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Ideas For Keeping Business Costs Down

Every penny counts when you are running a business. Not only will it free up substantial cash that you can use to improve your company’s performance, but it can also improve your bottom line – meaning you will be more profitable. And the key thing to remember about keeping costs down is that you don’t need to implement sweeping changes into your business to make it happen – all you need is a few simple, common sense strategies in place. In today’s guide, we’re going to go through some of the things that business owners old and new should be looking at to keep down their costs. Let’s get started right away.

Track and trace

The first step in saving money is to understand where it is all going. Every cent you spend in your business needs to be accounted for, and you have to have strict procedures in place that allow you to see where your money is going. A tight, controlled budget will always outperform one that is a little on the loose side, and it will give you a chance to identify potential areas where cost cutting can be achieved.

Location

It’s nice to have a flash office or premises to show off to your customers. But is it really necessary? Rental payments can be huge if you want to locate your business in a popular area, and you will always be paying a premium. In some cases, it can be worth it, of course, but in the vast majority? You will be far better off looking for a cheaper alternative to keep down your fixed costs and overheads as much as possible.

Office size

Are maximizing the space of your offices and premises? If not, the likelihood is that you are wasting money. Don’t forget, you will be spending money on every square yard of rental space, and if you have no need for it, it’s all going to waste. There are a couple of things you can do. First of all, consider downsizing to a new place that is sized more suitable for your business needs. Secondly, fill up space by renting it out to other firms or individuals.

Equipment, furniture, software

It’s nice to buy everything you use in your business brand new – but is it necessary? The truth is that you can save a small fortune by purchasing used furniture of PCs, for example. It’s the same principle with investing in expensive software. Could you save money by using an open source word processor like Openoffice, for instance, instead of forking out for Microsoft’s version? Maybe you could seek out an alternative to Photoshop and Illustrator, too?

Energy costs

All businesses use energy, of course. But the vast majority waste far too much. One of the easiest things you can do to save businesses costs is to start being sensible with your energy use. Switch utility providers every time you come to an end of a contract, as new customers always tend to get the best deals. Turn off the lights when you leave a room empty. Close windows to ensure you don’t waste heat. Run regular maintenance programs on equipment, heating, and air conditioning to make sure that everything is working as efficiently as possible. And, most importantly, get everyone on board with your efforts. If you can create a culture of energy saving, it can save you a substantial amount of money over the course of a year.

Insurance and banking

Banking and insurance charges can also vary wildly, and switching to cheaper alternatives is a simple process. You should always evaluate your insurance cover, too, to make sure that you aren’t paying for needless policies that are irrelevant to your business. If you look around for more competitive rates than you currently enjoy, you can use this information to ask your current lender to reduce their charges.

Waste reduction

If you start tracking your waste volume, you can start to identify a lot of inefficiencies in your business. And there are plenty of ways to save, from cutting out items that are never used, to selling cardboard and paper instead of recycling it. Don’t forget, every time you throw something away, you will be wasting money – and it’s unnecessary expenditure you can easily avoid.

Outsource

Hiring full-time staff is expensive. Not only do you have to pay people a wage, but you have to give them benefits, too, including things like insurance. Employees also require space, equipment, training, and much more besides – all of which you pay for. You also have to pay your employees during quiet periods where they may not be bringing any value to your business. In most cases, outsourcing to third parties can be a much more efficient way of controlling your expenses.

DIY

Of course, outsourcing still costs money, but you can cut back on this expenditure by learning how to do those activities yourself. Many startup owners do as much as they can themselves in the early stages of business. However, you do need to bear in mind that if it takes you away from your money-making activities – such as making sales – it might be better for you to outsource particular tasks.

Haggle

Haggling can save you a small fortune, yet so few businesses try it. Once you have developed a good relationship with your suppliers, for instance, they won’t want to lose you. And that puts you in a stronger position, particularly if you are growing and need to place additional bulk orders. Shop around and see if you can find a cheaper source of raw materials, and then use that information to tempt your current suppliers to drop their prices. As long as you can guarantee you won’t lower the quality of your end product, haggling for a better deal is a great way of reducing your cost per sale.

Barter

Finally, try swapping products or services – it’s an age-old method of reducing costs. You might trade services with another business in your local community, for example. You get what you need, and provide a similarly-priced service for someone else. These types of trade-offs can help you reduce a lot of spending – and also help you develop high-quality relationships with local businesses.

Additional resources

When You’ve Got to Cut Costs—Now
10 Simple Ways to Cut Business Costs
5 Ways to Reduce Your Business Expenses Right Now
7 Smart Ways for Your Small Business to Reduce Costs

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Finance

Why Entrepreneurs Often Fail

entrepreneur

Entrepreneur is an interesting word. It conjures up thoughts of bravery and superior business wisdom. It’s a person who sees in something what most of us fail to see.

