Thursday, May 28, 2009

Four Pricing Strategies for Setting the Optimum Price. Price to Cover Costs. Pricing to Meet the Market. Pricing to Close a Deal.

What Is Your Pricing Purpose?

The right price should meet the requirement of the buyer and seller. If you hit the optimum price, the theory suggests, your customers will be happier, your profits will be higher, and your bottom line will be healthier.

In reality, pricing is far from simple. Setting the optimum price is one of the most difficult decisions managers ever make. Most companies are so bad at it that they leave money on the table.

Pricing is about more than setting prices. Pricing represents a strategy to increase sales volume at a profit while incorporating and communicating critical messages about the value the offering delivers to the customer. In general, most organizations fail to use pricing in such a disciplined fashion.

There are four pricing strategies that organizations typically employ. Let’s take a look at each of these.
1. Price to Cover Costs: Here, you set prices based on your costs and add a reasonable margin. It makes sense to do this because if you always price to provide a profit over your costs, you’ll make money. Right? Not necessarily. There are two problems with Price to Cover Costs. First, your customers don’t care about your costs. They care only about the value you deliver. By ignoring the value that you create for customers, cost-based pricing can keep prices lower than they should be, thus leaving money on the table and reducing profits. On the flip side, pricing to cover costs can actually keep prices higher than optimum, thus reducing sales. The second problem with cost-based pricing is that it allocates overhead and/or fixed plant costs into pricing calculations. Sounds reasonable until you consider that often those costs appear to be variable when they aren’t. If you have low utilizations, your allocations are going to be high, preventing you from dropping the price to increase sales and subsequently the utilization. Again, you either forfeit profits or sales. Sometimes both.

2. Pricing to Meet the Market: If you know that your costing systems inflate the true costs, maybe you use market-based pricing. Here, organizations let the market set the price. We hear about this strategy a lot and on the surface it sounds good. After all, we know that the market alone sets prices. Here’s the problem with Pricing to Meet the Market: We don’t sell to markets. We sell to customers. And customers, being unique, often surprise us by behaving differently than markets predict they will. They ask for a lower price, and we give it to them. In the end, market-based pricing is just lowering price to close a deal.

3. Pricing to Close a Deal: Now we’re on to something. Pricing to close a deal is what business and pricing should be all about. After all, if we can’t price to close a deal, what good is pricing? The process should work to provide us with a profit, right? Well, not really. When you price to close a deal, it provides customers with every incentive to negotiate for lower prices. These customers put salespeople through a meat grinder of price negotiations. The process, in turn, gives salespeople every incentive to respond with lower prices. It undermines their confidence in prices and leaves money on the table.

4. Pricing to Gain Market Share: In this strategy, prices are set low to gain share against a competitor. Again, this sounds like a good idea. We all learned that increasing market share leads to increases in profits. The reality is not that clear-cut. If you already enjoy high market share, it’s true you’re going to be more profitable. But, it’s more likely that you are not the market share leader. In that case, using lower prices to go after market share is risky. You can’t expect to catch your competitors by surprise. Even if you do, the advantage will be temporary. Most likely, the market leader will simply match your price. Lower prices eat into profits of both companies. Customers love a price war.


Monday, May 25, 2009

INNOVATION CHALLENGES AND LEADERSHIP IMPERATIVES. How to create the fresh new insights. How to challenge our core beliefs.

Innovation challenge: How do I (we) create the fresh new insights that lead to game-changing innovations?

Leadership Imperatives
 Use the four perceptual lenses to expand your thinking in four new dimensions: challenging orthodoxies, harnessing discontinuities, leveraging competencies and strategic assets, and understanding unarticulated needs.
 Make these four lenses the foundation of your company’s proprietary point of view on the future.
 Engage a broad cross section of your organization in generating these insights and in validating them.

Innovation challenge: How do I (we) know if we are pushing our thinking—challenging our core beliefs?

Leadership Imperatives
 Analyze your company’s market and competitive situation differently from the way you have done it in the past. Try to get different answers by asking different questions—using the four lenses of orthodoxies, discontinuities, competencies/assets, and customer insights.
 Systematically challenge the way business is done in your company and your industry. You may decide to preserve some of your existing practices, but you should do so knowingly and deliberately, rather than blindly on precedent.
 Include “outsiders” in your innovation process who can bring a fresh view to the table—one that is unbiased by industry conventions.
 Challenge yourself and others to create the richest set of focused discovery insights; have you described well the “unknown, the underappreciated and the underleveraged?”


Stylish and Secure Mailbox

When free post delivery began, in 1863, mailboxes were designed primarily for utility with simple purpose of collecting mail. Today, Mailboxes also serve as a decorative compliment to the overall style of your home and landscape. Modern decorative mailbox looks appealing with the wide selection of designs, materials, colors, shapes and sizes. You can design your own perfect mailbox with customizable features such as color, trim and post styles. Designs include everything from antique to contemporary.

Different Types of Mailboxes
Most mail boxes have secure locks, which ensure that a person’s letters, checks, orders or bills are safe. Mailboxes need to have adequate storage capacity to hold many incoming mails, thus making it convenient for a person who travel for long holiday. Some mailboxes are large enough to collect parcel delivery. There are many variety for Residential Mailboxes. You can choose indoor and outdoor models; post mount to wall mount mailbox systems; single compartment residential mailboxes to multi-compartment residential mailboxes. Some have single slot for collection of outgoing mail, while others have multiple slots to divide the mail into first class mail, internal mail, and personal mail. Commercial Mailboxes can be used to centralize your mail for pick up and distribution. For commercial needs, wide selection of locking mailboxes, cluster units, drop boxes, and wall mounted box units are designed for ease of use and ultimate durability. Commercial Mailboxes includes vertical mailboxes, standard horizontal mailboxes, and private horizontal mailboxes.

