Home Business Page 2

Business

Leverage

Leverage

The Business Behind a Leverage


Leverage is a basic term for using any technique to increase or multiply gains and losses. Leverage can be done by using borrowed funds, using derivatives, and buying fixed assets. For example:
A company or public corporation can borrow money to leverage its equity. This means that the more the company borrows, the less capital it requires. Any losses or profits are then shared with a smaller base and as a result, are proportionately larger.
Hedge funds can be used to leverage assets through using their derivatives. By posting a certain value of cash as a margin, it may be possible for the hedge fun to get losses or gains on a larger value.
A business entity or company can buy fixed assets to leverage its revenue. Doing so will increase the proportion between the fixed costs, as opposed to variable. This will allow for a change in revenue that then gives a larger operating income change.
While the potential of getting a higher amount of profits is appealing, the obvious risk of leverage makes it somewhat risky. Leverage allows for a chance of multiple losses. Any corporation that winds up borrowing too much can face the possibility of bankruptcy or severe financial struggle when experiencing a business downturn. Meanwhile, a company using less leverage may have a better chance of surviving. For example:
If an investor purchases a stock that has a 50% margin, the investor can lose 40% of his money if the stock only declines 20%.
There is a very important implied assumption in looking at an account that has leverage versus an identical one that does not have leverage. In a situation where a company borrows money in order to modernize, expand internationally, or add new items to its product line, any additional diversification may potentially offset the additional risk from leverage even further.
Another situation is if an investor uses a certain fraction of his portfolio in order to margin stock index futures and ends up putting the remainder in a money market fund. In this case, the individual may have the equal amount of volatility and same predicted return as another investor who is in an unlevered equity index fund, which will have a limited downside.
Ultimately, adding leverage to a certain given asset will always add risk. However, this does not necessarily mean that a company with leverage or an investment with leverage is always riskier than one without leverage. It is very possible for a fund that has high leverage to have even less volatility in return in comparison to the funds without leverage.

Balance Sheet

Balance Sheet

The Basics of a Balance Sheet


A balance sheet is a financial statement of position at a given point in time. It gives a current or snapshot summary of the liabilities and assets of a company, business partnership or sole proprietorship at a given date, for example at the end of a financial year. 
A balance sheet as three main parts
Assets
Liabilities
Ownership Equity
The capital is given by finding the difference between the assets and the liabilities, which is also known as the net worth or net assets.
The International Accounting Standards Board has created standard guidelines balance sheets used by businesses.
Assets
Current Assets
o Cash and its equivalents
o Accounts receivable
o Inventories
o Prepaid expenses to be used in year
Non-Current Assets
o Investment property
o Property and equipment
o Financial assets not included in current assets
o Investments
o Intangible assets
o Biological assets
Liabilities

Accounts payable
Financial Liabilities
Liabilities and assets for tax
Deferred tax liabilities and assets
Provisions for warranties
Unearned revenue not yet provided

Equity
Issue capital or reserves from the controlling interest
Non-controlling interest in the equity
A personal balance sheet shows both current and long term assets such as account balances, as well as real estate. It also shows liabilities such as mortgages and loan debt. A value for personal net worth can be calculated as the difference between the assets and liabilities.
For a small business, assets would be things such as inventory, accounts receivable, cash, land, building and other assets like patents while the liabilities would be the expenses, long-term debt, and the accounts payable. The equity of the small business would be the difference between the assets and liabilities.
While self-employed individuals or partners and partnerships do not have to submit balance sheets on their tax returns, many of the financial details are still needed. Limited liability partnerships and limited companies do have to produce a balance sheet for their annual accounts. They then get submitted to HM Revenue and Customers shareholders, and the Companies House.
Balance sheets can sometimes be given to other individuals or parties such as trade unions, employees, potential purchasers, government departments, or potential lenders.
Having a proper balance sheet makes it possible to determine just how solvent a business, how the company or business is financed, how much of the capital is being used, and how much money can be converted into cash. These values can change dramatically in a short period of time, but the total amount net assets will not change rapidly under the company receives large changes in profits or losses.

Business Idea

Business Idea

Is a Business Idea a Good Idea?


