Econobiz

5 Tips Loan For Small Business, How To Qualify

2013-09-20T12:34:00.003-07:00

Loan For Small Business, how To Qualify. Nowadays, to start a small business, people will also consider how to qualify the loan from a bank, especially for them who don't cash money.

We may apply for a small business loan to obtain funds to start a new business or to grow and expand an existing business. When applying for a small business loan you need documentation to ascertain that the business credit is positive. The better your business situation, the better your chances of making the business look creditworthy; and a creditworthy business is more likely to obtain a small business loan.

5 Tips To Qualify The Loan

Tips 1 : Check The Cash Flow

Check the business cash flow. One of the first items a lender considers is the business&rsquo; ability to generate enough income to repay the loan. Put together the cash flow statement for your business to show that your business makes enough money to pay all of its expenses, including the loan payment you&rsquo;re applying for.

Tips 2 : Check The Credit History

Check your business credit history and score. According to Business Know-How, a credit score for a business below 640 can result in an immediate denial of a small business loan, while a score of 700 or higher helps you qualify. If the credit history or score is not good, take steps to increase your credit score by making your business bill payments on time and creating payment arrangements with creditors. This allows you to turn the negative debt showing on your credit report into a positive account--and ultimately boosting your credit score.

Tips 3 : Write A Business Plan

Update or write a business plan. For a start-up business, write a complete business plan outlining the purpose of your business, expected sales and costs, how to implement the business and how you plan to use the loan funds. A business plan for an existing business should also contain this information, but may simply need an update.

Tips 4 :The Requirements

Ask the lender for its requirements. Each lender has a set of criteria a business borrower must meet in order to obtain approval on a small business loan. Before submitting a small business loan application to a lender, request a list of these conditions. Go line by line and make sure that you meet each condition. If your business does not already meet these stipulations, take the necessary steps to do so.

Tips 5 : Submit a complete application package.

Fill out the application for the loan completely and accurately. Include all of the supporting documents the lender requires from the criteria checklist. A complete loan application increases your chances of approval, while an incomplete one can delay or prevent approval.

(article source : Kristie Lorette, Demand Media - smallbusiness.chron.com )

Business Loan Agreement - Lender And Borrower

2013-09-20T12:16:00.000-07:00

Business Loan Agrement - Lender And Borrower. The Loan Agreement list the terms under which a loan is given. The bank is a lender, and any borrowing entitiy is a borrower.

One well known way for a business to raise money is a business loan. If you do well, banks, unlike equity investors, still only get the interest instead of a profit percentage or company share. Keep in mind, however, that you must pay a loan back regardless of your company’s success.

The loan agreement covers many of the same terms and conditions as a promissory note, although it is longer and more complicated. According to All Business website, “Virtually all the terms in a loan agreement are negotiable; there is no such thing as a ‘standard loan.’

The agreement lists the amount of the loan, when the money will be received, if the money is going to be parceled in specific amounts on multiple dates, the repayment schedule, interest and all other conditions, terms and warranties that the lender requires from the borrower.

Repayment schedules are very precise and list exact payment dates and minimum expected amounts. Some include a voluntary prepayment clause allowing the borrower to pay the loan off before its due date under specific circumstances. The agreement must specify the interest rate, calculation process and repayment process. If your loan has a grace period, that should be stipulated as well.

Finally, you will find the consequences and penalties in case of a payment default by the borrower.

Banks usually require security to back your loan. The agreement must contain all the details of debentures--unsecured loan certificates that your company issues--as well as guarantees or charges given as loan security.

Collateral involves the pledge of a specific asset in a mortgage for real property or security agreement for personal property. Any co-signer or guarantors and their liability should be in the agreement as well.

About Covenants

With a business loan, the bank may add a list of covenants or conditions that the borrower must comply with to keep the loan in good standing. If you do not comply with the covenants, the loan is in default and the bank can require payment in full.

The covenants include proof of hazard insurance, life insurance for the owner with the bank listed as the beneficiary, up-to-date taxes, fees and licenses. In addition, covenants can prevent the owner from doing things, such as changing management or incurring additional debt without approval.

Any additional fees will be included in the agreement with explanations and amounts. Some banks include up-front loan or processing fees. Lenders often require a clause stating that if you fail to make your payments, you’ll be required to reimburse the lender’s fees or costs to enforce or collect on the debt. It is your job to read the fine print and make sure the fees are reasonable.

(Article source : Dana Griffin, Demand Media- smallbusiness.chron.com )

Economy And Environment, The Relationship Between

2013-09-18T00:25:00.004-07:00

The Relationship Between Economy And Environment. Market cannot resolve environmental problems and that a need to find a solution.

In the late 1960s and early 1970s, a powerful social movement emerged in affluent countries arguing that economic growth caused environmental decline and could not be sustained forever.

One of the most famous of the thousands of studies written on this issue was the book, The Limits to Growth, published in 1972 by Meadows and a team of scientists, environmentalists, economists and industrialists at the USA's Massachusett's Institute of Technology. It used a computer model of the world economy to show that the existing population and economic activity growth rates could not continue indefinitely on a planet that had limited resources and limited ability to deal with pollution.

But critics argued that even if notional limits were identifiable they could be extended through scientific and technological innovation and that economic growth was necessary to finance and motivate such innovation. The focus of early limits to growth writings on the depletion of resources such as oil and minerals, left them particularly open to this criticism and the lack of global shortages in subsequent years served more than anything else to discredit their arguments.

However, the limits to growth advocates also neglected to consider the social implications of no-growth policies and the social imperatives behind economic growth. Economic growth provided increasing living standards for many people in affluent countries and it was seen to be necessary to provide similar benefits for the remaining poor in those countries and for the populations of developing nations.