Important Features you should look for Residential or Commercial Mailboxes

  • Enhanced Security with the locking mechanism that features an angled incoming mail slot to deter thieves and an anti-pry design to prevent leveraged entry.
  • Expanded, Large Storage Capacity that can hold over several weeks worth of incoming mail and have a spacious outgoing mail compartment
  • Heavy Duty, Durable and Built to Last with weather resistant, rust free, rugged construction. Designed with sealed seams and heavy duty flipper door that can resist heavy rains/snow storms and withstand typical vandal abuse from baseball bats, rocks, or bricks.
  • Stylist mailboxes with customizable design and decorative address plaque.
  • USPS approved (Postal Certified)


Saturday, May 23, 2009

Dealing effectively with Different and Difficult People.

Here are some of the common sense tips on how to deal with difficult people:
 Focus on win/win solutions, providing the other parties with something they need.
 Explain how your suggestions are for the betterment of the company and will help in daily jobs.
 Keep communication on an open, honest, professional level and not be drawn into the toxic conversation.
 Try to understand their viewpoint and cooperate with them, but sometimes you must stand firm and indicate that these are the rules and they need to abide by them.
 Listening and trying to solve their problems.
 Active listening and showing support by echoing back their issue to demonstrate understanding prior to resolving the issue.
 Face-to-face communications are more effective when resolving conflicts.
 Make the issue about the facts and remove emotions as much as possible.
 Difficult people should be treated as any other challenge. As in the game of chess, when it appears difficult, you must continue and get more creative to make things go the way that will be most beneficial to the organization.
 It may be necessary to find other people who share your viewpoint to collaborate with, recognizing that this particular individual may never support your initiatives.
 Adjust communication based upon their personality style, as the security leader is part psychologist. Try to understand their style, determine if they are analytical, visual, or broad perspective-oriented and then try to match the style which makes them most comfortable.
 Engage them and make them part of the process.
 Try to understand the motivations that contributed to their point of view and understand the challenges that they may be facing.


Promoting your product using Trade Shows Marketing

Trade shows marketing can be one of the most cost effective promotion and sales tool for businesses. Participating in trade shows provide "face-to-face" method for reaching hundreds of motivated potential customers. To increase your chances for a successful trade show, you need to develop both strategic & tactical trade show marketing plan. A significant part of your marketing plan includes promotion - pre-show, at-show and post-show. Know your customer and apply different promotional programs for different target groups. Give a compelling incentive to your list of customers and prospects for attending your trade show, and invite them by direct mail, broadcast faxes, advertising, Press Relations, sponsorship, and the Internet.

To compete effectively with many other exhibitors, you need to stand out from the crowd by:
  • Differentiating Your Products/Services;
  • Displaying visual impact & attention-getting trade show booth. Maximize the return on your marketing investment with a high Impact trade show display with custom-printed graphics.
  • Creating high impact, professional presentation or demonstration to enhance memorability and increase sales. Your promoter should know why you are exhibiting; what you are exhibiting and what you expect from them;
  • Providing Giveaways as token of appreciation for participating your show and to increase your company brand recognition.
After the trade show, it is important to follow up your customers promptly.

Trade Show Exhibit Supplier
Camelback Displays is the leader in designing and supplying portable trade show exhibits. They offer one-stop shopping for factory priced trade show exhibits, displays and tradeshow booths. Camelback has handled over 16,000 projects over the years from start to finish for various large and small projects. They offers a wide range of trade show exhibits from table covers, table top display to full island displays using large graphics, truss, pop-ups, panel systems, and hybrid systems. Their lightweight, durable construction, portable displays are quick to ship and set-up. They are customizable to create vivid graphics that captivate your visitor's attention. Their products are constructed using highest quality materials and state-of-the-art processes to meet highest quality standard.


Wednesday, May 20, 2009

5 No-Cost Ways to develop and sustain Motivated and Energized Employees.

No-Cost Ways to Energize Employees

Some of the most effective things you can do to develop and sustain motivated and energized employees cost nothing. They are a function of the daily interactions that you have with employees at work. Consider the power of "the five I's":

Interesting Work. Everyone should have at least a part of their job be of high interest to them. As management theorist Frederick Herzberg put it, "If you want someone to do a good job, give them a good job to do." Find out what tasks your employees most enjoy and use that information in future work assignments.

Information. More than ever, employees want to know how they are doing in their jobs and how the company is doing in its business. Open channels of communication to allow employees to be informed, ask questions, and share information.

Involvement. Involving employees in decision making, especially when the decisions affect them directly, is both respectful and practical. Those closest to the problem typically have the best insight as to what to do about it. As you involve others, you increase their commitment and ease in implementing new ideas or change.

Independence. Most employees appreciate having the flexibility to do their jobs as they see fit. Giving people latitude increases the chance that they will also perform as you desire—and bring additional initiative, ideas, and energy to their jobs.

Increased Visibility. Everyone appreciates getting credit when it is due. Occasions to share the successes of employees with others are almost limitless. Giving your employees new opportunities to perform, learn, and grow as a form of recognition and thanks is highly motivating for most people.


Removing all negative items to fix your credit rating

Do you experience poor credit rating due to Late Payments, Charge Offs, Foreclosures, Judgements, Repossessions, Bankruptcies, Negative Settlements, or Collections? Having a bad or less-than-perfect credit rating will put you into disadvantage situation. You'll find difficulties in obtaining new loans ( home loans, car loans, etc), as many financial lenders don't want to take risk with it. In addition, if you get new loan, you'll have to pay a hefty price by paying higher interest rate due to your poor credit rating. Therefore, strive to achieve positive credit rating, which will give you easy financing and lower interest rate. If you have poor credit rating, try to repair your credit rating with patient and discipline.

There are many companies offering Bad Credit Repair service, but they are quite expensive by charging about $500-$1000 on average by quoting you something like a "$99 set up fee and $39 a month after that for up to 12 months." The drawback is on top of all that they expect YOU to get your own credit report ( an extra $30 fee) and send it to them before they even start working! After they have a copy of your credit reports, they'll go through the negative items and work to get as many of them ( late payments, outdated or inaccurate information, judgments, collections) legally removed as possible. Basically all the negative things that financial lenders, credit departments look at when they decide whether to give you that car, home loan, credit card, or interest rate you want. Well, you don’t need to pay that much if you repair credit with Repairyourbadcredit.