In order to build a successful business, it is important that the business idea can create a viable service or product. By figuring out whether one’s business idea is a good idea at the beginning can help create the foundation for this business and then measure its progress.
Developing a Business Idea
A new and innovative idea is usually the foundation for starting up a business. This idea can often fill in a gap in the free market. Here are some questions that may help identity a good business idea
Are there any skills that could be the foundation for a new business?
Is there a gap in the industry that an individual currently works in?
Was there a time where there was a product or service needed but no one could serve or provide it?
Are there any hobbies that could be made into a business?
After finding a good business idea, it must be refined through research. The market should be looked at to see whether the idea would fill any gap. It is also important to look at whether any social trends or innovative technology work in favor of the idea.
If there is a potential market for the new business idea, the idea must then be properly developed in order to satisfy the needs of the market. If an idea cannot realistically be developed, it should be dropped before too much money or time is put into it.
Some important steps in development include:
Designing the idea into a service or product that can be sold
Creating a prototype that can be tested
Patenting the product
Financing the product and business
Physically setting up the business
Marketing the service or product
Throughout this process, if all points are not done successfully, it is important to reevaluate the business idea to see whether continuing is worthwhile. Some situations that may require reevaluation include:
Competition with others who are releasing a similar or identical product, particularly if they are a well-established business
Developing a service or product that is not viable technically, for example it cannot meet performance needs or cannot be efficiently manufactured
Developing a service or product that is not viable commercially, meaning it will not be able to product a sufficient financial return
If all of these points are met, the development of the business idea should be financed, secured through patents, and tested on the market and eventually put out as not just a business idea, but a viable service or product.

Gross Income

Gross Income

What is Gross Income?


In the United States, individuals, members of partnerships, corporations, estates and trusts must pay income tax on their gross income (which is the value before tax). 
According to Title 26 of the United States Code along with Section 61 of the Internal Revenue code, gross income is the total income from whatever sources it may come from before any taxes applied to the income. The gross income is the starting point in figuring out just what income is applicable to be taxed under the federal income tax
Sources of gross income can include:
Gross income from a business
Compensation for fees, services, fringe benefits, commissions, and other similar items
Gains when dealing with property
Rent
Dividends
Royalties
Annuities
Alimony and other separate maintenance payments
Pensions
Income resulting endowment contracts and life insurance
Share of partnership gross income
Income resulting from discharge of indebtedness
Income from an interest in a trust or estate
Income of a decedent
In general, all income from whatever source can be considered a part of gross income unless it is specifically excluded by law, such as inheritances or gifts, although there may be an estate or gift tax on the donor.
The United States Supreme Court has taken this interpretation of gross income this to mean that under Article 1 Section 8 Clause 1 of the U.S. Constitution, the federal government can use its full power to tax the gross income as directed by the powers given to it in the Constitution. This power also is from the 16th amendment which says Congress can create an income tax without states approval.
Some items that are excluded gross income and do not get taxed are:
Social Security benefits, although this exemption is often not given to individuals who have a gross income over a certain amount
Tax exempt interest such as state and municipal bonds which do tax under the federal income tax
Life insurance proceeds
Inheritance and gifts
Scholarships, although certain types do get taxed, such as teaching scholarships
Compensation for sickness or injury
Meals and lodging given to an employee on an employer’s premises for the employer’s convenience
Specific employee benefits such as group health insurance, certain fringe benefits
Specific elective deferrals of an employee’s salary, such as for a 401k plan
Contributions received by a corporation to a capital
Profit of up to a quarter of a million dollars or half a million on a married joint tax return when selling a personal residence

B2B Marketing Defined

B2B Marketing Defined

B2B marketing refers to the marketing that occurs between two businesses that utilize each others products or services.  B2B is short for “business to business”.  B2B marketing is important for those companies, as they need to sustain supply chains or sustain business clients in order to be an active part of commerce.  B2B marketing applies to businesses in several different ways, ranging from the simple (having a good brand name, distinctive logo, and a website) to the very complex (appearing in trade magazines, e-mailing newsletters, and direct mail). 

How to use B2B Marketing for your business


1. Identify how B2B Marketing can help your business
B2B marketing is for those businesses that are in a supply chain and need to maintain their contacts, either from the supplying or purchasing end.  Identify whether your business has the type of relationships with other businesses that must be maintained for the benefit of your company.  Local, regional, and nationwide businesses can benefit from B2B marketing, but it needs to be adapted to your market.  Retail, distributors, and manufacturers are types of businesses in the supply chain that strive when using B2B marketing.  

