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Importance of Financial Stability Ratios

Common ratios to judge the financial stability of a business concern are gearing ratio, current ratio and liquid ratio. Gearing ratio shows the extent of a firm’s reliance on debt to fund its activities. As the proportion of debt climbs (especially if it exceeds 65 percent of total funds for most businesses), the greater the risk of financial distress. This is the downside of financial leverage – It increases the financial risk.

Current ratio measures the number of times the current assets of a firm cover its current liabilities. This is a measure of solvency: the capacity of a firm to pay its debts through the normal cash cycle, selling inventory on credit, collecting debts and paying creditors. This ratio must normally exceed 1:1 and should be closer to 2:1. It should also be noted that an excess of current assets will result in poor asset utilization.

Liquid or quick ratio is a more tighter measure of short term financial stability. It measures the firms ability to pay its current liabilities from its liquid assets. Liquid assets are cash or near cash resources. In practice liquid assets include cash, bank, short term securities and accounts receivable, the assets that be readily converted into cash to meet immediate calls for payment from lenders and suppliers.

Accounts receivables are normally included in liquid assets, as they may be sold to a finance company at a discount for later collection from debtors. This is called debt factoring. Debt factoring is not common in all the countries. Debt factoring is used as a means of managing the cash flow from operations, rather than trying entity’s funds up in accounts receivable. In arriving at liquid assets, the principle exclusion from current assets is inventory. As this may take some months to sell – and then often to credit customers – it can be many months before cash is collected from inventory. Among the current liabilities may be some debts that may not be due for many months. These may be excluded in calculating the liquid ratio. Examples include tax payable and a current portion of long term debt, both of which may not be due for some months. However, such adjustments should only be made if the repayment dates are known and are over six months later than balance sheet date.

One common (but risky) adjustment in calculating the liquid ratio is to exclude bank overdraft from current liabilities. This is not recommended. When a liquid ratio declines towards (or below) the 1:1 level (including overdraft), this is most likely time that the bank will require repayment – on demand. Hence, an overdraft should only be left out of this calculation when the firm is perfectly liquid – When it does not matter anyway!

As these ratios are based on the statement of financial position, they represent only a ‘snapshot’ of the financial stability of the business, taken at one point in time. These ratios can be manipulated by referring payments or delaying purchases until …

Tips to Help Your Business Grow, Even When You’re on a Budget

Lately I’ve had the opportunity to connect with some amazing individuals that are on the cusp of something great. The challenge is how to build you business while on a budget. It’s funny what a taboo word that is, in fact many times our new clients don’t even want to bring it up. Money is an awkward conversation, and I get that.

But what’s more awkward is having the feeling that you’re not meeting the client’s needs or causing them stress, because the conversation around budget hasn’t been honestly had. You’d be surprised, in our conversations, the brainstorming sessions that occur, all around concepts the client can do themselves, with little or no expense. Right off the top, there are numerous community organizations that are looking for guest speakers to offer workshops, they manage all of the promotion, can fill seats, and while it may not be a big revenue stream, it can be a source for testimonials and referrals. Sometimes you don’t know until you ask!

So how do you grow your business, on a budget. Here are our top 5 tips:

  1. Understand what your time is worth – and use it wisely. If you know an hour of your time can be billed for $100 and hour, and you just spent an hour on Facebook checking out what your friends have been up to – then that hour on Facebook just cost you $100. Was it worth it?
  2. Have disciplined office hours – set an alarm, get up, get dressed and get to work. Have a start time and an end time, and do not do laundry, get groceries, vacuum etc. during work hours. If you wouldn’t do it at the office, don’t do it from your home office. Don’t multi-task – FOCUS!
  3. Take an inventory of what you do really well and love to do, and what takes you too long and is outside of your skillset. If you spend too much time trying to figure it out, how much is it costing you versus the investment of having someone else do it for you. Virtual Assistants are great for that, have flexible hours, and because they don’t work just for you, they can work as much or as little as you need. In your first discussion with a VA, get the budget discussion out of the way, you may be surprised the suggestions and resources they can pull in to keep you on track.
  4. It takes a team! Now, I don’t mean a team of support staff (although you’ll get to that point), but align yourself with individuals that compliment your business, that you can refer people to and they can return the favor!
  5. Balance – succeeding doesn’t mean working 24/7, even if sometimes it feels that way! Balance work time with family time, office time with networking time. Let that balance change as your business does, and accept that it can change. What does balance have to do with budget? Absolutely nothing. But it is

Getting Into the Bulk Fuel Delivery Business

Whether you own your own gasoline business or if you own a fleet of trucks, having your own bulk fuel delivery company may be just what you need for the future success of your business. It will help you get your own fuel in large amounts at discount prices so that you can save money. There are several steps that you need to follow to get your new business up and running.

