Finance | Bankers Say

Smart Financing for a Small Business

Small businesses have to be savvy when it comes to securing financing and doing budgeting for each fiscal year. Careful planning, considering all options carefully and doing your research can make a big difference in how well your business will run.

When setting your business budget for the year, start with careful consideration of your monthly expenses. This can include items such as: inventory, supplies, traveling expenses and monthly utilities. This lets you know how much you need to set aside for bills, then you know what you have left over. When you set your budget, stick with it.

You should also set up a plan for saving money for future goals such as expansion. This is a smart way to make your company grow. If you have a surplus, set aside a set amount for plans like this. Over time you will generate enough capital to handle an expansion without having to look for business loans. This saves you money on interest payments and keeps you out of debt.

If you do have to use loans, compare banks to get the best rate and terms. You will need to have a solid business plan lined out to show the bank how the money will be used. This plan outlines your budget, projected sales and forms of marketing that you will use to help your business reach customers. It is also a valuable tool for you to set up your goals and plans for expansion in the future. Smart financing is much easier with a little planning, careful comparison of the options and keeping control of your funding.

Filed Under: Financial Markets Tagged With: Business, Finance, Small business

Off-Site Training Benefits

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When it comes time to make sure that all employees are up to date on training and company policy, it might be tempting to just gather everyone into the conference room.

It would be easy to create a dry speech with information overload that causes everyone’s eyes to glass over. This year consider taking everyone off-site to spend some time learning together. Each person spends a lot of time within his or her workspace and taking a break can be beneficial.

Your first concern might be financial and that makes sense. However, this doesn’t have to be a costly trip out of the state or even out of town. Group together in a new setting. It might be a local park that gets everyone out of the office and into a new environment.Â Go ahead and give them a day away from the office dress code. You’ll be surprised at how many participants look forward to sitting through a meeting in their Nike Clothes. Sometimes change is good.

If the office can completely shut down for the day, or even a few hours, you are providing all employees a chance to see each other in a new way. You may find that some are more willing to speak up and present new ideas or questions that they have been meaning to talk about.

Everyone is still going to learn and you are going to get your point across. But this time when you send out an email for the latest corporate meeting, you may find the people begin to get excited about the idea instead of the usual grumbling and complaining.

Filed Under: General Finance Tagged With: expansion, Finance, hiring

Is It Time to Expand?

The first thing to recognize as a small business owner is that profits do not necessarily mean you are ready to expand. There are many things that need to be taken into account before that can happen.

Longevity of profits is very important. A short spurt of profits does not mean those profits will hold. It is best to wait to 2 to 4 years to see if those profits stay constant. The last thing you want to do is expand and then realize that your profits were just a fluke that lasted during a fad that made your small business popular or during a particularly prosperous year in your city.

Cash flow is the second thing to look for. A constant cash flow will allow you to invest that money back into your business and eliminate or reduce the need for business loans. You must also have possession of a substantial portion of your local market and maintain a customer base that is loyal and that constantly invest in your product or service. Additionally, as a business owner, you must be aware of whether your product is increasing with demand or whether it is slowly fading out.

If all of these components are meant, then you are ready to expand. Remember that low capital tends to be the prime reason for business failure. It is vital that you have the financial backing to expand. If not, it is best not to risk such a big move. Customers are the back bone of any business so it is also important that your company have a client base that is steady and constant. These factors will tell you whether you are ready to expand or not.

Filed Under: General Finance Tagged With: Cash flow, Finance, Small business

The Heartache of Divorce!

Okay, look–it’s not an easy subject to discuss. But unfortunately it does happen to the best of us. Here it is–

When dealing with a divorce, our finances are seriously affected. It’s just a fact of life.

Thought this was about the actual heartache of divorce, hence the title of this article? Well, this isn’t a counseling session. Although divorce is always going to be difficult, let’s segue past all the horrible nonsense and take it for granted that divorce does stink and there’s nothing anyone can do about it except accept it and move on. Personally, the greatest issue next to children is finances. Think ‘child support’, and you’ll get the picture. It’s not a pretty one.