Take that idea, develop it and in turn found a business on it. When it works, it’s pure genius, and we’re in awe of their aptitude. However most businesses fail so most Entrepreneurs are less skilled than we give them credit for.

Bravery in launching a new business is really just a higher level of risk taking and with good debt it’s more acceptable. Good debt is a loan that used to create a revenue, i.e. it’s an investment used to generate and grow an income. Here’s a more extensive definition of good debt.

So the Entrepreneur or business will increase its borrowings via a line of credit, or even a home loan to invest in its products or people with the objective of earning more revenue.

The risky part of borrowing is the end goal is speculative i.e. its usually a well thought out plan but it’s not actually happened and numbers have to work out, i.e. the increase in revenue due to the loan, far exceeds the costs of the loan and other additional expenses, like more staff or systems.

Entrepreneurs have an appetite for risk and as mentioned it sometimes works out but mostly it doesn’t so it’s important to understand the pros and cons of business loans.

Once the good debt options run out, then the only way to go is bad debt loans and this is when it can all spiral downwards for businesses. Bad debt loans are essentially non income producing so they’re a liability. The loans can not be leveraged to make money. They can be written off against taxes and there is also bad debt recovery which is another subject altogether.

Startups fail for many of the same reasons including:

  • Lack of working capital – affecting operations
  • Liquidity issues with cash flow – struggling to pay staff, suppliers
  • Business growing too quickly – not enough resources to deliver on orders
  • Ego – too big to fail

Often it’s not just one thing either but a combo of challenges that just become too much to handle alone. The smart operators don’t go it alone though they have mentors.

Entrepreneurs Need Mentors Too

Behind every good Entrepreneur is a mentor. Yes this is not the adage you were expecting but it works.

Mentors keep us in check. They’re our sounding boards, listening to our rants and raves. Offering an objective viewpoint and advice on the direction we should take.

Of course no one person can be trusted to do the lot so more than one mentor is recommended. The experience and trusted authority from mentorship is recognised in just about all great leaders. Think of the big names in business today and they’ll say they have amazing mentors.

Facebook’s Mark Zuckerberg had Steve Jobs, and Bill Gate had Warren Buffett.

Maybe this is where some Entrepreneurs go wrong? They either don’t have mentors or they don’t use them enough.

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Finance

Neo or Ethereum – where is your investment safer

crypto currencies

The advent of cryptocurrencies and its stellar rise, despite relative infancy and new technology, have arguably impacted the marketing world significantly. Booming in the previous year, 2017 saw a rush of millions of money poured into the cryptocurrency market. And considering its continuously growing network, there is no sign that 2018 will be any different.

Over the last few years, cryptocurrencies and other blockchain projects were able to gain very impressive returns that helped investors to be ridiculously successful. However, inevitably, many had experienced its dramatic declines as well. But despite the risk, more and more people are looking for the next big thing in the market which has the highest potential to multiply ones’ investment. And while there are hundreds of cryptocurrencies, that although represent opportunities to achieve sustainable growth, are also highly risky; and from which it is quite hard to predict which one gives the best result, this article will focus on the two of the most popular alternate coins (altcoins) of today – Ethereum and NEO.

Ethereum and NEO are both high-profile altcoins with massive community support and which many investors swear by one or the other. However, as “the competition for the coin is expected to become tougher in 2018 as new players enter the domain”, the question of whether which of the two will be left holding the scepter becomes less important – but rather, where will investments be safer.

To attempt to answer this question, let’s take a closer look at the two altcoins.

Ethereum versus NEO: Philosophical Differences

Ethereum, according to its website, is “a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.”

NEO, on the other hand, is defined as a “non-profit community-based blockchain project that utilizes blockchain technology and digital identity to digitize assets, to automate the management of digital assets using smart contracts, and to realize a ‘smart economy’ with a distributed network.”

These respective definitions might sound remarkably similar – because, in many ways, they are. That is, both of them “run on a custom built block-chain that can move value around and represent the ownership of the property.”

Moreover, at first glance, these respective definitions might also imply that the two altcoins share the same objectives as both are aiming to dominate the cryptocurrency market by playing the similar roles of being the blockchain platforms for the new internet (or platforms that offer decentralized functionalities) such as Decentralized Applications (DApps), Initial Coin Offerings (ICO), and smart contracts. However, they aren’t, as there are subtle differences:

Ethereum’s goal is to develop its platform in response to new demands – that is, consolidating its role as the go-to platform for ICO’s. Whilst, NEO’s goal is mostly focused on developing its platform for future demands by realizing a so-called “smart economy” that will feature digitized physical assets which can be sold, traded, and leveraged through smart contracts.

Ethereum versus NEO: Backing and Partnership Differences

Because Ethereum is a certified government-agnostic, it is supported by some of the biggest global corporate names such as Enterprise Ethereum Alliance – making it enjoy popularity tointernational audience and thus, much larger support from the tech community.