Getting started with Repairyourbadcredit is simple, there's just a one-time setup fee of only $19, and 3 easy payments of $89. Or you can pay all three of your payments from the start, and they'll waive your setup fee. You can expect to see results within as little as 45 to 60 days. Unlike other credit repair company that require you to send your credit reports to them, this Bad Credit Repair service will obtain your credit reports on your behalf and save you an extra $30 fee. It's all inclusive. They will dispute all three major bureaus (Transunion, Experian, and Equifax also known as CSC ) and fix credit rating at a price you can afford, with quality service. After you sign up, you'll receive a welcome letter and an e-receipt sent to your email address. Then friendly representatives will contact you within the next 48 hours. You'll receive updates every week. You'll get the personal attention you deserve, and support is just a phone call or email away. There are truly no hidden fees or unpleasant surprises. Also, toward the end of your program they'll help to educate you with eTraining Smart Credit Course to keep your current credit in great standing and building new, positive credit.


Friday, May 15, 2009

Cost Innovation Challenge — The Chinese Dragons’ Secret Weapon. Powerful competitive weapon with the ability to disrupt global markets.

The Cost Innovation Challenge

It’s clear that cost innovation isn’t rocket science. But it should be equally clear that it is a powerful competitive weapon with the ability to disrupt global markets. By leveraging low-cost Chinese R&D and engineering resources; betting on cheaper, alternative technologies; and riding the open architecture wave, the emerging dragons can offer the world high technology at low cost. By using China’s labor cost advantage in novel ways to increase their process flexibility without undermining efficiency and via recombinative innovation, Chinese competitors are offering increased variety and customization at the same rock-bottom prices as standardized products—transforming the economics of supplying today’s high-priced, specialty products.

Today’s global leaders need to take these unconventional strategies seriously because they expose even products and activities requiring leading-edge technologies to competition from the Chinese—and, worse still, competition that comes completely from left field. Faced with new rules, much of the incumbents’ accumulated experience can be rendered irrelevant. And if an emerging Chinese competitor is able to apply high technology to a formerly lower-technology game, to deliver massively greater variety and choice, or to transform the economics of supplying specialist products, established players on all sides are left with frightening challenges. Those who basked in the high margins of the past are faced with a competitor capable of undermining the foundations of their business model by innovative use of cost advantage to deliver more for less. Those who relied on managing product life cycles to recoup their R&D costs and maximize profitability by gradually migrating new technology from high-end segments to the lower-price, mass market will find this strategy stopped dead if an emerging dragon starts to deliver high technology directly to mass-market products almost from day one.


Big and Tall Man's Problem

I have a big sized uncle. He is Big and Tall, and athletic. Due to his big size, he finds difficult to get suitable clothing, shoes and pants when shopping on Department Stores. So, he needs to go to his personal tailor and shoe maker to get tailor-made clothing, shoes and pants. If you are also Big and Tall man, do you love getting a nicely fitted clothing with famous brand name? You can try Bigmansland, which is the ultimate online source of Big & Tall Men's clothing and accessories for all ages and sizes. Established in 2004 and has become one of the leading retailers of big & tall clothing and accessories online.

Discover Big and Tall Men's Clothing and Accesories from Bigmansland for a great selection of fashionable, high-quality business and casual wear at unbeatable price. They carry an extensive selection of the best brand names and designer clothes, including Nike Golf, PING®, Tiger Woods, Cutter & Buck®, Red House™, TR Gold®, Port Authority®, Signature Port Authority®, Jerzees®, Hanes®, Sovereign Co., Outer Banks®, Port & Company®, Corner Stone™, Sport-Tek®, Creekwood, and District Threads™. Big and Tall Shirts collection includes big and tall polo shirts, big and tall button down shirts, big and tall short sleeve shirts, Big Mens Long Sleeve Shirts, and men's big and tall printed tee shirts. They stock big man's shirt sizes all the way up to 12 XL, and tall man's shirt sizes up to 10 XLT. Big and Tall Pants collection includes big and tall men's Denim jeans, slacks, athletic pants, casual pants and shorts in modern styles, comfortable cuts, and most importantly - in a size that fits right. They also carry Big & Tall Men's Sweatshirts & Sweatpants, Big Mens Jackets & Coats, Big Men's Fleeces, Big Mens Swimsuits (Swimwear), Big & Tall Men's Underwear. Bigmansland's Accessories Line includes backpacks, coolers, blankets and belts.

They have good order fulfillment by carrying a large inventory of 99% of the items advertised. All Ground Priority orders are shipped promptly using either UPS, Fed Ex, or the United States Postal Service for average of 2-10 business days. With Bigmansland's easy return policy, you get full credit back, excluding S&H costs, if you return products within 15 days of the date your order was placed and your returned products are completely unworn with all original tags in place.

  • Extensive selection of Big & Tall Men's Clothing and Accessories
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Shopping for Big & Tall Men's clothing online has never been easier. So get Comfortable, Fashionable, Stylish Clothing at the Quality you expect and the Price you love at Bigmansland.


Thursday, May 14, 2009

The Six Keys to Organic Growth. Grow Marketshare From Within for achieving Sustainability and Competitive Advantage.

Companies worked hard on creating a consistent, seamless, self-reinforcing internal system that drove certain value-creating organic growth behaviors. Organic growth is more than a strategy—it is an internal system. Here are The Six Keys to Organic Growth:

1) An Elevator-Pitch Business Model
Companies have a simple, easy-to-understand strategy and business model that can be explained to and understood by line employees. They also stay focused, are disciplined, and “stick to their knitting” rather than pursue complex diversification strategies. And they evolve through incremental improvement. Big innovations, new business models, and changing industry dynamics or rules are not prevalent. They keep it simple and focus on growing the business incrementally.

2) Instill a “Small-Company Soul” Into a “ Bigcompany Body”
The second key is to be entrepreneurial at the point of customer contact. Companies give employees the power to act to meet customer needs, while having strong central controls over quality, supplies, finance, etc. It is critical giving people with customer contact the authority, power, responsibility, and accountability for results. Companies push “ownership” of the customer down into the organization. And they successfully manage the paradoxes and tensions between entrepreneurship and central control. These companies structure themselves to promote entrepreneurial “ownership.”