Those who argued for limits to growth were accused of being elitist and of emphasising the environment at the expense of the quality of human life. Many did not differentiate between economic growth in affluent countries and economic growth in developing countries. Nor did they recognise that population growth in affluent countries could be far more environmentally damaging than population growth in poorer countries where resource use per person was low.

Sustainable development seeks to make the competing goals of economic growth and environmental protection compatible. Is this possible? And does it represent an eclipse of the ethical and political dimensions of environmental problems by economic interests and priorities?

Are They Partners?

The renewed interest in sustainability in the 1980s moved away from the original conception that economic growth cannot be sustainable to a new formulation which seeks to find ways of making it so. The limits-to-growth model has been replaced with the sustainable development model, and the 'gloom and doom' scenario has been replaced with 'win-win' solutions.

The changed use of the term 'sustainability' in itself indicates the differences between this wave of environmentalism and the earlier one. Earlier environmentalists had used the term to refer to systems in equilibrium: They argued that exponential growth was not sustainable, in the sense that it could not be continued forever because the planet was finite and there were limits to growth. In contrast, sustainable development seeks ways to make economic growth sustainable, mainly through technological change.

In 1982, the British Government began using the term 'sustainability' to refer to sustainable economic expansion rather than the sustainable use of resources. In the mid-1980s the World Commission on Environment and Development popularised the term 'sustainable development' in its Brundtland Report (1990). The Commission defined sustainable development as: 'Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.' In October 1987, the goal of sustainable development was largely accepted by the governments of 100 nations and approved by the UN General Assembly.

Sustainable development recognises that economic growth can harm the environment but argues that it does not need to. This new formulation of the term 'sustainability' still offends more radical environmentalists, such as Mohamed Idris :

"The term 'sustainable' from the ecological point of view means the maintenance of the integrity of the ecology. It means a harmonious relation between humanity and nature, that is, harmony in the interaction between individual human beings and in their interaction with natural resources."

The term 'sustainable' from the point of view of non-ecological elites means 'how to continue to sustain the supply of raw materials when the existing sources of raw materials run out'. (1990, p. 16)

However, for more conservative environmentalists and for economists, politicians, business people and others, the concept of sustainable development offers the opportunity to overcome previous differences and conflicts, and to work together towards achieving common goals rather than confronting each other over whether economic growth should be encouraged or discouraged.

Economic Growth And What It's Supposed To Be

One of the most pressing arguments for continued economic growth, is that it is necessary to meet the needs of poor people. Jim MacNeill, the secretary-general to the Brundtland Commission, argues that:

The most urgent imperative of the next few decades is further rapid growth. A fivefold to tenfold increase in economic activity would be required over the next 50 years in order to meet the needs and aspirations of a burgeoning world population, as well as to begin to reduce mass poverty. If such poverty is not reduced significantly and soon, there really is no way to stop the accelerating decline in the planet's stocks of basic capital: its forests, soils, species, fisheries, waters and atmosphere. " (1989, p. 106)

The Brundtland Report also argued that economic growth was necessary for poorer nations to meet their needs but used this argument to support economic growth in all nations. This argument is based on the idea that if the whole pie were bigger then each person's share would be larger and even the smallest portions would be adequate to meet a person's needs.

The need for a growing pie avoids facing up to the ethical questions about how the pie is distributed. If the pie is not growing then either some people will remain in poverty or others will have to give up some of their share to them. As William Rees has said: 'economic growth is a major instrument of social policy. By sustaining hope for improvement, it relieves the pressure for policies aimed at more equitable distribution of wealth.' (1990, p.18)

However, economic growth does not necessarily eliminate poverty. The economic growth that has occurred worldwide over the last 20 years has not decreased the poverty in many developing nations; and the richest nations in the world still accommodate some of the poorest people. Such poverty results from distributional problems rather than from a nation's lack of wealth. Although the world's economy has grown 5 times since 1950 there are arguably more people in absolute poverty today than there were then.

Yet the Brundtland Report, and much of the government policy-making that followed, have unashamedly used the needs of the poorest to argue for economic growth in even the most affluent countries. It could be quite easily demonstrated that these affluent nations already have economies large enough to maintain all their citizens in comfort and have been able to do so for 20 years or more. Barkley and Seckler had this to say in 1972:

The more developed nations of the world have now reached a state where all reasonable and rational demands for economic goods have been or can be satisfied. As a result, the virtues of added economic growth may be an illusion because growth does not come free. In fact, the costs of added growth are climbing quite rapidly as the pressures against certain resources, and on the environment as a whole, increase. The developed countries may have reached a level at which the costs of additional growth in terms of labor and loss of environmental quality exceeds the benefits ..."( p. 18)

Environmentalists Winin Pereira and Jeremy Seabrook (1991) also dispute the idea that high living standards, which they define as 'the widespread consumption of large volumes of goods and services,' can be sustained. No matter how much recycling and reuse occurs, the energy component in all manufactured goods and services cannot be recycled and inevitably creates pollution.

They say: 'Economic growth can be made compatible with environmental enhancement only if the emission of pollution is less than that which can be assimilated and transformed by the natural environment. In order that resources may be conserved, all articles must be manufactured so as to be fully recyclable. Further, they must be manufactured, transported, used, and recycled with energy from renewable sources only.' (p. 2)

However, complete recycling is not possible, since some materials are always lost through wear and tear, and corrosion. Moreover, Trainer claims that even if pollution generated by manufacturing could be cut by 30 percent, while manufacturing grew at 3 percent per year, the gains would be lost in 13 years -- and there would be twice as much pollution as we started with in 23 years' time. At this rate of growth (3 percent), Australia would be producing eight times as many goods in 2050 as it is now.

Limits to growth advocates argued that economic growth in general needed to be curbed whilst sustainable developers argue that economic growth should continue everywhere. What neither advocates nor opponents of economic growth seem to recognise is that economic growth in a particular country can be beneficial up to a point, beyond which the disadvantages begin outweighing the advantages.