2. Determine how to budget for B2B Marketing
B2B marketing poses a unique budgeting problem for businesses, as many companies seek increased revenue rather than nurturing relationships with other businesses.  B2B marketing also does not use traditional methods of marketing, as you are not trying to raise brand awareness, but rather increase the strength of an already existing connection.  Some B2B marketing ideas include have luncheons with other business professionals, providing informational sessions and talks that both benefit your businesses while raising awareness of your products and services, or just keeping in contact with decision makers at the other company.  


3. Establish your B2B marketing plan
Once you have determined that your company has the relationships that can benefit from B2B marketing, you must create a plan that will meet your goals.  Brainstorming to come up with unique ideas is one method in which you and your employees can use to work into your plan. B2B marketing must use non-traditional advertising or marketing ideas in order to keep brand awareness and likability for each business.  B2B marketing will require that the leaders of your business actively work and speak with those in charge of the other companies.  Group outings, co-sponsored events, and the exchange of information can be both enjoyable and serve to market your company to other businesses.  

4. Putting your B2B marketing ideas into effect
After coming up with the ideas and planning your B2B marketing strategy, you must put them into place.  Ensure that you follow through with your B2B marketing, in order to show the other businesses that you are capable of providing the services and products they need or that you can provide.  It will also be helpful to receive feedback about your B2B marketing strategies and continue using what works while phasing out any marketing that does not seem as helpful. 


Laws and legal issues for B2B Marketing
B2B marketing can sometimes create legal and regulatory problems for the businesses involved.  You must ensure that you are compliant with all laws, especially if your business works directly with government agencies, bidding processes, and government officials.  This is due to the fact that much of B2B marketing can involve direct solicitation, providing gifts or items to other entities, and other activities that may be violate business regulations. Contact a legal professional for help if you believe your business may need to abide by such regulation before beginning your B2B marketing plan.  

Utilizing Article Marketing

Utilizing Article Marketing

Article marketing is a form of advertising that uses short articles and informational writings related to a business’ industry.  Typically, these articles will be attached by a prominent text or picture box giving the business’ name and contact information.  Article marketing is a great way of keeping your business relevant to other companies and clients while also providing information that is helpful.  Article marketing’s main goal is to advertise and keep a business’ name relevant so when a client or other business needs their services, the name is available.   

How to utilize Article Marketing for your business


1. Identify your products, services, and clients
The first step before you can begin article marketing is to identify what your business produces, what services you provide, and who your client base is.  Understanding all of these factors will help you determine what type of articles you should write and at what technical level your article needs to be.  If your business works primarily with other business professionals or other highly educated clients, your articles will need to be much more in depth in order to keep their attention.  If your client base is the general public, your articles will need to be kept at a more simple level in order to keep their attention.  

2. Consider your budget
Article marketing will require both financial and time commitment in order to correctly use it.  Articles that will be sent through traditional mail or given to clients in hard copy require funds to have published and printed in a professional manner.  If your budget does not allow it or it does not make sense to use traditional mail, you can always use electronic mail to send your articles, however you run the risk of having them easily deleted from email.  

3. Develop your Article Marketing plan
After having determined who your articles will be sent to, how you will send them, and within what budget you must work, you can start to develop your plan for article marketing.  You must plan on how you will get your articles.  You have the choice of purchasing articles from professional sources, however this may be a very expensive option.  
Having yourself or an employee who is familiar with your business can be the best option for writing the articles that will be used.  However, you must ensure that you or your employee has the time and ability to write interesting and professional articles.  Your articles should be written either focusing on your business or your industry.  You can write about updates to your business, new clients you have obtained, or new products and services that you can provide.  Likewise, you can write about interesting stories about your industry and exciting new technology. 

4. Putting your Article Marketing into effect
Finally, once you have your plan in place, the money allocated for it, and your delivery method chosen, you now have to execute.  You will need to obtain all of the necessary hardware and software if you are writing the articles yourself and using the internet as your delivery.  Word processing programs, such as Microsoft Word or Word Perfect are essential for writing professional articles.  Newsletter software is also available, which will help put your articles into a readable form and send it out to clients.  “SendBlaster” is one such brand of online newsletter software and many other options are available.  

Legal Issues
You must be careful that you meet all regulatory requirements for writing business articles and newsletters.  One of the most important regulations that may apply to your company is that you have to identify if you are sending this as an advertisement or as a legitimate informative newsletter that customers subscribe.  Contact a legal professional with experience helping businesses develop their marketing plans while complying with all applicable laws and regulations.  