3) Measure Everything
Winners are measurement maniacs. They measure not only financial metrics but also key operational metrics (most daily) and behaviors. Metrics are necessary, but they become more value-creating when they are aligned with accountability and rewards. Metrics objectify employee performance and reduce corporate politics and favoritism. Companies do make mistakes. But because of their information and measurement systems, they know about them quickly and can make corrections quickly. They are resilient. They use metrics to give employees frequent feedback and therefore can reduce variances or exceptions.

4) Build a People Pipeline
The companies have engaged, loyal employees and build a multilayered talent pool. They obtain consistently superior performance from line employees on a daily basis and have above-average employee loyalty and retention rates compared with industry averages. And they get this engagement without sacrificing accountability, standards, or quality. In most of these companies, employees are treated fairly and with dignity and respect. Highgrowth companies generally create an environment of stability—regarding strategy and leadership—and emphasize iterative, be-better activities rather than largescale metamorphoses. This macro stability allows the companies to promote from within, giving their employees defined career paths. Employees in these companies “own” their results and their careers, and most even own part of the company. These companies’ management teams are frequently home grown, with long company tenures. Elitism is also rejected in these companies—the trappings of imperial or regal CEOs are absent. For example, Best Buy, Walgreen, and Tiffany & Company have no corporate jets or executive dining rooms.

5) Leaders: Humble, Passionate, Focused Operators
Organic growth companies typically are led by humble, passionate, internally focused operators. The majority of these CEOs are not self-absorbed. They know their success is due to the work of others. Few CEOs came from elitist or privileged backgrounds—most were educated at state schools. Most are operators—engineering types. These leaders fight arrogance and complacency in themselves and their organizations. They are focused on the business—on the operations and on their many be-better initiatives.

6) Be an Execution and Technology Champion
Winners do not have better strategies than the competition. Most do not even have unique products or services. What they do better every day is execute. These companies have engineering-processed most of their value chain and, through technology, have become very cost efficient, productive, and knowledgeable about what is going on inside their companies.
They are into the minutia—high standards (99 percent error-free is the norm). These companies know that they are only as good as their last delivery and that they earn their customers one transaction at a time. These companies use technology to drive efficiencies across their value chain. To them, technology is not a service function; it is an operational function. As such, technology professionals are integrated into functional areas in many of these companies.


Solve your Bad Credit Problem

Are you struggling with your bad credit or less than perfect credit rating? were you late with your credit card payment and accumulating more outstanding payments, thus lowering their credit rating? During recent economic downturn, getting a new credit is more difficult as banks and financial lenders are getting more careful with their lending assessment and approval process. Banks are unwilling to take risk on someone with bad credit. Therefore, debtors with bad credit rating find harder to get new loans or consolidate their debts.

By simply getting new credit card alone will not help you restore your credit rating. To repair your credit rating properly, usually you need to establish at least 3 or more credit lines and re-build good credit history ( ie: pay full balance on time every month, avoid paying financial charges/penalties, use your card sparingly by maintaining a balance that takes up < 30% of your credit limit). Making on-time payments with all of your creditors and maintaining your account balances below the credit limits is the key to changing your financial future.

Here is the good news: If you have less than perfect credit rating and looking to rebuild better credit rating and profile, you can shop around on Creditcardlowdown. They offer specialized cards to people with bad credit. The downside is you have to pay higher interest rate and get low credit limits due to your bad credit rating. When using this specialized Credit Cards Bad Credit, your goal should be to focus on repairing your credit rating so that you can move on to another card with more flexibility. Always try to exercise great discipline and patient when you try to rebuild your credit rating.

The above is a sponsored.


Wednesday, May 13, 2009

When Investors prefer Precious Metal or Gold Investment?

While stock market performance weakened recently, gold price still remain strong at above US$900 an ounce level. Adopting diversified investment portfolio by including precious metals investment prove to be attractive as it provides protection against fluctuation in the stock market. Gold is the preferred safe haven investment option, as it can increase in value during economic or political turmoil. Another conditions on when investors prefer precious metal or gold investment includes:
  • When the investor anticipates instability in traditional capital markets. Historically, when stock and bond markets have fallen, the price of gold and other precious metals has tended to increase.
  • When the worldwide economic or political outlook is one of uncertainty and fear, precious metals tend to be viewed as a more stable and secure investment.
  • When the investor anticipates that the purchasing power of the dollar will be eroded by high rates of inflation.
  • When the value of the investor’s dollars is declining because of international currency fluctuations. For example, when the value of the U.S. dollar declines, the price of gold and other precious metals generally increases.
  • When the investor desires to diversify a portfolio that already contains significant amounts of stocks, bonds, and real estate.

Gold Investment
It is easy to buy gold over the internet now – you can check the gold prices; sell and buy gold coins; build gold investment portfolio and monitor in real time on how your investment is doing. GoldCoinsGain is an Aurum Advisors online resource for gold coin and gold bullion acquisition. Aurum Advisors is one of the respected gold brokerage houses in the country. They help you build gold and precious metals investment portfolio that suits your investment objectives, budget and requirements. They provide expert guidance on whether to buy gold coins, buy gold bullion, buy gold ira transfer or other precious metals.

Gold bullion coins are coins minted and guaranteed by various different governments. You can choose: Gold American Eagle, Gold Canadian Maple Leaf, Gold South African Kruggerrand, American Buffalo, Australian Gold Nugget, Austrian Gold Philharmonic, Chinese Gold Panda.

Certified gold coins, as a general rule, are coins minted prior to 1933. You can choose: $20 Saint Gaudens Double Eagle and $2.5 Liberty Quarter Eagle

Apart from gold coins, other precious metals like silver and platinum are good choices. You can choose: American Platinum Eagle, Canadian Platinum Maple Leaf, American Silver Eagle, Canadian Silver Maple Leaf, Silver Rounds.