The problem is not only recognizing when the optimal point has been reached but also in finding alternative ways to satisfy the desirable goals of economic growth, such as elimination of poverty. While there needs to be growth in some areas (such as solar technology) and in some nations, two key questions need to be asked (Trainer, 1994):

Which specific things need developing?
What would constitute sufficient development?

Unless we move beyond the rhetoric of sustainable development that maintains that we need economic growth for the sake of the poor, to a more honest appraisal of what development is indeed sustainable and equitable and what development should be foregone, then the environment will indeed decline beyond the point of no return and few will be better off.

One obstacle to this is that countries like Australia have built up a momentum after 200 years of cultural development aimed at economic growth. Certain people have risen to power and influence because of their ability to facilitate economic growth and naturally they want to keep going. Many have a vested interest in the way things are and few know how they could be different.

Another obstacle is that because all nations are part of an international economic system, there is limited scope for individual nations to act independently. Most nations are dependent on loans from international banking institutions and need to export increasing amounts of goods in order to pay the interest on their loans.

Nations compete for markets for their goods and are concerned that a static economy will fail to provide the motivation for investment, innovation and increasing productivity necessary to keep the prices of their goods down and the quality up. All this global economic activity, made compulsive by a competitive imperative, inevitably imposes a severe toll on the global environment.

Incorporating the Environment into the Economic System

The sustainable development approach claims to be able to avoid the environmental degradation that has previously accompanied economic growth by integrating economic and environmental decisions. For most governments this means incorporating the environment into the economic system.

David Pearce and his colleagues, in their report on sustainable development to Margaret Thatcher, then British Prime Minister, said that the principles of sustainable development meant recognizing that 'resources and environments serve economic functions and have positive economic value.'(1989, p.5) As a component of the economic system, the environment is seen to provide raw materials for production and to be a receptacle for its wastes.

D.J.Thampapillai says in his text on Environmental Economics;

Clearly, the natural environment is an important component of the economic system, and without the natural environment the economic system would not be able to function. Hence, we need to treat the natural environment in the same way as we treat labour and capital; that is, as an asset and a resource."(1991, p.5)

Economists are interested in the environment to the extent it can ensure a continuous supply of goods and services to meet human wants and this seems to be the intent of the Brundtland Commission's definition of sustainable development, which makes no specific mention of the environment: 'development that meets the needs of the present without compromising the ability of future generations to meet their own needs.'

When viewed in this way, as a source of inputs and a sink for outputs of the economic system, the environment is not an equal partner. Environmental protection moves to a secondary and indeed supplementary position with respect to economic goals. Sustainability becomes a problem of how to sustain the economic functions of the environment rather than how to sustain the environment.

In theory economic growth might be achieved without additional impacts on the environment but this would mean many activities with economic growth potential would have to be foregone and this will not happen whilst top priority is given to achieving economic growth. The incorporation of the environment into the economic system ensures that it will only be protected to the extent necessary to ensure it is able to continue to supply goods and services to the economic system.

Sustainable development therefore represents a willingness to put up with a declining environmental amenity so long as human welfare in total is being enhanced. It recognises the need for balances and trade-offs. When the inevitable conflicts arise in particular instances, the environment will only be protected where the economic costs are not perceived to be too high.

The Australian Government, in its 1990 discussion paper on sustainable development, argued for example that;

"It is necessary to evaluate the risk to future economic prospects if business investment and growth is prevented or discouraged. In some cases it may be worthwhile paying the price of some environmental damage to ensure present and future economic benefits. This will be particularly relevant in commercial development of non-renewable resources, where at least some transient impact on the environment is inevitable." (Commonwealth Government, 1990, p.9).

In deciding what parts of the environment should be sacrificed environmental economists attempt to place a monetary value on the environment.

The Environment And The Price

Environmental economists argue that environmental degradation has resulted from the failure of the market system to put any value on the environment, even though the environment serves economic functions and provides economic and other benefits. It is argued that, because environmental assets are free or under-priced, they tend to be overused and abused, resulting in environmental damage. Because they are not owned and do not have price tags then there is no incentive to protect them.

The solution offered is to put a price on the environment so that it can be incorporated into the economic system and taken seriously by those who make decisions. Environmental values will then be integrated into economic decisions, market failures will be repaired and sustainable development assured. Cost-benefit analysis or CBA is one of the key ways in which environmental values are incorporated into economic activities. Another is through economic instruments. Economic instruments include taxes and charges on polluters that aim to internalise environmental costs into the decisions of companies and individuals and therefore provide an incentive to curtail environmentally damaging behaviour.

The measurement of environmental gains and losses is assessed in money terms. Direct costs and benefits are the easiest to estimate. These might include estimating the value of production foregone because of environmental damage, the value of earnings lost through health problems associated with air and water pollution, health care costs, and the value of decreased growth and quality of crops because of soil degradation.

These direct monetary costs tend to underestimate the full costs and benefits provided by the environment. For example, improved health resulting from a cleaner and safer environment is worth more than just the medical bills saved. Similarly, a clean beach is worth more than the just the value of having healthier beach goers. Economists attempt to measure these additional dimensions by considering the preferences of individuals for things like cleaner air and water, less noise and protection of wildlife. This is done in various ways (Beder, 1996, chapter 7).

The most popular is Willingness to Pay or Contingent Valuation Market demand may be derived from surveys to find out how much people are willing to pay to preserve or improve the environment, how much they will pay to visit a particular environment, or how much compensation a person is willing to accept for loss of environmental amenity ('willingness to sell'). Both methods, 'willingness to pay' and 'willingness to sell' have problems because they are based on surveys which are likely to be inaccurate because people may inflate or deflate the amounts they are willing to pay or accept.