The first step that you need to do is to write a plan for your business for your lending institution of choice. This forms the backbone for your company and consists of your vision and mission for your bulk fuel delivery business. This business plan helps the lending institution determine how much risk is involved in financing your business.

It is also important to check out all the competition so that you can see what you will be up against if you get your business off the ground. You can usually get the lists of businesses on the Internet, your chamber of commerce, or your local phone book. Once you have researched the competition, do what you can that will make you stand out in your city.

Another thing to consider if you want to own your own bulk fuel delivery business is to talk to other business people in the industry. More than likely, those in your town will not talk to you because they are the competition and they are not interested in helping out someone who will compete with them. However, someone from another part of the country may be a good source of information as you will not pose as an immediate threat to him.

You do have a couple of options that you need to consider when trying to determine what direction you want your business to go. You can either start up your own from scratch or you can purchase an existing business. If you choose to start your own, you have control of what goes on, but often, lending institutions resist funding new businesses due to lack of history. On the other hand, acquiring a known business is not as big of a risk, so lenders are more willing to finance you.

A third alternative is to purchase a recognizable business franchise. You can find out what is available by searching your local business directory or checking the various websites of possible companies that may offer franchising opportunities in your area.

Doing the proper research may even lead you in a completely different direction, or even to a new town. Your own bulk fuel delivery business may be just what you need to help your fleet be more competitive and efficient.…

SWOT Analysis of Network Marketing For Business Owners

For business owners who are curious to learn about the distribution method of network marketing, here is a SWOT analysis of the industry.

Strengths:

For decades business owners have noticed that word-of-mouth advertising is one of the most powerful methods of advertising. Companies who distribute their products in network marketing can experience exponential growth because of the viral effect. Everyday people can become distributors for your company and bring the products to their local market. This is based on the philosophy that people are willing to purchase products or services more readily from people they know and trust, rather than from a sales rep.

Compensation is performance-based as there is often a pay grid in place for satisfying certain quotas. Having this kind of pay structure in place reduces the risk for the business owner for if a new distributor does not perform, the financial burden of obtaining the new distributor / associate is minimized. Customers are loyal to both the Independent Distributor representing the company and the products. Products are usually consumable which creates repeat orders therefore increasing sales from one quarter to the next is common.

Weaknesses:

As business owners we will want to cover the weaknesses as part of our SWOT analysis of the Network Marketing industry. The first and obvious weakness is that the growth of the company becomes dependent on the strength of your distributors. This is not completely out of a business owners' control but can be difficult to influence. The compensation is the main motivating factor for distributors. Retention of distributors is a problem right across the industry. As it is easy for a distributor to join a company, it is just as easy to leave. This model of distribution works best for products or services that are consumable. This creates repeat orders which ideally can be set up on a monthly cycle. Works best for products between $ 30 and $ 180 which makes it affordable for customers, and still profitable for the company.

Threads:

Having a look at the Threats portion of our SWOT analysis of the industry, down line raiding can occur at any time. Down lines are referred to as a group of distributors who work and benefit from one another. If a key distributor decides to join another company and bring their team, a portion of sales can be loss. Having incentives and agreements in place is the best way to avoid this situation.

Another threat to the business owner and company is that distributors are free to promote in the field following certain guidelines. These guidelines may not always be followed resulting in possible lawsuits or defamation of the company's brand.

Opportunities:

Expanding into new markets is on top of the list of opportunities as part of our SWOT analysis of network marketing. As people are happy with the products in one market, distributors will be ready to move to expand into a new market. This will also be possible due to the low marketing budget needed …

Best Jobs to Meet Women – How to Make Money and Meet Girls

What could be better than making money while meeting beautiful women?

Answer: Not Much!

Let’s face it, most of us have pretty crappy jobs. Why do we think they’re crappy? Well, salary aside, our jobs are the things that take up the MOST time in our day!

And if you’re single, that’s time that can be put to use meeting gorgeous girls to have fun with.