It is a wise to build your gold investment portfolio during rising performance of gold investment now. Gold investment offers security and protection during period of economic turbulence. So start investing in gold with goldcoinsgain now.


Choosing the Best Option for your Business. Decision Making Guide for your Business Planning.

Business planning require making fundamental decisions about where the business is moving and how it will develop in the future. What do you personally want to achieve? What long-term objectives do you have for the business? What options are available to achieve the objectives?

Which option is best for my business?
Finding the answer to this question requires a systematic evaluation of the strategic options, in the context of the strategic analysis of the organization.

Three main factors you should consider:

 Suitability: to what extent the strategic options are compatible with the strategic analysis of the organization, its operating environment, and its strengths and weaknesses. Would a particular option make full use of the organization’s strengths whilst at the same time avoiding any adverse impact by its weaknesses or any foreseeable external factors such as changes in legislation or government policy?

 Feasibility: this examines how and whether or not the strategy might work in practice. For example, an option to expand into export markets might not be feasible if the business had no knowledge or experience of exporting and lacked the economies of scale to compete on price against the local suppliers in those markets. Similarly, the option to grow market share by acquiring another business would be totally unrealistic if the business had little or no spare capital and borrowing capacity to finance the acquisition. In the case of the small firm, the feasibility of any option in terms of the firm’s capacity and resources will always be the limiting factor.

 Acceptability: how acceptable and compatible it will be relative to the needs and objectives of the stakeholders in the business. An option that appeals to one stakeholder may be totally unacceptable to another. This is a situation that can frequently arise in partnerships and small family firms, when one partner wants to grow and expand whilst another wants to avoid risk and just consolidate the business. A similar situation might be where one director wants to focus on market penetration for current products or services, and another wants to diversify the business. In an ideal world, the business might be able to follow both strategies, but in small firms the financial resources rarely permit such luxuries.

In order to evaluate the various options effectively, you must ask a range of questions further:
 Which of the selected options are most compatible with the strengths and weaknesses that were identified in the strategic analysis of the business? Do they build on the strengths? Do they avoid or overcome the weaknesses?
 How do the options relate to the opportunities and threats that have been identified, and do they take full advantage of those opportunities? Are they robust enough to withstand any obvious threats?
 What external factors (changes in government policy, legislation, economic trends, etc.) could influence the various options, and would the effects of these factors be positive or negative?
 Are the options compatible with the objectives of the owners of the business, and if this is not the case, are the differences minor, substantial or critical?
 Are there any factors within the options which might be regarded as unacceptable by other stakeholders, such as suppliers, financiers or bankers?
 What risks are associated with each of the options, and are these regarded as acceptable by the owners and stake-holders involved in the business?
 Is the business capable of accommodating or implementing any changes implicit in the various options?
 What are the current limiting factors that might inhibit the options? For example, financial resources, borrowing capacity, physical space, management skills, staff availability and skills, market size and accessibility. How might these limiting factors be overcome?
 Given current resources, which of the proposed options could realistically be achieved by the business in the next three to five years?
 What returns (in terms of increased revenue, cost savings, improved profits, etc.) might we expect from the respective options, and what levels of investment would be required to achieve those returns?


Tuesday, May 12, 2009

Repair Your Credit Rating with Confidence

With continued global financial crisis, many bankruptcies and foreclosures are unavoidable recently. In addition, more people were getting late with their credit card payment and accumulating more outstanding payments, thus lowering their credit rating. At the same time, banks and financial lenders are getting more careful and tightening their lending assessment and approval process. In this situation, debtors with poor credit rating find harder to get new loans or consolidate their debts.

The good news is: If you have poor credit rating and looking to rebuild a fine credit rating and profile, you can shop around on CreditCardsClub. CreditCardsClub provides independent reviews and rating of over 200 credit card applications and other financial products. They provide plenty information on various types of Credit Card and Reward Card ( Low Interest Credit Cards, No Annual Fee Credit Cards, 0% Intro APR Credit Cards, Balance Transfer Credit Cards, Bad Credit Credit Cards, Business Credit Cards, Instant Approval Credit Cards, Cash Back Credit Cards, Student Credit Cards, Prepaid Credit Cards, Airline Rewards Credit Cards, Gas Rewards Credit Cards, Hotel Rewards Credit Cards, Travel Rewards Credit Cards, Financial
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What is interesting, they offer a special Bad Credit Credit Cards, which is suitable for people with bad credit score or credit history, to help rebuild their credit rating. To restore your credit rating properly, usually you need to establish at least 3 or more credit lines and re-build good credit history ( ie: with no late payments). The downside is you have to pay higher interest rate due to your bad credit rating. Read this Credit Repair articles to guide you through the necessary steps to repair your credit record. Always Try to exercise great discipline and patient when you try to restore your credit rating.


Key Accounting Ratios for Small Business. Liquidity Ratios. Borrowing Capacity. Profitability Ratios. Efficiency Ratios. Current ratio. Quick ratio.

Accounting ratios
Given the inherent shortfalls of benchmarking in the small firms sector, the standard and established alternative method of evaluating financial performance lies in the use of accounting ratios. These compare facts and figures gleaned from the annual accounts of businesses, and provide year-on-year data about performance in key areas for comparison. However, as stated above, these data are essentially concerned with internal performance, and do not make comparisons with the overall market environment, although they do facilitate year-on-year comparison. Accounting ratios are primarily tools that can be used to assess the performance of the business, particularly in terms of solvency and liquidity. There is a range of ratios that can be applied to test different aspects of business performance, but we will just concentrate on some of those that are of significance to the small business.

Liquidity ratios
The Working Capital ratio (also called the Current ratio) tests the short-term liquidity of a business. It compares the current assets (cash, stock, debtors, work in progress) to the current liabilities (bills falling due for payment). Ideally, the current assets : current liability ratio should be 2:1. If the ratio is less, then stock levels or credit facilities given to customers may be too high.

The Liquidity ratio (also called the Acid test or Quick ratio) is a more precise measure of liquidity, as it compares the liquid assets of the business (current assets less slow-moving stock or bad debts) with the current liabilities. The liquid assets when compared to current liabilities should show a ratio of at least 1:1 to demonstrate that the business can meet its current obligations, i.e. it can pay its creditors on time.

