forex Trading. Dos and Don'ts Guide for Currency Investing. A Foreign Exchange Primer for Everyone.

For more Information:
Forex Trading & Currency Investing Guide
Developing Effective Currency Strategy, Beat the Odds in Forex Trading, How to Achieve Over 100 Trades in a Row Without a Loss.


Saturday, January 10, 2009

BANKRUPTCY PREDICTION. What are indicators of financial distress? What are indicators used in predicting corporate bankruptcy?


Here are some concise points for our Financial Learning Corner.

Will the company fail?
Some key indicators you can use in predicting corporate bankruptcy are:
 Cash flow from operations to total liabilities
 Net income to total assets
 Total liabilities to total assets
 Quick ratio
 Current ratio
 Operating income to total assets
 Interest coverage (income before interest and Taxes o interest)
 Retained earnings to total assets
 Common equity to total liabilities
 Working capital to total assets
 Debt to equity
 Fixed assets to stockholders' equity

Does company size bear a relationship to the probability of failure?
In a study done by Dun & Bradstreet, it was found that small companies had higher failure rates than large companies. Size can be measured by total assets, sales, and age.

What are indicators of financial distress?
Financial and operating deficiencies pointing to financial distress include:
 Significant decline in stock price
 Reduction in dividend payments
 Sharp increase in the cost of capital
 Inability to obtain further financing
 Inability to meet past—due obligations
 Poor financial reporting system
 Movement into business areas unrelated to the company's basic business
 Failure to keep up—to—date
 Failure to control costs
 High degree of competition

A negative net assets (fund balance) (total liabilities exceed total assets) indicates a worrisome deficit position that is an indicator of potential bankruptcy. Cash forecasts showing expected cash outflows exceed expected cash inflows may point to financial distress. If cash is a problem, timely steps may be needed to improve cash flow and solve problems. How long will the current cash position last if all cash inflows were to cease?

A balanced budget, using conservative revenue estimates, is its own way to avoid financial ruin. A balanced budget requires difficult choices, such as curtailment or elimination in certain services or programs.

Answer these questions to gauge the probability of potential failure:
 Is there adequate insurance?
 Does excessive legal exposure exist? What is the nature of pending lawsuits?
 What government adjustments are expected regarding rate charges and reimbursements?
 Is there inadequate control over expenditures?
 Is there deferred maintenance that can no longer be postponed?
 Are loan restrictions excessive?
 What effect will contractual violations have?
 Are costs skyrocketing? Why?
 Are bills past due?
 Is debt excessive?
 Are debt repayment schedules staggered?
 Are more grant applications being rejected?
 Is there a cash shortage?
 Is there a buildup in assets (e.g., receivables)?
 Is a hedging approach used to finance assets by matching against them the maturity dates of liabilities?
 Is there a sharp increase in the number of employees per unit of service?
 Are there open lines of credit?
 Does a lack of communication exist?

Ways to avoid financial problems include:
 Merging with another financially stronger similar company. Will a merger aid in financing, lower overall operating costs, synergy and efficiency, and program expansion?
 Restructuring the organization.
 Selling off unproductive assets.
 Deferring the payment of bills.
 Discarding programs and activities no longer financially viable.
 Implementing a cost reduction program, including layoffs and attrition. But will this eliminate programs that will be hard to start up again? Are we getting rid of scarce talent? Such cuts are referred to as irreversible reductions, which in the long run may not be wise.
 Increasing service fees.
 Increasing fundraising efforts and contributions.
 Applying for grants.
 Stimulating contracts.

For more Information:
Bankruptcy and Debt Management
Distressed Debt Analysis, Debt Management, Financial Distress and Restructuring Process, How to Profit from Financial Distress


Friday, January 9, 2009

Essential Guide to Hiring Consultants. What Consultants Do, What Roles Consultants Play, Reasons to Use a Consultant.

A Field Guide to Hiring/Using Consultants

What Consultants Do
Before we outline the kinds of services an outside consultant can provide to a company or an organization, let's look at what a consultant considers to be his or her overall responsibility:
1. Define the problem.
2. Break it down.
3. Understand the business context.
4. Gather and analyze data.
5. Work with the client team.
6. Make recommendations.
7. Implement solutions.