The concept of willingness to pay assumes that the environment does not already belong to the community, but that they must buy it. Willingness to sell, on the other hand, assumes the environment belongs to the community and they must be compensated for any losses. However, economists tend to prefer willingness to pay because willingness to sell surveys 'tend to generate very high dollar values, to the point where many people find them implausible' (Streeting and Hamilton, 1991; 76).

A major problem with valuing the environment according to individual willingness to pay is that the preferences of future generations (and indeed other species) are not taken into account. For this reason, the market value might not be consistent with long-term welfare or survival. Individuals might prefer to continue adding to the greenhouse emissions rather than cutback on energy use even though this might threaten future generations.

Bryan Norton, Professor of Philosophy, argues that placing of dollar values on species so that they might be weighed against such things as 'the value of real estate around reservoirs and kilowatt-hours of hydroelectric power' is inappropriate because biodiversity is necessary for survival (1988, p. 204). He compares such reasoning to hospital administrators trying to work out which parts of a life-support system can be disconnected and sold to raise money for the hospital. They do not really know which part is necessary for the continued operation of the support system, and guess which parts will not be missed.

The Ethics and Politics of Pricing the Environment

For many people, not just environmentalists, putting a price on nature is as abhorrent as putting a price on family and friendship. It represents the further creep of the market and economics into areas of life that have traditionally been considered above material concerns. Like the packaging and marketing of religion and body organs, it is somehow unsavoury and definitely unwelcome. The usefulness of economic theory can be pushed too far.

Herman Daly and John Cobb (1989) note that resource economists have found people are often reluctant to co-operate with contingent valuation surveys. They quote a researcher who argues that 'respondents believe that environmental policy - for example, the degree of pollution permitted in national parks - involves ethical, cultural, and aesthetic questions over which society must deliberate on the merits, and that this has nothing to do with pricing the satisfaction of preferences at the margin' (p. 91).

While many economists argue that the market is democratic because individual consumers can vote by choosing how they spend their money, the move towards a market allocation of environmental resources is in reality a move away from democracy. Currently, communities can influence governments to protect the environment through legislation and intervention by campaigning and demonstrating as well as by voting. But in a system where the optimum level of environmental protection is decided by a market, influence is wielded by the wealthy—those with most market power. Where economic instruments are used, private firms can choose to pay the charge and continue to damage the environment.

The political process has traditionally determined environmental questions. Some economists and bureaucrats want to avoid this process because they argue it is economically inefficient. They claim that markets are more efficient at giving people what they want than governments but this assumes that there is no such thing as the common good outside of individual wants and preferences. However, Peter Self, a professor of public administration, argues that:

Economic markets follow an instrumental logic whereby, under the right conditions, rational egoistic behaviour is socially legitimated and acceptable -- In politics, by contrast, it is or was a general social belief that individuals should have some regard to the 'good of society' and not just their own private wants." (Self 1990, p. 9)

Humans are first and foremost social animals and although their personal spending may reflect their individual self-interests, their participation in the political process through voting, demonstrating and lobbying often reflects broader and more long-term communal values.

Moreover economic efficiency does not necessarily equate with social or environmental welfare. Just because the benefits of an action outweigh the costs, it does not mean that the decision is morally correct or politically acceptable. For example, child labour or slavery would be considered immoral even if the economic advantages to the whole society outweighed the costs to some individuals. Pricing mechanisms and markets tend to ignore distributional issues such as who gets the benefits and who bears the costs. As long as the sum of the benefits outweigh the sum of the costs, even if a small group of people get the benefits and a whole community suffers the costs, economists assume the society as a whole is better off.

There is an exacerbating tendency in our society for poor people to be the ones that suffer the costs of hazardous, dirty or unwelcome developments. Siting a dirty industry in an already dirty area will be less costly than siting it in a low-pollution area because the costs of pollution, if measured in terms of decline in property values will be lower. Similarly, siting the polluting industry in an area that already has depressed property values, will also be less costly by this method than siting it in an affluent area. In this way the poor are continually disadvantaged by market-driven environmental choices. Because it is based on individual preferences, environmental valuation tends to reflect and therefore maintain the prevailing distribution of income. Wealthier people are willing and able to pay more and therefore their votes count more in a market.

When market-based approaches to the environment are allowed to by-pass the political process they perpetuate the root causes of environmental degradation because the environment is simply treated as an adjunct to production. Attempts to assign dollar values to segments of the environment are ways of reaffirming the market as the primary social decision-making mechanism - a mechanism that relies on individual self-interest to achieve maximum social welfare.

It does not occur to us that by assigning value to diversity we merely legitimize the process that is wiping it out, the process that says, 'The first thing that matters in any important decision is the tangible magnitude of the dollar costs and benefits'.... if we persist in this crusade to determine value where value ought to be evident, we will be left with nothing but our greed when the dust finally settles."(Ehrenfield,1988, p. 213)

Conclusion

Both the Limits to Growth approach and the Sustainable Development approach have neglected the ethical and political dimensions. The limits to growth advocates of the 1960s and 70s tended to avoid the social implications of aborting economic growth in low-income countries and the issue of which nations were responsible for most resource use. The sustainable development advocates of the present similarly want to avoid the ethical issues by falling back on economic calculus to make decisions as if values can be determined by doing the sums correctly. They also avoid the distributional issues by advocating economic growth for all in the hope that this will solve the problem of equity.

On top of this the sustainable development approach makes further environmental degradation inevitable. It is apparent there is a need to go beyond these two failed approaches and find a third one which embraces the ethical dimension. This will involve getting beyond the current preoccupation of governments with economic growth as the overriding priority for all nations at all times. Our endeavours need to be focused on new ways of achieving a reasonable level of comfort in all nations, without the environmental damage normally associated with economic development.

We need to find ways of ensuring the fruits of this development are more evenly distributed within populations. This cannot be done if decision-making is based on the premise that any development that provides a net monetary benefit to a nation should be approved. Even if the calculation of the benefit incorporates measures of environmental damage, environmental amenity is likely to decline and equity issues will still be ignored. We need new forms of social decision-making that integrate the ethical dimension - neither limits to growth nor sustainable development offer the answers.