The other way to check on solvency is to compare the average credit given with the average credit taken. In the first case we take the average outstanding debtors figure x 365, divided by the sales turnover. For example, an average outstanding debt of £20 000 compared with an annual turnover of £240 000 is one-twelfth of 365 days, which equals approximately 30 days. An average credit taken of £24 000 compared with the same turnover equals one-tenth of 365 days, i.e. 36.5 days. It is obviously more advantageous for the cash flow and working capital of the business to give 30 days’ credit to customers, and to take 36.5 days’ credit from suppliers.

Borrowing capacity
The Gearing ratio is more concerned with solvency, as it compares the equity (or share capital) and reserves of the business with its long-term liabilities (loans, mortgages and preference shares), to ensure that loans etc. can be repaid if the business should cease trading. In simple terms, it compares the resources supplied by the owners with the resources borrowed from others, to ensure that the first exceeds the second. The preference shares are lumped in with the long-term liabilities simply because the dividends on these have to be paid before any ordinary share dividends can be considered. This ratio is regarded as a good measure of the borrowing capacity of the business, as the higher the ratio, the better the borrowing potential.

The Asset Cover ratio compares total assets with total debt to determine how many times the debts of the business are covered by its assets. This again reflects the borrowing capacity of the business, as the higher the ratio, the more it is likely to be able to borrow, because it is seen to have the surplus resources to cover further debt. The borrowing capacity is of interest not just to providers of long-term liability funds (bankers, debenture and mortgage lenders, etc.) but to the ‘current liabilities’, the ordinary suppliers and creditors who want to be assured that their credit is adequately covered by assets.

The Net Asset Value compares the ordinary shareholders’ funds (capital and reserves, etc.) with the number of shares issued. This measures the value of the assets of the business that are attributable to each share. So, a business with assets worth £4.00 for each £1.00 share issued would generally be regarded by a lender as being a better risk than one with assets worth just £1.50 per £1.00 share.

Profitability ratios
The Return on Capital Employed (ROCE) compares the profit received from ordinary trading activities before interest, with the sum of the capital employed in trading. It is expressed as a percentage. For example, if the company employs capital of £100 000 and produces a profit from ordinary trading of £30 000, it has made a Return on Capital Employed of 30 per cent. This ratio is of key interest to potential investors. It is also important to remember that if the ratio falls below the average level of interest paid on bank deposits or investments, then the business would be better off not trading, and just leaving its capital on deposit at the bank. In the case of owner-managers, this means that they would be better off shoving their money in the building society or some other form of investment, and getting a job working for someone else. The reduction in stress would probably also increase their life expectancy in the process! The point of this is that if you are working for yourself, you should expect a reasonable return on the time, money and energy you expend in running the business, and that the level of return should be demonstrably greater than that which could be achieved by leaving your money in the bank, and working for someone else (job satisfaction aside). The ROCE provides the means of comparing your results with the softer option.

The Earnings per share ratio compares the net profit after tax, less preference share dividends, with the number of ordinary shares issued. In very simple terms, the amount of tax paid profit that could possibly be distributed amongst shareholders, divided by the number of shares eligible to receive it.

Gross profit compared to turnover is another good indicator of profitability, especially on a year-on-year basis, as is also the operating profit to turnover ratio (gross profit less distribution and administration costs divided by sales turnover). However, these do not always necessarily correspond with each other year-on-year, if changes have occurred in distribution and administration costs during the year.

Another measure of profitability is the comparison between sales turnover and the number of employees in the organization, usually expressed in terms of thousands of pounds per head. Variants include comparisons of operating profit to turnover and net fixed assets to turnover. These ratios tend to be more popular in the USA than the UK, and can influence stock exchange values on the US stock markets. Whilst not particularly relevant to the small firms sector, these comparisons do actually influence the employment policies of large multinationals. Pfizer Pharmaceuticals, for example, employ large numbers of permanent contract staff in their UK locations for security and administrative duties, in order to maintain the ratio to their advantage in overseas stock markets. Those contract staff simply appear as an expense item on the profit and loss account. There is, of course, nothing illegal or improper about this practice, and it creates a lot of opportunities for the smaller local contract companies that supply the staff. However, employment policies such as these might create a false impression amongst individual US investors who had not taken the trouble to familiarize themselves with the details of the policies, or any relevant disclosures in the published accounts.

Efficiency ratios
There are quite a few of these to choose from; for example, the working capital (current assets less current liabilities) to sales turnover ratio tests the number of times the working capital is being utilized each year. This is a measure of how well the business is using its resources, although obviously what is deemed as a satisfactory or good ratio will depend on the market in which the business operates. A wholesaler or retailer of foodstuffs will turn over its stock rapidly, so in turn the working capital will have been used on a regular basis, perhaps weekly. In contrast, a manufacturer of specialist engineering machinery, that could take six months to build, install and commission, may only turn over its working capital a few times each year. This is the contrast between a low-profit/ high-turnover business and a high-profit/low-turnover business.

The same comparison can be made using the whole capital employed by the business in relation to sales turnover to determine how frequently that is being utilized, but again, the outcomes must be reviewed in the context of what is satisfactory or good for the market in which the business operates.

By comparing the ratio of the average stock held against the total value of stock purchased in the course of the trading year, it is possible to determine how fast and how efficiently the stock is being turned over. For example, an average stock of £10 000 compared with a total annual purchase of £730 000 over 365 days would indicate that the stock is being turned over, i.e. sold, every five days. This figure in itself is not particularly helpful unless compared or benchmarked in some way with an industrial average. For example, a branch of Sainsbury or Tesco supermarkets might expect to turn their stock of baked beans over every couple of days, and their bread almost daily, but a furniture retailer, such as Courts, would no doubt be more than happy to turn all of their stock over once each month.