All the same with NEO – the Chinese government might have gone far as to ban the ICO’s, but NEO remains to be China-based and Chinese-focused. Despite the country being seemingly unfriendly to the industry, NEO manages to receive backing from national banks and states – which allows it to capitalize on the huge Chinese market. Furthermore, it is also supported by Alibaba and Microsoft.

Ethereum versus NEO: Target Market Differences

There can be no doubt that Ethereum and NEO have the huge potential to become the next Bitcoin. Due to the impressive capabilities of their pluses to outweigh the minuses, both of which are continuously gaining popularity especially in comparison to other cryptocurrencies in the market.

Ethereum, which although has already been adopted by blockchain startups worldwide, is proportionally concentrated in the Western countries. Meanwhile, NEO is largely capitalizing in China.

Looking closely, Ethereum seems to benefit from a certain fallacy of thought that “West is the best” – which is quite true in terms of Western products catering to Western markets. But many fail to understand that Chinese investors are less likely to adopt Western technologies as they (like many East Asians) are far readier to support home-grown technology taking pride in and loyalty to national products.

NEO, however, might be having the advantage of a technologically-driven population that is nearly 1.4 billion people strong; not to mention that Chinese investors make up a very large percentage of the world’s cryptocurrency investors. But one should not fail to consider that the involvement of the Chinese government, which might have made NEO a state-mandated currency, plays a significant role in building a loyal following from Chinese investors.

Ethereum versus NEO: Where is your investment safer?

With the capabilities (i.e., both projects are open source and has massive community support) and differences (i.e., serving different markets and the opposite directions their visions are taking) that these altcoins have, should there really be a question of which among Ethereum and NEO is better, or should you invest in both?

While NEO appears and is turning out to be more investment-worthy – focusing on creating a “smart economy”, it should not be forgotten that Ethereum still holds the position of being the second most popular cryptocurrency in the world with a total market cap of $105 billion as compared to NEO’s $9 billion (as of January 25, 2018).

Thus, given that we are dealing with two very robust technologies, it might be better to conclude that there is certainly space aplenty for both altcoins to coexist.

And as to where your investment will be safer, perhaps the most suitable answer is in the altcoin where you can best tolerate the risk and that you understand well. There are more and more investors getting on board who often have a very limited understanding of the technicalities of the cryptocurrency they support, ending up investing based on brand loyalty and hearsays and even merely along the lines “Ethereum of China” NEO vs Ethereum.

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Finance

Top Six Ways Cash Advance Can Help A Business Grow

cash advance

A cash advance or merchant cash advance is a form of short-term loan given to a small business. Cash advance are payable with interest rates usually around 25% of the principal. The loan is paid by deducting a percentage of sales made periodically (usually weekly) from credit cards.

Cash advance are useful because the lenders do not ask for credit scores, collateral and other things that other banks and other lenders will ask for. Cash advance are also fast and are useful when loans are needed urgently.

If used the right way, cash advance loans are one of the best ways to grow a business. Here are the top six ways by which cash advance can help a business grow:

1. Payment of staff salaries:

There are moments when business is bad, but you need to pay your employees. A cash advance will help you to pay your employees and keep them motivated. If you are a small business looking to hire employees to handle more jobs, but you don’t have the means to pay them yet, you can get a cash advance to help you pay their salaries at first before you find yourself on your feet.

2. Purchase of equipment:

Imagine that you are a contractor, handyman or you are involved in any other kind of business, and you need to get a job. But the requirements of the contract or job involve having some equipment. You can collect a cash advance and use it to buy the equipment so that you can get the job or win the contract. Then, you pay back the cash advance gradually.

3. Stocking of inventory:

A lot of businesses use cash advance to buy inventory and stock them. You need to have goods in stock to satisfy your customers and retain them. When you’re just starting, it may be difficult to buy all the inventory items that you need yourself. A cash advance will help you do that. If you deal in seasonal goods, you can buy a lot of goods offseason with a cash advance.

4. Advertisement:

Without advertisement, no one will know about your goods and services. With advertisement, you can ensure that a lot of people know about your products and patronize you. But advertisement could be costly. Branding, building a website, radio and TV ads are expensive. A cash advance could pay for all these, and you pay back as the profits start to roll in.

5. Business expansion:

If you are a small business, expansion of the business could be difficult and expensive especially if you are opening a new branch in another location. You’ll need to replicate most of your assets, hire new staff, spend on advertisement and other things. A cash advance can help you with all these, and you then use the proceeds from the cash advance to pay for everything.

6. Increase working capital:

Working capital is the money that you use to manage the day-to-day affairs of your business. As a small business, you might need a cash advance to help you increase your working capital, so that you can increase your business operations. You will earn more profits which will help you repay the cash advance faster.

Conclusion

If used the right way, a cash advance could be what will take your business to the next level. Before taking the loan, decide how much you need. Plan out how you will spend it before receiving it. Meet your lenders and explain why you need cash advance to them. And once you receive the loan, use it for the exact thing you collected it for. Do not divert the loan for other purposes.

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