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Markets Are Influenced By Economic Reality

2013-09-17T23:10:00.000-07:00

Markets Are Influenced By Economic Reality. There are some connections or relationship between economy, market, and market stocks or market prices.

But this link is sometimes tenuous, and it is just not true that when the economy is doing well, you can be sure that stocks will go up in an appropriate manner, and vice versa. The problem is that the factors drivingstock prices are just too complex, fragmented and contradictory for a simple "up and down" correlation to apply.

Factors Driving the Stock Market

Certainly, the business cycle does play a role. If you look at a chart of business cycle fluctuations, superimposed on a stock market index, you will see that the stock market generally and roughly follows. But generally and roughly are the operative words, and that is the problem. If we consider some of the other factors that move the stock market, besides the economy simply doing well and growing, we easily see how complex it all becomes.

Interest Rates

If rates are likely to fall, stocks will be purchased and their prices will rise. But then there are also order quantities for American goods, which push up stock prices when they increase - and of course, the other way round. But, foreign orders depend partly on exchange rates, which also depend partly on the interest rate and so on. Get the idea? (Can butter production help you predict the market's next move? Read World's Wackiest Stock Indicators.)
Investor Psychology

People may plunge into overheated markets, which are best left alone. And they panic and flee at exactly the best time to buy. Throughout economic history, we have seen how markets overshoot and push prices up to levels that are not justified by the real economy. And there is the converse, with people selling out more than the economic situation justifies, simply because sentiment is negative.
Political Factors and Sundry Disasters

An election, an assassination, terrorists attacks, epidemics of diseases and many other shocks that can appear tomorrow and be gone the next, or be around for the next 20 years, can either make or lose you money. Note that these are non-economic factors, meaning that the stock market reflects these too.

Additionally, some of these factors are inevitably driving share prices up, while others are pushing them down; sometimes the same variable can have contradictory results when measured against other variables. So we have a simultaneous and multifaceted interaction of forces working in all directions, with extremely variable and varied intensities.
Speculation

Apart from the hard and soft factors described above, a fundamental reason for buying stocks is, simply, that people think other buyers will pay more for them in the future. This is the essence of speculation, and clearly has little to do with the productive process at the heart of economic development.

Stock prices are driven by a very messy combination of economic, psychological and political fundamentals. The result is that it is impossible to know in advance which "fundamentals" and non-fundamentals will really prevail.

Despite all this, the trend can still be your friend. It is often possible to figure out which factors will dominate over time, and, in particular, over a given period of time. Likewise, some stocks, sectors and asset classes that look good, in themselves, are really worth having. Predictions are possible, and it is not all a game of chance. But, if you are looking for sure-fire indicators and think that the business cycle and the stock exchange cycle are one and the same, you will be in for a disappointment or worse.

The trick is to not try and figure out all the angles, but to determine what factors are likely to count most over the time span of the investment. Despite the multitude of influences that are potentially relevant, some are more important than others at certain times, and for certain assets.

The Practice

If a popular president of a major economic power is assassinated, the markets are likely to drop. For how long is another matter. Likewise, truly disastrous unemployment figures must cause pessimism and eventually lead to stock sales.

Certain national and international trends can also be accurately forecasted to continue. The demographic ascent of the aged, in the developed world, is most definitely going to continue for the foreseeable future. This undoubtedly makes some health- and age-related investments very promising. Some will still do better than others, and individual schemes and assets will likely go bust along the way, but the general economic reality of the "age of aging" will be reflected in stock prices.

In a similar vein, climatic change doesn't seem to be going away. The fact that there is money to be made from jumping on this bandwagon is incontrovertible. But, exactly which investments will work and which will fail is difficult to determine, and demonstrates the lack of a clear link between sound economics and higher stock prices. There is a link, but there's no reliable correlation.

The same sorts of arguments apply to resources of various kinds. Nonetheless, this does not stop the resource sector from being volatile. Even if water, for example, will become a truly precious resource, over time, if you want a certain stream of income, a government bond is a more suitable investment than infrastructural projects in the Middle East.

What Is The Conclusion ?

If the economy is performing well, the stock market is likely to do the same. But, there is no real reliable and consistent link that persists through all-market cycles in a predictable pattern. There are simply too many forces at work and economic reality is just one of them.

This does not mean that anything can happen, but it does mean that the financial sector and the real sector go hand in hand only part of the time, and part of the way. This process is well summed-up by one expert as being similar to a dog (the stock market) going for a walk with its master (the real economy). The dog often runs this way and that, often in a rather unpredictable matter. But it will come back to its master – until the next walk.

(article source: Brian Bloch in www.investopedia.com - Nov 17 2011)

Small Business Will Be Great With These Tips

2013-09-17T12:01:00.000-07:00

Small Business Will Be Great With These Tips. Some people don't know how to start a small business, or how to manage the business with good methods.

1. Save up as much money as possible before starting.

All too often, people go into business without any savings, exclusively using loan money from friends, banks, or the SBA. They except to be able to start paying the loans back right away with their profits. What these business owners don't realize is that it can take months or years to make a profit. And once a lender discovers a business isn't as profitable as expected, the lender is likely to call in the loan or refuse to renew it for another year. Often new business owners then have to take out home equity loans or use credit cards to pay off their loans (which puts their home and credit rating at risk).

A better plan is to save up as much of the needed investment money as possible, including your living expenses for the first year, or even two. Odds are that your business won't be profitable for one to two years. Even if you get plenty of business coming your way -- and your customers pay you on time, which isn't always a sure thing -- you'll want to be able to invest most of that money back in the business for space, equipment, advertising, and insurance needs.