It is also possible to evaluate a whole range of specific costs as a percentage of sales turnover, for example sales costs, marketing costs, production costs, distribution costs, administration costs, etc., in the same way. In their own right, these are not necessarily immediately useful, but when compared year-on-year they can be a good indicator of changing patterns of performance within the business. For example, they may highlight how one cost area might be rising disproportionately in comparison with others, or perhaps to explain why the ratios of gross profit to turnover, and operating profit to turnover, may not be moving in the same direction or at the same rate, as mentioned earlier.


Saturday, May 9, 2009

Education Financing Options - Scholarship, Federal Aids, Private Student Loans

Good Education is the cornerstone for social and economic development. Getting Quality Education is one of the most important investments for your life, your career and your future. With rising tuition and study-related costs, students may need to rely on scholarships, goverment grants or private student loans to finance their study. There are many companies offering financial assistance for students. One of them is NextStudent, the Web site dedicated to education financing, suitable for Undergraduate students, Graduate students, Parents of undergraduate students. They provide plenty resources and information on scholarships, federal grants, low cost federal student loans, private student loans, student loan consolidation, financial aid counseling and advice for parents, college-bound, college, and graduate students.

Education Financing Options
1) Scholarship
Check this free Scholarship Search Engine, which allows you to search online database of more than 69,000 college funding sources comprised of more than 5.9 million individually awarded scholarships valued at over $16 billion. Just enter your personal and academic information, then the Search Engine will select appropriate Scholarships that match your profile. It also provides the funding source's eligibility requirements, due dates, number of awards, award amounts, and contact information.

2) Federal Aids
In addition to scholarship, another source for financing can be found from federal financial aid, like Federal Student Loan Programs and grants. Because federal student loans generally offer more attractive terms ( low-interest, federally guaranteed loans, no collateral and no credit checks, most of which don’t have to be repaid until after graduation ) than private student loans, you should always use your federal financing options first.

3) Private Student Loans
When your education costs still exceed the scholarships and Federal financial aid, it’s time to take advantage of the Private Student Loans Program.
With Private Student Loans, you can cover up to 100% of your higher education expenses. To be eligible for private student loans, borrowers may be either an undergraduate or graduate student enrolled at least half-time in a TERI-approved program, pursuing a degree or certificate-based coursework. Students may borrow the cost of their annual attendance or up to $40,000, whichever is less.

  • Easy Requirement and Fast Approval. No FAFSA required. Applying for Private Student Loans is fast and convenient. Get Instant pre-approval. Applications can be completed 15 minutes over the phone with the help of a borrower's personally assigned Education Finance Advisor.
  • Competitive interest rates and fees. Get FREE Application Fee. The interest rates on NextStudent Private Student Loans are variable rates based on the one-month LIBOR index, as published in The Wall Street Journal. The variable rate will be calculated by adding the current one-month LIBOR index to a margin and then rounding up to the nearest 0.125%. Your interest only capitalizes once, not quarterly like with other lenders. If you apply with a creditworthy co-signer, and you may qualify for a lower rate. Then, make your first 48 consecutive payments on time, and you can request to release your co-signer (you’ll need to meet the loan credit requirements at the time of request). You can take $300 off your principal loan amount when you graduate (with proof of graduation). Get an immediate 0.25% rate discount just for signing up for automatic monthly payments.
  • Flexible Repayment. No payments required unless you become enrolled less than half-time or until six months after graduation. Immediate repayment and interest-only repayment options are also available. Repayment begins no later than eight years after the loan is disbursed (five years’ deferment for undergraduates, three years’ deferment for graduate students). You can start paying with as little as $25, have many repayment options, up to 20 years to repay and may qualify for tax-deductible interest payments. Those with accumulated total student loan balances that exceed $40,000 may opt to extend the repayment term to 25 years. There is no prepayment penalties if you are making more than your minimum monthly payment or paying off your PLUS loan before it’s due.
  • Full Control on your money. Your check comes straight to YOU, not your school. This allows you to take control of your money and avoid the long wait times often associated with channeling the funds through the institution.

Private Student Loans may not be available in all USA states.

It is easy for you to apply for NextStudent Private Student Loans, either by applying online or by calling Toll-Free (800) 299-4639. Friendly Education Advisor will provide professional advise and resources to address your specific financial needs.

4) Federal Parent PLUS Loans
If your student loan aid doesn’t fill the gap, your parents could be eligible for a Federal Parent Loan for Undergraduate Students (PLUS). Under this program, creditworthy parents can borrow up to 100% of the total cost of education for dependent children, less other aid awarded.


Wednesday, May 6, 2009

Budgeting for Finance Managers. Flexible (Expense) Budget. Capital Expenditure Budget. Program Budget. Strategic Budgeting. Activity-Based Budgets.

Here are another important types of budgets:

Flexible (Expense) Budget
The flexible (expense) budget is most commonly used by companies. It allows for variability in the business and for unexpected changes. It is dynamic in nature rather than static. Flexible budgets adjust budget allowances to the actual activity. Flexible budgets are effective when volumes vary within a relatively narrow range. They are easy to prepare with computerized spreadsheets such as Excel. The four basic steps in preparing a flexible (expense) budget are:
1. Determine the relevant range over which activity is expected to fluctuate during the coming period.
2. Analyze costs that will be incurred over the relevant range in terms of determining cost behavior patterns (variable, fixed, or mixed).
3. Separate costs by behavior, determining the formula for variable and mixed costs.
4. Using the formula for the variable portion of the costs, prepare a budget showing what costs will be incurred at various points throughout the relevant range.
Due to uncertainties inherent in planning, three forecasts may be projected: one at an optimistic level, one at a pessimistic or extremely conservative level, and one at a balanced, in-between level.

Capital Expenditure Budget
The capital expenditure budget is a listing of important long-term projects to be undertaken and capital (fixed assets such as plant and equipment) to be acquired. The estimated cost of the project and the timing of the capital expenditures are enumerated along with how the capital assets are to be financed. The budgeting period is typically for 3 to 10 years. A capital projects committee, which is typically separate from the budget committee, may be created solely for capital budgeting purposes.