So if you can somehow “meld” work and play, you’ll not only be able to make rent this month, you’ll also be much, much happier!

Now, you can meet hot women in pretty much any job you can think of, but some jobs are actually better than others when it comes to meeting girls.

The criteria for these jobs are:

1. The job attracts lots of women to it.

2. The job requires you to interact with the women in some way.

3. You’re in a position in the job that makes you attractive to women.

So while I’m sure there are methods for meeting hot girls while flipping burgers at McDonald’s, for the sake of discussion, I’m going to focus on just five jobs which I think are the BEST for meeting super-hot girls, and don’t require a great deal of skill or training to do. (Because let’s face it, being a famous movie star or musician is hands down the best, but that’s usually limited to a select few lucky guys.)

So let’s begin…

Club Promoter: Club promoters are everyone’s “best friend.” They can get you the hook-ups at the hottest clubs, help you jump the line, get you free drinks — the works. So if you are a club promoter, all the girls want to know you!

Luckily, the only requirement for being a club promoter is to get people to show up to clubs. If you talk to the manager of the club and get to know him, you can get all sorts of benefits which make you the “guy to know” for all those hot club chicks.

Unfortunately, club promotion doesn’t pay that well, or at all in some cases, but hey – the perks are great! And you can do it in your spare time if you have another job.

Bartender: Everyone in the bar interacts with the bartender, and the hot girls love to flirt with the bartender as well! Being a bartender not only gives you an opportunity to meet everyone who enters the bar, but it also gives you an excuse to chat with anyone sitting at your station, including the super-hot ladies!

It doesn’t take much skill to be a bartender, but the hours can be brutal, and depending on where you bartend, the income can vary – as can the quality of women! Bartending at a hip nightclub can be much better than that crappy dive bar near your place, but regardless, few bartenders ever go home without at least one number at the end of the night. Not only that – your …

How to Earn 6-Figures in Holistic Nutrition

Does this story sound familiar to you?

You graduated from nutrition school totally jazzed about building your holistic nutrition practice.  You thought you had all the pieces in place for a successful nutrition business – the counseling program, the website, the business cards, the brochure, and the fire inside to spread your message about holistic health and nutrition.  You’re doing workshops, meeting referral partners, launching events, and coaching clients…you’re working your butt off!  And yet you’re almost dead broke.

I know your story, because I had the same experience!

Until one day I realized….why waste your valuable time and money building your practice using unproven strategies and trial and error, when it’s possible to discover the biggest mistakes – and the most effective strategies – of Holistic Nutrition Professionals who have careers that are already thriving?

I mean, how much money and time could you save if you could analyze, understand and MODEL real-world, profitable holistic nutrition practices?

With this in mind, I interviewed ten top holistic nutrition pros to discover EXACTLY how they built their booming careers.  And I learned that there are three keys to success in holistic nutrition.

1.    Passion

Most holistic nutritionists got into this career because they had a personal experience with nutrition that utterly transformed their own lives. They have a deep, burning conviction in the transformative power of nutrition, and a driving desire to help other people experience that transformation.

2.    Persistence

Would you believe that even Dawn Jackson Blatner, author of the best-selling “Flexitarian Diet” and featured nutritionist in magazines and TV shows all over the country, was turned down over and over again for almost every job she got? Even this brilliant and gifted nutritionist, who has made an indelible mark on the industry, had to push past “NO” a hundred times. 

Kathie Swift, Dr. Mark Hyman’s featured nutritionist in “UltraMetabolism” had to spend years convince top doctors about the benefits of nutrition and functional medicine before she could help create the now world-renowned nutrition and medical programs at Canyon Ranch Spa and Resorts.

These trailblazing holistic nutritionists had a driving passion for their work, and they simply didn’t take “no” for an answer!

3.    Passive Income

There is no doubt about it – the most successful holistic nutritionists are able to go beyond the traditional model of seeing individual clients and being paid by the hour.  These savvy nutrition pros know exactly how to package, price and market their services, so that they have products and services practically selling themselves when they’re asleep, at the gym, or on vacation at the beach!

By leveraging this kind of passive income stream, the top holistic nutrition pros have been able to easily explode their practices into the six-figure mark and beyond.

So what does studying and modeling the careers of successful Holistic Nutrition Pros mean for you?

If you’re someone with a passion for nutrition, who wants to turn that passion into a career…

It means that it IS …

How Venture Capital Is Different From Traditional Financing?