2. Start on a shoestring.

Think small. Don't rent premises if you can work somewhere else, and don't hire employees until you can keep them busy. (You can hire independent contractors or temps in the meantime.)

People who start their small business on the cheap, often in a garage, den, or some other scavenged space, and create their first goods or services with more sweat than cash, have the luxury of making their inevitable rookie mistakes on a small scale. And precisely because their early screw-ups don't bury them in debt, they are usually able to learn and recover from them. (Plus, running your business from home can save you tax dollars too).

3. Protect your personal assets.

When you go into business for yourself, you are usually personally liable for all judgments and debts that the business incurs. This includes business loans, taxes, money owed to suppliers and landlords, and any judgments against the business as a result of a lawsuit. If you don't protect yourself, a creditor can go after your personal assets, such as your car and your house, to pay for these debts.

While you can protect yourself against lawsuits by buying business liability insurance, this won't help you with business debts. If you will be running up big debts, consider forming a corporation or limited liability company (LLC). Just one person can form either of these types of businesses.

4. Understand how -- and if -- you will make a profit.

You should be able to state in just a few sentences how your business plans to make a substantial profit. For starters, you need to know your costs: how much you'll spend purchasing inventory, paying the rent, compensating any employees, and covering what is likely to be a surprisingly long list of other costs. Then you can figure out exactly how much you need to sell each month, for how many dollars, to cover those expenses and have an adequate profit besides. These numbers are all you need to create a "break-even analysis."

5. Make a business plan, no matter how short.

Understanding your profit numbers and creating a break-even analysis is the first step in making a business plan. For most small companies, the key portions of a business plan are the break-even analysis, a profit-and-loss forecast, and a cash flow projection. (Projecting your cash flow is key and will make or break your company: Even if your business is getting plenty of work or selling its products, if you're not getting paid for 90-180 days, you're not going to survive unless you've planned for it.) With a cash flow spreadsheet in place, as well as a profit-and-loss forecast, you can tinker with your business idea and improve it before you start -- and continue to use them after you start.

Creating a business plan also allows you to determine what your projected start-up costs are (how much money you'll need to save) and what you marketing strategies are (how you'll reach customers to make sales). If you can't make the numbers work on paper, you won't be able to make them work in real life.

6. Get and keep a competitive edge.

Building a competitive edge into the fabric of your business is crucially important to long-term success. Some ways to get this edge are by knowing more than your competitors, making a product that is hard or impossible to imitate, being able to produce or distribute your product more efficiently, having a better location, or offering superior customer service.

One way to hold on to your competitive edge is to protect your trade secrets -- confidential information that gives you a competitive advantage in the marketplace. Examples of trade secrets include customer lists, survey methods, marketing strategies, and manufacturing techniques. To protect your trade secrets under the law, you need to take steps to keep the information confidential. This includes marking documents "Confidential," using passwords to protect computer information, using nondisclosure and/or noncompete agreements, and limiting access to employees with a reasonable need to know the trade secrets.

Another way to keep your competitive edge is to react quickly to bad news. Once you see that your business faces some kind of adversity, you need to come up with a plan to deal with it immediately. This may involve moving your offices, introducing a new product or service, or developing a better way to reach customers.

7. Put all agreements in writing.

The laws of your state require you to put some contracts and agreements in writing:

Contracts that will last longer than a year.
Contracts that involve the sale of goods worth $500 or more.
Contracts that transfer the ownership of copyrights or real estate.

Even if not legally required, it's wise to put almost everything in writing, because oral agreements can be difficult or impossible to prove. This includes leases or rental agreements, storage agreements, contracts for services (such as consulting or electrical work), purchase orders or contracts for goods worth more than a couple hundred dollars, offer letters of employment, and employment policies. Get in the habit of getting and giving receipts for all goods, services, and deposits, regardless of how much.

8. Hire and keep good people.

Your goal should be to hire and retain truly excellent employees -- not just reasonably competent ones. A highly competent and truly enthusiastic employee is at least two and sometimes even three times as valuable as a person of average skills.

To create a stable and happy workforce, it's essential not only that your employees (and independent contractors) believe they are being fairly treated, but that your business is worthy of respect. Employees and contractors who like their work will represent you well on and off the job. And customers will more likely be loyal to an upbeat business -- and are more likely to recommend it to their friends.

9. Pay attention to the legal status of your workers.

When you hire workers as independent contractors, make sure they shouldn't really be taxed as employees. The IRS can impose substantial penalties against you for not withholding taxes and paying taxes for a worker who is really an employee. The IRS and other agencies are likely to think that a worker is an employee rather than an independent contractor under any of these conditions:

The worker works full-time or nearly full-time for you.
The worker doesn't work for anyone else.
The worker provides services that are an integral part of your operations.
You control how the worker does the job and provide detailed instructions and training for the worker.

One way to help avoid trouble is to have the worker sign a written service contract, or independent contractor agreement.

Most employees you hire will be "at-will" employees -- subject to being fired at any time and for any reason (except for illegal motives such as discrimination). It's important to preserve your at-will rights because they protect you from having to prove that you have a valid business-related reason to terminate an employee. Don't make any promises to prospective or current employees that you are offering a permanent job or that they will lose their job only if they perform poorly, because this will limit your ability to terminate the employee for other reasons, such as personality conflicts or finances.

When hiring an at-will employee, have the employee sign an offer letter that makes it clear that the employment relationship is at will. Except for high-level executives, you shouldn't have employees sign an employment contract -- this can limit your ability to alter the terms of employment as your business needs change and subjects you to higher legal standards.

10. Pay your bills early and your taxes on time.

In the real world, where a reputation for keeping one's word is a hugely important asset, a good strategy is either to pay your bills up front or pay them early. You gain trust, build a positive credit profile, and have a built-in safety net if things go badly. These benefits outweigh any interest you might earn by holding onto your money until the last possible minute.