Mobile Marketing Advantages

Mobile Marketing Advantages

Mobile marketing is a relatively new form of advertising that always a business to reach its clients via mobile phones.  Mobile phones have become one of the most used new technologies to come out, as about 91% of Americans have or regularly use a cell phone. Mobile marketing can connect you to your client via simple text messages or mobile messages that reach your clients at any time you like.  Mobile marketing is a new strategy, so beware of the pitfalls that may accompany using this new strategy.    

How to use Mobile Marketing to your advantage


1. Identify how Marketing Research can help your business
Mobile marketing is highly limited in that only brief messages can be sent and received.  Therefore, it is important to identify areas of your business that can be conveyed in a simple manner.  Highly technical details about new products or services just do not work with Mobile marketing.  Instead, try to determine if there are simple messages that will be of use to your client base or if there is a reason you need to contact them via mobile device.  

2. Determine how to budget for Mobile Marketing
While text messaging for personal use is a fairly inexpensive process, businesses sending mass text messages to a large client base are faced with much larger texting fees.  Mobile marketing may also require you to purchase the hardware needed to send such messages, such as new computers, software, or smart phones that fit your mobile marketing needs.  Always investigate the potential costs of a marketing strategy before planning on bringing it to your business.  

3. Establish your Mobile Marketing plan
Once you have concluded that a mobile marketing plan is both cost effective and fits your businesses needs, you need to come up with a plan that you will abide by during your marketing.  It is helpful to have a detailed plan that lists specific times, dates, and targeted clients for your mobile messages to reach.  You must also plan who will write the messages of the texts and the type of messages that will be sent.  Mobile marketing does not have to be strictly informational, you may text games, contests, announcements, or awards to your clients while keeping your name in their mind. 

4. Effectuating your Mobile Marketing
Once your plan is in place, follow it as well as you can, while remaining flexible to adapt to changes that may need to be made.  Always listen to your clients about your messages.  If they inform you that they do not wish to receive your messages, you must stop sending them immediately, or else you will lose clients while possibly running afoul of the do not contact list.  

How to adapt Mobile Marketing to your specific business
It will be important that you adapt mobile marketing concepts to your specific business and overall marketing plans.  Mobile marketing should be used in conjunction with other marketing methods, so try to determine how well they can work with each other.  Also, make sure that your messages serve a purpose.  Sending mass texts with the sole purpose of having name recognition may adversely affect your overall marketing scheme.  

Affiliate Marketing Program

Affiliate Marketing Program

An affiliate marketing program is a marketing strategy in which one business compensates a third party for bringing clients to the business by using the third party’s own marketing efforts.  Affiliate marketing programs typically involves the use of internet rewards websites and contests, although there are non-website affiliate marketing programs available.  Some of the benefits of affiliate marketing programs are that they can easily be monitored, payment can be conducted on a “cost-per-click” method, and the business is provided online marketing they could not accomplish on their own.    

How to use an Affiliate Marketing Program for your business


1. Identify your business strengths and your client base
Before you attempt to use an affiliate marketing program for your business, you must ensure that your business is ready to handle internet traffic or exposure to clients on the internet.  You will need a prominent business website in place, which affiliates can direct traffic for.  You must also have a client base that is dependent on the internet and will be attracted to online marketing strategies.  If all of these requirements apply to your business or you plan on having them apply, then you can seek an affiliate marketing program that works for you.  

2. Consider your budget
Affiliate marketing programs can be an expensive type of marketing, however it can also provide you with great exposure to clients and dramatically increase traffic to your business website.  It is important that you have the marketing budget to afford the costs of affiliate marketing programs, especially considering that the costs may not be established until after your program has been in effect.  Many affiliate marketers charge businesses based on each unique page visit.  While these can be estimated, they can vary widely depending on the success of the program initiated.  


3. Choosing the affiliate marketing program that is right for you
After determining what clients you can reach, whether you have the proper internet presence, and can estimate your budget for the program, you need to contract with an affiliate marketer that is qualified and experienced.  You can choose between an unattached affiliate marketer, related affiliate marketer, or an involved affiliate marketer.
Unattached Affiliate Marketer – This type of affiliate has no connection to the business that is paying for their services.  The marketer has no authority or presence in the industry it is marketing, but instead uses programs such as Google Ad words and Facebook ads to attract clicks.
Related Affiliate Marketer – These marketers have some sort of related content to the industry that you are trying to sell.  These types of websites will attract viewers for a purpose that is related to your business.  These can be much more useful than other forms, as the viewer is already geared towards your business.  
Involved Affiliate Marketer – Is a personal recommendation made by a content writer that has personal experience with your product.  These websites typically review and report on new products and services and give their opinion.  This can be a great way to market your product, as you will have a legitimate unbiased party recommending your product.  Of course, you always run the risk that your product or services will not be reviewed favorably, which can lead to negative marketing.  