Venture capital is a new form of financing that has come as a boon for young entrepreneurs and it plays a strategic role in financing small scale enterprises and high technology and risky ventures. In all the developed and developing nations it has made its mark by providing equity capital, so, they are more like equity partners rather than financiers and they are benefited through capital gains.

As young and growing businesses need capital at the right time, not only to float their company in the market, but also to survive in the long run. When financial institutions like banks and other private financial organizations hesitate to take the risk of early stage financing, since the credibility of the budding firm is not established, venture capital firms comes into the foray to fund the project in the form of equity which can be termed as “high risk capital”.

Although there is a misconception that the interest of venture capital firms are mainly driven by cutting edge technology in the industry, it is not always the case with all venture capital firms. A venture capitalist associates high risk with huge profits. Of course after thoroughly analyzing the prospects and consequences and the viability of the project. The venture capitalist becomes a partner with the entrepreneur in his business. True venture capital financing need not confine itself to high end technology products, any risky idea with great potential can be financed and venture capital is an all powerful mechanism to promote and institutionalize entrepreneurship.

Mainly venture capital focuses on growth. A venture capitalist is very much interested to see a small business growing into a larger one. He assists in setting up the business, funding it and comes all along to seethe firm grow. If it is a potential equity participation, the venture capitalist can come out of the partnership once the company becomes profitable and take back his money by selling the shares or convertible securities. If the firm opts for a long term investment from the venture capital finance, the financier has to develop an investment attitude for a long term, say five or ten years to allow the company to make large profits.

Another form of financing is that the venture capitalist has his hands on management by which he becomes an active participant in the operations of the firm and his thinking is streamlined as to how to multiply and make quick money which is a win-win situation for both sides. Not only finance, the venture capitalist also contributes to marketing, technology upgradation and management skills to the benefit of the new firm.

The venture capitalist’s management approach is significantly different from that of a banker whose prime concern is collaterals and securities in the form of assets. He keeps his hands off the management and plays safe. The venture capitalist can also not behave like a stock market investor who invests money without having thorough knowledge about the company’s business and management. He combines the qualities of …

Importance of Acquiring Knowledge in Business

Knowledge is a resource referred to as knowledge capital or intellectual capital in a business. It is the essential element that allows businesses to operate in the market sector. The knowledge of the organization is within the human capital of the organization. Despite the rapid global changes, knowledge addresses key issues that can lead to successful management within organizations and can be used as leverage in collective bargaining of existing knowledge and creating new ones.

Understanding customers’ needs and the business environment is a huge interface of information. If a market research is done, then the knowledge of the market can be integrated to the target clients specifically in developing new products/ services and improving existing ones.

Having knowledgeable staff sets the business on a competitive edge because it helps the business run more smoothly and efficiently. For example, knowing customers’ needs and feedback to develop products or services to ensure that their needs are met.

Moreover, monitoring and reporting the changes in the business world is also needed. Knowledge in building networks by professional associations and trading partners can provide an easy way to find out what the competitors are doing and to see the latest innovations in the market sector. Making product research and development is a vital source of knowledge that can help in retaining competitive edge.

Furthermore, using knowledge more effectively can improve goods/services offered. It can increase customer satisfaction. Knowledge of the market can result better awareness of what customers want and what the staff require. Knowledge or information sharing can also improve staff productivity.

In order to manage the utilization of knowledge, there is a need to build a culture in which knowledge is valued across the business to retain the competitive advantage and understand the characteristics of the target market.

Knowledge of the business can help entrepreneurs evaluate and understand the needs of potential customers and develop products/ services that meet customer satisfaction since possible customers show different behavior patterns and preferences such as brand loyalty and the like.

Through knowledge acquisition, business supply chain management is visible everywhere and anywhere. It leads to faster growth and development. It also impacts the competitive advantage and become strategically important to understand knowledge transfer in a more predetermined fashion. The sustainability of organization depends largely on the acquisition of knowledge with a continuous learning process.