The Roles Consultants Play
A consultant is called upon to provide technical training, coaching, facilitating, or subject-matter expertise. Let's look at eight broad consultant roles:

Technical expert. A technical expert does not necessarily work with technology (although an IT consultant certainly does). I call a technical consultant an experienced "pair of hands" because his or her value is in the "been-there, done-that" expertise. Technical experts might include manufacturing experts, scientists, programmers, and engineers. Technical experts bring a proven step-by-step framework for exactly what to do, how to do it, when to do it, and when to make exceptions to the rules.
Mentor. The Merriam-Webster's Collegiate Dictionary defines a mentor as "a trusted counselor or guide." Sometimes a consultant is brought in to act as an older, wiser, more experienced individual who helps and guides another individual's development. Mentors usually work with clients individually, but can also mentor work groups, entire departments, or senior leadership teams.

Coach. A coach is someone who provides structure, accountability, and perspective and who will hold you to your commitments to move steadily forward toward your specific goals. Coaches provide insights that help clients find solutions more quickly and effectively than they could on their own. If you have a coach, you'll have someone to complain to or celebrate out loud with, and when you hit a roadblock, your coach will support you and guide you back into action.

Lecturer. Sometimes a consultant is brought in to be "messenger" of good or bad news, but the real purpose of having a so-called lecturer-consultant is to convey or explain information, news, concepts, and practices. In the best cases, lecturers provide highly concentrated and actionable information; in the worst cases, they deliver a dry, boring message or bad news that clients don't want to deliver themselves.

Trainer. Consultants can also be brought in to teach. In fact, the best consultants teach all the time, whether they're officially doing "training" or not. Training can take many forms, from frontline supervisory training to sales training, customer service training, leadership skills, negotiating, communication, executive education programs, technology training, regulatory training, product knowledge training, or motivational training.

Advisor. An advisor can act as a little bit of everything. For example, an advisor might act as part coach, part trainer, and part technical expert. An advisor's greatest asset is his/her experience; he or she provides a sounding board and seasoned advice when it comes to complex issues or difficult decisions.

Facilitator. Consultant-facilitators create arenas for managers, teams, and organizations to solve their own problems using a structured facilitation process. The skilled facilitator's main task is to help the group increase its effectiveness by improving processes and communication. Facilitators act in a neutral manner and make sure that everyone is heard; they resolve conflicts, they systematically work through issues, and they make sure that good decisions get made on the basis of complete information and inclusive opinion-sharing.

Subject Matter Expert (SME). Subject matter experts are humorously referred to as "brains for hire." That description is fairly accurate: These consultants have deep expertise in their subject matter. An SME might be a former professional in the same industry as their clients, or work in a totally unrelated field. Attorneys, medical doctors, labor negotiators, authors, university faculty, and Internet criminals—turned—security consultants are all in this category.

When to Bring in a Consultant (and When Not To)
If you are thinking about hiring a consultant, be sure you really need an external resource. Here are the two basic questions that need to be answered if you are considering external consultants for any project:
1. Are there staff members with the required background, knowledge, and skills available within the organization to undertake the project?
2. Do you need to hire outside help in order to show the importance of the work, satisfy stakeholders, maintain objectivity (or the appearance of such), or for some other reason?

These are the questions you should ask yourself if you are still not sure you should hire an external consultant:
1. Are there sufficient funds designated for an external consulting project?
2. Has similar work been undertaken in-house? (e.g., previous iterations of similar programs)
3. Is there sufficient time and commitment to conduct the work?
4. Is the information or expertise available from other sources?
5. Are there existing measures or indicators of performance?
6. Will existing methods of information collection be useful for the purposes of this project?
7. Is there sufficient objectivity to conduct the work internally?
8. Is there anyone on staff who has training and experience in these specific project-related tasks?

Reasons to Use a Consultant
According to an Entrepreneur magazine survey, here are the top ten reasons organizations hire consultants:
1. Because of his or her expertise
2. To identify problems
3. To supplement staff expertise
4. To act as a catalyst to "get the ball rolling"
5. To provide much-needed objectivity
6. To teach
7. To do the "dirty work"
8. To bring new life to an organization
9. To create a new business
10. To influence other people

For more Information:
Management Consulting Resources
Business Consulting, Management Consulting, IT Consulting, The Consultant’s Toolkit, Consulting Best Practices


Wednesday, January 7, 2009

Entrepreneur Guide to Business Financing Sources - Secured Financing. Business Funding Solutions Using your Accounts Receivable and Inventory.

After showing you some unsecured financing sources on previous post, now let's turn to secured financing sources.

Secured Financing

Secured financing is "backed" by collateral of some specific asset or assets of the borrower. The collateral acts as a backup source of funds for the lender if the borrower fails to abide by the terms of the loan. The collateral for short-term financing arrangements is usually current assets—marketable securities, accounts receivable, or inventory. Below we will describe two types of secured financing arrangements: accounts receivable financing and inventory financing.