Here’s what you should do: review your credit report. Sounds a little too methodical, but you’d be surprised at the benefit of looking at the credit report and noticing some accounts that belong solely to your former spouse. Remember one key thing: protect your assets.

The second objective is to open some new INDIVIDUAL accounts and close all JOINT accounts. The reasons are obvious for those. Your money now solely belongs to you–not your spouse. So make sure you make the proper changes to reflect that.

This is thinking way ahead but definitely necessary: examine your will and estate plan. Think about it. If you had written a will with your spouse and his/her immediate family listed, you might want to take a quick look at it after a divorce. Just a suggestion.

You heard the scary, devilish term “child support”, which is why it’s absolutely paramount to revise your budget. Don’t get stuck in the quicksand. Making a few changes regarding your income will provide a few of those branches to help pull you out of trouble.

Those are a few tips to guiding you in the right path. No one wants to be divorced. But no one HAS to be financially ruined. That would be an even bigger headache.

Filed Under: General Finance Tagged With: Child support, Credit history, Divorce, Finance

Why You Should Seek a Financial Advisor For Financial Advice

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Many people believe that they can handle their finances themselves. However, very few people are actually qualified enough to make their financial decisions on their own. That is why many banks are offering financial planning services to its customers. The financial planning service usually includes the hiring of a financial advisor who is qualified to help you make the best financial decisions for you and your finances.

Many people are reluctant to hire a financial advisor. Here are some reasons why you should seek out the advise of a financial advisor before investing any of your money.

Advanced Knowledge. Financial advisors have advanced knowledge about the various types of investments that you might not be aware of. They know all the risks and benefits of the various types of investments and can help you choose which type of investments are bet for your future needs.

A Watchful Eye On Your Investments. Many financial advisors are keeping an eye out for your finances even when you might not be. That means if they see something that should be changed such as a stock that isn’t doing well or a hot new investment opportunity, they will let you know.

Ease of Transferring Investments. Many people enjoy the ease of having a financial advisor. All it takes is a phone call and they can transfer stocks, sell bonds and other things with your permission. This is a major benefit for some people as they do not have the time to do the trading and transferring themselves.

Information. Financial advisors can help you better understand what is going on with your investments. If your stocks go down, they can explain why. If your stocks are staying level they can help you understand that. They are your guide in the confusing world of finances and investing.

Filed Under: Finance Tagged With: Finance, Financial adviser, Investment

What to Expect When Meeting a Financial Adviser

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It can be nerve wracking to meet with a financial adviser for the first time. Financial planning is an important step for everyone in taking charge of their financial future. It is important to remember that financial planners are there to help you to understand the many options available for your money. While the first meeting will be filled with questions, it is really a chance for you to decide if this financial planner is right for you.

Take Your Time
Take time to think through everything when completing paperwork. While everyone knows that they want to make good decisions with their money, few people have given serious thought to their goals in five, fifteen, or fifty years. Taking the time to answer these questions and honestly think about your priorities can help your financial planner to make good decisions on your behalf.

Find Out About Your Planner
Ask questions about your financial adviser’s background and experience. What is his or her philosophy on financial planning? How does his or her background and philosophy set him or her apart from others? It is important to know you are getting a good match for your personal philosophy and needs regarding financial planning.

Ask Questions
Financial planners should be able to answer questions and explain financial terms to their clients. Never be afraid to ask for further clarification if things don’t make sense, your financial adviser doesn’t know your level of comfort with financial terms and it is important for them to always explain what they are doing so you are comfortable with your portfolio.

Having a good relationship with your financial planner will help you to keep on top of your money and make good decisions regarding your financial future. Before the end of the first meeting, be sure you have a full range of contact information so you can always reach your financial planner to discuss concerns or ideas.

Filed Under: General Finance Tagged With: Business, Finance, Financial adviser, Financial plan, Financial planner, Financial services, Investment, Money

Teaching Your Kids About Financial Planning

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Beginning to teach your children about finance early in life will help them to develop a strong knowledge base and learn about saving and investing in the future. There are several ways to help your children learn about money without a lot of stress or making it all seem too complicated. Trying a few methods while they are young will help them to stay interested in their money and take an active role in their financial planning later in life.