Most importantly, pay your payroll taxes on time, especially the portion that you withhold from your employees' paychecks. The IRS and state tax authorities can hold you personally liable for these taxes, plus stiff penalties, if they're not paid. This is true even if you operate your business as a corporation or LLC or if your business goes bankrupt -- you will still be personally and legally on the hook to pay back payroll taxes.

10 Realistic Ways To Make Money Online

2013-09-17T11:42:00.000-07:00

Money Online With These Realistic Ways To Make. Internet is very useful to make some money online. But how ? These are some realistic ways to make.

So here are 10 ideas that you can use to get some pocket money easily.

Amazon Mechanical Turk

Amazon's version of a "marketplace for work." Find tasks such as testing sites, writing articles, taking surveys, complete them and earn money.

Conduit

Conduit allows you to create custom toolbars. Every time someone downloads your toolbar, you get paid. Get people to download the toolbar and you'll receive a few dollars each time.

eBay

Rummage through you're stuff, find anything of value that you don't need sell it on eBay, Amazon or Craigslist. If you're interested in going further than that start selling your family and friend's items for a commission.

Paid Articles

Content sites are always looking to pay for quality content. Check out eHow, BrightHub, Constant-Content and cash in on you're expertise.

Experts Exchange

Are you a techie? If you are, join Experts Exchange and answer people's questions on hardware, software, programming and more, to receive rewards.

Microworkers

Make "micromoney" doing "microjobs" on Microworkers. Make money by completing tiny tasks online for people such as signing up for sites, Digging articles or linking to sites.

Student Of Fortune

Student of Fortune is an online tutoring and homework help platform. Students who need help post questions with cash rewards and depending on how well you answer it, you receive the cash. The top tutor has earned over $127,000!

99 Designs

If you've alway been good at Photoshop, 99Designs is the perfect place to cash in on your skills. Enter logo, tshirt, icon, website, print design contests.

Fiverr

Fiverr is a marketplace for $5 odd jobs. People offer jobs such as installing Wordpress plugins, computer programming, translations, designing business cards and much more.

ChaCha

This search engine is powered by real people. Each time you respond to someone's search you will be paid a small amount.

If you have any other ideas or suggestions please let us know below.

World Bank's Strategy To Poverty-Fighting Goals

2013-09-17T11:14:00.001-07:00

World Bank Ties Strategy To Poverty-Fighting Goals. The World Bank aims to become more selective in its lending.

As reported by a news on internet (Yahoo! Finance), The World Bank, faced with a tight budget and greater competition for development funds, aims to become more selective in its lending, focusing on fragile states, sub-Saharan Africa, South Asia and other areas where it can have the greatest impact, according to a draft strategy paper obtained by Reuters.

The 42-page paper, presented to the bank's executive board last week, is the first major strategic review under World Bank President Jim Yong Kim.

It offers the first concrete details of how the World Bank plans to fulfill his twin goals of eliminating extreme poverty by 2030 and boosting the incomes of the poorest 40 percent of the population in each country.

However, the strategy paper is still vague about what exact programs the bank will cut or bolster, and how it will change its budget to reflect new priorities and falling revenue.

When asked for comment, World Bank spokesman David Theis declined to elaborate further on the plan.

Founded after World War II to help rebuild Europe, the World Bank later focused on lending money to developing countries in order to improve the lives of poor people.

The global lender is praised for its worldwide reach, stringent standards and long-term focus. But it has also been criticized for avoiding risks, delaying approval of projects, not responding enough to what countries want, and focusing more on pushing money out the door rather than program outcomes.

Kim, who came to the helm of the multilateral development institution a little over a year ago, has launched a major reorganization to change all that, driving an emphasis on flexibility, measurable impact, and evidence, or what he calls "the science of delivery."

The draft strategy acknowledges the World Bank has become less important to the growth of many middle-income countries, which can rely more on private funding and bilateral loans from emerging markets like China.

The World Bank also admits it has limited funds to tackle the needs of the developing world, where new infrastructure projects alone will require $1.5 trillion in funding a year.

Instead, the World Bank wants to reposition itself as a "solutions" bank, offering not only financing but also its knowledge of how to solve common development challenges.

"The World Bank Group's role in knowledge, convening and global advocacy has increased relative to its role in providing finance," the paper said.

Keeping the bank relevant means focusing on areas where other donors are reluctant to go, such as fragile and conflict-affected states, by 2015 home to half of the world's poorest people.

The World Bank said it also plans to use its projects and global presence to share data and promote better policies in areas like climate change.

To help address countries' needs and better coordinate development policies, the bank also plans to work more closely with other development agencies like the United Nations and with philanthropic organizations.

And it wants to promote more private-public partnerships for basic services like health, education and housing - to the consternation of some non-profit organizations that argue such programs have mixed records for helping the poor.

As part of the new strategy, the World Bank also plans to make some cuts to its budget. Operating in fragile states, collecting data to measure countries' progress, and ensuring a global presence have strained the bank's administrative funds.

And less lending to middle-income or stable countries also means less revenue, as the bank has made money from interest-bearing loans.

"Maintaining a minimum scale of operations is important if the World Bank Group is to influence the policy agenda and support clients in delivering effective development solutions," the paper said.

"Although the World Bank Group does not face immediate financial concerns, its financial capacity will need to be strengthened," the paper added.

The bank said it will have to be selective in what it does and make cuts to certain programs, without specifying further. It is also considering relying more on fees for advisory services and on money from trust funds, or earmarked funds from governments for specific projects.

Trust funds already account for one of every 10 dollars the bank disburses to governments, according to the paper.

The new budget will be implemented for the next fiscal year, which begins in July 2014, and may be one of the thorniest issues for the bank to resolve as it decides which departments and programs must shrink.

Changing the bank's internal culture may also pose a threat to the success of the new strategy, according to several outside analysts who reviewed the paper.