1) Accounts Receivable
Accounts receivable can be used as collateral for a secured loan. There are three types of financing arrangements that use accounts receivable as security: assignment, factoring, and securitizing. Securitizing assets, also referred to as asset securitization, is an important financing arrangement for raising short- to intermediate-term funds. In the next chapter we discuss the process of asset securitization.

The simplest form of accounts receivable financing is the assignment of receivables. In an assignment of receivables, the lender makes a loan accepting the borrower's accounts receivable as the collateral. The borrower receives immediate cash in exchange for a promissory note to the lender. This type of financing may be either a non-notification or a notification plan. In the case of a non-notification plan, customers pay the company and the company in turn pays the bank. In the case of a notification plan, the borrower's customers are generally instructed to send their payments to the lender, who uses these payments to reduce the amount of the loan. This type of financing is flexible since the lender increases the loan as more receivables are generated (as acceptable collateral by the borrower) and reduces the loan as these receivables are paid off. Therefore the borrowed amount fluctuates with the needs of the borrower.

A borrower can go a step further in financing with accounts receivable. Instead of simply using accounts receivable as collateral, the borrower can sell them outright to another party—called a factor—typically a bank or a commercial finance company. Selling the receivables—called factoring—may be done with or without recourse. In a factoring arrangement without recourse, the factor performs all the accounts receivable functions: evaluating customers' credit, approving credit, and collecting on accounts receivable. If any of the accounts turn out to be uncollectible, the factor bears the bad debt. If a borrower has an arrangement with a factor with recourse and the borrower grants credit without permission from the factor, the borrower assumes responsibilities for collection of the account.

There are basically two types of factoring, maturity factoring and conventional factoring. They differ with respect to when cash is received for the receivables. In maturity factoring, the customer sends cash to the factor, who then sends the cash (less a commission) to the seller. In conventional factoring, the factor advances cash to the seller when the accounts are factored, and then keeps the customers' payments as they come in. Because factoring is a substitute for having accounts receivable personnel, whether a CFO should use factoring requires comparing what it costs to operate the receivables function with the factor's commission.

2) Inventory
Inventory can also be used as collateral for financing since it is a fairly liquid asset. Not all inventory is of equal importance as collateral: The amount of funds loaned depends on how easy it is for the lender to turn the inventory into cash. In general, (1) standardized inventory is much better than specialized inventory, (2) nonperishable inventory is better than perishable inventory, and (3) raw materials and finished goods are better than work-in-process.

There are several different types of loan arrangements that involve inventory as collateral. These arrangements differ in terms of the control that the lender has over the location and disposition of the inventory. A floating lien is the most flexible type of inventory loan. A floating lien gives the lender a lien on all inventory of the borrower—that is, all inventory is collateral for the loan. Therefore the collateral for the loan changes as the borrower buys and sells inventory.

A chattel mortgage is a loan secured by specified inventory. In other words, inventory items are uniquely identified, such as by serial number, as collateral for the loan. The borrower retains title of the inventory. And although the borrowing firm still owns the inventory, it cannot sell the inventory unless the lender gives permission. This type of loan is best suited for inventory that consists of large, slow-moving items.

In a trust receipts loan, the borrower holds the inventory in trust for the lender. As the inventory is sold, the borrower keeps the proceeds in trust for the lender. This type of arrangement is also referred to as floor planning and is used often with auto dealerships and other types of inventory in which the merchandise is serial numbered. First, the borrower arranges a loan with the finance company. The borrower then orders and receives the inventory, with the finance company paying the supplier. As the borrower sells the inventory items, the borrower remits the payments to the finance company, reducing the amount of the loan. Because the finance company is counting on the borrower to maintain the inventory (keep it in good condition) and send the payments when sales are made, the lender must devise a way to monitor the borrower.

In a field warehouse loan, the lender has tighter control over the inventory. The collateral (the inventory) is kept in a separate, secured area within the borrower's premises and is monitored by a field warehouse agent. This agent keeps control over the inventory in this area and issues receipts to the lender, indicating the existence of the inventory. As the lending entity receives these receipts, it makes a loan based on the collateral value of the inventory. This arrangement is more expensive than the floating lien, chattel mortgage, and trust receipts arrangements because a third party—the field warehouser—must be compensated for the services provided. This arrangement offers the lender more peace of mind over the inventory.