Make Allowance Matter
From an early age, children can receive an allowance and learn that part of that money can be spent on fun things, treats, and rewards. Another part, specified by the parents at an early age and by the parents and child later on, must go into a savings account. This money may be put away for college, saved for a first car, or eventually put into a ROTH IRA for the child’s eventual retirement. It is never too early to get your child thinking about financial planning.

Go to the Bank Together
Make it a family outing when your child has filled his or her bank and is ready to deposit the savings into a bank account. People at the bank can help you to explain about the savings account to the child and give them a friendly face to attach to the bank. They will learn to go to the bank when they have questions about their finances and use the resources available to them to save for the future.

Play the Stock Market Game
Later in elementary school is the perfect time to introduce children to the idea of the stock market. Using pretend money, have them pick stocks and watch them day to day by checking their price online. Keeping track of the fluctuations will help them to learn how stocks work and set the tone for learning more about investing in the future.

Filed Under: Finance Tagged With: Child, Finance, Financial plan, Learning, Money, ROTH IRA, Savings account, Stock market

Financial Planning: Learning to Stay Calm

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Many people begin to invest in stocks and bonds in early adulthood. As they see the money accumulating in these accounts, they feel good about the future and happy with their investment choices. Then they see stocks drop and can easily become discouraged by these losses. This is the time when it is important to learn not to panic. The worst thing investors can do is to sell when they see a stock drop. Instead, learn to control this urge and keep your investments where they are.

Don’t Sell
One of the simplest and yet most important lessons to learn about financial planning is not to sell when a stock begins to drop. This is particularly important for young adults who have plenty of time for the stock to recover before they will ever need it for their retirement. Drops are a natural part of the stock market and holding on to a stock until is recovers is a lesson that every investor must often learn the hard way. It’s worth it in the end to wait out a low period and sell when the stock has recovered.

Keep a Portfolio That Fits Your Type
This means keeping your risk lower if you are the type of person who cannot handle large drops and gains in their portfolio. Even though you will stand to make more money with a portfolio that includes riskier stocks, it is not worth the stress that some people experience due to these sudden changes. If you are not comfortable with risk, talk to your financial planner about ways to minimize risk and keep a portfolio that will rise slowly, but also stay consistent.

Learning to accept the fluctuations of the stock market is not easy, especially for people who are naturally risk averse. Learning to watch without fear is one of the most important lesson that investors can learn about their finances.

Filed Under: Finance Tagged With: Finance, Financial plan, Financial planner, Investment, Investor, Portfolio (finance), Stock, Stock market

Is Technology Dooming Capitalism?

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Is capitalism dead? While it might seem impossible, capitalism seemed to have run out of ideas as technology lapped a system of economics created nearly two centuries ago. When Adam Smith and other innovators dreamed up the the “invisible hand” system they could not have had in in mind the complex communications systems that now drive the global economy.

Smith saw financing as way to drive production. Bankers moved investments to push the best industrial practices. Stock trading was a system set up to make sure that only the best and most effective businesses survived. But the sophistication of international finance and trading has turned the system into some completely different than anything Smith could have envisioned.

Investors now make money without even caring about the long-term viability of a plan. The mortgage crisis that started in 2007 in was the result of banks creating and then trading terrible toxic assets on ignorant investors. Rather than invest in a business that provided a service or produced something of value, the banks were able to play a game of poker that had them bluff that they held something valuable. By the time that the banks had to show their cards, the terrible investments had already been traded off which left the banks with others people’s money.

Wealth was not created in this transaction. It was redistributed from one group to a much smaller group. The trade robbed many people of their jobs and created an enormous financial disaster. While politicians offer lip service to making reform, much of the same system remains in place.

Technology and the speed of trading allows banks to trade off investments hundreds of times prior to determining whether or not what is being traded is worth anything. Rather than creating wealth, technology might have made traditional aspects of capitalism too costly for an effective society.

Filed Under: General Finance Tagged With: Adam Smith, Capitalism, Finance, Invisible hand