Part of the new focus means integrating the work of the bank with the activities of its private sector lending arm, the International Finance Corporation, and the Multilateral Investment Guarantee Agency, which insures investments in difficult environments.

The three agencies work with different clients and may have different approaches to specific projects, creating conflicts of interest.

The details of how the bank will change its internal organization to align with the new strategy will be presented later in an "Implementation Paper."

For now, the draft strategy will go to the governments of the World Bank's members for approval, before being formally presented during the annual meetings of the World Bank and International Monetary Fund in early October.

(source : Yahoo!Finance)

Economy Issue : When Indonesia's Good Times End

2013-09-17T10:50:00.000-07:00

Economy Issue : When Indonesia's Good Times End. Indonesia's economy is now growing as it slowest pace in almost three years.

IN THE late 1990s Indonesia’s banking sector collapsed after the rupiah lost about 85% of its value against the dollar, leading to a spate of loan defaults by borrowers unable to service their foreign debts. The rupiah’s recent decline—the currency has dropped by 14% against the dollar since the start of the year—and a big current-account deficit have revived uncomfortable memories of that period.

In real terms GDP expanded at an annual rate of 5.8% in the second quarter, down from a recent high of 6.8%. Since May Bank Indonesia, the central bank, has lifted its main interest rate by 125 basis points to 7%, the highest since June 2009, in an effort to reverse the rupiah’s slide.

When the currency was stable it made sense for firms to borrow in dollars even if their revenues were in rupiah, says Ivan Tan of Standard & Poor’s, a ratings agency. Slower growth, currency depreciation and higher interest rates will “start to stretch” companies’ ability to repay their debts.

Firms with dollar revenues, which are naturally hedged against exchange-rate risk, may not be as safe as they once were. Many of Indonesia’s biggest exporters are in the natural-resources sector, selling things like palm oil, rubber or minerals. International prices for such commodities have tumbled recently as growth has slowed in China and other large importing countries.

This is not the 1990s again, however. Indonesia’s banks have high capital ratios—an average of 16.9% in May for the country’s commercial lenders. Credit growth has raced along at an annual rate of about 20% in recent years, but this has been financed mostly by deposits rather than flightier wholesale borrowing. Non-performing loans are equivalent to only 2% of total lending.

Corporate balance-sheets are widely accepted to be stronger than they were during the Asian crisis. Stricter regulation means that lenders are better at managing their own exposure to exchange-rate risk, too. Fitch, another ratings agency, notes that banks’ net open positions (the difference between the foreign assets and foreign liabilities on their balance-sheets) average only 2% of their capital, well within the 20% maximum permitted at the end of each business day.

Even so, change is coming to the industry. Indonesia’s banks have been among the world’s most profitable in recent years. As the economy slows, and banks put aside more provisions for bad loans, the years of effortlessly high returns are ending.

(article source : The Economist - http://www.economist.com )

Ideas For Online Business At Home Based

2013-09-17T02:07:00.001-07:00

Ideas For Online Business At Home Based. Home Based Business growing rapidly with increasing internet connection network which is able to reach the entire world.

Growing global market, especially demand for online transactions made drastic Home Based Business has a very good chance. For anyone who is very likely to start a new business in a globalized world.

Millions of people around the world have had the dream of finding the perfect home based business and being able to fire their boss. One thing that people just don’t realize when they decide to take their home based internet marketing business online is that there’s a lot more to it than meets the eye. Most people who have searched for a suitable home based Internet Business opportunity complain about a common illness: They are sick and tired of websites that promote best home based Internet Business opportunities… sick and tired of the false promises, the over-hyped sales pitches, and the downright SCAMS that lurk behind most Internet Business opportunities.

Once you’ve decided what you are going to sell on the internet and how, you venture online to search for profitable home based business opportunities that appeal to you. If you have finally decided to start your Internet home based business and have done all your home work, the key to making your home office conducive, as a working environment is organization. Also, start a business that you enjoy, you have to be motivated to wake up in the morning ready to start the day with your home based business, you are your own boss. After you’ve done your research on how to start your own home based business, you should be ready to be a home based business owner.

An internet home based business can either offer a service that another person may need (like web design or programming) or can offer a service that brings the “have’s” and the “have not’s” together. After you decide which direction you want to focus your internet home based business the next best step is to start learning how others are making a profit.

(source : http://www.mazziottimedia.com-Business Information Center)

Understanding Online Business As A New Business

2013-09-17T01:49:00.002-07:00

Understanding Online Business As A New Business. Online business is an activities or business in the search for profits through the internet connection.

Online business definition is often assumed by internet marketers that all business is done online by using the internet as a medium for marketing products and services is to cover portions of the online business. So in this case the internet is just the media because the Internet itself is composed of thousands of pages of thousands-even millions of Web pages are able to provide information for Internet users.

So do not be surprised if many business or personal use of the Internet as a powerful medium to commercialize and promotion of their products in hopes that internet users can see and recognize until finally interested in using its products, it’s only a small example of the advantages of online business.

Which is often a question for prospective customers is how to transact safely on the internet, how the payment and the delivery. Certainly reasonable if we are new to online business came questions like that because on the other hand many who abuse the Internet for fraud (Scam). For that you need to be selective in choosing sites that provide goods or services, it is advisable to choose a trusted site and have a great track record and at least you’ve got to understand tips In choosing safe online.

But trust the other side in the Internet world is full of scams there are many who actually use their site to do business with ethical, honorable and elegant. So it all depends on your level of trust and confidence of the sites visited and do not forget that every decision you take has a price. Risk & unintended consequences always lurk. I can only say online business is not easy but it is also not difficult as we imagined.

Business world wherever you are all need a process of learning, hard work, perseverance, and patience. Surely it was not a little to build your business empire. But if you already have a belief that there is a chance to win it all. Start now .. wake up and open your horizons wider and are confident that with willingness, perseverance and hard work we can shorten the time for success.