Even tighter control over collateral inventory is maintained in a public warehouse loan arrangement. In a public warehouse loan, collateral inventory is kept in a secured area away from the borrower's premises, such as in a public warehouse, and is only released to the borrower if the lender gives permission. The warehouser issues to the lender receipts (similar to the field warehouse arrangement) from which the lender acknowledges in the form of money loaned to the borrower. In this arrangement, the lender has title to the goods instead of the borrower.

Loan-To-Value for Secured Financing
In financing arrangements secured with accounts receivable, the lender will often limit the amount of financing to a specified percentage of the value of the collateral, measured by the loan-to-value ratio. For example, in the case of accounts receivable, the loan-to-value ratio may be 75% of the anticipated collections on accounts outstanding up to 30 days, but 60% for accounts outstanding 31 to 60 days. In the case of inventory, a lender may specify a loan-to-value ratio of 60% of finished goods, but 30% of raw materials or work-in-process inventory.

For more Information:
Business Finance Resources
Best Practices for Financial Advisors, Guide for Growing Business, Corporate Finance Handbook


Tuesday, January 6, 2009

SHORT-TERM FINANCING - Unsecured Financing. Where to get Funding for your Business? Funding Sources for Business. Small Business Loans and Funding.


Now we turn to short-term financing. In general, these forms of financing are classified as unsecured and secured. The cost of short-term financing is a function of many factors, including
(1) the prevailing interest rates,
(2) creditworthiness of borrower (credit rating),
(3) length of maturity of borrowing,
(4) level of seniority,
(5) collateral, and
(6) backup line of credit.
In comparing the cost of alternative short-term financing arrangements, the you must put the cost on an effective annual basis in order to facilitate this comparison. To do so, the you must consider any discount interest, compensating balance requirements (explained below), and fees.

Unsecured Financing
In some types of financing, the creditor is counting on being paid the promised interest and principal, relying on the general creditworthiness of the borrower. But other creditors want more assurance of being paid back. This assurance is provided in the form of the borrower's property specified to be transferred to the lender if the borrower fails to pay as promised.
A loan that is "backed" by specific property is a secured loan. A loan that is backed only by the general credit of the borrower is an unsecured loan. There are several different types of unsecured loans. We take a look at the more widely used types of unsecured credit: trade credit, bank loans, commercial paper, and bankers' acceptances.

1) Trade Credit
Trade credit is granted by a supplier to a customer purchasing goods or services. Trade credit arises spontaneously as the customer acquires goods or services and promises to pay some time in the future. From the seller's point of view, trade credit is a way of making more sales. From the customer's point of view, trade credit is an easy way to finance the purchase of goods. Once a satisfactory relationship is established between the seller and the customer, trade credit is granted automatically. For the seller, trade credit creates accounts receivable; for the customer, trade credit creates accounts payable.

2) Bank Financing
Banks lend money to firms under different financing arrangements. The financing arrangement may be straightforward, such as a single payment loan. Or a firm may obtain from a bank its promise to lend, such as a line of credit or revolving credit.

A single payment loan is the simplest short-term financing arrangement. In a single payment loan, the borrower negotiates a loan of a specific sum from the lender, usually a bank, and agrees to repay the loaned amount at the end of a specified period.

Short-term bank loans are generally self-liquidating. That is, they are used to acquire assets and the cash flows from these assets are sufficient to pay off the loan. Bank loans are represented in the form of a promissory note, which specifies the amount of the loan, the maturity date, and any interest. With single payment interest, the borrower receives the amount of the loan, paying back the full amount of the loan plus interest at maturity. The interest rate in a single payment loan may be either fixed or floating. Rates are often quoted relative to LIBOR or the prime rate. The prime rate is the rate banks charge their most creditworthy customers.

A line of credit is an agreement wherein a bank will make available to a firm a loan up to a specific limit—the "line"—if the firm requests these funds. The bank extends this line of credit for a specified period, typically one year.
A line of credit is a flexible source of credit. When a firm borrows under a line of credit, it takes out notes payable to the bank, which range in maturity from one to 90 days. A bank may require that the borrower "clean-up" the line—pay off the borrowings completely—for a specified period of time.