Hence, knowledge is vital to any organization because it empowers entrepreneurs to take informed decisions, improve services, produce better marketing decisions and increase profitability.…

Business Ethics – 6 Basic Principles of Business Etiquette

One of the most important, if not the most important factor in determining the chances of success in any business or professional activities is the ability to behave properly with people. Even in the early 1930s Dale Carnegie observed that the success of a man in his financial affairs, even in the technical field or engineering are fifteen percent dependent on his professional knowledge and eighty-five percent on his ability to communicate with people. In this context it is easy to explain the attempts of many researchers to formulate and justify the basic principles of ethical business communication or, as they are often called, the commandments of personal public relation or “business etiquette”. Business etiquette or the process of survival and succeeding in the business world could be explained in the following six basic principles:

  1. Punctuality (do everything on time). Delays affect the work and are a sign that a person cannot be relied upon. The principle to do everything on time applies to all service tasks. Experts studying the organization and distribution of working time recommend adding extra 25 percent to the time period that is required to perform the assigned task.
  2. Privacy (do not reveal too much). In any institutions, corporations, or particular deals there are secrets that should be kept as carefully as the ones of a personal nature. There is also no need to recount anyone heard from a colleague, supervisor or subordinate about his or her performance or personal life.
  3. Courtesy, friendliness and affability. In any situation it is necessary to behave politely, kindly and benevolent with customers, clients, customers and co-workers. This, however, does not require being friends with everyone whom you communicate in a work setting.
  4. Attention to people (think of others, and not only of yourself). Attention to the people surrounding you should be extended to colleagues, superiors and subordinates. Respect the opinions of others; try to understand why they have formed a particular point of view. Always listen to criticism and advice of colleagues, superiors and subordinates. When someone questions the quality of your work, show that you value the views and experiences of other people. Confidence should not prevent you to be modest.
  5. Appearance (dress as expected). The main approach is to fit in your environment at work, and within that environment – in your level of contingent workers. You should look the best way, which is to dress with taste, choosing matching colors. Carefully choosing accessories is important.
  6. Literacy (speak and write good language). Internal documents or letters to outside agencies should be composed paying attention to the proper language used, and all proper names transferred without errors. Do not use abusive words. Even if you only quote the words of another person around, they will be perceived as part of your own vocabulary.

Rich Dad Mentality Vs Poor Dad Mentality

This is the second in a series of articles based on the groundbreaking best-seller “Rich Dad, Poor Dad” written by Robert Kiyosaki. As stated in the first article, the book compares the mindset of Kiyosaki’s father-who held several degrees and an important position in the government, but struggled financially–, with the mindset of his best friend’s father-who never even finished high school but left his son a financial empire. In his book, Kiyosaki explains that the mindset held by each of these two men, his “poor dad” and his “rich dad”, was largely responsible for each man’s financial destiny.

The following quote by T. Harv Eker, author of “Secrets of the Millionaire Mind”, refers to the concept of a rich person’s mindset: “Rich people have a way of thinking that is different from poor and middle class people. They think differently about money, wealth, themselves, other people, and life.” Kiyosaki expounds this same principle in “Rich Dad, Poor Dad”.

Below you will find seven mayor differences between the “poor dad” and the “rich dad” mentality:

1. The “poor dad” mentality states that your wealth depends on your family of origin. That is, to be rich you have to be born rich. “Rich dad” espoused the view that being rich or poor is something that you learn. You can learn to think in ways that will support you, and you can raise your financial IQ by reading books on finance, talking to financially successful people, and attending seminars and lectures. When you have the right belief system and the necessary knowledge on how to create, build, and protect wealth, you will become rich even if you were not born into a wealthy family.

2. “Rich dad” taught Kiyosaki that he should get a job to learn and to acquire the necessary skills so that he could go on to start his own business. “Poor dad” saw his job as his source of income for life. While “rich dad” taught Kiyosaki to strive to become financially independent, “poor dad” taught him to depend on his employer for his financial well being.

3. When faced with an opportunity, “rich dad” would ask himself: “How can I afford this?” This forced his mind to think and to come up with creative solutions to be able to take advantage of the opportunity that had presented itself. Instead, when presented with an opportunity, “poor dad” would dismiss it by saying: “It’s too bad I can’t afford this.”

4. While “poor dad” stressed scholastic education, “rich dad” always stressed financial education.

5. For “rich dad” the main cause of poverty or financial struggle was self-inflicted fear and ignorance. “Poor dad” blamed the economy and the job market. That is, “rich dad” always took responsibility for himself and felt that he created his circumstances, while “poor dad” often felt like a victim of the outside world.

6. As for risk taking, “rich dad” taught Kiyosaki to learn to manage risk. “Poor dad” taught him that when it came …