The capital expenditures budget often classifies individual projects by objective, as for
? Expansion and enhancement of existing product lines
? Cost reduction and replacement
? Development of new products
? Health and safety expenditures
The lack of funds may prevent attractive potential projects from being approved.
An approval of a capital project typically means approval of the project in principle. However, final approval is not automatic. To obtain final approval, a special authorization request is prepared for the project, spelling out the proposal in more detail. The authorization requests may be approved at various managerial levels depending on their nature and dollar magnitude.

Program Budget
Programming is deciding on the programs to be funded and by how much. A common application of program budgets is to product lines. Resources are allocated to accomplish a specific objective with a review of existing and new programs. Some suitable program activities include research and development, marketing, training, preventive maintenance, engineering, and public relations. Funds usually are allocated based on cost effectiveness. In budget negotiations, proposed budgetary figures should be explained and justified. The program budget typically cannot be used for control purposes because the costs shown cannot ordinarily be related to the responsibilities of specific individuals.
Depending on needs and convenience, budgets can be classified as incremental, add-on, supplemental, bracket, stretch, strategic, activity-based, target, and/or continuous.

Incremental Budget
Incremental budgeting looks at the increase in the budget in terms of dollars or percentages without considering the whole accumulated body of the budget.
There are also self-contained, self-justified increments of projects. Each one specifies resource utilization and expected benefits. A project may be segregated into one or more increments. Additional increments are required to complete the project. Manpower and resources are assigned to each increment.
Add-on Budget
An add-on budget is one in which previous years' budgets are examined and adjusted for current information, such as inflation and employee raises. Money is added to the budget to satisfy the new requirements. With add-on, there is no incentive for efficiency, but competition forces one to look for new, better ways of doing things. For example, Konica Imaging U.S.A. has combined add-on with zero-based review.

Supplemental Budget
Supplemental budgets provide additional funding for an area not included in the regular budget.

Bracket Budget
A bracket budget is a contingency plan where costs are projected at higher and lower levels than the base amount. Sales are then forecasted for these levels. The purpose of this method is that if the base budget and the resulting sales forecast is not achieved, the bracket budget provides management with a sense of earnings impact and a contingency expense plan. A contingency budget may be appropriate when there are downside risks that should be planned for, such as a sharp drop in revenue.

Stretch Budget
A stretch budget may be considered a contingency budget on the optimistic side. Typically it is only confined to sales and marketing projections that are higher than estimates. It is rarely applied to expenses. Stretch targets may be held informally without making operating units accountable for them. Alternatively, stretch targets may be official estimates for sales/marketing personnel. Expenses may be estimated at the standard budget sales target.

Strategic Budget
Strategic budgeting integrates strategic planning and budgeting control. It is effective under conditions of uncertainty and instability.

Activity-Based Budget
Activity-based budgeting budgets costs for individual activities.
Target Budget
A target budget is a plan in which categories of major expenditures are matched to company goals. The emphasis is on formulating methods of project funding to move the company forward. There must be strict justification for large dollars and special project requests.

Continuous (Rolling) Budget
A continuous (rolling) budget is one that is revised on a regular (continuous) basis. Typically, a company extends such a budget for another month or quarter in accordance with new data as the current month or quarter ends. For example, if the budget is for 12 months, a budget for the next 12 months will be available continuously as each month ends. Note: Fixed budgets are criticized as being ineffective in a rapidly changing world. Companies report performance on a calendar basis, but floods, stock market crashes, strikes, and a competitor's new product announcement, happen continuously. In consequence, some leading companies have abandoned fixed budgets and changed to rolling forecasts to inspire and lead their companies to better performance. Rolling forecasts direct management's attention towards the future, and ensure that planning is ongoing, as opposed to an annual exercise.


Sunday, May 3, 2009

Top 10 Entrecard Droppers - April 09

I like to thank to all droppers for their continued support.
My special appreciation for the following Top 10 Droppers for April 2009:

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Please visit their great sites.


Friday, May 1, 2009

Different Types of Budgets. Master Budget. Operating and Financial Budgets. Cash Budget. Static (Fixed) Budget.

Types of Budgets

For Finance Executives, it is necessary to be familiar with the various types of budgets to understand the whole picture. The types of budgets include master, operating (for income statement items comprised of revenue and expenses), financial (for balance sheet items), cash, static (fixed), flexible, capital expenditure (facilities), and program (appropriations for specific activities such as research and development, and advertising). These budgets are briefly explained below.

Master Budget
A master budget is an overall financial and operating plan for a forthcoming calendar or fiscal year. It is usually prepared annually or quarterly. The master budget is really a number of subbudgets tied together to summarize the planned activities of the business. The format of the master budget depends on the size and nature of the business.

Operating and Financial Budgets
The operating budget deals with the costs for merchandise or services produced. The financial budget examines the expected assets, liabilities, and stockholders' equity of the business. It is needed to see the company's financial health.

Cash Budget
The cash budget is for cash planning and control. It presents expected cash inflow and outflow for a designated time period. The cash budget helps management keep cash balances in reasonable relationship to its needs and aids in avoiding idle cash and possible cash shortages. The cash budget typically consists of four major sections:
1. Receipts section, which is the beginning cash balance, cash collections from customers, and other receipts
2. Disbursement section, comprised of all cash payments made by purpose
3. Cash surplus or deficit section, showing the difference between cash receipts and cash payments
4. Financing section, providing a detailed account of the borrowings and repayments expected during the period
Static (Fixed) Budget
The static (fixed) budget is budgeted figures at the expected capacity level. Allowances are set forth for specific purposes with monetary limitations. It is used when a company is relatively stable. Stability usually refers to sales. The problem with a static budget is that it lacks the flexibility to adjust to unpredictable changes.

In industry, fixed budgets are appropriate for those departments whose workload does not have a direct current relationship to sales, production, or some other volume determinant related to the department's operations. The work of the departments is determined by management decision rather than by sales volume. Most administrative, general marketing, and even manufacturing management departments are in this category. Fixed appropriations for specific
projects or programs not necessarily completed in the fiscal period also become fixed budgets to the extent that they will be expended during the year.
Examples are appropriations for capital expenditures, major repair projects, and specific advertising or promotional programs.

We'll cover another type of Budgets on next 2 posts.


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