A line of credit may be uncommitted or committed. In an uncommitted line of credit, the bank makes a verbal agreement to lend funds up to the line within the specified period, but is not legally bound to do so. In a committed line of credit, the bank makes a written agreement to lend funds and is legally bound to do so under the terms of the line of credit. The cost of the line of credit comprises two costs. First, the borrower pays interest at a specified rate only on the funds borrowed and for the time borrowed. Second, if the agreement is a committed line of credit, the borrower pays either a commitment fee—from 1/4% to 1/2% of the unused portion of the line of credit—or must maintain a specified compensating balance for the period of the line of credit. A
compensating balance is a cash balance in a non-interest-bearing or low-interest-bearing account required by banks in exchange for banking services such as a bank loan. By keeping a balance in an account that is non-interest bearing or low-interest bearing, the borrower is effectively compensating the bank for the loan. In the case of the line of credit, the firm incurs some cost, though likely quite small, even if it does not borrow anything against the line.
In addition to the fee or compensating balance, there may be some covenants that limit the actions of the borrower. Covenants may require that the borrower provide financial statements periodically or that the certain financial ratios, such as a minimum interest coverage or current ratio, be satisfied. These covenants do not usually restrict the decision making of the borrower, but serve to protect the lender in extreme cases.

A revolving credit agreement is similar to a line of credit agreement, but is usually for a longer period—two to three years. The borrower can borrow and repay the credit many times within this period in a series of short-term notes. The cost of the revolving credit comprises two parts: (1) the commitment fee or compensating balance, and (2) the interest on any borrowings under the agreement. Unlike the line of credit, revolving credit agreements usually specify a floating rate. Typically, the borrower and lender renegotiate the revolving line of credit prior to maturity, insuring a continuous source of funds for the borrower.

3) Commercial Paper
Commercial paper is an unsecured promissory note with a fixed maturity issued by the borrower. Almost all commercial paper is backed up by a line of credit from a bank. If commercial paper is backed and the borrower is unable to pay the lender at maturity, the bank stands ready (for a fee) to lend the borrower funds to pay off the maturing paper.
Most commercial paper notes issued in the United States have maturities from 3 to 270 days, but average 30 days. This is because if a security has a maturity of more than 270 days, the issuer must register the security with the SEC. Doing so would delay the issuance and increase the cost of issuing the paper. Though these maturities are relatively short, some firms tend to use commercial paper for financing over longer periods of time. They do this by rolling over the paper—as the paper matures, they issue new commercial paper to pay off the maturing commercial paper.

Finance companies and nonfinancial companies issue commercial paper. Finance companies, such as General Motors Acceptance Corporation (GMAC) and C.I.T. Financial Corporation, are in the business of lending funds to consumers, usually for consumer durables such as automobiles. Finance companies tend to continually roll over their commercial paper since it is the major source of funds to use for their lending business. Non-financial companies tend to issue commercial paper to meet their seasonal financing needs.

Commercial paper is classified as either direct paper or dealer paper. Direct paper is sold by the issuing firm directly to investors without using a securities dealer as an intermediary. The vast majority of the issuers of direct paper are financial firms. Because financial firms require a continuous source of funds in order to provide loans to customers, they find it cost effective to establish a sales force to sell their commercial paper directly to investors. Direct issuers post rates at which they are willing to sell commercial paper with financial information vendors such as Bloomberg, Reuters, and Telerate. In the case of dealer-placed commercial paper, the issuer uses the services of a securities firm to sell its paper.

Although commercial paper is a short-term security, it is issued within a longer term program: U.S. commercial paper programs are often open-ended. For example, the CFO might establish a five-year commercial paper program with a limit of $300 million. Once the program is established, the company can issue commercial paper up to this amount. The program is continuous and new commercial paper can be issued at any time, daily if required.

4) Bankers' Acceptances
A bankers' acceptance is a bank's commitment to pay someone else's promise to pay a specified amount at a specified date as represented by a time draft.

With a bankers' acceptance, the bank is committing itself to making the specified payment at the maturity of the draft if the issuer of the draft does not pay. Bankers' acceptances are typically used in international trade, though they may be used domestically as well. They generally have maturities of less than 270 days. Although there are a variety of ways a bankers' acceptance can be arranged, the basic idea behind all of them is that a letter of credit is transformed into a financial instrument that can be bought and sold in the open market. The cost of a bankers' acceptance includes a commitment fee or commission for the commitment, and the interest rate on the loan if the bank makes the payment on behalf of the issuer.

A bankers' acceptance is similar to commercial paper. They both can be traded among investors, both have maturities of less than 270 days, and both generally have discount interest. But they differ in two ways. The first is the way in which they are created. The second is their risk. Commercial paper is backed by the issuer, which may have a backup line of credit; bankers' acceptance is backed by the issuer, yet the bank stands ready to pay the face value.

The lower risk on the bankers' acceptances results in slightly lower cost than the costs of commercial paper.

For more Information:
Financial Management Center
Tools & Techniques of Financial Planning, Strategic Corporate Finance, The Finance Controller's Function


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