4. Monitoring your Affiliate Marketing Program
Finally, once the program is up and running, you must actively monitor its effects.  Check to see if your website is experiencing increased traffic due to the program.  Modify your website or the affiliate program if you believe that you will benefit.  You will also need to monitor how much traffic your affiliate marketer is generating, as it will likely affect your total costs of the program.  

Legal Issues
Affiliate marketing programs that are run with the intention of informing and helping consumers understand products and services are acceptable, however many businesses may run into an issue if these forms of advertisements are spam or have hidden charges, you will face legal issues.  Always double check any affiliate marketer before using their services, as many use illegal methods and promise results that just aren’t possible.  Consult a legal professional who specializes in internet marketing to protect your marketing plan while obtaining valuable information.  

Pay Per Click Advertising Benefits

Pay Per Click Advertising Benefits

Pay per click advertising is a term used for internet advertising where a business pays a third party website to direct traffic to their website for a specific amount every time a unique visitor is sent to the business’ website.  The third party website will usually show an advertisement or other mention of the business, which takes the viewer from a content page to the advertising page.  This method has become very popular on all sorts of websites and is one of the main forms of income generation for these sites.  

How can Pay Per Click Advertising help your business


1. Evaluate how your business and its website
Before you can use the services of a pay per click advertising website, you must have an established business website that viewers can be directed to.  Your website must be readily accessible and should have content that keeps visitors engaged and informed about your company.  Not every business can benefit from this form of advertising.  Pay per click is usually used by businesses that are seeking widespread reach and less so by local businesses.  


2. Consider your budget
Pay per click advertising varies greatly depending on who the third party website is, how many unique visitors they generate, and how reliable they are.  Nationally read websites with creative content will charge very high pay per click advertising fees, so be aware of what expenses to expect before agreeing to a pay per click service.  There are two ways for purchasing per per click advertising, flat-rate and bid-based. 
A. Flat-Rate require that the business pay the advertising company a specific fee for each unique click that is generated from placing the ad on their website.  The costs will be dependent on the location of the ad on the web page, its visibility, and the size. 
B. Bid-Based pay per click advertising is typically used on search engines or content sites with search features.  The advertising will accept bids for keywords, essentially favoring those businesses that pay more when a consumer searches for a specific topic.  
The financial aspect of the advertising that is generated can be greatly beneficial for your company.   Pay per click has been increasing dramatically each year, but a click can range from 1 cent per click up to $4 per click, depending on the level the keyword costs or how prominent of a website your are using.  

3. Put your Pay Per Click Advertising into effect
After conducting research about where and when your business will benefit from pay per click advertising, you need to get your links set up and your website prepared for the increased traffic.  You will need to prepare the links that will be clicked on.  Your links may be text based or picture based, which in either case must be highly visible and attract the reader.  
Websites utilize pay per click advertising by placing them in locations where viewers are most likely to see them.  Search engines, such as Google or Bing, will place pay per click advertisements in specific “advertising boxes” above search results or on the side bar.  Content websites try to have pay per click advertisements below content articles titles and in between written text blocks.  

4. Evaluate whether Pay Per Click Advertising is working
Pay per click advertising is very easily evaluated, as you will be able to see whether you have increased website traffic and from what source this increased traffic is from.  You will also be billed on each unique visitor, so just from your billing statements you can determine whether it is working.  Also important will be determining whether visitors stay engaged on your site and how long they spend on your website.  All of this must be calculated in order to determine if you need to modify or eliminate the pay per click advertising that you are engaging in.  

Pay Per Click Search Engine Advertising
Search engines do not typically use a pay per click advertising method, but instead use a bidding system for specific keywords.  Keywords are purchased and the order of appearance will determine when a website will come up on a search engine.  Some search engines to have some forms of pay per click advertising, but they will either put your business’ link in a separate “advertiser box” or  outside of the main search results.  

Legal Issues
Pay per click advertising is usually a very safe way of advertising over the internet, as long as you avoid any fraudulent advertising or misleading information.  You must ensure that any services you use in implementing your pay per click advertising is not attaching spy ware to consumer’s computers and not keeping illegal data.  Consult a legal professional with experience in advertising and internet regulation if you require further consultation.